PLACEMENT AGENT AGREEMENT
Dated:
Xxxxx 00, 0000
Xxxxxx
Xxxxxx & Co., LLC
00
Xxxxx
Xxxxxx
Xxx
Xxxx,
XX 00000
Gentlemen:
1. Offering.
A. Morlex,
Inc. (the “Company”)
hereby
engages Xxxxxx Xxxxxx & Co., LLC (the “Placement
Agent”)
to act
as the Company’s exclusive placement agent with respect to the issuance and sale
by the Company (the “Offering”)
of
shares of the Company’s common stock (the “Common
Stock”)
as
follows: (i) 2,700,000 shares of its common stock, at $0.75 per share, or
$2,025,000, on a “best efforts, all or none” basis (the “Minimum
Offering”),
(ii)
up to an additional 2,700,000 shares of its common stock, also at $0.75 per
share, or $2,025,000, on a “best efforts” basis, for a maximum offering of
$4,050,000 (the “Maximum
Offering”),
and
(iii) up to an additional 2,700,000 shares of its common stock, at $0.75 per
share, or $2,025,000, on a “best efforts” basis, with respect to this, if and as
authorized by the Company and the Placement Agent, over-allotment amount
(collectively, the “Shares”).
The
Placement Agent is hereby authorized to engage, at its option, the services
of
other broker-dealers (the “Designees”)
who
are members of the Financial Industry Regulatory Authority (“FINRA”,
formerly, National Association of Securities Dealers, Inc.) to assist it in
soliciting subscribers and to remit to such broker-dealers the commissions
payable to the Placement Agent hereunder as it shall determine, provided that
the Company shall not be responsible for any fees or expenses of any such
Designees.
The
Offering is subject to (i) the completion and execution by the appropriate
parties of a Securities Purchase Agreement with all exhibits thereto, an Escrow
Agreement dated as of March 25, 2008, and a Confidential Investor Questionnaire
(collectively, the “Offering
Documents”)
and
(ii) the conditions set forth in Section
8
hereof.
The Company shall issue and sell to the Placement Agent or its designee(s),
for
nominal consideration, five-year warrants to purchase the number of shares
of
Common Stock equal to ten percent (10%) of the total number of issuable shares
of the Company’s common stock sold in the Offering (the “Placement
Agent Warrants”)
at a
purchase price equal to 100% of the price at which shares of Common Stock are
sold to purchasers in connection with the Offering. The Placement Agent Warrants
may not be exercised prior to one hundred and twenty (120) days following each
Closing of the Offering. The Shares and the shares of Common Stock issuable
upon
exercise of the Placement Agent Warrants (the “Placement
Agent Shares”)
are
hereinafter sometimes collectively referred to as the “Securities.”
The
Shares will be offered without registration under the Securities Act of 1933,
as
amended (the “Securities
Act”).
Purchasers of the Shares will be granted certain registration rights with
respect to the Securities, as more fully set forth in a certain Amended and
Restated Registration Rights Agreement dated as of April 15, 2008 (the
“Registration
Rights Agreement”).
The
Placement Agent will be granted certain registration rights with respect to
the
Placement Agent Warrants, as more fully set forth in the Registration Rights
Agreement.
B. The
initial closing of the Offering (the “Closing”) shall occur on the receipt of
acceptable subscriptions equal to the Minimum Offering. The Offering shall
terminate on June 4, 2008 (the “Offering
Period”);
provided,
however,
that
the Company and the Placement Agent may extend the Offering Period without
notice to the prospective purchasers of Shares for no more than two (2) thirty
(30) day periods thereafter. The
Company will issue or cause to be issued certificates representing the Shares
and the Placement Agent Warrants no later than three (3) business days following
each Closing.
2. Information.
A. Payment
for the Shares shall be made by wire transfer as more fully described in the
Offering Documents. The minimum purchase by any purchaser shall be 100,000
Shares or $75,000 Dollars, unless Securities purchase for lesser amounts are
accepted at the discretion of the Company. The Placement Agent and the Company
agree that the Shares will be offered solely to “accredited investors” within
the meaning of Rule 501 of Regulation D (“Accredited
Investors”)
promulgated by the United States Securities and Exchange Commission (the
“Commission”)
under
the Securities Act and Rule 506 of Regulation D under the Securities Act.
