EXHIBIT 10.1
PLACEMENT AGENCY AGREEMENT
September 10, 2003
Whitewing Environmental Corp.
000 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Ladies and Gentlemen:
This Placement Agency Agreement (the "AGREEMENT") confirms the
retention by Whitewing Environmental Corp., a Delaware corporation (the
"COMPANY"), of Maxim Group, LLC (the "PLACEMENT AGENT"), to act as the placement
agent on a "best efforts" basis in connection with the private placement (the
"PLACEMENT") of Units (as defined below) of the Company on the terms set forth
below.
1. PLACEMENT
(a) The securities of the Company which are the subject of the
Placement shall consist of up to Two Million Dollars ($2,000,000) (the "MAXIMUM
AMOUNT") of units of the Company (the "UNITS"), with each Unit consisting of:
one (1) share of Series A Convertible Preferred Stock, par value $.001 per
share, of the Company (the "SERIES A PREFERRED STOCK") and forty (40) Class A
Common Stock Purchase Warrants (the "WARRANTS"), each of which are initially
exercisable into one (1) share of common stock, par value $.001, of the Company
(the "COMMON STOCK" which, collectively with the Units, the shares of Series A
Preferred Stock and the Warrants, is referred to herein as the "SECURITIES"),
which Securities shall be issued to the investor(s) in the Placement (an
"INVESTOR" or the "INVESTORS").
(b) The Placement will be made pursuant to the Memorandum (as defined
below). The Securities will not be registered under the Securities Act of 1933,
as amended, or any applicable successor statute (the "ACT"), but will be issued
in reliance on the private offering exemption available under Section 4(2) of
the Act and the rules and regulations promulgated thereunder, including
Regulation D ("REGULATION D"). The Placement Agent understands that all
subscriptions for Units are subject to acceptance by the Company. The Company
and the Placement Agent reserve the right in their reasonable discretion to
accept or reject any or all subscriptions for Units in whole or in part,
regardless whether any funds have been deposited into an escrow account. Any
subscription monies received by the Placement Agent from Investors will be
handled in accordance with Rule 15c2-4 under the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT"), whether or not the Placement Agent is
subject to the Exchange Act, and as otherwise may be prescribed by the terms of
the Memorandum (as defined in Section 2 below).
(c) Until the Closing (as defined below) is held, all subscription
funds received shall be held by Continental Stock Transfer & Trust Company (the
"ESCROW AGENT"). The Placement Agent shall not have any independent obligation
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September 10, 2003
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to verify the accuracy or completeness of any information contained in any
Subscription Documents (as defined in Section 2 below) or the authenticity,
sufficiency or validity of any check delivered by any prospective Investor in
payment for the Units, nor shall the Placement Agent incur any liability with
respect to any such verification or failure to verify. All subscription checks
and funds shall be promptly and directly delivered without offset or deduction
to the Escrow Agent.
2. OFFERING MEMORANDUM AND RELATED MATTERS
(a) The Company has prepared a Confidential Private Placement
Memorandum, dated as of September 10, 2003, relating to the Company and the
Placement (such memorandum, together with the exhibits and attachments thereto
or available thereunder and any amendments or supplements thereto prepared and
furnished by the Company, being referred to herein as the "MEMORANDUM"), which
Memorandum, among other things, describes the Placement and certain investment
risks relating thereto.
(b) The Company has been and will continue to be responsible for
preparing and filing required documentation, if any, with the authorities in the
United States or any state located therein (and subsequent to, if required by
the laws of any such jurisdiction) in connection with the distribution of the
Memorandum to prospective Investors (the parties acknowledging, however, that
the Placement of the Units is intended and expected to be wholly or partially
exempt from filing requirements in the United States by reason of an "accredited
investor" exemption).
(c) The Placement Agent and its counsel and the Company and its counsel
have or will jointly prepare a form of subscription agreement (the "SUBSCRIPTION
AGREEMENT") and a form of purchaser questionnaire (collectively with the
Subscription Agreement, the form of certificate of designations for the Series A
Preferred Stock, the form of Warrant and any other stock purchase or other
documents required in connection with the Placement, the "SUBSCRIPTION
DOCUMENTS"), which Subscription Documents shall contain such representations,
warranties, conditions and covenants as are customary in private placements of
corporate debt and equity securities with United States accredited investors.
The Placement Agent and its counsel have had or will have an opportunity to
review the final form of the Memorandum and Subscription Documents prior to the
distribution thereof to prospective Investors, and the Memorandum and the
Subscription Documents will be the only offering documents (other than cover
letters which may be used by the Placement Agent, and any documents made
available to Investors in accordance with the terms of the Memorandum) shown to
prospective Investors. The Company and its counsel will advise the Placement
Agent and its counsel in writing of those jurisdictions in which the Units may
lawfully be offered and sold, and the manner in which the Units may lawfully be
offered and sold in each such jurisdiction in connection with the Placement, and
the Placement Agent agrees that the Units will be offered or sold only in such
jurisdictions and in the manner specified by the Company; provided, however,
that the Placement Agent shall not be responsible for independently verifying
such written advice with respect to the jurisdictions in which the Units may be
offered and sold and with respect to the manner in which the Units may be
offered and sold in such jurisdictions. Notwithstanding the foregoing, the
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September 10, 2003
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Placement Agent shall determine whether it is licensed to offer and sell the
Units in each jurisdiction in which it intends to do so.
(d) The Placement will be made in accordance with the requirements of
Section 4(2) under the Act and/or Regulation D only to investors that qualify as
accredited investors, as defined in Rule 501(a) under the Act ("ACCREDITED
INVESTORS"), purchasing for their own account for investment purposes only and
not for distribution in violation of securities laws. Furthermore, prospective
Investors will have been provided the Memorandum and access to the management of
the Company and afforded the opportunity to ask questions.
(e) The Company recognizes, agrees and confirms that the Placement
Agent (or any selling agent permitted to be utilized by the Placement Agrement
under Section 3(a) hereof): (i) will use and rely primarily on the information
contained in the Memorandum and the Subsciption Documents and on information
available from generally recognized public sources in performing the services
contemplated by this Agreement without having independently verified the same;
(ii) is authorized, as the Company's exclusive financial advisor and placement
agent in connection with the Placement, to transmit to any prospective Investor
a copy or copies of the Memorandum, the Subsciption Documents and any other
documentation supplied to the Placement Agent for transmission to any
prospective Investor by or on behalf of the Company or by any of the Company's
officers, representatives or agents, in connection with the performance of the
Placement Agent's services hereunder or any transaction contemplated hereby;
(iii) does not assume responsibility for the accuracy or completeness of any
information contained in the Memorandum and the Subsciption Documents or any
such other information; (iv) will not make an appraisal of the Company or any
assets of the Company or the securities being offered by the Company in the
Placement; and (v) retains the right to continue to perform due diligence of the
Company during the course of the Company's engagement of the Placement Agent.
3. PLACEMENT AGENT
(a) The Company hereby employs the Placement Agent as its exclusive
placement agent in the United States for the purpose of placing the Units for
the account and risk of the Company. This appointment shall be exclusive with
respect to the Placement and otherwise as provided herein, and the Company shall
not have the right to appoint additional sales agents in the United States
without the Placement Agent's express prior written consent. The Company hereby
agrees that the Placement Agent shall have the right to utilize other selling
broker-dealers in connection with the Placement of the Units on terms approved
by the Placement Agent. Subject to the provisions of Section 5 hereof and to the
performance by the Company of all of its obligations to be performed hereunder,
the Placement Agent agrees to use its best efforts to assist in arranging for
sales of Units. The Company recognizes that "best efforts" does not assure that
the Placement will be consummated. It is understood and agreed that this
Agreement does not create any partnership, joint venture or other similar
relationship between or among the Placement Agent and the Company, and that the
Placement Agent is acting only as a sales agent.
