Exhibit 10.60
Placement Agency Agreement
January 25, 1999
The Zanett Securities Corporation
Tower 49, 31st Floor
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Gentlemen:
This agreement ("Agreement") will confirm that Fidelity Holdings, Inc., a
Nevada corporation (the "Company"), has retained The Zanett Securities
Corporation ("Zanett" or the "Placement Agent") as its exclusive placement agent
to assist the Company, during the 30 day period commencing on the date hereof
(the "Term"), on a "best-efforts" basis, in connection with the placement of up
to 2,750 units (the "Units") at a price of $4,127.27 per Unit, each Unit
consisting of (i) $4,127.27 face amount of the Company's Convertible Term
Debentures (each, a "Debenture"), convertible into shares of the Company's
Common Stock, par value $0.01 per share (the "Common Stock"), (ii) 36.3636
shares of Common Stock (the "Purchased Shares"), (iii) Warrants to acquire
25.4545 shares of Common Stock, par value $0.01 per share, of Computer Business
Sciences, Inc. a Delaware corporation ("CBS") (each, a "CBS Warrant" and
collectively the "CBS Warrants") and (iv) Warrants to acquire 343.9394 shares of
Common Stock (each, a "Warrant" and collectively the "Warrants"). The Debentures
shall be in a form to be agreed upon by the Company and the Placement Agent. The
shares of Common Stock issuable upon conversion of the Debentures are referred
to herein as the "Conversion Shares" and the shares of Common Stock issuable
upon exercise of or otherwise pursuant to the Warrants are referred to herein as
the "Warrant Shares" and the shares of CBS Common Stock issuable upon exercise
of or otherwise pursuant to the CBS Warrants are referred herein as the "CBS
Shares". The Debentures, the Purchased Shares, the CBS Warrants, the CBS Shares,
the Warrants, the Conversion Shares and the Warrant Shares are collectively
referred to herein as the "Securities." The Company agrees that, during the
Term, Zanett shall have the exclusive right to offer and place the Securities
and that all conversations, negotiations, documents and other materials
exchanged between the Company and the Placement Agent shall not be disclosed or
released to any third party without the prior written consent of Zanett, which
consent shall not be unreasonably withheld or delayed. The Company acknowledges
that certain of the aforementioned Securities may be purchased by affiliates of
Zanett.
The Units are being offered to "accredited investors" in accordance with
Regulation D promulgated under the Securities Act of 1933, as amended (the
"Securities Act"). Each prospective investor ("Investor") subscribing to
purchase the Units will be required to deliver, among other things, a Securities
Purchase Agreement between the Company and the Investor (the "Securities
Purchase Agreement") in form and substance reasonably satisfactory to Zanett
and
the Company, representing and warranting, among other things, that such Investor
is an "accredited investor" as such term is defined in Regulation D.
Contemporaneous with the execution and delivery of the Securities Purchase
Agreement, the Investors shall execute and deliver a Registration Rights
Agreement (the "Registration Rights Agreement") in form and substance reasonably
satisfactory to Zanett and the Company pursuant to which the Company will agree
to provide the Investors certain registration rights under the Securities Act
with respect to the Conversion Shares and Warrant Shares.
The Securities Purchase Agreement, the form of Debenture, the Warrants and
the Registration Rights Agreement are referred to herein collectively as the
"Offering Documents." The offering of Units described in the Offering Documents
is referred to herein as the "Offering."
1. Appointment of Placement Agent. Zanett is hereby appointed Placement
Agent of the Company for the purposes of assisting the Company in finding
qualified Investors to participate in the Offering. On the basis of the
representations and warranties and subject to the terms and conditions contained
herein, Zanett hereby accepts such agency and agrees to assist the Company in
finding qualified Investors to participate in the Offering during the Term.
Zanett's agency hereunder is not terminable by the Company except upon
termination of the Offering or at the end of the Term. Upon termination of the
Offering, all subscriptions received, if any, shall be returned to Investors
without interest or deduction.
2. Closing; Placement Fee and Warrant; Expenses.
a. Closing. Upon satisfaction of the conditions to the closing
contained in the Securities Purchase Agreement, the closings (each, a "Closing")
of the purchase and sale of the Units shall take place at the offices of Klehr,
Harrison, Xxxxxx, Xxxxxxxxx & Xxxxxx LLP or such other mutually agreed place, at
such time and date (the "Closing Dates") as may be agreed upon between the
Placement Agent, the Investors and the Company.
b. Procedures at Closing. Counsel for the Placement Agent shall act
as escrow agent for the Closings (the "Escrow Agent"). At each Closing:
(i) The Company shall deliver to the Escrow Agent, on behalf
of the Placement Agent and the Investors, an opinion of the Company's outside
legal counsel, dated as of the applicable Closing Date, in such form as may be
reasonably acceptable to the Placement Agent and its counsel.