B. All
funds
received from subscriptions arranged will be promptly transmitted to the escrow
account maintained at U.S. Bank N.A. (the “Escrow
Agent”)
and
designated as “U.S. Bank/Morlex, Inc. - Escrow Account.” At each Closing, the
funds received in respect of the Shares closed on will be forwarded to the
Company, against delivery of the appropriate number of Shares and Warrants,
net
of (i) a Placement Agent commission payable in cash in an amount equal to ten
percent (10%) of the gross proceeds of the Shares sold in this Offering, and
(ii) any reasonable, documented out-of-pocket costs and expenses paid by the
Placement Agent including, but not limited to, printing, filing, background
examinations of the Company’s officers, directors, controlling persons and key
employees, mailing, travel, lodging, with prior approval by the Company of
any
individual item in excess of $5,000, plus
legal
expenses except that the Company shall not be responsible for any fees or
expenses of the Placement Agent’s legal counsel in excess of $30,000 without the
Company’s prior written approval. The Placement Agent hereby acknowledges the
receipt of $10,000 non-refundable deposit upon signing of the Letter of Intent
by and between the parties hereto.
C. The
Company and the Placement Agent reserve the right to reject any subscriber,
in
whole or in part, in either’s sole discretion. Funds received by the Company
from any subscriber whose subscription is rejected will be returned to such
subscriber, without deduction therefrom or interest thereon, but no sooner
than
such funds have cleared the banking system in the normal course of
business.
3. Representations,
Warranties and Covenants of Placement Agent.
The
Placement Agent represents, warrants and covenants as follows:
(i) It
has
the necessary power to enter into this Placement Agent Agreement and to
consummate the transactions contemplated hereby. The Placement Agent is a
limited liability company duly organized, validly existing and in good standing
under the laws of the State of Delaware.
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(ii) The
execution and delivery by the Placement Agent of this Placement Agent Agreement
and the consummation of the transactions contemplated herein will not result
in
any violation of, or be in conflict with, or constitute a default under, the
organizational documents of the Placement Agent, any agreement or instrument
to
which the Placement Agent is a party or by which the Placement Agent or its
properties are bound, or any judgment, decree, order or, to the Placement
Agent’s knowledge, any statute, rule or regulation applicable to the Placement
Agent. This Placement Agent Agreement constitutes the legal, valid and binding
obligation of the Placement Agent, enforceable against the Placement Agent
in
accordance with its terms, except to the extent that (a) the enforceability
hereof may be limited by bankruptcy, insolvency, reorganization, moratorium
or
similar laws from time to time in effect and affecting the rights of creditors
generally, (b) the enforceability hereof is subject to general principles of
equity, or (c) the indemnification provisions hereof may be held to be violative
of public policy.
(iii) The
Placement Agent will deliver to each potential investor, prior to any submission
by such person of a written offer relating to the purchase of the Shares, a
copy
of the Offering Documents (not including the Escrow Agreement) as they may
have
been most recently amended or supplemented by the Company.
(iv) Upon
receipt of executed Offering Documents from investors, the Placement Agent
will
promptly forward copies of the subscription documents to the
Company.
(v) The
Placement Agent will not deliver the Offering Documents to any person they
do
not reasonably believe to be an Accredited Investor or to any person in a state
where it does not reasonably believe that the Offering is exempt from the
applicable state “Blue Sky” laws.
(vi) The
Placement Agent will not take any action which it reasonably believes would
cause the Offering to violate the provisions of the Securities Act, the
Securities Exchange Act of 1934, as amended (the “Exchange
Act”)
or the
respective rules and regulations promulgated thereunder (the “Rules
and Regulations”).
(vii) The
Placement Agent shall have no obligation to insure that (a) any check, note,
draft or other means of payment for the Shares will be honored, paid or
enforceable against the subscriber in accordance with its terms; or (b) subject
to the performance of the Placement Agent’s obligations and the accuracy of its
representations and warranties hereunder, (i) the Offering is exempt from the
registration requirements of the Securities Act or any applicable state “Blue
Sky” law; or (ii) any prospective purchaser is an Accredited Investor; provided
that Placement Agent will not deliver the Offering Documents to any person
they
do not reasonably believe to be an Accredited Investor.
(viii) There
is
no litigation or governmental proceeding pending or, to the best of the
Placement Agent’s knowledge, threatened against it, which might have a material
adverse effect on the Placement Agent’s business or operations.
3
(ix) The
Placement Agent is a member of the FINRA and is a broker-dealer registered
as
such under the Exchange Act and under the securities laws of the states in
which
the Securities will be offered or sold by the Placement Agent, unless an
exemption for such state registration is available to the Placement Agent.
The
Placement Agent is in compliance with all material rules and regulations
applicable to the Placement Agent generally and to the Placement Agent’s
participation in the Offering.
