Attached files
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EX-5.1 - EX-5.1 - POLYMEDIX, INC | w75680a2exv5w1.htm |
EX-4.13 - EX-4.13 - POLYMEDIX, INC | w75680a2exv4w13.htm |
EX-23.1 - EX-23.1 - POLYMEDIX, INC | w75680a2exv23w1.htm |
EX-4.11 - EX-4.11 - POLYMEDIX, INC | w75680a2exv4w11.htm |
EX-4.12 - EX-4.12 - POLYMEDIX, INC | w75680a2exv4w12.htm |
S-1/A - AMENDMENT NO.2 TO FORM S-1 - POLYMEDIX, INC | w75680a2sv1za.htm |
Exhibit 1.1
POLYMEDIX, INC.
Units, Each Consisting of
Share of Common Stock, par value $0.001 per share
and Series C Warrant to Purchase of a Share of Common Stock
Share of Common Stock, par value $0.001 per share
and Series C Warrant to Purchase of a Share of Common Stock
PLACEMENT AGENCY AGREEMENT
November , 2009
Merriman Curhan Ford & Co.
135 E. 57th Street, 24th Floor
New York, New York 10022
135 E. 57th Street, 24th Floor
New York, New York 10022
Boenning and Scattergood, Inc.
4 Tower Bridge
200 Bar Harbor Drive, Suite 300
West Conshohocken, PA 19428
4 Tower Bridge
200 Bar Harbor Drive, Suite 300
West Conshohocken, PA 19428
Noble Financial Capital Markets
127 East 56th Street
New York, NY 10022
127 East 56th Street
New York, NY 10022
Dear Sir or Madam:
PolyMedix, Inc., a Delaware corporation (the Company), proposes to issue and sell up to
shares (the Offered Shares) of common stock, par value $0.001 per share (the Common Stock), and
Series C Warrants to purchase up to shares of Common Stock (the Offered Warrants) in the form
attached hereto as Exhibit A, to certain investors (collectively, the Investors). The
Offered Shares and the Offered Warrants shall be sold together as units, each unit consisting of
share(s) of Common Stock and Series C Warrant(s) to purchase of a share of Common Stock. The
units will not be certificated and the Offered Shares and the Offered Warrants shall be immediately
separable and transferable upon issuance. The Company desires to engage you as its placement
agents (each, a Placement Agent and, together, the Placement Agents) in connection with such
issuance and sale. The Common Stock issuable upon exercise of the Offered Warrants is herein
referred to as the Warrant Shares. The Offered Shares, the Offered Warrants and the Warrant
Shares are collectively referred to herein as the Offered Securities. The Offered Securities are
more fully described in the Registration Statement (as hereinafter defined).
The Company hereby confirms as follows its agreements with the Placement Agents.
1. Agreement to Act as Placement Agent. On the basis of the representations,
warranties and agreements of the Company herein contained and subject to all the terms and
conditions of this Agreement, the Placement Agents severally and not jointly agree to act as the
Companys exclusive placement agents in connection with the issuance and sale, on a reasonable
best efforts basis, by the Company of the Offered Securities to the Investors. The Placement
Agents shall use commercially reasonable efforts to assist the Company in obtaining performance by
each Investor whose offer to purchase Offered Securities has been solicited by the Placement Agents
and accepted by the Company, but the Placement Agents shall not, except as otherwise provided in
this Agreement, have any liability to the Company in the event any such purchase is not consummated
for any reason. In compensation for the services to be provided by the Placement Agents hereunder,
the Company shall (i) pay to the Placement
Agents a cash fee (the Cash Fee) equal to 7% of the proceeds received by the Company from
the sale of the Units as set forth on the cover page of the Prospectus (as hereinafter defined) and
(ii) issue to the Placement Agents, or as the Placement Agents may otherwise direct, warrants (the
Agent Warrants), in substantially the same form as the Warrants with the changes described below,
entitling the Placement Agents, or their respective assigns, to purchase up to an aggregate of 1.0%
of the total number of Offered Shares sold in the offering (the Agent Warrant Shares) at an
exercise price equal to the exercise price of the Offered Warrants set forth on the cover page of
the Prospectus. Notwithstanding the foregoing sentence, in the event that any of the Investors
listed in Schedule A to the amended engagement letter among the Company and the Placement Agents
(the Reduced Fee Investors) purchase Offered Securities, the Cash Fee and the number of Agent
Warrants that the Placement Agents are entitled to receive in respect of Offered Securities sold to
the Reduced Fee Investors shall be reduced by 50% with respect to such Reduced Fee Investors. The
Agent Warrants will be exercisable for a period of five years from the effective date of the
Registration Statement (as defined below) and will contain cashless exercise provisions in the
event that an effective registration statement is not available. The holders of the Agent Warrants
will have piggyback registration rights with respect to the Agent Warrant Shares. The Agent
Warrants will be deemed compensation by the Financial Industry Regulatory Authority (FINRA) and
may not be sold, transferred, pledged, hypothecated or assigned for a period of 180-days following
the effective date of the offering pursuant to Rule 5110(g)(1) of the FINRA Conduct Rules. The Cash
Fee and the Agent Warrants are hereinafter referred to herein as the Placement Fee. The
Placement Fee shall be allocated among the Placement Agents as they may agree. Each Placement
Agent may, in its discretion, retain other brokers or dealers who are members of FINRA to act as
selected dealers or subagents on such Placement Agents behalf in connection with the offering of
the Offered Securities, payment to whom shall be solely the responsibility of the Placement Agent
retaining such selected dealer or subagent.
2. Delivery and Payment.
The closing (the Closing) of the sale of the Offered Securities shall
take place at the office of Lowenstein Sandler PC at 1251 Avenue of the Americas, New York,
New York 10020 at 10:00 a.m., New York City time, on November , 2009, or at such other
time on such other date as may be agreed upon by the Company and the Placement Agents (the Closing Date).
All actions taken at the Closing shall be deemed to have occurred
simultaneously. Unless other arrangements have been made with a particular Investor, on or
prior to the Closing, the Placement Agents shall cause the Investors to deliver to the Company by
wire transfer of immediately available funds to an account previously specified by the Company,
payment in full for Offered Securities at the price to the public set forth on the cover page of the
Prospectus (the "Gross Proceeds"). At the Closing, the Company shall deliver the Offered Securities to those Investors
that have tendered payment in full to the Company for the Offered Securities, with the delivery
of the Offered Shares to be made, if possible, through the facilities of The Depository Trust
Company, and the delivery of the Offered Warrants to be made by mail to the Investors to the
addresses set forth on the applicable Investor Purchase Agreements
(as defined below). At the
Closing, the Company shall pay to the Placement Agents in accordance with the Placement
Agent allocation set forth in Section 1 above, by wire transfer of immediately available funds, to
an account previously specified by the Placement Agents, an aggregate amount equal to the sum
of (i) the Cash Fee and (ii) the expense reimbursements owed to the Placement Agents pursuant
to Section 6 hereof. The Placement Fee and the expense reimbursements to which the Placement Agents are entitled to hereunder (including, without limitation, the Advance (as defined below))
are hereinafter referred to as the Agents Compensation. In no event shall the Agents
Compensation exceed 8% of the Gross Proceeds from the sale of the Offered Securities.
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3. Representations and Warranties of the Company. The Company represents and warrants
and covenants to the Placement Agents that:
(a) The Company has prepared and filed with the Securities and Exchange Commission (the
Commission) under the Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the Securities Act), a registration statement (File No.
