EXHIBIT 10.3

 

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August 11, 2008

 

CONFIDENTIAL

 

EpiCept Corporation

777 Old Saw Mill River Road

Tarrytown, NY 10591

 

Attn:

Robert W. Cook

Senior Vice President & Chief Financial Officer

 

Dear Mr. Cook:

 

This letter (the “Agreement”) constitutes the agreement between Rodman &
Renshaw, LLC (“Rodman” or the “Placement Agent”) and EpiCept Corporation (the
“Company”), that Rodman shall serve as the exclusive placement agent for the
Company, on a reasonable “best efforts” basis, in connection with the proposed
placement (the “Placement”) of registered securities (the “Securities”) of the
Company, including shares (the “Shares”) of the Company’s common stock, par
value $0.0001 per share (the “Common Stock”), and warrants to purchase shares of
Common Stock (the “Warrants”). The terms of such Placement and the Securities
shall be mutually agreed upon by the Company and the purchasers (each, a
“Purchaser” and collectively, the “Purchasers”) and nothing herein constitutes
that Rodman would have the power or authority to bind the Company or any
Purchaser or an obligation for the Company to issue any Securities or complete
the Placement. This Agreement, the Securities Purchase Agreement, the Warrants
and the Prospectus and Prospectus Supplement shall be collectively referred to
herein as the “Transaction Documents.” The date of the closing of the Placement
shall be referred to herein as the “Closing Date.” The Company expressly
acknowledges and agrees that Rodman’s obligations hereunder are on a reasonable
best efforts basis only and that the execution of this Agreement does not
constitute a commitment by Rodman to purchase the Securities and does not ensure
the successful placement of the Securities or any portion thereof or the success
of Rodman with respect to securing any other financing on behalf of the Company.

 

SECTION 1.

Compensation and other Fees.

 

A.           Fees and Expenses. In connection with the services described above,
the Company shall pay to Rodman the following compensation:

 

1.   Placement Agent’s Fee. The Company shall pay to Rodman a cash placement fee
(the “Placement Agent’s Fee”) equal to 7% of the aggregate purchase price paid
by each purchaser of Securities. The Placement Agent’s Fee shall be paid at the
closing of the Placement (the “Closing”) from the gross proceeds of the
Securities sold.

 

2.   Warrants. As additional compensation for the services, the Company shall
issue to Rodman or its designees at the Closing such number of warrants (the
“Rodman Warrants”) to purchase shares of Common Stock equal to 5% of the
aggregate number of Shares sold to the public in the Placement. The Rodman
Warrants shall have the same terms, as the warrants issued to the Purchasers in
the Placement,

 

1251 Avenue of the Americas, 20th Floor, New York, NY 10020 ? Tel:: 212 356 0500
Fax:: 212 430 1711

www.rodm.com     Member: FINRA, SIPC

 

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except that the exercise price shall be 125% of the public offering price per
share. The Rodman Warrants shall not have antidilution protections or be
transferable for 6 months from the date of the Offering except as permitted by
NASD Rule 2710, and further, the number of Shares underlying the Rodman Warrants
shall be reduced if necessary to comply with FINRA rules or regulations.

 

SECTION 2.

REGISTRATION STATEMENT.

 

The Company represents and warrants to, and agrees with, the Placement Agent
that:

(A)      The Company has filed with the Securities and Exchange Commission (the
“Commission”) a registration statement on Form S-3 (Registration File
No.333-145561) under the Securities Act of 1933, as amended (the “Securities
Act”), which became effective on September 18, 2007, for the registration under
the Securities Act of the Shares and Warrants, as well as other securities of
the Company. At the time of such filing, the Company met the requirements of
Form S-3 under the Securities Act. Such registration statement meets the
requirements set forth in Rule 415(a)(1)(x) under the Securities Act and
complies with said Rule. The Company will file with the Commission pursuant to
Rule 424(b) under the Securities Act, and the rules and regulations (the “Rules
and Regulations”) of the Commission promulgated thereunder, a supplement to the
form of prospectus included in such registration statement relating to the
placement of the Shares and the plan of distribution thereof and has advised the
Placement Agent of all further information (financial and other) with respect to
the Company required to be set forth therein. Such registration statement, at
any given time, including the exhibits thereto filed at such time, as amended at
such time, is hereinafter called the “Registration Statement”; such prospectus
in the form in which it appears in the Registration Statement is hereinafter
called the “Base Prospectus”; and the supplemented form of prospectus, in the
form in which it will be filed with the Commission pursuant to Rule 424(b)
(including the Base Prospectus as so supplemented) is hereinafter called the
“Prospectus Supplement.” The Registration Statement at the time it originally
became effective is hereinafter called the “Original Registration Statement.”
Any reference in this Agreement to the Registration Statement, the Original
Registration Statement, the Base Prospectus or the Prospectus Supplement shall
be deemed to refer to and include the documents incorporated by reference
therein (the “Incorporated Documents”) pursuant to Item 12 of Form S-3 which
were or are filed under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), at any given time, as the case may be; and any reference in
this Agreement to the terms “amend,” “amendment” or “supplement” with respect to
the Registration Statement, the Original Registration Statement, the Base
Prospectus or the Prospectus Supplement shall be deemed to refer to and include
the filing of any document under the Exchange Act after the date of this
Agreement, or the issue date of the Base Prospectus or the Prospectus
Supplement, as the case may be, deemed to be incorporated therein by reference.
All references in this Agreement to financial statements and schedules and other
information which is “contained,” “included,” “described,” “referenced,” “set
forth” or “stated” in the Registration Statement, the Base Prospectus or the
Prospectus Supplement (and all other references of like import) shall be deemed
to mean and include all such financial statements and schedules and other
information which is or is deemed to be incorporated by reference in the
Registration Statement, the Base Prospectus or the Prospectus Supplement, as the
case may be. The Company has not received any notice that the Commission has
issued or intends to issue a stop order suspending the effectiveness of the
Registration Statement or the use of the Base Prospectus or the Prospectus
Supplement or intends to commence a proceeding for any such purpose. For
purposes of this Agreement, “free writing prospectus” has the meaning set forth
in Rule 405 under the Securities Act and the “Time of Sale Prospectus” means the
Base Prospectus, together with the Prospectus Supplement, if any, and the free
writing prospectuses, if any, used in connection with the Placement, including
any documents incorporated by reference therein.

