Xenonics Holdings, Inc. 3186 Lionshead Avenue Carlsbad, CA 92010 Attention: Alan P. Magerman, Chairman and CEO Dear Mr. Magerman:
Exhibit 1.1
▇▇▇▇▇ ▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇ Holdings, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Chairman and CEO
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Chairman and CEO
Dear ▇▇. ▇▇▇▇▇▇▇▇:
This agreement (the “Agreement”) constitutes the agreement between EarlyBird Capital,
Inc. (“EarlyBird” or the “Placement Agent”) and Xenonics Holdings, Inc. (the
“Company”), that EarlyBird shall serve as the exclusive placement agent for the Company, on
a reasonable best efforts basis, in connection with the proposed placement (the
“Placement”) of registered securities (the “Securities”) of the Company, including,
but not limited to, shares (the “Shares”) of the Company’s common stock (the “Common
Stock”) and warrants to purchase shares of Common Stock. The terms of such Placement and the
Securities shall be mutually agreed upon by the Company and the purchasers (each, a
“Purchaser” and collectively, the “Purchasers”) and nothing herein constitutes that
EarlyBird would have the power or authority to bind the Company or any Purchaser or an obligation
for the Company to issue any Securities or complete the Placement. This Agreement and the documents
executed and delivered by the Company and the Purchasers in connection with the Placement shall be
collectively referred to herein as the “Transaction Documents.” The date of the closing of
the Placement shall be referred to herein as the “Closing Date.” The Company expressly
acknowledges and agrees that EarlyBird’s obligations hereunder are on a reasonable best efforts
basis only and that the execution of this Agreement does not constitute a commitment by EarlyBird
to purchase the Securities and does not ensure the successful placement of the Securities or any
portion thereof or the success of EarlyBird with respect to securing any other financing on behalf
of the Company.
SECTION 1. COMPENSATION AND OTHER FEES.
As compensation for the services provided by EarlyBird hereunder, the Company agrees to pay to
EarlyBird a cash fee payable immediately upon the closing of the Placement and equal to 8% of the
aggregate gross proceeds raised in the Placement; provided , that if ▇▇▇▇▇ ▇▇▇▇▇ shall participate
in the Placement, the cash fee payable to EarlyBird based upon the amount of his participation
shall be 3.5% and not 8%. The Company has previously advanced EarlyBird the sum of $15,000 for its
out of pocket expenses, which shall be credited against the cash fee. If the Placement does not
close, the Placement Agent shall reimburse the Company for any unused amount of such advance, as
required by FINRA Rule 5110(f)(2)(d).
SECTION 2. REGISTRATION STATEMENT.
The Company represents and warrants to, and agrees with, the Placement Agent that:
(A) The Company has filed with the Securities and Exchange Commission (the
“Commission”) a registration statement on Form S-3 (Registration File No. 333-165577) under
the Securities Act of 1933, as amended (the “Securities Act”), which became effective on
March 30, 2010, for the registration under the Securities Act of the Shares. At the time of such
filing, the Company met the requirements of Form S-3 under the Securities Act. Such registration
statement meets the requirements set forth in Rule 415(a)(1)(x) under the Securities Act and
complies with said Rule. The Company will file with the Commission pursuant to Rule 424(b) under
the Securities Act, and the rules
and regulations (the “Rules and Regulations”) of the Commission promulgated
thereunder, a supplement to the form of
prospectus included in such registration statement relating
to the placement of the Shares and the plan of distribution thereof and has advised the Placement
Agent of all further information (financial and other) with respect to the Company required to be
set forth therein. Such registration statement, including the exhibits thereto, as amended at the
date of this Agreement, is hereinafter called the “Registration Statement”; such prospectus
in the form in which it appears in the Registration Statement is hereinafter called the “Base
Prospectus”; and the supplemented form of prospectus, in the form in which it will be filed
with the Commission pursuant to Rule 424(b) (including the Base Prospectus as so supplemented) is
hereinafter called the “Prospectus Supplement.” Any reference in this Agreement to the
Registration Statement, the Base Prospectus or the Prospectus Supplement shall be deemed to refer
to and include the documents incorporated by reference therein (the “Incorporated
Documents”) pursuant to Item 12 of Form S-3 which were filed under the Securities Exchange Act
of 1934, as amended (the “Exchange Act”), on or before the date of this Agreement, or the issue
date of the Base Prospectus or the Prospectus Supplement, as the case may be; and any reference in
this Agreement to the terms “amend,” “amendment” or “supplement” with respect to the Registration
Statement, the Base Prospectus or the Prospectus Supplement shall be deemed to refer to and include
the filing of any document under the Exchange Act after the date of this Agreement, or the issue
date of the Base Prospectus or the Prospectus Supplement, as the case may be, deemed to be
incorporated therein by reference. All references in this Agreement to financial statements and
schedules and other information that is “contained,” “included,” “described,” “referenced,” “set
forth” or “stated” in the Registration Statement, the Base Prospectus or the Prospectus Supplement
(and all other references of like import) shall be deemed to mean and include all such financial
statements and schedules and other information that is or is deemed to be incorporated by reference
in the Registration Statement, the Base Prospectus or the Prospectus Supplement, as the case may
be. No stop order suspending the effectiveness of the Registration Statement or the use of the
Base Prospectus or the Prospectus Supplement has been issued, and no proceeding for any such
purpose is pending or has been initiated or, to the Company’s knowledge, is threatened by the
Commission. For purposes of this Agreement, “free writing prospectus” has the meaning set
forth in Rule 405 under the Securities Act and the “Time of Sale Prospectus” means the
preliminary prospectus, if any, together with the free writing prospectuses, if any, used in
connection with the Placement, including any documents incorporated by reference therein.
