PLACEMENT AGREEMENT May 27, 2005
EXHIBIT
10.9
May
27,
2005
Xxxxxxx
Securities, LLC
0000
XXX
Xxxxxxx, Xxxxx 0000 Xxxxxxxxx Xxxxxxx, XX 00000
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Re:
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Private
placement offering of up to $3,000,000 of securities ("Offering"),
consisting of up to 300 units at an offering price of $10,000 per
unit,
each unit comprised of a 10% unsecured convertible promissory note
of
AeroGrow International, Inc. in the principal amount of $10,000
and 2,000
five-year warrants, each warrant providing for the purchase of
one share
of the Company's common stock at the exercise price of $5.01 per
share
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Dear
Sirs:
AeroGrow
International, Inc. ("Company") proposes to offer, offer for sale and sell
up to
$3,000,000 of securities, consisting of 300 units ("Units") at an offering
price
of $10,000 per Unit, to accredited investors. Each Unit will be comprised
of a
10% unsecured convertible promissory note in the principal amount of $10,000
due
June 30, 2006 ("Note") and 2,000 five-year warrants, each warrant providing
for
the purchase of one share of the Company's common stock at the exercise price
of
$5.01 per share ("Warrants").
In
the
event the Company completes a registered public offering of its securities
("Primary Offering") under the Securities Act of 1933, as amended ("Securities
Act") on or before June 30, 2006, the principal amount of the Note will be
convertible, at the holder's election, into the same securities (including
securities which are part of any unit) and at the same price as those being
offered in the Primary Offering. The Company agrees to register for re-offer
and
re-sale, the securities into which the Note may be converted ("Conversion
Securities"), on the registration statement filed by the Company with respect
to
the securities being offered in the Primary Offering. The Note may be converted,
in whole or in part, by the Holder at any time commencing on the earlier
of: (i)
the date 45 days after the effectiveness of the Primary Offering, or (ii)
the
date thirty days prior to the maturity date of the Note ("Commencement Date"),
and ending on the date the Note is paid in full by the Company. The Company
may
not redeem the Note and will have no right to pre-pay the Note without the
prior
consent of the holder.
The
Company agrees to file, on one occasion, a registration statement under the
Securities Act to register the common stock underlying the Warrants ("Underlying
Common Stock") and, to the extent the Company files a registration statement
with respect to the Primary Offering, the Underlying Common Stock shall be
included on such registration statement. The Warrants will be exercisable,
in
whole or in part, beginning on the earlier of (i) the date 45 days after
the
effectiveness of the Primary Offering, (ii) the date any other registration
statement on which Underlying Common Stock is registered for re-offer and
re-sale are included becomes effective; or (iii) the maturity date of the
Note
("Commencement Date"), and ending on the fifth anniversary of the final closing
of the Offering.
The
Company, the Units, the Note and the Warrants will be more fully described
in a
private placement memorandum to completed by the Company prior to commencement
of the Offering and any supplements or amendments thereto (the "Memorandum").
The Company desires to employ Xxxxxxx Securities, LLC (the "Placement Agent")
as
its exclusive placement agent to offer, offer for sale and sell the Units
subject to all of the terms and conditions of this Agreement and subject
to the
terms and conditions contained in the Memorandum.
For
purposes of this Agreement, the terms and conditions of the Units and underlying
Note and Warrants assume that the Company has completed, and therefore gives
effect to, the proposed 1-for-5 reverse stock split of the Company's common
stock. The Company agrees that it will complete the reverse stock split prior
to
the initial closing of this Offering.
1. Description
of Offering and Appointment of Agent.
(a) Appointment.
On the
basis of the representations, warranties and covenants herein contained,
but
subject to the terms and conditions herein set forth, the Placement Agent
is
hereby appointed the exclusive agent of the Company during the Offering Period
(as defined herein) for the purpose of finding subscribers for sale of up
to
$3,000,000 of Units on a "best efforts" basis. The Placement Agent may, in
its
sole discretion, appoint participating agents to offer and sell the Units
as
subagents of the Placement Agent (the "Participating Agents") pursuant a
certain
dealer agreement between the Placement Agent and each Participating Agent
("Dealer Agreement"). A minimum purchase of three Unit per investor is required,
unless the Company and Placement Agent agree to allow a minimum purchase
of one
or two Units per investor, provided, in no case, shall any fractional Units
be
sold in the Offering. The Placement Agent acknowledges that the Company may
limit its acceptance of subscriptions in any manner it deems prudent in order
to
provide for the timely use of subscriber funds and may reject any subscription
for any reason, and the Placement Agent agrees that any such rejection of
a
subscription obtained by the Placement Agent or by the Participating Agents
shall be deemed not to be a sale made by the Placement Agent or by the
Participating Agents. The Placement Agent further acknowledges that (i) all
wire
transfers of subscription funds will be sent to a segregated account maintained
by the Company at Xxxxxx Street State Bank ("Segregated Account"), (ii) all
subscribers' checks shall be made payable to and deposited into the Segregated
Account, (iii) all subscribers' check will be transmitted directly to Xxxxxx
Street State Bank by noon of the next business day after receipt by the
Placement Agent or the Participating Agents, (iv) all executed subscription
documents shall be promptly sent to the Placement Agent, (v) no funds shall
be
disbursed from the Segregated Account until such time as the subscription
has
been accepted by the Company and approved by the Placement Agent, and (vi)
Xxxxxx Street State Bank shall disburse funds from the Segregated Account
only
upon the written direction signed by the Company and the Placement
Agent.
(b) Offering
Period.
The
"Offering Period" shall mean that period during which the Units are offered
for
sale, commencing on the date of the Memorandum and continuing for forty-five
(45) days thereafter, or such later date mutually agreed to by the Company
and
Placement Agent but not later than August 15, 2005 (the "Termination Date");
provided, however, that the Offering Period shall in all events terminate
upon
the sale of all of the Units.
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(c) Acceptance.
The
Placement Agent hereby accepts such agency and agrees on the terms an conditions
herein set forth to use the Placement Agent's best efforts during the Offering
Period to find subscribers for the Units.
(d) Private
Placement Offering.
