PLACEMENT AGREEMENT
-------------------
This Agreement is made and entered into as of this 6th day of November,
2001 by and between Xxxxxx Xxxxxxx & Company, Inc. ("Xxxxxx Xxxxxxx") and
Atlantic Technology Ventures, Inc. ("the Company").
In consideration of the mutual promises made herein and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
(Note: All capitalized terms contained in this Agreement and not defined
herein shall have the meaning ascribed to them in the Securities Purchase
Agreement.)
1. Purpose: The Company hereby engages Xxxxxx Xxxxxxx for the term
specified in Paragraph 2 hereof to act as placement agent pursuant to the terms
and conditions set forth herein in connection with a proposed private placement
of the Securities to a limited number of accredited investors (the "Offering").
2. Term: This Agreement shall be effective from the date hereof until
December 1, 2001.
3. Disclosure of Information. Except as contemplated by the terms hereof or
as required by applicable law, Xxxxxx Xxxxxxx shall keep confidential all
material non-public information provided to it by the Company, and shall not
disclose such information to any third party, other than such of its employees
and advisors as Xxxxxx Xxxxxxx determines to have a need to know.
4. Closing; Placement and Fees.
(a) Conditions to Xxxxxx Xxxxxxx'x Obligations. The
obligations of Xxxxxx Xxxxxxx hereunder are subject to the accuracy of the
representations and warranties of the Company herein contained as of the date
hereof, and, as of the Closing Date, to the performance by the Company of its
obligations hereunder and to the following additional conditions:
(i) Due Qualification or Exemption. (A) The Offering
contemplated by this Agreement shall become qualified or be exempt from
qualification under the securities laws of the jurisdictions in which the
Securities are contemplated to be offered not later than the Closing Date,
subject to any filings to be made thereafter and (B) at the applicable Closing
Date no stop order suspending the sale of the Securities shall have been issued,
and no proceeding for that purpose shall have been initiated or threatened;
(ii) No Material Misstatements. The SEC Documents do not
contain an untrue statement of a fact, which in the opinion of Xxxxxx Xxxxxxx,
is material, or omit to state a fact, which, in the opinion of Xxxxxx Xxxxxxx,
is material and is
required to be stated therein, or is, in the opinion of Xxxxxx Xxxxxxx,
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading;
(iii) Compliance with Agreements. The Company shall have
complied with all agreements and satisfied all conditions on its part to be
performed or satisfied hereunder and under the Securities Purchase Agreement at
or prior to each Closing;
(iv) Corporate Action. The Company shall have taken all
corporate action necessary in order to permit the valid execution, delivery and
performance of the SEC Documents by the Company, including, without limitation,
obtaining the approval of the Company's board of directors, for the execution
and delivery of the SEC Documents, the performance by the Company of its
obligations hereunder and the Offering contemplated hereby;
(v) Opinion of Counsel to the Company. Xxxxxx Xxxxxxx
shall have received an opinion of counsel to the Company, substantially in the
form as attached hereto as Exhibit B (stating that each of the Investors may
rely thereon as though addressed directly to such Investor), dated as of each
Closing Date.
(vi) Officer's Certificate. Xxxxxx Xxxxxxx shall receive
an Officer's Certificate, signed by the appropriate parties and dated as of the
Closing Date. These certificates shall state, among other things, that the
representations and warranties contained herein hereof are true and accurate in
all material respects at such Closing Date with the same effect as though
expressly made at such Closing Date;
(c) Blue Sky. The Company shall take such action as is
necessary to qualify the Securities for sale to the Investors under the
Securities Purchase Agreement under applicable securities (or "blue sky") laws
of the states of the United States (or to obtain an exemption from such
qualification). In particular, if any Investor is located in any of the states
of New York, New Jersey, Illinois, Florida, California, Texas, Pennsylvania,
Georgia, Colorado, Oregon, Arizona, Connecticut, Ohio, Minnesota, Massachusetts,
Washington, Delaware, District of Columbia, Maryland, Kansas, Rhode Island,
South Dakota or Louisiana, the Company shall make any notice filings that are
required under the securities (or "blue sky") laws of those states in connection
with sale of the Securities to the Investors.
(d) Placement Fees and Expenses. At the Closing, the Company
shall at such Closing pay to Xxxxxx Xxxxxxx as a result of investments made by
individuals or entities introduced to the Company by Xxxxxx Xxxxxxx a commission
(the "Cash Commission") equal to seven percent (7%) of the aggregate purchase
price of the Securities sold to such investor. The Company shall also pay all
expenses in connection with qualifying the Securities for sale to the Investors
under the Securities Purchase Agreement under applicable securities or blue sky
laws of the states of the United States (or in obtaining an exemption from such
qualification). In addition, at the Closing the
2
Company shall issue to Xxxxxx Xxxxxxx, and/or its respective designees, warrants
(the "Placement Warrants") to acquire a number of newly issued shares of the
Company's Common Stock equal to 10% of the Securities sold to issued individuals
or entities introduced to the Company by Xxxxxx Xxxxxxx, for $.001 per warrant,
exercisable for a period of 5 years from the Closing Date at an exercise price
equal to 110% of the Purchase Price. The shares issuable upon exercise of the
Placement Warrants shall be entitled to the registration rights described in
Article V of the Securities Purchase Agreement. The shares underlying the
Placement Warrants shall not be subject to redemption by the Company nor shall
they be callable or mandatorily convertible by the Company. The Placement
Warrants shall not be transferred, sold, assigned or hypothecated for a period
of six months; provided, however, that Xxxxxx Xxxxxxx may assign in whole or in
part during such period to any NASD member participating in the Offering, any
officer or employee of Xxxxxx Xxxxxxx, or any such NASD member. The Placement
Warrants shall contain a cashless exercise feature, anti-dilution provisions and
registration rights comparable to those provided Investors in Article V of the
Securities Purchase Agreement. Furthermore, the Company shall issue to Xxxxxx
Xxxxxxx, and/or its respective designees, that number of shares of Common Stock
("Placement Shares") equal to 10% of the number of shares of Common Stock
purchased in the Offering. The Placement Shares shall be entitled to the
registration rights described in Article V of the Securities Purchase Agreement.
