PLACEMENT AGENT AGREEMENT
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THIS PLACEMENT AGENT AGREEMENT is made and entered into as of this
12th day of January, 2004, by and between Charleston Capital Corp., with an
office at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ("Charleston
Capital" or the "Placement Agent"), NanoPierce Technologies, Inc. with an office
at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Company").
WHEREAS, the proposed private placement offering (the "Offering") of
the Company's securities is being made under Rule 506 of Regulation D of the
Securities Act of 1933, as amended (the "Act") pursuant to the terms more fully
set forth on Exhibit A. This Placement Agent Agreement (the "Agreement") sets
forth the mutual agreements and understandings between the Company and the
Placement Agent relating to the Offering.
NOW THEREFORE, in consideration of the mutual promises made herein and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
1. The Placement Agent, an NASD member broker-dealer, will
introduce the Company to "accredited investors" as defined in Rule 501
promulgated under the Act for the purchase of units for a minimum of $1,250,000
(the "Minimum Offering Amount") and a maximum of $2,000,000 (the "Maximum
Offering Amount"). The units consisting of one (1) share of the Company's
common stock (the "Common Stock") and one (1) Warrant to purchase one (1) shares
of the Company's Common Stock will be offered at $.10 per unit and will be
offered and sold pursuant to the terms more fully set forth on Exhibit A,
attached hereto and made a part hereof.
2. The sale of units (the "Offering") will be made in a private
placement through the Placement Agent on a "best efforts" basis pursuant to a
Subscription Agreement and all supplements, amendments and exhibits thereto, all
of which constitute an integral part thereof, in accordance with Section 4(2) of
the Act and the regulations promulgated thereunder. The Placement Agent further
acknowledges that in connection with the Offering, it is not authorized to, and
agrees not to, provide any information or make any representation to any
potential purchaser of securities other than as set forth in the Securities
Purchase Agreement and the related Offering documents.
3. At any time after receipt of subscriptions for the Minimum
Offering Amount the Company may accept such subscriptions and may conduct a
closing (a "Closing") the date of any such Closing a "Closing Date".
Certificates representing shares of Common Stock and Warrants shall be delivered
to the investors no later than ten (10) calendar days after the Closing Date.
4. The Company agrees that following execution of the Securities
Purchase Agreement, the investor shall be entitled to the registration rights
described in the Offering Documents.
5. The Company has paid $2,500 and has (upon breaking escrow of a
minimum of $1,250,000 in gross subscription proceeds) agreed to pay an
additional $5,000 to Charleston Capital's counsel for all legal fees and costs
of Charleston Capital directly and necessarily incurred in connection with the
proposed Offering, including but not limited to, the costs of preparing and
printing the Subscription Agreement and review of any Registration Statement and
amendments thereto. Charleston Capital will bear any and all other expenses it
may incur in connection with this Offering ("Charleston's Expenses"). The
Company will bear its own expenses incurred in connection with this Offering,
including those expenses associated with any Registration Statement and
amendments, post-effective amendments and supplements thereto, if any;
preparing, printing and delivering exhibits thereto and copies of the
preliminary, final and supplemental prospectus (collectively, the "Company
Expenses"). The Company will also bear the costs, expenses and filing fees for
Blue Sky compliance, but has agreed to pay Charleston Capital's counsel the sum
of $2,500 for Blue Sky filing in New York and Florida as well as the Form D
filing with the SEC.
6. Wachovia Bank shall act as Escrow Agent and the Company shall
be responsible for escrow fees which will be assessed in accordance with a
schedule to be provided by Wachovia Bank before the Company has any binding
obligation of any nature to Charleston Capital or to Wachovia Bank.
7. Unless required by law, any services and advice rendered by the
Placement Agent pursuant to this Agreement (and the existence of this Agreement)
shall not be disclosed publicly in any manner without their prior written
approval and shall be treated by the Company as confidential information except
as otherwise provided in paragraph 14, below. The Company shall not use the
name of Charleston Capital or any officer, director, employee or shareholder
thereof in any press release regarding the Offering without the express written
permission of Charleston Capital. All material non-public information given to
the Placement Agent by the Company shall be treated by the Placement Agent as
confidential information and shall not be used by the Placement Agent except in
rendering its services pursuant to this Agreement. The Company will use its
best efforts to clearly delineate to the Placement Agent any such information.
