TECHNOCONCEPTS, INC. PLACEMENT AGENT AGREEMENT Dated: __________, 2007
Dated:
__________,
2007
Westminster
Securities Corporation
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Ladies
and Gentlemen:
The
undersigned, TechnoConcepts, Inc., a Colorado corporation (the “Company”),
proposes to issue and sell a minimum of $2,000,000 of investment units (“Units”)
(the “Minimum Offering”) and a maximum of $4,000,000 of Units (the “Maximum
Offering”) (subject to an over-allotment allowance of up to an additional
$2,000,000). The terms and conditions of the sale, issuance, and rights held
by
the securities underlying these Units are as set forth in the subscription
agreements among the Company and the investors in the offering (“Investors”),
which shall be prepared by the Company and subject to the approval of the
Placement Agent (together with all exhibits, schedules and supplements thereto,
the “Subscription Documents”). The Units, the 8% Secured Convertible Debentures
forming a part of the Units (“Debentures”), the common stock underlying the
Debentures (“Shares”), the warrants forming a part of the Units and the
additional warrants issuable in respect of certain sales of Units (collectively,
the “Warrants”), the common stock underlying the Warrants (“Warrant Shares”),
and the Placement Agent Warrants (as hereinafter defined) are referred to
collectively herein as the “Equity”.
The
offering of Units in the Company (the “Offering”) will be conducted on a “best
efforts, all or none” basis with respect to the Minimum Offering and on a “best
efforts” basis with respect to the remainder of the Maximum Offering in excess
of the Minimum Offering. Fractional Units may be sold at the discretion of
the
Company. As used herein, including with respect to the representations and
warranties contained herein, unless the context otherwise requires, the term
“Company” shall include the Company together with all of its direct and indirect
wholly owned subsidiaries, and all representations and warranties of the Company
herein shall also be deemed made on behalf of and with respect to each such
subsidiary of the Company, except where the context indicates that such
representation and warranty applies only to the Company, including, without
limitation, any representations and warranties relating to the capital stock
of
the Company. This Placement Agent Agreement (“Agreement”) is to confirm the
arrangements with you (the “Placement Agent”), with respect to the sale of the
Units by the Placement Agent as exclusive agent for the Company in the
Offering.
The
Offering will not be registered with the Securities and Exchange Commission
(“SEC”) nor with any state securities authority, but rather will be offered as a
private placement pursuant to an exemption from registration under Regulation
D
(“Regulation D”) promulgated under Section 4(2) and Rule 506 of the Securities
Act of 1933, as amended (“Securities Act”), and available state securities law
exemptions. The Units are to be sold in the Offering only to “accredited
investors”, as that term is defined in Regulation D, pursuant to the
Subscription Documents.
SECTION
1. Description
of Capital Stock.
The
Equity shall conform in all respects to descriptions thereof contained in the
Subscription Documents.
SECTION
2. Representations
and Warranties of the Company.
The
Company hereby represents, warrants and covenants with the Placement Agent
as
follows:
(a)
The
Subscription Documents, copies of which will be delivered to the Placement
Agent, will be carefully prepared to disclose or incorporate by reference all
information concerning the Company which would be material to an investment
decision by a reasonable investor. The date on which the Offering is authorized
by the Company to commence is January 19, 2007 and is herein called the
“Commencement Date.” The time and date of each issuance of Units hereunder is
herein called an “Issuance Date” or a “Closing.”
(b)
The
Company is duly incorporated and validly existing as a corporation in good
standing under the laws of the state of its incorporation, having corporate
power and authority to own its properties and conduct its business and is duly
qualified and in good standing in each foreign jurisdiction where the conduct
of
its business so requires such qualification, except where the failure to be
so
qualified would not have a material adverse effect on the financial condition,
results of operations, assets or business of the Company or the Material
Subsidiaries, taken as a whole (a “Material Adverse Effect”). No direct or
indirect rights to acquire Common Stock exist, except as have been previously
disclosed to the public or as disclosed in the Subscription
Documents.
(c)
The
audited financial statements of the Company for the years ended September 30,
2006 and 2005, each included in the SEC Reports (defined below) (collectively,
the “Financial Statements”), fairly present in all material respects the
information purported to be shown therein of the Company, at the respective
dates to which they apply; and such Financial Statements have been prepared
in
conformity with GAAP consistently applied throughout the periods involved and
are in accordance in all material respects with the books and records of the
Company.
(d)
The
assets of the Company, as shown in the Financial Statements, are owned by the
Company with good title, free and clear of all liens, encumbrances and equities
of record or otherwise, except (i) those specifically referred to in the
Subscription Documents, (ii) those which do not materially adversely affect
the
use or value of such assets, (iii) the lien of current taxes not now due or
which are being contested in good faith and for which adequate reserves have
been set aside and (iv) those disclosed in the Financial Statements or elsewhere
in the Subscription Documents. The Company has the full corporate right, power
and authority to maintain and operate its business and properties as the same
are now operated or proposed to be operated and is complying with all laws,
ordinances and regulations applicable thereto, except where the failure to
so
comply would not have a Material Adverse Effect.
