Exhibit 1.1
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PLACEMENT AGENT AGREEMENT
THIS AGREEMENT ("Agreement") is made as of the ___ day of November,
2001, by and between Howard P. Silverman, a principal shareholder and the chief
executive officer of LASIK America, Inc., a Nevada corporation ("Selling
Shareholder" and "Company," respectively), and West America Securities Corp.,
with its principal office location at 4510 East Thousand Oaks Boulevard, Suite
100, Westlake Village, CA 91362 ("Placement Agent").
RECITALS:
WHEREAS, the Selling Shareholder proposes to offer and sell 125,000
shares of his Common Stock and 125,000 Redeemable Common Stock Purchase Warrants
previously issued to him by the Company, (together the "Units"), on the same
terms and conditions as the Placement Agent proposes to offer Units to the
public pursuant to a public offering of Units to be consummated on behalf of the
Company; and
WHEREAS, the Placement Agent has offered to act as a selling and
placement agent on behalf of the Selling Shareholder in the offer and sale of
125,000 Units to the public, on a "best efforts" basis, with respect to sales of
the Units (as defined below), and the Selling Shareholder desires to secure the
services of the Placement Agent on the terms and conditions hereinafter set
forth.
TERMS:
NOW, THEREFORE, in consideration of the premises and the mutual
promises, conditions and covenants herein contained, the parties hereto do
hereby agree as follows:
1. ENGAGEMENT OF PLACEMENT AGENT. The Selling Shareholder, on the basis of the
representations and warranties contained herein, but subject to the terms and
conditions herein set forth, hereby appoints the Placement Agent as its
exclusive Placement Agent for this offering, to sell, on a "best efforts basis,"
a maximum of 125,000 Units at a public offering price of $6.10 per Unit, each
Unit consisting of one share of the Company's Common Stock and one Common Stock
Purchase Warrant ("Warrants"), each Warrant entitling the holder to purchase one
share of the Company's Common Stock at $7.20 per share, resulting in a maximum
amount of gross proceeds to the Selling Shareholder of $762,500 ("Gross Maximum
Proceeds"). The Placement Agent, on the basis of the representations and
warranties herein contained, but subject to the terms and conditions herein set
forth, accepts such appointment and agrees to use its best efforts to solicit
purchasers for the Units. This appointment shall be irrevocable for the period
commencing on the date of this Agreement and ending on the earlier of (i) the
date that the maximum number of Units are sold by the Selling Shareholder; or
120 days from the date that the Company's SB-2 Registration Statement, bearing
Registration No. 333-68942 (the "Registration Statement"), becomes effective
upon order of the U.S. Securities and Exchange Commission (the "Offering
Period").
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2. REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDER.
In order to induce the Placement Agent to enter into this Agreement, the
Selling Shareholder hereby represents and warrants to and agrees with the
Placement Agent as follows:
2.1 Registration of the Units. The Company (with the assistance of the
Placement Agent and Selling Shareholder) has prepared the Registration Statement
covering the registration for resale of the Units in conformity with the
requirements of the Securities Act of 1933 ("Act") and the rules and regulations
("Rules and Regulations") of the Commission promulgated thereunder. As used in
this Agreement, the term "Registration Statement" refers to and means the
prospectus and the exhibits that are part of the Registration Statement and all
amendments and supplements thereto.
2.2 Delivery of Prospectus. The Company and the Selling Shareholder
shall deliver to the Placement Agent, without charge, as many copies of the
Prospectus as the Placement Agent may reasonably require for the purposes
contemplated by this Agreement. The Company and the Selling Shareholder
authorizes the Placement Agent, in connection with the offering of the Units, to
use the Prospectus as from time to time amended or supplemented in connection
with the offering and sale of the Units in accordance with the applicable
provisions of the Act.
2.3 Accuracy of Registration Statement. The Registration Statement and
the Prospectus forming a part thereof, at the time of delivery to prospective
purchasers of the Units, conformed in all material respects with the
requirements, to the extent applicable, of the Act and the applicable Rules and
Regulations and did not include 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. On the Closing Date(s) (as hereinafter defined), the
Prospectus will contain all statements that are required to be stated therein in
accordance with the Act and the Rules and Regulations for the purposes of the
proposed offering of the Units, and all statements of material fact contained in
the Prospectus will be true and correct, and the Prospectus will not include 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.
2.4 Duty to Amend. If during such period of time as in the reasonable
opinion of the Placement Agent, or its counsel, the Prospectus relating to the
offer and sale of the Units is required to be delivered under the Act, any event
occurs or any event known to the Company or Selling Shareholder relating to or
affecting the Company or the Selling Shareholder shall occur as a result of
which the Prospectus as then amended or supplemented would include an untrue
statement of a material fact, or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, or if it is necessary at any time after the date hereof to
amend or supplement the Prospectus to comply with the Act or the applicable
Rules and Regulations, the Company and the Selling Shareholder shall forthwith
notify the Placement Agent thereof and shall prepare such further amendment or
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supplement to the Prospectus as may be required and shall furnish and deliver to
the Placement Agent, all at the cost of the Selling Shareholder, a reasonable
number of copies of the amendment or supplement, which will not contain an
untrue statement of a material fact or omit to state any material fact necessary
in order to make the Prospectus, not misleading in the light of the
circumstances when delivered to a purchaser or prospective purchaser, and which
will comply in all respects with the requirements (to the extent applicable) of
the Act and the applicable Rules Regulations.
