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EXHIBIT 10.9
WALNUT FINANCIAL SERVICES, INC.
AGENCY AGREEMENT
October 10, 1997
▇▇▇▇▇ ▇▇▇▇▇▇▇ Securities, LLC
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Gentlemen:
Walnut Financial Services, Inc., a Utah corporation ("Company"), proposes to
offer for sale in a private placement ("Offering"), up to 80 Units (the
"Units") (with a minimum of 50 Units), each Unit will contain (i) 50,000
shares of the Company's Common Stock; and (ii) 35,000 Class A Warrants.
Minimum purchase shall be One Unit or $50,000. The Placement Agent shall have
the right to accept fractional interests in quarters. The Class A Warrants
shall be exercisable at $1.50 per share over a five year period and are
redeemable, upon the option of the Company, after one year at $0.10 per Warrant
on 30 days written notice if the closing bid price on the NASDAQ quotation
systems is at least $4.00 for 20 consecutive trading days. The Units will be
offered on a "best efforts-all or none" basis, in accordance with Section 4(2)
of the Securities Act of 1933, as amended ("Securities Act"), and Rule 506 of
Regulation D promulgated thereunder with respect to 50 Units ("Minimum Units")
and on a best efforts basis for the balance of the Units.
The Units have the terms and conditions reflected in the Company's
Subscription Agreement to be executed by each purchaser of Shares
("Subscription Agreement"). The Confidential Private Placement Memorandum,
together with all exhibits thereto, including the Subscription Agreement will
be referred to herein as the "Offering Documents." ▇▇▇▇▇ ▇▇▇▇▇▇▇ Securities,
LLC is sometimes referred to herein as the "Placement Agent."
1. Appointment of Placement Agent; The offering.
1.1 Appointment of Placement Agent. You are hereby appointed exclusive
Placement Agent of the Company during the offering period herein specified for
the purpose of assisting the Company in finding qualified investors as
described in the Offering Documents ("Subscribers"). The Offering Period
("Offering Period") shall commence on the day the Offering Documents are first
made available to you by the Company and shall continue for a period of 60
days, provided, however, that the Offering Period may be extended for an
additional period not to exceed thirty (30) days by the mutual agreement of the
Company and the Placement Agent, or may be terminated earlier if all Units
offered hereby have been sold.
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If all Minimum Units are not sold prior to the end of the Offering Period, the
Offering will be terminated and all funds received from Subscribers will be
returned, without interest and without any deduction. The day that the
Offering Period terminates is hereinafter referred to as the "Termination
Date." You hereby accept such agency and agree to use your best efforts to
find qualified Subscribers. Your agency hereunder is not terminable by the
Company except upon termination of the Offering. The Placement Agent shall
have the right to have broker/dealers assist in the Offering at its sole
discretion; provided, however, that such broker/dealers shall be reasonably
acceptable to the Company.
1.2 Offering Documents. The Company will provide the Placement Agent
with a sufficient number of copies of the Offering Documents for delivery to
potential Subscribers and such other information, documents and instruments
which the Placement Agent deems reasonably necessary to comply with the rules,
regulations and judicial and administrative interpretations respecting
compliance with applicable state and federal statutes related to the Offering.
1.3 Segregation of Funds. Each subscriber for Units shall tender to
the Placement Agent a check payable to "American Stock Transfer Company-Walnut
Financial Services, Inc. Special Account" in the amount of the investment
subscribed for, which funds shall be held by held by American Stock
Transfer Company in a segregated non-interest bearing bank account, as set
forth in the Subscription Agreement. Closing of the Offering shall take place
within five business days after the minimum Units are sold and periodically
thereafter as mutually agreed by the parties hereto (the "Closing Date").
2. Representations and Warranties of the Company. The Company and each
of its subsidiaries, all of which are listed on Schedule 2.1 hereto
("Subsidiaries"), jointly and severally, represent and warrant as follows:
2.1 Due Incorporation and Qualification. The Company and each of its
Subsidiaries, respectively, has been duly incorporated, is validly existing
and is in good standing under the laws of its state of incorporation and is
duly qualified as a foreign corporation (except where the failure to so
qualify would not have a material adverse effect on the business, properties,
financial position or results of operations of the company taken as a whole)
for the transaction of business and is in good standing in each jurisdiction
in which the ownership or leasing of its properties or the conduct of its
business requires such qualification. The Company has elected to be regulated
as a "Business Development Company" pursuant to Section 54 of the Investment
Company Act of 1940, as amended (the "1940 Act"). Each of the Company and its
Subsidiaries has all requisite corporate power and authority necessary to own
or hold its properties and
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conduct its business as described in the Offering Documents and holds all
material licenses, permits and other required authorizations from governmental
authorities necessary for the conduct of its business (except where the
failure to obtain such license, permit or other authorization would not have a
material adverse effect on the business, properties, financial position or
results of operations of the Company taken as a whole). The Company owns all
of the issued and outstanding capital stock of each of the Subsidiaries free
and clear of all liens, security interests and other encumbrances of any
nature whatsoever, except as set forth on Schedule 2.1 attached hereto or
described in the Offering Documents. Unless the context otherwise requires,
all further references to the "Company" in this Agreement shall include the
Subsidiaries.
2.2 Authorized Capital. The Company shall have an authorized and
outstanding capitalization as set forth on Schedule 2.2 hereto, with an
authorized capital stock of no more than 50,000,000 shares of common stock,
par value $.01 per share and 1,000,000 shares of Preferred Stock, no stated
value, and all of the issued and outstanding shares of Common Stock have been
duly and validly authorized and issued and are fully paid and non-assessable.
No more than 14,806,653 shares of Common Stock are outstanding (exclusive of
shares of Common Stock underlying Class A Warrants) and no shares of Preferred
Stock will be outstanding prior to the Termination Date. None of the holders
of such outstanding shares of Common Stock is subject to personal liability
solely by reason of being such a holder except as otherwise provided by Utah
corporate law. The offers and sales of such outstanding shares of Common Stock
were at all relevant times either registered under the Securities Act and the
applicable state securities or Blue Sky laws, or exempt from such
registration. Except as described in the Offering Documents, no holder of any
of the Company's securities has any rights, "demand," piggyback" or otherwise,
to have such securities registered or to demand the filing of a registration
statement. With respect to the Company's assets, as of the date hereof, it is
in material compliance with Section 55 of the 1940 Act.
