EXHIBIT 10.12
PRODUCTIVITY TECHNOLOGIES CORPORATION
PLACEMENT AGENT AGREEMENT
Dated as of: June 21, 2004
Newbridge Securities Corporation
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Ladies and Gentlemen:
The undersigned, Productivity Technologies Corporation, a Delaware
corporation (the "Company"), hereby agrees with Newbridge Securities Corporation
(the "Placement Agent") and Cornell Capital Partners, LP, a Delaware Limited
Partnership (the "Investor"), as follows:
1. Offering. The Company hereby engages the Placement Agent to act as its
exclusive placement agent in connection with the Standby Equity Distribution
Agreement dated the date hereof (the "Standby Equity Distribution Agreement"),
pursuant to which the Company shall issue and sell to the Investor, from time to
time, and the Investor shall purchase from the Company (the "Offering") up to
Five Million U.S. Dollars (US$5,000,000) of the Company's common stock (the
"Commitment Amount"), par value US$0.001 per share (the "Common Stock"), at
price per share equal to the Purchase Price, as that term is defined in the
Standby Equity Distribution Agreement. The Placement Agent services shall
consist of reviewing the terms of the Standby Equity Distribution Agreement and
advising the Company with respect to those terms.
All capitalized terms used herein and not otherwise defined herein shall
have the same meaning ascribed to them as in the Standby Equity Distribution
Agreement. The Investor will be granted certain registration rights with respect
to the Common Stock as more fully set forth in the Registration Rights Agreement
between the Company and the Investor dated the date hereof (the "Registration
Rights Agreement"). The documents to be executed and delivered in connection
with the Offering, including, but not limited, to the Company's latest Quarterly
Report on Form 10-Q as filed with the United States Securities and Exchange
Commission, this Agreement, the Standby Equity Distribution Agreement, the
Registration Rights Agreement, and the Escrow Agreement dated the date hereof
(the "Escrow Agreement"), are referred to sometimes hereinafter collectively as
the "Offering Materials." The Company's Common Stock purchased by the Investor
hereunder or to be issued in connection with the conversion of any debentures
are sometimes referred to hereinafter as the "Securities." The Placement Agent
shall not be obligated to sell any Securities.
2. Compensation.
A. Upon the execution of this Agreement, the Company shall issue to
the Placement Agent or its designee shares of the Company's Common Stock in
an amount equal to Ten Thousand U.S. Dollars (US$10,000) divided by the
volume weighted average price of the Company's Common Stock on the date
hereof (the "Placement Agent's Shares"). The Placement Agent shall be
entitled to "piggy-back" registration rights, which shall be triggered upon
registration of any shares of Common Stock by the Investor with respect to
the Placement Agent's Shares pursuant to the Registration Rights Agreement
dated the date hereof.
3. Representations, Warranties and Covenants of the Placement Agent.
A. The Placement Agent represents, warrants and covenants as follows:
(i) The Placement Agent has the necessary power to enter into
this Agreement and to consummate the transactions contemplated hereby.
(ii) The execution and delivery by the Placement Agent of this
Agreement and the consummation of the transactions contemplated herein
will not result in any violation of, or be in conflict with, or
constitute a default under, any agreement or instrument to which the
Placement Agent is a party or by which the Placement Agent or its
properties are bound, or any judgment, decree, order or, to the
Placement Agent's knowledge, any statute, rule or regulation
applicable to the Placement Agent. This Agreement when executed and
delivered by the Placement Agent, will constitute the legal, valid and
binding obligations of the Placement Agent, enforceable in accordance
with their respective terms, except to the extent that (a) the
enforceability hereof or thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws from time to
time in effect and affecting the rights of creditors generally, (b)
the enforceability hereof or thereof is subject to general principles
of equity, or (c) the indemnification provisions hereof or thereof may
be held to be in violation of public policy.
(iii) Upon receipt and execution of this Agreement, the Placement
Agent will promptly forward copies of this Agreement to the Company or
its counsel and the Investor or its counsel.
(iv) The Placement Agent will not intentionally take any action
that it reasonably believes would cause the Offering to violate the
provisions of the Securities Act of 1933, as amended (the "1933 Act"),
the Securities Exchange Act of 1934 (the "1934 Act"), the respective
rules and regulations promulgated thereunder (the "Rules and
Regulations") or applicable "Blue Sky" laws of any state or
jurisdiction.
(v) The Placement Agent is a member of the National Association
of Securities Dealers, Inc., and is a broker-dealer registered as such
under the 1934 Act and under the securities laws of the states in
which the Securities will be offered or sold by the Placement Agent
unless an exemption for such state registration is available to the
Placement Agent. The Placement Agent is in material compliance with
the rules and regulations applicable to the Placement Agent generally
and applicable to the Placement Agent's participation in the Offering.
