MANNATECH, INCORPORATED
INITIAL PUBLIC OFFERING
A MINIMUM OF 2,500,000 SHARES
AND A MAXIMUM OF 5,295,015 SHARES
COMMON STOCK, $0.0001 PAR VALUE
PLACEMENT AGENT AGREEMENT
November 18, 1998
J.J.B. Xxxxxxxx, X.X. Xxxxx, Inc.
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Dear Sirs:
Mannatech, Incorporated, a Texas corporation (the "COMPANY"), and certain
selling shareholders named on the attached SCHEDULE A (the "SELLING
SHAREHOLDERS") propose to sell, in an initial public offering, a minimum of
2,500,000 shares and a maximum of 5,295,015 shares of the Company's common
stock, $0.0001 par value per share (the "COMMON STOCK"). Of the first 2,500,000
shares, 1,500,000 will be offered by the Company and 1,000,000 by the Selling
Shareholders. The next 1,055,000 shares will be offered by the Selling
Shareholders. Sales of shares in excess of 3,555,000 up to 4,955,000 shares
will be divided equally between the Company and the Selling Shareholders, and
sales in excess of 4,955,000 up to the maximum of 5,295,015 shares (the
"SHARES") will be made by the Selling Shareholders. That portion of the Shares
to be issued and sold by the Company are herein referred to as the "PRIMARY
SHARES," and that portion of the Shares to be sold by the Selling Shareholders
are herein referred to as the "SELLING SHAREHOLDERS' SHARES." All sales by the
Selling Shareholders will be divided ratably among the Selling Shareholders.
The Company hereby appoints J.J.B. Xxxxxxxx, X.X. Xxxxx, Inc. as placement agent
(the "PLACEMENT AGENT") of the offering (the "OFFERING"), to assist the Company
on the following terms and conditions.
Section 1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to and agrees with you that:
(a) The Company has filed with the Securities and Exchange Commission (the
"COMMISSION") a registration statement on Form S-1 (No. 333-63133) and
a related preliminary prospectus for the registration of the Shares
under the Securities Act of
1933, as amended (the "1933 ACT"), and the applicable rules and
regulations thereunder (the "1933 ACT REGULATIONS"). The Company
has prepared and filed such amendments thereto, if any, and such
amended preliminary prospectuses, if any, as may have been required
to the date hereof, and will file such additional amendments
thereto and such amended prospectuses as may hereafter be required.
Copies of such registration statement and of each amendment
thereto, including the related preliminary prospectus, heretofore
filed by the Company with the Commission have been delivered to
you. The term "REGISTRATION STATEMENT" as used in this Agreement
shall mean such registration statement at the time such
registration statement shall become effective (the "EFFECTIVE
TIME") including any prospectus included with such Registration
Statement, and, in the event any post-effective amendment thereto
becomes effective prior to the Initial Closing Time (as hereinafter
defined), shall also mean such registration statement as hereafter
amended; provided, however, that such term shall also include all
Rule 430A Information deemed to be included in such registration
statement at the time such registration statement becomes effective
as provided by Rule 430A of the 1933 Act Regulations. The term
"PRELIMINARY PROSPECTUS" shall mean any preliminary prospectus
included in the Registration Statement at the Effective Time. The
term "PROSPECTUS" as used in this Agreement shall mean the final
prospectus relating to the Shares in the form in which it is filed
with the Commission after the date hereof pursuant to Rule 424(b)
of the 1933 Act Regulations. The term "RULE 430A INFORMATION" means
information with respect to the Shares and the offering thereof
permitted pursuant to Rule 430A of the 1933 Act Regulations to be
omitted from the Registration Statement when it became effective.
(b) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and no proceedings for
that purpose have been instituted or threatened by the Commission or
the state securities or blue sky authority of any jurisdiction, and
each Preliminary Prospectus and any amendment or supplement thereto,
at the time of filing thereof, conformed in all material respects to
the requirements of the 1933 Act and the 1933 Act Regulations, and did
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 the light of the circumstances under which they
were made, not misleading.
(c) When the Prospectus is first filed pursuant to Rule 424(b) of the 1933
Act Regulations, when any amendment to the Registration Statement
becomes effective, when any amendment or supplement to the Prospectus
is filed with the Commission and at each Closing Time (i) the
Registration Statement, the Prospectus and any amendments thereof and
supplements thereto will conform in all material respects with the
applicable requirements of the 1933 Act and the 1933 Act Regulations,
and (ii) neither the Registration Statement, the Prospectus nor any
amendment or supplement thereto will contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein not
misleading.
