EXHIBIT 99.4
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DONOBI, INC.
PLACEMENT AGENT AGREEMENT
Dated as of: October 27, 2004
Newbridge Securities Corporation
0000 Xxxxxxx Xxxxx Xxxx, Xxxxx 000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Ladies and Gentlemen:
The undersigned, Donobi, Inc., a Nevada corporation (the "Company"), hereby
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agrees with Newbridge Securities Corporation (the "Placement Agent") and Cornell
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Capital Partners, LP, a Delaware Limited Partnership (the "Investor"), as
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follows:
Offering. The Company hereby engages the Placement Agent to act as its
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exclusive placement agent in connection with the Standby Equity Distribution
Agreement dated the date hereof (the "Standby Equity Distribution Agreement"),
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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
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Five Million U.S. Dollars ($5,000,000) of the Company's common stock (the
"Commitment Amount"), par value $0.001 per share (the "Common Stock"), at price
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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
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connection with the Offering, including, but not limited, to the Company's
latest Quarterly Report on Form 10-QSB as filed with the United States
Securities and Exchange Commission, this Agreement, the Standby Equity
Distribution Agreement, the Registration Rights Agreement, and the Escrow
Agreement dated the date hereof (the "Escrow Agreement"), are referred to
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sometimes hereinafter collectively as the "Offering Materials." The Company's
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Common Stock purchased by the Investor hereunder or to be issued in connection
with the conversion of any debentures are sometimes referred to hereinafter as
the "Securities." The Placement Agent shall not be obligated to sell any
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Securities.
Compensation.
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1. Upon the execution of this Agreement, the Company shall issue to the
Placement Agent or its designee shares of the Company's Common Stock in an
amount equal to Ten Thousand U.S. Dollars (US$10,000) divided by the volume
weighted average price of the Company's Common Stock, as quoted by Bloomberg,
LP, on the date hereof (the "Placement Agent's Shares"). The Placement Agent
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shall be entitled to "piggy-back" registration rights, which shall be triggered
upon registration of any shares of Common Stock by the Investor with respect to
the Placement Agent's Shares pursuant to the Registration Rights Agreement dated
the date hereof.
Representations, Warranties and Covenants of the Placement Agent.
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2. 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
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Securities Exchange Act of 1934 (the "1934 Act"), the respective rules
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and regulations promulgated thereunder (the "Rules and Regulations")
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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.
Representations and Warranties of the Company.
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3. The Company represents and warrants as follows:
i. The execution, delivery and performance of each of this Agreement, the
Standby Equity Distribution Agreement, the Escrow 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 Agreement,
the Standby Equity Distribution Agreement, the Escrow 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, the
Standby Equity Distribution Agreement and the certificates/instruments
representing such Securities, 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, dated the date
hereof 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 has been duly authorized
and, when issued and paid for in accordance with this Agreement, the
Standby Equity Distribution Agreement and the Compensation Debenture,
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.
vi. The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Nevada.
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 the Escrow Agreement, 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 Standby
Equity Distribution Agreement 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 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 and the securities offered pursuant to
the Securities Purchase Agreement dated the date hereof, 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.
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. Except as described in the Offering Materials, the Company is not
under any obligation to pay royalties or fees of any kind whatsoever
to any third party with respect to any trademarks, service marks,
copyrights, service names, trade names, patents, patent applications,
licenses or technology it has developed, uses, employs or intends to
use or employ, other than to their respective licensors.
xiii.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.
xiv. 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
xv. 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.
Representations, Warranties and Covenants of the Investor.
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4. The Investor represents, warrants and covenants as follows:
i. The Investor has the necessary power to enter into this Agreement and
to consummate the transactions contemplated hereby.
ii. The execution and delivery by the Investor 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 Investor is a party or
by which the Investor or its properties are bound, or any judgment,
decree, order or, to the Investor's knowledge, any statute, rule or
regulation applicable to the Investor. This Agreement when executed
and delivered by the Investor, will constitute the legal, valid and
binding obligations of the Investor, 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. The Investor will promptly forward copies of any and all due diligence
questionnaires compiled by the Investor to the Placement Agent.
iv. The Investor is an Accredited Investor (as defined under the 1933
Act).
v. The Investor is acquiring the Securities for the Inventor's own
account as principal, not as a nominee or agent, for investment
purposes only, and not with a view to, or for, resale, distribution or
fractionalization thereof in whole or in part and no other person has
a direct or indirect beneficial interest in such Securities. Further,
the Investor does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant participations
to such person or to any third person, with respect to any of the
Securities.
