EXHIBIT 10.7
xXxxxx.xxx, Inc.
0000 Xxxxxxxxx Xxxxxxxxx
Xxxxxxxxx Xxxxx, Xxxxxxx 00000
As of November 17, 1999
Whale Securities Co., L.P.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
xXxxxx.xxx, Inc., (formerly Olas, Inc.) a Delaware corporation (the
"Company"), hereby confirms its agreement with you (the "Placement Agent") as
follows:
1. DESCRIPTION OF TRANSACTION. The Company will offer for sale
to a limited number of persons meeting certain criteria for "accredited
investor" status (as more fully described in the Confidential Private Offering
Memorandum dated September 1, 1999 and the exhibits annexed thereto
(collectively, the "Memorandum"), up to one hundred sixty eight (168) units of
the Company's securities (the "Units"), each Unit consisting of (i) twenty five
thousand (25,000) shares (the "Shares") of the common stock, par value $.001 per
share (the "Common Stock") and (ii) twelve thousand five hundred (12,500)
redeemable warrants (the "Warrants"), each to purchase one share of Common Stock
(collectively, the "Warrant Shares") at a price of $2.50 per Warrant Share,
subject to adjustment under certain circumstances (the "Offering"). The purchase
price for the Units shall be Fifty Thousand Dollars ($50,000) per Unit. The
Units, the Shares and the Warrant Shares are more fully described in the
Memorandum; capitalized words not defined herein shall have the meanings set
forth in the Memorandum.
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, 100 Unit Minimum/168 Unit Maximum" 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, 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. The Units will be offered and sold in reliance
upon the exemption from registration provided
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by 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 part of the Memorandum, together with such other documents
and instruments as are set forth in the Memorandum.
(c) SEGREGATION OF FUNDS. Each Subscriber for the Units shall
tender a check payable to "Whale Securities Co., L.P., as Placement
Agent for xXxxxx.xxx, Inc.," or wire transfer funds, in respect of the
purchase price of the Units subscribed for, which funds shall be held
in a non-interest-bearing special bank account (the "Special Account")
in a commercial bank in the City of New York designated by the
Placement Agent (the "Bank") as set forth in the Memorandum.
(d) CLOSING; TERMINATION OF OFFERING. If at least one hundred
(100) Units are subscribed for on or prior to November 17, 1999, an
initial closing of the offering (the "Initial Closing") shall occur as
soon as practicable after Subscription Agreements for, and funds in
respect of the purchase price of, such Units are received and accepted
by the Placement Agent 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
one hundred sixty eight (168) Units. All such sales must be completed
not later than December 1, 1999 (or such later date 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." The Company shall deliver to the Placement Agent on the Closing
Date, on behalf of the Subscribers, certificates representing the
Shares and Warrants included in the Units being purchased by the
Subscribers on such Closing Date pursuant to Section 1 of this
Agreement against payment therefor, after deducting the amounts set
forth in Section 4 below. In the event of termination of the offering
contemplated herein, this Agreement, other than Sections 10 and 11
hereof, shall be automatically terminated and neither party shall have
any further obligation to the other party under this Agreement other
than the Company's
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obligation to pay expenses as set forth in Section 10 of this Agreement
and to indemnify and provide contribution as set forth in Section 11 of
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%) of the
aggregate Gross Proceeds (as hereinafter defined) of the Units, payable
by deducting the sales commission from the Gross Proceeds received for
the Units on the Initial Closing Date and each Additional Closing Date
(of which Fifteen Thousand Dollars ($15,000) has been paid and will be
credited against amounts payable at the Initial Closing); and
(b) Up to 697,500 Warrants (the "Placement Agent Warrants")
each to purchase one share of Common Stock at an exercise price of
$2.50 per Warrant Share, exercisable for a period of five years
commencing on the Initial Closing Date, pursuant to the terms of a
warrant agreement (the "Placement Agent Warrant Agreement") as follows:
(a) 487,500 Placement Warrants for the sale of the first one hundred
(100) Units, (b) 140,000 additional Placement Warrants for the next
forty (40) Units sold, or a pro rata amount thereof (i.e., 1,400
Placement Warrants for each of the forty (40) Units sold); and (c)
70,000 additional Placement Warrants for the next twenty eight (28)
Units sold, or a pro rata amount thereof (i.e., 2,500 Placement
Warrants for each of the additional twenty eight (28) Units sold), in
each case, to be issued on each Closing Date in relation to the number
of Units sold on each date and in the names provided by the Placement
Agent. Immediately prior to the listing of the Warrants on the Nasdaq
SmallCap Market, a securities exchange or the OTC Bulletin Board, the
Company shall offer in writing to the holders of Placement Warrants the
option to exchange the Placement Warrants for an equal number of
Warrants, which will be listed with the Warrants.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND EDIETS.
The Company and eDiets (as defined in Section 8(a) hereof) represents and
warrants to, and agrees with, the Placement Agent that:
(a) Memorandum. The Company and eDiets have prepared the
Memorandum, which may be supplemented from time to time, which contains
information, accurate as of the date specified therein, of the kind
specified by applicable statutes and regulations, including without
limitation:
(i) Terms of the Offering;
(ii) A description of the Units, the Shares and the
Additional Shares (as defined in Section 5(i) hereof);
(iii) the Acquisition (as defined in Section 8(a)
hereof);
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(iv) A description of the business conducted by the
Company and eDiets;
(v) The financial condition of the Company and
eDiets;
(vi) Past material activities of the Company and
eDiets;
(vii) Commissions and compensation to be paid to the
Placement Agent in connection with the Offering;
(viii) Disclosure of material contracts, agreements
or other business arrangements, which affect or are related to
the business conducted by the Company and eDiets and to be
conducted by the Company;
(ix) 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
(x) Any appropriate legends and such other
information or material as the Placement Agent may deem
necessary or desirable to be included therein.
(xi) 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 required under 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 organized and validly existing and in good standing under the laws
of the State of Delaware, with full power and authority, corporate and
other, 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
has no subsidiaries or other equity interests in any entity other than
eDiets. Each of the Company and eDiets 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
would have a material adverse effect on the financial condition,
results of operations, business or properties of the
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Company and eDiets taken as a whole. Unless the context otherwise
requires, all references to the "Company" in this Agreement shall
include eDiets. The term "Olas" is sometimes used herein to refer to
Olas, Inc. prior to the Acquisition. EDiets has full power and
authority, corporate and other, and all Permits (defined hereafter)
necessary 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 owns all of the issued and outstanding shares of capital
stock of eDiets, free and clear of any security interests, liens,
encumbrances, claims and charges, and all of such shares have been duly
authorized and validly issued and are fully paid and non-assessable.
Except as described in the Memorandum or the letter agreement dated
November 5, 1999 amending the Merger Agreement (the "November 5, 1999
Letter"), there are no options or warrants for the purchase of, or
other rights to purchase, or outstanding securities convertible into or
exchangeable for, any capital stock or other securities of eDiets.
(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 authorization, approval, consent,
order, registration, certification, license or permit (collectively,
"Permits") of any court or governmental agency or body, is required for
the valid authorization, issuance, sale and delivery of the Units, the
Shares, the Warrants or the Placement AgentWarrants to the Placement
Agent and/or the Subscribers and the consummation by the Company of the
transactions contemplated by this Agreement, the Warrants, the
Subscription Agreements, the Registration Rights Agreements between the
Company and the Subscribers and the Placement Agent, a form of which is
attached as Exhibit D to the Memorandum (the "Registration Rights
Agreements") and the Placement Agent Warrant Agreement.
