January 30, 2007
Xxxxxxx Xxxx
Chairman & Chief Executive Officer
Elite Pharmaceutical, Inc.
000 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Dear Buddy:
1. This letter agreement (the "Agreement") confirms our understanding that
Elite Pharmaceuticals, Inc. ("Company") has engaged Xxxxxxxxxxx & Co.
Inc. ("Oppenheimer") to act as lead placement agent to the Company for a
period of 180 days, commencing as of the date of your acceptance of this
letter, for the sale by the Company of shares of common stock (the
"Shares") of the Company, and warrants ("Warrants") to purchase shares of
common stock of the Company (the "Warrant Shares"; the proposed sale of
the Shares and Warrants are collectively referred to as the "Proposed
Financing"). The Company may instruct Oppenheimer to share the economics
with one investment bank in connection with the Proposed Financing.
The Proposed Financing will be made pursuant to the exemptions afforded
by Section 4(2) of the Securities Act of 1933, as amended (the "Act"),
and Regulation D promulgated thereunder and applicable state securities
laws. Our undertaking herein shall be subject to, among other things, the
terms and conditions set forth in this Agreement, our due diligence
investigation of the Company, the continuance of the Company without
material adverse change, the absence of unfavorable market conditions in
general, approval of our commitment committee and our continued
satisfaction with the results of our ongoing review of the Company's
business and affairs. It is understood that execution of this Agreement
does not assure the successful completion of the Proposed Financing.
2. Our services to the Company will include: (i) assistance in the
preparation of the Company's Offering Materials described below, if any;
(ii) assistance in structuring the Proposed Financing and its terms;
(iii) identifying and contacting (subject to the prior consent of the
Company) selected qualified accredited investors to purchase the
securities being offered in the Proposed Financing (the "Purchasers") and
furnishing them, on behalf of the Company, with copies of the Offering
Materials; and (iv) negotiating, under your guidance, the financial
aspects of the Proposed Financing.
3. As compensation for the services to be provided by Oppenheimer hereunder,
the Company agrees to pay to Oppenheimer a cash fee equal to 7.0% of the
gross proceeds of the Proposed Financing payable to Oppenheimer at the
closing of the Proposed Financing. In addition, Oppenheimer shall receive
at the closing of the Proposed Financing a five year non-callable warrant
to purchase shares of the Company's common stock equal to 3.0% of the
number of Shares sold in the Proposed Financing. If the Proposed
Financing is consummated by means of more than one closing, Oppenheimer
shall be entitled to the fees and warrants provided herein with respect
to each such closing.
In addition, and regardless of whether the Proposed Financing is
consummated, upon request by Oppenheimer from time to time, the Company
shall reimburse Oppenheimer for all documented out-of-pocket expenses
incurred by Oppenheimer in connection with the Proposed Financing,
including reasonable fees and expenses of its counsel, which will be
limited in the aggregate to (i) in the event the Proposed Financing is
consummated, $25,000 or (ii) in the event the Proposed Financing is not
consummated, $10,000, in the case, without prior written consent by the
Company.
4. The Company acknowledges and agrees that Oppenheimer has been retained
solely to provide the advice and services set forth in this Agreement.
Oppenheimer shall act as an independent contractor, and any duties of
Oppenheimer arising out of its engagement hereunder shall be owed solely
to the Company. As Oppenheimer will be acting on your behalf in such
capacity, it is our firm practice to be indemnified in connection with
engagements of this type and the Company agrees to the indemnification
agreement attached hereto as EXHIBIT A.
5. The Company has not taken, and will not take, any action, directly or
indirectly, so as to cause the Proposed Financing to fail to be entitled
to exemption under Section 4(2) of the Act or any other applicable
securities laws. Any filings under federal or state securities laws shall
be prepared by the Company's outside counsel.
