Exhibit 10.6
AMERICAN CONSOLIDATED MANAGEMENT GROUP INC.
PLACEMENT AGENT AGREEMENT
Dated as of: ▇▇▇▇▇ ▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇▇ Securities Corporation
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▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned, American Consolidated Management Group Inc.., a Utah
corporation (the "Company"), hereby agrees with Newbridge Securities Corporation
(the "Placement Agent") and Cornell Capital Partners, LP, a Delaware Limited
Partnership (the "Investor"), as follows:
1. Offering.
The Company hereby engages the Placement Agent to act as its exclusive
placement agent in connection with the Standby Equity Distribution
Agreement dated the date hereof (the "Standby Equity Distribution
Agreement"), pursuant to which the Company shall issue and sell to the
Investor, from time to time, and the Investor shall purchase from the
Company (the "Offering") up to Ten Million Dollars ($10,000,000) of the
Company's common stock (the "Commitment Amount"), par value $.01 per share
(the "Common Stock"), at price per share equal to the Purchase Price, as
that term is defined in the Standby Equity Distribution Agreement. The
Placement Agent services shall consist of reviewing the terms of the
Standby Equity Distribution Agreement and advising the Company with respect
to those terms.
All capitalized terms used herein and not otherwise defined herein shall
have the same meaning ascribed to them as in the Standby Equity
Distribution Agreement. The Investor will be granted certain registration
rights with respect to the Common Stock as more fully set forth in the
Registration Rights Agreement between the Company and the Investor dated
the date hereof (the "Registration Rights Agreement"). The documents to be
executed and delivered in connection with the Offering, including, but not
limited, to the Company's latest Quarterly Report on Form 10-QSB as filed
with the United States Securities and Exchange Commission, this Agreement,
the Standby Equity Distribution Agreement, the Registration Rights
Agreement, and the Escrow Agreement dated the date hereof (the "Escrow
Agreement"), are referred to sometimes hereinafter collectively as the
"Offering Materials." The Company's Common Stock purchased by the Investor
pursuant to the Standby Equity Distribution Agreement and/or issued
hereunder are sometimes referred to hereinafter as the "Securities." The
Placement Agent shall not be obligated to sell any Securities.
2. Compensation.
Upon the execution of this Agreement, the Company shall issue to the
Placement Agent or its designee five thousand (5,000) shares of the
Company's Common Stock (the "Placement Agent's Shares"). The Placement
Agent shall be entitled to "piggy-back" registration rights, which shall be
triggered upon registration of any shares of Common Stock by the Investor
with respect to the Placement Agent's Shares pursuant to the Registration
Rights Agreement dated the date hereof.
3. Representations, Warranties and Covenants of the Placement Agent.
a. The Placement Agent represents, warrants and covenants as follows:
i. The Placement Agent has the necessary power to enter into this
Agreement and to consummate the transactions contemplated hereby.
ii. The execution and delivery by the Placement Agent of this
Agreement and the consummation of the transactions contemplated
herein will not result in any violation of, or be in conflict
with, or constitute a default under, any agreement or instrument
to which the Placement Agent is a party or by which the Placement
Agent or its properties are bound, or any judgment, decree, order
or, to the Placement Agent's knowledge, any statute, rule or
regulation applicable to the Placement Agent. This Agreement when
executed and delivered by the Placement Agent, will constitute
the legal, valid and binding obligations of the Placement Agent,
enforceable in accordance with their respective terms, except to
the extent that (a) the enforceability hereof or thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws from time to time in effect and affecting the rights
of creditors generally, (b) the enforceability hereof or thereof
is subject to general principles of equity, or (c) the
indemnification provisions hereof or thereof may be held to be in
violation of public policy.
iii. Upon receipt and execution of this Agreement, the Placement Agent
will promptly forward copies of this Agreement to the Company or
its counsel and the Investor or its counsel.
iv. The Placement Agent will not intentionally take any action that
it reasonably believes would cause the Offering to violate the
provisions of the Securities Act of 1933, as amended (the "1933
Act"), the Securities Exchange Act of 1934 (the "1934 Act"), the
respective rules and regulations promulgated thereunder (the
"Rules and Regulations") or applicable "Blue Sky" laws of any
state or jurisdiction.
v. The Placement Agent is a member of the National Association of
Securities Dealers, Inc., and is a broker-dealer registered as
such under the 1934 Act and under the securities laws of the
states in which the Securities will be offered or sold by the
Placement Agent unless an exemption for such state registration
is available to the Placement Agent. The Placement Agent is in
material compliance with the rules and regulations applicable to
the Placement Agent generally and applicable to the Placement
Agent's participation in the Offering.
