Exhibit 10.16

 

 

 

  

 

PLACEMENT AGENT AGREEMENT

 

 

between CARDAX

PHARMA, INC. and

PORTFOLIO ADVISORS ALLIANCE, INC.

 

 

January 3, 2014

 

 

 

 

 

 

 

Section 1. The Offering 1       Section 2. Closing 3       Section 3. Retention
and Compensation of Placement Agent 4       Section 4. Representations and
Warranties of the Company 5       Section 5. Representations and Warranties of
the Placement Agent 11       Section 6. Covenants of the Company 11      
Section 7. Expenses of Sale 13       Section 8. Conditions to the Placement
Agent’s Closing Obligations 13       Section 9. Conditions to the Company’s
Closing Obligations 14       Section 10. Non-Solicitation and “Tail.” 14      
Section 11. Indemnification 15       Section 12. Registration 16       Section
13. Termination 17       Section 14. Notices 18       Section 15. Parties 19    
  Section 16. Severability 19       Section 17. Captions 19       Section 18.
Applicable Law 19       Section 19. Prior Agreements 19       Section 20.
Limitations 20       Section 21. Counterparts 20

 

Schedule 1 Description of Merger Agreement Transactions Schedule 2 Outstanding
Equity Securities of the Public Parent   Immediately Following the Reverse
Merger     Annex A Indemnification Provisions     Exhibit A Form of Amended
Subscription Agreement Exhibit B Form of Placement Agent Warrant

 

 

 

 

Defined Terms Cross Reference Table

 

Accredited Investors Section 1(a) Action Annex A Agreement Annex A Cash Fee
Section 3(b)(i)(A) Closing Section 2 Closing Date Section 2 Commission Section
1(d) Companies Section 4(d) Company Annex A, Page 1 Company Counsel Section
8(a)(ii) Concurrent Offering Section 1(e) Convertible Notes Section 1(a) Covered
Investors Section 10(a) Damages Annex A Escrow Account Section 1(c) Escrow Agent
Section 1(c) Exchange Act Section 4(a) Existing Secured Note Purchasers Section
4(p) FINRA Section 5(a) Holdings Section 4(c) Indemnified Person Annex A
Indemnified Persons Annex A Intellectual Property Rights Section 4(e) Material
Adverse Effect Section 4(d) Merger Agreement Section 4(c) Money Laundering Laws
Section 4(v) Non-Accountable Expense Allowance Section 3(b)(i)(B)
Non-Solicitation and ‘Tail’ Section 3(e) Non-Solicitation Period Section 10(a)
Note Shares Section 1(a) OFAC Section 4(u) Offering Section 1(a) Offering Shares
Section 1(a) Officers Certificate Section 8(a)(iii) Permit Section 4(f)
Placement Agent Annex A, Page 1 Placement Agent Fee Section 3(b)(i)(B) Placement
Agent Warrants Section 3(b)(ii) Pubco Sub Section 4(c) Public Filings Section
4(b) Public Parent Section 1(a)

 

ii

 

 

Public Parent Common Stock Section 1(a) Purchasers Section 1(b) Registration
Limitation Section 12(a) Registration Statement Section 12(a) Regulation D
Section 1(d) Regulation S Section 1(d) Reverse Merger Section 4(c) Securities
Annex A Securities Act Section 1(a) Subscription Agreement Section 1(b) Units
Section 1(e) Warrant Section 1(a) Warrant Shares Section 1(a)

 

iii

 

  

CARDAX PHARMA, INC.

2800 Woodlawn Drive, Suite 129

Honolulu, Hawaii 96822

  

$2,076,000 in Principal Amount

of Convertible Unsecured Promissory Notes

  

 

 

PLACEMENT AGENT AGREEMENT

 

 

 

 January 3, 2014

Portfolio Advisors Alliance, Inc.

330 Madison Avenue, 6th Floor

New York, New York 10017

 

Ladies and Gentlemen:

 

Cardax Pharma, Inc., a Delaware corporation (the “Company”), hereby confirms its
agreements with Portfolio Advisors Alliance, Inc., a California corporation (the
“Placement Agent”), as follows:

 

Section 1. The Offering.

 

(a) The Company proposes to issue and sell (the “Offering”) to selected
accredited investors (“Accredited Investors”), as that term is defined in Rule
501(a) of the Securities Act of 1933 (the “Securities Act”), $2,076,000 in
aggregate principal amount of convertible unsecured promissory notes of the
Company (the “Convertible Notes”), with each such Convertible Note in the form
attached as Exhibit II to the Subscription Agreement (as defined in Section 1(b)
hereof). Upon consummation of the Reverse Merger (as hereinafter defined), each
Convertible Note and the interest accrued thereunder shall be converted
automatically into (i) shares of the common stock, par value $0.001 per share
(the “Public Parent Common Stock”), of Koffee Korner, Inc., a Delaware
corporation (such entity, or, in lieu thereof, any other applicable public
company (in the Company’s reasonable discretion) with which the Company effects
a reverse merger transaction similar in effect to the “Merger” described
elsewhere herein, the “Public Parent”) that will change its name to Cardax, Inc.
upon consummation of the Reverse Merger, at a conversion price of sixty-two and
one-half cents ($0.625) for each share of the Public Parent Common Stock; and
(ii) a warrant (each, a “Warrant” and, collectively, the “Warrants”), in the
form attached as Exhibit I to the Subscription Agreement, to purchase for five
years a number of shares of Public Parent Common Stock determined by dividing
the initial principal amount of the applicable Convertible Note by $0.625. The
shares of Public Parent Common Stock issuable by the Public Parent upon
conversion of the Convertible Notes offered and sold in the Offering are
hereinafter referred to as the “Note Shares”; the shares of Public Parent Common
Stock underlying the Warrants that will be issued at the time of the Reverse
Merger upon conversion of the Convertible Notes are hereinafter referred to as
the “Warrant Shares”; and the Note Shares and the Warrant Shares are
collectively hereinafter referred to as the “Offering Shares.”

 

 

 

 

(b) The Company shall enter into a subscription agreement in the form attached
hereto as Exhibit A (the “Subscription Agreement”) with respect to each sale of
Convertible Notes in the Offering. Persons offering to subscribe for and who
thereafter purchase Convertible Notes are referred to herein as “Purchasers.”
The Company reserves the right to refuse to sell Convertible Notes to any person
at any time prior to the Company’s written acceptance of the applicable
Subscription Agreement for such person. The Company’s acceptance of any
subscription shall be irrevocable unless the Placement Agent consents otherwise
or any representation and warranty of the applicable Purchaser shall not be true
and correct. The Closing of the sale of the Convertible Notes in the Offering
will take place in accordance with Section 3 hereof.

 

(c) Proceeds received from prospective Purchasers for the purchase of
Convertible Notes initially will be deposited in an escrow account (“Escrow
Account”) with Signature Bank, as escrow agent (the “Escrow Agent”), pursuant to
that certain escrow deposit agreement dated as of November 18, 2013 and amended
as of January 2, 2014 between the Company, the Placement Agent and the Escrow
Agent, and will be released only pursuant to the terms of Section 2 hereof.