(e) CORPORATE AUTHORIZATION. Each of the Company and eDiets
has full power and authority, corporate and other, to execute, deliver
and perform this Agreement and to consummate the transactions
contemplated hereby. The Company has full power and authority,
corporate and other, to execute, deliver and perform the Subscription
Agreements, the Warrants, the Registration Rights Agreements, the
Placement Agent Warrant Agreement and the Placement Agent Warrants, and
to consummate the transactions contemplated thereby. The execution,
delivery and performance of this Agreement, the Warrants, the
Registration Rights Agreements, the Subscription Agreements, the
Placement Agent Warrant Agreement and the Placement Agent Warrants, the
consummation by the Company of the transactions herein and therein
contemplated and the compliance by the Company with the terms of this
Agreement, the Warrants, the Registration Rights Agreements, the
Subscription Agreements, the Placement Agent Warrant Agreement and the
Placement Agent Warrants and the issuance and sale of the Units, have
been duly authorized by all necessary corporate action, and each of
this agreement, the Warrants, the Registration Rights Agreements, the
Subscription Agreements, the Placement Agent Warrant Agreement and the
Placement Agent Warrants has been duly executed and delivered by the
Company. Each of this Agreement, the Warrants, the Registration Rights
Agreement, the Subscription Agreement and the Placement Agent Warrant
Agreement
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is a valid and binding obligation of the Company, enforceable in
accordance with its terms, enforceable in accordance with its terms, in
each case, 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 indemnification and contribution provisions set forth hereunder and
hereunder may be limited by the federal securities laws of the United
States or state securities laws or public policy relating thereto. The
execution, delivery and performance of this Agreement, the Warrants,
the Registration Rights Agreement, the Subscription Agreements, the
Placement Agent Warrant Agreement and the Placement Agent Warrants by
the Company, the consummation by the Company of the transactions herein
and therein contemplated and the compliance by the Company with the
terms of this Agreement, the Warrants, Registration Rights Agreement,
the Subscription Agreements, the Placement Agent Warrant Agreement and
the Placement Agent Warrants (i) result in any violation of the
Certificate of Incorporation or By-Laws, each as amended, of the
Company or eDiets; (ii) result in a breach of or conflict with any of
the terms or provisions of, or constitute a default under, or result in
the modification or termination of, or result in the creation or
imposition of any lien, security interest, charge or encumbrance upon
any of the properties or assets of the Company or eDiets pursuant to,
any indenture, mortgage, note, contract, commitment or other agreement
or instrument to which the Company or eDiets is a party or by which the
Company or eDiets or any of their respective properties or assets are
or may be bound or affected; (iii) 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
eDiets or any of their respective properties or businesses; or (iv)
have any adverse effect on any Permits necessary for the Company or
eDiets, to own or lease, as the case may be, and operate any of its
properties or conduct its business or on the ability of the Company or
eDiets to make use thereof.
(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 under the caption
"Capitalization". Immediately prior to the Initial Closing, the Company
will have a duly authorized and outstanding capitalization as set forth
in the Memorandum under the caption "Capitalization" on a pro forma
basis after giving effect to the Acquisition. The outstanding shares of
Common Stock and outstanding options and warrants to purchase shares of
Common Stock have been duly authorized and validly issued. All such
outstanding shares of Common Stock are fully paid and nonassessable.
The outstanding options and warrants to purchase shares of Common Stock
constitute the valid and binding obligations of the Company,
enforceable in accordance with their terms. None of such outstanding
shares of Common Stock, options or warrants to purchase shares of
Common Stock have been issued in violation of the preemptive rights of
any security holder of the Company. None of the holders of such
outstanding shares of Common Stock is subject to personal liability
solely by reason of being such a holder. The offers and sales of such
outstanding shares of Common Stock and outstanding options and warrants
to purchase
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shares of Common Stock were at all relevant times either registered
under the Act and the applicable state securities or Blue Sky laws, or
exempt from such registration requirements. The authorized shares of
Common Stock and outstanding options and warrants to purchase shares of
Common Stock conform in all material respects to the descriptions
thereof contained in the Memorandum. Except as described in the
Memorandum, no holder of any of the Company's securities has any
rights, "demand", "piggyback" or otherwise, to have such securities
registered under the Act or applicable state securities laws. Except as
set forth in the Memorandum or the November 5, 1999 Letter, on the
Closing Date there will be no outstanding options or warrants for the
purchase of, or other outstanding rights to purchase, shares of Common
Stock or securities convertible into shares of Common Stock. The
issuance of the Shares, the Additional Shares, the Placement Agent
Shares, the Placement Agent Warrants, the Placement Agent Warrant
Shares and the Penalty Shares (as defined in the Registration Rights
Agreements) will not give any holder of any of the Company's
outstanding options, warrants, or other convertible securities or
rights to purchase shares of Common Stock, the right to acquire any
additional shares of Common Stock and/or the right to acquire shares of
Common Stock at a reduced price.
(g) AUTHORIZATION OF UNITS. The issuance and sale of the
Shares and Warrants as Units have been duly authorized. When the Shares
are issued and delivered in accordance with this Agreement, the Shares
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. The Shares will not be subject to the preemptive
rights of any security holder of the Company.
(h) AUTHORIZATION OF WARRANT SHARES, ADDITIONAL SHARES,
PLACEMENT AGENT WARRANTS, PLACEMENT AGENT WARRANT SHARES AND PENALTY
SHARES. The issuances of Warrant Shares, Additional Shares, Placement
Agent Warrants, the Placement Agent Warrant Shares and Penalty Shares
under the circumstances described in, and pursuant to the terms of,
this Agreement, the Warrants, the Subscription Agreement, Placement
Agent Warrant Agreement and Registration Rights Agreements, as the case
may be, have been duly authorized and, when issued and delivered in
accordance with the provisions of this Agreement, the Warrants, the
Subscription Agreement, the Placement Agent Warrant Agreement and
Registration Rights Agreements, as the case may be, Warrant Shares, the
Additional Shares, the Placement Agent Warrant Shares and Penalty
Shares 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, and the Placement Agent Warrants will
constitute the valid and binding obligations of the Company,
enforceable in accordance with their terms. None of the Warrant Shares,
the Additional Shares, the Placement Agent Warrant Shares and Penalty
Shares will be subject to the preemptive rights of any security holder
of the Company.
(i) NONCONTRAVENTION. Neither the Company nor eDiets is in
violation of, or in default under, (i) any term or provision of its
Certificate of Incorporation or By-Laws, each as amended; (ii) any term
or provision, or any financial
7
covenants, of any indenture, mortgage, contract, commitment or other
agreement or instrument to which it is a party or by which it or any of
its properties or business is or may be bound or affected; or (iii) 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 eDiets or any of their respective
properties or businesses. Each of the Company and eDiets owns,
possesses or has obtained all governmental and other Permits necessary
to own or lease, as the case may be, and to operate its properties and
to conduct its business or operations as currently conducted and all
such Permits are outstanding and in good standing, and there are no
proceedings pending or, to the Company's or eDiets' knowledge,
threatened, nor is there any basis therefore, seeking to cancel,
terminate or limit such Permits.