(ii) The Company shall deliver to the Escrow Agent
certificates from the Company, signed by the President or a Vice President
thereof, certifying that attached thereto is a true and correct copy of
resolutions adopted by the Company's Board of Directors authorizing (A) the
execution, delivery and performance of this Agreement, the Securities Purchase
Agreement, the Registration Rights Agreement, the Debentures, the Warrants and
other documentation related to the Offering, and (B) the issuance of the
Purchased Shares and the
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reservation for issuance and issuance of the Conversion Shares and the Warrant
Shares. CBS shall deliver to the Escrow Agent certificates from CBS, signed by
the President or a Vice President thereof, certifying that attached thereto is a
true and correct copy of resolutions adopted by CBS's Board of Directors
authorizing (A) the execution, delivery and performance of the Securities
Purchase Agreement and the CBS Warrants, and (B) the reservation for issuance of
the CBS Shares. Each certificate shall also certify that such resolutions have
not been modified, rescinded or amended and are in full force and effect.
(iii) The Company shall deliver to the Escrow Agent
certificates of good standing of the Company and of CBS Corp., dated as of a
recent date, from the Secretaries of States of their respective states of
incorporation.
(iv) Each Investor shall deliver to the Escrow Agent two
executed copies of the Securities Purchase Agreement and Registration Rights
Agreement signed by such Investor, and the Company shall deliver to the Escrow
Agent with respect to each Investor, two executed copies of its acceptance of
the Securities Purchase Agreement and Registration Rights Agreement executed by
such Investor.
(v) Each Investor shall have wire transferred immediately
available funds to an escrow account designated by the Escrow Agent in an amount
equal to that portion of the aggregate purchase price of the Units(s) being
purchased by such Investor due at such Closing.
(vi) The Company shall have delivered to the Escrow Agent the
duly executed Debentures and Warrants being purchased by the Investors, (and, at
the First Closing, the duly executed CBS Warrants and certificates evidencing
the Purchased Shares being purchased by the Investors) in such denominations as
the Investors shall request.
(vii) The Company and the Placement Agent shall instruct the
Escrow Agent to pay to the Company that portion of the purchase price
(collectively, the "Purchase Price") for the Units subscribed for due at such
Closing, less the Placement Agent Fee (as defined below) and other authorized
expenses of the Offering, out of the funds on deposit in the escrow account
received from Investors whose Securities Purchase Agreements have been accepted.
c. Placement Fee; Expenses. The Company covenants and agrees to pay
to the Placement Agent at each Closing a fee (the "Placement Agent Fees") equal
to six percent 6% of the aggregate Purchase Price paid at such Closing. Such
Placement Agent Fee shall be delivered by the Escrow Agent to Zanett by wire
transfer, in accordance with Zanett's written wiring instructions, from the
funds on deposit in the escrow account simultaneously with payment for and
delivery of the Units at each Closing under the Securities Purchase Agreement as
provided in paragraph 2(a) above. In addition, the Placement Agent shall be
entitled to receive from the Company a non-accountable expense allowance (the
"Expense Allowance") equal to nine-tenths of one percent (0.9%) of the aggregate
Purchase Price. Such Expense Allowance shall be
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delivered in the same manner as the Placement Agent Fee. In addition, the
Company shall pay to the Placement Agent, on the first day of each calendar
month during which any Debentures or Warrants are outstanding, a monitoring and
financial advisory fee of One Thousand Seven Hundred Fifty Dollars ($1,750.00)
for which the Placement Agent shall periodically consult with the Company
concerning market conditions, investor perceptions of the Company and related
matters.
d. Stock and Warrants. In addition to the Placement Agent Fees, at
the First Closing under the Securities Purchase Agreement, the Company shall
issue to the Placement Agent or to its officers set forth on Schedule 2(d), each
of whom is an accredited investor (the "Zanett Officers"), as directed by the
Placement Agent (i) 18.1818 shares of the Company's Common Stock for each Unit,
(ii) CBS Warrants for 10.9091 CBS Shares for each Unit and (ii) Warrants, in
substantially the form attached hereto as Exhibit A, to purchase, in the
aggregate, 41.6667 shares of the Company's Common Stock for each Unit
("Placement Warrants"). At each of the Second Closing and the Third Closing
under the Security Purchase Agreement, the Company shall issue to the Placement
Agent or the Zanett Officers, as directed by the Placement Agent, Placement
Warrants to purchase, in the aggregate, 65.1515 shares of the Company's Common
Stock for each Unit. The shares of the Company's Common Stock issuable upon
exercise of the Placement Warrants shall hereinafter be referred to as the
"Placement Warrant Shares." The Company shall grant the Placement Agent certain
registration rights under the Securities Act with respect to the Placement
Warrant Shares pursuant to the Registration Rights Agreement.
e. Expenses of Offering. The Company shall be responsible for and
shall bear all expenses directly and necessarily incurred by it in connection
with the Offering. In the event the Closing does not occur during the Term, the
Company shall reimburse the Placement Agent for its reasonable attorneys' fees
and expenses and up to $3,500 of other reasonable, actual and accountable
out-of-pocket expenses incurred in connection with the Offering.
f. Non-Circumvention Period; Lockup Period; Additional Financing
Period.