(e)
There
are no actions, suits or proceedings at law or in equity pending, or to the
Company’s knowledge, threatened, against the Company before or by any federal or
state commission, regulatory body, administrative agency or other governmental
body wherein, either in any case or in the aggregate, an unfavorable ruling,
decision or finding would have a Material Adverse Effect which are not disclosed
in the Subscription Documents or the SEC Reports.
(f)
The
execution and delivery by the Company of this Agreement, the consummation and
performance of the transactions herein contemplated, and compliance with the
terms of this Agreement by the Company will not conflict with, result in a
material breach of, or constitute a material default under, the Certificate
of
Incorporation or the bylaws of the Company, in each case as amended, or any
indenture, mortgage, deed of trust or other agreement or instrument to which
the
Company is now a party or by which it or any of its assets or properties is
bound and which is filed as an exhibit to the Company’s Annual Report on Form
10-K for the year ended September 30, 2006, or any other periodic or current
report filed by the Company with the Securities and Exchange Commission since
September 30, 2006 (the “SEC Reports”) (such agreements or instruments, the
“Material Contracts”), or any law, order, rule, regulation, writ, injunction,
judgment or decree of any government, governmental instrumentality or court,
domestic or foreign, having jurisdiction over the Company or any of its business
or properties, to the extent that such conflict, breach or default could have
a
Material Adverse Effect.
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(g)
Except as set forth in the Subscription Documents or the SEC Reports, all
material licenses, permits and approvals referred to in the Subscription
Documents or the SEC Reports (including the Financial Statements) (the
“Permits”) have been obtained and are valid and in full force and effect. There
are no proceedings pending, or to the knowledge of the Company threatened,
seeking to cancel, terminate or limit such Permits. Neither the Company nor,
to
the knowledge of the Company, any other party is in default under any of the
Material Contracts, and to the knowledge of the Company, no event has occurred
which with the passage of time or the giving of notice, or both, would
constitute a default thereunder.
(h)
Except as described in the Subscription Documents or the SEC Reports, the
Company has timely filed all federal, state and local tax
returns
required to be filed, including without limitation, all sales tax returns,
or
has obtained extensions thereof and has paid, or is contesting in good faith,
all taxes shown on such returns.
(i)
The
Company shall use the net proceeds from the sale of the Units hereunder
primarily as described in the Subscription
Documents.
The
Company will not use any proceeds from the sale of the Units for the
satisfaction of any indebtedness for borrowed money, to redeem any Common Stock
or Common Stock Equivalents or to settle any litigation outstanding as of any
Closing.
(j)
The
SEC Reports describe all material patents, trademarks, trade names, copyright
registrations and applications therefor now or heretofore used or presently
proposed to be used in the conduct of the business of the Company and the
failure of which the Company to have would have a Material Adverse Effect (the
“IP Rights”). Except as set forth in the SEC Reports: (i) the Company owns
or possesses adequate licenses or other valid rights to use all IP Rights
necessary to the conduct of the business of the Company as presently being
conducted; (ii) the validity of such IP Rights and the rights of the
Company thereto have not been questioned in any litigation to which the Company
is or has been a party, nor, to the best knowledge of the Company, is any such
litigation threatened, other than as set forth in the SEC Reports; (iii) to
the best knowledge of the Company, the conduct of the business of the Company
as
now conducted does not and will not conflict with IP Rights of others in any
way
which has or might reasonably be expected to have a Material Adverse Effect;
and
(iv) no proceedings are pending against the Company nor, to the best
knowledge of the Company, are any proceedings threatened against the Company,
alleging any violation of IP Rights of any third person. The Company does not
know of (x) any
use that has heretofore been or is now being made of any IP Rights owned by
the
Company, except by the Company, any licensor of such IP Rights to the Company
or
by a person duly licensed by the Company to use the same under an agreement
described in the SEC Reports or (y) any
material infringement of any IP Right owned by or licensed by or to the Company.
To the best knowledge of the Company, all IP Rights heretofore owned or held
by
any agent, independent contractor, employee or officer of the Company or any
subsidiary thereof and used in the business of the Company in any manner have
been duly and effectively transferred to the Company. The consummation of the
transactions contemplated by this Agreement will not alter or impair the rights
and interests of the Company in any of the IP Rights.
(k)
All
of the representations, agreements and warranties in this Section 2 shall
survive delivery of and payment for all or any part of the Units for two years
from and after such delivery and payment.
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(l) The
Company has no subsidiaries other than as disclosed in the Subscription
Documents.
(m)
All of
the SEC Reports were true and correct in all material respects upon the dates
of
filing thereof except as subsequently amended or disclosed in the SEC
Reports.
SECTION
3. Issuance,
Sale and Delivery of the Units.
