EXHIBIT 10.29
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PLACEMENT AGENT AGREEMENT
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December 24, 2003
Xxxxxxx Xxxxxx Xxxxxx Inc.
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Xxxxxxx & Company, Inc.
00 Xxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000-0000
Dear Sirs:
1. Introductory. Xxxxxx, Inc., a Delaware corporation (the "Company"),
proposes to sell on a "best efforts" basis up to 3,000,000 shares (the "Shares")
of Common Stock $0.01 par value per share (the "Common Stock"), of the Company
at a purchase price of $3.00 per share (the "Offering Price") with a minimum
investment of $30,000 if there are subscriptions for more than 1,500,000 Shares
all upon the terms and conditions set forth in the Memorandum (as hereinafter
defined).
2. Representations and Warranties of the Company. The Company represents,
warrants, and agrees that:
(a) The Private Placement Memorandum dated December 24, 2003, with
respect to the sale of the Shares together with the exhibits thereto and
the documents incorporated by reference therein (collectively, the
"Memorandum"), copies of which have heretofore been delivered to you, have
been carefully prepared by the Company in conformity with the requirements
of Rule 506 of Regulation D ("Regulation D") of the rules and regulations
(the "Rules and Regulations") of the Securities and Exchange Commission
(the "Commission") under the Securities Act of 1933, as amended (the
"Act").
(b) At the date of the Memorandum, it did not include any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein in light of
the circumstances under which they were made not misleading and at all
times subsequent thereto up to and including each Closing Date (as
hereinafter defined): (i) neither the Memorandum nor any amendment or
supplement thereto includes or will include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein in light of the circumstances under which they were made
not misleading, and (ii) neither the Memorandum nor any supplemental sales
material supplied or approved in writing by an officer of the Company (when
read in conjunction with the Memorandum, whether designated only for
broker-dealer use or otherwise) includes any untrue statement of a material
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fact or omits to state a material fact necessary to make the statements
therein in the light of the circumstances under which they were made not
misleading; provided, however, that the foregoing representations,
warranties, and agreements shall not apply to information contained in or
omitted from the Memorandum or any such amendment or supplement or
supplemental sales material in reliance upon, and in conformity with,
information furnished to the Company by you specifically for use in the
preparation thereof.
(c) All reports and statements required to be filed by the Company
with the Commission under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and the rules and regulations thereunder, due at or
prior to the date of this Agreement have been made. Such filings, together
with all documents incorporated by reference therein, are referred to as
"Exchange Act Documents." Each Exchange Act Document, as amended, conformed
in all material respects to the requirements of the Exchange Act and the
rules and regulations thereunder, and no Exchange Act Document, as amended,
at the time each such document was filed, included any untrue statement of
a material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(c) The audited financial statements, together with the related notes
of the Company at December 31, 2002 and 2001, and for the years then ended,
included in the Company's Annual Report on Form 10-K for the year ended
December 31, 2002, and the unaudited financial statements of the Company at
September 30, 2003, and for the nine months then ended (collectively, the
"Company Financial Statements"), included in the Company's Quarterly Report
on Form 10-Q for the quarter ended September 30, 2003, respectively, fairly
present in all material respects, on the basis stated therein and on the
date thereof, the financial position of the Company at the respective dates
therein specified and its results of operations and cash flows for the
periods then ended (subject to, in the case of the unaudited financial
statements, normal audit adjustments). To the knowledge of the Company,
such statements and related notes have been prepared in accordance with
generally accepted accounting principles in the United States applied on a
consistent basis except as expressly noted therein (provided that the
unaudited financial statements lack footnotes and other presentation
items).
(d) Except as disclosed on Schedule 2(d), subsequent to September 30,
2003, the Company has not incurred any material liabilities or obligations,
direct or contingent, except in the ordinary course of business and except
for liabilities or obligations reflected or reserved against on the
Company's balance sheet dated September 30, 2003, and there has not been
any material adverse change, or to the actual knowledge of the Company, any
development involving a prospective material adverse change, in the
condition (financial or otherwise), business, or results of operations of
the Company or any change in the capital or material increase in the
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long-term debt of the Company, nor has the Company declared, paid, or made
any dividend or distribution of any kind on its capital stock.
(e) All action required to be taken by the Company necessary for the
authorization of this Agreement and the Related Agreements (as hereinafter
defined), the performance of all obligations of the Company hereunder and
thereunder at the Closing (as hereinafter defined), and as a condition to
the due and proper authorization, issuance, sale, and delivery of the
Shares to subscribers therefor in accordance with the terms of this
Agreement has been, or prior to the initial Closing Date, will have been
taken; and upon the payment of the consideration for the Shares specified
herein, the Shares will be duly and validly issued, fully paid, and
non-assessable with no personal liability attaching to the ownership
thereof and free and clear of all liens imposed by or through the Company.
(f) The Company is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Delaware and has all
requisite right, power, and authority to own or lease its properties, to
conduct its business as described in the Exchange Act Documents, and to
execute, deliver, and perform this Agreement, the Subscription Agreements
between the Company and the purchasers of the Shares in the form attached
as Exhibit A hereto (the "Subscription Agreements"), the Registration
Rights Agreement in the form attached as Exhibit B hereto (the
"Registration Rights Agreement" and together with the Subscription
Agreements, the "Related Agreements"), to issue and sell the Shares, and to
carry out the provisions of this Agreement and the Related Agreements and
to carry on its business as presently conducted. The Company is duly
qualified to do business and in good standing as a foreign corporation in
all other jurisdictions in which its ownership or leasing of properties, or
the conduct of its business requires or may require such qualification
except where the failure to be so qualified would not have a material
adverse effect on the Company. The Company has complied in all material
respects with all material laws, rules, regulations, applicable to the
Company's business, operations, properties, assets, products, and services,
and the Company is in possession of and operating in compliance with all
material permits, licenses, and other authorization, required to conduct
its business as currently conducted.
