Initials ______ ______
R-TEC TECHNOLOGIES, INC.
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(▇▇▇) ▇▇▇-▇▇▇▇
PERSONAL AND CONFIDENTIAL
September 21, 1999
▇▇. ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President and CEO
▇▇▇▇▇▇▇▇▇ Group, Inc.
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▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Agency Agreement
Dear ▇▇. ▇▇▇▇▇▇▇▇:
R-TEC TECHNOLOGIES, INC. ("R-TEC", formed under the laws of the State of New
Jersey (the 'Company'), desires to offer and sell in an offering (the
"Offering") to be made exclusively through ▇▇▇▇▇▇▇▇▇ Group, Inc. ("TGI" or the
"Placement Agent"), and pursuant to an S-1 Registration Statement ("Registration
Statement") by the Company as provided by the Securities Act of 1933, as amended
(the "Securities Act"), as set forth below, the Company's Common Stock (The
"Common Stock"). The Offering shall consist of the sale of Common Stock at a
price of $8.00 per share.
The Common Stock is to be sold at the prices and in the amounts set forth in
Section 2 below. The Offering will be limited to maximum gross proceeds of
$10,000,000 with a minimum of $1,000,000. The Offering period shall end
according to the Registration Statement, unless extended by the Company. It is
understood that the Offering will be conducted on a "professional best efforts"
basis with TGI acting as exclusive Placement Agent for the Company, and which
offering shall be conducted under the following terms and conditions:
SECTION 1. Type of Offering: Exemptions:
The Offering will be conducted as a self-underwritten S-1 registration as
required by the Securities Act, pursuant to the provisions of the Securities and
Exchange Commission ("SEC"). Investors will be required to subscribe
("Subscribers") for the Common Stock by executing the appropriate subscription
agreement (the "Subscription Agreement") in the forms set forth in a
Registration Statement to be completed by the Company and exhibits thereto, as
the same may be supplemented or amended from time to time.
SECTION 2. Appointment: Basic Terms:
On the basis of the representations and warranties and covenants herein
contained, but subject to the terms and conditions herein set forth:
(a) TGI is hereby appointed as the exclusive Placement Agent for the Company
during the period herein specified for the purpose of finding Subscribers for
the Common Stock.
(b) The Offering shall commence on the date hereof and shall continue according
to the Registration Statement, unless extended by the Company (the "Offering
Period").
(c) Subject to the performance by the Company of all of its obligations to be
performed hereunder and to the completeness and accuracy of all material
representations and warranties of the Company, TGI agrees, on the terms and
conditions herein set forth, to use its professional best efforts during the
Offering Period to find Subscribers for the Common Stock. TGI's agency hereunder
is coupled with an interest, is not terminable by the Company prior the
expiration of the Registration Statement, without TGI's consent and payment of
the break-up fee as described in SECTION 8 ( f ), and shall continue until the
termination of the Offering Period except as may be otherwise provided herein.
TGI shall have the right to appoint one or more additional agents and/or
selected dealers (who shall be members of the National Association of Securities
Dealers, Inc.) to assist in finding Subscribers for the Common Stock and any
such additional agents or selected dealers may rely upon the representations,
warranties and covenants of the Company along with the Due Diligence of TGI as
set forth in this Agreement.
(d) The minimum price of a Common Stock Unit to be sold to each Subscriber in
the Offering shall be $ 504.00 ( 63 shares of Common Stock times $8.00 per
share).
(e) Funds received from Subscribers in the Offering shall be deposited in an
escrow account with The Bank of New York, Inc. ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
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SECTION 3. Representations and Warranties of the Company:
The Company represents and warrants to TGI, for TGI's benefit and for the
benefit of the Subscribers of the Common Stock that, except as otherwise set
forth in the offering materials (copies of which shall be provided to each
Subscriber):
(a) The Common Stock to be sold in the Offering will be, when issued, duly
registered, delivered and paid for in accordance with the terms of the Offering,
duly and validly issued, fully paid and non-assessable; all presently
outstanding shares of Common Stock of the Company have been duly authorized,
validly issued and are fully paid and non-assessable; the holders of the shares
of Common Stock offered herein are not and will not be subject to personal
liability by reason of being such holders; the shares of Common Stock being sold
in the Offering are not being issued in violation of the preemptive rights of
any of the Company's security holders; all action required to be taken by the
Company to authorize thc issuance and sale of the Common Stock to qualified
Subscribers has been or, prior to the sale thereof, will have been taken.
