EXHIBIT 10.2
THE XXXXXX CENTER LLC
PLACEMENT AGENT AGREEMENT
Dated as of: April 11, 2005
Hunter World Markets, Inc.
0000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Ladies and Gentlemen:
The undersigned, The Xxxxxx Center LLC (the "Company"), hereby agrees with
Hunter World Markets, Inc. ("Hunter") as follows:
1. Placement.
The Company hereby engages Hunter to act as its exclusive placement agent
in a transaction on a "best efforts" basis involving the issuance and sale by
the Company (the "Offering") of Units, each Unit consisting of (i) two (2)
shares of Common Stock; (ii) one three-year warrant to purchase one share of
Common Stock at an exercise price equal to $1.05 (200% of the issue price per
share - the "Issue Price") (a "Class A Warrant"); and (iii) one three-year
warrant to purchase one share of Common Stock at an exercise price equal to
$1.575 (300% of Issue Price) per share (a "Class B Warrant"). The price per Unit
shall be $1.05. Prior to and as a condition to the initial closing of the
Offering and the reverse merger (the "Merger") of the Company with an
over-the-counter Bulletin Board listed shell company (the "Shell") (i) the
Company shall reorganized as a C corporation and (ii) there shall be outstanding
13,050,000 shares of the Company's Common Stock.
The Class A Warrants shall be redeemable by the Company at a price of five
(5) cents per warrant in the event (i) there is an effective registration
statement covering the shares of Common Stock underlying the Class A Warrants
and (ii) the closing market price of shares of Common Stock listed on a national
securities market equals or exceeds $1.575 which is 300% of the Issue Price of
the shares of Common Stock issued further to the Private Placement Unit Offering
for twenty of the thirty consecutive trading days immediately preceding the
Company's notice of redemption.
The Class B Warrants shall be redeemable by the Company at a price of five
(5) cents per warrant in the event (i) there is an effective registration
statement covering the shares of Common Stock underlying the Class B Warrants
and (ii) the closing market price of shares of Common Stock listed on a national
securities market equals or exceeds $2.10 which is 400% of the Issue Price for
twenty of the thirty consecutive trading days immediately preceding the
Company's notice of redemption.
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The "Minimum Funding" shall be $3,000,000 (2,857,142 Units) and the
"Maximum Funding" shall be $6,000,000 (5,714,284 Units). This pricing assumes a
capitalization of approximately 15,000,000 issued and outstanding shares (after
giving effect to the Merger) for a pre-money valuation of approximately
$8,000,000.
The Company shall file an SB-2 registration statement no later than thirty
(30) days following the closing of the Merger. The Company will use its best
efforts to have it declared effective 180 days after the initial closing of the
Offering. The securities to be included in the SB-2 registration statement are
the Common Stock purchased as part of the Units, the Class A Warrants, the Class
B Warrants, the Placement Agent Warrants (as that term is defined herein) and
the Bridge Warrants (as that term is defined herein). No additional shares shall
be included unless the Company shall have first received Hunter's prior written
consent so long as all securities purchased by investors in the Offering are
included in the Form SB-2.
The Company has borrowed an aggregate of $400,000 from funds introduced to
the Company by Hunter (the "Bridge Notes"). In connection therewith, the Company
issued such funds warrants (the "Bridge Warrants") to purchase up to 134,786
Membership Interests in the Company at a per LLC Membership Interest price of
$0.9348156 (after the recapitalization of the Company into a C corporation
referenced above, the Bridge Warrants will represent the right to purchase
400,000 shares of the Company's Common Stock at a per share exercise price of
$0.315).
All monies raised in the Offering shall be placed in a non-interest
bearing escrow account until the Minimum Funding amount is raised and deposited.
Upon closing of the Minimum Funding amount, proceeds shall first be
applied to payoff any interest and principal outstanding under the Bridge Notes.
Hunter shall not be obligated to sell any Units and this Offering by
Hunter shall be solely on a "best efforts basis."
The initial closing of Minimum Funding will take place concurrent with the
execution of a reverse merger agreement covering the Merger and the filing of
14C Information Statement covering the Merger by the Shell with the Securities
and Exchange Commission or at such earlier time as mutually agreed in writing by
the parties. Any additional monies raised under this Offering must be raised
within thirty (30) days after the initial Closing. The initial term of this
Agreement shall be for a period of six months from the date of this Agreement
unless terminated sooner by the mutual written agreement of the Company and
Hunter. The period commencing on the date of execution of this Agreement and
ending six months hereafter is referred to herein as the "Placement Term."
