PLACEMENT AGENCY AGREEMENT August 31, 2007
Exhibit
10.4
August
31, 2007
FIG
Partners, L.L.C.
000
Xxxxxx Xxxxxx
0000
Xxxxxxxxx Xxxxxx, XX
Xxxxx
0000
Xxxxxxx,
Xxxxxxx 00000
Gentlemen:
Northern
Oil and Gas, Inc., a Nevada corporation (the “Company”), proposes to offer (the
“Offering”) an aggregate up to 4,242,424 shares (the “Shares”) of its common
stock, $0.001 par value per share (“Common Stock”) at the price of $3.30 per
Share (the “Offering Price”) pursuant to the Offering. The Company proposes to
offer such Shares to “accredited investors” (as defined in Regulation D under
the Securities Act of 1933, as amended (the “1933 Act”)) as well as no more than
35 unaccredited investors pursuant to an exemption from registration under
Rule
506 issued under the 1933 Act.
The
Company hereby confirms its agreement, on the terms and subject to the
conditions set forth herein, to retain FIG Partners, L.L.C., a Georgia limited
liability company, and its Energy Capital Group (the “Placement Agent”), on a
“best efforts” basis, to (i) assist with the book keeping and marketing of the
Offering process, and (ii) to introduce the Company to, and assist the Company
in procuring subscriptions from, certain “accredited investors,” and up to 35
unaccredited investors who either alone or together with their advisors have
such knowledge and experience in financial and business matters that they
are
capable of evaluating the merits and risks of investment in the Common Stock
as
prospective purchasers (collectively “Purchasers”) of the Shares. The sale to
such Purchasers will be made through a private placement offering by the
Company, through the Placement Agent (or its designated selected dealers)
on a
“best efforts” basis, pursuant to the Confidential Private Placement Memorandum
dated August 17, 2007, and all supplements, amendments and exhibits thereto,
all
of which constitute an integral part thereof (the “Memorandum”), separate
subscription agreements (the “Subscription Agreements”) and certificates of
investor status (the “Questionnaires”) between the Company and each Purchaser of
Shares and related documents in accordance with Section 4(2) of the 1933
Act and
Regulation D promulgated thereunder.
The
Memorandum, the Subscription Agreements and the Questionnaires are collectively
referred to herein as the “Offering Documents.” The Company, at its sole cost,
shall prepare and deliver to the Placement Agent a reasonable number of copies
of the Offering Documents in form and substance satisfactory to the Placement
Agent.
FIG
Partners, L.L.C.
August
31, 2007
Page
2
Each
prospective Purchaser subscribing to purchase Shares shall be required to
deliver, among other things, an executed Subscription Agreement and
Questionnaire. The Company shall make available to each prospective Purchaser,
at a reasonable time prior to the purchase of Shares, the opportunity to
ask
questions of and receive answers from the Company concerning the terms and
conditions of the Offering and the opportunity to obtain additional information
necessary to verify the accuracy of the documents delivered in connection
with
the purchase of Shares to the extent it possesses such information or can
acquire it without unreasonable effort or expense. After the prospective
Purchasers have had an opportunity to review the Offering Documents and to
address all inquiries to the Company, separate Subscription Agreements and
Questionnaires shall be completed by each prospective Purchaser. The Company
and
the Placement Agent, in the exercise of their reasonable discretion, shall
each
have the right to reject subscriptions.
Capitalized
terms used in this Placement Agency Agreement (this “Agreement”), unless
otherwise defined herein or unless the context otherwise indicates, shall
have
the same meanings provided in the Offering Documents.
1. Appointment
of Placement Agent.
(a) The
Placement Agent is hereby appointed to act as the lead placement agent of
the
Company (subject to the Placement Agent’s right to have Selected Dealers, as
defined in Section 1(c) hereof, participate in the Offering) during the Offering
Period (as defined below). The Placement Agent’s engagement is on a “best
efforts” basis. The Company intends to identify its own investors and, in such
event, the Placement Agent will assist the Company in the development of
a
marketing strategy for the Offering. To the extent that the Company is unable
to
identify its own investors, the Placement Agent will assist the Company in
finding qualified Purchasers. The Placement Agent shall not be deemed an
agent
of the Company for any other purpose by virtue of this Agreement. The “Offering
Period” shall commence on the day the Offering Documents are first made
available to the Placement Agent by the Company for delivery in connection
with
the offering for the sale of Shares (the “Commencement Date”), and shall expire
upon the earlier to occur of (i) the closing of the Offering (the “Closing”),
and (ii) 11:59 p.m. Georgia time on September 30, 2007 subject to an extension,
at the option of the Placement Agent (the “Termination Date”).
(b) Subject
to the performance by the Company of all of its obligations to be performed
under this Agreement and to the completeness and accuracy of all representations
and warranties of the Company contained in this Agreement, the Placement
Agent
hereby accepts such agency and agrees to use its best efforts to assist the
Company in finding qualified Purchasers pursuant to the Offering described
in
the Offering Documents. It is understood that the Placement Agent has no
commitment to sell or purchase any of the Shares. The Placement Agent’s agency
hereunder is not terminable by the Company prior to the Termination Date
unless
the Placement Agent has materially breached any of its covenants or agreements
hereunder and failed to cure such breach within fifteen (15) days after written
notice thereof is given by the Company to the Placement Agent.
FIG
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August
31, 2007
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(c) The
Placement Agent may engage other persons, selected in its sole discretion,
who
are members of NASD and who have executed a Selected Dealers Agreement (each
such person being hereinafter referred to as a “Selected Dealer”) pursuant to
which such Selected Dealer agrees to comply with all the obligations of the
Placement Agent hereunder as if such Selected Dealer were a party hereto
for the
benefit of the Company, and the Placement Agent may allow such persons to
receive such part of the compensation and payment of expenses payable to
the
Placement Agent hereunder as the Placement Agent shall determine; provided,
however, that any such compensation shall be received pursuant to Section
4(d)
hereof.
(d) Subscriptions
for Shares shall be evidenced by the execution by each Purchaser of a
Subscription Agreement. No Subscription Agreement shall be effective unless
and
until it is accepted by the Company. The Placement Agent shall not have any
independent obligation to verify the accuracy or completeness of any information
contained in any Subscription Agreement or the authenticity, sufficiency,
or
validity of any check delivered by any prospective Purchaser in payment for
Shares nor shall the Placement Agent incur any liability with respect to
any
such verification or failure to verify.
(e) Certain
affiliates of the Placement Agent, as identified by the Placement Agent,
may
purchase Shares in the Offering. Affiliates of the Placement Agent will invest
net of cash commissions and expenses. Accordingly, the Placement Agent will
not
receive any commissions or expense allowances on the Shares purchased by
its
affiliates and the Company will receive net proceeds equivalent to the net
proceeds received from the purchase of Shares by persons not affiliated with
the
Placement Agent.
(f) All
subscription checks and funds shall be promptly and directly delivered without
offset or deduction to the Company. Any escrow procedures established by
the
Company in connection with the sale of Shares shall comply with Securities
and
Exchange Commission Rule 15c2-4 promulgated under the 0000 Xxx. All purchasers
to whom the Agent arranges for the sale of Shares shall be instructed to
make
their check for payment of the Shares payable to “Northern Oil and Gas, Inc.”
The Company shall transmit all funds that it receives from purchasers, along
with each originally executed subscription agreement for the purchase of
Shares,
to any applicable escrow agent by noon of the next business day following
receipt thereof.