4. Representations and Warranties of the Company.
A. The Company represents and warrants as follows:
(i) The execution, delivery and performance of each of this
Agreement, the Standby Equity Distribution Agreement, the Escrow
Agreement, and the Registration Rights Agreement has been or will be
duly and validly authorized by the Company and is, or with respect to
this Agreement, the Standby Equity Distribution Agreement, the Escrow
Agreement, and the Registration Rights Agreement, will be a valid and
binding agreement of the Company, enforceable in accordance with its
respective terms, except to the extent that (a) the enforceability
hereof or thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws from time to time in effect
and affecting the rights of creditors generally, (b) the
enforceability hereof or thereof is subject to general principles of
equity or (c) the indemnification provisions hereof or thereof may be
held to be in violation of public policy. The Securities to be issued
pursuant to the transactions contemplated by this Agreement and the
Standby Equity Distribution Agreement have been duly authorized and,
when issued and paid for in accordance with this Agreement, the
Standby Equity Distribution Agreement and the certificates/instruments
representing such Securities, will be valid and binding obligations of
the Company, enforceable in accordance with their respective terms,
except to the extent that (1) the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws from time to time in effect and affecting the rights of
creditors generally, and (2) the enforceability thereof is subject to
general principles of equity. All corporate action required to be
taken for the authorization, issuance and sale of the Securities has
been duly and validly taken by the Company.
(ii) The Company has a duly authorized, issued and outstanding
capitalization as set forth herein and in the Standby Equity
Distribution Agreement. The Company is not a party to or bound by any
instrument, agreement or other arrangement providing for it to issue
any capital stock, rights, warrants, options or other securities,
except for this Agreement, the agreements described herein and as
described in the Standby Equity Distribution Agreement, dated the date
hereof and the agreements described therein. All issued and
outstanding securities of the Company, have been duly authorized and
validly issued and are fully paid and non-assessable; the holders
thereof have no rights of rescission or preemptive rights with respect
thereto and are not subject to personal liability solely by reason of
being security holders; and none of such securities were issued in
violation of the preemptive rights of any holders of any security of
the Company. As of the June 1, 2004, the authorized capital stock of
the Company consists of 20,000,000 shares of Common Stock, par value
US$0.001 per share and 1,000,000 shares of Preferred Stock of which
2,475,000 shares of Common Stock were issued and outstanding as of the
date thereof.
(iii) The Common Stock to be issued in accordance with this
Agreement and the Standby Equity Distribution Agreement has been duly
authorized and, when issued and paid for in accordance with this
Agreement, the Standby Equity Distribution Agreement, the
certificates/instruments representing such Common Stock will be
validly issued, fully-paid and non-assessable; the holders thereof
will not be subject to personal liability solely by reason of being
such holders; such Securities are not and will not be subject to the
preemptive rights of any holder of any security of the Company.
(iv) The Company has good and marketable title to, or valid and
enforceable leasehold estates in, all items of real and personal
property necessary to conduct its business (including, without
limitation, any real or personal property stated in the Offering
Materials to be owned or leased by the Company), free and clear of all
liens, encumbrances, claims, security interests and defects of any
material nature whatsoever, other than those set forth in the Offering
Materials and liens for taxes not yet due and payable.
(v) There is no litigation or governmental proceeding pending or,
to the best of the Company's knowledge, threatened against, or
involving the properties or business of the Company, except as set
forth in the Offering Materials.
(vi) The Company has been duly organized and is validly existing
as a corporation in good standing under the laws of the State of
Delaware. Except as set forth in the Offering Materials, the Company
does not own or control, directly or indirectly, an interest in any
other corporation, partnership, trust, joint venture or other business
entity. The Company is duly qualified or licensed and in good standing
as a foreign corporation in each jurisdiction in which the character
of its operations requires such qualification or licensing and where
failure to so qualify would have a material adverse effect on the
Company. The Company has all requisite corporate power and authority,
and all material and necessary authorizations, approvals, orders,
licenses, certificates and permits of and from all governmental
regulatory officials and bodies (domestic and foreign) to conduct its
businesses (and proposed business) as described in the Offering
Materials. Any disclosures in the Offering Materials concerning the
effects of foreign, federal, state and local regulation on the
Company's businesses as currently conducted and as contemplated are
correct in all material respects and do not omit to state a material
fact. The Company has all corporate power and authority to enter into
this Agreement, the Standby Equity Distribution Agreement, the
Registration Rights Agreement, and the Escrow Agreement, to carry out
the provisions and conditions hereof and thereof, and all consents,
authorizations, approvals and orders required in connection herewith
and therewith have been obtained. No consent, authorization or order
of, and no filing with, any court, government agency or other body is
required by the Company for the issuance of the Securities or
execution and delivery of the Offering Materials except for applicable
federal and state securities laws. The Company, since its inception,
has not incurred any liability arising under or as a result of the
application of any of the provisions of the 1933 Act, the 1934 Act or
the Rules and Regulations.
