EXHIBIT 1.1
_____________, 2004
PLACEMENT AGENT AGREEMENT
Gentlemen:
Mac Filmworks, Inc., a Delaware corporation ("Company"), hereby
confirms its agreement with _______________________, a broker-dealer registered
pursuant to the Securities Exchange Act of 1934, as amended, and applicable
state law (the "Placement Agent"), as follows:
SECTION 1.
Description of Securities
The Company proposes to offer and sell up to 250,000 Units ("Units") at
a price of $1.00 per Unit on terms as hereinafter set forth (the "Offering").
Each Unit consisting of the following:
o one share of the Company's common stock, $.001 par value ("Common Stock");
o one Class A warrant to purchase one share of Common Stock at $2.00 per share;
o one Class B warrant to purchase one share of Common Stock at $3.00 per share;
o one Class C warrant to purchase one share of Common Stock at $4.00 per share;
o one Class D warrant to purchase one share of Common Stock at $5.00 per share;
o one Class E warrant to purchase one share of Common Stock at $6.00 per share;
o one Class F warrant to purchase one share of Common Stock at $7.00 per share; and
o one Class G warrant to purchase one share of Common Stock at $8.00 per share.
Each warrant expiring three years from the date of the Registration Statement
(as hereinafter defined).
SECTION 2.
Description of the Offering
All funds received from subscribers in the Offering will be held in
escrow by HIBERNIA NATIONAL BANK ("Escrow Agent"), pursuant to an agreement
among the Placement Agent, the Company and the Escrow Agent ("Escrow
Agreement").
The Company will determine, in its sole discretion, to accept or reject
subscriptions for Units within five days following receipt thereof. Funds of an
investor whose subscription is rejected will be promptly returned directly to
such person by the Escrow Agent, without interest thereon or deduction
therefrom, pursuant to the terms of the Escrow Agreement.
In the event that at least 100,000 Units have not been sold within 120
days from the initial effective date of the Registration Statement (as
hereinafter defined) under the Securities Act of 1933, as amended ("Securities
Act"), the Offering will terminate and all funds received from subscribers will
be promptly returned in full by the Escrow Agent directly to subscribers,
without interest thereon or deduction therefrom, as provided in the Escrow
Agreement. Provided that at least 100,000 Units are sold within the foregoing
period, the Company may continue to offer the Units for sale until (i) 250,000
Units are sold or (ii) six months from the effective date of the offering,
whichever first occurs; the Offering may be terminated at any time prior thereto
at the discretion of the Company. The Company reserves the right to refuse to
sell shares of Units to any person at any time.
The Company, the Units and the Offering are more fully described in the
Registration Statement (as hereinafter defined) and the Prospectus (as
hereinafter defined). All terms used in this Agreement, unless specifically
defined herein, shall have the meanings set forth in such Registration Statement
and Prospectus.
SECTION 3.
Representations and Warranties of the Company
In order to induce the Placement Agent to enter into this Agreement,
the Company hereby represents and warrants to and agrees with the Placement
Agent as follows:
2.01 A registration statement on Form SB-2 (Registration File No.
333-70526) with respect to the Units has been carefully prepared by the Company
in conformity with the requirements of the Securities Act and the rules and
regulations ("Rules and Regulations") of the Securities and Exchange Commission
("Commission") thereunder, and has been filed with the Commission; the Company
has so prepared and has filed or proposes to file prior to the effective date of
such registration statement or subsequent to such effective date pursuant to
Rule 430A under the Rules and Regulations, an amendment or amendments to such
registration statement. There have been delivered to the Placement Agent and its
counsel two signed copies of such registration statement, as initially filed
with the Commission and each amendment thereto, together with two copies of each
exhibit filed therewith, and eight conformed copies of such registration
statement, as initially filed with the Commission and each amendment thereto
(but without exhibits) and of each related preliminary prospectus ("Preliminary
Prospectus") and of the proposed final form of prospectus. As used in this
Agreement, the term "Registration Statement" means such registration statement,
including exhibits, financial statements and schedules and documents
incorporated therein by reference, as finally amended and revised at the time
such registration statement becomes effective, including the information, if
any, deemed to be a part thereof pursuant to Rule 430A of the Rules and
Regulations, and the term "Prospectus" means the related prospectus in the form
first filed on behalf of the Company with the Commission pursuant to Rule 424(b)
under the Securities Act. Any reference herein to any Registration Statement,
Preliminary Prospectus or the Prospectus shall be deemed to refer to and include
the documents and information, if any, incorporated by reference therein. Any
reference to any amendment or supplement to any Registration Statement,
Preliminary Prospectus or Prospectus shall be deemed to refer to and include any
documents filed after such date under the Exchange Act and incorporated therein
by reference.
2.02. The Company is duly organized and validly existing as a
corporation in good standing under the laws of the State of Delaware. The
Company has the full power and authority and all necessary authorizations,
approvals, orders, licenses, certificates and permits of and from all
governmental and regulatory officials and bodies required to own its properties
and conduct its business as described in the Prospectus; the Company is duly
qualified to do business under the laws of (and is in good standing as such in)
each jurisdiction in which it owns or leases property, has an office, or in
which business is conducted and such qualification is required, except where the
failure to so qualify would not have a material adverse effect on the business,
assets or financial condition of the Company, and no proceeding has been
instituted in any such jurisdiction revoking, limiting or curtailing, or seeking
to revoke, limit or curtail, such power and authority or qualification.
2.03. The Company does not own or control, directly or indirectly, any
corporation, association, partnership or other entity other than as identified
in the Registration Statement.