(B)      The Original Registration Statement, as amended, (and any further
documents to be filed with the Commission) contains all exhibits and schedules
as required by the Securities Act. Each of the Registration Statement and any
post-effective amendment thereto, at the time it became effective, complied in
all material respects with the Securities Act and the applicable Rules and
Regulations and did not contain

 

 

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any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading. The Base Prospectus, the Time of Sale Prospectus, if any, and the
Prospectus Supplement, each as of its respective date, comply in all material
respects with the Securities Act and the applicable Rules and Regulations. Each
of the Base Prospectus, the Time of Sale Prospectus, if any, and the Prospectus
Supplement, as amended or supplemented, did not and will not contain as of the
date thereof any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Incorporated
Documents, when they were filed with the Commission, conformed in all material
respects to the requirements of the Exchange Act and the applicable rules and
regulations promulgated thereunder, and none of such documents, when they were
filed with the Commission, contained any untrue statement of a material fact or
omitted to state a material fact necessary to make the statements therein (with
respect to Incorporated Documents incorporated by reference in the Base
Prospectus or Prospectus Supplement), in light of the circumstances under which
they were made not misleading. No post-effective amendment to the Registration
Statement reflecting any facts or events arising after the date thereof which
represent, individually or in the aggregate, a fundamental change in the
information set forth therein is required to be filed with the Commission.
Except for the Agreement, there are no documents required to be filed with the
Commission in connection with the transaction contemplated hereby that (x) have
not been filed as required pursuant to the Securities Act or (y) will not be
filed within the requisite time period. Except for the Agreement, there are no
contracts or other documents required to be described in the Base Prospectus,
the Time of Sale Prospectus, if any, or Prospectus Supplement, or to be filed as
exhibits or schedules to the Registration Statement, which have not been
described or filed as required.

(C)      The Company is eligible to use free writing prospectuses in connection
with the Placement pursuant to Rules 164 and 433 under the Securities Act. The
Company will not, without the prior consent of the Placement Agent, prepare, use
or refer to, any free writing prospectus.

(D)      Neither the Company nor any of its directors and officers have
distributed and none of them will distribute, prior to the Closing Date, any
offering material in connection with the offering and sale of the Shares other
than the Base Prospectus, the Time of Sale Prospectus, if any, the Prospectus
Supplement, the Registration Statement, copies of the documents incorporated by
reference therein and any other materials permitted by the Securities Act.

(E)       Without the prior written consent of the Company, the Placement Agent
hereby confirms that it has not given and will not give to any prospective
purchaser of the Shares and Warrants any free writing prospectuses other than as
set forth on Schedule A hereto.

(F)       The Company and the Placement Agent have agreed that the information
set forth on Schedule B hereto (such information shall be referred to in this
Agreement as the “Scripted Information”) shall be orally conveyed by the
Placement Agent to each Purchaser prior to the Placement Agent’s confirming
sales of Shares and Warrants.

SECTION 3.      REPRESENTATIONS AND WARRANTIES. Except as set forth in the
Registration Statement, the Prospectus, the Prospectus Supplement or the SEC
Reports (as defined below), the Company hereby represents and warrants to the
Placement Agent as follows:

(A)      Organization and Qualification. The Company owns, directly or
indirectly, all of the capital stock or other equity interests of each of its
direct and indirect subsidiaries (individually, a “Subsidiary”) Subsidiary free
and clear of any “Liens” (which for purposes of this Agreement shall mean a
lien, charge, security interest, encumbrance, right of first refusal, preemptive
right or other restriction, except for a lien on the Common Stock of the
Company’s subsidiaries pursuant to the Loan and Security Agreement dated August
30, 2006, as amended, with Hercules Technology Growth Capital Inc., or
“Hercules”), and all the issued and outstanding shares of capital stock or other
equity interests of each Subsidiary are validly issued and are fully

 

 

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paid, non-assessable and free of preemptive and similar rights to subscribe for
or purchase securities. The Company and each of the Subsidiaries is an entity
duly incorporated or otherwise organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization (as
applicable), with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently conducted.
Neither the Company nor any Subsidiary is in violation or default of any of the
provisions of its respective certificate or articles of incorporation, bylaws or
other organizational or charter documents. Each of the Company and the
Subsidiaries is duly qualified to conduct business and is in good standing as a
foreign corporation or other entity in each jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing, as
the case may be, could not have or reasonably be expected to result in (i) a
material adverse effect on the legality, validity or enforceability of any
Transaction Document with respect to the Company, (ii) a material adverse effect
on the results of operations, assets, business or financial condition of the
Company and the Subsidiaries, taken as a whole, or (iii) a material adverse
effect on the Company’s ability to perform in any material respect on a timely
basis its obligations under any Transaction Document (any of (i), (ii) or (iii),
a “Material Adverse Effect”) and no “Proceeding” (which for purposes of this
Agreement shall mean any action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened) has been instituted in any such
jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or
curtail such power and authority or qualification.

 

(B)       Authorization. The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by each
of the Transaction Documents and otherwise to carry out its obligations
hereunder and thereunder. The execution and delivery of each of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated thereby have been duly authorized by all necessary action on the
part of the Company and no further action is required by the Company, its board
of directors or its stockholders in connection therewith other than in
connection with the “Required Approvals” (as defined in subsection 3(D) below).
Each Transaction Document to which the Company is a party has been (or upon
delivery will have been) duly executed by the Company and, when delivered in
accordance with the terms hereof and thereof, will constitute the valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms except (i) as limited by general equitable principles and
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors’ rights generally, (ii)
as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies, and (iii) that rights to
indemnification and contribution thereunder may be limited by federal or state
securities laws or public policy relating thereto.

