EXHIBIT 1.1
SALES AGENCY AGREEMENT
This Agreement entered into this _____ day of _________________, 2002, by
and between Western Feed Xxxxx, Inc., a Kansas corporation (the "Company"),
and Carey, Thomas, Xxxxxx & Xxxxxxx (the "Sales Agent"), with its principal
offices located at 0000 Xxxx Xxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxx 00000.
WITNESSETH:
WHEREAS, the Company has an authorized capitalization of 50,000,000
shares of Common Stock, no par value (the "Common Shares"), and 30,000,000
shares of Preferred Stock (the "Preferred Shares") and as of the date hereof
5,842,596 of said common shares are currently issued and outstanding and none
of the Preferred Shares have been issued and are outstanding.
WHEREAS, the Sales Agent will use its best efforts to sell, for the account
of the Company, a minimum of 17,500,000 Common Shares and a maximum of
35,000,000 Common Shares at a price of $0.40 per Common Share.
WHEREAS, the term "Shares," as used herein, includes as many of the Common
Shares as are issued and sold pursuant to the terms hereof unless the context
indicates otherwise.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth and intending to be legally bound the parties hereby
agree as follows:
I. REPRESENTATIONS, WARRANTIES AND AGREEMENTS
A. The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement (File No. 333-88484)
on Form SB-2 and may have prepared and filed one or more amendments thereto
covering the registration of the Shares under the Securities Act of 1933, as
amended (the "Securities Act"), including the related preliminary prospectuses,
each and all such preliminary prospectuses (together with all documents
incorporated therein by reference) being herein referred to as the
"Preliminary prospectus," and has prepared and proposes to file, prior to
the effective date of such registration statement, an additional amendment
to such registration statement, including a final prospectus, copies of which
have heretofore been delivered to you. The Company will not, without Sales
Agent's prior consent (which consent shall not be unreasonably withheld),
file any other amendment thereto prior to the time such registration
statement shall become effective or make any change in such form of final
prospectus prior to the time it is first filed with the Commission pursuant
to Rule 424(b) of the rules and regulations of the Commission under the
Securities Act (the "Rules and Regulations"). Such registration statement
and prospectus, including all exhibits thereto and documents incorporated
therein by reference, as finally amended and revised at the time the
registration statement becomes effective are herein, respectively, called
the "Registration Statement" and the "Prospectus," except that, if the
prospectus first filed by the Company pursuant to Rule 424(b) of the Rules
and Regulations shall differ from the Prospectus, the term "Prospectus"
shall mean the prospectus first filed pursuant to Rule 424(b).
B. When the Registration Statement shall become effective and at all times
subsequent thereto up to and including the Closing Date (as hereinafter
defined), and, when any post-effective amendment thereof shall become
effective, the Registration Statement (and any post-effective amendment
thereof) will fully comply with the applicable provisions of the Securities
Act and the Rules and Regulations thereunder, and the Registration Statement
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will not contain any untrue statement of a material fact and will not omit to
state any material fact required to be stated therein or necessary in order
to make the statement therein not misleading, and when the Registration
Statement shall become effective and at all times subsequent thereto up to
and including the Closing Date, the Prospectus (and the Prospectus as amended
or supplemented, if the Company shall have filed with the Commission any
amendment thereof or supplement thereto) will fully comply with the
provisions of the Securities Act and the Rules and Regulations and will not
contain any untrue statement of a material fact and will not omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading; except that the foregoing does not apply to
statements or omissions in the Registration Statement or the Prospectus, or
any amendment or supplement thereto, based upon written information furnished
to the Company by Sales Agent specifically for use therein.
C. The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Kansas and the
Company has full power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus and as
being conducted, and is in compliance in all material respects with all
laws requiring its qualification to do business as a foreign corporation
in all other jurisdictions in which it owns or leases substantial
properties or in which the conduct of its business requires such
qualification.
D. The Shares have been duly authorized, and when issued and delivered as
contemplated by this Agreement, will have been validly issued and will be
fully paid and non-assessable, and conform to the description thereof
contained in the Prospectus. The certificates used to evidence the Shares
will be in due and proper form. No further approval or authority of the
stockholders or the Board of Directors of the Company will be required for
the issuance and sale of the Shares as contemplated herein.