2.04. The Company is not in violation of its articles of incorporation
and bylaws, or in default or breach under any court or administrative order or
decree, or in default with respect to any provision of any lease, loan
agreement, franchise, license, permit, agreement or other contractual obligation
to which the Company is a party or by which the Company or any of its property
is bound, and there does not exist any state of facts which constitutes an event
of default or breach under such documents or which, upon notice or lapse of time
or both, would constitute such an event of default or breach except those, if
any, described in the Prospectus or such defaults or breaches which,
individually or in the aggregate, are not, and with notice or lapse of time, or
both, would not become, material to the Company. The Company is not in violation
or breach of any law, order, rule, regulation, writ, injunction or decree of any
governmental authority or instrumentality or any court, domestic or foreign,
which violation would have a materially-adverse effect on its business as
described in the Prospectus.
2.05 The Company is not in default in the performance of any
obligation, agreement or condition contained in any material debenture, note or
other evidence of indebtedness or any indenture or loan agreement of the
Company. The execution and delivery of this Agreement and the consummation of
the transactions herein contemplated, and compliance with the terms of this
Agreement, will not conflict with or result in a breach of any of the terms,
conditions or provisions of, or constitute a default under, the Company's
certificate of incorporation or bylaws, any material note, indenture, mortgage,
deed of trust, or other agreement or instrument to which the Company is a party
or by which it or any of its property is bound, or any existing law, order,
rule, regulation, writ, injunction, or decree of any government, governmental
instrumentality, agency or body, arbitration tribunal or court, domestic or
foreign, having jurisdiction over the Company or its property. No consent,
approval, authorization, or order of any court or governmental instrumentality,
agency or body is required for the consummation of the transactions contemplated
herein and in the Offering except such as may be required under the state
securities laws and regulations (collectively, the "Blue Sky Laws").
2.06. The Units and underlying securities have been duly authorized
and, when issued and delivered against payment therefor as provided in this
Agreement, will be validly issued, fully paid and non-assessable. No preemptive
rights exist with respect to any of the Units and underlying securities or the
issue and sale thereof. The Company's Common Stock conforms to the description
thereof in the Offering.
2.07. There is no action, suit or proceeding before any court or
governmental agency, authority or body pending or, to the knowledge of the
Company, threatened which might result in judgments against the Company or any
officer or director of the Company which could materially adversely affect the
Company.
2.08. The Company will apply the proceeds from the sale of the Units to
the purposes set forth in the Offering.
2.09. The execution and delivery by the Company of this Agreement has
been duly authorized by all necessary corporate action, and this Agreement is
the valid, binding and legally enforceable obligation of the Company.
2.10. The Offering contains any and all material information that is
required to be stated therein by, and in all respects conforms to the
requirements of, the Securities Act and the Rules and Regulations. Since the
respective dates as of which information is given in the Offering, as it may be
amended or supplemented, there has not been any material adverse change in or
any development affecting the condition, financial or otherwise, of the
earnings, assets, business affairs or prospects of the Company, and there has
not been any material transaction entered into. The Company has no material
contingent obligations which are not disclosed in the Offering.
2.11. Neither the Securities and Exchange Commission ("Commission") nor
any state securities or "blue sky" authorities has issued any order preventing
or suspending the use of any Preliminary Prospectus, and each Preliminary
Prospectus has conformed fully in all material respects with the requirements of
the Securities Act, the Rules and Regulations, and the Blue Sky Laws and, as of
its date, has not included any untrue statement of a material fact or omitted to
state a fact required to be stated therein or necessary to make the statements
therein not misleading; when the Registration Statement becomes effective, and
at all times subsequent thereto up to each Closing Date (as defined herein), the
Registration Statement and the Prospectus, and any amendments or supplements
thereto, will contain all statements that are required to be stated therein in
accordance with the Securities Act, the Rules and Regulations and the Blue Sky
Laws and will in all material respects conform to the requirements of the
Securities Act, the Rules and Regulations and the Blue Sky Laws, and neither the
Registration Statement nor the Prospectus, nor any amendment or supplement
thereto, will include any untrue statement of a material fact or omit to state a
fact required to be stated therein or necessary to make the statements therein
not misleading; provided, however, that the Company makes no representation or
warranty as to information contained in or omitted from any Preliminary
Prospectus, the Registration Statement, the Prospectus, or any such amendment or
supplement, in reliance upon and in conformity with written information
furnished to the Company by the Placement Agent specifically for inclusion
therein.
2.12. There are no contracts or other documents, transactions or
relationships of or by and between the Company or any of the respective officers
or directors of the Company required to be described in the Registration
Statement or filed as exhibits to the Registration Statement by the Securities
Act or the Rules and Regulations which have not been described or filed as
required or incorporated by reference as permitted by the Securities Act and the
Rules and Regulations.
2.13. The financial statements and the related notes included in the
Registration Statement, in any Preliminary Prospectus or in the Prospectus
present fairly the financial position, results of operations and cash flows of
the Company at the dates and for the periods indicated and have been prepared in
accordance with generally accepted accounting principles, except as otherwise
stated therein. ▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.L.L.C., who have audited certain financial
statements as set forth in their report included in the Registration Statement
and Prospectus and each Preliminary Prospectus, are independent accountants as
required by the Securities Act and the Rules and Regulations.
2.14. The Company has good and marketable title to all the property and
assets reflected as owned by it in the Prospectus, subject to no lien, mortgage,
pledge, charge or encumbrance of any kind or nature whatsoever, except those, if
any, reflected in the Prospectus, or which are not material to the Company and
do not materially affect the value of such property and do not materially
interfere with the use made or proposed to be made of such property; all
properties held or used by the Company under leases, licenses, franchises or
other agreements are held by it under valid, subsisting and enforceable leases,
licenses, franchises or other agreements (subject to bankruptcy, reorganization,
moratorium or similar laws affecting creditors' rights generally).
2.15. The Company has filed all necessary federal, state and foreign
income and franchise tax returns and has paid all taxes shown as due thereon,
and has no knowledge of any tax deficiency which has been asserted or threatened
against the Company which would materially adversely affect its business,
operations or property.
SECTION 3.