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(d) The Company has been duly incorporated and is validly existing as a
corporation under the laws of the state of Texas with all requisite
corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the Registration Statement
and the Prospectus.
(e) The Primary Shares have been duly authorized by the Company and, when
issued and delivered in accordance with the terms of this Agreement
and the Escrow Agreement (as hereinafter defined), will be validly
issued, fully paid and nonassessable and will conform to the
description thereof contained in the Prospectus; and the issuance of
such Primary Shares will not be subject to any preemptive or similar
rights.
(f) This Agreement has been duly authorized, executed and delivered by the
Company and constitutes a valid and binding agreement of the Company,
enforceable in accordance with its terms.
(g) No authorization, approval, consent or order of, or any filing or
declaration with, any court or governmental authority or agency is
necessary in connection with the issuance and sale of the Common Stock
pursuant to the offering or the offering of the Shares or the
consummation of the transactions contemplated hereby, except as may
have been obtained, or will be obtained prior to completion of the
Offering, under the 1933 Act and the 1933 Act Regulations.
Section 2. REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS.
Each of the Selling Shareholders, severally and not jointly, represents and
warrants to, and agrees with, you that:
(a) All consents, approvals, authorizations and orders necessary for the
execution and delivery by such Selling Shareholder of this Agreement,
the Power of Attorney and Custody Agreement (the "CUSTODY AGREEMENT")
hereinafter referred to, and for the sale and delivery of the Shares
to be sold by such Selling Shareholder in the Offering, have been
obtained, or will be obtained prior to completion of the Offering; and
such Selling Shareholder has the requisite power and authority to
enter into this Agreement and the Custody Agreement and to sell,
assign, transfer and deliver the Shares to be sold by such Selling
Shareholder in the Offering, except as set forth on SCHEDULE B hereto.
(b) This Agreement and the Custody Agreement have each been duly
authorized, executed and delivered by such Selling Shareholder and
each such document constitutes a valid and binding obligation of such
Selling Shareholder, enforceable against such Selling Shareholder in
accordance with its terms.
Each of the Selling Shareholders represents and warrants that a certificate
in negotiable form representing all of the Shares to be sold by such Selling
Shareholder has been, or prior to the Closing will be, placed in custody under
the Custody Agreement, in the form heretofore furnished to you, duly executed
and delivered by such Selling Shareholder to the Custodian (as defined in the
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Custody Agreement), and that such Selling Shareholder has duly executed and
delivered a power of attorney, in the form contained in the Custody Agreement
(the "POWER OF ATTORNEY"), appointing Xxxxxxx X. Xxxxxxxx and Xxxxxx Xxxxxx and,
in certain instances, Xxxxxx X. Xxxxxx, and each of them, as such Selling
Shareholder's attorney-in-fact (the "ATTORNEY-IN-FACT") with authority to
execute and deliver this Agreement on behalf of such Selling Shareholder, to
authorize the delivery of the Shares to be sold by such Selling Shareholder
hereunder and otherwise to act on behalf of the Selling Shareholder in
connection with the transactions contemplated by this Agreement, the Escrow
Agreement and the Custody Agreement.
Section 3. DUTIES OF PLACEMENT AGENT.
(a) The Company and the Selling Shareholders hereby confirm their
appointment of you as Placement Agent, to assist the Company and the
Selling Shareholders to the extent set forth herein. On the basis of
the representations and warranties herein contained, and subject to
the terms and conditions herein set forth, you hereby confirm your
acceptance of such appointment and agree to use your best efforts to
assist the Company and the Selling Shareholders as set forth herein.
Among other things, you will assist the Company and the Selling
Shareholders with:
(i) the distribution of materials, as appropriate, to prospective
investors, including communicating with such prospective
investors regarding the details of the Offering and
establishing and maintaining a toll-free telephone line for
such prospective investors;
(ii) the receipt and processing of subscriptions to purchase
Shares, and systematically accounting therefor;
(iii) administrative and recording duties related to the Company's
solicitation of prospective investors, including, but not
limited to, ascertaining and ensuring that each prospective
investor has received a Prospectus and that each subscriber
has received a Prospectus;
(iv) administrative matters related to the closing or closings for
the Offering, including without limitation the transmission of
subscription and other relevant information concerning
subscribers of the Shares to the Escrow Agent and the
Company's transfer agent;
(v) depositing and accounting for funds received as set forth in
paragraph (d) below; and
(vi) such other administrative duties as may be requested by the
Company and are appropriate to perform in assisting the
Company and the Selling Shareholders with the Offering,
including conforming to any further guidelines or protocols
hereafter developed by the Company for the conduct of the
Offering.