(g) The authorized capital stock of the Company consists of 20,000,000
shares of Common Stock, $0.01 par value per share, of which 13,942,238
shares were issued and outstanding as of September 30, and 10,000,000
shares of preferred stock, $1.00 par value per share, of which 3,000,000
shares have been designated Series B Preferred Stock, of which 190,000
shares were issued and outstanding at September 30, 2003. Except as
contemplated by this Agreement, or as described in the Exchange Act
Documents or on Schedule 2(g), (i) there is no commitment by the Company to
issue any shares of capital stock, subscriptions, warrants, options,
convertible securities, or other similar rights to purchase or receive
Company securities or to distribute to the holders of any of its equity
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securities any evidence of indebtedness, cash, or other assets, (ii) the
Company is under no obligation (contingent or otherwise) to purchase,
redeem, or otherwise acquire any of its equity or debt securities or any
interest therein, and (iii) to the Company's knowledge there are no voting
trusts or similar agreements, shareholders' agreements, pledge agreements,
buy-sell agreements, rights of first refusal, preemptive rights, or proxies
relating to any securities of the Company. Except as set forth in the
Exchange Act Documents or filings with the Commission made by third parties
pursuant to Schedule 13D or 13G or Form 3 or 4, and to the knowledge of the
Company, no person holds of record or beneficially, 5% or more of the
outstanding shares of the capital stock of the Company. All outstanding
securities of the Company were issued in compliance with applicable Federal
and state securities laws.
(h) Except as disclosed in the Exchange Act Documents or as described
on Schedule 2(h), there is no material pending or, to the knowledge of the
Company, threatened (i) action, suit, claim, proceeding, or investigation
against the Company, at law or in equity, or before or by any Federal,
state, municipal, or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign (each, a
"Governmental Body"), (ii) arbitration proceeding against the Company,
(iii) governmental inquiry against the Company, or (iv) any action or suit
by or on behalf of the Company pending or threatened against others.
(i) The Company is not in violation of its certificate of
incorporation or bylaws, or in default, or with the giving of notice or
lapse of time or both, would be in default, in the performance of any
material obligation, agreement, or condition contained in any lease,
license, material contract, indenture, or loan agreement or in any bond,
debenture, note, or any other evidence of indebtedness, except for such
defaults as would not have a material adverse effect on the Company. The
execution, delivery, and performance of this Agreement, the Related
Agreements, and the Escrow Agreement (as hereinafter defined), the
incurrence of the obligations herein, the issuance, sale, and delivery of
the Shares, and the consummation of the transactions contemplated herein,
have been duly authorized by all requisite corporate action on the part of
the Company and (i) do not and will not conflict with the Company's
certificate of incorporation or bylaws, (ii) do not and will not, with or
without the passage of time or the giving of notice, result in the breach
of, or constitute a default, cause the acceleration of performance, or
require any consent under, or result in the creation of any lien, charge or
encumbrance upon any property assets of the Company pursuant to, any
material loan agreement, mortgage, deed of trust, indenture, or other
instrument or agreement to which the Company is a party or by which the
Company or its properties are bound, except such consents as have been
obtained as of the date hereof or to the extent that the same have been, or
prior to the initial Closing Date will be, waived or cured, or (iii) do not
and will not result in the violation of any law, statute, order, rule,
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administrative regulation, or decree of any court, or governmental agency
or body having jurisdiction over the Company or its properties.
(j) Except as disclosed in the Exchange Act Documents or as described
on Schedule 2(j), there are no pre-emptive rights or other rights to
subscribe for or to purchase, or any restriction upon the voting or
transfer of, shares of Common Stock pursuant to the Company's certificate
of incorporation, bylaws, or any agreement or other instrument to which the
Company is a party. Except as disclosed on Schedule 2(j), the issuance of
the Shares is not subject to any preemptive right of any shareholder of the
Company or to any right of first refusal or other right in favor of any
person.
(k) This Agreement has been duly and validly executed and delivered by
or on behalf of the Company and constitutes a legal, valid, and binding
obligation of the Company enforceable in accordance with its terms, except
to the extent that its enforceability is limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium, or other laws of
general application relating to or affecting the enforcement of creditors'
rights generally and (ii) laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies and except as
enforceability of the indemnity and contribution provisions contained in
Section 7 hereof may be limited by applicable law or principles of public
policy.
(l) The escrow agreement (the "Escrow Agreement") among the Company,
you, and Sterling Bank (the "Escrow Agent") has been duly and validly
executed and delivered by or on behalf of the Company and constitutes a
legal, valid, and binding obligation of the Company enforceable in
accordance with its terms, except as such enforceability may be limited by
(i) applicable bankruptcy, insolvency, reorganization, moratorium, or other
laws of general application relating to or affecting enforcement of
creditors' rights generally and (ii) laws relating to the availability of
specific performance, injunctive relief, or other equitable remedies.