(vii) There has been no material adverse change in the condition
or prospects of the Company, financial or otherwise, from the latest
dates as of which such condition or prospects, respectively, are set
forth in the Offering Materials, and the outstanding debt, the
property and the business of the Company conform in all material
respects to the descriptions thereof contained in the Offering
Materials.
(viii) Except as set forth in the Offering Materials, the Company
is not in breach of, or in default under, any term or provision of any
material indenture, mortgage, deed of trust, lease, note, loan or
Standby Equity Distribution Agreement or any other material agreement
or instrument evidencing an obligation for borrowed money, or any
other material agreement or instrument to which it is a party or by
which it or any of its properties may be bound or affected. The
Company is not in violation of any provision of its charter or by-laws
or in violation of any franchise, license, permit, judgment, decree or
order, or in violation of any
material statute, rule or regulation. Neither the execution and
delivery of the Offering Materials nor the issuance and sale or
delivery of the Securities, nor the consummation of any of the
transactions contemplated in the Offering Materials nor the compliance
by the Company with the terms and provisions hereof or thereof, has
conflicted with or will conflict with, or has resulted in or will
result in a breach of, any of the terms and provisions of, or has
constituted or will constitute a default under, or has resulted in or
will result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or pursuant to
the terms of any indenture, mortgage, deed of trust, note, loan or any
other agreement or instrument evidencing an obligation for borrowed
money, or any other agreement or instrument to which the Company may
be bound or to which any of the property or assets of the Company is
subject except (a) where such default, lien, charge or encumbrance
would not have a material adverse effect on the Company and (b) as
described in the Offering Materials; nor will such action result in
any violation of the provisions of the charter or the by-laws of the
Company or, assuming the due performance by the Placement Agent of its
obligations hereunder, any material statute or any material order,
rule or regulation applicable to the Company of any court or of any
foreign, federal, state or other regulatory authority or other
government body having jurisdiction over the Company.
(ix) Subsequent to the dates as of which information is given in
the Offering Materials, and except as may otherwise be indicated or
contemplated herein or therein and the securities offered pursuant to
the Securities Purchase Agreement dated the date hereof, the Company
has not (a) issued any securities or incurred any liability or
obligation, direct or contingent, for borrowed money, or (b) entered
into any transaction other than in the ordinary course of business, or
(c) declared or paid any dividend or made any other distribution on or
in respect of its capital stock. Except as described in the Offering
Materials, the Company has no outstanding obligations to any officer
or director of the Company.
(x) There are no claims for services in the nature of a finder's
or origination fee with respect to the sale of the Common Stock or any
other arrangements, agreements or understandings that may affect the
Placement Agent's compensation, as determined by the National
Association of Securities Dealers, Inc.
(xi) The Company owns or possesses, free and clear of all liens
or encumbrances and rights thereto or therein by third parties, the
requisite licenses or other rights to use all trademarks, service
marks, copyrights, service names, trade names, patents, patent
applications and licenses necessary to conduct its business
(including, without limitation, any such licenses or rights described
in the Offering Materials as being owned or possessed by the Company)
and, except as set forth in the Offering Materials, there is no claim
or action by any person pertaining to, or proceeding, pending or
threatened, which challenges the exclusive rights of the Company with
respect to any trademarks, service marks, copyrights, service names,
trade names, patents, patent applications and licenses used in the
conduct of the Company's businesses (including, without limitation,
any such licenses or rights described in the Offering Materials as
being owned or possessed by the Company) except any claim or action
that would not have a material adverse effect on the Company; the
Company's current products, services or processes do not infringe or
will not infringe on the patents currently held by any third party.
(xii) Except as described in the Offering Materials, the Company
is not under any obligation to pay royalties or fees of any kind
whatsoever to any third party with respect to any trademarks, service
marks, copyrights, service names, trade names, patents, patent
applications, licenses or technology it has developed, uses, employs
or intends to use or employ, other than to their respective licensors.
(xiii) Subject to the performance by the Placement Agent of its
obligations hereunder the offer and sale of the Securities complies,
and will continue to comply, in all material respects with the
requirements of Rule 506 of Regulation D promulgated by the SEC
pursuant to the 1933 Act and any other applicable federal and state
laws, rules, regulations and executive orders. Neither the Offering
Materials nor any amendment or supplement thereto nor any documents
prepared by the Company in connection with the Offering will contain
any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. All statements of material facts in the Offering Materials
are true and correct as of the date of the Offering Materials.