333-160833), including a prospectus, relating to the Offered Securities. Such registration
statement, as amended at the time it became effective, including the information, if any, deemed
pursuant to Rule 430A, 430B or 430C under the Securities Act to be part of the registration
statement at the time of its effectiveness (Rule 430 Information), is referred to herein as the
Registration Statement; and as used herein, the term Preliminary Prospectus means each
prospectus included in such registration statement (and any amendments thereto) before
effectiveness, any prospectus filed with the Commission pursuant to Rule 424(a) under the
Securities Act and the prospectus included in the Registration Statement at the time of its
effectiveness that omits Rule 430 Information, and the term Prospectus means the prospectus in
the form first used (or made available upon request of purchasers pursuant to Rule 173 under the
Securities Act) in connection with confirmation of sales of the Shares. If the Company has filed an
abbreviated registration statement pursuant to Rule 462(b) under the Securities Act (the Rule 462
Registration Statement), then any reference herein to the term Registration Statement shall be
deemed to include such Rule 462 Registration Statement. Any reference in this Agreement to the
Registration Statement, any Preliminary Prospectus or the Prospectus shall be deemed to refer to
and include the documents incorporated by reference therein, if any, pursuant to Item 12 of Form
S-1 under the Securities Act, as of the effective date of the Registration Statement or the date of
such Preliminary Prospectus or the Prospectus, as the case may be. The term General Disclosure
Package shall mean (i) the Preliminary Prospectus, if any, used most recently prior to the date
and time as of which the Registration Statement was declared effective by the Commission, (ii) the
issuer free writing prospectuses as defined in Rule 433(h) under the Securities Act, if any,
identified in Schedule 1, and (iii) any other free writing prospectus (as defined pursuant to
Rule 405 under the Securities Act) that the parties hereto shall hereafter expressly agree in
writing to treat as part of the General Disclosure Package. Applicable Time shall mean :00
[a/p].m. Eastern Time on the date of execution and delivery of this Agreement.
(b) The Registration Statement has been declared effective by the Commission under the
Securities Act. No order suspending the effectiveness of the Registration Statement has been issued
by the Commission, and no proceeding for that purpose or pursuant to Section 8A of the Securities
Act against the Company or related to the offering of the Offered Securities has been initiated or,
to the Companys knowledge, threatened by the Commission; as of the applicable effective date of
the Registration Statement and any post-effective amendment thereto, the Registration Statement and
any such post-effective amendment complied and will comply in all material respects with the
Securities Act, and did not and will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to make the statements
therein not misleading; and as of the date of the Prospectus and any amendment or supplement
thereto and as of the Closing Date, as the case may be, the Prospectus will not contain any 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 Company makes no representation or warranty with
respect to any statements contained in the Registration Statement or the Prospectus in reliance
upon and in conformity with information concerning the Placement Agents furnished in writing by the
Placement Agents to the Company expressly for use in the Registration Statement and the Prospectus
and any amendment or supplement thereto, as set forth in Section 8(b).
(c) The documents incorporated by reference in the Registration Statement, the Prospectus and
the General Disclosure Package, if any, when they were filed with the Commission conformed in all
material respects to the requirements of the Exchange Act, and none of such documents
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contained any untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in the light of the circumstances under which they were
made, not misleading.
(d) The General Disclosure Package did not, as of the Applicable Time, 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 light of the circumstances under which they were made,
not misleading; provided, however, that the Company makes no representation or
warranty with respect to any statement contained in the General Disclosure Package in reliance upon
and in conformity with information concerning the Placement Agents and furnished in writing by the
Placement Agents to the Company expressly for use in the General Disclosure Package, as set forth
in Section 8(b).
(e) Other than the Registration Statement, the Preliminary Prospectus and the Prospectus, the
Company (including its agents and representatives, other than the Placement Agents in their
capacity as such) has not prepared, used, authorized, approved or referred to and will not prepare,
use, authorize, approve or refer to any written communication (as defined in Rule 405 under the
Securities Act) that constitutes an offer to sell or solicitation of an offer to buy the Offered
Securities (each such communication by the Company or its agents (other than a communication
referred to in clause (i) below) an Issuer Free Writing Prospectus) other than (i) any document
not constituting a prospectus pursuant to Section 2(a)(10)(a) of the Securities Act or Rule 134
under the Securities Act or (ii) the documents listed on Annex A hereto, each electronic road show
and any other written communications approved in writing in advance by the Placement Agents. Each
such Issuer Free Writing Prospectus complied in all material respects with the Securities Act, has
been or will be (within the time period specified in Rule 433) filed in accordance with the
Securities Act (to the extent required thereby) and such Issuer Free Writing Prospectus did not as
of the Applicable Time, and as of the Closing Date will not, contain any 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 Company makes no representation or warranty with respect to any
statements contained in the Registration Statement or the Prospectus in reliance upon and in
conformity with information concerning the Placement Agents furnished in writing by the Placement
Agents to the Company expressly for use in the Registration Statement and the Prospectus and any
amendment or supplement thereto, as set forth in Section 8(b). Each Issuer Free Writing
Prospectus, as of its issue date and at all subsequent times through the completion of the public
offer and sale of the Offered Securities, did not, does not and will not include any information
that conflicted, conflicts or will conflict with the information contained in the Registration
Statement or the Prospectus, including any document incorporated by reference therein that has not
been superseded or modified.
(f) The Company and each of its Subsidiaries (as defined below) is, and at the Closing Date
will be, duly organized, validly existing and in good standing under the laws of its jurisdiction
of incorporation. Each of the Company and its Subsidiaries (i) has, and at the Closing Date will
have, full power and authority to conduct all the activities conducted by it, to own or lease all
the assets owned or leased by it and to conduct its business as described in the Registration
Statement and the Prospectus and (ii) is, and at the Closing Date will be, duly licensed or
qualified to do business and in good standing as a foreign organization in all jurisdictions in
which the nature of the activities conducted by it or the character of the assets owned or leased
by it makes such licensing or qualification necessary; except, in each case, where the failure to
be so qualified or in good standing or have such power or authority would not, individually or in
the aggregate, have a material adverse effect or would not reasonably be expected to have a
material adverse effect on or affecting the business, properties, management, financial position,
stockholders equity or results of operations of the Company and its Subsidiaries, taken as a whole
(a Material Adverse Effect). Complete and correct copies of the articles or certificate of
incorporation and of the bylaws of the Company and all amendments thereto have been
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delivered or made available to the Placement Agents, and no changes therein will be made
subsequent to the date hereof and prior to the Closing Date.
(g) The issued and outstanding shares of capital stock of the Company have been validly
issued, are fully paid and nonassessable and, other than as set forth in the Registration
Statement, are not subject to any preemptive rights, rights of first refusal or similar rights.
The Company has an authorized, issued and outstanding capitalization as set forth in the Prospectus
as of the dates referred to therein. The descriptions of the securities of the Company in the
Registration Statement and the Prospectus are, and at the Closing Date will be, complete and
accurate in all respects. Except for the Offered Warrants and the Agent Warrants and except as set
forth in the Registration Statement and the Prospectus or pursuant to plans or arrangements
described therein, the Company does not have outstanding any options to purchase, or any rights or
warrants to subscribe for, or any securities or obligations convertible into, or exchangeable for,
or any contracts or commitments to issue or sell, any shares of capital stock or other securities.
(h) The Company has full legal right, power and authority to enter into this Agreement and the
proposed purchase agreements to be executed by each Investor and the Company, substantially in the
form attached hereto as Exhibit B (the Investor Purchase Agreements, and together with
this Agreement, the Offered Warrants and the Agent Warrants, the Transaction Documents), and
perform the transactions contemplated hereby and thereby. The Transaction Documents have been
authorized and this Agreement has been, and the remaining Transaction Documents will be, validly
executed and delivered by the Company and this Agreement is, and the Investor Purchase Agreements
will be, legal, valid and binding agreements of the Company enforceable against the Company in
accordance with their respective terms, subject to the effect of applicable bankruptcy, insolvency
or similar laws affecting creditors rights generally and equitable principles of general
applicability and as enforceability of the indemnity and contribution provisions contained in
Section 9 hereof may be limited by applicable law or principles of public policy.
(i) The issuance and sale of each of the Offered Shares and the Offered Warrants have been
duly authorized by the Company, and the Offered Shares, when issued and paid for in accordance with
the Transaction Documents, will be duly and validly issued, fully paid and nonassessable and will
not be subject to preemptive or similar rights. The Warrant Shares have been duly authorized and
reserved for issuance pursuant to the terms of the Offered Warrants, and the Warrant Shares, when
issued by the Company upon valid exercise of the Offered Warrants and payment of the exercise
price, will be duly and validly issued, fully paid and nonassessable and will not be subject to
preemptive or similar rights. The Agent Warrants have been duly authorized by the Company. The
Agent Warrant Shares have been duly authorized and reserved for issuance pursuant to the terms of
the Agent Warrants, and the Agent Warrant Shares, when issued by the Company upon valid exercise of
the Agent Warrants and payment of the exercise price, will be duly and validly issued, fully paid
and nonassessable and will not be subject to preemptive or similar rights. The Offered Securities
and the Agent Warrants, when issued, will conform in all material respects to the description
thereof set forth in or incorporated into the Prospectus.