2. Representations
and Warranties of the Company.
The
Company represents and warrants to the Placement Agent and each Selected
Dealer,
if any, as follows:
(a) The
Offering Documents, as of their respective dates, do and shall, as of the
date
of the Memorandum and the Closing, describe the material aspects of an
investment in the Company and conform in all respects with the requirements
of
Section 4(2) of the 1933 Act and Regulation D promulgated thereunder and
with
the requirements of all other published rules and regulations of the Securities
and Exchange Commission (the “SEC”) currently in effect relating to “private
offerings” to “accredited investors” as that term is defined in Regulation D
under the 1933 Act. The Offering Documents will not, as of the date of the
Memorandum and the Closing, contain any untrue statement of a material fact
or
omit to state any material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that no representation, covenant or warranty
is
made with respect to information relating to the Placement Agent that is
provided in writing by the Placement Agent to the Company specifically for
inclusion in the Offering Documents. The statistical and market related data
contained in the Offering memorandum are based on or derived from sources
which
the Company reasonably believes are reliable and accurate. If at any time
prior
to the completion of the Offering or other termination of this Agreement
any
event shall occur as a result of which it might become necessary to amend
or
supplement the Offering Documents so that they do not include any untrue
statement of any material fact or omit to state any material fact necessary
in
order to make the statements therein, in the light of the circumstances then
existing, not misleading, the Company will promptly notify the Placement
Agent
and will supply the Placement Agent (or the prospective Purchasers designated
by
the Placement Agent) with amendments or supplements correcting such statement
or
omission. The Company shall also provide the Placement Agent, for delivery
to
all offerees and Purchasers and their representatives, if any, any information,
documents and instruments that the Placement Agent and the Company’s counsel
reasonably deem necessary to comply with applicable law. At the time of
submission to any regulatory agencies and at all times subsequent thereto
until
the Closing Date, all notices, applications and other filings (the
“Applications”) made therewith have and will comply as to form in all material
respects with all applicable rules and regulations of the applicable regulatory
agencies (except as modified or waived in writing by the applicable regulatory
agencies). The information included in the Applications is true, complete
and
correct in all material respects.
FIG
Partners, L.L.C.
August
31, 2007
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(b) The
Company has no subsidiaries other than those listed in the 10-K filed by
the
company with the SEC for the year ended December 31, 2006 (collectively,
the
“Subsidiaries”). The Company and each of its Subsidiaries is a corporation,
limited partnership, limited liability company or unlimited liability duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated or organized, with corporate or
limited
partnership power and authority to own, lease, use and operate its properties
and to carry on its business as now operated and conducted. The Company and
each
of its Subsidiaries is duly qualified as a foreign corporation or limited
partnership to do business and is in good standing in each jurisdiction in
which
its ownership or use of property or the nature of the business conducted
by it
makes such qualification necessary, except where the failure to be so qualified
or in good standing would not have any material adverse effect on the business,
operations, assets, financial condition or prospects of the Company (a “Material
Adverse Effect”).
(c) The
Company has all requisite corporate power and authority to enter into and
perform this Agreement, the Registrations Rights Agreement, and each of the
other documents contemplated by this Agreement (collectively, the “Transaction
Documents”), and to consummate the transactions contemplated hereby and thereby,
in accordance with the terms hereof and thereof. The execution and delivery
of
this Agreement and each of the other Transaction Documents by the Company
and
the consummation by it of the transactions contemplated hereby and thereby
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. This Agreement and each of the other Transaction Documents have
been
duly executed and delivered by the Company. This Agreement and each of the
other
Transaction Documents will constitute upon execution and delivery by the
Company, a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as such enforceability
may be limited by: (i) applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws in effect that limit creditors’ rights
generally; (ii) equitable limitations on the availability of specific remedies;
(iii) principles of equity (regardless of whether such enforcement is considered
in a proceeding in law or in equity); and (iv) to the extent rights to
indemnification and contribution may be limited by federal securities laws
or
the public policy underlying such laws.
FIG
Partners, L.L.C.
August
31, 2007
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5
(d) As
of the
date hereof, the authorized and outstanding capital stock of the Company
is as
set forth in the Subscription Agreements. All outstanding shares of Common
Stock
are duly authorized, validly issued, fully paid and nonassessable. No shares
of
capital stock of the Company are subject to preemptive rights or any other
similar rights of the shareholders of the Company or any liens or encumbrances
imposed through the actions or failure to act of the Company. As of the date
hereof, the Company's outstanding options to purchase shares of Common Stock
is
as set forth in the Subscription Agreements. As of the date hereof except
to the
extent described in the preceding sentence or in the Subscription Agreements,
(i) there are no outstanding options, warrants, scrip, rights to subscribe
for,
puts, calls, rights of first refusal, agreements, understandings, claims
or
other commitments or rights of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for any shares of capital
stock of the Company or any of its Subsidiaries, or arrangements by which
the
Company or any of its Subsidiaries is or may become bound to issue additional
shares of capital stock, and (ii) there are no agreements or arrangements
under
which the Company or any of its Subsidiaries is obligated to register the
sale
of any of its or their securities under the 1933 Act (except in the Registration
Rights Agreement incorporated herein). Except as may be described in any
documents which have been publicly filed by any of the Company's stockholders,
to the Company’s knowledge, there are no agreements between the Company’s
stockholders with respect to the voting or transfer of the Company’s capital
stock or with respect to any other aspect of the Company’s affairs.
(e) The
execution, delivery and performance of this Agreement and each of the other
Transaction Documents by the Company and the consummation by the Company
of the
transactions contemplated hereby and thereby will not (i) conflict with or
result in a violation of any provision of the articles of incorporation,
as
amended, of the Company or the bylaws, as amended, of the Company, (ii) violate
or conflict with, or result in a breach of any provision of, or constitute
a
default (or an event which with notice or lapse of time or both could become
a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any material agreement, indenture, patent,
patent license or instrument to which the Company or any of its Subsidiaries
is
a party, or (iii) result in a violation of any federal, state, local, municipal,
foreign, international, multinational or other law, rule, regulation, order,
judgment, decree, ordinance, policy or directive, including those entered,
issued, made, rendered or required by any court, administrative or other
governmental body, agency or authority, or any arbitrator (collectively,
a
“Legal Requirement”) applicable to the Company or any of its Subsidiaries or by
which any property or asset of the Company or any of its Subsidiaries is
bound
or affected (except for such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as would not, individually or
in the
aggregate, have a Material Adverse Effect). Neither the Company nor any of
its
Subsidiaries is in violation of its certificate or articles of incorporation,
bylaws or other organizational documents and neither the Company nor any
of its
Subsidiaries is in default (and no event has occurred which with notice or
lapse
of time would result in a default) under, and neither the Company nor any
of its
Subsidiaries has taken any action or failed to take any action that would
give
to others any rights of termination, amendment, acceleration or cancellation
of,
any agreement or instrument to which the Company or any of its Subsidiaries
is a
party or by which any property or assets of the Company or any of its
Subsidiaries is bound or affected, except for possible defaults as would
not,
individually or in the aggregate, have a Material Adverse Effect. Except
with
respect to any additional listing applications and other filings related
to the
listing of the Shares to be filed with the NASD as specifically contemplated
by
this Agreement and as required under the 1933 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,
governmental agency, regulatory agency, self regulatory organization or stock
market or any third party in order for it to execute, deliver or perform
any of
its obligations under the Transaction Documents. All consents, authorizations,
orders, filings and registrations that the Company is required to effect
or
obtain pursuant to the preceding sentence have been obtained or effected
on or
prior to the date hereof.
