PLACEMENT AGREEMENT
This Placement Agreement (the "Agreement") is entered into as of this ___ day of
January, 2000, by and between Xxxxxxx Xxxxxx & Company Financial Services, Inc.
("Financial Services"), whose address is 000 Xxxxxx Xxxxxx XX, Xxxxx Xxxxxx,
Xxxx 00000, and Xxxxxxx Communication Corporation, ("Xxxxxxx" or the "Company"),
whose address is 0000 00xx Xxxxxx XX, Xxxxx Xxxxxx, Xxxx, 00000.
WHEREAS, Xxxxxxx desires to retain Financial Services as its exclusive
placement agent to procure, on a best efforts basis, subscriptions from
accredited investors, as defined in Regulation D as promulgated by the
Securities Exchange Commission ("SEC") pursuant to the Securities Act of 1933,
as amended (hereinafter "Investors" or "Purchasers" or individually an
"Investor" or a "Purchaser") in connection with several private placements which
will be taking palace simultaneously, wherein, (1) it is contemplated Investors
will purchase Units which consist of (a) convertible Promissory Notes in the
principal amount of $50,000 which accrue interest at the rate of 12% per annum
and which are convertible into shares of the Company's no par value common stock
and (b) 8,576 shares of ACTEL Integrated Communications Inc.("ACTEL") preferred
stock at $5.83 per share if the Purchaser is an insider who is converting a
previous promissory note or 9,804 shares of ACTEL preferred stock, at $5.10 per
share, if the Purchaser is not an insider but is converting a previous
promissory note, or if the Purchaser is purchasing the unit and is not
converting a previous promissory note ("Offering Number 1"); and (2) it is
contemplated Investors will purchase shares of ACTEL preferred stock ("Offering
Number 2") (hereinafter when referring to Offering Number 1 and Offering Number
2 collectively, they will be referred to as the ("Offerings" or the
"Securities"); and
WHEREAS, Financial Services desires to act as the Company's exclusive
placement agent in connection with the Offerings;
NOW THEREFORE, in consideration of the premises and the mutual obligations
set forth herein, receipt of which is hereby acknowledged, the parties agree as
follows:
I. THE SECURITIES:
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The Offerings pertain to financings for the Company in the amount of up to
Twenty Million and 00/100 ($20,000,000.00) in connection with private placements
wherein the Investors will purchase the following:
(a) Offering Number 1; Investors will purchase units which consist of
convertible promissory notes in the principal amount of $50,000 which accrue
interest at the rate of 12% per annum and which are convertible into shares of
no par value common stock of the Company and 8,576 shares of ACTEL Integrated
Communications Inc.("ACTEL") preferred stock at $5.83 per share if the Purchaser
is an insider who is converting a previous promissory note or 9,804 shares of
ACTEL preferred stock, at $5.10 per share if the Purchaser is not an insider but
is converting a previous promissory note, or if the Purchaser is purchasing the
unit and is not converting a previous promissory note, together (the "Units");
and
(b) Offering Number 2; Investors will purchase shares of ACTEL
preferred stock at $5.83 per share.
II. APPOINTMENT OF AGENT:
-----------------------
The Company hereby appoints Financial Services as its exclusive financial
advisor for a period of eighteen months starting as of the date of execution of
this agreement and additionally, the Company hereby appoints Financial Services
as its exclusive placement agent ("Placement Agent") for the Offering. The
appointment shall commence upon execution of this Agreement, however the
Placement Agent must also receive properly completed offering circulars for
Offering Number 1 and Offering Number 2 (the "Memorandum(s)") and shall end 6
months following said starting date, however, said appointment may be extended
upon the mutual agreement of the parties for up to ninety days (the "Offering
Period"). The Placement Agent will commence each Offering upon receipt of a
"final" memorandum from the Company (or ACTEL) for such Offering. Financial
Services accepts such appointment subject to the terms and conditions herein and
shall on a best efforts basis endeavor to procure subscriptions for the
Securities from Purchasers who satisfy the Company that they qualify as
Purchasers. Financial Services shall continue as Agent until the termination
of the Offering Period or as such Offering Period may be extended. Financial
Services and Company shall agree as to the states in which the Securities are to
be offered, provided, however, that Financial Services, at its sole discretion,
may decline to offer the Securities in any state.
Subject to the observance of and performance by the parties hereto of all
their obligations to be observed and performed hereunder, and to the execution
and delivery by Financial Services of a copy of this Agreement as hereinafter
provided, Financial Services accepts such agency and agrees to use its best
efforts during the Offering Period to procure subscribers for the Securities on
the terms and conditions set forth herein and in the Memorandums. The agency of
Financial Services hereunder, which is coupled with an interest, is not
terminable by the Company without Financial Services' written consent or in the
event of a continuing material breach of this Agreement by Financial Services.
