eB2B COMMERCE, INC.
AGENCY AGREEMENT
Commonwealth Associates, L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
October 4, 1999
Gentlemen:
eB2B Commerce, Inc., a Delaware corporation (the "Company"), proposes to
offer for sale to "accredited investors," in a private placement (the "Bridge
Financing"), 10 units ("Bridge Units") at $100,000 per Bridge Unit, each Bridge
Unit consisting of (i) $100,000 principal amount of 8% promissory notes (the
"Notes") and (ii) seven-year warrants (the "Bridge Warrants") to purchase 35,000
shares of the Company's common stock, $.001 par value (the "Common Stock") at an
exercise price of $4.00 per share. The Bridge Financing will be made on a "best
efforts" basis, with subscriptions for no less than five Bridge Units ($500,000)
(inclusive of the conversion of $375,000 of notes held by ComVest Capital
Management, LLC ("ComVest") and ▇▇▇▇▇▇▇ ▇▇▇▇, affiliates of Commonwealth
Associates, L.P. (the "Pre-Bridge Notes")) to be received by the Company on or
prior to October 6, 1999. If the Bridge Financing has not been completed by the
close of business on October 6, 1999, the Company may choose to repay the
Pre-Bridge Notes by the close of business on October 7, 1999 and have no further
obligation hereunder.
After completion of the Bridge Financing, the Company proposes to offer
for sale to "accredited investors," in a private placement (the "Offering"),
units (the "Offering Units") each Offering Unit consisting of (i) 25,000 shares
(the "Preferred Shares") of Series B Convertible Preferred Stock (the "Preferred
Stock") having the rights and preferences set forth in the Certificate of
Designation of Preferred Stock attached hereto as Appendix A and incorporated by
reference herein (the "Designation") and (ii) seven-year warrants (the "Offering
Warrants") to purchase 11,364 shares of Common Stock at $250,000 per Offering
Unit. A minimum of 16 Offering Units or $4,000,000 ("Minimum Offering") and a
maximum of 24 Offering Units or $6,000,000 ("Maximum Offering") will be sold in
the Offering. In the event 12 Offering Units ($3,000,000) are subscribed for,
then four Offering Units ($1,000,000), representing the balance of the Minimum
Offering, will be purchased by investors in the Bridge Financing upon automatic
cancellation of the Notes in payment therefore. The Maximum Offering may be
increased by up to four Offering Units ($1,000,000) at the discretion of the
Company and the Placement Agent (as defined below) in the event of
over-subscription (the "Over-Allotment Option"). The Offering Units will be
offered pursuant to those terms and conditions acceptable to you as reflected in
a Confidential Private Placement Memorandum prepared by the Company in form and
substance satisfactory to you and your counsel (the "Memorandum"). The Minimum
Offering will be made on a "best efforts - all-or-none" basis and the balance of
the Offering will
be offered on a "best efforts" basis. The Bridge Units and the Offering Units
are being offered in accordance with Section 4(2) of the Securities Act of 1933,
as amended (the "Securities Act") and Regulation D promulgated thereunder.
Commonwealth Associates, L.P. will serve as placement agent (the
"Placement Agent") in connection with the Bridge Financing and the Offering.
The Bridge Financing and the Offering are sometimes collectively
referred to herein as the "Placements." The Bridge Units and the Offering Units
are sometimes collectively referred to herein as the "Units." The Memorandum
(including the exhibits thereto), as it may be amended or supplemented from time
to time, and the form of proposed subscription agreement between the Company and
each subscriber for the Placements (the "Subscription Agreement") and the
exhibits which are part of the Memorandum and/or Subscription Agreement are
collectively referred to herein as the "Offering Documents."
The Company will prepare and deliver to the Placement Agent a reasonable
number of copies of the Offering Documents in form and substance satisfactory to
counsel to the Placement Agent.
Each prospective investor subscribing to purchase Units ("Subscriber")
will be required to deliver, among other things, a Subscription Agreement and a
confidential purchaser questionnaire ("Questionnaire") in the form to be
provided to offerees. Capitalized terms used herein, unless otherwise defined or
unless the context otherwise indicates, shall have the same meanings provided in
the Offering Documents.
1. Appointment of Placement Agent.
(a) You are hereby appointed exclusive Placement Agent of the
Company (subject to your right to have selected dealers participate in the
Placements) during the respective offering periods for the Placements herein
specified for the purposes of assisting the Company in finding qualified
Subscribers. The offering period for the Bridge Financing (the "Bridge Offering
Period") shall commence on the day the Offering Documents are first made
available to you by the Company for delivery in connection with the offering for
sale of the Bridge Units and shall continue until the earlier to occur of (i)
the sale of all of the Bridge Units or (ii) October 15, 1999. The day that the
Bridge Offering Period terminates is hereinafter referred to as the "Bridge
Termination Date."
The offering period for the Offering (the "Preferred Offering Period")
shall commence after completion of the Bridge Financing and on the day the
Offering Documents are first made available to you by the Company for delivery
in connection with the offering for sale of the Offering Units and shall
continue until the earlier to occur of (i) the sale of the Maximum Offering or
(ii) November 30, 1999. If the Minimum Offering is not sold prior to the end of
the Preferred Offering Period, the Offering will be terminated and all funds
received from Subscribers will be returned, without interest and without any
deduction. The day that the Preferred Offering Period terminates is hereinafter
referred to as the "Preferred Termination
2
Date." The Preferred Termination Date may be extended for up to 30 days at the
option of the Company and the Placement Agent.
(b) Subject to the performance by the Company of all of its
obligations to be performed under this Agreement and to the completeness and
accuracy of all representations and warranties of the Company contained in this
Agreement, the Placement Agent hereby accepts such agency and agrees to use its
best efforts to assist the Company in finding qualified subscribers pursuant to
the Bridge Financing and the Offering described in the Offering Documents. It is
understood that the Placement Agent has no commitment to sell the Bridge Units
or the Offering Units. Your agency hereunder is not terminable by the Company
except upon termination of the Preferred Offering Period or earlier in the event
that any of the Bridge Financing has not been completed on or prior to the
Bridge Termination Date.
