EXHIBIT 4.3
H.E.R.C. PRODUCTS INCORPORATED
AGENCY AGREEMENT
As of November 15, 1996
▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ Capital Corp.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Gentlemen:
H.E.R.C. Products Incorporated, a Delaware corporation ("Company"),
proposes to offer for sale in a private placement ("Offering"), up to $1,500,000
in aggregate purchase price of shares of preferred stock, $.01 par value
("Preferred Stock"), as more fully described in the Certificate of Designations
attached hereto as Exhibit A. The per-share offering price ("Offering Price") to
purchasers ("Subscribers") will be $10.00 and the stated value will be $10.00
per share.
The Offering will be made on a "best efforts, minimum $1,000,000,
maximum $1,500,000 basis." The Preferred Stock will be sold only to "accredited
investors" in accordance with Section 4(2) and/or 3(b) of the Securities Act of
1933, as amended ("Securities Act"), and Rules 501-506 of Regulation D ("Reg D")
promulgated thereunder.
The Subscribers shall have the rights and be subject to the terms and
conditions reflected in the subscription agreement to be executed by each
Subscriber and the Company (collectively, the "Subscription Agreements"),
together with the exhibits thereto, including, but not limited to the Company's
Annual Report on Form 10-KSB for the fiscal year ended December 31, 1995, and
the Company's Quarterly Report on Form 10-QSB for the fiscal quarter ended
September 30, 1996, and the Company's Proxy Statement, dated January 11, 1996,
and the Company's Prospectus, dated June 12, 1996, all of which together will be
referred to herein as the "Offering Documents." ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
Capital Corp. is sometimes referred to herein as the "Placement Agent" or as
"PHD."
6. Appointment of Placement Agent; The Offering.
(a) Appointment of Placement Agent. You are hereby appointed exclusive
Placement Agent of the Company for the purpose of assisting the Company in
finding qualified Subscribers. You hereby accept such agency and agree to assist
the Company in finding qualified Subscribers. You are hereby authorized to
engage, at your option, the services of other broker-dealers who are members of
the National Association of Securities Dealers, Inc. ("NASD") to assist you in
soliciting Subscribers and to remit to the broker-dealers all or a portion of
the commissions payable to you under Section 4.3 hereof and the Placement Agent
Option issuable to you under Section 4.4 hereof, as you shall determine.
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(b) Offering Period; Closings. The offering period ("Offering Period")
shall commence on November 15, 1996 and shall continue until November 30, 1996
("Termination Date"), unless extended by the Company and the Placement Agent to
a date not later than December 15, 1996, without notice to Subscribers. If at
any time prior to the Termination Date, subscriptions for at least $1,000,000 in
aggregate purchase price for the shares of Preferred Stock have been received
and accepted (and funds in payment have cleared), then, upon the mutual consent
of the Company and the Placement Agent, a closing ("Initial Closing") shall take
place with respect to such accepted subscriptions and the Company shall continue
the Offering until all the Preferred Stock is sold or the end of the Offering
Period, whichever occurs first. After the Initial Closing, subsequent closings
of Preferred Stock with respect to accepted subscriptions may take place at any
time during the Offering Period as mutually determined by the Company and the
Placement Agent (the Initial Closing and any subsequent closing will each be
referred to herein as a "Closing"). If subscriptions for at least $1,000,000 in
aggregate purchase price for the shares of Preferred Stock are not received and
accepted (and funds in payment therefor cleared) by the Termination Date, then
the Offering will be terminated and all funds received from Subscribers will be
returned, without interest and without any deduction.
(c) Offering Documents. The Company will provide the Placement Agent with a
sufficient number of copies of the Offering Documents for delivery to potential
Subscribers and such other information, documents and instruments which the
Placement Agent deems reasonably necessary to act as placement agent hereunder
and to comply with the rules, regula tions and judicial and administrative
interpretations respecting compliance with applicable state and federal statutes
related to the Offering.
(d) Segregation of Funds. Each Subscriber for Preferred Stock shall wire
the purchase price to a designated account maintained by Attorneys ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇▇.
