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vem ag
AGREEMENT
This Agreement is made entered into on this 1st day of July 2005 ("Effective
Date") by and between
XXX XXXXXXXXXX XX, X.X. Xxx 00 00 00, X-00000 Xxxxxx, Xxxxxxx
- hereinafter "VEM" -
and
DERMISONICS, INC., Four Tower Bridge, 000 Xxx-Xxxxxx Xxxxx, Xxxx Xxxxxxxxxxxx,
XX 00000
- hereinafter "Dermisonics" or the "Company"-
RECITALS:
WHEREAS, VEM is a Munich-based investment bank which, in association with its
strategic partners, participates in the capitalization of small and mid-cap
corporations.
WHEREAS, Dermisonics is a U.S.-based bio-technical research, development and
marketing company which maintains a market for its common shares on the OTC
Bulletin Board ("OTCBB") under the symbol DMSI and is also listed in the
Freiverkehr at the Berlin-Bremen Stock Exchange ("Berlin Exchange") and the
Frankfurt Stock Exchange ("Frankfurt Exchange") under the symbol FQC (ISIN
US24983U1043/ WKN A0DK4Y).
WHEREAS, Dermisonics is seeking to raise working capital by borrowing funds for
which it will issue convertible promissory notes.
NOW, THEREFORE, in consideration of the mutual promises and other consideration
set forth herein, the parties agree as follows:
1. DUTIES OF VEM
1.1 Subscription services. VEM shall provide the following services:
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VEM shall subscribe for certain Convertible Promissory Notes (the "Notes")
to be issued by the Company during the course of a planned increase in the
capitalization of the Company. The Notes shall be issued by the Company
pursuant to the exemption from the registration provisions of the
Securities Act of 1933, as amended (the "Securities Act"), afforded by
Regulation S promulgated thereunder, in a principal amount to be determined
by VEM after canvassing its clientele and as may be subsequently agreed
upon by the Company (provided that such determination is made by VEM and
agreement is secured through the Company during the Engagement Period as
subsequently defined in clause 4.1). The Notes shall bear interest in the
amount of ten percent (10%) per annum, shall become due and payable two (2)
years after the date of issuance by the Company, and shall otherwise
conform to the terms of this Placement Agreement and the form of Note
attached hereto as Schedule A.
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VEM AKTIENBANK AG TEL +49(0)89/2 30 01-0 VORSTAND: DIPL-KFM XXXXXXX XXXXX,
FAX: +49(0)89/0 00 00-000 DIPL-KFM XXXXX XXXXXXXXXXXXX
ROSENTAL 5 E-MAIL: XXXX@XXX.XX \ VORSITZENDER DES AUFSICHTSRATES:
INTERNET: XXXX://XXX.XXX.XX DIPL-KFM MATTHIAS GIRNTH
D - 80331 MUNCHEN HYPOVEREINSBANK MUNCHEN (BLZ 700 202 70) KTO-NR 36 233 222 AMTSGERICHT MUNCHEN HRB 124 255
----------------- ---------------------------------------------------------- ---------------------------------
1.2 Investor Relation Services. VEM shall enlist the services of MIDAS
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Research and/or such other financial analysts and service providers as VEM
deems necessary in order to discharge its obligations under this Agreement.
1.3 Best Efforts. VEM shall exercise its best efforts and judgment in the
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performance of the service to be provided pursuant to clause 1.2, above.
The parties acknowledge and agree that certain market and other factors are
beyond their control and that there can be no assurance that the desired
results of the investor relation activities will be achieved.
1.4 Delegation. VEM shall be entitled to enlist the services of third
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parties at its own discretion and cost to provide the above services.
2. DUTIES OF DERMISONICS
Upon and after the execution hereof (the "Effective Date"), Dermisonics shall
provide VEM with regular coverage of Company news and with all public reports
filed with the Securities and Exchange Commission (the "SEC") in relation to its
listing on the OTCBB, any materials filed with the Frankfurt and Berlin-Bremen
Stock Exchanges as well as any other materials that materially effect the market
value of the Company's securities without delay. Additionally, Dermisonics shall
make available any material public information disseminated in the U.S. market
simultaneously to the German market.
3. PURCHASE PRICE, DELIVERY, FEE AND EXPENSES
3.1 Investor Relations Services Fee. As full compensation for the investor
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relations services to be provided under clause 1.2 herein, Dermisonics
shall pay VEM a fee of EUR 20,000.00 to be delivered to VEM within ten (10)
business days from the Effective Date of this Agreement.