8. The Placement Agent reserves the right to conduct legal,
business and financial due diligence of the Company to the extent that the
Placement Agent, in its sole discretion, deems it necessary and appropriate.
9. (a) The Company agrees to indemnify the Placement Agent and
each of its directors, officers, employees, shareholders, its attorneys,
controlling persons under the Act, affiliates and agents thereof (each a
"Placement Agent Indemnitee," together, the "Placement Agent Indemnitees"), pay
on demand and protect, defend, save and hold each Placement Agent Indemnitee
harmless from and against any
and all liabilities, damages, losses, settlements, claims, actions, suits,
penalties, fines, costs or expenses (and all actions in respect thereof)
(including, without limitation, reasonable attorneys' fees and related expenses)
(A) incurred by or asserted against any Placement Agent Indemnitee of
whatever kind or nature, arising from, in connection with or occurring as a
result of, this Agreement or the matters contemplated by this Agreement,
including without limitation, (i) the engagement of the Placement Agent pursuant
to this Agreement or any other related agreement, including any modifications or
future additions to such engagement and related activities prior to the date
hereof, (ii) any act by the Placement Agent or any Placement Agent Indemnitee
taken in good faith in connection with this Agreement or the transactions
contemplated therein (including, without limitation, the purchase of securities
of the Company) except to the extent any such act results from the negligence or
willful misconduct of the Placement Agent, (iii) a breach of any representation,
warranty, covenant, or agreement of the Company contained in this Agreement, the
Subscription Agreement or any of the other documents utilized in connection with
the Offering, (iv) the employment by the Company or by any person affiliated,
associated, or otherwise related to, retained by, or working under the direction
of the Company (not including any person who may be an indemnitor under
paragraph 9(b), below) of any device, scheme or artifice to defraud, or the
engaging by the Company or by any person affiliated, associated, or otherwise
related to, retained by, or working under the direction of the Company in any
act, practice or course of business which operates or would operate as a fraud
or deceit, or any conspiracy with respect thereto, in connection with the
Offering, or (v) any untrue statement or alleged untrue statement of a material
fact contained in any of the documents used in connection with or otherwise
related to the Offering 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 unless as a result of
the negligence or willful misconduct of the Placement Agent.
(B) The Company further agrees that it will not, without the prior
written consent of the Placement Agent, settle or compromise or consent to the
entry of any judgment in any pending or threatened claim, action, suit or
proceeding in respect of which indemnification may be sought hereunder (whether
or not the Placement Agent or any Placement Agent Indemnitee is an actual or
potential party to such claim, action, suit or proceeding) unless such
settlement, compromise or consent (i) includes an unconditional release of the
Placement Agent and each other Placement Agent Indemnitee hereunder from all
liability arising out of such claim, action, suit or proceeding, (ii) does not
include any finding, concession, evidence or admission of any liability,
wrongdoing of any nature, violation of any law, rule, regulation or the rights
of any person or entity, which could be used in any way as, or deemed to be
evidence of, an admission or concession that any person has or has not suffered
any damage, and (iii) does not include any other term or condition that could be
detrimental to, injure or adversely affect the business or reputation of a
Placement Agent Indemnitee.
