Nexia Holdings Inc. PLACEMENT AGENT AGREEMENT
Exhibit
10.3
Dated
as
of: August 15, 2005.
GunnAllen
Financial
0000
X.
Xxxxxx Xxxxxx
Xxxxx,
Xxxxxxx 00000
Ladies
and Gentlemen:
The
undersigned, Nexia
Holdings Inc.,
a
Nevada corporation (the "COMPANY"), hereby agrees with Xxxx Xxxxx Financial
(the
"PLACEMENT AGENT") and Dutchess Private Equities Fund II, L.P., a Delaware
Limited Partnership (the "INVESTOR") as follows:
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OFFERING.
The Company hereby engages the Placement Agent to act as its exclusive
placement agent in connection with the Investment Agreement dated August
15, 2005 (the "INVESTMENT AGREEMENT") pursuant to which the Company
shall
issue and sell to the Investor, from time to time, and the Investor
shall
purchase from the Company (the "OFFERING") up to Ten Million Dollars
($10,000,000) of the Company's Class A Voting Common Stock (the
"COMMITMENT AMOUNT"), par value $0.001 per share (the "COMMON STOCK"),
at
price per share equal to the Purchase Price, as that term is defined
in
the Investment Agreement. Pursuant to the terms hereof, the Placement
Agent shall render consulting services to the Company with respect
to the
Investment Agreement and shall be available for consultation in connection
with the advances to be requested by the Company pursuant to the
Investment Agreement. All capitalized terms used herein and not otherwise
defined herein shall have the same meaning ascribed to them as in the
Investment Agreement. The Investor will be granted certain registration
rights with respect to the Common Stock as more fully set forth in
a
Registration Rights Agreement between the Company and the Investor
dated
August 15, 2005 (the "REGISTRATION RIGHTS AGREEMENT"). The documents
to be
executed and delivered in connection with the Offering, including,
but not
limited, to this Agreement, the Investment Agreement, and the Registration
Rights Agreement, and any Prospectus or other disclosure document (
including all amendments and supplements ) utilized in connection with
the
Offering are referred to sometimes hereinafter collectively as the
"OFFERING MATERIALS." The Company's Common Stock is sometimes referred
to
hereinafter as the "SECURITIES." The Placement Agent shall not be
obligated to sell any Securities and this Offering by the Placement
Agent
shall be solely on a "best efforts basis."
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| 2. |
REPRESENTATIONS,
WARRANTIES AND COVENANTS OF THE PLACEMENT AGENT.
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A.
The
Placement Agent represents, warrants and covenants as follows:
(i) The
Placement Agent has the necessary power to enter into this Agreement and to
consummate the transactions contemplated hereby.
(ii) The
execution and delivery by the Placement Agent of this 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, 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 Agreement when executed and delivered by the
Placement Agent, will constitute the legal, valid and binding obligations of
the
Placement Agent, enforceable in accordance with their respective terms, except
to theextent
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 in violation
of
public policy.
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(iii) Upon
receipt and execution of this Agreement the Placement Agent will promptly
forward copies of this Agreement to the Company or its counsel and the Investor
or its counsel.
(iv) The
Placement Agent will not take any action that it reasonably believes would
cause
the Offering to violate the provisions of the Securities Act of 1933, as amended
(the "1933 ACT"), the Securities Exchange Act of 1934 (the "1934 ACT"), the
respective rules and regulations promulgated there under (the "RULES AND
REGULATIONS") or applicable "Blue Sky" laws of any state or
jurisdiction.
(v) The
Placement Agent will use all reasonable efforts to determine (a) whether the
Investor is an Accredited Investor and (b) that any information furnished by
the
Investor is true and accurate. The Placement Agent shall have no obligation
to
insure that (x) any check, note, draft or other means of payment for the Common
Stock will be honored, paid or enforceable against the Investor in accordance
with its terms, or (y) subject to the performance of the Placement Agent's
obligations and the accuracy of the Placement Agent's representations and
warranties hereunder, (1) the Offering is exempt from the registration
requirements of the 1933 Act or any applicable state "Blue Sky" law or (2)
the
Investor is an Accredited Investor.
