EXHIBIT 10.2
PLACEMENT AGENT AGREEMENT
This Agreement is made and entered into by and between Xxxxxxxxxx
Laboratories, Inc., a Texas corporation (the "Company") and Stonewall
Securities, Inc., a Texas corporation (the "Placement Agent"), this 7th day
of October 2005.
WHEREAS, the Company desires to engage in a financing involving the offer
and sale (the "Offering") of unsecured subordinated notes (the "Notes") and
detachable warrants (the "Warrants") to purchase shares of common stock (the
"Common Stock")of the Company (the "Securities");
WHEREAS, the Company desires to engage the Placement Agent and the Placement
Agent desires to accept such engagement, to sell the Securities;
NOW, THEREFORE, in consideration for the mutual promises of the parties
herein, the Company and the Placement Agent hereby agree as follows:
1. Appointment as Non-Exclusive Soliciting Dealer: The Company hereby
appoints the Placement Agent as a non-exclusive Placement Agent for the
purpose of selling the Securities pursuant to the terms described in "Manner
of the Offering" below, and in the term sheet, purchase agreement, form of
warrant, form of note or other written offering materials provided by the
Company to the Placement Agent and identified specifically for such use (the
"Offering Materials"). The Placement Agent shall offer and sell such
Securities only directly through its own representatives and only at the
price and upon the other terms and conditions stated in the Offering
Materials.
2. Method of Subscription:
a. The Placement Agent and its representatives shall effect the sale
of Securities only through the use of the Offering Materials. The full cash
portion of the subscription price and executed Offering Materials shall be
forwarded to the Company.
b. Before receiving a subscription from any offeree, the Placement
Agent, through its representatives, shall furnish the offeree a copy of the
Offering Materials and any supplemental materials supplied by the Company,
if any ("Addendums") and shall advise the offeree that he has the
opportunity: (i) to ask questions of and receive complete answers from the
Company concerning the offering, and (ii) to obtain any additional documents
or information which the Company may possess (or can acquire without
unreasonable effort or expense) as may be necessary or appropriate to verify
the accuracy of the information referred to in the Offering Materials or to
evaluate the risks and merits of investing in the Securities. Neither the
Placement Agent nor any of its representatives is authorized to make any
representation or furnish any information with respect to the Company or the
offering, other than the representations and information set forth in
the Offering Materials and any Addendums thereto or in other documents
furnished by the Company and identified specifically for such use. For
example, neither the Placement Agent nor its representatives shall make any
representations whatsoever regarding projected revenues or a projected rate
of return to owners of the Securities, other than to display the financial
information set forth in the Offering Materials. If the Placement Agent
or any of its representatives obtain knowledge that any unauthorized
representation has been made, the Company shall be promptly informed of such
occurrence. No supplemental material of any kind shall be used in placing
the Securities without the explicit prior written approval of the Company.
3. Manner of the Offering: The Placement Agent and its representatives
understand that the offering is not being registered under the Securities
Act of 1933, as amended (the "Act"), in reliance upon the private offering
exemption provided under Sections 3(b) and 4(2) of the Act and Regulation D,
Rules 501-502, 504 and 506 promulgated thereunder. In addition, the
offering will either be qualified under applicable state securities laws or
made in reliance upon exemptions from such qualification and registration
requirements. In order to assure that such exemptions are available and
that applicable qualification requirements are adhered to, the following
requirements shall be observed:
a. The Placement Agent and its representatives shall offer Securities
only in accordance with the terms and procedures set forth in the Offering
Materials and any Addendums thereto. The Offering Materials shall not be
presented, and no offers will be made, to any person unless and until: (i)
the Placement Agent or its representatives believe, and have reasonable
grounds for said belief, that such person meets the suitability standards
set forth in the Offering Materials and is capable of bearing the risks of
investment in the Securities; and (ii) the Placement Agent or its
representatives shall have in their files sufficient documentation
demonstrating that such person does in fact meet such suitability standards.
b. In addition, neither the Placement Agent nor its representatives
shall make any offer or sale to any person in any state, unless the Company
and its counsel have satisfied them that: (i) such offer or sale may be
effected in such state; and (ii) that such offer or sale is in compliance
with existing state securities laws or regulations applicable to non-public
offerings in such state.
c. Neither the Placement Agent nor any of its representatives shall
discuss the offering with any person or show any person the Offering
Materials unless and until the requirements set forth in paragraph 3(a)
above have been met with respect to such persons. Neither the Placement
Agent nor its representatives shall conduct or participate in any meeting in
which the offering is discussed which is not attended exclusively by the
Placement Agent's representatives or those of the Company and offerees
meeting the requirements referred to above.
