EXHIBIT 1.1
UWINK, INC.
UNITS CONSISTING OF
___________ SHARES OF COMMON STOCK
AND
WARRANTS TO PURCHASE _________ SHARES OF COMMON STOCK
PLACEMENT AGENCY AGREEMENT
______________, 2007
Xxxxxxxx Curhan Ford & Co.
000 Xxxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
uWink, Inc., a Delaware corporation (the "COMPANY"), proposes to issue
and sell, pursuant to the terms of this Placement Agent Agreement (the
"AGREEMENT") and the Subscription Agreement in the form of Exhibit A attached
hereto (the "SUBSCRIPTION AGREEMENT"), up to _______ shares (the "OFFERED
SHARES") of common stock, par value $0.001 per share (the "COMMON STOCK"), and
warrants, in the form attached hereto as Exhibit B, to purchase up to ______
shares of Common Stock (the "OFFERED WARRANTS"), to certain "accredited
investors" (as defined in Rule 501 of Regulation D, promulgated under the
Securities Act of 1933, as amended (the "SECURITIES ACT")) (collectively, the
"INVESTORS"). The Offered Shares and Offered Warrants shall be sold together as
units consisting of one (1) Offered Share and one (1) Offered Warrant to
purchase ____ shares of Common Stock (such units are referred to herein
individually as the "OFFERED SECURITY" and collectively as the "OFFERED
SECURITIES"). The Offered Warrants shall be immediately separable from the
units. The Common Stock issuable upon exercise of the Offered Warrants is
hereinafter referred to as the "WARRANT SHARES." The Offered Securities and the
Warrant Shares are described more fully in the Registration Statement (as
hereinafter defined). The maximum amount of Offered Securities offered pursuant
to the Registration Statement is referred to herein as the "MAXIMUM AMOUNT".
The Company hereby confirms its agreement with Xxxxxxxx Xxxxxx Ford &
Co. ("MCF") to act as lead placement agent in connection with such issuance and
sale of the Offered Securities, and in particular agrees as follows
1. AGREEMENT TO ACT AS PLACEMENT AGENT.
(a) On the basis of the representations, warranties and
agreements of the Company herein contained and subject to all the terms and
conditions of this Agreement, the Company hereby appoints, and MCF agrees to
act, as the Company's lead placement agent in connection with the issuance and
sale, on a best efforts basis, by the Company of the Offered Securities to the
Investors. The Company agrees that the NASD registered broker-dealers listed on
Xxxxxxxx Xxxxxx Ford & Co.
_____________, 2007
Page 2 of 30
Schedule A hereto shall act as co-placement agents for the Offered Securities
(such co-placement agents, collectively with MCF, the "PLACEMENT AGENTS"), it
being agreed, however, that MCF and such other co-placement agents selected by
MCF shall be the exclusive placement agents for the Offered Securities.
(b) The Company shall pay to the Placement Agents 8.00% of the
proceeds received by the Company from the sale of the Offered Securities as set
forth on the cover page of the Prospectus (as hereinafter defined). The Company
will also issue to the Placement Agents warrants to purchase Common Stock (the
"PLACEMENT AGENT WARRANTS") in an amount equal to 3.00% of the Offered Shares as
set forth on the cover page of the Prospectus, subject to certain adjustments,
and allocated between them as they shall mutually agree. The Placement Agent
Warrants will be identical to the Offered Warrants.
(c) The Offered Securities are being sold at a price of $___
per unit. The purchases of the Offered Securities shall be evidenced by the
execution of Subscription Agreements by each of the Investors and the Company.
(d) The Company hereby acknowledges that the obligations of
the Company contained in paragraph 5 of that certain engagement letter, dated
February 22, 2007, as amended June 15, 2007, shall remain in full force and
effect in accordance with the terms thereof.
(e) The offering contemplated hereby shall commence on the
date hereof and shall expire on December 31, 2007 unless the Maximum Amount is
earlier fully subscribed for before that date or this Agreement is terminated
pursuant to the terms hereof prior to that date. The period of time set forth in
this Section 1(e) is referred to herein as the "OFFERING PERIOD."
(f) Subject to the provisions of this Agreement and to the
performance by the Company of all of its obligations to be performed hereunder,
the Placement Agents agree to use their best efforts to assist in arranging for
sales of Offered Securities. The Company recognizes that "best efforts" does not
assure that the offering contemplated hereby will be consummated. It is
understood and agreed that the Placement Agents shall not and are under no
obligation to purchase any Offered Securities for their own account and that
this Agreement does not create any partnership, joint venture or other similar
relationship between or among the Placement Agents and the Company.
2. DELIVERY AND PAYMENT.
(a) Concurrently with the execution and delivery of this
Agreement, the Company, the Placement Agents, and JPMorgan Chase Bank N.A., as
escrow agent (the "ESCROW AGENT"), shall enter into an Escrow Agreement
substantially in the form of Exhibit C attached hereto (the "ESCROW AGREEMENT"),
pursuant to which an escrow account will be established, at the Company's
expense, for the benefit of the Investors (the "ESCROW ACCOUNT"). Prior to any
Closing Date (as hereinafter defined): (i) each of the Investors will deposit in
the Escrow Account an amount equal to the price per Offered Security as shown on
the cover page of the Prospectus (as hereinafter defined) multiplied by the
number of Offered Securities purchased by it, and (ii) on the last business day
Xxxxxxxx Xxxxxx Ford & Co.
_____________, 2007
Page 3 of 30
of each week following the Effective Date (or such earlier date as may be
reasonably requested by the Company or MCF), the Escrow Agent will notify the
Company and MCF in writing of the amount of the funds then being held by the
Escrow Agent in payment for the Offered Securities (the "RECEIVED FUNDS").
(b) At 10:00 a.m., New York City time, on such date or dates
as may be agreed upon by the Company and MCF (each, a "CLOSING DATE" and the
first to occur, the "INITIAL CLOSING DATE") beginning on the Effective Date and
ending at the conclusion of the Offering Period, the Escrow Agent will release
the Received Funds from the Escrow Account to each of the Company and the
Placement Agents as provided in the Escrow Agreement, and the Company shall
deliver the Offered Securities purchased thereby to the Investors, and the
Placement Agent Warrants relating thereto to MCF. The delivery of the Offered
Shares shall be made through the facilities of The Depository Trust Company.
(c) One or more closings of the transactions contemplated
hereby (each, a "CLOSING") may be undertaken during the Offering Period. Such
Closings shall take place at the offices of Xxxxxxxx Xxxxxxxx & Schole LLP,
counsel to the Placement Agents ("PA COUNSEL") at 000 Xxxxxxxxx Xxxxxx, Xxx
Xxxx, XX 00000, or at such other place as the Company and MCF may agree. All
actions taken at any Closing shall be deemed to have occurred simultaneously.
The conditions set forth herein and the obligations of the Company set forth
herein shall apply equally to each Closing.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants and covenants to the Placement Agents that:
(a) A registration statement (including all pre-effective
effective amendments thereto and all post-effective amendments thereto
filed before the execution of this Agreement, the "REGISTRATION
STATEMENT") on Form SB-2 (File No. 333-144029) with respect to the
Offered Securities, the shares of Common Stock underlying the Offered
Warrants and the shares of Common Stock underlying the Placement Agent
Warrants ("PLACEMENT WARRANT SHARES") has been prepared by the Company
in conformity with the requirements of the Securities Act and the rules
and regulations (the "RULES AND REGULATIONS") of the Securities and
Exchange Commission (the "COMMISSION"), has been filed with the
Commission and has become effective. The Company and the transactions
contemplated by this Agreement meet the requirements and comply with
the conditions for the use of Form SB-2. As used in this Agreement:
(i) "APPLICABLE TIME" means _____ (New York City time) on the
date of this Agreement;
(ii) "EFFECTIVE DATE" means the date as of which the
Registration Statement became, or is deemed to have become, effective
under the Securities Act in accordance with the Rules and Regulations;
Xxxxxxxx Xxxxxx Ford & Co.
_____________, 2007
Page 4 of 30
(iii) "PROSPECTUS" means, collectively, each of: (i) the
preliminary prospectus relating to the Offered Securities, dated July
23, 2007, (ii) the Company's free writing prospectus, dated August 1,
2007 (the "APPROVED FWP") and (iii) the final prospectus relating to
the Offered Securities including any prospectus supplement thereto
relating to the Offered Securities, as filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations; and
(iv) "REGISTRATION STATEMENT" means, collectively, the various
parts of such registration statement, each as amended as of the
Effective Date for such part, including the Prospectus and all exhibits
to such registration statement.
(b) The Registration Statement has heretofore become effective
under the Securities Act or, with respect to any registration statement
to be filed to register the offer and sale of Offered Securities
pursuant to Rule 462(b) under the Securities Act, will be filed with
the Commission and become effective under the Securities Act no later
than 10:00 p.m., New York City time, on the date of determination of
the public offering price for the Offered Securities. No stop order of
the Commission preventing or suspending the use of any Prospectus, or
the effectiveness of the Registration Statement, has been issued, and
no proceedings for such purpose have been instituted or, to the
Company's knowledge, are contemplated by the Commission.
(c) The Registration Statement, at the time it became
effective, as of the date hereof, and as of each Closing Date,
conformed and will conform in all material respects to the requirements
of the Securities Act and the Rules and Regulations. The Prospectus
conforms to the requirements of the Securities Act and the Rules and
Regulations.
(d) The Registration Statement did not, as of the Effective
Date, contain an 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 the light of the circumstances under which they
were made, not misleading.
(e) The Prospectus will not, as of its date and as of each
Closing Date, contain an 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 the light of the circumstances under
which they were made, not misleading; PROVIDED, HOWEVER, that the
Company makes no representation or warranty with respect to any
statement contained in the Prospectus in reliance upon and in
conformity with information concerning the Placement Agents and
furnished in writing by the Placement Agents to the Company expressly
for use in the Prospectus, as set forth in Section 8(b).
(f) The exhibits filed as part of the Registration Statement,
at the time they were or hereafter are filed with the Commission,
complied and will comply in all material respects with the requirements
of the Securities Act, the Securities Exchange Act of 1934 (the
"EXCHANGE ACT") and the Rules and Regulations, and, when read together
with the other information in the Prospectus, do not contain an untrue
statement of a material fact or omit to state a material fact required
Xxxxxxxx Xxxxxx Ford & Co.
_____________, 2007
Page 5 of 30
to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading. There are no contracts or other documents (including,
without limitation, any voting agreement), which are required to be
described in the Registration Statement and the Prospectus or filed as
exhibits to the Registration Statement by the Securities Act, the
Exchange Act or the Rules and Regulations and which have not been so
described, filed or incorporated by reference. All such contracts and
other documents to which the Company is a party have been authorized,
executed and delivered by the Company, constitute valid and binding
agreements of the Company, and are enforceable against the Company in
accordance with the terms thereof, subject to the effect of applicable
bankruptcy, insolvency or similar laws affecting creditors' rights
generally and equitable principles of general applicability.
