PLACEMENT AGENT AGREEMENT
May 25, 1999
Board of Directors
Training Devices Incorporated
0000 X Xxxxxx Xxxxxxx, Xxxx #0X
Xxxxxxxxx, Xxxxxxxx 00000
Gentlemen:
Bathgate XxXxxxxx Capital Group, LLC. (the "Placement Agent"), hereby
confirms its agreement with you (the "Company") as follows:
SECTION 1
DESCRIPTION OF SECURITIES
The Company proposes to offer and sell to qualified investors up to
seven (7) units of the Company's securities on terms as set forth herein.
Each unit ("Unit" or "Units") shall consist of a $100,000 Promissory
Note ("Note") and 30,000 Common Stock Purchase Warrants ("Warrant" or
"Warrants"). Each Warrant will entitle the Holder to purchase one share of
Common Stock at an exercise price (the "Exercise Price") of $.25 per share. As
used in this Agreement, the term "Memorandum" refers to a Private Placement
Memorandum dated May 25, 1999. The Units, Notes and Warrants shall be as further
described in the Memorandum and shall be sold on the terms and conditions as
described herein and in the Memorandum.
SECTION 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
In order to induce the Placement Agent to enter into this Agreement,
the Company hereby represents and warrants to and agrees with the Placement
Agent as follows:
2.01. PRIVATE PLACEMENT MEMORANDUM. The Memorandum with respect to the
Units and all exhibits thereto, copies of which have heretofore been delivered
by the Company to the Placement Agent, has been carefully prepared by the
Company in conformity with Regulation D ("Regulation D") promulgated pursuant to
the Securities Act of 1933, as amended (the "Act"), and with comparable
provisions of the securities laws of and other states as may be reasonably
requested by the Placement Agent. The Memorandum does not include any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however, the
Company does not make any representations or warranties as to information
contained in or omitted from the Memorandum in reliance upon written information
furnished on behalf of the Placement Agent specifically for use therein. Any
additional written information authorized by the Company to be provided to
prospective purchasers shall not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
2.02. FINANCIAL STATEMENTS. The financial statements of the Company,
together with related Schedules and Notes as set forth in the Memorandum,
present fairly the financial position and the results of operations of the
Company at the represented dates and for the represented periods to which they
apply.
2.03. NO MATERIAL ADVERSE CHANGE. Except as may be reflected in or
contemplated by the Memorandum, subsequent to the dates as of which information
is given in the Memorandum, and prior to the Closing Date (as defined
hereinafter), (i) there shall not be any material adverse change in the
business, properties, options to lease, leases, financial condition, management,
or otherwise of the Company or in the Company's business taken as a
whole, (ii) there shall not have been any material transaction entered into by
the Company other than transactions in the ordinary course of business; (iii)
the Company shall not have incurred any material obligations, contingent or
otherwise, which are not disclosed in the Memorandum; (iv) there shall not have
been nor will there be any change in the capital stock or adverse change in the
short-term or long-term debt (except current payments) of the Company; and (v)
the Company has not and will not have paid or declared any dividends or other
distributions.
2.04. NO DEFAULTS. The Company is not in default in the performance of
any obligation, agreement or condition contained in any debenture, note or other
evidence of indebtedness or any indenture or loan agreement of the Company,
other than as set forth in the Memorandum. The execution and delivery of this
Agreement and the consummation of the transactions herein contemplated, and
compliance with the terms of this Agreement will not conflict with or result in
a breach of any of the terms, conditions or provisions of, or constitute a
default under, the articles of incorporation or bylaws of the Company, or any
note, indenture, mortgage, deed of trust, or other agreement or instrument to
which the Company is a party or by which it or any of its property is bound, or
any existing law, order, rule, regulation, writ, injunction, or decree or any
government, governmental instrumentality, agency or body, arbitrator, tribunal
or court, domestic or foreign, having jurisdiction over the Company or its
property. The consent, approval, authorization, or order of any court or
governmental instrumentality, agency or body is not required for the
consummation of the transactions herein contemplated except such as may be
required under the Act or under the securities laws of any state or
jurisdiction.
2.05. ORGANIZATION AND STANDING. The Company is, and at the Closing
Date will be, duly organized and validly existing in good standing as a
corporation under the laws of its state of incorporation and with full power and
authority to own its property and conduct its business, present and proposed, as
described in the Memorandum; the Company has full power and authority to enter
into this Agreement and to issue the securities comprising the Units, and the
Company is duly qualified and in good standing as a foreign corporation in all
jurisdictions in which the character of the property owned or leased or the
nature of the business transacted by it makes such qualification necessary. The
Company has paid all fees required by the jurisdiction of organization and any
jurisdiction in which it is qualified as a foreign corporation.
2.06. CAPITALIZATION. Prior to the Closing Date, the capitalization of
the Company shall be as described in the Memorandum.
2.07. LEGALITY OF UNITS. The securities comprising the Units have been
duly and validly authorized and, when issued or sold and delivered against
payment therefor as provided in this Agreement, will be validly issued, fully
paid and nonassessable. The securities comprising the Units will conform in all
material respects to all statements with regard thereto in the Memorandum. A
sufficient number of shares of Common Stock of the Company has been reserved for
issuance upon exercise of the Warrants.
