EXHIBIT 10.3

 

SPHERIX INCORPORATED

PLACEMENT AGENT AGREEMENT

 

Dated as of: July 22, 2005

 

Newbridge Securities Corporation

1451 Cypress Creek Road, Suite 204

Fort Lauderdale, Florida 33309

 

Ladies and Gentlemen:

 

The undersigned, Spherix Incorporated, a Delaware corporation (the “Company”),
hereby agrees with Newbridge Securities Corporation (the “Placement Agent”), and
Cornell Capital Partners, LP (the “Investor”) as follows:

 

1. OFFERING.  THE COMPANY HEREBY ENGAGES THE PLACEMENT AGENT TO ACT AS ITS
EXCLUSIVE PLACEMENT AGENT IN CONNECTION WITH THE STANDBY EQUITY DISTRIBUTION
AGREEMENT DATED THE DATE HEREOF BETWEEN THE COMPANY AND THE INVESTOR (THE
“STANDBY EQUITY DISTRIBUTION AGREEMENT”), PURSUANT TO WHICH THE COMPANY SHALL
ISSUE AND SELL TO THE INVESTOR, FROM TIME TO TIME, AND THE INVESTOR SHALL
PURCHASE FROM THE COMPANY (THE “OFFERING”) UP TO FOUR MILLION DOLLARS
($4,000,000) (THE “COMMITMENT AMOUNT”) OF THE COMPANY’S COMMON STOCK, PAR VALUE
$0.005 PER SHARE (THE “COMMON STOCK”), AT PRICE PER SHARE EQUAL TO THE PURCHASE
PRICE, AS THAT TERM IS DEFINED IN THE STANDBY EQUITY DISTRIBUTION AGREEMENT. 
THE PLACEMENT AGENT SERVICES SHALL CONSIST OF REVIEWING THE TERMS OF THE STANDBY
EQUITY DISTRIBUTION AGREEMENT AND ADVISING THE COMPANY WITH RESPECT TO THOSE
TERMS.

 

All capitalized terms used herein and not otherwise defined herein shall have
the same meaning ascribed to them as in the Standby Equity Distribution
Agreement.  The Investor will be granted certain registration rights with
respect to the Common Stock as more fully set forth in the Registration Rights
Agreement between the Company and the Investor dated the date hereof (the
“Registration Rights Agreement”).  The documents to be executed and delivered in
connection with the Offering, including, but not limited, to the Company’s
latest Quarterly Report on Form 10-Q as filed with the United States Securities
and Exchange Commission, this Agreement, the Standby Equity Distribution
Agreement, and the Registration Rights Agreement are referred to sometimes
hereinafter collectively as the “Offering Materials.”  The Common Stock
purchased by the Investor under the Standby Equity Distribution Agreement is
sometimes referred to hereinafter as the “Securities.”  The Placement Agent
shall not be obligated to sell any Securities.

 

2. COMPENSATION.

 

A.                                   UPON THE EXECUTION OF THIS AGREEMENT, THE
COMPANY SHALL ISSUE TO THE PLACEMENT AGENT OR ITS DESIGNEE SHARES OF THE COMMON
STOCK IN AN AMOUNT EQUAL TO TEN THOUSAND DOLLARS ($10,000) DIVIDED BY TWO
DOLLARS ($2) PER SHARE (THE AGREED UPON MARKET VALUE OF THE COMMON STOCK ON THE
DATE HEREOF) (THE “PLACEMENT AGENT’S SHARES”).  THE PLACEMENT AGENT SHALL BE
ENTITLED TO “PIGGY-BACK” REGISTRATION RIGHTS WITH RESPECT TO THE

 

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PLACEMENT AGENT’S SHARES, WHICH SHALL BE TRIGGERED UPON REGISTRATION OF ANY
SHARES OF COMMON STOCK BY THE COMPANY PURSUANT TO THE REGISTRATION RIGHTS
AGREEMENT DATED THE DATE HEREOF.

 

3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PLACEMENT AGENT.

 

A.                                   THE PLACEMENT AGENT REPRESENTS, WARRANTS
AND COVENANTS AS FOLLOWS:

 

(I)                                     THE PLACEMENT AGENT HAS THE NECESSARY
POWER TO ENTER INTO THIS AGREEMENT AND TO CONSUMMATE THE TRANSACTIONS
CONTEMPLATED HEREBY.

 

(II)                                  THE EXECUTION AND DELIVERY BY THE
PLACEMENT AGENT OF THIS AGREEMENT AND THE CONSUMMATION OF THE TRANSACTIONS
CONTEMPLATED HEREIN WILL NOT RESULT IN ANY VIOLATION OF, OR BE IN CONFLICT WITH,
OR CONSTITUTE A DEFAULT UNDER, ANY AGREEMENT OR INSTRUMENT TO WHICH THE
PLACEMENT AGENT IS A PARTY OR BY WHICH THE PLACEMENT AGENT OR ITS PROPERTIES ARE
BOUND, OR ANY JUDGMENT, DECREE, ORDER OR, TO THE PLACEMENT AGENT’S KNOWLEDGE,
ANY STATUTE, RULE OR REGULATION APPLICABLE TO THE PLACEMENT AGENT.  THIS
AGREEMENT WHEN EXECUTED AND DELIVERED BY THE PLACEMENT AGENT, WILL CONSTITUTE
THE LEGAL, VALID AND BINDING OBLIGATIONS OF THE PLACEMENT AGENT, ENFORCEABLE IN
ACCORDANCE WITH THEIR RESPECTIVE TERMS, EXCEPT TO THE EXTENT THAT (A) THE
ENFORCEABILITY HEREOF OR THEREOF MAY BE LIMITED BY BANKRUPTCY, INSOLVENCY,
REORGANIZATION, MORATORIUM OR SIMILAR LAWS FROM TIME TO TIME IN EFFECT AND
AFFECTING THE RIGHTS OF CREDITORS GENERALLY, (B) THE ENFORCEABILITY HEREOF OR
THEREOF IS SUBJECT TO GENERAL PRINCIPLES OF EQUITY, OR (C) THE INDEMNIFICATION
PROVISIONS HEREOF OR THEREOF MAY BE HELD TO BE IN VIOLATION OF PUBLIC POLICY.

 

(III)                               UPON RECEIPT AND EXECUTION OF THIS
AGREEMENT, THE PLACEMENT AGENT WILL PROMPTLY FORWARD COPIES OF THIS AGREEMENT TO
THE COMPANY OR ITS COUNSEL AND THE INVESTOR OR ITS COUNSEL.

 

(IV)                              THE PLACEMENT AGENT WILL NOT INTENTIONALLY
TAKE ANY ACTION THAT IT REASONABLY BELIEVES WOULD CAUSE THE OFFERING TO VIOLATE
THE PROVISIONS OF THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), THE
SECURITIES EXCHANGE ACT OF 1934 (THE “1934 ACT”), THE RESPECTIVE RULES AND
REGULATIONS PROMULGATED THEREUNDER (THE “RULES AND REGULATIONS”) OR APPLICABLE
“BLUE SKY” LAWS OF ANY STATE OR JURISDICTION.