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As a condition of the initial closing of the Minimum Funding, the Company
will provide Hunter with: (a) an employment agreement between the Company and
Xxxxx Xxxxxx that is reasonably acceptable to Hunter, (b) evidence that all of
the media companies, media projects (including but not limited to books) and
related interests owned or controlled by Xxxxx Xxxxxx are owned by the Company
and (c) a signed non-compete agreement with Xxxxx Xxxxxx reasonably acceptable
to Hunter.
The Company shall prepare a Private Placement Memorandum ("PPM"), which
shall not contain a materially misleading statement, or omit to state a fact
required to make the statement therein not misleading. The Offering shall be
conducted pursuant to Regulation D promulgated by the Securities and Exchange
Commission (the "SEC") and shall be offered and sold only to "Accredited
Investors" as that term is defined in Regulation D. The Offering is intended to
qualify as a Regulation D, Rule 506 transaction. Other than Hunter itself, no
person, party or entity, including the Company, its officers, directors,
employees, agents, or attorneys, may distribute the Private Placement Memorandum
used in connection with the offering of the Units, in any manner (including
electronically) to any party, without the prior written consent of Hunter.
2. Public Company Status
Concurrent with the initial closing of the Offering, the Company will
complete the Merger with Shell provided by Hunter and/or its affiliates
provided, however that such Shell shall be subject to the approval of the
Company and its legal counsel. In connection with the Merger (but before
issuance of the Units under the Offering), the existing shareholders of the
Company will receive 87% of the issued and outstanding shares of stock of the
post merger company and the existing holders of the Shell, and their designees,
will hold the remaining 13% of the issued and outstanding shares of the post
merger company.
3. Compensation.
As compensation for the Units sold directly by Hunter, Hunter will receive
the following: (i) 10% commission on the total gross proceeds raised by Hunter;
(ii) a non-accountable expense allowance in the amount of 2% of the total gross
proceeds raised by Hunter; and (iii) warrants to purchase common stock in the
Company equal to 10% of the Common Stock included in any units sold in the
Offering (from Hunter and Company), provided, however, that Hunter has raised
the Minimum Funding amount ("Placement Agent Warrants").
The Placement Agent Warrants will receive registration rights identical to
the rights granted to the holders of Class A Warrants and Class B Warrants. The
Placement Agent Warrants will be exercisable at the Issue Price and will have a
three (3) year term.
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4. Exclusivity.
(a) During the Placement Term, Hunter shall have the exclusive
right to raise $6,000,000 (the "Exclusive Funding Amount").
(b) All monies raised by the Company or Hunter during the
Placement Term shall be under the same terms and conditions as the Offering.
(c) The Company may not solicit, engage or continue to work with
any underwriters, third party finders, brokers, or other consultants, during the
Placement Term, without express written approval of Hunter. During the Placement
Term, the Company shall provide Hunter with the name and other pertinent
information on any potential investor before accepting such investment, however
the Company shall at all times retain sole discretion to accept such investment.
(d) Hunter may raise up to the Maximum Funding amount prior to the
Company delivering notice of any potential investor, in which case, Hunter's
investors shall be accepted and the Offering will be closed.
5. Right of First Refusal. Provided that Hunter is able to raise the
Minimum Funding amount during the Placement Term, Hunter shall have the right of
first refusal (the "Right of First Refusal") for any equity financing entered
into by the Company within 12 months from the date of the filing of the
registration statement for the securities issued further to the Offering. The
Right of First Refusal shall not apply to (i) any strategic partner financing
whereby an investor brings qualitative value in addition to money being invested
or (ii) any financing related to an acquisition transaction.
6. Reserved.
7. Break Up Fee.
(a) In the event the Company receives, after the date of the
reverse merger agreement to be entered into between the Company and the Shell,
an unsolicited proposal or offer from a person or entity, or any affiliate
thereof to acquire all or substantially all of the assets or outstanding equity
of the Company (an "Acquisition Proposal"), and the Board of Directors of the
Company determines in good faith that its fiduciary obligations under applicable
law require that such Acquisition Proposal be accepted, the Company shall pay
the Shell the sum of $100,000 as liquidated damages.
