1
EXECUTION COPY
PLACEMENT AGENCY AGREEMENT
February 26, 2001
The Zanett Securities Corporation
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Gentlemen:
This agreement ("AGREEMENT") will confirm that FastComm Communications
Corporation, a Virginia corporation (the "COMPANY"), has retained The Zanett
Securities Corporation ("ZANETT" or the "PLACEMENT AGENT") to assist the
Company, during the thirty (30) day period commencing on the date hereof (the
"TERM"), on a "best-efforts" basis, in connection with the placement of up to
850 units (the "UNITS") at a price of $1,000 per Unit, each Unit consisting of
(i) a prepaid common stock purchase warrant (the "PREPAID WARRANTS") which
entitles the holder thereof to acquire up to $1,000 of the Company's common
stock, par value $.01 per share (the "COMMON STOCK"), on the terms and subject
to the conditions contained in such Prepaid Warrants (or an aggregate of up to
$850,000 of Common Stock based on the sale of 850 Units), and (ii) a warrant
to purchase the number of shares of Common Stock as provided therein
(collectively, the "INCENTIVE WARRANTS"),. The shares of Common Stock issuable
upon exercise of or otherwise pursuant to the Prepaid Warrants and the
Incentive Warrants are referred to herein as the "WARRANT SHARES." The Prepaid
Warrants, the Incentive Warrants, and Warrant Shares are collectively referred
to herein as the "SECURITIES." The Company agrees that, during the Term, 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. 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 Securities.
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The Securities Purchase Agreement, the Prepaid Warrants, the Incentive
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."
. 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.
Zanett's agency hereunder is not terminable by the Company except upon
termination of the Offering by failing to timely close the sale of the Units.
Upon termination of the Offering, all subscriptions received, if any, shall be
returned to Investors.
. Closing- Placement Fee and Warrant- Expenses.
() Closing. Upon satisfaction of the conditions to closing
contained in the Securities Purchase Agreement, the closing (the "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 DATE") as may be agreed upon between the
Placement Agent, the Investors and the Company. In no event, however, shall
the Closing for the Units take place later than March 6, 2001.
() Procedures at Closing. Counsel for the Placement Agent
shall act as escrow agent for the Closing (the "ESCROW AGENT"). At the
Closing:
() 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 Closing Date, in such form as may be
reasonably acceptable to the Placement Agent and its counsel.
() 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 Prepaid Warrants, the
Incentive Warrants and other documentation related to the Offering and (B) the
reservation for issuance and issuance of the Warrant Shares, and certifying
that such resolutions have not been modified, rescinded or amended and are in
full force and effect.
() The Company shall deliver to the Escrow Agent a
certificate of good standing of the Company, dated as of a recent date, from
the Secretary of State of the Commonwealth of Virginia.
() Each Investor shall deliver to the Escrow Agent
two executed copies of the Securities Purchase Agreement and Registration
Rights Agreement signed by such
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February 26, 2001
Page 3
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.
() Each Investor shall have delivered by wire
transfer to an escrow account designated by the Escrow Agent an amount equal
to the aggregate purchase price of the Units(s) being purchased by such
Investor.
() The Company shall have delivered to the Escrow
Agent the duly executed Prepaid Warrants and Incentive Warrants being
purchased by the Investors in such denominations as the Investors shall
request.
() The Company and the Placement Agent shall
instruct the Escrow Agent to pay to the Company the purchase price (the
"PURCHASE PRICE") for the Units subscribed for at the Closing, less the
Placement Agent Fee (as defined below), out of the funds on deposit in the
escrow account received from Investors whose Securities Purchase Agreements
have been accepted.