(b) Charleston Capital agrees to indemnify each of the Company,
the directors, officers, employees, shareholders, its attorneys, controlling
persons under the Act, affiliates and agents thereof (each a "Company
Indemnitee," together, the "Company Indemnitees"), pay on demand and protect,
defend, save and hold each Company Indemnitee harmless from and against any and
all liabilities, damages, losses, settlements, claims, actions, suits,
penalties, fines, costs or expenses (and all actions in respect thereof)
(including, without limitation, reasonable attorneys' fees and related expenses)
(A) incurred by or asserted against any Company Indemnitee of
whatever kind or nature, arising from, in connection with or occurring as a
result of, this Agreement or the matters contemplated by this Agreement,
including without limitation, (i) any act by Charleston Capital or any person
affiliated, associated, or otherwise related to, retained by, or working under
the direction of Charleston Capital, taken in good faith in connection with this
Agreement or the transactions contemplated therein (including, without
limitation, the purchase of securities of the Company) which liability results
from the negligence or willful misconduct of Charleston Capital or of any person
affiliated, associated, or otherwise related to, retained by, or working under
the direction of Charleston Capital, (ii) a breach of any representation,
warranty, covenant, or agreement of Charleston Capital contained in this
Agreement, the Subscription Agreement or any of the other documents utilized in
connection with the Offering, (iii) the employment by Charleston Capital or by
any person affiliated, associated, or otherwise related to, retained by, or
working under the direction of Charleston Capital of any device, scheme or
artifice to defraud, or the engaging by Charleston Capital or by any person
affiliated, associated, or otherwise related to, retained by, or working under
the direction of Charleston Capital in any act, practice or course of business
which operates or would operate as a fraud or deceit, or any conspiracy with
respect thereto, in connection with the Offering, or (v) any untrue statement or
alleged untrue statement of a material fact contained in any of the documents
used in connection with or otherwise related to the Offering 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 to the extent such information was provided to the Company by
Charleston Capital for use in the Subscription Agreement.
(B) Charleston Capital agrees that it will not, without the prior
written consent of the Company, settle or compromise or consent to the entry of
any judgment in any pending or threatened claim, action, suit or proceeding in
respect of which indemnification may be sought hereunder (whether or not the
Company or any Company Indemnitee is an actual or potential party to such claim,
action, suit or proceeding) unless such settlement, compromise or consent (i)
includes an unconditional release of the Company and each other Company
Indemnitee hereunder from all liability arising out of such claim, action, suit
or proceeding, (ii) does not include any finding, concession, evidence or
admission of any liability, wrongdoing of any nature, violation of any law,
rule, regulation or the rights of any person or entity, which could be used in
any way as, or deemed to be evidence of, an admission or concession that any
person has or has not suffered any damage, and (iii) does not include any other
term or condition that could be
detrimental to, injure or adversely affect the business or reputation of a
Company Indemnitee.
(c) Promptly upon receipt by any Indemnitee (which term
includes a Placement Agent Indemnitee or a Company Indemnitee, as the context
may require) of notice of any complaint or the assertion or institution of any
claim with respect to which indemnification is being sought hereunder, such
Indemnitee shall notify the Company and the Placement Agent in writing of such
complaint or of such assertion or institution, but failure to so notify the
Company or the Placement Agent shall not relieve the appropriate party from any
obligation such party may have hereunder, unless, and only to the extent that,
such failure results in the forfeiture by such party of substantial rights and
defenses, and such failure to so notify the Company or the Placement Agent will
not in any event relieve the Company or the Placement Agent (as appropriate)
from any other obligation or liability the Company or the Placement Agent may
have to any Indemnitee otherwise than under this Agreement. If the Company or
the Placement Agent (as appropriate) so elect or are requested by such
Indemnitee, the Company or the Placement Agent (as appropriate) will assume the
defense of such claim, including the employment of counsel reasonably
satisfactory to such Indemnitee and the payment of the fees and expenses of such
counsel. In the event, however, that such Indemnitee reasonably determines in
its sole judgment that having common counsel would present such counsel with a
conflict of interest or such Indemnitee concludes that there may be legal
defenses available to it or other Indemnitees that are different from or in
addition to those available to the Company or the Placement Agent (as
appropriate), then such Indemnitee may employ its own separate counsel to
represent or defend it in any such claim and the Company or the Placement Agent
(as appropriate) shall pay the reasonable fees and expenses of such counsel.