(j) The only direct or indirect subsidiary of the Company is PolyMedix Pharmaceuticals, Inc.
(the Subsidiaries). All of the outstanding shares of capital stock of such Subsidiaries are
legally and beneficially owned by the Company free and clear of all material liens, charges and
encumbrances of any kind whatsoever.
(k) The financial statements and the related notes included in the Registration Statement and
the Prospectus present fairly, in all material respects, the financial condition of the Company and
its Subsidiaries as of the dates thereof and the results of operations and cash flows at
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the dates and for the periods covered thereby in conformity with generally accepted accounting
principles (GAAP). No other financial statements or schedules of the Company or any other entity
are required by the Securities Act to be included in the Registration Statement or the Prospectus.
All disclosures, if any, contained in the Registration Statement, the Pricing Disclosure Materials
and the Prospectus regarding non-GAAP financial measures (as such term is defined by the
Commissions rules and regulations) comply with Regulation G of the Exchange Act and Item 10 of
Regulation S-K under the Act, to the extent applicable. Neither the Company nor any Subsidiary has
any material liabilities or obligations, direct or contingent (including any off-balance sheet
obligations or any variable interest entities within the meaning of Financial Accounting
Standards Board Interpretation No. 46), not disclosed in the Registration Statement, the General
Disclosure Package and the Prospectus.
(l) To the Companys knowledge, Deloitte & Touche LLP (the Accountants), who have reported
on such financial statements and schedules, are registered independent public accountants with
respect to the Company as required by the Securities Act and by the rules of the Public Company
Accounting Oversight Board. The consolidated financial statements of the Company and the related
notes and schedules included in the Registration Statement and the Prospectus have been prepared in
conformity with the requirements of the Securities Act and present fairly the information shown
therein.
(m) The Company is, and at the Closing Date will be, in compliance in all material respects
with all of the provisions of the Sarbanes Oxley Act of 2002 and the rules and regulations
promulgated therewith (the Sarbanes Oxley Act) with which the Company is required to comply. To
the Companys knowledge, there is, and has been, no failure on the part of any of the Companys
current directors or officers, in their capacities as such, to comply with any applicable
provisions of the Sarbanes Oxley Act with respect to the Company.
(n) The Company maintains systems of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with managements general or
specific authorizations; (ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting principles and to maintain
asset accountability; (iii) access to assets is permitted only in accordance with managements
general or specific authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with respect to any
differences. The Company has established disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15 and 15d-15). The Company presented in its Form 10-Q for the quarterly
period ended June 30, 2009 (the Evaluation Date) the conclusions of the certifying officers about
the effectiveness of the disclosure controls and procedures based upon their evaluations as of the
Evaluation Date. Since the Evaluation Date, there have been no significant changes in the
Companys internal controls (as such term is defined in Item 307(b) of Regulation S-K under the
Exchange Act) or, to the Companys knowledge, in other factors that could significantly affect the
Companys internal controls.
(o) Except as set forth in or otherwise contemplated by the Registration Statement, since the
date of the most recent financial statements of the Company included or incorporated by reference
in the Registration Statement and prior to Closing, (i) there has not been and will not have been
any change in the capital stock of the Company or long-term debt of the Company and its
Subsidiaries or any dividend or distribution of any kind declared, set aside for payment, paid or
made by the Company on any class of capital stock, or any material adverse change, or any
development that would reasonably be expected to result in a material adverse change in, or
affecting, the business, properties, management, financial position, stockholders equity or
results of operations of the Company and its Subsidiaries, taken as a whole (a Material Adverse
Change), and (ii) neither the Company nor any Subsidiary has sustained, and does not expect to
sustain, any material loss or interference with its
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business from fire, explosion, flood or other calamity, whether or not covered by insurance,
or from any labor disturbance or dispute or any action, order or decree of any court or arbitrator
or governmental or regulatory authority, except in each case as otherwise disclosed in the
Registration Statement and the Prospectus.
(p) Since the date as of which information is given in the most recent Preliminary Prospectus,
the Company has not entered into, and will not enter into prior to the Closing, any transaction or
agreement, not in the ordinary course of business, that is material to the Company and its
Subsidiaries, taken as a whole, or incurred or will incur prior to the Closing any liability or
obligation, direct or contingent, not in the ordinary course of business, that is material to the
Company and its Subsidiaries, taken as a whole.
(q) Neither the Company nor any Subsidiary owns any real property. Each of the Company and
its Subsidiaries has good and valid title to all personal property described in the Registration
Statement or the Prospectus as being owned by it 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 and
claims except those that (i) do not materially interfere with the use made and proposed to be made
of such property by the Company or any Subsidiary or (ii) would not reasonably be expected,
individually or in the aggregate, if determined adversely to the Company or any Subsidiary, to have
a Material Adverse Effect. Any real property described in the Registration Statement or the
Prospectus as being leased by the Company or any Subsidiary that is material to the business of the
Company and its Subsidiaries, taken as a whole, is held by the Company or a Subsidiary under valid,
existing and enforceable leases, except those that (A) do not materially interfere with the use
made or proposed to be made of such property by the Company or any Subsidiary or (B) would not be
reasonably expected, individually or in the aggregate, to have a Material Adverse Effect.
(r) The Company is not, nor upon completion of the transactions contemplated herein will it
be, an investment company or an affiliated person of, or promoter or principal underwriter
for, an investment company, as such terms are defined in the Investment Company Act of 1940, as
amended (the Investment Company Act).
(s) There are no legal, governmental or regulatory actions, suits or proceedings pending, nor,
to the Companys knowledge, any legal, governmental or regulatory investigations, to which the
Company or any Subsidiary is a party or to which any property of the Company or any Subsidiary is
the subject that, individually or in the aggregate, would reasonably be expected to have a Material
Adverse Effect or materially and adversely affect the ability of the Company to perform its
obligations under the Transaction Documents (collectively, the Actions); to the Companys
knowledge, no such Actions are threatened by any governmental or regulatory authority or threatened
by others; and, to the Companys knowledge, there are no current or pending legal, governmental or
regulatory investigations, actions, suits or proceedings that are required under the Securities Act
to be described in the Prospectus that are not so described.
(t) Each of the Company and its Subsidiaries has, and at the Closing Date will have, (i) all
governmental licenses, permits, consents, orders, approvals and other authorizations necessary to
carry on its respective business as presently conducted (including, without limitation, those from
the Food and Drug Administration of the U.S. Department of Health and Human Services (the FDA)
and any other foreign, federal, state or local regulatory authority performing functions similar to
those preformed by the FDA) except where the failure to have such governmental licenses, permits,
consents, orders, approvals and other authorizations would not have a Material Adverse Effect, (ii)
complied with all laws, regulations and orders applicable to either it or its business, including
but not limited to, those administered by the FDA or by any foreign, federal, state or local
regulatory authority
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performing functions similar to those preformed by the FDA, the laws contained in, and the
rules and regulations promulgated under, the Employee Retirement Income Security Act of 1974, as
amended, and the Currency and Foreign Transactions Reporting Act of 1970, as amended, except where
the failure to so comply would not have a Material Adverse Effect, and (iii) performed all its
obligations required to be performed, and is not, and at the Closing Date will not be, in default,
under any indenture, mortgage, deed of trust, voting trust agreement, loan agreement, bond,
debenture, note agreement, lease, contract or other agreement or instrument (collectively, a
contract or other agreement) to which it is a party or by which its property is bound or subject,
except where such failure to perform or default would not have a Material Adverse Effect, and, to
the Companys knowledge, no other party under any material contract or other agreement to which it
is a party is in default in any respect thereunder where such default would have a Material Adverse
Effect. Neither the Company nor any Subsidiary is in violation of any provision of its
organizational or governing documents.
