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EXHIBIT 10 (b)
PLACEMENT AGREEMENT
THIS PLACEMENT AGREEMENT (this "Agreement") is made on October 12,
1999, between BULLET ENVIRONMENTAL TECHNOLOGIES, INC., a Delaware corporation
(the "Company"), and MFC MERCHANT BANK S.A., a Swiss Corporation (the "Agent").
BACKGROUND
The Company wishes to privately place with purchasers at least
1,000,000 but no more than 2,000,000 Units (as hereinafter defined), at $5.00
per Unit, the proceeds of which will be used for working capital and general
corporate purposes.
The Company wishes to appoint the Agent as placement agent in
connection with such private placement.
In consideration of the mutual representations, warranties, covenants
and agreements contained in this Agreement, the parties agree as follows:
STATEMENT OF TERMS
1. DEFINITIONS
In this Agreement, the following terms have the following meanings:
(a) "Act" means the Securities Act of 1933 (United States), as
amended, the regulations and rules made thereunder and all
administrative policy statements, blanket orders, notices,
directions and rulings issued by the United States Securities
and Exchange Commission.
(b) "Closing" means the day on which Units are issued to the
Purchasers.
(c) "Company Stock" means the common voting stock, par value
$0.0001, of the Company.
(d) "Private Placement" means the offering of the Units on the
terms and conditions set forth in this Agreement or the
Subscription Agreements.
(e) "Private Placement Memorandum" means any private placement
memorandum, and any amendments made to such private placement
memorandum, which is required by the Act to be prepared, or
which is prepared, by the Company in connection with the sale
of any of the Units.
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(f) "Purchasers" means the purchasers of Units pursuant to the
Private Placement.
(g) "Subscription Agreement" means any Subscription Agreement in
connection with the Private Placement substantially in the
form of Attachment I, attached hereto.
(h) "Unit" means one share of the Company Stock and one warrant
for the purchase of one additional share of the Company Stock
for the price of Ten Dollars ($10.00) per share, which
warrant must be exercised within one year.
2. APPOINTMENT OF AGENT
The Company appoints the Agent as its exclusive agent and the Agent
accepts the appointment and agrees to act as the exclusive agent of
the Company to use its commercially reasonable efforts to find and
introduce to the Company potential purchasers to purchase up to
1,000,000, but no more than 2,000,000 Units, at a price of $5.00 per
Unit, by way of private placement prior to November 15, 1999.
3. COOPERATION AND INFORMATION
In connection with the Agent's activities hereunder on the Company's
behalf, the Company agrees to cooperate with the Agent and will
furnish to, or cause to be furnished to, the Agent, any and all
information and data reasonably requested by the Agent concerning the
Company, the Private Placement and the use of the proceeds generated
by the Private Placement.
4. OFFERING RESTRICTIONS
The Agent will only sell the Units to entities who represent
themselves as being:
(a) entities purchasing as principal who are accredited investors
residing outside the United States; and
(b) otherwise qualified to purchase the Units as described in the
Subscription Agreement.
The Agent agrees that at the time any buy order for the Units is
placed by clients of the Agent, the Purchaser will be outside the
United States, or the Agent and all persons acting on its behalf will
reasonably believe that the Purchaser is outside the United States,
and neither the Agent nor any person acting on its behalf will have
knowledge that such transaction has been pre-arranged with a Purchaser
within the United States.
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Neither the Company, the Agent, nor any of their respective
affiliates, nor any person acting on behalf of any of them, will offer
or sell any of the Units to persons or entities in the United States,
or undertake any activity for the purpose of, or that could reasonably
be expected to have the effect of, conditioning the market for the
Units in the United States.
