Exhibit 10.29
REDLINE PERFORMANCE PRODUCTS, INC.
SELLING AGENT AGREEMENT
Dated as of April 20, 2004
GunnAllen Financial, Inc.
0000 X. Xxxxxxxxx Xxxx.
Xxxxx 000
Xxxxx, Xxxxxxx 00000
Attention: Xx. Xxxxxxx Xxxxx
Gentlemen:
REDLINE PERFORMANCE PRODUCTS, INC. (the "Company") proposes to offer
for sale (the "Offering") in a private offering pursuant to Section 4(2) of the
Securities Act of 1933, as amended (the "Act"), and/or Regulation D promulgated
by the Securities and Exchange Commission thereunder, an aggregate of up to
$468,750 of its shares of Common Stock, par value $.01 per share ("Shares"), at
a subscription price of $1.60 per share. The Offering is being made on a "best
efforts" basis. Offers and sales of the Shares shall be solely to Accredited
Investors (as defined in Regulation D). This letter agreement shall confirm our
agreement concerning GunnAllen Financial, Inc. acting as a selling agent (the
"Selling Agent" or "GAF") in connection with the sale of the Shares.
The Company has prepared a Common Stock Purchase Agreement, dated as
of April 21, 2004 (the "Purchase Agreement"), relating to, among other things,
the Company, the Shares, the terms of the Offering and the terms of the sale of
the Shares, describing, among other things, the involvement of GAF as selling
agent and the compensation to be paid by the Company to GAF. The Common Stock
Purchase Agreement, including all supplements, exhibits and appendices thereto
and documents delivered therewith or referenced therein, are referred to herein
as the "Documents" and shall include any supplements or amendments in accordance
with this Agreement.
l. Appointment of Selling Agent.
On the basis of the representations and warranties contained herein,
and subject to the terms and conditions set forth herein, the Company hereby
appoints GAF as a Selling Agent and grants to GAF the right to offer, as its
agent, the Shares pursuant to the terms of this Agreement. On the basis of such
representations and warranties, and subject to such conditions, GAF hereby
accepts such appointment and agree to use its reasonable best efforts to secure
subscriptions for Shares. Nothing contained herein shall be deemed to grant GAF
an exclusive right to sell Shares, it being understood that the Company may
employee other registered broker dealers to assist it in the Offering. The
Company understands that the Selling Agent is being retained to obtain
subscriptions on a "best efforts" basis and has not guaranteed the sale of any
Shares. GAF hereby waives the 10-day notice requirement of Section 4(w) of the
Underwriting Agreement between GAF and the Company dated May 15, 2003, as
amended, and hereby consents to the
sale of Shares pursuant to Section 4(hh) of such agreement.
2. Terms of the Offering.
(a) The Offering shall consist of up to $468,750 of its
Shares, at a purchase price of $1.60 per Share. The Offering is being made on a
"best efforts" basis. In the event a subscription is not accepted, such rejected
subscription funds will be returned to the subscriber without interest or
deduction.
(b) The Offering commenced on or about April 20, 2004, and
shall expire at 5:00 p.m., New York time, on a date to be determined by the
Company. Such period, as same may be so extended, shall hereinafter be referred
to as the "Offering Period."
(c) Each prospective investor ("Prospective Investor") who
desires to purchase Shares shall deliver to the Selling Agent the Purchase
Agreement and immediately available funds in the amount necessary to purchase
the number of Shares such Prospective Investor desires to purchase. The Selling
Agent shall not have any obligation to independently verify the accuracy or
completeness of any information contained in any Purchase Agreement or the
authenticity, sufficiency, or validity of any check delivered by any Prospective
Investor in payment for Shares.
(d) The Selling Agent shall deliver each completed Purchase
Agreement to the Company. Upon acceptance of the Purchase Agreement, the Selling
Agent shall deliver each check (or wire of funds) received from a Prospective
Investor to the Company. The Company shall notify the Selling Agent promptly of
the acceptance or rejection or any Purchase Agreement.
3. No Escrow; Closings; Release of Funds.
All funds shall be made available to the Company and shall not
be placed into an escrow account. In the event that a subscription is returned
to a Prospective Investor, it will be returned without interest or deduction.
For purposes hereof, the term "Closing Date" shall mean the date the Purchase
Agreement is accepted by the Company and subscription funds are received by the
Company. The term "Final Closing Date" shall mean the date of acceptance of the
final Purchase Agreement and related subscription funds in the Offering.