Representations and Warranties of the Placement Agent.
The Placement Agent represents and warrants to an agrees with the
Company that:
3.01 The Placement Agent is a corporation duly organized, validly
existing under the laws of the State of Delaware, with all requisite power and
authority to enter into this Agreement and to carry out Placement Agent's
obligations hereunder.
3.02. The Placement Agent is registered as a broker-dealer pursuant to
the provisions of the Exchange Act, is a member of the National Association of
Securities Dealers, Inc. ("NASD"), and is registered to the extent that
registration is required with the appropriate government authorities in each
jurisdiction in which it may offer and sell the Units. The Placement Agent
agrees to maintain all of the foregoing registrations throughout the term of the
Offering and agrees to comply with all statutes and other requirements
applicable to it as a broker-dealer pursuant to those registrations. The
Placement Agent is not subject to any consent decrees or other orders that would
require disclosure pursuant to the Securities Act in the Offering or any
supplement thereto.
3.03. There is not now pending or, to the knowledge of the Placement
Agent, threatened against the Placement Agent any action or proceeding of which
the Placement Agent has been advised, either in any court of competent
jurisdiction, before the Commission or any state securities commission
concerning the Placement Agent's activities as a broker or dealer, nor has the
Placement Agent been named as a "cause" in any action or proceeding any of which
may be expected to have a material adverse effect upon the Placement Agent's
ability to act as agent to the Company as contemplated herein.
3.04. In the event any action or proceeding of the type referred to in
subparagraph 3.03 above shall be instituted or, to the knowledge of the
Placement Agent, threatened against the Placement Agent at any time prior to the
effective date hereunder, or in the event there shall be filed by or against the
Placement Agent in any court pursuant to any federal, state, local or municipal
statute, a petition in bankruptcy or insolvency or for reorganization or for the
appointment of a receiver or trustee of its assets or if the Placement Agent
makes an assignment for the benefit of creditors, the Company shall have the
right on three days' written notice to the Placement Agent to terminate this
Agreement without any liability to the Placement Agent of any kind.
3.05. Prior to the date of the Offering, it has not made, directly or
indirectly, any offers or sales of the Units.
3.06. The Placement Agent will not make an offer to sell the Units to
any offeree unless either before or at the same time it makes such offer, it
delivers to the offeree the Offering.
3.07. This Agreement (i) has been duly authorized, executed and
delivered by the Placement Agent, (ii) constitutes its legal, valid and binding
obligation, and (iii) subject to applicable bankruptcy, insolvency and other
laws affecting the enforceability of creditors' rights generally, is enforceable
as to Placement Agent in accordance with its terms, specific performance hereof
being limited by general principles of equity and the enforceability of the
indemnification provisions hereof.
3.08. The execution, delivery and performance of this Agreement by the
Placement Agent and the consummation of the transactions contemplated hereby and
by the Prospectus will not conflict with or result in a breach or violation by
the Placement Agent of any of the terms or provisions of, or constitute a
default in any material respect under, (i) any indenture, mortgage, deed of
trust, loan agreement, lease or other agreement or instrument to which the
Placement Agent is a party or to which its property is subject, (ii) its
articles of incorporation or bylaws or (iii) any statute, judgment, decree,
order, rule or regulation applicable of any court or governmental agency or body
having jurisdiction over the Placement Agent, its affiliates or property.
3.09. The Placement Agent is, and at all times through the final
Closing Date (as herein defined) shall remain, duly registered pursuant to the
provisions of the Exchange Act as a broker-dealer; the Placement Agent is, and
at all times through the final Closing Date shall remain, a member in good
standing of the NASD; the Placement Agent will not allow discounts or pay
commissions or other compensation for participation in the distribution of the
Offering to any broker-dealer which is not a member of the NASD, including
foreign broker-dealers registered under the Exchange Act; the Placement Agent
shall act as an independent contractor, and nothing herein shall constitute the
Placement Agent an employee of the Company.
3.10. In connection with the offer, offer for sale and sale of the
Units, the Placement Agent (and its representatives and agents) shall conform to
and comply with (i) the provisions of the Conduct Rules of the NASD, (ii)
applicable provisions of federal law, including without limitation the
Securities Act, the Rules and Regulations and the Exchange Act, and (iii) the
Blue Sky Laws applicable to the Offering, relating to, among other things, the
period during which and conditions under which the Units may be offered, offered
for sale and sold; the Placement Agent shall not distribute the Prospectus or
otherwise commence the Offering without prior written confirmation from the
Company or its counsel that the Offering may be commenced under applicable
securities laws, rules and regulations.
3.11. Pursuant to the appointment made in Section 4 hereof, the
Placement Agent will use its best efforts to procure subscribers for Units will
conduct the Offering in compliance with the provisions of the Securities Act,
the Rules and Regulations, the Exchange Act, applicable Blue Sky Laws and the
rules and regulations of the NASD.
SECTION 4.
Purchase Sale and Delivery of Units
On the basis of the covenants, representations, and warranties herein
contained and subject to the terms and conditions herein set forth:
4.01. The Company hereby appoints the Placement Agent as its exclusive
agent to solicit subscriptions for the Units in accordance with the terms of the
Registration Statement, the Prospectus and this Agreement; and the Placement
Agent, on the basis of the representations and warranties herein contained, but
subject to the terms and conditions herein set forth, accepts such appointment
and agrees to use its best efforts to offer and sell the Units at the price of
$1.00 per Unit; provided that the Company reserves the right to reject any
prospective investor ("Investor") and no commission shall be payable to the
Placement Agent in respect of any proposed sale to any rejected Investor. No
other person will be or has been authorized to offer and sell the Units, except
broker-dealers ("Assisting Brokers") who are members of the NASD, Inc. that have
entered into a broker-dealer selling agreement with Placement Agent or the
Company.
