▇▇▇▇▇▇▇.▇▇▇ INC.
PLACEMENT AGENT AGREEMENT
Dated as of November 10, 2000
May ▇▇▇▇▇ Group, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned, ▇▇▇▇▇▇▇.▇▇▇ inc., (the "Company"), hereby agrees with
May ▇▇▇▇▇ Group, Inc. ("May ▇▇▇▇▇") as follows:
1. OFFERING. The Company hereby engages May ▇▇▇▇▇ to act as its
exclusive placement agent in connection with the Credit Agreement (as defined
herein) for the issuance and sale by the Company (the "Offering") of the
Company's Common Stock, $0.01 par value per share (the "Common Stock"), at a
price per share equal to the Purchase Price, as that term is defined in the
Equity Line of Credit Agreement dated the date hereof between the Company and
the investor named therein ( the "Credit Agreement"), for an aggregate price of
$5,000,000. All capitalized terms used herein and not otherwise defined shall
have the same meaning ascribed to them as in the Credit Agreement. The Investor
will be granted certain registration rights with respect to the Common Stock as
more fully set forth in the Registration Rights Agreement between the Company
and the Investor dated the date hereof, and May ▇▇▇▇▇ will be granted common
stock of the Company described herein. The documents to be executed and
delivered in connection with the Offering, including but not limited to this
Agreement, the Credit Agreement, the Registration Rights Agreement, the Escrow
Agreement, (as hereinafter defined) are referred to sometimes hereinafter
collectively as the "Offering Materials." The Company's Common Stock and there
are sometimes referred to hereinafter collectively as the "Securities." May
▇▇▇▇▇ shall not be obligated to sell any Securities and this Offering by May
▇▇▇▇▇ shall be solely on a "best efforts basis."
2. INFORMATION.
A. Upon the occurrence of each Closing, the funds received in respect
of the shares of Common Stock purchased by the Investor will be disbursed in
accordance with the terms of the Credit Agreement, net of (i) legal fees and
other expenses related thereto due to May ▇▇▇▇▇'▇ counsel and the Escrow Agent.
B. In addition to the foregoing compensation, the Company shall issue
to May ▇▇▇▇▇
upon the execution of the Credit Agreement the following: (i) common stock of
the Company equal to five percent (5%) of the total amount of the Credit
Agreement, to be calculated by taking the average of the Closing Bid Price of
the Company's common stock for the five (5) days immediately preceding the
Closing.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF MAY ▇▇▇▇▇.
A. May ▇▇▇▇▇ represents, warrants and covenants as follows:
(i) May ▇▇▇▇▇ has the necessary power to enter into this
Agreement, the and to consummate the transactions contemplated hereby and
thereby.
(ii) The execution and delivery by May ▇▇▇▇▇ of this
Agreement, and the consummation of the transactions contemplated herein and
therein will not result in any violation of, or be in conflict with, or
constitute a default under, any agreement or instrument to which May ▇▇▇▇▇ is a
party or by which May ▇▇▇▇▇ or its properties are bound, or any judgment,
decree, order or, to May ▇▇▇▇▇'▇ knowledge, any statute, rule or regulation
applicable to May ▇▇▇▇▇. This Agreement, executed and delivered by May ▇▇▇▇▇,
▇▇▇▇ constitute the legal, valid and binding obligations of May ▇▇▇▇▇,
enforceable in accordance with their respective terms, except to the extent that
(a) the enforceability hereof or thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws from time to time in
effect and affecting the rights of creditors generally, (b) the enforceability
hereof or thereof is subject to general principles of equity, or (c) the
indemnification provisions hereof or thereof may be held to be violative of
public policy.
(iii) Upon receipt of an executed Credit Agreement, a
Registration Rights Agreement and Escrow Agreement and the documents related
thereto, May ▇▇▇▇▇ will, through the Escrow Agent, promptly forward copies of
the Credit Agreement, Registration Rights Agreement and Escrow Agreement and the
documents related thereto to the Company or its counsel.
