PLACEMENT AGENCY AGREEMENT
Exhibit
10.1
| December 1, 2006 |
Wentworth
II, Inc.
000X
Xxxxxxxxx Xxxx., Xxxxx 00
Xxxx
Xxxxx, XX 00000
Ladies
and Gentlemen:
Wentworth
II, Inc., a Delaware corporation (the “Company”),
hereby confirms its agreement (this “Agreement”)
with
XXX, a Delaware limited liability company (the “Placement Agent”)
as
follows:
1.
Offering.
(a) The
Company will offer for sale through the Placement Agent, as exclusive agent
for
the Company, and its selected dealers, if any, a minimum of 200,000 shares
(the
“Shares”)
of its
common stock, par value $.01 per share (the “Common
Stock”)
(the
“Minimum
Offering”)
and a
maximum of 400,000 Shares (the “Maximum
Offering”)
at a
purchase price of $.50 per Share (the “Offering”).
The
Shares shall have the rights and privileges described in the Memorandum (as
defined below). Related persons and/or affiliates of the Placement Agent and
the
Company may, but are not obligated to, participate in the Offering, and any
such
investments will be counted to determine whether the Minimum and Maximum
Amounts, as applicable, have been satisfied.
(b)
Placement of the Shares by the Placement Agent will be made on a “best efforts”
basis. The minimum subscription for Shares shall be 2,000 Shares; provided,
however,
that
the Company and the Placement Agent may, in their mutual discretion, offer
a
lesser number of Shares. The Shares will be offered commencing on the date
of
the Memorandum for a period of up to 60 days unless extended by mutual agreement
of the Placement Agent and the Company for up to an additional 30 days, or
terminated earlier as provided herein (the “Offering
Period”).
The
date on which the Offering Period shall terminate shall be referred to as the
“Termination
Date.”
A
Final Closing (as hereinafter defined) may be held up to ten days after the
Termination Date.
(c)
Subscriptions for the Shares will be accepted by the Company at a price of
$.50
per Share; provided,
however,
that
the Placement Agent shall not tender to the Company and the Company shall not
accept subscriptions from, or sell Shares to, any persons or entities who do
not
qualify as “accredited investors,” as such term is defined in Rule 501 of
Regulation D promulgated under Section 4(2) (“Regulation
D”)
of the
Securities Act of 1933, as amended (the “Securities
Act”).
(d)
The
offering of the Shares will be made by the Placement Agent on behalf of the
Company solely pursuant to the Memorandum, which at all times will be in form
and substance acceptable to the Placement Agent, the Company and their
respective counsel, and shall contain such legends and other information as
the
Placement Agent, the Company and their respective counsel may, from time to
time, deem necessary and desirable to be set forth therein. The term
“Memorandum”
as
used
in this Agreement means the Company’s Confidential Private Placement Memorandum
dated December 1, 2006, inclusive of all annexes, supplements and appendices
thereto, if any. Unless otherwise defined, each capitalized term used in this
Agreement has the same meaning ascribed to it in the Memorandum.
2.
Representations,
Warranties and Covenants of the Company.
The
Company hereby represents, warrants and covenants to the Placement Agent
that:
(a)
The
Memorandum has been diligently prepared by the Company, in conformity with
all
applicable laws, and is in compliance with Regulation D, the Securities Act
and
the requirements of all other rules and regulations (the “Regulations”)
of the
Securities and Exchange Commission (the “SEC”)
relating to offerings of the type contemplated by the Offering, and the
applicable securities laws and the rules and regulations of those jurisdictions
wherein the Shares are to be offered and sold. The Shares will be offered and
sold pursuant to the registration exemption provided by Regulation D and Section
4(2) of the Securities Act as a transaction not involving a public offering
and
the requirements of any other applicable state securities laws and the
respective rules and regulations thereunder in those United States jurisdictions
in which the Placement Agent notifies the Company that the Shares are being
offered for sale. The Memorandum describes all material aspects, including
attendant risks, of an investment in the Company. The Company has not taken
nor
will it take any action that conflicts with the conditions and requirements
of,
or that would make unavailable with respect to the Offering, the exemption(s)
from registration available pursuant to Regulation D or Section 4(2) of the
Securities Act, and knows of no reason why any such exemption would be otherwise
unavailable to it. None of the Company, its predecessors or affiliates has
been
subject to any order, judgment or decree of any court of competent jurisdiction
temporarily, preliminarily or permanently enjoining such person for failing
to
comply with Section 503 of Regulation D.
(b)
The
Memorandum does not include 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: provided,
however,
the
foregoing does not apply to any statements or omissions made solely in reliance
on and in conformity with written information furnished to the Company by the
Placement Agent specifically for use in the preparation thereof. None of the
statements, documents, certificates or other items prepared or supplied by
the
Company with respect to the transactions contemplated hereby contains an untrue
statement of a material fact or omits to state a material fact necessary to
make
the statements contained therein not misleading in light of the circumstances
in
which they were made. There is no fact which the Company has not disclosed
in
the Memorandum and to the Placement Agent and its counsel in writing and of
which the Company is aware that materially adversely affects or that could
reasonably be expected to have a material adverse effect on the prospects,
financial condition, operations or assets of the Company or any of its
subsidiaries.
(c)
The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. The Company has no subsidiaries and
does not have an equity interest in any other firm, partnership, association
or
other entity.
