Further Covenants. Company hereby covenants and agrees that: (a) If, at any time prior to the Closing, any event shall occur as a result of which, in the reasonable judgment of Company or the Placement Agent (or counsel thereto), (i) the Offering Documents would include any untrue statement of material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or (ii) it would be necessary to amend or supplement the Offering Documents so that the representations and warranties herein remain true in all material respects or to comply with Regulation D or any other applicable securities laws or regulations, Company or the Placement Agent, as applicable, will promptly notify the other party and Company shall, at its sole cost, prepare and furnish to the Placement Agent copies of appropriate amendments and/or supplements in such quantities as the Placement Agent may reasonably request. Company will not at any time, whether before or after the Closing, prepare or use any amendment or supplement to the Offering Documents of which the Placement Agent will not previously have been advised and furnished with a copy, or to which the Placement Agent or its counsel will have reasonably objected in writing or orally (confirmed in writing within 24 hours), or which is not in compliance in all material respects with the Act, the Regulations and other applicable securities laws, rules and regulations. As soon as Company is advised thereof, Company will advise the Placement Agent and its counsel, and confirm the advice in writing, of any order preventing or suspending the use of the Offering Documents, or the suspension of the qualification or registration of the Securities or shares of common stock of Company underlying the Securities for offering or the suspension of any exemption for such qualification or registration of the Securities underlying the Securities for offering in any jurisdiction, or of the institution or threatened institution of any proceedings for any of such purposes, and Company will use its commercially reasonable efforts to prevent the issuance of any such order, judgment or decree and, if issued, to endeavor to obtain as soon as reasonably possible the lifting thereof. (b) Company shall comply with the Act, the Regulations, the 1934 Act, and the rules and regulations thereunder, all applicable federal, state and foreign securities laws and the rules and regulations thereunder in the states in which the Securities are to be offered and in which Company’s counsel has advised the Placement Agent that the Securities are qualified or registered for sale or exempt from such qualification or registration, so as to permit the continuance of the sales of the Securities, and will file with the SEC, and shall promptly thereafter forward to the Placement Agent, any and all reports on Form D and other securities filings as are required. Company shall take all reasonable steps to assist the Placement Agent in complying with FINRA Rule 5123 and Regulation M, provided that compliance with FINRA Rule 5123 and Regulation M shall be the Placement Agent’s responsibility. (c) Company shall use its reasonable best efforts to qualify the Securities for sale (or seek exemption therefrom) under the state securities or Blue Sky laws of such jurisdictions in the United States as may be mutually agreed to by Company and the Placement Agent, and Company will (through its counsel) make such applications and furnish information as may be required for such purposes, provided that in no event shall Company be obligated to qualify to do business in any jurisdiction where it is not now so qualified or to take any action which would subject it to general service of process in any jurisdiction where it is not now subject, and provided further that Company shall not be required to produce any new disclosure document other than the Memorandum. Company will, from time to time, prepare and file such statements and reports as are or may be required to continue such qualifications in effect for so long a period as the Placement Agent may reasonably request. (d) To the extent required by applicable law or its governing documents, Company shall place a legend on the certificates representing the Securities issued to investors stating that the securities evidenced thereby have not been registered under the Act or applicable state securities laws and setting forth or referring to the applicable restrictions on transferability and sale of such securities under the Act and applicable state laws. (e) Company shall apply the net proceeds from the sale of the Securities for the purposes described in the Memorandum. (f) Whether or not the transactions contemplated hereby are consummated, or this Agreement is terminated, as partial consideration to the Placement Agent for the performance of its services hereunder, Company hereby agrees to pay all reasonable fees, costs and expenses incident hereto and to the Offering, including, without limitation, those in connection with: (i) preparing, printing, duplicating, filing, distributing and binding the Memorandum and any and all amendments and/or supplements thereto and any and all agreements, contracts and other documents related hereto and thereto; (ii) the creation, authorization, issuance, transfer and delivery of the Securities, including, without limitation, fees and expenses of any transfer agent or registrar; (iii) all fees and expenses of legal, accounting and other advisers to Company; (iv) the registration, qualification or exemption of the Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions pursuant to Section 6(c); (v) the fees and expenses of the Escrow Agent; (vi) all reasonable travel, long-distance telephone call, photocopying, courier and related other out-of-pocket expenses incurred by the Placement Agent in connection with this Agreement, including the reasonable fees and expenses of the Placement Agent’s counsel, all of which fees, costs and expenses shall be reasonably documented by the Placement Agent in an invoice submitted by the Placement Agent to Company; provided, however, that in no event shall Company be obligated to pay any fees and expenses described in this clause (vi) in excess of $20,000 in the aggregate without Company written consent; provided, further, that the foregoing limitation on fees and expenses shall in no way affect the obligations of Company with respect to the indemnification provisions set forth in Section 9 hereof and, provided further, that fees and expenses for the Placement Agent’s counsel shall not exceed $3,500. All fees and expenses described in this clause (vi) shall be payable to the Placement Agent by Company within 30 days after Company’s receipt of an invoice from the Placement Agent for such for such fees and expenses.
Appears in 1 contract
Further Covenants. The Company hereby covenants and agrees that:
(a) Except with the prior written consent of the Placement Agent, the Company shall not, at any time prior to the Final Closing, take any action that would cause any of the representations and warranties made by it in this Agreement not to be complete and correct on and as of each Closing Date with the same force and effect as if such representations and warranties had been made on and as of each such date.
(b) If, at any time prior to the Final Closing, any event shall occur that does or may reasonably be expected to materially affect the Company or as a result of whichwhich it might become necessary to amend or supplement the Memorandum so that the representations and warranties herein and therein remain true, or in case it shall, in the reasonable judgment opinion of Company or counsel to the Placement Agent (or counsel thereto)Agent, (i) the Offering Documents would include any untrue statement of material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or (ii) it would be necessary to amend or supplement the Offering Documents so that the representations and warranties herein remain true in all material respects or Memorandum to comply with Regulation D or any other applicable securities laws or regulations, the Company or the Placement Agent, as applicable, will promptly notify the other party Placement Agent and Company shall, at its sole cost, prepare and furnish to the Placement Agent copies of appropriate amendments and/or supplements in such quantities as the Placement Agent may reasonably request. The Company will not at any time, whether before or after the Final Closing, prepare or use any amendment or supplement to the Offering Documents Memorandum of which the Placement Agent will not previously have been advised and furnished with a copy, or to which the Placement Agent or its counsel will have reasonably objected in writing or orally (confirmed in writing within 24 hours), or which is not in compliance in all material respects with the Act, the Regulations and other applicable securities laws, rules and regulations. As soon as the Company is advised thereof, the Company will advise the Placement Agent and its counsel, and confirm the advice in writing, of any order preventing or suspending the use of the Offering DocumentsMemorandum, or the suspension of the qualification or registration of the Securities or shares of common stock of Company underlying the Securities Units for offering or the suspension of any exemption for such qualification or registration of the Securities underlying the Securities Units for offering in any jurisdiction, or of the institution or threatened institution of any proceedings for any of such purposes, and the Company will use its commercially reasonable best efforts to prevent the issuance of any such order, judgment or decree decree, and, if issued, to endeavor to obtain as soon as reasonably possible the lifting thereof.
(bc) The Company shall comply with the Act, the Regulations, the Securities Exchange Act of 1934, as amended (the “1934 Act”), and the rules and regulations thereunder, all applicable federal, state and foreign securities laws and the rules and regulations thereunder in the states in which the Securities are to be offered and in which CompanyPlacement Agent’s Blue Sky counsel has advised the Placement Agent that the Securities Units are qualified or registered for sale or exempt from such qualification or registration, so as to permit the continuance of the sales of the SecuritiesUnits, and will file with the SEC, and shall promptly thereafter forward to the Placement Agent, any and all reports on Form D and other securities filings as are required. Company shall take all reasonable steps to assist the Placement Agent in complying with FINRA Rule 5123 and Regulation M, provided that compliance with FINRA Rule 5123 and Regulation M shall be the Placement Agent’s responsibility.
(cd) The Company shall use its reasonable best efforts to qualify the Securities Units for sale (or seek exemption therefrom) under the state securities or Blue Sky laws of such jurisdictions in the United States as may be mutually agreed to by Company the Placement Agent shall designate, and the Placement Agent, and Company will (through its Blue Sky counsel) make such applications and furnish information as may be required for such purposes, provided that in no event shall Company be obligated to qualify to do business in any jurisdiction where it is not now so qualified or to take any action which would subject it to general service of process in any jurisdiction where it is not now subject, and provided further that Company shall not be required to produce any new disclosure document other than the Memorandum. The Company will, from time to time, prepare and file such statements and reports as are or may be required to continue such qualifications in effect for so long a period as the Placement Agent may reasonably request.
(de) To the extent required by applicable law or its governing documents, The Company shall place a legend on the certificates representing the Securities issued to investors subscribers stating that the securities evidenced thereby have not been registered under the Act or applicable state securities laws and laws, setting forth or referring to the applicable restrictions on transferability and sale of such securities under the Act and applicable state laws.
(ef) The Company shall apply the net proceeds from the sale of the Securities Units to fund its working capital requirements and/or for such other purposes as shall be specifically described under “Use of Proceeds” in the Memorandum. The net proceeds shall not be used to repay indebtedness to or pay bonuses or other extraordinary or deferred compensation to current executive officers or principal shareholders of the Company, or to repurchase or redeem any securities, except that it is hereby understood and agreed that up to $75,000 of subordinated debt may be paid from the net proceeds of the Offering to two individuals who are principal shareholders but who are not directors, officers or employees of the Company.
(g) During the Offering Period, the Company shall make available for review by prospective purchasers of the Units during normal business hours at the Company’s offices, upon their request, copies of the Company Agreements to the extent that such disclosure shall not violate any obligation on the part of the Company to maintain the confidentiality thereof and shall afford each prospective purchaser of Units the opportunity to ask questions of and receive answers from an officer of the Company concerning the terms and conditions of the Offering and the opportunity to obtain such other additional information necessary to verify the accuracy of the Memorandum to the extent it possesses such information or can acquire it without unreasonable expense.
(h) Except with the prior written consent of the Placement Agent or as set forth in the Memorandum with respect to the issuance of Units, the Company shall not, at any time prior to the earlier of the Final Closing or the Termination Date, engage in or commit to engage in any transaction outside the ordinary course of business, including, without limitation, the incurrence of material indebtedness (except for the purposes substitution of a senior lender and loan facility under terms no less favorable than existing terms with the Company’s current lender upon the satisfaction of all liabilities and obligations owed to such current lender); materially change its business or operations as shall be described in the Memorandum; dispose of any material assets or make any material acquisition; or issue, agree to issue or set aside for issuance any securities (debt or equity) or any right to acquire such securities, except as shall be contemplated by the Memorandum.
(fi) Whether or not the transactions contemplated hereby are consummated, or this Agreement is terminated, as partial consideration to the Placement Agent for the performance of its services hereunder, Company hereby agrees to pay all reasonable fees, costs and expenses incident hereto and to the Offering, including, without limitation, those in connection with: with (i) preparing, printing, duplicating, filing, distributing and binding the Memorandum and any and all amendments and/or supplements thereto thereto, fees for bound volumes and any and all agreements, contracts and other documents related hereto and thereto; (ii) the creation, authorization, issuance, transfer and delivery of the SecuritiesShares, the Warrants, Conversion Shares, the Agent’s Shares and the Agent’s Warrants, including, without limitation, fees and expenses of any transfer agent or registrar; (iii) the fees and expenses of the Escrow Agent (subject to Section 4(b) hereof); (iv) all fees and expenses of legal, accounting and other advisers to the Company; (iv) the registration, qualification or exemption of the Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions pursuant to Section 6(c); (v) the all filing fees, costs and legal fees and expenses for Blue Sky services and related filings with respect to Blue Sky exemptions and qualifications, including legal fees of $3,000 for the Escrow first ten states and $450 per state thereafter, $3,000 of which shall be paid to the Placement Agent’s counsel upon execution of this Agreement for legal fees in connection with obtaining Blue Sky exemptions, up to a maximum of $10,000 (the “Blue Sky Fees”) (notwithstanding the foregoing $10,000 cap on Blue Sky Fees, the Placement Agent shall in no way be responsible for any such filing fees, costs and legal fees and expenses for Blue Sky services and related filings with respect to Blue Sky exemptions and qualifications); and (vi) all reasonable travelsubject to Section 9 hereof, long-distance telephone call, photocopying, courier and related other out-of-pocket a nonaccountable expense allowance (“Placement Agent Expenses”) relating to expenses incurred by the Placement Agent in connection with this Agreementthe Offering (including, including the reasonable without limitation, travel and related expenses and fees and expenses of legal, accounting and other advisers to the Placement Agent’s counsel) equal to 3% of aggregate gross purchase price of the Units sold, all to be deducted from the gross proceeds from the sale of which feesUnits at each Closing, costs and less a good faith advance of $20,000 to cover up front expenses shall to be reasonably documented incurred by the Placement Agent in an invoice submitted which has been paid by the Company, receipt of which is hereby acknowledged by the Placement Agent.
