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EXHIBIT 10.4
EDUDATA CORPORATION
AGENCY AGREEMENT
As of October 23,1996
▇.▇. ▇▇▇▇▇▇▇▇ & Co.. Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Gentlemen:
This Agreement is being executed by the parties hereto this 26th day
of November, 1996, but effective as of October 23, 1996, and reflecting
modifications intended to be effective as of November 14, 1996.
Edudata Corporation, a Delaware corporation ("Company"), proposes to
offer for sale in a private placement ("Offering"), thirty-two (32) units
("Units) at a purchase price of $50,000 per Unit (or an aggregate of
$1,600,000), each Unit consisting of a $50,000 principal amount secured
convertible promissory note ("Note(s)") and a Warrant ("Warrant") to purchase
25,000 shares of common stock, $.01 par value per share ("Common Stock"). You
may accept subscriptions for fractional Units in your discretion and with the
Company's consent. The Notes and Warrants will be issued in the form of
Exhibits B and E to the Term Sheet (as defined below) hereto. The Units will
be offered on a "best efforts -- all or none" basis, in accordance with Section
4(2) and/or 3(b) of the Securities Act of 1933, as amended ("Securities Act"),
and Rules 501-506 of Regulation D ("Reg D") promulgated thereunder, only to
"accredited investors," as defined in Reg D.
The Company will issue to purchasers of Units additional Warrants
("Additional Warrants") in certain circumstances as set forth in Supplement No.
1 (as defined below) and Section 5.8 of this Agreement. For purposes of this
Agreement, (i) the term "Warrants" shall be deemed to include the Additional
Warrants as if they were the Warrants originally issued as part of the Units
unless the context otherwise requires.
The Units, Notes, Warrants and Additional Warrants have the terms and
conditions reflected in the Company's Confidential Term Sheet dated October 23,
1996, as supplemented by Supplement No. 1 (dated November 14, 1996)
("Supplement No. 1") to the Confidential Term
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Sheet dated October 23, 1996, to be delivered to each purchaser of Units
(together the "Term Sheet"). The Term Sheet, together with all exhibits
thereto, including the Subscription Agreement to be executed by each purchaser
and the Company, as such Subscription Agreement is amended by Supplement No. 1,
will be referred to herein as the "Offering Documents." ▇.▇. ▇▇▇▇▇▇▇▇ & Co.,
Inc. is sometimes referred to herein as "MHM" or the "Placement Agent." As used
herein, unless otherwise indicated, the term "Company" shall refer to and
include Edudata Corporation and its Subsidiary (as defined in Section 2.6).
1. Appointment of Placement Agent: The Offering Period.
1.1. Appointment of Placement Agent. You are hereby appointed
exclusive Placement Agent of the Company during the offering period herein
specified ("Offering Period") for the purpose of assisting the Company in
placing the Units with purchasers who are qualified accredited investors
("Subscribers"). The Offering Period shall commence on the day the Offering
Documents are first made available to you by the Company and shall continue
until November 15, 1996; provided, however, that the Offering Period may be
extended for an additional period not to exceed thirty (30) days by the mutual
decision of the Company and the Placement Agent without notice to any
Subscriber. If, at any time during the Offering Period, subscriptions for the
32 Units have been received (including up to 5 Units that may be subscribed for
by the holders ("October Note Holders") of the October Notes (as defined in the
Term Sheet) and paid for by tender of the October Notes) and accepted (and
funds in payment therefor have cleared) by the Company, then, upon the mutual
consent of the Company and the Placement Agent, a closing shall take place with
respect to such accepted subscriptions ("Closing"). If the Units are not sold
prior to the end of the Offering Period (including any extension thereof), the
Offering will be terminated and all funds received from Subscribers (and the
October Notes if they have been tendered) will be returned, without interest
and without any deduction. The day that the Offering Period terminates is
hereinafter referred to as the "Termination Date." You hereby accept such
agency and agree to assist the Company in placing Units with the Subscribers.
Your agency hereunder is not terminable by the Company except upon termination
of the Offering or breach by you of your obligations hereunder.
1.2. Offering Documents. The Company will provide the Placement
Agent with a sufficient number of copies of the Offering Documents for delivery
to potential Subscribers and such other information, documents and instruments
which the Placement Agent may reasonably request in order to comply with the
rules, regulations and judicial and administrative
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interpretations respecting compliance with applicable state and federal
statutes related to the Offering.
1.3. Segregation of Funds. Each subscriber for Units shall tender
to the Placement Agent a check payable to "▇.▇. ▇▇▇▇▇▇▇▇ & Co., Inc. -- Edudata
Special Account" in the amount of the investment subscribed for (or with
respect to the October Note Holders, they shall tender the October Notes),
which funds shall be held by the Placement Agent in a segregated noninterest
bearing bank account in accordance with Rules 10b-9 and 15c2-4 promulgated
under the Securities Exchange Act of 1934 ("Exchange Act"), as set forth in the
Offering Documents.
2. Representations and Warranties of the Company. The Company hereby
represents and warrants as follows:
2.1. Due Incorporation and Qualification. The Company has been
duly incorporated, is validly existing and is in good standing under the laws
of its state of incorporation and is duly qualified as a foreign corporation
for the transaction of business and is in good standing in each jurisdiction in
which the ownership or leasing of its properties or the conduct of its business
requires such qualification, except where the failure to so qualify would not
have a material adverse effect on the business of the Company and the
Subsidiary taken as a whole. The Company has all requisite corporate power and
authority necessary to own or hold its properties and conduct its business as
described in the Offering Documents.
