EXHIBIT 10.14
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Placement Agency Agreement
PLACEMENT AGENCY AGREEMENT
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June 18, 2004
Xxxxxxx Xxxxx Ventures, Inc.
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxxxx & Xxxxxxx, LLC
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Vyteris, Inc., a Delaware corporation (the "COMPANY"), hereby confirms its
agreement (the "AGREEMENT") with Xxxxxxx Xxxxx Ventures, Inc., a Delaware
corporation ("XXXXXXX XXXXX"), and Xxxxxx & Xxxxxxx, LLC, a Delaware limited
liability company ("R&R," each of Xxxxxxx Xxxxx and R&R being referred to herein
individually as a "PLACEMENT Agent" and collectively as the "PLACEMENT AGENTS"),
as follows (unless the context otherwise requires, as used herein, the "COMPANY"
refers to Vyteris, Inc. and each of its subsidiaries, if any):
1. OFFERING.
(a) The Company will offer (the "OFFERING") for sale through the Placement
Agents, as exclusive agents for the Company, and their respective selected
dealers, Units (as hereinafter defined) for minimum gross proceeds of
$25,000,000 (the "MINIMUM AMOUNT"). In the event the Offering is
over-subscribed, the Company and the Placement Agents may, in their discretion,
sell additional Units for gross proceeds of up to $5,000,000 to cover
over-allotments (the "OVER-ALLOTMENT"). The term "Unit" shall mean (i) four
shares of the Company's common stock, $0.001 par value per share (the "COMMON
STOCK") and (ii) a warrant to purchase one share of Common Stock at an exercise
price equal $1.875 (the "WARRANT"), which shall have the rights and privileges
described in the Memorandum (as defined in Section 1(d) hereof) under the
heading "Description of Capital Stock." Subscriptions for Units will be accepted
by the Company at a price of $6.00 per Unit (the "PURCHASE PRICE"), with a
minimum investment of $150,000 (25,000 Units): PROVIDED, HOWEVER, that
subscriptions in lesser amounts may be accepted in the Company's and the
Placement Agents' discretion.
Concurrently with the closing of the Offering, a publicly-held company
("PUBCO") will acquire by merger the business of Vyteris and, with the proceeds
of the Offering, continue the existing operations of Vyteris as a subsidiary of
Pubco.
(b) Placement of the Units by the Placements Agent will be made on a
reasonable efforts, "all-or-none" basis with respect to the Minimum Amount. The
Units will be offered to potential subscribers, which may include related
parties of the Placement Agents or the Company,
commencing on the date of the Memorandum for a period of 60 days, unless
extended by the Placement Agents within their mutual discretion for an
additional 15 days or terminated earlier as provided herein (the "OFFERING
PERIOD"). The date on which the Offering shall terminate shall be referred to as
the "TERMINATION DATE." The Closing (as defined in Section 4(c)) may be held up
to ten days after the Termination Date.
Xxxxxxx Xxxxx shall have the right to place $10,000,000 of the Minimum Amount
and R&R shall have the right to place $15,000,000 of the Minimum Amount (the
"ALLOCATED AMOUNTS"), in each case pursuant to the terms of a Co-Placement
Agency Agreement to be entered into between Xxxxxxx Xxxxx and R&R in connection
with the Offering. To the extent that either Placement Agent has not received
subscriptions for its Allocated Amount on or before the date which is two
business days prior to the Closing, such Placement Agent shall provide the other
Placement Agent with notice thereof and the other Placement Agent may place any
such shortfall in order to reach the Minimum Amount. Upon the mutual agreement
of the Company and the Placement Agents, R&R may offer for sale up to an
additional $5,000,000 of Units to cover over-subscriptions, if any. By mutual
agreement, the Placement Agents and the Company may decide to increase the size
of the Offering.
(c) The Placement Agents shall not tender to the Company and the Company
shall not accept subscriptions from, or sell Units to, any persons or entities
that do not qualify as (or are not reasonably believed to be) "accredited
investors," as such term is defined in Rule 501 of Regulation D promulgated
under Section 4(2) of the Securities Act of 1933, as amended (the "ACT").
(d) The offering of the Units will be made by the Placement Agents on behalf
of the Company solely pursuant to the Memorandum, which at all times will be in
form and substance acceptable to the Placement Agents and the Company and their
respective counsel and contain such legends and other information as the
Placement Agents and the Company 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 the Company's Confidential Private Placement Memorandum,
inclusive of all exhibits, and any and all amendments, supplements and
appendices thereto and other Company-approved documents that the Placement
Agents may use on the Company's behalf to sell the Units. Unless otherwise
defined, each capitalized term used in this Agreement will have the same meaning
as shall be set forth in the Memorandum.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. For the purpose of the
following representations and warranties, "Company" shall refer to Vyteris, Inc.
The Company hereby represents and warrants to the Placement Agents that except
as otherwise set forth in the Memorandum, each of the following is true as of
the date hereof except for all representations regarding the Merger Agreement
(as defined in Section 2(d)), the merger described therein (the "MERGER") and
the authorized shares of Vyteris' capital stock (the "PERMITTED EXCEPTIONS"),
and each of the following shall be true in all material respects as of the date
of the Closing:
(a) The Memorandum has been diligently prepared by the Company, at its sole
cost, in conformity with all applicable laws, and is in compliance with
Regulation D as promulgated under Section 4(2) of the Act ("REGULATION D"), the
Act and the requirements of all other rules and regulations (the "REGULATIONS")
of the Securities and Exchange Commission (the "SEC") relating
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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, excluding 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 United States jurisdictions in which either Placement Agent notifies the
Company that the Units are being offered for sale. The Memorandum describes all
material aspects, including attendant risks, of an investment in the Company.
The Company has not taken nor will it take any action that conflicts with the
conditions and requirements of, or that 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 and knows of no
reason why any such exemption would be otherwise unavailable to it. Neither the
Company nor its affiliates has been subject to any order, judgment or decree of
any court or governmental authority of competent jurisdiction temporarily,
preliminarily or permanently enjoining such person for failing to comply with
Section 503 of Regulation D or any other applicable state or federal securities
laws.
