Exhibit 10.20
TORQUE ENGINEERING CORPORATION
PLACEMENT AGENT AGREEMENT
Dated as of: November 14, 2001
Westport Partners, Ltd.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned, TORQUE ENGINEERING CORPORATION (the "COMPANY"), hereby
agrees with WESTPORT PARTNERS, LTD., ("WESTPORT") as follows:
1. OFFERING. The Company hereby engages Westport to act as its exclusive
placement agent in connection with the Equity Line of Credit Agreement dated the
date hereof, (the "EQUITY LINE OF CREDIT AGREEMENT") pursuant to which the
Company shall issue and sell to the Investor named therein, from time to time,
and the Investor shall purchase from the Company (the "OFFERING") up to Five
Million Dollars ($5,000,000) of the Company's common stock (the "COMMITMENT
AMOUNT"), par value $.00001 per share (the "COMMON STOCK"), at price per share
equal to the Purchase Price, as that term is defined in the Equity Line of
Credit Agreement.
All capitalized terms used herein and not otherwise defined shall have the
same meaning ascribed to them as in the Equity Line of Credit Agreement. The
Investor will be granted certain registration rights with respect to the Common
Stock as more fully set forth in the Registration Rights Agreement between the
Company and the Investor dated the date hereof (the "REGISTRATION RIGHTS
AGREEMENT"). The documents to be executed and delivered in connection with the
Offering, including, but not limited, to this Agreement, the Equity Line of
Credit Agreement, the Registration Rights Agreement, and the Escrow Agreement
with First Union National Bank (the "ESCROW AGREEMENT"), are referred to
sometimes hereinafter collectively as the "OFFERING MATERIALS." The Company's
Common Stock is sometimes referred to hereinafter as the "SECURITIES." Westport
shall not be obligated to sell any Securities and this Offering by Westport
shall be solely on a "best efforts basis."
2. Compensation.
------------
A. Upon the execution of this Agreement the Company shall issue to
Westport or its designee as set forth on Schedule A attached hereto twenty five
thousand (25,000) restricted shares of the Company's Common Stock (collectively,
the "PLACEMENT AGENT'S SHARES "). Westport shall be entitled to "piggy-back"
registration rights with respect to the Placement Agent's Shares pursuant to the
Registration Rights Agreement dated the date hereof.
3. Representations, Warranties and Covenants of Westport.
-----------------------------------------------------
A. Westport represents, warrants and covenants as follows:
(i) Westport has the necessary power to enter into this Agreement and
to consummate the transactions contemplated hereby.
(ii) The execution and delivery by Westport of this Agreement and the
consummation of the transactions contemplated herein will not result in any
violation of, or be in conflict with, or constitute a default under, any
agreement or instrument to which Westport is a party or by which Westport or its
properties are bound, or any judgment, decree, order or, to Westport's
knowledge, any statute, rule or regulation applicable to Westport. This
Agreement when executed and delivered by Westport, will constitute the legal,
valid and binding obligations of Westport, enforceable in accordance with their
respective terms, except to the extent that (a) the enforceability hereof or
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws from time to time in effect and affecting the rights of creditors
generally, (b) the enforceability hereof or thereof is subject to general
principles of equity, or (c) the indemnification provisions hereof or thereof
may be held to be in violation of public policy.
(iii) Upon receipt and execution of this Agreement Westport will
promptly forward copies of this Agreement to the Company or its counsel.
(iv) Westport will not intentionally take any action that it
reasonably believes would cause the Offering to violate the provisions of the
1933 Act, the 1934 Act, the respective rules and regulations promulgated there
under (the "RULES AND REGULATIONS") or applicable "Blue Sky" laws of any state
or jurisdiction.
(v) Westport has used all reasonable efforts to determine (a) whether
the Investor is an Accredited Investor and (b) that any information furnished by
the Investor is true and accurate. Westport shall have no obligation to insure
that (x) any check, note, draft or other means of payment for the Common Stock
will be honored, paid or enforceable against the Investor in accordance with its
terms, or (y) subject to the performance of Westport's obligations and the
accuracy of Westport's representations and warranties hereunder, (1) the
Offering is exempt from the registration requirements of the 1933 Act or any
applicable state "Blue Sky" law or (2) the Investor is an Accredited Investor.
