EXHIBIT 10.13
ELITE PHARMACEUTICALS, INC.
PLACEMENT AGENT AGREEMENT
This Placement Agent Agreement dated as of August 12, 2004 is entered
into by and between Elite Pharmaceuticals, Inc. (the "Company") and Indigo
Securities, LLC (the "Placement Agent"). The Company and the Placement Agent
shall sometimes collectively be referred to as the Parties, or singly as a
"Party."
WHEREAS, the Company desires to appoint the Placement Agent as its
agent to sell on a "best efforts" basis up to $6,000,000 in shares of Series A
Preferred Stock convertible into shares of Common Stock (subject to a 10% over
allotment option in favor of the Placement Agent) and warrants to purchase
shares of Common Stock (the "Investor Warrants" and together with the Series A
Preferred Stock the "Securities") pursuant to a Term Sheet and offering
documents to be prepared by the Company; and
WHEREAS, the Placement Agent desires to accept such appointment on the
terms and conditions set forth below.
NOW, THEREFORE, for good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the Parties hereby agree as
follows:
1. DEFINITIONS. The following terms shall have the meanings set
forth below:
"Blue Sky" means the laws of any state or other jurisdiction
relating to the requirements for registering and offering securities for sale in
such state or other jurisdiction.
"Blue Sky Application" means any application or other document
executed by the Company specifically for the purpose of qualifying the
Securities in any state or other jurisdiction under the Blue Sky laws of any
such state or other jurisdiction.
"Closing" shall refer to that event which, subject to the
terms hereof, occurs when the Placement Agent has received and delivered to the
Company subscriptions which the Company has agreed to accept for at least a
minimum of gross proceeds from Subscribers on or prior to the Termination Date.
Upon the prior consent of the Company, one or more additional Closings may be
held for additional subscriptions accepted by the Company no later than the
Termination Date of the offering.
"Closing Date" means the date when the Closing occurs.
"Closing Price" means the average closing sale price of a
share of Common Stock reported on the American Stock Exchange during the five
(5) trading days ending two (2) trading days immediately preceding the Closing.
"Company" shall have the meaning set forth in the preface.
"Common Stock" means common stock, par value $0.01 per share
of the Company.
"Controlling Person" shall have the meaning set forth under
Section 15 of the Securities Act.
"Covered Claims" shall refer to the claims set forth in
Section 10.1 for which a party may seek indemnification under Section 10.
"Exchange Act" means the Securities Exchange Act of 1934.
"Financial Statements" means the audited consolidated
financial statements of the Company for the fiscal years ended March 31, 2004
and 2003, including balance sheets and related statements of income,
stockholders' equity and cash flows, together with the related notes, audited by
the Company's independent certified public accountants as the same have been
filed with the SEC as part of the SEC Documents and the unaudited consolidated
financial statements of the Company for the quarters ended June 30, 2004 and
2003, including balance sheets and related statements of income, stockholders'
equity and cash flows as the same have been filed with the SEC as part of the
SEC Documents.
"Holder" or "Holders" means the holder of any Securities
and/or any Placement Agent Warrant, and the securities contained in, and
underlying each of, the foregoing securities.
"Indemnified Party" refers to a party who is entitled to
indemnification under Section 10 and shall refer either to (i) the Placement
Agent, or (ii) the Company, as the case may be, and (iii) their respective
stockholders, directors, officers, employees, and Controlling Persons.
"Indemnifying Party" means a party who has agreed to provide
indemnification under Section 10.
"Intellectual Property Rights" means all patents, patent
applications, trademarks, service marks, copyrights, trade secrets, processes or
formulations used or proposed to be used in the conduct of the business of the
Company and any Subsidiaries.
"Investor Warrants" means the LT Warrants and the ST Warrants
to purchase shares of Common Stock of the Company to be issued to the Investors
in connection with the Offering.
"Knowledge" shall mean the actual knowledge of the Chief
Executive Officer and the Financial Officer of the Company.
"License" or "Licenses" means all licenses, permits and other
governmental certificates, authorizations and permits, and approvals of the
Company or any Subsidiary.
"LT Warrants" means the warrants to purchase shares of Common
Stock to be issued to the Investors in connection with the Offering which expire
on the fifth anniversary of the Closing.
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"Material Adverse Effect" means any change or effect that is
materially adverse to the business, results of operations, financial condition,
or material proprietary rights of the Company or any Subsidiary.
"Most Recent Balance Sheet Date" shall refer to the
consolidated balance sheet of the Company dated as of June 30, 2004 as the same
has been filed with the SEC as part of the SEC Documents.
"NASDR" means the NASD Regulation, Inc.
"NOBO List" means the list of non-objecting beneficial owners
of the Company's publicly traded securities.
"Offering" means the solicitation by the Placement Agent of
Subscribers for the purchase of Securities pursuant to this Agreement, the Term
Sheet and applicable law.
"Offering Documents" shall refer to the Term Sheet and all
attachments and exhibits thereto, including but not limited to Elite's Annual
Report on Form 10-K for the year ended March 31, 2004 and Elite Quarterly Report
on Form 10-Q for the period ended June 30, 2004, the form of Registration Rights
Agreement, and Subscription Agreement.
"Offering Period" shall refer to the period during which the
Offering may occur as more particularly described in Section 3.1 hereof.
"Placement Agent" shall have the meaning set forth in the
preface.
"Placement Agent Warrants" shall refer to the warrants issued
to the Placement Agent as part of its compensation for services rendered
hereunder in the form attached hereto as EXHIBIT A.
"Private Placement" shall mean the placement of up to
$6,000,000 in shares of Series A Preferred Stock (subject to an over allotment
option in favor of the Placement Agent) and Investor Warrants to purchase a
number of shares of Common Stock by the Company through the Placement Agent
pursuant to this Agreement and the Term Sheet.
"Registration Rights Agreement" shall refer to that agreement
by and between the Company, on one hand and the Placement Agent and Holders on
the other hand.
"SEC" refers to the Securities and Exchange Commission.
"SEC Documents" means any registration statement, reports and
documents filed with the SEC by the Company.
"Securities" shall have the meaning set forth in the preface.
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"Securities Act" means the U.S. Securities Act of 1933, as
amended.
"Selected Dealer" means a person or entity which is a member
of the NASDR and which is selected by the Placement Agent pursuant to this
Placement Agent Agreement to assist the Placement Agent in the Offering.
"Series A Preferred Stock" means a newly created series of
preferred stock designated by the Company as Series A Preferred Stock, par value
$0.01 per share, of the Company.
"ST Warrants" means the warrants to purchase shares of Common
Stock to be issued to the Investors in connection with the Offering which expire
180 days after the date upon which a registration statement covering the shares
of Common Stock issuable upon exercise of such warrants is declared effective by
the SEC.
"Subscriber" or "Subscribers" means an "accredited investor,"
as defined under Rule 501 of the Securities Act, subscribing to purchase
Securities.
"Subscription Agreement" means the agreement between the
Company and a Subscriber for the purchase of one or more Securities, pursuant to
the Term Sheet.
