E XHIBIT 1.1
4,000,000 Shares
HOLLIS-EDEN PHARMACEUTICALS,
INC.
Common Stock
PLACEMENT AGENCY
AGREEMENT
November 7, 2006
R ODMAN & R ENSHAW ,
LLC
1270 Avenue of the Americas, 16th
Floor
New York, NY, 10020
C ANACCORD A DAMS ,
I NC .
99 High Street, 11th
Floor
Boston, Massachusetts
02110
Ladies and Gentlemen:
Hollis-Eden Pharmaceuticals, Inc., a
Delaware corporation (the “Company”), proposes to issue
and sell to certain investors (collectively, the
“Investors”) up to an aggregate of 4,000,000 shares
(the “Shares”) of the Company’s Common Stock, par
value $0.01 per share (the “Common Stock”). Each
Investor shall also receive a warrant, in the form of Exhibit
A attached hereto, to purchase up to a number of shares of the
Company’s Common Stock (the “Warrant Shares”)
equal to 20% of the Shares purchased by such Investor, at an
exercise price equal to $8.75 per share, exercisable beginning six
months after issuance and on or prior to the fourth anniversary of
issuance (the “Warrants”). The Shares, the Warrant and
the Warrant Shares (collectively, the “Securities”)
have been registered on a registration statement on Form S-3, File
No. 333-135095 (the “Registration Statement”),
which has been declared effective by the Securities and Exchange
Commission (“SEC”), and remains effective as of the
date hereof, and which includes a base prospectus relating to the
Shares, the Warrants and the Warrant Shares (the “Base
Prospectus”). The Shares, Warrant and Warrant Shares are free
of restrictive legends and are free of any resale restrictions. The
Company desires to engage Rodman & Renshaw, LLC as its
exclusive lead placement agent (the “Lead Placement
Agent”) and Canaccord Adams, Inc. as its exclusive
co-placement agent (the “Co-Placement Agent” and,
together with the Lead Placement Agent, the “Placement
Agents”) in connection with the issuance and sale of the
Shares. The Shares are described more fully in the Prospectus that
is referred to below.
The Company confirms its agreements
with the Placement Agents as follows:
1. Agreement to Act as Placement
Agents .
(a) On the basis of the
representations, warranties and agreements of the Company herein
contained and subject to all of the terms and conditions of this
Agreement, the Company engages the Placement Agents to act as its
exclusive placement agents in connection with the issuance and sale
of the Shares and each Placement Agent, severally and not jointly,
hereby agrees, as an agent of the Company, to use its commercially
reasonable efforts to solicit offers to purchase the Shares upon
the terms and conditions set forth in the Prospectus (as defined
below). 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 consent of the
Lead Placement Agent, solicit or accept offers to purchase Common
Stock (other than pursuant to the exercise of options or warrants
to purchase shares of Common Stock that are outstanding as of the
date hereof) otherwise than through the Placement Agents in
accordance herewith.
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(b) As compensation for the services
rendered hereunder, on the Closing Date (as defined below), the
Company shall pay to the Placement Agents, by wire transfer of
immediately available U.S. funds payable to the order of the
Placement Agents, to an account or accounts designated by the
Placement Agents, an amount equal to 6% of the gross proceeds
received by the Company from the sale of the Shares (the
“Fee”), with 66.67% of the Fee payable to the Lead
Placement Agent and 33.33% of the Fee payable to the Co-Placement
Agent. The Lead Placement Agent may, in its discretion, retain
other brokers or dealers to act as sub-agents on the Placement
Agents’ behalf in connection with the offering of the Shares,
provided that the Company shall not be obligated to pay any
additional amounts to the Placement Agents or any such sub-agent
with respect thereto.
(c) This Agreement shall not give
rise to a commitment by the Placement Agents or any of their
affiliates to underwrite or purchase any of the Shares or otherwise
provide any financing, and the Placement Agents shall have no
authority to bind the Company in respect of the sale of any Shares.
The Company shall have the sole right to accept offers to purchase
the Shares and may reject any such offer in whole or in part. Each
Placement Agent shall have the right, in its discretion reasonably
exercised, without notice to the Company, to reject any offer to
purchase Shares received by it, in whole or in part, and any such
rejection shall not be deemed a breach of its agreement contained
herein. The sale of the Shares shall be made pursuant to purchase
agreements in the form attached hereto as Exhibit B
(the “Purchase Agreements”).