(a)
The
Company hereby agrees to sell the Units directly to subscribers identified
by
the Placement Agent on a “best efforts all-or-none” basis with respect to the
Minimum Offering, and thereafter on a “best efforts” basis with respect to the
remaining Units up to the Maximum Offering. The offering will commence on the
Commencement Date and continue until January 31, 2007. Pending the closing
of
the sale of the Minimum Offering, the proceeds of the Offering will be deposited
in escrow in a non-interest bearing account at Signature Bank. Unless the
Minimum Offering of Units is sold, the Offering will terminate and all funds
theretofore received from the sale of the Units will be promptly returned to
the
subscribers without deduction therefrom or interest thereon. During the period
of escrow, subscribers will not be entitled to a return of their subscriptions,
except as required by law. If the Minimum Offering is completed, the remaining
Units up to the amount of the Maximum Offering will be offered on a “best
efforts” basis until the first to occur of (i) the completion of the Maximum
Offering (including any over-allotment sales), (ii) February 28, 2007 or (iii)
the termination of the Offering by mutual agreement of the Placement Agent
and
the Company (“Final Closing”). The Units will be offered for cash and, in
certain cases, in exchange for debt securities of the Company, and delivery
of
the purchase price for the Units and the certificates representing the
Debentures and Warrants shall be pursuant to the procedures set forth in the
Subscription Documents.
(b)
As
its basic compensation, the Placement Agent (or its designees) shall receive
(i)
cash compensation equal to seven percent (7%) of the gross cash proceeds
received by the Company from the sale of Units, as commission; and (ii)
additional compensation in the form of warrants (“Placement Agent Warrants”) to
purchase shares of Common Stock, in an amount equal to 9% of the Shares and
Warrant Shares underlying Units sold in the Offering, exercisable at the
conversion price of the Debentures or the exercise price of the Warrants. The
Placement Agent Warrants and the shares of Common Stock issuable upon exercise
of the Placement Agent Warrants shall have registration, anti-dilution and
other
rights identical to the Shares and Warrant Shares included in or issuable upon
sale of the Units, and shall be exercisable any time from the Issuance Date
through the last expiration date of any of the Warrants. Cash compensation
shall
be paid in full on the Issuance Date with respect to gross proceeds for Units
deliverable on such date.
(c)
The
parties hereto represent that at the Issuance Date, the representations and
warranties herein contained, and the statements contained in all certificates
theretofore or simultaneously delivered by any party to another pursuant to
this
Agreement, shall be true and correct, except as otherwise disclosed in any
certificate delivered on the Issuance Date.
SECTION
4. Covenants
of the Company.
The
Company covenants and agrees with the Placement Agent that:
(a)
On
the Commencement Date, and on each Issuance Date, the Subscription Documents
(as
amended or as supplemented, if the same shall have been amended or supplemented)
will not (i) contain an untrue statement of a material fact and will not omit
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 and (ii) contain any material, non-public information
required to be disclosed to the general public in order to comply with
Regulation FD promulgated under the Securities Exchange Act of 1934, as amended,
unless all recipients of the Subscription Documents execute a confidentiality
agreement in form and substance acceptable to the Company and the Placement
Agent, prior to receipt of the Subscription Documents.
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(b)
The
Company will prepare promptly upon the reasonable request of the Placement
Agent, such amendments or supplements to the Subscription Documents, in such
form as in the opinion of counsel to the Placement Agent may be reasonably
necessary or advisable in connection with the Offering. In addition, if at
any
time prior to the last date on which Units shall be issued, (i) an event
relating to or affecting the Company shall have occurred which, in the judgment
of the Company or in the opinion of counsel for the Placement Agent, would
cause
the Subscription Documents as then in effect to include an untrue statement of a
material fact or to omit 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, or (ii) it is
otherwise necessary to amend or supplement the Subscription Documents, the
Company shall promptly notify the Placement Agent of the occurrence and shall
promptly prepare and deliver to the Placement Agent, without charge, sufficient
copies of any amended or supplemented Subscription Documents, and shall use
its
reasonable best efforts to cause the appropriate state securities authorities
to
take any required action with regard to any amendment as may be necessary to
permit the lawful use of the Subscription Documents, as so amended and
supplemented, in connection with the Offering.
(c)
The
Company’s counsel shall prepare and file any necessary filings, in the
reasonable opinion of Company’s counsel or Placement Agent’s counsel, under the
state securities, or so-called “blue sky” laws and regulations (the “Blue Sky
Laws”) and the Company shall pay the filing fees and all other expenses in
connection with any such qualification in such jurisdictions as the Placement
Agent shall designate, and to continue such qualification in effect so long
as
required for the purposes of the Offering; provided, however, that the Company
shall not be required to qualify as a foreign corporation or to file a consent
to service of process in any jurisdiction in any action other than one arising
out of the offering or sale of the Units. The Company will provide copies to
the
Placement Agent of all documents, exhibits and information filed in connection
with the qualification of the Units for sale under the Blue Sky
Laws.
(d)
The
Company, at its own expense, will give and continue to give such financial
statements and other information to and as may be required by the proper public
bodies of the jurisdictions in which the Offering may be qualified.
