PLACEMENT AGENT AGREEMENT
Board of Directors
Training Devices Incorporated
00 Xxxxxxxxx Xxxxx Xxxx, #X
Xxxxxxxxx, Xxxxxxxx 00000
Gentlemen:
Bathgate XxXxxxxx Capital Group, LLC (the "Placement Agent"), hereby
confirms its agreement with you (the "Company") as follows:
SECTION 1
DESCRIPTION OF SECURITIES
The Company proposes to offer and sell to qualified investors up to
400,000 Shares ("Shares") of the Company's Common Stock ("Common Stock") on
terms as set forth herein. As used in this Agreement, the term "Memorandum"
refers to a Private Placement Memorandum dated January 6, 1997. The Common
Stock shall be as further described in the Memorandum and shall be sold on
the terms and conditions as described herein and in the Memorandum.
SECTION 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
In order to induce the Placement Agent to enter into this Agreement, the
Company hereby represents and warrants to and agrees with the Placement Agent
as follows:
2.01 PRIVATE PLACEMENT MEMORANDUM. The Memorandum with respect to the
Shares and all exhibits thereto, copies of which have heretofore been
delivered by the Company to the Placement Agent, has been carefully prepared
by the Company in conformity with Regulation D ("Regulation D") promulgated
pursuant to the Securities Act of 1933, as amended (the "Act"), and with
comparable provisions of the securities laws of and other states as may be
reasonably requested by the Placement Agent. The Memorandum does not include
any untrue statement of a material fact or omit to state a 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 Company does not make any representations or
warranties as to information contained in or omitted from the Memorandum in
reliance upon written information furnished on behalf of the Placement Agent
specifically for use therein. Any additional written information authorized
by the Company to be provided to prospective purchasers shall not contain any
untrue statement of a material fact or omit to state a 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.
2.02 FINANCIAL STATEMENTS. Xxxxxxx & Associates, which has compiled
the financial statements in the Memorandum, are independent certified public
accountants. The financial statements of the Company, together with related
Schedules and Notes as set forth in the Memorandum, present fairly the
financial position and the results of operations of the Company at the
represented dates and for the represented periods to which they apply; such
financial statements have been prepared in accordance with generally accepted
accounting principles which have been consistently applied throughout the
periods concerned except as otherwise stated therein.
2.03 NO MATERIAL ADVERSE CHANGE. Except as may be reflected in or
contemplated by the Memorandum, subsequent to the dates as of which
information is given in the Memorandum, and prior to the Closing Date (as
defined hereinafter), (i) there shall not be any material adverse change in
the
business, properties, options to lease, leases, financial condition,
management, or otherwise of the Company or in the Company's business taken as
a whole, (ii) there shall not have been any material transaction entered into
by the Company other than transactions in the ordinary course of business;
(iii) the Company shall not have incurred any material obligations,
contingent or otherwise, which are not disclosed in the Memorandum; (iv)
there shall not have been nor will there be any change in the capital stock
or adverse change in the short-term or long-term debt (except current
payments) of the Company; and (v) the Company has not and will not have paid
or declared any dividends or other distributions.
2.04 NO DEFAULTS. The Company is not in default in the performance of
any obligation, agreement or condition contained in any debenture, note or
other evidence of indebtedness or any indenture or loan agreement of the
Company, other than as set forth in the Memorandum. The execution and
delivery of this Agreement and the consummation of the transactions herein
contemplated, and compliance with the terms of this Agreement will not
conflict with or result in a breach of any of the terms, conditions or
provisions of, or constitute a default under, the articles of incorporation
or bylaws of the Company, or any note, indenture, mortgage, deed of trust, or
other agreement or instrument to which the Company is a party or by which it
or any of its property is bound, or any existing law, order, rule,
regulation, writ, injunction, or decree or any government, governmental
instrumentality, agency or body, arbitrator, tribunal or court, domestic or
foreign, having jurisdiction over the Company or its property. The consent,
approval, authorization, or order of any court or governmental
instrumentality, agency or body is not required for the consummation of the
transactions herein contemplated except such as may be required under the Act
or under the securities laws of any state or jurisdiction.
2.05 ORGANIZATION AND STANDING. The Company is, and at the Closing
Date will be, duly organized and validly existing in good standing as a
corporation under the laws of its state of incorporation and with full power
and authority to own its property and conduct its business, present and
proposed, as described in the Memorandum; the Company has full power and
authority to enter into this Agreement and to issue the securities comprising
the Units, and the Company is duly qualified and in good standing as a
foreign corporation in all jurisdictions in which the character of the
property owned or leased or the nature of the business transacted by it makes
such qualification necessary. The Company has paid all fees required by the
jurisdiction of organization and any jurisdiction in which it is qualified as
a foreign corporation.
2.06. CAPITALIZATION. Prior to the Closing Date, the capitalization of
the Company shall consist of a total of no more than 1,400,000 shares of
Common Stock of the Company and 10,000 shares of Series A Preferred Stock
issued and outstanding; 80,000 shares of Common Stock reserved for issuance
upon exercise of a $100,000 convertible note; 200,000 shares of Common Stock
reserved for issuance upon conversion of the Series A Preferred Stock; and
375,000 shares of Common Stock reserved for issuance upon exercise of options
that have been granted or may be granted under the Company's incentive stock
option plan. No other shares will have been issued or will be subject to
issuance upon the exercise of outstanding options, warrants or purchase
rights or upon the conversion of outstanding convertible securities.