4. Representations and Warranties of the Selling Agent.
The Selling Agent represents and warrants to the Company as
follows:
(a) The Selling Agent is duly incorporated and validly
existing and in good standing under the laws of its State of incorporation.
(b) The Selling Agent is, and at the time of each Closing will
be, a member in good standing of the NASD.
(c) Offers and sales of Shares by the Selling Agent will only
be made in such
jurisdictions in which the Selling Agent is a registered broker-dealer or where
an applicable exemption from such registration exists.
(d) Offers and sales of Shares by the Selling Agent will be
made only in accordance with this Selling Agent Agreement and in compliance with
the provisions of Rule 506 of Regulation D (it being understood and agreed that
the Selling Agent shall be entitled to rely upon the information and statements
provided by the Prospective Investor in the Purchase Agreement and/or Section
4(2) of the Securities Act of 1933, as amended (the "Act"), and the Selling
Agent will furnish to each investor a copy of the Documents prior to accepting
any subscription for the Shares.
5. Compensation.
(a) The Selling Agent shall be entitled, on each Closing Date,
as compensation for its services as Selling Agent under this Agreement, to
selling commissions equal to 5 % of the gross subscription proceeds received by
the Company through subscriptions made by investors introduced by GAF. Payment
shall be made by the Company to GAF within 48 hours of receipt of any
subscription funds and shall be made by wire transfer of funds.
(b) As further compensation for its services in the Offering,
the Selling Agent shall also be entitled to common stock purchase warrants
("Selling Agent Warrants") to purchase 10,000 shares of Common Stock of the
Company with an exercise price of $2.00 per share for each $250,000 in
subscription funds received by the Company from investors introduced by GAF. The
Selling Agent Warrants shall include "piggyback" registration rights similar to
those granted to investors in the Offering, shall include provisions for
"cashless exercise" and shall have a term of five years and otherwise be in form
acceptable to the Selling Agent. These Selling Agent Warrants are being issued
to the Selling Agent in lieu of an additional commission of 5% of the gross
subscription proceeds. The Selling Agent has advised the Company that it
normally charges a commission of 10% but has agreed to accept only a 5%
commission and the Selling Agent Warrants.
(c) In addition to the compensation payable to the Selling
Agent set forth in clause (a) above, the Company shall pay the reasonable legal
fees of the Selling Agent's counsel in the amount of $5,000, payable within 48
hours of acceptance of any subscription and shall be made by wire transfer of
funds.
6. Representations and Warranties of the Company.
(a) The Company represents and warrants to, and agrees with,
the Selling Agent that:
(i) Assuming the accuracy of the representations and
warranties of the Prospective Investors as may be set forth in the Purchase
Agreement and the representations and warranties of the Selling Agent set forth
herein, the Documents (a) contain, and at all times during the period from the
date hereof to and including each Closing Date, will contain all information
required to be contained therein, if any, pursuant to Rules 502 and 506 of
Regulation D and all applicable federal and/or state securities and "blue sky"
laws, and (b) do not, and during such period 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 in light of the
circumstances made therein not misleading. Each contract, agreement, instrument,
lease, license, or other document required to be described in the Documents
shall be, and have been, accurately described therein.
(ii) No Documents or information (it being understood
that neither the Company nor any of its officers or directors or employees shall
provide any information to any Prospective
Investor which is not contained in the Documents) provided by the Company or
made available to Prospective Investors, including, without limitation the
Securities and Exchange Act filings as contained or referred to in the Documents
("SEC Documents"), shall contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein in light of circumstances made therein not misleading.
(iii) The Company is, and at all times during the period
from the date hereof to and including each Closing Date will be, a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Minnesota, with full corporate power and authority, and has obtained
all necessary consents, authorizations, approvals, orders, licenses,
certificates, and permits and declarations of and from, and has made filings
with, all federal, state and local authorities, to own, lease, license, and use
its properties and assets and to conduct its business as presently conducted as
described in the Documents and/or in any such case where the failure to have any
of the foregoing would not have a material adverse effect on the Company's
presently conducted business. As of the date hereof, the Company is, and at all
times during the period from the date hereof to and including each Closing Date,
duly qualified to do business and is in good standing in every jurisdiction in
which its ownership, leasing, licensing, or use of property and assets or the
conduct of its business makes such qualification necessary except where the
failure to be so qualified would not have a material adverse effect on the
Company's business.
(iv) The Company has made, or shall make, during the
Offering Periodall required filings with the SEC and/or blue sky authorities of
the appropriate states in connection with the offer and sale of the Shares so as
to comply with the requirements of Regulation D and /or the securities laws of
the various states. The Company shall provide the Selling Agent with either (a)
copies of the filings (stamped or otherwise indicating filing) or (b) an opinion
of counsel regarding the filings, within 10 days of closing of the Offering.
