EXHIBIT 99.5
PLACEMENT AGENT AGREEMENT
THIS AGREEMENT ("Agreement") is made as of the 17th day of July, 1998,
by and between EA INDUSTRIES, INC., a corporation organized under the laws of
the state of New Jersey ("Company"), and XXXXXX INVESTMENTS, LLC, a Georgia
limited liability company (the "Agent").
WITNESSETH:
WHEREAS, the Company proposes to issue and sell its 6% Convertible
Notes, dated on or about July 16, 1998 (the "Convertible Notes"), which are
accompanied by a warrant or warrants to purchase a number of shares of Common
Stock of the Company (together the "Securities") resulting in gross proceeds to
the Company of a minimum of Two Million Dollars ($2,000,000) and a maximum of
Four Million Five Hundred Thousand Dollars ($4,500,000), in an offering (the
"Offering") not involving a public offering under the Securities Act of 1933, as
amended (the "Act"), pursuant to an exemption from the registration requirements
of the Act under Regulation D promulgated under the Act ("Regulation D"), as
described below; and
WHEREAS, the Agent has offered to assist the Company in placing the
Securities on a "best efforts" basis with respect to sales of Securities
thereafter up to the Maximum Shares (as defined below), and the Company desires
to secure the services of the Agent on the terms and conditions hereinafter set
forth;
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
promises, conditions and covenants herein contained, the parties hereto do
hereby agree as follows:
1. Engagement of Agent. The Company on the basis of the representations and
warranties contained herein, but subject to the terms and conditions herein set
forth, hereby appoints the Agent as its exclusive placement agent for the
Offering, to sell a minimum of Two Million Dollars ($2,000,000) (the "Minimum
Amount") and a maximum of Four Million Dollars Five Hundred Thousand
($4,500,000) (the "Maximum Amount"), on a "best efforts basis", resulting in
gross proceeds to the Company of a minimum of Two Million Dollars ($2,000,000)
(the "Minimum Proceeds") and a maximum of Four Million Five Hundred Dollars
($4,500,000) (the "Maximum Proceeds"). The 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 Securities. This appointment shall be
irrevocable for the period commencing on the date of the executed Letter of
Agreement, and ending July 31, 1998 which period may be extended by the mutual
consent of the Company and the Agent (the "Offering Period").
2. Representations and Warranties of the Company. In order to induce the
Agent to enter into this Agreement, the Company hereby represents and warrants
to and agrees with the Agent as follows:
2.1 Offering Documents. The Company (with the assistance of the Agent)
has prepared a Subscription Agreement, certain exhibits thereto, the Convertible
Notes, Irrevocable Instructions to the Transfer Agent, and a Registration Rights
Agreement, which documents have been or will be sent to proposed investors. In
addition, the Company will assure that proposed investors have received or will
receive prior to closing, copies of the Company's Annual Report on Form 10-K for
the year ended December 31, 1997, and the Company's quarterly report on Form
10-Q for the quarters ended March 28, 1998 ("SEC Documents"). The SEC Documents
were prepared in conformity in all material respects with the requirements (to
the extent applicable) of the Securities Exchange Act of 1934, as amended, (the
"`34 Act") and the rules and regulations ("Rules and Regulations") of the
Commission promulgated thereunder. As used in this Agreement, the term "Offering
Documents" refer to and mean the SEC Documents, the Subscription Agreement and
all amendments, exhibits and supplements thereto, together with any other
documents which are provided to the Agent by, or approved for Agent's use by,
the Company for the purpose of this Offering (including but not limited to the
Convertible Notes, Registration Rights Agreement, Irrevocable Instructions to
Transfer Agent, and Company investor packets).
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2.2 Provision of Offering Documents. The Company shall deliver to the
Agent, without charge, as many copies of the Offering Documents as the Agent may
reasonably require for the purposes contemplated by this Agreement. The Company
authorizes the Agent, in connection with the Offering of the Securities, to use
the Offering Documents as from time to time amended or supplemented in
connection with the offering and sale of the Securities and in accordance with
the applicable provisions of the Act and Regulation D.
2.3 Accuracy of Offering Documents. The Offering Documents, at the time
of delivery to subscribers for the Securities, conformed in all material
respects with the requirements, to the extent applicable, of the `34 Act and the
applicable Rules and Regulations and did not include any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. On the Closing Date (as hereinafter
defined), the Offering Documents will contain all statements which are required
to be stated therein in accordance with the Act and the Rules and Regulations
for the purposes of the proposed Offering, and all statements of material fact
contained in the Offering Documents will be true and correct, and the Offering
Documents will not include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
2.4 Duty to Amend. If during such period of time as in the opinion of
the Agent or its counsel an Offering Document relating to this financing is
required to be delivered under the Act, any event occurs or any event known to
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the Company relating to or affecting the Company shall occur as a result of
which the Offering Documents as then amended or supplemented would include an
untrue statement of a material fact, or omit 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 date hereof to amend or supplement the Offering Documents to comply with the
Act or the applicable Rules and Regulations, the Company shall forthwith notify
the Agent thereof and shall prepare such further amendment or supplement to the
Offering Documents as may be required and shall furnish and deliver to the Agent
and to others, whose names and addresses are designated by the Agent, all at the
cost of the Company, a reasonable number of copies of the amendment or
supplement (or of the amended or supplemented Offering Documents) which, as so
amended or supplemented, will not contain an untrue statement of a material fact
or omit to state any material fact necessary in order to make the Offering
Documents not misleading in the light of the circumstances when delivered to a
purchaser or prospective purchaser, and which will comply in all respects with
the requirements (to the extent applicable) of the `34 Act and the applicable
Rules and Regulations.
2.5 Corporation Condition. The Company's condition is as described in
its Offering Documents, except for changes in the ordinary course of business
and normal year-end adjustments that are not in the aggregate materially adverse
to the Company. The Offering Documents, taken as a whole, present fairly the
business and financial position of the Company as of the Closing Date, in all
material respects.
2.6 No Material Adverse Change. Except as may be reflected in or
contemplated by the Offering Documents, subsequent to the dates as of which
information is given in the Offering Documents, and prior to the Closing Date,
taken as a whole, there has not been any material adverse change in the
condition, financial or otherwise, or in the results of operations of the
Company or in its business.