(vi) Westport is a member of the National Association of Securities
Dealers, Inc., and is a broker-dealer registered as such under the 1934 Act and
under the securities laws of the states in which the Securities will be offered
or sold by Westport, unless an exemption for such state registration is
available to Westport. Westport is in compliance with all material rules and
regulations applicable to Westport generally and applicable to Westport's
participation in the Offering.
2
4. Representations and Warranties of the Company.
---------------------------------------------
A. The Company represents and warrants as follows:
(i) The execution, delivery and performance of each of this Agreement,
the Equity Line of Credit Agreement, the Escrow Agreement, and the Registration
Rights Agreement has been or will be duly and validly authorized by the Company
and is, or with respect to this Agreement, the Equity Line of Credit Agreement,
the Escrow Agreement, and the Registration Rights Agreement will be, a valid and
binding agreement of the Company, enforceable in accordance with its respective
terms, except to the extent that (a) the enforceability hereof or thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
from time to time in effect and affecting the rights of creditors generally, (b)
the enforceability hereof or thereof is subject to general principles of equity
or (c) the indemnification provisions hereof or thereof may be held to be in
violation of public policy. The Securities to be issued pursuant to the
transactions contemplated by this Agreement and the Equity Line of Credit
Agreement have been duly authorized and, when issued and paid for in accordance
with (x) this Agreement, the Equity Line of Agreement and the
certificates/instruments representing such Securities, (y) will be valid and
binding obligations of the Company, enforceable in accordance with their
respective terms, except to the extent that (1) the enforceability thereof may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
from time to time in effect and affecting the rights of creditors generally, and
(2) the enforceability thereof is subject to general principles of equity. All
corporate action required to be taken for the authorization, issuance and sale
of the Securities has been duly and validly taken by the Company.
(ii) The Company has a duly authorized, issued and outstanding
capitalization as set forth herein and in the Equity Line of Credit Agreement.
The Company is not a party to or bound by any instrument, agreement or other
arrangementproviding for it to issue any capital stock, rights, warrants,
options or other securities, except for this Agreement, the agreements described
herein and as described in the Equity Line of Credit Agreement, the Securities
Purchase Agreement dated October 26, 2001and the agreements described therein.
All issued and outstanding securities of the Company, have been duly authorized
and validly issued and are fully paid and non-assessable; the holders thereof
have no rights of rescission or preemptive rights with respect thereto and are
not subject to personal liability solely by reason of being security holders;
and none of such securities were issued in violation of the preemptive rights of
any holders of any security of the Company. The Company has 50,000,000 shares of
authorized Common Stock, 8,752,112 of which will be issued and outstanding as of
the date hereof.
(iii) The Common Stock to be issued in accordance with this Agreement
and the Equity Line of Credit Agreement has been duly authorized and when issued
and paid for in accordance with the this Agreement, the Equity Line of Credit
Agreement and the certificates/instruments representing such Common Stock, will
be validly issued, fully-paid and non-assessable; the holders thereof will not
be subject to personal liability solely by reason of being such holders; such
Securities are not and will not be subject to the preemptive rights of any
holder of any security of the Company.
(iv) The Company has good and marketable title to, or valid and
enforceable leasehold estates in, all items of real and personal property
necessary to conduct its business (including, without limitation, any real or
personal property stated in the Offering Materials to be owned or leased by the
Company), free and clear of all liens, encumbrances, claims, security interests
and defects of any material nature whatsoever, other than those set forth in the
Offering Materials and liens for taxes not yet due and payable.
3
(v) There is no litigation or governmental proceeding pending or, to
the best of the Company's knowledge, threatened against, or involving the
properties or business of the Company, except as set forth in the Offering
Materials.
