Attached files
Midtown
Partners & Co.,
LLC
4218 West
Linebaugh Avenue
Tampa,
FL 33624
Phone: 813.885.5744 ♦ Fax:
813.885.5911
PLACEMENT
AGENT AGREEMENT
This
agreement (the “Agreement”), made as of this 5th day of September, 2008, by and
between MAGNOLIASOLAR, INC., a
Delaware corporation, (the “Company”), with its principal place of business at
52-B Cummings Park, Suite 314, Woburn, MA 01801-2123and MIDTOWN PARTNERS &
CO., LLC, (the “Placement Agent”, “Midtown” or “Midtown Partners”), a
Florida limited liability company, with its principal place of business at 4218
West Linebaugh Avenue, Tampa, FL 33624, confirms the understanding and agreement
between the Company and the Placement Agent as follows:
SECTION
I
The
Company hereby engages the Placement Agent as the Company’s exclusive placement
agent in connection with a proposed private placement in the United States (the
“Offering”) of up to twenty-five million dollars (US$25,000,000) of the
Company’s securities (the “Financing”). It is intended that the Offering will be
made solely “accredited investors” (the “Accredited Investors”), as such term is
defined in Rule 501(a) of Regulation D (“Regulation D”) promulgated under the
United States Securities Act of 1933, as amended (the “Securities Act”),
pursuant to an exemption from registration under applicable federal and state
securities laws available under Rule 506 of Regulation D and in accordance with
the terms of this Agreement. The terms and conditions of the
Financing shall be subject to a final term Sheet to be set forth at a later date to
be approved by the Company. The Placement Agent hereby accepts such
engagement upon the terms and conditions set forth in this Agreement. This
Agreement shall not give rise to any commitment or obligation by the Placement
Agent to purchase any of the Financing or, except as set forth herein, to find
purchasers for the Financing, it being understood that the Offering will be
conducted on a best efforts basis.
The
Placement Agent shall provide the following services (the
“Services”):
(a) Advise
the Company with regard to the size of the Offering and the structure and terms
of the Financing in light of the current market environment;
(b) Assist
the Company in identifying and evaluating prospective qualified Accredited
Investors;
(c) Approach
such investors on a “best efforts basis” regarding an investment in the Company;
and
(d) Work with
the Company to develop a negotiating strategy and assist with the negotiations
with such potential investors; and
(e) Advise
the Company with respect to the reverse merger process, including but not
limited to public shell selection,
In
connection with the Placement Agent providing the Services, the Company agrees
to keep the Placement Agent up to date and apprised of all material business,
market and current legal practices and developments related to the Company and
its operations and management, including, but not limited to providing the
Placement Agent with lists of current members and investors and potential
investors. The Placement Agent shall devote such time and effort, as
it deems commercially reasonable under the
circumstances
in rendering the Services. The Placement Agent shall not provide any
work that is in the ordinary purview of a certified public
accountant. The Placement Agent cannot guarantee results on behalf of
the Company, but shall pursue all avenues that it deems reasonable through its
network of contacts.
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SECTION
II
The
Placement Agent, its affiliates and any person acting on its or their behalf
hereby represent, warrant and agree as follows (the “Placement Agent
Parties”):
(a) The
Placement Agent Parties will cooperate with the Company to ensure that the
Financing offered and sold by the Placement Agent have been and will be offered
and sold in compliance with all federal and state securities laws and
regulations governing the registration and conduct of broker-dealers, and each
Placement Agent Party making an offer or sale of Financing was or will be, at
the time of any such offer or sale, registered as a broker-dealer pursuant to
Section 15(b) of the United States Securities Exchange Act of 1934, as amended
(the “Exchange Act”), and under the laws of each applicable state of the United
States (unless exempted from the respective state’s broker-dealer registration
requirements), and in good standing with the Financial Industry Regulatory
Authority.