The
Offering will not be registered under federal securities laws or the securities
laws of any state. The Company will rely upon exemptions from registration
under
federal securities laws and state securities acts (the "State Acts"). With
respect to federal securities laws, the Company will rely on one or more
exemptions from registration for sales to accredited investors (as defined
in
Section 2(15) of the Securities Act and Rule 501 promulgated thereunder),
including, without limitation, exemptions from registration provided by Sections
3(b), 4(2) and/or 4(6) of the Securities Act, and Rule 506 of Regulation
D,
promulgated as part of the rules and regulations under the Securities Act
(the
"Rules and Regulations"). With respect to the State Acts, the Company will
not
be subject to them pursuant to preemption based on Section 18 of the Securities
Act or will rely upon limited offering exemptions of certain states approved
by
the Company. The Company shall use its best efforts to qualify or register
the
Units for sale, or exempt the Units from qualification of registration, under
the State Acts as requested by the Placement Agent, and the Company shall
continue such qualifications in effect for so long as may be necessary to
complete the Offering. The Company or its counsel shall provide Placement
Agent
with all applications, forms and documents filed in each jurisdiction where
the
Units are to be qualified or registered or qualified or offered in an exempt
transaction under the State Acts. The Offering of the Units shall be at the
offering price and upon the terms and conditions set forth in the Memorandum
and
the subscription agreement which is included in the subscription documents
to be
delivered with the Memorandum, and on the basis of the representations and
warranties therein contained, and subject to the terms and conditions herein
set
forth.
(e) Closing.
All cash
proceeds from the subscriptions (the "Funds") will be deposited into the
Segregated Account maintained by the Company at Xxxxxx Street State Bank.
After
the Company's acceptance of subscriptions in such amount as mutually determined
by the Company and the Placement Agent, and subject to the Placement Agent's
approval of such subscriptions, on a date to be determined by the Company
and
Placement Agent (the "First Closing Date"), a closing will take place at
the
offices of the Company's legal counsel or another location as determined
by the
Company, and the Notes and Warrants evidencing the subscriptions in the forms
shown in the Memorandum will be duly executed and issued by the Company in
accordance with the terms of the Memorandum and promptly delivered to the
investors (the "First Closing"). If the First Closing Date shall precede
the
Termination Date, all further proceeds from subscriptions will be deposited
into
the Segregated Account and any additional closings will take place at the
offices of the Company's legal counsel or another location as determined
by the
Company and the Placement Agent (the "Additional Closings"), on a date or
dates
determined by the Company and the Placement Agent (the "Additional Closing
Date(s)"). The Notes and the Warrants will be executed, issued and delivered
in
the same manner as at the First Closing.
(f) Other
Covenants.
In
connection with the Offering, the Company and Placement Agent each agree
as
follows: (i) the Units will be offered and sold only to accredited investors
pursuant to the registration exemption provided by Sections 3(b), 4(2) and/or
4(6) of the Securities Act and Rule 506 of Regulation D, as and to the extent
applicable to the Offering, and will otherwise comply with the applicable
laws
and regulations of any jurisdictions in which the Units are offered or sold,
(ii) neither the offer, sale nor delivery of the Units in conformity with
the
terms hereof will violate Section 5 of the Securities Act, as currently in
effect, and (iii) neither the Company nor Placement Agent has taken, nor
will
either party take any action which conflicts with the conditions and
requirements of, or which would make unavailable with respect to the sale
of the
Units, the exemptions from registration available pursuant to Rule 506 of
Regulation D or Section 3(b), 4(2) and/or 4(6) of the Securities Act and
neither
the Company nor Placement Agent knows of any reason why any such exemption
would
be otherwise unavailable to it.
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(g) Information
to be Supplied.
The
Company will furnish or cause to be furnished to Placement Agent such
information as Placement Agent reasonably believes appropriate to its assignment
or necessary in connection with its assistance in the preparation of, review
of,
or inclusion in, the Memorandum. It is also understood that the Company may
make
available to Placement Agent and the offerees of the Units additional material,
data or other information relating to the Company to the extent such information
can be obtained without unreasonable effort or expense and is not otherwise
confidential or a trade secret of the Company (collectively, as limited the
"Company Data"). The Company recognizes and confirms that (a) in performing
the
services contemplated by this Agreement, Placement Agent will use and rely
primarily on the Memorandum and Company Data made available to Placement
Agent
and on other information available from generally recognized public sources
without having independently verified the same; (b) the contents of the
Memorandum and the Company Data are the sole responsibility of the Company,
and
Placement Agent does not assume any responsibility for the accuracy or
completeness of the Memorandum or the Company Data, and will not undertake
to
verify independently any of their accuracy or completeness; and (c) Placement
Agent will furnish a copy of the Memorandum, and each supplement or amendment
thereto, to each purchaser of Units, and Placement Agent will not employ
any
written material other than the Memorandum, each supplement and amendment
thereto and the Company Data.
2. Representations
and Warranties of the Company.
The
Company represents and warrants to, and agrees with, the Placement Agent
and the
Participating Agents (if any) as follows:
(a) The
Company has been duly incorporated, and validly exists as a corporation in
good
standing under the laws of the state of Nevada.
(b) The
Company has complied or will comply with Sections 3(b), 4(2) and/or 4(6)
of the
Securities Act, with all of the provisions of the Rules and Regulations
promulgated under the Securities Act, specifically including the provisions
of
Regulation D and Rule 506 thereunder, applicable to them in connection with
the
offering and sale of the Units, and with all States Acts and regulations
applicable to them in connection with the offering and the sale of the
Units.
(c) The
Memorandum, and any amendments or supplements thereto, as of the date hereof,
and at all subsequent times through the First Closing Date and any Additional
Closing Dates, shall in all material respects conform to all applicable
provisions of the Securities Act, the Rules and Regulations and the State
Acts,
and shall not contain any untrue statement of a material fact or omit to
state
any material fact required to be stated therein or necessary to make the
statements therein not misleading; provided however, that this representation
and warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with written information furnished to the Company
by or
on behalf of the Placement Agent and any Participating Agents for use with
reference to the Placement Agent and any Participating Agents in connection
with
preparation of the Memorandum.
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(d) The
execution on performance of this Agreement, and the consummation of the
transactions contemplated hereby, have been duly authorized by the Company
and,
at the time of its execution and performance, shall not constitute or result
in
any breach or violation (other than any breach or violation which shall have
been waived or consented to in writing) of any of the terms, provisions or
conditions of, or constitute a default under, any indenture, mortgage, deed
of
trust, note, contract, commitment, instrument or document to which it or
any of
its properties is subject, the Articles of Incorporation or Bylaws or
corresponding documents of the Company, or any order, arbitration award,
or
judgment, of any court of governmental agency or body having jurisdiction
over
the Company or any of its activities or properties; and no consent, approval,
authorization or order of any court or governmental agency or body is required
for the consummation of the transactions contemplated hereby.
(e) The
Units, the Notes, the Warrants and the Agent Warrants shall be duly authorized
and shall be validly issued and binding obligations of the Company, and shall
conform to the description thereof contained in the Memorandum.
(f) The
Company has not been subject to any order, judgment or decree of any court
of
competent jurisdiction temporarily, preliminary or permanently enjoining
such
person for failing to comply with Section 503 of Regulation D.
