Exhibit 10.14
PLACEMENT AGREEMENT
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This PLACEMENT AGREEMENT (the "Agreement") dated as of the 19th day of
October, 2007, by and between PURE BIOSCIENCE., a California corporation (the
"Company"), and TAGLICH BROTHERS, INC. ("Placement Agent").
W I T N E S S E T H:
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WHEREAS, in reliance upon the representations, warranties, terms and
conditions hereinafter set forth, the Placement Agent will use its best efforts
to privately place (the "Proposed Offering") a minimum principal amount of
$3,500,000 (the "Minimum Amount") and a maximum principal amount of $8,000,000
(the "Maximum Amount") of the Company's Units, consisting of a share of Common
Stock and a warrant which entitles the holder to purchase one-fourth of a share
of Common Stock, in one or more closings (each a "Closing");
WHEREAS, the Units are being issued pursuant to the Company's Confidential
Private Placement Memorandum and exhibits thereto dated October 16, 2007, as the
same may be amended and/or supplemented from time to time, (collectively, the
"Memorandum"); and
WHEREAS, the Units are being issued to the buyers thereof (the "Investors")
pursuant to an exemption from the registration requirements of the Securities
Act of 1933, as amended (the "1933 Act").
NOW, THEREFORE, in consideration of the premises and the respective
promises hereinafter set forth, the Company and the Placement Agent hereby agree
as follows:
1. Agreement to Act as Placement Agent.
(a) The Placement Agent shall act on a best efforts basis and does not
guarantee that it will be able to raise new capital in any prospective Offering.
The Company acknowledges that any advice given by the Placement Agent to the
Company is solely for the benefit and use of the Board of Directors of the
Company and may not be used, reproduced, disseminated, quoted or referred to
without the Placement Agent's prior written consent.
(b) The term of The Placement Agent's non-exclusive engagement will end at
the end of the offering period as described in the Memorandum; however, the
Company may terminate the engagement at any time upon 30 days written notice to
the Placement Agent. Upon termination and thereafter, the Placement Agent will
be entitled to collect all amounts owed to it pursuant to Section 11.
2. Representations and Warranties of the Company. The Company hereby
represents and warrants to and covenants and agrees with the Placement Agent, as
of the date hereof and as of the date of each Closing, as follows:
(a) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of California and is qualified and in
good standing as a foreign corporation in each jurisdiction in which the nature
of the business conducted by the Company or the property owned or leased by the
Company requires such qualification. Except as described in the Memorandum, the
Company has no subsidiaries and does not own any equity interest and has not
made any loans or advances to or guarantees of indebtedness to any person,
corporation, partnership or other entity.
(b) The capital structure of the Company is as described in the Memorandum.
(c) The Company has the full right, power and authority to execute, deliver
and perform under this Agreement. This Agreement has been duly executed by the
Company and this Agreement and the transactions contemplated by this Agreement
have been duly authorized by all necessary corporate action and each constitute,
the legal, valid and binding obligations of the Company, enforceable in
accordance with their respective terms.
(d) All of the issued and outstanding shares of the Company's Common Stock
(the "Common Stock") have been duly and validly authorized and issued, are fully
paid and nonassessable (with no personal liability attaching to the holders
thereof or to the Company) and are free from preemptive rights or rights of
first refusal held by any person. All of the issued and outstanding shares of
Common Stock have been issued pursuant to either a current effective
registration statement under the 1933 Act or an exemption from the registration
requirements thereof, and were issued in accordance with all applicable Federal
and state securities laws.
(e) The Units to be issued at each Closing, and shares of Common Stock that
are included in the Units and that are issuable upon the exercise of the
Investor Warrants and the Placement Agent Warrants, have been duly and validly
authorized for issuance and, when issued pursuant to this Agreement or pursuant
to such conversion, will be duly and validly authorized and issued, fully paid
and nonassessable and free from preemptive rights or rights of first refusal
held by any person.