4. Representations and Warranties of the Company.
b. The Company represents and warrants as follows:
i. The execution, delivery and performance of each of this
Agreement, the Standby Equity Distribution Agreement, the Escrow
Agreement, and the Registration Rights Agreement has been or will
be duly and validly authorized by the Company and is, or with
respect to this Agreement, the Standby Equity Distribution
Agreement, the Escrow Agreement, and the Registration Rights
Agreement will be, a valid and binding agreement of the Company,
enforceable in accordance with its respective terms, except to
the extent that (a) the enforceability hereof or thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws from time to time in effect and affecting the rights
of creditors generally, (b) the enforceability hereof or thereof
is subject to general principles of equity or (c) the
indemnification provisions hereof or thereof may be held to be in
violation of public policy. The Securities to be issued pursuant
to the transactions contemplated by this Agreement, the Standby
Equity Distribution Agreement have been duly authorized and, when
issued and paid for in accordance with this Agreement, the
Standby Equity Distribution Agreement and the
certificates/instruments representing such Securities, will be
valid and binding obligations of the Company, enforceable in
accordance with their respective terms, except to the extent that
(1) the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws from time
to time in effect and affecting the rights of creditors
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generally, and (2) the enforceability thereof is subject to
general principles of equity. All corporate action required to be
taken for the authorization, issuance and sale of the Securities
has been duly and validly taken by the Company.
ii. The Company has a duly authorized, issued and outstanding
capitalization as set forth herein and in the Standby Equity
Distribution Agreement. Other than as disclosed in Schedule 4.3
of the Standby Equity Distribution Agreement, the Company is not
a party to or bound by any instrument, agreement or other
arrangement providing for it to issue any capital stock, rights,
warrants, options or other securities, except for this Agreement,
the agreements described herein and as described in the Standby
Equity Distribution Agreement, dated the date hereof and the
agreements described therein. All issued and outstanding
securities of the Company, have been duly authorized and validly
issued and are fully paid and non-assessable; the holders thereof
have no rights of rescission or preemptive rights with respect
thereto and are not subject to personal liability solely by
reason of being security holders; and none of such securities
were issued in violation of the preemptive rights of any holders
of any security of the Company. As of the date hereof, the
authorized capital stock of the Company consists of 70,000,000
shares of Common Stock, par value $.01 per share and no shares
of Preferred Stock of which 12,675,652 shares of Common Stock
were issued and outstanding as of the date thereof.
iii. The Common Stock to be issued in accordance with this Agreement,
the Standby Equity Distribution Agreement have been duly
authorized and, when issued and paid for in accordance with this
Agreement, the Standby Equity Distribution Agreement and the
certificates/instruments representing such Common Stock will be
validly issued, fully-paid and non-assessable; the holders
thereof will not be subject to personal liability solely by
reason of being such holders; such Securities are not and will
not be subject to the preemptive rights of any holder of any
security of the Company.
iv. The Company has good and marketable title to, or valid and
enforceable leasehold estates in, all items of real and personal
property necessary to conduct its business (including, without
limitation, any real or personal property stated in the Offering
Materials to be owned or leased by the Company), free and clear
of all liens, encumbrances, claims, security interests and
defects of any material nature whatsoever, other than those set
forth in the Offering Materials and liens for taxes not yet due
and payable.
v. There is no litigation or governmental proceeding pending or, to
the best of the Company's knowledge, threatened against, or
involving the properties or business of the Company, except as
set forth in the Offering Materials.
vi. The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Utah.
Except as set forth in the Offering Materials, the Company does
not own or control, directly or indirectly, an interest in any
other corporation, partnership, trust, joint venture or other
business entity. The Company is duly qualified or licensed and in
good standing as a foreign corporation in each jurisdiction in
which the character of its operations requires such qualification
or licensing and where failure to so qualify would have a
material adverse effect on the Company. To the best of the
Company's knowledge, the Company has all requisite corporate
power and authority, and all material and necessary
authorizations, approvals, orders, licenses, certificates and
permits of and from all governmental regulatory officials and
bodies (domestic and foreign) to conduct its businesses (and
proposed business) as described in the Offering Materials. Any
disclosures in the Offering Materials concerning the effects of
foreign, federal, state and local regulation on the Company's
businesses as currently conducted and as contemplated are correct
in all material respects and do not omit to state a material
fact. The Company has all corporate power and authority to enter
into this Agreement, the Standby Equity Distribution Agreement,
the Registration Rights Agreement, and the Escrow Agreement, to
carry out the provisions and conditions hereof and thereof, and
all consents, authorizations, approvals and orders required in
connection herewith and therewith have been obtained. No consent,
authorization or order of, and no filing with, any court,
government agency or other body is required by the Company for
the issuance of the Securities or execution and delivery of the
Offering Materials except for applicable federal and state
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securities laws. The Company, since its inception, has not
incurred any liability arising under or as a result of the
application of any of the provisions of the 1933 Act, the 1934
Act or the Rules and Regulations.