2.2. Authorized Capital. As of the date of this Agreement, the
Company is authorized to issue 10,000,000 shares of Common Stock, of which
8,746,900 shares are currently issued and outstanding. All of the issued and
outstanding shares of Common Stock have been duly and validly authorized and
issued and are fully paid and non-assessable. None of the holders of such
outstanding shares of Common Stock is subject to personal liability solely by
reason of being such a holder. The offers and sales of such outstanding shares
of Common Stock were at all relevant times either registered under the
Securities Act and the applicable state securities or Blue Sky laws, or exempt
from such registration.
2.3. No Preemptive Rights; Options; Registration Rights. Except as
set forth on Schedule 2.3, there are no preemptive or other rights to subscribe
for or purchase, or any restriction upon the voting or transfer of any shares
of Common Stock or other securities of the Company, under the Certificate of
Incorporation (and the proposed Amended and Restated Certificate of
Incorporation in substantially the form of Exhibit A to the Term Sheet
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("Amendment") to be filed by the Company subsequent to the closing of the
Offering as provided in Section 5.7) or By-Laws of the Company or under any
agreement or other outstanding instrument to which the Company is a party or by
which it is bound. Except as set forth on Schedule 2.3, the Company does not
have outstanding any option, warrant, convertible security, or other right
permitting or requiring it to issue, or otherwise to purchase or convert any
obligation into, shares of Common Stock or other securities of the Company and
the Company has not agreed to issue or sell any shares of Common Stock or other
securities of the Company. No holder of any of the Company's securities has
any rights, "demand," "piggyback" or otherwise, to have such securities
registered or to demand the filing of a registration statement.
2.4. Financial Statements. The financial statements of the Company
included in the Offering Documents ("Financials") fairly present the financial
position and results of operations of the Company at the dates thereof and for
the periods covered thereby, subject, in the case of interim periods, to
year-end adjustments and normal recurring accruals. The Company has no
material liabilities or obligations, contingent, direct, indirect or otherwise
except (i) as set forth in the latest balance sheet included in the Financials
(the date of such Financials being referred to as the "Financial Statements
Date"), (ii) those incurred in the ordinary course of business since the date
of the Financials and (iii) as set forth on Schedule 2.4. Schedule 2.4 also
sets forth all outstanding amounts due to affiliates or any employees, officers
or directors of the Company, including, but not limited to, accrued salaries,
loans, etc.
2.5. No Material Adverse Changes. Except as otherwise stated in
the Offering Documents, since the Financial Statements Date, there has not been
any change in the condition, financial or otherwise, of the Company which could
materially adversely affect its ability to conduct its operations as described
in the Offering Documents.
2.6. Subsidiary. Except for the entity set forth in Schedule 2.6
(the "Subsidiary"), the Company has no subsidiaries and has no interest in,
shares of capital stock of or right to acquire an interest in or shares of
capital stock of any other corporation, limited liability company, partnership
or other entity. The Company owns all of the outstanding capital stock, of the
Subsidiary free and clear of all liens, charges and encumbrances of any kind
whatsoever, and there are no outstanding rights to acquire, or directly or
indirectly control the vote or transfer of, any of the capital stock of the
Subsidiary. The representations and warranties made by the Company in this
Agreement shall also apply and be true with respect to the Subsidiary as if
each
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representation and warranty contained herein made specific reference to the
Subsidiary each time the term "Company" is used.
2.7. Taxes. Except as set forth on Schedule 2.7, the Company has
filed all federal tax returns and all state and municipal and local tax returns
(whether relating to income, sales, franchise, withholding, real or personal
property or other types of taxes) required to be filed under the laws of the
United States and applicable states, and has paid in full all taxes which have
become due pursuant to such returns or claimed to be due by any taxing
authority or otherwise due and owing; provided, however, that the Company has
not paid any tax, assessment, charge, levy or license fee that it is contesting
in good faith and by proper proceedings and adequate reserves for the accrual
of same are maintained if required by generally accepted accounting principles.
Each of the tax returns heretofore filed by the Company correctly and
accurately reflects the amount of its tax liability thereunder. Except as set
forth on Schedule 2.7, the Company has withheld, collected and paid all levies,
assessments, license fees and taxes to the extent required. As used herein,
"tax" or "taxes" include all taxes, charges, fees, levies or other assessments
imposed by any Federal, state, local, or foreign taxing authority, including,
without limitation, income, premium, recapture, credit, excise, property,
sales, use, occupation, service, service use, leasing, leasing use, value
added, transfer, payroll, employment, license, stamp, franchise or similar
taxes (including any interest earned thereon or penalties or additions
attributable thereto).
2.8. Finder's Fees; Other Underwriters. The Company is not
obligated to pay a finder's fee to anyone in connection with the introduction
of the Company to the Placement Agent or the consummation of the Offering
contemplated hereunder or the public offering ("Public Offering") contemplated
in the letter of intent, dated August 9, 1996, as amended on October 23, 1996,
between the Company and the Placement Agent ("Letter of Intent"). Except as
set forth in Schedule 2.8, the Company has not paid or issued any monies,
securities or other compensation to any member of the National Association of
Securities Dealers, Inc. ("NASD") or to any associate or affiliate of such a
member or to any other person in consideration for such person raising funds
for the Company or providing consulting services to the Company during the
previous 12 months, except payments made to the Placement Agent. The Company
is not indebted to or owes any monies to any NASD member, associate or
affiliate.