(f) The following financial statements of the Company (hereinafter
collectively, the "Financial Statements") are included in the Memorandum: (i)
consolidated balance sheets as of July 31, 2006 and 2005, and consolidated
statements of operations, shareholders' deficit and cash flows for the fiscal
years ended July 31, 2006 and 2005, and the related notes thereto, which have
been audited by Miller & McCollum ("M&M"), independent certified public
accountants, and (ii) unaudited consolidated balance sheet as of April 30, 2007,
and consolidated statements of operations and cash flows for the nine months
ended April 30, 2007 and 2006, and the related notes thereto. The Financial
Statements, which are included in the Company's Form 10KSB Annual Report for the
year ended July, 31 2006 (the "Form 10KSB") and the Company's Form 10QSB
Quarterly Report for the fiscal quarter ended April 30, 2007 (the "Form 10QSB"),
were prepared in accordance with generally accepted accounting principles
consistently applied and present and reflect fairly the financial position of
the Company at the respective balance sheet dates and the results of its
operations and cash flows for the periods then ended, provided, however, that
the financial statements included in the Form 10QSB are subject to normal
year-end adjustments and lack footnotes and other presentation items. During the
period of M&M's engagement as the Company's independent certified public
accountants, there have been no disagreements between the accounting firm and
the Company on any matters of accounting principles or practices, financial
statement disclosure or auditing scope or procedure. The only events required to
be reported on a current report on Form 8-K relating to the relationship between
the Company and M&M are as per the Company's 8-K filed with the SEC on September
24th, 2007. The Company has made and kept books and records and accounts which
are in reasonable detail and which fairly and accurately reflect the activities
of the Company, subject only to year-end adjustments.
(g) The Company has good and marketable title to all of its material
property and assets and, except as set forth in the Memorandum or the financial
statements of the Company (the "Financial Statements"), none of such property or
assets of the Company are subject to any lien, mortgage, pledge, encumbrance or
other security interest.
(h) Except as may be disclosed in the Memorandum, since April 30, 2007,
there has not been any material adverse change in the financial condition or in
the operations, business or prospects of the Company from that shown in the
Financial Statements or any damage or destruction, not covered by insurance,
which affects the business, property or assets of the Company.
(i) Except as set forth in the Exhibits to the Memorandum, the Company has
not filed any Current Reports on Form 8-K or other reports filed with the
Securities and Exchange Commission (the "SEC") subsequent to September 20, 2007.
(j) Neither the execution nor delivery of this Agreement, the Investor
Warrants or the Placement Agent Warrants (as defined below) or the issuance and
delivery of the Shares or the Common Stock issuable upon exercise of the
Investor Warrants and Placement Agent Warrants, by the Company, nor the
performance by the Company of the transactions contemplated by this Agreement or
the Investor Warrants and Placement Agent Warrants: (i) requires the consent,
waiver, approval, license or authorization of or filing with or notice to any
person, entity or public authority (except any filings required by Federal or
state securities laws, which filings have been or will be made by the Company on
a timely basis); (ii) violates or constitutes a default under or breach of any
law, rule or regulation applicable to the Company; or (iii) conflicts with or
results in a breach or termination of any provision of, or constitutes a default
under, or will result in the creation of any lien, charge or encumbrance upon
any of the property or assets of the Company with or without the giving of
notice, the passage of time or both, pursuant to (A) the Company's articles of
incorporation (as amended) or by-laws, (B) any mortgage, deed of trust,
indenture, note, loan agreement, security agreement, contract, lease, license,
alliance agreement, joint venture agreement, or other agreement or instrument,
or (C) any order, judgment, decree, statute, regulation or any other restriction
of any kind or character to which the Company is a party or by which any of the
assets of the Company may be bound.
(k) Except as described in the Memorandum or the Exhibits to the
Memorandum, the Company does not have any indebtedness to any officer, director,
5% stockholder or other Affiliate (as defined in the Rules and Regulations of
the SEC under the 1933 Act) of the Company, with the exception of regular
accrued payroll.
(l) The Company is in compliance with all laws, rules and regulations of
all Federal, state, local and foreign government agencies having jurisdiction
over the Company or affecting the business, assets or properties of the Company,
except where the failure to comply has not and will not have a material adverse
effect on the business, financial condition or results of operations of the
Company, taken as a whole (a "Material Adverse Effect"). The Company possesses
all licenses, permits, consents, approvals and agreements (collectively,
"Licenses") which are required to be issued by any and all applicable Federal,
state, local or foreign authorities necessary for the operation of its business
and/or in connection with its assets or properties, except where the failure to
possess such Licenses has not and will not have a Material Adverse Effect.