(i) The Company agrees that, during the period beginning on
the date hereof and ending four (4) years following the later of the date hereof
and the date of the Closing (as defined in Section 2(a) hereof) (the
"Non-Circumvention Period"), it will not, without the prior written consent of
the Placement Agent, negotiate or contract or have discussions concerning any
such matters with any Investor or any other party introduced to the Company by
Placement Agent, each of which are listed Schedule 2(f)(i) hereto to obtain
additional financing in any form.
(ii) The Company agrees that, during the period beginning on
the date hereof and ending two (2) years following the first Closing Date (the
"Lock-Up Period"), it will not, without the prior written consent of the
Placement Agent, contract with any other party to obtain additional financing in
which any below market equity or equity-linked securities are issued
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("Future Offerings"); provided, that if at such time the outstanding principal
balance of, and accrued but unpaid interest on, the Debentures is less than 40%
of the aggregate original principal amount of the Debentures, and such Future
Offering is for an aggregate amount (including the aggregate exercise price of
warrants or similar rights) of $1,000,000 or less, such consent shall not
unreasonably withheld. In addition, and independent of the foregoing sentence,
the Company will not conduct any Future Offering during the period beginning on
the date hereof and ending one year after the conclusion of the Lock-Up Period
unless it shall have first delivered to the Placement Agent written notice of
such proposed Future Offering, including the terms and conditions thereof, and
providing the Placement Agent an option, which option must be exercised within
fifteen (15) days following delivery of such notice, to act as the placement
agent for such Future Offering on terms, including fees, no less favorable to
the Company as those set forth in such notice and to place the securities being
offered by the Company in the Future Offering to the Investors or to such other
persons or entities as the Placement Agent shall determine (the limitations
referred to in this and the immediately preceding sentence are hereinafter
collectively referred to as the "Capital Raising Limitation"). In the event that
the Placement Agent does not exercise the foregoing option, the Company may
proceed with such Future Offering on the terms and conditions set forth in the
notice to the Placement Agent. The Capital Raising Limitation shall not apply to
any transaction involving issuances of securities as consideration in a merger,
consolidation or acquisition of assets, or in connection with any strategic
partnership or joint venture (the primary purpose of which is not to raise
equity capital), or as consideration for the acquisition of a business, product
or license by the Company. The Capital Raising Limitation shall also not apply
to (i) the issuance of securities pursuant to an underwritten public offering,
(ii) the issuance of securities upon exercise or conversion of the Company's
options, warrants or other convertible securities outstanding as of the date
hereof or issued as part of the Offering, (iii) the grant of additional options
or warrants, or the issuance of additional securities, under any Company stock
option, bonus or restricted stock plan for the benefit of the Company's
employees, consultants or directors, or (iv) the issuance of securities upon the
exercise of warrants issued to a bank or other commercial financing institution
as an "equity kicker" in connection with floor plan financing or financing of
the acquisition of substantially all of the assets or equity securities of other
entities. In the event that the Purchasers (as defined in the Securities
Purchase Agreement) exercise their right to elect not to fund the second or
third tranche of the Units (as described in the Securities Purchase Agreement),
the provisions of the first sentence of this Section 2(f)(ii) shall no longer be
applicable and, for purposes of the second sentence of this Section 2(f)(ii),
the Capital Raising Limitations thereafter shall not apply to any Future
Offering the terms and conditions of which are not materially more favorable to
the investor than the second and third tranches under the Securities Purchase
Agreement.
3. Representations and Warranties and Covenants.
a. The Company represents and warrants to Zanett that:
(i) This Agreement has been duly authorized, executed and
delivered by the Company and, assuming the due execution by Zanett, constitutes
a legal, valid and binding
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agreement of the Company, enforceable against the Company in accordance with its
terms except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, and other laws of general
application affecting enforcement of creditors' rights generally, as limited by
laws relating to the availability of specific performance, injunctive relief, or
other equitable remedies, or (ii) to the extent the indemnification provisions
contained in the Registration Rights Agreement may be limited by applicable
federal or state securities laws.
