EXHIBIT 10.9
PLACEMENT AGENT AGREEMENT
May 26, 2005
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear Sirs:
1. Introductory. Ronco Marketing Corporation, a Delaware corporation (the
"Company"), has entered into an asset purchase agreement dated December 10, 2004
(the "Asset Purchase Agreement") with Ronco Inventions, LLC, Popeil Inventions,
Inc., RP Productions, Inc. (collectively, the "Predecessor Entities") and RMP
Family Trust, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, (taken together with the Predecessor Entities,
the "Sellers"), whereby the Company has agreed to purchase substantially all the
assets of the Predecessor Entities from the Sellers for a total purchase price
of $55,000,000 (the "Purchase Price," consisting of $40,000,000 in cash and
$15,000,000 in promissory notes), subject to adjustment as provided in the Asset
Purchase Agreement. In addition, the Company has, or will prior to the closing
of the Ronco Asset Purchase (as defined below), executed a series of agreements
with ▇▇. ▇▇▇▇▇▇, including a multi-year consulting agreement and a new product
development agreement, which ensure ▇▇. ▇▇▇▇▇▇'▇ continued involvement and
financial interest in our business. Taken together, the foregoing agreements and
arrangements represent the "Ronco Asset Purchase." The Company has also entered
into a merger agreement (the "Merger Agreement") with Fi-Tek VII, Inc., a
Delaware corporation ("FTK"), pursuant to which (i) the Company will merge with
and into Ronco Acquisition Corporation, a wholly-owned subsidiary of FTK, with
the Company continuing as the surviving corporation and becoming a wholly-owned
subsidiary of FTK, and (ii) FTK will change its name to "Ronco Corporation" (the
"Merger Transaction"). Upon consummation of the Merger Transaction, Ronco
Corporation shall assume all of the Company's rights and obligations under this
Agreement and all references to the Company shall be deemed to be references to
Ronco Corporation. To fund the cash portion of the Purchase Price of the Ronco
Asset Purchase, the Company proposes to sell up to 13,262,600 shares (the
"Shares") of Common Stock, $0.00001 par value per share (the "Common Stock"), of
Ronco Corporation at a purchase price of $3.77 per share (the "Offering Price").
The consummation of the Ronco Asset Purchase, Merger Transaction and sale of the
Shares shall occur contemporaneously and shall be conditioned upon one another.
2. Representations and Warranties of the Company.
(a) The Company represents, warrants, and agrees that as of the date
hereof:
(i) Except as disclosed on Schedule 2(a)(i), the Company has not
incurred any material liabilities or obligations, direct or contingent.
(ii) 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 will have been taken.
(iii) The Asset Purchase Agreement and Merger Agreement
(collectively with the ancillary agreements related to each, the
"Transaction Documents") are in full force and effect.
(iv) 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 Private Placement Memorandum of
the Company dated May 23, 2005 (the "PPM") and to carry out the provisions
of this Agreement, and the Related Agreements and to consummate the
transaction contemplated by the Transaction Documents. 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, and 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.
(v) The authorized capital stock of the Company consists of
1,500,000 shares of Common Stock, $0.001 par value per share, of which
486,239 shares were issued and outstanding as of May 11, 2005. Except as
contemplated by this Agreement or on Schedule 2(a)(v), (a) 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 securities any evidence of indebtedness,
cash, or other assets, (b) 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 (c) to the Company's
knowledge there are no voting trusts or similar agreements, stockholders'
agreements, pledge agreements, buy-sell agreements, rights of first
refusal, preemptive rights, or proxies relating to any securities of the
Company. All outstanding securities of the Company were issued in
compliance with applicable Federal and state securities laws.
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(vi) Except as described on Schedule 2(a)(vi), there is no pending
or, to the knowledge of the Company, threatened (a) 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"), (b) arbitration proceeding
against the Company, (c) governmental inquiry against the Company, or (d)
any action or suit by or on behalf of the Company pending or threatened
against others.
(vii) 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, the Transaction Documents and the Escrow Agreement (as
hereinafter defined), the incurrence of the obligations herein, and the
consummation of the transactions contemplated herein, have been duly
authorized by all requisite corporate action on the part of the Company
and (a) do not and will not conflict with the Company's certificate of
incorporation or bylaws, (b) 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, or (c) do not and will not result in
the violation of any law, statute, order, rule, administrative regulation,
or decree of any court, or governmental agency or body having jurisdiction
over the Company or its properties.
(viii) 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 (a)
applicable bankruptcy, insolvency, reorganization, moratorium, or other
laws of general application relating to or affecting the enforcement of
creditors' rights generally, and (b) 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.