(B) The Registration Statement (and any further documents to be filed with the Commission)
contains all exhibits and schedules as required by the Securities Act. Each of the Registration
Statement and any post-effective amendment thereto, at the time it became effective, complied in
all material respects with the Securities Act and the Exchange Act and the applicable Rules and
Regulations and did not and, as amended or supplemented, if applicable, will not, contain any
untrue statement of a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading. The Base Prospectus, the Time of Sale
Prospectus, if any, and the Prospectus Supplement, each as of its respective date, comply in all
material respects with the Securities Act and the Exchange Act and the applicable Rules and
Regulations. Each of the Base Prospectus, the Time of Sale Prospectus, if any, and the Prospectus
Supplement, as amended or supplemented, did not and will not contain as of the date thereof any
untrue statement of a material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made, not misleading. The
Incorporated Documents, when they were filed with the Commission, conformed in all material
respects to the requirements of the Exchange Act and the applicable Rules and Regulations, and none
of such documents, when they were filed with the Commission, contained any untrue statement of a
material fact or omitted to state a material fact necessary to make the statements therein (with
respect to Incorporated Documents incorporated by reference in the Base Prospectus or Prospectus
Supplement), in light of the circumstances under which they were made not misleading; and any
further documents so filed and incorporated by reference in the Base Prospectus, the Time of Sale
Prospectus, if any, or Prospectus Supplement, when such documents are filed with the Commission,
will
conform in all material respects to the requirements of the Exchange Act and the applicable
Rules and Regulations, as applicable, and will not contain any untrue statement of a material fact
or omit to state a
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material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. No post-effective amendment to the
Registration Statement reflecting any facts or events arising after the date thereof which
represent, individually or in the aggregate, a fundamental change in the information set forth
therein is required to be filed with the Commission. There are no documents required to be filed
with the Commission in connection with the transaction contemplated hereby that (x) have not been
filed as required pursuant to the Securities Act or (y) will not be filed within the requisite time
period. There are no contracts or other documents required to be described in the Base Prospectus,
the Time of Sale Prospectus, if any, or Prospectus Supplement, or to be filed as exhibits or
schedules to the Registration Statement, that have not been described or filed as required.
(C) The Company has delivered, or will as promptly as practicable deliver, to the Placement
Agent complete conformed copies of the Registration Statement and of each consent and certificate
of experts, as applicable, filed as a part thereof, and conformed copies of the Registration
Statement (without exhibits), the Base Prospectus, the Time of Sale Prospectus, if any, and the
Prospectus Supplement, as amended or supplemented, in such quantities and at such places as the
Placement Agent reasonably requests. Neither the Company nor any of its directors and officers has
distributed and none of them will distribute, prior to the Closing Date, any offering material in
connection with the offering and sale of the Shares other than the Base Prospectus, the Time of
Sale Prospectus, if any, the Prospectus Supplement, the Registration Statement, copies of the
documents incorporated by reference therein and any other materials permitted by the Securities
Act.
SECTION 3. REPRESENTATIONS AND WARRANTIES. Except as set forth under the
corresponding section of the Disclosure Schedules, the Registration Statement or the Prospectus
Supplement, all of which shall be deemed a part hereof, the Company hereby makes the
representations and warranties set forth below to the Placement Agent.
(A) Organization and Qualification. All of the direct and indirect subsidiaries
(individually, a “Subsidiary”) of the Company are set forth in the Registration Statement.
The Company owns, directly or indirectly, all of the capital stock or other equity interests of
each Subsidiary free and clear of any “Liens” (which for purposes of this Agreement shall
mean a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or
other restriction), and all the issued and outstanding shares of capital stock of each Subsidiary
are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to
subscribe for or purchase securities. The Company and each of the Subsidiaries is an entity duly
incorporated or otherwise organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization (as applicable), with the requisite power and
authority to own and use its properties and assets and to carry on its business as currently
conducted. Neither the Company nor any Subsidiary is in violation or default of any of the
provisions of its respective certificate or articles of incorporation, bylaws or other
organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to
conduct business and is in good standing as a foreign corporation or other entity in each
jurisdiction in which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good standing, as the
case may be, could not have or reasonably be expected to result in (i) a material adverse effect on
the legality, validity or enforceability of any Transaction Document, (ii) a material adverse
effect on the results of operations, assets, business, prospects or condition (financial or
otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse
effect on the Company’s ability to perform in any material respect on a timely basis its
obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse
Effect”) and no “Proceeding” (which for purposes of this Agreement shall mean any
action, claim, suit, investigation or proceeding (including, without limitation, an investigation
or partial proceeding, such as a
deposition), whether commenced or threatened) has been instituted in any such jurisdiction
revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or
qualification.