(ii) The Company shall pay to Xxxxxx Xxxxxxx with
respect to any investment by any prospective Investors introduced to the Company
by such Xxxxxx Xxxxxxx ("Covered Investors") for any purchase of equity
securities by the Covered Investor from the Company during the twelve (12)
months following the Closing Date of the Offering: (A) a cash commission equal
to ten percent (10%) of the aggregate amount of any such investment and (B)
warrants to acquire a number of securities of even class with the securities
purchased by any such Covered Investor equal to 10% of the number of securities
purchased by such Covered Investor.
(e) No Adverse Changes. There shall not have occurred, at
any time prior to each Closing (i) any domestic or international event, act or
other similar occurrence which has disrupted, or in Xxxxxx Xxxxxxx'x sole
determination, will materially disrupt, the securities markets; (ii) a general
suspension of, or a general limitation on prices for, trading in securities on
the New York Stock Exchange, the American Stock Exchange, the National
Association of Securities Dealers Automated Quotation System ("NASDAQ") National
Market, the NASDAQ SmallCap Market, or on the OTC Bulletin Board for a minimum
of one-trading day; (iii) any outbreak of major hostilities (other than those
hostilities being engaged in on the date of this Agreement) or other national or
international calamity having a material effect on the performance of this
Agreement; (iv) any banking moratorium declared by a state or federal authority;
(v) any moratorium declared in foreign exchange trading by major international
banks or other persons; (vi) any material interruption in the mail service or
other means of communication within the United States (other than the
interruption being experienced on the date of this Agreement); (vii) any
materially adverse change in the business, properties, assets, results of
operations, prospects or financial condition of the Company;
3
or (viii) any change in the market for securities in general or in political,
financial, or economic conditions which, in Xxxxxx Xxxxxxx' reasonable judgment,
makes it inadvisable to proceed with the offering, sale, and delivery of the
Securities.
5. Covenants of the Company.
(a) Use of Proceeds. The net proceeds from the offering will
be used for working capital and general corporate purposes.
(b) Notification. The Company shall notify Xxxxxx Xxxxxxx
immediately, and in writing, (i) when any event shall have occurred during the
period commencing on the date hereof and ending on the Closing Date as a result
of which the SEC 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 in light of the circumstances under
which they were made, and (ii) of the receipt of any notification with respect
to the modification, rescission, withdrawal or suspension of the qualification
or registration of the Securities, or of any exemption from such registration or
qualification, in any jurisdiction. The Company will use its 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 Xxxxxx Xxxxxxx so requests, to obtain the lifting thereof as
promptly as possible.
(c) Press Releases, Etc. Except as otherwise required by
applicable law or the rules of a regulatory body, the Company shall not, during
the period commencing on the date hereof and ending thirty (30) days after the
Closing Date, issue any press release or other communication, make any written
or oral statement to any media organization or publication or hold any press
conference, presentation or seminar, or engage in any other publicity with
respect to the Company, their financial condition, results of operations,
business, properties, assets, or liabilities, or the Offering, without the prior
written consent of Xxxxxx Xxxxxxx except in the ordinary course of business and
not for the purpose of soliciting any interest in the Offering.
(d) Restrictions on Securities. Except as otherwise
contemplated hereby, during the 24 month period following the completion of the
Offering, the Company will not extend the expiration date or lower the exercise
or the conversion price of any options, warrants, convertible securities or
other security purchase rights without the prior written consent of Xxxxxx
Xxxxxxx (except as a result of any stock splits, reverse stock splits and
dividends).
(e) No Offerings. Pending completion or termination of the
Offering in accordance with the terms of this Agreement, the Company agrees that
it shall not enter into an agreement (whether binding or not) with any other
person or entity relating to a possible public or private offering or placement
of its securities (in connection with a corporate partnership, strategic
alliance or government funding) or any other transaction which would prevent the
consummation of the Offering.
4
(f) No Statements. The Company shall not use the name of
Xxxxxx Xxxxxxx or any officer, director, employee or shareholder thereof in any
press release regarding the Offering without the express written consent of such
party and such person.
6. Expenses of Xxxxxx Xxxxxxx: In addition to the fees payable hereunder, and
regardless of whether any transaction set forth above is consummated, the
Company shall reimburse Xxxxxx Xxxxxxx for all fees and disbursements of Xxxxxx
Xxxxxxx' counsel which amount shall be $10,000 payable to Xxxxxx X. XxXxxxx and
Xxxxxx Xxxxxxx' travel and out-of-pocket expenses incurred in connection with
the services performed by Xxxxxx Xxxxxxx pursuant to this Agreement, including
without limitation, copy costs for any offering booklets distributed to
investors or potential investors, hotels, food and associated expenses and
long-distance telephone calls. The Company is not required to reimburse any
expenses incurred by Xxxxxx Xxxxxxx unless the Company approves them in writing.