(v) The financial statements (the "Financial
Statements") of the Company included in the SEC Documents fairly present in
accordance with generally accepted accounting principles the financial position,
the results of operations, and the other information with respect to the Company
purported to be shown therein at the respective dates and for the respective
periods to which they apply. The Financial Statements have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved, are correct and complete, and are in accordance
with the books and records of the Company. There has at no time been a material
adverse change in the financial condition, results of operations, business,
properties, assets, liabilities, or future prospects of the Company from the
latest information set forth in the Documents, except as may be properly
described in the Documents as having occurred or as may occur and except for
continued deterioration in the Company's cash position and total assets and
continued losses from operations.
(vi) As of the date hereof there is no, and as of each
Closing Date shall not be any, litigation, arbitration, claim, governmental or
other proceeding (formal or informal), or investigation pending or to the
Company's knowledge threatened, with respect to the Company, or its respective
operations, businesses, properties, or assets, except as properly described in
the Documents or such as individually or in the aggregate do not
now have and will not in the future have a material adverse effect upon the
operations, business, properties, or assets of the Company. The Company is not,
nor as of each Closing Date shall be, in violation of, or in default with
respect to, any law, rule, regulation, order, judgment, or decree, except as
properly described in the Documents or such as individually or in the aggregate
do not have and will not in the future have a material adverse effect upon the
operations, business, properties, or assets of the Company; nor is the Company
required to take any action in order to avoid any such violation or default.
(vii) As of the date hereof, the Company is not, and at
all times during the period from the date hereof to and including the Final
Closing Date, shall not be, in violation or breach of, or in default with
respect to complying with any material provision of any material contract,
agreement, instrument, lease, license, arrangement, other than any such
violation or breach which would not have, individually or in the aggregate, a
material adverse effect on the Company's business, and each such contract,
agreement, instrument, lease, license, arrangement, and under-standing is in
full force and effect and is the legal, valid, and binding obligation of the
parties thereto enforceable as to them in accordance with its terms. The Company
enjoys peaceful and undisturbed possession under all leases and licenses under
which it is operating as of the date hereof. As of the date hereof, the Company
is not a party to or bound by any contract, agreement, instrument, lease,
license, arrangement, or understanding, or subject to any charter or other
restriction, which has had or may in the future have a material adverse effect
on the financial condition, results of operations, business, properties, assets,
liabilities, or future prospects of the Company. The Company is not in violation
or breach of, or in default with respect to, any term of its Articles of
Incorporation or By-Laws.
(viii) To its best knowledge, the Company has not
infringed, is not infringing, or has not received notice of infringement with
respect to asserted intangibles of others. To the best knowledge of the Company,
none of the patents, patent applications, trademarks, service marks, trade names
and copyrights, and licenses and rights to the foregoing presently owned or held
by the Company, materially infringe upon any like right of any other person or
entity. The Company owns or has the right to use, free and clear of all liens,
charges, claims, encumbrances, pledges, security interests, defects or other
restrictions of any kind whatsoever, sufficient patents, trademarks, service
marks, trade names, copyrights, licenses and rights with respect to the
foregoing, to conduct its business as presently conducted except as set forth in
the Documents, is not obligated or under any liability whatsoever to make any
payments by way of royalties, fees or otherwise to any owner or licensee of, or
other claimant to, any patent, trademark, service xxxx, trade name, copyright,
knowhow, technology or other intangible asset, with respect to the use thereof
or in connection with the conduct of its business as now conducted or otherwise.
The Company has direct ownership of title to all its intellectual property
(including all United States and foreign patent applications and patents), other
proprietary rights, confidential information and know-how; owns all the rights
to its intangibles as are currently used in or have potential for use in its
business.
(ix) The Company has all requisite corporate power and
authority to execute, deliver, and perform this Agreement and to consummate the
transactions contemplated hereby. All necessary corporate proceedings of the
Company have been duly taken to authorize the execution, delivery, and
performance by the Company of this Agreement and the consummation of the
transactions contemplated hereby. This Agreement has been duly authorized,
executed, and delivered by the Company, is a legal, valid, and binding
obligation of the Company, and is enforceable as to the Company in accordance
with its terms. Assuming the accuracy of the representations and warranties of
the Prospective Investors set forth in the Purchase Agreements and the
representations and warranties of the Selling Agent set forth herein, no
consent, authorization, approval, order, license, certificate, or permit of or
from, or registration, qualification, declaration, or filing with, any federal,
state, local, foreign, or other governmental authority or any court or other
tribunal is required by the Company for the execution, delivery, or performance
by the Company of this Agreement, the consummation of the transactions
contemplated hereby and thereby, except the filing of a Notice of Sales of
Securities on Form D pursuant to Regulation D, and such consents,
authorizations, approvals, registrations, and qualifications as may be required
under all applicable federal and/or securities or "blue sky" laws in connection
with the issuance, sale, and delivery of the Shares pursuant to this Agreement.
