PLACEMENT AGENCY AGREEMENT
EXHIBIT
10.5
October
3, 2005
Xxxxxxxxxx
Securities Corporation
0
Xxxx
Xxx Xxxx Xxxx.
0xx
Xxxxx
Xx.
Xxxxxxxxxx, Xxxxxxx 00000
Re: VirtualScopics,
LLC
Ladies
and Gentlemen:
This
Placement Agency Agreement (this “Agreement”)
sets
forth terms upon which Xxxxxxxxxx Securities Corporation, a registered
broker-dealer and a member of the National Association of Securities Dealers,
Inc. (together with its dealers, the “Placement
Agent”),
shall
be engaged by VirtualScopics, LLC
(“VirtualScopics”) and a publicly traded corporation, whose shares are
registered with the Securities and Exchange Commission and are listed on
the
Over the Counter Bulletin Board (“Pubco”), to act as lead Placement Agent in
connection with the private
placement (the
“Offering”)
on a
“best efforts - 3,000 units or none” basis of
up to
6,000
units (“Units”),
each
Unit consisting of one share of Pubco’s Series A Convertible Preferred Stock
(the “Series
A Preferred Stock”),
and a
four year detachable, transferable warrant (the “Warrant”)
to
purchase 200 shares of Pubco’s common stock (the “Common
Stock”)
at an
exercise price of $4.00 per share.
In the
event the Offering is oversubscribed, VirtualScopics and the Placement Agent
may
in their discretion sell as an over-allotment option up to an additional
1,000
Units.
Concurrently
with the closing of this Offering, Pubco will acquire VirtualScopics through
an
exchange offer of its Common Stock for all of VirtualScopics’ outstanding
membership units so that VirtualScopics will become a wholly-owned subsidiary
of
Pubco at the closing of this Offering (the
“Exchange Offer”)
and the
members of VirtualScopics will become shareholders of Pubco.
Subject
to Section 4(d), subscriptions for the Units will be accepted by Pubco at
a
price of $1,000 per Unit (the “Offering
Price”),
with
a minimum investment of 50 Units ($50,000); provided, however, that
subscriptions in lesser amounts may be accepted in Pubco’s and Placement Agent’s
discretion. The Placement Agent shall not tender to Pubco subscriptions for
any
persons or entities who do not qualify as “accredited investors,” as such term
is defined in Rule 501 of Regulation D as promulgated under Section 4(2)
(“Regulation
D”)
of the
Securities Act of 1933, as amended (the “Act”).
The
Units
will be offered until October 31, 2005 (the “Initial
Offering Period”)
commencing on the issue date of the Memorandum (as defined below), which
period
may be extended by Pubco and the Placement Agent for an additional 90-day
period
(this additional period and the Initial Offering Period shall be referred
to as
the “Offering
Period”).
The
date
on which the Offering shall terminate shall be referred to as the “Termination
Date.”
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With
respect to the Offering, Pubco shall provide the Placement Agent, on terms
set
forth herein, the right to offer and sell all (except for those provided
in
3.e)of the Units being offered. Each of the Placement Agent and Pubco may,
in
its sole reasonable discretion, accept or reject in whole or in part any
prospective investment in the Units or allot to any prospective subscriber
less
than the number of Units that such subscriber desires to purchase.
The
Offering will be made by Pubco solely pursuant to the Memorandum (as hereinafter
defined), which at all times will be in form and substance reasonably acceptable
to the Placement Agent, Pubco, VirtualScopics and their respective counsel
and
contain such legends and other information as such parties and their respective
counsel may, from time to time, deem necessary and desirable to be set forth
therein. “Memorandum”
as used
in this Agreement means Pubco’s Confidential Private Placement Memorandum dated
September 30, 2005, inclusive of all annexes, and all amendments, supplements
and appendices thereto.
1. Appointment
of Placement Agent.
On the
basis of the representations and warranties provided herein, and subject
to the
terms and conditions set forth herein, the Placement Agent is appointed as
exclusive Placement Agent of Pubco during the Offering Period to assist Pubco
in
finding qualified subscribers for the Offering. On the basis of such
representations and warranties and subject to such terms and conditions,
the
Placement Agent hereby accepts such appointment and agrees to perform its
services hereunder in a professional and businesslike manner and to use its
commercially reasonable best efforts to assist Pubco in finding subscribers
of
Units who qualify as “accredited investors,” as such term is defined in Rule 501
of Regulation D and to complete the Offering. The Placement Agent has no
obligation to purchase any of the Units. Unless sooner terminated in accordance
with this Agreement, the engagement of the Placement Agent hereunder shall
continue until the later of the Termination Date or the Closing (as defined
below). Prior to the Termination Date, neither Pubco nor VirtualScopics shall
engage any other party to act as placement agent of any type of security
(either
debt or equity) of the either Pubco or VirtualScopics.
2. Representations
and Warranties.
The
following representations and warranties of Pubco, only as to itself prior
to
the consummation of the Initial Closing and jointly, and severally with
VirtualScopics after the consummation of the Initial Closing, and
VirtualScopics, only as to itself prior to the consummation of the Initial
Closing, and jointly and severally with Pubco after the consummation of the
Initial Closing, contained in this Section 2 are true and correct as of the
date
of this Agreement:
(a) Pubco
is
a corporation, and VirtualScopics is a limited liability company, duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization. Except as disclosed in the
Memorandum, neither Pubco nor VirtualScopics has any subsidiaries and does
not
have an equity interest in any other firm, partnership, association or other
entity. Each of Pubco and VirtualScopics is duly qualified to transact business
as a foreign corporation or limited liability company and is in good standing
under the laws of each jurisdiction where the location of its properties
or the
conduct of its business makes such qualification necessary, except where
the
failure to be so qualified would not have a material adverse effect on Pubco,
VirtualScopics or their respective businesses.
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(b) Each
of
Pubco and VirtualScopics has all requisite power and authority to conduct
its
business as presently conducted and as proposed to be conducted, to enter
into
and perform its obligations under this Agreement and the share exchange
agreement that will effect the Exchange Offer (the “Share
Exchange Agreement”)
and at
the time of the Initial Closing Pubco will have all requisite power and
authority to issue, sell and deliver the securities comprising the Units
and the
Placement Agent Warrants (as hereinafter defined). Upon due execution and
delivery, this Agreement, the Subscription Agreement annexed to the Memorandum
(the “Subscription
Agreement”),
the
Warrants, the warrants to be issued to the Placement Agent at each closing
of
the Offering (“Placement
Agent Warrants”)
and
the Share Exchange Agreement will constitute the valid and binding obligations
of each of Pubco and VirtualScopics to the extent it is a party to such
agreements or instruments, enforceable against each of Pubco and VirtualScopics
in accordance with their respective terms, subject to any applicable bankruptcy,
insolvency or other laws affecting the rights of creditors generally, securities
laws applicable to indemnification and contribution obligations of the kind
set
forth herein and to general equitable principles and the availability of
specific performance.
(c) None
of
the execution and delivery of, or performance by Pubco or VirtualScopics
under
this Agreement or the Subscription Agreement, the Warrants, the Placement
Agent
Warrants and the Share Exchange Agreement, will conflict with or violate,
or
will result in the creation or imposition of, any lien, charge or other
encumbrance upon any of the assets of Pubco or VirtualScopics under any
agreement or other instrument to which either Pubco or VirtualScopics is
a party
or by which either Pubco or VirtualScopics or their respective assets may
be
bound, or any term of the charter or by-laws of Pubco or the articles of
organization or operating agreement of VirtualScopics, or any license, permit,
judgment, decree, order, statute, rule or regulation applicable to Pubco,
VirtualScopics or any of their respective assets.
