TRANSAX INTERNATIONAL, LTD.
PLACEMENT AGENT AGREEMENT
Dated as of: October 25, 2004
Monitor Capital, Inc.
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Ladies and Gentlemen:
The undersigned, Transax International, Ltd., a Colorado corporation (the
"Company"), hereby agrees with Monitor Capital, Inc. (the "Placement Agent")
and Cornell Capital Partners, LP, a Delaware Limited Partnership (the
"Investor"), as follows:
1. Offering. The Company hereby engages the Placement Agent to act as
its exclusive placement agent in connection with the Standby Equity
Distribution Agreement dated the date hereof (the "Standby Equity Distribution
Agreement"), pursuant to which the Company shall issue and sell to the
Investor, from time to time, and the Investor shall purchase from the Company
(the "Offering") up to Five Million U.S. Dollars ($5,000,000) of the
Company's common stock (the "Commitment Amount"), par value US$0.00001 per
share (the "Common Stock"), at price per share equal to the Purchase Price, as
that term is defined in the Standby Equity Distribution Agreement. The
Placement Agent services shall consist of reviewing the terms of the Standby
Equity Distribution Agreement and advising the Company with respect to those
terms.
All capitalized terms used herein and not otherwise defined herein shall
have the same meaning ascribed to them as in the Standby Equity Distribution
Agreement. The Investor will be granted certain registration rights with
respect to the Common Stock as more fully set forth in the Registration Rights
Agreement between the Company and the Investor dated the date hereof (the
"Registration Rights Agreement"). The documents to be executed and delivered
in connection with the Offering, including, but not limited, to the Company's
latest Quarterly Report on Form 10-QSB as filed with the United States
Securities and Exchange Commission, this Agreement, the Standby Equity
Distribution Agreement, the Registration Rights Agreement, and the Escrow
Agreement dated the date hereof (the "Escrow Agreement"), are referred to
sometimes hereinafter collectively as the "Offering Materials." The Company's
Common Stock purchased by the Investor hereunder or to be issued in connection
with the conversion of any debentures are sometimes referred to hereinafter as
the "Securities." The Placement Agent shall not be obligated to sell any
Securities.
2. Compensation.
A. Upon the execution of this Agreement, the Company shall issue to
the Placement Agent or its designee shares of the Company's Common Stock in an
amount equal to Ten Thousand U.S. Dollars (US$10,000) divided by the volume
weighted average price of the Company's Common Stock, as quoted by Bloomberg,
LP, on the date hereof (the "Placement Agent's Shares"). The Placement Agent
shall be entitled to "piggy-back" registration rights, which shall be triggered
upon registration of any shares of Common Stock by the Investor with respect to
the Placement Agent's Shares pursuant to the Registration Rights Agreement
dated the date hereof.
3. Representations, Warranties and Covenants of the Placement Agent.
A. The Placement Agent represents, warrants and covenants as
follows:
(i) The Placement Agent has the necessary power to
enter into this Agreement and to consummate the transactions contemplated
hereby.
(ii) The execution and delivery by the Placement Agent
of this Agreement and the consummation of the transactions contemplated herein
will not result in any violation of, or be in conflict with, or constitute a
default under, any agreement or instrument to which the Placement Agent is a
party or by which the Placement Agent or its properties are bound, or any
judgment, decree, order or, to the Placement Agent's knowledge, any statute,
rule or regulation applicable to the Placement Agent. This Agreement when
executed and delivered by the Placement Agent, will constitute the legal, valid
and binding obligations of the Placement Agent, enforceable in accordance with
their respective terms, except to the extent that (a) the enforceability hereof
or thereof may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws from time to time in effect and affecting the rights of
creditors generally, (b) the enforceability hereof or thereof is subject to
general principles of equity, or (c) the indemnification provisions hereof or
thereof may be held to be in violation of public policy.
(iii) Upon receipt and execution of this Agreement, the
Placement Agent will promptly forward copies of this Agreement to the Company
or its counsel and the Investor or its counsel.
(iv) The Placement Agent will not intentionally take
any action that it reasonably believes would cause the Offering to violate the
provisions of the Securities Act of 1933, as amended (the "1933 Act"), the
Securities Exchange Act of 1934 (the "1934 Act"), the respective rules and
regulations promulgated thereunder (the "Rules and Regulations") or applicable
"Blue Sky" laws of any state or jurisdiction.