2. Delivery and Payment .
Subject to the terms and conditions hereof, delivery of the Shares
shall be made by the Company to the Investors, and payment of the
purchase price shall be made by the Investors, in accordance with
the Purchase Agreements.
3. Representations and Warranties
of the Company . The Company represents, warrants and covenants
to each Placement Agent that:
(a) The Company has the requisite
corporate power and authority to enter into and to consummate the
transactions contemplated by each of the Transaction Documents and
otherwise to carry out its obligations hereunder and thereunder.
The execution and delivery of each of the Transaction Documents by
the Company and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by all
necessary action on the part of the Company and no further consent
or action is required by the Company, its Board of Directors or its
stockholders. Each of the Transaction Documents has been (or upon
delivery will be) duly executed by the Company and is, or when
delivered in accordance with the terms hereof, will constitute, the
valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as enforceability may
be limited by applicable (i) bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting
creditors’ rights generally, or (ii) laws relating to
the availability of specific performance, injunctive relief or
other equitable remedies. The execution, delivery and performance
of the Transaction Documents by the Company and the consummation by
the Company of the transactions contemplated hereby and thereby do
not and will not: (i) conflict with or violate any provision
of the Company’s certificate of incorporation, bylaws or
other organizational or charter documents as of the date of
execution of this Agreement, or (ii) subject to obtaining the
Required Approvals (as defined below), conflict with, or constitute
a default (or an event that with notice or lapse of time or both
would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation (with or
without notice, lapse of time or both) of, any agreement, credit
facility, debt or other instrument (evidencing a Company debt or
otherwise) or other understanding to which the Company is a party
or by which any property or asset of the Company is bound or
affected, or (iii) result in a violation of any law, rule,
regulation, order, judgment, injunction, decree or other
restriction of any court or governmental authority to which the
Company is subject (including federal and state securities laws and
regulations), or by which any property or asset of the Company is
bound or affected; except in the case of each of clauses
(ii) and (iii), such as could not, individually or in the
aggregate: (i) adversely affect the legality, validity or
enforceability of this Agreement, the Warrant, and any other
documents or agreements executed in connection with the
transactions contemplated hereunder (the “Transaction
Documents”), (ii) have or result in a material adverse
effect on the results of operations, assets, business operations or
financial condition of the Company, taken as a whole, or
(iii) adversely impair the Company’s ability to perform
fully on a timely basis its obligations under any of the
Transaction Documents (any of (i), (ii) or (iii), a
“Material Adverse Effect”).
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(b) The Company is not required to
obtain any consent, waiver, authorization or order of, give any
notice to, or make any filing or registration with, any court or
other federal, state, local or other governmental authority or
other Person in connection with the execution, delivery and
performance by the Company of the Transaction Documents, other than
(i) the filings of a Form 8-K disclosing the transaction
contemplated hereby, (ii) the filing with the SEC of the
prospectus supplement required by the Registration Statement (the
“Prospectus Supplement”) pursuant to Rule 424(b) under
the Securities Act of 1933 Act, as amended (the “1933
Act”) supplementing the base prospectus forming part of the
Registration Statement (the “Prospectus”),
(iii) the application(s) to The Nasdaq Global Market (the
“Principal Market”) for the listing of the Purchased
Shares and the Warrant Shares for trading thereon in the time and
manner required thereby, and (iv) applicable Blue Sky filings
(collectively, the “Required Approvals”).
“Person” means an individual or corporation,
partnership, trust, incorporated or unincorporated association,
joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of
any kind. The Securities that are being purchased hereunder are
duly authorized and, when issued and paid for in accordance with
the applicable Transaction Documents, will be duly and validly
issued, fully paid and nonassessable, free and clear of all Liens.
The Company has reserved from its duly authorized capital stock a
sufficient number of Warrant Shares to enable it to comply with its
exercise obligations under the Warrants. The issuance by the
Company of the Securities has been registered under the 1933 Act
and all of the Securities are freely transferable and tradable by
the Investors without restriction. The Shares and Warrants are
being issued pursuant to the Registration Statement and the
issuance of the Shares, the Warrants and the Warrant Shares has
been registered by the Company under the 1933 Act. The Registration
Statement is effective and available for the issuance of the
Securities thereunder and the Company has not received any notice
that the SEC has issued or intends to issue a stop-order with
respect to the Registration Statement or that the SEC otherwise has
suspended or withdrawn the effectiveness of the Registration
Statement, either temporarily or permanently, or has threatened in
writing to do so. The “Plan of Distribution” section
under the Registration Statement permits the issuance and sale of
the Securities hereunder and under the Warrants. Upon receipt of
the Securities, the Investors will have good and marketable title
to such Securities and the Shares and, so long as the
Company’s common stock remains listed on the Principal Market
and the Registration Statement is effective and no stop-order has
been issued with respect thereto, upon exercise of the Warrants,
the Warrant Shares will be freely tradable on the Principal Market.