Notwithstanding anything herein to the contrary, if the Company or the Placement
Agent (as appropriate) fail timely or diligently to defend, contest, or
otherwise protect against any claim, the relevant Indemnitee shall have the
right, but not the obligation, to defend, contest, compromise, settle, assert
crossclaims or counterclaims, or otherwise protect against the same, and shall
be fully indemnified by the Company or the Placement Agent (as appropriate)
therefor, including, but not limited to, for the fees and expenses of its
counsel and all amounts paid as a result of such claim or the compromise or
settlement thereof. In any claim in which the Company or the Placement Agent (as
appropriate) assume the defense, the Indemnitee shall have the right to
participate in such defense and to retain its own counsel therefor at its own
expense.
(d) To the extent any indemnification pursuant to the
preceding paragraphs (or any of them) is prohibited or limited by law, the
Company and the Placement Agent (as appropriate) agree to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under this Section 9 to the fullest extent permitted by law.
(e) (A) If (i) Charleston Capital other than by reason of
its negligence or willful misconduct, becomes involved in any capacity in any
action, proceeding or investigation brought by any shareholder of the Company,
in connection with or as a result of the consummation of the transactions
contemplated by this
Agreement, or if Charleston Capital is impleaded in any such action, proceeding
or investigation by any person, or (ii) Charleston Capital, other than by reason
of its negligence or willful misconduct, becomes involved in any capacity in any
action, proceeding or investigation brought by the Securities and Exchange
Commission ("SEC") against or involving the Company or in connection with or as
a result of the consummation of the transactions contemplated by this Agreement,
or if Charleston Capital is impleaded in any such action, proceeding or
investigation by any person, then in any such case, the Company will reimburse
Charleston Capital for its reasonable legal and other expenses (including the
cost of any investigation and preparation) incurred in connection therewith, as
such expenses are incurred. The reimbursement obligations of the Company under
this section shall be in addition to any liability which the Company may
otherwise have, shall extend upon the same terms and conditions to any
affiliates of Charleston Capital that are actually named in such action,
proceeding or investigation, and partners, directors, agents, employees,
attorneys, accountants, auditors and controlling persons (if any), of Charleston
Capital and any such affiliate, and shall be binding upon and inure to the
benefit of any successors of the Company, Charleston Capital and any such
affiliate and any such person.
(B) If (i) the Company, other than by reason of its negligence or
willful misconduct, becomes involved in any capacity in any action, proceeding
or investigation brought by any shareholder or affiliate of Charleston Capital,
in connection with or as a result of the consummation of the transactions
contemplated by this Agreement, or if the Company is impleaded in any such
action, proceeding or investigation by any person, or (ii) the Company, other
than by reason of its negligence or willful misconduct, becomes involved in any
capacity in any action, proceeding or investigation brought by the SEC against
or involving Charleston Capital or in connection with or as a result of the
consummation of the transactions contemplated by this Agreement, or if the
Company is impleaded in any such action, proceeding or investigation by any
person, then in any such case, Charleston Capital, will reimburse the Company
for its reasonable legal and other expenses (including the cost of any
investigation and preparation) incurred in connection therewith, as such
expenses are incurred. The reimbursement obligations of Charleston Capital under
this section shall be in addition to any liability which Charleston Capital may
otherwise have, shall extend upon the same terms and conditions to any
affiliates of the Company that are actually named in such action, proceeding or
investigation, and partners, directors, agents, employees, attorneys,
accountants, auditors and controlling persons (if any), as the case may be, of
the Company and any such affiliate, and shall be binding upon and inure to the
benefit of any successors of the Company, Charleston Capital and any such
affiliate and any such person.
(f) (A) Should Charleston Capital or any of its
directors, officers, partners, shareholders, agents or employees, other than by
reason of its or their negligence or willful misconduct, be required or be
requested by us to provide documentary evidence or testimony in connection with
any proceeding arising from or relating to the engagement of the Placement Agent
under this Agreement, the Company agrees to pay all reasonable expenses
(including, but not limited to, fees and expenses of counsel) in complying
therewith, payable in advance.
(B) Should the Company, or any of its directors, officers,
partners, shareholders, agents or employees, other than by reason of its or
their negligence or willful misconduct, be required or be requested by us to
provide documentary evidence or testimony in connection with any proceeding
arising from or relating to the engagement of the Placement Agent under this
Agreement, the Placement Agent agrees to pay all reasonable expenses (including,
but not limited to, fees and expenses of counsel) in complying therewith,
payable in advance.
