PLACEMENT AGENT AGREEMENT
THIS PLACEMENT AGENT AGREEMENT (the "AGREEMENT") is entered into as of May
31, 2004 by and between GeneThera, Inc., a Florida corporation (the "COMPANY"),
and Invest Linc Securities, LLC, a Delaware limited liability company (the
"PLACEMENT AGENT").
The Company proposes to offer and sell exclusively up to $2.5 million in
shares, plus the Over-Allotment, (the "OFFERING") of its common stock, $0.01 par
value per share (the "SECURITIES") in a registered offering on Form SB-2 under
the Securities Act of 1933, as amended (the "ACT"). All Securities are offered
subject to the right of the Company to reject any subscription for Securities in
whole or in part for any reason whatsoever or to sell to any prospective
investor less than the number of Securities subscribed for by such prospective
investor and subject to certain other conditions.
The Company has determined to use the services of the Placement Agent as
its exclusive agent to solicit subscriptions for the Securities in the Offering
on a "best efforts" basis as set forth in Section 3 (b), for as long as the
Offering continues or until the time period set forth in Section 4(b) expires,
whichever first occurs. The Placement Agent hereby agrees to act in such
capacity and to use its best efforts to find purchasers for the Securities in
accordance with the terms and conditions of this Agreement. Placement Agent may
engage other duly licensed agents to perform some or all of the Placement
Agent's duties hereunder ("PLACEMENT AGENT SYNDICATE MEMBERS"). In such event,
all arrangements as to compensation of other such Placement Agent Syndicate
Members shall be determined by Placement Agent and shall be chargeable against
the compensation due to Placement Agent from the Company. The Company shall be
advised of and shall have the right to approve any other Placement Agent
Syndicate Members.
As promptly as practicable following the execution of this Agreement by
the parties hereto, the Company shall prepare a Registration Statement on Form
SB-2, with subscription documents attached as an exhibit thereto (the
"SUBSCRIPTION DOCUMENTS") for use in conjunction with the offer and sale of the
Securities. Investors who subscribe for the Securities (the "SUBSCRIBERS") will
be required to complete the Subscription Documents and execute the Subscription
Agreement included with the Subscription Documents. Such Form SB-2 (as either
may be supplemented or amended from time-to-time) together with the Subscription
Documents is herein called the "OFFERING MEMORANDUM"
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to, and covenants and agrees with, the Placement Agent, as of the
date hereof, that:
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of Florida, and has the power and authority
to carry on its business as conducted or proposed to be conducted by it and to
hold title to its property, which business and property will be described in the
Offering Memorandum. The Company has the corporate power and authority to
execute and deliver this Agreement, to conduct such business and to perform its
obligations hereunder and consummate the transactions contemplated by each
Subscription Document tendered by a Subscriber that is accepted by the Company,
subject to the approval of the Offering under the Act and applicable securities
laws of various states ("Blue Sky" laws).
(b) The Offering Memorandum will not include 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.
(c) Except as will be disclosed in the Offering Memorandum, there
are no actions, suits, proceedings or investigations pending or, to the best of
the Company's knowledge, threatened against or affecting the Company.
(d) Except as will be disclosed in the Offering Memorandum, all
requisite authorizations, approvals or orders from any court, governmental or
regulatory official or body necessary to permit the Company to conduct its
business as will be described in the Offering Memorandum will have been obtained
or are in the process of being applied for prior to the Closing Date (as defined
in Section 4 below). All requisite authorizations, approvals or orders from any
court or any governmental or regulatory official or body necessary for the
consummation by the Company of the transactions contemplated by this Agreement
will have been obtained or are in the process of being applied for prior to the
Closing Date (as defined in Section 4 below).
(e) This Agreement has been duly and validly authorized, executed
and delivered by the Company and, when executed by the Placement Agent, will
constitute the valid and binding agreement of the Company, enforceable in
accordance with its terms, except that (i) such enforcement may be subject to
the effect of any applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance and other similar laws relating to or affecting creditors'
rights generally and general principles of equity (regardless of whether such
enforcement is considered in a proceeding in equity or at law) and (ii) the
indemnification provisions of this Agreement may be held to violate public
policy (under either federal or state law) in the context of the offer or sale
of securities.