(b) The Memorandum (excluding only information contained in Annexes D and E
of the Memorandum) does 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. None of the statements, documents, certificates or other
items prepared or supplied by the Company with respect to the transactions
contemplated hereby contains an untrue statement of a material fact or omits a
material fact necessary to make the statements contained therein not misleading.
There is no fact that the Company has not disclosed in the Memorandum and of
which the Company is aware that would reasonably be expected to have a material
and adverse effect on the business, condition (financial or otherwise),
operations, prospects or property of the Company or any of its subsidiaries,
taken as a whole ("MATERIAL ADVERSE EFFECT").
(c) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. The Company has no
subsidiaries and does not have an equity interest in any other firm,
partnership, association or other entity. The Company is duly qualified to
transact business as a foreign corporation 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.
(d) The Company has all requisite power and authority (corporate and other)
(i) to conduct its business as presently conducted and as proposed to be
conducted (as described in the Memorandum), (ii) to enter into and perform its
obligations under this Agreement, an agreement of merger that will effectuate
the Merger (the "MERGER AGREEMENT"), the Subscription Agreement (as defined in
Section 4(a) hereof), the Warrants, the Placement Agents' Warrants Agreement (as
defined in Section 3(e) hereof) and the Agents' Warrants (as defined in Section
3(e))(each as described in the Memorandum and collectively with this Agreement,
the "TRANSACTION DOCUMENTS") and (iii) to issue, sell and deliver the Common
Stock, the Warrants, the Agents' Warrants and the shares of the Company's Common
Stock issuable upon exercise of the Warrants and the Agents' Warrants (the
"CONVERSION SHARES"). As of the Closing the execution and delivery
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of each of the Transaction Documents shall have been duly authorized by all
necessary corporate action. This Agreement has been duly executed and delivered
and constitutes, and each of the other Transaction Documents, upon due execution
and delivery, will constitute, valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective terms (i)
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to or affecting creditors' rights generally, including the effect of
statutory and other laws regarding fraudulent conveyances and preferential
transfers, and except that no representation is made herein regarding the
enforceability of the Company's obligations to provide indemnification and
contribution remedies under the securities laws and (ii) subject to the
limitations imposed by general equitable principles (regardless of whether such
enforceability is considered in a proceeding at law or in equity).
(e) None of the execution and delivery of, or performance by the Company
under, this Agreement or any of the Transaction Documents or the consummation of
the transactions herein or therein contemplated conflicts with or violates, or
will result in the creation or imposition of any lien, charge or other
encumbrance upon any of the assets of the Company under, any agreement or other
instrument to which the Company is a party or by which the Company or its assets
may be bound, any term of the certificate of incorporation or by-laws of the
Company, or any license, permit, judgment, decree, order, statute, rule or
regulation applicable to the Company or any of its assets.
(f) Immediately prior to the Closing, the Company shall have authorized and
outstanding capital stock as set forth under the heading "Capitalization" in the
Memorandum. All outstanding shares of capital stock of the Company are duly
authorized, validly issued and outstanding, fully paid and nonassessable. Except
as set forth in the Memorandum, as of the date of the Closing: (i) there will be
no outstanding options, stock subscription agreements, warrants or other rights
permitting or requiring the Company or others to purchase or acquire any shares
of capital stock, or other equity securities of the Company, or to pay any
dividend or make any other distribution in respect thereof; (ii) there will be
no securities issued or outstanding that are convertible into or exchangeable
for any of the foregoing and there will be no contracts, commitments or
understandings, 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 the Company will be reserved for issuance for any
purpose; (iv) there will be no voting trusts or other contracts, commitments,
understandings, arrangements or restrictions of any kind with respect to the
ownership, voting or transfer of shares of stock or other securities of the
Company, including without limitation, any preemptive rights, rights of first
refusal, proxies or similar rights; and (v) no person will hold a right to
require the Company to register any securities of the Company under the Act or
to participate in any such registration. As of the date of the Closing, the
issued and outstanding shares of capital stock of the Company will conform to
all statements in relation thereto contained in the Memorandum and the
Memorandum describes all material terms and conditions thereof. All issuances by
the Company of its securities were at the time of their issuance exempt from
registration under the Act and any applicable state securities laws.
(g) No consent, authorization or filing of or with any court or governmental
authority is required in connection with the issuance of the Common Stock, the
Warrants, the Agents' Securities (as hereinafter defined) or the Conversion
Shares or the consummation of the
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transactions contemplated herein or in the other Transaction Documents, except
for required filings with the SEC and applicable "Blue Sky" or state securities
commissions relating specifically to the Offering (all of which will be duly
made on a timely basis).
(h) Except as set forth in the Memorandum, the financial statements,
together with the related notes thereto, of the Company included in the
Memorandum are true and complete and present fairly, in all material respects,
the financial position of the Company as of the date specified and the results
of its operations and changes in financial position for the period covered
thereby. Such financial statements and related notes were prepared in accordance
with U.S. generally accepted accounting principles ("GAAP") throughout the
period indicated except as may be disclosed in the notes thereto, and except
that the unaudited financial statements omit full notes, and except for normal
year-end adjustments. Except as set forth in such financial statements or in the
Memorandum, the Company has no material liabilities of any kind, whether
accrued, absolute, contingent or otherwise (other than liabilities which have
arisen in the ordinary course of business subsequent to the date of the most
recent balance sheet included in such financial statements) or entered into any
material transactions or commitments. The other financial and statistical
information with respect to the Company included in the Memorandum present
fairly the information shown therein on a basis consistent with the financial
statements of the Company included in the Memorandum.
(i) The conduct of business by the Company 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 the Company conducts or proposes to conduct such
business, except as described in the Memorandum and except such regulation as is
applicable to commercial enterprises generally. Except as described in the
Memorandum and except for regulatory approvals associated with products that the
Company has not begun to market, the Company has obtained all requisite
licenses, permits and other governmental authorization necessary to conduct its
business as presently, and as proposed to be, conducted, except where the
failure to obtain such license, permit or other governmental authorization would
not have a Material Adverse Effect.
(j) Except as set forth in the Memorandum, no default by the Company or, to
the knowledge of the Company, any other party exists in the due performance
under any material agreement to which the Company is a party or to which any of
its assets is subject (collectively, the "COMPANY AGREEMENTS"). The Company
Agreements disclosed in the Memorandum are the only material agreements to which
the Company is bound or by which its assets are subject, are accurately and
fairly described in the Memorandum and are in full force and effect in
accordance with their respective terms.
