Exhibit 10.9
4net Software, Inc.
00 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxxx 00000
(000) 000-0000
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SECURITIES OFFERED:
3,000,000 Shares of Common Stock, $.00001 par value
Price Per Share: $.50 per share
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PLACEMENT AGENT AGREEMENT
Dated as of July 2, 2001
Catalyst Financial LLC
00 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxxx 00000
Dear Sirs:
4net Software, Inc. (the "Company"), a Delaware corporation formed in 1986,
is engaged in acquiring, managing, and operating niche software and Internet
solution companies. In addition to providing management and financial support,
the Company also actively develops business strategies, operations, and
management teams for its acquired companies. The business of the Company is more
fully described in that certain Term Sheet, dated July 2, 2001 (references to
which shall be deemed to include any and all supplements and amendments thereto
and all financial statements and exhibits that are included therein, referred to
collectively herein as the "Memorandum").
The Company desires to raise up to $1,500,000 through the offer and sale of
up to 3,000,000 shares of the Company's common stock, par value $.00001 at the
offering price of $.50 per share (the "Common Stock"), as more fully described
in the Memorandum, in a private offering (the "Offering"). There is a minimum
investment of 80,000 shares of Common Stock or $40,000, however the Company may,
in its sole discretion, accept subscriptions in denominations of less than
$40,000. In connection with the Offering, the Company would like to retain the
services of Catalyst Financial LLC to act as the Placement Agent (the "Placement
Agent"), subject to the terms and conditions set forth herein.
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The offer and sale of the Common Stock is being made in accordance with the
Memorandum. The Common Stock will not be registered under the Securities Act of
1933, as amended (the "Securities Act") or any state securities or "blue sky"
laws and will be offered and sold in reliance upon the exemptions afforded by
Section 4(2) of the Securities Act and Rule 506 of Regulation D promulgated
thereunder and by similar exemptions afforded by or preempted from the state
securities or "blue sky" laws. The subscribers for the Common Stock each of whom
will be required to execute and deliver an executed Subscription Agreement (the
"Subscription Documents") will be issued the Common Stock (the "Investors").
Prior to the (i) registration of the Common Stock or (ii) the expiration of
the relevant holding period under Rule 144 promulgated pursuant to the
Securities Act, purchasers of the Common Stock in this Offering may not sell,
pledge, assign or otherwise transfer or hypothecate any shares of Common Stock,
sold in this Offering.
All capitalized terms not defined in this Agreement shall have the meanings
ascribed to them in the Memorandum.
Section 1. Appointment of Placement Agent and Terms of Offering.
1.1 Appointment of Placement Agent. You are hereby invited to become a
Placement Agent and by your confirmation of this Agreement you agree to act in
such capacity for the Offering during the term of the Offering Period (as
defined in Section 1.5 below) and to use your best efforts to find purchasers
for the Common Stock in accordance with the terms and conditions set forth in
this Agreement. You may retain other broker-dealers who are members of the
National Association of Securities Dealers, Inc. (the "NASD") or banks exempt
from broker-dealer registration to assist you to find purchasers for the Common
Stock in accordance with the terms and conditions set forth in this Agreement.
1.2 Co-Placement Agents. The Company may appoint one or more registered
broker- dealers who are members in good standing of the National Association of
Securities Dealers, Inc., ("NASD") or banks exempt from broker-dealer
registration to serve as Co-Placement Agents with you.
1.3 Solicitation of Subscriptions. You hereby agree to solicit, as an
independent contractor and not as an agent of the Company, Investors acceptable
to the Company in accordance with the terms of the Memorandum and this
Agreement.
1.4 Subscriptions.
1.4.1 Solicitation Procedures. Each person desiring to
purchase Common Stock in the Offering shall be required to execute and deliver
to the Company the applicable Subscription Documents and a payment, by check or
wire transfer, in the amount of $.50 per share for the total amount of the
Common Stock purchased, payable to "4net Software, Inc. Special Account." By way
of example, if an Investor purchased the minimum subscription of 80,000 shares
of Common Stock, the Investor must make a payment, by check or wire transfer, in
the amount of $40,000 payable to
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the Company. You shall transmit each investor's check or wire confirmation and
original Subscription Documents received by you to the Company care of the
address listed on the Subscription Documents, retaining a copy of each for your
files. The Company shall deposit the checks directly in its Special Account.