(m) The Company is not in default under any note, loan agreement, security
agreement, mortgage, contract, franchise agreement, distribution agreement,
lease, alliance agreement, joint venture agreement, other agreement, license,
permit, consent, approval or instrument to which it is a party, and no event has
occurred which, with or without the lapse of time or giving of notice, or both,
would constitute such default thereof by the Company or would cause acceleration
of any obligation of the Company or would adversely affect the business,
operations, or financial condition of the Company, except where such default or
event, whether with or without the lapse of time or giving of notice, or both,
has not and will not have a Material Adverse Effect. To the best of the
knowledge of the Company, no party to any note, loan agreement, security
agreement, mortgage, contract, franchise agreement, distribution agreement,
lease, alliance agreement, joint venture agreement, other agreement, license,
permit, consent, approval or instrument with or given to the Company is in
default thereunder and no event has occurred with respect to such party, which,
with or without the lapse of time or giving of notice, or both, would constitute
a default by such party or would cause acceleration of any obligations of such
party.
(n) To the best of the Company's knowledge, no officer, director or 5%
stockholder of the Company and no Affiliate of any such person either (i) holds
any interest in any corporation, partnership, business, trust, sole
proprietorship or any other entity which is engaged in a business similar to
that conducted by the Company (other than a passive immaterial interest in a
public company engaged in any such business) or (ii) engages in business with
the Company.
(o) There are no material (i.e., involving an asserted liability in excess
of twenty-five thousand dollars ($25,000)) claims, actions, suits, proceedings
or labor disputes, inquiries or investigations (whether or not purportedly on
behalf of the Company), pending or, to the best of the Company's knowledge,
threatened, against the Company, at law or in equity or by or before any
Federal, state, county, municipal or other governmental department, the SEC, the
National Association of Securities Dealers, Inc., board, bureau, agency or
instrumentality, domestic or foreign, whether legal or administrative or in
arbitration or mediation, nor is there any basis for any such action or
proceeding. Neither the Company, nor any of its assets are subject to, nor is
the Company in default with respect to, any order, writ, injunction, judgment or
decree that could adversely affect the financial condition, business, assets or
prospects of the Company.
(p) The accounts receivable of the Company represent receivables generated
from the sale of goods and services in the ordinary course of business. The
Company knows of no material disputes concerning accounts receivable of the
Company not disclosed in the Memorandum.
(q) The accounts payable of the Company represent bona fide payables to
third parties incurred in the ordinary course of business and represent bona
fide debts for services and/or goods provided to the Company.
(r) Except as set forth in the Memorandum or the Exhibits to the
Memorandum, the Company does not have (i) any written employment contracts or
oral employment contracts not terminable at will by the Company with any 5%
percent shareholder, officer or director of the Company; (ii) any consulting
agreement or other compensation agreement with any 5% percent shareholder,
officer or director of the Company; or (iii) any agreement or contract with any
5% percent shareholder, officer or director of the Company that will result in
the payment by the Company or the creation of any commitment or obligation
(absolute or contingent), of the Company to pay any severance, termination,
"golden parachute," or similar payment to any present or former personnel of the
Company following termination of employment. No director, executive officer or
other key employee of the Company has advised the Company that he or she intends
to resign as director and/or executive officer of the Company or to terminate
his or her employment with the Company.
(s) Except as set forth in the Memorandum, the Company is not a party to a
labor agreement with respect to any of its employees with any labor
organization, union, group or association and there are no employee unions (nor
any similar labor or employee organizations). There is no labor strike or labor
stoppage or slowdown pending, or, to the knowledge of the Company, threatened
against the Company, nor has the Company experienced in the last five (5) years
any work stoppage or other labor difficulty. The Company is in compliance with
all applicable laws, rules and regulations regarding employment practices,
employee documentation, terms or conditions of employment and wage and hours and
the Company is not engaged in any unfair labor practices, except where the
failure to comply has not and will not have a Material Adverse Effect. There are
no unfair labor practice charges or complaints against the Company pending
before the National Labor Relations Board or any other governmental agency.
(t) Except as disclosed in the Memorandum, there is no employee pension,
retirement or other benefit plans, maintained, contributed to or required to be
contributed to by the Company covering any employee or former employee of the
Company. The Company has no material liability or obligation of any kind or
nature, whether accrued or contingent, matured or unmatured, known or unknown,
under any provision of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") or any provision of the Internal Revenue Code of 1986, as
amended, specifically relating to persons subject to ERISA.
(u) The Company has timely filed or will timely file with the appropriate
taxing authorities all returns in respect of taxes required to be filed through
the date hereof and has timely paid or will timely pay all taxes that it is
required to pay or has established an adequate reserve therefore. There are no
pending or, to the knowledge of the Company, threatened audits, investigations
or claims for or relating to any liability of the Company in respect of taxes.
(v) The Company has no liabilities of any kind or nature whether accrued or
contingent, matured or unmatured, known or unknown, except as set forth in the
Memorandum and those liabilities incurred by the Company in the ordinary course
of business since April 30, 2007.