"Termination Date" means the date set forth in Section 3.1.
"Term Sheet" means the document prepared by the Company which
sets forth the terms and conditions of the Offering.
Capitalized terms used herein, not otherwise expressly defined above, shall have
the same meanings provided in the Offering Documents unless a contrary or
differing meaning is provided herein.
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2. NATURE OF OFFERING.
2.1 BEST EFFORTS. The Placement Agent shall offer to accredited
investors, as defined by Rule 501 under the Securities Act, on a "best efforts
basis" during the Offering Period (a) a minimum of $4,000,000 and a maximum of
$6,600,000 of Series A Preferred Stock at a price per share equal (i) 10
multiplied by (ii) the Closing Price, (b) LT Warrants to purchase a number of
shares of Common Stock equal to 50% of the number of shares of Common Stock
issuable at the Closing upon the conversion in full of all shares of Series A
Preferred Stock at an exercise price equal to 125% of the Closing Price and (c)
ST Warrants to purchase a number of shares of Common Stock issuable at the
Closing upon the conversion in full of all shares of Series A Preferred Stock at
an exercise price equal to 125% of the Closing Price. The Company and Placement
Agent shall take all necessary steps to insure that the Offering is exempt from
registration under Section 4(2) under the Securities Act and Rule 506
thereunder. The Offering shall be made solely to prospective investors which
qualify as "accredited investors" as defined in Rule 501(a) of Reg. D
promulgated under the Securities Act. The Company has prepared a Term Sheet,
acceptable to the Placement Agent, containing the terms and conditions of the
Offering.
2.2 SUBSCRIPTION PROCEEDS. All subscriptions shall be deposited in an
escrow account at Bank of New York reference: Elite Pharmaceuticals, Inc for the
benefit of customers established under Exchange Act Rule 15c2-4 pending the
Closing or termination of the Offering. Prior to the Closing or termination of
the Offering, the Company will notify the Placement Agent as to which, if any,
subscriptions it will not accept; provided that proceeds for subscriptions not
accepted will be promptly returned without interest following termination of the
Offering. The Company may not accept subscriptions if the aggregate subscription
do not equal or exceed $4,000,000 or if the Closing Price is less than $1.40.
2.3 SUBSCRIPTION DOCUMENTS. Each prospective investor who desires to
purchase Securities shall be required to deliver to a Placement Agent, one copy
of an executed Subscription Agreement, including applicable investor
questionnaire, one copy of the Registration Rights Agreement, and any other
documents required by the Company in connection with the purchase of the
Securities.
3. APPOINTMENT OF PLACEMENT AGENT.
3.1 APPOINTMENT. The Company hereby appoints the Placement Agent its
exclusive agent (subject to Section 3.3 hereof), for the purposes of placing the
Securities with qualified Subscribers during the Offering Period pursuant to the
Offering as described in the Offering Documents. The Offering Period shall
commence on the day the Offering Documents are first made available by the
Company to the Placement Agent for delivery in connection with the offering of
Securities for sale and such appointment shall continue until the earliest to
occur of (i) the closing of the sale of $6,600,000 of the Securities, (ii)
September [___], 2004(1), or (iii) the date the parties agree to terminate the
Offering (the "Termination Date").
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(1) To be 30 days after the Offering Materials are complete.
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3.2 ACCEPTANCE OF AGENCY. Subject to the performance by the Company of
all of its obligations to be performed under this Agreement and to the other
terms contained in this Agreement, the Placement Agent hereby accepts such
agency and agrees to use its best efforts to assist the Company in placing the
Securities with qualified Subscribers pursuant to the Offering described in the
Offering Documents. It is understood that the Placement Agent has no commitment
to sell any Securities.
3.3 SELECTED DEALERS. The Placement Agent may engage other persons
selected by the Placement Agent and approved by the Company that are members of
NASDR, and that have executed a selected dealer agreement in a form approved by
or acceptable to the Placement Agent to assist the Placement Agent in the
Offering. The Placement Agent may allow such persons such part of the
compensation and payment of expenses payable to the Placement Agent hereunder as
it shall determine. No compensation or other obligation shall be due to such
Selected Dealers by the Company. Each Selected Dealer shall be required to agree
in writing to comply with the provisions of, and to make the representations,
warranties and covenants contained in this Agreement applicable to the sale of
Securities.
3.4 SUBSCRIPTION AGREEMENTS FOR SECURITIES. Subscriptions for
Securities shall be evidenced by the execution by Subscribers of a Subscription
Agreement in the form of Exhibit B hereto. No Subscription Agreement shall be
effective unless and until it is accepted by the Company.
3.5 RIGHT OF FIRST OFFER TO SUBSEQUENT OFFERINGS. If, during the
eighteen (18) month period immediately following the final closing of the
Offering (the "FO Period"), the Company seeks to engage a placement agent or
finder to assist the Company in the placement of any equity securities or
securities convertible into equity securities of the Company (other than an
underwritten public offering) to any party that is not an affiliate at such time
or shareholder of the Company as of the date of this Agreement, the Company
shall provide to the Placement Agent a written summary of the terms for such
offering (a " Offering Notice"). During the ten (10) day period immediately
following the delivery of the Offering Notice, the Company and the Placement
Agent shall negotiate in good faith, on an exclusive basis, the terms of such
offering. If, at the end of such ten (10) day period, the Placement Agent elects
to assist in such offering, the Placement Agent shall (i) provide the Company
with written notice of its election to participate (a "Election Notice") and
include in such notice the agreed upon terms of such offering and (ii) provide
to the Company evidence of commitments for at least the minimum prospective
offering within thirty (30) days after delivery to the Company of the Election
Notice. If either of the conditions set forth in clause (i) or (ii) of the
previous sentence is not satisfied with respect to an prospective equity
financing during the FO Period, the Company may enter into a placement
arrangement with any third party or directly with prospective investors on terms
no more favorable to the prospective investors or placement agent than the terms
contained in the Offering Notice.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to the Placement Agent and each Selected Dealer, if any,
which representations and warranties which are true and correct and shall be
true and correct as of the time of the Closing, as follows:
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4.1 SECURITIES LAW COMPLIANCE. The Offering Documents shall not contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in light of the circumstances
in which they were made, not misleading. If at any time prior to the completion
of the Offering or other termination of this Agreement any event shall occur as
a result of which it might become necessary to amend or supplement the Offering
Documents so that they do not include any untrue statement of any material fact
or omit to state any material fact necessary in order to make the statements
therein, in light of the circumstances then existing, not misleading, the
Company shall promptly notify the Placement Agent and shall supply the Placement
Agent with amendments or supplements correcting such statement or omission. The
Company shall also provide the Placement Agent for delivery to all offerees and
their representatives, if any, any information, documents and instruments which
the Placement Agent and the Company deem necessary to comply with state and
federal law applicable to the offering.
