EXHIBIT 10.3
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[XXXXXX & XXXXXXX LOGO]
Serving Emerging Growth Sectors For Over 50 Years
October 10, 2007
CONFIDENTIAL
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Xxxxxx X. Xxxx
Senior Vice President & Chief Financial Officer
EpiCept Corporation
000 Xxx Xxx Xxxx Xxxxx Xxxx
Xxxxxxxxx, XX 00000
Dear Xx. Xxxx:
This letter (the "Agreement") constitutes the agreement between Xxxxxx &
Xxxxxxx, LLC ("R&R") and BMO Capital Markets Corp. ("BMO") (each of R&R and BMO
a "Placement Agent" and together the "Placement Agents") and EpiCept Corporation
(the "Company"), that R&R shall serve as the lead placement agent and BMO as the
co-placement agent for the Company, on a "best efforts" basis, in connection
with the proposed placement (the "Placement") of up to $20,000,000 of registered
securities of the Company, including shares (the "Shares") of the Company's
common stock, par value $0.0001 per share (the "Common Stock"), and warrants to
purchase shares of Common Stock (the "Warrants"). The terms of such Placement
and the Shares and Warrants shall be mutually agreed upon by the Company and the
purchasers (each, a "Purchaser" and collectively, the "Purchasers") and nothing
herein constitutes that either Placement Agent would have the power or authority
to bind the Company or any Purchaser or an obligation for the Company to issue
any Shares or Warrants or complete the Placement. This Agreement, the Securities
Purchase Agreement, the Warrant and the Prospectus and Prospectus Supplement
shall be collectively referred to herein as the "Transaction Documents." The
date of the closing of the Placement shall be referred to herein as the "Closing
Date." The Company expressly acknowledges and agrees that the Placement Agents'
obligations hereunder are on a reasonable best efforts basis only and that the
execution of this Agreement does not constitute a commitment by either Placement
Agent to purchase the Shares and Warrants and does not ensure the successful
placement of the Shares and Warrants or any portion thereof or the success of
the Placement Agents with respect to securing any other financing on behalf of
the Company.
SECTION 1. Compensation and other Fees.
As compensation for the services provided by the Placement Agents
hereunder, the Company agrees to pay to the Placement Agents:
(A) A cash fee payable immediately upon the closing of the
Placement equal to 6% of the first $10,000,000 of aggregate gross proceeds
raised in the Placement and 7.6% of aggregate gross proceeds in excess of
$10,000,000 up to $20,000,000 raised in the Placement. Such fees shall be
divided 70% to R&R and 30% to BMO on the first $10,000,000 (1.8% of gross
proceeds to BMO) and 66.32% to R&R and 23.68% to BMO on gross proceeds in
excess of $10,000,000 (1.8% of gross proceeds to BMO) for BMO's services
as co-Placement Agent in the Placement.
(B) The Company also agrees to reimburse R&R's actual
out-of-pocket expenses incurred (with supporting invoices/receipts) up to
a maximum of $35,000. Such reimbursement shall be payable immediately upon
(but only in the event of) the closing of the Placement.
SECTION 2. REGISTRATION STATEMENT.
The Company represents and warrants to, and agrees with, the Placement Agents
that, as of the date hereof:
EpiCept Corporation
October 10, 2007
Page 2
(A) The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3 (Registration File NO.
333-145561) under the Securities Act of 1933, as amended (the "Securities Act"),
which became effective on September 18, 2007, for the registration under the
Securities Act of the Shares and Warrants, as well as other securities of the
Company. At the time of such filing, the Company met the requirements of Form
S-3 under the Securities Act. Such registration statement meets the requirements
set forth in Rule 415(a)(1)(x) under the Securities Act and complies with said
Rule. The Company will file with the Commission pursuant to Rule 424(b) under
the Securities Act, and the rules and regulations (the "Rules and Regulations")
of the Commission promulgated thereunder, a supplement to the form of prospectus
included in such registration statement relating to the placement of the Shares
and the plan of distribution thereof and has advised the Placement Agent of all
further information (financial and other) with respect to the Company required
to be set forth therein. Such registration statement, at any given time,
including the exhibits thereto filed at such time, as amended at such time, is
hereinafter called the "Registration Statement"; such prospectus in the form in
which it appears in the Registration Statement is hereinafter called the "Base
Prospectus"; and the supplemented form of prospectus, in the form in which it
will be filed with the Commission pursuant to Rule 424(b) (including the Base
Prospectus as so supplemented) is hereinafter called the "Prospectus
Supplement." The Registration Statement at the time it originally became
effective is hereinafter called the "Original Registration Statement." Any
reference in this Agreement to the Registration Statement, the Original
Registration Statement, the Base Prospectus or the Prospectus Supplement shall
be deemed to refer to and include the documents incorporated by reference
therein (the "Incorporated Documents") pursuant to Item 12 of Form S-3 which
were filed under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), at any given time, as the case may be; and any reference in this
Agreement to the terms "amend," "amendment" or "supplement" with respect to the
Registration Statement, the Original Registration Statement, the Base Prospectus
or the Prospectus Supplement shall be deemed to refer to and include the filing
of any document under the Exchange Act after the date of this Agreement, or the
issue date of the Base Prospectus or the Prospectus Supplement, as the case may
be, deemed to be incorporated therein by reference. All references in this
Agreement to financial statements and schedules and other information which is
"contained," "included," "described," "referenced," "set forth" or "stated" in
the Registration Statement, the Base Prospectus or the Prospectus Supplement
(and all other references of like import) shall be deemed to mean and include
all such financial statements and schedules and other information which is or is
deemed to be incorporated by reference in the Registration Statement, the Base
Prospectus or the Prospectus Supplement, as the case may be. The Company has not
received any notice that the Commission has issued or intends to issue a stop
order suspending the effectiveness of the Registration Statement or the use of
the Base Prospectus or the Prospectus Supplement or intends to commence a
proceeding for any such purpose. For purposes of this Agreement, "free writing
prospectus" has the meaning set forth in Rule 405 under the Securities Act and
the "Time of Sale Prospectus" means the Base Prospectus, together with the
Prospectus Supplement, if any, and the free writing prospectuses, if any, used
in connection with the Placement, including any documents incorporated by
reference therein.