E. This Agreement and the Escrow Agreement (as defined below) have each
been duly authorized, executed and delivered by the Company and each of
this Agreement and the Escrow Agreement constitutes a legal, valid and
binding obligation of each of the Company enforceable in accordance with
its terms and is in all respects in full compliance with all applicable
provisions of the Securities Act.
F. The execution and delivery of this Agreement and the Escrow Agreement
and the performance by the Company hereunder and thereunder will not
conflict with, result in a breach or violation of or constitute a default
under any agreement or instrument to which the Company is a party or the
corporate charter or by-laws of the Company or any law, order, rule,
regulation, decree or injunction of any jurisdiction, court or governmental
agency or body, and no consent, approval, authorization or order of, or
filing with, any court or governmental agency or body is required for the
performance by the Company of this Agreement or the Escrow Agreement or the
consummation by the company, of the transactions contemplated hereby or
thereby, except such as may be required under the Securities Act, or state
securities or Blue Sky laws.
G. The Prospectus and the Preliminary Prospectus as originally filed or as
amended and supplemented, if the Company shall have filed with the
Commission any amendment thereof or supplement thereto will fully comply
with the applicable provisions of the Securities Act and the Rules and
Regulations and will not contain any untrue statement of a material fact
and will not omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
H. The Company has not given any information or made any representation in
connection with the offering of the Shares, written or oral, other than as
contained in the Prospectus or Preliminary Prospectus.
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II. OFFERING AND SALE OF THE SHARES
The Shares shall be offered on a best efforts basis directly by the
Company and through the Sales Agent. On the basis of the representations,
warranties and agreements herein contained, but subject to the terms and
conditions herein set forth, the Company appoints Sales Agent as its
exclusive agent to effect sales of the Shares for the account of the
Company at the offering price of $0.40 per Share and upon the other terms
and conditions set forth herein and in the Prospectus, and Sales Agent
agrees to use its best efforts as such agent to sell the Shares during the
term of this Agreement upon the terms and conditions set forth herein and
in the Prospectus. Sales Agent may in its discretion enter into one or
more agreements with other broker-dealers for the purpose of effecting
sales of the shares.
Sales Agent's appointment shall commence upon the date of the execution of
this Agreement, and shall continue for a period (such period, including any
extension thereof as hereinafter provided, being herein called the "Offering
Period") of 90 days from the effective date (the "Effective Date") of the
Registration Statement (and for a period of up to 90 additional days if
extended by agreement of the Company and Sales Agent), unless all of the
Shares have previously been subscribed for. The offering will terminate and
all amounts paid by applicants to purchase Shares will be promptly returned
to them with interest as provided in the Prospectus and the Escrow Agreement
(as hereinafter defined) (i) if subscriptions for at least 17,500,000 Shares
(the "Minimum Offering") have not been received within the Offering Period,
(ii) at any time by agreement of the Company and Sales Agent or (iii) this
Agreement shall be terminated as provided herein.
If subscriptions are received for at least the Minimum Offering, as
compensation for Sales Agent's services hereunder, the Company will, at
the Closing (as hereinafter defined), pay you commissions as follows:
An amount equal to $0.00080 per Share (i e., 2.00% percent of the gross
proceeds of the offering) resulting from the sale of Shares pursuant to
the offering contemplated herein plus an amount equal to $0.0320 per share
(i.e., 8% of the gross proceeds per share) with respect to those Shares
subscribed for by applicants solicited by Sales Agent, provided however,
that in no event shall the Sales Agents compensation exceed 8.00% of the
gross proceeds of the offering.
Sales Agent hereby acknowledges the Escrow Agreement (the "Escrow
Agreement") between U.S. Bank National Association, as Escrow Agent, and
the Company, a copy of which is attached hereto as Exhibit A. Sales Agent
will promptly upon receipt by Sales Agent deliver all cash and checks
received by Sales Agent from applicants to purchase Shares to the Company.
