EXHIBIT 10.128
PLACEMENT AGENT AGREEMENT
January 23, 2004
Xxxxxxx Xxxxxx Xxxxxx Inc.
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Dear Sirs:
1. INTRODUCTORY. Tarrant Apparel Group, a California corporation
(the "COMPANY"), proposes to issue and sell an aggregate of up to 1,200,000
shares (the "SHARES") of Common Stock, no par value ("COMMON Stock"), of the
Company in one or more transactions directly to various investors at a purchase
price of $3.35 per share (the "OFFERING PRICE") all upon the terms and
conditions set forth in the Prospectus (as hereinafter defined).
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents, warrants, and agrees that:
(a) The Company has prepared and filed with the
Securities and Exchange Commission (the "COMMISSION") a registration
statement (file number 333-111092) on Form S-3, including a related
base prospectus, for registration under the Securities Act of 1933, as
amended (the "ACT"), of the securities of the Company described therein
with an aggregate offering price of up to $20,000,000 (the "INITIAL
REGISTRATION STATEMENT"). At the time of the filing of the Initial
Registration Statement and on the effective date of the Initial
Registration Statement, the Company met the requirements for use of
Form S-3 under the Act. The Initial Registration Statement and any
post-effective amendment thereto, each in the form heretofore delivered
to you, have been declared effective by the Commission in such form.
Other than (i) a registration statement, if any, increasing the size of
the offering (a "RULE 462(B) REGISTRATION STATEMENT"), filed pursuant
to Rule 462(b) under the Act, which shall become effective upon filing,
(ii) documents incorporated by reference in the base prospectus
contained in the Initial Registration Statement, (iii) any amendment or
supplement filed thereto and any documents incorporated by reference to
such amendment or supplement, and (iv) an acceleration request with
respect to the Initial Registration Statement, no other document with
respect to the Initial Registration Statement has heretofore been filed
with the Commission. No stop order suspending the effectiveness of the
Initial Registration Statement, any post-effective amendment thereto or
the Rule 462(b) Registration Statement, if any, has been issued and no
proceeding for that purpose has been initiated or threatened by the
Commission. The various parts of the Initial Registration Statement and
the Rule 462(b)
1
Registration Statement, if any, including all exhibits thereto and
including (x) the information contained in the form of a final
prospectus supplement relating to this offering to the base prospectus
included in the Initial Registration Statement, which will be filed
with the Commission after the date hereof pursuant to Rule 424(b) under
the Act in accordance with Section 5(e) hereof and (y) the documents
incorporated by reference in such final prospectus supplement are
hereinafter collectively called the "REGISTRATION STATEMENT." Such
final prospectus supplement, in the form first filed pursuant to Rule
424(b) under the Act, together with the base prospectus included in the
Initial Registration Statement and any subsequently filed amendments,
supplements or other documents incorporated therein, is hereinafter
called the "PROSPECTUS." Any reference herein to the Prospectus shall
be deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the Act, as of
the date of such Prospectus, as the case may be. Any reference to any
amendment or supplement to the Prospectus shall be deemed to refer to
and include any documents filed after the date of such Prospectus, as
the case may be, under the Securities Exchange Act of 1934, as amended
(the "EXCHANGE Act"), and incorporated by reference in such Prospectus,
as the case may be. Any reference to any amendment or supplement to the
Registration Statement or Prospectus shall be deemed to refer to and
include the filing of any document under the Exchange Act after the
effective date of the Initial Registration Statement or the date of the
Prospectus, as the case may be, deemed to be incorporated by reference
in the Registration Statement or the Prospectus, as the case may be, as
well as the documents incorporated by reference therein pursuant to
Item 12 of Form S-3 under the Act.
(b) The documents incorporated by reference in the
Prospectus, when they were filed with the Commission, conformed in all
material respects to the requirements of the Exchange Act and the rules
and regulations of the Commission thereunder, and none of such
documents contained an untrue statement of a material fact or omitted
to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; and any further documents so filed and incorporated by
reference in the Prospectus or any further amendment or supplement
thereto, when such documents are filed with the Commission, as the case
may be, will conform in all material respects to the requirements of
the Exchange Act and the rules and regulations of the Commission
thereunder and will 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; PROVIDED, HOWEVER, that the foregoing representations
and warranties in this Section 2(b) shall not apply to any statements
or omissions made in reliance upon and in conformity with information
concerning you furnished in writing to the Company by you expressly for
use therein.
(c) No order preventing or suspending the use of any
Prospectus has been issued by the Commission. The Registration
Statement conforms, and the Prospectus and any further amendments or
supplements to the Registration
2
Statement or the Prospectus will conform, in all material respects to
the requirements of the Act and the rules and regulations of the
Commission thereunder and do not and will not: (i) with respect to the
Registration Statement, as of the applicable effective date as to the
Registration Statement and any amendment thereto contain an 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 not
misleading and (ii) with respect to the Prospectus, as of the
applicable filing date as to the Prospectus and any amendment or
supplement thereto, contain an 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; PROVIDED,
HOWEVER, that the foregoing representations and warranties in this
Section 2(c) shall not apply to any statements or omissions made in
reliance upon and in conformity with information concerning you
furnished in writing to the Company by you expressly for use therein.
(d) All reports and statements required to be filed by
the Company with the Commission under the Exchange Act, and the rules
and regulations thereunder, due at or prior to the date of this
Agreement have been made. Such filings, together with all documents
incorporated by reference therein, are referred to as "EXCHANGE ACT
DOCUMENTS." Each Exchange Act Document, as amended, conformed in all
material respects to the requirements of the Exchange Act and the rules
and regulations thereunder, and no Exchange Act Document, as amended,
at the time each such document was filed, included any untrue statement
of a material fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(e) The consolidated historical financial statements and
schedules of the Company included in the Registration Statement and
that will be included in the Prospectus fairly present in all material
respects, on the basis stated therein and on the date thereof, the
financial position of the Company at the respective dates therein
specified and its results of operations and cash flows for the periods
then ended (subject to, in the case of the unaudited financial
statements, normal audit adjustments), comply as to form with the
applicable accounting requirements of the Act, and have been prepared
in conformity with generally accepted accounting principles in the
United States applied on a consistent basis except as expressly noted
therein.