(b) The
Placement Agent will use its best efforts to ensure that the Financing offered
and sold by the Placement Agent has been and will be sold only to investors that
it reasonably believes are Accredited Investors in accordance with Rule 506 of
Regulation D and applicable state securities laws; provided, however, the
Company shall make all necessary filings under Rule 503 of Regulation D and such
similar notice filings under applicable state securities laws. Prior
to the sale and delivery of a Company security to any such investor, the
Placement Agent Parties will obtain an executed subscription agreement and an
executed investors’ rights agreement in the form agreed upon by the Company and
the Placement Agent (the “Subscription Documents”).
(c) In
connection with the offers and sales of the Financing, the Placement Agent
Parties have not and will not
(1) Offer
or sell, or solicit any offer to buy, any Financing by any form of “general
solicitation” or “general advertising”, as such terms are used in Regulation D,
or in any manner involving a public offering within the meaning of Section 4(2)
of the Securities Act;
(2) Use
any written material other than the term sheet, that will be approved by the
Company and the Placement Agent at a later date, and the Subscription Documents,
and shall only rely upon and communicate information that is publicly available
regarding the Company to any potential investors (without limiting the
foregoing, none of the Placement Agent Parties is authorized to make any
representation or warranty to any offeree concerning the Company or an
investment in the Financing); or
(3) Take
any action that would constitute a violation of Regulation M under the Exchange
Act.
(d) The
Placement Agent shall cause each affiliate or each party acting on its or their
behalf with whom they enter into contractual arrangements relating to the offer
and sale of any Financing to agree, for the benefit of the Company, to the same
provisions contained in this Agreement.
SECTION
III
The
Company hereby represents, warrants and agrees as follows:
(a) This
Agreement and the Subscription Documents have been authorized, executed and
delivered by the Company and, when executed by the Placement Agent each will
constitute the valid and binding agreement of the Company enforceable against
the Company in accordance with its terms, except as enforcement thereof may be
limited by bankruptcy, insolvency or reorganization, moratorium or other similar
laws relating to or affecting creditors’ rights generally or by general
equitable principles.
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(b) The
offer and sale of the Financing, the Shares, and the Warrants shall be exempt
from registration under the Securities Act, and will comply, in all material
respects with the requirements of Rule 506 of Regulation D promulgated under the
Securities Act and any applicable state securities laws. No documents prepared
by the Company in connection with the Offering, or any amendment or supplement
thereto, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(c) The
financial statements, audited and unaudited (including the notes thereto),
included in the Company’s latest annual information form and subsequent
quarterly reports (the “Financial Statements”), present fairly the financial
position of the Company as of the dates indicated and the results of operations
and cash flows of the Company for the periods specified. Such Financial
Statements have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis throughout the periods involved except
as otherwise stated therein.
(d) No
federal, state or foreign governmental agency has issued any order preventing or
suspending the Offering.
(e) The
Company is a Delaware corporation organized, existing and with active status
under the laws of Nevada, with corporate power and authority under such laws to
own, lease and operate its properties and conduct its business as now conducted.
The Company has all power, authority, authorization and approvals as may be
required to enter into this Agreement and each of the Subscription Documents,
and to carry out the provisions and conditions hereof and thereof, and to issue
and sell the Financing, the Shares, and Warrants.
(f) The
Financing, the Shares, the Warrants, and common shares issuable upon exercise of
the Warrants (the “Warrant Shares”), have all been authorized for issuance and
sale pursuant to the Subscription Documents, and when issued and delivered by
the Company against payment therefore in accordance with the terms of the
Subscription Documents, will be validly issued and fully paid and
non-assessable.
(g) With
the exception of any approvals required by the Securities and Exchange
Commission related to the Offering, no further approval or authorization of any
shareholder of the Company, its Board of Directors or other person or group is
required for the issuance and sale of the Financing, the Shares, the Warrants or
the Warrant Shares.