2.7 No Defaults. Except as disclosed in the Offering Documents or in
writing to the Agent, the Company is not in default in any material respect in
the performance of any obligation, agreement or condition contained in any
material debenture, note or other evidence of indebtedness or any material
indenture or loan agreement of the Company. 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 Certificate of Incorporation or By-Laws of the Company (in
any respect that is material to the Company), any material note, indenture,
mortgage, deed of trust, or other agreement or instrument to which the Company
is a party or by which the Company or any property of the Company is bound, or
to the Company's knowledge, any existing law, order, rule, regulation, writ,
injunction or decree of any government, governmental instrumentality, agency or
body, arbitration tribunal or court, domestic or foreign, having jurisdiction
over the Company or any property of the Company. 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 Blue Sky
or securities laws of any state or jurisdiction.
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2.8 Incorporation and Standing. The Company is, and at the Closing Date
will be, duly formed and validly existing in good standing as a corporation
under the laws of the State of New Jersey and with full corporate power and
authority to own its properties and conduct its business, present and proposed,
as described in the Offering Documents; the Company, has full corporate power
and authority to enter into this Agreement; and the Company is duly qualified
and in good standing as a foreign entity in each jurisdiction in which the
failure to so qualify would have a material adverse effect on the Company or its
properties.
2.9 Legality of Outstanding Securities. Prior to the Closing Date, the
outstanding securities of the Company have been duly and validly authorized and
issued, and are fully paid and non-assessable, and conform in all material
respects to the statements with regard thereto contained in the Offering
Documents.
2.10 Legality of Securities. The Securities when sold and delivered in
accordance with the Offering Documents, and the Warrants to Agent or its
designees when issued and delivered, will constitute legal, valid and binding
obligations of the Company, enforceable in accordance with the terms thereof,
and the Securities shall be duly and validly issued and outstanding, fully paid
and nonassessable. The Common Stock into which the Securities are convertible
and the Common Stock into which the Agent's Warrants are exercisable, when
issued upon conversion of the Securities in accordance with the Company's
Certificate of Incorporation and Convertible Notes or upon exercise of the
Agent's Warrants, as applicable, shall be duly and validly issued and
outstanding, fully paid and non-assessable.
2.11 Litigation. Except as set forth in the Offering Documents, there is
now, 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
not adequately covered by insurance or which collectively might result in any
material adverse change in the condition (financial or otherwise) or business of
the Company or which would materially adversely affect the properties or assets
of the Company.
2.12 Finders. The Company does not know of any outstanding claims for
services in the nature of a finder's fee or origination fees with respect to the
sale of the Securities hereunder for which the Agent may be responsible, and the
Company will indemnify the Agent from any liability for such fees (including the
payment of attorney's fees incurred by Agent due to any claim by any such finder
or originator) by any party who has a claim for such compensation from the
Company and for which person the Agent is not legally responsible. In the event
of such claim, Agent shall properly notify Company thereof and the Company may,
at its option and at its sole cost and expense, take over the defense of such a
claim with counsel of its choice, reasonably satisfactory to Agent. Agent shall
not settle any such claims or litigation arising hereunder without the prior
written consent of the Company.
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2.13 Tax Returns. The Company has filed all federal and state and local
tax returns which are required to be filed, and has paid all material taxes
shown on such returns and on all assessments received by it to the extent such
taxes have become due (except for taxes the amount of which the Company is
contesting in good faith). All 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.
2.14 Authority. The execution and delivery by the Company of this
Agreement have been duly authorized by all necessary action, and this Agreement
is the valid, binding and legally enforceable obligation of the Company except
as enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws, by principles governing
enforcement of equitable remedies and, with respect to indemnification against
liabilities under the Act, matters of public policy.
2.15 Actions by the Company. The Company will not voluntarily take any
action which will impair the effectiveness of the transactions contemplated by
this Agreement.
3. Issue, Sale and Delivery of the Securities.
3.1 Deliveries of Securities. Certificates in such form that, subject to
applicable transfer restrictions as described in the Subscription Agreement,
they can be negotiated by the purchasers thereof (issued in such denominations
and in such names as the Agent may direct the Company to issue) for the
Securities, and Warrants representing the Agent's Warrant compensation described
in Section 3.5 below ("Warrants"), shall be delivered by the Company to the
Escrow Agent, with copies made available to the Agent for checking at least one
(1) full business day prior to the Closing Date, it being understood that the
directions from the Agent to the Company shall be given at least two (2) full
business days prior to the Closing Date. The certificates for the Securities and
the Warrants shall be delivered at the initial Closing and at each Subsequent
Closing (as defined hereinafter).
3.2 Escrow of Funds. Pursuant to the Escrow Agreement, a copy of which
is attached hereto as Exhibit "A" (the "Escrow Agreement"), executed by the
Company, the Agent and the escrow agent (the "Escrow Agent"), the subscribers
shall place all funds for purchase of Securities in an escrow account set up by
the Company. The Company shall have the right in its sole and absolute
discretion, for any reason or no reason, to approve or reject the subscriptions
of each subscriber, as described in the Subscription Agreement. At such time as
subscribers subscribing for at least the Minimum Shares (but not more than the
Maximum Shares, unless otherwise agreed by the Company and Agent, and consented
to by the subscribers) have delivered to the Escrow Agent their signed
subscription documents, those subscribers have been approved by the Company and
all other Closing conditions have been met, Escrow Agent shall release the
subscription funds and signed documents to the Company and release the
certificates representing the Securities to the subscribers (the "Initial
Closing"). In the event that the Initial Closing shall be for an amount of
Securities less than the Maximum Amount, the Offering may be continued, and
additional Closings may be held (each a "Subsequent Closing") throughout the
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Offering Period. In no event, however, shall any Closing occur after July 31,
1998 or such later date as may be agreed by the Company and the Agent (the
"Termination Date"). In the event that the Escrow Agent is holding funds on the
Termination Date, after completion of any proper Subsequent Closing on the
Termination Date, the Escrow Agent shall return all funds to the subscribers who
deposited them in accordance with the Escrow Agreement.
3.3 Closing Date. The Initial Closing and any Subsequent Closing shall
take place at the offices of Escrow Agent at such time and date ("Closing Date")
as will be fixed either orally or in writing by notice to be given by the Agent
to the Company after consultation with the Company, such Closing Date to be not
less than one (1) full business day after the date on which such notice shall
have been given and not more than ten (10) full business days after the date on
which the Escrow Agent shall have given written notice to the Company and the
Agent that funds deposited with the Escrow Agent total at least the Minimum
Proceeds. The Closing Date may be changed by mutual agreement of the Agent and
the Company.
