Exhibit 10.16

 

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Investment Banking

Chardan Capital Markets, LLC
17 State Street
Suite 1600

New York, NY 10004
Tel: 646 465 9015
Fax: 646 465 9039

January 16th, 2013

Eyes On The Go, Inc.
40 Fulton Street, 24th Floor
New York, NY 10038

Attention: Mr. Chris Carey, Chairman and CEO

Re: Private Placement

Dear Chris:

This letter will confirm our understanding that the company known to us as Eyes
On The Go, Inc. or Gander.tv (the “Company”) has engaged Chardan Capital
Markets, LLC (“Chardan”, “Advisor” or “Placement Agent”) to act as the Company’s
exclusive placement agent and financial advisor in connection with the Private
Placement, or other transaction (as defined below) (together and separately
referred to as the “Transaction”).

Section 1.      Scope of Engagement and Services. In connection with this
engagement, Chardan shall, as appropriate:

(a)  

familiarize itself to the extent appropriate and feasible with the business,
operations, properties, financial condition and prospects of the Company in
order to, among other things, analyze the potential contributions of such
business, operations and facilities to the Company’s future operating results,
it being understood that Advisor shall be entitled, in the course of such
familiarization, to rely upon publicly available information and such other
information as may be supplied by the Company, without independent
investigation;

(b)  

advise and assist the Company in negotiating the terms and conditions of the
Private Placement or other transaction;

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(c)  

advise the Company on an appropriate investor relations program;

(d)  

introduce the Company to potential investors and/or business partners
(“Introduced Parties”); This Agreement also covers indirect introductions from
approved Introduced Parties – that is, if an Introduced Party introduces the
Company to a third party, then this third party is also deemed an Introduced
Party;

(e)  

at the Company’s request, assist the Company in preparing a memorandum, for
distribution to potential investors, lenders and/or other financial sources,
describing the Company and its business, operations, properties, financial
condition and prospects, it being specifically agreed that (i) any such
memorandum shall be based entirely upon information supplied by the Company,
which information the Company hereby warrants shall be accurate in all material
respects; (ii) the Company shall be solely responsible for the accuracy and
completeness of such memorandum; and (iii) other than as contemplated by this
paragraph, such memorandum shall not be used, reproduced, disseminated, quoted
or referred to at any time, in any manner or for any purpose, except with the
Company’s prior written consent;

(f) 

advise and assist management in preparing for presentations to investors,
lenders and/or other financial sources, including the development of the best
strategy for demonstrating the experience of management and the scope of such
experience;

(g) 

perform such other financial advisory services as Chardan and the Company may
from time to time agree upon.

For purposes of this agreement, the term “Transaction” shall include, without
limitation, any investment in or purchase (whether in one or a series of
transactions) of the assets or the capital stock of the Company, through any
proposed merger, consolidation, joint venture or other business/strategic
combination with or involving the Company or any event which results in the
transfer of control of or a material interest in the Company or of all or a
substantial amount of the assets thereof, as well as any recapitalization,
restructuring or liquidation of the Company by the current owners, a third party
or any combination thereof, or any other form of transaction which results in
the effective acquisition of the principal business and operations of the
Company.

Section 2.      The Private Placement. Chardan and the Company agree, subject to
the terms hereof, that Chardan shall act as the Company’s exclusive placement
agent in connection with a private placement solely to accredited investors of
shares of equity or equity linked securities of or debt issued by the Company
(or its successor public entity as described below) whether in one or in a
series of transactions (such securities sometimes referred to herein as the
“Shares” and “Notes”) that are expected to provide gross proceeds to the Company
of $1.0 million to $1.25 million, subject to an additional fifteen percent (15%)
over-allotment option (the “Private Placement”). The specific terms and
conditions of the Private Placement shall be determined by good faith
negotiations between the Company and the prospective investors for the Private
Placement.