(xiv) All material taxes which are due and payable from the
Company have been paid in full or adequate provision has been made for
such taxes on the books of the Company, except for those taxes
disputed in good faith by the Company
(xv) None of the Company nor any of its officers, directors,
employees or agents, nor any other person acting on behalf of the
Company, has, directly or indirectly, given or agreed to give any
money, gift or similar benefit (other than legal price concessions to
customers in the ordinary course of business) to any customer,
supplier, employee or agent of a customer or supplier, or official or
employee of any governmental agency or instrumentality of any
government (domestic or foreign) or any political party or candidate
for office (domestic or foreign) or other person who is or may be in a
position to help or hinder the business of the Company (or assist it
in connection with any actual or proposed transaction) which (A) might
subject the Company to any damage or penalty in any civil, criminal or
governmental litigation or proceeding, or (B) if not given in the
past, might have had a materially adverse effect on the assets,
business or operations of the Company as reflected in any of the
financial statements contained in the Offering Materials, or (C) if
not continued in the future, might adversely affect the assets,
business, operations or prospects of the Company in the future.
5. Representations, Warranties and Covenants of the Investor.
A. The Investor represents, warrants and covenants as follows:
(i) The Investor has the necessary power to enter into this
Agreement and to consummate the transactions contemplated hereby.
(ii) The execution and delivery by the Investor of this Agreement
and the consummation of the transactions contemplated herein will not
result in any violation of, or be in conflict with, or constitute a
default under, any agreement or instrument to which the Investor is a
party or by which the Investor or its properties are bound, or any
judgment, decree, order or, to the Investor's knowledge, any statute,
rule or regulation applicable to the Investor.
This Agreement when executed and delivered by the Investor, will
constitute the legal, valid and binding obligations of the Investor,
enforceable in accordance with their respective terms, except to the
extent that (a) the enforceability hereof or thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
from time to time in effect and affecting the rights of creditors
generally, (b) the enforceability hereof or thereof is subject to
general principles of equity, or (c) the indemnification provisions
hereof or thereof may be held to be in violation of public policy.
(iii) The Investor will promptly forward copies of any and all
due diligence questionnaires compiled by the Investor to the Placement
Agent.
(iv) The Investor is an Accredited Investor (as defined under the
1933 Act).
(v) The Investor is acquiring the Securities for the Inventor's
own account as principal, not as a nominee or agent, for investment
purposes only, and not with a view to, or for, resale, distribution or
fractionalization thereof in whole or in part and no other person has
a direct or indirect beneficial interest in such Securities. Further,
the Investor does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant participations
to such person or to any third person, with respect to any of the
Securities.
(vi) The Investor acknowledges the Investor's understanding that
the offering and sale of the Securities is intended to be exempt from
registration under the 1933 Act by virtue of Section 3(b) of the 1933
Act and the provisions of Regulation D promulgated thereunder
("Regulation D"). In furtherance thereof, the Investor represents and
warrants as follows:
(a) The Investor has the financial ability to bear the
economic risk of the Investor's investment, has adequate means
for providing for the Inventor's current needs and personal
contingencies and has no need for liquidity with respect to the
Investor's investment in the Company; and
(b) The Investor has such knowledge and experience in
financial and business matters as to be capable of evaluating the
merits and risks of the prospective investment. The Inventor also
represents it has not been organized for the purpose of acquiring
the Securities.
(vii) The Investor has been given the opportunity for a
reasonable time prior to the date hereof to ask questions of, and
receive answers from, the Company or its representatives concerning
the terms and conditions of the Offering, and other matters pertaining
to this investment, and has been given the opportunity for a
reasonable time prior to the date hereof to obtain such additional
information in connection with the Company in order for the Investor
to evaluate the merits and risks of purchase of the Securities, to the
extent the Company possesses such information or can acquire it
without unreasonable effort or expense. The Investor is not relying on
the Placement Agent or any of its affiliates with respect to the
accuracy or completeness of the Offering Materials or for any economic
considerations involved in this investment.
6. Certain Covenants and Agreements of the Company.
The Company covenants and agrees at its expense and without any expense to
the Placement Agent as follows:
A. To advise the Placement Agent and the Investor of any material
adverse change in the Company's financial condition, prospects or business
or of any development materially affecting the Company or rendering untrue
or misleading any material statement in the Offering Materials occurring at
any time as soon as the Company is either informed or becomes aware
thereof.
