EXHIBIT 1.2
July 27, 2004
▇▇. ▇▇▇ ▇▇▇▇▇▇▇▇
Chief Executive Officer
Ortec International Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Gentlemen:
This letter Agreement (the "Agreement") confirms the engagement of ▇▇▇▇▇▇▇ Hill
Partners ("BHP"), a division of Pali Capital, Inc., and ViewTrade Securities,
Inc. ("ViewTrade") by Ortec International (the "Company") to jointly act as the
Company's exclusive placement agent in connection with the Company's issuance of
common stock and warrants pursuant to the S-2 registration statement initially
filed with the Securities and Exchange Commission on September 22, 2003
("Financing"). Such registration statement and all amendments thereto, whether
such amendments have heretofore been, or will hereafter be, filed are
collectively referred to in this agreement as the "Registration Statement."
This agreement modifies and replaces in whole the agreement relating to the
Financing dated February 4, 2004, between the Company and BHP and any
modification of such February 4, 2004 agreement subsequently entered into
between the Company and BHP.
The Financing shall be for 6,000,000 shares of the Company's common stock and
3,000,000 five year Class E Warrants, each Warrant entitling the holder to
purchase one share of the Company's common stock at the exercise price to be set
forth in the pricing amendment to the Registration Statement (the "Pricing
Amendment") to be hereafter filed. The 6,000,000 shares and the 3,000,000 Class
E Warrants will be offered in units, each unit consisting of two detachable
shares and one detachable Class E Warrant, at an offering price to be set forth
in the Pricing Amendment. The offering will be on a best efforts, 2,500,000
units (5,000,000 shares and 2,500,000 Class E Warrants), or none, minimum basis,
so that no units will be sold unless a minimum of 2,500,000 units are sold. The
proceeds from the sale of the units will be held in an escrow account with the
law firm of Jenkens & ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP. The proceeds held in escrow
shall be paid by the escrow agent only upon the joint written instructions
signed by BHP, ViewTrade and the Company, it being understood that unless
2,500,000 units are sold all proceeds from the sale of units will be refunded in
whole to the purchasers of the units.
As compensation for the Financing, BHP and ViewTrade shall be paid an aggregate
cash commission of up to $875,000. However, no commission will be payable by the
Company unless the minimum of 2,500,000 units are sold.
BHP and ViewTrade or their assigns shall be issued Placement Agent Warrants in
an aggregate amount equal to 10% of the units sold (minimum of 2,500,000) in the
Financing. The Placement Agent Warrants shall be exercisable at a price equal to
one hundred twenty five (125%) percent of the purchase price of the units sold
in the Financing (which is currently anticipated to range
from $4-$8) and shall expire five years from the issuance date. The shares
issuable upon the exercise of the (a) Placement Agent Warrants and of the (b)
Class E Warrants issuable upon exercise of the Placement Agent Warrants, shall
have standard piggyback registration rights after the closing of the Financing,
a cashless exercise provision, shall be non-redeemable and shall become
exercisable six months and one day after the closing of the Financing.
Notice given pursuant to any of the provisions of this Agreement shall be given
in writing and shall be sent by recognized overnight courier or personally
delivered (a) if to the Company, to the Company's office at ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇. Attention: ▇▇▇ ▇▇▇▇▇▇▇▇, Chief Executive Officer; and (b) if to
BHP, to its office at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇. Attention: ▇▇▇▇▇
▇▇▇▇▇▇▇, Managing Director, and if to ViewTrade, to its office at ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ St. Clair.
BHP's and ViewTrade's engagement related to the Financing hereunder shall expire
upon the earlier of the completion of the Financing or ninety (90) days from the
effective date of the Registration Statement, which date may be extended in
thirty day intervals upon written agreement of the Company, BHP and ViewTrade.
BHP is a division of Pali Capital Inc., a European American Investment Group
Company. This letter Agreement shall remain in full force and effect as to BHP
and the Company in the event that BHP becomes an independent entity. In
connection with this engagement, BHP is acting as an independent contractor with
duties owing solely to the Company.
This Agreement shall be governed by and construed in accordance with the laws of
the State of New York without regard to conflicts of law principles thereof.
This Agreement may not be amended or modified except in writing signed by each
of the parties hereto.
This letter and the indemnification agreement contain the entire agreement of
the parties with respect to the Financing. The invalidity or unenforceability of
any provision of this letter Agreement shall not affect the validity or
enforceability of any other provisions of this Agreement or the indemnification
agreement.
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We are delighted to accept this engagement and look forward to working with you
on this assignment. Please confirm that the foregoing is in accordance with your
understanding by signing and returning to us the enclosed duplicate of this
Agreement.
Very truly yours,
▇▇▇▇▇▇▇ ▇▇▇▇ Partners
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Managing Director
ViewTrade Securities, Inc.
By: /s/ ▇▇▇▇▇ St. Claire
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Name: ▇▇▇▇▇ St. ▇▇▇▇▇▇
Title: Chief Executive Officer
Accepted and Agreed to as of the date first written above:
Ortec International, Inc.
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice Chairman and Chief Executive Officer