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(B) Authorization; Enforcement. The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by each of the Transaction
Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and
delivery of each of the Transaction Documents by the Company and the consummation by it of the
transactions contemplated thereby have been duly authorized by all necessary action on the part of
the Company and no further action is required by the Company, its board of directors or its
stockholders in connection therewith other than in connection with the “Required Approvals”
(as defined in subsection 3(D) below). Each Transaction Document has been (or upon delivery will
have been) duly executed by the Company and, when delivered in accordance with the terms hereof and
thereof, will constitute the valid and binding obligation of the Company enforceable against the
Company in accordance with its terms except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting enforcement of
creditors’ rights generally and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies.
(C) No Conflicts. The execution, delivery and performance of the Transaction
Documents by the Company, the issuance and sale of the Securities and the consummation by the
Company of the other transactions contemplated hereby and thereby do not and will not (i) conflict
with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of
incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or
constitute a default (or an event that with notice or lapse of time or both would become a default)
under, result in the creation of any Lien upon any of the properties or assets of the Company or
any Subsidiary, or give to others any rights of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility,
debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other
understanding to which the Company or any Subsidiary is a party or by which any property or asset
of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals,
conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction,
decree or other restriction of any court or governmental authority to which the Company or a
Subsidiary is subject (including federal and state securities laws and regulations), or by which
any property or asset of the Company or a Subsidiary is bound or affected; except in the case of
each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a
Material Adverse Effect.
(D) Filings, Consents and Approvals. The Company is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or make any filing or registration
with, any court or other federal, state, local or other governmental authority or other
“Person” (defined as an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any kind, including, without
limitation, any Trading Market) in connection with the execution, delivery and performance by the
Company of the Transaction Documents, other than such filings as are required to be made under
applicable Federal and state securities laws (collectively, the “Required Approvals”).
(E) Issuance of the Securities; Registration. The Securities are duly authorized and,
when issued and paid for in accordance with the applicable Transaction Documents, will be duly and
validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company
other than restrictions on transfer provided for in the Transaction Documents. The Company has
reserved from its duly authorized capital stock the maximum number of shares of Common Stock
issuable pursuant to the Transaction Documents. The issuance by the Company of the Securities has
been registered under the Securities Act and all of the Securities are freely transferable and
tradable by the Purchasers without
restriction (other than any restrictions arising solely from an act or omission of a
Purchaser). The Securities are being issued pursuant to the Registration Statement and the
issuance of the Securities has been registered by the Company under the Securities Act. The
Registration Statement is effective and available for the issuance of the Securities thereunder and
the Company has not received any notice that the Commission has issued or intends to issue a
stop-order with respect to the Registration Statement or that the Commission otherwise has
suspended or
4
withdrawn the effectiveness of the Registration Statement, either temporarily or
permanently, or intends or has threatened in writing to do so. The “Plan of Distribution” section
under the Registration Statement permits the issuance and sale of the Securities hereunder. Upon
receipt of the Securities, the Purchasers will have good and marketable title to such Securities
and the Securities will be freely tradable on the NYSE Amex (the “Trading Market”).
(F) Capitalization. The capitalization of the Company is as set forth in the
Registration Statement. The Company has not issued any capital stock since its most recently filed
periodic report under the Exchange Act, other than pursuant to the exercise of employee stock
options under the Company’s stock option plans, the issuance of shares of Common Stock to employees
pursuant to the Company’s employee stock purchase plan and pursuant to the conversion or exercise
of securities exercisable, exchangeable or convertible into Common Stock (“Common Stock
Equivalents”). No Person has any right of first refusal, preemptive right, right of
participation, or any similar right to participate in the transactions contemplated by the
Transaction Documents. Except as a result of the purchase and sale of the Securities, 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 exercisable or
exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common
Stock, or contracts, commitments, understandings or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock
Equivalents. The issuance and sale of the Securities will not obligate the Company to issue shares
of Common Stock or other securities to any Person (other than the Purchasers) and will not result
in a right of any holder of Company securities to adjust the exercise, conversion, exchange or
reset price under such securities. All of the outstanding shares of capital stock of the Company
are validly issued, fully paid and nonassessable, have been issued in compliance with all federal
and state securities laws, and none of such outstanding shares was issued in violation of any
preemptive rights or similar rights to subscribe for or purchase securities. No further approval
or authorization of any stockholder, the Board of Directors of the Company or others is required
for the issuance and sale of the Securities. There are no stockholders agreements, voting
agreements or other similar agreements with respect to the Company’s capital stock to which the
Company is a party or, to the knowledge of the Company, between or among any of the Company’s
stockholders.
5
(G) SEC Reports; Financial Statements. The Company has complied in all material
respects with requirements to file all reports, schedules, forms, statements and other documents
required to be filed by it under the Securities Act and the Exchange Act, including pursuant to
Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period
as the Company was required by law to file such material) (the foregoing materials, including the
exhibits thereto and documents incorporated by reference therein, being collectively referred to
herein as the “SEC Reports”) on a timely basis or has received a valid extension of such
time of filing and has filed any such SEC Reports prior to the expiration of any such extension.
As of their respective dates, the SEC Reports complied in all material respects with the
requirements of the Securities Act and the Exchange Act and the rules and regulations of the
Commission promulgated thereunder, and none of the SEC Reports, when filed, 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 the light of the circumstances under which
they were made, not misleading. The financial statements of the Company included in the SEC
Reports comply in all material respects with applicable accounting requirements and the rules and
regulations of the Commission with respect thereto as in effect at the time of filing. Such
financial statements have been prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis during the periods
involved (“GAAP”), except as may be otherwise specified in such financial statements
or the notes thereto and except that unaudited financial statements may not contain all footnotes
required by GAAP, and fairly present in all material respects the financial position of the Company
and its consolidated subsidiaries as of and for the dates thereof and the results of operations and
cash flows for the periods then ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.