2.5 Corporation Condition. To the best of the Selling Shareholder's
knowledge, the Company's condition is as described in its Prospectus, except for
continuing losses and changes in the ordinary course of business and normal
year-end adjustments that are not in the aggregate materially adverse to the
Company. The Prospectus, taken as a whole, presents fairly the business and
financial position of the Company as of the Closing Date(s).
2.6 No Material Adverse Change. Except as may be reflected in or
contemplated by the Prospectus, subsequent to the dates as of which information
is given in the Prospectus, and prior to the Closing Date(s), taken as a whole,
to the best of the Selling Shareholder's knowledge, there has not been any
material adverse change in the condition, financial or otherwise, or in the
results of operations of the Company or in its business.
2.7 No Defaults. Except as disclosed in the Prospectus or in writing to
the Placement Agent, to the best of the Selling Shareholder's knowledge, the
Company is not in default in any material respect in the performance of any
obligation, agreement or condition contained in any material debenture, note or
other evidence of indebtedness or any material indenture or loan agreement of
the Company. The execution and delivery of this Agreement, and the consummation
of the transactions herein contemplated, and compliance with the terms of this
Agreement will not conflict with or result in a breach of any of the terms,
conditions or provisions of, or constitute a default under, the Certificate of
Incorporation or Bylaws of the Company (in any respect that is material to the
Company), any material note, indenture, mortgage, deed of trust, or other
agreement or instrument to which the Company is a party or by which the Company
or any property of the Company is bound, or to the Company's knowledge, any
existing law, order, rule, regulation, writ, injunction or decree of any
government, governmental instrumentality, agency or body, arbitration tribunal
or court, domestic or foreign, having jurisdiction over the Company or any
property of the Company. The consent, approval, authorization or order of any
court or governmental instrumentality, agency or body is not required for the
consummation of the transactions herein contemplated except such as may be
required under the Act or under the Blue Sky or securities laws of any state or
jurisdiction.
2.8 Incorporation and Standing. To the best of the Selling Shareholder's
knowledge, the Company is, and at the Closing Date will be, duly formed and
validly existing in good standing as a corporation under the laws of the State
of Nevada and with full power and authority (corporate and other) to own its
properties and conduct its business, present and proposed, as described in the
Prospectus; the Selling Shareholder has full power and authority to enter into
and to perform this Agreement, and to the best of the Selling Shareholder's
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knowledge, the Company is duly qualified and in good standing as a foreign
entity in each jurisdiction in which the failure to so qualify would have a
material adverse effect on the Company or its properties.
2.9 Legality of Issued and Outstanding Units. Prior to the Closing Date,
the Common Stock and Warrants comprising the Units and to be offered and sold
hereunder, have been duly and validly authorized and issued, and, except as to
the Warrants, are fully paid and non-assessable, and conform in all material
respects to the statements with regard thereto contained in the Prospectus.
2.10 Legality of Units. The Units when offered and sold and delivered in
accordance with the Prospectus, will constitute legal, valid and binding
obligations of the Company, enforceable in accordance with the terms thereof,
and shall be duly and validly issued and outstanding, and except as to the
Warrants, shall be fully paid and non-assessable. The Common Stock into which
the Warrants are exercisable, when issued upon exercise, shall be duly and
validly issued and outstanding, fully paid and non-assessable.
2.11 Litigation. To the best of the Selling Shareholder's knowledge,
except as set forth in the Prospectus, there is now, and at the Closing Date
there will be, no action, suit or proceeding before any court or governmental
agency, authority or body pending or, to the best of the Selling Shareholder's
knowledge, threatened, which might result in judgments against the Company not
adequately covered by insurance or which collectively might result in any
material adverse change in the condition (financial or otherwise) or business of
the Company or which would materially adversely affect the properties or assets
of the Company.
2.12 Finders. The Selling Shareholder does not know of any outstanding
claims for services in the nature of a finder's fee or origination fees with
respect to the sale of the Units hereunder for which the Placement Agent may be
responsible, and the Selling Shareholder will indemnify the Placement Agent from
any liability for such fees (including the payment of attorney's fees incurred
by Placement Agent due to any claim by any such finder or originator) by any
party who, in the reasonable opinion of Placement Agent's counsel, has a
legitimate claim for such compensation from the Selling Shareholder and for
which person the Placement Agent is not legally responsible. In the event of
such claim, Placement Agent shall properly notify the Selling Shareholder
thereof and the Selling Shareholder, at his option and in his sole cost and
expense, take over the defense of such a claim with counsel of his choice,
reasonably satisfactory to Placement Agent. Placement Agent shall not settle any
such claims or litigation arising hereunder without the prior written consent of
the Selling Shareholder, which shall not be unreasonably withheld.
2.13 Tax Returns. To the best of the Selling Shareholder's knowledge,
the Company has filed all federal and state and local tax returns which are
required to be filed, and has paid all material taxes shown on such returns and
on all assessments received by it to the extent such taxes have become due
(except for taxes the amount of which the Company is contesting in good faith).
To the best of the Selling Shareholder's knowledge, all taxes with respect to
which the Company is obligated have been paid, or adequate accruals have been
set up to cover any such unpaid taxes.
