1
EXHIBIT 10.3
EXECUTION COPY
PLACEMENT AGENCY AGREEMENT
September 8, 2000
The Zanett Securities Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Gentlemen:
This agreement ("AGREEMENT") will CONFIRM that FastComm Communications
Corporation, a Virginia corporation (the "COMPANY"), has retained The Zanett
Securities Corporation ("ZANETT" or the "PLACEMENT AGENT") to assist the
Company, during the thirty (30) day period commencing on the date hereof (the
"TERM"), on a "best-efforts" basis, in connection with the placement of up to
3,500 units (the "UNITS") at a price of $1,000 per Unit, each Unit consisting of
(i) a prepaid common stock purchase warrant (the "PREPAID WARRANTS") which
entitles the holder thereof to acquire up to $1,000 of the Company's common
stock, par value $.01 per share (the "COMMON STOCK"), on the terms and subject
to the conditions contained in such Prepaid Warrants (or an aggregate of up to
$3,500,000 of Common Stock based on the sale of 3,500 Units), and (ii) a warrant
to purchase the number of shares of Common Stock as provided therein (the
"INCENTIVE WARRANTS"). In addition, this will also confirm that the Company has
retained Zanett in connection with the placement of an option to purchase up to
an additional 3,500 Units (the "OPTION"). The shares of Common Stock issuable
upon exercise of or otherwise pursuant to the Prepaid Warrants and the Incentive
Warrants are referred to herein as the "WARRANT SHARES." The Prepaid Warrants,
the Incentive Warrants and the Warrant Shares are collectively referred to
herein as the "SECURITIES." The Company agrees that, during the Term, all
conversations, negotiations, documents and other materials exchanged between the
Company and the Placement Agent shall not be disclosed or released to any third
party without the prior written consent of Zanett. The Company acknowledges that
certain of the aforementioned Securities may be purchased by affiliates of
Zanett.
The Units are being offered to "accredited investors" in accordance with
Regulation D promulgated under the Securities Act of 1933, as amended (the
"SECURITIES ACT"). Each prospective investor ("INVESTOR") subscribing to
purchase the Units will be required to deliver, among other things, a Securities
Purchase Agreement between the Company and the Investor (the "SECURITIES
PURCHASE AGREEMENT") in form and substance reasonably satisfactory to Zanett and
the Company, representing and warranting, among other things, that such Investor
is an "accredited investor" as such term is defined in Regulation D.
Contemporaneous with the execution and delivery of the Securities Purchase
Agreement, the Investors shall execute and deliver a Registration Rights
2
Agreement (the "REGISTRATION RIGHTS AGREEMENT") in form and substance reasonably
satisfactory to Zanett and the Company pursuant to which the Company will agree
to provide the Investors certain registration rights under the Securities Act
with respect to the Securities.
The Securities Purchase Agreement, the Prepaid Warrants, the Incentive
Warrants and the Registration Rights Agreement are referred to herein
collectively as the "OFFERING DOCUMENTS." The offering of Units described in the
Offering Documents is referred to herein as the "OFFERING."
1. Appointment of Placement Agent. Zanett is hereby appointed
Placement Agent of the Company for the purposes of assisting the Company in
finding qualified Investors to participate in the Offering. On the basis of the
representations and warranties and subject to the terms and conditions contained
herein, Zanett hereby accepts such agency and agrees to assist the Company in
finding qualified Investors to participate in the Offering. Zanett's agency
hereunder is not terminable by the Company except upon termination of the
Offering by failing to timely close the sale of the initial Units or Option
Units. Upon termination of the Offering, all subscriptions received, if any,
shall be returned to Investors.
2. Closing- Placement Fee and Warrant- Expenses.
(a) Closing. Upon satisfaction of the conditions to closing
contained in the Securities Purchase Agreement, the closing (the "CLOSING") of
the purchase and sale of the Units shall take place at the offices of Klehr,
Harrison, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP or such other mutually agreed place,
at such time and date (the "CLOSING DATE") as may be agreed upon between the
Placement Agent, the Investors and the Company. In no event, however, shall the
Closing for the initial Units take place later than September 11, 2000, and the
Closing in connection with the exercise of the Option take place later than
November 1, 2001.
