Exhibit 10.8
4net Software, Inc.
00 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxxx 00000
(000) 000-0000
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SECURITIES OFFERED:
400,000 Shares of Series A Convertible Preferred Stock
Price Per Share: $4.00 per share
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PLACEMENT AGENT AGREEMENT
Dated as of April 30, 2001
Catalyst Financial LLC
00 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxxx 00000
Dear Sirs:
4net Software, Inc. (the "Company"), a Delaware corporation formed in 1986,
is engaged in acquiring, managing, and operating niche software and
Internet solution companies. In addition to providing management and
financial support, the Company also actively develops business strategies,
operations, and management teams for its acquired companies. The business
of the Company is more fully described in that certain Confidential
Offering Memorandum, dated May 1, 2001 (references to which shall be deemed
to include any and all supplements and amendments thereto and all financial
statements and exhibits that are included therein, referred to collectively
herein as the "Memorandum").
The Company desires to raise up to $1,600,000 through the offer and sale of
up to 400,000 shares of the Company's Series A Convertible Preferred Stock,
par value $.01 at the offering price of $4.00 per share (the "Preferred
Shares" or "Preferred Stock"), as more fully described in the Memorandum,
in a private offering (the "Offering"). In addition, the Company reserves
the right to sell up to 100,000 additional Preferred Shares (the
"Additional Preferred Shares"), beyond the above stated maximum offering,
in the event the Company receives executed Subscription Agreements from
qualified purchasers for such Additional Preferred Shares prior to the
Closing Date. There is a minimum investment of 10,000 Preferred Shares or
$40,000, however the Company may, in its sole discretion, accept
subscriptions in denominations of less than $40,000. In connection with the
Offering, the Company would like to retain the services of Catalyst
Financial LLC to act as the Placement Agent (the "Placement Agent"),
subject to the terms and conditions set forth herein.
The offer and sale of the Preferred Shares is being made in accordance with
the Memorandum. The Preferred Shares will not be registered under the
Securities Act of 1933, as amended (the "Securities Act") or any state
securities or "blue sky" laws and will be offered and sold in reliance upon
the exemptions afforded by Section 4(2) of the Securities Act and Rule 506
of Regulation D promulgated thereunder and by similar exemptions afforded
by or preempted from the state securities or "blue sky" laws. The
subscribers for the Preferred Shares each of whom will be required to
execute and deliver the Subscription Agreement (the "Subscription
Documents") will be issued the Preferred Shares (the "Investors").
Prior to the (i) registration of the Preferred Shares or (ii) the
expiration of the relevant holding period under Rule 144 promulgated
pursuant to the Securities Act, purchasers of the Preferred Shares in this
Offering may not sell, pledge, assign or otherwise transfer or hypothecate
any Preferred Shares, sold in this Offering, or any securities into which
the Preferred Shares may be converted.
All capitalized terms not defined in this Agreement shall have the meanings
ascribed to them in the Memorandum.
Section 1. Appointment of Placement Agent and Terms of Offering.
1.1 Appointment of Placement Agent. You are hereby invited to become a
Placement Agent ("Placement Agent") and by your confirmation of this
Agreement you agree to act in such capacity for the Offering during the
term of the Offering Period (as defined in Section 1.5 below) and to use
your best efforts to find purchasers for the Preferred Shares in accordance
with the terms and conditions set forth in this Agreement. You may retain
other broker-dealers who are members of the National Association of
Securities Dealers, Inc. (the "NASD") or banks exempt from broker-dealer
registration to assist you to find purchasers for the Preferred Shares in
accordance with the terms and conditions set forth in this Agreement.
1.2 Co-Placement Agents. The Company may appoint one or more registered
broker- dealers who are members in good standing of the National
Association of Securities Dealers, Inc., ("NASD") or banks exempt from
broker-dealer registration to serve as co-Placement Agents with you.
1.3 Solicitation of Subscriptions. You hereby agree to solicit, as an
independent contractor and not as an agent of the Company, Investors
acceptable to the Company in accordance with the terms of the Memorandum
and this Agreement.
