Robert Prunetti, President & CEO Performance Health Technologies, Inc. Trenton, NJ 08611 June 21, 2007
EXHIBIT
10.90
Xxxxxx
Xxxxxxxx, President & CEO
Performance
Health Technologies, Inc.
000
Xxxxx
Xxxx Xxxxx
Xxxxxxx,
XX 00000
June
21,
2007
Xxxxxx
Xxxxx Securities, Inc.
000
Xxxxx
Xxxxxxx Xxxxxxx
0xx
Xxxxx
Xxxx
Xxxxx, XX 00000
Re: Selling
Agreement (the “Agreement”)
Dear
Xx.
Xxxxxx:
PERFORMANCE
HEALTH TECHNOLOGIES, INC., a Delaware corporation (the “Seller”), proposes to
offer and sell (the “Offering”), to selected investors, upon the terms set forth
herein and in the Subscription Agreement and the Confidential Private Placement
Memorandum (which collectively, together with the attachments and exhibits
thereto, is referred to as the “Offering Document”), a copy of which has been
delivered to you, up to $600,000 worth of units (the “Units”) consisting of
convertible notes (“Convertible Notes”) and warrants (“Warrants”). Xxxxxx Xxxxx
Securities, Inc. (the “Selling Agent”) agrees to offer and sell the Offered
Securities on a non-exclusive “best efforts” basis during the offering period
described in the Offering Document (the “Offering Period”). Capitalized terms
used and not otherwise defined herein shall have the respective meanings set
forth in the Offering Document. It is intended that the offer, offer
for sale and sale of the Offered Securities will be made only to “accredited
investors” (as such term is defined in Rule 501(a) of Regulation D of the
Securities Act of 1933, as amended (the “1933 Act”) and will be exempt from the
federal registration requirements of the 1933 Act, pursuant to Regulation D
promulgated under Section 3(b) and/or Section 4(2), respectively, of the 1933
Act and will qualify for an exemption from registration, if necessary, under
the
applicable state securities laws and regulations.
The
Seller hereby confirms its agreement with Selling Agent as follows:
1. Offer
and Sale of Offered Securities by Selling Agent; Compensation;
Closing.
1.1 On
the basis of Selling Agent’s representations, covenants and warranties, the
Seller appoints Selling Agent as the non-exclusive agent of the Seller for
the
period commencing on the date of the completion of the Offering Document and
ending on September 30, 2007; unless extended by the Seller and Selling Agent
by
their mutual agreement for a period not to exceed an additional thirty (30)
days
(“Offering Termination Date”), to use Selling Agent’s best efforts to offer and
sell, on the terms and conditions set forth in this Agreement (and
1
the
Term
Sheet attached hereto as Exhibit A) and in the Offering Document, subject
only to Selling Agent’s right to engage participating broker-dealers pursuant to
Section 2 hereof. The Selling Agent hereby accepts such appointment
and agrees pursuant to the terms and conditions set forth herein and in the
Offering Document to use its best efforts to offer and sell the Offered
Securities as agent for the Seller during the period specified above, and to
attempt to find suitable accredited purchasers for the Offered Securities
acceptable to the Seller.
1.2 Prior
to and subject to the closing, subscription proceeds from the sale of the
Offered Securities will be deposited in an escrow account with an escrow agent
to be mutually agreeable to Seller and the Selling Agent (the “Escrow
Agent”). The Seller will be responsible for setting up the Escrow
Account, pursuant to an escrow agreement among the Seller, the Selling Agent
and
the Escrow Agent, which escrow agreement will be approved by the Selling
Agent. Subscribers will be instructed to make their checks payable to
the Escrow Agent for the benefit of PERFORMANCE HEALTH TECHNOLOGIES, INC.,
or
shall cause the wire transfer of immediately available funds in favor of the
Escrow Agent for PERFORMANCE HEALTH TECHNOLOGIES, INC., in accordance with
instructions provided by the Selling Agent. At the end of the
Offering Period (as the same may be extended by the mutual agreement of the
Selling Agent and the Seller), a closing (the “ Closing”) will occur as soon as
possible after subscriptions have been accepted by the Seller and all other
conditions precedent to closing have occurred to the sole satisfaction of the
Selling Agent.
1.3 For
purposes hereof, the Offered Securities shall not be deemed to have been sold
unless (x) subscription agreements, completed and fully executed by subscribers
who are accredited investors have been received covering the Offered Securities
and (y) all checks, drafts and wire transfers submitted by such subscribers
in
payment of the purchase price of such Offered Securitas have been received
by
the Escrow Agent and have cleared so that there are “good funds” in the Escrow
Account at least equal to the aggregate purchase price of the Offered
Securities.