(H) Material Changes; Undisclosed Events, Liabilities or Developments. Since the date
of the latest audited financial statements included within the SEC Reports, except as specifically
disclosed in the SEC Reports, (i) there has been no event, occurrence or development that has had
or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has
not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued
expenses incurred in the ordinary course of business consistent with past practice and (B)
liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or
required to be disclosed in filings made with the Commission, (iii) the Company has not altered its
method of accounting, (iv) the Company has not declared or made any dividend or distribution of
cash or other property to its stockholders or purchased, redeemed or made any agreements to
purchase or redeem any shares of its capital stock and (v) the Company has not issued any equity
securities to any officer, director or “Affiliate” (as defined in SEC Rule 405), except
pursuant to existing Company stock option plans. The Company does not have pending before the
Commission any request for confidential treatment of information. Except for the issuance of the
Securities contemplated by this Agreement or as set forth on Schedule 3(H), no event, liability or
development has occurred or exists with respect to the Company or its Subsidiaries or their
respective business, properties, operations or financial condition, that would be required to be
disclosed by the Company under applicable securities laws at the time this representation is made
that has not been publicly disclosed one trading day prior to the date that this representation is
made.
(I) Litigation. There is no action, suit, inquiry, notice of violation, Proceeding or
investigation pending or, to the knowledge of the Company, threatened against or affecting the
Company, any Subsidiary or any of their respective properties before or by any court, arbitrator,
governmental or administrative agency or regulatory authority (federal, state, county, local or
foreign) (collectively, an “Action”) which (i) adversely affects or challenges the
legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii)
could, if there were an unfavorable decision, have or reasonably be expected to result in a
Material Adverse Effect. Neither the Company nor any Subsidiary, nor any director or officer
thereof, is or has been the subject of any Action involving a claim of violation of or liability
under federal or state securities laws or a claim of breach of fiduciary duty. There has not been,
and to the knowledge of the Company, there is not pending or contemplated, any investigation by the
Commission involving the Company or any current or former director or officer of the Company. The
Commission has not issued any stop order or other order suspending the effectiveness of any
registration statement filed by the Company or any Subsidiary under the
6
Exchange Act or the
Securities Act. None of the Company’s or its Subsidiaries’ employees is a member of a union that
relates to such employee’s relationship with the Company, and neither the Company or any of its
Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries
believe that their relationships with their employees are good. No executive officer, to the
knowledge of the Company, is, or is now expected to be, in violation of any material term of any
employment contract, confidentiality, disclosure or proprietary information agreement or
non-competition agreement, or any other contract or agreement or any restrictive covenant, and the
continued employment of each such executive officer does not subject the Company or any of its
Subsidiaries to any liability with respect to any of the foregoing matters. The Company and its
Subsidiaries are in compliance with all U.S. federal, state, local and foreign laws and regulations
relating to employment and employment practices, terms and conditions of employment and wages and
hours, except where the failure to be in compliance could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(J) Labor Relations. No material labor dispute exists or, to the knowledge of the
Company, is imminent with respect to any of the employees of the Company which could reasonably be
expected to result in a Material Adverse Effect.
(K) Compliance. Neither the Company nor any Subsidiary (i) is in default under or in
violation of (and no event has occurred that has not been waived that, with notice or lapse of time
or both, would result in a default by the Company or any Subsidiary under), nor has the Company or
any Subsidiary received notice of a claim that it is in default under or that it is in violation
of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a
party or by which it or any of its properties is bound (whether or not such default or violation
has been waived), (ii) is in violation of any order of any court, arbitrator or governmental body,
or (iii) is or has been in violation of any statute, rule or regulation of any governmental
authority, including without limitation all foreign, federal, state and local laws applicable to
its business and all such laws that affect the environment, except in each case as could not have a
Material Adverse Effect.
(L) Regulatory Permits. The Company and the Subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state, local or foreign regulatory
authorities necessary to conduct their respective businesses as described in the SEC Reports,
except where the failure to possess such permits could not have or reasonably be expected to result
in a Material Adverse Effect (“Material Permits”), and neither the Company nor any
Subsidiary has received any notice of proceedings relating to the revocation or modification of any
Material Permit.
(M) Title to Assets. The Company and the Subsidiaries have good and marketable title
in fee simple to all real property owned by them that is material to the business of the Company
and the Subsidiaries and good and marketable title in all personal property owned by them that is
material to the business of the Company and the Subsidiaries, in each case free and clear of all
Liens, except for Liens as do not materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of such property by the Company and
the Subsidiaries and Liens for the payment of federal, state or other taxes, the payment of which
is neither delinquent nor subject to penalties. Any real property and facilities held under lease
by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases
with which the Company and the Subsidiaries are in compliance.