4. Representations
and Warranties of the Company.
The
Company has filed with the Commission all forms, reports, schedules,
registration statements and preliminary or definitive proxy or information
statements required to be filed by it with the Commission prior to the date
hereof (the “Company
SEC Reports”).
Except as may be set forth in the Company SEC Reports, the Company hereby
represents and warrants as follows:
(i) The
execution, delivery and performance of each of this Placement Agent Agreement
and the Offering Documents to which it is a party has been duly and validly
authorized by the Company and is, or with respect to the Offering Agreements
to
which it is a party, will be, a valid and binding obligation of the Company,
enforceable in accordance with its respective terms, except to the extent that
(a) the enforceability hereof or thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws from time to time in
effect and affecting the rights of creditors generally, (b) the enforceability
hereof or thereof is subject to general principles of equity; or (c) the
indemnification provisions hereof or thereof may be held to be violative of
public policy.
(ii) Prior
to
the Closing, the issuance, sale and delivery by the Company of the Securities
will be duly authorized by all requisite corporate action of the Company. The
Shares and the Placement Agent Shares will, prior to the Closing, be duly
reserved for issuance upon the Closing of the Offering or exercise of the
Placement Agent Warrants, as applicable.
(iii) The
authorized capital stock of the Company consists of 1,000,000,000 shares of
common stock, par value $.001 per share (the “Company
Common Stock”).
As of
the date of this Agreement, before giving effect to the Offering, the Company
has 20,045,492 shares of Company Common Stock issued and outstanding, all of
which have been duly authorized, validly issued, fully paid and non-assessable.
The Company Common Stock is presently eligible for quotation and trading on
the
Over-the-Counter Bulletin Board (the “OTCBB”)
in all
00 xxxxxx xx xxx Xxxxxx Xxxxxx and is not subject to any notice of suspension
or
delisting. The Company Common Stock is eligible for registration under the
Securities Exchange Act of 1934, as amended (the “Exchange
Act”).
All
of the issued and outstanding shares of Company Common Stock were issued in
compliance with all applicable laws including, without limitation, the
Securities Act of 1933, as amended (the “Securities
Act”),
the
Exchange Act and applicable “blue sky laws”. Except as set forth in the
Registration Rights Agreement or in the Company SEC Reports, there are no
preemptive or other outstanding rights, options, warrants, conversion rights
(including pursuant to convertible securities), stock appreciation rights,
redemption rights, repurchase rights, registration rights, agreements,
arrangements, calls, commitments or rights of any kind relating to the issued
or
unissued capital stock of the Company or obligating the Company to issue or
sell
any shares of capital stock of, or other equity interests in, the Company.
As of
the date of this Agreement, there are no outstanding contractual obligations
of
the Company to repurchase, redeem or otherwise acquire any shares of capital
stock of the Company or to provide material funds to, or make any material
investment (in the form of a loan, capital contribution or otherwise) in, any
person.
4
(iv) The
Shares and the Placement Agent Shares, when issued in accordance with the terms
of the SPA and the Placement Agent Warrants and the terms of this Placement
Agent Agreement as the case may be, will be validly issued, fully-paid and
non-assessable.
(v) There
is
no litigation or governmental proceeding pending or, to the best of the
Company’s knowledge, threatened against, or involving the Company or its
properties or business, except as set forth in the Offering Documents. The
Company is not a party to any order, writ, injunction, judgment or decree of
any
court.
(vi) The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Colorado. The Company has the requisite corporate
power and authority to carry on its business as it is now being conducted and
is
duly qualified or licensed to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or held under lease
or
the nature of its activities makes such qualification necessary, except for
any
failure to so license, qualify or be in such good standing, which, when taken
together with all other such failures, has not had and does not have a material
adverse effect on the Company. The execution and delivery of this Agreement
and
the Offering Documents to which it is a party by the Company does not and will
not, and the performance of this Agreement and the Offering Documents to which
it is a party by the Company will not: (i) conflict with or violate the articles
of incorporation or by-laws of the Company, (ii) conflict with or violate any
laws applicable to the Company or by which any property or asset of the Company
is bound or affected, or (iii) result in any breach of or constitute a default
(or an event which with notice or lapse of time or both would become a default)
under, or give to others any right of termination, amendment, acceleration,
or
cancellation of, or result in the creation of a lien or other encumbrance on
any
property or asset of the Company pursuant to, any contract to which the Company
is a party or by which the Company or any property or asset of the Company
is
bound or affected.
