EXHIBIT 10.3
ARIEL WAY, INC.
PLACEMENT AGENT AGREEMENT
Dated as of: July 21, 2005
Newbridge Securities Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned, Ariel Way, Inc., a Florida 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
Fifty Million Dollars ($50,000,000) of the Company's common stock (the
"Commitment Amount"), par value $0.001 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
hereunder is sometimes referred to hereinafter as the "Securities." The
Placement Agent shall not be obligated to sell any Securities.
1
2. Compensation. The Company has previously issued to the Placement Agent
or its designee shares of the Company's Common Stock in an amount equal to Ten
Thousand Dollars ($10,000) which were determined by dividing Ten Thousand
Dollars ($10,000) by the Volume Weighted Average Price of the Company's Common
Stock on the fifth (5th) trading day of the Company's Common Stock. (the
"Placement Agent's Shares"). The Placement Agent shall be entitled to
"piggy-back" registration rights with respect to the Placement Agent's Shares,
which shall be triggered upon registration of any shares of Common Stock by the
Company 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 "Securities Act"), the
Securities Exchange Act of 1934 (the "Exchange 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 Exchange 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.
2
4. Representations, Warranties and Covenants of the Company.
A. The Company represents, warrants and covenants 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 have 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 and 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 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. 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.
(iii) The Common Stock to be issued in accordance with this
Agreement and the Standby Equity Distribution Agreement has been duly authorized
and, when issued and paid for in accordance with this Agreement and the Standby
Equity Distribution Agreement, 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.
3
(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 validly exists as
a corporation in good standing under the laws of the State of Florida. Except as
set forth in the Offering Materials, the Company does not own or control,
directly or indirectly, an interest in any other corporation, partnership,
trust, joint venture or other business entity. The Company is duly qualified or
licensed and in good standing as a foreign corporation in each jurisdiction in
which the character of its operations requires such qualification or licensing
and where failure to so qualify would have a material adverse effect on the
Company. The Company has all requisite corporate power and authority, and all
material and necessary authorizations, approvals, orders, licenses, certificates
and permits of and from all governmental regulatory officials and bodies
(domestic and foreign) to conduct its businesses (and proposed business) as
described in the Offering Materials. Any disclosures in the Offering Materials
concerning the effects of foreign, federal, state and local regulation on the
Company's businesses as currently conducted and as contemplated are correct in
all material respects and do not omit to state a material fact. The Company has
all corporate power and authority to enter into this Agreement, the 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 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 Securities
Act, the Exchange 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
4
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 that would not have a material adverse effect on the Company;
the Company's current products, services or processes do not infringe or will
not infringe on the patents currently held by any third party.
(xii) Except as described in the Offering Materials, the
Company is not under any obligation to pay royalties or fees of any kind
whatsoever to any third party with respect to any trademarks, service marks,
copyrights, service names, trade names, patents, patent applications, licenses
or technology it has developed, uses, employs or intends to use or employ, other
than to their respective licensors.
5
(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 Securities 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.
(xvi) The Company shall 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.
(xvii) The Company shall 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.
(xviii) The Company shall comply with the terms of the
Offering Materials.
6
(xix) The Company shall 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.
(xx) Upon the effectiveness of a registration statement
covering the Standby Equity Distribution Agreement, the Company shall deliver to
the Investor and the Placement Agent an opinion from 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.
(xxi) The Company shall furnish to the Investor and the
Placement Agent such documents, certificates and opinions as it 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.
5. Representations, Warranties and Covenants of the Investor.
A. 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.
(iv) The Investor is an Accredited Investor (as defined under
the Securities Act).
(v) The Investor is acquiring the Securities for the
Investor'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.
7
(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 Securities Act by virtue of Section 3(b) of the
Securities Act and the provisions of Regulation D promulgated thereunder
("Regulation D"). In furtherance thereof, the Investor represents and warrants
as follows:
(a) 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
(b) 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 Investor also represents it has not
been organized for the purpose of acquiring the Securities.
(vii) 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. 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 Securities Act or Section 20 of the Exchange Act or the SEC's 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
Securities Act, the Exchange 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
8
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 Securities Act
or Section 20 of the Exchange 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 Securities Act, the Exchange 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
Company in writing by one of the Placement Agent's indemnified persons
specifically for inclusion in the Offering Materials.
9
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 Securities Act or Section 20 of the Exchange 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
Securities Act, the Exchange 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 Securities Act
or Section 20 of the Exchange 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 Securities Act, the Exchange 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
10
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 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
Securities 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 Securities Act or Section 20
of the Exchange 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.
11
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 Securities Act or Section 20 of the Exchange 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 Securities Act or Section 20 of the
Exchange Act or the Rules and Regulations shall not exceed the compensation
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.
7. Payment of Expenses.
The Company hereby agrees to bear all of the expenses in connection with
the Offering, including, but not limited to the following: filing fees, printing
and duplicating costs, advertisements, postage and mailing expenses with respect
to the transmission of Offering Materials, registrar and transfer agent fees,
escrow agent fees and expenses, fees of the Company's counsel and accountants,
issue and transfer taxes, if any.
8. 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.
9. 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):
12
If to Placement Agent, to: Newbridge Securities Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company, to: Ariel Way, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Esq./ ▇▇▇▇ ▇▇▇▇▇▇▇▇,Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇. - ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Investor: Cornell Capital Partners, LP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Portfolio Manager
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
13
C. This Agreement shall be governed by and construed in all respects
under the laws of the State of New Jersey , without reference to its conflict of
laws rules or principles. Any suit, action, proceeding or litigation arising out
of or relating to this Agreement shall be brought and prosecuted in such federal
or state court or courts located within the State of New Jersey as provided by
law. The parties hereby irrevocably and unconditionally consent to the
jurisdiction of each such court or courts located within the State of New Jersey
and to service of process by registered or certified mail, return receipt
requested, or by any other manner provided by applicable law, and hereby
irrevocably and unconditionally waive any right to claim that any suit, action,
proceeding or litigation so commenced has been commenced in an inconvenient
forum.
D. This Agreement and the other agreements referenced herein contain
the entire understanding between the parties hereto and may not be modified or
amended except by a writing duly signed by the party against whom enforcement of
the modification or amendment is sought.
E. If any provision of this Agreement shall be held to be invalid or
unenforceable, such invalidity or unenforceability shall not affect any other
provision of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
14
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
COMPANY:
ARIEL WAY, INC.
By: __________________________________
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Executive Officer
PLACEMENT AGENT:
NEWBRIDGE SECURITIES CORPORATION
By: __________________________________
Name: ▇▇▇ ▇. ▇▇▇▇▇
Title: President
INVESTOR:
CORNELL CAPITAL PARTNERS, LP
By: Yorkville Advisors, LLC
Its: General Partner
By: __________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Portfolio Manager
15