Exhibit 10.1
7,650,000 Shares
GENVEC, INC.
Shares of Common Stock
($0.001 par value)
 
PLACEMENT AGENT AGREEMENT
September 20, 2005
SG Cowen & Co., LLC
1221 Avenue of the Americas
New York, New York 10020
Ladies and Gentlemen:
     GenVec, Inc., a Delaware corporation (the “Company”), pursuant to the terms
of this Placement Agent Agreement (this “Agreement”) and the Purchase Agreements
in the form of Exhibit A attached hereto (the “Purchase Agreements”) entered
into with the purchasers identified therein (each a “Purchaser” and,
collectively, the “Purchasers”), proposes to sell to the Purchasers an aggregate
of 7,650,000 shares of Common Stock, par value $0.001 per share, together with
associated stock purchase rights (the “Common Stock”) of the Company. The
aggregate of 7,650,000 shares of Common Stock so proposed to be sold by the
Company is hereinafter referred to as the “Stock.” The Company hereby confirms
its agreement with SG Cowen & Co., LLC (“SG Cowen” or the “Placement Agent”) as
follows (certain terms herein are defined in Section 13 hereof):
Section 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:
     (a) The Company hereby authorizes SG Cowen to act as its exclusive agent
(in such capacity, the “Placement Agent”) to solicit offers for the purchase of
all or part of the Stock from the Company in connection with the proposed
offering of the Stock (the “Offering”). Until the Closing Date, the Company
shall not, without the prior consent of the Placement Agent, solicit or accept
offers to purchase Stock otherwise than through the Placement Agent.
     (b) The Placement Agent agrees, as agent of the Company, to use its
commercially reasonable efforts to solicit offers to purchase the Stock from the
Company on the terms and subject to the conditions set forth in the Base
Prospectus (as defined below) and the Prospectus Supplement (as defined below).
The Placement Agent shall make commercially reasonable efforts to assist the
Company in obtaining performance by each Purchaser whose offer to purchase Stock
has been solicited by the Placement Agent and accepted by the Company, but the
Placement Agent shall not, except as otherwise provided in this Agreement, be
obligated to disclose the identity of any potential purchaser or have any
liability to the Company in the event any such purchase is not consummated for
any reason. Under no circumstances will the Placement Agent be obligated to
purchase any Stock for its own account and, in soliciting purchases of Stock,
the Placement Agent shall act solely as the agent of the Company and not as
principal. Notwithstanding the foregoing and except as otherwise provided in
Section 1(c), it is understood and agreed that the Placement Agent (or its
affiliates) may, solely at its discretion and without any obligation to do so,
purchase Stock as principal.

 

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     (c) Subject to the provisions of this Section 1, offers for the purchase of
Stock may be solicited by the Placement Agent as agent for the Company at such
times and in such amounts as the Placement Agent deems advisable. The Placement
Agent shall communicate to the Company, orally or in writing, each reasonable
offer to purchase Stock received by it as agent of the Company. The Company
shall have the right to accept offers to purchase the Stock and may reject any
such offer, in whole or in part. The Placement Agent shall have the right, in
its discretion reasonably exercised, without notice to the Company, to reject
any offer to purchase Stock received by it, in whole or in part, and any such
rejection shall not be deemed a breach of its agreement contained herein.
     (d) The purchases of the Stock by the Purchasers shall be evidenced by the
execution of the Purchase Agreements by each of the parties thereto.
     (e) As compensation for services rendered, on the Closing Date (as defined
below) the Company shall pay or cause to be paid to the Placement Agent by wire
transfer of immediately available funds to an account or accounts designated by
the Placement Agent, an amount equal to six percent (6%) of the aggregate gross
proceeds received by the Company from the sale of the Stock on such Closing
Date.
     (f) No Stock which the Company shall have agreed to sell pursuant to this
Agreement shall be deemed to have been purchased and paid for, or sold by the
Company, until such Stock shall have been delivered to the Purchaser thereof
against payment therefor by such Purchaser. If the Company shall default in its
obligation to deliver Stock to a Purchaser whose offer has been accepted, the
Company shall indemnify and hold the Placement Agent harmless against any loss,
claim or damage arising from or as a result of such default by the Company.
Section 2. Representations and Warranties of the Company. The Company represents
and warrants to, and agrees with, the Placement Agent and the Purchasers that:

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     (a) The Company meets the requirements for use of Form S-3, under the
Securities Act of 1933, as amended (the “Securities Act”), and has filed with
the Securities and Exchange Commission (the “Commission”) a registration
statement on such Form S-3 (Registration File No. 333-123968), which became
effective as of April 28, 2005 (the “Registration Statement”) for the
registration under the Securities Act of the Stock. The Registration Statement
meets the requirements set forth in Rule 415(a)(1)(x) under the Securities Act,
and complies in all material respects with such Rule. The Company will file with
the Commission pursuant to Rule 424(b) under the Securities Act, and the rules
and regulations (the “Rules and Regulations”) of the Commission promulgated
thereunder, supplements to the form of prospectus included in such registration
statement relating to the placement of the Stock and the plan of distribution
thereof and has provided the Placement Agent with copies of such supplement. The
Registration Statement, including the exhibits thereto, as amended at the date
of this Agreement, is hereinafter called the “Registration Statement”; the
prospectus relating to the Stock to be sold by the Company in the form in which
it appears in the Registration Statement is hereinafter called the “Base
Prospectus”; and the supplemented form of a prospectus, in the form in which it
will be filed with the Commission pursuant to Rule 424(b) (including the Base
Prospectus, as so supplemented) is hereinafter called the “Prospectus
Supplement.” Any reference herein to the Registration Statement, the Base
Prospectus or the Prospectus Supplement shall be deemed to refer to and include
the documents incorporated by reference therein (the “Incorporated Documents”)
pursuant to Item 12 of Form S-3, which were filed under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), on or before the date of this
Agreement, or the issue dates of the Base Prospectus or the Prospectus
Supplement, as the case may be; and any reference herein to the terms “amend,”
“amendment” or “supplement” with respect to the Registration Statement, the Base
Prospectus or the Prospectus Supplement shall be deemed to refer to and include
the filing of any document under the Exchange Act after the date of this
Agreement, or the issue date of the Base Prospectus or the Prospectus
Supplement, as the case may be, deemed to be incorporated therein by reference.
All references in this Agreement to financial statements and schedules and other
information which is “contained,” “included,” “described,” “set forth” or
“stated” in the Registration Statement, the Base Prospectus or the Prospectus
Supplement (and all other references of like import) shall be deemed to mean and
include all such financial statements and schedules and other information which
is or is deemed to be incorporated by reference in the Registration Statement,
the Base Prospectus or the Prospectus Supplement, as the case may be. No stop
order suspending the effectiveness of the Registration Statement or the use of
the Base Prospectus or the Prospectus Supplement has been issued, and no
proceeding for any such purpose is pending or has been initiated or, to the
Company’s knowledge, is threatened by the Commission.
     (b) The Registration Statement (and any further documents to be filed with
the Commission) contains all exhibits and schedules as required by the
Securities Act. The Registration Statement and any post-effective amendment
thereto, at the time it became effective, complied in all material respects with
the Securities Act and the Exchange Act and the applicable Rules and Regulations
and did not and, as amended or

