PLACEMENT AGENCY AGREEMENT
EXHIBIT
10.11
Xxxxxx
Securities LLC
d.b.a.
Xxxxxx Group Capital
0000
Xxxxxxxxx Xxxx, X.X., Xxxxx 000 Xxxxxxx,
XX 00000
Attn:
Xxxxxx Xxxxxxx
Gentlemen:
This
Placement Agent Agreement (the "Agreement") is made this 4th
day
of
April 2008 by and between East
Coast Ethanol, LLC, a Delaware limited liability company having an address
of
0000 Xxxxxxxx Xxxx, Xxxxxxxx,
XX 00000 (the "Company") and Xxxxxx Securities LLC, a Delaware limited liability
company (d.b.a. Xxxxxx Group Capital)(the "Placement Agent").
1.
AGREEMENT TO ACT AS PLACEMENT AGENT; PLACEMENT OF SECURITIES.
On
the
basis of the representations, warranties and agreements of the Company herein
contained, and subject to all the
terms
and conditions of this Agreement:
(a) Subject
to subsection 1(a)(i) below, the Company hereby authorizes the Placement Agent
to act
(x)
as its exclusive selling agent and registered broker-dealer for all sales of
the
Company's securities within the States
identified on Exhibit A attached hereto (the "Exclusive Territory") and (y)
as
its non-exclusive selling agent for
all
sales of the Company's securities outside of the Exclusive Territory. The
Company is offering and soliciting, offers
for the purchase of equity interests (the "Units") in the Company as part of
a
registered public offering (the "Offering") by the Company as described in
the
prospectus initially filed by the Company with the Securities and Exchange
Commission (the "SEC" or "Commission") as part of Form SB-2 on January 29,
2008,
a copy of which is attached
hereto as Exhibit B (together with any subsequently filed updates or amendments
thereto, the "Prospectus").
| (i) |
Upon
the six (6) month anniversary of the date of effectiveness of the
Company's registration
statement related to the Offering, the Company shall have the option
to
terminate the exclusivity of the relationship between the Company
and the
Placement Agent
in the Exclusive Territory such that the Company shall be able to
engage
one or more
party(ies) other than the Placement Agent to act as its selling or
placement agent for purposes
of selling the Company's securities in the Exclusive Territory; provided,
however,
that in the event the Company exercises such option, the Placement
Agent
shall only
he obligated to continue its relationship as the Company's registered
broker-dealer and
placement agent in the Exclusive Territory if (x) each additional
selling
or placement agent
engaged by the Company is a registered broker-dealer. and (y) the
Placement Agent retains the right to participate in a syndicate in
the
sale and distribution of the Company's securities
in the Exclusive Territory through any and all sales facilitated
by such
additional
selling or placement agent(s). In the event the Company exercises
its
option to terminate the exclusivity of its relationship with the
Placement
Agent in the Exclusive Territory and any new or additional selling
agent
or placement agent engaged by the Company acts in a finder's capacity
and
is not a registered broker-dealer, the Placement Agent shall have
the
option to terminate its relationship with the Company and its duties
and
responsibilities hereunder, including, without limitation, its
responsibilities as the Company's
registered broker-dealer, shall be terminated. The Company's exercise
of
the option
described herein shall be exercised by giving written notice to the
Placement Agent
pursuant to Section 12 of this
Agreement.
|
| (ii) |
Until
the earlier of the termination of this Agreement, the six (6) month
anniversary of the
effectiveness of the Company's registration statement related to
the
Offering or the Closing
Date (as defined in Section
3 hereof),
the Company shall not, within the Exclusive
Territory, without the prior consent of the Placement Agent, solicit
or
accept offers
to
|
purchase
Units otherwise than through the Placement Agent.
(b) Placement
of the Units by the Placement Agent will be made on a "best efforts" basis.
The
Placement
Agent represents and warrants to the Company that it is registered as a Broker
Dealer with the Financial Industry
Regulatory Authority ("FINRA"). The minimum subscription for Units shall he
one
Unit. The Units will be
offered for a period of time (the "Offering Period") commencing on the effective
date of the final Form SB-2 or on
Form
S-1/A filed by the Company, and ending no later than twelve (12) months from
the
effective date unless extended
in accordance with the Prospectus. The Offering will be for a minimum amount
of
$253,650,000 and a maximum amount of $591,825,000. Subscriptions for the Units
will be accepted by the Company at a price of $15,000.00 per Unit (the "Offering
Price"). The Placement Agent agrees, as agent of the Company, to use its best
efforts
to solicit offers to purchase the Units from the Company on the terms and
subject to the conditions set forth in
the
Prospectus (as defined below) and in accordance with the Company's requests.
The
Placement Agent shall make
commercially reasonable efforts to assist the Company in obtaining performance
by each Purchaser whose offer
to
purchase Units has been solicited by the Placement Agent and accepted by the
Company, but the Placement Agent
shall not, except as otherwise provided in this Agreement, be obligated to
disclose the identity of any potential
purchaser or have any liability to the Company in the event any such purchase
is
not consummated for any reason.
Under no circumstances will the Placement Agent be obligated to purchase any
Units for its own account and,
in
soliciting purchases of Units, the Placement Agent shall act solely as the
Company's agent and not as principal. Notwithstanding the foregoing and except
as otherwise provided in Section 1(c), it is understood and agreed
that the Placement Agent (or its affiliates) may, solely at its discretion
and
without any obligation to do so, purchase
Units from the Company as principal and any such purchases by the Placement
Agent (or its affiliates) shall
be
disclosed to the Company (including the identity of such
purchaser).
(c) Subject
to the provisions of this Section
1, offers
for the purchase of Units may be solicited by the
Placement Agent as agent for the Company at such times and in such amounts
as
the Placement Agent deems advisable.
The Placement Agent shall communicate to the Company, orally or in writing,
each
reasonable offer to purchase Units received by it as agent of the Company.
The
Company shall have the sole right in its absolute discretion
to accept offers to purchase the Units and in its absolute discretion may reject
any such offer, in whole or in
part.
The Placement Agent shall have the right, in its discretion reasonably
exercised, subject to giving prior notice
to
the Company, to reject any offer to purchase Units received by it, in whole
or
in part, and any such rejection
shall not be deemed a breach of its agreement contained herein.
(d) The
purchases of the Units by the Purchasers shall be evidenced by the execution
of
the subscription
agreements in form and substance as approved by the Company and Placement Agent
("Subscription Agreements")
by each of the parties thereto.
(e) As
compensation for services rendered, on the Closing Date the Company shall pay
to
the Placement
Agent, (a) in cash on the Closing Date by wire transfer of immediately available
funds to an account or accounts
designated by the Placement Agent, an amount equal to four and one-half percent
(4.5%) of the gross proceeds
received by the Company from the sale of (i) all Units sold within the Exclusive
Territory prior to the Company's termination of its exclusive relationship
with
the Placement Agent in accordance with Section 1(a)(i) above
(the time period commencing on the date hereof and ending upon such termination
is referred to herein as the "Exclusive
Period"), (ii) all Units sold subsequent to the Exclusive Period to Purchasers
identified and solicited by the
Placement Agent within the Exclusive Territory, and (iii) all Units sold to
Purchasers identified and solicited by the Placement Agent outside the Exclusive
Territory, and (b) warrants ("Warrants") to purchase, at purchase price
equal
to
the Offering Price, a number of Units equal to three and one-half percent of
all
Units upon which the fee equal
to
four and one-half percent (4.5%) is calculated pursuant to the immediately
preceding sentence of this subsection (e). The Warrants earned by the Placement
Agent hereunder shall be issued to the Placement Agent on the
Closing Date and shall be exercisable, at the Offering Price, for a period
of
ten (10) years from and after the Closing
Date. Notwithstanding Section l(f) below, for purposes of this provision, a
Unit
shall be deemed "sold" at the
earlier of the receipt by the Company (or its agent) of an executed Indication
of Interest (in such form as may be promulgated
by the Company) that subsequently results in an executed Subscription Agreement
or an executed Subscription
Agreement, regardless of whether or not the Company has accepted such
Subscription Agreement (but, for
clarification, the fee with respect to any such "sold" Unit will not be due
and
payable until the disbursement to the
Company of the funds paid for such Unit on the Closing Date).
-
2
-
Further,
in no event shall the cash portion of the fee payable pursuant to subsection
1(e)(a) above be less than $50,000.
(f) No
Units
which the Company has agreed to sell pursuant to this Agreement shall be deemed
to have
been
purchased and paid for, until such Units shall have been delivered to the
Purchaser thereof against payment
by such Purchaser. If the Company shall default in its obligations to deliver
Units to a Purchaser with whom
it
has entered into a binding Subscription Agreement, the Company shall indemnify
and hold the Placement Agent
harmless against any loss, claim or damage arising from or as a result of such
default by the Company.
