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EXHIBIT 10.111
XXXXXX.XXX, INC.
PLACEMENT AGENCY AGREEMENT
Commonwealth Associates, L.P.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
July 27, 2001
Gentlemen:
This Placement Agency Agreement (the "Agency Agreement") confirms the
retention by xxxxxx.xxx, Inc., a Delaware corporation (the "Company"), of
Commonwealth Associates, L.P., a New York limited partnership ("Commonwealth,"
or the "Placement Agent"), to act as the sales agent, on a best efforts basis,
in connection with the private placement of the Preferred Units (as defined
below) of the Company, on the terms set forth below.
The Company proposes to offer for sale solely to "accredited investors,"
in a private placement (the "Offering"), up to 50 units (the "Preferred Units")
at $100,000 per Preferred Unit, each Preferred Unit consisting of 10,000 shares
(the "E Preferred Shares") of the Company's Series E 8% Convertible Preferred
Stock (the "Series E Preferred Stock") having the rights and preferences set
forth in a Certificate of Designation of Series E Preferred Stock (the "Series E
Designation") attached as Appendix A hereto and incorporated by reference
herein. A minimum of 30 Preferred Units ($3,000,000) (the "Minimum Offering")
and a maximum of 50 Preferred Units ($5,000,000) (the "Maximum Offering") will
be sold in the Offering. The Maximum Offering may be increased by up to 10
Preferred Units ($1,000,000) at the option of the Placement Agent and the
Company in the event of over-subscription (the "Over-Allotment Option"). The
Preferred Units will be offered pursuant to those terms and conditions mutually
acceptable to the Placement Agent and the Company as reflected in a Confidential
Private Placement Memorandum prepared by the Company in form and substance
satisfactory to the Placement Agent and its counsel (the "Offering Memorandum").
The Minimum Offering will be made on a "best efforts - all-or-none" basis and
the balance of the Offering will be made on a "best efforts" basis. The
Preferred Units will be offered in accordance with Regulation D promulgated by
the Securities and Exchange Commission (the "SEC").
The (i) Offering Memorandum, as it may be amended or supplemented from
time to time (including any documents incorporated therein by reference or
otherwise), (ii) the form of subscription agreement between the Company and each
subscriber for the Offering (the "Subscription Agreement"), and (iii) the
exhibits which are part of the Offering Memorandum and/or the Subscription
Agreement, are collectively referred to herein as the "Offering Documents."
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The Company will prepare and deliver to the Placement Agent a reasonable
number of copies of the Offering Documents in form and substance satisfactory to
the Placement Agent and its counsel.
Each prospective investor subscribing to purchase Preferred Units (each,
a "Subscriber" and collectively, the "Subscribers") will be required to deliver,
among other things, a Subscription Agreement and a confidential purchaser
questionnaire ("Questionnaire") in the form to be provided to offerees.
Capitalized terms used herein, unless otherwise defined or unless the context
otherwise indicates, shall have the same meanings provided in the Offering
Documents.
1. Appointment of Placement Agent.
(a) Commonwealth is hereby appointed exclusive placement agent of
the Company (subject to Commonwealth's right to have selected dealers ("Selected
Dealers") in good standing with the National Association of Securities Dealers
("NASD") participate in the Offering) during the offering periods for the
Offering herein specified for the purposes of assisting the Company in finding
qualified Subscribers in the Offering. The offering period for the Offering (the
"Preferred Offering Period") shall commence on the day the Offering Documents
relating thereto are first made available to Commonwealth by the Company for
delivery in connection with the offering for sale of the Preferred Units and
shall continue until the earlier to occur of: (i) the sale of the Maximum
Offering (plus the Preferred Units included in the Over-Allotment Option, unless
waived by the Company); or (ii) August 17, 2001. If the Minimum Offering is not
sold prior to the end of the Preferred Offering Period, the Offering will be
terminated and all funds received from Subscribers will be returned, without
interest and without any deduction. The day that the Preferred Offering Period
terminates is hereinafter referred to as the "Preferred Termination Date." The
Preferred Termination Date may be extended for up to thirty (30) days by mutual
agreement of the Placement Agent and the Company.
(b) Subject to the performance by the Company in all material
respects of its obligations to be performed under this Agency Agreement and to
the completeness and accuracy of all representations and warranties of the
Company contained in this Agency Agreement, the Placement Agent hereby accepts
such agency and agrees to use its best efforts to assist the Company in finding
qualified Subscribers for the Offering. It is understood that the Placement
Agent has no commitment to sell the Preferred Units.
(c) Subscriptions for Preferred Units shall be evidenced by the
execution by Subscribers of a Subscription Agreement. No Subscription Agreement
shall be effective unless and until it is accepted by the Company. The Placement
Agent shall not have any obligation to independently verify the accuracy or
completeness of any information contained in any Subscription Agreement or the
authenticity, sufficiency or validity of any check delivered by any prospective
investor in payment for Preferred Units.
(d) The Placement Agent and/or its affiliates may be investors in
the Offering.
2. Representations and Warranties of the Company. The Company represents
and warrants to the Placement Agent and each Selected Dealer, if any, as
follows:
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(a) Securities Law Compliance. The offer, offer for sale, and sale
of the Preferred Units has not been registered with the SEC. The Preferred Units
are to be offered, offered for sale and sold in reliance upon the exemptions
from the registration requirements of Section 5 of the 1933 Act. The Company
will use its best efforts to conduct the Offering in compliance with the
requirements of Regulation D of the General Rules and Regulations under the 1933
Act, and the Company will file all appropriate notices of offering with the SEC.
The Company has prepared the Offering Documents. During the Preferred Offering
Period, the applicable Offering Documents will not contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make
the statements therein, in light of the circumstances in which they were made,
not misleading. If at any time prior to the Preferred Termination Date or other
termination of this Agency Agreement any event shall occur as a result of which
it becomes necessary to amend or supplement the Offering Documents relating
thereto so that they do not include any untrue statement of any material fact or
omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances then existing, not misleading, the
Company will promptly notify the Placement Agent and will supply the Placement
Agent with amendments or supplements correcting such statement or omission. The
Company will also provide the Placement Agent for delivery to all offerees and
purchasers and their representatives, if any, any information, documents and
instruments which the Placement Agent deems reasonably necessary to comply with
applicable state and federal law.