(k) Except as set forth in the Memorandum, there are no actions,
proceedings, claims or investigations, before or by any court or governmental
authority (or any state of facts which management of the Company has concluded
could reasonably be expected to give rise thereto), pending or, to the knowledge
of the Company, threatened, against the Company, or involving its assets or, to
the knowledge of the Company, involving any of its officers or directors which,
if determined adversely to the Company or such officer or director, could result
in any Material Adverse Effect or materially adversely affect the transactions
contemplated by this Agreement or the other Transaction Documents or the
enforceability thereof.
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(l) The Company is not in violation of: (i) its certificate of incorporation
or by-laws; (ii) any indenture, mortgage, deed of trust, note or other agreement
or instrument to which the Company is a party or by which it is or may be bound
or to which any of its assets may be subject; (iii) any statute, rule or
regulation currently applicable to the Company; or (iv) any judgment, decree or
order applicable to the Company, which violation or violations individually, or
in the aggregate, would result in any Material Adverse Effect.
(m) The Company does not own any real property in fee simple, and the
Company has good and marketable title to all property (personal, tangible and
intangible) owned by it, free and clear of all security interests, liens and
encumbrances, except for such as are described in the Memorandum.
(n) The Company owns all right, title and interest in, or possesses adequate
and enforceable rights to use, all patents, patent applications, trademarks,
trade names, service marks, copyrights, rights, licenses, franchises, trade
secrets, confidential information, processes, formulations, software and source
and object codes necessary for the conduct of its business, except as otherwise
described in the Memorandum (collectively, the "Intangibles"). Except as set
forth in the Memorandum, to the knowledge of the Company, it has not infringed
upon the rights of others with respect to the Intangibles and the Company has
not received notice that it has or may have infringed or is infringing upon the
rights of others with respect to the Intangibles, or any notice of conflict with
the asserted rights of others with respect to the Intangibles that could,
individually or in the aggregate, materially and adversely affect the condition
(financial or otherwise) or prospects of the Company.
(o) Except as set forth in the Memorandum and as may otherwise be
contemplated therein and except for securities issued to affiliates of the
Placement Agents, the Company has operated its business diligently and only in
the ordinary course as theretofore conducted and since the date of the most
recent balance sheet included in the Memorandum there has been no: (i) material
adverse change in the business condition (financial or otherwise) or prospects
of the Company; (ii) transaction by the Company otherwise than in the ordinary
course of business; (iii) issuance of any securities (debt or equity) or any
rights to acquire any such securities; (iv) damage, loss or destruction, whether
or not covered by insurance, with respect to any asset or property of the
Company; or (v) agreement to permit any of the foregoing.
(p) The Company has filed, on a timely basis, each federal, state, local and
foreign tax return which is required to be filed by it, or has requested an
extension therefor and has paid all taxes and all related assessments, penalties
and interest to the extent that the same have become due.
(q) The Company is not obligated to pay, and has not obligated either
Placement Agent to pay, a finder's or origination fee in connection with the
Offering and agrees to indemnify the Placement Agents from any such claim made
by any other person. The Company has not offered for sale or solicited offers to
purchase the Units except for negotiations with, or at the request of, the
Placement Agents. Except as set forth in the Memorandum, no other person has any
right to participate in any offer, sale or distribution of the Company's
securities to which the Placement Agents' rights, described herein, shall apply.
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(r) The Company has and will maintain appropriate casualty and liability
insurance coverage, in scope and amounts reasonable and customary for similar
businesses.
3. PLACEMENT AGENTS APPOINTMENT AND COMPENSATION.
(a) The Company hereby appoints each Placement Agent as its co-exclusive
agent in connection with the Offering. The Company acknowledges that each
Placement Agent may use selected dealers and sub-agents to fulfill its agency
hereunder provided that such dealers and sub-agents are compensated solely by
such Placement Agent. The Company has not and will not make, or permit to be
made, any offers or sales of the Units other than through the Placement Agents
without each Placement Agent's prior written consent. Neither Placement Agent
has any obligation to purchase any of the Units. The agency of the Placement
Agents hereunder shall continue until the earlier of the Termination Date or the
Closing Date.
(b) The Company will cause to be delivered to the Placement Agents 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 hereby
authorizes each Placement Agent and its agents, employees and selected dealers
to use the Memorandum in connection with the sale of the Units until the earlier
of the Termination Date or the Closing Date, and no other 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.
The Company will provide at its own expense such quantities of the Memorandum
and other documents and instruments relating to the Offering as each Placement
Agent may reasonably request.
(c) The Company will cooperate with each Placement Agent by making available
to their representatives such information as may be requested in making a
reasonable investigation of the Company and its affairs and shall provide access
to such employees as shall be reasonably requested. Prior to the Closing, if
requested by either Placement Agent, the Company shall provide, at its own
expense, credit or similar reports on such key management persons as such
Placement Agent shall reasonably request.
(d) Upon the Closing Date, the Company shall pay to each of the Placement
Agents a cash placement fee equal to ten percent (10%) of the aggregate Purchase
Price paid by each investor for Units that were placed by such Placement Agent
in the Offering (the "PLACEMENT AGENTS' FEE"). The Placement Agents' Fee will be
deducted from the gross proceeds of the Units sold at the Closing.
(e) As additional compensation, the Company shall sell to each of the
Placement Agents or their respective designees, for nominal consideration of
$10.00, warrants to purchase the number of shares of Common Stock equal to 20%
of (i) the aggregate number of shares of Common Stock included in the Units
placed by such Placement Agent, plus (ii) the aggregate number of shares of
Common Stock underlying the Warrants included in the Units placed by such
Placement Agent (the "AGENTS' WARRANTS," and, collectively with the Common Stock
issuable upon exercise of the Agents' Warrants, the "AGENTS' SECURITIES"). The
Agents' Warrants shall have an exercise price of $1.50 per share. The Agents'
Warrants shall be exercisable until the date five years after the date of the
Closing. The holders of the Agents' Securities shall have substantially similar
registration
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rights to those afforded to the purchasers of Units in the Offering. The Agents'
Warrants shall provide for cashless exercise. Prior to the Closing, the Company
and Placement Agents shall enter into a warrant agreement (the "PLACEMENT
AGENTS' WARRANT AGREEMENT"), in the form and substance reasonably agreed upon by
the Company and the Placement Agents prior to the Closing.