(b) The capitalization of the Company, including the outstanding shares of the
Company's Capital Stock and any warrants, options or other rights to subscribe
to or purchase shares of capital stock is as represented to subscribers of the
Common Stock.
(c) The Company is duly incorporated, validly existing and in good standing as
a corporation under the laws of its jurisdiction of incorporation
(d) The Company is duly qualified to do business as a corporation and is in
good standing in each jurisdiction in which its activities or its ownership or
leasing of property requires such qualification, other than those jurisdictions
in which failure to so qualify would not have a material adverse effect on the
business, operations or prospects or condition (financial or otherwise) of the
Company.
(e) This Agreement has been duly and validly authorized and executed and
delivered by and on behalf of the Company and constitutes a valid and binding
agreement of the Company enforceable against the Company in accordance with its
terms subject to any applicable bankruptcy, insolvency, reorganization,
fraudulent transfer, moratorium and similar laws of general applicability
relating to or effecting creditor's rights generally and to general principles
of equity and the enforceability of the indemnity and contribution provisions
contained in Section 10 of this Agreement.
(f) The Company is not in violation of (i) any term or provision of its
charter or by-laws or (ii) any material term or provision of any indenture,
mortgage, deed of trust, note, agreement, or other material agreement or
instrument to which the Company is a party or by which it is or may be bound or
to which any or its material assets, property or business is or may be subject,
or (iii) any material term of any significant indebtedness, or (iv) of any
statute or (v) to the best of the Company's knowledge any material judgment,
decree order rule or regulation applicable to the Company of any court,
regulatory body or administrative agency or other federal, state or other
governmental body, domestic or foreign having jurisdiction over it or its
material assets, property or business, which violation or violations, either in
any case or in the aggregate, might result in any material adverse change,
financial or otherwise, in the assets, properties, condition, business, earnings
or prospects of the Company and to the best of the Company's knowledge, the
execution and delivery by the Company of this Agreement, the consummation by the
Company of the transactions herein contemplated, and the compliance by the
Company with the terms of this Agreement will not result in any such material
violation or violations. All material licenses, approvals or permits from the
federal or any state, local or foreign government or agency thereof having
jurisdiction over the Company reasonably required for the conduct of the
business or operations of the Company have been obtained and are outstanding;
and there are no proceedings pending or to the Company's knowledge threatened
seeking to cancel, terminate or limit such licenses, approvals or permits.
(g) Other than reported on Form S-1, there are no actions, investigations,
statutes, rules or regulations or other proceedings of any nature in effect or
pending or to the Company's knowledge threatened, as the case may be, which,
either in any case or in the aggregate, if decided adversely, might reasonably
be expected to result in any material adverse change, financial or otherwise, in
the assets, properties, condition, business, prospects of the Company or which
question the validity of the capital stock of the Company, this Agreement or any
action taken or to be taken by the Company pursuant to or in connection with
this Agreement. The Company has filed all of the required financial statements
with the Securities and Exchange Commission in the Form S-1. The audited
financial statements provided to TGI present fairly the financial position of
the Company as of the respective dates thereof and the results of operations and
cash flows for the respective periods covered thereby. Since the dates of the
financial statements, there has been no material adverse change, financial or
otherwise, in the assets, properties, condition, business, earnings or prospects
of the Company. The Company has not incurred any liability for any finder's fees
or similar payments in connection with the transactions herein contemplated
accept as described in this Agreement or in the Company's SEC filings.
(h) The Company has filed each federal, state, local and foreign tax return
which is required to be filed, or has requested an extension therefor and has
paid or otherwise provided for all taxes shown on such return and all related
assessments to the extent that the same have become due.
(i) All information contained in the written material concerning the Company
which has been or is being provided by the Company to TGI or to subscribers to
the Offering and all information from the Company which is included in the
Subscription Agreement (collectively, the "Offering Material") is accurate and
complete in the best of the Company's knowledge, does not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
(j) The Company has not made and will not make, any offers or sales of the
Company's capital stock or any warrants, options or other rights to subscribe to
or purchase shares of the Company's common stock in contravention at the
requirements for this Offering.