2.08. PRIOR SALES. No securities of the Company have been sold by the
Company or by, or on behalf of, or for the benefit of, any person or persons
controlling, controlled by, or under common control with the Company at any time
prior to the date hereof, except as set out in the Memorandum. No prior
securities sales by the Company or any affiliate are required to be integrated
with the proposed sale of the Units such that the availability of Regulation D
or any other claimed exemption from the registration requirements of the Act
would be made unavailable to the offer and sale of the Units.
2.09. LITIGATION. There is and at the Closing Date there will be no
action, suit or proceeding before any court or governmental agency, authority or
body pending or to the knowledge of the Company threatened which might result in
judgments against the Company, or its officers, directors, employees or agents
which the Company is obligated to indemnify, not adequately covered by insurance
and which collectively might result in any material adverse change in the
condition (financial or otherwise), the business or the prospects of the Company
or would materially affect the properties or assets of the Company.
2.10. FINDER. No person has acted as a finder in connection with the
transactions contemplated herein, and the Company will indemnify the Placement
Agent with respect to any claim for finder's fees in connection herewith. The
Company further represents that it has no management or financial consulting or
advisory agreement with anyone except as set forth in the Memorandum. The
Company additionally represents that no officer, director,
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or 5% or greater shareholder of the Company is, directly or indirectly,
associated with a National Association of Securities Dealers, Inc. member
broker-dealer, other than such persons as the Company has advised the Placement
Agent in writing are so associated.
2.11. CONTRACTS. Each contract to which the Company is a party and to
which reference is made in the Memorandum has been duly and validly executed, is
in full force and effect in all material respects in accordance with their
respective terms, and none of such contracts has been assigned by the Company;
and the Company knows of no present situation or condition or fact which would
prevent compliance with the terms of such contracts, as amended to date. Except
for amendments or modifications of such contracts in the ordinary course of
business, the Company has no intention of exercising any right which it may have
to cancel any of its obligations under any of such contracts, and has no
knowledge that any other party to any of such contracts has any intention not to
render full performance under such contracts.
2.12. TAX RETURNS. The Company has filed all federal, state and
municipal tax returns which are required to be filed, and has paid all taxes
shown on such returns and on all assessments received by it to the extent such
taxes have become due. All other taxes with respect to which the Company is
obligated have been paid or adequate accruals have been set up to cover any such
unpaid taxes, including all federal and state withholding and FICA payments.
2.13. PROPERTY. Except as otherwise set forth in the Memorandum, the
Company has good title, free and clear of all liens, encumbrances and defects,
except liens for current taxes not due and payable, to all property and assets
which are described in the Memorandum as being owned by the Company, subject
only to such exceptions as are not material and do not adversely affect the
present or prospective business of the Company. All of the claims, options to
lease, leases and subleases material to the business of the Company under which
the Company holds or uses any real or personal property, including those
described or referred to in the Memorandum, are in full force and effect, and
the Company is not in default in respect of any of the terms or provisions of
any such claims, options to lease, leases or subleases, and no claim of any sort
has been asserted by anyone adverse to the Company's rights under any such
claims, options to lease, leases or subleases or affecting or questioning the
Company's rights to the continued possession of the claimed, optioned, leased or
subleased property covered by such claim, options to lease, lease or sublease.
2.14. AUTHORITY. The execution and delivery by the Company of this
Agreement has been duly authorized, and this Agreement is the valid, binding and
legally enforceable obligation of the Company.
2.15. USE OF PROCEEDS. The Company will apply the proceeds from the
sale of the Units to the purposes set forth in the Memorandum. The Company will
also establish procedures to ensure proper application and stewardship of such
proceeds.
2.16. NO LIMITATIONS ON PAYMENT OF DIVIDENDS. Except as otherwise set
forth in the Memorandum, there are no limitations, either contractual or
otherwise, nor will the Company enter into any agreement with any other party,
which prevents or limits the Company's ability to declare or pay dividends on
its Common Stock.
SECTION 3
ISSUE, SALE AND DELIVERY OF THE UNITS
3.01. PLACEMENT AGENT APPOINTMENT. The Company hereby appoints the
Placement Agent as its exclusive agent until (a) all of the Units have been
purchases, or (b) the Offering is terminated by the Placement Agent or the
Company (the "Sales Termination Date"), to solicit purchasers for up to seven
(7) Units on a "best efforts basis; and the Placement Agent, on the basis of the
representations and warranties herein contained, but subject to the terms and
conditions herein set forth, accepts such appointment and agrees to use its best
efforts to find purchasers for the Units at the price of $100,000 per Unit,
provided that the Company reserves the right to reject in good faith any
prospective investor ("Investor") and no commission shall be payable to the
Placement Agent in respect of any proposed sale to any rejected Investor. No
other person will be or has been authorized to solicit purchasers for the Units,
except those persons selected by the Placement Agent. Each Investor must
subscribe for at least one (1) Unit ($100,000), and must certify to the Company
that such investor is an "Accredited Investor" as
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defined in Rule 501(a) of Regulation D. Notwithstanding the above, the Company
and the Placement Agent may mutually agree to accept a subscription for fewer
than one (1) Unit.