 

(C)       No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company, the issuance and sale of the Shares and
Warrants and the consummation by the Company of the other transactions
contemplated hereby and thereby do not and will not (i) conflict with or violate
any provision of the Company’s or any Subsidiary’s certificate or articles of
incorporation, bylaws or other organizational or charter documents, or (ii)
conflict with, or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, result in the creation of any Lien
upon any of the properties or assets of the Company or any Subsidiary, or give
to others any rights of termination, amendment, acceleration or cancellation
(with or without notice, lapse of time or both) of, any agreement, credit
facility, debt or other instrument (evidencing a Company or Subsidiary debt or
otherwise) or other understanding to which the Company or any Subsidiary is a
party or by which any property or asset of the Company or any Subsidiary is
bound or affected (except as may have been waived), or (iii) subject to the
Required Approvals, conflict with or result in a violation of any law, rule,
regulation, order, judgment, injunction, decree or other restriction of any
court or governmental authority to which the Company or a Subsidiary is subject
(including federal and state securities laws and regulations), or by which any
property or asset of the Company or a Subsidiary is bound or affected; except in
the case of each of clauses (ii) and (iii), such as would not have a Material
Adverse Effect.

 

 

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(D)      Filings, Consents and Approvals. The Company is not required to obtain
any consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any court or other federal, state, local or other
governmental authority or other “Person” (defined as an individual or
corporation, partnership, trust, incorporated or unincorporated association,
joint venture, limited liability company, joint stock company, government (or an
agency or subdivision thereof) or other entity of any kind) in connection with
the execution, delivery and performance by the Company of the Transaction
Documents, other than such filings as are required to be made under applicable
Federal and state securities laws, by the Trading Market and under the
Securities Purchase Agreement (collectively, the “Required Approvals”).

 

(E)       Issuance of the Shares and Warrants; Registration. The Shares and
Warrants are duly authorized and, when issued and paid for in accordance with
the applicable Transaction Documents, will be duly and validly issued, fully
paid and nonassessable, free and clear of all Liens imposed by the Company other
than any restrictions on transfer provided for in the Transaction Documents. The
Company has reserved from its duly authorized capital stock the maximum number
of shares of Common Stock issuable pursuant to the Transaction Documents. The
issuance by the Company of the Shares and Warrants has been registered under the
Securities Act and all of the Shares and Warrants are freely transferable and
tradable by the Purchasers without restriction (other than any restrictions
arising solely from an act or omission of a Purchaser). The Shares and Warrants
are being issued pursuant to the Registration Statement. The "Plan of
Distribution" section under the Registration Statement contemplates the issuance
and sale of the Shares and Warrants as provided in the Transaction Documents.
Upon receipt of the Shares and Warrants, the Purchasers will have good and
marketable title to such Shares and Warrants and the Shares will be freely
tradable on the “Trading Market” (which, for purposes of this Agreement means
the following markets or exchanges on which the Common Stock is listed or quoted
for trading on the date in question: The Nasdaq Capital Market and OMX Nordic
Exchange).

 

(F)       Capitalization. The capitalization of the Company is as described in
the Registration Statement and the SEC Reports. The Company has not issued any
capital stock since the date of the filing of its most recently filed periodic
report under the Exchange Act, other than as described in the SEC Reports or
pursuant to the exercise of employee stock options under the Company’s stock
option plans, the issuance of shares of Common Stock to employees pursuant to
the Company’s employee stock purchase plan and pursuant to the conversion or
exercise of securities exercisable, exchangeable or convertible into Common
Stock (“Common Stock Equivalents”). No Person has any right of first refusal,
preemptive right, right of participation, or any similar right to participate in
the transactions contemplated by the Transaction Documents. Except as a result
of the purchase and sale of the Shares and Warrants and as described in the
Registration Statement, Prospectus, Prospectus Supplement or the SEC Reports,
there are no outstanding options, warrants, script rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities, rights or
obligations convertible into or exercisable or exchangeable for, or giving any
Person any right to subscribe for or acquire, any shares of Common Stock, or
contracts, commitments, understandings or arrangements by which the Company or
any Subsidiary is or may become bound to issue additional shares of Common Stock
or Common Stock Equivalents. Except as disclosed in the Registration Statement,
Prospectus, Prospectus Supplement, or the SEC Reports, the issuance and sale of
the Shares and Warrants will not obligate the Company to issue shares of Common
Stock or other securities to any Person (other than the Purchasers) and will not
result in a right of any holder of Company securities to adjust the exercise,
conversion, exchange or reset price under such securities. All of the
outstanding shares of capital stock of the Company are validly issued, fully
paid and nonassessable, have been issued in compliance with all federal and
state securities laws, and none of such outstanding shares was issued in
violation of any preemptive rights or similar rights to subscribe for or
purchase securities. No further approval or authorization of any stockholder,
the Board of Directors of the Company or others is required for the issuance and
sale of the Shares and Warrants. Except as described in the Registration
Statement and the SEC Reports, there are no stockholders agreements, voting
agreements or other similar agreements with respect to the Company’s capital
stock to which the Company is a party or, to the knowledge of the Company,
between or among any of the Company’s stockholders.

 

 

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(G)      SEC Reports; Financial Statements. The Company has complied in all
material respects with requirements to file all reports, schedules, forms,
statements and other documents required to be filed by it under the Exchange
Act, including pursuant to Section 13(a) or 15(d) thereof, for one year
preceding the date hereof (or such shorter period as the Company was required by
law or regulation to file such material) (the foregoing materials, including the
exhibits thereto and documents incorporated by reference therein, being
collectively referred to herein as the “SEC Reports”) on a timely basis or has
received a valid extension of such time of filing and has filed any such SEC
Reports prior to the expiration of any such extension. As of their respective
dates, the SEC Reports complied in all material respects with the requirements
of the Securities Act and the Exchange Act, as applicable, and the rules and
regulations of the Commission promulgated thereunder, and none of the SEC
Reports, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. The financial statements of the Company
included in the SEC Reports comply in all material respects with applicable
accounting requirements and the rules and regulations of the Commission with
respect thereto as in effect at the time of filing. Such financial statements
have been prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis during the periods involved
(“GAAP”), except as may be otherwise specified in such financial statements or
the notes thereto and except that unaudited financial statements may not contain
all footnotes required by GAAP, and fairly present in all material respects the
financial position of the Company and its consolidated subsidiaries as of and
for the dates thereof and the results of operations and cash flows for the
periods then ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.