(vii) Neither
the Company nor any of its officers, directors, employees or stockholders has
employed any broker or finder in connection with the transactions contemplated
by this Placement Agent Agreement other than the Placement Agent and there
are
no claims for services in the nature of a finder’s or origination fee with
respect to the sale of the Securities.
(viii) Subject
to the performance by the Placement Agent of its obligations hereunder, and
the
accuracy of the representations and warranties made by the respective investors
in the Offering Documents, the Offering Documents and the offer and sale of
the
Securities comply, and will continue to comply, through the Offering Period
with
the requirements of Rule 506 of Regulation D promulgated by the Commission
pursuant to the Securities Act and any other applicable federal and state laws,
rules, regulations and executive orders. Neither the Offering Documents nor
any
amendment or supplement thereto, nor any other documents prepared by the Company
in connection with the Offering contain any untrue statement of a material
fact
or omit to state any material fact required to be stated therein or necessary
to
make the statements therein, in light of the circumstances under which they
were
made, not misleading. All statements of material facts in the Offering Documents
are true and correct as of the date of the Offering Documents and will be true
and correct in all material respects on the date of the Closing. If at any
time
prior to the completion of the Offering or other termination of this Placement
Agent Agreement any event shall occur as a result of which it might, in the
Company’s opinion, become necessary to amend or supplement the Offering
Documents so that they do not include any untrue statement of any material
fact
or omit to state any material fact necessary in order to make the statements
therein, in light of the circumstances then existing, not misleading, the
Company will promptly notify the Placement Agent and will supply the Placement
Agent with amendments or supplements correcting such statement or
omission.
5
(ix) All
taxes
which are due and payable from the Company have been paid in full or appropriate
extensions of such payment have been obtained and the Company does not have
any
tax deficiency or claim outstanding assessed or proposed against it (except
for
such amounts set forth in the Offering Documents).
(x) The
Company has not taken any action which would cause it to be in violation of
the
Foreign Corrupt Practices Act of 1977, as amended, or any rules and regulations
thereunder. To the Company’s knowledge, there is not now any employment by the
Company of, or beneficial ownership in the Company by, any governmental or
political official.
(xi) The
Company understands that the foregoing representations and warranties shall
be
deemed material and to have been relied upon by the Placement Agent.
(xii) The
Company will not deliver the Offering Documents to any person it does not
reasonably believe to be an Accredited Investor.
(xiii) The
Company will not intentionally take any action which it reasonably believes
would cause the Offering to violate the provisions of the Securities Act,
Exchange Act or the Rules and Regulations.
(xiv) The
Company understands that the foregoing representations and warranties shall
be
deemed material and to have been relied upon by the Placement Agent. No
representation or warranty by the Company in this Placement Agent Agreement,
and
no written statement contained in any document, certificate or other writing
delivered by the Company to the Placement Agent contains any untrue statement
of
material fact or omits to state any material fact necessary to make the
statements herein or therein, in light of the circumstances under which they
were made, not misleading.
5. Certain
Covenants and Agreements of the Company.
The
Company covenants and agrees as follows:
A. To
advise
the Placement Agent of any material adverse change in the Company’s financial
condition, prospects or business or of any development materially affecting
the
Company or rendering untrue or misleading any material statement in the Offering
Documents occurring at any time prior to the Closing as soon as reasonably
practicable after the Company is either informed or becomes aware
thereof.
6
B. To
use
its reasonable e best efforts to cause the Securities to be qualified or
registered for sale, or to obtain exemptions from such qualification or
registration requirements, on terms consistent with those stated in the Offering
Documents, the Shares and the Placement Agent Warrants under the securities
laws
of such jurisdictions as the Placement Agent shall reasonably request, provided
that such states and jurisdictions do not require the Company to qualify as
a
foreign corporation. Qualification, registration and exemption charges and
fees
shall be at the sole cost and expense of the Company. The Company’s counsel
shall perform the required “Blue Sky” services, and all reasonable expenses and
disbursements of Company’s counsel relating to such “Blue Sky” matters and
relating to the Offering shall be paid by the Company.
C. To
apply
the net proceeds of the Offering as described in the Offering Documents
$5,000,000 for the acquisition of Ad Authority, Inc. and the remaining amount
for general working capital purposes.
D. To
issue
to the Placement Agent or its designees, at the Closing, the Placement Agent
Warrants and provide for registration by the Company of the Placement Agent
Shares issuable upon the exercise thereof as set forth in the Registration
Rights Agreement.
E. To
reserve out of the Company’s authorized and designated Common Stock, solely for
the purpose of issuance upon the exercise of the Placement Agent Warrants,
such
number of Placement Agent Shares.