(b) Organization. The Company and its "Subsidiaries" (which for
purposes of this Agency Agreement means any entity (i) in which the Company,
directly or indirectly, owns 51% of the capital stock or holds an equity or
similar interest and (ii) which conducts substantive business activities or
holds material assets) are corporations duly organized and validly existing in
good standing under the laws of the jurisdiction in which they are incorporated,
and have the requisite corporate power and authority to own their properties and
to carry on their business as now being conducted and as described in the
Offering Documents, to execute and deliver this Agency Agreement and to carry
out the transactions contemplated hereby (if a party hereto). Each of the
Company and its Subsidiaries is duly qualified as a foreign corporation to do
business and is in good standing in every jurisdiction in which its ownership of
property or the nature of the business conducted by it makes such qualification
necessary, except to the extent that the failure to be so qualified or be in
good standing would not reasonably be expected to have a Material Adverse
Effect. As used in this Agency Agreement, "Material Adverse Effect" means any
material adverse effect on the business, properties, assets, operations, results
of operations or financial condition of the Company and its Subsidiaries, taken
as a whole, or on the transactions contemplated hereby or by the Transaction
Documents (as defined below in Section 3(b)(v)(B)). A complete list of all
Subsidiaries of the Company with substantive business activities is set forth in
Schedule 2(b) hereto.
(c) Capitalization. The authorized, issued and outstanding capital
stock of the Company prior to the consummation of the transactions contemplated
hereby is set forth in Schedule 2(c). All of such outstanding shares have been
and are, or upon issuance will be, validly issued, fully paid and
non-assessable. Except as disclosed in Schedule 2(c), (i) no shares of the
Company's capital stock are subject to preemptive rights under Delaware law or
any other similar rights or any liens or encumbrances suffered or permitted by
the Company; (ii) there are no outstanding debt securities issued by the
Company; (iii) there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the
Company or any of
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its Subsidiaries, or contracts, commitments, understandings or arrangements by
which the Company or any of its Subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its Subsidiaries or
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its Subsidiaries; (iv) there
are no agreements or arrangements under which the Company or any of its
Subsidiaries is obligated to register the sale of any of their securities under
the 1933 Act; (v) there are no outstanding securities of the Company or any of
its Subsidiaries which contain any redemption or similar provisions, and there
are no contracts, commitments, understandings or arrangements by which the
Company or any of its Subsidiaries is or may become bound to redeem a security
of the Company or any of its Subsidiaries; (vi) there are no securities or
instruments containing anti-dilution or similar provisions that will be
triggered by the issuance of the Securities as described in this Agency
Agreement; and (vii) the Company does not have any stock appreciation rights or
"phantom stock" plans or agreements or any similar plan or agreement. All prior
sales of securities of the Company were either registered under the 1933 Act and
applicable state securities laws or exempt from such registration, and no
security holder has any rescission rights with respect thereto except to the
extent any such rights would not reasonably be expected to have a Material
Adverse Effect.
(d) SEC Documents; Financial Statements. Since December 31, 1999,
the Company has filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "1934
Act"), (all of the foregoing filed after December 31, 1999 and prior to the date
hereof and all exhibits included therein and financial statements and schedules
thereto and documents incorporated by reference therein being hereinafter
referred to as the "SEC Documents"). As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the 1934
Act and the rules and regulations of the SEC promulgated thereunder applicable
to the SEC Documents. None of the SEC Documents, at the time they were filed
with the SEC, contained any untrue statement of a material fact or omitted to
state a 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. As of their respective dates, the financial statements of
the Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements of the SEC with respect
thereto. Such financial statements have been prepared in accordance with
generally accepted accounting principles, consistently applied ("GAAP"), during
the periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed or
summary statements), show all material liabilities, absolute or contingent, of
the Company required to be recorded thereon, and fairly present in all material
respects the financial position of the Company as of the dates thereof and the
results of its operations and cash flows for the periods indicated (subject, in
the case of unaudited statements, to normal year-end audit adjustments). As of
the date hereof, the Company meets the requirements for the use of Form S-3 for
registration of the resale of the Common Stock issuable upon conversion of the
Series E Preferred Stock.
(e) Absence of Changes. Since December 31, 2000, there have been no
material adverse changes in the financial condition, business, properties or
prospects of the Company or of the Company and its Subsidiaries, taken as a
whole, other than changes referred to in the SEC
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Documents or in Schedule 2(e). Except as described in the SEC Documents or in
Schedule 2(e), since December 31, 2000, the Company has not incurred any
liabilities or obligations, direct or contingent, not in the ordinary course of
business, or entered into any transaction not in the ordinary course of
business, which is material to the business of the Company, and, except as set
forth in Schedule 2(e), there has not been any change in the capital stock of,
or any incurrence of long-term debt by, the Company, or any issuance of options,
warrants or other rights to purchase the capital stock of the Company, or any
adverse change or any development involving, so far as the Company can now
reasonably foresee, a prospective adverse change in the condition (financial or
otherwise), net worth, results of operations, business, key personnel or
properties which would be material to the business or financial condition of the
Company, and the Company has not become a party to, and neither the business nor
the property of the Company has become the subject of, any material litigation
whether or not in the ordinary course of business.
(f) Title. Except as set forth in or contemplated by Schedule 2(f),
the Company has good and marketable title to all material properties and assets
owned by it, free and clear of all liens, charges, encumbrances or restrictions,
except as are not significant or important in relation to the Company's
business; all of the material leases and subleases under which the Company is
the lessor or sublessor of properties or assets or under which the Company holds
properties or assets as lessee or sublessee are in full force and effect, and
the Company is not in default in any material respect with respect to any of the
terms or provisions of any of such leases or subleases, and no material claim
has been asserted by anyone adverse to rights of the Company as lessor,
sublessor, lessee or sublessee under any of the leases or subleases mentioned
above, or affecting or questioning the right of the Company to continued
possession of the leased or subleased premises or assets under any such lease or
sublease. The Company owns, leases or licenses all such properties as are
necessary to its operations as described in the Offering Documents.