(g) The
Company represents and warrants that at all times from the respective dates
that
the Memorandum (including, without limitation, any supplement or amendment
thereto) and the Company Data, if any, are furnished or made available by
the
Company to Placement Agent or, either directly or through Placement Agent,
to
offerees or any of their representatives, such Memorandum (including, without
limitation, any supplement or amendment thereto) and Company Data will not,
taken separately or in any combination as provided to Placement Agent or
any
offeree or its representatives, contain any untrue statement of a material
fact
or omit to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading,
(h) The
Company will furnish Placement Agent from time to time, such number of copies
of
the Memorandum and Company Data, any exhibits thereto and agreements and
documents referred to therein, as Placement Agent may reasonably
request.
(i) If
any
event shall occur or condition exist as a result of which it is necessary
or
advisable, in the opinion of the Company or Placement Agent, to amend or
supplement the Memorandum in order that the Memorandum will not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statement therein not misleading in light of the
circumstances existing at the time it is delivered to prospective purchasers,
the Company will forthwith prepare and furnish to Placement Agent such number
of
copies as Placement Agent may reasonably request of an amendment or supplement
to the Memorandum (in form and substance satisfactory to Placement Agent
and its
counsel) that will ensure that the Memorandum does not contain any misstatements
or omissions and is not in any respect misleading and provide the same to
offerees.
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(j) The
Company will advise Placement Agent promptly of (A) the occurrence of any
event
or the existence of any condition known to the Company referred to in Section
2(i) hereof; (B) the receipt by the Company of any communication, stop order
or
any order from the SEC, any state securities commissioner or any other domestic
or foreign securities or financial regulatory authority or self-regulatory
organization concerning the offering of the Units; and (C) the commencement
of
any lawsuit or proceeding to which the Company is a party relating to the
Units
or the Offering. The Company shall make every reasonable effort to prevent
the
issuance of any stop order and, if any stop order is issued, to obtain the
lifting thereof as promptly as possible.
(k) The
Company will (A) make available to each offeree of the Units the Memorandum;
and
(B) provide each offeree the opportunity to ask questions of, and receive
answers from, the officers and employees of the Company concerning the terms
and
conditions of the Offering and to obtain any other additional information
about
the Company and the Units to the extent the officers and employees of the
Company possess the same or can acquire it without unreasonable effort or
expense and it is not otherwise confidential or trade secret information.
The
Company may require appropriate confidentiality and non-disclosure agreements
as
it is advised by counsel prior to the disclosure of any information not
otherwise contained in the Memorandum.
(l) The
Company
is not in default in the performance or observance of any material obligation
(A) under its charter or its by-laws, or any indenture, mortgage, contract,
purchase order or other agreement or instrument to which the Company is a
party
or by which it or any of its property is bound or affected; or (B) with respect
to any order, writ injunction or decree of any court of any Federal, state,
municipal or other governmental department, commission, board, bureau, agency
or
instrumentality, domestic or foreign, and there exists no condition, event
or
act which constitutes, nor which after notice, the lapse of time or both,
could
constitute a default under any of the foregoing, which in either case would
have
a material adverse effect on the current business of the Company.
(m) The
Company has full right, power and authority to execute and deliver this
Agreement, and any document, certificate or instrument required hereunder
or to
be executed or delivered at any Closing in connection with the Offering
(collectively, the "Documents"), and to perform all of its obligations hereunder
and thereunder or contemplated hereby or thereby. The Documents have been,
or
will be, duly executed and delivered by the Company and the execution and
delivery by the Company of the Documents and the performance of all of its
obligations have been duly authorized by all requisite corporate action by
the
Company, and each Document (assuming the due authorization and execution
of the
other parties thereto) executed and delivered and obligation performed
constitutes, or will constitute, the legal, valid and binding obligation
of the
Company enforceable in accordance with its respective terms.
(n) The
(A)
authorization, execution, delivery and performance of the Documents; and
(B)
authorization, issuance, sale and delivery of the Units, the Note, the Warrants
and the Agent Warrants will not (1) violate any provision of law or statute
or
any order of any court or other governmental agency applicable to the Company;
or (Z) conflict with or result in any breach of any of the terms, conditions
or
provisions of, or constitute (with due notice or lapse of time or both) a
default under, or result in the creation of any material lien, security
interest, charge or encumbrance upon any of the properties or assets of the
Company under its charter or by-laws, or any indenture, mortgage, lease
agreement or other material agreement or instrument to which the Company
is a
party or by which it or any or its property is bound or affected except for
violations, conflicts breaches and defaults that would not, individually
or in
the aggregate materially and adversely affect the Company, Placement Agent
or
any investor in this Offering.
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(o) The
Company has all requisite corporate power and authority to issue, sell and
deliver the Units, the Note, the Warrants and the Agent Warrants and such
issuances, sales and deliveries have been duly authorized by all requisite
corporate action of the Company and when so issued, sold and delivered the
Units, the Note, the Warrants and the Agent Warrants will be duly and validly
issued and outstanding, valid and binding obligations of the Company, fully
paid
and nonassessable, with no personal liability attaching to the ownership
thereof
and will be free and clear of all liens, charges, claims, encumbrances,
restrictions or preemptive or any other similar rights imposed by or through
the
Company, except as waived prior to the Closing or as disclosed herein and
as
shall be disclosed in the Memorandum, and the Company shall have paid all
taxes,
if any, in respect of the issuance thereof. Assuming that the investors met
such
suitability standards as are specified by the Company and the representations
and warranties of Placement Agent are accurate as to the method of offering,
the
offer and sale of the Units, the Note, the Warrants and the Agent Warrants
are
exempt from the registration requirements of the Securities Act and the rules
and regulations promulgated thereunder and the state "blue sky" laws and
the
Units Securities will be issued in compliance with all applicable Federal
and
state securities laws.
(p) No
permit, consent, approval, authorization, order of, or filing with, any court
or
governmental authority is required in connection with the execution and delivery
by the Company of this Agreement or to consummate the Offering, except that
the
offer and sale of the Units in certain jurisdictions may be subject to the
provisions of the securities or "blue sky" laws of such jurisdictions and
the
federal securities laws.
(q) There
is
no action suit proceeding before or by any United States court or governmental
agency or body, now pending or threatened, against or affecting the Company,
or
any of its properties, which would reasonably be anticipated to result in
any
material adverse change in the condition (financial or otherwise) or in the
earnings, current business, current business plan as described in the
Memorandum, properties or assets of the Company and its subsidiaries (a
"Material Adverse Effect").
(r) The
Company has (A) duly and timely filed all tax returns required to be filed
by
the Company under applicable law that include or relate to the Company, its
income, assets, payroll, operations or business, which tax returns are true,
correct and complete in all material respects; (B) duly and timely paid,
in
full, all taxes which are currently due and payable and for which the Company
is
liable; or (C) adequately reserved for taxes that have not been paid or are
in
dispute.