(g) The Company and Charleston Capital each hereby consent to
personal jurisdiction and service and venue in any court in which any claim
which is subject to this Agreement is brought against any Indemnitee.
10. The parties anticipate the final Closing Date to be January
16, 2004 of the Offering, however the parties may extend the Offering date upon
mutual agreement without notice to the investors.
11. Placement Fees; Closing.
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(a) The placement fee shall consist of a cash payment equal
to three percent (3%) of the gross amount of such investment on the Closing Date
and three percent (3%) of the gross amount paid to the Company by the Investors
for the exercise of the $.10 Warrants. Charleston Capital Corporation shall
also receive upon the Closing Date a Warrant to purchase Common Stock of the
Company for that number of shares of Common Stock equal to three percent (3%) of
the number of shares of Common Stock purchased by the Investors on the Closing
Date. Charleston Capital Corporation shall also receive subsequent to the
Closing Date a Warrant to purchase Common Stock of the Company for that number
of shares of Common Stock equal to three percent (3%) of the number of shares of
Common Stock purchased by the Investors by exercising the $.10 Warrant. The
Warrants will be based on the same terms as the Warrants issued to the Investor
and will be registered in the Registration Statement for this Offering. The
Warrant shall survive until January 20, 2009, and have a $0.10 exercise price.
Registration shall be "piggy backed" on the registration statement set forth in
the Registration Rights herein.
(b) Conditions to the Placement Agent's Obligations. The
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obligations of the Placement Agent hereunder are subject to the accuracy of the
representations and warranties of the Company contained in this Agreement and
the Subscription Agreement, and, as of the Closing Date, to the performance by
the Company of its obligations hereunder and to the following additional
conditions:
(i) No Material Misstatements. The Company's public
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filings ("SEC Documents") do not contain an untrue statement of a fact, which in
the opinion of the Placement Agent, is material, or omit to state a fact, which,
in the opinion of the Placement Agent, is material and is required to be stated
therein, or is, in
the opinion of the Placement Agent, necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading;
(ii) Compliance with Agreements. The Company shall have
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complied with all agreements and satisfied all conditions on its part to be
performed or satisfied hereunder and under the Subscription Agreement at or
prior to each Closing;
(iii) Corporate Action. The Company shall have taken
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all corporate action necessary in order to permit the valid execution, delivery
and performance of the SEC Documents by the Company, including, without
limitation, obtaining the approval of the Company's board of directors, for the
execution and delivery of the SEC Documents, the performance by the Company of
its obligations hereunder and the Offering contemplated hereby;
(iv) Opinion of Counsel to the Company. The Placement
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Agent shall have received an opinion of counsel to the Company with respect to
the fact that the securities sold in the Offering are (or will be) legally and
validly authorized, fully-paid, and non-assessable, stating that each of the
investors may rely thereon as though addressed directly to such investor, dated
as of each Closing Date; and
(v) Officer's Certificate. The Placement Agent shall
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receive an Officer's Certificate, signed by the appropriate parties and dated as
of the Closing Date. These certificates shall state, among other things, that
the representations and warranties contained herein are true and accurate in all
material respects at such Closing Date with the same effect as though expressly
made at such Closing Date.
12. Press Releases, Etc. Except as otherwise required by
----------------------
applicable law or the rules of a regulatory body, the Company shall not, during
the period commencing on the date hereof and ending thirty (30) days after the
Closing Date, issue any press release or other communication, make any written
or oral statement to any media organization or publication or hold any press
conference, presentation or seminar, or engage in any other publicity with
respect to the Company, their financial condition, results of operations,
business, properties, assets, or liabilities, or the Offering, without the prior
written consent of the Placement Agent except in the ordinary course of business
and not for the purpose of soliciting any interest in the Offering.
