EXHIBIT 1: Underwriting Agreement.
PLACEMENT AGENT AGREEMENT
THIS PLACEMENT AGENT AGREEMENT (the "Agreement") is made and
entered to be effective this 12 day of July, 2002 by and between
Body Art & Science, Inc., a Nevada corporation (the "Company")
and NevWest Securities Corporation, a Nevada corporation (the
"Placement Agent"), with reference to the following facts:
RECITALS
A. WHEREAS the Company seeks to file an SB-2 registration
statement pursuant to the Securities Act of 1933 (the "Act") so
as to register the sale of securities and to achieve reporting
status with the United States Securities and Exchange Commission
(SEC);
B. WHEREAS subsequent to securing effective registration with
the SEC, the Company desires to issue and sell Common Stock of
the Company (par value $0.001 per share) subject to all
additional terms and conditions as shall be specified in a
Prospectus as filed with the SEC (the "Prospectus") prepared
pursuant to this Agreement;
C. WHEREAS the Company desires to issue and sell a minimum of
1,000,000 Shares at $0.25 per share for a total minimum aggregate
amount of $250,000 (the "Minimum Offering") and a maximum of
3,000,000 Shares for a total maximum aggregate amount of $750,000
(the "Maximum Offering");
D. WHEREAS the Company desires that the Placement Agent offer
and sell strictly on a "best efforts" basis to a limited number
of purchasers (the "Investors"), as exclusive agent of the
Company, the Shares described in the Prospectus;
AGREEMENT
NOW, THEREFORE, upon the terms, covenants, and conditions set
forth below and for good and valuable consideration, the parties
agree as follows:
1. Incorporation of Recitals. Recitals A through D above are
incorporated into this Agreement by this reference as though
fully set forth in this paragraph 1.
2. Certain Definitions. For the purposes of this Agreement,
the following terms have the meanings set forth below:
2.1. Company. "Company," to the extent the context permits,
includes any subsidiary.
2.2. Exchange Act. "Exchange Act" means the Securities Exchange
Act of 1934, as amended, or any similar federal law then in
force.
2.3. Prospectus. "Prospectus" refers to the offering document as
filed in conjunction with registration of the offering with the
SEC, embodying the terms and conditions of the offering and the
representations made by the Company in conjunction with the
Offering. Any reference to the Prospectus which reference is
made in the present tense assumes its creation and authorization
for use by the Company which authorization shall be in written
form emanating from the Company to the Placement Agent.
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2.4. Officer's Certification. "Officer's Certification" means a
writing signed by the Company's chief executive officer and its
chief financial officer, and its secretary or assistant
secretary, stating that (i) the Persons signing the writing have
made or have caused to be made the investigations necessary in
order to permit them to verify the accuracy of the information
set forth in such writing, and (ii) to the best of their
knowledge, the writing does not misstate any material fact and
does not omit to state any fact necessary to make the writing not
misleading.
2.5. Proprietary Rights. "Proprietary Rights" means patents,
registered or common law trademarks, service marks, trade names,
registered or common law copyrights, licenses, and other similar
rights (including, without limitation, know how, trade secrets,
and other confidential information) and applications for each of
the foregoing.
2.6. Securities Act. "Securities Act" means the Securities Act
of 1933, as amended, or any similar federal law then in force.
2.7. Shares. "Shares" shall mean shares of Common Stock to be
issued by the Company with par value $0.001 per share.
2.8. Subsidiary. "Subsidiary" means any corporation or other
entity of which shares of stock or other indicia of ownership
possessing a majority of the ordinary voting power in electing
the board of directors, or exercising corresponding control in
the case of a non-corporate entity, is, at the time as of which
any determination is being made, owned by the Company either
directly or indirectly through one or more Subsidiaries.
3. Agreement to Sell Shares and Engage Placement Agent
3.1. Appointment of Placement Agent. On the terms and subject to
all the conditions of this Agreement the Company agrees to sell,
and to engage the Placement Agent on an exclusive basis for 180
days from the date hereof to sell the Shares to be offered
pursuant to the Prospectus and the exhibits thereto, and the
Placement Agent agrees to sell on behalf of the Company and
pursuant to the Prospectus and the exhibits thereto and this
Agreement, up to 3,000,000 Shares for a maximum aggregate
offering amount of $750,000, with the minimum amount and escrow
of funds of $250,000 required, on a "best efforts" basis. The
Placement Agent shall act exclusively as agent in the sale of the
Shares.
3.2. Responsibility of Company. The Company recognizes that
compliance with applicable federal and state law in the
performance of its obligations described herein, including its
obligations concerning compliance with the requirements of
applicable federal and state securities laws pertaining to the
offer and sale of the Shares) is in all respects the
responsibility of the Company, and the Company agrees to take
such precautions as may be necessary to ensure compliance
therewith. Without in any way limiting the generality of the
foregoing, the parties contemplate that the offer and sale of
Shares will be made so as to comply with the registration
requirements of section 5 of the Securities Act of 1933, as
amended (the "Securities Act").
3.3. Offering Prospectus. The Company shall at its own expense
prepare and amend, if necessary, the Prospectus and such other
disclosure and offering documents as are required to comply with
the requirements of the applicable federal and state securities
laws for the offering contemplated by this Agreement. The
Placement Agent may facilitate the preparation of the Prospectus
on behalf of the Company but shall not be responsible for any
disclosures or omissions therein except for those matters
directly related to the Placement Agent and its role in this
Offering.