(m) No consent, approval, authorization, or order of any court or
governmental authority or agency is required for the consummation by the
Company of the transactions contemplated by this Agreement, except such as
may be required by the National Association of Securities Dealers, Inc.
("NASD"), the Act, or the Rules and Regulations or state securities or Blue
Sky laws.
(n) Except as would not have a material adverse effect on the
business, assets, results of operation, or condition of the Company, the
Company has filed, or caused to be filed, on a timely basis, all tax
returns (including payroll, unemployment, and other taxes related to its
employees and independent contractors) required to be filed with any
Governmental Body and has paid or caused to be paid all taxes, levies,
assessments, tariffs, duties or other fees imposed, assessed, or collected
by any Governmental Body that may have become due and payable pursuant to
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those tax returns or otherwise except taxes being disputed by the Company
in good faith. Except as disclosed on Schedule 2(n), no deficiency
assessment with respect to or proposed adjustment of any of the Company's
Federal, state, municipal, or local tax returns has occurred or is
threatened. There has been no tax lien imposed by any Governmental Body
outstanding against the Company's assets or properties, except the lien for
current taxes not yet due. The charges, accruals, and reserves on the books
of the Company with respect to taxes for all fiscal periods are adequate,
in the opinion of the Company, and the Company does not know of any actual
or proposed tax assessment for any fiscal period or of any basis therefor
against which adequate reserves have not been set up. Except as disclosed
on Schedule 2(n), the Company has not been advised that any Federal income
tax return of the Company has been, or will be, examined or audited by the
Internal Revenue Service.
(o) The Common Stock is registered pursuant to Section 12(b) of the
Exchange Act and is quoted with the symbol "NESO" on the OTC Bulletin
Board.
(p) The Company has not during the past six months offered or sold any
security by or for the Company that is of the same or a similar class as
the Shares, other than offers of securities made solely to accredited
investors or otherwise under an employee benefit plan as defined in Rule
405 under the Act, securities issued in connection with acquisitions, or
other securities that will not invalidate the exemption from registration
relied on to offer and sell the Shares.
(q) Neither the Company nor any of its affiliates is or has been
subject to any order, judgment, or decree of any court of competent
jurisdiction temporarily, preliminarily, or permanently enjoining such
person for failure to comply with Rule 503 under Regulation D.
(r) Other than the execution, delivery, and performance by the Company
of this Agreement and the Related Agreements, the offer and sale of the
Shares require no consent of, action by or in respect of, or filing with,
any person or Governmental Body other than those consents that have been
obtained and filings that have been made pursuant to applicable state
securities laws and post-sale filings pursuant to applicable state and
federal securities laws, which the Company undertakes to file within the
applicable time period.
3. Representations and Warranties of Xxxxxxx Xxxxxx Xxxxxx Inc. and Xxxxxxx
& Co. You each, severally and not jointly, represent and warrant to, and agree
with, the Company that:
(a) You are duly organized and are validly existing and in good
standing as a corporation under the laws of the jurisdiction of your
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incorporation, with power and authority (corporate and other) to perform
its obligations under this Agreement and the Escrow Agreement;
(b) You are a broker-dealer registered and in good standing under the
Exchange Act and under the securities or Blue Sky laws of each state in
which the Shares are being offered or sold by you, and you are a member in
good standing of the NASD; you are in possession of and operating in
compliance with all authorizations, licenses, permits, consents,
certificates, and orders required for the performance of your duties under
this Agreement and the Escrow Agreement, and your performance of your
duties hereunder and thereunder will be in compliance with all applicable
laws, including state securities and Blue Sky laws.
(c) There are no legal or governmental proceedings pending to which
you are a party or of which any of your properties is the subject or, to
your knowledge, threatened, which, if determined adversely to you, would
individually or in the aggregate materially and adversely affect your
ability to perform your obligations under this Agreement or the Escrow
Agreement.
(d) No consent, approval, authorization or order of any court or
governmental authority or agency is required for the performance by you of
your obligations under this Agreement, except such as may be required by
the NASD or under Regulation D or state securities or Blue Sky laws.
(e) This Agreement has been duly and validly executed and delivered by
or on behalf of you and constitutes a legal, valid, and binding obligation
of you enforceable in accordance with its terms, except to the extent that
its enforceability is limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium, or other laws of general application relating
to or affecting the enforcement of creditors' rights generally, and (ii)
laws relating to the availability of specific performance, injunctive
relief, or other equitable remedies and except as enforceability of the
indemnity and contribution provisions contained in Section 7 hereof may be
limited by applicable law or principles of public policy.
(f) The Escrow Agreement among the Company, you, and the Escrow Agent
has been duly and validly executed and delivered by or on behalf of you and
constitutes a legal, valid, and binding obligation of you enforceable in
accordance with its terms, except as such enforceability may be limited by
(i) applicable bankruptcy, insolvency, reorganization, moratorium, or other
laws of general application relating to or affecting enforcement of
creditors' rights generally and (ii) laws relating to the availability of
specific performance, injunctive relief, or other equitable remedies.
