PLACEMENT AGENCY AGREEMENT
April 12, 1999
The Zanett Securities Corporation
Tower 49, 31st Floor
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Gentlemen:
This agreement ("AGREEMENT") will confirm that XXXXXX HEALTHCARE, INC., a
Texas corporation (the "COMPANY"), has retained The Zanett Securities
Corporation ("ZANETT" or the "PLACEMENT AGENT") as its exclusive placement agent
to assist the Company, during the 30 day period commencing on the date hereof
(the "TERM"), on "best-efforts" basis, in connection with the placement of up
to 2,250 units (the "UNITS") in two tranches at an aggregate price of $1,000 per
Unit, each Unit consisting of (i) one share of the Company's Series C
Convertible Preferred Stock, par value $.10 per share (each, a "PREFERRED
SHARE"), convertible into shares of the Company's common stock, par value $.01
per share (the "COMMON STOCK"), and (ii) one warrant to acquire 166.667 shares
of Common Stock (each, a "WARRANT"). The rights, preferences and privileges of
the Preferred Shares, including the terms upon which such Preferred Shares will
be convertible into shares of Common Stock, are set forth in a Statement of
Designation of Rights and Preferences (as defined in the Securities Purchase
Agreement (defined below), the "STATEMENT OF DESIGNATION"). The shares of Common
Stock issuable upon conversion of the Preferred Shares or otherwise pursuant to
the Statement of Designation are referred to herein as the "CONVERSION SHARES"
and the shares of Common Stock issuable upon exercise of or otherwise pursuant
to the Warrants are referred to herein as the "WARRANT SHARES." The Preferred
Shares, the Warrants, the Conversion Shares and the Warrant Shares are
collectively referred to herein as the "SECURITIES." The Company agrees that,
during the Term, Zanett shall have the exclusive right to offer and place the
Securities and that all conversations, negotiations, documents and other
materials exchanged between the Company and the Placement Agent shall not be
disclosed or released to any third party without the prior written consent of
Zanett. The Company acknowledges that certain of the aforementioned Securities
may be purchased by affiliates of Zanett.
The Units are being offered to "accredited investors" in accordance with
Regulation D promulgated under the Securities Act of 1933, as amended (the
"SECURITIES ACT"). Each prospective investor ("INVESTOR") subscribing to
purchase the Units will be required to deliver, among other things, a Securities
Purchase Agreement between the Company and the Investor (the "SECURITIES
PURCHASE AGREEMENT") in form and substance reasonably satisfactory to Zanett and
the Company, representing and warranting, among other things, that such Investor
is an "accredited investor" as such term is defined in Regulation D.
Contemporaneous with the execution and delivery of the Securities Purchase
Agreement, the Investors shall execute and deliver a Registration Rights
Agreement (the "REGISTRATION RIGHTS AGREEMENT") in form and substance reasonably
satisfactory
to Zanett and the Company pursuant to which the Company will agree to provide
the Investors certain registration rights under the Securities Act with respect
to the Securities.
The Securities Purchase Agreement, the Statement of Designation, the
Warrants and the Registration Rights Agreement are referred to herein
collectively as the "OFFERING DOCUMENTS." The offering of Units described in the
Offering Documents is referred to herein as the "OFFERING."
1. APPOINTMENT OF PLACEMENT AGENT. Zanett is hereby appointed Placement
Agent of the Company for the purposes of assisting the Company in finding
qualified Investors to participate in the Offering. On the basis of the
representations and warranties and subject to the terms and conditions contained
herein, Zanett hereby accepts such agency and agrees to assist the Company in
finding qualified Investors to participate in the Offering. Zanett's agency
hereunder is not terminable by the Company except upon termination of the
Offering. Upon termination of the Offering, all subscriptions received, if any,
shall be returned to Investors.
