EXHIBIT 10.5
COMPANY SUBSCRIBER AGREEMENT
THIS AGREEMENT ("AGREEMENT") is made by and between the corporation listed
on the signature page of this Agreement ("COMPANY"), and Xxxxxxx.xxx, Inc., a
Delaware corporation (the "AGENT").
WITNESSETH:
WHEREAS, the Company proposes to offer and sell debt and/or equity
securities (the "SECURITIES") through the Agent (the "OFFERING") in a manner not
involving a public offering without registration under the Securities Act of
1933, as amended (the "ACT"), pursuant to exemptions from the registration
requirements of the Act and other applicable laws, rules and regulations ("RULES
AND REGULATIONS"); and
WHEREAS, the Agent has offered to assist the Company in offering the
Securities on a "best efforts basis" with respect to the Securities to potential
investors who have represented to Agent that they are "accredited investors" as
defined under the Act (the "SUBSCRIBERS");
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual promises,
conditions and covenants herein contained, the parties hereto do hereby agree as
follows:
1. Engagement of Agent. The Company hereby appoints the Agent on a
non-exclusive basis as an agent for the Offering. The Agent, on the basis of the
representations and warranties herein contained, but subject to the terms and
conditions provided herein, accepts such appointment and agrees to permit the
Company, subject to the terms and conditions contained herein, to offer the
Securities to Subscribers. This appointment shall be for the period commencing
as of the date hereof and ending three (3) calendar months thereafter, which
period may be extended by the consent of the Company and the Agent (the
"OFFERING PERIOD") unless terminated by written notice by either party for any
reason at any time upon 24 hours notice.
2. Representations and Warranties of the Company. In order to induce the
Agent to enter into this Agreement, the Company hereby represents and warrants
to and agrees with the Agent as follows:
2.1 Incorporation and Standing. The Company is, and at each closing date
will be, duly formed and validly existing in good standing as a corporation
under the laws of its state of incorporation and with full power and authority
(corporate and other) to own its properties and conduct its business, present
and proposed, as described in the Offering Documents; the Company, has full
power and authority to enter into this Agreement; and the Company is duly
qualified and in good standing as a foreign entity in each jurisdiction in which
the failure to so qualify would have a material adverse effect on the Company or
its properties.
2.2 Legality of Securities. The Securities, when sold and delivered, will
constitute legal, valid and binding obligations of the Company, enforceable in
accordance with the terms thereof, and shall be duly and validly issued and
outstanding, fully paid and nonassessable. The Securities to be delivered at
each closing shall be duly and validly issued and outstanding, fully paid and
non-assessable.
2.3 Finders. The Company does not know of any outstanding claims for
services in the nature of a finder's fee or origination fees with respect to the
sale of the Securities hereunder for which the Agent may be responsible, and the
Company will indemnify the Agent from any liability for such fees by any party
who has a claim for such compensation from the Company and for which person the
Agent is not legally responsible.
3. Escrow of Funds and Closing.
3.1 Escrow Agreement. Pursuant to an Escrow Agreement (the "ESCROW
AGREEMENT"), the Company hereby agrees to enter into an agreement with The Bank
of New York as escrow agent (the "ESCROW AGENT") and open an escrow account at
such bank (the "ESCROW ACCOUNT") for consummation of any Offering with the
Subscribers. The Subscribers have agreed to place all funds for purchase of
Securities for each closing in the Escrow Account. The Company
shall have the right to approve or object to the subscriptions of each
Subscriber. At such time as Subscribers subscribing for the Securities have
delivered to the Company their signed subscription documents, those Subscribers
have been approved by the Company and all other closing conditions have been met
as described in the Offering Documents, Escrow Agent shall, with the written
authorization of the Company and Agent, release the subscription funds to the
Company and the Company shall release the certificates representing the
Securities to the Subscribers (the "INITIAL CLOSING"). In the event that the
Initial Closing shall be for an amount of Securities less than the maximum
amount of the Offering, the Offering may be continued, and additional closings
may be held (each a "SUBSEQUENT CLOSING") throughout the Offering Period.
3.2 Closing Date. The Initial Closing and any Subsequent Closing shall take
place at such times and locations determined by the Company and the Subscribers.
The Company shall provide written notice to Agent of any such closing date as
well as the location and time thereof.