() Placement Fee- Expenses. The Company covenants and
agrees to pay to the Placement Agent at the Closing a fee (the "PLACEMENT
AGENT FEE") equal to 10% of the purchase price received by the Company from
the sale of the Units at Closing and upon exercise of the Option. 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 such Closing under the Securities Purchase Agreement
as provided in paragraph 2(a) above. The Company shall pay to the Placement
Agent, on the first day of each calendar month that the Investors, the
purchasers pursuant to that certain Securities Purchase Agreement dated as of
September 7, 2000 among the Company and the purchasers named therein and the
Placement Agent, in the aggregate, hold a minimum of One Million Dollars
($1,000,000) of Prepaid Warrants (based upon Prepaid Amount) and/or Warrant
Shares (based upon the fair market value thereof) issued upon exercise of
Prepaid Warrants or Warrants, a monitoring and financial advisory fee of Four
Thousand Nine Hundred Dollars ($4,900.00) (the "Monitoring Fee"), for which
the Placement Agent shall periodically consult with the Company concerning
market conditions, investor perceptions of the Company and related matters. As
a condition to Closing, the Company shall pay the Placement Agent $24,750,
representing the past due Monitoring Fees from September, 2000 to February,
2001 pursuant to that certain Placement Agency Agreement between the Company
and the Placement Agent dated September 7, 2000 (the "Placement Agency
Agreement"). After such payment the Company will have no further obligations
to pay Monitoring Fees pursuant to the Prior Placement Agency Agreement.
() Warrants. In addition to the Placement Agent Fee, at the
Closing under the Securities Purchase Agreement, and, if the Option is
exercised, at the closing of the Units purchased pursuant to the Option, the
Company shall issue to the Placement Agent warrants, in substantially the form
attached hereto as Exhibit A, to purchase shares of the Company's Common Stock
(the "PLACEMENT WARRANTS"). The Placement Warrants shall be exercisable for a
period of five (5) years from the date of issuance at a price per share equal
to 125% of the
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February 26, 2001
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Exercise Price (as defined in the Prepaid Warrants) of the Prepaid Warrants as
determined on the date of issuance. 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.
() Expenses of Offering. The Company shall pay to the
Placement Agent at the Closing an additional $15,000 in consideration of all
expenses directly and necessarily incurred by it in connection with the
Offering, including, but not limited to, the following: filing fees, registrar
and transfer agent fees, investigatory fees (including, but not limited to
travel, lodging and entertainment expenses), issuer's counsel and accounting
fees, blue sky fees and counsel, if any, and issue and transfer taxes, if any.
Such amount may be paid on behalf of the Company by one or more Investors from
the gross proceeds of the Offering at the Closing.
(f) Non-Circumvention Period; Lock-Up Period; Option on
Future Financing.
(i) The Company agrees that, during the period
beginning on the date hereof and ending one (1) year following the later of
the date hereof and the date of the Closing (as defined in the Securities
Purchase Agreement) (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 to obtain additional financing in
any form.
(ii) The Company agrees that, during the period
beginning on the date hereof and ending on that date on which the Purchasers
(as defined in the Securities Purchase Agreement) no longer own any Prepaid
Warrants purchased at the Closing but not later than one year after the date
hereof or if the Option is exercised one year after the date of the closing of
the purchase of the Option (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 equity or equity- linked securities
are issued ("FUTURE OFFERINGS") for no consideration or for a consideration
per share, or the exercise or conversion price of any such securities, is less
than the Closing Bid Price (as defined in the Prepaid Warrants) at the time of
issuance (calculating such consideration in accordance with the provisions of
Section 4(b)(v) of the Warrants). The Company agrees from the date of this
Agreement until the end of the Lock-Up Period it will not conduct any Future
Offering 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 (the "RIGHT OF FIRST
REFUSAL"), 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"). 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
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February 26, 2001
Page 5
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 a best efforts,
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 (iii) the grant of additional options or
warrants, or the issuance of additional securities, under any Company stock
option, bonus or stock purchase plan for the benefit of the Company's
employees, consultants or directors pursuant to plans approved by a majority
of the Board of Directors who are not officers of the Company, if any, or a
majority of the Board's compensation committee, if any. Notwithstanding the
foregoing, the Placement Agent shall not have a Right of First Refusal to act
as placement agent for any Future Offerings placed by Xxxxxxx Bros., L.P.,
pursuant to its letter agreement with the Company dated January 24, 2000.
. Representations and Warranties and Covenants of the Company.
() The Company represents and warrants to Zanett that 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
agreement of the Company, enforceable against the Company in accordance with
its terms.