(h) Since
the public filing of the Company’s latest audited or unaudited financial
statements there has not been any (A) material adverse change in the business,
properties, assets, rights, operations, condition (financial or otherwise) or
prospects of the Company, (B) transaction that is material to the Company,
except transactions in the ordinary course of business, (C) obligation that is
material to the Company, direct or contingent, incurred by the Company, except
obligations incurred in the ordinary course of business, (D) change that is
material to the Company or in the common shares or outstanding indebtedness of
the Company, or (E) dividend or distribution of any kind declared, paid, or made
in respect of the common shares.
(i) In
connection with the offers and sales of the Financing,
(1) Neither
the Company nor any of its directors, officers, employees, agents or
representatives (“Company Representatives”) has taken or will take any action
which has caused or may cause the Offering not to qualify for exemption from the
registration requirements of the Securities Act or of United States federal,
state or other securities or other laws. In connection with the Offering,
neither the Company nor the Company Representatives shall offer or cause to be
offered the Shares or Warrants by any form of general solicitation or general
advertising as defined in Rule 502(c) of Regulation D. Neither the
Company nor, to the Company’s knowledge, any of the Company Representatives has,
prior to the date hereof, made any offer or sale of securities which could be
integrated for purposes of the Securities Act or the rules and regulations
thereunder with the offer and sale of the Shares or Warrants in this
Offering.
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(2) The
Company shall notify the Placement Agent as soon as practicable of the receipt
of any notification with respect to the modification, rescission, withdrawal or
suspension of the qualification or registration of the Financing, Shares or
Warrants 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.
(3) The
Company shall not solicit any offer to buy or offer to sell the Financing,
Shares or Warrants 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.
(4)
Notify
the Placement Agent promptly of the acceptance or rejection of any
subscription.
(5) The
Company shall cooperate with the Placement Agent’s counsel to file five (5)
copies of a Notice of Sales of Securities on Form D with the Securities and
Exchange Commission no later than fifteen (15) days after the receipt into
escrow of subscription funds. 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 state, province or
jurisdiction in which offers and sales are made, including all appropriate “blue
sky” filings.
(6) The
Company shall not, directly or indirectly, engage in any act or activity which
may jeopardize the status of the Offering as an exempt transaction under the
Securities Act or under the securities or “blue sky” laws of any jurisdiction in
which the Offering may be made.
SECTION
IV
The
parties agree that the obligations of the Placement Agent to close the Offering
(the “Closing”) shall be subject to the satisfaction of the following
conditions, unless expressly waived in writing by the parties:
(a) The
Offering shall not be subject to any regulatory or judicial proceeding
questioning or reviewing its effectiveness for the purpose of offering the
Financing for sale and issuance.
(b) The
Company shall deliver a certificate of an officer of the Company dated as of the
Closing that affirms the accuracy of the representations and warranties
contained in Section III hereof.
(c)
The Agent shall have received an opinion of counsel to the Company, dated as of
the Closing, containing such opinions as requested by the Placement Agent
including that the Financing offered and sold in compliance with this Agreement
are not required to be registered under the Securities Act.
(d) The
Company shall have paid, or made arrangements satisfactory to the Agent for the
payment of, all such expenses as required by Section VII below.
(e) The
Placement Agent and the Company shall have finalized and agreed to the form of
the warrant agreement and registration rights agreement referred to in Section
VII below.
(f) The
Placement Agent shall have received certificates for Shares and Warrants sold to
the investors in the Offering, duly executed and made out in the name of such
investors for the amount purchased.
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(g) The
Placement Agent shall have received a certificate of the Secretary of the
Company, dated as of the closing date, certifying to the charter, bylaws, good
standing in its state of incorporation and board resolutions relating to the
Offering as of such date and the incumbency of the officers executing
documentation delivered at the closing.
(h) If
there is more than one closing, then at each closing there shall be delivered to
the Placement Agent updated opinions, certificates or other information
described in this Section.