FIG
Partners, L.L.C.
August
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(f) Since
December 31, 2005, the Company has timely filed all reports, schedules, forms,
statements and other documents required to be filed by it with the SEC pursuant
to the reporting requirements of the 1933 Act and 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 to such documents)
incorporated by reference therein, being hereinafter referred to herein as
the
“SEC Documents”), or has timely filed for a valid extension of such time of
filing and has filed any such SEC Documents prior to the expiration of any
such
extension. As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the 1933 Act and 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.
FIG
Partners, L.L.C.
August
31, 2007
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(g) 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
United States 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, year end
adjustments or may be condensed or summary statements) and fairly present
in all
material respects the consolidated financial position of the Company and
its
consolidated Subsidiaries 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
liabilities incurred in the ordinary course of business subsequent to December
31, 2006, and obligations under contracts and 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
taken in the aggregate would not reasonably be expected to have a Material
Adverse Effect.
(h) The
Company has established and maintains disclosure controls and procedures
(as
such term is defined in Rule 13a-15(e) under the Exchange Act). Such disclosure
controls and procedures: (i) are designed to ensure that material information
relating to the Company and its Subsidiaries is made known the Company’s chief
executive officer and its chief financial officer by others within those
entities, particularly during the periods in which the Company’s reports and
filings under the Exchange Act are being prepared, (ii) have been evaluated
for
effectiveness as of the end of the most recent annual period reported to
the
SEC, and (iii) are effective to perform the functions for which they were
established.
(i) Except
with respect to the transactions contemplated hereby and by each of the other
Transaction Documents and except as disclosed in the Disclosure Documents
or has
been disclosed in any public disclosure as defined in Section 101(e) of
Regulations FD promulgated under the Exchange Act, since December 31, 2006:
(i)
the Company and each of its Subsidiaries has conducted its business only
in the
ordinary course, consistent with past practice, and since that date, no changes
have occurred which would reasonably be expected to have a Material Adverse
Effect; and (ii) the Company has not incurred any liabilities (contingent
or
otherwise) other than (A) trade payables, accrued expenses and other liabilities
incurred in the ordinary course of business consistent with past practice
and
(B) liabilities not required to be reflected on the Company’s financial
statements pursuant to GAAP or required to be disclosed in filings made with
the
SEC.
FIG
Partners, L.L.C.
August
31, 2007
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(j) There
is
no Action pending or, to the knowledge of the Company or any of its
Subsidiaries, overtly threatened against or affecting the Company or any
of its
Subsidiaries that (i) adversely affects or challenges the legality, validity
or
enforceability of the Agreement, or (ii) would, if there were an unfavorable
decision, have or reasonably be expected to have a Material Adverse Effect.
Neither the Company nor any of its Subsidiaries, nor any director or officer
thereof (in his or her capacity as such), is or has been the subject of any
Action involving a claim of violation of or liability under federal or state
securities laws or a claim of breach of fiduciary duty. There has not been,
and
to the knowledge of the Company, there is not pending any investigation by
the
SEC involving the Company or any current or former director or officer of
the
Company (in his or her capacity as such). The SEC has not issued any stop
order
or other order suspending the effectiveness of any registration statement
filed
by the Company under the Exchange Act or the 1933 Act.
As used
in this Agreement, “Action” means any action, suit claim, inquiry, notice of
violation, proceeding (including any partial proceeding such as a deposition)
or
investigation against or affecting the Company, any of its Subsidiaries or
any
of their respective properties before or by any court, arbitrator, governmental
or administrative agency, regulatory authority (federal, state, county, local
or
foreign), public board, stock market, stock exchange or trading
facility.
(k) To
the
Company’s knowledge, the Company and each of its Subsidiaries owns or possesses
the requisite licenses or rights to use all patents, patent applications,
patent
rights, inventions, know-how, trade secrets, copyrights, trademarks, trademark
applications, service marks, service names, trade names and copyrights
(“Intellectual Property”) necessary to enable it to conduct its business as now
operated (and, to the Company’s knowledge, as presently contemplated to be
operated in the future); there is no claim or Action by any person pertaining
to, or proceeding pending, or to the Company’s knowledge threatened, which
challenges the right of the Company or of a Subsidiary with respect to any
Intellectual Property necessary to enable it to conduct its business as now
operated and to the Company’s knowledge, the Company’s or its Subsidiaries’
current products and processes do not infringe on any Intellectual Property
or
other rights held by any person, except where any such infringement would
not
reasonably be expected to have a Material Adverse Effect.
(l) The
Company and each of its Subsidiaries has made or filed all federal, state
and
foreign income and all other tax returns, reports and declarations required
by
any jurisdiction to which it is subject (unless and only to the extent that
the
Company and each of its Subsidiaries has set aside on its books provisions
reasonably adequate for the payment of all unpaid and unreported taxes) and
has
paid all taxes and other governmental assessments and charges that are material
in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and has set aside
on
its books provisions reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or declarations
apply. There are no unpaid taxes in any material amount claimed to be due
by the
taxing authority of any jurisdiction, and the officers of the Company know
of no
basis for any such claim. The Company has not executed a waiver with respect
to
the statute of limitations relating to the assessment or collection of any
foreign, federal, state or local tax.
FIG
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August
31, 2007
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(m) The
Company and each of its Subsidiaries is in possession of all material
franchises, grants, authorizations, licenses, permits, easements, variances,
exemptions, consents, certificates, approvals and orders necessary to own,
lease
and operate its properties and to carry on its business as it is now being
conducted (collectively, “Permits”), except when the failure to have same would
not result in a Material Adverse Effect, and would not prohibit or otherwise
materially interfere with the ability of the Company to continue business
in the
ordinary course or perform its obligations under this Agreement and under
its
other material agreements. There is no Action pending or, to the knowledge
of
the Company, threatened regarding suspension or cancellation of any of the
Permits. Neither the Company nor any of its Subsidiaries is in conflict with,
or
in default or violation of, any of the Permits, except for any such conflicts,
defaults or violations which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect.
(n) Since
December 31, 2006, except as set forth in any document filed with the SEC,
no
event has occurred or, to the knowledge of the Company, circumstance exists
that
(with or without notice or lapse of time): (i) may constitute or result in
a
violation by the Company or any of its Subsidiaries, or a failure on the
part of
the Company or its Subsidiaries to comply with, any Legal Requirement; or
(ii)
may give rise to any obligation on the part of the Company or any of its
Subsidiaries to undertake, or to bear all or any portion of the cost of,
any
remedial action of any nature in connection with a failure to comply with
any
Legal Requirement, except in either case that would not reasonably be expected
to have a Material Adverse Effect. Neither the Company nor any of its
Subsidiaries has received any notice or other communication from any regulatory
authority or any other person, nor does the Company have any knowledge
regarding: (x) any actual, alleged, possible or potential violation of, or
failure to comply with, any Legal Requirement, or (y) any actual, alleged,
possible or potential obligation on the part of the Company or any of its
Subsidiaries to undertake, or to bear all or any portion of the cost of,
any
remedial action of any nature in connection with a failure to comply with
any
Legal Requirement, except in either case that would not reasonably be expected
to have a Material Adverse Effect.