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The Private Placement shall also be conditioned upon (i) an acceptable capital
structure (including numbers of shares outstanding and stock price) at the
Company level, which may require the conversion of outstanding preferred stock
and/or debt to common stock or reverse split of approximately 50:1 and (ii) five
directors, two nominated by Chardan and one mutually agreed to by the parties,
agreeing to serve on the Company’s board of directors no later than upon
consummation of the Private Placement and whose identity and biographical
information shall be disclosed in the Offering Memorandum. Chardan agrees to
proceed toward consummation of the Private Placement and sale of the Shares
diligently and in good faith, but the Company hereby acknowledges that Chardan
is not providing any assurance or guaranty that any Shares will be sold. In that
regard, the Private Placement will be subject to a satisfactory due diligence
investigation of the Company performed by Chardan and its counsel and general
market conditions.

The Private Placement will be conducted in accordance with the exemption from
the registration requirements of the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder (collectively, the “Act”) provided
by Regulation D under the Act and the qualification and registration
requirements of applicable state and foreign securities or blue sky laws and
regulations.

Section 3.      Compensation.

(a)  

In connection with the Financial Advisory services, the Company will pay to
Chardan an Advisory Fee consisting of:

i.  

Shares of common stock equal to 3% of the Company’s aggregate post-reverse split
(fully diluted). Half (Shares of common stock equal to 1.5%.) of this Advisory
Fee will be due and paid immediately and the final amount due and paid at the
closing of a Private Placement. These shares will be registered by the Company
with the next filing.

(b) 

In the event a Private Placement is consummated, the Company will pay to Chardan
an aggregate placement agent fee (the “Placement Fee”) as stated below. All such
fees shall be immediately paid by the Company to Chardan at the closing of the
Private Placement, however, if such Private Placement occurs through multiple
closings, then pro rata portion of such fees shall be paid upon each closing:

i.  

The Company shall pay to Chardan an aggregate cash fee equal to ten percent
(10%) of the aggregate sales price of Shares sold in the Private Placement to
Introduced Parties and/or the aggregate gross proceeds from debt issued by the
Company to Introduced Parties. An investor shall be deemed to be an Introduced
Party if (i) Chardan arranges a meeting with such investor (or any of its
affiliates), which is accepted by the Company, (ii) Chardan arranges a
conference call with such investor (or any of its affiliates), which is accepted
by the Company or (iii) Chardan furnishes offering materials to such investor
(or any of its affiliates)

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ii.   

The Company shall pay to Chardan or its designee shall receive five-year
warrants (“Agent Warrants”) to purchase an aggregate of ten percent (10%) of the
number of Shares sold or granted in the Private Placement to Introduced
Investors at an exercise price equal to the price per share of the Shares sold
in the Private Placement. The Agent Warrants shall contain customary terms,
including, without limitation, provisions for cashless exercise and the same
registration rights afforded to investors in the Private Placement.

iii.  

If the Private Placement is not consummated prior to the expiration or
termination of the Term, Chardan shall be entitled to one hundred percent (100%)
of the Placement Fee set forth in Sections 3(a) and (b) with respect to any
securities of the Company sold or issued to any Introduced Parties within
twenty-four (24) months following the expiration or termination of the Term of
this Agreement

Section 4.      Indemnification. The Company agrees to indemnify Chardan in
accordance with the provisions of Annex A hereto, which is incorporated by
reference and made a part hereof.

Section 5.      Expenses. The Company shall reimburse Chardan for all of its
actual and reasonable out-of-pocket expenses, including but not limited to
reasonable and documented travel, legal fees and other expenses, incurred in
connection with the Private Placement whether or not the Private Placement is
commenced or completed, subject to presentation of appropriate documentation
evidencing such out-of-pocket expenses. In the event the Private Placement does
not close for any reason, the Company shall only be obligated to pay expenses of
up to $25,000 in the aggregate to Chardan subject to presentation of appropriate
documentation evidencing such out-of-pocket expenses. Chardan will not bear any
of the Company’s legal, accounting, printing or other expenses in connection
with any transaction considered or consummated hereby. It also is understood
that Chardan will not be responsible for any fees or commissions payable to any
finder or to any other financial or other advisor utilized or retained by the
Company (it being understood by the parties that Chardan, and not the Company,
shall be responsible for the payment of any fees, if any, due and owing to any
Selected Dealers (as defined below) it engages). .