2. REPRESENTATIONS
AND WARRANTIES OF THE COMPANY. The
Company represents
and warrants to, and agrees with, the Placement Agent that:
(a) As
of the
date of the initial filing of the registration statement with the Commission,
the Company met the requirements
for use of Form SB-2 under the Securities Act of 1933, as amended (the
"Securities Act"), and filed with
the
Commission a registration statement on such form (the "Initial Registration
Statement") identified as Registration File No. 333-148905. Subsequently, the
Commission adopted a new system of disclosure rules for smaller companies,
which
became effective as of February 4, 2008, for the registration of securities
under the Securities
Act whereby amendments to all registration statements originally filed on Form
SB-2 must be made on the
standard Form S-1 or S-3, as applicable, but may follow the Form SB-2 disclosure
format up to August 4, 2008. Accordingly,
the Company will file all future amendments to the Initial Registration
Statement on Form S-1/A. The
Initial Registration Statement meets the requirements set forth in Rule
415(a)(1)(x) under the Securities Act and complies
in all material respects with said Rule. The Initial Registration Statement,
the
exhibits thereto, and any amendments
filed with respect thereto from time to time, are hereinafter collectively
called the "Registration Statement."
Any reference herein to the Registration Statement or the Prospectus shall
be
deemed to refer to and include
the documents incorporated by reference therein (the "Incorporated Documents")
which may be filed under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), on or after
the date of this Agreement, or the
issue
date of the Prospectus, as the case may be; and any reference herein to the
terms "amend," "amendment" or "supplement"
with respect to the Registration Statement or the Prospectus shall be deemed
to
refer to and include the
filing of any document under the Exchange Act after the date of this Agreement,
or the issue date of the Prospectus,
as the case may be, deemed to be incorporated therein by reference. All
references in this Agreement to financial
statements and schedules and other information which is "contained," "included,"
"described," "set forth" or
"stated" in the Registration Statement or the Prospectus (and all other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is or is deemed
to be incorporated
by reference in the Registration Statement or the Prospectus, as the case may
be. No stop order suspending
the effectiveness of the Registration Statement or the use of the Prospectus
has
been issued, and no proceeding for any such purpose is pending or has been
initiated or, to the Company's knowledge, is threatened by the
Commission. All references in this Agreement to the Registration Statement
and
the Prospectus, or any amendments
or supplements to any of the foregoing shall be deemed to include any copy
thereof filed with the Commission pursuant to its Electronic Data Gathering,
Analysis and Retrieval System ("XXXXX").
(b) The
Registration Statement (and any further documents to be filed with the
Commission) contains or
will
contain, at the time of its effectiveness, all exhibits and schedules as
required by the Securities Act. Each of the Registration Statement and any
post-effective amendment thereto, at the time it became or becomes effective,
complied
or will comply in all material respects with the Securities Act and the Exchange
Act and the applicable Rules and Regulations and did not and, as amended or
supplemented, if applicable, will not, contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements
therein not misleading. The Prospectus, each as of its effective date, complied
in all material respects with
the
Securities Act and the Exchange Act and the applicable Rules and Regulations.
The Prospectus, as amended or
supplemented, did not and will not contain as of the date thereof any untrue
statement of a material fact or omit to state
a
material fact necessary in order to make the statements therein, in light of
the
circumstances under which they were made, not misleading. The Incorporated
Documents, when they were filed with the Commission, conformed in all
material respects to the requirements of the Exchange Act and the applicable
Rules and Regulations, and none of such
documents, when they were filed with the Commission, contained any untrue
statement of a material fact or omitted
to state a material fact necessary to make the statements therein, in light
of
the circumstances under which they
were
made, not misleading; and any further documents so filed and
-
3
-
incorporated
by reference in the Prospectus, when
such
documents are filed with the Commission, will conform in all material respects
to the requirements of the Exchange
Act and the applicable Rules and Regulations, as applicable, and will not
contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under
which they were made, not misleading; provided, however, that the Company makes
no representation or warranty
with respect to any statement contained in the Registration Statement or
Prospectus in reliance upon and in conformity
with information concerning the Placement Agent and furnished by or on behalf
of
the Placement Agent for
use
in the Registration Statement or Prospectus. No post-effective amendment to
the
Registration Statement reflecting any facts or events arising after the date
thereof which represent, individually or in the aggregate, a fundamental change
in the information set forth therein is required to be filed with the
Commission. There are no documents presently required to be filed with the
Commission in connection with the transaction contemplated hereby that (x)
have
not been filed as required pursuant to the Securities Act or (y) will not be
filed within the requisite
time period. There are no contracts or other documents required to be described
in the Prospectus, or to be filed as exhibits or schedules to the Registration
Statement, which have not been described or filed as required.
(c) The
Company has delivered. or will as promptly as practicable deliver, to the
Placement Agent complete
conformed copies of the Registration Statement and of each consent and
certificate of experts filed as a part
thereof, and conformed copies of the Registration Statement (without exhibits)
and the Prospectus, as amended or
supplemented, in such quantities and at such places as the Placement Agent
reasonably requests. Neither the Company
nor any of its directors and officers has distributed and none of them will
distribute, prior to the completion
of the distribution of the Units, any offering material in connection with
the
offering and sale of the Units
other than the Prospectus, the Registration Statement, copies of the documents
incorporated by reference therein and any other materials permitted by the
Securities Act.
(d) The
Company is a limited liability company duly organized, validly existing and
in
good standing under
the
laws of the State of Delaware. The Company is duly qualified to transact
business as a foreign limited liability
company and is in good standing under the laws of each jurisdiction where the
location of its properties or the
conduct of its business makes such qualification necessary, except where the
failure to be so qualified would not have,
singularly or in the aggregate, a material adverse effect on the condition
(financial or otherwise), results of operations, business, properties or
prospects of the Company taken as a whole (a "Material Adverse Effect"). The
Company has no subsidiaries.
(e) The
Units
to be issued and sold by the Company hereunder have been duly and validly
authorized
and, when issued and delivered against payment therefor as provided herein,
will
be duly and validly issued,
fully paid and nonassessable and free of any preemptive or similar rights.
The
Units conform to the description
thereof contained in the Prospectus.
(f) The
Company has an authorized capitalization as set forth in the Prospectus, all
of
the issued and
outstanding membership interests of the Company have been duly and validly
authorized and issued, are fully paid
and
non-assessable, have been issued in compliance with federal and state securities
laws, and conform to the description
thereof contained in the Prospectus. None of the outstanding Units was issued
in
violation of any preemptive
rights, rights of first refusal or other similar rights to subscribe for or
purchase securities of the Company,
except for such rights as may have been fully satisfied or waived. There are
no
authorized options or authorized
or outstanding warrants, preemptive rights, rights of first refusal or other
rights to purchase, or equity or debt
securities convertible into or exchangeable or exercisable for, any membership
interest of the Company that have been granted by the Company other than those
accurately described in the Prospectus.
(g) The
Company has the full right, power and authority to enter into this Agreement
and
each of the
Subscription Agreements and to perform and to discharge its obligations
hereunder and thereunder; and each of this
Agreement and each of the Subscription Agreements has been duly authorized,
executed and delivered by the Company,
and constitutes a valid and binding obligation of the Company enforceable in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally and except as enforceability may be
subject to general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or at
law).
(h) The
execution, delivery and performance of this Agreement and the Subscription
Agreements by
-
4
-
the
Company and the consummation of the transactions contemplated hereby and thereby
will not conflict with or result
in
a breach or violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which the
Company is a party or by which
the
Company is bound or to which any of the property or assets of the Company is
subject, nor will such actions
result in any violation of the provisions of (A) the certificate of organization
or operating agreement of the Company
or (B) any statute, law, rule or regulation or any judgment, order or decree
of
any court or governmental agency
or
body having jurisdiction over the Company or any of their properties or assets,
except, with respect to clause (B), any violation which, singularly or in the
aggregate, would not have a Material Adverse Effect.
(i) There
is
no contract, lease, instrument or other document of a character required by
the
Securities
Act or the Rules and Regulations to be described in the Prospectus, or to be
filed as an exhibit to the Registration
Statement, which is not described or filed as required; and all statements
summarizing any such contracts,
leases, instruments or other documents or legal matters contained in the
Registration Statement are accurate
and complete in all material respects. Other than as described in the
Prospectus, no such contract, lease, instrument or other document has been
suspended or terminated for convenience or default by the Company or any
of
the
other parties thereto, the Company has not sent or received any communication
regarding intent not to renew any
such
contract, lease, instrument or other document, and the Company has not received
notice or any other knowledge of any such pending or threatened suspension,
termination or non-renewal, except for such pending or threatened
suspensions, terminations or non-renewals that would not reasonably be expected
to, singularly or in the aggregate,
have a Material Adverse Effect.
(j) All
existing minute books of the Company, including all existing records of all
meetings and actions of the board of directors (including, Audit, Compensation,
Nomination/Corporate Governance and other board
committees, if any) and members of the Company through the date of the latest
meeting and action (collectively,
the "Corporate Records") have been made available to the Placement Agent and
counsel for the Placement
Agent. All such Corporate Records are complete and accurately reflect, in all
material respects, all transactions
referred to in such Corporate Records. There are no material transactions,
agreements or other actions of
the
Company that are not properly approved and/or recorded in the Corporate
Records.
(k) No
consent, approval, authorization, filing with or order of or registration with,
any court or governmental
agency or body is required in connection with the transactions contemplated
herein or in the Subscription
Agreements, except such as have been obtained or will be obtained or made under
the Securities Act or the Exchange Act, such as may be required under the
securities, or blue sky, laws of any jurisdiction in connection with
the
offer and sale of the Units by the Company in the manner contemplated herein
and
in the Prospectus.