(f) Except as disclosed on SCHEDULE 2(f), subsequent to
the respective dates as to which information is given in the
Registration Statement and the Prospectus, (i) the Company has not
incurred any material liabilities or obligations, direct or contingent,
except in the ordinary course of business and except for liabilities or
obligations reflected or reserved against on the Company's balance
sheet dated September 30, 2003, and (ii) there has not been (A) any
material adverse change, or to the actual knowledge of the Company, any
development involving a prospective material adverse change, in the
condition
3
(financial or otherwise), earnings, business, or results of operations
of the Company or any change in the capital or material increase in the
long-term debt of the Company, nor has the Company declared, paid, or
made any dividend or distribution of any kind on its capital stock, (B)
any transaction which is material to the Company or (C) any change in
the capital stock or outstanding indebtedness of the Company.
(g) All action required to be taken by the Company
necessary for the authorization of this Agreement and the Subscription
Agreements (as hereinafter defined), the performance of all obligations
of the Company hereunder and thereunder at the Closing (as hereinafter
defined), and as a condition to the due and proper authorization,
issuance, sale, and delivery of the Shares to subscribers therefor in
accordance with the terms of this Agreement has been, or prior to the
Closing Date will have been taken. The Shares have been duly and
validly authorized and when issued, delivered, and paid for as
specified herein, the Shares will be fully paid and non-assessable with
no personal liability attaching to the ownership thereof, free of any
preemptive rights or similar rights, and free and clear of all liens
imposed by or through the Company.
(h) The Company is a corporation duly organized, validly
existing, and in good standing under the laws of the State of
California, and has all requisite right, power, and authority to own or
lease its properties, to conduct its business as described in the
Registration Statement and as well be described in the Prospectus, and
to execute, deliver, and perform this Agreement, the Subscription
Agreements between the Company and the purchasers of the Shares in the
form attached as EXHIBIT A hereto (the "SUBSCRIPTION AGREEMENTS"), to
issue and sell the Shares, and to carry out the provisions of this
Agreement and the Subscription Agreement and to carry on its business
as presently conducted. The Company is duly qualified to do business
and in good standing as a foreign corporation in all other
jurisdictions in which its ownership or leasing of properties, or the
conduct of its business requires or may require such qualification
except where the failure to be so qualified would not have a material
adverse effect on the Company. The Company has complied in all material
respects with all material laws, rules, regulations, applicable to the
Company's business, operations, properties, assets, products, and
services, and the Company is in possession of and operating in
compliance with all material permits, licenses, and other
authorization, required to conduct its business as currently conducted.
(i) The authorized capital stock of the Company consists
of 100,000,000 shares of Common Stock, no par value, of which
27,614,763 shares were issued and outstanding as of December 23, 2003,
and 2,000,000 shares of preferred stock, no par value, none of which
were issued and outstanding as of December 23, 2003. The Common Stock
of the Company conforms in all material respects to the descriptions
thereof contained in the Registration Statement and as will be
contained in the Prospectus. All of the outstanding shares of Common
Stock of the Company have been duly and validly authorized and issued,
are fully
4
paid and nonassessable and are free of any preemptive or similar
rights. Except as contemplated by this Agreement, or as described in
the Exchange Act Documents or on SCHEDULE 2(i), (i) there is no
commitment by the Company to issue any shares of capital stock,
subscriptions, warrants, options, convertible securities, or other
similar rights to purchase or receive Company securities or to
distribute to the holders of any of its equity securities any evidence
of indebtedness, cash, or other assets, (ii) the Company is under no
obligation (contingent or otherwise) to purchase, redeem, or otherwise
acquire any of its equity or debt securities or any interest therein,
and (iii) to the Company's knowledge there are no voting trusts or
similar agreements, shareholders' agreements, pledge agreements,
buy-sell agreements, rights of first refusal, preemptive rights, or
proxies relating to any securities of the Company. Except as set forth
in the Exchange Act Documents or filings with the Commission made by
third parties pursuant to Schedule 13D or 13G or Form 3 or 4, and to
the knowledge of the Company, no person holds of record or
beneficially, 5% or more of the outstanding shares of the capital stock
of the Company. All outstanding securities of the Company were issued
in compliance with applicable Federal and state securities laws.
(j) Except as disclosed in the Registration Statement or
the Prospectus, there is no material pending or, to the knowledge of
the Company, threatened (i) action, suit, claim, proceeding, or
investigation against the Company, at law or in equity, or before or by
any Federal, state, municipal, or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or
foreign (each, a "GOVERNMENTAL BODY"), (ii) arbitration proceeding
against the Company, (iii) governmental inquiry against the Company, or
(iv) any action or suit by or on behalf of the Company pending or
threatened against others.
(k) The Company is not in violation of its articles of
incorporation or bylaws, or in default, or with the giving of notice or
lapse of time or both, would be in default, in the performance of any
material obligation, agreement, or condition contained in any lease,
license, material contract, indenture, or loan agreement or in any
bond, debenture, note, or any other evidence of indebtedness, except
for such defaults as would not have a material adverse effect on the
Company. The execution, delivery, and performance of this Agreement,
the Subscriptions Agreements, and the Escrow Agreement (as hereinafter
defined), the incurrence of the obligations herein, the issuance, sale,
and delivery of the Shares, and the consummation of the transactions
contemplated herein, have been duly authorized by all requisite
corporate action on the part of the Company and (i) do not and will not
conflict with the Company's articles of incorporation or bylaws, (ii)
do not and will not, with or without the passage of time or the giving
of notice, result in the breach of, or constitute a default, cause the
acceleration of performance, or require any consent under, or result in
the creation of any lien, charge or encumbrance upon any property
assets of the Company pursuant to, any material loan agreement,
mortgage, deed of trust, indenture, or other instrument or agreement to
which the Company is a party or by which the Company or its
5
properties are bound, except such consents as have been obtained as of
the date hereof or to the extent that the same have been, or prior to
the Closing Date will be, waived or cured, or (iii) do not and will not
result in the violation of any law, statute, order, rule,
administrative regulation, or decree of any court, or governmental
agency or body having jurisdiction over the Company or its properties.
(l) Except as disclosed in the Registration Statement or
the Prospectus or as described on SCHEDULE 2(l), there are no
pre-emptive rights or other rights to subscribe for or to purchase, or
any restriction upon the voting or transfer of, shares of Common Stock
pursuant to the Company's articles of incorporation, bylaws, or any
agreement or other instrument to which the Company is a party. Except
as disclosed on SCHEDULE 2(l), the issuance of the Shares is not
subject to any preemptive right of any shareholder of the Company or to
any right of first refusal or other right in favor of any person.
(m) This Agreement has been duly and validly executed and
delivered by or on behalf of the Company and constitutes a legal,
valid, and binding obligation of the Company enforceable in accordance
with its terms, except to the extent that its enforceability is limited
by (i) applicable bankruptcy, insolvency, reorganization, moratorium,
or other laws of general application relating to or affecting the
enforcement of creditors' rights generally, and (ii) laws relating to
the availability of specific performance, injunctive relief, or other
equitable remedies and except as enforceability of the indemnity and
contribution provisions contained in Section 7 hereof may be limited by
applicable law or principles of public policy.