3.3 In consideration of the Company's utilization of Xxxxxxx.xxx to
consummate an Offering, the Company agrees to (i) pay the Agent a cash fee of
ten percent (10%) of the gross subscription proceeds of the Initial Closing and
any Subsequent Closings (the "CLOSING FEE") with an investor identified by
Xxxxxxx.xxx and not previously known to the Company.
3.4 Payment of Fees. At any closing, the Escrow Agent shall be authorized
to pay from the fees in the Escrow Account; (i) Escrow Account fees (estimated
at between $2500-4000); and (ii) the Closing Fee.
4. Offering of the Securities by the Company.
4.1 In offering the Securities for sale, the Company shall undertake to
negotiate directly with the Subscribers without the assistance of the Agent
unless the Agent agrees in writing pursuant to a separate agreement to act on
behalf of the Company. However, the Company agrees to promptly keep the Agent
advised regarding all aspects of the Offering. All offers shall be made
exclusively by the Company upon the terms and subject to the conditions set
forth in the Offering Documents, as from time to time in effect.
4.2 The Subscribers have represented to the Agent and will be required to
represent to the Company that they are "accredited investors" as defined in
Regulation D of the Act.
5. Non-Circumvention. The Company hereby agrees as follows:
5.1 The Company acknowledges that the Subscribers are an extremely valuable
confidential business asset of the Agent and agrees to maintain the
confidentiality of the Subscriber's identity as well as the information provided
by the Subscribers and shall not disclose such information to third parties for
any reason, except as required by applicable law or pursuant to prior written
consent by Agent. The Company agrees to provide to Agent at least three (3)
business days prior written notice of any disclosure concerning a Subscriber
required by applicable law. Such Subscribers shall also include those entities
and their affiliates which invest or have been offered an opportunity to invest
by the Company or the Agent in the Offering (the "CLIENTS"). For the later to
occur of a period of two years from the date hereof or the date of termination
of this Agreement, neither the Company nor its affiliates will directly or
indirectly solicit or enter into any financing transaction with the Clients
without the written consent of Agent and payment to Agent of compensation no
less than the compensation to be paid to Agent hereunder if the Agreement were
still in effect.
5.2 In the event that Company breaches Section 5.1 of this Agreement, Agent
shall be entitled to receive compensation in the same amount as the Closing Fee
as if the financing raised in such Offering had been consummated pursuant to
this Agreement.
6. Covenants of the Company. The Company covenants and agrees with the
Agent that:
6.1 The Company will pay, whether or not the transactions contemplated
hereunder are consummated, all of its costs and expenses incident to the
performance of its obligations under this Agreement, including all expenses
incident to the authorization of the Securities and their issue and delivery to
the Agent, any original issue taxes in connection therewith, all transfer taxes,
if any, incident to the initial sale of the Securities, the fees and expenses of
the Company's counsel (except as provided below) and accountants, and the cost
of reproduction and furnishing to the Subscriber and Agent copies of any
Offering Documents.
6.2 The Company shall be solely responsible for making any and all filings
required by the Blue Sky authorities and filings required by the laws of the
jurisdictions in which the Subscribers are located.
7. Indemnification. The Company agrees to indemnify and hold harmless the
Agent, each person who controls the Agent within the meaning of Section 15 of
the Act and the Agent's employees, accountants, attorneys and agents (the
"AGENT'S INDEMNITEES") against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become subject
under the Act or any other statute or at common law for any legal or other
expenses (including the costs of any investigation and preparation) incurred by
them in connection with any litigation, whether or not resulting in any
liability, but only insofar as such losses, claims, damages, liabilities and
litigation arise out of or are based upon a breach of this Agreement, any untrue
statement of material fact made in connection with the Offering, contained in
any Offering Documents or any amendment or supplement thereto or any application
or other document filed in any state or jurisdiction in order to qualify the
Securities under the Blue Sky or securities laws thereof, or the omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, under the circumstances under which they were made, not
misleading, all as of the date of any Offering Documents or of such amendment as
the case may be; provided, however, that the indemnity agreement contained in
this Section 7.1 shall not apply to amounts paid in settlement of any such
litigation, if such settlements are made without the consent of the Company, nor
shall it apply to the Agent's Indemnitees in respect to any such losses, claims,
damages or liabilities arising out of or based upon any such untrue statement or
alleged untrue statement or any such omission or alleged omission, if such
statement or omission was made in reliance upon information furnished in writing
to the Company by the Agent specifically for use in connection with the
preparation of any Offering Documents or any such amendment or supplement
thereto or any application or other document filed in any state or jurisdiction
in order to qualify the Securities under the Blue Sky or securities law thereof.