SECTION
V
(a) The
term of this Agreement shall commence on the date first written above and shall
expire the earlier of one (1) year after the date the Company (1) provides the
Placement Agent with requested due diligence materials and (2) the Company and
the Placement Agent mutually agree that information documents (including, but
not limited to: a business plan; executive summary; three-year historical income
statement, statement of cash flows, and balance sheet; five-year projected
financial statements; use of proceeds statement; investor presentation;
valuation analysis), to be provided and approved by the Company, are ready for
presentation to the Placement Agent’s network of potential financing sources or
the closing of the Offering, unless terminated in accordance with the provisions
set forth below, or extended by the mutual written consent of the parties hereto
(the “Term”). This Agreement may be terminated only:
(1) By
the Placement Agent for any reason at any time upon thirty (30) days’ prior
written notice; or
(2) By
the Placement Agent upon default in the payment of any amounts due to the
Placement Agent pursuant to this Agreement or any breach of the representations,
warranties or covenants contained in this Agreement or any document prepared by
the Company in connection with the Offering, if such default continues for more
than fifteen (15) days following receipt by the Company from the Placement Agent
of written notice of such default and demand for payment or cure of such breach;
or.
(3) By
the Company or the Placement Agent for any reason at any time upon fifteen (15)
days’ prior written notice after the completion of the initial Term;
or
(4) By
the Company in the event (i) a Financing with minimum gross proceeds
of $1,000,000 has not been completed within the initial ninety (90)
day period following execution of this Agreement and (ii) a second financing
with minimum gross proceeds of $3,000,000 has not occurred by the six (6) month
anniversary of execution of this Agreement; or
(5) By
mutual agreement of the parties.
(a) In
the event of termination, the Placement Agent shall be immediately paid in full
on all items of compensation and expenses (including any amounts deferred)
payable to the Placement Agent pursuant hereto, as of the date of
termination.
(b) The
Placement Agent Fee or Financing Fee shall become due and payable to Placement
Agent upon the date that the Company receives the proceeds of the Financing from
the party providing the Financing. A Placement Agent Fee shall also
be payable with respect to any subsequent offering of securities of the Company
or any Qualified Financing (as defined in Section VI hereof) accepted and
received by Company within twenty four (24) months after the termination or
expiration of this Agreement, by any party or source of funding introduced or
facilitated by Placement Agent to Company; or
SECTION
VI
At any time during the twenty four
(24) months following the termination of this Agreement, the Placement Agent
shall be entitled to the compensation and fees as set forth in Section VII of
this Agreement for any Qualified Financing (as defined below) received by the
Company. “Qualified Financing” shall mean an investment from a person after the
termination of this Agreement that directly results from the Placement Agent’s
performance of the Services hereunder during the Term of this Agreement or use
by the Company of materials or work product prepared by the Placement Agent in
connection with such Services (for the avoidance of doubt this shall mean any
solicitation of a potential investor or an introduction of a potential investor
to the Company by the Placement Agent related to the Offering during the Term of
this Agreement). The Placement Agent agrees to provide to the
Company within ten (10) days after the termination of this Agreement (the
“Delivery Deadline”) a list of all persons solicited on behalf of the Company or
introduced to the Company by the Placement Agent related to the Offering (the
“Solicitation List”) to assist the parties in making a later determination as to
whether a Qualified Financing has occurred. If the Solicitation List
is not provided to the Company prior to the expiration of the Delivery Deadline,
the Company’s obligation to pay any commissions or fees related to a Qualified
Financing pursuant to this Section VII shall immediately terminate. For purposes
of this Agreement, receipt of Qualified Financing shall be deemed to be received
by the Company on the date that a letter of intent or a definitive agreement
regarding the Qualified Financing is executed by the Company and the party
providing such financing. The compensation or fees shall become
payable to the Placement Agent upon the date that the Company receives the
proceeds of the Qualified Financing.