1.4 Subscriptions.
1.4.1 Solicitation Procedures. Each person desiring to purchase Preferred
Shares in the Offering shall be required to execute and deliver to the
Company the applicable Subscription Documents and a payment, by check or
wire transfer, in the amount of $4.00 per Preferred Share for the total
amount of the Preferred Shares purchased, payable to "4net Software, Inc.
Special Account." By way of example, if an Investor purchased the minimum
subscription of 10,000 Preferred Shares, the Investor must make a payment,
by check or wire transfer, in the amount of $40,000 payable to the Company.
You shall transmit each investor's check or wire confirmation and original
Subscription Documents received by you to the Company care of the address
listed on the Subscription Documents, retaining a copy of each for your
files. The Company shall deposit the checks directly in its Special
Account.
1.4.2 Acceptance Standards and Procedures. The Company will not consider
any proposed subscription until all of a prospective Investor's
Subscription Documents have been completed, signed and delivered. After
receipt of all required Subscription Documents with respect to an Investor,
the Company will determine whether they wish to accept the offered
subscription. No subscriptions shall be effective unless and until accepted
by the Company. Subscriptions for Preferred Shares will be accepted only
from subscribers who meet the investor suitability standards set forth in
the Memorandum and the Subscription Documents. The minimum required
purchase by any Investor shall be 10,000 Preferred Shares, subject to the
right of the Company in its sole discretion to allow investment in a lesser
amount. The Company reserves the right to reject any subscriptions and to
allocate subscriptions received in the event the Preferred Shares are
oversubscribed.
1.4.3 Rejection. Subscriptions may be rejected in whole or in part by the
Company, provided the Company notifies the Placement Agent of the rejection
of any subscription and returns to the Placement Agent the funds previously
received from the person whose subscription was paid and the original
Subscription Documents, within ten (10) business days of the receipt of the
completed Subscription Documents. Should the Company determine to reject a
subscription, you will promptly return the Subscription Documents directly
to the prospective purchaser as well as the funds previously received upon
receipt of such documents and funds from the Company.
1.5 Offering Period. The "Offering Period" shall mean that period during
which any Preferred Shares are offered for sale, commencing on the date
upon which the Memorandum is initially delivered by the Company for
distribution to Investors and continuing until the earlier of (a) the date
on which subscriptions for the maximum number of Preferred Shares, which
may or may not include the Additional Shares are accepted or (b) July 1,
2001, unless earlier terminated by the Company, or unless extended for 30
days in the sole discretion of the Company (the "Termination Date").
1.6 Closings.
1.6.1 Final Closing. If at any time before the Termination Date,
subscriptions for the maximum number of Preferred Shares provided for
herein have been accepted (including subscriptions by the Company, the
Placement Agent(s) or their affiliates), the subscribers shall be admitted
to the Company as Investors in a final closing (the "Final Closing").
The Company shall fix a date no later than three business days after the
Termination Date on which the Final Closing will take place (or, if the
third day is not a business day, the next business day) (the "Final Closing
Date").
1.6.2 Closing Certificate. The Final Closing will take place at the
Company's offices, or at such other place as shall be mutually agreed upon
by the Company and you. At the Final Closing, you agree to deliver to the
Company if so requested by the Company, a certificate stating (i) the
number of offerees in each of the jurisdictions designated on the blue sky
memorandum (the "Blue Sky Memorandum") delivered to you by the Company, and
(ii) that your representations and warranties contained in Section 4 are
true and correct with the same effect as though expressly then made and
that you have complied with the covenants contained in Section 5.
1.7 Due Diligence. You agree to conduct your own investigation to determine
that all material facts upon which each person who purchases the Preferred
Shares might rely in making this investment decision have been accurately
and adequately disclosed in the Memorandum to the extent you deem
necessary.
1.8 Compensation to the Placement Agent. For your services hereunder the
Company agrees to pay to you: (i) a selling commission, in an amount equal
to ten percent (10%) of the gross offering proceeds for each Preferred
Share sold through the Placement Agent and (ii) a non-accountable expense
allowance equal to three percent (3%) of the gross offering proceeds for
each Preferred Share sold through the Placement Agent. The sales commission
and non-accountable expense allowance provided for under this Agreement
shall be payable by the Company to the Placement Agent within ten (10)
business days following the Company's acceptance of the Subscription
Agreement.