3.02. SEPARATE ACCOUNT. It is hereby agreed between the Company and the
Placement Agent that all funds from subscribers will be promptly delivered to
the Company by the Placement Agent.
3.03. SUBSCRIPTION AGREEMENT. Each Investor desiring to purchase Units
will be required to complete and execute a Subscription Agreement and, if
applicable, all other offering documents. The Placement Agent shall have the
right to review such documents for each Investor and to reject the tender of any
Investor which it deems not acceptable. All documents concerning any Investor
the Placement Agent has not rejected will be promptly forwarded to the Company
at the address set forth below. The Company, upon receipt of the documents, will
determine within three (3) business days whether it wishes to accept the
Investor.
3.04. SUBSCRIPTION ACCEPTANCE. If subscriptions are received for more
than seven (7) Units, the Company may accept one subscription over another
and/or allocate available Units among subscribers as it deems appropriate. As an
alternative, the Company may, in its own discretion, accept subscriptions for up
to 8 1/2 Units.
3.05. COMPENSATION OF PLACEMENT AGENT. In consideration for the
Placement Agent's execution of this Agreement, and for the performance of its
obligations hereunder, the Company agrees to pay the Placement Agent a
commission of ten percent (10%) of the gross proceeds received from the sale of
the Units ($10,000 per Unit). Payments for Units sold shall be made promptly
after subscriptions are accepted by the Company. In addition, the Company shall
issue to the Placement Agent warrants described in Section 14 hereof.
3.06. PAYMENT. Payment for Units sold shall be made to the Company
promptly after they are received by the Placement Agent. The date that Units are
accepted by the Company is defined as the "Closing" and the time and date
thereof are defined as the "Closing Date." As soon as practicable after each
Closing Date, the Company shall deliver by mail to each Investor a certificate
for the securities underlying the Units that have been purchased and which
contains a legend conforming to the requirements of Rule 502(d)(3) under the
Act.
3.07. OBLIGATIONS OF PLACEMENT AGENT. The Company agrees that the
obligations of the Placement Agent under this Agreement: (i) shall not preclude
the Placement Agent from contemporaneously participating in the offering or
underwriting of securities of other issuers; (ii) shall not impose any
obligation on the Placement Agent to require its registered representatives to
offer or to sell the Units, (iii) shall require the Placement Agent to make an
effort to find purchasers for the Units only to the extent the Placement Agent
is motivated to do so by the compensation and other provisions of this
Agreement, (iv) shall not otherwise limit or prevent the Placement Agent from
carrying on its customary business as a securities broker-dealer, and (v)shall
not require the Placement Agent to engage in any conduct which is violative of
any law or industry standard of conduct applicable to the Placement Agent.
3.8. REPRESENTATIONS AND WARRANTIES. The parties hereto each represent
that as of each Closing Date the representations and warranties herein contained
and the statements contained in all the certificates heretofore or
simultaneously delivered by any party to another, pursuant to this Agreement,
shall in all material respects be true and correct.
3.9. FORM D. The Placement Agent agrees that it will timely supply the
Company from time to time with all information required from the Placement Agent
for the completion of Form D to be filed with the Securities and Exchange
Commission and such additional information as the Company may reasonably request
to be supplied to the securities authorities of such states in which the Units
have been qualified for sale or are exempt from qualification or registration. A
copy of all such filings shall be delivered to the Placement Agent and counsel
for the Placement Agent promptly prior to their being filed.
SECTION 4
OFFERING OF THE UNITS ON BEHALF OF THE COMPANY
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4.01. AGENT. In offering the Units for sale, the Placement Agent shall
offer the Units solely as an agent for the Company, and such offer shall be made
upon the terms and subject to the conditions set forth herein and in the
Memorandum. The Placement Agent shall commence making such offers as an agent
for the Company as soon after the date of the Memorandum (the "Offering Date")
as it in its sole discretion may deem advisable; provided, however, that if the
Placement Agent does not commence such offering within ten (10) business days
after the Offering Date, it shall promptly advise the Company, and the Company
may terminate this agreement.
4.02. SELECTED DEALERS. The Placement Agent may offer and sell the
Units for the account of the Company through registered broker-dealers selected
by it ("Selected Dealers") and pursuant to a form of Selected Dealer Agreement
between the Placement Agent and the Selected Dealers, pursuant to which the
Placement Agent may allow such concession (out of its commissions) as it may
determine. Such Agreement shall provide that the Selected Dealers are acting as
agents of the Company. On such sale or allotment by the Placement Agent of any
of the Units to Selected Dealers, the Placement Agent shall require the Selected
Dealer selling any such Units to agree to offer and sell the same on the terms
and conditions of offering set forth in the Memorandum and in this Agreement.
SECTION 5
MEMORANDUM
5.01. DELIVERY AND FORM OF MEMORANDUM. The Company will procure, at its
expense, as many copies of the Memorandum as the Placement Agent may reasonably
require for the purposes contemplated by this Agreement and shall deliver said
copies of the Memorandum within two (2) business days after execution of this
Agreement at addresses, and in the quantity at each address, as specified by the
Placement Agent. Each Memorandum shall be of a size and format as determined by
the Placement Agent and shall be suitable for mailing and other distribution.