(iv) May ▇▇▇▇▇ will not deliver any documents related to the
Offering to any person it does not reasonably believe to be an Accredited
Investor.
(v) May ▇▇▇▇▇ will not intentionally take any action that it
reasonably believes would cause the Offering to violate the provisions of the
1933 Act, the 1934 Act, the respective rules and regulations promulgated there
under (the "Rules and Regulations") or applicable "Blue Sky" laws of any state
or jurisdiction.
(vi) May ▇▇▇▇▇ shall use all reasonable efforts to determine
(a) whether the Investor is an Accredited Investor and (b) that any information
furnished by the Investor is true and accurate. May ▇▇▇▇▇ shall have no
obligation to insure that (x) any check, note, draft or other means of payment
for the Common Stock will be honored, paid or enforceable against the Investor
in accordance with its terms, or (y) subject to the performance of May ▇▇▇▇▇'▇
obligations and the accuracy of May ▇▇▇▇▇'▇ representations and warranties
hereunder, (1) the Offering is exempt from the registration requirements of the
1933 Act or any applicable state "Blue Sky" law or (2) the Investor is an
Accredited Investor.
(vii) May ▇▇▇▇▇ is a member of the National Association of
Securities Dealers, Inc., and is a broker-dealer registered as such under the
1934 Act and under the securities laws of the states in which the Securities
will be offered or sold by May ▇▇▇▇▇, unless an exemption for such
2
state registration is available to May ▇▇▇▇▇. May ▇▇▇▇▇ is in compliance with
all material rules and regulations applicable to May ▇▇▇▇▇ generally and
applicable to May ▇▇▇▇▇'▇ participation in the Offering.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
A. The Company represents and warrants as follows:
(i) The execution, delivery and performance of each of this
Agreement, the Credit Agreement, the Escrow Agreement, and the Investor's
Registration Rights Agreement has been or will be duly and validly authorized by
the Company and is, or with respect to this Agreement, the Credit Agreement, the
Escrow Agreement, and the Investor's Registration Rights Agreement will be, a
valid and binding agreement of the Company, enforceable in accordance with its
respective terms, except to the extent that (a) the enforceability hereof or
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws from time to time in effect and affecting the rights of creditors
generally, (b) the enforceability hereof or thereof is subject to general
principles of equity or (c) the indemnification provisions hereof or thereof may
be held to be violative of public policy. The Securities to be issued pursuant
to the transactions contemplated by this Agreement, the Credit Agreement have
been duly authorized and, when issued and paid for in accordance with (x) this
Agreement, the Credit Agreement and the certificates/instruments representing
such Securities, (y) will be valid and binding obligations of the Company,
enforceable in accordance with their respective terms, except to the extent that
(1) the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws from time to time in effect and
affecting the rights of creditors generally, and (2) the enforceability thereof
is subject to general principles of equity. All corporate action required to be
taken for the authorization, issuance and sale of the Securities has been duly
and validly taken by the Company.
(ii) The Company has a duly authorized, issued and outstanding
capitalization as set forth in the Credit Agreement. The Company is not a party
to or bound by any instrument, agreement or other arrangement providing for it
to issue any capital stock, rights, warrants, options or other securities,
except for this Agreement and the agreements described herein and as described
in the Credit Agreement. All issued and outstanding securities of the Company,
have been duly authorized and validly issued and are fully paid and
non-assessable; the holders thereof have no rights of rescission or preemptive
rights with respect thereto other than as set forth in the Company's SB-2
Registration Statement and are not subject to personal liability solely by
reason of being security holders; and none of such securities was issued in
violation of the preemptive rights of any holders of any security of the
Company. The Company has 25,000,000 shares of authorized Common Stock,
8,710,000 of which will be issued and outstanding as of the date hereof.