vi. The Investor acknowledges the Investor's understanding that the
offering and sale of the Securities is intended to be exempt from
registration under the 1933 Act by virtue of Section 3(b) of the 1933
Act and the provisions of Regulation D promulgated thereunder
("Regulation D"). In furtherance thereof,
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the Investor represents and warrants as follows:
The Investor has the financial ability to bear the economic risk
of the Investor's investment, has adequate means for providing for the
Inventor's current needs and personal contingencies and has no need
for liquidity with respect to the Investor's investment in the
Company; and
The Investor has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks
of the prospective investment. The Inventor also represents it has not
been organized for the purpose of acquiring the Securities.
vii. The Investor has been given the opportunity for a reasonable time
prior to the date hereof to ask questions of, and receive answers
from, the Company or its representatives concerning the terms and
conditions of the Offering, and other matters pertaining to this
investment, and has been given the opportunity for a reasonable time
prior to the date hereof to obtain such additional information in
connection with the Company in order for the Investor to evaluate the
merits and risks of purchase of the Securities, to the extent the
Company possesses such information or can acquire it without
unreasonable effort or expense. The Investor is not relying on the
Placement Agent or any of its affiliates with respect to the accuracy
or completeness of the Offering Materials or for any economic
considerations involved in this investment.
Certain Covenants and Agreements of the Company.
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The Company covenants and agrees at its expense and without any expense to
the Placement Agent as follows:
5. To advise the Placement Agent and the Investor 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.
6. 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 and the Investor shall reasonably request.
Qualification, registration and exemption charges and fees shall be at the sole
cost and expense of the Company.
7. Upon written request, to provide and continue to provide the Placement
Agent and the Investor 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.
8. To deliver, during the registration period of the Standby Equity
Distribution Agreement, to the Investor upon the Investor's request, within
forty five (45) days, a statement of its income for each such quarterly period,
and its balance sheet and a statement of changes in stockholders' equity as of
the end of such quarterly period, all in reasonable detail, certified by its
principal financial or accounting officer; (ii) within ninety (90) days after
the close of each fiscal year, its balance sheet as of the close of such fiscal
year, together with a statement of income, a statement of changes in
stockholders' equity and a statement of cash flow for such fiscal year, such
balance sheet, statement of income, statement of changes in stockholders' equity
and statement of cash flow to be in reasonable detail and accompanied by a copy
of the certificate or report thereon of independent auditors if audited
financial statements are prepared; and (iii) a copy of all documents, reports
and information furnished to its stockholders at the time that such documents,
reports and information are furnished to its stockholders.
9. To comply with the terms of the Offering Materials.
10. 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.
Indemnification and Limitation of Liability.
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11. 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
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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.
12. 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 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.
13. The Investor 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 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) the conduct of the Investor or its
officers, employees or representatives in its acting as the Investor for the
Offering, (ii) the material breach of any representation, warranty, covenant or
agreement made by the Investor in the Offering Materials, or (iii) any false or
misleading information provided to the Placement Agent by one of the Investor's
indemnified persons.
14. The Placement Agent hereby agrees that it will indemnify and hold the
Investor and each officer, director, shareholder, employee or representative of
the Investor, and each person controlling, controlled by or under common control
with the Investor 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 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 Investor or such indemnified person of the Investor 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 the material breach of any representation, warranty,
covenant or agreement made by the Placement Agent in this Agreement.
15. Promptly after receipt by an indemnified party of notice of commencement
of any action covered by Section 7(A), (B), (C) or (D), 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), (B), (C), or (D) 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.
16. 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 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(F), 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.
17. 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.
18. 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.
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 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.
Conditions of Closing.
-----------------------
The Closing shall be held at the offices of the Investor or its counsel.
The obligations of the Placement Agent hereunder shall be subject to the
continuing accuracy of the representations and warranties of the Company and the
Investor herein as of the date hereof and as of the Date of Closing (the
"Closing Date") with respect to the Company or the Investor, as the case may be,
------------
as if it had been made on and as of such Closing Date; the accuracy on and as of
the Closing Date of the statements of the officers of the Company made pursuant
to the provisions hereof; and the performance by the Company and the Investor on
and as of the Closing Date of its covenants and obligations hereunder and to the
following further conditions:
19. Upon the effectiveness of a registration statement covering the Standby
Equity Distribution Agreement, the Investor and the Placement Agent shall
receive the opinion of Counsel to the Company, dated as of the date thereof,
which opinion shall be in form and substance reasonably satisfactory to the
Investor, their counsel and the Placement Agent.