Further, Financial Services may cancel, suspend or take whatever action
necessary in the event, Financial Services, in its sole discretion, determines
the said cancellation and/or suspension is in the best interest of the Company,
Financial Services or the Purchasers.
III. PRIVATE PLACEMENT:
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The Company agrees with Financial Services that, whether or not the
transactions contemplated by this Agreement are consummated or this Agreement is
terminated, the Company and its officers, directors, agents and employees will
hold the identity of Purchasers (and the persons to or from whom a subscription
to Securities was offered or received, as the case may be), by Financial
Services in confidence, except to the extent required by the Company's dealings
with governmental or self regulatory agencies, or as otherwise required by law,
it being understood that the agreement set forth in this sentence will survive
any termination or expiration of the agency of Financial Services and of this
Agreement.
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If subscriptions for more than the total number of Securities are received
and the Company does not elect to authorize additional Securities to be sold,
the order in which subscriptions are accepted by the Company shall govern the
selection of Purchasers.
The Company may introduce Purchasers to Financial Services and Financial
Services will make a "best efforts basis" to procure executed Subscription
Agreements from these investors. Financial Services will have the option to
introduce Purchasers to the Company. The Company and Financial Services both
agree, they each, in their sole discretion, have the right to reject any and all
proposed purchasers of the Securities for any reason.
Financial Services, may, at its sole option elect to employ one or more
brokers and/or Broker Dealers in order to form a Selling Group, so long as all
members of the Selling Group are duly registered under the Securities Exchange
Act of 1934, as amended (the "1934 Act") and are in compliance with all aspects
of the 1934 Act and the NASD Conduct Rules.
IV. CLOSING:
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An Initial Closing for the sale of Securities shall be held at the office
of Financial Services, or at such other place as the parties hereto shall
mutually agree. Thereafter there may be additional closings as mutually agreed
to from time to time by the parties (the Initial Closing and subsequent closings
collectively herein a "Closing") and all Closings shall be subject to the
disbursement of funds as set out in Section V below, (the "Initial Closing").
V. ESCROW AGREEMENT:
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All proceeds subscribed to and received as a result of the Offerings shall
be deposited into an account (the "Escrow Account") pursuant to an acceptable
Escrow Agreement to be entered into between the Company, the Placement Agent and
an Escrow Agent. As a result of either Offering Number 1 or Offering Number 2
or as a combination of the sales from both Offerings, the minimum amount that
must be obtained and deposited into the Escrow Account is Two Million Five
Hundred Thousand and 00/100 Dollars, ($2,500,000.00), (the "Minimum"), and such
Minimum must be deposited on or before May 31, 2000. In the event that less
than the Minimum is raised by the Placement Agent, then all funds received by
the Placement Agent and deposited into the Escrow Account will be returned to
such Purchasers with such interest or earnings as have actually been earned.
When the Minimum has been raised, the funds in the Escrow Account will be
released pursuant to a written request by both the Placement Agent and the
Company.
VI. COMPENSATION:
-------------
As compensation for Financial Services' services, the Company hereby agrees
to pay Financial Services as follows:
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(a) As partial payment for its services prior to the date of this
Agreement, Berthel acknowledges receipt of payment of Thirty Thousand Dollars
($30,000). In addition the Company will pay to Placement Agent a monthly
retainer fee equal to Fifteen Thousand Dollars ($15,000) with the first payment
due on January 15, 2000 and an additional monthly payment of Fifteen Thousand
Dollars ($15,000) due on the 15th of each subsequent month during the term of
this Agreement (the "Monthly Retainer Fees").