2.9. No Pending Actions. Except as set forth in the Offering
Documents, there are no actions, suits, proceedings, claims or hearings of any
kind or nature existing or pending (or, to
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the best knowledge of the Company, threatened) or, to the best knowledge of the
Company, any investigations or inquiries, before or by any court, or other
governmental authority, tribunal or instrumentality (or, to the Company's best
knowledge, any state of facts which would give rise thereto), pending or
threatened against the Company, or involving the properties of the Company,
which might result in any material adverse change in the business, properties,
financial position or results of operations of the Company, or which might
adversely affect the transactions or other sets contemplated by this Agreement
or the validity or enforceability of this Agreement. Schedule 2.9 sets forth
certain claims asserted against the Company, none of which, if resolved in a
manner adverse to the Company, would have a material adverse effect on the
Company.
2.10. Private Offering Exemption: Offering Documents. The Offering
Documents conform in all material respects with the requirements of Section
4(2) and/or 3(b) of the Securities Act and Rules 501-506 of Reg D and with the
requirements of all other applicable rules and regulations of the Securities
and Exchange Commission ("Commission") currently in effect relating to "private
offerings." The Offering Documents contain all material statements which are
required to be stated therein in accordance with such requirements and do not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
The Notes and Warrants conform to the descriptions thereof contained in the
Subscription Agreement, as amended by Supplement No. 1. When any exhibit to the
Term Sheet that was required to be filed with the Commission was filed with the
Commission pursuant to the Exchange Act or the Regulations promulgated
thereunder, such exhibit complied in all material respects with the applicable
provisions of the Exchange Act and the Regulations promulgated thereunder and
did not contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Assuming that (i) a proper Form D is filed in accordance with
Rule 503 of Reg D, (ii) the offer and the sale of the Units by the Placement
Agent was made in compliance with Rule 502(c) of Reg D and/or Section 4(2) of
the Securities Act, (iii) that the representations of the Subscribers in the
Subscription Agreements signed by them are true and correct (which facts will
not be independently verified by the Company), and (iv) each Subscriber signs
and delivers a copy of Supplement No. 1, the sale of Units in the Offering is
exempt from registration under the Securities Act and is in compliance with Reg
D.
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2.11. Due Authorization: Consents. The Company has full right,
power and authority to enter into this Agreement and the Notes, the Warrants,
the Subscription Agreements, as amended by Supplement No. 1, and the Security
Agreement to be entered into between the Company, the Subscribers and you, as
agent for the Subscribers in the form annexed as Exhibit D to the Term Sheet
(the "Security Agreement") (collectively the "Offering Agreements") and to
perform all of its obligations hereunder and thereunder. The execution and
delivery of this Agreement and the Offering Agreements has been duly authorized
by all necessary corporate action and no further corporate action or approval
is or will be required for their respective execution, delivery and
performance. This Agreement constitutes, and the Offering Agreements upon
execution and delivery will constitute, valid and binding obligations of the
Company, enforceable in accordance with their respective terms (except (i) as
the enforceability thereof may be limited by bankruptcy or other laws now or
hereafter in effect relating to or affecting creditors' rights generally, (ii)
that the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceedings therefor may be brought, and (iii) that
the enforceability of the indemnification and contribution provisions of the
respective agreements may be limited by the federal and state securities laws
and public policy), and, except as set forth on Schedule 2.11 (a), no consent,
approval, authorization, order of, or filing with, any court or governmental
authority or any other third party is required to consummate the transactions
contemplated by this Agreement or the Offering Documents, and except that the
offer and sale of the Units in certain jurisdictions may be subject to the
provisions of the securities or Blue Sky laws of such jurisdictions.
Additionally, no consents, approvals, authorizations, orders of, filings with,
any court or governmental authority or any other third party is required to
consummate the transactions contemplated by the Letter of Intent, except that
the registration statement on Forms S-1 or SB-2 and the registration statement
an Form 8-A must be declared effective by the Securities and Exchange
Commission, the shares must be approved for listing on Nasdaq, the compensation
payable to MHM must be approved by the NASD and the offer and sale of the
Company's securities may be subject to the provisions of the Blue Sky laws of
certain states. Subject to the liens set forth in Schedule 2.11(b), the
Security Agreement creates a valid security interest and lien, and, upon filing
the Financing Statements described in Section 3 thereof, will create a valid
and perfected first priority security interest and lien, and to all of the
Company's right, title and interest in and to the Collateral, as defined in the
Security Agreement
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2.12. Non-Contravention. The Company's execution and delivery of
this Agreement and the Offering Agreements and the incurrence of the
obligations herein and therein set forth, and the consummation of the
transactions contemplated herein and therein will not (i) conflict with, or
constitute a breach of, or a default under, the Certificate of Incorporation or
By-Laws of the Company, or any contract, lease or other agreement or instrument
to which the Company is a party or in which the Company has a beneficial
interest or by which the Company is bound, all of which are set forth in
Schedule 2.12; (ii) violate any existing applicable law, rule, regulation,
judgment, order or decree of any governmental agency or court, domestic or
foreign, having jurisdiction over the Company or any of its properties or
business, except where such violation(s) would not have a material adverse
effect, singly or in the aggregate, on the Company; or (iii) have any material
adverse affect on any permit, certification, registration, approval, consent,
license or franchise necessary for the Company to own or lease and operate any
of its properties and to conduct its business or the ability of the Company to
make use thereof.