(v) The Placement Agent is a member of the National
Association of Securities Dealers, Inc., and is a broker-dealer registered as
such under the 1934 Act and under the securities laws of the states in which
the Securities will be offered or sold by the Placement Agent unless an
exemption for such state registration is available to the Placement Agent. The
Placement Agent is in material compliance with the rules and regulations
applicable to the Placement Agent generally and applicable to the Placement
Agent's participation in the Offering.
4. Representations and Warranties of the Company.
A. The Company represents and warrants as follows:
(i) The execution, delivery and performance of each
of this Agreement, the Standby Equity Distribution Agreement, the Escrow
Agreement, and the Registration Rights Agreement has been or will be duly and
validly authorized by the Company and is, or with respect to this Agreement,
the Standby Equity Distribution Agreement, the Escrow Agreement, and the
Registration Rights Agreement, will be a valid and binding agreement of the
Company, enforceable in accordance with its respective terms, except to the
extent that (a) the enforceability hereof or thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws from time to
time in effect and affecting the rights of creditors generally, (b) the
enforceability hereof or thereof is subject to general principles of equity or
(c) the indemnification provisions hereof or thereof may be held to be in
violation of public policy. The Securities to be issued pursuant to the
transactions contemplated by this Agreement and the Standby Equity Distribution
Agreement have been duly authorized and, when issued and paid for in accordance
with this Agreement, the Standby Equity Distribution Agreement and the
certificates/instruments representing such Securities, will be valid and
binding obligations of the Company, enforceable in accordance with their
respective terms, except to the extent that (1) the enforceability thereof may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws from time to time in effect and affecting the rights of creditors
generally, and (2) the enforceability thereof is subject to general principles
of equity. All corporate action required to be taken for the authorization,
issuance and sale of the Securities has been duly and validly taken by the
Company.
(ii) The Company has a duly authorized, issued and
outstanding capitalization as set forth herein and in the Standby Equity
Distribution Agreement. The Company is not a party to or bound by any
instrument, agreement or other arrangement providing for it to issue any
capital stock, rights, warrants, options or other securities, except for this
Agreement, the agreements described herein and as described in the Standby
Equity Distribution Agreement, dated the date hereof and the agreements
described therein. All issued and outstanding securities of the Company, have
been duly authorized and validly issued and are fully paid and non-assessable;
the holders thereof have no rights of rescission or preemptive rights with
respect thereto and are not subject to personal liability solely by reason of
being security holders; and none of such securities were issued in violation of
the preemptive rights of any holders of any security of the Company.
(iii) The Common Stock to be issued in accordance with
this Agreement and the Standby Equity Distribution Agreement has been duly
authorized and, when issued and paid for in accordance with this Agreement, the
Standby Equity Distribution Agreement and the Compensation Debenture, the
certificates/instruments representing such Common Stock will be validly issued,
fully-paid and non-assessable; the holders thereof will not be subject to
personal liability solely by reason of being such holders; such Securities are
not and will not be subject to the preemptive rights of any holder of any
security of the Company.
(iv) The Company has good and marketable title to, or
valid and enforceable leasehold estates in, all items of real and personal
property necessary to conduct its business (including, without limitation, any
real or personal property stated in the Offering Materials to be owned or
leased by the Company), free and clear of all liens, encumbrances, claims,
security interests and defects of any material nature whatsoever, other than
those set forth in the Offering Materials and liens for taxes not yet due and
payable.
(v) There is no litigation or governmental proceeding
pending or, to the best of the Company's knowledge, threatened against, or
involving the properties or business of the Company, except as set forth in the
Offering Materials.
(vi) The Company has been duly organized and is
validly existing as a corporation in good standing under the laws of the State
of Colorado. Except as set forth in the Offering Materials, the Company does
not own or control, directly or indirectly, an interest in any other
corporation, partnership, trust, joint venture or other business entity. The
Company is duly qualified or licensed and in good standing as a foreign
corporation in each jurisdiction in which the character of its operations
requires such qualification or licensing and where failure to so qualify would
have a material adverse effect on the Company. The Company has all requisite
corporate power and authority, and all material and necessary authorizations,
approvals, orders, licenses, certificates and permits of and from all
governmental regulatory officials and bodies (domestic and foreign) to conduct
its businesses (and proposed business) as described in the Offering Materials.