(b) At each Closing and upon the receipt by the Company of the proceeds
of the Offerings, the Company shall pay the Placement Agent as follows: (i)
Offering Number 1- A Private Placement Fee of 5% of the amount raised as a
result of the sale of the Units, however, as relates to the sale of Units which
are the result of conversion of existing debt by insiders, officers and/or
directors (the "Insiders"), which because of the size of the Insider's existing
debt, the amount to be converted may or may not equate to an entire Unit, the
Placement Agent will be paid a fee equal to 2% of the value of the Promissory
Notes which are a part of each Unit converted to by the Insiders and 3% of the
value of the ACTEL stock which are a part of each Unit converted to by the
Insiders; and Offering Number 2- a Private Placement Fee of 3% of the value of
the ACTEL stock which is sold as part of the Offering; and, (ii) as a part of
Offering Number 1 and Offering Number 2, the Company will issue to the
Placement Agent Warrants for shares of common stock equivalent to ten percent
(10%) of the equity or subordinated debt securities raised by Placement Agent
(the "Warrants") and the Placement Warrants shall be priced at one hundred ten
percent (110%) of the market price of the Company common stock as of the Closing
date when the Warrants were issued and will be exercisable for a minimum for
five years from the date of issuance to the Placement Agent. The parties agree
that the price of and the number of Warrants issued to the Placement Agent will
be adjusted proportionately if necessary, in the event the Warrants do not
convert into common stock on a one to one basis. The Warrant to be issued at
the time of Closing will contain terms and conditions normally contained in a
Warrant of this type and size. The Warrant may be transferable at the sole
discretion of the Placement Agent subject to compliance with applicable
Securities laws.
(c) The Company shall pay to Placement Agent a fee of three percent
(3%) on the sale of any assets or subsidiaries of the company (with the
exception of the sale of the PIC/ATN subsidiary to ACTEL), and a fee equal to
One Hundred Thousand Dollars ($100,000) for producing a fairness Opinion for the
sale of any individual Company assets or subsidiaries (including such sales to
affiliates).
(d) Upon the closing of any Merger wherein the Company merges with or
sells to another entity (including specifically, but without limitation,
Xxxxxx.xxx) in a transaction involving either a stock or asset purchase
transaction, the Company shall pay Placement Agent a Success Fee for a completed
merger or sale, in whole or in part, calculated as a percentage of the Aggregate
Merger or Sale Price according to the following schedule: 5% of the first $1
Million, 4% of the second $1 Million, 3% of the third $1 Million, 2% of the
fourth $1 Million and 1% above $4 million of the Aggregate Merger or Sale Price.
As used in herein, the term Aggregate Merger or Sale Price shall be defined as
the present value of the sum of consideration paid by the Acquiror to or for the
Company or its shareholders including (i) cash, (ii) the face amount of any
installment notes, (iii) the amount of any debt, including long-term or current
debt issued in connection with
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the transaction, (iv) the balance of any debt assumed by the Acquiror, (v) the
fair market value of equity or any equity interest(s) issued to the Company or
its shareholders, and (vi) the value of any subsequent or contingent payments
including, but not limited to, earnouts, non-compete payments and any other
compensation paid. For earnouts and other payments that are not readily
ascertainable at closing, Placement Agent will be due its applicable Success Fee
as those amounts are paid, unless otherwise mutually agreed upon by both parties
to this Agreement.
(e) If Financial Services employs a selling group, any compensation
paid to said selling group shall be paid by Financial Services and all members
thereof shall be registered broker-dealers.
(f) Whether or not a Closing takes place, the Company agrees to
reimburse Financial Services for all reasonable and customary out-of-pocket
expenses incurred by Financial Services as a result of its activities as Agent
for Xxxxxxx, including but not necessarily limited to all due diligence, road
shows, travel, mailing, legal counsel, accounting, Blue Sky fees, registration
fees, printing and marketing expenses. Such expense reimbursement shall be
payable as billed by Financial Services.
Notwithstanding the foregoing, if the total amount paid to Financial
Services pursuant to this Article exceeds the amount permitted by the laws and
regulations of any state in which the Shares are offered (the "Permitted
Compensation"), Financial Services agrees to delay receipt of such fees until
the payment of Agent's compensation is less than or equals the Permitted
Compensation, and if the Agent's compensation to be paid pursuant to this
agreement exceeds at the final Closing the Permitted Compensation, then the
excess over Permitted Compensation shall be waived.
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VII. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY:
---------------------------------------------------------------
The Company warrants and agrees as follows:
(a) (i) The Company has authorized and reserved a sufficient number of
shares of Common Stock for issuance in connection with the Offering.
(ii) Prior to the sale of the Securities to any Offeree, pursuant to
Offering Number 1, such Offeree or any person advising such Offeree shall: (i)
be furnished by the Company, a copy of Memorandums containing information
regarding the Company and its business, and (ii) be given an opportunity to ask
questions and receive answers from the Company, its officers and directors
concerning the terms and conditions of an investment in the Securities and to
obtain any additional information which the Company possesses or could acquire
without unreasonable effort or expense that was necessary to verify the accuracy
of any information furnished to the investor. Prior to the sale of the
Securities to any Offeree pursuant to Offering Number 2, the Offeree shall be
furnished with a copy of the Memorandum for Offering Number 2.