3.2 Procedure and Payment for the Convertible Promissory Notes purchased by
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VEM. The Company shall deliver or cause the delivery of the executed Notes
----
made in favor of VEM as soon as practicable after Dermisonics receives the
loan proceeds related to each such Note.
3.3 Third Party Costs. Any reasonable third party costs not in excess of USD
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1,000 that are incurred by VEM in the performance of its services under
this Agreement shall be reimbursed by Dermisonics within 30 days of
presentation of an invoice by VEM detailing such costs. Any third party
costs incurred by VEM in excess of USD 1,000.00 shall require the prior
approval of Dermisonics. In particular, Dermisonics agrees to pay for such
additional services under Section 1.4 provided that the prior approval of
Dermisonics has been granted.
4. TERM
4.1 Term of Agreement. This Agreement shall commence upon the date first
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written above and end on August 31, 2005 (the "Engagement Period") subject
to VEM fulfilling its obligations under this agreement. In the event that
VEM has not met these obligations by October 31, 2005, this agreement can
be extended upon mutual consent.
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5. DEFAULT AND CANCELLATION
5.1 Failure to Pay Fee. In the event Dermisonics fails to pay the Investor
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Relations Services Fee as agreed to under Section 3.1, above, within 10
business days from the Effective Date, VEM may in its sole discretion
cancel this Agreement.
5.2 Unlawful or Improper Activities. In the event of an administrative or
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judicial determination that Dermisonics is engaged in any unlawful or
improper activities, VEM may terminate this Agreement immediately.
5.3 Breach of Representations and Warranties of Dermisonics. In the event
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that Dermisonics breaches any of the representations or warranties set
forth in Section 8.1(a) through Section 8.1 (c), below, Dermisonics shall
have 30 days from the date of notice by VEM of such breach to cure any such
breach, and upon failure to do so, VEM shall have the right to cancel this
Agreement. In the event that Dermisonics breaches any of the
representations or warranties set forth in Section 8.1(d) through Section
8.1(e), below, VEM may terminate this Agreement immediately.
5.4 Breach of Representations and Warranties of VEM. In the event that VEM
----------------------------------------------------
breaches any of the representations or warranties set forth in Section 8.2
(a), Section 8.2 (b) or Section 8.2(c), below, VEM shall have 30 days from
the date of notice by Dermisonics of such breach to cure any such breach,
and upon failure to do so, Dermisonics shall have the right to terminate
this Agreement. In the event of any early termination of this Agreement
pursuant to this Section 5.4, VEM shall have the right to retain cash to
pay any unreimbursed expenses.
5.5 Payment Due Upon Early Termination. Except as otherwise expressly
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provided herein, any early termination of this Agreement shall not affect
VEM's entitlement to payment of the fee referred to in Section 3.1 and
reimbursement for expenses due up to the time of termination.
5.7 Survival of Terms. Notwithstanding termination of this Agreement, the
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obligations of the Parties under Sections 2, 5.6, 5.7, 6.3, 6.4, and 7 of
this Agreement shall survive termination.
6. LIABILITY AND INDEMNITY
6.1 VEM's Liability. Neither VEM nor any officer, director, or agent thereof
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or of an affiliated company shall be liable to Dermisonics or to any
officer, director, employee, stockholder or creditor of Dermisonics for any
act, omission, error in judgment or for anything except willful
malfeasance, bad faith, gross negligence or reckless disregard in the
performance of its duties under the terms of this Agreement. Neither VEM
nor any person designated by VEM to perform hereunder shall make any
statements regarding the Company not included in the Company's filings with
the US Securities and Exchange Commission without the prior written
approval of the Company.
6.2 Accuracy and Completeness of Information. VEM shall have the right to
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rely upon information provided by Dermisonics and VEM shall not be
responsible for the accuracy and completeness of such information.