(e)
The
Company will pay all fees, taxes (excluding any taxes on the income or revenue
of the purchasers of the Units) and expenses incident to the preparation and
distribution of the Subscription Documents, the establishment of the escrow
account with the Escrow Agent, the issuance of the Units and the fees and
expenses of counsel and accountants for the Company. The Company will pay all
of
Placement Agent’s accountable fees and expenses (including printing, mailing,
travel, etc), payable at the earlier of each Closing or the termination of
the
Offering. The Company also agrees to pay all the reasonable fees of ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ LLP, Westminster Securities Corp.’s counsel, in addition to all
reasonable and customary disbursements of such counsel, subject to a maximum
aggregate amount of $25,000. The Company will additionally pay the Placement
Agent for its non-accountable fees and expenses at the rate of one percent
(1%)
of the gross proceeds received by the Company from the sale of the Units,
payable at each Closing. In the event that any payment due to the Placement
Agent or its counsel hereunder shall not be made when due, interest shall accrue
on the unpaid balance of such overdue payments at the rate of twelve percent
(12%) per annum until paid.
(f)
The
form of Subscription Documents, Debentures, Warrants and Placement Agent Warrant
shall contain the registration rights, anti-dilution protection and such other
information, representations, warranties and covenants as shall be reasonably
acceptable to the Placement Agent.
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(g)
The
Company shall not release any Offering documents or the Subscription Documents
unless they are reasonably acceptable to the Placement Agent.
(h)
Except as described in the SEC Reports or the Subscription Documents, all
Permits will be valid on the Issuance Date, the Company shall in all material
respects be complying therewith and there shall be no proceedings pending,
or to
the knowledge of the Company threatened, seeking to cancel, terminate, suspend
or limit any such Permits.
(i)
At
each Issuance Date, the Company shall not have failed to qualify to do business
as a
foreign
corporation in any jurisdiction where required, except where failure to so
qualify would not have a Material Adverse Effect or where any qualification
is
required solely as a result of conducting business over the
Internet.
(j)
At
the Commencement Date and at each Issuance Date, the Company will be validly
existing as a corporation in good standing under the laws of the state of its
incorporation, having corporate power and authority to own its properties and
conduct its business, and will have a capitalization as described in the SEC
Reports. Other than as described in the Subscription Documents or the SEC
Reports, there are no outstanding options, warrants, script rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities,
rights or obligations convertible into or exchangeable for, or giving any person
or entity any right to subscribe for or acquire, any shares of Common Stock,
or
contracts, commitments, understandings or arrangements by which the Company
or
any Material Subsidiary is or may become bound to issue additional shares of
Common Stock, or securities or rights convertible or exchangeable into shares
of
Common Stock. Following the date of publication of the Subscription Documents
and prior to the first Issuance Date, the only additional securities issued
in
addition to those described in the previous sentence shall be the Equity.
(k)
At
each Closing, (i) the Equity will conform, in all material respects, to all
statements with regard thereto contained in the Subscription Documents, (ii)
the
Equity shall have been duly and validly authorized by proper corporate
authority, (iii) each portion of the Equity, when issued, exercised and/or
paid
for (as applicable), or otherwise earned, each in accordance with its terms,
will be validly issued, fully paid and nonassessable and (iv) all shares of
Common Stock that comprise the Equity shall have been duly and validly reserved
for issuance. The Company shall ensure that all exercises properly requested
shall be effected promptly by the Company.
SECTION
5. Indemnification.
(a) The
Company hereby agrees to indemnify and hold harmless the Placement Agent, its
directors, officers, agents, employees, members, affiliates, counsel and each
other person or entity who controls the Placement Agent within the meaning
of
Section 15 of the Securities Act (collectively, the “Agent Indemnified Parties”)
from and against any and all losses, claims, damages or liabilities (or actions
in respect thereof), joint or several, to which they or any of them may become
subject under the Securities Act or any other statute or at common law, and
to
reimburse such Agent Indemnified Parties for any reasonable legal or other
expense (including the cost of any investigation and preparation) incurred
by
them in connection with any litigation, whether or not resulting in any
liability, but only insofar as such losses, claims, liabilities and litigation
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of a material fact required to be stated in the Subscription
Documents, or omission to state therein a material fact necessary in order
to
make the statements therein, in the light of the circumstances under which
they
are made, not misleading (including, but not limited to, any documents deemed
to
be incorporated into the Subscription Documents by reference), (ii) any breach
by the Company of any representation, warranty or covenant contained herein,
(iii) any matter otherwise relating to, arising out of or in connection with
the
Offering or (iv) Placement Agent’s service as Placement Agent hereunder;
provided, however, that the indemnity provisions contained in this subsection
(a) shall not apply to (x) amounts paid in settlement of any such litigation
if
such settlement is effected without the consent of the Company (which shall
not
be unreasonably withheld, delayed or denied), or (y) the Placement Agent or
any
other Agent Indemnified Parties in respect of any such losses, claims, damages,
liabilities or actions (A) arising out of, or based upon any such untrue
statement or alleged untrue statement, or any such omission or alleged omission,
if such statement or omission was made in reliance upon information furnished
in
writing to the Company by the Placement Agent or such Agent Indemnified Parties
specifically for use in connection with the preparation of the Subscription
Documents or any amendment thereof or supplement thereto or (B) arising from
the
willful misconduct or gross negligence of the Placement Agent or any other
Agent
Indemnified Party.