2. CLOSING; PLACEMENT FEE AND WARRANT; EXPENSES.
a. CLOSING. Upon satisfaction of the conditions to the closing
contained in the Securities Purchase Agreement, the closings (each, a "CLOSING")
of the purchase and sale of the Units shall take place at the offices of Klehr,
Harrison, Xxxxxx, Xxxxxxxxx & Xxxxxx LLP or such other mutually agreed place, at
such times and dates (each, a "CLOSING DATE") as may be agreed upon between the
Placement Agent, the Investors and the Company.
b. PROCEDURES AT CLOSING. Counsel for the Placement Agent shall act
as escrow agent for each Closing (the "ESCROW AGENT"). At each Closing:
(i) The Company shall deliver to the Escrow Agent, on behalf
of the Placement Agent and the Investors, an opinion of the Company's outside
legal counsel, dated as of the Closing Date, in such form as required by the
Securities Purchase Agreement.
(ii) The Company shall deliver to the Escrow Agent
certificates from the Company, signed by the President or a Vice President
thereof, certifying that attached thereto is a true and correct copy of
resolutions adopted by the Company's Board of Directors authorizing (A) the
execution, delivery and performance of this Agreement, the Securities Purchase
Agreement, the Registration Rights Agreement, the Warrants and other
documentation related to the Offering, (B) the execution and filing of the
amendment to the Statement of Designation with the Secretary of State of the
State of Texas referred to in the Securities Purchase Agreement, and (c) the
issuance of the Preferred Shares and the reservation for issuance and issuance
of the Conversion Shares and the Warrant Shares, and certifying that such
resolutions have not been modified, rescinded or amended and are in full force
and effect.
(iii) The Company shall deliver to the Escrow Agent a
certificate of good standing of the Company, dated as of a recent date, from the
Secretary of State of the State of Texas.
(iv) Each Investor shall deliver to the Escrow Agent two
executed copies of the Securities Purchase Agreement and Registration Rights
Agreement signed by such Investor,
and the Company shall deliver to the Escrow Agent with respect to each Investor
two executed copies of its acceptance of the Securities Purchase Agreement and
Registration Rights Agreement executed by such Investor.
(v) Each Investor shall have delivered by wire transfer to an
escrow account designated by the Escrow Agent an amount equal to the aggregate
purchase price of the Units(s) being purchased by such Investor at such Closing.
(vi) The Company shall have delivered to the Escrow Agent the
duly executed Preferred Shares and Warrants being purchased by the Investors in
such denominations as the Investors shall request.
(vii) The Company and the Placement Agent shall instruct the
Escrow Agent to pay to the Company the purchase price (the "PURCHASE PRICE") for
the Units subscribed for at such Closing, less the Placement Agent Fee (as
defined below), out of the funds on deposit in the escrow account received from
Investors whose Securities Purchase Agreements have been accepted.
c. PLACEMENT FEE; EXPENSES. The Company covenants and agrees to pay
to the Placement Agent at the Closing a fee (the "PLACEMENT AGENT Fee") equal to
9.5% of the aggregate gross proceeds payable to the Company for the sale of the
Units at each Closing. The Placement Agent Fee shall be delivered by the Escrow
Agent to Zanett by wire transfer, in accordance with Zanett's written wiring
instructions, from the funds on deposit in the escrow account simultaneously
with payment for and delivery of the Units at such Closing under the Securities
Purchase Agreement as provided in paragraph 2(a) above. In addition, the
Placement Agent shall be entitled to receive from the Company a non-accountable
expense allowance (the "EXPENSE ALLOWANCE") equal to $55,000. Such Expense
Allowance shall be delivered in the same manner as the Placement Agent Fee. In
addition, the Company shall pay to the Placement Agent, on the first day of each
calendar month during which any Preferred Shares or Warrants are outstanding, a
monitoring and financial advisory fee of Two Thousand Seven Hundred Dollars
($2,700.00).
d. WARRANTS. In addition to the Placement Agent Fee, at each Closing
under the Securities Purchase Agreement, the Company shall issue to the
Placement Agent warrants, in substantially the form attached hereto as EXHIBIT
A, to purchase 83.333 shares of the Company's Common Stock for each $1,000 of
aggregate gross proceeds received by the Company from the sale of the Units at
the Closing (the PLACEMENT WARRANTS"). The Placement Warrants shall be
exercisable for a period of forty (40) months from the date of issuance at a
price per share equal to 110% of the average of the Closing Sale Prices (as
defined in the Statement of Designation) for the Common Stock during the ten
(10) consecutive trading days ending on the trading day immediately preceding
the Closing Date. The shares of the Company's Common Stock issuable upon
exercise of the Placement Warrants shall hereinafter be referred to as the
"PLACEMENT WARRANT SHARES." The Company shall grant the Placement Agent certain
registration rights under the Securities Act with respect to the Placement
Warrant Shares pursuant to the Registration Rights Agreement.