Section 6.      Chardan’s and the Company’s Relationships with Others. The
Company acknowledges that Chardan and its affiliates are in the business of
providing investment banking, financial advisory and consulting services to
others and agrees that the provision of such services shall not constitute a
breach hereof of any duty owed to the Company by virtue of this Agreement.
Nothing contained herein, other than Chardan’s obligations relating to the
Company’s Confidential Material as provided in Section 7 hereof, shall be
construed to limit or restrict Chardan or its respective affiliates in
conducting such businesses with respect to others or in rendering such services
to others.

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Section 7.      Selected Dealers. Chardan shall have the right to engage
additional broker-dealers (“Selected Dealers”), upon the Company’s prior written
consent, which shall not be unreasonably withheld, who are licensed members of
the NASD and registered as broker dealers with the Securities and Exchange
Commission. Such Selected Dealers may be engaged by Chardan pursuant to selected
dealer agreements and shall receive a portion of the Placement Fee (but no
additional fee from the Company) pursuant to such agreements. Chardan shall be
responsible for ensuring that their actions and the actions of any Selected
Dealer comply with applicable securities laws and do not cause the Company to be
unable to rely upon any exemption from securities registration in connection
with the Private Placement.

Section 8.     Confidential Information. In connection with the rendering of
services hereunder, Chardan has been or will be furnished with certain
confidential information of the Company including, but not limited to, financial
statements and information, cost and expense data, scientific data, intellectual
property, trade secrets, business strategies, marketing and customer data, and
such other information not generally available from public or published
information sources. Such information shall be deemed “Confidential Material”,
shall be used solely in connection with the provision of services contemplated
hereby, and shall not be disclosed by Chardan without the prior written consent
of the Company. In the event Chardan is required by applicable law or legal
process to disclose any of the Confidential Material, Chardan will deliver to
the Company prompt notice of such requirement (by fax or overnight courier
promptly following Chardan’s knowledge or determination of such requirement)
prior to such disclosure so the Company may seek an appropriate protective order
and/or waive compliance of this provision. If, in the absence of a protective
order (because the Company elected to not seek such an order or it was denied by
a court of competent jurisdiction) or receipt of written waiver, Chardan is
nonetheless, in the written opinion of its counsel, compelled to disclose any
Confidential Material, Chardan may do so without liability hereunder.

Section 9.      Limitation Upon the Use of Advice and Services.

(a)  

No person or entity, other than the Company (including its directors, officers
and employees), shall be entitled to make use of, or rely upon any advice of
Chardan to be given hereunder, and the Company shall not transmit such advice
to, or encourage or facilitate the use or reliance upon such advice by others
without the prior written consent of Chardan

(b) 

The Company hereby acknowledges that Chardan, for services rendered as
contemplated by this Agreement, does not make any commitment whatsoever to make
a market in any of the Company’s securities on any stock exchange or in any
electronic marketplace. Any decision by Chardan to make a market in any of the
Company’s securities shall be based solely on the independent judgment of
Chardan’s management, employees, and agents

 

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(c) 

Use of Chardan’s name in annual reports or any other report of the Company or
releases by the Company requires the prior written approval of Chardan unless
the Company is required by law to include Chardan’s name in such annual reports,
other report or release of the Company, in which event the Company shall furnish
to Chardan copies of such annual reports or other reports or releases using
Chardan’s names in advance of publication by the Company