(vi) The
Placement Agent is a member of the National Association of Securities Dealers,
Inc., and is a broker-dealer registered as such under the 1934 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 applicable
to the Placement Agent's participation in the Offering.
3. REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.
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A.
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The
Company makes to the Placement Agent all the representations and
warranties it makes to the Investor in the Investment Agreement and,
in
addition, represents and warrants as follows:
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(i) The
execution, delivery and performance of each of this Agreement, the Investment
Agreement and the Registration Rights Agreement has been or will be duly and
validly authorized by the Company and is, and with respect to this Agreement,
the Investment Agreement and the Registration Rights Agreement will each be,
a
valid and binding agreement 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 in violation of public policy. The Securities to be issued
pursuant to the transactions contemplated by this Agreement and the Investment
Agreement have been duly authorized and, when issued and paid for in accordance
with (x) this Agreement, the Investment Agreement and the
certificates/instruments representing such Securities, (y) will be valid and
binding obligations of the Company, enforceable in accordance with their
respective terms, except to the extent that (1) the enforceability 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,
and
(2) the enforceability thereof is subject to general principles of equity.
All
corporate action required to be taken for the authorization, issuance and sale
of the Securities has been duly and validly taken by the Company.
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(ii) The
Company has a duly authorized, issued and outstanding capitalization as set
forth herein and in the Investment Agreement. The Company is not a party to
or
bound by any instrument, agreement or other arrangement providing for it to
issue any capital stock, rights, warrants, options or other securities, except
for this Agreement, the agreements described herein and as described in the
Investment Agreement, dated the date hereof and the agreements described
therein. All issued and outstanding securities of the Company, have been duly
authorized and validly issued and are fully paid and non-assessable; the holders
thereof have no rights of rescission or preemptive rights with respect thereto
and are not subject to personal liability solely by reason of being security
holders; and none of such securities were issued in violation of the preemptive
rights of any holders of any security of the Company. As of the date hereof,
the
authorized capital stock of the Company consists of 10,000,000,000 common shares
with 3,189,045,834 issued.
(iii) The
Common Stock to be issued in accordance with this Agreement and the Investment
Agreement has been duly authorized and when issued and paid for in accordance
with this Agreement, the Investment Agreement and the certificates/instruments
representing such Common Stock, will be validly issued, fully-paid and
non-assessable; the holders thereof will not be subject to personal liability
solely by reason of being such holders; such Securities are not and will not
be
subject to the preemptive rights of any holder of any security of the
Company.
4. REPRESENTATIONS,
WARRANTIES AND COVENANTS OF THE INVESTOR.
A. The
Investor makes to the Placement Agent all the representations and warranties
it
makes to the Company in the Investment Agreement and, in addition represents,
warrants and covenants as follows:
(i) The
Investor has the necessary power to enter into this Agreement and to consummate
the transactions contemplated hereby.
(ii) The
execution and delivery by the Investor of this 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, any agreement or instrument to which the Investor
is
a party or by which the Investor or its properties are bound, or any judgment,
decree, order or, to the Investor's knowledge, any statute, rule or regulation
applicable to the Investor. This Agreement when executed and delivered by the
Investor, will constitute the legal, valid and binding obligations of the
Investor, enforceable in accordance with their 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 in
violation of public policy.
(iii)
The
Investor is not, and will not be, as a result of the transactions contemplated
by the Offering Materials a “dealer” within the meaning of the Securities
Exchange Act of 1934 and applicable federal and state securities laws and
regulations. The Investor covenants that in this respect it is and will remain
in compliance with the requirements of applicable “no action” rulings of the
U.S. Securities Exchange Commission.