B. To use its commercially reasonable efforts to cause the Common
Stock issuable in connection with the Standby Equity Distribution Agreement
to be qualified or registered for sale on terms consistent with those
stated in the Registration Rights Agreement and under the securities laws
of such jurisdictions as the Placement Agent and the Investor shall
reasonably request. Qualification, registration and exemption charges and
fees shall be at the sole cost and expense of the Company.
C. Upon written request, to provide and continue to provide the
Placement Agent and the Investor copies of all quarterly financial
statements and audited annual financial statements prepared by or on behalf
of the Company, other reports prepared by or on behalf of the Company for
public disclosure and all documents delivered to the Company's
stockholders.
D. To deliver, during the registration period of the Standby Equity
Distribution Agreement, to the Investor upon the Investor's request, within
forty five (45) days, a statement of its income for each such quarterly
period, and its balance sheet and a statement of changes in stockholders'
equity as of the end of such quarterly period, all in reasonable detail,
certified by its principal financial or accounting officer; (ii) within
ninety (90) days after the close of each fiscal year, its balance sheet as
of the close of such fiscal year, together with a statement of income, a
statement of changes in stockholders' equity and a statement of cash flow
for such fiscal year, such balance sheet, statement of income, statement of
changes in stockholders' equity and statement of cash flow to be in
reasonable detail and accompanied by a copy of the certificate or report
thereon of independent auditors if audited financial statements are
prepared; and (iii) a copy of all documents, reports and information
furnished to its stockholders at the time that such documents, reports and
information are furnished to its stockholders.
E. To comply with the terms of the Offering Materials.
F. To ensure that any transactions between or among the Company, or
any of its officers, directors and affiliates be on terms and conditions
that are no less favorable to the Company, than the terms and conditions
that would be available in an "arm's length" transaction with an
independent third party.
7. Indemnification and Limitation of Liability.
A. The Company hereby agrees that it will indemnify and hold the
Placement Agent and each officer, director, shareholder, employee or
representative of the Placement Agent
and each person controlling, controlled by or under common control with the
Placement Agent within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act or the SEC's Rules and Regulations promulgated
thereunder (the "Rules and Regulations"), harmless from and against any and
all loss, claim, damage, liability, cost or expense whatsoever (including,
but not limited to, any and all reasonable legal fees and other expenses
and disbursements incurred in connection with investigating, preparing to
defend or defending any action, suit or proceeding, including any inquiry
or investigation, commenced or threatened, or any claim whatsoever or in
appearing or preparing for appearance as a witness in any action, suit or
proceeding, including any inquiry, investigation or pretrial proceeding
such as a deposition) to which the Placement Agent or such indemnified
person of the Placement Agent may become subject under the 1933 Act, the
1934 Act, the Rules and Regulations, or any other federal or state law or
regulation, common law or otherwise, arising out of or based upon (i) any
untrue statement or alleged untrue statement of a material fact contained
in (a) Section 4 of this Agreement, (b) the Offering Materials (except
those written statements relating to the Placement Agent given by the
Placement Agent for inclusion therein), (c) any application or other
document or written communication executed by the Company or based upon
written information furnished by the Company filed in any jurisdiction in
order to qualify the Common Stock under the securities laws thereof, or any
state securities commission or agency; (ii) the omission or alleged
omission from documents described in clauses (a), (b) or (c) above of a
material fact required to be stated therein or necessary to make the
statements therein not misleading; or (iii) the breach of any
representation, warranty, covenant or agreement made by the Company in this
Agreement. The Company further agrees that upon demand by an indemnified
person, at any time or from time to time, it will promptly reimburse such
indemnified person for any loss, claim, damage, liability, reasonable cost
or expense actually paid by the indemnified person as to which the Company
has indemnified such person pursuant hereto. Notwithstanding the foregoing
provisions of this Paragraph 7(A), any such payment or reimbursement by the
Company of fees, expenses or disbursements incurred by an indemnified
person in any proceeding in which a final judgment by a court of competent
jurisdiction (after all appeals or the expiration of time to appeal) is
entered against the Placement Agent or such indemnified person based upon
specific finding of fact that the Placement Agent or such indemnified
person's gross negligence or willful misfeasance will be promptly repaid to
the Company.