5. PRIVATE PLACEMENT MEMORANDUM
The Company will ensure that any Private Placement Memorandum which is
prepared and delivered by the Company will conform with any and all
the requirements of the Act and will be reasonably satisfactory to the
Agent. The Company will deliver to the Agent, as soon as possible
after the date on which the Company gives a "Transaction Notice" (as
described in that Investor Issuance Deposit Agreement between the
Company and Agent of even date hereof (the "Deposit Agreement"))
sufficient commercial copies of any Private Placement Memorandum which
has been prepared and the names and addresses of each person whom the
Company has provided the Private Placement Memorandum. If prior to the
Closing, there is any material adverse change in the Company's
business which has not previously been disclosed to the Agent, the
Company will as soon as possible inform the Agent of the change and
prepare an appropriate amendment to the Private Placement Memorandum.
Delivery by the Company of a Private Placement Memorandum will
constitute the Company's authorization to the Agent to utilize the
Private Placement Memorandum in connection with the Private Placement,
and will constitute a representation and warranty by the Company that
the Private Placement Memorandum does not contain any
misrepresentations (as defined in the Act), other than with respect to
information supplied by and relating solely to the Agent. If the
Company has delivered a Private Placement Memorandum to the Agent
which has been prepared in accordance with this Agreement, then the
Agent will, on behalf of the Company, deliver a copy of such Private
Placement Memorandum to each potential purchaser introduced to the
Company by the Agent.
6. SUBSCRIPTIONS
The Agent will use its best efforts to obtain from each Purchaser
introduced by the Agent on or before November 15, 1999, duly completed
and signed subscriptions in the form of the Subscription Agreement or
in such other form consented to by the Company and the Agent and
executed by the Purchaser.
7. AGENT'S FEE
In consideration for performing the duties of placement agent under
this Agreement and performing the duties of custody agent under the
Deposit Agreement, the Agent will be entitled to a combined total fee
under both this Agreement and the Deposit Agreement equal to (i) eight
percent (8%) of the amount of the proceeds of the Private Placement
(which in no event will be less
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than $500,000) (the "Fee Portion") distributable to the Company under
the terms contained herein, and (ii) reimbursement of reasonable
out-of-pocket costs and expenses incurred by the Agent in connection
with the Private Placement (the "Financing Expenses"). The combined
total fee will be paid as set forth in Section 8 of the Deposit
Agreement. The Agent acknowledges and agrees that the above-defined
Fee Portion and Financing Expenses constitute the entire amounts to be
paid by the Company in consideration of the Private Placement. In the
event that the Agent engages any sub-agents for the placement or
syndication of the Units, the Agent agrees to be solely responsible
for paying such sub-agents from the fees otherwise payable hereunder,
and no additional fee amounts will be due or owing from the Company
and the Company will have no obligation or liability to any sub-agent
for any amounts.
It is expressly understood and agreed by the parties to this Agreement
that the aforesaid fee is the same fee, and not an additional one, to
be paid to Agent under the Deposit Agreement, and that Agent is
entitled to a combined fee consisting of the Fee Portion and
reimbursement of the Financing Expenses upon the performance of its
duties under both this Agreement and the Deposit Agreement and the
disbursements set forth in Section 7(a) of the Deposit Agreement. It
is also expressly understood and agreed by the parties that in no
event will any fee or reimbursement of any expenses, whether arising
in connection with or under this Agreement, the Deposit Agreement, or
both, be payable to Agent if the proceeds of the Private Placement are
not disbursed to the Company in accordance with the provisions of
Section 7 and 8 of the Deposit Agreement and that, in any event, no
Fee Portion will be payable to Agent as to any proceeds of the Private
Placement not disbursed to the Company.