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supplemented, if applicable, will not, contain any 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 not misleading. The Base Prospectus and
Prospectus Supplement, each as of its respective date, comply in all material
respects with the Securities Act and the Exchange Act and the applicable Rules
and Regulations. The Base Prospectus and Prospectus Supplement, as amended or
supplemented, did not and will not contain as of the date thereof 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. The Incorporated Documents, when they were filed with
the Commission, conformed in all material respects to the requirements of the
Exchange Act and the applicable Rules and Regulations, and none of such
documents, when they were filed with the Commission, contained any untrue
statement of a material fact or omitted to state a material fact necessary to
make the statements therein not misleading; and any further documents so filed
and incorporated by reference in the Base Prospectus or Prospectus Supplement,
when such documents are filed with the Commission, will conform in all material
respects to the requirements of the Exchange Act and the applicable Rules and
Regulations, as applicable, and will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein not misleading. Notwithstanding the foregoing, the Company makes no
representations or warranties as to information, if any, contained in or omitted
from the Prospectus Supplement or any amendment thereof or supplement thereto in
reliance upon and in conformity with information furnished in writing to the
Company by or on behalf of the Placement Agent specifically for use in the
Prospectus Supplement, which information the parties hereto agree is limited to
the Placement Agent’s Information as defined in Section 15. No post-effective
amendment to the Registration Statement reflecting any facts or events arising
after the date thereof which represent, individually or in the aggregate, a
fundamental change in the information set forth therein is required to be filed
with the Commission. There are no documents required to be filed with the
Commission in connection with the transaction contemplated hereby that (x) have
not been filed as required pursuant to the Securities Act or (y) will not be
filed within the requisite time period. There are no contracts or other
documents required to be described in the Base Prospectus or Prospectus
Supplement, or to be filed as exhibits or schedules to the Registration
Statement, which have not been described or filed as required.
     (c) The Company has delivered, or will as promptly as practicable deliver,
to the Placement Agent complete conformed copies of the Registration Statement
and of each consent and certificate of experts filed as a part thereof, and
conformed copies of the Registration Statement (without exhibits) and the Base
Prospectus and the Prospectus Supplement, as amended or supplemented, in such
quantities and at such places as the Placement Agent reasonably requests.
Neither the Company nor any of its directors and officers has distributed and
none of them will distribute, prior to the completion of the distribution of
Stock, any offering material in connection with the offering and sale of the
Stock other than the Base Prospectus, the Prospectus Supplement, the
Registration Statement, copies of the documents incorporated by reference
therein and any other materials permitted by the Securities Act.

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     (d) The Company has been duly organized and is validly existing as a
corporation in good standing (or the equivalent thereof, if any) under the laws
of its jurisdiction of incorporation, is duly qualified to do business and is in
good standing (or the equivalent thereof, if any) as a foreign corporation in
each jurisdiction in which its ownership or lease of property or the conduct of
its business requires such qualification, and has all power and authority
necessary to own or hold its properties and to conduct the businesses in which
it is engaged, except where the failure to be so qualified and in good standing
or have such power or authority would not have, singularly or in the aggregate,
a material adverse effect on the condition (financial or otherwise), results of
operations, business, properties or prospects of the Company taken as a whole (a
“Material Adverse Effect”).
     (e) The Stock to be issued and sold by the Company hereunder and under the
Purchase Agreements has been duly and validly authorized and, when issued and
delivered against payment therefor as provided herein, will be duly and validly
issued, fully paid and nonassessable and free of any preemptive or similar
rights. The Stock conforms in all materials respects to the description thereof
contained in the Base Prospectus and the Prospectus Supplement.
     (f) The Company has an authorized and outstanding capitalization as set
forth in the Base Prospectus and the Prospectus Supplement, all of the issued
and outstanding shares of capital stock of the Company have been duly and
validly authorized and issued, are fully paid and non-assessable, have been
issued in compliance with federal and state securities laws, and conform to the
description thereof contained in the Base Prospectus and the Prospectus
Supplement. None of the outstanding shares of Common Stock was issued in
violation of any preemptive rights, rights of first refusal or other similar
rights to subscribe for or purchase securities of the Company. There are no
authorized or outstanding options, warrants, preemptive rights, rights of first
refusal or other rights to purchase, or equity or debt securities convertible
into or exchangeable or exercisable for, any capital stock of the Company that
has been granted by the Company other than those accurately described in the
Base Prospectus and the Prospectus Supplement. The description of the Company’s
stock option, stock bonus and other stock plans or arrangements, and the options
or other rights granted thereunder, as described in the Base Prospectus and the
Prospectus Supplement accurately and fairly present the information required to
be shown with respect to such plans, arrangements, options and rights.
     (g) The Company has the full right, power and authority to enter into this
Agreement, the Purchase Agreements and the Escrow Agreement dated as of the date
herewith by and between the Company and the escrow agent thereto (the “Escrow
Agreement”) and to perform and to discharge its obligations hereunder and
thereunder; and each of this Agreement and the Purchase Agreements has been duly
authorized, executed and delivered by the Company, and constitutes a valid and
binding obligation of the Company enforceable in accordance with its terms.
     (h) The execution, delivery and performance of this Agreement, the Purchase
Agreements and the Escrow Agreement by the Company and the consummation of the

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transactions contemplated hereby and thereby will not conflict with or result in
a breach or violation of any of the terms or provisions of, or constitute a
default under, any material indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which the Company is a party or by which the
Company is bound or to which any of the property or assets of the Company is
subject, nor will such actions result in any violation of, the provisions of the
charter or by-laws of the Company, any statute, law, rule or regulation
applicable to the Company or any judgment, order or decree of any court or
governmental agency or body having jurisdiction over the Company or any of its
properties or assets.
     (i) There is no franchise, contract, lease, instrument or other document of
a character required by the Securities Act or the Rules and Regulations to be
described in the Base Prospectus and the Prospectus Supplement, or to be filed
as an exhibit to the Registration Statement, which is not described or filed as
required; and all statements summarizing any such franchises, contracts, leases,
instruments or other documents or legal matters contained in the Registration
Statement are accurate and complete in all material respects. Other than as
described in the Base Prospectus and the Prospectus Supplement, no material
contract has been suspended or terminated for convenience or default by the
Company or any of the other parties thereto, the Company has not sent or
received any communication regarding intent not to renew any such material
contract, and the Company has not received notice or any other knowledge of any
such pending or threatened suspension, termination or non-renewal, except for
such pending or threatened suspensions, terminations or non-renewals that would
not reasonably be expected to, singularly or in the aggregate, have a Material
Adverse Effect.
     (j) All existing minute books of the Company since January 1, 2002,
including all existing records of all meetings and actions of the board of
directors (including, Audit, Compensation, Nomination/Corporate Governance and
other board committees) and stockholders of the Company through the date of the
latest meeting and action (collectively, the “Corporate Records”) have been made
available to the Placement Agent and counsel for the Placement Agent. All such
Corporate Records are complete and accurately reflect, in all material respects,
all transactions referred to in such Corporate Records. There are no
transactions, agreements or other actions of the Company that are not properly
approved and/or recorded in the Corporate Records.
     (k) No consent, approval, authorization, filing with or order of or
registration with, any court or governmental agency or body is required in
connection with the transactions contemplated herein and in the Purchase
Agreements and the Escrow Agreement, except such as have been obtained or made
under the Securities Act or the Exchange Act and such as may be required by
securities or blue sky laws of any jurisdiction in connection with the offer and
sale of the Stock by the Company in the manner contemplated herein and in the
Base Prospectus and the Prospectus Supplement.
     (l) The Common Stock is registered pursuant to Section 12(g) of the
Exchange Act and is listed on the Nasdaq National Market, and the Company has
taken no action designed to terminate, or reasonably likely to have the effect
of terminating, the

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registration of the Common Stock under the Exchange Act or delisting the Common
Stock from the Nasdaq National Market, and the Company has received no written
notice from Nasdaq relating to the delisting of the Common Stock on the Nasdaq
National Market. The Company has filed, or promptly following the execution of
this Agreement will file, a Notification Form for Listing of Additional Shares
with the Nasdaq National Market with respect to the Stock.
     (m) Except as described in the Base Prospectus and the Prospectus
Supplement, (i) no person has the right, contractual or otherwise, to cause the
Company to issue or sell to it any shares of Common Stock or shares of any other
capital stock or other equity interests of the Company, (ii) no person has any
preemptive rights, resale rights, rights of first refusal or other rights to
purchase any shares of Common Stock or shares of any other capital stock or
other securities of the Company, except persons who have waived said rights or
who have been given timely and proper notice and have failed to exercise such
rights and (iii) except as provided herein, no person has the right to act as an
underwriter, placement agent or financial advisor to the Company in connection
with and as a result of the offer and sale of the Stock, in the case of each of
the foregoing clauses (i), (ii) and (iii), whether as a result of the filing or
effectiveness of the Registration Statement or the sale of the Stock as
contemplated thereby or otherwise. Except as described in the Base Prospectus
and the Prospectus Supplement, no person has the right, contractual or
otherwise, to cause the Company to register under the Securities Act any shares
of Common Stock or shares of any other capital stock or other securities of the
Company, or to include any such shares or interests in the Registration
Statement or the offering contemplated thereby, whether as a result of the
filing or effectiveness of the Registration Statement or the sale of the Stock
as contemplated thereby or otherwise, except for persons and entities who have
expressly waived such right or who have been given timely and proper notice and
have failed to exercise such right within the time or times required under the
terms and conditions of such right, and the Company is not required to file any
registration statement for the registration of any securities of any person or
register any such securities pursuant to any other registration statement filed
by the Company under the Securities Act for a period of at least 90 days after
the date hereof.
     (n) As of the dates specified, the consolidated financial statements of the
Company, together with related notes and schedules, included or incorporated by
reference in the Registration Statement, the Base Prospectus or the Prospectus
Supplement complied and will comply in form in all material respects with
Regulation S-X promulgated by the Commission with respect thereto. Such
financial statements and related notes and schedules have been prepared in
accordance with United States generally accepted accounting principles,
consistently applied, during the period involved (except (i) as may be otherwise
indicated in such financial statements or notes thereto, or (ii) in the case of
unaudited interim statements, to the extent they may not include footnotes or
may be condensed or summary statements) and fairly present in all material
respects the consolidated financial position of the Company as of the dates
thereof and its results of operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments).