This indemnity agreement is in addition to any other liability which the Company
may otherwise have to the Agent's Indemnitees. The Agent's Indemnitees agree,
within ten (10) days after the receipt by them of written notice of the
commencement of any action against them in respect to which indemnity may be
sought from the Company under this Section 7.1, to notify the Company in writing
of the commencement of such action; provided, however, that the failure of the
Agent's Indemnitees to notify the Company of any such action shall not relieve
the Company from any liability which it may have to the Agent's Indemnitees on
account of the indemnity agreement contained in this Section 7.1, and further
shall not relieve the Company from any other liability which it may have to the
Agent's Indemnitees. If the Agent's Indemnitees shall notify the Company of the
commencement thereof, the Company shall be entitled to participate in (and, to
the extent that the Company shall wish, to direct) the defense thereof at its
own expense, but such defense shall be conducted by counsel of recognized
standing and reasonably satisfactory to the Agent's Indemnitees, defendant or
defendants, in such litigation. The Company agrees to notify the Agent's
Indemnitees promptly of the commencement of any litigation or proceedings
against the Company or any of the Company's officers or directors of which the
Company may be advised in connection with the issue and sale of any of the
Securities and to furnish to the Agent's Indemnitees, at their request, copies
of all pleadings therein and to permit the Agent's Indemnitees to be observers
therein and apprise the Agent's Indemnitees of all material developments
therein, all at the Company's expense.
7.2 The Agent agrees, in the same manner and to the same extent as set
forth in Section 7.1 above, to indemnify and hold harmless the Company, and the
Company's employees, accountants, attorneys and agents (the "COMPANY'S
INDEMNITEES") with respect to any material breach of any representation,
warranty or covenant made by the Agent in this Agreement, or any violation of
the Act, the Rules and Regulations and any other applicable laws. The Agent's
liability hereunder shall be limited to the amount received by it for acting as
Agent in connection with the Offering.
IN NO EVENT SHALL AGENT BE LIABLE TO THE COMPANY FOR ANY INDIRECT, INCIDENTAL OR
CONSEQUENTIAL DAMAGES ARISING OUT OF THE SERVICES PROVIDED UNDER THIS AGREEMENT
OR ANY RELATED AGREEMENT.
The Agent shall not be liable for amounts paid in settlement of any such
litigation if such settlement was effected without its consent. In case of the
commencement of any action in respect of which indemnity may be sought from the
Agent, the Company's Indemnitees shall have the same obligation to give notice
as set forth in Section 7.1 above, subject to the same loss of indemnity in the
event such notice is not given, and the Agent shall have the same right to
participate in (and, to the extent that it shall wish, to direct) the defense of
such action at its own expense, but such defense shall be conducted by counsel
of recognized standing reasonably satisfactory to the Company. The Agent agrees
to notify the Company's Indemnitees and, at their request, to provide copies of
all pleadings therein and to permit the Company's Indemnitees to be observers
therein and apprise them of all the material developments therein, all at the
Agent's expense.
8. Effectiveness of Agreement. This Agreement shall become effective upon
execution by both parties.
9. Termination.
9.1 This Agreement may be terminated by the Agent or the Company at any
time by notice to the other party in the sole discretion of the terminating
party.
9.2 Any termination of this Agreement pursuant to this Section shall be
without liability of any character (including, but not limited to, loss of
anticipated profits, actual or consequential damages) on the part of any party
thereto, except that the Company shall remain obligated to pay the costs and
expenses provided to be paid by it specified in Sections 3, 5, and 6; and the
Company and the Agent shall be obligated to pay, respectively, all losses,
claims, damages or liabilities, joint or several, under Section 7 of this
Agreement.
10. Agent's Representations, Warranties, and Covenants. The Agent
represents and warrants to and agrees with the Company that:
10.1 Agent is a corporation duly incorporated and existing under the laws
of the state of Delaware. Agent is registered with the Securities and Exchange
Commission and the NASD.