7. Liability of Xxxxxx Xxxxxxx: The Company acknowledges that all opinions
and advice (written or oral) given by Xxxxxx Xxxxxxx to the Company in
connection with Xxxxxx Xxxxxxx' engagement are intended solely for the benefit
and use of the Company in considering the transaction to which they relate, and
the Company agrees that no person or entity other than the Company shall be
entitled to make use of or rely upon the advice of Xxxxxx Xxxxxxx to be given
hereunder, and no such opinion or advice shall be used for any other purpose or
reproduced, disseminated, quoted or referred to at any time, in any manner or
for any purpose, nor may the company make any public references to Xxxxxx
Xxxxxxx, or use Xxxxxx Xxxxxxx' name in any annual reports or any other reports
or releases of the Company without Xxxxxx Xxxxxxx' prior written consent.
8. Xxxxxx Xxxxxxx' Services to Others: The Company acknowledges that Xxxxxx
Xxxxxxx is in the business of providing financial services and consulting advice
to others. Nothing herein contained shall be construed to limit or restrict
Xxxxxx Xxxxxxx in conducting such business with respect to others, or in
rendering such advice to others.
9. Representations and Warranties of the Company.
The Company represents and warrants to Xxxxxx Xxxxxxx that:
(a) Organization and Qualification. The Company is duly incorporated, validly
existing and in good standing under the laws of the jurisdiction in which it is
incorporated, with full power and authority (corporate and other) to own, lease,
use and operate its properties and to carry on its business as and where now
owned, leased, used, operated and conducted. The Company is duly qualified to do
business and is in good standing in every jurisdiction in which the nature of
the business conducted by it makes such qualification necessary, except where
the failure to be so qualified or in good standing would not have a Material
Adverse Effect.
(b) Authorization; Enforcement. (a) The Company has all requisite corporate
power and authority to enter into and to perform its obligations under this
Agreement,
5
to consummate the transactions contemplated hereby and thereby and to issue the
Securities in accordance with the terms hereof; (b) the execution, delivery and
performance of this Agreement by the Company and the consummation by it of the
transactions contemplated hereby (including without limitation the issuance of
the Securities) 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; (c) this Agreement has been duly executed by
the Company; and (d) this Agreement constitutes a legal, valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, subject to the effect of any applicable bankruptcy, insolvency,
reorganization, or moratorium or similar laws affecting the rights of creditors
generally and the application of general principles of equity.
(c) Capitalization. As of the date hereof, the authorized capital stock of the
Company consists of (a) 50,000,000 shares of Common Stock, par value $.001 per
share, of which 7,201,480 shares are issued and outstanding and 1,109,200 shares
are reserved for issuance under the Company's employee and director stock option
plans and warrants to purchase 646,500 shares of Common Stock at exercise prices
between $0.875 and $8.05; (b) 10,000,000 shares of preferred stock, par value
$.001 per share, of which 1,375,000 are designated as Series A Convertible
Preferred Stock, with 1,146,482 shares and warrants to purchase 369,170 shares
of Series A Convertible Preferred Stock outstanding, and 2,000,000 are
designated as Series B Convertible Preferred Stock, with none outstanding. All
of such outstanding shares of capital stock are, or upon issuance will be, duly
authorized, validly issued, fully paid and nonassessable. No shares of capital
stock of the Company, including the Securities issuable pursuant to this
Agreement, are subject to preemptive rights or any other similar rights of the
stockholders of the Company or any liens or encumbrances imposed through the
actions or failure to act of the Company. Except as disclosed in Schedule 3.3
and except for the transactions contemplated hereby, (i) there are no
outstanding options, warrants, scrip, rights to subscribe for, puts, calls,
rights of first refusal, agreements, understandings, claims or other commitments
or rights of any character whatsoever relating to, or securities or rights
convertible into, exercisable for, or exchangeable for any shares of capital
stock of the Company, or arrangements by which the Company is or may become
bound to issue additional shares of capital stock of the Company; (ii) there are
no agreements or arrangements under which the Company is obligated to register
the sale of any of its securities under the Securities Act and (iii) there are
no anti-dilution or price adjustment provisions contained in any security issued
by the Company (or in any agreement providing rights to security holders) that
will be triggered by the issuance of the Securities. The Company has furnished
to the Investors true and correct copies of the Company's Certificate of
Incorporation, as amended, as in effect on the date hereof, the Company's Bylaws
as in effect on the date hereof and the terms of all securities convertible into
or exercisable for Common Stock of the Company and the material rights of the
holders thereof in respect thereto.
(d) Issuance of Securities. The Securities are duly authorized and, upon
issuance in accordance with the terms of this Agreement, will be validly issued,
fully paid and non-assessable, free from all taxes, liens, claims, encumbrances
and charges with respect to the issue thereof, will not be subject to preemptive
rights or other similar rights of stockholders of the Company, and will not
impose personal liability on the holders thereof.
6
(e) No Conflicts; No Violation. The execution, delivery and performance of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby (including, without limitation, the
issuance of the Securities) will not (i) conflict with or result in a violation
of any provision of its Certificate of Incorporation or Bylaws or (ii) violate
or conflict with, or result in a breach of any provision of, or constitute a
default (or an event which with notice or lapse of time or both could become a
default) under, or give to others any rights of termination, amendment
(including without limitation, the triggering of any anti-dilution provision),
acceleration or cancellation of, any agreement, indenture, patent, patent
license, or instrument to which the Company is a party, or (iii) result in a
violation of any law, rule, regulation, order, judgment or decree (including
U.S. federal and state securities laws and regulations and regulations of any
self-regulatory organizations to which the Company or its securities are
subject) applicable to the Company or by which any property or asset of the
Company is bound or affected (except for such conflicts, breaches, defaults,
terminations, amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse Effect).