2.07. LEGALITY OF SHARES. The Shares have been duly and validly
authorized and, when issued or sold and delivered against payment therefor as
provided in this Agreement, will be validly issued, fully paid and
nonassessable. The Shares will conform in all material respects to all
statements with regard thereto in the Memorandum. A sufficient number of
shares of Common Stock of the Company has been reserved for issuance upon
exercise of the Placement Agent's Warrants.
2.08 PRIOR SALES. No securities of the Company have been sold by the
Company or by, or on behalf of, or for the benefit of, any person or persons
controlling, controlled by, or under common control with the Company at any
time prior to the date hereof, except as set out in the Memorandum. No prior
securities sales by the Company or any affiliate are required to be
integrated with the proposed sale of
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Placement Agent Agreement
Training Devices Incorporated
the Shares such that the availability of Regulation D or any other claimed
exemption from the registration requirements of the Act would be made
unavailable to the offer and sale of the Shares.
2.09. LITIGATION. There is and at the Closing Date there will be no
action, suit or proceeding before any court or governmental agency, authority
or body pending or to the knowledge of the Company threatened which might
result in judgments against the Company, or its officers, directors,
employees or agents which the Company is obligated to indemnify, not
adequately covered by insurance and which collectively might result in any
material adverse change in the condition (financial or otherwise), the
business or the prospects of the Company or would materially affect the
properties or assets of the Company.
2.10. FINDER. No person has acted as a finder in connection with the
transactions contemplated herein, and the Company will indemnify the
Placement Agent with respect to any claim for finder's fees in connection
herewith. The Company further represents that it has no management or
financial consulting or advisory agreement with anyone except as set forth in
the Memorandum. The Company additionally represents that no officer,
director, or 5% or greater shareholder of the Company is, directly or
indirectly, associated with a National Association of Securities Dealers,
Inc. member broker-dealer, other than such persons as the Company has advised
the Placement Agent in writing are so associated.
2.11. CONTRACTS. Each contract to which the Company is a party and to
which reference is made in the Memorandum has been duly and validly executed,
is in full force and effect in all material respects in accordance with their
respective terms, and none of such contracts has been assigned by the
Company; and the Company knows of no present situation or condition or fact
which would prevent compliance with the terms of such contracts, as amended
to date. Except for amendments or modifications of such contracts in the
ordinary course of business, the Company has no intention of exercising any
right which it may have to cancel any of its obligations under any of such
contracts, and has no knowledge that any other party to any such contracts
has any intention not to render full performance under such contracts.
2.12. TAX RETURNS. The Company has filed all federal, state and
municipal tax returns which are required to be filed, and has paid all taxes
shown on such returns and on all assessments received by it to the extent
such taxes have become due. All other taxes with respect to which the
Company is obligated have been paid or adequate accruals have been set up to
cover any such unpaid taxes, including all federal and state withholding and
FICA payments.
2.13. PROPERTY. Except as otherwise set forth in the Memorandum, the
Company has good title, free and clear of all liens, encumbrances and
defects, except liens for current taxes not due and payable, to all property
and assets which are described in the Memorandum as being owned by the
Company, subject only to such exceptions as are not material and do not
adversely affect the present or prospective business of the Company. All of
the claims, options to lease, leases and subleases material to the business
of the Company under which the Company holds or uses any real or personal
property, including those described or referred to in the Memorandum, are in
full force and effect, and the Company is not in default in respect of any
of the terms or provisions of any such claims, options to lease, leases or
subleases, and no claim of any sort has been asserted by anyone adverse to
the Company's rights under any such claims, options to lease, leases or
subleases or affecting or questioning the Company's rights to the continued
possession of the claimed, optioned, leased or subleased property covered by
such claim, options to lease, lease or sublease.
2.14. AUTHORITY. The execution and delivery by the Company of this
Agreement has been duly authorized, and this Agreement is the valid, binding
and legally enforceable obligation of the Company.
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2.15. USE OF PROCEEDS. The Company will apply the proceeds from the
sale of the Shares to the purposes set forth in the Memorandum. The Company
will also establish procedures to ensure proper application and stewardship
of such proceeds.
2.16. NO LIMITATIONS ON PAYMENT OF DIVIDENDS. Except as otherwise set
forth in the Memorandum, there are no limitations, either contractual or
otherwise, nor will the Company enter into any agreement with any other
party, which prevents or limits the Company's ability to declare or pay
dividends on its Common Stock.
SECTION 3
ISSUE, SALE AND DELIVERY OF THE SHARES
3.01. PLACEMENT AGENT APPOINTMENT. The Company hereby appoints the
Placement Agent as its exclusive agent until February 28, 1997, which period
may be extended on one or more occasions until April 30, 1997, by mutual
consent of the Company and the Placement Agent (the "Sales Termination
Date"), to solicit purchasers for up to 400,000 Shares on a "best efforts"
basis; and the Placement Agent, on the basis of the representations and
warranties herein contained, but subject to the terms and conditions herein
set forth, accepts such appointment and agrees to use its best efforts to
find purchasers for the Shares at the price of $1.25 per Share, provided that
the Company reserves the right to reject in good faith any prospective
investor ("Investor") and no commission shall be payable to the Placement
Agent in respect of any proposed sale to any rejected Investor. The Company
may accept subscriptions for an additional 80,000 Shares if the offering is
over-subscribed. No other person will be or has been authorized to solicit
purchasers for the Shares, except those persons selected by the Placement
Agent. Each Investor must subscribe for at least 20,000 Shares ($25,000),
and must certify to the Company that such investor is an "Accredited
Investor" as defined in Rule 501(a) of Regulation D or otherwise satisfies
all requirements imposed by the Company and Placement Agent in sales to a
limited number of non-accredited Investors. Notwithstanding the above, the
Company and the Placement Agent may mutually agree to accept a subscription
for fewer than 20,000 Shares.