d. The Placement Agent and its representatives shall keep a record of
each person who receives a copy of the Offering Materials and a list of the
Offering Materials supplied to each such offeree. A copy of any supplement
or amendment to the Offering Materials shall be sent to each person who has
received a copy of the Offering Materials. Records shall be kept showing
the name of each person who receives a copy of any such supplement or
amendment. At the conclusion of the offering, all unused copies of the
Offering Materials, any supplements or amendments thereto except for file
copies, shall be returned to the Company.
e. Each person desiring to purchase Securities will be required to
complete and execute the subscription documents provided in the Offering
Materials and return same to the Placement Agent together with a check
payable to the Company in the amount of the purchase price of said
Securities. The Placement Agent shall then ascertain that each signature
page has been properly executed by the subscriber and shall then forward the
subscription agreement along with the check to the Company. Notwithstanding
the foregoing, in the event that the rules or regulations of the National
Association of Securities Dealers, Inc. shall require funds received by the
Placement Agent in connection with the Offering be deposited in an escrow
account, the Company, the Placement Agent and an escrow agent reasonably
acceptable to the Company and the Placement Agent shall enter into an escrow
agreement upon terms reasonably acceptable to all parties thereto, which
agreement shall specify the terms and conditions relating to the receipt and
disbursement of funds received by the Placement Agent or the Company in
connection with the Offering.
f. The Company upon receipt of the aforementioned subscription
documents will determine as soon as practicable (but in no event more than
thirty (30) days after receipt) whether it will accept the subscriber as a
purchaser of the Securities, it being understood that the Company reserves
the right to reject the subscription for any reason, in its sole discretion.
Should the Company determine to reject the subscription, the Company will
promptly notify the Placement Agent of such determination and will return
the tendered subscription documents and issue a check to the subscriber in
payment of the purchase price of the Securities directly to the subscriber.
g. The offering shall terminate on the date on which the Company
sends notice to the Placement Agent.
4. Representations and Warranties of Placement Agent: The Placement Agent
hereby represents and warrants to the Company as follows:
a. The Placement Agent is a member in good standing, and during the
term of this Agreement will remain a member in good standing, with the
National Association of Securities Dealers, Inc. ("NASD"), and is, and
during the term of this Agreement will remain, registered as a broker-dealer
with the Securities and Exchange Commission ("SEC").
b. The Placement Agent is a corporation duly formed or organized,
validly existing and in good standing under its state of formation or
organization. The Placement Agent is in good standing and duly qualified to
do business in any state where such status is required and where it intends
to offer and sell the Securities. This Agreement is duly authorized,
executed and delivered by the Placement Agent and is binding on the
Placement Agent.
c. The Placement Agent will comply with all rules, regulations and
other requirements of the SEC and the NASD with respect to the sale of the
Securities.
d. The Placement Agent will not solicit any offer to buy or offer to
sell any Securities by means of any form of general solicitation or general
advertising, including, but not limited to, the following:
(i) any advertisement, article, notice or other communication
published in any newspaper, magazine or similar medium or broadcast
over television, radio, the world wide web or otherwise; and
(ii) any seminar or meeting whose attendees have been invited by
any general solicitation or general advertising.
e. The Placement Agent will not solicit any offer to buy from or
offer to sell to any person any Securities unless (i) the Placement Agent
has a preexisting relationship with such person, and (ii) the Placement
Agent has a reasonable belief that such person is an accredited investor (as
such term is defined in Rule 501 of Regulation D of the Act).
f. The Placement Agent will at all times comply with the provisions
of Rule 502(c) of Regulation D of the Act in connection with the manner of
the offering of the Securities.
g. The Placement Agent will timely assist the Company with the
preparation of the notice on Form D relating to the Securities offered or
sold in the offering by timely providing certain information relating to the
offering as reasonably requested by the Company.
h. The Placement Agent will, in the performance of its duties
hereunder, comply in all material respects with all applicable requirements
under the Act, and all other applicable state and federal securities laws.
The Placement Agent is Registered as a broker-dealer (1) to sell securities
under the Securities Exchange Act of 1934, as amended, and (2) in all states
in which the Placement Agent will offer or sell the Securities.
i. The Placement Agent will not undertake any expense on behalf of
the Company, without the prior written consent of the Company. Payment for
any other expenses undertaken by the Placement Agent is exclusively the
responsibility of the Placement Agent.
j. The Placement Agent will comply with terms set forth in "Manner of
Offering" herein.
k. If at any time when Offering Materials are required to be
delivered, the Placement Agent or its representatives become aware of any
event, occurrence or fact which, in their opinion, may cause the Offering
Materials or any other offering material to contain an untrue statement of a
material fact, or to fail to state any material fact necessary to make the
statements therein, the Placement Agent or its representatives will promptly
notify the Company of such event, occurrence or fact, in a manner so that
the Company might prepare an appropriate supplement or amendment to the
Offering Materials correcting such statement or omission.
l. Prior to providing Offering Materials to, or otherwise discussing
the Company or the Securities with, any prospective purchaser of the
Securities, the Placement Agent shall obtain and forward to the Company a
Confidentiality Agreement, in the form of the Confidentiality Agreement
attached hereto as Exhibit A, executed by the prospective purchaser.