The Company is not in violation of its Certificate of Incorporation, Bylaws or
other organizational documents and the Company is not in default (and no event
has occurred which with notice or lapse of time or both could put the Company in
default) under any agreement, indenture or instrument to which the Company is a
party or by which any property or assets of the Company is bound or affected,
except for possible defaults as would not, individually or in the aggregate,
have a Material Adverse Effect.
The Company is not conducting its business in violation of any law, ordinance or
regulation of any governmental entity, the failure to comply with which would,
individually or in the aggregate, 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 or any listing agreement
with any securities exchange or automated quotation system, 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, or to
issue and sell the Securities in accordance with the terms hereof. All consents,
authorizations, orders, filings and registrations which the Company is required
to obtain pursuant to the preceding sentence have been obtained or effected on
or prior to the date hereof.
(f) SEC Documents, Financial Statements. Since January 1, 2001, the Company has
timely 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 Exchange Act (all of the foregoing filed prior to the date hereof and all
exhibits included therein and
7
financial statements and schedules thereto and documents (other than exhibits)
incorporated by reference therein, being hereinafter referred to herein as the
"SEC Documents"). The Company has delivered to each Investor, or each Investor
has had access to, true and complete copies of the SEC Documents, except for
such exhibits and incorporated documents. As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the
Exchange Act or the Securities Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC Documents,
and 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 and the published rules and
regulations of the SEC with respect thereto. Such financial statements have been
prepared in accordance with U.S. generally accepted accounting principles,
consistently applied, 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 not include
footnotes or may be condensed or summary statements) 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 then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). Except as set forth in the financial statements included in the
SEC Documents, the Company has no liabilities, contingent or otherwise, other
than liabilities incurred in the ordinary course of business subsequent to June
30, 2001, and liabilities of the type not required under generally accepted
accounting principles to be reflected in such financial statements. Such
liabilities incurred subsequent to June 30, 2001, are not, in the aggregate,
material to the financial condition or operating results of the Company.
(g) Absence of Certain Changes. Except as disclosed in the SEC Documents or on
Schedule 3.7, since June 30, 2001, there has been no material adverse change in
the assets, liabilities, business, properties, operations, financial condition,
prospects or results of operations of the Company.
(h) Absence of Litigation. Except as disclosed in the SEC Documents, there is
no action, suit, claim, proceeding, inquiry or investigation before or by any
court, public board, government agency, self-regulatory organization or body
pending or, to the knowledge of the Company, threatened against or affecting the
Company or any of its officers or directors acting as such that could,
individually or in the aggregate, have a Material Adverse Effect.
(i) Intellectual Property Rights. The Company owns or possesses licenses or
rights to use all patents, patent applications, patent rights, inventions,
know-how, trade secrets, trademarks, trademark applications, service marks,
service names, trade names and copyrights necessary to enable it to conduct its
business as now operated (the "Intellectual Property"). Except as set forth in
the SEC Documents, there are no material
8
outstanding options, licenses or agreements relating to the Intellectual
Property, nor is the Company bound by or a party to any material options,
licenses or agreements relating to the patents, patent applications, patent
rights, inventions, know-how, trade secrets, trademarks, trademark applications,
service marks, service names, trade names or copyrights of any other person or
entity. Except as disclosed in the SEC Documents, there is no claim or action or
proceeding pending or, to the Company's knowledge, threatened that challenges
the right of the Company with respect to any Intellectual Property.
(j) Tax Status. The Company has timely made or filed all federal, state and
foreign income and all other tax returns, reports and declarations required by
any jurisdiction to which it is subject (unless and only to the extent that the
Company has set aside on its books provisions reasonably adequate for the
payment of all unpaid and unreported taxes) and has timely paid all taxes and
other governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith, and has set aside on its books provisions
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. To the knowledge
of the Company, there are no unpaid taxes in any material amount 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 not executed a waiver with
respect to the statute of limitations relating to the assessment or collection
of any foreign, federal, state or local tax. None of the Company's tax returns
is presently being audited by any taxing authority.
(k) Environmental Laws. The Company (i) is in compliance with all applicable
foreign federal, state and local laws and regulations relating to the protection
of human health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("Environmental Laws"), (ii) has received all
permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct its business and (iii) is in compliance with all
terms and conditions of any such permit, license or approval where, in each of
the three foregoing clauses, the failure to so comply would have, individually
or in the aggregate, a Material Adverse Effect
(l) No Integrated Offering. Neither the Company, nor any of its affiliates,
nor any person acting on its or their behalf, has directly or indirectly made
any offers or sales in any security or solicited any offers to buy any security
under circumstances that would require registration under the Securities Act of
the issuance of the Securities to the Investors. The issuance of the Securities
to the Investors will not be integrated with any other issuance of the Company's
securities (past, current or future) for purposes of the Securities Act or any
applicable rules of Nasdaq.
(m) No Brokers. The Company has taken no action which would give rise to any
claim by any person for brokerage commissions, finder's fees or similar payments
relating to this Agreement or the transactions contemplated hereby, except for
dealings with Xxxxxx Xxxxxxx whose commissions and fees will be paid by the
Company.
9
(n) Insurance. The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as management
of the Company believes to be prudent and customary in the businesses in which
the Company is engaged.
(o) Employment Matters. The Company is in compliance with all federal, state,
local and foreign laws and regulations respecting employment and employment
practices, terms and conditions of employment and wages and hours except where
failure to be in compliance would not have a Material Adverse Effect. The
Company is not bound by or subject to (and none of its assets or properties is
bound by or subject to) any written or oral, express or implied, contract,
commitment or arrangement with any labor union, and no labor union has requested
or, to the Company's knowledge, has sought to represent any of the employees,
representatives or agents of the Company. There is no strike or other labor
dispute involving the Company pending, or to the Company's knowledge,
threatened, that could have a Material Adverse Effect nor is the Company aware
of any labor organization activity involving its employees. The Company is not
aware that any officer or key employee, or that any group of officers or key
employees, intends to terminate their employment with the Company, nor does the
Company have a present intention to terminate the employment of any of the
foregoing.