F. To
execute and deliver employment agreements with key management in forms
reasonably acceptable to the Placement Agent and its counsel.
G. In
the
event the Company elects not to proceed with the Offering prior to April 15,
2008 for any reason other than (i) the Placement Agent’s bad faith, gross
negligence or willful misconduct in processing the transaction or breach of
any
provision of this Agreement by the Placement Agent or any of its affiliates
or
Designees or inaccuracy of any representation of the Placement Agent set forth
herein, (ii) the failure to close the acquisition of Ad Authority, Inc. for
any
reason or (iii) as a result of the Placement Agent’s willful failure to meet any
of the conditions to the Offering set forth herein, or if the Placement Agent
elects not to proceed due to (i) a material breach by the Company of any
representation, warranty or covenant contained in this Placement Agent Agreement
precluding the offering from proceeding on the terms set forth herein, or (ii)
as a result of the Company’s willful failure to meet any of the conditions to
the Offering previously described, to pay the Placement Agent, exclusive of
any
payments otherwise made, for its time, efforts and lost opportunities, a
“break-up” fee of $150,000 plus
125,000
Placement Agent Warrants or, if the Offering Documents have been distributed
to
potential purchasers of the Shares, $250,000 plus
250,000
Placement Agent Warrants.
7
6. Indemnification.
A. The
Company agrees to indemnify and hold harmless the Placement Agent, its
affiliates, the directors, officers and employees of the Placement Agent and
its
affiliates, and each other person or entity, if any, controlling the Placement
Agent or any of its affiliates (collectively, “Company
Indemnified Persons”),
from
and against, and the Company agrees that no Indemnified Person shall have any
liability to the Company or its owners, parents, affiliates, securityholders
or
creditors for, any losses, claims, damages, liabilities or expenses (including
actions, claims or proceedings in respect thereof brought by or against any
person, including stockholders of the Company, and the cost of any investigation
and preparation therefore and defense thereof) (collectively, “Placement
Agent Losses”)
related to or arising out of any statements or omissions made in the Offering
Documents or any exhibit thereto or the services undertaken by the Placement
Agent in this Placement Agent Agreement in connection with the sale of the
Securities in the Offering (collectively, the “Placement
Agent’s Role”),
except that the indemnification shall not apply to the Placement Agent Losses
of
an Indemnified Person that are determined by a court of competent jurisdiction
or by an agreement of the parties to have resulted from (i) the bad faith,
gross
negligence or willful misconduct of such Indemnified Person, or (ii) a claim
as
to an alleged omission from or misstatement in, the Offering Documents or any
exhibit thereto if either (x) at or prior to the execution of a Securities
Purchase Agreement the copy of the Offering Documents and exhibits were not
sent
or delivered to the subscriber, (y) the alleged untrue statement was corrected
or the omission of a material fact alleged was contained in a supplement or
amendment to the Memorandum was delivered to the subscriber prior to the written
acceptance of the subscriber’s Securities Purchase Agreement by the Company, or
(z) such claim is relating to misstatement or omission in the information
supplied by the Placement Agent, or any of its affiliates, agents or Designees.
B. The
Placement Agent agrees to indemnify and hold harmless the Company, its
affiliates, and their respective directors, officers and employees, and each
other person or entity, if any, controlling the Company or any of its affiliates
(collectively, “Placement
Agent Indemnified Persons”)
from
and against, and the Placement Agent agrees that no Placement Agent Indemnified
Person shall have any liability to the Placement Agent or its owners, parents,
affiliates, securityholders or creditors for any for, any losses, claims,
damages, liabilities or expenses (including actions, claims or proceedings
in
respect thereof) brought by or against any person, including stockholders or
members of the Placement Agent, and the cost of any investigation and
preparation therefore and defense thereof (collectively, “Company
Losses”
and,
together with the Placement Agent Losses, “Losses”)
(i)
related to or arising out of any acts or failures to act undertaken or omitted
to be taken by the Placement Agent, any of its affiliates or the Designees
in
connection with the Offering through their bad faith, willful misconduct or
gross negligence, or (ii) in whole or in part resulting from any (a) inaccuracy
in the representations and warranties of the Placement Agents contained herein,
(b) any failure of the Placement Agent to perform its obligations hereunder
or
(c) the information supplied by the Placement Agent, or any of its affiliates,
agents or Designees. The maximum aggregate payment that the Placement Agent
shall be liable to pay out hereunder in respect of indemnification of the
Company Indemnified Parties shall be limited, in the aggregate, to the amount
of
consideration received by the Placement Agent pursuant to this Placement Agent
Agreement, including the value of the Placement Agent Warrants.