4.2 ORGANIZATION. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
all requisite power and authority to own and lease its properties, to carry on
its business as currently conducted, to execute and deliver this Agreement and
to carry out the transactions contemplated by this Agreement, as appropriate,
and is duly licensed or qualified to do business as a foreign corporation in
each jurisdiction in which the conduct of its business or ownership or leasing
of is properties requires it to be so qualified, except where the failure to be
so qualified would not have a Material Adverse Effect.
4.3 CAPITALIZATION. The authorized, issued and outstanding capital
stock of the Company prior to the consummation of the transactions contemplated
hereby is as set forth in the Offering Documents and the SEC Documents. All
issued and outstanding shares of common stock of the Company are validly issued,
fully paid and nonassessable and have not been issued in violation of the
preemptive rights of any stockholder of the Company. All prior sales of
securities of the Company were either registered under the Securities Act and
applicable state securities laws or exempt from such registration.
4.4 DERIVATIVE SECURITIES; RIGHTS. Except as disclosed on SCHEDULE 4.4
hereof or as set forth in the most recent Form 10-Q or Form 10-K filed by the
Company, there are not, nor shall there be immediately prior to the Closing, any
outstanding warrants, options, agreements, convertible securities, preemptive
rights to subscribe for or other commitments pursuant to which the Company or
any of its Subsidiaries is, or may become, obligated to issue any shares of its
capital stock or other securities of the Company and this Offering shall not
cause any anti-dilution adjustments to such securities or commitments. Since the
most recent Form 10-Q or Form 10-K filed by the Company, there has not been any
additional re-pricing of any outstanding, warrants, options or other securities
of the Company.
4.5 SUBSIDIARIES AND INVESTMENTS. SCHEDULE 4.5 sets forth as of the
date hereof for each Subsidiary of the Company (i) its name and jurisdiction of
incorporation; (ii) the number of shares of authorized capital stock of each
class of its capital stock; (iii) the number of issued and outstanding shares of
each class of its capital stock, all of which is owned by the Company; and (iv)
its directors and officers. Each Subsidiary is a corporation duly organized,
validly existing, and in
in
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good standing under the laws of the jurisdiction of its incorporation. Each
Subsidiary is duly authorized to conduct business and is in good standing under
the laws of each jurisdiction where such qualification is required, except where
the failure shall not have a Material Adverse Effect. Each Subsidiary has full
power and authority and all licenses, permits, and authorizations necessary to
carry on the businesses in which it is engaged andwhich it presently proposes to
engage and to own and use the properties owned and used by it, except where the
failure shall not have a Material Adverse Effect. The Company has made available
to the Placement Agent correct and complete copies of the charter and bylaws of
each Subsidiary (as amended to date). All of the issued and outstanding shares
of capital stock of each Subsidiary has been duly authorized and are validly
issued, fully paid, and nonassessable. The Company holds of record and owns
beneficially all of the outstanding shares of each Subsidiary, free and clear of
any restrictions on transfer (other than restrictions under the Securities Act
and state securities laws), taxes, security interests, options, warrants,
purchase rights, contracts, commitments, equities, claims, and demands. There
are no outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights, or other contracts or
commitments that could require any of the Company or any Subsidiary to sell,
transfer, or otherwise dispose of any capital stock of any of a Subsidiary or
that could require any Subsidiary to issue, sell, or otherwise cause to become
outstanding any of its own capital stock. There are no outstanding stock
appreciation, phantom stock, profit participation, or similar rights with
respect to any Subsidiary. There are no voting trusts, proxies, or other
agreements or understandings with respect to the voting of any capital stock of
any Subsidiary. The minute books (containing the records of meetings of the
stockholders, the board of directors, and any committees of the board of
directors), the stock certificate books, and the stock record books of each
Subsidiary are correct and complete. None of the Subsidiaries are in default
under or in violation of any provision of their respective charters or bylaws.
Neither the Company nor any Subsidiary controls, directly or indirectly, or has
any direct or indirect equity participation in any corporation, partnership,
trust, or other business association which is not a Subsidiary.
4.6 FINANCIAL STATEMENTS. The Financial Statements included in the
Offering Documents are: (i) in accordance with all books, records and accounts
of the Company; (ii) are true, correct and complete; and (iii) have been
prepared in accordance with generally accepted accounting principles,
consistently applied. The Financial Statements fairly present, in all material
respects, the results of operations and cash flow for the periods covered. The
Company has no material liabilities, contingent or otherwise, other than: (a)
liabilities reflected on the Most Recent Balance Sheet; (b) liabilities incurred
in the ordinary course of business subsequent to the date of such Financial
Statements; and (c) obligations under contracts and commitments incurred in the
ordinary course of business and not required under generally accepted accounting
principles to be reflected in such Financial Statements.
4.7 ABSENCE OF CHANGES. Since the Most Recent Balance Sheet, to the
Company's Knowledge, neither the Company nor any Subsidiary has (i) incurred any
liabilities or obligations, direct or contingent, not in the ordinary course of
business, (ii) entered into any transaction not in the ordinary course of
business, which is material to the business of the Company or any Subsidiary, or
(iii) incurred any adverse change or any development involving, so far as the
Company or any Subsidiary can now reasonably foresee which would have a Material
Adverse Effect, and neither the Company nor any Subsidiary has become a party
to, and neither the business nor the property of the Company or any Subsidiary
has become the subject of, any litigation,
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whether or not in the ordinary course of their respective businesses. Nor has
there been any change in the capital stock of, or any incurrence of long-term
debt by the Company or any Subsidiary, or any issuance of options, warrants or
other rights to purchase the capital stock of the Company or any Subsidiary.
4.8 TITLE. Except as disclosed on SCHEDULE 4.8 hereto or as set forth
in the SEC Documents, each of the Company and the Subsidiaries has good and
marketable title to their respective properties and assets, free and clear of
all liens, charges, encumbrances or restrictions, which would have a Material
Adverse Effect; all of the leases and subleases under which the Company or any
Subsidiary is the lessor or sublessor of properties or assets or under which the
Company or any Subsidiary holds properties or assets as lessee or sublessee are
in full force and effect, and neither the Company (nor any Subsidiary) is in
default in any material respect with respect to any of the terms or provisions
of any of such leases or subleases, and no material claim has been asserted by
anyone adverse to rights of the Company or any Subsidiary as lessor, sublessor,
lessee or sublessee under any of the leases or subleases mentioned above, or
affecting or questioning the right of the Company or any Subsidiary to continued
possession of the leased or subleased premises or assets under any such lease or
sublease. To its Knowledge, the Company and each Subsidiary owns or leases all
such properties as are necessary to their respective operations as now
conducted.
4.9 LITIGATION. Except as set forth in the SEC Documents, there is no
action, suit, investigation, inquiry or similar governmental proceeding, claim
or proceeding at law or in equity by or before any arbitrator, governmental
instrumentality or other agency now pending or, to the Knowledge of any of the
Company or its Subsidiaries, threatened against the Company or any Subsidiary
(or basis therefore known to the Company or any Subsidiary) the adverse outcome
of which would have a Material Adverse Effect. Neither the Company nor any
Subsidiary is subject to any judgment, order, writ, injunction or decree of any
federal, state, municipal or other governmental instrumentality, commission,
board, bureau, agency or instrumentality, domestic or foreign which would have a
Material Adverse Effect.