2.3 No Preemptive Rights Options. Except as set forth on Schedule 2.3
hereto or described in the Offering Documents, there are no preemptive or
other rights to subscribe for or purchase, or any restriction upon the voting
or transfer of, any shares of Common Stock of the Company, under the Articles
or Certificate of Incorporation or By-Laws of the Company or under any
agreement or other outstanding instrument to which the Company is a party or
by which it is bound, or under the business corporation law of the State of
Utah. Except as set forth on Schedule 2.3 hereto or described in the Offering
Documents, the Company does not have outstanding any option, warrant,
convertible security, or other right permitting or requiring it to issue, or
otherwise to purchase or convert any obligation into, shares of Common Stock
of
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the Company and the Company has not agreed to issue or sell any shares of
Common Stock of the Company. As of the date hereof, the number of outstanding
options and warrants do not exceed the amounts permitted under Section 61 of
the 1940 Act.
2.4 No Material Adverse Changes. Except as otherwise stated in the
Offering Documents, (i) there has not been any change in the condition,
financial or otherwise, of the Company which could materially adversely affect
its ability to conduct its operations as described in the Offering Documents;
and (ii) the Company has not incurred any material liabilities or obligations,
direct or contingent, not in the ordinary course of business, which would have
a material adverse effect on the business, properties, financial position or
results of operations of the Company taken as a whole.
2.5 No Pending Actions. Except as set forth on Schedule 2.5 hereto
or described in the Offering Documents, there are no actions, suits,
proceedings, claims or hearings of any kind or nature or, to the best of the
knowledge and belief of the Company, any investigations or inquiries, before or
by any court, governmental authority, tribunal or instrumentality (or to the
best of the knowledge and judgment of the Company, any state of facts which
would give rise thereto except as described in the Offering Documents), pending
or, to the best knowledge of the Company, threatened, against the Company or
any of its Subsidiaries, or involving the properties of the Company taken as a
whole, which would result in any material adverse effect on the business,
properties, financial position or results of operations of the Company taken as
a whole, or which would materially adversely affect the transactions or other
acts contemplated by this Agreement or the validity or enforceability of this
Agreement.
2.6 Private Offering Exemption; Offering Documents. The Offering
Documents conform in all material respects with the applicable requirements of
the 1940 Act and Section 4(2) of the Securities Act and Rule 506 of Regulation
D promulgated thereunder ("Reg D") and with the requirements of all other
published rules and regulations of the Securities and Exchange Commission
currently in effect relating to "private offerings." The Offering Documents do
not contain an 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. The Units conform to
the description contained in the Offering Documents.
2.7 Due Authorization. The Company has full right, power and authority
to enter into this Agreement and issue the Units, the underlying securities and
to perform all of its obligations hereunder and as contemplated hereby and
pursuant to the terms of the securities comprising the Units. This Agreement
has been duly authorized, executed and delivered by the Company and
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is a valid and binding obligation of the Company, enforceable in accordance
with its terms (except (1) as the enforceability thereof may be limited by
bankruptcy or other laws now or hereafter in effect relating to or affecting
creditors' rights generally, (2) that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceedings
therefor may be brought, and (3) that the enforceability of the indemnification
and contribution provisions of this Agreement may be limited by the federal
securities laws and public policy), and except as described in the Offering
Documents or described in Schedule 2.7 attached hereto, no material consent,
approval, authorization, order of, or filing with, any court or governmental
authority or any other third party is required to consummate the transactions
contemplated by this Agreement, except that the offer and sale of the Units in
certain jurisdictions may be subject to the provisions of the securities or
Blue Sky laws of such jurisdictions.
2.8 Non-Default; Non-Contravention. Neither the Company nor any of its
Subsidiaries, respectively, is in violation of its Articles or Certificate of
Incorporation or By-Laws or in default in the performance or observance of any
material obligation, agreement, covenant or condition contained in any material
contract, lease or other instrument to which it is a party, and the Company's
execution and delivery of this Agreement, and/or the Units, and the incurrence
of the obligations herein and therein set forth, and the consummation of the
transactions contemplated herein will not (i) conflict with, or constitute a
material breach of, or a material default under, the Articles or Certificate of
Incorporation or By-Laws of the Company or any of its Subsidiaries, or any
material contract, lease or other instrument to which the Company or any of its
Subsidiaries is a party, or by which the properties of the Company or any of
its Subsidiaries are bound; (ii) violate in a material way any existing
applicable law, rule, regulation, judgment, order or decree of any governmental
agency or court, domestic or foreign, having jurisdiction over the Company or
any Subsidiary or any of their respective properties or business; or (iii) have
any material adverse effect on any permit, certification, registration,
approval, consent, license or franchise necessary for the Company or any
Subsidiary to own or lease and operate any of its properties and to conduct its
business or the ability of the Company or any Subsidiary to make use thereof.
2.9 Valid Issuances. The Units and the underlying securities have been
duly and validly authorized and, when issued and delivered in accordance with
the terms of the Subscription Agreement and this Agreement, will be duly and
validly issued, fully paid and non-assessable.
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2.10 No Anti-Dilution Adjustments. The issuance of the Units in the
Offering will not give any holder of any of the Company's outstanding
options, warrants or other convertible securities or rights to purchase shares
of the Company's Common Stock, the right to purchase any additional shares of
Common Stock and/or the right to purchase shares at a reduced price.