4.02. Subject to the terms and conditions set forth herein, in
consideration of the execution of this Agreement and performance of Placement
Agent's obligations hereunder, the Company will pay the Placement Agent (i) a
cash sales commission in an amount equal to 10% of the aggregate purchase price
of the Units sold by Placement Agent (or any Selected Placement Agent) and (ii)
a non-accountable expense allowance equal to 3% of the aggregate purchase price
of the Units sold by Placement Agent (or any Selected Placement Agent). The
aggregate commissions and expense allowance payable in connection with the sale
of Units will be disbursed to Placement Agent, as provided herein and in Escrow
Agreement; thereupon, Placement Agent shall pay to each of the other Selected
Placement Agents, if any, in such amount (which shall not exceed commissions and
expense allowance in the amounts of 10% and 3%, respectively, of the aggregate
purchase price of the Units sold by such Agent), at such times and upon such
terms and conditions as shall have been agreed upon between Placement Agent and
such Selected Placement Agent, that portion of the aggregate commissions to
which such Selected Placement Agent is entitled.
4.03. Each subscriber for Units must (i) complete and execute a
Subscription Agreement and (ii) tender payment in full for the Units subscribed
for ("Subscription Payment"); checks representing Subscription Payments should
be made payable to "Hibernia National Bank, Escrow Agent"; Placement Agent shall
deliver Subscription Payments received by Placement Agent to the Escrow Agent,
at 8989 ▇▇▇▇▇▇▇, Shreveport 71106, by 12:00, noon, on the business day following
such receipt by Placement Agent, together with a schedule setting forth the
amount of each such Subscription Payment and the name, mailing address and state
of residence of the subscriber. Concurrently with Placement Agent's delivery of
each Subscription Payment to the Escrow Agent, Placement Agent shall forward to
the Company executed originals of all related Subscription Documents, retaining
copies of all such Subscription Documents for its records.
4.04. Within five days following receipt by it of executed Subscription
Documents, the Company shall determine to accept or reject each subscription and
shall notify Placement Agent and the Escrow Agent orally (to be confirmed in
writing). If the Company elects to reject a subscription, the related
Subscription Payment shall, upon receipt by the Escrow Agent of oral notice (to
be confirmed in writing) from the Company of such rejection, promptly be
returned directly to the rejected subscriber by the Escrow Agent, without
interest thereon or deduction therefrom.
4.05. Subject to the terms hereof and of the Escrow Agreement, the
first disbursement of subscription proceeds (including disbursement of amounts
due to Placement Agent hereunder) shall take place not less than 5 days nor more
than 15 days following the date upon which cleared funds representing payment in
full for at least 100,000 Units have been received by the Escrow Agent under the
terms of the Escrow Agreement; such initial disbursement is referred to herein
as the "Initial Closing," and the date thereof is referred to as the "Initial
Closing Date." Following the Initial Closing, subscription proceeds shall be
disbursed from time to time as agreed among the Placement Agent, the Company and
the Escrow Agent; each such further disbursement of subscription proceeds is
referred to herein as an "Additional Closing," and the date thereof as an
"Additional Closing Date." The Initial Closing and Additional Closings are
sometimes referred to herein as a "Closing" or "Closings"; and the Initial
Closing Date and Additional Closing Dates are sometimes referred to herein as a
"Closing Date" or "Closing Dates."
4.06. The Company agrees that the obligations of the Placement Agent
under this Agreement: (i) shall not preclude the Placement Agent from
contemporaneously participating in the offering or underwriting of securities of
other issuers; (ii) shall not impose any obligation on the Placement Agent to
require its registered representatives to make an effort to find purchasers for
the Units other than to the extent the Placement Agent is motivated to do so by
the compensation and other provisions of this Agreement, and (iv) shall not
otherwise limit or prevent the Placement Agent from carrying on its customary
business as a securities broker-dealer.
SECTION 5.
Covenants of the Company
The Company covenants and agrees that:
5.01. The Company will use its best efforts to cause the Registration
Statement to become effective at the earliest possible time and will advise
Placement Agent promptly upon notification from the Commission of effectiveness.
The Company will advise Placement Agent promptly of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or of the institution of any proceedings for that purpose, or of any
notification of the suspension of qualification of the Units for sale in any
jurisdiction or the initiation or threatening of any proceedings for that
purpose, and will also advise Placement Agent promptly of any request of the
Commission for amendment or supplement to the Registration Statement (either
before or after it becomes effective), to any Preliminary Prospectus or to the
Prospectus, or for additional information, and will not file or make any
amendment or supplement to the Registration Statement (either before or after it
becomes effective), to any Preliminary Prospectus or the Prospectus of which
Placement Agent has not been furnished with a copy prior to such filing or to
which it reasonably objects; and the Company will file promptly and will furnish
to Placement Agent at or prior to the filing thereof copies of all reports and
any definitive proxy or information statements required to be filed by the
Company with the Commission pursuant to the Exchange Act subsequent to the date
of the Prospectus, and for so long as the delivery of a prospectus is required
in connection with the offer or sale of the Common Stock. If at any time the
Commission shall issue any stop order suspending the effectiveness of the
Registration Statement, the Company will make every reasonable effort to obtain
the withdrawal of such order at the earliest possible time. The Company will
file the Prospectus pursuant to Rule 424(b) under the Securities Act, if
required, not later than the Commission's close of business on the second
business day following the execution and delivery of this Agreement or, if
applicable, such earlier time as may be required by Rule 430A of the Commission.
5.02. If at any time when a prospectus relating to the Units is
required to be delivered under the Securities Act, any event occurs as a result
of which the Prospectus, including any amendments or supplements, would include
an untrue statement of a material fact, or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading, or if
it is necessary at any time to amend the Prospectus, including any amendments or
supplements, to comply with the Securities Act or the Rules and Regulations, the
Company will notify Placement Agent and request it to suspend (and to advise the
other Selected Placement Agents, if any, to suspend) solicitation of offers to
purchase Common Stock; and the Company will promptly prepare and file with the
Commission an amendment or supplement which will correct such statement or
omission or an amendment which will effect such compliance.