(d)
The
Company has all corporate power and authority to conduct its business as
presently conducted and as proposed to be conducted (as described in the
Memorandum), to enter into and perform its obligations under this Agreement,
the
Subscription Agreement substantially in the form of Exhibit A to the Memorandum
(the “Subscription
Agreement”),
the
Registration Rights Agreement substantially in the form of Exhibit B to the
Memorandum (the “Registration
Rights Agreement”),
and
the other agreements contemplated hereby (this Agreement, the Subscription
Agreement, the Registration Rights Agreement and the other agreements
contemplated hereby are collectively referred to herein as the “Transaction
Documents”)
and to
issue, sell and deliver the Shares. Prior to the First Closing, as defined
herein, each of the Transaction Documents will have been duly authorized. This
Agreement has been duly authorized, executed and delivered and constitutes,
and
each of the other Transaction Documents, upon due execution and delivery, will
constitute, valid and binding obligations of the Company, enforceable against
the Company in accordance with their respective terms (i) except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
related to laws affecting creditors’ rights generally, including the effect of
statutory and other laws regarding fraudulent conveyances and preferential
transfers and (ii) subject to the limitations imposed by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding at law or in equity).
(e)
None
of the execution and delivery of, or performance by the Company under this
Agreement or any of the other Transaction Documents or the consummation of
the
transactions herein or therein contemplated conflicts with or violates, or
will
result in the creation or imposition of, any lien, charge or other encumbrance
upon any of the assets of the Company under any agreement or other instrument
to
which the Company is a party or by which the Company or its assets may be bound,
or any term of the certificate of incorporation or by-laws of the Company,
or
any license, permit, judgment, decree, order, statute, rule or regulation
applicable to the Company or any of its assets.
(f)
As of
the date of the First Closing (as defined in Section 5(c) hereof), the Company
will have the authorized and outstanding capital stock as has been described
in
the SEC Filings (as hereinafter defined). All outstanding shares of capital
stock of the Company are duly authorized, validly issued and outstanding, fully
paid and nonassessable. Except as described in the Memorandum, as of the date
of
the First Closing: (i) there will be no outstanding options, stock subscription
agreements, warrants or other rights permitting or requiring the Company or
others to purchase or acquire any shares of capital stock or other equity
securities of the Company or to pay any dividend or make any other distribution
in respect thereof; (ii) there will be no securities issued or outstanding
that
are convertible into or exchangeable for any of the foregoing and there are
no
contracts, commitments or understandings, whether or not in writing, to issue
or
grant any such option, warrant, right or convertible or exchangeable security;
(iii) no shares of stock or other securities of the Company are reserved for
issuance for any purpose; (iv) there will be no voting trusts or other
contracts, commitments, understandings, arrangements or restrictions of any
kind
with respect to the ownership, voting or transfer of shares of stock or other
securities of the Company, including without limitation, any preemptive rights,
rights of first refusal, proxies or similar rights, and (v) no person holds
a
right to require the Company to register any securities of the Company under
the
Securities Act or to participate in any such registration. As of the date of
the
First Closing, the issued and outstanding shares of capital stock of the Company
will conform to all statements in relation thereto contained in the Memorandum,
and the Memorandum describes all material terms and conditions thereof.
(g)
No
consent, authorization or filing of or with any court or governmental authority
is required in connection with the issuance or the consummation of the
transactions contemplated herein or in the other Transaction Documents, except
for required filings with the SEC and the applicable state securities
commissions relating specifically to the Offering (all of which filings will
be
duly made by, or on behalf of, the Company), other than those which are required
to be made after the First Closing (all of which will be duly made on a timely
basis).
(h)
The
Company’s financial statements, together with the related notes, if any,
included in the Memorandum, present fairly the financial position of the Company
as of the dates specified and the results of operations for the periods covered
thereby. Such financial statements and related notes were prepared in accordance
with United States generally accepted accounting principles applied on a
consistent basis throughout the periods indicated. The Company has no known
material liabilities of any kind, whether accrued, absolute or contingent,
or
otherwise, and subsequent to the date of the Memorandum it shall not enter
into
any material transactions or commitments without promptly thereafter notifying
the Placement Agent in writing of any such material transaction or commitment.
The other financial and statistical information with respect to the Company
and
any pro forma information and related notes included in the Memorandum present
fairly the information shown therein on a basis consistent with the financial
statements of the Company included in the Memorandum. The
Company does not know of any facts, circumstances or conditions, which could
materially adversely affect its operations, earnings or prospects that have
not
been fully disclosed in the Memorandum.
(i)
The
conduct of business by the Company as presently and proposed to be conducted
is
not subject to continuing oversight, supervision, regulation or examination
by
any governmental official or body of the United States, or any other
jurisdiction wherein the Company conducts or proposes to conduct such business,
except as described in the Memorandum and except as such regulation is
applicable to commercial enterprises generally. The Company has obtained all
material licenses, permits and other governmental authorizations necessary
to
conduct its business as presently conducted.
(j)
The
Company has no material agreements to which the Company is bound or by which
its
assets are subject.
(k)
There
are no actions, proceedings, claims or investigations, before or by any court
or
governmental authority (or any state of facts which management of the Company
has concluded could give rise thereto) pending or, to the best knowledge of
the
Company, threatened, against the Company, or involving its assets or, to the
best knowledge of the Company, involving any of its officers or directors that,
if determined adversely to the Company or such officer or director, could
reasonably be expected to result in any material adverse change in the condition
(financial or otherwise) or prospects of the Company or adversely affect the
transactions contemplated by this Agreement or the other Transaction Documents
or the enforceability hereof or thereof.
(l)
The
Company is not in violation of: (i) its certificate of incorporation or by-laws
each as currently in effect; (ii) any indenture, mortgage, deed of trust, note
or other agreement or instrument to which the Company is a party or by which
it
is or may be bound or to which any of its assets may be subject; (iii) any
statute, rule or regulation currently applicable to the Company; or (iv) any
judgment, decree or order applicable to the Company, which violation or
violations individually, or in the aggregate, could reasonably be expected
to
result in any material adverse change in the condition (financial or otherwise)
or prospects of the Company or adversely affect the transactions contemplated
by
this Agreement or the other Transaction Documents or the enforceability
thereof.
(m)
The
Company does not own any real, personal, tangible or intangible property in
fee
simple.