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September 10, 2003
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(b) For the services of the Placement Agent hereunder, the Company will
pay or caused to be paid to the Placement Agent at any Closing the following
fees:
(i) a cash payment equal to 10% of the gross proceeds received by
the Company from the sale of the Units, payable at the Closing in lawful money
of the United States by check or wire transfer of immediately available funds;
and
(ii) an option (the "UNIT PURCHASE OPTION") to purchase a number of
Units, equal to ten percent (10%) of the number of Units issued in the
Placement. Such Unit Purchase Option will be issued at the Closing pursuant to a
Unit Purchase Option Agreement to be signed by the Placement Agent and the
Company, which agreement shall provide, among other things:
(A) that the Unit Purchase Option shall:
(1) be exercisable at an exercise price of $10.00 per Unit;
(2) expire five (5) years from the date of issuance; and
(3) be non-redeemable,
(B) for registration rights on the same terms granted to the
Investors,
(C) for the ability of a cashless exercise, and
(D) for such other terms as are normal and customary for unit
purchase options issued to placement agents.
(c) Notwithstanding any termination of this Agreement pursuant to the
terms hereof or otherwise, if on or before the twelve (12) month anniversary of
the Closing, the Company enters into a commitment or letter of intent relating
to any offering of debt or equity securities of the Company or any other
financing: (i) with any financing source to whom the Company was introduced by
the Placement Agent or who was contacted by Placement Agent in connection with
its services for the Company hereunder, or (ii) as a result of the use by the
Company of materials or other work product prepared by the Placement Agent in
connection with the Placement, the Company shall pay to the Placement Agent, at
the closing of any such offering or financing, the fees described in, and in
accordance with the terms and provisions of, Section 3(b)(i) and (ii) above.
(d) In addition to the foregoing, the Company hereby grants to the
Placement Agent the exclusive right to manage any private or public offering of
debt or equity or other securities of the Company for a period of twelve (12)
months from the Closing Date (as defined below). Subject to the provisions of
Section 3(c) hereof, if applicable, the terms of any such offering shall be
mutually agreed upon by the Company and the Placement Agent. Furthermore, the
Company hereby agrees that if the Company or any Subsidiary or affiliate of the
Company becomes a party to any preliminary or binding letter of intent or
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September 10, 2003
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agreement relating to any merger, acquisition of assets or other business
combination or reorganization involving the Company or any Subsidiary that, for
a period of twelve (12) months from the Closing Date, the Company or such other
applicable party shall engage the Placement Agent as the Company's or the
applicable party's exclusive financial advisor in connection with any such
transaction or series of related transactions. The Placement Agent shall be paid
reasonable and customary fees, and be reimbursed for its expenses in accordance
with customary terms, in connection with any transaction described in this
Section 3(d).
(e) In addition to the foregoing, the Company hereby grants to the
Placement Agent the right to appoint one (1) individual, reasonably acceptable
to the Company (the "BOARD OBSERVER"), to attend and observe all of the meetings
of the Company's board of directors (the "BOARD") as provided for in this
Section 3(e). The Board Observer may be removed and replaced (subject, with
respect to the replacement Board Observer only, to the reasonable acceptance of
the Company) at any time and for any reason or no reason by the Placement Agent
upon written notice from the Placement Agent to the Company. The Board Observer
shall be entitled to notice of and participation in all regular or special
meetings (whether in person, telephonic or otherwise) of the Board and shall
further receive, simultaneously with all other members of the Board, any
proposed written consent to action of the Board. The rights of the Placement
Agent contained in this Section 3(e) shall continue until the later of: (i) the
two (2) year anniversary of the Closing Date, or (ii) the date on all of the
shares of Series A Preferred Stock held by the Investors have been converted,
redeemed or retired.
(f) Upon receipt by the Company from a proposed Investor of completed
Subscription Documents, and such other documents as the Company requests, the
Company and the Placement Agent will determine in their reasonable discretion
whether they wish to accept or reject the subscription.
4. PAYMENT BY COMPANY OF EXPENSES
The Company will pay for or promptly reimburse to the Placement Agent,
as the case may be, and whether or not any Units are sold in connection with the
Placement, all expenses of the Company and the Placement Agent relating to the
Placement (including all reasonable legal fees incurred by the Placement Agent)
and all other reasonable out-of-pocket expenses of the Placement Agent relating
to activities under this Agreement, including, without limitation: (i) the
preparation, printing, reproduction, filing, distribution and mailing of the
Memorandum and all other documents relating to the Placement, and any
supplements or amendments thereto, including the fees and expenses of counsel to
the Company, and the cost of all copies thereof; (ii) the issuance, sale,
transfer and delivery of the Units and the Securities contained therein,
including any transfer or other taxes payable thereon and the fees of any
transfer agent or registrar; (iii) the public registration and listing of, or
registration and qualification of the Securities or the securing of an exemption
therefrom under state of foreign "blue sky" or securities laws, including,
without limitation, filing fees payable in the jurisdictions in which such
registration or qualification or exemption therefrom is sought, the costs of
preparing preliminary, supplemental and final "blue sky surveys" relating to the
offer and sale of the Securities and the fees and disbursements of counsel to
the Placement Agent in connection with such "blue sky" matters; (iv) the filing
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September 10, 2003
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fees, if any, payable to the applicable securities regulatory authorities; (v)
all Escrow Agent fees; and (vi) all road show expenses, travel, legal, and other
related expenses. Any expenses (other than Placement Agent's legal or other
professional expenses) in excess of $2,500 shall be subject to prior approval by
the Company, which approval shall not be unreasonably withheld or delayed.
5. TERMINATION OF PLACEMENT
The Placement may be terminated: (i) by the Placement Agent or the
Company at any time upon thirty (30) days prior written notice or (ii)
immediately by the Placement Agent upon giving written notice to the Company,
but only in the event that if:
(a) in the opinion of the Placement Agent, the Memorandum contains an
untrue statement of a material fact or omits to state a material fact required
to be stated therein or necessary in order to make the statements appearing
therein not misleading in the light of the circumstances in which they were
made, and the Company shall not have corrected such untrue statement or omission
to the reasonable satisfaction of the Placement Agent and its counsel within ten
(10) days after the Company receives notice of such untrue statement or
omission, provided that notwithstanding such ten (10) day period, the Closing
(as defined in Section 6 below) shall not occur hereunder until the Placement
Agent shall notify the Company that it is satisfied, in its reasonable
determination, that the Company has taken such steps (including circulating
amended offering materials and afforded prospective Investors a reasonable
opportunity to review such amendments) to allow the Closing to occur; or
(b) the Company shall be in material breach of any representation,
warranty or covenant made by it in this Agreement, any Subscription Document or
any other document relating to the Placement; or
(c) (i) any calamitous domestic or international event or act or
occurrence has taken place and, in the Placement Agent's opinion, has or will
materially disrupt general securities markets in the United States in the
immediate future; or (ii) if trading on the New York Stock Exchange, the
American Stock Exchange, or in the over-the-counter market shall have been
suspended or minimum or maximum prices for trading shall have been fixed, or
maximum ranges for prices for securities shall have been required on the
over-the-counter market by the National Association of Securities Dealers, Inc.