Neither the Company, nor any of its Affiliates, nor any Person
acting on its or their behalf has, directly or indirectly, made any
offers or sales of any security or solicited any offers to buy any
security, under circumstances that would cause this offering of the
Securities to be integrated with prior offerings by the Company for
purposes of any applicable stockholder approval provisions,
including, without limitation, under the rules and regulations of
any exchange or automated quotation system on which any of the
securities of the Company are listed or designated, nor will the
Company take any action or steps that would cause the offering of
the Securities to be integrated with other offerings. Except as
disclosed in the SEC Reports, the Company has not, in the 12 months
preceding the date hereof, received notice from the Principal
Market on which the Common Stock is or has been listed or quoted to
the effect that the Company is not in compliance with the listing
or maintenance requirements of the Principal Market. The Company
is, and has no reason to believe that it will not in the
foreseeable future continue to be, in compliance with all such
listing and maintenance requirements. The issuance and sale of the
Securities hereunder does not contravene the rules and regulations
of the Principal Market and no stockholder approval is required for
the Company to fulfill its obligations under the Transaction
Documents. The Common Stock is currently listed on the Principal
Market.
(c) The Company has filed all
reports required to be filed by it under the 1933 Act and the
Securities Exchange Act of 1934, as amended (the “1934
Act”), including pursuant to Section 13(a) or 15(d)
thereof, for the two (2) years preceding the date hereof (the
foregoing materials being collectively referred to herein as the
“SEC Reports”) on a timely basis or has received a
valid extension of such time of filing and has filed any such SEC
Reports prior to the expiration of any such extension. As of their
respective dates, the SEC Reports complied in all material respects
with the requirements of the 1933 Act and the 1934 Act and the
rules and regulations of the SEC promulgated thereunder, and none
of the SEC Reports, when filed, contained any untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading. The Registration Statement and any prospectus
included therein, including the Prospectus and the Prospectus
Supplement, complied in all material respects with the requirements
of the 1933 Act and the 1934 Act and the rules and regulations of
the SEC promulgated thereunder (collectively, the “Rules and
Regulations”), and none of such Registration Statement or any
such prospectus, including the Prospectus and the Prospectus
Supplement, contain or contained any untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in
the case of any prospectus in the light of the circumstances under
which they were made, not misleading. The Company is in compliance
with the Sarbanes-Oxley Act of 2002, and the rules and
regulations
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promulgated thereunder by all government and
regulatory authorities and agencies, except as could not reasonably
be expected to have a Material Adverse Effect. The financial
statements of the Company included in the SEC Reports comply in all
material respects with applicable accounting requirements and the
rules and regulations of the SEC with respect thereto as in effect
at the time of filing. Such financial statements have been prepared
in accordance with generally accepted accounting principles applied
on a consistent basis during the periods involved
(“GAAP”), except as may be otherwise specified in such
financial statements or the notes thereto, and fairly present in
all material respects the financial position of the Company as of
and for the dates thereof and the results of operations and cash
flows for the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial, year-end audit
adjustments.
(d) Since the date of the latest
audited financial statements included within the SEC Reports,
except as specifically disclosed in the SEC Reports: (i) there
has been no event, occurrence or development that, individually or
in the aggregate, has had or that could result in a Material
Adverse Effect, (ii) the Company has not incurred any
liabilities (contingent or otherwise) other than (A) trade
payables and accrued expenses incurred in the ordinary course of
business consistent with past practice and (B) liabilities not
required to be reflected in the Company’s financial
statements pursuant to GAAP or required to be disclosed in filings
made with the SEC, (iii) the Company has not altered its
method of accounting or the identity of its auditors, (iv) the
Company has not declared or made any dividend or distribution of
cash or other property to its stockholders or purchased, redeemed
or made any agreements to purchase or redeem any shares of its
capital stock, and (v) the Company has not issued any equity
securities to any officer, director or Affiliate, except pursuant
to existing Company stock option and purchase plans.