(g) Intellectual Property Rights. The Company and its Subsidiaries
own or possess adequate rights or licenses to use all trademarks, trade names,
service marks, service xxxx registrations, service names, patents, patent
rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and rights necessary to conduct their respective
businesses as now conducted. Except as set forth on Schedule 2(g), none of the
Company's trademarks, trade names, service marks, service xxxx registrations,
service names, patents, patent rights, copyrights, inventions, licenses,
approvals, government authorizations, trade secrets or other intellectual
property rights have expired or terminated, or are expected to expire or
terminate within two years from the date of this Agency Agreement, except where
such expiration or termination would not have either individually or in the
aggregate a Material Adverse Effect. The Company and its Subsidiaries do not
have any knowledge of any infringement by the Company or its Subsidiaries of
trademarks, trade name rights, patents, patent rights, copyrights, inventions,
licenses, service names, service marks, service xxxx registrations, trade
secrets or other similar rights of others, or of any such development of similar
or identical trade secrets or technical information by others and, except as set
forth on Schedule 2(g), no claim, action or proceeding has been made or brought
against, or to the Company's knowledge, has been threatened against, the Company
or its Subsidiaries regarding trademarks, trade name rights, patents, patent
rights, inventions, copyrights, licenses, service names, service marks, service
xxxx registrations, trade secrets or other infringement, except where such
infringement, claim, action or proceeding would not reasonably be expected to
have either individually or in
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the aggregate a Material Adverse Effect. Except as set forth on Schedule 2(g),
the Company and its Subsidiaries are unaware of any facts or circumstances which
might give rise to any of the foregoing. The Company and its Subsidiaries have
taken reasonable security measures to protect the secrecy, confidentiality and
value of all of their intellectual properties except where the failure to do so
would not have either individually or in the aggregate a Material Adverse
Effect.
(h) Litigation. Except as set forth in or contemplated by Schedule
2(h), there is no material action, suit, investigation, customer complaint,
claim or proceeding at law or in equity by or before any court, arbitrator,
governmental instrumentality or authority or other agency now pending or, to the
knowledge of the Company, threatened against the Company, the adverse outcome of
which would be reasonably likely to have a Material Adverse Effect. The Company
is not subject to any judgment, order, writ, injunction or decree of any
Federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign which have a Material
Adverse Effect.
(i) Non-Defaults; Non-Contravention; Etc. Except as disclosed in
Schedule 2(i), neither the execution, delivery and performance of this Agency
Agreement nor the consummation by the Company of the transactions contemplated
hereby will (i) result in a violation of its certificate of incorporation or any
certificate amendment thereto (collectively, "Certificate of Incorporation") or
its by-laws ("By-laws"); (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
require the consent of any party to, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its Subsidiaries is a
party; or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws and regulations
applicable to the Company or any of its Subsidiaries or by which any property or
asset of the Company or any of its Subsidiaries is bound or affected, except, in
the cases of foregoing clauses (ii) and (iii), any conflict, default or
violation which would not reasonably be expected to result in a Material Adverse
Effect. Except as disclosed in Schedule 2(i), neither the Company nor its
Subsidiaries is in violation of any term of (i) its Certificate of
Incorporation, or its By-laws or their organizational charter or by-laws,
respectively, or (ii) any statute, rule or regulation applicable to the Company
or its Subsidiaries and neither the Company nor its Subsidiaries is in default
under any contract, agreement, mortgage, indebtedness, indenture, instrument,
judgment, decree or order, except for such violations or defaults which would
not, individually or in the aggregate, have a Material Adverse Effect. Except as
specifically contemplated by this Agency Agreement and except such as have been
obtained as of the date hereof, the Company is not required to obtain any
consent, authorization or order of, or make any filing or registration with, any
court or governmental agency or any regulatory or self-regulatory agency in
order for it to execute, deliver or perform any of its obligations under or
contemplated by this Agency Agreement or the Offering Documents in accordance
with the terms hereof or thereof.
(j) Taxes. Except as set forth in or contemplated by Schedule 2(j),
the Company has filed all Federal, state, local and foreign tax returns which
are required to be filed by it or otherwise met its disclosure obligations to
the relevant agencies and all such returns are true and correct in all material
respects. The Company has paid or adequately provided for all tax liabilities of
the Company as reflected on such returns or determined to be due on such returns
or pursuant to any assessments received by it or which it is obligated to
withhold from amounts owing to any employee, creditor or third party. There are
no unpaid taxes in any material amount
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claimed to be due by the taxing authority of any jurisdiction, and the officers
of the Company know of no basis for any such claim. The Company has properly
accrued all taxes required to be accrued by GAAP consistently applied. The tax
returns of the Company have never been audited by any state, or Federal
authorities. The Company has not waived any statute of limitations with respect
to taxes or agreed to any extension of time with respect to any tax assessment
or deficiency.
(k) Compliance With Laws; Licenses; Etc. The business of the Company
and its Subsidiaries is not being conducted in violation of any law, ordinance
or regulation of any governmental entity except for such violations the
sanctions for which either individually or in the aggregate would not reasonably
be expected to have a Material Adverse Effect, and the Company has not received
notice of any violation of or noncompliance with any Federal, state, local or
foreign, laws, ordinances, regulations and orders applicable to its business
which has not been cured, the violation of, or noncompliance with which, would
be reasonably likely to have a Material Adverse Effect. The Company has all
material licenses and permits and other governmental certificates,
authorizations and permits and approvals (collectively, "Licenses") required by
every Federal, state and local government or regulatory body for the operation
of its business as currently conducted and the use of its properties, except
where the failure to be licensed or possess a permit would not reasonably be
expected to have a Material Adverse Effect. The Licenses are in full force and
effect and to the Company's knowledge no violations currently exist in respect
of any License and no proceeding is pending or threatened to revoke or limit any
thereof.