(d) None
of
the Units, the Warrants, the Placement Agent Warrants and the shares of Common
Stock issuable upon exercise of the Warrants or the Placement Agent Warrants
are
subject to preemptive or similar rights of any stockholder or security holder
of
Pubco or an adjustment under the anti-dilution or exercise rights of any
holders
of any outstanding shares of capital stock, options, warrants or other rights
to
acquire any securities of Pubco.
(e) Pubco
agrees that no consent, authorization or filing of or with any United States
court or government authority is required in connection with the consummation
of
the transactions contemplated herein, except for required filings with the
United States Securities and Exchange Commission (the “SEC”)
and
applicable “Blue Sky” or state securities commissions relating specifically to
the Offering.
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(f) The
Memorandum does not, and will not, include 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.
(g) The
Memorandum has been prepared in conformity with all applicable law, and is
in
compliance with Regulation D, the Act and the requirements of all other rules
and regulations (the “Regulations”)
of the
SEC relating to offerings of the type contemplated by the Offering, and the
applicable securities laws and the rules and regulations of those jurisdictions
wherein the Units are to be offered and sold other than foreign jurisdictions.
The Units will be offered and sold pursuant to the registration exemption
provided by Regulation D and Section 4(2) and/or Section 4(6) of the Act
as a
transaction not involving a public offering and the requirements of any other
applicable state securities laws and the respective rules and regulations
thereunder in those jurisdictions in the United States in which the Placement
Agent notifies Pubco that the Units are being offered for sale. Neither Pubco
nor VirtualScopics has taken, nor will either take, any action which conflicts
with the conditions and requirements of, or which would make unavailable
with
respect to the Offering, the exemption(s) from registration available pursuant
to Regulation D or Section 4(2) and/or Section 4(6) of the Act. None of Pubco,
its predecessors or, to Pubco’s knowledge, its affiliates, has been subject to
any order, judgment or decree of any court of competent jurisdiction
temporarily, preliminarily or permanently enjoining such person for failing
to
comply with Section 503 of Regulation D.
(h) Each
of
VirtualScopics and Pubco owns its property and assets free and clear of all
mortgages, liens, loans, pledges, security interests, claims, equitable
interests, charges, and encumbrances, except such encumbrances and liens
which
arise in the ordinary course of business and do not materially impair Pubco’s or
VirtualScopics’, ownership or use of such property or assets. With respect to
the property and assets it leases, if any, each of Pubco and VirtualScopics
is
in compliance in all material respects with such leases and, to its knowledge,
holds a valid leasehold interest free of any liens, claims, or encumbrances.
(i) Pubco
has
authorized and outstanding the capital stock as set forth in the Memorandum
as
of the date set forth therein. All outstanding shares of capital stock of
Pubco
are duly authorized, validly issued and outstanding, fully paid and
nonassessable. Except for warrants referred to in the Memorandum: (i) there
are
no outstanding options, warrants or other rights permitting or requiring
Pubco
or others to purchase or acquire any shares of capital stock or other equity
securities of Pubco or to pay any dividend or make any other distribution
in
respect thereof; (ii) there are no securities issued or outstanding which
are
convertible into or exchangeable for shares of capital stock or other equity
securities of Pubco and there are no contracts, commitments or understandings
to
which Pubco is a party, whether or not in writing, to issue or grant any
such
option, warrant, right or convertible or exchangeable security; (iii) no
shares
of stock or other securities of Pubco are reserved for issuance for any purpose;
(iv) there are no voting trusts or other contracts, commitments, understandings,
arrangements or restrictions of any kind to which Pubco is a party with respect
to the ownership, voting or transfer of Units of stock or other securities
of
Pubco, including without limitation, any preemptive rights, rights of first
refusal, proxies or similar rights and (v) no person holds a right to require
Pubco to register any securities of Pubco under the Act or to participate
in any
such registration. The issued and outstanding shares of capital stock of
Pubco
conform to all statements in relation thereto contained in the Memorandum
and
the Memorandum describes all material terms and conditions thereof. All
issuances by Pubco of its securities have been registered or were exempt
from
registration under the Act and any applicable state securities
laws.
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(j) The
financial statements, together with the related notes, of Pubco included
in
Pubco’s SEC filings present fairly in all material respects the financial
position of Pubco as of the respective dates specified and the results of
its
operations and cash flow for the respective periods covered thereby. Except
as
set forth in such financial statements, Pubco has not incurred any material
liabilities of any kind, whether accrued, absolute, contingent or otherwise
or
entered into any material transactions subsequent to December 31, 2004. The
financial statements, together with the related notes, of VirtualScopics
included in the Memorandum present fairly in all material respects the financial
position of VirtualScopics as of the respective dates specified and the results
of its operations and cash flow for the respective periods covered thereby.
Except as set forth in such financial statements and in the Memorandum,
VirtualScopics has not incurred any material liabilities of any kind, whether
accrued, absolute, contingent or otherwise or entered into any material
transactions subsequent to December 31, 2004.
(k) The
conduct of business by VirtualScopics as presently and proposed to be conducted
is not subject to continuing oversight, supervision, regulation or examination
by any governmental official or body of the United States or any other
jurisdiction wherein VirtualScopics conducts or proposes to conduct such
business, except as is described in the Memorandum or where such regulation
is
otherwise applicable to commercial enterprises generally. VirtualScopics
has
obtained all requisite licenses, permits and other governmental authorizations
to conduct its business as presently conducted, except to the extent the
failure
to so obtain would not materially and adversely affect or could reasonably
be
expected to materially and adversely affect the business, financial condition,
operations, prospects or property of Pubco or any of its subsidiaries, taken
as
a whole (a “Material
Adverse Effect”).
VirtualScopics has not received any notice of any violation of, or noncompliance
with, any federal, state, local or foreign laws, ordinances, regulations
and
orders (including, without limitation, those relating to environmental
protection, occupational safety and health, federal securities laws, equal
employment opportunity, consumer protection, credit reporting,
“truth-in-lending”, and warranties and trade practices) applicable to its
business, the violation of, or noncompliance with, which would have a Material
Adverse Effect, and VirtualScopics knows of no facts or set of circumstances
which would give rise to such a notice.
(l) Except
as
set forth in its SEC filings, no default by Pubco or, to the knowledge of
Pubco,
any other party exists in the due performance under any material agreements
to
which Pubco is a party or to which any of its assets are subject, other than
defaults that would not have a Material Adverse Effect. Except as set forth
in
the Memorandum, no default by VirtualScopics or, to the knowledge of
VirtualScopics, any other party exists in the due performance under any material
agreements to which VirtualScopics is a party or to which any of its assets
are
subject, other than defaults that would not have a Material Adverse
Effect.
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(m) Except
as
set forth in its SEC filings, there are no actions, suits, claims, hearings
or
proceedings pending before any court or governmental authority or, to the
knowledge of Pubco, threatened, against Pubco, or involving its assets or
any of
its officers or directors (in their capacity as such) which, if determined
adversely to Pubco or such officer or director, would have a Material Adverse
Effect or adversely affect the transactions contemplated by this Agreement
or
the Share Exchange Agreement or the enforceability thereof. Except as set
forth
in the Memorandum, there are no actions, suits, claims, hearings or proceedings
pending before any court or governmental authority or, to the knowledge of
VirtualScopics, threatened, against VirtualScopics, or involving its assets
or
any of its officers or directors (in their capacity as such) which, if
determined adversely to VirtualScopics or such officer or director, would
have a
Material Adverse Effect or adversely affect the transactions contemplated
by
this Agreement or the Share Exchange Agreement or the enforceability
thereof.