(ii) The Company has delivered to Zanett true and complete
copies of the SEC Documents (as defined in the Securities Purchase Agreement)
filed by the Company on or after December 31, 1996 with the Securities and
Exchange Commission (the "SEC") pursuant to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
(iii) The Company recognizes and confirms that Zanett (i) will
use and rely primarily on the SEC Documents and on information available from
generally recognized public sources in performing the services contemplated by
this Agreement without having independently verified the same; (ii) is
authorized to assist the Company in the structuring of the Offering with any
prospective purchaser who is an "accredited investor" as defined in Regulation D
under the Securities Act and to provide copies of the SEC Documents and forms of
the Securities Purchase Agreement and other Offering Documents to prospective
purchasers of the Company's securities in connection with the performance of
Zanett's services hereunder; and (iii) does not assume responsibility for the
accuracy or completeness of the SEC Documents.
(iv) In addition to the foregoing, the Company hereby
incorporates by reference all of the representations and warranties and
covenants to be set forth in the Securities Purchase Agreement and the other
Offering Documents with the same force and effect as if specifically set forth
herein.
(v) So long as the Debentures remain outstanding, (i) the
Company shall provide Zanett, within three (3) business days of the filing or
preparation thereof, with such financial and other statements including, without
limitation, management letters and consolidated financial statements as are
provided to any other lenders to or security holders of the Company; (ii) in the
event any current officer, director, employee, consultant or other agent ceases,
subsequent to the date hereof, to have such relationship with the Company and
such cessation has, or is likely to have, a material adverse effect on the
Company, taken as a whole, the Company shall promptly notify Zanett of such
event, which notification shall comprehensively describe such circumstances;
(iii) the Company shall, on a regular basis, provide to Zanett updates of any
material litigation and/or governmental proceedings which could reasonably be
expected to have a material adverse effect on the business of the Company; and
(iv) the Company shall promptly provide to Zanett notice of any event of default
under any agreement or other document with any lender or holder of any security
of the Company, which default reasonably could be expected to have a material
adverse effect on the Company, taken as a whole. Zanett shall hold in confidence
and shall not make any disclosure (except to an Investor who has agreed in
writing to restrictions
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on disclosure substantially equivalent to this Subsection) or use of (including
without limitation market activities) any such information disclosed to it
pursuant to clauses (i) through (iv) above which the Company determines in good
faith to be confidential, and of which determination Zanett is so notified,
unless (a) the release of such information is ordered pursuant to a subpoena or
other order from a court or government body of competent jurisdiction or (b) the
information has been made generally available to the public other than by
disclosure in violation of this or any other agreement. Anything contained
herein to the contrary notwithstanding, Placement Agent's obligations to proceed
with the Offering is conditioned upon Placement Agent's due diligence
investigation of the Company. Zanett shall be fully informed by the Company of
any events which might have a material affect on the financial condition of the
Company. If, in Zanett's opinion, the condition of the Company, financial or
otherwise, and its prospects are affected in a material and/or adverse manner
and do not fulfill Zanett's expectations, Zanett shall have the sole discretion
to review and determine its continued interest in the Offering. In the event
that Zanett elects not to proceed with the Offering, this Agreement shall
terminate.
(vi) So long as the Debentures remain outstanding, the Company
shall make available, during regular business hours on one (1) Business Day's
prior written notice, all records and books of account of the Company for
inspection by Zanett. The Company shall permit Zanett, during regular business
hours on one (1) Business Day's prior written notice, to inspect its properties.
(vii) The Company has the requisite corporate power and
authority to enter into and perform its obligations under this Agreement and to
issue the Placement Warrants in accordance with the terms hereof. The execution
and delivery of this Agreement and the Placement Warrants by the Company and the
consummation by it of the transactions contemplated hereby (including, without
limitation, the issuance of the Placement Warrants and the reservation for
issuance and issuance of the Placement Warrant Shares issuable upon exercise of
the Placement Warrants) have been duly authorized by the Company's Board of
Directors and no further consent or authorization of the Company, its Board of
Directors, or its shareholders is required, except for the shareholder approval
described in Section 4(n) of the Securities Purchase Agreement.
(viii) The Placement Warrant and the Placement Warrant Shares
issuable upon the exercise thereof are duly authorized and, upon issuance of the
Placement Warrants in accordance with the terms hereof and the Warrant Shares
upon exercise of the Placement Warrants in accordance with the terms thereof,
will be validly issued, fully paid and non-assessable, and free from all taxes,
liens and charges with respect to the issue thereof and shall not be subject to
preemptive rights or other similar rights of the shareholders of the Company,
other than restrictions on transfer imposed by federal and state securities
laws.