1.4.2 Acceptance Standards and Procedures. The Company will
not consider any proposed subscription until all of a prospective Investor's
Subscription Documents have been completed, signed and delivered. After receipt
of all required Subscription Documents with respect to an Investor, the Company
will determine whether or not to accept the offered subscription. No
subscriptions shall be effective unless and until accepted by the Company.
Subscriptions for Common Stock will be accepted only from subscribers who meet
the investor suitability standards set forth in the Memorandum and the
Subscription Documents. The minimum required purchase by any Investor shall be
80,000 Common Stock, subject to the right of the Company in its sole discretion
to allow investment in a lesser amount. The Company reserves the right to reject
any subscriptions and to allocate subscriptions received in the event the shares
of Common Stock are oversubscribed.
1.4.3 Rejection. Subscriptions may be rejected in whole or in
part by the Company, provided the Company notifies the Placement Agent of the
rejection of any subscription and returns to the Placement Agent the funds
previously received from the person whose subscription was paid and the original
Subscription Documents, within fifteen (15) business days of the receipt of the
completed Subscription Documents. Should the Company determine to reject a
subscription, you will promptly return the Subscription Documents directly to
the prospective purchaser as well as the funds previously received upon receipt
of such documents and funds from the Company.
1.5 Offering Period. The "Offering Period" shall mean that
period during which any shares of Common Stock are offered for sale, commencing
on the date upon which the Memorandum is initially delivered by the Company for
distribution to Investors and continuing until the earlier of (a) the date on
which subscriptions for the maximum number of shares of Common Stock or (b) July
31, 2001, unless earlier terminated by the Company, or unless extended for 30
days in the sole discretion of the Company (the "Termination Date").
1.6 Closings.
1.6.1 Final Closing. If at any time before the Termination
Date, subscriptions for the maximum number of shares of Common Stock provided
for herein have been accepted (including subscriptions by the Company, the
Placement Agent(s) or their affiliates), the subscribers shall be admitted to
the Company as Investors in a final closing (the "Final Closing"). The Company
shall fix a date no later than three business days after the Termination Date on
which the Final Closing will take place (or, if the third day is not a business
day, the next business day) (the "Final Closing Date").
1.6.2 Closing Certificate. The Final Closing will take place
at the Company's offices, or at such other place as shall be mutually agreed
upon by the Company and you. At the Final Closing, you agree to deliver to the
Company if so requested by the Company, a certificate stating
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(i) the number of offerees in each of the jurisdictions designated on the blue
sky memorandum (the "Blue Sky Memorandum") delivered to you by the Company, and
(ii) that your representations and warranties contained in Section 4 are true
and correct with the same effect as though expressly then made and that you have
complied with the covenants contained in Section 5.
1.7 Due Diligence. You agree to conduct your own investigation
to determine that all material facts upon which each person who purchases the
Common Stock might rely in making this investment decision have been accurately
and adequately disclosed in the Memorandum to the extent you deem necessary.
1.8 Compensation to the Placement Agent. For your services
hereunder the Company agrees to pay to you: (i) a selling commission, in an
amount equal to ten percent (10%) of the gross offering proceeds for each share
of Common Stock sold through the Placement Agent and (ii) a non- accountable
expense allowance equal to three percent (3%) of the gross offering proceeds for
each share of Common Stock sold through the Placement Agent. The sales
commission and non- accountable expense allowance provided for under this
Agreement shall be payable by the Company to the Placement Agent within fifteen
(15) business days following the Company's acceptance of the Subscription
Agreement.
Payment of the above compensation is subject to the following conditions:
No compensation will be payable with respect to any subscriptions for
Common Stock which are rejected by the Company; and
No compensation will be payable to you with respect to any sale of Common
Stock sold by you until such time as the Company has received the total proceeds
of any such sale.