1.4 As
compensation for the Selling Agent’s services hereunder, the Seller shall pay to
Selling Agent in cash a selling commission (“Commission”) upon the Closing, in
an amount equal to Twelve percent (12%) of the aggregate offering price of
the
Offered Securities sold by the Selling Agent or its authorized agent at such
Closing. At the Closing of the Offering, the Seller shall pay the
Selling Agent its Commission relating to the sale of the Offered Securities
that
are subject of the Closing provided that the Seller or counsel for the Seller
has received all documents, including but not limited to, an executed
Subscription Agreement for each investor (“Subscription Documents”) previously
furnished to Selling Agent which the Selling Agent is required to deliver to
the
Seller or counsel for the Seller prior to Closing. All or any portion
of such Commission may be re-allowed to Participating Broker-Dealers (as
hereinafter defined). No Offered Securities shall be considered to
have been sold by Selling Agent or any Participating Broker-Dealer selected
by
Selling Agent unless the purchaser is acceptable to the Seller, and no
compensation will be payable with respect to any agreement for the purchase
of
Offered Securities if the Subscription Agreement therefor is not actually
accepted by the Seller. Anything in this Agreement to the contrary
notwithstanding, the Seller shall not be required to pay a Commission to Selling
Agent and Selling Agent shall not be entitled to a Commission, pursuant to
this
Section 1.4 or any other provision, if to do so would
2
cause
the
Seller to violate federal or state securities laws, regulations or rules or
any
other law applicable to the Offering.
1.5 The
Seller will pay all of its costs relating to the Offering contemplated hereby,
including, without limitation, audit expenses, issuance costs and taxes, counsel
fees for the preparation of the Offering Documents, filing fees and
disbursements of counsel relating to the qualification of the Offered Securities
under federal securities laws, and legal fees and expenses of counsel in
connection with qualifying the Offered Securities under the state blue sky
laws. To the extent required by law, the Seller shall qualify the
Offered Securities for offer and sale in those jurisdictions designated by
the
Selling Agent and reasonably acceptable to the Seller. The Seller’s
counsel shall be responsible for state blue sky securities laws compliance
by
the Seller.
1.6 The
Seller shall pay the Selling Agent at each Closing a non-accountable expense
allowance (the “Expense Allowance”) of 5.0% of the aggregate dollar value of the
Offered Securities sold at such Closing.
1.7 Once
the Offered Securities are sold, or the Offering Period terminates, the agency
between the Seller and the Selling Agent shall terminate. The Selling
Agent, on the basis of the representations and warranties herein contained,
but
subject to the terms and conditions herein set forth, accepts such appointment
as the limited agent of the Seller and agrees to use its best efforts to find
purchasers for the Offered Securities.
1.8 Upon
each Closing of a sale of the Offered Securities, the Agent shall receive
warrants (“Agent Warrants”) to purchase that number of shares of common stock of
the Company that is equal to 10% of the number of shares of common stock of
the
Company issuable upon conversion of all of the Convertible Notes sold on the
Closing date calculated assuming all Convertible Notes sold on such Closing
date
are converted into shares of common stock of the Company as of the Closing
date
at a purchase price equal to the Conversion Price (as defined in the Term Sheet
attached as Exhibit A hereto) calculated as of such Closing date (the “Warrant
Price”). The Agent Warrants shall be exercisable at any time
during the five years from the date of Closing at a price equal to the Warrant
Price, shall contain cash-less exercise provisions and shall have the same
piggy-back registration rights as the investors in the Offering.
1.9 The
Closing shall be held at the offices of the Selling Agent, 000 X. Xxxxxxx
Xxxxxxx, 0xx
Xxxxx, Xxxx Xxxxx, XX 00000, or in an alternative location and at such time
and
date as Selling Agent and the Seller may mutually agree.
1.10 The
holders of the Offered Securities will be provided with Piggy-back registration
rights with respect to the shares of common stock underlying the Warrants and
the common stock.
2. Participating
Broker-Dealers. The Seller hereby authorizes Selling Agent to
engage other qualified broker-dealers (the “Participating Broker-Dealers”) to
assist the Selling Agent in the placement of the Offered Securities; provided
that during all times that each such Participating Broker-Dealer shall offer
and
sell the Offered Securities, each such Participating
3
Broker-Dealer
shall be registered as a broker-dealer under the Securities Exchange Act of
1934
(the “1934 Act”), shall be a member in good standing of the National Association
of Securities Dealers, Inc. (“NASD”), and shall be authorized to offer and sell
the Offered Securities under the laws of the jurisdictions in which the Offered
Securities will be offered and sold by such Participating
Broker-Dealer. All Participating Broker-Dealers will be required to
execute a Participating Broker-Dealer Agreement, the form of which is subject
to
the reasonable approval of the Seller, with Selling Agent containing
substantially the same terms and conditions as this Agreement, including,
without limitation, the representations and warranties contained in Section
3.2
below and provisions for indemnification of the Seller to the same extent as
your indemnification provided in Section 7 below. Any commissions,
fees, or expenses payable to such Participating Broker-Dealers will be paid
by
the Selling Agent and not by the Seller.
3. Representations,
Warranties and Covenants.