(u) All preclinical and clinical trials conducted by, or on behalf of, the Company or any
Subsidiary have been conducted in material compliance with experimental protocols, procedures and
controls pursuant to accepted professional scientific standards and applicable local, state and
federal laws, rules, regulations and guidances, including, but not limited to the applicable
requirements of Good Laboratory Practices or Good Clinical Practices, as applicable. To the
knowledge of the Company, there are no studies, tests or trials the results of which call into
question the clinical results described or referred to in the Registration Statement. Neither the
Company nor any Subsidiary has received any notices, correspondence or other communication from the
FDA or any other governmental authority requiring the termination, suspension or material
modification of any ongoing or planned clinical trials conducted by, or on behalf of, the Company
or any Subsidiary, or in which the Company or any Subsidiary has participated, and the Company has
no knowledge or reason to believe that the FDA or any other governmental authority is considering
such action. Neither the Company nor any Subsidiary nor, to the knowledge of the Company, any
officer, employee or agent of the Company or any Subsidiary has been convicted of any crime or
engaged in any conduct that would reasonably be expected to result in debarment under 21 U.S.C.
Section 335a or any similar law or regulation. The descriptions in the Registration Statement and
the Prospectus of the results of such studies and tests are accurate and complete in all material
respects and fairly present the published data derived from such studies and tests.
(v) All consents, authorizations, approvals and orders required in connection with the
Transaction Documents have been obtained, except such as may be required under state securities or
Blue Sky Laws or the by-laws and rules of the FINRA or the OTC Bulletin Board.
(w) Neither the execution of the Transaction Documents, nor the issuance, offering or sale of
the Offered Securities, the Agent Warrants or the Agent Warrant Shares nor the consummation of any
of the transactions contemplated herein and therein, nor the compliance by the Company with the
terms and provisions hereof and thereof will conflict with, or will result in a breach of, any of
the terms and provisions of, or has constituted or will constitute a default under, or has resulted
in or will result in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any Subsidiary pursuant to the terms of any contract or other
agreement to which the Company or any Subsidiary may be bound or to which any of the property or
assets of the Company or any Subsidiary is subject, except such conflicts, breaches or defaults as
may have been waived nor will such action result (x) in any violation of the provisions of the
organizational or governing documents of the Company or any Subsidiary or (y) in any violation of
the provisions of any statute or any order, rule or regulation applicable to the Company or any
Subsidiary or of any court or of any federal, state or other regulatory authority or other
government body having jurisdiction over the Company or any Subsidiary, except for such violations
that would not reasonably be expected to result in a Material Adverse Effect.
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(x) There is no document or contract of a character required to be described in the
Registration Statement or the Prospectus or to be filed as an exhibit to the Registration Statement
which is not described or filed as required. All such contracts to which the Company or any
Subsidiary is a party have been authorized, executed and delivered by the Company or the Subsidiary
party thereto, constitute valid and binding agreements of the Company, and are enforceable against
the Company or the Subsidiary party thereto in accordance with the terms thereof, subject to the
effect of applicable bankruptcy, insolvency or similar laws affecting creditors rights generally
and equitable principles of general applicability.
(y) The Company and, to the knowledge of the Company, its directors, officers or controlling
persons have not taken, directly or indirectly, any action intended, or which might reasonably be
expected, to cause or result, under the Securities Act or otherwise, in, or which has constituted,
stabilization or manipulation of the price of any security of the Company to facilitate the sale or
resale of the Offered Securities.
(z) No holder of securities of the Company has rights to the registration of any securities of
the Company as a result of the filing of the Registration Statement or the transactions
contemplated by this Agreement, except for such rights as have been waived or satisfied.
(aa) The Common Stock is currently quoted on the OTC Bulleting Board. The Company has not, in
the 12 months preceding the date hereof, received notice from the OTC Bulletin Board to the effect
that the Company is not in compliance with the listing or maintenance requirements thereof. The
Company is, and expects that in the foreseeable future that it will continue to be, in compliance
with such listing and maintenance requirements.
(bb) Neither the Company nor any Subsidiary is not involved in any material labor dispute nor
is any such dispute known by the Company to be threatened.
(cc) The business and operations of the Company and each Subsidiary have been and are being
conducted in compliance with all applicable laws, ordinances, rules, regulations, licenses,
permits, approvals, plans, authorizations or requirements relating to occupational safety and
health, or pollution, or protection of health or the environment (including, without limitation,
those relating to emissions, discharges, releases or threatened releases of pollutants,
contaminants or hazardous or toxic substances, materials or wastes into ambient air, surface water,
groundwater or land, or relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of chemical substances, pollutants, contaminants or
hazardous or toxic substances, materials or wastes, whether solid, gaseous or liquid in nature) of
any governmental department, commission, board, bureau, agency or instrumentality of the United
States, any state or political subdivision thereof, or any foreign jurisdiction, and all applicable
judicial or administrative agency or regulatory decrees, awards, judgments and orders relating
thereto, except where the failure to be in such compliance will not, individually or in the
aggregate, have a Material Adverse Effect; and neither the Company nor any Subsidiary has received
any notice from any governmental instrumentality or any third party alleging any material violation
thereof or liability thereunder (including, without limitation, liability for costs of
investigating or remediating sites containing hazardous substances and/or damages to natural
resources).
(dd) Except as disclosed in the Registration Statement, (i) each of the Company and its
Subsidiaries owns or has obtained valid and enforceable licenses or options for the inventions,
patent applications, patents, trademarks (both registered and unregistered), trade names,
copyrights and trade secrets necessary for the conduct of their respective businesses as currently
conducted (collectively, the Company Intellectual Property); and (ii) (a) there are no third
parties who have any ownership rights to any Company Intellectual Property described in the
Registration Statement
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that would preclude the Company or any Subsidiary from conducting its business as currently
conducted and have a Material Adverse Effect, except for the ownership rights of the owners of the
Company Intellectual Property licensed or optioned by the Company or any Subsidiary; (b) there is
no pending or, to the Companys knowledge, threatened action, suit, proceeding or claim by others
challenging the rights of the Company or any Subsidiary in or to any Company Intellectual Property,
other than claims which would not reasonably be expected to have a Material Adverse Effect; (c)
there is no pending or, to the Companys knowledge, threatened action, suit, proceeding or claim by
others challenging the validity or scope of any Company Intellectual Property, other than actions,
suits, proceedings and claims which would not reasonably be expected to have a Material Adverse
Effect; and (d) there is no pending or, to the Companys knowledge, threatened action, suit,
proceeding or claim by others that the Company or any Subsidiary infringes or otherwise violates
any patent, trademark, copyright, trade secret or other proprietary right of others, other than
actions, suits, proceedings and claims which would not reasonably be expected to have a Material
Adverse Effect; provided, however, that with respect to reexamination proceedings filed with the
United States Patent and Trademark Office (the USPTO), opposition proceedings in comparable
foreign authorities, or unpublished or provisional applications filed with the USPTO or comparable
foreign authorities, the representations and warranties set forth in clauses (b), (c) or (d) above,
are qualified as to the Companys knowledge.
(ee) Each of the Company and its Subsidiaries has filed all necessary federal, state and
foreign income and franchise tax returns required to be filed through the Closing Date, after
taking into account all applicable extensions obtained, except where the failure to file would not
reasonably be expected to have a Material Adverse Effect, and has paid or accrued all taxes shown
as due thereon, and the Company has no knowledge of any tax deficiency which has been or might be
asserted or threatened against it or any Subsidiary which could have a Material Adverse Effect.
(ff) Each of the Company and its Subsidiaries maintains insurance of the types and in the
amounts that the Company reasonably believes are appropriate for its business, including, but not
limited to, insurance covering real and personal property owned or leased by the Company and its
Subsidiaries against theft, damage, destruction, or acts of vandalism, all of which insurance, to
the knowledge of the Company, is in full force and effect.