(p) Investment Company Status. The Company is not and upon consummation of the
sale of the Securities will not be an "investment company," a company controlled
by an "investment company" or an "affiliated person" of, or "promoter" or
"principal underwriter" for, an "investment company" as such terms are defined
in the Investment Company Act of 1940, as amended.
(q) Subsidiaries. Except as set forth in the SEC Documents, the Company does
not presently own or control, directly or indirectly, any interest in any other
corporation, association, joint venture, partnership or other business entity
and the Company is not a direct or indirect participant in any joint venture or
partnership.
(r) No Conflict of Interest. The Company is not indebted, directly or
indirectly, to any of its officers or directors or to their respective spouses
or children, in any amount whatsoever other than in connection with expenses or
advances of expenses incurred in the ordinary course of business or relocation
expenses of employees. None of the Company's officers, directors or employees,
or any members of their immediate families, are directly, or indirectly,
indebted to the Company (other than in connection with purchases of the
Company's stock or as set forth on Schedule 3.18) or, to the best of the
Company's knowledge, have any direct or indirect ownership interest in any
entity with which the Company is affiliated or with which the Company has a
business relationship, or any entity which competes with the Company, except
that officers, directors, employees and/or stockholders of the Company may own
stock in (but not exceeding five percent (5%) of the outstanding capital stock
of) any publicly traded company that may compete with the Company. To the best
of the Company's knowledge, none of the Company's officers, directors or
employees or any members of their immediate families
10
are, directly or indirectly, interested in any material contract with the
Company. The Company is not a guarantor or indemnitor of any indebtedness of any
other person or entity.
10. Covenants.
(a) Reporting Status; Eligibility to Use Form S-3. The Company's Common Stock
is registered under Section 12 of the Exchange Act. During the Registration
Period (as defined below), the Company will timely file all reports, schedules,
forms, statements and other documents required to be filed by it with the SEC
under the reporting requirements of the Exchange Act, and the Company will not
terminate its status as an issuer required to file reports under the Exchange
Act even if the Exchange Act or the rules and regulations thereunder would
permit such termination. The Company currently meets, and will take all
reasonably necessary action to continue to meet, the "registrant eligibility"
requirements set forth in the general instructions to Form S-3 to enable the
registration of the Registrable Securities.
(b) Financial Information. The financial statements of the Company will be
prepared in accordance with United States generally accepted accounting
principles, consistently applied, and will fairly present in all material
respects the consolidated financial position of the Company and results of its
operations and cash flows as of, and for the periods covered by, such financial
statements (subject, in the case of unaudited statements, to normal year-end
audit adjustments).
(c) Compliance with Law. As long as an Investor owns any of the Securities,
the Company will conduct its business in compliance with all applicable laws,
rules and regulations of the jurisdictions in which it is conducting business,
(including, without limitation, all applicable local, state and federal
environmental laws and regulations), the failure to comply with which would have
a Material Adverse Effect.
(d) No Integration. The Company will not make any offers or sales of any
security (other than the Securities) under circumstances that would cause the
offering of the Securities to be integrated with any other offering of
securities by the Company (i) for the purpose of any stockholder approval
provision applicable to the Company or its securities or (ii) for purposes of
any registration requirement under the Securities Act.
(e) Sales by Xxxxxx Xxxxxxx. Xxxxxx Xxxxxxx will sell any Securities sold by
it in compliance with applicable prospectus delivery requirements, if any, or
otherwise in compliance with the requirements for an exemption from registration
under the Securities Act and the rules and regulations promulgated thereunder.
Xxxxxx Xxxxxxx will not make any sale, transfer or other disposition of the
Securities in violation of federal or state securities laws.
11. Indemnification: The placement agent and the Company have executed and
delivered an indemnity letter, the form of which is attached hereto as Exhibit
A. The placement agent and Company have entered into this Agreement in reliance
on the
11
indemnities set forth in such indemnity letter and the terms of the letter shall
be considered to be part of this Agreement.
12. Severability: Every provision of this Agreement is intended to be
severable. If any term or provision hereof is deemed unlawful or invalid for any
reason whatsoever, such unlawfulness or invalidity shall not affect the validity
of the remainder of this Agreement.
13. Miscellaneous:
(a) This Agreement between the Company and Xxxxxx Xxxxxxx
constitutes the entire agreement and understanding of the parties hereto, and
supersedes any and all previous agreements and understandings, whether oral or
written, between the parties with respect to the matters set forth herein.
(b) Any notice or communication permitted or required hereunder be
in writing and shall be deemed sufficiently given if hand-delivered or sent
postage prepaid by registered mail, return receipt requested, or by a recognized
overnight courier service.
(c) This Agreement shall be binding upon and inure to the benefit of
each of the parties hereto and their respective successors, legal
representatives and assigns.
(d) This Agreement may be executed in any number of counterparts,
each of which together shall constitute one and the same original document and a
facsimile copy of a signed counterpart shall be deemed an original.
(e) No provision of this Agreement may be amended, modified or
waived, except in a writing signed by all of the parties hereto.