2.11 No Regulatory Problems. The Company (i) has not filed a
registration statement which is subject of any pending proceeding or
examination under Section 8 of the Securities Act, or is the subject of any
refusal order or stop order thereunder; (ii) is not subject to any pending
proceeding under Rule 261 of the Securities Act or any similar rule adopted
under Section 3(b) of the Securities act, or to an order entered thereunder;
(iii) has not been convicted of any felony or misdemeanor in connection with
the purchase or sale of any security or involving the making of any false
filing with the Securities and Exchange Commission ("Commission"); (iv) is not
subject to any order, judgment, or decree of any court of competent
jurisdiction temporarily or preliminarily restraining or enjoining, or is
subject to any order, judgement, or decree of any court of competent
jurisdiction, permanently restraining or enjoining, the Company from engaging
in or continuing any conduct or practice in connection with the purchase or
sale of any security or involving the making of any false filing with the
Commission; or (v) is not subject a United States Postal Service false
representation order entered under Section 3005 of ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇
Code; or a temporary restraining order or preliminary injunction entered under
Section 3007 of Title 39, United States Code, with respect to conduct alleged
to have violated Section 3005 of ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code. None of the
Company's directors, officers, or beneficial owners of 10 percent or more of
any class of its equity securities (i) has been convicted of any felony or
misdemeanor in connection with the purchase or sale of any security, involving
the making of a false filing with the commission, or arising out of the conduct
of the business of an underwriter, broker, dealer, municipal securities dealer,
or investment advisor; (ii) is subject to any order, judgement, or decree of
any court of competent jurisdiction temporarily or preliminarily enjoining or
restraining, or is subject to any order, judgment, or decree of any court of
competent jurisdiction, permanently enjoining or restraining such person from
engaging in or continuing any conduct or practice in connection with the
purchase or sale of any security, or involving the making of a false filing
with the Commission, or arising out of the conduct of the business of an
underwriter, broker, dealer, municipal securities dealer, or investment
adviser; (iii) is subject to an order of the Commission entered pursuant to
Section 15(b), 15B(a) or 15B(c) of the Securities Exchange Act of 1934 ("1934
Act"), or is subject to an order of the Commission entered pursuant to Section
203(e) or (f) of the Investment Advisers Act of 1940; (iv) is suspended or
expelled from membership in, or suspended or barred from association with a
member of, an exchange registered as a national securities exchange pursuant to
Section 6 of the 1934 Act, an association registered as a national securities
association under Section 15A of the 1934 Act, or a Canadian
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securities exchange or association for any act or omission to act constituting
conduct inconsistent with just and equitable principles of trade; or (v) is
subject to a United States Postal Service false representation order entered
under Section 3005 of ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code; or is subject to a
restraining order or preliminary injunction entered under Section 3007 of
Title 39, United States Code, with respect to conduct alleged to have violated
Section 3005 of ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code.
3. Representations and Warranties of the Placement Agent. The Placement
Agent represents and warrants as follows:
(a) The Placement Agent is duly incorporated and validly existing and
in good standing under the laws of its State of Incorporation.
(b) The Placement Agent is a member of the National Association of
Securities Dealers, Inc. in good standing and is a registered broker/dealer
under the 1934 Act.
(c) Sales of Units by the Placement Agent will only be made in such
jurisdictions in which the Placement Agent is a registered broker-dealer or
where an applicable exemption from such registration exists.
(d) Offers and sales of Units by the Placement Agent will be made in
compliance with the provisions of Regulation D to accredited investors only and
the Placement Agent will furnish to each investor a copy of the Offering
Documents prior to accepting any payments for Units.
(e) The Placement Agent (i) has not filed a registration statement
which is subject of any pending proceeding or examination under Section 8 of
the Securities Act, or is the subject of any refusal order or stop order
thereunder; (ii) is not subject to any pending proceeding under Rule 261 of the
Securities Act or any similar rule adopted under Section 3(b) of the Securities
act, or to an order entered thereunder; (iii) has not been convicted of any
felony or misdemeanor in connection with the purchase or sale of any security
or involving the making of any false filing with the Securities and Exchange
Commission ("Commission"); (iv) is not subject to any order, judgment, or
decree of any court of competent jurisdiction temporarily or preliminarily
restraining or enjoining, or is subject to any order, judgement, or decree of
any court of competent jurisdiction, permanently restraining or enjoining, the
Placement Agent from engaging in or continuing any conduct or practice in
connection with the purchase or sale of any security or involving the making of
any false filing with the Commission; or (v) is not subject a United States
Postal Service false representation order entered under Section 3005 of ▇▇▇▇▇
▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code; or a temporary restraining order or preliminary
injunction entered under Section
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3007 of ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code, with respect to conduct alleged to have
violated Section 3005 of ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code. None of the Placement
Agent's directors, officers, or beneficial owners of 10 percent or more of any
class of its equity securities (i) has been convicted of any felony or
misdemeanor in connection with the purchase or sale of any security, involving
the making of a false filing with the commission, or arising out of the
conduct of the business of an underwriter, broker, dealer, municipal
securities dealer, or investment advisor; (ii) is subject to any order,
judgement, or decree of any court of competent jurisdiction temporarily or
preliminarily enjoining or restraining, or is subject to any order, judgment,
or decree of any court of competent jurisdiction, permanently enjoining or
restraining such person from engaging in or continuing any conduct or practice
in connection with the purchase or sale of any security, or involving the
making of a false filing with the Commission, or arising out of the conduct of
the business of an underwriter, broker, dealer, municipal securities dealer,
or investment adviser; (iii) is subject to an order of the Commission entered
pursuant to Section 15(b), 15B(a) or 15B(c) of the Securities Exchange Act of
1934 ("1934 Act"), or is subject to an order of the Commission entered
pursuant to Section 203(e) or (f) of the Investment Advisers Act of 1940; (iv)
is suspended or expelled from membership in, or suspended or barred from
association with a member of, an exchange registered as a national securities
exchange pursuant to Section 6 of the 1934 Act, an association registered as a
national securities association under Section 15A of the 1934 Act, or a
Canadian securities exchange or association for any act or omission to act
constituting conduct inconsistent with just and equitable principles of trade;
or (v) is subject to a United States Postal Service false representation order
entered under Section 3005 of ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code; or is subject to a
restraining order or preliminary injunction entered under Section 3007 of
Title 39, United States Code, with respect to conduct alleged to have violated
Section 3005 of ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code.