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(b) Hunter may reasonably determine that based upon due diligence
or market conditions, it may be impractical to raise money for the Company
during the Placement Term. In such an event, the parties will be discharged from
liability under this Break Up Fee provision.
8. Representations, Warranties and Covenants of Hunter.
Hunter represents, warrants and covenants as follows:
(a) Hunter has the necessary power to enter into this Agreement
and to consummate the transactions contemplated hereby.
(b) The execution and delivery by Hunter of this Agreement and the
consummation of the transactions contemplated herein will not result in any
violation of, or be in conflict with, or constitute a default under, any
agreement or instrument to which Hunter is a party or by which Hunter or its
properties are bound, or any judgment, decree, order or, to Hunter's knowledge,
any statute, rule or regulation applicable to Hunter. This Agreement, when
executed and delivered by Hunter, will constitute the legal, valid and binding
obligations of Hunter, enforceable in accordance with their respective terms,
except to the extent that (i) the enforceability hereof or thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
from time to time in effect and affecting the rights of creditors generally,
(ii) the enforceability hereof or thereof is subject to general principles of
equity, or (iii) the indemnification provisions hereof or thereof may be held to
violate public policy.
(c) Hunter will not deliver any documents related to the Offering
to any person it does not reasonably believe to be an Accredited Investor based
upon documentary evidence thereof, where appropriate.
(d) Hunter will not intentionally take any action that it
reasonably believes would cause the Offering to violate the provisions of the
Securities Act of 1933, the Securities Exchange Act of 1934, the respective
rules and regulations promulgated thereunder (the "Rules and Regulations") or
applicable "Blue Sky" laws of any state or jurisdiction.
(e) Hunter shall use all reasonable efforts to determine (i)
whether the Investor is an Accredited Investor and (ii) that any information
furnished by the Investor is true and accurate. Hunter shall have no obligation
to insure that any check, note, draft or other means of payment for the Units
will be honored, paid or enforceable against the Investor in accordance with its
terms.
(f) Hunter is a member of the NASD, and is a broker-dealer
registered as such under the Securities Exchange Act of 1934 and under the
securities laws of the states in which the Units will be offered or sold by
Hunter, unless an exemption for such state registration is available to Hunter.
Hunter is in compliance with all material rules and regulations applicable to
Hunter generally and applicable to Hunter's participation in the Offering.
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9. Representations and Warranties of the Company.
The Company represents and warrants as follows:
(a) The execution, delivery and performance of this Agreement has
been or will be duly and validly authorized by the Company and will be, a valid
and binding agreement of the Company, enforceable in accordance with its
respective terms, except to the extent that (i) the enforceability hereof or
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws from time to time in effect and affecting the rights of creditors
generally, (ii) the enforceability hereof or thereof is subject to general
principles of equity or (iii) the indemnification provisions hereof or thereof
may be held to violate public policy. The securities to be issued pursuant to
the transactions contemplated by this Agreement have been duly authorized and,
when issued and paid for in accordance with (x) this Agreement and (y) the
certificates/instruments representing such securities, will be valid and binding
obligations of the Company, enforceable in accordance with their respective
terms, except to the extent that (1) the enforceability thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws from time
to time in effect and affecting the rights of creditors generally, (2) the
enforceability thereof is subject to general principles of equity, or (iii) the
indemnification provisions hereof or thereof may be held to violate public
policy. All corporate action required to be taken for the authorization,
issuance and sale of the securities has been duly and validly taken by the
Company.
(b) The outstanding limited liability membership interests of the
Company have been duly authorized and issued and the Company has outstanding
capitalization as will be set forth in the PPM. The Company is not a party to or
bound by any instrument, agreement or other arrangement providing for it to
issue any capital stock, rights, warrants, options or other securities, except
for this Agreement, the agreements described herein or as set forth in the PPM.
All issued and outstanding securities of the Company, have been duly authorized
and validly issued and are fully paid and non-assessable; the holders thereof
have no rights of rescission or preemptive rights with respect thereto and are
not subject to personal liability solely by reason of being security holders;
and none of such securities was issued in violation of the preemptive rights of
any holders of any security of the Company.