(k) The representations and warranties made in this Agreement shall be deemed
repeated, and shall be true at the time of any closing provided for in this
Agreement
SECTION 3A. Representations and Warranties of the Placement Agent:
The Placement Agent represents and warrants to the Company for the Company's
benefit, that:
(a) The Placement Agent has not been the subject of any investigation by any
Federal, State or local government agency during any time within five (5) years
prior to the date Agreement, or as of the date hereof, and to its knowledge, no
such investigation is currently threatened and
(b) The Placement Agent is in compliance with all laws, rules and regulations
applicable to broker- dealers in the jurisdictions in which it conducts business
and with all applicable requirements and rules of the National Association of
Securities Dealers, Inc. ("NASD") and is a member in good standing with the
NASD.
SECTION 4. Closing:
A minimum of $1,000,000, upon SEC approval (the "Minimum") of Common Stock is
required to be sold under this Agreement according to the Registration
Statement. A closing ("Closing") for the sale of Common Stock subscribed for in
the Offering may be held on one or more occasions prior to the end of the
Offering Period, provided the Minimum in gross proceeds is reached and provided
that such Subscriptions are accepted by the Company. At each such closing,
payment of the proceeds of the Offering shall be made by certified or bank
check(s) or by wire transfer to the order of the Company pursuant to the escrow
agreement, against delivery of certificates for Common Stock, for transmittal to
the Subscribers of the Common Stock. The Company will instruct the escrow agent
to promptly remit to TGI any and all commissions, expense allowance and any
other amounts payable to TGI from the net proceeds delivered to the Company.
SECTION 5. Covenants of the Company:
The Company covenants with the Placement Agent that:
(a) From the commencement of the Offering Period through any Closing pursuant
to Section 4 hereof, any Offering Materials will not contain any untrue
statement of a material fact or omit to state a material fact, to the extent
known to the Company, necessary in order to make the statements therein in light
of the circumstances under which they were made, not misleading.
(b) Either directly or through TGI the Company shall offer to each Subscriber,
at a reasonable time prior to his purchase of Common Stock, the opportunity to
ask questions and receive answers concerning the terms and conditions of the
Offering and to obtain any additional information, which the Company possesses
or can acquire without unreasonable effort or expense.
(c) During the Offering Period, the parties hereto will keep each other
generally informed of offers for sale and solicitations of offers to buy Common
Stock being made
(d) The Company shall use its best efforts, through counsel performing
services on behalf of the Company in connection with the Offering, to qualify
and register, or perfect the exemption of the Common Stock for offer and sale
under the state or foreign securities laws of the jurisdictions in which offers
and sales are proposed to be made, and shall assist TGI and such counsel in
connection with the foregoing, provided that in no event shall the Company be
obligated to qualify to do business in any jurisdiction where it is not now
qualified or to take any action which would subject it to general service of
process in any jurisdiction where it is not now required.
(e) The Company shall, in a timely manner and as required, prepare and file an
amended Form S-1 and any required amendments thereto with the SEC. The Company
will use its best efforts to take all steps necessary to ensure that any and all
reports which may be required to be filed with the SEC under federal securities
laws are timely filed by the Company.
(f) For the period of time that Placement Agent's clients are holders of
Common Stock of the Company, not to exceed two (2) years, the Company will
provide TGI with copies of any stock reports of the Company's stock transfer
agent if so requested, but only while TGI's customers continue to hold stock or
Common Stock in the Company.
(g) The Company shall utilize the services of its current certified public
accounting firm or another firm acceptable to TGI.
(h) For the period of time that Placement Agent's clients are holders of
Common Stock of the Company, or at least a period of two (2) years after the
Closing, the Company will furnish TGI with copies of its annual and quarterly
financial statement and reports to shareholders. In addition, during the
Offering and for a period of two (2) years after the Closing, the Company will
provide TGI with all information and documentation with respect to the Company's
business and financial condition, as reasonably requested by TGI, and will
provide to TGI during the Offering regular access to the Company's officers,
directors, auditors and counsel to discuss any aspect of the Company's business
as reasonably requested by TGI. This paragraph shall cease to be operative if,
at any time, TGI ceases to have customers who hold Common Stock in the Company.