PAGE -2-
The representations made by the Prospectus are
exclusively the representations of the Company as relied upon by
the Placement Agent. The Company shall take prudent steps
necessary to assess the legal and/or regulatory sufficiency of
the Prospectus or like documentation via its own in-house counsel
or via the retention of outside counsel engaged specifically to
review such material and the relevant issues thereunto
pertaining. In any event, the Company warrants that in
authorizing the use of any documentation used in conjunction with
the activities anticipated to be conducted herein, it shall cause
to be undertaken sufficient review of such activity by competent
counsel and/or advisors and no provision contained herein shall
result in any duty incumbent upon the Placement Agent to
ascertain the legal and/or regulatory sufficiency of such
documentation.
3.4. Full and Fair Disclosure. It is expressly understood and
expected by both parties and expressly warranted by the Company
that the Prospectus and any other documentation provided by the
Company to the Placement Agent in connection with the offering of
the Shares pursuant to this Agreement shall be reviewed by the
Company or its appointees of sufficient competence for any
material deficiencies in such a manner as to ensure accuracy and
full and fair disclosure. The Company warrants that it shall
take prudent steps necessary to ensure that such documentation
contain no material misrepresentations or omissions and hereby
acknowledges that the Placement Agent is not responsible for
ensuring the accuracy or sufficiency of any documentation or
disclosures therein.
3.5. "Blue Sky." The Placement Agent, prior to making any offers
in any state, shall promptly advise the Company in writing of the
requirements of the state securities laws of each such state for
making such offers and sales or qualification of the securities
offered in that state. The Company shall evaluate said
requirements and advise the Placement Agent whether the Company
desires to proceed with the offering in each particular state.
Upon approval by the Company, the Placement Agent shall file all
documents and notices and pay such fees, recoverable from the
Company, as are required to make offers and sales in each state
chosen by the Company pursuant to this Offering. Nothing herein
shall require the Company to pay costs of the Placement Agent's
registering as a broker/dealer in any state.
3.6. Procedures. The offer and sale of the Shares and the
procedure for subscribing thereto shall conform to the
description thereof as set forth in the Prospectus.
3.7. Noncircumvention. The Company agrees not to sell, contract
to sell, offer to sell, solicit offers for the purchase, or
otherwise dispose of or offer to dispose of or enter into any
agreement to dispose of any Shares to any individual, entity,
institution, venture capitalist, etc., introduced to the Company
by the Placement Agent, without disclosing such an intent and
without securing written authorization from the Placement Agent
of such a sale or offer prior to occurrence, throughout the
offering period. In any event, the Company is obliged to
compensate the Placement Agent as stipulated in this Agreement.
4. Best Efforts Basis. The Company hereby expressly
acknowledges that the Placement Agent is under no obligation to
purchase any number of Shares in a manner which may be construed
as a firm underwriting or commitment and that the sum and
substance of this relationship is strictly characterized by the
term(s) "agent," "finder," and "best efforts" as these terms are
generally defined by applicable rules and regulations as
promulgated by the Securities Exchange Commission and NASD.
There is no obligation on the part of the Placement Agent to
purchase or raise the minimum proceeds indicated.
PAGE -3-
5. Escrow Provisions. The Placement Agent shall cause to be
created an Escrow Account with a bank acting as the Escrow Agent.
Delivery and payment of any proceeds from any Investors shall be
made to such Escrow Account. The Company shall compensate the
Placement Agent concurrent to the satisfaction of any contingency
and the subsequent release of any funds from escrow as
established in the Prospectus. The cost of initiating such
Escrow Account shall be borne by the Company, which cost is
estimated to be $1,500.00.
5.1. Escrow Agent. The Escrow Agent shall be a bank as defined
by Section 3(a)(6) of the Securities Exchange Act of 1934, as
amended.
5.2. Escrow Agreement. The Company, the Placement Agent, and the
Escrow Agent shall enter into an Escrow Agreement in accordance
with applicable rules and regulations, particularly SEC Rule
15(c)2-4.
5.3. Escrow Account. Pursuant to the Escrow Agreement, Xxxxx
Fargo Bank Arizona fbo BAS (the "Escrow Account") shall be a non-
interest bearing account held with the Escrow Agent.
5.4. Delivery of Escrow Funds.
5.4.1 The Subscribers shall deliver to The Placement Agent
checks or wire transfers made payable to the order of Xxxxx Fargo
Bank Arizona fbo BAS together with the Subscribers' mailing
addresses. All funds received by The Placement Agent shall (i)
be transmitted directly into the Escrow Account by noon of the
next business day after receipt thereof, and (ii) become
available to the issuer immediately upon satisfaction of the
contingency stipulated to be the attainment of the Minimum
Offering. The collected funds deposited into the Escrow Account
are referred to herein as the "Escrow Funds."
5.4.2 The Placement Agent shall have no duty or
responsibility to enforce the collection or demand payment of any
funds deposited into the Escrow Account. If, for any reason, any
check deposited into the Escrow Account shall be returned unpaid
to The Placement Agent, the sole duty of The Placement Agent
shall be to notify the Company and promptly return the check to
the Subscriber.
5.5. Investment of the Escrow Funds. The Escrow Account shall
not bear interest and no investments, other than those that
comply with SEC Rule 15(c)2-4, shall be made while the Escrow
Funds are held in escrow.
5.6. Release of Escrow Funds. The Escrow Funds shall be
disbursed from the Escrow Account in accordance with the
following:
PAGE -4-
5.6.1 Provided that the Escrow Funds total at least $250,000
at or before 5:00 p.m., Pacific Standard Time (PST), on the
Closing Date defined as the date 180 days from the date of
commencement of the Offering, or on any date prior thereto, the
Placement Agent shall instruct the Escrow Agent to release the
Escrow Funds (or any portion thereof) promptly to the Company,
and thereafter the Escrow Account shall remain open for the
purpose of depositing therein the subscription price for
additional Shares sold in the Offering, which additional Escrow
Funds shall be available to the Company immediately or as
otherwise instructed by the Company.