3.02. SUBSCRIPTION AGREEMENT. Each Investor desiring to purchase
Shares will be required to complete and execute a Subscription Agreement and,
if applicable, all other offering documents. The Placement Agent shall have
the right to review such documents for each Investor and to reject the tender
of any Investor which it deems not acceptable. All documents concerning any
Investor the Placement Agent has not rejected will be promptly forwarded to
the Company at the address set forth below. The Company, upon receipt of the
documents, will determine within three (3) business days whether it wishes to
accept the Investor. Payment for the Shares subscribed for in the
Subscription Agreements which have been accepted by the Company is to be
delivered to the Company on the Closing Date (as hereinafter defined).
3.03. COMPENSATION OF PLACEMENT AGENT. In consideration for the
Placement Agent's execution of this Agreement, and for the performance of its
obligations hereunder, the Company agrees to pay the Placement Agent a
commission of six percent (6%) of the gross proceeds received from the sale
of the Shares ($.075 per Share). Any commissions payable to the Placement
Agent under this paragraph shall be payable within three days after
acceptance of a subscription by the Company.
3.04. PAYMENT. Payment for Shares sold shall be made to the Company.
As soon as practicable after acceptance of a subscription, the Company shall
deliver by mail to each Investor a certificate for the securities underlying
the Shares that have been purchased and which contains a legend conforming to
the requirements of Rule 502(d)(3) under the Act.
3.05. FUTURE CORPORATE FINANCING TRANSACTIONS. The Company grants to
the Placement Agent right of first refusal for a period of two years after
the First Closing to act as managing underwriter for any public offerings or
placement agent for any private offerings of its securities contemplated by
the Company or any of its subsidiaries. The right shall continue in effect
during the entire two year period
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despite the exercise of the right or the refusal to exercise the right during
the period. The Placement Agent shall have thirty (30) days within which to
determine whether to exercise the right.
In addition, if the Placement Agent determines not to exercise the
right, upon the request of the Placement Agent, the Company agrees that the
Placement Agent will be designated as a co-manager of any public offering of
its securities and will receive at least 20% of the management fee for acting
in such capacity. The Placement Agent may waive this right of first refusal
upon the payment by the Company to the Placement Agent of a fee equal to 1%
of the gross proceeds of the proposed public offering.
3.06. OBLIGATIONS OF PLACEMENT AGENT. The Company agrees that the
obligations of the Placement Agent under this Agreement: (i) shall not
preclude the Placement Agent from contemporaneously participating in the
offering or underwriting of securities of other issuers; (ii) shall not
impose any obligation on the Placement Agent to require its registered
representatives to offer or to sell the Shares, (iii) shall require the
Placement Agent to make an effort to find purchasers for the Shares only to
the extent the Placement Agent is motivated to do so by the compensation and
other provisions of this Agreement, (iv) shall not otherwise limit or prevent
the Placement Agent from carrying on its customary business as a securities
broker-dealer, and (v) shall not require the Placement Agent to engage in any
conduct which is violative of any law or industry standard of conduct
applicable to the Placement Agent.
3.07. REPRESENTATIONS AND WARRANTIES. The parties hereto each
represent that as of each Closing Date the representations and warranties
herein contained and the statements contained in all the certificates
heretofore or simultaneously delivered by any party to another, pursuant to
this Agreement, shall in all material respects be true and correct.
3.08. FORM D. The Placement Agent agrees that it will timely supply
the Company from time to time with all information required from the
Placement Agent for the completion of Form D to be filed with the Securities
and Exchange Commission and such additional information as the Company may
reasonably request to be supplied to the securities authorities of such
states in which the Shares have been qualified for sale or are exempt from
qualification or registration. A copy of all such filings shall be delivered
to the Placement Agent and counsel for the Placement Agent promptly prior to
their being filed.
SECTION 4
OFFERING OF THE SHARES ON BEHALF OF THE COMPANY
4.01. AGENT. In offering the Shares for sale, the Placement Agent
shall offer the Shares solely as an agent for the Company, and such offer
shall be made upon the terms and subject to the conditions set forth herein
and in the Memorandum. The Placement Agent shall commence making such offers
as an agent for the Company as soon after the date of the Memorandum (the
"Offering Date") as it in its sole discretion may deem advisable; provided,
however, that if the Placement Agent does not commence such offering within
ten (10) business days after the Offering Date, it shall promptly advise the
Company.
4.02. SELECTED DEALERS. The Placement Agent may offer and sell the
Shares for the account of the Company through registered broker-dealers
selected by it ("Selected Dealers") and pursuant to a form of Selected Dealer
Agreement between the Placement Agent and the Selected Dealers, pursuant to
which the Placement Agent may allow such concession (out of its commissions)
as it may determine. Such Agreement shall provide that the Selected Dealers
are acting as agents of the Company. On such sale or allotment by the
Placement Agent of any of the Shares to Selected Dealers, the Placement Agent
shall require the Selected Dealer selling any such Shares to agree to offer
and sell the same on the terms and conditions of offering set forth in the
Memorandum and in this Agreement.