(c) Subscriptions for Units shall be evidenced by the execution
by Subscribers of a Subscription Agreement. No Subscription Agreement shall be
effective unless and until it is accepted by the Company. The Placement Agent
shall not have any obligation to independently verify the accuracy or
completeness of any information contained in any Subscription Agreement or the
authenticity, sufficiency, or validity of any check delivered by any prospective
investor in payment for Units.
(d) The Placement Agent and its affiliates will be investors in
the Placements.
2. Representations and Warranties of the Company. The Company represents
and warrants to the Placement Agent and each Selected Dealer, if any, as
follows:
(a) Securities Law Compliance. The Offering Documents for the
Bridge Financing conform, and the Offering Documents for the Offering when
delivered to Subscribers will conform, in all respects with the requirements of
Section 4(2) of the Securities Act and Regulation D promulgated thereunder and
with the requirements of all other published rules and regulations of the
Securities and Exchange Commission (the "Commission") currently in effect
relating to "private offerings" to "accredited investors" of the type
contemplated by the Company. The Offering Documents will not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in light of the circumstances in which
they were made, not misleading. If at any time prior to the completion of the
Offering or other termination of this Agreement any event shall occur as a
result of which it might become necessary to amend or supplement the Offering
Documents so that they do not include any untrue statement of any material fact
or omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances then existing, not misleading, the
Company will promptly notify you and will supply you with amendments or
supplements correcting such statement or omission. The Company will also provide
the Placement Agent for delivery to all offerees and purchasers and their
representatives, if any, any information, documents and instruments which the
Placement Agent deems reasonably necessary to comply with applicable state and
federal law.
3
(b) Organization. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to own and lease its
properties, to carry on its business as currently conducted and as proposed to
be conducted, to execute and deliver this Agreement and to carry out the
transactions contemplated by this Agreement, as appropriate, and is duly
licensed or qualified to do business as a foreign corporation in New York and in
each other jurisdiction in which the conduct of its business or ownership or
leasing of its properties requires it to be so qualified, except where the
failure to be so licensed or qualified would not, in the aggregate, have a
material adverse effect on the business or financial condition of the Company (a
"Material Adverse Effect").
(c) Capitalization. The authorized, issued and outstanding
capital stock of the Company prior to the consummation of the transactions
contemplated hereby is as set forth in Schedule 2(c) to this Agreement. All
issued and outstanding shares of the Company are validly issued, fully paid and
nonassessable and such shares have not been issued in violation of the
preemptive rights of any stockholder of the Company. All prior sales of
securities of the Company were either registered under the Securities Act and
applicable state securities laws or exempt from such registration, and no
security holder has any rescission rights with respect thereto.
(d) Warrants, Preemptive Rights, Etc. Except as set forth in or
contemplated by Schedule 2(d) to this Agreement, there are not, nor will there
be immediately after the Closing (as hereinafter defined), any outstanding
warrants, options, agreements, convertible securities, preemptive rights to
subscribe for or other commitments pursuant to which the Company is, or may
become, obligated to issue any shares of its capital stock or other securities
of the Company and neither of the Placements will cause any anti-dilution
adjustments to such securities or commitments except as set forth in Schedule
2(d) to this Agreement.
(e) Subsidiaries and Investments. Other than as set forth in
Schedule 2(e) to this Agreement, the Company has no subsidiaries and the Company
does not own, directly or indirectly, any capital stock or other equity
ownership or proprietary interests in any other corporation, association, trust,
partnership, joint venture or other entity.
(f) Financial Statements. The financial information contained in
the Offering Documents is accurate in all material respects. The financial
statements attached to the Offering Documents are hereinafter referred to
collectively as the "Financial Statements". The Financial Statements have been
prepared in conformity with generally accepted accounting principles ("GAAP")
consistently applied and show all material liabilities, absolute or contingent,
of the Company required to be recorded thereon and present fairly the financial
position and results of operations of the Company as of the dates and for the
periods indicated.
(g) Absence of Changes. Since the date of the Financial
Statements, except with respect to matters of which the Company has notified you
in writing, the Company has not incurred any liabilities or obligations, direct
or contingent, not in the ordinary course of business, or entered into any
transaction not in the ordinary course of business, which is material to the
4
business of the Company, and, except as set forth in Schedule 2(g) to this
Agreement there has not been any change in the capital stock of, or any
incurrence of long-term debt by, the Company, or any issuance of options,
warrants or other rights to purchase the capital stock of the Company, or any
adverse change or any development involving, so far as the Company can now
reasonably foresee, a prospective adverse change in the condition (financial or
otherwise), net worth, results of operations, business, key personnel or
properties which would be material to the business or financial condition of the
Company, and the Company has not become a party to, and neither the business nor
the property of the Company has become the subject of, any material litigation
whether or not in the ordinary course of business.
(h) Title. The Company has good and marketable title to all
properties and assets, owned by it, free and clear of all liens, charges,
encumbrances or restrictions, except such as are not significant or important in
relation to the Company's business; all of the material leases and subleases
under which the Company is the lessor or sublessor of properties or assets or
under which the Company holds properties or assets as lessee or sublessee are in
full force and effect, and the Company is not in default in any material respect
with respect to any of the terms or provisions of any of such leases or
subleases, and no material claim has been asserted by anyone adverse to rights
of the Company as lessor, sublessor, lessee or sublessee under any of the leases
or subleases mentioned above, or affecting or questioning the right of the
Company to continued possession of the leased or subleased premises or assets
under any such lease or sublease. The Company owns or leases all such properties
as are necessary to its operations as now conducted.
(i) Proprietary Rights. The Company owns or possesses adequate
and enforceable rights to use all patents, patent applications, trademarks,
service marks, copyrights, trade secrets, processes, formulations, technology or
know-how used in the conduct of its business (the "Proprietary Rights"). The
Company has not received any notice of any claims, nor does it have any
knowledge of any threatened claims, and knows of no facts which would form the
basis of any claim, asserted by any person to the effect that the sale or use of
any product or process now used or offered by the Company or proposed to be used
or offered by the Company infringes on any patents or infringes upon the use of
any such Proprietary Rights of another person and, to the best of the Company's
knowledge, no others have infringed the Company's Proprietary Rights.