("NASD") or by order of the Securities and Exchange Commission ("SEC") or any
other government authority having jurisdiction; or (iii) if the United States
shall have become involved in a war, major hostilities or the like; or (iv) if a
banking moratorium has been declared by a New York State or federal authority;
or (v) if the Company shall have sustained a material loss, whether or not
insured, by reason of fire, flood, accident or other calamity; or (vii) if there
shall have been such material adverse change in the conditions or prospects of
the Company, involving a change not contemplated by the Memorandum; or (viii) if
there shall have been such material adverse general market conditions as in the
Placement Agent's reasonable judgment would make it inadvisable to proceed with
the Placement or the sale or delivery of the Units.
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6. OFFERING PERIOD; CLOSINGS
(a) Subject to the terms and conditions set forth in Sections 5 and 10
hereof, the Units will be offered for a period beginning from the date of the
Memorandum and ending at 5:00 p.m., New York City time, on September 30, 2003,
unless earlier terminated by the Company and/or the Placement Agent or unless
extended one or more times by the Company and the Placement Agent (without
notice to the Investors required) to a date not later than October 31, 2003
(such period, the "OFFERING PERIOD"). Unless $500,000 worth of Units (the
"MINIMUM AMOUNT") are subscribed for and accepted by the Company by the
conclusion of the Offering Period, the Placement will be terminated and all
subscription proceeds will be returned to Investors without interest or
deduction. If at least the Minimum Amount has been subscribed for and accepted
by the Company at any time during the Offering Period, the Company will promptly
conduct a closing on such Units. Thereafter, additional closings (together with
any initial closing, each, a "CLOSING") will occur until the first to occur of:
(i) the full subscription for an acceptance by the Company of the Maximum
Amount, (ii) the conclusion of the Offering Period, or (iii) the termination of
the Placement or this Agreement. Any Closing shall be undertaken in a manner
agreed to by the Company and the Placement Agent. The date upon which the
initial Closing is held shall hereinafter be referred to as the "CLOSING DATE."
(b) At any Closing, the Company shall deliver to the Investors share
certificates representing the Series A Preferred Stock and instruments
representing the Warrants, duly executed by the Company, together with such
other closing documentation as may be required in order to affect the Closing.
7. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
The Company represents and warrants to the Placement Agent that:
(a) The Company has been validly formed and is legally existing as a
corporation in good standing under the laws of the State of Delaware, with full
corporate power and authority to conduct its business as currently conducted,
and is in good standing in each jurisdiction in which the conduct of its
business or the nature of its properties requires such qualification or
authorization, except where the failure to be so qualified or authorized and in
good standing could not reasonably be expected to have a material adverse effect
on the business and financial condition of the Company and its subsidiaries,
taken as a whole (a "MATERIAL ADVERSE Effect"). As of the date hereof, the
Company does not have, directly or indirectly, any subsidiaries other than as
disclosed in the Company's filings with the SEC (collectively, the
"SUBSIDIARIES"). Each Subsidiary has been duly organized, is validly existing
and in good standing under the laws of the jurisdiction of its organization, has
the power and authority to own its properties and to conduct its business and is
duly qualified and authorized to transact business and is in good standing in
each jurisdiction in which the conduct of its business or the nature of its
properties requires such qualification or authorization, except where the
failure to be so qualified or authorized and in good standing could not
reasonably be expected to have a Material Adverse Effect. All of the issued and
outstanding capital stock of each Subsidiary is owned by the Company, free and
clear of any liens, and has been duly authorized and validly issued, and is
non-assessable.
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(b) The authorized capital stock of the Company consists of 100,500,000
shares of capital stock, of which (i) 100,000,000 are classified as Common
Stock, and (ii) 400,000 are, or will be at the Closing, classified as Series A
Preferred Convertible Stock and 100,000 are classified as "blank check"
preferred stock, par value $0.001 per share. As of the date hereof and as of the
Closing Date, 39,611,443 shares of common stock, no shares of Series A Preferred
Stock and no other shares of capital stock of the Company are or will be issued
and outstanding, and all such shares of capital stock are, as the case may be,
duly authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights.
(c) Neither the Memorandum, the Subscription Documents nor any of the
Company's filings with the SEC (collectively, the "COMPANY DOCUMENTS") contain
any untrue statement of a material fact, and the Company Documents will not omit
to state any material fact necessary in order to make the statements made, in
light of the circumstances under which they were made, not misleading, except
that the Company shall have no liability for any information provided to the
Company in writing by, and relating to, the Placement Agent, for use in and used
in the Memorandum. It is understood that any summary in the Memorandum of a
document which appears therein in full (either as signed or substantially in the
form to be signed) does not constitute an untrue or misleading statement merely
because it is a summary; provided, however, that any such summary may not
contain any untrue statement of a material fact or omit to state any material
fact necessary to make the statements made, in light of the circumstances under
which they were made, not misleading. If, at any time before the Placement is
completed or terminated or before all subscriptions are accepted by the Company,
there should be any change which would cause the Company Documents not to comply
with this Section 7(b), the Company will promptly advise the Placement Agent
thereof and make any necessary corrective filings with the SEC and prepare and
furnish the Placement Agent with, for distribution to Investors, after prior
review and approval by the Placement Agent and its counsel (such approval not to
be unreasonably withheld), such copies of such supplements or amendments to the
Memorandum and the Subscription Documents as will cause the Memorandum and the
Subscription Documents, as so supplemented or amended, to comply with this
Section 7(b), and will authorize the Placement Agent to make to Investors, if:
(i) deemed necessary by counsel to the Placement Agent and approved by the
Placement Agent, or (ii) if deemed necessary by counsel to the Company, an offer
of rescission.
(d) The execution, delivery and performance of this Agreement, all
Company Documents and all other documents to be entered into by the Company in
connection with any transaction described in the Memorandum or in connection
with the Placement, and the consummation of the transactions contemplated hereby
and thereby, have been or will be prior to such execution, delivery, performance
or consummation, as the case may be, duly and validly authorized by the Company
and do not and will not: (i) constitute, or result in, a breach or violation of
any of the terms, provisions or conditions of the Articles of Incorporation or
Bylaws of the Company or any of its Subsidiaries, (ii) constitute, or result in,
a material violation of any applicable statute, law, ordinance or regulation of
any state, territory or other jurisdiction, or (iii) violate, constitute, or
result in, a default under (or an event which with the passing of time or the
giving of notice or both would constitute a default under) or breach of the
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terms, provisions or conditions of any material indenture, note, contract,
commitment, instrument or document to which the Company or any of its
Subsidiaries is or will be a party or by which the Company, any of its
Subsidiaries or any of their respective properties are bound, or any award,
judgment, decree, rule or regulation of any court or governmental or regulatory
agency or body having jurisdiction over the Company or any of its Subsidiaries
or their respective activities or properties. No consent, approval,
authorization or order of any court or governmental or regulatory agency or body
or any individual or entity is required on the part of the Company for the
lawful consummation of the transactions contemplated hereby and thereby, except
for such consents and approvals with respect to the offer and sale of the Units
in certain jurisdictions which are identified to the Placement Agent by counsel
for the Company.
(e) Neither the Company nor any of its directors, officers, employees,
agents or representatives ("COMPANY REPRESENTATIVES") has taken or will take any
action which has caused or may cause the Placement not to qualify for exemption
from the registration requirements of the Act or of United States federal, state
or other securities or other laws. In connection with the Placement, neither the
Company nor the Company Representatives shall offer or cause to be offered the
Units by any form of general solicitation or general advertising as defined in
Rule 502(c) of Regulation D. The Company and the Company Representatives have
not taken and shall not take any action (except for actions contemplated by the
Memorandum) that would cause the Placement to be integrated with other
transactions under Rule 502(a) of Regulation D.