No compensation will be payable with respect to transactions in
jurisdictions where such payments may not legally be made.
In no event will the value of the total compensation exceed the amount
allowable in connection with the Company' obtaining the benefits of the
exemptions from the qualification requirements of state securities laws.
On the Final Closing Date, the Company shall issue to the Placement Agent,
or its designees, five-year warrants (the "Placement Agent Warrants") to
purchase the number of shares of Common Stock equal to 10% of the number of
shares of Common Stock sold in the Offering. The Placement Agent Warrants shall
be transferable to officers, directors, consultants and shareholders of the
Placement Agent. The Placement Agent Warrants shall contain registration rights
similar to such rights provided to the purchasers of Common Stock in the
Offering.
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Section 2. Representations and Warranties of the Company.
The Company represents, warrants and agrees with you for your benefit that:
2.1 Power and Authority of the Company. The Company has been duly
organized and is validly existing and in good standing under the laws of the
State of Delaware, with full power and authority to conduct business as
described in the Memorandum. Complete and correct copies of the Certificate of
Incorporation and the Bylaws of the Company and all amendments thereto are
available upon request, and no changes therein will be made subsequent to the
date hereof and prior to the Final Closing Date.
2.2 Validity of Issuance of Securities. The outstanding common stock of
the Company has been, and the Common Stock to be issued and sold by the Company
pursuant to the Offering upon such issuance will be, when paid for as provided
in the Memorandum and the Subscription Documents, duly authorized, validly
issued, fully paid and non-assessable, and will not be subject to any preemptive
or similar rights. Subscribers for the Common Stock shall have no liability in
excess of their respective capital contributions.
2.3 Adequacy of the Memorandum. The Company will have prepared and
delivered to you the Memorandum. The Memorandum does not, and on any Closing
Date will not, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading. Every contract or other document required by
the Securities Act or any regulations promulgated thereunder (the "Regulations")
to be described in or attached as an exhibit to the Memorandum or otherwise made
available to Investors has been so described, attached or made available.
2.4 Due Authorization and Enforceability of This Agreement. This
Agreement has been duly and validly authorized, executed and delivered by or on
behalf of the Company and constitutes the valid, binding and enforceable
agreement of such Company, except to the extent that (i) the enforceability of
this Agreement may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally or by
general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law), and (ii) the indemnification
provisions of this Agreement may be held to violate public policy (under either
state or federal law) in the context of the offer or sale of securities.
2.5 No Material Adverse Change. Since the respective dates as of which
information is given in the Memorandum, there has not been any material adverse
change in the condition, financial or otherwise, of the Company or in the
earnings, affairs or business prospects of the Company.
2.6 Absence of Legal or Contractual Conflicts. The execution and
delivery of this Agreement by the Company, and the consummation of the
transactions contemplated in the Memorandum, will not, or with the passage of
time or the giving of notice would not, constitute a breach of, default under or
violation of (i) any statute, indenture, mortgage, deed of trust, voting trust,
note, lease or other agreement or any instrument to which the Company is or will
be a party or by which any of them or their property is or will be bound, or
(ii) any order, rule or regulation applicable to the
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Company of any court or any governmental body or administrative agency having
jurisdiction over its properties or businesses.
2.7 Governmental Consents. No consent, approval, authorization or order
of any court or governmental agency or body has been or is required for the
performance of this Agreement and the consummation of the transactions
contemplated in this Agreement or in the Memorandum by the Company, except such
as have been or are to be obtained under the state securities or "blue sky"
laws.
2.8 Adverse Claims. There is not pending or threatened any action, suit
or proceeding before or by any court or other governmental body against the
Company and no default exists in the due performance and observance of any
material obligation, term, covenant or condition of any agreement or instrument
to which the Company is a party, or by which it is bound that is not referred to
in the Memorandum and that might result in any material adverse change in the
condition (financial or otherwise), earnings, affairs or business or prospects
of the Company or might materially and adversely affect any of the assets of the
Company.