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(b) The
Placement Agent hereby agrees to indemnify and hold harmless the Company, its
directors, officers, agents, employees, members, affiliates, counsel and each
other person or entity who controls the Company within the meaning of Section
15
of the Securities Act (collectively, the “Company Indemnified Parties”) from and
against any and all losses, claims, damages or liabilities (or actions in
respect thereof), joint or several, to which they or any of them may become
subject under the Securities Act or any other statute or at common law, and
to
reimburse such Company Indemnified Parties for any reasonable legal or other
expense (including the cost of any investigation and preparation) incurred
by
them in connection with any litigation, whether or not resulting in any
liability, but only insofar as such losses, claims, liabilities and litigation
arise out of or are based upon Placement Agent’s service as Placement Agent
hereunder; provided, however, that the indemnity provisions contained in this
subsection (b) shall only apply to losses, claims, damages, liabilities or
actions arising from the willful misconduct or gross negligence of the Placement
Agent or any other Agent Indemnified Party and shall not apply to amounts paid
in settlement of any such litigation if such settlement is effected without
the
consent of the Placement Agent (which shall not be unreasonably withheld,
delayed or denied).
(c) Each
party will reimburse all the other’s Indemnified Parties for all reasonable
expenses (including, but not limited to, reasonable fees and disbursements
of
counsel for the applicable Indemnified Parties) incurred by any such Indemnified
Parties in connection with investigating, preparing and defending any such
action or claim, whether or not in connection with pending or threatened
litigation in connection with the transaction to which an Indemnified Party
is a
party, as such expenses are incurred or paid. Each party agrees, within thirty
(30) days of receipt, to notify the other party in writing of the receipt of
written notice of the commencement of any action against it or against any
other
Indemnified Parties, in respect of which indemnity may be sought from the other
party on account of the indemnity provisions contained in this Section 5. In
case any such action shall be brought against the any Indemnified Parties,
the
indemnifying party shall be entitled to participate in (and, to the extent
that
it shall wish, to direct) the defense thereof at its own expense, but such
defense shall be conducted by counsel reasonably satisfactory to the Indemnified
Parties.
(d) The
indemnity provisions set forth herein, and the representations and warranties
of
each party set forth in this Agreement, shall remain operative and in full
force
and effect, regardless of any investigation made by or on behalf of the other
party, subject to the limitations contained herein, and shall survive the
delivery of the Units, and any successor of any Indemnified Parties shall be
entitled to the benefit of the respective indemnity provisions.
(e) In
order
to provide for just and equitable contribution in any case in which (i) any
person entitled to indemnification under this Section 5 makes claim for
indemnification pursuant hereto 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 this Section 5 provides for indemnification in such case, or (ii)
contribution under the Securities Act may be required on the part of any such
person in circumstances for which indemnification is provided under this Section
5, then and in each such case, the Company and the Placement Agent shall
contribute to the aggregate losses, claims, damages or liabilities to which
they
may be subject (after any contribution from others) in such proportion so that
the Placement Agent is responsible for an aggregate of seven percent (7.0%)
of
the gross proceeds received by the Company on account of the sale of Units
by
the Placement Agent (being the Placement Agent’s cash commission with respect to
such Units), and the Company is responsible for the remaining portion; provided
however, that in any such case, no person guilty of a fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
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(f) Promptly
after receipt by any party to this Agreement (or its representative) of notice
of the commencement of any action, suit or proceeding, such party will, if
a
claim for contribution in respect thereof is to be made against another party
(the “Contributing Party”), notify the Contributing Party in writing of the
commencement thereof, but the omission to so notify the Contributing Party
will
not relieve it from any liability which it may have to any other party other
than for contribution hereunder. In case any such action, suit or proceeding
is
brought against any party and such party so notifies a Contributing Party or
his
or its representative of the commencement thereof within the aforesaid period,
the Contributing Party will be entitled to participate therein, with the
notifying party and any other Contributing Party similarly notified. Any such
Contributing Party shall not be liable to any party seeking contribution on
account of any settlement of any claim, action or proceeding effected by such
party seeking contribution without the written consent of such Contributing
Party. The contribution provisions contained in this Section 5 are in addition
to any other rights or remedies which the Company and the Placement Agent may
have hereunder or otherwise.
SECTION
6. Effectiveness
of Agreement.
This
Agreement shall become effective as of the date hereof.
SECTION
7. Conditions
of the Placement Agent’s Obligations.