(iii) The Memorandums relating to Offering Number 1, the
subscription documents, and any other material the Company formally approves as
offering materials will constitute all of the offering materials in connection
with the Offering Number 1 (collectively the "Company Information") and will not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the Company Information not misleading. The Company will
deliver to Financial Services at its above address such number of copies of the
Memorandums (and any amendment thereto) and any additional mutually agreed upon
material, prepared by the Company and approved by Financial Services and its
counsel as aforesaid, as Financial Services shall reasonably request. To the
knowledge of the Company, the Memorandum for Offering Number 2 does not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the Information not misleading.
(b) During the Offering and at all times at or prior to the final
Closing, the Memorandums, and all supplements and amendments thereto, will not
contain an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of circumstances
under which they were made, not misleading.
(c) If during the Offering Period or at any time at or prior to the
Closing any event relating to or affecting the Company or any other event shall
come to the attention of the Company as a result of which it would or might be
appropriate to amend or supplement the Memorandums in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, the Company will notify Financial Services immediately of such
event and, if Financial Services' counsel and counsel for the Company are of the
opinion that it is necessary to amend or supplement the Memorandums, the Company
will forthwith prepare and furnish to Financial Services a reasonable number of
copies of an amendment or amendments of, or supplement or supplements to, the
Memorandums which will so amend or supplement the Memorandums, and the same
shall be satisfactory in form and substance to Financial Services and its
counsel. The Company will promptly furnish to Financial Services such
information with respect to the Company or the Memorandums as Financial Services
may from time to time reasonably request.
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(d) The Company shall furnish or make available to Financial Services
and its agents any and all documentation and information reasonably requested by
Financial Services.
(e) The Company shall not, within a period of six (6) months after
completion of the last sale of Securities contemplated herein offer or sell any
Securities, in transactions which might be deemed a part of the offer and sale
of Securities for purposes of the 1933 Act unless the Company delivers to
Financial Services, an opinion of counsel satisfactory to Financial Services,
regarding whether the securities offered or sold or the offer or sale of such
securities did not or will not violate any securities laws.
(f) The Company and its agents, affiliates and employees (i) have not
taken or failed to take any action, whether in connection with the Offering or
otherwise, which action or failure to act conflicts or would conflict with, or
otherwise make unavailable, the exemption for the Offering and sale of the
Securities from the registration provision of the 1933 Act afforded by the 1933
Act, and (ii) will not at any time, either directly or indirectly, sell, offer
for sale, solicit offers to subscribe for or buy, or otherwise approach or
negotiate in respect of, the Securities or any other interest in the Company
prior to or during the Offering Period, except as provided for in this
Agreement, if such activity would or might cause the Offering contemplated
hereby to be not exempt from the registration provisions of the 1933 Act
pursuant to the 1933 Act, or to violate the securities or 'blue sky' laws of any
state or other jurisdiction which Financial Services shall designate as one in
which Financial Services or any broker/dealer employed by Financial Services
intends to sell the Securities or offer the Securities for sale.
(g) All actions required to be taken at or prior to the Closing by the
Company as a condition to the offer and sale of the Securities to qualified
subscribers have been taken or will have been taken prior to the Closing; and
upon (i) payment of the purchase price specified in each subscription agreement
and acceptance of each subscription agreement by the Company, and (ii) the
execution and delivery by each subscriber of such additional documents, if any,
as may reasonably be requested by the Company or as set forth in the
Memorandums, Securities will be issued or sold to each subscriber as set forth
in the Memorandums.
(h) The Company is duly incorporated, validly existing and in good
standing under the laws of the State of Iowa with full power and authority to
conduct its business as it is currently being conducted and to own its assets.
The Company is duly qualified to do business as a foreign corporation in good
standing in each other jurisdiction where such qualification is required by
virtue of the conduct of the Company's business or ownership of its assets,
except where the failure to be so qualified would not have a material adverse
effect on its business or properties; and has secured, or is in the process of
securing, any other authorizations, approvals, permits and orders required by
law for the conduct by the Company of its business as it is currently being
conducted.
(i) The Company will use its best efforts, in cooperation with
Financial Services, promptly to establish the exemption of the Securities from
qualification or registration, under the securities or "blue sky" laws of such
states and jurisdictions as Financial Services may designate as those in which
Financial Services or any broker/dealers employed by it intends to sell, or
offer for sale, the Securities; it will furnish Financial Services' counsel with
copies of all written communications and documentation, whether sent or
received, with regard to the foregoing and the Company will pay all costs and
expenses incurred in connection with the foregoing.