“Affiliate” means any Person that, directly or
indirectly through one or more intermediaries, controls or is
controlled by or is under common control with a Person, as such
terms are used in and construed under Rule 144. “Rule
144” means Rule 144 promulgated by the SEC pursuant to the
1933 Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the SEC having
substantially the same effect as such Rule.
(e) Neither the Company, nor any
director or officer thereof, is or has been the subject of any
action involving a claim of violation of or liability under federal
or state securities laws or a claim of breach of fiduciary duty, or
any criminal statute during the term of such director or
officer’s tenure with the Company, nor, to the knowledge of
the Company, prior to such tenure that is of a nature that would be
required to be disclosed in the Company’s SEC Reports
pursuant to Item 103 of Regulation S-K with regard to the
Company or Item 401 of Regulation S-K with regard to the
Company’s officer’s or directors. There has not been,
and to the knowledge of the Company, there is not pending or
contemplated, any investigation by the SEC involving the Company.
The SEC has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company
under the 1934 Act or the 1933 Act
(f) The Company confirms that
neither it nor any other Person acting on its behalf has provided a
Placement Agent or its agents or counsel with any information that
the Company believes constitutes, material nonpublic information.
The Company understands and confirms that the Placement Agents will
rely on the foregoing representations in effecting transactions in
securities of the Company. All disclosure provided to the Placement
Agents regarding the Company, its business and the transactions
contemplated hereby, furnished by or on behalf of the Company are
true and correct and do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order
to make the statements made therein, in the light of the
circumstances under which they were made, not
misleading.
(g) The Company shall, on or before
9:30 a.m., New York City Time, on the Trading Day following the
date hereof, issue a press release disclosing all material terms of
the transactions contemplated hereby and complying with applicable
SEC rules. On or before 8:00 p.m., New York City Time, on the first
business day following the execution and delivery of this
Agreement, the Company shall file a Current Report on Form 8-K
describing the terms of the transactions contemplated by the
Transaction Documents in the form required by the 1934 Act, and
attaching the form of this Agreement and the Warrant as exhibits to
such filing (including all attachments, the “8-K
Filing”). The Company shall not, and shall cause each of its
officers, directors, employees and agents, not to, provide the
Placement Agents with any material, nonpublic information regarding
the Company from and after the filing of the press release referred
to in the first sentence of this Section without the express
written consent of the Placement Agents. Subject to the foregoing,
neither the Company nor the Placement Agents shall issue any press
releases or any other public statements with respect to the
transactions contemplated hereby nor shall the Company disclose the
name of a Placement Agent in any filing, announcement, release or
otherwise
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without the Placement Agent’s consent;
provided, however, that the Company shall be entitled, without the
prior approval of the Placement Agents, to make any press release
or other public disclosure with respect to such transactions (i) in
substantial conformity with the 8-K Filing and contemporaneously
therewith and (ii) as is required by applicable law and
regulations, including the applicable rules and regulations of the
Principal Market.
(h) The Company has not, and to its
knowledge no one acting on its behalf has, (i) taken, directly
or indirectly, any action designed to cause or to result in the
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of any of the Securities,
(ii) sold, bid for, purchased, or, paid any compensation for
soliciting purchases of, any of the Securities (other than for the
placement agent’s placement of the Securities), or
(iii) paid or agreed to pay to any person any compensation for
soliciting another to purchase any other securities of the
Company.
4. Agreements of the Company
. The Company covenants and agrees with the Placement Agents as
follows:
(a) The Company will not, during
such period as the Prospectus is required by law to be delivered in
connection with sales of the Shares or a dealer, file any amendment
or supplement to the Registration Statement, any Issuer Free
Writing Prospectus or the Prospectus, unless a copy thereof shall
first have been submitted to the Placement Agents within a
reasonable period of time prior to the filing thereof (to the
extent practicable) and the Placement Agents shall not have
objected thereto in good faith.