(f) This Agreement shall be construed in accordance with and
governed by the laws of the State of New York, without giving effect to conflict
of law principles. The parties hereby agree that any dispute which may arise
between them arising out of or in connection with this Agreement shall be
adjudicated before a court located in New York City, and they hereby submit to
the exclusive jurisdiction of the courts of the State of New York located in New
York, New York and of the federal courts in the Southern District of New York
with respect to any action or legal proceeding commenced by any party, and
irrevocably waive any objection they now or hereafter may have respecting the
venue of any such actin or proceeding brought in such a court or respecting the
fact that such court is an inconvenient forum, relating to or arising out of
this Agreement, and consent to the service of process n any such action or legal
proceeding by means of registered or certified mail, return receipt requested,
in care of the address set forth in Exhibit A.
[Balance of this page intentionally left blank.]
12
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed, as of the day and year first above written.
XXXXXX XXXXXXX & COMPANY INC.
By: /s/ Xxxxxx Xxxxxxx
--------------------------------------------
Xxxxxx Xxxxxxx, its CEO
ATLANTIC TECHNOLOGY VENTURES, INC.
By: /s/ Xxxxxxxx X. Xxxxx
--------------------------------------------
Xxxxxxxx X. Xxxxx, its President and CEO
13
EXHIBIT A
October 26, 2001
XXXXXX XXXXXXX & COMPANY, INC.
00 Xxxxxx Xxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
In connection with the engagement by Atlantic Technology Ventures,
Inc.. (the "Company") of XXXXXX XXXXXXX & COMPANY, INC. (the "Placement Agent")
as the Company's financial advisor and investment banker, the Company hereby
agrees to indemnify and hold the Placement Agent and its affiliates, and the
directors, officers, partners, shareholders, agents and employees of the
Placement Agent (collectively the "Indemnified Persons"), harmless from and
against any and all claims, actions, suits, proceedings (including those of
shareholders), damages, liabilities and expenses incurred by any of them
(including, but not limited to, fees and expenses of counsel) which are (A)
related to or arise out of (i) any actions taken or omitted to be taken
(including any untrue statements made or any statements omitted to be made) by
the Company, or (ii) any actions taken or omitted to be taken by any Indemnified
Person in connection with our engagement of the Placement Agent pursuant to the
Placement Agreement, of even date herewith, between the Placement Agent and the
Company (the "Placement Agreement"), or (B) otherwise related to or arising out
of the Placement Agent's activities on the Company's behalf pursuant to the
Placement Agent's engagement under the Placement Agreement, and the Company
shall reimburse any Indemnified Person for all expenses (including, but not
limited to, fees and expenses of counsel) incurred by such Indemnified Person in
connection with investigating, preparing or defending any such claim, action,
suit or proceeding (collectively a "Claim"), whether or not in connection with
pending or threatened litigation in which any Indemnified Person is a party. The
Company will not, however, be responsible for any Claim which is finally
judicially determined to have resulted exclusively from the gross negligence or
willful misconduct of any person seeking indemnification hereunder. The Company
further agrees that no Indemnified Person shall have any liability to the
Company for or in connection with the Placement Agent's engagement under the
Placement Agreement except for any Claim incurred by the Company solely as a
direct result of any Indemnified Person's gross negligence or willful
misconduct.
The Company further agrees that the Company will not, without the
prior written consent of the Placement Agent, settle, compromise or consent to
the entry of any judgment in any pending or threatened Claim in respect of which
indemnification may be sought hereunder (whether or not any Indemnified Person
is an actual or potential party to such Claim), unless such settlement,
compromise or consent includes a legally binding,
unconditional, and irrevocable release of each Indemnified Person hereunder from
any and all liability arising out of such Claim.
Promptly upon receipt by an Indemnified Person of notice of any
complaint or the assertion or institution of any Claim with respect to which
indemnification is being sought hereunder, such Indemnified Person shall notify
the Company in writing of such complaint or of such assertion or institution,
but failure to so notify the Company shall not relieve the Company from any
obligation the Company may have hereunder, unless, and only to the extent that,
such failure results in the forfeiture by the Company of substantial rights and
defenses, and such failure to so notify the Company will not in any event
relieve the Company from any other obligation or liability the Company may have
to any Indemnified Person otherwise than under this Agreement. If the Company so
elects or is requested by such Indemnified Person, the Company will assume the
defense of such Claim, including the employment of counsel reasonably
satisfactory to such Indemnified Person and the payment of the fees and expenses
of such counsel. In the event, however, that such Indemnified Person reasonably
determines in its sole judgment that having common counsel would present such
counsel with a conflict of interest or such Indemnified Person concludes that
there may be legal defenses available to it or other Indemnified Persons that
are different from or in addition to those available to the Company, then such
Indemnified Person may employ its own separate counsel to represent or defend it
in any such Claim and the Company shall pay the reasonable fees and expenses of
such counsel. Notwithstanding anything herein to the contrary, if the Company
fails timely or diligently to defend, contest, or otherwise protect against any
Claim, the relevant Indemnified Party shall have the right, but not the
obligation, to defend, contest, compromise, settle, assert crossclaims or
counterclaims, or otherwise protect against the same, and shall be fully
indemnified by the Company therefor, including, but not limited to, for the fees
and expenses of its counsel and all amounts paid as a result of such Claim or
the compromise or settlement thereof. In any Claim in which the Company assumes
the defense, the Indemnified Person shall have the right to participate in such
defense and to retain its own counsel therefor at its own expense.
