PLACEMENT AGENCY AGREEMENT January 25, 2010
January
25, 2010
FIG
Partners, L.L.C.
000
Xxxxxx Xxxxxx
0000
Xxxxxxxxx Xxxxxx, XX
Xxxxx
0000
Xxxxxxx,
Xxxxxxx 00000
Gentlemen:
SulphCo,
Inc., a Nevada corporation (the "Company"), proposes to offer (the "Offering")
an aggregate up to 11,764,706 units (the "Units"), each comprising (i) 1 share
of common stock of the Company, par value $0.001 per share ("Common Stock");
(ii) a warrant to purchase 0.5 shares of Common Stock at the price of $0.70 per
share; and (iii) a warrant to purchase 0.5 shares of Common Stock at the price
of $1.00 per share (collectively, the "Warrants"), at the price of $0.51 per
Unit (the "Offering Price") pursuant to an offering registered by the Company
under the Securities Act of 1933, as amended (the "1933 Act").
The
Company hereby confirms its agreement, on the terms and subject to the
conditions set forth herein, to retain FIG Partners, L.L.C., a Georgia limited
liability company (the "Placement Agent"), on a "best efforts" basis, to (i)
assist with the book keeping and marketing of the Offering process, and (ii)
introduce the Company to, and assist the Company in procuring subscriptions
from, various investors (collectively "Purchasers") of the Units. The
sale to such Purchasers will be made under separate Unit purchase agreements
(each, a "Subscription Agreement") between the Company and each Purchaser of
Units. The Offering shall be made pursuant to the Offering Documents
(defined below). The Company, at its sole cost, shall prepare and
deliver to the Placement Agent a reasonable number of copies of the Offering
Documents in form and substance satisfactory to the Placement
Agent.
Each
prospective Purchaser subscribing to purchase Units shall be required to deliver
an executed Subscription Agreement. The Company shall make available
to each prospective Purchaser, at a reasonable time prior to the purchase of
Units, the opportunity to ask questions of and receive answers from the Company
concerning the terms and conditions of the Offering and the opportunity to
obtain additional information necessary to verify the accuracy of the documents
delivered in connection with the purchase of Units to the extent it possesses
such information or can acquire it without unreasonable effort or
expense. After the prospective Purchasers have had an opportunity to
review the Offering Documents and to address all inquiries to the Company,
separate Subscription Agreements shall be completed by each prospective
Purchaser. If a prospective Purchaser will become a holder of 5% or
more of the outstanding shares of the Common Stock, or potentially become a
holder of 5% or more of the outstanding shares of the Common Stock through
exercise of Warrants purchased under the Subscription Agreement, then such
Purchaser shall also be required to deliver a completed and executed Investor
Questionnaire, as required by NYSE-AMEX. The Company and the
Placement Agent, in the exercise of their reasonable discretion, shall each have
the right to reject subscriptions.
1. Appointment of Placement
Agent.
(a) The
Placement Agent is hereby appointed to act as the lead placement agent of the
Company (subject to the Placement Agent's right to have Selected Dealers, as
defined in Section 1(c) hereof, participate in the Offering) during the Offering
Period (as defined below). The Placement Agent's engagement is on a
"best efforts" basis. In the event that the Company has pre-existing
relationships with Purchasers, the Placement Agent will assist the Company in
the development of a marketing strategy for the Offering with respect to such
Purchasers and shall be entitled to receive fees as provided in Section 4(c)
with respect to such Purchasers. Exhibit A to this
Agreement contains a list of potential Purchasers with which the Company has
pre-existing relationships. The Placement Agent shall not be deemed
an agent of the Company for any other purpose by virtue of this
Agreement. The "Offering Period" shall commence on the day the
Offering Documents (defined below) are first made available to the Placement
Agent by the Company for delivery in connection with the offering for the sale
of Units (the "Commencement Date"), and shall expire upon the earlier to occur
of (i) the closing of the Offering (the "Closing"), and (ii) 11:59 p.m. Georgia
time on the 30th day after the Commencement Date subject to an extension, if
any, upon agreement by the parties hereto (the "Termination
Date").
FIG
Partners, L.L.C.
January
25, 2010
Page
2
(b) Subject
to the performance by the Company of all of its obligations to be performed
under this Agreement and to the completeness and accuracy of all representations
and warranties of the Company contained in this Agreement, the Placement Agent
hereby accepts such agency and agrees to use its best efforts to assist the
Company in finding Purchasers pursuant to the Offering described in the Offering
Documents. It is understood that the Placement Agent has no
commitment to sell or purchase any of the Units. The Placement
Agent's agency hereunder is not terminable by the Company prior to the
Termination Date unless the Placement Agent has materially breached any of its
covenants or agreements hereunder and failed to cure such breach within 5 days
after written notice thereof is given by the Company to the Placement
Agent.
(c) With
the Company's consent, the Placement Agent may engage other Persons who are
members of the Financial Industry Regulation Authority ("FINRA") and who have
executed a Selected Dealers Agreement (each such Person being hereinafter
referred to as a "Selected Dealer") pursuant to which such Selected Dealer
agrees to comply with all the obligations of the Placement Agent hereunder as if
such Selected Dealer were a party hereto for the benefit of the Company, and the
Placement Agent may allow such Persons to receive such part of the compensation
and payment of expenses payable to the Placement Agent hereunder as the
Placement Agent shall determine; provided, however, that any such compensation
shall be received pursuant to Section 4(c) hereof. For purposes of
this Agreement, "Person" shall mean and include any individual, corporation,
limited liability company, partnership, trust, association and any other entity
of any kind.
(d) Subscriptions
for Units shall be evidenced by the execution by each Purchaser of a
Subscription Agreement. No Subscription Agreement shall be effective
unless and until it is accepted by the Company. The Placement Agent shall not
have any independent obligation to verify the accuracy or completeness of any
information contained in any Subscription Agreement nor shall the Placement
Agent incur any liability with respect to any such verification or failure to
verify.
(e) Certain
affiliates of the Placement Agent, as identified by the Placement Agent, may
purchase Units in the Offering. Affiliates of the Placement Agent
will invest net of cash commissions and expenses. Accordingly, the
Placement Agent will not receive any commissions or expense allowances on the
Units purchased by its affiliates and the Company will receive net proceeds
equivalent to the net proceeds received from the purchase of Units by Persons
not affiliated with the Placement Agent.
(f) All
subscription funds shall be promptly and directly delivered without offset or
deduction to the Company. Any escrow procedures established by the
Company in connection with the sale of Units shall comply with the Securities
and Exchange Commission ("SEC") Rule 15c2-4 promulgated under the 0000
Xxx. All Purchasers to whom the Placement Agent arranges for the sale
of Units shall be instructed to wire funds to the account designated by the
Company for payment of the Units to be held by the Company in escrow until the
Closing Date (defined below).
FIG
Partners, L.L.C.
January
25, 2010
Page
3
2. Representations and
Warranties of the Company.