8. REPRESENTATIONS AND WARRANTIES
The Company represent and warrants to the Agent that:
(a) it is a valid and subsisting corporation under the law of the
jurisdiction in which it was incorporated;
(b) it is registered to do business in accordance with applicable
law in the jurisdictions required to the extent necessary in
connection with the transaction contemplated by this
Agreement;
(c) this Agreement has been, or will be as of the date of
execution, duly authorized by all necessary corporate action
on the part of the Company, and the Company has full
corporate power and authority to undertake the Private
Placement;
(d) the authorized and issued capital of the Company are as
disclosed in the Private Placement Memorandum and the
outstanding shares of the Company are fully paid and
non-assessable;
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(e) the Company will reserve or set aside sufficient shares in
its treasury to issue the Units and all such shares will be
duly and validly issued as fully paid and non-assessable;
(f) the Private Placement Memorandum, subscription form and all
other written or oral representations made by the Company to
a Purchaser or potential Purchaser in connection with the
Private Placement will be accurate in all material respects
and will omit no fact, the omission of which will make such
representations misleading or incorrect;
(g) the Company has complied in all material respects and will so
comply with the requirements of all applicable corporate and
securities laws and administrative policies and directions,
including, without limitation, the Act, in relation to the
issuance and trading of its securities and in all matters
relating to the Private Placement;
(h) there is not presently, and will not be until the Closing,
any material adverse change in the business of the Company
which has not been or will not be fully disclosed to the
Agent;
(i) the issuance and sale of the securities by the Company and
the Agent does not and will not conflict with, and does not
and will not result in a breach of, any of the terms of its
organizational documents or any material agreement or
instrument to which the Company is a party;
(j) neither the Company nor any of its subsidiaries is a party to
any actions, suits or proceedings which could materially
affect its business or financial condition and to the best of
the Company's knowledge no such actions, suits or proceedings
are contemplated or have been threatened which are not
disclosed in the Private Placement Memorandum;
(k) there are no judgments against the Company or any of its
subsidiaries, if any, which are unsatisfied, nor are there
any consent decrees or injunctions to which the Company or
any of its subsidiaries, if any, is subject;
(l) no order halting or suspending trading in securities of the
Company nor prohibiting the sale of such securities has been
issued to and is outstanding against the Company or its
directors, officers or promoters and no investigations or
proceedings for such purposes are pending or threatened;
(m) except as disclosed in the Private Placement Memorandum, no
person has any right, agreement or option, present or future,
contingent or absolute, or any right capable of becoming such
a right, agreement or option, for the issuance or allotment
of any unissued shares in the capital of the Company
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or its subsidiaries, if any, or any other security
convertible into or exchangeable for any such shares, or to
require the Company or its subsidiaries, if any, to purchase,
redeem or otherwise acquire any of the issued and outstanding
shares in its capital;
(n) other than the Agent, no person, firm or corporation acting
or purporting to act at the request of the Company is
entitled to any brokerage, agency or finder's fee in
connection with the transactions described herein; and
(o) the representations and warranties in this Section are
materially true and correct and will remain so as of the
Closing.
The Agent represents and warrants to the Company that:
(a) it is a valid and subsisting corporation under the law of the
jurisdiction in which it was incorporated;
(b) it is registered to do business in accordance with applicable
law in the jurisdictions required to the extent necessary in
connection with the transactions contemplated by this
Agreement;
(c) this Agreement has been, or will be as of the date of
execution, duly authorized by all necessary corporate action
on the part of the Agent, and the Agent has full corporate
power and authority to perform its obligations under this
Agreement;
(d) it is not a "U.S. person" as defined under the Act;
(e) it will sell the Units in compliance with the Act;
(f) it will only make representations consistent with the
information in the Private Placement Memorandum, the
Subscription Agreements and any other materials provided by
the Company; and
(g) the representations and warranties in this Section are
materially true and correct and will remain so as of the
Closing.
9. TERMINATION
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The Agent may terminate its obligations under this Agreement by notice
in writing to the Company at any time before the Closing if:
(a) a material adverse change in the business of the Company has
occurred;
(b) an inquiry or investigation from or by a governmental
regulatory agency (whether formal or informal) in relation to
the Company, or the Company's directors, officers or
promoters, which may have a material adverse offset on the
proposed offering is commenced or threatened in writing;
(c) any order to cease, halt or suspend trading (including an
order prohibiting communications with persons in order to
obtain expressions of interest) in the securities of the
Company prohibiting or restricting the Private Placement is
made by a competent regulatory authority and that order is
still in effect; or
(d) the Company breaches any material term of this Agreement and
fails to cure such breach within five (5) business days after
written notice thereof from the Agent.
