UNIVERSAL GUARDIAN HOLDINGS INC. PLACEMENT AGENT AGREEMENT
SJ&H DRAFT
5/6/04
UNIVERSAL GUARDIAN HOLDINGS INC.
Dated as of: January 12, 2005
Hunter World Markets, Inc
0000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Ladies and Gentlemen:
The undersigned, Universal Guardian Holdings Inc. (the “Company”), hereby agrees with Hunter World Markets, Inc. (“Hunter”) as follows:
1.
Placement.
The Company hereby engages Hunter to act as its exclusive placement agent (except as hereinafter provided) in a transaction on a “best efforts” basis involving the issuance and sale by the Company (the “Offering”) of $500,000 principal amount Universal Guardian Holdings Inc. 6 Month Secured Convertible Debentures (the “Debentures”). The Debentures will be secured by a pledge of 750,000 shares under a Pledge Agreement (the “Pledge Agreement”) dated the date of the Debentures by certain officers and employees of the Company in favor of the holders of the Debentures.
The closing of the Offering will take place on January 10, 2005. The current penalty of $30,000 due Hunter in respect of the Company’s failure to file an SB-2 Registration Statement under paragraph 5.1(a) of that certain May 25, 2004, Common Stock Purchase Agreement (“Common Stock Purchase Agreement”) will be deducted from the proceeds of the Offering and paid to Hunter. Thereafter, the monthly penalty as provided for under the Common Stock Purchase Agreement shall remain in effect , and shall be payable by the Company no later than the 25th day of each calendar month.
Hunter shall not be obligated to sell any Debentures and this Offering by Hunter shall be solely on a “best efforts basis.”
On or before February 11, 2005, the Company shall file a Form SB-2 with the SEC the closing of the Debentures covering not only previous securities with respect to which existing agreements between Hunter and the Company that are in place, but also all warrants owned by Hunter, all shares into which the Debentures are convertible and such other shares as
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Hunter shall approve in writing. The Company shall use its best efforts to have the SB-2 declared effective within 120 days of the closing.
The Offering shall be conducted pursuant to Regulation D promulgated by the Securities and Exchange Commission (the “SEC”) and shall be offered and sold only to “Accredited Investors” as that term is defined in Regulation D. The Offering is intended to qualify as a Regulation D, Rule 506 transaction.
2.
Compensation.
As compensation for the Debentures sold by Hunter, Hunter will receive the following: (i) $ 40,000 deducted from the proceeds of the Offering, (ii) Hunter’s attorney fees of $ 7,500, also deducted from the proceeds of the Offering (iii) reduction of the exercise price of that certain Common Stock Purchase Warrant issued May 25, 2004, as No. 052604-01 (“Warrant No. 052604-1”) from $1.50 per shares to $1.00 per share (iv) reduction of the exercise price of that certain Common Stock Purchase Warrant issued May 25, 2004, as No. 052604-02 (“Warrant No. 052604-02”) from $2.00 per share to $1.25 per share and (v) issuance of a new warrant, in substantially the same form as the above described warrants entitling the holder(s) of the Debenture to purchase an aggregate of 250,000 shares of common stock of the Company at an exercise price of $2.00 per share for a five year period commencing on the closing of the Offering. Notwithstanding any provision herein to the contrary, in the event the volume average weighted price (VWAP) of the Company’s common stock equals or exceeds $5.00 per share for a period of five (5) consecutive days or more after the closing of the Offering, the exercise price of Warrant No. 052604-01 shall return to $1.50 per share and the exercise price for Warrant No. 052604-2 shall return to $2.00 per share.
3.
Exclusivity.
Hunter will continue to act as the Company’s exclusive investment banker and placement agent with regard to all financings undertaken by the Company consistent with the terms and conditions of that certain May 21, 2004, Investment Banking Agreement (Investment Banking Agreement”) , provided, however, that the Company may close a PIPE financing with another investment banking firm (“PIPE”) and Hunter hereby waives any right(s) of first refusal as well as any right(s) to collect any compensation, fees or expenses as provided under Investment Banking Agreement or as may otherwise have been agreed in connection with the PIPE, provided, further, that in the event the PIPE results in proceeds to the Company in excess of $2,000,000.00 and is closed on or before March 15, 2005, the Company will prepay the Debentures, principal and interest, in full at the closing of the PIPE.