(n)
Subsequent to the respective dates as of which information is given in the
Memorandum, the Company has operated its business in the ordinary course and,
except as may otherwise be set forth in the Memorandum, there has been no:
(i)
material adverse change in the condition (financial or otherwise) of the
Company; (ii) transaction otherwise than in the ordinary course of business
consistent with past practice; (iii) issuance of any securities (debt or
equity) or any rights to acquire any such securities; (iv) damage, loss or
destruction, whether or not covered by insurance, with respect to any asset
or
property of the Company; or (v) agreement to permit any of the
foregoing.
(o)
The
Company has filed, on a timely basis, each federal, state, local and foreign
tax
return that was required to be filed, or has requested an extension therefor
and
has paid all taxes and all related assessments, penalties and interest to the
extent that the same have become due.
(p)
The
Company is not obligated to pay, and has not obligated the Placement Agent
to
pay, a finder’s or origination fee in connection with the Offering, and hereby
agrees to indemnify the Placement Agent from any such claim made by any other
person as more fully set forth in Section 8 hereof. The Company has not offered
for sale or solicited offers to purchase the Shares except for negotiations
with
the Placement Agent. Except as set forth in the Memorandum, no other person
has
any right to participate in any offer, sale or distribution of the Company’s
securities to which the Placement Agent’s rights, described herein, shall
apply
(q)
The
Company has no casualty or liability insurance coverage.
(r)
Neither the sale of the Shares by the Company nor its use of the proceeds
thereof will violate the Trading with the Enemy Act, as amended, or any of
the
foreign assets control regulations of the United States Treasury Department
(31
CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive
order relating thereto. Without limiting the foregoing, the Company is not
(a) a
person whose property or interests in property are blocked pursuant to Section
1
of Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting
Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism
(66 Fed. Reg. 49079 (2001)) or (b) a person who engages in any dealings or
transactions, or be otherwise associated, with any such person. The Company
and
its subsidiaries are in compliance, in all material respects, with the USA
Patriot Act of 2001 (signed into law October 26, 2001).
(s)
The
Company has filed all reports required to be filed by it under the Securities
Exchange Act of 1934, as amended (the “Exchange
Act”),
including, without limitation, pursuant to Section 13(a) and 15(d) thereof,
(the
foregoing materials being collectively referred to herein as the “SEC
Filings”)
on a
timely basis or has received a valid extension of such time of filing and has
filed any such SEC Filing prior to the expiration of any such extension. As
of
their respective dates, the SEC Filings complied in all material respects with
the requirements of the Securities Act and the Exchange Act and the rules and
regulations of the SEC promulgated thereunder, and none of the SEC Filings,
when
filed, contained any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. All material agreements to which the Company is a party have
been filed as exhibits to the SEC Filings to the extent required. The financial
statements of the Company included in the SEC Filings comply in all material
respects with applicable accounting requirements and the rules and regulations
of the SEC with respect thereto as in effect at the time of filing.
3.
Placement
Agent Appointment and Compensation.
(a) The
Company hereby appoints the Placement Agent and its selected dealers, if any,
as
its exclusive agent in connection with the Offering. The Company has not and
will not make, or permit to be made, any offers or sales of the Shares other
than through the Placement Agent without the Placement Agent’s prior written
consent. The Placement Agent has no obligation to purchase any of the Shares.
The agency of the Placement Agent hereunder shall continue until the later
of
the Termination Date or the Final Closing.
(b)
The
Company will cause to be delivered to the Placement Agent copies of the
Memorandum and has consented, and hereby consents, to the use of such copies
for
the purposes permitted by the Securities Act and applicable securities laws,
and
hereby authorizes the Placement Agent and its agents, employees and selected
dealers to use the Memorandum in connection with the sale of the Shares until
the later of the Final Closing or the Termination Date, and no other person
or
entity is or will be authorized to give any information or make any
representations other than those contained in the Memorandum or to use any
offering materials other than those contained in the Memorandum in connection
with the sale of the Shares.
(c)
The
Company will cooperate with the Placement Agent by making available to its
representatives such information as may be reasonably requested in making a
reasonable investigation of the Company and its affairs and shall provide access
to such employees as shall be reasonably requested. Prior to the First Closing,
if requested by the Placement Agent, the Company shall provide, at its own
expense, credit or similar reports on such key management persons as the
Placement Agent shall reasonably request.
(d)
The
Placement Agent shall provide such services as an accommodation to the Company,
whose principal stockholder, Xxxxxxx X. Xxxxxxx, holds approximately a YY%
interest in XXX and whose President, Xxxxx X. Xxxxxxx, the father of Xxxxxxx
X.
Xxxxxxx, serves as the ZZZ of XXX and in consideration of the sum of One Hundred
Dollars ($100.00) and other good and valuable consideration received from the
Company (the “Placement
Agent’s Consideration”).
4.
Representations,
Warranties and Covenants of the Placement Agent.
The
Placement Agent hereby represents, warrants and covenants to the Company that
it
is a
registered broker-dealer and member in good standing
of the NASD.
5.
Subscription
and Closing Procedures.
(a)
Each prospective purchaser will be required to complete and execute the Investor
Suitability Questionnaire, NASD Questionnaire, Investor Acknowledgment and
Agreement, Subscription Agreement, Registration Rights Agreement, and Form
W-9
or W-8BEN (together, the “Subscription
Documents”)
contained in the subscription booklet (the “Subscription
Booklet”),
along
with the entire Subscription Booklet itself, which will be forwarded or
delivered to the Placement Agent at the Placement Agent’s offices at the address
set forth in Section 12 hereof, together with the investor’s good funds in the
full amount of the Offering Price for the number of Shares desired to be
pur-chased.