(f) The Company's execution and delivery of this Agreement, the
fulfillment of the terms set forth herein and the consummation of the
transactions contemplated herein will not conflict with or constitute a breach
of, or default under (i) the Company's articles of incorporation or by-laws,
(ii) any material agreement, indenture or instrument by which the Company is
bound, or (iii) to its knowledge, any law, administrative regulation or court
decree.
(g) It is the Company's present intention to utilize the proceeds
from the sale of the Securities substantially in the manner as will be set forth
in the Offering Memorandum. Further, the Company has no present intention to
make any material changes in its business as it will be described in the
Offering Memorandum.
(h) On the date hereof, and at the Closing Date (as defined in
Section 4 below), the Company is not or will not be an "investment company" or a
company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(i) Any written or oral information provided to prospective
purchasers of Securities by authorized representatives of the Company other than
the Placement Agent ("AUTHORIZED PERSONS") will not contain any untrue statement
of a material fact or, when taken together with the information set forth in the
Offering Memorandum, omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(j) The sale of the Securities has been duly and validly authorized
by the Company. There are no outstanding options, warrants or other rights to
purchase or otherwise acquire any Securities of the Company or any security
convertible into such Securities, except as will be described in the Offering
Memorandum.
(k) The Company agrees to indemnify the Placement Agent with respect
to any claim for finder's fees made by persons other than the Placement Agent in
connection with the Offering. No director or principal shareholder of the
Company is a member of a broker-dealer registered with the National Association
of Securities Dealers, Inc. (the "NASD") or an employee or associated member of
a broker-dealer registered with the NASD.
(l) Any financial statements and related notes that may be included
in the Offering Memorandum will fairly represent the financial position and
results of the operations of the Company at the dates and for the periods to
which they relate. Said financial statements and related notes have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved and comply with the
requirements of the Securities Act of 1933, as amended, and any financial
information to be set forth in the Offering Memorandum will fairly present the
financial condition of the Company and will have been prepared on a basis
consistent with such financial statements or the books of the Company.
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(m) Subsequent to the respective dates of which information is given
in the Offering Memorandum and prior to the closing date of the Offering; (i)
the Company will not incur or will not have incurred any material liabilities or
obligations, direct or contingent, or entered into any material transactions,
not in the ordinary course of business; (ii) the Company will not have paid or
declared any dividends or other distributions on its capital stock; and (iii)
there will not be and not have been any material change in the capital stock or
outstanding indebtedness of the Company, or any material adverse change or
development involving a prospective material adverse change in or affecting the
business, business prospects, financial condition, or results of operations,
present or prospective, or the Company.
(n) The Company has filed all necessary federal, state and foreign
income and franchise tax returns and has paid or accrued all taxes due thereon.
The Company has no knowledge of any tax proceeding or action pending or
threatened against the Company which might materially adversely affect the
business, business prospects, financial condition or results of operation,
present or prospective, of the Company or the respective businesses or
properties of the Company, other than as described in the Offering Memorandum.
2. REPRESENTATIONS AND WARRANTIES OF THE PLACEMENT AGENT. The Placement
Agent hereby represents and warrants to, and covenants and agrees with, the
Company, as of the date hereof, that:
(a) The Placement Agent is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Delaware, with the limited liability company power and authority to conduct its
business, to execute and deliver this Agreement, and to perform the obligations
contemplated herein. The Placement Agent is an "accredited investor," as such
term is defined in Regulation D promulgated under the Act.
(b) This Agreement has been duly and validly authorized, executed
and delivered by the Placement Agent and, when executed by the Company, will
constitute the valid, binding and enforceable agreement of the Placement Agent,
except to the extent that (i) such enforcement may be subject to the effect of
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and
other similar laws relating to or affecting the rights of creditors generally
and general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law), and (ii) the indemnification
provisions of this Agreement may be held to violate public policy (under either
federal or state law) in the context of the offer or sale of securities.