5.6.2 If, by 5:00 p.m., PST, on the Closing Date, the Escrow
Funds do not total at least $250,000, then the Escrow Funds shall
be returned promptly to Subscribers by the Escrow Agent.
5.6.3 In the event that at any time the Placement Agent shall
receive from the Company written instructions signed by an
individual who is identified as an officer or director of the
Company, requesting to refund to a Subscriber the amount of a
collected check or other funds received in escrow, the Placement
Agent shall instruct the Escrow Agent for such refund to be made
promptly to the Subscriber.
5.7. Costs and Expenses. Any costs or expenses associated with
establishing and/or maintaining the Escrow Account shall be
payable by the Company.
5.8. Termination of Escrow Agreement. The Escrow Agent's
responsibilities shall terminate at such time as the Escrow Funds
shall have been fully disbursed pursuant to the terms hereof and
the Offering as contemplated has formally closed or at such other
time as explicitly provided in the Escrow Agreement.
6. Covenants of the Company.
6.1. Offering Documentation. The Company covenants and agrees to
provide the Placement Agent with any and all documentation and/or
information requisite to due diligence relating to the Company
and the Shares as soon as practicable after the execution and
delivery of this Agreement or as requested by the Placement Agent
from time to time, provided that the Placement Agent agrees to
keep this documentation completely confidential and release only
that information as agreed upon between the Placement Agent and
the Company.
6.2. Qualification of the Shares for Offer and Sale. The Company
covenants and agrees, prior to, during, and after the offering of
the Securities, to cooperate with the Placement Agent and its
Counsel in connection with the qualification of the Shares for
offer and sale under the securities or Blue Sky laws of such
jurisdictions as may be applicable.
6.3. Amendments to the Prospectus. The Company covenants and
agrees that, if during the period specified herein, any event
shall occur, as a result of which, in the judgment of the Company
or in the opinion of Counsel for the Company, it becomes
necessary to amend or supplement the Prospectus in order to make
the statements therein, in light of the circumstances when the
Prospectus is delivered to an offeree or purchaser, not
misleading, or if it is necessary to amend or supplement the
Prospectus to comply with any law, the Company shall take all
steps necessary to make such amendments and to inform the
Placement Agent so that it may furnish to Investors the amended
Prospectus so that the statements in the Prospectus as so amended
or supplemented will not, in the light of the circumstances when
it is so delivered, be misleading, or so that the Prospectus will
comply with the law, and to furnish to the Placement Agent and to
such others as applicable, such information in a timely fashion.
6.4. Complete Performance. The Company covenants and agrees to
use its best efforts to do and perform all things required or
necessary to be done and performed under this Agreement by the
Company and to satisfy all conditions precedent to the delivery
of the Shares.
7. Representations and Warranties of the Company. Subject to
the information set forth in this Agreement, the Prospectus, and
the exhibits to the Prospectus, the Company represents, warrants,
and agrees with the Placement Agent as follows:
PAGE -5-
7.1. Organization and Corporate Power. The Company is a
corporation duly organized, validly existing, and in good
Standing under the laws of the state of Nevada. The Company has
all requisite corporate power and authority and all material
licenses, permits, and authorizations necessary to own and
operate its properties and to carry on its business as now
conducted and as presently proposed to be conducted, and is in
good standing in each jurisdiction or place where the nature of
its properties or the conduct of its business requires such
registration or qualification, except where the failure to so
register or qualify does not have a material adverse affect on
the condition (financial or otherwise), business, properties, net
worth, or results of operations of the Company. The copies of
the articles of incorporation and bylaws which have previously
been provided to the Placement Agent reflect all amendments made
thereto at any time prior to the date of this Agreement and are
correct and complete.
7.2. Capital Stock and Related Matters. The authorized, issued,
and outstanding capital stock of the Company is as set forth in
the Prospectus. Except as set forth in the Prospectus, the
Company does not have outstanding any stock or securities
convertible or exchangeable for any shares of its capital stock,
and it is not subject to any obligation (contingent or otherwise)
to repurchase or otherwise acquire or retire any shares of its
capital stock. All of the outstanding shares of the Company's
capital stock have been duly authorized and validly issued, are
fully paid and non-assessable. There are no preemptive rights of
stockholders with respect to the shares that would be issued in
the event of conversion of the Shares and, upon issuance, such
shares will be validly issued, fully paid, and non-assessable.
7.3. Authorizations, No Breach. The execution, delivery, and
performance of this Agreement and all other agreements and
transactions contemplated hereby have been duly authorized by the
Company. This Agreement and all other agreements contemplated
hereby each constitutes a valid and binding obligation of the
Company, enforceable in accordance with its terms. The execution
and delivery by the Company of this Agreement and all other
agreements contemplated hereby and the fulfillment of and
compliance, with the respective terms hereof and thereof by the
Company are not and will not (i) conflict with or result in a
breach of the terms, conditions, or provisions of, (ii)
constitute a default under, (iii) result in the creation of any
lien, security interest, charge, or encumbrance upon the
Company's or any subsidiary's capital stock or assets pursuant
to, (iv) give any third party the right to accelerate any
obligation under, (v) result in a violation of the articles of
incorporation or bylaws of the Company, or any law, statute,
rule, or regulation to which the Company is subject, or any
agreement, instrument, order, judgment, or decree to which the
Company is subject; or require any authorization, consent,
approval, exemption, or other action by or notice to, any court
or administrative or governmental body required to be filed as of
the date of this representation.