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The price at which the Shares shall be offered and sold shall be
$8.00 per share, which price has been established by the Board of
Directors of the Company after consideration of all factors which it
deemed relevant and appropriate. The Placement Agent has not advised
the Company in any manner regarding the price at which the Shares
shall be sold. All subscriptions shall be subject to the Company's
right in its sole discretion to accept or reject any subscription
for any reason.
(b) The agency granted by the Company is restricted to the acts set forth
in this Section 3 and such further acts as may be requested of the
Placement Agent by the Company and agreed to in writing by the Company
and the Placement Agent. No general agency in favor of the Placement
Agent is created by this Agreement.
(c) As compensation for your services hereunder, the Company hereby agrees
to pay you an amount equal to four percent (4%) of the aggregate value
of the Shares purchased in the Offering (the "MANAGEMENT FEE"), less a
$50,000 retention fee (the "RETENTION FEE") which has been paid to you
prior to the execution of this Agreement. The Management Fee shall
be paid to you at the Initial Closing Time and at each subsequent
Closing, if any, based upon the aggregate value of Shares to be
purchased at each applicable Closing Time. The Management Fee shall
be payable by wire transfer to the account or accounts designated to
the Company in writing by you at the offices of J.J.B. Xxxxxxxx, X.X.
Xxxxx, Inc., 000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, or
at such other place as shall be agreed upon by the Company and you.
(d) It is hereby agreed between the Company and you that unless 2,500,000
shares of Common Stock are subscribed for and good funds therefore
received on or before 5:00 p.m., Louisville, Kentucky time, on the
date set forth in the Prospectus as the "TERMINATION DATE" of the
Offering, this Agreement shall automatically be terminated and the
entire subscription proceeds shall be returned to subscribers without
interest or deduction. During the period of the Offering, until the
Initial Closing Time, the proceeds from the subscriptions for the
Common Stock shall, upon receipt by you, be promptly deposited in an
account at Bank One, Kentucky, N.A., Louisville, Kentucky (the "ESCROW
AGENT"), subject to the terms of an escrow agreement, the form of
which is attached hereto as EXHIBIT A (the "ESCROW AGREEMENT"). Until
the Initial Closing Time, you shall promptly upon receipt deliver all
cashier's checks received by you from subscribers to the Escrow Agent.
Such cashier's checks shall be accompanied by one executed copy of the
Subscription Agreement for the purchase of Shares, properly completed
and executed and in the form included in the Prospectus (the
"SUBSCRIPTION AGREEMENT"). The Placement Agent shall confirm that
each person submitting a Subscription Agreement has received a
Prospectus. All such cashier's checks and executed copies of the
Subscription Agreement shall be deposited by the Escrow Agent,
pursuant to the Escrow Agreement, in the Mannatech Subscription
Account (the "ESCROW ACCOUNT") established by the Company with the
Escrow Agent. All
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checks received by you from subscribers to purchase Shares shall be
made payable to "Mannatech Subscription Account." After the Initial
Closing Time, such funds shall be deposited by you in a segregated
account entitled "Mannatech Subscription Account (the "Post-Escrow
Account"), bearing interest for the benefit of the Company, pending
subsequent closings. You will promptly deliver to the Company one
photocopy of each Subscription Agreement received by you which has
been deposited in the Escrow Account or the Post-Escrow Account, as
the case may be. Promptly after receipt of a Subscription
Agreement and the funds therefor and delivery of a copy of the
Subscription Agreement, you will mail an interim receipt, in the
form annexed hereto as EXHIBIT B, to each such subscriber to
purchase Shares for the amount deposited in the Escrow Account or
the Post-Escrow Account, as the case may be, on behalf of such
subscriber.
Section 4. DELIVERY OF AND PAYMENT FOR THE COMMON STOCK. As soon as
practicable after you and the Company have determined that 2,500,000 shares of
Common Stock have been subscribed for and good funds therefor have been received
by and deposited with the Escrow Agent, you shall so notify the Escrow Agent.
