Exhibit 10.3
Empire Asset Management
Company
2 Rector Street, 15th Floor
New York, NY 10006
February 27, 2009
Cardium Therapeutics,
Inc.
InnerCool Therapies, Inc.
Tissue Repair Company
12255 El Camino Real, Suite 250
San Diego, CA 92130
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Re:
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Placement
Agency Agreement
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Gentlemen:
The undersigned, Cardium
Therapeutics, Inc., a Delaware corporation (the “
Cardium ”), together with its wholly-owned
subsidiaries InnerCool Therapies, Inc. and Tissue Repair Company
(collectively, the “ Subsidiaries ” and together
with Cardium, the “ Borrowers ”) desire to offer
for sale (the “ Offering ”) to certain
“accredited investors” (each, an “
Investor ” and, collectively, the “
Investors ”) through Empire Asset Management Company
(“ Empire” or the “ Placement Agent
”) a minimum of $2,500,000 of principal amount of Senior
Subordinated Secured Promissory Notes (the “ Minimum
Amount ”) and up to a maximum of $3,500,000 of principal
amount of Senior Secured Promissory Notes (the “ Maximum
Amount ”). Each Senior Subordinated Secured Promissory
Note is sometimes referred to as a “ Note ” and
collectively as the “ Notes ”). In connection
with its investment, Cardium will issue to the Investors warrants
to purchase shares of its common stock, par value $0.0001 per share
(the “ Common Stock ”) equal to Forty Three
Percent (43%) of the Principal Amount of Notes purchased
(each, a “ Warrant ” and collectively, the
“ Warrants ”), subject to adjustment as further
described in the Warrants. The Notes and Warrants are hereinafter
collectively referred to as the “ Securities
.”
The offering of the Securities will
be made by the Borrowers pursuant to that certain Note and Warrant
Purchase Agreement, inclusive of all exhibits and schedules
thereto, and all amendments, supplements and appendices thereto
(the “ Transaction Documents/Offering Materials
”). Unless otherwise defined, each term used in this
Agreement will have the same meaning as set forth in the Note and
Warrant Purchase Agreement.
1. Agreement to Act as Placement
Agent . The Borrowers hereby appoint Empire to act as their
exclusive placement agent in connection with the Offering. Empire
hereby agrees, as agent of the Borrowers, to solicit offers to
purchase the Securities on a “reasonable efforts”
basis. The Offering will commence on the date hereof and will
continue until March 2, 2009, unless extended by the Borrowers
and the Placement Agent until March 31, 2009 or terminated
earlier as provided herein (the “ Offering Period
”). The
Empire Asset Management Company
February 27, 2009
Page 2 of 14
date on which the Offering shall terminate shall
be referred to as the “ Termination Date .”
Prior to the Termination Date, the Borrowers shall not, without the
prior written consent of the Placement Agent, solicit or accept
offers to purchase the Securities otherwise than through the
Placement Agent in accordance herewith.
2. Representations and Warranties
of the Borrowers . Each Borrower represents and warrants to the
Placement Agent as follows:
(a) With respect to actions taken by
any Borrower, the Securities will be offered and sold pursuant to
the registration exemption provided by Regulation D (“
Regulation D ”) as promulgated under Section 4(2)
of the Securities Act of 1933, as amended (the “ Act
”) and Section 4(2) and/or Section 4(6) of the Act
as a transaction not involving a public offering and the
requirements of any other applicable state securities laws and the
respective rules and regulations thereunder in those jurisdictions
in which the Placement Agent notifies Cardium that the Securities
are being offered for sale. None of the Borrowers have taken nor
will it take any action which conflicts with the conditions and
requirements of, or which would make unavailable with respect to
the Offering, the exemption(s) from registration available pursuant
to Regulation D or Section 4(2) and/or Section 4(6) of
the Act, and knows of no reason why any such exemption would be
otherwise unavailable to it. No Borrower has been subject to any
order, judgment or decree of any court of competent jurisdiction
temporarily, preliminarily or permanently enjoining it for failing
to comply with Section 503 of Regulation D.
(b) None of the statements,
documents, certificates or other items prepared or supplied by the
Borrowers with respect to the transactions contemplated hereby
contains an untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained therein
not misleading in light of the circumstances in which they were
made. Through the Transaction Documents/Offering Materials and the
SEC Reports, the Borrowers have disclosed to potential investors
all facts of which the Borrowers is aware which materially and
adversely affects or could reasonably be expected to materially and
adversely affect the business prospects, financial condition,
operations, property or affairs of the Borrowers taken as a
whole.