5.02. AMENDMENT OF MEMORANDUM. If during the offering any event occurs
or any event known to the Company relating to or affecting the Company shall
occur as a result of which the Memorandum as then amended or supplemented would
include an untrue statement of a material fact, or omits to state any material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, or if it is necessary at any time
after the Offering Date to amend or supplement the Memorandum to comply with the
Act, the Company will immediately notify the Placement Agent thereof and the
Company will prepare such further amendment to the Memorandum or supplemental or
amended Memorandum or Memoranda as may be required and furnish and deliver to
the Placement Agent, all at the cost of the Company, a reasonable number of
copies of the supplemental or amended Memorandum which as so amended or
supplemented will not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the Memorandum not misleading
in the light of the circumstances existing at the time it is delivered.
5.03. USE OF MEMORANDUM. The Company authorizes the Placement Agent and
the Selected Dealers, if any, in connection with the offer and sale of the Units
and all dealers to whom any of the Units may be sold by the Placement Agent or
by any Selected Dealer, to use the Memorandum as from time to time amended or
supplemented, in connection with the offering and sale of the Units and in
accordance with the provisions of the Act, the Rules and Regulations thereunder
and applicable state securities laws.
SECTION 6
COVENANTS OF THE COMPANY
The Company covenants and agrees with the Placement Agent that:
6.01. NOTIFICATION OF CHANGES. After the date hereof, the Company will
not at any time, whether before or after the date of the Memorandum, make any
amendment or supplement to the Memorandum of which amendment or supplement the
Placement Agent shall not have previously been advised and a copy of which shall
not have previously been furnished to the Placement Agent a reasonable time
period prior to the proposed date of such amendment or supplement, or which the
Placement Agent or counsel for the Placement Agent shall have reasonably
objected to in writing solely on the grounds that it is not in compliance with
the Act or the Rules and Regulations or with other federal or state laws.
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6.02. PROCEEDING. The Company will promptly advise the Placement Agent,
and will confirm such advice in writing, upon the happening of any event which,
in the judgment of the Company, makes any material statement in the Memorandum
untrue or which requires the making of any changes in the Memorandum in order to
make the statements therein not misleading, and upon the refusal of any state
securities administrator or similar official to qualify, or the suspension of
the qualification of the Units for offering or sale in any jurisdiction where
the Units are not exempt from qualification or registration, or of the
institution of any proceedings for the suspension of any exemption or for any
other purposes. The Company will use every reasonable effort to prevent any such
refusal to qualify or any such suspension and to obtain as soon as possible the
lifting of any such order, the reversal of any such refusal, and the termination
of any such suspension.
6.03. BLUE SKY EXEMPTIONS. As a condition of closing, the Company will
take whatever action is necessary in connection with filing or maintaining any
appropriate exemption from registration under the applicable laws of such states
as may be selected by the Placement Agent and agreed to by the Company, and
continue such qualifications and exemptions in effect so long as required for
the purposes of the offer and sale of the Units.
6.04. AGREEMENT TO PROVIDE INFORMATION. The Company, at its own
expense, will prepare and give and will continue to give such financial
statements and other information to and as may be required by the Commission or
the governmental authorities of states in which the Units may be exempt from
qualification or registration.
6.05. COSTS OF OFFERING. The Company will pay, whether or not the
transactions contemplated hereunder are consummated or this Agreement is
terminated, all costs and expenses incident to the performance of its
obligations under this Agreement, including all expenses incident to the
authorization and issuance of the Units, any taxes incident to the initial sale
of the Units hereunder, the fees and expenses of the Company's counsel and
accountants, the costs and expenses incident to the preparation and printing of
the Memorandum and any amendments or supplements thereto, the cost of preparing
and printing all exhibits to the Memorandum, the Blue Sky Memorandum, the cost
of furnishing to the Placement Agent copies of the Memorandum as herein
provided, and the cost of any filing with the Commission or pursuant to state
securities laws, including all filing fees.
6.06. USE OF PROCEEDS. The Company will apply the proceeds from the
sale of the Units to the purposes set forth in the Memorandum.
6.07. DUE DILIGENCE. Prior to the Final Closing, the Company will
cooperate with the Placement Agent in such investigation as the Placement Agent
may make or cause to be made of the properties, business, management and
operations of the Company in connection with the offering of the Units, and the
Company will make available to the Placement Agent in connection therewith such
information in its possession as the Placement Agent may reasonably request.
6.08. DOCUMENTATION. Prior to the Closing Date, the Company will
deliver to the Placement Agent true and correct copies of such documents and
information as is reasonably requested by the Placement Agent. To the extent
such documents had previously been provided, only amendments or updates need be
furnished.
6.09. MANAGEMENT COOPERATION. The Company shall provide the Placement
Agent, at any time, an opportunity to meet with and question management of the
Company and authorize management of the Company to speak at such meetings as the
Placement Agent reasonably requests.
6.10. PERIODIC REPORTS. The Company will provide to the Placement Agent
for not less than three (3) years following the Date of this Agreement,
quarterly and annual financial statements, copies of all correspondence to
shareholders and copies of all press releases or news items concerning the
Company.
6.11. COMPLIANCE WITH CONDITIONS PRECEDENT. The Company will use all
reasonable efforts to comply or cause to be complied with the conditions
precedent to the several obligations of the Placement Agent specified in this
Agreement.