3.1 The
Seller represents, warrants and covenants to Selling Agent that, except as
set
forth in Schedule 3.1 hereof or in the Offering Document:
(a) The
Seller and each subsidiary is a corporation duly formed and validly existing
and
in good standing under the laws of the jurisdiction of its incorporation as
in
effect on the date of this Agreement, with adequate power and authority to
enter
into and perform this Agreement and to own its property and to conduct its
business as described in the Offering Document and in Seller’s reports required
to be filed by it with the SEC pursuant to the 1933 Act, the 1934 Act or
otherwise (“SEC Reports”) ; and the Seller and each subsidiary is duly qualified
as a foreign corporation to transact business and is in good standing in each
jurisdiction in which it owns or leases substantial properties or in which
the
conduct of its business requires such qualification except for such
jurisdictions in which the failure to qualify in the aggregate would not have
material and adverse effect on the earnings, affairs or business prospects
of
the Seller or any such subsidiary (a “Material Adverse Effect”) and in which
jurisdictions such failure may be cured without such Material Adverse Effects;
the execution and delivery of this Agreement by the Seller has been duly and
validly authorized and will not result in a breach of its Certificate of
Incorporation or By-laws; and when executed and delivered by both parties
hereto, this Agreement will be a valid and binding obligation of the Seller,
assuming the due execution by the Selling Agent, enforceable in accordance
with
its terms (except to the extent that enforceability of the indemnification
provisions may be limited under applicable securities laws and except as
enforcement may be limited by bankruptcy, moratorium or other laws affecting
creditors’ rights or general principles of equity); and the execution and
delivery of this Agreement, the consummation of the transactions herein
contemplated and compliance with the terms of this Agreement by the Seller
do
not and will not conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, any agreement or any applicable
law, rule, regulation, judgment, order or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over the
Seller, to which the Seller is a party or by which it is bound;
(b) The
Offering Document and the SEC Reports do not contain and will not contain,
at
any time between the date hereof and to and including the date of each Closing,
any untrue statement of a material fact and does not omit nor during such period
will
4
omit
to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading;
(c) Except
as is otherwise disclosed in the Offering Document or the SEC Reports, there
is
no litigation or governmental proceeding pending or, to the best of its
knowledge, threatened against or involving the property or business of the
Seller or any subsidiary of the Seller that would result in a Material Adverse
Effect;
(d) Except
as is otherwise disclosed in the Offering Document or the SEC Reports, no
material defaults exist in the due performance and observance of any material
obligation, term, covenant or condition of any agreement or instrument to which
the Seller or any subsidiary is a party or by which they are bound that would
result in a Material Adverse Effect;
(e) The
offer, offer for sale, and sale of the Offered Securities have not been and
will
not be registered with the Securities and Exchange Commission (the “SEC”) except
as contemplated in the Offering Document. The Company’s actions with
respect to the offer, offer for sale and sale of the Offered Securities will
be
pursuant to the exemptions from the registration requirements of Section 5
of
the 1933 Act provided by Section 4(2) thereof and/or by Regulation D
thereunder;
(f)
To the best of its knowledge and belief, assuming the offer, offer for sale
and
sale of the Offered Securities is made in compliance with the terms of the
Offering Document, the applicable filings with the SEC and any applicable Blue
Sky laws, and subject to the performance of the Selling Agent’s obligations
hereunder, the Seller will have complied in all material respects with the
1933
Act and with all state securities laws and regulations applicable to it in
connection with the offer, offer for sale, and sale of the Offered
Securities. The Seller has not taken and will not take any action in
conflict with the 1933 Act or applicable state or foreign securities or Blue
Sky
laws, or which would make the exemption, qualification or registration pursuant
to applicable federal or state securities or Blue Sky laws unavailable with
respect to the offer, offer for sale and sale of the Offered
Securities. The Seller and its officers, directors or partners are
not subject to any disqualification, including but not limited to any judgment,
decree, order or decision issued by the SEC, any state or foreign securities
regulatory authority, any court of competent jurisdiction or the United States
Postal Service. In offering the Offered Securities, the Seller will
comply with all applicable federal, state or foreign securities laws, including
the rules covering exemptions from registration;
(g) Subject
to the performance of the Selling Agent’s obligations hereunder, the Offered
Securities, upon the payment therefor and issuance thereof, will conform to
all
statements and descriptions in relation thereto contained in the Offering
Document and will have the rights set forth in the Seller’s Certificate of
Incorporation;
(h) To
the best of the Seller’s knowledge, the Seller has neither been engaged in, nor
been the subject of, any of the actions or proceedings specified in subsection
(a) of Rule 262 promulgated under Section 3(b) of the 1933 Act, or any
substantially similar provisions under the securities laws of any state in
which
the Offered Securities are to be sold,
5
such
that
no exemption from registration would be available for the offering of the
Offered Securities by the Seller under applicable federal or state securities
laws;
(i)
Since the respective dates as of which information is given in the SEC Reports,
(i) there has been no material adverse change in the condition, business,
property, capital commitments, working capital and liabilities or prospects
of
the Seller or any subsidiary, financial or otherwise; (ii) the property and
business of the Seller materially conform to the descriptions thereof contained
in the SEC Reports; (iii) there have been no material liabilities or obligations
incurred or material transactions entered into by the Seller or any subsidiary
other than those in the ordinary course of business; (iv) there have been no
dividends or distributions of any kind declared, paid or made by the Seller
on
its capital stock; (v) there has not been any change in the capital stock,
or
any material increase in the current or long-term debt except as disclosed
in
the SEC Reports, or any issuance of options, warrants, convertible securities
or
other rights to purchase the capital stock of the Seller or any subsidiary;
and
(vi) there have been no transactions between the Seller, shareholders owning
five percent (5%) or more of its issued and outstanding capital stock, the
Seller’s officers and/or directors, nor have there been any corporate
opportunities taken or assumed by controlling shareholders, officers or
directors, that are not fully disclosed in the SEC Reports.