(e) No Firm Commitment. The Company understands and acknowledges that the
undertaking by the Placement Agent pursuant to this Agreement is not a "firm
commitment" offering and that the Placement Agent is not obligated in any way to
purchase or sell the Preferred Stock offered hereby.
7. Representations and Warranties of the Company. The Company represents
and warrants upon the execution of this Agreement and again at the Initial
Closing and any subsequent Closings as follows:
(a) Due Incorporation and Qualification. The Company has been duly
incorporated, is validly existing and is in good standing under the laws of its
state of incorporation and is duly qualified as a foreign corporation (except
where the failure to so qualify would not have a material adverse effect on the
Company) for the transaction of business and is in good standing in each
jurisdiction in which the ownership or leasing of its properties or the conduct
of its business requires such qualification.
(b) Authorized Capital. The Company is authorized to issue 40,000,000
shares of Common Stock and 1,000,000 shares of preferred stock, of which
6,356,487 shares of Common Stock and no shares of Preferred Stock are currently
issued and outstanding. All of the issued and outstanding shares of Common Stock
have been duly and validly authorized and issued and are fully paid and
non-assessable. The offers and sales of such outstanding shares of Common Stock
were at all relevant times either registered under the Securities Act and the
applicable state securities or Blue Sky laws, or exempt from such registration.
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(c) Financial Statements; No Material Adverse Changes. The financial
statements of the Company included in the Offering Documents ("Financials")
fairly present the consolidated financial position and results of operations of
the Company at the dates thereof and for the periods covered thereby, subject to
year-end adjustments and normal recurring accruals. Other than as set forth on
the September 30, 1996 balance sheet contained in the Financials ("Balance
Sheet"), the Company has no material liabilities or obligations, contingent,
direct, indirect or otherwise, except those incurred in the ordinary course of
business since the date of the Balance Sheet. Except as otherwise stated in the
Offering Documents or incurred in the ordinary course of the Company's business
since September 30, 1996, there has not been any change in the condition,
financial or otherwise, of the Company which could materially adversely affect
its ability to conduct its operations as described in the Offering Documents.
(d) No Pending Actions. There are no actions, suits, proceedings, claims,
hearings, any investigations or inquiries before or by any court, governmental
authority, tribunal or instrumentality (or to the Company's knowledge, any state
of facts which would give rise thereto), pending or, to the Company's knowledge,
threatened against the Company or involving the properties of the Company, which
might result in any material adverse change in the business, properties,
financial position or results of operations of the Company, or which might
adversely affect the transactions or other acts contemplated by this Agreement
or the validity or enforceability of this Agreement.
(e) Private Offering Exemption. Assuming that (i) a proper Form D is filed
in accordance with Rule 503 of Reg D, (ii) that the offer and the sale of the
Preferred Stock by the Placement Agent is made in compliance with Rule 502(c) of
Reg D and (iii) that the representations of the Subscribers in the Subscription
Agreements signed by them are true and correct (which facts will not be
independently verified by the Company), the sale of Preferred Stock in the
Offering is exempt from registration under the Securities Act and is in
compliance with Reg D.
(f) Due Authorization; Consents. The Company has full right, power and
authority to enter into this Agreement, the Subscription Agreements and the
Placement Agent Option (as defined in Section 4.4) and to perform all of its
obligations hereunder and thereunder. This Agreement has been, and the
Subscription Agreements and Placement Agent Option will be, duly authorized,
executed and delivered by the Company. The execution and delivery of this
Agreement has been, and the Subscription Agreements and Placement Agent Option,
when executed and delivered will have been, duly authorized by all necessary
corporate action and no further corporate action or approval is or will be
required for their respective execution, delivery and performance. This
Agreement constitutes, and the Subscription Agreements and Placement Agent
Option, upon execution and delivery will constitute, valid and binding
obligations of the Company, enforceable in accordance with their respective
terms (except (i) as the enforceability thereof may be limited by bankruptcy or
other laws now or hereafter in effect relating to or affecting creditors' rights
generally, (ii) that the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceedings therefor may be brought,
and (iii) that the enforceability of the indemnification and contribution
provisions of the respective agreements may be limited by the federal and state
securities laws and public policy), and no consent, approval, authorization,
order of, or filing with, any court or governmental authority or any other third
party is required to consummate the transactions contemplated by this Agreement,
the Subscription Agreements or Placement Agent Option, except that the offer and
sale of the Preferred Stock in certain jurisdictions may be subject to the
provisions of the securities or Blue Sky laws of such jurisdictions.