Except for the consent of GAF, no consent of any party to any material contract,
agreement, instrument, lease, license, arrangement, or understanding to which
the Company is a party, or to which any of its properties or assets are subject,
is required for the execution, delivery, or performance of this Agreement, and
the consummation of the transactions contemplated hereby and thereby, and such
execution, delivery and performance will not violate, result in a breach of,
conflict with, or (with or without the giving of notice or the passage of time
or both) entitle any party to terminate or call a default under any such
contract, agreement, instrument, lease, license, arrangement, or understanding,
violate or result in a breach of any term of the certificate of incorporation or
by-laws of the Company, or assuming the accuracy of the representations and
warranties of the Prospective Investors set forth in the purchase agreements and
the representations and warranties of the Selling Agent set forth herein,
violate, result in a breach of, or conflict with any law, rule, regulation,
order, judgment, or decree binding on the Company or to which any of its
operations, businesses, properties, or assets are subject.
(xi) The Shares conform to all statements relating
thereto as contained in the Documents. The Shares, when issued and delivered to
the Prospective Investor pursuant to the terms of the Offering shall be duly
authorized, validly issued, fully paid and non-assessable, without any personal
liability attaching to the ownership thereof solely by being such holder and
shall not have been issued in violation of any preemptive rights of
stockholders.
(xii) Neither the Company nor any of its officers,
directors, or affiliates, has engaged or will engage, directly or indirectly, in
any act or activity that may jeopardize the status of the offering and sale of
the Shares as an exempt transaction under the Act or under all applicable
federal and/or state securities or "blue sky" laws of any jurisdiction in which
the Shares may be offered or sold.
7. Covenants of the Company.
The Company covenants that it will:
(a) Notify you immediately, and confirm such notice in
writing, (i) when any event shall have occurred during the period commencing on
the date hereof and ending on the Final Closing Date, as a result of which the
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, in light of the circumstances under which they were made,
not misleading, and (ii) of the receipt of any notification with respect to the
modification, rescission, withdrawal, or suspension of the exemption from
registration or qualification of the Shares in any jurisdiction. The Company
will use its reasonable best efforts to prevent the issuance of any such
modification, rescission, withdrawal, or suspension and if you so request, to
obtain the lifting thereof as promptly as possible.
(b) Not make any supplement or amendment to the Documents
unless such supplement or amendment complies with the requirements of the Act
and Regulation D and the applicable federal and/or state securities and "blue
sky" laws and unless GAF shall have received copies of same. If, at any time
during the period commencing on the date hereof and ending on the Final Closing
Date, any event shall have occurred as a result of which the Documents 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, or if, in the opinion of counsel to the Company or counsel to the
Selling Agent, it is necessary at any time to supplement or amend the Documents
to comply with the Act, Regulation D, or any applicable securities or "blue sky"
laws, the Company will promptly prepare an appropriate supplement or amendment
(in form and substance satisfactory to GAF) which will correct such statement or
omission or which will effect such compliance.
(c) Deliver without charge to the Selling Agent such number of
copies of the Documents and any supplement or amendment thereto as may
reasonably be requested by the Selling Agent.
(d) Use its best efforts to establish an exemption from
qualification or registration under, the securities or "blue sky" laws of such
jurisdictions as requested by the Selling Agent; provided, however, that the
Company will not be obligated to qualify to do business in any jurisdiction in
which it is not so qualified. The Company will not consummate any sale of Shares
in any jurisdiction or in any manner in which such sale may not be lawfully
made.
(e) At all times during the period commencing on the date
hereof and ending on the Final Closing Date, provide to each Prospective
Investor or his Purchaser Representative (as defined in Regulation D), if any,
on request, such information (in addition to that contained in the Documents)
concerning the Offering, the Company and any other relevant matters, as it
possesses or can acquire without unreasonable effort or expense, and to extend
to each Prospective Investor or his Purchaser Representative, if any, the
opportunity to ask questions of, and receive answers from officers of the
Company concerning the terms and conditions of the Offering and the business of
the Company and to obtain any other additional information, to the extent it
possesses the same or can acquire it without reasonable effort or expense, as
such Prospective Investor or Purchaser Representative may consider necessary in
making an informed investment decision or in order to verify the accuracy of the
information furnished to such Prospective Investor or Purchaser Representative,
as the case may be.