5.03. The Company will not, prior to the final Closing Date, incur any
material liability or obligation, direct or contingent, or enter into any
material transaction other than in the ordinary course of business, except as
disclosed prior thereto in the Prospectus.
5.04. The Company shall promptly prepare and file with the Commission
such reports as may be required to be filed under the Securities Act, the Rules
and Regulations, the Exchange Act or the Blue Sky Laws.
5.05. Not later than 3 months after the end of the period referred to
below, the Company will make generally available to Placement Agent and to the
Company's security holders an earnings statement (which need not be audited)
covering a period of at least 12 months beginning with its first fiscal quarter
occurring after the effective date of the Registration Statement, which will
satisfy the provisions of the last paragraph of Section 11(a) of the Securities
Act and Rule 158 promulgated thereunder.
5.06. The Company shall comply in all respects with the undertakings
given by it in connection with the qualification or registration of the Units
under the Securities Act or the Blue Sky Laws.
5.07. During such period as a prospectus is required by law to be
delivered in connection with sales by any Selected Placement Agent, the Company
will furnish to Placement Agent at its expense, copies of the Registration
Statement, the Prospectus, any Preliminary Prospectus and all amendments and
supplements to any such documents in such quantities as it may reasonably
request, for the purposes contemplated by the Securities Act and the Rules and
Regulations.
5.08. The Company shall promptly apply for and take such steps as may
reasonably be necessary, to obtain and maintain the quotation of its Units by
the NASD OTC Bulletin Board.
5.09. During the period of 2 years following the date of this
Agreement, as soon as practicable after the end of each fiscal year, the Company
will furnish to Placement Agent two copies, and to each of the other Selected
Placement Agents one copy, of the Annual Report of the Company containing a
balance sheet as of the close of such fiscal year and corresponding statements
of income, members' equity and cash flows for the fiscal year then ended, such
financial statements to be under the report of independent public accountants.
During such period, the Company will also furnish to Placement Agent, if
applicable, one copy of (i) each report filed by the Company with the
Commission, or with any exchange or quotation source pursuant to the
requirements of, or any agreement with, such exchange or quotation source, as
soon as practicable after the filing thereof and (ii) each report of the Company
mailed to its shareholders, as soon as available.
5.10. The Company will apply the net proceeds from the sale of the
Units to be sold by it hereunder for the purposes set forth in the Prospectus.
5.11. The Company will not make any offer, sale, transfer, issuance or
other disposition of any of its securities within 120 days following the final
Closing Date, and will obtain the undertaking of each executive officer (as
defined under the Securities Act), director and holder of 10% or more of the
aggregate equity ownership of the Company immediately prior to such date not to
make any such offer, sale or other disposition within such period, otherwise
than hereunder or with Placement Agent's written consent or pursuant to bona
fide gifts, provided, in the last case, that each donee agrees in writing with
Placement Agent to be bound by the same restrictions on the offer, sale and
disposition of securities as are expressed in this Section 5.11.
5.12. The Company shall at all times reserve and keep available such
number of authorized shares of Common Stock; and the Common Stock or Warrants
underlying the Units will not have been issued in violation of or subject to any
preemptive rights provided for by law or by the Company's corporate charter or
bylaws or be subject to any lien, claim, encumbrance, security interest,
preemptive rights or any other claim of any third party.
5.13. Prior to the final Closing Date, the Company will not issue,
directly or indirectly, without the Placement Agent's prior written consent, a
press release or other communication or hold any press conference with respect
to the Company, its activities or the Offering.
5.14. The Company will, promptly upon Placement Agent's request,
prepare and file with the Commission any amendments or supplements to the
Registration Statement or Prospectus, and take any other action, which, in the
Placement Agent's opinion or the opinion of its counsel, may be reasonably
necessary or advisable in connection with the distribution of the Units, and
will use its best efforts to cause the same to become effective as promptly as
practicable.
SECTION 6.
Covenants of the Placement Agent
The Placement Agent covenants that:
6.01. It will use its best efforts to procure subscribers for Units and
will conduct the Offering in compliance with the provisions of the Securities
Act, the Rules and Regulations, the Exchange Act, applicable Blue Sky Laws and
the rules and regulations of the NASD.
6.02. As of each Closing Date (as herein defined), it will have not
made any untrue statement of a material fact and not omitted to state a material
fact required to be stated or necessary to make any statement made not
misleading, to the extent any representations are made by Placement Agent
concerning the Offering or matters set forth in the Prospectus other than those
which are set forth in the Registration Statement or Prospectus.
6.03. In the event it learns of any circumstances or facts which it
believes would make the Offering inaccurate or misleading as to any material
fact, it will immediately bring such circumstances or facts to the attention of
the Company.
6.04. The Placement Agent will solicit purchasers of Units only in the
jurisdictions in which it has been advised by counsel for the Company that such
solicitation can be made, and such solicitations shall be made subject to any
conditions specified in writing by such counsel.
SECTION 7.
State Qualifications
The Company further represents and warrants to, and agrees with,
Placement Agent as follows:
7.01. The Company will take all necessary action to either qualify or
register the Units for sale or exempt such securities from such qualification or
registration in such state(s) as the Placement Agent and the Company shall agree
upon in writing.
7.02. The Company or its counsel will provide the Placement Agent or
its counsel with copies, at the time they are filed, of all correspondence,
applications, forms, and other documents filed with each jurisdiction where the
Units is to be registered or qualified or offered in an exempt transaction.