(vi) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware. Except as
set forth in the Offering Materials, the Company does not own or control,
directly or indirectly, an interest in any other corporation, partnership,
trust, joint venture or other business entity. The Company is duly qualified or
licensed and in good standing as a foreign corporation in each jurisdiction in
which the character of its operations requires such qualification or licensing
and where failure to so qualify would have a material adverse effect on the
Company. The Company has all requisite corporate power and authority, and all
material and necessary authorizations, approvals, orders, licenses, certificates
and permits of and from all governmental regulatory officials and bodies
(domestic and foreign) to conduct its businesses (and proposed business) as
described in the Offering Materials. Any disclosures in the Offering Materials
concerning the effects of foreign, federal, state and local regulation on the
Company's businesses as currently conducted and as contemplated are correct in
all material respects and do not omit to state a material fact. The Company has
all corporate power and authority to enter into this Agreement, the Equity Line
of Credit Agreement, the Registration Rights Agreement, and the Escrow
Agreement, to carry out the provisions and conditions hereof and thereof, and
all consents, authorizations, approvals and orders required in connection
herewith and therewith have been obtained. No consent, authorization or order
of, and no filing with, any court, government agency or other body is required
by the Company for the issuance of the Securities or execution and delivery of
the Offering Materials except for applicable federal and state securities laws.
The Company, since its inception, has not incurred any liability arising under
or as a result of the application of any of the provisions of the 1933 Act, the
1934 Act or the Rules and Regulations.
(vii) There has been no material adverse change in the condition or
prospects of the Company, financial or otherwise, from the latest dates as of
which such condition or prospects, respectively, are set forth in the Offering
Materials, and the outstanding debt, the property and the business of the
Company conform in all material respects to the descriptions thereof contained
in the Offering Materials.
(viii) Except as set forth in the Offering Materials, the Company is
not in breach of, or in default under, any term or provision of any material
indenture, mortgage, deed of trust, lease, note, loan or Equity Line of Credit
Agreement or any other material agreement or instrument evidencing an obligation
for borrowed money, or any other material agreement or instrument to which it is
a party or by which it or any of its properties may be bound or affected. The
Company is not in violation of any provision of its charter or by-laws or in
violation of any franchise, license, permit, judgment, decree or order, or in
violation of any material statute, rule or regulation. Neither the execution and
delivery of the Offering Materials nor the issuance and sale or delivery of the
Securities, nor the consummation of any of the transactions contemplated in the
Offering Materials nor the compliance by the Company with the terms and
provisions hereof or thereof, has conflicted with or will conflict with, or has
4
resulted in or will result in a breach of, any of the terms and provisions of,
or has constituted or will constitute a default under, or has resulted in or
will result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or pursuant to the terms of any
indenture, mortgage, deed of trust, note, loan or any other agreement or
instrument evidencing an obligation for borrowed money, or any other agreement
or instrument to which the Company may be bound or to which any of the property
or assets of the Company is subject except (a) where such default, lien, charge
or encumbrance would not have a material adverse effect on the Company and (b)
as described in the Offering Materials; nor will such action result in any
violation of the provisions of the charter or the by-laws of the Company or,
assuming the due performance by Westport of its obligations hereunder, any
material statute or any material order, rule or regulation applicable to the
Company of any court or of any foreign, federal, state or other regulatory
authority or other government body having jurisdiction over the Company.
(ix) Subsequent to the dates as of which information is given in the
Offering Materials, and except as may otherwise be indicated or contemplated
herein or therein and the securities offered pursuant to the Securities Purchase
Agreement dated October 26, 2001, the Company has not (a) issued any securities
or incurred any liability or obligation, direct or contingent, for borrowed
money, or (b) entered into any transaction other than in the ordinary course of
business, or (c) declared or paid any dividend or made any other distribution on
or in respect of its capital stock. Except as described in the Offering
Materials, the Company has no outstanding obligations to any officer or director
of the Company.
(x) There are no claims for services in the nature of a finder's or
origination fee with respect to the sale of the Common Stock or any other
arrangements, agreements or understandings that may affect Westport's
compensation, as determined by the National Association of Securities Dealers,
Inc.