(n) Neither
Pubco nor VirtualScopics is: (i) in violation of its charter or By-laws;
(ii) in
default of any indenture, mortgage, deed of trust, note or other agreement
or
instrument to which it is a party or by which it is or may be bound or to
which
any of its assets may be subject, the default of which would have a Material
Adverse Effect; (iii) in violation of any statute, rule or regulation, the
violation of which would have a Material Adverse Effect; or (iv) in violation
of
any judgment, decree or order applicable to it, which violation or violations
individually, or in the aggregate, would have a Material Adverse
Effect.
(o) Except
as
set forth in the Memorandum, since June 30, 2005, there has been no: (i)
material adverse change in the financial condition of VirtualScopics or (ii)
damage, loss or destruction, whether or not covered by insurance, with respect
to any material asset or property of VirtualScopics.
(p) VirtualScopics
has appropriate casualty and liability insurance coverage, in scope and amounts
reasonable and customary for similar businesses.
(q) Each
of
Pubco
and
VirtualScopics has made or filed all federal, state and foreign income and
all
other tax returns, reports and declarations required by any jurisdiction
to
which it is subject and which are due (unless and only to the extent that
it has
set aside on its books provisions reasonably adequate for the payment of
all
unpaid and unreported taxes or has obtained an extension of the deadline
for
such filing) and has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and has set aside on its books provisions reasonably adequate for the payment
of
all taxes for periods subsequent to the periods to which such returns, reports
or declarations apply. To Pubco’s knowledge, there are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any jurisdiction,
and the officers of Pubco know of no basis for any such claim. Pubco has
not
executed a waiver with respect to the statute of limitations relating to
the
assessment or collection of any foreign, federal, statue or local tax. To
Pubco’s knowledge, none of Pubco’s tax returns is presently being audited by any
taxing authority. To VirtualScopics’ knowledge, there are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any jurisdiction,
and the officers of VirtualScopics know of no basis for any such claim.
VirtualScopics has not executed a waiver with respect to the statute of
limitations relating to the assessment or collection of any foreign, federal,
statue or local tax. To VirtualScopics’ knowledge, none of VirtualScopics’ tax
returns is presently being audited by any taxing authority.
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(s) Pubco
has
filed all reports required to be filed by it under the Securities Exchange
Act
of 1934, as amended (the “Exchange
Act”),
including pursuant to Section 13(a) or 15(d) thereof (the foregoing materials
being collectively referred to herein as the “SEC
Filings”).
As of
their respective dates, the SEC Filings complied in all material respects
with
the requirements of the Act and the Exchange Act and the rules and regulations
of the SEC promulgated thereunder, and none of the SEC Filings, when filed,
did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. All material agreements to which Pubco is a party have been filed
as
exhibits to the SEC Filings to the extent required. The financial statements
of
Pubco included in the SEC Filings comply in all material respects with
applicable accounting requirements and the rules and regulations of the SEC
with
respect thereto as in effect at the time of filing.
(t) Since
the
adoption of the Xxxxxxxx-Xxxxx Act of 2002 (the “New
Act”),
Pubco
has complied in all material respects with the laws, rules and regulation
under
the New Act to the extent applicable to Pubco.
(u) Neither
the sale of the Units hereunder nor its use of the proceeds thereof will
violate
the Trading with the Enemy Act, as amended, or any of the foreign assets
control
regulations of the United States Treasury Department (31 CFR, Subtitle B,
Chapter V, as amended) or any enabling legislation or executive order relating
thereto. Without limiting the foregoing, neither Pubco nor any of its
subsidiaries (a) is a person whose property or interests in property are
blocked
pursuant to Section 1 of Executive Order 13224 of September 23, 2001 Blocking
Property and Prohibiting Transactions With Persons Who Commit, Threaten to
Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)) or (b) engages in
any
dealings or transactions, or be otherwise associated, with any such person.
Pubco and its subsidiaries are in compliance with the USA Patriot Act of
2001
(signed into law October 26, 2001).
3. Placement
Agent Compensation.
(a) Pubco
shall cause to be delivered to the Placement Agent copies of the Memorandum
and
has consented, and hereby consents, to the use of such copies for the purposes
permitted by the Act and applicable securities laws and in accordance with
the
terms and conditions of this Agreement, and hereby authorizes the Placement
Agent and its agents and employees to use the Memorandum in connection with
the
sale of the Units until the Termination Date, and no person or entity is
or will
be authorized to give any information or make any representations other than
those contained in the Memorandum or to use any offering materials other
than
those contained in the Memorandum in connection with the sale of the
Units.
(b) Pubco
shall make available to the Placement Agent and its representatives such
information as may be reasonably requested in making a reasonable investigation
of Pubco and its affairs and shall provide access to such employees during
normal business hours as shall be reasonably requested by the Placement
Agent.
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(c) As
compensation for its services under this Agreement, at the Closing, subject
to
Section 3(e) below, the Placement Agent will receive a cash fee (the
“Placement
Agent Fee”)
equal
to 8%
of the
aggregate proceeds that Pubco receives from the sale of the Units and (ii)
reimbursement of all reasonable out-of-pocket expenses, including the reasonable
fees and expenses of counsel for the Placement Agent in connection with the
Offering up to an aggregate amount of $55,000,
(the
“Expense
Reimbursement”).
Notwithstanding anything to the contrary contained herein, the Placement
Agent
shall reallow to Matrix USA, LLC that portion of the Placement Agent Fee
that is
attributable to sales of Units made by Matrix USA, LLC as sub-placement
agent.
(d) In
addition to the Placement Agent Fee, subject to Section 3(e), Pubco shall
at
Closing sell to Placement Agent, or its designee(s), for consideration of
$10.00, a four-year warrant to purchase such number of shares of Common Stock
at
an exercise price of $2.50 per share equal to 10% of the number of shares
of
Common Stock initially issuable upon the conversion of the Series A Preferred
Stock sold in this Offering (the
“Placement Agent Warrants”).
The
Placement Agent Warrants shall have the same registration rights as those
afforded to investors in the Offering and shall contain provisions for cashless
exercise. Notwithstanding anything to the contrary contained herein, the
Placement Agent shall reallow to Matrix USA, LLC that portion of the Placement
Agent Warrants that are attributable to sales of Units made by Matrix USA,
LLC
as sub-placement agent. VirtualScopics hereby consents to such
reallowance.
(e) With
respect to the sale of the first 3,000 Units (i.e. gross proceeds of $3
million), the Placement Agent shall not be entitled to the Placement Agent
Fee
or to purchase Placement Agent Warrants with respect to sales of Units arranged
through the officers or directors of VirtualScopics to certain pre-existing
prospective investors. With respect to sales of Units after the sale of the
first 3,000 Units (i.e. gross proceeds in excess of $3 million), the Placement
Agent Fee shall be reduced from 8% to 2% with respect to sales of Units arranged
through the officers or directors of VirtualScopics. Notwithstanding anything
to
the contrary contained herein, with respect to sales of Units arranged through
the officers or directors of VirtualScopics (whether as part of the first
3,000
Units or thereafter) to:
(i)
Merck, (ii) Pfizer, (iii) Quest Diagnostics, (iv) NGN or (v) any of
VirtualScopic’s other existing investors as of the date hereof, the Placement
Agent shall not be entitled to purchase the Placement Agent Warrants.