(iii) The Common Stock to be issued in accordance with Credit
Agreement has been duly authorized and when issued and paid for in accordance
with the this Agreement, the Credit Agreement, and the certificates/instruments
representing such Common Stock, will be validly issued, fully-paid and
non-assessable; the holders thereof will not be subject to personal liability
solely by reason of being such holders; such securities are not and will not be
subject to the preemptive rights of any holder of any security of the Company.
(iv) The Company has good and marketable title to, or valid
and enforceable leasehold estates in, all items of real and personal property
necessary to conduct its business
3
(including, without limitation any real or personal property stated in the
Offering Materials to be owned or leased by the Company), free and clear of all
liens, encumbrances, claims, security interests and defects of any material
nature whatsoever, other than those set forth in the Offering Materials and
liens for taxes not yet due and payable.
(v) There is no litigation or governmental proceeding pending
or, to the best of the Company's knowledge, threatened against, or involving the
properties or business of the Company, except as set forth in the Offering
Materials.
(vi) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
Delaware. Except as set forth in the Offering Materials, the Company does not
own or control, directly or indirectly, an interest in any other corporation,
partnership, trust, joint venture or other business entity. The Company is duly
qualified or licensed and in good standing as a foreign corporation in each
jurisdiction in which the character of its operations requires such
qualification or licensing and where failure to so qualify would have a material
adverse effect on the Company. The Company has all requisite corporate power and
authority, and all material and necessary authorizations, approvals, orders,
licenses, certificates and permits of and from all governmental regulatory
officials and bodies (domestic and foreign) to conduct its businesses (and
proposed business) as described in the Offering Materials. Any disclosures in
the Offering Materials concerning the effects of foreign, federal, state and
local regulation on the Company's businesses as currently conducted and as
contemplated are correct in all material respects and do not omit to state a
material fact. The Company has all corporate power and authority to enter into
this Agreement, the Credit Agreement, the Registration Rights Agreement, the
Escrow Agreement, to carry out the provisions and conditions hereof and thereof,
and all consents, authorizations, approvals and orders required in connection
herewith and therewith have been obtained. No consent, authorization or order
of, and no filing with, any court, government agency or other body is required
by the Company for the issuance of the Securities or execution and delivery of
the Credit Agreement, Registration Rights Agreement, the Escrow Agreement,
except for applicable federal and state securities laws. The Company, since its
inception, has not incurred any liability arising under or as a result of the
application of any of the provisions of the 1933 Act, the 1934 Act or the Rules
and Regulations.
(vii) There has been no material adverse change in the
condition or prospects of the Company, financial or otherwise, from the latest
dates as of which such condition or prospects, respectively, are set forth in
the Offering Materials, and the outstanding debt, the property and the business
of the Company conform in all material respects to the descriptions thereof
contained in the Offering Materials.
(viii) Except as set forth in the Offering Materials, the
Company is not in breach of, or in default under, any term or provision of any
material indenture, mortgage, deed of trust, lease, note, loan or credit
agreement or any other material agreement or instrument evidencing an obligation
for borrowed money, or any other material agreement or instrument to which it is
a party or by which it or any of its properties may be bound or affected. The
Company is not in violation of any provision of its charter or by-laws or in
violation of any franchise, license, permit, judgment, decree or order, or in
violation of any material statute, rule or regulation. Neither the execution and
delivery of this Agreement, the Credit Agreement, the Registration Rights
Agreement, the Escrow Agreement, nor the issuance and sale or delivery of the
Securities, nor the consummation of any of
4
the transactions contemplated herein or in the Credit Agreement, the
Registration Rights Agreement, the Escrow Agreement, nor the compliance by the
Company with the terms and provisions hereof or thereof, has conflicted with or
will conflict with, or has resulted in or will result in a breach of, any of the
terms and provisions of, or has constituted or will constitute a default under,
or has resulted in or will result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or pursuant to
the terms of any indenture, mortgage, deed of trust, note, loan or credit
agreement or any other agreement or instrument evidencing an obligation for
borrowed money, or any other agreement or instrument to which the Company may be
bound or to which any of the property or assets of the Company is subject except
(a) where such default, lien, charge or encumbrance would not have a material
adverse effect on the Company and (b) as described in the Offering Materials;
nor will such action result in any violation of the provisions of the charter or
the by-laws of the Company or, assuming the due performance by May ▇▇▇▇▇ of its
obligations hereunder, any material statute or any material order, rule or
regulation applicable to the Company of any court or of any foreign, federal,
state or other regulatory authority or other government body having jurisdiction
over the Company.