2.9 Legal Actions. There are no actions, suits or proceedings pending,
or to the Company's knowledge, threatened against or affecting the Company or
any of its respective officers in their capacity as such, before or by any
Federal or state court, commission, regulatory body, administrative agency or
other governmental body, domestic or foreign, wherein an unfavorable ruling,
decision or finding might materially and adversely affect the Company or its
respective business, properties, business prospects, condition (financial or
otherwise) or results of operations taken as a whole.
2.10 Investment Company. On the date hereof and the Final Closing
Date, the Company is not and will not be an investment company as that term is
defined in the Investment Company Act of 1940.
2.11 No Offers. No offer, offer to sell, offer for sale, sale or
attempt to dispose of any Common Stock to any person has been made prior to the
Offering Period upon the authority of the Company.
2.12 Accuracy of Representations. No statement, representation,
warranty or covenant made by the Company in this Agreement or made in any
certificate or document required by this Agreement to be delivered to you was or
will be, when made, inaccurate, untrue or incorrect in any material respect.
Section 3. Covenants of the Company.
The Company covenants with you as follows:
3.1 Amendment of Memorandum. Promptly upon the occurrence of any event
which would cause the Memorandum to include during the Offering Period an untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein not misleading, the Company will promptly notify you
of the event. The Company will within a reasonable period of
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time prepare and furnish to you such number of copies as you may request of an
amendment or amendments of, or a supplement or supplements to, the Memorandum
which will amend or supplement the Memorandum so that as amended or supplemented
it shall not contain any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein not misleading.
3.2 Compliance with Securities Laws. The Company will use its best
efforts to cause the sale of the Common Stock to take place in a manner that
will permit reliance upon Regulation D promulgated under the Securities Act and
will file the required Form D in a timely fashion. The company will use its best
efforts to secure exemptions from qualification or registration of the Common
Stock or preemption under the securities or "blue sky" laws of such states in
which it advises you in writing that the Common Stock may be offered, and will
make such applications, file such documents, and furnish such information as may
reasonably be required for that purpose.
3.3 Due Diligence Inquiry. Upon request by you, the Company will make
reasonable effort to furnish you information necessary in your judgment, or in
the judgment of your counsel, to confirm the continued fairness, accuracy and
completeness of the Memorandum in all material respects during the Offering
Period.
3.4 Reports and Other Information. The Company will, as long as any
Common Stock may remain outstanding, furnish directly to you one (1) copy of
each report furnished to Investors at the time such report is furnished to the
Investors.
3.5 Delivery of Sales Material. The Company will deliver to you, from
time to time, all sales material (whether designated solely for broker-dealer
use or otherwise) proposed to be used or delivered in connection with the
offering of the Common Stock.
3.6 Limited Liability and Company Status. The Company will take all
steps necessary to preserve, to the extent possible, the limited liability of
the Investors and its status as a corporation.
3.7 Notification of Changes. The Company will notify you promptly of
any change having or which is likely to have a material adverse change on the
condition (financial or otherwise), earnings, affairs or business or prospects
of the Company or might materially and adversely affect any of the assets of the
Company relating to any of the Company's' representations, warranties, covenants
or agreements contained herein that occurs at any time prior to the Final
Closing.
Section 4. Representations and Warranties of the Placement Agent.
You hereby represent, warrant and agree with the Company for its benefit
that:
4.1 Valid Power and Authority. You have been duly formed and are
validly existing as a limited liability company in good standing under the laws
of the State of your formation, with all requisite power and authority to
conduct your business and to perform the obligations contemplated herein.
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4.2 Due Authorization and Enforceability of this Agreement. This
Agreement has been duly and validly authorized, executed and delivered by you or
on your behalf and constitutes your valid, binding and enforceable agreement,
except to the extent that (i) the enforceability of this Agreement may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally or by general principles of equity
(regardless of whether such enforcement is considered in a proceeding in equity
or at law), and (ii) the indemnification provisions of this Agreement may be
held to violate public policy (under either state or federal law) in the context
of the offer or sale of securities.