 

(V)                                 THE PLACEMENT AGENT IS A MEMBER OF THE
NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC., AND IS A BROKER-DEALER
REGISTERED AS SUCH UNDER THE 1934 ACT AND UNDER THE SECURITIES LAWS OF THE
STATES IN WHICH THE SECURITIES WILL BE OFFERED OR SOLD BY THE PLACEMENT AGENT
UNLESS AN EXEMPTION FOR SUCH STATE REGISTRATION IS AVAILABLE TO THE PLACEMENT
AGENT.  THE PLACEMENT AGENT IS IN MATERIAL COMPLIANCE WITH THE RULES AND
REGULATIONS APPLICABLE TO THE PLACEMENT AGENT GENERALLY AND APPLICABLE TO THE
PLACEMENT AGENT’S PARTICIPATION IN THE OFFERING.

 

4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

 

A.                                   THE COMPANY REPRESENTS AND WARRANTS AS
FOLLOWS:

 

(I)                                     THE EXECUTION, DELIVERY AND PERFORMANCE
OF EACH OF THIS AGREEMENT, THE STANDBY EQUITY DISTRIBUTION AGREEMENT, AND THE
REGISTRATION RIGHTS AGREEMENT HAS BEEN OR WILL BE DULY AND VALIDLY AUTHORIZED BY
THE COMPANY AND IS, OR WITH RESPECT TO THIS

 

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AGREEMENT, THE STANDBY EQUITY DISTRIBUTION AGREEMENT, AND THE REGISTRATION
RIGHTS AGREEMENT WILL BE, A VALID AND BINDING AGREEMENT OF THE COMPANY,
ENFORCEABLE IN ACCORDANCE WITH ITS RESPECTIVE TERMS, EXCEPT TO THE EXTENT THAT
(A) THE ENFORCEABILITY HEREOF OR THEREOF MAY BE LIMITED BY BANKRUPTCY,
INSOLVENCY, REORGANIZATION, MORATORIUM OR SIMILAR LAWS FROM TIME TO TIME IN
EFFECT AND AFFECTING THE RIGHTS OF CREDITORS GENERALLY, (B) THE ENFORCEABILITY
HEREOF OR THEREOF IS SUBJECT TO GENERAL PRINCIPLES OF EQUITY OR (C) THE
INDEMNIFICATION PROVISIONS HEREOF OR THEREOF MAY BE HELD TO BE IN VIOLATION OF
PUBLIC POLICY.  THE SECURITIES TO BE ISSUED PURSUANT TO THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT AND THE STANDBY EQUITY DISTRIBUTION AGREEMENT
HAVE BEEN DULY AUTHORIZED AND, WHEN ISSUED AND PAID FOR IN ACCORDANCE WITH THIS
AGREEMENT AND THE STANDBY EQUITY DISTRIBUTION AGREEMENT WILL BE VALID AND
BINDING OBLIGATIONS OF THE COMPANY, ENFORCEABLE IN ACCORDANCE WITH THEIR
RESPECTIVE TERMS, EXCEPT TO THE EXTENT THAT (1) THE ENFORCEABILITY THEREOF MAY
BE LIMITED BY BANKRUPTCY, INSOLVENCY, REORGANIZATION, MORATORIUM OR SIMILAR LAWS
FROM TIME TO TIME IN EFFECT AND AFFECTING THE RIGHTS OF CREDITORS GENERALLY, AND
(2) THE ENFORCEABILITY THEREOF IS SUBJECT TO GENERAL PRINCIPLES OF EQUITY.  ALL
CORPORATE ACTION REQUIRED TO BE TAKEN FOR THE AUTHORIZATION, ISSUANCE AND SALE
OF THE SECURITIES HAS BEEN DULY AND VALIDLY TAKEN BY THE COMPANY.

 

(II)                                  THE COMPANY HAS A DULY AUTHORIZED, ISSUED
AND OUTSTANDING CAPITALIZATION AS SET FORTH HEREIN AND IN THE STANDBY EQUITY
DISTRIBUTION AGREEMENT.  THE COMPANY IS NOT A PARTY TO OR BOUND BY ANY
INSTRUMENT, AGREEMENT OR OTHER ARRANGEMENT PROVIDING FOR IT TO ISSUE ANY CAPITAL
STOCK, RIGHTS, WARRANTS, OPTIONS OR OTHER SECURITIES, EXCEPT FOR THIS AGREEMENT,
THE AGREEMENTS DESCRIBED HEREIN AND AS DESCRIBED IN THE STANDBY EQUITY
DISTRIBUTION AGREEMENT AND THE AGREEMENTS DESCRIBED THEREIN.  ALL ISSUED AND
OUTSTANDING SECURITIES OF THE COMPANY, HAVE BEEN DULY AUTHORIZED AND VALIDLY
ISSUED AND ARE FULLY PAID AND NON-ASSESSABLE; THE HOLDERS THEREOF HAVE NO RIGHTS
OF RESCISSION OR PREEMPTIVE RIGHTS WITH RESPECT THERETO AND ARE NOT SUBJECT TO
PERSONAL LIABILITY SOLELY BY REASON OF BEING SECURITY HOLDERS; AND NONE OF SUCH
SECURITIES WERE ISSUED IN VIOLATION OF THE PREEMPTIVE RIGHTS OF ANY HOLDERS OF
ANY SECURITY OF THE COMPANY.

 

(III)                               THE COMMON STOCK TO BE ISSUED IN ACCORDANCE
WITH THIS AGREEMENT AND THE STANDBY EQUITY DISTRIBUTION AGREEMENT HAVE BEEN DULY
AUTHORIZED AND, WHEN ISSUED AND PAID FOR IN ACCORDANCE WITH THIS AGREEMENT, THE
STANDBY EQUITY DISTRIBUTION AGREEMENT AND THE CERTIFICATES/INSTRUMENTS
REPRESENTING SUCH COMMON STOCK WILL BE VALIDLY ISSUED, FULLY-PAID AND
NON-ASSESSABLE; THE HOLDERS THEREOF WILL NOT BE SUBJECT TO PERSONAL LIABILITY
SOLELY BY REASON OF BEING SUCH HOLDERS; SUCH SECURITIES ARE NOT AND WILL NOT BE
SUBJECT TO THE PREEMPTIVE RIGHTS OF ANY HOLDER OF ANY SECURITY OF THE COMPANY.

 

(IV)                              THE COMPANY HAS GOOD AND MARKETABLE TITLE TO,
OR VALID AND ENFORCEABLE LEASEHOLD ESTATES IN, ALL ITEMS OF REAL AND PERSONAL
PROPERTY NECESSARY TO CONDUCT ITS BUSINESS (INCLUDING, WITHOUT LIMITATION, ANY
REAL OR PERSONAL PROPERTY STATED IN THE OFFERING MATERIALS TO BE OWNED OR LEASED
BY THE COMPANY), FREE AND CLEAR OF ALL LIENS, ENCUMBRANCES, CLAIMS, SECURITY
INTERESTS AND DEFECTS OF ANY MATERIAL NATURE WHATSOEVER, OTHER THAN THOSE SET
FORTH IN THE OFFERING MATERIALS AND LIENS FOR TAXES NOT YET DUE AND PAYABLE.

 

(V)                                 THERE IS NO LITIGATION OR GOVERNMENTAL
PROCEEDING PENDING OR, TO THE BEST OF THE COMPANY’S KNOWLEDGE, THREATENED
AGAINST, OR INVOLVING THE PROPERTIES OR BUSINESS OF THE COMPANY, EXCEPT AS SET
FORTH IN THE OFFERING MATERIALS.