(xi) The Company owns or possesses, free and clear of all liens or
encumbrances and rights thereto or therein by third parties, the requisite
licenses or other rights to use all trademarks, service marks, copyrights,
service names, trade names, patents, patent applications and licenses necessary
to conduct its business (including, without limitation, any such licenses or
rights described in the Offering Materials as being owned or possessed by the
Company) and, except as set forth in the Offering Materials, there is no claim
or action by any person pertaining to, or proceeding, pending or threatened,
which challenges the exclusive rights of the Company with respect to any
trademarks, service marks, copyrights, service names, trade names, patents,
patent applications and licenses used in the conduct of the Company's businesses
(including, without limitation, any such licenses or rights described in the
Offering Materials as being owned or possessed by the Company) except any claim
or action that would not have a material adverse effect on the Company; the
Company's current products, services or processes do not infringe or will not
infringe on the patents currently held by any third party.
(xii) Except as described in the Offering Materials, the Company is
not under any obligation to pay royalties or fees of any kind whatsoever to any
third party with respect to any trademarks, service marks, copyrights, service
names, trade names, patents, patent applications, licenses or technology it has
developed, uses, employs or intends to use or employ, other than to their
respective licensors.
5
(xiii) Subject to the performance by Westport of its obligations
hereunder and the offer and sale of the Securities comply, and will continue to
comply in all material respects with the requirements of Rule 506 of Regulation
D promulgated by the SEC pursuant to the 1933 Act and any other applicable
federal and state laws, rules, regulations and executive orders. Neither the
Offering Materials nor any amendment or supplement thereto nor any documents
prepared by the Company in connection with the Offering will contain 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 under which they were made, not misleading. All statements of
material facts in the Offering Materials are true and correct as of the date of
the Offering Materials.
(xiv) All material taxes which are due and payable from the Company
have been paid in full or adequate provision has been made for such taxes on the
books of the Company except for those taxes disputed in good faith the Company
does not have any tax deficiency or claim outstanding assessed or proposed
against it.
(xv) None of the Company nor any of its officers, directors, employees
or agents, nor any other person acting on behalf of the Company, has, directly
or indirectly, given or agreed to give any money, gift or similar benefit (other
than legal price concessions to customers in the ordinary course of business) to
any customer, supplier, employee or agent of a customer or supplier, or official
or employee of any governmental agency or instrumentality of any government
(domestic or foreign) or any political party or candidate for office (domestic
or foreign) or other person who is or may be in a position to help or hinder the
business of the Company (or assist it in connection with any actual or proposed
transaction) which (A) might subject the Company to any damage or penalty in any
civil, criminal or governmental litigation or proceeding, or (B) if not given in
the past, might have had a materially adverse effect on the assets, business or
operations of the Company as reflected in any of the financial statements
contained in the Offering Materials, or (C) if not continued in the future,
might adversely affect the assets, business, operations or prospects of the
Company in the future.
5. Certain Covenants and Agreements of the Company.
-----------------------------------------------
The Company covenants and agrees at its expense and without any expense to
Westport as follows:
A. To advise Westport of any material adverse change in the Company's
financial condition, prospects or business or of any development materially
affecting the Company or rendering untrue or misleading any material statement
in the Offering Materials occurring at any time as soon as the Company is either
informed or becomes aware thereof.
B. To use its commercially reasonable efforts to cause the Common Stock
issuable in connection with the Equity Line of Credit to be qualified or
registered for sale on terms consistent with those stated in the Registration
Rights Agreement and under the securities laws of such jurisdictions as Westport
and the Investor shall reasonably request, provided that such states and
jurisdictions do not require the Company to qualify as a foreign corporation.
Qualification, registration and exemption charges and fees shall be at the sole
cost and expense of the Company.
6
C. Upon written request, to provide and continue to provide Westport and
the Investor copies of all quarterly financial statements and audited annual
financial statements prepared by or on behalf of the Company, other reports
prepared by or on behalf of the Company for public disclosure and all documents
delivered to the Company's stockholders.
D. To deliver, during the registration period of the Equity Line Credit
Agreement, to Westport, upon Westport's request, within forty five (45) days, a
statement of its income for each such quarterly period, and its balance sheet
and a statement of changes in stockholders' equity as of the end of such
quarterly period, all in reasonable detail, certified by its principal financial
or accounting officer; (ii) within ninety (90) days after the close of each
fiscal year, its balance sheet as of the close of such fiscal year, together
with a statement of income, a statement of changes in stockholders' equity and a
statement of cash flow for such fiscal year, such balance sheet, statement of
income, statement of changes in stockholders' equity and statement of cash flow
to be in reasonable detail and accompanied by a copy of the certificate or
report thereon of independent auditors if audited financial statements are
prepared; and (iii) a copy of all documents, reports and information furnished
to its stockholders at the time that such documents, reports and information are
furnished to its stockholders.