(j) Litigation. There is no material action, suit, investigation,
customer complaint, claim or proceeding at law or in equity by or before any
arbitrator, governmental instrumentality or other agency now pending or, to the
knowledge of the Company, threatened against the Company (or basis therefor
known to the Company) the adverse outcome of which would have a Material Adverse
Effect. The Company is not subject to any judgment, order, writ, injunction or
decree of any Federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign which
have a Material Adverse Effect.
(k) Non-Defaults; Non-Contravention. The Company is not in
violation of or default under, nor will the execution and delivery of this
Agreement or any of the Offering Documents, the Notes, the Bridge Warrants, the
Offering Warrants, the Warrant Agreement, the
5
Fund Escrow Agreement or the Finder's Agreement (all as defined herein) or
consummation of the transactions contemplated herein or therein or the issuance
of the Agent's Warrants (as defined herein) result in a violation of or
constitute a default in the performance or observance of any obligation under
(i) its Articles of Incorporation, or its By-laws, or (ii) any indenture,
mortgage, contract, material purchase order or other agreement or instrument to
which the Company is a party or by which it or its property is bound or
affected, where such violation or default would have a Material Adverse Effect,
or (iii) any material order, writ, injunction or decree of any court of any
Federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, where such violation or
default would have a Material Adverse Effect, and there exists no condition,
event or act which constitutes, nor which after notice, the lapse of time or
both, could constitute a default under any of the foregoing, which in either
case would have a Material Adverse Effect.
(l) Taxes. The Company has filed all Federal, state, local and
foreign tax returns which are required to be filed by it or otherwise met its
disclosure obligations to the relevant agencies and all such returns are true
and correct in all material respects. The Company has paid all taxes pursuant to
such returns or pursuant to any assessments received by it or which it is
obligated to withhold from amounts owing to any employee, creditor or third
party. The Company has properly accrued all taxes required to be accrued by GAAP
consistently applied. The tax returns of the Company have never been audited by
any state, local or Federal authorities. The Company has not waived any statute
of limitations with respect to taxes or agreed to any extension of time with
respect to any tax assessment or deficiency.
(m) Compliance With Laws; Licenses, Etc. The Company has not
received notice of any violation of or noncompliance with any Federal, state,
local or foreign, laws, ordinances, regulations and orders applicable to its
business which has not been cured, the violation of, or noncompliance with
which, would have a Material Adverse Effect. The Company has all licenses and
permits and other governmental certificates, authorizations and permits and
approvals (collectively, "Licenses") required by every Federal, state and local
government or regulatory body for the operation of its business as currently
conducted and the use of its properties, except where the failure to be licensed
would not have a Material Adverse Effect. The Licenses are in full force and
effect and to the Company's knowledge no violations currently exist in respect
of any License and no proceeding is pending or threatened to revoke or limit any
thereof.
(n) Authorization of Agreement, Etc. This Agreement has been duly
and validly authorized, executed and delivered by the Company and the execution,
delivery and performance by the Company of this Agreement, the Subscription
Agreement, the Warrant Agreement, the Fund Escrow Agreement and the Finder's
Agreement have been duly authorized by all requisite corporate action by the
Company and when delivered, constitute or will constitute the legal, valid and
binding obligations of the Company, enforceable in accordance with their
respective terms, subject to applicable laws regarding insolvency and to
principles of equity.
(o) Authorization of Notes, Warrants Etc. The issuance, sale and
delivery of the Pre-Bridge Notes, the Pre-Bridge Warrants, the Notes, the Bridge
Warrants, the Offering
6
Warrants, the Preferred Shares and the Agent's Warrants have been duly
authorized by all requisite corporate action of the Company. When so issued,
sold and delivered, such securities will be duly executed, issued and delivered
and will constitute valid and legal obligations of the Company enforceable in
accordance with their respective terms and, in each case, will not be subject to
preemptive or any other similar rights of the stockholders of the Company or
others which rights shall not have been waived prior to the initial closing of
the Bridge Financing (the "Initial Bridge Closing").
(p) Authorization of Reserved Shares. The issuance, sale and
delivery by the Company of (i) the shares of Common Stock issuable upon exercise
of the Pre-Bridge Warrants, the Bridge Warrants, the Offering Warrants and the
Agent's Warrants and conversion of the Preferred Shares and the Notes
(collectively, the "Reserved Shares") have been duly authorized by all requisite
corporate action of the Company, and the Reserved Shares have been duly reserved
for issuance and when so issued, sold, paid for and delivered, the Reserved
Shares will be validly issued and outstanding, fully paid and nonassessable, and
not subject to preemptive or any other similar rights of the stockholders of the
Company or others which rights shall not have been waived prior to the Initial
Bridge Closing.
(q) Exemption from Registration. Assuming (i) the accuracy of the
information provided by the respective Subscribers in the Subscription Documents
and (ii) that the Placement Agent has complied in all material respects with the
provisions of Regulation D promulgated under the Securities Act, the offer and
sale of the securities comprising the Bridge Units and the Offering Units
pursuant to the terms of this Agreement are exempt from the registration
requirements of the Securities Act and the rules and regulations promulgated
thereunder (the "Regulations"). The Company is not disqualified from the
exemption under Regulation D by virtue of the disqualifications contained in
Rule 505(b)(2)(iii) or Rule 507 promulgated thereunder.
(r) Registration Rights. Except with respect to holders of the
Pre-Bridge Warrants, the Bridge Units, the Offering Units and the Agent's
Warrants and except as set forth in Schedule 2(r) hereto, no person has any
right to cause the Company to effect the registration under the Securities Act
of any securities of the Company. The Company shall grant registration rights
under the Securities Act to the investors in the Placements and/or their
transferees as more fully described in the Bridge Warrants (with respect to the
Bridge Financing) and the Subscription Agreement (with respect to the Offering).
(s) Brokers. Neither the Company nor any of its officers,
directors, employees or stockholders has employed any broker or finder in
connection with the transactions contemplated by this Agreement other than the
Placement Agent.