(n) The Company is not and, after giving effect to the
offering and sale of the Shares and the application of the proceeds
thereof as will be described in the Prospectus, will not be an
"INVESTMENT COMPANY" as defined in the Investment Company Act of 1940,
as amended.
(o) No consent, approval, authorization, filing with or
order of any Governmental Body is required in connection with the
transactions contemplated herein, except such as have been obtained
under the Act (except for the filing of the Prospectus pursuant to Rule
424(b) promulgated under the Act) and such as may be required by the
Nasdaq Stock Market for quotation of the Shares or under the blue sky
laws of any jurisdiction in connection with the purchase and
distribution of the Shares in the manner contemplated herein and as
will be contemplated in the Prospectus.
(p) No holders of securities of the Company have rights
to the registration of such securities under the Registration
Statement.
(q) Ernst & Young, L.L.P., who have certified certain
financial statements of each of the Company and its consolidated
subsidiaries in the applicable financial statements, and delivered
their report with respect to the
6
audited financial statements and schedules for such entities, assets,
and businesses included in or incorporated by reference into the
Prospectus, are independent public accountants as required by the Act
and the applicable published rules and regulations thereunder.
(r) The escrow agreement (the "ESCROW AGREEMENT") among
the Company, you, and Sterling Bank (the "ESCROW AGENT") has been duly
and validly executed and delivered by or on behalf of the Company and
constitutes a legal, valid, and binding obligation of the Company
enforceable in accordance with its terms, except as such enforceability
may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium, or other laws of general application
relating to or affecting enforcement of creditors' rights generally and
(ii) laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies.
(s) The Company maintains insurance covering its
properties, operations, personnel and businesses as the Company deems
adequate; such insurance insures against such losses and risks to an
extent which is consistent with insurance coverage maintained by
similar companies and businesses; all such insurance is fully in force
on the date hereof and will be fully in force at the time of purchase.
(t) There are no transfer taxes or other similar fees or
charges under federal law or the laws of any state, or any political
subdivision thereof, required to be paid in connection with the
execution and delivery of this Agreement or the issuance or sale of the
Shares.
(u) Except as would not have a material adverse effect on
the business, assets, results of operation, or condition of the
Company, the Company has filed, or caused to be filed, on a timely
basis, all tax returns (including payroll, unemployment, and other
taxes related to its employees and independent contractors) required to
be filed with any Governmental Body and has paid or caused to be paid
all taxes, levies, assessments, tariffs, duties or other fees imposed,
assessed, or collected by any Governmental Body that may have become
due and payable pursuant to those tax returns or otherwise except taxes
being disputed by the Company in good faith. Except as disclosed on
SCHEDULE 2(u), no deficiency assessment with respect to or proposed
adjustment of any of the Company's Federal, state, municipal, or local
tax returns has occurred or is threatened. There has been no tax lien
imposed by any Governmental Body outstanding against the Company's
assets or properties, except the lien for current taxes not yet due.
The charges, accruals, and reserves on the books of the Company with
respect to taxes for all fiscal periods are adequate, in the opinion of
the Company, and the Company does not know of any actual or proposed
tax assessment for any fiscal period or of any basis therefor against
which adequate reserves have not been set up. Except as disclosed on
SCHEDULE 2(u), the Company has not been advised that any Federal income
tax return of the
7
Company has been, or will be, examined or audited by the Internal
Revenue Service.
(v) The Common Stock is registered pursuant to Section
12(g) of the Exchange Act and is listed for quotation with the symbol
"TAGS" on the Nasdaq National Market System maintained by the Nasdaq
Stock Market, Inc.
(w) No labor problem or dispute with the employees of the
Company exists or is threatened or, to the Company's knowledge, is
imminent, and the Company is not aware of any existing or imminent
labor disturbance by the employees of any of its or its subsidiaries'
principal suppliers, contractors or customers, that would, individually
or in the aggregate, have a material adverse effect on the condition
(financial or otherwise), earnings, business or properties of the
Company, whether or not arising from transactions in the ordinary
course of business, except as set forth in the Registration Statement
and as will be set forth in the Prospectus.
(x) The Company (i) possesses all licenses, certificates,
permits and other authorizations issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their
respective businesses, and (ii) has not received any notice of
proceedings relating to the revocation or modification of any such
license, certificate, authorization or permit which, in the case of (i)
and (ii) singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, or otherwise, would have a material
adverse effect on the condition (financial or otherwise), earnings,
business or properties of the Company, whether or not arising from
transactions in the ordinary course of business, except as set forth in
the Registration Statement and as will be set forth in the Prospectus.
(y) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or
specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability;
(iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to
any differences.
(z) Neither the Company nor its affiliates has taken,
directly or indirectly, any action designed to or which has constituted
or which would reasonably be expected to cause or result, under the
Exchange Act or otherwise, in stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale
of the Shares.
(aa) The Company has fulfilled its obligations, if any,
under the minimum funding standards of Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx
Employee Retirement Income Security Act of 1974 ("ERISA") and the
regulations and
8
published interpretations thereunder with respect to each "plan" (as
defined in Section 3(3) of ERISA and such regulations and published
interpretations) in which employees of the Company are eligible to
participate and each such plan is in compliance in all material
respects with the presently applicable provisions of ERISA and such
regulations and published interpretations. The Company has not incurred
any unpaid liability to the Pension Benefit Guaranty Corporation (other
than for the payment of premiums in the ordinary course) or to any such
plan under Title IV of ERISA.
(bb) Except as disclosed in the Registration Statement and
the Prospectus, the Company (i) does not have any material lending
relationship with any bank or lending affiliate of yours and (ii) does
not intend to use any of the proceeds from the sale of the Shares
hereunder to repay any outstanding debt owed to any affiliate of yours.
(cc) The Company has not sent or received any
communication regarding termination of, or intent not to renew, any of
the contracts or agreements referred to or described in, or filed as an
exhibit to, the Registration Statement, and no such termination or
non-renewal has been threatened by the Company or, to the Company's
knowledge, any other party to any such contract or agreement, except
where such termination or non-renewal would not, singly or in the
aggregate, have a material adverse effect on the condition (financial
or otherwise), earnings, business or properties of the Company.