The Company agrees that if any indemnity sought by an Indemnified
Person hereunder is held by a court to be unavailable for any reason, then
(whether or not the Placement Agent is the Indemnified Person) the Company and
the Placement Agent shall contribute to the Claim for which such indemnity is
held unavailable in such proportion as is appropriate to reflect the relative
benefits to the Company, on the one hand, and the Placement Agent, on the other,
in connection with the Placement Agent's engagement by the Company under the
Placement Agreement, subject to the limitation that in no event shall the amount
of the Placement Agent's contribution to such Claim exceed the amount of fees
actually received by the Placement Agent from the Company pursuant to the
Placement Agent's engagement under the Placement Agreement. The Company hereby
agrees that the relative benefits to the Company, on the one hand, and the
Placement Agent, on the other, with respect to the Placement Agent's engagement
under the Placement Agreement shall be deemed to be in the same proportion as
(a) the total value paid or proposed to be paid or received by the Company or
the Company's shareholders as the case may be, pursuant to the transaction
(whether or not consummated) for which the Placement Agent is engaged to
2
render services bears to (b) the fee paid or proposed to be paid to the
Placement Agent in connection with such engagement.
Our indemnity, reimbursement and contribution obligations under this
Agreement shall be in addition to, and shall in no way limit or otherwise
adversely affect any rights that any Indemnified Party may have at law or at
equity.
Should the Placement Agent, or any of its directors, officers,
partners, shareholders, agents or employees, be required or be requested by us
to provide documentary evidence or testimony in connection with any proceeding
arising from or relating to the Placement Agent's engagement under the Placement
Agreement, the Company agrees to pay all reasonable expenses (including, but not
limited to, fees and expenses of counsel) in complying therewith, payable in
advance.
The Company hereby consents to personal jurisdiction and service of
process and venue in any court in which any claim for indemnity is brought by
any Indemnified Person.
It is understood that, in connection with the Placement Agent's
engagement under the Placement Agreement, the Placement Agent may be engaged to
act in one or more additional capacities and that the terms of the original
engagement or any such additional engagement may be embodied in one or more
separate written agreements. The provisions of this Agreement shall apply to the
original engagement and any such additional engagement and shall remain in full
force and effect following the completion or termination of the Placement
Agent's engagement(s).
Very truly yours,
Atlantic Technology Ventures, Inc.
By: /s/ Xxxxxxxx X. Xxxxx
---------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: President and CEO
CONFIRMED AND AGREED TO:
XXXXXX XXXXXXX & COMPANY, INC.
By: /s/ Xxxxxx Xxxxxxx
---------------------------------
Xxxxxx Xxxxxxx
Chief Executive Office
EXHIBIT B
XXXXXX XXXXX XXXXXXXX & XXXXXXX LLP
000 XXXXX XXXXXX
XXX XXXX, X.X. 00000 - 3852
47, Avenue Hoche
TEL (000) 000-0000 00000 Xxxxx
FAX (000) 000-0000 France
November __, 2001
Xxxxxx Xxxxxxx & Company, Inc.
00 Xxxxxx Xxxx 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: [Name]
Dear Sirs:
We have acted as counsel to Atlantic Technology Ventures, Inc., a Delaware
corporation ("Atlantic"), in connection with sale of up to $3,000,0000 of
Atlantic's common stock, par value $0.001 per share, pursuant to a securities
purchase agreement dated as of November __, 2001 (the "Purchase Agreement"),
between Atlantic and the investors signatory thereto.
This opinion is furnished to you at Atlantic's request pursuant to Section
4(b)(v) of the placement agreement dated as of November __, 2001, between Xxxxxx
Xxxxxxx & Company, Inc. and Atlantic (the "Placement Agreement"). Except as
otherwise defined in this letter, capitalized terms used herein have the
meanings ascribed to them in the Placement Agreement.
In connection with our opinion expressed in this letter, we have examined
(1) executed copies of the Purchase Agreement, the Placement Agreement, and the
warrants issuable thereunder (collectively, the "Transaction Documents") and (2)
such corporate and other records, documents, instruments, certificates, and
other papers as we have deemed necessary, relevant or appropriate to enable us
to render the opinion expressed herein.
In our examination, we have assumed the genuineness of all signatures and
authenticity of all documents, instruments, records and certificates submitted
to us as originals, and the conformity to original documents of all documents
submitted to us as certified, photostatic or facsimile copies. We have also
assumed that the Transaction Documents have been duly authorized, executed and
delivered by the parties thereto other than Atlantic and constitute the valid
and binding obligations of such parties, enforceable against such parties in
accordance with their terms.
With respect to matters in this letter that are stated to be "to our
knowledge", we have undertaken no independent investigation or verification of
such matters, but have relied upon representations of Atlantic set forth in the
Purchase Agreement and the Placement Agreement or in certificates of or
otherwise represented to us by one or more officers or employees of Atlantic and
on the certificates of governmental officials. In the course of our
representation of Atlantic,
no information has come to our attention that would give us actual knowledge or
actual notice that (1) any such representation is not accurate and complete, or
(2) any information set forth in any of the foregoing documents, certificates
and information on which we have relied is not accurate and complete. The words
"our knowledge" and similar language used herein are expressly limited to the
actual knowledge of the lawyers within our firm who have given substantive
attention to representation of Atlantic.
Based on the foregoing, and subject to the assumptions and qualifications
set forth herein, we are of the opinion that:
1. Atlantic is a corporation existing and in good standing under the laws of
the State of Delaware. Atlantic is qualified to do business as a foreign
corporation and is in good standing in the State of New York.
2. Atlantic has the corporate power to execute and deliver, and perform its
obligations under, the Transaction Documents. Atlantic has the corporate
power to conduct its business as, to our knowledge, it is now conducted,
and to own and use the properties that, to our knowledge, are currently
owned and used by it.