(f) Except as disclosed in the Company Documents, and except for such
matters that, individually or in the aggregate, would not have a material
adverse effect on the business, operations or financial results of the Company
and its Subsidiaries (either individually or in the aggregate):
(i) The Company and each of its Subsidiaries are, and have been, in
compliance with all Environmental Laws (as defined below), and neither the
Company nor any of its Subsidiaries has received any (A) communication that
alleges that the Company or any such Subsidiary is in violation of, or has
liability under, any Environmental Law, (B) written request for information
pursuant to any Environmental Law, or (C) notice regarding any requirement that
is proposed for adoption or implementation under any Environmental Law and that
would be applicable to the operations of the Company or any of its Subsidiaries;
(ii) (A) the Company and each of its Subsidiaries have obtained and
are in compliance with all permits, licenses and governmental authorizations
pursuant to all Environmental Laws (collectively, "ENVIRONMENTAL Permits")
necessary for their operations as currently conducted, (B) all such
Environmental Permits are valid and in good standing, and (C) neither the
Company nor any of its Subsidiaries has been advised by any governmental entity
or authority of any actual or potential change in the status or terms and
conditions of any Environmental Permit;
(iii) there are no Environmental Claims pending or, to the
knowledge of the Company, threatened, against the Company or any of its
Subsidiaries;
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September 10, 2003
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(iv) there have been no Releases of any Hazardous Material that
could reasonably be expected to form the basis of any Environmental Claim
against the Company or any of its Subsidiaries or against any person whose
liabilities for such Environmental Claims the Company or any of its Subsidiaries
has, or may have, retained or assumed, either contractually or by operation of
law; and
(v) (A) neither the Company nor any of its Subsidiaries has
retained or assumed, either contractually or by operation of law, any
liabilities or obligations that could reasonably be expected to form the basis
of any Environmental Claim against the Company or any Company Subsidiary, and
(B) to the knowledge of the Company, no Environmental Claims are pending against
any person or entity whose liabilities for such Environmental Claims the Company
or any Company Subsidiary has, or may have, retained or assumed, either
contractually or by operation of law.
As used in this Agreement, the terms: (A) "ENVIRONMENTAL CLAIM" means
any and all administrative, regulatory or judicial actions, suits, orders,
demands, directives, claims, investigations, proceedings or notices of violation
by or from any person or entity alleging liability of whatever kind or nature
arising out of, based on or resulting from (y) the presence or release of, or
exposure to, any Hazardous Materials at any location; or (z) the failure to
comply with any Environmental Law; (B) "ENVIRONMENTAL LAWS" means all applicable
federal, state, local and foreign laws, rules, regulations, orders, decrees,
judgments, legally binding agreements or Environmental Permits issued,
promulgated or entered into by or with any governmental entity or authority,
relating to pollution, natural resources or protection of endangered or
threatened species, human health or the environment (including ambient air,
surface water, groundwater, land surface or subsurface strata); (C) "HAZARDOUS
MATERIALS" means (y) any petroleum or petroleum products, radioactive materials
or wastes, asbestos in any form, urea formaldehyde foam insulation and
polychlorinated biphenyls; and (z) any other chemical, material, substance or
waste that in relevant form or concentration is prohibited, limited or regulated
under any Environmental Law; and (D) "RELEASE" means any actual or threatened
release, spill, emission, leaking, dumping, injection, pouring, deposit,
disposal, discharge, dispersal, leaching or migration into or through the
environment (including ambient air, surface water, groundwater, land surface or
subsurface strata) or within any building, structure, facility or fixture.
(g) The Company will include all the shares of Common Stock underlying
the Series A Preferred Stock and Warrants issued in this Placement and the Unit
Purchase Option in a registration statement of its securities under the Act to
be filed with the SEC promptly following the conclusion of the Placement and
will use its best efforts to have the SEC declare such registration statement
effective by no later than March 31, 2004 (the "TARGET EFFECTIVE DATE"), and to
maintain the effectiveness of such registration statement until the third (3rd)
anniversary of the Closing. In the event that the Company fails to have the SEC
declare such registration statement effective by the Target Effective Date, then
the dividend rate on the shares of Series A Preferred Stock shall increase by 2%
for each whole calendar month during which such registration statement is not
declared effective by the SEC; provided however, that in no event shall the
dividend rate exceed 20%. Upon the effectiveness of such registration statement,
the dividend rate shall re-adjust to 11%. In addition, Investors shall be
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provided with certain "piggy back" registration rights as described in the
Memorandum. The Company will prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective
until the sale of the securities registered thereunder, and shall comply with
the provisions of the Act with respect to the disposition of all securities
owned by the Investors and the Placement Agent that are covered by such
registration statement during such period in accordance with the intended
methods of disposition by the Investors and the Placement Agent. The Company
will furnish to the Investors and the Placement Agent such number of copies of
such registration statement, each amendment and supplement thereto, the
prospectus included in such registration statement (including each preliminary
prospectus) and such other documents as the Investors and the Placement Agent
may request in order to facilitate the disposition of the shares of Common Stock
which may be owned by the Investors and the Placement Agent.
(h) If at any time or from time to time, the Company proposes to file a
registration statement under the Act with respect to an offering of Common
Stock: (i) for the Company's own account (other than a registration statement on
Form S-4 or Form S-8 (or any substitute form that may be adopted by the SEC)) or
(ii) for the account of any of its holders of Common Stock, then the Company
shall give written notice of such proposed filing to the Placement Agent or its
nominee as soon as practicable (but in no event less than thirty (30) days
before the anticipated filing date), and such notice shall offer Placement Agent
or its nominee the opportunity to register under such registration statement
(and any related qualification under blue sky laws) such number of shares of
Common Stock as the Placement Agent or its nominee may request on the same terms
and conditions as the Company's or such holder's Common Stock. It is understood
and agreed that the foregoing shall not be applicable if the shares of Common
Stock issuable to the Placement Agent or its nominee are, at the applicable
time, either (x) registered pursuant to a valid and effective registration
statement or (y) available for sale pursuant to Rule 144 under the Act.
(i) This Agreement has been duly authorized, executed and delivered by
the Company and constitutes the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except
insofar as enforcement of the indemnification or contribution provisions hereof
may be limited by applicable laws or principles of public policy and except
further as to enforcement, to the availability of equitable remedies and
limitations imposed by bankruptcy, insolvency, reorganization and other similar
laws and related court decisions relating to or affecting creditors' rights
generally.
(j) The Company will not offer the Units for sale hereunder on the
basis of any communications or documents relating to the Placement Agent or the
Units except the Memorandum and the exhibits thereto and documents described or
referred to therein, including the Subscription Documents.
(k) So long as the Series A Preferred Stock and the Warrants (including
the Common Stock receivable upon the exercise thereof) are "restricted
securities" within the meaning of Rule 144(a)(3) under the Act, the Company,
during any period in which it is not subject to and in compliance with Section
Whitewing Environmental Corp.
September 10, 2003
Page 12 of 24
s13 or 15(d) of the Exchange Act, or is not exempt from such reporting
requirements pursuant to and in compliance with Rule 12g3-2b under the Exchange
Act, provide to each holder of Series A Preferred Stock and to each prospective
purchaser (as designated by such holder) of Series A Preferred Stock, upon the
request of such holder or prospective holder, any information required to be
provided by Rule 144A(d)(4) under the Act.