7.4. Financial Statements. The Prospectus shall contain audited
balance sheets of the Company as of the last auditable period
immediately prior to start of the offering, and the related
audited statements of operations, stockholders' equity, and cash
flows of the Company including the footnotes thereto, together
with the opinion of the independent certified public accountants,
with respect thereto. Such financial statements shall have been
prepared in accordance with generally accepted accounting
principles consistently followed throughout the periods
PAGE -6-
indicated. The Prospectus may also contain unaudited financial
statements (the "Latest Financial Statements"). The balance
sheet of the Latest Financial Statements shall present fairly, as
of its date, the financial condition of the Company on such date.
The Company shall not have had, as of the date of such balance
sheets, except as and to the extent reflected or reserved against
therein (including the notes thereto), any liabilities or
obligations (absolute or contingent) of a nature customarily
reflected in a balance sheet or the notes thereto prepared in
accordance with generally accepted accounting principles. The
statements of operations of the Latest Financial Statements shall
present fairly, the results of operations of the Company for the
periods indicated. The statements of stockholders' equity and
cash flows of the Latest Financial Statements shall present
fairly the information which should be presented therein in
accordance with generally accepted accounting principles. The
presentation of the Latest Financial Statements in accordance
with regulation S-X promulgated by the Securities and Exchange
Commission (the "Commission") regarding the form and content of
and requirements for financial statements to be filed with the
Commission would not materially and adversely affect the reported
amount of the Company's assets, stockholders' equity, or results
of operations as of any date or for any period included therein.
7.5. Independent Public Accountants. The independent public
accountants, whose report respecting the audited financial
statements of the Company is included in the Prospectus and who,
as expert, having reviewed certain other information of a
financial nature contained in the Prospectus, shall be
independent certified public accountants as required by the
Securities Act.
7.6. No Material Adverse Change. Except as set forth in the
Prospectus, since the date of the Latest Financial Statements,
there has been no material adverse change in the Company's
financial condition, operating results, business prospects,
employee relations, customer relations, or otherwise, other than
changes occurring in the ordinary course of business which in the
aggregate shall have not been materially adverse to the Company.
7.7. Absence of Certain Developments.
7.7.1 Except as expressly provided by this Agreement and
except as disclosed in or contemplated by the Prospectus, since
the date of the Latest Financial Statements the Company has not:
(a) issued any equity stock, bonds, or other securities;
(b) borrowed any amount or incurred or become subject to any
liabilities, except current liabilities incurred in the
ordinary course of business and liabilities, under contracts
entered into in the ordinary course of business;
(c) discharged or satisfied any lien or encumbrance or paid any
obligation or liability, other than current liabilities paid in
the ordinary course of business;
(d) declared or made any payment or distribution of cash or
other property to stockholders with respect to its stock, or
purchased or redeemed any Shares of its capital stock,
(e) mortgaged or pledged any of its properties or assets, or
subjected them to any lien, security interest, charge, or any
other encumbrance, except liens for current property taxes not
yet due and payable,
(f) sold, assigned, or transferred any of its tangible assets,
except in the ordinary course of business, or canceled any
debts or claims;
PAGE -7-
(g) sold, assigned, or transferred any patents, trademarks,
trade names, copyrights, trade secrets, or other intangible
assets, or disclosed any proprietary confidential information
to any person;
(h) suffered any extraordinary losses or intentionally waived
any rights of material value or compromised any material
claims, whether or not in the ordinary course of business of
consistent with past practice;
(i) made capital expenditures or commitments therefore that
aggregate in excess of $50,000;
(j) entered into any other transaction other than in the
ordinary course of business, or entered into any other material
transaction, whether or not in the ordinary course of business,
(k) made charitable contributions or pledges, or
(1) suffered any damage, destruction, or casualty loss, whether
or not covered by insurance.
7.7.2 The Company has not at any time made any political
contributions, or any bribes, kickback payments, or other illegal
payments.
7.8. Assets
7.8.1 Except as set forth in the Prospectus or the Latest
Financial Statements, the Company has good and marketable title
to, or a valid leasehold interest in, the material properties and
assets shown on the Latest Financial Statements or in the
Prospectus or acquired thereafter, free and clear of all material
liens, security interests, charges and encumbrances, other than
liens for current property taxes not yet due and payable and as
disclosed in the Prospectus or the Latest Financial Statements.
7.8.2 Except as set forth in the Prospectus, the Company's
buildings, equipment, and other tangible assets are in good
condition in all material respects and are usable in the ordinary
course of business.
7.8.3 Except as set forth in the Prospectus, the Company
owns, or has a valid leasehold interest in, all assets necessary
for the conduct of its business as presently conducted.
7.9. Material Contracts. Except as set forth in the Prospectus,
the Company is not a party to any material contract (meaning
thereby a contract materially affecting its business or
properties). No default of any material significance exists in
the due performance and observance by the Company of any term,
covenant, or condition of any such contract; all such contracts
are in full force and affect and are binding on the parties
thereto in accordance with their terms; and to the knowledge of
the Company, no other party to any such material contract has
threatened or instituted any action or proceeding wherein the
Company is alleged to be in default thereunder.
PAGE -8-
7.10. Tax Returns. Except as set forth in the Prospectus,
the Company has filed all federal, state and local tax returns
which are required to be filed and has paid all takes shown on
such returns and all assessments received by it to the extent
such taxes have become due. All taxes with respect to which the
Company is obligated have been paid or provided for by adequate
reserves.
7.11.Proprietary Rights. Except as set forth in the
Prospectus, the Company, to the best of its knowledge, possesses
all material proprietary rights necessary to the conduct of its
business. Except as set forth in the Prospectus, (i) the
Company, to the best of its knowledge, owns all right, title, and
interest in and to all such proprietary rights, (ii) there have
been no claims made against the Company for the assertion of the
invalidity, abuse, misuse, or unenforceability of any of such
rights, and to the best of the Company's knowledge, there are no
grounds for the same, (iii) the Company has not received a notice
of conflict with the asserted rights of others, and (iv) to the
best of the Company's knowledge, the conduct of the Company's
business has not infringed any proprietary rights of others.