13. Liability of Placement Agent: (a) The Company acknowledges
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that all opinions and advice (written or oral) given by the Placement Agent to
the Company in connection with the engagement of the Placement Agent are
intended solely for the benefit and use of the Company in considering the
transaction to which they relate, and the Company agrees that no person or
entity other than the Company shall be entitled to make use of or rely upon the
advice of the Placement Agent to be given hereunder, and no such opinion or
advice shall be used for any other purpose or reproduced, disseminated, quoted
or referred to at any time, in any manner or for any purpose, nor may the
Company make any public references to the Placement Agent, or
use the name of Charleston Capital in any annual reports or any other reports or
releases of the Company without the prior written consent of Charleston Capital.
(b) The Placement Agent represents to the Company that it is a
broker-dealer registered as such under the Securities Exchange Act of 1934 and
applicable state laws, and they are members in good standing of the National
Association of Securities Dealers, Inc. The Placement Agent further represents
and warrants to the Company that it will cause the Offering to be conducted in a
manner in compliance with all applicable laws governing offerings to accredited
investors only.
14. The Company agrees not to use the name of the Placement Agent
in any written document used externally without the Placement Agent's prior
consent, which shall not be unreasonably withheld, except as otherwise required
by law. The Placement Agent recognizes that the Company is subject to the
reporting requirements of the Securities Exchange Act of 1934, as amended, and
consequently will be required to make all disclosures required by or that the
Company deems is appropriate under the Securities Exchange Act of 1934 and the
rules and regulations thereunder.
15. (A) The Company hereby represents and warrants to the
Placement Agent that all representation and warrantees made in the Subscription
Agreement shall be true and correct as of each closing date.
(B) To the extent the Subscription Agreement contains any
representations and warranties by the Placement Agent (including, without
limitation, with respect to the plan of distribution, the manner of the
Offering, and other similar sections), they each hereby represent and warrant to
the Company that all representation and warrantees made by them in the
Subscription Agreement shall be true and correct as of each closing date.
16. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to principles
of conflicts of law. The parties hereby irrevocably submit to the exclusive
jurisdiction of the Courts of the State of New York. The Company and the
Placement Agent hereby waive a trial by jury in any action, proceeding or
counterclaim brought by either of the parties hereto against the other in
respect of any matter arising out or in connection with this Agreement.
17. This Agreement shall be binding upon and inure to the benefit
of Charleston Capital and the Company and each of their successors and assigns.
This Agreement may not be assigned by either party without the prior written
consent of the other.
18. Charleston Capital or the Company may terminate this Agreement
at any time after January 25, 2004, if the minimum amount of $1,250,000 is not
raised.
19. Nothing herein shall restrict or otherwise limit Charleston
Capital from performing similar or dissimilar services for any other private or
publicly listed
companies or for its own account. The provisions of this paragraph 19 shall be
enforceable to the fullest extent permitted by law.
20. This Agreement, including Exhibit A attached hereto and made a
part hereof, embodies the entire agreement and understanding between the parties
hereto and supersedes any prior agreements or understandings, oral or written,
relating to the subject matter hereof. If any provision of this Agreement is
determined to be invalid or unenforceable in any respect, such determination
will not affect such provision in any other respect or any other provision of
this Agreement, which will remain in full force and effect. This Agreement may
not be amended or otherwise modified or waived except by an instrument in
writing signed by the Company and Charleston Capital. This Agreement may be
executed in any number of counterparts, each of which together shall constitute
one and the same original document and a facsimile copy of a signed counterpart
shall be deemed an original.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
CHARLESTON CAPITAL CORP.
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇ ▇▇▇▇▇▇▇▇
Title: President and CEO
NANOPIERCE TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President and CEO
EXHIBIT A
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF
THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS
INVOLVED. NO FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY HAS
RECOMMENDED THESE SECURITIES. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT
CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS TRANSACTION. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND
MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM. PURCHASERS SHOULD BE AWARE THAT THEY WILL
BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE
PERIOD OF TIME.
NANOPIERCE TECHNOLOGIES, INC.
FINANCING TERM SHEET
ISSUER: NanoPierce Technologies, Inc. (the "Company") Symbol:
NPCT trading OTC:BB
AMOUNT: Minimum of $1,250,000.00 and maximum of $2,000,000 on
the Closing Date.