3.4 Agent's Compensation. At the Initial Closing and any subsequent
Closing, the Company shall pay the Agent the following, which shall be the full
amount payable to the Agent for its services, fees and expenses in connection
with this Offering:
(i) A placement fee ("Cash Placement Fee") equal to five percent
(5%) of the aggregate gross proceeds resulting from the sale of the securities
in the Offering; plus
(ii) a non-accountable expense allowance equal to two percent (2%)
of the aggregate gross proceeds resulting from the sale of the Securities in the
Offering (the "Non-Accountable Expense Allowance", together with the Cash
Placement Fee, referred to as the ("Cash Fee")).
3.5 Agent's Warrants. In addition to the fees and reimbursement of costs
set forth above, the Company shall also issue to Agent or its designees
warrants, designated as Series D Warrants ("Warrants") to purchase a number of
shares of the Company's Common Stock equal to the sum of (i) six percent (6%)
(the "Warrant Percentage") multiplied by the dollar amount of Securities placed
all divided by the Warrant Exercise Price (defined as the Market Price, as
defined below, at the time of Closing), subject to a minimum of 50,000 shares,
exerciseable at the Warrant Exercise Price.
For purposes hereof, "Market Price" shall equal the lowest Closing Bid
Price (as defined in the Convertible Notes) occurring during the twenty (20)
consecutive trading days ending on the trading day immediately preceding the
Last Closing Date (as defined in the Convertible Notes).
The term of the Warrants shall be five (5) years commencing with the
date of issuance thereof. The initial exercise price for the Warrants shall be
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the Warrant Exercise Price (as defined above). The Warrants shall have cashless
exercise provisions and reset provisions. The shares of Common Stock issuable
upon exercise of the Warrants shall be included in the next registration
statement filed by the Company, and shall have the rights set forth in the
Registration Rights Agreement, dated on or about July 16, 1998, by and among the
Company, the Agent, and the Subscribers. The Warrants shall be delivered by the
Company to the Escrow Agent prior to each Closing, and the Escrow Agent shall
deliver to the Agent the Warrants applicable to each Closing simultaneous with
the respective Closing.
3.6 Payment of Fees. The Escrow Agent shall be instructed to pay all
fees and cost reimbursements and Warrants pursuant to Sections 3.4 and 3.5 of
this Agreement, directly to the Agent from the proceeds of the Closing and all
Subsequent Closings, simultaneous with the transfer of proceeds to the Company.
3.7 Press Release. The Agent shall have the right to approve any press
release issued by the Company in connection with the Offering which approval
shall not be unreasonably withheld.
4. Offering of the Securities on Behalf of the Company.
4.1 In offering the Securities for sale, the Agent shall offer them
solely as an agent for the Company, and such offer shall be made upon the terms
and subject to the conditions set forth in the Offering Documents. The Agent
shall commence making such offer as an agent for the Company as soon as possible
following delivery of the final Company approved Offering Documents to Agent (or
notification by Company or its Counsel the latest version of any Offering
Documents on Agent's computer system is acceptable for faxing to subscribers).
4.2 The Agent will only make offers to sell the Securities to, or
solicit offers to subscribe for any Securities from, persons or entities that
Agent reasonably believes are "accredited investors" as defined in Regulation D.
5. Right of First Refusal. The Company hereby grants Agent rights of
first refusal as follows:
5.1 The Agent has the right of first refusal to act as placement agent
for any future private financings of the Company, whether equity securities,
convertible debt securities, or securities or instruments convertible into or
exchangeable for debt or equity securities of the Company, excluding public
offerings, joint ventures, mergers, acquisitions, or similar transactions. It is
understood that the Agent shall have no right of first refusal with respect to
straight (non-convertible) debt issuances by the Company, provided however that
Agent shall have the right to receive notice of any non-convertible debt
issuance in the manner provided in this Section 5. The duration of the Agent's
right of first refusal under this Section 5.1 shall be for a period of one (1)
year following the last Closing of this Offering.
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5.2 In the event that the Company wishes to undertake a transaction
described in this Section 5, the Company must send Agent a written notice of the
proposed transaction (whether the transaction is initiated by the Company or is
offered to the Company by a third party), in sufficient specificity to allow the
Agent to understand the proposed transaction clearly. This notice must be
delivered to Agent at least twenty (20) days prior to the proposed closing of
the transaction. The Agent shall have ten (10) days from receipt of that notice
to determine whether or not it wishes to exercise its right of first refusal
with respect to that transaction. The Agent shall notify the Company in writing
of its decision to exercise or waive its right of first refusal with respect to
the transaction described in the notice. If the Agent waives its right of first
refusal with respect to a particular transaction, the Company may proceed with
that transaction; provided, however, that if prior to any Closing in the
proposed transaction the terms of the transaction are changed in any material
way from the terms set forth in the notice to the Agent, the Agent's right of
first refusal shall commence again.
5.3 In the event that Company breaches Section 5.1 of this Agreement,
Agent shall be entitled to receive compensation based upon the aggregate
purchase price of securities placed in such transaction in an amount calculated
pursuant to Section 3.4 hereof.
6. Covenants of the Company. The Company covenants and agrees with the
Agent that:
6.1 After the date hereof, the Company will not at any time, prepare and
distribute any amendment or supplement to the Offering Documents, of which
amendment or supplement the Agent shall not previously have been advised and the
Agent and its counsel furnished with a copy within a reasonable time period
prior to the proposed adoption thereof, or to which the Agent shall have
reasonably objected in writing on the ground that it is not in compliance with
the Act or the Rules and Regulations (if applicable).
6.2 The Company will pay, whether or not the transactions contemplated
hereunder are consummated or this Agreement is prevented from becoming effective
or is terminated, all costs and expenses incident to the performance of its
obligations under this Agreement, including all expenses incident to the
authorization of the Securities and their issue and delivery to the Agent, any
original issue taxes in connection therewith, all transfer taxes, if any,
incident to the initial sale of the Securities, the fees and expenses of the
Company's counsel (except as provided below) and accountants, the cost of
reproduction and furnishing to the Agent copies of the Offering Documents as
herein provided; provided, however, that the Company shall not be responsible
for the direct payment of fees and costs incurred by Agent, including attorney's
fees of or any costs incurred by the Agent's counsel.
6.3 As a condition precedent to the Initial Closing, the Company will
deliver to the Agent a true and correct copy of all documents requested by Agent
included in Agent's due diligence request, including but not limited to the
Certificate of Incorporation of the Company, and all amendments and certificates
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of designation of preferences of preferred stock, certified by the Secretary of
State of the State of New Jersey.