() The Company has delivered to Zanett or has made
publically available true and complete copies of all reports, schedules,
forms, statements and other documents filed by the Company on or after April
30, 2000 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") (all of the foregoing filed prior to the date hereof and
all exhibits included therein and financial statements and schedules thereto
and documents (other than exhibits) incorporated by reference therein, being
hereinafter referred to as the "SEC DOCUMENTS"). As of their respective dates,
the SEC Documents complied in all material respects with the requirements of
the Exchange Act 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 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 consolidated financial position of the Company as of the dates
thereof and the consolidated results of their 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 of the Company included in the SEC Documents, the Company has no
liabilities, contingent or otherwise, other than (i) liabilities incurred in
the ordinary course of business subsequent to April 30, 2000, and (ii)
obligations under contracts and
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February 26, 2001
Page 6
commitments incurred in the ordinary course of business and not required under
generally accepted accounting principles to be reflected in such financial
statements, which, individually or in the aggregate, are not material to the
financial condition or operating results of the Company.
() 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.
() 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.
() For so long as Zanett and/or its affiliates own 350,000
or more shares of the Company's Common Stock or Warrants exercisable for such
amount, (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 lenders to or security holders of the
Company; (ii) in the event any current executive officer, director or key
employee 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; (iv) the Company shall promptly provide to Zanett notice of any
material event of default under any agreement or other document with any
lender or holder of any security of the Company and (v) a weekly bank balance
and statement of accounts receivable and accounts payable. In addition, the
Company's CEO and/or CFO shall meet with Zanett on at least a once a month
basis or as otherwise periodically requested by Zanett to review the Company's
operations and results, provided, however, that Zanett and the Observer (as
defined below) shall execute such confidentiality agreements and take such
other action as reasonably requested by the Company to comply with the
requirements of Regulation FD. Zanett and the Observer shall hold in
confidence and shall not make any disclosure (except to an Investor who also
agrees to execute and be bound by such confidentiality agreement) or use of
any such information disclosed to it pursuant to this section which the
Company determines in good faith to be confidential, and of which
determination Zanett and the Observer 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
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February 26, 2001
Page 7
obligations to proceed with the Offering is conditioned upon Placement Agent's
due diligence investigation of the Company and 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.
() Board Observer Rights. The Company shall afford an
"Observer Right" to a designee of the Placement Agent (the "Observer") (i) who
shall receive notice of all Board of Directors meetings, whether in person, by
telephone or other, and the Company shall provide to the Observer,
concurrently with making available to the members of the Board of Directors, a
copy of all board packages, minutes, documents, slides, audio/visual
materials, charts, graphs, or other materials provided to such members, unless
distributed at the actual meeting in which case such materials shall be
furnished to the Observer at such meeting, or if the Observer has not attended
such meeting, as soon as practicable thereafter; and (ii) who may attend, in a
nonvoting observer capacity, any such Board of Directors meeting. Zanett
shall, prior to receiving any non-public information concerning the Company,
provide the Company with an indemnity agreement, in form, substance and scope
reasonably satisfactory to the Company and its counsel and customary for such
matters, indemnifying the Company and its officers and directors from and
against any and all claims relating to violations of Regulation FD or other
applicable securities laws or regulations by Zanett and its officers,
directors, employees or agents or the Observer.
() The Company has the requisite corporate power and
authority to enter into and perform this Agreement and 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
reservation for issuance and issuance of the Placement Warrant Shares issuable
upon exercise thereof) 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.
() The Placement Warrants and the Placement Warrant Shares
issuable upon the exercise thereof are duly authorized and, upon issuance of
the Placement Warrant Shares upon exercise of the Placement Warrants in
accordance with the terms thereof, the Placement Warrant Shares 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.
() 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) 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 agreement, indenture or
instrument to which the Company is a party, or 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
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February 26, 2001
Page 8
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.
() 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.
() 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.
. Publicity. The Company shall not make any reference to Zanett
or to any of its affiliates in any release or other communication without
Zanett's prior written consent. Without Zanett's prior written consent, 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).
. Indemnification and Contribution.
() 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, an "INDEMNIFIED PERSON"), against any joint or several losses, claims,
damages, liabilities or expenses (collectively, together with commenced
actions,
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February 26, 2001
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proceedings or inquiries by any regulatory or self-regulatory organization,
"CLAIMS") to which any of them may become subject insofar as such Claims arise
out of or are based upon: (i) 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
material breach of any of the Company's representations, warranties or
covenants contained herein. The Company shall reimburse each of the
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.