4.
Representations, Warranties and Covenants of Hunter.
Hunter represents, warrants and covenants as follows:
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(a)
Hunter has the necessary power to enter into this Agreement and to consummate the transactions contemplated hereby.
(b)
The execution and delivery by Hunter 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 Hunter is a party or by which Hunter or its properties are bound, or any judgment, decree, order or, to Hunter’s knowledge, any statute, rule or regulation applicable to Hunter. This Agreement, when executed and delivered by Hunter, will constitute the legal, valid and binding obligations of Hunter, enforceable in accordance with their respective terms, except to the extent that (i) 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, (ii) the enforceability hereof or thereof is subject to general principles of equity, or (iii) the indemnification provisions hereof or thereof may be held to violate public policy.
(c)
Hunter will not deliver any documents related to the Offering to any person it does not reasonably believe to be an Accredited Investor based upon documentary evidence thereof, where appropriate.
(d)
Hunter will not intentionally take any action that it reasonably believes would cause the Offering to violate the provisions of the Securities Act of 1933, the Securities Exchange Act of 1934, the respective rules and regulations promulgated thereunder (the “Rules and Regulations”) or applicable “Blue Sky” laws of any state or jurisdiction.
(e)
Hunter shall use all reasonable efforts to determine (i) whether the Investor is an Accredited Investor and (ii) that any information furnished by the Investor is true and accurate. Hunter shall have no obligation to insure that any check, note, draft or other means of payment for the Units will be honored, paid or enforceable against the Investor in accordance with its terms.
(f)
Hunter is a member of the NASD, and is a broker-dealer registered as such under the Securities Exchange Act of 1934 and under the securities laws of the states in which the Units will be offered or sold by Hunter, unless an exemption for such state registration is available to Hunter. Hunter is in compliance with all material rules and regulations applicable to Hunter generally and applicable to Hunter’s participation in the Offering.
5.
Representations and Warranties of the Company.
The Company represents and warrants as follows:
(a)
The execution, delivery and performance of this Agreement has been or will be duly and validly authorized by the Company and will be a valid and binding agreement of the Company, enforceable in accordance with its respective terms, except to the extent that (i) 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, (ii) the enforceability hereof or thereof is subject to general principles of equity or (iii) the indemnification provisions hereof or thereof may be held to violate public policy. The securities to be issued pursuant to the transactions contemplated by this Agreement have been duly authorized and, when issued and paid for in accordance with (x) this Agreement and (y) 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.
(b)
The Company has a duly authorized, issued and outstanding capitalization as set forth in the Private Placement Memorandum effective as of the date of the Private Placement Memorandum previously delivered to Hunter in connection with the previous financing (the “PPM”). 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 or as set forth in the PPM. 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 was issued in violation of the preemptive rights of any holders of any security of the Company.
(c)
The Debenture, when issued and delivered as contemplated hereunder will have been duly authorized executed and delivered by the Company and will be enforceable in accordance with their terms, except as enforceability may affected by bankruptcy and creditors rights generally. The Common Stock issuable upon exercise of the Debentures and the warrants referred to in Section 2 have been duly authorized and when issued and paid for in accordance with this Agreement and proper exercise of the Debentures and such warrants, respectively, 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.
(d)
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 to be owned or leased by the Company). ,
(e)
Other than two labor claims asserted by former employees as well as a dispute with the Company’s former investor relations firm concerning an alleged breach of contract, there is no litigation or governmental proceeding pending or, to the best of the
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Company’s knowledge, there is no threatened litigation or governmental proceeding, against, or involving the properties or business of the Company.