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(j) Except as may be otherwise prohibited by applicable "blue sky"
laws, the Company will make available to Financial Services, and Financial
Services is authorized on behalf of the Company to make available to each
Purchaser and his representatives with respect to this investment, prior to the
sale of Securities to such Purchaser, the opportunity to ask questions of, and
receive answers from the Company concerning the Company, or the terms and
conditions of the Offerings which the Company possesses or can acquire without
unreasonable effort or expense that is necessary to verify the accuracy of the
information contained in the Memorandums and of any other information referred
to herein.
(k) The Company will use its best efforts to meet and/or maintain all
requirements, established by the U.S. Congress, the Internal Revenue Service,
any agency of the federal government or the federal or state courts necessary
for the classification of the Company for federal income tax purposes to be
taxable as a corporation.
(l) The Company will complete, execute, deliver and file with the
Securities and Exchange Commission such copies of Form D, satisfactory to
Financial Services and its counsel in form and substance, as and when required
by Regulation D, if it is determined that Regulation D is available and
applicable for either of the Offerings.
(m) For a period of five (5) years following the final Closing, the
Company will deliver to Financial Services, all internal financial statements
and/or any additional financial information generally provided to the Company's
Board of Directors, lending institutions and/or any other party, other than the
Company's executive officers. In the event the Company should become a
reporting Company, the Company shall simultaneously provide Financial Services
with all financial information which it normally provides to its Shareholders in
lieu of the information required by the first sentence of this paragraph.
(n) The Common Stock of the Company, when issued upon conversion of the
Notes, will represent validly authorized, duly issued and fully paid and
non-assessable shares of the Company, and the issuance thereof will not conflict
with the Articles of Incorporation or Bylaws of the Company nor with any
outstanding warrant, option, call, pre-emptive right or commitment of any type
relating to the Company's capital stock.
(o) There is no litigation or governmental proceeding pending or
threatened against the Company which would materially and adversely affect the
business or financial condition of the Company. All litigation to which Xxxxxxx
is a party is set forth in schedule VII (o) attached hereto.
(p) Except as set out on Schedule VII (p) attached hereto, the Company
is not in material default in the performance of any obligation, agreement or
condition contained in any agreement of the Company, and the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby will not conflict with, or constitute a breach of or default under the
Company's Articles of Incorporation or Bylaws, any material agreement, indenture
or instrument by which the Company is bound, or any law, administrative rule,
regulation or decree of any court or any governmental body or administrative
agency applicable to the Company.
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(q) The Agreement has been duly and validly authorized, executed and
delivered by or on behalf of the Company and, except insofar as the
enforceability of the indemnification provisions herein may be subject to
challenge, constitutes the valid and legally binding agreement of the Company.
VIII. CONDITIONS OF THE COMPANY'S OBLIGATIONS:
--------------------------------------------
The obligations of the Company are subject to the accuracy of and
compliance with Financial Services' representations, warranties and covenants in
all material respects, to the observance and performance by Financial Services
of its obligations hereunder in all material respects, and to the following
further conditions (any of which may be waived in writing in whole or in part by
the Company). If any of the conditions specified in this Section shall not have
been fulfilled when and as required by this Agreement to be fulfilled, all the
obligations of the Company under this Agreement may be terminated in writing or
by telegram at any time at or prior to the Closing.
(a) At the Closings, the Company may request Financial Services'
certificate, dated the date of the Closings, (i) as to the number of investors
to whom Financial Service and all broker/dealers employed by Financial Services
sold Securities, (ii) as to the number of persons, listed by state, to whom
Financial Services shall have made offers to subscribe for Securities, from whom
offers to subscribe for or buy Securities shall have been received, and (iii)
stating that the representations and Warranties of Financial Services contained
herein are true and correct with the same effect as though made expressly at and
as of the time of Closing.
(b) Financial Services shall not have taken or failed to take any
action, at any time at or prior to the Closing, which, in the opinion of the
Company conflicts or would conflict with, or otherwise makes unavailable, the
exemption for the offering and sale of the Securities from the registration
provisions of the 1933 Act afforded by the 1933 Act.
IX. REPRESENTATIONS, WARRANTIES AND COVENANTS OF FINANCIAL SERVICES:
----------------------------------------------------------------------
Financial Services represents and warrants to and agrees with the Company
as follows:
(a) Financial Services is duly registered under the Securities Exchange
Act of 1934 (the "1934 Act"), is a member in good standing of the NASD, is in
compliance with all rules and regulations under the 1934 Act and the NASD
Conduct Rules and is duly registered as a broker/dealer in every state in which
it intends to offer or sell the Securities.