 

(d) Neither the offer for sale nor the sale of the Convertible Notes has been or
will be registered with the United States Securities and Exchange Commission
(the “Commission”). The Company and the Placement Agent shall each conduct all
of their activities with respect to the Offering in a manner that will ensure
that the Convertible Notes will be offered for sale, and sold in reliance upon,
the exemptions from the registration requirements of Section 5 of the Securities
Act provided by the provisions of Regulation D promulgated thereunder
(“Regulation D”), or if permitted by the Company Regulation S promulgated under
the Securities Act (“Regulation S”), and the Company will file all appropriate
notices of the Offering with the Commission on Form D with respect to the
Offering. In addition, the Company shall obtain all “Blue Sky” and state
securities registrations, qualifications, approvals or exemptions therefrom and
take all necessary action and file all necessary forms and documents in order to
qualify or register all or a portion of the Convertible Notes for offer or sale
in such states as the Placement Agent shall reasonably request or effect the
exemption therefrom; provided, however, that in no event shall the Company be
obligated to qualify to do business in any jurisdiction where it is not now so
qualified or to take any action which would subject it to service of process in
suits, other than those arising out of the offering or sale of the Convertible
Notes. If permitted by the Company, the offering of the Convertible Notes may be
made in reliance upon the exemption from the registration requirements of
Section 5 of the Securities Act provided by the provisions of Regulation S, in
which case, the Purchaser will be required to agree to certain restrictions with
respect to the sale of any Note Shares or Warrant Shares in the United States.

 

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(e) The Placement Agent acknowledges that the Company is currently conducting a
concurrent offering (the “Concurrent Offering”) of units (“Units”) of shares of
Public Parent Common Stock and warrants to be issued by the Public Parent. In
the Concurrent Offering, the Units will be offered and sold for the same
offering price as the conversion price of the Notes being offered and sold in
the Offering described in this Agreement (i.e., $0.625 per share), and the
warrants to be issued by the Public Parent in the Concurrent Offering will be
exercisable at the same exercise price per share as the exercise price of the
Warrants to be issued upon conversion of the Convertible Notes being offered and
sold in the Offering described in this Agreement (i.e., $0.625 per share) and
have other similar terms and conditions as the Warrants.

 

(f) The Company and the Placement Agent agree that Agincourt Ltd., and its
subagent Paulson Investment Company, Inc. will not receive any compensation
described in Section 3 hereof with respect to the sale of the Convertible Notes
offered hereby except as specifically contemplated in Section 3(b)(i)(C) hereof.
Further, the Placement Agent agrees that it will not receive any compensation
described in Section 3 hereof with respect to the securities being offered and
sold in the Concurrent Offering that were introduced to the Company by any such
Person. On or prior to the closing of the Concurrent Offering, Agincourt Ltd.
shall confirm to the Placement Agent that the investors in the Concurrent
Offering were introduced to the Company by Agincourt Ltd.; provided, however,
that it is acknowledged and agreed by the Placement Agent that neither Holdings,
the Company nor the Public Parent nor any of their respective affiliates shall
be responsible for any breach of the obligations of Agincourt, Ltd under this
sentence and the obligations under this sentence shall be the sole obligation of
Agincourt Ltd.

 

Section 2. Closing. At such time as the Company has accepted subscriptions from
one or more Purchasers for such amount as the Company and the Placement Agent
shall agree will be the closing amount, the Company and the Placement Agent
shall, subject to the satisfaction of the conditions of closing required by
Section 8(a) hereof, agree upon a date and time for a closing at which the
Company shall issue and sell to the Purchasers the Convertible Notes subscribed
for in the applicable Subscription Agreements (the “Closing”). The Closing is
anticipated to occur on January 3, 2014, provided that such date may be extended
by mutual agreement between the Company and the Placement Agent. The date of the
Closing is referred to in this Agreement as the “Closing Date.”

 

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Section 3. Retention and Compensation of Placement Agent.

 

(a) The Company hereby engages the Placement Agent as its agent to solicit
subscriptions for the Convertible Notes to be sold in the Offering in accordance
with the terms of this Agreement, and the Placement Agent hereby accepts such
engagement and agrees to use its reasonable best efforts to solicit such
subscriptions. The Placement Agent shall cause each of its prospective
Purchasers to evidence its intent to subscribe for Convertible Notes by the
completion and execution of a Subscription Agreement and the related documents
referred to therein.

 

(b) At the Closing (or, in the case of the warrants referred to in item (ii)
below, upon the closing of the Reverse Merger), the Company will pay the
following:

 

(i) A cash fee from the gross purchase price of the Convertible Notes sold at
the Closing to Purchasers introduced, identified, sourced or in any other way
brought to the attention of the Company by the Placement Agent, as follows:

 

(A) To the Placement Agent, seven percent (7%) of such gross purchase price (the
“Cash Fee”);

 

(B) To the Placement Agent, a non-accountable expense allowance equal to three
percent (3%) of such gross purchase price (the “Non-Accountable Expense
Allowance”) and collectively with the Cash Fee, the “Placement Agent Fee”), and

 

(C) To Agincourt Ltd. (a registered broker-dealer with a prior placement agent
relationship with the Company), in lieu of any other compensation to which it
may otherwise be entitled with respect to the Offering from the Company or the
Public Parent under any separate agreement, a manager’s fee of three percent
(3%) of such gross purchase price; and

 

(ii) To the Placement Agent, five-year warrants to acquire four hundred
ninety-eight thousand, two hundred forty (498,240) shares of the Public Parent’s
common stock, which warrants will have an exercise price of $0.625 per share,
will have a cashless exercise feature, and will provide customary anti-dilution
protection for structural changes in the issuer’s capitalization, such warrants
to be in the form attached hereto as Exhibit B (the “Placement Agent Warrants”).

 

(c) For the avoidance of doubt, no compensation shall be payable to the
Placement Agent under this Agreement with respect to any Units sold to current
investors in the Company or to the purchasers in the Concurrent Offering.

 

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(d) The wire transfer instructions for all cash payments to the Placement Agent
are as follows:

 

Account Name:

Bank:

Phone:

ABA Routing #:

Account #:

 

(e) The Placement Agent shall also be entitled to compensation as contemplated
in Section 10 hereof (“Non-Solicitation and ‘Tail’”), if applicable.

 

(f) The Company shall pay the Placement Agent’s reasonable costs and expenses in
connection with the Offering, including, but not limited to, travel, mail,
overnight packages, copying, printing and legal fees. For this purpose, the fees
and expenses of the Placement Agent’s legal counsel, Troutman Sanders LLP, are
estimated to be in the range of $60,000 to $75,000 (and shall not exceed such
amount without the Company’s prior written consent) in connection with the
Offering; it is acknowledged that Pharma has previously paid the amount of
$20,000 of such fees and expenses.

 

Section 4. Representations and Warranties of the Company. The Company represents
and warrants to the Placement Agent, for the benefit of the Placement Agent and
the Purchasers, as follows:

 

(a) The Public Parent is registered as a reporting company under the Securities
and Exchange Act of 1934 (the “Exchange Act”). The Public Parent has taken no
action intended to, or that would terminate, or would be likely to have the
effect of terminating, the registration under the Exchange Act, nor has the
Public Parent received any notification that the Commission is contemplating
terminating such registration.