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6.12. REPORTS. The Company agrees to file with the Commission, and
states where required, all reports on Form D in accordance with the provisions
of Regulation D promulgated under the Act and to promptly provide copies of such
reports to the Placement Agent and its counsel.
SECTION 7
INDEMNIFICATION
7.01. INDEMNIFICATION BY COMPANY. The Company agrees to indemnify,
defend and hold harmless the Placement Agent, its agents, managers, members,
representatives, guarantors, sureties and each person who controls the Placement
Agent within the meaning of either Section 15 of the Act or Section 20 of the
Securities Exchange Act of 1934 ("Indemnified Persons") from and against any and
all losses, claims, damages, liabilities or expenses, joint or several,
(including reasonable legal or other expenses incurred by each such person in
connection with defending or investigating any such claims or liabilities,
whether or not resulting in any liability to such Indemnified Persons) which
they or any of them may incur under the Act, or any state securities law and the
Rules and Regulations or the rules and regulations under any state securities
laws or any other statute or at common law or otherwise and to reimburse such
Indemnified Persons for any legal or other expense (including the cost of any
investigation and preparation) incurred by any of them in connection with any
litigation, whether or not resulting in any liability, but only insofar as such
losses, claims, damages, liabilities and expenses arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact contained in
the Memorandum or any amendment or supplement thereto or any authorized sales
literature or any application or other document filed with the Commission or in
any state or other jurisdiction in order to qualify the Units under the
securities laws thereof, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, all as of the date of the Memorandum or such amendment
or supplement, as the case may be, or any untrue statement or alleged untrue
statement of a material fact contained in the Memorandum (as amended or
supplemented) or other document, or the failure to comply with the security
registration requirement of the Act or any applicable state law; provided,
however, that the indemnity agreement contained in this Section 7.01 shall not
apply to amounts paid in settlement of any such litigation if such settlements
are effected without the consent of the Company, nor shall it apply to any
Indemnified Persons in respect of any such losses, claims, damages, liabilities
or actions arising out of or based upon any such untrue statement or alleged
untrue statement, or any such omission or alleged omission, if such statement or
omission was made in reliance upon information furnished in writing to the
Company by such Indemnified Persons specifically for use in connection with the
preparation of the Memorandum or any such amendment or supplement thereto. This
indemnity agreement is in addition to any other liability which the Company may
otherwise have to the Indemnified Persons.
7.02. NOTIFICATION TO COMPANY. The Indemnified Persons agree to notify
the Company promptly of the commencement of any litigation or proceeding against
the Indemnified Persons, of which it may be advised, in connection with the
offer and sale of any of the Units of the Company, and to furnish to the Company
at its request copies of all pleadings therein and permit the Company to be an
observer therein and apprise it of all the developments therein. In case of
commencement of any action in which indemnity may be sought from the Company on
account of the indemnity agreement contained in Section 7.01, the Indemnified
Persons within ten (10) days after the receipt of written notice of the
commencement of any action against the Indemnified Persons, shall notify the
Company in writing of the commencement thereof. The omission of the Indemnified
Persons to so notify the Company of any such action shall relieve the Company
from any liability which it may have to the Indemnified Persons on account of
the indemnity agreement contained in Section 7.01 or otherwise. In case any such
action shall be brought against the Indemnified Persons of which the Indemnified
Persons shall have notified the Company of the commencement thereof, the Company
shall be entitled to participate in (and to the extent that it shall wish, to
direct) the defense thereto at its own expense, but such defense shall be
conducted by counsel of recognized standing and reasonably satisfactory to the
Indemnified Persons in such litigation. After notice that the Company elects to
direct the defense, the Company will not be liable for any legal or other
expenses incurred by the Indemnified Persons without the prior written consent
of the Company. The Company shall not be liable for amounts paid in settlement
of any litigation if such settlement was effected without its consent.
7.03. INDEMNIFICATION BY PLACEMENT AGENT. The Placement Agent agrees to
indemnify and hold harmless the Company, its agents, officers, directors,
representatives, guarantors, sureties and each person who controls the Company
within the meaning of either Section 15 of the Act or Section 20 of the
Securities Exchange
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Act of 1934 ("Indemnified Persons") from and against any and all losses, claims,
damages, liabilities or expenses, joint or several, (including reasonable legal
or other expenses incurred by each such person in connection with defending or
investigating any such claims or liabilities, whether or not resulting in any
liability to such person) which they or any of them may incur under the Act, or
any state securities law and the Rules and Regulations or the rules and
regulations under any state securities laws or any other statute or at common
law or otherwise and to reimburse persons indemnified as above for any legal or
other expense (including the cost of any investigation and preparation) incurred
by any of them in connection with any litigation, whether or not resulting in
any liability, but only insofar as such losses, claims, damages, liabilities and
litigation arise out of or are based upon any statement in or omission from the
Memorandum or any amendment or supplement thereto, or any application or other
document filed with the Commission or in any state or other jurisdiction in
order to qualify the Units under the securities laws thereof, or any information
furnished pursuant to Section 3.10 hereof, if such statements or omissions were
made in reliance upon information furnished in writing to the Company by the
Placement Agent or on its behalf specifically for use in connection with the
preparation of the Memorandum or amendment or supplement thereto or application
or document filed. This indemnity agreement is in addition to any other
liability which the Placement Agent may otherwise have to the Company and other
indemnified persons.