(g) The statistical, industry-related and market-related data
included in the Registration Statement and the Prospectus are based on
or derived from sources which the Company reasonably and in good faith
believes are reliable and, in all material respects, accurate. Such
data agree with the sources from which they are derived.
(h) The Company has filed all proxy statements, reports and
other documents required to be filed by it under the Exchange Act (the
"SEC REPORTS"). Each SEC Report was, at the time of its filing, in
compliance in all material respects with the requirements of its
respective form and none of the SEC Reports, nor the financial
statements (and the notes thereto) included in the SEC Reports, as of
their respective filing dates, contained any untrue statement of a
material fact or omitted 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.
(i) The Company is, and as of each Closing Date will be, duly
organized, validly existing and in good standing under the laws of the
State of Delaware. The Company has, and as of each Closing Date will
have, full power and authority to conduct all the activities conducted
by it, to own or lease all the assets owned or leased by it and to
conduct its business as described in the Registration Statement and the
Prospectus. The Company is, and as of each Closing Date will be, duly
licensed or qualified to do business and in good standing as a foreign
organization in all jurisdictions in which the nature of the activities
conducted by it or the character of the assets owned or leased by it
makes such licensing or qualification necessary, except where the
failure to be so qualified or in good standing or have such power or
authority would not, individually or in the aggregate, have a material
adverse effect or would not reasonably be expected to have a material
adverse effect on or affecting the business, properties, those
prospects specifically described in the Registration Statement and the
Prospectus, management, consolidated financial position, stockholders'
equity or results of operations of the Company and its Subsidiaries (as
defined below) taken as a whole (a "MATERIAL ADVERSE EFFECT"). Complete
and correct copies of the articles or certificate of incorporation and
of the bylaws of the Company and all amendments thereto have been
delivered to the Placement Agents, and no changes therein will be made
subsequent to the date hereof and prior to the Initial Closing Date,
except as described in the Registration Statement.
Xxxxxxxx Xxxxxx Ford & Co.
_____________, 2007
Page 6 of 30
(j) Schedule 2 of this Agreement contains a true and complete
list of all of the subsidiaries (each, a "SUBSIDIARY" and collectively,
the "SUBSIDIARIES"). Each Subsidiary has been duly organized and
validly exists as a corporation in good standing under the laws of its
jurisdiction of formation. The Subsidiaries are duly qualified and in
good standing as a foreign corporation in each jurisdiction in which
the character or location of its properties (owned, leased or licensed)
or the nature or conduct of its business makes such qualification
necessary, except for those failures to be so qualified or in good
standing which will not have a Material Adverse Effect. All of the
shares of issued capital stock of the Subsidiaries has been duly
authorized and validly issued, are fully paid and non-assessable and
are owned directly or indirectly by the Company, free and clear of any
lien, encumbrance, claim, security interest, restriction on transfer,
shareholders' agreement, voting trust or other defect of title
whatsoever.
(k) The issued and outstanding shares of capital stock of the
Company have been validly issued, are fully paid and nonassessable and,
other than as set forth in the Registration Statement, are not subject
to any preemptive rights, rights of first refusal or similar rights.
The Company has an authorized, issued and outstanding capitalization as
set forth in the Prospectus as of the dates referred to therein. The
descriptions of the securities of the Company in the Registration
Statement and the Prospectus are, and as of each Closing Date will be,
complete and accurate in all respects. Except as set forth in the
Registration Statement and the Prospectus, the Company does not have
outstanding any options to purchase, or any rights or warrants to
subscribe for, or any securities or obligations convertible into, or
exchangeable for, or any contracts or commitments to issue or sell, any
shares of capital stock or other securities other than the Offered
Securities.
(l) The Company has full legal right, power and authority to
enter into this Agreement, the Subscription Agreements and the Escrow
Agreement (together, the "TRANSACTION DOCUMENTS") and perform the
transactions contemplated hereby and thereby. The Transaction Documents
have been authorized and validly executed and delivered by the Company
and are legal, valid and binding agreements of the Company enforceable
against the Company in accordance with their respective terms, subject
to the effect of applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally and equitable principles of
general applicability.
(m) As of the date hereof, there are _______ shares of Common
Stock issued and outstanding and no shares of preferred stock, par
value $0.001, issued and outstanding and ____________ shares of Common
Stock were issuable upon the exercise of all options, warrants and
convertible securities outstanding.
(n) The issuance and sale of each of the Offered Shares and
the Offered Warrants have been duly authorized by the Company, and the
Offered Shares, when issued and paid for in accordance with this
Agreement, will be duly and validly issued, fully paid and
nonassessable and will not be subject to preemptive or similar rights.
The Warrant Shares and Placement Warrant Shares have been duly
authorized and reserved for issuance pursuant to the terms of the
Offered Warrants, and the Warrants Shares and Placement Warrant Shares,
when issued by the Company upon valid exercise of the Offered Warrants
and Placement Agent Warrants, respectively, and payment of the exercise
Xxxxxxxx Xxxxxx Ford & Co.
_____________, 2007
Page 7 of 30
price, will be duly and validly issued, fully paid and nonassessable
and will not be subject to preemptive or similar rights. The holders of
the Offered Securities will not be subject to personal liability by
reason of being such holders. The Offered Securities, when issued, will
conform in all material respects to the description thereof set forth
in or incorporated into the Prospectus.
(o) The consolidated financial statements and the related
notes included in the Registration Statement and the Prospectus present
fairly, in all material respects, the financial condition of the
Company and its consolidated Subsidiaries as of the dates thereof and
the results of operations and cash flows at the dates and for the
periods covered thereby in conformity with generally accepted
accounting principles ("GAAP"). No other financial statements or
schedules of the Company, the Subsidiaries or any other entity are
required by the Securities Act or the Rules and Regulations to be
included in the Registration Statement or the Prospectus. All
disclosures contained in the Registration Statement and the Prospectus
regarding "non-GAAP financial measures" (as such term is defined by the
Rules and Regulations) comply with Regulation G of the Exchange Act and
Item 10 of Regulation S-B under the Securities Act, to the extent
applicable. The Company and the Subsidiaries do not have any material
liabilities or obligations, direct or contingent (including any
off-balance sheet obligations or any "variable interest entities"
within the meaning of Financial Accounting Standards Board
Interpretation No. 46), not disclosed in the Registration Statement and
the Prospectus.
(p) There are no pro forma or as adjusted financial statements
which are required to be included in the Registration Statement and the
Prospectus in accordance with Regulation S-X under the Securities Act
which have not been included as so required. The pro forma and/or as
adjusted financial information included in the Registration Statement
and the Prospectus has been properly compiled and prepared in
accordance with the applicable requirements of the Securities Act and
the Rules and Regulations and include all adjustments necessary to
present fairly, in accordance with GAAP and in all material respects,
the pro forma and as adjusted financial position of the respective
entity or entities presented therein at the respective dates indicated
and their cash flows and the results of operations for the respective
periods specified. The assumptions used in preparing the pro forma and
as adjusted financial information included in the Registration
Statement and the Prospectus provide a reasonable basis for presenting
the significant effects directly attributable to the transactions or
events described therein. The related pro forma and pro forma as
adjusted adjustments give appropriate effect to those assumptions; and
the pro forma and pro forma as adjusted financial information reflect
the proper application of those adjustments to the corresponding
historical financial statement amounts.
(q) Xxxxxx & Company, Inc. (the "ACCOUNTANTS"), who have
reported on such consolidated financial statements and schedules, are
registered independent public accountants with respect to the Company
as required by the Securities Act and the Rules and Regulations and by
the rules of the Public Company Accounting Oversight Board. The
consolidated financial statements of the Company and the related notes
and schedules included in the Registration Statement and the Prospectus
have been prepared in conformity with the requirements of the
Securities Act, Exchange Act and the Rules and Regulations and present
fairly the information shown therein.
Xxxxxxxx Xxxxxx Ford & Co.
_____________, 2007
Page 8 of 30
(r) There is and has been no failure on the part of the
Company, or to its knowledge, any of the Company's directors or
officers, in their capacities as such, to comply with any provisions of
the Sarbanes Oxley Act of 2002 and the rules and regulations
promulgated therewith (the "SARBANES OXLEY ACT") applicable to the
Company. Each of the principal executive officer and the principal
financial officer of the Company (or each former principal executive
officer of the Company and each former principal financial officer of
the Company, as applicable) has made all certifications required by
Sections 302 and 906 of the Xxxxxxxx-Xxxxx Act with respect to all
reports, schedules, forms, statements and other documents required to
be filed by it with the Commission. For purposes of the preceding
sentence, "principal executive officer" and "principal financial
officer" shall have the meanings given to such terms in the
Xxxxxxxx-Xxxxx Act. The Company has taken all necessary actions to
ensure that it is in compliance with all provisions of the
Xxxxxxxx-Xxxxx Act that are in effect and with which the Company is
required to comply. The Company's Board of Directors satisfies all
"independence" requirements (as that term is defined under applicable
laws, rules and regulations), including, without limitation, all
members of the audit committee of the Company's Board of Directors,
meet the qualifications of independence as set forth under applicable
laws, rules and regulations and the audit committee of the Company's
Board of Directors has, or will have prior to the approval of the
listing of the Common Stock on the American Stock Exchange ("AMEX") at
least one member who is "financially sophisticated" (as that term is
defined under applicable laws, rules, regulations and listing
standards).
(s) The Company and its Subsidiaries maintain systems of
internal accounting controls sufficient to provide reasonable assurance
that: (i) transactions are executed in accordance with management's
general or specific authorizations; (ii) transactions are recorded as
necessary to permit preparation of financial statements in conformity
with GAAP and to maintain asset accountability; (iii) access to assets
is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences. The
Company has established disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the Company and designed
such disclosure controls and procedures to ensure that material
information relating to the Company and its Subsidiaries is made known
to the certifying officers by others within those entities,
particularly during the period in which the Company's Annual Report on
Form 10-KSB or Quarterly Report on Form 10-QSB, as the case may be, is
being prepared. The Company presented in its Form 10-QSB for the
quarter ended April 3, 2007 (such date, the "EVALUATION DATE") the
conclusions of the certifying officers about the effectiveness of the
disclosure controls and procedures based on their evaluations as of the
Evaluation Date. Since the Evaluation Date, there have been no
significant changes in the Company's internal controls (as such term is
defined in Item 307 of Regulation S-B under the Exchange Act) or, to
the Company's knowledge, in other factors that could significantly
affect the Company's internal controls.
Xxxxxxxx Xxxxxx Ford & Co.