(j) LITIGATION. Except as set forth in the Memorandum or the
November 5, 1999 Letter there are no claims, actions, suits,
proceedings, arbitrations, investigations or inquiries before any
governmental agency, court or tribunal, domestic or foreign, or before
any private arbitration tribunal, pending, or, to the Company's or
eDiets, knowledge, threatened, against the Company or eDiets involving
the properties or business of the Company or eDiets, which, if
determined adversely to the Company or eDiets would, individually or in
the aggregate, have an adverse effect on the financial position,
results of operations, properties or business of the Company and eDiets
taken as a whole, or which question the validity of the outstanding
capital stock of the Company or eDiets or this Agreement, or of any
action taken or to be taken by the Company or eDiets pursuant to, or in
connection with, this Agreement, nor is there any basis for any such
claim, action, suit proceeding, arbitration, investigation or inquiry.
There are no outstanding orders, judgments or decrees of any court,
governmental agency or other tribunal specifically naming the Company
or eDiets and enjoining the Company or eDiets from taking, or requiring
the Company or eDiets to take, any action, or to which the Company or
eDiets or their respective properties or businesses is bound or subject
which would be material to the Company and eDiets taken as a whole.
(k) FINANCIAL STATEMENTS. The financial statements and
schedules and notes thereto included in the Memorandum present fairly
the financial position of the Company and eDiets , as the case may be,
as of the dates thereof, and the results of operations and changes in
financial position of the Company and eDiets, as the case may be, for
the periods indicated therein, are in conformity with generally
accepted accounting principles applied on a consistent basis throughout
the periods involved, except as otherwise stated in the Memorandum.
(l) LIABILITIES. Except as and to the extent reflected or
reserved against in the financial statements of the Company included in
the Memorandum or as otherwise described in the Memorandum, neither the
Company nor eDiets as at June 30, 1999, had any material liabilities,
debts, obligations or claims asserted against it, whether accrued,
absolute, contingent or otherwise, and whether due or to become due,
including, but not limited to, liabilities on account of taxes, other
governmental charges
8
or lawsuits brought subsequent to such date. Other than as described in
the Memorandum, subsequent to June 30, 1999, neither the Company nor
eDiets has incurred liabilities or debts or obligations of any nature
whatsoever, other than those incurred in the ordinary course of its
business which are not material to its business, financial condition or
operating results.
(m) TAXES. Each of the Company and eDiets has filed all
federal, state, municipal and local tax returns (whether relating to
income, sales, franchise, withholding, real or personal property or
other types of taxes) required to be filed under the laws of the United
States and applicable states or has duly obtained extensions of time
for the filing thereof, and has paid in full all taxes which have
become due pursuant to such returns or claimed to be due by any taxing
authority other than those being contested in good faith; and the
provisions for income taxes payable, if any, shown on the financial
statements contained in the Memorandum are sufficient for all accrued
and unpaid foreign and domestic taxes, whether or not disputed, and for
all periods to and including the dates of such financial statements.
Each of the Company and eDiets believes that each of the tax returns
heretofore filed by it correctly and accurately reflects the amount of
its tax liability thereunder. Each of the Company and eDiets has
withheld, collected and paid all other levies, assessments, license
fees and taxes to the extent required and, with respect to payments, to
the extent that the same have become due and payable. Except as
disclosed in writing to the Placement Agent, neither the Company nor
eDiets has executed or filed with any taxing authority, foreign or
domestic, any agreement extending the period for assessment or
collection of any income taxes nor is a party to any pending action or
proceeding by any foreign or domestic governmental agency for
assessment or collection of taxes; and no claims for assessment or
collection of taxes have been asserted against the Company or eDiets.
(n) CONDUCT OF BUSINESS. Since the respective dates as of
which information is given in the Memorandum, neither the Company nor
eDiets has (i) incurred any obligation or liability (absolute or
contingent), except obligations and liabilities incurred in the
ordinary course of the operation of business of the Company or eDiets,
as the case may be, as carried on at and prior to such date; (ii)
canceled, without payment in full, any notes, loans or other
obligations receivable or other debts or claims held by it other than
in the ordinary course of business; (iii) sold, assigned, transferred,
abandoned, mortgaged, pledged or subjected to lien any of its
properties, tangible or intangible, or rights under any contract,
permit, license, franchise or other agreement other than sales or other
dispositions of goods or services in the ordinary course of business at
customary terms and prices; (iv) increased compensation payable to any
of its officers, directors or other employees (including in the term
"compensation," salaries, fringe benefits, pensions, profit
participations and payments or benefits of any kind whatsoever) other
than in the ordinary course of business; (v) entered into any line of
business other than that conducted by it on such date or entered into
any transaction not in the ordinary course of its business; (vi)
conducted any line of business in any manner except by transactions
customary in the operation of its business
9
as conducted on such date; or (vii) declared, made or paid or set aside
for payment any cash or non-cash distribution on any shares of its
capital stock.
(o) PROPERTIES. Neither the Company nor eDiets owns any real
property. Each of the Company and eDiets has good title to all material
personal property (tangible and intangible) owned by it, free and clear
of all security interests, charges, mortgages, liens, encumbrances and
defects, except such as are described in the Memorandum or such as do
not materially affect the value or transferability of such property and
do not interfere with the use of such property made, or proposed to be
made, by the Company or eDiets. The leases, licenses or other contracts
or instruments under which the Company or eDiets leases, holds or is
entitled to use any property, real or personal, are valid, subsisting
and enforceable, only with such exceptions as are not material and do
not interfere with the use of such property made, or proposed to be
made, by the Company or eDiets and all rentals, royalties or other
payments accruing thereunder which became due prior to the date of this
Agreement have been duly paid, and neither the Company nor eDiets is,
nor to the Company's or eDiets knowledge, is any other party in default
thereunder and, to the Company's and eDiets knowledge, no event has
occurred which, with the passage of time or the giving of notice, or
both, would constitute a default thereunder. Neither the Company nor
eDiets has received notice of any violation of any applicable law,
ordinance, regulation, order or requirement relating to its owned or
leased properties.
(p) CONTRACTS. Each contract or other instrument (however
characterized or described) to which the Company or eDiets is a party
or by which their properties or business is or may be bound or affected
and to which reference is made in the Memorandum has been duly and
validly executed by the Company or eDiets, as the case may be, and,
assuming that such contracts or other instruments have been properly
executed by parties other than the Company and eDiets is in full force
and effect in all material respects and is enforceable against the
parties thereto in accordance with its terms, and none of such
contracts or instruments has been assigned by the Company or eDiets, as
the case may be, and except as described in the memorandum, neither the
Company nor eDiets is, nor to the best of the Company's and eDiets'
knowledge, is any other party in default thereunder and, to the best of
the Company's nor eDiets, knowledge, no event has occurred which, with
the lapse of time or the giving of notice, or both, would constitute a
default thereunder.
To the best of the Company's knowledge, none of the material
provisions of such contracts or instruments violates any existing
applicable law, rule, regulation, judgment/order or decree of any
governmental agency or court having jurisdiction over the Company or
eDiets or any of their respective assets or businesses.
(q) BENEFIT PLANS. Except as set forth in or contemplated by
the Memorandum or as set forth in Schedule 5(q) attached hereto,
neither the Company nor eDiets has employee benefit plans (including,
without limitation, profit sharing and
10
welfare benefit plans) or deferred compensation arrangements that are
subject to the provisions of the Employee Retirement Income Security
act of 1974.