Additionally, other than such consents as may have already been
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obtained, no consent, approval, authorization, order of, filing with, any court
or governmental authority or any other third party is required to consummate the
transactions contemplated by this Agreement, the Subscription Agreements and the
Placement Agent Option.
(g) Non-Contravention. The Company's execution and delivery of this
Agreement, the Subscription Agreements and the Placement Agent Option, and the
incurring of the obligations herein and therein set forth, and the consummation
of the transactions contemplated herein and therein, will not (i) conflict with,
or constitute a breach of, or a default under, the Certificate of Incorporation
or By-Laws of the Company, or any contract, lease or other agreement or
instrument to which the Company is a party or in which the Company has a
beneficial interest or by which the Company is bound, except where such
breach(es) or default(s), singly or in the aggregate, would not have a material
adverse effect on the Company; (ii) violate any existing applicable law, rule,
regulation, judgment, order or decree of any governmental agency or court,
domestic or foreign, having jurisdiction over the Company or any of its
properties or business, except where such violation(s), singly or in the
aggregate, would not have a material adverse effect on the Company; or (iii)
have any material adverse effect on any approval necessary for the Company to
own, lease or operate any of its properties or to conduct its business.
(h) Valid Issuances. The Preferred Stock, when issued and delivered in
accordance with the terms of the Offering Documents, will be duly and validly
issued, fully paid and non-assessable. The Placement Agent Option when issued
and delivered in accordance with the terms of this Agreement or the Placement
Agent Option, as the case may be, will be duly and validly issued. The Common
Stock issuable upon conversion of the Preferred Stock and exercise of the
Placement Agent Option when issued and delivered in accordance with their terms,
will be duly and validly issued, fully paid and non-assessable. The Company has
reserved for issuance a sufficient number of shares of Common Stock to be issued
upon conversion of the Preferred Stock and exercise of the Placement Agent
Option.
(i) Offering Documents; 10b-5 Representation. The Offering Documents
conform in all material respects with the requirements of Section 4(2) and/or
3(b) of the Securities Act and Rules 501-506 of Reg D and with the requirements
of all other applicable rules and regulations of the Securities and Exchange
Commission (the "Commission") currently in effect relating to "private
offerings." The Offering Documents, taken as a whole, do not con tain 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.
(j) Exchange Act Reports. The Company is subject to the reporting
requirements of the Securities Act and Securities Exchange Act of 1934, as
amended ("Exchange Act") and has filed all reports and statements required under
the Securities Act and Exchange Act on a timely basis, and each report and
statement was true and complete in all material respects when filed.
(k) Subsidiaries. Whenever the context of this Agreement permits, the
representations and warranties made by the Company in this Agreement shall also
apply and be true with respect to each subsidiary individually and as to the
Company taken as a whole with all the subsidiaries, as if each representation
and warranty contained herein made specific reference to the subsidiary each
time the term "Company" is used.
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8. Representations and Warranties of the Placement Agent. The Placement
Agent represents and warrants as follows:
(a) Due Incorporation. The Placement Agent is duly incorporated and validly
existing and in good standing under the laws of its state of incorporation and
is duly qualified as a foreign corporation for the transaction of business and
is in good standing in each jurisdiction where the failure to be so qualified
would not have a materially adverse effect on the business of the Placement
Agent.
(b) Broker-Dealer Registration. The Placement Agent is registered as a
broker-dealer under Section 15 of the Exchange Act.
(c) Good Standing. The Placement Agent is a member in good standing of the
NASD.
