EXHIBIT 10.39
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EUROPEAN MICRO HOLDINGS, INC..
PLACEMENT AGENT AGREEMENT
Dated as of: August 24, 2000
May Davis Group, Inc.
One World Trade Center - Suite 8735
New York, New York, 10048
Ladies and Gentlemen:
The undersigned, European Micro Holdings, Inc., (the "Company"),
hereby agrees with May Davis Group, Inc. ("May Davis") as follows:
1. OFFERING. The Company hereby engages May Davis to act as its
exclusive placement agent in connection with the Credit Agreement (as defined
herein) for the issuance and sale by the Company (the "Offering") of the
Company's Common Stock, $0.01 par value per share (the "Common Stock"), at a
price per share equal to the Purchase Price, as that term is defined in the
Equity Line of Credit Agreement dated the date hereof between the Company and
the investor named therein ( the "Credit Agreement"), for an aggregate price of
$20,000,000. All capitalized terms used herein and not otherwise defined shall
have the same meaning ascribed to them as in the Credit Agreement. The Investor
will be granted certain registration rights with respect to the Common Stock as
more fully set forth in the Registration Rights Agreement between the Company
and the Investor dated the date hereof, and May Davis will be granted common
stock purchase warrants and certain registration rights as described herein. The
documents to be executed and delivered in connection with the Offering,
including but not limited to this Agreement, the Credit Agreement, the
Registration Rights Agreement, the Escrow Agreement, the Placement Agent's
Warrants (as hereinafter defined) and the Placement Agent's Registration Rights
Agreement (as hereinafter defined) are referred to sometimes hereinafter
collectively as the "Offering Materials." The Company's Common Stock and the
Placement Agent's Warrants are sometimes referred to hereinafter collectively as
the "Securities." May Davis shall not be obligated to sell any Securities and
this Offering by May Davis shall be solely on a "best efforts basis."
2. INFORMATION.
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A. Upon the occurrence of each Closing, the funds received in
respect of the shares of Common Stock purchased by the Investor will be
disbursed in accordance with the terms of the Credit Agreement, net of (i) the
commission payable to May Davis, equal to seven percent (7%) of the gross
proceeds from the sale of Common Stock, and (ii) legal fees and other expenses
related thereto due to May Davis's counsel and the Escrow Agent.
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B. In addition to the foregoing compensation, the Company shall
issue to May Davis upon the execution of the Credit Agreement the following: (i)
a warrant in substantially the form annexed hereto to purchase 500,000 shares of
Common Stock at an exercise price per share of $7.00, exercisable in part or in
whole at any time by May Davis at its discretion for a period of sixty (60)
months from the date of issuance (the "Class A Warrant"), and (ii) a warrant in
substantially the same form annexed hereto to purchase 500,000 shares of Common
Stock at an exercise price equal of $10.00, exercisable pro rata on the basis of
the number of shares of Common Stock issuable on each Advance Date for a period
of sixty months from the date of issuance (the "Class B Warrant"), (the Class A
Warrant and the Class B Warrant are referred to collectively as the "Placement
Agent's Warrants"). The Placement Agent's Warrants shall be issued to the
individuals and in the amounts set forth on Schedule A. The Company may redeem
the "A" Warrants at a redemption price of $.01 per share provided that the Bid
Price for the Common Stock equals $10.00 or higher per share for a period of ten
(10) consecutive Trading Days, as described in the Placement Agent's Warrants
and redeem the "B" Warrants at a redemption price of $.01 per share provided
that the Bid Price for the Common Stock equals $15.00 or higher per share for a
period of ten (10) consecutive Trading Days, as described in the Placement
Agent's Warrants. May Davis shall be entitled to certain demand registration
rights with respect to the shares of Common Stock issuable upon exercise of the
Warrants pursuant to a registration rights agreement in substantially the same
form annexed hereto (the "Placement Agent's Registration Rights Agreement").
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF MAY DAVIS.