Such cash or checks will be accompanied by one executed copy of the
Subscription Application pursuant to which applications to purchase Shares
are made, properly completed and executed and in the form of Exhibit 10.3
attached to Part II of the Form SB-2 Registration Statement ("Subscription
Application"). All such cash or checks and executed copies of Subscription
Application are to be deposited by the Escrow Agent, pursuant to the Escrow
Agreement (the "Escrow Account") established by the Company with the Escrow
Agent. All checks received by Sales Agent from applicants to purchase shall
be made payable to "Western Feed Xxxxx, Inc. Escrow Account." Sales Agent
will promptly deliver to the Company one photocopy of each Subscription
Agreement deposited in the Escrow Account. Promptly after receipt of a
Subscription Application and the funds therefor by the Escrow Agent and
delivery of a copy of the Subscription Application, the Company will mail
an interim receipt, in the form annexed to the Escrow Agreement as Exhibit
A, to each such applicant to purchase for the amount deposited in the
Escrow Account on behalf of such applicant to purchase. Any entity
selected by Sales Agent to process orders for Shares on behalf of applicants
to purchase may deliver cash or checks and Subscription Applications
received from such applicants directly to the Escrow Agent and deliver a
photocopy of Subscription Applications so received directly to the Company.
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It is understood that Sales Agent shall have the right to refuse to forward
to the Escrow Agent any Subscription Application, and in such event you
shall promptly remit all funds received by Sales Agent to the person on
whose behalf such funds were submitted to Sales Agent.
III. CLOSING
Subject to the prior termination of the offering as provided herein, there
shall be a closing (the "Closing") at the offices of Carey, Thomas, Xxxxxx
& Xxxxxxx, 0000 Xxxx Xxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxx 00000, on the
fifth business day immediately following the termination of the Offering
Period (or at such other place or time not later than ten business days
thereafter as Sales Agent and the Company shall determine) (the "Closing
Date"). Such Closing shall include the following: (i) satisfaction of the
conditions set forth in Section 8; (ii) payment for the Shares to the
Company by release of funds from the Escrow Account and delivery to the
Company of properly completed and executed Subscription Applications to
each purchaser; (iii) deliver by the Company of certificates for the Shares
purchased by each purchaser; and (iv) payment by the Company to Sales Agent,
out of the funds held in the Escrow Account, of the commission referred to
in Section 3 for each Share sold. The certificates for Shares to be
delivered at the Closing will be in definitive form in such denominations
and registered in such names as Sales Agent requests at least three business
days prior to the Closing Date and will be made available at the above office
for checking and packaging at least one full business day prior to the
Closing Date.
IV. COVENANTS OF THE COMPANY
The Company covenants and agrees with Sales Agent that:
A. The Company will use its best efforts to cause the registration
statement as filed and any subsequent amendments thereto to become
effective as promptly as possible and will notify Sales Agent immediately
and confirm in writing (i) when the Registration Statement and any
amendment thereto shall have become effective or any supplement to the
Prospectus or any amended Prospectus shall have been filed, (ii) of any
request by the Commission for any amendment to the Registration Statement
or any amendment or supplement to the Prospectus or for additional
information, (iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of the
institution of any proceedings for that purpose, or of the institution or
threatening by the Commission of any investigation or other proceeding that
might result in the suspension of the use of the Prospectus, or of the
suspension of the qualification of the Shares for offering or sale in any
jurisdiction, or of the institution or threatening of any proceedings for
any such purpose or for the purpose of preventing the use of or noticing a
deficiency in the Prospectus, any amended Prospectus or any supplement
thereto. The Company will not file any post-effective amendment to the
Registration Statement or supplement or amendment to the Preliminary
Prospectus or the Prospectus or, prior to the completion of the offering
of the Shares, make any supplement to the Prospectus, unless Sales Agent
shall have been advised thereof and shall not have reasonably disapproved
such amendment or supplement.