(i) Unless TGI shall otherwise agree in writing, the Company will not issue
any securities during the period from the date of this Agreement until the
expiration of the Offering Period, except for securities issued pursuant to this
Agreement and pre-existing option, warrant and loan commitments, or in the
ordinary course of business in which cast the shares issued, shall be subject to
the same restrictions as provided for in SECTION 8 e.
(j) To the extent the Company is duly authorized to do so, the Company will
reserve and set aside, out of its registered capital stock, the number of shares
of Additional Common Stock (as hereinafter described) issuable to TGI under this
Agreement, if any such shares, when issued, paid for and delivered upon exercise
of such warrants or options, will be duly and validly issued, fully paid and
non-assessable, and will not violate any preemptive rights of Company
shareholders.
(k) The Company will keep confidential the identity of TGI's clients and
customers involved in this offering, except as may be otherwise required by law.
The Company will not solicit such persons directly for the sale of securities or
for other financing proposals without the express written consent of TGI, which
consent may be given on the condition that the Company agrees to compensate TGI
on the terms set forth in this Agreement for any sales made to such persons for
a period of five years after the closing.
(l) Satisfactory employment agreements must be in place with key management
personnel, who have passed a satisfactory 10-year background check, prior to
commencement of the Offering, which shall include among other things,
performance based compensation and performance based incentives, satisfactory to
TGI. Compensation to approved incoming key employees, who are also existing
shareholders, shall be limited to the terms of the approved employment
agreements, which agreements shall also contain, among other things,
confidentially, non-competition, non-circumvention and other provisions
acceptable to TGI.
(m) TGI shall have the option to receive, at TGI's expense, appropriate and
satisfactory valuations of the Common Stock being offered.
(n) The Company shall enter into a consulting contract for a term of not less
than (2) two years, satisfactory to TGI.
SECTION 6. The Placement Agents Covenants:
The Placement Agent covenants with the Company that:
(a) In offering the Common Stock, the Placement Agent will advise the Company
to deliver to each potential Subscriber contacted by it, prior to accepting any
subscription from such subscriber, the appropriate form of Registration
Statement and approved Company information.
(b) The Placement Agent will make offers to sell Common Stock to, or solicit
offers to subscribe for any Common Stock from, persons in only those
jurisdictions where the Offering and the Common Stock have been qualified or
where it has been determined that an exemption from such qualification is, or
may reasonably be anticipated to he available, under applicable securities
statutes.
(c) TGI shall maintain a record of all information obtained by TGI indicating
that subscribers for Common Stock sold through TGI meet the criteria referred to
in subsection (6) above. At the Closing, TGI shall have no reason to believe
that the information with respect to, and the representations to each purchaser
of Common Stock as set forth in the appropriate Subscription Agreement are not
accurate.
SECTION 7 Compensation:
TGI will require, immediately prior to the commencement of the Proposed
Offering, to have the Company enter into a exclusive Placement Agent Agreement
(the "Placement Agreement") which shall contain such terms and conditions as are
customarily contained in agreements of such character and, among other things,
provide for the following:
(a) The Company shall pay to the Placement Agent a commission of ten percent
(10%) of all the gross proceeds of the Proposed Offering, which shall be payable
to the Placement Agent at the initial Closing and each subsequent closing with
respect to the amounts raised as of such closing date;
(b) In order to reimburse the Placement Agent for those costs, fees and
expenses customarily incurred by a placement agent in connection with the
offering process, the Company will pay to the Placement Agent three percent (3%)
of the gross proceeds of the amounts raised, non-accountable expense allowance
at Closing and each subsequent closing with respect to the amounts raised as of
such closing dates.
(c) In addition to the foregoing, the Company shall bear all the Company's
fees, disbursements, Internet listing services and direct out of pocket expenses
in connection with the Proposed Offering, including, without limitation, the
Company's legal and accounting fees and disbursements. The cost of background
checks on all key management personal that TGI deems necessary, not to exceed
$3,000 and shall be paid by the Company out of the proceeds at closing, if
necessary, however, if this Agreement is terminated, then the Company shall pay
TGI upon termination.
(d) The Placement Agent shall require the Company and Subscriber and its
principal officers and its directors to provide certain warranties and
representations against shorting or hedging of the Company's stock satisfactory
to the Placement Agent.