Payment of the above compensation is subject to the following conditions:
No compensation will be payable with respect to any subscriptions for
Preferred Shares which are rejected by the Company; and
No compensation will be payable to you with respect to any sale of
Preferred Shares sold by you until such time as the Company has received
the total proceeds of any such sale.
No compensation will be payable with respect to transactions in
jurisdictions where such payments may not legally be made. You may waive
all your compensation in connection with any sales of Preferred Shares to
you, the Company and certain officers, directors, employees or affiliates
of you or the Company, and you in your discretion may waive all or a
portion of your compensation in connection with any sales of Preferred
Shares to other purchasers with whom the Company or their affiliates have a
business relationship.
In no event will the value of the total compensation exceed the amount
allowable in connection with the Company' obtaining the benefits of the
exemptions from the qualification requirements of state securities laws.
On the Final Closing Date, the Company shall issue to the Placement Agent,
or its designees, five-year warrants (the "Placement Agent Warrants") to
purchase the number of shares of Preferred Stock equal to 10% of the number
of Preferred Shares sold in the Offering. The Placement Agent Warrants
shall be transferable to officers, directors, consultants and shareholders
of the Placement Agent. The Placement Agent Warrants shall contain
registration rights similar to such rights provided to the holders of the
Preferred Shares.
Section 2. Representations and Warranties of the Company.
The Company represents, warrants and agrees with you for your benefit that:
2.1 Power and Authority of the Company. The Company has been duly organized
and is validly existing and in good standing under the laws of the State of
Delaware, with full power and authority to conduct business as described in
the Memorandum. Complete and correct copies of the Certificate of
Incorporation and the Bylaws of the Company and all amendments thereto are
available upon request, and no changes therein will be made subsequent to
the date hereof and prior to the Final Closing Date.
2.2 Validity of Issuance of Securities. The outstanding common stock of the
Company has been, and the Preferred Shares to be issued and sold by the
Company pursuant to the Offering upon such issuance will be, when paid for
as provided in the Memorandum and the Subscription Documents, duly
authorized, validly issued, fully paid and non-assessable, and will not be
subject to any preemptive or similar rights. Subscribers for the Preferred
Shares shall have no liability in excess of their respective capital
contributions.
2.3 Adequacy of the Memorandum. The Company will have prepared and
delivered to you the Memorandum. The Memorandum does not, and on any
Closing Date will not, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements therein not misleading. Every contract or other
document required by the Securities Act or any regulations promulgated
thereunder (the "Regulations") to be described in or attached as an exhibit
to the Memorandum or otherwise made available to Investors has been so
described, attached or made available.
2.4 Due Authorization and Enforceability of This Agreement. This Agreement
has been duly and validly authorized, executed and delivered by or on
behalf of the Company and constitutes the valid, binding and enforceable
agreement of such Company, except to the extent that (i) the enforceability
of this Agreement may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally or
by general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law), and (ii) the
indemnification provisions of this Agreement may be held to violate public
policy (under either state or federal law) in the context of the offer or
sale of securities.
2.5 No Material Adverse Change. Since the respective dates as of which
information is given in the Memorandum, there has not been any material
adverse change in the condition, financial or otherwise, of the Company or
in the earnings, affairs or business prospects of the Company.
2.6 Absence of Legal or Contractual Conflicts. The execution and delivery
of this Agreement by the Company, and the consummation of the transactions
contemplated in the Memorandum, will not, or with the passage of time or
the giving of notice would not, constitute a breach of, default under or
violation of (i) any statute, indenture, mortgage, deed of trust, voting
trust, note, lease or other agreement or any instrument to which the
Company is or will be a party or by which any of them or their property is
or will be bound, or (ii) any order, rule or regulation applicable to the
Company of any court or any governmental body or administrative agency
having jurisdiction over its properties or businesses.
2.7 Governmental Consents. No consent, approval, authorization or order of
any court or governmental agency or body has been or is required for the
performance of this Agreement and the consummation of the transactions
contemplated in this Agreement or in the Memorandum by the Company, except
such as have been or are to be obtained under the state securities or "blue
sky" laws.