B. If prior to the Closing Date or at any time thereafter when a
prospectus relating to the Shares is required to be delivered under the
Securities Act any event occurs as a result of which the Preliminary
Prospectus or the Prospectus as then amended or supplemented would, in
Sales Agent's judgment with the concurrence of Xxxxxxxxxx, Xxxxxxx &
Xxxxxxx, LLP, counsel for the Sales Agent, include an untrue statement of
a material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or if it is necessary at any time to amend the Preliminary
Prospectus or the Prospectus to comply with the Securities Act, the Company
promptly will prepare and file with the Commission an amendment or supplement
which will correct such statement or omission or an amendment which will
effect such compliance and, at the Company's expense, will prepare and
furnish as many copies of any such amendment or supplement as you may
reasonably request.
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C. Not later than sixteen months from the date hereof, the Company will
make generally available to its security holders an earnings statement
covering a period of at least twelve months beginning after the effective
date of the Registration Statement which will satisfy the provisions of
Section 11(a) of the Securities Act.
D. The Company will furnish to Sales Agent copies of the Registration
Statement (two of which will be signed and will include all exhibits), each
related preliminary prospectus, the Prospectus and all amendments and
supplements to such documents, in each case as soon as available and in such
quantities as Sales Agent reasonably requests.
E. The Company will use its best efforts to arrange for the qualification
of the Shares under the laws of such jurisdictions as Sales Agent designates
and will continue such qualifications in effect so long as required for the
offering of the Shares as contemplated herein, provided that the Company
shall not be obligated to file any general consent to service of process, or
to qualify as a foreign corporation or as a dealer in securities in any state
in which it is not now so qualified.
F. During the period of five years from the date hereof, the Company will
furnish to Sales Agent, as soon as practicable after the end of each fiscal
year, a copy of its annual report to securityholders for such fiscal year,
and during such period the Company will also furnish to Sales Agent (i) as
soon as available, a copy of each report or definite proxy statement of the
Company filed with the Commission under the Securities Exchange Act of 1934
(the "Securities Exchange Act") or mailed to securityholders and (ii) from
time to time such other information concerning the Company as Sales Agent
may reasonably request.
G. The Company will apply the net proceeds from the sale of the Shares to
be sold by it hereunder for the purposes set forth in the Prospectus.
H. During the course of the offering of the Shares the Company will not
take directly or indirectly any action designed to or that might, in the
future, reasonably be expected to cause or result in stabilization or
manipulation of the price of the Shares.
I. The Company will not give any information or make any representation
in connection with the offering of the Shares, written or oral, other than
as contained in the Prospectus or the Preliminary Prospectus.
V. EXPENSES
Whether or not the transactions contemplated hereunder are consummated, the
Company will pay all costs and expenses incident to the performance of its
obligations hereunder, including, without limiting the generality of the
foregoing, all costs and expenses incurred in connection with: (i) the
issuance, sale and delivery of the shares being offered hereby (including
all transfer and other taxes thereon); (ii) the preparation, filing,
printing, and delivery of the Registration Statement (including all exhibits
thereto and documents incorporated therein by reference), the Preliminary
Prospectus, the Prospectus and any amendments thereof and supplements
thereto, the Blue Sky memorandum, this Agreement and related selling and
other documents in connection with the offering (iii) the filing fees and
expenses (including fees and disbursements of Sales Agent's counsel)
incurred in connection with the qualification of the Shares under state
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securities or Blue Sky laws and the preparation of the Blue Sky memorandum
for the offering and filing fees in connection with the review of the terms
of the public offering of the Shares by the National Association of
Securities Dealers, Inc. ("NASD"); (iv) the fees, disbursements and expenses
of the accountants and counsel for the Company; (v) the fees of the Company's
transfer agent and registrar; (vi) all expenses of obtaining approval for
listing of the Shares on any stock exchange; (vii) the advertising costs
(including tombstone advertisements, newspaper advertising, direct mailings
to potential investors and fees and expenses of marketing consultants) of
the offering approved in advance by the Company; (viii) the fees and expenses
of Sales Agent's counsel, not to exceed $3,000; and (ix) all fees and
expenses regarding the Escrow Agreement and Escrow Agent fees. It is
understood that except as provided in this Section 5 and Section 6 Sales
Agent will pay all of Sales Agent's costs and expenses, including travel,
telephone, advertising, and fees, disbursements and expenses of Sales Agent's
counsel, relating to the offering of the Shares.