Delivery of certificates representing the shares of Common Stock and payment for
the Common Stock shall be made at a closing (the "CLOSING") to be held at the
Company's office in Dallas, Texas, at 10:00 a.m., Dallas time, on the third full
business day after the date on which you so notify the Escrow Agent as provided
in the immediately preceding sentence or such other day and time as shall be
agreed upon in writing by the Company and you. Such notice shall set forth the
number of shares to be delivered by the Company against payment therefor by the
Escrow Agent. The date and hour of such delivery and payment are herein called
the "INITIAL CLOSING TIME." Payment for the Common Stock purchased from the
Company shall be made to the Company or its order by the Escrow Agent, acting
upon instructions from you pursuant to the terms of the Escrow Agreement, and
delivered to the Company by the Escrow Agent by wire transfer in immediately
available funds. Payment for the Common Stock purchased from the Selling
Shareholders shall be made to the Attorney-in-Fact or his or her order by the
Escrow Agent, for the accounts of the several Selling Shareholders, acting upon
instructions from you pursuant to the terms of the Escrow Agreement, and
delivered to the Attorney-in-Fact by the Escrow Agent for the accounts of the
several Selling Shareholders by wire transfer in immediately available funds.
Following the Initial Closing Time, at the discretion of the Company, a Closing
or Closings shall occur with respect to Shares subscribed for after the Initial
Closing Time.
Section 5. CERTAIN COVENANTS OF THE COMPANY. The Company covenants and
agrees with you as follows:
(a) The Company will deliver to you notice of its intention to prepare or
file any amendment to the Registration Statement (including any
post-effective amendment) or any amendment or supplement to the
Prospectus which the Company proposes for use in connection with
the offering of the Shares and which differs from the Prospectus on
file with the Commission at the time of this Agreement, whether or
not such revised Prospectus is required to be filed pursuant to
Rule 424(b) of the
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1933 Act Regulations, and will furnish you and your counsel with
copies of any such amendment or supplement a reasonable amount of
time prior to such use.
(b) The Company will apply for listing and quotation of the Shares on the
Nasdaq National Market System (the "NASDAQ NMS"), and will use its
best efforts to obtain such listing. The Company will promptly notify
you that the Common Stock has been approved for quotation and trading
on the Nasdaq NMS, or of any determination by The Nasdaq Stock Market
that the Common Stock fails to so qualify. In the event of a
determination by The Nasdaq Stock Market that the Shares fail to
qualify for listing and quotation on the Nasdaq NMS, all funds in the
Escrow Account shall be returned to the subscribers pursuant to the
terms of the Escrow Agreement.
(c) If any event shall occur as a result of which it is necessary to amend
or supplement the Prospectus (as then amended or supplemented) in
order to ensure that the Prospectus does not contain an untrue
statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or it is
necessary to amend or supplement the Prospectus to comply with the
1933 Act or any other law, the Company will forthwith prepare and
furnish, at the Company's expense, to you, either amendments or
supplements to the Prospectus so that the statements in the Prospectus
as so amended or supplemented will not, in the light of the
circumstances under which they were made, be misleading or so that the
Prospectus will comply with the 1933 Act or such other law, as the
case may be.
Section 6. CERTAIN COVENANTS OF THE PLACEMENT AGENT. You hereby agree to
register with Nasdaq Market Operations as a market maker in the Common Stock no
later than five business days after the execution of this Agreement. You hereby
agree to comply with all securities laws and all rules of the NASD and of the
Nasdaq NMS applicable to market makers on the Nasdaq NMS. In order to avoid the
termination of your registration as a market maker, you hereby agree to enter
quotations in the Common Stock within five business days after your registration
as a market maker in the Common Stock becomes effective. You agree to inform
the Company in writing (i) fifteen business days in advance of any voluntary
termination of your market maker status with respect to the Common Stock and
(ii) two business days after being notified of any violation which could result
in termination of your status as a market maker in the Common Stock.
Section 7. REPRESENTATIONS AND WARRANTIES OF THE PLACEMENT AGENT. The
Placement Agent represents and warrants to and agrees with the Company that:
(a) The Placement Agent has been duly incorporated and is validly existing
as a corporation under the laws of the Commonwealth of Kentucky with
all requisite corporate power and authority to conduct its business as
a broker-dealer. The Placement Agent has all licenses, approvals and
consents necessary to operate as a broker-dealer under the laws of the
each state in which it conducts such activities
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and under the federal securities laws. The Placement Agent is a
member in good standing of the NASD and meets the capital
requirements of the Securities Exchange Act of 1934 for operation
as a broker-dealer.