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The provisions set forth in this
Section VI shall survive any termination of this Agreement.
SECTION
VII
The
Company shall pay to the Placement Agent a non-refundable retainer fee of common
stock purchase warrants (the “Retainer Warrants”) in an amount equal to 1% of
the total common stock outstanding as of the date of execution of this
Agreement. The Retainer Warrants shall be exercisable at the
equivalent of a $17 million valuation. The Retainer Warrants shall
have identical terms and conditions as the PA Warrants below. The
retainer fee and is due and payable upon the execution to this
Agreement.
In
consideration for the performance of the Services hereunder, the Company hereby
agrees to pay to the Placement Agent such fees (“The “Placement Agent Fee” or
the “Financing Fee”) as outlined below:
(a) If
either the Company or the Placement Agent receives subscriptions for Financing
as a part of the Offering (the “Investors”), the Company shall:
1) Pay to
the Placement Agent in US dollars via wire from the third party agent’s escrow
at closing an amount equal to ten percent (10%) of the principal amount of the
Financing purchased by the Investors (the “Financing Fee”), and pay to the
Placement Agent a warrant solicitation fee equal to ten percent (10%) of the
gross proceeds received by the Company on the exercise of any Warrants purchased
by the Investors, which shall be payable immediately following such
exercise.
2) On
each closing date of a Financing on which aggregate consideration is paid or
becomes payable to the Company for its Equity Securities, the Company shall
issue to the Placement Agent or its permitted assigns warrants (the “ PA
Warrants”) to purchase such number of shares of the common stock of the Company
equal to ten percent (10%) of the aggregate number of (x) shares of common stock
of the Company issued at each such Closing and (y) issuable by the Company under
the terms of any convertible securities issued in connection with the
Financings, which shall include the issuance to the Placement Agent of all
Series of Warrants equal to ten percent (10%) of the number of Warrants issued
to the Investors. The number of shares of common stock issuable upon
exercise of the Warrants shall include all shares of common stock issuable under
the securities, including, without limitation, shares issuable upon conversion
or exercise of the securities. The PA Warrants shall have a seven (7)
year term and shall provide for cashless exercise (even if the Purchasers do not
have such right) and have terms and conditions identical to the Warrants
purchased by the Investors, including, without limitation, anti-dilution,
including protection against issuances of securities at prices (or with exercise
prices, in the case of warrants, options or rights) below the exercise price of
the Warrants and full ratchet provisions to take into account any issuance of
additional shares of common stock as a result of an adjustment to the Securities
or the shares of common stock underlying the Securities. The PA
Warrants shall not be callable or redeemable. The PA Warrants shall also include
one (1) demand registration right exercisable following the first anniversary of
the closing, and piggyback registration rights. The PA Warrants shall
be transferable within Midtown Partners and to any designee of the Placement
Agent, at the Placement Agent’s discretion.
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3) An
escrow with a third party agent approved by the parties hereto will be used for
each closing to which the Placement Agent shall be a party. All
consideration due the Placement Agent shall be paid to the Placement Agent
directly there from. Any fee charged by the escrow agent in the
performance of its duties as escrow agent shall be borne by the
Company.
4) Cause
its affiliates to pay to the Placement Agent all compensation described in this
Section VII with respect to all securities sold to a purchaser or purchasers at
any time prior to the expiration of twelve (12) months after the expiration of
this Agreement (the “Tail Period”).
5) In
addition to all other payments set forth in this Section VII, the Company agrees
to pay two percent (2%) of the principal amount of the Financing purchased by
the Investors (the “Non-accountable Fee”), less the non-refundable due diligence
fee stated at the beginning of this Section VII herein, which will be used to
pay Placement Agent expenses including fees such as entertainment expenses,
travel, etc. The Company also agrees to pay for the legal and due diligence fees
of the investor(s) as outlined in a final tern sheet to be set forth at a later
date to be approved by the Company.