Section 10.      Right to Act.. Upon closing of the Private Placement, the
Company will grant Chardan a thirty-six (36) month right to act as a lead
placement agent on any future private placement of the Company’s securities in
which the Company elects to engage a placement agent or as a lead managing
underwriter on any public offering of the Company’s securities. It is understood
that if, during the thirty-six (36) month period following the consummation of a
Successful Private Placement, a third party broker-dealer provides the Company
with written terms with respect to a future securities offering (“Written
Offering Terms”) that the Company desires to accept, the Company shall promptly
present the Written Offering Terms to Chardan. Chardan shall have five (5)
business days from its receipt of the Written Offering Terms in which to
determine whether or not to accept such offer and, if Chardan declines such
offer or fail to respond within such five day period, then the Company shall
have the right to proceed with such financing with another placement agent or
underwriter upon substantially the same terms and conditions as the Written
Offering Terms. In the event that either Placement Agent declines in exercising
its right of first refusal in accordance with the foregoing terms, Chardan that
accepts shall have the sole right to act as placement agent or underwriter with
respect to the subsequent offering of the Company’s securities.

Section 11.      Control Transaction. If the Company executes a letter of intent
to conduct a Control Transaction (as defined below) during the Exclusivity
Period and the Control Transaction contemplated in such letter of intent is
ultimately consummated or the Company consummates a Control Transaction with any
party prior December 31, 2016, then the Company shall pay Chardan a cash fee of
4% of the Control Transaction Consideration (as defined below) received upon the
closing of such Control Transaction to be paid upon the closing of the Control
Transaction. For the avoidance of doubt, Chardan shall not receive Control
Transaction Consideration relating to (i) the execution of a letter of intent
for a Control Transaction following the expiration of the Exclusivity Period or
(ii) the consummation of a Control Transaction following the expiration of the
Exclusivity Period (provided that a letter of intent for such Control
Transaction was not executed during the Exclusivity Period). For purposes
hereof, a "Control Transaction" shall mean any transaction or series or
combination of transactions, whereby, directly or indirectly, control of, or a
majority interest in, the Company or all or substantially all of its businesses,
assets or properties, is sold, leased or otherwise transferred to one or more
non-affiliated third parties, including, without limitation, a sale or exchange
of capital stock or assets, a lease of assets with or without a purchase option,
a merger or consolidation, a leveraged buy-out, a restructuring, a
recapitalization, a repurchase of capital stock, an extraordinary dividend or
distribution (whether cash, property, securities or a combination thereof) or a
liquidation or any other similar control transaction; provided, however, that
neither the reverse merger to be consummated by the Company in connection with
the Private Placement nor the senior secured convertible note bridge financing
(which is intended to serve as a bridge towards the Private Placement) shall
constitute a Control Transaction hereunder. In the case of a tender or exchange
offer or a multi-step transaction which contemplates the acquisition of more
than 50% of the Company's outstanding voting stock, a transaction shall be
deemed to have been consummated upon the acquisition of more than 50% of the
Company's outstanding voting power or the ability to elect a majority of the
Company's Board of Directors. For purposes hereof, “Control Transaction
Consideration” shall mean the total value of all cash, securities, other
property and any other consideration, including, without limitation, any
contingent, earned or other consideration paid or payable, directly or
indirectly, to the Company or its stockholders (in the case of its stockholders,
solely in consideration for the securities held by such stockholders) in
connection with a Change of Control Transaction; provided, however, any Control
Transaction Consideration constituting contingent consideration (such as an
earn-out) shall be paid when and if such contingent consideration is paid to the
Company or its stockholders, as applicable.

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Section 12.     Registration Rights. The Company shall provide registration
rights to the investors on customary terms for transactions of this nature to be
negotiated.