(B) The Original Registration Statement (and any further documents to be
filed with the Commission) contains all exhibits and schedules as required by
the Securities Act. Each of the Registration Statement and any post-effective
amendment thereto, at the time it became effective, complied in all material
respects with the Securities Act and the applicable Rules and Regulations and
did 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 not misleading. The Base Prospectus, the Time of Sale Prospectus, if
any, and the Prospectus Supplement, each as of its respective date, comply in
all material respects with the Securities Act and the applicable Rules and
Regulations. Each of the Base Prospectus, the Time of Sale Prospectus, if any,
and the Prospectus Supplement, as amended or supplemented, did not and will not
contain as of the date thereof any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
EpiCept Corporation
October 10, 2007
Page 3
Incorporated Documents, when they were filed with the Commission, conformed in
all material respects to the requirements of the Exchange Act and the applicable
rules and regulations promulgated thereunder, and none of such documents, when
they were filed with the Commission, contained any untrue statement of a
material fact or omitted to state a material fact necessary to make the
statements therein (with respect to Incorporated Documents incorporated by
reference in the Base Prospectus or Prospectus Supplement), in light of the
circumstances under which they were made not misleading. No post-effective
amendment to the Registration Statement reflecting any facts or events arising
after the date thereof which represent, individually or in the aggregate, a
fundamental change in the information set forth therein is required to be filed
with the Commission. As of the date hereof, there are no documents required to
be filed with the Commission in connection with the transaction contemplated
hereby that (x) have not been filed as required pursuant to the Securities Act
or (y) will not be filed within the requisite time period. As of the date
hereof, there are no contracts or other documents required to be described in
the Base Prospectus, the Time of Sale Prospectus, if any, or Prospectus
Supplement, or to be filed as exhibits or schedules to the Registration
Statement, which have not been described or filed as required.
(C) The Company is eligible to use free writing prospectuses in
connection with the Placement pursuant to Rules 164 and 433 under the Securities
Act. Any free writing prospectus that the Company is required to file pursuant
to Rule 433(d) under the Securities Act has been, or will be, filed with the
Commission in accordance with the requirements of the Securities Act and the
applicable rules and regulations of the Commission thereunder. Each free writing
prospectus that the Company has filed, or is required to file, pursuant to Rule
433(d) under the Securities Act or that was prepared by or behalf of or used by
the Company complies or will comply in all material respects with the
requirements of the Securities Act and the applicable rules and regulations of
the Commission thereunder. The Company will not, without the prior consent of
the Placement Agents, prepare, use or refer to, any free writing prospectus.
(D) Neither the Company nor any of its directors and officers has
distributed and none of them will distribute, prior to the Closing Date, any
offering material in connection with the offering and sale of the Shares other
than the Base Prospectus, the Time of Sale Prospectus, if any, the Prospectus
Supplement, the Registration Statement, copies of the documents incorporated by
reference therein and any other materials permitted by the Securities Act.
(E) Without the prior written consent of the Company, the Placement
Agents hereby confirm that neither of them has given and will not give to any
prospective purchaser of the Shares and Warrants any free writing prospectuses
other than as set forth on Schedule A hereto
(E) The Company and the Placement Agents have agreed that the
information set forth on Schedule B hereto (such information shall be referred
to in this Agreement as the "Scripted Information") shall be orally conveyed by
the Placement Agents to each Purchaser prior to the Placement Agents confirming
sales of Shares and Warrants.
SECTION 3. REPRESENTATIONS AND WARRANTIES. Except as set forth in the
Registration Statement or the SEC Reports (as defined below), the Company hereby
represents and warrants to the Placement Agents as follows:
(A) Organization and Qualification. The Company owns, directly or
indirectly, all of the capital stock or other equity interests of each of its
direct and indirect subsidiaries (individually, a "Subsidiary") Subsidiary free
and clear of any "Liens" (which for purposes of this Agreement shall mean a
lien, charge, security interest, encumbrance, right of first refusal, preemptive
right or other restriction, except for a lien on the Common Stock of the
Company's subsidiaries pursuant to the Loan and Security Agreement dated August
30, 2006, with Hercules Technology Growth Capital Inc.), and all the issued and
outstanding shares of capital stock or other equity interests of each Subsidiary
are validly issued and are fully paid, non-assessable and free of preemptive and
similar rights to subscribe for or purchase securities. The Company and each of
the Subsidiaries is an entity duly incorporated or otherwise organized, validly
EpiCept Corporation
October 10, 2007
Page 4
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization (as applicable), with the requisite power and
authority to own and use its properties and assets and to carry on its business
as currently conducted. Neither the Company nor any Subsidiary is in violation
or default of any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents. Each of the
Company and the Subsidiaries is duly qualified to conduct business and is in
good standing as a foreign corporation or other entity in each jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not have or reasonably be expected to result
in (i) a material adverse effect on the legality, validity or enforceability of
any Transaction Document, (ii) a material adverse effect on the results of
operations, assets, business or financial condition of the Company and the
Subsidiaries, taken as a whole, or (iii) a material adverse effect on the
Company's ability to perform in any material respect on a timely basis its
obligations under any Transaction Document (any of (i), (ii) or (iii), a
"Material Adverse Effect") and no "Proceeding" (which for purposes of this
Agreement shall mean any action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened) has been instituted in any such
jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or
curtail such power and authority or qualification.
(B) Authorization. The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by each
of the Transaction Documents and otherwise to carry out its obligations
hereunder and thereunder. The execution and delivery of each of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated thereby have been duly authorized by all necessary action on the
part of the Company and no further action is required by the Company, its board
of directors or its stockholders in connection therewith other than in
connection with the "Required Approvals" (as defined in subsection 3(D) below).
Each Transaction Document to which the Company is a party has been (or upon
delivery will have been) duly executed and delivered by the Company and
constitutes the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors' rights generally, (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies, and (iii) that rights to indemnification and
contribution thereunder may be limited by federal or state securities laws or
public policy relating thereto.