(ix) 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
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constitutes a legal, valid, and binding obligation of the Company
enforceable in accordance with its terms, except as such enforceability
may be limited by (a) applicable bankruptcy, insolvency, reorganization,
moratorium, or other laws of general application relating to or affecting
enforcement of creditors' rights generally and (b) laws relating to the
availability of specific performance, injunctive relief, or other
equitable remedies.
(x) 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.
(xi) 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
those tax returns or otherwise except taxes being disputed by the Company
in good faith. 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. 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.
(xii) 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.
(xiii) The execution, delivery, and performance by the Company of
this Agreement and the Related Agreements 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.
(xiv) All disclosure provided to you regarding the Company, its
business and the transactions contemplated hereby, furnished by or on
behalf of the Company (including the disclosure in the PPM and the
Company's representations and warranties set forth in this Agreement) are
true and correct and do not contain any untrue statement of a material
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fact or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they
were made, not misleading.
(xv) There are no brokers, representatives or other persons which
have an interest in commissions or other compensation payable by the
Company in connection with the transactions contemplated hereunder other
than as set forth in that certain engagement letter dated May 20, 2005 by
and among the Company, Copper Beech Equity Partners LLC, ▇▇▇▇▇▇▇▇▇▇▇
Equity Partners LLC, Coll International LLC, and Content Holding LLC (the
"Engagement Letter").
(b) The Company represents, warrants, and agrees that upon the
consummation of the Merger Transaction and Ronco Asset Purchase, the following
are true, correct and complete at and as of the date of Closing:
(i) All reports and statements required to be filed by the Company
with the Securities and Exchange Commission (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.
(ii) The audited financial statements, together with the related
notes of the Company at June 30, 2003 and June 30, 2004, and for the years
then ended, included in the Company's Annual Report on Form 10-KSB for the
year ended June 30, 2004, and the audited financial statements of the
Company at December 31, 2004, and for the six months then ended included
in the Company's Quarterly Report on Form 10-QSB for the quarter ended
December 31, 2004, 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). The audited financial statements, together with the related
notes of the Predecessor Entities, at December 31 for each of the years
then ended for 2000 through 2003 included in the PPM, and the audited
financial statements of the Predecessor Entities at September 30, 2004 for
the nine months then ended included in the PPM, respectively, fairly
present in all material respects, on the basis stated therein and on the
date thereof, the financial position of the Predecessor Entities at the
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respective dates therein specified and their results of operations and
cash flows for the periods then ended. 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).
(iii) Except as disclosed on Schedule 2(b)(iii), subsequent to
September 30, 2004, 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, 2004, 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 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.
(iv) All action required to be taken by the Company necessary for
the authorization of this Agreement and the Related Agreements, 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 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.
(v) 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 PPM,
and to execute, deliver, and perform this Agreement, the Subscription
Agreements between the Company and the purchasers of the Common Stock 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
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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.
(vi) The authorized capital stock of the Company consists of
500,000,000 shares of Common Stock, $0.00001 par value per share, of which
455,140 shares on a post reverse stock split basis, were issued and
outstanding as of May 11, 2005, and 20,000,000 shares of preferred stock,
$0.00001 par value per share, of which no shares were designated, issued
or outstanding as of May 20, 2005. Except as contemplated by this
Agreement, or as described in the Exchange Act Documents or on Schedule
2(b)(vi), (a) 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 securities any evidence of
indebtedness, cash, or other assets, (b) 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
(c) to the Company's knowledge there are no voting trusts or similar
agreements, stockholders' 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.
(vii) Except as disclosed in the Exchange Act Documents or as
described on Schedule 2(b)(vii), there is no pending or, to the knowledge
of the Company, threatened (a) 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
Governmental Body, (b) arbitration proceeding against the Company, (c)
governmental inquiry against the Company, or (d) any action or suit by or
on behalf of the Company pending or threatened against others.
(viii) 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, the Transaction Documents, and the Escrow Agreement, the
incurrence of the obligations herein, the issuance, sale, and delivery of
the Shares, and the consummation of the transactions contemplated herein,
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have been duly authorized by all requisite corporate action on the part of
the Company and (a) do not and will not conflict with the Company's
certificate of incorporation or bylaws, (b) 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 Closing Date will be, waived or cured, and as may be
required by the National Association of Securities Dealers, Inc. ("NASD")
OTC Bulletin Board, which the Company undertakes to obtain as promptly as
practicable, or (c) do not and will not result in the violation of any
law, statute, order, rule, administrative regulation, or decree of any
court, or governmental agency or body having jurisdiction over the Company
or its properties. The Transaction Documents are in full force and effect.