ADDITIONAL AMOUNT: Up to $2,000,000.00 five (5) days after the
effectiveness of the Registration statement and on the
same terms and conditions defined below (the
"Additional Closing Date").
SECURITIES: Common Shares issued at $0.10 per share. Warrants to
purchase Common Shares at $0.25 per share.
WARRANT COVERAGE: The investor(s) gets a warrant to purchase an
additional share of stock at $0.25 for every one share
of restricted stock purchased under this placement.
CLOSING: Two weeks from the date of this Term Sheet.
ADDITIONAL CLOSING: The effective date of the Registration Statement
referred to herein.
ESCROW ACCOUNT WITH: Wachovia Bank National Association
REGISTRATION RIGHTS: The Company shall use its best efforts to file a
registration statement covering the resale of the
Common Shares and the Common Shares obtainable on
exercise of the warrants within 45 days of Closing and
effective in 100 days from Closing. In the event the
registration statement is not filed within 45 days from
Closing and or not declared effective in 100 days, then
the Company shall pay to the Investor(s) a cash amount
within 3 business days of the end of the month equal to
1% per month thereafter of the Amount as liquidated
damages and not as a penalty. The Company shall keep
the registration statement "Evergreen".
INVESTOR(S): Accredited and institutional investors only.
BLUE SKY: a) The Company shall "Blue Sky" the Securities in
states CHARLESTON designates for sale which are
currently designated as New York and Florida.
Placement Agent's counsel shall assist the Company
with the filing.
RIGHT OF FIRST REFUSAL: Upon Closing, CHARLESTON shall have the right of first
refusal on any ensuing financing presented to the
Company by entities other than CHARLESTON for a period
of one year from the date of the Additional Closing
(the Engagement Period). Furthermore, should the
Company, at any time within the Engagement Period
receive funds from an investor introduced by
CHARLESTON, including any investor connected with this
proposed financing, the Company shall pay CHARLESTON a
fee no less than the fees set forth herein, and should
the Company raise capital elsewhere during the
Engagement Period, the Company will remit CHARLESTON
its Placement Agent Fee immediately.
PLACEMENT AGENT FEES
AND EXPENSES: The fee shall consist of a cash payment equal to three
percent (3%) of the gross amount of such investment on
the Closing Date and three percent (3%) of the gross
amount paid to the Company by the Investors for the
exercise of the $.10 Warrants. Charleston Capital
Corporation shall also receive upon the Closing Date a
Warrant to purchase Common Stock of the Company for
that number of shares of Common Stock equal to three
percent (3%) of the number of shares of Common Stock
purchased by the Investors on the Closing Date.
Charleston Capital Corporation shall also receive
subsequent to the Closing Date a Warrant to purchase
Common Stock of the Company for that number of shares
of Common Stock equal to three percent (3%) of the
number of shares of Common Stock purchased by the
Investors by exercising the $.10 Warrant. The Warrants
will be based on the same terms as the Warrants issued
to the Investor and will be registered in the
Registration Statement for this Offering. The Warrant
shall survive until January 20, 2009, and have a $0.10
exercise price. Registration shall be "piggy backed" on
the registration statement set forth in the
Registration Rights herein.
The Company will bear all of the expenses in
connection with the Offering, including, but not
limited to the following: escrow fee to Wachovia Bank
National Association, COBRADesk filing and review fees
--------------------------------
of the NASD, SEC and other filing fees, printing and
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duplicating costs, postage and mailing expenses with
respect to the transmission of Offering Agreements,
registrar and transfer agent fees and expenses, fees of
the Company's counsel and accountants, issue and
transfer taxes, if any.
PLACEMENT AGENT: CHARLESTON CAPTIAL CORPORATION
Dated and Effective: January 9, 2004
CHARLESTON CAPITAL NANOPIERCE TECHNOLOGIES, INC.
CORPORATION
By: By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------- -----------------------------------
Authorized Officer ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
President & Chief Executive Officer