The
Placement Agent’s obligation to act as the agent of the Company hereunder, and
the Placement Agent's obligation to use its best efforts to find purchasers
for
the Units, shall be subject to the satisfactory completion of its due diligence
examination and the accuracy, as of each Issuance Date, of the representations
and warranties on the part of the Company herein contained, to the performance
by the Company of all its agreements herein contained, to the fulfillment of
or
compliance by the Company with all covenants and conditions hereof, and to
the
following additional conditions:
(a)
The
Placement Agent shall not have disclosed in writing to the Company that the
Subscription Documents or any amendment 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.
(b)
Between the date hereof and each Issuance Date, the Company shall not have
sustained any loss on account of fire, explosion, flood, accident, calamity
or
other cause, of such character as shall, in the sole discretion of the Placement
Agent, materially adversely affect its business or property.
(c)
Between the date hereof and each Issuance Date, there shall be no litigation
instituted, or to the knowledge of the Company threatened, against the Company
and there shall be no proceeding instituted or threatened against the Company
or
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 have a Material Adverse Effect.
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(d)
During the period subsequent to the Commencement Date and prior to each Issuance
Date, the Company (i) shall have conducted its business in the usual and
ordinary manner as the same was being conducted on the Commencement Date and
(ii) the Company shall not have suffered or experienced any Material Adverse
Effect.
(e)
The
authorization of the Units, the Placement Agent Warrants, the Equity, the
Subscription Documents, and all corporate proceedings and other legal matters
incident thereto and to this Agreement shall be reasonably satisfactory in
all
material respects to counsel to the Placement Agent.
(f)
The
Company shall have furnished to the Placement Agent the opinion of its counsel,
that:
(i)
The
Company is a validly existing corporation in good standing under the laws of
the
state of its incorporation with full corporate power and authority to enter
into
this Agreement and perform its obligations hereunder, and the Company is in
good
standing as a foreign corporation in the jurisdictions where it is qualified
to
do business and where its business requires such qualification.
(ii)
The
Company has an authorized capitalization as described in the Subscription
Documents. The Units, Additional Warrants and Placement Agent Warrants are
in
due and proper form and conform in all material respects to the rights set
forth
in the instruments defining the same. Except as set forth in the Subscription
Documents or in the Company’s filings with the SEC, no direct or indirect rights
to acquire Common Stock exist.
(iii)
The
Equity has been duly and validly issued and are fully paid and does not have
any
preemptive rights applicable thereto; and all of the Common Stock underlying
the
Equity has been duly authorized, reserved for issuance and, upon payment or
conversion therefor (as applicable) in accordance with the terms of the
applicable security, will be duly and validly issued, fully paid and
non-assessable and will have no preemptive rights applicable
thereto.
(iv)
This
Agreement, the Subscription Documents and all transactions contemplated hereby
and thereby have been duly authorized, executed and delivered by the Company
and
are valid and binding obligations of the Company legally enforceable against
the
Company in accordance with its terms except as enforceability may be limited
by
bankruptcy, insolvency, reorganization and other laws of general applicability
relating to or affecting creditors’ rights now or hereafter in effect, and to
general equitable principles.
(v)
Neither the execution, delivery or performance of this Agreement nor the
consummation of the transactions herein contemplated, nor compliance with the
terms hereof by the Company do or will conflict with or result in a breach
of
any of the terms or provisions of, or constitute a default under, the articles
of incorporation, as amended, or the bylaws, as amended, of the Company, any
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 assets or properties is bound,
or any law, order, rule, regulation, judgment, writ, injunction or decree of
any
government, governmental instrumentality or court, domestic or foreign, having
jurisdiction over the Company or its business or any of its properties, the
violation of which could prevent the Company from performing its obligations
hereunder or otherwise materially adversely affect the Company; and no consent,
approvals, authorizations or orders of agencies, officers or other regulatory
authorities are necessary for the valid authorization, issue or sale of the
Equity, and the performance by the Company of this Agreement and its
consummation of the transactions contemplated hereby and under the Subscription
Documents, except under state securities or Blue Sky Laws, as to which no
opinion need be expressed.
9
(vi) There
are
no actions, suits or proceedings at law or in equity pending or threatened,
against the Company and there are no proceedings pending or threatened against
the Company before or by any federal or state commission, regulatory body or
administrative agency or other governmental body wherein, either in any case
or
in the aggregate, an unfavorable ruling, decision or finding could materially
adversely affect the business, franchise, licenses, permits, operations,
financial condition or income of the Company which are not disclosed in the
Subscription Documents.
(vii)
The
issuance of the Equity is exempt from registration under the Securities Act
of
1933, as amended.
(g)
The
Company shall have furnished to the Placement Agent a certificate of the Chief
Executive Officer and the Chief Financial Officer of the Company dated as of
each Issuance Date, in the form attached hereto as Exhibit A.
All
the
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 of the Placement
Agent, whose approval shall not be unreasonably withheld.