(e) In addition to the compensation set forth herein,, the Company shall issue
to the Placement Agent 12,500 warrants for Common Stock, under the same terms as
the Offering, on a pro rata basis for every $1,000,000 in gross proceeds raised
by the Placement Agent exercisable at $8.00 per share for a period of five (5)
years.
(f) Commencing with the date hereof and for a period of two years thereafter,
regardless of whether this Agreement is sooner terminated, the Company hereby
agrees to afford to Placement Agent the right to act as the Company's
non-exclusive Placement Agent, as the case may be, in any public offering(s) and
private placement(s) to be effectuated by or on behalf of the Company and for
which the Company proposes to utilize the services of an underwriter,
broker-dealer, or Placement Agent, and with such compensation to be determined
on a deal-by-deal basis. Accordingly, if during such period the Company intends
to effectuate a public offering or private placement of the Company's securities
for its benefit, the Company shall promptly notify Placement Agent in writing of
such intention along with the proposed terms of such offering or placement. The
Company shall thereafter promptly furnish Placement Agent with such information
concerning the business, condition and prospects of the Company as Placement
Agent may reasonably request. If within thirty (30) business days of receipt of
such notice of intention, statement of terms and information, TGI finds
comparable financing with the same or better terms and a comparable underwriter,
the Company agrees to utilize TGI as the Placement Agent for such offering.
However, nothing hereunder shall obligate the placement Agent to participate in
any such financing. If TGI brings any private placement financing or secondary
offering to the Company and the terms are acceptable to the company, the Company
will agree to utilize the services of TGI as the Placement Agent for such
transaction and TGI's fees for such will be negotiated on a case by case basis
at that time.
(g) In the event TGI effectuates a merger, acquisition, joint venture, or
other similar business relationship or business transaction ("Transaction") for
the Company subsequent to the date hereof and or prior to two years from the
date of termination of this Agreement, irrespective of any reason for such
termination, and such Transaction is effectuated as a result or consequence of
any introduction made directly or indirectly by TGI through any third party
introduced by TGI to the Company, or by a person whose introduction to the
Company can be traced back to TGI, during the term of this Agreement, or which
Transaction was initiated, directly or indirectly through any person introduced
by TGI to the Company during the term of this Agreement, then the Company hereby
agrees to pay TGI the following consideration, which payment shall be due and
payable on the date of any such closing with respect thereto:
10% of the first $2,000,000 of total
consideration paid in the transaction,
plus 8% of the next $2,000,000 of total
consideration paid in the transaction,
plus 6% of the next $2,000,000 of total
consideration paid in the transaction,
plus 4% of the next $2,000,000 of total
consideration paid in the transaction,
plus 2% of the balance of total
consideration paid in the transaction.
For purposes of this Agreement, "consideration" shall mean the aggregate
consideration paid by the acquirer in connection with the merger, joint venture,
acquisition or divestiture, described herein and shall include all cash, the
principal of any notes executed as part of the purchase price for such
transaction, the value, as determined in good faith by the parties hereto, of
any securities paid or exchanged in connection with the merger, joint venture,
acquisition or divestiture and the amounts of any long-term liabilities, capital
leases, or bank financing of the acquired entity and which are paid or assumed
by the acquiring entity as part of the purchase price for the acquisition. In
the event the Company requests that TGI assists the Company in raising capital
which is not as a result of an introduction made directly or indirectly by TGI
and/or not initiated by TGI, the parties hereto agree that the compensation to
be paid to TGI for said assistance shall be 50% of the above compensation as
incorporated into this agreement.
SECTION 8. Conditions of TGI's Obligations:
TGI's obligation to offer and sell the Common Stock is subject to the accuracy
of and compliance with the representations and warranties of the Company made in
Section 3 hereof, to the performance by the Company of its obligations under
this Agreement and to the following further conditions;
(a) At such Closing, TGI's counsel shall have been furnished with such
documents upon request, as TGI may reasonably require in order to evidence the
accuracy or completeness of each of the representations or warranties and the
compliance with each of the covenants or satisfaction of any of the conditions
herein contained; and all actions taken by the Company in connection with the
sale of the Common Stock as herein contemplated shall be reasonably satisfactory
in form and substance to TGI and TGI's counsel.
(b) At such Closing, TGI shall receive an opinion from counsel to the Company
in form and substance reasonably satisfactory to TGI's counsel, with respect
to the matters set forth in Section 3 and 5 above.