2.13. Shares and Warrant Shares. The issuance of the shares of
Common Stock issuable upon conversion of the Notes ("Note Shares") and upon
exercise of the Warrants ("Warrant Shares") have been duly and validly
authorized, and such shares, when issued and delivered in accordance with the
terms of this Agreement and the Warrants, respectively, will be duly and
validly issued, fully paid and non-assessable. The holders of the Note Shares
and the Warrant Shares will not be subject to personal liability by reason of
being such holders and will not be subject to the preemptive rights of any
holders of any security of the Company or similar contractual rights granted by
the Company. Except for those steps required by the first sentence of Section
5.7 of this Agreement, all corporate action required to be taken for the
authorization, issuance and sale of the Note Shares and the Warrant Shares has
been duly and validly taken.
2.14. No Right to Purchase. The issuance of the Units in the
Offering will not give any holder of any of the Company's outstanding shares of
Common Stock, options, warrants or other convertible securities or rights to
purchase securities of the Company (i) the right to purchase any additional
shares of Common Stock or any other securities of the Company, or (ii) the
right to purchase any securities at a reduced price.
2.15. No Regulatory Problems. The Company (i) has not filed a
registration statement which is the subject of any pending proceeding or
examination under Section 8 of the Securities Act, and is not and has not been
the subject of any refusal order or stop order thereunder; (ii) is not subject
to any pending proceeding under Rule 258 of the Securities Act or any similar
rule
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adopted under Section 3(b) of the Securities Act, or to an order entered
thereunder; (iii) has not been convicted of any felony or misdemeanor in
connection with the purchase or sale of any security or involving the making of
any false filing with the Commission; (iv) is not subject to any order,
judgment, or decree of any court of competent jurisdiction temporarily or
preliminarily restraining or enjoining, or is subject to any order, judgment,
or decree of any court of competent jurisdiction, permanently restraining or
enjoining, the Company from engaging in or continuing any conduct or practice
in connection with the purchase or sale of any security or involving the making
of any false filing with the Commission; and (v) is not subject to a United
States Postal Service false representation order entered under Section 3005 of
▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code or a temporary restraining order or preliminary
injunction entered under Section 3007 of Title 39, United States Code, with
respect to conduct alleged to have violated Section 3005 of ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇ Code. None of the Company's directors, officers, or beneficial owners
of 10 percent or more of any class of its equity securities (i) has been
convicted of any felony or misdemeanor in connection with the purchase or sale
of any security, involving the making of a false Wing with the Commission, or
arising out of the conduct of the business of an underwriter, broker, dealer,
municipal securities dealer, or investment advisor, (ii) is subject to any
order, judgment or decree of any court of competent jurisdiction temporarily or
preliminarily enjoining or restraining. or is subject to any order, judgment or
decree of any court of competent jurisdiction permanently enjoining or
restraining such person from engaging in or continuing any conduct or practice
in connection with the purchase or sale of any security, or involving the
making of a false filing with the Commission, or arising out of the conduct of
the business of an underwriter, broker, dealer, municipal securities dealer, or
investment adviser; (iii) is subject to an order of the Commission entered
pursuant to Section 15(b), 15B(a) or 15B(c) of the Exchange Act, or is subject
to an order of the Commission entered pursuant to Section 203(e) or (f) of the
Investment Advisers Act of 11940; (iv) is suspended or expelled from membership
in, or suspended or barred from association with a member of, an exchange
registered as a national securities exchange pursuant to Section 6 of the
Exchange Act, an association registered as a national securities association
under Section 15A of the Exchange Act, or a Canadian securities exchange or
association for any act or omission to act constituting conduct inconsistent
with just and equitable principles of trade: or (v) is subject to a United
States Postal Service false representation order entered under Section 3005 of
Title 39, United States Code, or is subject to a restraining order or
preliminary injunction entered under Section 3007 of Title 39, United States
Code, with respect to conduct alleged to have violated ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code.
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2.16. No Defaults or Violations. Except as set forth in Schedule
2.16, the Company is not in default in the performance and observance of any
term, covenant or condition of any license, contract, indenture, mortgage, deed
of trust, note, loan or credit agreement, or any other agreement or instrument
evidencing an obligation for borrowed money, or any other agreement or
instrument to which the Company is a party or by which the Company may be bound
or to which any of the properties or assets of the Company is subject, except
defaults which (singly or in the aggregate) would not have a material adverse
effect on the Company. The Company is not in violation of any term or
provision of its Certificate of Incorporation or By-Laws. The Company is not
in violation of any franchise, license, permit, applicable law, rule,
regulation, judgment or decree of any governmental agency or court, domestic or
foreign, having jurisdiction over the Company or any of its properties or
business, except where such violation would not have a material adverse effect
on the Company.