(l) Authorization of Agency Agreement; Enforceability; Etc. The
Company has the requisite corporate power and authority to enter into and
perform its obligations under this Agency Agreement, the Subscription
Agreements, the Agency Warrants (as defined below) and the Fund Escrow Agreement
(as defined below). The execution and delivery of this Agency Agreement, the
Subscription Agreements and the Funds Escrow Agreement by the Company and the
consummation by it of the transactions contemplated hereby and thereby, have
been duly authorized by the board of directors of the Company (the "Board of
Directors") and no further consent or authorization is required by the Company,
the Board of Directors or the Company's stockholders. This Agency Agreement has
been duly executed and delivered by the Company and constitutes the valid and
binding obligations of the Company enforceable against the Company in accordance
with its terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally, the
enforcement of creditors' rights and remedies.
(m) Authorization of E Preferred Shares. Except as set forth in or
contemplated by Schedule 2(m), the issuance, sale and delivery of the E
Preferred Shares have been duly authorized by all requisite corporate action of
the Company. When so issued, sold and delivered in accordance with this
Agreement and the Offering Documents for the consideration set forth therein,
the E Preferred Shares will be duly issued and delivered and will constitute
valid and legal obligations of the Company enforceable in accordance with their
respective terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally, the
enforcement of creditors' rights and remedies, and, in each case, will not be
subject to preemptive or any other similar rights of the stockholders of the
Company.
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(n) Authorization of Reserved Shares. Except as set forth in or
contemplated by Schedule 2(n), the issuance, sale and delivery by the Company of
the shares of Common Stock issuable upon conversion of the E Preferred Shares
and exercise of the Agency Warrants (the "Reserved Shares") have been duly
authorized by all requisite corporate action of the Company, and the Reserved
Shares have been duly reserved for issuance upon conversion of all or any of the
E Preferred Shares and exercise of the Agency Warrants. When so issued, sold,
paid for and delivered for the consideration set forth in the Offering
Documents, the Reserved Shares will be validly issued and outstanding, fully
paid and nonassessable, and not subject to preemptive rights under Delaware law
or any other similar rights of the stockholders of the Company or others.
(o) Exemption from Registration. Assuming (i) the accuracy of the
information provided by the respective Subscribers in the Subscription
Agreements and Questionnaires, and (ii) that all of the offerees and Subscribers
are "accredited investors" as such term is defined in Rule 501 of Regulation D
and (iii) that the Placement Agent has not engaged, nor will engage, in
connection with the Offering, in any form of general solicitation or general
advertising within the meaning of Rule 502(c) of Regulation D, the offer and
sale of the Preferred Units pursuant to the terms of this Agency Agreement are
exempt from the registration requirements of the 1933 Act and the rules and
regulations promulgated thereunder. The Company is not disqualified from the
exemption under Regulation D by virtue of the disqualification contained in Rule
507 thereof.
(p) Registration Rights. Except with respect to holders of the
Preferred Units, and except as set forth in Schedule 2(p), no person has any
right to cause the Company to effect the registration under the 1933 Act of any
securities of the Company. The Company shall grant registration rights under the
1933 Act to the Subscribers and/or their transferees as more fully described in
the applicable Subscription Agreements.
(q) Brokers. Neither the Company nor any of its officers, directors,
employees or stockholders has employed any broker or finder in connection with
the transactions contemplated by this Agency Agreement other than the Placement
Agent.
(r) Title to Securities. When certificates representing the E
Preferred Shares have been duly delivered to the Subscribers in the Offering,
and payment shall have been made therefor, such persons shall receive from the
Company good and marketable title to such securities free and clear of all
liens, encumbrances and claims whatsoever (with the exception of claims arising
through the acts or omissions of the purchasers and except as arising from
applicable Federal and state securities laws), and the Company shall have paid
all taxes, if any, in respect of the original issuance thereof in the United
States.
(s) Right of First Refusal. No person, firm or other business entity
is a party to any agreement, contract or understanding, written or oral
entitling such party to a right of first refusal with respect to offerings by
the Company.
3. Closing and Fees.
(a) Closing of the Offering. Provided the Minimum Offering shall
have been subscribed for and funds representing the sale thereof shall have
cleared, a closing (the "Initial Preferred Closing") shall take place at the
offices of the Placement Agent, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx within
three business days thereafter (but in no event later than five days
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following the Preferred Termination Date), which closing date may be accelerated
or adjourned by agreement between the Company and the Placement Agent. At the
Initial Preferred Closing, payment for the Preferred Units issued and sold by
the Company shall be made against delivery of the E Preferred Shares comprising
such Preferred Units. In addition, subsequent closings of the Offering (if
applicable) may be scheduled at the discretion of the Company and the Placement
Agent, each of which shall be deemed a "Preferred Closing" hereunder. The date
of the last closing of the Offering is hereinafter referred to as the "Final
Closing" and the date of any Preferred Closing hereunder is hereinafter referred
to as a "Closing Date".
(b) Conditions to Placement Agent's Obligations. The obligations of
the Placement Agent hereunder will be subject to the accuracy in all material
respects of the representations and warranties of the Company herein contained
as of the date hereof and as of each Closing Date of the Placements, to the
performance by the Company of its obligations hereunder and to the following
additional conditions:
(i) Due Qualification or Exemption. (A) The Offering will become
qualified or be exempt from qualification under the securities or "blue sky"
laws of the several states pursuant to paragraph 4(d) below not later than the
Initial Preferred Closing Date, and (B) at any Closing Date no stop order
suspending the sale of the Preferred Units shall have been issued, and no
proceeding for that purpose shall have been initiated or threatened;
(ii) No Material Misstatements. Neither the blue sky
qualification materials nor the Offering Documents, nor any supplement thereto,
will contain any untrue statement of a fact which in the reasonable opinion of
the Placement Agent is material, or omits to state a fact, which in the
reasonable opinion of the Placement Agent is material and is required to be
stated therein, or is necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(iii) Compliance with Agreements. The Company will have complied
in all material respects with all agreements and satisfied all conditions on its
part to be performed or satisfied hereunder at or prior to each Preferred
Closing;
(iv) Corporate Action. The Company has or will have taken all
necessary corporate action, including, without limitation, obtaining the
approval of its Board of Directors, for the execution and delivery of this
Agency Agreement, the performance by the Company of its obligations hereunder
and the Offering contemplated hereby;
(v) Opinion of Company Counsel. At each Preferred Closing, the
Placement Agent shall receive the opinion of Xxxxxx & Xxxxxxx, counsel to the
Company, and the opinion of Xxxxxxxx, Xxxxxx and Finger, Delaware counsel to the
Company, in a form mutually agreeable to the parties and their counsel.