e. EXPENSES OF OFFERING. The Company shall be responsible for and
shall bear all expenses directly and necessarily incurred by it in connection
with the Offering, including, but not limited to, the following: filing fees,
registrar and transfer agent fees, investigatory fees (including,
but not limited to travel, lodging and entertainment expenses), issuer's counsel
and accounting fees, blue sky fees and counsel, if any, and issue and transfer
taxes, if any. In the event one or both of the Closings do not occur during the
Term, the Company shall reimburse the Placement Agent for its reasonable
out-of-pocket expenses incurred in connection with the Offering.
f. NON-CIRCUMVENTION PERIOD; LOCK-UP PERIOD.
(i) The Company agrees that, during the period beginning on
the date hereof and ending three (3) years following the later of the date
hereof and the date of the First Closing (as defined in the Securities Purchase
Agreement) (the "NON-CIRCUMVENTION PERIOD"), it will not, without the prior
written consent of the Placement Agent, negotiate or contract or have
discussions concerning any such matters with any Investor or any other party
introduced to the Company by Placement Agent to obtain additional financing in
any form.
(ii) The Company agrees that, during the period beginning on
the date hereof and ending on that date on which the Purchasers (as defined in
the Securities Purchase Agreement) no longer own twenty percent (20%) or more of
the Preferred Shares (as defined in the Securities Purchase Agreement) purchased
at the First Closing (the "LOCK-UP PERIOD"), it will not, without the prior
written consent of the Placement Agent, contract with any other party to obtain
additional financing in which any equity or equity-linked securities are issued
("FUTURE OFFERINGS"); PROVIDED, HOWEVER, the limitation contained in this
sentence shall not apply to any transaction if at the time of such transaction
the aggregate number of Conversion Shares (as defined in the Securities Purchase
Agreement) issuable on Conversion of Preferred Shares issued at the First
Closing is less than twenty percent (20%) of the average daily trading volume
for shares of Common Stock on the principal exchange or market on which such
shares are traded for the ten (10) trading days immediately preceding the date
of such determination. The Company agrees from the date of this Agreement until
the end of the Lock-Up Period it will not conduct any Future Offering unless it
shall have first delivered to the Placement Agent written notice of such
proposed Future Offering, including the terms and conditions thereof, and
providing the Placement Agent an option, which option must be exercised within
fifteen (15) days following delivery of such notice, to act as the placement
agent for such Future Offering on terms, including fees, no less favorable to
the Company as those set forth in such notice and to place the securities being
offered by the Company in the Future Offering to the Investors or to such other
persons or entities as the Placement Agent shall determine (the limitations
referred to in this and the immediately preceding sentence are hereinafter
collectively referred to as the "CAPITAL RAISING LIMITATION"). The Capital
Raising Limitation shall not apply to any transaction involving issuances of
securities as consideration in a merger, consolidation or acquisition of assets,
or in connection with any strategic partnership or joint venture (the primary
purpose of which is not to raise equity capital), or as consideration for the
acquisition of a business, product or license by the Company, provided such
shares are not covered by an effective registration statement within one year of
the date of consummation thereof. The Capital Raising Limitation shall also not
apply to (i) the issuance of securities pursuant to an underwritten public
offering, (ii) the issuance of securities upon exercise or conversion of the
Company's options, warrants or other convertible securities outstanding as of
the date hereof, or (iii) the grant of additional options or warrants, or the
issuance of additional securities, under any Company stock option, bonus or
restricted stock plan for the benefit of the Company's employees, consultants or
directors pursuant to plans approved by a majority of the Board of Directors who
are not officers of the Company or a majority of the Board's compensation
committee, if any.
