Current Report — Form 8-K Filing Table of Contents
Document/ExhibitDescriptionPagesSize
1: 8-K Current Report HTML 420K
2: EX-3.1 Articles of Incorporation/Organization or By-Laws HTML 9K
3: EX-4.1 Instrument Defining the Rights of Security Holders HTML 10K
4: EX-4.2 Instrument Defining the Rights of Security Holders HTML 7K
5: EX-4.3 Instrument Defining the Rights of Security Holders HTML 93K
6: EX-4.4 Instrument Defining the Rights of Security Holders HTML 93K
7: EX-10.3 Material Contract HTML 260K
8: EX-10.4 Material Contract HTML 113K
9: EX-10.5 Material Contract HTML 248K
10: EX-10.6 Material Contract HTML 134K
11: EX-23.1 Consent of Experts or Counsel HTML 9K
12: EX-23.2 Consent of Experts or Counsel HTML 9K
13: EX-99.1 Miscellaneous Exhibit HTML 122K
14: EX-99.2 Miscellaneous Exhibit HTML 93K
15: EX-99.3 Miscellaneous Exhibit HTML 216K
This
Placement Agency Agreement (the “Agreement”)
confirms the retention by PACE
Health Management Systems, Inc.,
an Iowa
corporation (“Pace”
or
the
“Company”),
of
Maxim Group LLC (the
“Placement
Agent”),
to
act as the placement agent on a “best efforts” basis in connection with the
private placement (the “Placement”)
of
Units (as defined below) on the terms set forth below. As a condition to the
closing of the Placement, the Stock Purchase Agreement and amendment thereto
entered into among Pace, Conmed, Inc. (“Conmed”)
and
the other parties named therein (the “Stock
Purchase Agreement”)
pursuant to which Pace shall acquire all of the outstanding capital stock of
Conmed (the “Acquisition”)
shall
have been, simultaneously with the closing of the Placement, consummated
pursuant to the terms of the Stock Purchase Agreement and as described in the
Offering Documents (as defined below).
1.PLACEMENT
(a) The
securities of the Company which are the subject of the Placement shall consist
of no less than Ten Million Dollars ($10,000,000) (the “Minimum
Amount”)
and no
more than Fifteen Million Dollars ($15,000,000) (the “Maximum
Amount”)
of
Units (the “Units”),
each
Unit consisting of: (1) 100 shares (the “Shares”)
of
Series B Convertible Preferred Stock, no par value, of Pace (the “Preferred
Stock”),
(2) a
common stock purchase warrant entitling the holder to purchase up to 10,000
shares of Common Stock at an exercise price of $0.30 per share and (3) a common
stock purchase warrant entitling the holder to purchase up to 3,320 shares
of
Common Stock at an exercise price equal to $2.50 per share (collectively the
“Warrants”)
at a
purchase price of $100,000 per Unit, or $1,000 per share of Series B Preferred
Stock (the “Purchase
Price”).
The
Preferred Stock shall be convertible by the holder thereof, at any time
following approval by the shareholders of the Company of the Plan of
Recapitalization described in the Memorandum, into four hundred (400) shares
of
common stock, no par value per share, of Pace (the “Common
Stock”).
The
conversion rate of 400 for 1 assumes the prior effectiveness of the 1 for 20
reverse stock split which the Company covenants to effect as soon as practical
after consummation of the Acquisition described in the Confidential Private
Placement Memorandum dated January 16, 2007 (the “Memorandum”)
pursuant to which the Units are being offered by the Company. The Units, the
Shares, the Warrants, the Placement Agent Warrants (defined below) and the
shares of Common Stock issuable upon conversion of the Preferred Stock and
the
exercise of the Warrants (the “Warrant
Shares”)
and
the Placement Agent Warrants (the “Placement
Agent Shares”),
are
referred
to herein as the “Securities,”
which
Securities shall be issued to the investor(s) in the Placement (an “Investor”
or
the
“Investors”)
or the
Placement Agent, respectively. Subscriptions for the Units shall be accepted
in
minimum increments of $100,000; provided that the Company and the Placement
Agent may agree, in their discretion, to allow subscriptions in smaller
increments. The terms of the Securities shall be as set forth in the Offering
Documents (as defined below).
(b) The
Placement will be made by the Company solely pursuant to the Offering Documents
(as defined below). The Securities will not be registered under the Securities
Act of 1933, as amended, or any applicable successor statute (the “Act”),
but
will be issued in reliance on the private offering exemption available under
Section 4(2) of the Act and the rules and regulations promulgated thereunder,
including Regulation D (“Regulation
D”).
The
Placement Agent understands that all subscriptions for Units are subject to
acceptance by the Company. The Company and the Placement Agent reserve the
right
in their reasonable discretion to accept or reject any or all subscriptions
for
Units in whole or in part, regardless whether any funds have been deposited
into
an escrow account. Any subscription monies received by the Placement Agent
from
Investors will be handled in accordance with Rule 15c2-4 under the Securities
Exchange Act of 1934, as amended (the “Exchange
Act”),
whether or not the Placement Agent is subject to the Exchange Act, and as
otherwise may be prescribed by the terms of the Offering Documents (as defined
in Section 2 below).
