Exhibit 10.11
Redline Performance Products, Inc.
0000 Xxxxxxx Xxx
Xxxxx, Xxxxxxxxxx 00000
Xxxxx 0, 0000
XxxxXxxxx Financial, Inc.
0000 Xxxxx Xxxxxxxxx Xxxx., Xxxxx 000
Xxxxx, Xxxxxxx 00000
Gentlemen:
Redline Performance Products, Inc., a company incorporated under the laws
of the State of Minnesota (the "Company"), hereby confirms its agreement with
GunnAllen Financial, Inc. (the "Placement Agent") as follows:
1. Description of Transaction. The Company will offer (the "Offering")
for sale to a limited number of persons meeting certain criteria for "accredited
investor" status (as more fully described in a Confidential Private Offering
Memorandum and the exhibits and other attachments annexed thereto (collectively,
the "Memorandum")) to be approved by the Placement Agent, up to one hundred
(100) units, subject to the sale of up to an additional twenty-two (22) units
(the "Units"), each consisting of twenty thousand (20,000) shares of the
Company's Series A Preferred Stock (the "Shares"), at a purchase price of $1.25
per Share and a warrant which expires at the close of business on June 30, 2002
(the "Warrants") to purchase five thousand (5,000) shares of the Company's
common stock at an exercise price of $1.50 per share, with a minimum purchase of
one (1) Unit ($30,000). The Placement Agent shall have the right to accept less
than the minimum one (1) Unit at its option. The purchase price of each Unit
shall be allocated $25,000 for the Shares and $5,000 for the Warrant. The Units
are more fully described in the Memorandum. Capitalized words not defined herein
shall have the meaning set forth in the Memorandum. The Company may accept
subscriptions for Units at its discretion.
Additionally, the Company hereby authorizes the Placement Agent to
solicit qualified institutional investors (the "Institutional Placement")
regarding a potential investment or loan in the amount of up to five million
dollars ($5,000,000). The terms of any investment or loan in the Institutional
Placement are subject to the Company's prior approval and to the Company and the
Agent entering into a supplemental agency agreement or an amendment to this
Agency Agreement pertaining to the Institutional Placement.
The Placement Agent shall be entitled to engage sub-agents in connection
with the Offering, and their compensation shall be included as part of and not
in addition to the compensation provided for the Placement Agent herein. Any
such sub-agent shall be bound by the terms of this Agreement.
2. Appointment of the Placement Agent. The Company hereby appoints the
Placement Agent as its exclusive agent to offer and sell the Units on a "best
efforts, any or all" basis to accredited investors, as set forth in Section 3
below. The Placement Agent, on the basis of the representations, warranties,
covenants and agreements of the Company, and subject to the conditions contained
herein,
GunnAllen Financial, Inc.
March 1, 2001
Page 2
accepts such appointment and agrees to use its best efforts to sell the Units.
It is understood that the Placement Agent has no commitment to sell the Units
other than to use its best efforts.
3. Purchase, Sale and Delivery of Units. On the basis of the
representations and warranties contained herein, and subject to the terms and
conditions set forth herein, the parties agree that:
a. Regulation D Offering. Neither the offer nor the sale of the
Units has been or will be registered with the Securities and Exchange
Commission ("SEC"). The Units will be offered and sold in reliance upon
the exemption from registration provided by Rule 506 under Regulation D
("Reg D") adopted under the Securities Act of 1933, as amended (the
"Act"), will only be sold to "accredited investors" as such term is
defined under Reg D ("Accredited Investors") and will be made within the
limitations of Rules 502(c) and (d); the Units will be offered for sale
only in states in which the Units have been qualified or registered for
sale or are exempt from such qualification or registration; and the
Company will provide the Placement Agent for delivery to all offerees and
purchasers and their representatives, if any, any information, documents
and instruments which the Placement Agent and Company deem necessary to
comply with the rules, regulations and judicial and administrative
interpretations respecting compliance with applicable state and federal
statutes and regulations.
b. Subscription for Units. Subscription for Units shall occur by
execution and delivery by the subscriber (the "Subscriber") of a
Subscription Agreement (the "Subscription Agreement") in the form annexed
as a part of the Memorandum together with such other documents and
instruments as are set forth in the Memorandum (the "Subscription
Documents").
c. Receipt of Funds. Each Subscriber for the Units shall deliver
to the Placement Agent a check payable to "Redline Performance Products,
Inc." or shall wire transfer funds to the Placement Agent, in respect of
the purchase price of the Units subscribed for, in accordance with the
instructions of the Placement Agent, which funds shall be held without
interest by the Placement Agent until the Company has accepted and
approved the Subscriber's Subscription Agreement, after which, the funds
shall be immediately available for use by the Company.