3. REPRESENTATIONS AND WARRANTIES AND COVENANTS.
a. The Company represents and warrants to Zanett that this Agreement
has been duly authorized, executed and delivered by the Company and, assuming
the due execution by Zanett, constitutes a legal, valid and binding agreement of
the Company, enforceable against the Company in accordance with its terms.
b. The Company has delivered to Zanett true and complete copies of
the SEC Documents (as defined in the Securities Purchase Agreement) filed by the
Company on or after December 31, 1997 with the Securities and Exchange
Commission (the "SEC") pursuant to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT").
c. The Company recognizes and confirms that Zanett (i) will use and
rely primarily on the SEC Documents and on information provided by the Company
in connection with the transactions contemplated by this Agreement in performing
the services contemplated by this Agreement without having independently
verified the same; (ii) is authorized to assist the Company in the structuring
of the Offering with any prospective purchaser who is an "accredited investor"
as defined in Regulation D under the Securities Act and to provide copies of the
SEC Documents and forms of the Securities Purchase Agreement and other Offering
Documents to prospective purchasers of the Company's securities in connection
with the performance of Zanett's services hereunder; and (iii) does not assume
responsibility for the accuracy or completeness of the SEC Documents.
d. In addition to the foregoing, the Company hereby incorporates by
reference all of the representations and warranties and covenants to be set
forth in the Securities Purchase Agreement and the other Offering Documents with
the same force and effect as if specifically set forth herein.
e. So long as Zanett and/or affiliates own any securities of the
Company issued pursuant to the Offering Documents or this Agreement, (i) the
Company shall provide Zanett, within three (3) business days of the filing or
preparation thereof, with such financial and other statements including, without
limitation, management letters and consolidated financial statements as are
provided to any other lenders to or security holders of the Company; (ii) in the
event any current officer, director, employee, consultant or other agent ceases,
subsequent to the date hereof, to have such relationship with the Company and
such cessation has, or is likely to have, a material adverse effect on the
Company, taken as a whole, the Company shall promptly notify Zanett of such
event, which notification shall comprehensively describe such circumstances;
(iii) the Company shall, on a regular basis, provide to Zanett updates of any
material litigation and/or governmental proceedings which could reasonably be
expected to have a material adverse effect on the business of the Company; and
(iv) the Company shall promptly provide to Zanett notice of any event of default
under any agreement or other document with any lender or holder of any security
of the Company. Zanett shall hold in confidence and shall not make any
disclosure (except to an Investor) or use of any such information disclosed to
it pursuant to clauses (i) through (iv) above which the Company determines in
good faith to be confidential, and of which determination Zanett is so notified,
unless (a) the release
of such information is ordered pursuant to a subpoena or other order from a
court or government body of competent jurisdiction or (b) the information has
been made generally available to the public other than by disclosure in
violation of this or any other agreement. Anything contained herein to the
contrary notwithstanding, Placement Agent's obligations to proceed with the
Offering is conditioned upon Placement Agent's due diligence investigation of
the Company. Zanett shall be fully informed by the Company of any events which
might have a material affect on the financial condition of the Company. If, in
Zanett's opinion, the condition of the Company, financial or otherwise, and its
prospects are affected in a material and/or adverse manner and do not fulfill
Zanett's expectations, Zanett shall have the sole discretion to review and
determine its continued interest in the Offering.
f. So long as Zanett and/or affiliates own any securities of the
Company, the Company shall make available, during regular business hours, all
records and books of account of the Company for inspection by Zanett, subject to
the execution of an acceptable confidentiality agreement. The Company shall
permit Zanett, at its expense and during regular business hours, to inspect its
properties with three days notice and in a manner that does not disrupt
operations.