_____________, 2007
Page 9 of 30
(t) Except as set forth in or otherwise contemplated by the
Registration Statement: (i) since the Evaluation Date and prior to the
Initial Closing Date, there has not been and will not have been any
change in the capital stock of the Company (except for changes in the
number of outstanding shares of Common Stock of the Company due to the
issuance of shares upon the exercise of stock options, the issuance of
shares upon the conversion of convertible promissory notes outstanding
as of the date hereof, or upon the grant of restricted stock pursuant
to the Company's authorized and approved employee incentive plans) or
long-term debt of the Company or the Subsidiaries or any dividend or
distribution of any kind declared, set aside for payment, paid or made
by the Company on any class of capital stock, or any material adverse
change, or any development that would reasonably be expected to result
in a material adverse change, in or affecting the business, properties,
those prospects specifically described in the Registration Statement
and the Prospectus, management, consolidated financial position,
stockholders' equity, or results of operations of the Company and its
Subsidiaries taken as a whole (a "MATERIAL ADVERSE CHANGE") and (ii)
since the Evaluation Date, neither the Company nor the Subsidiaries
have sustained, and the Company is unaware of any existing condition
(other than those conditions occurring naturally and of equivalent risk
to similarly situated businesses) with respect to any of its properties
that, to the knowledge of the Company, is reasonably likely to cause
the Company or its Subsidiaries to sustain, any material loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor
disturbance or dispute or any action, order or decree of any court or
arbitrator or governmental or regulatory authority, except in each case
as otherwise disclosed in the Registration Statement and the
Prospectus.
(u) Since the date as of which information is given in the
Registration Statement, neither the Company nor the Subsidiaries have
entered or will enter into any transaction or agreement, not in the
ordinary course of business, that is material to the Company and the
Subsidiaries taken as a whole, or incurred or has reason to believe
that they will incur any liability or obligation, direct or contingent,
not in the ordinary course of business, that is material to the Company
and the Subsidiaries taken as a whole.
(v) Neither the Company nor the Subsidiaries own any real
property. Each of the Company and the Subsidiaries has good and valid
title to all personal property described in the Registration Statement
or the Prospectus as being owned by them that are material to the
businesses of the Company and the Subsidiaries taken as a whole, in
each case free and clear of all liens, encumbrances and claims except
those that: (i) do not materially interfere with the use made and
proposed to be made of such property by the Company and the
Subsidiaries or (ii) would not reasonably be expected, individually or
in the aggregate, to have a Material Adverse Effect. Any real property
described in the Registration Statement or the Prospectus as being
leased by the Company or the Subsidiaries that is material to the
business of the Company and the Subsidiaries taken as a whole is held
by them under valid, existing and enforceable leases, except those that
(A) do not materially interfere with the use made or proposed to be
made of such property by the Company and the Subsidiaries or (B) would
not be reasonably expected, individually or in the aggregate, to have a
Material Adverse Effect.
Xxxxxxxx Xxxxxx Ford & Co.
_____________, 2007
Page 10 of 30
(w) The Company is not, nor upon completion of the
transactions contemplated herein will it be, an "investment company" or
an "affiliated person" of, or "promoter" or "principal underwriter"
for, an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended.
(x) There are no legal, governmental or regulatory actions,
suits, investigations or proceedings pending to which the Company, its
officers and directors or the Subsidiaries are a party or to which any
property of the Company or the Subsidiaries is the subject that,
individually or in the aggregate, if determined adversely to the
Company or the Subsidiaries, would reasonably be expected to have a
Material Adverse Effect or materially and adversely affect the ability
of the Company to perform its obligations under the Transaction
Documents. To the Company's knowledge, no such actions, suits or
proceedings are threatened or contemplated by any governmental or
regulatory authority or threatened by others. To the Company's
knowledge, there are no current or pending legal, governmental or
regulatory investigations, actions, suits or proceedings that are
required under the Securities Act to be described in the Prospectus
that are not so described.
(y) Each of the Company and the Subsidiaries have, and as of
each Closing Date will have: (i) all governmental licenses, permits,
consents, orders, approvals and other authorizations necessary to carry
on its respective business as presently conducted except where the
failure to have such governmental licenses, permits, consents, orders,
approvals and other authorizations would not have a Material Adverse
Effect, (ii) complied with all laws, regulations and orders applicable
to either it or its business, except where the failure to so comply
would not have a Material Adverse Effect, and (iii) performed all its
obligations required to be performed, and is not, and as of each
Closing Date will not be, in default, under any indenture, mortgage,
deed of trust, voting trust agreement, loan agreement, bond, debenture,
note agreement, lease, contract or other agreement or instrument
(collectively, a "CONTRACT OR OTHER AGREEMENT") to which it is a party
or by which its property is bound or affected and, to the Company's
knowledge, no other party under any material contract or other
agreement to which it is a party is in default in any respect
thereunder, except where such default, individually or in the
aggregate, would not have a Material Adverse Effect. The Company and
the Subsidiaries are not in violation of any material provision of
their respective organizational or governing documents.
(z) The Company has all corporate power and authority to enter
into the Transaction Documents, and to carry out the provisions and
conditions hereof and thereof, and all consents, authorizations,
approvals and orders required in connection herewith and therewith have
been obtained, except such as have been obtained, such as may be
required under state securities or Blue Sky Laws or the by-laws and
rules of the National Association of Securities Dealers, Inc. (the
"NASD") or the AMEX in connection with the distribution of the Offered
Securities by the Placement Agents.
(aa) Neither the execution of the Transaction Documents, nor
the issuance, offering or sale of the Offered Securities, nor the
consummation of any of the transactions contemplated herein or in the
Subscription Agreements or Escrow Agreement, nor the compliance by the
Company with the terms and provisions hereof or thereof will conflict
Xxxxxxxx Xxxxxx Ford & Co.
_____________, 2007
Page 11 of 30
with, or will result in a breach of, any of the terms and provisions
of, or has constituted or will constitute a default under, or has
resulted in or will result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or the
Subsidiaries pursuant to the terms of any contract or other agreement
to which the Company or the Subsidiaries may be bound or to which any
of the property or assets of the Company or the Subsidiaries are
subject, except such conflicts, breaches or defaults as may have been
waived or such conflicts, breaches or defaults, individually or in the
aggregate, as shall not result in a Material Adverse Effect; nor will
such action result in any violation of the provisions of the
organizational or governing documents of the Company or the
Subsidiaries, or any statute or any order, rule or regulation
applicable to the Company or the Subsidiaries or of any court or of any
federal, state or other regulatory authority or other government body
having jurisdiction over the Company or the Subsidiaries, except such
violations, individually or in the aggregate, that shall not result in
a Material Adverse Effect.
(bb) No statement, representation or warranty made by the
Company in this Agreement or made in any certificate or document
required by the Transaction Documents to be delivered to the Placement
Agents, the Investors or the Escrow Agent was or will be, when made, in
light of the circumstances under which such statement was made,
inaccurate, untrue or incorrect in any material respect.
(cc) The Company and its directors, officers or controlling
persons have not taken, directly or indirectly, any action intended, or
which might reasonably be expected, to cause or result, under the
Exchange Act or otherwise, in, or which has constituted, stabilization
or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Common Stock.
(dd) No holder of securities of the Company has rights to the
registration of any securities of the Company as a result of the filing
of the Registration Statement or the transactions contemplated by this
Agreement, except for such rights as have been waived or satisfied, or
as described in the Registration Statement.
(ee) The Common Stock is currently listed on the OTC Bulletin
Board. Except as disclosed in the Company's public filings, the Company
has not, in the 12 months preceding the date hereof, received notice
from the OTC Bulletin Board to the effect that the Company is not in
compliance with its listing or maintenance requirements. The Company
is, and has no reason to believe that it will not in the foreseeable
future continue to be, in compliance with all listing and maintenance
requirements of the AMEX. The Company has applied to list its Common
Stock the AMEX.
(ff) The Company is not involved in any material labor dispute
nor is any such dispute known by the Company to be threatened.
(gg) The business and operations of the Company and the
Subsidiaries have been and are being conducted in compliance with all
applicable laws, ordinances, rules, regulations, licenses, permits,
approvals, plans, authorizations or requirements relating to
Xxxxxxxx Xxxxxx Ford & Co.
_____________, 2007
Page 12 of 30
occupational safety and health, or pollution, or protection of health
or the environment (including, without limitation, those relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants or hazardous or toxic substances, materials or wastes into
ambient air, surface water, groundwater or land, or relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of chemical substances, pollutants,
contaminants or hazardous or toxic substances, materials or wastes,
whether solid, gaseous or liquid in nature) of any governmental
department, commission, board, bureau, agency or instrumentality of the
United States, any state or political subdivision thereof, or any
foreign jurisdiction, and all applicable judicial or administrative
agency or regulatory decrees, awards, judgments and orders relating
thereto, except where the failure to be in such compliance will not,
individually or in the aggregate, have a Material Adverse Effect; and
neither the Company nor the Subsidiaries have received any notice from
any governmental instrumentality or any third party alleging any
material violation thereof or liability thereunder (including, without
limitation, liability for costs of investigating or remediating sites
containing hazardous substances and/or damages to natural resources).
(hh) Except as disclosed in the Registration Statement: (i) to
the Company's knowledge, each of the Company and the Subsidiaries own
or have obtained valid and enforceable licenses or options for the
inventions, patent applications, patents, trademarks (both registered
and unregistered), trade names, copyrights and trade secrets necessary
for the conduct of its respective business as currently conducted
(collectively, the "INTELLECTUAL PROPERTY"); and (ii) (a) to the
Company's knowledge, there are no third parties who have any ownership
rights to any Intellectual Property that is owned by, or has been
licensed to, the Company or the Subsidiaries for the products described
in the Registration Statement that would preclude the Company or the
Subsidiaries from conducting its business as currently conducted and
have a Material Adverse Effect, except for the ownership rights of the
owners of the Intellectual Property licensed or optioned by the Company
or the Subsidiaries; (b) to the Company's knowledge, there are
currently no sales of any products that would constitute an
infringement by third parties of any Intellectual Property owned,
licensed or optioned by the Company or the Subsidiaries, which
infringement would have a Material Adverse Effect; (c) there is no
pending or, to the Company's knowledge, threatened action, suit,
proceeding or claim by others challenging the rights of the Company or
the Subsidiaries in or to any Intellectual Property owned, licensed or
optioned by the Company or the Subsidiaries, other than claims which
would not reasonably be expected to have a Material Adverse Effect; (d)
there is no pending or, to the Company's knowledge, threatened action,
suit, proceeding or claim by others challenging the validity or scope
of any Intellectual Property owned, licensed or optioned by the Company
or the Subsidiaries, other than non-material actions, suits,
proceedings and claims, or other than normal patent application
examination procedures; and (e) there is no pending or, to the
Company's knowledge, threatened action, suit, proceeding or claim by
others that the Company or the Subsidiaries infringes or otherwise
violates any patent, trademark, copyright, trade secret or other
proprietary right of others, other than non-material actions, suits,
proceedings and claims.