 

(b) The documents filed by the Public Parent (the “Public Filings”) with the
Commission since May 29, 2012, at the time they were filed with the Commission,
complied in all material respects with the requirements of the Securities Act,
the Exchange Act, and the rules and regulations promulgated thereunder, as
applicable. The Public Filings do not include 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.

 

(c) As promptly as practicable after the date hereof (assuming that the closing
conditions of the Merger Agreement may be satisfied and there would not be a
breach or default by Public Parent under the Merger Agreement), the Company will
cause a merger (the “Reverse Merger”) to be consummated between Cardax
Acquisition, Inc., a Delaware corporation and a wholly-owned subsidiary of the
Public Parent (“Pubco Sub”), and the Company, with the Company being the
surviving corporation of the Reverse Merger and becoming a wholly owned
subsidiary of the Public Parent. The Reverse Merger will be consummated pursuant
to the Agreement and Plan of Merger dated as of November 27, 2013 (as such
agreement may be amended, the “Merger Agreement”), by and among the Company,
Pubco Sub, Cardax Pharmaceuticals, Inc., a Delaware corporation (“Holdings”),
and Pharma. Pursuant to the Merger Agreement, the parties thereto will give
effect to the transactions described on Schedule 1 attached hereto.

 

5

 

 

(d) Each of the Company and the Purblic Parent (together, hereinafter, the
“Companies”) is a corporation duly organized and validly existing under the laws
of the state of Delaware with full corporate power and authority to own, lease
and operate its respective properties and to conduct its respective business as
presently conducted, and is duly registered and qualified to conduct its
business and is in good standing in each jurisdiction or place where the nature
of its properties or the conduct of itsbusiness requires such registration or
qualification, except where the failure to so register or qualify would not
reasonably be expected to have a Material Adverse Effect. For purposes of this
Agreement, a “Material Adverse Effect” shall mean a material adverse effect on
the condition (financial or other), business, properties, net worth or results
of operations of the Company or the Public Parent.

 

(e) The Company owns or possesses or has valid rights to use all patents, patent
applications, trademarks, service marks, trade names, trademark registrations,
service mark registrations, copyrights, licenses, inventions, trade secrets and
similar rights (“Intellectual Property Rights”) necessary for the conduct of the
business of the Company as currently carried on.

 

(f) The Company is engaged in the development of certain carotenoid products, in
particular a synthetic form of astaxanthin, directly and through agreement with
BASF, Aktiengesselschaft, a German chemical company. Each of the Companies (i)
has all permits, licenses, franchises, approvals, consents and authorizations of
governmental or regulatory authorities or private persons or entities
(hereinafter “permit” or “permits”) as are necessary to own its properties and
to conduct its business in the manner currently conducted, except where the
failure to have obtained any such permit has not and will not have a Material
Adverse Effect, and (ii) has fulfilled and performed all of its obligations with
respect to each such permit in all material respects.

 

(g) The Company has all requisite corporate power and authority to enter into
this Agreement and to perform its obligations hereunder, including without
limitation the obligation to issue the Convertible Notes at the Closing
hereunder. The execution and delivery of this Agreement and the performance by
the Company of its obligations hereunder have been duly and validly authorized
by all necessary action on the part of the Company, including its board of
directors, and this Agreement has been duly executed and delivered by the
Company and constitutes the valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms.

 

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(h) The execution and delivery of the Merger Agreement and the performance by
the Public Parent, PubCo Sub, the Company, Holdings and any other party thereto
of its respective obligations thereunder and the transactions contemplated
thereby were duly and validly authorized by all necessary action on the part of
each such entity, its board of directors and its stockholders, as applicable,
and the Merger Agreement was duly executed and delivered by Public Parent, PubCo
Sub, the Company, Holdings and any other party thereto and constitutes the valid
and legally binding agreement of each of such parties, enforceable against such
party in accordance with its terms.

 

(i) The outstanding shares of Public Parent Common Stock, and all securities and
other agreements or obligations of the Public Parent that represent the right to
acquire shares of Public Parent Common Stock, in each case to be outstanding on
the effective date of the Reverse Merger following (i) the consummation of the
Reverse Merger, (ii) the conversion of the Convertible Notes offered and sold
hereby, (iii) the conversion of the convertible secured notes offered and sold
by the Company in a private placement transaction during 2013, (iv) the
conversion of the convertible secured notes issued by the Company to prior
investors in Cardax Pharmaceuticals, Inc. during 2013, and (v) the issuance of
any shares of Public Parent Common Stock in the Concurrent Offering, are as set
forth on Schedule 2 attached hereto (subject to the assumptions set forth in
such Schedule). All of such shares of Public Parent Common Stock to be issued as
shown on Schedule 2, will have been duly authorized and validly issued, and are
fully paid and nonassessable. Except as described on Schedule 2, including
without limitation the authorization of the Company to issue options and other
awards under its Equity Incentive Plan, the Public Parent will not have
outstanding any shares of Public Parent Common Stock or preferred stock, or any
options to purchase, any warrants to subscribe for, or any other securities or
obligations convertible into or exchangeable for, or any contracts or
commitments to issue or sell, or otherwise providing the right to acquire, any
shares of Public Parent Common Stock or preferred stock of the Public Parent or
any rights of any kind that would allow the holder thereof to acquire any such
options, warrants, securities or obligations; provided, however, that the
Placement Agent acknowledges and agrees that the actual capitalization of Public
Parent may be changed (but in any event not by an amount that in the aggregate
would change the fully diluted shares by more than 5% or such other amount as
may be agreed to by the Placement Agent) to reflect stock or warrants issued to
other persons involved in the Reverse Merger or the transactions related thereto
or the number of shares that will be held by stockholders of Public Parent prior
to the closing of the Reverse Merger. The Placement Agent accepts the changes
between Schedule 3.2(b) to the Subscription Agreement and Schedule 2 of this
Agreement for the purposes of Section 3.1(b) of the Subscription Agreement.

 

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(j) When issued and sold in accordance with the terms hereof and the applicable
Subscription Agreements, the Convertible Notes will be validly authorized by all
necessary action on the part of the Company, including its board of directors.
Assuming that the Reverse Merger is effected in accordance with the terms of the
Merger Agreement, when issued upon conversion of the Convertible Notes, the Note
Shares, the Warrants issuable by the Public Parent upon such conversion and the
Warrant Shares issuable upon exercise of the Warrants will be duly and validly
authorized by all necessary action on the part of the Public Parent, including
its board of directors. Assuming that the Reverse Merger is effected in
accordance with the terms of the Merger Agreement, when issued upon conversion
of the Convertible Notes, the Note Shares will be duly authorized, validly
issued, fully paid and nonassessable shares of Public Parent Common Stock.
Assuming that the Reverse Merger is effected in accordance with the terms of the
Merger Agreement, when issued upon exercise of the Warrants in accordance with
their terms, the Warrant Shares will be duly authorized, validly issued, fully
paid and nonassessable shares of Public Parent Common Stock.