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(s) The
Company is not in default under any agreement, lease, license contract or
commitment, whether oral or written including, without limitation, agreements
with employees and consultants ("Company Agreements") to which the Company
is a
party or by which any of its assets are bound, and there is no event known
to
the Company that, with notice, or lapse of time, or both, would constitute
a
default by any party to any Company Agreement or give any party the right
to
terminate or modify any of the same and the Company has not received notice
that
any party to any Company Agreement intends to cancel or terminate any Company
Agreement or to exercise or not to exercise any renewal or extension options
under any Company Agreement, except as to any events described in this
subparagraph that would not have a Material Adverse Effect.
(t) The
Company holds, and is in compliance with, all permits, licenses, registrations
and authorizations required by it in connection with the conduct of the business
of the Company as currently conducted under all Federal, state and local
laws,
rules and regulations (the "Permits"), except where the failure to be in
compliance has not had, and is not reasonably expected to have, a Material
Adverse Effect.
(u) The
Company's financial statements, which may be unaudited, that will be included
in
the Memorandum, will be true and correct and fairly present, in accordance
with
generally accepted accounting principles, consistently applied, the financial
condition of the Company as of the dates specified.
(v) Since
December 31, 2004, the Company has conducted its business in the ordinary
course
and has not suffered any Material Adverse Effect. The Company does not have
any
liabilities or obligations (whether actual or accrued, accruing or contingent,
or otherwise) which, individually or in aggregate, would be deemed material,
other than those set forth in the balance sheet included within the financial
statements included in the Memorandum, and those incurred, in the ordinary
course of its business, since December 31, 2004.
(w) The
capitalization of the Company shall be correctly and completely described
in the
Memorandum and, except as shall be disclosed therein, no person has any right
of
first refusal, preemptive right, right of participation, or any similar right
to
participate in the transactions contemplated by the Documents. There are
no
outstanding options, warrants, rights to subscribe to, calls or commitments
of
any character whatsoever relating to, or securities, rights or obligations
convertible into or exchangeable for, or giving any person any right to
subscribe for or acquire, any shares of capital stock of the Company, or
contracts, commitments, understandings or arrangements by which the Company
is
or may become bound to issue shares of capital stock, except as shall be
reflected in the Memorandum. All of the outstanding shares of capital stock
of
the Company are validly issued, fully paid and nonassessable, have been issued
in compliance with all federal and state securities laws, and none of such
outstanding shares of capital stock was issued in violation of any pre-emptive
rights or similar rights to subscribe for or purchase securities.
(x) The
Company has rights to use, all patents, patent applications, trademarks,
trademark applications, service marks, trade names, copyrights, licenses
and
other similar rights that are necessary or material for use in connection
with
its business (collectively, the "Intellectual Property Rights"), except to
the
extent that the failure to have such Intellectual Property Rights, individual
or
in the aggregate, would not have or reasonably be expected to result in a
Material Adverse Effect. No claims have been made or threatened by any third
party to the effect that Intellectual Property Rights used by the Company
violate or infringe upon the rights of such claimant. To the actual knowledge
of
the Company, all of the Intellectual Property Rights are enforceable and
there
is no existing infringement by another person of any of the Intellectual
Property Rights.
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(y) At
each
Closing, the Company will deliver, or cause to be delivered, to Placement
Agent,
in each case in form and substance satisfactory to Placement Agent and its
counsel: (A) a certificate of the Company signed by the Chief Executive Officer
and the Chief Financial Officer thereof certifying (1) that the representations
and warranties of the Company contained in this Agreement are true and accurate
in all material respects as of the Closing; and, (2) that the representations
and warranties of the Company contained in each subscription agreement entered
into with a prospective purchaser of the Units are true and correct in all
material respects as of the date of such certificate, except to the extent
any
such representation or warranty was expressly made as of any other date,
in
which case such representation and warranty was true anal correct in all
material respects as of such other date; and at the Closing, and (B) an opinion
of the Company's counsel, as to matters reasonably requested by the Placement
Agent. In rendering the opinions required herein, counsel and special securities
counsel to the Company may, as to factual matters, rely upon certificates,
statements, letters, representations and affidavits of officers of the Company,
its officers, any other records of the Company, certificates of public
officials, and letters of independent certified public accountants. With
respect
to the opinions required herein, "known to such counsel", "to the best knowledge
of such counsel" or any like phrase or reference shall mean to the best of
knowledge of such counsel after due inquiry and investigation; "due inquiry
and
investigation" shall include only (i) discussions, inquiries and conferences
with officials and agents of the Company occurring in connection with such
counsel's representation of the Company, (ii) review of certain corporate
records documents and proceedings of the Company as provided to such counsel
by
the Company and (iii) review of files maintained by such counsel relating
to the
Company; "due inquiry and investigation" shall not mean or imply any independent
verification of any factual matter of which such counsel becomes aware as
a
result of the foregoing discussions, inquiries and reviews.
(z) The
Company further agrees that it will not consummate the Offering unless it
delivers or causes to be delivered the items described in Section 2(m) to
Placement Agent at each Closing. The consummation of the Offering and the
release of the investor funds from the Segregated Account shall be further
subject to any other conditions set forth in the Memorandum or the subscription
agreement entered into by each purchaser of Units.
(aa) The
Company will be responsible for and comply with all applicable notification
and
fee requirements to qualify the offering and sale under the state securities
or
"blue sky" laws of such jurisdiction in which any sales pursuant to the offering
may be transacted and as may otherwise be required or as requested by Placement
Agent provided that, in connection therewith, the Company shall not be required
to qualify as a foreign corporation.
3. Representations
and Warranties of the Placement Agent.
The
Placement Agent represents and warrants to, and agrees with, the Company
as
follows:
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(a)
The
Placement Agent is a limited liability duly organized, validly existing and
in
good standing under the laws of the jurisdiction in which it was formed,
with
all requisite power and authority to enter into this Agreement and to carry
out
your obligations hereunder. This Agreement (i) has been duly authorized,
executed and delivered by the Placement Agent, (ii) constitutes legal, valid
and
binding obligation of the Placement Agent, and (iii) subject to applicable
bankruptcy, insolvency and other laws affecting the enforceability of creditors'
rights generally, is enforceable as to the Placement Agent in accordance
with
its terms, specific performance hereof being limited by general principles
of
equity and the enforceability of the indemnification provisions
hereof.
(b)
The
execution, delivery and performance of this Agreement by the Placement Agent
and
the consummation by the Placement Agent of the transactions contemplated
hereby
and by the Memorandum will not conflict with or result in the Placement Agent's
breach or violation of any of the terms or provisions of, or constitute a
default in any material respect under, (i) any indenture, mortgage, deed
of
trust, loan agreement, lease or other agreement or instrument to which the
Placement Agent is a party or to which the Placement Agent or its property
is
subject, (ii) the Placement Agent's charter or its operating agreement or
(iii)
any statute, judgment, decree, order, rule or regulation applicable to the
Placement Agent of any court or governmental agency or body having jurisdiction
over the Placement Agent.