(f) The Company shall also pay the Placement Agents' Fee to each Placement
Agent, and deliver warrants on a basis comparable to the delivery of the Agents'
Warrants under the Placement Agents' Warrant Agreement and this Agreement, with
respect to, and based on, any investment by any investor in this Offering (a
"POST-CLOSING Investor") that invests in the Company or an affiliate of or
successor to the Company at any time within two years from the later of the
Termination Date and the Closing Date: PROVIDED, HOWEVER, that neither Placement
Agent shall be entitled to any such compensation for investments made as part of
an underwritten offering by the Company or by Xxxxxxx Xxxxx Specialty Group, LLC
or any employees of the Company.
4. SUBSCRIPTION AND CLOSING PROCEDURES.
(a) Each prospective purchaser will be required to complete and execute two
original omnibus signature pages for the Subscription Agreement in the form
attached to the Memorandum as ANNEX A ("SUBSCRIPTION AGREEMENT"), which will be
forwarded or delivered to each Placement Agent at such Placement Agent's offices
at the address set forth in Section 11 hereof, together with the subscriber's
check or good funds in the full amount of the Purchase Price for the number of
Units desired to be purchased.
(b) All funds for subscriptions received from the Offering will be promptly
forwarded by each Placement Agent or the Company, if received by it, to and
deposited into non-interest bearing escrow account (the "ESCROW ACCOUNT")
established for such purpose with Signature Bank (the "ESCROW AGENT"). All such
funds for subscriptions will be held in the Escrow Account pursuant to the terms
of an escrow agreement among the Company, each Placement Agent and the Escrow
Agent, such agreement to be in form and substance satisfactory to the Company
and each Placement Agent. The Company will pay all fees related to the
establishment and maintenance of the Escrow Account, regardless of whether a
closing occurs hereunder. Subject to the receipt of such subscriptions for the
Minimum Amount, the Company will either accept or reject the Subscription
Agreement in a timely fashion and at the Closing will countersign the
Subscription Agreement and provide duplicate copies of such Agreements to the
applicable Placement Agent for distribution to the subscribers. The Company will
give written notice to each respective Placement Agent of its acceptance or
rejection of each subscription. The Company, or the applicable 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 such Placement Agent upon such return.
(c) If subscriptions for at least the Minimum Amount have been accepted
prior to the Termination Date, the funds therefor have been collected by the
Escrow Agent and all of the conditions set forth elsewhere in this Agreement are
fulfilled, a closing (the "Closing") shall occur within ten days after the
earlier of the Termination Date or the sale of at least the Minimum Amount (the
"CLOSING DATE"). Delivery of payment for the accepted subscriptions from the
funds held in the Escrow Account will be made by wire transfer from the Escrow
Agent to the Company
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at Closing against delivery by the Company of the Common Stock and Warrants
comprising the Units, which wire transfer shall be net of amounts due to the
Placement Agents and Blue Sky counsel pursuant to Section 5(i). The Common
Stock, the Warrants and the Agents' Warrants will be in such authorized
denominations and issued in such names as the Placement Agents may request on or
before the second full business day prior to the Closing Date, and will be made
available to the Placement Agents for review and packaging at Xxxxxxx Xxxxx'x
office at least one full business day prior to the Closing Date.
(d) If Subscription Agreements for the Minimum Amount have not been received
and accepted by the Company on or before the Termination Date for any reason,
the Offering will be terminated (the date of such termination being referred to
herein as the "EXPIRATION DATE"), no Units will be sold, and the Escrow Agent
will, at the request of each Placement Agent, cause all monies received from
subscribers for the Units to be promptly returned to such subscribers without
interest or offset.
5. FURTHER COVENANTS. The Company hereby covenants and agrees that:
(a) Except with the prior written consent of each Placement Agent (which
consent shall not be unreasonably withheld), the Company shall not, at any time
prior to the Closing Date, take any action that would cause any of the
representations and warranties made by it in this Agreement not to be complete
and correct 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.
(b) If, at any time prior to the Closing, any event shall occur that does or
may materially affect the Company or as a result of which it might become
necessary to amend or supplement the Memorandum so that the representations and
warranties herein remain true, or in case it shall, in the reasonable opinion of
counsel to either Placement Agent, be necessary to amend or supplement the
Memorandum to comply with Regulation D or any other applicable securities laws
or regulations, the Company will promptly notify each Placement Agent and shall,
at its sole cost, prepare and furnish to each Placement Agent copies of
appropriate amendments and/or supplements in such quantities as each Placement
Agent may reasonably request. The Company will not at any time, whether before
or after the Closing, prepare or use any amendment or supplement to the
Memorandum of which each Placement Agent will not previously have been advised
and furnished with a copy, or to which either Placement Agent or its counsel
will have reasonably objected in writing or orally (confirmed in writing within
24 hours), or which is not in compliance in all material respects with the Act,
the Regulations and other applicable securities laws. As soon as the Company is
advised thereof, the Company will advise each 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 the qualification or registration of the
Common Stock and/or Warrants for offering or the suspension of any exemption for
such qualification or registration of the Common Stock and/or Warrants for
offering in any jurisdiction, or of the institution or threatened institution of
any proceedings for any of such purposes, and the Company will use its best
efforts to prevent the issuance of any such order, judgment or decree, and, if
issued, to obtain as soon as reasonably possible the lifting thereof.
(c) The Company shall comply with the Act, the Regulations, the Securities
and Exchange Act of 1934, as amended (the "1934 ACT"), and the rules and
regulations thereunder, all applicable state
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securities laws and the rules and regulations thereunder in the states in which
the Units are to be offered and in which the Blue Sky counsel has advised the
Placement Agents 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 each Placement Agent, any and all reports on Form D as are required.
(d) The Company shall use its reasonable best efforts to qualify the Units
for sale (or seek exemption therefrom) under the securities laws of such
jurisdictions in the United States as may be mutually agreed to by the Company
and the Placement Agents, and the Company will (through Blue Sky counsel) make
such applications and furnish information as may be required for such purposes.