(dd) The Company has provided you true, correct, and
complete copies of all documentation pertaining to any outstanding
extension of credit in the form of a personal loan made, directly or
indirectly, by the Company to any executive officer or director of the
Company, or to any family member or affiliate of any executive officer
or director of the Company. Since September 30, 2003, the Company has
not, directly or indirectly, including through any subsidiary: (i)
extended credit, arranged to extend credit, or renewed any extension of
credit, in the form of a personal loan, to or for any executive officer
or director of the Company, or to or for any family member or affiliate
of any executive officer or director of the Company; or (ii) made any
material modification, including any renewal thereof, to any term of
any personal loan to any executive officer or director of the Company,
or any family member or affiliate of any executive officer or director
of the Company, which loan was outstanding on September 30, 2003.
(ee) Neither the Company nor, to the Company's knowledge,
any employee or agent of the Company has made any payment of funds of
the Company or received or retained any funds in violation of any law,
rule or regulation, which payment, receipt or retention of funds is of
a character required to be disclosed in the Registration Statement or
the Prospectus.
(ff) To the Company's knowledge, there are no
"affiliations" or "associations" (as defined in the NASD Conduct Rules)
between any member of
9
the NASD and any of the Company's officers, directors, or 5% or greater
securityholders, except as set forth in the Registration Statement and
the Prospectus.
In addition, any certificate signed by any officer of the
Company and delivered to the you or your counsel in connection with the
offering of the Shares shall be deemed to be a representation and
warranty by the Company as to matters covered thereby, to you.
3. REPRESENTATIONS AND WARRANTIES OF XXXXXXX XXXXXX XXXXXX INC. You
represent and warrant to, and agree with, the Company that:
(a) You have been duly organized and are validly existing
and in good standing as a corporation under the laws of the State of
Texas, with power and authority (corporate and other) to perform your
obligations under this Agreement and the Escrow Agreement; you are a
broker-dealer registered and in good standing under the Exchange Act
and under the securities or Blue Sky laws of each state in which the
Shares are being offered or sold by you, and you are a member in good
standing of the NASD; you are in possession of and operating in
compliance with all authorizations, licenses, permits, consents,
certificates, and orders required for the performance of your duties
under this Agreement and the Escrow Agreement, and your performance of
your duties hereunder and thereunder will be in compliance with all
applicable laws, including state securities and Blue Sky laws.
(b) There are no legal or governmental proceedings
pending to which you are a party or of which any of your properties is
the subject or, to your knowledge, threatened, which, if determined
adversely to you, would individually or in the aggregate materially and
adversely affect your ability to perform your obligations under this
Agreement or the Escrow Agreement.
(c) No consent, approval, authorization or order of any
court or governmental authority or agency is required for the
performance by you of your obligations under this Agreement, except
such as may be required by the NASD.
(d) This Agreement has been duly and validly executed and
delivered by or on behalf of you and constitutes a legal, valid, and
binding obligation of you enforceable in accordance with its terms,
except to the extent that its enforceability is limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium, or other
laws of general application relating to or affecting the enforcement of
creditors' rights generally, and (ii) laws relating to the availability
of specific performance, injunctive relief, or other equitable remedies
and except as enforceability of the indemnity and contribution
provisions contained in Section 7 hereof may be limited by applicable
law or principles of public policy.
(e) The Escrow Agreement among the Company, you, and the
Escrow Agent has been duly and validly executed and delivered by or on
behalf of you
10
and constitutes a legal, valid, and binding obligation of you
enforceable in accordance with its terms, except as such enforceability
may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium, or other laws of general application
relating to or affecting enforcement of creditors' rights generally and
(ii) laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies.
(f) You agree to comply and shall comply with any
applicable requirements of the Act, the Exchange Act, the published
rules and regulations of the Commission thereunder, and the applicable
state securities or blue sky laws, and the Rules of the NASD,
specifically including, but not limited to, Rules 2420, 2730, 2740, and
2750 therein. With respect to your participation in any resales or
transfers of the Shares, you agree to comply and shall comply with any
applicable requirements set forth above.
(g) In offering the Shares for sale, you shall not give
or provide any information or make any representation other than those
contained in the Prospectus, the sale literature, or any other
documents provided to you for such purpose by the Company.
(h) You shall solicit purchases of the Shares only in
jurisdictions in which you are legally qualified to so act and in which
you have been advised by the Company that such solicitations may be
made.
4. OFFERING AND SALE OF THE SHARES. (a) On the basis of the
representations, warranties, and covenants herein contained, but subject to the
terms and upon the conditions herein set forth, you are hereby appointed the
non-exclusive placement agent of the Company during the term herein specified
(the "Offering Period") to solicit subscriptions for the Shares on a
best-efforts basis for the account of the Company at the Offering Price through
a public offering (the "Offering") and upon the terms and conditions set forth
in the Prospectus and in the Subscription Agreements. Subject to the performance
by the Company of all its obligations to be performed hereunder, and to the
completeness and accuracy of all the representations and warranties contained
herein, you hereby accept such agency and agree on the terms and conditions
herein set forth to use your best efforts during the Offering Period to find
subscribers for Shares at the Offering Price. Your agency hereunder, which is
terminable as provided in Section 11 hereof, shall terminate at 11:59 p.m.,
Houston, Texas time, on January 30, 2004; provided that such termination date
(the "Termination Date") may be extended by mutual written agreement of the
parties until February 13, 2004.
(b) Each Investor desiring to purchase Shares will be required to:
(i) complete, execute, and deliver to you an executed copy of a Subscription
Agreement between the Investor and the Company and (ii) deliver to you payment
for such subscription in the form of a check or a wire transfer of immediately
available funds in the amount that the Investor desires to purchase. Any payment
you receive that does not conform to this requirement will be returned to an
Investor by the end of the next business day following
11
receipt. Upon receipt, you shall hold all such Subscription Agreements and funds
for safekeeping. You shall promptly forward each executed Subscription Agreement
received to the Company for acceptance or rejection together with a schedule
setting forth the name and address of each subscriber and the amount received
from each subscriber. The Company shall notify you of such acceptance or
rejection within 10 days of receipt of a Subscription Agreement.
(c) If, by the Termination Date or such earlier time as may be
agreed upon by you and the Company, you have received subscriptions and such
subscriptions have been accepted by the Company (in its sole discretion), you
shall promptly notify the Company in writing of the aggregate amount of Shares
for which you have received subscriptions (the "Notice Date"). Payment of the
purchase price for the Shares for which you have found subscribers, and
delivery, with respect to each subscriber for Shares, of a copy of a
Subscription Agreement signed by such subscriber (the "Closing"), shall then be
made at such place and time as shall be agreed upon between you and the Company,
no later than the third full business day after the Notice Date (the "Closing
Date").