2.8 Adverse Claims. There is not pending or threatened any action, suit or
proceeding before or by any court or other governmental body against the
Company and no default exists in the due performance and observance of any
material obligation, term, covenant or condition of any agreement or
instrument to which the Company is a party, or by which it is bound that is
not referred to in the Memorandum and that might result in any material
adverse change in the condition (financial or otherwise), earnings, affairs
or business or prospects of the Company or might materially and adversely
affect any of the assets of the Company.
2.9 Legal Actions. There are no actions, suits or proceedings pending, or
to the Company's knowledge, threatened against or affecting the Company or
any of its respective officers in their capacity as such, before or by any
Federal or state court, commission, regulatory body, administrative agency
or other governmental body, domestic or foreign, wherein an unfavorable
ruling, decision or finding might materially and adversely affect the
Company or its respective business, properties, business prospects,
condition (financial or otherwise) or results of operations taken as a
whole.
2.10 Investment Company. On the date hereof and the Final Closing Date, the
Company is not and will not be an investment company as that term is
defined in the Investment Company Act of 1940.
2.11 No Offers. No offer, offer to sell, offer for sale, sale or attempt to
dispose of any Preferred Shares to any person has been made prior to the
Offering Period upon the authority of the Company.
2.12 Accuracy of Representations. No statement, representation, warranty or
covenant made by the Company in this Agreement or made in any certificate
or document required by this Agreement to be delivered to you was or will
be, when made, inaccurate, untrue or incorrect in any material respect.
Section 3. Covenants of the Company.
The Company covenants with you as follows:
3.1 Amendment of Memorandum. Promptly upon the occurrence of any event
which would cause the Memorandum to include during the Offering Period an
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading, the Company will
promptly notify you of the event. The Company will within a reasonable
period of time prepare and furnish to you such number of copies as you may
request of an amendment or amendments of, or a supplement or supplements
to, the Memorandum which will amend or supplement the Memorandum so that as
amended or supplemented it shall not contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading.
3.2 Compliance with Securities Laws. The Company will use its best efforts
to cause the sale of the Preferred Shares to take place in a manner that
will permit reliance upon Regulation D promulgated under the Securities Act
and will file the required Form D in a timely fashion. The company will use
its best efforts to secure exemptions from qualification or registration of
the Preferred Shares or preemption under the securities or "blue sky" laws
of such states in which it advises you in writing that the Preferred Shares
may be offered, and will make such applications, file such documents, and
furnish such information as may reasonably be required for that purpose.
3.3 Due Diligence Inquiry. Upon request by you, the Company will make
reasonable effort to furnish you information necessary in your judgment, or
in the judgment of your counsel, to confirm the continued fairness,
accuracy and completeness of the Memorandum in all material respects during
the Offering Period.
3.4 Reports and Other Information. The Company will, as long as any
Preferred Shares may remain outstanding, furnish directly to you one (1)
copy of each report furnished to Investors at the time such report is
furnished to the Investors.
3.5 Delivery of Sales Material. The Company will deliver to you, from time
to time, all sales material (whether designated solely for broker-dealer
use or otherwise) proposed to be used or delivered in connection with the
offering of the Preferred Shares.
3.6 Limited Liability and Company Status. The Company will take all steps
necessary to preserve, to the extent possible, the limited liability of the
Investors and its status as a corporation.
3.7 Notification of Changes. The Company will notify you promptly of any
change having or which is likely to have a material adverse change on the
condition (financial or otherwise), earnings, affairs or business or
prospects of the Company or might materially and adversely affect any of
the assets of the Company relating to any of the Company's'
representations, warranties, covenants or agreements contained herein that
occurs at any time prior to the Final Closing.
Section 4. Representations and Warranties of the Placement Agent.
You hereby represent, warrant and agree with the Company for its benefit
that:
4.1 Valid Power and Authority. You have been duly formed and are validly
existing as a limited liability company in good standing under the laws of
the State of your formation, with all requisite power and authority to
conduct your business and to perform the obligations contemplated herein.
