XXXXXXXX BAY INTERNATIONAL LTD. PLACEMENT AGENT AGREEMENT
Dated as of: April 6, 2004
Xxxxxxx Xxxxxx LLC 000 Xxxx Xxxxxx, 0xx Xxxxx Xxx Xxxx, XX 00000
Ladies and Gentlemen:
The undersigned, XxXxxxxx Bay International Ltd., a Delaware corporation (the
"Company"), hereby agrees with Xxxxxxx Xxxxxx LLC (the "Placement Agent") and
Cornell Capital Partners, LP, a Delaware Limited Partnership (the "Investor"),
as follows:
1. Offering. The Company hereby engages the Placement Agent to act as its
exclusive placement agent in connection with the Standby Equity Distribution
Agreement dated the date hereof (the "Standby Equity Distribution 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
Fifteen Million Dollars ($15,000,000) of the Company's common stock (the
"Commitment Amount"), par value $.001 per share (the "Common Stock"), at price
per share equal to the Purchase Price, as that term is defined in the Standby
Equity Distribution Agreement. The Placement Agent services shall consist of
reviewing the terms of the Standby Equity Distribution Agreement and advising
the Company with respect to those terms.
All capitalized terms used herein and not otherwise defined herein shall have
the same meaning ascribed to them as in the Standby Equity Distribution
Agreement. The Investor will be granted certain registration rights with
respect to the Common Stock as more fully set forth in the Registration Rights
Agreement between the Company and the Investor dated the date hereof (the
"Registration Rights Agreement"). The documents to be executed and delivered in
connection with the Offering, including, but not limited, to the Company's
latest Quarterly Report on Form 10-QSB as filed with the United States
Securities and Exchange Commission, this Agreement, the Standby Equity
Distribution Agreement, the Registration Rights Agreement, and the Escrow
Agreement dated the date hereof (the "Escrow Agreement"), are referred to
sometimes hereinafter collectively as the "Offering Materials." The Company's
Common Stock purchased by the Investor hereunder or to be issued in connection
with the conversion of any debentures are sometimes referred to hereinafter as
the "Securities." The Placement Agent shall not be obligated to sell any
Securities.
2. Compensation.
A. Upon the execution of this Agreement, the Company shall issue to the
Placement Agent or its designee shares of the Company's Common Stock in an
amount equal to Ten Thousand ($10,000) divided by the volume weighted average
price of the Company's Common Stock, as quoted by Bloomberg, LP, on the date
hereof (the "Placement Agent's Shares"). The Placement Agent shall be entitled
to "piggy-back" registration rights, which shall be triggered upon registration
of any shares of Common Stock by the Investor with respect to the Placement
Agent's Shares pursuant to the Registration Rights Agreement dated the date
hereof.
3. Representations, Warranties and Covenants of the Placement Agent.
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 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) 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 intentionally 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
thereunder (the "Rules and Regulations") or applicable "Blue Sky" laws of any
state or jurisdiction.
(v) 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 material compliance with the rules and regulations applicable to the
Placement Agent generally and applicable to the Placement Agent's participation
in the Offering.
4. Representations and Warranties of the Company.
A. The Company represents and warrants as follows:
(i) The execution, delivery and performance of each of this Agreement, the
Standby Equity Distribution Agreement, the Escrow Agreement, and the
Registration Rights Agreement has been or will be duly and validly authorized by
the Company and is, or with respect to this Agreement, the Standby Equity
Distribution Agreement, the Escrow Agreement, and the Registration Rights
Agreement will 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, the Standby Equity Distribution Agreement have been duly authorized
and, when issued and paid for in accordance with this Agreement, the Standby
Equity Distribution Agreement and the certificates/instruments representing such
Securities, 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.
(ii) The Company has a duly authorized, issued and outstanding capitalization
as set forth herein and in the Standby Equity Distribution 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 Standby Equity Distribution 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 ___________ shares of Common Stock, par value
$____ per share and _____________ shares of Preferred Stock of which
______________ shares of Common Stock and ______________ shares of Preferred
Stock were issued and outstanding as of the date thereof.
(iii) The Common Stock to be issued in accordance with this Agreement, the
Standby Equity Distribution Agreement have been duly authorized and, when issued
and paid for in accordance with this Agreement, the Standby Equity Distribution
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.