(1) Except
as
described in the Prospectus, (i) no person has the right, contractual or
otherwise, to cause
the
Company to issue or sell to it any Units or other equity interests of the
Company, and (ii) no person has any
preemptive rights, resale rights, rights of first refusal or other rights to
purchase any Units or other securities of the
Company. Except as provided herein, no person has the right to act as an
underwriter, placement agent or financial
advisor to the Company for sales of the Company's Units within the Exclusive
Territory. Except as described
in the Prospectus, no person has the right, contractual or otherwise, to cause
the Company to register under
the
Securities Act any Units or other securities of the Company, or to include
any
such Units or securities in the Registration Statement or the offering
contemplated thereby, whether as a result of the filing or effectiveness of
the
Registration Statement or the sale of the Units as contemplated thereby or
otherwise, except for persons and entities
who have expressly waived such right or who have been given timely and proper
notice and have failed to exercise
such right within the time or times required under the terms and conditions
of
such right, and the Company is not required to file any registration statement
for the registration of any securities of any person or register any such
securities pursuant to any other registration statement filed by the Company
under the Securities Act for a period of at least 90 days after the date
hereof.
(m) The
financial statements, together with the related notes and schedules, of the
Company included
in the Prospectus or the Registration Statement, or incorporated by reference
therein, as the case may be, present
fairly the financial condition, results of operations and cash flows of the
Company as of the dates and for the periods indicated, comply in all material
respects with the Securities Act and the Rules and Regulations thereunder,
and
have
been prepared in conformity with generally accepted accounting principles
applied on a consistent basis throughout
the periods involved. No other financial statements or supporting schedules
or
exhibits are required by
-
5
-
the
Securities Act or the Rules and Regulations thereunder to be included in the
Prospectus or the Registration Statement, or incorporated by reference therein,
as the case may be.
(n) Except
as
set forth in the Prospectus, there is no legal or governmental proceeding
pending to which
the
Company is a party or of which any property or assets of the Company is the
subject which is required to he described in the Prospectus and is not described
therein, or which, singularly or in the aggregate, if determined adversely
to the Company, would be likely to have a Material Adverse Effect or prevent
or
adversely affect the ability
of the Company to perform its obligations under this Agreement; and to the
best
of the Company's knowledge,
except as set forth in the Prospectus, no such proceedings are threatened or
contemplated by governmental
authorities or threatened by others.
(o) The
Company has good and marketable title to all property (real and personal)
described in the Registration
Statement and the Prospectus being owned by the Company, free and clear of
any
claim, lien, encumbrance, security interest, defect or restriction upon voting
or transfer or any other claim of any kind ("Liens"), except
as
described in the Prospectus or for those Liens that do not materially interfere
with the use made or proposed
to be made of such property by the Company or that would not have a Material
Adverse Effect; all the property described in the Registration Statement and
the
Prospectus as being held under lease by the Company is held
thereby under valid, subsisting and enforceable leases except where the failure
to be valid, subsisting or enforceable
would not have a Material Adverse Effect.
(p) The
Company is not (i) in violation of any provision of its certificate of
organization or operating
agreement, (ii) in default in any respect, and no event has occurred which,
with
notice or lapse of time or both,
would constitute such a default, in the due performance or observance of any
term, covenant, or condition of any
indenture, contract, lease, mortgage, deed of trust, note agreement, loan
agreement or other agreement, obligation,
condition, covenant or instrument to which it is a party or by which it is
bound
or to which any of its property
or assets is subject, or (iii) in violation in any respect of any statute,
law,
rule, regulation, ordinance, judgment,
order or decree of any court, regulatory body, administrative agency,
governmental body, arbitrator or other
authority having jurisdiction over the Company or any of its properties, as
applicable, except, with respect to clauses
(ii) and (iii), any violations or defaults which, singularly or in the
aggregate, would not have a Material Adverse Effect.
(q) Except
as
set forth in the Registration Statement and Prospectus, the contracts described
in the Prospectus
or incorporated by reference therein that are material to the Company are in
full force and effect on the date
hereof, and neither the Company nor, to the Company's knowledge, any other
party
to such contracts is in breach
of
or default under any of such contracts which would have a Material Adverse
Effect.
(t) The
Company maintains insurance in such amounts and covering such risks as the
Company reasonably
considers adequate for the conduct of its business and the value of its
properties, all of which insurance is in
full
force and effect, except where the failure to maintain such insurance could
not
reasonably be expected to have a Material Adverse Effect.
(u) Except
as
set forth in the Registration Statement and Prospectus, the Company has made
all
filings,
applications and submissions required by, and possesses all approvals, licenses,
certificates, certifications, clearances, consents, exemptions, marks,
notifications, orders, permits and other authorizations issued by, the
appropriate
federal, state or foreign regulatory authorities necessary to conduct its
businesses (collectively, "Permits"),
except for such Permits which the failure to obtain or comply with could not
reasonably be expected to have
a
Material Adverse Effect, and is in compliance with the terms and conditions
of
all such Permits; all of such Permits
held by the Company are valid and in full force and effect except as could
not
have a Material Adverse Effect; there is no pending or threatened action, suit,
claim or proceeding which may cause any such Permit to be limited, revoked,
cancelled, suspended, modified or not renewed and the Company has not received
any notice of proceedings relating to the limitation, revocation, cancellation,
suspension, modification or non-renewal of any such Permit which, singularly
or
in the aggregate, if the subject of an unfavorable decision, ruling or finding,
would have a
Material Adverse Effect, whether or not arising from transactions in the
ordinary course of business, except as set forth
in
or contemplated by the Prospectus.
-
6
-
(v) Xxxx
& Associates LLP, who has certified certain financial statements of the
Company and delivered
its report with respect to the audited consolidated financial statements and
schedules included in the Prospectus
or the Registration Statement, or incorporated by reference therein, as the
case
may be, is an independent public
accountant with respect to the Company within the meaning of the Securities
Act
and the Rules and Regulations.
(w) The
Company has filed all foreign, federal, state and local tax returns that are
required to be filed
or
has requested extensions thereof (except in any case in which the failure so
to
file would not have a Material Adverse
Effect, except as set forth in the Prospectus) and has paid all taxes required
to be paid by it and any other assessment,
fine or penalty levied against it, to the extent that any of the foregoing
is
due and payable, except for any
such
assessment, fine or penalty that is currently being contested in good faith
or
as would not have a Material Adverse
Effect, except as set forth in the Prospectus.
(x) The
Company maintains "disclosure controls and procedures" (as defined in Rule
13a-15 and 15d-15
under the Exchange Act), and such controls and procedures are designed (i)
to
ensure that information required
to be disclosed by the Company in the reports that it may be required to file
or
submit under the Exchange Act
is
recorded, processed, summarized and reported, within the time periods specified
in the Commission's rules and
forms
and (ii) to ensure that information required to be disclosed by the Company
in
the reports that it may be required
to file or submit under the Exchange Act is accumulated and communicated to
the
Company's management.
including its principal executive officer and principal financial officer,
as
appropriate to allow timely decisions
regarding required disclosure. There has been no fraud, whether or not material,
that involves management or
other
employees who have a significant role in the Company's internal controls. The
Company is in compliance in all respects with all applicable effective
provisions of the Xxxxxxxx-Xxxxx Act of 2002 and the rules and regulations
promulgated in connection therewith (and intends to comply with all applicable
provisions that are not yet effective upon effectiveness).
(y) The
Company maintains a system of internal accounting controls sufficient to provide
reasonable
assurance that (i) transactions are executed in accordance with management's
general or specific authorizations;
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with
generally accepted accounting principles and to maintain accountability of
assets; (iii) access to assets is permitted
only in accordance with management's general or specific authorization; and
(iv)
the recorded accountability
for assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with
respect to any differences.
(z) Except
as
set forth in the Registration Statement and Prospectus, the Company (i) is
in
compliance
in all material respects with any and all applicable foreign, federal, state
and
local laws and regulations relating to the protection of human health and
safety, the environment or hazardous or toxic substances or wastes, pollutants
or contaminants ("Environmental Laws"), (ii) has received and is in compliance
with all permits, licenses or other approvals required of it under applicable
Environmental Laws to conduct its business and (iii) has not received notice
of
any actual or potential liability for the investigation or remediation of any
disposal or release of hazardous or toxic substances or wastes, pollutants
or
contaminants, except where such non-compliance with Environmental Laws, failure
to receive required permits, licenses or other approvals, or liability would
not, individually
or in the aggregate, have a Material Adverse Effect, whether or not arising
from
transactions in the ordinary
course of business. To the best of its knowledge, the Company has not been
named
as a "potentially responsible
party" under the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended.
(aa) In
the
ordinary course of its business, the Company periodically reviews the effect
of
Environmental
Laws on the business, operations and properties of the Company, in the course
of
which it identifies and
evaluates associated costs and liabilities (including, without limitation,
any
capital or operating expenditures required for clean-up, closure of properties
or compliance with Environmental Laws, or any permit, license or approval,
any related constraints on operating activities and any potential liabilities
to
third parties). On the basis of such
review, the Company has reasonably concluded that such associated costs and
liabilities would not, singularly or in the aggregate, have a Material Adverse
Effect, whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated by the
Prospectus.