(f) Notify you promptly of the acceptance or rejection of any
subscription. The Company shall not (i) accept subscriptions from, or make sales
of Shares to, any Prospective Investors who are not, to the Company's knowledge,
accredited investors, or (ii) unreasonably reject any subscription for Shares.
(g) File five copies of a Notice of Sales of Securities on
Form D with the Securities and Exchange Commission (the "Commission") no later
than 15 days after the first sale of the Shares. The Company shall file promptly
such amendments to such Notice on Form D as shall become necessary and, as
requested by you, shall also comply with any filing requirement imposed by the
laws of any state or jurisdiction in which offers and sales are made. The
Company shall furnish GAF with copies of all such filings (including copies of
cover letters and filing receipts). All filing and other expenses incurred by
the Company in connection with such filings shall be borne by the Company
(h) Not, directly or indirectly, engage in any act or activity
which may jeopardize the status of the offering and sale of the Shares as exempt
transactions under the Act or under the securities or "blue sky" laws of any
jurisdiction in which the Offering may be made. Without limiting the generality
of the foregoing, and notwithstanding anything contained herein to the contrary,
the Company shall not, directly or indirectly, engage in any offering of
securities which, if integrated with the Offering in the manner prescribed by
Rule 502(a) of Regulation D and applicable releases of the Commission, may
jeopardize the status of the offering and sale of the Shares as exempt
transactions under Regulation D.
(i) Not, during the period commencing on the date hereof and
ending on the Final Closing Date, issue any press release or other
communication, or hold any press conference with respect to the Company, its
financial condition, results of operations, business, properties, assets, or
liabilities, or the Offering, without your prior written consent, except as
required by applicable securities laws and except as may be related to the
marketing and sale of its products in the normal course of business.
8. Payment of Expenses.
The Company hereby agrees to pay all fees, charges, and expenses
incident to the performance by the Company of its obligations hereunder,
including, without limitation, all fees, charges, and expenses in connection
with:(i) the preparation and printing of the Documents and all other documents
relating to the offering, purchase, sale, and delivery of the Shares, and any
supplements or amendments thereto, including the cost of all copies thereof;
(ii) the issuance, sale, transfer, and delivery of the Shares, including any
transfer or other taxes payable thereon and the fees of any transfer agent or
registrar; (iii) the registration or qualification of the Shares or the securing
of an exemption therefrom under state or foreign "blue sky" or securities laws,
including without limitation, filing fees payable in the jurisdictions in which
such registration or qualification or exemption therefrom is sought and
disbursements in connection therewith; and (iv) the fees of counsel to the
Selling Agent in the amount of $5,000 payable in accordance with Section 5(c).
9. Conditions of Selling Agent's Obligations.
The obligations of the Selling Agent pursuant to this
Agreement
shall be subject, in its discretion, to the continuing accuracy of the
representations and warranties of the Company contained herein and in each
certificate and document contemplated under this Agreement to be delivered to
the Selling Agent, as of the date hereof and as of each Closing Date, with
respect to the performance by the Company of its obligations hereunder, and to
the following conditions:
(a) At each Closing, the Selling Agent shall have received a
certificate of the chief executive officer and of the chief financial officer of
the Company, dated the applicable Closing Date to the effect that, as of the
date of this Agreement and as of the applicable Closing Date the representations
and warranties of the Company contained herein were and are accurate, and that
as of the Closing Date the obligations to be performed by the Company hereunder
on or prior thereto have been fully performed. Notwithstanding the foregoing,
the Company hereby represents and warrants that at each Closing, the
representations and warranties contained herein shall be true and correct in all
respects.
(b) All proceedings taken in connection with the issuance,
sale, and delivery of the Shares shall be satisfactory in form and substance to
GAF. Certificates representing the Shares subscribed by persons introduced to
the Company by GAF shall be delivered to GAF promptly after the release of
subscription funds to the Company and the acceptance of the Shares for listing
on the American Stock Exchange.