(c)
The
Placement Agent is, and at all times through the date of the final sale of
a
Unit shall remain, duly registered pursuant to the provisions of the Securities
Exchange Act of 1934, as amended ("Exchange Act") as a broker-dealer and
duly
registered as a broker-dealer in those states in which the Placement Agent
is
required to be so registered in order to carry out the Offering as contemplated
by the Memorandum; the Placement Agent is, and at all times through the date
of
the final sale of a Unit shall remain, a member in good standing of the National
Association of Securities Dealers, Inc. ("NASD"); the Placement Agent will
not
reallow discounts or pay commissions or other compensation for participation
in
the distribution of the Offering in the United States to any broker-dealer
which
is not a member of the NASD, the Placement Agent shall act as independent
contractor, and nothing herein shall constitute the Placement Agent an employee
of the Company; the Placement Agent shall not make sales of Units to
discretionary accounts.
(d)
In
connection with the offer, offer for sale and sale of the Units, the Placement
Agent (and its representatives and agents) shall conform to and comply with
(i)
the provisions of the Rules of Fair Practice of the NASD, (ii) applicable
provisions of federal law, including without limitation the Securities Act,
the
Exchange Act and the Rules and Regulations, and (iii) the State Acts and
the
rules and regulations thereunder, including without limitation those referred
to
in such letters regarding state securities and "blue sky" matters ("Blue
Sky
Letters") as are prepared by counsel for the Company and sent to the Placement
Agent from time to time, with regard to, among other things, the period during
which and conditions under which the Units may be offered, offered for sale
and
sold in various states; the Placement Agent shall not distribute the Memorandum
or otherwise commence the Offering in any jurisdiction without prior
confirmation from the Company or its counsel that the Offering may be commenced
under applicable securities laws, rules and regulations.
(e)
The
Placement Agent will use its best efforts to procure subscribers for the
Units
and will conduct the Offering in compliance with the suitability standards
set
forth in the Memorandum and with the requirements of Sections 3(b), 4(2)
and/or
4(6) of the Securities Act and Rule 506 of Regulation D, as and to the extent
applicable to the Offering; accordingly, at all times through the date of
the
final sale of a Unit, the Placement Agent will have:
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(i)
not
made
any untrue statement of a material fact and not omitted to state a material
fact
required to be stated or necessary to make any statement made not misleading,
to
the extent any representations are made by the Placement Agent concerning
the
Offering or matters set forth in the Memorandum and Company Data other than
those set forth in the Memorandum and Company Data;
(ii)
not
offered, offered for sale, or sold the Units by means of: (A) any advertisement,
article, notice, or other communication mentioning the Units published in
any
newspaper, magazine or similar medium or broadcast over television or radio;
(B)
any seminar or meeting, the attendees of which have been invited by any general
solicitation or general advertising; or (C) any letter, circular, notice,
or
other written communication, unless the communication is accompanied or preceded
by the Memorandum;
(iii) prior
to
the sale of any of the Units, reasonably believed that each subscriber and
his
or her purchaser representative, if any, met the suitability and other investor
standards set forth in the Memorandum and the Blue Sky Letters, and the
Placement Agent will have prepared and maintained, for your benefit and the
benefit of the Company, file memoranda and other appropriate records
substantiating the foregoing;
(iv) only
used
sales materials other than the Memorandum and Company Data which have been
approved for use in the Offering by the Company, and refrained from providing
any such materials to any offeree unless such materials were accompanied
or
preceded by the Memorandum;
(v) provided
each offeree with a copy of the Memorandum;
(vi) promptly
distributed any amendment or supplement to the Memorandum provided to the
Placement Agent by the Company under this Agreement to persons who had
previously received a copy of the Memorandum from the Placement Agent and
who
the Placement Agent believed continued to be interested in the Units and
have
included such amendment or supplement in all deliveries of the Memorandum
made
after receipt of any such amendment or supplement; and
(vii) not
made
any representations on behalf of the Company other than those contained in
the
Memorandum and the Company Data, nor shall the Placement Agent have acted
as an
agent of the Company or for the Company in any other capacity, except as
expressly set forth herein.
4. Compensation
and Expenses.
(a) The
Company agrees to pay to the Placement Agent a placement fee of ten percent
(10%) of the aggregate gross offering proceeds of all of the Units sold.
The
Placement Agent may instruct the Company to pay a portion of any placement
fee
due directly to Participating Agents. Such placement fee shall be due and
payable at each closing. The Company also agrees to pay to the Placement
Agent,
as warrant placement agent for transactions involving the exercise of any
Warrants after the first anniversary of the closing of this Offering, which
exercise is solicited by the Placement Agent, a warrant solicitation fee
of five
percent (5%) of the aggregate exercise price received. Notwithstanding the
foregoing, the warrant solicitation fee shall immediately terminate without
further action by any party in the event the Company commences a registered
offering of its securities which is declared effective by the U.S. Securities
and Exchange Commission ("SEC") prior the first anniversary of the closing
of
this Offering.
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(b) In
addition, the Company shall issue and sell, at each closing, to the Placement
Agent or its designees 200 warrants for each Unit sold in the Offering at
a
price of $0.0001 per warrant ("Agent Warrants"). Each Agent Warrant shall
entitle the holder thereof to purchase one share of the Company's common
stock.
The Agent Warrants shall be exercisable at any time alter the first anniversary
of the closing of this Offering at a price equal $6.00 per share, on a
net-issuance or cashless basis. The Company hereby grants the same registration
rights to the Placement Agent with respect to the shares of common stock
underlying the Agent Warrants as are granted to investors with respect to
the
Warrants as set forth in this Agreement. The Agent Warrants will expire five
(5)
years from the date of issuance. Notwithstanding the foregoing, the Agent
Warrants shall immediately terminate and be canceled without further action
by
any party in the event the Company commences a registered offering of its
securities which is declared effective by the SEC prior the first anniversary
of
the closing of this Offering.
(c) The
Company will pay all costs and expenses related to the Offering and/or the
performance of the Company's obligations under this Agreement, including
preparation of the Memorandum, preparation of related documentation, accounting
fees, legal fees, experts fees, consultants' fees, escrow fees, filing fees
with
the SEC and applicable states, any costs and expenses to qualify the Units
for
sale in any state, and any all costs and expenses for investor or road show
presentations. Notwithstanding the foregoing, the Company shall not be
responsible for any expenses of the Placement Agent or Participating Agents
incurred in connection with the Offering, including, but without limitation,
attorneys' fee, operating expenses, travel expenses and other incidental
expenses incurred by the Placement Agent or the Participating Agents; except
that the Company shall pay the Placement Agent a non-accountable expense
allowance equal to three percent (3%) of the aggregate gross offering proceeds
of all of the Units sold ("Allowance"). Upon execution of this Agreement,
the
Company shall pay the Placement Agent a non-refundable advance of $15,000,
which
such advance being credited against the Allowance earned with respect to
the
first $500,000 of gross offering proceeds raised in the Offering.