(f) The Placement Agent has full right, power and authority to enter
into this Agreement. This Agreement has been duly authorized, executed and
delivered by the Placement Agent and is a valid and binding obligation of the
Placement Agent, enforceable in accordance with its terms (except (1) as the
enforceability thereof may be limited by bankruptcy or other laws now or
hereafter in effect relating to or affecting creditors' rights generally, (2)
that the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceedings therefor may be brought, and (3) that
the enforceability of the indemnification and contribution provisions of this
Agreement may be limited by the federal securities laws and public policy), and
no material consent, approval, authorization, order of, or filing with, any
court or governmental authority or any other third party is required to
consummate the transactions
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contemplated by this Agreement.
(g) The Placement Agent's execution, and delivery of this Agreement and
the incurrence of the obligations herein and the consummation of the
transactions contemplated herein will not (i) conflict with, or constitute of
material breach of, or a material default under, the limited liability
agreement, certificate of limited liability company or other organizational
documents of the Placement Agent, or any contract, lease or other instrument by
which the Placement Agent is bound; (ii) violate in a material way any existing
applicable law, rule, regulation, judgment, order or decree of any governmental
agency or court, domestic or foreign, having jurisdiction over the Placement
Agent or its properties or business; or (iii) have any material adverse effect
on any permit, certification, registration, approval, consent, license or
franchise necessary for the Placement Agent to conduct its business.
4. Closing.
4.1 Closing. At any time prior to the Termination Date and after the
sale of the Minimum Units and the clearance of the funds representing the sale
of the Minimum Units, upon the mutual consent of the Company and the Placement
Agent that there should be a Closing, a closing (the "Closing") shall take
place at the offices of the Placement Agent, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ or such other place mutually agreed upon the parties. No Closing shall
occur unless the Company's issued and outstanding securities conform to the
requirements of the 1940 Act applicable to a BDC with respect to (i) type and
amount; and (ii) the price, method and timing of issuance and will conform
after the Closing. Thereafter, during the Offering Period Closings shall be
scheduled periodically upon the sale of the balance of the Units. At each
Closing, payment for the Units issued and sold by the Company shall be made
against delivery of the certificates representing the Units and the underlying
securities. The Placement Agent will deliver the Units to its customers.
4.2 Deliveries at Closing. At the Closing, the Company shall deliver or
cause to be delivered to the Placement Agent on behalf of the Placement Agent
and the Subscribers:
(i) The Opinion of Barack ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇ dated as of the date of each Closing, substantially to the effect
that:
(A) The Company and each of its Subsidiaries, respectively,
has been duly organized and is validly existing and in good standing under the
laws of the jurisdiction of its incorporation, has all requisite corporate
power and authority necessary to own or hold its properties and conduct its
business as described in the Offering Documents and is duly qualified as a
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foreign corporation for the transaction of business and is in good standing in
each jurisdiction where the failure to be so qualified would have a materially
adverse effect on the business, properties, financial position or results of
operations of the Company taken as a whole.
(B) The Company has full corporate right, power and authority
to enter into this Agreement, and to perform all of its obligations hereunder or
contemplated hereby; the Company has full corporate right, power and authority
to issue, sell and deliver the Units and the underlying securities except that
the approval of the Company's shareholders is required in order to complete
the maximum offering; this Agreement and the Units and the underlying
securities have been duly authorized, executed and delivered by the Company
and are the valid and binding obligation of the Company, enforceable in
accordance with its terms except (1) as the enforceability thereof may be
limited by bankruptcy or other laws now or hereafter in effect relating to or
affecting creditors' rights generally, (2) that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject
to equitable defenses and to the discretion of the court before which any
proceedings therefor may be brought, and (3) that the enforceability of the
indemnification and contribution provisions of the Agreement may be limited by
the federal securities laws and public policy;
(C) The Units and the underlying securities, when issued in
accordance with the terms of this Agreement, will be duly and validly issued
and fully paid and non-assessable. The Units and the underlying securities
conform to the description thereof contained in the Offering Documents. The
certificates representing the Units and the underlying securities are in proper
legal form. To the best knowledge of such counsel, except as described on
Schedule 2.2 hereto or in the Offering Documents, no holder of any of the
Company's securities has any rights, "demand", piggyback" or otherwise, to have
such securities registered or to demand the filing of a registration statement.
Except as set forth on Schedule 2.3 hereto or in the Offering Documents, there
are no preemptive or other rights to subscribe for or purchase, or any
restriction upon the voting or transfer of, any shares of Common Stock of the
Company, under the Articles or Certificate of Incorporation or By-Laws of the
Company or under the business corporation law of the State of Utah, or, to the
best knowledge of such counsel, under any agreement or other outstanding
instrument to which the Company is a party or by which it is bound;
(D) Assuming that a proper Form D is filed in accordance with
Rule 503 and that the offer and the sale of the Units by the Placement Agent
was made in compliance with Rule 502(c) (which facts will not be independently
verified by such counsel), the sale of Units and the underlying securities in
the Offering is exempt from registration under the Securities Act and
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is in compliance with Reg D;
(E) Neither the execution and delivery of this Agreement nor
compliance with the terms hereof, or the consummation of the transactions
herein contemplated, has, or will, (i) conflict with, or constitute a material
breach of, or a material default under, the Articles or Certificate of
Incorporation or By-laws, of the Company or any of its Subsidiaries,
respectively, or, to the best of such counsel's knowledge, any material
contract, instrument or document to which the Company or any of its
Subsidiaries, respectively, is a party, or by which the properties of the
Company or any of its Subsidiaries are bound; (ii) to the best knowledge of
such counsel, violate in a material way any existing applicable law, rule,
regulation, judgment, order or decree of any governmental agency or court,
domestic or foreign, having jurisdiction over the Company or any Subsidiary or
any of their respective properties or business; or (iii) to the best knowledge
of such counsel, have any material adverse effect on any permit, certification,
registration, approval, consent, license or franchise necessary for the Company
to own or lease and operate any its properties and to conduct its business or
the ability of the Company or any Subsidiary to make use thereof;
(F) To the best of such counsel's knowledge, except as
disclosed on Schedule 2.5 hereto, there are no claims, actions, suits,
hearings, investigations, inquiries or proceedings of any kind or nature,
before or by any court, governmental authority, tribunal or instrumentality
pending or threatened against or affecting the Company or any of its
Subsidiaries or involving the properties of the Company or any of its
Subsidiaries which would result in any material adverse effect on the business,
properties, financial position or results of operations of the Company taken as
a whole, or which would materially adversely affect the transactions or other
acts contemplated by this Agreement or the validity or enforceability of this
Agreement;
(ii) A certificate of the Company, signed by two executive
officers thereof stating that the representations and warranties contained in
Section 2 hereof are true and accurate in all material respects at each
Closing, with the same effect as though expressly made at the Closing.