vii. There has been no material adverse change in the condition or
prospects of the Company, financial or otherwise, from the latest
dates as of which such condition or prospects, respectively, are
set forth in the Offering Materials, and the outstanding debt,
the property and the business of the Company conform in all
material respects to the descriptions thereof contained in the
Offering Materials.
viii. Except as set forth in the Offering Materials, the Company is
not in breach of, or in default under, any term or provision of
any material indenture, mortgage, deed of trust, lease, note,
loan or Standby Equity Distribution Agreement or any other
material agreement or instrument evidencing an obligation for
borrowed money, or any other material agreement or instrument to
which it is a party or by which it or any of its properties may
be bound or affected. The Company is not in violation of any
provision of its charter or by-laws or in violation of any
franchise, license, permit, judgment, decree or order, or in
violation of any material statute, rule or regulation. Neither
the execution and delivery of the Offering Materials nor the
issuance and sale or delivery of the Securities, nor the
consummation of any of the transactions contemplated in the
Offering Materials nor the compliance by the Company with the
terms and provisions hereof or thereof, has conflicted with or
will conflict with, or has resulted in or will result in a breach
of, any of the terms and provisions of, or has constituted or
will constitute a default under, or has resulted in or will
result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or
pursuant to the terms of any indenture, mortgage, deed of trust,
note, loan or any other agreement or instrument evidencing an
obligation for borrowed money, or any other agreement or
instrument to which the Company may be bound or to which any of
the property or assets of the Company is subject except (a) where
such default, lien, charge or encumbrance would not have a
material adverse effect on the Company and (b) as described in
the Offering Materials; nor will such action result in any
violation of the provisions of the charter or the by-laws of the
Company or, assuming the due performance by the Placement Agent
of its obligations hereunder, any material statute or any
material order, rule or regulation applicable to the Company of
any court or of any foreign, federal, state or other regulatory
authority or other government body having jurisdiction over the
Company.
ix. Subsequent to the dates as of which information is given in the
Offering Materials, and except as may otherwise be indicated or
contemplated herein or therein the Company has not (a) issued any
securities or incurred any liability or obligation, direct or
contingent, for borrowed money, or (b) entered into any
transaction other than in the ordinary course of business, or (c)
declared or paid any dividend or made any other distribution on
or in respect of its capital stock. Except as described in the
Offering Materials, the Company has no outstanding obligations to
any officer or director of the Company.
x. There are no claims for services in the nature of a finder's or
origination fee with respect to the sale of the Common Stock or
any other arrangements, agreements or understandings that may
affect the Placement Agent's compensation, as determined by the
National Association of Securities Dealers, Inc.
xi. The Company owns or possesses, free and clear of all liens or
encumbrances and rights thereto or therein by third parties, the
requisite licenses or other rights to use all trademarks, service
marks, copyrights, service names, trade names, patents, patent
applications and licenses necessary to conduct its business
(including, without limitation, any such licenses or rights
described in the Offering Materials as being owned or possessed
by the Company) and, except as set forth in the Offering
Materials, there is no claim or action by any person pertaining
to, or proceeding, pending or threatened, which challenges the
exclusive rights of the Company with respect to any trademarks,
service marks, copyrights, service names, trade names, patents,
patent applications and licenses used in the conduct of the
Company's businesses (including, without limitation, any such
licenses or rights described in the Offering Materials as being
owned or possessed by the Company) except any claim or action
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that would not have a material adverse effect on the Company; the
Company's current products, services or processes do not infringe
or will not infringe on the patents currently held by any third
party.
xii. Other than as disclosed to the Investor, except as described in
the Offering Materials, the Company is not under any obligation
to pay royalties or fees of any kind whatsoever to any third
party with respect to any trademarks, service marks, copyrights,
service names, trade names, patents, patent applications,
licenses or technology it has developed, uses, employs or intends
to use or employ, other than to their respective licensors.
xiii. Subject to the performance by the Placement Agent of its
obligations hereunder the offer and sale of the Securities
complies, and will continue to comply, in all material respects
with the requirements of Rule 506 of Regulation D promulgated by
the SEC pursuant to the 1933 Act and any other applicable federal
and state laws, rules, regulations and executive orders. Neither
the Offering Materials nor any amendment or supplement thereto
nor any documents prepared by the Company in connection with the
Offering will contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. All
statements of material facts in the Offering Materials are true
and correct as of the date of the Offering Materials.