-
7
-
(bb) The
Company owns or possesses all inventions, patent applications, patents,
trademarks (both registered
and unregistered), trade names, copyrights, trade secrets and other proprietary
information described in the
Registration Statement and Prospectus, if any, as being owned or licensed by
it
or which is necessary for the conduct of, or material to, its businesses
(collectively, the "Intellectual Property") and the Company is unaware of
any
claim
to the contrary or challenge by any other person to the rights of the Company
with respect to the Intellectual
Property. To the Company's knowledge, the Company has neither infringed nor
is
infringing the intellectual
property of a third party nor has the Company received notice of a claim by
a
third party to the contrary.
(cc) The
Company has not failed to file with the applicable regulatory authorities any
material filing,
declaration, listing, registration, report or submission; all such filings,
declarations, listings, registrations, reports or submissions were in compliance
with applicable laws when filed, except where the failure to be in compliance
did not, singularly or in the aggregate, have a Material Adverse Effect, and,
except as described in the Prospectus,
the Company has not been notified that any material deficiencies have been
asserted by any applicable regulatory
authority with respect to any such filings, declarations, listings,
registrations, reports or submissions.
(dd) No
relationship, direct or indirect, exists between or among the Company on the
one
hand and the
directors, officers, stockholders, customers or suppliers of the Company on
the
other hand which is required to be described in the Prospectus and which is
not
so described.
(ee) Neither
the Company nor, to the Company's knowledge, any other person associated with
or
acting
on
behalf of the Company including, without limitation, any director, officer,
agent or employee of the Company,
has, directly or indirectly, while acting on behalf of the Company (i) used
any
corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses, or received
or
retained any funds, relating to political
activity; (ii) made any unlawful payment from corporate funds to, or received
or
retained any unlawful funds
from, foreign or domestic government officials or employees or to or from
foreign or domestic political parties
or campaigns; (iii) violated any provision of the Foreign Corrupt Practices
Act
of 1977, as amended; or (iv) made
any
other unlawful payment or received or retained any other unlawful funds, which
payment, receipt or retention
of funds is of a character required to be disclosed in the Registration
Statement or the Prospectus.
(ff) The
Company is nor or, after giving effect to the offering and sale of the Units
and
the application
of the proceeds thereof as described in the Prospectus, will not become an
"investment company" as defined
in the Investment Company Act of 1940, as amended.
(gg) Other
than as set forth in the Registration Statement and Prospectus, the Company
is
not a party
to
any contract, agreement or understanding with any person that would give rise
to
a valid claim against the Company
or the Placement Agent for a brokerage commission, finder's fee or like payment
in connection with the offering
and sale of the Units.
(hh) The
Company has not sustained, since the date of the latest audited financial
statements included
in the Prospectus, or incorporated by reference therein, as the case may be,
any
material loss or interference with
its
business from fire, explosion, flood, terrorist act or other calamity, whether
or not covered by insurance, or from
any
labor dispute or court or governmental action, order or decree, otherwise than
as set forth in or contemplated
by the Prospectus.
(ii) Except
as
set forth in or as otherwise contemplated by the Registration Statement or
the
Prospectus,
subsequent to the respective dates as of which information is given in the
Registration Statement and the Prospectus,
there has not been (i) any material adverse change, or any development that
would reasonably be expected
to result in a material adverse change, in the business, properties, management,
financial condition or results
of operations of the Company taken as a whole, (ii) any transaction which is
material to the Company taken as a whole, (iii) any obligation, direct or
contingent (including any off-balance sheet obligations), incurred by the
Company
outside the ordinary course of business, which is material to the Company taken
as a whole, (iv) any change
in
the membership interests (other than the issuance of shares of Units upon
exercise of options and warrants disclosed
as outstanding in the Registration Statement and the Prospectus or outstanding
indebtedness of the Company
or (v) any dividend or distribution of any kind declared, paid or made on the
membership interests of the Company.
-
8
-
(jj) Any
statistical and market-related data included in the Registration Statement
or
the Prospectus are
based
on or derived from sources that the Company believes to be reliable and
accurate.
(ll) The
Company has not taken, nor to the Company's knowledge, have any of its
respective directors,
officers or affiliates (within the meaning of Rule 144 promulgated under the
Securities Act) taken, directly
or indirectly, any action which constitutes or is designed to cause or result
in, or which could reasonably be expected to constitute, cause or result in,
the
stabilization or manipulation of the price of any security to facilitate the
sale
or
resale of the Units in violation of Regulation M under the Exchange
Act.
(mm) Neither
the Company, nor to the Company's knowledge, has any director or executive
officer,
been the subject of any of the disqualification provisions contained in the
Securities Act or the Exchange Act. Without limiting the generality of the
foregoing, neither the Company, nor to the Company's knowledge, any director
or
executive officer,: (i) has been the subject of any pending proceeding or
examination under Section 8 of the Securities Act, or has been the subject
of
any refusal order or stop order thereunder within 10 years prior to the
date
of
this Agreement; (ii) is subject to any pending proceeding under Rule 258 or
any
similar section adopted under
Section 3(b) of the Securities Act, or to an order entered thereunder within
10
years prior to the date of this Agreement;
(iii) has been convicted within 10 years of this Agreement of any felony or
misdemeanor in connection with
the
purchase or sale of any security or involving the making of any 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; (iv)
is
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, entered
within 10 years prior to the filing of such offering statement, permanently
restraining or enjoining, such person 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 SEC, or arising out of
the
conduct of the business of an underwriter,
broker, dealer, municipal securities dealer, or investment adviser; (v) is
subject to a United States Postal Service
false representation order entered under 39 U.S.C. §3005 within 10 years prior
to the date of this Agreement,
or is subject to a temporary restraining order or preliminary injunction entered
under 39 U.S.C. §3007 with respect to conduct alleged to have violated 39 U.S.C.
§3005; (vi) is subject to an order of the Commission entered
pursuant to section 15(b), 15B(a), or 15B(c) of the Exchange Act, or section
203(e) or (f) of the Investment Advisers
Act of 1940; or (vii) is suspended or expelled from membership in, or suspended
or barred from association
with a member of, a national securities exchange registered under section 6
of
the Exchange Act or a national
securities association registered under section 15A of the Exchange Act for
any
act or omission to act constituting
conduct inconsistent with just and equitable principles of trade.
Any
certificate signed by any officer of the Company and delivered to the Placement
Agent or counsel for the
Placement Agent in connection with the offering of the Units shall be deemed
a
representation and warranty by the
Company as to the matters covered thereby, to the Placement Agent.
3. THE
CLOSING. The
time
and date of closing and delivery of the documents required to be delivered
to the Placement Agent pursuant to Section
6 hereof
shall be at 10:00 A.M., local time, on the date the Company
releases equity offering proceeds from escrow due to satisfaction of the
conditions necessary for releasing funds
from escrow as described in the Registration Statement and Prospectus (the
"Closing Date") at the office of the
Company's escrow agent.
4. FURTHER
AGREEMENTS OF THE COMPANY. The
Company agrees with the Placement
Agent
and
the Purchasers:
(a)
(i)
to make no further amendment or supplement prior to the Closing Date to the
Registration Statement or
any
amendment or supplement to the Prospectus, without the consent of the Placement
Agent, which consent shall
not
be unreasonably withheld; (ii) for so long as the delivery of a prospectus
is
required in connection with the offering
or sale of the Units, to advise the Placement Agent promptly after it receives
notice thereof, of the time when
any
amendment to the Registration Statement has been filed or becomes effective
or
any supplement or amendment
to the Prospectus has been filed and to furnish the Placement Agent with copies
thereof; (iii) subsequent to
the
date of the Prospectus and for so long as the delivery of a prospectus is
required in connection with the offering
or sale of the Units, to use its reasonable best efforts, to file promptly
all
reports
-
9
-
and
any
definitive proxy or information
statements required to be filed by the Company with the Commission pursuant
to
Section 13(a), 15 or 15(d)
of
the Exchange Act subsequent to the date of the Prospectus; (iv) to advise the
Placement Agent, promptly after
it
receives notices thereof, (x) of any request by the Commission to amend the
Registration Statement or to amend
or
supplement the Prospectus or for additional information and (y) of the issuance
by the Commission, of any stop
order suspending the effectiveness of the Registration Statement or any
post-effective amendment thereto or any
order
directed at any Incorporated Document or any amendment or supplement thereto
or
any order preventing or suspending the use of the Prospectus or any amendment
or
supplement thereto, of the suspension of the qualification of the Units for
offering or sale in any jurisdiction, of the institution or threatening of
any
proceeding for any such purpose, or of any request by the Commission for the
amending or supplementing of the Registration Statement or Prospectus or for
additional information; and, (v) in the event of the issuance of any stop order
or of any order preventing or suspending the use of the Prospectus or suspending
any such qualification, promptly to use its reasonable best efforts to obtain
the withdrawal of such order.
(b) To
comply
with the Securities Act and the Exchange Act, and the Rules and Regulations
thereunder,
so as to permit the completion of the distribution of the Units as contemplated
in this Agreement and the Prospectus.