6.4 Prior to the Closing Date, the Company will cooperate with the Agent
in such investigation as it may make or cause to be made of all of the
properties, business and operations of the Company in connection with the
Offering of the Securities. The Company will make available to it in connection
therewith such information in its possession as the Agent may reasonably request
and will make available to the Agent such persons as the Agent shall deem
reasonably necessary and appropriate in order to verify or substantiate any such
information so supplied.
6.5 The Company shall be responsible for making any and all filings
required by the Blue Sky authorities of the State of New Jersey and filings
required by the laws of the jurisdictions in which the subscribers who are
accepted for purchase of Securities are located, if any.
7. Non-Circumvention & Confidentiality of Proprietary Agent Information.
7.1. Non-Circumvention. The investors who participate in the Offering
and the other investors introduced to Company by Xxxxxx who are listed on the
schedule attached hereto as Exhibit B, and their affiliates, shall be
considered, for purposes of this Agreement, the property of Agent. The Company
on behalf of itself, its parent or its subsidiaries (collectively hereinafter
referred to as "Company") agree not to circumvent, directly or indirectly,
whether through another placement agent or broker or without any placement agent
or broker, Agent's relationship with these investors and their affiliates,
(hereinafter referred to singularly as an "Investor" and collectively as
"Investors") and Company will not directly or indirectly contact or negotiate
with any of these Investors, whether through another placement agent or broker
or without any placement agent or broker, regarding an investment in the
Company, or any other company, and will not enter into any agreement or
transaction with Investors, or disclose the names of Investors (provided,
however, that the Company may contact the Investors for purposes directly
related to the business of the Company not involving any agreement or
transaction with Investors and not involving an investment of funds by an
Investor), for a period of five (5) years from the date hereof without the prior
written approval of Agent; provided, however, that notwithstanding the above,
nothing contained in this Agreement shall prevent Company from, directly or
indirectly, selling securities to the Investors through a public offering or
from, directly or indirectly, contacting or negotiating with the Investors in
satisfaction of Company's obligations under the Subscription Agreements entered
into in connection herewith. In the event that the Company or one of its
subsidiaries, with Xxxxxx'x advance written permission. accepts an investment (a
"Subsequent Investment") from an Investor or Investors (other than in a public
offering), regardless of whether such investment is arranged without an agent
(including but not limited to investments arranged through direct solicitation
by the Company) or through an agent other than the Agent, during the period
beginning on the date hereof and terminating on the fifth (5th) anniversary of
the date of the Last Closing as described in the Subscription Agreement, the
Company agrees to pay to the Agent (i) a cash fee equal to seven percent (7%) of
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all amounts invested by such Investor(s) plus (ii) warrants to purchase a number
of shares of the Company's Common Stock equal to the quotient of (a) seven
percent (7%) multiplied by the dollar amount invested by such Investors, all
divided by (b) the Market Price, as defined above, at the time of closing of
such investment, exerciseable at the Market Price, as defined above, at the time
of closing of such investment. In the event that the Company accepts a
Subsequent Investment without Xxxxxx'x advance written permission, the Company
agrees to pay to the Agent (i) a fee equal to fourteen percent (14%) of all
amounts invested by such Investor(s) plus (ii) warrants to purchase a number of
shares of the Company's Common Stock equal to the quotient of (a) fourteen
percent (14%) multiplied by the dollar amount invested by such Investors, all
divided by (b) the Market Price, as defined above, at the time of closing of
such investment, exerciseable at the Market Price, as defined above, at the time
of closing of such investment.
7.2 Protection of Proprietary Customer Information. Furthermore, Company
agrees to safeguard in strict confidence and will not disclose to any other
person, business, partnership, corporation, fiduciary, agent or any entity of
any type whatsoever the names of any Investors introduced by Agent to Company or
information concerning any Investor (including the names of any individual,
employee, representative, fiduciary or agent of or related to such Investor)
except pursuant to a registration of the securities or other filing with the SEC
or any state securities commission, for purposes directly related to the
business of the Company, or as such disclosure may be required by any law, rule,
regulation, regulatory body, court or administrative agency, and upon prior
notice to Agent before disclosing such information under such compulsion of law.
7.3. [Intentionally Left Blank].
7.4. [Intentionally Left Blank].
7.5 Specific Performance and Attorneys Fees. The Company agrees to pay
to Agent (severally and not jointly) all costs and expenses incurred by Agent
relating to the enforcement of the terms of Sections 7.1 and 7.2 hereof due to
its own actions, whether by injunction, a suit for damages or both, including
reasonable fees and disbursements of counsel (both at trial and in appellate
proceedings).
8. Indemnification.
8.1 The Company agrees to indemnify and hold harmless the Agent, each
person who controls the Agent within the meaning of Section 15 of the Act and
the Agent's employees, accountants, attorneys and agents (the "Agent's
Indemnitees") against any and all losses, claims, damages or liabilities, joint
or several, to which they or any of them may become subject under the Act or the
`34 Act or any other statute or at common law and for any reasonable legal or
other expenses (including the costs of any investigation and preparation)
incurred by 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 (i) the Company's breach of its
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obligations under the Convertible Notes and the Subscription Agreement to
deliver shares of Common Stock to a Subscriber upon submission by Subscriber of
the required documentation, or (ii) any untrue statement of material fact
contained in the Offering Documents or any amendment or supplement thereto or
any application or other document filed in any state or jurisdiction in order to
qualify the Securities under the Blue Sky or securities laws thereof, or the
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, under the circumstances under which
they were made, not misleading, or for Company's breach of contract respecting
this Placement, all as of the date of the Offering Documents or of such
amendment as the case may be, or (iii) any material breach of any
representation, warranty or covenant made by the Company in this Agreement;
provided, however, that the indemnity agreement contained in this Section 8.1
shall not apply to amounts paid in settlement of any such litigation, if such
settlements are made without the consent of the Company (but no such settlement
may be made without the Company's prior written consent), nor shall it apply to
the Agent's Indemnitees in respect to any such losses, claims, damages or
liabilities 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 the Agent specifically for use in connection with the preparation of
the Offering Documents or any such amendment or supplement thereto or any
application or other document filed in any state or jurisdiction in order to
qualify the Securities under the Blue Sky or securities law thereof. This
indemnity agreement is in addition to any other liability which the Company may
otherwise have to the Agent's Indemnitees. The Agent's Indemnitees agree, within
ten (10) days after the receipt by them of written notice of the commencement of
any action against them in respect to which indemnity may be sought from the
Company under this Section 8.1, to notify the Company in writing of the
commencement of such action; provided, however, that the failure of the Agent's
Indemnitees to notify the Company of any such action shall not relieve the
Company from any liability which it may have to the Agent's Indemnitees on
account of the indemnity agreement contained in this Section 8.1, and further
shall not relieve the Company from any other liability which either may have to
the Agent's Indemnitees, and if the Agent's Indemnitees shall notify the Company
of the commencement thereof, the Company shall be entitled to participate in
(and, to the extent that the Company shall wish, to direct) the defense thereof
at its own expense, but such defense shall be conducted by counsel of recognized
standing and reasonably satisfactory to the Agent's Indemnitees, defendant or
defendants, in such litigation. The Company agrees to notify the Agent's
Indemnitees promptly of the commencement of any litigation or proceedings
against the Company or any of the Company's officers or directors of which the
Company may be advised in connection with the issue and sale of any of the
Securities and to furnish to the Agent's Indemnitees, at their request, and to
provide copies of all pleadings therein and to permit the Agent's Indemnitees to
be observers therein and apprise the Agent's Indemnitees of all developments
therein, all at the Company's expense.