(b) This Agreement has been duly authorized, executed and delivered by the
Placement Agent and constitutes a valid and binding agreement of the
Placement Agent, enforceable in accordance with its terms.
Section 8. PAYMENT OF EXPENSES. The Company will bear and pay all costs,
fees and expenses incident to the performance of the Company's obligations under
this Agreement. The Placement Agent will bear and pay all costs, fees and
expenses incident to the performance of the Placement Agent's obligations under
this Agreement.
If the sale of the Shares provided for herein is not consummated for any
reason, the Placement Agent shall retain the Retention Fee. If the sale of the
Shares provided for herein is not consummated because any condition set forth in
SECTION 9 hereof is not satisfied, because of any termination pursuant to
SECTION 12 hereof or because of any refusal, inability or failure on the part of
the Company to perform any agreement herein or comply with any provision hereof
other than by reason of default by the Placement Agent, the Company will
reimburse the Placement Agent on demand for all reasonable, documented
out-of-pocket expenses incurred after September 16, 1998, in connection with
the Offering, including fees and disbursements of the Placement Agent's
counsel, up to an aggregate amount not to exceed $50,000 (the "EXPENSE
REIMBURSEMENT FEE"). The Expense Reimbursement Fee is separate and distinct
from the Retention Fee. All amounts paid pursuant to this paragraph shall be
considered liquidated damages in the event that the Company shall abandon the
Offering or otherwise terminate this Agreement, but the foregoing
notwithstanding, shall not constitute liquidated damages in the instance
where the Placement Agent shall have substantially performed the duties,
undertakings, obligations and covenants of this Agreement.
Section 9. CONDITIONS OF CLOSING. The obligation of the Escrow Agent to
deliver payment for the Shares is subject to the accuracy of the representations
and warranties of the Company and each Selling Shareholder contained herein as
of the Initial Closing Time and as of each subsequent Closing and to the
performance by the Company and each Selling Shareholder of their obligations
hereunder, and to the following further conditions:
(a) Subscriptions for at least 2,500,000 Shares and payment therefor shall
have been received by the Escrow Agent.
(b) The Shares shall have been approved for listing on the Nasdaq NMS,
subject only to the closing on sufficient Shares to meet the public
float requirements of the Nasdaq NMS.
(c) Three broker-dealers, including the Placement Agent, shall have
registered as Nasdaq NMS market makers in the Shares or shall have
executed an agreement with
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the Company to so register within the time period prescribed by
Rule 4611 of The Nasdaq Stock Market.
(d) The Registration Statement shall have been declared effective by the
Commission and no stop order suspending such effectiveness shall have
been issued by the Commission and no proceedings for that purpose
shall have been instituted by the Commission.
Section 10. INDEMNIFICATION AND CONTRIBUTION
(a) The Company will indemnify and hold harmless Placement Agent against
any losses, claims, damages or liabilities, joint or several, to
which such Placement Agent may become subject under the 1933 Act,
or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise (i) from acts
outside the scope of the Placement Agent's duties under this
Agreement, (ii) out of or are based upon any breach of any warranty
or covenant of the Company herein contained, (iii) out of or are
based upon any untrue statement or alleged untrue statement of a
material fact contained in (A) any Preliminary Prospectus, the
Registration Statement, or the Prospectus, or any amendment or
supplement thereto, or (B) any application or other document, or
any amendment or supplement thereto, executed by the Company or
based upon written information furnished by or on behalf of the
Company filed in any jurisdiction in order to qualify the Shares
under the securities or Blue Sky laws thereof or filed with the
Commission or any securities association or securities exchange
(each an "APPLICATION"), or (iv) out of or are based upon the
omission or alleged omission to state in any Preliminary
Prospectus, the Registration Statement, the Prospectus, or any
amendment or supplement thereto, or any Application a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse Placement Agent for any
legal or other expenses reasonably incurred by Placement Agent in
connection with investigating or defending any such loss, claim,
damage, liability or action. In addition to its other obligations
under this SECTION 10(a), the Company agrees that as an interim
measure during the pendency of any such claim, action,
investigation, inquiry or other proceeding arising out of or based
upon any statement or omission, or any alleged statement or
omission, described in this SECTION 10(a), it will reimburse the
Placement Agent on a quarterly basis for all reasonable legal and
other expenses incurred in connection with investigating or
defending any such claim, action, investigation, inquiry or other
proceeding, notwithstanding the absence of a judicial determination
as to the propriety and enforceability of the Company's obligation
to reimburse the Placement Agent for such expenses and the
possibility that such payments might later be held to have been
improper by a court of competent jurisdiction. The Company will
not, without the prior written consent of Placement Agent, settle
or compromise or consent to the entry of any judgment in any
pending or threatened action or claim or related cause of action or
portion of such cause of action in respect of which indemnification
may be sought hereunder (whether or not Placement Agent is a party
to such action or
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claim), unless such settlement, compromise or consent includes an
unconditional release of Placement Agent from all liability arising
out of such action or claim (or related cause of action or portion
thereof).