Any disclosures in the Offering Materials concerning the effects of foreign,
federal, state and local regulation on the Company's businesses as currently
conducted and as contemplated are correct in all material respects and do not
omit to state a material fact. The Company has all corporate power and
authority to enter into this Agreement, the Standby Equity Distribution
Agreement, the Registration Rights Agreement, and the Escrow Agreement, to
carry out the provisions and conditions hereof and thereof, and all consents,
authorizations, approvals and orders required in connection herewith and
therewith have been obtained. No consent, authorization or order of, and no
filing with, any court, government agency or other body is required by the
Company for the issuance of the Securities or execution and delivery of the
Offering Materials except for applicable federal and state securities laws.
The Company, since its inception, has not incurred any liability arising under
or as a result of the application of any of the provisions of the 1933 Act, the
1934 Act or the Rules and Regulations.
(vii) There has been no material adverse change in the
condition or prospects of the Company, financial or otherwise, from the latest
dates as of which such condition or prospects, respectively, are set forth in
the Offering Materials, and the outstanding debt, the property and the business
of the Company conform in all material respects to the descriptions thereof
contained in the Offering Materials.
(viii)Except as set forth in the Offering Materials,
the Company is not in breach of, or in default under, any term or provision of
any material indenture, mortgage, deed of trust, lease, note, loan or Standby
Equity Distribution Agreement or any other material agreement or instrument
evidencing an obligation for borrowed money, or any other material agreement or
instrument to which it is a party or by which it or any of its properties may
be bound or affected. The Company is not in violation of any provision of its
charter or by-laws or in violation of any franchise, license, permit, judgment,
decree or order, or in violation of any material statute, rule or regulation.
Neither the execution and delivery of the Offering Materials nor the issuance
and sale or delivery of the Securities, nor the consummation of any of the
transactions contemplated in the Offering Materials 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 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
pursuant to the terms of any indenture, mortgage, deed of trust, note, loan or
any other agreement or instrument evidencing an obligation for borrowed money,
or any other agreement or instrument to which the Company may be bound or to
which any of the property or assets of the Company is subject except (a) where
such default, lien, charge or encumbrance would not have a material adverse
effect on the Company and (b) as described in the Offering Materials; nor will
such action result in any violation of the provisions of the charter or the by-
laws of the Company or, assuming the due performance by the Placement Agent of
its obligations hereunder, any material statute or any material order, rule or
regulation applicable to the Company of any court or of any foreign, federal,
state or other regulatory authority or other government body having
jurisdiction over the Company.
(ix) Subsequent to the dates as of which information
is given in the Offering Materials, and except as may otherwise be indicated or
contemplated herein or therein and the securities offered pursuant to the
Securities Purchase Agreement dated the date hereof, the Company has not (a)
issued any securities or incurred any liability or obligation, direct or
contingent, for borrowed money, or (b) entered into any transaction other than
in the ordinary course of business, or (c) declared or paid any dividend or
made any other distribution on or in respect of its capital stock. Except as
described in the Offering Materials, the Company has no outstanding obligations
to any officer or director of the Company.
(x) There are no claims for services in the nature of
a finder's or origination fee with respect to the sale of the Common Stock or
any other arrangements, agreements or understandings that may affect the
Placement Agent's compensation, as determined by the National Association of
Securities Dealers, Inc.
(xi) The Company owns or possesses, free and clear of
all liens or encumbrances and rights thereto or therein by third parties, the
requisite licenses or other rights to use all trademarks, service marks,
copyrights, service names, trade names, patents, patent applications and
licenses necessary to conduct its business (including, without limitation, any
such licenses or rights described in the Offering Materials as being owned or
possessed by the Company) and, except as set forth in the Offering Materials,
there is no claim or action by any person pertaining to, or proceeding, pending
or threatened, which challenges the exclusive rights of the Company with
respect to any trademarks, service marks, copyrights, service names, trade
names, patents, patent applications and licenses used in the conduct of the
Company's businesses (including, without limitation, any such licenses or
rights described in the Offering Materials as being owned or possessed by the
Company) except any claim or action that would not have a material adverse
effect on the Company; the Company's current products, services or processes do
not infringe or will not infringe on the patents currently held by any third
party.
(xii) Except as described in the Offering Materials,
the Company is not under any obligation to pay royalties or fees of any kind
whatsoever to any third party with respect to any trademarks, service marks,
copyrights, service names, trade names, patents, patent applications, licenses
or technology it has developed, uses, employs or intends to use or employ,
other than to their respective licensors.
(xiii)Subject to the performance by the Placement Agent
of its obligations hereunder the offer and sale of the Securities complies, and
will continue to comply, in all material respects with the requirements of Rule
506 of Regulation D promulgated by the SEC pursuant to the 1933 Act and any
other applicable federal and state laws, rules, regulations and executive
orders. Neither the Offering Materials nor any amendment or supplement thereto
nor any documents prepared by the Company in connection with the Offering will
contain any untrue statement of a material fact or omit to state any 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. All
statements of material facts in the Offering Materials are true and correct as
of the date of the Offering Materials.