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2.14 Authority. The execution and delivery by the Selling Shareholder of
this Agreement have been duly authorized by all necessary action, and this
Agreement is the valid, binding and legally enforceable obligation of the
Selling Shareholder except as enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other similar laws, by
principles governing enforcement of equitable remedies and, with respect to
indemnification against liabilities under the Act, matters of public policy.
2.15 Actions by the Selling Shareholder. The Selling Shareholder will
not take any action that will impair the effectiveness of the transactions
contemplated by this Agreement.
3. ISSUE, SALE AND DELIVERY OF THE SECURITIES.
3.1 Deliveries of Securities. Certificates for the Common Stock,
Warrants and Units, (issued in such denominations and in such names as
subscriptions for same are accepted by the Selling Shareholder), shall be
delivered by the Selling Shareholder to the Company's duly appointed stock
transfer agent, Corporate Stock Transfer, in the same manner as the Units are
issued directly by the Company to purchasers of Units in the Company's initial
public offering of the Units.
3.2 Escrow of Funds. Pursuant to a separate form of escrow agreement
("Escrow Agreement") to be entered into by and among the Company, the Selling
Shareholder and the "Bank" selected to act as escrow agent ("Escrow Agent") in
the offering and sale of the Units, all subscriber funds received from
purchasers of the Units shall be first deposited into such Escrow Account set up
on behalf of the parties to the Escrow Agreement. Pursuant to the Escrow
Agreement, the Placement Agent shall place all funds for purchase of the Units
with respect to any purchase into the Escrow Account, and funds received into
the Escrow Account shall thereafter be transferred to the Selling Shareholder
only after acceptance of any subscription agreement tendered by a prospective
purchaser of the Units. With respect to the acceptance by the Selling
Shareholder of any subscription agreement for the purchase of Units placed by
Placement Agent, certificates for the Units, Common Stock and Warrants shall be
delivered to any and all purchasers in accordance with the Rules and
Regulations.
3.3 Closing Date(s). The initial Closing shall take place at the offices
of Placement Agent as and when subscription agreements from purchasers of the
Units are duly accepted by the Selling Shareholder. Any subsequent Closings
shall take place at the offices of the Placement Agent on each date that the
Placement Agent and the Selling Shareholder shall determine by mutual agreement
from time to time. The initial Closing Date and any subsequent Closing Dates
shall be referred to herein as the "Closing Date."
3.4 Placement Agent's Compensation. The Selling Shareholder shall pay
the Placement Agent the amounts pursuant to this Section 3.4, which shall be the
full amount payable to the Placement Agent for its services, as fees and
expenses, in connection with the placement of the Units. Based upon the total
aggregate amount of the Units sold by the Placement Agent on behalf of the
Selling Shareholder, the Placement Agent shall be paid a cash placement fee
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("Cash Placement Fee") equal to ten percent (10%) of the purchase price of any
and all Units placed up to the aggregate purchase price of $762,500 of Units
placed, which shall equal a Cash Placement Fee not to exceed $76,250 for the
maximum number of Units to be offered and sold on behalf of the Selling
Shareholder.
3.5 Payment of Fees. The Escrow Agent shall be instructed to pay all
Cash Placement Fees directly to the Placement Agent from the proceeds of the
sale of the Units, simultaneous with the transfer of proceeds to the Selling
Shareholder.
4. OFFERING OF THE SECURITIES ON BEHALF OF THE SELLING SHAREHOLDER.
4.1 In offering the Units for sale, the Placement Agent shall offer them
solely as a Placement Agent for the Selling Shareholder, and such offers and
sales shall be made upon the terms and subject to the conditions set forth in
the Prospectus. The Placement Agent shall commence making such offers and sales
as a Placement Agent for the Selling Shareholder only at such time and date that
the Company has accepted subscriptions for 425,000 of the Units offered and sold
on the Company's behalf by the Placement Agent. No Units may be offered by or
sold by the Selling Shareholder until the sale of all 425,000 Units by the
Company through solicitations made by the Placement Agent, is concluded.
4.2 The Placement Agent will only make offers to sell the Units, or
solicit offers to subscribe for any Units, in accordance with the Prospectus and
this Agreement.
5. COVENANTS OF THE SELLING SHAREHOLDER.
The Selling Shareholder covenants and agrees with the Placement Agent
that:
5.1 After the date hereof, the Selling Shareholder will not at any time,
cause to have prepared and distributed any amendment or supplement to the
Prospectus, of which amendment or supplement the Placement Agent shall not
previously have been advised and the Placement Agent and its counsel furnished
with a copy within a reasonable time period prior to the proposed adoption
thereof, or to which the Placement Agent shall have reasonably objected in
writing on the ground that it is not in compliance with the Act or the Rules and
Regulations (if applicable).
5.2 The Selling Shareholder and/or the Company, will pay, whether or not
the transactions contemplated hereunder are consummated or this Agreement is
prevented from becoming effective or is terminated, all costs and expenses
incident to the performance of his obligations under this Agreement, including
all expenses incident to the authorization of the Units and their issue and
delivery to the Placement Agent, any original issue taxes in connection
therewith, all transfer taxes, if any, incident to the sale and transfer of the
Units, the fees and expenses of the Company's counsel (except as provided below)
and accountants, the cost of reproduction and furnishing to the Placement Agent
copies of the documents as herein provided; provided, however, that the Selling
Shareholder shall not be responsible for the direct payment of fees and costs
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incurred by the Placement Agent, including attorney's fees of or any costs
incurred by the Placement Agent's counsel.