2.17. Conduct of Business; Compliance. Except as disclosed in
Supplement No. 1, the Company has all requisite corporate power and authority,
and has all necessary authorizations, approvals, orders, licenses, certificates
and permits of and from all governmental regulatory officials and bodies, to
own or lease its properties and conduct its business as described in the
Offering Documents. The disclosures in the Offering Documents concerning the
effects of federal, state and local regulation on the Company's business as
currently contemplated are correct in all material respects and do not omit to
state a material fact. The Company is in compliance with all federal, state
and local laws, rules and regulations applicable to the conduct of its
business, except where noncompliance would not have a material adverse effect
on the Company. Except as disclosed in Supplement No. 1, the products
manufactured and/or distributed by the Company and the processes used in the
production and/or storage of such products do not violate any applicable state
or federal laws, regulations or rules, including those promulgated by the Food
and Drug Administration, Environmental Protection Agency or applicable state
agencies.
2.18. Title to Property; insurance. The Company has good and
marketable title to, or valid and enforceable leasehold estates in, all items
of real and personal property (tangible and intangible) owned or leased by it,
free and clear of all liens, encumbrances, claims, security interests, defects
and restrictions of any material nature whatsoever. The Company has adequately
insured its properties against loss or damage by fire or other casualty and
maintains, in adequate amounts.
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2.19. Intangibles. The Company owns or possesses the requisite
licenses or rights to use all trademarks, service marks, service names, trade
names, patents and patent applications, copyrights and other rights
(collectively, "Intangibles") used by the Company in its business or relating
to products sold by the Company. None of the Company's Intangibles have been
registered in the United States Patent and Trademark Office. There is no claim
or action by any person pertaining to, or proceeding pending or, to the
Company's knowledge, threatened and the Company has not received any notice of
conflict with, the asserted rights of others which challenges the exclusive
right of the Company with respect to any Intangibles used in the conduct of the
Company's business except as described in the Offering Documents. The
Intangibles and the Company's current products, services and processes do not
infringe on any intangibles hold by any third party. To the best of the
Company's knowledge, no others have infringed upon the Intangibles of the
Company.
2.20. Exchange Act Reports. The Company is subject to the reporting
requirements of the Securities Act and the Exchange Act and, except for the
Form 10-QSB for the quarter ended April 30, 1995, for the past three years has
filed all reports and statements required under the Securities Act and the
Exchange Act on a timely basis, and each report and statement was true and
complete in all material respects when filed.
2.21. Management Team. To the best of the Company's knowledge, the
background and other information concerning the officers and directors of the
Company previously furnished to the Placement Agent and each of such person's
responses to the Directors' and Officers' Questionnaires are true and accurate
in all material respects.
3. Representations and Warranties of the Placement Agent. The Placement
Agent represents and warrants as follows:
3.1. Due Incorporation. The Placement Agent is duly incorporated
and validly existing and in good standing under the laws of its state of
incorporation and is duly qualified as a foreign corporation for the
transaction of business and is in good standing in each jurisdiction where the
failure to be so qualified would not have a materially adverse effect on the
business of the Placement Agent.
3.2. Broker/Dealer Registration. The Placement Agent is registered
as a broker-dealer under Section 15 of the Exchange Act.
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3.3. Good Standing. The Placement Agent is a member in good
standing of the NASD.
3.4. Sale In Certain Jurisdictions. Sales of Units by the
Placement Agent will be made only in such jurisdictions in Which (i) the
Placement Agent is a registered broker-dealer or where an applicable exemption
from such registration exists and (ii) the Offering and sale of Units is
registered under, or is exempt from, applicable registration requirements.
3.5. Compliance with Laws. Offers and sales of Units by the
Placement Agent will be made in compliance with the provisions of Rule 502(c)
of Reg D and/or Section 4(2) of the Securities Act, and the Placement Agent
will furnish to each investor a copy of the Offering Documents prior to
accepting any payments for Units.
3.6. Disqualification Provisions. Neither the Placement Agent nor
any principal, director, officer or agent thereof is subject to any of the
disqualification provisions set forth in Rules 262(b) or (c) under the Act or
state law applicable to the transactions contemplated hereby.
4. Closing.
4.1. Closing. At any time prior to the Termination Date and after
the sale of the 32 Units and the clearance of the funds representing the sale
of such Units, upon the mutual consent of the Company and the Placement Agent
that there should be a Closing, a Closing shall take place at the offices of
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇ ("GM&M"), ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇. At
the Closing, payment for the Units issued and sold by the Company (by wire
transfer as instructed by the Company) less the amount payable to the Placement
Agent pursuant to Section 4.3 hereof shall be made against delivery of (i) the
Notes and (ii) certificates representing the Warrants included in the Units.
4.2. Deliveries at Closing. At the Closing, and as a condition to
such Closing, the Company shall deliver or cause to be delivered to the
Placement Agent:
4.2.1 Opinions of Counsel. The opinion of Troop ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, dated as of the date of the Closing, in form and
substance satisfactory to GM&M. The opinion of ▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, dated
as of the date of the Closing, in form and substance satisfactory to GM&M.