(c) Until
the
Closing (as defined below) is held, all subscription funds received shall be
held by Continental Stock Transfer & Trust Company (the “Escrow
Agent”).
The
Placement Agent shall not have any independent obligation to verify the accuracy
or completeness of any information contained in any Subscription Documents
(as
defined in Section 2 below) or the authenticity, sufficiency or validity of
any
check delivered by any prospective Investor in payment for the Units, nor shall
the Placement Agent incur any liability with respect to any such verification
or
failure to verify. All subscription checks and funds shall be promptly and
directly delivered without offset or deduction to the Escrow Agent.
2.OFFERING
MEMORANDUM AND RELATED MATTERS
(a) The
Company has prepared offering documents, including a Confidential Private
Placement Memorandum and the Subscription Documents (defined below), relating
to
the Company and the Placement (such documents, together with the exhibits and
attachments thereto or available thereunder or delivered to potential investors
in connection with the Placement and any amendments or supplements thereto
prepared and furnished by the Company, including Pace’s reports and other
filings with the Securities and Exchange Commission (the “SEC”)
attached as exhibits to the Confidential Private Placement Memorandum (the
“SEC
Documents”),
being
referred to herein as the “Offering
Documents”),
which, among other things, describes the Placement, the Acquisition and certain
investment risks relating thereto.
(b) The
Company has been and will continue to be responsible for preparing and filing
required documentation, if any, with the authorities in the United States or
any
state located therein (and subsequent to, if required by the laws of any such
jurisdiction) in connection with the distribution of the Offering Documents
to
prospective Investors (the parties acknowledging, however, that the Placement
of
the Units is intended and expected to be wholly or partially exempt from filing
requirements in the United States by reason of an “accredited investor”
exemption).
(c) The
Placement Agent and its counsel and the Company and its counsel have or will
jointly prepare forms of subscription agreement and securities purchase
agreements (“SPAs”,
and
collectively with the subscription agreements, the “Subscription
Agreement”)
and a
form of purchaser questionnaire (collectively with the Subscription Agreement,
and any other stock purchase or other documents required in connection with
the
Placement, including the Escrow Agreement to be entered into with the Escrow
Agent, the “Subscription
Documents”),
which
Subscription Documents shall contain such representations, warranties,
conditions and covenants as are customary in private placements of corporate
debt and equity securities with United States accredited investors. The
Placement Agent and its counsel have had or will have an opportunity to review
the final form of the Offering Documents prior to the distribution thereof
to
prospective Investors, and the Offering Documents will be the only offering
documents (other than cover letters which may be used by the Placement Agent,
and any documents made available to Investors in accordance with the terms
of
the Offering Documents) shown to prospective Investors. The Company and its
counsel will advise the Placement Agent and its counsel in writing of those
jurisdictions in which the Shares may lawfully be offered and sold, and the
manner in which the Shares may lawfully be offered and sold in each such
jurisdiction in connection with the Placement,and
the
Placement Agent agrees that the Shares will be offered or sold only in such
jurisdictions and in the manner specified by the Company; provided,
however,
that
the
Placement Agent shall not be responsible for independently verifying such
written advice with respect to the jurisdictions in which the Shares
may be
offered and sold and with respect to the manner in which the Shares
may be
offered and sold in such jurisdictions.
Notwithstanding the foregoing, the Placement Agent shall determine whether
it is
licensed to offer and sell the Shares in each jurisdiction in which it intends
to do so.
(d) The
Placement will be made in accordance with the requirements of Section 4(2)
under
the Act and/or Regulation D only to investors that qualify as accredited
investors, as defined in Rule 501(a) under the Act (“Accredited
Investors”),
purchasing for their own account for investment purposes only and not for
distribution in violation of securities laws. Furthermore, prospective Investors
will have been provided the Offering Documents and access to the management
of
the Company and afforded the opportunity to ask questions.
(e) The
Company recognizes, agrees and confirms that the Placement Agent (or any selling
agent permitted to be utilized by the Placement Agreement under Section 3(a)
hereof): (i) will use and rely primarily on the information contained in the
Offering Documents in performing the services contemplated by this Agreement
without having independently verified the same; (ii) is authorized, as the
Company’s exclusive financial advisor and placement agent in connection
with
the
Placement, to transmit to any prospective Investor a copy or copies of the
Offering Documents and any other documentation supplied to the Placement Agent
for transmission to any prospective Investor by or on behalf of the Company
or
by any of the Company’s officers, representatives or agents, in connection with
the performance of the Placement Agent’s services hereunder or any transaction
contemplated hereby; (iii) does not assume responsibility for the accuracy
or
completeness of any information contained in the Offering Documents or any
such
other information; (iv) will not make an appraisal of the Company or any assets
of the Company or the securities being offered by the Company in the Placement;
and (v) retains the right to continue to perform due diligence of the Company
during the course of the Company’s engagement of the Placement
Agent.