6. Oppenheimer will assist the Company in preparing and providing its
publicly filed documents or other reasonably requested materials to the
Purchasers ("Offering Materials") relating to the Proposed Financing. The
Company authorizes Oppenheimer to transmit the Offering Materials to
prospective Purchasers of the Proposed Financing, as may be identified to
the Company, and represents and warrants that the information that it
provides to be included in the Offering Materials, at all times through
the closing, will not 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 contained therein, in light of the
circumstances under which they were made, not misleading. The Company
shall not transmit the Offering Materials to prospective Purchasers
without first advising Oppenheimer. The Proposed Financing shall be made
pursuant to the terms of a purchase agreement or subscription agreement
(each a "Purchase Agreement") in form satisfactory to Oppenheimer and the
Company shall establish an escrow account (the "Escrow Account") with a
suitable financial institution agreeable to the Company and Oppenheimer
(the "Escrow Agent"), and shall enter into an Escrow Agreement (the
"Escrow Agreement") with the Escrow Agent. Upon the closing of the
Proposed Financing (or each such closing if there shall be more than
one), the Escrow Agent shall deliver to the Company, by wire transfer of
immediately available funds, the funds deposited in the Escrow Account in
payment for the securities, less (x) the amounts payable to the Escrow
Agent pursuant to the terms of the Escrow Agreement, and (y) the amounts
payable to Oppenheimer pursuant to Section 3 hereof. The receipt by
Oppenheimer of the amounts to which it is entitled pursuant to Section 3
shall be a condition to any closing of the Proposed Financing. The
Company will also cause to be furnished to Oppenheimer at the Closing,
copies of such other agreements, opinions, certificates and other
documents delivered at the Closing as Oppenheimer may reasonably request
including, without limitation, an opinion of Company counsel to the
effect that the placement of the securities was exempt from registration
under the Act.
7. The Company represents and warrants that: (i) the representations and
warranties contained in each Purchase Agreement will be true and correct
in all respects on the date such Purchase Agreement is entered into and
as of the closing date of the sale of the Shares to which such Purchase
Agreement relates, and (ii) Oppenheimer shall be entitled to rely on such
representations and warranties (and on the representations and warranties
contained in any of the other Offering Materials) as if they were made
directly to Oppenheimer. Oppenheimer shall also be entitled to rely upon
any opinions of counsel delivered to any purchaser in the Proposed
Financing, including, without limitation, any
opinions relating to the registration statement.
8. Oppenheimer represents and warrants that: (i) it is duly registered as a
broker-dealer pursuant to the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder and is a
member in good standing of the NASD, (ii) during the course of the
Proposed Financing, it will not make any untrue statement of a material
fact, or omit to state a material fact required to be stated by it or
necessary to make any statement made by it not misleading, concerning the
Proposed Financing or any matters set forth in or contemplated by the
Offering Materials (it being understood that the statements made in the
Offering Materials are deemed to be made by the Company and not by
Oppenheimer), (iii) Oppenheimer will not offer, offer to sell or sell any
Shares or Warrants on the basis of any written communications or
documents relating to the Company or its business other than the Offering
Materials, (iv) Oppenheimer will not engage in any form of general
solicitation or general advertising which is prohibited by Regulation D
in connection with the Proposed Financing, (v) Oppenheimer will not offer
to sell or sell the Shares or Warrants to any investor unless Oppenheimer
believes and has reason to believe, based on such investigation believed.
by it to be appropriate, that such investor is an "accredited investor"
as defined in Regulation D, Rules 501, of the Act, and (vi) Oppenheimer
will cooperate fully with the Company and its counsel with respect to
compliance with all applicable federal, state and foreign securities and
"blue sky" laws applicable to the Proposed Financing.
9. The Company will make available to Oppenheimer all financial and other
information concerning the Company's business and operations and the
Proposed Financing, which Oppenheimer reasonably requests and will
provide access to the Company's officers, directors, employees,
independent accountants and legal counsel. Oppenheimer shall be entitled
to rely without investigation upon all information that is available from
public sources as well as all other information supplied to it by or on
behalf of the Company or the Company's other advisors and shall not in
any respect be responsible for the accuracy or completeness of, or have
any obligation to verify, the same or to conduct any appraisal of assets.