8
C. Promptly
after receipt by an Indemnified Person (each an “indemnified
party”)
under
this Section
6
of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against any indemnifying party under
this
Section
6,
notify
in writing the indemnifying party of the commencement thereof, provided however,
that no delay on the part of the indemnified party in notifying the indemnifying
party shall relieve the indemnifying party from any obligation hereunder unless
the indemnifying party is prejudiced by such delay. In case any such action
is
brought against any indemnified party, and it notifies an indemnifying party
of
the commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent that it may wish, jointly with any other indemnifying
party, similarly notified, to assume the defense thereof, with counsel who
shall
be to the reasonable satisfaction of such indemnified party, and after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party will not be liable to such
indemnified party under this Section
6
for any
legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation; provided,
however,
that
if, in the reasonable judgment of the indemnified party, it is advisable for
the
indemnified party to be represented by separate counsel, the indemnified party
shall have the right to employ a single counsel only to represent the
indemnified parties who may be subject to liability arising out of any claim
in
respect of which indemnity may be sought by the indemnified parties thereof
against the indemnifying party, in which event the fees and expenses of such
separate counsel shall be borne by the indemnifying party. Any such indemnifying
party shall not be liable to any such indemnified party on account of any
settlement of any claim or action effected without the consent of such
indemnifying party.
If
such
an indemnity provided for in this Placement Agent Agreement is unavailable
or
insufficient for any Indemnified Person with respect to any Losses (other than
by reason of the gross negligence, willful misconduct or bad faith of such
indemnifying party), then the indemnifying party, in lieu of indemnifying such
Indemnified Person, will contribute to the amount paid or payable by such
Indemnified Person as a result of such Losses (i) in such proportion as it
is
appropriate to reflect the relative benefits received by the Company on the
one
hand, and the Placement Agent, on the other hand, from the transactions
contemplated hereunder (the “Transactions”),
or
(ii) if the allocation provided by (i) above is not permitted by applicable
law
in such proportion as is appropriate to reflect not only the relative benefits
referred to in (i) above, but also the relative fault on the Company, on the
one
hand, and of the Placement Agent on the other hand in connection with statements
or omissions that resulted in Losses as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand,
and the Placement Agent, on the other hand shall be deemed to be in the same
proportion as the total proceeds from the Transactions (net of sales
commissions, but before deducting other expenses) received by the Company bear
to the commissions received or receivable by the Placement Agent. The fault
of
the Company, on the one hand, and the Placement Agent, on the other hand, will
be determined with reference to, among other things, whether the untrue or
alleged untrue statement of material fact or the omission to state a material
fact relates to the information supplied by the Company, on the one hand, and
the Placement Agent, on the other hand, and their relative intent, knowledge,
access to information and opportunity to correct or prevent such statement
or
omission.
The
Company and the Placement Agent agree that it would not be just and equitable
if
contribution pursuant to this Section
6
were
determined by pro rata allocation or by any other method of allocation that
does
not take into account the equitable considerations referred to in the
immediately preceding paragraph.
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THE
PLACEMENT AGENT HEREBY AGREES AND THE COMPANY HEREBY AGREES, ON ITS OWN BEHALF
AND ON BEHALF OF ITS SECURITYHOLDERS, TO WAIVE ANY RIGHT TO TRIAL BY JURY WITH
RESPECT TO ANY CLAIM, COUNTER-CLAIM OR ACTION ARISING OUT OF THE PLACEMENT
AGENT’S ROLE OR THIS PLACEMENT AGENT AGREEMENT.
7. Payment
of Expenses.
Whether
or not the Offering is successfully completed, the Company hereby agree to
bear
all of the customary reasonable expenses in connection with the Offering,
including, but not limited to the following: due diligence, background
examinations of the Company’s officers, directors, controlling persons and key
employees, travel, lodging, filing fees, printing and duplicating costs, lucite
deal blocks, advertisements, postage and mailing expenses with respect to the
transmission of offering material, registrar and transfer agent fees, escrow
agent fees and expenses, fees of the Company’s counsel and accountants, issue
and transfer taxes, if any, “Blue Sky” counsel fees and expenses of Company’s
counsel and the legal fees and expenses of the Placement Agent’s counsel in an
amount not to exceed $30,000, without the Company’s approval; provided that any
expense of the Placement Agent in excess of $5,000 individually shall be subject
to prior approval by the Company. It is agreed that the Company’s counsel shall
perform the required Blue Sky legal services.