(b)
All
funds for subscriptions received from the Offering will be promptly forwarded
by
the Placement Agent or the Company, if received by it, to and deposited into
a
non-interest bearing escrow account (the “Escrow
Account”)
established for such purpose with Xxxxxx Street State Bank or Xxxxx Fargo Bank,
N.A., as applicable, (each, an “Escrow
Agent”).
All
such funds for subscriptions will be held in the Escrow Account pursuant to
the
terms of an escrow agreement among the Company, the Placement Agent and the
Escrow Agent. The Company will pay all fees related to the establishment and
maintenance of the Escrow Account. Subject to the receipt of subscriptions
for
the Minimum Offering, the Company will either accept or reject, for any or
no
reason, the Subscription Documents in a timely fashion and at each Closing
will
countersign the Subscription Documents and provide duplicate copies of such
documents to the Placement Agent for distribution to the Investors. The Company
will give notice to the Placement Agent of its acceptance of each subscription.
The Company, or the Placement Agent on the Company’s behalf, will promptly
return to Investors incomplete, improperly completed, improperly executed and
rejected subscriptions and give written notice thereof to the Placement Agent
upon such return.
(c)
If
subscriptions for at least the Minimum Offering have been accepted prior to
the
Termination Date, the funds therefor have been collected by the Escrow Agent
and
all of the conditions set forth elsewhere in this Agreement are fulfilled,
a
closing shall be held promptly with respect to Shares sold (the “First
Closing”).
Thereafter, the remaining Shares will continue to be offered and sold until
the
Termination Date. Additional closings (each, including the First Closing, a
“Closing”,
and
all, the “Closings”)
may
from time to time be conducted at times mutually agreed to between the Placement
Agent and the Company with respect to additional Shares sold, with the final
closing (the “Final
Closing”)
to
occur within 10 days after the Termination Date. Delivery of payment for the
accepted subscriptions for Shares from the funds held in the Escrow Account
will
be made at each Closing at the Placement Agent’s offices against delivery of the
Shares by the Company at the address set forth in Section 12 hereof (or at
such other place as may be mutually agreed upon between the Company and the
Placement Agent), net of amounts due to the Placement Agent and its Blue Sky
counsel pursuant to Section 6(i) hereof as of such Closing. Executed
certificates for the Shares will be in such authorized denominations and
registered in such names as the Placement Agent may request on or before the
second full business day prior to the date of each Closing (“Closing
Date”),
and
will be made available to the Placement Agent for checking and packaging at
the
Placement Agent’s office at least one full business day prior
thereto.
(d)
If
Subscription Documents for the Minimum Offering have not been received and
accepted by the Company on or before the Termination Date for any reason, the
Offering will be terminated, no Shares will be sold, and the Escrow Agent will,
at the request of the Placement Agent, cause all monies received from investors
for the Shares to be promptly returned to such investors without interest,
penalty, expense or deduction.
6.
Further
Covenants of the Company.
The
Company hereby covenants and agrees that:
(a)
Except with the prior written consent of the Placement Agent, the Company shall
not, at any time prior to the Final Closing, take any action which would cause
any of the representations, warranties and covenants made by it in this
Agreement not to be complete, accurate and correct on and as of each Closing
Date with the same force and effect as if such representations, warranties
and
covenants had been made on and as of each such date.
(b)
If,
at any time prior to the Final Closing (i) any event shall occur which does
or
may materially affect the Company or as a result of which it might become
necessary to amend or supplement the Memorandum so that the representations,
warranties and covenants herein remain true, or (ii) in case it shall, in the
reasonable opinion of counsel to the Placement Agent, be necessary to amend
or
supplement the Memorandum to comply with Regulation D or any other applicable
securities laws or regulations, the Company shall, in the case of (i) above,
promptly notify the Placement Agent and, in the event of either (i) or (ii)
above shall, at its sole cost, prepare and furnish to the Placement Agent copies
of appropriate amendments and/or supplements to the Memorandum in such
quantities as the Placement Agent may request. The Company shall not at any
time, whether before or after the Final Closing, prepare or use any supplement
to the Memorandum of which the Placement Agent shall not previously have been
advised and furnished with a copy, or to which the Placement Agent or its
counsel will have reasonably objected in writing or orally (confirmed in writing
within 24 hours), or which is not in compliance in all material respects with
the Securities Act, the Regulations and other applicable securities laws. As
soon as the Company is advised thereof, the Company shall advise the Placement
Agent and its counsel, and confirm the advice in writing, of any order
preventing or suspending the use of the Memorandum, or the suspension of the
qualification or registration of the Shares for offering or the suspension
of
any exemption for such qualification or registration of the Shares for offering
in any jurisdiction, or of the institution or threatened institution of any
proceedings for any of such purposes, and the Company shall use its best efforts
to prevent the issuance of any such order and, if issued, to obtain as soon
as
reasonably possible the lifting thereof.
(c)
The
Company shall comply with the Securities Act, the Regulations, the Exchange
Act,
and the rules and regulations promulgated thereunder, all applicable state
securities laws and the rules and regulations thereunder in the states in which
the Shares are to be offered and in which Blue Sky counsel has advised the
Placement Agent that the Shares are exempt from qualification or registration
requirements, so as to permit the continuance of the sales of the Shares, and
will file with the SEC, and shall promptly thereafter forward to the Placement
Agent, any and all reports on Form D as are required.
(d)
The
Company shall use its best efforts to qualify the Shares for sale under the
securities laws of such jurisdictions in the United States as may be mutually
agreed to by the Company and the Placement Agent, and the Company shall make
such applications and furnish information as may be required for such purposes,
provided that the Company shall not be required to qualify as a foreign
corporation in any jurisdiction. The Company shall, from time to time, prepare
and file such statements and reports as are or may be required to continue
such
qualifications in effect for so long a period as the Placement Agent may
reasonably request.