(f)
To the best of its knowledge, the Company is not aware of any federal or securities violations by any of its current officers, directors or consultants, nor does the Company believe that any of its officers, directors or consultants are or were the subject of any enforcement proceedings by the SEC or the NASD. In addition to the Indemnification provisions under Section 11, the Company agrees to indemnify and hold the Placement Agent and its attorneys, accountants, agent and employees, officers and directors, free and harmless from any liability, cost and expense, including attorneys’ fees in the event of a breach of this representation and warranty, except for acts of Hunter involving gross negligence or willful misconduct.
(g)
The Company and each subsidiary, has been duly organized and is a validly existing as a corporation in good standing under the laws of the State of Delaware. T [NOTE: The Company owns multiple direct and indirect subsidiaries.] The Company, and each subsidiary 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 and each subsidiary 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 business (and proposed business), and the Company is doing business in strict compliance with all such authorizations, approvals, orders, licenses, certificates and permits and all foreign, federal, state and local laws, rules and regulations concerning the business in which it is engaged. The Company and each subsidiary has all corporate power and authority to enter into this Agreement, to carry out the provisions and conditions hereof, and all consents, authorizations, approvals and orders required in connection herewith 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 except for applicable federal and state securities laws. The Company, in the last three years, has not incurred any liability arising under or as a result of the application of any of the provisions of the Securities Act of 1933, the Securities Exchange Act of 1934 or the Rules and Regulations.
(h)
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 credit 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 (other than the obligation to hold annual meetings of its shareholders and related matters) or in violation of any franchise, license, permit, judgment, decree or order, or in violation of any statute, rule or regulation. Neither the execution and delivery of this Agreement, nor the issuance and sale or delivery of the securities, nor the consummation of any of the transactions contemplated herein, 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
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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 credit agreement 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) 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 Hunter of its obligations hereunder, any statute or any 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.
(i)
The information in the PPM, including, without limitation, information concerning any liability or obligation, direct or contingent, for borrowed money, or any transaction other than in the ordinary course of business, or with respect to the declaration or payment of any dividend or other distribution on or in respect of its capital stock and as to any outstanding obligations to any officer or director of the Company, shall be true and correct as of the date of the PPM, and the PPM shall be amended during the Placement Term to update any changes in the information therein.
(j)
There are no claims for services in the nature of a finder’s or origination fee with respect to the sale of the Debentures, or the securities comprising a part thereof, or any other arrangements, agreements or understandings that may affect Hunter's compensation, other than as set forth herein.
(k)
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 and to the best of the Company’s knowledge 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 except any claim or action that would not have a material adverse effect on the Company; to the best of the Company’s knowledge, the Company’s current products, services or processes do not infringe or will not infringe on the patents currently held by any third party.
(l)
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.
(m)
Subject to the performance by Hunter, of its obligations hereunder, the offer and sale of the Debentures comply in all material respects with the requirements of Rule
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506 of Regulation D promulgated by the SEC pursuant to the Securities Act of 1933 and any other applicable federal and state laws, rules, regulations and executive orders. The Company will not cause or knowingly permit any action to be taken in connection with the placement which violates the Securities Act of 1933 or any state securities laws.
(n)
All taxes which are due and payable from the Company have been paid in full and the Company does not have any tax deficiency or claim outstanding assessed or proposed against it.
(o)
None of the Company nor to the best of the Company’s knowledge 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 (i) might subject the Company to any damage or penalty in any civil, criminal or governmental litigation or proceeding, or (ii) 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, or (iii) if not continued in the future, might adversely affect the assets, business, operations or prospects of the Company in the future.
(p)
All information and statements provided by the Company in writing to prospective investors is and will be true and correct.
(q)
Any written offering material prepared by the Company in writing is not misleading or violative of the anti-fraud provisions of the Securities Exchange Act of 1934.
(r)
The financial statements presented to Hunter fairly reflect the financial condition of the Company and the results of its operations at a time and for the periods covered by the financial statements.
6.
Certain Covenants and Agreements of the Company.