d. Closing; Termination of Offering. An initial closing of the
Offering (the "Initial Closing") may occur after one or more Subscription
Agreements for (and funds in respect of the purchase price of) any Units
are received and accepted by the Placement Agent or the Company and such
Subscription Agreements are approved by the Company. Thereafter, the
Offering may continue, up to a maximum (including the Units sold in
connection with the Initial Closing) of 122 Units. All such sales must be
completed not later than the close of business on June 30, 2001 (or such
later date not to exceed two 30 day extensions as is mutually agreed to
by the Company and the Placement Agent). The date on which the Initial
Closing occurs is hereinafter referred to as the "Initial Closing Date;"
the date or dates on which the subsequent closing or closings occur are
hereinafter referred to as the "Additional Closing Date;" and the Initial
Closing Date and Additional Closing Date(s) are sometimes hereinafter
referred to collectively as the "Closing Date," the last of which shall
be referred to herein as the "Final Closing Date." On each Closing Date
the Company shall deliver to the Placement Agent, on behalf of the
Subscribers, the certificates representing the Shares and Warrants being
purchased by the Subscribers on such Closing Date pursuant to Section 1
of this Agreement, against payment therefore, and a check or wire
transfer in payment of the amounts set forth in Section 4 below. In the
event of termination of the Offering contemplated herein, this Agreement,
other
GunnAllen Financial, Inc.
March 1, 2001
Page 3
than Sections 9 and 10 hereof, shall be automatically terminated and
neither party shall have any further obligation to the other party under
this Agreement other than as expressly set forth in this Agreement.
4. Compensation of Placement Agent. As compensation for its services
rendered as Placement Agent under this Agreement, the Placement Agent shall
receive the following compensation:
a. A sales commission equal to ten percent (10%) and reimbursement
of out-of-pocket expenses not to exceed three percent (3%) for actual
expenses incurred in connection with the Offering (of which $12,500 shall
be paid in advance on the execution of this Agreement) of the aggregate
Gross Proceeds (as hereinafter defined) of the Units sold by the Company
(such Units referred to hereinafter as the "Placed Units"), payable by
check or wire transfer from the Company on each Closing Date. "Gross
Proceeds" is defined as the total price paid by Subscribers for the
Units.
b. A sales commission equal to five percent (5%) and reimbursement
of out-of-pocket expenses not to exceed two percent (2%) for actual
expenses incurred in connection with the Institutional Placement.
c. The Placement Agent shall be granted a performance warrant (the
"Agent Warrant") to purchase shares of the Company's common stock at an
exercise price of $1.50 per share. The number of shares subject to the
Agent Warrant will equal: (i) ten percent (10%) of the total number of
Shares sold in the Offering on an as-converted (or as-exercised) to
common basis, not to exceed 200,000 shares, and (ii) five percent (5%) of
the total number of shares sold (or number of shares on an as converted
basis if in the form of convertible securities) in the Institutional
Placement . The Agent Warrant will have a term of four (4) years and is
exercisable beginning one year from the date of issuance (which shall be
the Final Closing Date). The Agent Warrant will contain standard
antidilution protection and registration provisions, including
"piggyback" and "demand" registration rights on the same terms contained
in the Warrants, and in addition shall contain a provision for "cashless
exercise."
5. Representations and Warranties of the Company. The Company represents
and warrants to, and agrees with, the Placement Agent that:
a. Memorandum. The Company shall prepare the Memorandum, which may
be supplemented from time to time and approved by the Placement Agent.
The Memorandum shall contain information, accurate as of the date
specified therein, of the general kind specified by applicable statutes
and regulations, including without limitation:
i. Terms of the Offering;
ii. A description of the Units;
iii. A description of the business conducted by the Company;
iv. The financial condition of the Company;
v. Past material activities of the Company;
vi. Commissions and compensation to be paid to the Placement
Agent in connection with the Offering;
vii. Disclosure of material contracts, agreements or other
business arrangements, which affect or are related to the
business conducted and to be conducted by the Company;
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March 1, 2001
Page 4
viii. Information regarding the Company, its management, material
obligations, liabilities, any pending or threatened
lawsuits or proceedings, and recent material adverse
changes in its financial condition; and
ix. Any appropriate legends and such other information or
material as the Placement Agent may deem necessary or
desirable to be included therein.
The Memorandum, including all exhibits thereto, as of its date and
at all times subsequent thereto up to and including the Final Closing
Date, does not (as of the date hereof) and will not (as of any such
subsequent date) include any untrue statement of a material fact, or omit
to state any 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.
b. Additional Information. The Company has provided, and shall
provide to the Placement Agent, such information, documents and
instruments as may be reasonably requested in order to comply with
Section 4(2) of the Act and Reg D for an offer made to Accredited
Investors.
c. Organization; Good Standing. The Company is a corporation duly
incorporated and validly existing under the laws of the State of
Minnesota, with requisite corporate power and authority to own or lease,
as the case may be, and operate its properties and to conduct its
business as described in the Memorandum. The Company is duly qualified to
do business as a foreign corporation and is in good standing in all
jurisdictions wherein such qualification is necessary and where failure
so to qualify could have a material adverse effect on the financial
condition, results of operations, business or properties of the Company.
d. Governmental Authority. Except for the filing of Form D under
the Act and other than as may be required under applicable state
securities or Blue Sky laws, no permit, authorization, approval, consent,
order, registration, certification or license (collectively, "Permits")
of any court or governmental agency or body, domestic or foreign, is
required for the valid authorization, issuance, sale and delivery (in the
manner contemplated hereby and by the Memorandum) of the Units or the
Agent Warrant to the Placement Agent and/or the Subscribers and the
consummation by the Company of the transactions contemplated by this
Agreement, the Units, the Agent Warrant and the Subscription Agreements
in the form annexed as part of the Memorandum.