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4.2.2 Other Documents. At the Closing, as a condition to
such Closing, the Company shall also deliver or cause to be delivered to the
Placement Agent the following documents:
(i) A certificate of the Company, signed by two
executive officers thereof, stating (a) that the representations and warranties
contained in Section 2 hereof are true and accurate at the Closing as applied
to the Company and the Subsidiaries with the same effect as though expressly
made at the Closing, and (b) that the stockholders of the Company have
authorized and approved a 1:2.197317574 reverse stock split of the Common Stock
of the Company and other matters set forth in the Amendment and certifying the
resolution adopted by the stockholders with respect thereto:
(ii) Subscription Agreements signed by the Company
and each of the Subscribers, together with Supplement No. 1 signed by the
Company and each of the Subscribers;
(iii) The Notes and the certificates representing
Warrants to be included in the Units;
(iv) The Security Agreement and UCC-1 financing
statements for filing in such jurisdictions as GM&M may reasonably require;
(v) Consents of any parties required to
consummate this Offering and the transactions contemplated thereby;
(vi) Lock-Up Agreements and Right of First Refusal
Agreements as contemplated by paragraphs (h) and (i) of the Letter of Intent
signed by the persons identified on SCHEDULE 4.2.2(vi); and
(vii) Such other closing documents as shall be
reasonably requested by the Placement Agent or GM&M.
4.3. Placement Agent's Fees and Expenses. At the Closing, the
Company shall pay to the Placement Agent a commission equal to 10% of the
aggregate purchase price of the Units (including any Units paid for by tender
of the October Notes). In order to reimburse the Placement Agent for its
expenses incurred in connection with the Offering, at the Closing, the Company
also shall pay to the Placement Agent a non-accountable expense allowance equal
to 3% of the aggregate purchase price of the Units. On or before the Closing,
the Company
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shall pay the fees and disbursements of GM&M referred to in Section 5.3 below
in connection with the qualification of the Units under the securities or Blue
Sky laws of the states which the Placement Agent shall designate. All the
foregoing amounts are payable directly to the parties who are owed same by
deduction from the aggregate purchase price of the Units sold, If the October
Notes are tendered for Units in the Offering, the Placement Agent shall deduct
from the aggregate purchase prim of the Units, the interest accrued through the
Closing on the October Notes and shall remit same, on behalf of the Company, to
the October Note Holders.
5. Covenants. The Company covenants and agrees that:
5.1. Amendments to Offering Documents. Until the Offering has been
completed or terminated, it there shall occur any event relating to or
affecting, among other things, the Company or any affiliate, or the proposed
operations of the Company as described in the Offering Documents, as a result
of which it is necessary, in the reasonable opinion of GM&M or counsel for the
Company, to amend or supplement the Offering Documents in order that the
Offering Documents will not contain an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, the Company shall immediately prepare and furnish to the Placement
Agent a reasonable number of copies of an appropriate amendment of or
supplement to the Offering Documents, in form and substance satisfactory to
GM&M.
5.2. Use of Proceeds. The net proceeds of the Offering will not be
used to repay any indebtedness for borrowed funds or any Related Party
Indebtedness (as such term is defined in the Notes) except as otherwise
provided in the Notes.
5.3. Expenses of Offering. The Company shall be responsible for,
and shall pay, all expenses incurred in connection with the Offering,
including, but not limited to, the costs of preparing, printing and filing,
where necessary, the Offering Documents and all amendments and supplements
thereto; and the fees and disbursements (including filing fees) of GM&M in
connection with blue sky matters (which fees (excluding disbursements) shall be
$15,000). State exemption and blue sky filing fees will be paid by the Company
as the same are due.
5.4. Further Assurances. The Company will take such actions as may
be reasonably required or desirable to can out the provisions of this Agreement
and the transactions contemplated hereby. The Company further agrees to
promptly take, or cause to be taken, all actions and to promptly do, or cause
to be done, all other things necessary, proper or advisable
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to prepare the registration statement necessary to file with the Commission in
connection with the proposed Public Offering and have such registration
statement declared effective by the Commission.
5.5. Capitalization. The Company will not change its current
capitalization or issue any shares of capital stock or any options, warrants or
other securities convertible into or exchangeable for shares of Common Stock,
other than as contemplated in the Letter of Intent, without the consent of the
Placement Agent prior to the earlier of the effectiveness or abandonment of the
proposed Public Offering.
5.6. Accuracy of Representations and Warranties. The Company
hereby agrees that prior to the Termination Date it will not enter into any
transaction and take no action, and use its best efforts to prevent the
occurrence of any event, which could result in any of its representations,
warranties or covenants contained in this Agreement or any of the Offering
Documents not to be true and correct, or not to be performed as contemplated,
at and as of the time immediately after the occurrence of such transaction or
event.
5.7. Amendment. As soon as practicable after the date of this
Agreement, the Company shall take such steps as are necessary to file the
Amendment in the Office of the Secretary of State of Delaware, including
without limitation making such filings as are necessary under the Exchange Act
and giving notice to the stockholders of the Company in accordance with the
Delaware General Corporation Law. Such filing shall not be revoked or amended
without the written consent of MHM, which consent may be withheld in its sole
discretion. Upon such filing, the Company shall furnish a certified copy of
the Amendment to counsel for the Placement Agent and the Company shall reserve
for issuance a sufficient number of shares of Common Stock to be issued to the
Subscribers upon conversion of the Notes and upon exercise of the Warrants.