3.PLACEMENT
AGENT
(a) The
Company hereby employs the Placement Agent during the Offered Period (as defined
below) as its exclusive placement agent in the United States for the purpose
of
placing the Units for the account and risk of the Company. This appointment
shall be exclusive with respect to the Placement and otherwise as provided
herein, and the Company shall not have the right to appoint additional sales
agents in the United States without the Placement Agent’s express prior written
consent. The Company hereby agrees that the Placement Agent shall have the
right
to utilize other selling broker-dealers in connection with the Placement of
the
Units on terms approved by the Placement Agent. Subject to the provisions of
Section 5 hereof and to the performance by the Company of all of its obligations
to be performed hereunder, the Placement Agent agrees to use its best efforts
to
assist in arranging for sales of Units. The Company recognizes that “best
efforts” does not assure that the Placement will be consummated. It is
understood and agreed that this Agreement does not create any partnership,
joint
venture or other similar relationship between or among the Placement Agent
and
the Company, and that the Placement Agent is acting only as a sales
agent.
(b) For
the
services of the Placement Agent hereunder, the Company will pay or caused to
be
paid to the Placement Agent at any Closing the following fees:
(i) a
cash
payment equal to 10% of the gross proceeds received by the Company from the
sale
of the Units, payable at each Closing in lawful money of the United States
by
check or wire transfer of immediately available funds; and
(ii) $55,000
for all out-of-pocket expenses, including the reasonable fees and expenses
of
counsel to the Placement Agent, whether or not the Placement is consummated,
as
well as any fees in connection with any Blue Sky filings; such expenses to
be
paid at the Initial Closing, payable in lawful money of the United States by
check or wire transfer of immediately available funds (with blue sky filing
fees
paid as incurred); and
(iii) a
warrant
(the
“Placement
Agent Warrants”)
to
purchase a number of shares of Common Stock, equal to five percent (5%) of
the
number of shares issuable upon
conversion
of the Shares sold in the Placement. Such Placement Agent Warrants will be
issued at each Closing and shall provide, among other things:
(A)
that
the Placement Agent Warrants shall:
(1) be
exercisable at an initial exercise price of $2.75;
(2) expire
five (5) years from the date of issuance; and
(3) be
non-redeemable,
(B)
for
registration rights on the same terms granted to the Investors (other
than
provisions for liquidated damages),
(C)
for
the ability of a cashless exercise of the warrants included in the
Placement Agent Warrants, and
(D)
for
such other terms as are normal and customary for warrants issued
to
placement agents, including, without limitation, standard anti-dilution
protections.
(c) Notwithstanding
any termination of this Agreement pursuant to the terms hereof or otherwise,
if
on or before the twelve (12) month anniversary of the final Closing, the Company
or any successor or subsidiary of the Company, enters into a commitment or
letter of intent relating to any offering of debt or equity securities of the
Company or any other financing: with any financing source to whom the Company
was introduced by the Placement Agent or who was contacted by Placement Agent
in
connection with its services for the Company hereunder, the Company shall pay
to
the Placement Agent, at the closing of any such offering or financing, the
fees
described in, and in accordance with the terms and provisions of, Section
3(b)(i) and (iii) above.
(d) The
Engagement Letter dated May 25, 2006 between the Company and the Placement
Agent
(the “Engagement
Letter”),
and
the obligations and liabilities thereunder shall be superseded by this
Agreement.
(e) Upon
receipt by the Company from a proposed Investor of completed Subscription
Documents, and such other documents as the Company requests, the Company and
the
Placement Agent will determine in their reasonable joint discretion whether
they
wish to accept or reject the subscription, in whole or in part.
The
Company will pay for, whether or not any Units are sold in connection with
the
Placement, all
expenses relating to the Placement, including, without limitation: (i)
the
preparation, printing, reproduction, filing, distribution and mailing of the
Offering Documents and all other documents relating to the Placement, and any
supplements or amendments thereto, including the fees and expenses of counsel
to
the Company, and the cost of all copies thereof; (ii) the issuance, sale,
transfer and delivery of the Units, and the Securities contained therein,
including any transfer or other taxes payable thereon and the fees of any
transfer agent or registrar; (iii) the public registration and listing of,
or
registration and qualification of the Securities or the securing of an exemption
therefrom under state of foreign “blue sky” or securities laws, including,
without limitation, filing fees payable in the jurisdictions in which such
registration or qualification or exemption therefrom is sought, the costs of
preparing preliminary, supplemental and final “blue sky surveys” relating to the
offer and sale of the Securities and the fees and disbursements of counsel
to
the Placement Agent in connection with such “blue sky” matters, (iv) the filing
fees in connection with filings required by the applicable securities regulatory
authorities, including filings with the National Association of the Securities
Dealers; Inc. in connection with the Placement and the registration for resale
of the Securities with the SEC on behalf of the Investors; (v) all Escrow Agent
fees; and (vi) all
road
show expenses, travel, legal, and other related expenses of the Company.
Notwithstanding
the limitation set forth in Section 3(b)(ii), the Company shall be responsible
for the payment of the fees and expenses, including legal fees and expenses,
described under clauses (iii), (iv) and (v) of this Section. In addition, the
Company will be responsible for the expenses of the Placement Agent subject
to
the limitations of Section 3(b)(ii).