e. Corporate Authorization. The Company has the requisite
corporate power and authority, to execute, deliver and perform this
Agreement, the Subscription Agreements, the Units, and the Agent Warrant
(such Subscription Agreements, Registration Rights Agreements, Units, and
Agent Warrant hereinafter referred to collectively as the "Transaction
Documents"), and to consummate the transactions contemplated hereby and
thereby. The execution, delivery and performance of this Agreement and
the Transaction Documents, the consummation by the Company of the
transactions herein and therein contemplated and the compliance by the
Company with the terms of this Agreement and the Transaction Documents
and the issuance and sale of the Units, have been duly authorized by all
necessary corporate action, and each of this Agreement and the
Transaction Documents has been or will be as applicable, duly executed
and delivered by the Company. Each of this Agreement and the Transaction
Documents, when executed by the parties thereto, is a valid and binding
obligation of the Company, enforceable in accordance with its terms,
subject, as to enforcement of remedies, to applicable bankruptcy,
insolvency, reorganization, moratorium and other laws affecting the
rights of creditors generally and the discretion of courts in granting
equitable remedies and except that enforceability of the
GunnAllen Financial, Inc.
March 1, 2001
Page 5
indemnification and contribution provisions set forth thereunder and
hereunder may be limited by the federal securities laws of the United
States or public policy relating thereto. The execution, delivery and
performance of this Agreement and the Transaction Documents by the
Company, the consummation by the Company of the transactions herein and
therein contemplated in the manner described by the Memorandum and the
compliance by the Company with the terms of this Agreement and the
Transaction Documents, do not, and will not, with or without the giving
of notice or the lapse of time, or both (i) result in any violation of
the Articles of Incorporation or Bylaws of the Company; or (ii) to the
Company's knowledge, violate any existing applicable law, rule,
regulation, judgment, order or decree of any governmental agency or
court, domestic or foreign, having jurisdiction over the Company or any
of its properties or businesses.
f. Capitalization. The Company had, at the date or dates indicated
in the Memorandum, a duly authorized and outstanding capitalization as
set forth in the Memorandum. The outstanding Common Shares and
outstanding options and warrants to acquire Common Shares have been duly
authorized and validly issued. All such outstanding Common Shares are
fully paid and nonassessable. The outstanding options and warrants to
acquire Common Shares constitute the valid and binding obligations of the
Company, enforceable in accordance with their terms. None of such
outstanding Common Shares or options or warrants to acquire Common Shares
have been issued in violation of the preemptive rights of any security
holder of the Company. None of the holders of such outstanding Common
Shares is subject to personal liability solely by reason of being such a
holder. The offers and sales of such outstanding Common Shares and
outstanding options and warrants to acquire Common Shares were at all
relevant times either registered under the applicable securities laws of
the United States and the applicable state securities or Blue Sky laws,
or exempt from such registration requirements. The authorized Common
Shares and outstanding options and warrants to acquire Common Shares
conform in all material respects to the descriptions thereof contained in
the Memorandum. Except as set forth in the Memorandum, on the Closing
Date there will be no outstanding options or warrants for the purchase
of, or other outstanding rights to acquire Common Shares or securities
convertible into Common Shares.
g. Authorization of Shares, Warrants and Other Securities. The
issuance and sale of the Units and the Agent Warrant have been duly
authorized. The issuance of the Units and Agent Warrant under the
circumstances described in, and pursuant to the terms of, the Memorandum
have been duly authorized and, when issued and delivered in accordance
with the provisions of the Memorandum, the Subscription Agreements, the
Units and the Agent Warrant, will be validly issued, fully paid and
nonassessable, and the holders thereof will not be subject to personal
liability solely by reason of being such holders.
h. Reg D Qualification; Offering Documents. The Memorandum and
related documents (the "Offering Documents") conform in all material
respects with the requirements of Section 4(2) of the Securities Act and
Reg D promulgated thereunder.
i. Finder's Fee. Other than any payments to the Placement Agent
hereunder, the Company has not incurred any liability for any finder's
fees or similar payments in connection with the transactions herein
contemplated.
Any certificate signed by an officer of the Company and delivered
to the Placement Agent, or to counsel for the Placement Agent, shall be
deemed to be a representation and warranty by the Company to the
Placement Agent as to the matters covered thereby.
GunnAllen Financial, Inc.
March 1, 2001
Page 6
j. Right of First Refusal. For a period of two (2) years following
the successful closing of at least $2 million in the Offering or in the
Institutional Placement, the Placement Agent shall have a right of first
refusal to sell for the account of the Company, if the Company engages an
agent or underwriter in such transaction, any equity or debt securities
with respect to which the Company may seek a public offering up to $10
million for cash or private offering up to $5 million for cash, if the
Placement Agent agrees to sell such securities on substantially the same
terms and conditions as offered by another broker/dealer, including
number of shares or aggregate principal amount, price per security, sales
commission and method of distribution (e.g. firm commitment underwriting
or best efforts). Upon effectiveness of the foregoing right of first
refusal, all prior rights of first refusal, rights of first offer or
similar rights provided by the Company shall immediately terminate. The
right of first refusal described in this paragraph terminates upon the
earliest of (i) the execution by the Company of an agreement with a
licensed agent or underwriter regarding a private financing in excess of
$5 million or a public financing in excess of $10 million; (ii) Placement
Agent's failure to exercise its right of first refusal with respect to
any financing transaction in which it has a right of first refusal; (iii)
the Company registers a class of securities under the Securities Exchange
Act of 1934; and (iv) the Company raises at least $5 million in debt or
equity financing without the assistance of any licensed agent or
underwriter. If the Company proceeds with another broker-dealer in a
private financing transaction in excess of $5 million or in a public
financing transaction in excess of $10 million during the two (2) year
period beginning on the date referenced above, the Company will use
reasonable efforts to provide the Placement Agent the right to
participate as a selling group member to place up to ten percent (10%) of
the offering.