(iv) The
Investor will promptly forward copies of any and all due diligence
questionnaires compiled by the Investor to the Placement Agent.
(v) The
Investor is an Accredited Investor (as defined under the 1933 Act).
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5. CERTAIN
COVENANTS AND AGREEMENTS OF THE COMPANY.
The
Company covenants and agrees at its expense and without any expense to the
Placement Agent 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
Materials occurring at any time as soon as the Company is either informed or
becomes aware thereof.
B. To
use
its commercially reasonable efforts to cause the Common Stock issuable in
connection with the Equity Line of Credit to be qualified or registered for
sale
on terms consistent with those stated in the Registration Rights Agreement
and
under the securities laws of such jurisdictions as the Placement Agent and
the
Investor shall reasonably request. Qualification, registration and exemption
charges and fees shall be at the sole cost and expense of the
Company.
C. Upon
written request, to provide and continue to provide the Placement Agent and
the
Investor copies of all quarterly financial statements and audited annual
financial statements prepared by or on behalf of the Company, other reports
prepared by or on behalf of the Company for public disclosure and all documents
delivered to the Company's stockholders.
D. To
deliver, during the registration period of the Investment Agreement, to the
Placement Agent upon the Placement Agent's request,
(i) within
forty five (45) days, a statement of its income for each such quarterly period,
and its balance sheet and a statement of changes in stockholders' equity as
of
the end of such quarterly period, all in reasonable detail, certified by its
principal financial or accounting officer;
(ii) within
ninety (90) days after the close of each fiscal year, its balance sheet as
of
the close of such fiscal year, together with a statement of income, a statement
of changes in stockholders' equity and a statement of cash flow for such fiscal
year, such balance sheet, statement of income, statement of changes in
stockholders' equity and statement of cash flow to be in reasonable detail
and
accompanied by a copy of the certificate or report thereon of independent
auditors if audited financial statements are prepared; and
(iii) a
copy of
all documents, reports and information furnished to its stockholders at the
time
that such documents, reports and information are furnished to its stockholders.
(iv) a
copy of
all documents, reports and information furnished to the Investor at the time
that such documents, reports and information are furnished to the
Investor.
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E. To
comply
with the terms of the Offering Materials.
F. To
ensure
that any transactions between or among the Company, or any of its officers,
directors and affiliates be on terms and conditions that are no less favorable
to the Company, than the terms and conditions that would be available in an
"arm's length" transaction with an independent third party.
6. INDEMNIFICATION.
A. The
Company hereby agrees that it will indemnify and hold the Placement Agent and
each officer, director, shareholder, employee or representative of the Placement
Agent and each person controlling, controlled by or under common control with
the Placement Agent within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act or the SEC's Rules and Regulations promulgated there under
(the "Rules and Regulations"), harmless from and against any and all loss,
claim, damage, liability, cost or expense whatsoever (including, but not limited
to, any and all reasonable legal fees and other expenses and disbursements
incurred in connection with investigating, preparing to defend or defending
any
action, suit or proceeding, including any inquiry or investigation, commenced
or
threatened, or any claim whatsoever or in appearing or preparing for appearance
as a witness in any action, suit or proceeding, including any inquiry,
investigation or pretrial proceeding such as a deposition) to which the
Placement Agent or such indemnified person of the Placement Agent may become
subject under the 1933 Act, the 1934 Act, the Rules and Regulations, or any
other federal or state law or regulation, common law or otherwise, arising
out
of or based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in (a) Section 4 of this Agreement, (b) the Offering
Materials (except those written statements relating to the Placement Agent
given
by an indemnified person for inclusion therein), (c) any application or other
document or written communication executed by the Company or based upon written
information furnished by the Company filed in any jurisdiction in order to
qualify the Common Stock under the securities laws thereof, or any state
securities commission or agency; (ii) the omission or alleged omission from
documents described in clauses (a), (b) or (c) above of a material fact required
to be stated therein or necessary to make the statements therein not misleading;
or (iii) the breach of any representation, warranty, covenant or agreement
made
by the Company in this Agreement. The Company further agrees that upon demand
by
an indemnified person, at any time or from time to time, it will promptly
reimburse such indemnified person for any loss, claim, damage, liability, cost
or expense actually and
reasonably
paid by the indemnified person as to which the Company has indemnified such
person pursuant hereto. Notwithstanding the foregoing provisions of this
Paragraph 6(A), any such payment or reimbursement by the Company of fees,
expenses or disbursements incurred by an indemnified person in any proceeding
in
which a final judgment by a court of competent jurisdiction (after all appeals
or the expiration of time to appeal) is entered against the Placement Agent
or
such indemnified person based upon specific finding of fact as to the Placement
Agent or such indemnified person's gross negligence or willful misfeasance
will
be promptly repaid to the Company.