(C) No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company, the issuance and sale of the Shares and
Warrants and the consummation by the Company of the other transactions
contemplated hereby and thereby do not and will not (i) conflict with or violate
any provision of the Company's or any Subsidiary's certificate or articles of
incorporation, bylaws or other organizational or charter documents, or (ii)
conflict with, or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, result in the creation of any Lien
upon any of the properties or assets of the Company or any Subsidiary, or give
to others any rights of termination, amendment, acceleration or cancellation
(with or without notice, lapse of time or both) of, any agreement, credit
facility, debt or other instrument (evidencing a Company or Subsidiary debt or
otherwise) or other understanding to which the Company or any Subsidiary is a
party or by which any property or asset of the Company or any Subsidiary is
bound or affected, or (iii) subject to the Required Approvals, conflict with or
result in a violation of any law, rule, regulation, order, judgment, injunction,
decree or other restriction of any court or governmental authority to which the
Company or a Subsidiary is subject (including federal and state securities laws
and regulations), or by which any property or asset of the Company or a
Subsidiary is bound or affected; except in the case of each of clauses (ii) and
(iii), such as would not have a Material Adverse Effect.
(D) Filings, Consents and Approvals. The Company is not required to
obtain any consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any court or other federal, state, local
EpiCept Corporation
October 10, 2007
Page 5
or other governmental authority or other "Person" (defined as an individual or
corporation, partnership, trust, incorporated or unincorporated association,
joint venture, limited liability company, joint stock company, government (or an
agency or subdivision thereof) or other entity of any kind) in connection with
the execution, delivery and performance by the Company of the Transaction
Documents, other than such filings as are required to be made under applicable
Federal and state securities laws and by the Trading Market (collectively, the
"Required Approvals").
(E) Issuance of the Shares and Warrants; Registration. The Shares and
Warrants are duly authorized and, when issued and paid for in accordance with
the applicable Transaction Documents, will be duly and validly issued, fully
paid and nonassessable, free and clear of all Liens imposed by the Company other
than any restrictions on transfer provided for in the Transaction Documents. The
Company has reserved from its duly authorized capital stock the maximum number
of shares of Common Stock issuable pursuant to the Transaction Documents. The
issuance by the Company of the Shares and Warrants has been registered under the
Securities Act and all of the Shares and Warrants are freely transferable and
tradable by the Purchasers without restriction (other than any restrictions
arising solely from an act or omission of a Purchaser). The Shares and Warrants
are being issued pursuant to the Registration Statement. The "Plan of
Distribution" section under the Registration Statement contemplates the issuance
and sale of the Shares and Warrants as provided in the Transaction Documents.
Upon receipt of the Shares and Warrants, the Purchasers will have good and
marketable title to such Shares and Warrants and the Shares will be freely
tradable on the "Trading Market" (which, for purposes of this Agreement means
the following markets or exchanges on which the Common Stock is listed or quoted
for trading on the date in question: the Nasdaq Capital Market and OMX Nordic
Exchange).
(F) Capitalization. The capitalization of the Company is as described in
the Registration Statement and the SEC Reports. The Company has not issued any
capital stock since the date of the filing of its most recently filed periodic
report under the Exchange Act, other than pursuant to the exercise of employee
stock options under the Company's stock option plans, the issuance of shares of
Common Stock to employees pursuant to the Company's employee stock purchase plan
and pursuant to the conversion or exercise of securities exercisable,
exchangeable or convertible into Common Stock ("Common Stock Equivalents"). No
Person has any right of first refusal, preemptive right, right of participation,
or any similar right to participate in the transactions contemplated by the
Transaction Documents, except for those investors who participated in the
Company's December 2006 Private Placement. Except as a result of the purchase
and sale of the Shares and Warrants and as described in the Registration
Statement, there are no outstanding options, warrants, script rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities, rights or obligations convertible into or exercisable or
exchangeable for, or giving any Person any right to subscribe for or acquire,
any shares of Common Stock, or contracts, commitments, understandings or
arrangements by which the Company or any Subsidiary is or may become bound to
issue additional shares of Common Stock or Common Stock Equivalents. The
issuance and sale of the Shares and Warrants will not obligate the Company to
issue shares of Common Stock or other securities to any Person (other than the
Purchasers) and will not result in a right of any holder of Company securities
to adjust the exercise, conversion, exchange or reset price under such
securities. All of the outstanding shares of capital stock of the Company are
validly issued, fully paid and nonassessable, have been issued in compliance
with all federal and state securities laws, and none of such outstanding shares
was issued in violation of any preemptive rights or similar rights to subscribe
for or purchase securities. No further approval or authorization of any
stockholder, the Board of Directors of the Company or others is required for the
issuance and sale of the Shares and Warrants. Except as described in the
Registration Statement and the SEC Reports, there are no stockholders
agreements, voting agreements or other similar agreements with respect to the
Company's capital stock to which the Company is a party or, to the knowledge of
the Company, between or among any of the Company's stockholders.
(G) SEC Reports; Financial Statements. The Company has complied in all
material respects with requirements to file all reports, schedules, forms,
statements and other documents required to be filed by it under the Exchange
Act, including pursuant to Section 13(a) or 15(d) thereof, for one year
EpiCept Corporation
October 10, 2007
Page 6
preceding the date hereof (or such shorter period as the Company was required by
law or regulation to file such material) (the foregoing materials, including the
exhibits thereto and documents incorporated by reference therein, being
collectively referred to herein as the "SEC Reports") on a timely basis or has
received a valid extension of such time of filing and has filed any such SEC
Reports prior to the expiration of any such extension. As of their respective
dates, the SEC Reports complied in all material respects with the requirements
of the Securities Act and the Exchange Act, as applicable, and the rules and
regulations of the Commission promulgated thereunder, and none of the SEC
Reports, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. The financial statements of the Company
included in the SEC Reports comply in all material respects with applicable
accounting requirements and the rules and regulations of the Commission with
respect thereto as in effect at the time of filing. Such financial statements
have been prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis during the periods involved
("GAAP"), except as may be otherwise specified in such financial statements or
the notes thereto and except that unaudited financial statements may not contain
all footnotes required by GAAP, and fairly present in all material respects the
financial position of the Company and its consolidated subsidiaries as of and
for the dates thereof and the results of operations and cash flows for the
periods then ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.