 

(k) Immediately following the Reverse Merger, except for the Company, the Public
Parent will not have any subsidiaries or own a material interest in or control
directly or indirectly any other domestic of foreign corporation, limited
liability company, limited partnership, general partnership, joint venture,
association, trust or other business organization, provided that on or promptly
after the Closing, the Company, distribute all of the shares of Koffee Korner’s
Inc., a Texas corporation, to Nazneen D’Silva.

 

(l) All offers and sales of the capital stock and debt or other securities of
the Company and of the Public Parent prior to the date hereof were made in
compliance with the Securities Act and all other applicable state and federal
laws and regulations, or any actions under the Securities Act or any state or
federal laws or regulations in respect of any such offers or sales are barred by
effective waivers or statutes of limitation.

 

(m) Assuming the compliance by the Placement Agent with its obligations under
Sections 5 and 7 of this Agreement, the sale of the Convertible Notes in the
Offering is exempt from the registration requirements of the Securities Act.

 

(n) There is no material action, suit, inquiry or proceeding by or before any
court or governmental or other regulatory or administrative agency or commission
pending or, to the knowledge of the Company, overtly threatened against or
involving the Company or any of its property or assets, nor, to the knowledge of
the Company, is there any investigation by any governmental or other regulatory
or administrative agency or commission against the Company or any of its
property or assets, nor is there any reasonable basis for any such action, suit,
inquiry, proceeding or investigation.

 

(o) Neither the issuance and sale of the Convertible Notes, the execution or
delivery of this Agreement nor the consummation by the Company or the Public
Parent of the transactions contemplated hereby (i) violates any agreement to
which the Company or the Public Parent is a party, or (ii) requires any consent,
approval, authorization or other order of or registration or filing with, any
person or entity, including without limitation any court, regulatory body,
administrative agency or other governmental body, agency or official (except
such as may be required for the compliance with the securities or “Blue Sky”
laws of various jurisdictions, all of which shall have been obtained or timely
filed and obtained and except for filings with respect to the Reverse Merger
that will be made on the effective date of the Reverse Merger).

 

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(p) On the effective date of the Reverse Merger, no person or entity, including
without limitation any holder of any securities of the Public Parent or the
Company or any rights exercisable for or convertible or exchangeable into
securities of the Public Parent or the Company or any of their affiliates, has
the right to require the Public Parent or the Company to register any such
securities of the Public Parent or the Company under the Securities Act or to
include any such securities in a registration statement to be filed by the
Public Parent or the Company, except for shares of Public Parent Common Stock
issued to the holders who purchased or otherwise acquired senior secured
convertible notes from the Company in a private placement in 2013 (the “Existing
Secured Note Purchasers”) and purchasers of Units in the Concurrent Offering or
others who purchase Units and placement agents and others who receive securities
issued by the Public Parent in connection with the Reverse Merger or any
issuance of securities by Pharma. Subject to the Registration Limitation (as
hereinafter defined in Section 12), the Company agrees to file a registration
statement to include the Note Shares and the Warrant Shares to be offered on a
delayed or continuous basis.

 

(q) The Company is covered by insurance in such amounts and covering such risks
as is adequate for the conduct of its business and the value of its properties
and as is customary for companies engaged in similar businesses in similar
industries.

 

(r) The Company is not, and after consummation of the Reverse Merger the Public
Parent will not be, an “investment company” or an “affiliated person” of, or
“promoter” or “principal underwriter” for, an investment company within the
meaning of the Investment Company Act of 1940, as amended.

 

(s) Each of the Company and the Public Parent has complied with all federal,
state, local, and foreign laws, ordinances, administrative or government rules
or regulations, and of any decree of any court or governmental agency or body
having jurisdiction over the Company or the Public Parent, as applicable, except
where the failure to comply with any such laws or requirements has not, and will
not, have a Material Adverse Effect.

 

(t) Neither the Company nor the Public parent, nor, to the Company’s knowledge,
any director, officer, agent, employee or affiliate of the Company or the Public
Parent, nor any other person acting on behalf of the Company or the Public
Parent, 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 was, 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) that would be reasonably
likely to pose a material risk of subjecting the Company or the Public Parent to
any damage or penalty in any civil, criminal or governmental litigation or
proceeding. Each of the Company the Public Parent has taken reasonable steps to
ensure that its accounting controls and procedures are sufficient to cause the
Company and the Public Parent to comply in all material respects with the
Foreign Corrupt Practices Act of 1977.

 

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(u) Neither the Company nor the Public Parent nor, to the Company’s knowledge,
any director, officer, agent, employee or affiliate of the Company or the Public
Parent or any other person acting on behalf of the Company or the Public Parent,
is currently subject to any U.S. sanctions administered by the Office of Foreign
Assets Control of the U.S. Department of the Treasury (“OFAC”), and the Company
will not, directly or indirectly, use the proceeds of the Offering hereunder, or
lend, contribute or otherwise make available such proceeds to any subsidiary,
joint venture partner or other person or entity, for the purpose of financing
the activities of any person currently subject to any U.S. sanctions
administered by OFAC.

 

(v) The operations of the Company and its the Public Parent are and have been
conducted at all times in compliance with applicable financial recordkeeping and
reporting requirements of the Currency and Foreign Transactions Reporting Act of
1970, as amended, the money laundering statutes of all jurisdictions, the rules
and regulations thereunder and any related or similar rules, regulations or
guidelines, issued, administered or enforced by any governmental entity
(collectively, the “Money Laundering Laws”); and no action, suit or proceeding
by or before any governmental entity involving the Company or the Public Parent
with respect to the Money Laundering Laws is pending or, to the best knowledge
of the Company, threatened.

 

(w) The Company maintains, and the Public Parent will maintain, a system of
internal accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management’s general or
specific authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management’s general or specific
authorizations; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any material differences.

 

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(x) There are no business relationships or related party transactions involving
the Company or the Public Parent except transactions on terms that are not
materially less favorable to the Company or the Public Parent than could have
been obtained in an arms-length transaction with unrelated third parties and
investments by officers or directors in the Company and as otherwise previously
disclosed to the Placement Agent.

 

(y) The board of directors of the Company are Nicholas Mitsakos, Frank C.
Herringer and David G. Watumull. It is expected that the board of directors of
the Public Parent upon the consummation of the Reverse Merger will be the same
individuals.

 

Section 5. Representations and Warranties of the Placement Agent. The Placement
Agent represents and warrants to the Company as follows:

 

(a) The Placement Agent is duly registered pursuant to the provisions of the
Exchange Act, as a broker-dealer and is in good standing with the Financial
Industry Regulatory Association (“FINRA”) and is duly registered as a
broker-dealer in those states in which the Placement Agent is required to be so
registered in order to carry out the Offering contemplated hereby, and there are
no orders issued or, to the knowledge of the Placement Agent, proposed to be
issued against the Placement Agent by FINRA or any state or other regulatory
authority having jurisdiction over the Placement Agent that would prevent it
from conducting the Offering contemplated hereby.