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     (o) Except as set forth in the Base Prospectus and the Prospectus
Supplement, there is no legal or governmental proceeding pending to which the
Company is a party or of which any property or assets of the Company is the
subject which is required to be described in the Base Prospectus or the
Prospectus Supplement and is not described therein, or which, singularly or in
the aggregate, if determined adversely to the Company would reasonably be
expected to have a Material Adverse Effect or would prevent or materially and
adversely affect the ability of the Company to perform its obligations under
this Agreement; and to the Company’s knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened by others.
     (p) Except as described in the Registration Statement, the Base Prospectus
and the Prospectus Supplement, the Company has good and marketable title to all
property (real and personal), free and clear of any claim, lien, encumbrance,
security interest, defect or restriction upon voting or transfer or any other
claim of any kind (“Liens”), except for those Liens that do not materially
interfere with the use made or proposed to be made of such property by the
Company or that would not have a Material Adverse Effect.
     (q) The Company is not (i) in violation of any provision of its charter or
bylaws, (ii) in default in any respect, and no event has occurred which, with
notice or lapse of time or both, would constitute such a default, in the due
performance or observance of any term, covenant, or condition of any indenture,
contract, lease, mortgage, deed of trust, note agreement, loan agreement or
other agreement, obligation, condition, covenant or instrument to which it is a
party or by which it is bound or to which any of its property or assets is
subject, or (iii) in violation in any respect of any statute, law, rule,
regulation, ordinance, judgment, order or decree of any court, regulatory body,
administrative agency, governmental body, arbitrator or other authority having
jurisdiction over the Company, or any of its properties, as applicable,
(including, without limitation, those administered by the Food and Drug
Administration of the U.S. Department of Health and Human Services (the “FDA”)
or by any foreign, federal, state or local governmental or regulatory authority
performing functions similar to those performed by the FDA), except, with
respect to clauses (ii) and (iii), any violations or defaults which, singularly
or in the aggregate, would not have a Material Adverse Effect.
     (r) The Company does not have any employee benefit “plan” as defined in
Section 3(3) of the United States Employee Retirement Income Security Act of
1974 (“ERISA”), that is subject to Section 302 of ERISA or Title IV of ERISA.
     (s) The Company carries, or is covered by, insurance in such amounts and
covering such risks as it reasonably believes is adequate for the conduct of its
businesses and the value of its properties and as is customary for companies
engaged in similar businesses in similar industries.
     (t) The Company has made all filings, applications and submissions required
by, and possesses all approvals, licenses, certificates, certifications,
clearances, consents, exemptions, marks, notifications, orders, permits and
other authorizations issued by, the

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appropriate federal, state or foreign regulatory authorities (including, without
limitation, the FDA, and any other foreign, federal, state or local government
or regulatory authorities performing functions similar to those performed by the
FDA) necessary to conduct its businesses (collectively, “Permits”), except for
such Permits which the failure to obtain would not have a Material Adverse
Effect, and the Company has not received any actual notice of any proceeding
relating to revocation or modification of any such Permit, except as described
in the Base Prospectus and the Prospectus Supplement; and the Company is in
compliance in all material respects with all laws and regulations relating to
the conduct of its business as conducted as of the date hereof.
     (u) KPMG LLP, who have certified certain financial statements of the
Company and delivered their report with respect to the audited financial
statements and schedules included in the Base Prospectus, the Prospectus
Supplement or the Registration Statement, or incorporated by reference therein,
as the case may be, are independent registered public accountants with respect
to the Company within the meaning of the Securities Act and the Rules and
Regulations.
     (v) The Company has filed all foreign, federal, state and local tax returns
that are required to be filed or has requested extensions thereof (except in any
case in which the failure so to file would not have a Material Adverse Effect,
except as set forth in the Base Prospectus and the Prospectus Supplement) and
has paid all taxes required to be paid by it and any other assessment, fine or
penalty levied against it, to the extent that any of the foregoing is due and
payable, except for any such assessment, fine or penalty that is currently being
contested in good faith or as would not have a Material Adverse Effect, except
as set forth in the Base Prospectus and the Prospectus Supplement.
     (w) The principal executive officer and principal financial officer of the
Company have made all certifications required by the Sarbanes-Oxley Act of 2002
and the rules and regulations promulgated in connection therewith (the
“Sarbanes-Oxley Act”), and the statements contained in any such certification
are complete and correct in all material respects. The Company maintains
“disclosure controls and procedures” (as defined in Rule 13a-14(c) under the
Exchange Act), and such controls and procedures are designed (i) to ensure that
information required to be disclosed by the Company in the reports that it files
or submits under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the Commission’s rules and forms
and (ii) to ensure that information required to be disclosed by the Company in
the reports that it files or submits under the Exchange Act is accumulated and
communicated to the Company’s management, including its principal executive
officer and principal financial officer, as appropriate to allow timely
decisions regarding required disclosure. The Company does not have any material
weaknesses in internal controls, and there has been no fraud, whether or not
material, that involves management or other employees who have a significant
role in the Company’s internal controls. The Company is otherwise in compliance
in all material respects with all applicable effective provisions of the
Sarbanes-Oxley Act and the rules and regulations promulgated by the Commission
with respect thereto.

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     (x) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management’s general or specific authorizations;
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability of assets; (iii) access to assets is permitted only in
accordance with management’s 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.
     (y) The Company (i) is in compliance in all material respects with any and
all applicable foreign, federal, state and local laws and regulations relating
to the protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants (“Environmental Laws”),
(ii) has received and is in compliance with all permits, licenses or other
approvals required of it under applicable Environmental Laws to conduct its
business and (iii) has not received notice of any actual or potential liability
for the investigation or remediation of any disposal or release of hazardous or
toxic substances or wastes, pollutants or contaminants, except where such
non-compliance with Environmental Laws, failure to receive required permits,
licenses or other approvals, or liability would not, individually or in the
aggregate, have a Material Adverse Effect, whether or not arising from
transactions in the ordinary course of business, except as set forth in or
contemplated by the Base Prospectus and the Prospectus Supplement.
     (z) Except as described in the Base Prospectus and the Prospectus
Supplement, the Company owns, is licensed to use or otherwise possesses adequate
right to use the patents, patent rights, licenses, inventions, trademarks,
service marks, trade names, copyrights and know-how, including trade secrets and
other unpatented and/or unpatentable proprietary or confidential information,
systems, processes or procedures (collectively, the “Intellectual Property”)
reasonably necessary to carry on the business conducted by it, except to the
extent that the failure to own, be licensed to use or otherwise possess adequate
rights to use such Intellectual Property would not reasonably be expected to
have a Material Adverse Effect; except as described in the Base Prospectus and
the Prospectus Supplement, the Company has not received any notice of
infringement of or conflict with, and the Company has no knowledge of any
infringement of or conflict with, asserted rights of others with respect to its
Intellectual Property which could reasonably be expected to result in a Material
Adverse Effect; except as described in the Base Prospectus and the Prospectus
Supplement, the discoveries, inventions, products or processes of the Company
referred to in the Base Prospectus and the Prospectus Supplement do not, to the
knowledge of the Company, infringe or conflict with any right or patent of any
third party, or any discovery, invention, product or process which is the
subject of a patent application filed by any third party, which infringement or
conflict could reasonably be expected to have a Material Adverse Effect; except
as described in the Base Prospectus and the Prospectus Supplement, the Company
is not obligated to pay a royalty, grant a license or provide other
consideration to any third party in connection with its patents, patent rights,
licenses, inventions, trademarks, service

