Exhibit 10.3
July 30, 2008
PRIVATE & CONFIDENTIAL
----------------------
Bernard Beck
Chairman & Chief Executive Officer
Elite Pharmaceutical, Inc.
165 Ludlow Avenue
Northvale, NJ 07647
Dear Mr. Berk:
This
letter will serve as the engagement agreement ("AGREEMENT") between
Elite Pharmaceuticals,
Inc. (the "COMPANY"),
ROTH Capital
Partners, LLC and
Boenning & Scattergood, Inc. (the "PLACEMENT AGENTS") and amends and
replaces
the letter
agreement dated as of April 24, 2008 among the Company and the
Placement Agents.
The Company agrees to
engage the Placement
Agents to act as
its co-lead placement
agents for a financing in the form of a private financing
(a "PRIVATE
PLACEMENT") of up to
approximately $5
million through a privately
negotiated sale of common stock or convertible preferred stock (in either
case,
the "SHARES") of the Company.
1. SERVICES OF
THE PLACEMENT AGENTS
--------------------------------
The
Placement Agents are prepared to commence work immediately, including
beginning their due diligence activities and assisting the
Company in preparing
and providing
its publicly filed documents or other reasonably requested
materials ("OFFERING
MATERIALS")
for prospective purchasers in the Private
Placement. The
Placement Agents will also advise the Company in structuring
the
Private Placement. The
Placement Agents will further: (a) identify and contact
suitable
investors; (b)
respond to questions, coordinate requests for
information and
meetings with the Company and solicit commitments from
investors, and (c) otherwise assist in closing the Private
Placement.
It
is understood,
that the decision to
proceed with, and the
final terms
of, the Private Placement will depend on the satisfactory results of the
Placement Agents' due
diligence
investigation
(including review of
legal and
accounting issues),
the Company's business
prospects,
prevailing
securities
market conditions at the time of the Private Placement and final
approval by the
Placement Agents'
respective
Commitment
Committees.
It is understood that
execution of this
Agreement does not
assure the successful
completion of the
Private Placement.
The
Placement Agents agree
that the Company shall be notified, in writing
or by email, of each potential investor contacted by the Placement
Agents.
2. THE COMPANY'S
ACTIONS AND RESPONSIBILITIES
------------------------------------------
In
connection with Placement Agents' activities:
(a) The Company will comply with all applicable securities and other
laws in connection with the Private Placement including, without limitation,
making all appropriate
filings with
applicable
federal and state
securities
commissions or authorities, if so required,
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Elite Pharmaceuticals, Inc.
July ___, 2008
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(b) The Company
authorizes
the Placement Agents to transmit the
Offering Materials to prospective purchasers in the Private
Placement, as may be
identified to the Company, and represents and warrants that the
information that
it provides to be included in the Offering Materials, at all times through the
closing, will not
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 contained
therein, in light of the circumstances
under which they
were made, not misleading. The Company shall not transmit the
Offering Materials
to any prospective purchasers without first advising the Placement
Agents, other
than as may be provided through any co-placement agent.
(c) The Company
represents and warrants that: (i) the representations
and warranties
contained in each purchase agreement with investors (the
"PURCHASE AGREEMENT")
will be true and correct in all respects on the date such
Purchase Agreement is entered into and as of the closing date of
the sale of the
Shares to which such Purchase Agreement relates, and (ii) the Placement Agents
shall be entitled to rely on such representations and warranties as
if they were
made directly to the
Placement Agents. The Placement Agents shall also be
entitled to rely upon any opinions of counsel delivered to any purchaser in
the
Private Placement,
including, without
limitation, any opinions relating to the
registration statement.
(d) The Company shall establish an escrow account (the "ESCROW
ACCOUNT") with a suitable financial institution agreeable to the
Company and the
Placement Agents (the "ESCROW AGENT"), and shall enter into an escrow
agreement
(the "ESCROW
AGREEMENT") with the Escrow Agent. Upon the closing of the
Private
Placement (or each
such closing if there
shall be more than
one), the Escrow
Agent shall deliver to the Company, by wire transfer of immediately available
funds, the funds
deposited in the Escrow Account in payment for the securities,
less (x) the amounts
payable to the Escrow
Agent pursuant to the
terms of the
Escrow Agreement,
and (y) the amounts
payable to the Placement Agents pursuant
to Section 3 hereof.
(e) The Company
will not authorize any other person to act on its
behalf as investment
banker with respect to a Private Placement for a period of
90 days, commencing
on the date of this
letter, other than such additional
co-placement agents as
to which the Company shall have provided notice to the
Placement Agents,
subject to the consent of the Placement Agents, which consent
shall not be unreasonably withheld, conditioned or delayed;
PROVIDED that any
such co-placement agent has entered into a Co-Placement Agent
Agreement with the
Placement Agents, a form of which has been provided to the Company.