(iii) The certificates representing the Common Stock and Warrants
underlying the Units; and
(iv) Such other Closing documents as shall be reasonably
requested by the Placement Agent or its counsel.
(v) The Company shall deliver to the Placement Agent the
opinion of counsel acceptable to the Placement Agent.
(A) To the best of such counsel's knowledge and
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based on a certificate delivered by the Company, the Company qualifies for
election as a "Business Development Company" ("BDC") as such term is defined in
the 1940 Act and the regulations promulgated thereunder;
(B) The Company has filed the necessary Notification of
Election to be subject to the provisions of Sections 55 through 65 of the 1940
Act (the "Notice") with the Securities and Exchange Commission (the
"Commission") to effect such election and that it is not aware of any
impediment to such Notice being accepted by the Commission;
(C) To the best of such counsel's knowledge, and based on a
certificate delivered by the Company, the Company is not, as of the date of
Closing, in material violation of any provisions of the 1940 Act applicable to
a BDC;
(D) To the best of such counsel's knowledge and based on a
certificate delivered by the Company, the Company's issued and outstanding
securities conform to the requirements of the 1940 Act applicable to a BDC with
respect to (i) type and amount; and (ii) the price, method and timing of
issuance; and
(E) Based on the information set forth in the Offering
Documents and based on a certificate delivered by the Company, the securities
to be issued by the Company in the Private Placement conform to the
requirements of the 1940 Act applicable to a BDC with respect to (i) type and
amount; and (ii) the price, method and timing of issuance; based on the
information set forth in the Offering Documents and based on a certificate
delivered by the Company, the compensation to be received by the Placement
Agent for placing the securities offered in the Private Placement does not
violate the 1940 Act.
4.3 Blue Sky Survey. Counsel for the Placement Agent shall prepare
and deliver at the Closing a summary blue sky survey stating the extent to
which and the conditions upon which offers and sales of the Units 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 his
Subscription Agreement, and (ii) the representations, warranties and agreements
of the Company and the Placement Agent set forth in this Agreement.
4.4 Placement Agent's Fees and Expenses. At each closing, the
Company shall pay to the Placement Agent; (i) a commission equal to 10% of the
aggregate purchase price of the Units sold; and (ii) a non-accountable expense
allowance of 3% of the gross proceeds of the Offering, of which amount the sum
of $15,000 shall be paid simultaneously herewith as a non-refundable deposit.
On or before the Closing, the Company shall pay all expenses of the Offering,
including reasonable fees and disbursements of counsel to the Placement Agent
in connection with
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the qualification of the Units under the securities or Blue Sky laws of the
states which the Placement Agent shall designate (subject to the reasonable
approval of the Company). All the foregoing amounts are payable directly to
the parties who are owed same by deduction from the aggregate purchase price
of the Units sold. If the Offering is not consummated because the Placement
Agent prevents its completion (except if such prevention is based upon a
breach by the Company of any material covenant, representation or warranty
contained herein or upon a misstatement to the Placement Agent by the Company
of a material fact or omission by the Company to state a material fact
relating to the business and financial condition and prospects of Company
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading), then the Company
shall not be liable to the Placement Agent for any of the foregoing expenses.
If the Offering is not consummated because the Company prevents its completion
or because of a breach by the Company of any such covenants, representations
or warranties or because of any such misstatements or omissions by the
Company, then the Company's liability for the Placement Agent's expenses shall
be equal to the Placement Agent's actual accountable expenses, but the
Company's total liability for such expense allowance shall be no more than
$25,000.00, in the aggregate.
4.5 Warrant Solicitation Fee. Commencing on the date hereof, the
Company shall pay to the Placement Agent a commission equal to five (5%)
percent of the exercise price of the Warrants forming a part of the Units,
payable on the date of exercise thereof on terms provided for in the Warrant
Agreement dated on or before the Closing between the Company and Corporate
Stock Transfer Company, Inc. The Company will not solicit the exercise price of
such Warrants other than through the Placement Agent and will not authorize any
other dealer or engage in such solicitation without the Placement Agent's prior
written consent.
5. Covenants. The Company and each of its Subsidiaries, respectively,
covenant and agree that:
5.1 Amendments to Offering Documents. Until the Offering has been
completed or terminated, if there shall occur any event relating to or
affecting, among other things, the Company, any of its Subsidiaries or any
affiliate, or the proposed operations of the Company as described in the
Offering Documents, as a result of which it is necessary, in the opinion of
counsel for the Placement Agent or counsel for the Company, to amend or
supplement the Offering Documents in order that the Offering Documents will not
contain an 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, the Company shall
immediately prepare and furnish to the Placement Agent a reasonable number of
copies of an appropriate amendment of or supplement to the Offering
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Documents, in form and substance reasonable satisfactory to counsel for the
Placement Agent.
5.2 Use of Proceeds. The net proceeds of the offering of the Units
will be used by the Company for working capital and other operational
requirements of its business as set forth in the Offering Documents.
5.3 Expenses of Offering. The Company shall be responsible for, and
shall pay, all expenses directly and necessarily incurred by the Company in
connection with the proposed financing, including, but not limited to, the
costs of preparing, printing and filing, where necessary, the Offering
Documents and all amendments and supplements thereto, other than Placement
Agent's legal fees.