6. Covenants.
a. Memorandum. The Company will furnish the Placement Agent,
without charge, during the Offering, as many copies of the Memorandum
(and any amended or supplemental Memorandum) as the Placement Agent may
reasonably request. If during the offering period any event occurs as the
result of which the Memorandum, as then amended or supplemented, would
include an untrue statement of a material fact, or omit to state a
material fact necessary in order to make the statements made in light of
the circumstances in which they were made not misleading, or if it shall
be necessary to amend or supplement the Memorandum to comply with
applicable law, the Company will forthwith notify the Placement Agent
thereof, and furnish to the Placement Agent in such quantities as may be
reasonably requested, an amendment or amended or supplemented Memorandum
which corrects such statements or omissions or causes the Memorandum to
comply with applicable law.
b. Blue Sky Filings. The Company will file all documents required
by federal and state blue sky laws in connection with the Offering and
shall provide Placement Agent with copies of the same.
c. Use of Proceeds. The Company will use the proceeds from the
sale contemplated herein only for the purposes described in the
Memorandum. Through and including June 30, 2002, the Company agrees to
furnish the Placement Agent monthly statements of income and cash flow
specifically indicating the use of proceeds. The Placement Agent
acknowledges and agrees that such information is of a confidential nature
and agrees not to disclose such information to any person without the
prior consent of the Company.
GunnAllen Financial, Inc.
March 1, 2001
Page 7
d. Benefit Plan Approval. The Company will use its reasonable best
efforts to execute all documents necessary, as recommended by the
Placement Agent, to make this offering eligible for benefit plans
including IRA's, Pension and Profit Sharing Plans, etc.
e. Business Plan. The Company shall prepare and furnish the
Placement Agent an updated business plan and annual budget approved by
the Company's Board of Directors, including a detailed use of proceeds
raised in the Offering. This plan shall be updated quarterly. Within 30
days after each year end, the Company shall prepare and furnish the
Placement Agent a budget and business plan for the next fiscal year,
prepared monthly, including balance sheets and sources and applications
of funds, statements for such months, and as soon as prepared any other
budgets or revised budgets prepared by the Company. The Placement Agent
acknowledges and agrees that such information is of a confidential nature
and agrees not to disclose such information to any person without the
prior consent of the Company.
f. Board Meetings. Commencing as of the date of effectiveness of
this agreement and until the earlier of (i) the date three (3) years from
the date of the Final Closing and (ii) the date on which the Placement
Agent's right of first refusal described in Section 5.j. is terminated,
the Placement Agent may designate a representative of the Placement Agent
to attend meetings of the Company's Board of Directors. Attendance at any
such meeting of the Board of Directors is subject to execution and
delivery by such representative of a nondisclosure agreement in a form
acceptable to the Company.
g. Reg D Compliance. The Company will comply in all respects with
the terms and conditions of Reg D and applicable state securities laws
with respect to the Offering and the sale of the Units only to Accredited
Investors.
7. Representations and Warranties of the Placement Agent. The Placement
Agent represents and warrants to, and agrees with, the Company that:
a. No General Solicitation. No form of general solicitation or
general advertising has been or will be used by the Placement Agent or
any of its sub-agents, affiliates or representatives in connection with
the offer and sale of any of the Units or securities in the Institutional
Placement, including, but not limited to, articles, notices or other
communication published in any newspaper, magazine, or similar medium or
broadcast over television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation or general
advertising.
b. Accredited Investors Only. In connection with the sale of the
Units, the Placement Agent and its sub-agents will solicit offers to buy
the Units only from, and will offer to sell the Units only to, Accredited
Investors.
c. Delivery of Memorandum. Prior to the sale by the Company to any
purchaser of any of the Units pursuant hereto, the Placement Agent and
its sub-agents will furnish to such purchaser a copy of the Memorandum
(and any amendment thereof or supplement thereto that the Company shall
have furnished to the Placement Agent prior to the date of such sale).
The Placement Agent and its sub-agents will not utilize any sales
materials other than the Memorandum and will not make any statements
concerning the Company other than information contained in the
Memorandum, unless prior written approval is obtained from the Company
and its legal counsel and copies of such materials are delivered to the
Company and its legal counsel.
GunnAllen Financial, Inc.
