EXHIBIT 7.3
PLACEMENT AGREEMENT
This Agreement is made and entered into as of this 31 st day of
October 2006 by and between ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Securities, Inc. ("CMS") and
The Enlightened Gourmet, Inc. ("the Company").
In consideration of the mutual promises made herein and for other good
and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
1. Purpose :The Company hereby engages CMS for the term specified in
Paragraph 2 hereof to act as placement agent pursuant to the terms
and conditions set forth herein in connection with a proposed private
placement of up to $1.5 Million in convertible promissory notes
(the "Securities") to a limited number of accredited investors
(the "Offering").
2. Term : This Agreement shall be effective from the date hereof until
November 15, 2006, unless extended by the parties.
3. Disclosure of Information. Except as contemplated by the terms hereof
or as required by applicable law, CMS shall keep confidential all
material non-public information provided to it by the Company, and
shall not disclose such information to any third party, other than
such of its employees and advisors as CMS determines to have a
need to know.
4. Closing; Placement and Fees .
(a) Conditions to CMS's Obligations . The obligations of CMS
hereunder are subject to the accuracy of the representations
and warranties of the Company herein contained as of the date
hereof, and, as of the closing date, to the performance by the
Company of its obligations hereunder and to the following
additional conditions:
(i) Due Qualification or Exemption . (A) The Offering
contemplated by this Agreement shall become qualified
or be exempt from qualification under the securities
laws of the jurisdictions in which the Securities are
contemplated to be offered not later than the closing
date, subject to any filings to be made thereafter and
(B) at the applicable closing date no stop order
suspending the sale of the Securities shall have been
issued, and no proceeding for that purpose shall have
been initiated or threatened;
(ii) No Material Misstatements . It is represented by the
Company that the Company's filings with the SEC and
any other materials disseminated by the Company to
potential investors do not contain any untrue
statement of fact, or omit to state a fact or other
material required to be stated therein, which is
necessary to make the statements, in light of the
circumstances under which they were made,
not misleading;
(iii) Compliance with Agreements . The Company shall have
complied with all agreements and satisfied all
conditions on its part to be performed as a condition
to the sale of the Securities prior to each Closing;
(iv) Corporate Action. The Company shall have taken all
corporate action necessary in order to permit the
valid execution, delivery and performance of the
Promissory Notes by the Company, including, without
limitation, obtaining the approval of the Company's
board of directors, for the execution and delivery
of the Promissory Notes, the performance by the
Company of its obligations hereunder and the Offering
contemplated hereby, as well as any necessary
restructuring of the capital structure of the Company
required by CMS;
(c) Blue Sky . The Company shall take such action as is necessary
to qualify the Securities for sale to the Investors under
applicable securities (or "blue sky") laws of the states of
the United States (or to obtain an exemption from such
qualification).
(d) Placement Fees and Expenses . Upon Closing, the Company shall
pay to CMS (to be paid directly from the escrowed funds raised)
a commission (the "Cash Commission") equal to ten percent (10%)
of the aggregate purchase price of the Securities sold to such
investor, plus an additional three percent (3%) of the purchase
price for non-accountable expenses ("Non-Accountable
Expense Fee"). The Company shall also pay all expenses in
connection with qualifying the Securities for sale to the
Investors under applicable securities or blue sky laws of the
states of the United States (or in obtaining an exemption from
such qualification). These same fees are described in the
Investment Banking Agreement between CMS and the Company and
are not intended to be charged twice.
In addition to the Cash Commission and the Non-Accountable Expense
Fee, the Company shall receive placement agent warrants equivalent to 10% of
the number of shares which would be issued by the Company if all Notes sold
would be converted (ie. in the event that $1.5 Million in Notes is sold, the
underlying shares would be 30 million; thus the Placement Agent would receive
3 million warrants). These warrants shall be exercisable at $0.06 (6 cents)
per share. The holders of the warrants shall have the right to a traditional
"cashless exercise". If at the time of the exercise of the warrants, there is
not an effective registration statement covering resale of the shares being
received upon exercise, then such stock certificate or certificates shall bear
an appropriate legend referring to the registration requirements of the
Securities Act of 1933; however, in such event, the Company shall prepare and
file with the Securities and Exchange Commission within 90 days after
Conversion a registration statement on Form SB-2 or S-1 or such other form as
is appropriate in order to register the Converted Shares. In the event that
the Company fails to file a registration statement within 90 days as set forth
above; or fails to prosecute such registration in good faith, the Company
shall be obligated to pay to CMS that number of additional placement agent
warrants equal to 2,187,500 multiplied by (the dollar value of the Notes sold
in the offering divided by $1,500,000).