5.4 Finder's Fees. The Company does hereby engage the Placement Agent
to render services under the terms and conditions herein set forth:
(a) In the event that the Placement Agent introduces in writing,
after the date hereof, any acquisition of and/or merger with other companies or
joint ventures for other contracts or arrangements with any third parties
including, without limitation, the sale of the Company (or any significant
portion, subsidiaries or affiliates thereof) occur which were arranged by the
Placement Agent, the Company shall pay the Placement Agent as follows:
Legal Consideration Fee
------------------- ---
$ -0- to $3,000,000 5% of Legal Consideration
$3,000,001 to $4,000,000 $150,000 plus 4% of excess Legal
Consideration over $3,000,000
$4,000,001 to $5,000,000 $190,000 plus 3% of excess Legal
Consideration over $4,000,000
$ Over $5,000,000 $220,000 plus 2% of excess Legal
Consideration over $5,000,000
The phrase "Legal Consideration" for the purpose of this Agreement, shall
mean the total of securities (valued at market on the day of closing, or if
there is no public market, valued as set forth in the acquisition agreement),
cash and assets and property or other benefits exchanged by the Company or
received by the Company or its shareholders as consideration, irrespective of
the period of payment or terms (all valued at fair market present value as
agreed or, if not, by an independent appraiser), for such
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transaction.
Notwithstanding anything to the contrary contained in this Section 5.4,
the Company shall be under no obligation to negotiate with or consummate any
transaction with any person or entity introduced to the Company by the
Placement Agent except, if at all, on terms and conditions acceptable to the
Company in its sole and absolute discretion. Furthermore, the provisions of
this Section 5.4 shall not apply to the acquisition of any of the assets or
securities of, or merger with, any of Pacific Financial Services Corp., Inland
Financial Services, National Factors, Inc. or Management Financial.
(b) All fees payable under this Section 5.4 are due and payable to
the Placement Agent, in cash or by certified check, at the closing or closings
of any transactions contemplated hereby; provided, that if the Legal
Consideration on any transaction is other than all cash, the payment to the
Placement Agent shall be, at the option of the Placement Agent, either the cash
equivalent or such other consideration proportionate with the types of Legal
Consideration paid on such transaction. No fees shall be payable under this
Section 5.4 or otherwise if, for any reason, the transactions described herein
are not consummated.
(c) Subject to Sections 8 and 9 below, this Section 5.4 shall remain
in effect for a term of two (2) years from the date hereof.
5.5 Right of First Refusal. In consideration of accepting the
appointment as Placement Agent hereunder, the Company does hereby grant to the
Placement Agent for a period of three (3) years from the date hereof (subject
to Sections 8 and 9 below) the first right of refusal to act as managing
underwriter for a public or private offering of securities for the Company,
excluding any offering to employees of the Company or offerings made in
connection with any acquisition of, or merger with, another company. The
Company shall give to the Placement Agent copies of all information concerning
any proposal for a public or private offering by any underwriter and the
Placement Agent shall have 15 business days to accept or reject such proposal.
5.6 Key-Man Life Insurance. The Company shall maintain key-man life
insurance in the face amounts of $1,000,000 on each of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and
▇▇▇▇ ▇▇▇▇▇▇.
5.7 Observe Rights. The Placement Agent shall have the right to have
a designee attend all meetings of the Board of Directors for a five year period
from the Closing of the Offering. The Company shall reimburse such designee for
all reasonable out-of-pocket expenses incurred by such designee for attendance
at such meetings, upon presentation of invoices, receipts or such other
documentation reasonably requested by the Company. Such designee
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shall have no right to vote on any matters brought before the Board of
Directors.
5.8 Notice Requirement. For a period of two years from the closing
of the Offering, the Company shall provide to the Placement Agent 30 days
advance written notice of (i) all issuances of securities by the Company; and
(ii) all registration statements to be filed by the Company with the commission
registering securities for or by the Company or any security holder.
6. Registration Rights; Lock-Up.
6.1 Registration Rights. As more fully described in the Offering
Documents to be executed by the Company and each Subscriber, the Company shall
grant each Subscriber the right to "piggy back" the Common Stock included in
the Units and the Common Stock underlying the Warrants included in the Units
purchased by him on each registration statement for the sale of Common Stock
filed by the Company after the Closing (except Registration Statements on Form
S-4 and S-8), at the Company's cost and expense (except commissions); provided
however, that, if the offering with respect to which the registration statement
is filed is managed by an underwriter, then (A) if shares of Common Stock
to be sold only by the Company are being registered (and not those of security
holders other than the Subscribers), the Subscribers shall not sell their
shares of Common Stock under such registration statement until 90 days after
the effective date of the registration statement or later as determined by the
underwriter in its sole discretion, and (B) if shares of Common Stock are to be
registered for the benefit of any other selling security holder ("Selling
Holder"), each Subscriber shall be entitled to sell immediately under such
registration statement, a percentage of the total number of shares owned by him
equal to the highest percentage of shares to be sold under such registration
statement (vis-a-vis the total number of shares owned) by any such Selling
Holder, with each Subscriber being entitled to sell the balance of his shares
under such registration statement commencing 90 days after the effective date
of the registration statement. The Company shall give the Subscribers 30 days
notice of the filing of any registration statement and shall keep any
registration statement onto which Subscribers have "piggy backed" their shares
effective for a period of not less than nine months from its effective date, or
such shorter period terminating when all Subscribers electing to be included in
such registration statement have sold all of their shares.
6.2 Demand Registration. Commencing six months following the final
Closing hereunder, the Placement Agent on behalf of the Subscribers shall have
the right to demand that the Company register with the Commission the Common
Stock included in
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the Units and the Common Stock underlying the Warrants included in the Units
(the "Registerable Securities") and to keep such Registration Statement
effective and current" until the earlier of (i) the public sale of all of the
Registerable Securities; or (ii) until all of the Registerable Securities may
be sold pursuant to Rule 144 promulgated under the Securities Act as then in
effect. The Company will, at its sole expense, "Blue Sky" the Registerable
Securities in such states as the Placement Agent shall reasonably request,
including but not limited to each state in which the Units are sold. All
expenses of such registration shall be at the Company's expense. Such
registration statement shall remain effective for a period of nine months from
its effective date.
6.3 Lock-Up. As more fully described in the Subscription Agreement
to be executed by the Company and each Subscriber, each Subscriber will agree
not to sell, transfer, gift or otherwise dispose of, either publicly or
privately, the Units of the underlying securities acquired in the Offering for
a period of 18 months from the final Closing hereunder, without the written
consent of the Placement Agent, and all officers, directors and those
shareholders listed on Schedule 6.3 hereto shall agree not to sell, transfer,
gift or otherwise dispose of, either publicly or privately, their securities in
the Company for a two year period from the final closing, without the consent
of the Placement Agent.
