PLACEMENT AGENT AGREEMENT
June 30, 2004
GRAVITAS, LLC.
000 X. 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Pursuant to this Placement Agent Agreement (this "Agreement"), (i) UTIX
GROUP, INC., a Delaware corporation (the "Company"), proposes to engage
Gravitas, LLC as placement agent (the "Placement Agent") to assist the Company,
on a "best efforts" basis, in the sale of up to an aggregate of 16,000,000
shares (the "Company Shares") of common stock, par value $.001 per share, of the
Company (the "Common Stock"), and (ii) each of the stockholders of the Company
set forth in Schedule A hereto (the "Selling Stockholders"), acting severally
and not jointly, propose to sell the respective number of shares of Common Stock
(the "Selling Stockholders' Shares") set forth opposite the Selling
Stockholders' names in Pre-Effective Amendment No. 2 to the Form SB-2
Registration Statement, dated June 17, 2004 (the "Registration Statement"),
filed on this date with the Securities and Exchange Commission (the
"Commission").
In addition, the Company proposes to issue to you the Placement Agent's
Warrant, referred to and defined in Section 10 hereof, to purchase certain
additional shares of Common Stock.
The aggregate of the Company Shares and the Selling Stockholders' Shares
are herein collectively called the "Shares." The term "Company Counsel" shall
mean the firm of Xxxxxxx, Savage, Kaplowitz, Wolf & Marcus, LLP, counsel to the
Company. Unless the context otherwise requires, all references herein to a
"Section" shall mean the appropriate Section of this Agreement.
The Company and the Selling Stockholders confirm the agreements made by
them with respect the engagement of the Placement Agent and the sale of the
Shares, as follows:
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1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLING
STOCKHOLDERS.
A. BY THE COMPANY
The Company represents and warrants to, and agrees with, the Placement
Agent that:
(i) REGISTRATION STATEMENT; PROSPECTUS. A registration statement (File
No.333-112745) on Form SB-2 relating to the public offering of the Shares (the
"Offering"), including a preliminary form of prospectus, copies of which have
heretofore been delivered to you, has been prepared by the Company in conformity
with the requirements of the Securities Act of 1933, as amended (the "Act"), and
the rules and regulations of the Securities and Exchange Commission (the
"Commission") promulgated thereunder (the "Rules and Regulations"), and has been
filed with the Commission under the Act. As used herein, the term "Preliminary
Prospectus" shall mean each prospectus filed pursuant to Rule 430 or Rule 424(a)
of the Rules and Regulations. The Preliminary Prospectus bore the legend
required by Item 501 of Regulation S-B under the Act and the Rules and
Regulations. Such registration statement (including all financial statements,
schedules and exhibits) as amended at the time it becomes effective and the
final prospectus included therein are herein respectively called the
"Registration Statement" and the "Prospectus," except that (i) if the prospectus
filed by the Company pursuant to Rule 424(b) or Rule 430A of the Rules and
Regulations shall differ from such final prospectus as then amended, then the
term "Prospectus" shall instead mean the prospectus first filed pursuant to said
Rule 424(b) or Rule 430A, and (ii) if such registration statement is amended or
such prospectus is amended or supplemented after the effective date of such
registration statement then (unless the context necessarily requires otherwise)
the term "Registration Statement" shall include such registration statement as
so amended, and the term "Prospectus" shall include such prospectus as so
amended or supplemented, as the case may be.
(ii) CONTENTS OF REGISTRATION STATEMENT. On the Effective Date, and at
all times subsequent thereto for so long as the delivery of a prospectus is
required in connection with the offering or sale of any of the Shares, (a) the
Registration Statement and the Prospectus shall in all material respects conform
to the requirements of the Act and the Rules and Regulations, and (b) neither
the Registration Statement nor the Prospectus shall include any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary or make statements therein in light of the circumstances in
which they were made, not misleading; provided, however, that the Company makes
no representations, warranties or agreements as to information contained in or
omitted from the Registration Statement or Prospectus in reliance upon, and in
conformity with, written information furnished to the Company by or on behalf of
the Placement Agent specifically for use in the preparation thereof. The
Placement Agent represents and warrants to the Company that, to the extent
funished in writing by the Placement Agent for inclusion in the Registration
Statement and Prospectus, the statements set forth in the Prospectus with
respect to stabilization, the material set forth under the caption "PLAN OF
DISTRIBUTION," the information on the cover page of the Prospectus regarding the
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selling arrangements, is true and correct in all material respects and does not
omit to state any material fact required to be stated therein or necessary to
make statements therein, in light of the circumstances in which they were made,
not misleading.
(iii) ORGANIZATION, STANDING, ETC. The Company and each of its
subsidiaries (the "Subsidiaries) have been duly incorporated and are validly
existing as corporations in good standing under the laws of their respective
jurisdictions of incorporation, with full power and corporate authority to own
their properties and conduct their business as described in the Prospectus, and
are duly qualified or licensed to do business as foreign corporations and are in
good standing in each other jurisdiction in which the nature of their businesses
or the character or location of their properties requires such qualification,
except where failure so to qualify will not have a material adverse effect on
the business, properties or financial condition of the Company or its
Subsidiaries.
(iv) CAPITALIZATION. The authorized, issued and outstanding capital
stock of the Company as of the date of the Prospectus is as set forth in the
Prospectus under the caption "CAPITALIZATION." The shares of Common Stock issued
and outstanding on the Effective Date have been duly authorized, validly issued
and are fully paid and non-assessable. No options, warrants or other rights to
purchase, agreements or other obligations to issue, or agreements or other
rights to convert any obligation into, any shares of capital stock of the
Company have been granted or entered into by the Company, except as expressly
described in the Prospectus. The Shares conform to all statements relating
thereto contained in the Registration Statement or the Prospectus.
(v) SHARES. The Shares and the Placement Agent's Warrant have been
duly authorized and, when issued and delivered against payment therefor pursuant
to this Agreement, or the Placement Agent's Warrant, as the case may be, will be
duly authorized, validly issued, fully paid and non-assessable and free of
preemptive rights of any security holder of the Company. Neither the filing of
the Registration Statement nor the offering or sale of any of the Shares or the
Placement Agent's Warrant as contemplated by this Agreement gives rise to any
rights, other than those which have been waived or satisfied, for or relating to
the registration of any securities of the Company, except as described in the
Registration Statement.
(vi) AUTHORITY, ETC. This Agreement has been duly and validly
authorized, executed and delivered by the Company and, assuming due execution of
this Agreement by the other parties hereto, constitute valid and binding
obligations of the Company enforceable against the Company in accordance with
its terms. The Company has full right, power and lawful authority to authorize,
issue and sell the Shares and the Placement Agent's Warrant on the terms and
conditions set forth herein. All consents, approvals, authorizations and orders
of any court or governmental authority which are required in connection with the
authorization, execution and delivery of this Agreement, the authorization,
issue and sale of the Shares and the Placement Agent's Warrant, and the
consummation of the transactions contemplated hereby have been obtained.
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(vii) NO CONFLICT. Except as described in the Prospectus, the Company is
not in violation, breach or default of or under, and consummation of the
transactions hereby contemplated and fulfillment of the terms of this Agreement
will not conflict with or result in a breach of, any of the terms or provisions
of, or constitute a default under, or result in the creation or imposition of
any lien, charge or encumbrance pursuant to the terms of, any material contract,
indenture, mortgage, deed of trust, loan agreement or other material agreement
or instrument to which the Company or its Subsidiary is a party or by which the
Company or its Subsidiary may be bound or to which any of the property or assets
of the Company or its Subsidiary is subject, nor will such action result in any
violation of the provisions of the Articles of Incorporation or the By-laws of
the Company or its Subsidiary, as amended to date, or any statute or any order,
rule or regulation applicable to the Company or its Subsidiary, or of any court
or of any regulatory authority or other governmental body having jurisdiction
over the Company or its Subsidiary.