(w) There are no finder's fees or brokerage commissions payable with
respect to the transactions contemplated by this Agreement due to the actions of
the Company, except as provided in Section 11 of this Agreement.
(x) Except as set forth in the Memorandum, the Company is not currently and
has not during the past six (6) months been engaged in negotiations with respect
to: (i) any merger or consolidation of the Company where the Company would not
be the surviving entity; or (ii) the sale of the Company or any of its assets
other than sales in the ordinary course of business.
(y) The Company has the right to conduct its business in the manner in
which its business has been heretofore conducted. To the knowledge of the
Company, the conduct of such businesses by the Company does not violate or
infringe upon the patent, copyright, trade secret or other proprietary rights of
any third party, and the Company has not received any notice of any claim of any
such violation or infringement.
(z) The Company is currently in compliance in all respects with all
applicable Environmental Laws (as defined below), including, without limitation,
obtaining and maintaining in effect all permits, licenses, consents and other
authorizations required by applicable Environmental Laws, and the Company is
currently in compliance with all such permits, licenses, consents and other
authorizations, except where the failure to comply does not and will not have a
Material Adverse Effect. The Company has not received notice from any property
owner, landlord, tenant or Governmental Authority (as defined below) that
Hazardous Wastes (as defined below) are being improperly used, stored or
disposed of at any property currently or formerly owned or leased by the Company
or that any soil or ground water contamination has emanated from any such
property. For purposes hereof, the term "Environmental Laws" means,
collectively, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, the Superfund Amendments and Reauthorization
Act of 1986, as amended, the Resource Conservation and Recovery Act, as amended,
the Toxic Substances Act, as amended, the Clean Air Act, as amended, the Clean
Water Act, as amended, any other "Superfund" or "Superlien" law or any other
Federal, state or local statute, law, ordinance, code, rule, regulation, order
or decree regulating, relating to, or imposing liability or standards of conduct
concerning any hazardous, toxic or dangerous waste, substance, or material, as
now or at any time hereafter in effect. For purposes hereof, the term
"Governmental Authority" shall mean the Federal Government of the United States
of America, any state or any political subdivision of the Federal Government or
any state, including but not limited to courts, departments, commissions,
boards, bureaus, agencies, ministries or other instrumentalities. For purposes
hereof, the term "Hazardous Wastes" shall mean any regulated quantity of
hazardous substances as listed by the Environmental Protection Agency (the
"EPA") and the list of toxic pollutants designated by the United States Congress
and/or the EPA or defined by any other Federal, state or local statute, law,
ordinance, code, rule, regulation, order, or decree regulating, relating to or
imposing liability for standard of conduct concerning any hazardous, toxic
substance or material.
(aa) The information contained in the Memorandum, taken together, describes
in all material respects the business and financial condition of the Company,
and such material, taken together, does not contain any misstatement of a
material fact or omit to state a material fact necessary to make the information
not misleading. The Investors and the Placement Agent shall be entitled to rely
on such material notwithstanding any investigation they or any of them may have
made.
(bb) The Financial Statements included in the Memorandum present fairly the
financial position of the Company as of the dates indicated and the results of
its operations for the periods specified. The historical financial information
included in the Memorandum has been derived from the accounting records of the
Company and presents fairly the information shown thereby.
(cc) The Investor Warrants and Placement Agent Warrants have been
authorized for issuance to the Investors and the Placement Agent or its
designees, respectively. The shares of Common Stock issuable upon exercise of
the Investor Warrants and Placement Agent Warrants (the "Warrant Shares"), when
issued and delivered against payment therefor in accordance with the terms
thereof, will be duly and validly issued, fully paid, nonassessable and free of
preemptive rights or rights of first refusal held by any person, and all
corporate action required to be taken for the authorization and issuance of the
Investor Warrants and Placement Agent Warrants and the Warrant Shares has been
validly and sufficiently taken. The execution by the Company of the Investor
Warrants and Placement Agent Warrants has been duly authorized by all required
action of the Company and, when so executed and delivered, will constitute the
valid and binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general equity principles.
3. Representations, Warranties and Covenants of Placement Agent.
(a) Placement Agent hereby represents and warrants that it is duly
authorized to execute this Agreement and perform its duties hereunder, and the
execution and delivery by Placement Agent of this Agreement and the consummation
of the transactions contemplated by this Agreement have been authorized by all
necessary corporate action and will not result in any violation of, or be in
conflict with, or constitute a default under, Placement Agent's Articles of
Incorporation or By-Laws, any agreement or instrument to which Placement Agent
is a party or Placement Agent's property is bound, or any judgment, decree,
order or any statute, rule or regulation applicable to Placement Agent.