VI. CONDITIONS OF SALES AGENT'S OBLIGATIONS
Sales Agent's obligations to use its best efforts to sell the Shares as
provided herein and the release of funds from the Escrow Account on the
Closing Date shall be subject to the accuracy of the representations and
warranties of the Company as of the date hereof and at the Closing Date,
to the accuracy of the statements of the officers of the Company made
pursuant to the provisions hereof, to the performance by the Company, of
its respective obligations hereunder and to the following additional
conditions:
A. The Registration Statement shall have become effective not later than
9:00 A.M., New York time, on the day of this Agreement, or such later time
or date as shall have been consented to by Sales Agent. No stop order
suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been instituted, or,
to the knowledge of the Company, shall be contemplated, by the Commission.
B. Sales Agent shall not have advised the Company that the Registration
Statement or Prospectus, or any amendment or supplement thereto, contains
an untrue statement of fact or omits to state a fact which, Sales Agent has
concluded, after conferring with Sales Agent's counsel, is in either case
material and in the case of an omission is required to be stated therein or
is necessary to make the statements therein not misleading.
C. Sales Agent shall received an opinion of Morris, Laing, Xxxxx, Xxxxx
& Xxxxxxx, Chartered, counsel for the Company, dated the Closing Date, to
the effect that:
1. The Company has been duly incorporated and are validly existing as
corporations in good standing under the laws of the State of Kansas and
the Company has full corporate power and authority to own its property
and conduct its business as described in the Prospectus, is in
compliance in all material respects with all laws requiring its
qualification to do business as a foreign corporation in all other
jurisdictions in which it owns or leases substantial properties or in
which the conduct of its business requires such qualification;
2. The Shares delivered on the Closing Date have been duly authorized
and validly issued and are fully paid and non-assessable and conform to
the description thereof contained in the Prospectus. The certificates
used to evidence the Shares are in due and proper form. All actions of
the Company in connection with the offer and sale of the Shares have
been effected in compliance with applicable law;
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3. This Agreement has been duly authorized, executed and delivered by
the Company, and (assuming due authorization, execution and delivery by
Sales Agent) constitutes a legal, valid and binding agreement of the
Company, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization and moratorium laws and other laws
affecting enforcement of creditors rights generally and to equitable
principles that may restrict the availability of remedies and except as
rights to indemnity hereunder may be limited under the Securities Act;
4. The Escrow Agreement has been duly authorized, executed and
delivered by the Company and (assuming due authorization, execution and
delivery by the other parties thereto) constitute the legal, valid and
binding agreements of the Company enforceable in accordance with their
respective terms, subject to applicable bankruptcy, insolvency,
reorganization and moratorium laws and other laws affecting enforcement
of creditors' rights generally and to equitable principles that may
restrict the availability of remedies, and each such agreement is in all
respects in full compliance with all applicable provisions of the
Securities Act;
5. All required action has been taken by the Company under the
Securities Act and the Securities Exchange Act to make the public
offering and consummate the sale of the Shares pursuant to this
Agreement; the issue and sale by the Company of the Shares and the
execution and delivery of this Agreement, the Custodian Agreement and
the Escrow Agreement by the Company and the performance by the Company
of its obligations hereunder and thereunder will not conflict with,
result in a breach of, or constitute a default under any agreement or
instrument known to such counsel to which the Company is a party or any
applicable law, order, rule, regulation, decree or injunction of any
jurisdiction, court or governmental agency or body or the corporate
charter or by-laws of the Company; and no consent, approval,
authorization or order of, or filing with, any court or governmental
agency or body is required in connection with the issuance or sale of
the Shares by the Company or for the performance by the Company of this
Agreement, or the Custodian Agreement or the consummation by the
Company, of the transactions contemplated hereby or thereby, except
such as have been obtained under the Securities Act, and/or the
Securities Exchange Act and such as may be required under state
securities or Blue Sky laws in connection with the offering of the
Shares as contemplated herein;
6. The Escrow Agreement, having been duly authorized, executed and
delivered by and (assuming due authorization, execution and delivery
by) the other parties thereto constitutes its legal, valid and binding
agreement, enforceable in accordance with their respective terms,
subject to applicable bankruptcy, insolvency, reorganization and
moratorium laws and other laws affecting enforcement of creditors'
rights generally and to equitable principles that may restrict the
availability of remedies; and the execution and delivery of this
Agreement and the Escrow Agreement and the performance by the Company
of its obligations hereunder and thereunder will not conflict with,
result in a breach of, or constitute a default under any agreement or
instrument known to such counsel to which it is a party or any
applicable law, order, rule, regulation, decree or injunction of any
jurisdiction, court or governmental agency or body or the corporate
charter or by-laws of the Company;
7. The Registration Statement and the Prospectus (except as to the
financial information contained therein, as to which they need express
no opinion) complied as to form in all material respects with the
requirements of the Securities Act, and the rules and regulations of
the Commission thereunder;
8. The terms of the escrow established pursuant to the Escrow
Agreement comply in all material respects with the requirements of
Rule 10b-9 under the Securities Exchange Act.