(c) The Common Stock being offered as part of the Units, as well
as issuable upon exercise of the Warrants that form part of the Units will be
duly authorized and when issued and paid for in accordance with this Agreement
and proper exercise of such warrants, respectively, and the
certificates/instruments representing such Common Stock, will be validly issued,
fully-paid and non-assessable; the holders thereof will not be subject to
personal liability solely by reason of being such holders; such securities are
not and will not be subject to the preemptive rights of any holder of any
security of the Company.
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(d) The Company has good and marketable title to, or valid and
enforceable leasehold estates in, all items of real and personal property
necessary to conduct its business (including, without limitation any real or
personal property to be owned or leased by the Company).
(e) There is no litigation or governmental proceeding pending or,
to the best of the Company's knowledge, threatened against, or involving the
properties or business of the Company.
(f) The Company is not aware of any federal or securities
violations by any of its current officers, directors or consultants, nor does
the Company believe that any of its officers, directors or consultants are or
were the subject of any enforcement proceedings by the Securities Exchange
Commission or the National Association of Securities Dealers.
(g) The Company has been duly organized and is validly existing as
a limited liability company in good standing under the laws of the State of
Illinois. The Company does not own or control, directly or indirectly, an
interest in any other corporation, partnership, trust, joint venture or other
business entity. The Company is duly qualified or licensed and in good standing
as a foreign corporation in each jurisdiction in which the character of its
operations requires such qualification or licensing and where failure to so
qualify would have a material adverse effect on the Company. The Company has all
requisite power and authority, and all material and necessary authorizations,
approvals, orders, licenses, certificates and permits of and from all
governmental regulatory officials and bodies (domestic and foreign) to conduct
its business (and proposed business), and the Company is doing business in
strict compliance with all such authorizations, approvals, orders, licenses,
certificates and permits and all foreign, federal, state and local laws, rules
and regulations concerning the business in which it is engaged. The Company has
all power and authority to enter into this Agreement, to carry out the
provisions and conditions hereof, and all consents, authorizations, approvals
and orders required in connection herewith have been obtained. No consent,
authorization or order of, and no filing with, any court, government agency or
other body is required by the Company for the issuance of the securities except
for applicable federal and state securities laws. The Company, in the last three
years, has not incurred any liability arising under or as a result of the
application of any of the provisions of the Securities Act of 1933, the
Securities Exchange Act of 1934 or the Rules and Regulations.
(h) The Company is not in breach of, or in default under, any term
or provision of any material indenture, mortgage, deed of trust, lease, note,
loan or credit agreement or any other material agreement or instrument
evidencing an obligation for borrowed money, or any other material agreement or
instrument to which it is a party or by which it or any of its properties may be
bound or affected. The Company is not in violation of any provision of its
charter or by-laws (other than the obligation to hold annual meetings of its
shareholders and related matters) or in violation of any franchise, license,
permit, judgment, decree or order, or in violation of any statute, rule or
regulation. Neither the execution and delivery of this Agreement, nor the
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issuance and sale or delivery of the securities, nor the consummation of any of
the transactions contemplated herein, has conflicted with or will conflict with,
or has resulted in or will result in a breach of, any of the terms and
provisions of, or has constituted or will constitute a default under, or has
resulted in or will result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or pursuant to the terms
of any indenture, mortgage, deed of trust, note, loan or credit agreement or any
other agreement or instrument evidencing an obligation for borrowed money, or
any other agreement or instrument to which the Company may be bound or to which
any of the property or assets of the Company is subject except (a) where such
default, lien, charge or encumbrance would not have a material adverse effect on
the Company and (b) nor will such action result in any violation of the
provisions of the charter or the by-laws of the Company or, assuming the due
performance by Hunter of its obligations hereunder, any statute or any order,
rule or regulation applicable to the Company of any court or of any foreign,
federal, state or other regulatory authority or other government body having
jurisdiction over the Company.
(i) The information in the PPM, including, without limitation,
information concerning any liability or obligation, direct or contingent, for
borrowed money, or any transaction other than in the ordinary course of
business, or with respect to the declaration or payment of any dividend or other
distribution on or in respect of its capital stock and as to any outstanding
obligations to any officer or director of the Company, shall be true and correct
as of the date of the PPM, and the PPM shall be amended during the Placement
Term to update any changes in the information therein.
(j) There are no claims for services in the nature of a finder's
or origination fee with respect to the sale of the Units, or the securities
comprising a part thereof, or any other arrangements, agreements or
understandings that may affect Hunter's compensation.