(d) Sales in Certain Jurisdictions. Sales of Preferred Stock by the
Placement Agent will be made only in such jurisdictions in which the Placement
Agent is a registered broker-dealer or where an applicable exemption from such
registration exists.
(e) Compliance with Laws. Offers and sales of Preferred Stock by the
Placement Agent will be made in compliance with the provisions of Rule 502(c) of
Reg D of the Securities Act, and the Placement Agent will furnish to each
investor a copy of the Offering Documents prior to accepting any payments for
the Preferred Stock. The Placement Agent will offer the Preferred Stock only in
the jurisdictions indicated in the Blue Sky Survey delivered by ▇▇▇▇▇▇▇▇ Mollen
& ▇▇▇▇▇▇ ("GM&M") and in accordance with the limitations set forth therein.
(f) Disqualification Provisions. Neither the Placement Agent nor any
principal, director, officer or agent thereof is subject to any of the
disqualification provisions set forth in Rules 262(b) or (c) under the
Securities Act or state law applicable to the transactions contemplated hereby.
9. Closings.
(a) Closings. The Closings will take place at the offices of GM&M, located
at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇. At each Closing, the Company shall
deliver to the Subscribers for the shares of Preferred Stock being purchased at
such Closing, certificates representing the Preferred Stock against payment
therefor by wire transfer.
(b) Deliveries at each Closing. At each Closing, and as a condition to each
Closing, the Company shall deliver or cause to be delivered to the Placement
Agent on behalf of the Placement Agent and the Subscribers:
a. Officers' Certificate. A certificate of the Company, signed by an
executive officer thereof stating that (a) the representations and warranties
contained in Section 2 hereof are true and accurate in all material respects at
each Closing, with the same effect as though expressly made at each Closing and
(b) that all covenants and agreements to be complied with by the Company prior
to the Closing have been complied with;
b. Secretary's Certificate. A certificate of the Company, signed by the
Secretary or Assistant Secretary thereof, certifying that the attached copy of
the Certificate of
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Incorporation, as amended by the Certificate of Designations related to the
Preferred Stock, is in full force and effect, and has not been amended.
c. Certificates. The certificates representing the Preferred Stock in the
names of the Subscribers at such Closing and, at the last Closing,
notwithstanding the preamble to this Section 4.2, the Placement Agent Option in
such names as it designates.
d. Other Documents. Such other Closing documents as shall be reasonably
requested by the Placement Agent.
(c) Placement Agent's Fees and Expenses. At each Closing, the Company shall
pay to the Placement Agent a commission equal to 10% of the aggregate purchase
price of the Preferred Stock sold. On or before the Initial Closing, the Company
shall pay the legal fees and disbursements of GM&M referred to in paragraph 5.2
below. All the foregoing amounts are payable directly to the parties who are
owed same by deduction from the aggregate pur chase price of the Preferred Stock
sold.
(d) Issuance of Placement Agent Option. At the last Closing with respect to
the Offering, the Company shall issue to the Placement Agent or its designees,
five-year options ("Placement Agent Option") to purchase that number of shares
of Common Stock equivalent to one share of Common Stock for every two shares of
Preferred Stock sold to subscribers in the Offering, at a purchase price of
$3.00 per share of Common Stock, exercisable until the fifth anniversary date of
the Initial Closing. The Placement Agent Option shall contain registration
rights with respect to the shares underlying the Placement Agent Option
identical to the registration rights granted to the Subscribers in the Offering.
(e) GKN Securities Corp. Letter. At the first Closing, with respect to the
Offering, the Company will deliver to the Placement Agent a letter pursuant to
which GKN Securities Corp. will waive its right of first refusal in respect of
the Offering and agreeing not to release certain officers and directors from the
lockup agreements given in connection with offering of securities by the Company
on April 3, 1996.
10. Covenants. The Company covenants and agrees that:
(a) Amendments to Offering Documents. Until the Offering has been completed
or terminated, if there shall occur any event relating to or affecting, among
other things, the Company or any affiliate, or the proposed operations of the
Company taken as a whole as described in the Offering Documents, as a result of
which it is necessary, in the opinion of counsel for the Company, to amend or
supplement the Offering Documents in order that the Offering Documents will not
contain an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, the Company shall
immediately prepare and furnish to the Placement Agent a reasonable number of
copies of an appropriate amendment of or supplement to the Offering Documents,
in form and substance satisfactory to the Placement Agent.