4.10 NON-DEFAULT; NON-CONTRAVENTION. Neither the Company nor any of the
Subsidiaries is in breach of, or in default under, any term or provision of any
indenture, mortgage, deed of trust, lease, note, loan or credit agreement or any
other agreement or instrument evidencing an obligation for borrowed money, or
any other agreement or instrument to which it is a party or by which it or any
of its properties may be bound or affected. Neither the Company nor any of the
Subsidiaries is in violation of any provision of its charter or Bylaws or in
violation of any franchise, license, permit, judgment, decree or order, or in
violation of any statute, rule or regulation that would individually or in the
aggregate have a Material Adverse Effect. Neither the execution and delivery of
this Agreement, the Subscription Agreements, nor the issuance and sale or
delivery of the securities comprising the Securities and the Placement Agent
Warrants, nor the consummation of any of the transactions contemplated herein or
in the Subscription Agreements, or the Term Sheet, nor the compliance by the
Company with the terms and provisions hereof or thereof, has conflicted with or
will conflict with, or has resulted in or will result in a breach of, any of the
material terms and provisions of, or has constituted or will constitute a
default under, or has resulted in or will result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the Company or
any of the Subsidiaries or pursuant to the terms of any indenture, mortgage,
deed of trust, note, loan or credit agreement or any other agreement or
instrument evidencing an obligation for borrowed money, or any other agreement
or instrument to which the Company or any of the
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Subsidiaries may be bound or to which any of the property or assets of the
Company or any of the Subsidiaries is subject; nor will such action result in
any violation of the provisions of the charter or the Bylaws of the Company or
any of the Subsidiaries or, assuming the due performance by the Placement Agent
of its obligations hereunder, any statute or any order, rule or regulation
applicable to the Company or any of the Subsidiaries of any court or of any
foreign, federal, state or other regulatory authority or other government body
having jurisdiction over the Company or any of the Subsidiaries.
4.11 TAXES. Each of the Company and its Subsidiaries has filed all U.S.
federal, state, local and foreign tax returns which are required to be filed by
each of them and all such returns are true and correct in all material respects.
The Company and each Subsidiary has paid all taxes pursuant to such returns or
pursuant to any assessments received by any of them or by which any of them are
obligated to withhold from amounts owing to any employee, creditor or third
party. The Company and each Subsidiary has properly accrued all taxes required
to be accrued and/or paid, except where the failure would not have a Material
Adverse Effect. The tax returns of the Company and its Subsidiaries are not
currently being audited by any state, local or federal authorities. Neither the
Company nor any Subsidiary has waived any statute of limitations with respect to
taxes or agreed to any extension of time with respect to any tax assessment or
deficiency.
4.12 COMPLIANCE WITH LAWS, LICENSES, ETC. To the best of the Company's
Knowledge, neither the Company nor any Subsidiary has received notice of any
violation of or noncompliance with any federal, state, local or foreign, laws,
ordinances, regulations and orders applicable to its business (including but not
limited to all applicable laws and regulations relating to the protection of
human health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants), which has not been cured, the violation of,
or noncompliance with which would have a Material Adverse Effect. The Company
and each Subsidiary has all Licenses required by every federal, state and local
government or regulatory body for the operation of its business as currently
conducted and the use of its properties, except where the failure to be licensed
would not have a Material Adverse Effect. The Licenses are in full force and
effect and no violations are or have been recorded in respect of any License and
no proceeding is pending or threatened to revoke, modify or limit any thereof.
4.13 AUTHORIZATION OF AGREEMENT, ETC. This Agreement has been duly
executed and delivered by the Company and the execution, delivery and
performance by the Company of this Agreement, the Offering Documents and the
Placement Agent Warrants have been duly authorized by the Company's board of
directors and no further consent or authorization of its board of directors or
its stockholders is required by the Company and constitute the legal, valid and
binding obligations of the Company, enforceable in accordance with their
respective terms, except as enforceability may be limited by general equitable
principles, bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally.
4.14 AUTHORIZATION OF SECURITIES AND PLACEMENT AGENT WARRANTS. The
Securities and the Placement Agent Warrants, when issued and delivered in
accordance with this Agreement, and the
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shares of common stock underlying the Placement Agent Warrants, when issued and
delivered upon exercise of the Placement Agent Warrants shall be validly issued,
fully paid, and nonassessable and shall not be issued in violation of any
preemptive rights of stockholders.
4.15 EXEMPTION FROM REGISTRATION. Assuming (i) the accuracy of the
information provided by the respective Subscribers in the Subscription
Documents, and (ii) that each Placement Agent shall comply in all respects with
the provisions of Rule 506 Regulation D promulgated under the Securities Act,
the offer and sale of the Securities and Placement Agent Warrants pursuant to
the terms of this Agreement shall be exempt from the registration requirements
of the Securities Act and the rules and regulations promulgated thereunder. The
Company is not disqualified from the exemption under Regulation D by virtue of
the disqualifications contained in Rule 507 promulgated thereunder.
4.16 BROKERS. Neither the Company nor any of its officers, directors,
employees or stockholders has employed any broker or finder in connection with
the transactions contemplated by this Agreement other than the Placement Agent.
4.17 TITLE TO SECURITIES AND PLACEMENT AGENT WARRANTS. When the
certificates representing the Securities and the Placement Agent Warrants have
been duly delivered and payment shall have been made therefor by the Holders
and/or the Placement Agent as the case may be (i) the Subscribers shall receive
good title to the Securities, and the Placement Agent shall receive good title
to the Placement Agent Warrants, (and the underlying common stock upon exercise
of the Investor Warrants or Placement Agent Warrants). All such title shall be
free and clear of all liens, security interests, pledges, charges, encumbrances,
stockholders' agreement, and voting trusts (with the exception of claims arising
or through the acts of the Holders and except as arising from applicable federal
and securities laws), and the Company shall have paid all taxes, if any, in
respect of the original issuance thereof. .
4.18 RIGHTS OF FIRST REFUSAL. Except for rights granted to the
Placement Agent pursuant to Section 7.3 hereof, no other person, firm or other
business entity is a party to any agreement, contract or understanding, written
or oral entitling such party to a right of first refusal with respect to
securities to be issued by the Company.