 

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(VI)                              THE COMPANY IS DULY ORGANIZED AND VALIDLY
EXISTS AS A CORPORATION IN GOOD STANDING UNDER THE LAWS OF THE STATE OF
DELAWARE.  EXCEPT AS SET FORTH IN THE OFFERING MATERIALS, THE COMPANY DOES NOT
OWN OR CONTROL, DIRECTLY OR INDIRECTLY, AN INTEREST IN ANY OTHER CORPORATION,
PARTNERSHIP, TRUST, JOINT VENTURE OR OTHER BUSINESS ENTITY.  THE COMPANY IS DULY
QUALIFIED OR LICENSED AND IN GOOD STANDING AS A FOREIGN CORPORATION IN EACH
JURISDICTION IN WHICH THE CHARACTER OF ITS OPERATIONS REQUIRES SUCH
QUALIFICATION OR LICENSING AND WHERE FAILURE TO SO QUALIFY WOULD HAVE A MATERIAL
ADVERSE EFFECT ON THE COMPANY.  THE COMPANY HAS ALL REQUISITE CORPORATE POWER
AND AUTHORITY, AND ALL MATERIAL AND NECESSARY AUTHORIZATIONS, APPROVALS, ORDERS,
LICENSES, CERTIFICATES AND PERMITS OF AND FROM ALL GOVERNMENTAL REGULATORY
OFFICIALS AND BODIES (DOMESTIC AND FOREIGN) TO CONDUCT ITS BUSINESSES (AND
PROPOSED BUSINESS) AS DESCRIBED IN THE OFFERING MATERIALS. ANY DISCLOSURES IN
THE OFFERING MATERIALS CONCERNING THE EFFECTS OF FOREIGN, FEDERAL, STATE AND
LOCAL REGULATION ON THE COMPANY’S BUSINESSES AS CURRENTLY CONDUCTED AND AS
CONTEMPLATED ARE CORRECT IN ALL MATERIAL RESPECTS AND DO NOT OMIT TO STATE A
MATERIAL FACT.  THE COMPANY HAS ALL CORPORATE POWER AND AUTHORITY TO ENTER INTO
THIS AGREEMENT, THE STANDBY EQUITY DISTRIBUTION AGREEMENT, THE REGISTRATION
RIGHTS AGREEMENT, AND TO CARRY OUT THE PROVISIONS AND CONDITIONS HEREOF AND
THEREOF, AND ALL CONSENTS, AUTHORIZATIONS, APPROVALS AND ORDERS REQUIRED IN
CONNECTION HEREWITH AND THEREWITH HAVE BEEN OBTAINED.  NO CONSENT, AUTHORIZATION
OR ORDER OF, AND NO FILING WITH, ANY COURT, GOVERNMENT AGENCY OR OTHER BODY IS
REQUIRED BY THE COMPANY FOR THE ISSUANCE OF THE SECURITIES OR EXECUTION AND
DELIVERY OF THE OFFERING MATERIALS EXCEPT FOR APPLICABLE FEDERAL AND STATE
SECURITIES LAWS.  THE COMPANY, SINCE ITS INCEPTION, HAS NOT INCURRED ANY
LIABILITY ARISING UNDER OR AS A RESULT OF THE APPLICATION OF ANY OF THE
PROVISIONS OF THE 1933 ACT, THE 1934 ACT OR THE RULES AND REGULATIONS.

 

(VII)                           THERE HAS BEEN NO MATERIAL ADVERSE CHANGE IN THE
CONDITION OR PROSPECTS OF THE COMPANY, FINANCIAL OR OTHERWISE, FROM THE LATEST
DATES AS OF WHICH SUCH CONDITION OR PROSPECTS, RESPECTIVELY, ARE SET FORTH IN
THE OFFERING MATERIALS, AND THE OUTSTANDING DEBT, THE PROPERTY AND THE BUSINESS
OF THE COMPANY CONFORM IN ALL MATERIAL RESPECTS TO THE DESCRIPTIONS THEREOF
CONTAINED IN THE OFFERING MATERIALS.

 

(VIII)                        EXCEPT AS SET FORTH IN THE OFFERING MATERIALS, THE
COMPANY IS NOT IN BREACH OF, OR IN DEFAULT UNDER, ANY TERM OR PROVISION OF ANY
MATERIAL INDENTURE, MORTGAGE, DEED OF TRUST, LEASE, NOTE, LOAN OR ANY OTHER
MATERIAL AGREEMENT OR INSTRUMENT EVIDENCING AN OBLIGATION FOR BORROWED MONEY, OR
ANY OTHER MATERIAL AGREEMENT OR INSTRUMENT TO WHICH IT IS A PARTY OR BY WHICH IT
OR ANY OF ITS PROPERTIES MAY BE BOUND OR AFFECTED.  THE COMPANY IS NOT IN
VIOLATION OF ANY PROVISION OF ITS CHARTER OR BY-LAWS OR IN VIOLATION OF ANY
FRANCHISE, LICENSE, PERMIT, JUDGMENT, DECREE OR ORDER, OR IN VIOLATION OF ANY
MATERIAL STATUTE, RULE OR REGULATION.  NEITHER THE EXECUTION AND DELIVERY OF THE
OFFERING MATERIALS NOR THE ISSUANCE AND SALE OR DELIVERY OF THE SECURITIES, NOR
THE CONSUMMATION OF ANY OF THE TRANSACTIONS CONTEMPLATED IN THE OFFERING
MATERIALS NOR THE COMPLIANCE BY THE COMPANY WITH THE TERMS AND PROVISIONS HEREOF
OR THEREOF, HAS CONFLICTED WITH OR WILL CONFLICT WITH, OR HAS RESULTED IN OR
WILL RESULT IN A BREACH OF, ANY OF THE TERMS AND PROVISIONS OF, OR HAS
CONSTITUTED OR WILL CONSTITUTE A DEFAULT UNDER, OR HAS RESULTED IN OR WILL
RESULT IN THE CREATION OR IMPOSITION OF ANY LIEN, CHARGE OR ENCUMBRANCE UPON ANY
PROPERTY OR ASSETS OF THE COMPANY OR PURSUANT TO THE TERMS OF ANY INDENTURE,
MORTGAGE, DEED OF TRUST, NOTE, LOAN OR ANY OTHER AGREEMENT OR INSTRUMENT
EVIDENCING AN OBLIGATION FOR BORROWED MONEY, OR ANY OTHER AGREEMENT OR
INSTRUMENT TO WHICH THE COMPANY MAY BE BOUND OR TO WHICH ANY OF THE PROPERTY OR
ASSETS OF THE COMPANY IS SUBJECT EXCEPT (A) WHERE SUCH DEFAULT, LIEN, CHARGE OR
ENCUMBRANCE WOULD NOT HAVE A MATERIAL ADVERSE EFFECT ON THE COMPANY AND (B) AS
DESCRIBED IN THE OFFERING MATERIALS; NOR WILL SUCH ACTION RESULT IN ANY
VIOLATION OF THE PROVISIONS

 

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OF THE CHARTER OR THE BY-LAWS OF THE COMPANY OR, ASSUMING THE DUE PERFORMANCE BY
THE PLACEMENT AGENT OF ITS OBLIGATIONS HEREUNDER, ANY MATERIAL STATUTE OR ANY
MATERIAL ORDER, RULE OR REGULATION APPLICABLE TO THE COMPANY OF ANY COURT OR OF
ANY FOREIGN, FEDERAL, STATE OR OTHER REGULATORY AUTHORITY OR OTHER GOVERNMENT
BODY HAVING JURISDICTION OVER THE COMPANY.