(e) As compensation for your services, a cash commission will be
paid to you with respect to subscriptions received by you as to which the
payments and deliveries provided for in this Section 4 are made at the Closing
Date equal to 7.0% of the purchase price of each Share purchased at the Closing.
Such commissions shall be paid to you on the Closing Date by bank wire transfer
payable in immediately available funds. In addition, the Company agrees to
reimburse you for your reasonable out-of-pocket expenses in accordance with
Section 5(p) hereof; provided, however, that the sum of the commissions paid to
you, expenses reimbursed, and the value of the Agent's Warrant (as hereinafter
defined) as determined pursuant to NASAD Rule 2710(c)(5)(C), may not exceed 8.0%
of the gross proceeds of the offering.
(f) Neither you nor the Company shall, directly or indirectly, pay
or award any finder's fees, commissions or other compensation to any person
engaged by a potential investor for investment advice as an inducement to such
advisor to advise the purchase of the Shares; provided, however, that normal
sales commissions payable to a registered broker-dealer or other properly
licensed person for selling the Shares shall not be prohibited hereby.
(g) You will prepare and file such statements and reports as are
or may be required to enable the Shares to be qualified for sale under the
securities laws of such jurisdictions as you may designate.
(h) As additional compensation, the Company will issue to you on
the Closing Date a Common Stock purchase warrant (the "AGENT'S WARRANT") in
substantially the form attached hereto as EXHIBIT B granting you the right to
purchase from the Company for a period commencing on the Closing Date and ending
five years after the Closing Date, one share of Common Stock for every 40 Shares
sold in the Offering, at a per share purchase price equal to the Offering Price.
12
5. COVENANTS AND AGREEMENTS OF THE COMPANY. The Company covenants and
agrees with you:
(a) to not, except as contemplated or described in this Agreement
or in a public disclosure made prior to the date hereof, prior to the Closing
Date, incur any material liability or obligation, direct or contingent, or enter
into any material transaction, in each case, other than in the ordinary course
of business;
(b) to not, prior to the Closing Date, declare or pay any dividend
on the Common Stock or make any distribution on the Common Stock payable to
shareholders of record on a date prior to the Closing Date;
(c) to furnish such information as may be required and otherwise
to cooperate in qualifying the Shares for offering and sale under the securities
or blue sky laws of such states as you may designate and to maintain such
qualifications in effect so long as required for the distribution of the Shares;
PROVIDED THAT the Company shall not be required to qualify as a foreign entity
or to consent to the service of process under the laws of any such state (except
service of process with respect to the offering and sale of the Shares); and to
promptly advise you of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose;
(d) to make available to you in Houston, Texas as soon as
practicable after the date hereof, and thereafter from time to time to furnish
to you, as many copies of the Prospectus as you may request for the purposes
contemplated by the Act; in case you are required to deliver a prospectus after
the nine-month period referred to in Section 10(a)(3) of the Act in connection
with the sale of the Shares, the Company will prepare, at its expense, promptly
upon request such amendment or amendments to the Registration Statement and the
Prospectus as may be necessary to permit compliance with the requirements of
Section 10(a)(3) of the Act;
(e) to prepare the Prospectus in a form approved by you and to
file such Prospectus pursuant to Rule 424(b) under the Act not later than the
Commission's close of business on the second business day following the
execution and delivery of this Agreement, or, if applicable, such earlier time
as may be required by Rule 430A(a)(3) under the Act; to make no further
amendment or any supplement (other than a Current Report on Form 8-K disclosing
the terms of this Agreement) to the Registration Statement or Prospectus prior
to the time of purchase which shall be disapproved by you promptly after
reasonable notice thereof; PROVIDED THAT you will not unreasonably disapprove
any such amendment or supplement;
(f) to advise you promptly, confirming such advice in writing, of
any request by the Commission so long as a Prospectus is required to be
delivered in connection with this offering for amendments or supplements to the
Registration Statement or the Prospectus or for additional information with
respect thereto, or of notice so long as a Prospectus is required to be
delivered in connection with this offering of institution of proceedings for, or
the entry of a stop order, suspending the effectiveness of the
13
Registration Statement and, if the Commission should enter a stop order
suspending the effectiveness of the Registration Statement so long as a
Prospectus is required to be delivered in connection with this offering, to use
its best efforts to obtain the lifting or removal of such order as soon as
possible; to advise you promptly of any proposal made so long as a Prospectus is
required to be delivered in connection with this offering to amend or supplement
the Registration Statement or the Prospectus, including by filing any documents
that would be incorporated therein by reference, and to furnish you with drafts
of such proposed amendment in advance of such filing and to file no such
amendment or supplement to which you shall reasonably object in writing;
(g) to file promptly all reports and any definitive proxy or
information statement required to be filed by the Company with the Commission to
comply with the Exchange Act subsequent to the date hereof and for so long as
the delivery of a prospectus is required in connection with the offering or sale
of the Shares; to provide you with a copy of such reports and statements and
other documents to be filed by the Company pursuant to Section 13, 14 or 15(d)
of the Exchange Act during such period a reasonable amount of time prior to any
proposed filing, and to promptly notify you of such filing;
(h) if necessary or appropriate, to file a registration statement
pursuant to Rule 462(b) under the Act;
(i) (i) to advise you promptly upon receipt of notice from the
Commission or any state securities regulator of any action, request, order or
proceeding that is being or will be taken or given by it with respect to the
offering of the Shares, or the Prospectus and Registration Statement in
connection with the offering of the Shares, or the happening of any event that
would require the making of any change in the Prospectus in connection with the
offering of the Shares so that the Prospectus would not include an untrue
statement of material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under and the date on
which they are made, not misleading, (ii) to furnish you with drafts of any
proposed amendments or supplements to the Prospectus or Registration Statement
that may be necessary as a result of any such action, request, order or
proceeding or the happening of any such event in advance of such filing and
(iii) to file no such amendment or supplement to the extent disapproved by you
promptly after reasonable notice thereof; provided that you will not
unreasonably disapprove any such amendment or supplement;
(j) to make generally available to its stockholders as soon as
practicable, but in any event not later than eighteen months after the effective
date of the Registration Statement (as defined in Rule 158(c) of the Act), an
earnings statement of the Company complying with Section 11(a) of the Act;