5. Expenses of CMS and its counsel: In addition to the fees payable hereunder,
and regardless of whether any transaction set forth above is
consummated, the Company shall reimburse CMS for all fees and
disbursements of CMS's legal counsel in an amount of $10,000 payable
to ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇, LLP. This fee is non-inclusive of any fees
which may be incurred in connection with counsel's performance of its
duties as an escrow agent to hold certain shares of stock in connection
with the transaction. This legal fee is payment solely for work
performed on behalf of CMS in preparing the transaction documents
being executed for the first round of financing (up to $1,500,000 in
Notes). ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇, LLP does not in any fashion represent
the Company.
6 . Liability of CMS: The Company acknowledges that all opinions and advice
(written or oral) given by CMS to the Company in connection with CMS's
engagement are intended solely for the benefit and use of the Company
in considering the transaction to which they relate, and the Company
agrees that no person or entity other than the Company shall be
entitled to make use of or rely upon the advice of CMS to be given
hereunder, and no such opinion or advice shall be used for any other
purpose or reproduced, disseminated, quoted or referred to at any time,
in any manner or for any purpose, nor may the Company make any public
references to CMS, or use CMS's name in any annual reports or any other
reports or releases of the Company (except as required by law) without
CMS's prior written consent.
7. CMS's Services to Others: The Company acknowledges that CMS is in the
business of providing financial services and consulting advice to
others. Nothing herein contained shall be construed to limit or
restrict CMS in conducting such business with respect to others,
or in rendering such advice to others.
8. Representations and Warranties of the Company.
The Company represents and warrants to CMS that:
(a) Organization and Qualification . The Company is duly incorporated,
validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated, with full power and
authority (corporate and other) to own, lease, use and operate
its properties and to carry on its business as and where now
owned, leased, used, operated and conducted. The Company is
duly qualified to do business and is in good standing in every
jurisdiction in which the nature of the business conducted by
it makes such qualification necessary, except where the failure
to be so qualified or in good standing would not have a
material adverse effect.
(b) Authorization; Enforcement . (i) The Company has all requisite
corporate power and authority to enter into and to perform its
obligations under this Agreement, to consummate the
transactions contemplated hereby and thereby and to issue the
Securities in accordance with the terms hereof;
(ii) the execution, delivery and performance of this Agreement
by the Company and the consummation by it of the transactions
contemplated hereby (including without limitation the issuance
of the Securities) have been duly authorized by the Company's
Board of Directors and no further consent or authorization of
the Company, its Board of Directors, or its shareholders is
required; (iii) this Agreement has been duly executed by the
Company; and (iv) this Agreement constitutes a legal, valid
and binding obligation of the Company enforceable against the
Company in accordance with its terms, subject to the effect of
any applicable bankruptcy, insolvency, reorganization, or
moratorium or similar laws affecting the rights of creditors
generally and the application of general principles of equity.
(c) Issuance of Securities . The Securities are duly authorized and,
upon issuance in accordance with the terms of this Agreement,
will be validly issued, fully paid and non-assessable, free
from all taxes, liens, claims, encumbrances and charges with
respect to the issue thereof, will not be subject to preemptive
rights or other similar rights of stockholders of the Company,
and will not impose personal liability on the holders thereof.