(j)
The Seller will notify the Selling Agent immediately and confirm the notice
in
writing (i) of the issuance by the SEC or by any state attorney general or
securities administrator of any order enjoining the sale of the Offered
Securities or suspending the effectiveness of any qualification of the Offered
Securities for sale or (ii) of the initiation of any proceedings for that
purpose. The Seller will make every reasonable effort to prevent the
issuance of any such order and, if any such order shall at any time be issued,
to obtain the lifting thereof at the earliest possible moment;
(k) The
audited and unaudited combined financial statements of the Seller (including
the
related notes) included in the SEC Reports present fairly the financial position
of the Seller and its subsidiaries at the dates indicated; said financial
statements have been prepared in conformity with United States generally
accepted accounting principles applied on a consistent basis, except as
expressly qualified therein, and are in conformity with Regulation S-X
promulgated under the Act;
(l)
Except as set forth in the SEC Reports, the Seller does not have any
subsidiaries and does not own any interest in any other corporation,
partnership, joint venture or other entity;
(m) As
of the date of this Agreement, the Seller and its subsidiaries have not agreed,
or agreed in principle, to any merger or acquisition, or combination with,
of
any other corporation, partnership, person, party, entity or trust or the sale
of its business or assets to any other corporation, partnership, person, party,
entity or trust;
(n) The
Seller and its subsidiaries have not, directly or indirectly, at any time during
their existence (i) made any unlawful contribution to any candidate for
political office, or failed to disclose fully any contribution in violation
of
law, or (ii) made any payment to
6
any
federal, state or foreign governmental officer or official, or other person
charged with similar public or quasi-public duties, other than payments required
or permitted by the laws of the United States or any jurisdiction
thereof;
(o) To
the best of Seller’s knowledge, the Seller and its subsidiaries have filed all
necessary federal, state, local, foreign and other tax returns required to
be
filed by them and have paid all taxes shown as due thereon; the Seller and
its
subsidiaries have not been notified, either orally or in writing, that any
state, local, federal or foreign taxing authority is conducting or intends
to
conduct an audit of any tax return or report filed by the Seller and its
subsidiaries or concerning their business or properties; and the Seller has
no
knowledge of any tax deficiency which has been asserted or threatened against
the Seller and any subsidiary which would materially and adversely affect the
business, properties, financial condition, results of operations, liabilities
or
working capital of the Seller;
(p) The
Seller and its subsidiaries make and keep accurate books and records and
maintain internal accounting controls which provide reasonable assurance that
(i) transactions are executed in accordance with management’s authorization,
(ii) transactions are recorded as necessary to permit preparation of its
financial statements and to maintain accountability for its assets, (iii) access
to their assets is permitted only in accordance with management’s authorization,
and (iv) the reported assets are compared with existing assets at reasonable
intervals;
(q) There
are no pre-emptive rights applicable to any of the Seller’s outstanding
securities, or granted by the Seller to any person or party;
(r) The
capitalization of the Seller is as described in the SEC Reports and the Seller
has outstanding no more than 48,476,352 shares of its common stock as of the
date hereof; all presently outstanding shares of the Seller’s common stock are
duly and validly authorized and issued, fully paid and non-assessable and
contain no preemptive rights; the Seller has not contracted for the issuance
of
any additional equity securities other than as set forth herein or as
contemplated or described in the Offering Document and no shares of any other
classes of equity securities are issued and outstanding except as follows:
outstanding options to purchase 11,755,433 shares of common stock and
outstanding warrants to purchase 28,161,563 shares of common stock;
(s) The
Seller agrees that, for a period of Twelve months (12) months from the date
hereof, it shall not solicit any offer to buy from or offer to sell to any
person introduced to the Seller by the Selling Agent in connection with the
Offering, any securities of the Seller or provide the name of any such person
to
any other securities broker or dealer or selling agent. For purposes
of this subsection, a person shall be considered to have been “introduced to the
Seller” by the Selling Agent only so long as Seller delivers an investment
presentation to such person as part of the “road show” for the Offering as
arranged by the Selling Agent, each of whose name(s) shall be thereafter listed
and set forth on a schedule to this Agreement, which shall be updated from
time
to time. In the event that the Seller or any of its
affiliates, directly or indirectly, solicits, offers to buy from or offers
to
sell to any such person any such securities, or provides the name of any such
person to any other securities broker or
7
dealer
or
selling agent, and such person purchases such securities or purchases securities
of the Seller from any other securities broker or dealer or selling
agent, the Seller shall pay to the Selling Agent an amount equal to ten percent
(10.0%) of the aggregate purchase price of the securities so purchased by such
person.
(t) The
Seller is currently in compliance with (i) all applicable, material provisions
of the Xxxxxxxx-Xxxxx Act of 2002, and the rules and regulations promulgated
thereunder, and (ii) all listing standards and rules promulgated by the NASD,
except to the extent that non-compliance with such requirements in subsections
(i) or (ii) would not result in a Material Adverse Effect.
(u) All
shares of common stock to be issued pursuant to this offer (including shares
of
common stock underlying the Warrants) shall be delivered to the investors or
the
Selling Agent, as may be applicable, in the form of a physical certificate
and
not electronically.