B. The
Placement Agent hereby agrees that it will indemnify and hold the Company and
each officer, director, shareholder, employee or representative of the Company,
and each person controlling, controlled by or under common control with the
Company within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act or the Rules and Regulations, harmless from and against any and all
loss, claim, damage, liability, cost or expense whatsoever (including, but
not
limited to, any and all reasonable legal fees and other expenses and
disbursements incurred in connection with investigating, preparing to defend
or
defending any action, suit or proceeding, including any inquiry or
investigation, commenced or threatened, or any claim whatsoever or in appearing
or preparing for appearance as a witness in any action, suit or proceeding,
including any inquiry, investigation or pretrial proceeding such as a
deposition) to which the Company or such indemnified person of the Company
may
become subject under the 1933 Act, the 1934 Act, the Rules and Regulations,
or
any other federal or state law or regulation, common law or otherwise, arising
out of or based upon (i) the conduct of the Placement Agent or its officers,
employees or representatives in willful violation of any of such laws and
regulations while acting as Placement Agent for the Offering or (ii) the
material breach of any representation, warranty, covenant or agreement made
by
the Placement Agent in this Agreement (iii) any false or misleading information
provided to the Company by one of the Placement Agent's indemnified
persons.
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C. The
Investor hereby agrees that it will indemnify and hold the Placement Agent
and
each officer, director, shareholder, employee or representative of the Placement
Agent, and each person controlling, controlled by or under common control with
the Placement Agent within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act or the Rules and Regulations, harmless from and against
any
and all loss, claim, damage, liability, cost or expense whatsoever (including,
but not limited to, any and all reasonable legal fees and other expenses and
disbursements incurred in connection with investigating, preparing to defend
or
defending any action, suit or proceeding, including any inquiry or
investigation, commenced or threatened, or any claim whatsoever or in appearing
or preparing for appearance as a witness in any action, suit or proceeding,
including any inquiry, investigation or pretrial proceeding such as a
deposition) to which the Placement Agent or such indemnified person of the
Placement Agent may become subject under the 1933 Act, the 1934 Act, the Rules
and Regulations, or any other federal or state law or regulation, common law
or
otherwise, arising out of or based upon (i) the conduct of the Investor or
its
officers, employees or representatives in its acting as the Investor for the
Offering or (ii) the material breach of any representation, warranty, covenant
or agreement made by the Investor in the Offering Materials (iii) any false
or
misleading information provided to the Placement Agent by the Investor or one
of
the Investor's indemnified persons.