xiv. All material taxes which are due and payable from the Company
have been paid in full or adequate provision has been made for
such taxes on the books of the Company, except for those taxes
disputed in good faith by the Company.
xv. None of the Company nor any of its officers, directors, employees
or agents, nor any other person acting on behalf of the Company,
has, directly or indirectly, given or agreed to give any money,
gift or similar benefit (other than legal price concessions to
customers in the ordinary course of business) to any customer,
supplier, employee or agent of a customer or supplier, or
official or employee of any governmental agency or
instrumentality of any government (domestic or foreign) or any
political party or candidate for office (domestic or foreign) or
other person who is or may be in a position to help or hinder the
business of the Company (or assist it in connection with any
actual or proposed transaction) which (A) might subject the
Company to any damage or penalty in any civil, criminal or
governmental litigation or proceeding, or (B) if not given in the
past, might have had a materially adverse effect on the assets,
business or operations of the Company as reflected in any of the
financial statements contained in the Offering Materials, or (C)
if not continued in the future, might adversely affect the
assets, business, operations or prospects of the Company in the
future.
5. Representations, Warranties and Covenants of the Investor.
c. The Investor represents, warrants and covenants as follows:
i. The Investor has the necessary power to enter into this Agreement
and to consummate the transactions contemplated hereby.
ii. The execution and delivery by the Investor of this Agreement and
the consummation of the transactions contemplated herein will not
result in any violation of, or be in conflict with, or constitute
a default under, any agreement or instrument to which the
Investor is a party or by which the Investor or its properties
are bound, or any judgment, decree, order or, to the Investor's
knowledge, any statute, rule or regulation applicable to the
Investor. This Agreement when executed and delivered by the
Investor, will constitute the legal, valid and binding
obligations of the Investor, enforceable in accordance with their
respective terms, except to the extent that (a) the
enforceability hereof or thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws from time
to time in effect and affecting the rights of creditors
generally, (b) the enforceability hereof or thereof is subject to
general principles of equity, or (c) the indemnification
provisions hereof or thereof may be held to be in violation of
public policy.
iii. The Investor will promptly forward copies of any and all due
diligence questionnaires compiled by the Investor to the
Placement Agent.
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iv. The Investor is an Accredited Investor (as defined under the 1933
Act).
v. The Investor is acquiring the Securities for the Inventor's own
account as principal, not as a nominee or agent, for investment
purposes only, and not with a view to, or for, resale,
distribution or fractionalization thereof in whole or in part and
no other person has a direct or indirect beneficial interest in
such Securities. Further, the Investor does not have any
contract, undertaking, agreement or arrangement with any person
to sell, transfer or grant participations to such person or to
any third person, with respect to any of the Securities.
vi. The Investor acknowledges the Investor's understanding that the
offering and sale of the Securities is intended to be exempt from
registration under the 1933 Act by virtue of Section 3(b) of the
1933 Act and the provisions of Regulation D promulgated
thereunder ("Regulation D"). In furtherance thereof, the Investor
represents and warrants as follows:
vii. The Investor has the financial ability to bear the economic risk
of the Investor's investment, has adequate means for providing
for the Inventor's current needs and personal contingencies and
has no need for liquidity with respect to the Investor's
investment in the Company; and
viii. The Investor has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and
risks of the prospective investment. The Inventor also represents
it has not been organized for the purpose of acquiring the
Securities.
ix. The Investor has been given the opportunity for a reasonable time
prior to the date hereof to ask questions of, and receive answers
from, the Company or its representatives concerning the terms and
conditions of the Offering, and other matters pertaining to this
investment, and has been given the opportunity for a reasonable
time prior to the date hereof to obtain such additional
information in connection with the Company in order for the
Investor to evaluate the merits and risks of purchase of the
Securities, to the extent the Company possesses such information
or can acquire it without unreasonable effort or expense. The
Investor is not relying on the Placement Agent or any of its
affiliates with respect to the accuracy or completeness of the
Offering Materials or for any economic considerations involved in
this investment.
6. Certain Covenants and Agreements of the Company.
The Company covenants and agrees at its expense and without any expense to the
Placement Agent as follows:
11. To advise the Placement Agent and the Investor of any material adverse
change in the Company's financial condition, prospects or business or
of any development materially affecting the Company or rendering
untrue or misleading any material statement in the Offering Materials
occurring at any time as soon as the Company is either informed or
becomes aware thereof.