(e)
The
Company shall place a legend on the Shares issued to Investors stating that
the
securities evidenced thereby have not been registered under the Securities
Act
or applicable state securities laws and cannot be sold or otherwise transferred
without an effective registration or an exemption therefrom, and may not be
sold
pursuant to the exemptions provided by Section 4(1) of the Securities Act or
Rule 144 under the Securities Act, in accordance with the letter from Xxxxxxx
X.
Xxxxx, Chief
of
the Office of Small Business Policy of the Securities and Exchange Commission’s
Division of Corporation Finance,
to Xxx
Worm of NASD Regulation, Inc., dated January 21, 2000.
(f)
The
Company shall apply the net proceeds from the sale of the Shares to fund its
working capital requirements and for such other purposes as are specifically
described under the “Use of Proceeds” section of the Memorandum. Except as set
forth in the Memorandum, the Company shall not use any of the net proceeds
of
the Offering to repay indebtedness to officers, directors or stockholders of
the
Company without the prior written consent of the Placement Agent.
(g)
During the Offering Period, the Company shall make available for review by
prospective purchasers of the Shares during normal business hours at the
Company’s offices, upon their request, copies of all Company agreements to the
extent that such shall not violate any obligation on the part of the Company
to
maintain the confidentiality thereof and shall afford each prospective purchaser
of Shares the opportunity to ask questions of and receive answers from an
officer of the Company concerning the terms and conditions of the Offering
and
the opportunity to obtain such other additional information necessary to verify
the accuracy of the Memorandum to the extent it possesses such information
or
can acquire it without unreasonable expense or effort.
(h)
Except with the prior written consent of the Placement Agent, the Company shall
not, at any time prior to the later of the Final Closing or the Termination
Date, (i) engage in or commit to engage in any transaction outside the ordinary
course of business as described in the Memorandum, (ii) issue, agree to issue
or
set aside for issuance any securities (debt or equity) or any rights to acquire
any such securities except as contemplated by the Memorandum, (iii) incur,
outside the ordinary course of business, any material indebtedness, (iv) dispose
of any material assets, (v) make any material acquisition or (vi) change its
business or operations.
(i)
The
Company shall pay all expenses incurred in connection with the preparation
and
printing of all necessary offering documents, amendments, and instruments
related to the Offering and the issuance of the Shares, and shall also pay
its
own expenses for accounting fees, legal fees, bound volumes of closing
documents, and other costs involved with the Offering. The Company shall provide
at its own expense such quantities of the Memorandum and other documents and
instruments relating to the Offering as the Placement Agent may reasonably
request. In addition, the Company shall pay all reasonable filing fees, costs
and legal fees for Blue Sky services and related filings and expenses of the
Placement Agent’s counsel with respect to Blue Sky exemptions (collectively, the
“Blue
Sky Expenses”),
$500
per state, which shall be paid to the Company’s counsel upon execution of this
Agreement for legal fees in connection with obtaining Blue Sky exemptions,
and
additional amounts, if any, of which shall be paid at each Closing, as
applicable. The Blue Sky filings shall be prepared by the Company’s counsel for
the Company’s account.
(j)
Until
the later of the Final Closing or the Termination Date, neither the Company
nor
any person or entity acting on its behalf shall negotiate with any other
placement agent or underwriter with respect to a private or public offering
of
the Company’s or any affiliate’s debt or equity securities. Neither the Company
nor anyone acting on its behalf shall, until the later of the Final Closing
or
the Termination Date, offer for sale to, or solicit offers to subscribe for
Shares or other securities of the Company from, or otherwise approach or
negotiate in respect thereof with, any other person, without the prior written
consent of the Placement Agent.
7.
Conditions
of Placement Agent’s Obligations.
The
obligations of the Placement Agent hereunder are subject to the fulfillment,
at
or before each Closing, of the following additional conditions:
(a)
Each
of the representations, warranties and covenants of the Company shall be true
and correct when made on the date hereof and on and as of each Closing Date
as
though made on and as of each Closing Date.
(b)
The
Company shall have performed and complied with all agreements, covenants and
conditions required to be performed and complied with by it under the
Transaction Documents at or before each Closing.
(c)
No
order suspending the use of the Memorandum or enjoining the offering or sale
of
the Shares shall have been issued, and no proceedings for that purpose or a
similar purpose shall have been initiated or pending, or, to the best of the
Company’s knowledge, are contemplated or threatened.
(d)
As of
the First Closing, the Company will have the authorized capitalization as
described in the SEC filings.
(e)
The
Placement Agent shall have received a certificate of the President of the
Company, dated as of each Closing Date, certifying, in such detail as the
Placement Agent may reasonably request, as to the fulfillment of the conditions
set forth in paragraphs (a), (b), (c) and (d) above.
(f)
The
Company shall have delivered to the Placement Agent: (i) a currently dated
good
standing certificate from the Secretary of State of Delaware and each
jurisdiction in which the Company is qualified to do business as a foreign
corporation and (ii) at the First Closing, certified resolutions of the
Company’s Board of Directors approving this Agreement and the other Transaction
Documents, and the transactions and agreements contemplated by this Agreement
and the other Transaction Documents.
(g)
At
each Closing, the President of the Company shall have provided a certificate
to
the Placement Agent confirming that there have been no material adverse changes
in the condition (financial or otherwise) or prospects of the Company from
the
date of the financial statements included in the Memorandum, the absence of
undisclosed known material liabilities (other than liabilities arising in the
ordinary course of business subsequent to the date of the most recent balance
sheet included in the Memorandum) and such other matters relating to the
financial condition and prospects of the Company that the Placement Agent may
reasonably request.
(h)
At
each Closing, the Company shall pay and deliver to the Placement Agent the
Placement Agent’s Consideration, each calculated in accordance with Sections
3(d) hereof.