 

(H)      Material Changes; Undisclosed Events, Liabilities or Developments.
Since the date of the latest audited financial statements included within the
SEC Reports or the Registration Statement, except as disclosed in the SEC
Reports, (i) there has been no event, occurrence or development that has had or
would result in a Material Adverse Effect, (ii) the Company has not incurred any
liabilities (contingent or otherwise) other than (A) trade payables and accrued
expenses incurred in the ordinary course of business consistent with past
practice and (B) liabilities not required to be reflected in the Company’s
financial statements pursuant to GAAP or required to be disclosed in filings
made with the Commission, (iii) the Company has not altered its method of
accounting, (iv) the Company has not declared or made any dividend or
distribution of cash or other property to its stockholders or purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital
stock and (v) the Company has not issued any equity securities to any officer,
director or “Affiliate” (defined as any Person that, directly or indirectly
through one or more intermediaries, controls or is controlled by or is under
common control with a Person, as such terms are used in and construed under Rule
144 under the Securities Act), except pursuant to existing Company equity
compensation plans. The Company does not have pending before the Commission any
request for confidential treatment of information. Except for the issuance of
the Shares and Warrants pursuant to the Transaction Documents, no event,
liability or development has occurred or exists with respect to the Company or
its Subsidiaries or their respective business, properties, operations or
financial condition, that would be required to be disclosed by the Company under
applicable securities laws at the time this representation is made that has not
been publicly disclosed prior to the date of this Agreement or in the Time of
Sale Prospectus.

 

(I)        Litigation. Except as disclosed in the SEC Reports, Prospectus,
Prospectus Supplement or the Registration Statement, there is no action, suit,
inquiry, notice of violation, Proceeding or investigation pending or, to the
knowledge of the Company, threatened against or affecting the Company, any
Subsidiary or any of their respective properties before or by any court,
arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an “Action”) which (i)
adversely affects or challenges the legality, validity or enforceability of any
of the Transaction Documents or the Shares or Warrants or (ii) would, if there
were an unfavorable decision, have a Material Adverse Effect. Neither the
Company nor any Subsidiary, nor any director or officer thereof, is or has been
the subject of any Action involving a claim of violation of or liability under
federal or state securities laws or a claim of breach of fiduciary duty. There
has

 

 

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not been, and to the knowledge of the Company, there is not pending or
contemplated, any investigation by the Commission involving the Company or any
current or former director or officer of the Company. To the knowledge of the
Company, the Commission has not issued any stop order or other order suspending
the effectiveness of any registration statement filed by the Company or any
Subsidiary under the Securities Act. No executive officer, to the knowledge of
the Company, is in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement or
non-competition agreement, or any other contract or agreement or any restrictive
covenant, and, to the Company’s knowledge, the continued employment of each such
executive officer does not subject the Company or any of its Subsidiaries to any
liability with respect to any of the foregoing matters. The Company and its
Subsidiaries are in compliance with all U.S. federal, state, local and foreign
laws and regulations relating to employment and employment practices, terms and
conditions of employment and wages and hours, except where the failure to be in
compliance would not, individually or in the aggregate, have a Material Adverse
Effect.

 

(J)        Labor Relations. No material labor dispute exists or, to the
knowledge of the Company, is imminent with respect to any of the employees of
the Company which would have a Material Adverse Effect.

 

(K)      Compliance. Neither the Company nor any Subsidiary (i) is in default
under or in violation of (and no event has occurred that has not been waived
that, with notice or lapse of time or both, would result in a default by the
Company or any Subsidiary under), nor has the Company or any Subsidiary received
notice of a claim that it is in default under or that it is in violation of, any
indenture, loan or credit agreement or any other agreement or instrument to
which it is a party or by which it or any of its properties is bound (whether or
not such default or violation has been waived), (ii) is in violation of any
order of any court, arbitrator or governmental body, or (iii) is or has been in
violation of any statute, rule or regulation of any governmental authority,
including without limitation all foreign, federal, state and local laws
applicable to its business and all such laws that affect the environment, except
in each case as would not have a Material Adverse Effect.

 

(L)       Regulatory Permits. The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities required to conduct their
respective businesses as described in the SEC Reports, except where the failure
to possess such permits would not have a Material Adverse Effect (“Material
Permits”), and neither the Company nor any Subsidiary has received any notice of
proceedings relating to the revocation or modification of any Material Permit.

 

(M)      Title to Assets. The Company and the Subsidiaries have good and
marketable title in all personal property owned by them that is material to the
business of the Company and the Subsidiaries, in each case free and clear of all
Liens, except for Liens in favor of Hercules and Liens as do not materially
affect the value of such property and do not materially interfere with the use
made and proposed to be made of such property by the Company and the
Subsidiaries and Liens for the payment of federal, state or other taxes, the
payment of which is neither delinquent nor subject to penalties. Any real
property and facilities held under lease by the Company and the Subsidiaries are
held by them under valid and subsisting leases enforceable against the Company.