Section 13.     Information; Cooperation. The Company will cooperate with and
will furnish Chardan with all reasonable information and data concerning the
Company and the Private Placement which Chardan deems appropriate and will
provide Chardan with reasonable access to the Company’s officers, directors,
employees, independent accountants and legal counsel. The Company represents
that all information and any disclosure materials made available to Chardan for
distribution to investors will be complete and correct in all material respects
and will not contain any untrue statement of material fact or omit to state a
material fact necessary in order to make the statements therein not misleading
in light of the circumstances under which such statements are made. The Company
further represents and warrants that to the extent any projections are
furnished, such projections will have been prepared in good faith and will be
based upon assumptions, which, in light of the circumstances under which they
are made, are reasonable. Chardan shall not, and shall cause any of its selected
dealers not to, deliver to any prospective investors any information concerning
the Company, unless the Company has previously consented to the distribution of
such information.

Section 14.      Condition Precedent to Certain Obligations. The Company’s and
Chardan’s obligations to commence the Private Placement shall be subject to
execution of a Placement Agency Agreement on customary terms and incorporating
the principal terms hereof (it being acknowledged and agreed that no additional
fees shall be set forth in the Placement Agency Agreement other than blue sky
and FINRA filing fees and legal expenses). The Company will, at the closing of
the Private Placement, furnish Chardan with a favorable opinion of its outside
counsel. Such opinion will include customary items contained in legal opinions
rendered in connection with financing transactions, including, among other
things, opinions on matters relating to organization and good standing,
capitalization, corporate power and authority, non-contravention, exemption of
the Private Placement and 10b-5 statements.

Section 15.      Miscellaneous.

(a)  

Any notice or communication between the parties hereto shall be sufficiently
given if sent by certified or registered mail, postage prepaid, or faxed and
confirmed if to the Company, addressed to it at: 40 Fulton Street, 24th Floor,
New York, NY 10038, or if to Chardan, addressed to them at: 17 State Street,
Suite 1600, New York, NY 10004. Such notice or other communication shall be
deemed to be given on the date of receipt

 

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(b) 

This Agreement embodies the entire agreement and understanding between the
Company and Chardan and supersedes any and all negotiations, prior discussions
and preliminary and prior agreements and understandings that Chardan may have
had with the Company related to the subject matter hereof, and may be modified
only by a written instrument duly executed by each party. This Agreement shall
inure to the benefit of and be binding upon the successors, assigns and personal
representatives of each of the parties hereto. This Agreement has been duly
authorized, executed and delivered by and on behalf of the Company and Chardan

(c) 

This Agreement shall be deemed to have been made and delivered in New York City
and shall be governed as to validity, interpretation, construction, effect and
in all other respects by the internal laws of the State of New York without
regard to principles of conflicts of law thereof. Any and all disputes,
controversies or claims arising out of or relating to this Agreement, or the
breach, termination or invalidity thereof, shall be finally and exclusively
resolved by arbitration in accordance with the Rules of the FINRA as at present
in force. The arbitration shall take place in New York City, the State of New
York. The parties hereby submit themselves to the exclusive jurisdiction of the
arbitration tribunal in the City of New York, the State of New York under the
auspices of FINRA. To the extent permitted by law, the award of the arbitrators
may include, without limitation, one or more of the following: a monetary award,
a declaration of rights, an order of specific performance, an injunction,
reformation of the contract. The decision of the arbitrators shall be final and
binding upon the parties hereto, and judgment on the award may be entered in any
court having jurisdiction over the subject matter thereof. Each party to the
arbitration shall bear its own expenses of the arbitration (including without
limitation reasonable fees and expenses of counsel, experts and consultants)

(d) 

There is no relationship of partnership, agency, employment, franchise or joint
venture between the parties. No party has the authority to bind the other or
incur any obligation on the other’s behalf

(e)  

The Company hereby acknowledges that Chardan is not a fiduciary of the Company.
Chardan makes no representations or warranties regarding the Company’s ability
to secure financing, whether now or in the future

(f)  

This Agreement and the rights hereunder may not be assigned by either party
(except by operation of law)

(g) 

Any term or provision of this Agreement which is invalid or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or unenforceable
the remaining terms and provisions of this Agreement or affecting the validity
or enforceability of any of the terms or provisions of this Agreement in any
other jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only as broad as is
enforceable.