March 1, 2001
Page 8
d. Licensure. The Placement Agent is, and any sub-agents will be,
licensed as broker-dealers, authorized to conduct offerings of the sort
contemplated hereby by the Securities and Exchange Commission and the
blue sky authorities of each other state in which the Units will be
offered. The Placement Agent and its sub-agents are members in good
standing of the National Association of Securities Dealers, Inc. and to
the Placement Agent's knowledge, no proceedings are pending or threatened
to revoke or limit any such status of the Placement Agent or any
sub-agent.
e. Compliance. The Placement Agent and its sub-agents will comply
with the provisions of the Act, the Exchange Act and the respective rules
and regulations thereunder in connection with the Offering and the
Institutional Placement.
f. Sub-agents. The Placement Agent will use its best efforts to
ensure that all sub-agents are in compliance with the above
representations.
g. Reliance on Representations. The Company and, for purposes of
the opinions that may be delivered to the Placement Agent pursuant to
this Agreement, counsel to the Company will rely upon the accuracy and
truth of the foregoing representations and the Placement Agent hereby
consents to such reliance.
8. Indemnification and Contribution.
a. Indemnification by the Company. In connection with the Offering
and sale of the Units by the Placement Agent, the Company shall
indemnify, save, defend, and hold the Placement Agent and its officers,
directors, employees, agents, and each person, if any, who controls the
Placement Agent (within the meaning of either the Act or the 0000 Xxx)
harmless from and against any and all losses, claims, damages, demands,
expenses, and liabilities, including but not limited to interest,
penalties, court costs, and attorneys' fees (collectively, "Losses"),
arising out of or in connection with (i) any untrue statement or alleged
untrue statement of a material fact contained (A) in the Memorandum, or
(B) in any Blue Sky Application, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was
made in reliance upon and in conformity with written information
furnished to the Company by the Placement Agent specifically for use with
reference to the Placement Agent in the preparation of the Memorandum or
any such Blue Sky Application, or (ii) the omission or alleged omission
to state in the Memorandum or in any Blue Sky Application a material fact
required to be stated therein or necessary in order to make the
statements therein not misleading, unless such untrue statement or
omission or such alleged untrue statement or omission was made in
reliance upon and in conformity with written information supplied to the
Company by or on behalf of the Placement Agent expressly for use in the
Memorandum (or any amendment or supplement thereto).
b. Indemnification by the Placement Agent. The Placement Agent
agrees to indemnify and hold harmless the Company and its officers,
directors, employees, agents, and each person, if any, who controls the
Company within the meaning of the Act and the Exchange Act against any
Losses, to which the Company or such persons may become subject, under
the Act or otherwise insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based
upon (i) any untrue statement or alleged untrue statement of a material
fact contained (A) in the Memorandum, or (B) in any Blue Sky Application,
or (ii) the omission or alleged omission to state in the Memorandum or in
any Blue Sky Application a
GunnAllen Financial, Inc.
March 1, 2001
Page 9
material fact required to be stated therein or necessary in order to make
the statements therein not misleading, but, with respect to clause (i) or
(ii) above, only to the extent that such untrue statement or alleged
untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company
by the Placement Agent specifically for use with reference to the
Placement Agent in the preparation of the Memorandum or any such Blue Sky
Application, or (iii) any unauthorized verbal or written representation
in connection with the Offering and sale of the Units made by the
Placement Agent, its agents, employees, or affiliates; any act by or on
behalf of the Placement Agent or its agents, employees, or affiliates in
connection with the Offering and sale of the Units and in violation of
the Securities Laws or rules and regulations thereunder.
c. Claims for Indemnification. The indemnified party shall give
prompt notice to the indemnifying party of any action commenced against
it in respect of which indemnity may be sought hereunder, and the Company
shall have the right to assume the defense of any action against the
Placement Agent for which indemnity is sought. The indemnified party may
participate at its own expense in the defense of such action. In no event
shall the indemnifying party be liable for the fees and expenses of more
than one counsel for all indemnified parties in connection with any one
action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or
circumstances.
d. Contribution. In connection with the Offering, if the
indemnification provided for in Sections 8.a or 8.b hereof is
unenforceable although applicable in accordance with its terms, then the
parties agree that, in order to provide for just and equitable
contribution, they each shall contribute to the aggregate Losses
contemplated by such indemnity agreement incurred by each of them in an
amount bearing the same proportionate relationship to the total amount of
such Losses as the net proceeds from the Offering in the case of the
Company, or the aggregate total of all commissions and fees in the case
of the Placement Agent, bears to the total gross proceeds from the
Offering; provided, however, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall
be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8.d, each
person, if any, who controls an unindemnified party or the Company within
the meaning of either the Act or the 1934 Act shall have the same right
to contribution as the indemnified party.
9. Representations and Agreements to Survive Delivery. All
representations, warranties and agreements of the Company and of the Placement
Agent herein will survive the delivery and execution hereof and the Closings
hereunder, and shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of the Placement Agent or any person who
controls the Placement Agent within the meaning of the Act, or by the Company or
any person who controls the Company within the meaning of the Act, and will
survive delivery of the securities constituting the Shares hereunder and any
termination of this Agreement.
10. Termination. The Placement Agent will have the right to terminate
this Agreement by giving written notice as herein specified, at any time, at or
prior to the Initial Closing Date:
a. If the Company shall have failed, refused, or been unable at or
prior to the date of termination of this Agreement, to perform any of its
material obligations hereunder; or
GunnAllen Financial, Inc.