 

(IX)                                SUBSEQUENT TO THE DATES AS OF WHICH
INFORMATION IS GIVEN IN THE OFFERING MATERIALS, AND EXCEPT AS MAY OTHERWISE BE
INDICATED OR CONTEMPLATED HEREIN OR THEREIN THE COMPANY HAS NOT (A) ISSUED ANY
SECURITIES OR INCURRED ANY LIABILITY OR OBLIGATION, DIRECT OR CONTINGENT, FOR
BORROWED MONEY, OR (B) ENTERED INTO ANY TRANSACTION OTHER THAN IN THE ORDINARY
COURSE OF BUSINESS, OR (C) DECLARED OR PAID ANY DIVIDEND OR MADE ANY OTHER
DISTRIBUTION ON OR IN RESPECT OF ITS CAPITAL STOCK.  EXCEPT AS DESCRIBED IN THE
OFFERING MATERIALS, THE COMPANY HAS NO OUTSTANDING OBLIGATIONS TO ANY OFFICER OR
DIRECTOR OF THE COMPANY OTHER THAN NORMAL PAYABLE IN CONNECTION WITH SERVICES
PROVIDED RECENTLY.

 

(X)                                   THERE ARE NO CLAIMS FOR SERVICES IN THE
NATURE OF A FINDER’S OR ORIGINATION FEE WITH RESPECT TO THE SALE OF THE COMMON
STOCK OR ANY OTHER ARRANGEMENTS, AGREEMENTS OR UNDERSTANDINGS THAT MAY AFFECT
THE PLACEMENT AGENT’S COMPENSATION, AS DETERMINED BY THE NATIONAL ASSOCIATION OF
SECURITIES DEALERS, INC.

 

(XI)                                THE COMPANY OWNS OR POSSESSES, FREE AND
CLEAR OF ALL LIENS OR ENCUMBRANCES AND RIGHTS THERETO OR THEREIN BY THIRD
PARTIES, THE REQUISITE LICENSES OR OTHER RIGHTS TO USE ALL TRADEMARKS, SERVICE
MARKS, COPYRIGHTS, SERVICE NAMES, TRADE NAMES, PATENTS, PATENT APPLICATIONS AND
LICENSES NECESSARY TO CONDUCT ITS BUSINESS (INCLUDING, WITHOUT LIMITATION, ANY
SUCH LICENSES OR RIGHTS DESCRIBED IN THE OFFERING MATERIALS AS BEING OWNED OR
POSSESSED BY THE COMPANY) AND, EXCEPT AS SET FORTH IN THE OFFERING MATERIALS,
THERE IS NO CLAIM OR ACTION BY ANY PERSON PERTAINING TO, OR PROCEEDING, PENDING
OR THREATENED, WHICH CHALLENGES THE EXCLUSIVE RIGHTS OF THE COMPANY WITH RESPECT
TO ANY TRADEMARKS, SERVICE MARKS, COPYRIGHTS, SERVICE NAMES, TRADE NAMES,
PATENTS, PATENT APPLICATIONS AND LICENSES USED IN THE CONDUCT OF THE COMPANY’S
BUSINESSES (INCLUDING, WITHOUT LIMITATION, ANY SUCH LICENSES OR RIGHTS DESCRIBED
IN THE OFFERING MATERIALS AS BEING OWNED OR POSSESSED BY THE COMPANY) EXCEPT ANY
CLAIM OR ACTION THAT WOULD NOT HAVE A MATERIAL ADVERSE EFFECT ON THE COMPANY;
THE COMPANY’S CURRENT PRODUCTS, SERVICES OR PROCESSES DO NOT INFRINGE OR WILL
NOT INFRINGE ON THE PATENTS CURRENTLY HELD BY ANY THIRD PARTY.

 

(XII)                             SUBJECT TO THE PERFORMANCE BY THE PLACEMENT
AGENT OF ITS OBLIGATIONS HEREUNDER THE OFFER AND SALE OF THE SECURITIES
COMPLIES, AND WILL CONTINUE TO COMPLY, IN ALL MATERIAL RESPECTS WITH THE
REQUIREMENTS OF RULE 506 OF REGULATION D PROMULGATED BY THE SEC PURSUANT TO THE
1933 ACT AND ANY OTHER APPLICABLE FEDERAL AND STATE LAWS, RULES, REGULATIONS AND
EXECUTIVE ORDERS.  NEITHER THE OFFERING MATERIALS NOR ANY AMENDMENT OR
SUPPLEMENT THERETO NOR ANY DOCUMENTS PREPARED BY THE COMPANY IN CONNECTION WITH
THE OFFERING WILL CONTAIN ANY UNTRUE STATEMENT OF A MATERIAL FACT OR OMIT TO
STATE ANY MATERIAL FACT REQUIRED TO BE STATED THEREIN OR NECESSARY TO MAKE THE
STATEMENTS THEREIN, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE,
NOT MISLEADING.  ALL STATEMENTS OF MATERIAL FACTS IN THE OFFERING MATERIALS ARE
TRUE AND CORRECT AS OF THE DATE OF THE OFFERING MATERIALS.

 

(XIII)                          ALL MATERIAL TAXES WHICH ARE DUE AND PAYABLE
FROM THE COMPANY HAVE BEEN PAID IN FULL OR ADEQUATE PROVISION HAS BEEN MADE FOR
SUCH TAXES ON THE BOOKS OF THE COMPANY, EXCEPT FOR THOSE TAXES DISPUTED IN GOOD
FAITH BY THE COMPANY

 

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(XIV)                         NONE OF THE COMPANY NOR ANY OF ITS OFFICERS,
DIRECTORS, EMPLOYEES OR AGENTS, NOR ANY OTHER PERSON ACTING ON BEHALF OF THE
COMPANY, HAS, DIRECTLY OR INDIRECTLY, GIVEN OR AGREED TO GIVE ANY MONEY, GIFT OR
SIMILAR BENEFIT (OTHER THAN LEGAL PRICE CONCESSIONS TO CUSTOMERS IN THE ORDINARY
COURSE OF BUSINESS) TO ANY CUSTOMER, SUPPLIER, EMPLOYEE OR AGENT OF A CUSTOMER
OR SUPPLIER, OR OFFICIAL OR EMPLOYEE OF ANY GOVERNMENTAL AGENCY OR
INSTRUMENTALITY OF ANY GOVERNMENT (DOMESTIC OR FOREIGN) OR ANY POLITICAL PARTY
OR CANDIDATE FOR OFFICE (DOMESTIC OR FOREIGN) OR OTHER PERSON WHO IS OR MAY BE
IN A POSITION TO HELP OR HINDER THE BUSINESS OF THE COMPANY (OR ASSIST IT IN
CONNECTION WITH ANY ACTUAL OR PROPOSED TRANSACTION) WHICH (A) MIGHT SUBJECT THE
COMPANY TO ANY DAMAGE OR PENALTY IN ANY CIVIL, CRIMINAL OR GOVERNMENTAL
LITIGATION OR PROCEEDING, OR (B) IF NOT GIVEN IN THE PAST, MIGHT HAVE HAD A
MATERIALLY ADVERSE EFFECT ON THE ASSETS, BUSINESS OR OPERATIONS OF THE COMPANY
AS REFLECTED IN ANY OF THE FINANCIAL STATEMENTS CONTAINED IN THE OFFERING
MATERIALS, OR (C) IF NOT CONTINUED IN THE FUTURE, MIGHT ADVERSELY AFFECT THE
ASSETS, BUSINESS, OPERATIONS OR PROSPECTS OF THE COMPANY IN THE FUTURE.