4.3 Absence of Legal or Contractual Conflicts. Your execution and
delivery of this Agreement, and the performance of your obligations thereunder,
will not result in a violation of, be in conflict with or constitute a default
under any agreement or instrument to which you are a party or by which you or
your properties are bound, or any judgment, decree, order or, to your knowledge,
any statute, rule or regulation applicable to you.
4.4 Adequacy of the Memorandum. The information contained in the
Memorandum relating to you, if any, is complete and correct and does not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein not misleading.
4.5 Broker-Dealer Qualifications. You are (and will continue to be
during the term of this Agreement) a member in good standing of the NASD and
agree to abide by the Rules of Fair Practice of such association. You are
properly registered or licensed as a broker or dealer under applicable federal
and state securities laws and regulations. You, your affiliates, and your or
their officers and directors (or any other person serving in a similar capacity)
have not taken or failed to take any act, and are not subject to any order or
proceedings, that would make unavailable any limited offering exemption from
registration or qualification requirements of applicable federal or state
securities laws.
4.6 No Disqualifications. Neither you nor any of your directors,
officers, predecessors or agents nor any beneficial owner of 10% or more of any
class of your equity securities, nor any of their respective affiliates (nor any
other person serving in a similar capacity):
Has been convicted within ten years prior to the date hereof of any
crime or offense involving the purchase or sale of any security, involving the
making of a false statement with the Securities and Exchange Commission (the
"SEC"), or arising out of such person's conduct as an underwriter, broker,
dealer, municipal securities dealer or investment adviser;
Is subject to any order, judgment or decree of any court of competent
jurisdiction temporarily or preliminarily enjoining or restraining, or is
subject to any order, judgment, or decree of any court of competent
jurisdiction, entered within five years prior to the date hereof, permanently
enjoining or restraining such person from engaging in or continuing any conduct
or practice in connection with the purchase or sale of any security, involving
the making of a false filing with the SEC, or arising out of the conduct of the
business of an underwriter, broker, dealer, municipal securities dealer or
investment adviser;
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Is subject to an order of the SEC entered pursuant to section 15(b),
15B(a), or 15B(c) of the Exchange Act; or is subject to an order of the SEC
entered pursuant to section 203(e) or (f) of the Investment Advisers Act of
1940;
Is suspended or expelled from membership in, or suspended or barred
from association with a member of, an exchange registered as a national
securities exchange pursuant to section 6 of the Exchange Act, an association
registered as a national securities association under section 15A of the
Exchange Act, or a Canadian securities exchange or association for any act or
omission constituting conduct inconsistent with just and equitable principles of
trade;
Is subject to a United States Postal Service false representation order
entered within five years prior to the date hereof; or is subject to a
restraining order or preliminary injunction entered under section 3007 of title
39, United States Code, with respect to any conduct alleged to constitute postal
fraud;
Has been or has been named as an underwriter of any securities covered
by any registration statement which is the subject of any pending proceeding or
examination under section 8 of the Securities Act, or is the subject of any
refusal order or stop order entered thereunder within five years prior to the
date hereof;
Has been or has been named as an underwriter of any securities covered
by any filing which is subject to any pending proceeding under Rule 261 or any
similar Rule adopted under section 3(b) of the Securities Act, or to an order
entered thereunder within five years prior to the date hereof;
Has taken or failed to take any other act, or are subject to any other
order or proceedings, that would make unavailable to the Company any limited
offering exemption from the registration or qualification requirements of
federal or state securities laws;
Has filed a registration statement that is the subject of a currently
effective stop order entered pursuant to any state's securities law within five
years prior to the date hereof;
Has been convicted within five years prior to the date hereof of any
felony or misdemeanor in connection with the offer, purchase or sale of any
security or any felony involving fraud or deceit, including but not limited to
forgery, embezzlement, obtaining money under false pretenses, larceny or
conspiracy to defraud;
Is currently subject to any state administrative enforcement order or
judgment entered by that state's securities administrator within five years
prior to the date hereof or is subject to any state's administrative enforcement
order or judgment in which fraud or deceit, including but not limited to making
untrue statements of material facts and omitting to state material facts, was
found and the order or judgment was entered within five years prior to the date
hereof;
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Is subject to any state's administrative enforcement order or judgment
that prohibits, denies or revokes the use of any exemption from registration in
connection with the offer, purchase or sale of securities; or
Is currently subject to any order, judgment or decree of any court of
competent jurisdiction temporarily or preliminarily restraining or enjoining, or
is subject to any order, judgment or decree of any court of competent
jurisdiction permanently restraining or enjoining, such party from engaging in
or continuing any conduct or practice in connection with the purchase or sale of
any security or involving the making of any false filing with the state entered
within five years prior to the date hereof.