(b) Prior to the date hereof, Financial Services and its officers,
agents and employees have not taken or failed to take any action, whether in
connection with the aforesaid solicitation or otherwise, which action or failure
to act conflicts or would conflict with, sale of the Securities from the
registration provisions of the 1933 Act afforded by the 1933 Act; and hereafter
they will not, either directly or indirectly, sell, offer for sale, solicit
offers to subscribe for or buy, or otherwise approach or negotiate in respect
of, the Securities or any other interest in the Company prior to or during the
Offering Period, except as provided for in this Agreement.
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(c) Financial Services is not subject to any disqualification
provisions of Rule 262 of Regulation A.
(d) This Agreement has been duly and validly authorized, executed and
delivered by and on behalf of Financial Services and, except insofar as the
enforceability of the indemnification provision herein may be subject to
challenge, constitutes the valid and legally binding agreement of Financial
Services.
(e) The execution and delivery of this Agreement, the observance and
performance hereof, and the consummation of the transactions contemplated herein
and in the Memorandums, does not and will not constitute a breach of or a
default under, any instrument or agreement by which Financial Services is bound,
and does not and will not contravene any existing law, decree or order
applicable to Financial Services.
(f) Financial Services will not make an offer or sale of Securities on
the basis of any communications or documents relating to the Company or the
Securities, except the Memorandums and the exhibits thereto, other documents
supplied or prepared by the Company and delivered to Financial Services for use
in making an offer or sale of Securities, and any cover or transmittal letter in
respect of the foregoing. Financial Services will conduct the Offerings in
compliance with all applicable federal and state securities laws and Financial
Services will not make any general advertisement or general solicitation
(including communications published in any newspaper, newsletter, magazine, the
Internet, or other broadcast) in connection with the Offerings.
(g) Financial Services will offer and sell Securities only to
accredited Investors, as defined in Rule 501 promulgated under the 1933 Act.
(h) In making any offer or sale of Securities, Financial Services shall
comply with the provisions of the 1933 Act, the 1934 Act, and the securities or
"blue sky" laws of the jurisdictions in which Financial Services makes offers or
sales of Securities.
(i) Financial Services will exercise reasonable care to assure that the
Purchasers to whom it offers Securities are not underwriters within the meaning
of Section 2(l1) of the 1933 Act. In that connection, Financial Services will
make reasonable inquiry to determine that the Purchaser is acquiring the
Securities for his, her or its own account for investment purposes.
X. CONDITIONS OF FINANCIAL SERVICES' OBLIGATIONS:
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Financial Services' obligations hereunder are subject to the accuracy of
and compliance by the Company with representations, warranties and covenants
herein of the Company, in all material respects, to the observance and
performance by the Company of its obligations hereunder, in all material
respects, and under the Memorandums, and to the following further conditions
(any of which may be waived in writing in whole or in part by Financial
Services):
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(a) After each Closing, Financial Services may request in writing
certificates dated the day of the Closing, signed by the Company to the effect
that all representations and warranties of the Company contained herein are true
and correct with the same effect as though made expressly at and as of the time
of the Closing.
(b) Financial Services' counsel shall have been furnished promptly,
upon written request, such instruments and other documents as they may
reasonably require for the purpose of enabling them to pass upon the sales of
the Securities as herein contemplated and related proceedings and in order to
evidence the accuracy and completeness of any and all the representations or
warranties, or the fulfillment of any and all of the conditions, contained in
this Agreement or in the Memorandums, and all such instruments and other
documents shall be reasonably satisfactory in form and substance to such
counsel; all actions taken by the Company in connection with the sale of the
Securities as herein contemplated shall be reasonably satisfactory to Financial
Services and its counsel; and the Memorandums (and any supplements or amendments
thereto) shall, at all times during the Offering Period and at the time of
Closing, be reasonably satisfactory in form and substance to Financial Services
and its counsel.
(c) Prior to each Closing, the Company agrees to deliver to the
Placement Agent an opinion of the Company's counsel reasonably satisfactory in
form and substance to the Placement Agent and its counsel, dated as of or prior
to the date of the Closing, to the effect that:
(i) The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Iowa, with
corporate power to carry on the business described in the Memorandums.
(ii) The Execution and delivery of this Agreement and the issuance
of the Securities will not violate or conflict with the Articles of
Incorporation or By laws of the Company, or any material agreement known to such
counsel to which the Company is a party.
(iii) This Agreement has been duly authorized by all requisite
corporate action, executed and delivered by the Company, and constitutes a
valid, binding and enforceable obligation of the Company in accordance with its
terms, except as rights of indemnity thereunder may be limited by federal or
state securities laws and enforcement may be limited by applicable bankruptcy,
insolvency, moratorium or similar laws generally affecting the enforcement of
creditors' rights or by judicial limitations on the right of specific
performance.