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marks, trade names, copyrights and know-how; and no third party, including any
academic or governmental organization, possesses rights to the Intellectual
Property which, if exercised would reasonably be expected to have a Material
Adverse Effect.
     (aa) Since the respective dates as of which information is given in the
Base Prospectus and the Prospectus Supplement, the studies, tests and
preclinical and clinical trials conducted by or on behalf of the Company that
are described in the Base Prospectus and the Prospectus Supplement were and, if
still pending, are being conducted in all material respects in accordance with
experimental protocols, procedures and controls pursuant to, where applicable,
accepted professional scientific standards; the descriptions of the results of
such studies, tests and trials contained in the Base Prospectus and the
Prospectus Supplement are accurate in all material respects; except as described
in the Base Prospectus and the Prospectus Supplement, the Company has not
received any notices or correspondence from the FDA or any foreign, state or
local governmental body exercising comparable authority requiring the
termination, suspension or material modification of any studies, tests or
preclinical or clinical trials conducted by or on behalf of the Company which
termination, suspension or material modification would reasonably be expected to
have a Material Adverse Effect.
     (bb) The Company has not failed to file with the applicable regulatory
authorities (including, without limitation, the FDA or any foreign, federal,
state or local governmental or regulatory authority performing functions similar
to those performed by the FDA) any filing, declaration, listing, registration,
report or submission; all such filings, declarations, listings, registrations,
reports or submissions were in compliance with applicable laws when filed and no
deficiencies have been asserted by any applicable regulatory authority
(including, without limitation, the FDA or any foreign, federal, state or local
governmental or regulatory authority performing functions similar to those
performed by the FDA) with respect to any such filings, declarations, listings,
registrations, reports or submissions.
     (cc) No relationship, direct or indirect, exists between or among the
Company on the one hand, and the directors, officers, stockholders, customers or
suppliers of the Company on the other hand, which is required by the Securities
Act to be described in the Base Prospectus and the Prospectus Supplement which
is not so described.
     (dd) The Company is not nor, after giving effect to the offering and sale
of the Stock and the application of the proceeds thereof as described in the
Base Prospectus and the Prospectus Supplement, will it become an “investment
company” as defined in the Investment Company Act of 1940, as amended.
     (ee) No forward-looking statement (within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act) contained in the Base
Prospectus and the Prospectus Supplement has been made or reaffirmed without a
reasonable basis or has been disclosed other than in good faith.

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     (ff) Other than as contemplated by this Agreement, the Company is not a
party to any contract, agreement or understanding with any person that would
give rise to a valid claim against the Company or the Placement Agent for a
brokerage commission, finder’s fee or like payment in connection with the
offering and sale of the Stock.
     (gg) The Company has not sustained, since the date of the latest audited
financial statements included in the Base Prospectus, the Prospectus Supplement
or the Registration Statement, or incorporated by reference therein, as the case
may be, any material loss or interference with its business from fire,
explosion, flood, terrorist act or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order or
decree, otherwise than as set forth in or contemplated by the Base Prospectus
and the Prospectus Supplement.
     (hh) Except as set forth in or as otherwise contemplated by the
Registration Statement, the Base Prospectus or the Prospectus Supplement,
subsequent to the respective dates as of which information is given in the
Registration Statement, the Base Prospectus and the Prospectus Supplement, there
has not been (i) any Material Adverse Effect, or any development that would
reasonably be expected to result in a material adverse change, in the business,
properties, management, financial condition or results of operations of the
Company taken as a whole, (ii) any transaction which is material to the Company
taken as a whole, (iii) any obligation, direct or contingent (including any
off-balance sheet obligations), incurred by the Company outside the ordinary
course of business, which is material to the Company taken as a whole, (iv) any
change in the capital stock (other than the issuance of shares of Common Stock
upon the exercise of stock options and warrants disclosed as outstanding in the
Registration Statement, the Base Prospectus and the Prospectus Supplement and
the grant of options under existing stock option plans described in the
Registration Statement, the Base Prospectus and the Prospectus Supplement) or
outstanding indebtedness of the Company or (v) any dividend or distribution of
any kind declared, paid or made on the capital stock of the Company.
     (ii) Any statistical and market-related data included in the Registration
Statement, the Base Prospectus or the Prospectus Supplement are based on or
derived from sources that the Company believes to be reliable and accurate.
     (jj) The Stock is registered under the Exchange Act and is duly listed on
the Nasdaq National Market (“Nasdaq”) and the Company has taken no action
designed to terminate, or reasonably likely to have the effect of terminating
the registration of the Common Stock under the Exchange Act or delisting or
suspending from trading the Common Stock from Nasdaq.
     (kk) The Company nor any of its officers, directors or affiliates has taken
or will take, directly or indirectly, any action designed or intended to
stabilize or manipulate the price of any security of the Company, or which
caused or resulted in, or which might in the future reasonably be expected to
cause or result in, stabilization or manipulation of the price of any security
of the Company.

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     (ll) The Company nor any of its officers, directors or affiliates has
offered, or caused any Placement Agent to offer, Stock to any person with the
intent to influence unlawfully (i) a customer or supplier of the Company to
alter the customer’s or supplier’s level or type of business with the Company,
or (ii) a trade journalist or publication to write or publish favorable
information about the Company or any of its respective products or services.
     (mm) There are no affiliations with the NASD among the Company’s officers,
directors or, to the best of the Company’s knowledge, any five percent or
greater stockholder of the Company, except as set forth in the Base Prospectus,
the Prospectus Supplement or the Registration Statement or otherwise disclosed
in writing to the Placement Agent.
     (nn) The Company satisfies the pre-1992 eligibility requirements for the
use of a Registration Statement on Form S-3 in connection with the Offering
contemplated thereby (the pre-1992 eligibility requirements for the use of the
Registration Statement on Form S-3 include (i) having a non-affiliate, public
common equity float of at least $150 million or a non-affiliate, public common
equity float of at least $100 million and annual trading volume of at least
three million shares and (ii) having been subject to the Exchange Act reporting
requirements for a period of 36 months).
     (oo) No approval of the stockholders of the Company under the rules and
regulations of any trading market (including Rule 4350 of the Nasdaq National
Marketplace Rules), and no approval of the stockholders of the Company
thereunder is required for the Company to issue and deliver to the Purchasers
the Stock, including such as may be required pursuant to Rule 4350 of the Nasdaq
National Marketplace Rules.
     (pp) The Company has no subsidiaries.
     Any certificate signed by any officer of the Company and delivered to the
Placement Agent or counsel for the Placement Agent in connection with the
offering of the Stock shall be deemed a representation and warranty by the
Company as to the matters covered thereby, to the Placement Agent and each of
the Purchasers as to the matters covered thereby.
Section 3. The Closing. The time and date of closing and delivery of the
documents required to be delivered to the Placement Agent pursuant to Section 6
hereof shall be at 10:00 A.M., local time, on September 26, 2005 (the “Closing
Date”) at the office of Arnold & Porter LLP, 555 Twelfth Street, NW, Washington,
DC 20004
Section 4. Further Agreements of the Company. The Company agrees with the
Placement Agent and the Purchasers:
     (a) (i) to make no further amendment or supplement prior to the Closing
Date to the Registration Statement or any amendment or supplement to the
Prospectus Supplement without the consent of the Placement Agent, which consent
shall not be unreasonably withheld; (ii) for so long as the delivery of a
prospectus is required in