5. Representations and Warranties of the Company: The Company hereby
represents and warrants to the Placement Agent that:
a. The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Texas, with power and
authority to enter into the agreements contemplated by the offering. This
Agreement is duly authorized, executed and delivered by the Company and is
binding on the Company.
b. To the best of the Company's knowledge, the Offering Materials and
any Addendums (together with any supplement or amendment thereto and any
documents included therewith or otherwise furnished by the Company for use
in the offering) do not contain any untrue statement of a material fact or,
when read in conjunction with the materials referred to therein, omit any
material fact required to be included therein or necessary to make the
statements therein not misleading.
c. The Company will furnish to the Placement Agent as many copies as
it may reasonably request of: (i) the Offering Materials; (ii) this
Agreement; (iii) any Addendums to the Offering Materials (including any
supplements or amendments thereto); and (iv) any other information or
material which the Placement Agent may reasonably request which the Company
may acquire without unreasonable effort in connection with the contemplated
offering.
d. If at any time when Offering Materials are required to be
delivered, any event occurs which, in the opinion of either the Company or
the Placement Agent, would cause the Offering Materials or any Addendums
(including any supplements or amendments thereto) to contain an untrue
statement of a material fact, or to fail to state any material fact
necessary to make the statements therein, the Company will promptly notify
the Placement Agent and will prepare an amendment or supplement to the
Offering Materials correcting such statement or omission.
6. Indemnification/Contribution:
a. The Placement Agent shall indemnify and hold harmless the Company
against any losses, claims, damages, or liabilities to which the Company may
become subject, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon the material
inaccuracy of any representation made by the Placement Agent or any of its
representatives in this Agreement or in placing or attempting to procure the
sale of Securities, or any failure by the Placement Agent or its
representatives to comply with this Agreement.
b. The Company shall indemnify and hold harmless the Placement Agent
against any losses, claims, damages or liabilities to which it may become
subject insofar as such losses, claims, damages or liabilities (or action in
respect thereof) arise out of or are based upon the material inaccuracy of
any representation made by the Company in this Agreement, any failure of the
Company to comply with this Agreement or any untrue statement of material
fact made by the Company and contained in the Offering Materials.
c. Notwithstanding the above, no party shall be indemnified hereunder
to the extent that any loss, claim, damage or liability for which such party
would otherwise be indemnified hereunder arises out of (i) any untrue
statement or alleged untrue statement or omission or alleged omission made
in reliance upon or in conformity with any written information furnished by
such party specifically for use in the offering or (ii) any breach of this
Agreement by such party. The indemnities provided for in paragraphs 6a or
6b above shall extend to and inure to the benefit of any person controlling
the indemnified party.
d. Promptly upon receiving written notice of the commencement of any
action, an indemnified party shall notify the other party or parties in
writing of such commencement. But the failure to so notify the indemnifying
party shall not relieve it from any liability hereunder. In case of any
such action, the indemnifying party shall be entitled to participate in and
to assume the defense thereof, with counsel satisfactory to the indemnified
party. After the indemnified party shall have received notice from the
agreed counsel that the defense under such action has been assumed, the
indemnifying party shall not be responsible for any separate legal or other
expenses subsequently incurred by such indemnified party in connection with
the defense thereof.
e. In the event that the indemnification provided for in this section
is held to be unenforceable, the other provisions of this Agreement shall
continue in full force and effect and the Company and the Placement Agent
shall contribute to the aggregate losses, claims, damages and liabilities
(including the costs of any investigation, legal and other expenses
incurred, and any amount paid in settlement of any action, suit, proceeding
or claims) in such amounts as a court of competent jurisdiction may
determine or (in the case of settlement, in such amounts as may be agreed
upon by the parties). No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who is not guilty of such a fraudulent
misrepresentation. For purposes of this subsection, each person who
controls the Company or the Placement Agent, as the case may be, shall have
the same rights to contribution as such party. Any person or party entitled
to contribution will, promptly after receipt of notice of commencement of
any action, suit or proceeding against such party, notify such other
parties. The failure to so notify such person or party shall not relieve
the person or party from any obligation hereunder.