(c) As soon as practicable after the date hereof and immediately prior to such
Closing and with respect to any sale of Common Stock pursuant to the
Registration Statement, TGI shall receive a blue sky survey or memorandum and a
supplement thereto addressed to TGI and the Company as prepared by the Company's
counsel satisfactory to TGI and relating to the securities laws of certain
jurisdictions designated by the Company and TGI, indicating the conditions under
which offers and sale of the Common Stock may be made in the Offering in
compliance with such securities laws and advising that the appropriate action,
if any, was taken in each such jurisdiction.
(d) The representations and warranties of the Company set forth in Section 3
hereof shall be true and correct as of the Closing, to the best knowledge of the
Company, and the Company shall have complied with all applicable terms and
conditions of this Agreement.
(e) The Company will, prior to the completion of the initial closing of the
Offering, cause each officer and director of the Company who holds 5% or more
shares ("Insiders") of Common Stock (either individually or together with
members of his or her family or together with any affiliate) to enter into an
agreement under which each such Insider agrees to abide by Rule 144 and/or any
State escrow requirements.
(f) If any of the conditions specified in Section 8 of this Agreement shall
not have been fulfilled when and as required by this Agreement, then this
Agreement and all of TGI's obligations hereunder may be canceled by TGI by
notifying the Company of such cancellation in writing at any time at or prior to
the subject Closing and any such cancellation will not in any way relieve the
Company of its obligation to TGI as described in Section 7, herein, except by
payment to TGI of an additional $100,000 as a break up fee.
(g) At its option, TGI shall receive one board seat. If acceptable director
and officer insurance is available, TGI may elect to designate person(s) to sit
on the Board. If there is no acceptable director and officer insurance, at its
option TGI will be an advisor to the Board. In any event, TGI shall receive
notice of all board, shareholder and committee meetings and have the right to
receive all meeting materials, financial data and other data and the right to
participate in all discussions.
SECTION 9. Conditions of the Obligations of the Company:
The obligations of the Company hereunder are subject to the accuracy of and
compliance with TGI's representations and warranties and any other firm that
participates in the Offering, to the performance by TGI of TGI's obligations
hereunder, and to the following further conditions:
(a) At the Closing, the Company shall receive a certificate from TGI as to the
number and identity of persons from whom subscriptions for Shares shall have
been received and accepted, which certificate shall farther be to the effect
that:
(i) Executed Subscription Agreements have been received and accepted
only from persons who, to the best of TGI's knowledge and belief meet the
requirements for Subscribers referred to in Section 6(b,) hereof and are
acting for themselves and not on behalf of any other person; and
(ii) TGI has complied with all applicable broker-dealer registration
requirements with respect to the Offering (but no reference need be made as to
other agents or dealers involved in the Offering)
(iii) The representations and warranties of the Placement Agent
shall be true and correct as of the Closing, to the best knowledge of the
Placement Agent, and the Placement Agent shall have complied with all applicable
terms and conditions of this Agreement.
(b) If any of the conditions specified in this Section 9 shall not have been
fulfilled when and as required by this Agreement, or if the Minimum of Common
Stock is not sold by the completion of the Offering Period, then this Agreement
may be canceled by the Company by notifying TGI of such cancellation in writing
at any time at or prior to the subject Closing.
(c) Notwithstanding anything to the contrary in this Agreement, the Company
will not be required to sell and issue any securities to the extent that the
issuance of any shares underlying such securities would prevent the Company from
complying with NASDAQ or equivalent requirements (as they apply to the Company)
and the Company's charter and by-laws.
SECTION 10. Indemnification:
(a) Indemnification by the Company. The Company agrees to indemnify and hold
harmless the Placement Agent and each person, if any, who controls the Placement
Agent within the meaning of the Securities Act against any losses, claims,
damages or liabilities, joint or several, to which the Placement Agent or such
controlling person may become subject, under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement or
the omission or alleged omission to state therein a material fact required to be
stated regarding the Company or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading or (ii) the Offering; and will reimburse the Placement Agent and each
such controlling person for any legal or other expenses reasonably incurred by
the Placement Agent or such controlling person in connection with investigating
or defending any such loss, claim, damage, liability or action; provided,
however, that the Company will not be liable in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in reliance upon and in conformity with written information furnished to
the Company by the Placement Agent for use in the preparation of the
Registration Statement.