3. The execution and delivery by Atlantic of the Transaction Documents,
performance of the obligations of Atlantic thereunder, and consummation by
it of the transactions contemplated therein have been duly authorized and
approved by Atlantic's board of directors, and no further consent,
approval or authorization of Atlantic's board of directors or its
stockholders is required. Atlantic has duly executed and delivered the
Transaction Documents and they constitute valid and binding obligations of
Atlantic, enforceable against Atlantic in accordance with their terms.
4. Issuance and sale of shares of Atlantic common stock under the Purchase
Agreement (the "Shares") and issuance of the Placement Shares under the
Placement Agreement has been duly authorized. Atlantic has reserved shares
of Atlantic common stock for issuance upon exercise of the Warrants and
the Placement Warrants. When issued in accordance with the Transaction
Documents, the Shares, the Placement Shares, and the shares issuable upon
exercise of the Warrants and the Placement Warrants will be validly
issued, fully paid, and nonassessable and free of all taxes, liens,
charges, restrictions (other than any restrictions imposed under the
Purchase Agreement or that may be imposed by securities or "blue sky" laws
or as a result of any action taken by the holder thereof), rights of first
refusal and preemptive rights under Atlantic's certificate of
incorporation or bylaws and, to our knowledge, under any contract or
agreement to which Atlantic is a party.
5. Execution, delivery and performance by Atlantic of the Transaction
Documents and consummation by Atlantic of the transactions contemplated
thereby do not (1) conflict with or constitute a breach of or default (or
an event which, with the giving of notice or lapse of time or both,
constitutes or would constitute a breach or a default) under (A) the
certificate of incorporation or the bylaws of Atlantic, or (B) any
material agreement, note, lease, mortgage, deed or other material
instrument to which to our knowledge Atlantic is a party or by which to
our knowledge Atlantic or any of its assets are bound, (2) assuming the
accuracy of the representations contained in Article II of the Purchase
Agreement, violate the General Corporation Law of the State of Delaware or
the applicable law of the State of New York, or
2
(3) to our knowledge violate any order, writ, injunction or decree
applicable to Atlantic or any of its subsidiaries.
6. Assuming the accuracy of the representations contained in Article II of
the Purchase Agreement, issuance and sale of the Securities and issuance
of the Placement Warrants is exempt from registration under the Securities
Act.
7. To our knowledge, except as disclosed in the SEC Documents there is no
private or governmental action, suit, proceeding, claim, arbitration,
complaint, allegation or investigation, whether pending or threatened in
writing, before any governmental department, commission, authority,
arbitrator, agency, court or tribunal, foreign or domestic, against
Atlantic.
The opinion set forth herein is subject to and limited by the following:
(a) The enforceability of the Transaction Documents is subject to
the application of and may be limited by the effect of bankruptcy, insolvency,
reorganization, arrangement, fraudulent conveyance, fraudulent transfer,
moratorium or other laws and court decisions or other legal or equitable
principles, now or hereafter in effect, relating to, limiting or affecting the
enforcement of creditors' rights generally.
(b) The enforceability of the Transaction Documents is subject to
the application of and may be limited by (1) compliance with, and limitations
imposed by, procedural requirements relating to the exercise of remedies, and
(2) general principles of equity (including, but not limited to, concepts of
materiality, commercial reasonableness, good faith and fair dealing and the
requirement that the right, remedy, damages or compensation sought be
proportionate to the breach, default, or injury), regardless of whether
considered in a proceeding in equity or at law.
(c) We express no opinion with respect to the validity or
enforceability of the following: (1) provisions restricting access to legal or
equitable remedies, such as specific performance of executory covenants; (2)
provisions that purport to establish evidentiary standards; (3) provisions
relating to waivers, severability, indemnity or contribution, set-off, delay or
omission of enforcement of rights or remedies; (4) provisions purporting to
convey rights to persons other than parties to the Transaction Documents; (5)
provisions purporting to waive unmatured rights to the extent such provisions
may be limited by applicable state or federal laws or public policy underlying
such laws; (6) provisions relating to severability; (7) provisions relating to
consent to jurisdiction, selection of venue, means of service, choice of law or
payment of attorneys' fees; (8) provisions requiring the payment or
reimbursement of fees, costs, expenses, or other amounts without regard to
whether they are reasonable in nature or amount; (9) provisions relating to
non-competition, non-solicitation or confidentiality; (10) provisions
authorizing any party to act in its sole discretion; or (11) the potential
effect of any claim by any holder of any security or other interest in Atlantic
with respect to the amount or allocation of any consideration to any security
holder, employee, consultant or other person in connection with any of the
transactions contemplated by the Transaction Documents.
(d) The remedy of specific performance and injunctive and other
forms of equitable relief are subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought. (d)
We express no opinion as to (1) the applicability or effect of the provisions of
the antitrust laws or (2) the applicability of any anti-fraud provision of any
federal or state law.
3
The opinions expressed herein are limited to the laws of the State of New
York, the federal securities laws of the United States, and the laws of the
General Corporation Law of the State of Delaware, and we express no opinion as
to the effect on the matters covered by any other jurisdiction.
The opinion expressed herein is limited solely to those matters set forth
above, and we specifically do not render any opinion pertaining to any matter
not expressly stated herein. The information and opinions set forth in this
letter are as of this date, and we disclaim any undertaking to advise you of
changes that thereafter may be brought to our attention.
We have rendered this opinion as counsel to Atlantic solely for your
benefit in connection with the Placement Agreement, as well as for the benefit
of the Investors (as defined in the Purchase Agreement). Neither you nor any
other person may rely on this letter for any other purpose, except as may be
requested and required by Atlantic's transfer agent to give effect to the
transactions contemplated by the Transaction Documents.
Very truly yours,
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP
4