(gg) Neither the Company nor any Subsidiary, nor, to the knowledge of the Company, any
director, officer, agent or employee of the Company or any Subsidiary, has directly or indirectly,
(i) made any unlawful contribution to any candidate for public office, or failed to disclose fully
any contribution in violation of law, (ii) made any payment to any United States federal or state
governmental officer or official, or other person charged with similar public or quasi-public
duties, other than payments required or permitted by the laws of the United States or any
jurisdiction thereof, (iii) violated or is in violation of any provisions of the U.S. Foreign
Corrupt Practices Act of 1977 or (iv) made any bribe, rebate, payoff, influence payment, kickback
or other unlawful payment.
(hh) The Company has not distributed and, prior to the later to occur of the Closing Date and
completion of the distribution of the Offered Securities, will not distribute any offering material
in connection with the offering and sale of the Offered Securities other than the Registration
Statement, any Preliminary Prospectus, the Prospectus and any Issuer Free Writing Prospectus to
which the Placement Agents have consented.
(ii) No relationship, direct or indirect, exists between or among the Company or any
Subsidiary, on the one hand, and the directors, officers, stockholders, customers or suppliers of
the Company or any Subsidiary, on the other, which is required by the Securities Act to be
disclosed in the Registration Statement and the Prospectus and is not so disclosed.
-10-
(jj) The Company has not sold or issued any securities that would be integrated with the
offering of the Offered Securities contemplated by this Agreement pursuant to the Act, the rules
and regulations thereunder or the interpretations thereof by the Commission.
(kk) Neither the Company nor any Subsidiary is a party to any contract, agreement or
understanding with any person (other than this Agreement) that would give rise to a valid claim
against the Company, any Subsidiary or the Placement Agents (or any Placement Agents co-agent or
sub-agent, if any) for a brokerage commission, finders fee or like payment in connection with the
offering and sale of the Offered Securities.
(ll) As
of September 30, 2009, the Company had consolidated tangible
assets in excess of $2,000,000.
4. Agreements of the Company. The Company covenants and agrees with the Placement
Agent as follows:
(a) The Registration Statement has become effective under the Securities Act, and if Rule 430A
is used or the filing of the Prospectus is otherwise required under Rule 424(b), the Company will
file the Prospectus (properly completed if Rule 430A has been used), subject to the prior approval
of the Placement Agents (which approval shall not be unreasonably withheld, conditioned or
delayed), pursuant to Rule 424(b) within the prescribed time period and will provide a copy of such
filing to the Placement Agents promptly following such filing.
(b) The Company will not, during such period as the Prospectus would be required by law to be
delivered in connection with sales of the Offered Securities by an underwriter or dealer in
connection with the offering contemplated by this Agreement, file any amendment or supplement to
the Registration Statement or the Prospectus unless a copy thereof shall first have been submitted
to the Placement Agents within a reasonable period of time prior to the filing thereof and the
Company has in good faith considered any reasonable objections or comments of the Placement Agents.
(c) The Company will notify the Placement Agents promptly, and will, if requested, confirm
such notification in writing, (1) when any post-effective amendment to the Registration Statement
becomes effective, but only during the period mentioned in Section 4(b); (2) of any request by the
Commission for any amendments to the Registration Statement or any amendment or supplements to the
Prospectus or any Issuer Free Writing Prospectus or for additional information, but only during the
period mentioned in Section 4(b); (3) of the issuance by the Commission of any stop order
preventing or suspending the effectiveness of the Registration Statement, or the initiation of any
proceedings for that purpose or the threat thereof, but only during the period mentioned in Section
4(b); (4) of becoming aware of the occurrence of any event during the period mentioned in Section
4(b) that in the judgment of the Company makes any statement made in the Registration Statement or
the Prospectus untrue in any material respect or that requires the making of any changes in the
Registration Statement or the Prospectus in order to make the statements therein, in light of the
circumstances in which they are made, not misleading; and (5) of receipt by the Company of any
notification with respect to any suspension of the qualification of the Offered Securities for
offer and sale in any jurisdiction. If at any time the Commission shall issue any order suspending
the effectiveness of the Registration Statement in connection with the offering contemplated
hereby, the Company will make every reasonable effort to obtain the withdrawal of any such order at
the earliest possible moment. If the Company has omitted any information from the Registration
Statement, pursuant to Rule 430A, it will use its best efforts to comply with the provisions of and
make all requisite filings with the Commission pursuant to said Rule 430A and to notify the
Placement Agents promptly of all such filings.
(d) If, at any time when a Prospectus relating to the Offered Securities is required to be
delivered under the Securities Act, the Company becomes aware of the occurrence of any event as a
result of which the Prospectus, as then amended or supplemented, would, in the reasonable
-11-
judgment of counsel to the Company or counsel to the Placement Agents, include any untrue
statement of a material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made, not misleading,
or the Registration Statement, as then amended or supplemented, would, in the reasonable judgment
of counsel to the Company or counsel to the Placement Agents, include any untrue statement of a
material fact or omit to state a material fact necessary to make the statements therein not
misleading, or if for any other reason it is necessary, in the reasonable judgment of counsel to
the Company or counsel to the Placement Agents, at any time to amend or supplement the Prospectus
or the Registration Statement to comply with the Securities Act, the Company will promptly notify
the Placement Agents and, subject to Section 4(b) hereof, will promptly prepare and file with the
Commission, at the Companys expense, an amendment to the Registration Statement or an amendment or
supplement to the Prospectus that corrects such statement or omission or effects such compliance
and will deliver to the Placement Agents, without charge, such number of copies thereof 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.
(e) The Company will furnish to the Placement Agents and their counsel upon request, without
charge (i) one conformed copy of the Registration Statement as originally filed with the Commission
and each amendment thereto, including financial statements and schedules, and all exhibits thereto,
(ii) so long as a prospectus relating to the Offered Securities is required to be delivered under
the Securities Act, as many copies of each Issuer Free Writing Prospectus, Preliminary Prospectus
or the Prospectus or any amendment or supplement thereto as the Placement Agents may reasonably
request.
(f) The Company will comply with all the undertakings contained in the Registration Statement.
(g) Prior to the sale of the Offered Securities to the Investors, the Company will cooperate
with the Placement Agents and their counsel in connection with the registration or qualification of
the Offered Securities for offer and sale under the state securities or Blue Sky laws of such
jurisdictions as the Placement Agents may reasonably 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 which would subject it to general service of process in any
jurisdiction where it is not now so subject.
(h) The Company will not make any offer relating to the Offered Securities that would
constitute an Issuer Free Writing Prospectus without the prior written consent of the Placement
Agents.
(i) The Company will retain in accordance with the Securities Act all Issuer Free Writing
Prospectuses not required to be filed pursuant to the Securities Act.
(j) The Company will apply the net proceeds from the offering and sale of the Offered
Securities in the manner set forth in the Prospectus under the caption Use of Proceeds.
(k) The Company will not at any time, directly or indirectly, take any action intended, or
which might reasonably be expected, to cause or result in, or which will constitute, stabilization
of the price of the Offered Shares to facilitate the sale or resale of any of the Offered Shares.
5. Agreements of the Placement Agents. Each Placement Agent, severally but not
jointly, agrees that it shall not include any issuer information (as defined in Rule 433 under
the Securities Act) in any free writing prospectus (as defined in Rule 405) used or referred to
by it without
-12-
the prior consent of the Company (any such issuer information with respect to whose use the
Company has given its consent, Permitted Issuer Information). The Placement Agents also agree,
severally and not jointly, to provide to each Investor, prior to the Closing, a copy of the
Prospectus and any amendments or supplements thereto.