(d) There shall not have occurred after the date hereof, at
any time prior to each Closing: (A) any domestic or international event, act, or
occurrence which has materially disrupted, or in your opinion will in the
immediate future materially disrupt the securities markets; (B) a general
suspension of, or a general limitation on prices for, trading in securities on
the American Stock Exchange or the over-the-counter market; (C) any banking
moratorium declared by a state or federal authority; (D) any material
interruption in the mail service or other means of communication within the
United States; (E) any material adverse change in the business, properties,
assets, results of operations, or financial condition of the Company; or (F) any
change in the market for securities in general or in political, financial, or
economic conditions which, in your judgment, makes it inadvisable to proceed
with the offering, sale, and delivery of the Shares.
Any certificate or other document signed by any officer of the
Company and delivered to you or to your counsel at a Closing shall be deemed a
representation and warranty by the Company hereunder as to the statements made
therein. If any condition to your obligations hereunder has not been fulfilled
as and when required to be so fulfilled, you may terminate this Agreement or, if
you so elect, in writing waive any such conditions which have not been fulfilled
or extend the time for their fulfillment. In the event that you elect to
terminate this Agreement, you shall notify the Company of such election in
writing. Upon such termination, neither party shall have any further liability
or obligation to the other except as provided in Section 10 hereof.
10. Termination.
This Agreement may be terminated by the Selling Agent
(i) at anytime in the event the Selling Agent has determined, in good faith,
that the Documents fail to contain a material fact required to be stated therein
or necessary to make the statements therein not misleading or (ii) upon three
days notice. In the event that the
Agreement is terminated as the result of a material breach by the Company of any
covenant, representation or warranty contained in this Agreement then, in that
event, and provided the Selling Agent is not in breach hereunder, the Company
shall be liable for the Selling Agent's reasonable expenses, including counsel
fees up to $5,000. The Company may not terminate this Agreement in the absence
of a material breach of any covenant, representation or warranty contained in
this Agreement made by the Selling Agent. This Agreement shall terminate on May
14, 2004.
11. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless the
Selling Agent, its officers, directors, partners, employees, agents, and
counsel, and each person, if any, who controls the Selling Agent within the
meaning of Section 15 of the Act or Section 20(a) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), against any and all loss, liability,
claim, damage, and expense whatsoever (which shall include, for all purposes of
this Section 11, but not be limited to, attorneys' fees and any and all expense
reasonably incurred in investigating, preparing, or defending against any
litigation, commenced or threatened, or any claim whatsoever and any and all
amounts paid in settlement of any claim or litigation) as and when incurred
arising out of, based upon, or in connection with (A) any untrue statement or
alleged untrue statement of a material fact contained in the Document, or in any
application or other document or communication (it being understood that neither
the Company nor any officer, director or employee shall provide any information
to any Prospective Investor which is not contained in the Documents) executed by
or on behalf of the Company or based upon written information furnished by or on
behalf of the Company filed in any jurisdiction in order to register or qualify
the Shares under the "blue sky" or securities laws thereof or in order to secure
an exemption from such registration or qualification or filed with the
Commission (in this Section 11 collectively called an "application"); or (B) any
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, unless such
statement or omission was made in reliance upon and in conformity with written
information furnished to the Company as stated in Section 11(b) with respect to
the Selling Agent expressly for inclusion in the Documents or in any
application, as the case may be; or (C) any material breach of any
representation, warranty, covenant, or agreement of the Company contained in
this Agreement. The foregoing agreement to indemnify shall be in addition to any
liability the Company may otherwise have, including liabilities arising under
this Agreement.
If any action is brought against the Selling Agent or any of
its officers, directors, partners, employees, agent, or counsel, or any
controlling persons of the Selling Agent (an "indemnified party"), in respect of
which indemnify may be sought against the Company pursuant to the foregoing
paragraph, such indemnified party or parties shall promptly notify the Company
(the "indemnifying party") in writing of the institution of such action (but the
failure so to notify shall not relieve the indemnifying party from any liability
it may have other than pursuant to this Section 11(a)) and the indemnifying
party shall promptly assume the defense of such action, including the employment
of counsel (reasonably satisfactory to such indemnified party or parties) and
payment of expenses. Such indemnified party shall have the right to employ its
own
counsel in any such case, but the fees and expense of such counsel shall be at
the expense of such indemnified party unless the employment of such counsel
shall have been authorized in writing by the indemnifying party in connection
with the defense of such action or the indemnifying party shall not have
promptly employed counsel satisfactory to such indemnified party or parties to
have charge of the defense of such action or such indemnified party or parties
shall have reasonably concluded that there may be one or more legal defenses
available to it or them or to other indemnified parties which are different from
or additional to those available to one or more of the indemnifying parties, in
any of which events such fees and expenses of one such counsel shall be borne by
the indemnifying party and the indemnifying party shall not have the right to
direct the defense of such action on behalf of the indemnified party or parties.