4.19 INTELLECTUAL PROPERTY. The Company owns or possesses valid and
binding licenses or other rights to use, whether or not registered, all its
Intellectual Property. The Intellectual Property constitutes all of the
intellectual property necessary to operate the Company's business as presently
conducted. Neither the Company nor any Subsidiary has received any notice of any
claims, nor do any of them have any Knowledge of any threatened claims, and none
of them know of any facts which would form the basis of any claim, asserted by
any person to the effect that the sale or use of any product or process now used
or offered by the Company or any Subsidiary or proposed to be used or offered by
the Company or any Subsidiary infringes upon the use of any such patents,
trademarks, copyrights, technology, know-how, processes or other intellectual
property of another person. To the best of the Company's Knowledge, no person is
infringing upon the Intellectual Property. The Company has taken reasonable
security measures to protect the secrecy, confidentiality and value of the
Intellectual Property. No person, other than the Company, owns or has any
proprietary, financial or other interest, direct or indirect, in whole or in
part, in any Intellectual Property.
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4.20 FOREIGN CORRUPT PRACTICES. To the best of the Company's Knowledge,
neither the Company nor any Subsidiary nor to the Knowledge of any of their
respective directors, officers, agents, employees or other persons acting on
their behalf, in the course of their actions for, or on behalf of the Company or
any Subsidiary, used any corporate funds, which would have a Material Adverse
Effect for any unlawful contribution, gift, entertainment or other unlawful
expenses relating to political activity; made any direct or indirect unlawful
payment to any foreign or domestic government official or employee from
corporate funds; violated or is in violation of any provision of the Foreign
Corrupt Practices Act of 1977, as amended; or made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to any foreign or domestic
government official or employee.
4.21 FILINGS WITH THE SEC. The Company has made all filings with the
SEC that it has been required to make under the Securities Act and the Exchange
Act. All documents required to be filed as exhibits to the SEC Documents have
been so filed, and all material contracts so filed as exhibits are in full force
and effect, except those which have expired in accordance with their terms, and
neither the Company nor any of its subsidiaries is in material default of these
material contracts. Each of the Company's SEC Documents has complied in all
material respects with the Securities Act and the Exchange Act in effect as of
their respective dates of filing. None of the Company's SEC Documents, as of
their respective filing dates, contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading.
5. REPRESENTATIONS AND WARRANTIES OF PLACEMENT AGENT. The Placement
Agent represents, warrants and covenants to the Company that:
5.1 The Placement Agent is a member in good standing of the NASDR., and
is duly registered as a broker-dealer under the Exchange Act, and under the laws
of each state in which we propose to offer the Securities, except where such
registration would not be required by law.
5.2 Each purchaser of Securities will execute the Subscription
Agreement in the form attached as Exhibit B to the Term Sheet. The Placement
Agent will have no reason to believe that the persons executing such Agreement
do not have the qualifications set forth therein.
5.3 This Agreement when accepted and approved will be duly authorized,
executed and delivered by the Placement Agent and is a valid and binding
agreement on its part in accordance with its terms, except as enforceability may
be limited by general equitable principles, bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights generally.
5.4 The consummation of the transactions contemplated by the Term Sheet
related to the offering will not result in any beach of any of the terms or
conditions of or constitute a default under any indenture, agreement or other
instrument to which the Placement Agent is a party, or violate any order
applicable to the Placement Agent of any federal or state regulatory body or
administrative agency having jurisdiction over it or its property.
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5.5 Until the termination of this Agreement, if any event affecting the
Company or the Placement Agent shall occur which, in the opinion of counsel to
the Company, should be set forth in a supplement or amendment to the Term Sheet,
the Placement Agent agrees to distribute each supplement or amendment to the
Term Sheet to each person who has previously received a copy of the Term Sheet
from the Company or the Placement Agent and further agrees to include each
supplement or amendment in all future deliveries of the Term Sheet.
5.6 In recommending to an investor the purchase of the Securities,
the Placement Agent shall:
(a) have reasonable grounds to believe, on the basis of
information obtained from the investor concerning his
investment objectives, other investments, financial situation
and needs, any and other information known by it, that:
(1) the investor is or will be in a financial position
appropriate to enable him to realize to a significant
extent the benefits described in the Term Sheet.
(2) the investor is an accredited investor and able to
sustain the risks inherent in the investment in the
Securities, including loss of investment and lack of
liquidity; and
(3) the investment is otherwise suitable for the
investor; and
(b) maintain in the Placement Agent's files for a period of six
years following the Closing documents disclosing the basis
upon which the determination of suitability was reached as to
each investor.
5.7 The Placement Agent shall not execute any transaction relating to
the Company in a discretionary account without prior written approval of the
transaction by the customer.
5.8 The Placement Agent has reasonable grounds to believe, based on
information made available to it by the Company through the Term Sheet or other
materials, that all material facts are adequately and accurately disclosed and
provide a basis for evaluating the Company.
5.9 Prior to executing a purchase transaction the Placement Agent shall
inform the prospective investor of all pertinent facts relating to the liquidity
and marketability of the Securities during the term of the investment.
6. CLOSING; CONDITIONS OF CLOSING.
6.1 CLOSING. The Closing shall be subject to this Section 6 and shall
take place at such place as the parties shall mutually agree, as soon as
practicable. At the Closing, payment for the Securities issued and sold by the
Company shall be made against delivery of the Securities. In addition, a final
Closing (if applicable) shall occur as soon as practicable following termination
of the Offering.
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6.2 CONDITIONS TO PLACEMENT AGENT'S OBLIGATIONS. The obligations of the
Placement Agent hereunder shall be subject to the representations and warranties
of the Company and each Subsidiary contained herein being true and correct in
all material respects as of the date hereof and as of the Closing Date, to the
performance by the Company of its obligations hereunder and to the following
additional conditions:
6.2.1 NO MATERIAL MISSTATEMENTS. The Placement Agent shall not
have notified the Company that the Blue Sky qualification materials or the
Offering Documents, or any supplement thereto, contains an untrue statement of a
fact which in its opinion is material, or omits to state a fact, which in its
opinion is material and is necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
6.2.2 RECEIPT OF CONFIDENTIALITY AGREEMENTS FROM SUBSCRIBERS. The
Company shall have received from each Subscriber prior to the delivery of the
Offering Documents to any Subscriber, a confidentiality agreement from such
Subscriber in form and substance satisfactory to the Company and its counsel and
which confidentiality agreement shall meet the requirements of Regulation FD
under the Exchange Act.
6.2.3 COMPLIANCE WITH AGREEMENTS. The Company shall have complied
in all material respects with this Agreement and satisfied all conditions on its
part to be performed or satisfied hereunder at or prior to the Closing.
6.2.4 CORPORATE ACTION. The Company shall have taken all necessary
corporate action, including, without limitation, obtaining the approval of the
Company's board of directors, for the execution and delivery of this Agreement,
the performance by the Company of its obligations hereunder and the offering of
the Securities and Placement Agent Warrants.
6.2.5 CERTIFICATES. The Placement Agent shall receive a
certificate of the Company, signed by the President and Chief Financial Officer
thereof, that the representations and warranties contained in Section 4 hereof
are true and accurate in all respects at the Closing with the same effect as
though expressly made at the Closing.
6.2.6 BRING-DOWN CERTIFICATES. If there is more than one Closing,
then at each such Closing there shall be delivered to the Placement Agent
updated certificates as described in Section 6.2.5 above.