(k) to furnish to its stockholders as soon as practicable after
the end of each fiscal year an annual report (including a consolidated balance
sheet and statements of income, stockholders' equity and cash flow of the
Company for such fiscal year, accompanied by a copy of the certificate or report
thereon of independent certified public accountants);
14
(l) to furnish to you copies of the Registration Statement, as
initially filed with the Commission, the Prospectus, and all amendments and
supplements thereto (including all exhibits thereto and documents incorporated
by reference therein), and such other information with respect to the Company as
you may from time to time reasonably request, in each case as soon as available
and in such quantities as you may reasonably request;
(m) to furnish or otherwise make available to you promptly upon
request for a period of two years from the date of this Agreement the following
documents, provided such documents are not otherwise publicly available via
XXXXX: (i) copies of any reports or other communications which the Company shall
send to its stockholders or shall from time to time publish or publicly
disseminate, (ii) copies of all annual, quarterly and current reports filed with
the Commission on Forms 10-K, 10-Q and 8-K, or such other similar forms as may
be designated by the Commission, (iii) copies of documents or reports filed with
any national securities exchange on which any class of securities of the Company
is listed, and (iv) such other information as you may reasonably request
regarding the Company;
(n) [Intentionally Omitted]
(o) to apply the net proceeds from the sale of the Shares in the
manner set forth under the caption "Use of Proceeds" in the Prospectus;
(p) whether or not the transactions contemplated in this Agreement
are consummated, to pay all costs, expenses, fees, and taxes in connection with
(i) the preparation and filing of the Registration Statement, the Prospectus,
and any amendments or supplements thereto, and the printing and furnishing of
copies of each thereof to you and to dealers (including costs of mailing and
shipment), (ii) the registration, issue, sale and delivery of the Shares
including any transfer taxes and stamp or similar duties payable upon the sale,
issuance or delivery of the Shares, (iii) the producing, word processing and/or
printing of this Agreement, any dealer agreements, any Powers of Attorney and
any closing documents (including compilations thereof) and the reproduction
and/or printing and furnishing of copies of each thereof to you and (except
closing documents) to dealers (including costs of mailing and shipment), (iv)
all of your reasonable out-of-pocket expenses (including fees and disbursements
of your counsel, travel, and related expenses incurred in connection with this
Agreement and the Offering) incurred in connection with this Agreement,
preparing to market, and marketing the Shares, (v) the reasonable legal fees and
expenses incurred by counsel to subscribers for Shares in connection with the
negotiation, execution, and delivery of subscription agreements and any related
agreements; (vi) the qualification of the Shares for offering and sale under
state or foreign laws and the determination of their eligibility for investment
under state or foreign law as aforesaid (including the legal fees and filing
fees and other disbursements of your counsel) and the printing and furnishing of
copies of any blue sky surveys or legal investment surveys to you and to
dealers, (vii) any listing of the Shares on any securities exchange, (viii) any
filing for review of the public offering of the Shares by the NASD, including
the legal fees and filing fees and other disbursements of your counsel; provided
that the aggregate expenses paid or reimbursed pursuant to
15
clauses (iv), (v), and (viii) shall not exceed $30,000 in the aggregate; (ix)
the fees and disbursements of any transfer agent or registrar for the Shares,
(x) the costs and expenses of the Company relating to presentations or meetings
undertaken in connection with the marketing of the offering and sale of the
Shares to prospective investors and your sales force, including, without
limitation, expenses associated with the production of road show slides and
graphics, fees and expenses of any consultants engaged in connection with the
road show presentations, travel, lodging and other expenses incurred by the
officers of the Company and any such consultants, and the cost of any aircraft
chartered in connection with the road show, and (xi) the performance of the
Company's other obligations hereunder;
(q) if required, to prepare and file with the Nasdaq Stock Market
an additional shares listing application covering the Shares and take all steps
necessary to cause such shares to be approved for listing as soon as practicable
thereafter; and
(r) to maintain a transfer agent and, if necessary under the
jurisdiction of formation of the Company, a registrar for the Shares.
6. CONDITIONS OF YOUR OBLIGATIONS. Your obligations hereunder are
subject to the accuracy of the representations and warranties on the part of the
Company on the date hereof, at the time of purchase, the performance by the
Company of its obligations hereunder and to the following additional conditions
precedent:
(a) The Company shall furnish to you at the time of
purchase an opinion of Xxxxxx, Xxxxxxxx & Markiles, L.L.P., counsel for
the Company, addressed to you, and dated the time of purchase, in the
form attached hereto as EXHIBIT C.
(b) No Prospectus or amendment or supplement to the
Registration Statement or the Prospectus, including documents deemed to
be incorporated by reference therein, shall have been filed to which
you object in writing.
(c) The Prospectus shall have been filed with the
Commission pursuant to Rule 424(b) under the Act at or before 5:30
P.M., Washington D.C. time, on the second full business day after the
date of this Agreement.
(d) Prior to the time of purchase, (i) no stop order with
respect to the effectiveness of the Registration Statement shall have
been issued under the Act or proceedings initiated under Section 8(d)
or 8(e) of the Act; (ii) the Registration Statement and all amendments
thereto shall not contain an 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 not misleading; and (iii) the
Prospectus and all amendments or supplements thereto shall not contain
an 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 are made,
not misleading.
16
(e) Between the time of execution of this Agreement and
the time of purchase, no material adverse change or any development
involving a prospective material adverse change (other than as
disclosed in the Registration Statement and Prospectus, exclusive of
any amendments or supplements subsequent to the date hereof) in the
condition (financial or otherwise), earnings, business, properties or
results of operations of the Company shall occur or become known.
(f) The Company will, at the time of purchase, deliver to
you a certificate of the Company's Chief Executive Officer or Chief
Operating Officer and its Chief Financial Officer to the form attached
as EXHIBIT D hereto.
(g) The Company shall have furnished to you such other
documents and certificates as to the accuracy and completeness of any
statement in the Registration Statement and the Prospectus as of the
time of purchase, as you may reasonably request.
(h) The Shares shall have been approved for quotation on
the Nasdaq Stock Market as a National Market Security, subject only to
notice of issuance at or prior to the time of purchase.
If any of the conditions provided for in this Section 6 shall not have
been satisfied when and as required by this Agreement, this Agreement may be
terminated by you by notifying the Company of such termination in writing at or
prior to the Closing Date, but you shall be entitled to waive any of such
conditions.