(N) Patents and Trademarks. The Company and the Subsidiaries have, or have rights to
use, all patents, patent applications, trademarks, trademark applications, service marks, trade
names, trade secrets, inventions, copyrights, licenses and other similar intellectual property
rights necessary or material for use in connection with their respective businesses as described in
the SEC Reports and which the failure to so have could have a Material Adverse Effect
(collectively, the “Intellectual Property Rights”). Neither the Company nor any Subsidiary
has received notice (written or otherwise) that the Intellectual Property Rights used by the
Company or any Subsidiary violates or infringes upon the rights of any third party. To the
knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no
existing infringement by
7
another Person of any of the Intellectual Property Rights of others. The
Company and its Subsidiaries have taken reasonable security measures to protect the secrecy,
confidentiality and value of all of their intellectual properties, except where failure to do so
could not, individually or in the aggregate, reasonably be expected to have a Material Adverse
Effect.
(O) Insurance. The Company and the Subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as are prudent and
customary in the businesses in which the Company and the Subsidiaries are engaged, including, but
not limited to, directors and officers insurance coverage. Neither the Company nor any Subsidiary
has any reason to believe that it will not be able to renew its existing insurance coverage as and
when such coverage expires
or to obtain similar coverage from similar insurers as may be necessary to continue its
business without a significant increase in cost.
(P) Transactions With Affiliates and Employees. Except as set forth in the SEC
Reports, none of the officers or directors of the Company and, to the knowledge of the Company,
none of its employees are presently a party to any transaction with the Company or any Subsidiary
(other than for services as employees, officers and directors), including any contract, agreement
or other arrangement providing for the furnishing of services to or by, providing for rental of
real or personal property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any entity in which any officer,
director, or any such employee has a substantial interest or is an officer, director, trustee or
partner, other than for (i) payment of salary or consulting fees for services rendered, (ii)
reimbursement of expenses incurred on behalf of the Company and (iii) other employee benefits,
including stock option agreements under any stock option plan of the Company.
(Q) ▇▇▇▇▇▇▇▇-▇▇▇▇▇. The Company is in material compliance with all provisions of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 which are applicable to it as of the date hereof and of the closing date
of the Placement.
(R) Certain Fees. Except as otherwise provided in this Agreement, no brokerage or
finder’s fees or commissions are or will be payable by the Company to any broker, financial advisor
or consultant, finder, placement agent, investment banker, bank or other Person with respect to the
transactions contemplated by the Transaction Documents. The Purchasers shall have no obligation
with respect to any fees or with respect to any claims made by or on behalf of other Persons for
fees of a type contemplated in this Section that may be due in connection with the transactions
contemplated by the Transaction Documents.
(S) Trading Market Rules. The issuance and sale of the Securities hereunder does not
contravene the rules and regulations of the Trading Market.
(T) Investment Company. The Company is not, and is not an Affiliate of, and
immediately after receipt of payment for the Securities, will not be or be an Affiliate of, an
“investment company” within the meaning of the Investment Company Act of 1940, as amended. The
Company shall conduct its business in a manner so that it will not become subject to the Investment
Company Act.
(U) Registration Rights. No Person has any right to cause the Company to effect the
registration under the Securities Act of any securities of the Company.
(V) Listing and Maintenance Requirements. The Company’s Common Stock is registered
pursuant to Section 12(b) of the Exchange Act, and the Company has taken no action designed to, or
which to its knowledge is likely to have the effect of, terminating the registration of the Common
Stock under the Exchange Act nor has the Company received any notification that the Commission is
contemplating terminating such registration. Except as described in the Registration Statement,
the Company has not, in the 12 months preceding the date hereof, received notice from any Trading
Market on which the Common Stock
8
is or has been listed or quoted to the effect that the Company is
not in compliance with the listing or maintenance requirements of such Trading Market. The Company
is, and has no reason to believe that it will not in the foreseeable future continue to be, in
compliance with all such listing and maintenance requirements.
(W) Solvency. Based on the financial condition of the Company as of the Closing Date
after giving effect to the receipt by the Company of the proceeds from the sale of the Securities
hereunder, (i) the fair saleable value of the Company’s assets exceeds the amount that will be
required to be paid on or in
respect of the Company’s existing debts and other liabilities (including known contingent
liabilities) as they mature; (ii) the Company’s assets do not constitute unreasonably small capital
to carry on its business for the current fiscal year as now conducted and as proposed to be
conducted including its capital needs taking into account the particular capital requirements of
the business conducted by the Company, and projected capital requirements and capital availability
thereof; and (iii) the current cash flow of the Company, together with the proceeds the Company
would receive, were it to liquidate all of its assets, after taking into account all anticipated
uses of the cash, would be sufficient to pay all amounts on or in respect of its debt when such
amounts are required to be paid. The Company does not intend to incur debts beyond its ability to
pay such debts as they mature (taking into account the timing and amounts of cash to be payable on
or in respect of its debt). The Company has no knowledge of any facts or circumstances which lead
it to believe that it will file for reorganization or liquidation under the bankruptcy or
reorganization laws of any jurisdiction within one year from the Closing Date. The SEC Reports set
forth as of the dates thereof all outstanding secured and unsecured Indebtedness of the Company or
any Subsidiary, or for which the Company or any Subsidiary has commitments. For the purposes of
this Agreement, “Indebtedness” shall mean (a) any liabilities for borrowed money or amounts
owed in excess of $100,000 (other than trade accounts payable incurred in the ordinary course of
business), (b) all guaranties, endorsements and other contingent obligations in respect of
Indebtedness of others, whether or not the same are or should be reflected in the Company’s balance
sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of business; and (c) the
present value of any lease payments in excess of $50,000 due under leases required to be
capitalized in accordance with GAAP. Neither the Company nor any Subsidiary is in default with
respect to any Indebtedness.