(d) No Conflicts; No Violation . The execution, delivery and
performance of this Agreement by the Company and the
consummation by the Company of the transactions contemplated
hereby and thereby (including, without limitation, the
issuance of the Securities) will not (i) conflict with or
result in a violation of any provision of its Certificate of
Incorporation or Bylaws or (ii) violate or conflict with, or
result in a breach of any provision of, or constitute a default
(or an event which with notice or lapse of time or both could
become a default) under, or give to others any rights of
termination, amendment (including without limitation, the
triggering of any anti-dilution provision), acceleration or
cancellation of, any agreement, indenture, patent, patent
license, or instrument to which the Company is a party, or
(iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including U.S. federal and state securities
laws and regulations and regulations of any self-regulatory
organizations to which the Company or its securities are
subject) applicable to the Company or by which any property
or asset of the Company is bound or affected (except for such
conflicts, breaches, defaults, terminations, amendments,
accelerations, cancellations and violations as would not,
individually or in the aggregate, have a material
adverse effect).
(e) The Company is not in violation of its Certificate of
Incorporation, Bylaws or other organizational documents
and the Company is not in default (and no event has occurred
which with notice or lapse of time or both could put the
Company in default) under any agreement, indenture or
instrument to which the Company is a party or by which any
property or assets of the Company is bound or affected, except
for possible defaults as would not, individually or in the
aggregate, have a material adverse effect.
(f) The Company is not conducting its business in violation of any law,
ordinance or regulation of any governmental entity, the failure
to comply with which would, individually or in the aggregate,
have a material adverse effect.
(g) Except as specifically contemplated by this Agreement and as
required under the Securities Act and any applicable state
securities laws or any listing agreement with any securities
exchange or automated quotation system, the Company is not
required to obtain any consent, authorization or order of,
or make any filing or registration with, any court or
governmental agency or any regulatory or self regulatory
agency in order for it to execute, deliver or perform any of
its obligations under this Agreement in accordance with the
terms hereof, or to issue and sell the Securities in accordance
with the terms hereof. All consents, authorizations, orders,
filings and registrations which the Company is required to
obtain pursuant to the preceding sentence have been obtained
or effected on or prior to the date hereof.
9. Indemnification: The placement agent and the Company have executed and
delivered an indemnity letter, the form of which is attached hereto as
Exhibit A . The placement agent and Company have entered into this
Agreement in reliance on the indemnities set forth in such indemnity
letter and the terms of the letter shall be considered to be part of
this Agreement.
10. Severability: Every provision of this Agreement is intended to be
severable. If any term or provision hereof is deemed unlawful or
invalid for any reason whatsoever, such unlawfulness or invalidity
shall not affect the validity of the remainder of this Agreement.
11. Miscellaneous:
(a) This Agreement between the Company and CMS constitutes the entire
agreement and understanding of the parties hereto, and
supersedes any and all previous agreements and understandings,
whether oral or written, between the parties with respect to
the matters set forth herein.
(b) Any notice or communication permitted or required hereunder be
in writing and shall be deemed sufficiently given if
hand-delivered or sent postage prepaid by registered mail,
return receipt requested, or by a recognized overnight
courier service.
(c) This Agreement shall be binding upon and inure to the benefit of
each of the parties hereto and their respective successors,
legal representatives and assigns.
(d) This Agreement may be executed in any number of counterparts,
each of which together shall constitute one and the same
original document and a facsimile copy of a signed counterpart
shall be deemed an original.
(e) No provision of this Agreement may be amended, modified or waived,
except in a writing signed by all of the parties hereto.
(f) This Agreement shall be construed in accordance with and governed
by the laws of the State of New York, without giving effect to
conflict of law principles. The parties hereby agree that any
dispute which may arise between them arising out of or in
connection with this Agreement shall be adjudicated before a
court located in New York City, and they hereby submit to the
exclusive jurisdiction of the courts of the State of New York
located in New York, New York and of the federal courts in the
Southern District of New York with respect to any action or
legal proceeding commenced by any party, and irrevocably waive
any objection they now or hereafter may have respecting the
venue of any such action or proceeding brought in such a court
or respecting the fact that such court is an inconvenient
forum, relating to or arising out of this Agreement, and
consent to the service of process in any such action or legal
proceeding by means of registered or certified mail, return
receipt requested.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed, as of the day and year first above written.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ SECURITIES, INC
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President/ CEO
THE ENLIGHTENED GOURMET, INC
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, III
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ III
President and Chairman