E. To comply with the terms of the Offering Materials.
F. To ensure that any transactions between or among the Company, or any of
its officers, directors and affiliates be on terms and conditions that are no
less favorable to the Company, than the terms and conditions that would be
available in an "arm's length" transaction with an independent third party.
6. Indemnification.
---------------
A. The Company hereby agrees that it will indemnify and hold
Westport and each officer, director, shareholder, employee or representative of
Westport, and each person controlling, controlled by or under common control
with Westport within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act or the SEC's Rules and Regulations promulgated there under (the
"RULES AND REGULATIONS"), harmless from and against any and all loss, claim,
damage, liability, cost or expense whatsoever (including, but not limited to,
any and all reasonable legal fees and other expenses and disbursements incurred
in connection with investigating, preparing to defend or defending any action,
suit or proceeding, including any inquiry or investigation, commenced or
threatened, or any claim whatsoever or in appearing or preparing for appearance
as a witness in any action, suit or proceeding, including any inquiry,
investigation or pretrial proceeding such as a deposition) to which Westport or
such indemnified person of Westport may become subject under the 1933 Act, the
1934 Act, the Rules and Regulations, or any other federal or state law or
regulation, common law or otherwise, arising out of or based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in (a)
Section 4 of this Agreement, (b) the Offering Materials (except those written
statements relating to Westport given by an indemnified person for inclusion
therein), (c) any application or other document or written communication
executed by the Company or based upon written information furnished by the
Company filed in any jurisdiction in order to qualify the Common Stock under the
securities laws thereof, or any state securities commission or agency; (ii) the
omission or alleged omission from documents described in clauses (a), (b) or (c)
above of a material fact required to be stated therein or necessary to make the
statements therein not misleading; or (iii) the breach of any representation,
warranty, covenant or agreement made by the Company in this Agreement. The
Company further agrees that upon demand by an indemnified person, at any time or
7
from time to time, it will promptly reimburse such indemnified person for any
loss, claim, damage, liability, cost or expense actually and reasonably paid by
the indemnified person as to which the Company has indemnified such person
pursuant hereto. Notwithstanding the foregoing provisions of this Paragraph
6(A), any such payment or reimbursement by the Company of fees, expenses or
disbursements incurred by an indemnified person in any proceeding in which a
final judgment by a court of competent jurisdiction (after all appeals or the
expiration of time to appeal) is entered against Westport or such indemnified
person as a direct result of Westport or such person's gross negligence or
willful misfeasance will be promptly repaid to the Company.
B. Westport hereby agrees that it will indemnify and hold the Company and
each officer, director, shareholder, employee or representative of the Company,
and each person controlling, controlled by or under common control with the
Company within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act or the Rules and Regulations, harmless from and against any and all
loss, claim, damage, liability, cost or expense whatsoever (including, but not
limited to, any and all reasonable legal fees and other expenses and
disbursements incurred in connection with investigating, preparing to defend or
defending any action, suit or proceeding, including any inquiry or
investigation, commenced or threatened, or any claim whatsoever or in appearing
or preparing for appearance as a witness in any action, suit or proceeding,
including any inquiry, investigation or pretrial proceeding such as a
deposition) to which the Company or such indemnified person of the Company may
become subject under the 1933 Act, the 1934 Act, the Rules and Regulations, or
any other federal or state law or regulation, common law or otherwise, arising
out of or based upon (i) the conduct of Westport or its officers, employees or
representatives in its acting as Placement Agent for the Offering or (ii) the
breach of any representation, warranty, covenant or agreement made by Westport
in this Agreement (iii) any false or misleading information provided to the
Company by one of the Westport indemnified persons.