(f) To
the
extent there is more than one Closing, payment of the proportional amount
of the
Placement Agent Fee will be made out of the proceeds of subscriptions for
the
Units sold at each Closing and Placement Agent Warrants shall be issued at
each
Closing. Payment of the Expense Reimbursement incurred as of the date of
each
Closing, will be made out of the proceeds of subscriptions for Units at each
Closing.
4. Subscription
and Closing Procedures.
(a) The
Units
sold in the Offering will be sold pursuant to Subscription Agreements between
Pubco and the investors in the Offering in the form annexed to the
Memorandum.
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(b) All
funds
for subscriptions received from the sale of Units in the Offering will be
deposited into the escrow account (the “Escrow
Account”)
established for such purpose with Signature Bank, New York, New York (the
“Escrow
Agent”).
All
such funds for subscriptions will be held in the Escrow Account pursuant
to the
terms of the Escrow Agreement by and among the Placement Agent, VirtualScopics
and the Escrow Agent. Pubco will pay all fees related to the establishment
and
maintenance of the Escrow Account.
(c) If
subscriptions for $3,000,000 of Units have been accepted prior to the expiration
of the Initial Offering Period or any extension thereof, the funds therefor
have
been collected by the Escrow Agent and all of the conditions set forth elsewhere
in this Agreement are fulfilled, the Initial Closing shall be held in accordance
with the terms of the Subscription Agreements with respect to the Units sold
at
the offices of Xxxxxxxxx Xxxxxxx, LLP, counsel to Pubco. Thereafter, additional
closings may be held until the full $6.0 million of Units is sold. To the
extent
the over-allotment option is exercised, the remaining Units will continue
to be
offered and sold until the Termination Date, with the final closing (the
“Final
Closing”
and
each closing of the purchase and sale of Units is referred to in this Agreement
as a “Closing”)
to
occur within 10 days from the earlier of the Termination Date or the sale
of all
Units offered. Delivery of payment for the accepted subscriptions for Units
from
funds held in the Escrow Account will be made at the Closing against delivery
of
the Units by Pubco. Executed certificates for the securities comprising the
Units and the Placement Agent Warrants will be made available to the Placement
Agent for checking and packaging at the Placement Agent’s office prior to the
Closing or within five (5) business days following the Closing.
(d) If
subscriptions for $3,000,000 of Units have not been received and accepted
by
Pubco (with VirtualScopics’ consent) on or before the expiration of the Initial
Offering Period or any extension thereof for any reason, the Offering will
be
terminated, no Units will be sold, and the Escrow Agent will, at the request
of
the Placement Agent, cause all monies received from subscribers for the Units
to
be promptly returned to such subscribers without interest, penalty, expense
or
deduction. Subject
to the receipt of such subscriptions for
$3,000,000,
Pubco
(with VirtualScopics’ consent) will accept or reject the Subscription Document
in a timely fashion and at each Closing will countersign the Subscription
Document and provide duplicate copies of such Agreements to the Placement
Agent
for distribution to the Subscribers. Pubco will give written notice to the
Placement Agent of its acceptance or rejection of each subscription. Pubco
or
the Placement Agent on the Company's behalf, will promptly return to Subscribers
incomplete, improperly completed, improperly executed and rejected subscriptions
and give written notice thereof to the Placement Agent upon such return.
5. Further
Covenants.
Each of
Pubco and VirtualScopics hereby covenants and agrees that:
(a) Except
upon prior written notice to the Placement Agent, neither Pubco nor
VirtualScopics shall, at any time prior to the Closing, knowingly take any
action which would cause any of the representations and warranties made by
it in
this Agreement not to be complete and correct in all material respects on
and as
of the Closing date with the same force and effect as if such representations
and warranties had been made on and as of each such date.
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(b) If,
at
any time prior to the Closing, any event shall occur that causes or is
reasonably likely to result in a Material Adverse Effect or as a result of
which
it becomes necessary to amend or supplement the Memorandum so that the
representations and warranties herein remain true and correct in all material
respects, or in case it shall be necessary to amend or supplement the Memorandum
to comply with Regulation D or any other applicable securities laws or
regulations, VirtualScopics will promptly notify the Placement Agent and
shall,
at its sole cost, prepare and furnish to the Placement Agent copies of
appropriate amendments and/or supplements in such quantities as the Placement
Agent may reasonably request. Neither Pubco nor VirtualScopics will at any
time
before the Closing prepare or use any amendment or supplement to the Memorandum
of which the Placement Agent will not previously have been advised and furnished
with a copy, or which is not in compliance in all material respects with
the Act
and other applicable securities laws. As soon as Pubco or VirtualScopics
is
advised thereof, Pubco or VirtualScopics will advise the Placement Agent
and its
counsel, and confirm the advice in writing, of any order preventing or
suspending the use of the Memorandum, or the suspension of any exemption
for
such qualification or registration thereof for offering in any jurisdiction,
or
of the institution or threatened institution of any proceedings for any of
such
purposes, and Pubco and VirtualScopics will use their best efforts to prevent
the issuance of any such order and, if issued, to obtain as soon as reasonably
possible the lifting thereof.
(c) Pubco
and
VirtualScopics shall comply with the Act, the Exchange Act and the rules
and
regulations thereunder, all applicable state securities laws and the rules
and
regulations thereunder in the states in which Blue
Sky
counsel has advised the Placement Agent that the Units are qualified or
registered for sale or exempt from such qualification or registration, so
as to
permit the continuance of the sales of the Units, and will file with the
SEC,
and shall promptly thereafter forward to the Placement Agent, any and all
reports on Form D as are required.
(d) Pubco
and
VirtualScopics shall use commercially reasonable best efforts to qualify
the
Units for sale under the securities laws of such jurisdictions in the United
States as may be mutually agreed to by Pubco, VirtualScopics and the Placement
Agent, and Pubco and VirtualScopics will make such applications and furnish
information as may be required for such purposes, provided that neither Pubco
nor VirtualScopics will be required to qualify as a foreign corporation in
any
jurisdiction or execute a general consent to service of process. Pubco and
VirtualScopics will, from time to time, prepare and file such statements
and
reports as are or may be required to continue such qualifications in effect
for
so long a period as the Placement Agent may reasonably request with respect
to
the Offering.
(e) Pubco
shall place a legend on the certificates representing the securities comprising
the Units and the Placement Agent Warrants that the securities evidenced
thereby
have not been registered under the Act or applicable state securities laws,
setting forth or referring to the applicable restrictions on transferability
and
sale of such securities under the Act and applicable state laws.
(f) Pubco
shall apply the net proceeds from the sale of the Units to fund its working
capital requirements and for such other purposes as substantially described
under the “Use of Proceeds” section of the Memorandum.
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(g) During
the Offering Period, VirtualScopics shall afford each prospective purchaser
of
Units the opportunity to ask questions of and receive answers from an officer
of
VirtualScopics concerning the terms and conditions of the Offering and the
opportunity to obtain such other additional information necessary to verify
the
accuracy of the Memorandum to the extent it possesses such information or
can
acquire it without unreasonable expense or violation of any confidentiality
agreements.
(h) Pubco
and
VirtualScopics shall pay all reasonable expenses incurred in connection with
the
preparation and printing of all necessary offering documents and instruments
related to the Offering and the issuance of the Units and the Placement Agent
Warrants and will also pay their own respective expenses for accounting fees,
legal fees, and other costs involved with the Offering. VirtualScopics will
provide at its own expense such quantities of the Memorandum and other documents
and instruments relating to the Offering as the Placement Agent may reasonably
request. In addition, Pubco will pay all reasonable filing fees, costs and
legal
fees for Blue Sky services and related filings and expenses of counsel with
respect to Blue Sky qualifications. The Blue Sky filings shall be prepared
by
Pubco’s Blue Sky counsel and all Blue Sky filing fees shall be paid by Pubco
prior to any filing. Pubco’s Blue Sky counsel shall promptly send copies of all
Blue Sky filings that it makes to the Placement Agent following the Closing.