(H) Material Changes; Undisclosed Events, Liabilities or Developments.
Since the date of the latest audited financial statements included within the
SEC Reports or the Registration Statement, except as disclosed in the SEC
Reports, (i) there has been no event, occurrence or development that has had or
would result in a Material Adverse Effect, (ii) the Company has not incurred any
liabilities (contingent or otherwise) other than (A) trade payables and accrued
expenses incurred in the ordinary course of business consistent with past
practice and (B) liabilities not required to be reflected in the Company's
financial statements pursuant to GAAP disclosed in filings made with the
Commission, (iii) the Company has not altered its method of accounting, (iv) the
Company has not declared or made any dividend or distribution of cash or other
property to its stockholders or purchased, redeemed or made any agreements to
purchase or redeem any shares of its capital stock and (v) the Company has not
issued any equity securities to any officer, director or "Affiliate" (defined as
any Person that, directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with a Person, as such
terms are used in and construed under Rule 144 under the Securities Act), except
pursuant to existing Company stock option plans. The Company does not have
pending before the Commission any request for confidential treatment of
information. Except for the issuance of the Shares and Warrants pursuant to the
Transaction Documents, no event, liability or development has occurred or exists
with respect to the Company or its Subsidiaries or their respective business,
properties, operations or financial condition, that would be required to be
disclosed by the Company under applicable securities laws at the time this
representation is made that has not been publicly disclosed prior to the date of
this Agreement or in the Time of Sale Prospectus.
(I) Litigation. Except as disclosed in the SEC Reports or the
Registration Statement, there is no action, suit, inquiry, notice of violation,
Proceeding or investigation pending or, to the knowledge of the Company,
threatened against or affecting the Company, any Subsidiary or any of their
respective properties before or by any court, arbitrator, governmental or
administrative agency or regulatory authority (federal, state, county, local or
foreign) (collectively, an "Action") which (i) adversely affects or challenges
the legality, validity or enforceability of any of the Transaction Documents or
the Shares or Warrants or (ii) would, if there were an unfavorable decision,
have a Material Adverse Effect. Neither the Company nor any Subsidiary, nor any
director or officer thereof, is or has been the subject of any Action involving
a claim of violation of or liability under federal or state securities laws or a
claim of breach of fiduciary duty. There has not been, and to the knowledge of
the Company, there is not pending or contemplated, any investigation by the
Commission involving the Company or any current or former director or officer of
the Company. The Commission has not issued any stop order or other order
suspending the effectiveness of any registration statement filed by the Company
or any Subsidiary under the Securities Act. No executive officer, to the
knowledge of the Company, is in violation of any material term of any employment
EpiCept Corporation
October 10, 2007
Page 7
contract, confidentiality, disclosure or proprietary information agreement or
non-competition agreement, or any other contract or agreement or any restrictive
covenant, and, to the Company's knowledge, the continued employment of each such
executive officer does not subject the Company or any of its Subsidiaries to any
liability with respect to any of the foregoing matters. The Company and its
Subsidiaries are in compliance with all U.S. federal, state, local and foreign
laws and regulations relating to employment and employment practices, terms and
conditions of employment and wages and hours, except where the failure to be in
compliance would not, individually or in the aggregate, have a Material Adverse
Effect.
(J) Labor Relations. No material labor dispute exists or, to the
knowledge of the Company, is imminent with respect to any of the employees of
the Company which would have a Material Adverse Effect.
(K) Compliance. Neither the Company nor any Subsidiary (i) is in default
under or in violation of (and no event has occurred that has not been waived
that, with notice or lapse of time or both, would result in a default by the
Company or any Subsidiary under), nor has the Company or any Subsidiary received
notice of a claim that it is in default under or that it is in violation of, any
indenture, loan or credit agreement or any other agreement or instrument to
which it is a party or by which it or any of its properties is bound (whether or
not such default or violation has been waived), (ii) is in violation of any
order of any court, arbitrator or governmental body, or (iii) is or has been in
violation of any statute, rule or regulation of any governmental authority,
including without limitation all foreign, federal, state and local laws
applicable to its business and all such laws that affect the environment, except
in each case as would not have a Material Adverse Effect.
(L) Regulatory Permits. The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities required to conduct their
respective businesses as described in the SEC Reports, except where the failure
to possess such permits would not have a Material Adverse Effect ("Material
Permits"), and neither the Company nor any Subsidiary has received any notice of
proceedings relating to the revocation or modification of any Material Permit.
(M) Title to Assets. The Company and the Subsidiaries have good and
marketable title in all personal property owned by them that is material to the
business of the Company and the Subsidiaries, in each case free and clear of all
Liens, except for Liens for the benefit of Hercules Technology Growth Capital,
Inc. ("Hercules") and Xxxxx as do not materially affect the value of such
property and do not materially interfere with the use made and proposed to be
made of such property by the Company and the Subsidiaries and Liens for the
payment of federal, state or other taxes, the payment of which is neither
delinquent nor subject to penalties. Any real property and facilities held under
lease by the Company and the Subsidiaries are held by them under valid and
subsisting leases enforceable against the Company of which the Company and the
Subsidiaries are in compliance.
(N) Patents and Trademarks. The Company and the Subsidiaries have, or
have rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, trade secrets, inventions, copyrights,
licenses and other similar intellectual property rights necessary or material
for use in connection with their respective businesses as described in the SEC
Reports and which the failure to so have would have a Material Adverse Effect
(collectively, the "Intellectual Property Rights"). Neither the Company nor any
Subsidiary has received a notice (written or otherwise) that the Intellectual
Property Rights used by the Company or any Subsidiary violates or infringes upon
the rights of any Person. To the knowledge of the Company, all such Intellectual
Property Rights are enforceable and there is no existing infringement by another
Person of any of the Intellectual Property Rights of others. The Company and its
Subsidiaries have taken reasonable measures to protect the secrecy,
confidentiality and value of all of their intellectual properties, except where
failure to do so would not, individually or in the aggregate, have a Material
Adverse Effect.