(xiv) All material taxes which are due and payable from
the Company have been paid in full or adequate provision has been made for such
taxes on the books of the Company, except for those taxes disputed in good
faith by the Company
(xv) None of the Company nor any of its officers,
directors, employees or agents, nor any other person acting on behalf of the
Company, has, directly or indirectly, given or agreed to give any money, gift
or similar benefit (other than legal price concessions to customers in the
ordinary course of business) to any customer, supplier, employee or agent of a
customer or supplier, or official or employee of any governmental agency or
instrumentality of any government (domestic or foreign) or any political party
or candidate for office (domestic or foreign) or other person who is or may be
in a position to help or hinder the business of the Company (or assist it in
connection with any actual or proposed transaction) which (A) might subject the
Company to any damage or penalty in any civil, criminal or governmental
litigation or proceeding, or (B) if not given in the past, might have had a
materially adverse effect on the assets, business or operations of the Company
as reflected in any of the financial statements contained in the Offering
Materials, or (C) if not continued in the future, might adversely affect the
assets, business, operations or prospects of the Company in the future.
5. Representations, Warranties and Covenants of the Investor.
A. The Investor represents, warrants and covenants as follows:
(i) The Investor has the necessary power to enter
into this Agreement and to consummate the transactions contemplated hereby.
(ii) The execution and delivery by the Investor of
this Agreement and the consummation of the transactions contemplated herein
will not result in any violation of, or be in conflict with, or constitute a
default under, any agreement or instrument to which the Investor is a party or
by which the Investor or its properties are bound, or any judgment, decree,
order or, to the Investor's knowledge, any statute, rule or regulation
applicable to the Investor. This Agreement when executed and delivered by the
Investor, will constitute the legal, valid and binding obligations of the
Investor, enforceable in accordance with their respective terms, except to the
extent that (a) the enforceability hereof or thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws from time to
time in effect and affecting the rights of creditors generally, (b) the
enforceability hereof or thereof is subject to general principles of equity, or
(c) the indemnification provisions hereof or thereof may be held to be in
violation of public policy.
(iii) The Investor will promptly forward copies of any
and all due diligence questionnaires compiled by the Investor to the Placement
Agent.
(iv) The Investor is an Accredited Investor (as
defined under the 1933 Act).
(v) The Investor is acquiring the Securities for the
Inventor's own account as principal, not as a nominee or agent, for investment
purposes only, and not with a view to, or for, resale, distribution or
fractionalization thereof in whole or in part and no other person has a direct
or indirect beneficial interest in such Securities. Further, the Investor does
not have any contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant participations to such person or to any third person,
with respect to any of the Securities.
(vi) The Investor acknowledges the Investor's
understanding that the offering and sale of the Securities is intended to be
exempt from registration under the 1933 Act by virtue of Section 3(b) of the
1933 Act and the provisions of Regulation D promulgated thereunder ("Regulation
D"). In furtherance thereof, the Investor represents and warrants as follows:
(a)The Investor has the financial ability
to bear the economic risk of the Investor's investment, has adequate means for
providing for the Inventor's current needs and personal contingencies and has
no need for liquidity with respect to the Investor's investment in the Company;
and
(b)The Investor has such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of the prospective investment. The Inventor also represents
it has not been organized for the purpose of acquiring the Securities.
(vii) The Investor has been given the opportunity for a
reasonable time prior to the date hereof to ask questions of, and receive
answers from, the Company or its representatives concerning the terms and
conditions of the Offering, and other matters pertaining to this investment,
and has been given the opportunity for a reasonable time prior to the date
hereof to obtain such additional information in connection with the Company in
order for the Investor to evaluate the merits and risks of purchase of the
Securities, to the extent the Company possesses such information or can acquire
it without unreasonable effort or expense. The Investor is not relying on the
Placement Agent or any of its affiliates with respect to the accuracy or
completeness of the Offering Materials or for any economic considerations
involved in this investment.
6. Certain Covenants and Agreements of the Company.
The Company covenants and agrees at its expense and without any expense
to the Placement Agent as follows:
A. To advise the Placement Agent and the Investor of any material
adverse change in the Company's financial condition, prospects or business or
of any development materially affecting the Company or rendering untrue or
misleading any material statement in the Offering Materials occurring at any
time as soon as the Company is either informed or becomes aware thereof.