(i)
At
the First Closing and each Closing thereafter, the Company and each Investor,
as
of the date thereof, shall have entered into a Subscription Agreement and a
Registration Rights Agreement.
(j)
All
proceedings taken at or prior to each Closing in connection with the
authorization, issuance and sale of the Shares will be reasonably satisfactory
in form and substance to the Placement Agent and its counsel, and such counsel
shall have been furnished with all such documents, certificates and opinions
as
it may reasonably request upon reasonable prior notice in connection with the
transactions contemplated hereby.
7A. Mutual
Condition.
The
obligations of the Placement Agent and the Company hereunder are subject to
the
execution by each Investor of a Subscription Agreement in form and substance
acceptable to the Placement Agent and the Company.
8.
Indemnification.
(a) The
Company will (i) indemnify and hold harmless the Placement Agent, its selected
dealers and their respective officers, directors, employees and each person,
if
any, who controls, within the meaning of the Securities Act, the Placement
Agent
and such selected dealers (each an “Indemnitee”)
against, and pay or reimburse each Indemnitee for, any and all losses, claims,
damages, liabilities or expenses whatsoever (or actions or proceedings or
investigations in respect thereof), joint or several (which will, for all
purposes of this Agreement, include, but not be limited to, all costs of defense
and investigation and all attorneys’ fees and disbursements, including appeals),
to which any Indemnitee may become subject (x) under the Securities Act or
otherwise, in connection with the offer and sale of the Shares, and
(y) as
a
result of the breach of any representation, warranty or covenant made by the
Company herein, regardless of whether such losses, claims, damages, liabilities
or expenses shall result from any claim of any Indemnitee or any third party;
and (ii) reimburse each Indemnitee for any legal or other expenses reasonably
incurred in connection with investigating or defending against any such loss,
claim, action, damage or liability; provided,
however,
that
the Company will not be liable in any such case to the extent that any such
claim, damage or liability results from (A) an untrue statement or alleged
untrue statement of a material fact made in the Memorandum, or an omission
or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, made solely in
reliance upon and in conformity with written information furnished to the
Company by the Placement Agent specifically for use in the preparation thereof,
or (B) any violations by the Placement Agent of the Securities Act or state
securities laws that does not result from a violation thereof by the Company
or
any of its affiliates. In addition to the foregoing agreement to indemnify
and
reimburse, the Company will indemnify and hold harmless each Indemnitee from
and
against any and all losses, claims, damages, liabilities or expenses whatsoever
(or actions or proceedings or investigations in respect thereof), joint or
several (which shall for all purposes of this Agreement, include, but not be
limited to, all costs of defense and investigation and all attorneys’ fees,
including appeals) to which any Indemnitee may become subject insofar as such
costs, expenses, losses, claims, damages or liabilities arise out of or are
based upon the claim of any person or entity that he or it is entitled to
broker’s or finder’s fees from any Indemnitee in connection with the Offering.
The foregoing indemnity agreements are in addition to any liability that the
Company may otherwise have.
(b)
The
Placement Agent will indemnify and hold harmless the Company, its officers,
directors, employees and each person, if any, who controls the Company within
the meaning of the Securities Act against, and pay or reimburse any such person
for, any and all losses, claims, damages or liabilities or expenses whatsoever
(or actions, proceedings or investigations in respect thereof) to which the
Company or any such person may become subject under the Securities Act or
otherwise, whether such losses, claims, damages, liabilities or expenses shall
result from any claim of the Company, any of its officers, directors, employees,
agents, or any person who controls the Company within the meaning of the
Securities Act or any third party, but only to the extent that such losses,
claims, damages or liabilities are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Memorandum or an omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in either
case, if made or omitted in reliance upon and in conformity with written
information furnished to the Company by the Placement Agent, specifically for
use in the preparation thereof. The Placement Agent will reimburse the Company
or any such person for any legal or other expenses reasonably incurred in
connection with investigating or defending against any such loss, claim, damage,
liability or action, proceeding or investigation to which such indemnity
obligation applies. The foregoing indemnity agreements are in addition to any
liability that the Placement Agent may otherwise have.
(c)
Promptly after receipt by an indemnified party under this Section 8 of notice
of
the commencement of any action, claim, proceeding or investigation (the
“Action”),
such
indemnified party, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, will notify the indemnifying party
of
the commencement thereof, but the omission to so notify the indemnifying party
will not relieve it from any liability that it may have to any indemnified
party
under this Section 8 unless the indemnifying party has been substantially
prejudiced by such omission. The indemnifying party will be entitled to
participate in, and, to the extent that it may wish, jointly with any other
indemnifying party, to assume the defense thereof sub-ject to the provisions
herein stated, with counsel reasonably satisfactory to such indemnified party.
The indemnified party will have the right to employ separate counsel in any
such
Action and to participate in the defense thereof, but the fees and expenses
of
such counsel will not be at the expense of the indemnifying party if the
indemnifying party has assumed the defense of the Action with counsel reasonably
satisfactory to the indemnified party, provided,
however,
that if
the indemnified party shall be requested by the indemnifying party to
participate in the defense thereof or shall have concluded in good faith and
specifically notified the indemnifying party either that there may be specific
defenses available to it that are different from or additional to those
available to the indemnifying party or that such Action involves or could have
a
material adverse effect upon it with respect to matters beyond the scope of
the
indemnity agreements contained in this Agreement, then the counsel representing
it, to the extent made necessary by such defenses, shall have the right to
direct such defenses of such Action on its behalf and in such case the
reasonable fees and expenses of such counsel in connection with any such
participation or defenses shall be paid by the indemnifying party. No settlement
of any Action against an indemnified party will be made without the consent
of
the indemnifying party and the indemnified party, which consent shall not be
unreasonably withheld or delayed in light of all factors of importance to such
party and no indemnifying party shall be liable to indemnify any person for
any
settlement of any such claim effected without such indemnifying party’s
consent.