(b) The Company will notify the
Placement Agents promptly, and will confirm such advice in writing,
(i) when any post-effective amendment to the Registration
Statement becomes effective, (ii) of any request by the SEC
for amendments or supplements to the Registration Statement or the
Prospectus or for additional information, (iii) of the
issuance by the SEC of any stop order suspending the effectiveness
of the Registration Statement or the initiation of any proceedings
for that purpose or the threat thereof, (iv) of the happening
of any event during the period mentioned in the second sentence of
Section 4(e) that in the judgment of the Company makes any
statement made in the Registration Statement, any Issuer Free
Writing Prospectus or the Prospectus untrue or that requires the
making of any changes in the Registration Statement or the
Prospectus in order to make the statements therein, in the light of
the circumstances in which they are made, not misleading, and
(v) of receipt by the Company or any representative or
attorney of the Company of any other communication from the SEC
relating to the Company, the Registration Statement, any
preliminary prospectus, the Base Prospectus, the Prospectus
Supplement, any Issuer Free Writing Prospectus or the Prospectus.
If at any time the SEC shall issue any order suspending the
effectiveness of the Registration Statement, the Company will make
every reasonable effort to obtain the withdrawal of such order at
the earliest possible moment. If the Company has omitted any
information from the Registration Statement pursuant to
Rule 430A of the Rules and Regulations promulgated under the
1933 Act, the Company will comply with the provisions of and make
all requisite filings with the SEC pursuant to said Rule 430A
and notify the Placement Agents promptly of all such filings. If
the Company elects to rely upon Rule 462(b) under the Act, the
Company shall file a registration statement under Rule 462(b)
with the SEC in compliance with Rule 462(b) by
10:00 P.M., Eastern Standard Time, on the date of this
Agreement, and the Company shall at the time of filing either pay
to the SEC 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) If requested by a Placement
Agent, the Company will furnish to such Placement Agent, without
charge, a copy of one signed copy of each of the Registration
Statement and of any post-effective amendment thereto, including
financial statements and schedules, and all exhibits thereto and
will furnish to such Placement Agent, without charge, a copy of the
Registration Statement and any pre- or post-effective amendment
thereto, including financial statements and schedules but without
exhibits.
(d) The Company will comply with all
the provisions of any undertakings contained in the Registration
Statement.
(e) From time to time, the Company
will deliver to the Placement Agents, without charge, as many
copies of the Prospectus or any amendment or supplement thereto as
the Placement Agents may reasonably request. The Company consents
to the use of the Prospectus or any amendment or supplement thereto
by the Placement Agents, both in connection with the offering or
sale of the Shares and for any period of time thereafter during
which the Prospectus is required by law to be delivered in
connection therewith. If during such period of time any
event
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shall occur that in the judgment of the Company
or counsel to the Placement Agents should be set forth in the
Prospectus in order to make any statement therein, in the light of
the circumstances under which it was made, not misleading, or if it
is necessary to supplement or amend the Prospectus to comply with
law, the Company will forthwith prepare and duly file with the SEC
an appropriate supplement or amendment thereto, and will deliver to
the Placement Agents, without charge, such number of copies of such
supplement or amendment to the Prospectus as the Placement Agents
may reasonably request.
(f) Prior to any public offering of
the Shares, the Company will cooperate with the Placement Agents
and counsel to the Placement Agents in connection with the
registration or qualification of the Shares for offer and sale
under the securities or Blue Sky laws of such jurisdictions as the
Placement Agents may request; provided, that in no event shall the
Company be obligated to qualify to do business in any jurisdiction
where it is not now so qualified or to take any action that would
subject it to general service of process in any jurisdiction where
it is not now so subject.
(g) The Company will, so long as
required under the Rules and Regulations, furnish to its
stockholders as soon as practicable after the end of each fiscal
year an annual report (including a balance sheet and statements of
income, stockholders’ equity and cash flow of the Company and
its consolidated subsidiary(ies), if any, certified by independent
public accountants) and, as soon as practicable after the end of
each of the first three quarters of each fiscal year (beginning
with the fiscal quarter ending after the effective date of the
Registration Statement), consolidated summary financial information
of the Company and its subsidiary(ies), if any, for such quarter in
reasonable detail.
(h) During the period of five years
commencing on the date hereof, if requested by a Placement Agent,
the Company will furnish to such Placement Agent copies of such
financial statements and other periodic and special reports as the
Company may from time to time distribute generally to the holders
of any class of its capital stock, and will furnish to such
Placement Agent a copy of each annual or other report it shall be
required to file with the SEC.
(i) If required by the Rules and
Regulations, the Company will make generally available to holders
of its securities as soon as may be practicable, but in no event
later than the Availability Date (as defined below), an earning
statement (which need not be audited but shall be in reasonable
detail) covering a period of 12 months commencing after the
Effective Date that will satisfy the provisions of
Section 11(a) of the Act (including Rule 158 of the
R