g. The Company has the requisite corporate power and authority to
enter into and perform its obligations under this Agreement and the Placement
Warrants in accordance with the terms hereof. The execution, delivery and
performance of this Agreement and the Placement Warrants by the Company and the
consummation by it of the transactions contemplated hereby (including, without
limitation, the reservation for issuance and issuance of the Placement Warrant
Shares issuable upon exercise thereof) have been duly authorized by the
Company's Board of Directors and no further consent or authorization of the
Company, its Board of Directors, or its shareholders is required, except, as to
stockholder approval, as set forth on Schedule 3(f) to the Securities Purchase
Agreement. This Agreement constitutes, and upon execution and delivery by the
Company of the Placement Warrants, such Placement Warrants will constitute,
valid and binding obligations of the Company enforceable against the Company in
accordance with their terms.
h. The Placement Warrants and the Placement Warrant Shares issuable
upon the exercise thereof are duly authorized and, upon issuance of the
Placement Warrant Shares upon exercise of the Placement Warrants in accordance
with the terms thereof, the Placement Warrant Shares will be validly issued,
fully paid and non-assessable, and free from all taxes, liens and charges with
respect to the issue thereof and shall not be subject to preemptive rights or
other similar rights of the shareholders of the Company.
i. Except as set forth on Schedule 3(f) to the Securities Purchase
Agreement, the execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby will not (A) result in a violation of the Company's Articles of
Incorporation or By-laws or (B) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company is
a party, or result in a violation of any law, rule, regulation, order, judgment
or decree (including federal and state securities laws and regulations)
applicable to the Company or by which any property or asset of the Company is
bound or affected (except, with respect to clause (B), for such conflicts,
defaults, terminations, amendments, accelerations, cancellations and violations
as would not, individually or in the aggregate, have a material adverse
effect on the operation, properties, prospects or financial condition of the
Company ("MATERIAL ADVERSE EFFECT")). The Company is not in violation of its
Articles of Incorporation or By-laws and is not in default (and no event has
occurred which with notice or lapse of time of both would put the Company in
default) under, nor has there occurred any event giving others (with notice or
lapse of time or both) any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company is
a party, except for possible defaults as would not, individually or in the
aggregate, have a Material Adverse Effect. The business of the Company is not
being conducted, and shall not be conducted, in violation of any law, ordinance
or regulation of any governmental entity, except for possible violations which
either singly or in the aggregate do not have a Material Adverse Effect. Except
as specifically contemplated by this Agreement and as required under the
Securities Act and any applicable state securities laws, the Company is not
required to obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency or any regulatory or self
regulatory agency in order for it to execute, deliver or perform any of its
obligations under this Agreement in accordance with the terms hereof.
j. The Company shall at all times have authorized, and reserved for
the purpose of issuance, a sufficient number of Placement Warrant Shares to
provide for the full exercise of the outstanding Placement Warrants.
k. The Company shall promptly secure the listing of the Placement
Warrant Shares upon each national securities exchange or automated quotation
system, if any, upon which shares of Common Stock are then listed (subject to
official notice of issuance) and shall maintain, so long as any other shares of
Common Stock shall be so listed, such listing of all Placement Warrant Shares
from time to time issuable upon exercise of the Placement Warrants; PROVIDED,
HOWEVER, that the Placement Agent acknowledges and agrees that the Company will
be required to obtain shareholder approval for the issuance of the Placement
Warrant Shares subsequent to the First Closing in order to secure such listing
with respect to listing a number of shares in excess of the Cap Amount (as
defined in the Statement of Designation).
l. The Placement Agent represents and warrants to the Company that:
(i) The Placement Agent is acquiring the Placement Warrants
and the Placement Warrant Shares for its own account and not with a present view
towards the public sale or distribution thereof, except pursuant to sales that
are exempt from the registration requirements of the Securities Act and/or sales
registered under the Securities Act.
(ii) The Placement Agent is an "ACCREDITED INVESTOR" as that
term is defined in Rule 501(a) of Regulation D.
(iii) The Placement Agent understands that the Placement
Warrants and the Placement Warrant Shares are being issued to Purchaser in
reliance upon specific exemptions from the registration requirements of United
States federal and state securities laws and that the Company is relying upon
the truth and accuracy of, and Placement Agent's compliance with, the
representations, warranties, agreements, acknowledgments and understandings set
forth herein in order to determine the availability of such exemptions and the
eligibility of Placement Agent to acquire the Placement Warrants and the
Placement Warrant Shares.