7.04. NOTIFICATION TO PLACEMENT AGENT. The Company and other
Indemnified Persons agree to notify the Placement Agent promptly of commencement
of any litigation or proceedings against the Placement Agent or other
Indemnified Persons, in connection with the offer and sale of any of the Units
and to furnish to the Placement Agent, at its request, copies of all pleadings
therein and permit the Placement Agent to be an observer therein and apprise the
Placement Agent of all developments therein, all at the Company's expense. In
case of commencement of any action in which indemnity may be sought from the
Placement Agent on account of the indemnity agreement contained in Section 7.03,
the Company or other Indemnified Persons shall notify the Placement Agent of the
commencement thereof in writing within ten (10) days after the receipt of
written notice of the commencement of any action against the Company or against
any other person indemnified, shall notify the Placement Agent in writing of
such notification. The omission of the Company or other Indemnified Persons to
so notify the Placement Agent of any such action shall relieve the Placement
Agent from any liability which it may have to the Company, its agents, officers,
directors, representatives, guarantors, sureties or any person controlling it,
on account of the indemnity agreement contained in Section 7.03 or otherwise. In
case any such action shall be brought against the Company or any other person
indemnified of which the Company shall have notified the Placement Agent of the
commencement thereof, the Placement Agent shall be entitled to participate in
(and to the extent that it shall wish, to direct) the defense thereto at its own
expense, but such defense shall be conducted by counsel of recognized standing
and reasonably satisfactory to the Company or other persons indemnified in such
litigation. After notice that the Placement Agent elects to direct the defense,
the Placement Agent will not be liable for any legal or other expenses incurred
by the indemnified party without the prior written consent of the Placement
Agent. The Placement Agent shall not be liable for amounts paid in settlement of
any litigation if such settlement was effected without its consent.
7.05. INDEMNIFICATION OF SELECTED DEALERS. The Company agrees to
indemnify Selected Dealers, if any, and its agents, officers, directors,
representatives, guarantors and sureties on substantially the same terms and
conditions as it indemnifies the Placement Agent and Indemnified Persons
pursuant to Section 7.01 provided that each such Selected Dealer agrees in
writing with the Placement Agent to indemnify the Company and its agents,
officers, directors, representatives, guarantors and sureties on substantially
the same terms and conditions as the Placement Agent indemnifies the Company in
Section 7.03. The Company hereby authorizes the Placement Agent to enter into
agreements with Selected Dealers providing for such indemnity by the Company.
7.06. CONTRIBUTION. If the indemnification provided for in Sections
7.01, 7.03 and 7.05 is unavailable to an indemnified party in respect of any
losses, claims, damages or liabilities referred to therein, then each
indemnifying party under either such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities: (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and by the Placement Agent or
Selected Dealer on the other from the offering and sale of the Units, or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company on
the one hand and of the Placement Agent or Selected Dealer on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations.
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The relative benefits received by the Company on the one hand and the Placement
Agent or Selected Dealer on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bears to the total commissions received by the
Placement Agent or Selected Dealer, as in each case set forth in the Memorandum.
The relative fault of the Company and of the Placement Agent or Selected Dealer
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission to state a material
fact relates to information supplied by the Company or by the Placement Agent or
Selected Dealer and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Placement Agent agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, the Placement Agent shall not
be required to contribute any amount in excess of the amount by which the total
price at which the Units sold by it and distributed exceeds the amount of any
damages which such Placement Agent otherwise has been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution hereunder from any person
who was not guilty of such fraudulent misrepresentation.
7.07. LIMITATION OF LEGAL EXPENSES. Notwithstanding anything herein to
the contrary, the indemnification for legal expenses included in Sections 7.01,
7.03 And 7.05 shall be limited to the legal expenses of one law firm, except in
the event of a bona fide conflict of interest, in which event such legal
expenses shall be limited to the legal expenses of two law firms.
SECTION 8
EFFECTIVENESS OF AGREEMENT
8.01. This Agreement shall become effective upon execution by all
parties hereto.
SECTION 9
CONDITIONS OF THE PLACEMENT AGENT'S OBLIGATIONS
The Placement Agent's obligations to act as agent of the Company
hereunder shall be subject to the accuracy of the representations and warranties
on the part of the Company herein contained, to the performance by the Company
of all its agreements herein contained, to the fulfillment of or compliance by
the Company with all covenants and conditions hereof, and to the following
additional conditions:
9.01. NO MATERIAL CHANGES. Except as contemplated herein or as set
forth in the Memorandum, during the period subsequent to the date of the last
balance sheet included in the Memorandum the Company: (a) shall have conducted
its business in the usual and ordinary manner as the same was being conducted on
the date of the last balance sheet included in the Memorandum, and (b) except in
the ordinary course of its business, the Company shall not have incurred any
material liabilities, claims or obligations (direct or contingent) or disposed
of any material portion of its assets, or entered into any material transaction
or suffered or experienced any materially adverse change in its condition,
financial or otherwise. The capitalization and short term debt of the Company
shall be substantially the same as at the date of the latest balance sheet
included in the Memorandum, without considering the proceeds from the sale of
the Units, other than as may be set forth in the Memorandum, and except as the
financial statements of the Company reflect the result of continued losses from
operations consistent with prior periods.