(ii) Each of the Company and the Subsidiaries have filed all
necessary federal, state and foreign income and franchise tax returns
and have paid or accrued all taxes shown as due thereon, and the
Xxxxxxxx Xxxxxx Ford & Co.
_____________, 2007
Page 13 of 30
Company has no knowledge of any tax deficiency which has been or might
be asserted or threatened against it or the Subsidiaries which could
have a Material Adverse Effect.
(jj) On each Closing Date, all stock transfer or other taxes
(other than income taxes) which are required to be paid in connection
with the sale and transfer of the Offered Securities to be sold
hereunder will be, or will have been, fully paid or provided for by the
Company and all laws imposing such taxes will be or will have been
complied with in all material respects.
(kk) Each of the Company and the Subsidiaries maintain
insurance of the types and in the amounts that the Company reasonably
believes is adequate for their respective businesses, including, but
not limited to, insurance covering all real and personal property owned
or leased by the Company or the Subsidiaries against theft, damage,
destruction, acts of vandalism and all other risks customarily insured
against by similarly situated companies, all of which insurance is in
full force and effect.
(ll) The Company has delivered to MCF the Company's Uniform
Franchise Offering Circular dated inclusive of all of the exhibits
identified therein ("UFOC") and all exhibits, amendments and
supplements thereto and each application filed with any state franchise
authority for registration to sell franchises in the state ("STATE
REGISTRATIONS"). The UFOC contained information in compliance, as of
the date of the UFOC, with the disclosure requirements of the FTC Trade
Regulation Rule entitled "Disclosure Requirements and Prohibitions
Concerning Franchising and Business Opportunity Ventures" (the "FTC
Rule") and the State Regulations of those states with which the Company
has applied for registration to sell franchises, and the UFOC filed
with the applications complied as to form with the FTC Rule and such
State Regulations, except for any non-compliance which would not have a
Material Adverse Effect.
(mm) The procedures of the Company for offering and selling
franchises: (i) comply in all material respects with the FTC Rule and
the State Registrations of those states with which the Company is
registered to sell franchises, and (ii) with respect to the UFOC, the
Company has made all filings with all federal and state authorities
required for the offer and sale of franchises in such states where the
Company offers franchises, except for any noncompliance or failure to
file which would not have a Material Adverse Effect.
(nn) Neither the Company nor the Subsidiaries, nor, to the
knowledge of the Company, any director or officer, has directly or
indirectly: (i) made any unlawful contribution to any candidate for
public office, or failed to disclose fully any contribution in
violation of law, (ii) made any payment to any federal or state
governmental officer or official, or other person charged with similar
public or quasi-public duties, other than payments required or
permitted by the laws of the United States or any jurisdiction thereof,
(iii) violated or is in violation of any provisions of the U.S. Foreign
Corrupt Practices Act of 1977 or (iv) made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment.
Xxxxxxxx Xxxxxx Ford & Co.
_____________, 2007
Page 14 of 30
(oo) Each officer and director of the Company listed on
Schedule 3 hereto has delivered to MCF an agreement in the form of
EXHIBIT D hereto duly executed by such persons.
(pp) The Company has delivered to MCF an agreement in the form
of EXHIBIT E hereto to the effect that it will not, for a period of 90
days from the Initial Closing Date, without the prior written consent
of MCF and except as contemplated by this Agreement, offer to sell,
sell, contract to sell, grant any option to purchase or otherwise
dispose (or announce any offer, sale, grant of any option to purchase
or other disposition) of any shares of capital stock of the Company or
securities convertible into, or exchangeable or exercisable for, shares
of capital stock of the Company, except with respect to the: (i)
issuance of shares of Common Stock upon the exercise of stock options
and warrants outstanding as of the date hereof; (ii) issuance of shares
of Common Stock upon the conversion of convertible promissory notes
outstanding as of the date hereof; and (iii) grant of restricted stock
or restricted stock units and the issuance of Common Stock or stock
options under any benefit plan of the Company existing on the date
hereof, including, without limitation, the Company's deferred
compensation arrangements, and described in the Prospectus.
(qq) The Company has not distributed and, prior to the later
to occur of the final Closing Date and completion of the distribution
of the Offered Securities, will not distribute any offering material in
connection with the offering and sale of the Offered Securities other
than the Prospectus (including the Approved FWP) and any Permitted Free
Writing Prospectus (as defined below) to which MCF has consented.
(rr) Each material employee benefit plan, within the meaning
of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), that is maintained, administered or contributed
to by the Company or any of its affiliates for employees or former
employees of the Company and the Subsidiaries has been maintained in
material compliance with its terms and the requirements of any
applicable statutes, orders, rules and regulations, including but not
limited to ERISA and the Internal Revenue Code of 1986, as amended (the
"CODE"); no prohibited transaction, within the meaning of Section 406
of ERISA or Section 4975 of the Code, has occurred which would result
in a material liability to the Company or the Subsidiaries with respect
to any such plan excluding transactions effected pursuant to a
statutory or administrative exemption; and for each such plan that is
subject to the funding rules of Section 412 of the Code or Section 302
of ERISA, no "accumulated funding deficiency" as defined in Section 412
of the Code has been incurred, whether or not waived, and the fair
market value of the assets of each such plan (excluding for these
purposes accrued but unpaid contributions) exceeds the present value of
all benefits accrued under such plan determined using reasonable
actuarial assumptions.
(ss) Except as disclosed in the Registration Statement, the
Company is not a party to or subject to any employment contract or
arrangement providing for annual future compensation, or the
opportunity to earn annual future compensation (whether through fixed
salary, bonus, commission, options or otherwise) of more than $60,000
to any officer, consultant, director or employee.
Xxxxxxxx Xxxxxx Ford & Co.
_____________, 2007
Page 15 of 30
(tt) No relationship, direct or indirect, exists between or
among the Company or the Subsidiaries, on the one hand, and the
directors, officers, stockholders, customers or suppliers of the
Company or the Subsidiaries, on the other, which is required by the
Securities Act to be disclosed in the Registration Statement and the
Prospectus and is not so disclosed.
(uu) The Company has not sold or issued any securities that
would be integrated with the offering of the Offered Securities
contemplated by this Agreement pursuant to the Securities Act, the
Rules and Regulation or the interpretations thereof by the Commission.
(vv) Neither the Company nor the Subsidiaries are a party to
any contract, agreement or understanding with any person (other than
this Agreement) that would give rise to a valid claim against the
Company or the Subsidiaries or the Placement Agents for a brokerage
commission, finder's fee or like payment in connection with the
offering and sale of the Offered Securities. Neither the Company nor
the Subsidiaries are a party to any contract, agreement or
understanding with any person (other than this Agreement) which, for
the purposes of NASD Rule 2710, would result in any compensation or
other item of value owed to such other person being aggregated with the
compensation to be received by the Placement Agents hereunder.
(ww) No forward-looking statement (within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act)
(a "FORWARD LOOKING STATEMENT") contained in the Registration Statement
and the Prospectus has been made or reaffirmed without a reasonable
basis or has been disclosed other than in good faith. The Forward
Looking Statements under the heading "Management's Discussion and
Analysis of Financial Condition and Results of Operations: (i) were
made by the Company with a reasonable basis and in good faith and
reflect the Company's good faith reasonable best estimate of the
matters described therein, and (ii) have been prepared in accordance
with Item 10 of Regulation S-B under the Securities Act.
(xx) The operations of the Company and the Subsidiaries are
and have been in material compliance with applicable financial record
keeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, the Uniting and
Strengthening of America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, as
amended, the money laundering statutes of all jurisdictions to which
the Company or the Subsidiaries are subject, the rules and regulations
thereunder and any related or similar rules, regulations or guidelines,
issued, administered or enforced by any governmental agency
(collectively, the "MONEY LAUNDERING LAWS") and no action, suit or
proceeding by or before any court or governmental agency, authority or
body or any arbitrator involving the Company or the Subsidiaries with
respect to the Money Laundering Laws is pending or, to the best
knowledge of the Company, threatened.
(yy) Neither the Company, nor the Subsidiaries, nor, to the
knowledge of the Company, any director or officer, employee, agent or
other person acting on behalf of the Company or the Subsidiaries have,
in the course of its actions for, or on behalf of, the Company: (i)
used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expenses relating to political
activity; (ii) made any direct or indirect unlawful payment to any
Xxxxxxxx Xxxxxx Ford & Co.
_____________, 2007
Page 16 of 30
foreign or domestic government official or employee from corporate
funds; (iii) violated or is in violation of any provision of the U.S.
Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any
unlawful bribe, rebate, payoff, influence payment, kickback or other
unlawful payment to any foreign or domestic government official or
employee.
(zz) As used in this Agreement, references to matters being
"MATERIAL" with respect to the Company shall mean a material event,
change, condition, status or effect related to the condition (financial
or otherwise), properties, assets (including intangible assets),
liabilities, those prospects specifically described in the Registration
Statement and the Prospectus, business, operations or results of
operations of the Company.
(aaa) As used in this Agreement, the term "KNOWLEDGE OF THE
COMPANY" (or similar language) shall mean the knowledge of the officers
and directors of the Company who are named in the Prospectus, with the
assumption that such officers and directors shall have made reasonable
and diligent inquiry of the matters presented.
(bbb) Any certificate signed by or on behalf of the Company
and delivered to the Placement Agents or to PA Counsel shall be deemed
to be a representation and warranty by the Company to each Placement
Agent as to the matters covered thereby.
4. AGREEMENTS OF THE COMPANY. The Company covenants and agrees with the
Placement Agents as follows:
(a) The Registration Statement has become effective, and if
Rule 430A is used or the filing of the Prospectus is otherwise required under
Rule 424(b), the Company will file the Prospectus (properly completed if Rule
430A has been used), subject to the prior approval of MCF, pursuant to Rule
424(b) within the prescribed time period and will provide a copy of such filing
to MCF promptly following such filing.
(b) The Company will not, during such period as the Prospectus
would be required by law to be delivered in connection with sales of the Offered
Securities by an underwriter or dealer in connection with the offering
contemplated by this Agreement, file any amendment or supplement to the
Registration Statement or the Prospectus unless a copy thereof shall first have
been submitted to MCF within a reasonable period of time prior to the filing
thereof and MCF shall not have reasonably objected thereto in good faith.