D. The
Placement Agent hereby agrees that it will indemnify and hold the Investor
and
each officer, director, shareholder, employee or representative of the Investor,
and each person controlling,
controlled by or under common control with the Investor within the meaning
of
Section 15 of the 1933 Act or Section 20 of the 1934 Act or the Rules and
Regulations, harmless from and against any and all loss, claim, damage,
liability, cost or expense whatsoever (including, but not limited to, any and
all reasonable legal fees and other expenses and disbursements incurred in
connection with investigating, preparing to defend or defending any action,
suit
or proceeding, including any inquiry or investigation, commenced or threatened,
or any claim whatsoever or in appearing or preparing for appearance as a witness
in any action, suit or proceeding, including any inquiry, investigation or
pretrial proceeding such as a deposition) to which the Investor or such
indemnified person of the Investor may become subject under the 1933 Act, the
1934 Act, the Rules and Regulations, or any other federal or state law or
regulation, common law or otherwise, arising out of or based upon (i) the
conduct of the Placement Agent or its officers, employees or representatives
in
willful violation of any of such laws and regulations while acting as the
Placement Agent for the Offering or (ii) the material breach of any
representation, warranty, covenant or agreement made by the Placement Agent
in
this Agreement (iii) any false or misleading information provided to the
Investor by one of the Placement Agent's indemnified persons.
E. Promptly
after receipt by an indemnified party of notice of commencement of any action
covered by Section 6(A), (B), (C) or (D), the party to be indemnified shall,
within five (5) business days, notify the indemnifying party of the commencement
thereof; the omission by one (1) indemnified party to so notify the indemnifying
party shall not relieve the indemnifying party of its obligation to indemnify
any other indemnified party that has given such notice and shall not relieve
the
indemnifying party of any liability outside of this indemnification if not
materially prejudiced thereby. In the event that any action is brought against
the indemnified party, the indemnifying party will be entitled to participate
therein and, to the extent it may desire, to assume and control the defense
thereof with counsel chosen by it which is reasonably acceptable to the
indemnified party. After notice from the indemnifying party to such indemnified
party of its election to so assume the defense thereof, the indemnifying party
will not be liable to such indemnified party under such Section 6(A), (B),
(C),
or (D) for any legal or other expenses subsequently incurred by such indemnified
party in connection with the defense thereof, but the indemnified party may,
at
its own expense, participate in such defense by counsel chosen by it, without,
however, impairing the indemnifying party's control of the defense. Subject
to
the proviso of this sentence and notwithstanding any other statement to the
contrary contained herein, the indemnified party or parties shall have the
right
to choose its or their own counsel and control the defense of any action, all
at
the expense of the indemnifying party if, (i) the employment of such counsel
shall have been authorized in writing by the indemnifying party in connection
with the defense of such action at the expense of the indemnifying party, or
(ii) the indemnifying party shall not have employed counsel reasonably
satisfactory to such indemnified party to have charge of the defense of such
action within a reasonable time after notice of commencement of the action,
or
(iii) such indemnified party or parties shall have reasonably concluded that
there may be defenses available to it or them which are different from or
additional to those available to one or all of the indemnifying parties (in
which case the indemnifying parties shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties), in any
of
which events such fees and expenses of one additional counsel shall be borne
by
the indemnifying party; provided, however, that the indemnifying party shall
not, in connection with any one action or separate but substantially similar
or
related actions in the same jurisdiction arising out of the same general
allegations or circumstance, be liable for the reasonable fees and expenses
of
more than one separate firm of attorneys at any time for all such
indemnified parties. No settlement of any action or proceeding against an
indemnified party shall be made without the consent of the indemnifying
party.