Anything in this paragraph to the contrary notwithstanding, the indemnifying
party shall not be liable for any settlement of any such claim or action
effected without its written consent. The Company agrees promptly to notify the
Selling Agent of the commencement of any litigation or proceedings against the
Company or any of its officers or directors in connection with the sale of the
Shares, the Documents, or any application.
(b) The Selling Agent agrees to indemnify and hold harmless
the Company, its officers, directors, employees, agents, and counsel, and each
other person, if any, who controls the Company within the meaning of Section 15
of the Act or Section 20(a) of the Exchange Act, to the same extent as the
foregoing indemnity from the Company to the Selling Agent in Section 11(a), with
respect to any and all loss, liability, claim, damage, and expense whatsoever
(which shall include, for all purposes of this Section 11, but not be limited
to, attorneys' fees and any and all expense whatsoever incurred in
investigating, preparing, or defending against any litigation, commenced or
threatened, or any claim whatsoever and any and all amounts paid in settlement
of any claim or litigation) as and when incurred arising out of, based upon, or
in connection with (i) statements or omissions, if any, made in the Documents in
reliance upon and in conformity with written information furnished to the
Company as stated in this Section 11 with respect to the Selling Agent expressly
for inclusion in the Offering Documents, and (ii) the failure of the Selling
Agent to comply with the provisions of Section 4(c) and Section 4(d) hereof or
with the "blue sky" or securities laws of the jurisdictions in which the Selling
Agent solicits offers to buy or offers to sell any Shares or any breach of any
representation, warranty, covenant or agreement of the Selling Agent contained
in this Agreement. If any action shall be brought against the Company or any
other person so indemnified based on the Documents and in respect of which
indemnity may be sought against the Selling Agent pursuant to this Section 11,
the Selling Agent shall have the rights and duties given to the indemnifying
party, and the Company and each other person so indemnified shall have the
rights and duties given to the indemnified parties, by the provisions of Section
11(a) hereof. Notwithstanding anything to the contrary in this Agreement (and
Section 11 specifically) in no event under this Section 11 shall the Selling
Agent by responsible or liable in excess of the compensation received by it
pursuant to Section 5(a) hereof.
(c) To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant to Section 11(a) or
11(b) hereof but it is found in a final judicial determination, 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 Act, the Exchange Act, or otherwise, then the Company
(including for this purpose any contribution made by or on behalf of an
indemnified party, on the one hand, and the Selling Agent (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 Selling Agent, 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 and the Selling Agent
in connection with the facts which resulted in such losses, liabilities, claims,
damages, and expenses shall also be considered. The relative benefits received
by the Company, on the one hand, and the Selling Agent, on the other hand, shall
be deemed to be in the same proportion as (x) the total proceeds from the
Offering (net of compensation payable to the Selling Agent pursuant to Section
5(a) hereof but before deducting expenses) received by the Company, and (y) the
compensation received by the Selling Agent pursuant to Section 5(a) hereof.
The relative fault, in the case of an untrue statement,
alleged untrue statement, omission, or alleged omission, shall be determined by,
among other things, whether such statement, alleged statement, omission, or
alleged omission relates to information supplied by the Company or by the
Selling Agent, and the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent such statement, alleged
statement, omission, or alleged omission. The Company and the Selling Agent
agree that it would be unjust and inequitable if the respective obligations of
the Company and the Selling Agent for contribution were determined by pro rata
or per capita allocation of the aggregate losses, liabilities, claims, damages,
and expenses or by any other method of allocation that does not reflect the
equitable considerations referred to in this Section 11(c). 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 11(c), each person, if any, who controls the Selling Agent within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act and each
officer, director, partners, employee, agent, and counsel of the Selling Agent,
shall have the same rights to contribution as the Selling Agent, and each
person, if any, who controls the Company within the meaning of Section 15 of the
Act or Section 20(a) of the Exchange Act and each officer, director, employee,
agent, and counsel of the Company, shall have the same rights to contribution as
the Company, subject in each case to the provisions of this Section 11(c).
Anything in this Section 11(c) 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.
12. Non-Solicitation.
The Company agrees that, for a period of 24 months from the date
hereof, it shall not solicit any offer to buy from or offer to sell to any
person introduced to the Company by the Selling Agent in connection with the
Offering, directly or indirectly, any securities of the Company or securities of
any other entity, or provide the name of any such person to any other securities
broker or dealer or selling agent, without the consent
of GAF. In the event that the Company or any of its affiliates, directly or
indirectly, solicits, offers to buy from or offers to sell to any such person
any such securities, or provides the name of any such person to any other
securities broker or dealer or selling agent, and such person purchases such
securities or purchases securities from any other securities broker or dealer or
selling agent, the Company shall pay to the Selling Agent an amount equal to 8%
of the aggregate purchase price of the securities so purchased by such person.