All
other fees and expenses of Blue Sky counsel shall be payable at the Closing.
Further, as promptly as practicable after the Closing, Pubco shall prepare,
at
its own expense, velobound “closing binders” relating to the Offering and will
distribute such binders to the individuals designated by counsel to the
Placement Agent.
(i) Except
with the prior written consent of the Placement Agent, not to be unreasonably
withheld or delayed, as contemplated by the Memorandum or any transaction
involving the issuance of equity securities to: (i) Merck, (ii) Pfizer, (iii)
Quest Diagnostics, (iv) NGN or (v) any of the VirtualScopic’s other existing
investors, neither Pubco nor VirtualScopics shall, at any time prior to the
Closing, engage in any transaction outside the ordinary course of its business
or issue, agree to issue or set aside for issuance any securities (debt or
equity) or any rights to acquire any such securities.
(j) Except
as
otherwise approved by the Placement Agent, until
the
Termination Date, neither Pubco, nor VirtualScopics nor any person or entity
acting on its behalf will negotiate with any other placement agent or
underwriter with respect to a private or public offering of Pubco’s or any
subsidiary’s debt or equity securities. Neither Pubco, nor anyone acting on its
behalf will, until the Termination Date, without the prior written consent
of
the Placement Agent, offer for sale to, or solicit offers to subscribe for
securities of Pubco or VirtualScopics from, or otherwise approach or negotiate
in respect thereof with, any other person. The foregoing shall not in any
limit
the ability of VirtualScopics officers and directors from selling or offering
for sale any Units in the Offering.
6. Conditions
of Placement Agent’s Obligations.
The
obligations of the Placement Agent hereunder to effect the Closing are subject
to the fulfillment, at or before the Closing, of the following additional
conditions:
(a) Each
of
the representations and warranties of Pubco and VirtualScopics shall be true
and
correct in all material respects when made on and as of the Closing date
as
though made on and as of the Closing, except as to representations and
warranties made as of a specific date.
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(b) Pubco
and
VirtualScopics shall have performed and complied in all material respects
with
all agreements, covenants and conditions required to be performed and complied
with by it at or before the Closing.
(c) No
order
suspending the use of the Memorandum or enjoining the Offering or sale of
the
Units shall have been issued, and no proceedings for that purpose or a similar
purpose shall have been initiated or pending, or, to the best of Pubco’s and
VirtualScopics’ knowledge, be contemplated or threatened.
(d) The
Placement Agent shall have received a certificate of the President and Chief
Executive Officer of each of Pubco and VirtualScopics, dated as of the Closing
Date, certifying, as to the fulfillment of the conditions set forth in
subparagraphs (a), (b) and (c) above, as those conditions relate to their
respective companies.
(e) Each
of
Pubco and VirtualScopics shall have delivered to the Placement Agent: (i)
a
recently dated good standing certificate from the secretary of state of its
jurisdiction of incorporation or organization and each jurisdiction in which
it
is qualified to do business as a foreign corporation; and (ii) resolutions
of
its Board of Directors or other governing body approving this Agreement and
the
transactions and agreements contemplated by this Agreement, the Share Exchange
Agreement and the Memorandum, certified by its President and Chief Executive
Officer and (iii) resolutions of its shareholders or members, to the extent
required, approving the Share Exchange Agreement and the transactions and
agreements contemplated by the Share Exchange Agreement.
(f) At
each
Closing, Pubco shall pay to the Placement Agent the Placement Agent Fee and
the
Expense Reimbursement and shall issue the Placement Agent Warrants.
(g) Pubco
shall deliver to the Placement Agent a signed opinion of Xxxxxxxxx Traurig,
LLP,
counsel to Pubco dated as of the Closing Date, containing the opinions set
forth
in Exhibit A, subject to condtions, limitations and qualifications provided
for
therein.
(h) VirtualScopics
shall deliver to the Placement Agent a signed opinion of Xxxxx Xxxxxx Xxxxxx
LLP, counsel to VirtualScopics, dated as of the Closing Date, containing
the
opinions set forth in Exhibit B, subject to condtions, limitations and
qualifications provided for therein.
(i) All
proceedings taken at or prior to each Closing in connection with the
authorization, issuance and sale of the Units and the Placement Agent Warrants
will be reasonably satisfactory in form and substance to the Placement Agent
and
its counsel, and such counsel shall have been furnished with all such documents,
certificates and opinions as it may reasonably request upon reasonable prior
notice in connection with the transactions contemplated hereby.
(j) The
transactions contemplated in the Share Exchange Agreement shall have been
consummated.
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(k) A
Registration Rights Agreement covering the Placement Agent Warrants
substantively equivalent to the registration rights granted to the investors
in
the Offering shall be executed and delivered by Pubco.
(l) The
Share
Exchange Agreement, which includes language pursuant to which the
representations, warranties and covenants of VirtualScopics as contained
therein, are made in favor of the Placement Agent, shall have been consummated.
7. Intentionally
Omitted
8. Representation
and Warranties of the Placement Agent; Covenants of the Placement
Agent.
(a) The
Placement Agent hereby represents and warrants to Pubco and VirtualScopics
that
(i) it is a registered broker-dealer pursuant to the Exchange Act and a member
in good standing of the National Association of Securities Dealers, Inc.,
and
(ii) this Agreement has been duly authorized, executed and delivered by the
Placement Agent and is a valid and binding agreement on its part.
(b) The
Placement Agent shall not engage in any form of general solicitation or general
advertising that is prohibited by Regulation D in connection with
the
Offering, or take any action that might reasonably be expected to jeopardize
the
availability for the Offering of the exemption from registration provided
by
Rule 506 under Regulation D. The Placement Agent shall comply in all
material respects with all laws in effect in all US jurisdictions in which
securities of Pubco are offered by it and the rules, regulations and orders
of
any securities administrator existing or adopted thereunder, including without
limitation, the Act, the Exchange Act and the rules and regulations thereunder.
(c) The
Placement Agent shall maintain appropriate records of the documents signed
by
each subscriber for a period of at least four years after the Termination
Date.
9. Confidentiality.
In the
course of its services under this Agreement, the Placement Agent will have
access to Confidential Information (as defined below) concerning Pubco and
VirtualScopics. The Placement Agent agrees that all Confidential Information
will be treated by the Placement Agent as confidential in all respects. The
Placement Agent hereby agrees that it and its dealers, affiliates and
representatives shall: (i) use the Confidential Information solely for the
purposes of its engagement hereunder; and (ii) not disclose any Confidential
Information to any other party except to those Placement Agent representatives
who need to know such information for the purposes of the Placement Agent’s
engagement hereunder and who have been advised of such confidentiality
restrictions. The term “Confidential
Information”
shall
mean all information, whether written or oral, which is or has been disclosed
by
Pubco, VirtualScopics or their respective affiliates, agents or representatives
to the Placement Agent or any of its representatives in connection with the
Offering and the transactions contemplated hereby, which is not in the public
domain, but shall not include: (i) information which is publicly disclosed
other
than by the Placement Agent in violation of this Agreement; (ii) information
which is obtained by the Placement Agent from a third party that (x) is not
known by Placement Agent to have violated, or obtained such information in
violation of, any obligation to Pubco, VirtualScopics, or their respective
affiliates with respect to such information, and (y) does not require the
Placement Agent to refrain from disclosing such information; and (iii)
information which is required to be disclosed by the Placement Agent or its
outside counsel under compulsion of law (whether by oral question,
interrogatory, subpoena, civil investigative demand or otherwise) or by order
of
any court or governmental or regulatory body to whose supervisory authority
the
Placement Agent is subject; provided that,
in such
circumstance, the Placement Agent will give Pubco or VirtualScopics, as the
case
may be, prior written notice of such disclosure and cooperate with Pubco
or
VirtualScopics, as the case may be, to minimize the scope of any such
disclosure. The Placement Agent’s obligation under this section shall continue
for a period of two years after the
date
of expiration, termination or completion of this Agreement or the Placement
Agent’s engagement hereunder.