The Company 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 Agents may reasonably request.
(e) The Company shall place a legend on the certificates representing the
Common Stock, Warrants and the Conversion Shares issued to subscribers stating
that the securities evidenced thereby have not been registered under the Act or
applicable state securities laws and setting forth or referring to the
applicable restrictions on transferability and sale of such securities under the
Act and applicable state laws.
(f) The Company shall apply the net proceeds from the sale of the Units to
fund its working capital requirements and/or for such other purposes as shall be
described under "Use of Proceeds" in the Memorandum. The net proceeds of the
Offering shall not be used to repay indebtedness to officers, directors or
stockholders of the Company without the prior written consent of the Placement
Agents: PROVIDED, HOWEVER, a portion of the net proceeds of the Offering will be
used for the repayment of indebtedness in the amount of $500,000 plus accrued
interest owed to a related party of Xxxxxxx Xxxxx.
(g) During the Offering Period, the Company shall make available for review
by prospective purchasers of the Units during normal business hours at the
Company's offices, upon their request, copies of the Company Agreements to the
extent that such disclosure shall not violate any obligation on the part of the
Company to maintain the confidentiality thereof and shall afford each
prospective purchaser of Units the opportunity to ask questions of and receive
answers from an officer of the Company 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.
(h) Except with the prior written consent of each Placement Agent (which
shall not be unreasonably withheld) or as set forth in the Memorandum, the
Company shall not, at any time prior to the earlier of the Closing Date or the
Termination Date, engage in or commit to engage in any transaction outside the
ordinary course of business, including without limitation the incurrence of
material indebtedness, materially change its business or operations as described
in the Memorandum, or issue, agree to issue or set aside for issuance any
securities (debt or equity) or any rights to acquire any such securities except
as shall be contemplated by the Memorandum.
(i) Whether or not the transactions contemplated hereby are consummated, or
this Agreement is terminated, the Company hereby agrees to pay all fees, costs
and expenses incident hereto and to
10
the Offering, including, without limitation, those in connection with (i)
preparing, printing, duplicating, filing, distributing and binding the
Memorandum and any and all amendments and/or supplements thereto and any and all
agreements, contracts and other documents related hereto and thereto; (ii) the
creation, authorization, issuance, transfer and delivery of the Common Stock,
Warrants, the Conversion Shares and the Agents' Securities, including, without
limitation, fees and expenses of any transfer agent or registrar; (iii) the fees
and expenses of the Escrow Agent; (iv) the formation, organization and
qualification of one or more investment vehicles for the purchasers of the
Units; (v) all fees and expenses of legal, accounting and other advisers to the
Company; (vi) all reasonable filing fees, costs and legal fees and expenses for
Blue Sky services and related filings with respect to Blue Sky exemptions and
qualifications, $6,500 of which shall be paid to Xxxxxxx Xxxxx'x counsel upon
execution of this Agreement for legal fees in connection with obtaining Blue Sky
exemptions (the "BLUE SKY FEES"); and (vii) subject to Section 9 hereof, a
non-accountable expense allowance equal to three percent (3%) of the aggregate
purchase price of the Units placed by each Placement Agent ("PLACEMENT AGENTS'
EXPENSES"), which shall be deducted from the gross proceeds of the Units sold at
the Closing, to cover, without limitation, the legal fees, mailing, telephone,
travel, due diligence and similar expenses of each Placement Agent.
(j) Until the earlier of the Closing Date or the Termination Date, neither
the Company nor any person or entity acting on its behalf will negotiate or
enter into any agreement with any other placement agent or underwriter with
respect to a private or public offering of the Company's or any subsidiary's
debt or equity securities. Neither the Company nor anyone acting on its behalf
will, until the earlier of the Closing Date or the Termination Date, without the
prior written consent of each Placement Agent, offer for sale to, or solicit
offers to subscribe for Units or other securities of the Company from, or
otherwise approach or negotiate in respect thereof with, any other person.
(k) Until the earlier of (x) the Expiration Date (if applicable) or (y) the
fifth anniversary of the Closing, in the event that no employee of Xxxxxxx
Xxxxx, or one of its related parties, is a member of the Company's Board of
Directors, Xxxxxxx Xxxxx or one of its related parties shall be entitled to
appoint one observer to attend meetings of the Company's Board of Directors
(subject to exclusion with respect to any matter in which it would present, in
the reasonable opinion of the Company's Board of Directors, a conflict of
interest for such observer to participate in a Company's Board of Directors
discussion with respect to such matter).
(l) On or prior to the Closing, the Company and the Placement Agents shall
enter into a Right of First Refusal Agreement (the "ROFR AGREEMENT") in a form
acceptable to the Company and each Placement Agent and their respective counsel:
PROVIDED, HOWEVER, that R&R's right of first refusal under the ROFR Agreement
shall take effect if, and only if, R&R places at least $15,000,000 of the
Minimum Offering. The ROFR Agreement shall provide that (i) for a period of two
years from the Closing, the Company shall give each Placement Agent who is a
party to the ROFR Agreement the irrevocable preferential right of first refusal
to purchase for such Placement Agent's account, or to act as agent for any
proposed private offering of the Company's securities by the Company and (ii)
should the Placement Agents each decide to exercise their Right of First Refusal
on or about the same time, they shall do so in accordance with the terms set
forth in the Right of First Refusal Agreement. The Company agrees to offer each
Placement Agent the opportunity to purchase or sell such securities on terms no
less favorable than it can obtain elsewhere. If within 20 business days of the
receipt of such notice of intention and statement of terms the Placement Agent
does not accept in writing such offer to purchase such securities or to
11
act as agent with respect to such offering upon the terms proposed, the Company
shall be free to negotiate terms with third parties with respect to such
offering and to effect such offering on such proposed terms. Before the Company
shall accept any proposal materially less favorable to it than as originally
proposed to each Placement Agent, each Placement Agent's preferential rights
shall be applied, and the procedure set forth above with respect to such
modified proposal adopted. Each Placement Agent's failure to exercise these
preferential rights in any situation shall not affect such Placement Agent's
preferential rights to any subsequent offering during the term of the right of
first refusal agreement. The Company represents and warrants that no other
person has any right to participate in any offer, sale or distribution of the
Company's securities to which each Placement Agent's preferential rights shall
apply.