The
Company represents and warrants to the Placement Agent and each Selected Dealer,
if any, as follows:
(a) The
registration statement of the Company (the "Registration Statement"), which
became effective on September 4, 2007, for the registration of the sale of
certain securities under the 1933 Act, the prospectus, in the form in which it
appears in the Registration Statement (the "Base Prospectus"), and the
supplemented form of prospectus (the "Prospectus Supplement," and together with
the Registration Statement and the Base Prospectus, the "Offering Documents"),
in the form in which it will be filed with the SEC, as of the date hereof and
the Closing Date, comply with the applicable requirements of the 1933 Act, and
do not and shall not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading; provided,
however, that no representation, covenant or warranty is made with respect to
information relating to the Placement Agent that is provided in writing by the
Placement Agent to the Company specifically for inclusion in the Offering
Documents. If at any time prior to the completion of the Offering any
event shall occur as a result of which it might become necessary to amend or
supplement the Offering Documents so that they do not include any untrue
statement of any material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances then
existing, not misleading, the Company will promptly notify the Placement Agent
and will supply the Placement Agent (or the prospective Purchasers designated by
the Placement Agent) with amendments or supplements correcting such statement or
omission. The Company shall also provide the Placement Agent, for
delivery to all offerees and Purchasers and their representatives, if any, any
information, documents and instruments that the Placement Agent and the
Company's counsel reasonably deem necessary to comply with applicable
law. At the time of submission to any regulatory agencies and at all
times subsequent thereto until the Closing Date, all notices, applications and
other filings (the "Applications") made therewith have and will comply as to
form in all material respects with all applicable rules and regulations of the
applicable regulatory agencies (except as modified or waived in writing by the
applicable regulatory agencies). The information included in the
Applications is true, complete and correct in all material
respects.
(b) The
Company has no subsidiaries. The Company is a corporation duly
organized, validly existing and in good standing under the laws of Nevada, with
corporate power and authority to own, lease, use and operate its properties and
to carry on its business as now operated and conducted. The Company
is duly qualified as a foreign corporation to do business and is in good
standing in each jurisdiction in which its ownership or use of property or the
nature of the business conducted by it makes such qualification necessary,
except where the failure to be so qualified or in good standing would not have
any material adverse effect on the business, operations, assets, financial
condition or prospects of the Company (a "Material Adverse
Effect").
(c) The
Company has all requisite corporate power and authority to enter into and
perform this Agreement, the Subscription Agreement and each of the other
documents contemplated by this Agreement (collectively, the "Transaction
Documents"), and to consummate the transactions contemplated hereby and thereby,
in accordance with the terms hereof and thereof. The execution and
delivery of this Agreement and each of the other Transaction Documents by the
Company and the consummation by it of the transactions contemplated hereby and
thereby have been duly authorized by the Company's Board of Directors and no
further consent or authorization of the Company, its Board of Directors, or its
shareholders is required. This Agreement and each of the other
Transaction Documents have been duly executed and delivered by the
Company. This Agreement and each of the other Transaction Documents
will constitute upon execution and delivery by the Company, a legal, valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except as such enforceability may be limited by: (i) applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws in
effect that limit creditors' rights generally; (ii) equitable limitations on the
availability of specific remedies; (iii) principles of equity (regardless of
whether such enforcement is considered in a proceeding in law or in equity); and
(iv) to the extent rights to indemnification and contribution may be limited by
federal securities laws or the public policy underlying such laws.
(d) As
of the date hereof, the authorized and outstanding capital stock of the Company
is as set forth in the Offering Documents. All outstanding shares of Common
Stock are duly authorized, validly issued, fully paid and
nonassessable. No shares of capital stock of the Company are subject
to preemptive rights or any other similar rights of the shareholders of the
Company or any liens or encumbrances imposed through the actions or failure to
act of the Company. As of the date hereof, the Company's outstanding
options and warrants to purchase shares of Common Stock is as set forth in the
Offering Documents. As of the date hereof except to the extent described in the
preceding sentence or in the Offering Documents, (i) there are no outstanding
options, warrants, scrip, rights to subscribe for, puts, calls, rights of first
refusal, agreements, understandings, claims or other commitments or rights of
any character whatsoever relating to, or securities or rights convertible into
or exchangeable for any shares of capital stock of the Company, or arrangements
by which the Company is or may become bound to issue additional shares of
capital stock, and (ii) there are no agreements or arrangements under which the
Company is obligated to register the sale of any of its or their securities
under the 1933 Act. Except as may be described in any documents which
have been publicly filed by the Company or by any of the Company's stockholders,
to the Company's knowledge, there are no agreements between the Company's
stockholders with respect to the voting or transfer of the Company's capital or
with respect to the internal governance of the Company's
affairs.
FIG
Partners, L.L.C.
January
25, 2010
Page
4
(e) The
execution, delivery and performance of this Agreement and each of the other
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby will not (i) conflict with or
result in a violation of any provision of the Company's articles of
incorporation, as amended, or bylaws, as amended, (ii) violate or conflict with,
or result in a breach of any provision of, or constitute a default (or an event
which with notice or lapse of time or both could become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, any material agreement, indenture, patent, patent license or
instrument to which the Company is a party, or (iii) result in a violation of
any federal, state, local, municipal, foreign, or other law, rule, regulation,
order, judgment, decree, ordinance, policy or directive, including those
entered, issued, made, rendered or required by any court, administrative or
other governmental body, agency or authority, or any arbitrator (collectively, a
"Legal Requirement") applicable to the Company or by which any property or asset
of the Company is bound or affected (except for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse
Effect). The Company is not in violation of its articles of
incorporation or bylaws and the Company is not in default (and no event has
occurred which with notice or lapse of time would result in a default) under,
and the Company has not taken any action or failed to take any action that would
give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement or instrument to which the Company is a party or
by which any property or assets of the Company is bound or affected, except for
possible defaults as would not, individually or in the aggregate, have a
Material Adverse Effect. Except with respect to any additional
listing applications and other filings related to the listing of the Units to be
filed with NYSE-AMEX and FINRA, and as specifically contemplated by this
Agreement and as required under the 1933 Act and any applicable state securities
laws, the Company is not required to obtain any consent, authorization or order
of, or make any filing or registration with, any court, governmental agency,
regulatory agency, self regulatory organization or stock market or any third
party in order for it to execute, deliver or perform any of its obligations
under the Transaction Documents. All consents, authorizations,
orders, filings and registrations that the Company is required to effect or
obtain pursuant to the preceding sentence have been obtained or effected on or
prior to the date hereof.
(f) Since
September 4, 2007, the Company has timely filed all reports, schedules, forms,
statements and other documents required to be filed by it with the SEC pursuant
to the reporting requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") (all of the foregoing filed prior to the date hereof and
all exhibits included therein and financial statements and schedules thereto and
documents (other than exhibits to such documents) incorporated by reference
therein, being hereinafter referred to herein as the "SEC Documents"), or has
timely filed for a valid extension of such time of filing and has filed any such
SEC Documents prior to the expiration of any such extension. As of
their respective dates, the SEC Documents complied in all material respects with
the requirements of the Exchange Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents, and none of the SEC
Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(g) As
of their respective dates, the financial statements of the Company included in
the SEC Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto. Such financial statements have been prepared in
accordance with United States generally accepted accounting principles ("GAAP"),
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or (ii)
in the case of unaudited interim statements, to the extent they may not include
footnotes, year end adjustments or may be condensed or summary statements) and
fairly present in all material respects the financial position of the Company as
of the dates thereof and the results of its operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments). Except as set forth in the financial
statements of the Company included in the SEC Documents, the Company has no
liabilities, contingent or otherwise, other than liabilities incurred in the
ordinary course of business subsequent to December 31, 2008, and obligations
under contracts and commitments incurred in the ordinary course of business and
not required under GAAP to be reflected in such financial statements, which,
individually or taken in the aggregate would not reasonably be expected to have
a Material Adverse Effect.