 

5. CERTAIN COVENANTS AND AGREEMENTS OF THE COMPANY.

 

The Company covenants and agrees at its expense and without any expense to the
Placement Agent as follows:

 

A.                                   TO ADVISE THE PLACEMENT AGENT OF ANY
MATERIAL ADVERSE CHANGE IN THE COMPANY’S FINANCIAL CONDITION, PROSPECTS OR
BUSINESS OR OF ANY DEVELOPMENT MATERIALLY AFFECTING THE COMPANY OR RENDERING
UNTRUE OR MISLEADING ANY MATERIAL STATEMENT IN THE OFFERING MATERIALS OCCURRING
AT ANY TIME AS SOON AS THE COMPANY IS EITHER INFORMED OR BECOMES AWARE THEREOF.

 

B.                                     TO USE ITS COMMERCIALLY REASONABLE
EFFORTS TO CAUSE THE COMMON STOCK ISSUABLE IN CONNECTION WITH THE STANDBY EQUITY
DISTRIBUTION AGREEMENT TO BE QUALIFIED OR REGISTERED FOR SALE ON TERMS
CONSISTENT WITH THOSE STATED IN THE REGISTRATION RIGHTS AGREEMENT AND UNDER THE
SECURITIES LAWS OF SUCH JURISDICTIONS AS THE PLACEMENT AGENT SHALL REASONABLY
REQUEST.  QUALIFICATION, REGISTRATION AND EXEMPTION CHARGES AND FEES SHALL BE AT
THE SOLE COST AND EXPENSE OF THE COMPANY.

 

C.                                     UPON WRITTEN REQUEST, TO PROVIDE AND
CONTINUE TO PROVIDE THE PLACEMENT AGENT COPIES OF ALL QUARTERLY FINANCIAL
STATEMENTS AND AUDITED ANNUAL FINANCIAL STATEMENTS PREPARED BY OR ON BEHALF OF
THE COMPANY, OTHER REPORTS PREPARED BY OR ON BEHALF OF THE COMPANY FOR PUBLIC
DISCLOSURE AND ALL DOCUMENTS DELIVERED TO THE COMPANY’S STOCKHOLDERS.

 

D.                                    TO COMPLY WITH THE TERMS OF THE OFFERING
MATERIALS.

 

E.                                      TO ENSURE THAT ANY TRANSACTIONS BETWEEN
OR AMONG THE COMPANY, OR ANY OF ITS OFFICERS, DIRECTORS AND AFFILIATES BE ON
TERMS AND CONDITIONS THAT ARE NO LESS FAVORABLE TO THE COMPANY, THAN THE TERMS
AND CONDITIONS THAT WOULD BE AVAILABLE IN AN “ARM’S LENGTH” TRANSACTION WITH AN
INDEPENDENT THIRD PARTY.

 

F.                                      UPON THE EFFECTIVENESS OF A REGISTRATION
STATEMENT COVERING THE SECURITIES, THE COMPANY SHALL PROMPTLY PROVIDE THE
PLACEMENT AGENT SHALL AN OPINION OF COUNSEL TO THE COMPANY, WHICH OPINION SHALL
BE IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO AND THE PLACEMENT AGENT.

 

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G.                                     AT OR PRIOR TO THE CLOSING, THE COMPANY
SHALL HAVE BEEN FURNISHED SUCH DOCUMENTS, CERTIFICATES AND OPINIONS AS IT MAY
REASONABLY REQUIRE FOR THE PURPOSE OF ENABLING THE PLACEMENT AGENT TO REVIEW OR
PASS UPON THE MATTERS REFERRED TO IN THIS AGREEMENT AND THE OFFERING MATERIALS,
OR IN ORDER TO EVIDENCE THE ACCURACY, COMPLETENESS OR SATISFACTION OF ANY OF THE
REPRESENTATIONS, WARRANTIES OR CONDITIONS HEREIN CONTAINED.

 

6. INDEMNIFICATION AND LIMITATION OF LIABILITY.

 