(o) The
Company is in compliance in all material respects with the provisions of
the
Xxxxxxxx-Xxxxx Act of 2002 and the rules and regulations promulgated thereunder
that are applicable to it.
FIG
Partners, L.L.C.
August
31, 2007
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10
(p) “Environmental
Laws” shall mean, collectively, all Legal Requirements, including any federal,
state, local or foreign statute, laws, rule, regulation, ordinance, code,
policy
or rule of common law or any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent, decree or judgment,
relating to pollution or protection of human health, the environment (including,
without limitation, ambient air, surface water, groundwater, land surface
or
subsurface strata) or wildlife, including, without limitation, laws and
regulations relating to the release or threatened release of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products (collectively, “Hazardous Materials”) or to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials. Except
for such matters as could not, singly or in the aggregate, reasonably be
expected to result in a Material Adverse Effect, (i) the Company and its
Subsidiaries have complied and are in compliance with all applicable
Environmental Laws;
(ii)
without limiting the generality of the foregoing, the Company and its
Subsidiaries have obtained, have complied, and are in compliance with all
Permits that are required pursuant to Environmental Laws for the occupation
of
their respective facilities and the operation of their respective
businesses;
(iii)
none
of
the Company or its Subsidiaries has received any written notice, report or
other
information regarding any actual or alleged violation of Environmental Laws,
or
any liabilities or potential liabilities (including fines, penalties, costs
and
expenses), including any investigatory, remedial or corrective obligations,
relating to any of them or their respective facilities arising under
Environmental Laws, nor, to the knowledge of the Company is there any factual
basis therefor; (iv)
there
are no underground storage tanks, polychlorinated biphenyls, urea formaldehyde
or other hazardous substances (other than small quantities of hazardous
substances for use in the ordinary course of the operation of the Company’s and
its Subsidiaries’ respective businesses, which are stored and maintained in
accordance and in compliance with all applicable Environmental Laws), in,
on,
over, under or at any real property
owned or
operated by the Company and/or its Subsidiaries; (v)
there
are no conditions existing at any real property or with respect to the Company
or any of its Subsidiaries that require remedial or corrective action, removal,
monitoring or closure pursuant to the Environmental Laws;
and
(vi) to the knowledge of the Company, neither the Company nor any of its
Subsidiaries has contractually, by operation of law, or otherwise amended
or
succeeded to any liabilities arising under any Environmental Laws of any
predecessors or any other Person.
(q) Except
for any lien for current taxes not yet delinquent or which are being contested
in good faith and by appropriate proceedings, the Company and its Subsidiaries
have good and marketable title to all real property and all personal property
owned by them which is material to the business of the Company and its
Subsidiaries. Any leases of real property and facilities of the Company and
its
Subsidiaries are valid and effective in accordance with their respective
terms,
except as would not have a Material Adverse Effect.
(r) Except
pursuant to the Registration Rights Agreement or as described in the
Subscription Agreements, neither the Company nor any Subsidiary is currently
subject to any agreement providing any person or entity any rights (including
piggyback registration rights) to have any securities of the Company or any
Subsidiary registered with the SEC or registered or qualified with any other
governmental authority.
(s) The
Common Stock is registered pursuant to Section 12(g) of the Exchange Act,
and the Company has taken no action designed to, or which, to the knowledge
of
the Company, is likely to have the effect of, terminating the registration
of
the Common Stock under the Exchange Act. The Company believes in good faith
that
it is eligible to register its Common Stock for resale under Form SB-2
promulgated under the 1933 Act.
FIG
Partners, L.L.C.
August
31, 2007
Page
11
(t) No
labor
or employment dispute exists or, to the knowledge of the Company, is imminent
or
threatened, with respect to any of the employees of the Company that has,
or
could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
(u) Except
as
set forth in the SEC Documents, none of the officers or directors of the
Company, and to the knowledge of the Company, none of the employees of the
Company, is presently a party to any transaction or agreement with the Company
(other than for services as employees, officers and directors) exceeding
$60,000, including any contract, agreement or other arrangement providing
for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any entity
in
which any officer, director, or any such employee has a substantial interest
or
is an officer, director, trustee or partner.
(v) The
Company and its Subsidiaries have insurance policies in full force and effect
of
a type, covering such risks and in such amounts, and having such deductibles
and
exclusions as are customary for conducting businesses and owing assets similar
in nature and scope to those of the Company and its Subsidiaries. The amounts
of
all such insurance policies and the risks covered thereby are in accordance
in
all material respects with all material contracts and agreements to which
the
Company and/or its Subsidiaries is a party and with all applicable Legal
Requirements. With respect to each such insurance policy: (i) the policy
is
valid, outstanding and enforceable in accordance with its terms, except as
such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws in effect that limit creditors’
rights generally, equitable limitations on the availability of specific remedies
and principles of equity (regardless of whether such enforcement is considered
in a proceeding in law or in equity); (ii) neither the Company nor any of
its
Subsidiaries is in breach or default with respect to its obligations thereunder
in any material respect; and (iii) no party to the policy has repudiated,
or
given notice of an intent to repudiate, any provision thereof.
(w) The
Company will file with the SEC a Form 8-K disclosing the Offering within
four
(4) business days of the final Closing of the Offering and attach the relevant
agreements to such Form 8-K.
(x) The
Company understands and confirms that each Subscriber will rely on the
representations and covenants contained in the Subscription Agreement in
effecting the transactions contemplated thereby and the other Transaction
Documents. All representations and warranties provided to the Subscriber,
including the disclosures in the Company’s disclosure schedules attached thereto
furnished by or on behalf of the Company, taken as a whole are true and correct
and do not contain any untrue statement of material fact or omit to state
any
material fact necessary in order to make the statements made therein, in
the
light of the circumstances under which they were made, not misleading. No
event
or circumstance has occurred or information exists with respect to the Company
or its Subsidiaries or its or their businesses, properties, prospects,
operations or financial conditions, which, under applicable law, rule or
regulation, requires public disclosure or announcement by the Company but
which
has not been so publicly announced or disclosed.
FIG
Partners, L.L.C.
August
31, 2007
Page
12
(y) The
Company is not and, after giving effect to the offering and sale of the Shares,
will not be an “investment company” or an entity “controlled” by an “investment
company,” as such terms are defined in the Investment Company Act of 1940, as
amended.
(z) Except
as
otherwise required by applicable law or the rules of any regulatory agency
and
to make a formal announcement of the closing of this Offering, the Company
shall
not, during the period commencing on the date hereof and ending thirty (30)
days
after the Closing Date, issue any press release or other communication, make
any
written or oral statement to any media organization or publication or hold
any
press conference, presentation or seminar, or engage in any other publicity
with
respect to the Company, its financial condition, results of operations,
business, properties, assets, or liabilities, or the Offering, without the
prior
written consent of the Placement Agent except in the ordinary course of business
and not for the purpose of soliciting any interest in the Offering.
(aa) All
employee benefit plans established, maintained or contributed by the Company
and
the Subsidiaries comply in all material respects with requirements of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and no
such plan incurred or assumed any “accumulated funding deficiency” within the
meaning of Section 302 of ERISA or has incurred or assumed any material
liability to the Pension Benefit Guaranty Corporation.
(bb) In
connection with the Offering, the Company has not distributed any offering
materials or made any representation, written or oral, other than as contained
in, or in the case of oral communications, consistent with, the Offering
Documents.