(j) Until the Termination Date, neither the Company nor any person or entity acting on its behalf will negotiate or enter into any agreement with any other placement agent or underwriter with respect to a private or public offering of the Company’s or any subsidiary’s debt or equity securities. Neither the Company nor anyone acting on its behalf will, until the Termination Date, without the prior written consent of the Placement Agent, offer for sale to, or solicit offers to subscribe for Units or other securities of the Company from, or otherwise approach or negotiate in respect thereof with, any other person.
(k) At each Closing Date, (i) the independent auditors for the Company shall have provided a “comfort letter” concerning the Company’s financial statements in the form customarily provided by ▇▇▇▇▇ & ▇▇▇▇▇, LLP in connection with securities offerings by its audit clients and (ii) the chief executive officer and chief financial officer of the Company shall have provided representations and warranties relating to the Company’s most recent quarterly and year-to-date unaudited financial statements and internal financial controls, similar to those to be included in the Company’s 2002 annual report on Form 10-KSB under the 1934 Act, and as required by the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002.
(l) The Company shall use its best efforts to file a Registration Statement on Form SB-2 or another appropriate registration document under the Securities Act of 1933, as amended, for resale of the shares of Common Stock included in the Units, and the Common Stock underlying the Warrants and the Placement Agent Warrants, as soon as possible following the Final Closing, and in any event, not later than 30 days following the Final Closing. The Company shall use its best efforts to Company; providedcause the effectiveness of such Registration Statement on or before ninety (90) days after the Final Closing. If the Registration Statement has not been filed within the said 30-day period or does not become effective on or before 90 days after the Final Closing (120 days in the event of a “full review” by the SEC), howeverthe Company shall pay to each investor an amount in cash, that in no event shall as liquidated damages and not as a penalty, equal to 1.0% per month of the subscription amount paid by such investor for the Units until the filing or effectiveness of the Registration Statement, as applicable. If the Company be obligated fails to pay any fees and expenses described liquidated damages pursuant to this Section in this clause full within seven days after the date payable, the Company will pay interest thereon at a rate of 15% per annum (vior such lesser maximum amount that is permitted to be paid by applicable law) to each investor, accruing daily from the date such liquidated damages are due until such amounts, plus all such interest thereon, are paid in excess of $20,000 in the aggregate without Company written consent; provided, further, that the foregoing limitation on fees and expenses shall in no way affect the obligations of Company with respect full. The liquidated damages pursuant to the indemnification provisions set forth in Section 9 terms hereof and, provided further, that fees and expenses shall apply on a pro-rata basis for the Placement Agent’s counsel shall not exceed $3,500. All fees and expenses described in this clause (vi) shall be payable any portion of a month prior to the Placement Agent by Company within 30 days after Company’s receipt filing or effectiveness of an invoice from the Placement Agent for such for such fees and expensesRegistration Statement, as applicable.
Appears in 1 contract
Further Covenants. The Company hereby covenants and agrees that:
(a) If, at any time prior to The Company agrees that it shall modify or supplement the Closing, any event shall occur as a result Memorandum during the course of which, in the reasonable judgment of Company or the Placement Agent (or counsel thereto), (i) the Offering Documents would include to ensure that the Memorandum does not contain any untrue statement of a material fact or omit to state a any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under in which they were made, not misleading, or (ii) it would be necessary to amend or supplement the Offering Documents so that the representations and warranties herein remain true in all material respects or to comply with Regulation D or any other applicable securities laws or regulations, Company or the Placement Agent, as applicable, will promptly notify the other party and Company shall, at its sole cost, prepare and furnish to the Placement Agent copies of appropriate amendments and/or supplements in such quantities as the Placement Agent may reasonably request. The Company will not at any time, whether before or after the Final Closing, prepare or use any amendment or supplement to the Offering Documents Memorandum of which the Placement Agent will not previously have been advised and furnished with a copy, or to which the Placement Agent or its counsel will have reasonably objected in writing or orally (confirmed in writing within 24 hours), or which is not in compliance in all material respects with the Act, the Regulations and other applicable securities laws.
(b) Except with the prior written consent of the Placement Agent, rules which consent shall not be unreasonably withheld, the Company shall not, at any time prior to the Final Closing, take any action that would cause any of the representations and regulations. warranties made by it in this Agreement not to be complete and correct in all material respects on and as of each Closing Date with the same force and effect as if such representations and warranties had been made on and as of each such date.
(c) As soon as Company is advised practicable following notification thereof, the Company will advise the Placement Agent and its counsel, and confirm the advice in writing, of any order preventing or suspending the use of the Offering DocumentsMemorandum, or the suspension of the qualification or registration of the Securities or shares of common stock of Company underlying the Securities Units for offering or the suspension of any exemption for such qualification or registration of the Securities underlying the Securities Units for offering in any jurisdiction, or of the institution or threatened institution of any proceedings for any of such purposes, and the Company will use its commercially reasonable best efforts to prevent the issuance of any such order, judgment or decree decree, and, if issued, to endeavor to obtain as soon as reasonably possible practicable the lifting thereof.
(bd) The Company shall comply in all material respects with the Act, the Regulationsrules and regulations of the Securities and Exchange Commission (the "SEC"), the 1934 Act, and the rules and regulations thereunderthereunder in each case applicable to the offer and sale of the Units, and all applicable federal, state and foreign securities laws and the rules and regulations thereunder in the states in which the Securities are to be offered and in which Company’s Placement Agent's Blue Sky counsel has advised the Placement Agent that the Securities Units are qualified or registered for sale or exempt from such qualification or registrationregistration (except to the extent that such qualification or registration would require the Company to be qualified to do business in such state or states), so as to permit the continuance of the sales of the SecuritiesUnits, and will file with the SEC, and shall promptly thereafter forward to the Placement Agent, any and all reports on Form D and other securities filings as are required. Company shall take all reasonable steps to assist the Placement Agent in complying with FINRA Rule 5123 and Regulation M, provided that compliance with FINRA Rule 5123 and Regulation M shall be the Placement Agent’s responsibility.
(ce) The Company shall use its reasonable best efforts to qualify the Securities Units for sale (or seek exemption therefrom) under the state securities or Blue Sky laws of such jurisdictions in the United States as may be mutually agreed to by Company the Placement Agent shall designate, and the Placement Agent, and Company will (through its Blue Sky counsel) make such applications and furnish information as may be required for such purposes, provided that in no event shall Company be obligated to qualify to do business in any jurisdiction where it is not now so qualified or to take any action which would subject it to general service of process in any jurisdiction where it is not now subject, and provided further that Company shall not be required to produce any new disclosure document other than the Memorandum. The Company will, from time to time, prepare and file such statements and reports as are or may be required to continue such qualifications in effect for so long a period as the Placement Agent may reasonably request.
(df) To the extent required by applicable law or its governing documents, The Company shall place a legend on the certificates representing the Securities issued to investors subscribers stating that the securities evidenced thereby have not been registered under the Act or applicable state securities laws and laws, setting forth or referring to the applicable restrictions on transferability and sale of such securities under the Act and applicable state laws.
(eg) During the Offering Period, the Company shall apply the net proceeds from the sale make available for review by prospective purchasers of the Securities for Units during normal business hours at the purposes Company's offices, upon their request, copies of the Company Agreements to the extent that such disclosure shall not violate any obligation on the part of the Company to maintain the confidentiality thereof and shall afford each prospective purchaser of Units the opportunity to ask questions of and receive answers from an officer of the Company concerning the terms and conditions of the Offering and the opportunity to obtain such other additional information necessary to verify the accuracy of the Memorandum to the extent it possesses such information or can acquire it without unreasonable expense.
(h) Except with the prior written consent of the Placement Agent, which consent shall not be unreasonably withheld, or as set forth in the Memorandum with respect to the issuance of Units, the Company shall not, at any time prior to the earlier of the Final Closing or the Termination Date, engage in or commit to engage in any transaction outside the ordinary course of business, including, without limitation, the incurrence of material indebtedness; materially change its business or operations as shall be described in the Memorandum; dispose of any material assets or make any material acquisition; or issue, agree to issue or set aside for issuance any securities (debt or equity) or any right to acquire such securities, except as shall be contemplated by the Memorandum. Notwithstanding the preceding sentence, the Company may issue (i) compensatory option grants to employees and consultants in the ordinary course of business pursuant to option plans presently in effect, (ii) shares of its Common Stock upon exercise of outstanding options or warrants or conversion of outstanding convertible securities and (iii) securities included in the Units sold in the Offering and the Agent's Warrants.
(fi) Whether or not the transactions contemplated hereby are Offering is consummated, or this Agreement is terminated, as partial consideration to the Placement Agent for the performance of its services hereunder, Company hereby agrees to pay all reasonable of its fees, costs and expenses incident hereto and to the Offering, including, without limitation, those in connection with: with (i) preparing, printing, duplicating, filing, distributing and binding the Memorandum and any and all amendments and/or supplements thereto thereto, fees for bound volumes and any and all agreements, contracts and other documents related hereto and thereto; (ii) the creation, authorization, issuance, transfer and delivery of the Securities, Conversion Shares, and the Agent's Securities, including, without limitation, fees and expenses of any transfer agent or registrar; (iii) the fees and expenses of the Escrow Agent (subject to Section 4(b) hereof); (iv) all fees and expenses of legal, accounting and other advisers to the Company; (iv) the registration, qualification or exemption of the Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions pursuant to Section 6(c); (v) the all filing fees, costs and legal fees and expenses for Blue Sky services and related filings with respect to Blue Sky exemptions and qualifications, including legal fees of $3,000 for the Escrow first ten states and $450 per state thereafter, $3,000 of which shall be paid to the Placement Agent's counsel upon execution of this Agreement for legal fees in connection with obtaining Blue Sky exemptions (the "Blue Sky Fees"); and (vi) all reasonable travelsubject to Section 9 hereof, long-distance telephone call, photocopying, courier and related other out-of-pocket a nonaccountable expense allowance ("Placement Agent Expenses") relating to expenses incurred by the Placement Agent in connection with this Agreementthe Offering (including, including the reasonable without limitation, travel and related expenses and fees and expenses of legal, accounting and other advisers to the Placement Agent’s counsel, all ) equal to 3% of which fees, costs and the gross proceeds from the sale of Units. A good faith advance of $25,000 to cover up front expenses shall to be reasonably documented incurred by the Placement Agent has been paid by the Company on March 16, 2004. Such amount shall be credited at the First Closing against the 3% nonaccountable expense allowance.
(j) Until the Termination Date, neither the Company nor any person or entity acting on its behalf will negotiate or enter into any agreement with any other placement agent or underwriter with respect to a private or public offering of the Company's or any subsidiary's debt or equity securities. Neither the Company nor anyone acting on its behalf will, until the Termination Date, without the prior written consent of the Placement Agent, offer for sale to, or solicit offers to subscribe for Units or other securities of the Company from, or otherwise approach or negotiate in respect thereof with, any other person.