(c) The Placement Agent's execution and delivery of this Agreement,
and the performance of its obligations hereunder, will not result in a breach or
violation of any of the terms and provisions of, or constitute a default under,
its articles of organization or operating agreement, any agreement or instrument
to which it is a party or by which it is bound, or any judgment, decree, order
or, to its knowledge, any statute, rule or regulation applicable to Placement
Agent.
(d) As of the date of the Offering Memorandum, the information
contained in the Offering Memorandum relating to the Placement Agent, if any,
will not include 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.
(e) The Placement Agent is (i) a broker-dealer duly registered
pursuant to the provisions of the Exchange Act; (ii) a member in good standing
of the NASD; and (iii) duly registered as a broker-dealer under the applicable
statutes and regulations of each state in which the Securities will be offered
and sold, except such states in which the Placement Agent is exempt from
registration or such registration is not otherwise required.
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(f) Except as will be disclosed in the Offering Memorandum, there
are no actions, suits, proceedings or investigations pending or, to the best of
the Placement Agent's knowledge, threatened against or affecting the Placement
Agent.
(g) All requisite authorizations, approvals or orders from any court
or any governmental or regulatory official or body necessary for the
consummation by the Placement Agent of the transactions contemplated by this
Agreement will have been obtained or are in the process of being applied for
prior to the Closing Date (as defined in Section 4 below).
(h) Any written or oral information provided to prospective
purchasers of Securities by authorized representatives of the Placement Agent or
Placement Agent Syndicate Members will not contain any untrue statement of a
material fact or, when taken together with the information set forth in the
Offering Memorandum, omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
3. SALE OF THE SECURITIES BY THE PLACEMENT AGENT. The Company and the
Placement Agent hereby agree as follows:
(a) To the extent required under the Act and applicable state Blue
Sky laws:
(i) The Offering will be made within the United States
exclusively to accredited investors in accordance with the rules promulgated by
the Securities and Exchange Commission relating to public offerings and as
permitted in the jurisdictions in which the Securities are to be offered.
(ii) The Placement Agent and the Company shall make reasonable
inquiry to determine whether an accredited investor is purchasing for its own
account or if it is purchasing for the account of others.
(iii) In the case of any purchaser acting on behalf of one or
more third parties, the Placement Agent and the Company shall make reasonable
inquiry to determine that each such third party is an accredited investor.
(b) The Company hereby appoints the Placement Agent as its exclusive
selling agent to solicit prospective purchasers of the Securities and as such to
effect sales of the Securities, on a best efforts basis, under the terms and
conditions of this Agreement. The Company may terminate the Placement Agent's
agency hereunder immediately upon written notice to the Placement Agent in the
event of the Placement Agent's failure to perform its obligations hereunder in
any material respect, upon the Placement Agent's material breach of any of its
representations and warranties contained herein or upon the Placement Agent's
gross negligence or willful misconduct. Subject to the terms and conditions and
upon the basis of the representations and warranties herein set forth, the
Placement Agent accepts such appointment and agrees to use its best efforts to
find prospective purchasers for the Securities in accordance with the terms and
conditions of this Agreement. Either party may terminate the Agreement upon
thirty (30) days written notice to the other party.
(c) Each person desiring to purchase Securities will be required to
complete and execute the Subscription Documents. Each Subscriber will deliver
payment by wire transfer or by check payable to the order of the Company or the
appointed "Escrow Agent," in the amount of the aggregate purchase price of the
Securities subscribed for. Each Subscriber will return to the Placement Agent or
the Company such Subscription Documents together with such a check (or wire
transfer) and any other documents that may be required under state securities
laws or by the Company. Neither the Placement Agent nor any investment advisor
is permitted to sign any Subscription Documents for any Investor.