(r) CONTRIBUTIONS. Neither the Company nor eDiets has directly
or indirectly, at any time W made any contributions to any candidate
for political office, or failed to disclose fully any such contribution
in violation of law or (ii) made any payment to any state, federal or
foreign governmental officer or official, or other person charged with
similar public or quasi-public duties, other than payments or
contributions required or allowed by applicable law.
(s) REG D QUALIFICATION; OFFERING DOCUMENTS. Assuming the
representations and warranties of the Placement Agent contained herein
and of the purchasers contained in the Subscription Documents are true
and correct, the offer and sale of the Units by the Company has
satisfied and on. the Closing Date will have satisfied, all of the
requirements of Reg D and the Company is not disqualified from the
exemption under Rule 505 contained in Reg D by virtue of the
disqualifications contained in Rule 505(b)(2)(iii), or the exemption
under Reg D by virtue of the disqualification contained in Rule 507.
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 and with the
requirements of all other published rules and regulations of the
Securities and Exchange Commission currently in effect relating to
"private offerings."
(t) FINDER'S FEE. Other than any payments to the Placement
Agent hereunder, neither the Company, Olas nor eDiets has incurred any
liability for any finder's fees or similar payments in connection with
the transactions herein contemplated.
(u) INTANGIBLES. Each of the Company and eDiets owns or
possesses or can acquire on reasonable terms adequate and enforceable
rights to use all trademarks, service marks, copyrights, rights, trade
secrets or other confidential information currently used in the conduct
of its respective business as described in the Memorandum (collectively
the "Intangibles"); except as disclosed in the Memorandum, to the
Company's and eDiets' knowledge, neither the Company nor eDiets has
infringed nor is infringing upon the rights of others with respect to
the Intangibles; and neither the Company nor eDiets has received any
notice that it has or may have infringed or is infringing upon the
rights of others with respect to the Intangibles; and neither the
Company nor eDiets has not received any notice of conflict with the
asserted rights of others with respect to the Intangibles which could,
singly or in the aggregate, materially adversely affect its business,
financial condition or results of operations and neither the Company
nor eDiets knows of any basis therefore; and, to the Company's and
eDiets, knowledge, no others have infringed upon the Intangibles.
11
(v) LABOR RELATIONS. To the best of the Company's and eDiets,
knowledge, no labor problem exists with the Company's or eDiets'
employees or is imminent which could adversely affect the Company and
eDiets.
(w) INSURANCE. Each of the Company and eDiets has adequately
insured its properties against loss or damage by fire or other casualty
and maintains, in amounts which it deems, in good faith, to be
adequate, such other insurance, including but not limited to, liability
insurance, as is usually maintained by companies engaged in the same or
similar businesses.
(x) ENCUMBRANCES. Concurrently with or prior to the execution
hereof, each of the Company and eDiets has provided the Placement Agent
with the results of UCC, lieu and title searches in all appropriate
jurisdictions.
(y) NO ADVERSE CHANGE. Since the respective dates as of which
information is given in the Memorandum and the Company's and eDiets
latest financial statements, neither the Company nor eDiets has
incurred any material liability or obligation, direct or contingent, or
entered into any material transaction, whether or not in the ordinary
course of business, and has not sustained any material loss or
interference with its business from fire, storm, explosion, flood or
other casualty, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree; and since the
respective dates as of which information is given in the Memorandum,
there have not been, and prior to the Closing Date, except as disclosed
in the Memorandum there will not be, any changes in the capital stock
or any material increases in the long-term debt of the Company or any
material increases in the long-term debt of eDiets or any material
adverse change in or affecting the general affairs, management,
financial condition, shareholders' equity, or results of operations of
the Company or eDiets, otherwise than as set forth or contemplated in
the Memorandum.
(z) REGULATORY MATTERS. Each of the Company and eDiets is in
all material respects in compliance with the provision of all
applicable laws, rules and regulations.
(aa) DUE DILIGENCE. Each of the Company's and eDiets response
to the Corporate Review Memorandums of Xxxxxx Xxxxxxxxxx LLP, dated
June 29, 1999, is true, complete and correct in all material respects
as of the date hereof and each Closing Date.
(bb) ACQUISITION AGREEMENT. The representations and warranties
of each of the Company, eDiets and the stockholder of eDiets contained
in the Acquisition Agreement are true, accurate and complete as of the
date hereof and all conditions to the consummation of the Acquisition
(other than the Initial Closing) have been satisfied.
12
(cc) Any certificate signed by an officer of the Company or
eDiets and delivered to the Placement Agent or its counsel, or to
counsel for the Placement Agent, shall be deemed to be a representation
and warranty by the Company or eDiets, as the case may be, to the
Placement Agent as to the matters covered thereby.
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. No copies of the Memorandum,
or any exhibit thereto, or any material prepared by the Company in
connection with the Offering will be given without the prior written
permission of the Placement Agent, by the Company or its counsel or by
any principal or agent of the Company to any person not a party to this
Agreement, unless such person is a director or principal shareholder
of, or directly employed by, the Company.
(b) STATE SECURITIES REGISTRATION. The Company will provide
Placement Agent's counsel with all information which such counsel
determines to be necessary and will otherwise cooperate with such
counsel, to permit such counsel to take all necessary action and file
all necessary forms and documents in order to qualify or register the
Units for sale under the securities laws of the states in which offers
or sales will be made or to take any necessary action and file any
necessary forms which are required to obtain an exemption from such
qualification or registration in such jurisdictions. The Company will
promptly advise the Placement Agent:
(i) If any securities regulator of any state shall
make a request or suggestion of or to the Company of any
amendment to the Memorandum or any registration materials or
for any additional information, including the nature and
substance thereof; and
(ii) Of the issuance of a stop order suspending the
qualification of the Units for sale in any state, including
the initiation or threatening of any proceeding for such
purpose, and the Company will use its best efforts to prevent
the issuance of such a stop order, or if such an order shall
be issued, to obtain the withdrawal thereof at the earliest
practicable date.
13
The Company will provide the Placement Agent for
delivery to all offerees and purchasers and their
representatives any additional information, documents and
instruments which the Placement Agent shall deem necessary to
comply with the rules, regulations and judicial and
administrative interpretations in those states and
jurisdictions where the Units are to be offered for sale or
sold. The Company will file all post-offering forms, documents
or materials and take all other actions required by states in
which the Units have been offered or sold. The Placement Agent
will not make offers or sales of the Units in any jurisdiction
in which the Units have not been qualified or registered, or
are not exempt from such qualification or registration.
(c) USE OF PROCEEDS. The Company will use the net proceeds of
the Offering in the manner set forth in the Memorandum and, except as
set forth in the Memorandum, the Company will not use any portion of
the proceeds derived from the proposed offering to repay any
indebtedness for borrowed monies.
(d) 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" as set forth in the Memorandum.
(e) RESTRICTION ON ISSUANCE OF SECURITIES. During the six (6)
month period commencing on the Initial Closing Date, without the prior
written consent of the Placement Agent, (i) neither the Company nor any
of its officers, directors or security holders (other than security
holders of Olas prior to the acquisition who were not officers,
directors or beneficial owners of 52~5 or more of the outstanding
common stock of Olas prior to the Acquisition) will sell or otherwise
dispose of any securities of the Company and (ii) no holders of
registration rights relating to securities of the Company will exercise
any registration rights. The Company will not file a registration
statement on Form S-8 (or any similar form) during the six (6) month
period commencing on the Initial Closing Date. The Company will deliver
to the Placement Agent, the agreements of its officers, directors and
security holders (other than security holders of Olas prior to the
acquisition who were not officers, directors or beneficial owners of 5%
or more of the outstanding common stock of Olas prior to the
Acquisition) to this effect.