(k) At each Closing Date, (i) the independent auditors for the Company shall have provided a "comfort letter" concerning the Company's financial statements in the form customarily provided by Terance Kelley, CPA in conn▇▇▇▇▇▇ ▇▇▇▇ ▇▇curities offerings by its audit clients and (ii) the chief executive officer and chief financial officer of the Company shall have provided representations and warranties relating to the Company's most recent quarterly and year-to-date unaudited financial statements and internal financial controls, similar to those to be included in the Company's 2003 annual report on Form 10-KSB under the 1934 Act, and as required by the Sarbanes-Oxley Act of 2002.
(▇) ▇▇▇ ▇▇▇▇any hereby agrees to file a registration statement on Form SB-2 or other appropriate registration document under the Act for resale of the Shares, the Conversion Shares and the Agent's Shares, as soon as possible, but not later than 30 days following the Final Closing. The Company shall cause such registration statement to become effective within the earlier of (i) the fifth trading day following the date on which the Company is notified by the SEC that such registration statement will not be reviewed or is no longer subject to further review and comments, (ii) one hundred twenty (120) days after the Final Closing or (iii) ninety (90) days from the date of the filing of such registration statement. If the registration statement has not been filed, or does not become effective within the respective periods set forth in the preceeding sentence, the Company shall pay to each investor in the Offering as liquidated damages and not as a penalty, an invoice submitted amount in cash equal to 2% of the aggregate purchase price paid by such investor in the Offering per month, until such registration statement has been filed or has been declared effective, as applicable. If the Company fails to pay any liquidated damages pursuant to this Section in full within seven days after the date payable, the Company will pay interest thereon at a rate of 10% per annum (or such lesser maximum amount that is permitted to be paid by applicable law) to the holder, accruing daily from the date such liquidated damages are due until such amounts, plus all such interest thereon, are paid in full. The liquidated damages pursuant to the terms hereof shall apply on a pro-rate basis for any portion of a month prior to the filing or effectiveness of the registration statement required hereunder, as applicable.
(m) Effective immediately following the First Closing, the Company hereby grants the Placement Agent the right to designate a nonvoting observer to the Company's Board of Directors (the "Observer"). Such status as an observer shall include advance written notice of and the right to attend all meetings of the Board of Directors of the Company and to obtain copies of all minutes from, and notices regarding, such meetings, as well as copies of all correspondence to members of the Board of Directors. If reasonably requested by the Company, the Observer will execute a non-disclosure agreement in a customary form.
(n) The Company hereby agrees to use its best efforts to (A) no later than November 30, 2004, (x) add an additional member to the Board of Directors such that the Board of Directors shall be composed of a total of seven (7) members and (y) appoint two (2) "independent directors" (as defined in New Nasdaq Rule 4200(a)(15)) to fill the vacancy created by such addition to the Board of Directors and other vacancies; providedand (B) at any time after November 30, however2004, but not later than February 28, 2005, designate an audit committee of the Board of Directors and appoint two (2) new members to the Board of Directors to replace two (2) existing directors, which audit committee shall be in compliance with the requirements of Nasdaq (as if the Company were subject to those requirements) or, if the Company's Common Stock is then traded on the American Stock Exchange ("Amex"), in compliance with the requirements of Amex. The Company shall use its reasonable best efforts to maintain compliance with the provisions of this Section 5(n) until the end of the Effectiveness Period (as defined in the Registration Rights Agreement).
(o) Within three (3) days following the date of the First Closing, the Company shall instruct its transfer agent that in no event shall such transfer agent be permitted to issue any certificates evidencing newly-issued shares of Common Stock, unless the issuances of shares of Common Stock evidenced by such certificates shall have been first approved by the Board of Directors of the Company, and the transfer agent shall have obtained a written certification from both the Chief Executive Officer and the Chief Financial Officer of the Company be obligated to pay any fees and expenses described such effect.
(p) As soon as reasonably practicable following the Final Closing, the Company hereby agrees, in this clause (vi) in excess of $20,000 in the aggregate without Company written consent; provided, further, that the foregoing limitation on fees and expenses shall in no way affect the obligations of Company consultation with respect to the indemnification provisions set forth in Section 9 hereof and, provided further, that fees and expenses for the Placement Agent’s counsel shall not exceed $3,500. All fees , to use its reasonable best efforts to cause its stockholders to approve and expenses described effect either a reverse stock split or increase in this clause (vi) shall be payable to the Placement Agent by Company within 30 days after Company’s receipt number of an invoice from the Placement Agent for such for such fees and expensesauthorized shares of Common Stock.
Appears in 1 contract
Sources: Placement Agency Agreement (Wireless Frontier Internet Inc)
Further Covenants. The Company hereby covenants and agrees that:
(a) The Company shall not, at any time prior to the Final Closing, take any action which would cause any of the representations and warranties made by it in this Agreement not to be materially true, accurate and correct on and as of each closing date with the same force and effect as if such representations and warranties had been made on and as of each such date.
(b) If, at any time prior to the Closing, Final Closing any event shall occur which does or may materially affect the Company or as a result of which, in the reasonable judgment of Company or the Placement Agent (or counsel thereto), (i) the Offering Documents would include any untrue statement of material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or (ii) it would be might become necessary to amend or supplement the Offering Documents so that the representations and warranties herein remain true correct, or in all material respects case it shall, in the reasonable opinion of counsel to the Placement Agent communicated in writing or to the Company (with a copy to its counsel), be necessary to amend or supplement the Offering Documents to comply with Regulation D or any other applicable securities laws or regulations, the Company or the Placement Agent, as applicable, will promptly notify the other party Placement Agent and Company shall, at its sole cost, prepare and furnish to the Placement Agent copies of appropriate amendments and/or supplements in such quantities as the Placement Agent may reasonably request. The Company will not at any time, whether before or after the Final Closing, prepare or use any amendment or supplement to the Offering Documents of which the Placement Agent will not previously have been advised and furnished with a copy, or to which the Placement Agent or its counsel will have objected reasonably objected in writing or orally (confirmed in writing within 24 hours), or which is not in compliance in all material respects with the Act, the Regulations and other applicable securities laws, rules and regulations. As soon as the Company is advised thereof, the will Company will advise the Placement Agent and its counsel, and confirm the advice in writing, of any order preventing or suspending the use of the Offering Documents, or the suspension of the qualification or registration of the Securities or shares of common stock of Company underlying the Securities Shares for offering (to the extent applicable) or the suspension of any exemption for such qualification or registration of the Securities underlying the Securities Shares for offering in any jurisdiction, or of the institution or threatened institution of any proceedings for any of such purposes, and the Company will use its commercially good faith reasonable efforts to prevent the issuance of any such order, judgment or decree order and, if issued, to endeavor to obtain as soon as reasonably possible the lifting thereof.
(bc) The Company shall comply with the Act, the Regulations, the 1934 Act, Act and the rules and regulations thereunder, all applicable federal, state and foreign securities laws and the rules and regulations thereunder in the states in which the Securities are to be offered and in which Company’s 's Blue Sky counsel has advised the Placement Agent that the Securities Shares are qualified or registered for sale or exempt from such qualification or registration, so as to permit the continuance of the sales of the SecuritiesShares, and will file with the SEC, and shall promptly thereafter forward to the Placement Agent, copies of any and all reports on Form D and other securities filings as are required. Company shall take all reasonable steps to assist the Placement Agent in complying with FINRA Rule 5123 and Regulation M, provided that compliance with FINRA Rule 5123 and Regulation M shall be the Placement Agent’s responsibility.
(c) Company shall use its reasonable best efforts to qualify the Securities for sale (or seek exemption therefrom) under the state securities or Blue Sky laws of such jurisdictions in the United States as may be mutually agreed to by Company and the Placement Agent, and Company will (through its counsel) make such applications and furnish information as may be required for such purposes, provided that in no event shall Company be obligated to qualify to do business in any jurisdiction where it is not now so qualified or to take any action which would subject it to general service of process in any jurisdiction where it is not now subject, and provided further that Company shall not be required to produce any new disclosure document other than the Memorandum. Company will, from time to time, prepare and file such statements and reports as are or may be required to continue such qualifications in effect for so long a period as the Placement Agent may reasonably request.
(d) To the extent required by applicable law or its governing documents, The Company shall place a legend on the certificates representing the Securities Shares issued to investors subscribers stating that the securities evidenced thereby have not been registered under the Act or applicable state securities laws and laws, setting forth or referring to the applicable restrictions on transferability and sale of such securities under the Act and applicable state laws.
(e) The Company shall apply the net proceeds from the sale of the Securities for the purposes described Shares to fund its working capital requirements, and as outlined in the Memorandum.Memorandum with regard to the Acquisition of The Holder Hospitality Group, Inc.
(f) Whether During the Offering Period, the Company shall make available for review by prospective purchasers of the Shares during normal business hours at the Company's legal counsel's offices, upon their request, copies of any Corporate records to the extent that such shall not violate any obligation on the part of the Company to maintain the confidentiality thereof and shall afford each prospective purchaser of Shares the opportunity to ask questions of and receive answers from an officer of the Company concerning the terms and conditions of the Offering and the opportunity to obtain such other additional information necessary to verify the accuracy of the Offering Documents to the extent it possesses such information or can acquire it without unreasonable expense.
(g) The Company shall pay all reasonable expenses incurred in connection with the preparation and printing of all necessary Offering Documents and instruments related to the Offering and the issuance of the Shares and will also pay the Company's own expenses for accounting fees, legal fees and other costs involved with the Offering. The Company will provide at its own expense such quantities of the Offering Documents and other documents and instruments relating to the Offering as the Placement Agent may reasonably request. In addition, the Company will pay all filing fees, costs and legal fees for Blue Sky services and related filings and expenses of its counsel with respect to Blue Sky qualifications and filings. The Blue Sky filings shall be prepared by the Company's Blue Sky counsel and timely filed by Company's Blue Sky counsel. The Company's Blue Sky counsel shall be responsible for filing the Federal Form D with the SEC. In the event the Offering is not closed for any reason the transactions contemplated hereby are consummatedPlacement Agent shall be responsible for all of its own costs and fees.
(h) Until the termination of the Offering in accordance with the provisions of Section 9 of this Agreement, or the expiration of the Offering or this Agreement, without the prior written consent of the Placement Agent, neither the Company nor any person or entity acting on its behalf will negotiate with any other placement agent or underwriter with respect to a private or public offering of the Company's debt or equity securities. Neither the Company nor anyone acting on its behalf will, until the termination of the Offering in accordance with the provisions of Section 9 of this Agreement is terminatedor the expiration of the Offering or this Agreement, as partial consideration without the prior written consent of the Placement Agent, offer for sale to, or solicit offers to subscribe for Shares or other securities of the Company from, or otherwise approach or negotiate in respect thereof with, any other person. The Company may, however, provide information regarding the Offering and the business of the Company to prospective purchasers and will refer all such prospective purchasers to the Placement Agent for the performance of its services hereunder, Company hereby agrees to pay all reasonable fees, costs and expenses incident hereto and to the Offering, including, without limitation, those in connection with: actual subscription.
(i) preparing, printing, duplicating, filing, distributing and binding the Memorandum and any and all amendments and/or supplements thereto and any and all agreements, contracts and other documents related hereto and thereto; (ii) the creation, authorization, issuance, transfer and delivery of the Securities, including, without limitation, fees and expenses of any transfer agent or registrar; (iii) all fees and expenses of legal, accounting and other advisers to Company; (iv) the registration, qualification or exemption of the Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions pursuant to Section 6(c); (v) the fees and expenses of the Escrow Agent; (vi) all reasonable travel, long-distance telephone call, photocopying, courier and related other out-of-pocket expenses incurred by the Placement Agent in connection with this Agreement, including the reasonable fees and expenses As part of the Placement Agent’s counsel's due diligence, all of which fees, costs and expenses shall be reasonably documented by the Placement Agent may wish to conduct background checks of the Company's management or principal shareholders. The Company agrees to provide requested data, such as social securities numbers and home addresses, which may be required to conduct background checks.