(c) The Company will notify the Placement Agents promptly, and
will, if requested, confirm such notification in writing: (i) when any
post-effective amendment to the Registration Statement becomes effective; (ii)
of any request by the Commission for any amendments to the Registration
Statement or any amendment or supplements to the Prospectus or for additional
information; (iii) of the issuance by the Commission of any stop order
preventing or suspending the effectiveness of the Registration Statement, the
Prospectus, or the initiation of any proceedings for that purpose or the threat
thereof; (iv) of becoming aware of the occurrence of any event that in the
judgment of the Company makes any statement made in the Registration Statement
or the Prospectus untrue in any material respect or that requires the making of
Xxxxxxxx Xxxxxx Ford & Co.
_____________, 2007
Page 17 of 30
any changes in the Registration Statement or the Prospectus in order to make the
statements therein, in light of the circumstances in which they are made, not
misleading; and (v) of receipt by the Company of any notification with respect
to any suspension of the qualification of the Offered Securities for offer and
sale in any jurisdiction. If at any time the Commission shall issue any order
suspending the effectiveness of the Registration Statement in connection with
the offering contemplated hereby, the Company will make every reasonable effort
to obtain the withdrawal of any such order at the earliest possible moment. If
the Company has omitted any information from the Registration Statement,
pursuant to Rule 430A, it will use its best efforts to comply with the
provisions of and make all requisite filings with the Commission pursuant to
said Rule 430A and to notify the Placement Agents promptly of all such filings.
(d) If, at any time when a Prospectus relating to the Offered
Securities is required to be delivered under the Securities Act, the Company
becomes aware of the occurrence of any event as a result of which the
Prospectus, as then amended or supplemented, would, in the reasonable judgment
of counsel to the Company or PA Counsel, include any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or the Registration Statement, as then amended or
supplemented, would, in the reasonable judgment of counsel to the Company or PA
Counsel, include any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if for any other
reason it is necessary, in the reasonable judgment of counsel to the Company or
PA Counsel, at any time to amend or supplement the Prospectus or the
Registration Statement to comply with the Securities Act or the Rules and
Regulations, the Company will promptly notify MCF and, subject to Section 4(b)
hereof, will promptly prepare and file with the Commission, at the Company's
expense, an amendment to the Registration Statement or an amendment or
supplement to the Prospectus that corrects such statement or omission or effects
such compliance and will deliver to the Placement Agents, without charge, such
number of copies thereof as the Placement Agents may reasonably request. The
Company consents to the use of the Prospectus or any amendment or supplement
thereto by the Placement Agents.
(e) The Company will furnish to the Placement Agents and PA
Counsel, without charge: (i) one conformed copy of the Registration Statement as
originally filed with the Commission and each amendment thereto, including
financial statements and schedules, and all exhibits thereto, (ii) so long as a
prospectus relating to the Offered Securities is required to be delivered under
the Securities Act, as many copies of the Prospectus or any amendment or
supplement thereto as the Placement Agents may reasonably request.
(f) The Company will comply with all the undertakings
contained in the Registration Statement.
(g) The Company represents and agrees that, except for the
Approved FWP, it has not and will not, unless it obtains the prior consent of
MCF, which consent will not be unreasonably withheld, conditioned or delayed,
make any offer relating to the Offered Shares that would constitute an "issuer
free writing prospectus," as defined in Rule 433 promulgated under the
Xxxxxxxx Xxxxxx Ford & Co.
_____________, 2007
Page 18 of 30
Securities Act, or that would otherwise constitute a "free writing prospectus,"
as defined in Rule 405 promulgated under the Securities Act, required to be
filed with the Commission. Any such free writing prospectus consented to by MCF
(including the Approved FWP) is hereinafter referred to as a "PERMITTED FREE
WRITING PROSPECTUS." The Company represents that it has treated or agrees that
it will treat each Permitted Free Writing Prospectus as an "issuer free writing
prospectus," as defined in Rule 433 promulgated under the Securities Act, and
has complied and will comply with the requirements said Rule 433 applicable to
any Permitted Free Writing Prospectus, including timely filing with the
Commission where required, legending and record keeping. The Company will retain
in accordance with the Rules and Regulations all Permitted Free Writing
Prospectuses not required to be filed pursuant to the Rules and Regulations.
(h) Prior to the sale of the Offered Securities to the
Investors, the Company will cooperate with MCF and PA Counsel in connection with
the registration or qualification of the Offered Securities for offer and sale
under the state securities or Blue Sky laws of such jurisdictions as MCF may
reasonably request; provided, that in no event shall the Company be obligated to
qualify to do business in any jurisdiction where it is not now so qualified or
to take any action which would subject it to general service of process in any
jurisdiction where it is not now so subject.
(i) The Company will apply the net proceeds from the offering
and sale of the Offered Securities in the manner set forth in the Prospectus
under the caption "Use of Proceeds." Without the written consent of MCF, which
shall not be unreasonably withheld, conditioned or delayed, no proceeds of the
Offering will be used to pay outstanding loans from officers, directors or
stockholders, except for the repayment of the promissory notes issued on April
2, 2007 and June 8, 2007.
(j) The Company will use its best efforts to ensure that the
Offered Shares are listed on the AMEX at the time of the Initial Closing.
(k) The Company will not at any time, directly or indirectly,
take any action intended, or which might reasonably be expected, to cause or
result in, or which will constitute, stabilization of the price of the Offered
Shares to facilitate the sale or resale of any of the Offered Shares.
(l) The Company shall, upon the reasonable request of the
Placement Agents, deliver written affirmation of any certificate delivered to
the Placement Agents pursuant to Section 7 prior to any Closing Date following
the Initial Closing Date.
5. AGREEMENTS OF THE PLACEMENT AGENTS. The Placement Agents agree that
it shall not include any "issuer information" (as defined in Rule 433 under the
Securities Act) in any "free writing prospectus" (as defined in Rule 405) used
or referred to by such Placement Agents without the prior consent of the Company
(any such issuer information with respect to whose use the Company has given its
consent, which consent will not be unreasonably withheld, conditioned or
delayed, "PERMITTED ISSUER INFORMATION"); provided that: (i) no such consent
Xxxxxxxx Xxxxxx Ford & Co.
_____________, 2007
Page 19 of 30
shall be required with respect to any such issuer information contained in any
document filed by the Company with the Commission prior to the use of such free
writing prospectus and (ii) "issuer information," as used in this Section 5
shall not be deemed to include information prepared by such Placement Agents on
the basis of or derived from issuer information. The Placement Agents also agree
to provide to each Investor, prior to the Closing, a copy of the Prospectus and
any amendments or supplements thereto.
6. EXPENSES. Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, the Company will pay
all costs and expenses incident to the performance of the obligations of the
Company under this Agreement, including but not limited to costs and expenses of
or relating to:
(a) the preparation, printing and filing of the Registration
Statement (including each pre- and post-effective amendment thereto) and
exhibits thereto, any Permitted Free Writing Prospectus, the Prospectus and any
amendments or supplements thereto, including all fees, disbursements and other
charges of counsel and accountants to the Company;
(b) the preparation and delivery of certificates representing
the Offered Securities;
(c) furnishing (including costs of shipping and mailing) such
copies of the Registration Statement (including all pre- and post-effective
amendments thereto), the Prospectus and any Permitted Free Writing Prospectus,
and all amendments and supplements thereto, as may be requested for use in
connection with the direct placement of the Offered Securities;
(d) the listing of the Common Stock on AMEX;
(e) any filings required to be made by the Placement Agents
with the NASD, and the fees, disbursements and other charges of counsel for the
Placement Agents in connection therewith;
(f) the cost and charges of any transfer agent or registrar
for the Offered Securities;
(g) the registration or qualification of the Offered
Securities for offer and sale under the securities or Blue Sky laws of such
jurisdictions reasonably designated by MCF, including the reasonable fees,
disbursements and other charges of PA Counsel in connection therewith and the
preparation and printing of preliminary, supplemental and final Blue Sky
memoranda;
(h) fees, disbursements and other charges of counsel to the
Company;
Xxxxxxxx Xxxxxx Ford & Co.
_____________, 2007
Page 20 of 30
(i) reasonable fees, disbursements and other charges of PA
Counsel, up to a maximum of $75,000, including any fees incurred in connection
with any Blue Sky registrations described in subsection (g) above;
(j) fees and disbursements of the Accountants, including those
incurred in delivering the letter(s) described in Section7(f) of this Agreement;
(k) the fees of the Escrow Agent;
(l) any stock transfer taxes incurred in connection with the
offering contemplated by this Agreement;
(m) all expenses of the Company and its representatives
incurred in connection with attending or hosting meetings with prospective
purchasers of the Offered Securities;
(n) all reasonable travel and other out-of-pocket expenses of
the Placement Agents on a fully accountable basis; and
(o) all other costs and expenses incident to the performance
of the Company obligations hereunder which are not otherwise specifically
provided for in this Section 6.
7. CONDITIONS OF THE OBLIGATIONS OF THE PLACEMENT AGENTS. The
obligations of the Placement Agents hereunder are subject to the following
conditions:
(a) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued, and no proceedings for
that purpose shall be pending or threatened by any securities or other
governmental authority (including, without limitation, the Commission),
(ii) no order suspending the effectiveness of the Registration
Statement or the qualification or registration of the Offered
Securities under the securities or Blue Sky laws of any jurisdiction
shall be in effect and no proceeding for such purpose shall be pending
before, or threatened or contemplated by, any securities or other
governmental authority (including, without limitation, the Commission),
(iii) any request for additional information on the part of the staff
of any securities or other governmental authority (including, without
limitation, the Commission) shall have been complied with to the
satisfaction of the staff of the Commission or such authorities and
(iv) after the date hereof no amendment or supplement to the
Registration Statement, any Permitted Free Writing Prospectus or the
Prospectus shall have been filed unless a copy thereof was first
submitted to MCF and MCF did not object thereto in good faith, and MCF
shall have received certificates of the Company, dated as of the
Initial Closing Date and signed by the President and Chief Executive
Officer or the Chairman of the Board of Directors of the Company, and
the Chief Financial Officer of the Company, to the effect of clauses
(i), (ii) and (iii).
(b) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus: (i) there shall
not have been a Material Adverse Change, whether or not arising from
transactions in the ordinary course of business, in each case other
Xxxxxxxx Xxxxxx Ford & Co.
_____________, 2007
Page 21 of 30
than as set forth in or contemplated by the Registration Statement and
the Prospectus and (ii) the Company shall not have sustained any
material loss or interference with its business or properties from
fire, explosion, flood or other casualty, whether or not covered by
insurance, or from any labor dispute or any court or legislative or
other governmental action, order or decree, which is not set forth in
the Registration Statement and the Prospectus, if in the reasonable
judgment of MCF any such development makes it impracticable or
inadvisable to consummate the sale and delivery of the Offered
Securities to Investors as contemplated hereby.
(c) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there shall
have been no litigation or other proceeding instituted against the
Company or any of its officers or directors in their capacities as
such, before or by any Federal, state or local court, commission,
regulatory body, administrative agency or other governmental body,
domestic or foreign, which litigation or proceeding, in the reasonable
judgment of MCF, could have a Material Adverse Effect.