10. Oppenheimer agrees to treat all information provided to it by the Company
in connection with the Proposed Financing (the "Confidential
Information") as confidential; provided, however, that such obligation of
confidentiality: (i) shall not apply to any information that is already
or becomes public through no breach of this provision or that becomes
available to Oppenheimer on a non-confidential basis from a third party
that does not violate any obligation to the Company in making such
disclosure; and (ii) shall not prohibit Oppenheimer from providing the
Offering Materials to prospective investors approved by the Company. For
purposes of this Agreement, "Confidential Information" shall mean any and
all non-public information concerning the Company's business, including
but not limited to any non-public information of, the qualifications and
capabilities of its technical employees, the scope and nature of
technical work in process, the terms of any and all agreements between
the Company and other entities, processes, formulae, data, techniques,
know-how, results, methods, research and development work with respect
products, the data or results generated by testing or evaluating such
products, the decisions to develop or forego development of any product,
the financial condition and revenues of the Company, the identities of
shareholders of the Company, and any other non-public fact or matter
pertaining to the business of the Company. In the event Oppenheimer is
required to disclose any Confidential Information to any of its advisors,
employees, agents or similar persons ("Representatives"), Oppenheimer
shall notify such Representative of the confidential nature of such
information and the restrictions upon use of such information. Upon the
request of the Company, Oppenheimer will promptly return, or will
promptly cause the return of, to the Company all copies of Confidential
Information in its possession and in the possession of its
Representatives, and such other party will destroy all copies
of any analyses, compilations, studies or other documents prepared by it
or for its internal use which reflect the Confidential Information and
shall direct his Representatives to do likewise. Oppenheimer acknowledges
that a breach of this paragraph 10 will result in irreparable harm to the
Company. Accordingly, Oppenheimer agrees that, without prejudice to the
rights and remedies otherwise available to the Company, the Company shall
be entitled to equitable relief by way of injunction against actual or
threatened disclosure of Confidential Information in violation of this
Agreement.
11. Oppenheimer shall not be prevented from engaging in future transactions
involving companies in a similar industry to the Company provided that no
Confidential Information is used in connection with such engagement.
12. Any written advice provided by Oppenheimer pursuant to this Agreement
will be solely for the information and assistance of the Company in
connection with the Proposed Financing and may not be quoted, nor will
any such advice or the name of Oppenheimer be referred to in any report,
document, release or other communication, whether written (including,
without limitation, the Offering Materials) or oral, prepared, issued or
transmitted by the Company or any affiliate, director, officer, employee,
agent or representative of any thereof, without, in each instance,
Oppenheimer `s prior written consent.
13. Either the Company or Oppenheimer may terminate this Agreement at any
time upon written notice. Upon the expiration or termination of this
Agreement, Oppenheimer will be entitled to prompt reimbursement of all
its outstanding out-of-pocket expenses and fees as described above. If at
any time prior to twelve (12) months after the termination or expiration
of this Agreement, the Company consummates a private financing
transaction, including the Proposed Financing, with any party contacted
regarding the Proposed Financing during the term of our engagement as to
which the Company shall have provided its prior consent, other than
existing stockholders of the Company, Oppenheimer will be entitled to
payment in full of the compensation described in the third paragraph of
this Agreement. Promptly following any termination or expiration of this
Agreement, Oppenheimer will provide the Company with written notice of
the parties contacted by Oppenheimer regarding the Proposed Financing
during the term of our engagement, each of which shall have previously
been approved by the Company. The indemnity provisions contained in
EXHIBIT A will also remain operative and in full force and effect
regardless of any expiration or termination of this Agreement.
14. This Agreement shall not give rise to any express or implied commitment
by Oppenheimer to purchase or place any securities of the Company.
15. The indemnification obligations of the parties are set forth on EXHIBIT A
attached hereto.
16. This Agreement and the exhibits attached hereto incorporate the entire
understanding of the parties and supersedes all previous agreements
relating to the subject matter hereof. The benefits of this Agreement
shall inure to the parties hereto, their respective successors and
assigns and the obligations and liabilities assumed in this Agreement
shall be binding upon the parties hereto and their respective successors
and assigns. Notwithstanding anything contained herein to the contrary,
none of the parties hereto shall assign any of its obligations hereunder
without the prior written consent of each of the other parties hereto.
17. All notices provided hereunder shall be given in writing and either
delivered personally or by overnight courier service or sent by certified
mail, return receipt requested, if to Oppenheimer, to Xxxxxxxxxxx & Co.
Inc., 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Xxxxxx Xxxxxx, with a copy to Mintz, Levin, Cohn, Ferris, Glovsky and
Popeo P.C., 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxx
X. Xxxxxxxxxx, Esq. and if to the Company, to Elite Pharmaceuticals,
Inc., Attention: Xxxxxxx Xxxx, with a copy to Reitler, Xxxxx & Xxxxxxxxxx
LLC, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000, Attention: Xxxxx
Xxxxxxxxxx, Esq. Any notice delivered personally shall be deemed given
upon receipt; any notice given by overnight courier shall be deemed given
on the next business day after delivery to the overnight courier; and any
notice given by certified mail shall be deemed given upon the second
business day after certification thereof.
18. The failure or neglect of either of the parties hereto to insist, in any
one or more instances, upon the strict performance of any of the terms or
conditions of this Agreement, or its waiver of strict performance of any
of the terms or conditions of this Agreement, shall not be construed as a
waiver or relinquishment in the future of such term or condition by such
party, but the same shall continue in full force and effect. Any waiver
must be in writing.
19. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York applicable to agreements made and to be
fully performed therein, without regard to conflicts of law principles.
Each of the parties irrevocably submits to the exclusive jurisdiction of
any court of the City of New York, State of New York or the United States
District Court located in the City of New York, State of New York for the
purpose of any suit, action or other proceeding arising out of this
Agreement, or any of the agreements or transactions contemplated hereby,
and agrees that service of process in connection with any such suit,
action or proceeding may be made in accordance with Section 17 hereof.
The parties hereby expressly waive all rights to trial by jury in any
suit, action or proceeding arising under this Agreement.
20. This Agreement may not be modified or amended except in a writing duly
executed by the parties hereto.
21. At any time after the consummation or other public announcement of the
Proposed Financing, Oppenheimer may place an announcement in such
newspapers and publications as it may choose, stating that Oppenheimer
has acted as lead placement agent in connection with the Proposed
Financing.
22. For the convenience of the parties, this Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original
instrument, but all of which taken together shall constitute one and the
same agreement. Facsimile signatures shall be deemed to be original
signatures for all purposes.
23. After reviewing this Agreement, please confirm that the foregoing is in
accordance with your understanding by signing and returning the duplicate
of this letter attached hereto, whereupon it shall be our binding
Agreement.
Very truly yours,
XXXXXXXXXXX & CO. INC.
By:
--------------------------
Xxxxxx Xxxxxx
Managing Director
Accepted and agreed
to this 30th day of January, 2007.
ELITE PHARMACEUTICALS, INC.
By:
-----------------------------
Xxxxxxx Xxxx
President and CEO
EXHIBIT A
January 30, 2007
Xxxxxxxxxxx & Co. Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxx
Managing Director
Dear Xx. Xxxxxx:
In connection with our engagement of Xxxxxxxxxxx & Co. Inc.
("Oppenheimer") as our placement agent, we hereby agree to indemnify and hold
harmless Oppenheimer and its affiliates, and the respective controlling persons,
directors, officers, shareholders, agents and employees of any of the foregoing
(collectively the "Indemnified Persons"), from and against any and all claims,
actions, suits, proceedings (including those of shareholders), damages,
liabilities and expenses incurred by any of them (including the reasonable fees
and expenses of counsel), (collectively a "Claim"), which are (A) related to or
arise out of (i) any actions taken or omitted to be taken (including any untrue
statements made or any statements omitted to be made) by the Company, or (ii)
any actions taken or omitted to be taken by any Indemnified Person in connection
with our engagement of Oppenheimer, or (B) otherwise relate to or arise out of
Xxxxxxxxxxx'x activities on our behalf under Xxxxxxxxxxx'x engagement, unless
such statement or omission was made in reliance upon and in conformity with (i)
written information furnished to the Company with respect to Oppenheimer by or
on behalf of Oppenheimer expressly for use in the Offering Materials or any
amendment or supplement thereto or (ii) any other document or communication
executed by or on behalf of Oppenheimer or based upon written information
furnished by or on behalf of Oppenheimer filed in any jurisdiction in order to
qualify the Proposed Financing under the securities laws thereof, with respect
to Oppenheimer. We will not, however, be responsible for any Claim, which is
judicially determined to have resulted from the gross negligence or willful
misconduct of any person seeking indemnification hereunder. We further agree
that no Indemnified Person shall have any liability to us for or in connection
with our engagement of Oppenheimer except for any Claim incurred by us as a
result of any Indemnified Person's gross negligence or willful misconduct.
We further agree that we will not, without the prior written consent of
Oppenheimer, settle, compromise or consent to the entry of any judgment in any
pending or threatened Claim in respect of which indemnification may be sought
hereunder (whether or not any Indemnified Person is an actual or potential party
to such Claim), unless such settlement, compromise or consent includes an
unconditional, irrevocable release of each Indemnified Person hereunder from any
and all liability arising out of such Claim.