9.02. AUTHORIZATION. The authorization for the issuance of the
securities comprising the Units and the use of the Memorandum and all corporate
proceedings and other legal matters incident thereto and to this Agreement shall
be reasonably satisfactory in all respects to counsel to the Placement Agent.
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9.03. STATE QUALIFICATION OR EXEMPTION. The Company shall use its best
efforts to secure an exemption from registration or qualification in those
states identified in Section 2.01, and such exemption shall be in effect and not
subject to any stop order or other proceeding on the Closing Date.
9.04. ADVERSE EVENTS. Between the date hereof and each 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 materially
adversely affects its business or property considered as an entity, whether or
not such loss is covered by insurance.
9.05. LITIGATION. Between the date hereof and each 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,
licenses, operations or financial condition or income of the Company.
9.06. CERTIFICATES. Any certificate signed by an officer of the Company
and delivered to the Placement Agent shall be deemed a representation and
warranty by the Company to the Placement Agent as to the statements made
therein.
SECTION 10
TERMINATION
10.01. FAILURE TO COMPLY WITH AGREEMENT. This Agreement may be
terminated by either party hereto by notice to the other party in the event that
such party shall have failed or been unable to comply with any of the terms,
conditions or provisions of this Agreement required by the Company or the
Placement Agent to be performed, complied with or fulfilled by it within the
respective times herein provided for, unless compliance therewith or performance
or satisfaction thereof shall have been expressly waived by the non-defaulting
party in writing.
10.02. GOVERNMENT RESTRICTIONS. This Agreement may be terminated by
either party by notice to the other party at any time if, in the judgment of
either party, payment for and delivery of the Units are rendered impracticable
or inadvisable because: (i) additional material governmental restrictions not in
force and effect on the date hereof shall have been imposed upon the trading in
securities generally, or minimum or maximum prices shall have been generally
established on the New York Stock Exchange, the Chicago Board of Trade or the
Commodity Futures Trading Commission, or trading in securities generally on such
Exchange, Board, or Commission shall have been suspended, or a general
moratorium shall have been established by federal or state authorities; or (ii)
a war or other national calamity shall have occurred; or (iii) the condition of
any matter affecting the Company or any other circumstance is such that it would
be undesirable, impracticable or inadvisable in the judgment of the Placement
Agent to proceed with this Agreement or with the sale of the Units.
10.03. LIABILITY ON TERMINATION. Any termination of this Agreement
pursuant to this Section 10 shall be without liability of any character
(including, but not limited to, loss of anticipated profits or consequential
damages on the part of any party thereto); except that the Company and the
Placement Agent shall be obligated to pay, respectively, all losses, claims,
damages or liabilities, joint or several, under Section 7.01 in the case of the
Company, Section 7.03 in the case of the Placement Agent and Section 7.06 as to
all parties.
SECTION 11
PLACEMENT AGENT'S REPRESENTATIONS AND WARRANTIES
The Placement Agent represents and warrants to and agrees with the
Company that:
11.01. REGISTRATION. The Placement Agent is registered as a
broker-dealer with the Securities and Exchange Commission, and is a member in
good standing of the National Association of Securities Dealers, Inc. ("NASD").
The Placement Agent is registered or otherwise qualified to sell the Units in
each state in which the Placement Agent sells such Units or is exempt from such
registration or qualification.
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11.02. ABILITY TO ACT AS AGENT. There is not now pending or, to the
knowledge of the Placement Agent, threatened against the Placement Agent any
action or proceeding of which the Placement Agent has been advised, either in
any court of competent jurisdiction, before the NASD, the Securities and
Exchange Commission or any state securities commission concerning the Placement
Agent's activities as a broker or dealer, nor has the Placement Agent been named
as a "cause" in any action or proceeding, any of which may be expected to have a
material adverse effect upon the Placement Agent's ability to act as agent to
the Company as contemplated herein.
11.03. TERMINATE AGREEMENT. In the event any action or proceeding of
the type referred to in Section 11.02 above (except for actions referred to in
the Memorandum) shall be instituted or, to the knowledge of the Placement Agent,
threatened against the Placement Agent at any time prior to the termination of
the Offering, or in the event there shall be filed by or against the Placement
Agent in any court pursuant to any federal, state, local or municipal statute, a
petition in bankruptcy or insolvency or for reorganization or for the
appointment of a receiver or trustee of its assets or if the Placement Agent
makes an assignment for the benefit of creditors, the Company shall have the
right on three (3) days' written notice to the Placement Agent to terminate this
Agreement without any liability to the Placement Agent of any kind, except the
payment of any commissions earned by the Placement Agent pursuant to Paragraph
3.05 hereof.
SECTION 12
NOTICE
Except as otherwise expressly provided in this Agreement:
12.01. NOTICE TO COMPANY. Whenever notice is required by the provisions
of this Agreement to be given to the Company, such notice shall be in writing
addressed to the Company as provided below:
Training Devices Incorporated
Xxxxxx X. Xxxxxxxxx, CEO
0000 X. Xxxxxx Xxxxxxx, Xxxx. 0X
Xxxxxxxxx, Xxxxxxxx 00000-0000
with a copy to:
Xxxxxx Xxxxxxx & Xxxxx, LLC
Attn: Xxxxx X. Xxxxxxx, Esq.