(c) Except as set forth in the
Transaction Documents/Offering Materials, the Borrowers is not
obligated to pay, and has not obligated the Placement Agent to pay,
a finder’s or origination fee in connection with the Offering
to anyone other than the Placement Agent and hereby agrees to
indemnify the Placement Agent from any such claim made by any other
person. The Borrowers have not offered for sale or solicited offers
to purchase the Securities except for negotiations with the
Placement Agent. No other person has any right to participate in
any offer, sale or distribution of the Borrowers’s securities
to which the Placement Agent’s rights, described herein,
shall apply.
(d) Immediately prior to the
Closing, the Agent’s Warrants (as defined in
Section 3(e) hereof) will have been duly authorized. No holder
of any of the Agent’s Warrants will be subject to personal
liability solely by reason of being such a holder. None of the
Agent’s Warrants are subject to preemptive or similar rights
of any stockholder or security holder of
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February 27, 2009
Page 3 of 14
Cardium or an adjustment under the
antidilution or exercise rights of any holders of any outstanding
shares of capital stock, options, warrants or other rights to
acquire any securities of Cardium. Immediately prior to the
Closing, a sufficient number of authorized but unissued shares of
Cardium’s Common Stock will have been reserved for issuance
upon the exercise of the Agent’s Warrants.
(e) The Borrowers have all requisite
corporate power and authority to (i) enter into and perform
its obligations under this Agreement and (ii) issue, sell and
deliver the Securities and the Agent’s Warrants. This
Agreement has been duly authorized, executed and delivered and
constitutes valid and binding obligations of the Borrowers,
enforceable against the Borrowers in accordance with its terms
(i) except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect related to laws affecting
creditors’ rights generally, including the effect of
statutory and other laws regarding fraudulent conveyances and
preferential transfers, and except that no representation is made
herein regarding the enforceability of the Borrowers’
obligations to provide indemnification and contribution remedies
under the securities laws and (ii) subject to the limitations
imposed by general equitable principles (regardless of whether such
enforceability is considered in a proceeding at law or in
equity).
(f) For the benefit of the Placement
Agent, the Borrowers hereby incorporate by reference all of their
representations and warranties as set forth in Section 4 of
the Note and Warrant Purchase Agreement with the same force and
effect as if specifically set forth herein.
3. Closing; Fees .
(a) Closing . Each
prospective purchaser of Securities will be required to complete
and execute one original of the Note and Warrant Purchase Agreement
and the Investor Questionnaire in the forms provided to investors.
All funds for subscriptions received from the Offering will be
promptly forwarded by the Placement Agent, if received by it, to
and deposited into the escrow account (the “ Escrow
Account ”) established for such purpose with Signature
Bank, a New York State chartered bank, 261 Madison Avenue, New York
NY 10016 (the “ Escrow Agent ”). All such funds
for purchase of Securities will be held in the Escrow Account
pursuant to the terms of the Escrow Agreement among Cardium, the
Placement Agent and the Escrow Agent. The Borrowers will either
accept or reject subscriptions for the purchase of Securities in a
timely fashion and at each closing of the purchase and sale of the
Securities (each, a “ Closing ”) will
countersign the Transaction Documents and provide duplicate copies
of such Transaction Documents (originals in the case of the Notes
and Warrants) to the Placement Agent for distribution to the
subscribers. If the Borrowers and Placement Agent has received and
accepted subscriptions for the Minimum Amount prior to the
Termination Date and is satisfied that the funds for such
Securities have been collected and all of the conditions set forth
elsewhere in this Agreement and in the Note and Warrant Purchase
Agreement are fulfilled, a Closing shall be held
Empire Asset Management Company
February 27, 2009
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promptly with respect to the
Securities sold. Thereafter, the remaining Securities will continue
to be offered and sold until the Termination Date. Additional
Closings may from time to time be conducted at times mutually
agreeable with respect to additional Securities sold. The final
Closing (the “ Final Closing ”) shall occur
within ten (10) days from the earlier of the Termination Date
or the Borrowers’ acceptance of subscriptions for all
Securities offered. Delivery of payment for the accepted
subscriptions for Securities from the funds received in respect of
such sales will be made at each Closing at such place as may be
mutually agreed upon between Cardium and the Placement Agent
against delivery of the Securities by the Borrowers. If
subscriptions for the Minimum Amount have not been received and
accepted by the Borrowers on or before the Termination Date, the
Offering may be terminated by the Placement Agent and the Borrowers
and no Securities will be sold, and the Escrow Agent will, at the
request of the Placement Agent and Cardium, cause all monies
received from purchasers for the Securities to be promptly returned
to such purchasers without interest, penalty, expense or
deduction.
(b) Agents Fee . Cardium will
pay a cash placement fee (the “ Agent’s Fee
”) to the Placement Agent at each Closing equal to six
percent (6%) of the aggregate gross proceeds from the sale of
all Securities sold in the Offering.
(c) Agent’s Warrants .