5.3 As a condition precedent to the Closing Date(s), the Selling
Shareholder will deliver to the Placement Agent a true and correct copy of all
documents requested by Placement Agent included in Placement Agent's due
diligence request, including but not limited to the Certificate of Incorporation
of the Company, and all amendments and certificates of designation of
preferences of preferred stock, certified by the Secretary of State of the State
of Nevada.
5.4 Prior to the Closing Date(s), the Selling Shareholder will cooperate
with the Placement Agent in such investigation as it may make or cause to be
made of all of the representations made by the Selling Shareholder in this
Agreement or the Prospectus, in connection with the offering of the Units. The
Selling Shareholder will make available in connection therewith such information
in his possession as the Placement Agent may reasonably request and will make
available to the Placement Agent such persons as the Placement Agent shall deem
reasonably necessary and appropriate in order to verify or substantiate any such
information so supplied.
5.5 The Selling Shareholder shall be responsible for making any and all
filings required by the state securities regulatory agencies and Blue Sky
authorities and filings required by the laws of any and all jurisdictions in
which the Units are offered and sold.
6. INDEMNIFICATION.
6.1 The Selling Shareholder agrees to indemnify and hold harmless the
Placement Agent, each person who controls the Placement Agent within the meaning
of Section 15 of the Securities Act of 1934 and the Placement Agent's employees,
accountants, attorneys and Placement Agents (the "Placement Agent's
Indemnitees") against any and all losses, claims, damages or liabilities, joint
or several, to which they or any of them may become subject under the Act or any
other statute or at common law and for any reasonable legal or other expenses
(including the costs of any investigation and preparation) incurred by them in
connection with any litigation, whether or not resulting in any liability, but
only insofar as such losses, claims, damages, liabilities and litigation arise
out of or are based upon (i) the Selling Shareholder's breach of this Agreement,
or (ii) any untrue statement of material fact contained in the Prospectus or any
amendment or supplement thereto or any application or other document filed in
any state or jurisdiction in order to qualify the Units, the Common Stock or the
Warrants under the Blue Sky or securities laws thereof, or the omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, under the circumstances under which they were made, not
misleading, all as of the date of the Prospectus or of such amendment as the
case may be, or (iii) any breach of any representation, warranty or covenant
made by the Selling Shareholder in this Agreement, provided, however, that the
indemnity agreement contained in this Section 6.1 shall not apply to amounts
paid in settlement of any such litigation, if such settlements are made without
the consent of the Selling Shareholder (but no such settlement may be made
without the Selling Shareholder's prior written consent, which consent shall not
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be unreasonably withheld), nor shall it apply to the Placement Agent's
Indemnitees in respect to any such losses, claims, damages or liabilities
arising out of or based upon any such untrue statement or alleged untrue
statement or any such omission or alleged omission, if such statement or
omission was made in reliance upon information furnished in writing to the
Selling Shareholder by the Placement Agent specifically for use in connection
with the preparation of the Prospectus or any such amendment or supplement
thereto or any application or other document filed in any state or jurisdiction
in order to qualify the Common Stock and Warrants under the Blue Sky or
securities law thereof. This indemnify agreement is in addition to any other
liability which the Selling Shareholder may otherwise have to the Placement
Agent's Indemnitees. The Placement Agent's Indemnitees agree, within ten (10)
days after the receipt by them of written notice of the commencement of any
action against them in respect to which indemnify may be sought from the Selling
Shareholder under this Section 6.1, to notify the Selling Shareholder in writing
of the commencement of such action; provided, however, that the failure of the
Placement Agent's Indemnitees to notify the Selling Shareholder of any such
action shall not relieve the Selling Shareholder from any liability which it may
have to the Placement Agent's Indemnitees on account of the indemnity agreement
contained in this Section 6.1, except with respect to any failure which
irreparably prejudices the Selling Shareholder or causes an event of
adjudication materially adverse to the Selling Shareholder. The Selling
Shareholder shall not be relieved from any other liability which he may have to
the Placement Agent's Indemnitees, and if the Placement Agent's Indemnitees
shall notify the Selling Shareholder of the commencement thereof, the Selling
Shareholder shall be entitled to participate in (and, to the extent that the
Selling Shareholder shall wish, to direct) the defense thereof at his own
expense, but such defense shall be conducted by counsel of recognized standing
and reasonably satisfactory to the Placement Agent's Indemnitees, defendant or
defendants, in such litigation. The Selling Shareholder agrees to notify the
Placement Agent's Indemnitees promptly of the commencement of any litigation or
proceedings against the Selling Shareholder of which the Selling Shareholder may
be advised in connection with the issue and sale of any of the Units and to
furnish to the Placement Agent's Indemnitees, at their request, copies of all
pleadings therein and to permit the Placement Agent's Indemnitees to be
observers therein and apprise the Placement Agent's Indemnitees of all
developments therein, all at the Selling Shareholder's expense.