7.03. Upon receipt of notification by the Company of the qualification,
registration, or exemption of the Units by an applicable jurisdiction, the
Company or its counsel will promptly notify the Placement Agent or its counsel
in writing of such action, which writing shall summarize the conditions and
other requirements imposed by such jurisdiction in granting such qualification,
registration or exemption, including offeree qualification or suitability and
broker-dealer and agent registration requirements applicable to the conduct of
the Offering (collectively, the "Blue Sky Letters"); Placement Agent shall not
offer or sell the Units in any jurisdiction until receipt of such Blue Sky
Letters from the Company or its counsel.
7.04. In each jurisdiction where the Units has been registered or
qualified or is offered or sold in an exempt transaction as provided above, the
Company will make and file such statements, documents, materials, and reports as
are or may be required to be made or filed.
7.05. The Company will promptly provide to the Placement Agent for
delivery to all offerees and purchasers of Units any additional information,
documents or instruments which the Placement Agent, the Company and/or the
Placement Agent's respective counsel deem necessary to comply with the rules,
regulations, and judicial and administrative interpretations respecting
compliance with such exemptions or qualifications and registrations in those
jurisdictions where the Units is to be offered or sold.
SECTION 8.
Conditions of the Obligations of the Placement Agent
The Placement Agent's obligations hereunder shall be subject to the
condition that all of the representations and warranties of the Company herein
as of the date hereof and as of each Closing Date are true and correct in all
material respects and to the accuracy of the statements of the officers of the
Company made pursuant hereto, to the performance by the Company of its
obligations hereunder, and to the following conditions:
8.01. The Registration Statement shall have become effective not later
than 1 P.M., C.S.T., on the business day following the date hereof, unless
otherwise effective prior hereto pursuant to Rule 430A of the Rules and
Regulations or otherwise. The Prospectus shall have been filed with the
Commission pursuant to Rule 424(b) of the Rules and Regulations, if required,
within the applicable time period prescribed for such filing by the Rules and
Regulations and in accordance with this Agreement. Prior to each Closing Date,
no stop order suspending the effectiveness of the Registration Statement shall
have been instituted or shall be pending or, to the knowledge of the Company or
Placement Agent, shall be contemplated by the Commission or any Blue Sky
authority, and any request of the Commission or any Blue Sky authority of any
jurisdiction for additional information (to be included in the Registration
Statement or Prospectus or otherwise) shall have been complied with to Placement
Agent's reasonable satisfaction.
8.02. The Units shall have been qualified or registered for sale under
the Blue Sky Laws of such states as shall have been agreed upon between
Placement Agent and the Company, pursuant to and as provided in Section 7 of
this Agreement.
8.03. The legality and sufficiency of the authorization, issuance and
sale of the Units pursuant to the Registration Statement, the validity and form
of the certificates representing the Common Stock, the execution and delivery of
this Agreement, and all proceedings and other legal matters incident thereto,
and the form of the Registration Statement (except financial statements, if any,
and other financial data included in such Registration Statement) shall have
been approved by the Placement Agent's counsel.
8.04. The Placement Agent shall not have advised the Company that the
Registration Statement or Prospectus, or any amendment or supplement thereto,
contains an untrue statement of fact, or omits to state a fact which is material
and is required to be stated therein or necessary to make the statements therein
not misleading, unless, in the opinion of its counsel, any such untrue statement
or omission is not material.
8.05. Since the dates as of which information is given in the
Registration Statement , the Company shall not have sustained any material loss
or interference with its business from any labor dispute, fire, explosion, flood
or other calamity (whether or not insured), or from any court or governmental
action, order or decree.
8.06. The Placement Agent shall not have disclosed in writing to the
Company that the Offering or any amendment thereof or supplement thereto
contains an untrue statement of a fact which, in the opinion of counsel to the
Placement Agent, is material, or omits to state a fact which, in the opinion of
such counsel, is material and is required to be stated therein, or is necessary
to make the statements therein not misleading.
8.07. All opinions, letters, certificates and evidence mentioned above
or elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance satisfactory to counsel
to the Placement Agent, whose approval shall not be unreasonably withheld.
8.08. Between the date hereof and the Closing Date, there shall be no
litigation instituted or threatened against the Company and there shall be no
proceeding instituted or threatened against the Company before or by any federal
or state commission, regulatory body or administrative agency or other
governmental body, domestic or foreign, wherein an unfavorable ruling, decision
or finding would materially adversely affect the business, franchises, licenses,
operations or financial condition or income of the Company.
SECTION 9.
Indemnification
9.01. The Company agrees to indemnify and hold harmless the Placement
Agent, each of its officers, directors, employees and agents, and each person,
if any, who controls the Placement Agent within the meaning of the Securities
Act or the Exchange Act against any losses, claims, damages or liabilities,
joint or several, to which the Placement Agent or each such officer, director,
employee, agent or controlling person may become subject under the Securities
Act, the Exchange Act, Blue Sky Laws or other federal or state laws or
regulations, at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of the
Company), insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in or incorporated in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, or in any application filed under any Blue Sky
Law or other document executed by the Company specifically for that purpose or
based upon written information furnished by the Company and filed in any state
or other jurisdiction in order to qualify any or all of the Units under the
securities laws thereof (any such document, application or information being
hereinafter referred to as a "Blue Sky Application") or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading; the Company agrees to reimburse Placement Agent and each such other
indemnified person for any legal or other expenses incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will not be liable in
any such case to the extent that:
(a) any such loss, claim, damage or liability arises out of or
is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in the Registration Statement, any
Preliminary Prospectus, the Prospectus or any amendment or supplement
thereto or in any Blue Sky Application in reliance upon and in
conformity with written information furnished to the Company by
Placement Agent specifically for use therein (but in no event shall the
assistance in the drafting of all or any portion of the Registration
Statement, any Preliminary Prospectus, the Prospectus, such amendment
or supplement or such other document of the type referred to in the
preceding paragraph by Placement Agent or its counsel constitute such
information); or
(b) if such statement or omission was contained or made in a
Preliminary Prospectus and corrected in the Prospectus and (i) any such
loss, claim, damage or liability suffered or incurred by the Placement
Agent (or any person who controls it) resulted from an action, claim or
suit by any person who purchased Units from Placement Agent in the
Offering, and (ii) the Placement Agent failed to deliver or provide a
copy of the Prospectus to such person at or prior to the confirmation
of the sale of such Units in any case where such delivery is required
by the Securities Act unless such failure was due to failure by the
Company to provide copies of the Prospectus to the Placement Agent as
required by this Agreement.