6.2.7 EXECUTION OF AGREEMENTS. The Company shall have delivered
duly executed counterparts of the Registration Rights Agreement and the
Placement Agent Warrants.
6.2.8 OPINION OF COUNSEL. On the Closing Date, the Placement Agent
shall receive the opinion of either the Company's general counsel or the
Company's securities counsel, in substantially the form attached hereto as
EXHIBIT 6.2.8.
6.2.9. SUPPORTING DOCUMENTS. On or prior to the Closing Date, the
Placement
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Agent and its counsel shall have been furnished such documents, certificates and
opinions as they may reasonably request for the purpose of enabling them to
review or pass upon the matters referred to in Section 6.2.8, or in order to
evidence the accuracy, completeness or satisfaction of any of the
representations, warranties or conditions herein contained.
6.2.10. NO ADVERSE CHANGES. On and prior to the Closing Date,
there shall have been no transaction, not in the ordinary course of business,
entered into by the Company from the latest date as of which the financial
condition of the Company is set forth in the Offering Documents which is
material to the Company which has not been disclosed to the Placement Agent in
writing; (ii) the Company shall not be in default under any provision of any
instrument relating to any outstanding indebtedness; (iii) no assets of the
Company shall have been pledged or mortgaged as of the date hereof, except as
disclosed in this Agreement or as indicated or contemplated in the Offering
Documents; and (iv) no action, suit or proceeding, at law or in equity, shall
have been pending or threatened against the Company or affecting any of its
respective properties or businesses before or by any court of federal or state
commission, board or other administrative agency wherein an unfavorable
decision, ruling or finding could materially adversely affect the business
operations, prospects, financial condition or income of the Company, except as
set forth in the Offering Documents.
6.3 CONDITIONS TO THE COMPANY'S OBLIGATIONS. The obligations of the
Company hereunder shall be subject to the representations and warranties of the
Placement Agent contained herein being true and correct in all respects as of
the date hereof and as of the Closing Date, to the performance by the Placement
Agent of its obligations hereunder and to the following additional conditions:
6.3.1 DUE QUALIFICATION OR EXEMPTION. The Offering contemplated by
this Agreement and the Placement Agent Warrants shall be exempt from
registration under Section 4(2) of the Securities Act and Rule 506 thereunder
and from registration or qualification under the applicable Blue Sky laws as
provided in Section 7 hereof not later than the Closing, all required filings
shall have been made with the SEC and applicable Blue Sky administrators not
applicable to a private placement.
6.3.2 RECEIPT OF CONFIDENTIALITY AGREEMENTS FROM SUBSCRIBERS. The
Company shall have received from each Subscriber prior to the delivery of the
Offering Documents to any Subscriber, a confidentiality agreement from each
Subscriber in form and substance satisfactory to the Company and its counsel and
which confidentiality agreement shall meet the requirements of Regulation FD
under the Exchange Act.
6.3.3 COMPLIANCE WITH AGREEMENTS. The Placement Agent shall have
complied with all agreements and satisfied all conditions on its part to be
performed or satisfied hereunder at or prior to the Closing.
7. BLUE SKY. Prior to the Closing, a summary Blue Sky survey shall be
prepared by counsel to the Placement Agent for the states listed on SCHEDULE 7
(as it may be supplemented, summarizing the pre-filing and post-filing
requirements of each such state in which the Securities are to be offered and it
is understood that such survey may be based on or rely upon the
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representations and warranties of the Subscribers as to their qualification as
accredited investors.
8. PLACEMENT AGENT COMPENSATION. Upon the Closing, the Company shall
pay to the Placement Agent the following compensation:
8.1 COMMISSIONS. Simultaneous with payment for and delivery of the
Securities, at the Closing as provided in Section 6.1 above, the Company shall
pay the Placement Agent an aggregate commission of 10% percent of the gross cash
proceeds of the subscription for Securities accepted by the Company as of the
Closing.
8.2 EXPENSES. The Company shall pay the actual reasonable legal fees
and expenses of the counsel to the Placement Agent in an aggregate amount not to
exceed (i) if the Offering closes $75,000 or (ii) if the Offering does not
close, $40,000, in each case, upon provision of reasonable evidence of such fees
and expenses.
8.3 BLUE SKY EXPENSES. The Placement Agent's attorneys shall prepare
all forms to be filed with state securities regulators in connection with this
Offering. The Company shall advance the Blue Sky filing fees as incurred and at
the Closing of the Offering, the Company shall pay all related attorneys fees
and expenses of Placement Agent's counsel incurred as in connection with Blue
Sky filings up to a maximum of [$5,000].
8.4 PLACEMENT AGENT WARRANTS. At the Closing of this Offering, the
Company shall grant to the Placement Agent (or their respective designees),
Placement Agent Warrants to purchase a number of shares of Common Stock equal to
10% of the total number of shares of Common Stock into which the Series A
Preferred Stock sold in the Offering is convertible as of the Closing (but not
any of the Investor Warrants). The Placement Agent Warrants shall be exercisable
at a price equal to 100% of the Closing Price.
9. COVENANTS OF THE COMPANY.
9.1 USE OF PROCEEDS. The Company shall not use any of the proceeds from
the Offering to repay any indebtedness to any current executive officers or
directors of the Company.
9.2 EXPENSES OF OFFERING. Whether or not the transactions contemplated
hereunder are consummated, the Company shall be responsible for, and shall pay
all costs and expenses directly incurred by it in connection with the proposed
Offering including, but not limited to, its legal fees, the costs of preparing,
printing or photocopying and binding, filing and distributing the Offering
Documents and all amendments, supplements and exhibits thereto, and the filing
fees in connection with Blue Sky Applications.
9.3 NOTIFICATION. The Company shall notify the Placement Agent
immediately, and in writing (i) when any event shall have occurred during the
period commencing on the date hereof and ending on the later of the Closing or
the Termination Date as a result of which the Offering Documents would include
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading, (ii) whenever it files
any report or other document with the SEC or it receives notice that any person
or entity has filed any Schedule 13D or
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other documents with the SEC relating to the Company, and/or (iii) of the
receipt of any notification with respect to the modification, rescission,
withdrawal, suspension of any exemption from registration or qualification, in
any jurisdiction. The Company shall use its best efforts to prevent the issuance
of any such modification, rescission, withdrawal, or suspension and, if any such
modification, rescission, withdrawal, stop order or suspension is issued and you
so request, to obtain the lifting thereof as promptly as possible.