A.                                   THE COMPANY HEREBY AGREES THAT IT WILL
INDEMNIFY AND HOLD THE PLACEMENT AGENT AND EACH OFFICER, DIRECTOR, SHAREHOLDER,
EMPLOYEE OR REPRESENTATIVE OF THE PLACEMENT AGENT AND EACH PERSON CONTROLLING,
CONTROLLED BY OR UNDER COMMON CONTROL WITH THE PLACEMENT AGENT WITHIN THE
MEANING OF SECTION 15 OF THE 1933 ACT OR SECTION 20 OF THE 1934 ACT OR THE SEC’S
RULES AND REGULATIONS PROMULGATED THEREUNDER (THE “RULES AND REGULATIONS”),
HARMLESS FROM AND AGAINST ANY AND ALL LOSS, CLAIM, DAMAGE, LIABILITY, COST OR
EXPENSE WHATSOEVER (INCLUDING, BUT NOT LIMITED TO, ANY AND ALL REASONABLE LEGAL
FEES AND OTHER EXPENSES AND DISBURSEMENTS INCURRED IN CONNECTION WITH
INVESTIGATING, PREPARING TO DEFEND OR DEFENDING ANY ACTION, SUIT OR PROCEEDING,
INCLUDING ANY INQUIRY OR INVESTIGATION, COMMENCED OR THREATENED, OR ANY CLAIM
WHATSOEVER OR IN APPEARING OR PREPARING FOR APPEARANCE AS A WITNESS IN ANY
ACTION, SUIT OR PROCEEDING, INCLUDING ANY INQUIRY, INVESTIGATION OR PRETRIAL
PROCEEDING SUCH AS A DEPOSITION) TO WHICH THE PLACEMENT AGENT OR SUCH
INDEMNIFIED PERSON OF THE PLACEMENT AGENT MAY BECOME SUBJECT UNDER THE 1933 ACT,
THE 1934 ACT, THE RULES AND REGULATIONS, OR ANY OTHER FEDERAL OR STATE LAW OR
REGULATION, COMMON LAW OR OTHERWISE, ARISING OUT OF OR BASED UPON (I) ANY UNTRUE
STATEMENT OR ALLEGED UNTRUE STATEMENT OF A MATERIAL FACT CONTAINED IN
(A) SECTION 4 OF THIS AGREEMENT, (B) THE OFFERING MATERIALS (EXCEPT THOSE
WRITTEN STATEMENTS RELATING TO THE PLACEMENT AGENT GIVEN BY THE PLACEMENT AGENT
FOR INCLUSION THEREIN), (C) ANY APPLICATION OR OTHER DOCUMENT OR WRITTEN
COMMUNICATION EXECUTED BY THE COMPANY OR BASED UPON WRITTEN INFORMATION
FURNISHED BY THE COMPANY FILED IN ANY JURISDICTION IN ORDER TO QUALIFY THE
COMMON STOCK UNDER THE SECURITIES LAWS THEREOF, OR ANY STATE SECURITIES
COMMISSION OR AGENCY; (II) THE OMISSION OR ALLEGED OMISSION FROM DOCUMENTS
DESCRIBED IN CLAUSES (A), (B) OR (C) ABOVE OF A MATERIAL FACT REQUIRED TO BE
STATED THEREIN OR NECESSARY TO MAKE THE STATEMENTS THEREIN NOT MISLEADING; OR
(III) THE BREACH OF ANY REPRESENTATION, WARRANTY, COVENANT OR AGREEMENT MADE BY
THE COMPANY IN THIS AGREEMENT.  THE COMPANY FURTHER AGREES THAT UPON DEMAND BY
AN INDEMNIFIED PERSON, AT ANY TIME OR FROM TIME TO TIME, IT WILL PROMPTLY
REIMBURSE SUCH INDEMNIFIED PERSON FOR ANY LOSS, CLAIM, DAMAGE, LIABILITY, COST
OR EXPENSE ACTUALLY AND REASONABLY PAID BY THE INDEMNIFIED PERSON AS TO WHICH
THE COMPANY HAS INDEMNIFIED SUCH PERSON PURSUANT HERETO.  NOTWITHSTANDING THE
FOREGOING PROVISIONS OF THIS PARAGRAPH 7(A), ANY SUCH PAYMENT OR REIMBURSEMENT
BY THE COMPANY OF FEES, EXPENSES OR DISBURSEMENTS INCURRED BY AN INDEMNIFIED
PERSON IN ANY PROCEEDING IN WHICH A FINAL JUDGMENT BY A COURT OF COMPETENT
JURISDICTION (AFTER ALL APPEALS OR THE EXPIRATION OF TIME TO APPEAL) IS ENTERED
AGAINST THE PLACEMENT AGENT OR SUCH INDEMNIFIED PERSON BASED UPON SPECIFIC
FINDING OF FACT THAT THE PLACEMENT AGENT OR SUCH INDEMNIFIED PERSON’S GROSS
NEGLIGENCE OR WILLFUL MISFEASANCE WILL BE PROMPTLY REPAID TO THE COMPANY.

 

B.                                     THE PLACEMENT AGENT HEREBY AGREES THAT IT
WILL INDEMNIFY AND HOLD THE COMPANY AND EACH OFFICER, DIRECTOR, SHAREHOLDER,
EMPLOYEE OR REPRESENTATIVE OF THE COMPANY, AND EACH PERSON CONTROLLING,
CONTROLLED BY OR UNDER COMMON CONTROL WITH THE COMPANY WITHIN THE MEANING OF
SECTION 15 OF THE 1933 ACT OR SECTION 20 OF THE 1934 ACT OR THE RULES AND
REGULATIONS, HARMLESS FROM AND AGAINST ANY AND ALL LOSS, CLAIM, DAMAGE,
LIABILITY, COST OR EXPENSE WHATSOEVER (INCLUDING, BUT NOT LIMITED TO, ANY AND
ALL REASONABLE LEGAL FEES AND OTHER EXPENSES

 

7

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AND DISBURSEMENTS INCURRED IN CONNECTION WITH INVESTIGATING, PREPARING TO DEFEND
OR DEFENDING ANY ACTION, SUIT OR PROCEEDING, INCLUDING ANY INQUIRY OR
INVESTIGATION, COMMENCED OR THREATENED, OR ANY CLAIM WHATSOEVER OR IN APPEARING
OR PREPARING FOR APPEARANCE AS A WITNESS IN ANY ACTION, SUIT OR PROCEEDING,
INCLUDING ANY INQUIRY, INVESTIGATION OR PRETRIAL PROCEEDING SUCH AS A
DEPOSITION) TO WHICH THE COMPANY OR SUCH INDEMNIFIED PERSON OF THE COMPANY MAY
BECOME SUBJECT UNDER THE 1933 ACT, THE 1934 ACT, THE RULES AND REGULATIONS, OR
ANY OTHER FEDERAL OR STATE LAW OR REGULATION, COMMON LAW OR OTHERWISE, ARISING
OUT OF OR BASED UPON (I) THE MATERIAL BREACH OF ANY REPRESENTATION, WARRANTY,
COVENANT OR AGREEMENT MADE BY THE PLACEMENT AGENT IN THIS AGREEMENT, OR (II) ANY
FALSE OR MISLEADING INFORMATION PROVIDED TO THE COMPANY IN WRITING BY ONE OF THE
PLACEMENT AGENT’S INDEMNIFIED PERSONS SPECIFICALLY FOR INCLUSION IN THE OFFERING
MATERIALS.

 