Section 5. Covenants of the Placement Agent.
You covenant with the Company as follows:
5.1 Delivery of Offering Materials. You or a person acting on your
behalf shall furnish to each offeree, concurrently with making an offer to such
offeree (and its purchaser representative, if such a representative has been
selected), a numbered copy of the Memorandum, as it may have been amended or
supplemented by the Company, and shall maintain adequate records of each person
to whom a Memorandum has been delivered. Neither you nor any of your agents will
give any information or make any representation with respect to the Company or
its business or affairs other than the information or representations contained
in the Memorandum or any sales literature authorized for use in connection with
the Offering, or such other information as is specifically authorized by the
Company.
5.2 Conduct of Solicitation. You or a person acting on your behalf will
cause each person interested in acquiring Common Stock to complete and execute
the Subscription Documents (copies of which are included in the Memorandum) in
order to enable the Company to determine whether such person is qualified to
acquire the Common Stock. You will not execute any Subscription Documents for
any person and will not invest in the Common Stock through any person's
discretionary trading account without the written approval of such person. You
will abide by, and take reasonable precautions to insure compliance with, all
provisions contained in the Memorandum and the Subscription Documents regulating
the terms and manner of conducting the Offering.
5.3 Compliance with Federal Securities Laws. You will comply with all
applicable requirements of the Securities Act and the rules and regulations
promulgated thereunder, including Regulation D. Specifically, but without
limitation, neither you nor any person acting on your behalf will offer the
Common Stock by means of any form of general solicitation or general advertising
nor to any person or entity unless you or your licensed personnel have a
substantial pre-existing business relationship with such person or entity. No
advertisement, article, notice or other communication regarding the Offering
will be published by you in any newspaper, magazine or similar medium or
broadcast over television or radio. Neither you nor any of your agents will
sponsor, hold or
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participate in any seminar or meeting regarding the Offering at which the
persons attending have been invited by any general solicitation or general
advertising. You and any person acting on your behalf will make offers of the
Common Stock only to persons whom you and your agents have reasonable grounds to
believe and do believe: (a) have such knowledge and experience in business and
financial matters (either alone or together with a purchaser representative)
that they are capable of evaluating the merits and risks of the prospective
investment and of protecting their own interests in connection with the
transaction and (b) meet the investor suitability requirements contained in the
Memorandum and the Subscription Documents. You and any person acting on your
behalf will cooperate with the Company so that the Common Stock are offered and
sold only to "accredited investors" as such term is defined in Rule 501 of
Regulation D. Additionally, you and your agents will exercise reasonable care to
ensure that a purchaser is not an underwriter within the meaning of Section
2(11) of the Securities Act.
5.4 Compliance with Blue Sky Laws. You will comply with all applicable
requirements of any state securities or "blue sky" law or rule or regulation
promulgated thereunder. You will not offer or sell any of the Common Stock in
any jurisdiction (i) prior to receiving written instructions from the Company
that offers may be made in such jurisdiction and (ii) except in compliance with
all applicable securities or "blue sky" laws. With respect to any state which
limits the number of offers and sales which may be made, you shall offer for
sale no more than such number of shares of Common Stock as we may advise you may
be offered and/or sold.
5.5 Maintenance of Records. You will retain in your records and make
available to the Company, for a period of at least five years, information
establishing that each person who purchases the Common Stock pursuant to a
Subscription Documents solicited by you is within the permitted class of
investors under the requirements, if any, of the jurisdiction in which such
purchaser is a resident and the suitability standards set forth in the
Memorandum and the Subscription Documents.