(ix) The execution, delivery and performance of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby will not (A) result in a violation of the Company's
Certificate of Incorporation or By-laws or (B)
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conflict with, or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any material agreement,
indenture or instrument to which the Company is a party, or, to its knowledge,
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 by which any property or asset of the Company is bound or affected
(except, with respect to clause (B), for such conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations as would not,
individually or in the aggregate, have a material adverse effect on the
operation, properties, prospects or financial condition of the Company
("Material Adverse Effect")). The Company is not in violation of its Certificate
of Incorporation or By-laws and is not in default (and no event has occurred
which with notice or lapse of time of both would put the Company in default)
under, nor has there occurred any event giving others (with notice or lapse of
time or both) any rights of termination, amendment, acceleration or cancellation
of, any agreement, indenture or instrument to which the Company is a party,
except for possible defaults as would not, individually or in the aggregate,
have a Material Adverse Effect. The business of the Company is not being
conducted, and shall not be conducted, in violation of any law, ordinance or
regulation of any governmental entity, except for possible violations which
either singly or in the aggregate do not have a Material Adverse Effect. Except
as specifically contemplated by this Agreement and as required under the
Securities Act and any applicable state securities laws, 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 this Agreement in accordance with the terms hereof.
(x) The Company shall at all times have authorized, and
reserved for the purpose of issuance, a sufficient number of Placement Warrant
Shares to provide for the full exercise of the outstanding Placement Warrants.
(xi) The Company shall promptly secure the listing of the
Placement Warrant Shares upon each national securities exchange or automated
quotation system, if any, upon which shares of Common Stock are then listed
(subject to official notice of issuance) and shall maintain, so long as any
other shares of Common Stock shall be so listed, such listing of all Placement
Warrant Shares from time to time issuable upon exercise of the Placement
Warrants.
b. The Zanett Officers each individually represent and warrant to
the Company that:
(i) The Zanett Officer is acquiring the Placement Warrants and
the Placement Warrant Shares for its own account and not with a present view
towards the public sale or distribution thereof.
(ii) The Zanett Officer is an "Accredited Investor" as that
term is defined in Rule 501(a) of Regulation D.
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(iii) The Zanett Officer understands that the Placement
Warrants and the Placement Warrant Shares are being issued to the Zanett Officer
in reliance upon specific exemptions from the registration requirements of
United States federal and state securities laws and that the Company is relying
upon the truth and accuracy of, and the Zanett Officer's compliance with, the
representations, warranties, agreements, acknowledgments and understandings set
forth herein in order to determine the availability of such exemptions and the
eligibility of the Zanett Officer to acquire the Placement Warrants and the
Placement Warrant Shares.
(iv) The Zanett Officer understands that (i) except as
provided in the Registration Rights Agreement, the sale or resale of the
Placement Warrants and the Placement Warrant Shares issuable upon exercise
thereof have not been and are not being registered under the Securities Act or
any state securities laws, and may not be transferred unless (a) the resale of
the Securities has been registered thereunder; or (b) the Zanett Officer shall
have delivered to the Company an opinion of counsel (which opinion shall be in
form, substance and scope customary for opinions of counsel in comparable
transactions) to the effect that the securities to be sold or transferred may be
sold or transferred pursuant to an exemption from such registration; or (c) the
Securities are sold under Rule 144 promulgated under the Securities Act (or a
successor rule) ("Rule 144"); or (d) the Securities are sold or transferred to a
non-broker dealer affiliate of the Zanett Officer who agrees to sell or
otherwise transfer such securities only in accordance with the provisions of the
terms hereof and who is an Accredited Investor; and (ii) neither the Company nor
any other person is under any obligation to register such Securities under the
Securities Act or any state securities laws (other than pursuant to the
Registration Rights Agreement). Notwithstanding the foregoing or anything else
contained herein to the contrary, such securities may be pledged as collateral
in connection with a bona fide margin account or other lending arrangement so
long as the pledgee is an accredited investor.
(v) This Agreement has been duly and validly authorized,
executed and delivered on behalf of Placement Agent and duly and validly
executed and delivered by each Zanett Officer and is the valid and binding
agreement of each of them enforceable against each of them in accordance with
its terms.
(vi) Neither the Placement Agent nor the Zanett Officers have
any authority to act on behalf of, or otherwise bind, the Company.
c. The Placement Agent represents and warrants to the Company that:
(i) The Placement Agent is (i) a registered broker-dealer
under the Securities Exchange Act of 1934, (ii) a member in good standing of the
National Association of Securities Dealers, Inc. ("NASD") and (iii) registered
as a broker-dealer in any state in which it is required to be in order to offer
and sell the Securities in such state.