5.TERMINATION
OF PLACEMENT
Notwithstanding
the Offering Period set forth in Section 6 of this Agreement, the Placement
may
be terminated immediately by the Placement Agent upon giving written notice
to
the Company, but only in the event that:
(a) in
the
opinion of the Placement Agent, the Offering Documents contain an untrue
statement of a material fact or omits to state a material fact required to
be
stated therein or necessary in order to make the statements appearing therein
not misleading in the light of the circumstances in which they were made, and
the Company shall not have corrected such untrue statement or omission to the
reasonable satisfaction of the Placement Agent and its counsel within ten (10)
days after the Company receives notice of such untrue statement or omission,
provided that notwithstanding such ten (10) day period, the Closing (as defined
in Section 6 below) shall not occur hereunder until the Placement Agent shall
notify the Company that it is satisfied, in its reasonable determination, that
the Company has taken such steps (including circulating amended offering
materials and afforded prospective Investors a reasonable opportunity to review
such amendments) to allow the Closing to occur; or
(b) the
Company shall be in material breach of any representation, warranty or covenant
made by it in this Agreement, any Offering Document or any other document
relating to the Placement; or
(c)(i) any
calamitous domestic or international event or act or occurrence has taken place
and, in the Placement Agent’s opinion, has or will materially disrupt general
securities markets in the United States in the immediate future; or (ii) if
trading on the New York Stock Exchange, the American Stock Exchange, or in
the
over-the-counter market shall have been suspended or minimum or maximum prices
for trading shall have been fixed, or maximum ranges for prices for securities
shall have been required on the over-the-counter market by the National
Association of Securities Dealers, Inc. (“NASD”)
or by
order of the SEC or any other government authority having jurisdiction; or
(iii)
if the United States shall have become involved in a war, major hostilities,
acts of terrorism or the like; or (iv) if a banking moratorium has been declared
by a New York State or federal authority; or (v) if the Company shall have
sustained a material loss, whether or not insured, by reason of fire, flood,
accident or other calamity; or (vii) if there shall have been such material
adverse change in the conditions or prospects of the Company, involving a change
not contemplated by the Offering Documents; or (viii) if there shall have been
such material adverse general market conditions as in the Placement Agent’s
reasonable judgment would make it inadvisable to proceed with the Placement
or
the sale or delivery of the Units.
In
the
event of any such termination pursuant to this Section 5, the Placement Agent
shall be entitled to receive, in addition to other rights and remedies it may
have hereunder, at law or otherwise, an amount equal to the sum of (A) all
Placement Agent’s fees in accordance with Section 3 and (B) the fees and
expenses incurred by the Placement Agent in connection with the Placement in
accordance with Section 4 subject to the limitations in Section
3(b)(ii).
6.OFFERING
PERIOD; CLOSINGS
(a) Subject
to the terms and conditions set forth in Sections 5 and 10 hereof, the Shares
will be offered for a period beginning from the date hereof and ending on the
earliest to occur of (i) January 31, 2007 (which date may be extended to
February 15, 2007 by the parties), (ii) such time as the Company and the
Placement Agent shall agree; (iii) the Placement is terminated by the Company
and/or the Placement Agent in accordance with the terms hereof; and (iv) the
date on which full subscription for an acceptance by the Company of the Maximum
Amount (such period, the “Offering
Period”).
If
any Shares have been subscribed for and accepted by the Company at any time
during the Offering Period representing the Minimum Amount, the Company will
promptly conduct a closing on such Shares. Thereafter, additional closings
(together with any initial closing, each, a “Closing”)
will
occur until the first to occur of: (i) the full subscription for an acceptance
by the Company of the Maximum Amount, (ii) the conclusion of the Offering
Period, or (iii) the termination of the Placement or this Agreement. Any Closing
shall be undertaken in a manner agreed to by the Company and the Placement
Agent. The date upon which a Closing is held shall hereinafter be referred
to as
the “Closing
Date.”
Notwithstanding the foregoing, the Company
and
the
Placement understand and agree that the initial Closing shall be for not
less
than the Minimum Amount.
(b) At
any
Closing, the Company shall deliver to the Investors certificates representing
the Shares, duly executed by the Company, together with Warrants and such other
closing documentation as may be required in order to affect the
Closing.
The
Company represents and warrants to the Placement Agent that all representations
and warranties (i) of Conmed and Pace in the Stock Purchase Agreement and (ii)
of Conmed and Pace in any SPA or Subscription Agreement with any investor in
the
Placement, including but not limited to a SPA with LB I Group, Inc. dated
January 26, 2007, are accurate and complete and the Placement Agent and the
Investors, as intended third party beneficiaries, may rely on such
representations and warranties as if made directly to them. Conmed and Pace
have
substantially complied with all covenants and other obligations to which they
are bound under the Stock Purchase Agreement. The transactions contemplated
by
the Stock Purchase Agreement are being consummated as described in the Offering
Documents, simultaneously with the closing of any SPA or Subscription Agreement
with Investors.