(l) The Company will initially invest the proceeds of the Placement and
all other funds of the Company in such a manner so as to cause the Company not
to be subject to the United States Investment Company Act of 1940, as amended
(the "1940 ACT"), and will thereafter use its best efforts to avoid the
Company's becoming subject to the 0000 Xxx.
(m) The shares of Common Stock underlying: (i) the Series A Preferred
Stock, (ii) the Warrants and (iii) the shares of Series A Preferred Stock and
Common Stock issuable upon exercise of the Unit Purchase Option, have been duly
reserved, and when issued in accordance with the terms of the Placement, will be
validly issued, fully paid and nonassessable and not subject to preemptive or
any other similar rights and no personal liability will attach to the ownership
thereof.
(n) In addition to the foregoing, to the extent not set forth herein,
the Placement Agent may rely on the representations and warranties made by the
Company in the Subscription Agreement provided by the Company and used in
connection with the Placement.
8. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PLACEMENT AGENT
The Placement Agent hereby represents and warrants to, and covenants
with, the Company that:
(a) This Agreement has been duly authorized, executed and delivered by
the Placement Agent and constitutes the legal, valid and binding obligation of
the Placement Agent, enforceable against it in accordance with its terms, except
insofar as enforcement of the indemnification or contribution provisions hereof
may be limited by applicable laws or principles of public policy and subject, as
to enforcement, to the availability of equitable remedies and limitations
imposed by bankruptcy, insolvency, reorganization and other similar laws and
related court decisions relating to or affecting creditors' rights generally.
(b) The Placement Agent will cooperate with the Company to ensure that
the offering and sale of the Units will comply with the requirements of the Act,
including, without limitation, the general conditions contained in Regulation D
and the federal securities laws, and will follow the reasonable advice of the
Company with respect to the manner in which to offer and sell the Units so as to
ensure that the offering and sale thereof will comply with the securities laws
of any jurisdiction in which Securities are offered by the Placement Agent, and
the Placement Agent will not make an offer of Securities in any jurisdiction in
which the Company advises it in writing that such offer would be unlawful for
the Placement Agent to offer or sell securities.
Whitewing Environmental Corp.
September 10, 2003
Page 13 of 24
(c) The Placement Agent is: (i) a registered broker-dealer under the
Exchange Act; (ii) a member in good standing of the NASD; and (iii) registered
as a broker-dealer in each jurisdiction in which it is required to be registered
as such in order to offer and sell the Units in such jurisdiction.
(d) The Placement Agent has not and will not make an offer of Units (or
of any securities, the offering of which may be integrated with the Placement)
on the basis of any communications or documents relating to the Company or the
Units except the Memorandum and the exhibits thereto and documents described or
referred to therein (including the Subscription Documents), and the cover
letters referred to in Section 2 hereof. Without limiting the generality of the
foregoing, the Placement Agent has not and will not make any representation as
to any rate of return on investment that an offeree may obtain from the
ownership of Series A Preferred Stock or Warrants other than as set forth in the
Memorandum. The Placement Agent will deliver a copy of the Memorandum to each
prospective Investor solicited by it prior to such offeree's execution of the
Subscription Documents or, in the case of amendments or supplements to the
Memorandum (other than those amendments and supplements approved in writing by
the Company but designated in writing as not subject to this requirement), prior
to such offeree's execution of an acknowledgment of receipt of such amendment or
supplement and reconfirmation of intent to subscribe.
(e) The Placement Agent has not and will not knowingly make an offer of
Units on behalf of the Company, or of any securities, the offering of which may
be integrated with the Placement, by any form of general solicitation or general
advertising in violation of Rule 502(c) of Regulation D such as would cause the
offering of Units not to qualify under Section 4(2) of the Act as a transaction
exempt from Section 5 thereof. The Placement Agent has not and will not supply
in writing for inclusion in the Memorandum or any related sales materials any
information relating to the Placement Agent containing any untrue statement of a
material fact or omitting to state any material fact required to be stated
therein or necessary to make such information, in light of the circumstances
under which it is used, not misleading.
(f) The Placement Agent will not transmit to the Company any written
offer from an offeree to purchase Securities unless, immediately prior thereto,
it reasonably believes that:
(i) the offeree is an Accredited Investor; and
(ii) the offeree meets all other offeree and/or purchaser
suitability standards, if any, required under
applicable securities laws and regulations.
(g) The Placement Agent will exercise reasonable care to determine that
prospective Investors are not "underwriters" within the meaning of Section 2(11)
of the Act, and in that connection will obtain from each investor purchasing
Securities in the Placement duly executed Subscription Documents, in the forms
provided to the Placement Agent by the Company with the approval of the
Placement Agent and its counsel.
Whitewing Environmental Corp.
September 10, 2003
Page 14 of 24
(h) The Placement Agent will periodically notify the Company of the
jurisdiction in which the Securities are being offered by it or will be offered
by it pursuant to this Agreement, and will periodically notify the Company of
the status of the offering conducted pursuant to this Agreement.
(i) The Placement Agent has delivered or caused to be delivered (or
will so deliver prior to the Closing Date) to each prospective Investor the
Memorandum.
9. COVENANTS
The Company covenants to the Placement Agent that it shall:
(a) Notify the Placement Agent as soon as practicable, and confirm such
notice promptly in writing: (i) when any event shall have occurred during the
period commencing on the date hereof and ending on the later of the Closing Date
as a result of which the Memorandum would 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 not misleading, and (ii) of the
receipt of any notification with respect to the modification, rescission,
withdrawal or suspension of the qualification or registration of the Securities
or of an exemption from such registration or qualification in any jurisdiction.
The Company will use its reasonable best efforts to prevent the issuance of any
such modification, rescission, withdrawal or suspension and, if any such
modification, rescission, withdrawal or suspension is issued, to obtain the
lifting thereof as promptly as possible.
(b) Not supplement or amend the Memorandum unless the Placement Agent
and its counsel shall have approved of such supplement or amendment in writing,
such approval not to be unreasonably withheld, delayed or conditioned. If, at
any time during the period commencing on the date hereof and ending on the
Closing Date, any event shall have occurred as a result of which the Memorandum
contains any untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, or if, in the opinion of counsel to the Company or counsel to
the Placement Agent, it is necessary at any time to supplement or amend the
Memorandum to comply with the Act, Regulation D or any applicable securities or
"blue sky" laws, the Company will promptly prepare an appropriate supplement or
amendment (in form and substance reasonably satisfactory to the Placement Agent
and its counsel) which will correct such statement or omission or which will
effect such compliance.
(c) Use its best good faith efforts to, within sixty (60) says of the
Closing, obtain "key man" life insurance policy with a nationally recognized
carrier and with the Company as the beneficiary on the life of Xxxxx XxXxxx in
an amount no less than $2,000,000 worth of coverage.
(d) Use its best good faith efforts, from the date hereof and from and
after the Closing Date, to maintain in full force and effect all pollution
insurance currently held by the Company pursuant to the same terms and
conditions currently in effect (including, without limitation, $10,000,000 of
coverage).
Whitewing Environmental Corp.
September 10, 2003
Page 15 of 24
(e) In the event that proceeds from the Placement exceed $1,500,000 in
the aggregate (regardless of when during the Offering Period such milestone is
achieved), use $250,000 of such proceeds to repay (simultaneously with the
Closing at which such amount of proceeds are received by the Company) $250,000
of the indebtedness of the Company held by Columbus Nova.