6.2 With the exception provided below as to limitations of indemnity,
the Placement Agent agrees, in the same manner and to the same extent as set
forth in Section 6.1 above, to indemnify and hold harmless the Selling
Shareholder, and his accountants and attorneys (the "Seller's Indemnitees") with
respect to (i) any statement in or omission from the Prospectus or any amendment
or supplement thereto or any application or other document filed by the Selling
Shareholder in any state or jurisdiction in order for the Selling Shareholder to
qualify, the Common Stock and Warrants under the Blue Sky or securities laws
thereof, or any information furnished pursuant to Section 2.4 hereof, if such
statement or omission was made in reliance upon information furnished in writing
to the Selling Shareholder by the Placement Agent in a document executed by
Placement Agent on its behalf specifically for use in connection with the
preparation thereof or supplement thereto, or (ii) any untrue statement of a
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material fact made by the Placement Agent not based on statements in the
Prospectus or authorized in writing by the Selling Shareholder, or with respect
to any misleading statement made by the Placement Agent resulting from the
omission of material facts which misleading statement is not based upon the
Prospectus, and any documents filed with public or governmental authorities or
agencies, and any public press releases or information furnished in writing by
the Selling Shareholder or, (iii) any breach of any representation, warranty or
covenant made by the Placement Agent in this Agreement. The Placement Agent
shall not be liable for amounts paid in settlement of any such litigation if
such settlement was effected without its consent. In case of the commencement of
any action in respect of which indemnity may be sought from the Placement Agent,
the Seller's Indemnitees shall have the same obligation to have notice as set
forth in Section 6.1 above, subject to the same loss of indemnity in the event
such notice is not given, and the Placement Agent shall have the same night to
participate in (and, to the extent that it shall wish, to direct) the defense of
such action at its own expense, but such defense shall be conducted by counsel
of recognized standing reasonably satisfactory to the Selling Shareholder. The
Placement Agent agrees to notify the Seller's Indemnitees, at their request, and
to provide copies of all pleadings therein and to permit the Seller's
Indemnitees to be observers therein and appraise them of all the developments
therein, all at the Placement Agent's expense. As to damages, Selling
Shareholder recognizes that since he is receiving the net proceeds of the monies
generated by this placement, that indemnity, if any, to be paid by the Placement
Agent to the Selling Shareholder shall be strictly limited to the Placement
Agent's Cash Fee, inclusive of attorney fees and costs of arbitration and/or
court proceedings.
7. LIQUIDATION DAMAGES.
Selling Shareholder and Placement Agent both acknowledge that it would
be extremely impractical and difficult to ascertain the actual damages to be
suffered by the Selling Shareholder if Placement Agent is found by an arbitrator
or a court of competent jurisdiction to have breached any of the
representations, warranties and covenants contained in Section 9 of this
Agreement. Accordingly, should a breach of the representations of Section _____
be proven and Placement Agent found liable for said breach, Selling Shareholder
and Placement Agent hereby agree that the damages shall be limited to an amount
equal to the Cash Placement Fee received by Placement Agent pursuant to Section
3.4 of this Agreement plus the return to the Selling Shareholder of the
Placement Agent Units received by Placement Agent pursuant to Section 3.4 of
this Agreement (or, to the extent that the Placement Agent Units have already
been sold by Placement Agent, the value, as defined below, of the Placement
Agent Units), inclusive of all attorney's fees and cost of court. For purposes
hereof, the value of the Placement Agent Common Stock shall be deemed to equal
the lesser of (i) the aggregate share price of any Placement Agent Common Stock
issued to Placement Agent or (ii) the market value of such Placement Agent
Common Stock on the date that such shares were sold by Placement Agent, and in
either case, the Placement Agent may return such Placement Agent Common Stock to
the Selling Shareholder in lieu of any payment, as to the value of such
Placement Agent Common Stock, for damages pursuant to this section. For purposes
hereof, the value of each Warrant issued to Placement Agent which has been
exercised by Placement Agent shall be the difference of (i) the market value of
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the Common Stock received upon such exercise on the date that such shares were
sold by Placement Agent, minus (ii) the Exercise Price of such Warrant. This
provision is not to be construed as a penalty, but as full liquidated damages
under Nevada law.
8. EFFECTIVENESS OF AGREEMENT.
This Agreement shall become effective the date which is the later of:
(i) 12:00 noon, New York, New York time, on the date hereof or (ii) 12:00 noon,
New York, New York time on the date of effectiveness of the Company's
Registration Statement as ordered by the Commission. The Placement Agent agrees
to notify the Selling Shareholder immediately after the Placement Agent shall
have taken any action wherein this Agreement shall have become effective.
10. CONDITIONS OF THE PLACEMENT AGENT'S OBLIGATIONS.
The Placement Agent's obligations to act as Placement Agent of the Units
offered by the Selling Shareholder hereunder and to find purchasers for the
Units shall be subject to the accuracy, as of the Closing Date, of the
representations and warranties on the part of the Selling Shareholder herein
contained, to the fulfillment of or compliance by the Selling Shareholder with
all covenants and conditions hereof, and to the following additional conditions:
10.1 Counsel to the Placement Agent shall not have objected in writing
or shall not have failed to give his consent to the Prospectus (which objection
or failure to give consent shall not have been done unreasonably).