(cc) The
Company has not relied upon the Placement Agent or legal counsel for the
Placement Agent for any legal, tax or accounting advice in connection with
the
offering and sale of the Shares.
3. Representations
and Warranties of the Placement Agent.
The
Placement Agent represents and warrants to the Company as follows:
(a) The
Placement Agent is registered as a broker-dealer under applicable federal
and
state law, is a member in good standing of NASD and has met and will continue
to
meet all registration, licensing, financial and reporting requirements it
is
required to meet under applicable federal and state laws and regulations
in
order to provide the services the Placement Agent has agreed to provide,
or that
the Placement Agent contemplates that it will provide, to the Company under
this
Agreement or otherwise in connection with the Subscription Offering.
FIG
Partners, L.L.C.
August
31, 2007
Page
13
(b) The
Placement Agent will not provide any service or engage in any activity, and
it
will not permit any of its employees, agents, representatives or affiliates
(including any Selected Dealer) to provide any service or engage in any
activity, whether pursuant to this Agreement or otherwise in connection with
the
sale of the Shares, for which it does not have in effect all registrations,
licenses and approvals necessary to cause that service or activity to comply
with applicable federal and state laws and regulations.
(c) The
Placement Agent agrees that any employees, agents or representatives of any
of
the Placement Agent’s affiliates that provide any services to the Company under
this Agreement or otherwise in connection with the sale of the Shares will
be
considered, for purposes of the Placement Agent’s agreements, representations,
warranties and obligations under this Agreement to also be employees, agents,
or
representatives of the Placement Agent.
(d) Notwithstanding
anything contained in this Agreement to the contrary, the terms and conditions
of the sale of the Shares as described in the Offering Documents shall control
the conduct of the sale of the Shares, and neither the Placement Agent nor
any
of its respective employees, agents, representatives or affiliates shall
take
any action in connection with the sale of the Shares contrary to those terms
and
conditions.
(e) In
connection with or during the course of the sale of the Shares, neither the
Placement Agent nor any employee, agent, representative or affiliate of the
Placement Agent will make any representation or provide any information to
any
subscriber or potential subscriber for the Shares other than the representations
and information contained in the Offering Documents or other information
specifically approved by the Company’s Chief Executive Officer or Chief
Financial Officer.
(f) During
the course of the sale of the Shares, only the directors or officers of the
Company are authorized to receive or accept from a subscriber any subscription
and/or payment. In the event that any subscription or payment comes into
the
possession of the Placement Agent or any of its respective employees, agents,
representatives or affiliates, it or he will immediately deliver the same
to an
officer or director of the Company.
(g) This
Agreement has been duly and validly authorized, executed and delivered by
the
Placement Agent and is a valid and binding agreement and obligation of the
Placement Agent.
(h) In
connection with the sale of the Shares, the Placement Agent has not and will
not:
|
a.
|
engage
in general advertising;
|
FIG
Partners, L.L.C.
August
31, 2007
Page
14
|
b.
|
to
its knowledge, solicit a subscription for Shares from an offeree
unless
the Company, its officers or directors, or the Placement Agent
has a
“preexisting relationship” with the offeree;
or
|
|
c.
|
otherwise
violate the requirements for the exemption from the registration
requirements of the Securities Act provided by Rule 506 of Regulation
D.
|
4. Closing;
Placement and Fees.
(a) Closing.
The
Closing shall occur as provided in the Subscription Agreements or any other
such
time and date and may be mutually agreed upon by the parties hereto (the
“Closing Date”). On the Closing Date, payment for the Shares issued and sold by
the Company shall be made to the Company in immediately available funds against
delivery of certificates evidencing the Common Stock comprising such Shares.
The
parties shall evidence the payments made pursuant to this agreement by execution
of a cross receipt at Closing.
(b) Conditions
to Placement Agent’s Obligations.
The
obligations of the Placement Agent hereunder are subject to the accuracy
of the
representations and warranties of the Company herein contained as of the
date
hereof and as of the Closing Date, to the performance by the Company of its
obligations hereunder and to the following additional conditions:
|
1.
|
Due
Qualification or Exemption.
(A) The Offering contemplated by this Agreement shall become qualified
or
be exempt from qualification under the securities laws of the
jurisdictions in which the Shares are contemplated to be offered
not later
than the Closing Date, subject to any filings to be made thereafter
and
(B) at the Closing Date, no stop order suspending the sale of the
Shares
shall have been issued, and no proceeding for that purpose shall
have been
initiated or threatened;
|
|
2.
|
No
Material Misstatements.
Neither the Blue Sky qualification materials, the Offering Documents,
nor
any attachment or supplement thereto, will contain an untrue statement
of
a fact, which in the opinion of the Placement Agent, is material,
or omit
to state a fact, which, in the opinion of the Placement Agent,
is material
and is required to be stated therein, or is, in the opinion of
the
Placement Agent, necessary to make the statements therein, in light
of the
circumstances under which they were made, not
misleading;
|
|
3.
|
Compliance
with Agreements.
The Company shall have complied with all agreements and satisfied
all
conditions on its part to be performed or satisfied hereunder and
under
the Subscription Agreements at or prior to each
Closing;
|
FIG
Partners, L.L.C.
August
31, 2007
Page
15
|
4.
|
Corporate
Action.
The Company shall have taken all corporate action necessary in
order to
permit the valid execution, delivery and performance of the Offering
Documents by the Company, including, without limitation, obtaining
the
approval of the Company’s board of directors, for the execution and
delivery of the Offering Documents, the performance by the Company
of its
obligations hereunder and the Offering contemplated
hereby;
|
|
5.
|
Opinion
of Counsel to the Company.
The Placement Agent shall have received an opinion of counsel to
the
Company, dated as of the Closing Date, in substantially the same
form as
delivered to the Subscribers;
|
|
6.
|
Officer’s
Certificate.
At the Closing, the Placement Agent shall receive a certificate
of the
Chief Executive Officer and Chief Financial Officer of the Company,
dated
as of the Closing Date, to the effect that (i) they have carefully
examined the Memorandum and, as of its date, and the time of purchase,
the
Memorandum did not contain any untrue statement of a material fact
or omit
to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not
misleading; (ii) there has not been, since the respective dates
as of
which information is given in the Memorandum, any material adverse
change
in the financial condition or in the management, earnings, capital,
properties, business prospects or business affairs of the Company,
considered as one enterprise, whether or not arising in the ordinary
course of business; (iii) the representations and warranties of
the
Company contained in this Agreement and the Subscription Agreements
are
true and correct with the same force and effect as though made
at and as
of the Closing Date; (iv) the Company has complied in all material
respects with all material agreements and satisfied all conditions
on its
part to be performed or satisfied under this Agreement and the
Subscription Agreements at or prior to the Closing Date including
the
conditions contained in this Section 4; (v) no stop order has been
issued
or, to their knowledge, is threatened, by any regulatory agency,
or any
other federal or state authority; (vi) no order suspending the
Offering
has been issued and to their knowledge, no proceedings for any
such
purpose have been initiated or threatened by any regulatory agency
or any
other federal or state authority.
|
(c) Blue
Sky.