9.4 BLUE SKY. The Company shall use its best efforts to qualify or
register the shares of common stock contained in the Securities and the
Placement Agent Warrants for offering and sale under, or establish an exemption
from such qualification or registration under, the securities or Blue Sky laws
of such jurisdictions as the Placement Agent may reasonably request; PROVIDED,
HOWEVER that the Company shall not be obligated to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in which it is not
so qualified. The Company shall not consummate any sale of Securities or the
Placement Agent Warrants in any jurisdiction in which it is not so qualified or
in any manner in which such sale may not be lawfully made. The Company shall
file such consents to service of process or other documents as may be requested
by the Placement Agent and which, in the opinion of the Placement Agent or
counsel to the Placement Agent, are necessary or advisable in order to effect
such registration or qualification and continue the same in effect for so long a
period as may be necessary to complete the distribution, PROVIDED, HOWEVER, in
each jurisdiction where the Securities or Placement Agent Warrants shall have
been registered or qualified as above, the Company shall make and file such
statements and reports as are or may be required under the laws of such
jurisdiction to continue such qualification in effect for so long a period as
the Offering in such jurisdiction is in effect.
9.5 FORM D FILING. The Company shall file five copies of a Notice of
Sales of Securities on Form D with the SEC prior to the Closing and shall file
promptly such amendments thereto on Form D as shall become necessary. It shall
also comply with any filing requirement imposed by the laws of any state or
jurisdiction in which offers and sales of Securities or the Placement Agent
Warrants are made prior to the Closing. The Company shall furnish the Placement
Agent with copies of all such filings.
9.6 REPORTS. The Company shall furnish to the Placement Agent, during
the period ending three YEARS from the Termination Date, that number of copies
of such of the following documents as the Placement Agent may reasonably
request: (i) as soon as they are available, a copy of all communications sent to
holders of the Company's securities other than reports filed with SEC; and (ii)
such other information of a public nature as a Placement Agent may from time to
time reasonably request.
9.7 NO ADDITIONAL OFFERS OR SALES. Until the termination of the
Offering, the Company shall not without the prior written consent of the
Placement Agent, offer, issue, sell, contract to sell, grant any option for the
sale of, or otherwise dispose of, directly or indirectly, any shares of common
stock, preferred stock or warrants (or any security or other instrument which by
its terms is convertible into, exercisable for, or exchangeable for shares of
common stock) except as permitted or authorized by this Agreement, except for
shares of common stock issuable upon exercise of a previously outstanding
warrant or option or the granting of options under the Stock Option Plan.
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9.8 TRANSFER OF THE PLACEMENT AGENT WARRANTS. The Company shall upon
the Closing or promptly following the Termination Date, cancel the Placement
Agent Warrants upon presentment and transfer them to persons designated by the
Placement Agent as instructed by the Placement Agent in writing.
10. INDEMNIFICATION.
10.1 The Company agrees to indemnify and hold harmless the Placement
Agent and each Selected Dealer, if any (collectively, referred to as the
Placement Agent in this Section 10.1) and Indemnified Parties against any and
all losses, liabilities, claims, damages and expenses whatsoever, and to
reimburse the Placement Agent for reasonable legal fees and related expenses as
incurred, arising out of the following Covered Claims: (i) any breach or alleged
breach of any representation or warranty of the Company under this Agreement or
the Offering Documents; (ii) any untrue statement or alleged untrue statement of
a material fact contained in the Offering Documents, or under any Blue Sky law
or in any Blue Sky Application; or (iii) the omission or alleged omission
therefrom of a material fact necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading.
10.2 Each Placement Agent agrees to indemnify and hold harmless the
Company and each Indemnified Party of the Company to the same extent as the
indemnity from the Company to such Placement Agent, pursuant to Section 10.1
hereof, but only with respect to (i) any breach or alleged breach of any
representation or warranty of such Placement Agent in this Agreement; or (ii)
any untrue statement or alleged untrue statement or omission or alleged omission
made in reliance upon or in conformity with written information relating to such
Placement Agent offering furnished by such Placement Agent or on its behalf
expressly for use in connection with the Offering Documents or any Blue Sky
Application as each may be amended or supplemented.
10.3 Promptly after receipt by a person entitled to indemnification
pursuant to the foregoing Section 10.1 or 10.2, as applicable, of notice of the
commencement of any action, the Indemnified Party shall, if a claim in respect
thereof is to be or has been made against an Indemnifying Party under Section
10.1 or 10.2, as applicable, promptly notify in writing the Indemnifying Party
of the commencement thereof; but the omission so to notify the Indemnifying
Party shall not relieve it from any liability which it may have to the
Indemnified Party except to the extent the Indemnifying Party is prejudiced by
the delay or failure to notify it. In case any such action is brought against an
Indemnified Party, and it notifies the Indemnifying Party of the commencement
thereof, the Indemnifying Party shall be entitled to participate in, and, to the
extent that it may wish, jointly with any other Indemnifying Party similarly
notified, to assume the defense thereof, subject to the provisions herein
stated, with counsel reasonably satisfactory to the Indemnified Party, and after
notice from the Indemnifying Party to the Indemnified Party of its election so
to assume the defense thereof, the Indemnifying Party shall not be liable to the
Indemnified Party under this Section 10 for any legal or other expenses
subsequently incurred by the Indemnified Party in connection with the defense
thereof other than reasonable costs of investigation. The 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 not be at the expense of the Indemnifying Party if the Indemnifying Party
has assumed the defense of the action with counsel reasonably satisfactory to
the Indemnified Party; provided that the fees and
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expenses of such counsel shall be at the expense of the Indemnifying Party if
(i) the employment of such counsel has been specifically authorized in writing
by the Indemnifying Party, or (ii) the named parties to any such action
(including any impleaded parties) include both the Indemnified Party or parties
and the Indemnifying Party and, in the judgment of counsel for the Indemnified
Party, it is advisable because of conflicts of their respective interests for
the Indemnified Party or parties to be represented by separate counsel, in which
case the Indemnifying Party shall not have the right to assume the defense of
such action on behalf of the Indemnified Party or parties, 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 for the Indemnified Party or parties. No settlement of any action
against an Indemnified Party shall be made without the consent of the
Indemnified Party, which shall not be unreasonably withheld in light of all
factors of importance to the Indemnified Party.
11. CONTRIBUTION.
11.1 To provide for just and equitable contribution, if (i) an
Indemnified Party makes a claim for indemnification pursuant to Section 10 but
it is found in a final judicial determination, not subject to further appeal,
that such indemnification may not be enforced in such case, even though this
Agreement expressly provides indemnification in such case, or (ii) any
Indemnified or Indemnifying Party seeks contribution under the Securities Act,
the Exchange Act or otherwise, then the Indemnifying Party (including for this
purpose any contribution made by or on behalf of any officer, director, employee
or agent for an Indemnifying Party, or any Controlling Person of an Indemnifying
Party), on the one hand, and the Indemnified Party (including for this purpose
any contribution by or on behalf of any other Indemnified Party), on the other
hand, shall contribute to the losses, liabilities, claims, damages, and expenses
whatsoever to which any of them may be subject, in such proportions as are
appropriate to reflect the relative benefits received by the Indemnifying Party,
on the one hand, and the Indemnifying Party, on the other hand; PROVIDED,
HOWEVER, that if applicable law does not permit such allocation, then other
relevant equitable considerations such as the relative fault of an Indemnifying
Party in connection with the facts which resulted in such losses, liabilities,
claims, damages, and expenses shall also be considered. Notwithstanding the
foregoing, in no case shall the Placement Agent, a Selected Dealer of either or
any Controlling Person be responsible for a portion of the contribution
obligation in excess of the compensation received by the Placement Agent or
Selected Dealer pursuant to Section 8 hereof or the Selected Dealer Agreement,
as the case may be. No person liable for a fraudulent misrepresentation shall be
entitled to contribution from any person who is not liable for such fraudulent
misrepresentation.