The Company covenants and agrees at its expense and without any expense to Hunter as follows:
(a)
To advise Hunter 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 PPM occurring at any time until the expiration of the exclusivity period referred to in Section 3 of that certain May 21, 2004, Investment Banking Agreement between Hunter and the Company. The Company shall at all times have sufficient shares authorized and unissued to keep available out of its authorized
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Common Stock solely for the purpose of issuance upon the conversion of the Debenture and the exercise of all Warrants described in this Agreement, such number of shares of Common Stock as shall then be issuable upon the exercise or conversion thereof.
(b)
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.
(c)
To ensure that the Company will not cause or knowingly permit any action to be taken in connection with the placement which violates the Securities Act of 1933 or any state securities laws;
(d)
To ensure that all information and statements provided by the Company to prospective investors in writing will be true and correct in all material respects;
(e)
To ensure that any written offering material will not be misleading or violative of the anti- fraud provisions of the Securities and Exchange Act of 1934;
(f)
To cooperate with Hunter as to permit the Offering to be conducted in a manner consistent with the applicable state and federal securities laws.
7.
Indemnification.
(a)
The Company hereby agrees that it will indemnify and hold Hunter and each officer, director, shareholder, employee, attorneys, accountants, agents or representative of Hunter, and each person controlling, controlled by or under common control with Hunter within the meaning of Section 15 of the Securities Act of 1933 or Section 20 of the Securities Exchange Act of 1934 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 including attorneys’ fees in the event of a breach of this representation and warranty) to which Hunter or such indemnified person of Hunter may become subject under the Securities Act of 1933, the Securities Exchange Act of 1934, 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) this Agreement, (b) any written offering material prepared by the Company including the PPM (except those written statements relating to Hunter given by an indemnified person for inclusion therein), (c) any application or other document or written communication executed by the Company or based upon written information furnished by the Company filed in any jurisdiction
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in order to qualify the Units, the Common Stock and the Warrants 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 Section 13(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 Hunter or such indemnified person as a direct result of Hunter or such person’s gross negligence or willful misfeasance will be promptly repaid to the Company.
(b)
Hunter 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 Securities Act of 1933 or Section 20 of the Securities Exchange Act of 1934 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 Securities Act of 1933, the Securities Exchange Act of 1934, 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 Hunter or its officers, employees or representatives in acting as placement agent for the Offering or (ii) the breach of any representation, warranty, covenant or agreement made by Hunter in this Agreement.
(c)
Promptly after receipt by an indemnified party of notice of commencement of any action covered by Section 13(a) or 13(b), the party to be indemnified shall, within five (5) business days, notify the indemnifying party of the commencement thereof; the omission by one 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 13(a) or 13(b) for any legal or other
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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.
(d)
In order to provide for just and equitable contribution in circumstances in which the indemnification provided for in Section 13(a) or 13(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 Hunter 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 Hunter 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 Hunter 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 Securities Act of 1933 shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 13(d), any person controlling, controlled by or under common control with Hunter, or any partner, director, officer, employee, representative or any agent of any thereof, shall have the same rights to contribution as Hunter and each person controlling, controlled by or under common control with the Company within the meaning of Section 15 of the Securities Act of 1933 or Section 20 of the Securities Exchange Act of 1934 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 13(d), 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
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or otherwise if the party from whom contribution may be sought is not materially prejudiced thereby. The indemnity and contribution agreements contained in this Section 13 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.
8.
Non-Circumvention.
Pursuant to this Agreement, it is contemplated that Hunter shall supply to the Company and its officers and directors certain information concerning investors and other customers of Hunter. Except for any prior contacts established prior to the date of this Agreement, neither the Company, nor any of its majority owned or controlled entities or any of their officers and directors shall, without the prior written consent of Hunter, contact any of such investors and other customers for the purpose of an investment in the Company or an investment in any other entity or enterprise controlled by the Company.