Promptly upon receipt by an Indemnified Person of notice of any
complaint or the assertion or institution of any Claim with respect to which
indemnification is being sought hereunder, such Indemnified Person shall notify
us in writing of such complaint or of such assertion or institution but failure
to so notify us shall not relieve us from any obligation we may have hereunder,
unless and only to the extent such failure results in the forfeiture by us of
substantial rights and defenses. If we so elect or are requested by such
Indemnified Person, we will assume the defense of such Claim, including the
employment of counsel reasonably satisfactory to such Indemnified Person and the
payment of the fees and expenses of such counsel. In the event, however, that
legal counsel to such Indemnified Person reasonably determines and provides
written correspondence to us, that having common counsel would
present such counsel with a conflict of interest which is not waivable or if the
defendant in, or target of, any such Claim, includes an Indemnified Person and
us, and legal counsel to such Indemnified Person reasonably concludes that there
may be legal defenses available to it or other Indemnified Persons different
from or in addition to those available to us, then such Indemnified Person may
employ its own separate counsel reasonably acceptable to us to represent or
defend it in any such Claim and we shall pay the reasonable fees and expenses of
such counsel. Notwithstanding anything herein to the contrary, if we fail timely
or diligently to defend, contest, or otherwise protect against any Claim, the
relevant Indemnified Party shall have the right, but not the obligation, to
defend, contest, compromise, settle, assert crossclaims, or counterclaims or
otherwise protect against the same, and shall be fully indemnified by us
therefor, including without limitation, for the reasonable fees and expenses of
its counsel and all amounts paid as a result of such Claim or the compromise or
settlement thereof. In any Claim in which we assume the defense, the Indemnified
Person shall have the right to participate in such Claim and to retain its own
counsel therefor at its own expense.
We agree that if any indemnity sought by an Indemnified Person
hereunder is unavailable for any reason then (whether or not Oppenheimer is the
Indemnified Person), we and Oppenheimer shall contribute to the Claim for which
such indemnity is held unavailable in such proportion as is appropriate to
reflect the relative benefits to us, on the one hand, and Oppenheimer on the
other, in connection with Xxxxxxxxxxx'x engagement referred to above, subject to
the limitation that in no event shall the amount of Xxxxxxxxxxx'x contribution
to such Claim exceed the amount of fees actually received by Oppenheimer from us
pursuant to Xxxxxxxxxxx'x engagement unless such amount results from
Xxxxxxxxxxx'x gross negligence or willful misconduct. We hereby agree that the
relative benefits to us, on the one hand, and Oppenheimer on the other, with
respect to Xxxxxxxxxxx'x engagement shall be deemed to be in the same proportion
as (a) the total value paid or proposed to be paid or received by us or our
stockholders as the case may be, pursuant to the transaction (whether or not
consummated) for which you are engaged to render services bears to (b) the fee
paid or proposed to be paid to Oppenheimer in connection with such engagement.
Our indemnity, reimbursement and contribution obligations under this
Agreement shall be in addition to, and shall in no way limit or otherwise
adversely affect any rights that any Indemnified Party may have at law or at
equity.
The validity and interpretation of this agreement shall be governed by
and construed and enforced in accordance with the laws of the State of New York
applicable to agreements made and to be fully performed therein (excluding the
conflicts of laws rules). Each of Oppenheimer and the Company hereby irrevocably
submits to the jurisdiction of any court of the State of New York, County of New
York or the United States District Court for the Southern District of New York
for the purpose of any suit, action or other proceeding arising out of this
agreement or the transactions contemplated hereby, which is brought by or
against Oppenheimer or the Company and in connection therewith, each of
Oppenheimer and the Company (i) hereby irrevocably agrees that all claims in
respect of any such suit, action or proceeding may be heard and determined in
any such court, (ii) to the extent that it has acquired, or hereafter may
acquire, any immunity from jurisdiction of any such court or from any legal
process therein, it hereby waives, to the fullest extent permitted by law, such
immunity and (iii) agrees not to commence any action, suit or proceeding
relating to this agreement other than in any such court. Each of Oppenheimer and
the Company hereby waives and agrees not to assert in any such action, suit or
proceeding, to the fullest extent permitted by applicable law, any claim that
(a) it is not personally subject to the jurisdiction of any such court, (b) it
is immune from any legal process (whether through
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service or notice, attachment prior to judgment, attachment in aid of execution,
execution or otherwise) with respect to its property of (c) any suit, action or
proceeding is brought in an inconvenient forum.
The provisions of this Agreement shall remain in full force and effect
following the completion or termination of Xxxxxxxxxxx'x engagement.
Very truly yours,
ELITE PHARMACEUTICALS, INC.
By:
-----------------------------
Xxxxxxx Xxxx
President and CEO
Confirmed and agreed to:
XXXXXXXXXXX & CO. INC.
By:
------------------------------
Xxxxxx Xxxxxx
Managing Director
Date: January 30, 2007
-----------------------------
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