3.2 The
Selling Agent represents and warrants to the Seller as follows:
(a) The
Selling Agent is, has been and will be at all times during the Offering Period,
a Delaware corporation duly organized and validly existing under the laws of
the
state of its incorporation, with all requisite power and authority to enter
into
and perform this Agreement; the execution and delivery of this Agreement by
the
Selling Agent has been duly and validly authorized; and when executed and
delivered by the Seller, this Agreement will be a valid and binding obligation
of the Selling Agent enforceable in accordance with its terms subject
to: (i) due authorization, execution and delivery hereof by the
Seller; (ii) the enforcement of remedies under applicable bankruptcy, insolvency
and other laws affecting creditors’ rights generally and moratorium laws from
time to time in effect; (iii) general equitable principles which may limit
the
right to obtain the remedy of specific performance; and (iv) the public policy
limitation on indemnification under the federal securities laws;
(b)
The Selling Agent shall not offer or sell the Offered Securities in any state
or
states without the approval of the Seller and completion by the Seller of all,
or any, Blue Sky filings for such states and shall not offer or sell the Offered
Securities in any state or states in which it is not qualified or registered
as
a broker-dealer or authorized to engage in the brokerage business;
and
(c)
The Selling Agent is (i) a broker-dealer registered with the SEC pursuant to
the
1934 Act, and no proceeding has been initiated to revoke such registration;
(ii)
a member in good standing of the NASD; and (iii) a broker-dealer registered
with
the securities authorities of each jurisdiction in which it is required to
be
registered in connection with the offers or sales of the Offered Securities,
and
all such offers or sales will be made only by individuals licensed as required
by all applicable federal and state securities laws. The Selling
Agent agrees to maintain each of the foregoing memberships and registrations
in
good standing throughout the Offering Period.
8
4. Sale
and Delivery of Offered Securities.
4.1 No
sale of Offered Securities shall take place or be regarded as effective unless
and until accepted by the Seller, such acceptance to occur at Closing, and
the
Seller reserves the right in its sole and absolute discretion to refuse to
sell
Offered Securities to any or all persons at any time. Selling Agent
shall send to the Seller and to the Escrow Agent designated in Section 1.2,
with
copies to counsel for the Seller, all acceptable executed Subscription
Documents, promptly upon receipt of the same, subject to any reasonable delay
occasioned by further inquiry as to a prospective purchaser’s qualification or
requests by the Seller or Selling Agent for further information from a
prospective purchaser. The Seller shall notify Selling Agent as to
whom to send the originals of such executed Subscription Documents and to whom
to send copies. Selling Agent shall promptly send each such
prospective purchaser’s payment for his Offered Securities to the Escrow
Agent. Subject to review by counsel for the Seller, the Seller shall
notify Selling Agent whether such prospective purchaser will be accepted by
the
Seller at Closing within ten (10) business days after receipt of the executed
subscription documents for each prospective purchaser of Offered Securities,
but
in no event later than the earlier of (i) the date the parties have agreed
to
for Closing or (ii) the Offering Termination Date. For every
prospective purchaser of Offered Securities whose subscription is rejected,
the
Seller will promptly return all of such prospective purchaser’s executed
Subscription Documents to Selling Agent for return to the prospective purchaser,
and will notify the Escrow Agent to return the funds received to such
prospective purchaser without interest and without deduction.
5. Conditions
to the Obligations of the Seller.
The
obligations of the Seller hereunder are subject to the accuracy of Selling
Agent’s representations and warranties, to the observance and performance by
Selling Agent of its obligations hereunder, and to the following further
conditions (any of which may be waived in writing in whole or in part by the
Seller):
(a) Selling
Agent shall not have taken or failed to take any action at any time at or prior
to Closing, which, in the opinion of the Seller or counsel for Seller, conflicts
or would conflict with, or otherwise make unavailable, the exemption from
registration requirements for the offer and sale of the Offered Securities
under
applicable securities laws and regulations.
(b) If
any of the conditions specified in this Section 5 shall not have been fulfilled
when and as required by this Agreement to be fulfilled, all the obligations
of
the Seller under this Agreement may be terminated in writing at any time at
or
prior to Closing, and any such termination shall be without liability to the
parties, and further provided that the obligations under Section 7 and Section
9.1 shall nevertheless survive and continue thereafter.
6. Conditions
of the Obligations of the Selling Agent.
The
obligations of the Selling Agent to act as agent hereunder, to find purchasers
for the Offered Securities, and to attend and to deliver documents at Closing
shall be subject to the following conditions:
9
(a) Between
the date hereof and Closing, the Seller and its subsidiaries shall not have
sustained any loss on account of fire, explosion, flood, accident, calamity
or
other cause, of such character as results in a Material Adverse Effect on the
Seller and its subsidiaries, whether or not such loss is covered by
insurance.
(b) Between
the date hereof and Closing, there shall be no material litigation instituted
or
threatened against the Seller or any subsidiary (other than as set forth in
the
Offering Document) and there shall be no material proceeding instituted or
threatened before or by any federal or state commission, regulatory body or
administrative agency or other governmental body, domestic or foreign, wherein
an unfavorable ruling, decision or finding would materially adversely affect
the
business, franchises, licenses, permits, operations or financial condition
or
income of the Seller.
(c) Except
as contemplated herein or as set forth in the Offering Document, during the
period subsequent to the date hereof, and prior to Closing, the Seller and
each
subsidiary: (i) shall have conducted its business in the usual and
ordinary manner as the same was being conducted on the date hereof, and (ii)
except in the ordinary course of its business, the Seller and each subsidiary
shall not have incurred any liabilities or obligations (direct or contingent),
or disposed of any assets, or entered into any material transaction or suffered
or experienced any substantially adverse change in its condition, financial
or
otherwise, or in its working capital position. At Closing, the
capitalization of the Seller shall be substantially the same as set forth in
the
Offering Document.