B. The Placement Agent hereby agrees that it will indemnify and hold
the Company and each officer, director, shareholder, employee or
representative of the Company, and each person controlling, controlled by
or under common control with the Company within the meaning of Section 15
of the 1933 Act or Section 20 of the 1934 Act or the Rules and Regulations,
harmless from and against any and all loss, claim, damage, liability, cost
or expense whatsoever (including, but not limited to, any and all
reasonable legal fees and other expenses and disbursements incurred in
connection with investigating, preparing to defend or defending any action,
suit or proceeding, including any inquiry or investigation, commenced or
threatened, or any claim whatsoever or in appearing or preparing for
appearance as a witness in any action, suit or proceeding, including any
inquiry, investigation or pretrial proceeding such as a deposition) to
which the Company or such indemnified person of the Company may become
subject under the 1933 Act, the 1934 Act, the Rules and Regulations, or any
other federal or state law or regulation, common law or otherwise, arising
out of or based upon (i) the material breach of any representation,
warranty, covenant or agreement made by the Placement Agent in this
Agreement, or (ii) any false or misleading information provided to the
Company in writing by
one of the Placement Agent's indemnified persons specifically for inclusion
in the Offering Materials.
C. The Investor hereby agrees that it will indemnify and hold the
Placement Agent and each officer, director, shareholder, employee or
representative of the Placement Agent, and each person controlling,
controlled by or under common control with the Placement Agent within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act or the
Rules and Regulations, harmless from and against any and all loss, claim,
damage, liability, cost or expense whatsoever (including, but not limited
to, any and all reasonable legal fees and other expenses and disbursements
incurred in connection with investigating, preparing to defend or defending
any action, suit or proceeding, including any inquiry or investigation,
commenced or threatened, or any claim whatsoever or in appearing or
preparing for appearance as a witness in any action, suit or proceeding,
including any inquiry, investigation or pretrial proceeding such as a
deposition) to which the Placement Agent or such indemnified person of the
Placement Agent may become subject under the 1933 Act, the 1934 Act, the
Rules and Regulations, or any other federal or state law or regulation,
common law or otherwise, arising out of or based upon (i) the conduct of
the Investor or its officers, employees or representatives in its acting as
the Investor for the Offering, (ii) the material breach of any
representation, warranty, covenant or agreement made by the Investor in the
Offering Materials, or (iii) any false or misleading information provided
to the Placement Agent by one of the Investor's indemnified persons.
D. The Placement Agent hereby agrees that it will indemnify and hold
the Investor and each officer, director, shareholder, employee or
representative of the Investor, and each person controlling, controlled by
or under common control with the Investor within the meaning of Section 15
of the 1933 Act or Section 20 of the 1934 Act or the Rules and Regulations,
harmless from and against any and all loss, claim, damage, liability, cost
or expense whatsoever (including, but not limited to, any and all
reasonable legal fees and other expenses and disbursements incurred in
connection with investigating, preparing to defend or defending any action,
suit or proceeding, including any inquiry or investigation, commenced or
threatened, or any claim whatsoever or in appearing or preparing for
appearance as a witness in any action, suit or proceeding, including any
inquiry, investigation or pretrial proceeding such as a deposition) to
which the Investor or such indemnified person of the Investor may become
subject under the 1933 Act, the 1934 Act, the Rules and Regulations, or any
other federal or state law or regulation, common law or otherwise, arising
out of or based upon the material breach of any representation, warranty,
covenant or agreement made by the Placement Agent in this Agreement.
E. Promptly after receipt by an indemnified party of notice of
commencement of any action covered by Section 7(A), (B), (C) or (D), the
party to be indemnified shall, within five (5) business days, notify the
indemnifying party of the commencement thereof; the omission by one (1)
indemnified party to so notify the indemnifying party shall not relieve the
indemnifying party of its obligation to indemnify any other indemnified
party that has given such notice and shall not relieve the indemnifying
party of any liability outside of this indemnification if not materially
prejudiced thereby. In the event that any action is brought against the
indemnified party, the indemnifying party will be entitled to participate
therein and, to the extent it may desire, to assume and control the defense
thereof with counsel chosen by it which is reasonably acceptable to the
indemnified party. After notice from
the indemnifying party to such indemnified party of its election to so
assume the defense thereof, the indemnifying party will not be liable to
such indemnified party under such Section 7(A), (B), (C), or (D) for any
legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof, but the indemnified party may, at its
own expense, participate in such defense by counsel chosen by it, without,
however, impairing the indemnifying party's control of the defense. Subject
to the proviso of this sentence and notwithstanding any other statement to
the contrary contained herein, the indemnified party or parties shall have
the right to choose its or their own counsel and control the defense of any
action, all at the expense of the indemnifying party if (i) the employment
of such counsel shall have been authorized in writing by the indemnifying
party in connection with the defense of such action at the expense of the
indemnifying party, or (ii) the indemnifying party shall not have employed
counsel reasonably satisfactory to such indemnified party to have charge of
the defense of such action within a reasonable time after notice of
commencement of the action, or (iii) such indemnified party or parties
shall have reasonably concluded that there may be defenses available to it
or them which are different from or additional to those available to one or
all of the indemnifying parties (in which case the indemnifying parties
shall not have the right to direct the defense of such action on behalf of
the indemnified party or parties), in any of which events such fees and
expenses of one additional counsel shall be borne by the indemnifying
party; provided, however, that the indemnifying party shall not, in
connection with any one action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstance, be liable for the reasonable fees and expenses
of more than one separate firm of attorneys at any time for all such
indemnified parties. No settlement of any action or proceeding against an
indemnified party shall be made without the consent of the indemnifying
party.