Nonetheless,
the Placement
Agents reserve the right to involve
other Financial Industry
Regulatory Authority.
Inc. ("FINRA") member
Broker Dealers in good standing in
the Private Placement,
subject to the approval of the Company, which shall not
be unreasonably withheld.
3. FEES &
EXPENSES
---------------
(a) As compensation
for the services to be
provided by the
Placement
Agents hereunder,
the Company agrees to
pay to the Placement Agents a cash fee
equal to 6.5% of the gross proceeds of the Private Placement payable at the
closing of the Private
Placement. In
addition, the Placement Agents shall
receive at the closing of the Private Placement a five-year
non-callable warrant
to purchase that number of shares of the Company's common stock
equal to 4.0% of
the number of shares of the Company's common stock sold in the
Private Placement
(on an as-converted basis if shares of the Company's preferred
stock are sold in
the Private Placement)
to investors contacted
by the Placement Agents with the
approval of the Company at a price per share equal to the greater
of (i) 110% of
the conversion price per share of the common stock sold in the
Private Placement
(or in the case of convertible preferred stock, 110% of the price at which the
convertible preferred
stock may be converted
into common stock, as of the date
of the closing of the Private Placement), and (ii) the market price
per
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Elite Pharmaceuticals, Inc.
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share of the Company's
common stock on the initial closing date. If the Private
Placement is consummated by means of more than one closing, the
Placement Agents
shall be entitled to the fees and warrants provided herein with respect to
each
such closing.
(b) In addition to the foregoing fees, and regardless of whether any
Private Placement is
consummated,
the Company
shall reimburse the Placement
Agents for all reasonable out-of-pocket expenses incurred from time to
time in
connection with the provision of the services hereunder, including reasonable
fees and expenses of its counsel, travel-related expenses (without regard to
volume- based or
similar credits or
rebates the Placement
Agents may receive
from travel agents,
airlines and other vendors on a periodic basis), research,
database and
similar information charges paid to third party vendors, and
postage,
telecommunication and duplicating expenses. Such fees will be limited
in the aggregate to $30,000 without prior written consent of the
Company.
4. TERMS OF
ENGAGEMENT
-------------------
The
Company or the Placement Agents may terminate the Agreement anytime
after the close of business on August 31. 2008 (the "TERMINATION
DATE"), with or
without cause by notifying the other in writing 10 days prior to
the Termination
Date. This Agreement
shall terminate, without further action by either
party
upon the earlier of (i) the date of the closing of the Private
Placement,
(ii)
provision by either party of written notice and expiration of the
10-day period
described above,
and (iii) the Termination Date. Following the Company's
termination of
this Agreement, if the Company, on or before the first
anniversary of the date of such termination, sells securities of the Company
to
any investors
contacted by the Placement Agents in connection with the
Private
Placement, the Company will pay to the Placement Agents the fees
that would have
been payable
to the Placement Agents in accordance with Section 3 above.
Termination of the Agreement shall not affect the Placement Agents'
right (a) to
indemnification, contribution or reimbursement of expenses under
this Agreement,
or (b) to any amounts owed on or prior to the date of such
termination.
Without
limiting the foregoing, notwithstanding the expiration of this Agreement,
the
provisions of Sections 3 through 8, including, without limitation
the obligation
to pay additional
cash fees and issue additional warrants upon additional
closings of the Private Placement, shall remain operative in accordance
with
their respective terms.
5.
INDEMNIFICATION
---------------
The
Company
agrees
to provide indemnification,
contribution
and
reimbursement to the Placement Agents and certain other parties,
including any
co-placement agents in
accordance with,
and the Company
further agrees to
be
bound by, the limitations on liability and other provisions set forth in
SCHEDULE A attached hereto, which SCHEDULE A is incorporated
herein and made a
part hereof.
6. INFORMATION
PROVIDED TO THE PLACEMENT AGENTS
--------------------------------------------
In
performing the services described above, the Company agrees to
furnish
or cause to be
furnished to the Placement Agents such information as the
Placement Agents reasonably believe appropriate to permit the
Placement Agents
to provide the services contemplated by this Agreement
(all such information so
furnished being the
"INFORMATION"). The
Company represents and
covenants that
all information
furnished by the Company or its agents
will be complete
and
correct in all material respects and that during the term of this
Agreement, the
Company will advise Placement Agents immediately of the occurrence of
any event
or any other change
known by the
Company or its agents
which results in the
Information ceasing to
be complete and
correct in all material respects. The
Company also represents and
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Elite Pharmaceuticals, Inc.
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warrants that any
projections
or forecasts
that it provides to
the Placement
Agents will be prepared in good faith and will be based upon
assumptions
which
the management of the Company