(viii) ASSETS. Subject to the qualifications stated in the Prospectus:
(a) each of the Company and its Subsidiary have good and marketable title to all
properties and assets described in the Prospectus as owned by them, including
without limitation intellectual property, free and clear of all liens, charges,
encumbrances or restrictions, except such as do not materially affect the value
of such properties or assets and do not materially interfere with the use made
or proposed to be made of such assets or properties by the Company and/or its
Subsidiary or are not materially significant or important in relation to the
business of the Company or its Subsidiary; (b) all of the material leases and
subleases under which the Company and/or its Subsidiary is the lessor or
sublessor of properties or assets or under which the Company and/or its
Subsidiary holds properties or assets as lessee or sublessee, as described in
the Prospectus, are in full force and effect and, except as described in the
Prospectus, the Company and/or its Subsidiary are not in default in any material
respect with respect to any of the terms or provisions of any of such leases or
subleases, and no claim has been asserted by any party adverse to the rights of
the Company and/or its Subsidiary as lessor, sublessor, lessee or sublessee
under any such lease or sublease, or affecting or questioning the right of the
Company and/or its Subsidiary to continued possession of the leased or subleased
premises or assets under any such lease or sublease, except as described or
referred to in the Prospectus; and (c) each of the Company and its Subsidiary
owns or leases all such assets and properties, described in the Prospectus, as
are necessary to their operations as now conducted and, except as otherwise
stated in the Prospectus, as proposed to be conducted as set forth in the
Prospectus.
(ix) LNDEPENDENT ACCOUNTANTS. Xxxxxx, Xxxxxxxx & Company, PC,
independent accountants who have given their report on certain financial
statements filed with the Commission as a part of the Registration Statement and
which are included in the Prospectus, are with respect to the Company and its
Subsidiary, independent public accountants as required by the Act and the Rules
and Regulations.
(x) FINANCIAL STATEMENTS. The financial statements, together with
related notes, set forth in the Registration Statement and the Prospectus
present fairly the financial position, results of operations, changes in
stockholders' equity and cash flows of the Company and its Subsidiary on the
basis stated in the Registration Statement, at the
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respective dates and for the respective periods to which they apply. Such
financial statements and related notes have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the entire period involved, except to the extent disclosed therein.
The Summary Historical Financial Information included in the Registration
Statement and the Prospectus present fairly the information shown therein and
have been prepared on a basis consistent with that of the financial statements
included in the Registration Statement and the Prospectus.
(xi) NO MATERIAL CHANGE. Except as otherwise set forth in the
Prospectus, subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus, neither the Company nor its
Subsidiary have: (i) incurred any material liability or obligation, direct or
contingent, or entered into any material transaction other than in the ordinary
course of business; (ii) effected or experienced any change in its capital stock
or incurred any long-term debt, (iii) issued any options, warrants or other
rights to acquire its capital stock; (iv) declared, paid or made any dividend or
distribution of any kind on its capital stock; or (v) effected or experienced
any material adverse change, or development involving a prospective material
adverse change, in its financial position, net worth, results of operations,
business or business prospects, assets or properties or key personnel.
(xii) LITIGATION. Except as set forth in the Prospectus, there is not
now pending nor, to the knowledge of the Company or its Subsidiary, threatened,
any action, suit or proceeding (including any related to environmental matters
or discrimination on the basis of age, sex, religion or race), whether or not in
the ordinary course of business, to which the Company or its Subsidiary is a
party or its business or property is subject, before or by any court or
governmental authority, which, if determined adversely to the Company or its
Subsidiary, would have a material adverse effect on the financial position, net
worth, or results of operations, business or business prospects, assets or
property of the Company or its Subsidiary; and no labor disputes involving the
employees of the Company or its Subsidiary exist which would materially
adversely affect the business, property, financial position or results of
operations of the Company or its Subsidiary.
(xiii) NO UNLAWFUL PROSPECTUSES. The Company has not distributed any
prospectus or other offering material in connection with the Offering
contemplated herein, other than any Preliminary Prospectus, the Prospectus or
other material permitted by the Act and the Rules and Regulations.
(xiv) TAXES. Except as disclosed in the Prospectus, each of the
Company and its Subsidiary have filed all necessary federal, state, local and
foreign income and franchise tax returns and have paid all taxes shown as due
thereon on or before the date such taxes are due to be paid; and there is no tax
deficiency which has been or, to the knowledge of the Company or its Subsidiary,
might be asserted against the Company or its Subsidiary.
(xv) LICENSES, ETC. Each of the Company and its Subsidiary have in
effect all necessary licenses, permits and other governmental authorizations
currently required for the conduct of their businesses or the ownership of their
property, as described in the
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Prospectus, and are in all material respects in compliance therewith. Each of
the Company and its Subsidiary owns or possesses adequate rights to use all
material patents, patent applications, trademarks, xxxx registrations,
copyrights and licenses disclosed in the Prospectus and/or which are necessary
for the conduct of such business, and except as disclosed in the Prospectus
neither the Company nor its Subsidiary have received any notice of conflict with
the asserted rights of others in respect thereof. To the knowledge of the
Company, none of the activities or business of the Company and its Subsidiary is
in violation of, or would cause the Company or its Subsidiary to violate, any
law, rule, regulation or order of the United States, any country, state, county
or locality, the violation of which would have a material adverse effect upon
the financial position, net worth, results of operations, business or business
prospects, assets or property of the Company.
(xvi) NO PROHIBITED PAYMENTS. The Company has not, directly or
indirectly at any time: (i) made any contribution to any candidate for political
office, or failed to disclose fully any such contribution in violation of law;
or (ii) made any payment to any federal, state, local or foreign governmental
officer or official, or other person charged with similar public or quasi-public
duties, other than payments or contributions required or allowed by applicable
law. The internal accounting controls and procedures of the Company are
sufficient to cause the Company to comply in all material respects with the
Foreign Corrupt Practices Act of 1977, as amended.
(xvii) TRANSFER TAXES. On the Closing Dates (as defined in Section 2(d)
hereof), all transfer and other taxes (including franchise, capital stock and
other taxes, other than income taxes, imposed by any jurisdiction), if any,
which are required to be paid in connection with the sale of the Shares by the
Placement Agent hereunder shall have been fully paid or provided for by the
Company and the Selling Stockholders, and all laws imposing such taxes shall
have been fully complied with.
(xviii) EXHIBITS. All contracts and other documents of the Company
which, under the Rules and Regulations, are required to be filed as exhibits to
the Registration Statement have been so filed.
(xix) STOCKHOLDER AGREEMENTS, REGISTRATION RIGHTS. Except as described
in the Prospectus, no security holder of the Company has any rights with respect
to the purchase, sale or registration of any Shares, and all registration rights
with respect to the Offering have been waived or complied with.
(xx) NO STABILIZATION OR MANIPULATION. The Company has not taken and
will not take, directly or indirectly, any action designed to cause or result
in, or which has constituted or which might reasonably be expected to
constitute, the stabilization or manipulation of the price of the Common Stock
to facilitate the sale or resale of the Shares hereunder.