(ix) Subsequent to the dates as of which information is given
in the Offering Materials, and except as may otherwise be indicated or
contemplated herein or therein or in the Company's SB-2 Registration Statement,
the Company has not (a) issued any securities or incurred any liability or
obligation, direct or contingent, for borrowed money, or (b) entered into any
transaction other than in the ordinary course of business, or (c) declared or
paid any dividend or made any other distribution on or in respect of its capital
stock. Except as described in the Offering Materials, the Company has no
outstanding obligations to any officer or director of the Company.
(x) There are no claims for services in the nature of a
finder's or origination fee with respect to the sale of the Common Stock or any
other arrangements, agreements or understandings that may affect May ▇▇▇▇▇'▇
compensation, as determined by the National Association of Securities Dealers,
Inc.
(xi) The Company owns or possesses, free and clear of all
liens or encumbrances and rights thereto or therein by third parties, the
requisite licenses or other rights to use all trademarks, service marks,
copyrights, service names, trade names, patents, patent applications and
licenses necessary to conduct its business (including, without limitation, any
such licenses or rights described in the Offering Materials as being owned or
possessed by the Company) and, except as set forth in the Offering Materials,
there is no claim or action by any person pertaining to, or proceeding, pending
or threatened, which challenges the exclusive rights of the Company with respect
to any trademarks, service marks, copyrights, service names, trade names,
patents, patent applications and licenses used in the conduct of the Company's
businesses (including, without limitation, any such licenses or rights described
in the Offering Materials as being owned or possessed by the Company) except any
claim or action that would not have a material adverse effect on the Company;
the Company's current products, services or processes do not infringe or will
not infringe on the patents currently held by any third party.
(xii) Except as described in the Offering Materials, the
Company is not under any obligation to pay royalties or fees of any kind
whatsoever to any third party with respect to any trademarks, service marks,
copyrights, service names, trade names, patents, patent applications,
5
licenses or technology it has developed, uses, employs or intends to use or
employ, other than to their respective licensors.
(xiii) Subject to the performance by May ▇▇▇▇▇ of its
obligations hereunder, the Credit Agreement and the offer and sale of the
Securities comply, and will continue to comply, up to the Commitment Period (as
defined in the Credit Agreement) in all material respects with the requirements
of Rule 506 of Regulation D promulgated by the SEC pursuant to the 1933 Act and
any other applicable federal and state laws, rules, regulations and executive
orders. Neither the Offering Materials nor any amendment or supplement thereto
nor any documents prepared by the Company in connection with the Offering will
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. All
statements of material facts in the Offering Materials are true and correct as
of the date of the Offering Materials and will be true and correct on the date
of the Closing.
(xiv) All material taxes which are due and payable from the
Company have been paid in full or adequate provision has been made for such
taxes on the books of the Company except for those taxes disputed in good faith
the Company does not have any tax deficiency or claim outstanding assessed or
proposed against it.
(xv) None of the Company nor any of its officers, directors,
employees or agents, nor any other person acting on behalf of the Company, has,
directly or indirectly, given or agreed to give any money, gift or similar
benefit (other than legal price concessions to customers in the ordinary course
of business) to any customer, supplier, employee or agent of a customer or
supplier, or official or employee of any governmental agency or instrumentality
of any government (domestic or foreign) or any political party or candidate for
office (domestic or foreign) or other person who is or may be in a position to
help or hinder the business of the Company (or assist it in connection with any
actual or proposed transaction) which (A) might subject the Company to any
damage or penalty in any civil, criminal or governmental litigation or
proceeding, or (B) if not given in the past, might have had a materially adverse
effect on the assets, business or operations of the Company as reflected in any
of the financial statements contained in the Offering Materials, or (C) if not
continued in the future, might adversely affect the assets, business, operations
or prospects of the Company in the future.