8.2 With the exception provided below as to limitations of indemnity,
the Agent agrees, in the same manner and to the same extent as set forth in
Section 8.1 above, to indemnify and hold harmless the Company, and the Company's
and Company's employees, accountants, attorneys and agents (the "Company's
Indemnitees") with respect to (i) any statement in or omission from the Offering
11
Documents or any amendment or supplement thereto or any application or other
document filed by the Company in any state or jurisdiction in order for the
Company to qualify the Securities under the Blue Sky or securities laws thereof,
or any information furnished pursuant to Section 2.4 hereof, if such statement
or omission was made in reliance upon information furnished in writing to the
Company by the Agent in a document executed by Agent on its behalf specifically
for use in connection with the preparation thereof or supplement thereto, or
(ii) any untrue statement of a material fact made by the Agent or its agents not
based on statements in the Offering Documents or authorized in writing by the
Company, or with respect to any misleading statement made by the Agent or its
agents resulting from the omission of material facts which misleading statement
is not based upon the Offering Documents, and any documents filed with public or
governmental authorities or agencies, and any public press releases or
information furnished in writing by the Company or, (iii) any material breach of
any representation, warranty or covenant made by the Agent in this Agreement.
The Agent shall not be liable for amounts paid in settlement of any such
litigation if such settlement was effected without its consent. In case of the
commencement of any action in respect of which indemnity may be sought from the
Agent, the Company's Indemnitees shall have the same obligation to give notice
as set forth in Section 8.1 above, subject to the same loss of indemnity in the
event such notice is not given, and the Agent shall have the same right to
participate in (and, to the extent that it shall wish, to direct) the defense of
such action at its own expense, but such defense shall be conducted by counsel
of recognized standing reasonably satisfactory to the Company. The Agent agrees
to notify the Company's Indemnitees, at their request, and to provide copies of
all pleadings therein and to permit the Company's Indemnitees to be observers
therein and appraise them of all the developments therein, all at the Agent's
expense. As to Damages, Company recognizes that since it is receiving the net
proceeds of the monies generated by this placement, that indemnity, if any, to
be paid by the Agent to the Company shall be strictly limited to the Agent's
Cash Fee, inclusive of attorney fees and costs of arbitration and/or court
proceedings.
9. Liquidated Damages. Company and Agent both acknowledge that it would
be extremely impractical and difficult to ascertain the actual damages to be
suffered by Company if Agent is found by an arbitrator or a court of competent
jurisdiction to have breached any of the representations, warranties and
covenants contained in this Agreement. Accordingly, should a breach of this
Agreement be proven and Agent found liable for said breach, Company and Agent
hereby agree that the damages shall be fixed at no more than $100,000, inclusive
of all attorney's fees and cost of court. This provision is not to be construed
as a penalty, but as full liquidated damages under Georgia law.
10. Effectiveness of Agreement. This Agreement shall become effective
(i) at 9:00 A.M., Atlanta, Georgia time, on the date hereof or (ii) upon release
by the Agent of the Securities for offering after the date hereof, whichever
occurs first. The Agent agrees to notify the Company immediately after the Agent
shall have taken any action by such release or otherwise wherein this Agreement
shall have become effective.
12
11. Conditions of the Agent's Obligations. The Agent's obligations to
act as agent of the Company hereunder and to find purchasers for the Securities
shall be subject to the accuracy, as of the Closing Date, of the representations
and warranties on the part of the Company herein contained, to the fulfillment
of or compliance by the Company with all covenants and conditions hereof, and to
the following additional conditions:
11.1 Counsel to the Agent shall not have objected in writing or shall
not have failed to give his consent to the Offering Documents (which objection
or failure to give consent shall not have been done unreasonably).
11.2 The Agent shall not have disclosed to the Company that the Offering
Documents, or any amendment thereof or supplement thereto, contains an untrue
statement of fact, which, in the opinion of counsel to the Agent, is material,
or omits to state a fact, which, in the opinion of such counsel, is material and
is required to be stated therein, or is necessary to make the statements
therein, under the circumstances in which they were made, not misleading.
11.3 Between the date hereof and the Closing Date, the Company shall not
have sustained any loss on account of fire, explosion, flood, accident, calamity
or any other cause of such character as would materially adversely affect its
business or property considered as an entire entity, whether or not such loss is
covered by insurance.
11.4 Between the date hereof and the Closing Date, there shall be no
litigation instituted or threatened against the Company, and there shall be no
proceeding instituted or threatened against the Company before or by any federal
or state commission, regulatory body or administrative agency or other
governmental body, domestic or foreign, wherein an unfavorable ruling, decision
or finding would materially adversely affect the business, franchises, license,
permits, operations or financial condition or income of the Company considered
as an entity.
11.5 Except as contemplated herein or as set forth in the Offering
Documents, during the period subsequent to the most recent financial statements
contained in the Offering Documents, if any, and prior to the Closing Date, the
Company (i) shall have conducted its business in the usual and ordinary manner
as the same is being conducted as of the date hereof in all material respects
and (ii) except in the ordinary course of business, the Company shall not have
incurred any material liabilities or obligations (direct or contingent) or
disposed of any material assets, or entered into any material transaction or
suffered or experienced any substantially adverse change in its condition,
financial or otherwise. At the Closing Date, the equity account of the Company
shall be substantially the same as reflected in the most recent balance sheet
contained in the Offering Documents except for reductions for matters discussed
in the Subscription Agreements and without considering the proceeds from the
sale of the Securities other than as may be set forth in the Offering Documents.