12. To use its commercially reasonable efforts to cause the Common Stock
issuable in connection with the Standby Equity Distribution Agreement
to be qualified or registered for sale on terms consistent with those
stated in the Registration Rights Agreement and under the securities
laws of such jurisdictions as the Placement Agent and the Investor
shall reasonably request. Qualification, registration and exemption
charges and fees shall be at the sole cost and expense of the Company.
13. Upon written request, to provide and continue to provide the Placement
Agent and the Investor copies of all quarterly financial statements
and audited annual financial statements prepared by or on behalf of
the Company, other reports prepared by or on behalf of the Company for
public disclosure and all documents delivered to the Company's
stockholders.
14. To deliver, during the registration period of the Standby Equity
Distribution Agreement, to the Investor upon the Investor's request or
as may be required by the SEC, within forty five (45) days, a
statement of its income for each such quarterly period, and its
balance sheet and a statement of changes in stockholders' equity as of
the end of such quarterly period, all in reasonable detail, certified
by its principal financial or accounting officer; (ii) within ninety
(90) days after the close of each fiscal year, its balance sheet as of
the close of such fiscal year, together with a statement of income, a
statement of changes in stockholders' equity and a statement of cash
flow for such fiscal year, such balance sheet, statement of income,
statement of changes in stockholders' equity and statement of cash
flow to be in reasonable detail and accompanied by a copy of the
certificate or report thereon of independent auditors if audited
financial statements are prepared; and (iii) a copy of all documents,
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reports and information furnished to its stockholders at the time that
such documents, reports and information are furnished to its
stockholders.
e) To comply with the terms of the Offering Materials.
f) Other than as disclosed in Schedule 4.3 of the Standby Equity
Distribution Agreement, to ensure that any transactions between or
among the Company, or any of its officers, directors and affiliates be
on terms and conditions that are no less favorable to the Company,
than the terms and conditions that would be available in an "arm's
length" transaction with an independent third party.
7. Indemnification and Limitation of Liability.
A. The Company hereby agrees that it will indemnify and hold the Placement
Agent and each officer, director, shareholder, employee or representative
of the Placement Agent and each person controlling, controlled by or under
common control with the Placement Agent within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act or the SEC's Rules and
Regulations promulgated thereunder (the "Rules and Regulations"), harmless
from and against any and all loss, claim, damage, liability, cost or
expense whatsoever (including, but not limited to, any and all reasonable
legal fees and other expenses and disbursements incurred in connection with
investigating, preparing to defend or defending any action, suit or
proceeding, including any inquiry or investigation, commenced or
threatened, or any claim whatsoever or in appearing or preparing for
appearance as a witness in any action, suit or proceeding, including any
inquiry, investigation or pretrial proceeding such as a deposition) to
which the Placement Agent or such indemnified person of the Placement Agent
may become subject under the 1933 Act, the 1934 Act, the Rules and
Regulations, or any other federal or state law or regulation, common law or
otherwise, arising out of or based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in (a) Section 4 of this
Agreement, (b) the Offering Materials (except those written statements
relating to the Placement Agent given by the Placement Agent for inclusion
therein), (c) any application or other document or written communication
executed by the Company or based upon written information furnished by the
Company filed in any jurisdiction in order to qualify the Common Stock
under the securities laws thereof, or any state securities commission or
agency; (ii) the omission or alleged omission from documents described in
clauses (a), (b) or (c) above of a material fact required to be stated
therein or necessary to make the statements therein not misleading; or
(iii) the breach of any representation, warranty, covenant or agreement
made by the Company in this Agreement. The Company further agrees that upon
demand by an indemnified person, at any time or from time to time, it will
promptly reimburse such indemnified person for any loss, claim, damage,
liability, cost or expense actually and reasonably paid by the indemnified
person as to which the Company has indemnified such person pursuant hereto.
Notwithstanding the foregoing provisions of this Paragraph 7(A), any such
payment or reimbursement by the Company of fees, expenses or disbursements
incurred by an indemnified person in any proceeding in which a final
judgment by a court of competent jurisdiction (after all appeals or the
expiration of time to appeal) is entered against the Placement Agent or
such indemnified person based upon specific finding of fact that the
Placement Agent or such indemnified person's gross negligence or willful
misfeasance will be promptly repaid to the Company.