The indemnity agreement in this SECTION 10(a) shall extend upon the
same terms and conditions to, and shall inure to the benefit of, each
person, if any, who controls Placement Agent within the meaning of the 1933
Act to the same extent as such agreement applies to the Placement Agent.
(b) Placement Agent will indemnify and hold harmless the Company and each
Selling Shareholder against any losses, claims, damages or liabilities
to which the Company may become subject, under the 1933 Act, or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any
breach of any warranty or covenant by Placement Agent herein
contained; and will reimburse the Company and each Selling
Shareholder for any legal or other expenses reasonably incurred by
the Company and each Selling Shareholder in connection with
investigating or defending any such loss, claim damage, liability
or action. In addition to its other obligations under this SECTION
10(b), Placement Agent agrees that, as an interim measure during
the pendency of any such claim, action, investigation, inquiry or
other proceeding, it will reimburse the Company and each Selling
Shareholder on a monthly basis for all reasonable legal and other
expenses incurred in connection with investigating or defending any
such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the
propriety and enforceability of its obligation to reimburse the
Company and each Selling Shareholder for such expenses and the
possibility that such payments might later be held to have been
improper by a court of competent jurisdiction. Placement Agent
will not, without the prior written consent of the Company and each
Selling Shareholder, settle or compromise or consent to the entry
of judgment in any pending or threatened action or claim or related
cause of action or portion of such cause of action in respect of
which indemnification may be sought hereunder (whether or not the
Company and each Selling Shareholder is a party to such action or
claim), unless such settlement, compromise or consent includes an
unconditional release of the Company and each Selling Shareholder
from all liability arising out of such action or claim (or related
cause of action or portion thereof).
The indemnity agreement in this SECTION 10(b) shall extend upon the
same terms and conditions to, and shall inure to the benefit of, each
officer and director of the Company and each person, if any, who
controls the Company within the meaning of the 1933 Act to the same
extent as such agreement applies to the Company.
(c) Promptly after receipt by an indemnified party under subsection (a) or
(b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party under such subsection, notify
the indemnifying party in writing of the commencement thereof;
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no indemnification provided for in subsection (a) or (b) shall be
available to any party who shall fail to give notice as provided in
this subsection (c) if the party to whom notice was not given was
unaware of the proceeding to which such notice would have related
and was prejudiced by the failure to give such notice, but the
omission so to notify the indemnifying party will not relieve the
indemnifying party from any liability that it may have to any
indemnified party otherwise than under SECTION 10. In case any
such action shall be brought against any 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 such indemnified party (who
shall not, except with the consent of the indemnified party, be
counsel to the indemnifying party), and, after notice from the
indemnifying party to such indemnified of its election so to assume
the defense thereof, the indemnifying party shall not be liable to
such indemnified party under such subsection for any legal or other
expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation, except that if the indemnified party has been
advised by counsel in writing that there are one or more defenses
available to the indemnified party which are different from or
additional to those available to the indemnifying party, then the
indemnified party shall have the right to employ separate counsel
and in that event the reasonable fees and expenses of such separate
counsel for the indemnified party shall be paid by the indemnifying
party; provided, however, that if the indemnifying party is the
Company, the Company shall only be obligated to pay the reasonable
fees and expenses of a single law firm (and any reasonably
necessary local counsel) employed by the indemnified party. The
indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled
with such consent or if there be a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason
of such settlement or judgment.