10.2 The Placement Agent shall not have disclosed to the Selling
Shareholder that the Prospectus, or any amendment thereof or supplement thereto,
contains an untrue statement of fact, which, in the opinion of counsel to the
Placement Agent, is material, or omits to state a fact which, in the opinion of
such counsel, is material and is required to be stated therein, or is necessary
to make the statements therein, under the circumstances in which they were made,
not misleading.
10.3 Between the date hereof and the Closing Date, the Company shall not
have sustained any loss on account of fire, explosion, flood, accident, calamity
or any other cause of such character as would materially adversely affect its
business or property considered as an entire entity, whether or not such loss is
covered by insurance.
10.4 Except as set forth in the Prospectus, during the time period
between the date hereof and the initial Closing Date, there shall be no
litigation instituted or threatened against the Company, and there shall be no
proceeding instituted or threatened against the Company before or by any federal
or state commission, regulatory body or administrative agency or other
governmental body, domestic or foreign, wherein an unfavorable ruling, decision
or finding would materially adversely effect the business, franchises, license,
permits, operations or financial condition or income of the Company considered
as an entity.
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10.5 Except as contemplated herein or as set forth in the Prospectus,
during the period subsequent to the most recent financial statements contained
in the Prospectus, if any, and prior to the initial Closing Date, the Company
(i) shall have conducted its business in all material respects in the usual and
ordinary manner as the same is being conducted as of the date hereof and (ii)
except in the ordinary course of business, the Company shall not have incurred
any liabilities or obligations (direct or contingent) or disposed of any assets,
or entered into any material transaction or suffered or experienced any
substantially adverse change in its condition, financial or otherwise. At the
Closing Date, the equity account of the Company shall be substantially the same
as reflected in the most recent balance sheet contained in the Prospectus and
without considering the proceeds from the sale of the Units other than as may be
set forth in the Prospectus.
10.6 The authorization of the Units, Common Stock and Warrants for
transfer by the Selling Shareholder and all proceedings and other legal matters
hereto and to this Agreement shall be reasonably satisfactory in all material
respects matters to the Placement Agent or counsel to the Placement Agent, who
shall have furnished the Placement Agent on the Closing Date with such favorable
opinion with respect to the sufficiency of all corporate proceedings and other
legal matters relating to this Agreement as the Placement Agent may reasonably
require, and the Selling Shareholder shall have furnished such counsel such
documents as he may have requested to enable him to pass upon the matters
referred to in this subparagraph.
10.7 The Selling Shareholder shall have furnished to the Commission as
an Exhibit to the Registration Statement, with a true and correct copy to the
Placement Agent, an opinion of counsel, dated the effective date of the
Registration Statement, addressed to the Placement Agent, from counsel to the
Selling Shareholder, as required by the Act, in substantially the form attached
to the Registration Statement as an Exhibit.
10.8 The Selling Shareholder shall have furnished to the Placement Agent
a due diligence certificate signed by the Selling Shareholder, dated as of the
Effective Date of the Registration Statement, to the effect that:
(i) the representations and warranties of the Selling Shareholder
in this Agreement are true and correct in all material respects at and as of the
Closing Date (other than representations and warranties which by their terms are
specifically limited to a date other than the Closing Date), and the Selling
Shareholder has complied with all the agreements and has satisfied all the
conditions on his part to be performed or satisfied at or prior to the Closing
Date;
(ii) the Selling Shareholder has carefully examined the Prospectus,
and any amendments and supplements thereto, and, to the best of his knowledge,
all statements contained in the Prospectus, and any amendments and supplements
thereto, are true and correct, and neither the Prospectus, nor any amendment or
supplement thereto, includes any untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein under the circumstances in which they were made not
misleading, and since the date hereof, there has occurred no event required to
1.1 - 11
be set forth in an amended or supplemented Prospectus, which has not been set
forth; except as set forth in the Prospectus, since the respective dates as of
which the periods for which the information is given in the Prospectus and prior
to the date of such certificate, (a) there has not been any material adverse
change, financial and otherwise, in the affairs of condition of the Company, and
(b) except as disclosed in the Prospectus, the Company has not incurred any
material liabilities, direct or contingent or entered into any material
transactions, otherwise than in the ordinary course of business; and
(iii) the Selling Shareholder has provided true and correct copies
of all documents in his possession or which he could obtain that were requested
by Placement Agent pursuant to any due diligence inquiry.
11. TERMINATION.
11.1 This Agreement may be terminated by the Placement Agent by notice
to the Selling Shareholder in the event that the Selling Shareholder shall have
failed or been unable to comply with any of the material terms, conditions or
provisions of this Agreement on the part of the Selling Shareholder to be
performed, complied with fulfilled within the respective times, if any, herein
provided for, unless compliance therewith or performance or satisfaction thereof
shall have been expressly waived by the Placement Agent in writing. However, if
any material breach by the Selling Shareholder can be cured within ten (10)
business days, Placement Agent shall provide the Selling Shareholder such
reasonable period to cure.
11.2 This Agreement may be terminated by the Selling Shareholder by
notice to the Placement Agent in the event that the Placement Agent shall have
materially failed or been materially unable to comply with any of the terms,
conditions or provisions of this Agreement on the part of the Placement Agent to
be performed, complied with or fulfilled within the respective times, if any,
herein provided for, unless compliance therewith or performance or satisfaction
thereof shall have been expressly waived by the Selling Shareholder in writing.