(b) Expenses of Offering. The Company shall be responsible for, and shall
pay, all fees, disbursements and expenses incurred in connection with the
Offering, including, but not limited to, the Company's legal (including the fees
and disbursements of GM&M) and accounting fees and disbursements, the costs of
preparing, mailing and delivering the Offering Documents and amendments and
supplements thereto, this Agreement, the Subscription
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Agreements and the Placement Agent Option and related documents (all in such
quantities as the Placement Agent may reasonably require), preparing and
printing stock, filing fees, costs and expenses (including fees and
disbursements of GM&M) incurred in qualifying the Offering under the "Blue Sky"
laws of the states reasonably specified by the Placement Agent (which fees,
excluding disbursements, shall be $5,000).
(c) Further Assurances. The Company will take such actions as may be
reasonably required or desirable to carry out the provisions of this Agreement
and the transactions contemplated hereby.
(d) Accuracy of Representations and Warranties. The Company hereby agrees
that, prior to the Termination Date, it will take no action, and use its best
efforts to prevent the occurrence of any event, which could result in any of its
representations, warranties or covenants contained in this Agreement or any of
the Offering Documents not to be true and correct, or not to be performed as
contemplated, at and as of the time immediately after the occurrence of such
transaction or event.
11. Registration Rights; Subscriber Lockup.
(a) Registration Rights. As additional consideration for this Agreement and
the transactions contemplated hereby, the Company agrees with the Placement
Agent and will agree with each Subscriber, as the case may be, to register for
resale under a Registration Statement ("Registration Statement") pursuant to the
Securities Act and the Blue Sky or state securities laws of states reasonably
selected by the Placement Agent, the Common Stock into which the Preferred Stock
is convertible and the Common Stock underlying the Placement Agent Option. The
Company agrees that the Registration Statement will be filed on or before the
one-month anniversary of the Initial Closing. The Company agrees to use its best
efforts to have the Registration Statement declared effective by February 14,
1997. If the Registration Statement is not declared effective by the close of
business on April 15, 1997, as provided in the Certificate of Designations for
the Preferred Stock, the conversion rate will be lowered. The Company shall keep
the Registration Statement effective and current until all the securities
registered thereunder are sold or the securities may be sold by the holder
pursuant to Rule 144, subject to customary "blackout" periods referred to in the
Placement Agent Option and the Subscription Agreement. The Company shall bear
all the expenses and pay all the fees it incurs in connection with the
preparation, filing and modification or amendment of the Registration Statement.
12. Indemnification and Contribution.
(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 and/or the Exchange 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
(A) in the Offering Documents, or (B) in any blue sky application or other
document executed by the Company specifically for blue sky purposes or based
upon any other written information furnished by the Company or on its behalf to
any state or other jurisdiction in order to qualify any or all of the Preferred
Stock under the securities laws thereof (any such application, document or
information being hereinafter called a "Blue Sky Application"); (ii) the
omission or alleged omission by the Company to state in the Offering Documents
or in any Blue Sky Application a material fact required to be
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stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; or (iii) any breach by
the Company of any of its representations, warranties or covenants contained
herein or in the Subscription Agreements or Placement Agent Option 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 solely upon (a) an untrue statement or
alleged untrue statement or omission or alleged omission made in reliance upon
and in conformity with written information regarding the Placement Agent which
is furnished to the Company by the Placement Agent specifically for inclusion in
the Offering Documents or any such Blue Sky Application; or (b) any breach by
the Placement Agent of its representations, warranties or covenants contained
herein (collectively, (a) and (b) above are referred to as the "Non-Indemnity
Events").