6. Expenses. Whether or not the transactions contemplated by this Agreement are
consummated or this Agreement is terminated, the Company will pay all costs and expenses incident
to the performance of the obligations of the Company under this Agreement, including but not
limited to costs and expenses of or relating to (1) the preparation, printing and filing of the
Registration Statement (including each pre- and post-effective amendment thereto) and exhibits
thereto, any Issuer Free Writing Prospectus, each Preliminary Prospectus, the Prospectus and any
amendments or supplements thereto, including all fees, disbursements and other charges of counsel
and accountants to the Company, (2) the preparation and delivery of certificates representing the
Offered Securities, the Agent Warrants and the Agent Warrant Shares, (3) furnishing (including
costs of shipping and mailing) such copies of the Registration Statement (including all pre- and
post-effective amendments thereto), the Prospectus and any Preliminary Prospectus or Issuer Free
Writing Prospectus, and all amendments and supplements thereto, as may be requested for use in
connection with the direct placement of the Offered Securities, (4) any filings required to be made
with the OTC Bulletin Board, (5) any filings required to be made by the Placement Agents with FINRA
and the fees, disbursements and other charges of counsel for the Placement Agents in connection
therewith (provided that such fees, disbursements and other charges of counsel shall be subject to
the limit in the last sentence of this Section 6), (6) the registration or qualification of the
Offered Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions
designated pursuant to Section 4(g), including the reasonable fees, disbursements and other charges
of counsel to the Placement Agents in connection therewith (provided that such fees, disbursements
and other charges of counsel shall be subject to the limit in the last sentence of this Section 6)
and the preparation and printing of preliminary, supplemental and final Blue Sky memoranda, and (7)
fees, disbursements and other charges of counsel to the Company. The Company shall reimburse the
Placement Agents for all reasonable out-of-pocket expenses (including the reasonable fees and
disbursements of their counsel); provided, however, that reasonable out-of-pocket expenses (other
than legal expenses) in an aggregate amount in excess of $10,000 and reasonable fees and
disbursement of their counsel in excess of $60,000 shall require the written approval of the
Company, such approval not to be unreasonably withheld and; provided, further, that in no event
shall the Agents Compensation exceed 8% of the Gross Proceeds from the sale of the Offered
Securities. Any obligation to reimburse Merriman Curhan Ford & Co. for its reasonable
out-of-pocket expenses shall be calculated net of the $25,000 advance (the Advance) previously
paid to it, receipt of which is hereby acknowledged.
7. Conditions of the Obligations of the Placement Agents. The obligations of the
Placement Agents hereunder are subject to the following conditions:
(a) (i) No stop order suspending the effectiveness of the Registration Statement shall have
been issued, and no proceedings for that purpose shall be pending or threatened by any securities
or other governmental authority (including, without limitation, the Commission), (ii) no order
suspending the effectiveness of the Registration Statement or the qualification or registration of
the Offered Securities under the securities or Blue Sky laws of any jurisdiction shall be in effect
and no proceeding for such purpose shall be pending before, or threatened by any securities or
other governmental authority (including, without limitation, the Commission), (iii) any request for
additional information on the part of the staff of any securities or other governmental authority
(including, without limitation, the Commission) shall have been complied with to the satisfaction
of the staff of the Commission or such authorities and (iv) after the date hereof and prior to the
Closing no amendment or supplement to the Registration Statement, any Issuer Free Writing
Prospectus or the Prospectus shall have
-13-
been filed unless a copy thereof was first submitted to the Placement Agents and the Placement
Agents did not object thereto in good faith.
(b) Since the respective dates as of which information is given in the Registration Statement
and the Prospectus, (i) there shall not have been a Material Adverse Change, whether or not arising
from transactions in the ordinary course of business, in each case other than as set forth in or
contemplated by the Registration Statement and the Prospectus and (ii) the Company shall not have
sustained any material loss or interference with its business or properties from fire, explosion,
flood or other casualty, whether or not covered by insurance, or from any labor dispute or any
court or legislative or other governmental action, order or decree, which is not set forth in the
Registration Statement and the Prospectus, if in the reasonable judgment of the Placement Agents
any such development makes it impracticable or inadvisable to consummate the sale and delivery of
the Offered Securities to Investors as contemplated hereby.
(c) Since the respective dates as of which information is given in the Registration Statement
and the Prospectus, there shall have been no litigation or other proceeding instituted against the
Company or any of its officers or directors in their capacities as such, before or by any Federal,
state or local court, commission, regulatory body, administrative agency or other governmental
body, domestic or foreign, which litigation or proceeding, in the reasonable judgment of the
Placement Agents, would have a Material Adverse Effect.
(d) Each of the representations and warranties of the Company contained herein shall be true
and correct in all material respects at the Closing Date, as if made on such date, and all
covenants and agreements herein contained to be performed on the part of the Company and all
conditions herein contained to be fulfilled or complied with by the Company at or prior to the
Closing Date shall have been duly performed, fulfilled or complied with in all material respects.
(e) The Placement Agent shall have received (i) an opinion, dated the Closing Date, of Pepper
Hamilton LLP, counsel to the Company, in form and substance reasonably satisfactory to the
Placement Agents, and (ii) a letter, dated the Closing Date, of Pepper Hamilton LLP in form and
substance reasonably satisfactory to the Placement Agents.
(f) The Placement Agents shall have received on the date of the Applicable Time, a letter
dated the date hereof, (the Original Letter), addressed to the Placement Agents and in form and
substance reasonably satisfactory to the Placement Agents and their counsel, from the Accountants,
which letter shall cover, without limitation, the various financial disclosures, if any, contained
in the Registration Statement, the Prospectus and the General Disclosure Package and shall contain
statements and information of the type customarily included in accountants comfort letters to
underwriters, delivered according to Statement of Auditing Standards No. 72 and Statement of
Auditing Standard No. 100 (or successor bulletins), with respect to the audited and unaudited
financial statements and certain financial information contained in or incorporated by reference
into the Registration Statement, the Prospectus and the General Disclosure Package. At the Closing
Date, the Placement Agents shall have received from the Accountants, a letter, dated the Closing
Date, which shall confirm, on the basis of a review in accordance with the procedures set forth in
the Original Letter, that nothing has come to their attention during the period from the date of
the Original Letter referred to in the prior sentence to a date (specified in the letter) not more
than three days prior to the Closing Date which would require any change in the Original Letter if
it were required to be dated and delivered at the Closing Date.
(g) At the Closing, the Company shall furnish to the Placement Agents a certificate, dated the
date of its delivery, signed by each of the Chief Executive Officer and the Chief Financial Officer
of the Company, in form and substance reasonably satisfactory to the Placement Agents
-14-
to the effect that each signer has carefully examined the Registration Statement, the
Prospectus and the General Disclosure Package, and that to each of such persons knowledge:
1. (A) As of the date of such certificate, (x) the Registration Statement does not
contain any untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein not misleading and
(y) neither the Prospectus nor the General Disclosure Package contains any untrue statement
of a material fact or omits to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances under which
they were made, not misleading and (B) no event has occurred as a result of which it is
necessary to amend or supplement the Prospectus in order to make the statements therein not
untrue or misleading in any material respect.
2. Each of the representations and warranties of the Company contained in this
Agreement were, when originally made, and are, at the time such certificate is delivered,
true and correct in all material respects.
3. Each of the covenants required herein to be performed by the Company on or prior to
the date of such certificate has been duly, timely and fully performed and each condition
herein required to be complied with by the Company on or prior to the delivery of such
certificate has been duly, timely and fully complied with.
4. Subsequent to the date of the most recent financial statements in the Prospectus,
there has been no Material Adverse Change.
5. No order suspending the effectiveness of the Registration Statement or the
qualification or registration of the Offered Securities under the securities or Blue Sky
laws of any jurisdiction are in effect and no proceeding for such purpose is pending before,
or, to the Companys knowledge, threatened in writing by, any securities or other
governmental authority (including, without limitation, the Commission).
6. The Company has complied with any request for additional information from the staff
of any securities or other governmental authority (including, without limitation, the
Commission) to the satisfaction of the staff of the Commission or such authorities.
(h) At the Closing, the Company shall furnish to the Placement Agents a certificate, dated the
date of its delivery, signed by the Secretary of the Company, in form and substance reasonably
satisfactory to the Placement Agents.
(i) FINRA shall not have raised any unresolved objection with respect to the fairness and
reasonableness of the placement agency terms and arrangements relating to the issuance and sale of
the Offered Securities.