(iv) The Placement Agent understands that (i) except as
provided in the Registration Rights Agreement, the sale or resale of the
Placement Warrants and the Placement Warrant Shares issuable upon exercise
thereof have not been and are not being registered under the Securities Act or
any state securities laws, and may not be transferred unless (a) the resale of
the Securities has been registered thereunder; or (b) Placement Agent shall have
delivered to the Company an opinion of counsel (which opinion shall be in form,
substance and scope customary for opinions of counsel in comparable
transactions) to the effect that the securities to be sold or transferred may be
sold or transferred pursuant to an exemption from such registration; or (c) the
Securities are sold under Rule 144 promulgated under the Securities Act (or a
successor rule) ("RULE 144"); or (d) the Securities are sold or transferred to
an affiliate of Placement Agent who agrees to sell or otherwise transfer such
securities only in accordance with the provisions of the terms hereof and who is
an Accredited Investor; and (ii) neither the Company nor any other person is
under any obligation to register such Securities under the Securities Act or any
state securities laws (other than pursuant to the Registration Rights
Agreement). Notwithstanding the foregoing or anything else contained herein to
the contrary, such securities may be pledged as collateral in connection with a
bona fide margin account or other lending arrangement.
(v) This Agreement has been duly and validly authorized,
executed and delivered on behalf of Placement Agent and is the valid and binding
agreement of Placement Agent enforceable against Placement Agent in accordance
with its
terms.
(vi) The Placement Agent is a registered broker dealer (as
such term is defined under the Securities Act of 1933, as amended) and has not
made any general solicitations (as such term is defined under the Securities Act
of 1933, as amended) with respect to the sale of the Securities.
4. PUBLICITY. The Company shall not make any reference to Zanett or to any
of its affiliates in any release or other communication without Zanett's prior
written consent. Without Zanett's prior written consent, no advice rendered by
Zanett in connection with the services performed by Zanett pursuant to this
Agreement will be quoted by the Company, its affiliates or representatives nor
will any such advice be referred to in any report, document, release or other
communication, whether oral or written, prepared or issued or transmitted by
such person, except to the extent required by law (in which case the appropriate
party shall so advise Zanett in writing prior to such use and shall consult with
Zanett with respect to the form and timing of the disclosure).
5. INDEMNIFICATION AND CONTRIBUTION.
a. To the extent permitted by law, each party hereto (such party
being the "INDEMNIFYING PARTY") will indemnify, hold harmless and defend the
other party hereto and each of its directors, officers, partners, members,
employees, agents and each person who controls such other party within the
meaning of the Securities Act or the Exchange Act, if any, (each, an
"INDEMNIFIED PERSON"), against any joint or several losses, claims, damages,
liabilities or expenses (collectively, together with actions, proceedings or
inquiries by any regulatory or self-regulatory organization, whether commenced
or threatened, in respect thereof, "CLAIMS") to which any of them may become
subject insofar as such Claims arise out of or are based upon: (a) where the
Company is the Indemnifying Party, (i) any transaction contemplated by this
Agreement, the retention of Zanett as
Placement Agent under this Agreement, the performance of services by Zanett
hereunder or any involvement or alleged involvement of Zanett in the Offering or
(ii) any breach of any of the Company's representations, warranties or covenants
contained herein or (b) where Zanett is the Indemnifying Party, any breach of
any of Zanett's representations or warranties contained herein. The Indemnifying
Party shall reimburse each of the Indemnified Persons, promptly as such expenses
are incurred and are due and payable, for any reasonable legal fees or other
reasonable out of pocket expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 5(a) shall not (i) apply in instances where the Claims were the result
of Zanett's or the Company's, in each case as the Indemnified Person, gross
negligence or based on Zanett's or the Company's, in each case as the
Indemnified Person, wilful misconduct, and (ii) apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld.