(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 and/or the Exchange 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 Non-Indemnity
Event; and will reimburse the Company for any legal or other expenses reasonably
incurred by the Company in connection with investigating or defending any such
loss, claim, damage, liability or action provided that such loss, claim, damage
or liability is found ultimately to arise out of or be based upon any
Non-Indemnity Event.
(c) Procedure. Promptly after receipt by an indemnified party under this
Section 7 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 7, notify in writing the indemnifying party of the
commencement thereof; and the omission so to notify the indemnifying party will
relieve the indemnifying party from any liability under this Section 7 as to the
particular item for which indemnification is then being sought (if such failure
materially prejudices the indemnifying party), but not from any other liability
which it may have to any indemnified party. 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 7 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, which consent shall not be unreasonably withheld.
(d) Contribution. If the indemnification provided for in this Section 7 is
unavailable to any indemnified party in respect to any losses, claims, damages,
liabilities or expenses referred to therein, then the indemnifying party, in
lieu of indemnifying such indemnified party, will contribute to the amount paid
or payable by such indemnified party, as a result of such losses, claims,
damages, liabilities or expenses (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand, and the
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Placement Agent on the other hand, from the Offering, or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above, but also the relative fault of the Company on the one
hand, and of the Placement Agent on the other hand, in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses as well as any other relevant equitable considerations.
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 the
total proceeds from the Offering (net of sales commissions, but before deducting
other expenses) received by the Company, bear to the commissions received by the
Placement Agent. The relative fault of the Company on the one hand, and the
Placement Agent on the other hand, will be determined with reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by the
Company, and its relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
(e) Equitable Considerations. The Company and the Placement Agent agree
that it would not be just and equitable if contribution pursuant to this Section
7 were determined by pro rata allocation or by any other method of allocation
which does not take into account the equitable considerations referred to in the
immediately preceding paragraph.
(f) Attorneys' Fees. The amount payable by a party under this Section 7 as
a result of the losses, claims, damages, liabilities or expenses referred to
above will be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any action
or claim (including, without limitation, fees and disbursements of counsel
incurred by an indemnified party in any action or proceeding between the
indemnifying party and indemnified party or between the indemnified party and
any third party or otherwise).
13. Termination of Agreement. The Placement Agent will have the right to
terminate this Agreement by giving written notice, as herein specified, at any
time, at or prior to the Closing if: (i) material information comes to the
attention of the Placement Agent relating to the Company, its management or its
position in the industry which would preclude a successful Offering; (ii) a
material adverse change has occurred in the financial condition, business or
prospects of the Company (it being understood that losses not significantly in
excess of losses for prior periods shall not be deemed to be material adverse
changes); or (iii) the Company has breached any of its material representations,
warranties or obligations hereunder, or failed to expeditiously proceed with the
Offering. Notwithstanding anything contained herein to the contrary, if a
Closing does not occur by December 15, 1996, through no fault of the Company,
the Company may terminate this Agreement. The provisions of Sections 7, 8 and 18
of this Agreement shall survive the termination of this Agreement for any
reason.
14. Notices. Any notice hereunder shall be in writing and shall be
effective when delivered in person or by facsimile transmission, or mailed by
certified mail, postage prepaid, return receipt requested, to the appropriate
party or parties, at the following addresses: if to the Placement Agent, to
▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ Capital Corp., ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇, President (Fax No. 212/▇▇▇-▇▇▇▇); if
to the Company, to H.E.R.C. Products Incorporated, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
#▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President (Fax No.
602/▇▇▇-▇▇▇▇); and, in either case, a copy to ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Esq. (Fax
No. 212/▇▇▇-▇▇▇▇); or, in each case, to such other address as the parties may
hereinafter designated by like notice.
9
15. Parties. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and assigns. Neither
party may assign this Agreement or its obligations hereunder without the prior
written consent of the other party. This Agreement is intended to be, and is for
the sole and exclusive benefit of the parties hereto and the persons described
in Section 7.1 and 7.2 hereof, and their respective successors and assigns, and
for the benefit of no other person, and no other person will have any legal or
equitable right, remedy or claim under, or in respect of this Agreement.