(t) Title to Securities. When certificates representing the Notes
and Bridge Warrants and certificates representing the Preferred Shares and
Offering Warrants have been duly delivered to the purchasers participating in
the Bridge Financing and Offering, respectively, and payment shall have been
made therefor, the several purchasers shall have good and marketable title to
such securities free and clear of all liens, encumbrances and claims
7
whatsoever (with the exception of claims arising through the acts or omissions
of the purchasers and except as arising from applicable Federal and state
securities laws), and the Company shall have paid all taxes, if any, in respect
of the original issuance thereof.
(u) Right of First Refusal. Except for the right of first refusal
granted to the Placement Agent herein, no person, firm or other business entity
is a party to any agreement, contract or understanding, written or oral
entitling such party to a right of first refusal with respect to offerings by
the Company.
3. Closing; Placement and Fees.
(a) Closing of the Placements.
(i) Bridge Financing. The Initial Bridge Closing shall take
place at the offices of the Placement Agent, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ no later than three business after the date hereof. Provided additional
Bridge Units shall have been subscribed for and funds representing the sale
thereof shall have cleared, a final Bridge Closing shall take place at the
offices of the Placement Agent, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ no later
than three business days following the Bridge Termination Date, which closing
date may be accelerated or adjourned by agreement between the Company and the
Placement Agent. At each Bridge Closing, payment for the Bridge Units issued and
sold by the Company shall be made against delivery of the Notes and Bridge
Warrants comprising such Bridge Units.
(ii) Offering. Provided the Minimum Offering shall have been
subscribed for (including four Offering Units ($1,000,000) to be purchased by
holders of Bridge Units) and funds representing the sale thereof shall have
cleared, a closing (the "Initial Preferred Closing") shall take place at the
offices of the Placement Agent, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ within
three business days thereafter (but in no event later than five days following
the Preferred Termination Date), which closing date may be accelerated or
adjourned by agreement between the Company and the Placement Agent. At the
Initial Preferred Closing, payment for the Offering Units issued and sold by the
Company shall be made against delivery of the Preferred Shares and Offering
Warrants. In addition, subsequent closings of the Offering (if applicable) may
be scheduled at the discretion of the Company and Placement Agent, each of which
shall be deemed a "Preferred Closing" hereunder.
(b) Conditions to Placement Agent's Obligations. The obligations
of the Placement Agent hereunder will be subject to the accuracy of the
representations and warranties of the Company herein contained as of the date
hereof and as of each closing date of the Placements, to the performance by the
Company of its obligations hereunder and to the following additional conditions:
(i) Due Qualification or Exemption. (A) The Placements will
become qualified or be exempt from qualification under the securities laws of
the several states pursuant to paragraph 4(e) below not later than the Closing
Date, and (B) at the Closing Date no stop
8
order suspending the sale of the Units shall have been issued, and no proceeding
for that purpose shall have been initiated or threatened;
(ii) No Material Misstatements. Neither the Blue Sky
qualification materials nor the Offering Documents, nor any supplement thereto,
will contain any untrue statement of a fact which in the opinion of the
Placement Agent is material, or omits to state a fact, which in the opinion of
the Placement Agent is material and is required to be stated therein, or is
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading;
(iii) Compliance with Agreements. The Company will have
complied with all agreements and satisfied all conditions on its part to be
performed or satisfied hereunder at or prior to each Closing;
(iv) Corporate Action. The Company will have taken all
necessary corporate action, including, without limitation, obtaining the
approval of the Company's board of directors, for the execution and delivery of
this Agreement, the performance by the Company of its obligations hereunder and
the Placements contemplated hereby;
(v) Opinion of Counsel. The Placement Agent shall receive
the opinion of ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, counsel to the Company,
substantially to the effect that:
(A) the Company is validly existing and in good standing
under the laws of the State of Delaware, has all requisite corporate
power and authority necessary to own or hold its respective properties
and conduct its business and is duly qualified or licensed to do
business as a foreign corporation and is in good standing in New York
and in each other jurisdiction in which the ownership or leasing of its
properties or conduct of its business requires such qualification,
except where the failure to so qualify or be licensed would not have a
Material Adverse Effect;
(B) each of this Agreement, the Notes, the Bridge
Warrants, the Offering Warrants, the Agent's Warrants, the Fund Escrow
Agreement, the Subscription Agreements, the Warrant Agreement and the
Finder's Agreement has been duly and validly authorized, executed and
delivered by the Company, and is the valid and binding obligation of the
Company, enforceable against it in accordance with its terms, subject to
any applicable bankruptcy, insolvency or other laws affecting the rights
of creditors generally and to general equitable principles;
(C) the authorized, issued and outstanding capital stock
of the Company as of the date hereof (before giving effect to the
transactions contemplated by this Agreement) is as set forth in Schedule
2(c) hereto. To such counsel's knowledge, there are no outstanding
warrants, options, agreements, convertible securities, preemptive rights
or other commitments pursuant to which the Company is, or may become,
obligated to issue any shares of its capital stock or other securities
of the Company other
9
than as set forth in Schedule 2(d). All of the issued shares of capital
stock of the Company have been duly and validly authorized and issued,
are fully paid and nonassessable and to such counsel's knowledge have
not been issued in violation of the preemptive rights of any
securityholder of the Company. The offers and sales of such securities
were either registered under the Securities Act and applicable state
securities laws or exempt from such registration requirements;
(D) assuming (i) the accuracy of the information provided
by the Subscribers in the Subscription Documents and (ii) that the
Placement Agent has complied with the requirements of section 4(2) of
the Securities Act (and the provisions of Regulation D promulgated
thereunder), the issuance and sale of the [Bridge Units in the Bridge
Financing][Offering Units in the Offering] is exempt from registration
under the Securities Act and Regulation D promulgated thereunder;
(E) neither the execution and delivery of this Agreement,
the Subscription Agreement , the Warrant Agreement or the Finder's
Agreement, nor compliance with the terms hereof or thereof, nor the
consummation of the transactions herein or therein contemplated, nor the
issuance of the Notes, the Bridge Warrants, the Offering Warrants, the
Preferred Shares or the Agent's Warrants, has, nor will, conflict with,
result in a breach of, or constitute a default under the Articles of
Incorporation or By-laws of the Company, or any material contract,
instrument or document known to such counsel to which the Company is a
party, or by which it or any of its properties is bound or violate any
applicable law, rule, regulation, judgment, order or decree known to us
of any governmental agency or court having jurisdiction over the Company
or any of its properties or business;
(F) to the best of such counsel's knowledge, there are no
claims, actions, suits, investigations or proceedings before or by any
arbitrator, court, governmental authority or instrumentality pending or,
to such counsel's knowledge, threatened against or affecting the Company
or involving the properties of the Company which might materially and
adversely affect the business, properties or financial condition of the
Company or which might materially adversely affect the transactions or
other acts contemplated by this Agreement or the validity or
enforceability of this Agreement, except as set forth in or contemplated
by the Offering Documents; and
(G) [for the Offering only] such counsel has reviewed the
Offering Documents and nothing has come to the attention of such counsel
to cause them to have reason to believe that the Offering Documents
contained any untrue statement of a material fact required to be stated
therein or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading
(except for the financial statements, notes thereto and other financial
information and statistical data contained therein, as to which such
counsel need express no opinion).