(b) Indemnification by the Placement Agent. The Placement Agent agrees to
indemnify and hold harmless the Company and each person, if any, who controls
the Company within the meaning of the Securities Act against any losses, claims,
damages or liabilities, joint or several, to which the Company or such
controlling person may become subject, under the Securities Act or otherwise
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; in each
case to the extent but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in conformity with
information furnished in writing to the Company by the Placement Agent for use
in the preparation of the Registration Statement.
(c) Procedure. Promptly after receipt by an indemnified party under this
Section 10 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against any indemnifying party
under this Section 10, notify in writing the indemnifying party of the
commencement thereof; and the omission so to notify the indemnifying party will
relieve it from any liability under this Section 10 as to the particular item
for which indemnification is then being sought, but not from any other liability
which it may have to any indemnified party; provided, however, that any failure
by the Placement Agent to notify the Company shall not relieve the Company from
its obligations hereunder, unless the Company is materially prejudiced by such
failure. In case any such action is brought against any indemnified party, and
it notifies an indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein, and to the extent that it may
wish, jointly with any other indemnifying party, similarly notified, to assume
the defense thereof, with counsel who shall be to the reasonable satisfaction of
such indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section 10 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. Any such indemnifying party shall not be liable to any
such indemnified party on account of any settlement of any claim or action
effected without the consent of such indemnifying party.
(d) Contribution. To provide for just and equitable contribution, if: (i) an
indemnified party makes a claim for indemnification pursuant to Section 10(a) or
10(b) but it is found in a final judicial determination, not subject to further
appeal, that such indemnification may not be enforced in such case, even though
this Agreement expressly provides for indemnification in such case, or (ii) any
indemnified or indemnifying party seeks contribution under the Securities Act,
the Exchange Act, or otherwise, then the Company, on the one hand, and the
Placement Agent, on the other hand, shall contribute to the losses, liabilities,
claims, damages, and expenses whatsoever to which any Placement Agent indemnitee
or Company indemnitee, respectively, may be subject, in such proportions as are
appropriate to reflect the relative benefits received by the Company, on the one
hand, and the Placement Agent, on the other hand; provided, however, that if
applicable law does not permit such allocation, then other relevant equitable
considerations such as the relative fault of the Company and the Placement Agent
in connection with the facts which resulted in such losses, liabilities, claims,
damages, and expenses shall also be considered. The relative benefits received
by the Company, on the one hand, and the Placement Agent, on the other hand,
shall be deemed to be in the same proportion as (x) the total proceeds from the
Offering (net of compensation payable to the Placement Agent pursuant to Section
7 hereof but before deducting expenses) received by the Company, and (y) the
compensation received by the Placement Agent pursuant to Section 7 hereof.
The relative fault, in the case of an untrue statement, alleged untrue
statement, omission, or alleged omission, shall be determined by, among other
things, whether such statement, alleged statement, omission, or alleged omission
relates to information supplied by the Company or by the Placement Agent, and
the parties, relative intent, knowledge, access to information, and opportunity
to correct or prevent such statement, alleged statement, omission, or alleged
omission. The Company and the Placement Agent agree that it would be unjust and
inequitable if the respective obligations of the Company and the Placement Agent
for contribution were determined by pro rata or per capita allocation of the
aggregate losses, liabilities, claims, damages, and expenses or by any other
method of allocation that does not reflect the equitable considerations referred
to in this Section. In no case (except fraud) shall the Placement Agent by
responsible for a portion of the contribution obligation in excess of the
compensation received by it pursuant to Section 7 hereof. No person guilty of a
fraudulent misrepresentation shall be entitled to contribution from any person
who is not guilty of such fraudulent misrepresentation. For purposes of this
Section, each person, if any, who controls the Placement Agent within the
meaning of Section 15 of the Securities Act and each officer, director,
partners, employee, agent, and counsel of the Placement Agent, shall have the
same rights to contribution as the Placement Agent, and each person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act and
each officer, director, employee, agent, and counsel of the Company, shall have
the same rights to contribution as the Company, subject in each case to the
provisions of this Section. Anything in this Section to the contrary
notwithstanding, no party shall be liable for contribution with respect to the
settlement of any claim or action effected without its written consent. This
Section is intended to supersede any right to contribution under the Securities
Act, the Exchange Act, or otherwise
SECTION 11. Registration Rights for Placement Agent's Stock:
The Company shall include in any registration, at its own expense, all of the
underlying Common Stock for the Warrants issued to TGI as compensation as set
forth herein in Section 7(e) provided that if the registration statement
pertains to an underwritten offering, the inclusion of any such shares shall be
subject to an underwriter's cutback if the underwriter determines, in good
faith, that the inclusion of such shares will adversely affect the offering by
the Company with such cutback to be accomplished on a pro-rata basis among all
selling shareholders or as shall be otherwise required by such underwriter.