5.8. Regulatory Compliance. The Company will use its best efforts
to achieve compliance with all applicable regulations of the U.S. Food and Drug
Administration ("FDA") and the State of California as they pertain to the
manufacture, marketing and sale of medical devices as expeditiously as
possible, including, but not limited to, those regulations described in
Supplement No. 1. The Company covenants to issue to Subscribers the Additional
Warrants as set forth in Supplement No. 1 unless Holland & Associates (the
Company's regulatory consultant referred to in Supplement No. 1) or, in the
event that Holland & Associates shall cease doing business, a similar
consultant reasonably acceptable to Placement Agent shall issue and deliver
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a written report to the Company and the Placement Agent, by the dates set forth
in Supplement No. 1, stating that based upon its review of the Company's
operations, the Company is in substantial compliance with GMP and MDR
regulations (as defined in Supplement No. 1), as well as labeling requirements,
established by the FDA and the State of California. The Company will also use
its best efforts to determine whether the sale of its products in foreign
countries is in compliance with laws of such foreign countries and, to the
extent it is not, either discontinue sales not in compliance with such laws or,
alternatively, with the advice of counsel experienced in such laws, continue
such sales and use its best efforts to achieve compliance as expeditiously as
possible.
6. Indemnification and Contribution.
6.1. Indemnification by the Company. The Company agrees to
indemnify and hold harmless the Placement Agent, its officers, directors,
shareholders and agents and each person, if any, who controls the Placement
Agent within the meaning of the Securities Act and/or the Exchange Act against
any losses, claims, damages or liabilities, joint or several, to which the
Placement Agent or such controlling person may become subject, under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
(i) any untrue statement or alleged untrue statement of a material fact
contained (A) in the Offering Documents, or (B) in any blue sky application or
other document executed by the Company specifically for blue sky purposes or
based upon any other written information furnished by the Company or on its
behalf to any state or other jurisdiction in order to qualify any or all of the
Units under the securities laws thereof (any such application, document or
information being hereinafter called a "Blue Sky Application"), (ii) any breach
by the Company of any of its representations, warranties or covenants contained
herein or in any of the Offering Agreements, or (iii) the omission or alleged
omission by the Company to state in the Offering Documents or in any Blue Sky
Application a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading; and will reimburse the Placement Agent and each such
controlling person for any legal or other expenses reasonably incurred by the
Placement Agent or such controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action, whether arising out
of an action between the Placement Agent and the Company or the Placement Agent
and a third party: provided, however, that the Company will not be liable in any
such case to the extent that any such loss, claim, damage or liability arises
out of or is based upon (i) an untrue statement or alleged untrue statement or
omission or alleged omission made
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in reliance upon and in conformity with written information regarding the
Placement Agent which is furnished to the Company by the Placement Agent
specifically for inclusion in the Offering Documents or any such Blue Sky
Application or (ii) any breach by the Placement Agent of the representations,
warranties or covenants contained herein (collectively, (i) and (ii) above are
referred to as the "Non-Indemnity Events").
6.2. Indemnification by the Placement Agent. The Placement Agent
agrees to indemnity and hold harmless the Company, its officers, directors,
stockholders and agents and each person, if any, who controls the Company
within the meaning of the Securities Act and/or the Exchange Act against any
losses, claims, damages or liabilities, joint or several, to which the Company
or such controlling person may become subject, under the Securities Act or
otherwise insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any Non-indemnity Event; and
will reimburse the Company and each such controlling person for any legal or
other expenses reasonably incurred by the Company or such controlling person in
connection with investigating or defending any such loss, claim, damage,
liability or action provided that such loss, claim, damage or liability is
found ultimately to arise out of or be based upon any Non-indemnity Event.
6.3. Procedure. Promptly after receipt by an indemnified party
under this Section 6 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against any
indemnifying party under this Section 6, notify in writing the indemnifying
party of the commencement thereof; and the omission so to notify the
indemnifying party will relieve the indemnifying party from any liability under
this Section 6 as to the particular item for which indemnification is then
being sought, but not from any other liability which it may have to any
indemnified party. In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and to the extent
that it may wish, jointly with any other indemnifying party, similarly
notified, to assume the defense thereof, with counsel who shall be to the
reasonable satisfaction of such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party under this Section 6 for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof other
than reasonable costs of investigation. Any such indemnifying party shall not
be liable to any such indemnified party on account of any settlement of any
claim or action affected without the consent of such indemnifying party.
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6.4. Contribution. If the indemnification provided for in this
Section 6 is unavailable to any indemnified party in respect to any losses,
claims, damages, liabilities or expenses referred to therein, then the
indemnifying party, in lieu of indemnifying such indemnified party, will
contribute to the amount paid or payable by such indemnified party, as a result
of such losses, claims, damages, liabilities or expenses (i) in such proportion
as is appropriate to reflect the relative benefits received by the Company on
the one hand, and the Placement Agent, on the other hand, from the Offering, or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above, but also the relative fault
of the Company, on the one hand, and of the Placement Agent, on the other hand,
in connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses as well as any other relevant
equitable considerations. The relative benefits received by the Company, on
the one hand, and the Placement Agent, on the other hand, shall be deemed to be
in the same proportion as the total proceeds from the Offering (net of sales
commissions and the nonaccountable expense allowance, but before deducting
other expenses) received by the Company bear to the commissions and
nonaccountable expense allowance received by the Placement Agent. The relative
fault of the Company, on the one hand, and the Placement Agent, on the other
hand, will be determined with reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission to state
a material fact relates to information supplied by the Company, and its
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
6.5. Equitable Considerations. The Company and the Placement Agent
agree that it would not be just and equitable if contribution pursuant to this
Section 6 were determined by pro rate allocation or by any other method of
allocation which does not take into account the equitable considerations
referred to in the immediately preceding paragraph.