SECTION
8. Termination.
(a)
This
Agreement may be terminated by the Placement Agent by notice to the Company
in
the event that the Company shall have failed or been unable to comply with
any
of the terms, conditions or provisions of this Agreement on the part of the
Company to be performed, complied with or fulfilled within the respective times
herein provided for, unless compliance therewith or performance or satisfaction
thereof shall have been expressly waived by the Placement Agent in
writing.
(b)
This
Agreement may be terminated by the Placement Agent by notice to the Company
at
any time if, in the sole judgment of the Placement Agent, the Offering or the
sale or the payment for or the delivery of the Units is rendered impracticable
or inadvisable because (i) additional material governmental restrictions not
in
force and effect on the date hereof shall have been imposed upon trading in
securities generally, or minimum or maximum prices shall have been generally
established, or trading in securities generally on the Over-The-Counter Bulletin
Board shall have been suspended or a general banking moratorium shall have
been
established by federal or New York State authorities, (ii) a war, major
hostilities, terrorist or similar activity, act of God or other calamity shall
have occurred which materially adversely affects the ability of the Placement
Agent to perform its obligations hereunder, (iii) of a Material Adverse Effect
or (iv) the Placement Agent, in its sole discretion, shall be dissatisfied
with
the results of its due diligence investigation.
(c)
Any
termination of this Agreement pursuant to this section shall be without
liability of any character (including, but not limited to, loss of anticipated
profits or consequential damages) on the part of any party hereto, except that
the Company shall remain obligated to pay the costs and expenses provided to
be
paid by it specified in Section 4(e) through the date of termination, and the
Company shall be obligated to pay all losses, claims, damages or liabilities,
joint or several, payable by the Company under Section 5(a).
SECTION
9. Finders.
The
Company and the Placement Agent mutually represent that they know of no third
party who rendered any service in connection with the introduction of the
Company to the Placement Agent and who is making a claim against anyone for
a
“finder’s fee” or similar type of fee in connection with the Offering. Each
party hereby indemnifies the other against any claims by any person known to
it
and not known to the other parties hereto, who shall claim to have rendered
services in connection with the introduction of the Company to the Placement
Agent or to have such a claim and who shall make a claim for a fee in connection
therewith.
10
SECTION
10. Placement
Agent’s Representations and Warranties.
The
Placement Agent represents and warrants to and agrees with the Company
that:
(a)
The
Placement Agent is registered as a broker-dealer with the Securities and
Exchange Commission and is a member in good standing of the National Association
of Securities Dealers, Inc. (“NASD”).
(b)
The
Placement Agent will not effect offers or sales of the Units in any jurisdiction
unless it or its representative is duly licensed to effect offers and sales
in
such jurisdiction and the offer and sale of the Units are registered or exempt
from registration in such jurisdiction.
(c)
The
Placement Agent has duly authorized this Agreement and this Agreement is the
valid, binding and enforceable obligation of the Placement Agent.
(d)
In
making any offer of the Units, the Placement Agent will not make any material
representation to potential investors not contained in the Subscription
Documents which has not been authorized in writing by the Company.
(e)
The
Placement Agent shall not utilize any general advertising or solicitation to
offer the Units.
SECTION
11. Notice.
Except
as otherwise expressly provided in this Agreement, (a) whenever notice is
required by the provisions of this Agreement to be given to the Company, such
notice shall be given
in
writing, addressed to the Company at the address set forth in the Subscription
Documents,
with a
copy to ▇▇▇▇▇
▇.
▇▇▇▇▇, Esq., ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇
and (b)
whenever notice is required by the provisions of this Agreement to be given
to
the Placement Agent,
such notice
shall be in writing addressed
to the Placement Agent at the address set forth
above,
with a copy to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇▇ ▇▇▇▇▇,
Esq.
SECTION
12. Miscellaneous.
(a)
This
Agreement is made solely for the benefit of the Placement Agent, the Company
and
any controlling person referred to in Section 15 of the Securities Act, and
their respective successors and assigns, and no other person shall acquire
or
have any right under or by virtue of this Agreement. The term “successor” or the
term “successors and assigns” as used in this Agreement shall not include any
purchaser, as such, of any of the Units.
(b)
The
headings in this Agreement are for reference only and shall not limit or
otherwise affect any of the terms or provisions hereof.
(c)
The
provisions of this Agreement shall be deemed severable, so that if any part,
section or provision hereof shall be declared unlawful or unenforceable, the
remaining parts, sections or provisions hereof shall not be affected thereby
and
shall remain in full force and effect.
11
(d)
This
Agreement shall be deemed to have been drafted jointly by the parties
hereto.
(e)
The
Placement Agent shall have the right to associate itself with such other members
of the NASD and/or foreign investment firms duly licensed, if required, in
their
respective locales offering the Units only offshore to the United States as
additional agents as the Placement Agent may elect, in its sole discretion.
Such
additional agents may become selected dealers subject to this Agreement in
the
sole discretion of the Placement Agent by signing a Selected Dealer Agreement
in
form satisfactory to the Placement Agent. The Placement Agent shall have the
right to share any compensation due to the Placement Agent hereunder, with
such
additional agents and in such amounts as the Placement Agent deems fit, in
its
sole judgment. In addition, such additional agents shall be afforded the same
indemnification by the Company as offered to the Placement Agent
hereunder.