5. Covenants
of the Company.
The
Company covenants and agrees that it will:
(a) Comply
with all requirements imposed upon it by the Securities Act, as now and
hereafter amended, by the Rules and Regulations from time to time in force,
and
by all State Acts, to permit the continuance of offers and sales of the Units
in
accordance with the provisions of Sections 3(b), 4(2) and/or 4(6) of the
Securities Act and of Rule 506 of Regulation D, as and to the extent applicable
to the Offering, and the Memorandum. During the Offering Period, the Company
will amend or supplement the Memorandum in order to make such Memorandum
comply
with the requirements of the Securities Act, the Rules and Regulations and
the
State Acts.
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(b) Until
the
termination of the Offering Period, furnish to the Placement Agent information
necessary to keep the Memorandum fair, accurate and complete in all material
respects.
(c) If
at any
time any event occurs as a result of which the Memorandum would include an
untrue statement of a material fact or, in view of the circumstances under
which
they were made, omit to state any material fact necessary to make the statements
therein not misleading, the Company will notify the Placement Agent thereof
(unless the information shall have been received from the Placement Agent)
and
will effect the preparation of an amended or supplemental Memorandum which
will
correct such statement or omission.
(d) Upon
the
Placement Agent's reasonable request, the Company will prepare an amended
or
supplemental Memorandum and take any other action which may be necessary
of
advisable in connection with the offer and sale of the Units.
(e) Not
offer, offer to sell, offer for sale or sell any of the Units of the Company
or
other securities, except and to the extent any such offer, offer to sell,
offer
for sale or sale shall not render unavailable the exemptions from registration
and qualification requirements of the Securities Act and the State Acts relied
upon the respect to the offering and sale of the Units contemplated by this
Agreement.
(f) Provided
their subscriptions are accepted by the Company and approved by the Placement
Agent, issue the Notes and Warrants with respect to the Units to the holders
in
accordance with the description of the procedures as set forth in the Memorandum
and the subscription documents to be delivered with the Memorandum.
(g) Prepare,
execute and file a Form D (and any and all amendments or supplements thereto)
with the SEC in timely manner and deliver copies thereof to the placement
Agent,
together with copies of all forms (including without limitation, Form Ds)
and
other documents and/or materials filed either before or after the First Closing
Date and the Additional Closing Dates, and comply with Regulation D and the
State Acts and make any fillings required by the SEC and state securities
authorities in a timely manner.
(h) The
Company will make available for inspection by the Placement Agent or its
authorized representatives, at the Company's principal office during normal
business hours, any information and documents relating to the business and
operations of the Company as the Placement Agent may reasonably request and
as
are available to the Company or obtainable by it without unreasonable effort
or
expense.
(j) The
Company shall at all times reserve and keep available such number of authorized
shares of its common stock as are sufficient to permit the exercise of the
Warrants and Agent Warrants; all shares of common stock issued upon the exercise
of Warrants and Agent Warrants, upon receipt of full payment therefore, will
be
duly authorized, validly and legally issued, fully paid and nonassessable,
and
such common stock will not have been issued in violation of or subject to
any
preemptive rights provided for by law or by the Company's corporate charter
or
bylaws or be subject to any lien, claim, encumbrance, security interest,
preemptive rights or any other claim of any third party.
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(k) The
Company shall file such registration statements and include such securities
of
the Company in such registration statements filed under the Securities Act
as
specifically provided in the Memorandum and the subscription agreement entered
into by the purchaser of the Units.
6. Covenants
of Placement Agent.
The
Placement Agent covenants and agrees that it will:
(a) Comply
with all requirements imposed upon it by the Securities Act, as now and
hereafter amended, by the Rules and Regulations from time to time in force,
and
by all State Acts, to permit the continuance of offers and sales of the Units
in
accordance with Sections 3(b), 4(2) and/or 4(6) of the Securities Act and
of
Rule 506 of Regulation D, as and to the extent applicable to the Offering,
and
the Memorandum.
(b) Comply
with all applicable rules of the NASD and any other laws, rules and regulations
applicable to broker-dealers.
(c) Not
offer, offer to sell, offer for sale or sell any of the Units of the Company
or
other securities, except and to the extent any such offer, offer to sell,
offer
for sale or sale shall nor render unavailable the exemptions from registration
and qualification requirements of the Securities Act and the State Acts relied
upon with respect to the offering and sale of the Units contemplated by this
Agreement.
7. Conditions
of Closing.
The
purchase of, and payment for, the Units on the First Closing Date and any
Additional Closing Dates shall be subject to the continuing accuracy of the
representations and warranties of the Company and the Placement Agent as
of the
date hereof and as of the First Closing and any Additional Closings, to the
performance by the Company and Placement Agent of their respective obligations
hereunder, and to the following conditions:
(a) The
Placement Agent's obligations as provided herein shall be subject to the
accuracy of the representations, warranties and covenants of the Company
herein
contained as of the date hereof and as of the Closing Date and any Additional
Closing Dates, and to the performance by the Company of its obligations
hereunder to be performed.
(b) At
the
First Closing and the Additional Closing, if any, the Company
shall:
(1) Accept
subscriptions of qualifying potential purchasers that the Company reasonably
believes to be qualified investors under Regulation D and the State Acts,
in
accordance with the Memorandum.
(2) Issue
and
deliver the Notes and Warrants with respect to the Units to subscribers as
described in the Memorandum.
(c) At
the
First Closing and the Additional Closing, if any, the Placement Agent
shall:
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(1) Deliver
to the Company all subscription agreements that the Company agrees are
acceptable.
(2) Receive
from the Company or give assignment instructions for all compensation, including
Agent Warrants, payable to the Placement Agent.