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Placement Agent Agreement
Training Devices Incorporated
SECTION 5
MEMORANDUM
5.01. DELIVERY AND FORM OF MEMORANDUM. The Company will procure, at
its expense, as many copies of the Memorandum as the Placement Agent may
reasonably require for the purposes contemplated by this Agreement and shall
deliver said copies of the Memorandum within two (2) business days after
execution of this Agreement at addresses, and in the quantity at each
address, as specified by the Placement Agent. Each Memorandum shall be of a
size and format as determined by the Placement Agent and shall be suitable
for mailing and other distribution.
5.02. AMENDMENT OF MEMORANDUM. If during the offering any event occurs
or any event known to the Company relating to or affecting the Company shall
occur as a result of which the Memorandum as then amended or supplemented
would include an untrue statement of a material fact, or omits to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or if it is
necessary at any time after the Offering Date to amend or supplement the
Memorandum to comply with the Act, the Company will immediately notify the
Placement Agent thereof and the Company will prepare such further amendment
to the Memorandum or supplemental or amended Memorandum or Memoranda as may
be required and furnish and deliver to the Placement Agent, all at the cost
of the Company, a reasonable number of copies of the supplemental or amended
Memorandum which as so amended or supplemented will not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the Memorandum not misleading in the light of the circumstances
existing at the time it is delivered.
5.03. USE OF MEMORANDUM. The Company authorizes the Placement Agent
and the Selected Dealers, if any, in connection with the offer and sale of
the Shares and all dealers to whom any of the Shares may be sold by the
Placement Agent or by any Selected Dealer, to use the Memorandum as from time
to time amended or supplemented, in connection with the offering and sale of
the Shares and in accordance with the provisions of the Act, the Rules and
Regulations thereunder and applicable state securities laws.
SECTION 6
COVENANTS OF THE COMPANY
The Company covenants and agrees with the Placement Agent that:
6.01. NOTIFICATION OF CHANGES. After the date hereof, the Company will
not at any time, whether before or after the date of the Memorandum, make any
amendment or supplement to the Memorandum of which amendment or supplement
the Placement Agent shall not have previously been advised and a copy of
which shall not have previously been furnished to the Placement Agent a
reasonable time period prior to the proposed date of such amendment or
supplement, or which the Placement Agent or counsel for the Placement Agent
shall have reasonably objected to in writing solely on the grounds that it is
not in compliance with the Act or the Rules and Regulations or with other
federal or state laws.
6.02. PROCEEDING. The Company will promptly advise the Placement
Agent, and will confirm such advice in writing, upon the happening of any
event which, in the judgment of the Company, makes any material statement in
the Memorandum untrue or which requires the making of any changes in the
Memorandum in order to make the statements therein not misleading, and upon
the refusal of any state securities administrator or similar official to
qualify, or the suspension of the qualification of the Shares for offering or
sale in any jurisdiction where the Shares are not exempt from qualification
or registration, or of the institution of any proceedings for the suspension
of any exemption or for any other purposes. The Company will use every
reasonable effort to prevent any such refusal to qualify or any such
suspension and to obtain as soon as possible the lifting of any such order,
the reversal of any such refusal, and the termination of any such suspension.
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Placement Agent Agreement
Training Devices Incorporated
6.03. BLUE SKY MEMORANDUM. As a condition of closing, the Company will
provide notice of the Offering under the applicable laws of such states as
may be selected by the Placement Agent and agreed to by the Company.
6.04. AGREEMENT TO PROVIDE INFORMATION. The Company, at its own
expense, will prepare and give and will continue to give such financial
statements and other information to and as may be required by the Commission
or the governmental authorities of states in which the Shares are sold.
6.05. COSTS OF OFFERING. The Company will pay, whether or not the
transactions contemplated hereunder are consummated or this Agreement is
terminated, all costs and expenses incident to the performance of its
obligations under this Agreement, including all expenses incident to the
authorization and issuance of the Shares, any taxes incident to the initial
sale of the Shares hereunder, the fees and expenses of the Company's counsel
and accountants, the costs and expenses incident to the preparation and
printing of the Memorandum and any amendments or supplements thereto, the
cost of preparing and printing all exhibits to the Memorandum, the Blue Sky
Memorandum, the cost of furnishing to the Placement Agent copies of the
Memorandum as herein provided, and the cost of any filing with the Commission
or pursuant to state securities laws, including all filing fees.
6.06. USE OF PROCEEDS. The Company will apply the proceeds from the
sale of the Shares to the purposes set forth in the Memorandum.
6.07. DUE DILIGENCE. Prior to the Final Closing, the Company will
cooperate with the Placement Agent in such investigation as the Placement
Agent may make or cause to be made of the properties, business, management
and operations of the Company in connection with the offering of the Shares,
and the Company will make available to the Placement Agent in connection
therewith such information in its possession as the Placement Agent may
reasonably request.
6.08. DOCUMENTATION. Prior to the Closing Date, the Company will
deliver to the Placement Agent true and correct copies of the articles and
bylaws of the Company and of the minutes of all meetings of the directors and
shareholders of the Company held since inception; true and correct copies of
all material contracts to which the Company is a party; and such other
documents and information as is reasonably requested by the Placement Agent.