EpiCept Corporation
October 10, 2007
Page 8
(O) Insurance. The Company and the Subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which the Company and
the Subsidiaries are engaged, including, but not limited to, directors and
officers insurance coverage. Neither the Company nor any Subsidiary has any
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business without a
significant increase in cost.
(P) Transactions With Affiliates and Employees. Except as disclosed in
the Registration Statement or the SEC Reports, none of the officers or directors
of the Company and, to the knowledge of the Company, none of the employees of
the Company is presently a party to any transaction with the Company or any
Subsidiary (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner, other than (i) for payment of
salary or consulting fees for services rendered, (ii) reimbursement for expenses
incurred on behalf of the Company and (iii) for other employee benefits,
including equity compensation arrangements.
(Q) Xxxxxxxx-Xxxxx. The Company is in material compliance with all
provisions of the Xxxxxxxx-Xxxxx Act of 2002 which are applicable to it as of
the date hereof and of the Closing Date.
(R) Certain Fees. Except as otherwise provided in this Agreement and
fees payable to Banc of America Securities LLC ("BAS") and R&R pursuant to that
certain agreement dated July 31, 2007 by and among the Company, BAS and R&R, as
well as that certain letter agreement between the Company and R&R dated July 31,
2007, no brokerage or finder's fees or commissions are or will be payable by the
Company to any broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the transactions
contemplated by the Transaction Documents. The Purchasers shall have no
obligation with respect to any fees or with respect to any claims made by or on
behalf of other Persons for fees of a type contemplated in this Section that may
be due in connection with the offer and sale of the Shares and Warrants
contemplated by the Transaction Documents.
(S) Trading Market Rules. The issuance and sale of Shares and Warrants
hereunder does not contravene the rules and regulations of the Trading Market.
(T) Investment Company. The Company is not, and immediately after
receipt of payment for Shares and Warrants, will not be, an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
(U) Registration Rights. Except as disclosed in the Registration
Statement or the SEC Reports, no Person has any right to cause the Company to
effect the registration under the Securities Act of any securities of the
Company.
(V) Listing and Maintenance Requirements. The Company's Common Stock is
registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the
Company has taken no action designed to, or which to its knowledge will have the
effect of, terminating the registration of the Common Stock under the Exchange
Act nor has the Company received any notification that the Commission is
contemplating terminating such registration. Except as disclosed in the
Registration Statement or the SEC Reports, the Company has not, in the 12 months
preceding the date hereof, received notice from any Trading Market on which the
Common Stock is or has been listed or quoted to the effect that the Company is
not in compliance with the listing or maintenance requirements of such Trading
Market. The Company is, and at the Closing Date will be, in compliance with all
such listing and maintenance requirements.
EpiCept Corporation
October 10, 2007
Page 9
(W) Application of Takeover Protections. The Company and its Board of
Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under the Company's Certificate of Incorporation (or
similar charter documents) or the laws of its state of incorporation that is or
could become applicable to the Purchasers as a result of the Purchasers and the
Company fulfilling their obligations or exercising their rights under the
Transaction Documents, including without limitation as a result of the Company's
issuance of Shares and Warrants and the Purchasers' ownership of the Shares and
Warrants.
(X) Indebtedness. Other than as set forth or described in the
Registration Statement and SEC Reports, including without limitation, the
Company's independent registered public accounting firm's explanatory paragraph
in its report on the Company's consolidated financial statements for 2006. the
Company has no knowledge of any facts or circumstances which lead it to believe
that it will file for reorganization or liquidation under the bankruptcy or
reorganization laws of any jurisdiction within one year from the Closing Date.
The Registration Statement or SEC Reports set forth, as of the dates thereof,
all outstanding secured and unsecured Indebtedness of the Company or any
Subsidiary, or for which the Company or any Subsidiary has commitments. For the
purposes of this Agreement, "Indebtedness" shall mean (a) any liabilities for
borrowed money or amounts owed in excess of $50,000 (other than trade accounts
payable incurred in the ordinary course of business), (b) all guaranties,
endorsements and other contingent obligations in respect of Indebtedness of
others, whether or not the same are or should be reflected in the Company's
balance sheet (or the notes thereto), except guaranties by endorsement of
negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business; and (c) the present value of any lease payments in
excess of $50,000 due under leases required to be capitalized in accordance with
GAAP. Neither the Company nor any Subsidiary is in default with respect to any
Indebtedness.
(Y) Tax Status. Except for matters that would not, individually or in
the aggregate, have a Material Adverse Effect, the Company and each Subsidiary
has filed all necessary federal, state and foreign income and franchise tax
returns and has paid or accrued all taxes shown as due thereon, and the Company
has no knowledge of a tax deficiency which has been asserted or threatened
against the Company or any Subsidiary.
(Z) Foreign Corrupt Practices. Neither the Company, nor to the knowledge
of the Company, any agent or other person acting on behalf of the Company, has
(i) directly or indirectly, used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses related to foreign or domestic
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to any foreign or domestic political
parties or campaigns from corporate funds, (iii) failed to disclose fully any
contribution made by the Company (or made by any person acting on its behalf of
which the Company is aware) which is in violation of law, or (iv) violated in
any material respect any provision of the Foreign Corrupt Practices Act of 1977,
as amended.
(AA) Accountants. The Company's accountants are Deloitte & Touche LLP. To
the knowledge of the Company, such accountants, who the Company expects will
express their opinion with respect to the financial statements to be included in
the Company's next Annual Report on Form 10-K, are a registered public
accounting firm as required by the Securities Act.
(BB) Regulation M Compliance. The Company has not, and to its knowledge
no one acting on its behalf has, (i) taken, directly or indirectly, any action
designed to cause or to result in the stabilization or manipulation of the price
of any security of the Company to facilitate the sale or resale of any of the
Shares and Warrants, (ii) sold, bid for, purchased, or, paid any compensation
for soliciting purchases of, any of the Shares and Warrants (other than for the
placement agent's placement of the Shares and Warrants), or (iii) paid or agreed
to pay to any person any compensation for soliciting another to purchase any
other securities of the Company.
EpiCept Corporation
October 10, 2007
Page 10
(CC) Approvals. Other than the filing of an additional listing
application, the issuance and listing on the Nasdaq Capital Market of the Shares
requires no further approvals, including but not limited to, the approval of
shareholders.