(b) In offering the Units for sale, Placement Agent will not offer the
Units for sale, or solicit any offers to buy any Units, or otherwise negotiate
with any person in respect of the Units, on the basis of any communications or
documents relating to the Units or any investment therein or to the Company or
investment therein, other than the Memorandum and any other document
satisfactory in form and substance to the Company. Placement Agent will promptly
deliver a copy of each amendment or supplement to the Memorandum (i) to all
offerees then being or thereafter solicited by Placement Agent, and (ii) to each
person who has subscribed for Units prior to the receipt by such person of such
amendment or supplement.
(c) In offering the Units for sale, Placement Agent shall conduct such
sales in the manner described in the Memorandum.
4. Covenants of the Company.
(a) In connection with the Proposed Offering, the Company will at all times
comply with all requirements imposed upon it by the 1933 Act, as now and
hereafter amended, and by all applicable state securities laws and regulations,
to permit the continuance of offers and sales of the Units in accordance with
the provisions hereof and the Memorandum. During such period, the Company will
amend and supplement the Memorandum in order to make the Memorandum comply with
the requirements of the Act.
(b) If at any time it is known or believed that any event occurred as a
result of which the Memorandum or any representation or warranty contained in
this section includes an untrue statement of a material fact or, in view of the
circumstances under which they were made, omits to state any material fact
necessary to make the statements therein not misleading, the Company will notify
The Placement Agent and will prepare an amended or supplemented Memorandum which
will correct such statement or omission.
(c) The Company will not make any offers or sales of any security (other
than the Units) under circumstances that would cause the Proposed Offering to
fail to qualify for an exemption from the registration requirements of
applicable federal and state securities laws .
(d) The Company agrees at all times as long as the Investor Warrants or
Placement Agent Warrants may be exercised, to keep reserved from the authorized
and unissued Common Stock, such number of shares of Common Stock as may be, from
time to time, issuable upon exercise of the Investor Warrants and Placement
Agent Warrants.
5. Survival of Representations and Warranties and Indemnification. The
representations, warranties and covenants of the Company and Placement Agent set
forth in Sections 2, 3 and 4 of this Agreement shall survive the execution and
delivery of the Units. The indemnification obligations of the Company as set
forth in the indemnification rider identified as Appendix II (as amended or
supplemented from time to time, the "Indemnification Rider") to that certain
engagement letter between the Company and the Placement Agent, dated May 7, 2007
(as amended or supplemented from time to time) is hereby incorporated by
reference in its entirety as if more fully set forth herein, and the provisions
of the Indemnification Rider shall apply and be applicable to, among other
things, all representations and warranties of the Company.
6. Use of Proceeds. The net proceeds to the Company from the sale of the Minimum
Amount of Common Stock and the Maximum Amount of Common Stock are estimated to
be approximately 3,180,000 and 7,320,000, respectively, after deducting the fees
and expenses associated with the Private Placement Offering. The net proceeds
from the sale of the Units will be used by the Company as disclosed in the
Offering Materials.
7. Unregistered Securities. None of the shares of Common Stock that are included
in the Units and that are issuable upon the exercise of the Investor Warrants
and the Placement Agent Warrants have been registered under the 1933 Act, in
reliance upon the applicability of Section 4(2), 4(6) and/or Rule 506 of
Regulation D of the 1933 Act to the transactions contemplated hereby. The
certificates representing the Shares of common stock and the Warrant Shares will
bear an investment legend stating that they are "restricted securities" (as
defined in Rule 144 under the Securities Act) and may only be publicly offered
and sold pursuant to an effective registration statement filed with the SEC or
pursuant to an exemption from the registration requirements.
8. Registration Rights. The Placement Agent shall be deemed to be a party to,
and entitled to the benefits of the registration rights set forth in Section 3
of, that certain Stock Purchase Agreement executed and delivered by the Company
to the Investors, and the shares of Common Stock issuable upon exercise of the
Placement Agent Warrants shall be included as Registrable Securities in said
agreement.