(k) The Company owns or possesses, free and clear of all liens or
encumbrances and rights thereto or therein by third parties, the requisite
licenses or other rights to use all trademarks, service marks, copyrights,
service names, trade names, patents, patent applications and licenses necessary
to conduct its business and to the best of the Company's knowledge there is no
claim or action by any person pertaining to, or proceeding, pending or
threatened, which challenges the exclusive rights of the Company with respect to
any trademarks, service marks, copyrights, service names, trade names, patents,
patent applications and licenses used in the conduct of the Company's businesses
except any claim or action that would not have a material adverse effect on the
Company; to the best of the Company's knowledge, the Company's current products,
services or processes do not infringe or will not infringe on the patents
currently held by any third party.
(l) The Company is not under any obligation to pay royalties or
fees of any kind whatsoever to any third party with respect to any trademarks,
service marks, copyrights, service names, trade names, patents, patent
applications, licenses or technology it has developed, uses, employs or intends
to use or employ, other than to their respective licensors.
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(m) Subject to the performance by Hunter of its obligations
hereunder, the offer and sale of the Units comply, and will continue to comply,
up to the Placement Term in all material respects with the requirements of Rule
506 of Regulation D promulgated by the SEC pursuant to the Securities Act of
1933 and any other applicable federal and state laws, rules, regulations and
executive orders. The Company will not cause or knowingly permit any action to
be taken in connection with the placement which violates the Securities Act of
1933 or any state securities laws.
(n) All taxes which are due and payable from the Company have been
paid in full and the Company does not have any tax deficiency or claim
outstanding assessed or proposed against it.
(o) None of the Company nor to the best of the Company's knowledge
any of its officers, directors, employees or agents, nor any other person acting
on behalf of the Company, has, directly or indirectly, given or agreed to give
any money, gift or similar benefit (other than legal price concessions to
customers in the ordinary course of business) to any customer, supplier,
employee or agent of a customer or supplier, or official or employee of any
governmental agency or instrumentality of any government (domestic or foreign)
or any political party or candidate for office (domestic or foreign) or other
person who is or may be in a position to help or hinder the business of the
Company (or assist it in connection with any actual or proposed transaction)
which (i) might subject the Company to any damage or penalty in any civil,
criminal or governmental litigation or proceeding, or (ii) if not given in the
past, might have had a materially adverse effect on the assets, business or
operations of the Company as reflected in any of the financial statements, or
(iii) if not continued in the future, might adversely affect the assets,
business, operations or prospects of the Company in the future.
(p) All information and statements provided by the Company to
prospective investors will be true and correct.
(q) Any written offering material prepared by the Company will not
be misleading or violative of the anti-fraud provisions of the Securities
Exchange Act of 1934.
(r) The financial statements presented to Hunter fairly reflect
the financial condition of the Company and the results of its operations at a
time and for the periods covered by the financial statements.
10. Certain Covenants and Agreements of the Company.
The Company covenants and agrees at its expense and without any
expense to Hunter as follows:
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(a) To advise Hunter of any material adverse change in the
Company's financial condition, prospects or business or of any development
materially affecting the Company or rendering untrue or misleading any material
statement in the PPM occurring at any time prior to any closing of any Units as
soon as the Company is either informed or becomes aware thereof.
(b) The Company shall at all times have sufficient shares
authorized and unissued to keep available out of its authorized Common Stock
solely for the purpose of issuance upon the exercise of all Warrants described
in this Agreement, such number of shares of Common Stock as shall then be
issuable upon the exercise or conversion thereof.
(c) To ensure that any transactions between or among the Company,
or any of its officers, directors and affiliates be on terms and conditions that
are no less favorable to the Company, than the terms and conditions that would
be available in an "arm's length" transaction with an independent third party.
(d) To cooperate with Hunter as to permit the Offering to be
conducted in a manner consistent with the applicable state and federal
securities.
(e) To provide its financial statements from inception through
December 31, 2004.
(f) To not cause or knowingly permit any action to be taken in
connection with the placement which violates the Securities Act of 1933 or any
State securities laws.