B. The Placement Agent hereby agrees that it will indemnify and hold the
Company and each officer, director, shareholder, employee or representative
of the Company, and each person controlling, controlled by or under common
control with the Company within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act or the Rules and Regulations, harmless from
and against any and all loss, claim, damage, liability, cost or expense
whatsoever (including, but not limited to, any and all reasonable legal
fees and other expenses and disbursements incurred in connection with
investigating, preparing to defend or defending any action, suit or
proceeding, including any inquiry or investigation, commenced or
threatened, or any claim whatsoever or in appearing or preparing for
appearance as a witness in any action, suit or proceeding, including any
inquiry, investigation or pretrial proceeding such as a deposition) to
which the Company or such indemnified person of the Company may become
subject under the 1933 Act, the 1934 Act, the Rules and Regulations, or any
other federal or state law or regulation, common law or otherwise, arising
out of or based upon (i) the material breach of any representation,
warranty, covenant or agreement made by the Placement Agent in this
Agreement, or (ii) any false or misleading information provided to the
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Company in writing by one of the Placement Agent's indemnified persons
specifically for inclusion in the Offering Materials.
C. The Investor hereby agrees that it will indemnify and hold the Placement
Agent and each officer, director, shareholder, employee or representative
of the Placement Agent, and each person controlling, controlled by or under
common control with the Placement Agent within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act or the Rules and Regulations,
harmless from and against any and all loss, claim, damage, liability, cost
or expense whatsoever (including, but not limited to, any and all
reasonable legal fees and other expenses and disbursements incurred in
connection with investigating, preparing to defend or defending any action,
suit or proceeding, including any inquiry or investigation, commenced or
threatened, or any claim whatsoever or in appearing or preparing for
appearance as a witness in any action, suit or proceeding, including any
inquiry, investigation or pretrial proceeding such as a deposition) to
which the Placement Agent or such indemnified person of the Placement Agent
may become subject under the 1933 Act, the 1934 Act, the Rules and
Regulations, or any other federal or state law or regulation, common law or
otherwise, arising out of or based upon (i) the conduct of the Investor or
its officers, employees or representatives in its acting as the Investor
for the Offering, (ii) the material breach of any representation, warranty,
covenant or agreement made by the Investor in the Offering Materials, or
(iii) any false or misleading information provided to the Placement Agent
by one of the Investor's indemnified persons.
D. The Placement Agent hereby agrees that it will indemnify and hold the
Investor and each officer, director, shareholder, employee or
representative of the Investor, and each person controlling, controlled by
or under common control with the Investor within the meaning of Section 15
of the 1933 Act or Section 20 of the 1934 Act or the Rules and Regulations,
harmless from and against any and all loss, claim, damage, liability, cost
or expense whatsoever (including, but not limited to, any and all
reasonable legal fees and other expenses and disbursements incurred in
connection with investigating, preparing to defend or defending any action,
suit or proceeding, including any inquiry or investigation, commenced or
threatened, or any claim whatsoever or in appearing or preparing for
appearance as a witness in any action, suit or proceeding, including any
inquiry, investigation or pretrial proceeding such as a deposition) to
which the Investor or such indemnified person of the Investor may become
subject under the 1933 Act, the 1934 Act, the Rules and Regulations, or any
other federal or state law or regulation, common law or otherwise, arising
out of or based upon the material breach of any representation, warranty,
covenant or agreement made by the Placement Agent in this Agreement.
E. Promptly after receipt by an indemnified party of notice of commencement of
any action covered by Section 7(A), (B), (C) or (D), the party to be
indemnified shall, within five (5) business days, notify the indemnifying
party of the commencement thereof; the omission by one (1) indemnified
party to so notify the indemnifying party shall not relieve the
indemnifying party of its obligation to indemnify any other indemnified
party that has given such notice and shall not relieve the indemnifying
party of any liability outside of this indemnification if not materially
prejudiced thereby. In the event that any action is brought against the
indemnified party, the indemnifying party will be entitled to participate
therein and, to the extent it may desire, to assume and control the defense
thereof with counsel chosen by it which is reasonably acceptable to the
indemnified party. After notice from the indemnifying party to such
indemnified party of its election to so assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under such
Section 7(A), (B), (C), or (D) for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof,
but the indemnified party may, at its own expense, participate in such
defense by counsel chosen by it, without, however, impairing the
indemnifying party's control of the defense. Subject to the proviso of this
sentence and notwithstanding any other statement to the contrary contained
herein, the indemnified party or parties shall have the right to choose its
or their own counsel and control the defense of any action, all at the
expense of the indemnifying party if (i) the employment of such counsel
shall have been authorized in writing by the indemnifying party in
connection with the defense of such action at the expense of the
indemnifying party, or (ii) the indemnifying party shall not have employed
counsel reasonably satisfactory to such indemnified party to have charge of
the defense of such action within a reasonable time after notice of
commencement of the action, or (iii) such indemnified party or parties
shall have reasonably concluded that there may be defenses available to it
or them which are different from or additional to those available to one or
all of the indemnifying parties (in which case the indemnifying parties
shall not have the right to direct the defense of such action on behalf of
the indemnified party or parties), in any of which events such fees and
8
expenses of one additional counsel shall be borne by the indemnifying
party; provided, however, that the indemnifying party shall not, in
connection with any one action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstance, be liable for the reasonable fees and expenses
of more than one separate firm of attorneys at any time for all such
indemnified parties. No settlement of any action or proceeding against an
indemnified party shall be made without the consent of the indemnifying
party.