5. CERTAIN COVENANTS AND AGREEMENTS OF THE COMPANY.
The Company covenants and agrees at its expense and without any expense
to May ▇▇▇▇▇ as follows:
A. To advise May ▇▇▇▇▇ of any material adverse change in the Company's
financial condition, prospects or business or of any development materially
affecting the Company or rendering untrue or misleading any material statement
in the Offering Materials occurring at any time prior to any Advance Date as
soon as the Company is either informed or becomes aware thereof.
B. To use its best efforts to cause the Common Stock issuable in
connection with the Credit Agreement to be qualified or registered for sale on
terms consistent with those stated in the Investor's Registration Rights
Agreement, and under the securities laws of such jurisdictions as May ▇▇▇▇▇ and
the Investor shall reasonably request, provided that such states and
jurisdictions do not
6
require the Company to qualify as a foreign corporation. Qualification,
registration and exemption charges and fees shall be at the sole cost and
expense of the Company.
C. Upon written request, to provide and continue to provide the to each
holder of Securities, copies of all quarterly financial statements and audited
annual financial statements prepared by or on behalf of the Company, other
reports prepared by or on behalf of the Company for public disclosure and all
documents delivered to the Company's stockholders.
D. To deliver, during the Commitment Period, to May ▇▇▇▇▇, upon May
▇▇▇▇▇'▇ request, in the manner provided in Section 10(B) of this Agreement,
within forty five (45) days after the end of each of the first three quarters of
each fiscal year of the Company, commencing with the first quarter ending after
the Commitment Period, a statement of its income for each such quarterly period,
and its balance sheet and a statement of changes in stockholders' equity as of
the end of such quarterly period, all in reasonable detail, certified by its
principal financial or accounting officer; (ii) within ninety (90) days after
the close of each fiscal year, its balance sheet as of the close of such fiscal
year, together with a statement of income, a statement of changes in
stockholders' equity and a statement of cash flow for such fiscal year, such
balance sheet, statement of income, statement of changes in stockholders' equity
and statement of cash flow to be in reasonable detail and accompanied by a copy
of the certificate or report thereon of independent auditors if audited
financial statements are prepared; and (iii) a copy of all documents, reports
and information furnished to its stockholders at the time that such documents,
reports and information are furnished to its stockholders.
E. To comply with the terms of the Credit Agreement, the Registration
Rights Agreement, and the Escrow Agreement.
F. To issue to May ▇▇▇▇▇, or May ▇▇▇▇▇'▇ designee, upon the execution
of the Credit Agreement, that number of shares of Common Stock in the form
substantially as annexed hereto as provided for in this Agreement.
G. To ensure that any transactions between or among the Company, or any
of its officers, directors and affiliates be on terms and conditions that are no
less favorable to the Company, than the terms and conditions that would be
available in an "arm's length" transaction with an independent third party.