B. To use its commercially reasonable efforts to cause the Common
Stock issuable in connection with the Standby Equity Distribution Agreement to
be qualified or registered for sale on terms consistent with those stated in
the Registration Rights Agreement and under the securities laws of such
jurisdictions as the Placement Agent and the Investor shall reasonably request.
Qualification, registration and exemption charges and fees shall be at the sole
cost and expense of the Company.
C. Upon written request, to provide and continue to provide the
Placement Agent and the Investor copies of all quarterly financial statements
and audited annual financial statements prepared by or on behalf of the
Company, other reports prepared by or on behalf of the Company for public
disclosure and all documents delivered to the Company's stockholders.
D. To deliver, during the registration period of the Standby Equity
Distribution Agreement, to the Investor upon the Investor's request, within
forty five (45) days, a statement of its income for each such quarterly period,
and its balance sheet and a statement of changes in stockholders' equity as of
the end of such quarterly period, all in reasonable detail, certified by its
principal financial or accounting officer; (ii) within ninety (90) days after
the close of each fiscal year, its balance sheet as of the close of such fiscal
year, together with a statement of income, a statement of changes in
stockholders' equity and a statement of cash flow for such fiscal year, such
balance sheet, statement of income, statement of changes in stockholders'
equity and statement of cash flow to be in reasonable detail and accompanied by
a copy of the certificate or report thereon of independent auditors if audited
financial statements are prepared; and (iii) a copy of all documents, reports
and information furnished to its stockholders at the time that such documents,
reports and information are furnished to its stockholders.
E. To comply with the terms of the Offering Materials.
F. To ensure that any transactions between or among the Company, or
any of its officers, directors and affiliates be on terms and conditions that
are no less favorable to the Company, than the terms and conditions that would
be available in an "arm's length" transaction with an independent third party.
7. Indemnification and Limitation of Liability.
A. The Company hereby agrees that it will indemnify and hold the
Placement Agent and each officer, director, shareholder, employee or
representative of the Placement Agent and each person controlling, controlled
by or under common control with the Placement Agent within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act or the SEC's Rules and
Regulations promulgated thereunder (the "Rules and Regulations"), harmless from
and against any and all loss, claim, damage, liability, cost or expense
whatsoever (including, but not limited to, any and all reasonable legal fees
and other expenses and disbursements incurred in connection with investigating,
preparing to defend or defending any action, suit or proceeding, including any
inquiry or investigation, commenced or threatened, or any claim whatsoever or
in appearing or preparing for appearance as a witness in any action, suit or
proceeding, including any inquiry, investigation or pretrial proceeding such as
a deposition) to which the Placement Agent or such indemnified person of the
Placement Agent may become subject under the 1933 Act, the 1934 Act, the Rules
and Regulations, or any other federal or state law or regulation, common law or
otherwise, arising out of or based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in (a) Section 4 of this
Agreement, (b) the Offering Materials (except those written statements relating
to the Placement Agent given by the Placement Agent for inclusion therein), (c)
any application or other document or written communication executed by the
Company or based upon written information furnished by the Company filed in any
jurisdiction in order to qualify the Common Stock under the securities laws
thereof, or any state securities commission or agency; (ii) the omission or
alleged omission from documents described in clauses (a), (b) or (c) above of a
material fact required to be stated therein or necessary to make the statements
therein not misleading; or (iii) the breach of any representation, warranty,
covenant or agreement made by the Company in this Agreement. The Company
further agrees that upon demand by an indemnified person, at any time or from
time to time, it will promptly reimburse such indemnified person for any loss,
claim, damage, liability, cost or expense actually and reasonably paid by the
indemnified person as to which the Company has indemnified such person pursuant
hereto. Notwithstanding the foregoing provisions of this Paragraph 7(A), any
such payment or reimbursement by the Company of fees, expenses or disbursements
incurred by an indemnified person in any proceeding in which a final judgment
by a court of competent jurisdiction (after all appeals or the expiration of
time to appeal) is entered against the Placement Agent or such indemnified
person based upon specific finding of fact that the Placement Agent or such
indemnified person's gross negligence or willful misfeasance will be promptly
repaid to the Company.
