EMPLOYEES IN CONNECTION WITH THE PERFORMANCE OF STONEGATE'S
SERVICES UNDER THIS AGREEMENT.
FOR THESE PURPOSES, "OUT-OF-POCKET EXPENSES"
SHALL INCLUDE, BUT NOT BE LIMITED TO LONG DISTANCE TELEPHONE, FACSIMILE,
COURIER, MAIL, SUPPLIES, TRAVEL AND SIMILAR EXPENSES; PROVIDED, HOWEVER, THAT NO
DIRECTOR, OFFICER OR EMPLOYEE OF STONEGATE SHALL UNDERTAKE ANY TRAVEL FOR OR ON
BEHALF OF THE COMPANY WITHOUT THE PRIOR AUTHORIZATION OF THE COMPANY.
(D)
UPON CLOSING OF THE PLACEMENT AND EXECUTION AND DELIVERY OF
EVIDENCE OF ITS STATUS AS AN ACCREDITED INVESTOR IN FORM AND SUBSTANCE
REASONABLY ACCEPTABLE TO THE COMPANY AND ITS COUNSEL, THE COMPANY AGREES TO
ISSUE TO STONEGATE A SECURITIES PURCHASE WARRANT (THE "REPRESENTATIVE'S
WARRANT") ENTITLING THE HOLDER(S) THEREOF TO PURCHASE AN AMOUNT OF SHARES OF THE
COMPANY'S COMMON STOCK EQUAL TO SIX PERCENT (6%) OF THE GROSS PROCEEDS RECEIVED
IN THE PLACEMENT FROM QUALIFIED PURCHASERS AT AN EXERCISE PRICE EQUAL TO THE PER
SHARE EXERCISE PRICE OF THE UNDERLYING THE WARRANTS RECEIVED BY THE QUALIFIED
PURCHASERS RELATIVE TO THEIR INVESTMENT IN THE PLACEMENT (OR IF NO SUCH WARRANTS
ARE ISSUED, THE CONVERSION PRICE OF ANY CONVERTIBLE SECURITIES OR THE PER SHARE
PURCHASE PRICE OF ANY COMMON STOCK, AS APPLICABLE) ISSUED IN THE PLACEMENT).
THE REPRESENTATIVE'S WARRANT SHALL BE EXERCISABLE FOR A PERIOD OF FIVE (5) YEARS
AT AN EXERCISE PRICE PER SHARE EQUAL TO THE PRICE AT WHICH THE SECURITIES ARE
SOLD TO PURCHASERS.
THE REPRESENTATIVE'S WARRANT SHALL OTHERWISE BE
SUBSTANTIALLY IN THE FORM OF EXHIBIT A ATTACHED HERETO.
(E)
THE OBLIGATIONS OF THE PARTIES UNDER THIS SECTION 6 SHALL SURVIVE
THE TERMINATION OF THIS AGREEMENT FOR ANY REASON.
7.
INDEMNIFICATION.
(A)
THE COMPANY AGREES TO INDEMNIFY AND HOLD STONEGATE HARMLESS FROM
AND AGAINST ANY AND ALL LOSSES, CLAIMS, DAMAGES OR LIABILITIES (OR ACTIONS,
INCLUDING SECURITYHOLDER ACTIONS, IN RESPECT THEREOF) RELATED TO OR ARISING OUT
OF STONEGATE'S ENGAGEMENT HEREUNDER OR ITS ROLE IN CONNECTION HEREWITH, AND WILL
REIMBURSE STONEGATE FOR ALL REASONABLE EXPENSES (INCLUDING REASONABLE COSTS,
EXPENSES, AWARDS AND COUNSEL FEES
4
AND/OR JUDGMENTS) AS THEY ARE INCURRED BY STONEGATE IN CONNECTION WITH
INVESTIGATING, PREPARING FOR OR DEFENDING ANY SUCH ACTION OR CLAIM, WHETHER OR
NOT IN CONNECTION WITH PENDING OR THREATENED LITIGATION IN WHICH STONEGATE IS A
PARTY.
THE COMPANY WILL NOT, HOWEVER, BE RESPONSIBLE FOR ANY CLAIMS,
LIABILITIES, LOSSES, DAMAGES OR EXPENSES WHICH ARE FINALLY JUDICIALLY DETERMINED
TO HAVE RESULTED PRIMARILY FROM THE BAD FAITH, GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT , OR RECKLESS DISREGARD OF ITS OBLIGATIONS OR DUTIES OF OR BY
STONEGATE OR ANY OF ITS OFFICERS, DIRECTORS OR EMPLOYEES (COLLECTIVELY,
"EXCLUDED CLAIMS").
THE COMPANY ALSO AGREES THAT STONEGATE SHALL NOT HAVE ANY
LIABILITY TO THE COMPANY FOR OR IN CONNECTION WITH SUCH ENGAGEMENT, EXCEPT FOR
ANY SUCH LIABILITY FOR LOSSES, CLAIMS, DAMAGES, LIABILITIES OR EXPENSES INCURRED
BY THE COMPANY THAT RESULT PRIMARILY FROM AN EXCLUDED CLAIM .
IN THE EVENT THAT
THE FOREGOING INDEMNITY IS UNAVAILABLE (EXCEPT BY REASON OF AN EXCLUDED CLAIM),
THEN THE COMPANY SHALL CONTRIBUTE TO AMOUNTS PAID OR PAYABLE BY STONEGATE IN
RESPECT OF ITS LOSSES, CLAIMS,