8. Indemnification.
(a) The
Placement Agent and each of the Participating Agents, severally and not jointly,
agree to indemnify and hold the Company and the directors, officers, employees,
agents, attorneys, shareholders and control persons (as defined under federal
and state securities laws) of the Company, and the respective heirs, personal
representatives and assigns of each of the foregoing (collectively, the "Company
Indemnified Persons") harmless from and against any loss, liability, claim,
damage and expense (including, but not limited to, expenses reasonably incurred
in investigating, preparing or defending against any litigation, commenced
or
threatened, or any claim whatsoever based upon) to which the Company Indemnified
Persons may become subject, under the Securities Act or otherwise, insofar
as
such losses, claims, damages, liabilities, costs and expenses (including
reasonable attorneys' and experts' fees) arise solely out of (i) any breach
of
any representation, warranty, agreement or covenant under this Agreement
by
Placement Agent or under the Dealer Agreement by Participating Agents, (ii)
any
untrue statement or alleged untrue statement of any material fact contained
in
the Memorandum, or any amendment or supplement thereto, or arise out of or
are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
not
misleading; in each case to the extent, but only to the extent, that such
untrue
statement or alleged untrue statement or omission or alleged omission was
made
in the Memorandum or such supplement or such amendment in reliance upon and
in
conformity with information furnished to the Company by the Placement Agent,
(iii) any statement made, either orally or in a writing other than the
Memorandum or the Company Data, by the Placement Agent or the Participating
Agents containing an untrue statement or alleged untrue statement of any
material fact or the omission or alleged omission to state a material fact
required to be stated or necessary to make the statements not misleading,
unless
such statements or omissions are made in reliance upon or in conformity with
statements made or information provided by the Company and/or the actions
of the
Company, and/or (iv) any amount paid in settlement of any litigation, commenced
or threatened, or of any claim based upon any of the matters under (i) through
(iii) (including, but not limited to, expenses reasonably incurred in
investigating, preparing or defending against any such litigation or claim)
if
such settlement is affected with the written consent of the Placement Agent
and/or the effected Participating Agents.
If
for
any reason, the foregoing indemnification is unavailable to any Company
Indemnified Persons, then the Placement Agent or Participating Agents shall
contribute to the amount paid or payable by any such Company Indemnified
Person
as a result of such loss, claim, damage or liability in such proportion as
is
appropriate to reflect the relative fault of the Placement Agent or
Participating Agents and any Company Indemnified Person.
Promptly
after a Company Indemnified Person receives notice of the commencement of
any
action, claim, proceeding or investigation ("Action"), such Company Indemnified
Person, if a claim in respect thereof is to be made against the Placement
Agent
or Participating Agents under this Section 8(a), will notify the Placement
Agent
or Participating Agents of the commencement thereof. The omission to so notify
the Placement Agent or Participating Agents will relieve the Placement Agent
and
Participating Agents from any liability which they may have to any Company
Indemnified Person under this Section 8(a) if the Placement Agent or
Participating Agents have been prejudiced in asserting, or shall have lost
the
right to assert, a legal defense by reason of such omission. The Placement
Agent
or Participating Agents will be entitled to participate in, and, to the extent
that they may wish, to assume the defense thereof subject to the provisions
herein stated, with counsel reasonably satisfactory to such Company Indemnified
Person. The Company Indemnified Person will have the right to employ separate
counsel in any such Action and to participate in the defense thereof but
the
fees and expenses of such counsel will be at the expense of the Company
Indemnified Person if the Placement Agent or Participating Agents have assumed
the defense of the Action with counsel reasonably satisfactory to the Company
Indemnified Person. No settlement of any Action against a Company Indemnified
Person for which indemnification from the Placement Agent or Participating
Agents is sought will be made without the consent of the Placement Agent
or
Participating Agents.
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(b) The
Company agrees to indemnify and hold the Placement Agent and Participating
Agents, and the directors, officers, employees, agents, attorneys, shareholders
and control persons (as defined under federal and state securities laws)
of the
Placement Agent and Participating Agents, and the respective heirs, personal
representatives and assigns of each of the foregoing (collectively, the "Agent
Indemnified Persons") harmless from and against any loss, liability, claim,
damage and expense (including, but not limited to, expenses reasonably incurred
in investigating, preparing or defending against any litigation, commenced
or
threatened, or any claim whatsoever based upon) to which the Agent Indemnified
Persons may become subject, under the Securities Act or otherwise, insofar
as
such losses, claims, damages, liabilities, costs and expenses (including
reasonable attorneys' and experts' fees) arise out of or relate to: (i) any
breach of any representation, warranty, agreement or covenant under this
Agreement by the Company, (ii) any untrue statement or alleged untrue statement
of any material fact contained in the Memorandum, or any amendment or supplement
thereto, or the Company Data, or arise out of or are based upon the omission
or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, (iii) any statement
made, either orally or in a writing other than the Memorandum or the Company
Data, by the Company containing an untrue statement or alleged untrue statement
of any material fact or the omission or alleged omission to state a material
fact required to be stated or necessary to make the statements not misleading,
and/or (iv) any amount paid in settlement of any litigation, commenced or
threatened, or of any claim based upon any of the matters under (i) through
(iii) (including, but not limited to, expenses reasonably incurred in
investigating, preparing or defending against any such litigation or claim)
if
such settlement is affected with the written consent of the Company; provided,
however, that the Company shall not be liable to any Agent Indemnified Persons
to the extent that any such losses, claims, damages, liabilities, costs or
expenses, or any actions in respect thereof, arises out of or is based upon
an
untrue statement or alleged untrue statement or omission or alleged omission
made in the Memorandum or such amendment or such supplement in reliance upon
and
in conformity with information furnished to the Company by or on behalf of
the
Placement Agent.
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If
for
any reason, the foregoing indemnification is unavailable to any Agent
Indemnified Persons, then the Company shall contribute to the amount paid
or
payable by any such Agent Indemnified Persons as a result of such loss, claim,
damage or liability in such proportion as is appropriate to reflect the relative
fault of the Company and any Agent Indemnified Person.
Promptly
after an Agent Indemnified Person receives notice of the commencement of
any
action, claim, proceeding or investigation ("Action"), such Agent Indemnified
Person, if a claim in respect thereof is to be made against the Company under
this Section 8(b), will notify the Company of the commencement thereof. The
omission to so notify the Company will relieve the Company from any liability
which it may have to any Agent Indemnified Person under this Section 8(b)
if the
Company has been prejudiced in asserting, or shall have lost the right to
assert, a legal defense by reason of such omission. The Company will be entitled
to participate in, and, to the extent that they may wish, to assume the defense
thereof subject to the provisions herein stated, with counsel reasonably
satisfactory to such Agent Indemnified Person. The Agent Indemnified Person
will
have the right to employ separate counsel in any such Action and to participate
in the defense thereof but the fees and expenses of such counsel will be
at the
expense of the Agent Indemnified Person if the Company has assumed the defense
of the Action with counsel reasonably satisfactory to the Agent Indemnified
Person. No settlement of any Action against an Agent Indemnified Person for
which indemnification from the Company is sought will be made without the
consent of the Company.
9. Representations,
Indemnities and Agreements to Survive Sale and Payment.
The
respective representations, indemnities, warranties, covenants and other
agreements of the Company and the Placement Agent set forth in or made pursuant
to this Agreement, shall remain in full force and effect, regardless of any
investigation made by or on behalf of the Placement Agent, the Company, or
any
Agent Indemnified Person or Company Indemnified Person, and shall survive
closing, delivery of, and payment for the Units.