FIG
Partners, L.L.C.
January
25, 2010
Page
5
(h) The
Company has established and maintains disclosure controls and procedures (as
such term is defined in Rule 13a-15(e) under the Exchange Act). Such
disclosure controls and procedures: (i) are designed to ensure that
material information relating to the Company is made known to the Company's
Chief Executive Officer and its Chief Financial Officer by others within the
Company, particularly during the periods in which the Company's reports and
filings under the Exchange Act are being prepared, (ii) have been evaluated for
effectiveness as of the end of the most recent annual period reported to the
SEC, and (iii) are effective to perform the functions for which they were
established. The Company has taken all reasonable actions necessary to ensure
that it is in compliance with all provisions of the Xxxxxxxx-Xxxxx Act that are
in effect and with which the Company is required to comply.
(i) Except
with respect to the transactions contemplated hereby and by each of the other
Transaction Documents and except as disclosed in the Offering Documents or has
been disclosed in any public disclosure as defined in Section 101(e) of
Regulations FD promulgated under the Exchange Act, since December 31, 2008: (i)
the Company has conducted its business only in the ordinary course, consistent
with past practice, and since that date, no changes have occurred which would
reasonably be expected to have a Material Adverse Effect; and (ii) the Company
has not incurred any liabilities (contingent or otherwise) other than (A) trade
payables, accrued expenses and other liabilities incurred in the ordinary course
of business consistent with past practice and (B) liabilities not required to be
reflected on the Company's financial statements pursuant to GAAP or required to
be disclosed in filings made with the SEC.
(j) Except
as set forth in the SEC Documents, there is no Action pending or, to the
knowledge of the Company, overtly threatened against or affecting the Company
that (i) adversely affects or challenges the legality, validity or
enforceability of the Agreement, or (ii) would, if there were an unfavorable
decision, have or reasonably be expected to have a Material Adverse
Effect. Except as set forth in the SEC Documents, neither the
Company, nor any director or officer thereof (in his or her capacity as such),
is or has been the subject of any Action involving a claim of violation of or
liability under federal or state securities laws or a claim of breach of
fiduciary duty. Except as set forth in the SEC Documents, there has
not been and, to the knowledge of the Company, there is not pending any
investigation by the SEC involving the Company or any current or former director
or officer of the Company (in his or her capacity as such). The SEC
has not issued any stop order or other order suspending the effectiveness of any
registration statement filed by the Company under the Exchange Act or the 1933
Act. As used in this Agreement, "Action" means any action, suit claim, inquiry,
notice of violation, proceeding (including any partial proceeding such as a
deposition) or investigation against or affecting the Company or any of their
respective properties before or by any court, arbitrator, governmental or
administrative agency, regulatory authority (federal, state, county, local or
foreign), public board, stock market, stock exchange or trading
facility.
(k) To
the Company's knowledge, the Company owns or possesses the requisite licenses or
rights to use all patents, patent applications, patent rights, inventions,
know-how, trade secrets, copyrights, trademarks, trademark applications, service
marks, service names, trade names and copyrights ("Intellectual Property")
necessary to enable it to conduct its business as now operated (and, to the
Company's knowledge, as presently contemplated to be operated in the future);
except as set forth in the SEC Documents, there is no claim or Action by any
Person pertaining to, or proceeding pending, or to the Company's knowledge
threatened, which challenges the right of the Company with respect to any
Intellectual Property necessary to enable it to conduct its business as now
operated and to the Company's knowledge, the Company's current products and
processes do not infringe on any Intellectual Property or other rights held by
any Person, except where any such infringement would not reasonably be expected
to have a Material Adverse Effect.
FIG
Partners, L.L.C.
January
25, 2010
Page
6
(l) The
Company has made or filed all federal, state and foreign income and all other
tax returns, reports and declarations required by any jurisdiction to which it
is subject (unless and only to the extent that the Company has set aside on its
books provisions reasonably adequate for the payment of all unpaid and
unreported taxes) and has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and has set aside on its books provisions reasonably adequate for the payment of
all taxes for periods subsequent to the periods to which such returns, reports
or declarations apply. There are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any jurisdiction, and the
officers of the Company know of no basis for any such claim. The
Company has not executed a waiver with respect to the statute of limitations
relating to the assessment or collection of any foreign, federal, state or local
tax.
(m) The
Company is in possession of all material franchises, grants, authorizations,
licenses, permits, easements, variances, exemptions, consents, certificates,
approvals and orders necessary to own, lease and operate its properties and to
carry on its business as it is now being conducted (collectively, "Permits"),
except when the failure to have the same would not result in a Material Adverse
Effect, and would not prohibit or otherwise materially interfere with the
ability of the Company to continue business in the ordinary course or perform
its obligations under this Agreement and under its other material
agreements. Except as set forth in the SEC Documents, there is no
Action pending or, to the knowledge of the Company, threatened regarding
suspension or cancellation of any of the Permits. The Company is not in conflict
with, or in default or violation of, any of the Permits, except for any such
conflicts, defaults or violations which, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect.
(n) Since
December 31, 2008, except as set forth in the SEC Documents, no event has
occurred or, to the knowledge of the Company, circumstance exists that (with or
without notice or lapse of time): (i) may constitute or result in a violation by
the Company, or a failure on the part of the Company to comply with, any Legal
Requirement; or (ii) may give rise to any obligation on the part of the Company
to undertake, or to bear all or any portion of the cost of, any remedial action
of any nature in connection with a failure to comply with any Legal Requirement,
except in either case that would not reasonably be expected to have a Material
Adverse Effect. Except for the comment letters from the SEC dated as
of September 28, 2009, October 30, 2009 and November 19, 2009 covering certain
SEC Documents, the Company has not, in the prior 12 months of the date hereof,
received any notice or other communication from any regulatory authority or any
other Person, nor does the Company have any knowledge regarding: (x) any actual,
alleged, possible or potential violation of, or failure to comply with, any
Legal Requirement, or (y) any actual, alleged, possible or potential obligation
on the part of the Company to undertake, or to bear all or any portion of the
cost of, any remedial action of any nature in connection with a failure to
comply with any Legal Requirement, except in either case that would not
reasonably be expected to have a Material Adverse Effect.
(o) "Environmental
Laws" shall mean, collectively, all Legal Requirements, including any federal,
state, local or foreign statute, laws, rule, regulation, ordinance, code, policy
or rule of common law or any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent, decree or judgment,
relating to pollution or protection of human health, the environment (including,
without limitation, ambient air, surface water, groundwater, land surface or
subsurface strata) or wildlife, including, without limitation, laws and
regulations relating to the release or threatened release of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products (collectively, "Hazardous Materials") or to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials. Except for such matters
as could not, singly or in the aggregate, reasonably be expected to result in a
Material Adverse Effect, (i) the Company has complied and is in compliance with
all applicable Environmental Laws; (ii) without limiting the generality of the
foregoing, the Company has obtained, has complied, and is in compliance with all
Permits that are required pursuant to Environmental Laws for the occupation of
its facilities and the operation of its businesses; (iii) the Company has not
received any written notice, report or other information regarding any actual or
alleged violation of Environmental Laws, or any liabilities or potential
liabilities (including fines, penalties, costs and expenses), including any
investigatory, remedial or corrective obligations, relating to the Company or
its facilities arising under Environmental Laws, nor, to the knowledge of the
Company is there any factual basis therefor; (iv) there are no underground
storage tanks, polychlorinated biphenyls, urea formaldehyde or other hazardous
substances (other than small quantities of hazardous substances for use in the
ordinary course of the operation of the Company's business, which are stored and
maintained in accordance and in compliance with all applicable Environmental
Laws), in, on, over, under or at any real property owned or operated by the
Company; (v) there are no conditions existing at any real property or with
respect to the Company that require remedial or corrective action, removal,
monitoring or closure pursuant to the Environmental Laws; and (vi) to the
knowledge of the Company, the Company has not contractually, by operation of
law, or otherwise amended or succeeded to any liabilities arising under any
Environmental Laws of any predecessors or any other Person.