(d) The
authorization for the issuance and delivery of the Offered Securities and the
Offering Document and related materials, and for the execution and delivery
of
this Agreement, and all other legal matters incident thereto, shall be
reasonably satisfactory in all respects to counsel for Selling
Agent.
(e) The
Seller shall have furnished to the Selling Agent the opinion, dated the Closing
Date, of its counsel, which opinion shall be reasonably acceptable to the
Selling Agent and its counsel
(f)
The representations and warranties of the Seller made in this Agreement or
in
any document or certificate delivered to the Selling Agent pursuant hereto
shall
be true and correct on and as of the Closing with the same force and effect
as
though such representations and warranties have been made on and as of the
Closing, and the Selling Agent shall have received a certificate, dated the
Closing Date, to such effect executed by the Chairman of the Board or President
of the Seller.
(g) The
Seller shall have performed and complied in all material respects with all
covenants, terms and agreements to be performed and complied with by the Seller
on or before the Closing.
(h) The
Seller shall have provided such certificates as the Selling Agent shall
reasonably request.
10
(i)
The Seller and its President shall provide certificates to the Selling Agent
certifying that the proceeds of the Offering will be used in accordance with
the
uses designated in “Use of Proceeds” in the Offering Document.
7. Indemnification.
7.1 The
Seller agrees to indemnify and hold harmless Selling Agent and each person,
if
any, who controls Selling Agent within the meaning of the 1933 Act or the 1934
Act (together, the “Acts”), the Selling Agent’s affiliated entities, partners,
employees, legal counsel and agents (the “SA Indemnified Parties”) against any
losses, claims, damages, obligations, penalties, judgments, awards, liabilities,
costs, expenses and disbursements (and any and all actions, suits, proceedings
and investigations in respect thereof and any and all legal and other costs,
expenses and disbursements in giving testimony or furnishing documents in
response to a subpoena or otherwise), joint or several, to which Selling Agent
or such person may be subject, under the Acts or otherwise, including, without
limitation, the costs, expenses and disbursements, as and when incurred, of
investigating, preparing or defending any such action, suit, proceeding or
investigation (whether or not in connection with litigation in which the Selling
Agent is a party), directly or indirectly, caused by, relating to, based upon,
arising out of, or in connection with (i) the violation or breach of any
representation, warranty or covenant or agreement of the Seller set forth in
this Agreement or in any instrument, document, agreement or certificate
delivered by the Seller in connection herewith; (ii) any untrue statement or
omission or any alleged untrue statement or omission in the Offering Document
or
selling material, excluding information contained in or omitted from the
Offering Document or selling material in reliance upon, and in conformity with,
information furnished to the Seller by Selling Agent or any Participating
Broker-Dealer specifically for use in preparation of the Offering Document
or
selling material, as the case may be; (iii) any information provided by or
on
behalf of Seller in order to qualify or exempt the Offered Securities for sale
in any jurisdiction; or (iv) the failure of the Seller to comply with the
provisions of the Acts and the regulations thereunder, including Regulation
D;
and will reimburse the SA Indemnified Parties for any legal or other expenses
reasonably incurred by the SA Indemnified Parties in connection with
investigation of or defending against any such loss, claim, expense, damage,
liability, (or actions in respect thereof); provided, however, that the Seller
shall not be required to indemnify the SA Indemnified Parties for any payment
made to any claimant in settlement of any suit or claim unless such payment
is
agreed to by the Seller (which agreement shall not be unreasonably withheld)
or
by a court having jurisdiction of the controversy. This indemnity
agreement shall remain in full force and effect notwithstanding any
investigation made by Selling Agent or on Selling Agent’s behalf, shall survive
consummation of the sale of the Offered Securities hereunder and shall be in
addition to any liability which the Seller may otherwise have.