If during the period in which a prospectus is required by law to be delivered
by
a Placement Agent or a dealer
in
connection with the distribution of Units contemplated by the Prospectus, any
event shall occur as a result of which, in the judgment of the Company or in
the
reasonable opinion of the Placement Agent or counsel for the Placement Agent,
it
becomes necessary to amend or supplement the Prospectus in order to make the
statements therein,
in the light of the circumstances existing at the time the Prospectus is
delivered to a purchaser, not misleading,
or, if it is necessary at any time to amend or supplement the Prospectus to
comply with any law, the Company promptly will prepare and file with the
Commission, and furnish at its own expense to the Placement Agent and to
dealers, an appropriate amendment to the Registration Statement or supplement
to
the Prospectus so that
the
Prospectus as so amended or supplemented will not, in the light of the
circumstances when it is so delivered, be
misleading, or so that the Prospectus will comply with such law. Before amending
the Registration Statement or supplementing
the Prospectus in connection with the Offering, the Company will furnish the
Placement Agent with a copy of such proposed amendment or supplement and will
not file such amendment or supplement to which the Placement Agent reasonably
objects.
(c) To
furnish promptly to the Placement Agent and to counsel for the Placement Agent
a
copy of the
Registration Statement as originally filed with the Commission, and each
amendment thereto filed with the Commission, including all consents and exhibits
filed therewith.
(d) To
deliver promptly to the Placement Agent such number of the following documents
as the Placement
Agent shall reasonably request: (i) conformed copies of the Registration
Statement as originally filed with
the
Commission and each amendment thereto (in each case excluding exhibits), (ii)
the Prospectus and any amendment or supplement thereto (not later than 3:00
P.M., New York City time, on the Business Day following the date of such
amendment or supplement); and (iv) any document incorporated by reference in
the
Prospectus. The Company will pay the expenses of printing or other production
of
all documents relating to the Offering.
(e) To
the
extent not available on XXXXX, to make generally available to its members as
soon as practicable,
but in any event not later than eighteen months after the effective date of
the
Initial Registration Statement
(as defined in Rule 158(c) under the Securities Act), an earnings statement
of
the Company (which need not
be
audited) complying with Section 11(a) of the Securities Act and the Rules and
Regulations (including, at the option
of
the Company, Rule 158).
(f) To
promptly take from time to time such actions as the Placement Agent may
reasonably request to qualify the Units for offering and sale under the
securities, or blue sky, laws of such jurisdictions (including
without limitation any post-filing requirements) as the Placement Agent may
designate and to continue such
qualifications in effect for so long as required for the distribution of the
Units. The Company shall not be obligated
to qualify as a foreign corporation in any jurisdiction in which it is not
so
qualified or to file a general consent
to service of process in any jurisdiction.
(g) Prior
to
the Closing Date, to furnish to the Placement Agent, as soon as they have been
prepared,
copies of any unaudited interim consolidated financial statements of the Company
for any periods
-
10
-
subsequent
to the periods covered by the financial statements appearing or incorporated
by
reference in the Prospectus
or the Registration Statement.
(h) Prior
to
the Closing Date, not to issue any press release or other communication directly
or indirectly
or hold any press conference with respect to the Company, its condition,
financial or otherwise, or earnings,
business affairs or business prospects (except for routine oral marketing
communications in the ordinary course
of
business and consistent with the past practices of the Company and of which
the
Placement Agent is notified),
without the prior written consent of the Placement Agent, unless in the judgment
of the Company and its counsel,
and after notification to the Placement Agent, such press release or
communication is required by law. In such
event, the Company shall consult with the Placement Agent as to the contents
of
such press release.
(i) To
apply
the net proceeds from the sale of the Units in substantially the same manner
as
set forth
in
the Prospectus under the heading "Use of Proceeds", unless any deviation from
such application is in accordance
with the Registration Statement and occurs only after approval by the Board
of
Directors of the Company.
(j) To
comply
in all material respects with all applicable securities and other applicable
laws, rules and
regulations, including, without limitation, the Xxxxxxxx-Xxxxx Act, and use
its
best efforts to cause the Company's
directors and officers, in their capacities as such, to comply with such laws,
rules and regulations, including, without limitation, the provisions of the
Xxxxxxxx-Xxxxx Act.
(k) To
engage
and maintain, at its expense, a registrar and transfer agent for the Units
or to
act as its
own
registrar and transfer agent.
(1) To
not
take any action prior to the Closing Date which would require the Prospectus
to
be amended
or supplemented pursuant to Section
6(b).
(m) To
supply
the Placement Agent with copies of all correspondence to and from, and all
documents
issued to and by, the Commission in connection with the registration of the
Units under the Securities Act.
5. PAYMENT
OF EXPENSES. The
Company agrees with the Placement Agent to pay (a) the costs
incident to the authorization, issuance, sale, preparation and delivery of
the
Units to the Purchasers and any taxes payable in that connection; (b) the costs
incident to the Registration of the Units under the Securities Act; (c)
the
costs
incident to the preparation, printing and distribution of the Registration
Statement and Prospectus and any amendments
and exhibits thereto or any document incorporated by reference therein, and
the
costs of printing, reproducing and distributing, this Agreement by mail, telex
or other means of communication; (d) the related reasonable fees and expenses
of
counsel for the Placement Agent, including without limitation, those incurred
in
connection with the preparation of this Agreement and the review, revision,
comment and filing of the Prospectus and
preparation or review of filings required under the Securities Act, Exchange
Act, Blue Sky or FINRA rules and regulations;
(e) any applicable listing or other fees; (f) the fees and expenses of
qualifying the Units under the securities
laws of the several jurisdictions as provided in Section
4(f) and
of
preparing, printing and distributing Blue
Sky
Memoranda (including related reasonable fees and expenses of counsel to the
Placement Agent); (g) all fees
and
expenses of the registrar and transfer agent of the Units; and (h) all other
costs and expenses incident to the performance
of the obligations of the Company under this Agreement (including, without
limitation, the fees and expenses
of the Company's independent accountants and the travel and other expenses
incurred by Company personnel
in connection with any "roadshow" including, without limitation, any expenses
advanced by the Placement
Agent on the Company's behalf (which will be promptly reimbursed)). All
out-of-pocket expenses incurred
by the Placement Agent as described in this Section 5 shall be submitted by
the
Placement Agent to the Company, on a monthly basis, and shall be deemed
reasonable and unobjectionable upon a reasonable showing by the Placement Agent
that such expenses were incurred, directly or indirectly, in connection with
the
proposed transactions
or relationship of the parties as described herein. The Company has previously
remitted to the Placement Agent a retainer sum of $50,000. This amount
constitutes an advance fee payable to the Placement Agent
for
securing its efforts hereunder and shall not be considered an advance against
any out-of-pocket expenses incurred by the Placement Agent to be reimbursed
by
the Company pursuant to this provision. Within 30 days of submission
from the Placement Agent to the Company of the requested reimbursement expense,
the Company shall make
full
payment of the requested reimbursement provided that the expenses are deemed
reasonable and
-
11
-
unobjectionable.
In addition to any fees, costs or expenses paid to Placement Agent hereunder,
the Placement Agent shall be entitled to retain the $50,000 retainer described
above upon termination of the Offering prior to the Closing Date,
regardless of the reason for such termination. Upon successful closing of the
Offering, the retainer shall be applied
against the fees due the Placement Agent.
6. CONDITIONS
TO THE OBLIGATIONS OF THE PLACEMENT AGENT AND THE PURCHASERS,
AND THE SALE OF THE UNITS. The
respective obligations of the Placement Agent and the Purchasers,
and the closing of the sale of the Units hereunder are subject to the accuracy,
when made and on the Closing
Date, of the representations and warranties of the Company contained herein,
to
the accuracy of the statements of the Company made in any certificates pursuant
to the provisions hereof, to the performance by the Company of its obligations
hereunder, and to each of the following additional terms and
conditions:
(a) No
stop
order suspending the effectiveness of the Registration Statement shall have
been
issued and
no
proceedings for that purpose shall have been initiated or threatened by the
Commission, and any request for additional
information on the part of the Commission (to be included in the Registration
Statement or the Prospectus or
otherwise) shall have been complied with to the reasonable satisfaction of
the
Placement Agent. The Registration Statement
and any filings required to be made by the Company in accordance with
Section
4(a) shall
have been timely
filed with the Commission.
(b) The
Placement Agent shall not have discovered and disclosed to the Company on or
prior to the
Closing Date that the Registration Statement or the Prospectus or any amendment
or supplement thereto contains an
untrue
statement of a fact which, in the opinion of counsel for the Placement Agent,
is
material or omits to state any
fact
which, in the opinion of such counsel, is material and is required to be stated
therein or is necessary to make the statements therein (in the case of the
Prospectus in light of the circumstances under which they were made) not
misleading.
(c) All
corporate proceedings and other legal matters incident to the authorization,
form, execution, delivery
and validity of each of this Agreement, the Units, the Registration Statement
and the Prospectus and all other
legal matters relating to this Agreement and the transactions contemplated
hereby shall be reasonably satisfactory
in all material respects to counsel for the Placement Agent, and the Company
shall have furnished to such
counsel all documents and information that they may reasonably request to enable
them to pass upon such matters.