() Promptly after receipt by 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 this Section 5, deliver to the
Company a written notice of the commencement thereof, and the Company shall
have the right to participate in, and, to the extent the Company so desires,
to assume control of the defense thereof with counsel mutually satisfactory to
the Company and the Indemnified Person; provided, however, that an Indemnified
Person shall have the right to retain its own counsel (with the fees of such
counsel not to exceed $250 per hour), with the fees and expenses to be paid by
the Company, if, in the reasonable opinion of counsel retained by the
Indemnified Person after consultation with the Company, the representation by
such counsel of the Indemnified Person and the Company would be inappropriate
due to actual or potential differing interests between such Indemnified Person
and any other party represented by the Company's counsel in such proceeding.
The Company shall pay for only one separate legal counsel for the Indemnified
Persons, and such legal counsel shall be selected by Placement Agent. The
failure to deliver written notice to the Company within a reasonable time of
the commencement of any such action shall not relieve the Company of any
liability to the Indemnified Person under this Section 5, except to the extent
that the Company 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.
() To the extent any indemnification by the Company of an
Indemnified Person is prohibited or limited by law or otherwise unavailable in
respect of any Claim, the Company 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 Company 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 Company, 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 Company, on the one hand, and of
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February 26, 2001
Page 10
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 Company, 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 Company in the
Offering or any other financing bears to such Indemnified Person's
compensation. The relative fault of the Company 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 Company, on the one hand, or 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 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 Company and Zanett 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.
() 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 Zanett's engagement hereunder,
and shall remain in full force and effect regardless of any investigation made
by or on behalf of Placement Agent or any of its 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 Company agrees to promptly notify Zanett 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.
() The Company also agrees that no Indemnified Person shall
have any liability (whether direct or indirect, in contract or tort or
otherwise) to the Company, 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
Company that are determined by a final judgment of a court of competent
jurisdiction to have resulted primarily from such Indemnified Party's gross
negligence or wilful misconduct in connection with any such advice, actions,
inactions or services.
. 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 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,
11
The Zanett Securities Corporation
February 26, 2001
Page 11
assigns, heirs and personal representatives of the Company, Zanett, the
Indemnified Parties and any holder of Placement Warrants.
. Miscellaneous.
() 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 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:
() If to Placement Agent, to
The Zanett Securities Corporation
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxx
-with a copy to -
Klehr, Harrison, Xxxxxx, Branzburg & Xxxxxx, LLP
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
() If to the Company, to
FastComm Communications Corporation
00000 Xxxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attn: Xxxxx X. Xxxxxx, President
-with a copy to -
Xxxxxxx, Dunaud, Mercadier & Xxxxxxxx XXX
000 Xxxxxxxxx Xxxxxx - 0xx Xxxxx
12
The Zanett Securities Corporation
February 26, 2001
Page 12
Xxx Xxxx, XX 00000-0000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attn: Xxxxxx X. Xxxx, Esq.
() 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.
() 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 and Zanett hereby agree 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 the State of
New York in connection with any suit, action or proceeding related to this
Agreement or any of the matters contemplated hereby, irrevocably waive any
defense of lack of personal jurisdiction and irrevocably agree that all claims
in respect of any suit, action or proceeding may be heard and determined in by
such panel. The Company and Zanett irrevocably waive, to the fullest extent
they 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 agrees to pay or reimburse the other for all
reasonable costs and expenses incurred in connection with the enforcement of
any of its rights under this Agreement, including without limitation, all
attorneys' fees and expenses of its counsel.
() The section headings in this Agreement have been
inserted as a matter of convenience of reference and are not a part of this
Agreement.
() This Agreement may not be modified or amended except in
writing duly sworn by the parties hereto.
() 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.
() 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.
13
The Zanett Securities Corporation
February 26, 2001
Page 13
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,
FASTCOMM COMMUNICATIONS CORPORATION
By:
Xxxxx X. Xxxxxx, President
Accepted and Agreed to this
_____ day of February, 2001.
THE ZANETT SECURITIES CORPORATION
By:
Name: Xxxxxxx Xxxxxxxx
Title: President