The indemnification obligations of the Company as provided above (i)
extend upon the same terms and conditions to, and shall inure to the benefit of,
each Selected Placement Agent and each of its respective officers, directors and
each person, if any, who controls such Selected Placement Agent within the
meaning of the Securities Act or the Exchange Act and (ii) are in addition to
any liabilities the Company may otherwise have under other agreements, under
common law or otherwise.
9.02. The Placement Agent will indemnify and hold harmless the Company,
each of the directors, officers, employees and agents of the Company, and each
person, if any, who controls the Company within the meaning of the Securities
Act or the Exchange Act, against any losses, claims, damages or liabilities to
which the Company or any such director, officer, employee, agent or controlling
person may become subject under the Securities Act, the Exchange Act, Blue Sky
Laws or other federal or state laws or regulations, at common law or otherwise
(including in settlement of any litigation, if such settlement is effected with
Placement Agent's written consent, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue or alleged untrue statement of any material fact contained in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, or in any Blue Sky Application, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission was
made in the Registration Statement, any Preliminary Prospectus, the Prospectus,
or any amendment or supplement thereto, or in any Blue Sky Application, in
reliance upon and in conformity with any written information furnished to the
Company by the Placement Agent specifically for use therein (but in no event
shall the assistance in the drafting of all or any portion of the Registration
Statement, any Preliminary Prospectus, the Prospectus, such amendment or
supplement or such other document of the type referred above by it or its
counsel constitute such information). The Placement Agent agrees to reimburse
the Company and each such other indemnified person for any legal or other
expenses incurred by them in connection with investigating or defending any such
loss, claim, damage, liability or action.
The Placement Agent's indemnification obligations as provided above (i)
extend upon the same terms and conditions to, and shall inure to the benefit of,
the Company and each of its respective officers, directors and each person, if
any, who controls the Company within the meaning of the Securities Act or the
Exchange Act and (ii) are in addition to any liabilities which the Placement
Agent may otherwise have under other agreements, under common law or otherwise.
9.03. Promptly after receipt by an indemnified party under this Section
9 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under this
Section 9, notify the indemnifying party in writing of the commencement thereof,
but the omission to so notify the indemnifying party will not relieve an
indemnifying party from any liability which it or he may have to any indemnified
party otherwise than under this Section 9. In case any such action is brought
against any indemnified party, and such indemnified party notifies an
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate in, and to the extent that it may wish, to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified party;
provided, however, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses available to it or he
and/or other indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnified party or parties shall have
the right to select separate counsel to assume such legal defenses and to
otherwise participate in the defense of such action on behalf of such
indemnified party or parties. Upon receipt of notice from the indemnifying party
to such indemnified party of its election to assume the defense of such action
and upon approval by the indemnified party of counsel to the indemnifying party,
the indemnifying party will not be liable to such indemnified party under this
Section 9 for any legal expenses subsequently incurred by such indemnified party
as a result of or in connection with the defense of such action, unless:
(a) the indemnified party shall have employed such counsel in
connection with the assumption of legal defenses in accordance with the
proviso to the next preceding sentence (it being understood, however,
that the indemnifying party shall not be liable for the expenses of
more than one separate counsel, in the event that Placement Agent and
one or more of its directors, officers or controlling persons are the
indemnified parties);
(b) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of commencement
of the action; or
(c) the indemnifying party has authorized the employment of
counsel at the expense of the indemnifying party.
9.04. In order to provide for just and equitable contribution under the
Securities Act or the Exchange Act in any case in which (1) any person who would
be entitled to indemnification pursuant to this Section 9 if enforceable
according to its terms makes a claim for indemnification pursuant to this
Section 9, but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that the express provisions of
this Section 10 provide for indemnification in such case, or (2) contribution
under the Securities Act or the Exchange Act may otherwise be required,
Placement Agent shall contribute to the aggregate losses, claims, damages or
liabilities incurred (which shall, for all purposes of this Agreement, include,
but not be limited to, all costs of defense and investigation and all attorneys'
fees) in either such case (after contribution from others) an amount equal to
the product determined by multiplying the total amount of such losses, claims,
damages or liabilities by a fraction, the numerator of which equals the fees
paid to Placement Agent under Section 4, and the denominator of which is equal
to the aggregate proceeds of the sale of Units in the Offering (before deduction
of commissions or expenses), and the Company shall be responsible for the
balance of such losses, claims, damages or liabilities; provided, that with
respect to the rescission of the sale of any Units, Placement Agent's liability
shall not exceed the compensation earned by Placement Agent under this Agreement
with respect to the rescinded sale. If the foregoing allocation is not permitted
by law, there shall be considered, in determining the amount of contribution to
which the respective parties are entitled, the relative benefits received by
each party from the sale of Units (taking into account the portion of the
proceeds of the Offering realized by each), the parties' relative knowledge and
access to information concerning the matter with respect to which the claim was
asserted, the opportunity to correct and prevent any statement or omission, and
any other equitable considerations appropriate in the circumstances. The Company
and Placement Agent agree that it would not be equitable if the amount of such
contribution were determined by pro rata or pro capita allocation. Neither
Placement Agent nor any person controlling it shall be obligated to make
contribution hereunder which in the aggregate exceeds the total purchase price
of Units sold to subscribers procured by Placement Agent, less the aggregate
amount of any damages which it and its controlling persons have otherwise been
required to pay in respect of the same or any substantially similar claim. No
person guilty of a fraudulent misrepresentation (within the meaning of Section
11 of the Securities Act) shall be entitled to contribution from any person who
is not guilty of such fraudulent misrepresentation. The foregoing contribution
agreement shall in no way affect the contribution liabilities of any persons
having liability under Section 11 of the Securities Act other than those
identified in this Section 9 as being entitled to indemnification. Any of the
officers, directors or controlling persons of a Selected Placement Agent
(including Placement Agent) and any officers, directors or controlling persons
of the Company shall be entitled to contribution to the same extent as Placement
Agent or the Company.