10. CONFIDENTIALITY
Each party to this Agreement agrees that it will not make any public
announcements of any kind and will not release or issue any reports,
statements or releases relating or pertaining to the Private
Placement, this Agreement or the transactions contemplated herein,
without the prior written consent of the other party, except (i) to
professional advisors under a duty of confidentiality as necessary to
consummate the transactions contemplated herein, and (ii) as may be
required upon the written advice of counsel to comply with applicable
laws or regulatory requirements after consulting with the other party
and seeking their consent to such announcement, report, statement or
release. Each party agrees that such information will be used solely
for the purposes of consummating the transactions contemplated herein
and that such information will not be used or disclosed other than in
furtherance of such purposes under the terms of this Agreement.
11. INDEMNIFICATIONS
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The Company will indemnify the Agent and each of the Agent's agents,
directors, officers and employees (collectively, the "Indemnified
Parties") and save them harmless against all losses, claims, damages
or liabilities:
(a) existing by reason of a material misstatement contained in
the Private Placement Memorandum, Subscription Agreement or
other written or oral representation made by the Company to a
Purchaser or potential Purchaser in connection with the
Private Placement by reason of the omission to state a
material fact necessary to make such statements or
representations not misleading (except for information and
statements supplied by and relating solely to the Agent);
(b) arising directly or indirectly out of any order made by any
regulatory authority based upon an allegation that any such
material misstatement, misrepresentation or omission exists
(except information and statements supplied by and relating
solely to Agent), that trading in or distribution of any of
the securities is to cease;
(c) resulting from the failure by the Company to obtain any
required regulatory approval to the Private Placement unless
the failure to obtain such approval is the result of a breach
of this Agreement by the Agent;
(d) resulting from a material breach by the Company of any of the
terms of this Agreement; or
(e) if, following the completion of a sale of any of the Units, a
determination is made by any competent authority setting
aside the sale, unless that determination arises out of an
act or omission by the Agent.
If any action or claim is brought against an Indemnified Party in
respect of which indemnity may be sought from the Company pursuant to
this Agreement, the Indemnified Party will promptly notify the Company
in writing. The Company will assume the defense of the action or
claim, including the employment of counsel and the payment of all
expenses. The Indemnified Party will have the right to employ counsel
acceptable to the Company, and the Company will pay the reasonable
documented fees and expenses of such counsel.
The indemnity provided for in this Section will not be limited or
otherwise affected by any other indemnity obtained by the Indemnified
Party from any other person in respect of any matters specified in
this Agreement and will continue in full force and effect until all
possible liability of the Indemnified Parties arising out of the
transactions contemplated by this Agreement has been extinguished by
the operation of law.
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If indemnification under this Agreement is found in a final judgment
(not subject to further appeal) by a court of competent jurisdiction
not to be available for reason of public policy, the Company and the
Indemnified Parties will contribute to the losses, claims, damages,
liabilities or expenses (or actions in respect thereof) for which such
indemnification is held unavailable in such proportion as is
appropriate to reflect the relative benefits to and fault of the
Company, on the one hand, and the Indemnified Parties on the other
hand, in connection with the mater giving rise to such losses, claims,
damages, liabilities or expenses (or actions in respect thereof). No
person found liable for a fraudulent misrepresentation (within the
meaning of applicable securities laws) will be entitled to
contribution from any person who is not found liable for such
fraudulent misrepresentation.
To the extent that any Indemnified Party is not a party to this
Agreement, the Agent will obtain and hold the right and benefit of
this Section in trust for and on be half of such Indemnified Party.
The Agent will indemnify the Company and each of the Company's agents,
directors, officers and employees and save them harmless against all
losses, claims, damages or liabilities resulting from the Agent's
material breach of any term of this Agreement.