11. Indemnification.
(a) The Company hereby agrees that it will indemnify and hold
Hunter and each officer, director, shareholder, employee, attorneys,
accountants, agents or representative of Hunter, and each person controlling,
controlled by or under common control with Hunter within the meaning of Section
15 of the Securities Act of 1933 or Section 20 of the Securities Exchange Act of
1934 or the SEC's rules and regulations promulgated thereunder (the "Rules and
Regulations"), harmless from and against any and all loss, claim, damage,
liability, cost or expense whatsoever (including, but not limited to, any and
all reasonable legal fees and other expenses and disbursements incurred in
connection with investigating, preparing to defend or defending any action, suit
or proceeding, including any inquiry or investigation, commenced or threatened,
or any claim whatsoever or in appearing or preparing for appearance as a witness
in any action, suit or proceeding, including any inquiry, investigation or
pretrial proceeding such as a deposition including attorneys' fees in the event
of a breach of this representation and warranty) to which Hunter or such
indemnified person of Hunter may become subject under the Securities Act of
1933, the Securities Exchange Act of 1934, the Rules and Regulations, or any
other federal or state law or regulation, common law or otherwise, arising out
of or based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in (a) this Agreement, (b) any written offering material
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prepared by the Company including the PPM (except those written statements
relating to Hunter given by an indemnified person for inclusion therein), (c)
any application or other document or written communication executed by the
Company or based upon written information furnished by the Company filed in any
jurisdiction in order to qualify the Units, the Common Stock and the Warrants
under the securities laws thereof, or any state securities commission or agency;
(ii) the omission or alleged omission from documents described in clauses (a),
(b) or (c) above of a material fact required to be stated therein or necessary
to make the statements therein not misleading; or (iii) the breach of any
representation, warranty, covenant or agreement made by the Company in this
Agreement. The Company further agrees that upon demand by an indemnified person,
at any time or from time to time, it will promptly reimburse such indemnified
person for any loss, claim, damage, liability, cost or expense actually and
reasonably paid by the indemnified person as to which the Company has
indemnified such person pursuant hereto. Notwithstanding the foregoing
provisions of this Section 11(a), any such payment or reimbursement by the
Company of fees, expenses or disbursements incurred by an indemnified person in
any proceeding in which a final judgment by a court of competent jurisdiction
(after all appeals or the expiration of time to appeal) is entered against
Hunter or such indemnified person as a direct result of Hunter or such person's
gross negligence or willful misfeasance will be promptly repaid to the Company.
(b) Hunter hereby agrees that it will indemnify and hold the
Company and each officer, director, shareholder, employee or representative of
the Company, and each person controlling, controlled by or under common control
with the Company within the meaning of Section 15 of the Securities Act of 1933
or Section 20 of the Securities Exchange Act of 1934 or the Rules and
Regulations, harmless from and against any and all loss, claim, damage,
liability, cost or expense whatsoever (including, but not limited to, any and
all reasonable legal fees and other expenses and disbursements incurred in
connection with investigating, preparing to defend or defending any action, suit
or proceeding, including any inquiry or investigation, commenced or threatened,
or any claim whatsoever or in appearing or preparing for appearance as a witness
in any action, suit or proceeding, including any inquiry, investigation or
pretrial proceeding such as a deposition) to which the Company or such
indemnified person of the Company may become subject under the Securities Act of
1933, the Securities Exchange Act of 1934, the Rules and Regulations, or any
other federal or state law or regulation, common law or otherwise, arising out
of or based upon (i) the conduct of Hunter or its officers, employees or
representatives in acting as placement agent for the Offering or (ii) the breach
of any representation, warranty, covenant or agreement made by Hunter in this
Agreement.