However, if any material breach by Placement Agent can be cured within ten (10)
business days, the Selling Shareholder shall provide Placement Agent such ten
(10) business days to cure.
11.3 This Agreement may be terminated by the Placement Agent by notice
to the Selling Shareholder at any time, if, in the reasonable, good faith
judgment of the Placement Agent, payment for and delivery of the Units is
rendered impracticable or inadvisable because: (i) additional material
governmental restrictions not in force and effect on the date hereof shall have
been imposed upon trading in securities generally, (ii) a war or other national
calamity shall have occurred, or (iii) the condition of the market (either
generally or with reference to the sale of the Units to be offered hereby) or
the condition of any matter affecting the Selling Shareholder or the Company or
any other circumstance is such that it would be undesirable, impracticable or
inadvisable, in the judgment of the Placement Agent, to proceed with this
Agreement or with the offering of the Units.
11.4 Any termination of this Agreement pursuant to this Section 11 shall
be without liability of any character (including, but not limited to, loss of
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anticipated profits or consequential damages) on the part of any party thereto,
except that the Selling Shareholder shall remain obligated to pay the costs and
expenses provided to be paid by him specified in Section 3; and the Selling
Shareholder and the Placement Agent shall be obligated to pay, respectively, all
losses, claims, damages or liabilities, joint or several, under Section 6.1 in
the case of the Selling Shareholder and Section 6.2 in the case of the Placement
Agent.
12. PLACEMENT AGENT'S REPRESENTATIONS, WARRANTIES AND COVENANTS.
The Placement Agent represents and warrants to and agrees with the
Selling Shareholder that:
12.1 The Placement Agent is a corporation duly organized and
existing under the laws of the state of Colorado. The Placement Agent is a
licensed NASD broker-dealer, and a member of SIPC.
12.2 There is not now pending or threatened or to the Placement Agent's
knowledge, contemplated against the Placement Agent any action or proceeding of
which the Placement Agent has been advised, either in any court of competent
jurisdiction, before the Commission or before any state securities commission or
the NASD, concerning the Placement Agent's activities which would impair the
ability of the Placement Agent to conduct the offering of the Units as
contemplated by this Agreement.
12.3 In the event any action or proceeding of the type referred to
Section 12.2 above shall in be instituted or threatened against the Placement
Agent at any time prior to the Closing Date or, in the event there shall be
filed by or against the Placement Agent in any court, pursuant to any federal,
state, local or municipal statute, a petition in bankruptcy or insolvency or for
reorganization or for the appointment of a receiver or trustee of its assets or
if the Placement Agent makes an assignment for the benefit of creditors, the
Selling Shareholder shall have the right, on three (3) days' written notice to
the Placement Agent, to terminate this Agreement without any liability to the
Placement Agent of any kind, except for the payment of all expenses provided
herein.
12.4 Placement Agent understands and acknowledges that prior to the
offer for resale to the public of the Units, the Units, the Common Stock and
Warrants are being registered for resale with the Commission pursuant to the
Act. Accordingly, in conducting its activities under this Agreement.
(a) Placement Agent will not offer or sell any Units or other
securities offered by the Selling Shareholder, except in conformity with the
Prospectus.
(b) Placement Agent will not solicit or accept the subscription of
any Units of any person unless immediately before accepting such subscription
Placement Agent has reasonable grounds to believe and does believe that (i) such
person is suitable for investing in the Units, and (ii) all representations made
and information furnished by such person, to the best knowledge of the Placement
Agent, are true and correct in all material respects.
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(c) Placement Agent will not solicit any purchasers of any Units or
other securities unless the Prospectus is furnished to such prospective
purchaser in accordance with the prospectus delivery requirements of the Act.
(d) Upon notice from the Company or the Selling Shareholder that
the Prospectus is required to be amended or supplemented, Placement Agent will
immediately cease use of the Prospectus until Placement Agent has received such
amendment or supplement and thereafter will make use of the Prospectus only as
so amended or supplemented, and Placement Agent will deliver a copy of such
amendment or supplement to each prospective purchaser to whom a copy of the
Prospectus had previously been delivered (and who has not returned such copy).
(e) Placement Agent will use its best efforts to conduct the
offering and placement of the Units on behalf of the Selling Shareholder.
(g) Placement Agent will notify the Selling Shareholder in writing
promptly when any event shall have occurred during the offering period as a
result of which any representation or warranty of the Placement Agent herein
would not be true.
12.5 Neither the Placement Agent nor any of its affiliates or
controlling persons will take any action that will impair the effectiveness of
the transactions contemplated by this Agreement.
12.6 All corporate actions by Placement Agent required for the
execution, delivery and performance of this Agreement have been taken. The
execution and delivery of this Agreement by the Placement Agent, the observance
and performance thereof, and the consummation of the transactions contemplated
herein or in the Prospectus do not and will not constitute a material breach of,
or a material default under, any instrument or agreement by which the Placement
Agent is bound, and does not and will not, to the best of the Placement Agent's
knowledge, contravene any existing law, decree or order applicable to it. This
Agreement constitutes a valid and binding agreement of Placement Agent,
enforceable in accordance with its terms.