(d) The
Placement Agent shall have received from Brown, Winick, Graves, Gross,
Xxxxxxxxxxx & Schoenebaum
P.L.C., counsel for the Company, such counsel's written opinion, addressed
to
the Placement Agent and
the
Purchasers and dated as of the Closing Date, in form and substance reasonably
satisfactory to the Placement Agent
as
set forth in Exhibit
C attached
hereto.
(e) The
Company shall have furnished to the Placement Agent and the Purchasers a
certificate, dated
as
of the Closing Date, executed by its Chief Executive Officer and its Chief
Financial Officer stating that (i) such
officers have carefully examined the Registration Statement and the Prospectus
and, in their opinion, each of the
Registration Statement as of its effective date and the Prospectus, as of each
such effective date, did not include any
untrue statement of a material fact and did not omit to state a material fact
required to be stated therein or necessary
to make the statements therein (in the case of the Prospectus in light of the
circumstances under which they
were
made) not misleading, (ii) since the effective date of the Initial Registration
Statement no event has occurred which should have been set forth in a supplement
or amendment to the Registration Statement or the Prospectus,
(iii) to the best of their knowledge after reasonable investigation, as of
the
Closing Date, the representations
and warranties of the Company in this Agreement are true and correct and the
Company has complied
with all agreements and covenants contained in this Agreement and satisfied
all
conditions on its part to be performed
or satisfied hereunder at or prior to the Closing Date, (iv) subsequent to
the
date of the most recent financial
statements included or incorporated by reference in the Prospectus, there has
been no change in the financial
position or results of operation of the Company that could have a Material
Adverse Effect, or any change, or
any
development including a prospective change, in or affecting the condition
(financial or otherwise), results of operations,
business or prospects of the Company taken as a whole, except as set forth
in
the Prospectus, and (v) the Initial
Registration Statement became effective on January 29, 2008, and to their
knowledge, as of the Closing Date (I)
no
stop order suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that
-
12
-
purpose
have been commenced or are pending before or are contemplated by the Commission
and (II) no action has been taken by any governmental agency, body or official,
and no injunction, restraining order or order of any nature
by
any federal or state court has been issued, which would prevent the issuance
of
the Units.
(f) At
the
Execution Time, the Placement Agent shall have received from Xxxx &
Associates LLP a
letter,
addressed to the Placement Agent and dated such date, in form and substance
satisfactory to the Placement Agent
(i)
confirming that they are independent certified public accountants with respect
to the Company within the meaning of the Securities Act and the Rules and
Regulations and (ii) stating the conclusions and findings of such firm
with
respect to the financial statements and certain financial information contained
or incorporated by reference in
the
Prospectus.
(g) On
the
Closing Date, the Placement Agent shall have received a letter (the "bring-down
letter") from
Xxxx
& Associates LLP addressed to the Placement Agent and dated the Closing Date
confirming, as of the date
of
the bring-down letter (or, with respect to matters involving changes or
developments since the respective dates
as
of which specified financial information is given in the Prospectus as of a
date
not more than three Business Days
prior to the date of the bring-down letter), the conclusions and findings of
such firm with respect to the financial
information and other matters covered by its letter delivered to the Placement
Agent concurrently with the execution of this Agreement.
(h) (i)
The
Company shall not have sustained since the date of the latest audited financial
statements
included or incorporated by reference in the Prospectus any loss or interference
with its business from fire, explosion, flood, terrorist act or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth in or
contemplated by the Prospectus, and (ii) since such date there shall not have
been any change in the membership interests or long-term debt of the
Company
or any change, or any development involving a prospective change, in or
affecting the business, general affairs,
management, financial position, members' equity, results of operations or
prospects of the Company, otherwise
than as set forth in or contemplated by the Prospectus, the effect of which,
in
any such case described in clause
(i) or (ii), is, in the judgment of the Placement Agent, so material and adverse
as to make it impracticable or inadvisable to proceed with the sale or delivery
of the Units on the terms and in the manner contemplated by the
Prospectus.
(i) Subsequent
to the execution and delivery of this Agreement, there shall not have occurred
any of
the
following: (i) trading in securities generally on the New York Stock Exchange,
the Nasdaq National Market or the
American Stock Exchange or in the over-the-counter market, or trading in any
securities of the Company on any exchange
or in the over-the-counter market, shall have been suspended or minimum or
maximum prices or maximum
ranges for prices shall have been established on any such exchange or such
market by the Commission, by
such
exchange or by any other regulatory body or governmental authority having
jurisdiction, (ii) a banking moratorium shall have been declared by Federal
or
state authorities or a material disruption has occurred in commercial
banking or securities settlement or clearance services in the United States,
(iii) the United States shall have
become engaged in hostilities, or the subject of an act of terrorism, there
shall have been an escalation in hostilities
in which it is not already engaged involving the United States or there shall
have been a declaration of a national
emergency or war by the United States or (iv) there shall have occurred any
other calamity or crisis or any change in general economic, political or
financial conditions in the United States or elsewhere, if the effect of any
such event in clause (iii) or (iv) makes it, in the sole judgment of the
Placement Agent, impracticable or inadvisable to
proceed with the sale or delivery of the Units on the terms and in the manner
contemplated by the Prospectus.
(j) No
action
shall have been taken and no statute, rule, regulation or order shall have
been
enacted,
adopted or issued by any governmental agency or body which would, as of the
Closing Date, prevent the issuance
or sale of the Units; and no injunction, restraining order or order of any
other
nature by any federal or state court
of
competent jurisdiction shall have been issued as of the Closing Date which
would
prevent the issuance or sale of the Units.
(k) The
Company shall have prepared and filed with the Commission all appropriate
Current Reports
on Form 8-K as may be required under the Exchange Act.
(l) The
Company shall have entered into Subscription Agreements with each of the
Purchasers and
-
13
-
such
agreements shall be in full force and effect.
(m) Prior
to
the Closing Date, the Company shall have furnished to Placement Agent such
further information,
certificates and documents as it may reasonably request.
All
opinions, letters, evidence and certificates mentioned above or elsewhere in
this Agreement shall be deemed
to
be in compliance with the provisions hereof only if they are in form and
substance reasonably satisfactory to
counsel for the Placement Agent.
7. INDEMNIFICATION
AND CONTRIBUTION.
(a) The
Company shall indemnify and hold harmless the Placement Agent, its officers,
employees, representatives and agents and each person, if any, who controls
the
Placement Agent within the meaning of the Securities Act (collectively the
"Placement Agent Indemnified Parties" and each a "Placement Agent Indemnified
Party") against any loss, claim, damage or liability, joint or several, or
any
action in respect thereof, to which that Placement
Agent Indemnified Party may become subject, under the Securities Act or
otherwise, insofar as such loss, claim,
damage, liability or action arises out of or is based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or the Prospectus or in any amendment or supplement
thereto except insofar as any such loss, claim, damage, liability or action
arises out of or is based upon any untrue statement
or alleged untrue statement of material fact contained in, and in conformity
with, information concerning such
Placement Agent furnished by Placement Agent for use in the Registration
Statement; (ii) the omission or alleged
omission to state in the Registration Statement or the Prospectus or in any
amendment or supplement thereto a
material fact required to be stated therein or necessary to make the statements
therein not misleading except insofar
as any such loss, claim, damage, liability or action arises out of or is based
upon any omission or alleged omission
to state a material fact in the Registration Statement in connection with
information concerning such Placement
Agent furnished by Placement Agent for use in the Registration Statement (or
which Placement Agent failed
to
provide but that was necessary to make the information provided not misleading),
or (iii) any breach of the representations
and warranties of the Company contained herein, and shall reimburse each
Placement Agent Indemnified
Party promptly upon demand for any legal or other expenses reasonably incurred
by that Placement Agent
Indemnified Party in connection with investigating or preparing to defend or
defending against or appearing as a third party witness in connection with
any
such loss, claim, damage, liability or action as such expenses are incurred.
This indemnity agreement is not exclusive and will be in addition to any
liability, which the Company might
otherwise have and shall not limit any rights or remedies which may otherwise
be
available at law or in equity to
each
Placement Agent Indemnified Party.
(b) The
Placement Agent shall indemnify and hold harmless the Company its officers,
employees, representatives
and agents, each of its directors and each person, if any, who controls the
Company within the meaning
of the Securities Act (collectively the "Company Indemnified Parties" and each
a
"Company Indemnified Party")
against any loss, claim, damage or liability, joint or several, or any action
in
respect thereof, to which the Company
Indemnified Parties may become subject, under the Securities Act or otherwise,
insofar as such loss, claim,
damage, liability or action arises out of or is based upon (i) any breach by
the
Placement Agent of the representations,
warranties, covenants, or agreements by the Placement Agent contained in this
Agreement, (ii) any untrue
statement or alleged untrue statement of material fact contained in, and in
conformity with, information concerning
such Placement Agent furnished by Placement Agent for use in the Registration
Statement, or (iii) any omission
or alleged omission to state a material fact in the Registration Statement
in
connection with information concerning such Placement Agent furnished by
Placement Agent for use in the Registration Statement (or which Placement
Agent failed to provide but that was necessary to make the information provided
not misleading), and shall
reimburse the Company Indemnified Parties for any legal or other expenses
reasonably incurred by such parties
in connection with investigating or preparing to defend or defending against
or
appearing as third party witness in connection with any such loss, claim,
damage, liability or action as such expenses are incurred. This indemnity
agreement is not exclusive and will be in addition to any liability, which
the
Placement Agent and the Purchasers might otherwise have and shall not limit
any
rights or remedies which may otherwise he available at law or in equity to
the
Company Indemnified Parties. Notwithstanding the provisions of this Section
7(b), in
no
event shall
any
indemnity by the Placement Agent under this Section
7(b) exceed
the total compensation received by such Placement
Agent in accordance with Section
1(e).