6.3 Indemnification by Dermisonics. Dermisonics agrees to defend and hold
---------------------------------
VEM harmless, should any action relating to or arising from this Agreement
be brought against VEM by
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any third party except in those cases where VEM is guilty of willful
malfeasance, bad faith, gross negligence or reckless disregard in the
performance of its duties under the terms of this Agreement, Dermisonics
agrees to defend, indemnify and hold VEM harmless from and against any and
all reasonable costs, expenses and liability (including reasonable
attorney's fee paid in defense of VEM) which may in any way result from
services rendered by VEM pursuant to or in any connection with this
Agreement, except in those cases where VEM acts, with willful malfeasance,
bad faith, gross negligence or reckless disregard in the performance its
duties under the terms of this Agreement
6.4 Indemnification by VEM. VEM agrees to defend, indemnify, and hold
------------------------
Dermisonics harmless from and against all reasonable costs, expenses and
liability (including reasonable attorney's fees paid in defense of
Dermisonics), which may in any way result pursuant to VEM's or any party
engaged by VEM as provided in Sections 1.2 and 1.4 hereof, willful
malfeasance, bad faith, gross negligence or reckless disregard in the
performance of its duties under the terms of this Agreement, or in
connection with any actions or statements on behalf of Dermisonics made by
VEM without the prior approval or authorization of Dermisonics.
7. CONFIDENTIALITY
Each party acknowledges that confidential information proprietary to the other
party may be obtained during the term of, and in connection with this Agreement.
Each party shall hold strictly confidential any such confidential information
whether disclosed in writing, orally or otherwise, and neither party shall
disclose such confidential information to third parties, directly or indirectly,
without the prior written consent of the other party. This confidentiality
obligation shall survive any termination of this Agreement. Notwithstanding the
foregoing, this confidentiality obligation shall not apply to confidential
information that was obtained from a third party in good faith, or that was
developed or known prior to disclosure by the other party, or to information
that is in the public domain.
8. REPRESENTATIONS AND WARRANTIES
8.1 Dermisonics represents and warrants:
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(a) that it is a duly formed corporation domiciled and in good standing in
United States of America with authority to conduct operations in all
jurisdictions where it does business;
(b) that it is current in all of its filings with the SEC and the OTCBB;
(c) that this Agreement, including all transactions contemplated herein,
have been duly approved by the board of directors of Dermisonics, and
that Dermisonics has obtained such additional approvals and consents
as may be required by the law of the state of its incorporation, its
charter, its bylaws or any agreement to which it is a party;
(d) that it shall not fail to disclose nor attempt to hide any relevant,
material information about Dermisonics, or its stock, financial
condition, management, products or prospects;
(e) that it shall not provide any false, inaccurate or misleading
information concerning Dermisonics to VEM; and
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8.2 VEM represents and warrants:
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(a) that it is a duly formed corporation domiciled and in good standing in
The Federal Republic of Germany, licensed to operate as an investment
bank with authority to conduct operations in all jurisdictions where
it does business;
(b) that this Agreement, including all transactions contemplated herein,
have been duly approved by VEM's board of directors, and that VEM has
obtained such additional approvals and consents (such as from
shareholders, lenders, and others) as may be required by the law of
the jurisdiction of its incorporation, its charter, its bylaws or any
agreement to which it is a party; and
(c) that it will exercise its best efforts and judgment in performing its
duties under this Agreement and that it will conduct the placement in
accordance with German laws.
(d) Regulation S Representations, Warranties and Covenants.
(i) (A) VEM understands and acknowledges that (I) the Notes and any
Common Stock issuable upon conversion of the Notes (the "Conversion
Shares") have not been and will not be registered under the Securities
Act and may not be offered or sold in the United States or to, or for
the benefit of, any "U.S. person" (as defined in Regulation S, a copy
of which is attached as Schedule B hereto), unless the Notes or
Conversion Shares, as the case may be, are registered under the
Securities Act or such offer or sale is made pursuant to an exemption
from the registration requirements of the Act, or (II) the Notes are
being offered and sold pursuant to the terms of Regulation S under the
Securities Act, which permits the transfer of the Notes and the
Conversion Shares to non "U.S. Persons" in "off-shore transactions"
(as defined in Regulation S), subject to certain terms and conditions,
as described elsewhere herein.
(ii) VEM is not purchasing the Notes as a result of or in connection
with any activity that would constitute "directed selling efforts"
(within the meaning given that term in Regulation S) in the United
States and VEM will not undertake any such "directed selling efforts"
in connection with the Notes or the Conversion Shares in the future.
(iii) VEM is not a "U.S. Person," as defined in Rule 904 of Regulation
S.
(iv) VEM was outside the United States at the time (A) the offer to
purchase and the sale of the Notes was made, (B) the buy order was
made for the Notes and (C) it executed this Agreement.