F. In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in Section 7(A) or
7(B) is due in accordance with its terms but is for any reason held by a
court to be unavailable on grounds of policy or otherwise, the Company and
the Placement Agent shall contribute to the aggregate losses, claims,
damages and liabilities (including legal or other expenses reasonably
incurred in connection with the investigation or defense of same) which the
other may incur in such proportion so that the Placement Agent shall be
responsible for such percent of the aggregate of such losses, claims,
damages and liabilities as shall equal the percentage of the gross proceeds
paid to the Placement Agent and the Company shall be responsible for the
balance; provided, however, that no person guilty of fraudulent
misrepresentation within the meaning of Section 11(f) of the 1933 Act shall
be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 7(F), any person
controlling, controlled by or under common control with the Placement
Agent, or any partner, director, officer, employee, representative or any
agent of any thereof, shall have the same rights to contribution as the
Placement Agent and each person controlling, controlled by or under common
control with the Company within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act and each officer of the Company and each
director of the Company shall have the same rights to contribution as the
Company. Any party entitled to contribution will, promptly after receipt of
notice of commencement of any action, suit or proceeding against such party
in respect of which a claim for contribution may be made against the other
party under this Section 7(D), notify such party from whom contribution may
be sought, but the omission to so notify such party shall not relieve the
party from whom contribution may be sought from any obligation they may
have
hereunder or otherwise if the party from whom contribution may be sought is
not materially prejudiced thereby.
G. The indemnity and contribution agreements contained in this Section
7 shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any indemnified person or any
termination of this Agreement.
H. The Company hereby waives, to the fullest extent permitted by law,
any right to or claim of any punitive, exemplary, incidental, indirect,
special, consequential or other damages (including, without limitation,
loss of profits) against the Placement Agent and each officer, director,
shareholder, employee or representative of the placement agent and each
person controlling, controlled by or under common control with the
Placement Agent within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act or the Rules and Regulations arising out of any cause
whatsoever (whether such cause be based in contract, negligence, strict
liability, other tort or otherwise). Notwithstanding anything to the
contrary contained herein, the aggregate liability of the Placement Agent
and each officer, director, shareholder, employee or representative of the
Placement Agent and each person controlling, controlled by or under common
control with the Placement Agent within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act or the Rules and Regulations shall
not exceed the compensation received by the Placement Agent pursuant to
Section 2 hereof. This limitation of liability shall apply regardless of
the cause of action, whether contract, tort (including, without limitation,
negligence) or breach of statute or any other legal or equitable
obligation.
8. Payment of Expenses.
The Company hereby agrees to bear all of the expenses in connection with
the Offering, including, but not limited to the following: filing fees, printing
and duplicating costs, advertisements, postage and mailing expenses with respect
to the transmission of Offering Materials, registrar and transfer agent fees,
escrow agent fees and expenses, fees of the Company's counsel and accountants,
issue and transfer taxes, if any.
9. Conditions of Closing.
The Closing shall be held at the offices of the Investor or its counsel.
The obligations of the Placement Agent hereunder shall be subject to the
continuing accuracy of the representations and warranties of the Company and the
Investor herein as of the date hereof and as of the Date of Closing (the
"Closing Date") with respect to the Company or the Investor, as the case may be,
as if it had been made on and as of such Closing Date; the accuracy on and as of
the Closing Date of the statements of the officers of the Company made pursuant
to the provisions hereof; and the performance by the Company and the Investor on
and as of the Closing Date of its covenants and obligations hereunder and to the
following further conditions:
A. Upon the effectiveness of a registration statement covering the
Standby Equity Distribution Agreement, the Investor and the Placement Agent
shall receive the opinion of Counsel to the Company, dated as of the date
thereof, which opinion shall be in form and substance reasonably
satisfactory to the Investor, their counsel and the Placement Agent.
B. At or prior to the Closing, the Investor and the Placement Agent
shall have been furnished such documents, certificates and opinions as it
may reasonably require for the
purpose of enabling them to review or pass upon the matters referred to in
this Agreement and the Offering Materials, or in order to evidence the
accuracy, completeness or satisfaction of any of the representations,
warranties or conditions herein contained.
