EYI INDUSTRIES INC.
PLACEMENT AGENT AGREEMENT
Dated as of: May 13, 2005
Newbridge Securities Corporation
0000 Xxxxxxx Xxxxx Xxxx, Xxxxx 000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Ladies and Gentlemen:
The undersigned, EYI Industries, Inc., a Nevada corporation (the
"Company"), hereby agrees with Newbridge Securities Corporation (the
"Placement Agent") and Cornell Capital Partners, LP, a Delaware
Limited Partnership (the "Investor"), as follows:
1. Offering. The Company hereby engages the Placement
Agent to act as its exclusive placement agent in connection with the
Standby Equity Distribution Agreement dated the date hereof (the
"Standby Equity Distribution Agreement"), pursuant to which the
Company shall issue and sell to the Investor, from time to time, and the
Investor shall purchase from the Company (the "Offering") up to Ten
Million U.S. Dollars ($10,000,000) of the Company's common stock (the
"Commitment Amount"), par value US$0.001 per share (the "Common
Stock"), at price per share equal to the Purchase Price, as that term is
defined in the Standby Equity Distribution Agreement. The Placement
Agent services shall consist of reviewing the terms of the Standby Equity
Distribution Agreement and advising the Company with respect to those
terms.
All capitalized terms used herein and not otherwise defined herein
shall have the same meaning ascribed to them as in the Standby Equity
Distribution Agreement. The Investor will be granted certain registration
rights with respect to the Common Stock as more fully set forth in the
Registration Rights Agreement between the Company and the Investor
dated the date hereof (the "Registration Rights Agreement"). The
documents to be executed and delivered in connection with the Offering,
including, but not limited, to the Company's latest Quarterly Report on
Form 10-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 sometimes hereinafter collectively as the "Offering Materials." The
Company's 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 Securities.
2. Compensation.
A. The Placement Agent and the Company hereby
acknowledge and agree that the Company previously issued to the
Placement Agent Thirty-Three Thousand Four Hundred and
Eleven (33,411) shares of the Company's Common Stock (the
"Placement Agent's Shares"). The Placement Agent 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.
3. Representations, Warranties and Covenants of the
Placement Agent.
A. The Placement Agent represents, warrants and
covenants as follows:
(i) The Placement Agent has the necessary
power to enter into this Agreement and to consummate the transactions
contemplated hereby.
(ii) The execution and delivery by the
Placement Agent of this Agreement and the consummation of the
transactions contemplated herein will not result in any violation of, or be
in conflict with, or constitute a default under, any agreement or
instrument to which the Placement Agent is a party or by which the
Placement Agent or its properties are bound, or any judgment, decree,
order or, to the Placement Agent's knowledge, any statute, rule or
regulation applicable to the Placement Agent. This Agreement when
executed and delivered by the Placement Agent, will constitute the legal,
valid and binding obligations of the Placement Agent, enforceable in
accordance with their respective terms, except to the extent that (a) the
enforceability hereof or thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws from time to time
in effect and affecting the rights of creditors generally, (b) the
enforceability hereof or thereof is subject to general principles of equity,
or (c) the indemnification provisions hereof or thereof may be held to be
in violation of public policy.
(iii) Upon receipt and execution of this
Agreement, the Placement Agent will promptly forward copies of this
Agreement to the Company or its counsel and the Investor or its counsel.
(iv) The Placement Agent will not intentionally
take any action that it reasonably believes would cause the Offering to
violate the provisions of the Securities Act of 1933, as amended (the
"1933 Act"), the Securities Exchange Act of 1934 (the "1934 Act"), the
respective rules and regulations promulgated thereunder (the "Rules and
Regulations") or applicable "Blue Sky" laws of any state or jurisdiction.
(v) The Placement Agent is a member of the
National Association of Securities Dealers, Inc., and is a broker-dealer
registered as such under the 1934 Act and under the securities laws of the
states in which the Securities will be offered or sold by the Placement
Agent unless an exemption for such state registration is available to the
Placement Agent. The Placement Agent is in material compliance with
the rules and regulations applicable to the Placement Agent generally and
applicable to the Placement Agent's participation in the Offering.
4. Representations and Warranties of the Company.
A. The Company represents and warrants as follows:
(i) The execution, delivery and performance of
each of this Agreement, the Standby Equity Distribution Agreement, 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 and the Standby Equity Distribution
Agreement, 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.
5. Representations, Warranties and Covenants of the
Investor.
A. 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. 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, the Investor
represents and warrants as follows:
(a) 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
(b) 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.
6. Certain Covenants and Agreements of the Company.
The Company covenants and agrees at its expense and without
any expense to the Placement Agent as follows:
A. To advise the Placement Agent 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.
B. To use its commercially reasonable efforts to cause
the Common Stock issuable in connection with the Standby Equity
Distribution Agreement to be qualified or registered for sale on terms
consistent with those stated in the Registration Rights Agreement and
under the securities laws of such jurisdictions as the Placement Agent and
the Investor shall reasonably request. Qualification, registration and
exemption charges and fees shall be at the sole cost and expense of the
Company.
C. Upon written request, to provide and continue to
provide the Placement Agent 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.
D. 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.
E. To comply with the terms of the Offering
Materials.