8.REPRESENTATIONS,
WARRANTIES AND COVENANTS OF THE PLACEMENT
AGENT
The
Placement Agent hereby represents and warrants to, and covenants with, the
Company that:
(a) This
Agreement has been duly authorized, executed and delivered by the Placement
Agent and constitutes the legal, valid and binding obligation of the Placement
Agent, enforceable against it in accordance with its terms, except insofar
as
enforcement of the indemnification or contribution provisions hereof may be
limited by applicable laws or principles of public policy and subject, as to
enforcement, to the availability of equitable remedies and limitations imposed
by bankruptcy, insolvency, reorganization and other similar laws and related
court decisions relating to or affecting creditors’ rights
generally.
(b)(i) Sales
of
Units by the Placement Agent will be made only in such jurisdictions in which:
(i) the Placement Agent is a registered broker-dealer; and (ii) the Placement
Agent has been advised by counsel that the offering and sale of the Units is
registered under, or is exempt from registration under, applicable
laws.
(ii)Offers
and sales of Units by the Placement Agent will be made in compliance with the
provisions of Regulation D under the Act and/or Section 4(2) of the Act, and
the
Placement Agent shall furnish to each investor a copy of the Offering Documents
(including all Schedules and Exhibits thereto) prior to accepting any payments
for Units.
(c) The
Placement Agent is: (i) a registered broker-dealer under the Exchange Act;
(ii)
a member in good standing of the NASD; and (iii) registered as a broker-dealer
in each jurisdiction in which it is required to be registered as such in order
to offer and sell the Units in such jurisdiction.
(d) The
Placement Agent will periodically notify the Company of the jurisdiction in
which it intends the Securities to be offered by it or will be offered by it
pursuant to this Agreement, and will periodically notify the Company of the
status of the offering conducted pursuant to this Agreement.
9.COVENANTS
The
Company covenants to the Placement Agent that it shall:
(a) Notify
the Placement Agent as soon as practicable, and confirm such notice promptly
in
writing: (i) when any event shall have occurred during the period commencing
on
the date hereof and ending on the final Closing Date as a result of which the
Offering Documents would 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 not misleading, and (ii) of the receipt of any
notification with respect to the modification, rescission, withdrawal or
suspension of the qualification or registration of the Securities or of an
exemption from such registration or qualification in any jurisdiction. The
Company will use its reasonable best efforts to prevent the issuance of any
such
modification, rescission, withdrawal or suspension and, if any such
modification, rescission, withdrawal or suspension is issued, to obtain the
lifting thereof as promptly as possible.
(b) Not
supplement or amend the Offering Documents unless the Placement Agent and its
counsel shall have approved of such supplement or amendment in writing, such
approval not to be unreasonably withheld, delayed or conditioned. If, at any
time during the period commencing on the date hereof and ending on the final
Closing Date, any event shall have occurred as a result of which the Offering
Documents 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 not misleading, or if, in the opinion of counsel to the Company or
counsel to the Placement Agent, it is necessary at any time to supplement or
amend the Offering Documents to comply with the Act, Regulation D or any
applicable securities or “blue sky” laws, the Company will promptly prepare an
appropriate supplement or amendment (in form and substance reasonably
satisfactory to the Placement Agent and its counsel) which will correct such
statement or omission or which will effect such compliance.
(c) Deliver
without charge to the Placement Agent such number of copies of the Offering
Documents and any supplement or amendment thereto as may reasonably be requested
by the Placement Agent.
(d) Not,
directly or indirectly, in connection with the Placement or as otherwise agreed
to in this Agreement, solicit any offer to buy from, or offer to sell to, any
person or entity any Securities or other securities of the Company except
through the Placement Agent.
(e) Not
solicit any offer to buy or offer to sell Securities by any form of general
solicitation or advertising, including, without limitation, any advertisement,
article, notice or other communication published in any newspaper, magazine
or
similar medium or broadcast over the Internet, television or radio or at any
seminar or meeting whose attendees have been invited by any general solicitation
or advertising.
(f) At
all
times during the period commencing on the date hereof and ending on the date
of
the final Closing, provide to each prospective Investor or his purchaser
representative, if any, on reasonable request, such information (in addition
to
that contained in the Offering Documents) concerning the Placement, the Company,
the Securities and any other relevant matters as it possesses or can acquire
without unreasonable effort or expense and extend to each prospective investor
or his purchaser representative, if any, the opportunity to ask questions of,
and receive answers from the Company concerning the terms and conditions of
the
Placement and the business of the Company and to obtain any other additional
information, to the extent it possesses the same or can acquire it without
unreasonable effort or expense, as such prospective Investor or purchaser
representative may consider necessary in making an informed investment decision
or in order to verify the accuracy of the information furnished to such
prospective Investor or purchaser representative, as the case may
be.
(g) Notify
the Placement Agent promptly of the acceptance or rejection of any subscription.
(h) File
five
(5) copies of a Notice of Sales of Securities on Form D with the SEC no later
than 15 days after the first sale of the Units, if required by law. The Company
shall file promptly such amendments to such Notices on Form D as shall become
necessary and shall also comply with any filing requirement imposed by the
laws
of any province or jurisdiction in which offers and sales are made. The Company
shall furnish the Placement Agent with copies of all such filings.
(i) Place
the
following or similar legend on all certificates representing the
Securities:
“THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES
NOR
ANY INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT OR SUCH LAWS OR AN EXEMPTION FROM
REGISTRATION
UNDER SUCH ACT AND SUCH LAWS WHICH, IN THE OPINION OF COUNSEL FOR THIS
CORPORATION, IS AVAILABLE.”