 

(b) The execution and delivery of this Agreement and the performance by the
Placement Agent of its obligations hereunder have been duly and validly
authorized by the Placement Agent, and this Agreement has been duly executed and
delivered by the Placement Agent and constitutes the valid and legally binding
agreement of the Placement Agent, enforceable against the Placement Agent in
accordance with its terms.

 

(c) The Placement Agent is a duly organized and validly existing corporation
partnership under the laws of the State of California.

 

(d) The disclosure regarding the Placement Agent or its principals in the
Subscription Agreement accurately discloses all actions or matters referred to
in Section 506(d) of Regulation D with respect to the Placement Agent or any
person that has been or will be paid (directly or indirectly) remuneration for
solicitation of purchasers in connection with such sale of securities in the
Offering that is associated with, an executive officer or owner of the Placement
Agent.

 

Section 6. Covenants of the Company. The Company covenants and agrees with the
Placement Agent, for the benefit of the Placement Agent and the Purchasers, as
follows:

 

11

 

 

(a) Each certificate, if any, evidencing the Convertible Notes, the Note Shares,
the Warrants or the Warrants Shares, or, if applicable, any advice from the
Company’s transfer agent evidencing the ownership of any such securities in
book- entry form on the records of the transfer agent’s Direct Registration
System or otherwise, shall, until such time as the same is no longer required
under the applicable requirements of the Securities Act, bear substantially the
following legend (along with such other legends as the Placement Agent and its
counsel reasonably deem necessary), and the Company shall cause its transfer
agent to issue stop transfer instructions with respect to such securities:

 

“THE SECURITIES [EVIDENCED BY THIS CERTIFICATE] [DESCRIBED HEREIN] HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”) OR APPLICABLE STATE
SECURITIES LAWS (THE “STATE ACTS”), AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT,
THE STATE ACTS AND ANY OTHER APPLICABLE SECURITIES LAWS UNLESS, IN THE WRITTEN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY, WHICH OPINION SHALL BE IN FORM
AND SUBSTANCE SATISFACTORY TO THE COMPANY, SUCH OFFER, SALE, TRANSFER, PLEDGE OR
HYPOTHECATION IS EXEMPT FROM REGISTRATION OR IS OTHERWISE IN COMPLIANCE WITH THE
ACT, THE STATE ACTS AND ANY OTHER APPLICABLE SECURITIES LAWS.”

 

(b) During the course of the Offering, until the Closing Date, except to the
extent agreed by the Placement Agent, the Company shall not, and the Company
shall cause the Public Parent not to, make any offers, offers to sell, offers of
sale or sales of the shares (or any notes, warrants, stock or other securities
of or interests in the Public Parent) other than in accordance with the terms
hereof or in connection with the Concurrent Offering or to current investors in
Holdings.

 

(c) The Company will apply the net proceeds from the sale of the Convertible
Notes as described in the Subscription Agreement.

 

(d) Until the Closing Date, and thereafter with specifically respect to the
Offering, the Company will not issue any press release, grant any interview, or
otherwise communicate with the media in any manner whatsoever without the
Placement Agent’s express prior written consent, which shall not be unreasonably
withheld. Notwithstanding the foregoing, the Company may make any press release
or other statements that it reasonably believes is consistent with the
obligations of a public company.

 

(e) The Company acknowledges that the Placement Agent and its affiliates are in
the business of, among other things, providing financial advisory and consulting
services and agrees that the provision of such services to other persons and
entities (including, but not limited to, a direct and/or indirect competitor of
the Company or the Public Parent), shall not constitute a breach of any duty
owed to the Company or the Public Parent by virtue of this Agreement or
otherwise.

 

12

 

 

Section 7. Expenses of Sale. In addition to payment of certain of the Placement
Agent’s legal fees and expenses as contemplated in Section 3(f) hereof, the
Company shall bear all other fees, disbursements and expenses in connection with
the Offering and the matters contemplated hereby, including, without limitation,
the Company’s legal and accounting fees and disbursements, the costs of issuing
Convertible Notes and the underlying securities, the fees and expenses of any
transfer agent or registrar for the Convertible Notes and the underlying
securities, reasonable costs and expenses of qualifying or exempting the
Offering under the “Blue Sky” laws of the states specified by the Placement
Agent or the Company, and the costs related to the Company management’s
participation in any roadshow or investor presentations (including slides,
consultants, travel and lodging expenses of representatives and officers of the
Company, aircraft and other transportation costs).

 

Section 8. Conditions to the Placement Agent’s Closing Obligations. The
Placement Agent’s obligations to direct the Escrow Agent to release funds for
the Closing shall be subject to the accuracy of and compliance with, as of the
date hereof and as of the date of such Closing, the Company’s representations,
warranties and covenants contained in Sections 2 and 4 hereof, the performance
by the Company of its obligations hereunder required to be performed on or
before such Closing, and to the following further conditions:

 

(i) Since September 30, 2013, there shall not have occurred any material and
adverse change, or any development involving or which would reasonably be
expected to involve a potential future material and adverse change, in the
condition (financial or other), business, properties, net worth prospects or
results of operations of the Company or the Public Parent.

 

(ii) The Placement Agent shall have received (for its benefit and the benefit of
the Purchasers) an opinion, dated as of the date of the Closing, of the law firm
of Herrick Feinstein LLP (“Company Counsel”), coveringsuch customary corporate
matters (pertaining to the Company) regarding corporate existence and good
standing, authorizations, validity, enforceability, no violations and the like,
as to the absence of a requirement to register the Securities under the
Securities Act and with respect to any such other matters as the Placement Agent
may reasonably request.

 

(iii) The Placement Agent shall have received a certificate, dated the date of
the Closing, from the Chief Executive Officer of the Company with respect to
certain corporate matters, confirming the continued accuracy of the Company’s
representations and warranties hereunder and the performance by the Company with
the agreements and covenants required to be performed at or prior to the date of
such certificate and with respect to other customary matters satisfactory in
form and substance to the Placement Agent and its counsel (the foregoing, an
“Officers Certificate”).

 

13

 

 

(iv) The Company shall have furnished to the Placement Agent such further
certificates and documents as the Placement Agent shall reasonably request.

 

Section 9. Conditions to the Company’s Closing Obligations. The obligations of
the Company shall be subject to the accuracy of and compliance with, as of the
date hereof and on each Closing Date, the representations, warranties and
covenants contained in Sections 2 and 5 hereof.

 

Section 10. Non-Solicitation and “Tail.”

 

(a) For a period of 24 months from the date of the final Closing under the
Offering (the “Non-Solicitation Period”), the Company shall not, and it shall
cause each of its subsidiaries and other affiliates not to, solicit any offer to
buy from or offer to sell to any of the persons (individuals and/or entities)
first introduced to the Company by the Placement Agent who are Purchasers under
the Subscription Agreement (the “Covered Investors”), any securities of the
Company or of any subsidiary or other affiliate or any other person or entity,
either directly or indirectly through any selling agent, placement agent, broker
or dealer or other person or entity, without, in each case, providing for and
making the payment of the compensation to the Agent described in Section 10(c)
hereof. The Company agrees that the Placement Agent shall be entitled to the
Placement Agent Fee and Placement Agent Warrants (or (if applicable) a cash fee
and warrants as near as possible thereto) with respect to any securities of the
Company or the successor or (as applicable) the securities of any other entity
that are sold during the Non-Solicitation Period as a result of any such
solicitation to any of the Covered Investors.