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Such counsel shall also have stated that (i) the Registration Statement
has become effective under the Securities Act, and, to the best of the
knowledge of such counsel, no stop order suspending the effectiveness
of the Registration Statement has been issued and no proceedings for
such purposes have been instituted or are pending or contemplated under
the Securities Act; (ii) in the course of their review and discussion
of the contents of the Registration Statement and Prospectus with
certain officers and employees of the Company and its independent
accountants, no facts have come to their attention which would lead
them to believe that either the Registration Statement as of its
effective date or the Prospectus (except as to the financial
information contained therein, as to which they need express no
opinion), as of its issue date or thereafter to and including the
Closing Date, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
In rendering such opinion, such counsel may rely as to matters
involving the application of laws other than the laws of the
jurisdictions in which such counsel is admitted, to the extent
such counsel deems proper and to the extent specified in such opinion,
upon an opinion or opinions of other counsel, satisfactory to Sales
Agent. The opinion of counsel for the Company shall also state that
the opinion of any other counsel on whom such counsel is relying is in
form and substance satisfactory to such counsel and that, in such
counsel's opinion, Sales Agent and they are justified in relying
thereon.
D. Sales Agent shall have received from Xxxxxxxxxx, Xxxxxxx &
Xxxxxxx, LLP, Sales Agent?s counsel, such opinion or opinions, dated
such Closing Date, with respect to matters relating to the offering of
the Shares as Sales Agent may reasonably request, and the Company shall
have furnished to such counsel such documents as they reasonably request
for the purpose of enabling them to pass upon such matters.
E. Sales Agent shall have received a certificate of the chief executive
officer and a principal financial or accounting officer of each of the
Company dated the Closing Date, to the effect that:
1. The representations and warranties herein of the Company are true
and correct as of the Closing Date with the same force and effect as
if made on that date;
2. The Company has performed all of its obligations hereunder to be
performed at or prior to the Closing Date; and
3. Since the effective date of the Registration Statement, there has
not occurred any event required to be set forth in an amended or
supplemented Prospectus which has not been so set forth, and any such
amendment or supplement does not include any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading.
F. At the time of the signing of this Agreement and at the Closing
Date, Sales Agent shall have received a letter of Xxxxxx & Associates,
P.A., certified public accountants, dated the date of this Agreement
or the Closing Date, 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 stating in effect
that:
1. In their opinion the balance sheet included in the Prospectus
complies as to form in all material respects with the applicable
accounting requirements of the Securities Act and the Rules and
Regulations;
2. On the basis of a reading of the latest available interim
financial statements of the Company, inquiries of officials of the
Company responsible for financial and accounting matters and other
specified procedures, nothing came to their attention that caused them
to believe that at the date of the latest available balance sheet read
by such accountants, or at a subsequent specified date not more than
five days prior to the Closing Date, there was any change in the
capital stock or stockholders equity of the Company as compared with
amounts shown on the balance sheet included in the Prospectus, except
for such changes as are contemplated by the Prospectus and as are
described in such letter; and
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3. They have confirmed such procedures with respect to certain
information contained in the Prospectus as were previously agreed upon
by Sales Agent and them.