7. INDEMNIFICATION AND CONTRIBUTION. (a) The Company agrees to
indemnify and hold harmless you and each person, if any, who controls you within
the meaning of the Act, against any losses, claims, damages, liabilities, or
expenses (including, unless the Company elects to assume the defense as
hereinafter provided, the reasonable cost of investigating and defending against
any claims therefor and counsel fees incurred in connection therewith), joint or
several, which arise out of or is based upon (a) the Company's breach of a
representation or warranty or covenant or agreement contained in this Agreement
or (b) any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement (or in the Registration Statement as
amended by any post-effective amendment thereof by the Company) or in a
Prospectus (the term Prospectus for the purpose of this Section 7 being deemed
to include the Prospectus and the Prospectus as amended or supplemented by the
Company), or arises out of or is based upon any omission or alleged omission to
state a material fact required to be stated in either such Registration
Statement or such Prospectus or necessary to make the statements made therein
not misleading, except insofar as any such loss, damage, expense, liability or
claim arises out of or is based upon any untrue statement or alleged untrue
statement of a material fact contained in and in conformity with information
concerning you furnished in writing by or on behalf of you through you to the
Company expressly for use in such Registration Statement or such Prospectus or
arises out of or is based upon any omission or alleged omission to state a
material fact in connection with such information required to be stated in such
Registration Statement or such Prospectus or necessary to make such information
not misleading; provided that in no case is the
17
Company to be liable with respect to any claims made against you, or any such
controlling person unless you or such controlling person shall have notified the
Company in writing promptly after the summons or other first legal process
giving information of the nature of the claim shall have been served upon you or
such controlling person, but failure to notify the Company of any such claim
shall not relieve it from any liability that it may have to you or such
controlling person otherwise than on account of the indemnity agreement
contained in this paragraph. The Company will be entitled to participate at its
own expense in the defense, or if it so elects, to assume the defense of any
suit brought to enforce any such liability, but, if the Company elects to assume
the defense, such defense shall be conducted by counsel chosen by it and
reasonably acceptable to you. In the event the Company elects to assume the
defense of any such suit and retain such counsel, you or such controlling person
or persons, defendant or defendants in the suit, may retain additional counsel
but shall bear the fees and expenses of such counsel unless (i) the Company
shall have specifically authorized the retaining of such counsel or (ii) the
parties to such suit include you or such controlling person or persons, and the
Company and you or such controlling person or persons have been advised by
counsel that one or more material legal defenses may be available to you or them
that may not be available to the Company in which case the Company shall not be
entitled to assume the defense of such suit notwithstanding its obligation to
bear the reasonable fees and expenses of such counsel. In no event shall the
Company be liable for the fees and expenses of more than one counsel for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances. The Company shall not be required to indemnify any
person for any settlement of any such claim effected without the Company's
consent, which shall not be unreasonably withheld. The Company shall not,
without your consent, consent to the entry of any judgment or enter into any
settlement that does not include as an unconditional term thereof, the giving by
the claimant or plaintiff to such indemnified party of a release from all
liability in respect of such claim or litigation. This indemnification
obligation will be in addition to any primary liability that the Company might
otherwise have. The foregoing obligation of indemnification of the Company shall
be limited to the net proceeds of the Offering.
(b) You agree to indemnify and hold harmless the Company, each of
the Company's officers, directors, and each other person, if any, who controls
the Company within the meaning of the Act, against any losses, claims, damages,
liabilities, or expenses (including, unless you elect to assume the defense, the
reasonable cost of investigating and defending against any claims therefor and
counsel fees incurred in connection therewith), joint or several, which (i)
arise of any untrue statement or alleged untrue statement of a material fact
contained in and in conformity with information concerning you furnished in
writing by you or on your behalf to the Company expressly for use in the
Registration Statement (or in the Registration Statement as amended by any
post-effective amendment thereto by the Company) or in a Prospectus, or arises
out of or is based upon any omission or alleged omission to state a material
fact in connection with such information required to be stated in the
Registration Statement or such Prospectus or necessary to make such information
not misleading or (ii) arise out of your breach of a representation or warranty
or covenant or agreement contained in this Agreement;
18
provided, however, that in no case are you to be liable with respect to any
claims made against the Company or any such person against whom the action is
brought unless the Company or such person shall have notified you in writing
within a reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon the Company
or such person, but failure to notify you of such claim shall not relieve you
from any liability that you may have to the Company or such person otherwise
than on account of the indemnity agreement contained in this paragraph. You
shall be entitled to participate at your expense in the defense, or if you so
elect, to assume the defense of any suit brought to enforce any such liability,
but, if you elect to assume the defense, counsel chosen by you and reasonably
acceptable to the Company shall conduct such defense. In the event that you
elect to assume the defense of any such suit and retain such counsel, the
Company, said officers and directors and any person or persons, defendant or
defendants in the suit, may retain additional counsel but shall bear the fees
and expenses of such counsel unless (i) you shall have specifically authorized
the retaining of such counsel or (ii) the parties to such suit include you or
such controlling person or persons, and the Company and you or such controlling
person or persons have been advised by counsel that one or more material legal
defenses may be available to the Company that may not be available to you or
them in which case you shall not be entitled to assume the defense of such suit
notwithstanding your obligation to bear the reasonable fees and expenses of such
counsel. You shall not be liable to indemnify any person for any settlement of
any such claim effected without your or its consent which consent shall not be
unreasonably withheld. You shall not, without the consent of the Company,
consent to entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof, the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in respect
of such claim or litigation. This indemnification obligation will be in addition
to any primary liability that you might otherwise have.
(c) If the indemnification provided for in this Section 7 is
unavailable, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) in such proportion as is
appropriate to reflect not only the relative benefits received by the Company on
one hand and you on the other from the offering, but also the relative fault of
the Company on the one hand and you on the other in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities, or expenses (or actions in respect thereof), as well as any other
relevant equitable considerations. The relative benefits received by the Company
on the one hand and you 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, bear to the total selling commissions
received by you and the value of the Agent's Warrant issued to you pursuant to
Section 4(h). The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company, the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission, and whether a party breached a representation or warranty or covenant
or agreement
19
contained in this Agreement. The Company and you agree that it would not be just
and equitable if contribution 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. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, liabilities or expenses (or
actions in respect thereof) referred to above shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such claim. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
8. SURVIVAL OF INDEMNITIES, REPRESENTATIONS, WARRANTIES, ETC. The
respective representations and warranties of you and the Company as set forth in
this Agreement or made by them respectively, pursuant to this Agreement, shall
remain in full force and effect, regardless of any investigation made by or on
behalf of you, the Company, or any of the officers or directors of the Company
or any controlling person, and shall survive delivery of and payment for the
Shares for a period ending on the date two years subsequent to the Closing Date.
9. EFFECTIVE DATE. This Agreement shall become effective at 11:00
A.M., Houston time, on the date hereof (the "Effective Time").
10. TERMINATION. In the event of any termination of this Agreement
under this or any other provision of this Agreement, there shall be no liability
of any party to this Agreement to any other party, other than as provided in
Sections 5(p), 7, and 8 and this Section 10.