 

(b) During the Non-Solicitation Period, the Company shall not give the names or
other information of the Covered Investors to any other broker dealer or selling
or placement agent; provided, however, it shall not be a violation of this
provision if the Company includes the names and other information regarding the
Covered Investors in any public filing made by the Company as may be required by
law, including but not limited to filings that the Company may make with
Commission or if the Company provides the names of Covered Investors to persons
that are entitled to such information under applicable law (after appropriate
demand or request by any such person, as applicable). Without limitation of the
foregoing, the Company shall cause its legal counsel and other representatives
to use their best commercially reasonable efforts to redact names and other
identifying information from all closing binder materials prepared in connection
with the Offering.

 

(c) The Placement Agent understands that: (i) Cardax may disclose information
about Covered Investors to Agincourt, Ltd. but (ii) Agincourt may not solicit
such Covered Investors for securities transactions, it being acknowledged and
agreed by the Placement Agent that neither Holdings, the Company nor the Public
Parent nor any of their respective affiliates shall be responsible for any
breach of clause (ii) of this paragraph by Agincourt, Ltd.

 

14

 

 

(d) Upon receipt of written request by the Placement Agent, the Company shall
promptly deliver to the Placement Agent the names of any persons with whom the
Company completes a subsequent financing within 24 months from the date of the
Closing that were introduced to the Company by the Placement Agent and who
become investors in the Offering.

 

(e) This provision shall survive termination of this Agreement.

 

(f) By signing below, Agincourt, Ltd. agrees that it shall not, and it shall
cause all of its affiliates, agents, sub-agents and representatives not to,
directly or indirectly solicit any offer to buy from, or offer to sell to, any
of the persons (individuals and/or entities) introduced to Cardax by the Agent
who become investors in the Offering, any securities of any person or entity
(other than Cardax or its Successor as may be permitted under Section 10(a)
hereof), either directly or indirectly through any selling agent, placement
agent, broker or dealer or other person or entity. Further Agincourt, Ltd. shall
not give the names or other information of the subscribers to any other broker
dealer or selling or placement agent. This provision shall survive termination
of this Agreement. The Agent acknowledges and agrees that this Section 10(f) is
a separate covenant of Agincourt, Ltd. and that Cardax is not responsible for
any breach hereof by Agincourt, Ltd.

 

(g) In the event that either Cardax or Agincourt, directly or through any agent
or other person, violates any provision applicable to them under this Section
10, the Placement Agent shall be entitled (in addition to any other rights the
Placement Agent may have in law or equity) to treble damages with respect to
such violation which shall consist of three times the fee and three times the
warrants that would have been payable to the Agent if it had given its consent
to such solicitation; provided, however, that such penalty shall not be enforced
if there is a good faith dispute by the Company as to whether such compensation
is payable to Placement Agent and the Company first offers to mediate (and then
mediates) any dispute to determine whether such compensation is in fact payable
with JAMS or other mediation service reasonably specified by the Placement Agent
and the dispute is amicably resolved in such mediation.

 

Section 11. Indemnification.

 

(a) The Company hereby agrees to the provisions with respect to the
indemnification of the Placement Agent and related parties and other matters set
forth in Annex I, which is incorporated herein by reference as if a part hereof.
The Company’s obligations as set forth in such Annex I shall survive any
termination of this Agreement.

 

15

 

 

(b) All representations, warranties, covenants and agreements of the Company and
the Placement Agent herein or in certificates delivered pursuant hereto, and the
indemnity agreement contained in Section 11(a) hereof (and Annex A hereto),
shall survive the execution and delivery of this Agreement and the Closings and
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Placement Agent or any controlling
person thereof, the Company or any of its officers, directors, or any
controlling persons.

 

Section 12. Registration.

 

(a) As promptly as possible after the Closing, and in any event on or prior to
the seven-month anniversary of the effective date of the Reverse Merger, the
Company shall cause the Public Parent to prepare and file with the Commission,
(prior to the filing by the Public Parent of any other registration statement
after the effective date of the Reverse Merger other than a registration
statement for the issuance of securities for cash or a registration statement on
Form S-4), a registration statement (the “Registration Statement”) covering the
resale of all of the Note Shares and all of the Warrant Shares, and such other
outstanding shares of Public Parent Common Stock (and outstanding securities
convertible, exercisable or exchangeable for Public Parent Common Stock) as the
Board of the Public Parent may determine in its discretion. Such registration
shall be for an offering to be made on a delayed or continuous basis pursuant to
Rule 415 and each holder of such registrable shares shall be required to provide
such information as the Public Parent reasonably requires for inclusion in such
Registration Statement and shall sell such registered shares in accordance with
the plan of distribution provided in such Registration Statement. The
obligations of the Public Parent to include Note Shares and Warrant Shares or
any other shares included in such Registration Statement in any such
registration shall be subject to the limitations of applicable law (which
include comments by the Commission with respect to any such registration
statement), including without limitation, any restriction on the number of such
shares so that such offering is not deemed an offering by or on behalf of the
Company or other restriction on the use of Rule 415 with respect to such
registration statement (the “Registration Limitation”). Subject to the
Registration Limitation, the Company shall cause the Public Parent to use its
reasonable efforts to give priority to the Note Shares and the Warrant Shares
equal to all other securities included in the Registration Statement (for
example, and without limitation, if by virtue of a Commission comment the number
of shares included in the Registration Statement must be reduced, then the
number of shares of each holder whose shares are included in the Registration
Statement would be reduced by the same percentage, except where, by virtue of
Commission rules and regulations, the shares of different holders would be
required to be treated differently and as a result different percentages of
shares would be accepted by the Commission in such registration statement).

 

(b) Subject to the Registration Limitation and the last sentence of Section
12(a) hereof, the Company shall use its reasonable efforts to cause the
Registration Statement, or a successor registration statement, if applicable, to
be declared effective by the Commission as promptly as possible after the filing
thereof, and shall use its reasonable efforts to keep the Registration
Statement, or a successor registration statement, if applicable, continuously
effective under the Securities Act until the date that all shares covered
thereby have been sold or can be sold publicly under Rule 144 without volume
limitations by the holders of such shares assuming that such holders are not
affiliates of the Public Parent as defined under Rule 144.

 

16

 

 

(c) The Company shall notify the Investors in writing promptly (and in any event
within two trading days) after receiving notification from the Commission that
the Registration Statement has been declared effective.

 

(d) The Company shall not, from the date hereof until the effective date of the
registration statement referred to above, prepare and file with the Commission a
registration statement relating to an offering for its own account under the
Securities Act of any of its equity securities, unless such registration
statement includes all of the Note Shares and Warrant Shares offered and sold
hereby.