FIG
Partners, L.L.C.
January
25, 2010
Page
7
(p) Except
for any lien for current taxes not yet delinquent or which are being contested
in good faith and by appropriate proceedings, the Company has good and valid
title to all personal property and good and indefeasible title to all real
property owned by it which is material to the business of the
Company. Any leases of real property and facilities of the Company
are valid and effective in accordance with their respective terms, except as
would not have a Material Adverse Effect.
(q) With
the exception of the Development and Manufacturing Agreement between the Company
and Märkisches Werk Halver, GmbH, dated as of June 28, 2008, the Company is not
currently subject to any agreement providing any Person any rights (including
piggyback registration rights, but excluding any rights that have been waived or
have expired by reason of lapse of time following notification of the Company's
intention to file one or more registration statements as described in the
Offering Documents) to have any securities of the Company or registered with the
SEC.
(r) The
Common Stock is registered pursuant to Section 12(b) of the Exchange Act,
and the Company has taken no action designed to, or which, to the knowledge of
the Company, is likely to have the effect of, terminating the registration of
the Common Stock under the Exchange Act. The Company shall,
consistent with the 1933 Act, effect the Offering under the Registration
Statement.
(s) No
labor or employment dispute exists or, to the knowledge of the Company, is
imminent or threatened, with respect to any of the employees of the Company that
has, or could reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect.
(t) Except
as set forth in the SEC Documents, none of the officers or directors of the
Company, and to the knowledge of the Company, none of the employees of the
Company, is presently a party to any transaction or agreement with the Company
(other than for services as employees, officers and directors) exceeding
$60,000, including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner.
(u) The
Company has insurance policies in full force and effect of a type, covering such
risks and in such amounts, and having such deductibles and exclusions as are
customary for conducting businesses and owning assets similar in nature and
scope to those of the Company. The amounts of all such insurance
policies and the risks covered thereby are in accordance in all material
respects with all material contracts and agreements to which the Company is a
party and with all applicable Legal Requirements. With respect to
each such insurance policy: (i) the policy is valid, outstanding and
enforceable in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws in effect that limit creditors' rights generally, equitable
limitations on the availability of specific remedies and principles of equity
(regardless of whether such enforcement is considered in a proceeding in law or
in equity); (ii) the Company is not in breach or default with respect to its
obligations thereunder in any material respect; and (iii) no party to the policy
has repudiated, or given notice of an intent to repudiate, any provision
thereof.
FIG
Partners, L.L.C.
January
25, 2010
Page
8
(v) The
Company will file with the SEC a Form 8-K disclosing the Offering within 4
business days of the Closing of the Offering.
(w) The
Company understands and confirms that each Purchaser will rely on the
representations, warranties and covenants contained in this Agreement in
effecting the transactions contemplated by the Subscription Agreement and the
other Transaction Documents. All representations and warranties
provided to the Purchaser, including any disclosures in the Company's disclosure
schedules attached thereto furnished by or on behalf of the Company, taken as a
whole are true and correct and do not contain any untrue statement of material
fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. No event or circumstance has occurred or
information exists with respect to the Company or its businesses, properties,
prospects, operations or financial conditions, which, under applicable law, rule
or regulation, requires public disclosure or announcement by the Company but
which has not been so publicly announced or disclosed.
(x) Except
as otherwise required by applicable law or the rules of any regulatory agency
and to make a formal announcement of the closing of this Offering, the Company
shall not, during the period commencing on the date hereof and ending 30 days
after the Closing Date, issue any press release or other communication, make any
written or oral statement to any media organization or publication or hold any
press conference, presentation or seminar, or engage in any other publicity with
respect to the Company, its financial condition, results of operations,
business, properties, assets, or liabilities, or the Offering, without the prior
written consent of the Placement Agent except in the ordinary course of business
and not for the purpose of soliciting any interest in the Offering.
(y) All
employee benefit plans maintained, administered or contributed to by the Company
have been maintained in all material respects with requirements of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and no such plan
incurred or assumed any "accumulated funding deficiency" within the meaning of
Section 302 of ERISA.
(z) In
connection with the Offering, the Company has not distributed any offering
materials or made any representation, written or oral, other than as contained
in, or in the case of oral communications, consistent with, the Offering
Documents.
(aa) The
Company has not relied upon the Placement Agent or legal counsel for the
Placement Agent for any legal, tax or accounting advice in connection with the
offering and sale of the Units.
3. Representations and
Warranties of the Placement Agent. The Placement Agent
represents and warrants to the Company as follows:
(a) The
Placement Agent is registered as a broker-dealer under applicable federal and
state law, is a member in good standing of FINRA and has met and will continue
to meet all registration, licensing, financial and reporting requirements it is
required to meet under applicable federal and state laws and regulations in
order to provide the services the Placement Agent has agreed to provide, or that
the Placement Agent contemplates that it will provide, to the Company under this
Agreement or otherwise in connection with the Offering.
(b) The
Placement Agent will not provide any service or engage in any activity, and it
will not permit any of its employees, agents, representatives or affiliates
(including any Selected Dealer) to provide any service or engage in any
activity, whether pursuant to this Agreement or otherwise in connection with the
sale of the Units, for which it does not have in effect all registrations,
licenses and approvals necessary to cause that service or activity to comply
with applicable federal and state laws and regulations.
(c) The
Placement Agent agrees that any employees, agents or representatives of any of
the Placement Agent's affiliates that provide any services to the Company under
this Agreement or otherwise in connection with the sale of the Units will be
considered, for purposes of the Placement Agent's agreements, representations,
warranties and obligations under this Agreement to also be employees, agents, or
representatives of the Placement Agent.
FIG
Partners, L.L.C.
January
25, 2010
Page
9
(d) Notwithstanding
anything contained in this Agreement to the contrary, the terms and conditions
of the sale of the Units as described in the Offering Documents shall control
the conduct of the sale of the Units, and neither the Placement Agent nor any of
its respective employees, agents, representatives or affiliates shall take any
action in connection with the sale of the Units contrary to those terms and
conditions.
(e) In
connection with or during the course of the sale of the Units, neither the
Placement Agent nor any employee, agent, representative or affiliate of the
Placement Agent will make any representation or provide any information to any
Purchaser or potential Purchaser for the Units other than the representations
and information contained in the Offering Documents or other information
specifically approved by the Company's Chief Executive Officer or Chief
Financial Officer.
(f) This
Agreement has been duly and validly authorized, executed and delivered by the
Placement Agent and is a valid and binding agreement and obligation of the
Placement Agent.
4. Closing; Placement and
Fees.