The indemnities contained in this Section will survive for a period of
one (1) year from the date of the Closing.
12. GOVERNING LAW
This Agreement will be governed and construed in accordance with the
laws of Delaware.
13. ENFORCEMENT
Each party to this Agreement (i) submits to personal jurisdiction in
Delaware for the enforcement of this Agreement or in connection with
this Agreement, and (ii) waives any and all rights under the laws of
any state to object to jurisdiction within Delaware for the purposes
of litigation to enforce this Agreement or in connection with this
Agreement.
14. WAIVER OF JURY TRIAL
Each of the parties hereto knowingly, voluntarily, and irrevocably
waives any right it may have to a trial by jury in respect of any
claim based upon, arising out of or in connection with this Agreement
or the Private Placement.
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15. ASSIGNMENT AND SELLING GROUP PARTICIPATION
This Agreement may not be assigned in whole, or in part, by either
party without the prior written consent of the other party.
The Agent may offer selling group participation in compliance with
applicable laws and consistent with the normal course of brokerage
business to selling groups of other licensed dealers, brokers, and
investment dealers, who may or may not be offered part of the Agent's
fee defined in Section 7 of this Agreement.
16. BENEFITS; NO THIRD PARTY BENEFICIARIES
This Agreement is specifically for the benefit of the parties hereto
and the Indemnified Parties as set forth in Section 11 hereof, and is
binding on the aforesaid parties to this Agreement and their
successors and permitted assigns. None of the provisions of this
Agreement is or may be construed as for the benefit of or enforceable
by any other person.
17. NOTICES; DELIVERIES
Any notice required to be given hereunder must be in writing and
delivered by fax, hand delivery or sent by Federal Express, DHL or
other recognized international express courier service that provides
receipt of delivery, to the party to whom it is to be delivered at the
addresses set forth below. Any notice given by fax must be sent to the
fax numbers provided below and the electronic confirmation of the
sender will be evidence of receipt. Any notice given by fax must also
be sent by express courier on the same day as the fax transmission or
the next business day.
If to the Company: Bullet Environmental Technologies, Inc.
0000 Xxxx Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0
Attention: G.W. Xxxxxx Xxxxxxx, President
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to: Powell, Goldstein, Xxxxxx & Xxxxxx LLP
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxx Xxxxx
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
[Continued on the following page.]
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If to Agent: MFC Merchant Bank S.A.
0 Xxxxx Xx Xxxx
0000 Xxxxxx, Xxxxxxxxxxx
Attention: Mr. Xxxxx Xxxxxx
Tel: 00-00-000-0000
Fax: 00-00-000-0000
18. TIME
Time is of the essence of this Agreement.
19. ENTIRE AGREEMENT; AMENDMENTS
This Agreement constitutes the entire Agreement and understanding
among the parties hereto relating to the Private Placement described
herein and supersedes any and all prior agreements and understandings
relating to the matters provided for herein. No alteration, waiver,
amendment, change or supplement hereto will be binding or effective
unless the same is set forth in writing, signed by a duly authorized
representative of both parties.
20. COUNTERPARTS
This Agreement may be executed in one or more counterparts each of
which will be deemed to be an original. In order for this Agreement to
be effective, it will not be necessary for all counterparts to be
signed by each party hereto, provided that at least one counterpart of
this Agreement is signed by each of the parties hereto.
21. FAX EXECUTION
This Agreement may be executed by delivery of a signed signature page
by fax and such fax execution will be effective in all respects, but
must be followed by an exchange of copies by one of the methods
provided in the "Notices" section of this Agreement.
[Signatures on following page.]
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EXECUTED on , 1999.
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BULLET ENVIRONMENTAL TECHNOLOGIES, INC.
By: /s/
-----------------------------------
G.W. Xxxxxx Xxxxxxx
President
MFC MERCHANT BANK S.A.
By: /s/
-----------------------------------
Name:
Title: President