(b) It
is acknowledged and agreed that the Company shall bear all costs and expenses
incident to the issuance, offer, sale and delivery of the
Financing. These costs and expenses will include but are not limited
to state “Blue Sky” fees, legal fees, printing costs, travel costs, mailing,
couriers, personal background checks, and other expenses incidental to the
advancement and completion of the Offering. The Company shall
promptly, upon request, from time to time reimburse the Placement Agent’s
expenses within ten (10) days of receipt by the Company of a written request
from the Placement Agent for reimbursement of expenses, including documentation
therefore satisfactory to the Company. These expenses shall not exceed
$20,000. The Company must pre-approve any expense in excess of
$1,000. Upon execution of this Agreement, the Company shall
immediately pay to the Placement Agent $1,000 to conduct personal background
checks on the Company’s Officers and Directors using a background investigation
agency. All reimbursements under this section shall be credited
against the Non-accountable Fee referenced in Section VII, subsection
5.
(c) Subject
to the other requirements set forth in this Agreement, the Placement Agent may
introduce investors to the Offering directly or through other FINRA member
broker-dealers. If the Placement Agent utilizes any intermediaries, the
Placement Agent shall be the Company’s point of contact, not the intermediary,
and the Placement Agent, not the Company, shall be responsible for any
compensation arrangement with the intermediary. The Company’s sole compensation
arrangement, responsibility and obligation are with the Placement
Agent. The Placement Agent will disclose the identity and
compensation arrangements with all of its intermediaries in order to allow the
Company to adequately disclose such arrangements, where necessary.
(d) If
at any time during the term of this Agreement or within twelve (12) months from
the effective date of the termination of this Agreement, the Company proposes to
effect a financing, or future offering of securities, contemplates conducting a
financing of future offering of securities, receives an offer to conduct such a
financing or future offering of securities or to engage an investment banking
firm or broker dealer to provide any other services to the Company (other than
the services to be provided by Midtown hereunder during the term of this
Agreement), the Company shall offer to retain Midtown as its advisor, investment
banker or broker dealer in connection with such financing or future offering of
securities or the provision of such other advisory services or other matter,
upon such terms as the parties may mutually agree, such terms to be set forth in
a separate engagement letter or other agreement between the
parties. Such offer shall be made in writing in order to be
effective. The Company shall not offer to retain any other investment
banking firm or broker dealer in connection with any such financing or future
offering of securities or other matter on terms more favorable than those
discussed with Midtown without offering to retain Midtown on such more favorable
terms. Midtown shall notify the Company within ten (10) days of its
receipt of the written offer contemplated above as to whether or not it agrees
to accept such retention. If Midtown should decline such retention,
the Company shall have no further obligations to Midtown with respect to that
particular offer, except as specifically provided for herein.
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SECTION
VIII
(a) The
Company agrees to indemnify and hold harmless the Placement Agent, any person
who controls the Placement Agent within the meaning of the Securities 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
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, collectively “Damages”) which any such person
or entity may incur or which may be made or brought against any such person
arising out of or based upon: (i) any material breach of any of the agreements,
representations or warranties of the Company contained in or contemplated by
this Agreement or the Subscription Documents, including, without limitation,
those arising out of or based on any alleged untrue statement of a material fact
or omission to state a material fact required to be stated in any document
prepared by the Company in connection with this Offering or the Subscription
Documents or necessary in order to make the statements appearing therein not
misleading in the light of the circumstances in which they were made, except
insofar as any loss, damage, expense, liability or claim, or actions or
proceedings arises out of or is based upon any alleged untrue
statement of a material fact contained in information furnished in writing by
the Placement Agent, (ii) any violation of any federal or state securities laws
attributable to the Offering, or (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
Offering. This indemnity agreement by, and the agreements, warranties
and representations of, the Company shall survive the offer, sale and delivery
of the Financing 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 Financing 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
Securities 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 Damages which any such person or entity
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 the documents prepared by the Company for distribution to
investors in connection with this Offering. This indemnity
agreement by, and the agreements, warranties and representations of, the
Placement Agent shall survive the offer, sale and delivery of the Financing 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 Financing 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 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; provided that the Indemnifying Party shall not be liable for the
expense of more than one separate counsel in any one action. All
references to the Indemnified Party contained in this paragraph (c) include, and
extend to and protect with equal effect, any persons who may control the
Indemnified Party within the meaning of the Securities 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
VIII 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 cash consideration received by the Placement
Agent for Services rendered hereunder.