C. At and prior to the Closing, (i) there shall have been no material
adverse change nor development involving a prospective change in the
condition or prospects or the business activities, financial or otherwise,
of the Company from the latest dates as of which such condition is set
forth in the Offering Materials; (ii) there shall have been no transaction,
not in the ordinary course of business except the transactions pursuant to
the Securities Purchase Agreement entered into by the Company on the date
hereof which has not been disclosed in the Offering Materials or to the
Placement Agent in writing; (iii) except as set forth in the Offering
Materials, the Company shall not be in default under any provision of any
instrument relating to any outstanding indebtedness for which a waiver or
extension has not been otherwise received; (iv) except as set forth in the
Offering Materials, the Company shall not have issued any securities (other
than those to be issued as provided in the Offering Materials) or declared
or paid any dividend or made any distribution of its capital stock of any
class and there shall not have been any change in the indebtedness (long or
short term) or liabilities or obligations of the Company (contingent or
otherwise) and trade payable debt; (v) no material amount of the assets of
the Company shall have been pledged or mortgaged, except as indicated in
the Offering Materials; and (v) no action, suit or proceeding, at law or in
equity, against the Company or affecting any of its properties or
businesses shall be pending or threatened before or by any court or federal
or state commission, board or other administrative agency, domestic or
foreign, wherein an unfavorable decision, ruling or finding could
materially adversely affect the businesses, prospects or financial
condition or income of the Company, except as set forth in the Offering
Materials.
D. If requested at Closing the Investor and the Placement Agent shall
receive a certificate of the Company signed by an executive officer and
chief financial officer, dated as of the applicable Closing, to the effect
that the conditions set forth in subparagraph (C) above have been satisfied
and that, as of the applicable closing, the representations and warranties
of the Company set forth herein are true and correct.
E. The Placement Agent shall have no obligation to insure that (x) any
check, note, draft or other means of payment for the Common Stock will be
honored, paid or enforceable against the Investor in accordance with its
terms, or (y) subject to the performance of the Placement Agent's
obligations and the accuracy of the Placement Agent's representations and
warranties hereunder, (1) the Offering is exempt from the registration
requirements of the 1933 Act or any applicable state "Blue Sky" law or (2)
the Investor is an Accredited Investor.
10. Termination.
This Agreement shall be co-terminus with, and terminate upon the same terms
and conditions as those set forth in, the Standby Equity Distribution Agreement.
The rights of the Investor and the obligations of the Company under the
Registration Rights Agreement, and the rights of the Placement Agent and the
obligations of the Company shall survive the termination of this Agreement
unabridged.
11. Miscellaneous.
A. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, but all which shall be deemed
to be one and the same instrument.
B. Any notice required or permitted to be given hereunder shall be
given in writing and shall be deemed effective when deposited in the United
States mail, postage prepaid, or when received if personally delivered or
faxed (upon confirmation of receipt received by the sending party),
addressed as follows to such other address of which written notice is given
to the others):
If to Placement Agent, to: Newbridge Securities Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company, to: Productivity Technologies Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, CFO
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Investor: Cornell Capital Partners, LP
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▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Portfolio Manager
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to: Cornell Capital Partners, LP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
C. This Agreement shall be governed by and construed in all respects
under the laws of the State of New Jersey, without reference to its
conflict of laws rules or principles. Any suit, action, proceeding or
litigation arising out of or relating to this Agreement shall be brought
and prosecuted in such federal or state court or courts located within the
State of New Jersey as provided by law. The parties hereby irrevocably and
unconditionally consent to the jurisdiction of each such court or courts
located within the State of New Jersey and to service of process by
registered or certified mail, return receipt requested, or by any other
manner provided by applicable law, and hereby irrevocably and
unconditionally waive any right to claim that any suit, action, proceeding
or litigation so commenced has been commenced in an inconvenient forum.
D. This Agreement and the other agreements referenced herein contain
the entire understanding between the parties hereto and may not be modified
or amended except by a writing duly signed by the party against whom
enforcement of the modification or amendment is sought.
E. If any provision of this Agreement shall be held to be invalid or
unenforceable, such invalidity or unenforceability shall not affect any
other provision of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
COMPANY:
PRODUCTIVITY TECHNOLOGIES CORPORATION
By: /s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: CFO
PLACEMENT AGENT:
NEWBRIDGE SECURITIES CORPORATION
By: /s/▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇ ▇. ▇▇▇▇▇
Title: President
INVESTOR:
CORNELL CAPITAL PARTNERS, LP
By: Yorkville Advisors, LLC
Its: General Partner
By: /s/▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Portfolio Manager