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connection with the offering or sale of the Stock, to advise the Placement Agent
promptly after it receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective or any supplement to
the Prospectus Supplement or any amended Prospectus Supplement has been filed
and to furnish the Placement Agent with copies thereof; (iii) to use its
commercially practicable efforts to file promptly all reports and any definitive
proxy or information statements required to be filed by the Company with the
Commission and Nasdaq pursuant to Section 13(a), 15 or 15(d) of the Exchange Act
subsequent to the dates of the Prospectus Supplement and for so long as the
delivery of a prospectus is required in connection with the offering or sale of
the Stock; (iv) to advise the Placement Agent, promptly after it receives
notices thereof for so long as the delivery of a prospectus is required in
connection with the offering or sale of Stock, (x) of any request by the
Commission to amend the Registration Statement or to amend or supplement the
Prospectus Supplement or for additional information related thereto and (y) of
the issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or any post-effective amendment thereto or any order
directed at any Incorporated Document or any amendment or supplement thereto or
any order preventing or suspending the use of the Base Prospectus or the
Prospectus Supplement or any amendment or supplement thereto, of the suspension
of the qualification of the Stock for offering or sale in any jurisdiction, of
the institution or threatening of any proceeding for any such purpose, or of any
request by the Commission for the amending or supplementing of the Registration
Statement or Prospectus Supplement or for additional information related
thereto; and, (v) in the event of the issuance of any stop order or of any order
preventing or suspending the use of the Base Prospectus or Prospectus Supplement
or suspending any such qualification, promptly to use its commercially
reasonable best efforts to obtain the withdrawal of such order.
     (b) To comply with the Securities Act and the Exchange Act, and the Rules
and Regulations, so as to permit the completion of the distribution of the Stock
as contemplated in this Agreement and the Prospectus Supplement. If during the
period in which a prospectus is required by law to be delivered by the Placement
Agent or a dealer in connection with the distribution of Stock contemplated by
the Prospectus Supplement, any event shall occur as a result of which, in the
judgment of the Company or in the reasonable opinion of the Placement Agent or
counsel for the Placement Agent, it becomes necessary to amend or supplement the
Prospectus Supplement in order to make the statements therein, in the light of
the circumstances existing at the time the Prospectus Supplement are delivered
to a purchaser, not misleading, or, if it is necessary at any time to amend or
supplement the Prospectus Supplement to comply with any law, the Company
promptly will prepare and file with the Commission, and furnish at its own
expense to the Placement Agent and to dealers, an appropriate amendment to the
Registration Statement or supplement to the Prospectus Supplement so that the
Prospectus Supplement as so amended or supplemented will not, in the light of
the circumstances when it is so delivered, be misleading, or so that the
Prospectus Supplement will comply with such law. Before amending the
Registration Statement or supplementing the Base Prospectus in connection with
the Offering, the Company will furnish the Placement Agent with a copy of such
proposed amendment or supplement and will not file such amendment or supplement
to which the Placement Agent reasonably objects.

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     (c) To deliver promptly to the Placement Agent such number of the following
documents as the Placement Agent shall reasonably request: (i) the Base
Prospectus, (ii) the Prospectus Supplement (not later than 10:00 A.M., New York
time, on the Business Day following the execution and delivery of this
Agreement) and any amendment or supplement thereto (not later than 10:00 A.M.,
New York City time, on the Business Day following the date of such amendment or
supplement); and (iii) any document incorporated by reference in the Base
Prospectus or Prospectus Supplement. The Company will pay the expenses of
printing or other production of all documents relating to the Offering.
     (d) To make generally available to its stockholders as soon as practicable,
but in any event not later than eighteen months after the effective date of the
Company Registration Statement (as defined in Rule 158(c) under the Securities
Act), an earnings statement of the Company (which need not be audited) complying
with Section 11(a) of the Securities Act and the Rules and Regulations
(including, at the option of the Company, Rule 158).
     (e) To promptly take from time to time such actions as the Placement Agent
may reasonably request to qualify the Stock for offering and sale under the
securities, or blue sky, laws of such jurisdictions (including without
limitation any post-filing requirements) as the Placement Agent may designate
and to continue such qualifications in effect for so long as required for the
distribution of the Stock, and the Company will pay the fee of the NASD in
connection with its review of the Offering, if applicable. The Company shall not
be obligated to qualify as a foreign corporation in any jurisdiction in which it
is not so qualified or to file a general consent to service of process in any
jurisdiction.
     (f) Not to directly or indirectly offer, sell, assign, transfer, pledge,
contract to sell, or otherwise dispose of any share of Common Stock or
securities convertible into or exercisable or exchangeable for Common Stock for
a period of ninety (90) days from the date of the Prospectus Supplement without
the prior written consent of SG Cowen, other than (i) the Company’s sale of the
Stock and shares or options to purchase shares pursuant to qualified stock
option plans, currently outstanding options, warrants or rights and (ii)
securities issued to a collaborative partner of the Company solely in connection
with a corporate partnering transaction approved by the Board of Directors of
the Company; provided, however, that before issuing any shares to a
collaborative partner, the Company shall obtain from such collaborative partner
an agreement to be bound by a letter substantially in the form of Exhibit B,
pursuant to which such collaborative partner shall agree not to directly or
indirectly offer, sell, assign, transfer, pledge, contract to sell, or otherwise
dispose of any shares of Common Stock or securities convertible into or
exercisable or exchangeable for Common Stock for the Lock-Up Period (as defined
in the form of agreement attached as Exhibit B hereto), without the prior
written consent of the Placement Agent. The Company will cause each of its
executive officers and directors to

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furnish to the Placement Agent, at the Execution Time, a letter, substantially
in the form of Exhibit B attached hereto, pursuant to which each such person
shall agree not to directly or indirectly offer, sell, assign, transfer, pledge,
contract to sell, or otherwise dispose of any shares of Common Stock or
securities convertible into or exercisable or exchangeable for Common Stock for
the Lock-Up Period (as defined in the form of agreement attached as Exhibit B
hereto) without the prior written consent of the Placement Agent. If (i) the
Company issues an earnings release or material news or a material event relating
to the Company occurs during the last 17 days of the Lock-Up Period, or
(ii) prior to the expiration of the Lock-Up Period, the Company announces that
it will release earnings results during the 16-day period beginning on the last
day of the Lock-Up Period, the restrictions imposed by this Section 4(f) shall
continue to apply until the expiration of the 18-day period beginning on the
issuance of the earnings release or the occurrence of the material news or
material event.
     (g) Prior to the Closing Date, to furnish to the Placement Agent, as soon
as they have been prepared, copies of any unaudited interim consolidated
financial statements of the Company for any periods subsequent to the periods
covered by the financial statements appearing or incorporated by reference in
the Base Prospectus, the Prospectus Supplement or the Registration Statement.
     (h) Prior to the Closing Date, not to issue any press release or other
communication directly or indirectly or hold any press conference with respect
to the Company, its condition, financial or otherwise, or earnings, business
affairs or business prospects (except for routine oral marketing communications
in the ordinary course of business and consistent with the past practices of the
Company and of which the Placement Agent is notified), without the prior written
consent of the Placement Agent, unless in the judgment of the Company and its
counsel, and after notification to the Placement Agent, such press release or
communication is required by law. In such event, the Company shall consult with
the Placement Agent as to the contents of such press release.
     (i) To apply the net proceeds from the sale of the Stock as set forth in
the Prospectus Supplement under the heading “Use of Proceeds.”
     (j) To maintain, at its expense, a registrar and transfer agent for the
Stock.
     (k) To not take any action prior to the Closing Date which would require
the Prospectus Supplement to be amended or supplemented pursuant to
Section 4(b).
     (l) To supply the Placement Agent with copies of all correspondence to and
from, and all documents issued to and by, the Commission in connection with the
registration of the Stock under the Securities Act.
     (m) To use commercially reasonably efforts as requested to permit the Stock
to be continued to be quoted on the Nasdaq National Market at the Closing Date.