7. Compensation: The Company shall pay to the Placement Agent a cash
commission with respect to subscriptions received by the Company as to which
the payments and deliveries are made equal to 6.0% of the aggregate
principal amount of the Notes issued by the Company in the Offering.
Notwithstanding the foregoing, the Company shall not be obligated to pay any
commission to the Placement Agent, unless the subscription and payment
received by the Company resulted exclusively from the efforts of the
Placement Agent. In the event that the aggregate principal amount of the
Notes issued by the Company in the Offering (for which subscriptions and
payments received by the Company resulted from the exclusive efforts of the
Placement Agent) equals or exceeds $2,500,000, then the Company shall issue
to the Placement Agent Warrants to purchase 200,000 shares of the Company's
Common Stock. The Warrants shall be exercisable, in whole or in part, at a
price of $5.00 at any time prior to their expiration. If the closing price
of the Common Stock as reported on The NASDAQ National Market exceeds $7.00
per share for 20 consecutive trading days, the Warrants are mandatorily
exercisable and must be exercised within 10 trading days after the twentieth
day that the share price is above $7.00. If the Warrants are not so
exercised, they shall be forfeited. The Warrants will expire upon the
fourth anniversary of the Notes. The compensation payable under this
section 7 shall be payable within thirty (30) days after the consummation of
the Offering.
8. Miscellaneous Provisions:
a. Survival of Representations and Covenants: All representations,
covenants and agreements of the parties herein or in certificates delivered
pursuant hereto, and the indemnity and contribution agreements contained
herein, shall survive the termination of this Agreement, the termination of
the offering and the delivery of the Securities.
b. Termination: This Agreement may be terminated by either party
upon five (5) days prior written notice to the other party, or by either
party immediately in the event of a breach by the other party. To the
extent that the Placement Agent shall have earned all or a portion of the
compensation described in section 7 of this Agreement and such compensation
shall be payable by the Company in accordance with the terms of this
Agreement, such obligation to pay said compensation shall survive the
termination of this Agreement.
c. Purchase Advisor: Neither the Placement Agent nor any of its
representatives or affiliates shall act as a purchaser advisor
(representative) in connection with the offering.
d. Notices: All notices hereunder shall be in writing and mailed or
sent by telegraph, telex, facsimile or similar transmission and confirmed to
the following addresses:
(i) If directed to the Placement Agent, at the address set forth
as follows:
Attn: Mr. Xxx Xxxxxx
Stonewall Securities, Inc.
0000 Xxxxxx Xxxxxxxxx
Xxxxxx, XX 00000
and,
(ii) if directed to the Company to:
Attn: Dr. Xxxxxxx Xxxxxx
Xxxxxxxxxx Laboratories, Inc.
0000 Xxxxxx Xxxx Xxxx
Xxxxxx, Xxxxx 00000
with a copy to:
Attn: Xxxxx X. Xxxxxxx
Xxxxxxxx & Knight, LLP
0000 Xxxxxxx Xxx, Xxxxx 0000
Xxxxxx, XX 00000
e. Successors and Assigns: This Agreement shall be binding upon the
Placement Agent and the Company and their respective successors and assigns.
No purchaser of any of the Securities from or through the Placement Agent
shall be construed a successor or assign merely by reason of such purchase.
f. Integration: This Agreement contains the entire understanding
between the parties and supersedes any prior written or oral agreement
between them.
g. Amendment: This Agreement may be amended only if the amendment is
set forth in a writing signed by both parties.
h. No Assignment: This Agreement may not be assigned by any party
hereto without the prior written consent of each party hereto.
i. Applicable Law; Legal Expenses: This Agreement shall be governed
by and construed in accordance with the laws of the State of Texas without
giving effect to the conflict of laws rules or choice of laws rules thereof.
In the event any dispute regarding this Agreement arises between the
parties, such dispute shall be brought in a proper jurisdiction located
within Dallas County, Texas. In the event of any litigation between the
parties hereto arising out of, or pertaining to, the subject matter of this
Agreement, the prevailing party shall be entitled to an award of costs and
reasonable attorney's fees at both the trial and appellate level to the
extent same is authorized by law.
j. Counterparts: This Agreement may be executed in counterparts,
each of which will be deemed an original but all of which together will
constitute one and the same document.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first set forth above.
XXXXXXXXXX LABORATORIES, INC. STONEWALL SECURITIES, INC.
By: By:
----------------------- -----------------------
Name: Xxxxxxx X. Xxxxxx Name: Xxx Xxxxxx
Title: President and CEO Title: President