F. In order to provide for just and equitable contribution in circumstances in
which the indemnification provided for in Section 7(A) or 7(B) is due in
accordance with its terms but is for any reason held by a court to be
unavailable on grounds of policy or otherwise, the Company and the
Placement Agent shall contribute to the aggregate losses, claims, damages
and liabilities (including legal or other expenses reasonably incurred in
connection with the investigation or defense of same) which the other may
incur in such proportion so that the Placement Agent shall be responsible
for such percent of the aggregate of such losses, claims, damages and
liabilities as shall equal the percentage of the gross proceeds paid to the
Placement Agent and the Company shall be responsible for the balance;
provided, however, that no person guilty of fraudulent misrepresentation
within the meaning of Section 11(f) of the 1933 Act shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 7(F), any person
controlling, controlled by or under common control with the Placement
Agent, or any partner, director, officer, employee, representative or any
agent of any thereof, shall have the same rights to contribution as the
Placement Agent and each person controlling, controlled by or under common
control with the Company within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act and each officer of the Company and each
director of the Company shall have the same rights to contribution as the
Company. Any party entitled to contribution will, promptly after receipt of
notice of commencement of any action, suit or proceeding against such party
in respect of which a claim for contribution may be made against the other
party under this Section 7(D), notify such party from whom contribution may
be sought, but the omission to so notify such party shall not relieve the
party from whom contribution may be sought from any obligation they may
have hereunder or otherwise if the party from whom contribution may be
sought is not materially prejudiced thereby.
G. The indemnity and contribution agreements contained in this Section 7 shall
remain operative and in full force and effect regardless of any
investigation made by or on behalf of any indemnified person or any
termination of this Agreement.
H. The Company hereby waives, to the fullest extent permitted by law, any
right to or claim of any punitive, exemplary, incidental, indirect,
special, consequential or other damages (including, without limitation,
loss of profits) against the Placement Agent and each officer, director,
shareholder, employee or representative of the placement agent and each
person controlling, controlled by or under common control with the
Placement Agent within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act or the Rules and Regulations arising out of any cause
whatsoever (whether such cause be based in contract, negligence, strict
liability, other tort or otherwise). Notwithstanding anything to the
contrary contained herein, the aggregate liability of the Placement Agent
and each officer, director, shareholder, employee or representative of the
Placement Agent and each person controlling, controlled by or under common
control with the Placement Agent within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act or the Rules and Regulations or the
Company and each officer, director, shareholder, employee or representative
of the Company and each person controlling, controlled by or under common
control with the Company within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act or the Rules and Regulations shall not exceed
the compensation paid by the Company and received by the Placement Agent
pursuant to Section 2 hereof. This limitation of liability shall apply
regardless of the cause of action, whether contract, tort (including,
without limitation, negligence) or breach of statute or any other legal or
equitable obligation.
9
8. Payment of Expenses.
The Company hereby agrees to bear all of the expenses in connection with the
Offering, including, but not limited to the following: filing fees, printing and
duplicating costs, advertisements, postage and mailing expenses with respect to
the transmission of Offering Materials, registrar and transfer agent fees,
escrow agent fees and expenses, fees of the Company's counsel and accountants,
issue and transfer taxes, if any.
9. Conditions of Closing.
The Closing shall be held at the offices of the Investor or its counsel. The
obligations of the Placement Agent hereunder shall be subject to the continuing
accuracy of the representations and warranties of the Company and the Investor
herein as of the date hereof and as of the Date of Closing (the "Closing Date")
with respect to the Company or the Investor, as the case may be, as if it had
been made on and as of such Closing Date; the accuracy on and as of the Closing
Date of the statements of the officers of the Company made pursuant to the
provisions hereof; and the performance by the Company and the Investor on and as
of the Closing Date of its covenants and obligations hereunder and to the
following further conditions:
A. Upon the effectiveness of a registration statement covering the
Standby Equity Distribution Agreement, the Investor and the Placement
Agent shall receive the opinion of Counsel to the Company, dated as of
the date thereof, which opinion shall be in form and substance
reasonably satisfactory to the Investor, their counsel and the
Placement Agent.
B. At or prior to the Closing, the Investor and the Placement Agent shall
have been furnished such documents, certificates and opinions as
either may reasonably require for the purpose of enabling them to
review or pass upon the matters referred to in this Agreement and the
Offering Materials, or in order to evidence the accuracy, completeness
or satisfaction of any of the representations, warranties or
conditions herein contained.