(j) Not,
directly or indirectly, engage in any act or activity which may jeopardize
the
status of the offering and sale of the Units as exempt transactions under the
Act or under the securities or “blue sky” laws of any jurisdiction in which the
Placement may be made.
(k) Apply
the
net proceeds from the sale of the Units for the purposes set forth under the
caption “Use of Proceeds” in the Offering Documents in the manner indicated
thereunder.
(l) Except
as
required by law, not, during the period commencing on the date hereof and ending
on the Closing Date, issue any press release or other communication or hold
any
press conference with respect to the Company, its financial condition, results
of operations, business properties, assets, liabilities or future prospects
of
the Placement, without the prior written consent of the Placement Agent, which
consent will not be unreasonably withheld.
(m) Not,
prior
to the completion of the Placement, bid for, purchase, attempt to induce others
to purchase, or sell, directly or indirectly, any shares of Common Stock or
any
other securities in violation of the provisions of Regulation M under the
Exchange Act.
(n) The
Company will include all the shares of Common Stock underlying the Preferred
Shares, the Warrants and the Placement Agent Warrants in a registration
statement of its securities under the Act to be filed with the SEC pursuant
to
the terms of the Subscription Agreements.
(o) So
long
as the Securities are “restricted securities” within the meaning of Rule
144(a)(3) under the Act, the Company, during any period in which it is not
subject to and in compliance with Section 13 or 15(d) of the Exchange Act,
or is
not exempt from such reporting requirements pursuant to and in compliance with
Rule 12g3-2b under the Exchange Act, provide to each holder of Securities and
to
each prospective purchaser (as designated by such holder) of Securities, upon
the request of such holder or prospective holder, any information required
to be
provided by Rule 144A(d)(4) under the Act.
(p) The
Company will initially invest the proceeds of the Placement and all other funds
of the Company in such a manner so as to cause the Company not to be subject
to
the United States Investment Company Act of 1940, as amended (the “1940
Act”),
and
will thereafter use its best efforts to avoid the Company’s becoming subject to
the 1940 Act.
(q) In
addition to the foregoing, to the extent not set forth herein, the Placement
Agent may rely on the covenants made by the Company in the SPAs and the other
Subscription Documents used in connection with the Placement.
10.CONDITIONS
OF THE PLACEMENT AGENT’S OBLIGATIONS
The
obligations of the Placement Agent pursuant to this Agreement shall be subject,
in its discretion, to the continuing accuracy of the representations and
warranties of the Company contained herein and in each certificate and document
contemplated under this Agreement to be delivered to the Placement Agent or
otherwise at any Closing (including, without limitation, all Subscription
Documents), as of the date hereof and as of the Closing Date or the date of
any
Closing subsequent to the Closing Date, to the performance by the Company of
its
obligations hereunder, and to the following conditions:
(a) At
the
Closing, the Placement Agent shall have received the favorable opinion of
Ellenoff
Grossman & Schole LLP,
counsel
for the Company, in the form and substance reasonably satisfactory to the
Placement Agent and addressed to the Placement Agent and the Investors with
respect to the Placement and the Acquisition.
(b) If
there
is more than one Closing, then at each such Closing there shall be delivered
to
the Placement Agent updated opinions, certificates or other information
described in this Section 10.
(c) On
or
prior to or following the Closing Date, as the case may be, the Placement Agent
shall have been furnished such information, documents and certificates as it
may
reasonably require for the purpose of enabling it to review the matters referred
to in this Section 10 and in order to evidence the accuracy, completeness or
satisfaction of any of the representations, warranties, covenants, agreements
or
conditions herein contained, or as it may otherwise reasonably request.
(d) The
Company shall have delivered to the Placement Agent (i) a Good Standing
Certificate from the Secretary of State of its jurisdiction of incorporation
and
each jurisdiction in which the Company and the Subsidiary are qualified to
do
business as a foreign corporation, and (ii) certified resolutions of the
Company’s Board of Directors approving this Agreement and any other Offering
Agreements and the transactions and agreements contemplated by this Agreement
and any other Offering Agreements.
(e) At
each
Closing, the Placement Agent shall have received a certificate of all officers
of the Company and the Subsidiary, dated, as applicable, as of the Closing
Date
or the date of such Closing, to the effect that, as of the date of this
Agreement and as of the applicable date, the representations and warranties
of
the Company contained or incorporated herein were and are accurate, and that,
as
of the applicable date, the obligations to be performed by the Company hereunder
on or prior thereto have been fully performed.
(f) All
proceedings taken in connection with the issuance, sale and delivery of the
Units, the Shares, the Warrants and the Placement Agent Warrants shall be
reasonably satisfactory in form and substance to the Placement Agent and its
counsel.
(g) Lock-up
agreements from each of the following shareholders of the Company. John
Pappajohn, Edgewater Private Equity Fund, L.P., Gainesborough LLC and Ann
Vassilou.