SECTION 12. Representations and Agreements to Survive Sale and Payment:
Except as the context otherwise requires, all representations, warranties and
agreements contained in this Agreement shall be deemed to be representations,
warranties and agreements at a Closing; and such representations, warranties and
agreements of the Placement Agent and the Company, including the indemnity
agreements contained in Section 10 hereof, shall remain operative and in full
force and effect regardless of any investigation made by you or on your behalf,
or any controlling person, or by or on behalf of the Company, and shall survive
the sale of, and payment for the Shares.
SECTION 13.Notices:
All notices provided for by this Agreement shall be made in writing either (a)
by actual delivery of the notice into the hands of the parties thereto entitled,
or (b) by the mailing of the notice in the United States mails to the address,
as stated below (or at such other address as may have been designated by written
notice), of the party entitled thereto, by certified or registered mail, return
receipt requested, postage prepaid or faxed with confirmation. The notice shall
be deemed to be received in the case of (a) above, on the date of its actual
receipt by the party entitled thereto, and in the case of (b) above, three days
after the date of deposit in the United States mails. All communications
hereunder, except as herein otherwise specifically provided, shall be in writing
and, if sent to the Placement Agent, shall be mailed or delivered to the
Placement Agent at the address set forth on page 1 hereof, and if sent to the
Company shall be mailed or delivered to ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President and CEO,
R-TEC TECHNOLOGIES, INC., ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇.
SECTION 14. Governing Law:
This Agreement shall be governed by, subject to and construed in accordance with
the laws of the State of Florida and proper venue will be Palm Beach County,
Florida.
SECTION 15. Severability:
If any portion of this Agreement shall be held invalid or inoperative, then, so
far as is reasonable and possible (a) the remainder of this Agreement shall be
considered valid and operative; and (b) effect shall be given to the intent
manifested by the portion held invalid or inoperative.
SECTION 16. Counterparts:
This Agreement may be executed in a number of identical counterparts, including
facsimile signatures, each of which shall be deemed to be an original, but all
of which constitute, collectively, one and the same Agreement; but in making
proof of this Agreement, it shall not be necessary to produce or account for
more than one such counterpart.
SECTION 17. Modification or Amendment:
This Agreement may not be modified or amended except by written agreement
executed by all the parties hereto.
SECTION 18. Other Instruments:
The parties hereto covenant and agree that they will execute such other and
further instruments and documents as are or may become necessary or convenient
to effectuate and carry out this Agreement.
SECTION 19. Captions:
The captions used in this Agreement are for convenience only and shall not be
construed in interpreting this Agreement.
SECTION 20. Parties:
This Agreement shall be binding upon and inure solely for the benefit of the
parties hereto, the controlling persons and indemnified parties referred to in
Section 10 hereof and their respective successors, legal representatives, heirs
and assigns, and no other person shall have or be construed to have any legal or
equitable right, remedy or claim under or in respect of or by virtue of this
Agreement or any provision herein contained.
SECTION 21.Entire Agreement:
This Agreement contains the entire understandings between the parties and
supersedes any prior understandings or written or oral agreements between them
respecting the subject matter hereof.
If the foregoing correctly sets forth the understanding between the Placement
Agent and the Company, please so indicate in the space provided below for that
purpose, whereupon this letter shall constitute a binding Agreement between us.
Sincerely,
R-TEC TECHNOLOGIES, INC.
By: _____________________________
Name: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and CEO
ACCEPTED as of the _______ day of September, 1999:
▇▇▇▇▇▇▇▇▇ GROUP, INC.
By: __________________________
Name: ▇▇. ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President and CEO