4. Offering and Sale of the Shares. (a) On the basis of the
representations, warranties, and covenants herein contained, but subject to the
terms and upon the conditions herein set forth, you are hereby appointed the
non-exclusive placement agent of the Company during the term herein specified
(the "Offering Period") for the purpose of finding subscribers for the Shares on
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a best-efforts basis for the account of the Company at the Offering Price
through a private offering (the "Offering") to an unlimited number of
"accredited investors" (as such term is defined in Rule 501 of Regulation
D)("Accredited Investors") pursuant to and in accordance with the Act. Subject
to the performance by the Company of all its obligations to be performed
hereunder, and to the completeness and accuracy of all the representations and
warranties contained herein, you hereby accept such agency and agree on the
terms and conditions herein set forth to use your best efforts during the
Offering Period to find subscribers for Shares at the Offering Price. Your
agency hereunder, which is terminable as provided in Section 11 hereof, shall
terminate at 11:59 p.m., Houston, Texas time, on January 15, 2004; provided that
such termination date (the "Termination Date") may be extended by mutual written
agreement of the parties until January 31, 2004.
(b) Each Investor desiring to purchase Shares will be required to: (i)
complete, execute, and deliver to you an executed copy of (A) a
Subscription Agreement and (B) an Investor Questionnaire, in the form
attached as Exhibit C hereto, and (ii) deliver to you payment for such
subscription in the form of a check payable to the order of "Xxxxxx -
Escrow Account" or a wire transfer of immediately available funds in the
amount that the Investor desires to purchase. Any payment you receive that
does not conform to this requirement will be returned to an Investor by the
end of the next business day following receipt. Upon receipt, you shall
hold all such Subscription Agreements and Investor Questionnaires for
safekeeping and immediately forward all funds delivered to you to the
Escrow Agent. The Escrow Agent, upon receipt of such funds, will hold the
funds in an escrow account pursuant to the Escrow Agreement. You shall
promptly forward each executed Subscription Agreement received to the
Company for acceptance or rejection together with a schedule setting forth
the name and address of each subscriber and the amount received from each
subscriber. The Company shall notify you of such acceptance or rejection
within 10 days of receipt of a Subscription Agreement.
(c) In the event that acceptable subscriptions for 1,500,000 Shares
(the "Minimum Shares") shall not have been received and accepted by the
Company by the Termination Date, all funds received from subscribers (if
any) shall be returned in full, and your agency and this Agreement shall
terminate without obligation on your part or on the part of the Company.
(d) If, by the Termination Date or such earlier time as may be agreed
upon by you and the Company, you have received subscriptions for the
Minimum Shares and such subscriptions have been accepted by the Company (in
its sole discretion), you shall promptly notify the Company in writing of
the aggregate amount of Shares for which you have received subscriptions
(the "Notice Date"). Payment of the purchase price for the Shares for which
you have found subscribers, and delivery, with respect to each subscriber
for Shares, of a copy of a Subscription Agreement signed by such subscriber
(a "Closing"), shall then be made at such place and time as shall be agreed
upon between you and the Company, no later than the fifth full business day
after the Notice Date (a "Closing Date").
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(e) As compensation for your services, a cash commission will be paid
to you with respect to subscriptions received by you as to which the
payments and deliveries provided for in this Section 4 are made at each
Closing Date equal to 8% of the purchase price of each Share purchased at
the Closing. Such commissions shall be paid to you on the Closing Date by
bank wire transfer payable in immediately available funds. In addition, the
Company agrees to reimburse you for your reasonable out-of-pocket expenses
in accordance with Section 6 hereof.
(f) Neither you, the Company, nor any Additional Agent (as hereinafter
defined) shall, directly or indirectly, pay or award any finder's fees,
commissions or other compensation to any person engaged by a potential
investor for investment advice as an inducement to such advisor to advise
the purchase of the Shares; provided, however, that normal sales
commissions payable to a registered broker-dealer or other properly
licensed person for selling the Shares shall not be prohibited hereby.
(g) You will prepare and file such statements and reports as are or
may be required to enable the Shares to be qualified for sale under the
securities laws of such jurisdictions as you may designate.
(h) In connection with the Offering you will, to the extent within
your control, conduct the Offering in accordance with the applicable
provisions of the Act and Regulation D so as to preserve for the Company
the exemption provided by Rule 506 of Regulation D. You agree not to offer
or sell the Shares by means of (i) any means of general solicitation,
including any advertisement, article, notice, or other communication
published in any newspaper, magazine, or similar media or broadcast over
television or radio or (ii) any seminar or meeting, whose attendees have
been invited by any general solicitation or general advertising. Prior to
the sale of any of the Shares, you will have reasonable grounds to believe,
and in fact believe, that each subscriber for Shares is an Accredited
Investor. You agree not to disclose any material nonpublic information
regarding the Company to any subscriber except as such disclosure may be
permitted pursuant to Regulation FD and is agreed to in advance by the
Company.
(i) In connection with the performance of your obligations under this
Agreement, you may engage, for the account of the Company, the services of
one or more broker-dealers ("Additional Agents") who are members of the
NASD and who are acceptable to the Company, and, as compensation for their
services, shall pay to such Additional Agents an amount to be negotiated
between you and such Additional Agents. Such amount will be paid to the
Additional Agents by you only out of the commissions received by you in
respect of sales of Shares as described in paragraph (e) of this Section 4,
and the Company shall have no obligation to any Additional Agents
respecting any such payment. The arrangements, if any, between the Company,
you, and any Additional Agent shall be set forth in an Additional Agent
Agreement ("Additional Agent Agreement"), which shall provide, among other
things, that such Additional Agent shall be deemed to have agreed to the
matters set forth herein as if the Additional Agent were a signatory
hereof. Nothing contained in this Agreement or in the Additional Agent
Agreement shall be deemed to constitute the Additional Agents, if any, as
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your agents, and you shall not be liable to the Company in respect of the
performance by the Additional Agents, if any, of any representations,
warranties or covenants of such Additional Agents contained herein or in
the Additional Agent Agreement.