11.6 The authorization of the Securities by the Company and all
proceedings and other legal matters incident thereto and to this Agreement shall
be reasonably satisfactory in all respects to counsel to the Agent, who shall
13
have furnished the Agent on the Closing Date with such favorable opinion with
respect to the sufficiency of all corporate proceedings and other legal matters
relating to this Agreement as the Agent may reasonably require, and the Company
shall have furnished such counsel such documents as he may have requested to
enable him to pass upon the matters referred to in this subparagraph.
11.7 The Company shall have furnished to the Agent the opinion, dated
the Closing Date, addressed to the Agent, from counsel to the Company, as
required by the Subscription Agreement in substantially the form attached to the
Subscription Agreement as Exhibit D.
11.8 The Company shall have furnished to the Agent a due diligence back
up certificate signed by the Chief Executive Officer and the Chief Financial
Officer of the Company (a copy of which is attached hereto as Exhibit C), dated
as of the Closing Date, to the effect that:
(i) the representations and warranties of the Company in this
Agreement are true and correct in all material respects at and as of the Closing
Date (other than representations and warranties which by their terms are
specifically limited to a date other than the Closing Date), and the Company has
complied with all the agreements and has satisfied all the conditions on its
part to be performed or satisfied at or prior to the Closing Date;
(ii) the respective signers have each carefully examined the
Offering Documents, and any amendments and supplements thereto, and, to the best
of their knowledge, all statements contained in the Offering Documents, and any
amendments and supplements thereto, are true and correct, and neither the
Offering Documents, nor any amendment or supplement thereto, includes any untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein under the
circumstances in which they were made not misleading, and since the date hereof,
there has occurred no event required to be set forth in an amended or
supplemented Offering Documents, which has not been set forth; except as set
forth in the Offering Documents, since the respective dates as of which the
periods for which the information is given in the Offering Documents and prior
to the date of such certificate, (a) there has not been any substantially
adverse change, financial and otherwise, in the affairs of condition in the
Company, and (b) the Company has not incurred any material liabilities, direct
or contingent, or entered into any material transactions, otherwise than in the
ordinary course of business; and
(iii) the Company has provided true and correct copies of all
documents in its possession or which it could obtain that were requested by
Agent pursuant to any due diligence inquiry.
12 Termination.
12.1 This Agreement may be terminated by the Agent by notice to the
Company in the event that the Company shall have failed or been unable to comply
14
with any of the material terms, conditions or provisions of this Agreement on
the part of the Company to be performed, complied with fulfilled within the
respective times, if any, herein provided for, unless compliance therewith or
performance or satisfaction thereof shall have been expressly waived by the
Agent in writing. However, if any material breach by Company can be cured within
a reasonable period of time, Agent shall provide Company such reasonable period
to cure.
12.2 This Agreement may be terminated by the Company by notice to the
Agent in the event that the Agent shall have failed or been unable to comply
with any of the terms, conditions or provisions of this Agreement on the part of
the Agent to be performed, complied with or fulfilled within the respective
times, if any, herein provided for, unless compliance therewith or performance
or satisfaction thereof shall have been expressly waived by the Company in
writing. However, if any material breach by Agent can be cured within a
reasonable period of time, Company shall provide Agent such reasonable period to
cure.
12.3 This Agreement may be terminated by the Agent by notice to the
Company at any time, if, in the reasonable, good faith judgment of the Agent,
payment for and delivery of the Securities is rendered impracticable or
inadvisable because: (i) additional material governmental restrictions not in
force and effect on the date hereof shall have been imposed upon trading in
securities generally; (ii) a war or other national calamity shall have occurred;
or (iii) the condition of the market (either generally or with reference to the
sale of the Securities to be offered hereby) or 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 Agent, to
proceed with this Agreement or with the Offering.
12.4 Any termination of this Agreement pursuant to this Section 12 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 shall remain obligated to pay if due hereunder the costs
and expenses provided to be paid by it specified in Sections 3 and 5; and the
Company and the Agent shall be obligated to pay, respectively, all losses,
claims, damages or liabilities, joint or several, under Section 8.1 in the case
of the Company and Section 8.2 in the case of the Agent.
13. Agent's Representations, Warranties and Covenants. The Agent
represents and warrants to and agrees with the Company that:
13.1 The Placement Agent is a limited liability company duly organized
and existing under the laws of the state of Georgia. The Placement Agent is an
OSJ branch office of Dunwoody Brokerage Services, Inc., a licensed NASD
broker-dealer, and a member of SIPC.
13.2 There is not now pending or threatened or to the Agent's knowledge,
contemplated against the Agent any action or proceeding, either in any court of
competent jurisdiction, before the Commission or before any state securities
15
commission or the NASD, concerning the Agent's activities which would impair the
ability of the Agent to conduct the Offering as contemplated by this Agreement.
13.3 In the event any action or proceeding of the type referred to in
Section 13.2 above shall be instituted or threatened against the Agent at any
time prior to the Closing Date or, in the event there shall be filed by or
against the 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 Agent
makes an assignment for the benefit of creditors, the Company shall have the
right, on three (3) days' written notice to the Agent, to terminate this
Agreement without any liability to the Agent of any kind, except for the payment
of all expenses provided herein, if due.
13.4 Agent understands and acknowledges that prior to issuance, the
Securities are not being registered under the Act, and that the Offering is to
be conducted pursuant to Regulation D under the Securities Act of 1933, as
amended, (the "Act"). Accordingly, in conducting its activities under this
Agreement:
(a) Agent has not offered or sold and will not offer or sell any
Securities to any investor which Agent does have reasonable grounds to believe,
or does not believe, is an "Accredited Investor," within the meaning of
Regulation D under the Act.
(b) Agent has not offered or sold and will not offer or sell any
Securities by means of any form of general solicitation or general advertising,
including, but not limited to, the following:
(1) any advertisement, article, notice or other communication
published in any newspaper, magazine or similar medium or broadcast over
television or radio or internet; and
(2) any seminar or meeting whose attendees have been invited by
any general solicitation or general advertising.