(a) Closing. The
Closing shall occur as provided in the Subscription Agreements or any other such
time and date and may be mutually agreed upon by the parties hereto (the
"Closing Date"). On the Closing Date, each Purchaser shall purchase
from the Company, severally and not jointly with the other Purchasers, and the
Company shall issue and sell to each Purchaser, the number of Units set forth in
each Subscription Agreement. Upon execution of the Subscription
Agreements, the funds for the purchase of the Units, together with all other
closing deliverables available, shall be held by the Company in escrow pending
the Closing.
(b) Conditions to Placement
Agent's Obligations. The obligations of the Placement Agent
hereunder are subject to the accuracy of the representations and warranties of
the Company herein contained as of the date hereof and as of the Closing Date,
to the performance by the Company of its obligations hereunder and to the
following additional conditions:
|
|
1.
|
Due Qualification or
Exemption. (A) The Offering contemplated by this
Agreement shall become qualified or be exempt from qualification under the
securities laws of the jurisdictions in which the Units are contemplated
to be offered not later than the Closing Date, subject to any filings to
be made thereafter and (B) at the Closing Date, no stop order suspending
the sale of the Units shall have been issued, and no proceeding for that
purpose shall have been initiated or
threatened;
|
|
|
2.
|
No Material
Misstatements. Neither the Blue Sky qualification
materials, the Offering Documents, nor any attachment or supplement
thereto, will contain an untrue statement of a fact, which in the opinion
of the Placement Agent, is material, or omit to state a fact, which, in
the opinion of the Placement Agent, is material and is required to be
stated therein, or is, in the opinion of the Placement Agent, necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading;
|
|
|
3.
|
Compliance with
Agreements. The Company shall have complied with all
agreements and satisfied all conditions on its part to be performed or
satisfied hereunder and under the Subscription Agreements at or prior to
each Closing;
|
|
|
4.
|
Corporate
Action. The Company shall have taken all corporate
action necessary in order to permit the valid execution, delivery and
performance of the Offering Documents by the Company, including, without
limitation, obtaining the approval of the Company's board of directors,
for the execution and delivery of the Offering Documents, the performance
by the Company of its obligations hereunder and the Offering contemplated
hereby;
|
FIG
Partners, L.L.C.
January
25, 2010
Page
10
|
|
5.
|
Opinion of Counsel to
the Company. The Placement Agent shall have received an
opinion of counsel to the Company, in customary form, dated as of the
Closing Date;
|
|
|
6.
|
Officer's
Certificate. At the Closing, the Placement Agent shall
receive a certificate of the Chief Executive Officer and Chief Financial
Officer of the Company, dated as of the Closing Date, to the effect that
(i) they have carefully examined the Offering Documents and, as of its
date, and the time of purchase, the Offering Documents did not contain any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; (ii) there has
not been, since the respective dates as of which information is given in
the Offering Documents, any material adverse change in the financial
condition or in the management, earnings, capital, properties, business
prospects or business affairs of the Company, considered as one
enterprise, whether or not arising in the ordinary course of business;
(iii) the representations and warranties of the Company contained in this
Agreement and the Subscription Agreements are true and correct with the
same force and effect as though made at and as of the Closing Date; (iv)
the Company has complied in all material respects with all material
agreements and satisfied all conditions on its part to be performed or
satisfied under this Agreement and the Subscription Agreements at or prior
to the Closing Date including the conditions contained in this Section 4;
(v) no stop order has been issued or, to their knowledge, is threatened,
by any regulatory agency, or any other federal or state authority; (vi) no
order suspending the Offering has been issued and to their knowledge, no
proceedings for any such purpose have been initiated or threatened by any
regulatory agency or any other federal or state
authority.
|
(c) Placement Fees and
Expenses. Simultaneously with payment for, and delivery of,
the Units at the Closing as provided in Section 4(a) above, the Company shall at
such Closing pay to the Placement Agent, as consideration for the Placement
Agent's services in connection with the Offering, a fee equal to six percent
(6%) of the principal value of the Units placed by the Placement Agent for
sale. With respect to purchases by Purchasers set forth on Exhibit A, the
Company shall at Closing pay to the Placement Agent a fee equal to one percent
(1%) of the principal value of the Units purchased by such
Purchasers. In addition, 60 days following the Closing, the Company
agrees to provide the Placement Agent with warrants to purchase a number of
shares of Common Stock equal to two and one half percent (2.5%) of the principal
value of the Units placed by the Placement Agent. The warrants will
have the same provisions as the Warrants offered to investors participating in
this Offering; provided, however, that their price shall be equal to the greater
of the Warrant price offered in the Offering or the closing price of the Common
Stock on the 60th day (or the trading day nearest the 60th day) following the
Closing. The warrants will expire 2 years from the date of issue. Whether or not
the Closing of the Offering occurs, the Company shall reimburse the Placement
Agent for all reasonable out–of–pocket expenses incurred by the Placement Agent
in connection with its engagement hereunder (including, without limitation,
reasonable fees and expenses of legal counsel, independent accountants and other
consultants to the Placement Agent); provided, however, that without the written
consent of the Company, the amount of such reimbursable expenses for legal
counsel, independent accountants and other consultants shall not exceed
$10,000. Reimbursement of such expenses shall be made by the Company
promptly following submission by the Placement Agent of invoices therefore from
time to time. The Company shall also pay all expenses in connection with the
qualification of the Units under the securities or Blue Sky laws of the states
which the Placement Agent shall designate.
FIG
Partners, L.L.C.
January
25, 2010
Page
11
(d) No Adverse
Changes. There shall not have occurred, at any time prior to
the Closing (i) any domestic or international event, act or other similar
occurrence which has disrupted, or in the Placement Agent's sole determination,
will materially disrupt the securities markets; (ii) a general suspension of, or
a general limitation on prices for, trading in securities on the New York Stock
Exchange, the NYSE Amex, the NASDAQ Global Market, or on the OTC Bulletin Board
for a minimum of one–trading day; (iii) any outbreak of major hostilities or
other national or international calamity having a material effect on the
performance of this Agreement; (iv) any banking moratorium declared by a state
or federal authority; (v) any material interruption in the mail service or other
means of communication within the United States; (vi) any materially adverse
change in the business, properties, assets, results of operations, prospects or
financial condition of the Company; or (vii) any change in the market for
securities in general or in political, financial, or economic conditions which,
in the Placement Agent's reasonable judgment, makes it inadvisable to proceed
with the offering, sale, and delivery of the Units.
5. Covenants of the
Company.
(a) Use of
Proceeds. The net proceeds of the Offering shall be used by
the Company substantially as set forth in the Prospectus
Supplement.
(b) Expenses of
Offering. The Company shall be responsible for and shall bear
all expenses incurred in connection with the Offering, including but not limited
to, the costs of preparing and duplicating the Offering Documents; preparing,
duplicating and delivering (including by facsimile) all selling documents,
including but not limited to this Agreement, the Subscription Agreements, the
blue sky memoranda and stock certificates; blue sky fees, filing fees and
reasonable legal fees, expenses and disbursements of the Placement Agent's
counsel (subject to the limitations set forth in Section 4(d) above); and the
cost of a reasonable number of closing books for the Placement Agent and its
counsel.
(c) Notification. The
Company shall notify the Placement Agent immediately, and in writing, (i) when
any event shall have occurred during the period commencing on the date hereof
and ending on the Closing Date as a result of which the Offering Documents would
include 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
not misleading in light of the circumstances under which they were made, and
(ii) of the receipt of any notification with respect to the modification,
rescission, withdrawal or suspension of the qualification or registration of the
Common Stock, or of any exemption from such registration or qualification, in
any jurisdiction. The Company will use its best efforts to prevent
the issuance of any such modification, rescission, withdrawal or suspension and,
if any such modification, rescission, withdrawal or suspension is issued and the
Placement Agent so requests, to obtain the lifting thereof as promptly as
possible.