 

(N)      Patents and Trademarks. The Company and the Subsidiaries have, or have
rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, trade secrets, inventions, copyrights,
licenses and other similar intellectual property rights necessary or material
for use in connection with their respective businesses as described in the SEC
Reports and which the failure to so have would have a Material Adverse Effect
(collectively, the “Intellectual Property Rights”). Neither the Company nor any
Subsidiary has received a notice (written or otherwise) that the Intellectual
Property Rights used by the Company or any Subsidiary violates or infringes upon
the rights of any Person. To the knowledge of the Company, all such Intellectual
Property Rights are enforceable and there is no existing infringement by another
Person of any of the Intellectual Property Rights of others. The Company and its
Subsidiaries have taken

 

 

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reasonable measures to protect the secrecy, confidentiality and value of all of
their intellectual properties, except where failure to do so would not,
individually or in the aggregate, have a Material Adverse Effect.

 

(O)      Insurance. The Company and the Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which the Company and
the Subsidiaries are engaged, including, but not limited to, directors and
officers insurance coverage. Neither the Company nor any Subsidiary has any
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business without a
significant increase in cost.

 

(P)       Transactions With Affiliates and Employees. Except as disclosed in the
Registration Statement or the SEC Reports, none of the officers or directors of
the Company and, to the knowledge of the Company, none of the employees of the
Company is presently a party to any transaction with the Company or any
Subsidiary (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner, other than (i) for payment of
salary or consulting fees for services rendered, (ii) reimbursement for expenses
incurred on behalf of the Company and (iii) for other employee benefits,
including equity compensation arrangements.

 

(Q)      Sarbanes-Oxley. The Company is in material compliance with all
provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it as of
the date hereof and of the Closing Date.

 

(R)      Certain Fees. Except as otherwise provided in this Agreement, no
brokerage or finder’s fees or commissions are or will be payable by the Company
to any broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the transactions
contemplated by the Transaction Documents. The Purchasers shall have no
obligation with respect to any fees or with respect to any claims made by or on
behalf of other Persons for fees of a type contemplated in this Section that may
be due in connection with the offer and sale of the Shares and Warrants
contemplated by the Transaction Documents.

 

(S)       Trading Market Rules. The issuance and sale of Shares and Warrants
hereunder does not contravene the rules and regulations of the Trading Market.

 

(T)       Investment Company. The Company is not, and immediately after receipt
of payment for Shares and Warrants, will not be, an “investment company” within
the meaning of the Investment Company Act of 1940, as amended.

 

(U)      Registration Rights. Except as disclosed in the Registration Statement,
Prospectus, Prospectus Supplement or the SEC Reports, no Person has any right to
cause the Company to effect the registration under the Securities Act of any
securities of the Company.

 

(V)      Listing and Maintenance Requirements. The Company’s Common Stock is
registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the
Company has taken no action designed to, or which to its knowledge is likely to
have the effect of, terminating the registration of the Common Stock under the
Exchange Act nor has the Company received any notification that the Commission
is contemplating terminating such registration. Except as disclosed in the
Registration Statement or the SEC Reports, the Company has not, in the 12 months
preceding the date hereof, received notice from any Trading Market on which the
Common Stock is or has been listed or quoted to the effect that the Company is
not in compliance with the listing or maintenance requirements of such Trading
Market.

 

 

8

 

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EpiCept Corporation

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(W)      Application of Takeover Protections. The Company and its Board of
Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under the Company’s Certificate of Incorporation (or
similar charter documents) or the laws of its state of incorporation that is or
could become applicable to the Purchasers as a result of the Purchasers and the
Company fulfilling their obligations or exercising their rights under the
Transaction Documents, including without limitation as a result of the Company’s
issuance of Shares and Warrants and the Purchasers’ ownership of the Shares and
Warrants.

 

(X)      Indebtedness. The Registration Statement, Prospectus, Prospectus
Supplement or SEC Reports set forth, as of the dates thereof, all outstanding
secured and unsecured Indebtedness of the Company or any Subsidiary, or for
which the Company or any Subsidiary has commitments. For the purposes of this
Agreement, “Indebtedness” shall mean (a) any liabilities for borrowed money or
amounts owed in excess of $50,000 (other than trade accounts payable incurred in
the ordinary course of business) and (b) all guaranties, endorsements and other
contingent obligations in respect of indebtedness of others, whether or not the
same are or should be reflected in the Company’s balance sheet (or the notes
thereto), except guaranties by endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of business.
Neither the Company nor any Subsidiary is in material default with respect to
any Indebtedness.

 

(Y)      Tax Status. Except for matters that would not, individually or in the
aggregate, have a Material Adverse Effect, the Company and each Subsidiary has
filed all necessary federal, state and foreign income and franchise tax returns
and has paid or accrued all taxes shown as due thereon, and the Company has no
knowledge of a tax deficiency which has been asserted or threatened against the
Company or any Subsidiary.

 

(Z)       Foreign Corrupt Practices. Neither the Company, nor to the knowledge
of the Company, any agent or other person acting on behalf of the Company, has
(i) directly or indirectly, used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses related to foreign or domestic
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to any foreign or domestic political
parties or campaigns from corporate funds, (iii) failed to disclose fully any
contribution made by the Company (or made by any person acting on its behalf of
which the Company is aware) which is in violation of law, or (iv) violated in
any material respect any provision of the Foreign Corrupt Practices Act of 1977,
as amended.

 

(AA)    Accountants. The Company’s accountants are Deloitte & Touche LLP. To the
knowledge of the Company, such accountants, who the Company expects will express
their opinion with respect to the financial statements to be included in the
Company’s next Annual Report on Form 10-K, are a registered public accounting
firm as required by the Securities Act.

 

(BB)    Regulation M Compliance.  The Company has not, and to its knowledge no
one acting on its behalf has, (i) taken, directly or indirectly, any action
designed to cause or to result in the stabilization or manipulation of the price
of any security of the Company to facilitate the sale or resale of any of the
Shares and Warrants, (ii) sold, bid for, purchased, or, paid any compensation
for soliciting purchases of, any of the Shares and Warrants (other than for the
placement agent’s placement of the Shares and Warrants), or (iii) paid or agreed
to pay to any person any compensation for soliciting another to purchase any
other securities of the Company., other than, in the case of clauses (ii) and
(iii), compensation paid pursuant to Section 1.A.