Section 6. Certificates from the Company and the Placement Agent.
6.1 At the Final Closing Date, you shall have received a certificate
signed by an officer of the Company on behalf of the Company to the effect that
(i) the signer has carefully examined the Memorandum and, in the signer's
opinion, at all times from the time the Memorandum was initially delivered to
you for distribution to investors the Memorandum did not contain any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading; (ii) since the date the Memorandum was initially delivered
to you for distribution to investors, no event has occurred which should have
been set forth in an amendment of or supplement to the Memorandum but which has
not been so set forth; (iii) no proceedings have been instituted or threatened
by the Commission or any blue sky agency with respect to the Offering; and (iv)
the representations and warranties contained in Section 2 are true and correct
with the same effect as though expressly then made and the Company has
materially complied with the covenants contained in Section 3.
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6.2 At the Final Closing Date, the Company shall have received a
certificate from you that the representations and warranties contained in
Section 4 are true and correct with the same effect as though expressly then
made and you have materially complied with the covenants contained in Section 5.
Section 7. Indemnification.
7.1 By the Company. The Company will indemnify and hold harmless you
and each person, if any, who controls you within the meaning of the Securities
Act, against any losses, claims, damages or liabilities, joint or several, to
which you or such controlling person may become subject under the Securities Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Memorandum, or in
any related sales material (whether designated solely for broker-dealer use or
otherwise) which the Company or any respective officer thereof authorizes in
writing for use by you or any Placement Agent, or arise out of or are based upon
the omission or alleged omission to state therein any material fact required to
be stated therein or necessary to make the statements therein not misleading;
provided, however, that none of such persons will be liable to indemnify you or
such a controlling person thereof pursuant to this Section 7.1 to the extent
that any such loss, claim, damage or liability arises out of or is based upon
any untrue statement or alleged untrue statement or omission or alleged omission
made in reliance upon and in conformity with written information furnished to
any of them by you specifically for use in the Memorandum or sales material; and
will reimburse you and each such controlling person for any legal or other
expenses reasonably incurred in connection with investigating or defending any
such loss, claim, damage, liability or action. Notwithstanding the foregoing
provisions of this Section 7.1, the Company shall not indemnify you or any
person, if any, who controls you within the meaning of the Securities Act, for
losses, liabilities or expenses arising from or out of an alleged violation of
federal or state securities laws unless (i) there has been a successful
adjudication on the merits of each count involving alleged securities law
violations by the particular indemnitee not caused by materials supplied by the
Company or (ii) such claims have been dismissed with prejudice on the merits by
a court of competent jurisdiction as to the particular indemnitee or (iii) a
court of competent jurisdiction approves the settlement of the claims against
the particular indemnitee. In any claim against a Company for indemnification
for federal or state securities law violations, the party seeking
indemnification shall place before the court the position of the SEC and states
that may require it with respect to the issue of indemnification for securities
law violations.
7.2 By the Placement Agent. You will indemnify and hold harmless
Company and each other person who controls Company within the meaning of the
Securities Act, against any losses, claims, damages or liabilities, joint or
several, to which the Company may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in the Memorandum, or
any related sales material which the Company authorize in writing for use by
you, or arise out of or are based upon the omission or the alleged omission to
state therein any material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to the extent that such
untrue statement or
Page -12-
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company by you
specifically for use therein and (ii) any breach by you or any Placement Agent
of any representation, warranty or covenant contained in this Agreement,
provided that you or any Placement Agent shall be liable under this Section 7.2
only to the extent that such losses, claims, damages or liabilities result from
any action or inaction by you. You will reimburse any legal or other expenses
reasonably incurred by the Company or any controlling person in connection with
investigating or defending any such loss, claim, damage, liability or action,
provided that you shall reimburse any such legal or other expenses in connection
with investigating or defending any such loss, claim, damage, liability or
action only to the extent that such loss, claim, damage or liability results
from any action or inaction caused by you.