 

(e) With a view to making available the benefits of certain rules and
regulations of the Commission which may at any time permit the sale of the Note
Share and Warrant Shares to the public without registration or pursuant to a
registration on Form S-3, assuming that the Reverse Merger is effected in
accordance with the terms of the Merger Agreement, the Company shall cause the
Public Parent to use its reasonable efforts to:

 

(i) Make and keep public information available, as those terms are understood
and defined in Rule 144, at all times;

 

(ii) File with the Commission in a timely manner all reports and other documents
required of the Company under the Securities Act and the Exchange Act; and

 

(iii) Furnish to any Purchaser forthwith upon request a written statement by the
Company as to its compliance with the reporting requirements of Rule 144, the
Securities Act and the Exchange Act, a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents of the
Company as a Purchaser may reasonably request in availing itself of any rule or
regulation of the Commission allowing a Purchaser to sell any such securities
without registration.

 

Section 13. Termination. The appointment and authorization of the Placement
Agent shall expire on the Closing but in any event on January 4, 2014, unless
such date is extended by written agreement of the Company and the Placement
Agent. In addition, either the Company or the Placement Agent shall have the
right to terminate this Agreement at any time by giving the other party at least
10 days prior written notice. Notwithstanding the foregoing, the provisions of
Sections 3(f), 7, 11, and 14 through 21 shall survive any expiration or any
termination of this Agreement pursuant to this Section 13 or otherwise.

 

17

 

 

Section 14. Notices. All notices or communications hereunder, except as herein
otherwise specifically provided, shall be in writing and if given to Placement
Agent, shall be mailed, delivered via courier or by facsimile or e-mail to the
parties at the following addresses:

 

If to the Placement Agent, to:

 

Portfolio Advisor Alliance, Inc.

330 Madison Avenue, 6th Floor

New York, New York 10017

Telephone: 212-812-8900

Facsimile: 212-867-1993

E-Mail: kwasserman@allenps.com

Attention: Ms. Kerri Wasserman,

                   Chief Compliance Officer

 

 

With a copy to:

 

Timothy I. Kahler, Esq.

Troutman Sanders,

LLP The Chrysler Building

405 Lexington Avenue

New York, New York 10174

Telephone: (212) 704-6169

Fax: (212) 704-5948

E-Mail: timothy.kahler@troutmansanders.com

 

If to the Company, to:

Cardax Pharma, Inc.

2800 Woodlawn Drive, Suite 129

Honolulu, Hawaii 96822

Telephone: (808) 457-1400

Facsimile: (808) n237-1509

E-Mail: DWatamull@cardaxpharma.com

Attention: Mr. David G. Watamull,

    President and Chief Executive Officer

 

18

 

 

With a copy to:

 

Richard M. Morris, Esq.

Herrick, Feinstein LLP

2 Park Avenue

New York, New York 10016

Telephone: (212) 592-1432

Facsimile: (212) 545-3371

Email: RMorris@Herrick.com

 

The Company or the Placement Agent may change its address for receiving notices
by giving written notice to the other party.

 

Section 15. Parties. This Agreement shall inure to the benefit of and be binding
upon the Placement Agent and the Company, and each of their respective
successors and assigns. In addition, the representations and warranties of the
Company under Section 4 and the covenants of the Company in Section 6 hereof and
Section 12 hereof shall also be for the direct benefit of the Purchasers, each
of whom shall be an intended third party beneficiary of this Agreement for such
purposes and shall have the right to enforce this Agreement directly against the
Company. Nothing expressed or mentioned in this Agreement is intended or shall
be construed to give any person or corporation, other than the parties hereto
and their respective successors and assigns, controlling persons, officers and
directors and counsel referred to in this Agreement, any legal or equitable
right, remedy or claim under or in respect to this Agreement or any provision
herein contained.

 

Section 16. Severability. Every provision in this Agreement is intended to be
severable. If any term or provision hereof is illegal or invalid for any reason
whatsoever, such illegality or invalidity shall not affect the validity of the
remainder hereof.

 

Section 17. Captions. The captions or headings in this Agreement are inserted
for convenience and identification only and are in no way intended to describe,
interpret, define, or limit the scope, extent, or intent of this Agreement or
any provisions hereof.

 

Section 18. Applicable Law. This Agreement shall be governed by, construed and
interpreted under the law of the state of New York other than any provision
thereof that would result in the application of the law of any other
jurisdiction; for the avoidance of doubt, this choice of governing and
applicable law is made in reliance on Sections 5-1401 and 5-1402 of the New York
General Obligations Law.

 

Section 19. Prior Agreements. This Agreement is the entire agreement of the
parties with respect to the subject matter hereof and supersedes all prior
agreements, verbal or written, covering such subject matter, including the
Financial Representative Agreement dated November 8, 2013, as amended.

 

19

 

 

Section 20. Limitations. The Company acknowledges and agrees that (i) the
Placement Agent and its affiliates may be engaged in a broad range of
transactions that involve interests that differ from those of the Company, and
(ii) the Placement Agent has not provided any legal, accounting, regulatory or
tax advice with respect to the Offering and the Company has consulted its own
legal, accounting, regulatory and tax advisors to the extent it deemed
appropriate.

 

Section 21. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument. The exchange of copies of
this Agreement and of signature pages by facsimile, e-mail or other electronic
means shall constitute effective execution and delivery of this Agreement by the
parties hereto and may be used in lieu of the original signatures pages to this
Agreement for all purposes.

  

[The remainder of this page is intentionally blank.]

 

20

 

 

If the foregoing correctly sets forth our understanding, please so indicate in
the space provided below for that purpose whereupon this letter shall constitute
a binding agreement between us.

 

  Very truly yours,         CARDAX PHARMA, INC.           By: /s/ David G.
Watumull     Name:      David G. Watumull     Title: President and       Chief
Executive Officer

 

CONFIRMED as of the date first set forth above.

 

PORTFOLIO ADVIS RS ALLIANCE, INC.           By:         Name:   Kerri Wasserman
    Title: Chief Compliance Officer
and Authorized Signatory  

  

Agincourt Ltd. hereby consents and agrees to the matters set forth in Section 10
above as of the date first set forth above.

 

AGINCOURT LTD.           By:         Name:   James J. Cahill     Title: Managing
Director  

 

[Signature Page to Placement Agent Agreement]

 

21

 

  

If the foregoing correctly sets forth our understanding, please so indicate in
the space provided below for that purpose whereupon this letter shall constitute
a binding agreement between us.

 

  Very truly yours,         CARDAX PHARMA, INC.           By:     Name:     
David G. Watumull     Title: President and       Chief Executive Officer

 

CONFIRMED as of the date first set forth above.

 

PORTFOLIO ADVIS RS ALLIANCE, INC.           By:   /s/ Kerri Wasserman    
Name:   Kerri Wasserman     Title: Chief Compliance Officer
and Authorized Signatory  

  

Agincourt Ltd. hereby consents and agrees to the matters set forth in Section 10
above as of the date first set forth above.

 

AGINCOURT LTD.                          Name:         Title:    

 

[Signature Page to Placement Agent Agreement]

 

22

 

 

If the foregoing correctly sets forth our understanding, please so indicate in
the space provided below for that purpose whereupon this letter shall constitute
a binding agreement between us.