(f) On or prior to the Closing Date, enter into agreements with Xxxxx
Xxxxx and Xxxxxx Xxxxxx to extend the maturity date of the $500,000 loan made by
such individuals to the Company from September 30, 2003 to a date no earlier
than September 30, 2004.
(g) Deliver without charge to the Placement Agent such number of copies
of the Memorandum and any supplement or amendment thereto as may reasonably be
requested by the Placement Agent.
(h) Not, directly or indirectly, in connection with the Placement or as
otherwise agreed to in this Agreement, solicit any offer to buy from, or offer
to sell to, any person or entity any Securities or other securities of the
Company except through the Placement Agent.
(i) Not solicit any offer to buy or offer to sell Securities by any
form of general solicitation or advertising, including, without limitation, any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar medium or broadcast over the Internet, television
or radio or at any seminar or meeting whose attendees have been invited by any
general solicitation or advertising.
(j) At all times during the period commencing on the date hereof and
ending on the date of the final Closing, provide to each prospective Investor or
his purchaser representative, if any, on reasonable request, such information
(in addition to that contained in the Memorandum) concerning the Placement, the
Company, the Securities and any other relevant matters as it possesses or can
acquire without unreasonable effort or expense and extend to each prospective
investor or his purchaser representative, if any, the opportunity to ask
questions of, and receive answers from the Company concerning the terms and
conditions of the Placement and the business of the Company and to obtain any
other additional information, to the extent it possesses the same or can acquire
it without unreasonable effort or expense, as such prospective Investor or
purchaser representative may consider necessary in making an informed investment
decision or in order to verify the accuracy of the information furnished to such
prospective Investor or purchaser representative, as the case may be.
(k) Notify the Placement Agent promptly of the acceptance or rejection of any
subscription.
(l) File five (5) copies of a Notice of Sales of Securities on Form D
with the SEC no later than 15 days after the first sale of the Securities, if
required by law. The Company shall file promptly such amendments to such Notices
on Form D as shall become necessary and shall also comply with any filing
requirement imposed by the laws of any province or jurisdiction in which offers
Whitewing Environmental Corp.
September 10, 2003
Page 16 of 24
and sales are made. The Company shall furnish the Placement Agent with copies of
all such filings.
(m) Place the following legend on all certificates representing the
shares of Series A Preferred Stock and the Warrants:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST
THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH LAWS OR AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS
WHICH, IN THE OPINION OF COUNSEL FOR THIS CORPORATION, IS
AVAILABLE."
(n) Not, directly or indirectly, engage in any act or activity which
may jeopardize the status of the offering and sale of the Units as exempt
transactions under the Act or under the securities or "blue sky" laws of any
jurisdiction in which the Placement may be made.
(o) Apply the net proceeds from the sale of the Units for the purposes
set forth under the caption "Use of Proceeds" in the Memorandum in the manner
indicated thereunder.
(p) Not, during the period commencing on the date hereof and ending on
the Closing Date, issue any press release or other communication or hold any
press conference with respect to the Company, its financial condition, results
of operations, business properties, assets, liabilities or future prospects of
the Placement, without the prior written consent of the Placement Agent, which
consent will not be unreasonably withheld.
(q) Not, prior to the completion of the Placement, bid for, purchase,
attempt to induce others to purchase, or sell, directly or indirectly, any
shares of Common Stock or any other securities in violation of the provisions of
Regulation M under the Exchange Act.
(r) In addition to the foregoing, to the extent not set forth herein,
the Placement Agent may rely on the covenants made by the Company in the
Subscription Documents used in connection with the Placement.
10. CONDITIONS OF THE PLACEMENT AGENT'S OBLIGATIONS
The obligations of the Placement Agent pursuant to this Agreement shall
be subject, in its discretion, to the continuing accuracy of the representations
and warranties of the Company contained herein and in each certificate and
Whitewing Environmental Corp.
September 10, 2003
Page 17 of 24
document contemplated under this Agreement to be delivered to the Placement
Agent or otherwise at any Closing (including, without limitation, all
Subscription Documents), as of the date hereof and as of the Closing Date or the
date of any Closing subsequent to the Closing Date, to the performance by the
Company of its obligations hereunder, and to the following conditions:
(a) At the Closing, the Placement Agent shall have received the
favorable opinion of Xxxxx Xxxxxxx Berlack Israels, counsel for the Company,
and/or Xxxxxx Xxxxxxx, General Counsel to the Company, in the form and substance
reasonably satisfactory to the Placement Agent and substantially to the effect
that:
(i) the Company has been duly organized and is validly
existing and in good standing under the laws of the State of Delaware, has all
requisite power and authority necessary to own or hold its properties and
conduct its business, and is duly qualified or licensed to do business as a
foreign corporation in each other jurisdiction in which the ownership or leasing
of its properties or the conduct of its business requires such qualification,
except where the failure to so qualify or be licensed would not have a Material
Adverse Effect;
(ii) Each Subsidiary has been duly organized, is validly
existing and in good standing under the laws of the jurisdiction of its
organization, has the power and authority to own its properties and to conduct
its business and is duly qualified and authorized to transact business and is in
good standing in each jurisdiction in which the conduct of its business or the
nature of its properties requires such qualification or authorization, except
where the failure to be so qualified or authorized and in good standing could
not reasonably be expected to have a Material Adverse Effect. All of the issued
and outstanding capital stock of each Subsidiary is owned by the Company, free
and clear of any liens (except Permitted Liens), and has been duly authorized
and validly issued, and is non-assessable. The definition of the term "Permitted
Liens" shall be agreed to by the Company and the Placement Agent prior to the
Closing Date.
(iii) each of this Agreement, the Escrow Agreement by and
among the Placement Agent, the Company and the Escrow Agent, the shares of
Series A Preferred Stock, the Warrants, the Unit Purchase Option and the
Subscription Documents has been duly and validly authorized, executed and
delivered by the Company, and is the valid and binding obligation of the
Company, enforceable against it in accordance with its terms, subject to any
applicable bankruptcy, insolvency or other laws affecting the rights of
creditors generally and to general equitable principles;
(iv) the authorized capital stock of the Company as of the
date hereof (before giving effect to the transactions contemplated by this
Agreement) is as set forth in the Memorandum. Except for the Securities to be
issued as contemplated by this Agreement, there are no outstanding warrants,
options, agreements, convertible securities, preemptive rights or other
commitments pursuant to which the Company is, or may become, obligated to issue
any shares of its capital stock or other securities of the Company other than as
set forth in the Memorandum. All of the shares of capital stock of the Company
issued since May 3, 2002 have been duly and validly authorized and issued, are
Whitewing Environmental Corp.