(ix) Except as disclosed in the Exchange Act Documents or as
described on Schedule 2(b)(ix), 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(b)(ix),
the issuance of the Shares is not subject to any preemptive right of any
stockholder of the Company or to any right of first refusal or other right
in favor of any person.
(x) 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 (a) applicable
bankruptcy, insolvency, reorganization, moratorium, or other laws of
general application relating to or affecting the enforcement of creditors'
rights generally, and (b) 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.
(xi) The Escrow 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 as such enforceability may be limited by (a) applicable
bankruptcy, insolvency, reorganization, moratorium, or other laws of
general application relating to or affecting enforcement of creditors'
rights generally and (b) laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies.
8
(xii) 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 NASD, the Securities Act of 1933, as amended (the
"Act"), or the rules and regulations thereunder or state securities or
Blue Sky laws.
(xiii) 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
those tax returns or otherwise except taxes being disputed by the Company
in good faith. Except as disclosed on Schedule 2(b)(xiii), 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(b)(xiii), 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.
(xiv) The Common Stock is registered pursuant to Section 12(b) of
the Exchange Act and is listed for quotation with the symbol "FYTK.OB" on
the NASD OTC Bulletin Board.
(xv) 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.
(xvi) 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.
9
(xvii) The execution, delivery, and performance by the Company of
this Agreement and the Related Agreements, and 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.
(xviii) All disclosure provided to you regarding the Company, its
business and the transactions contemplated hereby, furnished by or on
behalf of the Company (including the disclosure in the PPM and the
Company's representations and warranties set forth in this Agreement) are
true and correct and do not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they
were made, not misleading.
(xix) There are no brokers, representatives or other persons which
have an interest in commissions or other compensation payable by the
Company in connection with the transactions contemplated hereunder other
than as set forth in the Engagement Letter.
3. Representations and Warranties of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Inc. You
represent and warrant to, and agree with, the Company that:
(i) You have been duly organized and are validly existing and in
good standing as a corporation under the laws of the State of Texas with
power and authority (corporate and other) to perform your obligations
under this Agreement and the Escrow Agreement; 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.
(ii) 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.
(iii) No consent, approval, authorization or order of any court or
governmental authority or agency is required for the performance by you of
10
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.
(iv) 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 (a) applicable bankruptcy,
insolvency, reorganization, moratorium, or other laws of general
application relating to or affecting the enforcement of creditors' rights
generally, and (b) 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.
(v) 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 (a) applicable bankruptcy, insolvency, reorganization,
moratorium, or other laws of general application relating to or affecting
enforcement of creditors' rights generally and (b) 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
placement agent of the Company on an exclusive basis during the term herein
specified (the "Offering Period") for the purpose of finding subscribers for the
Shares on 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., New York time, on June 30, 2005; provided that such termination date (the
"Termination Date") may be extended by mutual written agreement of the parties
until July 31, 2005.
(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 between the Investor and the Company, and (b) an Investor
Questionnaire, in the form attached as Exhibit C hereto, and (ii) deliver to the
escrow agent payment for such subscription in the form of a check payable to the
order of "Ronco Corporation - Escrow Account" or a wire transfer of immediately
available funds in the amount that the Investor desires to purchase as provided
in the Escrow Agreement or as otherwise directed by you. Any payment you receive
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that does not conform to this requirement will be returned to an Investor by the
end of the next business day following receipt. In the event funds are received
by you, 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 $50,000,000 in 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) and the other conditions to Closing the Offering of Shares have been
satisfied, 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 (the "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 (the
"Closing Date").
(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 the Closing Date equal to
6.0% 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. The Company shall also pay to you a
financial advisory fee equal to 1.0% of the purchase price of each Share
purchased at the Closing. 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.
12
(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) As additional compensation, the Company will issue to you on the
Closing Date a Common Stock purchase warrant (the "Agent's Warrant") in
substantially the form attached hereto as Exhibit D granting you the right to
purchase from the Company for a period commencing after the Closing Date and
ending five years after the Closing Date, a number of shares of Common Stock
equal to 2% of the number of common Shares sold in the Offering, at a per share
purchase price equal to the Offering Price.
(i) 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 (a) 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 (b) 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.
(j) In connection with the performance of your obligations under this
Agreement, SMH 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 Common Stock 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 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:
13
(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 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 Closing Date, declare or pay any dividend
on the Common Stock or make any distribution on the Common Stock payable to
stockholders of record on a date prior to the 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 the 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 the
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 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 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,
14
will comply in all respects with its reporting and filing obligations under the
Exchange Act, and will not take any action or file any document (whether or not
permitted by the Exchange Act or the rules thereunder) to terminate or suspend
such registration or to terminate or suspend its reporting and filing
obligations under said Act unless required to do so by the Exchange Act.