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10. Indemnification.
(a) Each
of
Pubco and VirtualScopics shall: (i) indemnify and hold harmless the Placement
Agent, its selected dealers, agents and their respective officers, directors,
employees and each person, if any, who controls the Placement Agent within
the
meaning of the Act and such agents (each an “Indemnitee”)
against, and pay or reimburse each Indemnitee for, any and all losses, claims,
damages, liabilities or expenses whatsoever (or actions or proceedings or
investigations in respect thereof), joint or several (which will, for all
purposes of this Agreement, include, but not be limited to, all reasonable
costs
of defense and investigation and all reasonable attorneys’ fees, including
appeals), to which any Indemnitee may become subject, under the Act or
otherwise, in connection with the offer and sale of the Units, and (ii)
reimburse each Indemnitee for any legal or other expenses reasonably incurred
in
connection with investigating or defending against any such loss, claim,
action,
proceeding or investigation; provided,
however,
that
neither Pubco nor VirtualScopics will be liable in any such case to the extent
that any such claim, damage or liability results from (A) an untrue statement
or
alleged untrue statement of a material fact made in the Memorandum, or an
omission or alleged omission to state therein a material fact required to
be
stated therein or necessary to make the statements therein not misleading,
in
reliance upon and in conformity with written information furnished to Pubco
by
the Placement Agent or any such controlling persons specifically for use
in the
Memorandum, (B) any violations by the Placement Agent or such controlling
persons of the Act or state securities laws which does not result from a
violation thereof by Pubco or any of its affiliates, or (C) the gross
negligence, willful misconduct, or bad faith of the Placement Agent or the
party
claiming a right to indemnification. In addition to the foregoing agreement
to
indemnify and reimburse, each of Pubco and VirtualScopics will indemnify
and
hold harmless each Indemnitee against any and all losses, claims, damages,
liabilities or expenses whatsoever (or actions or proceedings or investigations
in respect thereof), joint or several (which shall for all purposes of this
Agreement, include, but not be limited to, all reasonable costs of defense
and
investigation and all reasonable attorneys’ fees, including appeals) to which
any Indemnitee may become subject insofar as such costs, expenses, losses,
claims, damages or liabilities arise out of or are based upon the claim of
any
person or entity that he or it is entitled to broker’s or finder’s fees from any
Indemnitee in connection with the Offering, other than fees due to the Placement
Agent and its selected dealers and agents and Verus International Group.
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(b) The
Placement Agent will indemnify and hold harmless each of VirtualScopics and
Pubco, its officers, directors, agents, employees and each person, if any,
who
controls Pubco or VirtualScopics within the meaning of the Act against, and
pay
or reimburse any such person for, any and all losses, claims, damages,
liabilities or expenses whatsoever (or actions, proceedings or investigations
in
respect thereof) joint or several (which shall for all purposes of this
Agreement, include, but not be limited to, all reasonable costs of defense
and
investigation and all reasonable attorneys’ fees, including appeals) to which
Pubco, VirtualScopics or any such person may become subject under the Act
or
otherwise, whether such losses, claims, damages, liabilities or expenses
shall
result from any claim of Pubco or VirtualScopics, any of their respective
officers, directors, agents, employees, any person who controls Pubco within
the
meaning of the Act or any third party, insofar as such losses, claims, damages
or liabilities are based upon (A) any untrue statement or alleged untrue
statement of any material fact contained in the Memorandum but only with
reference to information contained in the Memorandum relating to the Placement
Agent furnished in writing to Pubco by the Placement Agent or any controlling
person; or (B) Placement Agent’s violation of the Act or state securities laws
which did not result from a violation thereof by Pubco.
(c) Promptly
after receipt by an indemnified party under this Section 10 of notice of
the
commencement of any action, claim, proceeding or investigation (the
“Action”),
such
indemnified party, if a claim in respect thereof is to be made against the
indemnified party under this Section 10, will notify the indemnifying party
of
the commencement thereof, but the omission to so notify the indemnifying
party
will not relieve it from any liability which it may have to any indemnified
party under this Section 10 unless the indemnifying party has been substantially
prejudiced by such omission. The indemnifying party will have the right,
at its
option, to assume the defense thereof subject to the provisions herein stated,
with counsel reasonably satisfactory to such indemnified party, which consent
shall not be unreasonably withheld. The indemnified party will 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 will 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,
however,
that if
the indemnified party shall be requested by the indemnifying party to
participate in the defense thereof or shall have concluded in good faith
and
specifically notified the indemnifying party either that there may be specific
defenses available to it which are different from or additional to those
available to the indemnifying party or that such Action involves or could
have a
material adverse effect upon it with respect to matters beyond the scope
of the
indemnity agreements contained in this Agreement, then the counsel representing
the indemnified party, to the extent made necessary by such defenses, shall
have
the right to direct such defenses of such Action on its behalf and in such
case
the reasonable fees and expenses of such counsel in connection with any such
participation or defenses shall be paid by the indemnifying party. No settlement
of any Action against an indemnified party will be made without the consent
of
the indemnified party, which consent shall not be unreasonably withheld or
delayed in light of all factors of importance to such party, unless such
settlement includes an unconditional release of such indemnified party from
all
liability arising or that may arise out of such Action. No indemnified party
shall settle any Action for which indemnification may be sought by him or
it
hereunder without the prior written consent of the indemnifying
party.
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11. Contribution.
To
provide for just and equitable contribution, if: (i) an indemnified party
makes
a claim for indemnification pursuant to Section 10 hereof and it is finally
determined, by a judgment, order or decree not subject to further appeal
that
such claims for indemnification may not be enforced, even though this Agree-ment
expressly provides for indemnification in such case; or (ii) any
indemnified or indemnifying party seeks contribution under the Act, the Exchange
Act, or otherwise, then each indemnifying party shall contribute to such
amount
paid or payable by such indemnified party in such proportion as is appropriate
to reflect not only such relative benefits but also the relative fault of
Pubco
and VirtualScopics on the one hand and the Placement Agent on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses (or actions in respect thereof),
as
well as any other relevant equitable considerations. The relative benefits
received by Pubco and VirtualScopics on the one hand and the Placement Agent
on
the other shall be deemed to be in the same proportion as the total net proceeds
from the Offering (before deducting expenses) received by Pubco bear to the
total compensation (with respect to stock compensation, the value of such
stock
shall be determined by reference to the value of the stock at the time the
contribution payment is determined) received by the Placement Agent. The
relative fault, in the case of an untrue statement, alleged untrue statement,
omission or alleged omission will be determined by, among other things, whether
such statement, alleged statement, omission or alleged omission relates to
information supplied by Pubco or VirtualScopics or by the Placement Agent,
and
the parties’ relative intent, knowledge, access to information and opportunity
to correct or prevent such statement, alleged statement, omission or alleged
omission. Pubco, VirtualScopics and the Placement Agent agree that it would
be
unjust and inequitable if the respective contribution obligations of Pubco
and
VirtualScopics on the one hand and the Placement Agent on the other hand
were
determined by pro rata
allocation of the aggregate losses, liabilities, claims, damages and expenses
or
by any other method or allocation that does not reflect the equitable
considerations referred to in this Section 11. No person guilty of a fraudulent
misrepresentation (within the meaning of Section 10(f) of the Act) will be
entitled to contribution from any person who is not guilty of such fraudulent
misrepresentation. For purposes of this Section 11, each person, if any,
who
controls the Placement Agent within the meaning of the Act will have the
same
rights to contribution as the Placement Agent, and each person, if any, who
controls Pubco or VirtualScopics within the meaning of the Act will have
the
same rights to contribution as Pubco or VirtualScopics, subject in each case
to
the provisions of this Section 11. Anything in this Section 11 to the contrary
notwithstanding, no party will 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, to the extent permitted by law, any
right
to contribution under the Act, the Exchange Act or otherwise
available.