(b) Procedures at Closing. Counsel for the Placement Agent
shall act as escrow agent for the Closing (the "ESCROW AGENT"). At the Closing:
(i) The Company shall deliver to the Escrow Agent, on
behalf of the Placement Agent and the Investors, an opinion of the Company's
outside legal counsel, dated as of the Closing Date, in such form as may be
reasonably acceptable to the Placement Agent and its counsel.
(ii) The Company shall deliver to the Escrow Agent
certificates from the Company, signed by the President or a Vice President
thereof, certifying that attached thereto is a true and correct copy of
resolutions adopted by the Company's Board of Directors authorizing (A) the
execution, delivery and performance of this Agreement, the Securities Purchase
Agreement, the Registration Rights Agreement, the Prepaid Warrants, the
Incentive Warrants and other documentation related to the Offering and (B) the
reservation for issuance and issuance of the
-2-
3
Warrant Shares, and certifying that such resolutions have not been modified,
rescinded or amended and are in full force and effect.
(iii) The Company shall deliver to the Escrow Agent a
certificate of good standing of the Company, dated as of a recent date, from the
Secretary of State of the Commonwealth of Virginia.
(iv) Each Investor shall deliver to the Escrow Agent two
executed copies of the Securities Purchase Agreement and Registration Rights
Agreement signed by such Investor, and the Company shall deliver to the Escrow
Agent with respect to each Investor two executed copies of its acceptance of the
Securities Purchase Agreement and Registration Rights Agreement executed by such
Investor.
(v) Each Investor shall have delivered by wire transfer
to an escrow account designated by the Escrow Agent an amount equal to the
aggregate purchase price of the Units(s) being purchased by such Investor.
(vi) The Company shall have delivered to the Escrow Agent
the duly executed Prepaid Warrants and Incentive Warrants being purchased by the
Investors in such denominations as the Investors shall request.
(vii) The Company and the Placement Agent shall instruct
the Escrow Agent to pay to the Company the purchase price (the "PURCHASE PRICE")
for the Units subscribed for at the Closing, less the Placement Agent Fee (as
defined below), out of the funds on deposit in the escrow account received from
Investors whose Securities Purchase Agreements have been accepted.
(c) Placement Fee- Expenses. The Company covenants and agrees
to pay to the Placement Agent at the Closing a fee (the "PLACEMENT AGENT FEE")
equal to 10% of the purchase price received by the Company from the sale of the
Units at Closing and upon exercise of the Option. Such Placement Agent Fee shall
be delivered by the Escrow Agent to Zanett by wire transfer, in accordance with
Zanett's written wiring instructions, from the funds on deposit in the escrow
account simultaneously with payment for and delivery of the Units at such
Closing under the Securities Purchase Agreement as provided in paragraph 2(a)
above. In addition, the Company shall pay to the Placement Agent, on the first
day of each calendar month for the next consecutive twenty-four (24) months, a
monitoring and financial advisory fee of Four Thousand Nine Hundred Dollars
($4,900.00) (the "MONITORING FEE"), for which the Placement Agent shall
periodically consult with the Company concerning market conditions, investor
perceptions of the Company and related matters.
(d) Warrants. In addition to the Placement Agent Fee, at the
Closing under the Securities Purchase Agreement, and, if the Option is
exercised, at the closing of the Units purchased pursuant to the Option, the
Company shall issue to the Placement Agent warrants, in substantially
-3-
4
the form attached hereto as Exhibit A, to purchase (i) 437,500 shares in
connection with the first Closing and (ii) an amount equal to 1/4 a share for
each share purchasable under the Prepaid Warrants at time of the Closing, if
any, of the Option, of the Company's Common Stock (the "PLACEMENT WARRANTS").
The Placement Warrants shall be exercisable for a period of five (5) years from
the date of issuance at a price per share equal to 125% of the Exercise Price
(as defined in the Prepaid Warrants) of the Prepaid Warrants as determined on
the date of issuance. The shares of the Company's Common Stock issuable upon
exercise of the Placement Warrants shall hereinafter be referred to as the
"PLACEMENT WARRANT SHARES." The Company shall grant the Placement Agent certain
registration rights under the Securities Act with respect to the Placement
Warrant Shares pursuant to the Registration Rights Agreement.