A
summary blue sky survey shall be prepared by counsel to the Company and
delivered to the Placement Agent prior to the Closing, and shall state the
extent to which and the conditions upon which offers and sales of the Shares
may
be made in certain jurisdictions. It is understood that such survey may be
based
on or rely upon (i) the representations of each Subscriber set forth in the
Subscription Agreement delivered by such Subscriber, (ii) the representations,
warranties and agreements of the Company set forth in Section 2 of this
Agreement, (iii) the representations and warranties of the Placement Agent,
and
(iv) the representations of the Company set forth in the certificate to be
delivered at each Closing pursuant to paragraph (vi) of Section 5(b)
hereof.
FIG
Partners, L.L.C.
August
31, 2007
Page
16
(d) Placement
Fees and Expenses.
Simultaneously with payment for, and delivery of, the Shares at the Closing
as
provided in Section 4(a) above, the Company shall at such Closing pay to
the
Placement Agent, as consideration for the Placement Agent’s services in
connection with the Offering, a fee equal to six percent (6%) of the gross
value
of the Common Stock placed by the Placement Agent for sale. In addition,
the
Company agrees to provide the Placement Agent with warrants to purchase a
number
of shares of Common Stock equal to 6% of the number of shares of Common Stock
placed by the Placement Agent. The warrants will have the same provisions
as the
warrants offered to investors participating in this Offering. Whether or
not the
closing of the Offering occurs, the Company shall reimburse the Placement
Agent
for all reasonable out-of-pocket expenses incurred by the Placement Agent
in
connection with its engagement hereunder (including, without limitation,
reasonable fees and expenses of legal counsel to the Placement Agent); provided,
however, that without the written consent of the Company, the amount of such
reimbursable expenses shall not exceed $45,000 in the aggregate. Reimbursement
of such expenses shall be made by the Company promptly following submission
by
the Placement Agent of invoices therefore from time to time. The Company
shall
also pay all expenses in connection with the qualification of the Shares
under
the securities or Blue Sky laws of the states which the Placement Agent shall
designate.
(e) No
Adverse Changes.
There
shall not have occurred, at any time prior to the Closing (i) any domestic
or
international event, act or other similar occurrence which has disrupted,
or in
the Placement Agent’s sole determination, will materially disrupt the securities
markets; (ii) a general suspension of, or a general limitation on prices
for,
trading in securities on the New York Stock Exchange, the American Stock
Exchange, the NASDAQ Global or Capital Market, or on the OTC Bulletin Board
for
a minimum of one-trading day; (iii) any outbreak of major hostilities or
other
national or international calamity having a material effect on the performance
of this Agreement; (iv) any banking moratorium declared by a state or federal
authority; (v) any moratorium declared in foreign exchange trading by major
international banks or other persons; (vi) any material interruption in the
mail
service or other means of communication within the United States; (vii) any
materially adverse change in the business, properties, assets, results of
operations, prospects or financial condition of the Company; or (viii) any
change in the market for securities in general or in political, financial,
or
economic conditions which, in the Placement Agent’ reasonable judgment, makes it
inadvisable to proceed with the offering, sale, and delivery of the
Shares.
5. Covenants
of the Company.
(a) Use
of
Proceeds.
The net
proceeds of the Offering shall be used by the Company substantially as set
forth
in the Memorandum.
FIG
Partners, L.L.C.
August
31, 2007
Page
17
(b) Expenses
of Offering.
The
Company shall be responsible for and shall bear all expenses incurred in
connection with the Offering, including but not limited to, the costs of
preparing and duplicating the Memorandum and all exhibits thereto; preparing,
duplicating and delivering exhibits thereto and copies of a preliminary,
final
and supplemental prospectus; preparing, duplicating and delivering (including
by
facsimile) all selling documents, including but not limited to the Memorandum,
this Agreement, the Subscription Agreements, the blue sky memoranda and stock
certificates; blue sky fees, filing fees and reasonable legal fees, expenses
and
disbursements of the Placement Agent’s counsel (subject to the limitations set
forth in Section 4(d) above); and the cost of a reasonable number of closing
books for the Placement Agent and its counsel.
(c) Notification.
The
Company shall notify the Placement Agent immediately, and in writing, (i)
when
any event shall have occurred during the period commencing on the date hereof
and ending on the Closing Date as a result of which the Offering Documents
would
include any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances under which they were made,
and
(ii) of the receipt of any notification with respect to the modification,
rescission, withdrawal or suspension of the qualification or registration
of the
Common Stock, or of any exemption from such registration or qualification,
in
any jurisdiction. The Company will use its best efforts to prevent the issuance
of any such modification, rescission, withdrawal or suspension and, if any
such
modification, rescission, withdrawal or suspension is issued and the Placement
Agent so requests, to obtain the lifting thereof as promptly as
possible.
(d) Blue
Sky.
The
Company shall use its best efforts to qualify the Shares for offering and
sale
under exemptions from qualification or registration requirements under the
securities or “blue sky” laws of such jurisdictions as the Placement Agent may
reasonably request; provided however, that the Company will not be obligated
to
qualify as a dealer in securities in any jurisdiction in which it is not
so
qualified or to sign a general consent to service of process in any such
jurisdiction. The Company will not consummate any sale of Shares in any
jurisdiction in which it is not so qualified or in any manner in which such
sale
may not be lawfully made.
(e) Form
D
Filing.
The
Company shall file required copies of a Notice of Sales of Securities on
Form D
with the SEC no later than fifteen (15) days after the first Closing Date.
The
Company shall promptly file such amendments to such Notices on Form D as
shall
become necessary and shall also comply with any filing requirement imposed
by
the laws of any state or jurisdiction in which offers and sales are made.
The
Company shall furnish the Placement Agent with copies of all such filings
and
pay any applicable fees related thereto.
(f) Press
Releases, Etc.
Except
as otherwise required by applicable law or the rules of any regulatory agency,
the Company shall not, during the period commencing on the date hereof and
ending thirty (30) days after the Closing Date, issue any press release or
other
communication, make any written or oral statement to any media organization
or
publication or hold any press conference, presentation or seminar, or engage
in
any other publicity with respect to the Company, their financial condition,
results of operations, business, properties, assets, or liabilities, or the
Offering, without the prior written consent of the Placement Agent except
in the
ordinary course of business and not for the purpose of soliciting any interest
in the Offering.
FIG
Partners, L.L.C.
August
31, 2007
Page
18
(g) No
Offerings.
Pending
completion or termination of the Offerings in accordance with the terms of
this
Agreement, the Company agrees that for a period of 180 days following closing
of
the Offering, it shall not, without the written consent of Placement Agent,
enter into an agreement (whether binding or not) with any other person or
entity
relating to a possible public or private offering or placement of its securities
(in connection with a corporate partnership, strategic alliance or government
funding) or any other transaction which would prevent the consummation of
the
Offering, other than (i) any shares of Common Stock issuable upon exercise
of
warrants or options described in the Memorandum or (ii) any options to purchase
Common stock granted pursuant to the Company’s stock option plan described in
the Subscription Agreements.
(h) Lock-Up
Agreement.
The
Company agrees that its directors, executive officers, and beneficial owners
of
five percent (5%) or more of the Company’s Common Stock, shall not, for a period
of 180 days from the date of the completion of this Offering, sell, assign
or
transfer any of their shares of the Company’s securities without the Placement
Agent’s prior written consent, other than to satisfy the exercise price and/or
tax withholding obligations in connection with the exercise of stock options
granted by the Company (provided that prior notice is given to the Placement
Agent).
(i) No
Statements.