 

(CC)    Approvals. Other than the filing of an additional listing application,
the issuance and listing on the NASDAQ Capital Market of the Shares requires no
further approvals, including but not limited to, the approval of shareholders.

 

 

9

 

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(DD)    NASD Affiliations. To the knowledge of the Company, there are no
affiliations with any Financial Industry Regulatory Authority (“FINRA”) member
firm among the Company’s officers, directors or any five percent (5%) or greater
stockholder of the Company, except as set forth in the Base Prospectus.

In addition to the representations made in this Section 3 and in Section 4, as
of the Closing Date, the Company hereby makes to Rodman each of the
representations and warranties made by the Company to the Purchasers in the
Securities Purchase Agreement, as though restated in their entirety herein.

SECTION 4.    INDEMNIFICATION. The Company agrees to the indemnification and
other agreements set forth in the Indemnification Provisions (the
“Indemnification”) attached hereto as Addendum A, the provisions of which are
incorporated herein by reference and shall survive the termination or expiration
of this Agreement.

 

SECTION 5.    ENGAGEMENT TERM. Rodman’s engagement hereunder will be for the
period of 30 days or until the Closing Date, whichever is shorter. The
engagement may be terminated by either the Company or Rodman at any time upon 10
days’ written notice. Notwithstanding anything to the contrary contained herein,
the provisions concerning confidentiality, indemnification, contribution and the
Company’s obligations to pay fees and reimburse expenses contained herein and
the Company’s obligations contained in the Indemnification Provisions will
survive any expiration or termination of this Agreement. Rodman agrees not to
use any confidential information concerning the Company provided to it by the
Company for any purposes other than those contemplated under this Agreement.

 

SECTION 6.    RODMAN INFORMATION. The Company agrees that any information or
advice rendered by Rodman in connection with this engagement is for the
confidential use of the Company only in their evaluation of the Placement and,
except as otherwise required by law, the Company will not disclose or otherwise
refer to the advice or information in any manner without Rodman’s prior written
consent. Notwithstanding the foregoing, the Company may file this Agreement and
any Transaction Document with the Commission in any filing made by the Company
pursuant to the Securities Act, the Exchange Act or the rules and regulations
thereunder, and may refer to Rodman’s engagement hereunder and the terms of this
Agreement in any such filing (including any exhibit thereto).

 

SECTION 7.    NO FIDUCIARY RELATIONSHIP. This Agreement does not create, and
shall not be construed as creating rights enforceable by any person or entity
not a party hereto, except those entitled hereto by virtue of the
Indemnification Provisions hereof. The Company acknowledges and agrees that
Rodman is not and shall not be construed as a fiduciary of the Company and shall
have no duties or liabilities to the equity holders or the creditors of the
Company or any other person by virtue of this Agreement or the retention of
Rodman hereunder, all of which are hereby expressly waived.

 

SECTION 8.    CLOSING. The obligations of the Placement Agent and the
Purchasers, and the closing of the sale of the Shares and Warrants hereunder are
subject to the accuracy, when made and on the Closing Date, of the
representations and warranties on the part of the Company and its Subsidiaries
contained herein, to the accuracy of the statements of the Company and its
Subsidiaries made in any certificates pursuant to the provisions hereof, to the
performance by the Company and its Subsidiaries of their obligations hereunder,
and to each of the following additional terms and conditions:

(A)      No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall have
been initiated or threatened by the Commission, and any request for additional
information on the part of the Commission (to be included in the Registration
Statement, the Base Prospectus or the Prospectus Supplement or otherwise) shall
have been complied with to the reasonable satisfaction of the Placement Agent.
Any Exchange Act filings required to be made by the Company in connection with
the offer and sale of the Shares and Warrants shall have been timely filed with
the Commission.

 

 

10

 

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EpiCept Corporation

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(B)      All corporate proceedings and other legal matters incident to the
authorization, form, execution, delivery and validity of each of this Agreement,
the Shares and Warrants, the Registration Statement, the Base Prospectus and the
Prospectus Supplement and all other legal matters relating to this Agreement and
the transactions contemplated hereby shall be reasonably satisfactory in all
material respects to counsel for the Placement Agent, and the Company shall have
furnished to such counsel all documents and information that they may reasonably
request to enable them to pass upon such matters.

(C)      The Placement Agent shall have received from outside counsel to the
Company such counsel’s written opinion, addressed to the Placement Agent and the
Purchasers dated as of the Closing Date, in form and substance reasonably
satisfactory to the Placement Agent.

(D)      Neither the Company nor any of its Subsidiaries shall have sustained
since the date of the latest audited financial statements included or
incorporated by reference in the Base Prospectus, any loss or interference with
its business from fire, explosion, flood, terrorist act or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth in or
contemplated by the Base Prospectus, the Time of Sale Prospectus, if any, the
Prospectus Supplement or the Incorporated Documents and (ii) since such date
there shall not have been any change in the capital stock or long-term debt of
the Company or any of its Subsidiaries or any change, or any development
involving a prospective change, in or affecting the business, financial
condition, stockholders’ equity or results of operations of the Company and its
Subsidiaries, otherwise than as set forth in or contemplated by the Base
Prospectus, the Time of Sale Prospectus, if any, the Prospectus Supplement or
the Incorporated Documents, the effect of which, in any such case described in
clause (i) or (ii), is, in the judgment of the Placement Agent, so material and
adverse as to make it impracticable or inadvisable to proceed with the sale or
delivery of the Shares and Warrants on the terms and in the manner contemplated
by the Base Prospectus, the Time of Sale Prospectus, if any, the Prospectus
Supplement or the Incorporated Documents.