(DD) NASD Affiliations. To the knowledge of the Company, there are no
affiliations with any Financial Industry Regulatory Authority ("FINRA") member
firm among the Company's officers, directors or any five percent (5%) or greater
stockholder of the Company, except as set forth in the Base Prospectus.
SECTION 4. INDEMNIFICATION. The Company agrees to the indemnification and other
agreements set forth in the Indemnification Provisions (the "Indemnification")
attached hereto as Addendum A, the provisions of which are incorporated herein
by reference and shall survive the termination or expiration of this Agreement.
SECTION 5. ENGAGEMENT TERM. The Placement Agents' engagement hereunder will be
for the period of 30 days. The engagement may be terminated by either the
Company or the Placement Agents at any time upon 5 days' written notice.
Notwithstanding anything to the contrary contained herein, the provisions
concerning confidentiality, indemnification, contribution and the Company's
obligations to pay fees and reimburse expenses contained herein and the
Company's obligations contained in the Indemnification Provisions will survive
any expiration or termination of this Agreement. Each Placement Agent agrees not
to use any confidential information concerning the Company provided to it by the
Company for any purposes other than those contemplated under this Agreement.
SECTION 6. PLACEMENT AGENT INFORMATION. The Company agrees that any information
or advice rendered by either Placement Agent in connection with this engagement
is for the confidential use of the Company only in their evaluation of the
Placement and, except as otherwise required by law, the Company will not
disclose or otherwise refer to the advice or information in any manner without
such Placement Agent's prior written consent. Notwithstanding the foregoing, the
Company may file this Agreement and any Transaction Document with the Commission
in any filing made by the Company pursuant to the Securities Act, the Exchange
Act of the rules and regulations thereunder, and may refer to the Placement
Agents' engagement hereunder and the terms of this Agreement as well in any such
filing.
SECTION 7. NO FIDUCIARY RELATIONSHIP. This Agreement does not create, and shall
not be construed as creating rights enforceable by any person or entity not a
party hereto, except those entitled hereto by virtue of the Indemnification
Provisions hereof. The Company acknowledges and agrees that neither Placement
Agent is, and shall not be construed as, a fiduciary of the Company and shall
have no duties or liabilities to the equity holders or the creditors of the
Company or any other person by virtue of this Agreement or the retention of
either Placement Agent hereunder, all of which are hereby expressly waived.
SECTION 8. CLOSING. The obligations of the Placement Agents and the Purchasers,
and the closing of the sale of the Shares and Warrants hereunder are subject to
the accuracy, when made and on the Closing Date, of the representations and
warranties on the part of the Company and its Subsidiaries contained herein, to
the accuracy of the statements of the Company and its Subsidiaries made in any
certificates pursuant to the provisions hereof, to the performance by the
Company and its Subsidiaries of their obligations hereunder, and to each of the
following additional terms and conditions:
(A) No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall have
been initiated or threatened by the Commission, and any request for additional
information on the part of the Commission (to be included in the Registration
Statement, the Base Prospectus or the Prospectus Supplement or otherwise) shall
have been complied with to the reasonable satisfaction of the Placement Agents.
Any filings required to be made by the Company in connection with the offer and
EpiCept Corporation
October 10, 2007
Page 11
sale of the Shares and Warrants shall have been timely filed with the
Commission.
(B) All corporate proceedings and other legal matters incident to the
authorization, form, execution, delivery and validity of each of this Agreement,
the Shares and Warrants, the Registration Statement, the Base Prospectus and the
Prospectus Supplement and all other legal matters relating to this Agreement and
the transactions contemplated hereby shall be reasonably satisfactory in all
material respects to counsel for the Placement Agents, and the Company shall
have furnished to such counsel all documents and information that they may
reasonably request to enable them to pass upon such matters.
(C) The Placement Agents shall have received from outside counsel to the
Company such counsel's written opinion, addressed to the Placement Agents and
the Purchasers dated as of the Closing Date, in form and substance reasonably
satisfactory to the Placement Agents and a "negative assurance letter" to the
Placement Agents from such counsel. BMO shall have received from the Company's
independent registered public accounting firm, Deloitte & Touche LLP, a
customary comfort letter addressed to BMO in form and substance reasonably
satisfactory to BMO.
(D) Neither the Company nor any of its Subsidiaries shall have sustained
since the date of the latest audited financial statements included or
incorporated by reference in the Base Prospectus, any loss or interference with
its business from fire, explosion, flood, terrorist act or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth in or
contemplated by the Base Prospectus and (ii) since such date there shall not
have been any change in the capital stock or long-term debt of the Company or
any of its Subsidiaries or any change, or any development involving a
prospective change, in or affecting the business, financial condition,
stockholders' equity or results of operations of the Company and its
Subsidiaries, otherwise than as set forth in or contemplated by the Base
Prospectus, the effect of which, in any such case described in clause (i) or
(ii), is, in the judgment of the Placement Agent, so material and adverse as to
make it impracticable or inadvisable to proceed with the sale or delivery of the
Shares and Warrants on the terms and in the manner contemplated by the Base
Prospectus, the Time of Sale Prospectus, if any, and the Prospectus Supplement.
(E) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange or the Nasdaq Capital Market or trading
in any securities of the Company on any exchange or in the over-the-counter
market, shall have been suspended or minimum or maximum prices or maximum ranges
for prices shall have been established on any such exchange or such market by
the Commission, by such exchange or by any other regulatory body or governmental
authority having jurisdiction, (ii) a banking moratorium shall have been
declared by federal or state authorities or a material disruption has occurred
in commercial banking or securities settlement or clearance services in the
United States, (iii) the United States shall have become engaged in hostilities
in which it is not currently engaged, the subject of an act of terrorism, there
shall have been an escalation in hostilities involving the United States, or
there shall have been a declaration of a national emergency or war by the United
States, or (iv) there shall have occurred any other calamity or crisis or any
change in general economic, political or financial conditions in the United
States or elsewhere, if the effect of any such event in clause (i), (iii) or
(iv) makes it, in the sole judgment of the Placement Agents, impracticable or
inadvisable to proceed with the sale or delivery of the Shares and Warrants on
the terms and in the manner contemplated by the Base Prospectus and the
Prospectus Supplement.