4.2 Due Authorization and Enforceability of this Agreement. This Agreement
has been duly and validly authorized, executed and delivered by you or on
your behalf and constitutes your valid, binding and enforceable agreement,
except to the extent that (i) the enforceability of this Agreement may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the rights of creditors generally or by general principles
of equity (regardless of whether such enforcement is considered in a
proceeding in equity or at law), and (ii) the indemnification provisions of
this Agreement may be held to violate public policy (under either state or
federal law) in the context of the offer or sale of securities.
4.3 Absence of Legal or Contractual Conflicts. Your execution and delivery
of this Agreement, and the performance of your obligations thereunder, will
not result in a violation of, be in conflict with or constitute a default
under any agreement or instrument to which you are a party or by which you
or your properties are bound, or any judgment, decree, order or, to your
knowledge, any statute, rule or regulation applicable to you.
4.4 Adequacy of the Memorandum. The information contained in the Memorandum
relating to you, if any, is complete and correct and does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein not misleading.
4.5 Broker-Dealer Qualifications. You are (and will continue to be during
the term of this Agreement) a member in good standing of the NASD and agree
to abide by the Rules of Fair Practice of such association. You are
properly registered or licensed as a broker or dealer under applicable
federal and state securities laws and regulations. You, your affiliates,
and your or their officers and directors (or any other person serving in a
similar capacity) have not taken or failed to take any act, and are not
subject to any order or proceedings, that would make unavailable any
limited offering exemption from registration or qualification requirements
of applicable federal or state securities laws.
4.6 No Disqualifications. Neither you nor any of your directors, officers,
predecessors or agents nor any beneficial owner of 10% or more of any class
of your equity securities, nor any of their respective affiliates (nor any
other person serving in a similar capacity):
Has been convicted within ten years prior to the date hereof of any crime
or offense involving the purchase or sale of any security, involving the
making of a false statement with the Securities and Exchange Commission
(the "SEC"), or arising out of such person's conduct as an underwriter,
broker, dealer, municipal securities dealer or investment
adviser;
Is subject to any order, judgment or decree of any court of competent
jurisdiction temporarily or preliminarily enjoining or restraining, or is
subject to any order, judgment, or decree of any court of competent
jurisdiction, entered within five years prior to the date hereof,
permanently enjoining or restraining such person from engaging in or
continuing any conduct or practice in connection with the purchase or sale
of any security, involving the making of a false filing with the SEC, or
arising out of the conduct of the business of an underwriter, broker,
dealer, municipal securities dealer or investment adviser;
Is subject to an order of the SEC entered pursuant to section 15(b),
15B(a), or 15B(c) of the Exchange Act; or is subject to an order of the SEC
entered pursuant to section 203(e) or (f) of the Investment Advisers Act of
1940;
Is suspended or expelled from membership in, or suspended or barred from
association with a member of, an exchange registered as a national
securities exchange pursuant to section 6 of the Exchange Act, an
association registered as a national securities association under section
15A of the Exchange Act, or a Canadian securities exchange or association
for any act or omission constituting conduct inconsistent with just and
equitable principles
of trade;
Is subject to a United States Postal Service false representation order
entered within five years prior to the date hereof; or is subject to a
restraining order or preliminary injunction entered under section 3007 of
title 39, United States Code, with respect to any conduct alleged to
constitute postal fraud;
Has been or has been named as an underwriter of any securities covered by
any registration statement which is the subject of any pending proceeding
or examination under section 8 of the Securities Act, or is the subject of
any refusal order or stop order entered thereunder within five years prior
to the date hereof;
Has been or has been named as an underwriter of any securities covered by
any filing which is subject to any pending proceeding under Rule 261 or any
similar Rule adopted under section 3(b) of the Securities Act, or to an
order entered thereunder within five years prior to the date hereof;
Has taken or failed to take any other act, or are subject to any other
order or proceedings, that would make unavailable to the Company any
limited offering exemption from the registration or qualification
requirements of federal or state securities laws;
Has filed a registration statement that is the subject of a currently
effective stop order entered pursuant to any state's securities law within
five years prior to the date hereof;
Has been convicted within five years prior to the date hereof of any felony
or misdemeanor in connection with the offer, purchase or sale of any
security or any felony involving fraud or deceit, including but not limited
to forgery, embezzlement, obtaining money under false pretenses, larceny or
conspiracy to defraud;
Is currently subject to any state administrative enforcement order or
judgment entered by that state's securities administrator within five years
prior to the date hereof or is subject to any state's administrative
enforcement order or judgment in which fraud or deceit, including but not
limited to making untrue statements of material facts and omitting to state
material facts, was found and the order or judgment was entered within five
years prior to the date hereof;
Is subject to any state's administrative enforcement order or judgment that
prohibits, denies or revokes the use of any exemption from registration in
connection with the offer, purchase or sale of securities; or
Is currently subject to any order, judgment or decree of any court of
competent jurisdiction temporarily or preliminarily restraining or
enjoining, or is subject to any order, judgment or decree of any court of
competent jurisdiction permanently restraining or enjoining, such party
from engaging in or continuing any conduct or practice in connection with
the purchase or sale of any security or involving the making of any false
filing with the state entered within five years prior to the date hereof.