9. Conditions. The following obligations of the Company shall be satisfied or
fulfilled on or prior to the date of each Closing, unless otherwise agreed to in
writing by the Placement Agent:
(a) The Company shall have delivered to the Placement Agent, at the Initial
Closing, (i) a currently-dated long-form good standing certificate or telegram
from the Secretary of State where the Company is incorporated and each other
jurisdiction in which the Company is qualified to do business as a foreign
corporation; (ii) the articles of incorporation (as amended) of the Company, as
currently in effect, certified by the Secretary of State of the state where the
Company is incorporated; (iii) by-laws of the Company certified by the secretary
of the Company; and (iv) certified resolutions of the Board of Directors of the
Company approving the execution and delivery of this Agreement, the Investor
Warrants and the Placement Agent Warrants, the issuance and sale of the Shares,
the issuance of Common Stock upon exercise of the Investor Warrants and
Placement Agent Warrants and the registration of the Registrable Securities.
(b) There shall have occurred no event which has a Material Adverse Effect
on the Company or any of its businesses, assets, prospects or the Company's
securities since the date of this Agreement.
(c) No litigation or administrative proceeding shall have been threatened
or commenced against the Company which (i) seeks to enjoin or otherwise prohibit
or restrict the consummation of the transactions contemplated by this Agreement
or (ii) if adversely determined, would have a Material Adverse Effect on the
Company or the Company's securities.
(d) The Company shall have delivered to the Placement Agent a certificate
of its principal executive and financial officers as to the matters set forth in
paragraphs 9(a), (b) and (c) of this Agreement and to the further effect that
(i) the Company is not in default, in any respect, under any note, loan
agreement, security agreement, mortgage, deed of trust, indenture, contract,
alliance agreement, lease, license, joint venture agreement, other agreement or
other instrument to which it is a party, except as disclosed in the Financial
Statements or the Memorandum and except where such default has not and will not
have a Material Adverse Effect; (ii) the Company's representations and
warranties contained in this Agreement are true and correct in all respects on
such date with the same force and effect as if made on such date, (iii) there
has been no amendment or changes to the Company's articles of incorporation or
by-laws or authorizing resolutions from those delivered pursuant to Paragraph
9(a) of this Agreement; and (iv) no event has occurred which, with or without
the lapse of time or giving of notice, or both, would constitute a breach of
default thereof by the Company, or would cause acceleration of any obligation of
the Company, or could adversely affect the business, operations, financial
condition or prospects of the Company.
(e) The Placement Agent shall have received the opinion of Dennis Brovarone
Attorney at Law, counsel for the Company, dated as of the Closing date in form
and substance reasonably satisfactory to the Placement Agent and its counsel.
(f) The Company shall have prepared and filed or delivered to counsel for
filing with the SEC and any states in which such filing is required, a Form D
relating to the sale of the Common Stock and such other documents and
certificates as are required.
(g) Subscriptions for at least the Minimum Amount of Units shall have been
accepted by the Company.
(h) In addition to the right of the Placement Agent to terminate this
Agreement and not consummate the transactions contemplated by this Agreement as
a result of the failure of the Company to comply with any of its obligations set
forth in this Agreement, this Agreement may be terminated by the Placement Agent
by written notice to the Company at any time prior to the Initial Closing if, in
the Placement Agent's sole judgment, (i) the Company shall have sustained a loss
that is material to the Company, whether or not insured, by reason of fire,
earthquake, flood, accident or other calamity, or from any labor dispute or
court or government action, order or decree; (ii) trading in securities on any
exchange or system shall have been suspended or limited either generally or
specifically with respect to the Common Stock; (iii) material governmental
restrictions have been imposed on trading in securities generally or
specifically with respect to the Common Stock (not in force and effect on the
date of this Agreement); (iv) a banking moratorium shall have been declared by
Federal or New York State authorities; (v) an outbreak of major international
hostilities or other national or international calamity shall have occurred;
(vi) the Congress of the United States or any state legislative body shall have
passed or taken any action or measure, or such bodies or any governmental body
or any authoritative accounting institute, or board, or any governmental
executive shall have adopted any orders, rules or regulations, which the
Placement Agent reasonably believes is likely to have a Material Adverse Effect
on the business, financial condition or financial statements of the Company or
the market for the Common Stock; (vii) the Common Stock shall have been delisted
from the exchange on which it currently listed, or the Company shall have
received notice from such exchange advising the Company of its intention to have
the Common Stock delisted from such exchange, whether conditional or otherwise,
or the Company shall fail to meet the requirements for continued listing on such
exchange; or (viii) there shall have been, in the Placement Agent's judgment, a
material decline in the Dow Jones Industrial Index or the market price of the
Common Stock at any time subsequent to the date of this Agreement.