(X) Tax Status. Except for matters that would not, individually or in the aggregate,
have or reasonably be expected to result in a Material Adverse Effect, the Company and each
Subsidiary has filed all necessary federal, state and foreign income and franchise tax returns and
has paid or accrued all taxes shown as due thereon, and the Company has no knowledge of a tax
deficiency which has been asserted or threatened against the Company or any Subsidiary.
(Y) Foreign Corrupt Practices. Neither the Company, nor to the knowledge of the
Company, any agent or other person acting on behalf of the Company, has (i) directly or indirectly,
used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related
to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to any foreign or domestic political parties or campaigns from
corporate funds, (iii) failed to disclose fully any contribution made by the Company (or made by
any person acting on its behalf of which the Company is aware) which is in violation of law, or
(iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977,
as amended.
(Z) Accountants. The Company’s accountants are named in the Prospectus Supplement.
To the knowledge of the Company, such accountants are a registered public accounting firm as
required by the Securities Act.
(AA) Regulation M Compliance. The Company has not, and to its knowledge no one acting
on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in
the stabilization or manipulation of the price of any security of the Company to facilitate the
sale or resale of any of the Securities, (ii) sold, bid for, purchased, or, paid any compensation
for soliciting purchases of, any of the
9
Securities (other than for the Placement Agent’s placement
of the Securities), or (iii) paid or agreed to pay to any person any compensation for soliciting
another to purchase any other securities of the Company.
(BB) Approvals. The issuance and listing on the Trading Market of the Shares requires
no further approvals, including but not limited to, the approval of shareholders.
(CC) FINRA Affiliations. There are no affiliations with any FINRA member firm among
the Company’s officers, directors or, to the knowledge of the Company, any five percent (5%) or
greater stockholder of the Company, except as set forth in the Base Prospectus.
SECTION 4. ENGAGEMENT TERM. EarlyBird’s engagement hereunder will be for the
period of 30 days. The engagement may be terminated by either the Company or EarlyBird at any time
upon 10 days’ written notice. Notwithstanding anything to the contrary contained herein, the
provisions in this Agreement concerning confidentiality, indemnification and contribution will
survive any expiration or termination of this Agreement. Upon any termination of this Agreement,
the Company’s obligation to pay EarlyBird any fees actually earned on closing of the Offering and
otherwise payable under Section 1 shall survive any expiration or termination of this Agreement.
SECTION 5. EARLYBIRD’S INFORMATION. The Company agrees that any information or
advice rendered by EarlyBird in connection with this engagement is for the confidential use of the
Company only in their evaluation of the Placement and, except as otherwise required by law, the
Company will not disclose or otherwise refer to the advice or information in any manner without
EarlyBird’s prior written consent.
SECTION 6. NO FIDUCIARY RELATIONSHIP. This Agreement does not create, and shall
not be construed as creating rights enforceable by any person or entity not a party hereto, except
those entitled hereto by virtue of the indemnification provisions hereof. The Company acknowledges
and agrees that EarlyBird is not and shall not be construed as a fiduciary of the Company and shall
have no duties or liabilities to the equity holders or the creditors of the Company or any other
person by virtue of this Agreement or the retention of EarlyBird hereunder, all of which are hereby
expressly waived.
SECTION 7. CLOSING. The obligations of the Placement Agent and the closing of the
sale of the Securities hereunder are subject to the accuracy, when made and on the Closing Date, of
the representations and warranties on the part of the Company and its Subsidiaries contained
herein, to the accuracy of the statements of the Company and its Subsidiaries made in any
certificates pursuant to the provisions hereof, to the performance by the Company and its
Subsidiaries of their obligations hereunder, and to each of the following additional terms and
conditions:
(A) No stop order suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been initiated or threatened by the
Commission, and any request for additional information on the part of the Commission (to be
included in the Registration Statement, the Base Prospectus or the Prospectus Supplement or
otherwise) shall have been complied with to the reasonable satisfaction of the Placement Agent.
(B) The Placement Agent shall not have discovered and disclosed to the Company on or prior to
the Closing Date that the Registration Statement, the Base Prospectus or the Prospectus Supplement
or any amendment or supplement thereto contains an untrue statement of a fact which, in the opinion
of counsel for the Placement Agent, is material or omits to state any 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.
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(C) All corporate proceedings and other legal matters incident to the authorization, form,
execution, delivery and validity of each of this Agreement, the Securities, the Registration
Statement, the Base Prospectus and the Prospectus Supplement and all other legal matters relating
to this Agreement and the transactions contemplated hereby shall be reasonably satisfactory in all
material respects to
counsel for the Placement Agent, and the Company shall have furnished to such counsel all
documents and information that they may reasonably request to enable them to pass upon such
matters.
(D) The Placement Agent shall have received from outside counsel to the Company such counsel’s
written opinion, addressed to the Placement Agent and the Purchasers dated as of the Closing Date,
in form and substance reasonably satisfactory to the Placement Agent, which opinion shall include a
negative assurance representation from such counsel.