To the extent such documents had previously been provided, only amendments or
updates need to be furnished.
6.09. MANAGEMENT COOPERATION. The Company shall provide the Placement
Agent, at any time, an opportunity to meet with and question management of
the Company and authorize management of the Company to speak at such meetings
as the Placement Agent reasonably requests.
6.10. PERIODIC REPORTS. The Company will provide to the Placement
Agent for not less than three (3) years following the Closing Date, quarterly
and annual financial statements, copies of all correspondence to shareholders
and copies of all press releases or news items concerning the Company.
6.11. COMPLIANCE WITH CONDITIONS PRECEDENT. The Company will use all
reasonable efforts to comply or cause to be complied with the conditions
precedent to the several obligations of the Placement Agent specified in this
Agreement.
6.12. REPORTS. The Company agrees to file with the Commission, and
states where required, all reports on Form D in accordance with the
provisions of Regulation D promulgated under the Act and to promptly provide
copies of such reports to the Placement Agent and its counsel.
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Placement Agent Agreement
Training Devices Incorporated
SECTION 7
INDEMNIFICATION
7.01. INDEMNIFICATION BY COMPANY. The Company agrees to indemnify,
defend and hold harmless the Placement Agent, its agents, managers, members,
representatives, guarantors, sureties and each person who controls the
Placement Agent within the meaning of either Section 15 of the Act or Section
20 of the Securities Exchange Act of 1934 ("Indemnified Persons") from and
against any and all losses, claims, damages, liabilities or expenses, joint
or several (including reasonable legal or other expenses incurred by each
such person in connection with defending or investigating any such claims or
liabilities, whether or not resulting in any liability to such Indemnified
Persons), which they or any of them may incur under the Act, or any state
securities law and the Rules and Regulations or the rules and regulations
under any state securities laws or any other statute or at common law or
otherwise and to reimburse such Indemnified Persons for any legal or other
expense (including the cost of any investigation and preparation) incurred by
any of them in connection with any litigation, whether or not resulting in
any liability, but only insofar as such losses, claims, damages, liabilities
and expenses arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the Memorandum or any
amendment or supplement thereto or any authorized sales literature or any
application or other document filed with the Commission or in any state or
other jurisdiction in order to qualify the Shares under the securities laws
thereof, or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, all as of the date of the Memorandum or such amendment or
supplement, as the case may be, or any untrue statement or alleged untrue
statement of a material fact contained in the Memorandum (as amended or
supplemented) or other document, or the failure to comply with the security
registration requirement of the Act or any applicable state law; provided,
however, that the indemnity agreement contained in this Section 7.01 shall
not apply to amounts paid in settlement of any such litigation if such
settlements are effected without the consent of the Company, nor shall it
apply to any Indemnified Persons in respect of any such losses, claims,
damages, liabilities or actions arising out of or based upon any such untrue
statement or alleged untrue statement, or any such omission or alleged
omission, if such statement or omission was made in reliance upon information
furnished in writing to the Company by such Indemnified Persons specifically
for use in connection with the preparation of the Memorandum or any such
amendment or supplement thereto. This indemnity agreement is in addition to
any other liability which the Company may otherwise have to the Indemnified
Persons.
7.02. NOTIFICATION TO COMPANY. The Indemnified Persons agree to notify
the Company promptly of the commencement of any litigation or proceeding
against the Indemnified Persons, of which it may be advised, in connection
with the offer and sale of any of the Shares of the Company, and to furnish
to the Company at its request copies of all pleadings therein and permit the
Company to be an observer therein and apprise it of all the developments
therein. In case of commencement of any action in which indemnity may be
sought from the Company on account of the indemnity agreement contained in
Section 7.01, the Indemnified Persons within ten (10) days after the receipt
of written notice of the commencement of any action against the Indemnified
Persons, shall notify the Company in writing of the commencement thereof. The
omission of the Indemnified Persons to so notify the Company of any such
action shall relieve the Company from any liability which it may have to the
Indemnified Persons on account of the indemnity agreement contained in
Section 7.01 or otherwise. In case any such action shall be brought against
the Indemnified Persons of which the Indemnified Persons shall have notified
the Company of the commencement thereof, the Company shall be entitled to
participate in (and to the extent that it shall wish, to direct) the defense
thereto at its own expense but such defense shall be conducted by counsel of
recognized standing and reasonably satisfactory to the Indemnified Persons in
such litigation. After notice that the Company elects to direct the defense,
the Company will not be liable for any legal or other expenses incurred by
the Indemnified Persons without
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Placement Agent Agreement
Training Devices Incorporated
the prior written consent of the Company. The Company shall not be liable for
amounts paid in settlement of any litigation if such settlement was effected
without its consent.