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(d) Upon receipt of a Subscriber's Subscription Documents, the
Company will determine promptly whether it wishes to accept the proposed
purchaser as a holder of Securities in the Company, it being understood that the
Company reserves the right to reject the tender of any Subscription Document
before the end of the second business day following the Company's receipt of the
Subscription Document; provided, however, the Company may subsequently reject
the tender of any Subscription Documents in the event that at least $1,000,000
of shares have not been subscribed by the end of the Minimum Offering Period (as
hereinafter defined). Should the Company determine to reject the tender, it will
promptly notify the Placement Agent of such determination. The Placement Agent
will notify the Subscriber of such determination, and the Company will issue and
mail (or wire transfer) (or cause the appointed Escrow Agent to issue and mail
(or wire transfer)) to the Subscriber, a check in an amount equal to the
tendered purchase price of the Securities.
4. CLOSING DATES.
(a) The Company will hold the closing of this Offering (the "FIRST
CLOSING") at any time in its discretion on or before sixty (60) days after the
Effective Date and upon receipt of at least $1,000,000 in shares subscribed in
accordance with Section 3 above. Thereafter, the Offering will be sold until the
Final Closing, which will occur on the earlier of sixty (60) days after the
First Closing or the sale of the maximum placement, as described in the
following paragraph (the "FINAL CLOSING"). The First Closing, Final Closing and
any additional closing in connection with the Over-Allotment are each referred
to as a "Closing."
(b) The time limit for the minimum placement of $1,000,000 of shares
shall be sixty (60) days after the Effective Date (the "MINIMUM OFFERING
PERIOD"). If the minimum has not been reached within the Minimum Offering Period
either party may terminate this Agreement by written notice to the other party.
Upon completion of the minimum placement within the Minimum Offering Period,
Placement Agent shall have up to the date of the Final Closing in which to
complete the maximum placement, which shall be $2,500,000 in shares, subject to
the Over-Allotment (defined below). If by mutual consent, any of the above time
periods may be extended or shortened; provided, however, that no extension of
the Minimum Offering Period may be made without the written consent of all
Subscribers who have then executed Subscription Documents and tendered the
purchase price for such securities.
(c) If the maximum placement of $2,500,000 in shares is reached by
the Final Closing, then the Company agrees that it will, for a period of up to
30 days, sell up to an additional $250,000 in shares to investors previously
contacted by the Placement Agent (the "OVER-ALLOTMENT"), subject to the prior
approval of individual subscriptions as described in Section 3(d), above.
(d) Included in the Over-Allotment if requested by the Company will
be the shares of one or more selling shareholders.
5. COMPENSATION.
(a) For the services of the Placement Agent in soliciting and
obtaining purchasers of the Securities, the Company agrees to pay the Placement
Agent a one-time, non-refundable fee of $10,000 of which $5000 is to be paid at
the beginning of the engagement and the remaining $5000 upon the earlier of the
Final Closing or the termination of this Agreement; (ii) a selling commission
equal to ten percent (10%) of the aggregate proceeds received from the sale of
Securities at each particular Closing (the "SELLING COMMISSION"), payable at
each particular Closing; (iii) one Placement Agent warrant entitling Placement
Agent or its designees to purchase seven percent (7%) of the number of shares of
Company Common Stock sold at each particular Closing ("PLACEMENT AGENT
WARRANT"), payable at each particular Closing, which Placement Agent Warrant
will be exercisable at the price of the Securities sold in the Offering, subject
to cashless exercise rights, and (iv) a non-accountable expenses fee equal to 3%
of the total funds raised in the round and whose purpose is to cover travel,
promotional and other miscellaneous expenses incurred in syndicating the
offering. Notwithstanding the foregoing, the total compensation to be paid to
the Placement Agent shall not exceed the compensation permitted by the rules of
the NASD.
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(b) Each Placement Agent Warrant shall have cashless exercise
rights. Placement Agent shall pay $10.00 for the Placement Agent Warrant. The
Placement Agent Warrant will have a five-year exercise period.