(E)       Subsequent to the execution and delivery of this Agreement, there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange or The Nasdaq Capital Market or trading
in any securities of the Company on any exchange or in the over-the-counter
market, shall have been suspended or minimum or maximum prices or maximum ranges
for prices shall have been established on any such exchange or such market by
the Commission, by such exchange or by any other regulatory body or governmental
authority having jurisdiction, (ii) a banking moratorium shall have been
declared by federal or state authorities or a material disruption has occurred
in commercial banking or securities settlement or clearance services in the
United States, (iii) the United States shall have become engaged in hostilities
in which it is not currently engaged, the subject of an act of terrorism, there
shall have been an escalation in hostilities involving the United States, or
there shall have been a declaration of a national emergency or war by the United
States, or (iv) there shall have occurred any other calamity or crisis or any
change in general economic, political or financial conditions in the United
States or elsewhere, if the effect of any such event in clause (i), (iii) or
(iv) makes it, in the sole judgment of the Placement Agent, impracticable or
inadvisable to proceed with the sale or delivery of the Shares and Warrants on
the terms and in the manner contemplated by the Base Prospectus and the
Prospectus Supplement.

(F)       No action shall have been taken and no statute, rule, regulation or
order shall have been enacted, adopted or issued by any governmental agency or
body which would, as of the Closing Date, prevent the issuance or sale of the
Shares and Warrants or materially and adversely affect or potentially and
adversely affect the business or operations of the Company; and no injunction,
restraining order or order of any other nature by any federal or state court of
competent jurisdiction shall have been issued as of the Closing Date which would
prevent the issuance or sale of the Shares and Warrants or materially and
adversely affect or potentially and adversely affect the business or operations
of the Company.

 

 

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EpiCept Corporation

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(G)      The Company shall have prepared and filed with the Commission a Current
Report on Form 8-K with respect to the Placement, including this Agreement as an
exhibit thereto.

(H)      The Company shall have entered into subscription agreements with each
of the Purchasers and such agreements shall be in full force and effect and
shall contain representations and warranties of the Company as agreed to between
the Company and the Purchasers.

(I)        The FINRA shall have raised no objection to the fairness and
reasonableness of the terms and arrangements of this Agreement. In addition, the
Company shall, if requested by the Placement Agent, make or authorize Placement
Agent’s counsel to make on the Company’s behalf, an Issuer Filing with the FINRA
Corporate Financing Department pursuant to NASD Rule 2710 with respect to the
Registration Statement and pay all filing fees required in connection therewith.

 

(J)        Prior to the Closing Date, the Company shall have furnished to the
Placement Agent such further information, certificates and documents as the
Placement Agent may reasonably request.

All opinions, letters, evidence and certificates mentioned above or elsewhere in
this Agreement shall be deemed to be in compliance with the provisions hereof
only if they are in form and substance reasonably satisfactory to counsel for
the Placement Agent.

SECTION 9.    GOVERNING LAW. This Agreement will be governed by, and construed
in accordance with, the laws of the State of New York applicable to agreements
made and to be performed entirely in such State. This Agreement may not be
assigned by either party without the prior written consent of the other party.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto, and their respective successors and permitted assigns. Any right to
trial by jury with respect to any dispute arising under this Agreement or any
transaction or conduct in connection herewith is waived. Any dispute arising
under this Agreement may be brought into the courts of the State of New York or
into the Federal Court, in either case, located in New York, New York and, by
execution and delivery of this Agreement, the Company hereby accepts for itself
and in respect of its property, generally and unconditionally, the jurisdiction
of aforesaid courts. Each party hereto hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or proceeding by delivering a copy thereof via overnight delivery (with evidence
of delivery) to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
If either party shall commence an action or proceeding to enforce any provisions
of this Agreement, then the prevailing party in such action or proceeding shall
be reimbursed by the other party for its reasonable attorneys’ fees and other
costs and expenses incurred with the investigation, preparation and prosecution
of such action or proceeding.

 

SECTION 10.  ENTIRE AGREEMENT/MISC. This Agreement (including the attached
Indemnification Provisions) embodies the entire agreement and understanding
between the parties hereto and supersedes all prior agreements and
understandings relating to the subject matter hereof. If any provision of this
Agreement is determined to be invalid or unenforceable in any respect, such
determination will not affect such provision in any other respect or any other
provision of this Agreement, which will remain in full force and effect. This
Agreement may not be amended or otherwise modified or waived except by an
instrument in writing signed by both Rodman and the Company. The
representations, warranties, agreements and covenants contained herein shall
survive the closing of the Placement and delivery and/or exercise of the Shares
and Warrants, as applicable. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission or a .pdf format file, such signature shall
create a valid and binding obligation of the party

 

 

12

 

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EpiCept Corporation

August 11, 2008

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executing (or on whose behalf such signature is executed) with the same force
and effect as if such facsimile signature page were an original thereof.

 

SECTION 11.  NOTICES. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile or e-mail at the
facsimile number or e-mail address specified on the signature pages attached
hereto prior to 6:30 p.m. (New York City time) on a business day, (b) the next
business day after the date of transmission, if such notice or communication is
delivered via facsimile or e-mail at the facsimile number or e-mail address on
the signature pages attached hereto on a day that is not a business day or later
than 6:30 p.m. (New York City time) on any business day, (c) the business day
following the date of mailing, if sent by U.S. nationally recognized overnight
courier service, or (d) upon actual receipt by the party to whom such notice is
required to be given. The address for such notices and communications shall be
as set forth on the signature pages hereto.

 

 

 

 

 

 

 

 

 

 

 

13

 

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EpiCept Corporation

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Please confirm that the foregoing correctly sets forth our agreement by signing
and returning to Rodman the enclosed copy of this Agreement.

 

 

Very truly yours,

 

 

Rodman & Renshaw, LLC

 

 

By:

Name:

Title:

 

 

 

Address for notice:

 

1251 Avenue of the Americas, 20th Floor

 

New York, NY, 10020

 

Attention: General Counsel

 

 

Accepted and Agreed to as of

the date first written above:

 

EPICEPT CORPORATION

 

By: ____________________________

 

Name:

 

Title:

 

 

Address for notice:

 

777 Old Saw Mill River Road

Tarrytown, NY 10591

 

Attn:

Robert W. Cook

Senior Vice President & Chief Financial Officer

 

 

 

 

 

 

 

 

 

14

 

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[img1.jpg]

ADDENDUM A

 

INDEMNIFICATION PROVISIONS

 

In connection with the engagement of Rodman & Renshaw, LLC (“Rodman”) by EpiCept
Corporation (the “Company”) pursuant to a letter agreement dated July 25, 2008,
between the Company and Rodman, as it may be amended from time to time in
writing (the “Agreement”), the Company hereby agrees as follows:

 

1.