C.                                     PROMPTLY AFTER RECEIPT BY AN INDEMNIFIED
PARTY OF NOTICE OF COMMENCEMENT OF ANY ACTION COVERED BY SECTION 7(A) OR (B),
THE PARTY TO BE INDEMNIFIED SHALL, WITHIN FIVE (5) BUSINESS DAYS, NOTIFY THE
INDEMNIFYING PARTY OF THE COMMENCEMENT THEREOF; THE OMISSION BY
ONE (1) INDEMNIFIED PARTY TO SO NOTIFY THE INDEMNIFYING PARTY SHALL NOT RELIEVE
THE INDEMNIFYING PARTY OF ITS OBLIGATION TO INDEMNIFY ANY OTHER INDEMNIFIED
PARTY THAT HAS GIVEN SUCH NOTICE AND SHALL NOT RELIEVE THE INDEMNIFYING PARTY OF
ANY LIABILITY OUTSIDE OF THIS INDEMNIFICATION IF NOT MATERIALLY PREJUDICED
THEREBY.  IN THE EVENT THAT ANY ACTION IS BROUGHT AGAINST THE INDEMNIFIED PARTY,
THE INDEMNIFYING PARTY WILL BE ENTITLED TO PARTICIPATE THEREIN AND, TO THE
EXTENT IT MAY DESIRE, TO ASSUME AND CONTROL THE DEFENSE THEREOF WITH COUNSEL
CHOSEN BY IT WHICH IS REASONABLY ACCEPTABLE TO THE INDEMNIFIED PARTY.  AFTER
NOTICE FROM THE INDEMNIFYING PARTY TO SUCH INDEMNIFIED PARTY OF ITS ELECTION TO
SO ASSUME THE DEFENSE THEREOF, THE INDEMNIFYING PARTY WILL NOT BE LIABLE TO SUCH
INDEMNIFIED PARTY UNDER SUCH SECTION 7(A) OR (B), FOR ANY LEGAL OR OTHER
EXPENSES SUBSEQUENTLY INCURRED BY SUCH INDEMNIFIED PARTY IN CONNECTION WITH THE
DEFENSE THEREOF, BUT THE INDEMNIFIED PARTY MAY, AT ITS OWN EXPENSE, PARTICIPATE
IN SUCH DEFENSE BY COUNSEL CHOSEN BY IT, WITHOUT, HOWEVER, IMPAIRING THE
INDEMNIFYING PARTY’S CONTROL OF THE DEFENSE.  SUBJECT TO THE PROVISO OF THIS
SENTENCE AND NOTWITHSTANDING ANY OTHER STATEMENT TO THE CONTRARY CONTAINED
HEREIN, THE INDEMNIFIED PARTY OR PARTIES SHALL HAVE THE RIGHT TO CHOOSE ITS OR
THEIR OWN COUNSEL AND CONTROL THE DEFENSE OF ANY ACTION, ALL AT THE EXPENSE OF
THE INDEMNIFYING PARTY IF (I) THE EMPLOYMENT OF SUCH COUNSEL SHALL HAVE BEEN
AUTHORIZED IN WRITING BY THE INDEMNIFYING PARTY IN CONNECTION WITH THE DEFENSE
OF SUCH ACTION AT THE EXPENSE OF THE INDEMNIFYING PARTY, OR (II) THE
INDEMNIFYING PARTY SHALL NOT HAVE EMPLOYED COUNSEL REASONABLY SATISFACTORY TO
SUCH INDEMNIFIED PARTY TO HAVE CHARGE OF THE DEFENSE OF SUCH ACTION WITHIN A
REASONABLE TIME AFTER NOTICE OF COMMENCEMENT OF THE ACTION, OR (III) SUCH
INDEMNIFIED PARTY OR PARTIES SHALL HAVE REASONABLY CONCLUDED THAT THERE MAY BE
DEFENSES AVAILABLE TO IT OR THEM WHICH ARE DIFFERENT FROM OR ADDITIONAL TO THOSE
AVAILABLE TO ONE OR ALL OF THE INDEMNIFYING PARTIES (IN WHICH CASE THE
INDEMNIFYING PARTIES SHALL NOT HAVE THE RIGHT TO DIRECT THE DEFENSE OF SUCH
ACTION ON BEHALF OF THE INDEMNIFIED PARTY OR PARTIES), IN ANY OF WHICH EVENTS
SUCH FEES AND EXPENSES OF ONE ADDITIONAL COUNSEL SHALL BE BORNE BY THE
INDEMNIFYING PARTY; PROVIDED, HOWEVER, THAT THE INDEMNIFYING PARTY SHALL NOT, IN
CONNECTION WITH ANY ONE ACTION OR SEPARATE BUT SUBSTANTIALLY SIMILAR OR RELATED
ACTIONS IN THE SAME JURISDICTION ARISING OUT OF THE SAME GENERAL ALLEGATIONS OR
CIRCUMSTANCE, BE LIABLE FOR THE REASONABLE FEES AND EXPENSES OF MORE THAN ONE
SEPARATE FIRM OF ATTORNEYS AT ANY TIME FOR ALL SUCH INDEMNIFIED PARTIES.  NO
SETTLEMENT OF ANY ACTION OR PROCEEDING AGAINST AN INDEMNIFIED PARTY SHALL BE
MADE WITHOUT THE CONSENT OF THE INDEMNIFYING PARTY.

 

D.                                    IN ORDER TO PROVIDE FOR JUST AND EQUITABLE
CONTRIBUTION IN CIRCUMSTANCES IN WHICH THE INDEMNIFICATION PROVIDED FOR IN
SECTION 7(A) OR 7(B) IS DUE IN ACCORDANCE WITH ITS

 

8

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TERMS BUT IS FOR ANY REASON HELD BY A COURT TO BE UNAVAILABLE ON GROUNDS OF
POLICY OR OTHERWISE, THE COMPANY AND THE PLACEMENT AGENT SHALL CONTRIBUTE TO THE
AGGREGATE LOSSES, CLAIMS, DAMAGES AND LIABILITIES (INCLUDING LEGAL OR OTHER
EXPENSES REASONABLY INCURRED IN CONNECTION WITH THE INVESTIGATION OR DEFENSE OF
SAME) WHICH THE OTHER MAY INCUR IN SUCH PROPORTION SO THAT THE PLACEMENT AGENT
SHALL BE RESPONSIBLE FOR SUCH PERCENT OF THE AGGREGATE OF SUCH LOSSES, CLAIMS,
DAMAGES AND LIABILITIES AS SHALL EQUAL THE PERCENTAGE OF THE GROSS PROCEEDS PAID
TO THE PLACEMENT AGENT AND THE COMPANY SHALL BE RESPONSIBLE FOR THE BALANCE;
PROVIDED, HOWEVER, THAT NO PERSON GUILTY OF FRAUDULENT MISREPRESENTATION WITHIN
THE MEANING OF SECTION 11(F) OF THE 1933 ACT SHALL BE ENTITLED TO CONTRIBUTION
FROM ANY PERSON WHO WAS NOT GUILTY OF SUCH FRAUDULENT MISREPRESENTATION.  FOR
PURPOSES OF THIS SECTION 7(D), ANY PERSON CONTROLLING, CONTROLLED BY OR UNDER
COMMON CONTROL WITH THE PLACEMENT AGENT, OR ANY PARTNER, DIRECTOR, OFFICER,
EMPLOYEE, REPRESENTATIVE OR ANY AGENT OF ANY THEREOF, SHALL HAVE THE SAME RIGHTS
TO CONTRIBUTION AS THE PLACEMENT AGENT AND EACH PERSON CONTROLLING, CONTROLLED
BY OR UNDER COMMON CONTROL WITH THE COMPANY WITHIN THE MEANING OF SECTION 15 OF
THE 1933 ACT OR SECTION 20 OF THE 1934 ACT AND EACH OFFICER OF THE COMPANY AND
EACH DIRECTOR OF THE COMPANY SHALL HAVE THE SAME RIGHTS TO CONTRIBUTION AS THE
COMPANY.  ANY PARTY ENTITLED TO CONTRIBUTION WILL, PROMPTLY AFTER RECEIPT OF
NOTICE OF COMMENCEMENT OF ANY ACTION, SUIT OR PROCEEDING AGAINST SUCH PARTY IN
RESPECT OF WHICH A CLAIM FOR CONTRIBUTION MAY BE MADE AGAINST THE OTHER PARTY
UNDER THIS SECTION 7(D), NOTIFY SUCH PARTY FROM WHOM CONTRIBUTION MAY BE SOUGHT,
BUT THE OMISSION TO SO NOTIFY SUCH PARTY SHALL NOT RELIEVE THE PARTY FROM WHOM
CONTRIBUTION MAY BE SOUGHT FROM ANY OBLIGATION THEY MAY HAVE HEREUNDER OR
OTHERWISE IF THE PARTY FROM WHOM CONTRIBUTION MAY BE SOUGHT IS NOT MATERIALLY
PREJUDICED THEREBY.

 

E.                                      THE INDEMNITY AND CONTRIBUTION
AGREEMENTS CONTAINED IN THIS SECTION 7 SHALL REMAIN OPERATIVE AND IN FULL FORCE
AND EFFECT REGARDLESS OF ANY INVESTIGATION MADE BY OR ON BEHALF OF ANY
INDEMNIFIED PERSON OR ANY TERMINATION OF THIS AGREEMENT.