(vi) Officers' Certificate. The Placement Agent shall
receive a certificate of the Company, signed by the Chief Executive Officer and
Chief Financial Officer
10
thereof, that the representations and warranties contained in Section 2 hereof
are true and accurate in all material respects at such closing with the same
effect as though expressly made at such closing.
(vii) Conversion of Debt. The Company will have entered
into agreements pursuant to which (i) the $80,000 loan payable to ▇▇▇▇▇▇
▇▇▇▇▇▇▇, (ii) accrued salary in excess of $60,000 owed to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, and
(iii) accrued salary in the aggregate amount of $312,500 owed to other employees
will have converted to Common Stock at a conversion price of $.50 per share for
the Bentley loan and $5.50 per share for the rest.
(viii) Board of Directors. The Placement Agent shall have
the right to designate one member of the Board of Directors, which designee is
not expected to be appointed to the Board until completion of the Offering.
The obligation of the Placement Agent to consummate the Offering is
subject to the following additional conditions:
(ix) By-Laws. The Company's By-Laws shall contain a
provision stating that meetings of the Board of Directors may be called by any
two directors acting in concert.
(x) Budgets. The Placement Agent shall receive two-year
quarterly operating budgets which have been reviewed and approved by the
Company's Board of Directors and the Placement Agent.
(xi) Fund Escrow Agreement. The Placement Agent shall
receive a copy of a duly executed escrow agreement in the form previously
delivered to you regarding the deposit of funds pending the closing(s) of the
respective Placements with a bank or trust company acceptable to the Placement
Agent (each, a "Fund Escrow Agreement").
(xii) Finder's Agreement. The Company shall execute and
deliver to the Placement Agent an agreement with the Placement Agent providing
for a finder's fee to the Placement Agent in the event the Company consummates
certain transactions (the "Finder's Agreement").
(xiii) Lock-Up Agreements. The Placement Agent shall
receive agreements from each officer, director and principal stockholder of the
Company to the effect that such individual shall not sell, assign or transfer
any of their securities of the Company for the period of 12 months from the
final closing of the Offering (the "Final Preferred Closing").
(xiv) Board of Directors. The Company's Board of Directors
shall be acceptable to the Placement Agent (the existing members being so
acceptable) and shall include one member appointed by the Placement Agent and
one member designated by the Offering investors.
11
(xv) Key-Man Insurance. The Company shall have obtained a
"key-man" life insurance policy in the amount of at least $1,000,000 on the
life of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and shall keep such policy in effect for at least
three years after the Initial Preferred Closing.
(c) Blue Sky. Counsel to the Placement Agent will prepare and
file the necessary documents so that offers and sales of the securities to be
offered in the Offering may be made in certain jurisdictions. It is understood
that such filings may be based on or rely upon (i) the representations of each
Subscriber set forth in the Subscription Agreement delivered by such Subscriber,
(ii) the representations, warranties and agreements of the Company set forth in
Section 2 of this Agreement, (iii) the representations and warranties of the
Placement Agent, and (iv) the representations of the Company set forth in the
certificate to be delivered at each closing pursuant to paragraph (vi) of
Section 3(b).
(d) Placement Fee and Expenses.
(i) Bridge Financing. Simultaneously with payment for and
delivery of the Bridge Units at the Initial Bridge Closing, the Company shall
pay to the Placement Agent $15,000, which non-refundable payment shall be
credited against reimbursable expenses as set forth in subsection (ii)(C) below.
ComVest and ▇▇▇▇▇▇▇ ▇▇▇▇ will have previously received seven-year warrants to
purchase an aggregate of 498,659 shares of the Company's Common Stock
substantially identical to the Warrants included in the Units (the "Pre-Bridge
Warrants") in consideration of the Pre-Bridge Notes, which notes will be
converted into Notes in the Bridge Financing. Portions of the Pre-Bridge
Warrants are subject to forfeiture as set forth therein. The Company shall also
pay all expenses in connection with the qualification of the Bridge Units under
the securities or Blue Sky laws of the states which the Placement Agent shall
designate, including legal fees and filing fees.
(ii) Offering. Simultaneously with payment for and
delivery of the Preferred Shares at each closing of the Offering, the Company
will (A) pay to the Placement Agent a sales concession equal to 7% of the
aggregate purchase price of the Offering Units sold in the Offering, except for
up to $500,000 of Offering Units purchased by investors introduced by the
Company or its officers or directors; (B) pay to the Placement Agent a
structuring fee equal to 3% of the aggregate purchase price of the Offering
Units sold in the Offering, except for up to $500,000 of Offering Units
purchased by investors introduced by the Company or its officers or directors;
(C) reimburse the Placement Agent for up to $50,000 of accountable expenses
(including expenses incurred in connection with the Bridge Financing), and (D)
issue to the Placement Agent or its designees seven-year warrants in the form
attached hereto as Appendix A to purchase that number of shares of Common Stock
as equals 18.723% of the shares of Common Stock underlying the Preferred Shares
and the Offering Warrants (the "Agent's Warrants") sold in the Offering,
including by investors introduced by the Company or its officers or directors.
The Company shall also pay all expenses in connection with the qualification of
the Preferred Shares under the securities or Blue Sky laws of the states which
the Placement Agent shall designate, including legal fees and filing fees.