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Section 16.     Termination. The term (the “Term”) of Chardan’s engagement
hereunder shall commence on the date hereof and shall end on the final closing
of the Private Placement; provided however that this Agreement can be terminated
prior to such time as follows: (i) fifteen (15) days after receipt of written
notice of termination from Chardan for any reason, (ii) fifteen (15) days after
receipt of written notice of termination from the Company for any reason,
provided such notice is delivered following December 31, 2013.

In the event of any termination of this Agreement prior to the expiration of the
Term, this Agreement shall become null and void, except for indemnity
obligations of all parties hereunder, reimbursement for Placement Agent expenses
incurred up to the date of such termination in accordance with Section 5
hereunder and fees that may become due to Chardan under Sections 3 or 11
hereunder.

In addition, in the event this Agreement shall be terminated in accordance with
the provisions of this Section 16 or upon expiration of this Agreement, the
sections headed “Confidential Information,” “Indemnification,” “Miscellaneous,”
“Expenses,” “Limitation of Liability,” “Control Transaction” and the “Tail
Period” provisions set forth under Section 3 will survive.

Section 17.     Limitation of Liability. The liability of Chardan pursuant to
this Engagement Letter shall be limited to the Placement Fee received by Chardan
hereunder, which shall not include any liability for incidental, consequential
or punitive damages.

Section 18.     No Finders or Other Brokers. The Company represents that this
agreement does not conflict with any other finder or broker agreement entered
into by Company, and that if another person or entity is entitled to payment by
Company of a finder’s fee or any type of brokerage commission in connection with
any Transactions contemplated by this Agreement as a result of any agreement or
understanding with the Company, this will not reduce Company’s obligations to
Chardan hereunder. Chardan likewise represents that to the extent it has
incurred any broker or finder’s fee obligation, e.g., for a third party’s
assistance to Chardan, such obligation will be and remain Chardan’s
responsibility.

Section 20.      Provision for Alternative Outcomes.In the event that other
services are requested by the Company, the parties hereto shall negotiate in
good faith to determine a mutually acceptable level of compensation in such an
eventuality.

We are delighted to accept this engagement and look forward to working with you
on this assignment. Please confirm that the foregoing is in accordance with your
understanding by signing and returning to us one copy of this enclosed duplicate
of this agreement .

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Very truly yours,

CHARDAN CAPITAL MARKETS, LLC

By: ______________________________

Investment Banking

Agreed to and accepted this 16th day of January, 2013

Christopher Carey, Chairman and CEO

 

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ANNEX A

(a)     INDEMNIFICATION

The Company agrees to indemnify and hold harmless Chardan and its affiliates and
their respective officers, directors, employees, agents (including selected
dealers) and controlling persons (Placement Agent and each such person being an
“Indemnified Party”), from and against any losses, claims, damages and
liabilities, joint or several, to which such Indemnified Party may become
subject under any applicable law, or otherwise, which relate to or arise in any
manner out of any transaction, financing, or any other matter (collectively, the
"Matters") contemplated by the engagement letter of which this Annex A forms a
part and the performance by Chardan of the services contemplated thereby, and
will promptly reimburse each Indemnified Party for all reasonable expenses
(including reasonable fees and expenses of legal counsel) as incurred in
connection with the investigation of, preparation for or defense of any pending
or threatened claim or any action or proceeding arising therefrom, whether or
not such Indemnified Party is a party and whether or not such claim, action or
proceeding is initiated or brought by or on behalf of the Company.
Notwithstanding the foregoing, the Company shall not be liable under the
foregoing to the extent that any loss, claim, damage, liability or expense is
found in a final judgment by a court of competent jurisdiction to have resulted
solely from Placement Agent’s bad faith or gross negligence.

The Company also agrees that no Indemnified Party shall have any liability
(whether direct or indirect, in contract or tort or otherwise) to the Company or
its security holders or creditors related to, arising out of, or in connection
with, any Matters, the engagement of Placement Agent pursuant to, or the
performance by Placement Agent of the services contemplated by, the engagement
letter, except to the extent any loss, claim, damage or liability if found in a
final judgment by a court of competent jurisdiction to have resulted solely from
Placement Agents’ bad faith or gross negligence.