F. 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.
7. Indemnification and Limitation of Liability.
A. The Company hereby agrees that it will indemnify
and hold the Placement Agent and each officer, director, shareholder,
employee or representative of the Placement Agent and each person
controlling, controlled by or under common control with the Placement
Agent within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act or the SEC's Rules and Regulations promulgated
thereunder (the "Rules and Regulations"), harmless from and against any
and all loss, claim, damage, liability, cost or expense
whatsoever (including, but not limited to, any and all reasonable legal
fees and other expenses and disbursements incurred in connection with
investigating, preparing to defend or defending any action, suit or
proceeding, including any inquiry or investigation, commenced or
threatened, or any claim whatsoever or in appearing or preparing for
appearance as a witness in any action, suit or proceeding, including any
inquiry, investigation or pretrial proceeding such as a deposition) to
which the Placement Agent or such indemnified person of the Placement
Agent may become subject under the 1933 Act, the 1934 Act, the Rules
and Regulations, or any other federal or state law or regulation, common
law or otherwise, arising out of or based upon (i) any untrue statement or
alleged untrue statement of a material fact contained in (a) Section 4 of
this Agreement, (b) the Offering Materials (except those written
statements relating to the Placement Agent given by the Placement Agent
for inclusion therein), (c) any application or other document or written
communication executed by the Company or based upon written
information furnished by the Company filed in any jurisdiction in order
to qualify the Common Stock under the securities laws thereof, or any
state securities commission or agency; (ii) the omission or alleged
omission from documents described in clauses (a), (b) or (c) above of a
material fact required to be stated therein or necessary to make the
statements therein not misleading; or (iii) the breach of any
representation, warranty, covenant or agreement made by the Company
in this Agreement. The Company further agrees that upon demand by an
indemnified person, at any time or from time to time, it will promptly
reimburse such indemnified person for any loss, claim, damage, liability,
cost or expense actually and reasonably paid by the indemnified person
as to which the Company has indemnified such person pursuant hereto.
Notwithstanding the foregoing provisions of this Paragraph 7(A), any
such payment or reimbursement by the Company of fees, expenses or
disbursements incurred by an indemnified person in any proceeding in
which a final judgment by a court of competent jurisdiction (after all
appeals or the expiration of time to appeal) is entered against the
Placement Agent or such indemnified person based upon specific finding
of fact that the Placement Agent or such indemnified person's gross
negligence or willful misfeasance will be promptly repaid to the
Company.
B. The Placement Agent hereby agrees that it will
indemnify and hold the Company and each officer, director, shareholder,
employee or representative of the Company, and each person controlling,
controlled by or under common control with the Company within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act or
the Rules and Regulations, harmless from and against any and all loss,
claim, damage, liability, cost or expense whatsoever (including, but not
limited to, any and all reasonable legal fees and other expenses and
disbursements incurred in connection with investigating, preparing to
defend or defending any action, suit or proceeding, including any inquiry
or investigation, commenced or threatened, or any claim whatsoever or in
appearing or preparing for appearance as a witness in any action, suit or
proceeding, including any inquiry, investigation or pretrial proceeding
such as a deposition) to which the Company or such indemnified person
of the Company may become subject under the 1933 Act, the 1934 Act,
the Rules and Regulations, or any other federal or state law or regulation,
common law or otherwise, arising out of or based upon (i) the material
breach of any representation, warranty, covenant or agreement made by
the Placement Agent in this Agreement, or (ii) any false or misleading
information provided to the Company in writing by one of the Placement
Agent's indemnified persons specifically for inclusion in the Offering
Materials.
C. 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.
D. 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.
E. 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.
F. 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.
G. 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.
H. 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.
8. 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.
9. 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:
A. 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.
B. 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.
C. 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.
D. 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.
E. 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.
10. 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.
11. Miscellaneous.
A. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all
which shall be deemed to be one and the same instrument.
B. Any notice required or permitted to be given
hereunder shall be given in writing and shall be deemed effective when
deposited in the United States mail, postage prepaid, or when received if
personally delivered or faxed (upon confirmation of receipt received by
the sending party), addressed as follows to such other address of which
written notice is given to the others):
If to Placement Agent, to:
Newbridge Securities Corporation
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:
EYI Industries, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxx, XX X0X 0X0
Attention: Xxx Xxxxxxxx, President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Xxxxxxxxxxx & Xxxxxxxx Xxxxxxxxx
Xxxxxx LLP
000 Xxxxx Xxxxxxxx Xxxxxxxxx Xxxxx
0000
Xxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
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:
Cornell Capital Partners, LP
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, Xxx Xxxxxx 00000
Attention: Xxxxx Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
C. 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.
D. This Agreement and the other agreements
referenced herein contain the entire understanding between the parties
hereto and may not be modified or amended except by a writing duly
signed by the party against whom enforcement of the modification or
amendment is sought.
E. If any provision of this Agreement shall be held to
be invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provision of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
COMPANY:
EYI INDUSTRIES, INC.
By: /s/ Xxx Xxxxxxxx
Name: Xxx Xxxxxxxx
Title: President
PLACEMENT AGENT:
NEWBRIDGE
SECURITIES
CORPORATION
By:
Name: Xxx X. Xxxxx
Title: President
INVESTOR:
CORNELL CAPITAL
PARTNERS, LP
By: Yorkville
Advisors, LLC
Its: General Partner
By:/s/ Xxxx Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Portfolio Manager