(E) Neither the Company nor any of its Subsidiaries shall have sustained since the date of the
latest audited financial statements included or incorporated by reference in the Base Prospectus,
any loss or interference with its business from fire, explosion, flood, terrorist act or other
calamity, whether or not covered by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth in or contemplated by the Base Prospectus and
(ii) since such date there shall not have been any change in the capital stock or long-term debt of
the Company or any of its Subsidiaries or any change, or any development involving a prospective
change, in or affecting the business, general affairs, management, financial position,
stockholders’ equity, results of operations or prospects of the Company and its Subsidiaries,
otherwise than as set forth in or contemplated by the Base Prospectus, the effect of which, in any
such case described in clause (i) or (ii), is, in the judgment of the Placement Agent, so material
and adverse as to make it impracticable or inadvisable to proceed with the sale or delivery of the
Securities on the terms and in the manner contemplated by the Base Prospectus, the Time of Sale
Prospectus, if any, and the Prospectus Supplement.
(F) The Common Stock is registered under the Exchange Act and, as of the Closing Date, the
Shares shall be listed and admitted and authorized for trading on the Trading Market, and
satisfactory evidence of such actions shall have been provided to the Placement Agent. The Company
shall have taken no action designed to, or likely to have the effect of terminating the
registration of the Common Stock under the Exchange Act or delisting or suspending from trading the
Common Stock from the Trading Market, nor has the Company received any information suggesting that
the Commission or the Trading Market is contemplating terminating such registration or listing.
(G) Subsequent to the execution and delivery of this Agreement, there shall not have occurred
any of the following: (i) trading in securities generally on the New York Stock Exchange, the
Nasdaq Global Market or the NYSE Amex market, or trading in any securities of the Company on any
exchange or in the over-the-counter market, shall have been suspended or minimum or maximum prices
or maximum ranges for prices shall have been established on any such exchange or such market by the
Commission, by such exchange or by any other regulatory body or governmental authority having
jurisdiction, (ii) a banking moratorium shall have been declared by federal or state authorities or
a material disruption has occurred in commercial banking or securities settlement or clearance
services in the United States, (iii) the United States shall have become engaged in hostilities in
which it is not currently engaged, the subject of an act of terrorism, or there shall have been a
declaration of a national emergency or war by the United States, or (iv) there shall have occurred
any other calamity or crisis or any change in general economic, political or financial conditions
in the United States or elsewhere, if the effect of any such event in clause (iii) or (iv) makes
it, in the sole judgment of the Placement Agent, impracticable or inadvisable to proceed with the
sale or delivery of the Securities on the terms and in the manner contemplated by the Base
Prospectus and the Prospectus Supplement.
(H) No action shall have been taken and no statute, rule, regulation or order shall have been
enacted, adopted or issued by any governmental agency or body which would, as of the Closing Date,
11
prevent the issuance or sale of the Securities or materially and adversely affect or potentially
and adversely affect the business or operations of the Company; and no injunction, restraining
order or order of any other nature by any federal or state court of competent jurisdiction shall
have been issued as of the
Closing Date which would prevent the issuance or sale of the Securities or materially and
adversely affect or potentially and adversely affect the business or operations of the Company.
(I) The Company shall have prepared and filed with the Commission a Current Report on Form 8-K
with respect to the Placement, including as an exhibit thereto this Agreement.
(J) The Company shall have entered into subscription agreements with each of the Purchasers
and such agreements shall be in full force and effect and shall contain representations and
warranties of the Company as agreed between the Company and the Purchasers.
(K) FINRA shall have raised no objection to the fairness and reasonableness of the terms and
arrangements of this Agreement. In addition, the Company shall, if requested by the Placement
Agent, make or authorize Placement Agent’s counsel to make on the Company’s behalf, an Issuer
Filing with FINRA pursuant to FINRA Rule 5110 with respect to the Registration Statement and pay
all filing fees required in connection therewith.
(L) Prior to the Closing Date, the Company shall have furnished to the Placement Agent
such further information, certificates and documents as the Placement Agent may reasonably request.
All opinions, letters, evidence and certificates 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 reasonably satisfactory to counsel for the Placement Agent.
SECTION 8. INDEMNIFICATION. (A) To the extent permitted by law, the Company will
indemnify EarlyBird and its affiliates, stockholders, directors, officers, employees and
controlling persons (within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) against all losses, claims, damages, expenses and liabilities, as the same are
incurred (including the reasonable fees and expenses of counsel), relating to or arising out of its
activities hereunder or pursuant to this engagement letter, except to the extent that any losses,
claims, damages, expenses or liabilities (or actions in respect thereof) are found in a final
judgment (not subject to appeal) by a court of law to have resulted primarily and directly from
EarlyBird’s willful misconduct or gross negligence in performing the services described herein.
(B) Promptly after receipt by EarlyBird of notice of any claim or the commencement of any
action or proceeding with respect to which EarlyBird is entitled to indemnity hereunder, EarlyBird
will notify the Company in writing of such claim or of the commencement of such action or
proceeding, and the Company will assume the defense of such action or proceeding and will employ
counsel reasonably satisfactory to EarlyBird and will pay the fees and expenses of such counsel.