The
Company shall not use the name of the Placement Agent or any officer, director,
employee or shareholder thereof without the express written consent of such
party and such person.
(j) Right
of First Refusal.
The
Placement Agent shall have a right of first refusal to act as the placement
agent on the next succeeding private or public offering by the Company of
any
equity or debt securities conducted during the 24-month period following
the
closing of the Offering. Terms for any equity offering will be on substantially
the same terms set forth in this Agreement, including the same economic terms
as
set forth in Section 4(d) hereof unless otherwise negotiated by the parties
to
this Agreement. Terms for any debt offering shall be negotiated by the parties
of this Agreement, including payment to the placement agent of a cash fee
of no
more than 3% of the principal value of the investment. Such rights shall
survive
for a period of 24 months from the Closing Date or, if earlier, until the
completion of the next succeeding offering
FIG
Partners, L.L.C.
August
31, 2007
Page
19
6. Indemnification.
(a) The
Company agrees to indemnify and hold harmless the Placement Agent and each
Selected Dealer, if any, and their respective partners, affiliates,
shareholders, directors, officers, agents, advisors, representatives, employees,
counsel and controlling persons within the meaning of the Act (a “Placement
Agent Indemnified Party”) from and against any and all losses, liabilities,
claims, damages and expenses whatsoever (and all actions in respect thereof),
and to reimburse the Placement Agent Indemnified Party for reasonable legal
fees
and related expenses as incurred (including, but not limited to the costs
of
giving testimony or furnishing documents in response to a subpoena or otherwise,
the costs of investigating, preparing, pursuing or defending any such action
or
claim, whether or not pending or threatened, whether or not resulting in
any
liability, and whether or not the Placement Agent or any Placement Agent
Indemnified Party is a party thereto), insofar as such losses, liabilities,
claims, damages or expenses arise out of, relate to, whether or not resulting
in
any liability, are in incurred in connection with or are in any way a result
of
(i) the engagement of the Placement Agent pursuant to this Agreement and
in
connection with the transactions contemplated by this Agreement and the other
Offering Documents (the “Engagement”), including any modifications or future
additions to such Engagement and related activities prior to the date hereof,
(ii) any act by either the Placement Agent or any Placement Agent Indemnified
Party taken in connection with the Engagement pursuant to and in accordance
with
this Agreement, except if such Placement Agent or Placement Agent Indemnified
Party was grossly negligent or engaged in willful misconduct, (iii) a breach
of
any representation, warranty, covenant, or agreement of the Company contained
in
this Agreement, (iv) the employment by the Company or any Subsidiary of any
device, scheme or artifice to defraud, or the engaging by the Company or
any
Subsidiary in any act, practice or course of business which operates or would
operate as a fraud or deceit, or any conspiracy with respect thereto, in
connection with the sale of the Shares, or (v) any untrue statement or alleged
untrue statement of a material fact contained in the Offering Documents or
the
omission or alleged omission therefrom of a material fact necessary in order
to
make the statements therein, in light of the circumstances under which they
were
made, not misleading, provided, however, that the Company will not be liable
in
any such case to the extent that any such loss, claim, damage, liability
or
expense arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission so made in conformity with information
furnished by any such Placement Agent Indemnified Party in writing for use
in
the Offering Documents. In addition, the Company shall not be liable for
any
amounts paid in the settlement of any loss, claim, damage, liability, or
action
if such settlement is effected without the consent of the Company (which
such
consent shall not be unreasonably withheld). Any advancement of expenses
pursuant to this Section need only be made by the Company to a Placement
Agent
Indemnified Party if such party first agrees in form and substance reasonably
satisfactory to the Company to repay any such amounts promptly to the Company,
as the case may be, if it is later determined that such person or entity
acted
in bad faith, was grossly negligent or whose misconduct was
willful.
(b) The
Company agrees to indemnify and hold harmless a Placement Agent Indemnified
Party to the same extent as the foregoing indemnity, and subject to the
limitations set forth therein, against any and all loss, liability, claim,
damage and expense whatsoever directly arising out of the exercise by any
person
of any right under the 1933 Act or the Exchange Act or the securities or
Blue
Sky laws of any state on account of violations of the representations,
warranties or agreements set forth in Section 2 hereof.
FIG
Partners, L.L.C.
August
31, 2007
Page
20
(c) The
Placement Agent agrees to indemnify and hold harmless the Company, the Company’s
directors, officers, employees, counsel, advisors, representatives, agents
and
controlling persons within the meaning of the Act (a “Company Indemnified
Party”) and each and all of them, to the same extent as set forth in Section
6(a)(v) of the foregoing indemnity from the Company to the Placement Agent,
but
only with reference to information regarding the Placement Agent furnished
in
writing to the Company by the Placement Agent for use in the Offering Documents
and only to the extent that any losses, claims, damages, and liabilities
in
respect of which indemnification is claimed are finally judicially determined
to
have resulted primarily and directly from the bad faith or gross negligence
of
the Placement Agent.
(d) Promptly
after receipt by a person entitled to indemnification pursuant to subsection
(a), (b), or (c) (an “indemnified party”) of this Section of notice of the
commencement of any action, the indemnified party will, if a claim in respect
thereof is to be made against a person granting indemnification (an
“indemnifying party”) under this Section, notify in writing the indemnifying
party of the commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability which it may have
to
the indemnified party otherwise than under this Section. In case any such
action
is brought against an indemnified party, and it notifies the indemnifying
party
of the commencement thereof, the indemnifying party will be entitled to
participate in, and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, subject
to
the provisions herein stated, with counsel reasonably satisfactory to the
indemnified party, and after notice from the indemnifying party to the
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to the indemnified party for any legal
or
other expenses subsequently incurred by the indemnified party in connection
with
the defense thereof other than reasonable costs of investigation incurred
at the
request of the indemnifying party. The indemnified party shall 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 shall not be at the expense
of the indemnifying party if the indemnifying party has assumed the defense
of
the action with counsel reasonably satisfactory to the indemnified party;
provided that the reasonable fees and expenses of such counsel shall be at
the
expense of the indemnifying party if (i) the employment of such counsel has
been
specifically authorized in writing by the indemnifying party or (ii) the
named
parties to any such action (including any impleaded parties) include both
the
indemnified party or parties and the indemnifying party and, in the opinion
of
counsel of the indemnified party, a conflict of interest exists between such
parties in which case the indemnifying party shall not have the right to
assume
the defense of such action on behalf of the indemnified party or parties,
it
being understood, however, that the indemnifying party shall not, in connection
with any one such action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general allegations
or
circumstances, be liable for the reasonable fees and expenses of more than
one
separate firm of attorneys for the indemnified party or parties (plus local
counsel). No settlement, compromise, consent to entry of judgment or other
termination of any action (collectively, “Terminations”) in respect of which a
Placement Agent Indemnified Party may seek indemnification hereunder (whether
or
not any Placement Agent Indemnified Party is a party thereto) shall be made
without the prior written consent of the Placement Agent Indemnified Party,
which such consent may be withheld at the sole discretion of such Placement
Agent Indemnified Party, provided, however, that the foregoing requirement
of
prior written consent for Terminations shall not apply to the Placement Agent
who may agree to such Terminations on behalf of a Placement Agent Indemnified
Party without the prior written consent of any Placement Agent Indemnified
Party.
FIG
Partners, L.L.C.