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(d) Notwithstanding
the provisions of paragraphs (a) and (b) hereof, no Indemnified Party hereunder
shall be entitled to or receive indemnification pursuant to this Agreement if it
is determined by a court of competent jurisdiction (not subject to appeal) that
the Damages in question were caused primarily by the gross negligence or willful
misconduct of such Indemnified Party.
(e) If
recovery is not available under the foregoing indemnification provisions of this
Section VIII, 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
VIII, 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 VIII or otherwise. For purposes of this
Section VIII, each person, if any, who controls a party to this Agreement within
the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act shall have the same rights to contribution as that party to this Placement
Agreement.
SECTION
IX
All
notices, demands or other communications given hereunder shall be in writing and
shall be deemed to have been duly given when delivered in person or transmitted
by facsimile transmission or the fifth calendar day after being mailed by
registered or certified mail, return receipt requested, postage prepaid, to the
addresses herein above first mentioned or to such other address as any party
hereto shall designate to the other for such purpose herein set
forth.
SECTION
X
Governing
Law. The subject matter of this Agreement shall be governed by
and construed in accordance with the laws of the State of Florida (without
reference to its choice of law principles), and to the exclusion of the law of
any other forum, without regard to the jurisdiction in which any action or
special proceeding may be instituted. EACH PARTY HERETO AGREES TO
SUBMIT TO THE PERSONAL JURISDICTION AND VENUE OF THE STATE AND/OR FEDERAL COURTS
LOCATED IN HILLSBOROUGH COUNTY, FLORIDA FOR RESOLUTION OF ALL DISPUTES ARISING
OUT OF, IN CONNECTION WITH, OR BY REASON OF THE INTERPRETATION, CONSTRUCTION,
AND ENFORCEMENT OF THIS AGREEMENT, AND HEREBY WAIVES THE CLAIM OR DEFENSE
THEREIN THAT SUCH COURTS CONSTITUTE AN INCONVENIENT FORUM. AS A
MATERIAL INDUCEMENT FOR THIS AGREEMENT, EACH PARTY SPECIFICALLY WAIVES THE RIGHT
TO TRIAL BY JURY OF ANY ISSUES SO TRIABLE. If it becomes
necessary for any party to institute legal action to enforce the terms and
conditions of this Agreement, the prevailing party may be awarded reasonable
attorneys fees, expenses and costs.
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Confidentiality.
The Placement Agent may acquire certain non-public information respecting the
business of the Company in connection with the performance of services
hereunder, including information, which is reasonably understood to be
proprietary or confidential in nature (collectively, “Confidential
Information”). The Placement Agent hereby agrees that all
Confidential Information shall be kept strictly confidential by the Placement
Agent and its affiliates, members, partners, shareholders, managers, directors,
officers, employees, advisors, agents, and controlling persons (collectively,
“Representatives”), except that Confidential Information or portions thereof may
be (i) disclosed to Representatives who need to know such information for the
purpose of enabling the Placement Agent to perform services hereunder (it being
understood that prior to such disclosure, such Representative will be informed
by the Placement Agent of the confidential nature of such Confidential
Information and shall agree to be bound by this Agreement) or (ii) used by the
Placement Agent or representative for the sole purpose of the solicitation of
investors for future transactions. The Placement Agent shall be
responsible for any breach of this provision by any of its
Representatives. For purposes hereof, Confidential Information shall
not include any information which (i) at the time of disclosure or thereafter is
or becomes generally known by the public (other than as a result of its
disclosure by the Placement Agent or its Representatives), (ii) was or becomes
available to the Placement Agent on a non-confidential basis from a person who
is not subject to a confidentiality agreement concerning that information, or
(iii) is required by law to be disclosed by the Placement Agent (provided that
if such disclosure is required by order of a court or administrative agency, the
Placement Agent shall notify the Company as soon as possible so that the Company
may seek a protective order).