Except for any prior contacts established prior to the date of this Agreement, in the event that the Company or any of its majority owned or controlled entities or any of its or their officers and directors enters into an agreement with any investor or other customer of Hunter referenced above within thirty-six (36) months after the Offering, regarding a Transaction and completes such Transaction, Hunter shall be entitled to payment at the closing of such Transaction of ten percent (10%) of the Aggregate Consideration with respect to such Transaction (excluding the Placement pursuant to which amounts payable to Hunter are set forth herein). “Transaction” shall be defined as any direct or indirect sale, transfer, conveyance, exchange, financing, investment, trade, or other change in legal or beneficial ownership of any property, whether accomplished by an issuance or purchase of assets of securities, merger, consolidation, management contract, joint venture, partnership, trade or exchange of assets or stock or otherwise. The “Aggregate Consideration” in a Transaction for purposes of determining the aforementioned fees shall mean (x) the aggregate amount of consideration received by the subject party and/or its shareholders (treating any shares issuable under exercise of options, warrants or other rights of conversion as outstanding) and the implied value of any equity interest retained by the subject party’s shareholders and the value of any assets retained by the subject party plus (y) the amount of any debt assumed or repaid or preferred stock redeemed or remaining outstanding in connection with a Transaction (i.e. deferred payments, covenants not to compete, consulting agreements or traded/exchange properties). Furthermore, neither the Company nor any of its majority owned or controlled entities or any of its or their officers, directors shall solicit any investor or other customer of Hunter within thirty-six (36) months after the Offering, regarding a Transaction. Both Standard Capital Securities Corporation and Hunter shall sign reciprocal non-solicitation agreements with the same respective terms.
9.
Conditions Closing.
The closing shall be held at the offices of Company’s counsel or as otherwise determined by Hunter and the Company. The obligations of Hunter hereunder shall be subject to the continuing accuracy in all material respects of the representations and warranties of the
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Company herein as of the date hereof and as of each closing date with respect to the Company as if it had been made on and as of such closing date; the accuracy on and as of each closing date of the statements of the officers of the Company made pursuant to the provisions hereof; and the performance by the Company on and as of each closing of its covenants and obligations hereunder and to the following further conditions:
(a)
At or prior to the closing, counsel for Hunter shall have been furnished such documents, certificates and opinions as they 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.
(b)
At the closing, (i) there shall have been no material adverse 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 which has not been disclosed in the offering materials or to Hunter 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 those issuable on conversion or exercise of outstanding warrants, options, or convertible bridge loans) 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); (v) no material amount of the assets of the Company shall have been pledged or mortgaged, except as indicated in the offering materials; and (vi) 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.
(c)
At the closing Hunter shall have received a certificate of the Company signed by its chief executive officer, dated as of the applicable closing date, to the effect that the conditions set forth in subparagraph (b) above have been satisfied and that, as of the applicable closing date, the representations and warranties of the Company set forth herein are true and correct.
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10.
Miscellaneous.
(a)
This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of 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, addressed as follows:
To Hunter:
Hunter World Markets, Inc.
0000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxx Xxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxx & Xxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
Fax: (000) 000-0000
To the Company:
Xxxx X. Xxxxxxxxx, Esq.
General Counsel
Universal Guardian Holdings Inc.
0000 XxxXxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Telephone: 000.000.0000
Facsimile: 949.221.0019
or to such other address of which written notice is given to the others.
(c)
All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of California, without giving effect to any choice of law or conflict of law provision. Any controversy arising
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hereunder shall be resolved by arbitration from the American Arbitration Association.
(d)
This Agreement contains 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.
(f)
Hunter and the Company shall execute and deliver any and all additional papers, documents or other assurances, and shall do any and all acts and things reasonably necessary in connection with the performance of their obligations under this Agreement and to carry out the intent and agreements of the parties to this Agreement.
[SIGNATURES ON THE FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.
UNIVERSAL GUARDIAN HOLDINGS INC.
a Delaware corporation
/s/ Xxxxxxx X. Xxxxxxxx
By:
Xxxxxxx X. Xxxxxxxx
Its:
Chief Executive Officer
AGREED AND ACCEPTED
HUNTER WORLD MARKETS, INC.
A California corporation
/s/ Xxxx Xxxxxx
By:
Xxxx Xxxxxx
Its:
President and CEO
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