(c) Promptly after receipt by an indemnified party of notice of
commencement of any action covered by Section 11(a) or 11(b), the party to be
indemnified shall, within five (5) business days, notify the indemnifying party
of the commencement thereof; the omission by one indemnified party to so notify
the indemnifying party shall not relieve the indemnifying party of its
obligation to indemnify any other indemnified party that has given such notice
and shall not relieve the indemnifying party of any liability outside of this
indemnification if not materially prejudiced thereby. In the event that any
action is brought against the indemnified party, the indemnifying party will be
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entitled to participate therein and, to the extent it may desire, to assume and
control the defense thereof with counsel chosen by it which is reasonably
acceptable to the indemnified party. After notice from the indemnifying party to
such indemnified party of its election to so assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under such
Section 11(a) or 11(b) for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof, but the
indemnified party may, at its own expense, participate in such defense by
counsel chosen by it, without, however, impairing the indemnifying party's
control of the defense. Subject to the proviso of this sentence and
notwithstanding any other statement to the contrary contained herein, the
indemnified party or parties shall have the right to choose its or their own
counsel and control the defense of any action, all at the expense of the
indemnifying party if, (i) the employment of such counsel shall have been
authorized in writing by the indemnifying party in connection with the defense
of such action at the expense of the indemnifying party, or (ii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
such indemnified party to have charge of the defense of such action within a
reasonable time after notice of commencement of the action, or (iii) such
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from or additional to those
available to one or all of the indemnifying parties (in which case the
indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
such fees and expenses of one additional counsel shall be borne by the
indemnifying party; provided, however, that the indemnifying party shall not, in
connection with any one action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstance, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys at any time for all such indemnified parties. No
settlement of any action or proceeding against an indemnified party shall be
made without the consent of the indemnifying party.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in Section 11(a) or
11(b) is due in accordance with its terms but is for any reason held by a court
to be unavailable on grounds of policy or otherwise, the Company and Hunter
shall contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with the
investigation or defense of same) which the other may incur in such proportion
so that Hunter shall be responsible for such percent of the aggregate of such
losses, claims, damages and liabilities as shall equal the percentage of the
gross proceeds paid to Hunter and the Company shall be responsible for the
balance; provided, however, that no person guilty of fraudulent
misrepresentation within the meaning of Section 11(f) of the Securities Act of
1933 shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. For purposes of this Section 11(d), any
person controlling, controlled by or under common control with Hunter, or any
partner, director, officer, employee, representative or any agent of any
thereof, shall have the same rights to contribution as Hunter and each person
controlling, controlled by or under common control with the Company within the
meaning of Section 15 of the Securities Act of 1933 or Section 20 of the
Securities Exchange Act of 1934 and each officer of the Company and each
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director of the Company shall have the same rights to contribution as the
Company. Any party entitled to contribution will, promptly after receipt of
notice of commencement of any action, suit or proceeding against such party in
respect of which a claim for contribution may be made against the other party
under this Section 11(d), notify such party from whom contribution may be
sought, but the omission to so notify such party shall not relieve the party
from whom contribution may be sought from any obligation they may have hereunder
or otherwise if the party from whom contribution may be sought is not materially
prejudiced thereby. The indemnity and contribution agreements contained in this
Section 11 shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any indemnified person or any termination
of this Agreement. Notwithstanding anything to the contrary in this Section 11,
no party shall be liable for contribution with respect to the settlement of any
claim or action effected without its written consent.
12. Non-Circumvention.
Pursuant to this Agreement, it is contemplated that Hunter shall
supply to the Company and its officers and directors a certified list (the
"Certified List") of investors and customers that Hunter has contacted in
connection with the proposed reverse merger transaction and related financing
transaction. If, during the twelve month period after the placement term, the
Company completes a Transaction (as defined below) with a person on the
Certified List, the Company shall pay Hunter concurrently with the closing of
such Transaction the compensation due under Section 3 of this Agreement.
"Transaction" shall be defined as any direct or indirect sale,
transfer, conveyance, exchange, financing, investment, trade, exchange or other
change in legal or beneficial ownership of any property, whether accomplished by
an issuance or purchase of assets of securities, merger, consolidation,
management contract, joint venture, partnership, trade or exchange of assets or
stock or otherwise.
13. Payment of Expenses.
The Company hereby agrees to bear all of its expenses in connection
with the Offering, including, but not limited to the following: filing fees,
printing and duplicating costs, Company approved advertisements, road show costs
and expenses (road show costs and expenses up to a maximum of $45,000 which the
parties acknowledged was paid further to the $400,000 of the Bridge Notes),
postage and mailing expenses with respect to the transmission of offering
materials, registrar and transfer agent fees, escrow agent fees and expenses,
fees of the Company's counsel (but excluding fees of counsel to the Placement
Agent in excess of the $10,000 paid further to the $400,000 of the Bridge Notes)
and accountants, issue and transfer taxes, if any.
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14. Board of Representation. All existing members of the Shell shall
resign on the closing. The Investors shall have the right to elect one
additional member to the Board of Directors following the Merger for a period of
one year.