(xxi) NO FINDERS. As of the date hereof, except for this Agreement and
any other agreements with the Placement Agent, the Company has not entered into
any agreement
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pursuant to which any person is entitled either directly or indirectly to
compensation from the Company for services as a finder in connection with the
proposed public offering.
B. BY THE SELLING STOCKHOLDERS
(i) Each of the Selling Stockholders, severally and not jointly,
represents and warrants to, and agrees with, the Placement Agent as of the date
hereof, the name and number of Selling Stockholders' Shares set forth in the
Registration Statement under the caption "SELLING STOCKHOLDERS" is accurate, and
such Selling Stockholder has and will have, at the Effective Date, good and
marketable title to the Selling Stockholders' Shares to be sold by such Selling
Stockholder, free and clear of any pledge, lien, security interest, encumbrance,
claim or equity, created by or arising through the Selling Stockholder; such
Selling Stockholder has full right, power and authority to sell, his, her or its
Selling Stockholders' Shares.
(ii) For a period of one year from the Effective Date of the
Registration Statement, such Selling Stockholder will not, without the prior
written consent of the Company, directly or indirectly, offer to sell, grant any
option for the sale of, or otherwise dispose of (collectively, "Transfer"), any
of the Selling Stockholders' Shares or any other shares of Common Stock of the
Company or any securities exercisable or convertible into Common Stock owned by
such Selling Stockholder or with respect to which such Selling Stockholder has
the power of disposition. Notwithstanding the foregoing, by its execution of
this Agreement, The Xxxxx Family Irrevocable Stock Trust agrees that it will not
Transfer an aggregate of 1,825,000 of its Selling Stockholders' Shares prior to
November 13, 2005.
(iii) Such Selling Stockholder has not taken, and will not take,
directly or indirectly, any action which is designed to or which has constituted
or which might reasonably be expected to cause or result in stabilization or
manipulation of the price of any security or the Company to facilitate the sale
or exercise of the Shares.
2. SALE OF THE SHARES.
(a) The Company Shares that shall be sold by the Placement Agent for
the benefit of the Company pursuant to this Agreement shall be sold during the
offering period set forth in the Registration Statement at a selling price per
share of not less than $0.35 and not more than $0.65 per Company Share (the
"Selling Price"). NOTWITHSTANDING ANYTHING TO THE CONTRARY, EXPRESS OR IMPLIED,
CONTAINED IN THIS AGREEMENT, IT IS EXPRESSLY UNDERSTOOD AND AGREED BY THE
COMPANY AND THE SELLING STOCKHOLDERS THAT THE PLACEMENT AGENT IS ACTING ONLY AS
AGENT FOR THE COMPANY AND IS NOT PURCHASING OR OBLIGATING ITSELF TO PURCHASE ANY
OF THE COMPANY SHARES, WHETHER FOR RESALE OR OTHERWISE. ALL SALES OF COMPANY
SHARES EFFECTED BY OR THROUGH THE PLACEMENT AGENT SHALL BE ON A "BEST EFFORTS"
BASIS ONLY, AND NEITHER THE PLACEMENT AGENT NOR ANY OF ITS EQUITY OWNERS,
OFFICERS, MEMBERS, DIRECTORS OR AFFILIATES SHALL HAVE ANY OBLIGATION TO PURCHASE
OR OTHERWISE CONSUMMATE SALES OF ANY SPECIFIC NUMBER OR DOLLAR AMOUNT OF THE
COMPANY SHARES.
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UNLESS EXPRESSLY REQUESTED IN WRITING BY A SELLING STOCKHOLDER, THE PLACEMENT
AGENT SHALL NOT UNDERTAKE TO SELL ANY SELLING STOCKHOLDERS SHARES.
(b) The Placement Agent shall be entitled to deduct form any Company
Shares sold by or through the Placement Agent a commission equal to ten percent
(10%) of the product of the number of such Company Shares sold, multiplied by
the applicable Selling Price per share (the "Placement Agent's Commissions").
Such Placement Agent's Commissions shall be inclusive of any related
commissions, fees or other payments payable to any other broker/dealers or other
persons legally entitled to received commissions who, at the request of the
Placement Agent, has assisted or shall assist the Placement Agent in the sale of
the Company Shares (the "Co-Brokerage Commissions"); all of which Co-Brokerage
Commissions shall be deducted from the Placement Agent's Commissions otherwise
payable to the Placement Agent hereunder.
(c) Notwithstanding the provisions of Section 2(b) above, the
Placement Agent shall not be entitled to receive Placement Agent's Commission in
respect of (i) the sale of any Company Shares sold by officers, directors,
stockholders or other Affiliates of the Company, unless otherwise expressly
directed in writing by the Company, or (ii) the sale of any of the Selling
Stockholders' Shares, unless expressly requested in writing by a Selling
Stockholder.
3. COVENANTS OF THE COMPANY. The Company covenants and agrees with the
Placement Agent that:
(a) REGISTRATION.
(i) The Company shall use its best effort to cause the Registration
Statement to become effective and, upon notification from the Commission that
the Registration Statement has become effective, shall so advise you and shall
not at any time, whether before or after the Effective Date, file any amendment
to the Registration Statement or any amendment or supplement to the Prospectus
of which you shall not previously have been advised and furnished with a copy,
or to which you or Placement Agent's Counsel shall have objected in writing, or
which is not in compliance with the Act and the Rules and Regulations.
(ii) Promptly after you or the Company shall have been advised
thereof, you shall advise the Company or the Company shall I advise you, as the
case may be, and confirm such advice in writing, of (A) the receipt of any
comments of the Commission, (B) the effectiveness of any post-effective
amendment to the Registration Statement, (C) the filing of any supplement to the
Prospectus or any amended Prospectus, (D) any request made by the Commission for
amendment of the Registration Statement or amendment or supplementing of the
Prospectus, or for additional information with respect thereto, or (E) the
issuance by the Commission or any state or regulatory body of any stop order or
other order denying or suspending the effectiveness of the Registration
Statement, or preventing or suspending the use of any Preliminary Prospectus, or
suspending the qualification of the Shares for offering in any jurisdiction, or
otherwise preventing or impairing the Offering,
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or the institution or threat of any proceeding for any of such purposes. The
Company and you shall not acquiesce in such order or proceeding, and shall
instead actively defend such order or proceeding at its sole expense, unless the
Company and you agree in writing to such acquiescence.
(iii) The Company has caused to be delivered to you copies of each
Preliminary Prospectus, and the Company has consented and hereby consents to the
use of such copies for the purposes permitted by the Act. The Company authorizes
the Placement Agent and selected dealers to use the Prospectus in connection
with the sale of the Shares for such period as in the opinion of Placement
Agent's Counsel the use thereof is required to comply with the applicable
provisions of the Act and the Rules and Regulations. In case of the happening,
at any time within such period as a prospectus is required under the Act to be
delivered in connection with sales by the Placement Agent or a dealer, of any
event of which the Company has knowledge and which materially affects the
Company or the Shares, or which in the opinion of Company Counsel or of
Placement Agent's Counsel should be set forth in an amendment to the
Registration Statement or an amendment or supplement to the Prospectus in order
to make the statement made therein not then misleading, in light of the
circumstances existing at the time the Prospectus is required to be delivered to
a purchaser of the Shares, or in case it shall be necessary to amend or
supplement the Prospectus to comply with the Act or the Rules and Regulations,
the Company shall notify you promptly and forthwith prepare and furnish to the
Placement Agent copies of such amended Prospectus or of such supplement to be
attached to the Prospectus, in such quantities as you may reasonably request, in
order that the Prospectus, as so amended or supplemented, shall not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements in the Prospectus, in the light of the
circumstances under which they are made, not misleading. The preparation and
furnishing of each such amendment to the Registration Statement, amended
Prospectus or supplement to be attached to the Prospectus shall be without
expense to the Placement Agent. If the Placement Agent is required, in
connection with the sale of the Shares, to deliver a prospectus nine months or
more after the Effective Date, the Company shall upon your request, amend the
Registration Statement and amend or supplement the Prospectus, or file a new
registration statement, if necessary, and furnish the Placement Agent with
reasonable quantities of prospectuses complying with section 10(a)(3) of the
Act.