12. Termination.
(a) The
engagement of the Placement Agent may be terminated by the Placement Agent
at
any time prior to the expiration of the Offering Period (such date of
termination of the engagement of the Placement Agent or the date of termination
of the engagement of the Placement Agent under Section 12(b) below, as the
case
may be, the “Expiration
Date”)
in the
event that: (i) any of the representations or warranties of Pubco
or
VirtualScopics contained herein or in the Memorandum shall prove to have
been
false or misleading in any material respect when made or deemed made;
(ii) Pubco or VirtualScopics shall have failed to perform any of its
material obligations hereunder; or (iii) the Placement Agent shall
determine in good faith that it is reasonably likely that any of the conditions
to Closing set forth herein will not or cannot be satisfied (other than
Placement Agent’s inability to sell at least $3 million of Units). In the event
of any such termination occasioned by or arising out of or in connection
with
any breach or failure hereunder on the part of Pubco or VirtualScopics described
in clauses (i), (ii), or (iii) above, the Placement Agent shall be entitled
to
receive from Pubco and VirtualScopics, jointly and severally, in addition
to
other rights and remedies it may have hereunder, at law or otherwise, an
amount
equal to the sum of: (A) all unpaid Placement Agent Fees earned through the
Expiration Date based upon the amount of funds then in escrow and (B) the
full
amount of the unpaid Expense Reimbursement.
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(b) The
engagement of the Placement Agent may be terminated by Pubco or VirtualScopics
at any time prior to the Expiration Date in the event: (i) any of
the
representations or warranties of the Placement Agent contained herein shall
prove to have been false or misleading in any material respect when made
or
deemed made; (ii) the Placement Agent shall have failed to perform
any of
its material obligations hereunder; or (iii) of the gross negligence, bad
faith,
or willful misconduct of the Placement Agent or its agents or
representatives.
(c) Upon
any
such termination, the Escrow Agent will, at the request of the Placement
Agent,
cause all monies received in respect of subscriptions for Units then in escrow
to be promptly returned to such subscribers without interest, penalty, expense
or deduction.
13. Survival.
The
provisions of Sections 9, 10, 11, 12, 13, 14, 15, 16, 17 and 18 shall survive
any termination hereunder.
14. Notices.
All
communications hereunder will be in writing and, except as otherwise expressly
provided herein or after notice by one party to the other of a change of
address, if sent to the Placement Agent, will be mailed, delivered or telefaxed
and confirmed to Xxxxxxxxxx Securities Corporation, 0 Xxxx Xxx Xxxx Xxxx.,
Xx.
Xxxxxxxxxx Xxxxxxx 00000 telefax number (000) 000-0000 with a copy to Peckar
& Xxxxxxxx, PC, 00 Xxxxx Xxxxxx, Xxxxx Xxxx, Xxx Xxxxxx 00000, Attn: Xxxxxxx
X. Xxxx, Esq., telefax number (000) 000-0000, and if sent to Pubco, will
be
mailed, delivered or telefaxed and confirmed to the address set forth on
the
signature paged to this Agreement, with a copy to Xxxxxxxxx Traurig, LLP,
MetLife
Building, 000 Xxxx Xxxxxx, Xxx Xxxx, XX 00000 Attn: Xxxxxxx X. Xxxxxxx, Esq.,
telefax
number (000) 000-0000, and if sent to VirtualScopics, will be mailed, delivered
or telefaxed and confirmed to 000 Xxxxxx Xxxx, Xxxxxxxxx, Xxx Xxxx 00000
Attn: Xxxxxx
Xxxxxxxxxxx, telefax number (000) 000-0000, with a copy to Xxxxx Xxxxxx Xxxxxx
LLP, 000 Xxxxxxxxxx Xxxxxxxx, 0 Xxxxx Xxxxxx, Xxxxxxxxx, XX 00000, Attn:
Xxxxxx
Forth, Esq., telefax number (000) 000-0000.
15. Governing
Law, Jurisdiction.
This
Agreement shall be deemed to have been made and delivered in Fort Lauderdale,
Florida and shall be governed as to validity, interpretation, construction,
effect and in all other respects by the internal laws of the State of Florida
without regard to principles of conflicts of law thereof.
16. Miscellaneous.
No
provision of this Agreement may be changed or terminated except by a writing
signed by the party or parties to be charged therewith. Unless expressly
so
provided, no party to this Agreement will be liable for the performance of
any
other party’s obligations hereunder. Either party hereto may waive compliance by
the other with any of the terms, provisions and conditions set forth herein;
provided, however, that any such waiver shall be in writing specifically
setting
forth those provisions waived thereby. No such waiver shall be deemed to
constitute or imply waiver of any other term, provision or condition of this
Agreement.
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17. Entire
Agreement.
This
Agreement together with any other agreement referred to herein supersedes
all
prior agreements between the parties with respect to the Offering and the
subject matter hereof.
18. Counterparts.
This
Agreement may be executed in multiple counterparts, each of which may be
executed by less than all of the parties and shall be deemed to be an original
instrument which shall be enforceable against the parties actually executing
such counterparts and all of which together shall constitute one and the
same
instrument.
*****
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If
the
foregoing is in accordance with your understanding of the agreement, kindly
sign
and return this Agreement, whereupon it will become a binding agreement between
Pubco and the Placement Agent in accordance with its terms.
VIRTUALSCOPICS,
LLC
By:
/s/ Xxxxx Xxxxxxxxx
Name:
Xxxxx Xxxxxxxxx
Title:
CFO
Accepted
and agreed to this
3 day
of October, 2005
XXXXXXXXXX
SECURITIES CORPORATION
By:
/s/ Xxxxxxx X. Xxxxxxxx
Name:
Xxxxxxx X. Xxxxxxxx
Title:
President
By
its
execution of this Agreement on or before the Closing, Pubco hereby acknowledges,
agrees and confirms that it will be deemed to be a party to this Agreement
and
shall have all of the related rights and obligations inuring to it as if
Pubco
had executed this Agreement on the original date of the Agreement. Pubco
further
ratifies and agrees to be bound by all of the terms, provisions and conditions
contained in this Agreement.
Pubco
hereby acknowledges, agrees and confirms that, at the Closing, it shall execute
and deliver to the Company and the Placement Agent a counterpart signature
page
of this Agreement, at which time it shall become bound by all of the terms,
provisions and conditions hereof as if it was an original party
hereto.