SECTION 10.
Effective Date
This Agreement shall become effective upon execution by both parties
hereto.
SECTION 11.
Termination
Without limiting the right to terminate this Agreement pursuant to any
other provision hereof:
11.01. This Agreement may be terminated by the Company by notice to the
Placement Agent or by the Placement Agent by notice to the Company at any time
prior to the time this Agreement shall become effective as to all its
provisions, and any such termination shall be without liability on the part of
the Company or the Placement Agent (except for the fees or expenses to be paid
or reimbursed by the Company pursuant to Section 9 hereof or paid by the Company
pursuant to Section 11 hereof).
11.02. This Agreement may also be terminated by the Placement Agent
prior to the final Closing Date if, in its judgment and discretion, the offer,
offer for sale, sale and delivery of the Units is rendered impracticable or
inadvisable because:
(a) additional material governmental restrictions or
limitations, not in force on the date hereof, shall have been imposed
upon trading in securities generally or minimum or maximum prices shall
have been generally established on the New York Stock Exchange, the
American Stock Exchange or over-the-counter, or trading in securities
generally shall have been suspended or limited on either such exchange
or over-the-counter or a general banking moratorium shall have been
established by federal or New York authorities;
(b) a war or other national calamity shall have occurred;
(c) any event shall have occurred or shall exist which makes
untrue or incorrect in any material respect any statement or
information contained in the Registration Statement or which is not
reflected in the Registration Statement but should be reflected therein
in order to make the statements or information contained therein not
misleading in any material respect;
(d) the condition of the market (either generally or with
reference to the sale of the Units to be offered hereby) or the
condition of any matter affecting the Company or any other circumstance
is such that it would be undesirable, impracticable or inadvisable in
the judgment of the Placement Agent to proceed with this Agreement or
with the Offering.
Any termination pursuant to this Section 11.02. shall be without
liability on the part of any Selected Placement Agent (including Placement
Agent) to the Company, or on the part of the Company to any Selected Placement
Agent (including Placement Agent), except for expenses or fees to be paid or
reimbursed by the Company pursuant to Section 4 hereof and except as to
indemnification as provided in Section 9 hereof. In the event the Offering is
terminated, the Selected Placement Agent (including Placement Agent) shall be
reimbursed for its actual accountable out-of-pocket expenses.
SECTION 12.
Notice
Except as otherwise expressly provided in this Agreement:
12.01 Whenever notice is required by the provisions of this Agreement
to be given to the Company, such notice shall be in writing addressed to the
Company as follows:
Mac Filmworks, Inc
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇-▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Sr.
with a copy as follows:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, P.C.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
12.02 Whenever notice is required by the provisions of this Agreement
to be given to the Placement Agent, such notice shall be given in writing
addressed to the Placement Agent at the address set out at the beginning of this
Agreement, and a copy to the Placement Agents attorney addressed as follows:
SECTION 13.
Miscellaneous
13.01 Parties. This Agreement shall inure to the benefit of and be
binding upon the Placement Agent, the Company, and the respective successors and
assigns of each.
No purchaser of Units from Placement Agent shall be construed as a
successor or assign by reason merely of such purchase. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any person
or corporation, other than the parties hereto and their respective successors
and assigns and the controlling persons, officers and directors and counsel
referred to in this Agreement, any legal or equitable right, remedy or claim
under or in respect to this Agreement or any provision herein contained.
13.02. Representations and Indemnities to Survive Delivery. All
representations, warranties, covenants and agreements of the Company and the
Placement Agent contained herein or in certificates of officers delivered
pursuant hereto, and the indemnity agreement contained in Section 9 hereof,
shall survive the delivery and execution of this Agreement and the final Closing
Date and shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of Placement Agent or any person controlling
Placement Agent, any Selected Placement Agent or any controlling person thereof,
the Company or any of its officers, directors, or controlling persons. The
indemnification provisions of Section 9 hereof are in addition to any and all
remedies or rights which either of the parties hereto may have, including the
right to ▇▇▇ and recover damages for any breach of any representation, warranty
or covenant made or given by either of the parties hereto to any other party.
13.03. Integration. This Agreement constitutes the entire agreement
among the parties hereto with respect to the subject matters hereof and
supersedes all prior agreements and understandings among the parties both
written and oral.
13.04. Partial Unenforceability. If any Section, paragraph or provision
of this Agreement is for any reason determined to be invalid or unenforceable,
such determination shall not affect the validity or enforceability of any other
Section, paragraph or provision hereof.
13.05. Applicable Law; Venue. The Agreement is governed by and
construed under the laws of the State of Texas, and any action brought by either
party against the other party to enforce or interpret this Agreement shall be
brought in an appropriate court of such State. In the event of any such action,
the prevailing party shall recover all costs and expenses thereof, including
reasonable attorney's fees from the losing party. Venue for all disputes under
this Agreement shall be in ▇▇▇▇▇▇ County, Texas.
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return the enclosed duplicate hereof, whereupon it
will become a binding agreement between us in accordance with its terms.
Very truly yours,
Mac Filmworks, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Sr., President
ACCEPTED AND AGREED TO AS OF THE
DAY AND YEAR FIRST ABOVE WRITTEN.
By:
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Name:
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Title:
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Dated: __________, 2004