(d) In order to provide for just and equitable contribution in
circumstances under which the indemnity provided for in this
SECTION 10 is for any reason judicially determined (by the entry of
a final judgment or decree by a court of competent jurisdiction and
the expiration of time to appeal or the denial of the right of
appeal) to be unenforceable by the indemnified parties although
applicable in accordance with its terms, then each indemnifying
party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as
is appropriate to reflect the relative benefits received by the
Company and the Selling Shareholders on the one hand and the
Placement Agent on the other from the offering of the Shares;
provided, however, that no person guilty of fraudulent
misrepresentations (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation; provided, further,
that if the allocation provided above is not permitted by
applicable law, then
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each indemnifying party shall contribute to such amount paid or
payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the
relative fault of the Company and the Selling Shareholders on the
one hand and the Placement Agent on the other in connection with
the statements or omissions or actions which resulted in such
losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Selling
Shareholders on the one hand and the Placement Agent 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 and the Selling Shareholders, respectively, bear to the
Placement Agent Fee received by the Placement Agent. The relative
fault shall be determined by reference to, among other things,
whether the untrue or alleged statement of a materil fact or the
omission or alleged omission to state a material fact relates to
information supplied by the Company or the Selling Shareholders and
such parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The
Company, the Selling Shareholders and Placement Agent agree that it
would not be just and equitable if contributions pursuant to this
SECTION 10(d) were determined by pro rata allocation or by any
other method of allocation which does not take account of the
equitable considerations referred to above in this SECTION 10(d).
The amount paid or payable by an indemnified party as a result of
the losses, claims, damages or liabilities referred to above shall
be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or
defending such action or claim. Notwithstanding the provisions of
this SECTION 10(d), the Placement Agent shall not be required to
contribute any amount in excess of the amount by which the total
price at which the Shares sold to the purchasers exceeds the amount
of any damages which such Placement Agent has otherwise been
required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. For purposes of this
SECTION 10(d), each person, if any, who controls Placement Agent
within the meaning of Section 15 of the 1933 Act shall have the
same rights to contribution as Placement Agent, and each director
and officer of the Company who signed the Registration Statement,
and each person, if any, who controls the Company within the
meaning of Section 15 of the 1933 Act shall have the same rights to
contribution as the Company.
Section 11. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. The respective representations, warranties, indemnities, agreements
and other statements of the Company, each Selling Shareholder and the Placement
Agent, as set forth in or made pursuant to this Agreement, will remain
operative and in full force and effect regardless of any investigation made by
or on behalf of the Placement Agent or any controlling person of the Placement
Agent, or the Company or any Selling Shareholder, or any officer or director or
controlling person of the Company or any Selling Shareholder, and shall survive
delivery of and payment for the Shares or termination of this Agreement.
Section 12. EFFECTIVE DATE OF AGREEMENT AND TERMINATION
12
(a) This Agreement shall become effective upon the execution and delivery
hereof by the parties hereto.
(b) The Placement Agent may terminate this Agreement, by notice to the
Company, at any time at or prior to the Closing Time if any of the
conditions specified in SECTION 9 shall not have been fulfilled when
and as required by the terms of this Agreement to be fulfilled.
(c) If this Agreement is terminated pursuant to this SECTION 12, such
termination shall be without liability of any party to any other
party, except to the extent provided in SECTION 8. Notwithstanding any
such termination, the provisions of SECTION 10 shall remain in effect.
Section 13. NOTICES. All notices and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given if
delivered, mailed or transmitted by any standard form of telecommunication.
Notices to the Placement Agent shall be directed to J.J.B. Xxxxxxxx, X.X. Xxxxx,
Inc., 000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, Attention: Xxxxxx X.
Xxxxxx (with a copy sent in the same manner to Xxxxxx & Xxxxxxxx, 000 Xxxx
Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxxx, Xxxxxxxx 00000, Attention: X. Xxxxx
Xxxxxxx, Xx.); and notices to the Company and the Selling Shareholders shall be
directed to them at 000 X. Xxxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000,
Attention: Xxxxxxx X. Xxxxxxxx, Chief Executive Officer (with a copy sent in the
same manner to Xxxx, Xxxx, Xxxxxxx, Xxxxx & Xxxx, L.L.P., 1700 Xxxxxxx, Xxxxx
0000, Xxxxxx, Xxxxx 00000, Attention: X. Xxxxxxx Xxxxxx, Xx., P.C.).
Section 14. PARTIES. This Agreement is made solely for the benefit of and
is binding upon the Placement Agent, the Company and the Selling Shareholders
and, to the extent provided in SECTIONS 10 AND 11 hereof, the officers and
directors of the Company and each person who controls the Company, any Selling
Shareholder or the Placement Agent, and their respective executors,
administrators, successors and assigns and subject to the provisions of SECTION
10, no other person shall acquire or have any right under or by virtue of this
Agreement. The term "SUCCESSORS AND ASSIGNS" shall not include any purchaser of
any of the Shares merely by reason of such purchase.