(vi) Officers' Certificate. The Placement Agent shall receive a
certificate of the Company, signed on its behalf by the Chief Executive Officer
and Chief Financial Officer thereof, that (i) the representations and warranties
contained in Section 2 hereof are true and accurate at such closing with the
same effect as though expressly made at such closing and (ii) the Company has
complied with its covenants and agreements set forth herein.
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(vii) Designation of Preferred. The Series E Designation shall
have been accepted for filing by the Secretary of State of the State of
Delaware.
(viii) Fund Escrow Agreement. The Placement Agent shall receive
a copy of a duly executed escrow agreement in the form previously delivered to
the Placement Agent regarding the deposit of funds pending the closing(s) of the
Offering with a bank or trust company acceptable to the Placement Agent (the
"Fund Escrow Agreement").
(ix) O&D Insurance. The Company shall have in place and full
force and effect at least $5,000,000 of officers and directors liability
insurance.
(x) No Adverse Changes. There shall not have occurred, at any
time prior to the applicable closing (i) a general suspension of, or a general
limitation on prices for, trading in securities on the New York Stock Exchange
or the Nasdaq - Amex Stock Exchange or in the over-the-counter market; (ii) any
outbreak of major hostilities or other national or international calamity; (iii)
any banking moratorium declared by Federal or New York authorities; (iv) any
material adverse change in the business, properties, assets, results of
operations, or financial condition of the Company which materially impairs the
investment quality of the Preferred Units; or (v) any material adverse change in
the market for securities in general or in political, financial, or economic
conditions which, in the Placement Agent's reasonable judgment, makes it
inadvisable to proceed with the Offering.
(xi) Capitalization; Indebtedness. At the date of each Preferred
Closing (i) there shall be no more than 177,200,000 shares of Common Stock
outstanding on a fully diluted basis (excluding shares issued or issuable in
connection with the Company's acquisition of the assets of IVonyx, Inc.); and
(ii) the Company shall have no outstanding indebtedness except for (w) accounts
payable, (x) capital lease obligations, (y) indebtedness to a bank or financial
institution under a senior secured working capital facility, and (z) up to
$3,000,000 of senior subordinated debt.
(xii) Series D Waivers and Consents. A majority of the holders
of the Company's shares of Series D 8% Convertible Preferred Stock (the "D
Preferred Shares") shall have executed waivers of (i) Section 6(D) the
Certificate of Designation of the D Preferred Shares (the "Series D
Designation") that would result in an adjustment to the conversion price of the
D Preferred Shares as a result of this Offering, and (ii) Section 5(A) of the
Series D Designation with respect to the issuance by the Company of the E
Preferred Shares, which shall rank senior to the D Preferred Shares.
(c) Blue Sky. Counsel to the Placement Agent will prepare and file
the necessary documents so that offers and sales of the securities to be offered
in the Offering may be made in certain jurisdictions in the United States. It is
understood that such filings may be based on or rely upon: (i) the
representations of each Subscriber set forth in the Subscription Agreement
delivered by such Subscriber; (ii) the representations, warranties and
agreements of the Company set forth in Section 2 of this Agency Agreement; and
(iii) the representations of the Company set forth in the certificate to be
delivered at each Preferred Closing pursuant to paragraph (vi) of Section 3(b).
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(d) Placement Fee and Expenses.
(i) Offering. Simultaneously with payment for and delivery of
the Preferred Units at the Initial Preferred Closing, the Company shall: (A) pay
to the Placement Agent a cash fee of $300,000; (B) issue to the Placement Agent,
or its designees, seven-year warrants to purchase 36,000 E Preferred Shares at a
price of $10.00 per share (the "Agency Warrants"); and (C) reimburse the
Placement Agent for the Placement Agent Expenses (as defined below), which
expenses shall not exceed $150,000 in the aggregate and which expenses shall be
credited by $25,000 pursuant to a payment made by the Company to the Placement
Agency in connection with that certain engagement letter, dated June 11, 2001,
by and between the Company and the Placement Agent, as amended (the "Engagement
Letter"). The Company shall also pay all expenses in connection with the
qualification of the E Preferred Shares or Preferred Units under the blue sky
laws of the states which the Placement Agent shall designate, including legal
fees and filing fees not to exceed $5,000.
(ii) Interest. In the event that for any reason the Company
shall fail to pay to the Placement Agent all or any portion of the fees payable
hereunder when due, interest shall accrue and be payable on the unpaid cash
balance due hereunder from the date when first due through and including the
date when actually collected by the Placement Agent, at a rate equal to four
percent above the prime rate of Citibank, N.A., in New York, New York, computed
on a daily basis and adjusted as announced from time to time.
(e) Bring-Down Opinions and Certificates. If there is more than one
Preferred Closing, then at each such Closing there shall be delivered to the
Placement Agent updated opinions and certificates as described in (v) and (vi)
of Section 3(b) above, respectively.
4. Covenants of the Company.
(a) Use of Proceeds. The net proceeds of the Offering will be used
by the Company substantially as set forth in the Offering Memorandum. Except as
set forth on Schedule 4(a), the Company shall not use any of the proceeds from
the Offering to repay any indebtedness of the Company (other than trade payables
as they become due) outstanding on the date hereof, including but not limited to
indebtedness to any current executive officers, directors or principal
stockholders of the Company.