7.2 Selling
Agent agrees to indemnify and hold harmless the Seller and each person, if
any,
who controls the Seller within the meaning of the Acts, Seller’s affiliated
entities, partners, employees, legal counsel and agents (the “Seller Indemnified
Parties”) against any losses, claims, damages, obligations, penalties,
judgments, awards, liabilities, costs, expenses and disbursements (and any
and
all actions, suits, proceedings and investigations in respect thereof and any
and all legal and other costs, expenses and disbursements in giving testimony
or
11
furnishing
documents in response to a subpoena or otherwise), joint or several (including,
without limitation, the costs, expenses and disbursements, as and when incurred,
of investigating, preparing or defending any such action, suit, proceeding
or
investigation (whether or not in connection with litigation in which the Seller
is a party)), to which the Seller or any such person may be subject,
under the Acts or otherwise, insofar as such losses, claims, expenses, damages
or liabilities (or actions in respect thereof) which (i) arise out of or are
based upon any untrue statement or omission or any alleged untrue statement
or
omission in the Offering Document contained in or omitted from the Offering
Document in reliance upon, and in conformity with, information furnished to
the
Seller by Selling Agent or any Participating Broker-Dealer or either of them
specifically for use in preparation of the Offering Document or selling
material, as the case may be or (ii) are directly or indirectly, caused by,
relating to, based upon, arising out of, or in connection with the violation
or
breach of any representation, warranty or covenant or agreement of the Selling
Agent set forth in this Agreement or in any instrument, document, agreement
or
certificate delivered by the Selling Agent in connection herewith) ; and will
reimburse the Seller Indemnified Parties for any legal or other expenses
reasonably incurred by them in connection with investigating or defending
against any such loss, claim, expense, damage, liability, (or actions in respect
thereof); provided, however, that Selling Agent shall not be required to
indemnify the Seller Indemnified Parties for any payment made to any claimant
in
settlement of any suit or claim unless such payment is approved by a court
having jurisdiction over the controversy or Selling Agent agrees to such
settlement (which agreement shall not be unreasonably withheld); and provided
further that Selling Agent shall not be liable under this Section 7.2 for any
losses, claims, expenses, damages or liabilities arising out of any act or
failure to act on the part of any other person except Selling Agent, its
partners, employees and agents (including registered representatives) or any
Participating Broker-Dealer. This indemnity agreement shall remain in
full force and effect notwithstanding any investigation made by or on behalf
of
the Seller and shall survive consummation of the sale of the Offered Securities
hereunder and the termination of this Agreement, and shall be in addition to
any
liability which Selling Agent may otherwise have. Notwithstanding the
foregoing, in no event shall the amount that the Selling Agent is required
to
indemnify the Seller Indemnified Parties, exceed in the aggregate the
compensation received by the Selling Agent hereunder, except in the case of
fraud on the part of the Selling Agent.
7.3 The
indemnified party shall notify the indemnifying party in writing promptly after
the summons or other first legal process giving information of the nature of
any
and all claims which have been served upon the indemnified party. In
case any action is brought against any indemnified party upon any such claim,
the indemnifying party shall be entitled to participate at its own expense
in
the defense, or if it so elects, in accordance with arrangements satisfactory
to
any other indemnifying party or parties similarly notified, to assume the
defense thereof, with counsel who shall be satisfactory to such indemnified
party and other indemnified parties who are defendants in such action; and
after
notice from the indemnifying party to such indemnified party of its election
so
to assume the defense thereof and the retaining of such counsel by the
indemnifying party, the indemnifying party shall not be liable to such
indemnified party under this Section 7 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof, other than the reasonable costs of investigation, unless the
indemnified party shall have reasonably concluded that there are or may be
defenses available to it which are different from or in addition to those
available to the
12
indemnifying
party (in which case the indemnifying party shall not have the right to direct
the defense of such action on behalf of the indemnified party), in any of which
circumstances such expenses shall be borne by the indemnifying
party.
8. Termination
of Agreement.
8.1 This
Agreement shall terminate:
(a) If
at any time after commencement of the Offering, any material condition of
Seller’s obligations hereunder shall not have been met or shall cease to be met
and Selling Agent shall have given to the Seller notice of Selling Agent’s
desire to terminate this Agreement on account of the nonfulfillment of such
condition; or
(b)
At such time as all of the Offered Securities shall have been sold and the
subscriptions therefor have been accepted or the Offering Termination Date
has
been reached, whichever shall first occur.
Notwithstanding
the termination of this Agreement in accordance with the foregoing provisions
of
this Section 8, the respective indemnities, covenants, agreements,
representations, warranties and other statements of the Seller and Selling
Agent
set forth in or made pursuant to this Agreement will remain operative and in
full force and effect.
8.2 If
this Agreement is terminated pursuant to Section 8.1(a) above, the Selling
Agent
shall have no liability to the Seller, and if this Agreement is terminated
pursuant to Section 8.1(b) above, the Seller shall have no liability to the
Selling Agent.
9. Miscellaneous.
9.1
Except as otherwise specifically provided in this Agreement or as may be
otherwise agreed between the parties hereto, Selling Agent, on the one hand,
and
the Seller, on the other, shall each pay their respective expenses incident
to
this Agreement and the transactions contemplated hereby (including, without
limitation, the fees and disbursements of their respective counsel), and no
party to the Agreement shall have any liability for such expenses incurred
by
any other party.
9.2 It
is understood and agreed that Selling Agent’s relationship to the Seller is that
of an independent contractor and that nothing herein shall be construed to
create a relationship of partners, affiliates, joint venturers or employer
and
employee between Selling Agent or either of them and the Seller.
9.3 No
rights or interests arising hereunder may be assigned except with the prior
written consent of both the Seller and the Selling Agent. Subject to
this limitation, this Agreement shall inure to the benefit and be binding upon
Selling Agent and the Seller 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 their respective successors and
assigns and for the benefit of no other person. Except as provided in
this Agreement, nothing expressed or
13
mentioned
in this Agreement is intended or shall be construed to give any person, other
than the parties to it and their respective successors and assigns, any legal
or
equitable right, remedy or claim under or with respect to this Agreement or
any
of its provisions. No purchaser of Offered Securities shall be
construed as a successor or assign merely by reason of such
purchase.
9.4 If
any portion of this Agreement shall be held invalid or inoperative, then so
far
as is reasonable and possible:
(a)
the remainder of this Agreement shall be considered valid and operative;
and
(b) to
the extent possible under applicable law, effect shall be given to the intent
manifest by the portion held invalid or inoperative.
9.5 This
Agreement may be executed in a number of identical counterparts and by
facsimile, each of which shall be deemed to be an original, but all of which
constitute, collectively, one and the same Agreement; but, in making proof
of
this Agreement, it shall not be necessary to produce or account for more than
one counterpart.