(e) Expenses of Offering. The Company shall pay to the
Placement Agent at the Closing an additional $30,000 in consideration of all
expenses directly and necessarily incurred by it in connection with the
Offering, including, but not limited to, the following: filing fees, registrar
and transfer agent fees, investigatory fees (including, but not limited to
travel, lodging and entertainment expenses), issuer's counsel and accounting
fees, blue sky fees and counsel, if any, and issue and transfer taxes, if any.
(f) Non-Circumvention Period; Lock-Up Period; Option on Future
Financing.
(i) The Company agrees that, during the period beginning
on the date hereof and ending one (1) year following the later of the date
hereof and the date of the Closing (as defined in the Securities Purchase
Agreement) (the "NON-CIRCUMVENTION PERIOD"), it will not, without the prior
written consent of the Placement Agent, negotiate or contract or have
discussions concerning any such matters with any Investor or any other party
introduced to the Company by Placement Agent to obtain additional financing in
any form.
(ii) The Company agrees that, during the period beginning
on the date hereof and ending on that date on which the Purchasers (as defined
in the Securities Purchase Agreement) no longer own any Prepaid Warrants
purchased at the Closing but not later than one year after the date hereof or if
the Option is exercised one year after the date of the closing of the purchase
of the Option (the "LOCK-UP PERIOD"), it will not, without the prior written
consent of the Placement Agent, contract with any other party to obtain
additional financing in which any equity or equity-linked securities are issued
("FUTURE OFFERINGS") for no consideration or for a consideration per share, or
the exercise or conversion price of any such securities, is less than the
Closing Bid Price (as defined in the Prepaid Warrants) at the time of issuance
(calculating such consideration in accordance with the provisions of Section
4(b)(v) of the Warrants). The Company agrees from the date of this Agreement
until the end of the Lock-Up Period it will not conduct any Future Offering
unless it shall have first delivered to the Placement Agent written notice of
such proposed Future Offering, including the terms and conditions thereof, and
providing the Placement Agent an option (the "RIGHT OF FIRST REFUSAL"), which
option must be exercised within fifteen (15) days following delivery of such
notice, to act as the placement agent for such Future Offering on terms,
including
-4-
5
fees, no less favorable to the Company as those set forth in such notice and to
place the securities being offered by the Company in the Future Offering to the
Investors or to such other persons or entities as the Placement Agent shall
determine (the limitations referred to in this and the immediately preceding
sentence are hereinafter collectively referred to as the "CAPITAL RAISING
LIMITATION"). The Capital Raising Limitation shall not apply to any transaction
involving issuances of securities as consideration in a merger, consolidation or
acquisition of assets, or in connection with any strategic partnership or joint
venture (the primary purpose of which is not to raise equity capital), or as
consideration for the acquisition of a business, product or license by the
Company. The Capital Raising Limitation shall also not apply to (i) the issuance
of securities pursuant to a best efforts, underwritten public offering, (ii) the
issuance of securities upon exercise or conversion of the Company's options,
warrants or other convertible securities outstanding as of the date hereof, or
(iii) the grant of additional options or warrants, or the issuance of additional
securities, under any Company stock option, bonus or stock purchase plan for the
benefit of the Company's employees, consultants or directors pursuant to plans
approved by a majority of the Board of Directors who are not officers of the
Company, if any, or a majority of the Board's compensation committee, if any.
Notwithstanding the foregoing, the Placement Agent shall not have a Right of
First Refusal to act as placement agent for any Future Offerings placed by
▇▇▇▇▇▇▇ Bros., L.P., pursuant to its letter agreement with the Company dated
January 24, 2000.
3. Representations and Warranties and Covenants of the Company.
(a) The Company represents and warrants to Zanett that this
Agreement has been duly authorized, executed and delivered by the Company and,
assuming the due execution by Zanett, constitutes a legal, valid and binding
agreement of the Company, enforceable against the Company in accordance with its
terms.