Section 5. Covenants of the Placement Agent.
You covenant with the Company as follows:
5.1 Delivery of Offering Materials. You or a person acting on your behalf
shall furnish to each offeree, concurrently with making an offer to such
offeree (and its purchaser representative, if such a representative has
been selected), a numbered copy of the Memorandum, as it may have been
amended or supplemented by the Company, and shall maintain adequate records
of each person to whom a Memorandum has been delivered. Neither you nor any
of your agents will give any information or make any representation with
respect to the Company or its business or affairs other than the
information or representations contained in the Memorandum or any sales
literature authorized for use in connection with the Offering, or such
other information as is specifically authorized by the Company.
5.2 Conduct of Solicitation. You or a person acting on your behalf will
cause each person interested in acquiring Preferred Shares to complete and
execute the Subscription Documents (copies of which are included in the
Memorandum) in order to enable the Company to determine whether such person
is qualified to acquire Preferred Shares. You will not execute any
Subscription Documents for any person and will not invest in the Preferred
Shares through any person's discretionary trading account without the
written approval of such person. You will abide by, and take reasonable
precautions to insure compliance with, all provisions contained in the
Memorandum and the Subscription Documents regulating the terms and manner
of conducting the Offering.
5.3 Compliance with Federal Securities Laws. You will comply with all
applicable requirements of the Securities Act and the rules and regulations
promulgated thereunder, including Regulation D. Specifically, but without
limitation, neither you nor any person acting on your behalf will offer the
Preferred Shares by means of any form of general solicitation or general
advertising nor to any person or entity unless you or your licensed
personnel have a substantial pre-existing business relationship with such
person or entity. No advertisement, article, notice or other communication
regarding the Offering will be published by you in any newspaper, magazine
or similar medium or broadcast over television or radio. Neither you nor
any of your agents will sponsor, hold or participate in any seminar or
meeting regarding the Offering at which the persons attending have been
invited by any general solicitation or general advertising. You and any
person acting on your behalf will make offers of the Preferred Shares only
to persons whom you and your agents have reasonable grounds to believe and
do believe: (a) have such knowledge and experience in business and
financial matters (either alone or together with a purchaser
representative) that they are capable of evaluating the merits and risks of
the prospective investment and of protecting their own interests in
connection with the transaction and (b) meet the investor suitability
requirements contained in the Memorandum and the Subscription Documents.
You and any person acting on your behalf will cooperate with the Company so
that the Preferred Shares are offered and sold only to "accredited
investors" as such term is defined in Rule 501 of Regulation D and up to an
additional 35 investors who are not "accredited investors" but who
otherwise meet the sophistication and suitability requirements of Rule
506(b)(2)(ii) of Regulation D. Additionally, you and your agents will
exercise reasonable care to ensure that a purchaser is not an underwriter
within the meaning of Section 2(11) of the Securities Act.
5.4 Compliance with Blue Sky Laws. You will comply with all applicable
requirements of any state securities or "blue sky" law or rule or
regulation promulgated thereunder. You will not offer or sell any of the
Preferred Shares in any jurisdiction (i) prior to receiving written
instructions from the Company that offers may be made in such jurisdiction
and (ii) except in compliance with all applicable securities or "blue sky"
laws. With respect to any state which limits the number of offers and sales
which may be made, you shall offer for sale no more than such number of
Preferred Shares as we may advise you may be offered and/or sold.