b. Promptly after receipt by an Indemnified Person under this
Section 5 of notice of the commencement of any action (including any
governmental action), such Indemnified Person shall, if a Claim in respect
thereof is made against the Indemnifying Party under this Section 5, deliver to
the Indemnifying Party a written notice of the commencement thereof, and the
Indemnifying Party shall have the right to participate in, and, to the extent
the Indemnifying Party so desires, to assume control of the defense thereof with
counsel mutually satisfactory to the Indemnifying Party and the Indemnified
Person; PROVIDED, HOWEVER, that an Indemnified Person shall have the right to
retain its own counsel, with the fees and expenses to be paid by the
Indemnifying Party, if, in the reasonable opinion of counsel retained by the
Indemnified Person, the representation by such counsel of the Indemnified Person
and the Indemnifying Party would be inappropriate due to actual or potential
differing interests between such Indemnified Person and any other party
represented by the Indemnifying Party's counsel in such proceeding. The
Indemnifying Party shall pay for only one separate legal counsel for the
Indemnified Persons, and such legal counsel shall be selected by Placement
Agent, where the Company is the Indemnifying Party, or the Company, where the
Placement Agent is the Indemnifying Party. The failure to deliver written notice
to the Indemnifying Party within a reasonable time of the commencement of any
such action shall not relieve the Indemnifying Party of any liability to the
Indemnified Person under this Section 5, except to the extent that the
Indemnifying Party is actually prejudiced in its ability to defend such action.
The indemnification required by this Section 5 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as such expense, loss, damage or liability is incurred and is due and
payable.
c. To the extent any indemnification by the Indemnifying Party of an
Indemnified Person is prohibited or limited by law or otherwise unavailable in
respect of any Claim, the Indemnifying Party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under this Section 5 to the fullest extent permitted by law. In this regard, the
Indemnifying Party shall contribute to the amount paid or payable by such
Indemnified Person as a result of any such Claim (i) in such portion as is
appropriate to reflect the relative benefits received by the Indemnifying Party,
on the one hand, and the Indemnified Person, on the other, from the structuring
and issuance of the securities in the Offering or any other transaction in which
Zanett rendered services hereunder or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Indemnifying Party, on
the one hand, and of the Indemnified Person, on the other, in connection with
untrue statements or omissions or other actions (or alleged untrue statements,
omissions or other actions) which resulted in such Claim as well as any other
relevant equitable considerations. The relative benefits received by the
Indemnifying Party, on the one hand, and the Indemnified Person, on the other,
shall be deemed to be in the same proportion as the total gross proceeds
received by the Indemnifying Party in the Offering or any other financing bears
to such Indemnified Person's compensation. The relative fault of the
Indemnifying Party on the one hand and of the Indemnified Person on the other
shall be determined by reference to, among other things, whether such untrue
statements or omissions or other actions (or alleged untrue statements,
omissions or other actions) relate to information supplied or action taken by
the Indemnifying Party, on the one hand, or by the Indemnified Person, on the
other, and the relevant persons' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statements,
omission or actions. The amount paid or payable by a party as a result of the
Claim shall be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any action
or claim. The Company and Zanett agree that it would not be just and equitable
if contribution pursuant to this Section 5 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to above.
d. The aforesaid indemnity and contribution agreements shall apply
to any related activities engaged in by any Indemnified Person prior to this
date and to any modification of Zanett's engagement hereunder, and shall remain
in full force and effect regardless of any investigation made by or on behalf of
Indemnified Person or any of its agents, employees, officers, directors or
controlling persons and shall survive the issuance of any securities in any
transaction referred to hereunder (including the Offering) and any termination
of this Agreement or Placement Agent's engagement hereunder. Each party hereto
agrees to promptly notify the other party hereto of the commencement of any
litigation or proceeding against it or any of its directors, officers, agents or
employees in connection with the transactions contemplated hereby.
e. The Company also agrees that no Indemnified Person shall have any
liability (whether direct or indirect, in contract or tort or otherwise) to the
Company, its owners, creditors or security holders for or in connection with
advice or services rendered or to be rendered by Zanett pursuant to this
Agreement, the transactions contemplated hereby or any Indemnified Person's
actions or inactions in connection with any such advice, services or
transactions except for liabilities (and related expenses) of the Company that
are determined by a final judgment of a court of competent jurisdiction to have
resulted primarily from such Indemnified Party's gross negligence or wilful
misconduct in connection with any such advice, actions, inactions or services.