(iv) The Company will deliver to you at or before the two signed
copies of the Registration Statement including all financial statements and
exhibits filed therewith, and of all amendments thereto. The Company will
deliver to or upon your order, from time to time until the Effective Date as
many copies of any Preliminary Prospectus filed with the commission prior to the
Effective Date as you may reasonably request. The Company will deliver to you on
the Effective Date and thereafter for so long as a Prospectus is required to be
delivered under the Act, from time to time, as many copies of the Prospectus, in
final form, or as thereafter amended or supplemented, as the Placement Agent may
from time to time reasonably request.
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(v) The Company shall comply with the Act, the Rules and
Regulations, and the Shares Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations promulgated thereunder in connection with
the offering and issuance of the Shares in all material respects.
(b) BLUE SKY. The Company shall, at its own expense, use its best efforts to
qualify or register the Shares for sale (or obtain an exemption from
registration) under the securities or "blue sky" laws of such jurisdictions as
you may designate, and shall make such applications and furnish such information
to Placement Agent's Counsel as may be required for that purpose, and shall
comply with such laws; provided, however, that the Company shall not be required
to qualify as a foreign corporation or a dealer in securities or to execute a
general consent to service of process in any jurisdiction in any action other
than one arising out of the offering or sale of the Shares. The Company shall
bear all of the expense of such qualifications and registrations, including
without limitation the legal fees and disbursements of Placement Agent's
Counsel, which fees, exclusive of disbursements, shall not exceed $15,000
(unless otherwise agreed). After each Closing Date the Company shall, at its own
expense, from time to time prepare and file such statements and reports as may
be required to continue each such qualification (or maintain such exemption from
registration) in effect for so long a period as required by law, regulation or
administrative policy in connection with the offering of the Shares. In
addition, the Company shall engage Placement Agent's Counsel to provide the
Placement Agent, at the Closing and quarterly thereafter, until such time as the
Common Stock is listed on the New York Stock Exchange or the American Stock
Exchange or quoted on NASDAQ/NMS or the NASD Over-the-Counter Bulletin Board,
with a memorandum, setting forth those states in which the Common Stock may be
traded in non-issuer transactions under the Blue Sky laws of the 50 states. The
Company shall pay such counsel a one-time fee of $7,500 at the Closing for such
opinions.
(c) PROSPECTUS COPIES. The Company shall deliver to you on or before the
First Closing Date a copy of the Registration Statement including all financial
statements, schedules and exhibits filed therewith, and of all amendments
thereto. The Company shall deliver to or on the order of the Placement Agent,
from time to time until the Effective Date, as many copies of any Preliminary
Prospectus filed with the Commission prior to the Effective Date as the
Placement Agent may reasonably request. The Company shall deliver to the
Placement Agent on the Effective Date, and thereafter for so long as a
prospectus is required to be delivered under the Act, from time to time, as many
copies of the Prospectus, in final form, or as thereafter amended or
supplemented, as the Placement Agent may from time to time reasonably request.
(d) AMENDMENTS AND SUPPLEMENTS. The Company shall, promptly upon your
request, prepare and file with the Commission any amendments to the Registration
Statement, and any amendments or supplements to the Preliminary Prospectus or
the Prospectus, and take any other action which in the reasonable opinion of
Placement Agent's Counsel and Company Counsel may be reasonably necessary or
advisable in connection with the distribution of the Shares, and shall use its
best efforts to cause the same to become effective as promptly as possible.
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(e) CERTAIN MARKET PRACTICES. The Company has not taken, and shall not take,
directly or indirectly, any action designed, or which might reasonably be
expected, to cause or result in, or which has constituted, the stabilization or
manipulation of the price of the Shares to facilitate the sale or resale
thereof.
(f) CERTAIN REPRESENTATIONS. Neither the Company nor any representative of
the Company has made or shall make any written or oral representation in
connection with the Offering and sale of the Shares or the Placement Agent's
Warrant that is not contained in the Prospectus, which is otherwise inconsistent
with or in contravention of anything contained in the Prospectus, or which shall
constitute a violation of the Act, the Rules and Regulations, the Exchange Act
or the rules and regulations promulgated under the Exchange Act.
(g) USE OF PROCEEDS. The Company shall apply the net proceeds from the sale
of the Shares substantially for the purposes set forth in the Prospectus under
the caption "USE OF PROCEEDS," and shall file such reports with the Commission
with respect to the sale of the Shares and the application of the proceeds
therefrom as may be required pursuant to Rule 463 of the Rules and Regulations.
(h) EXCHANGE LISTINGS, ETC. The Company shall immediately make all filings
required to seek approval for the quotation of the Shares on the NASD
Over-the-Counter Bulletin Board ("OTC-BB") and shall use its best efforts to
effect and maintain such approval for at least five years from the Effective
Date. Within 10 days after the Effective Date, the Company shall also use its
best efforts to list itself in Xxxxx'x OTC Industrial Manual, Standard & Poor's
or other recognized securities manual acceptable to the Placement Agent and to
cause such listing to be maintained for five years from the Effective Date.
(i) BOARD OF DIRECTORS. For a period of five (5) years from the Effective
Date, the Company shall allow an observer designated by the Placement Agent and
reasonably acceptable to the Company, to receive notice of and to attend all
meetings of the Board of Directors of the Company and shall be compensated in
the same manner as are non-employee directors of the Company. The Company shall
hold at least four (4) meetings per year and the observer will be indemnified by
the Company against any claims arising out of his participation at Board
Meetings and shall be compensated for all reasonable travel and lodging expenses
incurred.
(j) PERIODIC REPORTS. For so long as the Company is a reporting company
under section 12(g) or section 15(d) of the Exchange Act, the Company shall, at
its own expense, furnish to its stockholders an annual report (including
financial statements audited by certified public accountants) in reasonable
detail. In addition, during the period ending five years from the date hereof,
the Company shall, at its own expense, furnish to you: (i) within 90 days of the
end of each fiscal year, a balance sheet of the Company and its Subsidiaries as
at the end of such fiscal year, together with statements of income,
stockholders' equity and cash flows of the Company and its Subsidiaries as at
the end of such fiscal year, all in reasonable detail and accompanied by a copy
of the certificate or report thereon of certified
11
public accountants; (ii) as soon as they are available, a copy of all reports
(financial or otherwise) distributed to security holders; (iii) as soon as they
are available, a copy of all non-confidential reports and financial statements
furnished to or filed with the Commission; and (iv) such other information as
you may from time to time reasonably request. The financial statements referred
to herein shall be on a consolidated basis to the extent the accounts of the
Company and its Subsidiaries are consolidated in reports furnished to its
stockholders generally.