6. CONDITIONS OF PLACEMENT AGENTS' OBLIGATIONS. The obligations of each
Placement Agent hereunder are subject to the fulfillment, at or before the
Closing, of the following additional conditions:
(a) Each of the representations and warranties of the Company shall be true
and correct in all material respects when made on the date hereof (except for
the Permitted Exceptions) and shall be true in all material respects on and as
of the Closing Date as though made on and as of the Closing Date.
(b) The Company shall have performed and complied in all material respects
with all agreements, covenants and conditions required to be performed and
complied with by it under the Transaction Documents 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 and pending, or, to the Company's
knowledge, are contemplated or threatened.
(d) At the Closing the Company shall have an outstanding capitalization as
described in the Memorandum. All shares of capital stock outstanding as of the
Closing Date, and all shares which may be issued at the Closing will be upon
issuance, validly issued, fully paid, and non-assessable. As of the Closing, no
securities will be issuable upon the exercise of warrants or options, without
the written authorization of the Placement Agents, except (i) those warrants and
options described in the Memorandum and (ii) stock options for shares of the
Company's Common Stock granted to new employees in a manner consistent with
prior practices and approved by the Company's Board of Directors and its
Compensation Committee.
(e) Each Placement Agent shall have received certificates signed by the
President of the Company, dated as of the Closing Date, certifying on behalf of
the Company, in such detail as such Placement Agent may reasonably request, as
to the fulfillment of the conditions set forth in subparagraphs (a), (b), (c)
and (d) above.
(f) The Company shall have delivered to each Placement Agent (i) a currently
dated good standing certificate from the Secretary of State of Delaware and each
jurisdiction in which the Company is qualified to do business as a foreign
corporation, and (ii) certified resolutions of the Company's Board of Directors
approving this Agreement and the other Transaction
12
Documents, and the transactions and agreements contemplated by this Agreement
and the other Transaction Documents.
(g) At the Closing, the Company shall have provided to each Placement Agent
a certificate, signed by the President of the Company, confirming on behalf of
the Company that there have been no undisclosed material and adverse changes in
the business condition (financial or otherwise) or prospects of the Company from
the date of the latest financial statements included in the Memorandum, the
absence of undisclosed liabilities (other than liabilities arising in the
ordinary course of business subsequent to the date of the most recent balance
sheet included in the Memorandum) and such other matters relating to the
financial condition and prospects of the Company that such Placement Agent may
reasonably request.
(h) At the Closing, the Company shall have (i) paid to each Placement Agent
its applicable Placement Agents' Fee in respect of all Units sold at the
Closing, (ii) paid all fees, costs and expenses as set forth in Section 5(i)
hereof, and (iii) executed and delivered to each Placement Agent the applicable
Agents' Warrants in an amount proportional to the Units placed by such Placement
Agent at the Closing.
(i) There shall have been delivered to the Placement Agents a signed opinion
of counsel (including a 10(b)-5 opinion in customary form) to the Company
("COMPANY COUNSEL"), dated as of the Closing Date, which shall be in the form
substantially similar to the opinion delivered by Company Counsel with respect
to Bridge Notes Financing and shall contain language reasonably satisfactory to
the Placement Agents and their respective counsel with respect to any appraisal
rights triggered by the Merger.
(j) All proceedings taken at or prior to the Closing in connection with the
authorization, issuance and sale of the Common Stock, Warrants and the Agent's
Warrants will be reasonably satisfactory in form and substance to each Placement
Agent and its respective counsel, and such counsel shall have been furnished
with all such documents, certificates and opinions as they may reasonably
request upon reasonable prior notice in connection with the transactions
contemplated hereby.
(k) At the Closing, Treasure Mountain Holdings, Inc. ("PUBCO"), shall have
provided to each Placement Agent a certificate, signed by the President of
Pubco, or its successor or assign, confirming on behalf of Pubco, that the
Merger has been consummated in accordance with the Merger Agreement and that all
representations and warranties of Pubco set forth in the Merger Agreement shall
be deemed to be made directly to the Placement Agents, which representations and
warranties shall survive the closing of the Offering.
(l) At the Closing, Pubco shall have provided to each Placement Agent a
certificate, signed by the President of Pubco, or its successor or assign,
confirming on behalf of Pubco, that the Registration Rights Agreement (as
defined in the Memorandum) has been executed by Pubco.
6A. MUTUAL CONDITION. The obligations of the Placement Agents and the
Company hereunder are subject to the execution by the investors of subscription
agreements in form and substance acceptable to the Placement Agents and the
Company.
13
7. INDEMNIFICATION.
(a) The Company will (i) indemnify and hold harmless each Placement Agent,
its selected dealers and its respective officers, directors, employees, agents,
attorneys and each person, if any, who controls such Placement Agent within the
meaning of the Act and such selected dealers (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, whether such losses, claims, damages,
liabilities or expenses shall result from any claim of any Indemnitee or any
third party; and (ii) reimburse each Indemnitee, promptly after written request
therefore, 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 the Company will not 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 the Company by such Placement Agent or any such controlling persons
or their respective agents specifically for use in the preparation thereof, or
(B) any violations by such Placement Agent of the Act or state securities laws
which does not result from a violation thereof or a breach hereof by the Company
or any of its affiliates. In addition to the foregoing agreement to indemnify
and reimburse, the Company 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 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 other Indemnitee in connection with the
Offering as a result of such acts or omissions of the Company or its
representatives.
(b) Each Placement Agent will indemnify and hold harmless the Company, its
officers, directors, employees and each person, if any, who controls the Company
within the meaning of the Act against, and pay or reimburse any such person for,
any and all losses, claims, damages or liabilities or expenses whatsoever (or
actions, proceedings or investigations in respect thereof) to which the Company
or any such person may become subject under the Act or otherwise, whether such
losses, claims, damages, liabilities or expenses (or actions, proceedings or
investigations in respect thereof) shall result from any claim of the Company,
any of its officers, directors, employees, agents, any person who controls the
Company within the meaning of the Act or any third party, insofar as such
losses, claims, damages or liabilities are based upon 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 such
Placement Agent, 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, if made or omitted in reliance upon and
14
in conformity with written information furnished to the Company by such
Placement Agent or any such controlling persons or their respective agents
specifically for use in the preparation thereof. Each Placement Agent will
reimburse the Company or any such person for any legal or other expenses
reasonably incurred in connection with investigating or defending against any
such loss, claim, damage, liability or action, proceeding or investigation to
which such indemnity obligation applies. Notwithstanding the foregoing, in no
event shall either Placement Agent's indemnification obligation hereunder exceed
the amount of such Placement Agent's Fees actually received by it.