To the extent permitted by law, the Company will indemnify Rodman and its
affiliates, stockholders, directors, officers, employees and controlling persons
(within the meaning of Section 15 of the Securities Act of 1933, as amended, or
Section 20 of the Securities Exchange Act of 1934) against all losses, claims,
damages, expenses and liabilities, as the same are incurred (including the
reasonable fees and expenses of counsel), relating to or arising out of its
activities hereunder or pursuant to the Agreement, except to the extent that any
losses, claims, damages, expenses or liabilities (or actions in respect thereof)
are found in a final judgment (not subject to appeal) by a court of law to have
resulted primarily and directly from Rodman’s willful misconduct or gross
negligence in performing the services described herein

 

2.

Promptly after receipt by an indemnified party of notice of any claim or the
commencement of any action or proceeding with respect to which an indemnified
party is entitled to indemnity hereunder, the indemnified party will notify the
indemnifying party in writing of such claim or of the commencement of such
action or proceeding, and the indemnifying party will assume the defense of such
action or proceeding and will employ counsel reasonably satisfactory to the
indemnified party and will pay the fees and expenses of such counsel; provided
that if an indemnified party fails to provide prompt notice of such claim or
proceeding the indemnifying party shall be relieved of its obligations set forth
in paragraph 1 and 3 if and to the extent the indemnifying party is materially
prejudiced by such failure to so notify. Notwithstanding the preceding sentence,
the indemnified party will be entitled to employ counsel separate from counsel
for the indemnifying party and from any other party in such action if counsel
for the indemnified party reasonably determines that it would be inappropriate
under the applicable rules of professional responsibility for the same counsel
to represent both the indemnifying party and the indemnified party. In such
event, the reasonable fees and disbursements of no more than one such separate
counsel will be paid by the indemnifying party. The indemnifying party will have
the exclusive right to settle the claim or proceeding provided that the
indemnifying party will not settle any such claim, action or proceeding without
the prior written consent of the indemnified party, which will not be
unreasonably withheld.

 

3.

The Company agrees to notify Rodman promptly of the assertion against it or any
other person of any claim or the commencement of any action or proceeding
relating to the Placement.

 

4.

If for any reason the foregoing indemnity is unavailable to the indemnified
party or insufficient to hold the indemnified party harmless, then the Company
and Rodman agree to contribute to the amount paid or payable by the indemnified
party as a result of such losses, claims, damages or liabilities in such
proportion as is appropriate to reflect not only the relative benefits received
by the Company on the one hand and Rodman on the other, but also the relative
fault of the Company on the one hand and Rodman on the other that resulted in
such losses, claims, damages or liabilities, as well as any relevant equitable
considerations. The amounts paid or payable by a party in respect of losses,
claims, damages and liabilities referred to above shall be deemed to include any
legal or other fees and expenses incurred in

 

1251 Avenue of the Americas, 20th Floor, New York, NY 10020 ? Tel:: 212 356 0500
Fax:: 212 430 1711

www.rodm.com     Member: FINRA, SIPC

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EpiCept Corporation

August 11, 2008

Page 2

 

 

defending any litigation, proceeding or other action or claim. Notwithstanding
the provisions hereof, Rodman’s share of the liability hereunder shall not be in
excess of the amount of fees actually received, or to be received, by Rodman
under the Agreement (excluding any amounts received as reimbursement of expenses
incurred by Rodman). No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.

 

5.

These Indemnification Provisions shall remain in full force and effect whether
or not the transaction contemplated by the Agreement is completed and shall
survive the termination of the Agreement, and shall be in addition to any
liability that the Company might otherwise have to any indemnified party under
the Agreement or otherwise.

 

 

 

Rodman & Renshaw, LLC

 

 

 

By: ______________________

 

Name:

 

Title:

 

 

 

Accepted and Agreed to as of

the date first written above:

 

EPICEPT CORPORATION

 

By: ______________________

 

Name:

 

Title:

 

 

2

 

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EpiCept Corporation

August 11, 2008

Page 3

 

 

SCHEDULE A

 

Free Writing Prospectuses

 

Emails sent to prospective purchasers with draft agreements and base prospectus.

 

3

 

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[img1.jpg]

 

SCHEDULE B

 

SCRIPTED INFORMATION

 

 

Shares Being Offered

Up to 7,500,000 shares. We have indications of interest of up to shares.

Warrants Being Offered

Warrants to purchase up to 7,500,000 shares (or
shares based on current indications of interest) of the Company’s common stock
at an exercise price of $ per share from the Closing Date.

Public Offering Price

$ per share.

Aggregate Co-Placement Agents’ Fees

A cash fee payable immediately upon the closing of the Placement equal to 7% of
the aggregate gross proceeds and warrants to purchase shares of common stock
equal to 5% of the aggregate number of shares sold to the public in the
Placement. The Rodman Warrants shall have the same terms, as the warrants issued
to the Purchasers in the Placement, except that the exercise price shall be 125%
of the public offering price per share.

Net Proceeds Before Expenses to the Company

Up to $ million if we sell all of the shares being offered. We currently have
indications of interest of shares yielding net proceeds of up to $ million.

Shares Outstanding Before the Offering

As of August 8, 2008, 67,295,757 shares, not including shares issuable upon
exercise of the Warrants.

 

The last reported sale price of EpiCept’s common stock on August 8, 2008 was
$0.63 per share.

 

1270 Avenue of the Americas, 16th Floor, New York, NY 10020 ? Tel:: 212 356 0500
Fax:: 212 581 5690

www.rodmanandrenshaw.com     Member: FINRA, SIPC