B. The Placement Agent hereby agrees that it will indemnify and
hold the Company and each officer, director, shareholder, employee or
representative of the Company, and each person controlling, controlled by or
under common control with the Company within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act or the Rules and Regulations, harmless
from and against any and all loss, claim, damage, liability, cost or expense
whatsoever (including, but not limited to, any and all reasonable legal fees
and other expenses and disbursements incurred in connection with investigating,
preparing to defend or defending any action, suit or proceeding, including any
inquiry or investigation, commenced or threatened, or any claim whatsoever or
in appearing or preparing for appearance as a witness in any action, suit or
proceeding, including any inquiry, investigation or pretrial proceeding such as
a deposition) to which the Company or such indemnified person of the Company
may become subject under the 1933 Act, the 1934 Act, the Rules and Regulations,
or any other federal or state law or regulation, common law or otherwise,
arising out of or based upon (i) the material breach of any representation,
warranty, covenant or agreement made by the Placement Agent in this Agreement,
or (ii) any false or misleading information provided to the Company in writing
by one of the Placement Agent's indemnified persons specifically for inclusion
in the Offering Materials.
C. The Investor hereby agrees that it will indemnify and hold the
Placement Agent and each officer, director, shareholder, employee or
representative of the Placement Agent, and each person controlling, controlled
by or under common control with the Placement Agent within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act or the Rules and
Regulations, harmless from and against any and all loss, claim, damage,
liability, cost or expense whatsoever (including, but not limited to, any and
all reasonable legal fees and other expenses and disbursements incurred in
connection with investigating, preparing to defend or defending any action,
suit or proceeding, including any inquiry or investigation, commenced or
threatened, or any claim whatsoever or in appearing or preparing for appearance
as a witness in any action, suit or proceeding, including any inquiry,
investigation or pretrial proceeding such as a deposition) to which the
Placement Agent or such indemnified person of the Placement Agent may become
subject under the 1933 Act, the 1934 Act, the Rules and Regulations, or any
other federal or state law or regulation, common law or otherwise, arising out
of or based upon (i) the conduct of the Investor or its officers, employees or
representatives in its acting as the Investor for the Offering, (ii) the
material breach of any representation, warranty, covenant or agreement made by
the Investor in the Offering Materials, or (iii) any false or misleading
information provided to the Placement Agent by one of the Investor's
indemnified persons.
D. The Placement Agent hereby agrees that it will indemnify and
hold the Investor and each officer, director, shareholder, employee or
representative of the Investor, and each person controlling, controlled by or
under common control with the Investor within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act or the Rules and Regulations, harmless
from and against any and all loss, claim, damage, liability, cost or expense
whatsoever (including, but not limited to, any and all reasonable legal fees
and other expenses and disbursements incurred in connection with investigating,
preparing to defend or defending any action, suit or proceeding, including any
inquiry or investigation, commenced or threatened, or any claim whatsoever or
in appearing or preparing for appearance as a witness in any action, suit or
proceeding, including any inquiry, investigation or pretrial proceeding such as
a deposition) to which the Investor or such indemnified person of the Investor
may become subject under the 1933 Act, the 1934 Act, the Rules and Regulations,
or any other federal or state law or regulation, common law or otherwise,
arising out of or based upon the material breach of any representation,
warranty, covenant or agreement made by the Placement Agent in this Agreement.
E. Promptly after receipt by an indemnified party of notice of
commencement of any action covered by Section 7(A), (B), (C) or (D), the party
to be indemnified shall, within five (5) business days, notify the indemnifying
party of the commencement thereof; the omission by one (1) indemnified party to
so notify the indemnifying party shall not relieve the indemnifying party of
its obligation to indemnify any other indemnified party that has given such
notice and shall not relieve the indemnifying party of any liability outside of
this indemnification if not materially prejudiced thereby. In the event that
any action is brought against the indemnified party, the indemnifying party
will be entitled to participate therein and, to the extent it may desire, to
assume and control the defense thereof with counsel chosen by it which is
reasonably acceptable to the indemnified party. After notice from the
indemnifying party to such indemnified party of its election to so assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party under such Section 7(A), (B), (C), or (D) for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof, but the indemnified party may, at its own expense, participate in such
defense by counsel chosen by it, without, however, impairing the indemnifying
party's control of the defense. Subject to the proviso of this sentence and
notwithstanding any other statement to the contrary contained herein, the
indemnified party or parties shall have the right to choose its or their own
counsel and control the defense of any action, all at the expense of the
indemnifying party if (i) the employment of such counsel shall have been
authorized in writing by the indemnifying party in connection with the defense
of such action at the expense of the indemnifying party, or (ii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
such indemnified party to have charge of the defense of such action within a
reasonable time after notice of commencement of the action, or (iii) such
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from or additional to
those available to one or all of the indemnifying parties (in which case the
indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
such fees and expenses of one additional counsel shall be borne by the
indemnifying party; provided, however, that the indemnifying party shall not,
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 circumstance, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys at any time for all such indemnified
parties. No settlement of any action or proceeding against an indemnified
party shall be made without the consent of the indemnifying party.