C. At and prior to the Closing, (i) there shall have been no material
adverse change nor development involving a prospective change in the
condition or prospects or the business activities, financial or
otherwise, of the Company from the latest dates as of which such
condition is set forth in the Offering Materials; (ii) other than as
disclosed in Schedule 4.3 of the Standby Equity Distribution
Agreement, there shall have been no transaction, not in the ordinary
course of business entered into by the Company on the date hereof
which has not been disclosed in the Offering Materials or to the
Placement Agent in writing; (iii) except as set forth in the Offering
Materials, the Company shall not be in default under any provision of
any instrument relating to any outstanding indebtedness for which a
waiver or extension has not been otherwise received; (iv) except as
set forth in the Offering Materials, the Company shall not have issued
any securities (other than those to be issued as provided in the
Offering Materials) or declared or paid any dividend or made any
distribution of its capital stock of any class and there shall not
have been any change in the indebtedness (long or short term) or
liabilities or obligations of the Company (contingent or otherwise)
and trade payable debt; (v) no material amount of the assets of the
Company shall have been pledged or mortgaged, except as indicated in
the Offering Materials; and (v) no action, suit or proceeding, at law
or in equity, against the Company or affecting any of its properties
or businesses shall be pending or threatened before or by any court or
federal or state commission, board or other administrative agency,
domestic or foreign, wherein an unfavorable decision, ruling or
finding could materially adversely affect the businesses, prospects or
financial condition or income of the Company, except as set forth in
the Offering Materials.
D. If requested at Closing the Investor and the Placement Agent shall
receive a certificate of the Company signed by an executive officer
and chief financial officer, dated as of the applicable Closing, to
the effect that the conditions set forth in subparagraph (C) above
have been satisfied and that, as of the applicable closing, the
representations and warranties of the Company set forth herein are
true and correct.
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E. The Placement Agent shall have no obligation to insure that (x) any
check, note, draft or other means of payment for the Common Stock will
be honored, paid or enforceable against the Investor in accordance
with its terms, or (y) subject to the performance of the Placement
Agent's obligations and the accuracy of the Placement Agent's
representations and warranties hereunder, (1) the Offering is exempt
from the registration requirements of the 1933 Act or any applicable
state "Blue Sky" law or (2) the Investor is an Accredited Investor.
10. Termination.
This Agreement shall be co-terminus with, and terminate upon the same terms and
conditions as those set forth in, the Standby Equity Distribution Agreement. The
rights of the Investor and the obligations of the Company under the Registration
Rights Agreement, and the rights of the Placement Agent and the obligations of
the Company shall survive the termination of this Agreement unabridged.
11. Miscellaneous.
A. This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but all which shall be deemed
to be one and the same instrument.
B. Any notice required or permitted to be given hereunder shall be given
in writing and shall be deemed effective when deposited in the United
States mail, postage prepaid, or when received if personally delivered
or faxed (upon confirmation of receipt received by the sending party),
addressed as follows to such other address of which written notice is
given to the others):
If to Placement Agent, to: Newbridge Securities Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company, to: American Consolidated Management Group Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇ - ▇▇▇▇▇ ▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Investor: Cornell Capital Partners, LP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Portfolio Manager
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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With Copies to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
C. This Agreement shall be governed by and interpreted in accordance with
the laws of the State of Utah without regard to the principles of
conflict of laws. The parties further agree that any action between
them shall be heard in ▇▇▇▇▇▇ County, New Jersey, and expressly
consent to the jurisdiction and venue of the Superior Court of New
Jersey, sitting in ▇▇▇▇▇▇ County, New Jersey and the United States
District Court of New Jersey, sitting in Newark, New Jersey, for the
adjudication of any civil action asserted pursuant to this paragraph.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES
NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT
OR ANY TRANSACTION CONTEMPLATED HEREBY.
D. This Agreement and the other agreements referenced herein contain the
entire understanding between the parties hereto and may not be
modified or amended except by a writing duly signed by the party
against whom enforcement of the modification or amendment is sought.
E. If any provision of this Agreement shall be held to be invalid or
unenforceable, such invalidity or unenforceability shall not affect
any other provision of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
COMPANY:
AMERICAN CONSOLIDATED MANAGEMENT GROUP INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Executive Officer
PLACEMENT AGENT:
NEWBRIDGE SECURITIES CORPORATION
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇
Title: President
INVESTOR:
CORNELL CAPITAL PARTNERS, LP
By: Yorkville Advisors, LLC
Its: General Partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Portfolio Manager
13