(b) The Company has delivered to Zanett or has made publically
available true and complete copies of all reports, schedules, forms, statements
and other documents filed by the Company on or after April 30, 1999 with the
Securities and Exchange Commission (the "SEC") pursuant to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT") (all of the foregoing filed prior to the date hereof and all exhibits
included therein and financial statements and schedules thereto and documents
(other than exhibits) incorporated by reference therein, being hereinafter
referred to as the "SEC DOCUMENTS"). As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the
Exchange Act and the rules and regulations of the SEC promulgated thereunder
applicable to the SEC Documents, and none of the SEC Documents, at the time they
were filed with the SEC, contained any untrue statement of a material fact or
omitted to state a 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. As of their respective dates, the financial
statements of the Company included in the SEC Documents complied as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto. Such financial statements
have been prepared in accordance with generally accepted accounting
-5-
6
principles, consistently applied, during the periods involved (except (i) as may
be otherwise indicated in such financial statements or the notes thereto, or
(ii) in the case of unaudited interim statements, to the extent they may not
include footnotes or may be condensed or summary statements) and fairly present
in all material respects the consolidated financial position of the Company as
of the dates thereof and the consolidated results of their operations and cash
flows for the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments). Except as set forth in the financial
statements of the Company included in the SEC Documents, the Company has no
liabilities, contingent or otherwise, other than (i) liabilities incurred in the
ordinary course of business subsequent to April 30, 2000, and (ii) obligations
under contracts and commitments incurred in the ordinary course of business and
not required under generally accepted accounting principles to be reflected in
such financial statements, which, individually or in the aggregate, are not
material to the financial condition or operating results of the Company.
(c) The Company recognizes and confirms that Zanett (i) will
use and rely primarily on the SEC Documents and on information available from
generally recognized public sources in performing the services contemplated by
this Agreement without having independently verified the same (ii) is authorized
to assist the Company in the structuring of the Offering with any prospective
purchaser who is an "accredited investor" as defined in Regulation D under the
Securities Act and to provide copies of the SEC Documents and forms of the
Securities Purchase Agreement and other Offering Documents to prospective
purchasers of the Company's securities in connection with the performance of
Zanett's services hereunder; and (iii) does not assume responsibility for the
accuracy or completeness of the SEC Documents.
(d) In addition to the foregoing, the Company hereby
incorporates by reference all of the representations and warranties and
covenants to be set forth in the Securities Purchase Agreement and the other
Offering Documents with the same force and effect as if specifically set forth
herein.
(e) For so long as Zanett and/or its affiliates own 350,000 or
more shares of the Company's Common Stock or Warrants exercisable for such
amount, (i) the Company shall provide Zanett, within three (3) business days of
the filing or preparation thereof, with such financial and other statements
including, without limitation, management letters and consolidated financial
statements as are provided to any lenders to or security holders of the Company;
(ii) in the event any current executive officer, director or key employee
ceases, subsequent to the date hereof, to have such relationship with the
Company and such cessation has, or is likely to have, a material adverse effect
on the Company, taken as a whole, the Company shall promptly notify Zanett of
such event, which notification shall comprehensively describe such
circumstances; (iii) the Company shall, on a regular basis, provide to Zanett
updates of any material litigation and/or governmental proceedings which could
reasonably be expected to have a material adverse effect on the business of the
Company; and (iv) the Company shall promptly provide to Zanett notice of any
material event of default under any agreement or other document with any lender
or holder of any security of the Company. In addition, the Company's CEO and/or
CFO shall meet with Zanett on at least a once
-6-
7
a month basis or as otherwise periodically requested by Zanett to review the
Company's operations and results, provided, however, that Zanett shall execute
such confidentiality agreements and take such other action as reasonably
requested by the Company to comply with the requirements of Regulation FD.
Zanett shall hold in confidence and shall not make any disclosure (except to an
Investor who also agrees to execute and be bound by such confidentiality
agreement) or use of any such information disclosed to it pursuant to this
section which the Company determines in good faith to be confidential, and of
which determination Zanett is so notified, unless (a) the release of such
information is ordered pursuant to a subpoena or other order from a court or
government body of competent jurisdiction or (b) the information has been made
generally available to the public other than by disclosure in violation of this
or any other agreement. Anything contained herein to the contrary
notwithstanding, Placement Agent's obligations to proceed with the Offering is
conditioned upon Placement Agent's due diligence investigation of the Company
and Zanett shall be fully informed by the Company of any events which might have
a material affect on the financial condition of the Company. If, in Zanett's
opinion, the condition of the Company, financial or otherwise, and its prospects
are affected in a material and/or adverse manner and do not fulfill Zanett's
expectations, Zanett shall have the sole discretion to review and determine its
continued interest in the Offering.