5. Covenants and Agreements of the Company. The Company covenants and
agrees with you that:
(a) Except as contemplated or described in this Agreement or in a
public disclosure made prior to the date hereof, it will not, prior to the
initial Closing Date, incur any material liability or obligation, direct or
contingent, or enter into any material transaction, in each case, other
than in the ordinary course of business. It will not, prior to the initial
Closing Date, declare or pay any dividend on the Common Stock or make any
distribution on the Common Stock payable to shareholders of record on a
date prior to the initial Closing Date.
(b) It will cooperate with you to enable the Shares to be qualified
for sale under the securities laws of such jurisdictions as you may
designate, subject to approval by the Company, and at your request will
make such applications and furnish such information as may be required of
it for that purpose; provided, however, that you and the Company shall
first determine whether an exemption from registration other than the
Uniform Limited Offering Exemption (ULOE) or a similar exemption is
available in each such jurisdiction and the Company shall not be required
to qualify to do business or to file a general consent to service of
process in any such jurisdiction or to subject itself to taxation. It will,
from time to time, prepare and file such statements and reports as are or
may be required to continue such qualifications in effect for so long a
period as you may reasonably request for the distribution of the Shares.
(c) It will make available to you and each purchaser of Shares at a
reasonable time prior to each Closing Date the opportunity to ask questions
and receive answers concerning the terms and conditions of the Offering and
to obtain any additional information that the Company possesses or can
acquire without unreasonable effort or expense that is necessary to verify
the accuracy of any information in the Exchange Act Documents or otherwise
furnished by the Company to you or any purchaser of Shares; provided,
however, that the Company shall not be required to disclose any material
nonpublic information to any purchaser of Shares.
(d) It will file all reports required by Regulation D with regard to
sales of the Shares and use of the proceeds therefrom; provided that you
provide all relevant information to the Company in writing as to purchasers
of the Shares required for such filings.
(e) It will not offer or sell any securities of the Company that are
of the same or a similar class as the Shares for a period of six months
after final Closing Date, other than those offers or sales of securities
under an employee benefit plan as defined in Rule 405 under the Act, in
connection with options, warrants, or convertible securities outstanding as
of the Closing Date, or in connection with an acquisition of assets or
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another business by the Company if such offering will be integrated with
the Offering of the Shares pursuant to this Agreement for purposes of the
exemptions under Regulation D, so as to invalidate the exemption from
registration relied on to offer and sell the Shares.
(g) For a period of at least 18 months following the final Closing
Date, the Company will maintain the registration of its Common Stock under
Section 12 of the Exchange Act so long as the Exchange Act requires it to
be so registered, will comply in all respects with its reporting and filing
obligations under the Exchange Act.
(h) For a period of at least 18 months following the final Closing
Date, the Company will use its commercially reasonable best efforts (i) to
timely file all reports required to be filed by the Company after the date
hereof under the Securities Act and the Exchange Act (including the reports
pursuant to Section 13(a) or 15(d) of the Exchange Act referred to in
subparagraph (c)(1) of Rule 144) and the rules and regulations adopted by
the Commission thereunder), (ii) if the Company is not required to file
reports pursuant to such sections, it will prepare and furnish to the
purchasers of Shares and make publicly available in accordance with Rule
144(c) such information as is required for the purchasers to sell the
Shares under Rule 144, and (iii) to take such further action as any holder
of Shares may reasonably request, all to the extent required from time to
time to enable the purchasers to sell Shares without registration under the
Securities Act within the limitation of the exemptions provided by Rule
144, including causing its attorneys to issue and deliver any appropriate
legal opinion required to permit a purchaser to sell Shares under Rule 144
upon receipt of appropriate documentation relating to such sale.
6. Payment of Expenses. If this Agreement becomes effective and the
transactions contemplated by this Agreement are consummated, the Company will
pay (a) all reasonable expenses incident to the performance of the obligations
of the Company under this Agreement, (b) all of your reasonable out-of-pocket
expenses (including fees and disbursements of your counsel, travel, and related
expenses incurred in connection with this Agreement and the Offering) incurred
in connection with this Agreement, preparing to market, and marketing the
Shares, (c) the fees and expenses of the Escrow Agent, and (d) the reasonable
legal fees and expenses incurred by counsel to subscribers for Shares in
connection with the negotiation, execution, and delivery of subscription
agreements and any related agreements; provided that the aggregate expenses
reimbursed pursuant to clauses (b) and (d) shall not to exceed [$45,000] in the
aggregate.