(b) Expenses of Offering and Other Payments. The Company shall be
responsible for, and shall bear all expenses directly incurred in connection
with, the Offering including, but not limited to, (i) legal fees of the
Company's counsel relating to the costs of preparing the Offering Documents and
all amendments, supplements and exhibits thereto and preparing this Agency
Agreement and delivering all Preferred Units and the Agency Warrants, and (ii)
the blue sky fees, filing fees and the fees and disbursements of Placement
Agent's counsel in connection with the blue sky matters (the "Company
Expenses"). In addition, the Company shall reimburse the Placement Agent for all
of its out-of-pocket expenses incurred in connection with the Offering,
including, without limitation the Placement Agent's mailing, printing, copying,
telephone, travel, background searches, due diligence investigations, legal and
consulting fees or other similar expenses (the "Placement Agent Expenses").
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On or prior to the Preferred Termination Date, if the Company
decides not to proceed with the Offering for any reason (other than as a result
of a material breach by the Placement Agent of its obligations hereunder or the
Placement Agent's failure to close on the Offering prior to the Preferred
Termination Date or upon mutual agreement with the Placement Agent not to
proceed with the Offering) or if the Placement Agent decides not to proceed with
the Offering because of a material breach by the Company of its representations,
warranties, or covenants in this Agency Agreement or as a result of material
adverse changes in the affairs of the Company, the Company will be obligated to
pay the Placement Agent a financial advisory fee of $150,000 payable at the
Placement Agent's sole discretion in either cash or in shares of the Common
Stock based on the average of the closing bid price for the 10 trading days
immediately preceding the date of notice not to proceed with Offering (the
"Termination Fee") (which fee the Company agrees is a fair measure of the
compensation to be received by the Placement Agent in respect of, among other
things its advice, time and effort in respect of the Offering), and to reimburse
the Placement Agent for the Placement Agent Expenses as set forth above within
ten business days of the occurrence or any such event. The Placement Agent shall
have no liability to the Company should the Placement Agent choose not to
proceed with the Offering contemplated hereby. After the Preferred Termination
Date, provided that up until such date the Company has been proceeding in good
faith to consummate the Offering, the Company shall have no obligation to pay
the Termination Fee should the Company choose to terminate this Agreement or not
to proceed with the Offering contemplated hereby for any reason, provided,
however, that in such event, the Company shall remain obligated to reimburse the
Placement Agent for the Placement Agent Expenses and for the blue sky expenses
and legal fees pursuant to the last sentence of Section 3(d)(i) above.
(c) Notification. The Company shall notify the Placement Agent
immediately, and in writing, (i) when any event shall have occurred during the
period commencing on the date hereof and ending on the later of the Final
Closing or the Preferred Termination Date as a result of which the Offering
Documents would include any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading, and (ii) of the receipt of any notification
with respect to the modification, rescission, withdrawal or suspension of the
qualification or registration of the Preferred Units, or of any exemption from
such registration or qualification, in any jurisdiction. The Company will use
its reasonable best efforts to prevent the issuance of any such modification,
rescission, withdrawal or suspension and, if any such modification, rescission,
withdrawal or suspension is issued and the Placement Agent so requests, to
obtain the lifting thereof as promptly as possible.
(d) Blue Sky. The Company will use its reasonable best efforts to
qualify or register the securities to be offered in the Offering for offering
and sale under, or establish an exemption from such qualification or
registration under, the blue sky laws of such jurisdictions in the United States
as the Placement Agent may reasonably request; provided however, that the
Company will not be obligated to register as a foreign corporation or qualify as
a dealer in securities in any jurisdiction in which it is not so qualified. The
Company will not consummate any sale of securities pursuant to the Offering in
any jurisdiction in which it is not so qualified or in any manner in which such
sale may not be lawfully made.
(e) Form D Filing. The Company shall: (i) timely file with the SEC
five copies of a Notice of Sales of Securities on Form D with respect to the
sale of the Preferred Units within the time period required; (ii) file promptly
such amendments to such Notices on Form D as shall
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become necessary; and (iii) comply with any filing requirement imposed by the
laws of any state or jurisdiction in which offers and sales are made. Upon
request, the Company shall furnish the Placement Agent with copies of all such
filings.
(f) Press Releases, Etc. The Company shall provide two business days
prior written notice of any proposed press release or other communication, or
any press conference with respect to any material development concerning the
Company, its financial condition, results of operations, business, properties,
assets, or liabilities; provided however, the Company may issue any press
release without such prior notice if in the reasonable opinion of counsel to the
Company issuance before such notice can be provided is required for compliance
with any governmental agency or exchange on which the Company's securities are
listed. Furthermore, the Company shall not at any time include information with
respect to the use of the Placement Agent's name in any press release,
advertisement or on any website maintained by the Company without the prior
written consent of the Placement Agent.
(g) Restrictions on Issuances of Securities. During the period
commencing on the date hereof and ending on the earlier of (i) the date that the
Company advises the Placement Agent that it elects not to proceed with the
Offering and (ii) the later of (A) the Final Closing or (B) the Preferred
Termination Date, provided the Placement Agent shall not have breached any
material covenant, representation or warranty contained in this Agency Agreement
and the Placement Agent is actively conducting the Offering, the Company will
not, without the prior written consent of the Placement Agent, issue additional
shares of Common Stock, other than pursuant to the exercise of options, warrants
or rights outstanding on the date hereof, or grant any warrants, options or
issue other securities of the Company.
(h) Independent Auditors. During the three-year period following the
Initial Preferred Closing, the Company will not switch auditors, other than to a
"Big Five" accounting firm, without the approval of a majority of the
independent members of the Board of Directors.
(i) Quarterly Communications. Within 45 days after the end of each
fiscal quarter, the Company shall (i) send to the Placement Agent (x) a letter
setting forth the results of operations for the fiscal quarter and management's
analysis thereof (which delivery obligation shall be satisfied by timely filing
with the SEC the applicable quarterly report on Form 10-Q) and (y) a schedule of
all securities issuances by the Company, including the issuances of shares
pursuant to the cashless exercise provisions of any options or warrants, and
(ii) present an update on the affairs of the Company at the offices of the
Placement Agent for the Subscribers and employees of the Placement Agent. In
addition, within 90 days after the end of each fiscal year, the Company shall
send to the Subscribers a stockholders letter in form and substance reasonably
satisfactory to the Placement Agent setting forth the results of operations for
the fiscal year and management's analysis thereof (which delivery obligation
shall be satisfied by timely filing with the SEC the applicable annual report on
Form 10-K).