C. Promptly after receipt by an indemnified party of notice of
commencement of any action covered by Section 6(A) or 6(B), the party to be
indemnified shall, within five (5) business days, notify the indemnifying party
of the commencement thereof; the omission by one (1) indemnified party to so
notify the indemnifying party shall not relieve the indemnifying party of its
obligation to indemnify any other indemnified party that has given such notice
and shall not relieve the indemnifying party of any liability outside of this
indemnification if not materially prejudiced thereby. In the event that any
action is brought against the indemnified party, the indemnifying party will be
entitled to participate therein and, to the extent it may desire, to assume and
control the defense thereof with counsel chosen by it which is reasonably
acceptable to the indemnified party. After notice from the indemnifying party to
such indemnified party of its election to so assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under such
Section 6(A) or 6(B) for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof, but the
indemnified party may, at its own expense, participate in such defense by
counsel chosen by it, without, however, impairing the indemnifying party's
control of the defense. Subject to the proviso of this sentence and
notwithstanding any other statement to the contrary contained herein, the
indemnified party or parties shall have the right to choose its or their own
counsel and control the defense of any action, all at the expense of the
8
indemnifying party if, (i) the employment of such counsel shall have been
authorized in writing by the indemnifying party in connection with the defense
of such action at the expense of the indemnifying party, or (ii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
such indemnified party to have charge of the defense of such action within a
reasonable time after notice of commencement of the action, or (iii) such
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from or additional to those
available to one or all of the indemnifying parties (in which case the
indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
such fees and expenses of one additional counsel shall be borne by the
indemnifying party; provided, however, that the indemnifying party shall not, in
connection with any one action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstance, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys at any time for all such indemnified parties. No
settlement of any action or proceeding against an indemnified party shall be
made without the consent of the indemnifying party.
D. In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in Section 6(A) or 6(B)
is due in accordance with its terms but is for any reason held by a court to be
unavailable on grounds of policy or otherwise, the Company and Westport shall
contribute to the aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in connection with the investigation
or defense of same) which the other may incur in such proportion so that
Westport shall be responsible for such percent of the aggregate of such losses,
claims, damages and liabilities as shall equal the percentage of the gross
proceeds paid to Westport and the Company shall be responsible for the balance;
provided, however, that no person guilty of fraudulent misrepresentation within
the meaning of Section 11(f) of the 1933 Act shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation. For
purposes of this Section 6(D), any person controlling, controlled by or under
common control with Westport, or any partner, director, officer, employee,
representative or any agent of any thereof, shall have the same rights to
contribution as Westport and each person controlling, controlled by or under
common control with the Company within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act and each officer of the Company and each director
of the Company shall have the same rights to contribution as the Company. Any
party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may be made against the other party under this
Section 6(D), notify such party from whom contribution may be sought, but the
omission to so notify such party shall not relieve the party from whom
contribution may be sought from any obligation they may have hereunder or
otherwise if the party from whom contribution may be sought is not materially
prejudiced thereby. The indemnity and contribution agreements contained in this
Section 6 shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any indemnified person or any termination
of this Agreement.
7. Payment of Expenses.
-------------------
The Company hereby agrees to bear all of the expenses in connection with
the Offering, including, but not limited to the following: filing fees, printing
and duplicating costs, advertisements, postage and mailing expenses with respect
to the transmission of Offering Materials, registrar and transfer agent fees,
escrow agent fees and expenses, fees of the Company's counsel and accountants,
issue and transfer taxes, if any.
9
8. Conditions of Closing
---------------------
The Closing shall be held at the offices of the Investor or its counsel.
The obligations of Westport hereunder shall be subject to the continuing
accuracy of the representations and warranties of the Company herein as of the
date hereof and as of the Date of Closing (the "CLOSING Date") with respect to
the Company as if it had been made on and as of such Closing Date; the accuracy
on and as of the Closing Date of the statements of the officers of the Company
made pursuant to the provisions hereof; and the performance by the Company on
and as of the Closing Date of its covenants and obligations hereunder and to the
following further conditions:
A. Upon the effectiveness of a registration statement covering the Equity
Line of Credit Agreement, Westport shall receive the opinion of Counsel to the
Company, dated as of the date thereof, which opinion shall be in form and
substance reasonably satisfactory to the Investor, their counsel and Westport.