10.2 There is not now pending or threatened against the Agent any action or
proceeding of which the Agent has been advised, either in any court of competent
jurisdiction, before the Securities and Exchange Commission or before any state
securities commission or the NASD, concerning the Agent's activities which would
materially and adversely impair the ability of the Agent to conduct the Offering
as contemplated by this Agreement.
10.3 Agent shall use its best efforts so as not to introduce any Subscriber
to the Company who has not represented to the Agent that they are an "accredited
investor" as defined under the Act and the rules and regulations promulgated
thereunder.
11. Notices. Except as otherwise expressly provided in this Agreement:
11.1 Whenever notice is required by the provisions of this Agreement to be
given to the Company, such notice shall be in writing, addressed to the Company
as described on the signature page of this Agreement.
11.2 Whenever notice is required by the provisions of this Agreement to be
given to the Agent, such notice shall be given in writing, addressed to the
Agent, at:
If to the Agent: Xxxxxxx.xxx, Inc.
Atlanta Financial Center
0000 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxx X. Xxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
11.3 Any notice instructing the Escrow Agent to distribute monies or
Securities held in Escrow must be signed by authorized agents of both the
Company and the Agent in order to be valid.
12. Miscellaneous.
12.1 Benefit. This Agreement is made solely for the benefit of the
Agent and the Company, their respective officers and directors and any
controlling person referred to in Section 15 of the Act and their respective
successors and assigns, and no other person may acquire or have any right under
or by virtue of this Agreement, including, without limitation, the holders of
any Securities. The term "successor" or the term "successors and assigns" as
used in this Agreement shall not include any purchasers, as such, of any of the
Securities.
12.2 Survival. The respective indemnities, agreements, representations,
warranties, covenants and other statements of the Company and the Agent, or the
officers, directors or controlling persons of the Company and the Agent as
set forth in or made pursuant to this Agreement and the indemnity agreements of
the Company and the Agent contained in Section 7 hereof shall survive and remain
in full force and effect, regardless of (i) any investigation made by or on
behalf of the Company or the Agent or any such officer, director or controlling
person of the Company or of the Agent; or (ii) termination of this Agreement.
12.3 Governing Law. The validity, interpretation, and construction of this
Agreement will be governed by the Laws of the State of Georgia. The parties
further agree that any action between them shall be heard in Atlanta, Georgia,
and expressly consent to the jurisdiction and venue of the Superior Court of
Xxxxxx County, Georgia, and the United States District Court for the Northern
District of Georgia, Atlanta Division for the adjudication of any civil action
asserted pursuant to this Paragraph.
12.4 Counterparts. This Agreement may be executed in any number of
counterparts, each of which may be deemed an original and all of which together
will constitute one and the same instrument.
12.5 Confidential Information. All confidential financial or business
information (except publicly available or freely usable material otherwise
obtained from another source) respecting either party will be used solely by the
other party in connection with the transactions contemplated by this Agreement,
will be revealed only to employees or contractors of such other party who are
necessary to the conduct of such transactions, and be otherwise held in strict
confidence ("CONFIDENTIAL INFORMATION").
12.6 Ownership. All materials, documentation, computer programs, inventions
(whether or not patentable), pictures, audio, video, artistic works, and all
works of authorship, including all worldwide rights therein under patent,
copyright, trademark, trade secret or other property right created or developed
by Agent ("WORK PRODUCT") are owned by Agent. Work Product shall not include
Confidential Information of the Company. If ownership of all title, right and
interest of the intellectual property rights in the Work Product shall not
exclusively vest in the Agent, Company hereby assigns to Agent, and upon the
future creation thereof automatically assigns to Agent, without further
consideration, the ownership of all Work Product.
12.7 Public Announcements. Neither party hereto will issue any public
announcement concerning the within transactions without the approval of the
other party.
12.8 Recitals. The recitals to this Agreement are a material part hereof,
and each recital is incorporated into this Agreement by reference and made a
part of this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly caused this Agreement to be
executed as of the 1st day of February, 2001.
"THE COMPANY"
PRONETLINK, INC.
By:
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Name: Xxxx Xxxxxx Collardeau
Title: President & Chief Executive Officer
Address: 000 Xxxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Email: xxx@xxxxxxxxxx.xxx
Tax ID #: 00-0000000
"THE AGENT"
XXXXXXX.XXX, INC.
By:
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Name: XXXXXXX X. XXXXXX
Title: CHIEF COMPLIANCE OFFICER