(c) Promptly after receipt by an indemnified party under this Section 7 of
notice of the commencement of any action, claim, proceeding or investigation
("ACTION"), such indemnified party, if a claim in respect thereof is to be made
against the indemnifying party under this Section 7, 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 7 unless the indemnifying party has
been substantially prejudiced by such omission. The indemnifying party will be
entitled to participate in, and, to the extent that it may wish, jointly with
any other indemnifying party, to assume the defense thereof subject to the
provisions herein stated, with counsel reasonably satisfactory to such
indemnified party. 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
it, 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 indemnifying party and the indemnified party, which consent shall not be
unreasonably withheld or delayed in light of all factors of importance to such
party and no indemnifying party shall be liable to indemnify any person for any
settlement of any such claim effected without such indemnifying party's consent.
8. CONTRIBUTION. To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant to Section 7 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 Agreement expressly provides for indemnification in such case; or
(ii) any indemnified or indemnifying party seeks contribution under the Act, the
1934 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 the relative benefits described below, but also
the relative fault of the Company on the one hand and either 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
15
equitable considerations. The relative benefits received by the Company on the
one hand and either 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 the Company bear to the total commissions and fees
received by the Placement Agents. 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 the Company or
by the Placement Agents, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement, alleged
statement, omission or alleged omission. The Company and the Placement Agents
agree that it would be unjust and inequitable if the respective obligations of
the Company and the Placement Agents for contribution 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 8. No person guilty of a
fraudulent misrepresentation (within the meaning of Section 11(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 8, each person, if
any, who controls either Placement Agent within the meaning of the Act will have
the same rights to contribution as such Placement Agent, and each person, if
any, who controls the Company within the meaning of the Act will have the same
rights to contribution as the Company, subject in each case to the provisions of
this Section 8. Anything in this Section 8 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 8 is intended
to supersede, to the extent permitted by law, any right to contribution under
the Act, the 1934 Act or otherwise available.
9. TERMINATION.
(a) The Offering may be terminated, upon agreement of the Placement Agents
at any time prior to the expiration of the Offering Period in the event that (i)
any of the representations or warranties of the Company contained herein shall
prove to be false or misleading in any material respect when made (except for
the Permitted Exceptions) or deemed made as of the day of the Closing, (ii) the
Company shall have failed to perform any of its material obligations hereunder,
or (iii) both Placement Agents shall mutually determine that it is reasonably
likely that any of the conditions to Closing set forth herein will not, or
cannot, be satisfied. In the event of any such termination occasioned by or
arising out of or in connection with the matters set forth in clauses (i) or
(ii) above, or occasioned by or arising out of or in connection with a matter
set forth in clause (iii) above due to the Company's failure to perform any of
its material obligations hereunder, each Placement Agent shall be entitled to
receive, in addition to other rights and remedies they may have hereunder, at
law or otherwise, a pro rata amount (based on the Allocated Amounts) equal to
three percent (3%) of the Purchase Price of all Units sold in the Offering by
such Placement Agent ("PLACEMENT AGENT'S EXPENSES") (deeming, for this purpose,
that $25 million of Units have been sold), less any amounts theretofore paid in
respect of such Placement Agent's Placement Agent Expenses, and all unpaid Blue
Sky Fees and other expenses set forth in Section 5(i) hereof. In addition to the
foregoing, in the event that (a) the Company is sold (in a stock or asset sale),
merged or otherwise acquired or combined, or (b) the Company enters into a
letter of intent or agreement with respect to the foregoing, or (c) the Company
completes a public or private offering of its securities, in each case within
one year after the Offering is terminated by the Placement
16
Agents pursuant to (i) or (ii) above, or because the Company has determined
prior to the Expiration Date (if applicable) not to proceed with the Offering,
the Company shall pay to each Placement Agent, as applicable, (x) if the
Placement Agents have not exercised their rights under this Section 9(a) an
investment banking fee equal to their pro rata portion (based on the Allocated
Amounts) of five percent (5%) of the total consideration received by the Company
and/or its stockholders in connection with such sale, merger, acquisition or
sale of securities or (y) if the Placement Agents have exercised their rights
under this Section 9(a) applicable Placement Agent commissions, fees and
expenses described in Sections 3(d) and 5(i) hereof as if the Minimum Amount had
been sold.
(b) This Offering may be terminated by the Company at any time prior to the
Termination Date in the event that (i) either Placement Agent shall have failed
to perform any of its material obligations hereunder or (ii) the Company shall
have determined for any reason not to continue with the Offering. In the event
of any termination by the Company pursuant to clause (i) above, each Placement
Agent shall be entitled to receive all Placement Agent Expenses incurred by it
through the Termination Date (PROVIDED, HOWEVER, that such costs and expenses
shall not exceed the maximum Placement Agent Expense and all unpaid Blue Sky
Fees and other expenses set forth in Section 5(i) hereof), but shall be entitled
to no other amounts whatsoever except as may be due under any indemnity or
contribution obligation provided herein or any other Transaction Document, at
law or otherwise. In the event of any termination by the Company pursuant to
clause (ii) above, each Placement Agent shall be entitled to receive all
compensation, and shall have all rights, that the Placement Agents would be
entitled to upon a termination by the Placement Agents pursuant to clauses (i)
or (ii) of Section 9(a).
(c) Upon any such termination, the Escrow Agent will, at the direction of
the Placement Agents in accordance with the terms set forth in that certain
Escrow Agreement entered into by and among the Company, the Placement Agents and
the Escrow Agent, of even date herewith, cause all money received in respect of
subscriptions for Units not accepted by the Company to be promptly returned to
such subscribers without interest, penalty, expense or deduction.