(iv) The Company has good and marketable title to, or valid and enforceable
leasehold estates in, all items of real and personal property necessary to
conduct its business (including, without limitation, any real or personal
property stated in the Offering Materials to be owned or leased by the Company),
free and clear of all liens, encumbrances, claims, security interests and
defects of any material nature whatsoever, other than those set forth in the
Offering Materials and liens for taxes not yet due and payable.
(v) There is no litigation or governmental proceeding pending or, to the
best of the Company's knowledge, threatened against, or involving the properties
or business of the Company, except as set forth in the Offering Materials.
(vi) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware. Except as
set forth in the Offering Materials, the Company does not own or control,
directly or indirectly, an interest in any other corporation, partnership,
trust, joint venture or other business entity. The Company is duly qualified or
licensed and in good standing as a foreign corporation in each jurisdiction in
which the character of its operations requires such qualification or licensing
and where failure to so qualify would have a material adverse effect on the
Company. The Company has all requisite corporate power and authority, and all
material and necessary authorizations, approvals, orders, licenses, certificates
and permits of and from all governmental regulatory officials and bodies
(domestic and foreign) to conduct its businesses (and proposed business) as
described in the Offering Materials. Any disclosures in the Offering Materials
concerning the effects of foreign, federal, state and local regulation on the
Company's businesses as currently conducted and as contemplated are correct in
all material respects and do not omit to state a material fact. The Company has
all corporate power and authority to enter into this Agreement, the Standby
Equity Distribution Agreement, the Registration Rights Agreement, and the Escrow
Agreement, to carry out the provisions and conditions hereof and thereof, and
all consents, authorizations, approvals and orders required in connection
herewith and therewith have been obtained. No consent, authorization or order
of, and no filing with, any court, government agency or other body is required
by the Company for the issuance of the Securities or execution and delivery of
the Offering Materials except for applicable federal and state securities laws.
The Company, since its inception, has not incurred any liability arising under
or as a result of the application of any of the provisions of the 1933 Act, the
1934 Act or the Rules and Regulations.
(vii) There has been no material adverse change in the condition or prospects
of the Company, financial or otherwise, from the latest dates as of which such
condition or prospects, respectively, are set forth in the Offering Materials,
and the outstanding debt, the property and the business of the Company conform
in all material respects to the descriptions thereof contained in the Offering
Materials.
(viii) Except as set forth in the Offering Materials, the Company is not in
breach of, or in default under, any term or provision of any material indenture,
mortgage, deed of trust, lease, note, loan or Standby Equity Distribution
Agreement or any other material agreement or instrument evidencing an obligation
for borrowed money, or any other material agreement or instrument to which it is
a party or by which it or any of its properties may be bound or affected. The
Company is not in violation of any provision of its charter or by-laws or in
violation of any franchise, license, permit, judgment, decree or order, or in
violation of any material statute, rule or regulation. Neither the execution
and delivery of the Offering Materials nor the issuance and sale or delivery of
the Securities, nor the consummation of any of the transactions contemplated in
the Offering Materials nor the compliance by the Company with the terms and
provisions hereof or thereof, has conflicted with or will conflict with, or has
resulted in or will result in a breach of, any of the terms and provisions of,
or has constituted or will constitute a default under, or has resulted in or
will result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or pursuant to the terms of any
indenture, mortgage, deed of trust, note, loan or any other agreement or
instrument evidencing an obligation for borrowed money, or any other agreement
or instrument to which the Company may be bound or to which any of the property
or assets of the Company is subject except (a) where such default, lien, charge
or encumbrance would not have a material adverse effect on the Company and (b)
as described in the Offering Materials; nor will such action result in any
violation of the provisions of the charter or the by-laws of the Company or,
assuming the due performance by the Placement Agent of its obligations
hereunder, any material statute or any material order, rule or regulation
applicable to the Company of any court or of any foreign, federal, state or
other regulatory authority or other government body having jurisdiction over the
Company.
(ix) Subsequent to the dates as of which information is given in the Offering
Materials, and except as may otherwise be indicated or contemplated herein or
therein the Company has not (a) issued any securities or incurred any liability
or obligation, direct or contingent, for borrowed money, or (b) entered into any
transaction other than in the ordinary course of business, or (c) declared or
paid any dividend or made any other distribution on or in respect of its capital
stock. Except as described in the Offering Materials, the Company has no
outstanding obligations to any officer or director of the Company.
(x) There are no claims for services in the nature of a finder's or
origination fee, other than Xxxxxxx Xxxxxx, with respect to the sale of the
Common Stock or any other arrangements, agreements or understandings that may
affect the Placement Agent's compensation, as determined by the National
Association of Securities Dealers, Inc.