6. INDEMNIFICATION.
A. The Company hereby agrees that it will indemnify and hold ▇▇▇▇▇ and
each officer, director, shareholder, employee or representative of May ▇▇▇▇▇,
and each person controlling, controlled by or under common control with May
▇▇▇▇▇ within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934
Act or the SEC's rules and regulations promulgated there under (the "Rules and
Regulations"), harmless from and against any and all loss, claim, damage,
liability, cost or expense whatsoever (including, but not limited to, any and
all reasonable legal fees and other expenses and disbursements incurred in
connection with investigating, preparing to defend or defending any action, suit
or proceeding, including any inquiry or investigation, commenced or threatened,
or any claim whatsoever or in appearing or preparing for appearance as a witness
in any action, suit or proceeding, including any inquiry, investigation or
pretrial proceeding such as a deposition) to which May ▇▇▇▇▇ or such indemnified
person of May ▇▇▇▇▇ may become subject under the 1933 Act, the 1934 Act, the
Rules and Regulations, or any other federal or state
7
law or regulation, common law or otherwise, arising out of or based upon (i) any
untrue statement or alleged untrue statement of a material fact contained in (a)
Section 4 of this Agreement, (b) the Offering Materials (except those written
statements relating to May ▇▇▇▇▇ given by an indemnified person for inclusion
therein), (c) any application or other document or written communication
executed by the Company or based upon written information furnished by the
Company filed in any jurisdiction in order to qualify the Common Stock under the
securities laws thereof, or any state securities commission or agency; (ii) the
omission or alleged omission from documents described in clauses (a), (b) or (c)
above of a material fact required to be stated therein or necessary to make the
statements therein not misleading; or (iii) the breach of any representation,
warranty, covenant or agreement made by the Company in this Agreement. The
Company further agrees that upon demand by an indemnified person, at any time or
from time to time, it will promptly reimburse such indemnified person for any
loss, claim, damage, liability, cost or expense actually and reasonably paid by
the indemnified person as to which the Company has indemnified such person
pursuant hereto. Notwithstanding the foregoing provisions of this Paragraph
6(A), any such payment or reimbursement by the Company of fees, expenses or
disbursements incurred by an indemnified person in any proceeding in which a
final judgment by a court of competent jurisdiction (after all appeals or the
expiration of time to appeal) is entered against May ▇▇▇▇▇ or such indemnified
person as a direct result of May ▇▇▇▇▇ or such person's gross negligence or
willful misfeasance will be promptly repaid to the Company.
B. May ▇▇▇▇▇ hereby agrees that it will indemnify and hold the Company
and each officer, director, shareholder, employee or representative of the
Company, and each person controlling, controlled by or under common control with
the Company within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act or the Rules and Regulations, harmless from and against any and all
loss, claim, damage, liability, cost or expense whatsoever (including, but not
limited to, any and all reasonable legal fees and other expenses and
disbursements incurred in connection with investigating, preparing to defend or
defending any action, suit or proceeding, including any inquiry or
investigation, commenced or threatened, or any claim whatsoever or in appearing
or preparing for appearance as a witness in any action, suit or proceeding,
including any inquiry, investigation or pretrial proceeding such as a
deposition) to which the Company or such indemnified person of the Company may
become subject under the 1933 Act, the 1934 Act, the Rules and Regulations, or
any other federal or state law or regulation, common law or otherwise, arising
out of or based upon (i) the conduct of May ▇▇▇▇▇ or its officers, employees or
representatives in its acting as Placement Agent for the Offering or (ii) the
breach of any representation, warranty, covenant or agreement made by May ▇▇▇▇▇
in this Agreement (iii) any false or misleading information provided to the
Company by one of the May ▇▇▇▇▇ indemnified persons.
C. Promptly after receipt by an indemnified party of notice of
commencement of any action covered by Section 6(A) or 6(B), the party to be
indemnified shall, within five (5) business days, notify the indemnifying party
of the commencement thereof; the omission by one indemnified party to so notify
the indemnifying party shall not relieve the indemnifying party of its
obligation to indemnify any other indemnified party that has given such notice
and shall not relieve the indemnifying party of any liability outside of this
indemnification if not materially prejudiced thereby. In the event that any
action is brought against the indemnified party, the indemnifying party
8
will be entitled to participate therein and, to the extent it may desire, to
assume and control the defense thereof with counsel chosen by it which is
reasonably acceptable to the indemnified party. After notice from the
indemnifying party to such indemnified party of its election to so assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party under such Section 6(A) or 6(B) for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof, but the indemnified party may, at its own expense, participate in such
defense by counsel chosen by it, without, however, impairing the indemnifying
party's control of the defense. Subject to the proviso of this sentence and
notwithstanding any other statement to the contrary contained herein, the
indemnified party or parties shall have the right to choose its or their own
counsel and control the defense of any action, all at the expense of the
indemnifying party if, (i) the employment of such counsel shall have been
authorized in writing by the indemnifying party in connection with the defense
of such action at the expense of the indemnifying party, or (ii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
such indemnified party to have charge of the defense of such action within a
reasonable time after notice of commencement of the action, or (iii) such
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from or additional to those
available to one or all of the indemnifying parties (in which case the
indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
such fees and expenses of one additional counsel shall be borne by the
indemnifying party; provided, however, that the indemnifying party shall not, in
connection with any one action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstance, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys at any time for all such indemnified parties. No
settlement of any action or proceeding against an indemnified party shall be
made without the consent of the indemnifying party.