10. SURVIVAL.
(a) The obligations of the parties to pay any fees, costs and expenses
hereunder and to provide indemnification and contribution as provided herein
shall survive any termination hereunder.
(b) The respective indemnities, agreements, representations, warranties and
other statements of the Company set forth in or made pursuant to this Agreement
will remain in full force and effect, regardless of any investigation made by or
on behalf of, and regardless of any access to information by, the Company or
each Placement Agent, or any of their officers or directors or any controlling
person thereof, and will survive the sale of the Units.
11. 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 Xxxxxxx Xxxxx will be mailed, delivered or
telefaxed and confirmed to Xxxxxxx Xxxxx Ventures, Inc., 000 Xxxxxxx Xxxxxx,
00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxx X. Xxxxxxxxx, Telefax
number 000-000-0000, with a copy to Xxxxxxx Krooks LLP, 000 Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxxx X. Xxxxxxx, Esq., Telefax number (212)
17
490-2020, if sent to R&R will be mailed, delivered or telefaxed and confirmed to
Xxxxxx & Xxxxxxx, LLC, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention Xxxxxx
Xxxxxxx, Telefax number (000) 000-0000, with a copy to Morse, Zelnick, Rose &
Lander LLP, Attention: Xxxxxxx X. Xxxx Esq., Telefax number (000) 000-0000, and
if sent to the Company, will be mailed, delivered or telefaxed and confirmed to
Vyteris, Inc., 00-00 Xxxxxxx Xxxxx, Xxxxxxxx, Xxx Xxxxxx 00000, Attention:
Xxxxxxx X. XxXxxxxx, Ph.D, Telefax number (000) 000-0000, with a copy to
Xxxxxxxxxx Xxxxxxx P.C., 00 Xxxxxxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxxxx 00000,
Attention: Xxxxx X. Xxxxxxxxx, Esq., Telefax number (000) 000-0000.
12. ARBITRATION, CHOICE OF LAW; COSTS. THE PARTIES HERETO AGREE TO SUBMIT
ALL CONTROVERSIES TO ARBITRATION IN ACCORDANCE WITH THE PROVISIONS SET FORTH
BELOW AND UNDERSTAND THAT (A) ARBITRATION IS FINAL AND BINDING ON THE PARTIES,
(B) THE PARTIES ARE WAIVING THEIR RIGHTS TO SEEK REMEDIES IN COURT, INCLUDING
THE RIGHT TO A JURY TRIAL, (C) PRE-ARBITRATION DISCOVERY IS GENERALLY MORE
LIMITED AND DIFFERENT FROM COURT PROCEEDINGS, (D) THE ARBITRATOR'S AWARD IS NOT
REQUIRED TO INCLUDE FACTUAL FINDINGS OR LEGAL REASONING AND ANY PARTY'S RIGHT TO
APPEAL OR TO SEEK MODIFICATION OF RULES BY ARBITRATORS IS STRICTLY LIMITED, (E)
THE PANEL OF NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. (THE "NASD")
ARBITRATORS WILL TYPICALLY INCLUDE A MINORITY OF ARBITRATORS WHO WERE OR ARE
AFFILIATED WITH THE SECURITIES INDUSTRY, AND (F) ALL CONTROVERSIES WHICH MAY
ARISE BETWEEN THE PARTIES CONCERNING THIS AGREEMENT SHALL BE DETERMINED BY
ARBITRATION PURSUANT TO THE RULES THEN PERTAINING TO THE NASD. JUDGMENT ON ANY
AWARD OF ANY SUCH ARBITRATION MAY BE ENTERED IN THE SUPREME COURT OF THE STATE
OF NEW YORK OR IN ANY OTHER COURT HAVING JURISDICTION OVER THE PERSON OR PERSONS
AGAINST WHOM SUCH AWARD IS RENDERED. THE PARTIES AGREE THAT THE DETERMINATION OF
THE ARBITRATORS SHALL BE BINDING AND CONCLUSIVE UPON THEM. THE PREVAILING PARTY,
AS DETERMINED BY SUCH ARBITRATORS IN AN ARBITRATION PROCEEDING SHALL BE ENTITLED
TO COLLECT ANY COSTS, DISBURSEMENTS AND REASONABLE ATTORNEY'S FEES FROM THE
OTHER PARTY.
13. CONFIDENTIALITY. The Company hereby agrees to hold confidential the
identities of the purchasers in the Offering and shall not disclose their names
and addresses without the prior written consent of each Placement Agent, unless
required by law. The Company hereby consents to the granting of an injunction
against it by any court of competent jurisdiction to enjoin it from violating
the foregoing confidentiality provisions. The Company hereby agrees that neither
Placement Agent will have an adequate remedy at law in the event that the
Company breaches these confidentiality provisions contained herein, and that
each Placement Agent will suffer irreparable damage and injury as a result of
any such breach. Resort to such equitable relief shall not, however, be
construed to be a waiver of any other rights or remedies which each Placement
Agent may have. Notwithstanding the foregoing, the Company shall not be deemed
to be in violation of this Section
18
13 by virtue of revealing the identities of such purchasers to the Company's
transfer agent and professional advisors.
14. 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. Any 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. This Agreement contains the entire
agreement between the parties hereto and is intended to supersede any and all
prior agreements between the parties relating to the same subject matter.
15. ENTIRE AGREEMENT. This Agreement together with any other agreement
referred to herein is intended to supersede all prior agreements between the
parties with respect to the Units purchased hereunder and the subject matter
hereof.
16. COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an original, and
all of which together shall constitute one and the same document. This Agreement
may be executed by facsimile signatures.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
19
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return this Agreement, whereupon it will become a
binding agreement between the Company and the Placement Agent in accordance with
its terms.
Very truly yours,
VYTERIS, INC.
By: /s/ Xxxxxxx Xx Xxxxxx
---------------------
Name: Xxxxxxx Xx Xxxxxx
Title: President
Accepted and agreed to as of the
18th day of June, 2004.
XXXXXXX XXXXX VENTURES, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: President
XXXXXX & XXXXXXX, LLC
By: /s/ Xxxxxx X. Xxxxx
-------------------
Name: Xxxxxx X. Xxxxx
Title: Chief Financial Officer
20