August
31, 2007
Page
21
(e) Notwithstanding
any of the provisions of this Agreement, the aggregate indemnification or
contribution of the Placement Agent for or on account of any losses, claims,
damages, liabilities or actions under this Section 6, Section 7 or any other
applicable section of this Agreement, shall not
exceed
the cash fees actually paid to the Placement Agent, except to the extent
such
losses, claims, damages, liabilities or actions are finally judicially
determined to have resulted primarily and directly from the bad faith or
willful
misconduct of the Placement Agent. The respective indemnity and contribution
agreements by the Company and the Placement Agent contained in subsections
(a),
(b), (c) and (d) of this Section 6 and Section 7, and the covenants,
representations and warranties of the Company and the Placement Agent set
forth
in this Agreement shall remain operative and in full force and effect regardless
of (i) any investigation made by the Placement Agent, on the Placement Agent’s
behalf or by or on behalf of any person who controls the Placement Agent,
the
Company or any controlling person of the Company or any director or officer
of
the Company, (ii) acceptance of any of the Shares and payment therefor, or
(iii)
any termination of this Agreement, and shall survive the delivery of the
Shares,
and any successor of the Placement Agent or of the Company or of any person
who
controls the Placement Agent or the Company, as the case may be, shall be
entitled to the benefit of such respective indemnity and contribution
agreements. The respective indemnity and contribution agreements by the Company
and the Placement Agent contained in subsections (a), (b) and (c) of this
Section 6 and Section 7 shall be in addition to any liability which the Company
and the Placement Agent may otherwise have.
7. Contribution.
To
provide for just and equitable contribution, if (i) an indemnified party
makes a
claim for indemnification pursuant to Section 6 but it is found in a final
judicial determination, by a court of competent jurisdiction, not subject
to
further appeal, that such indemnification may not be enforced in such case,
even
though this Agreement expressly provides for indemnification in such case,
or
(ii) any indemnified or indemnifying party seeks contribution under the 1933
Act, the Exchange Act, or otherwise, then the Company (including for this
purpose any contribution made by or on behalf of any officer, director, employee
or agent for the Company, or any controlling person of the Company), on the
one
hand, and the Placement Agent and any Selected Dealers (including for this
purpose any contribution by or on behalf of an indemnified party), on the
other
hand, shall contribute to the losses, liabilities, claims, damages, and expenses
whatsoever to which any of them may be subject, in such proportions as are
appropriate to reflect the relative benefits received by the Company, on
the one
hand, and the Placement Agent and the Selected Dealers, on the other hand;
provided, however, that if applicable law does not permit such allocation,
then
other relevant equitable considerations such as the relative fault of the
Company, the Placement Agent and the Selected Dealers in connection with
the
facts which resulted in such losses, liabilities, claims, damages, and expenses
shall also be considered. In no case shall the Placement Agent or a Selected
Dealer be responsible for a portion of the contribution obligation in excess
of
the cash fees actually received by it pursuant to this Agreement. No person
guilty of a fraudulent misrepresentation shall be entitled to contribution
from
any person who is not guilty of such fraudulent misrepresentation. For purposes
of this Section 7, each person, if any, who controls either of the Placement
Agent or a Selected Dealer within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act and each officer, director, stockholder,
employee and agent of the Placement Agent or a Selected Dealer, shall have
the
same rights to contribution as the Placement Agent or the Selected Dealer,
and
each person, if any who controls the Company within the meaning of Section
15 of
the 1933 Act or Section 20(a) of the Exchange Act and each officer, director,
employee and agent of the Company, shall have the same rights to contribution
as
the Company, subject in each case to the provisions of this Section 7. Anything
in this Section 7 to the contrary notwithstanding, no party shall be liable
for
contribution with respect to the settlement of any claim or action effected
without its written consent. This Section 7 is intended to supersede any
right
to contribution under the Act, the Exchange Act, or otherwise.
FIG
Partners, L.L.C.
August
31, 2007
Page
22
8. Miscellaneous.
(a) Survival.
Any
termination of the Offering without the Closing shall be without obligation
on
the part of any party except that the provisions regarding fees and expenses
contained in Section 5(b), the indemnification provided in Section 6 hereof
and
the contribution provided in Section 7 hereof shall survive any termination
and
shall survive any Closing.
(b) Representations,
Warranties and Covenants to Survive Delivery.
Except
as provided in Section 8(a), the respective representations, warranties,
indemnities, agreements, covenants and other statements of the Company as
of the
date hereof shall survive execution of this Agreement and delivery of the
Shares
and the termination of this Agreement.
(c) No
Other Beneficiaries.
This
Agreement is intended for the sole and exclusive benefit of the parties hereto
and their respective successors and controlling persons, and no other person,
firm or corporation shall have any third-party beneficiary or other rights
hereunder.
(d) Governing
Law; Arbitration.
This
Agreement shall be governed by and construed in accordance with the law of
the
State of Georgia without regard to conflict of law provisions. Any disputes
between the parties hereto shall be settled by binding arbitration in Xxxxxx
County, Georgia.
(e) Counterparts.
This
Agreement may be signed in counterparts with the same effect as if both parties
had signed one and the same instrument.
FIG
Partners, L.L.C.
August
31, 2007
Page
23
(f) Notices.
All
communications hereunder shall be in writing and, except as otherwise provided
herein, will be mailed, delivered or telecopied and confirmed as follows:
if to
the Placement Agent, to FIG Partners, L.L.C., 100 Colony Square, 0000 Xxxxxxxxx
Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx 00000, Attention: Xxxxxxxxxxx X. Xxxxxxx;
if to the Company, to Northern Oil and Gas, Inc., 000 Xxxx Xxxxxx Xxxx, Xxxxx
000, Xxxxxxx, Xxxxxxxxx 00000, Attention: Xxxx Xxxxxxxxxx.
(g) Termination.
Subject
to the general survival provisions contained herein, this Agreement may be
terminated solely at the discretion of the Placement Agent prior to the Closing
upon written notice to the Company.
(h) Entire
Agreement.
This
Agreement constitutes the entire agreement of the parties with respect to
the
matters herein referred and supersedes all prior agreements and understandings,
written and oral, between the parties with respect to the subject matter
hereof.
Neither this Agreement nor any term hereof may be changed, waived or terminated
orally, but only by an instrument in writing signed by the party against
which
enforcement of the change, waiver or termination is sought.
(i) Independent
Contractor.
The
Placement Agent shall act as an independent contractor and nothing contained
herein or otherwise shall be construed to create any partnership or joint
venture between the Placement Agent and the Company.
(j) Headings.
The
headings and captions of the various subdivisions of this Agreement are for
convenience or reference only and shall in no way modify or affect the meaning
or construction of any of the terms or provisions hereof.
(k) Definition.
Any
reference in this Agreement or in any certificate delivered pursuant hereto
to a
party’s “knowledge” or other similar expressions relating to the knowledge or
awareness of any party will include all matters which any of such party’s
officers or directors actually knew or should have known acting in their
capacity as an officer or director of such party.
[Signature
Page Follows]
If
the
foregoing is in accordance with your understanding of our agreement, please
sign
and return to us four copies of this Agreement, whereupon this Agreement
will
become a binding agreement in accordance with its terms.
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Very
truly yours,
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NORTHERN
OIL AND GAS, INC.
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By:
Name:
Title:
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is
hereby confirmed and accepted as of
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the
date first above written.
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FIG
PARTNERS, L.L.C.
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By:
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