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Section 5. Payment of Expenses. The Company agrees with the Placement Agent to
pay (a) the costs incident to the authorization, issuance, sale, preparation and
delivery of the Stock to the Purchasers and any taxes payable in that
connection; (b) the costs incident to the registration of the Stock under the
Securities Act; (c) the costs incident to the preparation, printing and
distribution of the Registration Statement, Base Prospectus and Prospectus
Supplement and any amendments and exhibits thereto or any document incorporated
by reference therein, and the costs of printing, reproducing and distributing,
this Agreement by mail, telex or other means of communication; (d) the fees and
expenses (including related fees and expenses of counsel for the Placement
Agent) incurred in connection with filings, if any, made with the NASD, if
applicable; (e) any applicable listing or other fees; (f) the fees and expenses
of qualifying the Stock under the securities laws of the several jurisdictions
as provided in Section 4(e) and of preparing, printing and distributing Blue Sky
Memoranda (including related fees and expenses of counsel to the Placement
Agent); (g) all fees and expenses of the registrar and transfer agent of the
Stock; (h) reasonable fees and expenses of counsel for the Placement Agent not
to exceed $100,000 without the Company’s prior written consent; and (i) all
other costs and expenses incident to the performance of the obligations of the
Company under this Agreement (including, without limitation, the fees and
expenses of the Company’s counsel and the Company’s independent accountants and
the travel and other expenses incurred by Company personnel in connection with
any “roadshow” including, without limitation, any expenses advanced by the
Placement Agent on the Company’s behalf (which will be promptly reimbursed));
provided that, except as otherwise provided in this Section 5 and in Sections 7
and 9, the Placement Agent shall pay its own costs and expenses, including the
fees and expenses of its counsel.
Section 6. Conditions to the Obligations of the Placement Agent and the
Purchasers, and the Sale of the Stock. The respective obligations of the
Placement Agent and the Purchasers, and the closing of the sale of the Stock
hereunder are subject to the accuracy, when made and on the Closing Date, of the
representations and warranties on the part of the Company contained herein, to
the accuracy of the statements of the Company made in any certificates pursuant
to the provisions hereof, to the performance by the Company of its obligations
hereunder, and to each of the following additional terms and conditions:
     (a) No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall have
been initiated or threatened by the Commission, and any request for additional
information on the part of the Commission (to be included in the Registration
Statement, the Base Prospectus or the Prospectus Supplement or otherwise) shall
have been complied with to the reasonable satisfaction of the Placement Agent.
Any filings required to be made by the Company in accordance with Section 4(a)
shall have been timely filed with the Commission.
     (b) The Placement Agent shall not have discovered and disclosed to the
Company on or prior to the Closing Date that the Registration Statement, the
Base Prospectus or the Prospectus Supplement or any amendment or supplement
thereto contains an untrue statement of a fact which, in the opinion of counsel
for the Placement Agent, is material or omits to state any fact which, in the
opinion of such counsel, is material and is required to be stated therein or is
necessary to make the statements therein not misleading.

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     (c) All corporate proceedings and other legal matters incident to the
authorization, form, execution, delivery and validity of each of this Agreement,
the Stock, the Registration Statement, the Base Prospectus and the Prospectus
Supplement and all other legal matters relating to this Agreement and the
transactions contemplated hereby shall be reasonably satisfactory in all
material respects to counsel for the Placement Agent, and the Company shall have
furnished to such counsel all documents and information that they may reasonably
request to enable them to pass upon such matters.
     (d) The Placement Agent shall have received from each of (i) Arnold &
Porter LLP, corporate counsel for the Company and (ii) Leydig, Voit & Mayer,
Ltd, intellectual property counsel for the Company, such counsel’s written
opinion, addressed to the Placement Agent and the Purchasers and dated as of the
Closing Date, in form and substance reasonably satisfactory to the Placement
Agent as set forth in Exhibits C-1 and C-2 attached hereto, respectively.
     (e) The Company’s corporate counsel shall also have furnished to the
Placement Agent a written statement, addressed to the Placement Agent and the
Purchasers and dated the Closing Date, in form and substance satisfactory to the
Placement Agent, to the effect that (x) such counsel has acted as counsel to the
Company in connection with the preparation of the Registration Statement,
(y) based on such counsel’s examination of the Registration Statement and such
counsel’s investigations made in connection with the preparation of the
Registration Statement and conferences with certain officers and employees of
and with auditors for and counsel to the Company, such counsel has no reason to
believe that (I) the Registration Statement, as of its effective date, contained
any untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading, or that the Base Prospectus or the Prospectus Supplement
contain any untrue statement of a material fact or omits to state any 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 or (II) any document incorporated by reference in the Base Prospectus
or the Prospectus Supplement or any further amendment or supplement to any such
incorporated document made by the Company prior to the Closing Date, when they
became effective or were filed with the Commission, as the case may be,
contained, in the case of a registration statement which became effective under
the Securities Act, any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary in order to make
the statements therein not misleading, or, in the case of other documents which
were filed under the Exchange Act with the Commission, any untrue statement of a
material fact or omitted to state any material fact necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading; it being understood that such counsel need express no
opinion as to the financial statements or other financial data contained in the
Registration Statement, the Base Prospectus or the Prospectus Supplement.

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     (f) The Placement Agent shall have received from Brown Raysman Millstein
Felder & Steiner LLP, such opinion or opinions, dated the Closing Date and
addressed to the Placement Agent, with respect to the sale of the Stock, the
Registration Statement, the Base Prospectus, the Prospectus Supplement (together
with any supplement thereto) and other related matters as the Placement Agent
may reasonably require, and the Company shall have furnished to such counsel
such documents as they request for the purpose of enabling them to pass upon
such matters.
     (g) The Company shall have furnished to the Placement Agent and the
Purchasers a certificate, dated as of the Closing Date, executed by its Chief
Executive Officer and its Chief Financial Officer stating that (i) such officers
have carefully examined the Registration Statement, the Base Prospectus and the
Prospectus Supplement and, in their opinion, the Registration Statement
(including the Base Prospectus) as of its effective date and the Prospectus
Supplement, as of each such effective date, did not include any untrue statement
of a material fact and did not omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading,
(ii) since the effective dates of the Registration Statement no event has
occurred which should have been set forth in a supplement or amendment to the
Registration Statement, the Base Prospectus or the Prospectus Supplement,
(iii) to the best of their knowledge after reasonable investigation, as of the
Closing Date, the representations and warranties of the Company in this
Agreement are true and correct and the Company has complied with all agreements
and covenants contained in this Agreement and satisfied all conditions on its
part to be performed or satisfied hereunder at or prior to the Closing Date,
(iv) subsequent to the date of the most recent financial statements included or
incorporated by reference in the Base Prospectus and the Prospectus Supplement,
there has been no change in the financial position or results of operation of
the Company that could have a Material Adverse Effect, or any change, or any
development including a prospective change, in or affecting the condition
(financial or otherwise), results of operations, business or prospects of the
Company taken as a whole, except as set forth in the Base Prospectus and the
Prospectus Supplement, and (v) the Registration Statement became effective as of
April 28, 2005, and to the best of their knowledge, as of the Closing Date
(I) no stop order suspending the effectiveness of the Registration Statement has
been issued and no proceedings for that purpose have been commenced or are
pending before or are contemplated by the Commission and (II) no action has been
taken by any governmental agency, body or official, and no injunction,
restraining order or order of any nature by any federal or state court has been
issued, which would prevent the sale and issuance of the Stock.
     (h) At the time of the execution of this Agreement, the Placement Agent
shall have received from KPMG LLP a letter, addressed to the Placement Agent and
dated such date, in form and substance satisfactory to the Placement Agent
(i) confirming that they are independent certified public accountants with
respect to the Company within the meaning of the Securities Act and the Rules
and Regulations and (ii) stating the conclusions and findings of such firm with
respect to the financial statements and certain financial information contained
or incorporated by reference in the Base Prospectus and the Prospectus
Supplement.