9.
Contribution.
To
provide for just and equitable contribution, if (i) an indemnified party makes
a
claim for indemnification pursuant to Section 8 hereof and it is finally
determined, by a judgment, order or decree not subject to further appeal that
such claim for indemnification may not be enforced, even though this Agreement
expressly provides for indemnification in such case; or (ii) any indemnified
or
indemnifying party seeks contribution under the Securities Act, the Exchange
Act, or otherwise, then each indemnifying party shall contribute to such amount
paid or payable by such indemnified party in such proportion as is appropriate
to reflect not only the relative benefits but also the relative fault of the
Company on the one hand and the Placement Agent on the other in connection
with
the statements or omissions that resulted in such losses, claims, damages,
liabilities or expenses (or actions in respect thereof), as well as any other
relevant equitable considerations. The relative benefits received by the Company
on the one hand and the Placement Agent on the other shall be deemed to be
in
the same proportion as the total net proceeds from the Offering (before
deducting expenses) received by the Company bear to the total commissions and
fees actually received by the Placement Agent. The relative fault, in the case
of an untrue statement, alleged untrue statement, omission or alleged omission
will be determined by, among other things, whether such statement, alleged
statement, omission or alleged omission relates to information supplied by
the
Company or by the Placement Agent, and the parties’ relative intent, knowledge,
access to information and opportunity to correct or prevent such statement,
alleged statement, omission or alleged omission. The Company and the Placement
Agent agree that it would be unjust and inequitable if the respective
obligations of the Company and the Placement Agent for contribution were
determined by pro
rata
allocation of the aggregate losses, liabilities, claims, damages and expenses
or
by any other method or allocation that does not reflect the equitable
considerations referred to in this Section 9. No person guilty of a fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person who is not guilty of such
fraudulent misrepresentation. For purposes of this Section 9, each person,
if
any, who controls the Placement Agent within the meaning of the Securities
Act
will have the same rights to contribution as the Place-ment Agent, and each
person, if any, who controls the Company within the meaning of the Securities
Act will have the same rights to contribution as the Company, subject in each
case to the provisions of this Section 9. Anything in this Section 9 to the
contrary notwithstanding, no party will be liable for contribution with respect
to the settlement of any claim or action effected without its written consent.
This Section 9 is intended to supersede, to the extent permitted by law, any
right to contribution under the Securities Act, the Exchange Act or otherwise
available.
10.
Termination.
(a) The
Offering may be terminated by the Placement Agent at any time prior to the
expiration of the Offering Period in the event that: (i) any of the
representations, warranties or covenants of the Company contained herein, in
the
Memorandum or in any other Transaction Document shall prove to have been false
or misleading in any material respect when actually made; (ii) the Company
shall
have failed to perform any of its material obligations hereunder or under any
other Transaction Document; (iii) there shall occur any event, within the
control of the Company, that could materially adversely affect the transactions
contemplated by this Agreement or the other Transaction Documents or the ability
of the Company to perform hereunder or thereunder; or (iv) the Placement Agent
determines that it is reasonably unlikely that any of the conditions to the
First Closing set forth herein will not, or cannot, be satisfied. In the event
of any such termination by the Placement Agent pursuant to clauses (i), (ii),
or
(iii) of this Section 9(a), the Placement Agent shall be entitled to receive
from the Company, in addition to any other right or remedy the Placement Agent
may have hereunder, at law or otherwise, an amount equal to the Placement
Agent’s Consideration (the “Termination
Amount”).
(b)
The
Offering may be terminated by the Company at any time prior to the expiration
of
the Offering Period in the event that the Placement Agent shall have failed
to
perform any of its material obligations hereunder. In the event of any such
termination by the Company, the Placement Agent shall not be entitled to any
amounts whatsoever except (i) any Agent’s Compensation earned through the
Termination Date, provided there has been a Closing and (ii) as may be due
under
any indemnity or contribution obligation provided herein or any other
Transaction Document, at law or otherwise.
(c)
The
Offering may be terminated upon mutual agreement of the
Company and Placement Agent at
any
time prior to the expiration of the Offering Period.
(d)
Before any termination by the Placement Agent under Section 10(a) or by the
Company under Section 10(b) shall become effective, the terminating party shall
give written notice to the other party of its intention to terminate the
Offering (the “Termination
Notice”).
The
Termination Notice shall specify the grounds for the proposed termination.
If
the specified grounds for termination, or their resulting adverse effect on
the
transactions contemplated hereby, are curable, then the other party shall have
ten (10) days from the Termination Notice within which to remove such grounds
or
to eliminate all of their material adverse effects on the transactions
contemplated hereby; otherwise, the Offering shall terminate.
(e)
Upon
any termination pursuant to this Section 10, the Placement Agent and the Company
shall instruct the Escrow Agent to cause all monies received with respect to
the
subscriptions for Shares not accepted by the Company to be promptly returned
to
such investors without interest, penalty, expense or deduction. The Company
shall be responsible for any outstanding fees owed to the Escrow
Agent.
11.
Survival.
(a) The
obligations of the parties to pay any costs and expenses hereunder and to
provide indemnification and contribution as provided herein shall survive any
termination of the Offering and/or this Agreement.
(b)
The
respective indemnities, covenants, agreements, representations, warranties
and
other statements of the Company and the Placement Agent set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless
of
any investigation made by or on behalf of, and regardless of any access to
information by, the Company or the Placement Agent, or any of their officers
or
directors or any controlling person thereof, and will survive the sale of the
Shares.
12.
Notices.