16. Amendment and/or Modification. Neither this Agreement, nor any term or
provision hereof, may be changed, waived, discharged, amended, modified or
terminated orally, or in any manner other than by an instrument in writing
signed by each of the parties hereto.
17. Further Assurances. Each party to this Agreement will perform any and
all acts and execute any and all documents as may be necessary and proper under
the circumstances in order to accomplish the intents and purposes of this
Agreement and to carry out its provisions.
18. Validity. In case any term of this Agreement will be held invalid,
illegal or unenforceable, in whole or in part, the validity of any of the other
terms of this Agreement will not in any way be affected thereby.
19. Waiver of Breach. The failure of any party hereto to insist upon strict
performance of any of the covenants and agreements herein contained, or to
exercise any option or right herein conferred in any one or more instances, will
not be construed to be a waiver or relinquishment of any such option or right,
or of any other covenants or agreements, and the same will be and remain in full
force and effect.
20. Entire Agreement. This Agreement contains the entire agreement and
understanding of the parties with respect to the subject matter hereof and
thereof, respectively, and there are no representations, inducements, promises
or agreements, oral or otherwise, not embodied in this Agreement. Any and all
prior discussions, negotiations, commitments and understanding relating to the
subject matter of these agreements are superseded by them.
21. Counterparts. This Agreement may be executed in counterparts and each
of such counterparts will for all purposes be deemed to be an original, and such
counterparts will together constitute one and the same instrument.
22. Law. This Agreement will be deemed to have been made and delivered in
New York City and will be governed as to validity, interpretation, construction,
effect and in all other respects by the internal laws of the State of New York.
The Company (i) agrees that any legal suit, action or proceeding arising out of
or relating to this Agreement shall be instituted exclusively in New York State
Supreme Court, County of New York, or in the United States District Court for
the Southern District of New York, (ii) waives any objection to the venue of any
such suit, action or proceeding, and (iii) irrevocably consents to the
jurisdiction of the New York State Supreme Court, County of New York, and the
United States District Court for the Southern District of New York in any such
suit, action or proceeding. The Company further agrees to accept and acknowledge
service of any and all process which may be served in any such suit, action or
proceeding brought in the New York State Supreme Court, County of New York, or
in the United States District Court for the Southern District of New York and
agrees that service of process upon it mailed by certified mail to its address
shall be deemed in every respect effective service of process upon it in any
suit, action or proceeding.
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23. Representations, Warranties and Covenants to Survive Delivery. The
respective representations, indemnities, agreements, covenants, warranties and
other statements of the Company and the Placement Agent shall survive execution
of this Agreement and delivery of the Preferred Stock and/or the termination of
this Agreement prior thereto.
If you find the foregoing is in accordance with our understanding,
kindly sign and return to us a counterpart hereof, whereupon this instrument
along with all counterparts will become a binding agreement between us.
Very truly yours,
H.E.R.C. PRODUCTS INCORPORATED
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
AGREED:
▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
CAPITAL CORP.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇, President
11
H.E.R.C. PRODUCTS INCORPORATED
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
December 5, 1996
▇▇▇▇▇▇, Holden & ▇▇▇▇▇▇▇▇▇ Capital Corp.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: Private Offering of Preferred Stock of H.E.R.C. Products Incorporated
Gentlemen:
Reference is made to the Agency Agreement, dated as of
November 15, 1996, between you and H.E.R.C. Products Incorporated ("Company"),
pursuant to which the Company proposed to offer for sale in a private placement
("Offering"), up to $1,500,000 in aggregate purchase price of shares of
preferred stock, $.01 par value ("Preferred Stock") on a "best efforts, minimum
$1,000,000, maximum $1,500,000 basis." This is to confirm our agreement to
increase the Offering to up to $1,850,000 in aggregate purchase price of shares
of Preferred Stock on a "best efforts, minimum $1,000,000, maximum $1,850,000
basis."
If you find the foregoing is in accordance with our
understanding, please execute a copy of this letter where indicated below.
Sincerely,
H.E.R.C. PRODUCTS INCORPORATED
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
AGREED:
▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ CAPITAL CORP.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇, President
12