(c) For the services of the Placement Agent in connection with any
Strategic Transaction with any person or entity (or an affiliate thereof) with
whom the Company had substantive discussions about a potential Strategic
Transaction and which was contacted by Advisor during the term of this
Agreement, Company agrees to pay Advisor a success fee, upon closing of a
Strategic Transaction in which of 1% of all Consideration received by the
Company and/or its stockholders initially and subsequently, including without
limitation contingent Consideration and other post-closing payments.
"Consideration" will be deemed to include extraordinary dividends, forgiveness
of debt, and other consideration paid in connection with the transaction
including any indebtedness for borrowed money directly or indirectly assumed in
connection with a transaction, but shall not include amounts payable under
consulting, non-competition, employment, severance or other similar agreements.
This fee will be due when the consideration is received by the Company or its
stockholders, as applicable, and will be payable in cash at closing (except as
otherwise provided herein). The value of any Consideration received in the form
of securities will be determined based on the average of the closing daily sales
prices of such securities on the primary exchange on which they are traded for
the ten trading days ending two trading days prior to the transaction closing.
Should the Company request that Advisor provide an opinion as to the fairness of
the financial Consideration to be received by stockholders of the Company (a
"Fairness Opinion"), the request to Advisor must be made at least 30 days prior
to the delivery date, and $75,000 will be due upon delivery of the Fairness
Opinion. This amount will be credited against the success fee which will be due
when the Consideration is received, directly or in escrow. The Fairness Opinion
may be included in any disclosure document filed by the Company with the
Securities and Exchange Commission with respect to such proposed transaction or
in any disclosure document disseminated to the Company's stockholders to obtain
the stockholders' consent to the transaction, provided that it is reproduced in
full, and that any description of or reference to Advisor or summary of the
Fairness Opinion in the disclosure document is in a form reasonably acceptable
to Advisor and its counsel.
6. TERM.
The term of this Agreement shall be six months from the execution hereof,
unless extended by the mutual agreement of the parties.
7. FURTHER AGREEMENTS OF THE COMPANY.
(a) The Company covenants and agrees that it will pay or cause to be
paid (i) all expenses and fees in connection with the preparation, printing,
filing, delivery and shipping of the Offering Memorandum (and all other exhibits
to the Offering Memorandum and any amendments or supplements thereto, but not
including the preparation or negotiation of this Agreement); (ii) filing fees
required in connection for offering and sale by the Placement Agent under the
securities or Blue Sky laws of the states and other jurisdictions where
necessary; and (iii) all reasonable fees and expenses of Placement Agent's
counsel for its review of the Offering Memorandum and work related thereto, not
to exceed $5,000 without prior approval by the Company.
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(b) If at any time when an Offering Memorandum relating to the
Securities is required to be delivered under the Act, any event will have
occurred as a result of which, in the opinion of counsel for the Company or the
Placement Agent, the Offering Memorandum includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, or if it is necessary at any time to amend
the Offering Memorandum to comply with the Act, the Company promptly will
prepare an appropriate supplement or amendment thereto, and will deliver to the
Placement Agent such number of copies thereof as the Placement Agent may
reasonably request.
(c) To the extent required under the Act and applicable state Blue
Sky laws:
(i) The Company shall exercise reasonable care to assure the
Subscribers are not underwriters within the meaning of Section 2(11) of the Act,
shall take all actions required by state securities laws, and setting forth or
referring to the restrictions on transferability and sale of the Securities.
(ii) The Company will duly and timely file (i) with the
Commission all required reports, with respect to the sale of the Securities and
(ii) all reports required to be filed under applicable state securities laws and
regulations and by the regulatory agencies charged with enforcement thereof.
(d) The Company shall make available to each offeree and any
individual advising such offeree the opportunity to ask questions and receive
answers concerning the Company and the terms and conditions of the Offering, and
to obtain any additional information, to the extent that such information is in
the possession of the Company or can be acquired by any of it without
unreasonable effort or expense, necessary to verify the accuracy of the
information contained in the Offering Memorandum.
(e) The Company will notify the Placement Agent immediately upon
receipt thereof and confirm the notice in writing of the issuance by the
Commission or any state securities administrator of any stop order suspending
the effectiveness of any qualification of the Securities for sale or enjoining
the sale of the Securities or of the initiation of any proceeding for that
purpose. The Company will make every reasonable effort to prevent the issuance
of any stop order and, if any stop order shall be issued, to obtain the lifting
of the stop order at the earliest possible time.