(f) BOARD OF DIRECTORS COMPOSITION AND MEETINGS. As of the
Initial Closing Date and until the earlier of the completion of an
initial public offering of the Company's securities or one (1) year
from the Initial Closing Date, the Company's Board of Directors shall
be comprised five (5) members consisting of Xxxxx Xxxxxx, Xxxxx Xxxx,
Xxxxxxx Xxxx and two (2) designees of eDiets (who must be unaffiliated
with the Company or with the management or founders of eDiets or the
Company (e.g., not an employee or officer of the Company or eDiets or a
relative of an employee or officer of the Company or eDiets) who were
reasonably satisfactory to the Placement
14
Agent. The Company will cause its Board of Directors to meet, either in
person or telephonically, a minimum of four (4) times per year.
(g) EXECUTIVE COMMITTEE. As of the Initial Closing Date, the
Board of Directors shall have (i) established an executive committee,
(ii) appointed Messrs. Xxxxx Xxxxxx, Xxxxx Xxxx and Xxxxxxx Xxxx to
serve as the committee's only members for a period of six (6) months,
and (iii) granted to each committee member options to purchase 100,000
shares of Common Stock at an exercise price of $2.00 per share.
(h) EMPLOYEE STOCK OPTION PLAN. The Company will not grant any
options under its employee stock options plan with an exercise price
less than the greater of $2.00 per share and the market price per share
on the date of grant.
(i) REGISTRATION UNDER SECTION 12(G) OF THE EXCHANGE ACT AND
LISTING ON NASDAQ . If the Common Stock has not been registered under
the provisions of Section 12(g) of the Securities Exchange Act of 1934
and listed for trading on Nasdaq SmallCap Market within six (6) months
following the Initial Closing Date, the Company shall issue to each
holder of Warrants a number of shares of Common Stock equal to one-half
of the Warrants held by such holder (collectively, the "Additional
Shares") ; provided that if the Final Closing Date takes place more
than 45 days after the Initial Closing Date, the six (6) months shall
be increased by the number of days which elapse between the 45th day
after the Initial Closing Date and the Final Closing Date. The Company
will apply to list the Warrants on the Nasdaq SmallCap Market or any
securities exchange or the OTC Bulletin Board on which the Company
applies to list the Common Stock and will use customary reasonable
efforts to cause the Warrants to be so listed.
(j) TRANSFER AGENT FOR THE COMMON STOCK. The Company will
provide a transfer agent and registrar for the Common Stock, which may
be a single entity, not later than the earliest of (i) the registration
of the Common Stock under Section 12 (g) of the Exchange Act, (ii)
listing of the Common Stock for trade on Nasdaq or (iii) the effective
date of the Mandatory Registration Statement (as defined in the
Registration Rights Agreements).
7. REPRESENTATIONS AND WARRANTIES OF THE PLACEMENT AGENT. The
Placement Agent represents and warrants to, and agrees with, the Company that:
(a) NO DISQUALIFICATION. The Placement Agent is not
disqualified from the exemption under Rule 506 contained in Reg D by
virtue of the disqualifications contained in Rule 507.
(b) 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 affiliates or representatives in connection with the
offer and sale of any of the Xxxxx,
00
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.
(c) ACCREDITED INVESTORS ONLY. In connection with the sale of
the Units, the Placement Agent will solicit offers to buy the Units
only from, and will offer to sell the Units only to Accredited
Investors who make the representations contained in, and execute and
return to the Company, a Subscription Agreement and a Confidential
Purchaser Questionnaire in the forms attached as exhibits to the
Memorandum.
(d) DELIVERY OF MEMORANDUM. Prior to or simultaneously with
the sale by the Company to any purchaser of any of the Units pursuant
hereto, the Placement Agent 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).
(e) RELIANCE ON REPRESENTATIONS. The Company and, for purposes
of the opinions to be delivered to the Placement Agent pursuant to
Section 8(g) hereof, counsel to the Company will rely upon the accuracy
and truth of the foregoing representations and the Placement Agent
hereby consents to such reliance.
(f) COMPLIANCE WITH THE ACT AND THE EXCHANGE ACT. In
connection with the offer and sale of the Units, the Placement Agent
agrees to comply with the applicable requirements under the Act and the
Exchange Act, and the published rules and regulations of the Securities
and Exchange Commission thereunder, including Regulation D.
8. CONDITIONS TO PLACEMENT AGENT'S OBLIGATIONS. The
obligations of the Placement Agent hereunder will be subject to the accuracy of
the representations and warranties of the Company herein contained as of the
date hereof and as of each Closing Date, to the performance by the Company of
its obligations hereunder and to the following additional conditions:
(a) ACQUISITION OF EDIETS. The Company shall have completed
the acquisition of all of the outstanding capital stock of xXxxxx.xxx,
Inc. ("eDiets") , a Delaware corporation, through the merger of eDiets
Acquisition Corp. with and into eDiets on the terms and conditions set
forth in the Agreement and Plan of Merger and Reorganization (the
"Acquisition Agreement") , dated August 30, 1999, by and among the
Company, eDiets and the stockholder of eDiets (the "Acquisition"). The
Company shall have changed its name from "Olas, Inc." to "xXxxxx.xxx,
Inc." and eDiets shall have changed its name from "xXxxxx.xxx, Inc." to
"eDiets, Inc."
16
(b) DUE QUALIFICATION OR EXEMPTION. (i) The Offering will
become qualified or be exempt from qualification under the securities
laws of the several states pursuant to Section 6(b) above not later
than the Closing Date, and (ii) at the Closing Date no stop order
suspending the sale of the Units shall have been issued, and no
proceeding for that purpose shall have been initiated or threatened;
(c) NO MATERIAL MISSTATEMENTS. The Placement Agent will not
have notified the Company that the Blue Sky qualification materials or
the Memorandum, or any supplement thereto, contains an untrue statement
of a fact which in its opinion is material, or omits to state a fact,
which in its opinion is material and is required to be stated therein,
or is necessary to make the statements therein not misleading;
(d) COMPLIANCE WITH AGREEMENTS. The Company will have complied
in all material respects with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or
prior to the Closing Date;
(e) CORPORATE ACTION. The Company will have taken all
necessary corporate action, including, without limitation, obtaining
the approval of the Company's board of directors, for the execution and
delivery of this Agreement, the performance by the Company of its
obligations hereunder and the commencement of the Offering;
(f) OFFICER'S CERTIFICATE. At each Closing Date, the Company
will have delivered a certificate of its Chairman of the Board or
President to the effect set forth in the preamble and subparagraphs (c)
and (d) of this Section 8;
(g) OPINION OF COUNSEL. On each Closing Date, the Placement
Agent will have received from (i) counsel to the Company ("Company
Counsel"), a signed opinion, dated as of such Closing Date, covering
the matters and language set forth in the form attached as Exhibit A
hereto and (ii) Nason, Yeager, Gerson, White & Xxxxx, P.A. ("eDiets
Counsel"), a signed opinion, dated as of such Closing Date, covering
the matters and language set forth in the form attached as Exhibit B
hereto.