13. Representations and Agreements to Survive Delivery.
All representations, warranties, covenants, and agreements contained
in this Agreement shall be deemed to be representations, warranties, covenants,
and agreements at the Closing Date and, such representations, warranties,
covenants, and agreements, including the indemnification and contribution
agreements contained in Section 11, shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of the Selling Agent
or any indemnified person, or by or on behalf of the Company or any person or
entity which is entitled to be indemnified under Section 11(b), and shall
survive termination of this Agreement or the issuance, sale, and delivery of the
Shares. In addition, notwithstanding any election hereunder or any termination
of this Agreement, and whether or not the terms of this Agreement are otherwise
carried out, the provisions of Sections 4, 6, 11 and 12 shall survive
termination of this Agreement and shall not be affected in any way by such
election or termination or failure to carry out the terms of this Agreement or
any part thereof.
14. Notices.
All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and shall be either (i) mailed
by first class mail in which case delivery shall be deemed to be made three days
following deposit in the United States mail; or (ii) sent by overnight courier
service in case delivery shall be deemed to be made upon receipt, to: GunnAllen
Financial, Inc., 0000 X. Xxxxxxxxx Xxxx., Xxxxx 000, Xxxxx, Xxxxxxx 00000
Attention: Xx. Xxxxxxx Xxxxx, with a copy to Xxxxxxxxx & XxXxxxx LLP, 00
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 Attn: Xxxxx X. Xxxxxxxx, Esq.; Redline
Performance Products, Inc., 0000 Xxxxxxxx Xxx, Xxxxx, XX 00000 Attn.: Xxxx
Xxxxx, President, with a copy to Xxxxxx Xxxxxxx Xxxx & Xxxxxxxx, Ltd., 7900
Xerxes Avenue South, 0000 Xxxxx Xxxxx Xxxxx, Xxxxxxxxxxx, XX 00000, Attn:
Xxxxxxx X. Xxxxxx, Esq.
15. Parties.
This Agreement shall inure solely to the benefit of, and shall be
binding upon, the Selling Agent and the Company and the persons and entities
referred to in Section 11 who are entitled to indemnification or contribution,
and their respective successors, legal representatives, and assigns (which shall
not include any purchaser, as such, of Shares), and no other person shall have
or be construed to have any legal or equitable right remedy, or claim under or
in respect of or by virtue of this Agreement or any provision herein contained.
16. Construction; Governing Law; Submission to Jurisdiction.
This Agreement shall be construed in accordance with the laws of the
State of New York, without giving effect to conflict of laws. ) Each of GAF and
the Company (a) agrees that any legal suit, action or proceeding arising out of
or relating to this Agreement shall be instituted exclusively in New York State
Supreme Court, County of New York, or in the United States District Court for
the Southern District of New York, (b) waives any objection which the Company
may have now or hereafter to the venue of any such suit, action or proceeding,
and (c) irrevocably consents to the jurisdiction of the New York State Supreme
Court, County of New York and the United States District Court for the Southern
District of New York in any such suit, action or procedure. Each of the Company
and GAF further agrees to accept and acknowledge service of any and all process
which may be served in any suit, action or proceeding in the New York State
Supreme Court for the Southern District of New York, and agrees that service of
process upon either party mailed by certified mail to the party's address set
forth in Section 14 shall be deemed in every respect effective service of
process upon the company in any such suit, action or proceeding. In the event of
litigation between the parties arising hereunder, the prevailing party shall be
entitled to costs and reasonable attorney's fees.
[signature page appears next] 17. Counterparts.
This Agreement may be executed in counterparts, each of which shall
constitute an original and all of which, when taken together, shall constitute
one agreement.
If the foregoing correctly sets forth the understanding between us,
please so indicate in the space provided below for that purpose, whereupon this
letter shall constitute a binding agreement among us.
Very truly yours,
REDLINE PERFORMANCE PRODUCTS, INC.
By: /s/ Xxxx X. Xxxxx
-----------------------------------
Xxxx X. Xxxxx
President and CFO
Accepted as of the date
first above written:
GUNNALLEN FINANCIAL, INC.
By: /s/ Xxxxxx X. Xxxx
------------------------
Xxxxxx X. Xxxx President