7.03. INDEMNIFICATION BY PLACEMENT AGENT. The Placement Agent agrees
to indemnify and hold harmless the Company, its agents, officers, directors,
representatives, guarantors, sureties and each person who controls the
Company within the meaning of either Section 15 of the Act or Section 20 of
the Securities Exchange Act of 1934 from and against any and all losses,
claims, damages, liabilities or expenses, joint or several, (including
reasonable legal or other expenses incurred by each such person in connection
with defending or investigating any such claims or liabilities, whether or
not resulting in any liability to such person) which they or any of them may
incur under the Act, or any state securities law and the Rules and
Regulations or the rules and regulations under any state securities laws or
any other statute or at common law or otherwise and to reimburse persons
indemnified as above for any legal or other expense (including the cost of any
investigation and preparation) incurred by any of them in connection with any
litigation, whether or not resulting in any liability, but only insofar as
such losses, claims, damages, liabilities and litigation arise out of or are
based upon any statement in or omission from the Memorandum or any amendment
or supplement thereto, or any application or other document filed with the
Commission or in any state or other jurisdiction in order to qualify the
Shares under the securities laws thereof, or any information furnished
pursuant to Section 3.10 hereof, if such statements or omissions were made
in reliance upon information furnished in writing to the Company by the
Placement Agent or on its behalf specifically for use in connection with the
preparation of the Memorandum or amendment or supplement thereto or
application or document filed. This indemnity agreement is in addition to any
other liability which the Placement Agent may otherwise have to the Company
and other indemnified persons.
7.04. NOTIFICATION TO PLACEMENT AGENT. The Company and other
Indemnified Persons agree to notify the Placement Agent promptly of
commencement of any litigation or proceedings against the Placement Agent or
other Indemnified Persons, in connection with the offer and sale of any of the
Shares and to furnish to the Placement Agent, at its request, copies of all
pleadings therein and permit the Placement Agent to be an observer therein
and apprise the Placement Agent of all developments therein, all at the
Company's expense. In case of commencement of any action in which indemnity
may be sought from the Placement Agent on account of the indemnity agreement
contained in Section 7.03, the Company or other Indemnified Persons shall
notify the Placement Agent of the commencement thereof in writing within ten
(10) days after the receipt of written notice of the commencement of any
action against the Company or against any other person indemnified, shall
notify the Placement Agent in writing of such notification. The omission of
the Company or other Indemnified Persons to so notify the Placement Agent of
any such action shall relieve the Placement Agent from any liability which it
may have to the Company, its agents, officers, directors, representatives,
guarantors, sureties or any person controlling it, on account of the
indemnity agreement contained in Section 7.03 or otherwise. In case any such
action shall be brought against the Company or any other person indemnified
of which the Company shall have notified the Placement Agent of the
commencement thereof, the Placement Agent shall be entitled to participate in
(and to the extent that it shall wish, to direct) the defense thereto at its
own expense, but such defense shall be conducted by counsel of recognized
standing and reasonably satisfactory to the Company or other persons
indemnified in such litigation. After notice that the Placement Agent elects
to direct the defense, the Placement Agent will not be liable for any legal
or other expense incurred by the indemnified party without the prior written
consent of the Placement Agent. The Placement Agent shall not be liable for
amounts paid in settlement of any litigation if such settlement was effected
without its consent.
7.05 INDEMNIFICATION OF SELECTED DEALERS. The Company agrees to
indemnify Selected Dealers, if any, and its agents, officers, directors,
representatives, guarantors and sureties on substantially the same terms and
conditions as it indemnifies the Placement Agent and Indemnified Persons
pursuant to Section 7.01 provided that each such Selected Dealer agrees in
writing with the Placement Agent to indemnify the Company and its agents,
officers, directors, representatives, guarantors and sureties on
substantially the same terms and conditions as the Placement Agent
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Placement Agent Agreement
Training Devices Incorporated
indemnifies the Company in Section 7.03. The Company hereby authorizes the
Placement Agent to enter into agreements with Selected Dealers providing for
such indemnity by the Company.
7.06. CONTRIBUTION. If the indemnification provided for in Sections
7.01, 7.03 and 7.05 is unavailable to an indemnified party in respect of any
losses, claims, damages or liabilities referred to therein, then each
indemnifying party under either such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable
by such indemnified party as a result of such losses, claims, damages or
liabilities: (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and by the Placement Agent
or Selected Dealer on the other from the offering and sale of the Shares, or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault
of the Company on the one hand and of the Placement Agent or Selected Dealer
on the other in connection with the statements or omissions which resulted in
such losses, claims, damages or liabilities, as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the Placement Agent or Selected Dealer 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 bears to the total
commissions received by the Placement Agent or Selected Dealer, as in each
case set forth in the Memorandum. The relative fault of the Company and of
the Placement Agent or Selected Dealer shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates to
information supplied by the Company or by the Placement Agent or Selected
Dealer and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company and the Placement Agent agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages and liabilities referred to in the
immediately preceding paragraph shall be deemed to include, subject to
the limitations set forth above, any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of this
Section 7, the Placement Agent shall not be required to contribute any amount
in excess of the amount by which the total price at which the Shares sold by
it and distributed exceeds the amount of any damages which such Placement
Agent otherwise has been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution hereunder from any person who was not
guilty of such fraudulent misrepresentation.
7.07. LIMITATION OF LEGAL EXPENSES. Notwithstanding anything herein to
the contrary, the indemnification for legal expenses included in Sections 7.01,
7.03 and 7.04 shall be limited to the legal expenses of one law firm, except
in the event of a bona fide conflict of interest, in which event such legal
expenses shall be limited to the legal expenses of two law firms.
SECTION 8
EFFECTIVENESS OF AGREEMENT
This Agreement shall become effective upon execution by all parties
hereto.