(f) The Company, at Company expense, shall establish an escrow
account which fulfills the Placement Agent's obligations as promulgated under
Rule 15(c)2-4 of the Securities Exchange Act of 1934, as amended. Such escrow
account may be established at a mutually acceptable national bank or as such
other place as may be agreed upon.
(g) The Company agrees to furnish, at Company's sole expense, to
Placement Agent throughout the life of the Placement Agent Warrants the
following documentation:
(i) all filings with state and federal securities regulatory
bodies, including without limitation all documents filed with any office of the
United States Securities and Exchange Commission, any exchange upon which the
Company's securities are listed in any state and copies of all other documents,
reports and information furnished by the Company to its shareholders; and
(ii) copies of monthly transfer sheets.
The furnishing of such reports shall not be characterized as additional
compensation.
8. FURTHER AGREEMENTS OF THE PLACEMENT AGENT.
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(a) The Placement Agent agrees (on behalf of itself and the other
Placement Agent Syndicate Members) that it will accept subscriptions only from
investors who have received a copy of the Offering Memorandum, who have fully
completed and executed the appropriate Subscription Documents. The Placement
Agent agrees (on behalf of itself and the other Placement Agent Syndicate
Members) not to publish, circulate or use any other advertisement or
solicitation material without the prior written approval of the Company or
otherwise conduct the offering in a manner which would be deemed to be a public
offering where this would violate any federal or state securities laws
applicable to the Offering.
(b) The Placement Agent agrees (on behalf of itself and the other
Placement Agent Syndicate Members) to solicit Subscribers only in the states and
other jurisdictions that such solicitation can be made in accordance with any
limitations described therein and in the states and jurisdictions in which the
Placement Agent (or any Placement Agent Syndicate Members) is licensed or
qualified to make offers and sales of the Securities. The Placement Agent agrees
(on behalf of itself and the other Placement Agent Syndicate Members) not to
make offers and sales to residents of foreign countries.
(c) The Placement Agent (on behalf of itself and the other Placement
Agent Syndicate Members) agrees to keep confidential and not provide any
information to prospective purchasers of Securities or other persons not
contained in the Offering Memorandum or publicly disclosed and available.
(d) The Placement Agent shall use its best reasonable efforts to
register or qualify the Securities to be offered in the Offering in each such
state as the Placement Agent shall determine to offer and sell the Securities
(or in which any Placement Agent Syndicate Member determines to offer or sell
the Securities).
9. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless Placement
Agent and each person who controls Placement Agent within the meaning of the Act
(collectively, the "PLACEMENT AGENT INDEMNIFIED PARTIES") against any losses,
claims, damages or liabilities, joint or several (including, without limitation,
any legal or other expenses reasonably incurred by such Placement Agent
Indemnified Party in connection with investigating or defending any such claim,
liability or action), to which such Placement Agent Indemnified Party may become
subject under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of a material fact contained
(A) in the Offering Memorandum or any amendment or supplement thereof or
thereto, as applicable, or (B) in any Blue Sky application or other document
executed by the Company specifically for that purpose or based upon written
information furnished by the Company filed in any state or other jurisdiction in
order to qualify any or all of the Securities under the securities laws thereof
(any such application, document or information being hereinafter called a "BLUE
SKY APPLICATION"); (ii) the omission or alleged omission to state in the
Offering Memorandum or any amendment or supplement thereof or thereto, as
applicable, or in any Blue Sky Application, a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; or (iii) any
misrepresentation, breach of warranty or nonfulfillment of any agreement or
covenant on the part of the Company under this Agreement, or from any
misrepresentation in or omission from any certificate, agreement, schedule,
statement, document or instrument furnished to the Placement Agent pursuant
hereto; provided, however, that the Company will not be liable in any such case
to the extent that any such loss, claim, damage or liability (x) arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with written
information furnished to the Company by the Placement Agent specifically for use
with reference to the Placement Agent in the preparation of the Offering
Memorandum or any such Blue Sky Application or any such amendments or
supplements thereto or (y) is primarily the result of the Placement Agent's
willful misconduct or gross negligence. This indemnity agreement will be in
addition to any liability which the Company may otherwise have.