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F. In
order
to provide for just and equitable contribution in circumstances in which the
indemnification provided for in Section 6 is due in accordance with its terms
but is for any reason held by a court to be unavailable on grounds of policy
or
otherwise, the Company and the Placement Agent and the Investor shall contribute
to the aggregate losses, claims, damages and liabilities (including legal or
other expenses reasonably incurred in connection with the investigation or
defense of same) which the other may incur in such proportion so that the
Company, the Placement Agent and the Investor shall be responsible for such
percent of the aggregate of such losses, claims, damages and liabilities as
shall equal the percentage of the gross proceeds paid to each of them.;
provided, however, that no person guilty of fraudulent misrepresentation within
the meaning of Section 11(f) of the 1933 Act shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation. For
purposes of this Section 6(F), any person controlling, controlled by or under
common control with the Placement Agent, or any partner, director, officer,
employee, representative or any agent of any thereof, shall have the same rights
to contribution as the Placement Agent and each person controlling, controlled
by or under common control with the Company within the meaning of Section 15
of
the 1933 Act or Section 20 of the 1934 Act and each officer of the Company
and
each director of the Company shall have the same rights to contribution as
the
Company and each person controlling, controlled by or under common control
with
the Investor within the meaning of Section 15 of the 1933 Act or Section 20
of
the 1934 Act and each member of the general partner of the Investor shall have
the same rights to contribution as the Company. Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against the other party under this Section 6(F), notify
such party from whom contribution may be sought, but the omission to so notify
such party shall not relieve the party from whom contribution may be sought
from
any obligation they may have hereunder or otherwise if the party from whom
contribution may be sought is not materially prejudiced thereby. The indemnity
and contribution agreements contained in this Section 6 shall remain operative
and in full force and effect regardless of any investigation made by or on
behalf of any indemnified person or any termination of this
Agreement.
7. FEES.
The
Company hereby agrees to pay the Placement Agent $1000.00 from the gross
proceeds from each Put to a maximum of Ten Thousand Dollars ($10,000) upon
the
execution of this Agreement.
8.
PAYMENT
OF EXPENSES. The Company hereby agrees to bear all of the expenses in connection
with the Offering, including, but not limited to the following: filing fees,
printing and duplicating costs, advertisements, postage and mailing expenses
with respect to the transmission of Offering Materials, registrar and transfer
agent fees, and expenses, fees of the Company's counsel and accountants, issue
and transfer taxes, if any. The Company agrees to bear all the reasonable
expenses of the Placement Agent in performing its services under this Agreement
including but not limited to the fees and expenses of counsel.
9.
CONDITIONS
OF CLOSING. The Closing shall be held at the offices of the Investor or its
counsel. The obligations of the Placement Agent hereunder shall be subject
to
the continuing accuracy of the representations and warranties of the Company
herein as of the date hereof and as of the Date of Closing (the "Closing Date")
with respect to the Company as if it had been made on and as of such Closing
Date; the accuracy on and as of the Closing
Date 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
Date of its covenants and obligations hereunder and to the following further
conditions:
A. Upon
the
effectiveness of a registration statement in accordance with the Investment
Agreement, the Placement Agent shall receive the opinions of Counsel to the
Company and of the Investor, dated as of the date thereof, which opinion shall
be in form and substance reasonably satisfactory to the Investor, the Company,
their counsel and the Placement Agent.
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B.
At
or
prior to the Closing, the Placement Agent shall have been furnished such
documents, certificates and opinions as it may reasonably require for the
purpose of enabling them to review or pass upon the matters referred to in
this
Agreement and the Offering Materials, or in order to evidence the accuracy,
completeness or satisfaction of any of the representations, warranties or
conditions herein contained.
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At
and prior to the Closing, (i) there shall have been no material adverse
change nor development involving a prospective change in the condition
or
prospects or the business activities, financial or otherwise, of the
Company from the latest dates as of which such condition is set forth
in
the Offering Materials; (ii) there shall have been no transaction,
not in
the ordinary course of business except the transactions pursuant to
the
Investment Agreement entered into by the Company which has not been
disclosed in the Offering Materials or to the Placement Agent in writing;
(iii) except as set forth in the Offering Materials, the Company shall
not
be in default under any provision of any instrument relating to any
outstanding indebtedness for which a waiver or extension has not been
otherwise received; (iv) except as set forth in the Offering Materials,
the Company shall not have issued any securities (other than those
to be
issued as provided in the Offering Materials) or declared or paid any
dividend or made any distribution of its capital stock of any class
and
there shall not have been any change in the indebtedness (long or short
term) or liabilities or obligations of the Company (contingent or
otherwise) and trade payable debt; (v) no material amount of the assets
of
the Company shall have been pledged or mortgaged, except as indicated
in
the Offering Materials; and (v) no action, suit or proceeding, at law
or
in equity, against the Company or affecting any of its properties or
businesses shall be pending or threatened before or by any court or
federal or state commission, board or other administrative agency,
domestic or foreign, wherein an unfavorable decision, ruling or finding
could materially adversely affect the businesses, prospects or financial
condition or income of the Company, except as set forth in the Offering
Materials.