G. The Company shall have furnished to Sales Agent such additional
certificates, if any, with respect to the representations and
warranties of the Company contained herein as you shall reasonably
have requested.
H. Since the respective dates as of which information is given in the
Prospectus, there shall not have been any change, or any development
involving a prospective change, in the condition (financial or
otherwise) of the Company or in any pending action, suit, proceeding
or investigation involving the Company whether or not arising from
transactions in the ordinary course of business, that, in your
reasonable judgment, is material and renders it impractical or
inadvisable to proceed with the completion of the sale of and payment
for the Shares on the Closing Date.
I. No notice of disapproval shall have been issued or proceedings for
that purpose shall have been instituted by the Commission, the NASD, or
any state securities or Blue Sky authority with respect to the
distribution arrangements relating to the offering of the Shares.
The Company will furnish Sales Agent with such conformed copies of
such opinions, certificates, letters and documents as you reasonably
request.
VIII. INDEMNIFICATION AND CONTRIBUTION.
A. The Company will indemnify and hold harmless Sales Agent and each
person, if any, who controls Sales Agent within the meaning of the
Securities Act against any losses, claims, damages or liabilities,
joint or several, to which Sales Agent or such controlling person may
become subject, under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement,
the Prospectus, or any amendment or supplement thereto, or any
Preliminary Prospectus, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading; and will reimburse Sales Agent and each such controlling
person for any legal or other expenses reasonably incurred by you or
such controlling person in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, that the
Company will not be liable in any such case to the extent that any such
loss, claim, damage, liability or action arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged
omission made in any of such documents in reliance upon and in
conformity with written information furnished to the Company by Sales
Agent specifically for use therein; and provided further, that the
indemnity agreement contained in this Section 8.A. with respect to any
Preliminary Prospectus shall not inure to the benefit of you (or of any
person controlling you) on account of any such losses, claims, damages,
or liabilities (or actions in respect thereof), arising from the sale of
any of the Shares to any person if Sales Agent shall have failed to send
or give to such person with or prior to the delivery to Sales Agent by
such person of a Subscription Application, a copy of the Prospectus or
the Prospectus as amended or supplemented, if any amendments or
supplements thereto shall have been furnished at or prior to the time
of receipt by Sales Agent of such person's subscription application, to
the extent that any such loss, claim, damage or liability results from
an untrue statement or an omission which was corrected in the Prospectus
or the Prospectus as amended or supplemented. This indemnity agreement
will be in addition to any liability which the Company may otherwise
have.
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B. Sales Agent will indemnify and hold harmless the Company, each of
its directors, each of its officers who have signed the Registration
Statement and each person, if any, who controls the Company within the
meaning of the Securities Act, against any losses, claims, damages or
liabilities to which the Company or any such director, officer or
controlling person may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, the Prospectus, or any
amendment or supplement thereto, or any Preliminary Prospectus or
arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in
reliance upon and in conformity with written information furnished to
the Company by Sales Agent specifically for use therein; and will
reimburse any legal or other expenses reasonably incurred by the
Company or any such director, officer or controlling person in
connection with investigating or defending any such loss, claim,
damage, liability or action. This indemnity agreement will be in
addition to any liability which Sales Agent may otherwise have.
C. Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party
of the commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability which it may
have to any indemnified party otherwise than under this Section 8. In
case any such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the
extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party will not be liable
to such indemnified party under this Section 8 for any legal or other
expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation.
An indemnifying party against whom indemnity may be sought shall not be
liable to indemnify an indemnified party under this Section 8 if any
settlement of any such action is effected without such indemnifying
party's consent.