This Agreement may be terminated after the Effective Time by (a) the
Company for any reason by notice to you and (b) you by notice to the Company (i)
if at or prior to the Closing Date trading in securities on the New York Stock
Exchange, the American Stock Exchange, or the Nasdaq Stock Market (collectively,
the "Exchanges") shall have been suspended for longer than four consecutive
hours or minimum or maximum prices shall have been established on either such
exchange or stock market, or a banking moratorium shall have been declared by
Texas or United States authorities (unless such suspension is made pending
completion of the sale of the Shares, at which time, such suspension will be
lifted); (ii) if at or prior to the Closing Date there shall have been a
material escalation of hostilities between the United States and any foreign
country (other than Iraq), or any other material insurrection or armed conflict
involving the United States which, in your reasonable judgment, after
consultation with the Company, makes it impracticable or inadvisable to offer or
sell the Shares; or (iii) if there shall be any material litigation or
regulatory action, pending or threatened against or involving the Company,
which, in your reasonable judgment, after consultation with the Company, makes
it impracticable or inadvisable to offer or deliver the Shares on the terms
contemplated by this Agreement.
20
If, and only if, the Company terminates this Agreement after it becomes
effective for any reason (other than your material failure to comply with your
obligations under this Agreement or material breach of your representations and
warranties) or the Offering fails to close because of the Company's breach of
any representations or warranties contained in this Agreement or the Company's
failure to fulfill its covenants and agreements contained in this Agreement, the
Company shall pay you your actual out-of-pocket expenses incurred as provided in
Section 5(p) hereof.
11. AGREEMENT CONCERNING DISCLOSURE OF INFORMATION. You agree to
treat confidentially any material nonpublic information that is furnished to you
(or to parties acting on your behalf) by or on behalf of the Company (the
"Information"). You agree that you will use the Information only for the
purposes related to a determination of your willingness to act as non-exclusive
selling agent pursuant to this Agreement, and that the Information will be kept
confidential by you and your partners, members, managers, officers, directors,
employees, agents, and other affiliates (collectively, the "Affiliates"), and
your attorneys and accountants (collectively, the "Professionals"), and that
you, such Affiliates, or Professionals will not disclose the Information to any
investor or other person; provided, however, that the Information may be
disclosed to (a) Affiliates and Professionals who need to know such Information
for the purpose of evaluating or providing services in connection with the your
and your clients' investment in the Company; provided such parties agree to be
bound by this undertaking, (b) to any federal or state regulatory agency and
their employees, agents, and attorneys (collectively, "Regulators") for the
purpose of making any filings with Regulators if disclosure of such Information
is required by law (provided that you advise the Company in writing of the
Information to be so disclosed within a reasonable time prior to such filing),
and (c) any other person to which the Company consents in writing prior to any
such disclosure.
In the event that you are requested or required (by oral questions,
documents, subpoena, civil investigation, demand, interrogatories, request for
information, or other similar process) to disclose to any person or entity any
information supplied to you, your Affiliates, or your Professionals in the
course of their dealings with the Company or their respective representatives,
you agree that you will provide the Company with prompt notice of such
request(s) within a reasonable time prior to such disclosure so that the Company
may seek an appropriate protective order and/or waiver of compliance with the
provisions of this Agreement. It is further agreed that, if a protective order
is not obtained, or a waiver is not granted hereunder, and you are nonetheless,
in the written opinion of counsel, compelled to disclose information concerning
the Company to any tribunal or else stand liable for contempt or suffer the
censure or penalty, you may disclose such information to such tribunal without
liability hereunder. Prior to making such disclosure, you shall deliver a
written opinion of your counsel to the Company's counsel that disclosure is
compelled by law. You will exercise your best efforts to obtain a protective
order or other reliable assurance that confidential treatment will be accorded
the Information.
12. NOTICES. All notices or other communications that are required
or permitted under this Agreement shall be in writing and sufficient if
delivered by hand, by
21
facsimile transmission, by registered or certified mail, postage pre-paid, by
electronic mail, or by courier or overnight carrier, to the persons at the
addresses set forth below (or at such other address as may be provided
hereunder), and shall be deemed to have been delivered as of the date so
delivered:
If to the Company: Tarrant Apparel Group
0000 Xxxx Xxxxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Chief Financial Officer
Facsimile: (000) 000-0000
e-mail: xxxxxxx.xxxx@xxxx.xxx
If to you: Xxxxxxx Xxxxxx Xxxxxx Inc.
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: President
Facsimile: (000) 000-0000
e-mail: xxx.xxxxxx@xxxxxx.xxx
or at such other address as any party shall have furnished to the other parties
in writing.
13. SUCCESSORS. This Agreement shall inure to the benefit of and
be binding upon you, the Company, and their respective successors and legal
representatives, except that neither the Company nor you may assign or transfer
any of its or your rights or obligations under this Agreement without the prior
written consent of the other. Nothing expressed or mentioned in this Agreement
is intended or shall be construed to give any person other than the persons
mentioned in the preceding sentence any legal or equitable right, remedy or
claim under or in respect of this Agreement, or any provisions herein contained,
this Agreement and all conditions and provisions hereof being intended to be and
being for the sole and exclusive benefit of such persons and for the benefit of
no other person; except that the representations, warranties, covenants,
agreements and indemnities of the Company contained in this Agreement shall also
be for the benefit of the person or persons, if any, who control you within the
meaning of Section 15 of the Act, and your indemnities shall also be for the
benefit of each officer and director of the Company and the person or persons,
if any, who control the Company within the meaning of Section 15 of the Act.
14. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California. Any judicial
proceeding brought against either of the parties to this agreement or any
dispute arising out of this Agreement or any matter related hereto may be
brought in the courts of the State of California or in the United States
District Court for the Central District of California and, by its execution and
delivery of this agreement, each party to this Agreement accepts the
jurisdiction of such courts. The foregoing consent to jurisdiction shall not be
deemed to confer rights on any person other than the parties to this Agreement.
The prevailing party in any such
22
litigation shall be entitled to receive from the losing party or parties all
costs and expenses, including reasonable attorney fees, incurred by the
prevailing party.
[Signatures on the following page]
23
If the foregoing correctly sets forth our understanding please indicate
your acceptance thereof in the space provided below for that purpose, whereupon
this letter and your acceptance shall constitute a binding agreement between us.
Very truly yours,
TARRANT APPAREL GROUP
By /S/ XXXXXXX XXXX
----------------------------
Name: Xxxxxxx Xxxx
Title: Chief Financial Officer
Accepted and delivered in Houston,
Texas as of the date first above written
XXXXXXX XXXXXX XXXXXX INC.
By: /s/ Xxxxx Xxxxx
----------------------------
Name: Xxxxx Xxxxx
Title: Vice President
24