(j) Subject to the sale of the Minimum Amount of Shares in an invoice submitted by the Offering, the Company grants to the Placement Agent Agent, for a period of twelve (12) months from the Final Closing, the right of first refusal to Company; provided, however, that in no event shall Company be obligated to pay any fees and expenses described in this clause (vi) in excess of $20,000 in the aggregate without Company written consent; provided, further, that the foregoing limitation on fees and expenses shall in no way affect the obligations of Company act as agent with respect to future private offerings of the indemnification provisions set forth in Section 9 hereof and, provided further, Company's securities. It is understood that fees and expenses for the Placement Agent’s counsel shall not exceed $3,500. All fees and expenses described in this clause (vi) shall be payable if such an offering is proposed to the Placement Agent by Company within 30 days after Company’s receipt of an invoice from on terms and conditions substantially similar to the terms and conditions set forth herein, (a) the Placement Agent shall have thirty (30) days in which to negotiate and enter into a Placement Agreement with the Company to raise or facilitate the consummation of such financing and, if the Placement Agent fails or refuses to do so, then the Company shall be permitted to facilitate its own equity financing on its own or through a third party without the requirement of compensating the Placement Agent, whereupon this right of first refusal shall thereafter be forfeited and terminated. The Company grants to the Placement Agent the right to introduce any public offering of the Company's Securities or of any successor corporation to the Company for a period of 12 months from the Final Closing.
(k) The Company shall provide for inclusion in the Offering Documents, by Supplement, unaudited interim financial statements for each of its fiscal quarters beginning March 31, 2004. Such statements shall be provided within forty-five (45) days of the end of such quarter. Following the Final Closing of the Offering, the Company will provide audited annual financial statements to the holders of the Shares not more than one hundred and twenty (120) days following the end of its fiscal year.
(l) The Company shall, for such fees a period of not less than three years following the date of the Offering Documents, keep its books and expensesrecords up to date and provide annual budgets to its limited partners along with audited financial statements.
Appears in 1 contract
Sources: Agreement and Plan of Reorganization (Bronze Marketing Inc)
Further Covenants. The Company hereby covenants and agrees that:
(a) If, at any time prior to the Closing, any event shall occur as a result of which, in the reasonable judgment of Company or the Placement Agent (or counsel thereto), (i) the Offering Documents would include any untrue statement of material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or (ii) it would be necessary to amend or supplement the Offering Documents so that the representations and warranties herein remain true in all material respects or to comply with Regulation D or any other applicable securities laws or regulations, Company or the Placement Agent, as applicable, will promptly notify the other party and Company shall, at its sole cost, prepare and furnish to the Placement Agent copies of appropriate amendments and/or supplements in such quantities as the Placement Agent may reasonably request. The Company will not at any time, whether before or after the ClosingTermination Date, prepare or use any amendment or supplement to the Offering Documents Memorandum of which the Placement Agent will not previously have been advised and furnished with a copy, or to which the Placement Agent or its counsel will have reasonably objected in writing or orally (confirmed in writing within 24 hours), or which is not in compliance in all material respects with the Act, Act and the Regulations and other applicable securities laws, rules and regulationsRegulations. As soon as the Company is advised thereof, the Company will advise the Placement Agent and its counsel, and confirm the advice in writing, of any order preventing or suspending the use of the Offering DocumentsMemorandum, or the suspension of or the qualification or registration of the Securities or shares of common stock of Company underlying the Securities Shares for offering or the suspension of any exemption for such qualification or registration of the Securities underlying the Securities Shares for offering in any jurisdiction, or of the institution or threatened institution of any proceedings for any of such purposes, and the Company will use its commercially reasonable best efforts to prevent the issuance of any such order, judgment or decree order and, if issued, to endeavor to obtain as soon as reasonably possible the lifting thereof.
(b) The Company shall has caused to be delivered to the Placement Agent copies of the Memorandum, has consented, and hereby consents, to the use of such copies for the purposes contemplated hereby permitted by the Act and applicable state securities laws, and has authorized, and hereby authorizes, the Placement Agent to use the Memorandum in connection with the sale of the Shares until the Termination Date, in each case subject to the limitations contained therein and herein, and no person is or will be authorized to give any information or make any representations other than those contained in the Memorandum or to use any offering materials other than those contained in the Memorandum in connection with the sale of the Shares. In the event of the happening, at any time within such period, of any event to which the Company has knowledge and which materially adversely affects, or may affect, the Company, and which should in the opinion of the Placement Agent's counsel be set forth in an amendment or supplement to the Memorandum in order to make the statement therein not misleading, in light of the circumstances existing at the time the Memorandum is required to be delivered to a purchaser of the Shares, or in case it shall, in the opinion of counsel to the Placement Agent, be necessary to amend or supplement the Memorandum to comply with any Federal or state securities laws or with the Regulations or the rules and regulations of any state in which the Memorandum is made available to a prospective subscriber, the Company will forthwith prepare and furnish to the Placement Agent copies of such amended Memorandum or of such supplement to be attached to the Memorandum in such quantities as the Placement Agent may reasonably request, in order that the Memorandum, as so amended or supplemented, will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements in the Memorandum, in light of the circumstances under which they were made, not misleading. The preparation, distribution and furnishing of any such amendment to the Memorandum or any such supplement to be attached to the Memorandum will be without expense to the Placement Agent.
(c) The Company will comply with the Act, the RegulationsRegulations (including, the 1934 Actwithout limitation, and the rules and regulations thereunder, all applicable federal, state and foreign securities laws and the rules and regulations thereunder in the states in which the Securities are to be offered and in which Company’s counsel has advised the Placement Agent that the Securities are qualified or registered for sale or exempt from such qualification or registration, Rule 506) so as to permit the continuance of the sales of the SecuritiesShares, and will file with the SEC, and shall will promptly thereafter forward to the Placement Agent, Agent any and all reports on Form D and other securities filings as are required. Company shall take all reasonable steps to assist the Placement Agent in complying with FINRA Rule 5123 and Regulation M, provided that compliance with FINRA Rule 5123 and Regulation M shall be the Placement Agent’s responsibility.
(cd) During the Offering Period, the Company shall will make available for review by prospective purchasers of the Shares, upon their request, all material contracts or other documents described or listed in the Memorandum.
(e) The Company will use its reasonable best efforts to qualify the Securities Shares for sale (or seek exemption therefrom) under the state securities or Blue Sky laws of such jurisdictions in the United States as may be mutually agreed to by Company of [INSERT STATE NAMES], and the Placement Agent, and Company will (through its counsel) make such applications and furnish information as may be reasonably required for such purposes, provided that in no event shall the Company be obligated to qualify to do business in any jurisdiction where it is not now so qualified or to take any action which would subject it to general service of process in any jurisdiction where it is not now subject, and provided further that Company shall will not be required to produce qualify as a foreign corporation in any new disclosure document other than the Memorandumjurisdiction. The Company will, from time to time, prepare and file such statements and reports as are or may be required to continue such qualifications qualifications, in effect for so long a period as the Placement Agent may reasonably request.
(df) To the extent required by applicable law or its governing documents, The Company shall place a legend on the certificates representing the Securities issued to investors stating that the securities evidenced thereby have not been registered under the Act or applicable state securities laws and setting forth or referring will deliver to the applicable restrictions on transferability Placement Agent from time to time and sale without charge, until the Termination Date, as many copies of such securities under the Act and applicable state lawsMemorandum as the Placement Agent may reasonably request.
(eg) The Company shall will apply the net proceeds from the sale of the Securities Shares substantially for the purposes described set forth under "Use of Proceeds" in the Memorandum.
(fh) Whether or not For a period of three years from the transactions contemplated hereby are consummatedTermination Date, or this Agreement is terminated, as partial consideration the Company will deliver to the Placement Agent for (i) within 45 days from the performance end of its services hereunderthe applicable fiscal quarter, a copy of each unaudited quarterly financial statement which shall have been prepared in accordance with generally accepted accounting principles consistently applied, and, if applicable, any other documents or reports which may be issued by the Company hereby agrees to pay all reasonable fees, costs and expenses incident hereto and to the Offeringpublic, including, without limitation, those reports on Forms 8-K, 10-K and 10-Q and exhibits thereto, (ii) reports or communications (financial or other) of the Company mailed to its security holders, and (iii) every press release and every material news item and article in connection with: respect of the Company or its affairs which was released by the Company. Further, for a period of three years from the Termination Date, the Company will (i) preparingwithin 90 days of the end of the fiscal year furnish to the Placement Agent and distribute the Company's stockholders annual financial statements prepared by an independent auditor in conformity with generally accepted accounting principles, printingconsistently applied, duplicatingwhich clearly set forth the financial position of the Company and (ii) furnish to the Placement Agent a duplicate list of stockholders of the Company at such time as reasonably requested by the Placement Agent together with monthly DTC transfer sheets, filingif applicable.
(i) The Company will pay all expenses incurred in connection with the preparation and printing of all necessary offering documents and instruments related to the Offering and the issuance of the Shares, distributing and binding the Memorandum underlying shares of Common Stock and will also pay its own expenses for accounting fees, legal fees, transfer agent fees and other costs involved with the Offering. The Company will furnish at its expense such quantities of the offering documents and instruments as the Placement Agent may reasonably request.
(j) The Company will provide to the Placement Agent, for delivery to all offerees and subscribers and their representatives, any additional information, documents and instruments which the Placement Agent or its counsel reasonably deems necessary to comply with the Act and the Regulations and the securities laws and the rules and regulations thereunder of those states in which the Shares are to be offered and sold.
(k) The Company will comply with all registration, filing and reporting requirements of the Act or the Securities Exchange Act of 1934 (the "Exchange Act") which may from time to time be applicable to the Company.
(l) For a period of three years from the Termination Date, the Placement Agent shall have the right of first refusal (the "Right of First Refusal") to act as underwriter or agent for any and all amendments public or private offerings of securities (excluding all lease financing, bank financing or institutionally placed property debt), of the Company, or any successor to or subsidiary of the Company or other entity in which the Company either has a controlling equity interest or is generally authorized to enter into contracts or otherwise act on behalf of, (collectively referred to herein as the "Company") by the Company (the "Subsequent Company Offering"). In addition, the Company will use its best efforts to cause all officers, directors and holders of five percent or more of the Company's equity securities (the "Principal Stockholders") to agree in writing that the Placement Agent shall have such Right of First Refusal with respect to any secondary offering of the Company's securities by the Principal Stockholders made during the three year period following the Termination Date. Accordingly, if during such period the Company intends to make a Subsequent Company Offering, the Company shall notify the Placement Agent in writing of such intention and of the proposed terms of the offering. The Company shall thereafter promptly furnish the Placement Agent with such information concerning the business, condition and prospects of the Company as the Placement Agent may reasonably request. If within 15 business days of the receipt of such notice of intention and statement of terms, the Placement Agent does not accept in writing such offer to act as underwriter or agent with respect to such offering upon the terms proposed, the Company and each of the Principal Stockholders shall be free to negotiate terms with other underwriters with respect to such offering and to effect such offering on such proposed terms within six months after the end of such 15 business days. Before the Company and each of the Principal Stockholders and/or supplements thereto shall accept any modified proposal from such underwriter, the Placement Agent's preferential right shall be reinstated and the same procedure with respect to such modified proposal as provided above shall be adopted. The failure of the Placement Agent to exercise its Right of First Refusal in any particular instance shall not affect in any way such right with respect to any other Subsequent Company Offering or Secondary Offering. [OPTIONAL - SEE LOI] Notwithstanding the foregoing, (i) should an investment banking firm which is generally recognized to be of a higher tier than the Placement Agent agree to the Subsequent Company Offering resulting in aggregate gross proceeds of $15,000,000 or more, and all agreements, contracts and other documents related hereto and thereto; (ii) the creationPlacement Agent is permitted by such investment banking firm to participate in the Subsequent Company Offering to the extent of at least 10%, authorizationthen the Right of First Refusal granted herein shall not apply to the Subsequent Company Offering or any related offering.