(k) STOCK TRANSFER SHEETS. The Company shall instruct its transfer agent to
deliver to you copies of all advance sheets showing the daily transfer of the
outstanding shares of Common Stock sold by the Company in the public offering
and shall, at its own expense, furnish you with Depository Trust Company stock
transfer sheets on a weekly basis for the period ending three (3) years from the
First Closing Date.
(l) PUBLIC RELATIONS. Prior to the Effective Date the Company shall have
retained a public relations firm reasonably acceptable to you, and shall
continue to retain such firm, or an alternate firm reasonably acceptable to you,
for a period of two years.
(m) BOUND VOLUMES. Within 120 days from the First Closing Date, the Company
shall deliver to you, at the Company's expense, two bound volumes in form and
content acceptable to you, containing the Registration Statement and all
exhibits filed therewith and all amendments thereto, and all other agreements,
correspondence, filings, certificates and other documents filed and/or delivered
in connection with the Offering.
4. CONDITIONS TO PLACEMENT AGENT'S OBLIGATIONS. The agreement of the
Placement Agent to use its best efforts to sell the Company Shares is subject to
the accuracy (as of the date hereof and as of each Closing Date) of and
compliance with the representations and warranties of the Company and the
Selling Stockholders contained herein, the performance by the Company and the
Selling Stockholders of all of their respective obligations hereunder and the
following further conditions:
(a) EFFECTIVE REGISTRATION STATEMENT; NO STOP ORDER. The Registration
Statement shall have become effective and you shall have received notice thereof
not later than 6:00 p.m., New York time, on the date of this Agreement, or at
such later time or on such later date as to which you may agree in writing. In
addition, on each Closing Date (i) no stop order denying or suspending the
effectiveness of the Registration Statement shall be in effect, and no
proceedings for that or any similar purpose shall have been instituted or shall
be pending or, to your knowledge or to the knowledge of the Company, shall be
contemplated by the Commission, and (ii) all requests on the part of the
Commission for additional information shall have been complied with to the
reasonable satisfaction of Placement Agent's Counsel.
(b) OPINION OF COMPANY COUNSEL. On the First Closing Date, you shall have
received the opinion, dated as of the First Closing Date, of Company Counsel, in
form and substance satisfactory to the Placement Agent's Counsel, to the effect
that:
12
(i) the Company and its Subsidiaries have been duly incorporated and
are validly existing as corporations in good standing under the laws of their
respective jurisdictions of incorporation, with full corporate power and
authority to own their properties and conduct their business as described in the
Prospectus, and are duly qualified or licensed to do business as foreign
corporations and are in good standing in each other jurisdiction in which the
nature of their business or the character or location of their properties
requires such qualification, except where failure to so qualify will not have a
material adverse effect on the business, properties or financial condition of
the Company or its Subsidiaries;
(ii) (A) the authorized capitalization of the Company as of the date
of the Prospectus was as is set forth in the Prospectus under the caption
"CAPITALIZATION;" (B) all of the shares of capital stock now outstanding have
been duly authorized and validly issued, are fully paid and non-assessable,
conform in all material respects to the description thereof contained in the
Prospectus, have not been issued in violation of the preemptive rights of any
stockholder and, except as described in the Prospectus, are not subject to any
restrictions upon the voting or transfer thereof; (C) all have been duly
authorized and, when issued and delivered to the Placement Agent against payment
therefor as provided herein, shall be validly issued, fully paid and
non-assessable, shall not have been issued in violation of the preemptive rights
of any stockholder, and no personal liability shall attach to the ownership
thereof; (D) the stockholders of the Company do not have any preemptive rights
or other rights to subscribe for or purchase, and except for the transfer
restrictions imposed by Rule 144 of the Rules and Regulations promulgated under
the Act or contained in the Lock-up Agreements executed with the Placement
Agent, there are no restrictions upon the voting or transfer of, any of the
Shares; (E) the Shares and the Placement Agent's Warrant conform in all material
respects to the respective descriptions thereof contained in the Prospectus; (F)
all issuances of the Company's securities have been made in compliance with, or
under an exemption from, the Act and applicable state securities laws; (G) a
sufficient number of shares of Common Stock has been reserved, for all times
when the Placement Agent's Warrant is outstanding, for issuance upon exercise of
the Placement Agent's Warrant; and (H) to the knowledge of such counsel, neither
the filing of the Registration Statement nor the offering or sale of the Shares
as contemplated by this Agreement gives rise to any registration rights or other
rights, other than those which have been effectively waived or satisfied or
described in the Prospectus, for or relating to the registration of any
securities of the Company;
(iii) the certificates evidencing the Shares are each in valid and
proper legal form;
(iv) this Agreement and the Placement Agent's Warrant have been duly
and validly authorized, executed and delivered by the Company and (assuming due
execution and delivery thereof by the Placement Agent all of such agreements
are, or when duly executed shall be, the valid and legally binding obligations
of the Company, enforceable in accordance with their respective terms (except as
enforceability may be limited by bankruptcy, insolvency or other laws affecting
the rights of creditors generally); provided,
13
however, that no opinion need to be expressed as to the enforceability of the
indemnity provisions contained in Section 6 or the contribution provisions
contained in Section 7;
(v) to the knowledge of such counsel, other than as described in the
Prospectus (A) there is no pending, threatened or contemplated legal or
governmental proceeding affecting the Company which could materially and
adversely affect the business, property, operations, condition (financial or
otherwise) or earnings of the Company, or which questions the validity of the
Offering, the Shares, this Agreement, the Placement Agent's Warrant or the
Financial Consulting Agreement or of any action taken or to be taken by the
Company pursuant thereto; and (B) there is no legal or governmental regulatory
proceeding required to be described or referred to in the Registration Statement
which is not so described or referred to;
(vi) to the knowledge of such counsel, (A) the Company is not in
violation of or in default under this Agreement or the Placement Agent's
Warrant; and (B) to the knowledge of such counsel, the execution and delivery
hereof and thereof and consummation of the transactions herein or therein
contemplated shall not result in a material violation of, or constitute a
default under, the Certificate of Incorporation or By-laws of the Company, both
as amended to date, or any material obligation, agreement, covenant or condition
contained in any bond, debenture, note or other evidence of indebtedness, or in
any material contract, indenture, mortgage, loan agreement, lease, joint venture
or other agreement or instrument to which the Company is a party or by which the
assets of the Company is bound, or any material order, rule, regulation, writ,
injunction or decree of any government, governmental instrumentality or court
applicable to the Company;
(vii) the Registration Statement has become effective under the Act,
and to the knowledge of such counsel, no stop order denying or suspending the
effectiveness of the Registration Statement is in effect, and no proceedings for
that or any similar purpose have been instituted or are pending before or
threatened by the Commission;
(viii) the Registration Statement and the Prospectus (except for the
financial statements, notes thereto and other financial information and
statistical data contained therein, as to which counsel need not express an
opinion) comply as to form in all material respects with the Act and the Rules
and Regulations;
(ix) the statements in the Registration Statement and the Prospectus
under the captions "Risk Factors," "Use of Proceeds," "Business," "Management,"
and "Description of Shares," which purport to summarize the provisions of
agreements, licenses, statutes or rules and regulations, have been reviewed by
such counsel and are accurate summaries in all material respects; and
(x) except for registration under the Act and registration or
qualification of the Shares under applicable state or foreign securities or blue
sky laws, no authorization, approval, consent or license of any governmental or
regulatory authority or agency is necessary in connection with: (A) the
authorization, issuance, sale, transfer or delivery of
14
the Shares by the Company and the Selling Stockholders in accordance with this
Agreement; (B) the execution, delivery and performance of this Agreement by the
Company and the Selling Stockholders or the taking of any action contemplated
herein; (C) the issuance of the Placement Agent's Warrant in accordance with
this Agreement or the Shares issuable upon exercise thereof; or the taking of
any action contemplated herein.