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(ii) The Placement Agent will cooperate with the Company to
ensure that the offering and sale of the Securities complies with the
requirements of Rule 506, including, without limitation, the general conditions
contained in Regulation D, the federal securities laws and the state securities
or "blue sky" laws of the jurisdiction in which the Securities are offered, and
the Placement Agent will not make an offer of Securities in any jurisdictions in
which such offer would be unlawful. The Placement Agent shall fully conform with
all Federal, state and NASD rules and regulations (including without limitation
those described in NASD Notices to Members) with respect to escrow provisions
and requirements.
(iii) The Placement Agent will not offer the Securities by any
form of general solicitation or general advertising (as prohibited by Rule
502(c) of Regulation D), including any communication published in any newspaper,
magazine or electronic media, or by any seminar or meeting whose attendees have
been invited by any general solicitation or general advertising. Additionally,
the Placement Agent will not employ any sales literature except the Securities
Purchase Agreement.
(iv) The Placement Agent has the necessary power and authority
to enter into this Agreement and to consummate the transactions contemplated
hereby.
(v) The Placement Agent is a corporation duly organized and
validly existing under the laws of the state of Delaware; and the consummation
of the transactions herein contemplated will not result in any violation of, or
be in conflict with, or constitute a default under, any material agreement or
instrument to which the Placement Agent is a party or by which the Placement
Agent or its properties are bound, or to its knowledge, any judgment, decree,
order or any statute, rule or regulation applicable to the Placement Agent.
(vi) Neither the Placement Agent nor any of its directors or
officers are subject to disqualification under Regulation D or applicable state
securities laws.
4. Publicity. The Company shall not make any reference to Zanett, the
Zanett Officers or to any of their affiliates in any release or other
communication without Zanett's prior written consent, which shall not be
unreasonably withheld or delayed; provided, that the foregoing shall not
prohibit the Company from complying with applicable law. Without Zanett's prior
written consent, which shall not be unreasonably withheld or delayed, no advice
rendered by Zanett in connection with the services performed by Zanett pursuant
to this Agreement will be quoted by the Company, its affiliates or
representatives nor will any such advice be referred to in any report, document,
release or other communication, whether oral or written, prepared or issued or
transmitted by such person, except to the extent required by law (in which case
the appropriate party shall so advise Zanett in writing prior to such use and
shall consult with Zanett with respect to the form and timing of the
disclosure).
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5. Indemnification and Contribution.
a. To the extent permitted by law, the Company will indemnify, hold
harmless and defend Zanett and each of its directors, officers, partners,
members, employees, agents and each person who controls Zanett within the
meaning of the Securities Act or the Exchange Act, if any, (each, a "Zanett
Indemnified Person"), against any joint or several losses, claims, damages,
liabilities or expenses (collectively, together with actions, proceedings or
inquiries by any regulatory or self-regulatory organization, whether commenced
or threatened, in respect thereof, "Claims") to which any of them may become
subject insofar as such Claims arise out of or are based upon: (i) any
transaction contemplated by this Agreement, the retention of Zanett as Placement
Agent under this Agreement, the performance of services by Zanett hereunder or
any involvement or alleged involvement of Zanett in the Offering or (ii) any
breach of any of the Company's representations, warranties or covenants
contained herein. The Company shall reimburse each of the Zanett Indemnified
Persons, promptly as such expenses are incurred and are due and payable, for any
reasonable legal fees or other reasonable expenses incurred by them in
connection with investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 5(a) shall not (i) apply in instances where the Claims
were the result of Zanett's gross negligence or based on Zanett's wilful
misconduct, and (ii) apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of the Company, which
consent shall not be unreasonably withheld.
b. To the extent permitted by law, Zanett will indemnify, hold
harmless and defend the Company and each of its directors, officers, partners,
members, employees, agents and each person who controls the Company within the
meaning of the Securities Act or the Exchange Act, if any, (each, a "Company
Indemnified Person"), against any joint or several losses, claims, damages,
liabilities or expenses (collectively, together with actions, proceedings or
inquiries by any regulatory or self-regulatory organization, whether commenced
or threatened, in respect thereof, "Claims") to which any of them may become
subject insofar as such Claims arise out of or are based upon: (i) any failure
by Zanett to comply with Federal, state or any other applicable securities laws
or (ii) any breach of any of Zanett's representations, warranties or covenants
contained herein. Zanett shall reimburse each of the Company Indemnified
Persons, promptly as such expenses are incurred and are due and payable, for any
reasonable legal fees or other reasonable expenses incurred by them in
connection with investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 5(b) shall not apply to amounts paid in settlement of
any Claim if such settlement is effected without the prior written consent of
Zanett, which consent shall not be unreasonably withheld.