7.12.Litigation, Etc. Except as set forth in the,
Prospectus, (i) there are no actions, suits, proceedings, orders,
investigations, or claims pending or threatened against or
affecting the Company at law or in equity, or before or by any
governmental department, commission, board, bureau, agency, or,
instrumentality, (ii) there are no arbitration proceedings
pending under collective bargaining agreements or otherwise;
(iii) there are no governmental inquiries (including inquiries as
to the qualification of the Company to hold or receive any
license or permit), and (iv) to the best of the Company's
knowledge, there is no basis for any of the foregoing.
7.13.Brokerage. Except as set forth in the Prospectus,
there are no claims for brokerage commissions, finders' fees, or
similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or
agreement binding upon the Company. The Company will pay, and
hold the Placement Agent harmless against, any liability, loss,
damage, or expense (including, without limitation, attorneys'
fees and travel and out-of-pocket expenses) arising in connection
with any such claim.
7.14. Governmental Consent, Etc. No permit, consent,
approval, or authorization of, or declaration to or filing with,
any governmental authority is required in connection with the
execution, delivery, and performance of this Agreement by the
Company or the consummation by the Company of any other
transactions contemplated hereby, except as have been obtained or
accomplished and except as expressly contemplated herein or in
the exhibits hereto.
7.15.Compliance with Laws. Except as set forth in the
Prospectus, the Company is not in violation of any law or any
regulation or requirements which might have a material adverse
effect upon the Company's business, and the Company has not
received notice of any such violation.
7.16. Disclosure. Neither this Agreement, its exhibits, nor
any of the attachments, written statements, documents,
certificates, or other items prepared or supplied by the Company
with respect to the transactions contemplated hereby contains any
untrue statement of a material fact or omits a material fact
necessary to make the statements contained herein or therein not
misleading. The Prospectus (i) describes accurately in all
material respects the business, condition (financial and
otherwise), and operations of the Company; (ii) contains
substantially all information material to the purpose of the
Prospectus to the extent that the Company possesses such
PAGE -9-
information, and (iii) contains no untrue statement of a material
fact or omits to state any material fact necessary in order to
make the statements, in the light of the circumstances in which
made, not misleading. The Company acknowledges and agrees that
all responsibility for the accuracy and adequacy of information
contained in the Prospectus (other than information relating to
the Placement Agent made in reliance on and in conformity with
information furnished to the Company in writing by or on behalf
of the Placement Agents expressly for use therein) shall be the
sole responsibility of the Company and shall not be the
responsibility of the Placement Agent; and the Company shall
promptly take such steps as are or may become necessary to ensure
the accuracy and adequacy thereto. Notwithstanding the
foregoing, with respect to projections and other forward looking
information, if any, contained in the Prospectus, the Company
represents only that such projections and other forward looking
information were prepared in good faith, that the Company
believes it has a reasonable basis for the projections and other
forward looking information and the assumptions on which they are
based, that the projections represent management's estimate of
possible results of operations, that the Company is not aware of
any change in its circumstances or other fact that has occurred
that would cause it to believe that it will be unable to meet the
forecasts set forth in the Prospectus.
7.17. Environmental Matters. The Company is in compliance
with all federal, state, local, and regional statutes,
ordinances, orders, judgments, rulings, and regulations relating
to any environmental matter of pollution or of environmental
regulation or control to the extent that any failure to comply
therewith or violation thereof have resulted or may result in
material actual or potential fines, penalties, or liabilities,
and there are and have been no material releases or threatened
releases of "hazardous substances" into the environment, as that
term is defined in section 101(14) of the Comprehensive
Environmental Response Compensation and Liability Act, as
amended. The Company has no notice of any actual or claimed
failure to comply with such statutes, ordinances, orders,
judgments, rulings, or regulations with respect to environmental
matters.
7.18. Material Transactions or Affiliations. Every contract,
agreement, or arrangement between the Company and any predecessor
and any person who is or has ever been an officer or director of
the Company or person owning of record, or known by the Company
to own beneficially, 5% or more of the issued and outstanding
common stock of the Company and which is to be performed in whole
or in part after the date hereof or was entered into within three
years before the date hereof was for a bona fide business purpose
of the Company, and the amount paid or received, whether in cash,
in services, or in kind, is, has been during the full term
thereof, and is required to be during the un-expired portion of
the term thereof, no less favorable to the Company than terms
available from otherwise unrelated parties in arm's-length
transactions. Each of the foregoing is accurately and completely
described in the Prospectus.
7.19. Use of Proceeds. The Company will apply the proceeds
from the sale of the Shares in the manner set forth in the
Prospectus under the caption "Use of Proceeds."
7.20. Books and Records. The books, records and accounts of
the Company and its subsidiaries accurately and fairly reflect,
in reasonable detail, the transactions and dispositions of their
respective assets. The system of internal accounting controls
maintained by the Company and its subsidiaries is sufficient to
provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary (A) to
permit preparation of financial statements and (B) to maintain
accountability, for assets; and (iii) access to assets is
permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for
assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any
difference.
PAGE -10-
8. Conditions to Obligations of the Company. The obligations
of the Company under this Agreement are, at the option of the
Company, subject to the satisfaction of each of the following
conditions:
8.1. Suitability of Purchasers. The Company has reason to
believe and does believe, based on information provided to it by
the Placement Agent or otherwise, that each prospective purchaser
is qualified to be a purchaser pursuant to the suitability
standards set forth in the Prospectus and all applicable federal
and state securities laws
8.2. Execution of Documents. Each prospective purchaser has
completed and executed a subscription agreement and an offeree
suitability questionnaire, all in such form that is acceptable to
the Company.