(F) No action shall have been taken and no statute, rule, regulation or
order shall have been enacted, adopted or issued by any governmental agency or
body which would, as of the Closing Date, prevent the issuance or sale of the
Shares and Warrants or materially and adversely affect or potentially and
adversely affect the business or operations of the Company; and no injunction,
restraining order or order of any other nature by any federal or state court of
competent jurisdiction shall have been issued as of the Closing Date which would
EpiCept Corporation
October 10, 2007
Page 12
prevent the issuance or sale of the Shares and Warrants or materially and
adversely affect or potentially and adversely affect the business or operations
of the Company.
(G) The Company shall have prepared and filed with the Commission a
Current Report on Form 8-K with respect to the Placement, including this
Agreement as an exhibit thereto.
(H) The Company shall have entered into subscription agreements with
each of the Purchasers and such agreements shall be in full force and effect and
shall contain representations and warranties of the Company as agreed to between
the Company and the Purchasers.
(I) The FINRA shall have raised no objection to the fairness and
reasonableness of the terms and arrangements of this Agreement. In addition, the
Company shall, if requested by the Placement Agents, make or authorize Placement
Agent's counsel to make on the Company's behalf, an Issuer Filing with the FINRA
Corporate Financing Department pursuant to NASD Rule 2710 with respect to the
Registration Statement and pay all filing fees required in connection therewith.
(J) Prior to the Closing Date, the Company shall have furnished to the
Placement Agents such further information, certificates and documents as the
Placement Agents may reasonably request.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Placement Agents.
SECTION 9. Governing Law. This Agreement will be governed by, and construed in
accordance with, the laws of the State of New York applicable to agreements made
and to be performed entirely in such State. This Agreement may not be assigned
by either party without the prior written consent of the other party. This
Agreement shall be binding upon and inure to the benefit of the parties hereto,
and their respective successors and permitted assigns. Any right to trial by
jury with respect to any dispute arising under this Agreement or any transaction
or conduct in connection herewith is waived. Any dispute arising under this
Agreement may be brought into the courts of the State of New York or into the
Federal Court, in either case located in New York, New York, and, by execution
and delivery of this Agreement, the Company hereby accepts for itself and in
respect of its property, generally and unconditionally, the jurisdiction of
aforesaid courts. Each party hereto hereby irrevocably waives personal service
of process and consents to process being served in any such suit, action or
proceeding by delivering a copy thereof via overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
If either party shall commence an action or proceeding to enforce any provisions
of this Agreement, then the prevailing party in such action or proceeding shall
be reimbursed by the other party for its reasonable attorneys' fees and other
costs and expenses incurred with the investigation, preparation and prosecution
of such action or proceeding.
SECTION 10. Entire Agreement/Misc. This Agreement (including the attached
Indemnification Provisions) embodies the entire agreement and understanding
between the parties hereto and supersedes all prior agreements and
understandings relating to the subject matter hereof. If any provision of this
Agreement is determined to be invalid or unenforceable in any respect, such
determination will not affect such provision in any other respect or any other
provision of this Agreement, which will remain in full force and effect. This
Agreement may not be amended or otherwise modified or waived except by an
instrument in writing signed by both Placement Agents and the Company. The
representations, warranties, agreements and covenants contained herein shall
survive the closing of the Placement and delivery and/or exercise of the Shares
and Warrants, as applicable. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
EpiCept Corporation
October 10, 2007
Page 13
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission or a .pdf format file, such signature shall
create a valid and binding obligation of the party executing (or on whose behalf
such signature is executed) with the same force and effect as if such facsimile
signature page were an original thereof.
SECTION 11. Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile or e-mail at the
facsimile number or e-mail address specified on the signature pages attached
hereto prior to 6:30 p.m. (New York City time) on a business day, (b) the next
business day after the date of transmission, if such notice or communication is
delivered via facsimile or e-mail at the facsimile number or e-mail address on
the signature pages attached hereto on a day that is not a business day or later
than 6:30 p.m. (New York City time) on any business day, (c) the business day
following the date of mailing, if sent by U.S. nationally recognized overnight
courier service, or (d) upon actual receipt by the party to whom such notice is
required to be given. The address for such notices and communications shall be
as set forth on the signature pages hereto.
EpiCept Corporation
October 10, 2007
Page 14
Please confirm that the foregoing correctly sets forth our agreement by signing
and returning to R&R the enclosed copy of this Agreement.
Very truly yours,
XXXXXX & XXXXXXX, LLC
By:
-----------------------------------
Name:
Title:
Address for notice:
0000 Xxxxxx xx xxx Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX, 00000
e-mail: xxxxxx@xxxxxxxxxxxxxxxx.xxx
---------------------------
BMO CAPITAL MARKETS CORP.
By:
-----------------------------------
Name:
Title:
Address for notice:
0 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
email: xxxxxx.xxxxxxx@xxx.xxx
Accepted and Agreed to as of the date first written above:
EPICEPT CORPORATION
By:
-----------------------------------
Name:
Title:
Address for notice:
000 Xxx Xxx Xxxx Xxxxx Xxxx, 0xx Xxxxx
Xxxxxxxxx, XX, 00000
e-mail:
ADDENDUM A
INDEMNIFICATION PROVISIONS
In connection with the engagement of Xxxxxx & Xxxxxxx, LLC ("R&R") and BMO
Capital Markets Corp. ("BMO") by EpiCept Corporation (the "Company") pursuant to
a letter agreement, dated October 8, 2007, between the Company and R&R, as it
may be amended from time to time in writing (the "Agreement"), the Company
hereby agrees as follows:
1. To the extent permitted by law, the Company will indemnify R&R, BMO and
their repsective affiliates, stockholders, directors, officers, employees
and controlling persons (within the meaning of Section 15 of the
Securities Act of 1933, as amended, or Section 20 of the Securities
Exchange Act of 1934) against all losses, claims, damages, expenses and
liabilities, as the same are incurred (including the reasonable fees and
expenses of counsel), relating to or arising out of its activities
hereunder or pursuant to the Agreement, except to the extent that any
losses, claims, damages, expenses or liabilities (or actions in respect
thereof) are found in a final judgment (not subject to appeal) by a court
of law to have resulted primarily and directly from (a) R&R's or BMO's
willful misconduct or gross negligence in performing the services
described herein or in the Agreement or (b) the failure of either R&R or
BMO to convey the Scripted Information as provided in Section 2(E) of the
Agreement.