In rendering its opinion, Company Counsel and eDiets Counsel
may rely upon (i) the certificates of government officials and officers
of the Company as to matters of fact; provided that Company Counsel and
eDiets counsel shall state that they have no reason to believe, and do
not believe, that they are not justified in relying upon such opinions
or such certificates of government officials and officers of the
Company as to matters of fact, as the case may be.
The opinion letter delivered pursuant to this Section 8(g) of
the Placement Agent Agreement shall state that any opinion given
therein qualified by the phrase "to the best of our knowledge" is being
given by Company Counsel after due investigation of the matters therein
discussed.
17
(h) DELIVERY OF AGREEMENTS BY THE COMPANY. The Company will
have duly executed and delivered the Registration Rights Agreements,
the Subscription Agreements, the Shares and Warrants comprising the
Units sold on each Closing Date, the Placement Agreement Warrant
Agreement (on the Initial Closing Date) and the Placement Agreement
Warrants.
(i) DELIVERY OF AGREEMENTS OF OFFICERS, DIRECTORS AND
STOCKHOLDERS. The Company will have delivered to the Placement Agent on
or prior to the Initial Closing Date, the agreements of its officers,
directors and stockholders to the effect of the matters set forth in
Section 6(e) hereof.
9. CONDITIONS OF THE COMPANY'S OBLIGATIONS. The obligations of
the Company hereunder will be subject to the accuracy of the representations and
warranties of the Placement Agent contained herein as of the date hereof and as
of the Closing Date, to the performance by the Placement Agent of its
obligations hereunder and to the following additional conditions:
(a) APPROVAL OF INVESTORS. The Company shall have approved,
which approval shall not be unreasonably withheld, each purchaser of
Units;
(b) ABSENCE OF CERTAIN EVENTS. No stop order suspending the
sale of the Units will have been issued, and no proceeding for that
purpose will have been initiated or threatened; and
10. EXPENSES OF SALE. In addition to those items referred to
in Sections 4 hereof, the Company will pay or cause to be paid all costs and
expenses incident to the proposed sale of Units, whether or not the Offering is
consummated, including, without limitation, the fees, disbursements and expenses
of (a) its counsel and accountants, (b) preparing, printing, or otherwise
reproducing, and mailing, the Memorandum and other appropriate documents, and
any amendments or supplements thereto (all in such quantities as the Placement
Agent may require) , (c) registering or qualifying the Units for offer and sale
in the applicable states, as specified by the Placement Agent, or obtaining
exemptions therefrom, and the fees, expenses and disbursements of the Placement
Agent, including fees (up to a maximum of $7,500), expenses and disbursements of
Placement Agent's counsel, incurred in connection therewith, (d) all taxes, if
any, on the issuance of the Units, and (e) all other expenses relating to the
Offering.
18
11. Indemnification and Contribution.
(a) INDEMNIFICATION BY THE COMPANY AND EDIET. Each of the
Company and eDiets agrees, jointly and severally, to indemnify and hold
harmless the Placement Agent and each person, if any, who controls the
Placement Agent within the meaning of the Act or the Exchange Act
against any losses, claims, damages or liabilities, joint or several,
to which the Placement Agent or such controlling person may become
subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Memorandum, or in any Blue Sky
application or other document executed by the Company or eDiets
specifically for that purpose or based upon written information
furnished by the Company or eDiets filed in any state or other
jurisdiction in order to qualify any or all of the Units under the
securities laws thereof (any such application, document or information
being hereinafter called a "Blue Sky Application") or 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
to make the statements therein, in the light of the circumstances under
which they were made, not misleading; and will reimburse the Placement
Agent and each other indemnified person for any legal or other expenses
reasonably incurred by the Placement Agent or such controlling person
in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the Company and
eDiets will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with written
information furnished to the Company by the Placement Agent, with
respect to the Placement Agent, specifically for inclusion in the
Memorandum.
(b) INDEMNIFICATION BY THE PLACEMENT AGENT. The Placement
Agent agrees to indemnify and hold harmless the Company and each
person, if any, who controls the Company within the meaning of the Act
and the Exchange Act against any losses, claims, damages or
liabilities, joint or several, to which the Company or such controlling
person 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 any untrue statement or alleged untrue
statement of a material fact contained in the Memorandum or 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, in the light of the
circumstances under which they were made, not misleading; in each case
to the extent, 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, with respect to the Placement
Agent, specifically for inclusion in the Memorandum.
(c) PROCEDURE. Promptly after receipt by an indemnified party
under this Section 11 of notice of the commencement of any action, such
indemnified party
19
will, if a claim in respect thereof is to be made against any
indemnifying party under this Section 11, notify in writing the
indemnifying party of the commencement thereof; provided, however, that
the failure so to notify the indemnifying party will not relieve the
indemnifying party from any liability under this Section 11, except to
the extent it is materially prejudiced thereby. In case any such action
is brought against any indemnified party, and it notifies an
indemnifying party of the commencement thereof, the indemnifying party
will be entitled to participate therein, and to the extent that it may
wish, jointly with any other indemnifying party, similarly notified, to
assume the defense thereof, with counsel who shall be to the reasonable
satisfaction of such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party will not be liable
to such indemnified party under this Section 11 for any legal or other
expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation;
provided, however, that if, in the reasonable judgment of the
indemnified party or parties it is reasonable for the indemnified party
or parties to be represented by separate counsel, the indemnified party
shall have the right to employ a single counsel to represent the
indemnified parties who may be subject to liability arising out of any
claim in respect of which indemnity may be sought by the indemnified
parties thereof against the indemnifying party, in which event the fees
and expenses of such separate counsel shall be borne by the
indemnifying party. Any such indemnifying party shall not be liable to
any such indemnified party on account of any settlement of any claim or
action effected without the consent of such indemnifying party, which
consent shall not be unreasonably withheld.
(d) CONTRIBUTION. If the indemnification provided for in this
Section 11 is unavailable to any indemnified party in respect to any
losses, claims, damages, liabilities or expenses referred to therein,
then the indemnifying party, in lieu of indemnifying such indemnified
party, will contribute to the amount paid or payable by such
indemnified party, as a result of such losses, claims, damages,
liabilities or expenses (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company and eDiets on the
one hand, and the Placement Agent on the other hand, from the Offering,
or (ii) if the allocation provided by clause (i) above is not permitted
by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the
relative fault of the Company and eDiets on the one hand, and of the
Placement Agent on the other hand, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities
or expenses as well as any other relevant equitable considerations. The
relative benefits received by the Company and eDiets on the one hand,
and the Placement Agent on the other hand, shall be deemed to be in the
same proportion as the total proceeds from the Offering (net of sales
commissions, but before deducting expenses) received by the Company and
eDiets, bear to the commissions received by the Placement Agent. The
relative fault of the Company and eDiets on the one hand, and the
Placement Agent on the other hand, will be determined with reference
to, among other things, whether the untrue or alleged untrue statement
of a material fact or
20
the omission to state a material fact relates to information supplied
by the Company or eDiets, and its relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The amount payable by a party as a result of the losses,
claims, damages, liabilities or expenses referred to above will be
deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending
any action or claim.
(e) EQUITABLE CONSIDERATIONS. The Company, eDiets and the
Placement Agent agree that it would not be just and equitable if
contribution pursuant to this Section 11 were determined by pro rata
allocation or by any other method of allocation which does not take
into account the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the provisions of this
Section 11, 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.