(m) Within 90 days after the Termination Date, issuance, transfer and delivery the Company shall elect a minimum of two "outside" persons (excluding affiliates of the SecuritiesCompany and family members of the Company's existing directors, includingofficers and principal shareholders) to the Company's Board of Directors, which such individuals shall be reasonably acceptable to the Placement Agent. Within 90 days of the Termination Date, the Board of Directors of the Company shall create an audit committee consisting of a majority of outside directors, which such audit committee will generally supervise the financial affairs of the Company.
(n) For a period of five years from the Termination Date, unless waived by the Placement Agent, the Placement Agent shall have a right to designate an individual to attend all meetings of the Company's Board of Directors or committees thereof. The Company shall provide the Placement Agent with notice of all Board or committee meetings contemporaneously with notification to the members of the Board of Directors, as well as copies of any draft written consents of the Board of Directors or other documents or materials which may be provided to the Board of Directors. All information received by such representative at such meetings shall be kept confidential, shall not be disclosed by the representative to any third party, and shall be dealt with in full compliance with federal and state securities laws.
(o) [IF APPLICABLE] For a period of five years from the Termination Date, the Company shall use its best efforts to maintain its current listing on the OTC Bulletin Board, including taking such actions as are necessary to comply with any newly enacted listing standards.
(p) For a period of one year from the Termination Date, the Company will not, without limitationthe Placement Agent's prior written consent, fees and expenses redeem any securities outstanding at the Termination Date nor declare or pay any dividends or make any other cash distribution in respect of any transfer agent or registrar; (iii) all fees and expenses of legal, accounting and other advisers to Company; (iv) the registration, qualification or exemption its securities in excess of the Securities for offer and sale under amount of the Company's then current retained earnings as reflected on its most recent balance sheet. sell any securities, grant warrants or options to acquire any securities except pursuant to its existing Stock Option Plans or conversions of convertible securities or Blue Sky laws the exercise of such jurisdictions pursuant to Section 6(c); (v) the fees and expenses of the Escrow Agent; (vi) all reasonable travel, long-distance telephone call, photocopying, courier and related other out-of-pocket expenses incurred by outstanding options or Warrants. The Company shall advise the Placement Agent in connection with this Agreement, including the reasonable fees writing at least five business days in advance of its intent to either redeem any outstanding securities or declare and expenses of the Placement Agent’s counsel, all of which fees, costs and expenses shall be reasonably documented by the Placement Agent in an invoice submitted by the Placement Agent to Company; provided, however, that in no event shall Company be obligated to pay any fees and expenses described in this clause (vi) in excess of $20,000 in the aggregate without Company written consent; provided, further, that the foregoing limitation on fees and expenses shall in no way affect the obligations of Company with respect to the indemnification provisions set forth in Section 9 hereof and, provided further, that fees and expenses for the Placement Agent’s counsel shall not exceed $3,500. All fees and expenses described in this clause (vi) shall be payable to the Placement Agent by Company within 30 days after Company’s receipt of an invoice from the Placement Agent for such for such fees and expensesdividends.
Appears in 1 contract
Sources: Placement Agency Agreement (Circle Group Internet Inc)
Further Covenants. The Company hereby covenants and agrees that:
(a) Except with the prior written consent of the Placement Agent, the Company shall not, at any time prior to the Final Closing, take any action that would cause any of the representations and warranties made by it in this Agreement not to be complete and correct on and as of each Closing Date with the same force and effect as if such representations and warranties had been made on and as of each such date.
(b) If, at any time prior to the Final Closing, any event shall occur that does or may materially affect the Company or as a result of which, in the reasonable judgment of Company or the Placement Agent (or counsel thereto), (i) the Offering Documents would include any untrue statement of material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or (ii) it would be might become necessary to amend or supplement the Offering Documents Memorandum so that the representations and warranties herein remain true true, or in all material respects case it shall, in the reasonable opinion of counsel to the Placement Agent, be necessary to amend or supplement the Memorandum to comply with Regulation D or any other applicable securities laws or regulations, the Company or the Placement Agent, as applicable, will promptly notify the other party Placement Agent and Company shall, at its sole cost, prepare and furnish to the Placement Agent copies of appropriate amendments and/or supplements in such quantities as the Placement Agent may reasonably request. The Company will not at any time, whether before or after the Final Closing, prepare or use any amendment or supplement to the Offering Documents Memorandum of which the Placement Agent will not previously have been advised and furnished with a copy, or to which the Placement Agent or its counsel will have reasonably objected in writing or orally (confirmed in writing within 24 hours), or which is not in compliance in all material respects with the Act, the Regulations and other applicable securities laws, rules and regulations. As soon as the Company is advised thereof, the Company will advise the Placement Agent and its counsel, and confirm the advice in writing, of any order preventing or suspending the use of the Offering DocumentsMemorandum, or the suspension of the qualification or registration of the Securities or shares of common stock of Company underlying the Securities Units for offering or the suspension of any exemption for such qualification or registration of the Securities underlying the Securities Units for offering in any jurisdiction, or of the institution or threatened institution of any proceedings for any of such purposes, and the Company will use its commercially reasonable best efforts to prevent the issuance of any such order, judgment or decree decree, and, if issued, to endeavor to obtain as soon as reasonably possible the lifting thereof.
(bc) The Company shall comply with the Act, the Regulations, the Securities and Exchange Act of 1934, as amended (the "1934 ActACT"), and the rules and regulations thereunder, all applicable federal, state and foreign securities laws and the rules and regulations thereunder in the states in which the Securities are to be offered and in which Company’s Placement Agent's Blue Sky counsel has advised the Placement Agent that the Securities Units are qualified or registered for sale or exempt from such qualification or registration, so as to permit the continuance of the sales of the SecuritiesUnits, and will file with the SEC, and shall promptly thereafter forward to the Placement Agent, any and all reports on Form D and other securities filings as are required. Company shall take all reasonable steps to assist the Placement Agent in complying with FINRA Rule 5123 and Regulation M, provided that compliance with FINRA Rule 5123 and Regulation M shall be the Placement Agent’s responsibility.
(cd) The Company shall use its reasonable best efforts to qualify the Securities Units for sale (or seek exemption therefrom) under the state securities or Blue Sky laws of such jurisdictions in the United States as may be mutually agreed to by Company the Placement Agent shall designate, and the Placement Agent, and Company will (through its Blue Sky counsel) make such applications and furnish information as may be required for such purposes, provided that in no event shall Company be obligated to qualify to do business in any jurisdiction where it is not now so qualified or to take any action which would subject it to general service of process in any jurisdiction where it is not now subject, and provided further that Company shall not be required to produce any new disclosure document other than the Memorandum. The Company will, from time to time, prepare and file such statements and reports as are or may be required to continue such qualifications in effect for so long a period as the Placement Agent may reasonably request. The Company shall not, however, in either case, be required to file any general consent to service of process or to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which it is not so qualified or to subject itself to taxation in respect of doing business in any jurisdiction in which it is not otherwise so subject.
(de) To the extent required by applicable law or its governing documents, The Company shall place a legend on the certificates representing the Securities Notes and the Conversion Shares issued to investors subscribers stating that the securities evidenced thereby have not been registered under the Act or applicable state securities laws and laws, setting forth or referring to the applicable restrictions on transferability and sale of such securities under the Act and applicable state laws.
(ef) The Company shall apply the net proceeds from the sale of the Securities Units to fund its working capital requirements and/or for the such other purposes as shall be specifically described under "USE OF PROCEEDS" in the Memorandum.
(fg) During the Offering Period, the Company shall make available for review by prospective purchasers of the Units during normal business hours at the Company's offices, upon their request, copies of the Company Agreements to the extent that such disclosure shall not violate any obligation on the part of the Company to maintain the confidentiality thereof and shall afford each prospective purchaser of Units the opportunity to ask questions of and receive answers from an officer of the Company concerning the terms and conditions of the Offering and the opportunity to obtain such other additional information necessary to verify the accuracy of the Memorandum to the extent it possesses such information or can acquire it without unreasonable expense.
(h) Except with the prior written consent of the Placement Agent or as set forth in the Memorandum with respect to the Merger, the Company shall not, at any time prior to the earlier of the Final Closing or the Termination Date, engage in or commit to engage in any transaction outside the ordinary course of business, including, without limitation, the incurrence of material indebtedness, materially change its business or operations as shall be described in the Memorandum, or issue, agree to issue or set aside for issuance any securities (debt or equity) or any right to acquire such securities except as shall be contemplated by the Memorandum.
(i) Until the earlier of (A) the five-year anniversary of the Final Closing or (B) a Liquidity Event (as defined below), the Company shall, unless otherwise required by applicable securities laws, (i) deliver to the Placement Agent and the Company's stockholders annual audited financial statements prepared in accordance with GAAP setting forth fairly the financial position of the Company, (ii) deliver to the Placement Agent semi-annual unaudited financial statements including both a balance sheet and statement of income prepared in accordance with GAAP applied on a consistent basis throughout the periods indicated except as may be disclosed in the notes thereto, and except that the unaudited financial statements omit full notes, and except for normal year end adjustments, (iii) deliver to the Company's stockholders a quarterly report, reviewed by the Placement Agent, of the progress and status of the Company and an annual report setting forth clearly the financial position of the Company, (iv) deliver to the Placement Agent a copy of a list of its stockholders as and when so requested, to extent the Company has such information is available or otherwise will take such action as is necessary to make such information available, and (v) deliver to the Placement Agent such additional information and documents concerning the business and financial condition and outlook of the Company as the Placement Agent may from time to time reasonably request.
(j) Whether or not the transactions contemplated hereby are consummated, or this Agreement is terminated, as partial consideration to the Placement Agent for the performance of its services hereunder, Company hereby agrees to pay all reasonable fees, costs and expenses incident hereto and to the Offering, including, without limitation, those in connection with: with (i) preparing, printing, duplicating, filing, distributing and binding the Memorandum and any and all amendments and/or supplements thereto thereto, fees for bound volumes and any and all agreements, contracts and other documents related hereto and thereto; (ii) the creation, authorization, issuance, transfer and delivery of the SecuritiesNotes, the Conversion Shares, the Agent's Shares and the Agent's Warrants, including, without limitation, fees and expenses of any transfer agent or registrar; (iii) the fees and expenses of the Escrow Agent (subject to Section 4(b) hereof); (iv) all fees and expenses of legal, accounting and other advisers to the Company; (iv) the registration, qualification or exemption of the Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions pursuant to Section 6(c); (v) the all reasonable filing fees, costs and legal fees and expenses for Blue Sky services and related filings with respect to Blue Sky exemptions and qualifications, $12,500 of which shall be paid to the Escrow Placement Agent's counsel upon execution of this Agreement (for legal fees in connection with obtaining Blue Sky exemptions (the "BLUE SKY FEES"); and (vi) all reasonable travelsubject to Section 9 hereof, long-distance telephone call, photocopying, courier and related other out-of-pocket expenses a nonaccountable expense allowance ("PLACEMENT AGENT EXPENSES") incurred by the Placement Agent in connection with this Agreementthe Offering, including the reasonable including, without limitation, travel and related expenses and fees and expenses of legal, accounting and other advisers to the Company equal to three (3%) percent of the gross proceeds from the subscriptions for Units sold.
(k) Until the Termination Date, neither the Company nor any person or entity acting on its behalf will negotiate or enter into any agreement with any other placement agent or underwriter with respect to a private or public offering of the Company's or any subsidiary's debt or equity securities. The Company agrees that any such offering of the Company's securities, other than through the Placement Agent’s counsel, all in accordance with the terms and provisions of which feesthis Agreement, costs and expenses shall be reasonably documented by will terminate immediately upon the Placement Agent in an invoice submitted by commencement of the Placement Agent to Company; providedOffering. Neither the Company nor anyone acting on its behalf will, howeveruntil the Termination Date, that in no event shall Company be obligated to pay any fees and expenses described in this clause (vi) in excess without the prior written consent of $20,000 in the aggregate without Company written consent; provided, further, that the foregoing limitation on fees and expenses shall in no way affect the obligations of Company with respect to the indemnification provisions set forth in Section 9 hereof and, provided further, that fees and expenses for the Placement Agent’s counsel , offer for sale to, or solicit offers to subscribe for Units or other securities of the Company from, or otherwise approach or negotiate in respect thereof with, any other person.