7. Indemnification and Contribution.
(a) Indemnification by the Company. The Company agrees to indemnify
and hold harmless the Placement Agent and each person, if any, who controls
the Placement Agent within the meaning of the Securities Act and/or 1934 Act
against any losses, claims, damages or liabilities, joint or several, to which
the Placement Agent or such controlling person may become subject, under the
Securities Act or otherwise, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
any untrue statement of a material fact contained (A) in the Offering
Documents, or (B) in any blue sky application or other document executed by the
Company specifically for blue sky purposes or based upon any other written
information furnished by the Company or on its behalf to any state or other
jurisdiction in order to qualify any or all of the Units and the underlying
securities under the securities laws thereof (any such application, document or
information being hereinafter called a "Blue Sky Application"), or (ii) the
omission to state in the Offering Documents or in any Blue Sky Application a
material fact required to be stated therein or necessary to make the statements
therein,
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in light of the circumstances under which they were made, not misleading; and
will reimburse the Placement Agent and each such controlling person for any
legal or other expenses subject to Section 7(c) below reasonably incurred by
the Placement Agent or such controlling person in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is
based upon (i) an untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with written
information furnished to the Company by the Placement Agent in the preparation
of the Offering Documents or any such Blue Sky Application, or (ii) the
Placement Agent's bad faith, gross negligence or willful misconduct.
(b) Indemnification by the Placement Agent. The Placement Agent
agrees to indemnify and hold harmless the Company and each person, if any, who
controls the Company with in the meaning and the Securities Act and/or 1934 Act
against any losses, claims, damages or liabilities, joint or several, to which
the Company or such controlling person may become subject, under the Securities
Act or otherwise insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon (i) any untrue
statement of a material fact contained (A) in the Offering Documents, or (B) in
any Blue Sky Application, or (ii) the omission to state in the Offering
Documents or in any Blue Sky Application a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; but in each case,
only if and to the extent that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by the Placement
Agent specifically for use in the preparation of the Offering Documents or any
such Blue Sky Application; provided however that the Placement Agent will not
be liable for the Company's bad faith, gross negligence or willful misconduct.
(c) Procedure. Promptly after receipt by an indemnified party under
this Section 7 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against any
indemnifying party under this Section 7, notify in writing the indemnifying
party of the commencement thereof; provided however, that the omission so to
notify the indemnifying party will not relieve the indemnifying party from any
liability under this Section 7 as to the particular item for which
indemnification is then being sought, unless such failure to so notify
materially adversely prejudices the indemnifying party with respect to such
particular item. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and to
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the extent that it may wish, jointly with any other indemnifying party,
similarly notified, to assume the defense thereof, with counsel who shall be
to the reasonable satisfaction of such indemnified party, and after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party will not be liable to such
indemnified party under this paragraph 7 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation. Any such indemnifying
party shall not be liable to any such indemnified party on account of any
settlement of any claim or action effected without the consent of such
indemnifying party.
(d) Contribution. If the indemnification provided for in this Section
7 is unavailable to any indemnified party in respect to any losses, claims,
damages, liabilities or expenses referred to therein then the indemnifying
party, in lieu of indemnifying such indemnified a party, will contribute to the
amount paid or payable by such indemnified party, as a result of such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand, and the Placement Agent on the other hand, from the
Offering, 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 Company on the one hand, and of the Placement Agent on
the other hand, in connection with the statements or omissions which resulted
in such losses, claims, damages, liabilities or expense as well as any other
relevant equitable considerations. The relative benefits received by the
Company on the one hand, and the Placement Agent on the other hand, shall be
deemed to be in the same proportion as the total proceeds from the Offering
(net of sales commissions and other payments to the Placement Agent, but before
deducting expenses) received by the Company, bear to the commissions received
by the Placement Agent. The relative fault of the Company on the one hand, and
the Placement Agent on the other hand, will be determined with reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates to information
supplied by the Company, and its relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
(e) Equitable Considerations. The Company and the Placement Agent
agree that it would not be just and equitable if contribution pursuant to this
Section 7 were determined by pro rata allocation or by any other method of
allocation which does not take into account the equitable considerations
referred to in the immediately preceding paragraph.
(f) Attorneys' Fees. The amount payable by a party
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under this Section 7 as a result of the losses, claims, damages, liabilities or
expenses referred to above will be deemed to include any legal or other fees
or expenses reasonably incurred by such party in connection with investigating
or defending (subject to Section 7(c) above) any action or claim.
8. Termination by Placement Agent. The Placement Agent will have the
right to terminate this Agreement by giving written notice to the Company as
herein specified, at any time, at or prior to the Closing Date: (a) if the
Company shall have failed, refused, or been unable to perform any of its
material obligations hereunder, or materially breached any of its
representations or warranties hereunder and failed to cure the same within 30
days after receipt of written notice from the Placement Agent specifying such
failure or breach; or (b) if, in the Placement Agent's opinion, there has
occurred an event materially and adversely affecting the value of the Common
Stock; or (c) the due diligence investigation of the Company by the Placement
Agent shall not be satisfactorily completed to the Placement Agent's sole
satisfaction or (d) failure to obtain shareholder approval for the maximum
Offering shall terminate this Agreement as to the maximum Offering or (e)
failure to reduce outstanding options and warrants to satisfy the requirements
of the Investment Act. Such due diligence shall be completed within 10 business
days following delivery to the Placement Agent of a Confidential Private
Placement Memorandum satisfactory to the Placement Agent. Any termination of
this Agreement pursuant to this Section 8 shall constitute a termination of all
provisions and obligations contained herein including, Sections 5.4 and 5.5,
and the Company shall be liable to the Placement Agent only for the $15,000
non-refundable deposit paid herewith.