As additional compensation hereunder, at each Closing, Cardium will
issue to the Placement Agent or its designees, warrants (the
“ Agent’s Warrants ”) to purchase such
number of shares of Common Stock equal to six percent (6%) of
the shares of Common Stock initially issuable upon exercise of the
Warrants issued at such Closing. The Agent’s Warrants shall
have an exercise price equal to the exercise price contained in the
Warrants and shall contain the same provisions (including
adjustment provisions) as those contained in the Warrants. At the
Placement Agent’s election, Cardium may issue the
Agent’s Warrants all at once at the Final Closing. For the
benefit of the Placement Agent, Cardium hereby incorporates by
reference the registration rights provisions as set forth in
Section 6 of the Purchase Agreement with the same force and
effect as if specifically set forth in the Agent’s Warrants.
The Agent’s Warrants and the Agent’s Fee are sometimes
collectively referred to herein as the “ Agent’s
Compensation .”
(d) Expenses . The Borrowers
shall bear all of their respective expenses in connection with the
Offering as further described in section 4(a) below. Whether or not
the Offering is successfully completed for any reason, Empire will
be entitled, upon presentation of a written accounting therefor in
reasonable detail, to prompt reimbursement of its actual,
out-of-pocket expenses related to the Offering, including but not
limited to fees and expenses of Empire’s legal counsel,
travel expenses, and due diligence related expenditures (the
“ Agent Expense Reimbursement ”);
provided , however , that any travel expenses over
five hundred dollars ($500) shall be pre-approved by Cardium prior
to being incurred. The provisions of this paragraph shall survive
the Final Closing and any termination of the Offering.
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February 27, 2009
Page 5 of 14
(e) EI Investors Tail .
Cardium shall also pay and issue to the Placement Agent the
Agent’s Compensation calculated according to the percentages
set forth in Sections 3(b) and (c) of this Agreement, if any
person or entity to whom the Placement Agent has introduced
(directly or indirectly) to Cardium during the term of this
Agreement (“ EI Investors ”) makes a private
investment in Cardium at any time prior to the date that is twelve
(12) months after the termination or expiration of this
Agreement regardless of whether such EI Investor purchased
Securities in the Offering.
4. Covenants .
(a) Borrowers’ Expenses
. Cardium shall pay all reasonable expenses incurred in connection
with the preparation and printing of all necessary offering
documents and instruments related to the Offering, the issuance of
the Securities and will also pay Cardium’s own expenses for
accounting fees, legal fees, escrow account fees and other costs
involved with the Offering, including the printing costs, if any,
of the Offering documentation. Cardium will provide at its own
expense such quantities of the Transaction Documents/Offering
Materials and other documents and instruments relating to the
Offering as the Placement Agent may reasonably request. Further, as
promptly as practicable after the Final Closing Date, Cardium shall
prepare, at its own expense, no more than four “velobound
volumes” relating to the Offering and will distribute such
volumes to the individuals designated by counsel to the Placement
Agent.
(b) Blue Sky . Cardium will
qualify the Securities for sale under the securities laws of such
jurisdictions as may be mutually agreed to by Cardium and the
Placement Agent, and Cardium will make such applications and
furnish information as may be required for such purposes,
provided , that Cardium will not be required or obligated to
qualify to do business in any jurisdiction where it is not now so
qualified or to take any action which would subject it to service
of process in suits, other than those arising out of the offering
or sale of the Securities.
Cardium or its counsel will provide
counsel for the Placement Agent with copies of all correspondence
or other documentation filed with or received from any jurisdiction
where the Securities are to be registered or qualified or offered
(including, without limitation, Form D filing with the SEC). In
addition, upon receipt of notification by Cardium of the
qualification, registration or exemption of the Securities by an
applicable jurisdiction, Cardium will promptly notify counsel for
the Placement Agent in writing of such action.
In each jurisdiction where the
Securities have been registered or qualified or are offered in an
exempt transaction as provided above, Cardium will make and file
such statements, documents, materials, and reports as are or may be
required to be made or filed by Cardium by the laws of such
jurisdiction.
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February 27, 2009
Page 6 of 14
Cardium will promptly provide to the
Placement Agent for delivery to all offerees and investors and
their representatives any additional information, documents and
instruments which the Placement Agent or Cardium reasonably deem
necessary to comply with the rules, regulations and judicial and
administrative interpretations respecting compliance with such
exemptions or qualifications and registrations in those states
where the Securities are to be offered or sold.
Cardium shall place a legend on the
certificates representing the Securities issued to Investors and
the Agent’s Warrants stating that the securities evidenced
thereby have not been registered under the Act or applicable state
securities laws, setting forth or referring to the applicable
restrictions on transferability and sale of such securities under
the Act and applicable state laws.
(c) Amendments and
Supplements . If, at any time prior to the Final Closing, any
event shall o