(d) Blue
Sky. The Company shall use its best efforts to qualify the
Units for offering and sale under exemptions from qualification or registration
requirements under the securities or "blue sky" laws of such jurisdictions as
the Placement Agent may reasonably request; provided however, that the Company
will not be obligated to qualify as a dealer in securities in any jurisdiction
in which it is not so qualified or to sign a general consent to service of
process in any such jurisdiction. The Company will not consummate any
sale of Units in any jurisdiction in which it is not so qualified or in any
manner in which such sale may not be lawfully made.
(e) Securities Law
Filings. The Company shall comply with any filing requirement
imposed by the laws of any state or jurisdiction in which offers and sales are
made in connection with the Offering. The Company shall furnish the
Placement Agent with copies of all such filings and pay any applicable fees
related thereto. The Company shall make any filings under the 1933
Act and the Exchange Act required to be made by it in connection with the
Offering.
(f) Press Releases,
Etc. Except as otherwise required by applicable law or the
rules of any regulatory agency, the Company shall not, during the period
commencing on the date hereof and ending 30 days after the Closing Date, issue
any press release or other communication, make any written or oral statement to
any media organization or publication or hold any press conference, presentation
or seminar, or engage in any other publicity with respect to the Company, its
financial condition, results of operations, business, properties, assets, or
liabilities, or the Offering, without the prior written consent of the Placement
Agent except in the ordinary course of business and not for the purpose of
soliciting any interest in the Offering.
FIG
Partners, L.L.C.
January
25, 2010
Page
12
(g) No
Offerings. Pending completion or termination of the Offering
in accordance with the terms of this Agreement, the Company agrees that for a
period of 180 days following the Closing Date, it shall not, without the written
consent of the Placement Agent, enter into an agreement (whether binding or not)
with any other Person relating to a possible public or private offering or
placement of its securities or any other transaction which would prevent the
consummation of the Offering, other than (i) offers or sales of securities under
an employee benefit plan as defined in Rule 405 under the 1933 Act; (ii) offers
or sales of securities in connection with options, warrants, or convertible
securities outstanding as of the Closing Date; (iii) securities issued pursuant
to stock splits, stock dividends or distributions, and similar events affecting
the Common Stock; (iv) shares of Common Stock or warrants to vendors or
strategic partners of the Company; or (v) securities issued pursuant to mergers,
acquisitions or strategic transactions.
(h) Lock–Up
Agreement. The Company agrees that its directors and executive
officers shall not, for a period of 180 days following the Closing Date, sell,
assign or transfer any of their shares of the Company's securities without the
Placement Agent's prior written consent, other than (i) to satisfy the exercise
price and/or tax withholding obligations in connection with the exercise of
stock options granted by the Company; (ii) pursuant to a Rule 10b5-1 Selling
Plan effective as of the date of this Agreement (provided that prior notice of
any sale, assignment or transfer is given to the Placement Agent); (iii) to
complete one or more bona fide gift transfers of securities; (iv) to transfer
securities to one or more trusts for bona fide estate planning purposes; (v) to
transfer securities to any corporation, partnership, limited liability company
or other entity all of the beneficial ownership interests of which are held by
the transferor or the immediate family of the transferor; or (vi) to effect the
cashless exercise of any stock options outstanding as of the date hereof,
provided that any shares received by the director or executive officer upon such
exercise will be subject to the terms of this Section 5(h) and except that in
connection with such exercise the director or executive officer shall be
permitted to sell or otherwise transfer only such number of shares of Common
Stock necessary to fund the exercise price of such stock options and any
withholding taxes resulting from such exercise.
(i) No
Statements. The Company shall not use the name of the
Placement Agent or any officer, director, employee or shareholder thereof
without the express written consent of such party and such Person, except as
required by applicable law.
(j) Right of First
Refusal. The Placement Agent shall have a right of first
refusal to act as the placement agent on any private or public offerings by the
Company of any equity or debt securities conducted during the 12-month period
following the Closing Date. Terms for any equity offerings will be on
substantially the same terms set forth in this Agreement, including the same
economic terms as set forth in Section 4(c) hereof unless otherwise negotiated
by the parties to this Agreement. Terms for any debt offerings, as well as bona
fide unsolicited offers to invest capital in the Company shall be negotiated by
the parties of this Agreement, including payment to the Placement Agent of a
cash fee of no more than three percent (3%) of the principal value of the
investment. Such rights shall survive for a period of 12 months from
the Closing Date.
(k) No Variable Rate
Transactions. The Company agrees that, subject to the terms of this
Agreement, from the Closing Date until such time as no Purchaser holds any of
the Warrants, the Company shall be prohibited from effecting or entering into an
agreement to effect any issuance by the Company of Common Stock or common stock
equivalents for cash consideration (or a combination of units hereof) involving
a Variable Rate Transaction. “Variable Rate Transaction” means a
transaction in which the Company (i) issues or sells any debt or equity
securities that are convertible into, exchangeable or exercisable for, or
include the right to receive additional shares of Common Stock either (A) at a
conversion price, exercise price or exchange rate or other price that is based
upon and/or varies with the trading prices of or quotations for the shares of
Common Stock at any time after the initial issuance of such debt or equity
securities, or (B) with a conversion, exercise or exchange price that is subject
to being reset at some future date after the initial issuance of such debt or
equity security (other than in connection with anti-dilution protection or
adjustment for corporate events including, but not limited to, stock splits,
dividends and reclassifications) or upon the occurrence of specified or
contingent events directly or indirectly related to the business of the Company
or the market for the Common Stock or (ii) enters into any agreement, including,
but not limited to, an equity line of credit, whereby the Company may sell
securities at a future determined price. Any Purchaser shall be
entitled to obtain injunctive relief against the Company to preclude any such
issuance, which remedy shall be in addition to any right to collect
damages. Notwithstanding anything herein to the contrary, the Company
may enter into an equity line of credit with institutional investors at a fixed
price so long as such investors cannot sell the equity so received for 180 days
after the closing of such equity line and provided further that, following the
90th day after the Closing, the Company may enter into an equity line of credit
without restriction so long as the Company has received shareholder
approval.
FIG
Partners, L.L.C.
January
25, 2010
Page
13
(l) Reservation of Common
Stock. The Company agrees that, as of the Closing Date, the Company has
reserved and the Company shall continue to reserve and keep available at all
times, free of preemptive rights, a sufficient number of shares of Common Stock
for the purpose of enabling the Company to issue shares pursuant to this
Agreement and to issue shares upon the exercise of the Warrants.
(m) Integration. The
Company shall not sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in Section 2 of the 0000 Xxx)
that would be integrated with the Offering for purposes of the rules and
regulations of the NYSE-AMEX such that it would require shareholder approval
prior to the closing of such other transaction unless shareholder approval is
obtained before the closing of such subsequent transaction.