(iv) Similar opinions as related in paragraphs (b) and (c) above,
regarding the Escrow Agreement.
(v) With the exception of the sale of the ACTEL shares which are
sold as a part of Offering Number 1 and Offering Number 2, the Securities, when
executed and delivered by the Company, have been duly authorized and will
constitute valid, binding and enforceable obligations of the Company in
accordance with their respective terms, except as enforcement may be limited by
applicable bankruptcy, insolvency, moratorium or similar laws generally
affecting the enforcement of creditors' rights or by judicial limitations on the
right of specific performance.
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(vi) To the best of its knowledge, such counsel knows of no
litigation or governmental investigation against the Company except as shown as
Schedule VII (o).
(vii) Based on the assumption that the Securities are only sold to
Accredited Investors, and that the Company is not an affiliate of ACTEL, the
Offerings and particularly the sale of the ACTEL Preferred Stock will be exempt
from registration under any federal securities laws.
(d) If any of the conditions specified in this Section shall not have
been fulfilled when and as required by this Agreement to be fulfilled, all
Financial Services obligations under this Agreement may be terminated in writing
or by telegram at any time at or prior to the Closing.
XI. NOTICE:
-------
Except where otherwise herein provided, all notices, information, consents
and other communications required or permitted by the provision of this
Agreement to be given or sent by any party, shall be in writing and shall be
deemed to be properly given when: (i) delivered personally to any of the
hereinafter designated addresses or the named representatives thereof; (ii)
mailed by prepaid certified or registered mail, return receipt requested; (iii)
when sent by prepaid telephone facsimile, telegram, cable or telex; (iv) when
sent for overnight delivery by recognized commercial carrier; and in each
instance addressed to such party at the respective address as follows:
IF TO THE COMPANY:
---------------------
Xxxxxxx Communications Corporation
0000 00xx Xxxxxx XX
Xxxxx Xxxxxx, XX 00000
IF TO FINANCIAL SERVICES:
----------------------------
XXXXXXX XXXXXX & COMPANY FINANCIAL SERVICES, INC.
000 Xxxxxx Xxxxxx XX
X.X. Xxx 00000
Xxxxx Xxxxxx, Xxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxx
Either party may at any time change its respective designated address above
by giving notice thereof to the other parties hereto.
XII. INDEMNIFICATION:
----------------
(a) The Company agrees to indemnify and hold harmless Financial
Services, and each person, if any, who controls Financial Services, and each of
Financial Services' officers, directors, agents and employees:
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(1) against any and all loss, liability, claim, damage and expense
whatsoever arising out of a breach by the Company of any of its representations
and warranties and covenants herein or out of any untrue statement or alleged
untrue statement of a material fact contained in the Memorandums or any document
filed with the securities agency of any state or other jurisdiction or the
omission or alleged omission therefrom of a material fact necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading, except to the extent that such untrue statement or alleged
untrue statement or omission or alleged omission is made in reliance upon and in
conformity with written information furnished by Financial Services or its
affiliates, officers, directors, agents, employees or counsel specifically for
use with reference to Financial Services or its affiliates in the preparation of
the Memorandums or any document filed with the securities agency of any state or
other jurisdiction;
(2) against any and all loss, liability, claim, damage and expense
whatsoever to the extent of the aggregate amount paid in settlement of any
litigation, commenced or threatened, or of any claim whatsoever, based upon any
breach or untrue or alleged untrue statement or omission or alleged omission
referred to in paragraph (1) above, if such settlement if effected with the
written consent of the Company; and
(3) against any and all expense whatsoever incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, based upon any breach or untrue statement
or omission, or any alleged untrue statement or omission, referred to above, to
the extent that any such expense is not paid as provided above.