8. Indemnification.
(a) The Company shall indemnify and hold harmless each Placement Agent, its directors,
officers, employees and agents and each person, if any, who controls such Placement Agent within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against
any and all losses, claims, liabilities, expenses and damages, joint or several, (including any and
all investigative, legal and other expenses reasonably incurred in connection with, and any amount
paid in settlement of, any action, suit or proceeding or any claim asserted), to which it, or any
of them, may
-15-
become subject under the Securities Act or other Federal or state statutory law or regulation,
at common law or otherwise, insofar as such losses, claims, liabilities, expenses or damages arise
out of or are based on (i) any untrue statement or alleged untrue statement of any material fact
contained in (A) any Preliminary Prospectus, the Registration Statement or the Prospectus or any
amendment or supplement thereto, (B) any Issuer Free Writing Prospectus or any amendment or
supplement thereto or (C) any Permitted Issuer Information used or referred to in any free writing
prospectus (as defined in Rule 405) used or referred to by the Placement Agent and (D) any
application or other document, or any amendment or supplement thereto, executed by the Company
based upon written information furnished by or on behalf of the Company filed in any jurisdiction
in order to qualify the Offered Securities under the securities or Blue Sky laws thereof or filed
with the Commission or any securities association or securities exchange (each, an Application),
or (ii) the omission or alleged omission to state in any Preliminary Prospectus, the Registration
Statement, the Prospectus or any Issuer Free Writing Prospectus, or any amendment or supplement
thereto, or in any Permitted Issuer Information or any Application a material fact required to be
stated therein or necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading; provided, however, that the Company will not be
liable to the extent that such loss, claim, liability, expense or damage arises from the sale of
the Offered Securities in the public offering to any person and is based solely on an untrue
statement or omission or alleged untrue statement or omission made in reliance on and in conformity
with information relating to such Placement Agent furnished in writing to the Company by such
Placement Agent expressly for inclusion in the Registration Statement, any Preliminary Prospectus,
the Prospectus, any Issuer Free Writing Prospectus or in any amendment or supplement thereto or in
any Permitted Issuer Information or any Application (as set forth in Section 8(b) below);
provided, further, that such indemnity with respect to any Preliminary Prospectus,
Issuer Free Writing Prospectus or any Permitted Issuer Information shall not inure to the benefit
of such Placement Agent (or any person controlling the Placement Agent) from whom the person
asserting any such loss, claim, damage, liability or action purchased Offered Securities which are
the subject thereof to the extent that any such loss, claim, damage or liability (i) results from
the fact that such Placement Agent failed to send or give a copy of the Preliminary Prospectus,
Prospectus (as amended or supplemented) or Issuer Free Writing Prospectus to such person at or
prior to the confirmation of the sale of such Offered Securities to such person in any case where
such delivery is required by the Securities Act and (ii) arises out of or is based upon an untrue
statement or omission of a material fact contained in such Preliminary Prospectus, Issuer Free
Writing Prospectus or any Permitted Issuer Information that was corrected in the Prospectus (or any
amendment or supplement thereto), unless such failure to deliver the Prospectus (as amended or
supplemented) was the result of noncompliance by the Company with Section 4(d). This indemnity
agreement will be in addition to any liability which the Company may otherwise have.
(b) Each Placement Agent will, severally and not jointly, indemnify and hold harmless the
Company, each person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, each director of the Company and each officer of
the Company who signs the Registration Statement to the same extent as the foregoing indemnity from
the Company to such Placement Agent, but only insofar as losses, claims, liabilities, expenses or
damages (i) arise out of or are based on any untrue statement or omission or alleged untrue
statement or omission made in reliance on and in conformity with information relating to such
Placement Agent furnished in writing to the Company by such Placement Agent expressly for use in,
any Preliminary Prospectus, the Registration Statement, the Prospectus or any Issuer Free Writing
Prospectus or (ii) (a) results from the fact that such Placement Agent failed to send or give a
copy of the Preliminary Prospectus, Prospectus or Issuer Free Writing Prospectus to such person at
or prior to the confirmation of the sale of such Offered Securities to such person in any case
where such delivery is required by the Securities Act and (b) arises out of or is based upon an
untrue statement or omission of a material fact contained in such Preliminary Prospectus,
Prospectus or Issuer Free Writing Prospectus that was corrected in the Prospectus, unless such
failure to deliver the Prospectus was the result of noncompliance by the Company with Section 4(d).
-16-
This indemnity agreement will be in addition to any liability that the Placement Agent might
otherwise have. The Company acknowledges that, for all purposes under this Agreement, the names of
the Placement Agents and the paragraph relating to placement agents fees and reimbursement of
expenses appearing under the caption Plan of Distribution in the Prospectus constitute the only
information relating to the Placement Agents furnished in writing to the Company by the Placement
Agents expressly for inclusion in the Registration Statement, any Preliminary Prospectus or the
Prospectus.
(c) Any party that proposes to assert the right to be indemnified under this Section 8 will,
promptly after receipt of notice of commencement of any action against such party in respect of
which a claim is to be made against an indemnifying party or parties under this Section 8, notify
each such indemnifying party of the commencement of such action, enclosing a copy of all papers
served, but the omission so to notify such indemnifying party will not relieve it from any
liability that it may have to any indemnified party under the foregoing provisions of this Section
8 unless, and only to the extent that, such omission prejudiced the indemnifying party. If any
such action is brought against any indemnified party and it notifies the indemnifying party of its
commencement, the indemnifying party will be entitled to participate in and, to the extent that it
elects by delivering written notice to the indemnified party promptly after receiving notice of the
commencement of the action from the indemnified party, jointly with any other indemnifying party
similarly notified, to assume the defense of the action, with counsel reasonably satisfactory to
the indemnified party, and after notice from the indemnifying party to the indemnified party of its
election to assume the defense, the indemnifying party will not be liable to the indemnified party
for any legal or other expenses except as provided below and except for the reasonable costs of
investigation subsequently incurred by the indemnified party in connection with the defense. The
indemnified party will have the right to employ its own counsel in any such action, but the fees,
disbursements and other charges of such counsel will be at the expense of such indemnified party
unless (1) the indemnifying party has agreed in writing to pay such fees, expenses and other
charges, (2) the indemnified party has reasonably concluded (based on advice of counsel) that a
conflict exists (based on advice of counsel to the indemnified party) between the indemnified party
and the indemnifying party that would prevent the counsel selected by the indemnifying party from
representing the indemnified party (in which case the indemnifying party will not have the right to
direct the defense of such action on behalf of the indemnified party) or (3) the indemnifying party
has not in fact employed counsel to assume the defense of such action within a reasonable time
after receiving notice of the commencement of the action, in each of which cases the reasonable
fees, disbursements and other charges of counsel will be at the expense of the indemnifying party
or parties. It is understood that the indemnifying party or parties shall not, in connection with
any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm admitted to practice in such
jurisdiction at any one time for all such indemnified party or parties. All such fees,
disbursements and other charges will be reimbursed by the indemnifying party promptly as they are
incurred. The indemnifying party will not, without the prior written consent of the indemnified
party (which consent will not be unreasonably withheld, conditioned or delayed), settle or
compromise or consent to the entry of any judgment in any pending or threatened claim, action, suit
or proceeding in respect of which indemnification has been sought hereunder, unless such
settlement, compromise or consent includes an unconditional release of the indemnified party from
all liability arising out of such claim, action, suit or proceeding. An indemnifying party will
not be liable for any settlement of any action or claim effected without its written consent (which
consent will not be unreasonably withheld).