(f) [Intentionally omitted].
(g) The Company has the requisite corporate power and authority
to enter into and perform this Agreement and the Placement Warrants in
accordance with the terms hereof. The execution and delivery of this Agreement
and the Placement Warrants by the Company and the consummation by it of the
transactions contemplated hereby (including, without limitation, the reservation
for issuance and issuance of the Placement Warrant Shares issuable upon exercise
thereof) have been duly authorized by the Company's Board of Directors and no
further consent or authorization of the Company, its Board of Directors, or its
shareholders is required.
(h) The Placement Warrants and the Placement Warrant Shares
issuable upon the exercise thereof are duly authorized and, upon issuance of the
Placement Warrant Shares upon exercise of the Placement Warrants in accordance
with the terms thereof, the Placement Warrant Shares will be validly issued,
fully paid and non-assessable, and free from all taxes, liens and charges with
respect to the issue thereof and shall not be subject to preemptive rights or
other similar rights of the shareholders of the Company.
(i) The execution, delivery and performance of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby will not (A) result in a violation of the Company's
Certificate of Incorporation or By-laws or (B) conflict with, or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which
the Company is a party, or result in a violation of any law, rule, regulation,
order, judgment or decree (including federal and state securities laws and
-7-
8
regulations) applicable to the Company or by which any property or asset of the
Company is bound or affected (except, with respect to clause (B), for such
conflicts, defaults, terminations, amendments, accelerations, cancellations and
violations as would not, individually or in the aggregate, have a material
adverse effect on the operation, properties, prospects or financial condition of
the Company ("MATERIAL ADVERSE EFFECT")). The Company is not in violation of its
Certificate of Incorporation or By-laws and is not in default (and no event has
occurred which with notice or lapse of time of both would put the Company in
default) under, nor has there occurred any event giving others (with notice or
lapse of time or both) any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company is
a party, except for possible defaults as would not, individually or in the
aggregate, have a Material Adverse Effect. The business of the Company is not
being conducted, and shall not be conducted, in violation of any law, ordinance
or regulation of any governmental entity, except for possible violations which
either singly or in the aggregate do not have a Material Adverse Effect. Except
as specifically contemplated by this Agreement and as required under the
Securities Act and any applicable state securities laws, the Company is not
required to obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency or any regulatory or self
regulatory agency in order for it to execute, deliver or perform any of its
obligations under this Agreement in accordance with the terms hereof.
(j) The Company shall at all times have authorized, and
reserved for the purpose of issuance, a sufficient number of Placement Warrant
Shares to provide for the full exercise of the outstanding Placement Warrants.
(k) The Company shall promptly secure the listing of the
Placement Warrant Shares upon each national securities exchange or automated
quotation system, if any, upon which shares of Common Stock are then listed
(subject to official notice of issuance) and shall maintain, so long as any
other shares of Common Stock shall be so listed, such listing of all Placement
Warrant Shares from time to time issuable upon exercise of the Placement
Warrants.
4. Publicity. The Company shall not make any reference to Zanett or
to any of its affiliates in any release or other communication without Zanett's
prior written consent. Without Zanett's prior written consent, no advice
rendered by Zanett in connection with the services performed by Zanett pursuant
to this Agreement will be quoted by the Company, its affiliates or
representatives nor will any such advice be referred to in any report, document,
release or other communication, whether oral or written, prepared or issued or
transmitted by such person, except to the extent required by law (in which case
the appropriate party shall so advise Zanett in writing prior to such use and
shall consult with Zanett with respect to the form and timing of the
disclosure).