(n) Furnishing of
Information. The Company agrees that, from the Closing Date
until the earliest of the time that (i) no Purchaser owns securities purchased
hereunder, or (ii) the Warrants have expired, the Company covenants to timely
file (or obtain extensions in respect thereof and file within the applicable
grace period) all reports required to be filed by the Company after the date
hereof pursuant to the Exchange Act even if the Company is not then subject to
the reporting requirements of the Exchange Act. As long as any
Purchaser owns securities purchased hereunder, if the Company is not required to
file reports pursuant to the Exchange Act, it will prepare and furnish to the
Purchasers and make publicly available in accordance with Rule 144(c) such
information as is required for the Purchasers to sell such securities, including
without limitation, under Rule 144. The Company further covenants that it will
take such further action as any holder of securities may reasonably request, to
the extent required from time to time to enable such Person to sell such
securities without registration under the 1933 Act, including without
limitation, within the requirements of the exemption provided by Rule
144.
6. Indemnification.
(a) The
Company agrees to indemnify and hold harmless the Placement Agent and each
Selected Dealer, if any, and their respective partners, affiliates,
shareholders, directors, officers, agents, advisors, representatives, employees,
counsel and controlling Persons within the meaning of the 1933 Act (a "Placement
Agent Indemnified Party") from and against any and all losses, liabilities,
claims, damages and expenses whatsoever (and all actions in respect thereof),
and to reimburse the Placement Agent Indemnified Party for reasonable legal fees
and related expenses as incurred (including, but not limited to the costs of
giving testimony or furnishing documents in response to a subpoena or otherwise,
the costs of investigating, preparing, pursuing or defending any such action or
claim, whether or not pending or threatened, whether or not resulting in any
liability, and whether or not the Placement Agent or any Placement Agent
Indemnified Party is a party thereto), insofar as such losses, liabilities,
claims, damages or expenses arise out of, relate to, whether or not resulting in
any liability, are incurred in connection with or are in any way a result of (i)
the engagement of the Placement Agent pursuant to this Agreement and in
connection with the transactions contemplated by this Agreement and the other
Offering Documents (the "Engagement"), including any modifications or future
additions to such Engagement and related activities prior to the date hereof,
(ii) any act by either the Placement Agent or any Placement Agent Indemnified
Party taken in connection with the Engagement pursuant to and in accordance with
this Agreement, except if such Placement Agent or Placement Agent Indemnified
Party was grossly negligent or engaged in willful misconduct, (iii) a breach of
any representation, warranty, covenant, or agreement of the Company contained in
this Agreement, (iv) the employment by the Company of any device, scheme or
artifice to defraud, or the engaging by the Company in any act, practice or
course of business which operates or would operate as a fraud or deceit, or any
conspiracy with respect thereto, in connection with the sale of the Units, or
(v) any untrue statement or alleged untrue statement of a material fact
contained in the Offering Documents or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading,
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage, liability or expense arises out of or
is based upon an untrue statement or alleged untrue statement or omission or
alleged omission so made in conformity with information furnished by any such
Placement Agent Indemnified Party in writing for use in the Offering
Documents. In addition, the Company shall not be liable for any
amounts paid in the settlement of any loss, claim, damage, liability, or action
if such settlement is effected without the consent of the Company (which such
consent shall not be unreasonably withheld). Any advancement of
expenses pursuant to this Section need only be made by the Company to a
Placement Agent Indemnified Party if such party first agrees in form and
substance reasonably satisfactory to the Company to repay any such amounts
promptly to the Company, as the case may be, if it is later determined that such
Person acted in bad faith, was grossly negligent or whose misconduct was
willful.
FIG
Partners, L.L.C.
January
25, 2010
Page
14
(b) The
Company agrees to indemnify and hold harmless a Placement Agent Indemnified
Party to the same extent as the foregoing indemnity, and subject to the
limitations set forth therein, against any and all loss, liability, claim,
damage and expense whatsoever directly arising out of the exercise by any Person
of any right under the 1933 Act or the Exchange Act or the securities or Blue
Sky laws of any state on account of violations of the representations,
warranties or agreements set forth in Section 2 hereof.
(c) The
Placement Agent agrees to indemnify and hold harmless the Company, the Company's
directors, officers, employees, counsel, advisors, representatives, agents and
controlling Persons within the meaning of the 1933 Act (a "Company Indemnified
Party") and each and all of them, to the same extent as set forth in Section
6(a)(v) of the foregoing indemnity from the Company to the Placement Agent, but
only with reference to information regarding the Placement Agent furnished in
writing to the Company by the Placement Agent for use in the Offering
Documents and only to the extent that any losses, claims, damages, and
liabilities in respect of which indemnification is claimed are finally
judicially determined to have resulted primarily and directly from the bad faith
or gross negligence of the Placement Agent.
(d) Promptly
after receipt by a Person entitled to indemnification pursuant to subsection
(a), (b), or (c) (an "indemnified party") of this Section of notice of the
commencement of any action, the indemnified party will, if a claim in respect
thereof is to be made against a Person granting indemnification (an
"indemnifying party") under this Section, notify in writing the indemnifying
party of the commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability which it may have to
the indemnified party otherwise than under this Section. In case any
such action is brought against an indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will 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 herein stated, with counsel reasonably satisfactory to
the indemnified party, and after notice from the indemnifying party to the
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to the indemnified party for any legal or
other expenses subsequently incurred by the indemnified party in connection with
the defense thereof other than reasonable costs of investigation incurred at the
request of the indemnifying party. 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 that the reasonable 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 the indemnified party or parties and the indemnifying party and, in the
opinion of counsel of the indemnified party, a conflict of interest exists
between such parties in which case the indemnifying party shall not have the
right to assume the defense of such action on behalf of the indemnified party or
parties, 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 for the indemnified party or parties
(plus local counsel). No settlement, compromise, consent to entry of
judgment or other termination of any action (collectively, "Terminations") in
respect of which a Placement Agent Indemnified Party may seek indemnification
hereunder (whether or not any Placement Agent Indemnified Party is a party
thereto) shall be made without the prior written consent of the Placement Agent
Indemnified Party, which such consent may be withheld at the sole discretion of
such Placement Agent Indemnified Party, provided, however, that the foregoing
requirement of prior written consent for Terminations shall not apply to the
Placement Agent who may agree to such Terminations on behalf of a Placement
Agent Indemnified Party without the prior written consent of any Placement Agent
Indemnified Party.
FIG
Partners, L.L.C.
January
25, 2010
Page
15
(e) Notwithstanding
any of the provisions of this Agreement, the aggregate indemnification or
contribution of the Placement Agent for or on account of any losses, claims,
damages, liabilities or actions under this Section 6, Section 7 or any other
applicable section of this Agreement, shall not exceed the cash fees actually
paid to the Placement Agent, except to the extent such losses, claims, damages,
liabilities or actions are finally judicially determined to have resulted
primarily and directly from the bad faith or willful misconduct of the Placement
Agent. The respective indemnity and contribution agreements by the
Company and the Placement Agent contained in subsections (a), (b), (c) and (d)
of this Section 6 and Section 7, and the covenants, representations and
warranties of the Company and the Placement Agent set forth in this Agreement
shall remain operative and in full force and effect regardless of (i) any
investigation made by the Placement Agent, on the Placement Agent's behalf or by
or on behalf of any Person who controls the Placement Agent, the Company or any
controlling Person of the Company or any director or officer of the Company,
(ii) acceptance of any of the Units and payment therefor, or (iii) any
termination of this Agreement, and shall survive the delivery of the Units, and
any successor of the Placement Agent or of the Company or of any Person who
controls the Placement Agent or the Company, as the case may be, shall be
entitled to the benefit of such respective indemnity and contribution
agreements. The respective indemnity and contribution agreements by
the Company and the Placement Agent contained in subsections (a), (b) and (c) of
this Section 6 and Section 7 shall be in addition to any liability which the
Company and the Placement Agent may otherwise have.