 

  Very truly yours,         CARDAX PHARMA, INC.           By:     Name:     
David G. Watumull     Title: President and       Chief Executive Officer

 

CONFIRMED as of the date first set forth above.

 

PORTFOLIO ADVIS RS ALLIANCE, INC.           By:         Name:   Kerri Wasserman
    Title: Chief Compliance Officer
and Authorized Signatory  

  

Agincourt Ltd. hereby consents and agrees to the matters set forth in Section 10
above as of the date first set forth above.

 

AGINCOURT LTD.           By:   /s/ James J. Cahill     Name:   James J. Cahill  
  Title: Managing Director  

 

[Signature Page to Placement Agent Agreement]

  

23

 

  

ANNEX A

 

This Annex A is attached to and incorporated by reference into the Placement
Agent Agreement (the “Agreement”) between the Company, Inc., a Delaware
corporation (the “Company”), and Portfolio Advisors Alliance, Inc., a California
corporation (the “Placement Agent”), dated January 3, 2014. Capitalized terms
used herein and not otherwise defined herein shall have the meanings assigned to
such terms in the Agreement.

 

The Company hereby agrees to indemnify and hold harmless the Placement Agent and
its affiliates, and the respective directors, officers, partners, 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, as amended),
agents, sub-agents, and employees of the Placement Agent or any of its
affiliates (the Placement Agent and each such other person or entity being
referred to individually as an “Indemnified Person” and, collectively, as
“Indemnified Persons”), to the fullest extent lawful, from and against any and
all Damages (as hereinafter defined) directly or indirectly related to or
arising out of the Offering, the Convertible Notes sold therein and the Note
Shares and Warrant Shares that may be issued upon the conversion of the
Convertible Notes (together with the Convertible Notes, the “Securities”) or any
information contained in the Offering Materials or otherwise provided by the
Company, the Company's employees or other agents, which either the Company or an
Indemnified Person provides to any person or entity, or otherwise directly or
indirectly in connection with, arising out of, based upon, or in any way related
to the engagement of the Placement Agent under the Agreement or any transaction,
thing or conduct in connection therewith, including without limitation the
Offering and the Securities. The Company will not, however, be responsible for
any Damages, or any associated counsel fees or expenses, that are finally
determined in the manner specified by the Agreement (and not subject to further
review) to have resulted from the Placement Agent’s or other Indemnified
Person’s bad faith, willful misconduct or gross negligence.

 

“Damages” means any and all losses, Actions (as hereinafter defined), damages,
judgments, assessments, investigation costs, settlement costs, fines, penalties,
arbitration awards and any other liabilities, costs, fees and expenses,
including without limitation all documented out of pocket costs and expenses,
including reasonable counsel fees and disbursements, in connection with
investigating, preparing for and defending any Action to which the Placement
Agent or any other Indemnified Person is named as a party or is reasonably
anticipated to become a party thereto, whether or not in connection with any
pending or threatened Action, caused by or arising out of or in connection with
the Placement Agent acting pursuant to the Agreement or otherwise relating to
the Offering or the Securities.

 

AA-1

 

 

“Action” means any formal or informal action, case, claim, litigation, appeal,
hearing, inquest, investigation, arbitration, mediation, inquiry or other
proceeding (including, without limitation, stockholder actions).

 

If multiple claims are brought against an Indemnified Person, with respect to at
least one of which indemnification is permitted under applicable law and
provided for under the terms of this Annex A, the Company agrees that all
Damages associated therewith, including any judgment or award against such
Indemnified Person in connection therewith, shall be conclusively deemed to be
based on claims as to which indemnification is permitted and provided for
hereunder, except to the extent the judgment or award expressly states that it,
or any portion thereof, is based on a claim as to which indemnification is not
available.

 

The Company also agrees that neither the Placement Agent nor any other
Indemnified Person shall have any liability to the Company for, in connection
with or arising out of the engagement of the Placement Agent under the Agreement
except for any such liability for Damages, including attorneys fees, incurred by
the Company that are finally determined in the manner specified by the Agreement
(and not subject to further review) to have resulted from the Placement Agent’s
or other Indemnified Person’s bad faith, willful misconduct or gross negligence.

 

In no event shall the Company or any Indemnified Person be responsible for any
special, indirect or consequential damages incurred by the other; provided that
nothing in this sentence shall be deemed to (i) relieve the Company of any
obligation it may otherwise have hereunder to indemnify an Indemnified Person
for any such damages asserted by an unaffiliated third party or (ii) relieve the
Placement Agent of any liability it may otherwise have hereunder to the Company
for any such damages which the Company becomes legally obligated to pay to an
unaffiliated third party.

 

In the event that the foregoing indemnity is unavailable (except by reason of
the bad faith, willful misconduct or gross negligence of the Placement Agent or
an Indemnified Party), then the Placement Agent and the Company shall contribute
to amounts paid or payable by the Indemnified Parties, in respect of the Damages
sustained or incurred by the Indemnified Parties, in such proportion as
appropriately reflects the relative benefits received by, and the relative fault
of, the Placement Agent and the Company in connection with the matters as to
which such Damages relate and other equitable considerations; provided, however,
that in no event shall the amount to be contributed by the Placement Agent
exceed the amount of the Placement Agent Fees actually received by the Placement
Agent in cash from the Company under the terms of the Agreement.

 

The Company will not, without the Placement Agent’s prior written consent (which
shall not be unreasonably withheld), consent to the entry of any judgment in or
otherwise seek to terminate any Action in respect of which indemnification may
be sought hereunder (if any Indemnified Person is a party, or reasonably
anticipated to become a party, thereto) unless such settlement, compromise,
consent or termination includes an unconditional release of each Indemnified
Person from all Damages arising out of such Action. No Indemnified Person
seeking indemnification, reimbursement or contribution hereunder will, without
prior written consent the Company, which consent shall not be unreasonably
withheld, settle, compromise, consent to the entry of any judgment in or
otherwise seek to terminate any Action in respect of which indemnification may
be sought hereunder.

 

AA-2

 

 

Promptly after receipt by an Indemnified Person of notice of its involvement in
any Action, the Placement Agent shall, if a claim for indemnification in respect
thereof is to be made against the Company hereunder, notify the Company of such
involvement; provided, however, that the failure to so notify the Company shall
not relieve the Company of any liability that it may have under the provisions
of this Annex A except to the extent that it has been prejudiced in any material
respect by such failure, or from any liability which it may otherwise have to
the Indemnified Parties.

 

If an Indemnified Person is entitled to indemnification under this Annex A with
respect to any action or proceeding brought by a third party, the Company shall
be entitled to assume the defense of any such action or proceeding with counsel
reasonably satisfactory to the Indemnified Person. Upon assumption by the
Company of the defense of any such action or proceeding, the Indemnified Person
shall have the right to participate in such action or proceeding and to retain
its own counsel, but the Company shall not be liable for any legal expenses of
other counsel subsequently incurred by such Indemnified Person in connection
with the defense thereof unless the Company shall have failed to employ counsel
reasonably satisfactory to the Indemnified Person in a timely manner. the
Company shall not have any obligation to pay for more than one counsel of the
Indemnified Persons.

 

AA-3