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Placement Agent Agreement
Training Devices Incorporated
SECTION 9
CONDITIONS OF THE PLACEMENT AGENT'S OBLIGATIONS
The Placement Agent's obligations to act as agent of the Company
hereunder shall be subject to the accuracy of the representations and
warranties on the part of the Company herein contained, to the performance by
the Company of all its agreements herein contained, to the fulfillment of or
compliance by the Company with all covenants and conditions hereof, and to
the following additional conditions:
9.01. NO MATERIAL CHANGES. Except as contemplated herein or as set forth
in the Memorandum, during the period subsequent to the date of the last
balance sheet included in the Memorandum the Company: (a) shall have
conducted its business in the usual and ordinary manner as the same was being
conducted on the date of the last balance sheet included in the Memorandum,
and (b) except in the ordinary course of its business, the Company shall not
have incurred any material liabilities, claims or obligations (direct or
contingent) or disposed of any material portion of its assets, or entered
into any material transaction or suffered or experienced any materially
adverse change in its condition, financial or otherwise. The capitalization
and short term debt of the Company shall be substantially the same as at the
date of the latest balance sheet included in the Memorandum, without
considering the proceeds from the sale of the Shares, other than as may be
set forth in the Memorandum, and except as the financial statements of the
Company reflect the result of continued losses from operations consistent
with prior periods.
9.02. AUTHORIZATION. The authorization for the issuance of the
securities comprising the Shares and the use of the Memorandum and all
corporate proceedings and other legal matters incident thereto and to this
Agreement shall be reasonably satisfactory in all respects to counsel to the
Placement Agent.
9.03. SATISFACTORY FORM OF DOCUMENTS. All opinions, letters,
certificates and evidence mentioned above or elsewhere in this Agreement
shall be deemed to be in compliance with the provisions hereof only if they
are in form and substance satisfactory to counsel to the Placement Agent,
whose approval shall not be unreasonably withheld.
9.04. CERTIFICATES. Any certificate signed by an officer of the Company
and delivered to the Placement Agent shall be deemed a representation and
warranty by the Company to the Placement Agent as to the statements made
therein.
SECTION 10
TERMINATION
10.01. FAILURE TO COMPLY WITH AGREEMENT. This Agreement may be
terminated by either party hereto by notice to the other party in the event
that such party shall have failed or been unable to comply with any of the
terms, conditions or provisions of this Agreement required by the Company or
the Placement Agent to be performed, complied with or fulfilled by it within
the respective times herein provided for, unless compliance therewith or
performance or satisfaction thereof shall have been expressly waived by the
non-defaulting party in writing.
10.02. GOVERNMENT RESTRICTIONS. This Agreement may be terminated by
either party by notice to the other party at any time if, in the judgment of
either party, payment for and delivery of the Shares are rendered
impracticable or inadvisable because: (i) additional material governmental
restrictions not in force and effect on the date hereof shall have been
imposed upon the trading in securities generally, or minimum or maximum
prices shall have been generally established on the New York Stock Exchange,
the Chicago Board of Trade or the Commodity Futures Trading Commission, or
trading in securities generally on such Exchange, Board, or Commission shall
have been suspended, or a
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Placement Agent Agreement
Training Devices Incorporated
general moratorium shall have been established by federal or state
authorities; or (ii) a war or other national calamity shall have occurred; or
(iii) the condition of any matter affecting the Company or any other
circumstance is such that it would be undesirable, impracticable or
inadvisable in the judgment of the Placement Agent to proceed with this
Agreement or with the sale of the Shares.
10.03. LIABILITY ON TERMINATION. Any termination of this Agreement
pursuant to this Section 10 shall be without liability of any character
(including, but not limited to, loss of anticipated profits or consequential
damages on the part of any party thereto); except that the Company and the
Placement Agent shall be obligated to pay, respectively, all losses, claims,
damages or liabilities, joint or several, under Section 7.01 in the case of
the Company, Section 7.03 in the case of the Placement Agent and Section 7.06
as to all parties.
SECTION 11
PLACEMENT AGENT'S REPRESENTATIONS AND WARRANTIES
The Placement Agent represents and warrants to and agrees with the
Company that:
11.01. REGISTRATION. The Placement Agent is registered as a
broker-dealer with the Securities and Exchange Commission, and is a member in
good standing of the National Association of Securities Dealers, Inc.
("NASD"). The Placement Agent is registered or otherwise qualified to sell
the Shares in each state in which the Placement Agent sells such Shares or is
exempt from such registration or qualification.
11.02. ABILITY TO ACT AS AGENT. There is not now pending or, to the
knowledge of the Placement Agent, threatened against the Placement Agent any
action or proceeding of which the Placement Agent has been advised, either in
any court of competent jurisdiction, before the NASD, the Securities and
Exchange Commission or any state securities commission concerning the
Placement Agent's activities as a broker or dealer, nor has the Placement
Agent been named as a "cause" in any action or proceeding, any of which may
be expected to have a material adverse effect upon the Placement Agent's
ability to act as agent to the Company as contemplated herein.
11.03. TERMINATION OF AGREEMENT. In the event any action or proceeding
of the type referred to in Section 11.02 above (except for actions referred
to in the Memorandum) shall be instituted or, to the knowledge of the
Placement Agent, threatened against the Placement Agent at any time prior to
the effective date hereunder, or in the event there shall be filed by or
against the Placement Agent in any court pursuant to any federal, state,
local or municipal statute, a petition in bankruptcy or insolvency or for
reorganization or for the appointment of a receiver or trustee of its assets
or if the Placement Agent makes an assignment for the benefit of creditors,
the Company shall have the right on three (3) days written notice to the
Placement Agent to terminate this Agreement without any liability to the
Placement Agent of any kind.