D. In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in Section 6(A) or 6(B)
is due in accordance with its terms but is for any reason held by a court to be
unavailable on grounds of policy or otherwise, the Company and May ▇▇▇▇▇ shall
contribute to the aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in connection with the investigation
or defense of same) which the other may incur in such proportion so that May
▇▇▇▇▇ shall be responsible for such percent of the aggregate of such losses,
claims, damages and liabilities as shall equal the percentage of the gross
proceeds paid to May ▇▇▇▇▇ and the Company shall be responsible for the balance;
provided, however, that no person guilty of fraudulent misrepresentation within
the meaning of Section 11(f) of the 1933 Act shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation. For
purposes of this Section 6(D), any person controlling, controlled by or under
common control with May ▇▇▇▇▇, or any partner, director, officer, employee,
representative or any agent of any thereof, shall have the same rights to
contribution as May ▇▇▇▇▇ and each person controlling, controlled by or under
common control with the Company within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act and each officer of the Company and each director
of the Company shall have the same rights to contribution as the Company. Any
party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may
9
be made against the other party under this Section 6(D), notify such party from
whom contribution may be sought, but the omission to so notify such party shall
not relieve the party from whom contribution may be sought from any obligation
they may have hereunder or otherwise if the party from whom contribution may be
sought is not materially prejudiced thereby. The indemnity and contribution
agreements contained in this Section 6 shall remain operative and in full force
and effect regardless of any investigation made by or on behalf of any
indemnified person or any termination of this Agreement.
7. PAYMENT OF EXPENSES.
The Company hereby agrees to bear all of the expenses in connection
with the Offering, including, but not limited to the following: filing fees,
printing and duplicating costs, advertisements, postage and mailing expenses
with respect to the transmission of Offering Materials, registrar and transfer
agent fees, Escrow Agent fees and expenses, fees of the Company's counsel and
accountants, issue and transfer taxes, if any, and counsel fees and expenses
(such counsel fees not to exceed $25,000 plus out of pocket expenses).
8. CONDITIONS OF EACH CLOSING
Each Closing shall be held at the offices of May ▇▇▇▇▇ or its counsel.
The obligations of May ▇▇▇▇▇ hereunder shall be subject to the continuing
accuracy of the representations and warranties of the Company herein as of the
date hereof and as of each Advance Date with respect to the Company as if it had
been made on and as of such Advance Date; the accuracy on and as of each Advance
Date of the statements of the officers of the Company made pursuant to the
provisions hereof; and the performance by the Company on and as of each Closing
of its covenants and obligations hereunder and to the following further
conditions:
A. At each Closing, May ▇▇▇▇▇ shall receive the opinion of counsel,
dated as of the date of the Closing, which opinion shall be in form and
substance reasonably satisfactory to counsel for May ▇▇▇▇▇.
B. At or prior to each Closing, counsel for May ▇▇▇▇▇ shall have been
furnished such documents, certificates and opinions as they may reasonably
require for the purpose of enabling them to review or pass upon the matters
referred to in this Agreement and the Offering Materials, or in order to
evidence the accuracy, completeness or satisfaction of any of the
representations, warranties or conditions herein contained.