c. Promptly after receipt by a Zanett Indemnified Person or Company
Indemnified Person, as the case may be (each an "Indemnified Person") under this
Section 5 of notice of the commencement of any action (including any
governmental action), such Indemnified Person shall, if a Claim in respect
thereof is made against the Company under Section 5(a) or
11
against Zanett under Section 5(b), deliver to the Company or Zanett, as the case
may be (each an "Indemnifying Party") a written notice of the commencement
thereof, and the Indemnifying Person shall have the right to participate in,
and, to the extent the Indemnifying Person so desires, to assume control of the
defense thereof with counsel mutually satisfactory to the Indemnifying Person
and the Indemnified Person; provided, however, that an Indemnified Person shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the Indemnifying Person, if, in the reasonable opinion of counsel retained by
the Indemnified Person, the representation by such counsel of the Indemnified
Person and the Indemnifying Person would be inappropriate due to actual or
potential differing interests between such Indemnified Person and any other
party represented by the Indemnifying Person's counsel in such proceeding. The
Indemnifying Person shall pay for only one separate legal counsel for the
Indemnified Persons, and such legal counsel shall be selected by the
Indemnifying Person. The failure to deliver written notice to the Indemnifying
Person within a reasonable time of the commencement of any such action shall not
relieve the Indemnifying Person of any liability to the Indemnified Person under
this Section 5, except to the extent that the Indemnifying Person is actually
prejudiced in its ability to defend such action. The indemnification required by
this Section 5 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as such expense, loss, damage or
liability is incurred and is due and payable.
d. To the extent any indemnification by the Indemnifying Person of
an Indemnified Person is prohibited or limited by law or otherwise unavailable
in respect of any Claim, the Indemnifying Person agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 5 to the fullest extent permitted by law. In this regard, the
Indemnifying Person shall contribute to the amount paid or payable by such
Indemnified Person as a result of any such Claim (i) in such portion as is
appropriate to reflect the relative benefits received by the Indemnifying
Person, on the one hand, and the Indemnified Person, on the other, from the
structuring and issuance of the securities in the Offering or any other
transaction in which Zanett rendered services hereunder or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Indemnifying
Person, on the one hand, and of the Indemnified Person, on the other, in
connection with untrue statements or omissions or other actions (or alleged
untrue statements, omissions or other actions) which resulted in such Claim as
well as any other relevant equitable considerations. The relative benefits
received by the Indemnifying Person, on the one hand, and the Indemnified
Person, on the other, shall be deemed to be in the same proportion as the total
gross proceeds received by the Indemnifying Person in the Offering or any other
financing bears to such Indemnified Person's compensation. The relative fault of
the Indemnifying Person on the one hand and of the Indemnified Person on the
other shall be determined by reference to, among other things, whether such
untrue statements or omissions or other actions (or alleged untrue statements,
omissions or other actions) relate to information supplied or action taken by
the Indemnifying Person, on the one hand, by the Indemnified Person, on the
other, and the relevant persons' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statements,
omission or actions. The amount paid or payable by a party as
12
a result of the Claim shall be deemed to include any legal or other fees or
expenses reasonably incurred by such party in connection with investigating or
defending any action or claim. The parties agree that it would not be just and
equitable if contribution pursuant to this Section 5 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to above.
e. The aforesaid indemnity and contribution agreements shall apply
to any related activities engaged in by any Indemnified Person prior to this
date and to any modification of this Agreement, and shall remain in full force
and effect regardless of any investigation made by or on behalf of either party
or any of its respective agents, employees, officers, directors or controlling
persons and shall survive the issuance of any securities in any transaction
referred to hereunder (including the Offering) and any termination of this
Agreement or Placement Agent's engagement hereunder. The Indemnifying Person
agrees to promptly notify the Indemnified Person of the commencement of any
litigation or proceeding against it or any of its directors, officers, agents or
employees in connection with the transactions contemplated hereby.
f. The Indemnifying Person also agrees that no Indemnified Person
shall have any liability (whether direct or indirect, in contract or tort or
otherwise) to the Indemnifying Person, its owners, creditors or security holders
for or in connection with advice or services rendered or to be rendered by
Zanett pursuant to this Agreement, the transactions contemplated hereby or any
Indemnified Person's actions or inactions in connection with any such advice,
services or transactions except for liabilities (and related expenses) of the
Indemnifying Person that are determined by a final judgment of a court of
competent jurisdiction to have resulted primarily from such Indemnified Person's
gross negligence or wilful misconduct in connection with any such advice,
actions, inactions or services.