8. Conditions
of the Closing
Provided
the Offering shall have been subscribed for and funds representing such amount
thereof shall have cleared, the Closing shall be held at the offices of the
Placement Agent’s counsel or such other place as mutually agreed upon by the
parties hereto. The obligations of the Placement Agent hereunder shall be
subject to the continuing accuracy of the representations and warranties, in
all
material respects, of the Company as of the date hereof and as of the date
of
the Closing as if such representations and warranties had been made on and
as of
the Closing; the accuracy on and as of the date of the Closing of the statements
of the officers of the Company made pursuant to the provisions hereof; and
the
performance by the Company on and as of the Closing of its covenants and
obligations hereunder and to the following further conditions:
A. At
each
Closing, the Placement Agent shall receive the opinion of Xxxxx Xxxxxxx LLP,
counsel to the Company, dated as of the date of the Closing, which opinion
shall
be in the form attached to the Securities Purchase Agreement.
B. At
or
prior to the Closing, counsel for the Placement Agent shall have been furnished
such documents, certificates and opinions as it may reasonably require for
the
purpose of enabling it to review or pass upon the matters referred to in this
Placement Agent Agreement and the Offering Documents, or in order to evidence
the accuracy, completeness or satisfaction of any of the representations,
warranties or conditions contained herein.
C. Since
the
date of this Agreement, there has been no material adverse change in the
business, operations or financial condition of the Company, provided, however,
that none of the following, either alone or in combination, shall be considered
in determining whether a material adverse change has occurred: any change or
effect resulting from (i) any change in economic conditions generally or in
the
industry in which Company operates; (ii) any change in any law applicable to
Company; (iii) changes arising from the announcement or consummation of the
transactions contemplated hereby; or (vi) any actions to be taken pursuant
to or in accordance with this Agreement .
10
D. Subject
to the filing of any necessary state “Blue Sky” filings, the Offering will
become qualified or be exempt from qualification under the securities laws
of
the several states as contemplated by Section
5(B)
hereof
no later than the date of the Closing and no stop order suspending the sale
of
the Shares shall have been issued, and no proceedings for that purpose shall
have been initiated or threatened.
E. At
each
Closing, the Placement Agent shall have received certificates of the Company
signed by their respective chief executive officers and chief financial
officers, dated as of the date of the Closing, to the effect that the conditions
set forth in subparagraph (C) above have been satisfied and that, as of the
date
of the Closing, the representations and warranties of the Company set forth
herein are true and correct in all material respects.
F. At
final
Closing, the Company shall have delivered employment agreements with key
management reasonably acceptable to the Placement Agent and its
counsel.
G. At
final
Closing, the Company shall have delivered quarterly financial projections and
a
budget of the Company for the two-year period following the Offering, as
approved by the Company’s Board of Directors.
H. There
shall be reasonable satisfaction by the Placement Agent with its ongoing due
diligence of the Company, including, but not limited to, the Company’s financial
condition, business prospects, acquisition targets, management and Board of
Directors. This also includes satisfactory background examinations of the
Company’s officers, directors, controlling persons and key
employees.
I. Prior
to
the final Closing, the Company and the Placement Agent shall have executed
a
non-exclusive Investment Banking Advisory Agreement (the “Advisory
Agreement”)
in
connection with the Company’s future financings (other than the Offering) so
that the Placement shall be entitled to co-lead or manage any such future
financing, and/or general corporate finance and corporate advisory needs. The
term of the Advisory Agreement shall be at least twelve (12) months, with the
Placement Agent’s compensation to be determined by mutual agreement.
J. Prior
to
the final Closing, the Company and the Placement Agent shall have executed
a
non-exclusive Investment Banking Advisory Agreement (the “M&A
Advisory Agreement”)
in
connection with the Company’s business combinations, mergers and acquisitions.
The term of the M&A Advisory Agreement shall be at least twelve (12) months,
with the Placement Agent’s compensation to be determined by mutual
agreement.
The
obligations of the Company hereunder shall be subject to the continuing accuracy
of the representations and warranties, in all material respects, of the
Placement Agent as of the date hereof and as of the date of the Closing as
if
such representations and warranties had been made on and as of the Closing;
the
accuracy on and as of the date of the Closing of the statements of the officers
of the Placement Agent made pursuant to the provisions hereof; and the
performance by the Placement Agent on and as of the Closing of its covenants
and
obligations hereunder and to the following further conditions:
11
K. The
closing of acquisition of Ad Authority, Inc. by a subsidiary of the Company
shall be taking place simultaneously with the Closing hereunder.