C. At and prior to each Closing, (i) there shall have been no material
adverse change nor development involving a prospective change in the condition
or prospects or the business activities, financial or otherwise, of the Company
from the latest dates as of which such condition is set forth in the Offering
Materials; (ii) there shall have been no transaction, not in the ordinary course
of business, entered into by the Company which has not been disclosed in the
Offering Materials or to May ▇▇▇▇▇ in writing; (iii) except as set forth in the
Offering Materials, the Company shall not be in default under any provision of
any instrument relating to any outstanding indebtedness for which a waiver or
extension has not been otherwise received; (iv) except as set forth in the
Offering Materials, the Company shall not have issued any securities (other than
those to be issued as provided in the Offering Materials) or declared or paid
any dividend or made any distribution of its capital stock of any class and
there shall not have been any change in the indebtedness (long or short
10
term) or liabilities or obligations of the Company (contingent or otherwise);
(v) no material amount of the assets of the Company shall have been pledged or
mortgaged, except as indicated in the Offering Materials; and (v) no action,
suit or proceeding, at law or in equity, against the Company or affecting any of
its properties or businesses shall be pending or threatened before or by any
court or federal or state commission, board or other administrative agency,
domestic or foreign, wherein an unfavorable decision, ruling or finding could
materially adversely affect the businesses, prospects or financial condition or
income of the Company, except as set forth in the Offering Materials.
D. At each Closing, May ▇▇▇▇▇ shall have received a certificate of the
Company signed by an executive officer and chief financial officer, dated as of
the applicable Advance Date, to the effect that the conditions set forth in
subparagraph (C) above have been satisfied and that, as of the applicable
Advance Date, the representations and warranties of the Company set forth herein
are true and correct.
E. At the initial Closing, the Company shall have duly executed and
delivered to May ▇▇▇▇▇, or its designees, shares of the Company's common stock,
in the names and denominations specified by May ▇▇▇▇▇.
9. TERMINATION.
This Agreement shall be co-terminus with, and terminate upon the same
terms and conditions as those set forth in, the Credit Agreement. The rights of
the Investor and the obligations of the Company under the Registration Rights
Agreement, shall survive the termination of this Agreement unabridged.
10. MISCELLANEOUS.
A. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all which shall be deemed
to be one and the same instrument.
B. Any notice required or permitted to be given hereunder shall be
given in writing and shall be deemed effective when deposited in the United
States mail, postage prepaid, or when received if personally delivered or faxed
( upon confirmation of receipt received by the sending party), addressed as
follows:
To May ▇▇▇▇▇:
May ▇▇▇▇▇ Group, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ #▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
11
To the Company:
▇▇▇▇▇▇▇.▇▇▇ INC.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. Grotto, Chairman & Chief Executive
Officer
with copy to:
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Tel: (▇▇▇) ▇▇▇-▇▇▇▇, Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address of which written notice is given to the others.
C. This Agreement shall be governed by and construed in all respects
under the laws of the State of New York, without reference to its conflict of
laws rules or principles. Any suit, action, proceeding or litigation arising out
of or relating to this Agreement shall be brought and prosecuted in such federal
or state court or courts located within the State of New York as provided by
law. The parties hereby irrevocably and unconditionally consent to the
jurisdiction of each such court or courts located within the State of New York
and to service of process by registered or certified mail, return receipt
requested, or by any other manner provided by applicable law, and hereby
irrevocably and unconditionally waive any right to claim that any suit, action,
proceeding or litigation so commenced has been commenced in an inconvenient
forum.
D. This Agreement and the other agreements referenced herein contain
the entire understanding between the parties hereto and may not be modified or
amended except by a writing duly signed by the party against whom enforcement of
the modification or amendment is sought.
E. If any provision of this Agreement shall be held to be invalid or
unenforceable, such invalidity or unenforceability shall not affect any other
provision of this Agreement.
[SIGNATURE PAGE TO FOLLOW]
12
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
▇▇▇▇▇▇▇.▇▇▇ INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. GROTTO
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. Grotto
Title: Chairman & Chief Executive Officer
MAY ▇▇▇▇▇ GROUP, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title:
13