6. SURVIVAL OF CERTAIN PROVISIONS. The representations, warranties,
covenants and provisions contained in Section 2(f), Section 3, Section 4 and
Section 5 hereof shall survive in full force and effect until Zanett no longer
owns any Placement Warrants or Placement Warrant Shares, regardless of (a) any
completion or termination of any financing contemplated by this Agreement
(including the Offering), (b) any termination of this Agreement, or (c) any
investigation made by or on behalf of Placement Agent or any affiliate of
Placement Agent, and shall be binding upon, and shall inure to the benefit of,
any successors, assigns, heirs and personal representatives of the Company,
Zanett, the Indemnified Parties and any holder of Placement Warrants.
7. MISCELLANEOUS.
a. All notices, requests, demands and other communications which are
required or may be given hereunder shall be in writing and shall be deemed to
have been duly given when delivered personally, receipt acknowledged or five (5)
days after being sent by registered or certified mail, return receipt requested,
postage prepaid. All notices shall be made to the parties at the addresses
designated above or at such other or different addresses which party may
subsequently provided with notice thereof, and, to their respective legal
counsel, as follows:
(i) IF TO PLACEMENT AGENT, to
The Zanett Securities Corporation
Tower 49, 31st Floor
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxx
-with a copy simultaneously transmitted by like means to -
Klehr, Harrison, Xxxxxx, Branzburg & Xxxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx, Esquire
(ii) IF TO THE COMPANY, to
Xxxxxx Healthcare, Inc.
000 Xxxxxxxxxx Xxxxxxxxx
Xxxxx Xxxx, Xxxxx 00000-0000
Telecopy: 000-000-0000
Attn: Chief Financial Officer
b. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument. This Agreement, once executed by a
party, may be delivered to the other parties hereto by facsimile transmission of
a copy of this Agreement bearing the signature of the party so delivering this
Agreement.
c. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York (without regard to its conflict of laws
provisions). The Company hereby agrees to submit to the exclusive jurisdiction
of an arbitration panel of the National Association of Securities Dealers, Inc.
located in the City of New York in the State of New York in connection with any
suit, action or proceeding related to this Agreement or any of the matters
contemplated hereby, irrevocably waives any defense of lack of personal
jurisdiction and irrevocably agrees that all claims in respect of any suit,
action or proceeding may be heard and determined in by
such panel. The Company irrevocably waives, to the fullest extent it may
effectively do so under applicable law any objection which it may now or
hereafter have to the laying of venue of any such suit, action or proceeding
brought before any such court and any claims that any such suit, action or
proceeding brought in any such arbitration panel has been brought in an
inconvenient forum. The Company further agrees to pay or reimburse Zanett for
all reasonable costs and expenses incurred by Placement Agent in connection with
the enforcement of any of its rights under this Agreement, including without
limitation, all attorneys' fees and expenses of its counsel.
d. The section headings in this Agreement have been inserted as a
matter of convenience of reference and are not a part of this Agreement.
e. This Agreement may not be modified or amended except in writing
duly sworn by the parties hereto.
f. If any term, provision, covenant or restriction contained in this
Agreement is held by a court of competent jurisdiction or other authority to be
invalid, void, unenforceable or against its regulatory policy, the remainder of
the terms, provisions, covenants and restrictions contained in this Agreement
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated.
g. Each party to this Agreement has participated in the negotiation
and drafting of this Agreement. As such, the language used herein shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction will be applied against any party to
this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
Please sign and return the original and one copy of this letter to
indicate your acceptance of the terms set forth herein whereupon this letter and
your acceptance shall constitute a binding agreement between you and the
Company.
Very truly yours,
XXXXXX HEALTHCARE, INC.
By: /s/ XXXXXXX X. XXXXXXX
Name: Xxxxxxx X. Xxxxxxx
Title: President & CEO
Accepted and Agreed to
this 12th day of April, 1999.
THE ZANETT SECURITIES CORPORATION
By: /s/ CLAUDIO GUIAZZONI
Name: Claudio Guiazzoni
Title: President