7. Indemnification and Contribution. (a) The Company agrees to indemnify
and hold harmless you, each Additional Agent, and each person, if any, who
controls you or such Additional Agent within the meaning of the Act, against any
losses, claims, damages, liabilities, or expenses (including, unless the Company
elects to assume the defense as hereinafter provided, the reasonable cost of
investigating and defending against any claims therefor and counsel fees
incurred in connection therewith), joint or several, which arise out of the
Company's breach of a representation or warranty or covenant or agreement
contained in this Agreement; provided that in no case is the Company to be
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liable with respect to any claims made against you, such Additional Agent, or
any such controlling person unless you, such Additional Agent, or such
controlling person shall have notified the Company in writing promptly after the
summons or other first legal process giving information of the nature of the
claim shall have been served upon you or such controlling person, but failure to
notify the Company of any such claim shall not relieve it from any liability
that it may have to you, such Additional Agent, or such controlling person
otherwise than on account of the indemnity agreement contained in this
paragraph. The Company will be entitled to participate at its own expense in the
defense, or if it so elects, to assume the defense of any suit brought to
enforce any such liability, but if the Company elects to assume the defense,
such defense shall be conducted by counsel chosen by it and reasonably
acceptable to you. In the event the Company elects to assume the defense of any
such suit and retain such counsel, you, such Additional Agent, or such
controlling person or persons, defendant or defendants in the suit, may retain
additional counsel but shall bear the fees and expenses of such counsel unless
(i) the Company shall have specifically authorized the retaining of such counsel
or (ii) the parties to such suit include you, such Additional Agent, or such
controlling person or persons, and the Company and you, such Additional Agent,
or such controlling person or persons have been advised by counsel that one or
more material legal defenses may be available to you, such Additional Agent, or
them that may not be available to the Company in which case the Company shall
not be entitled to assume the defense of such suit notwithstanding its
obligation to bear the reasonable fees and expenses of such counsel. In no event
shall the Company be liable for the fees and expenses of more than one counsel
for all indemnified parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances. The Company shall not be required to
indemnify any person for any settlement of any such claim effected without the
Company's consent, which shall not be unreasonably withheld. The Company shall
not, without your consent, consent to the entry of any judgment or enter into
any settlement that does not include as an unconditional term thereof, the
giving by the claimant or plaintiff to such indemnified party of a release from
all liability in respect of such claim or litigation. This indemnification
obligation will be in addition to any primary liability that the Company might
otherwise have. The foregoing obligation of indemnification of the Company shall
be limited to the net proceeds of the Offering.
(b) Each of you, severally and not jointly, and each Additional Agent
agree to indemnify and hold harmless the Company, each of the Company's
officers, directors, and each other person, if any, who controls the
Company within the meaning of the Act, against any losses, claims, damages,
liabilities, or expenses (including, unless you or such Additional Agent
elect to assume the defense, the reasonable cost of investigating and
defending against any claims therefor and counsel fees incurred in
connection therewith), joint or several, which (i) arise of any untrue
statement of a material fact with respect to the Company made by you or
such Additional Agent to any purchaser of Shares not contained in an
Exchange Act Document or other written material provided to you or such
Additional Agent by the Company, (ii) arise out of any acts or omissions by
you, any Additional Agent, or any purchaser of Shares that cause the
offering to involve a public offering under the Act or your failure to be
-12-
properly licensed to sell the Shares or (iii) arise out of your breach of a
representation or warranty or covenant or agreement contained in this
Agreement; provided, however, that in no case are you or any Additional
Agent to be liable with respect to any claims made against the Company or
any such person against whom the action is brought unless the Company or
such person shall have notified you or such Additional Agent in writing
within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon
the Company or such person, but failure to notify you or such Additional
Agent of such claim shall not relieve you or such Additional Agent from any
liability that you or such Additional Agent may have to the Company or such
person otherwise than on account of the indemnity agreement contained in
this paragraph. For avoidance of doubt, neither placement agent shall be
liable to the Company for any act or omission or breach of a representation
or warranty by the other placement agent. Each of you or such Additional
Agent shall be entitled to participate at your or its expense in the
defense, or if you or such Additional Agent so elect, to assume the defense
of any suit brought to enforce any such liability, but, if either of you or
such Additional Agent elect to assume the defense, counsel chosen by you or
such Additional Agent and reasonably acceptable to the Company shall
conduct such defense. In the event that either of you or such Additional
Agent elect to assume the defense of any such suit and retain such counsel,
the Company, said officers and directors and any person or persons,
defendant or defendants in the suit, may retain additional counsel but
shall bear the fees and expenses of such counsel unless (i) you shall have
specifically authorized the retaining of such counsel or (ii) the parties
to such suit include either of you, such Additional agent, or such
controlling person or persons, and the Company and either of you, such
Additional Agent, or such controlling person or persons have been advised
by counsel that one or more material legal defenses may be available to the
Company that may not be available to either of you or them in which case
you shall not be entitled to assume the defense of such suit
notwithstanding your obligation to bear the reasonable fees and expenses of
such counsel. You or such Additional Agent shall not be liable to indemnify
any person for any settlement of any such claim effected without your or
its consent which consent shall not be unreasonably withheld. You shall
not, without the consent of the Company, consent to entry of any judgment
or enter into any settlement that does not include as an unconditional term
thereof, the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect of such claim or litigation.
This indemnification obligation will be in addition to any primary
liability that either of you or any Additional Agent might otherwise have.
(c) If the indemnification provided for in this Section 7 is
unavailable, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) in
such proportion as is appropriate to reflect not only the relative benefits
received by the Company on one hand and you and the Additional Agents, if
any, on the other from the offering, but also the relative fault of the
Company on the one hand and you and the Additional Agents, if any, on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities, or expenses (or actions in respect
thereof), as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and you and the
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Additional Agents, if any, on the other, shall be deemed to be in the same
proportion as the total net proceeds from the Offering (before deducting
expenses) received by the Company, bear to the total selling commissions
received by you. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company, you, or an Additional
Agent, the party's relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission, and whether a
party breached a representation or warranty or covenant or agreement
contained in this Agreement. The Company and you agree that it would not be
just and equitable if contribution 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. The amount paid or payable by
an indemnified party as a result of the losses, claims, damages,
liabilities or expenses (or actions in respect thereof) referred to above
shall be deemed to include any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any
such claim. 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 was not guilty of such fraudulent misrepresentation.