8.3. Certificate of Placement Agent. The Placement Agent shall
have delivered to the Company executed certificates, one
certificate dated as of the date of each Closing, duly executed
by a qualified representative of the Placement Agent, stating
that the actions of the Placement Agent in making sales of the
Shares have been (i) in conformance with the terms and conditions
of the Prospectus, and (ii) in compliance with the requirements
of federal securities laws and applicable state securities laws
regarding the manner of offering such Shares.
8.4. Acceptance of Subscribers. The Company, in its good faith
discretion, has accepted as Investors the subscribers to whom
Shares are to be issued at such Closing.
8.5. Representations. Each representation and warranty of the
Placement Agent contained in this Agreement or in any statement
(including, but not limited to the Prospectus and any financial
statements), certificate, schedule, or other document delivered
pursuant hereto, or in connection with the transactions
contemplated hereby, shall continue to be valid and shall be
deemed to be made again at and as of the time of the Initial
Closing and each additional closing and shall then be valid in
all material respects.
9. Covenants of the Placement Agent.
9.1. Best Efforts. The Placement Agent covenants and agrees to
use its best efforts as the exclusive agent of the Company, to
offer and sell the Shares; but this covenant shall not constitute
an obligation or guarantee to purchase or sell any or all of the
Shares. The right to offer and sell is subject to and limited by
the conditions in the Prospectus and this Agreement.
9.2. Compliance with Securities Laws. The Placement Agent
further covenants and agrees that:
9.2.1 It will comply with all the terms and conditions of the
Prospectus and applicable state and federal securities laws with
which it must comply in order to offer and sell the Shares in
compliance with the registration requirements of section 5 of the
Securities Act and other applicable state securities laws;
9.2.2 It will maintain, and deliver a copy to the Company, a
record of names and addresses of persons to whom it delivered a
copy of the Prospectus, and the serial number of each such
Prospectus so delivered;
PAGE -11-
9.2.3 It will obtain a manually executed Subscription
Agreement for each prospective purchaser and shall assure that
each such document has been completed;
9.2.4 It will have a reasonable belief that each subscriber
presented for consideration to the Company meets the minimum
investor suitability standards set forth in the Prospectus and,
where applicable.
9.2.5 It shall not make any factual statement or
representation, whether written or oral, concerning the Company,
this Offering, or the Shares that is inconsistent with the
representations contained in the Offering materials presented to
each prospective purchaser by the Company or approved in writing
by the Company;
Notwithstanding anything contained in the foregoing
provisions of this section 9.2, or any other
provisions of this Agreement, the Company shall
have responsibility with respect to determining the
requirements of state laws and to comply with the
qualification requirements of such states with
respect to any filings required to comply with
such.
10. Representations and Warranties of the Placement Agent. The
Placement Agent represents and warrants that:
10.1. Organization and Corporate Power. It is a corporation
duly organized, validly existing, and in good standing under the
law of the state of Nevada, and has full corporate power and
authority to execute this Agreement and complete the transactions
contemplated hereby.
10.2. Registration. It is in good standing and duly
registered so that it may undertake the acts and obligations
contemplated by this Agreement, in accordance with the rules and
regulations of the U.S. Securities and Exchange Commission
("SEC"), and the securities laws and regulations of the Nevada
Secretary of State Securities Division and any other state in
which it is contemplated that the Placement Agent may offer and
sell the Shares.
10.3. NASD Licensing. It is a member in good standing of the
National Association of Securities Dealers, Inc. ("NASD") and
will be able to offer and sell the Shares in compliance with
registration provisions under which the offering is to be
conducted under the Securities Act and the relevant
qualifications in each state in which the Shares will be offered
or sold, will have such licenses, approvals, and authorizations
in any states in which offers or sales of the Shares are made at
such time that any such offers or sales are made, and is subject
to no statutory disqualification provisions including, but not
limited to those contained in Regulation Section 230.262.
10.4.Authorizations. The execution, delivery, and
performance of this Agreement has been duly authorized by all
requisite corporate action on behalf of the Placement Agent, and
this Agreement has been duly executed and delivered and
constitutes the valid and binding obligation of the Placement
Agent.
10.5. No Breach. The execution and delivery by the Placement
Agent of this Agreement, the performance by the Placement Agent
of this Agreement and the completion of the transactions herein
contemplated will not conflict with or result in a breach of the
terms of, or constitute a default under or violation of, any law
or regulation of any governmental authority, domestic or foreign,
or the articles of incorporation or bylaws of the Placement Agent
or any material agreement or instrument to which the Placement
Agent is a party or by which it is bound or to which it is
subject, nor will it give to others any interests or rights,
including rights of termination, acceleration, or cancellation,
in of with respect to any of the properties, assets, agreements,
contracts, or business of the Placement Agent.
10.6. Governmental Consent, Etc. No permit, consent,
approval, or authorization of, or declaration to, or filing with,
any governmental authority is required in connection with the
execution, delivery, and performance of this Agreement by the
PAGE -12-
Placement Agent or the consummation by the Placement Agent of any
other transactions contemplated hereby, except as have been
obtained or accomplished and except as expressly acknowledged
herein or in the exhibits hereto.
10.7. Litigation. The Placement Agent is not aware of any
litigation or threatened litigation, regulatory proceeding or
order, disciplinary proceeding or claim of violation, or any
known basis for any of the foregoing that could materially affect
the ability of the Placement Agent to carry out its functions as
Placement Agent contemplated by this Agreement.