March 1, 2001
Page 10
b. There has occurred an event, which materially and adversely
affects the value of the Units (or any components thereof) or otherwise
renders the purchase of such Units inadvisable.
If the Placement Agent elects to terminate this Agreement pursuant to any
of subsections (a) or (b) of this Section 10, the Company will be notified
promptly by telephone or telecopier, and such notification will be confirmed by
notice as provided for in Section 11 hereof.
This Agreement shall automatically terminate on June 30, 2001, subject to
extension by mutual agreement of the Company and the Placement Agent for up to
two thirty (30) day periods.
Notwithstanding the foregoing, nothing contained in this Section 10 shall
imply that the Placement Agent has undertaken any commitment to sell the Units
other than to use its best efforts.
11. Notices. Any notice hereunder shall be in writing and shall be
effective only upon receipt (including confirmed receipt of facsimile
transmission) and shall be delivered in person, sent by telecopier or mailed by
certified or registered mail, postage prepaid, return receipt requested, to the
appropriate party or parties, at the following addresses: if to the Placement
Agent, to GunnAllen Financial, Inc., 0000 Xxxxx Xxxxxxxxx Xxxx., Xxxxx 000,
Xxxxx, Xxxxxxx 00000, Attention: Xxxxxxx Xxxxx (telecopier no. 813-282-1275); if
to the Company, to Redline Performance Products, Inc., 0000 Xxxxxxx Xxx, Xxxxx,
Xxxxxxxxxx 00000, Attention: President (telecopier no. 760-598-0167) or, in each
case, to such other address as the parties may hereinafter designate by like
notice.
12. Parties. This Agreement will inure to the benefit of and be binding
upon the Placement Agent, the Company and their respective successors and
assigns. This Agreement is intended to be, and is for the sole and exclusive
benefit of the parties hereto and the persons described in subsections 8(a) and
8(b) hereof, and their respective successors and assigns, and for the benefit of
no other person, and no other person will have any legal or equitable right,
remedy or claim under, or in respect of this Agreement. No purchaser of any of
the Units will be construed as successor or assign merely by reason of such
purchase.
13. Amendment and/or Modification. Neither this Agreement, nor any term
or provision hereof, may be changed, waived, discharged, amended, modified or
terminated orally, or in any manner other than by an instrument in writing
signed by each of the parties hereto.
14. Further Assurances. Each party to this Agreement will perform any and
all acts and execute any and all documents as may be necessary and proper under
the circumstances in order to accomplish the intents and purposes of this
Agreement and to carry out its provisions.
15. Validity. In case any term of this Agreement will be held invalid,
illegal or unenforceable, in whole or in part, the validity of any of the other
terms of this Agreement will not in any way be affected thereby.
16. Waiver of Breach. The failure of any party hereto to insist upon
strict performance of any of the covenants and agreements herein contained, or
to exercise any option or right herein conferred in any one or more instances,
will not be construed to be a waiver or relinquishment of any such option or
right, or of any other covenants or agreements, and the same will be and remain
in full force and effect.
GunnAllen Financial, Inc.
March 1, 2001
Page 11
17. Entire Agreement. This Agreement contains the entire agreement and
understanding of the parties with respect to the entire subject matter hereof,
and there are no representations, inducements, promises or agreements, oral or
otherwise, not embodied herein. Any and all prior discussions, negotiations,
commitments and understanding relating to the Offering are superseded hereby.
There are no conditions precedent to the effectiveness of this Agreement other
than as stated herein, and there are no related collateral agreements existing
between the parties that are not referred to herein.
18. Counterparts. This Agreement may be executed in counterparts and each
of such counterparts will for all purposes be deemed to be an original, and such
counterparts will together constitute one and the same instrument.
19. Governing Law, Jurisdiction and Venue. This Agreement will be deemed
to have been made and delivered in the State of Florida and will be governed as
to validity, interpretation, construction, effect and in all other respects by
the internal laws of the State of Florida. The Company (a) agrees that any legal
suit, action or proceeding arising out of or relating to this Agreement will be
instituted exclusively in Florida State Court, County of Hillsborough, or in the
United States District Court for the Middle District of Florida, Tampa Division
(collectively, the "Florida Courts") (b) waives any objection which the Company
may have now or hereafter to the venue of any such suit, action or proceeding,
and (c) irrevocably consents to the jurisdiction of the Florida Courts in any
such suit, action or proceeding.
20. Company Approval. This Agreement is subject to, and will not become
effective until, the Company's Board of Directors has authorized the
transactions described herein and the execution of this Agreement.
If the foregoing correctly sets forth our understanding, please so
indicate in the space provided below for that purpose, whereupon this letter
will constitute a binding agreement between us.
REDLINE PERFORMANCE PRODUCTS, INC.
By: /s/ Xxxx Xxxxx
--------------------------------------
Name: Xxxx Xxxxx
Title: President and Chief Executive Officer
CONFIRMED AND ACCEPTED:
GUNNALLEN FINANCIAL, INC.
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxx
-------------------------------
Title: CEO
------------------------------
Redline Performance Products, Inc.
0000 Xxxxxxx Xxx
Xxxxx, XX 00000
June 28, 2001
GunnAllen Financial, Inc.