(xi) The Company owns or possesses, free and clear of all liens or
encumbrances and rights thereto or therein by third parties, the requisite
licenses or other rights to use all trademarks, service marks, copyrights,
service names, trade names, patents, patent applications and licenses necessary
to conduct its business (including, without limitation, any such licenses or
rights described in the Offering Materials as being owned or possessed by the
Company) and, except as set forth in the Offering Materials, there is no claim
or action by any person pertaining to, or proceeding, pending or threatened,
which challenges the exclusive rights of the Company with respect to any
trademarks, service marks, copyrights, service names, trade names, patents,
patent applications and licenses used in the conduct of the Company's businesses
(including, without limitation, any such licenses or rights described in the
Offering Materials as being owned or possessed by the Company) except any claim
or action that would not have a material adverse effect on the Company; the
Company's current products, services or processes do not infringe or will not
infringe on the patents currently held by any third party.
(xii) Except as described in the Offering Materials, the Company is not under
any obligation to pay royalties or fees of any kind whatsoever to any third
party with respect to any trademarks, service marks, copyrights, service names,
trade names, patents, patent applications, licenses or technology it has
developed, uses, employs or intends to use or employ, other than to their
respective licensors.
(xiii) Subject to the performance by the Placement Agent of its obligations
hereunder the offer and sale of the Securities complies, and will continue to
comply, in all material respects with the requirements of Rule 506 of Regulation
D promulgated by the SEC pursuant to the 1933 Act and any other applicable
federal and state laws, rules, regulations and executive orders. Neither the
Offering Materials nor any amendment or supplement thereto nor any documents
prepared by the Company in connection with the Offering will contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. All statements of
material facts in the Offering Materials are true and correct as of the date of
the Offering Materials.
(xiv) All material taxes which are due and payable from the Company have been
paid in full or adequate provision has been made for such taxes on the books of
the Company, except for those taxes disputed in good faith by the Company
(xv) None of the Company nor any of its officers, directors, employees or
agents, nor any other person acting on behalf of the Company, has, directly or
indirectly, given or agreed to give any money, gift or similar benefit (other
than legal price concessions to customers in the ordinary course of business) to
any customer, supplier, employee or agent of a customer or supplier, or official
or employee of any governmental agency or instrumentality of any government
(domestic or foreign) or any political party or candidate for office (domestic
or foreign) or other person who is or may be in a position to help or hinder the
business of the Company (or assist it in connection with any actual or proposed
transaction) which (A) might subject the Company to any damage or penalty in any
civil, criminal or governmental litigation or proceeding, or (B) if not given in
the past, might have had a materially adverse effect on the assets, business or
operations of the Company as reflected in any of the financial statements
contained in the Offering Materials, or (C) if not continued in the future,
might adversely affect the assets, business, operations or prospects of the
Company in the future.
5. Representations, Warranties and Covenants of the Investor.
A. The Investor 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 will promptly forward copies of any and all due diligence
questionnaires compiled by the Investor to the Placement Agent.
(iv) The Investor is an Accredited Investor (as defined under the 1933 Act).
(v) The Investor is acquiring the Securities for the Inventor's own account
as principal, not as a nominee or agent, for investment purposes only, and not
with a view to, or for, resale, distribution or fractionalization thereof in
whole or in part and no other person has a direct or indirect beneficial
interest in such Securities. Further, the Investor does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of the
Securities.
(vi) The Investor acknowledges the Investor's understanding that the offering
and sale of the Securities is intended to be exempt from registration under the
1933 Act by virtue of Section 3(b) of the 1933 Act and the provisions of
Regulation D promulgated thereunder ("Regulation D"). In furtherance thereof,
the Investor represents and warrants as follows:
(a) The Investor has the financial ability to bear the economic risk of the
Investor's investment, has adequate means for providing for the Inventor's
current needs and personal contingencies and has no need for liquidity with
respect to the Investor's investment in the Company; and
(b) The Investor has such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of the prospective
investment. The Inventor also represents it has not been organized for the
purpose of acquiring the Securities.
(vii) The Investor has been given the opportunity for a reasonable time prior
to the date hereof to ask questions of, and receive answers from, the Company or
its representatives concerning the terms and conditions of the Offering, and
other matters pertaining to this investment, and has been given the opportunity
for a reasonable time prior to the date hereof to obtain such additional
information in connection with the Company in order for the Investor to evaluate
the merits and risks of purchase of the Securities, to the extent the Company
possesses such information or can acquire it without unreasonable effort or
expense. The Investor is not relying on the Placement Agent or any of its
affiliates with respect to the accuracy or completeness of the Offering
Materials or for any economic considerations involved in this investment.