11.2 For purpose of this Section 11, each Person, if any, who controls
the Placement Agent or a Selected Dealer within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act and each officer, director,
stockholder, employee and agent of the Placement Agent or a Selected Dealer,
shall have the same rights to contribution as the Placement Agent or the
Selected Dealer, and each person, if any who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act
and each officer, director, employee and agent of the Company, shall have the
same rights to contribution as the Company, subject in each case to the
provisions of this Section 11. Notwithstanding, anything in this Section 11 to
the
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contrary, no party shall be liable for contribution with respect to the
settlement of any claim or action effected without its written consent. This
Section 11 is intended to supersede any right to contribution under the
Securities Act, the Exchange Act, or otherwise.
11.3 Notwithstanding any of the other provisions of this Agreement, the
aggregate indemnification or contribution obligations of a Placement Agent for
or on account of any losses, claims, damages, liabilities or actions under
Section 10, this Section 11 or other applicable section of this Agreement, shall
not exceed the amount of cash commissions actually received by the Placement
Agent.
12. TERMINATION.
12.1 This Agreement may be terminated by the Placement Agent at any
time prior to the Termination Date, if (i) the Company sustains a loss that is
material to the Company, whether or not insured, by reason of fire, earthquake,
flood, accident or other calamity, or from any labor dispute or court or
government action, order or decree; (ii) the Company shall fail to meet any of
the closing conditions set forth in this Agreement; (iii) trading in securities
on the New York or American Stock Exchange or the Nasdaq Stock Market has been
suspended or limited; (iv) material governmental restrictions have been imposed
on trading in securities generally (not in force and effect on the date of this
Agreement); (v) a banking moratorium has been declared by federal or New York
state authorities; (vi) an outbreak of major international hostilities or other
national or international calamity has occurred; (vii) any action, proceeding,
investigation or inquiry has been instituted against (or relating to) the
Company (or any subsidiary thereof) or by any federal, state or municipal
commission, board or agency wherein any unfavorable decision would have a
Material Adverse Effect, regardless of whether the possibility thereof shall
have been disclosed in the Offering Documents; or (viii) the passage by the
Congress of the United States or by any state legislative body of any action or
measure, or the adoption of any orders, rules or regulations by any governmental
body or any authoritative accounting institute, or board, or any governmental
executive, which is reasonably likely to have a Material Adverse Effect or
materially affects the marketing of the Securities.
12.2 This Agreement may be terminated by the Company on written notice
to the Placement Agent on or after the Termination Date.
13. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY. Except as the
context otherwise requires, the respective indemnities, agreements,
representations, warranties, and other statements of the Company set forth in or
made pursuant to this Agreement regardless of any investigation made by or on
behalf of the Placement Agent or any Controlling Person thereof, shall survive
delivery of, and payment for, the Securities and the Placement Agent Warrants.
PROVIDED, HOWEVER, no claim or indemnification shall be brought by or on behalf
of the Placement Agent more than two years after the Closing.
14. SEVERABILITY. In the event any parts of this Agreement are found to
be void, the remaining provisions of this Agreement shall nevertheless be
binding with the same effect as though the void parts were deleted.
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15. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. The execution of this
Agreement may be by actual or facsimile signature.
16. ARBITRATION. Any controversy, dispute or claim arising out of or
relating to this Agreement, or its interpretation, application, implementation,
breach or enforcement which the Parties are unable to resolve by mutual
agreement, shall be settled by submission by either party of the controversy,
claim or dispute to binding arbitration in New York County, New York (unless the
Parties agree in writing to a different location), in accordance with the rules
of the NASDR then in effect. In any such arbitration proceeding the Parties
agree to provide all discovery deemed necessary by the arbitrators. The decision
and award made by the arbitrator shall be final, binding and conclusive on all
Parties hereto for all purposes, and judgment may be entered thereon in any
court having jurisdiction thereof.
17. BENEFIT. This Agreement shall be binding upon and inure to the
benefit of the Parties hereto and their legal representatives, successors and
assigns.
18. NOTICES AND ADDRESSES. All notices, offers, acceptance and any
other acts under this Agreement (except payment) shall be in writing, and shall
be sufficiently given if delivered to the addresses in person, by Federal
Express or similar receipted delivery, or by facsimile delivery as follows:
the Company: Elite Pharmaceuticals, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇, Chief Executive Officer
with a copy to: Reitler ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
the Placement Agent: Indigo Securities, LLC
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▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & Deutsch LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. Deutsch, Esq.
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or to such other address as either of them, by notice to the other may designate
from time to time. The transmission confirmation receipt from the sender's
facsimile machine shall be evidence of successful facsimile delivery. Time shall
be counted to, or from, as the case may be, the delivery in person or by
mailing.
19. ATTORNEY'S FEES. In the event that there is any controversy or
claim arising out of or relating to this Agreement, or to the interpretation,
breach or enforcement thereof, and any action or proceeding including an
arbitration proceeding is commenced to enforce the provisions of this Agreement,
the prevailing party shall be entitled to an award by the court or arbitrator,
as appropriate, of reasonable attorney's fees, costs and expenses.
20. GOVERNING LAW. This Agreement and any dispute, disagreement, or
issue of construction or interpretation arising hereunder whether relating to
its execution, its validity, the obligations provided herein or performance
shall be governed or interpreted according to the internal laws of the State of
New York without regard to choice of law considerations.
21. ENTIRE AGREEMENT. This Agreement constitutes the entire Agreement
between the Parties and supersedes all prior oral and written agreements between
the Parties hereto with respect to the subject matter hereof. Neither this
Agreement nor any provision hereof may be changed, waived, discharged or
terminated orally, except by a statement in writing signed by the Party or
Parties against which enforcement or the change, waiver discharge or termination
is sought.
22. ADDITIONAL DOCUMENTS. The Parties hereto shall execute such
additional instruments as may be reasonably required by their counsel in order
to carry out the purpose and intent of this Agreement and to fulfill the
obligations of the Parties hereunder.
23. SECTION OR PARAGRAPH HEADINGS. Section headings herein have been
inserted for reference only and shall not be deemed to limit or otherwise
affect, in any matter, or be deemed to interpret in whole or in part any of the
terms or provisions of this Agreement.
[REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the Parties hereto have duly executed this
Agreement that date and year first above written.
Witnesses: ELITE PHARMACEUTICALS, INC.
------------------------ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Chief Executive Officer
------------------------
INDIGO SECURITIES, LLC
------------------------ By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Managing Partner
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EXHIBIT A
FORM OF PLACEMENT AGENT WARRANTS
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