20. At or prior to the Closing, the Investor and the Placement Agent shall
have been furnished such documents, certificates and opinions as it may
reasonably require for the purpose of enabling them 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.
21. At and prior to the Closing, (i) there shall have been no material
adverse change nor development involving a prospective change in the condition
or prospects or the business activities, financial or otherwise, of the Company
from the latest dates as of which such condition is set forth in the Offering
Materials; (ii) there shall have been no transaction, not in the ordinary course
of business except the transactions pursuant to the Securities Purchase
Agreement entered into by the Company on the date hereof which has not been
disclosed in the Offering Materials or to the Placement Agent in writing; (iii)
except as set forth in the Offering Materials, the Company shall not be in
default under any provision of any instrument relating to any outstanding
indebtedness for which a waiver or extension has not been otherwise received;
(iv) except as set forth in the Offering Materials, the Company shall not have
issued any securities (other than those to be issued as provided in the Offering
Materials) or declared or paid any dividend or made any distribution of its
capital stock of any class and there shall not have been any change in the
indebtedness (long or short term) or liabilities or obligations of the Company
(contingent or otherwise) and trade payable debt; (v) no material amount of the
assets of the Company shall have been pledged or mortgaged, except as indicated
in the Offering Materials; and (v) no action, suit or proceeding, at law or in
equity, against the Company or affecting any of its properties or businesses
shall be pending or threatened before or by any court or federal or state
commission, board or other administrative agency, domestic or foreign, wherein
an unfavorable decision, ruling or finding could materially adversely affect the
businesses, prospects or financial condition or income of the Company, except as
set forth in the Offering Materials.
22. If requested at Closing the Investor and the Placement Agent shall
receive a certificate of the Company signed by an executive officer and chief
financial officer, dated as of the applicable Closing, to the effect that the
conditions set forth in subparagraph (C) above have been satisfied and that, as
of the applicable closing, the representations and warranties of the Company set
forth herein are true and correct.
23. The Placement Agent shall have no obligation to insure that (x) any
check, note, draft or other means of payment for the Common Stock will be
honored, paid or enforceable against the Investor in accordance with its terms,
or (y) subject to the performance of the Placement Agent's obligations and the
accuracy of the Placement Agent's representations and warranties hereunder, (1)
the Offering is exempt from the registration requirements of the 1933 Act or any
applicable state "Blue Sky" law or (2) the Investor is an Accredited Investor.
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.
The rights of the Investor and the obligations of the Company under the
Registration Rights Agreement, and the rights of the Placement Agent and the
obligations of the Company shall survive the termination of this Agreement
unabridged.
Miscellaneous.
-------------
24. 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.
25. 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
0000 Xxxxxxx Xxxxx Xxxx, Xxxxx 000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxx Xxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Company, to: Donobi, Inc.
0000 Xxxxx Xxx XX
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx, III
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to: Xxxxxxxxxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxxxxx Xxxxxxxxx - Xxxxx 0000
Xxxxx, XX 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Investor: Cornell Capital Partners, LP
000 Xxxxxx Xxxxxx - Xxxxx 0000
Xxxxxx Xxxx, Xxx Xxxxxx 00000
Attention: Xxxx X. Xxxxxx
Portfolio Manager
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With copies to: Xxxxx Xxxxxxxx, Esq.
000 Xxxxxx Xxxxxx - Xxxxx 0000
Xxxxxx Xxxx, Xxx Xxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
26. This Agreement shall be governed by and construed in all respects under
the laws of the State of Nevada, 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 New Jersey 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 New Jersey 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.
27. 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.
28. 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 INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
COMPANY:
DONOBI, INC.
By: /s/ Xxxxxxx Xxxxxx, III
--------------------------
Name: Xxxxxxx Xxxxxx, III
Title: Chief Executive Officer
PLACEMENT AGENT:
NEWBRIDGE SECURITIES CORPORATION
By: /s/ Xxx X. Xxxxx
-------------------
Name: Xxx X. Xxxxx
Title: President
INVESTOR:
CORNELL CAPITAL PARTNERS, LP
BY: YORKVILLE ADVISORS, LLC
ITS: GENERAL PARTNER
By: /s/Xxxx X. Xxxxxx
-------------------
Name: Xxxx X. Xxxxxx
Title: Portfolio Manager