SECTION 12
PLACEMENT AGENT'S WARRANTS
12.01. WARRANTS. The Company shall sell to the Placement Agent, for a
total of $100, warrants to purchase Shares ("Placement Agent's Warrants") on
the basis of one (1) warrant for each ten (10) Shares sold in the Offering.
Each Placement Agent's Warrant will entitle the holder to purchase one share
at the exercise price of $1.25 per Share. The Placement Agent's Warrants will
be exercisable for a period of five (5) years after their issuance; and if
the Placement Agent's Warrants are not exercised during this term, they
shall, by their terms, automatically expire. The Company shall set aside and
at all times have available a sufficient number of shares of its Common Stock
to be issued upon the exercise of the Placement Agent's Warrants. The
Warrants shall contain a "cashless exercise" provision.
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Placement Agent Agreement
Training Devices Incorporated
12.02. REGISTRATION RIGHTS. The Company understands and agrees that if,
at any time during the seven-year period commencing the date the Placement
Agent's Warrants are issued, it should file a Registration Statement with the
Commission pursuant to the Act, for a public offering of securities, either
for the account of the Company or for the account of any other person, the
Company at its own expense, will offer to holders of Placement Agent's
Warrants or shares of common stock previously issued upon the exercise
thereof, the opportunity to register or qualify for public offering the
Placement Agent's Warrants and shares of common stock underlying the
Placement Agent's Warrants or the shares so issued. This paragraph is not
applicable to a Registration Statement filed with the Securities and Exchange
Commission on Forms S-4 or S-8 or any other inappropriate forms; nor does it
apply to the public offering.
In addition to the rights above provided, the Company will cooperate with
the then holder(s) of the Placement Agent's Warrants and common stock issued
upon the exercise of the Placement Agent's Warrants, no more often than once
in any twelve (12) month period, in preparing and signing any Registration
Statement other than the Registration Statement discussed above, required in
order to sell or transfer the aforesaid Placement Agent's Warrants and
underlying shares of common stock and shall supply all information required
therefore, but such additional Registration Statement shall be at the then
holder(s) cost and expense.
SECTION 13
NOTICE
Except as otherwise expressly provided in this Agreement:
13.01. NOTICE TO COMPANY. Whenever notice is required by the provisions
of this Agreement to be given to the Company, such notice shall be in writing
addressed to the Company as provided below:
Training Devices Incorporated
Xxxxx Xxxxxxxxx, President
00 Xxxxxxxxx Xxxxx Xxxx, #X
Xxxxxxxxx, Xxxxxxxx 00000
with a copy to:
Xxxx X. Xxxxxx, Esq.
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000-0000
13.02. NOTICE TO PLACEMENT AGENT. Whenever notice is required by the
provisions of this Agreement to be given to the Placement Agent, such notice
shall be given in writing addressed to the Placement Agent as follows:
Bathgate XxXxxxxx Capital Group, LLC
0000 X. Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
SECTION 14
MISCELLANEOUS
14.01. BENEFITS. This Agreement is made solely for the benefit of the
Placement Agent, the Company, their respective agents, officers, directors,
managers, members, representatives, guarantors, sureties and any controlling
person referred to in Section 15 of the Act or Section 20 of the Securities
Exchange Act of 1934, and their respective successors and assigns, and no
other person shall acquire or have any right under or by virtue of this
Agreement. The term "successor" or the term "successors and assigns" as used
in this Agreement shall not include any purchasers, as such, of any of the
Shares.
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Placement Agent Agreement
Training Devices Incorporated
14.02. SURVIVAL. The respective indemnities, agreements,
representations, warranties, covenants and other statements of the Company or
the Company's officers, as set forth in or made pursuant to this Agreement
and the indemnity agreements of the Company and the Placement Agent contained
in Section 7 hereof shall survive and remain in full force and effect,
regardless of (i) any investigation made by or on behalf of the Company or
the Placement Agent or any affiliated persons thereof or any controlling
person of the Company or of the Placement Agent, and (ii) delivery of or
payment for the Shares. Any successor of the Company, the Placement Agent and
Selected Dealers, or any controlling person, or other person indemnified by
Section 7, as the case may be, shall be entitled to the benefits hereof.
14.03. GOVERNING LAW. The validity, interpretation and construction of
this Agreement and of each part hereof will be governed by the laws of the
State of Colorado. The parties agree that any dispute which arises between
them relating to this Agreement or otherwise shall be submitted for
resolution in conformity with the Securities Arbitration Rules of the
American Arbitration Association. The parties agree that the situs of an
arbitration hearing before the arbitrators shall be in Denver, Colorado, and
each party shall request such situs.
14.04. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which will constitute an original.
Please confirm that the foregoing correctly sets forth the Agreement
between you and the Placement Agent.
Very truly yours,
BATHGATE XXXXXXXX CAPITAL GROUP, LLC
1/7/97 By /s/ Xxxxxx X. XxXxxxxx
------------------ ---------------------------------
Date Xxxxxx X. XxXxxxxx
We hereby confirm as of the date hereof that the above letter sets forth
the Agreement between the Placement Agent and us.
TRAINING DEVICES INCORPORATED
1/7/97 By /s/ Xxxxx Xxxxxxxxx
------------------ ----------------------------------
Date Xxxxx Xxxxxxxxx, President
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Placement Agent Agreement
Training Devices Incorporated