8. Survival of Indemnities, Representations, Warranties, etc. The
respective representations and warranties of you and the Company as set forth in
this Agreement or made by them respectively, pursuant to this Agreement, shall
remain in full force and effect, regardless of any investigation made by or on
behalf of you, the Company, or any of the officers or directors of the Company
or any controlling person, and shall survive delivery of and payment for the
Shares for a period ending on the date two years subsequent to the final Closing
Date.
9. Conditions of Your Obligations. Your obligations hereunder, the Closing,
and the release of funds raised in the Offering to the Company, are subject to
the accuracy in all material respects at and (except as otherwise stated herein)
as of the date hereof and at and as of each Closing Date, of the representations
and warranties made herein by the Company, to the compliance in all material
respects at and as of each Closing Date by the Company with its covenants and
agreements herein contained and other provisions hereof to be satisfied at or
prior to each Closing Date and to the following additional conditions:
(a) You shall not have stated in writing prior to each Closing Date to
the Company that any Exchange Act Document, or any amendment or supplement
thereto contains an untrue statement of fact which, in your reasonable
opinion, is material, or omits to state a fact which, in your reasonable
opinion, is necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(b) You shall have received a certificate, dated the Closing Date, on
behalf of the Company by the Chief Executive Officer or the President and
the chief financial or accounting officer of the Company to the effect
that:
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(i) To the best of the knowledge of the signers, the
representations and warranties of the Company in this Agreement are
true and correct in all material respects at and as of the Closing
Date, and the Company has complied in all material respects with all
the agreements and satisfied in all material respects all the
conditions on its part to be performed or satisfied at or prior to the
Closing Date;
(ii) Between the date of this Agreement and the Closing Date, no
litigation has been instituted or, to the knowledge of the Company,
threatened against the Company of a character required to be disclosed
in an Exchange Act Document under Item 103 of Regulation S-K that has
not been so disclosed to you; and
(iii) Between the date of this Agreement and the Closing Date,
there has not been any material adverse change in the financial
condition, business, or results of operations of the Company.
(d) The Company shall have entered into the Registration Rights
Agreement with the Purchasers in the form attached hereto as Exhibit C.
(e) You shall have received from Xxxxxxxxx, Snow & Xxxx, LLP, counsel
to the Company, an opinion, dated the initial Closing Date, with respect to
such matters as you may reasonably request. . If any of the conditions
provided for in this Section 9 shall not have been satisfied when and as
required by this Agreement, this Agreement may be terminated by you by
notifying the Company of such termination in writing at or prior to a
Closing Date, but you shall be entitled to waive any of such conditions.
10. Effective Date. This Agreement shall become effective at 11:00 A.M.,
Houston time, on the date hereof (the "Effective Time").
11. Termination. In the event of any termination of this Agreement under
this or any other provision of this Agreement, there shall be no liability of
any party to this Agreement to any other party, other than as provided in
Sections 6, 7, and 8 and this Section 11.
This Agreement may be terminated after the Effective Time by (a) the
Company for any reason by notice to you and (b) you by notice to the Company (i)
if at or prior to the initial Closing Date trading in securities on the New York
Stock Exchange, the American Stock Exchange, or the Nasdaq Stock Market
(collectively, the "Exchanges") shall have been suspended for longer than four
consecutive hours or minimum or maximum prices shall have been established on
either such exchange or stock market, or a banking moratorium shall have been
declared by Texas or United States authorities (unless such suspension is made
pending completion of the sale of the Shares, at which time, such suspension
-15-
will be lifted); (ii) if at or prior to the initial Closing Date there shall
have been a material escalation of hostilities between the United States and any
foreign country (other than Iraq), or any other material insurrection or armed
conflict involving the United States which, in your reasonable judgment, after
consultation with the Company, makes it impracticable or inadvisable to offer or
sell the Shares; or (iii) if there shall be any material litigation or
regulatory action, pending or threatened against or involving the Company,
which, in your reasonable judgment, after consultation with the Company, makes
it impracticable or inadvisable to offer or deliver the Shares on the terms
contemplated by this Agreement.
If, and only if, the Company terminates this Agreement after it becomes
effective for any reason (other than your material failure to comply with your
obligations under this Agreement or material breach of your representations and
warranties) or the Offering fails to close because of the Company's breach of
any representations or warranties contained in this Agreement or the Company's
failure to fulfill its covenants and agreements contained in this Agreement, the
Company shall pay you your actual out-of-pocket expenses incurred as provided in
Section 6 hereof.