Such opinion shall also state that Company Counsel's examination of the
Registration Statement and its discussions with the Company and its independent
auditors did not disclose any information which gives Company Counsel reason to
believe that the Registration Statement (other than the financial statements and
other financial and statistical information as to which counsel need not express
an opinion) at the time it became effective contained any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, or that the
Prospectus (other than the schedules, financial statements and other financial
and statistical information as to which no view is expressed) at the time it
became effective contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus (other than the
financial statements and other financial and statistical information as to which
counsel need not express an opinion) contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. In rendering such opinion, Company Counsel may rely as to matters of
fact upon certificates of officers of the Company, and of public officials, and
may rely as to all matters of law other than the law of the United States and
the General Corporation law of the State of Delaware upon opinions of counsel
satisfactory to you, in which case the opinion shall state that they have no
reason to believe that you and they are not entitled so to rely.
(c) CORPORATE PROCEEDINGS. All corporate proceedings and other legal matters
relating to this Agreement, the Registration Statement, the Prospectus and other
related matters shall be reasonably satisfactory to or approved by Placement
Agent's Counsel.
(d) BRING DOWN . At the Effective Date, (i) the representations and
warranties of the Company contained in this Agreement shall be true and correct
with the same effect as if made on and as of such Closing Date, and the Company
shall have performed all of its obligations hereunder and satisfied all the
conditions to be satisfied at or prior to such Closing Date; (ii) the
Registration Statement and the Prospectus shall contain all statements which are
required to be stated therein in accordance with the Act and the Rules and
Regulations, and shall in all material respects conform to the requirements of
the Act and the Rules and Regulations, and neither the Registration Statement
nor the Prospectus shall contain any untrue statement of a material fact or omit
to state any material fact required to be stated or which they were made, not
misleading; (iii) there shall have been, since the respective dates as of which
information is given, no material adverse change in the business, property,
operations, condition (financial or otherwise), earnings, capital stock,
long-term or short-term debt or general affairs of the Company from that set
forth in the Registration Statement and the Prospectus, except changes which the
Registration
15
Statement and Prospectus indicate might occur after the Effective Date, and the
Company shall not have incurred any material liabilities or entered into any
material agreement other than as referred to in the Registration Statement and
Prospectus other than in the ordinary course of business; and (iv) except as set
forth in the Prospectus, no action, suit or proceeding shall be pending or
threatened against the Company before or by any commission, board or
administrative agency in the United States or elsewhere, wherein an unfavorable
decision, ruling or finding would materially adversely affect the business,
property, operations, condition (financial or otherwise), earnings or general
affairs of the Company.
If any of the conditions herein provided for in this Section shall not have been
completely fulfilled as of the date indicated, this Agreement and all
obligations of the Placement Agent under this Agreement may be canceled at, or
at any time prior to the Effective Date by your notifying the Company of such
cancellation in writing or by telecopy at or prior to the applicable Closing
Date. Any such cancellation shall be without liability of the Placement Agent,
except as otherwise provided herein.
5. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The obligations of the
Company and the Selling Stockholders to sell the Shares are subject to the
following conditions:
(a) EFFECTIVE REGISTRATION STATEMENT. The Registration Statement shall have
become effective not later than 6:00 p.m. Eastern time, on or before July 15,
2004, or at such later time or on such later date as the Company and you may
agree in writing.
(b) NO STOP ORDER. On the applicable Closing Date, no stop order denying or
suspending the effectiveness of the Registration Statement shall have been
issued under the Act or any proceedings therefor initiated or threatened by the
Commission.
6. INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. As used in this Agreement, the term
"Liabilities" shall mean any and all losses, claims, damages and liabilities,
and actions and proceedings in respect thereof (including without limitation all
reasonable costs of defense and investigation and all attorneys' fees) including
without limitation those asserted by any party to this Agreement against any
other party to this Agreement. The Company and the Selling Stockholders hereby
indemnify and hold harmless the Placement Agent and each person, if any, who
controls the Placement Agent within the meaning of the Act, from and against all
Liabilities, joint or several, to which the Placement Agent or such controlling
person may become subject, under the Act or otherwise, insofar as such
Liabilities arise out of or are based upon: (i) any untrue statement or alleged
untrue statement of any material fact, in light of the circumstances in which it
was made, contained in (A) the Registration Statement or any amendment thereto,
or the Prospectus or any Preliminary Prospectus, or any amendment or supplement
thereto, or (B) any "blue sky" application or other document executed by the
Company specifically for that purpose, or based upon written information
furnished by the Company, filed in any state or other jurisdiction in order to
qualify any or
16
all of the Shares under the securities laws thereof (any such application,
document or information being herein called a "Blue Sky Application"); or (ii)
the omission or alleged omission to state in the Registration Statement or any
amendment thereto, or the Prospectus or any Preliminary Prospectus, or any
amendment or supplement thereto, or in any Blue Sky Application, a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which it was made, not misleading; provided,
however, that the Company and the Selling Stockholders shall not be liable in
any such case to the extent, but only to the extent, that any such Liabilities
arise out of or are based upon an untrue statement or alleged untrue statement
or omission or alleged omission (x) made in reliance upon and in conformity with
written information furnished to the Company through you by or on behalf of the
Placement Agent specifically for use in the preparation of the Registration
Statement or any such amendment thereto, or the Prospectus or any such
Preliminary Prospectus, or any such amendment or supplement thereto, or any such
Blue Sky Application or (y) corrected by the final Prospectus and the failure of
the Placement Agent to deliver the final Prospectus. The foregoing indemnity
shall be in addition to any other liability, which the Company may otherwise
have.
(b) INDEMNIFICATION BY PLACEMENT AGENT. The Placement Agent hereby
indemnifies and holds harmless the Company, each of its directors, each nominee
(if any) for director named in the Prospectus, each of its officers who have
signed the Registration Statement, and each person, if any, who controls the
Company within the meaning of the Act, and the Selling Stockholders from and
against all Liabilities to which the Company or any such director, nominee,
officer or controlling person and/or the Selling Stockholders may become subject
under the Act or otherwise, insofar as such Liabilities arise out of or are
based upon (i) any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement or any amendment thereto, or the
Prospectus or any Preliminary Prospectus, or any amendment or supplement
thereto, or (ii) the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
any such Liabilities arise out of or are based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in the
Registration Statement or any amendment thereto, or the Prospectus or any
Preliminary Prospectus, or any amendment or supplement thereto, in reliance upon
and in conformity with written information furnished to the Company through you,
by or on behalf of the Placement Agent, specifically for use in the preparation
thereof. In no event shall the Placement Agent be liable under this Section 6(b)
for any amount in excess of the compensation received by such Placement Agent,
in the form of underwriting discounts or otherwise, pursuant to this Agreement
or any other agreement contemplated hereby. The foregoing indemnity shall be in
addition to any other liability, which any Placement Agent may otherwise have.