0000 Xxxxx Xxxxxxxxx Xxxxxxxxx., Xxxxx 000
Xxxxx, Xxxxxxx 00000
Gentlemen:
As you know, Redline and GunnAllen have entered into an agency
agreement dated March 1, 2001 (the "Agreement") pursuant to which GunnAllen is
acting as Redline's agent in the sale of units of preferred stock and warrants
in the Offering, as that term is defined in the Agreement. To date, GunnAllen
has raised approximately $600,000 of the $3,000,000 proposed maximum proceeds of
the Offering. Redline and GunnAllen acknowledge that Redline's aggregate debt
and equity financing needs are approximately $7,000,000.
We have discussed the positive developments that have taken place at
Redline over the past several months, and of the need for representatives of
GunnAllen and Redline to increase their collective efforts to raise the capital
needed by Redline to produce and sell snowmobiles this year. Significant
progress has been made. Redline and GunnAllen will continue to use their best
efforts to identify and close persons willing to invest in Redline. Redline and
GunnAllen understand and agree that persons who desire to provide large amounts
of capital and are identified by representatives of Redline will likely not be
willing to invest in the current Offering, will negotiate their own loan or
investment transactions outside the terms of the current Offering, and will be
unwilling to pay any compensation to GunnAllen. In addition, such persons or
others identified by Redline may require compensation for making introductions
or otherwise assisting Redline in raising capital.
Redline will continue to refer leads of investors seeking to invest
$200,000 or less to GunnAllen, but will independently negotiate the terms of any
investment in excess of $200,000. GunnAllen understands and agrees that unless
persons identified by Redline seeking to make loans to or to invest in Redline
in amounts in excess of $200,000 are identified by GunnAllen, GunnAllen will not
receive any compensation upon the completion of any investment or loan by any
such person. GunnAllen also understands and agrees that Redline may engage one
or more persons to identify and close investment or loan transactions, and that
such persons will receive compensation to do so which may be similar to
GunnAllen's compensation described in the Agreement. GunnAllen and Redline agree
that the foregoing are necessary to meet Redline's financing needs.
The Agreement and the Offering, by their terms, expire on June 30,
2001. Redline and GunnAllen are committed to their collective capital-raising
efforts and agree to extend the term of the Agreement and of the Offering,
through and including July 30, 2001. This letter amends the terms of the
Agreement and will be referred to as amendment number one to the Agreement.
/s/ Xxxx Xxxxx
--------------------------------------------
Xxxx Xxxxx, President
Redline: Redline Performance Products, Inc.
Agreed to and accepted:
GunnAllen: GunnAllen Financial, Inc.
By: /s/ Xxxxxx X. Xxxxx
---------------------------------------
Its: Executive Vice President
--------------------------------------
2.
Redline Performance Products, Inc.
0000 Xxxxxxx Xxx
Xxxxx, XX 00000
July 30, 2001
GunnAllen Financial, Inc.
0000 Xxxxx Xxxxxxxxx Xxxxxxxxx., Xxxxx 000
Xxxxx, Xxxxxxx 00000
Gentlemen:
As you know, Redline and GunnAllen have entered into an agency
agreement dated March 1, 2001, as amended, (the "Agreement") pursuant to which
GunnAllen is acting as Redline's agent in the sale of units of preferred stock
and warrants in the Offering, as that term is defined in the Agreement, pursuant
to a Confidential Private Placement Memorandum dated March 20, 2001 (the
"Memorandum"). The Memorandum provides that the Offering will terminate on the
date 90 days from the date of the Memorandum (which was on June 18, 2001),
subject to up to two 30-day extensions. Redline and GunnAllen previously agreed
to extend the term of the Offering and the Agreement through and including July
30, 2001. Redline and GunnAllen are committed to their collective
capital-raising efforts and, as permitted in the Agreement, agree to extend the
term of the Agreement and of the Offering, through and including August 17, 2001
(the date 150 days from the date of the Memorandum). This letter amends the
terms of the Agreement and will be referred to as amendment number two to the
Agreement.
/s/ Xxxx Xxxxx
--------------------------------------------
Xxxx Xxxxx, President
Redline: Redline Performance Products, Inc.
Agreed to and accepted:
GunnAllen: GunnAllen Financial, Inc.
By: /s/ Xxxxxx Xxxxx
----------------------------------------
Its: Executive V.P.
-------------------------------------
Redline Performance Products, Inc.
0000 Xxxxxxx Xxx
Xxxxx, XX 00000
August __, 0000
XxxxXxxxx Financial, Inc.
0000 Xxxxx Xxxxxxxxx Xxxxxxxxx., Xxxxx 000
Xxxxx, Xxxxxxx 00000
Gentlemen:
As you know, Redline and GunnAllen have entered into an agency
agreement dated March 1, 2001, as amended, (the "Agreement") pursuant to which
GunnAllen is acting as Redline's agent in the sale of units of preferred stock
and warrants in the Offering, as that term is defined in the Agreement, pursuant
to a Confidential Private Placement Memorandum dated March 20, 2001 (the
"Memorandum"). The Memorandum provides that the Offering will terminate on the
date 90 days from the date of the Memorandum (which was on June 18, 2001),
subject to up to two 30-day extensions. Redline and GunnAllen previously agreed
to extend the term of the Offering and the Agreement through and including
August 17, 2001. The Agreement and the Offering will expire by their terms on
August 18, 2001 unless extended.