5.5 Maintenance of Records. You will retain in your records and make
available to the Company, for a period of at least five years, information
establishing that each person who purchases the Preferred Shares pursuant
to a Subscription Documents solicited by you is within the permitted class
of investors under the requirements, if any, of the jurisdiction in which
such purchaser is a resident and the suitability standards set forth in the
Memorandum and the Subscription Documents.
Section 6. Certificates from the Company and the Placement Agent.
6.1 At the Final Closing Date, you shall have received a certificate signed
by an officer of the Company on behalf of the Company to the effect that
(i) the signer has carefully examined the Memorandum and, in the signer's
opinion, at all times from the time the Memorandum was initially delivered
to you for distribution to investors the Memorandum did not contain any
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading; (ii) since the date the
Memorandum was initially delivered to you for distribution to investors, no
event has occurred which should have been set forth in an amendment of or
supplement to the Memorandum but which has not been so set forth; (iii) no
proceedings have been instituted or threatened by the Commission or any
blue sky agency with respect to the Offering; and (iv) the representations
and warranties contained in Section 2 are true and correct with the same
effect as though expressly then made and the Company has materially
complied with the covenants contained in Section 3.
6.2 At the Final Closing Date, the Company shall have received a
certificate from you that the representations and warranties contained in
Section 4 are true and correct with the same effect as though expressly
then made and you have materially complied with the covenants contained in
Section 5.
Section 7. Indemnification.
7.1 By the Company. The Company will indemnify and hold harmless you and
each person, if any, who controls you within the meaning of the Securities
Act, against any losses, claims, damages or liabilities, joint or several,
to which you or such controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact
contained in the Memorandum, or in any related sales material (whether
designated solely for broker-dealer use or otherwise) which the Company or
any respective officer thereof authorizes in writing for use by you or any
Placement Agent, or arise out of or are based upon the omission or alleged
omission to state therein any material fact required to be stated therein
or necessary to make the statements therein not misleading; provided,
however, that none of such persons will be liable to indemnify you or such
a controlling person thereof pursuant to this Section 7.1 to the extent
that any such loss, claim, damage or liability arises out of or is based
upon any untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with written
information furnished to any of them by you specifically for use in the
Memorandum or sales material; and will reimburse you and each such
controlling person for any legal or other expenses reasonably incurred in
connection with investigating or defending any such loss, claim, damage,
liability or action. Notwithstanding the foregoing provisions of this
Section 7.1, the Company shall not indemnify you or any person, if any, who
controls you within the meaning of the Securities Act, for losses,
liabilities or expenses arising from or out of an alleged violation of
federal or state securities laws unless (i) there has been a successful
adjudication on the merits of each count involving alleged securities law
violations by the particular indemnitee not caused by materials supplied by
the Company or (ii) such claims have been dismissed with prejudice on the
merits by a court of competent jurisdiction as to the particular indemnitee
or (iii) a court of competent jurisdiction approves the settlement of the
claims against the particular indemnitee. In any claim against a Company
for indemnification for federal or state securities law violations, the
party seeking indemnification shall place before the court the position of
the SEC and states that may require it with respect to the issue of
indemnification for securities law violations.
7.2 By the Placement Agent. You will indemnify and hold harmless Company
and each other person who controls Company within the meaning of the
Securities Act, against any losses, claims, damages or liabilities, joint
or several, to which the Company may become subject, under the Securities
Act or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon (i) any
untrue statement or alleged untrue statement of any material fact contained
in the Memorandum, or any related sales material which the Company
authorize in writing for use by you, or arise out of or are based upon the
omission or the alleged omission to state therein any material fact
required to be stated therein or necessary to make the statements therein
not misleading, in each case to the extent that such untrue statement or
alleged untrue statement or omission or alleged omission was made in
reliance upon and in conformity with written information furnished to the
Company by you specifically for use therein and (ii) any breach by you or
any Placement Agent of any representation, warranty or covenant contained
in this Agreement, provided that you or any Placement Agent shall be liable
under this Section 7.2 only to the extent that such losses, claims, damages
or liabilities result from any action or inaction by you. You will
reimburse any legal or other expenses reasonably incurred by the Company or
any controlling person in connection with investigating or defending any
such loss, claim, damage, liability or action, provided that you shall
reimburse any such legal or other expenses in connection with investigating
or defending any such loss, claim, damage, liability or action only to the
extent that such loss, claim, damage or liability results from any action
or inaction caused by you.