12
(e) Bring-Down Opinions and Certificates. If there is more than
one Closing, then at each such Closing there shall be delivered to the Placement
Agent updated opinion and certificate as described in (v) and (vi) of Section
3(b) above, respectively.
(f) No Adverse Changes. There shall not have occurred, at any
time prior to the applicable closing (i) any domestic or international event,
act or occurrence which has materially disrupted, or in the Placement Agent's
opinion will in the immediate future materially disrupt, the securities markets;
(ii) a general suspension of, or a general limitation on prices for, trading in
securities on the New York Stock Exchange or the American Stock Exchange or in
the over-the-counter market; (iii) any outbreak of major hostilities or other
national or international calamity; (iv) any banking moratorium declared by a
state or federal authority; (v) any moratorium declared in foreign exchange
trading by major international banks or other persons; (vi) any material
interruption in the mail service or other means of communication within the
United States; (vii) any material adverse change in the business, properties,
assets, results of operations, or financial condition of the Company; or (viii)
any change in the market for securities in general or in political, financial,
or economic conditions which, in the Placement Agent's reasonable judgment,
makes it inadvisable to proceed with the applicable Placement.
4. Covenants of the Company.
(a) Use of Proceeds. Up to $60,000 of the net proceeds of the
Bridge Financing may be used to pay accrued salary to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇. The
balance of the net proceeds of the Bridge Financing will be used for general
working capital purposes. The net proceeds of the Offering will be used by the
Company substantially as set forth in the Memorandum. Except as set forth on
Schedule 4(a) to this Agreement, the Company shall not use any of the proceeds
from the Placements to repay any indebtedness of the Company (other than trade
payables in the ordinary course), including but not limited to indebtedness to
any current executive officers, directors or principal stockholders of the
Company.
(b) Expenses of Offering. The Company shall be responsible for,
and shall bear all expenses directly incurred in connection with, the proposed
Placements including, but not limited to, (i) legal fees of the Company's
counsel relating to the costs of preparing the Offering Documents and all
amendments, supplements and exhibits thereto and preparing and delivering all
placement agent and selling documents; Note, Bridge Warrant, Preferred Share and
Offering Warrant certificates; (ii) blue sky fees, filing fees and the fees and
disbursements of Placement Agent's counsel in connection with blue sky matters
(the "Company Expenses"). The Company shall also reimburse the Placement Agent
for up to $50,000 of its expenses (including the Bridge Financing), including
the cost of the Placement Agent's printing, mailing, reproduction, word
processing, travel and lodging, reasonable fees and disbursements of the
Placement Agent's counsel, and fees and disbursements of other consultants and
advisors retained by the Placement Agent (with the Company's consent) or other
similar expenses.
(c) Notification. The Company shall notify the Placement Agent
immediately, and in writing, (i) when any event shall have occurred during the
period commencing on the date hereof and ending on the later of the last Closing
or the Termination
13
Date as a result of which the Offering Documents would include any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
(ii) of the receipt of any notification with respect to the modification,
rescission, withdrawal or suspension of the qualification or registration of the
Units, or of any exemption from such registration or qualification, in any
jurisdiction. The Company will use its best efforts to prevent the issuance of
any such modification, rescission, withdrawal or suspension and, if any such
modification, rescission, withdrawal or suspension is issued and you so request,
to obtain the lifting thereof as promptly as possible.
(d) Blue Sky. The Company will use its best efforts to qualify or
register the securities to be offered in the Placements for offering and sale
under, or establish an exemption from such qualification or registration under,
the securities or "blue sky" laws of such jurisdictions as you may reasonably
request; provided however, that the Company will not be obligated to qualify as
a dealer in securities in any jurisdiction in which it is not so qualified. The
Company will not consummate any sale of securities pursuant to the Placements in
any jurisdiction in which it is not so qualified or in any manner in which such
sale may not be lawfully made.
(e) Form D Filing. The Company shall file five copies of a Notice
of Sales of Securities on Form D with the Securities and Exchange Commission
(the "Commission") no later than 15 days after the sale of the Bridge Units and
no later than 15 days after the first sale of the Offering 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 or jurisdiction in which offers and sales are made. The Company
shall furnish the Placement Agent with copies of all such filings.
(f) Press Releases, Etc. The Company shall not, during the period
commencing on the date hereof and ending on the last to occur of (i) the final
Bridge Closing, (ii) the Bridge Termination Date; (iii) the Final Closing and
(iv) the Preferred Termination Date, issue any press release or other
communication, or hold any press conference with respect to the Company, its
financial condition, results of operations, business, properties, assets, or
liabilities, or the Placements, without the prior consent of the Placement
Agent, which consent shall not be unreasonably withheld.
(g) Executive Compensation. The compensation of the Company's
executive officers shall not increase during the three-year period following the
Initial Preferred Closing (other than as set forth in employment agreements in
existence on the date hereof) without the approval of a majority of the Board of
Directors.
(h) Restrictions on Issuances of Securities. During the period
commencing on the date hereof and ending on the later of (i) the Final Closing
or (ii) the Preferred Termination Date, the Company will not, without the prior
written consent of the Placement Agent, issue additional shares of Common Stock,
other than pursuant to the exercise of options or warrants outstanding on the
date hereof, or grant any warrants, options or other securities of the Company.
If the Minimum Offering is sold, the Company agrees that it will not, without
approval of a
14
majority of the Board, issue additional shares of Common Stock, other than
pursuant to the exercise of options or warrants outstanding on the date hereof,
or grant any warrants, options or other securities of the Company.
(i) Budgets; Financial Statements. During the two-year period
after the Initial Preferred Closing, any expenditures in excess of 5% within a
particular budget category (i.e., sales and marketing, general and
administrative) outside the budgets previously delivered to the Placement Agent
pursuant to Section 3(b)(ix) hereof must be approved by a majority of the Board
of Directors. During the two-year period after the Initial Preferred Closing,
the Company will deliver to the Placement Agent monthly financial statements
within 15 days after the end of each month.
(j) D&O Insurance. Commencing on the Initial Preferred Closing,
the Company shall maintain officers and directors liability insurance in the
amount of $2,000,000.