F. In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in Section 7(A) or 7(B)
is due in accordance with its terms but is for any reason held by a court to be
unavailable on grounds of policy or otherwise, the Company and the Placement
Agent shall contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with the
investigation or defense of same) which the other may incur in such proportion
so that the Placement Agent shall be responsible for such percent of the
aggregate of such losses, claims, damages and liabilities as shall equal the
percentage of the gross proceeds paid to the Placement Agent and the Company
shall be responsible for the balance; provided, however, that no person guilty
of fraudulent misrepresentation within the meaning of Section 11(f) of the 1933
Act shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. For purposes of this Section 7(F), any
person controlling, controlled by or under common control with the Placement
Agent, or any partner, director, officer, employee, representative or any agent
of any thereof, shall have the same rights to contribution as the Placement
Agent and each person controlling, controlled by or under common control with
the Company within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act and each officer of the Company and each director of the Company
shall have the same rights to contribution as the Company. Any party entitled
to contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against the other party under this Section 7(D),
notify such party from whom contribution may be sought, but the omission to so
notify such party shall not relieve the party from whom contribution may be
sought from any obligation they may have hereunder or otherwise if the party
from whom contribution may be sought is not materially prejudiced thereby.
G. The indemnity and contribution agreements contained in this
Section 7 shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any indemnified person or any termination
of this Agreement.
H. The Company hereby waives, to the fullest extent permitted by
law, any right to or claim of any punitive, exemplary, incidental, indirect,
special, consequential or other damages (including, without limitation, loss of
profits) against the Placement Agent and each officer, director, shareholder,
employee or representative of the placement agent and each person controlling,
controlled by or under common control with the Placement Agent within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act or the
Rules and Regulations arising out of any cause whatsoever (whether such cause
be based in contract, negligence, strict liability, other tort or otherwise).
Notwithstanding anything to the contrary contained herein, the aggregate
liability of the Placement Agent and each officer, director, shareholder,
employee or representative of the Placement Agent and each person controlling,
controlled by or under common control with the Placement Agent within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act or the
Rules and Regulations shall not exceed the compensation received by the
Placement Agent pursuant to Section 2 hereof. This limitation of liability
shall apply regardless of the cause of action, whether contract, tort
(including, without limitation, negligence) or breach of statute or any other
legal or equitable obligation.
8. Payment of Expenses.
The Company hereby agrees to bear all of the expenses in connection with
the Offering, including, but not limited to the following: filing fees,
printing and duplicating costs, advertisements, postage and mailing expenses
with respect to the transmission of Offering Materials, registrar and transfer
agent fees, escrow agent fees and expenses, fees of the Company's counsel and
accountants, issue and transfer taxes, if any.
9. Conditions of Closing.
The Closing shall be held at the offices of the Investor or its counsel.
The obligations of the Placement Agent hereunder shall be subject to the
continuing accuracy of the representations and warranties of the Company and
the Investor herein as of the date hereof and as of the Date of Closing (the
"Closing Date") with respect to the Company or the Investor, as the case may
be, as if it had been made on and as of such Closing Date; the accuracy on and
as of the Closing Date of the statements of the officers of the Company made
pursuant to the provisions hereof; and the performance by the Company and the
Investor on and as of the Closing Date of its covenants and obligations
hereunder and to the following further conditions:
A. Upon the effectiveness of a registration statement covering the
Standby Equity Distribution Agreement, the Investor and the Placement Agent
shall receive the opinion of Counsel to the Company, dated as of the date
thereof, which opinion shall be in form and substance reasonably satisfactory
to the Investor, their counsel and the Placement Agent.
B. At or prior to the Closing, the Investor and the Placement Agent
shall have been furnished such documents, certificates and opinions as it may
reasonably require for the purpose of enabling them to review or pass upon the
matters referred to in this Agreement and the Offering Materials, or in order
to evidence the accuracy, completeness or satisfaction of any of the
representations, warranties or conditions herein contained.