-
14
-
(c) Promptly
after receipt by an indemnified party under this Section
7 of
notice
of any claim or the
commencement of any action, the indemnified party shall, if a claim in respect
thereof is to be made against the indemnifying
party under this Section
7, notify
the indemnifying party in writing of the claim or the commencement of
that
action; provided,
however, that
the
failure to notify the indemnifying party shall not relieve it from any
liability
which it may have under this Section
7 except
to
the extent it has been materially prejudiced by such failure; and,
provided,
further, that
the
failure to notify the indemnifying party shall not relieve it from any liability
which it may
have
to an indemnified party otherwise than under this Section
7. If
any
such claim or action shall be brought against
an indemnified party, and it shall notify the indemnifying party thereof, the
indemnifying party shall be entitled
to participate therein and, to the extent that it wishes, jointly with any
other
similarly notified indemnifying party,
to
assume the defense thereof with counsel reasonably satisfactory to the
indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying
party shall not be liable to the indemnified party under this Section
7 for
any
legal or other expenses subsequently incurred by the indemnified party in
connection with the defense thereof other than reasonable costs of investigation:
provided,
however, that
any
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 be at the expense of
such
indemnified party unless (i) the employment thereof has been specifically
authorized by the indemnifying party
in
writing, (ii) such indemnified party shall have been advised by such counsel
that there may be one or more legal
defenses available to it which are different from or additional to those
available to the indemnifying party and in
the
reasonable judgment of such counsel it is advisable for such indemnified party
to employ separate counsel or (iii) the indemnifying party has failed to assume
the defense of such action in accordance with the terms hereof and employ
counsel reasonably satisfactory to the indemnified party, in which case, if
such
indemnified party notifies the
indemnifying party in writing that it elects to employ separate counsel at
the
expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such action
on behalf of such indemnified party,
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
at any time for all such indemnified parties, which firm shall be designated
in
writing by the Placement Agent,
if
the indemnified parties under this Section
7 consist
of any Placement Agent Indemnified Party, or by the Company
if the indemnified parties under this Section
7 consist
of any Company Indemnified Parties. Each indemnified
party, as a condition of the indemnity agreements contained in Sections
7(a) and
7(b)
shall
use
all reasonable
efforts to cooperate with the indemnifying party in the defense of any such
action or claim. Subject to the provisions
of Section
7(d) below,
no
indemnifying party shall be liable for any settlement, compromise or consent
to
the
entry
of judgment in connection with any such action effected without its written
consent (which consent shall not be unreasonably withheld), but if settled
with
its written consent or if there be a final judgment for the plaintiff in any
such action (other than a judgment entered with the consent of such indemnified
party), the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against
any
loss or liability by reason of
such
settlement or judgment.
(d) If
at any
time an indemnified party shall have requested that an indemnifying party
reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement
of the nature contemplated by this Section
7 effected
without its written consent if (i) such settlement is entered
into more than 45 days after receipt by such indemnifying party of the request
for reimbursement, (ii) such indemnifying
party shall have received notice of the terms of such settlement at least 30
days prior to such settlement
being entered into and (iii) such indemnifying party shall not have reimbursed
such indemnified party in accordance
with such request prior to the date of such settlement.
(e) If
the
indemnification provided for in this Section
7 is
unavailable or insufficient to hold harmless
an indemnified party under Section
7(a) or
7(11),
then
each
indemnifying party shall, in lieu of indemnifying
such indemnified party, contribute to the amount paid or payable by such
indemnified party as a result of
such
loss, claim, damage or liability, or action in respect thereof, (i) in such
proportion as shall be appropriate to reflect
the relative benefits received by the Company on the one hand and the Placement
Agent on the other from the offering
of the Units or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion
as is appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault
of
the Company on the one hand and the Placement Agent on the other with respect
to
the statements or omissions
which resulted in such loss, claim, damage or liability, or action in respect
thereof, as well
-
15
-
as
any
other relevant
equitable considerations. The relative benefits received by the Company on
the
one hand and the Placement Agent
on
the other with respect to such offering shall be deemed to he in the same
proportion as the total net proceeds
from the offering of the Units purchased under this Agreement (before deducting
expenses) received by the Company
bears to the total compensation received by the Placement Agent with respect
to
the Units purchased under this Agreement.. The Company and the Placement Agent
agree that it would not be just and equitable if contributions
pursuant to this Section
7(e) were
to
be determined by pro rata allocation or by any other method of allocation
which does not take into account the equitable considerations referred to
herein. The amount paid or payable by an indemnified party as a result of the
loss, claim, damage or liability, or action in respect thereof, referred
to above in this Section
7(e) shall
be
deemed to include, for purposes of this Section
7(e), any
legal
or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action
or
claim. Notwithstanding the provisions of this Section
7(e), the
Placement Agent shall not be required to contribute
any amount in excess of the total compensation received by such Placement Agent
in accordance with Section
1(e) less
the
amount of any damages which such Placement Agent has otherwise paid or become
liable to pay by reason of any untrue or alleged untrue statement or omission
or
alleged omission. No person guilty of fraudulent misrepresentation (within
the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution
from any person who was not guilty of such fraudulent
misrepresentation.
8. TERMINATION.
The
obligations of the Placement Agent and the Purchasers hereunder and under
the
Subscription Agreements may be terminated by the Placement Agent, in its
reasonable discretion by notice given
to
the Company prior to delivery (including electronic delivery) of and payment
for
the Units if, prior to that time,
any
condition to the obligations of the Placement Agent and the Purchasers set
forth
in Section
6 hereof
is
not satisfied to the satisfaction of Placement Agent or if the Purchasers shall
decline to purchase the Units for any reason permitted
under this Agreement or the Subscription Agreements. This Agreement and the
obligations of the Company
hereunder may be terminated by the Company upon breach by the Placement Agent
of
any of the representations, warranties, covenants, or agreements by the
Placement Agent contained in this Agreement if said breach
remains uncured ten (10) days after written notice thereof from the Company.
The
provisions of Sections 1(e),
2,
4, 5, 6, 7 and 9 hereof shall survive any termination of this Agreement. Without
limiting the forgoing, the Placement
Agent's right to receive payment pursuant to Section 1(e) hereof shall continue
despite any such termination
and the Placement Agent shall be entitled to receive full payment on the Closing
Date of any amounts it would
have been entitled to, pursuant to Section 1(e), 5, 9 or otherwise, the same
as
if this Agreement had not been terminated.
9. REIMBURSEMENT
OF PLACEMENT AGENT'S EXPENSES. If
the
sale of the Units provided
for herein is not consummated because any condition to the obligations of the
Placement Agent and the Purchasers
set forth in Section
6 hereof
is
not satisfied, because of any termination pursuant to Section
8 hereof
or
because of any refusal, inability or failure on the part of the Company to
perform any agreement herein or comply with
any
provision hereof other than by reason of a default by the Placement Agent,
the
Company will reimburse the Placement
Agent upon demand for all reasonable out-of-pocket expenses (including
reasonable fees and disbursements
of counsel and any expenses advanced by the Placement Agent on the Company's
behalf) that shall have
been
incurred by the Placement Agent in connection with this Agreement and the
proposed purchase and sale of
the
Units and, upon demand, the Company shall pay the full amount thereof to
Placement Agent.
10. SUCCESSORS;
PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This
Agreement shall inure to the benefit of and be binding upon the Placement Agent,
the Purchasers, the Company, and their
respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give
any
person other than the persons mentioned in the preceding sentence any legal
or
equitable right, remedy or claim
under or in respect of this Agreement, or any provisions herein contained,
this
Agreement and all conditions and
provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit
of no other person; except that the representations, warranties, covenants,
agreements and indemnities of the Company
contained in this Agreement shall also he for the benefit of the Placement
Agent
Indemnified Parties, and the
indemnities of the Placement Agent shall also be for the benefit of the Company
Indemnified Parties. It is understood that the Placement Agent's
responsibilities to the Company are solely contractual in nature and the
Placement
Agent does not owe the Company, or any other party, any fiduciary duty as a
result of this Agreement.
-
16
-
11. SURVIVAL
OF INDEMNITIES, REPRESENTATIONS, WARRANTIES, ETC. The
respective
indemnities, covenants, agreements, representations, warranties and other
statements of the Company and the
Placement Agent, as set forth in this Agreement or made by them respectively,
pursuant to this Agreement, shall remain
in
full force and effect, regardless of any investigation made by or on behalf
of
the Placement Agent, the Company,
the Purchasers or any person controlling any of them and shall survive delivery
of and payment for the Units.