5. Indemnification and Contribution.
-8-
9
(a) To the extent permitted by law, the Company will indemnify,
hold harmless and defend Zanett and each of its directors, officers, partners,
members, employees, agents and each person who controls Zanett within the
meaning of the Securities Act or the Exchange Act, if any, (each, an
"INDEMNIFIED PERSON"), against any joint or several losses, claims, damages,
liabilities or expenses (collectively, together with commenced actions,
proceedings or inquiries by any regulatory or self-regulatory organization,
"CLAIMS") to which any of them may become subject insofar as such Claims arise
out of or are based upon: (i) the retention of Zanett as Placement Agent under
this Agreement, the performance of services by Zanett hereunder or any
involvement or alleged involvement of Zanett in the Offering or (ii) any
material breach of any of the Company's representations, warranties or covenants
contained herein. The Company shall reimburse each of the Indemnified Persons,
promptly as such expenses are incurred and are due and payable, for any
reasonable legal fees or other reasonable expenses incurred by them in
connection with investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 5(a) shall not (i) apply in instances where the Claims
were the result of Zanett's gross negligence or based on Zanett's wilful
misconduct, and (ii) apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of the Company, which
consent shall not be unreasonably withheld.
(b) Promptly after receipt by an Indemnified Person under this
Section 5 of notice of the commencement of any action (including any
governmental action), such Indemnified Person shall, if a Claim in respect
thereof is made against the Company under this Section 5, deliver to the Company
a written notice of the commencement thereof, and the Company shall have the
right to participate in, and, to the extent the Company so desires, to assume
control of the defense thereof with counsel mutually satisfactory to the Company
and the Indemnified Person; provided, however, that an Indemnified Person shall
have the right to retain its own counsel (with the fees of such counsel not to
exceed $250 per hour), with the fees and expenses to be paid by the Company, if,
in the reasonable opinion of counsel retained by the Indemnified Person after
consultation with the Company, the representation by such counsel of the
Indemnified Person and the Company would be inappropriate due to actual or
potential differing interests between such Indemnified Person and any other
party represented by the Company's counsel in such proceeding. The Company shall
pay for only one separate legal counsel for the Indemnified Persons, and such
legal counsel shall be selected by Placement Agent. The failure to deliver
written notice to the Company within a reasonable time of the commencement of
any such action shall not relieve the Company of any liability to the
Indemnified Person under this Section 5, except to the extent that the Company
is actually prejudiced in its ability to defend such action. The indemnification
required by this Section 5 shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, as such expense,
loss, damage or liability is incurred and is due and payable.
(c) To the extent any indemnification by the Company of an
Indemnified Person is prohibited or limited by law or otherwise unavailable in
respect of any Claim, the Company agrees to make the maximum contribution with
respect to any amounts for which it would otherwise be liable under Section 5 to
the fullest extent permitted by law. In this regard, the Company shall
-9-
10
contribute to the amount paid or payable by such Indemnified Person as a result
of any such Claim (i) in such portion as is appropriate to reflect the relative
benefits received by the Company, on the one hand, and the Indemnified Person,
on the other, from the structuring and issuance of the securities in the
Offering or any other transaction in which Zanett rendered services hereunder 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 Indemnified Person, on the other, in
connection with untrue statements or omissions or other actions (or alleged
untrue statements, omissions or other actions) which resulted in such Claim as
well as any other relevant equitable considerations. The relative benefits
received by the Company, on the one hand, and the Indemnified Person, on the
other, shall be deemed to be in the same proportion as the total gross proceeds
received by the Company in the Offering or any other financing bears to such
Indemnified Person's compensation. The relative fault of the Company on the one
hand and of the Indemnified Person on the other shall be determined by reference
to, among other things, whether such untrue statements or omissions or other
actions (or alleged untrue statements, omissions or other actions) relate to
information supplied or action taken by the Company, on the one hand, or by the
Indemnified Person, on the other, and the relevant persons' relative intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statements, omission or actions. The amount paid or payable by a party as
a result of the Claim shall 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. The Company and Zanett agree that it would not be
just and equitable if contribution pursuant to this Section 5 were determined by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above.
(d) The aforesaid indemnity and contribution agreements shall
apply to any related activities engaged in by any Indemnified Person prior to
this date and to any modification of Zanett's engagement hereunder, and shall
remain in full force and effect regardless of any investigation made by or on
behalf of Placement Agent or any of its agents, employees, officers, directors
or controlling persons and shall survive the issuance of any securities in any
transaction referred to hereunder (including the Offering) and any termination
of this Agreement or Placement Agent's engagement hereunder. The Company agrees
to promptly notify Zanett of the commencement of any litigation or proceeding
against it or any of its directors, officers, agents or employees in connection
with the transactions contemplated hereby.