6. Survival of Certain Provisions. The representations, warranties,
covenants and provisions contained in Section 2(f), Section 3, Section 4 and
Section 5 hereof shall survive in full force and effect until that date which is
three (3) years from the date hereof (or such longer period as may be specified
in such provisions) regardless of (a) any completion or termination of any
financing contemplated by this Agreement (including the Offering), (b) any
termination of this Agreement, or (c) any investigation made by or on behalf of
Placement Agent or any affiliate of Placement Agent, and shall be binding upon,
and shall inure to the benefit of, any successors, assigns, heirs and personal
representatives of the Company, Zanett, the Indemnified Parties and any holder
of Placement Warrants.
7. Miscellaneous.
a. All notices, requests, demands and other communications which are
required or may be given hereunder shall be in writing and shall be deemed to
have been duly given when delivered personally, receipt acknowledged or five (5)
days after being sent by registered or certified mail, return receipt requested,
postage prepaid. All notices shall be made to
13
the parties at the addresses designated above or at such other or different
addresses which party may subsequently provided with notice thereof, and, to
their respective legal counsel, as follows:
(i) If to Placement Agent, to
The Zanett Securities Corporation
Tower 49, 31st Floor
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxx
- with a copy to -
Klehr, Harrison, Xxxxxx, Branzburg & Xxxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxx, Esquire
(ii) If to the Company, to
Fidelity Holdings, Inc.
00-00 Xxx Xxxxxxx Xxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxx, President
-with a copy to -
Xxxxxxx Krooks Xxxx & Ball P.C.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxxxx, Esquire
b. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument. This Agreement, once executed by a
party, may be delivered to the other parties hereto by facsimile transmission of
a copy of this Agreement bearing the signature of the party so delivering this
Agreement.
c. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York (without regard to its conflict of laws
provisions). The Company hereby agrees to submit to the exclusive jurisdiction
of an arbitration panel of the National Association of Securities Dealers, Inc.
located in the City of New York in connection
14
with any suit, action or proceeding related to this Agreement or any of the
matters contemplated hereby, irrevocably waives any defense of lack of personal
jurisdiction and irrevocably agrees that all claims in respect of any suit,
action or proceeding may be heard and determined in by such panel. The Company
irrevocably waives, to the fullest extent it may effectively do so under
applicable law any objection which it may now or hereafter have to the laying of
venue of any such suit, action or proceeding brought before any such court and
any claims that any such suit, action or proceeding brought in any such
arbitration panel has been brought in an inconvenient forum. Each party further
agrees to pay or reimburse the other party for all reasonable costs and expenses
incurred by the other party in connection with the enforcement of any of its
rights under this Agreement, including without limitation, all attorneys' fees
and expenses of its counsel.
d. The section headings in this Agreement have been inserted as a
matter of convenience of reference and are not a part of this Agreement.
e. This Agreement may not be modified or amended except in writing
duly signed by the parties hereto.
f. If any term, provision, covenant or restriction contained in this
Agreement is held by a court of competent jurisdiction or other authority to be
invalid, void, unenforceable or against its regulatory policy, the remainder of
the terms, provisions, covenants and restrictions contained in this Agreement
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated.
g. Each party to this Agreement has participated in the negotiation
and drafting of this Agreement. As such, the language used herein shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction will be applied against any party to
this Agreement.
15
Please sign and return the original and one copy of this letter to
indicate your acceptance of the terms set forth herein whereupon this letter and
your acceptance shall constitute a binding agreement between you and the
Company.
Very truly yours,
FIDELITY HOLDINGS, INC.
By: /s/ Xxxxx Xxxxx
---------------------------------
Name: Xxxxx Xxxxx
Title: President
Accepted and Agreed to this 25th day of January, 1999.
THE ZANETT SECURITIES CORPORATION
By: /s/ Xxxxxxx Xxxxxxxx
---------------------------
Name: Xxxxxxx Xxxxxxxx
Title: President
/s/ Xxxxxxx Xxxxxxxx
---------------------------------
Xxxxxxx Xxxxxxxx
/s/ Xxxxx XxXxxxxx
---------------------------------
Xxxxx XxXxxxxx
/s/ Xxxx Xxxxxxx
---------------------------------
Xxxx Xxxxxxx
16
Schedule 2(d)
Number of Warrants Number of Shares of Number of CBS
Officer per Unit Common Stock per Unit Warrants per Unit
------- -------- --------------------- -----------------
Xxxxxxx Xxxxxxxx 1st: 15.6250 6.8182 4.0909
2nd: 24.4318
3rd: 24.4318
Xxxxx XxXxxxxx 1st: 15.6250 6.8182 4.0909
2nd: 24.4318
3rd: 24.4318
Xxxx Xxxxxxx 1st: 10.4167 4.5455 2.7273
2nd: 16.2879
3rd: 16.2879
Total