0000 XXX Xxxxxxx, XX-0
Xxxxxxxxx, Xxxxxxxx 00000
12.02. NOTICE TO PLACEMENT AGENT. Whenever notice is required by the
provisions of this Agreement to be given to the Placement Agent, such notice
shall be given in writing addressed to the Placement Agent as follows:
Bathgate XxXxxxxx Capital Group, LLC
0000 X. Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. XxXxxxxx
SECTION 13
MISCELLANEOUS
13.01. BENEFITS. This Agreement is made solely for the benefit of the
Placement Agent, the Company, their respective agents, officers, directors,
managers, members, representatives, guarantors, sureties and any controlling
person referred to in Section 15 of the Act or Section 20 of the Securities
Exchange Act of 1934, and their respective successors and assigns, and no other
person shall acquire or have any right under or by virtue of this
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Agreement. The term "successor" or the term "successors and assigns" as used in
this Agreement shall not include any purchasers, as such, of any of the Units.
13.02. SURVIVAL. The respective indemnities, agreements,
representations, warranties, covenants and other statements of the Company or
the Company's officers, as set forth in or made pursuant to this Agreement and
the indemnity agreements of the Company and the Placement Agent contained in
Section 7 hereof shall survive and remain in full force and effect, regardless
of (i) any investigation made by or on behalf of the Company or the Placement
Agent or any affiliated persons thereof or any controlling person of the Company
or of the Placement Agent, (ii) delivery of or payment for the Units and (iii)
the Closing Date, and any successor of the Company, the Placement Agent and
Selected Dealers, or any controlling person, or other person indemnified by
section 7, as the case may be, shall be entitled to the benefits hereof.
13.03. GOVERNING LAW. The validity, interpretation and construction of
this Agreement and of each part hereof will be governed by the laws of the State
of Colorado. The parties agree that any dispute which arises between them
relating to this Agreement or otherwise shall be submitted for resolution in
conformity with the Securities Arbitration Rules of the American Arbitration
Association. The parties agree that the situs of an arbitration hearing before
the arbitrators shall be in Denver, Colorado, and each party shall request such
situs.
13.04. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which will constitute an original.
SECTION 14
PLACEMENT AGENT'S WARRANTS
14.01. WARRANTS. The Company shall sell to the Placement Agent, for a
total of $100, warrants to purchase Shares ("Placement Agent's Warrants") on the
basis of one (1) warrant for each $10.00 sold in the Offering. Each Placement
Agent's Warrant will entitle the holder to purchase one Share (which Share shall
be identical to the Shares offered hereunder) of the Company, exercisable at
$1.00 per Share. The Placement Agent's Warrants will be exercisable for a period
of five (5) years after their issuance; and if the Placement Agent's Warrants
are not exercised during this term, they shall, by their terms, automatically
expire. The Company shall set aside and at all times have available a sufficient
number of shares of its Common Stock to be issued upon the exercise of the
Placement Agent's Warrants and the warrants comprising part of the Shares. At
the option of the Placement Agent, the Placement Agent's Warrants shall be
represented by a separate warrant for each security comprising the Shares.
14.02. REGISTRATION RIGHTS. The Company understands and agrees that if,
at any time during the seven-year period commencing the Closing Date, it should
file a Registration Statement with the Commission pursuant to the Act, for a
public offering of securities, either for the account of the Company or for the
account of any other person, the Company at its own expense, will offer to
holders of Placement Agent's Warrants or shares of common stock previously
issued upon the exercise thereof, the opportunity to register or qualify for
public offering the Placement Agent's Warrants and shares of common stock
underlying the Placement Agent's Warrants or the shares so issued. This
paragraph is not applicable to a Registration Statement filed with the
Securities and Exchange Commission on Forms S-4 or S-8 or any other
inappropriate forms; nor does it apply to the public offering.
In addition to the rights above provided, the Company will cooperate
with the then holder(s) of the Placement Agent's Warrants and common stock
issued upon the exercise of the Placement Agent's Warrants, no more often than
once in any twelve (12) month period, in preparing and signing any Registration
Statement other than the Registration Statement discussed above, required in
order to sell or transfer the aforesaid Placement Agent's Warrants and
underlying shares of common stock and shall supply all information required
therefore, but such additional Registration Statement shall be at the then
holder(s) cost and expense.
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Please confirm that the foregoing correctly sets forth the Agreement
between you and the Placement Agent.
Very truly yours,
BATHGATE XXXXXXXX CAPITAL GROUP, LLC
By /s/ Xxxxxx X. XxXxxxxx
----------------------------------
Xxxxxx X. XxXxxxxx
We hereby confirm as of the date hereof that the above letter sets
forth the Agreement between the Placement Agent and us.
TRAINING DEVICES INCORPORATED
5/25/99 By /s/ Xxxxxx X. Xxxxxxxxx, CEO
------------------ ----------------------------------
Date Xxxxxx X. Xxxxxxxxx, CEO
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