(l) Until the earlier of the second anniversary of the Final Closing or a Liquidity Event (as defined below), except for the Company's option plan in effect as of the date hereof, the Company will not issue or sell any of its securities or grant any warrants, options or other rights to acquire its securities (except pursuant to any existing options, warrants and rights and option and similar plans as shall be described in the Memorandum) to any other person or entity without the Placement Agent's prior written consent, which shall not exceed $3,500be unreasonably withheld. All fees For the purposes of this Agreement, a "Liquidity Event" shall mean (A) the consummation of the IPO, (B) the Merger or (C) the consummation of any merger, consolidation or business combination of the Company with any other entity other than an Affiliate and expenses described in this clause pursuant to which (vi1) shall be payable to the Placement Agent by Company within 30 days is not the surviving entity or the shareholders of the Company immediately before such transaction own less than 50% of the voting power of the Company immediately after Company’s receipt such transaction and (2) the shares of an invoice from the Placement Agent for such for such fees and expensessurviving entity are publicly traded.
Appears in 1 contract
Further Covenants. The Company hereby covenants and agrees that:
(a) Except with the prior written consent of the Placement Agent, the Company shall not, at any time prior to the Final Closing, take any action which would cause any of the representations and warranties made by it in this Agreement not to be complete and correct on and as of each Closing Date with the same force and effect as if such representations and warranties had been made on and as of each such date.
(b) If, at any time prior to the Final Closing, any event shall occur which does or may materially affect the Company or as a result of which, in the reasonable judgment of Company or the Placement Agent (or counsel thereto), (i) the Offering Documents would include any untrue statement of material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or (ii) it would be might become necessary to amend or supplement the Offering Documents Memorandum so that the representations and warranties herein remain true in all material respects respects, or in case it shall, in the opinion of counsel to the Placement Agent, be necessary to amend or supplement the Memorandum to comply with Regulation D or any other applicable securities laws or regulations, the Company or the Placement Agent, as applicable, will promptly notify the other party Placement Agent and Company shall, at its sole cost, prepare and furnish to the Placement Agent copies of appropriate amendments and/or supplements in such quantities as the Placement Agent may reasonably request. The Company will not at any time, whether before or after the Final Closing, prepare or use any amendment or supplement to the Offering Documents Memorandum of which the Placement Agent will not previously have been advised and furnished with a copy, or to which the Placement Agent or its counsel will have reasonably objected in writing or orally (confirmed in writing within 24 hours), or which is not in compliance in all material respects with the Act, the Regulations regulations and other applicable securities laws, rules and regulations. As soon as the Company is advised thereof, the Company will advise the Placement Agent and its counsel, and confirm the advice in writing, of any order preventing or suspending the use of the Offering DocumentsMemorandum, or the suspension of the qualification or registration of the Securities or shares of common stock of Company underlying the Securities Shares for offering or the suspension of any exemption for such qualification or registration of the Securities underlying the Securities Shares for offering in any jurisdiction, or of the institution or threatened institution of any proceedings for any of such purposes, and the Company will use its commercially reasonable best efforts to prevent the issuance of any such order, judgment or decree order and, if issued, to endeavor to obtain as soon as reasonably possible the lifting thereof.
(bc) The Company shall comply in all material respects with the Act, the Regulationsregulations, the 1934 Act, Act and the rules and regulations thereunder, all applicable federal, state and foreign securities laws and the rules and regulations thereunder in the states in which the Securities are to be offered and in which Company’s Placement Agent's Blue Sky counsel has advised the Placement Agent that the Securities Units are qualified or registered for sale or exempt from such qualification or registration, so as to permit the continuance of the sales of the SecuritiesUnits, and will file with the SEC, and shall promptly thereafter forward to the Placement Agent, any and all reports on Form D and other securities filings as are required. Company shall take all reasonable steps to assist the Placement Agent in complying with FINRA Rule 5123 and Regulation M, provided that compliance with FINRA Rule 5123 and Regulation M shall be the Placement Agent’s responsibility.
(cd) The Company shall use its reasonable best efforts to qualify the Securities Units for sale (or seek exemption therefrom) under the state securities or Blue Sky laws of such jurisdictions in the United States as may be mutually agreed to by the Company and the Placement Agent, and the Company will (through its counsel) make such applications and furnish information as may be required for such purposes, provided that in no event shall the Company will not be obligated required to qualify to do business as a foreign corporation in any jurisdiction where it is not now so qualified or to take any action which would subject it itself to general service of process in any jurisdiction where it is not now subject, (with the exception of the State of New York and provided further that Company shall not be required to produce any new disclosure document other than United States Federal courts sitting in the MemorandumCity of New York). The Company will, from time to time, prepare and file such statements and reports as are or may be required to continue such qualifications in effect for so long a period as the Placement Agent may reasonably request.
(de) To the extent required by applicable law or its governing documents, The Company shall place a legend on the certificates representing the Securities issued to investors Shares, and the Agent's Warrants and the Agent's Shares stating that the securities evidenced thereby have not been registered under the Act or applicable state securities laws and laws, setting forth or referring to the applicable restrictions on transferability and sale of such securities under the Act and applicable state laws.
(ef) The Company shall apply the net proceeds from the sale of the Securities Units in the manner described under "Risk Factors - Discretionary Use of Proceeds" and "Use of Proceeds" headings in the Memorandum. Except as specifically set forth in the Memorandum, the net proceeds of the Offering shall not be used to repay indebtedness to officers, directors or stockholders of the Company without the prior written consent of the Placement Agent, except for the purposes reimbursement for reasonable and necessary expenses which are related to Company business or which are incurred in connection with attendance at board, committee or shareholder meetings.
(g) During the Offering Period, the Company shall make available for review by prospective purchasers of the Units during normal business hours at the Company's offices, upon their request, copies of the Company Agreements to the extent that such disclosure shall not violate any obligation on the part of the Company to maintain the confidentiality thereof and shall afford each prospective purchaser of Units the opportunity to ask questions of and receive answers from, an officer of the Company concerning the terms and conditions of, the Offering and the opportunity to obtain such other additional information necessary to verify the accuracy of the Memorandum and the Current Reports to the extent it possesses such information or can acquire it without unreasonable expense.
(h) In connection with the Placement Agent's due diligence investigation, the Company shall cooperate with the Placement Agent and the Placement Agent's counsel by making available to the Placement Agent's representatives such information as may be appropriate in making a reasonable investigation of the Company and its affairs. The Company shall provide, at its expense, background checks, credit or similar reports on such key management persons as the Placement Agent shall reasonably request. These expenses will not exceed $5,000. Prior to the First Closing, the Company shall make available to such credit reporting firm such materials relating to the Company, and shall provide such firm with access to such employees, as shall be reasonably requested by the Placement Agent.
(i) [Intentionally Omitted].
(j) The Company shall pay all reasonable expenses incurred in connection with the preparation and printing of all necessary offering documents and instruments related to the Offering and the issuance of the Units, the Agent's Warrants, the Agent's Shares and any warrants issued by the Company to the Placement Agent pursuant to the consulting agreement referred to in Section 3(h) and will also pay the Company's own expenses for accounting fees, legal fees, and other costs involved with the Offering. The Company will provide at its own expense such quantities of the Memorandum and other documents and instruments relating to the Offering as the Placement Agent may reasonably request. In addition, the Company will pay all reasonable filing fees, costs and reasonable legal fees for Blue Sky services and related filings and expenses of counsel with respect to Blue Sky qualifications. The Blue Sky filings shall be prepared by the Placement Agent's Blue Sky counsel and all Blue Sky filing fees shall be paid by the Company prior to any filing. All other fees and expenses of Blue Sky counsel shall be payable at each Closing.
(k) Until the earlier of the Termination Date and the Final Closing, neither the Company nor any person or entity acting on its behalf will negotiate with any other placement agent or underwriter with respect to a private or public offering of the Company's or any subsidiary's debt or equity securities. Neither the Company nor anyone acting on its behalf will, until the earlier of the Termination Date and the Final Closing, without the prior written consent of the Placement Agent, offer for sale to, or solicit offers to, subscribe for Units or other securities of the Company from, or otherwise approach or negotiate in respect thereof with, any other person.
(l) Current Company management, as described in the Memorandum, will retain their positions through the Final Closing and the Company will not modify the employment agreements between each member of management and the Company prior the earlier of the Termination Date and the Final Closing.
(m) At all times from and after the date of the Memorandum and until the earlier of the Termination Date and the Final Closing, the Company shall own all right, title and interest in all Intangibles, as described in the Memorandum or Current Reports. Prior to earlier of the Termination Date and the Final Closing and except as otherwise described in the Memorandum of the Current Reports, the Company will not incur any material indebtedness or dispose of any material assets or make any material acquisition or change in its business or operations, except with the Placement Agent's knowledge or consent.
(n) For a period of three (3) years after the Final Closing, the Company shall file with the SEC in a timely manner all reports and other documents required of the Company under the Act and the 1934 Act, and reports on Form 6-K for each of the first three quarters of its fiscal year, and promptly shall furnish copies of the same to the Placement Agent within five (5) days of the filing thereof.
(o) The Company shall file five (5) copies of a Notice of Sales of Securities on Form D with the SEC no later than 15 days after the first sale of the Units. The Company shall file promptly such amendments to such Notices on Form D as shall become necessary and shall also comply with any filing requirement imposed by the laws of any state of jurisdiction in which offers and sales are made. The Company shall furnish the Placement Agent with copies of all filings.
(p) The Company shall not, during the period commencing on the date hereof and ending on the earlier of the Termination Date and the Final Closing, issue any press release or other public communication, or hold any press conference with respect to the Company, its financial condition, results of operations, business, properties, assets or liabilities, or the Offering, without the prior consent of the Placement Agent, which consent shall not be unreasonably withheld or delayed, subject to the Company's obligation to comply with applicable securities laws.
(q) The Company shall continue to maintain "key man" life insurance on ▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇▇▇ in an amount of $2,000,000 and on ▇▇▇▇ ▇▇▇▇▇▇ in an amount of $1,000,000 as set forth under the caption "Risk Factors" in the Memorandum.
(fr) Whether or not The Placement Agent shall have the transactions contemplated hereby are consummated, or this Agreement is terminated, as partial consideration right to have one board observer for a two-year period following the Final Closing. The Placement Agent's board observer shall initially be ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇. The Company will reimburse the Placement Agent for the performance of its services hereunder, Company hereby agrees to pay all reasonable fees, costs and expenses incident hereto and related to the Offering, including, without limitation, those in connection with: (i) preparing, printing, duplicating, filing, distributing and binding the Memorandum and any and all amendments and/or supplements thereto and any and all agreements, contracts and other documents related hereto and thereto; (ii) the creation, authorization, issuance, transfer and delivery attendance of the Securities, including, without limitation, fees and expenses of any transfer agent or registrar; (iii) all fees and expenses of legal, accounting and other advisers to Company; (iv) the registration, qualification or exemption of the Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions pursuant to Section 6(c); (v) the fees and expenses of the Escrow Agent; (vi) all reasonable travel, long-distance telephone call, photocopying, courier and related other out-of-pocket expenses incurred by the Placement Agent in connection with this Agreement, including the reasonable fees and expenses of the Placement Agent’s counsel, all of which fees, costs and expenses shall be reasonably documented by the Placement Agent in an invoice submitted by the Placement Agent to Company; provided, however, that in no event shall Company be obligated to pay any fees and expenses described in this clause (vi) in excess of $20,000 in the aggregate without Company written consent; provided, further, that the foregoing limitation on fees and expenses shall in no way affect the obligations of Company with respect to the indemnification provisions set forth in Section 9 hereof and, provided further, that fees and expenses for the Placement Agent’s counsel shall not exceed $3,500. All fees and expenses described in this clause (vi) shall be payable to the Placement Agent by Company within 30 days after Company’s receipt of an invoice from the Placement Agent for such for such fees and expensesobserver at board meetings.