(k) Right of First Refusal. If during the one-year period after
the final Bridge Closing, provided the Bridge Notes are outstanding(other than
as a result of converting into the Offering), the Company proposes to use a
manager, placement agent or investment banker or persons performing similar
services for a fee, the Placement Agent shall have the right of first refusal
(the "Right of First Refusal") to purchase for the account of the Placement
Agent or to act as an underwriter or agent for any and all public or private
offerings (including pursuant to Rule 144A) of the securities of the Company
(exclusive of any senior secured bank financing or equipment leases), or any
successor to or subsidiary of the Company or other entity in which the Company
has a controlling equity interest (collectively referred to herein as the
"Company"), up to $25,000,000 (the "Subsequent Offering"). Accordingly, if
during such period the Company intends to make a Subsequent Offering, the
Company shall notify you in writing of such intention and of the proposed terms
of the offering. The Company shall thereafter promptly furnish you with such
information concerning the business, condition and prospects of the Company as
you may reasonably request. If within 10 business days of the mailing by
registered mail addressed to the Placement Agent with respect to a Subsequent
Offering of such notice of intention and statement of terms you do not accept in
writing such offer to act as underwriter or agent with respect to such offering
or investment banker with respect to such transaction, upon the terms proposed,
the Company shall be free to negotiate terms with other underwriters or agents
with respect to such offering or investment banker with respect to such
transaction, and to effect such offering or transaction on such proposed terms.
Before the Company shall accept any proposal less favorable to the Company from
such underwriter or agent or investment banker or if such Subsequent Offering is
not consummated within five (5) months, your preferential right shall be
reinstated and the same procedure with respect to such modified proposal as
provided above shall be adopted; provided, however, that your preferential right
shall not be reinstated later than one year after the Initial Closing Date. The
failure by you to exercise your Right of First Refusal in any particular
instance shall not affect in any way such right with respect to any other
Subsequent Offering.
15
(l) Independent Auditors. Within three months following the
Initial Preferred Closing, the Company will retain as its independent auditors
an accounting firm acceptable to the Placement Agent.
(m) Sale Fee Agreement. In the event the Company is sold for cash
or stock during the five-year period following the date hereof, the Company will
pay to the Placement Agent a fee equal to one percent (1.0%) of the total
consideration paid in such sale transaction, payable upon consummation of the
transaction. The determination of "total consideration" shall be made in
accordance with the provisions therefor set forth in the form of Finder's
Agreement. The fee due to Commonwealth hereunder and under the Finder's
Agreement; however, shall not exceed, in the aggregate, 3% of the total
consideration in any sale transaction.
(n) Board Designees; Irrevocable Proxy. During the three-year
period following the Initial Preferred Closing, the Company agrees to nominate
one designee of the Placement Agent and one designee of the Preferred
Shareholders to the Company's Board of Directors. The Placement Agent shall
receive, at the Initial Preferred Closing, an irrevocable proxy (which by its
terms will expire on an initial public offering) from each of the officers and
directors of the Company granting the Placement Agent a proxy to vote their
shares for the election of directors solely for the purpose of enforcing the
Placement Agent's rights described in this Section 4(n). The Designation shall
contain a provision setting forth the Preferred Shareholders' right described
herein.
(o) Transmittal Letters. Within five days after each closing of
the Placements, the Placement Agent shall receive copies of all letters from the
Company to the investors transmitting the securities sold in such Placement and
shall receive a letter from the Company confirming transmittal of the securities
to the investors.
(p) Delivery of Memorandum. The Company shall deliver the
Memorandum in final form reasonably acceptable to the Placement Agent no later
than October 29, 1999.
5. Indemnification.
(a) The Company agrees to indemnify and hold harmless the
Placement Agent and each selected dealer, if any, and their respective
shareholders, directors, officers, agents and controlling persons (an
"Indemnified Party") against any and all loss, liability, claim, damage and
expense whatsoever (and all actions in respect thereof), and to reimburse the
Placement Agent for reasonable legal fees and related expenses as incurred
(including, but not limited to the costs of investigating, preparing or
defending any such action or claim whether or not in connection with litigation
in which the Placement Agent is a party and the costs of giving testimony or
furnishing documents in response to a subpoena or otherwise), arising out of any
untrue statement or alleged untrue statement of a material fact contained in the
Offering Documents or the omission or alleged omission therefrom of a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading;
16
(b) The Company agrees to indemnify and hold harmless an
Indemnified Party to the same extent as the foregoing indemnity, against any and
all loss, liability, claim, damage and expense whatsoever directly arising out
of the exercise by any person of any right under the Securities Act or the
Exchange Act or the securities or Blue Sky laws of any state on account of
violations of the representations, warranties or agreements set forth in Section
2 hereof.
(c) The Placement Agent agrees to indemnify and hold harmless the
Company against any and all loss, liability, claim, damage and expense
whatsoever directly arising out of any untrue statement or alleged untrue
statement of a material fact contained in the Offering Documents provided to the
Company in writing by the Placement Agent specifically for use in the Offering
Documents.
(d) Promptly after receipt by an Indemnified Party under this
Section of notice of the commencement of any action, the indemnified party will,
if a claim in respect thereof is to be made against the Company under this
Section, notify in writing the Company of the commencement thereof; but the
omission so to notify the Company will not relieve it from any liability which
it may have to the Indemnified Party otherwise than under this Section except to
the extent the defense of the claim is prejudiced. In case any such action is
brought against an Indemnified Party, and it notifies the Company of the
commencement thereof, the Company will be entitled to participate in, and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, subject to the provisions herein
stated, with counsel reasonably satisfactory to the Indemnified Party, and after
notice from the Company to the Indemnified Party of its election so to assume
the defense thereof, the Company will not be liable to the Indemnified Party
under this Section for any legal or other expenses subsequently incurred by the
Indemnified Party in connection with the defense thereof other than reasonable
costs of investigation (provided the Company has been advised in writing that
such investigation is being undertaken). The Indemnified Party shall have the
right to employ separate counsel in any such action and to participate in the
defense thereof, but the fees and expenses of such counsel shall not be at the
expense of the Company if the Company has assumed the defense of the action with
counsel reasonably satisfactory to the Indemnified Party; provided that the fees
and expenses of such counsel shall be at the expense of the Company if (i) the
employment of such counsel has been specifically authorized in writing by the
Company or (ii) the named parties to any such action (including any impleaded
parties) include both the Indemnified Party or Parties and the Company and, in
the reasonable judgment of counsel for the Indemnified Party, it is advisable
for the Indemnified Party or Parties to be represented by separate counsel due
to an actual conflict of interest (in which case the Company shall not have the
right to assume the defense of such action on behalf of the an Indemnified Party
or Parties), it being understood, however, that the Company shall not, in
connection with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys for all the Indemnified Parties. No
settlement of any action against an Indemnified Party shall be made unless such
an Indemnified Party is fully and completely released in connection therewith.