9.6
This Agreement may not be modified or amended except by written agreement
executed by each of the parties to this Agreement.
9.7 Whenever
the context so requires, the masculine shall include the feminine and neuter,
and the singular shall include the plural, and conversely. The words
“shall” and “will” and “agrees” are mandatory, “may” is permissive.
9.8
The parties to this Agreement covenant and agree that they will execute any
other and further instruments and documents which reasonably are or may become
necessary or convenient to effectuate and carry out this Agreement.
9.9 This
Agreement (and the other documents and agreements referenced herein) contains
the entire understanding between the parties and supersedes prior understandings
or written or oral agreements between the parties with respect to the subject
matter of this Agreement.
9.10
This Agreement shall be construed and governed by the laws of the State of
Florida. Each party hereby consents to any and all actions or
controversies arising from this agreement shall be have venue in the exclusive
jurisdiction of the state and federal courts located in Palm Beach County,
Florida. Any terms and conditions of this Agreement which are inconsistent
with
the terms and conditions of the Offering Document, shall be modified to conform
to the terms and conditions set forth in the Offering Document.
9.11 All
notices or communications, except as otherwise specifically provided, shall
be
in writing, and, if sent to any party, shall be mailed, delivered or telegraphed
and confirmed to that party at the address set forth below:
14
|
If
to the Seller:
|
PERFORMANCE
HEALTH TECHNOLOGIES,
INC.
|
000
Xxxxx
Xxxx Xxxxx
Xxxxxxx,
XX 00000
Attn:
Xxxxxx Xxxxxxxx, President & CEO
With
a
copy contemporaneously
by
like
means:
|
If
to Selling Agent, to:
|
Xxxxxx
Xxxxx Securities,
|
000
X. Xxxxxxx Xxxxxxx
0xx
Xxxxx
Xxxx
Xxxxx, XX 00000
Attention: Xxxxx
Xxxxxxxxx
With
a
copy contemporaneously
by
like
means:
9.12 All
of the terms of this Agreement, including all representations, warranties,
covenants and agreements of Selling Agent and the Seller, shall survive
completion of the Offering for three years.
9.13 Section
titles or captions contained in this Agreement are inserted only as a matter
of
convenience and for reference. Those titles in no way define, limit,
extend or describe the scope of this Agreement, or the intent of any provision
of this Agreement.
10. Right
of First Refusal. The Seller will grant to the Selling Agent a
right of first refusal for a period of twenty-four (24) months from the Closing
Date of the Offered Securities being offered in this transaction to be engaged
as placement agent for any public or private sale of securities of the Seller
to
be made by the Seller or any of its affiliates or subsidiaries.
If
the
foregoing correctly sets forth the understanding between us, please indicate
acceptance by signing in the space provided below for that purpose and return
to
us a counterpart hereof so signed, whereupon this letter and Selling Agent’s
acceptance shall constitute a binding agreement between us.
[Signature
Page Follows]
15
|
Very
truly yours,
PERFORMANCE
HEALTH
TECHNOLOGIES,
INC.
By:____________________________
(Authorized
Officer)
|
The
foregoing Selling Agreement for PERFORMANCE HEALTH TECHNOLOGIES, INC. is hereby
accepted and agreed to as of the date first above written.
|
XXXXXX
XXXXX
SECURITIES, INC.
As
Selling Agent
By:
__________________________
(Authorized
Officer)
By:
__________________________
(Authorized
Officer)
|
16
Exhibit
A
Date
Performance
Health Technologies, Inc.
Private
Placement of Convertible Notes
Offering
Size:$600,000
Attached
is a proposed structure for a possible financing arranged by Xxxxxx Xxxxx
Securities, Inc. for Performance Health Technologies, Inc The terms
of this proposal (this “Proposal”) are preliminary, for discussion purposes
only. Your receipt of this Proposal constitutes your agreement that
this Proposal is the confidential information of Xxxxxx Xxxxx Securities, Inc.
and may not be distributed without our prior written consent other than to
your
attorneys, accountants and as required by law.
|
Issuer:
|
Performance
Health Technologies, Inc (the “Company”).
|
|
Securities
Offered:
|
600
Units, Each unit consists of a $1,000 Convertible Note (the
“Notes”) and 2,000 class A warrants and 2,000 class B
warrants.
|
|
Conversion
Price of Notes:
|
The
conversion price of the Notes shall be the lower of $0.75 or 70%
of the
average of the closing bid price for the Company’s common stock for the 20
days preceding the conversion notice, as reported by the exchange
on which
the Company’s common stock is then traded but in any event not less than $
0.30 (the “Conversion Price”).
|
|
Term
of Notes:
|
12
months.
|
|
Note
Interest:
|
10.0%
per annum, payable at maturity.
|
|
Warrants:
|
Subject
to certain adjustments, the class A Warrant exercise price shall
be $0.75
and the class B warrant exercise price shall be $1.50, each to have
a 5
year term.
|
|
Most
Favored Nations Exchange Right:
|
For
the term of the Notes, if the Company does a private equity or equity
linked financing (a “Subsequent Financing”) prior to an IPO, the holders
of the Notes may exchange the Notes at the stated value for the securities
issued in the Subsequent Financing.
|
|
Use
of Proceeds:
|
Working
capital.
|
17