September 10, 2003
Page 18 of 24
fully paid and nonassessable and have not been issued in violation of the
preemptive rights of any security holder of the Company. The offers and sales of
such outstanding securities were either registered under the Act and applicable
state securities laws or exempt from such registration requirements. Such shares
have been duly authorized, validly issued, fully paid and nonassessable and no
personal liability will attach to the ownership thereof. The Common Stock
underlying the Series A Preferred Stock, the Warrants and the Unit Purchase
Option have been duly reserved, and when issued in accordance with the terms of
the Placement, will be validly issued, fully paid and nonassessable and not
subject to preemptive or any other similar rights and no personal liability will
attach to the ownership thereof;
(v) assuming: (i) the accuracy of the information provided by
the Investors in the Subscription Documents, and (ii) that the Placement Agent
has complied in all material respects with the requirements of Section 4(2) of
the Act (and the provisions of Regulation D promulgated thereunder), the
issuance and sale of the Units is exempt from registration under the Act and
Regulation D promulgated thereunder;
(vi) To the best knowledge of such counsel, after due
investigation, neither the execution and delivery of this Agreement and the
Warrants, nor compliance with the terms hereof, nor the consummation of the
transactions herein contemplated, has, nor will, conflict with, result in a
breach of, or constitute a default under the Articles of Incorporation or Bylaws
of the Company, or any material contract, instrument or document to which the
Company is a party, or by which it or any of its properties is bound or violate
any applicable law, rule, regulation, judgment, order or decree of any
governmental agency or court having jurisdiction over the Company or any of its
properties or business;
(vii) to the best knowledge of such counsel, there are no
claims, actions, suits, investigations or proceedings before or by any
arbitrator, court, governmental authority or instrumentality pending or
threatened against or affecting the Company or involving the properties of the
Company which might materially and adversely affect the business, properties or
financial condition of the Company or which might materially adversely affect
the transactions or other acts contemplated by this Agreement or the validity or
enforceability of this Agreement, except as set forth in or contemplated by the
Memorandum or Subscription Documents; and
(viii) such counsel has participated in the preparation of the
Company Documents and nothing has come to the attention of such counsel to cause
them to have reason to believe that the Company Documents contained any untrue
statement of a material fact required to be stated therein or omitted to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading.
(b) If there is more than one Closing, then at each such Closing there
shall be delivered to the Placement Agent updated opinions, certificates or
other information described in this Section 10.
Whitewing Environmental Corp.
September 10, 2003
Page 19 of 24
(c) On or prior to or following the Closing Date, as the case may be,
the Placement Agent shall have been furnished such information, documents and
certificates as it may reasonably require for the purpose of enabling it to
review the matters referred to in this Section 10 and in order to evidence the
accuracy, completeness or satisfaction of any of the representations,
warranties, covenants, agreements or conditions herein contained, or as it may
otherwise reasonably request.
(d) At the initial Closing, the Placement Agent shall have received
documentation satisfactory to the Placement Agent memorializing the rights
described in Section 3(e) hereof relating to the Board Observer.
(e) At the initial Closing, the Placement Agent shall have received
documentation satisfactory to the Placement Agent memorializing the extension of
loan maturities on the indebtedness of the Company held by Xxxxx Xxxxx and
Xxxxxx Xxxxxx as described in Section 9(f) hereof.
(f) At the initial Closing, the Placement Agent shall have received
"lock-up" agreements, in the form to be agreed upon by the Company and the
Placement Agent, duly executed by each director, officer and holder of ten
percent (10%) or more of the Company's Common Stock as of the Closing, which
"lock-up" agreement shall provide that such persons shall not offer, sell,
contract to sell, pledge or otherwise dispose of, directly or indirectly, any
securities of the Company (or instruments exercisable into securities of the
Company) for a period of twelve (12) months from the Closing Date.
(g) To the extent applicable as of any Closing, the Placement Agent
shall have received documentation satisfactory to the Placement Agent
memorializing the repayment of $250,000 of the indebtedness of the Company held
by Columbus Nova as described in Section 9(e) hereof.
(h) At each Closing, the Placement Agent shall have received a
certificate of the chief executive officer of the Company, dated, as applicable,
as of the Closing Date or the date of such Closing, to the effect that, as of
the date of this Agreement and as of the applicable date, the representations
and warranties of the Company contained herein were and are accurate, and that,
as of the applicable date, the obligations to be performed by the Company
hereunder on or prior thereto have been fully performed.
(i) All proceedings taken in connection with the issuance, sale and
delivery of the Units and the Unit Purchase Option shall be reasonably
satisfactory in form and substance to the Placement Agent and its counsel.
(j) Any certificate or other document signed by any officer of the
Company and delivered to the Placement Agent and its counsel as required
hereunder shall be deemed a representation and warranty by the Company hereunder
as to the statements made therein. If any condition to the Placement Agent's
obligations hereunder have not been fulfilled as and when required to be so
fulfilled, the Placement Agent may terminate this Agreement or, if the Placement
Agent so elects, in writing waive any such conditions which have not been
Whitewing Environmental Corp.
September 10, 2003
Page 20 of 24
fulfilled or extended the time for their fulfillment. In the event that
Placement Agent elects to terminate this Agreement, Placement Agent shall notify
the Company of such election in writing. Upon such termination, neither party
shall have any further liability nor obligation to the other except as provided
in Section 11 hereof.
11. INDEMNIFICATION
(a) The Company agrees to indemnify and hold harmless the Placement
Agent, any person who controls the Placement Agent within the meaning of the
Act, Section 20(a) of the Exchange Act or any applicable statute, and each
partner, director, officer, employee, agent and representative of the Placement
Agent and its representatives from and against any loss, damage, expense,
liability or claim, or actions or proceedings in respect thereof (including,
without limitation, reasonable attorneys' fees and expenses incurred in
investigating, preparing or defending against any litigation commenced) which
any such person may incur or which may be made or brought against any such
person arising out of or based upon: (i) any breach of any of the agreements,
representations or warranties of the Company contained in or contemplated by
this Agreement or the Subscription Documents, including, without limitation,
those arising out of or based on any alleged untrue statement of a material fact
or omission to state a material fact required to be stated in the Memorandum or
the Subscription Documents or necessary in order to make the statements
appearing therein not misleading in the light of the circumstances in which they
were made, (ii) any violation of any federal or state securities laws
attributable to the Placement, or (iii) any violation of law by the Company or
any affiliate thereof, or any director, officer, employee, agent or
representative of any of them, related to or arising out of the Placement. This
indemnity agreement by, and the agreements, warranties and representations of,
the Company shall survive the offer, sale and delivery of the Units and the
termination of this Agreement and shall remain in full force and effect
regardless of any investigation made by or on behalf of any person indemnified
hereunder, and termination of this Agreement and acceptance of any payment for
the Units hereunder.
(b) The Placement Agent agrees to indemnify and hold harmless the
Company and its affiliates, any person who controls any of them within the
meaning of the Act, Section 20(a) of the Exchange Act or any applicable statute,
and each officer, director, employee, agent and representative of the Company or
any of its affiliates from and against any loss, damage, expense, liability or
claim or actions or proceedings in respect thereof (including, without
limitation, reasonable attorneys' fees and expenses incurred in investigating,
preparing or defending against any litigation commenced) which any such person
may incur or which may be made or brought against any such person, but only to
the extent the same arises out of or is based upon: (i) any breach of any of the
agreements, representations or warranties of the Placement Agent contained in
this Agreement, or (ii) any untrue statement of a material fact in any
information provided to the Company in writing by the Placement Agent, expressly
for use in and used in the Memorandum. This indemnity agreement by, and the
agreements, warranties and representations of, the Placement Agent shall survive
the offer, sale and delivery of the Units and shall remain in full force and
effect regardless of any investigation made by or on behalf of any person
indemnified hereunder, and termination of this Agreement and acceptance of any
payment for the Units hereunder.