11. Conditions to Obligations of Placement Agent. The
obligations of the Placement Agent under this Agreement are, at
the option of the Placement Agent, subject to the satisfaction at
or prior to the Initial Closing and through each additional
closing, of each of the following conditions,
11.1. Statutory Compliance/Consents. All statutory
requirements for the valid completion of the transactions
contemplated by this Agreement shall have been fulfilled, all
authorizations, consents, and approvals of all federal, state,
local, and foreign governmental agencies and authorities, and any
membership in a regulatory or self-regulatory organization
required to be obtained in order to permit the completion of the
transactions contemplated by this Agreement shall have been
obtained.
11.2. No Material Adverse Clause. The business, properties,
or operations of the Company shall not have been adversely
affected in any material way as a result of any fire, accident,
or other casualty or extraordinary natural occurrence and there
shall not have been incurred any material adverse change in the
business, properties, results of operations, or financial
condition of the Company.
11.3. Litigation. There shall not be any action, proceeding,
investigation, or pending or threatened litigation or
arbitration, the purpose of which is to enjoin or may be to
enjoin the transactions contemplated by this Agreement or which
would have the effect, if successful, of imposing material
liability on the Company, or any of its officers or directors
thereof, or the Placement Agent, because of the completion of the
transactions contemplated by this Agreement.
11.4. Representations. Each representation and warranty of
the Company contained in this Agreement or in any statement
(including, but not limited to the Prospectus and any financial
Statements), certificate, schedule, or other document delivered
pursuant hereto, or in connection with the transactions
contemplated hereby, shall continue to be valid and shall be
deemed to be made again at and as of the time of the Initial
Closing and each additional closing and shall then be valid in
all material respects.
11.5. Company Compliance. The Company shall have performed
and complied in all material respects with each and every
covenant, agreement, and condition required by this Agreement to
be performed or complied with by it prior to or at the initial
closing and each additional closing.
PAGE -13-
11.6. Officers' Certification. The Company shall have
delivered to the Placement Agent certification as of the date of
the Closing which acknowledges the fulfillment of the conditions
set forth herein.
11.7. Direction to Escrow Agent. The Company shall have
directed the Escrow Agent to pay directly to the Placement Agent
at the Closing any amounts due the Placement Agent as of such
Closing pursuant to this Agreement, upon request of the Placement
Agent.
11.8. Further Certificates. The Company shall furnish or
cause to have furnished to the Placement Agent at such Closing
such further certification(s) and/or documents as the Placement
Agent shall have reasonably requested.
12. Compensation to Placement Agent; Expenses of Offering.
12.1. Payment of Fees and Commissions. Subject to the terms,
conditions, and covenants of this Agreement, the Company shall
pay to the Placement Agent, the following:
12.1.1 A non-refundable retainer in the amount of $3,500.00
payable upon exectution of this Agreement.
12.1.2 A success fee of $15,000 in the event that greater than
$400,000 in gross proceeds are raised in conjunction of this
offering.
12.1.3 Commissions from the sale of the Shares subject to the
sale of the Minimum Offering as follows:
12.1.3.1. 7.5% of the gross proceeds from the sale of the Shares
to Investors payable in the form of a cash commission;
12.1.3.2. 2.5% of the gross proceeds from the sale of the Shares
payable in the form of common stock of the Company valued
at a price per share equal to the offering price of shares
as contemplated in this Agreement.
12.2. Company Offering Expenses. The Company will pay all
its costs and expenses in connection with the offering of the
Shares, including, but not limited to, accountants' fees, legal
fees, escrow fees, printing and distribution costs, travel
expenses of its employees, miscellaneous sales expenses, and
filing fees, if any.
13. Indemnification
13.1. Company Indemnification. The Company will indemnify
and hold harmless the Placement Agent against any losses, claims,
damages, or liabilities, joint or several, to which the Placement
Agent may become subject, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Prospectus or any
amendment or supplement thereto, or arise out of or are based
upon 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, and will reimburse the
PAGE -14-
Placement Agent for any legal or other expenses reasonably
incurred by the Placement Agent in connection with investigating
or defending any such action or claim; provided, however, that
the Company shall not be liable in any case to the extent that
any such loss, claim, damage, or liability arises out of or is
based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in the Prospectus or such
amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by the Placement
Agent directly or through the Placement Agent expressly for use
therein; provided further, that in no event shall the
indemnification agreement contained in this subsection inure to
the benefit of the Placement Agent (or any person controlling the
Placement Agent) on account of any losses, claims, damages,
liabilities, or actions arising from the sale of the Shares
pursuant to the Offering to any person by the Placement Agent if
such losses, claims, damages, liabilities, or options arise out
of, or are based upon, an untrue statement or omission or alleged
untrue statement or omission in the Prospectus or any amendment
or supplement thereto based upon and in conformity with written
information furnished to the Company by the Placement Agent
specifically for use therein.
The indemnity agreement in this subsection shall be in
addition to any liability which the Company may otherwise
have and shall extend upon the same terms and conditions
to each officer, director, or partner of the Placement
Agent and to each person, if any, who controls the
Placement Agent within the meaning of section 15 of the
Securities Act.
13.2. Notice of Claim. Promptly after receipt by the
indemnified party under subsection 13.1 of notice of the
commencement of any action, the indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying
party under this section, notify the indemnifying party in
writing of the commencement thereof; but the omission so to
notify the indemnifying party shall not relieve it from any
liability which it may have to the indemnified party otherwise
than under this section.
In case any such action shall be brought against the
indemnified party and it shall notify the indemnifying
party of the commencement thereof, the indemnifying party
shall be entitled to participate therein and, to the
extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the
defense thereof, with counsel satisfactory to the
indemnified party; and after notice from the indemnifying
party to the indemnified party of its election so to
assume the defense thereof, the indemnifying party shall
not be liable to the indemnified party under this section
for any legal or other expenses subsequently incurred by
the indemnified party in connection with the defense
thereof other than reasonable costs of investigation.