15. Lock-up. All shares of The Xxxxxx Center LLC publicly issued in
connection with the reverse merger to existing shareholders of The Xxxxxx Center
LLC will have trading and transfer restrictions for a period of 12 months
following the date of the filing of the registration statement.
16. Conditions of Each Closing.
Each closing shall be held at the offices of Company's counsel or as
otherwise determined by Hunter and the Company. The obligations of Hunter
hereunder shall be subject to the continuing accuracy of the representations and
warranties of the Company herein as of the date hereof and as of each closing
date with respect to the Company as if it had been made on and as of such
closing date; the accuracy on and as of each closing date of the statements of
the officers of the Company made pursuant to the provisions hereof; and the
performance by the Company on and as of each closing of its covenants and
obligations hereunder and to the following further conditions:
(a) At or prior to each closing, counsel for Hunter shall have
been furnished such documents, certificates and opinions as they may reasonably
require for the purpose of enabling them to review or pass upon the matters
referred to in this Agreement and the offering materials or in order to evidence
the accuracy, completeness or satisfaction of any of the representations,
warranties or conditions herein contained.
(b) At and prior to each closing, (i) there shall have been no
material adverse change in the condition or prospects or the business
activities, financial or otherwise, of the Company from the latest dates as of
which such condition is set forth in the offering materials; (ii) there shall
have been no transaction, not in the ordinary course of business, entered into
by the Company which has not been disclosed in the offering materials or to
Hunter in writing; (iii) except as set forth in the offering materials, the
Company shall not be in default under any provision of any instrument relating
to any outstanding indebtedness for which a waiver or extension has not been
otherwise received; (iv) except as set forth in the offering materials, the
Company shall not have issued any securities (other than those to be issued as
provided in the offering materials) or declared or paid any dividend or made any
distribution of its capital stock of any class and there shall not have been any
change in the indebtedness (long or short term) or liabilities or obligations of
the Company (contingent or otherwise); (v) no material amount of the assets of
the Company shall have been pledged or mortgaged, except as indicated in the
offering materials; and (vi) no action, suit or proceeding, at law or in equity,
against the Company or affecting any of its properties or businesses shall be
pending or threatened before or by any court or federal or state commission,
board or other administrative agency, domestic or foreign, wherein an
unfavorable decision, ruling or finding could materially adversely affect the
businesses, prospects or financial condition or income of the Company, except as
set forth in the offering materials.
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(c) At each closing, Hunter shall have received a certificate of
the Company signed by its chief executive officer, dated as of the applicable
closing date, to the effect that the conditions set forth in subparagraph (b)
above have been satisfied and that, as of the applicable closing date, the
representations and warranties of the Company set forth herein are true and
correct.
17. Miscellaneous.
(a) This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all which shall be deemed
to be one and the same instrument. (b) Any notice required or permitted to be
given hereunder shall be given in writing and shall be deemed effective when
deposited in the United States mail, postage prepaid, or when received if
personally delivered or faxed, addressed as follows:
To Hunter:
Hunter World Markets, Inc.
0000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxx Xxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxx & Xxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
Fax: (000) 000-0000
To the Company:
The Xxxxxx Center LLC
000 Xxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
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with a copy to:
Xxxxxxxxxxx & Xxxxxxxx, LLP
00000 Xxxxx Xxxxxx Xxxx., Xxxxx 000
Xxx Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxx
Telephone: 000-000-0000
Fax: 000-000-0000
or to such other address of which written notice is given to the others.
(c) This Agreement shall be construed pursuant to the laws of the
State of California without regard to conflicts of law principals thereof. Any
controversy arising hereunder shall be resolved by arbitration from the American
Arbitration Association.
(d) This Agreement contain the entire understanding between the
parties hereto and may not be modified or amended except by a writing duly
signed by the party against whom enforcement of the modification or amendment is
sought.
(e) If any provision of this Agreement shall be held to be invalid
or unenforceable, such invalidity or unenforceability shall not affect any other
provision of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
THE XXXXXX CENTER LLC
/S/ XXXXXX XXXXXXX
---------------------------------
By: Xxxxxx Xxxxxxx
Its: Chief Executive Officer
AGREED AND ACCEPTED
HUNTER WORLD MARKETS, INC.
/S/ XXXX XXXXXX
--------------------------
By: Xxxx Xxxxxx
Its: President and CEO
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