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| D. |
At
Closing, the Placement Agent shall receive a certificate of the Company
signed by an executive officer and chief financial officer, dated as
of
the applicable Closing, to the effect that the conditions set forth
in
subparagraph (C) above have been satisfied and that, as of the applicable
closing, the representations and warranties of the Company set forth
herein are true and correct.
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10.
TERMINATION.
This Agreement shall be co-terminus with, and terminate upon the same terms
and
conditions as those set forth in, the Investment Agreement. The rights of the
Investor and the obligations of the Company under the Registration Rights
Agreement, and the rights of the Placement Agent and the obligations of the
Company shall survive the termination of this Agreement unabridged for a period
of twenty-four (24) months after the Closing Date.
11. MISCELLANEOUS.
A. This 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
or
faxed (upon confirmation of receipt received by the sending party), addressed
as
follows:
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If to Placement Agent, to:
GunnAllen
Financial
0000
X.
Xxxxxx Xxxxxx
Xxxxx,
Xxxxxxx 00000
Attention:
Xxxxxxx Xxxxx
Facsimile:
(000) 000-0000
With
a
copy to:
If to the Company, to:
59
West
000 Xxxxx, Xxxxxx Xxxxx
Xxxx
Xxxx
Xxxx, XX 00000
Attention:
Xxxxxxx Xxxxxx
Telephone: (000)
000-0000
With
a
copy to:
59
West
000 Xxxxx, Xxxxxx Xxxxx
Xxxx
Xxxx
Xxxx, XX 00000
Attention:
Xxxxxxx Xxxxxxxxx
Facsimile:
(000) 000-0000
If
to the
Investor:
Dutchess
Private Equities Fund II, L.P.
000
Xxxxxx Xx.
Xxxxxx,
XX 00000
Tel: (000)
000-0000
Fax:
(000) 000-0000
or
to
such other address of which written notice is given to the others.
9
| C. |
This
Agreement shall be governed by and construed in all respects under
the
laws of the State of Delaware, without reference to its conflict
of laws
rules or principles. Any suit, action, proceeding or litigation arising
out of or relating to this Agreement shall be brought and prosecuted
in
such federal or state court or courts located within the Commonwealth
of
Massachusetts as provided by law. The parties hereby irrevocably
and
unconditionally consent to the jurisdiction of each such court or
courts
located within the Commonwealth of Massachusetts 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
Agreement and the other agreements referenced herein contain the
entire
understanding between the parties hereto 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.
|
| E. |
If
any provision of this Agreement shall be held to be invalid or
unenforceable, such invalidity or unenforceability shall not affect
any
other provision of this Agreement.
|
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
10
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date
first written above.
COMPANY:
By:
/s/ Xxxxxxx Xxxxxx
Name:
Xxxxxxx Xxxxxx
Title:
CEO
PLACEMENT
AGENT:
By:
/s/ Xxxxxxx Xxxxx
Name:
Xxxxxxx Xxxxx
Title:
Managing Director
INVESTOR:
DUTCHESS
PRIVATE EQUITIES FUND II, L.P.
BY
ITS
GENERAL PARTNER DUTCHESS
CAPITAL
MANAGEMENT, LLC
By:
/s/ Xxxxxxx X. Xxxxxxxx
Name:
Xxxxxxx X. Xxxxxxxx
Title:
A
Managing Member
11