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     (i) On the Closing Date, the Placement Agent shall have received a letter
(the “bring-down letter”) from KPMG LLP addressed to the Placement Agent, and
dated the Closing Date confirming, as of the date of the bring-down letter (or,
with respect to matters involving changes or developments since the respective
dates as of which specified financial information is given in the Base
Prospectus and the Prospectus Supplement as of a date not more than three
Business Days prior to the date of the bring-down letter), the conclusions and
findings of such firm with respect to the financial information and other
matters covered by its letter delivered to the Placement Agent concurrently with
the execution of this Agreement pursuant to Section 6(h).
     (j) The Company shall not have sustained since the date of the latest
audited financial statements included or incorporated by reference in the Base
Prospectus and the Prospectus Supplement any loss or interference with its
business from fire, explosion, flood, terrorist act or other calamity, whether
or not covered by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth in or contemplated by the
Base Prospectus and the Prospectus Supplement, and (ii) since such date there
shall not have been any change in the capital stock or long-term debt of the
Company or any change, or any development involving a prospective change, in or
affecting the business, general affairs, management, financial position,
stockholders’ equity, results of operations or prospects of the Company,
otherwise than as set forth in or contemplated by the Base Prospectus and the
Prospectus Supplement, the effect of which, in any such case described in clause
(i) or (ii), is, in the judgment of the Placement Agent, so material and adverse
as to make it impracticable or inadvisable to proceed with the sale or delivery
of the Stock on the terms and in the manner contemplated by the Base Prospectus
and the Prospectus Supplement.
     (k) The Stock is registered under the Exchange Act and, as of the Closing
Date, the Stock shall be listed and authorized for trading on the Nasdaq
National Market.
     (l) At the Execution Time, the Placement Agent shall have received a letter
substantially in the form of Exhibit B hereto from each executive officer and
director of the Company and certain affiliated entities of HealthCare Ventures
LLC.
     (m) Subsequent to the execution and delivery of this Agreement, there shall
not have occurred any of the following: (i) trading in securities generally on
the New York Stock Exchange, the Nasdaq National Market or the American Stock
Exchange or in the over-the-counter market, or trading in any securities of the
Company on any exchange or in the over-the-counter market, shall have been
suspended or minimum or maximum prices or maximum ranges for prices shall have
been established on any such exchange or such market by the Commission, by such
exchange or by any other regulatory body or governmental authority having
jurisdiction, (ii) a banking moratorium shall have been declared by Federal or
state authorities or a material disruption has occurred in commercial banking or
securities settlement or clearance services in the United States, (iii) the
United States shall have become engaged in hostilities, or the subject of an act
of terrorism, there shall have been an escalation in hostilities involving the
United States or there shall have been a declaration of a national emergency or
war by

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the United States or (iv) there shall have occurred any other calamity or crisis
or any change in general economic, political or financial conditions in the
United States or elsewhere, if the effect of any such event in clause (iii) or
(iv) makes it, in the sole judgment of the Placement Agent, impracticable or
inadvisable to proceed with the sale or delivery of the Stock on the terms and
in the manner contemplated by the Base Prospectus and the Prospectus Supplement.
     (n) No action shall have been taken and no statute, rule, regulation or
order shall have been enacted, adopted or issued by any governmental agency or
body which would, as of the Closing Date, prevent the issuance or sale of the
Stock or materially and adversely affect or potentially and adversely affect the
business or operations of the Company; and no injunction, restraining order or
order of any other nature by any federal or state court of competent
jurisdiction shall have been issued as of the Closing Date which would prevent
the issuance or sale of the Stock or materially and adversely affect or
potentially and adversely affect the business or operations of the Company.
     (o) Not more than one Business Day after the Execution Time, the Company
shall have prepared and filed with the Commission a Current Report on Form 8-K
with respect to the Offering, including as an exhibit thereto this Agreement and
any other documents relating thereto.
     (p) The Company shall have entered into Purchase Agreements with each of
the Purchasers and such agreements shall be in full force and effect.
     (q) Prior to the Closing Date, the Company shall have furnished to the
Placement Agent such further information, certificates and documents as the
Placement Agent may reasonably request.
     (r) The Company, the Placement Agent and Brown Raysman Millstein Felder &
Steiner LLP shall have entered into the Escrow Agreement and such agreement
shall be in full force and effect.
     (s) All preemptive rights, rights of first refusal, demand registration
rights or other similar rights in connection with the Offering shall have been
waived by the holders at such rights.
     All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Placement Agent.
Section 7. Indemnification and Contribution.
     (a) The Company shall indemnify and hold harmless the Placement Agent, its
members, officers, employees, representatives and agents and each person, if
any, who controls the Placement Agent within the meaning of the Securities Act
(collectively the “Placement Agent Indemnified Parties” and each a “Placement
Agent Indemnified Party”) against any loss, claim, damage or liability, joint or
several, or any action in

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respect thereof, to which the Placement Agent Indemnified Party may become
subject, under the Securities Act or otherwise, insofar as such loss, claim,
damage, liability or action arises out of or is based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the Base
Prospectus, the Registration Statement or the Prospectus Supplement or in any
amendment or supplement thereto and (ii) the omission or alleged omission to
state in the Base Prospectus, the Registration Statement or the Prospectus
Supplement or in any amendment or supplement thereto a material fact required to
be stated therein or necessary to make the statements therein not misleading,
and shall reimburse each Placement Agent Indemnified Party promptly upon demand
for any legal or other expenses reasonably incurred by that Placement Agent
Indemnified Party in connection with investigating or preparing to defend or
defending against or appearing as a third party witness in connection with any
such loss, claim, damage, liability or action as such expenses are incurred;
provided, however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage, liability or action arises out of or
is based upon an untrue statement or alleged untrue statement in or omission or
alleged omission from the Base Prospectus, the Registration Statement or the
Prospectus Supplement or any such amendment or supplement in reliance upon and
in conformity with written information furnished to the Company by or on behalf
of the Placement Agent specifically for use therein, which information the
parties hereto agree is limited to the Placement Agent’s Information (as defined
in Section 15). This indemnity agreement is not exclusive and will be in
addition to any liability, which the Company might otherwise have and shall not
limit any rights or remedies which may otherwise be available at law or in
equity to each Placement Agent Indemnified Party.
     (b) The Placement Agent shall indemnify and hold harmless the Company, its
officers, employees, representatives and agents, each of its directors and each
person, if any, who controls the Company within the meaning of the Securities
Act (collectively the “Indemnified Parties” and each a “Indemnified Party”)
against any loss, claim, damage or liability, joint or several, or any action in
respect thereof, to which the Indemnified Parties may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage, liability or
action arises out of or is based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in the Base Prospectus, the Registration
Statement or the Prospectus Supplement or in any amendment or supplement thereto
or (ii) the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, but in each case only to the extent that the untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company by the
Placement Agent specifically for use therein, and shall reimburse the
Indemnified Parties for any legal or other expenses reasonably incurred by such
parties in connection with investigating or preparing to defend or defending
against or appearing as third party witness in connection with any such loss,
claim, damage, liability or action as such expenses are incurred; provided that
the parties hereto hereby agree that such written information provided by the
Placement Agent consists solely of the Placement Agent’s Information. This
indemnity agreement is not exclusive and will be in addition to any liability,
which the Placement Agent and

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the Purchasers might otherwise have and shall not limit any rights or remedies
which may otherwise be available at law or in equity to the Indemnified Parties.
Notwithstanding the provisions of this Section 7(b), in no event shall any
indemnity by the Placement Agent under this Section 7(b), together with any
amounts owed or indebted under Section 7(d), exceed the total compensation
received by such Placement Agent in accordance with Section 1(e).
     (c) Promptly after receipt by an indemnified party under this Section 7 of
notice of any claim or the commencement of any action, the indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under this Section 7, notify the indemnifying party in writing of the
claim or the commencement of that action; provided, however, that the failure to
notify the indemnifying party shall not relieve it from any liability which it
may have under this Section 7 except to the extent it has been materially
prejudiced by such failure; and, provided, further, that the failure to notify
the indemnifying party shall not relieve it from any liability which it may have
to an indemnified party otherwise than under this Section 7. If any such claim
or action shall be brought against an indemnified party, and it shall notify the
indemnifying party thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 7 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
any indemnified party shall have the right to employ separate counsel in any
such action and to participate in the defense thereof but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless (i) the
employment thereof has been specifically authorized by the indemnifying party in
writing, (ii) such indemnified party shall have been advised by such counsel
that there may be one or more legal defenses available to it which are different
from or additional to those available to the indemnifying party and in the
reasonable judgment of such counsel it is advisable for such indemnified party
to employ separate counsel or (iii) the indemnifying party has failed to assume
the defense of such action in accordance with the terms hereof and employ
counsel reasonably satisfactory to the indemnified party, in which case, if such
indemnified party notifies the indemnifying party in writing that it elects to
employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such action
on behalf of such indemnified party, it being understood, however, that the
indemnifying party shall not, in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys at any
time for all such indemnified parties, which firm shall be designated in writing
by the Placement Agent, if the indemnified parties under this Section 7 consist
of any Placement Agent Indemnified Party, by the Company if the indemnified
parties under this Section 7 consist of any Indemnified Parties. Each
indemnified party, as a condition of the indemnity agreements contained in