 

F.                                      THE COMPANY HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO OR CLAIM OF ANY PUNITIVE,
EXEMPLARY, INCIDENTAL, INDIRECT, SPECIAL, CONSEQUENTIAL OR OTHER DAMAGES
(INCLUDING, WITHOUT LIMITATION, LOSS OF PROFITS) AGAINST THE PLACEMENT AGENT AND
EACH OFFICER, DIRECTOR, SHAREHOLDER, EMPLOYEE OR REPRESENTATIVE OF THE PLACEMENT
AGENT AND EACH PERSON CONTROLLING, CONTROLLED BY OR UNDER COMMON CONTROL WITH
THE PLACEMENT AGENT WITHIN THE MEANING OF SECTION 15 OF THE 1933 ACT OR
SECTION 20 OF THE 1934 ACT OR THE RULES AND REGULATIONS ARISING OUT OF ANY CAUSE
WHATSOEVER (WHETHER SUCH CAUSE BE BASED IN CONTRACT, NEGLIGENCE, STRICT
LIABILITY, OTHER TORT OR OTHERWISE).  NOTWITHSTANDING ANYTHING TO THE CONTRARY
CONTAINED HEREIN, THE AGGREGATE LIABILITY OF THE PLACEMENT AGENT AND EACH
OFFICER, DIRECTOR, SHAREHOLDER, EMPLOYEE OR REPRESENTATIVE OF THE PLACEMENT
AGENT AND EACH PERSON CONTROLLING, CONTROLLED BY OR UNDER COMMON CONTROL WITH
THE PLACEMENT AGENT WITHIN THE MEANING OF SECTION 15 OF THE 1933 ACT OR
SECTION 20 OF THE 1934 ACT OR THE RULES AND REGULATIONS SHALL NOT EXCEED THE
COMPENSATION RECEIVED BY THE PLACEMENT AGENT PURSUANT TO SECTION 2 HEREOF.  THIS
LIMITATION OF LIABILITY SHALL APPLY REGARDLESS OF THE CAUSE OF ACTION, WHETHER
CONTRACT, TORT (INCLUDING, WITHOUT LIMITATION, NEGLIGENCE) OR BREACH OF STATUTE
OR ANY OTHER LEGAL OR EQUITABLE OBLIGATION.

 

7. PAYMENT OF EXPENSES.

 

The Company hereby agrees to bear all of the expenses in connection with the
Offering, including, but not limited to the following: filing fees, printing and
duplicating costs, advertisements, postage and mailing expenses with respect to
the transmission of Offering

 

9

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Materials, registrar and transfer agent fees, escrow agent fees and expenses,
fees of the Company’s counsel and accountants, issue and transfer taxes, if any.

 

8. TERMINATION.

 

This Agreement shall be co-terminus with, and terminate upon the same terms and
conditions as those set forth in the Standby Equity Distribution Agreement.

 

9. MISCELLANEOUS.

 

A.                                   THIS AGREEMENT MAY BE EXECUTED IN ANY
NUMBER OF COUNTERPARTS, EACH OF WHICH SHALL BE DEEMED TO BE AN ORIGINAL, BUT ALL
WHICH SHALL BE DEEMED TO BE ONE AND THE SAME INSTRUMENT.

 

B.                                     ANY NOTICE REQUIRED OR PERMITTED TO BE
GIVEN HEREUNDER SHALL BE GIVEN IN WRITING AND SHALL BE DEEMED EFFECTIVE WHEN
DEPOSITED IN THE UNITED STATES MAIL, POSTAGE PREPAID, OR WHEN RECEIVED IF
PERSONALLY DELIVERED OR FAXED (UPON CONFIRMATION OF RECEIPT RECEIVED BY THE
SENDING PARTY), ADDRESSED AS FOLLOWS TO SUCH OTHER ADDRESS OF WHICH WRITTEN
NOTICE IS GIVEN TO THE OTHERS):

 

If to Placement Agent, to:

 

Newbridge Securities Corporation

 

 

1451 Cypress Creek Road, Suite 204

 

 

Fort Lauderdale, Florida 33309

 

 

Attention:

Doug Aguililla

 

 

Telephone:

(954) 334-3450

 

 

Facsimile:

(954) 229-9937

 

 

 

If to the Company, to:

 

Spherix Incorporated

 

 

12051 Indian Creek Court

 

 

Beltsville, Maryland 20705

 

 

Attention:

President

 

 

Telephone:

(301) 419-3900

 

 

Facsimile:

(301) 210-4908

 

 

 

With a copy to:

 

James E. Baker, Jr., Esq.

 

 

Baxter, Baker, Sidle, Conn & Jones, P.A.

 

 

120 E. Baltimore Street, Suite 2100

 

 

Baltimore, MD 21202

 

 

Facsimile:

(410) 230-3801

 

C.                                     THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ALL RESPECTS UNDER THE LAWS OF THE STATE OF NEW JERSEY, WITHOUT
REFERENCE TO ITS CONFLICT OF LAWS RULES OR PRINCIPLES.  ANY SUIT, ACTION,
PROCEEDING OR LITIGATION ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE
BROUGHT AND PROSECUTED IN SUCH FEDERAL OR STATE COURT OR COURTS LOCATED WITHIN
THE STATE OF FLORIDA AS PROVIDED BY LAW.  THE PARTIES HEREBY IRREVOCABLY AND
UNCONDITIONALLY CONSENT TO THE JURISDICTION OF EACH SUCH COURT OR COURTS LOCATED
WITHIN THE STATE OF FLORIDA AND TO SERVICE OF PROCESS BY REGISTERED OR CERTIFIED
MAIL, RETURN RECEIPT REQUESTED, OR BY ANY OTHER MANNER PROVIDED BY APPLICABLE
LAW, AND HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO CLAIM THAT
ANY SUIT, ACTION, PROCEEDING OR LITIGATION SO COMMENCED HAS BEEN COMMENCED IN AN
INCONVENIENT FORUM.

 

10

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D.                                    THIS AGREEMENT AND THE OTHER AGREEMENTS
REFERENCED HEREIN CONTAIN THE ENTIRE UNDERSTANDING BETWEEN THE PARTIES HERETO
AND MAY NOT BE MODIFIED OR AMENDED EXCEPT BY A WRITING DULY SIGNED BY THE PARTY
AGAINST WHOM ENFORCEMENT OF THE MODIFICATION OR AMENDMENT IS SOUGHT.

 

E.                                      IF ANY PROVISION OF THIS AGREEMENT SHALL
BE HELD TO BE INVALID OR UNENFORCEABLE, SUCH INVALIDITY OR UNENFORCEABILITY
SHALL NOT AFFECT ANY OTHER PROVISION OF THIS AGREEMENT.

 

[REMAINDER OF PAGE INTENTIALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Placement Agent
Agreement as of the date first written above.

 

 

SPHERIX INCORPORATED

 

 

 

By:

 

 

 

Name:

 

Title:

 

 

 

 

 

NEWBRIDGE SECURITIES CORPORATION

 

 

 

By:

 

 

 

Name:

Guy S. Amico

 

Title:

President

 

 

 

 

 

CORNELL CAPITAL PARTNERS, LP

 

 

 

By:

Yorkville Advisors, LLC

 

Its:

General Partner

 

 

 

By:

 

 

 

Name:

Mark A. Angelo

 

Title:

Portfolio Manager

 

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