(h) Any
certificate or other document signed by any officer of the Company and delivered
to the Placement Agent and its counsel as required hereunder shall be deemed
a
representation and warranty by the Company hereunder as to the statements made
therein. If any condition to the Placement Agent’s obligations hereunder have
not been fulfilled as and when required to be so fulfilled, the Placement Agent
may terminate this Agreement or, if the Placement Agent so elects, in writing
waive any such conditions which have not been fulfilled or extended the time
for
their fulfillment. In the event that Placement Agent elects to terminate this
Agreement, Placement Agent shall notify the Company of such election in writing.
Upon such termination, neither party shall have any further liability nor
obligation to the other except as provided in Section 11 hereof.
11.INDEMNIFICATION
(a) The
Company agrees to indemnify and hold harmless the Placement Agent, any person
who controls the Placement Agent within the meaning of the Act, Section 20(a)
of
the Exchange Act or any applicable statute, and each partner, director, officer,
employee, agent and representative of the Placement Agent and its
representatives from and against any loss, damage, expense, liability or claim,
or actions or proceedings in respect thereof (including, without limitation,
reasonable attorneys’ fees and expenses incurred in investigating, preparing or
defending against any litigation commenced) which any such person may incur
or
which may be made or brought against any such person arising out of or based
upon: (i) any breach of any of the agreements, representations or warranties
of
the Company contained in or contemplated by this Agreement or the Offering
Documents, including, without limitation, those arising out of or based on
any
alleged untrue statement of a material fact contained in the Offering Documents
or omission to state a material fact required to be stated in the Offering
Documents or necessary in order to make the statements appearing therein not
misleading in the light of the circumstances in which they were made, (ii)
any
violation of any federal or state securities laws attributable to the Placement,
(iii) any violation of law by the Company or any affiliate thereof, or any
director, officer, employee, agent or representative of any of them, related
to
or arising out of the Placement or (iv) the Placement Agent’s entering into
or performing services under this Agreement, or arising out of any other matter
referred to in this Agreement. This indemnity agreement by, and the agreements,
warranties and representations of, the Company shall survive the offer, sale
and
delivery of the Units and the termination of this Agreement and shall remain
in
full force and effect regardless of any investigation made by or on behalf
of
any person indemnified hereunder, and termination of this Agreement and
acceptance of any payment for the Units hereunder.
(b) The
Placement Agent agrees to indemnify and hold harmless the Company and its
affiliates, any person who controls any of them within the meaning of the Act,
Section 20(a) of the Exchange Act or any applicable statute, and each officer,
director, employee, agent and representative of the Company or any of its
affiliates from and against any loss, damage, expense,
liability
or claim or actions or proceedings in respect thereof (including, without
limitation, reasonable attorneys’ fees and expenses incurred in investigating,
preparing or defending against any litigation commenced) which any such person
may incur or which may be made or brought against any such person, but only
to
the extent the same arises out of or is based upon: (i) any breach of any of
the
agreements, representations or warranties of the Placement Agent contained
in
this Agreement, or (ii) any untrue statement of a material fact in any
information provided to the Company in writing by the Placement Agent, expressly
for use in and used in the Offering Documents. This indemnity agreement by,
and
the agreements, warranties and representations of, the Placement Agent shall
survive the offer, sale and delivery of the Units and shall remain in full
force
and effect regardless of any investigation made by or on behalf of any person
indemnified hereunder, and termination of this Agreement and acceptance of
any
payment for the Units hereunder.
(c) If
any
action is brought against a party (the “Indemnified
Party”)
in
respect of which indemnity may be sought against one or more other parties
(the
“Indemnifying
Party”
or
“Indemnifying
Parties”),
the
Indemnified Party shall promptly notify the Indemnifying Party or Parties in
writing of the institution of such action; provided,
however,
the
failure to give such notice shall not release the Indemnifying Party or Parties
from its or their obligation to indemnify the Indemnified Party hereunder except
to the extent the Indemnifying Party actually incurs substantial damage by
reason of such failure and shall not release the Indemnifying Party or Parties
from any other obligations or liabilities to the Indemnified Party in any event.
The Indemnifying Party or Parties may at its or their own expense elect to
assume the defense of such action, including the employment of counsel
reasonably acceptable to the Indemnified Party; provided,
however,
that no
Indemnifying or Indemnified Party shall consent to the entry of any judgment
or
enter into any settlement by which the other party is to be bound without the
prior written consent of such other party, which consent shall not be
unreasonably withheld. In the event the Indemnifying Party or Parties assume
a
defense hereunder, the Indemnified Party shall be entitled to retain its own
counsel in connection therewith and, except as provided below, shall bear the
fees and expenses of any such counsel, and counsel to the Indemnified Party
or
Parties shall cooperate with such counsel to the Indemnifying Party in
connection with such proceeding. If an Indemnified Party reasonably determines
that there are or may be differing or additional defenses available to the
Indemnified Party which are not available to the Indemnifying Party, or that
there is or may be a conflict between the respective positions of the
Indemnifying Party and of the Indemnified Party in conducting the defense of
any
action, then the Indemnifying Party shall bear the reasonable fees and expenses
of any counsel retained by the Indemnified Party in connection with such
proceeding. All references to the Indemnified Party contained in this Section
11(c) include, and extend to and protect with equal effect, any persons who
may
control the Indemnified Party within the meaning of the Act, Section 20(a)
of
the Exchange Act or any applicable statute, any successor to the Indemnified
Party and each of its partners, officers, directors, employees, agents and
representatives. The indemnity agreements set forth in this Section 11 shall
be
in addition to any other obligations or liabilities of the Indemnifying Party
or
Parties hereunder or at common law or otherwise. Notwithstanding anything herein
to the contrary, in no event shall the Placement Agent be obligated to indemnify
any
person
or
entity in an amount in excess of the gross consideration received by the
Placement Agent for services rendered hereunder.