17
6. Contribution.
To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant to Section (5) but
it is found in a final judicial determination, not subject to further appeal,
that such indemnification may not be enforced in such case, even though this
Agreement expressly provides for indemnification in such case, or (ii) any
indemnified or indemnifying party seeks contribution under the Securities Act,
the Exchange Act, or otherwise, then the Company (including for this purpose any
contribution made by or on behalf of any officer, director, employee or agent
for the Company, or any controlling person of the Company), on the one hand, and
the Placement Agent and any selected dealers (including for this purpose any
contribution by or on behalf of an indemnified party), on the other hand, shall
contribute to the losses, liabilities, claims, damages, and expenses whatsoever
to which any of them may be subject, in such proportions as are appropriate to
reflect the relative benefits received by the Company, on the one hand, and the
Placement Agent and the selected dealers, on the other hand; provided, however,
that if applicable law does not permit such allocation, then other relevant
equitable considerations such as the relative fault of the Company and the
Placement Agent and the selected dealers in connection with the facts which
resulted in such losses, liabilities, claims, damages, and expenses shall also
be considered. In no case shall the Placement Agent or a selected dealer be
responsible for a portion of the contribution obligation in excess of the
compensation received by it pursuant to Section 3 hereof or any selected dealer
Agreement, as the case may be. No person guilty of a fraudulent
misrepresentation shall be entitled to contribution from any person who is not
guilty of such fraudulent misrepresentation. For purposes of this Section 6,
each person, if any, who controls the Placement Agent or a selected dealer
within the meaning of Section 15 of the Securities Act or Section 20(a) of the
Exchange Act and each officer, director, stockholder, employee and agent of the
Placement Agent or a selected dealer, shall have the same rights to contribution
as the Placement Agent or the selected dealer, and each person, if any who
controls the Company within the meaning of Section 15 of the Securities Act or
Section 20(a) of the Exchange Act and each officer, director, employee and agent
of the Company, shall have the same rights to contribution as the Company,
subject in each case to the provisions of this Section 6. Anything in this
Section 6 to the contrary notwithstanding, no party shall be liable for
contribution with respect to the settlement of any claim or action effected
without its written consent. This Section 6 is intended to supersede any right
to contribution under the Securities Act, the Exchange Act, or otherwise.
7. Miscellaneous.
(a) Survival. Any termination of the Placements without
consummation thereof shall be without obligation on the part of any party except
that the indemnification provided in Section 5 hereof and the contribution
provided in Section 6 hereof shall survive any termination and shall survive the
Final Closing for a period of five years.
(b) Representations, Warranties and Covenants to Survive
Delivery. The respective representations, warranties, indemnities, agreements,
covenants and other statements of the Company as of the date hereof shall
survive execution of this Agreement and delivery of
18
the Units and the termination of this Agreement for a period of one year after
such respective event.
(c) No Other Beneficiaries. This Agreement is intended for the
sole and exclusive benefit of the parties hereto and their respective successors
and controlling persons, and no other person, firm or corporation shall have any
third-party beneficiary or other rights hereunder.
(d) Governing Law; Resolution of Disputes. This Agreement shall
be governed by and construed in accordance with the law of the State of New York
without regard to conflict of law provisions. The Placement Agent and the
Company will attempt to settle any claim or controversy arising out of this
Agreement through consultation and negotiation in good faith and a spirit of
mutual cooperation. Should such attempts fail, then the dispute will be mediated
by a mutually acceptable mediator to be chosen by the Placement Agent and the
Company within 15 days after written notice from either party demanding
mediation. Neither party may unreasonably withhold consent to the selection of a
mediator, and the parties will share the costs of the mediation equally. Any
dispute which the parties cannot resolve through negotiation or mediation within
six months of the date of the initial demand for it by one of the parties may
then be submitted to the courts for resolution. The use of mediation will not be
construed under the doctrine of latches, waiver or estoppel to affect adversely
the rights of either party. Nothing in this paragraph will prevent either party
from resorting to judicial proceedings if (a) good faith efforts to resolve the
dispute under these procedures have been unsuccessful or (b) interim relief from
a court is necessary to prevent serious and irreparable injury.
(e) Counterparts. This Agreement may be signed in counterparts
with the same effect as if both parties had signed one and the same instrument.
(f) Notices. Any communications specifically required hereunder
to be in writing, if sent to the Placement Agent, will be sent by overnight
courier providing a receipt of delivery or by certified or registered mail to it
at Commonwealth Associates, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Att:
▇▇▇▇ ▇▇▇▇▇▇▇▇ with a copy to ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Att: ▇▇▇▇ ▇▇▇▇▇▇▇ and if sent to the Company, will be
sent by overnight courier providing a receipt of delivery or by certified or
registered mail to it at ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Att:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, with a copy to ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, ▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Att: ▇▇▇▇ ▇▇▇▇▇▇.
(g) Entire Agreement. This Agreement constitutes the entire
agreement of the parties with respect to the matters herein referred and
supersedes all prior agreements and understandings, written and oral, between
the parties with respect to the subject matter hereof. Neither this Agreement
nor any term hereof may be changed, waived or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, waiver or termination is sought.
19
If you find the foregoing is in accordance with our understanding,
kindly sign and return to us a counterpart hereof, whereupon this instrument
along with all counterparts will become a binding agreement between us.
Very truly yours,
eB2B COMMERCE, INC.
By: \s\ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
Agreed:
COMMONWEALTH ASSOCIATES, L.P.
a New York limited partnership
By: Commonwealth Associates Management Corp., Inc.
a New York corporation, its general partner
By: \s\ ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Chief Financial Officer