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(b) The Placement Agent agrees to indemnify and hold harmless the
Company and each of its directors, officers, employees, agents and
representatives (collectively, the "COMPANY INDEMNIFIED PARTIES") against any
losses, claims, damages or liabilities, joint or several (including, without
limitation, any legal or other expenses reasonably incurred by such Company
Indemnified Party in connection with investigating or defending any such claim,
liability or action), to which such Company Indemnified Party may become subject
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of a material fact contained
based upon written information supplied by the Placement Agent regarding the
Placement Agent (A) in the Offering Memorandum or any amendment or supplement
thereof or thereto, as applicable, regarding the Placement Agent or (B) in any
Blue Sky Application; (ii) the omission or alleged omission to state in the
Offering Memorandum or any amendment or supplement thereof or thereto, as
applicable, or in any Blue Sky Application, a material fact regarding the
Placement Agent required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; or (iii) any misrepresentation, breach of warranty or
nonfulfillment of any agreement or covenant on the part of the Placement Agent
under this Agreement, or from any misrepresentation in or omission from any
certificate, agreement, schedule, statement, document or instrument furnished to
the Company pursuant hereto.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against any indemnifying party
under this Section 9, notify in writing the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying Party will
not relieve it from any liability under this Section 9. The indemnifying party
shall, upon the request of the indemnified party, retain counsel reasonably
satisfactory to the indemnified party to represent the indemnified party and any
others the indemnifying party may designate in such proceedings and shall pay as
incurred the reasonable fees and expenses of such counsel related to such
proceeding. In no event shall the indemnifying party be liable for the fees and
expenses of more than one counsel for all indemnified parties in connection with
any one action or separate but substantially similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances
(other than such local counsel as may be employed by counsel to the indemnified
parties to render legal advice with respect to the laws of, or legal services
in, states or jurisdictions other than those states and jurisdictions in which
counsel to the indemnified parties is admitted to practice law.) In any such
proceeding, any indemnified party shall cooperate in the defense and shall have
the right to retain its own counsel at its own expense. In case any such action
is brought against any indemnified party, and it notifies an indemnifying party
of the commencement thereof, the indemnifying party will be entitled to
participate therein, and, to the extent that it may wish, jointly with any other
indemnifying party, similarly notified, to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section 9 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof. In the event that the
indemnified party assumes the defense of such action or proceeding, the
indemnified party will keep the indemnifying party reasonably informed of the
progress of any defense, compromise or settlement and will cooperate and consult
with the indemnifying party and its counsel in connection therewith. No
indemnifying party will enter into any comprise or settlement of any claim or
action without the consent of the indemnified party, which consent will not be
unreasonably withheld. Likewise, No indemnified party will enter into any
comprise or settlement of any claim or action without the consent of the
indemnifying party, which consent will not be unreasonably withheld.
10. EFFECTIVE DATE. Upon the execution and delivery of this Agreement by
all of the parties hereto, this Agreement will become effective upon the date
specified on the signature page hereto. The Offering shall become effective at
such time as the Company informs the Placement Agent that the Offering has been
approved by the Company's Board of Directors and indicating that the Offering
Memorandum is released for distribution.
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11. SURVIVAL OF INDEMNITIES, WARRANTIES AND REPRESENTATIONS. The
respective indemnity agreements of the Company and Placement Agent contained in
Section 9 hereof, and the representations and warranties of the Company and
Placement Agent set forth herein, will remain operative and in full force and
effect, regardless of any termination or cancellation of this Agreement or any
investigation made by or on behalf of the Company or Placement Agent, or any
controlling person referred to in Section 9, and will survive the delivery of
and payment for the Securities, and any successor of the Placement Agent or the
Company or of any such controlling person or any legal representative of any
such controlling person, as the case may be, will be entitled to the benefit of
the respective indemnity agreements.