If the indemnification of an Indemnified Party provided for this letter
agreement is for any reason held unenforceable, although otherwise applicable in
accordance with its terms, the Company agrees to contribute to the losses,
claims, damages and liabilities for which such indemnification is held
unenforceable (i) in such proportion as is appropriate to reflect the relative
benefits to the Company, on the one hand, and Placement Agents, on the other
hand, of any Matter (whether or not the Matter is consummated) or (ii) if (but
only if) the allocation provided for in clause (i) is for any reason held
unenforceable, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) but also the relative fault of the
Company, on the one hand, and Placement Agent, on the other hand, as well as any
other relevant equitable considerations. The Company agrees that for the
purposes of this paragraph the relative benefits to the Company and Placement
Agent of any contemplated Matter (whether or not such Matter is consummated)
shall be deemed to be in the same proportion that the total value paid or
received or to be paid or received by the Company as a result of or in
connection with any Matter, bears to the fees paid or to be paid to Placement
Agent under the engagement letter; provided, however, that, to the extent
permitted by applicable law, in no event shall the Indemnified Parties be
required to contribute an aggregate amount in excess of the aggregate fees
actually paid to Chardan under the engagement letter of which this Annex A is a
part.

Promptly after receipt by Placement Agent or any other Indemnified Party of any
notice of any proceeding, or the commencement of any legal action or proceeding
in respect of which indemnity may be sought against the Company, Chardan or such
other Indemnified Party shall notify the Company promptly in writing of the
receipt of any such notice or commencement of such an action or proceeding. In
the event the Company shall be obligated under this Indemnification Annex to
indemnify Chardan and/or such other Indemnified Party, the Company may assume
and control all aspects of the defense of such proceeding, including, inter
alia, selection of counsel (which counsel shall be reasonably acceptable to
Chardan) and, subject to the next paragraph, settlement; provided, however, that
the Indemnified Parties shall have the right to retain separate counsel, but the
fees and expenses of such counsel shall be at the expense of the Indemnified
Parties, unless (i) the employment of such counsel has been specifically
authorized in writing by the Company, (ii) the Company has failed to assume the
defense and employ reasonably acceptable counsel as required above, or (iii) the
named parties to any such action (including any impleaded parties) include both
(a) the Indemnified Parties and (b) the Company, and the Indemnified Parties
shall have reasonably determined that the defenses available to them are not
available to the Company and/or may not be consistent with the best interests of
the Company or the Indemnified Parties (in which case the Company shall not have
the right to assume the defense of such action on behalf of the Indemnified
Parties); it being understood, however, that the Company shall not, in
connection with any one such action or separate, substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys for the Indemnified Parties, which firm
shall be designated in writing by Chardan.

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The Company agrees that it will not, without the prior written consent of
Chardan, settle, compromise or consent to the entry of any judgment in any
pending or threatened claim, action or proceeding in respect of which
indemnification may be sought hereunder (whether or not Chardan or any other
Indemnified Party is an actual or potential party to such claim, action or
proceeding), unless such settlement, compromise or consent includes an
unconditional release of such Placement Agent and each other Indemnified Party
hereunder from all liability arising out of such claim, action or proceeding.

If Chardan or any other Indemnified Party is requested or required to appear as
a witness in any action brought by or on behalf of or against the Company in
which such party is not named as a defendant, the Company will reimburse Chardan
for all reasonable expenses incurred in connection with such party’s appearing
and preparing to appear as such a witness, including, without limitation, the
fees and disbursements of its legal counsel.

The provisions of this Annex A shall continue to apply and shall remain in full
force and effect regardless of any modification or termination of the engagement
or engagement letter of which this Annex A is a part or the completion of
Placement Agent’s services thereunder.