(c) PROCEDURE . Promptly after receipt by an indemnified party under this
Section 6 of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under this Section 6, notify in writing the indemnifying party of the
commencement thereof, but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any
17
indemnified party otherwise than under this Section 6 unless the rights of the
indemnifying party have been prejudiced by such omission or delay. In case any,
such action is brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate in and, to the extent that it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof,
subject to the provisions hereof, with counsel reasonably satisfactory to 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 shall 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. The indemnified party shall have the right to employ
separate counsel in any such action and to participate in the defense thereof,
but the fees and expenses of such counsel shall not be at the expense of the
indemnifying party if the indemnifying party has assumed the defense of the
action with counsel reasonably satisfactory to the indemnified party; provided,
however, that the fees and expenses of such counsel shall be at the expense of
the indemnifying party if (i) the employment of such counsel has been
specifically authorized in writing by the indemnifying party, or (ii) the named
parties to any such action (including any impleaded parties) include both such
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses available to it which
are different from or in addition to those available to the indemnifying party
or that the indemnified and indemnifying party have conflicting interests which
would make it inappropriate for the same counsel to represent both of them (in
which case the indemnifying party shall have the right to assume the defense of
such action on behalf of the indemnified party, it being understood, however,
that the indemnifying party shall not, in connection with any one such action or
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys). No
settlement of any action against an indemnified party shall be made without the
consent of the indemnified party, which shall not be unreasonably withheld in
light of all factors of importance to such indemnified party.
7. CONTRIBUTION. In order to provide for just and equitable contribution
under the Act in any case in which (a) any indemnified party makes claims for
indemnification pursuant to Section 6 but it is judicially determined (by the
entry of a final judgment or decree by a court of competent jurisdiction and the
expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case, notwithstanding the fact
that the express provisions of Section 6 provide for indemnification in such
case, or (b) contribution under the Act may be required on the part of any
indemnified party, then such indemnified party and each indemnifying party (if
more than one) shall contribute to the aggregate Liabilities to which it may be
subject, in either such case (after contribution from others) in such
proportions that the Placement Agent is responsible for the portion of such
Liabilities represented by the percentage that the underwriting discount per
Share appearing on the cover page of the Prospectus bears to the public offering
price per Share, appearing thereon, and the Company and/or the Selling
Stockholders shall be responsible for the remaining portion; provided, however,
that if such
18
allocation is not permitted by applicable law, then the relative fault of the
Company, the Selling Stockholders and the Placement Agent in connection with the
statements or omissions which resulted in such Liabilities and other relevant
equitable considerations shall also be considered. The relative fault shall be
determined by reference to, among other things, whether in the case of an untrue
statement of material fact or the omission to state a material fact, such
statement or omission relates to information supplied by the Company, the
Selling Stockholders, or the Placement Agent, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The Company, the Selling Stockholders and the
Placement Agent agree that it would not be just and equitable if the respective
obligations of the Company, the Selling Stockholders, and the Placement Agent to
contribute pursuant to this Section 7 were to be determined by PRO RATA OR PER
CAPITA allocation of the aggregate Liabilities or by any other method of
allocation that does not take account of the equitable considerations referred
to in the first sentence of this Section 7. However, the contribution of the
Placement Agent shall not be in excess of the cash compensation received by the
Placement Agent, in the form of underwriting discounts or otherwise, pursuant to
this Agreement or any other agreement contemplated hereby. No person guilty of a
fraudulent misrepresentation (within the meaning of section 11 (f) of the Act)
shall be entitled to contribution from any person who is not guilty of such
fraudulent misrepresentation. As used in this Section 7, the term "Company"
shall include any officer, director or person who controls the Company within
the meaning of section 15 of the Act. If the full amount of the contribution
specified in this Section 7 is not permitted by law, then each indemnified party
and each person who controls an indemnified party shall be entitled to
contribution from each indemnifying party to the fullest extent permitted by
law. The foregoing contribution agreement shall in no way affect the
contribution liabilities of any persons having liability under section 11 of the
Act other than the Company and the Placement Agent. No contribution shall be
requested with regard to the settlement of any matter from any party who did not
consent to the settlement provided, however, that such consent shall not be
unreasonably withheld in light of all factors of importance to such party.
8. COSTS AND EXPENSES.
(a) CERTAIN COSTS AND EXPENSES. Whether or not this Agreement becomes
effective or the Placement Agent consummates the sale of any Company Shares, the
Company shall pay all costs and expenses incident to the issuance, offering,
sale and delivery of the Shares and the performance of its obligations under
this Agreement, including without limitation: (i) all fees and expenses of the
Company's legal counsel and accountants; (ii) all costs and expenses incident to
the preparation, printing, filing, distribution and mailing of the Registration
Statement (including the financial statements contained therein and all exhibits
and amendments thereto), each Preliminary Prospectus and the Prospectus, each as
amended or supplemented, this Agreement and the other underwriting documents, as
well as the other agreements and documents referred to herein and the Blue Sky
Memorandum; each in such quantities as you shall deem necessary; (iii) all fees
of NASD required in connection with the filing required by NASD to be made by
the Placement Agent with respect to the Offering; (iv) all expenses, including
fees (but not in excess of the amount set
19
forth in Section 3(b) and disbursements of Placement Agent's Counsel in
connection with the qualification of the Shares under the "blue sky" laws which
you shall designate; (v) all costs and expenses of printing the respective
certificates representing the Shares; (vi) the expense of placing one or more
"tombstone" advertisements or promotional materials as directed by you and of
Offering memorabilia; (vii) all costs and expenses associated with due diligence
meetings and presentations (including the payment for road show conference
centers); (viii) any and all taxes (including without limitation any transfer,
franchise, capital stock or another tax imposed by any jurisdiction) on sales of
the Shares to the Placement Agent hereunder; and (ix) all costs and expenses
incident to the furnishing of any amended Prospectus or any supplement to be
attached to the Prospectus as required by Sections 3(a) and 3(d), except as
otherwise provided by said Sections.
(b) NO FINDERS. No person is entitled either directly or indirectly to
compensation from the Company, the Placement Agent or any other person for
services as a finder in connection with the Offering, and the Company hereby
indemnifies and holds harmless the Placement Agent, and the Placement Agent
hereby indemnifies and holds harmless the Company from and against all
Liabilities, joint or several, to which the indemnified party may become subject
insofar as such Liabilities arise out of or are based upon the claim of any
person or entity that he or it is entitled to a finder's fee in connection with
the Offering by reason of such person's or entity's influence or prior contact
with the indemnifying party. Notwithstanding the foregoing, the Placement Agent
shall be solely responsible to pay any finders' or related fees to Xxxxxx Xxxxxx
or his affiliates.
9. TERMINATION. The Agreement shall become effective on the first full
business day following the Effective Date. This Agreement may be terminated by
either the Company or the Placement Agent at any time before the Effective Date,
and may be terminated by the Company at any time upon five (5) days notice to
the Placement Agent at any time after the Effective Date.
10. PLACEMENT AGENT'S WARRANT. On the completion of the Offering Period
(being 90 days after the Effective Date of the Registration Statement), the
Company shall issue and sell to you, for a total purchase price of $10.00, and
upon the terms and conditions set forth in the form of Placement Agent's Warrant
filed as an exhibit to the Registration Statement, a warrant (the "Placement
Agent's Warrant") entitling you to purchase that number of shares of Company
Common Stock as shall equal 10% of the number of Company Shares sold by or
through the direct efforts of the Placement Agent and for which you shall be
entitled to receive commissions hereunder. The per share exercise price of the
shares of Common Stock issuable upon full or partial exercise price of the
Placement Agent's Warrants shall be 110% of the average per share price of the
Company Shares sold in the Offering. In the event of conflict in the terms of
this Agreement and the Placement Agent's Warrant, the terms and conditions of
the Placement Agent's Warrant shall control.
11. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY. The
respective indemnities, agreements, representations, warranties, covenants and
other statements of the Company, the Selling Stockholders and the
20
Placement Agent set forth in this Agreement shall remain in full force and
effect regardless of any investigation made by or on behalf of any other party,
and shall survive the Offering Period and the termination of this Agreement. The
Company and the Selling Stockholders hereby indemnify and hold harmless the
Placement Agent from and against all Liabilities, joint or several, to which the
Placement Agent may become subject insofar as such Liabilities arise out of or
are based upon the breach or failure of any of the representations, warranties
or agreements of the Placement Agent hereunder.
12. NOTICES. All communications hereunder shall be in writing and, except as
otherwise expressly provided herein, if sent to you, shall be mailed, delivered
or telegraphed and confirmed to you at the address first set forth above, to the
attention of the President, with a copy sent to Xxxxxxx X. Xxxxx, Esq., Xxxxxxx,
Savage, Kaplowitz, Wolf & Marcus, LLP, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000; or if sent to the Company, shall be mailed, delivered, or telegraphed and
confirmed to it at Utix Group, Inc., 000 Xxxxxxxxx Xxxxxx, Xxxxxxxxxx, XX 00000,
Attention: Xxxxxxx X. Xxxx, President.
13. PARTIES IN INTEREST. This Agreement is made solely for the benefit of
the Placement Agent, the Selling Stockholders, the Company, and, to the extent
expressed, any person controlling the Company or the Placement Agent, as the
case may be, and the directors of the Company, nominees for directors of the
Company (if any) named in the Prospectus, officers of the Company who have
signed the Registration Statement, and their respective executors,
administrators, successors and assigns; and no other person shall acquire or
have any right under or by virtue of this Agreement. The term "successors and
assigns" shall not include any purchaser, as such, from the Placement Agent of
the Shares.
14. APPLICABLE LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York applicable to agreements made
and to be performed entirely within such State.
15. DISPUTE RESOLUTION. (a) If there shall occur any dispute as to the
interpretation or application of this Agreement, and such dispute or difference
has not been settled within thirty (30) days or within such other period as the
Company and the Placement Agent may agree in writing, then such dispute or
difference shall be submitted to final and binding arbitration to JAMS or
End-Dispute before a three-person panel of arbitrators who shall be either (i)
retired federal judges, or (ii) other persons experienced in resolving
commercial disputes and who are acceptable to both the Company and the Placement
Agent (the "Arbitration"). Any such Arbitration shall be held in New York, New
York. The panel of arbitrators shall be selected within twenty (20) days of
submission of such dispute to Arbitration. The parties shall use their
collective best efforts to promptly schedule and conduct the hearings before
such arbitrators, with a view toward concluding such arbitration proceedings not
later than ninety (90) days from the first submission of the dispute to
arbitration. In addition to, and not in lieu of, Arbitration as a means of
dispute resolution hereunder, any party hereto shall have the right to seek
specific enforcement of this Agreement or other injunctive or equitable relief
or remedy before any court of competent jurisdiction.
21
(b) In connection with any Arbitration pursuant to this Section 15,
the arbitrators shall, as part of their award, allocate the fee of the
Arbitration, including all fees of the arbitrators, the cost of any transcripts,
and the parties' reasonable attorneys' fees, based upon and taking into account
the arbitrators' determination of the merits and good faith of the parties'
claims and defenses in the subject proceeding.
(c) Any process or other papers hereunder may be served by
registered or certified mail, return receipt requested, or by personal service,
provided that a reasonable time for appearance or response is allowed. Any award
shall be final and not subject to appeal and the Parties hereby waive all
challenge to any award by the arbitrators under this Section 9.12. The decision
of the arbitrators shall be final and binding on the Parties and may be
presented by either Party for enforcement in any court of competent
jurisdiction. In any such enforcement action, irrespective of where it is
brought, neither party will (and the parties hereby waive any right to) seek to
invalidate or modify the decision of the arbitrators or otherwise to invalidate
or circumvent the procedures set forth in this Section 15. Each party
acknowledges that its agreements set forth in this Section 15 are material
inducements for the other party or parties to execute, deliver and perform this
Agreement. Further, the parties understand and agree that the provisions of this
Section 15 may be specifically enforced by injunction or otherwise in any court
of competent jurisdiction.
16. COUNTERPARTS. This Agreement may be executed in two or more counterpart
copies, each of which shall be deemed an original but all of which together
shall constitute one and the same instrument.
[the balance of this page intentionally left blank - signature page follows]
22
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return this Agreement, whereupon it will become a binding
agreement between the parties in accordance with its terms.
Very truly yours,
UTIX GROUP, INC..
By:____________________________________
Name:
Title:
Accepted as of the date
first above written:
GRAVITAS, LLC.
By: ____________________________
Name:
Title:
23
SELLING STOCKHOLDERS
NAME SHARES OWNED SHARES OFFERED SIGNATURE
Xxxxx Xxxxxx 612,770 612,770
Xxxxxxx Xxxxxx 316,621 316,621
Xxxxxx Xxxx 1,535,517 325,584
Xxxx Xxxxx Jr
Revocable Trust 57,142 57,142
Xxxx Xxxxxxx 525,001 525,001
Xxxxxx Xxxxxxx 142,858 142,858
Xxxxx Xxxxxxx 285,714 285,714
Xxxxxxx Xxxx 745,000 745,000
Phil St. Germain 382,143 382,143
Xxxxxx Xxxxxxxxx 95,714 95,714
Xxxxx Xxxxxxxxx 38,571 38,571
Xxxxxxx Xxxxxxx &
Xxxxxx Xxxxxxx 142,858 142,858
Xxxxxx Xxxxxxx 285,714 285,714
Xxxxx Xxxxx 28,572 28,572
Xxxxxxxx Xxxxx 28,572 28,572
Xxxxxx Xxxxxxx 85,714 85,714
Xxxxx Family Irrevocable
Stock Trust 1,012,500 1,012,500
Xxxxx Family Irrevocable
Stock Trust 1,825,000 1,825,000
24
NAME SHARES OWNED SHARES OFFERED SIGNATURE
Xxxxxxx Xxxxxxx Family
Limited Partnership 819,643 819,643
Xxxx Xxxxxxxx and 192,857 192,857
Xxxxxx Xxxxxxxx
Xxxxxx Xxxxxxxx 96,429 96,429
Xxxxx X. Xxxxxx 50,000 50,000
Xxxx Xxxxxx 38,571 38,571
Xxxxxx Xxxxxx 38,571 38,571
Xxxx Xxxxx 38,571 38,571
Xxxxxx Xxxxxxxx 75,000 75,000
Xxxxxx Georgiafanids 10,000 10,000
Xxxxxxx Associates 100,000 100,000
Capital Access Group, Ltd. 100,000 100,000
Xxxxxxx X. Xxxxx 196,429 196,429
Xxx Xxxxxxxxx 87,500 87,500
Xxxxxx Xxxxxx 37,500 37,500
Xxxx Financial Group 1,961,919 510,000
Xxxxxxx Xxxxxxxx 285,714 285,714
Xxxx Xxxxxxx 285,714 285,714