10. Termination
of Agreement.
Notwithstanding any of the terms and provisions thereof, this Agreement may
be
terminated by the Placement Agent based on a material breach of this Agreement
by the Company. The Placement Agent shall give fifteen (15) days' prior written
notice to the Company of such material breach, and the Company shall have
thirty
(30) days to cure such material breach before the Placement Agent may terminate
the Agreement. In the event the Placement Agent reasonably determines that
the
Units are not marketable, notwithstanding its best efforts to sell the Units,
the Placement Agent may terminate this Agreement with thirty (30) days' prior
written notice to the Company.
In
the
event of any termination this Agreement or the expiration of the Offering
Period, the Placement Agent shall be entitled to: (i) any fees and compensation
to which it was entitled as of the date of termination or expiration, and
(ii)
the fees and compensation as set forth in Section 4 for any securities sold
by
Company during the one (1) year period following such expiration or termination
to any investor introduced by Placement Agent and/or any Participating
Agent.
Additionally,
Sections 4, 8, 9, 10, 11, 12 and 14 shall survive any termination or survive
closing, delivery of, and payment for the Units.
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11. Notices.
All
notices, requests, demands or other communications with respect to this
Agreement shall be in writing and shall be personally delivered or mailed,
postage prepaid, certified mail, or delivered by facsimile or a nationally
recognized express courier service, charges prepaid, to the Company or Placement
Agent at the addresses set forth in this Agreement (or such other addresses
as
the parties may specify from time to time in accordance with this section).
Any
such notice shall, when sent in accordance with the preceding sentence, be
deemed to have been given and received, on the earliest of: (i) on the day
personally delivered including by facsimile, (ii) on the third day following
the
date mailed, or (iii) twenty-four hours after shipment by such courier
service.
12. Successors.
This
Agreement shall be binding upon and inure solely to the benefit of the Placement
Agent and the Company and, to the extent provided in Section 8, an Agent
Indemnified Person or Company Indemnified Person, and no other person shall
acquire or have any right under or by virtue of this Agreement. No purchaser
of
any of the Units shall be construed a successor, representative or assignee
by
reason of such purchase.
13. Right
of Exclusive Representation.
During
the one year period following the date hereof, the Company grants Placement
Agent the right to act as the Company's exclusive placement agent and/or
managing underwriter for any private placement or public offering of securities
by the Company. This provision will not apply to any sale of securities to
employees.
14. Miscellaneous
Provisions.
(a) Construction.
This
agreement shall be governed by, subject to and construed in accordance with
the
laws of the state of Colorado without regard to such state's conflicts of
law
principles.
(b) Severability.
If any
portion of this Agreement shall be held invalid or inoperative, then, so
far as
is reasonable and possible (i) the remainder of this Agreement shall be
considered valid and operative, and (ii) effect shall be given to the intent
manifested by the portion held invalid or inoperative.
(c) Modification
or Amendment.
This
Agreement may not be modified or amended except by written agreement executed
by
the parties hereto.
(d) Number
and Gender of Words.
Whenever
the context so requires, the masculine shall include the feminine and neuter,
and the singular shall include the plural, and conversely,
(e) Other
Instruments; Counterparts.
The
parties hereto covenant and agree that they will execute such other and further
instruments and documents are or may become necessary or convenient to effect
and carry out the terms of this Agreement. This Agreement may be executed
by
facsimile signatures and in multiple counterparts, each of which shall be
deemed
an original. It shall not be necessary that each party executes each
counterpart, or that any one counterpart be executed by more than one party
so
long as each party executes at least one counterpart.
(f) No
Partnership.
The
Placement Agent is not a principal of or a partner with, or does not control
in
any way, the Company or its employees or agents.
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(g) Announcements.
Before
the Company releases any information referring to the Placement Agent's role
under this Offering or uses Placement Agent's name in a manner which may
result
in public dissemination thereof, the Company shall furnish drafts of all
documents or prepared oral statements to Placement Agent for comments, and
shall
not release any information relating thereto without the prior written consent
of the Placement Agent. Nothing herein shall prevent the Company from releasing
any information to the extent that such release is required by law, rule
or
regulation. The Company agrees that, following the completion of the Offering,
the Placement Agent shall have the right to place "tomb stone" advertisements
in
financial and other newspapers and journals, at the Company's cost, describing
its services to the Company hereunder, provided that Placement Agent will
submit
a copy of any such advertisements to the Company for its prior approval,
which
approval shall not be unreasonably withheld.
(h) Assignment.
The
Placement Agent may assign this Agreement to another company or firm under
its
common control. Otherwise, this Agreement shall not be assignable by any
party
to this Agreement without the express prior written consent of the other
party
to the Agreement, and in the event of an attempted assignment by one party
to
this Agreement without such consent, such attempted assignment shall be void
and
without effect.
(i) Parties.
This
Agreement shall be binding upon and inure solely to the benefit of the parties
hereto and any permitted assigns, and no other person shall have or be construed
to have any legal or equitable right, remedy or claim under or in respect
of or
by virtue of this Agreement or any provision herein contained, except that
the
Participating Dealers shall be a third party beneficiary of the provisions
of
Section 8(b) hereof.
(j) Entire
Agreement.
This
Agreement contains the entire understanding between the parties and supersedes
any prior understandings or written or oral agreements between them respecting
the subject matter hereof.
(k) Consent
to Jurisdiction and Waiver of Trial by Jury.
Each
party hereto: (i) consents to personal jurisdiction and service and venue
in any
court in which a claim subject to this agreement is brought against the other
party hereto or any other Indemnified Party; and (ii) waives all right to
trial
by jury in any action, proceeding or counterclaim (whether based upon contract,
tort or otherwise) related to or arising out of the engagement of Placement
Agent pursuant to, or the performance by Placement Agent of the services
contemplated by, this Agreement.
(1) Attorneys'
Fees.
In the
event any party hereto shall commence legal proceedings against the other
to
enforce the terms hereof, or to declare rights hereunder, as the result of
a
breach of any covenant or condition of this Agreement, the prevailing party
in
any such proceeding shall be entitled to recover from the losing party its
costs
of suit, including reasonable attorneys' fees, as may be fixed by the
court.
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If
the
foregoing is in accordance with your understanding, please sign and return
to us
a counterpart hereof, whereupon this Agreement and the Placement Agent's
acceptance thereof shall constitute a binding agreement between you, as the
Placement Agent, and the Company.
| AeroGrow International, Inc. | ||
| By: | /s/ Xxxxxxx Xxxxxxxxxxx, President | |
|
|
||
| ACCEPTED AND AGREED TO: | |||
| /s/ Xxxxxxx X. Xxxxxxx, President | |||
|
|
|||
| Date: May 27, 2005 |
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