(f) PLACEMENT AGENT'S LIABILITY. Notwithstanding anything
contained in this Section 11 to the contrary, in no event shall the
amount for which the Placement Agent may be liable under this Section
11 exceed the amount which is paid to and received by the Placement
Agent pursuant to Section 4 (a) of this Agreement as compensation for
its services hereunder.
(g) INFORMATION WITH RESPECT TO THE PLACEMENT AGENT. The
Company and eDiets hereby acknowledge and agree that for all purposes
of this Section 11, the only information furnished to the Company or
eDiets by or on behalf of the Placement Agent specifically for
inclusion in this Memorandum is the information set forth in the
Memorandum under the caption "Plan of Distribution."
12. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVER. All
representations, warranties and agreements of the Company, eDiets 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, eDiets or any person who controls the Company or eDiets within the
meaning of the Act, and will survive delivery of the securities constituting the
Units hereunder and any termination of this Agreement.
13. NOTICES. Any notice hereunder shall be in writing and
shall be effective when delivered in person, or the day delivered if sent by
courier or mailed by certified or registered mail, postage prepaid, return
receipt requested (regardless of whether or not delivery is refused) , to the
appropriate party or parties, at the following addresses: if to the Placement
Agent, to Whale Securities Co., L.P., 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Xx. Xxxxxxx X. Xxxxxxx, Chairman, with a copy to Xxxxxx
Xxxxxxxxxx LLP, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Xxxxxx X. Xxxxxxx, Esq.; if to the Company, to Olas Inc., 000 Xxxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention:
21
Xx. Xxxxx Xxxx, Chief Executive Officer, with a copy to Xxxxxx Xxxxxxxxxx LLP,
000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx X. Xxxxxxx,
Esq.; if to the Company or eDiets, to xXxxxx.xxx, Inc., 0000 Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxxx Xxxxx, Xxxxxxx 00000, Attention: Xx. Xxxxx Xxxxxx, Chairman
and Chief Executive Officer, with a copy to Nason, Yeager, Gerson, White &
Xxxxx, P.A., Mellon United National Bank Tower, 1645 Palm Beach Xxxxx Xxxxxxxxx,
Xxxxx 0000, Xxxx Xxxx Xxxxx, Xxxxxxx 00000, Attention: Xxxx Xxxxxxx, Esq.; or,
in any case, to such other address as the parties may hereinafter designate by
like notice.
14. PARTIES. This Agreement will inure to the benefit of and
be binding upon the Placement Agent, the Company, eDiets 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 11(a) and 11(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.
15. 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.
16. 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.
17. 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.
18. 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.
19. 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 thereto 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.
22
20. 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.
21. LAW. This Agreement will be deemed to have been made and
delivered in New York City and will be governed as to validity, interpretation,
construction, effect and in all other respects by the internal laws of the State
of New York. Each of the Company and eDiets (a) agrees that any legal suit,
action or proceeding arising out of or relating to this Agreement will be
instituted exclusively in New York State Supreme Court, County of New York, or
in the United States District Court for the Southern District of New York, (b)
waives any objection which it may have now or hereafter to the venue of any such
suit, action or proceeding, and (c) irrevocably consents to the jurisdiction of
the New York State Supreme Court, County of New York and the United States
District Court for the Southern District of New York in any such suit, action or
proceeding. Each of the Company and eDiets 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 New York State Supreme Court, County of New York or
in the United States District Court for the Southern District of New York and
agrees that service of process upon it, mailed by certified mail to its address
will be deemed in every respect effective service of process upon it, in any
suit, action or proceeding.
23
If the foregoing correctly sets forth our understanding,
please so indicate in the space provided below for that purpose. Upon such
execution by you and delivery thereof to us (which may be by facsimile), this
letter will constitute a binding agreement between us in accordance with its
terms.
XXXXXX.XXX, INC.
By: /S/ XXXXX X. XXXXXX
-----------------------------
Name: Xxxxx X. Xxxxxx
Title: Chairman and Chief
Executive Officer
CONFIRMED AND ACCEPTED:
WHALE SECURITIES CO., L.P.
By: Whale Securities Corp.,
General Partner
By: /S/ XXXXXXX X. XXXXXXX
--------------------------------
Xxxxxxx X. Xxxxxxx,
Chairman
24
EXHIBIT A
(a) The Company is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware. To the
best of Company Counsel's knowledge, the Company has no subsidiaries or other
equity interest in any entity other than eDiets. To the best of Company
Counsel's knowledge, prior to the Acquisition, the Company was not actively
engaged in any material business activities. All references to the "Company" in
this opinion specifically excludes eDiets.
(b) The Company has full power and authority, corporate and
other, to execute, deliver and perform the Placement Agent Agreement and to
consummate the transactions contemplated thereby. The Company has full corporate
power and authority, corporate to execute, deliver and perform the Subscription
Agreements, the Warrants, the Registration Rights Agreements, the Placement
Agent Warrant Agreement and the Placement Agent Warrants, and to consummate the
transactions contemplated thereby. The execution, delivery and performance of
the Placement Agent Agreement, the Subscription Agreements, the Warrants, the
Registration Rights Agreements, the Placement Agent Warrant Agreement and the
Placement Agent Warrants by the Company, the consummation by the Company of the
transactions therein contemplated, the compliance by the Company with the terms
of the Placement Agent Agreement, the Subscription Agreements, the Warrants, the
Registration Rights Agreements, the Placement Agent Warrant Agreement and the
Placement Agent Warrants and the issuance and sale of the Units have been duly
authorized by all necessary corporate action, and each of the Placement Agent
Agreement, the Subscription Agreements, the Warrants, the Registration Rights
Agreements, the Placement Agent Warrant Agreement and the Placement Agent
Warrants have been duly executed and delivered by the Company. Each of the
Placement Agent Agreement, the Subscription Agreements, the Warrants, the
Registration Rights Agreements, and the Placement Agent Warrant Agreement
(assuming for the purposes of this opinion that each is valid and binding upon
the other party thereto) is the valid and binding obligation of the Company,
enforceable in accordance with their respective terms, enforceable in accordance
with its terms, in each case, subject, as to enforcement of remedies, to
applicable bankruptcy, insolvency, reorganization, moratorium and other similar
laws affecting the rights of creditors generally and the discretion of courts in
granting equitable remedies and except that enforceability of the
indemnification provisions and the contribution provisions set forth herein may
be limited by the federal securities laws of the United States or public policy
underlying such laws.
(c) The execution, delivery and performance of the Placement
Agent Agreement, the Subscription Agreements, the Warrants, the Registration
Rights Agreements, the Placement Agent Warrant Agreement and the Placement Agent
Warrants by the Company, the consummation by the Company of the transactions
therein contemplated and the compliance by the Company with the terms of the
Placement Agent Agreement, the Subscription Agreements, the Warrants, the
Registration Rights Agreements, the Placement Agent Warrant Agreement and the
Placement Agent Warrants do not, and will not, with or without the giving of
notice or the lapse of time, or both, result in a violation of the Certificate
of Incorporation or By-Laws, each as amended, of the Company.