Assignments
and Binding Effect. This Agreement shall be binding on and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. The rights and obligations of the parties under
this Agreement may not be assigned or delegated without the prior written
consent of both parties, and any purported assignment without such written
consent shall be null and void.
Modification
and Waiver. Only an instrument in writing executed by the
parties hereto may amend this Agreement. The failure of any party to
insist upon strict performance of any of the provisions of this Agreement shall
not be construed as a waiver of any subsequent default of the same or similar
nature, or any other nature.
Construction. The
captions used in this Agreement are provided for convenience only and shall not
affect the meaning or interpretation of any provision of this
Agreement.
Facsimile
Signatures. Facsimile transmission of any signed original
document, and re-transmission of any signed facsimile transmission, shall be the
same as delivery of an original. At the request of either party, the
parties shall confirm facsimile transmitted signatures by signing an original
document. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original and all of which taken together shall
constitute one and the same agreement.
Severability. If
any provision of this Agreement shall be invalid or unenforceable in any respect
for any reason, the validity and enforceability of any such provision in any
other respect, and of the remaining provisions of this Agreement, shall not be
in any way impaired.
Exclusive. The
Company acknowledges and agrees that Midtown is being granted exclusive rights
with respect to the Services to be provided to the Company and the Company is
not free to engage other parties to provide services similar to those being
provided by Midtown hereunder without the prior written consent of
Midtown.
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Non-Circumvention. The
Company hereby irrevocably agrees not to circumvent, avoid, bypass, or obviate,
directly or indirectly, the intent of this Agreement. The Company agrees not to
accept any investment opportunity from any third party to whom Placement Agent
introduces to the Company (or whom the company has a prior relationship with)
without the consent of Placement Agent, unless for each business opportunity
accepted by the Company from a third party introduced by Placement Agent or
otherwise, the Company remits a term sheet and then a contract which defines a
mutually agreeable compensation structure for Placement Agent. In
addition, the Company shall not work with, negotiate with or enter into any
financing whatsoever with any Investor, Consultant or Placement Agent without
Midtown’s prior written consent. If the Company raises capital
through in any offering or sale of securities while engaged with
Midtown as the exclusive Placement Agent, the Company shall pay to Midtown all
of its fees in Section VII, even if the Placement Agent has provided no
assistance whatsoever in raising such capital.
Survivability. Neither
the termination of this Agreement nor the completion of any services to be
provided by the Placement Agent hereunder, shall affect the provisions of this
Agreement that shall remain operative and in full force and effect.
Entire
Agreement. This Agreement constitutes the entire agreement and
understanding of the parties hereto with respect to the subject matter of this
Agreement and supersedes all prior understandings and agreements, whether
written or oral, among the parties with respect to such subject
matter.
If the
foregoing correctly sets forth the understanding between the Placement Agent and
the Company, please so indicate in the space provided below for that purpose
within ten (10) days of the date hereof or this Agreement shall be
withdrawn and become null and void. The undersigned parties hereto
have caused this Agreement to be duly executed by their authorized
representatives, pursuant to corporate board approval and intend to be legally
bound.
| MAGNOLIASOLAR, INC. |
MIDTOWN
PARTNERS & CO., LLC
|
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/s/
Ashok K. Sood
|
/s/
Bruce Jordan
|
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|
Ashok
K. Sood, PhD
|
Bruce
Jordan, President
|
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|
Title
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