12. NOTICES.
All
statements, requests, notices and agreements hereunder shall be in writing,
and:
(a) if
to the
Placement Agent, shall be delivered or sent by mail, telex or facsimile
transmission to
Xxxxxx
Securities LLC, d.b.a. Xxxxxx Group Capital, 0000 Xxxxxxxxx Xxxx, X.X., Xxxxx
000, Xxxxxxx, XX 00000,
Attn: Xxxxxx Xxxxxxx (Fax: 000-000-0000), with a copy to: Taylor, Busch,
Slipakoff & Duma, LLP, 0000 Xxxxxxxx
Xxxxxx, Xxxxx 000, Xxxxxxx, XX 00000, Attention: Xxxx Xxxxxxxxx, Esq. (Fax:
000-000-0000).
(b) if
to the
Company shall be delivered or sent by mail, telex or facsimile transmission
to
East Coast
Ethanol, LLC, 0000 Xxxxxxxx Xxxx, X.X. Xxx 0000, Xxxxxxxx, Xxxxx Xxxxxxxx 00000,
Attention: Xxxx X. Xxxx, Chief Financial Officer (Fax: 000.000.0000), with
a
copy to: BrownWinick, PLC, Suite 2000 Ruan Center, 000 Xxxxx Xxxxxx, Xxx Xxxxxx,
Xxxx 00000, Attention: Xxxxxxx Xxxxxxxx, Esq. (Fax: 000.000.0000)
13. DEFINITIONS
OF CERTAIN TERMS. The
terms
which follow, when used in this Agreement,
shall have the meanings indicated.
"Business
Day" shall
mean any day other than a Saturday, a Sunday, a legal holiday, a day on which
banking
institutions or trust companies are authorized or obligated by law to close
in
New York City or any day on which
the
Nasdaq National Market is not open for trading.
"Effective
Date" shall
mean each date and time that the Registration Statement (and any post-effective
amendment
or amendments thereto) became or becomes effective.
"Execution
Time" shall
mean the date and time that this Agreement is executed and delivered by the
parties
hereto.
"Interference
Proceeding" shall
have the meaning set forth in 35 U.S.C. § 135.
"To
the Company's knowledge" and
words
of similar import shall mean that knowledge which the Company
actually has in its possession.
14. GOVERNING
LAW. This
Agreement shall be governed by and construed in accordance with the
laws
of the State of Georgia.
15. PARTIAL
UNENFORCEABILITY. The
invalidity or unenforceability of any Section, paragraph
or provision of this Agreement shall not affect the validity or enforceability
of any other Section, paragraph
or provision hereof. If any Section, paragraph or provision of this Agreement
is
for any reason determined to he invalid or unenforceable, there shall be deemed
to be made such minor changes (and only such minor changes) as
are
necessary to make it valid and enforceable.
16. GENERAL.
This
Agreement constitutes the entire agreement of the parties to this Agreement
and
supersedes all prior written or oral and all contemporaneous oral agreements,
understandings and negotiations with
respect to the subject matter hereof. In this Agreement, the masculine, feminine
and neuter genders and the singular
and the plural include one another. The section headings in this Agreement
are
for the convenience of the parties
only and will not affect the construction or interpretation of this Agreement.
This Agreement may be amended
or
-
17
-
modified,
and the observance of any term of this Agreement may be waived, only by a
writing signed by
the
Company and the Placement Agent.
17. COUNTERPARTS.
This
Agreement may be signed in any number of counterparts, each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.
If
the
foregoing is in accordance with your understanding of the agreement between
the
Company and the Placement
Agent, kindly indicate your acceptance in the space provided for that purpose
below.
Very
truly yours,
By:
/s/
Xxxxx
X. Xxxxxx
Name:
Xxxxxxx X. Xxxxxx
Title:
Chief Executive Officer
Accepted
as of the date first above written:
XXXXXX
SECURITIES LLC
/s/
Xxxxxxx X. Xxxxxxx
Xxxxxxx
X. Xxxxxxx
President/CEO
-
18
-
EXHIBIT
A
EXCLUSIVE
TERRITORY
North
Carolina
Virginia
Maryland
-
19
-
EXHIBIT
B
PROSPECTUS
-
20
-
EXHIBIT
C
OPINION
OF COUNSEL FOR THE COMPANY
1.
The
Company validly exists as a limited liability company in good standing under
the
laws of the State of Delaware, with the limited liability company power and
authority to own its properties and conduct its business as described in
the
Registration Statement and the Prospectus. The Company has no subsidiaries
2.
The
Company is duly qualified to do business as a foreign limited liability company
and is in good standing in each jurisdiction where the ownership or leasing
of
its properties or the conduct of its business requires such qualification,
except where the failure to be so qualified and in good standing would not,
individually, or in the aggregate, have a Material Adverse Effect.
3.
The
Company has the authorized capitalization set forth in the Registration
Statement and the Prospectus. The Units to be delivered on the Closing Date
have
been duly and validly authorized and, when issued, delivered and paid for
in
accordance with the Placement Agreement, will be fully paid and non-assessable.
The Units conform as to legal matters to the descriptions thereof contained
in
the Registration Statement and the Prospectus in all material respects.
4.
The
Company is not in violation of any material provision of its certificate
of
organization or operating agreement and, to the best of our knowledge, is
not in
material default in the performance of any obligation, agreement, covenant
or
condition contained in any document filed as an exhibit to the Registration
Statement or incorporated by reference therein.
5.
Except
as otherwise disclosed in the Registration Statement and Prospectus, there
are
no preemptive or similar rights that entitle or will entitle any person to
acquire any Units from the Company upon issuance or sale thereof pursuant
to any
document filed as an exhibit to the Registration Statement or incorporated
by
reference therein.
6.
Except
as otherwise disclosed in the Registration Statement and Prospectus and to
our
knowledge, no person or entity has the right to require the registration
of
Units or other securities of the Company because of the filing or effectiveness
of the Registration Statement or the completion of the offering.
7.
The
Company has the limited liability company power and authority to execute
and
deliver the Placement Agreement, the Subscription Agreements and the Units
and
to perform its obligations under the Placement Agreement and the Subscription
Agreements. All limited liability company action required to be taken for
the
due and proper authorization, execution and delivery of the Placement Agreement
and consummation of the transactions contemplated by the Placement Agreement
have been duly and validly taken.
8.
The
Placement Agreement has been duly and validly authorized, executed and delivered
by the Company and constitutes the legal, valid and binding obligation of
the
Company, enforceable in accordance with its terms, except as enforceability
may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or
similar laws affecting creditors' rights generally and except as enforceability
may be subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
9.
To our
knowledge and other than as set forth in the Registration Statement or the
Prospectus, there are no judicial, regulatory or other legal or governmental
proceedings pending to which the Company is a party or of which any property
of
the Company is subject which are required to be disclosed in the Registration
Statement or the Prospectus pursuant to Item 103 of Regulation S-B of the
Rules
and Regulations that are not described as required.
10.
The
execution, delivery and performance of the Placement Agreement and consummation
of the transactions contemplated by the Placement Agreement do not and will
not
(A) conflict with or result in a breach of any of the terms and provisions
of,
or constitute a default (or an event which with notice or lapse of time,
or
both, would constitute a default) under, or result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the Company
pursuant to, any indenture, mortgage, deed of trust, loan agreement or any
other
agreement, instrument, franchise, license or permit known to us to which
the
Company is a party or by which any of the Company or its properties or assets
may be bound and which is filed as an exhibit to the Registration Statement
and
the documents incorporated therein by reference, (B) violate or conflict
with
any provision of the certificate of organization or operating agreement of
the
Company, or, (C) to our knowledge, violate or conflict with any judgment,
decree, order, statute, rule or regulation of any court or any judicial,
regulatory or other legal or governmental agency or body known by us to be
applicable to the Company, except (in the case of clauses (A) and (C)) for
any
of the foregoing that would not individually or in the aggregate have a Material
Adverse Effect.
-
21 -
11.
No
consent, approval, authorization, order, registration, filing, qualification,
license or permit of or with any court or any judicial, regulatory or other
legal or governmental agency or body is required for the execution, delivery
and
performance of the Placement Agreement or consummation of the transactions
contemplated by the Placement Agreement, including the issuance and sale
of the
Units, except for (1) such as are required by the Securities Act and blue
sky
laws; and (2) such as are required by FINRA.
12.
To
our knowledge, the Company is not a party to any contract or agreement of
a
character required to be described or incorporated by reference in the
Registration Statement or the Prospectus or to be filed as an exhibit to
the
Registration Statement pursuant to Item 601(b)(10) of Regulation S-B of the
Rules and Regulations that has not been described or filed as
required.
13.
No
facts have come to our attention that have caused us to believe that the
Registration Statement or the Prospectus and any amendments thereof or
supplements thereto contain any untrue statement of material fact or omit to
state a material fact necessary in order to make the statements therein,
in
light of the circumstances under which they were made, not misleading (except
that in each case we do not express any view as to the financial statements,
schedules and other financial or statistical information included therein
or
excluded therefrom or the statements contained in the exhibits to the
Registration Statement).
14.
The
Company is not and, after giving effect to the offering and sale of the Units
and the application of the proceeds thereof as described in the Registration
Statement and the Prospectus, will not be, an "investment company" as such
term
is defined in the Investment Company Act of 1940, as amended.
-
22 -