PUBCO
ConsultAmerica
Name
of
Pubco
By:
/s/ Xxxxxx X. Xxxxxxxx
Name:
Xxxxxx X. Xxxxxxxx
Title:
President
Exhibit
A
Form
of
Opinion of Pubco Counsel
1. The
“Company”
(for
purposes of the opinion, the Company means ___________
after
giving retroactive effect to the Offering and the Share Exchange)
has
been duly organized as a corporation and is validly existing in good standing
under the laws of the jurisdiction of its incorporation, has full corporate
power and authority to own, lease and operate its properties and conduct
its
business as described in its SEC filings and is duly qualified as a foreign
corporation for the transaction of business and is in good standing in each
jurisdiction where the conduct of its business makes such qualification
necessary, except where the failure to so qualify would not have a material
adverse effect upon the business (as currently conducted), financial condition
or results of operation of the Company (a “Material Adverse
Effect”).
2. The
Company has the authorized and issued capital stock as set forth in the
Memorandum.
3. The
(i)
Units and (ii) the Placement Agent Warrants and the shares of Common Stock
issuable upon exercise of the Warrants and the Placement Agent Warrants have
been duly authorized for issuance by all necessary corporate action on the
part
of the Company; and the Units, the Placement Agent Warrants and the shares
of
Common Stock issuable upon exercise of the Warrants and the Placement Agent
Warrants, when issued, sold and delivered against payment therefor in accordance
with the provisions of the Warrants and the Placement Agent Warrants, as
applicable, will be duly and validly issued, fully paid and
non-assessable.
The
issuance of the Units, the Placement Agent Stock and the shares of Common
Stock
issuable upon exercise of the Warrants and the Placement Agent Warrants are
not
subject to any statutory or, to our knowledge, contractual or other preemptive
rights. A sufficient number of authorized but unissued shares of Common Stock
have been reserved for issuance upon exercise of the Warrants and the Placement
Agent Warrants.
4. The
execution and delivery by the Company of the Transaction Documents (this
term
shall include, without limitation, the Placement Agency Agreement, Subscription
Agreements, Warrants, Placement Agent Warrants and the Share Exchange Agreement)
and the consummation by the Company of the transactions contemplated thereby
have been duly authorized by all necessary corporate action (including
shareholder approval with respect to the Share Exchange Agreement) on the
part
of the Company, and the Transaction Documents have been duly executed and
delivered by the Company. Each of the Transaction Documents constitutes the
valid and binding obligation of the Company, enforceable against the Company
in
accordance with its terms.
5. The
execution and delivery by the Company of the Transaction Documents and the
consummation by the Company of the transactions contemplated thereby will
not
(a) violate the provisions of any U.S. Federal or state (limited to
DE and
NY) law, rule or regulation applicable to the Company or the Delaware General
Corporation Law; (b) violate the provisions of the Company’s Certificate of
Incorporation or By-laws, each as amended to date; (c) violate any
judgment, decree, order or award of any court, governmental body or arbitrator
specifically naming the Company of which we are aware; or (d) result
in the
breach or termination of any material term or provision of any agreement
to
which the Company is a party of which we are aware.
6. Assuming
that the Units were sold only to “accredited investors” (as defined in Rule 501
of Regulation D) and the Placement Agent complied with Regulation D, such
sales
were made in conformity with the requirements of Section 4(2) of the Act
and
Regulation D, and with the requirements of all other Regulations currently
in
effect relating to “private offerings” of the type made by the
Company.
7. To
our
knowledge, there is no action, proceeding or litigation pending or threatened
against the Company before any court, governmental or administrative agency
or
body.
8. No
consent, approval or authorization of, or other action by, and no notice
to or
filing with, any United States Federal or state (limited to DE and NY)
governmental authority on the part of the Company is required in connection
with
the valid execution and delivery of the Transaction Documents and the
consummation by the Company of the transactions contemplated thereunder,
except
for (i) the filing of a Form D that may be filed with the Securities
and
Exchange Commission, (ii) any filings under the securities laws of
the
various jurisdictions in which the Units and the Placement Agent Warrants
are
being offered and sold by the Company (iii) the registration required
by
the registration rights provisions contained in the subscription document
and
(iv) any filings relating to public disclosure of the transactions
contemplated by the Transaction Documents.
9. We
have
participated in the preparation of the Memorandum and in conferences with
officers and other representatives of the Company and VirtualScopics, at
which
such conferences the contents of the Memorandum and related matters were
discussed, and although we have not undertaken to determine independently,
and
do not assume any responsibility for, the accuracy or completeness of the
statements contained in the Memorandum, based upon those conferences and
upon
our participation in the preparation of the Memorandum, and any amendment
or
supplement thereto (other than the historical and projected financial
statements, including supporting schedules and other financial and statistical
information derived therefrom), the Memorandum, as of its date, does not
contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein,
in
light of the circumstances under which they were made, not misleading with
respect to the Company (without giving effect to the Offering and the Exchange
Offer); and with respect to the contents of the Memorandum relating to
VirtualScopics, we offer no opinion and refer to the separate opinion rendered
by Xxxxx
Xxxxxx Xxxxxx LLP,
counsel
to VirtualScopics.
EXHIBIT
B
FORM
OF
OPINION OF VIRTUALSCOPICS
1. The
Company is a limited liability company duly organized, validly existing and
in
good standing under the laws of the State of New York and has all requisite
corporate power and authority to carry on its business, to own and hold its
properties owned and leased, to enter into the Placement Agent Agreement
and to
carry out the provisions of such agreement.
2. The
Placement Agent Agreement has been duly executed and delivered by the Company
and is the legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except (a) as such enforcement
is limited by bankruptcy, reorganization, insolvency and other similar laws
affecting the enforcement of creditors’ rights generally and (b) no opinion is
expressed as to the availability of specific performance or other equitable
remedies or the enforceability of indemnification or contribution obligations
against securities laws claims.
3. The
execution, delivery and performance by the Company of the Placement Agent
Agreement and the consummation by the Company of the transactions contemplated
by the Placement Agent Agreement will not (a) violate or contravene in any
material respect any provision of the Company’s Articles of Organization,
operating agreement or other constituent documents, as currently in effect;
(b)
violate the provisions of any U.S. Federal or state law, rule or regulation
applicable to the Company or the New York Limited Liability Company Law;
(c)
violate any judgment, decree, order or award of any court, governmental body
or
arbitrator specifically naming the Company of which we are aware; or (d)
result
in the breach or termination of any material term or provision of any agreement
to which the Company is a party of which we are aware.
4. No
consent, approval or authorization of, or other action by, and no notice
to or
filing with, any United States Federal or governmental authority or the State
of
New York on the part of the Company is required in connection with the valid
execution and delivery of the Placement Agent Agreement and the Share Exchange
Agreement and the consummation by the Company of the transactions contemplated
thereunder.
5. To
our
knowledge, there is no action, proceeding or litigation pending or threatened
against the Company before any court, governmental or administrative agency
or
body.
6. We
have
participated in conferences with officers and other representatives of the
Company, at which conferences the contents of the Memorandum and related
matters
were discussed. Although we are not passing upon, and do not assume any
responsibility for, the accuracy, completeness or fairness of the statements
contained in the Memorandum and have made no independent check or verification
thereof, based upon those conferences and upon our participation in the
preparation of the Memorandum, nothing has come to our attention which would
lead us to believe that the Memorandum, as of its date (except for historical
and projected financial statements, including supporting schedules, and other
financial and statistical information contained in the Memorandum, as to
which
we express no view), contained or contains any untrue statement of a material
fact or omitted or omits to state a 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. ); and with respect
to
the contents of the Memorandum relating to Pubco, we offer no opinion and
refer
to the separate opinion rendered by Xxxxxxxxx
& Traurig, LLP, counsel
to Pubco.