6. 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 and the Investor 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 Standby Equity Distribution Agreement 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 Standby Equity
Distribution Agreement, to the Investor upon the Investor's request, 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.
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.
7. Indemnification and Limitation of Liability.
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
thereunder (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 the Placement Agent 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 7(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 that 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 material breach of any representation, warranty,
covenant or agreement made by the Placement Agent in this Agreement, or (ii) any
false or misleading information provided to the Company in writing by one of the
Placement Agent's indemnified persons specifically for inclusion in the Offering
Materials.
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, (ii) the material breach of any representation, warranty, covenant or
agreement made by the Investor in the Offering Materials, or (iii) any false or
misleading information provided to the Placement Agent by 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 the material breach of any representation, warranty,
covenant or agreement made by the Placement Agent in this Agreement.
E. Promptly after receipt by an indemnified party of notice of commencement
of any action covered by Section 7(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 7(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.
F. In order to provide for just and equitable contribution in circumstances
in which the indemnification provided for in Section 7(A) or 7(B) 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 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 Placement Agent 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 the Placement Agent and the Company
shall be responsible for the balance; 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 7(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. 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 7(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.
G. The indemnity and contribution agreements contained in this Section 7
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.
H. The Company hereby waives, to the fullest extent permitted by law, any
right to or claim of any punitive, exemplary, incidental, indirect, special,
consequential or other damages (including, without limitation, loss of profits)
against 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
arising out of any cause whatsoever (whether such cause be based in contract,
negligence, strict liability, other tort or otherwise). Notwithstanding
anything to the contrary contained herein, the aggregate liability of 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
shall not exceed the compensation received by the Placement Agent pursuant to
Section 2 hereof. This limitation of liability shall apply regardless of the
cause of action, whether contract, tort (including, without limitation,
negligence) or breach of statute or any other legal or equitable obligation.
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,
escrow agent fees and expenses, fees of the Company's counsel and accountants,
issue and transfer taxes, if any.
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 and the Investor
herein as of the date hereof and as of the Date of Closing (the "Closing Date")
with respect to the Company or the Investor, as the case may be, 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 and the Investor 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 covering the Standby
Equity Distribution Agreement, the Investor and the Placement Agent shall
receive the opinion of Counsel to the Company, dated as of the date thereof,
which opinion shall be in form and substance reasonably satisfactory to the
Investor, their counsel and the Placement Agent.
B. At or prior to the Closing, the Investor and 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.
C. 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 entered into by the Company on the date hereof 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.
D. If requested at Closing the Investor and 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.
E. 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.
10. Termination.
This Agreement shall be co-terminus with, and terminate upon the same terms and
conditions as those set forth in, the Standby Equity Distribution 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.
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 to
such other address of which written notice is given to the others):
If to Placement Agent, to: Xxxxxxx Xxxxxx LLC
000 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Company, to: XxXxxxxx Bay International Ltd.
000 Xxxxxxxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to: Xxxxxx X. Xxxxx, Esq.
00000 00 Xxxx Xxxx - Xxxxx 000
Xxxxxxxxxx Xxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Investor: Cornell Capital Partners, LP
000 Xxxxxx Xxxxxx - Xxxxx 0000
Xxxxxx Xxxx, Xxx Xxxxxx 00000
Attention: Xxxx X. Xxxxxx
Portfolio Manager
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With Copies to: Xxxxxx Xxxxxxxx LLP
0000 Xxxxxx Xxxxxx - Xxxxx 000
Xxxxx, Xxx Xxxxxx 00000
Attention: Xxxxx Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
Xxxxxx Xxxxxxxx LLP
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 State of New Jersey as provided by law.
The parties hereby irrevocably and unconditionally consent to the jurisdiction
of each such court or courts located within the State of New Jersey 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]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above. COMPANY:
XXXXXXXX BAY INTERNATIONAL LTD.
By: /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx Xxxxxxx
Title: Chief Financial Officer
PLACEMENT AGENT:
XXXXXXX XXXXXX LLC
By: /s/ Xxxx Xxxxxxxx
Name: Xxxx Xxxxxxxx
Title: President
INVESTOR:
CORNELL CAPITAL PARTNERS, LP
By: Yorkville Advisors, LLC
Its: General Partner
By: /s/ Xxxx Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Portfolio Manager