(f)
The
validity, interpretation and construction of this Agreement, and of each part
hereof, will be governed by the local laws of the State of New York, without
giving effect to its conflict of law principles or rules. In the event of a
dispute, the parties hereto agree to be bound by the arbitration procedures
of
the American Arbitration Association, and that such arbitration shall take
place
in the New York City metropolitan area. In actions not involving collection
by a
Placement Agent of compensation and/or reimbursement expenses, the prevailing
party shall be reimbursed by the nonprevailing party for all reasonable
attorney’s fees and costs (including all arbitration costs) incurred by the
prevailing party in resolving such dispute. In any action in which a Placement
Agent seeks compensation and/or reimbursement of expenses, the Company shall
reimburse such Placement Agent for all costs associated with such action
(including but not limited to reasonable attorney fees) as and when the
Placement Agent provides the Company with invoices for such costs and expenses.
(g)
This
Agreement may be executed in counterparts, each of which shall be deemed an
original and all of which together will constitute one and the same instrument.
This Agreement may be executed by facsimile signatures or scanned electronic
mail (e-mail) attachment.
(h)
The
Placement Agent shall not be obligated to provide advice or perform services
to
the Company that are not specifically addressed in this Agreement and/or the
engagement letter between the Company and Westminster Securities Corp. effective
as of April 10, 2006 (the “Engagement Letter”). The obligations of the Placement
Agent described in this Agreement and the Engagement Letter consist solely
of
best efforts services to the Company. In no event shall the Placement Agent
be
required or permitted without express authorization by this Agreement or the
Engagement Letter to make decisions for the Company or to provide legal or
accounting services. All final decisions with respect to acts of the Company
or
its affiliates, whether or not made pursuant to or in reliance upon information
or advice furnished by the Placement Agent hereunder, shall be those of the
Company or such affiliates, and the Placement Agent shall under no circumstances
be liable for any expense incurred or loss suffered by the Company as a
consequence of such decisions.
(i)
This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and authorized assigns. Any attempt by either party
to assign any rights, duties, or obligations which may arise under this
Agreement without the prior written consent of the other party shall be
void.
(j)
This
Agreement and the Engagement Letter contain the entirety of the agreements
between the parties with respect to the subject matters hereof and thereof,
and
neither party is relying on any agreement, representation, warranty, or other
understanding not expressly stated in this Agreement and/or the Engagement
Letter.
12
(k)
The
parties acknowledge that certain provisions of this Agreement must survive
any
termination or expiration thereof in order to be fair and equitable to the
party
to whom any promise or duty to perform is owed under such provision prior to
such termination or expiration of the Agreement. Therefore, the parties agree
that the provisions of Sections 1, 2, 3, 4, 5, 7, 8(c), 9, 10, 11, and 12 shall
survive the termination or expiration of this Agreement for the period required
to meet and satisfy any obligations and promises arising therein and
thereunder
Please
confirm that the foregoing correctly sets forth the Agreement between the
Placement Agent and the Company.
We
hereby
confirm as of the date hereof that the above letter sets forth the agreement
between the Company and us.
|
WESTMINSTER
SECURITIES CORPORATION
|
||
| By: | ||
|
▇▇▇▇ ▇. ▇’▇▇▇▇, Chairman & CEO |
||
13
EXHIBIT
A
FORM
OF OFFICER’S CERTIFICATE
[Date]
Westminster
Securities Corporation
▇▇▇
▇▇▇▇
▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇ ▇▇▇▇▇
Ladies
and Gentlemen:
We,
the
Chief Executive Officer and Chief Financial Officer of TechnoConcepts, Inc.
(the
“Company”), in connection with the execution and delivery by the Company of each
Subscription Agreement (the "Subscription Agreements"), by and among the Company
and the investors identified on each signature page thereto (the “Investors”) as
of the date above (“Closing”), do hereby certify as follows (Capitalized terms
not otherwise defined herein are defined as set forth in the Subscription
Agreements.):
(i)
The
representations and warranties of the Company in each Subscription Agreement
are
true and correct in all material respects at and as of the Closing and the
Company has complied in all material respects with all the agreements and
satisfied all the conditions on its part to be performed or satisfied at or
prior to the Closing.
(ii)
The
Subscription Documents and any amendments and supplements thereto, and all
statements contained therein, are true and correct, and neither the Subscription
Documents nor any amendment or supplement thereto includes any untrue statement
of a material fact or omits to state any material fact required to be stated
therein in light of the circumstances in which they were made or necessary
to
make the statements therein not misleading, and since the Commencement Date,
there has occurred no event required to be set forth in amended or supplemented
Subscription Documents which has not been so set forth.
| Very truly yours, | |||
|
|
|||
|
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Executive Officer
|
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Chief Financial
Officer
|
14