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September 10, 2003
Page 21 of 24
(c) If any action is brought against a party (the "INDEMNIFIED PARTY")
in respect of which indemnity may be sought against one or more other parties
(the "INDEMNIFYING PARTY" or "INDEMNIFYING PARTIES"), the Indemnified Party
shall promptly notify the Indemnifying Party or Parties in writing of the
institution of such action; provided, however, the failure to give such notice
shall not release the Indemnifying Party or Parties from its or their obligation
to indemnify the Indemnified Party hereunder except to the extent the
Indemnifying Party actually incurs damage by reason of such failure and shall
not release the Indemnifying Party or Parties from any other obligations or
liabilities to the Indemnified Party in any event. The Indemnifying Party or
Parties may at its or their own expense elect to assume the defense of such
action, including the employment of counsel reasonably acceptable to the
Indemnified Party; provided, however, that no Indemnifying or Indemnified Party
shall consent to the entry of any judgment or enter into any settlement by which
the other party is to be bound without the prior written consent of such other
party, which consent shall not be unreasonably withheld. In the event the
Indemnifying Party or Parties assume a defense hereunder, the Indemnified Party
shall be entitled to retain its own counsel in connection therewith and, except
as provided below, shall bear the fees and expenses of any such counsel, and
counsel to the Indemnified Party or Parties shall cooperate with such counsel to
the Indemnifying Party in connection with such proceeding. If an Indemnified
Party reasonably determines that there are or may be differing or additional
defenses available to the Indemnified Party which are not available to the
Indemnifying Party, or that there is or may be a conflict between the respective
positions of the Indemnifying Party and of the Indemnified Party in conducting
the defense of any action, then the Indemnifying Party shall bear the reasonable
fees and expenses of any counsel retained by the Indemnified Party in connection
with such proceeding. All references to the Indemnified Party contained in this
Section 11(c) include, and extend to and protect with equal effect, any persons
who may control the Indemnified Party within the meaning of the Act, Section
20(a) of the Exchange Act or any applicable statute, any successor to the
Indemnified Party and each of its partners, officers, directors, employees,
agents and representatives. The indemnity agreements set forth in this Section
11 shall be in addition to any other obligations or liabilities of the
Indemnifying Party or Parties hereunder or at common law or otherwise.
Notwithstanding anything herein to the contrary, in no event shall the Placement
Agent be obligated to indemnify any person or entity in an amount in excess of
the gross consideration received by the Placement Agent for services rendered
hereunder.
(d) If recovery is not available under the foregoing indemnification
provisions of this Section 11, for any reason other than as specified therein,
the party entitled to indemnification by the terms thereof shall be entitled to
contribution to losses, damages, liabilities and expenses of the nature
contemplated by such indemnification provisions. In determining the amount of
such contribution, there shall be considered the relative benefits received by
the Company on the one hand, and the Placement Agent on the other hand from the
Placement (which shall be deemed to be the portion of the proceeds of the
Placement realized by each party), the parties' relative knowledge and access to
information concerning the matter with respect to which the claim was asserted,
the opportunity to correct and prevent any statement or omission, the relative
culpability of the parties, the relative benefits received by the parties and
any other equitable considerations appropriate under the circumstances. No party
shall be liable for contribution with respect to any action or claim settled
Whitewing Environmental Corp.
September 10, 2003
Page 22 of 24
without its consent. 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 another
party or parties under this Section 11, notify such party or parties from whom
contribution may be sought, but the omission to so notify such party or parties
shall not relieve the party or parties from whom contribution may be sought from
any obligation it or they may have under this Section 11 or otherwise. For
purposes of this Section 11, each person, if any, who controls a party to this
Agreement within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act shall have the same rights to contribution as that party to this
Placement Agreement.
(e) In any claim for indemnification for United States Federal or state
securities law violations, the party seeking indemnification shall place before
the court the position of: (i) the SEC and (ii) if applicable, any state
securities commissioner or agency having jurisdiction with respect to the issue
of indemnification for securities law violations.
12. MISCELLANEOUS
(a) The agreements set forth in this Agreement have been made and are
made solely for the benefit of the Company, the Placement Agent, and the
respective affiliates, heirs, personal representatives and permitted successors
and assigns thereof, and except as expressly provided herein nothing expressed
or mentioned herein is intended or shall be construed to give any other person,
firm or corporation any legal or equitable right, remedy or claim under or in
respect of this Agreement or any representation, warranty or agreement herein
contained. The term "successors and assigns" as used herein shall not include
any purchaser of any Units merely because of such purchase.
(b) Neither party will be liable to the other by reason of any failure
in performances of this Agreement if the failure arises out of the
unavailability of third party communication facilities or energy sources or acts
of God, acts of governmental authority, fires, strikes, delays in
transportation, riots or war, or any cause beyond the reasonable control of such
party.
(c) Any notice or other communication required or appropriate under the
provisions of this Agreement shall be given in writing addressed as follows: (i)
if to the Company, at the address set forth above, Attention: Xxxxxx Xxxxx,
Executive Vice President; and (ii) if to the Placement Agent, Maxim Group, Inc.,
000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention: Xx. Xxxxxxx Xxxxxx; with a
copy to Ellenoff Xxxxxxxx & Schole LLP, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Xxxxx X. Xxxxxxxx, Esq., or at such other address as any party
may designate to the others in accordance with this Section 12(c).
(d) This Agreement shall be governed and construed in accordance with
the laws of the State of New York, without giving effect to conflicts of law
provisions thereof.
Whitewing Environmental Corp.
September 10, 2003
Page 23 of 24
(e) This Agreement constitutes the entire agreement between the parties
hereto with respect to the Placement and supercedes any and all prior
agreements, and may be amended or modified only by a duly authorized writing
signed by such parties. This Agreement may be executed in any number of
counterparts and by facsimile, each of which shall be deemed an original and all
of which shall constitute a single instrument.
[SIGNATURE PAGE FOLLOWS]
Whitewing Environmental Corp.
September 10, 2003
Page 24 of 24
This Placement Agency Agreement is executed and shall be effective as
of September 10, 2003.
Very truly yours,
MAXIM GROUP, LLC
By: /s/ Xxxxxxx Xxxxxx
----------------------------
Name: Xxxxxxx Xxxxxx
Title: Managing Director
ACCEPTED AND AGREED TO:
WHITEWING ENVIRONMENTAL CORP.
By: /s/ Xxxxxx Xxxxx
-----------------------------------
Name: Xxxxxx Xxxxx
Title: Executive Vice President and Secretary
FIRST AMENDMENT TO
PLACEMENT AGENCY AGREEMENT
This First Amendment to Placement Agency Agreement, dated September 11,
2003, is entered into by and between Maxim Group, LLC ("MAXIM") and Whitewing
Environmental Corp. (the "COMPANY").
PRELIMINARY STATEMENT
A. Maxim and the Company are parties to that certain Placement Agency
Agreement, dated as of September 10, 2003 (the "PAA").
B. Pursuant to Section 12(e) of the PAA, amendments to the PAA must to
agreed to in writing by Maxim and the Company.
C. Maxim and the Company desire to amend the PAA in the manner set
forth herein. Capitalized terms used but not defined herein shall have the
meanings ascribed such terms in the PAA.
NOW, THEREFORE, Maxim and the Company hereby amend the PAA as follows:
1. Section 3(b) to the PAA is amended by adding the following
subparagraph (iii) thereto:
"(iii) If any Warrants held by any Investors are exercised at any time,
the Company hereby agrees to pay to the Placement Agent a cash fee, payable
immediately upon receipt by the Company of the Warrant exercise price, equal to
five percent (5%) of the actual cash funds received by the Company upon such
exercise."
2. Except as amended hereby, the PAA shall remain unchanged and in full
force and effect.
IN WITNESS WHEREOF, the parties have executed this amendment as of the
date first written above.
MAXIM GROUP, LLC WHITEWING ENVIRONMENTAL CORP.
By: /s/ Xxxxxxx Xxxxxx By: /s/ Xxxxxx Xxxxx
------------------ ------------------------------
Name: Xxxxxxx X. Xxxxxx Name: Xxxxxx Xxxxx
Title: Managing Director Title: Executive Vice President