(c) Agent will not solicit or accept the subscription of any person
unless immediately before accepting such subscription Agent has reasonable
grounds to believe and does believe that (i) such person is an Accredited
Investor and (ii) all representations made and information furnished by such
person in the Subscription Agreement and related documents are true and correct
in all material respects.
(d) [Intentionally Omitted].
(e) Upon notice from the Company that the Offering Documents are
required to be amended or supplemented, Agent will immediately cease use of the
Offering Documents until Agent has received such amendment or supplement and
thereafter will make use of the Offering Documents only as so amended or
supplemented, and Agent will deliver a copy of such amendment or supplement to
16
each prospective investor to whom a copy of the Offering Documents had
previously been delivered (and who has not returned such copy).
(f) Agent use its best efforts to conduct the offering of the
Securities in a manner that will allow the availability of the private offering
exemption from federal securities regulation provided by Regulation D
promulgated under the Securities Act of 1933, as amended, provided, however,
that agent is not responsible for the unavailability of such exemption caused by
the misrepresentations of the Company or of an Investor.
(g) Agent will notify the Company in writing promptly when any
event shall have occurred during the Offering Period as a result of which any
representation or warranty of the Agent herein would not be true.
13.5 Neither the Agent nor any of its Affiliates will take any action
which will impair the effectiveness of the transactions contemplated by this
Agreement.
13.6 All corporate actions by Agent required for the execution, delivery
and performance of this Agreement have been taken. The execution and delivery of
this Agreement by the Agent, the observance and performance thereof, and the
consummation of the transactions contemplated herein or in the Offering
Documents do not and will not constitute a material breach of, or a material
default under, any instrument or agreement by which the Agent is bound, and does
not and will not, to the best of the Agent's knowledge, contravene any existing
law, decree or order applicable to it. This Agreement constitutes a valid and
binding agreement of Agent, enforceable in accordance with its terms.
13.7 Agent understands that the Company is relying upon Agent's
representations and warranties in connection with the Offering and the sale of
the Securities contemplated by this Agreement.
13.8 Agent's representations and warranties under this Section 13 shall
be true and correct as of the Closing, and shall survive the Closing
indefinitely.
13.9 Upon closing of the Offering, Placement Agent agrees to provide the
following services (the "PLUS Package Aftermarket Services") for a period of one
(1) year following the Last Closing Date of the Offering (service may be
provided for periods following one (1) year subject to subsequent agreement
between Company and Placement Agent); provided, however, that Placement Agent,
in its discretion, may discontinue providing the PLUS Package Aftermarket
Services if there is a material adverse change to the Company's fundamentals or
business prospects after the date hereof.
1) Analyst Coverage and Reporting.
Placement Agent's analyst will prepare a full-scale research report
("Analyst Report") on the Company which is expected to include the
following:
17
- Company's Technology
- Company's Target Market
- Industry overview
- Business plan & strategy
- Competitors
- Current contracts
- 3rd Party Partners
- Company Management and Board
The Analyst Report will be prepared following the Offering and will be
updated at least quarterly thereafter.
2) Identification of Target Institutions to Distribute Analyst Coverage.
Placement Agent will identify a minimum of twenty five (25) institutional
buy-side equity investors (together with the private equity investors in
the Offering, referred to as the "Target Affinity Group") which have
orientation toward the Company's specific industry and/or small
capitalization equity securities. Placement Agent will contact the
institutional investment manager of each member of the Target Affinity
Group and use its best efforts to get each to agree to participate in the
"PLUS" program. Placement Agent will thereafter distribute its Analyst
Report to the participating Target Affinity Group, including all Analyst
Report updates.
3) Quarterly Institutional Conference Calls.
Placement Agent will arrange and conduct Quarterly (post earnings)
conference calls between the Target Affinity Group and the Company
regarding the Company's progress and future prospects. Placement Agent will
bear the telephone expense of such conference calls.
4) Annual Investor Conference.
Placement Agent will arrange and conduct a New York based investor
conference to highlight the Company to the Target Affinity Group and other
institutional equity investors who have interest in attending the Company
presentation. The investor conference will be arranged by Placement Agent
approximately twelve (12) months after the Offering. Placement Agent will
make all arrangements, organize the event, contact and make invitations to
targeted participants and provide support personnel at the event. The
Company will be responsible for the expenses of all accommodations and
conference facilities as well as travel and lodging expenses for Company
and Placement Agent personnel during conference.
5) Competitive/Industry Tracking and Alert Service.
18
Placement Agent will identify Company's top three publicly traded
competitors and will use reasonable efforts to provide timely "Fax Alerts"
to a person designated by Company highlighting significant announcements by
competition and of significant industry related news.
6) "PLUS - ONLINE" Services.
(i) Internet Site. Placement Agent will use its best efforts to provide,
within six (6) months of the closing of the Offering, an internet based
on-line system which will provide access to the Target Affinity Group and
others designated by the Company (as agreed between Placement Agent and
Company) of the following Company related information:
- Company overview/slideshow presentation
- A full motion video of the Company's overview
- Placement Agent Analyst Report coverage including quarterly updates
- A chronological archive of the Company's press releases
- Video/voice Archive of Company's quarterly earnings conference call
presentations
- A full motion video "Virtual Roadshow" or "Factory Tour"
- 10Q and 10K documents
Placement Agent will bear expense of the on-line internet system and
uploading/maintenance of all textual and static graphics materials. Company
will bear the expense and determine the extent of the full-motion video
based presentation material to be included in the on-line presentations.
(ii) E-mail Connectivity. The on-line internet system will include
electronic mail functions between Company management, Placement Agent
personnel and the participating "PLUS" Program members.
14. Company Acknowledgments.
14.1 Company understands and acknowledges that each of the Investors,
in their sole discretion, may elect to hold the Securities for various periods
of time, as provided in the Offering Documents, and the Company further
acknowledges that Agent makes no representations or warranties as to how long
the Securities will be held by each Investor or the Investors' trading history
or investment strategies.
14.2 Company understands that the Securities are convertible based upon
the market price at the time of conversion. Since there is no floor on the
variable conversion price of the Convertible Notes, there is the risk that
conversion of the Securities could result in significant dilution to the
Company's Common Stock if the price of the Company's Common Stock declines.
19
14.3 Company understands that, although the redemption privilege
protects against unsatisfactory dilution, the Company must have available funds
or credit lines in order to effect a redemption. There is no assurance that the
Company will have available funds or credit lines in order to effect a
redemption at any given time.
14.4 Company understands that there is no assurance as to how the
market and/or market makers will respond to the private placement structure.