12. Agreement Concerning Disclosure of Information. You agree to treat
confidentially any material nonpublic information that is furnished to you (or
to parties acting on your behalf) by or on behalf of the Company (the
"Information"). You agree that you will use the Information only for the
purposes related to a determination of your willingness to act as non-exclusive
selling agent pursuant to this Agreement, and that the Information will be kept
confidential by you and your partners, members, managers, officers, directors,
employees, agents, and other affiliates (collectively, the "Affiliates"), and
your attorneys and accountants (collectively, the "Professionals"), and that
you, such Affiliates, or Professionals will not disclose the Information to any
investor or other person; provided, however, that the Information may be
disclosed to (a) Affiliates and Professionals who need to know such Information
for the purpose of evaluating or providing services in connection with the your
and your clients' investment in the Company; provided such parties agree to be
bound by this undertaking, (b) to any federal or state regulatory agency and
their employees, agents, and attorneys (collectively, "Regulators") for the
purpose of making any filings with Regulators if disclosure of such Information
is required by law (provided that you advise the Company in writing of the
Information to be so disclosed within a reasonable time prior to such filing),
and (c) any other person to which the Company consents in writing prior to any
such disclosure.
In the event that you are requested or required (by oral questions,
documents, subpoena, civil investigation, demand, interrogatories, request for
information, or other similar process) to disclose to any person or entity any
information supplied to you, your Affiliates, or your Professionals in the
course of their dealings with the Company or their respective representatives,
you agree that you will provide the Company with prompt notice of such
request(s) within a reasonable time prior to such disclosure so that the Company
may seek an appropriate protective order and/or waiver of compliance with the
provisions of this Agreement. It is further agreed that, if a protective order
is not obtained, or a waiver is not granted hereunder, and you are nonetheless,
-16-
in the written opinion of counsel, compelled to disclose information concerning
the Company to any tribunal or else stand liable for contempt or suffer the
censure or penalty, you may disclose such information to such tribunal without
liability hereunder. Prior to making such disclosure, you shall deliver a
written opinion of your counsel to the Company's counsel that disclosure is
compelled by law. You will exercise your best efforts to obtain a protective
order or other reliable assurance that confidential treatment will be accorded
the Information.
13. Notices. All notices or other communications that are required or
permitted under this Agreement shall be in writing and sufficient if delivered
by hand, by facsimile transmission, by registered or certified mail, postage
pre-paid, by electronic mail, or by courier or overnight carrier, to the persons
at the addresses set forth below (or at such other address as may be provided
hereunder), and shall be deemed to have been delivered as of the date so
delivered:
If to the Company: Xxxxxx, Inc.
400 Massasoit Avenue, Suite 200
East Providence, Rhode Island 02914-2020
Attention: Chief Financial Officer
Facsimile: (000) 000-0000
e-mail: xxxxxxx@xxxxxx.xxx
with a copy to:: Xxxxxxxxx Xxxx & Xxxx LLP
180 South Main Street
Providence, Rhode Island 03
Attention: Xxxxxxxx X. Xxxxxxxxx, Esq.
Facsimile: (000) 000-0000
e-mail: xxx@xxx.xxx
If to you: Xxxxxxx Xxxxxx Xxxxxx Inc.
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: President
Facsimile: (000) 000-0000
e-mail: xxx.xxxxxx@xxxxxx.xxx
with a copy to: Xxxxxxxx & Knight LLP
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxx X. Xxxxx
Facsimile: (000) 000-0000
e-mail: xxxx.xxxxx@xxxxx.xxx
or at such other address as any party shall have furnished to the other parties
in writing.
-17-
14. Successors. This Agreement shall inure to the benefit of and be binding
upon you, and Additional Agents, the Company, and their respective successors
and legal representatives, except that neither the Company nor you may assign or
transfer any of its or your rights or obligations under this Agreement without
the prior written consent of the other. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any person other than the
persons mentioned in the preceding sentence any legal or equitable right, remedy
or claim under or in respect of this Agreement, or any provisions herein
contained, this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of such persons and
for the benefit of no other person; except that the representations, warranties,
covenants, agreements and indemnities of the Company contained in this Agreement
shall also be for the benefit of the person or persons, if any, who control you
or any Additional agents within the meaning of Section 15 of the Act, and your
and any Additional Agent's indemnities shall also be for the benefit of each
officer and director of the Company and the person or persons, if any, who
control the Company within the meaning of Section 15 of the Act.
15. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware. Any judicial proceeding
brought against either of the parties to this agreement or any dispute arising
out of this Agreement or any matter related hereto may be brought in the courts
of the State of Rhode Island or the State of Texas or in the United States
District Court for the District of Rhode Island and, by its execution and
delivery of this agreement, each party to this Agreement accepts the
jurisdiction of such courts. The foregoing consent to jurisdiction shall not be
deemed to confer rights on any person other than the parties to this Agreement.
The prevailing party in any such litigation shall be entitled to receive from
the losing party or parties all costs and expenses, including reasonable
attorney fees, incurred by the prevailing party.
[Signatures on the following page]
-18-
If the foregoing correctly sets forth our understanding please indicate
your acceptance thereof in the space provided below for that purpose, whereupon
this letter and your acceptance shall constitute a binding agreement between us.
Very truly yours,
XXXXXX, INC.
By: /s/ Xxxxx X. Xxxxxxx
------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Chief Financial Officer
Accepted and delivered in Houston,
Texas as of the date first above written
XXXXXXX XXXXXX XXXXXX INC.
By: /s/ Xxx X. Xxxxxx
------------------------------------
Name: Xxx X. Xxxxxx
Title: Chief Executive Officer
XXXXXXX & COMPANY, INC.
By: /s/ Xxxxxx X. Xxxxxxx XX
------------------------------------
Name: Xxxxxx X. Xxxxxxx XX
Title: Vice President and Managing Directo
-19-