(j) Transmittal Letters. Within five days after each closing of the
Offering, the Placement Agent shall receive copies of all letters from the
Company to the Subscribers transmitting the securities sold in the Offering and
shall receive a letter from the Company confirming transmittal of the securities
to the Subscribers.
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(k) Committees. The Company will not create any committees of its
Board of Directors that are not composed of a majority of the independent
members of the Board of Directors unless it has received the approval of a
majority of the independent members of the Board of Directors to do so.
(l) Transfer Agent. The Company shall provide a transfer agent and
registrar in respect of its capital stock, which transfer agent and registrar
shall be reasonably acceptable to the Placement Agent.
(m) Indebtedness. For so long as 85,000 E Preferred Shares remain
outstanding, other than (i) indebtedness of the Company permitted to exist on
the date of a Preferred Closing under Section 3(C)(xi) above, (ii) indebtedness
of the Company to trade creditors incurred in the ordinary course of business or
in connection with the restructuring of their claims, (iii) the acquisition of
personal property through indebtedness or leases on a purchase money basis, (iv)
refundings or refinancings of indebtedness described above, or (v) indebtedness
of the Company not referred to in the forgoing clauses (i) through (iv) not to
exceed $2,500,000, the Company will hereafter not create, incur, assume or
suffer to exist, contingently or otherwise, any indebtedness for borrowed money.
(n) Lock-Up Agreements. In connection with any public offering of
the Company's securities resulting in gross proceeds to the Company in excess of
$25,000,000 and effected at a per share offering price in excess of $1.50, in
which Subscribers are bound by the lock-up provisions of Section 1.17 of their
Subscription Agreement, the Company shall use reasonable efforts to obtain the
agreement of each officer, director and 5% (or greater) stockholder of the
Company to the effect that such individual shall not, for up to 180 days
following the effective date of such public offering, sell, transfer or
otherwise dispose of such person's securities of the Company.
(o) Amendments to Series E Designation. The Company will not,
without the prior written consent of the Placement Agent (i) agree to amend or
waive any provision of the Series E Designation, or (ii) take any action that
would not be permissible under the Series E Designation without the consent of
the holders of 20% of the outstanding E Preferred Shares.
5. Indemnification.
(a) The Company agrees to indemnify and hold harmless the Placement
Agent and each Selected Dealer, if any, and their respective stockholders,
directors, officers, agents and controlling persons (an "Indemnified Party")
against any and all loss, liability, claim, damage and expense whatsoever (and
all actions in respect thereof), and to reimburse the Placement Agent for
reasonable legal fees and related expenses as incurred (including, but not
limited to the costs of investigating, preparing or defending any such action or
claim whether or not in connection with litigation in which the Placement Agent
is a party and the costs of giving testimony or furnishing documents in response
to a subpoena or otherwise), caused by or arising out of (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Offering Documents or the omission or alleged omission therefrom of a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading (provided, however,
that the Company shall not be liable in any such case to the extent that any
such loss, liability, claim, damage or expense arises out of or is based upon
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any untrue statement of a material fact or alleged untrue statement or a
material fact provided by the Placement Agent in writing to the Company
specifically for use in the Offering Documents), any violation by the Company of
the federal securities laws or the securities laws of any states, or otherwise
arising out of the Placement Agent's engagement hereunder, except in respect of
any matters as to which the Placement Agent shall have been adjudicated to have
acted with gross negligence, or (iii) any breach by the Company of any of its
representations, warranties or covenants contained in this Agency Agreement.
(b) Promptly after receipt by an Indemnified Party under this
Section of notice of the commencement of any action, the indemnified party will,
if a claim in respect thereof is to be made against the Company under this
Section, notify in writing the Company of the commencement thereof; but the
omission so to notify the Company will not relieve it from any liability which
it may have to the Indemnified Party otherwise than under this Section except to
the extent the defense of the claim is prejudiced. In case any such action is
brought against an Indemnified Party, and it notifies the Company of the
commencement thereof, the Company will be entitled to participate in, and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, subject to the provisions herein
stated, with counsel reasonably satisfactory to the Indemnified Party, and after
notice from the Company to the Indemnified Party of its election so to assume
the defense thereof, the Company will not be liable to the Indemnified Party
under this Section 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 the Company has been advised in writing that
such investigation is being undertaken). The 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 not be at the
expense of the Company if the Company has assumed the defense of the action with
counsel reasonably satisfactory to the Indemnified Party; provided that the fees
and expenses of such counsel shall be at the expense of the Company if (i) the
employment of such counsel has been specifically authorized in writing by the
Company (which it shall have no obligation to do) or (ii) the named parties to
any such action (including any impleaded parties) include both the Indemnified
Party or Parties and the Company and, in the reasonable judgment of counsel for
the Indemnified Party, it is advisable for the Indemnified Party or Parties to
be represented by separate counsel due to material conflict of interest (in
which case the Company shall not have the right to assume the defense of such
action on behalf of an Indemnified Party or Parties), it being understood,
however, that the Company 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 for all
the Indemnified Parties. No settlement by an Indemnified Party of any action
against an Indemnified Party shall be made without the Company's consent which
shall not be unreasonably withheld. No settlement of any action against an
Indemnified Party by the Company shall be made unless such an Indemnified Party
is fully and completely released in connection therewith.