(h) The Company shall prepare and file with the NASD OTC Bulletin Board an
additional shares listing application covering the Shares and take all steps
necessary to cause such shares to be approved for listing as soon as practicable
thereafter.
(i) For a period of at least 18 months following the 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.
(j) The Company shall use best efforts to consummate the Ronco Asset
Purchase and the Merger Transaction.
6. Payment of Expenses. The Company shall 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, and (c) the fees
and expenses of the Escrow Agent.
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
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
15
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) You 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 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
16
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. 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
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 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 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 the Company that may not be
available to 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 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 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 and the value of the Agent's Warrant issued to you
pursuant to Section 4(h). The relative fault shall be determined by reference
17
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 Closing Date.
9. Conditions of Your Obligations. Your obligations hereunder are subject
to (i) the accuracy in all material respects at and (except as otherwise stated
herein) as of the date hereof, of the representations and warranties made by the
Company in Section 2(a), (ii) the accuracy in all material respects at and
(except as otherwise stated herein) as of the Closing Date, of the
representations and warranties made by the Company in Section 2(b), (iii) the
compliance in all material respects at and as of the Closing Date by the Company
with its covenants and agreements herein contained and other provisions hereof
to be satisfied at or prior to the Closing Date, and (iv) the following
additional conditions:
(a) You shall not have stated in writing prior to the 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) The Ronco Asset Purchase and Merger Transaction shall have been
consummated.
(c) 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:
18
(i) The representations and warranties of the Company in Section
2(b) are true and correct in all material respects at and as of the
Closing Date, and the Company has complied 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) The Ronco Asset Purchase and Merger Transaction have been
consummated;
(iii) 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
(iv) 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 B.
(e) You shall have received from counsel to the Company, an opinion, dated
the Closing Date, with respect to such matters as you may reasonably request.
(f) The Company shall have completed an audit of the financial statements
of Ronco Inventions LLC and related entities for the nine months ending
September 30, 2004.
(g) The Company shall have entered into employment agreements with ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇ ▇▇. and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ on terms substantially similar to those set
forth in the PPM.
(h) The Company shall have entered into Consulting Agreements with ▇▇▇▇▇▇
▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇, New Product Development Agreement, Trademark
Co-Existence Agreement, and Seller Notes, each on terms substantially similar to
those set forth in the PPM.
(i) You shall have received such other documentation reasonably requested
by you to effect the transactions contemplated herein.
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 the Closing Date, but you shall be entitled to waive any of such
conditions.
19
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 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 will be
lifted); (ii) if at or prior to the 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
20
for the purpose of evaluating or providing services in connection with you 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,
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: Ronco Marketing Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇,
Director
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, #▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
e-mail: ▇▇▇▇▇▇▇.▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
21
If to you: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Syndicate Associate
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
e-mail: ▇▇▇▇▇.▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇
With a copy to:
Day, ▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: R. ▇▇▇▇▇ ▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
e-mail: ▇▇▇▇▇▇▇@▇▇▇.▇▇▇
or at such other address as any party shall have furnished to the other parties
in writing.
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; provided, however,
that upon consummation of the Merger Transaction, Ronco Corporation shall assume
all of the rights and obligations of the Company under this Agreement without
the need for further consent of the parties. 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 New York. 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 New York or the State of Texas or in the United States District
Court for the Southern District of New York or the Southern District of Texas
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
22
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 following page]
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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,
RONCO MARKETING CORPORATION
By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Director
Accepted and delivered in New York,
New York as of the date first above written
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ INC.
By /s/ A. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Name: A. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Managing Director
Exhibit A
Subscription Agreement
Exhibit B
Registration Rights Agreement
Exhibit C
Investor Questionnaire
Exhibit D
Agent's Warrant
Schedule 2(a)(i)
Material Obligations
None
Schedule 2(a)(v)
Stock Options, Warrant, Subscription Rights etc.
None
Schedule 2(a)(vi)
Pending Litigation
None
Schedule 2(b)(iii)
Material Obligations
None
Schedule 2(vi)
Stock Options, Warrant, Subscription Rights etc.
None
Schedule 2(b)(vii)
Pending Litigation
None
Schedule 2(b)(ix)
Preemptive Rights
None
Schedule 2(b)(xiii)
Outstanding Tax Liens, Tax Returns etc.
None