2. To the extent permitted by law, R&R will indemnify the Company and its
affiliates, stockholders, directors, officers, employees and controlling
persons (within the meaning of Section 15 of the Securities Act of 1933,
as amended, or Section 20 of the Securities Exchange Act of 1934) against
all losses, claims, damages, expenses and liabilities, as the same are
incurred (including the reasonable fees and expenses of counsel), relating
to or arising out of any allegations or claims by Xxxxxxxx Capital, LLC
relating to the alleged delivery by R&R to Xxxxxxxx Capital, LLC of
information that could be deemed to include material non-public
information concerning the Company without the prior consent of Xxxxxxxx
Capital, LLC; provided, that in no event shall R&R's liability under this
provision exceed the aggregate amount of the fees received by R&R pursuant
to the Agreement.
3. To the extent permitted by law, R&R and BMO will indemnify the Company and
its affiliates, stockholders, directors, officers, employees and
controlling persons (within the meaning of Section 15 of the Securities
Act of 1933, as amended, or Section 20 of the Securities Exchange Act of
1934) against all losses, claims, damages, expenses and liabilities, as
the same are incurred (including the reasonable fees and expenses of
counsel), relating to or arising out of the failure of R&R or BMO to
convey the Scripted Information as provided in Section 2(E) of the
Agreement.
4. Promptly after receipt by an indemnified party of notice of any claim or
the commencement of any action or proceeding with respect to which an
indemnified party is entitled to indemnity hereunder, the indemnified
party will notify the indemnifying party in writing of such claim or of
the commencement of such action or proceeding, and the indemnifying party
will assume the defense of such action or proceeding and will employ
counsel reasonably satisfactory to the indemnified party and will pay the
fees and expenses of such counsel. If an indemnified party fails to
provide prompt notice of such claim or proceeding the indemnifying party
shall be relieved of its obligations set forth in paragraph 1 and 4 if and
to the extent the indemnifying party is materially prejudiced by such
failure to so notify. Notwithstanding the preceding sentence, the
indemnified party will be entitled to employ counsel separate from counsel
for the indemnifying party and from any other party in such action if
counsel for the indemnified party reasonably determines that it would be
inappropriate under the applicable rules of professional responsibility
for the same counsel to represent both the indemnifying party and the
indemnified party. In such event, the reasonable fees and disbursements of
no more than one such separate counsel will be paid by the indemnifying
party. The indemnifying party will have the exclusive right to settle the
claim or proceeding provided that the indemnifying party will not settle
any such claim, action or proceeding without the prior written consent of
the indemnified party, which will not be unreasonably withheld.
5. The Company agrees to notify R&R and BMO promptly of the assertion against
it or any other person of any claim or the commencement of any action or
proceeding relating to the Placement.
6. If for any reason the foregoing indemnity is unavailable to the
indemnified party or insufficient to hold the indemnified party harmless,
then the Company, R&R and BMO agree to contribute to the amount paid or
payable by the indemnified party as a result of such losses, claims,
damages or liabilities in such proportion as is appropriate to reflect not
only the relative benefits received by the Company on the one hand and R&R
and BMO on the other, but also the relative fault of the Company on the
one hand and R&R and BMO on the other that resulted in such losses,
claims, damages or liabilities, as well as any relevant equitable
considerations. The amounts paid or payable by a party in respect of
losses, claims, damages and liabilities referred to above shall be deemed
to include any legal or other fees and expenses incurred in defending any
litigation, proceeding or other action or claim. Notwithstanding the
provisions hereof, R&R's an BMO's share of the liability hereunder shall
not be in excess of the amount of fees actually received, or to be
received, by R&R or BMO, as applicable, under the Agreement (excluding any
amounts received as reimbursement of expenses incurred by R&R). No person
guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
7. These Indemnification Provisions shall remain in full force and effect
whether or not the transaction contemplated by the Agreement is completed
and shall survive the termination of the Agreement, and shall be in
addition to any liability that the Company might otherwise have to any
indemnified party under the Agreement or otherwise.
XXXXXX & XXXXXXX, LLC
BMO CAPITAL MARKETS CORP.
By:____________________________
By:__________________________ Name:
Name: Title:
Title:
Accepted and Agreed to as of the date first written above:
EPICEPT CORPORATION
By:__________________________
Name:
Title:
SCHEDULE A
FREE WRITING PROSPECTUSES
-------------------------
Emails sent to prospective purchasers with draft agreements and base prospectus
SCHEDULE B
SCRIPTED INFORMATION
--------------------
Shares Being Offered................... Up to 7,568,662 shares. We have
indications of interest of up to
4,388,298 shares.
Warrants Being Offered................. Warrants to purchase up to 3,784,331
shares (or 2,194,149 shares based on
current indications of interest) of the
Company's common stock at an exercise
price of $1.88 per share from and after
the six month anniversary of the
Closing Date.
Public Offering Price.................. $1.88 per share.
Aggregate Co-Placement Agents' Fees.... A cash fee payable immediately upon the
closing of the Placement equal to 6% of
the first $10,000,000 of aggregate
gross proceeds raised in the Placement
and 7.6% of aggregate gross proceeds in
excess of $10,000,000.
Net Proceeds Before Expenses to the Up to $13.3 million if we sell all of
Company................................ the shares being offered. We currently
have indications of interest of shares
yielding net proceeds of up to $7.8
million.
Shares Outstanding Before the Offering.. As of September 30, 2007, 37,952,289
shares, not including shares issuable
upon exercise of the Warrants.
The last reported sale price of EpiCept's common stock on October 9, 2007 was
$1.88 per share.
In addition, the Proceeds Before Expenses to the Company may be reduced by
approximately $250,000 in fees owed to other financial advisors to the Company.