(d) Each of the representations and warranties of the Company
contained herein shall be true and correct in all material respects as
of each Closing Date, as if made on such date, and all covenants and
agreements herein contained to be performed on the part of the Company
and all conditions herein contained to be fulfilled or complied with by
the Company at or prior to such Closing Date shall have been duly
performed, fulfilled or complied with in all material respects.
(e) The Placement Agents shall have received an opinion, dated
the Initial Closing Date, of Xxxxxxxxxxxx Xxxx & Xxxxxxxxx LLP with
respect to the matters set forth in Exhibit F hereto.
(f) On the date hereof, the Accountants shall have furnished
to the Placement Agents a letter, dated the date of its delivery (the
"COMFORT LETTER"), addressed to the Placement Agents and in form and
substance satisfactory to MCF, confirming that: (i) they are
independent public accountants with respect to the Company within the
meaning of the Securities Act and the Rules and Regulations; (ii) in
their opinion, the financial statements and any supplementary financial
information included in the Registration Statement and examined by them
comply as to form in all material respects with the applicable
accounting requirements of the Securities Act and the Rules and
Regulations; (iii) on the basis of procedures, not constituting an
examination in accordance with generally accepted auditing standards,
set forth in detail in the Comfort Letter, a reading of the latest
available interim financial statements of the Company, inspections of
the minute books of the Company since the latest audited financial
statements included in the Prospectus, inquiries of officials of the
Company responsible for financial and accounting matters and such other
inquiries and procedures as may be specified in the Comfort Letter to a
date not more than five days prior to the date of the Comfort Letter,
nothing came to their attention that caused them to believe that: (A)
as of a specified date not more than five days prior to the date of the
Comfort Letter, there have been any changes in the capital stock of the
Company or any increase in the long-term debt of the Company, or any
decreases in net current assets or net assets or other items specified
by MCF, or any increases in any items specified by MCF, in each case as
compared with amounts shown in the latest balance sheet included in the
Xxxxxxxx Xxxxxx Ford & Co.
_____________, 2007
Page 22 of 30
Prospectus, except in each case for changes, increases or decreases
which the Prospectus discloses have occurred or may occur or which are
described in the Comfort Letter; and (B) for the period from the date
of the latest financial statements included in the Prospectus to the
specified date referred to in Clause (A), there were any decreases in
revenues or the total or per share amounts of net income or other items
specified by MCF, or any increases in any items specified by MCF, in
each case as compared with the comparable period of the preceding year
and with any other period of corresponding length specified by MCF,
except in each case for decreases or increases which the Prospectus
discloses have occurred or may occur or which are described in the
Comfort Letter; and (iv) in addition to the examination referred to in
their reports included in the Prospectus and the procedures referred to
in clause (iii) above, they have carried out certain specified
procedures, not constituting an examination in accordance with
generally accepted auditing standards, with respect to certain amounts,
percentages and financial information specified by MCF, which are
derived from the general accounting, financial or other records of the
Company, as the case may be, which appear in the Prospectus or in Part
II of, or in exhibits or schedules to, the Registration Statement, and
have compared such amounts, percentages and financial information with
such accounting, financial and other records and have found them to be
in agreement.
(g) At the Initial Closing Date, there shall be furnished to
the Placement Agents a certificate, dated the date of its delivery,
signed by each of the Chief Executive Officer and the Chief Financial
Officer of the Company, in form and substance satisfactory to MCF to
the effect that each signer has carefully examined the Registration
Statement and the Prospectus, and that to each of such person's
knowledge:
(i) (A) As of the date of such certificate, (x) the
Registration Statement does not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading and (y)
the Prospectus does not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading and (B) no
event has occurred as a result of which it is necessary to amend or
supplement the Prospectus in order to make the statements therein not
untrue or misleading in any material respect.
(ii) All the representations and warranties of the Company
contained in this Agreement that are qualified as to materiality or
Material Adverse Effect shall have been on the date hereof and shall be
as of the Initial Closing Date, as if made on and as of the Initial
Closing Date, true and complete in all respects, and all the
representations and warranties of the Company contained in this
Agreement that are not qualified as to materiality or Material Adverse
Effect shall have been true and complete in all material respects on
the date hereof and shall be true and complete in all material respects
as of the Initial Closing Date, provided, however, that any
representation or warranty of the Company in this Agreement made only
as of some date other than the date hereof shall have been true and
complete only as of such other date.
Xxxxxxxx Xxxxxx Ford & Co.
_____________, 2007
Page 23 of 30
(iii) Each of the covenants required herein to be performed by
the Company on or prior to the date of such certificate has been duly,
timely and fully performed and each condition herein required to be
complied with by the Company on or prior to the delivery of such
certificate has been duly, timely and fully complied with.
(iv) No stop order or other order suspending the effectiveness
of the Registration Statement, or any part thereof, or the
qualification or registration of the Offered Securities under the
securities or Blue Sky laws of any jurisdiction, has been issued and no
proceedings for that purpose have been instituted or are contemplated
by the Commission.
(v) Any request for additional information on the part of the
staff of any securities or other governmental authority (including,
without limitation, the Commission) shall have been complied with to
the satisfaction of the staff of the Commission or such authorities.
(vi) Subsequent to the date of the most recent financial
statements in the Prospectus, there has been no Material Adverse
Change.
(h) The Offered Securities shall be qualified for sale in such
states as MCF may reasonably request, and each such qualification shall be in
effect and not subject to any stop order or other proceeding on any Closing Date
with respect to the sale of the Offered Securities in such state or states, as
provided for herein.
(i) The Company shall have furnished or caused to be furnished
to the Placement Agents such a customary certificate of the Company's Secretary,
as well as certificates, in addition to those specifically mentioned herein, as
MCF may have reasonably requested as to the accuracy and completeness at the
Initial Closing Date of any statement in the Registration Statement or the
Prospectus, as to the accuracy at the Initial Closing Date of the
representations and warranties of the Company as to the performance by the
Company of its obligations hereunder, or as to the fulfillment of the conditions
concurrent and precedent to the obligations hereunder of the Placement Agents.
(j) MCF shall have received the agreements referred to in
Section 3(oo) and (pp) hereof substantially in the form of Exhibits D and E
hereto.
8. INDEMNIFICATION.
(a) The Company shall indemnify and hold harmless the
Placement Agents, their respective directors, officers, employees and agents and
each person, if any, who controls the Placement Agents within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any and all losses, claims, liabilities, expenses and damages, joint or
several, (including any and all investigative, legal and other expenses
reasonably incurred in connection with, and any amount paid in settlement of,
any action, suit or proceeding or any claim asserted), to which it, or any of
them, may become subject under the Securities Act or other Federal or state
Xxxxxxxx Xxxxxx Ford & Co.
_____________, 2007
Page 24 of 30
statutory law or regulation, at common law or otherwise, insofar as such losses,
claims, liabilities, expenses or damages arise out of or are based on (i) any
untrue statement or alleged untrue statement made by the Company in Section 3 of
this Agreement, (ii) any untrue statement or alleged untrue statement of any
material fact contained in (A) the Registration Statement or the Prospectus or
any amendment or supplement thereto, (B) any Permitted Free Writing Prospectus
or any amendment or supplement thereto, (C) any application or other document,
or any amendment or supplement thereto, executed by the Company based upon
written information furnished by or on behalf of the Company filed in any
jurisdiction in order to qualify the Offered Securities under the securities or
Blue Sky laws thereof or filed with the Commission or any securities association
or securities exchange (each, an "APPLICATION"), or (iii) the omission or
alleged omission to state in the Registration Statement, the Prospectus or any
Permitted Free Writing Prospectus, or any amendment or supplement thereto, or
any Application a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in which they were
made, not misleading; PROVIDED, HOWEVER, that the Company will not be liable to
the extent that such loss, claim, liability, expense or damage arises from the
sale of the Offered Securities in the public offering to any person and is based
solely on an untrue statement or omission or alleged untrue statement or
omission made in reliance on and in conformity with information relating to the
Placement Agents furnished in writing to the Company by the Placement Agents
expressly for inclusion in the Registration Statement, the Prospectus, any
Permitted Free Writing Prospectus or in any amendment or supplement thereto or
in any Permitted Issuer Information or any Application (as set forth in
paragraph (b) below). This indemnity agreement will be in addition to any
liability which the Company may otherwise have.
(b) The Placement Agents will indemnify and hold harmless the
Company, each person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, each
director of the Company and each officer of the Company who signs the
Registration Statement to the same extent as the foregoing indemnity from the
Company to the Placement Agents, but only insofar as losses, claims,
liabilities, expenses or damages arise out of or are based on any untrue
statement or omission or alleged untrue statement or omission made in reliance
on and in conformity with information relating to the Placement Agents furnished
in writing to the Company by the Placement Agents expressly for use in the
Registration Statement, the Prospectus or any Permitted Free Writing Prospectus.
This indemnity agreement will be in addition to any liability that the Placement
Agent might otherwise have. The Company acknowledges that, for all purposes
under this Agreement: (i) the fourth to last paragraph under the heading "Plan
of Distribution" in the Prospectus and (ii) the names of the Placement Agents,
constitute the only information relating to the Placement Agents furnished in
writing to the Company by the Placement Agents expressly for inclusion in the
Registration Statement or the Prospectus.
(c) Any party that proposes to assert the right to be
indemnified under this Section 8 will, promptly after receipt of notice of
commencement of any action against such party in respect of which a claim is to
be made against an indemnifying party or parties under this Section 8, notify
each such indemnifying party of the commencement of such action, enclosing a
Xxxxxxxx Xxxxxx Ford & Co.