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Sections 7(a) and 7(c) shall use all reasonable efforts to cooperate with the
indemnifying party in the defense of any such action or claim. Subject to the
provisions of Section 7(d) below, no indemnifying party shall be liable for any
settlement, compromise or consent to the entry of judgment in connection with
any such action effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with its written consent or if there be a
final judgment for the plaintiff in any such action (other than a judgment
entered with the consent of such indemnified party), the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against any
loss or liability by reason of such settlement or judgment.
     (d) If at any time an indemnified party shall have requested that an
indemnifying party reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by this Section 7 effected without its
written consent if (i) such settlement is entered into more than 60 days after
receipt by such indemnifying party of the request for reimbursement, (ii) such
indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
     (e) If the indemnification provided for in this Section 7 is unavailable or
insufficient to hold harmless an indemnified party under Section 7(a) or 7(b),
then each indemnifying party shall, in lieu of indemnifying such indemnified
party, contribute to the amount paid or payable by such indemnified party as a
result of such loss, claim, damage or liability, or action in respect thereof,
(i) in such proportion as shall be appropriate to reflect the relative benefits
received by the Company and the Placement Agent on the other from the offering
of the Stock or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and the Placement Agent on the other with
respect to the statements or omissions which resulted in such loss, claim,
damage or liability, or action in respect thereof, as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the Placement Agent on the other with respect to such offering
shall be deemed to be in the same proportion as the total net proceeds from the
offering of the Stock purchased under this Agreement (before deducting expenses)
received by the Company bears to the total compensation received by the
Placement Agent with respect to the Stock purchased under this Agreement. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company on the one hand or the Placement Agent on the other, the intent of the
parties and their relative knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission; provided that the parties
hereto agree that the written information furnished to the Company by the
Placement Agent for use in the Prospectus Supplement consists solely of the
Placement Agent’s Information. The Company and the Placement Agent agree that it
would not be just and equitable if contributions pursuant to this Section 7(e)

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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, damage or liability, or action in respect thereof,
referred to above in this Section 7(e) shall be deemed to include, for purposes
of this Section 7(e), 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 7(e), the Placement
Agent shall not be required to contribute any amount in excess of total
compensation received by such Placement Agent in accordance with Section 1(e)
less the amount of any damages which such Placement Agent has otherwise paid or
become liable to pay by reason of any untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
Section 8. Termination. The obligations of the Placement Agent and the
Purchasers hereunder and under the Purchase Agreements may be terminated by the
Placement Agent, in its absolute discretion by notice given to the Company prior
to delivery (including electronic delivery) of and payment for the Stock if,
prior to that time, any of the events described in Sections 6(j) or 6(m) have
occurred or if the Purchasers shall decline to purchase the Stock for any reason
permitted under this Agreement or the Purchase Agreements.
Section 9. Reimbursement of Placement Agent’s Expenses. If the sale of the Stock
provided for herein is not consummated because any condition to the obligations
of the Placement Agent and the Purchasers set forth in Section 6 hereof is not
satisfied, because of any termination pursuant to Section 8 hereof 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 other than by reason of a
default by the Placement Agent, the Company will reimburse the Placement Agent
upon demand for all out-of-pocket expenses (including fees and disbursements of
counsel and any expenses advanced by the Placement Agent on the Company’s
behalf) that shall have been incurred by the Placement Agent in connection with
this Agreement and the proposed purchase and sale of the Stock and, upon demand,
the Company shall pay the full amount thereof to the Placement Agent.
Section 10. Successors; Persons Entitled to Benefit of Agreement. This Agreement
shall inure to the benefit of and be binding upon the Placement Agent, the
Purchasers and the Company, and their respective successors. Nothing expressed
or mentioned in this Agreement is intended or shall be construed to give any
person other than the persons mentioned in the preceding sentence 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 the representations,
warranties, covenants, agreements and indemnities of the Company contained in
this Agreement shall also be for the benefit of the Placement Agent Indemnified
Parties, and the indemnities of the Placement Agent shall also be for the
benefit of the Indemnified Parties. It is understood that the Placement Agent’s
responsibilities to the Company are solely contractual in nature and the
Placement Agent does not owe the Company or any other party, any fiduciary duty
as a result of this Agreement.

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Section 11. Survival of Indemnities, Representations, Warranties, etc. The
respective indemnities, covenants, agreements, representations, warranties and
other statements of the Company and the Placement Agent, as set forth in this
Agreement or made by them respectively, pursuant to this Agreement, shall remain
in full force and effect, regardless of any investigation made by or on behalf
of the Placement Agent, the Company, and the Purchasers or any person
controlling any of them and shall survive delivery of and payment for the Stock.
Section 12. Notices. All statements, requests, notices and agreements hereunder
shall be in writing, and:
     (a) if to the Placement Agent, shall be delivered or sent by mail, telex or
facsimile transmission to SG Cowen & Co., LLC, 1221 Avenue of the Americas, New
York, New York 10020, Attention: Veronica Iuliano (Fax: 212-278-7995), with a
copy to: Brown Raysman Millstein Felder & Steiner LLP, 900 Third Avenue, New
York, New York 10022, Attention: Stuart Bressman, Esq. (Fax: 212-895-2900).
     (b) if to the Company, shall be delivered or sent by mail, telex or
facsimile transmission to GenVec, Inc., 65 West Watkins Mill Road, Gaithersburg,
MD 20878, Attention: Jeffrey W. Church, CFO (Fax: (240) 632-0735), with a copy
to: Arnold & Porter, LLP, 555 Twelfth St., NW, Washington, DC 20004, Attention:
Richard E. Baltz (Fax: 202-942-5999).
Section 13. Definitions of Certain Terms. The terms which follow, when used in
this Agreement, shall have the meanings indicated.
     “Business Day” shall mean any day other than a Saturday, a Sunday, a legal
holiday, a day on which banking institutions or trust companies are authorized
or obligated by law to close in New York City or any day on which the Nasdaq
National Market is not open for trading.
     “Effective Date” shall mean each date and time that the Registration
Statement (and any post-effective amendment or amendments thereto) became or
becomes effective.
     “Execution Time” shall mean the date and time that this Agreement is
executed and delivered by the parties hereto.
     “Interference Proceeding” shall have the meaning set forth in 35 U.S.C. §
135.
     “To the knowledge of the Company” or “to the Company’s knowledge” and words
of similar import shall mean that which the Company’s senior management knows or
should have known using the exercise of reasonable due diligence.
Section 14. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to the
principles of conflicts of law that would require the application of the laws of
any other jurisdiction.

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Section 15. Placement Agent’s Information. The parties hereto acknowledge and
agree that, for all purposes of this Agreement, the Placement Agent’s
Information consists solely of the statements concerning the Placement Agent
contained in the third paragraph under the heading “Plan of Distribution” in the
Prospectus Supplement.
Section 16. Partial Unenforceability. The invalidity or unenforceability of any
Section, paragraph or provision of this Agreement shall not affect the validity
or enforceability of any other Section, paragraph or provision hereof. If any
Section, paragraph or provision of this Agreement is for any reason determined
to be invalid or unenforceable, there shall be deemed to be made such minor
changes (and only such minor changes) as are necessary to make it valid and
enforceable.
Section 17. General. This Agreement constitutes the entire agreement of the
parties to this Agreement and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof. In this Agreement, the masculine, feminine and neuter
genders and the singular and the plural include one another. The section
headings in this Agreement are for the convenience of the parties only and will
not affect the construction or interpretation of this Agreement. This Agreement
may be amended or modified, and the observance of any term of this Agreement may
be waived, only by a writing signed by the Company and the Placement Agent.
Section 18. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
[Signature Pages Follow]

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     If the foregoing is in accordance with your understanding of the agreement
between the Company and the Placement Agent, kindly indicate your acceptance in
the space provided for that purpose below.

            Very truly yours,

GENVEC, INC.

    By:   /s/ Jeffrey W. Church        Name:   Jeffrey W. Church        Title:  
Chief Financial Officer, Treasurer and Corporate Secretary    

Accepted as of
the date first above written:

          SG COWEN & CO., LLC

    By:   /s/ Richard E. Gormley       Name:   Richard E. Gormley       Title:  
Managing Director      

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Exhibit A
Form of Purchase Agreements

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Exhibit B
Form of Lock-Up Agreement

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Exhibit C-1
Form of Corporate Counsel Opinion

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Exhibit C-2
Form of IP Counsel Opinion

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