7.3 Notification. Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 7, notify 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 any
indemnified party otherwise than under this Section 7. In case any such
action is brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will
be entitled to participate therein and, to the extent that it may wish,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not
be liable to such indemnified party under this Section 7 for any legal or
other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation.
Section 8. Termination of this Agreement.
8.1 Right of Termination. You or the Company shall have the right to
terminate this Agreement at any time.
8.2 Notice. If you elect to terminate this Agreement as provided in this
Section 8, the Company shall be notified promptly by you pursuant to
Section 9 of this Agreement. If the Company elects to terminate this
Agreement as provided in this Section 8, you shall be notified promptly by
the Company pursuant to Section 9 of this Agreement.
8.3 Liability of Parties. All representations, warranties and
indemnification agreements contained in this Agreement shall remain
operative and in full force and effect, regardless of any termination
pursuant to Section 8.1, and shall survive the Final Closing Date.
Section 9. Miscellaneous Provisions.
9.1 Notices. All notices provided for by this Agreement shall be made in
writing either (i) by actual delivery of the notice to the parties
thereunto entitled or (ii) by the mailing of the notice in the United
States mails to the address, as stated below (or at such other address as
may have been designated by written notice), of the party entitled thereto,
by certified or registered mail, return receipt requested. The notice shall
be deemed to have been received in case (i), above, on the date of its
actual receipt by the party entitled thereto and in case (ii), above, on
the date of deposit in the United States mail.
All communications hereunder, except as herein otherwise specifically
provided, shall be in writing and, shall be mailed or delivered to:
The Company: 4net Software, Inc.
00 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxxx 00000
The Placement Agent: Catalyst Financial LLC
00 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxxx 00000
9.2 Parties. This Agreement shall inure to the benefit of and be binding
upon you, the Company and each of your and the Company's respective
successors and legal representatives. Except as otherwise set forth in this
Section, nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any other person any legal or equitable right,
remedy or claim under or in respect of this Agreement, or any provision
herein contained. No purchaser of Preferred Shares will be deemed a
successor because of such purchase.
9.3 Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
9.4 Arbitration. You and the Company agree that any controversy arising out
of or relating to this Agreement or the Offering contemplated hereby shall
be settled by arbitration in New York, New York, in accordance with the
rules then in effect for the NASD.
9.5 Multiple Counterparts. This Agreement may be executed in a number of
identical counterparts, each of which shall be deemed to be an original,
but all of which constitute, collectively, one and the same Agreement; but
in making proof of this Agreement, it shall not be necessary to produce or
account for more than one such counterpart.
9.6 Modification or Amendment. This Agreement may not be modified or
amended except by written agreement executed by the parties hereto.
9.7 Other Instruments. The parties hereto covenant and agree that they will
execute such other and further instruments and documents as are or may
become necessary or convenient to effectuate and carry out this Agreement.
9.8 Validity. Should any portion of this Agreement be declared invalid and
unenforceable, then such portion shall be deemed to be severable from this
Agreement and shall not affect the remainder of this Agreement.
9.9 Captions. The captions used in this Agreement are for convenience only
and shall not be construed in interpreting this Agreement.
9.10 Entire Agreement. This Agreement contains the entire understanding
between the parties and supersedes any prior understandings or written or
oral agreements between them respecting the subject matter hereof.
If the foregoing is in accordance with our agreement, please sign and
return to us a counterpart hereof, whereupon this instrument along with all
counterparts will become a binding agreement among you and the Company in
accordance with its terms.
Very truly yours,
4net Software, Inc.
By: /s/ Xxxxxxx Xxxxx
---------------------------
Xxxxxxx Xxxxx, Director
CATALYST FINANCIAL LLC
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------
Xxxxxx X. Xxxxxxx, President