6.6. Attorneys' Fees. The amount payable by a party under this
Section 6 as a result of the losses, claims, damages, liabilities or expenses
referred to above will be deemed to include any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or
defending any action or claim.
7. Termination by Placement Agent. The Placement Agent will have the
right to terminate this Agreement by giving written notice as herein specified,
at any time, at or prior to the Closing (a) if the Company shall have failed,
refused, or been unable to perform any of its obligations
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hereunder, or breached any of its representations or warranties hereunder, or
(b) if, in the Placement Agent's opinion, there has occurred an event
materially and adversely affecting the value of the Warrants (or the shares of
Common Stock underlying the Warrants) or Notes.
8. Notices. Any notice hereunder shall be in writing and shall be
effective when delivered in person or by facsimile transmission, or mailed by
certified mail, postage prepaid, return receipt requested, to the appropriate
party or parties, at the following addresses: if to the Placement Agent, to
▇.▇. ▇▇▇▇▇▇▇▇ & Co., Inc., ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (Fax No. ▇▇▇-▇▇▇-▇▇▇▇); with a copy to
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Esq. (Fax No. ▇▇▇-▇▇▇-▇▇▇▇); if to the Company,
to Edudata Corporation, ▇▇▇ ▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, CEO/Chairman
(Fax No. ▇▇▇-▇▇▇-▇▇▇▇); with a copy to Troop ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP,
Attention: C.N. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, III, Esq. (Fax No. ▇▇▇-▇▇▇-▇▇▇▇); or, in each
case, to such other address as the parties may hereinafter designated by like
notice.
9. Parties. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and assigns. Neither
party may assign this Agreement or its obligations hereunder without the prior
written consent of the other party. This Agreement is intended to be, and is,
for the sole and exclusive benefit of the parties hereto and the persons
described in Section 6.1 and 6.2 hereof and their respective successors and
assigns, and for the benefit of no other person, and no other person will have
any legal or equitable right, remedy or claim under, or in respect of this
Agreement.
10. Amendments and/or Modification. Neither this Agreement, nor any term
or provision hereof, may be changed, waived, discharged, amended, modified or
terminated orally, or in any manner other than by an instrument in writing
signed by each of the parties hereto.
11. Further Assurances. Each party to this Agreement will perform any and
all acts and execute any and all documents as may be necessary and proper under
the circumstances in order to accomplish the intents and purposes of this
Agreement and to carry out its provisions.
12. Validity. In case any term of this Agreement will be held invalid,
illegal or unenforceable, in whole or in part, the validity of any of the other
terms of this Agreement will not in any way be affected thereby.
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13. Waiver of Breach. The failure of any party hereto to insist upon
strict performance of any of the covenants and agreements herein contained, or
to exercise any option or right herein conferred in any one or more instances,
will not be construed to be a waiver or relinquishment of any such option or
right, or of any other covenants or agreements, and the same will be and remain
in full force and effect.
14. Entire Agreement. This Agreement and the Letter of Intent contain the
entire agreement and understanding of the parties with respect to the subject
matter hereof and thereof, respectively, and there are no representations,
inducements, promises or agreements, oral or otherwise, not embodied in this
Agreement and/or in the Letter of Intent. Any and all prior discussions,
negotiations, commitments and understanding relating to the subject matter of
these agreements are superseded by them.
15. Counterparts. This Agreement may be executed in counterparts and each
of such counterparts will for all purposes be deemed to be an original, and
such counterparts will together constitute one and the same instrument.
16. Law. This Agreement will be deemed to have been made and delivered in
New York City and will be governed as to validity, interpretation,
construction, effect and in all other respects by the internal law of the State
of New York. The Company (i) agrees that any legal suit, action or proceeding
arising out of or relating to this Agreement shall be instituted exclusively in
New York State Supreme Court, County of New York, or in the United States
District Court for the Southern District of New York, (ii) waives any objection
to the venue of any such suit, action or proceeding, and the right to assert
that such forum is an inconvenient forum, and (iii) irrevocably consents to the
jurisdiction of the New York State Supreme Court, County of New York, and the
United States District Court for the Southern District of New York in any such
suit, action or proceeding. The Company further agrees to accept and
acknowledge service of any and all process which may be served in any such
suit, action or proceeding in the New York State Supreme Court, County of New
York, or in the United States District Court for the Southern District of New
York and agrees that service of process upon it mailed by certified mail to its
address shall be deemed in every respect effective service of process upon it
in any such suit, action or proceeding.
17. Representations, Warranties and Covenants to Survive Delivery. The
respective representations, indemnities, agreements, covenants, warranties and
other statements of the
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Company and the Placement Agent shall survive execution of this Agreement and
delivery of the Units and/or the termination of this Agreement prior thereto.
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,
EDUDATA CORPORATION
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
CEO/Chairman
AGREED:
▇.▇. ▇▇▇▇▇▇▇▇ & CO., INC.
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
President
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