All
notices and other communications given or made pursuant hereto shall be in
writing and shall be deemed to have been duly given or made as of the date
delivered personally, or the date mailed if mailed by registered or certified
mail (postage prepaid, return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
changes of address which shall be effective upon receipt) or sent by electronic
transmission, with confirmation received, if sent to the Placement Agent, will
be mailed, delivered or telefaxed and confirmed to: XXX at AAA, attention BBB,
telefax number CCC, and if sent to the Company, to: Wentworth II, Inc., 000X
Xxxxxxxxx Xxxx., Xxxxx 00, Xxxx Xxxxx, XX 00000, Attention: Xxxxx X. Xxxxxxx,
President, telefax number (000) 000-0000, with a copy to: Xxxxxxx Xxxxxxxxx
& Xxxxx LLP, 000 Xxxxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxxx X. Xxxxxxx, Esq., telefax number (000) 000-0000.
13.
ARBITRATION;
CHOICE OF LAW; COSTS.
THE PARTIES HERETO AGREE TO SUBMIT ALL CONTROVERSIES TO ARBITRATION IN
ACCORDANCE WITH THE PROVISIONS SET FORTH BELOW AND UNDERSTAND AND AGREE THAT
(A)
ARBITRATION IS FINAL AND BINDING ON THE PARTIES, (B) THE PARTIES ARE WAIVING
THEIR RIGHTS TO SEEK REMEDIES IN COURT, INCLUDING THE RIGHT TO A JURY TRIAL,
(C)
PRE-ARBITRATION DISCOVERY IS GENERALLY MORE LIMITED AND DIFFERENT FROM COURT
PROCEEDINGS, (D) THE ARBITRATOR’S AWARD IS NOT REQUIRED TO INCLUDE FACTUAL
FINDINGS OR LEGAL REASONING AND ANY PARTY’S RIGHT TO APPEAL OR TO SEEK
MODIFICATION OF RULINGS BY ARBITRATORS IS STRICTLY LIMITED, (E) THE PANEL OF
NASD, INC. (THE “NASD”) ARBITRATORS WILL TYPICALLY INCLUDE A MINORITY OF
ARBITRATORS WHO WERE OR ARE AFFILIATED WITH THE SECURITIES INDUSTRY, AND (F)
ALL
CONTROVERSIES THAT MAY ARISE BETWEEN THE PARTIES CONCERNING THIS AGREEMENT
SHALL
BE DETERMINED BY ARBITRATION PURSUANT TO THE RULES THEN PERTAINING TO THE NASD
IN THE CITY OF DENVER, STATE OF DENVER. JUDGMENT ON ANY AWARD OF ANY SUCH
ARBITRATION MAY BE ENTERED IN THE DISTRICT COURT OF THE STATE OF COLORADO OR
IN
ANY OTHER COURT HAVING JURISDICTION OVER THE PERSON OR PERSONS AGAINST WHOM
SUCH
AWARD IS RENDERED. THE PARTIES AGREE THAT THE DETERMINATION OF THE
ARBITRATORS SHALL BE BINDING AND CONCLUSIVE UPON THEM. ANY NOTICE OF SUCH
ARBITRATION OR FOR THE CONFIRMATION OF ANY AWARD IN ANY ARBITRATION SHALL BE
SUFFICIENT IF GIVEN IN ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT.
THE PREVAILING PARTY, AS DETERMINED BY SUCH ARBITRATORS IN AN ARBITRATION
PROCEEDING SHALL BE ENTITLED TO COLLECT ANY COSTS, DISBURSEMENTS AND REASONABLE
ATTORNEY’S FEES FROM THE OTHER PARTY.
14.
Modification;
Performance; Waiver.
No
provision of this Agreement may be changed or terminated except by a writing
signed by the party or parties to be charged therewith. Unless expressly so
provided, no party to this Agreement will be liable for the performance of
any
other party’s obligations hereunder. Any party hereto may waive compliance by
the other with any of the terms, provisions and conditions set forth herein;
provided,
however,
that
any such waiver shall be in writing specifically setting forth those provisions
waived thereby. No such waiver shall be deemed to constitute or imply waiver
of
any other term, provision or condition of this Agreement.
15.
Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Delaware applicable to contacts entered into and to be performed wholly
within said State.
16.
Entire
Agreement.
This
Agreement, together with any other agreement referred to herein, supersedes
all
prior agreements between the parties with respect to the Shares to be offered
and sold hereunder and the subject matter hereof.
17.
Execution
in Counterparts.
This
Agreement may be executed in counterparts (and by facsimile), each of which
shall be deemed to be an original, and all of which taken together shall
constitute one and the same agreement (and all signatures need not appear on
anyone counterpart). This Agreement shall become effective when one or more
counterparts has been signed and delivered by each of the parties
hereto.
18.
Severability.
If any
provision of this Agreement is held to be illegal, invalid or unenforceable
under any present or future laws, such provision shall be fully severable.
This
Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part of this Agreement, and the
remaining provisions of this Agreement shall remain in full force and effect
and
shall not be affected by the illegal, invalid or unenforceable provision or
by
its severance from this Agreement. Furthermore, in lieu of each such illegal,
invalid or unenforceable provision there shall be deemed added automatically
as
a part of this Agreement a provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible to cause such provision
to
be legal, valid and enforceable.
19.
Headings.
The
captions and headings used in this Agreement are for convenience only and do
not
in any way affect, limit, amplify or modify the terms and provisions of this
Agreement.
[SIGNATURE
PAGE TO FOLLOW]
If
the
foregoing is in accordance with your understanding of our agreement, kindly
sign
and return this Agreement, whereupon it will become a binding agreement between
the Company and the Placement Agent in accordance with its terms.
| Very truly yours, | ||
| WENTWORTH II, INC. | ||
| |
|
|
| By: | /s/ Xxxxx X. Xxxxxxx | |
|
Name: Xxxxx X. Xxxxxxx |
||
| Title: President | ||
|
Accepted
and agreed to this
1st
day of December, 2006.
|
||
| XXX | ||
| By: | /s/ AAA | |
|
Name: AAA |
||
| Title: DDD | ||