25
(d) When the Shares and Warrants have been issued and duly
delivered in accordance with the provisions of this Agreement, the Shares will
be validly issued, fully paid and nonassessable, and, to the best of Company
Counsel's knowledge, the holders thereof will not be subject to personal
liability solely by reason of being such holders and the Warrants will
constitute the valid and binding obligations of the Company, enforceable in
accordance with their terms. The issuances of the Warrant Shares, Additional
Shares, Penalty Shares, Placement Agent Warrants and Placement Agent Warrant
Shares under the circumstances described in, and pursuant to the terms of, the
Placement Agent Agreement, the Warrants, the Subscription Agreements, the
Registration Rights Agreements or the Placement Agent Warrant Agreement, as the
case may be, have been duly authorized and, when issued and delivered in
accordance with the provisions of the Placement Agent Agreement, the Warrants,
the Subscription Agreements, the Registration Rights Agreements or the Placement
Agent Warrant Agreement, as the case may be, the Warrant Shares, Additional
Shares, Penalty Shares and Placement Agent Warrant Shares will be validly
issued, fully paid and nonassessable, and, to the best of Company Counsel's
knowledge, the holders thereof will not be subject to personal liability solely
by reason of being such holders, and the Placement Agent Warrants will
constitute the valid and binding obligations of the Company, enforceable in
accordance with their terms, in each case, subject, as to enforcement of
remedies, to applicable bankruptcy, insolvency, reorganization, moratorium and
other similar laws affecting the rights of creditors generally and the
discretion of courts in granting equitable remedies and except that
enforceability of the indemnification provisions and the contribution provisions
set forth herein may be limited by the federal securities laws of the United
States or public policy underlying such laws. None of the Shares, Warrant
Shares, Penalty Shares or Placement Agent Warrant Shares are subject to the
preemptive rights of any security holder of the Company under Delaware General
Corporate Law or the Company's Certificate of Incorporation or By-Laws. The
certificates representing the Shares, Warrant Shares, Penalty Shares, Placement
Agent Warrants and Placement Agent Warrant Shares when issued and delivered will
be in proper legal form.
26
EXHIBIT B
(b) EDiets has full power and authority, corporate
and other, necessary to own or lease, as the case may be, and operate
its properties and to conduct its business as described in the
Memorandum. In connection with the Acquisition, to the best of eDiets
Counsel's knowledge the Company acquired all of the issued and
outstanding shares of capital stock of eDiets, free and clear of any
security interests, liens, encumbrances, claims and charges, and all of
such shares have been duly authorized and validly issued and are fully
paid and non-assessable. Except as set forth in the Memorandum, to the
best of eDiets Counsel's knowledge, there are no options or warrants
for the purchase of, or other rights to purchase, or outstanding
securities convertible into or exchangeable for, any capital stock or
other securities of eDiets.
(c) The execution, delivery and performance of the
Placement Agent Agreement, the Subscription Agreements, the Warrants,
the Registration Rights Agreements, the Placement Agent Warrant
Agreement and the Placement Agent Warrants by the Company, the
consummation by the Company of the transactions therein contemplated
and the compliance by the Company with the terms of the Placement Agent
Agreement, the Subscription Agreements, the Warrants, the Registration
Rights Agreements, the Placement Agent Warrant Agreement and the
Placement Agent Warrants do not, and will not, with or without the
giving of notice or the lapse of time, or both, (1) result in a
violation of the Certificate of Incorporation or By-Laws, each as
amended, of the eDiets; (2) to the best of counsel's knowledge result
in a breach of or conflict with any terms or provisions of, or
constitute a default under, or result in the modification or
termination of, or result in the creation or imposition of any lien,
security interest, charge or encumbrance upon any of the properties or
assets of eDiets pursuant to, any indenture, mortgage, note, contract,
commitment or other agreement or instrument to which eDiets is a party
or by which eDiets or any of its properties or assets are or may be
bound or affected; (3) to the best of counsel's knowledge, violate any
existing applicable material law, rule, regulation, judgment, order or
decree of any governmental agency or court, domestic or foreign, that
would reasonably be expected to have jurisdiction over eDiets or any of
its properties or its business or (4) to the best of counsel's
knowledge have any effect on any Permit necessary for eDiets to own or
lease and operate any of its properties and to conduct business or the
ability of eDiets to make use thereof.
(d) The Units, the Shares, the Warrants, the
Placement Agent Warrants conform to the descriptions thereof contained
in the Memorandum.
(e) To the best of eDiets Counsel's knowledge, no
stop order relating to the offering contemplated by the Memorandum and
no proceedings for that purpose have been instituted or are pending,
threatened or contemplated under applicable securities laws.
27
(f) The descriptions in the Memorandum of statutes
regulations, government classifications, contracts, instruments and
other documents have been reviewed by eDiets Counsel, and, based upon
such review, are accurate in all material respects and present fairly
the information with respect to eDiets required to be disclosed, and
there are no material statutes, regulations or government
classifications or material contracts or documents, of a character such
that they should be described in the Memorandum, which are not so
described. None of the material provisions of the contracts or
instruments described above violates any existing applicable law, rule,
regulation that we, exercising customary professional diligence would
reasonably recognize being directly applicable to the Company, or any,
judgment, order or decree known to us of any governmental agency or
court that would reasonably be expected to have jurisdiction over
eDiets or any of its assets or its business. To the best of eDiets
Counsel's knowledge, except so disclosed in the Memorandum eDiets is
not in default under any contract or agreement material to its business
or under any promissory note or other evidence of indebtedness for
borrowed funds.
(g) To the best of eDiets Counsel's knowledge, there
are no claims, actions, suits, proceedings, arbitrations,
investigations or inquiries before any governmental agency, court or
tribunal, foreign or domestic, or before any private arbitration
tribunal, pending or threatened against eDiets or involving their
respective properties or businesses, other than as described in the
Memorandum and other than litigation incident to the kind of business
conducted by eDiets which, individually and in the aggregate, is not
material.
(h) To the best of eDiets Counsel's knowledge, eDiets
has not infringed and is infringing upon, and eDiets Counsel has
received no notice to the effect that eDiets has infringed or is
infringing upon, the Intangibles of others, and, to the best of eDiets
Counsel's knowledge, after due inquiry of eDiets, eDiets has not
received any notice of conflict with the asserted rights of others with
respect to the Intangibles which might, singly or in the aggregate,
materially adversely affect its business, results of operations or
financial condition and such counsel is not aware of any licenses with
respect to the Intangibles which are required to be obtained by eDiets.
(i) No consent, approval, authorization or order of
any court or governmental agency or body of the United States or any
state of the United States or any political subdivision of any of the
foregoing is required for the consummation of the offering, except
such as may be required under the Blue Sky or other securities laws of
any state of the United States in connection with the purchase of
Units by the Subscribers and the distribution of the Units by the
Placement Agent.
eDiets Counsel has participated in reviews and discussions in
connection with the preparation of the Memorandum, and, in the course of such
reviews and discussions and such other investigation as eDiets Counsel deemed
necessary, no facts came to its attention which lead it to believe that the
Memorandum (except as to the financial statements as to which eDiets Counsel
need not express an opinion) , on the Closing Date, contained any untrue
28
statement of a material fact, or omitted to state any material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
29
SCHEDULE 5(G)
Employee Pension Benefit Plans
* Spectrum, a professional employer service used by eDiets, maintains a 401K
Pension Plan for eDiets employees for which eDiets reimburses Spectrum for the
costs of administering contributions made under the Plan. Xxxxx X. Xxxxxx, who
is not an employee of eDiets, is not covered under the Plan.
30