L. Prior
to
the final Closing, the Company shall have engaged the public accounting firm
of
Xxxxxxxxx, Kass and Company, P.C. acceptable to the Placement
Agent.
M. Prior
to
the final Closing, the Placement Agent shall have received “comfort letter”
representations from the Company’s bank creditors.
N. Prior
to
the final Closing, the Company shall have appointed a non-voting observer
designated by the Placement Agent to its Board of Directors at the final Closing
of the Offering for a period of two (2) years following such final Closing.
Such
observer shall be entitled to receive reimbursement for reasonably incurred
expenses and all data as and when received by voting members.
9. Termination.
This
Placement Agent Agreement shall terminate if the Closing does not take place
on
or before seven (7) business days following the termination of the Offering
Period. In the event that the Offering is not successfully completed, then
the
Company shall immediately pay to the Placement Agent the amount of its
reasonable, documented out-of-pocket expenses incurred in connection with the
offer of the Securities in accordance with this agreement,
plus
the
Placement Agent’s legal expenses except that the Company shall not be
responsible for any fees or expenses of the Placement Agent’s legal counsel in
excess of $30,000 without the Company’s prior written approval.
Upon any
termination of the Offering, all subscription documents and payments for the
Securities not previously delivered to the purchasers thereof, shall be returned
to the respective subscribers, without interest thereon or deduction therefrom,
and no party hereto shall have any further obligation to the other, except
as
specifically provided herein.
10. Miscellaneous.
A. This
Placement Agent Agreement may be executed in any number of counterparts, each
of
which shall be deemed to be an original, but all which shall be deemed to be
one
and the same instrument.
B. Any
notice required or permitted to be given hereunder shall be given in writing
and
shall be deemed effective when deposited in the United States mail, postage
prepaid, or when received if personally delivered, sent by overnight courier
or
faxed, addressed as follows:
To
the
Placement Agent:
Xxxxxx
Xxxxxx & Co.,
LLC
00
Xxxxx Xxxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Fax:
(000) 000-0000
Attention:
Xxxxxxx X. Xxxxx
12
with
a
copy to:
Cozen
X’Xxxxxx
0000
X Xxxxxx, XX, Xxxxx 0000
The
Army and Xxxx Xxxx Xxxxxxxx
Xxxxxxxxxx,
XX 00000
Fax
(000) 000-0000
Attention:
Xxxxx X. Xx Xxxxxxx, Esq.
To
the
Company:
Morlex,
Inc.
000
Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxx
Xxxx,
Xxx Xxxx 00000
Attn:
Xxxxxxx Xxxxxx
with
a
copy to:
Xxxxx
Peabody LLP
Attn:
Xxxx Xxxxx, Esq.
000
Xxxxxxx Xxxxxx
Xxx
Xxxx,
XX 00000
Fax:
(000) 000-0000
or
to
such other address of which written notice is given to the others.
C. This
Placement Agent Agreement shall be governed by and construed in all respects
under the laws of the State of New York, without reference to its conflict
of
laws rules or principles. Any suit, action, proceeding or litigation arising
out
of or relating to this Placement Agent Agreement shall be brought and prosecuted
only in federal and state courts in the City, County and State of New York.
The
parties hereby irrevocably and unconditionally consent to the jurisdiction
of
each such court or courts located within the State of New York and to service
of
process by registered or certified mail, return receipt requested, or by any
other manner provided by applicable law, and hereby irrevocably and
unconditionally waive any right to claim that any suit, action, proceeding
or
litigation so commenced has been commenced in an inconvenient
forum.
D. This
Placement Agent Agreement and the other agreements referenced herein contain
the
entire understanding between the parties hereto with respect to the subject
Offering and may not be modified or amended except by a writing duly signed
by
the party against whom enforcement of the modification or amendment is
sought.
13
E. If
any
provision of this Placement Agent Agreement shall be held to be invalid or
unenforceable, such invalidity or unenforceability shall not affect any other
provision of this Placement Agent Agreement.
[Remainder
of page left intentionally blank]
14
IN
WITNESS WHEREOF, the parties hereto have executed this Placement Agent Agreement
as of the date first written above.
|
MORLEX,
INC.
|
|
|
By:
|
/s/
Xxxxxxx X. Xxxxxx
|
|
Name:
Xxxxxxx X. Xxxxxx
|
|
|
Title:
Chief Executive Officer
|
|
|
By:
|
/s/
Xxxxxxx X. Xxxxx
|
|
Name:
Xxxxxxx X. Xxxxx
|
|
|
Title:
Chief Operating Officer
|
|