12. CREDIT. Upon Closing of any Offering, Placement Agent may, at its own
expense, place announcements in financial and other newspapers and periodicals
(such as customary "tombstone" advertisement) describing its services in
connection therewith. Notwithstanding, Placement Agent is hereby authorized to
include the Company on its publicly disclosed list of clients.
13. NOTICES. Except as is otherwise provided in this Agreement, (a)
whenever notice is required by the provisions of this Agreement or otherwise to
be given to the Company, such notice will be in writing addressed to the Company
at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Attention: ▇▇. ▇▇▇▇
▇▇▇▇▇▇.; and (b) whenever notice is required by the provisions of this Agreement
or otherwise to be given to Placement Agent, such notice will be in writing
addressed to the Placement Agent at ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇. ▇▇▇, ▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. Paris, II. Any notice referred to herein may be given
in writing or by telecopy or telephone and if by telecopy or telephone will be
immediately confirmed in writing. Notice (unless actual) will be effective upon
mailing or telecopy transmission, as the case may be.
14. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement is made
solely for the benefit of Placement Agent, the Company and the controlling
persons referred to in Section 9 hereof, and their respective successors and
assigns, and no other person will acquire or have any right by virtue or this
Agreement, and the term "successors and assigns," as used in this Agreement,
will not include any Purchaser.
15. DISPUTE RESOLUTION. (a) If a dispute arises out of or relates to this
Agreement, the parties agree first to try in good faith to settle the dispute by
mediation before resorting to arbitration or litigation. The parties agree that
the mediator shall be chosen no later than thirty (30) days after the submission
of a claim by either party, and that the mediation process shall be concluded no
later than thirty (30) days after selection of the mediator. If the parties
cannot agree on the selection of a mediator, one shall be selected by the
American Arbitration Association ("AAA"). The fees and expenses of the mediator
shall be borne equally by the parties. (b) If the controversy is not resolved
through mediation pursuant to Paragraph (a) above, the parties agree that any
controversy or claim arising out of or relating to this Agreement shall be
determined by binding arbitration. This transaction involves commerce, and the
arbitration is subject to and shall be conducted by a single arbitrator in
accordance with the United States Arbitration Act notwithstanding any choice of
law provision in this Agreement, and under the Commercial Arbitration Rules of
the AAA. The arbitrator shall have authority to award damages and grant other
relief he deems appropriate. The arbitrator shall give effect to statues of
limitation in determining any claim. Reasonable discovery shall be permitted in
any arbitration proceeding. Any controversy concerning whether an issue is
arbitrable, shall be determined by the arbitrator. Judgment upon the arbitration
award may be entered in any court having jurisdiction. The fees and expenses of
the arbitrator and AAA shall be borne equally by the parties. Any mediation or
arbitration under this Section 15 shall be held in Texas.
16. GOVERNING LAW. This Agreement is to be governed by and construed in
accordance with the laws of the State of Illinois, without regard to principles
of conflicts of law.
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17. COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, any one of which need not contain the signatures of more than
one party, but all such counterparts taken together shall constitute one and the
same Agreement.
18. ENTIRE AGREEMENT. This Agreement, including all exhibits and
schedules, sets forth the entire agreement of the Placement Agent and the
Company with respect to the subject matter hereof and terminates and supersedes
all prior agreements and understandings between or among the Placement Agent and
the Company with respect to the subject matter hereof.
19. HEADINGS. The descriptive headings in this Agreement have been
inserted for convenience only and do not constitute a part of this Agreement.
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IN WITNESS WHEREOF, the parties have entered into this Agreement effective
as of the as of the date first set forth above.
GENETHERA, INC.
By: _________________________________
▇▇. ▇▇▇▇ ▇▇▇▇▇▇, Chairman, President & CEO
Date: ________________________________
INVEST LINC SECURITIES, LLC
By:________________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, President
Date:_____________________________________
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