7.3 Notification. Promptly after receipt by an indemnified party under
this Section 7 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 7, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under this Section 7. In case any such action is brought against any indemnified
party and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the extent
that it may wish, jointly with any other indemnifying party similarly notified,
to assume the defense thereof, with counsel satisfactory to such indemnified
party, and after notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof, the indemnifying party will not
be liable to such indemnified party under this Section 7 for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation.
Section 8. Termination of this Agreement.
8.1 Right of Termination. You or the Company shall have the right to
terminate this Agreement at any time.
8.2 Notice. If you elect to terminate this Agreement as provided in
this Section 8, the Company shall be notified promptly by you pursuant to
Section 9 of this Agreement. If the Company elects to terminate this Agreement
as provided in this Section 8, you shall be notified promptly by the Company
pursuant to Section 9 of this Agreement.
8.3 Liability of Parties. All representations, warranties and
indemnification agreements contained in this Agreement shall remain operative
and in full force and effect, regardless of any termination pursuant to Section
8.1, and shall survive the Final Closing Date.
Page -13-
Section 9. Miscellaneous Provisions.
9.1 Notices. All notices provided for by this Agreement shall be made
in writing either (i) by actual delivery of the notice to the parties thereunto
entitled or (ii) by the mailing of the notice in the United States mails to the
address, as stated below (or at such other address as may have been designated
by written notice), of the party entitled thereto, by certified or registered
mail, return receipt requested. The notice shall be deemed to have been received
in case (i), above, on the date of its actual receipt by the party entitled
thereto and in case (ii), above, on the date of deposit in the United States
mail.
All communications hereunder, except as herein otherwise specifically
provided, shall be in writing and, shall be mailed or delivered to:
The Company: 4net Software, Inc.
00 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxxx 00000
The Placement Agent: Catalyst Financial LLC
00 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxxx 00000
9.2 Parties. This Agreement shall inure to the benefit of and be
binding upon you, the Company and each of your and the Company's respective
successors and legal representatives. Except as otherwise set forth in this
Section, nothing expressed or mentioned in this Agreement is intended or shall
be construed to give any other person any legal or equitable right, remedy or
claim under or in respect of this Agreement, or any provision herein contained.
No purchaser of Common Stock will be deemed a successor because of such
purchase.
9.3 Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware.
9.4 Arbitration. You and the Company agree that any controversy arising
out of or relating to this Agreement or the Offering contemplated hereby shall
be settled by arbitration in New York, New York, in accordance with the rules
then in effect for the NASD.
9.5 Multiple Counterparts. This Agreement may be executed in a number
of identical counterparts, each of which shall be deemed to be an original, but
all of which constitute, collectively, one and the same Agreement; but in making
proof of this Agreement, it shall not be necessary to produce or account for
more than one such counterpart.
9.6 Modification or Amendment. This Agreement may not be modified or
amended except by written agreement executed by the parties hereto.
Page -14-
9.7 Other Instruments. The parties hereto covenant and agree that they
will execute such other and further instruments and documents as are or may
become necessary or convenient to effectuate and carry out this Agreement.
9.8 Validity. Should any portion of this Agreement be declared invalid
and unenforceable, then such portion shall be deemed to be severable from this
Agreement and shall not affect the remainder of this Agreement.
9.9 Captions. The captions used in this Agreement are for convenience
only and shall not be construed in interpreting this Agreement.
9.10 Entire Agreement. This Agreement contains the entire understanding
between the parties and supersedes any prior understandings or written or oral
agreements between them respecting the subject matter hereof.
If the foregoing is in accordance with our agreement, please sign and
return to us a counterpart hereof, whereupon this instrument along with all
counterparts will become a binding agreement among you and the Company in
accordance with its terms.
Very truly yours,
4net Software, Inc.
By: /s/ Xxxxxxx Xxxxx
------------------------------
Xxxxxxx Xxxxx, Director
CATALYST FINANCIAL LLC
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------
Xxxxxx X. Xxxxxxx, President
Page -15-