14. Miscellaneous.
14.1. Expenses. The Company will pay, and hold the Placement
Agent harmless against liability for the payment of (i)
reasonable fees and expenses incurred with respect to any
amendments or waivers requested by the Company (whether or not
the same become effective) under or in respect of this Agreement,
the Shares, or the other agreements contemplated hereby; (ii)
stamp and other taxes which may be payable in respect to the
execution and delivery of this Agreement or the issuance,
delivery, or sales of the Shares or any Shares of Common stock
issuable on conversion of the Shares; and (iii) reasonable fees
and expenses incurred, as against the Company, in respect of the
enforcement of the rights granted under this Agreement, the
Shares, or the other agreements contemplated hereby.
14.2. Notice. All notices or demands shall be in writing and
shall be served personally, te1egraphically, or by express or
certified mail. Services shall be deemed conclusively made at
the time of service if personally served; at the time that the
telegraphic agency confirms to the sender delivery thereof to the
addressee if served telegraphically; 48 hours after deposit
PAGE -15-
thereof in the United States mail properly addressed and postage
prepaid, return receipt requested, if served by express mail; and
five days after deposit thereof in the United States mail,
properly addressed and postage prepaid, return receipt requested,
if served by certified mail; if sent by facsimile transmission,
confirmed with a written copy thereof sent by overnight express
delivery; or if sent by overnight express delivery. Any notice
or demand to the parties shall be given to:
To the Company:
Body Art & Science, Inc.
0000 Xxxx Xxxx Xxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxx 00000
Attn: Xxxxx Xxxxx
Telecopy: (000) 000-0000
To the Placement Agent:
NevWest Securities Corporation
0000 Xxxx Xxxxxxx Xxxxx Xxxxxxx Xxxxx X-0
Henderson, Nevada 89052
Attn: Xxxxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
Any party may change its address by providing written
notice of such change to the other parties hereto.
14.3. Remedies. The Placement Agent and the Company will
have all rights and remedies set forth in this Agreement. Any
person having any rights under any provision of this Agreement
will be entitled to enforce these rights specifically, to recover
damages by reason of any breach of any provision of this
Agreement, and to exercise all other rights granted by law.
14.4. Consent to Amendments and Waivers. Except as otherwise
expressly provided herein, the provisions of this Agreement may
be amended, and the Company or the Placement Agent, as the case
may be, may take any action herein prohibited, or omit to perform
any act herein required to be performed by it, only if it has
obtained the written consent of the other. No course of dealing
between the Company and the Placement Agent or any delay in
exercising any rights hereunder will operate as a waiver of any
rights of the Placement Agent or the Company.
14.5. Survival of Representations and Warranties. All
representations and warranties contained herein or made in
writing by any party in connection herewith will survive the
execution and delivery of this Agreement regardless of any
investigation made by the Placement Agent, the Company, or on
their respective behalves.
14.6. Successors and Assigns. Except as otherwise expressly
provided herein, all covenants and agreements contained in this
Agreement by or on behalf of any of the parties hereto will bind
and inure to the benefit of the respective successors and assigns
of the parties hereto whether so expressed or not.
14.7. Entire Agreement, Amendments. This Agreement and the
Exhibits and Schedules referred to herein and the documents
delivered pursuant hereto contain the entire understanding of the
parties hereto with regard to the subject matter contained herein
or therein, and supercedes all prior agreements, understandings
or letters of intent between of among any of the parties hereto.
This Agreement shall not be amended, modified or supplemented
except by a written instrument signed by an authorized
representative of each of the parties hereto.
PAGE -16-
14.8. Severability. Whenever possible, each provision of
this Agreement will be interpreted in a manner as to be effective
and valid under applicable law, but if any provision of this
Agreement is held to be prohibited by or invalid Xxxxxx
applicable law, that provision will be ineffective only to the
extent of the prohibition or invalidity, without invalidating the
remainder of this Agreement.
14.9. Term and Termination. This Agreement shall terminate
on the first to occur of the sale of all Shares to be offered and
sold pursuant hereto or the expiration of 180 days after the
effective date of the Prospectus, unless extended for up to 30
additional days on the agreement of the Company and the Placement
Agent, in which event this Agreement shall terminate at the
expiration of such extension.
14.10. Counterparts. This Agreement may be executed in two or
more counterparts, any one of which need not contain the
signatures of more than one party, but all counterparts taken
together will constitute one and the same Agreement.
14.11. Descriptive Heading. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute
a part of this Agreement.
14.12. Governing Law. The construction, validity, and
interpretation of this Agreement and the exhibits and schedules
hereto will be governed by the laws of the state of Nevada.
14.13. Final Approval. This Agreement in its entirety, is
subject to final written authorization by the then General
Counsel for NevWest Securities Corporation (the Placement Agent)
and is contingent upon a satisfactory due diligence review by the
Placement Agent which shall have the discretion to proceed with
the offering as contemplated herein or terminate its services
depending upon its findings in the process of conducting a due
diligence review of the Company. Any accountable expense amounts
expended in the process of conducting this due diligence review
shall be retained by the Placement Agent. Any amount not
otherwise expended shall be returned to the Company within ten
(10) days of written notice from the Placement Agent indicating
its election not to proceed.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement to be effective on the date first written above.
Body Art & Science, Inc.
Signature: _________________________ Date:
__________________
Print Name/Position _________________________
NevWest Securities Corporation
Signature: /s/ Xxxxxx Xxxxxxxxxx Date: July 12, 2002
Xxxxxx Xxxxxxxxxx, President & CEO
PAGE -17-