(d) In order to provide for just and equitable contribution in circumstances in which the
indemnification provided for in the foregoing paragraphs of this Section 8 is applicable in
accordance with its terms but for any reason is held to be unavailable from the Company or the
Placement Agents, the Company and the Placement Agents will, severally and not jointly, contribute
to the total losses, claims, liabilities, expenses and damages (including any investigative, legal
and other expenses
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reasonably incurred in connection with, and any amount paid in settlement of, any action, suit
or proceeding or any claim asserted, but after deducting any contribution received by the Company
from persons other than the Placement Agents such as persons who control the Company within the
meaning of the Securities Act or the Exchange Act, officers of the Company who signed the
Registration Statement and directors of the Company, who also may be liable for contribution) to
which the Company and the Placement Agents may be subject in such proportion as shall be
appropriate to reflect the relative benefits received by the Company on the one hand and the
Placement Agents on the other. The relative benefits received by the Company on the one hand and
each Placement Agent on the other shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting Company expenses) received by the Company as set forth
in the table on the cover page of the Prospectus bear to the fee received by such Placement Agent
hereunder. If, but only if, the allocation provided by the foregoing sentence is not permitted by
applicable law, the allocation of contribution shall be made in such proportion as is appropriate
to reflect not only the relative benefits referred to in the foregoing sentence but also the
relative fault of the Company, on the one hand, and the Placement Agents on the other, with respect
to the statements or omissions which resulted in such loss, claim, liability, expense or damage, or
action in respect thereof, as well as any other relevant equitable considerations with respect to
such offering. Such relative fault shall be determined by reference to whether the untrue or
alleged untrue statement of a material fact or omission or alleged omission to state a material
fact relates to information supplied by the Company or the Placement Agents, the intent of the
parties and their relative knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company and the Placement Agents agree that it would not be just
and equitable if contributions pursuant to this Section 8(d) were to be determined by pro rata
allocation or by any other method of allocation which does not take into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified party as a result
of the loss, claim, liability, expense or damage, or action in respect thereof, referred to above
in this Section 8(d) shall be deemed to include, for purpose of this Section 8(d), any legal or
other expenses reasonably incurred by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of this Section 8(d), no
Placement Agent shall be required to contribute any amount in excess of the fee received by it, and
no person found guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8(d), any person who controls a party
to this Agreement within the meaning of the Securities Act or the Exchange Act will have the same
rights to contribution as that party, and each officer of the Company who signed the Registration
Statement will have the same rights to contribution as the Company, subject in each case to the
provisions hereof. Any party entitled to contribution, promptly after receipt of notice of
commencement of any action against such party in respect of which a claim for contribution may be
made under this Section 8(d), will notify any such party or parties from whom contribution may be
sought, but the omission so to notify will not relieve the party or parties from whom contribution
may be sought from any other obligation it or they may have under this Section 8(d). No party will
be liable for contribution with respect to any action or claim settled without its written consent
(which consent will not be unreasonably withheld).
9. Termination.
(a) The obligations of the Placement Agents under this Agreement may be terminated at any time
prior to the Closing Date, by notice to the Company from the Placement Agents, without liability on
the part of the Placement Agent to the Company if, prior to delivery and payment for the Offered
Securities, in the sole judgment of the Placement Agents (i) trading in the Common Stock of the
Company shall have been suspended by the Commission, (ii) trading in securities generally on the
New York Stock Exchange, the NYSE Amex or the NASDAQ Stock Market shall have been suspended or
limited or minimum or maximum prices shall have been generally established on any of such exchanges
or additional material governmental restrictions, not in force on the date of this Agreement,
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shall have been imposed upon trading in securities generally by any of such exchanges or by
order of the Commission or any court or other governmental authority, (iii) a general banking
moratorium shall have been declared by Federal or New York State authorities or (iv) any material
adverse change in the financial or securities markets in the United States or any outbreak or
material escalation of hostilities or declaration by the United States of a national emergency or
war or other calamity or crisis shall have occurred, the effect of any of which is such as to make
it, in the sole judgment of the Placement Agents, impracticable or inadvisable to market the
Offered Securities on the terms and in the manner contemplated by the Prospectus.
(b) If this Agreement shall be terminated pursuant to any of the provisions hereof, or if the
sale of the Offered Securities provided for herein is not consummated because any condition to the
obligations of the Placement Agents set forth herein is not satisfied or because of any refusal,
inability or failure on the part of the Company to perform any agreement herein or comply with any
provision hereof, the Company will reimburse the Placement Agents for their reasonable
out-of-pocket expenses incurred in connection herewith subject to the limitations set forth in
Section 6.
10. No Fiduciary Duty. The Company acknowledges and agrees that in connection with
this offering, sale of the Offered Securities or any other services the Placement Agents may be
deemed to be providing hereunder, notwithstanding any preexisting relationship, advisory or
otherwise, between the parties or any oral representations or assurances previously or subsequently
made by the Placement Agents: (i) no fiduciary or agency relationship between the Company and any
other person, on the one hand, and the Placement Agents, on the other, exists; (ii) the Placement
Agents are not acting as advisors, expert or otherwise, to the Company, including, without
limitation, with respect to the determination of the offering price of the Offered Securities, and
such relationship between the Company, on the one hand, and the Placement Agents, on the other, is
entirely and solely commercial, based on arms-length negotiations; (iii) any duties and obligations
that the Placement Agents may have to the Company with respect to the offering contemplated by this
Agreement shall be limited to those duties and obligations specifically stated herein; and (iv) the
Placement Agents and their respective affiliates may have interests that differ from those of the
Company. The Company hereby waives any claims that the Company may have against the Placement
Agents with respect to any breach of fiduciary duty in connection with this offering.
11. Notices. Notice given pursuant to any of the provisions of this Agreement shall
be in writing and, unless otherwise specified, shall be mailed or delivered (a) if to the Company,
at the office of the Company, 170 N. Radnor-Chester Road, Suite 300, Radnor, Pennsylvania 19087,
Attention: Edward Smith, with copies to Pepper Hamilton LLP, 400 Berwyn Park, 899 Cassatt Road,
Berwyn, Pennsylvania 19312, Attention: Jeffrey Libson and Donald Readlinger, or (b) if to the
Placement Agents, at the office of Merriman Curhan Ford & Co., 135 East 57th Street, 24th Floor,
New York, New York 10022, Attention: Michael Margolis, with copies to Lowenstein Sandler PC. 1251
Avenue of the Americas, New York, New York 10020, Attention: John D. Hogoboom. Any such notice
shall be effective only upon receipt. Any notice under Section 8 may be made by facsimile or
telephone, but if so made shall be subsequently confirmed in writing.
12. Survival. The respective representations, warranties, agreements, covenants,
indemnities and other statements of the Company and the Placement Agents set forth in this
Agreement or made by or on behalf of them, respectively, pursuant to this Agreement shall remain in
full force and effect, regardless of (i) any investigation made by or on behalf of the Company, any
of its officers or directors, the Placement Agents or any controlling person referred to in Section
8 hereof and (ii) delivery of and payment for the Offered Securities. The respective agreements,
covenants, indemnities and other statements set forth in Sections 6 and 8 hereof shall remain in
full force and effect, regardless of any termination or cancellation of this Agreement.
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13. Successors. This Agreement shall inure to the benefit of and shall be binding
upon the Placement Agents, the Company and their respective successors and legal representatives,
and nothing expressed or mentioned in this Agreement is intended or shall be construed to give any
other person any legal or equitable right, remedy or claim under or in respect of this Agreement,
or any provisions herein contained, this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of such persons and for the benefit of
no other person except that (i) the indemnification and contribution contained in Sections 8(a) and
(d) of this Agreement shall also be for the benefit of the directors, officers, employees and
agents of each Placement Agent and any person or persons who control any Placement Agent within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act and (ii) the
indemnification and contribution contained in Sections 8(b) and (d) of this Agreement shall also be
for the benefit of the directors of the Company, the officers of the Company who have signed the
Registration Statement and any person or persons who control the Company within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act. No Investor shall be deemed a
successor because of such purchase.
14. Applicable Law. The validity and interpretations of this Agreement, and the terms
and conditions set forth herein, shall be governed by and construed in accordance with the laws of
the State of New York, without giving effect to any provisions relating to conflicts of laws.
15. Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute one and the same
instrument.
16. Entire Agreement. This Agreement constitutes the entire understanding between the
parties hereto as to the matters covered hereby and supersedes all prior understandings, written or
oral, relating to such subject matter.
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Please confirm that the foregoing correctly sets forth the agreement between the Company and
the Placement Agents.
Very truly yours, POLYMEDIX, INC. |
||||
By: | ||||
Name: | ||||
Title: | ||||
Confirmed as of the date first
above mentioned:
above mentioned:
MERRIMAN CURHAN FORD & CO. | ||||
By: |
||||
Name: Michael Margolis | ||||
Title: Managing Director | ||||
BOENNING & SCATTERGOOD, INC. | ||||
By: |
||||
Name: | ||||
Title: Managing Director | ||||
NOBLE FINANCIAL CAPITAL MARKETS | ||||
By: |
||||
Name: | ||||
Title: Managing Director |
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