C. At and prior to the Closing, (i) there shall have been no
material adverse change nor development involving a prospective change in the
condition or prospects or the business activities, financial or otherwise, of
the Company from the latest dates as of which such condition is set forth in
the Offering Materials; (ii) there shall have been no transaction, not in the
ordinary course of business except the transactions pursuant to the Securities
Purchase Agreement entered into by the Company on the date hereof which has not
been disclosed in the Offering Materials or to the Placement Agent in writing;
(iii) except as set forth in the Offering Materials, the Company shall not be
in default under any provision of any instrument relating to any outstanding
indebtedness for which a waiver or extension has not been otherwise received;
(iv) except as set forth in the Offering Materials, the Company shall not have
issued any securities (other than those to be issued as provided in the
Offering Materials) or declared or paid any dividend or made any distribution
of its capital stock of any class and there shall not have been any change in
the indebtedness (long or short term) or liabilities or obligations of the
Company (contingent or otherwise) and trade payable debt; (v) no material
amount of the assets of the Company shall have been pledged or mortgaged,
except as indicated in the Offering Materials; and (v) no action, suit or
proceeding, at law or in equity, against the Company or affecting any of its
properties or businesses shall be pending or threatened before or by any court
or federal or state commission, board or other administrative agency, domestic
or foreign, wherein an unfavorable decision, ruling or finding could materially
adversely affect the businesses, prospects or financial condition or income of
the Company, except as set forth in the Offering Materials.
D. If requested at Closing the Investor and the Placement Agent
shall receive a certificate of the Company signed by an executive officer and
chief financial officer, dated as of the applicable Closing, to the effect that
the conditions set forth in subparagraph (C) above have been satisfied and
that, as of the applicable closing, the representations and warranties of the
Company set forth herein are true and correct.
E. The Placement Agent shall have no obligation to insure that (x)
any check, note, draft or other means of payment for the Common Stock will be
honored, paid or enforceable against the Investor in accordance with its terms,
or (y) subject to the performance of the Placement Agent's obligations and the
accuracy of the Placement Agent's representations and warranties hereunder, (1)
the Offering is exempt from the registration requirements of the 1933 Act or
any applicable state "Blue Sky" law or (2) the Investor is an Accredited
Investor.
10.Termination.
This Agreement shall be co-terminus with, and terminate upon the same
terms and conditions as those set forth in, the Standby Equity Distribution
Agreement. The rights of the Investor and the obligations of the Company under
the Registration Rights Agreement, and the rights of the Placement Agent and
the obligations of the Company shall survive the termination of this Agreement
unabridged.
11.Miscellaneous.
A. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all which shall be deemed
to be one and the same instrument.
B. Any notice required or permitted to be given hereunder shall be
given in writing and shall be deemed effective when deposited in the United
States mail, postage prepaid, or when received if personally delivered or faxed
(upon confirmation of receipt received by the sending party), addressed as
follows to such other address of which written notice is given to the others):
If to Placement Agent, to:Monitor Capital, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Hsiao-▇▇▇ ▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company, to: Transax International, Ltd.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Investor: Cornell Capital Partners, LP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Portfolio Manager
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to: Cornell Capital Partners, LP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ -▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇, Esq.
Senior Vice-President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
C. This Agreement shall be governed by and construed in all
respects under the laws of the State of New Jersey, without reference to its
conflict of laws rules or principles. Any suit, action, proceeding or
litigation arising out of or relating to this Agreement shall be brought and
prosecuted in such federal or state court or courts located within the State of
New Jersey as provided by law. The parties hereby irrevocably and
unconditionally consent to the jurisdiction of each such court or courts
located within the State of New Jersey and to service of process by registered
or certified mail, return receipt requested, or by any other manner provided by
applicable law, and hereby irrevocably and unconditionally waive any right to
claim that any suit, action, proceeding or litigation so commenced has been
commenced in an inconvenient forum.
D. This Agreement and the other agreements referenced herein
contain the entire understanding between the parties hereto and may not be
modified or amended except by a writing duly signed by the party against whom
enforcement of the modification or amendment is sought.
E. If any provision of this Agreement shall be held to be invalid
or unenforceable, such invalidity or unenforceability shall not affect any
other provision of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
COMPANY:
TRANSAX INTERNATIONAL, LTD.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title:President & CEO
PLACEMENT AGENT:
MONITOR CAPITAL, INC.
By: /s/ Hsiao-▇▇▇ ▇▇▇
Name: ▇▇▇▇▇-▇▇▇ ▇▇▇
Title:President
INVESTOR:
CORNELL CAPITAL PARTNERS, LP
BY: YORKVILLE ADVISORS, LLC
ITS: GENERAL PARTNER
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title:Portfolio Manager
#