(b) Financial Services agrees to indemnify and hold harmless the
Company, each of its directors, officers, agents and each person who controls
the Company within the meaning of Section 15 of the Act against any losses,
claims, damages, or liabilities to which the Company or any such director, or
controlling person may become subject, under the Act, the 1934 Act, the common
law, or otherwise, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereof) arise out of, or are based upon(i) any breach by
Financial Services of any of its representatives, warranties and covenants
herein, (ii) any untrue statement or alleged untrue statement of a material
fact contained in the Memorandums or any amendment thereof, or the omission or
alleged omission to state in the Memorandums or any amendment thereof or
supplement thereto, a material fact required to be stated therein or necessary
to make the statements therein not misleading; or (iii) any untrue statement or
alleged untrue statement of a material fact contained in any application or
other statement executed by the Company or by Financial Services and filed in
any jurisdiction in order to obtain an exemption from registration for the
Securities or the sale thereof from the securities laws of such jurisdiction, or
the omission or alleged omission to state in such application or statement a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; in each case of (ii) or (iii) above to the extent, but only the
extent, that such untrue statement, or alleged untrue statement, or omission, or
alleged omission, was made in reliance upon and in conformity with written
information furnished to the Company by, or on behalf of, Financial Services in
writing specifically for use in the preparation of the Memorandums or any
amendment thereof or supplement thereto, or in any application or other
statement executed by the Company or by Financial Services and filed in any
jurisdiction; and will reimburse any legal or other expenses reasonably incurred
by the Company or any such director or controlling person in connection with
investigating or defending against any such loss, claim, damage, liability or
action. This indemnity agreement is in addition to any liability, which the
Agent may otherwise have.
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(c) Within a reasonable time after the assertion of any claim against
any party hereto (or any person who controls such party) in connection with the
Offering or sale of the Securities, such party shall give notice of such claim
to the other parties hereto. A contributor under this Section shall have the
right to participate, at such party's own expense and through counsel of such
party's own choosing, in contesting and defending against any such claim and in
any litigation, proceedings or settlement negotiation with respect thereto. The
indemnity set forth in this Section shall be in addition to any liability that
either of the parties hereto may otherwise have.
(d) The indemnity agreement contained in paragraph XII herein shall
remain operative and in full force and effect regardless of any termination of
the Agreement or of any investigation made by or on behalf of the Company or
Financial Services, and shall survive the delivery of and payment for the
Securities.
XIII. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE CLOSING:
--------------------------------------------------------------------
All representations, warranties, covenants and agreements contained in this
Agreement or contained in certificates submitted pursuant thereto shall remain
operative and in full force and effect, regardless of any investigation made by
or on behalf of Financial Services or any person who controls Financial
Services, or by or on behalf of the Company, or any person who controls the
Company and shall survive the Closing.
XIV. PARTIES:
--------
This Agreement shall inure to the benefit of and be binding upon Financial
Services, the Company, and their respective successors, this Agreement and the
conditions and provisions hereof being intended to be and being for the sole and
exclusive benefit of no other person, except as otherwise herein specifically
provided.
XV. GOVERNING LAW:
---------------
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of Iowa applicable to agreements made and to be performed
wholly within such state.
XVI. COUNTERPARTS:
-------------
This Agreement may be executed in a number of counterparts, all of which
together shall for all purposes constitute one Agreement, binding on all parties
notwithstanding that all parties have not signed the same counterpart.
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XVII. MISCELLANEOUS:
--------------
All titles or captions of Sections contained herein are for convenience
only and shall not be deemed a part hereof. All pronouns and any variations
thereof shall be deemed to refer to the masculine, feminine, neuter, singular or
plural, as the identity of the person or persons or entity or entities may
require. The terms "person" and "persons" shall include reference to
individuals, partnerships, corporations, trusts and other entities. The terms
"law" and "laws" shall include, without limitation, any rules and regulations
promulgated under a statute. Any payment of a sum to be made hereunder by the
Company to Financial Services shall be made by a check payable to the order of
Financial Services.
XVIII. ADVISORY AGREEMENT TERMINATED:
--------------------------------
The December 1999 financial advisory agreement executed between the Company
and Financial Services is hereby terminated in its entirety.
XIX. TERMINATION:
-----------
This engagement may be terminated by the Company or by Financial Services
at any time after 180 days with or without cause upon written notice to that
effect to the other party, but no such termination shall affect Financial
Service's rights to compensation earned on or prior to such termination, and
Financial Services shall be entitled to reimburse of any reasonable expenses not
previously reimbursed. Financial Services shall be entitled to the compensation
hereinafter provided in the event that at any time prior to the expiration of
eighteen months after expiration or termination of this Agreement a Financing or
Merger is consummated (I) with a lender/investor or merger partner introduced to
the Company by Financial Services or contacted by Financial Services or the
Company during the term of this Agreement or (ii) as a result of the use by the
Company of materials or other work product prepared by Financial Services.
IN WITNESS WHEREOF, both parties hereto execute this Agreement as of the
day and date stated above.
XXXXXXX XXXXXX & COMPANY XXXXXXX COMMUNICATIONS
FINANCIAL SERVICES, INC. CORPORATION
By: By:
--------------------------------------- ----------------------------
Xxxxxx X. Xxxxxxx
President and Chief Executive Officer Chief Financial Officer
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