10. Indemnification.
(a) Indemnification by Company. The Company agrees to indemnify and hold
harmless Placement Agent, its officers, directors and agents from and against
any and all losses, liabilities, claims, damages and expenses (each a "Claim"
and, collectively, "Claims") whatsoever arising out of (1) a breach or alleged
breach by the Company of any warranty set forth in Section 2, (2) failure or
alleged failure by the Company to comply with the provisions of Section 2, or
(3) any untrue statement or alleged untrue statement of a material fact
contained in the Memorandum or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided, however,
that the Company will not be liable in any such case to the extent that any such
Claim arises out of or is based upon any such untrue statement or alleged untrue
statement or omission or alleged omission contained in the material furnished to
the Company by Placement Agent on Placement Agent's behalf, specifically for
inclusion therein, which relates to Placement Agent's activities pursuant to
this Agreement.
(b) Indemnification by Placement Agent. Placement Agent agrees to indemnify
and hold harmless the Company (its officers, directors and agents) and each
person, if any, who controls any of the foregoing within the meaning of the 1933
Act to the same extent as the indemnity from the Company described above against
any and all Claims whatsoever (or actions in respect thereto) arising out of or
based upon any misrepresentation or alleged misrepresentation, failure or
alleged failure by Placement Agent to comply with the covenants and agreements
set forth in Section 3.
(c) Any person entitled to indemnification under Section 10(a) or (b) of
this Agreement (an "indemnified party") shall notify promptly the person
obligated to provide such indemnification (the "indemnifying party") in writing
of the commencement of any any action or proceeding brought by a third person
against the indemnified party with respect to a Claim (a "Third Party Claim")
for which the indemnified party may be entitled to indemnification from the
indemnifying party under this Section 10, but the omission of such notice shall
not relieve the indemnifying party from any liability which it may have to any
indemnified party under Section 10 of this Agreement, except to the extent that
such failure shall materially adversely affect any indemnifying party or its
rights hereunder. The indemnifying party shall be entitled to participate in,
and, to the extent that it chooses, to assume the defense of any Third Party
Claim with counsel reasonably satisfactory to the indemnified party; and, after
notice from the indemnifying party to the indemnified party that it so chooses,
the indemnifying party shall not be liable for any legal or other expenses or
disbursements subsequently incurred by the indemnified party in connection with
the defense thereof other than reasonable costs of investigation; provided,
however, that (i) if the indemnifying party fails to take reasonable steps
necessary to defend diligently the Third Party Claim within twenty (20) days
after receiving notice from the indemnified party that the indemnified party of
such Third Party Claim; (ii) if the indemnified party who is a defendant in such
Third Party Claim which is also brought against the indemnifying party
reasonably shall have concluded that there are legal defenses available to the
indemnified party which are not available to the indemnifying party; or (iii) if
representation of both parties by the same counsel is otherwise inappropriate
under applicable standards of professional conduct, the indemnified party shall
have the right to assume or continue its own defense as set forth above (but
with no more than one firm of counsel for all indemnified parties in each
jurisdiction, except to the extent any indemnified party or parties reasonably
shall have concluded that there are legal defenses available to such party or
parties which are not available to the other indemnified parties or to the
extent representation of all indemnified parties by the same counsel is
otherwise inappropriate under applicable standards of professional conduct) and
the indemnifying party shall be liable for any reasonable expenses therefor;
provided, that no indemnifying party shall be subject to any liability for any
settlement of a Third Party Claim made without its consent (which may not be
unreasonably withheld, delayed or conditioned). If the indemnifying party
assumes the defense of any Third Party Claim hereunder, such indemnifying party
shall not enter into any settlement without the consent of the indemnified party
if such settlement attributes liability to the indemnified party.
11. Fees; Other Rights.
(a) As disclosed in the Memorandum, a fee ("Success Fee") equal to eight
percent (8%) of the gross proceeds through the sale of the Units shall be
payable to the Placement Agent.
(b) In addition to the sums payable to the Placement Agent as provided
elsewhere herein, the Placement Agent shall be entitled to receive at the
Closing, as additional compensation for its services, warrants (the "Placement
Agent Warrants") with a five (5) year term for the purchase of an amount of
Common Stock equal to ten percent (10.0%) of the Common Stock in the Units sold
in this Offering. The exercise price of the Placement Agent Warrants will be
equal to one hundred twenty percent (120%) of the Market Price at the Initial
Closing Date.