9. Termination by Company. The Company shall have the right to terminate
this Agreement (including, without limitation, Sections 5.4 and 5.5) upon
written notice to the Placement Agent, as herein specified, in the event the
Placement Agent fails to sell the Minimum Units during the Offering Period. In
the event of such termination, the Company shall be liable to the Placement
Agent only for the $15,000 non-refundable deposit paid herewith. In addition,
the Company shall have the right to terminate this Agreement (including,
without limitation, Sections 5.4, 5.5 and 6.3) upon written notice to the
Placement Agent, as herein specified, in the event that the Placement Agent
substantially ceases operations. In the event of such termination, the Company
shall be liable to the Placement Agent only for obligations that have fully
accrued prior to the date of such termination.
10. Notices. Any notice hereunder shall be in writing and shall be
effective when delivered in person or by facsimile transmission, or mailed by
certified mail, postage prepaid, return receipt requested, to the appropriate
party or parties, at the following addresses: if to the Placement Agent, to
▇▇▇▇▇ ▇▇▇▇▇▇▇
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Securities, LLC, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Senior Managing Director (Fax No. ▇▇▇-▇▇▇-▇▇▇▇); with a
copy to ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
(Fax No. ▇▇▇-▇▇▇-▇▇▇▇); if to the Company: Walnut Financial Services, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇. 22182, Attention: ▇▇▇▇ ▇.
▇▇▇▇▇▇, Chief Executive Office (Fax No. ▇▇▇-▇▇▇-▇▇▇▇); with a copy to Barack
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇. 60606, (Fax No. ▇▇▇-▇▇▇-▇▇▇▇); or, in each case, to such other
address as the parties may hereinafter designated by like notice.
11. Parties. This Agreement will inure to the benefit and be binding upon
the Placement Agent, the Company and their respective successors and assigns.
This Agreement is intended to be, and is for the sole and exclusive benefit of
the parties hereto and the persons described in Section 7(a) and 7(b) hereof,
and their respective successors and assigns, and for the benefit of no other
person (including, without limitation, any Subscriber), and no other person
will have any legal or equitable right, remedy or claim under, or in respect
of this Agreement.
12. Amendment and/or Modification. Neither this Agreement, nor any term
or provision hereof, may be changed, waived, discharged, amended, modified or
terminated orally, or in any manner other than by an instrument in writing
signed by each of the parties hereto.
13. Further Assurances. Each party to this Agreement will perform any and
all acts and execute any and all documents as may be reasonably necessary and
proper under the circumstances in order to accomplish the intents and purposes
of this Agreement and to carry out its provisions.
14. Validity. In case any term of this Agreement will be held invalid,
illegal or unenforceable, in whole or in part, the validity of any of the
other terms of this Agreement will not in any way be affected thereby.
15. Waiver of Breach. The failure of any party hereto to insist upon
strict performance of any of the covenants and agreements herein contained, or
to exercise any option or right herein conferred in any one or more instances,
will not be construed to be a waiver or relinquishment of any such option or
right, or of any other covenants or agreements, and the same will be and
remain in full force and effect.
16. Entire Agreement. This Agreement contains the entire agreement and
understanding of the parties with respect to the subject matter hereof and
thereof, respectively, and there are no representations, inducements, promises
or agreements, oral or otherwise, not embodied in this Agreement and/or in the
Letter of
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Intent. Any and all prior discussions, negotiations, commitments and
understanding relating to the subject matter of these agreements are
superseded by them.
17. Counterparts. This Agreement may be executed in counterparts and
each of such counterparts will for all purposes be deemed to be an original,
and such counterparts will together constitute one and the same instrument.
18. Law. This Agreement will be deemed to have been made and delivered
in New York City and will be governed as to validity, interpretation,
construction, effect and in all other respects by the internal laws of the
State of New York.
19. Representations, Warranties and Covenants to Survive Delivery.
Subject to Sections 8 and 9 above, the respective representations, indemnities,
agreements, covenants, warranties and other statements of the Company and the
Placement Agent shall survive execution of this Agreement and delivery of the
Units.
If you find the foregoing is in accordance with our understanding, kindly
sign and return to us a counterpart hereof, whereupon this instrument along
with all counterparts will become a binding agreement between us.
Very truly yours,
WALNUT FINANCIAL SERVICES, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Executive
Officer
AGREED:
▇▇▇▇▇ ▇▇▇▇▇▇▇ SECURITIES, LLC
By:
--------------------------------
▇▇▇▇▇ ▇▇▇▇▇, President
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SCHEDULE 2.1
List of Subsidiaries
Percentage Owned Directly
or Indirectly by
Walnut Financial Services. Inc.
-------------------------------
Walnut Capital Corp. 100 %
Walnut Funds, Inc. 100%
WGP Management Company, Inc. 40%
Walnut GP, L.L.C. 40%
Walnut Consulting, Inc. 100%
Universal Bridge Fund, Inc. 100%
Universal Partners, L.P. 83%*
F&G Holdings LLC 50%
* 83% of the outstanding limited partnership interest. In addition, Walnut
Financial Services, Inc., through Universal Bridge Fund, Inc., owns 50% of the
1% general partnership interest.
24
SCHEDULE 2.2
Authorized Capital
As of September 30, 1997, the number of outstanding common stock was 14,659,172.
25
SCHEDULE 2.3
PREEMPTIVE RIGHTS; OPTIONS
There are no preemptive rights. As of September 30, 1997, the number of
outstanding shares or options was 2,278,054.
26
SCHEDULE 2.5
Pending Actions
None.
27
SCHEDULE 2.7
The Offering Documents describe certain consents, including the approval
of the Company's shareholders for the maximum offering and the consent of
enough holders of Universal Warrants (as defined in the Offering Documents).
28
SCHEDULE 6.3
Necessary Lock-Up Agreements
----------------------------
Shareholders Number of Shares
------------ ----------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustee of ▇▇▇ ▇▇▇▇▇ 339,659
Trusts
Federal Business Investment Company 540,159
▇▇▇ ▇. ▇▇▇▇ 75,000
The Holding Company 366,043
Kanter Family Foundation 282,993
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 193,381
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 287,003
▇▇▇▇▇▇▇▇ ▇▇▇▇ 50,000
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustee of the Rainbow 89,062
Trusts
Windy City, Inc. 455,033