(d) If
recovery is not available under the foregoing indemnification provisions of
this
Section 11, for any reason other than as specified therein, the party entitled
to indemnification by the terms thereof shall be entitled to contribution to
losses, damages, liabilities and expenses of the nature contemplated by such
indemnification provisions. In determining the amount of such contribution,
there shall be considered the relative benefits received by the Company on
the
one hand, and the Placement Agent on the other hand from the Placement (which
shall be deemed to be the portion of the proceeds of the Placement realized
by
each party), the parties’ relative knowledge and access to information
concerning the matter with respect to which the claim was asserted, the
opportunity to correct and prevent any statement or omission, the relative
culpability of the parties, the relative benefits received by the parties and
any other equitable considerations appropriate under the circumstances. No
party
shall be liable for contribution with respect to any action or claim settled
without its consent. 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 another
party or parties under this Section 11, notify such party or parties from whom
contribution may be sought, but the omission to so notify such party or parties
shall not relieve the party or parties from whom contribution may be sought
from
any obligation it or they may have under this Section 11 or otherwise. For
purposes of this Section 11, each person, if any, who controls a party to this
Agreement within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act shall have the same rights to contribution as that party to this
Placement Agreement. Notwithstanding the foregoing, in no event will the
aggregate contribution by the Placement Agent hereunder exceed the amount of
fees actually received by the Placement Agent pursuant to this Agreement. The
reimbursement, indemnity and contribution obligations of the Company hereinabove
set forth shall be in addition to any liability which the Company may otherwise
have and these obligations and the other provisions hereinabove set forth shall
be binding upon and inure to the benefit of any successors, assigns, heirs
and
personal representatives of the Company, the Placement Agent and any other
Indemnified Person.
(e) In
any
claim for indemnification for United States Federal or state securities law
violations, the party seeking indemnification shall place before the court
the
position of: (i) the SEC and (ii) if applicable, any state securities
commissioner or agency having jurisdiction with respect to the issue of
indemnification for securities law violations.
12.MISCELLANEOUS
(a) The
agreements set forth in this Agreement have been made and are made solely for
the benefit of the Company, the Placement Agent, and the respective affiliates,
heirs, personal representatives and permitted successors and assigns thereof,
and except as expressly provided herein nothing expressed or mentioned herein
is
intended or shall be construed to give any other person, firm or corporation
any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any representation, warranty or agreement herein contained. The term
“successors and assigns” as used herein shall not include any purchaser of any
Units merely because of such purchase.
(b) Neither
party will be liable to the other by reason of any failure in performances
of
this Agreement if the failure arises out of the unavailability of third party
communication facilities or energy sources or acts of God, acts of governmental
authority, fires, strikes, delays in transportation, riots or war, or any cause
beyond the reasonable control of such party.
Any
notice or other communication required or appropriate under the provisions
of
this Agreement shall be given in writing addressed as follows: (i) if to the
Company, at the address set forth above, Attention: Dr. Richard Turner, with
a
copy to Ellenoff
Grossman & Schole LLP, 370 Lexington Avenue, New York, New York10017;
Attention: Barry I. Grossman, Esq. and (ii) if to the Placement Agent, Maxim
Group Inc., 405 Lexington Avenue, New York, NY10174, Attention: Mr. Andrew
Scott; with a copy to Lowenstein Sandler PC, 65 Livingston Avenue, Roseland,
NewJersey07068, Attention: Steven M. Skolnick, Esq., or at such other address
as
any party may designate to the others in accordance with this Section
12(c).
(c) This
Agreement shall be governed and construed in accordance with the laws of the
State of New York, without giving effect to conflicts of law provisions thereof.
Each of the parties hereto hereby (i) irrevocably consents to the jurisdiction
of the United States District Court for the Southern District of New York and
any state court in the State of New York (and of the appropriate appellate
courts from any of the foregoing) in connection with any suit, action or other
proceeding (each a “Proceeding”) directly or indirectly arising out of or
relating to this Agreement and (ii) irrevocably waives, to the fullest
extent permitted by law, any objection that it may now or hereafter have to
the
laying of the venue of any such Proceeding in any such court or that any such
Proceeding which is brought in any such court has been brought in an
inconvenient forum.
(d) This
Agreement constitutes the entire agreement between the parties hereto with
respect to the Placement and supersedes any and all prior agreements (including
the Engagement Letter), and may be amended or modified only by a duly authorized
writing signed by such parties. This Agreement may be executed in any number
of
counterparts and by facsimile, each of which shall be deemed an original and
all
of which shall constitute a single instrument.