_____________, 2007
Page 25 of 30
copy of all papers served, but the omission so to notify such indemnifying party
will not relieve it from any liability that it may have to any indemnified party
under the foregoing provisions of this Section 8 unless, and only to the extent
that, such omission results in the forfeiture of substantive rights or defenses
by the indemnifying party. If any such action is brought against any indemnified
party and it notifies the indemnifying party of its commencement, the
indemnifying party will be entitled to participate in and, to the extent that it
elects by delivering written notice to the indemnified party promptly after
receiving notice of the commencement of the action from the indemnified party,
jointly with any other indemnifying party similarly notified, to assume the
defense of the action, with counsel reasonably satisfactory to the indemnified
party, and after notice from the indemnifying party to the indemnified party of
its election to assume the defense, the indemnifying party will not be liable to
the indemnified party for any legal or other expenses except as provided below
and except for the reasonable costs of investigation subsequently incurred by
the indemnified party in connection with the defense. The indemnified party will
have the right to employ its own counsel in any such action, but the fees,
expenses and other charges of such counsel will be at the expense of such
indemnified party unless (1) the employment of counsel by the indemnified party
has been authorized in writing by the indemnifying party, (2) the indemnified
party has reasonably concluded (based on advice of counsel) that a conflict
exists (based on advice of counsel to the indemnified party) between the
indemnified party and the indemnifying party that would prevent the counsel
selected by the indemnifying party from representing the indemnified party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (3) the indemnifying party
has not in fact employed counsel to assume the defense of such action within a
reasonable time after receiving notice of the commencement of the action, in
each of which cases the reasonable fees, disbursements and other charges of
counsel will be at the expense of the indemnifying party or parties. It is
understood that the indemnifying party or parties shall not, in connection with
any proceeding or related proceedings in the same jurisdiction, be liable for
the reasonable fees, disbursements and other charges of more than one separate
firm admitted to practice in such jurisdiction at any one time for all such
indemnified party or parties. All such fees, disbursements and other charges
will be reimbursed by the indemnifying party promptly as they are incurred. The
Company will not, without the prior written consent of MCF (which consent will
not be unreasonably withheld, conditioned or delayed), settle or compromise or
consent to the entry of any judgment in any pending or threatened claim, action,
suit or proceeding in respect of which indemnification has been sought hereunder
(whether or not the Placement Agents or any person who controls any of the
Placement Agents within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act is a party to such claim, action, suit or
proceeding), unless such settlement, compromise or consent includes an
unconditional release of the Placement Agents and each such controlling person
from all liability arising out of such claim, action, suit or proceeding. An
indemnifying party will not be liable for any settlement of any action or claim
effected without its written consent (which consent will not be unreasonably
withheld, conditioned or delayed).
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in the foregoing
paragraphs of this Section 8 is applicable in accordance with its terms but for
any reason is held to be unavailable from the Company or the Placement Agents,
Xxxxxxxx Xxxxxx Ford & Co.
_____________, 2007
Page 26 of 30
the Company and the Placement Agents will contribute to the total losses,
claims, liabilities, expenses and damages (including any investigative, legal
and other expenses reasonably incurred in connection with, and any amount paid
in settlement of, any action, suit or proceeding or any claim asserted, but
after deducting any contribution received by the Company from persons other than
the Placement Agents such as persons who control the Company within the meaning
of the Securities Act or the Exchange Act, officers of the Company who signed
the Registration Statement and directors of the Company, who also may be liable
for contribution) to which the Company and the Placement Agents may be subject
in such proportion as shall be appropriate to reflect the relative benefits
received by the Company on the one hand and the Placement Agents on the other.
The relative benefits received by the Company on the one hand and the Placement
Agents on the other shall be deemed to be in the same proportion as the total
net proceeds from the offering (before deducting Company expenses) received by
the Company as set forth in the table on the cover page of the Prospectus bear
to the fee received by the Placement Agents hereunder. If, but only if, the
allocation provided by the foregoing sentence is not permitted by applicable
law, the allocation of contribution shall be made in such proportion as is
appropriate to reflect not only the relative benefits referred to in the
foregoing sentence but also the relative fault of the Company, on the one hand,
and the Placement Agents on the other, with respect to the statements or
omissions which resulted in such loss, claim, liability, expense or damage, or
action in respect thereof, as well as any other relevant equitable
considerations with respect to such offering. Such relative fault shall be
determined by reference to whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company or the Placement Agents, the intent of
the parties and their relative knowledge, access to information and opportunity
to correct or prevent such statement or omission. The Company and the Placement
Agents agree that it would not be just and equitable if contributions pursuant
to this Section 8(d) were to be determined by pro rata allocation or by any
other method of allocation which does not take into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, liability, expense or damage, or action in
respect thereof, referred to above in this Section 8(d) shall be deemed to
include, for purpose of this Section 8(d), any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 8(d), the Placement Agents shall not be required to contribute any
amount in excess of the fee received by it, and no person found guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section 8(d),
any person who controls a party to this Agreement within the meaning of the
Securities Act or the Exchange Act will have the same rights to contribution as
that party, and each officer of the Company who signed the Registration
Statement will have the same rights to contribution as the Company, subject in
each case to the provisions hereof. Any party entitled to contribution, promptly
after receipt of notice of commencement of any action against such party in
respect of which a claim for contribution may be made under this Section 8(d),
will notify any such party or parties from whom contribution may be sought, but
the omission so to notify will not relieve the party or parties from whom
contribution may be sought from any other obligation it or they may have under
Xxxxxxxx Curhan Ford & Co.
_____________, 2007
Page 27 of 30
this Section 8(d). No party will be liable for contribution with respect to any
action or claim settled without its written consent (which consent will not be
unreasonably withheld).
9. TERMINATION.
(a) The obligations of the Placement Agents under this
Agreement may be terminated at any time prior to the completion of the
distribution of the Offered Securities, by notice to the Company from MCF,
without liability on the part of the Placement Agents to the Company if, prior
to delivery and payment for the Offered Securities, in the sole judgment of MCF:
(i) trading in the Common Stock of the Company shall have been suspended by the
Commission or by AMEX, or, if the Common Stock is not listed on AMEX, if trading
shall have been suspended by the OTC Bulletin Board, (ii) trading in securities
generally on AMEX, the New York Stock Exchange or the Nasdaq Stock Market shall
have been suspended or limited or minimum or maximum prices shall have been
generally established on any of such exchange or additional material
governmental restrictions, not in force on the date of this Agreement, shall
have been imposed upon trading in securities generally by any of such exchange
or by order of the Commission or any court or other governmental authority,
(iii) a general banking moratorium shall have been declared by Federal or New
York State authorities, or (iv) any material adverse change in the financial or
securities markets in the United States or any outbreak or material escalation
of hostilities or declaration by the United States of a national emergency or
war or other calamity or crisis (including any material act of terrorism) shall
have occurred, the effect of any of which is such as to make it, in the sole
judgment of MCF, impracticable or inadvisable to market the Offered Securities
on the terms and in the manner contemplated by the Prospectus.
(b) If this Agreement shall be terminated pursuant to any of
the provisions hereof, or if the sale of the Offered Securities provided for
herein is not consummated because any condition to the obligations of the
Placement Agents set forth herein is not satisfied, in each case because of any
refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision hereof, the Company will, subject
to demand by MCF, reimburse the Placement Agents for all reasonable
out-of-pocket accountable expenses directly incurred in connection herewith.
10. NO FIDUCIARY DUTY. The Company acknowledges and agrees that in
connection with this offering, sale of the Offered Securities or any other
services the Placement Agents may be deemed to be providing hereunder,
notwithstanding any preexisting relationship, advisory or otherwise, between the
parties or any oral representations or assurances previously or subsequently
made by the Placement Agents: (i) no fiduciary relationship between the Company
and any other person, on the one hand, and the Placement Agents, on the other,
exists; (ii) the Placement Agents are not acting as advisors, experts or
otherwise, to the Company, including, without limitation, with respect to the
determination of the offering price of the Offered Securities, and such
relationship between the Company, on the one hand, and the Placement Agents, on
the other, is entirely and solely commercial, based on arms-length negotiations;
(iii) any duties and obligations that the Placement Agents may have to the
Company shall be limited to those duties and obligations specifically stated
herein; and (iv) the Placement Agents and their respective affiliates may have
Xxxxxxxx Xxxxxx Ford & Co.
_____________, 2007
Page 28 of 30
interests that differ from those of the Company. The Company hereby waives any
claims that the Company may have against the Placement Agents with respect to
any breach of fiduciary duty in connection with this offering.
11. NOTICES. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing, and:
(a) if sent to MCF or any Placement, shall be mailed,
delivered, or faxed and confirmed in writing, to Xxxxxxxx Curhan Ford & Co., 000
Xxxxxxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxx
Xxxxxxxxx, with copies to Xxxxxxxx Xxxxxxxx & Schole LLP, 000 Xxxxxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxxx X. Xxxxxxxxxx, Esq.; and
(b) if sent to the Company shall be mailed, delivered, or
faxed and confirmed in writing to the Company at the addresses set forth in the
Registration Statement, with a copy to Xxxxxxxxxxxx Xxxx & Xxxxxxxxx LLP, 0000
Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, XX 00000-0000, Attention: Xxx X Xxxxxxx, Esq.;
Any such notices and other communications shall take effect at the time
of receipt thereof.
12. SURVIVAL. The respective representations, warranties, agreements,
covenants, indemnities and other statements of the Company and the Placement
Agents set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement shall remain in full force and effect,
regardless of: (i) any investigation made by or on behalf of the Company, any of
its officers or directors, the Placement Agents or any controlling person
referred to in Section 8 hereof and (ii) delivery of and payment for the Offered
Securities. The respective agreements, covenants, indemnities and other
statements set forth in Sections 6 and 8 hereof shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement.
13. SUCCESSORS. This Agreement shall inure to the benefit of and shall
be binding upon the Placement Agents, the Company and their respective
successors and legal representatives, and nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any other person 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: (i)
the indemnification and contribution contained in Sections 8(a) and (d) of this
Agreement shall also be for the benefit of the directors, officers, employees
and agents of the Placement Agents and any person or persons who control the
Placement Agents within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act and (ii) the indemnification and contribution
contained in Sections 8(b) and (d) of this Agreement shall also be for the
benefit of the directors of the Company, the officers of the Company who have
signed the Registration Statement and any person or persons who control the
Company within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act. No Investor shall be deemed a successor because of such
purchase.
Xxxxxxxx Xxxxxx Ford & Co.
_____________, 2007
Page 29 of 30
14. APPLICABLE LAW; VENUE. This Agreement shall be deemed to have been
executed and delivered in New York and both this Agreement and the transactions
contemplated hereby shall be governed as to validity, interpretation,
construction, effect, and in all other respects by the laws of the State of New
York, without regard to the conflicts of laws principals thereof (other than
Section 5-1401 of The New York General Obligations Law). Each of the Placement
Agents and the Company: (a) agrees that any legal suit, action or proceeding
arising out of or relating to this Agreement and/or the transactions
contemplated hereby shall be instituted exclusively in the Supreme Court of the
State of New York, New York County, or in the United States District Court for
the Southern District of New York, (b) waives any objection which it may have or
hereafter to the venue of any such suit, action or proceeding, and (c)
irrevocably consents to the jurisdiction of Supreme Court of the State of New
York, New York County, or in the United States District Court for the Southern
District of New York in any such suit, action or proceeding. Each of the
Placement Agents and the Company further agrees to accept and acknowledge
service of any and all process which may be served in any such suit, action or
proceeding in the Supreme Court of the State of New York, New York County, or in
the United States District Court for the Southern District of New York and
agrees that service of process upon the Company mailed by certified mail to the
Company's address or delivered by Federal Express via overnight delivery shall
be deemed in every respect effective service of process upon the Company, in any
such suit, action or proceeding, and service of process upon the Placement
Agents mailed by certified mail to the Placement Agents' address or delivered by
Federal Express via overnight delivery shall be deemed in every respect
effective service process upon the Underwriter, in any such suit, action or
proceeding. THE COMPANY (ON BEHALF OF ITSELF AND, TO THE FULLEST EXTENT
PERMITTED BY LAW, ON BEHALF OF ITS RESPECTIVE EQUITY HOLDERS AND CREDITORS)
HEREBY WAIVES ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM
BASED UPON, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, THE REGISTRATION STATEMENT AND THE
PROSPECTUS.
15. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same instrument. Delivery of
a signed counterpart of this Agreement by facsimile or other electronic
transmission shall constitute valid and sufficient delivery thereof.
16. ENTIRE AGREEMENT. This Agreement, together with the schedule and
exhibits attached hereto and as the same may be amended from time to time in
accordance with the terms hereof, contains the entire agreement among the
parties hereto relating to the subject matter hereof and there are no other or
further agreements outstanding not specifically mentioned herein.
17. SEVERABILITY. If any term or provision of this Agreement or the
performance thereof shall be invalid or unenforceable to any extent, such
invalidity or unenforceability shall not affect or render invalid or
unenforceable any other provision of this Agreement and this Agreement shall be
valid and enforced to the fullest extent permitted by law.
18. HEADINGS. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
[Signature Page Follows]
Xxxxxxxx Xxxxxx Ford & Co.
_____________, 2007
Page 30 of 30
Please confirm that the foregoing correctly sets forth the agreement
between the Company and the Placement Agents.
Very truly yours,
UWINK, INC.
By: _______________________________
Name:
Title:
CONFIRMED BY MCF, ACTING FOR ITSELF AND AS A REPRESENTATIVE OF THE PLACEMENT
AGENTS NAMED ON SCHEDULE A ATTACHED HERETO, AS OF THE DATE FIRST ABOVE
MENTIONED:
XXXXXXXX CURHAN FORD & CO.
By: _________________________________
Name:
Title:
SCHEDULE 1
PLACEMENT AGENTS
Xxxxxxxx Curhan Ford & Co.
Sterne, Agee & Xxxxx, Inc.
SCHEDULE 2
SUBSIDIARIES
uWink Franchise Corporation, a Delaware corporation
uWink California, Inc. a Delaware corporation
SCHEDULE 3
SCHEDULE OF LOCK-UPS
EXHIBIT A
FORM OF SUBSCRIPTION AGREEMENT
EXHIBIT B
FORM OF WARRANT
EXHIBIT C
FORM OF ESCROW AGREEMENT
EXHIBIT D
FORM OF INDIVIDUAL LOCK-UP AGREEMENT
EXHIBIT E
FORM OF COMPANY LOCK-UP AGREEMENT
EXHIBIT F
MATTERS TO BE COVERED IN THE
XXXXXXXXXXXX XXXX & XXXXXXXXX LLP LEGAL OPINION
1. The Company has been incorporated, and is validly existing as a
corporation in good standing under the laws of the State of Delaware. The
Company's two Subsidiaries of which we have notice have been incorporated and
are validly existing as corporations in good standing under the laws of the
State of Delaware.
2. Each of the Company and its Subsidiaries are in good standing as a
foreign corporation and is duly qualified to transaction business in every
jurisdiction in which the Company or Subsidiaries, as applicable, own or lease
properties or conducts business for which the failure to be so qualified would
have a Material Adverse Effect on the Company and Subsidiaries, taken as a
whole.
3. The Company has the corporate power and authority to enter into and
perform its obligations under the Transaction Documents.
4. Each of the Offered Shares and the Offered Warrants have been duly
authorized and, when issued and delivered by the Company pursuant to the
Placement Agency Agreement against due payment of applicable consideration, will
be validly issued, fully paid and nonassessable. The Warrant Shares have been
duly authorized and reserved for issuance pursuant to the terms of the Offered
Warrants and the Warrant Shares, when issued and delivered upon valid exercise
of the Offered Warrants and payment of the exercise price, will be validly
issued, fully paid and nonassessable.
5. The issuance of the Offered Securities is not subject to any
statutory preemptive right of any securityholder of the Company or other right
known to such counsel to subscribe for or otherwise acquire the Offered
Securities.
6. Except as set forth in or otherwise contemplated by the Registration
Statement or the Prospectus, to the knowledge of such counsel, no person has the
right to require the Company or its Subsidiaries to register any securities for
sale under the Securities Act, by reason of the filing of the Registration
Statement with the Commission or by reason of the issuance and sale of the
Offered Securities, except for rights which have been waived or satisfied.
7. The statements in the Prospectus under the captions "Description of
Capital Stock" and "Description of Warrants," insofar as they purport to
constitute summaries of the terms of the Company's charter or by-laws or
Delaware statutes, rules and regulations thereunder, constitute accurate
summaries of the terms of such documents, statutes, rules and regulations in all
material respects.
8. The execution, delivery and performance of the Transaction Documents
do not, and will not, result in any violation of the provisions of the charter
or by-laws of the Company in effect on the date hereof. The Transaction
Documents have been duly authorized, executed and delivered by the Company and
each constitutes a valid and binding agreement of the Company, and is
enforceable against the Company in accordance with the terms thereof.
F-1
9. To the knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued under the Act and no
proceedings for that purpose have been instituted, are pending or are threatened
by the Commission.
10. The Registration Statement and Prospectus, and each amendment or
supplement to the Registration Statement and Prospectus, as the case may be, as
of their respective effective or issue dates, or as of the dates they were filed
with the Commission, or for any as have been amended then as of the dates of
such amendments, as the case may be (other than the financial statements, other
financial information and supporting schedules included therein or omitted
therefrom, as to which such counsel need not express opinion), complied as to
form in all material respects with the applicable requirements of the Securities
Act and the Rules and Regulations and the applicable requirements of the
Exchange Act.
11. To the knowledge of such counsel, there is not pending or
threatened in writing any action, suit or proceeding, inquiry or investigation
to which the Company or its Subsidiary is a party, or to which the property of
the Company or its Subsidiary is subject, before or brought by any court or
governmental agency or body that is of a character required to be disclosed in
the Registration Statement which is not adequately disclosed in the Prospectus.
12. To the knowledge of such counsel, there are no franchises,
contracts indentures, mortgages, loan agreements, notes, leases or other
instruments of a character required to be described in the Registration
Statement or the Prospectus, or to be filed as exhibits thereto, which are not
described or filed as required.
13. No filing with, or authorization, approval, consent, license,
order, registration or qualification of any domestic court or governmental
agency or body of the State of New York, the DGCL, or the federal government
(other than under the Securities Act and the Rules and Regulations, which have
been obtained, or as may be required under the securities or blue sky laws of
any jurisdiction in connection with the distribution of the Offered Securities
by the Placement Agents or the purchase of the Offered Securities by the
Investors in the manner contemplated in the Placement Agency Agreement and in
the Prospectus or the by-laws and rules of the NASD, as to which we express no
opinion) is required in connection with the due authorization, execution and
delivery of the Transaction Documents or for the offering, issuance, sale or
delivery of the Offered Securities.
14. The execution, delivery and performance of the Transaction
Documents and the consummation of the transactions contemplated therein and in
the Registration Statement and the Prospectus (including the issuance and sale
of the Offered Securities to the Investors), compliance by the Company with its
obligations under the Placement Agency Agreement and in connection with the
offering, and issuance and sale of the Offered Securities to the Investors do
not and will not conflict with, result in a breach or violation of or imposition
of any lien, charge or encumbrance upon any property or assets of the Company
pursuant to, (i) the charter or by-laws of the Company or (ii) any statute, law,
rule, regulation or any judgment, order or decree applicable to the Company of
any court, regulatory body, administrative agency, governmental body, arbitrator
or other authority having jurisdiction over the Company or any of its
properties, which violation or default would, in the case of clause (ii) above,
F-2
either individually or in the aggregate with all other violations and defaults
referred to in this paragraph (14) (if any), have a Material Adverse Effect,
except as set forth in or contemplated in the Prospectus.
15. The Company is not, nor will be after giving effect to the offering
and sale of the Offered Securities and the application of the proceeds thereof
as described in the Prospectus, an "investment company" as such terms are
defined in the Investment Company Act of 1940, as amended.
16. The Company's uniform franchise offering circular dated [ ]
inclusive of attached exhibits ("UFOC") contained information in compliance, as
of the date of the UFOC, with the disclosure provisions of the FTC Trade
Regulation Rule entitled "Disclosure Requirements and Prohibitions Concerning
Franchising and Business Opportunity Ventures" (the "FTC Rule") and the
franchise disclosure laws of those states with which the Company has filed such
UFOC, and the UFOC complied as to form with the FTC Rule and such state
franchise disclosure laws; except for any non-compliance which would not have a
Material adverse Effect.
17. To such counsel's knowledge: (a) the procedures of the Company for
offering and selling franchises comply in all material respects with the FTC
Rule and the franchise disclosure laws of those states with which the Company
has filed the UFOCS and (b) with respect to the UFOC, the Company and/or it
Subsidiaries has made all filings with all federal and state authorities
required for the offer and sale of franchises in such states where the Company
offers franchises, except for any noncompliance or failure to file which would
not have a Material Adverse Effect.
18. The descriptions of federal and state franchise regulations set
forth in the Prospectus under the captions "Risk Factors" and "Business"
accurately describe the status of the material governmental franchise
regulations pertaining to franchising activities of the Company and its
Subsidiaries.
19. The description of the franchising agreements of the Company and
its Subsidiaries set forth in the Prospectus under the caption "Business"
accurately describes the material terms of such franchise agreements.
20. To such counsel's knowledge, neither the Company nor any of its
Subsidiaries have received any notice of violation of the FTC Rule or any state
franchise registration or franchise disclosure law.
21. While such counsel is not passing upon and do not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement, the Prospectus or any supplements or
amendments thereto, no facts have come to the attention of such counsel which
has caused such counsel to believe that: (i) the Registration Statement or any
amendments thereto, at the time the Registration Statement or any such
amendments became effective or as of the Initial Closing Date, contained or
contains any untrue statement of a material fact or omitted or omits 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; (ii) the Prospectus as of the Applicable Time, together with each
Permitted Free Writing Prospectus used before the Applicable Time and filed by
F-3
the Company pursuant to Rule 433 of the Rules and Regulations, contained any
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading; or (iii) the Prospectus, as of its
date or as of the date hereof, contained or contains any untrue statement of a
material fact or omitted or omits to state a material fact necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading (it being understood that in each case that such counsel is
not expressing a belief as to the financial statements, including the notes and
schedules thereto, or any other financial or accounting information, or the
information regarding the Placement Agent or the method of distribution of the
Offered Securities included in the Registration Statement, the Prospectus or any
such amendments or supplements thereto).
F-4