D. If the indemnification provided for in subsection A, B or C of
this Section 8 is for any reason, other than as specified in such
subsections, unavailable and the Company or Sales Agent have been
required to pay damages as a result of a determination by a court that
the Registration Statement, any Preliminary Prospectus or the
Prospectus, or any amendment or supplement thereto contains an untrue
statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading, then the Company shall contribute to the damages paid by
Sales Agent, and Sales Agent shall contribute to the damages paid by
the Company, but in each case only to the extent that such damages
arise out of or are based upon such untrue statement or omission in
such proportion as is appropriate to reflect the relative fault of the
Company, on the one hand and Sales Agent on the other in connection
with the statements or omissions which resulted in such damages as well
as any other relevant equitable considerations.
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E. The relative fault of the Company on the one hand and Sales Agent
on the other shall be determined by reference to, among other things,
whether the untrue statement of a material fact or the omission to
state a material fact relates to information supplied by the Company
on the hand or by Sales Agent on the other, and the parties relevant
intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The Company and Sales Agent
agree that it would not be just and equitable if their respective
obligations to contribute pursuant to this Section 8.E. were to be
determined by pro rata allocation of the aggregate damages or by any
other method of allocation which does not take account of the equitable
considerations referred to in the first sentence of this Section 8.E.
For purposes of this Section 8.E., the term "damages" shall include any
legal or other expenses reasonably incurred by the Company or Sales
Agent in connection with investigating or defending against any action
or claim which is the subject of the contribution provisions of this
Section 8.E. Notwithstanding the provisions of this Section 8.E., Sales
Agent shall not be required to contribute any amount in excess of the
amount by which the total price at which the Shares distributed to the
public were offered to the public exceeds the amount of any damages
which Sales Agent have otherwise been required to pay by reason of such
untrue statement or 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.
IV. TERMINATION
Sales Agent shall have the right to terminate this Agreement and the
offering of the Shares at any time prior to the Closing if, between
the date hereof and the Closing Date, there shall have been any
declaration of war by the Government of the United States, the Armed
Forces of the United States shall be engaged in any major hostilities,
or any event shall have occurred resulting in (i) the closing of the
New York Stock Exchange or the American Stock Exchange, (ii) the
general suspension of trading on either such Exchange, (iii) the
general establishment of minimum prices by either such Exchange or
by the Commission, or (iv) the declaration of a bank moratorium by
authorities of the United States or of the State of New York, the
effect of which in your judgment makes it impracticable or inadvisable
to proceed with the offering.
V. REPRESENTATIONS INDEMNITIES TO SURVIVE DELIVERY
The respective indemnities, agreements, representations, warranties
and other statements of Company and its officers set forth in or made
pursuant to this Agreement will remain in full force and effect,
regardless of any investigation, or statement as to the results
thereof, made by or on behalf of Sales Agent, the Company or any of
its officers, directors or controlling persons, and will survive
payment to the Company for the Shares. If this Agreement is
terminated pursuant to Section 9 hereof or if for any reason the sale
of the Shares is not consummated, the Company shall remain responsible
for the expenses to be paid or reimbursed by it pursuant to Sections
5 and 6 and to Sales Agent pursuant to Section 8 shall remain in effect.
VI. NOTICES
All communications hereunder will be in writing and, if sent to Sales
Agent, will be mailed, delivered, or telegraphed and confirmed to Sales
Agent at 0000 Xxxx Xxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxx 00000,
Attention: Xx. Xxxx Xxxxxxx; if sent to the Company, will be mailed,
delivered, or telegraphed and confirmed to it at Route 1, Sale Barn
Road, X.X. Xxx 000, Xxxxx Xxxx, Xxxxxx 00000, Attention: Chairman of
the Board and President.
VII. SUCCESSORS
This Agreement will inure to the benefit and be binding upon the
parties hereto and their respective successors and the officers,
directors and controlling persons referred to in Section 8, and no
other person will have any right or obligation hereunder.
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VIII. GOVERNING LAW
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Kansas.
IV. COUNTERPARTS
This Agreement may be executed in counterparts, all of which, taken
together, shall constitute a single agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first written
above.
WESTERN FEED XXXXX, INC.
By: ___________________________________
Xxxx Xxxxxxx,
Chairman of the Board and President
CAREY, THOMAS, XXXXXX & XXXXXXX
By: ___________________________________
Xxxx Xxxxxxx
_________________________
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