(v) Unless registered under the Securities Act, VEM agrees that any
offer, sale or transfer of the Notes or the Conversion Shares or any
interest therein to any non "U.S. Person" shall be made in accordance
with the provisions of Regulation S and this Agreement, as described
below, and that the Company is under no obligation to register or
recognize and may refuse the transfer of any of such securities by the
undersigned unless said offer, sale or transfer is made in accordance
with the provisions of this Agreement and Regulation S. The following
provisions, among others which now exist or which may hereafter be
enacted, apply to any proposed offer, sale or transfer of the
securities to a non "U.S. Person;" provided, however, that the Company
may refuse to register the transfer of any Notes or Conversion Shares
despite a sale or transfer in conformity with the provisions described
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below and Regulation S, if it reasonably believes that such sale or
transfer is being made in bad faith not in conformity with Regulation
S:
(A) VEM (and any subsequent holder of any of the Notes or
Conversion Shares which are transferred in accordance with the
provisions of this Agreement and Regulation S) must certify in writing
that neither record nor beneficial ownership of any of such
securities, or any interest therein, as the case may be, has been
offered or sold in the United States or to or for the account or
benefit of any U.S. Person.
(B) Any proposed transferee or holder of the Notes or the
Conversion Shares must (I) certify in writing that it is not a U.S.
Person and that it is not acquiring such securities for the account or
benefit of a U.S. Person or if such transferee is a U.S. Person that
it acquired such securities in a transaction that did not require
registration under the Act and that it agrees to be bound by the
restrictions on resale of any of such securities set forth in this
Agreement and Regulation S; (II) agree in writing to resell such
securities only in accordance with the provisions of this Agreement,
Regulation S, pursuant to registration under the Securities Act, or
pursuant to an available exemption from registration and must agree in
writing not to engage in hedging transactions with regard to any of
such securities unless in compliance with the Securities Act; and
(III) agree in writing to the placement of a legend on the
certificate(s) representing such securities substantially in the form
set forth in Section 8.2(d)(vii), below, and to the placement of a
stop transfer on the Notes and the Conversions Shares on the stock
books and records maintained by the Company or its transfer agent.
(vii) Legend on Certificates. The Notes acquired by VEM hereby are and
the Conversion Shares if and when acquired will be, "restricted
securities" as that term is defined in Rule 144 ("Rule 144")
promulgated under the Securities Act and are subject to the
restrictions on transfer imposed therein and pursuant to Regulation S.
VEM agrees and acknowledges that the Notes and the Conversion Shares
will bear a restrictive legend in substantially the following form:
"NEITHER THIS PROMISSORY NOTE NOR THE SECURITIES INTO WHICH THIS NOTE
IS CONVERTIBLE HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT") OR ANY OTHER SECURITIES LAWS
AND HAVE BEEN ISSUED IN RELIANCE UPON THE EXEMPTION FROM SUCH
REGISTRATION CONTAINED IN REGULATION S UNDER THE SECURITIES ACT. THE
SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED, SOLD OR
TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, ANY "U.S. PERSON" (AS SUCH TERM IS DEFINED IN REGULATION
S) EXCEPT IN ACCORDANCE WITH REGULATION S, PURSUANT TO A REGISTRATION
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT."
(viii) VEM shall not engage in any activity for the purpose of, or
which may reasonably be expected to have the effect of, conditioning
the market in the United States for any of the Notes, or offer, sell
or transfer the Notes, or any interest therein to, or for the account
of benefit of, a U.S. Person.
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(ix) VEM will not, directly or indirectly, engage in any hedging
transactions (as such term is defined in the Securities Act) with
respect to the Common Stock unless such transactions are in compliance
with the Securities Act.
(xi) If VEM publicly re-offers all or any part of the Notes or the
Conversion Shares in the United States, VEM (and/or certain persons
who participate in any such re-offer) may be deemed, under certain
circumstances, to be an "underwriter" as defined in Section 2(11) of
the Act. If VEM plans to make any such re-offer, it will consult with
its counsel prior to any such re-offer in order to determine its
liabilities and obligations under this Agreement, Regulation S, the
Securities Act and any applicable state securities laws.
9. OTHER TERMS
9.1 Notices. All notices, consents and other communications under this
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Agreement shall be in writing and shall be deemed to have been duly given
when: (a) delivered by hand with signed delivery receipt requested; (b)
sent by facsimile (with receipt confirmed), provided a copy is mailed on
the same day by registered mail, return receipt requested; or (c) received
by the addressee, if sent by Federal Express or other express delivery
service (receipt requested), in each case to the appropriate addresses (or
to such other addresses as a Party may designate as to itself by notice to
the other):
If to Dermisonics:
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Dermisonics, Inc.