12.7 Placement Agent understands that the Selling Shareholder is
relying upon Placement Agent's representations and warranties in connection with
the offering and the sale of the Units and the underlying securities
contemplated by this Agreement.
12.8 Placement Agent's representations and warranties under this
Section 12 shall be true and correct as of the Closing, and shall survive the
Closing indefinitely.
13. NOTICES. Except as otherwise expressly provided in this Agreement:
13.1 Whenever notice is required by the provisions of this Agreement to
be given to the Selling Shareholder, such notice shall be in writing, addressed
to the Selling Shareholder, at:
1.1 - 14
If to Selling Shareholder: Attn: Howard P. Silverman
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With a Copy to: Attn: Gregory Bartko, Esq.
Law Office Of Gregory Bartko
3475 Lenox Road
Suite 400
Atlanta, GA 30326
13.2 Whenever notice is required by the provisions of this Agreement to
be given to the Placement Agent, such notice shall be given in writing,
addressed to the Placement Agent, at:
If to the Placement Agent: Attn: Stuart Greenberg
West America Securities Corp.
4510 East Thousand Oaks Blvd.
Suite 100
Westlake Village, CA 91362
With a Copy to: Attn:
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14. MISCELLANEOUS.
14.1 Benefit. This Agreement is made solely for the benefit of the
Placement Agent and the Selling Shareholder, their respective officers and
directors and any controlling person referred to in Section 15 of the Securities
Act of 1934 and their respective successors and assigns, and no other person may
acquire or have any night under or by virtue of this Agreement, including,
without limitation, the holders of any Units or the securities underlying the
Units. The term "successor" or the term "successors and assigns" as used in this
Agreement shall not include any purchasers, as such, of any of the Units.
14.2 Survival. The respective indemnities, agreements, representations,
warranties, covenants and other statements of the Selling Shareholder and the
Placement Agent, or the officers, directors or controlling persons of the
Placement Agent as set forth in or made pursuant to this Agreement and the
indemnity agreements of the Selling Shareholder and the Placement Agent shall
survive and remain in full force and effect, regardless of (i) any investigation
made by or on behalf of the Company, Selling Shareholder, or the Placement Agent
or any officer, director or controlling person of the Company or of the
Placement Agent; (ii) delivery of or payment for the Units; or (iii) the Closing
Date(s), and any successor of the Selling Shareholder or the Placement Agent or
any controlling person, officer or director thereof, as the case may be, shall
be entitled to the benefits hereof.
1.1 - 15
14.3 Governing Law, Jurisdiction and Arbitration. The validity,
interpretation and construction of this Agreement and of each party hereof will
be governed by the laws of the State of Nevada. Any controversy or claim arising
out of or related to this Agreement or the breach thereof, shall be settled by
binding arbitration in Carson City, Nevada in accordance with the Commercial
Arbitration Rules then in effect of the American Arbitration Association located
nearest to Carson City, Nevada ("AAA"). A proceeding shall be commenced upon
written demand by the Selling Shareholder or the Placement Agent to the other.
The arbitrator(s) shall enter a judgment by default against any party which
fails or refuses to appear in any properly noticed arbitration proceeding. The
proceeding shall be conducted by one (1) arbitrator, unless the amount alleged
to be in dispute exceeds two hundred fifty thousand dollars ($250,000), in which
case three (3) arbitrators shall preside. The arbitrator(s) will be chosen by
the parties from a list provided by the AAA, and if they are unable to agree
within ten (10) days, the AAA shall select the arbitrator(s). The arbitrators
must be experts in securities law and financial transactions. The arbitrators
shall assess costs and expenses of the arbitration, including all attorneys' and
experts' fees, as the arbitrators believe is appropriate in light of the merits
of parties' respective positions in the issues in dispute. The award of the
arbitrator(s) shall be final and binding upon the parties and may be enforced in
any court having jurisdiction.
14.4 Counterparts. This Agreement may be executed in any number of
counterparts, each of which may be deemed an original and all of which together
will constitute one and the same instrument.
14.5 Confidential Information. All confidential financial or business
information (except publicly available or freely usable material otherwise
obtained from another source) respecting either party will be used solely by the
other party in connection with the within transactions, be revealed only to
employees or contractors of such other party who are necessary to the conduct of
such transactions, and be otherwise held in strict confidence.
14.6 Finders. The Selling Shareholder represents that he is not
obligated to pay any compensation or other fees, costs or related expenditures
in cash or securities in excess of $5,000 to any underwriter, broker, placement
agent, finder or other representative other than Placement Agent. Selling
Shareholder agrees to indemnify the Placement Agent with respect to any other
claim for a fee in connection with the offering of the Units. Placement Agent
agrees to indemnify the Selling Shareholder with respect to any claim for a
finder's fee that arises because of Placement Agent's agreement to pay a fee to
the person or entity making such claim.
16.8 Recitals. The recitals to this Agreement are a material part
hereof, and each recital is incorporated into this Agreement by reference and
made a part of this Agreement.
1.1 - 16
IN WITNESS WHEREOF, the parties hereto have duly caused this Placement
Agent Agreement to be executed as of the day and year first above written.
SELLING SHAREHOLDER
By:
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Howard P. Silverman
PLACEMENT AGENT
WEST AMERICA SECURITIES CORP
By:
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