(c) The Company also agrees to pay to the Placement Agent, a cash fee equal
to eight (8.0%) percent of the gross proceeds, if any, received subsequent to
the termination of the Offering from any party introduced to the Company by the
Placement Agent during the Offering Period; provided that such proceeds are
received by the Company within one year of the date of such introduction and
that the Placement Agent has promptly notified the Company that such
introduction has been made
(d) Upon closing, the Company will reimburse the Placement Agent for up to
$40,000 of its actual and reasonable out-of-pocket expenses incurred in
connection with Offering, including fees and expenses of its counsel.
(e) The Company shall pay any fees required in connection with the
qualification of the sale of the Units under the state securities or "blue sky"
laws of any state which the Placement Agent reasonably deems necessary.
(f) All payments in connection with the sale of the Units shall be made
pursuant to the terms and conditions of the escrow agreement between Placement
Agent and CSC Trust Company of Delaware, an executed copy of which has been
delivered to and acknowledged by the Company.
(g) During the 12 months following the termination of this Agreement, if
the Company issues and sells securities to any person that the Placement Agent
introduced to the Company or with which the Placement Agent had discussions or
negotiations during the term of this Agreement on behalf of the Company
regarding the Company's securities, then the Company shall pay the Placement
Agent upon such issuance and sale a cash fee equal to that which would have been
payable to the Placement Agent had such issuance and sale occurred during the
term of this Agreement.
12. Confidentiality. The Placement Agent and the Company mutually agree that
they will not disclose any confidential information received from the other
party to others, except with the written permission of the other party or as
such disclosure may be required by law.
13. Notices. All notices provided for in this Agreement shall be in writing
signed by the party giving such notice, and delivered personally or sent by
overnight courier or messenger against receipt thereof or sent by registered or
certified mail, return receipt requested, or by facsimile transmission, if
confirmed by mail as provided in this Section 12. Notices shall be deemed to
have been received on the date of personal delivery or facsimile or, if sent by
certified or registered mail, return receipt requested, shall be deemed to be
delivered on the third business day after the date of mailing. Notices shall be
sent to the following addresses:
To the Company:
PURE BIOSCIENCE
1725 Gillespie Way
El Cajon, California 92020
Attention: Michael Krall
Facsimile: (619)596-8790
With a copy to:
Dennis Brovarone, Attorney-at-Law
18 Mountain Laurel Drive
Littleton, CO 80127
Facsimile: (303) 466-4826
Attention: Dennis Brovarone
To Placement Agent:
TAGLICH BROTHERS, INC.
405 Lexington Avenue, 51st Floor
New York, NY 10174
Facsimile: (212) 661-6824
Attention: Robert Schroeder
With a copy to:
EDWARDS ANGELL PALMER & DODGE LLP
750 Lexington Avenue
New York, NY 10022
Facsimile: (212) 308-4844
Attention: Geoffrey Etherington, Esq.
or to such other address as any party shall designate in the manner provided in
this Section 12.
14. Miscellaneous.
(a) This Agreement constitutes the entire agreement between the parties
relating to the subject matter hereof and supercedes any and all prior or
contemporaneous oral and prior written agreements and understandings. This
Agreement may not be modified or amended nor may any right be waived except by a
writing which expressly refers to this Agreement, states that it is a
modification, amendment or waiver and is signed by all parties with respect to a
modification or amendment or the party granting the waiver with respect to a
waiver. No course of conduct or dealing and no trade custom or usage shall
modify any provisions of this Agreement.
(b) This Agreement shall be governed by and construed in accordance with
the laws of the State of New York applicable to contracts made and to be
performed entirely within such state. Each party hereby consents to the
exclusive jurisdiction of the Federal and state courts situated in New York
County, New York in connection with any action arising out of or based upon this
Agreement and the transactions contemplated by this Agreement.
(c) This Agreement shall be binding upon and inure to the benefit of the
parties hereto, and their respective personal representatives, successors and
permitted assigns.
(d) In the event that any provision of this Agreement becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision.
(e) Each party shall, without payment of any additional consideration by
any other party, at any time on or after the date of any Closings take such
further action and execute such other and further documents and instruments as
the other party may request in order to provide the other party with the
benefits of this Agreement.
(f) The captions and headings contained herein are solely for convenience
and reference and do not constitute a part of this Agreement.
(g) All references to any gender shall be deemed to include the masculine,
feminine or neuter gender, the singular shall include the plural and the plural
shall include the singular.
(h) 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 one
and the same document.
[Signature page follows]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.
PURE BIOSCIENCE TAGLICH BROTHERS, INC.
By: /s/ Michael L. Krall By: /s/ Robert Schroder
-------------------- -------------------
Name: Michael L. Krall Name: Robert Schroder
Title: Chief Executive Officer Title: President