6. Contribution.
To provide for just and equitable contribution, if (i) an
Indemnified Party makes a claim for indemnification pursuant to Section 5 but it
is found in a final judicial determination, not subject to further appeal, that
such indemnification may not be enforced in such case, even though this Agency
Agreement expressly provides for indemnification in such case, or (ii) any
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indemnified or indemnifying party seeks contribution under the 1933 Act, the
1934 Act, or otherwise, then the Company (including for this purpose any
contribution made by or on behalf of any officer, director, employee or agent
for the Company, or any controlling person of the Company), on the one hand, and
the Placement Agent and any Selected Dealers (including for this purpose any
contribution by or on behalf of an indemnified party), on the other hand, shall
contribute to the losses, liabilities, claims, damages, and expenses whatsoever
to which any of them may be subject, in such proportions as are appropriate to
reflect the relative benefits received by the Company, on the one hand, and the
Placement Agent and the Selected Dealers, on the other hand; provided, however,
that if applicable law does not permit such allocation, then other relevant
equitable considerations such as the relative fault of the Company and the
Placement Agent and the Selected Dealers in connection with the facts which
resulted in such losses, liabilities, claims, damages, and expenses shall also
be considered. In no case shall the Placement Agent or a Selected Dealer be
responsible for a portion of the contribution obligation in excess of the
compensation received by it or the Selected Dealer Agreement, as the case may
be. No person guilty of a fraudulent misrepresentation shall be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation. For purposes of this Section 6, each person, if any, who
controls the Placement Agent or a Selected Dealer within the meaning of Section
15 of the 1933 Act or Section 20(a) of the 1934 Act and each officer, director,
shareholder, employee and agent of the Placement Agent or a Selected Dealer,
shall have the same rights to contribution as the Placement Agent or the
Selected Dealer, and each person, if any who controls the Company within the
meaning of Section 15 of the 1933 Act or Section 20(a) of the 1934 Act and each
officer, director, employee and agent of the Company, shall have the same rights
to contribution as the Company, subject in each case to the provisions of this
Section 6. Anything in this Section 6 to the contrary notwithstanding, no party
shall be liable for contribution with respect to the settlement of any claim or
action effected without its written consent. This Section 6 is intended to
supersede any right to contribution under the 1933 Act, the 1934 Act, or
otherwise.
7. Miscellaneous.
(a) Survival. Except as set forth in Section 4(b), any termination
of the Offering without consummation thereof shall be without obligation on the
part of any party except that the indemnification provided in Section 5 hereof
and the contribution provided in Section 6 hereof shall survive any termination
and shall survive the Final Closing for a period of three years.
(b) Representations, Warranties and Covenants to Survive Delivery.
The respective representations, warranties, indemnities, agreements, covenants
and other statements as of the date hereof shall survive execution of this
Agency Agreement and delivery of the Preferred Units and the termination of this
Agency Agreement for a period of three years after such respective event.
(c) No Other Beneficiaries. This Agency Agreement is intended for
the sole and exclusive benefit of the parties hereto and their respective
successors and controlling persons, and no other person, firm or corporation
shall have any third-party beneficiary or other rights hereunder.
(d) Governing Law; Resolution of Disputes. This Agency Agreement
shall be governed by and construed in accordance with the law of the State of
New York without regard
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to conflict of law provisions. The Placement Agent and the Company will attempt
to settle any claim or controversy arising out of this Agency Agreement through
consultation and negotiation in good faith and a spirit of mutual cooperation.
Should such attempts fail, then the dispute will be mediated by a mutually
acceptable mediator to be chosen by the Placement Agent and the Company within
15 days after written notice from either party demanding mediation. Neither
party may unreasonably withhold consent to the selection of a mediator, and the
parties will share the costs of the mediation equally. Any dispute which the
parties cannot resolve through negotiation or mediation within six months of the
date of the initial demand for it by one of the parties may then be submitted to
the courts for resolution. The use of mediation will not be construed under the
doctrine of latches, waiver or estoppel to affect adversely the rights of either
party. Nothing in this paragraph will prevent either party from resorting to
judicial proceedings if (a) good faith efforts to resolve the dispute under
these procedures have been unsuccessful or (b) interim relief from a court is
necessary to prevent serious and irreparable injury.
(e) Counterparts. This Agency Agreement may be signed in
counterparts with the same effect as if both parties had signed one and the same
instrument.
(f) Notices. Any communications specifically required hereunder to
be in writing, if sent to the Placement Agent, will be sent by overnight courier
providing a receipt of delivery or by certified or registered mail to it at
Commonwealth Associates, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Xxxx Xxxxxxxx, with a copy to Kronish Xxxx Xxxxxx & Xxxxxxx, LLP, 0000 Xxxxxx xx
xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx Xxxxxx, and if sent to
the Company, will be sent by overnight courier providing a receipt of delivery
or by certified or registered mail to it at 000 Xxxxxxx Xxxxxx, Xxxxx 000 Xxxxx
Xxxxxx, Xxxxxxxxxx 00000, Attention: Chief Executive Officer, with a copy to
Xxxxxx & Xxxxxxx, 000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx
000000, Attention: W. Xxxx Xxxxxx.
(g) Entire Agreement. Except as otherwise set forth below, this
Agency Agreement constitutes the entire agreement of the parties with respect to
the matters herein referred and supersedes all prior agreements and
understandings, written and oral, between the parties with respect to the
subject matter hereof including, but not limited to, the Engagement Letter.
Neither this Agency Agreement nor any term hereof may be changed, waived or
terminated orally, except by an instrument in writing signed by the party
against which enforcement of the change, waiver or termination is sought. This
Agency Agreement does not replace that certain Agency Agreement dated as of June
23, 2000, as amended by Amendment No. 1 dated August 22, 2000 (the "Prior Agency
Agreement") between the Placement Agent and the Company with respect to the
Bridge Financing and the Offering of D Preferred Shares and Warrants referred to
therein, which Prior Agency Agreement shall remain in full force and effect. In
the event any term or provision contained in the Prior Agency Agreement
conflicts with this Agency Agreement, this Agency Agreement shall govern.
If you find the foregoing is in accordance with our understanding,
kindly sign and return to us a counterpart hereof, whereupon this instrument
along with all counterparts will become a binding agreement between us.
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Very truly yours,
xxxxxx.xxx, Inc.
By: /s/ XXXXXX X. XXXXXXXX
--------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
Agreed:
COMMONWEALTH ASSOCIATES, L.P.
By: Commonwealth Associates Management Company, Inc.,
its general partner
By: /s/ XXXXXX X. XXXXX
-----------------------------
Name: Xxxxxx X. Xxxxx
Title: Chief Financial Officer
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