(e) The Company also agrees that no Indemnified Person shall
have any liability (whether direct or indirect, in contract or tort or
otherwise) to the Company, its owners, creditors or security holders for or in
connection with advice or services rendered or to be rendered by Zanett pursuant
to this Agreement, the transactions contemplated hereby or any Indemnified
Person's actions or inactions in connection with any such advice, services or
transactions except for liabilities (and related expenses) of the Company that
are determined by a final judgment of a court of
-10-
11
competent jurisdiction to have resulted primarily from such Indemnified Party's
gross negligence or wilful misconduct in connection with any such advice,
actions, inactions or services.
6. Survival of Certain Provisions. The representations, warranties,
covenants and provisions contained in Section 2(f), Section 3, Section 4 and
Section 5 hereof shall survive in full force and effect until that date which is
three (3) years from the date hereof (or such period as may be specified in such
provisions) regardless of (a) any completion or termination of any financing
contemplated by this Agreement (including the Offering), (b) any termination of
this Agreement, or (c) any investigation made by or on behalf of Placement Agent
or any affiliate of Placement Agent, and shall be binding upon, and shall inure
to the benefit of, any successors, assigns, heirs and personal representatives
of the Company, Zanett, the Indemnified Parties and any holder of Placement
Warrants.
7. Miscellaneous.
(a) All notices, requests, demands and other communications
which are required or may be given hereunder shall be in writing and shall be
deemed to have been duly given when delivered personally, receipt acknowledged
or five (5) days after being sent by registered or certified mail, return
receipt requested, postage prepaid. All notices shall be made to the parties at
the addresses designated above or at such other or different addresses which
party may subsequently provided with notice thereof, and, to their respective
legal counsel, as follows:
(i) If to Placement Agent, to
The Zanett Securities Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-with a copy to -
Klehr, Harrison, ▇▇▇▇▇▇, Branzburg & ▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
(ii) If to the Company, to
FastComm Communications Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
-11-
12
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
-with a copy to -
▇▇▇▇▇▇▇, Dunaud, Mercadier & Carreras LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
(b) This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
shall constitute one and the same instrument. This Agreement, once executed by a
party, may be delivered to the other parties hereto by facsimile transmission of
a copy of this Agreement bearing the signature of the party so delivering this
Agreement.
(c) This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York (without regard to its
conflict of laws provisions). The Company and Zanett hereby agree to submit to
the exclusive jurisdiction of an arbitration panel of the National Association
of Securities Dealers, Inc. located in the City of New York in the State of New
York in connection with any suit, action or proceeding related to this Agreement
or any of the matters contemplated hereby, irrevocably waive any defense of lack
of personal jurisdiction and irrevocably agree that all claims in respect of any
suit, action or proceeding may be heard and determined in by such panel. The
Company and Zanett irrevocably waive, to the fullest extent they may effectively
do so under applicable law any objection which it may now or hereafter have to
the laying of venue of any such suit, action or proceeding brought before any
such court and any claims that any such suit, action or proceeding brought in
any such arbitration panel has been brought in an inconvenient forum. Each party
agrees to pay or reimburse the other for all reasonable costs and expenses
incurred in connection with the enforcement of any of its rights under this
Agreement, including without limitation, all attorneys' fees and expenses of its
counsel.
(d) The section headings in this Agreement have been inserted
as a matter of convenience of reference and are not a part of this Agreement.
(e) This Agreement may not be modified or amended except in
writing duly sworn by the parties hereto.
(f) If any term, provision, covenant or restriction contained
in this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void, unenforceable or against its regulatory policy,
the remainder of the terms, provisions, covenants and restrictions
-12-
13
contained in this Agreement shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.
(g) Each party to this Agreement has participated in the
negotiation and drafting of this Agreement. As such, the language used herein
shall be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be applied against any
party to this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-13-
14
Please sign and return the original and one copy of this letter to
indicate your acceptance of the terms set forth herein whereupon this letter and
your acceptance shall constitute a binding agreement between you and the
Company.
Very truly yours,
FASTCOMM COMMUNICATIONS
CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Accepted and Agreed to this
____ day of September, 2000.
THE ZANETT SECURITIES CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