14.5 Company acknowledges that Agent has not made (either directly or
through any agent or representative) any representations, warranties or
covenants contrary to sections 14.1 through 14.4 and that Agent has disclosed
the risks inherent in the structure of the Offering including, without
limitation, risks associated with the activities contemplated in sections 14.1
through 14.4.
14.6 Company acknowledges that due to the existence of a variable
conversion price, future conversions of the Convertible Notes could result in
the issuance of more than twenty percent (20%) of the outstanding Common Stock
of Company.
14.7 Company acknowledges that it has conducted a thorough analysis and
has determined to its satisfaction that (i) the Offer and sales of the
Convertible Notes and the issuance of Common Stock upon conversion thereof will
not result in a violation of New York Stock Exchange ("NYSE") Listed Company
Manual Section 312.03(c) (or any successor rule) (the "NYSE 20% Rule") or any
other applicable NYSE Rules and (ii) this Offering will not be deemed to be
integrated with any prior placement of securities by the Company under Rule 502
of the Securities Act of 1933 or other applicable law.
15. Notices. Except as otherwise expressly provided in this Agreement:
15.1 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, at:
If to Company: Attn: Xxxxx X. Xxxxxxx, Chief Financial Officer
EA Industries, Inc.
000 Xxxxxxxx Xxxxxxx
Xxxx Xxxx Xxxxxx, XX 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a Copy to: Attn: Xxxxxxx X. Xxxxx, Esq.
Mesirov Xxxxxx Xxxxx Xxxxxx & Xxxxxxxx, LLP
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
15.2 Whenever notice is required by the provisions of this Agreement to
be given to the Agent, such notice shall be given in writing, addressed to the
Agent, at:
20
If to the Agent: Attn: Xxxx Xxxxxx, President
Xxxxxx Investments, LLC
0000 Xxxxxxx Xxxxxx Xxxx
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
21
With a Copy to: Attn: Xxxxxx X. Xxxxxxx, President
Dunwoody Brokerage Services, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
15.3 Any notice instructing the Escrow Agent to distribute monies or
Securities held in Escrow must be signed by authorized agents of both the
Company and the Agent in order to be valid.
16. Miscellaneous.
16.1 Benefit. This Agreement is made solely for the benefit of the
Agent and the Company, their respective officers and directors and any
controlling person referred to in Section 15 of the Act and their respective
successors and assigns, and no other person may acquire or have any right under
or by virtue of this Agreement, including, without limitation, the holders of
any Securities. 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
Securities.
16.2 Survival. The respective indemnities, agreements, representations,
warranties, covenants and other statements of the Company and the Agent, or the
officers, directors or controlling persons of the Company and the Agent as set
forth in or made pursuant to this Agreement and the indemnity agreements of the
Company and the Agent shall survive and remain in full force and effect,
regardless of (i) any investigation made by or on behalf of the Company or the
Agent or any such officer, director or controlling person of the Company or of
the Agent; (ii) delivery of or payment for the Securities; or (iii) the Closing
Date, and any successor of the Company or the Agent or any controlling person,
officer or director thereof, as the case may be, shall be entitled to the
benefits hereof.
16.3 Governing Law, Jurisdiction and Arbitration. The validity,
interpretation and construction of this Agreement and of each party hereof will
be governed by the Laws of the State of Georgia. Any controversy or claim
arising out of or related to this Agreement or the breach thereof, shall be
settled by binding arbitration in Atlanta, Georgia in accordance with the
Expedited Procedures (Rules 53-57) of the Commercial Arbitration Rules of the
American Arbitration Association (AAA). A proceeding shall be commenced upon
written demand by Company or any Holder to the other. The arbitrator(s) shall
enter a judgment by default against any party which fails or refuses to appear
in any properly noticed arbitration proceeding. The proceeding shall be
conducted by one (1) arbitrator, unless the amount alleged to be in dispute
exceeds two hundred fifty thousand dollars ($250,000), in which case three (3)
arbitrators shall preside. The arbitrator(s) will be chosen by the parties from
a list provided by the AAA, and if they are unable to agree within ten (10)
days, the AAA shall select the arbitrator(s). The arbitrators must be experts in
22
securities law and financial transactions. The arbitrators shall assess costs
and expenses of the arbitration, including all attorneys' and experts' fees, as
the arbitrators believe is appropriate in light of the merits of parties'
respective positions in the issues in dispute. Each party submits irrevocably to
the jurisdiction of any state court sitting in Xxxxxx County, Georgia or to the
United States District Court for the Northern District of Georgia for purposes
of enforcement of any discovery order, judgment or award in connection with such
arbitration. The award of the arbitrator(s) shall be final and binding upon the
parties and may be enforced in any court having jurisdiction. The arbitration
shall be held in such place as set by the arbitrator(s) in accordance with Rule
55.
16.4 Counterparts. This Agreement may be executed in any number of
counterparts, each of which may be deemed an original and all of which together
will constitute one and the same instrument.
16.5 Confidential Information. All confidential financial or business
information (except publicly available or freely usable material otherwise
obtained from another source) respecting either party will be used solely by the
other party in connection with the within transactions, be revealed only to
employees or contractors of such other party who are necessary to the conduct of
such transactions, and be otherwise held in strict confidence.
16.6 Public Announcements. Neither party hereto will issue any public
announcement concerning the within transactions without the approval of the
other party. The Agent shall have the right to approve any press release issued
by the Company in connection with the Offering which approval shall not be
unreasonably withheld.
16.7 Finders. Company represents that it is not obligated to pay any
compensation or other fees, costs or related expenditures in cash or securities
to any underwriter, broker, agent, finder or other representative other than
Agent. Company agrees to indemnify the Agent with respect to any other claim for
a fee in connection with the Offering. Agent agrees to indemnify the Company
with respect to any claim for a finder's fee which arises because of Agent's
agreement to pay a fee to the person or entity making such claim.
16.8 Recitals. The recitals to this Agreement are a material part
hereof, and each recital is incorporated into this Agreement by reference and
made a part of this Agreement.
[INTENTIONALLY LEFT BLANK]
23
IN WITNESS WHEREOF, the parties hereto have duly caused this Placement
Agent Agreement to be executed as of the day and year first above written.
"THE COMPANY"
EA INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------
Xxxxxx X. Xxxxxx, Vice President
"THE AGENT"
XXXXXX INVESTMENTS, INC.
By: /s/ Xxxx X. Xxxxxx
-----------------------------
Xxxx X. Xxxxxx, President
24