Appears in 1 contract
Further Covenants. The Company hereby covenants and agrees that:
(a) If, at any time prior to the Closing, any event shall occur as a result of which, in the reasonable judgment of Company or the Placement Agent (or counsel thereto), (i) the Offering Documents would include any untrue statement of material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or (ii) it would be necessary to amend or supplement the Offering Documents so that the representations and warranties herein remain true in all material respects or to comply with Regulation D or any other applicable securities laws or regulations, Company or the Placement Agent, as applicable, will promptly notify the other party and Company shall, at its sole cost, prepare and furnish to the Placement Agent copies of appropriate amendments and/or supplements in such quantities as the Placement Agent may reasonably request. The Company will not at any time, whether before or after the ClosingClosing Date, prepare or use any amendment or supplement to the Offering Documents Memorandum of which the Placement Agent will not previously have been advised and furnished with a copy, or to which the Placement Agent or its counsel will have reasonably objected in writing or orally (confirmed in writing within 24 hours), or which is not in compliance in all material respects with the Act, Act and the Regulations and other applicable securities laws, rules and regulationsRegulations. As soon as the Company is advised thereof, the Company will advise the Placement Agent and its counsel, and confirm the advice in writing, of any order preventing or suspending the use of the Offering DocumentsMemorandum, or the suspension of or the qualification or registration of the Securities or shares of common stock of Company underlying the Securities Shares for offering or the suspension of any exemption for such qualification or registration of the Securities underlying the Securities Shares for offering in any jurisdiction, or of the institution or threatened institution of any proceedings for any of such purposes, and the Company will use its commercially reasonable best efforts to prevent the issuance of any such order, judgment or decree order and, if issued, to endeavor to obtain as soon as reasonably possible the lifting thereof.
(b) The Company shall has caused to be delivered to the Placement Agent copies of the Memorandum, has consented, and hereby consents, to the use of such copies for the purposes contemplated hereby permitted by the Act and applicable state securities laws, and has authorized, and hereby authorizes, the Placement Agent to use the Memorandum in connection with the sale of the Shares until the expiration of the Offering Period, in each case subject to the limitations contained therein and herein, and no person is or will be authorized to give any information or make any representations other than those contained in the Memorandum or to use any offering materials other than those contained in the Memorandum in connection with the sale of the Shares. In the event of the happening, at any time within such period, of any event to which the Company has knowledge and which materially adversely affects, or may affect, the Company, and which should in the opinion of the Placement Agent's counsel be set forth in an amendment or supplement to the Memorandum in order to make the statement therein not misleading, in light of the circumstances existing at the time the Memorandum is required to be delivered to a purchaser of the Shares, or in case it shall, in the opinion of counsel to the Placement Agent, be necessary to amend or supplement the Memorandum to comply with any Federal or state securities laws or with the Regulations or the rules and regulations of any state in which the Memorandum is made available to a prospective subscriber, the Company will forthwith prepare and furnish to the Placement Agent copies of such amended Memorandum or of such supplement to be attached to the Memorandum in such quantities as the Placement Agent may reasonably request, in order that the Memorandum, as so amended or supplemented, will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements in the Memorandum, in light of the circumstances under which they were made, not misleading. The preparation, distribution and furnishing of any such amendment to the Memorandum or any such supplement to be attached to the Memorandum will be without expense to the Placement Agent.
(c) The Company will comply with the Act, the RegulationsRegulations (including, the 1934 Actwithout limitation, and the rules and regulations thereunder, all applicable federal, state and foreign securities laws and the rules and regulations thereunder in the states in which the Securities are to be offered and in which Company’s counsel has advised the Placement Agent that the Securities are qualified or registered for sale or exempt from such qualification or registration, Rule 504) so as to permit the continuance of the sales of the SecuritiesShares, and will file with the SEC, and shall will promptly thereafter forward to the Placement Agent, Agent any and all reports on Form D and other securities filings as are required. Company shall take all reasonable steps to assist the Placement Agent in complying with FINRA Rule 5123 and Regulation M, provided that compliance with FINRA Rule 5123 and Regulation M shall be the Placement Agent’s responsibility.
(cd) During the Offering Period, the Company shall will make available for review by prospective purchasers of the Shares, upon their request, all material contracts or other documents described or listed in the Memorandum.
(e) The Company will use its reasonable best efforts to qualify the Securities Shares for sale (or seek exemption therefrom) under the state securities or Blue Sky laws of such jurisdictions in the United States as may be mutually agreed to by Company of Florida and New York, and the Placement Agent, and Company will (through its counsel) make such applications and furnish information as may be reasonably required for such purposes, provided that in no event shall the Company be obligated to qualify to do business in any jurisdiction where it is not now so qualified or to take any action which would subject it to general service of process in any jurisdiction where it is not now subject, and provided further that Company shall will not be required to produce qualify as a foreign corporation in any new disclosure document other than the Memorandumjurisdiction. The Company will, from time to time, prepare and file such statements and reports as are or may be required to continue such qualifications qualifications, in effect for so long a period as the Placement Agent may reasonably request.
(df) To the extent required by applicable law or its governing documents, The Company shall place a legend on the certificates representing the Securities issued to investors stating that the securities evidenced thereby have not been registered under the Act or applicable state securities laws and setting forth or referring will deliver to the applicable restrictions on transferability Placement Agent from time to time and sale without charge, until the Closing Date, as many copies of such securities under the Act and applicable state lawsMemorandum as the Placement Agent may reasonably request.
(eg) The Company shall will apply the net proceeds from the sale of the Securities Shares substantially for the purposes described set forth under "Use of Proceeds" in the Memorandum.
(fh) Whether or not For a period of five years from the transactions contemplated hereby are consummatedClosing Date, or this Agreement is terminated, as partial consideration the Company will deliver to the Placement Agent for (i) a copy of each unaudited quarterly financial statement and together with any other documents or reports which may be issued by the performance of its services hereunder, Company hereby agrees to pay all reasonable fees, costs and expenses incident hereto and to the Offeringpublic, including, without limitation, those reports on Forms 8-K, 10-K and 10-Q and exhibits thereto, (ii) reports or communications (financial or other) of the Company mailed to its security holders, and (iii) every press release and every material news item and article in connection with: respect of the Company or its affairs which was released by the Company. Further, for a period of three years from the Closing Date, the Company will (i) preparingfurnish to the Placement Agent and distribute the Company's shareholders annual financial statements prepared by an independent auditor in conformity with generally accepted accounting principles, printingconsistently applied, duplicatingwhich clearly set forth the financial position of the Company and (ii) furnish to the Placement Agent a duplicate list of shareholders of the Company at such time as reasonably requested by the Placement Agent together with monthly DTC transfer sheets.
(i) The Company will pay all expenses incurred in connection with the preparation and printing of all necessary offering documents and instruments related to the Offering and the issuance of the Shares, filingand will also pay its own expenses for accounting fees, distributing legal fees, transfer agent fees and binding other costs involved with the Memorandum Offering. The Company will furnish at its expense such quantities of the offering documents and instruments as the Placement Agent may reasonably request.
(j) The Company will provide to the Placement Agent, for delivery to all offerees and subscribers and their representatives, any additional information, documents and instruments which the Placement Agent or its counsel reasonably deems necessary to comply with the Act and the Regulations and the securities laws and the rules and regulations thereunder of those states in which the Shares are to be offered and sold.
(k) The Company will comply with all registration, filing and reporting requirements of the Act or the Exchange Act which may from time to time be applicable to the Company.
(l) For a period of three years from the Closing Date, the Placement Agent shall have the right of first refusal (the "Right of First Refusal") to act as underwriter or agent for any and all amendments public or private offerings of securities (excluding all lease financing, bank financing or institutionally placed property debt), of the Company, or any successor to or subsidiary of the Company or other entity in which the Company either has a controlling equity interest or is generally authorized to enter into contracts or otherwise act on behalf of, (collectively referred to herein as the "Company") by the Company (the "Subsequent Company Offering"). In addition, the Company will use its best efforts to cause all officers, directors and holders of five percent (5%) or more of the Company's equity securities (the "Principal Stockholders") to agree in writing that the Placement Agent shall have such Right of First Refusal with respect to any sale of the Company's securities by the Principal Stockholders made during the three year period following the Closing Date. Accordingly, if during such period the Company intends to make a Subsequent Company Offering, the Company shall notify the Placement Agent in writing of such intention and of the proposed terms of the offering. The Company shall thereafter promptly furnish the Placement Agent with such information concerning the business, condition and prospects of the Company as the Placement Agent may reasonably request. If within 15 business days of the receipt of such notice of intention and statement of terms, the Placement Agent does not accept in writing such offer to act as underwriter or agent with respect to such offering upon the terms proposed, the Company and each of the Principal Stockholders shall be free to negotiate terms with other underwriters with respect to such offering and to effect such offering on such proposed terms within six months after the end of such 15 business days. Before the Company and each of the Principal Stockholders and/or supplements thereto shall accept any modified proposal from such underwriter, the Placement Agent's preferential right shall be reinstated and the same procedure with respect to such modified proposal as provided above shall be adopted. The failure of the Placement Agent to exercise its Right of First Refusal in any particular instance shall not affect in any way such right with respect to any other Subsequent Company Offering or Secondary Offering. Notwithstanding the foregoing, (i) should an investment banking firm which is generally recognized to be of a higher tier than the Placement Agent agree to the Subsequent Company Offering resulting in aggregate gross proceeds of $15,000,000 or more and all agreements, contracts and other documents related hereto and thereto; (ii) the creationPlacement Agent is permitted by such investment banking firm to participate in the Subsequent Company Offering to the extent of at least ten percent (10%), authorization, issuance, transfer and delivery then the Right of First Refusal granted herein shall not apply to the Subsequent Company Offering or any related offering.
(m) Within 90 days of the SecuritiesClosing Date, includingthe Company shall elect a minimum of two "outside" persons to the Company's Board of Directors, which such individuals shall not be affiliates of the Company or family members of the Company's existing directors, officers or shareholders, and the Board of Directors of the Company shall create an audit committee consisting of a majority of outside directors, which such audit committee will generally supervise the financial affairs of the Company.
(n) For a period of five years from the Closing Date, the Placement Agent shall have the right to designate a member to the Company's Board of Director, which such individual shall be reasonably acceptable to the Company. The Company shall, prior to the Closing Date, obtain from the officers, directors and holders of five percent (5%) or more of the outstanding shares of Common Stock of the Company, agreements in writing to vote the shares of Common Stock respectively owned by them, whether directly or indirectly, during such five-year period in favor of the election of such nominee. Following the election of such nominee as director, such person shall receive the same compensation paid to other non-officer directors of the Company for attendance at meetings of the Board of Directors of the Company and shall be entitled to receive reimbursement for all reasonable costs incurred in attending such meetings to the extent permitted under applicable law, and on the same basis as all other directors of the Company. The Company agrees to indemnify and hold such director harmless, to the maximum extent permitted under applicable law, against any and all claims, actions, awards and judgments arising out of his or her service as a director and, in the event the Company maintains a liability insurance policy affording coverage for the acts of its officers and directors, indemnification and the benefits of such insurance shall, to the extend possible, extend to the Placement Agent insofar as it may be or may be alleged to be responsible for such director, provided that the extension of such rights and benefits to the Placement Agent may be done without additional cost to the Company. In the event that the Placement Agent does not elect to designate one member to the Company's Board of Directors, the Placement Agent shall have the right during such five-year period to have one representative attend all meetings of the Board of Directors of the Company, including any meetings of any committees of the Board of Directors. All information received by such representative at such meetings shall be kept confidential, shall not be disclosed by the representative to any third party, and shall be dealt with in full compliance with federal and state securities laws.