Redline and GunnAllen are committed to their collective capital-raising
efforts and hereby agree to extend the term of the Agreement and of the Offering
for an additional 60 days, through and including October 16, 2001. Either party
may terminate the Agreement upon 15 days' written notice. Redline and GunnAllen
agree to provide each investor purchasing Units in the Offering after August 17,
2001 with a supplement to the Memorandum. In addition, Redline and GunnAllen
agree that GunnAllen's engagement by Redline will be on a non-exclusive basis
for the remainder of the term of the Offering and the Agreement. Redline may
engage the services of one or more additional agents to assist Redline in the
sale of its securities and may accept investments from investors regardless of
whether such sales were completed with the assistance of any sales agent. Any
such engagement or investment will be completed without compensation to
GunnAllen. This letter amends the terms of the Agreement and will be referred to
as amendment number three to the Agreement.
/s/ Xxxx Xxxxx
--------------------------------------------
Xxxx Xxxxx, President
Redline: Redline Performance Products, Inc.
Agreed to and accepted:
GunnAllen: GunnAllen Financial, Inc.
By: /s/ Xxxxxxx X. Xxxxx
----------------------------------------
Its: CEO
------------------------------------
Redline Performance Products, Inc.
0000 Xxxxxxx Xxx
Xxxxx, XX 00000
October 16, 2001
GunnAllen Financial, Inc.
0000 Xxxxx Xxxxxxxxx Xxxxxxxxx., Xxxxx 000
Xxxxx, Xxxxxxx 00000
Gentlemen:
As you know, Redline and GunnAllen have entered into an agency
agreement dated March 1, 2001, as amended, (the "Agreement") pursuant to which
GunnAllen is acting as Redline's agent in the sale of units of preferred stock
and warrants in the Offering, as that term is defined in the Agreement, pursuant
to a Confidential Private Placement Memorandum dated March 20, 2001 (the
"Memorandum"). The Memorandum provides that the Offering will terminate on the
date 90 days from the date of the Memorandum (which was on June 18, 2001),
subject to up to two 30-day extensions. Redline and GunnAllen previously agreed
to extend the term of the Offering and the Agreement through and including
October 16, 2001. The Agreement and the Offering will expire by their terms on
October 16, 2001 unless extended.
Redline and GunnAllen are committed to their collective capital-raising
efforts and hereby agree to extend the term of the Agreement and of the Offering
for an additional 60 days, through and including December 15, 2001. Redline and
GunnAllen agree to provide each investor purchasing Units in the Offering after
October 16, 2001 with Supplement No. 2 to the Memorandum, which will supercede
and replace Supplement No. 1. This letter amends the terms of the Agreement and
will be referred to as amendment number four to the Agreement.
/s/ Xxxx Xxxxx
--------------------------------------------
Xxxx Xxxxx, President
Redline: Redline Performance Products, Inc.
Agreed to and accepted:
GunnAllen: GunnAllen Financial, Inc.
By: /s/ Xxxxxx Xxxxx
----------------------------------------
Its: Executive V.P.
-------------------------------------
Redline Performance Products, Inc.
0000 Xxxxxxxx Xxx
Xxxxx, XX 00000
Xxxxx 0, 0000
XxxxXxxxx Financial, Inc.
0000 Xxxxx Xxxxxxxxx Xxxxxxxxx., Xxxxx 000
Xxxxx, Xxxxxxx 00000
Gentlemen:
As you know, Redline and GunnAllen have entered into an agency
agreement dated March 1, 2001, as amended, (the "Agreement") pursuant to which
GunnAllen is acting as Redline's agent in the sale of units of preferred stock
and warrants in the Offering, as that term is defined in the Agreement, pursuant
to a Confidential Private Placement Memorandum dated March 20, 2001 (the
"Memorandum"). The Memorandum provides that the Offering was to terminate on the
date 90 days from the date of the Memorandum (which was on June 18, 2001),
subject to up to two 30-day extensions. Redline and GunnAllen previously agreed
to extend the term of the Offering and the Agreement through and including
October 16, 2001, and then again to December 15, 2001. The Agreement and the
Offering expired by their terms on December 15, 2001.
Redline and GunnAllen are committed to their collective capital-raising
efforts and hereby agree, effective December 15, 2001, to extend the term of the
Agreement and of the Offering through and including May 31, 2002. Until an
updated Memorandum is completed, Redline and GunnAllen agree to provide each
investor purchasing Units in the Offering after December 15, 2001 with
Supplement No. 3 to the Memorandum, which will supercede and replace Supplement
Nos. 1 and 2. Thereafter, Redline and GunnAllen will provide each investor
purchasing Units in the Offering with the updated Memorandum. This letter amends
the terms of the Agreement and will be referred to as amendment number five to
the Agreement.
/s/ Xxxx Xxxxx
--------------------------------------------
Xxxx Xxxxx, President
Redline: Redline Performance Products, Inc.
Agreed to and accepted by:
GunnAllen: GunnAllen Financial, Inc.
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------
Its: Executive Vice President
-------------------------------------