7. Contribution. To
provide for just and equitable contribution, if (i) an indemnified party makes a
claim for indemnification pursuant to Section 6 but it is found in a final
judicial determination, by a court of competent jurisdiction, not subject to
further appeal, that such indemnification may not be enforced in such case, even
though this Agreement expressly provides for indemnification in such case, or
(ii) any indemnified or indemnifying party seeks contribution under the 1933
Act, the Exchange Act, or otherwise, then the Company (including for this
purpose any contribution made by or on behalf of any officer, director, employee
or agent for the Company, or any controlling Person of the Company), on the one
hand, and the Placement Agent and any Selected Dealers (including for this
purpose any contribution by or on behalf of an indemnified party), on the other
hand, shall contribute to the losses, liabilities, claims, damages, and expenses
whatsoever to which any of them may be subject, in such proportions as are
appropriate to reflect the relative benefits received by the Company, on the one
hand, and the Placement Agent and the Selected Dealers, on the other hand;
provided, however, that if applicable law does not permit such allocation, then
other relevant equitable considerations such as the relative fault of the
Company, the Placement Agent and the Selected Dealers in connection with the
facts which resulted in such losses, liabilities, claims, damages, and expenses
shall also be considered. In no case shall the Placement Agent or a
Selected Dealer be responsible for a portion of the contribution obligation in
excess of the cash fees actually received by it pursuant to this
Agreement. No Person guilty of a fraudulent misrepresentation shall
be entitled to contribution from any Person who is not guilty of such fraudulent
misrepresentation. For purposes of this Section 7, each Person, if
any, who controls either of the Placement Agent or a Selected Dealer within the
meaning of Section 15 of the 1933 Act or Section 20(a) of the Exchange Act and
each officer, director, stockholder, employee and agent of the Placement Agent
or a Selected Dealer, shall have the same rights to contribution as the
Placement Agent or the Selected Dealer, and each Person, if any who controls the
Company within the meaning of Section 15 of the 1933 Act or Section 20(a) of the
Exchange Act and each officer, director, employee and agent of the Company,
shall have the same rights to contribution as the Company, subject in each case
to the provisions of this Section 7. Anything in this Section 7 to
the contrary notwithstanding, no party shall be liable for contribution with
respect to the settlement of any claim or action effected without its written
consent. This Section 7 is intended to supersede any right to
contribution under the 1933 Act, the Exchange Act, or otherwise.
8. Miscellaneous.
(a) Survival. Any
termination of the Offering without the Closing shall be without obligation on
the part of any party except that the provisions regarding fees and expenses
contained in Sections 4(d) and 5(b), the indemnification provided in Section 6
hereof and the contribution provided in Section 7 hereof shall survive any
termination and shall survive any Closing.
FIG
Partners, L.L.C.
January
25, 2010
Page
16
(b) Representations, Warranties
and Covenants to Survive Delivery. Except as provided in
Section 8(a), the respective representations, warranties, indemnities,
agreements, covenants and other statements of the Company and the Placement
Agent as of the date hereof shall survive execution of this Agreement and
delivery of the Units and the termination of this Agreement.
(c) No Other
Beneficiaries. This Agreement is intended for the sole and
exclusive benefit of the parties hereto and their respective successors and
controlling Persons, and, except as provided in Section 2(w) above, no other
Person shall have any third-party beneficiary or other rights
hereunder.
(d) Governing
Law. This Agreement shall be governed by and construed in
accordance with the law of the State of New York without regard to conflict of
law provisions.
(e) Consent to
Jurisdiction. Any legal suit, action or proceeding arising out
of or based upon this Agreement or the transactions contemplated hereby may be
instituted in the federal courts of the United States of America located in New
York County, New York, or the courts of the State of New York in each case
located in New York County (collectively, the “Specified Courts”), and each
party irrevocably submits to the exclusive jurisdiction (except for proceedings
instituted in regard to the enforcement of a judgment of any such court, as to
which such jurisdiction is non-exclusive) of such courts in any such suit,
action or proceeding. Service of any process, summons, notice or
document by mail to such party’s address set forth below shall be effective
service of process for any suit, action or other proceeding brought in any such
court. The parties irrevocably and unconditionally waive any
objection to the laying of venue of any suit, action or other proceeding in the
Specified Courts and irrevocably and unconditionally waive and agree not to
plead or claim in any such court that any such suit, action or other proceeding
brought in any such court has been brought in an inconvenient
forum.
(e) Counterparts. This
Agreement may be signed in counterparts with the same effect as if both parties
had signed one and the same instrument.
(f) Notices. All
communications hereunder shall be in writing and, except as otherwise provided
herein, will be mailed, delivered or telecopied and confirmed as follows: if to
the Placement Agent, to FIG Partners, L.L.C., 100 Colony Square, 0000 Xxxxxxxxx
Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx 00000, Attention: Xxxxxxxxxxx X. Xxxxxxx;
if to the Company, to SulphCo, Inc., 0000 Xxxx Xxx Xxxxxxx Xxxxxxx Xxxxx, Xxxxx
000, Xxxxxxx, Xxxxx 00000, Attention: Xx. Xxxxx X. Xxxx.
(g) Termination. Subject
to the general survival provisions contained herein, this Agreement may be
terminated by either party prior to the Closing upon written
notice.
(h) Entire
Agreement. This Agreement constitutes the entire agreement of
the parties hereto with respect to the matters herein referred and supersedes
all prior agreements and understandings, written and oral, between the parties
with respect to the subject matter hereof, other than that certain Engagement
Letter Agreement between the parties hereto, dated as of May 27, 2009 (the
"Engagement Letter"). In the event of any inconsistency between the
terms of this Agreement and the Engagement Letter, the terms of this Agreement
shall control. Neither this Agreement nor any term hereof may be
changed, waived or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, waiver or
termination is sought.
(i) Independent
Contractor. The Placement Agent shall act as an independent
contractor and nothing contained herein or otherwise shall be construed to
create any partnership or joint venture between the Placement Agent and the
Company.
FIG
Partners, L.L.C.
January
25, 2010
Page
17
(j) Headings. The
headings and captions of the various subdivisions of this Agreement are for
convenience or reference only and shall in no way modify or affect the meaning
or construction of any of the terms or provisions hereof.
(k) Definition. Any
reference in this Agreement or in any certificate delivered pursuant hereto to a
party's "knowledge" or other similar expressions relating to the knowledge or
awareness of any party will include all matters which any of such party's
officers or directors actually knew or should have known acting in their
capacity as an officer or director of such party.
(l) Subscription
Agreements. Notwithstanding anything contained herein to the contrary, in
the event of termination of this Agreement, the Company's consummation of the
transactions contemplated by the Subscription Agreements shall not violate any
term of this Agreement and the Placement Agent shall not be entitled to any
compensation in connection therewith.
[Signature
Page Follows]
If the
foregoing is in accordance with your understanding of our agreement, please sign
and return to us four copies of this Agreement, whereupon this Agreement will
become a binding agreement in accordance with its terms.
|
Very
truly yours,
|
||
|
SULPHCO,
INC.
|
||
|
By:
|
||
|
Name:
|
||
|
Title:
|
||
The
foregoing Placement Agency Agreement
is hereby
confirmed and accepted as of
the date
first above written.
|
FIG
PARTNERS, L.L.C.
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