(o) For a period of five years from the Closing Date, the Company shall use its best efforts to obtain and maintain a listing on the OTC Bulletin Board, including taking such actions as are necessary to comply with any newly enacted listing standards.
(p) For a period of one year from the Closing Date, and except as contemplated in the Memorandum, the Company will not, without limitationthe Placement Agent's prior written consent, fees and expenses redeem any securities outstanding at the Closing Date nor declare or pay any dividends or make any other cash distribution in respect of any transfer agent or registrar; (iii) all fees and expenses of legal, accounting and other advisers to Company; (iv) the registration, qualification or exemption its securities in excess of the Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions pursuant to Section 6(c); (v) the fees and expenses amount of the Escrow Agent; (vi) all reasonable travel, long-distance telephone call, photocopying, courier and related other out-of-pocket expenses incurred by Company's then current retained earnings as reflected on its most recent balance sheet. The Company shall advise the Placement Agent in connection with this Agreement, including the reasonable fees writing at least five business days in advance of its intent to either redeem any outstanding securities or declare and expenses of the Placement Agent’s counsel, all of which fees, costs and expenses shall be reasonably documented by the Placement Agent in an invoice submitted by the Placement Agent to Company; provided, however, that in no event shall Company be obligated to pay any fees and expenses described in this clause (vi) in excess of $20,000 in the aggregate without Company written consent; provided, further, that the foregoing limitation on fees and expenses shall in no way affect the obligations of Company with respect to the indemnification provisions set forth in Section 9 hereof and, provided further, that fees and expenses for the Placement Agent’s counsel shall not exceed $3,500. All fees and expenses described in this clause (vi) shall be payable to the Placement Agent by Company within 30 days after Company’s receipt of an invoice from the Placement Agent for such for such fees and expensesdividends.
Appears in 1 contract
Sources: Placement Agency Agreement (Peregrine Industries Inc)
Further Covenants. The Company hereby covenants and agrees that:
(a) Except with the prior written consent of the Placement Agent, the Company shall not, at any time prior to the Final Closing, take any action that would cause any of the representations and warranties made by it in this Agreement not to be complete and correct on and as of each Closing Date with the same force and effect as if such representations and warranties had been made on and as of each such date.
(b) If, at any time prior to the Final Closing, any event shall occur that does or may materially affect the Company or as a result of which, in the reasonable judgment of Company or the Placement Agent (or counsel thereto), (i) the Offering Documents would include any untrue statement of material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or (ii) it would be might become necessary to amend or supplement the Offering Documents Memorandum so that the representations and warranties herein remain true true, or in all material respects case it shall, in the reasonable opinion of counsel to the Placement Agent, be necessary to amend or supplement the Memorandum to comply with Regulation D or any other applicable securities laws or regulations, the Company or the Placement Agent, as applicable, will promptly notify the other party Placement Agent and Company shall, at its sole cost, prepare and furnish to the Placement Agent copies of appropriate amendments and/or supplements in such quantities as the Placement Agent may reasonably request. The Company will not at any time, whether before or after the Final Closing, prepare or use any amendment or supplement to the Offering Documents Memorandum of which the Placement Agent will not previously have been advised and furnished with a copy, or to which the Placement Agent or its counsel will have reasonably objected in writing or orally (confirmed in writing within 24 hours), or which is not in compliance in all material respects with the Act, the Regulations and other applicable securities laws, rules and regulations. As soon as the Company is advised thereof, the Company will advise the Placement Agent and its counsel, and confirm the advice in writing, of any order preventing or suspending the use of the Offering DocumentsMemorandum, or the suspension of the qualification or registration of the Securities or shares of common stock of Company underlying the Securities Units for offering or the suspension of any exemption for such qualification or registration of the Securities underlying the Securities Units for offering in any jurisdiction, or of the institution or threatened institution of any proceedings for any of such purposes, and the Company will use its commercially reasonable best efforts to prevent the issuance of any such order, judgment or decree decree, and, if issued, to endeavor to obtain as soon as reasonably possible the lifting thereof.
(bc) The Company shall comply with the Act, the Regulations, the Securities and Exchange Act of 1934, as amended (the "1934 ActACT"), and the rules and regulations thereunder, all applicable federal, state and foreign securities laws and the rules and regulations thereunder in the states in which the Securities are to be offered and in which Company’s Placement Agent's Blue Sky counsel has advised the Placement Agent that the Securities Units are qualified or registered for sale or exempt from such qualification or registration, so as to permit the continuance of the sales of the SecuritiesUnits, and will file with the SEC, and shall promptly thereafter forward to the Placement Agent, any and all reports on Form D and other securities filings as are required. Company shall take all reasonable steps to assist the Placement Agent in complying with FINRA Rule 5123 and Regulation M, provided that compliance with FINRA Rule 5123 and Regulation M shall be the Placement Agent’s responsibility.
(cd) The Company shall use its reasonable best efforts to qualify the Securities Units for sale (or seek exemption therefrom) under the state securities or Blue Sky laws of such jurisdictions in the United States as may be mutually agreed to by Company the Placement Agent shall designate, and the Placement Agent, and Company will (through its Blue Sky counsel) make such applications and furnish information as may be required for such purposes, provided that in no event shall Company be obligated to qualify to do business in any jurisdiction where it is not now so qualified or to take any action which would subject it to general service of process in any jurisdiction where it is not now subject, and provided further that Company shall not be required to produce any new disclosure document other than the Memorandum. The Company will, from time to time, prepare and file such statements and reports as are or may be required to continue such qualifications in effect for so long a period as the Placement Agent may reasonably request. The Company shall not, however, in either case, be required to file any general consent to service of process or to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which it is not so qualified or to subject itself to taxation in respect of doing business in any jurisdiction in which it is not otherwise so subject.
(de) To the extent required by applicable law or its governing documents, The Company shall place a legend on the certificates representing the Securities Notes and the Conversion Shares issued to investors subscribers stating that the securities evidenced thereby have not been registered under the Act or applicable state securities laws and laws, setting forth or referring to the applicable restrictions on transferability and sale of such securities under the Act and applicable state laws.
(ef) The Company shall apply the net proceeds from the sale of the Securities Units to fund its working capital requirements and/or for the such other purposes as shall be specifically described under "Use of Proceeds" in the Memorandum.
(fg) During the Offering Period, the Company shall make available for review by prospective purchasers of the Units during normal business hours at the Company's offices, upon their request, copies of the Company Agreements to the extent that such disclosure shall not violate any obligation on the part of the Company to maintain the confidentiality thereof and shall afford each prospective purchaser of Units the opportunity to ask questions of and receive answers from an officer of the Company concerning the terms and conditions of the Offering and the opportunity to obtain such other additional information necessary to verify the accuracy of the Memorandum to the extent it possesses such information or can acquire it without unreasonable expense.
(h) Except with the prior written consent of the Placement Agent or as set forth in the Memorandum with respect to the Merger, the Company shall not, at any time prior to the earlier of the Final Closing or the Termination Date, engage in or commit to engage in any transaction outside the ordinary course of business, including, without limitation, the incurrence of material indebtedness, materially change its business or operations as shall be described in the Memorandum, or issue, agree to issue or set aside for issuance any securities (debt or equity) or any right to acquire such securities except as shall be contemplated by the Memorandum.
(i) Until the earlier of (A) the five-year anniversary of the Final Closing or (B) a Liquidity Event (as defined below), the Company shall, unless otherwise required by applicable securities laws, (i) deliver to the Placement Agent and the Company's stockholders annual audited financial statements prepared in accordance with GAAP setting forth fairly the financial position of the Company, (ii) deliver to the Placement Agent semi-annual unaudited financial statements including both a balance sheet and statement of income prepared in accordance with GAAP applied on a consistent basis throughout the periods indicated except as may be disclosed in the notes thereto, and except that the unaudited financial statements omit full notes, and except for normal year end adjustments, (iii) deliver to the Company's stockholders a quarterly report, reviewed by the Placement Agent, of the progress and status of the Company and an annual report setting forth clearly the financial position of the Company, (iv) deliver to the Placement Agent a copy of a list of its stockholders as and when so requested, to extent the Company has such information is available or otherwise will take such action as is necessary to make such information available, and (v) deliver to the Placement Agent such additional information and documents concerning the business and financial condition and outlook of the Company as the Placement Agent may from time to time reasonably request.
(j) Whether or not the transactions contemplated hereby are consummated, or this Agreement is terminated, as partial consideration to the Placement Agent for the performance of its services hereunder, Company hereby agrees to pay all reasonable fees, costs and expenses incident hereto and to the Offering, including, without limitation, those in connection with: with (i) preparing, printing, duplicating, filing, distributing and binding the Memorandum and any and all amendments and/or supplements thereto thereto, fees for bound volumes and any and all agreements, contracts and other documents related hereto and thereto; (ii) the creation, authorization, issuance, transfer and delivery of the SecuritiesNotes, the Conversion Shares, the Agent's Shares and the Agent's Warrants, including, without limitation, fees and expenses of any transfer agent or registrar; (iii) the fees and expenses of the Escrow Agent (subject to Section 4(b) hereof); (iv) all fees and expenses of legal, accounting and other advisers to the Company; (iv) the registration, qualification or exemption of the Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions pursuant to Section 6(c); (v) the all reasonable filing fees, costs and legal fees and expenses for Blue Sky services and related filings with respect to Blue Sky exemptions and qualifications, $12,500 of which shall be paid to the Escrow Placement Agent's counsel upon execution of this Agreement (for legal fees in connection with obtaining Blue Sky exemptions (the "BLUE SKY FEES"); and (vi) all reasonable travelsubject to Section 9 hereof, long-distance telephone call, photocopying, courier and related other out-of-pocket expenses a nonaccountable expense allowance ("PLACEMENT AGENT EXPENSES") incurred by the Placement Agent in connection with this Agreementthe Offering, including the reasonable including, without limitation, travel and related expenses and fees and expenses of legal, accounting and other advisers to the Company equal to three (3%) percent of the gross proceeds from the subscriptions for Units sold.
(k) Until the Termination Date, neither the Company nor any person or entity acting on its behalf will negotiate or enter into any agreement with any other placement agent or underwriter with respect to a private or public offering of the Company's or any subsidiary's debt or equity securities. The Company agrees that any such offering of the Company's securities, other than through the Placement Agent’s counsel, all in accordance with the terms an and provisions of which feesthis Agreement, costs and expenses shall be reasonably documented by will terminate immediately upon the Placement Agent in an invoice submitted by commencement of the Placement Agent to Company; providedOffering. Neither the Company nor anyone acting on its behalf will, howeveruntil the Termination Date, that in no event shall Company be obligated to pay any fees and expenses described in this clause (vi) in excess without the prior written consent of $20,000 in the aggregate without Company written consent; provided, further, that the foregoing limitation on fees and expenses shall in no way affect the obligations of Company with respect to the indemnification provisions set forth in Section 9 hereof and, provided further, that fees and expenses for the Placement Agent’s counsel , offer for sale to, or solicit offers to subscribe for Units or other securities of the Company from, or otherwise approach or negotiate in respect thereof with, any other person.
(l) Until the earlier of the second anniversary of the Final Closing or a Liquidity Event (as defined below), except for the Company's option plan in effect as of the date hereof, the Company will not issue or sell any of its securities or grant any warrants, options or other rights to acquire its securities (except pursuant to any existing options, warrants and rights and option and similar plans as shall be described in the Memorandum) to any other person or entity without the Placement Agent's prior written consent, which shall not exceed $3,500be unreasonably withheld. All fees For the purposes of this Agreement, a "LIQUIDITY EVENT" shall mean (A) the consummation of the IPO, (B) the Merger or (C) the consummation of any merger, consolidation or business combination of the Company with any other entity other than an Affiliate and expenses described in this clause pursuant to which (vi1) shall be payable to the Placement Agent by Company within 30 days is not the surviving entity or the shareholders of the Company immediately before such transaction own less than 50% of the voting power of the Company immediately after Company’s receipt such transaction and (2) the shares of an invoice from the Placement Agent for such for such fees and expensessurviving entity are publicly traded.
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