B. At or prior to the Closing, Westport shall have been furnished such
documents, certificates and opinions as they may reasonably require for the
purpose of enabling them to review or pass upon the matters referred to in this
Agreement and the Offering Materials, or in order to evidence the accuracy,
completeness or satisfaction of any of the representations, warranties or
conditions herein contained.
C. At and prior to the Closing, (i) there shall have been no material
adverse change nor development involving a prospective change in the condition
or prospects or the business activities, financial or otherwise, of the Company
from the latest dates as of which such condition is set forth in the Offering
Materials; (ii) there shall have been no transaction, not in the ordinary course
of business, except the transactions pursuant to the Securities Purchase
Agreement dated October 26, 2001, entered into by the Company which has not been
disclosed in the Offering Materials or to Westport in writing; (iii) except as
set forth in the Offering Materials, the Company shall not be in default under
any provision of any instrument relating to any outstanding indebtedness for
which a waiver or extension has not been otherwise received; (iv) except as set
forth in the Offering Materials, the Company shall not have issued any
securities (other than those to be issued as provided in the Offering Materials)
or declared or paid any dividend or made any distribution of its capital stock
of any class and there shall not have been any change in the indebtedness (long
or short term) or liabilities or obligations of the Company (contingent or
otherwise) and trade payable debt; (v) no material amount of the assets of the
Company shall have been pledged or mortgaged, except as indicated in the
Offering Materials; and (v) no action, suit or proceeding, at law or in equity,
against the Company or affecting any of its properties or businesses shall be
pending or threatened before or by any court or federal or state commission,
board or other administrative agency, domestic or foreign, wherein an
unfavorable decision, ruling or finding could materially adversely affect the
businesses, prospects or financial condition or income of the Company, except as
set forth in the Offering Materials.
10
D. At Closing, Westport shall receive a certificate of the Company signed
by an executive officer and chief financial officer, dated as of the applicable
Closing, to the effect that the conditions set forth in subparagraph (C) above
have been satisfied and that, as of the applicable closing, the representations
and warranties of the Company set forth herein are true and correct.
9. Termination.
-----------
This Agreement shall be co-terminus with, and terminate upon the same
terms and conditions as those set forth in, the Equity Line of Credit Agreement.
The rights of the Investor and the obligations of the Company under the
Registration Rights Agreement, and the rights of Westport and the obligations of
the Company shall survive the termination of this Agreement unabridged.
10. Miscellaneous.
-------------
A. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all which shall be
deemed to be one and the same instrument.
B. Any notice required or permitted to be given hereunder shall be given
in writing and shall be deemed effective when deposited in the United States
mail, postage prepaid, or when received if personally delivered or faxed (upon
confirmation of receipt received by the sending party), addressed as follows:
If to Placement Agent, to: Westport Partners, Ltd.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With Copy to:
11
If to the Company, to: Torque Engineering Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Chief Financial Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇. - ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address of which written notice is given to the others.
C. This Agreement shall be governed by and construed in all respects under
the laws of the State of New York, without reference to its conflict of laws
rules or principles. Any suit, action, proceeding or litigation arising out of
or relating to this Agreement shall be brought and prosecuted in such federal or
state court or courts located within the State of New York as provided by law.
The parties hereby irrevocably and unconditionally consent to the jurisdiction
of each such court or courts located within the State of New York and to service
of process by registered or certified mail, return receipt requested, or by any
other manner provided by applicable law, and hereby irrevocably and
unconditionally waive any right to claim that any suit, action, proceeding or
litigation so commenced has been commenced in an inconvenient forum.
D. This Agreement and the other agreements referenced herein contain the
entire understanding between the parties hereto and may not be modified or
amended except by a writing duly signed by the party against whom enforcement of
the modification or amendment is sought.
E. If any provision of this Agreement shall be held to be invalid or
unenforceable, such invalidity or unenforceability shall not affect any other
provision of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
12
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
COMPANY:
TORQUE ENGINEERING CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Chief Executive Officer
PLACEMENT AGENT:
WESTPORT PARTNERS, LTD.
By:
---------------------------------
Name:
Title:
13