Section 15. GOVERNING LAW; VENUE. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
Texas without regard to the principles of conflicts of law thereof.
Section 16. COUNTERPARTS. This Agreement may be executed in one or more
counterparts and when a counterpart has been executed by each party, all such
counterparts taken together shall constitute one and the same agreement.
[THIS SPACE INTENTIONALLY LEFT BLANK.]
13
If the foregoing is in accordance with your understanding, please sign and
return to us a counterpart hereof, and upon the acceptance hereof by you, this
letter and such acceptance will constitute a binding agreement among each of the
Company, the Selling Shareholders and the Placement Agent in accordance with its
terms.
Any person executing and delivering this Agreement as Attorney-in-Fact for
the Selling Shareholders represents by so doing that he or she has been duly
appointed as Attorney-in-Fact by each Selling Shareholder pursuant to a validly
existing and binding Power of Attorney which authorizes such Attorney-in-Fact to
take such action.
Very truly yours,
MANNATECH, INCORPORATED
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
-------------------------------
Title: Chief Executive Officer
------------------------------
SELLING SHAREHOLDERS
(Named in Schedule A attached hereto)
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
-------------------------------
Title: Attorney-in-Fact
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Attorney-in-Fact
The foregoing Agreement is hereby confirmed and accepted as of the date first
written above:
J.J.B. XXXXXXXX, X.X. XXXXX, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxx
----------------------------
Title: Senior Vice President
---------------------------
14
SCHEDULE A
SELLING SHAREHOLDERS
Name Number of Shares
------------------------------------------------ -----------------------
Minimum Maximum
Offering Offering
-------- --------
Xxxxxx X. Xxxxxx................................ 105,980 360,000
Xxxxxxx X. Xxxxxxxx............................. 300,620 760,000
Xxxxxxx X. Xxxxxxxx............................. 105,980 360,000
Xxxxx X. Xxxxxxxx............................... 38,928 105,000
Xxxxxxx X. Xxxx................................. 48,660 150,000
X. Xxxxxxxx XxXxxxxx............................ 37,031 55,000
Xxxxxxxxxxx X. Xxxxxxx.......................... 17,031 475,015
Xxxx Xxxxxxx, Xx................................ 97,320 300,000
Xxx Xxxxxxx..................................... 29,196 60,000
Xxxx Xxxxxx..................................... 48,660 200,000
Xxxx X. XxXxxxxxx............................... 29,196 60,000
Xxxxx X. Xxxxxx................................. 19,500 65,000
Xxx Xxxxxx...................................... 12,165 25,000
Xxxxx Xxxxxxxx.................................. 9,733 20,000
Xxxxxxx X. Xxxxx................................ 100,000 100,000
SCHEDULE B
PLEDGED SHARES
Shares held by the Selling Shareholders set forth below are pledged to the
party set forth in the right hand column below. Such shares will be sold in the
Offering to repay the debt owed.
Debtor Secured Party
------ -------------
Xxxxx X. Xxxxxx Mannatech, Incorporated
Xxxxx X. Xxxxxx Xxxxxxx X. Xxxxxxxx
Xxxx X. XxXxxxxxx Mannatech, Incorporated
Xxx Xxxxxx Mannatech, Incorporated
X. Xxxxxxxx XxXxxxxx Xxxxxxxxx, Incorporated
EXHIBIT A
FORM OF ESCROW AGREEMENT
[Attached]
EXHIBIT B
Form of Interim Receipt
[Mannatech Letterhead]
(Subscriber Name)
(Subscriber Address)
Dear Subscriber:
We have received your subscription for _________ shares at a price of $8.00
per share and have deposited your cashier's check in the amount of $_________ in
the Mannatech Subscription Account pending such time as [THE MINIMUM OF
2,500,000 SHARES ARE SUBSCRIBED FOR] [THERE ARE SUFFICIENT SHARES SUBSCRIBED FOR
TO WARRANT A CLOSING ON SUCH SHARES] at which time your shares will be delivered
to you. If this does not occur, your money will be returned to you, without
interest or deduction. Thank you for your interest in Mannatech, Incorporated.
If you have any questions, please call the placement agent for this offering,
J.J.B. Xxxxxxxx, X.X. Xxxxx, Inc. at (800) ___-____.
-----------------------------------------
Xxxxxxx X. Xxxxxxxx
Chairman of the Board and Chief Executive
Officer