Notwithstanding the preceding sentence, EarlyBird will be entitled to employ counsel separate from
counsel for the Company and from any other party in such action if counsel for EarlyBird reasonably
determines that it would be inappropriate under the applicable rules of professional responsibility
for the same counsel to represent both the Company and EarlyBird. In such event, the reasonable
fees and disbursements of no more than one such separate counsel will be paid by the Company, in
addition to local counsel. The Company will have the exclusive right to settle the claim or
proceeding provided that the Company will not settle any such claim, action or proceeding without
the prior written consent of EarlyBird, which will not be unreasonably withheld.
12
(C) The Company agrees to notify EarlyBird promptly of the assertion against it or any other
person of any claim or the commencement of any action or proceeding relating to a transaction
contemplated by this engagement letter.
(D) If for any reason the foregoing indemnity is unavailable to EarlyBird or insufficient to
hold EarlyBird harmless, then the Company shall contribute to the amount paid or payable by
EarlyBird as a result of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect not only the relative benefits received by the Company on the one hand and
EarlyBird on the other, but also the relative fault of the Company on the one hand and EarlyBird on
the other that resulted in such losses, claims, damages or liabilities, as well as any relevant
equitable considerations. The amounts paid or payable by a party in respect of losses, claims,
damages and liabilities referred to above shall be deemed to include any legal or other fees and
expenses incurred in defending any litigation, proceeding or other action or claim.
Notwithstanding the provisions hereof, EarlyBird’s share of the liability hereunder shall not be in
excess of the amount of fees actually received, or to be received, by EarlyBird under this
engagement letter (excluding any amounts received as reimbursement of expenses incurred by
EarlyBird).
(E) These indemnification provisions shall remain in full force and effect whether or not the
transaction contemplated by this engagement letter is completed and shall survive the termination
of this engagement letter, and shall be in addition to any liability that the Company might
otherwise have to any indemnified party under this engagement letter or otherwise.
SECTION 9. GOVERNING LAW. This Agreement will be governed by, and construed in
accordance with, the laws of the State of New York applicable to agreements made and to be
performed entirely in such State. This Agreement may not be assigned by either party without the
prior written consent of the other party. This Agreement shall be binding upon and inure to the
benefit of the parties hereto, and their respective successors and permitted assigns. Any right to
trial by jury with respect to any dispute arising under this Agreement or any transaction or
conduct in connection herewith is waived. Any dispute arising under this Agreement may be brought
into the courts of the State of New York or into the Federal Court located in New York, New York
and, by execution and delivery of this Agreement, the Company hereby accepts for itself and in
respect of its property, generally and unconditionally, the jurisdiction of aforesaid courts. Each
party hereto hereby irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by delivering a copy thereof via overnight delivery
(with evidence of delivery) to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient service of process and
notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. If either party shall commence an action or proceeding to
enforce any provisions of a Transaction Document, then the prevailing party in such action or
proceeding shall be reimbursed by the other party for its attorneys’ fees and other costs and
expenses incurred with the investigation, preparation and prosecution of such action or proceeding.
SECTION 10. ENTIRE AGREEMENT/MISC. This Agreement embodies the entire agreement
and understanding between the parties hereto, and supersedes all prior agreements and
understandings, relating to the subject matter hereof other than the engagement letter dated March
29, 2010. If any provision of this Agreement is determined to be invalid or unenforceable in any
respect, such determination will not affect such provision in any other respect or any other
provision of this Agreement, which will remain in full force and effect. This Agreement may not be
amended or otherwise modified or waived except by an instrument in writing signed by both EarlyBird
and the Company. The representations, warranties, agreements and covenants contained herein shall
survive the closing of the Placement and delivery and/or exercise of the Securities, as applicable.
This Agreement may be executed in two or more counterparts, all of which when taken together shall
be considered one and the same agreement and shall become effective when counterparts have been
signed by each party and delivered to the other party, it being understood that both parties need
not sign the same counterpart. In the event that
13
any signature is delivered by facsimile
transmission or a .pdf format file, such signature shall create a valid and binding obligation of
the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile or .pdf signature page were an
original thereof.
SECTION 11. NOTICES. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of (a) the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile number specified on the signature pages attached hereto
prior to 6:30 p.m. (New York City time) on a business day, (b) the next business day after the date
of transmission, if such notice or communication is delivered via facsimile at the facsimile number
on the signature pages attached hereto on a day that is not a business day or later than 6:30 p.m.
(New York City time) on any business day, (c) the business day following the date of mailing, if
sent by U.S. nationally recognized overnight courier service, or (d) upon actual receipt by the
party to whom such notice is required to be given. The address for such notices and communications
shall be as set forth on the signature pages hereto.
Please confirm that the foregoing correctly sets forth our agreement by signing and returning
to EarlyBird a copy of this Agreement.
| Very truly yours, | ||||||
| EARLYBIRD CAPITAL, INC. | ||||||
| By: | /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
|
|||||
| Title: Chief Executive Officer | ||||||
| Address for notice: | ||||||
| ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ | ||||||
| ▇▇▇ ▇▇▇▇, ▇▇, ▇▇▇▇▇ | ||||||
| Fax (▇▇▇) ▇▇▇-▇▇▇▇ | ||||||
| Attention: General Counsel | ||||||
Accepted and Agreed to as of
the date first written above:
the date first written above:
| XENONICS HOLDINGS, INC. | ||||
By:
|
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
|
|||
| Title: Chairman and Chief Executive Officer | ||||
Address for notice:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax:
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