0 Xxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Chairman
If to VEM:
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VEM Aktienbank XX
Xxxxxxxx 0
00000 Xxxxxxx
Xxxxxxx
Attention: Xxxxxxx Xxxxx, CEO
9.2 Independent Contractor. This Agreement neither expressly nor impliedly
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creates a relationship of employer and employee between the parties. In its
performance hereunder, VEM and its agents shall act as independent
contractors. The parties acknowledge that the value of VEM's services is
not measurable in any quantitative manner, and that VEM shall not be
obligated to spend any specific amount of time providing such services.
Nothing in this Agreement shall be construed to require VEM to provide
services to Dermisonics at any specific time, or in any specific place or
manner.
9.3 No Partnership or Joint Venture. Nothing herein shall expressly nor
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impliedly constitute or be construed to be or create a partnership or joint
venture between the Parties to this Agreement.
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9.4 No Principal and Agent. This Agreement neither expressly nor impliedly
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creates a relationship of principal and agent between the parties. Neither
party nor its agents are authorized to enter into any agreements on behalf
of the other party without the other party's express written consent.
9.5 No Authority to Bind Other Party. No party shall have any right or
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authority, express or implied, to commit or otherwise obligate the other
parties in any manner whatsoever except to the extent specifically provided
for herein or specifically otherwise authorized in writing by the parties.
Neither party shall have any right or interest in any other party, nor any
claim of lien with respect thereto, arising out of this Agreement or the
performance of the services hereunder.
9.6 Governing Law, Venue, Attorneys' Fees and Costs. This Agreement shall be
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construed in accordance with the substantive laws of the Federal Republic
of Germany without regard to the conflict of laws principles thereof. The
place of performance of this Agreement is Germany, and exclusive venue for
any cause of action that may arise out of this Agreement shall be in a
court of competent jurisdiction in the city of Munich, Germany. Each Party
consents to the jurisdiction of the courts of Federal Republic of Germany
in the event any action is brought for declaratory relief or enforcement of
any of the terms and provisions of this Agreement. The prevailing party in
any such action shall be entitled to recover, in addition to its costs of
enforcement, its costs and expenses including reasonable attorney's fees.
10. MISCELLANEOUS
10.1 Entire Agreement. This Agreement sets forth the entire agreement and
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understanding among the Parties relating to the subject matter contained
herein, and this Agreement supersedes all prior discussions, agreements and
understandings between the Parties with respect thereto.
10.2 Amendment of Agreement. This Agreement may be amended only in writing,
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in whole or in part, at any time only by the agreement of the Parties. No
provision of this Agreement may be waived except by a writing signed by the
Party to be charged therewith.
10.3 Assignments. No party shall assign the benefit or the burden of this
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Agreement without the written consent of the other party, which consent
shall not be unreasonably withheld.
10.4 Binding Effect. This Agreement shall be binding upon, and inure to the
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benefit of, the Parties and their respective successors and assigns.
10.5 No Third Party Beneficiaries. This Agreement is made solely among, and
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for the benefit of the parties and their respective successors and assigns.
No provision of this Agreement shall be applied for the benefit of, or be
enforceable by any person who is not a party to, or authorized successor or
assignee of this Agreement.
10.6 Severability, Validity. If any provision of this Agreement is held to
------------------------
be invalid under applicable law, as applied to any fact or circumstance,
such invalidity shall not affect the validity of any other provision hereof
or the validity of such provision as applied to any other fact or
circumstance.
10.7 Headings. All headings contained in this Agreement are for convenience
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of reference only and shall not be considered in any way in connection with
the interpretation or enforcement of any provision of this Agreement.
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10.8 Counterparts, Facsimile Copies. This Agreement may be executed in any
---------------------------------
number of counterparts each of which shall be deemed an original, but all
of which together shall constitute the same instrument. Facsimile copies of
this Agreement or of any counterpart, and facsimile signatures hereon or on
any counterpart, shall have the same force and effect as originals.
10.9 Authority. The parties whose signatures appears below each represent
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and warrant that they are authorized to enter into this agreement on behalf
of the named Parties and do so with the intention of binding those Parties
by the terms set forth herein.
IN WITNESS WHEREOF, the parties have duly executed this Agreement to become
effective on
the date first stated above.
Dermisonics, Inc. VEM Aktienbank AG
a Nevada U.S. corporation a German stock corporation
By: By:
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Name: Xxxxx X. Xxxxxxx Name: Xxxxxxx Xxxxx
Title: Chairman Title: CEO
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