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A. May Davis represents, warrants and covenants as follows:
(i) May Davis has the necessary power to enter into
this Agreement, the Placement Agent's Warrants, the Placement Agent's
Registration Rights Agreement and to consummate the transactions contemplated
hereby and thereby.
(ii) The execution and delivery by May Davis of this
Agreement, the Placement Agent's Warrants, the Placement Agent's Registration
Rights Agreement and the consummation of the transactions contemplated herein
and therein will not result in any violation of, or be in conflict with, or
constitute a default under, any agreement or instrument to which May Davis is a
party or by which May Davis or its properties are bound, or any judgment,
decree, order or, to May Davis's knowledge, any statute, rule or regulation
applicable to May Davis. This Agreement, the Placement Agent's Warrants and the
Placement Agent's Registration Rights Agreement when executed and delivered by
May Davis, will constitute the legal, valid and binding obligations of May
Davis, enforceable in accordance with their respective terms, except to the
extent that (a) the enforceability hereof or thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws from time to
time in effect and affecting the rights of creditors generally, (b) the
enforceability hereof or thereof is subject to general principles of equity, or
(c) the indemnification provisions hereof or thereof may be held to be vilative
of public policy.
(iii) Upon receipt of an executed Credit Agreement, a
Registration Rights Agreement and Escrow Agreement and the documents related
thereto, May Davis will, through the Escrow Agent, promptly forward copies of
the Credit Agreement, Registration Rights Agreement and Escrow Agreement and the
documents related thereto to the Company or its counsel.
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(iv) May Davis will not deliver any documents related
to the Offering to any person it does not reasonably believe to be an Accredited
Investor.
(v) May Davis will not intentionally take any action
that it reasonably believes would cause the Offering to violate the provisions
of the 1933 Act, the 1934 Act, the respective rules and regulations promulgated
there under (the "Rules and Regulations") or applicable "Blue Sky" laws of any
state or jurisdiction.
(vi) May Davis shall use all reasonable efforts to
determine (a) whether the Investor is an Accredited Investor and (b) that any
information furnished by the Investor is true and accurate. May Davis shall have
no obligation to insure that (x) any check, note, draft or other means of
payment for the Common Stock will be honored, paid or enforceable against the
Investor in accordance with its terms, or (y) subject to the performance of May
Davis's obligations and the accuracy of May Davis's representations and
warranties hereunder, (1) the Offering is exempt from the registration
requirements of the 1933 Act or any applicable state "Blue Sky" law or (2) the
Investor is an Accredited Investor.
(vii) May Davis is a member of the National Association
of Securities Dealers, Inc., and is a broker-dealer registered as such under the
1934 Act and under the securities laws of the states in which the Securities
will be offered or sold by May Davis, unless an exemption for such state
registration is available to May Davis. May Davis is in compliance with all
material rules and regulations applicable to May Davis generally and applicable
to May Davis's participation in the Offering.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
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A. The Company represents and warrants as follows:
(i) The execution, delivery and performance of each
of this Agreement, the Credit Agreement, the Escrow Agreement, the Placement
Agent's Registration Rights Agreements, the Placement Agent's Warrants and the
Investor's Registration Rights Agreement has been or will be duly and validly
authorized by the Company and is, or with respect to this Agreement, the Credit
Agreement, the Escrow Agreement, the Placement Agent's Registration Rights
Agreements, the Placement Agent's Warrants and the Investor's Registration
Rights Agreement will be, a valid and binding agreement of the Company,
enforceable in accordance with its respective terms, except to the extent that
(a) the enforceability hereof or thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws from time to time in
effect and affecting the rights of creditors generally, (b) the enforceability
hereof or thereof is subject to general principles of equity or (c) the
indemnification provisions hereof or thereof may be held to be violative of
public policy. The Securities to be issued pursuant to the transactions
contemplated by this Agreement, the Credit Agreement and the Placement Agent's
Warrants have been duly authorized and, when issued and paid for in accordance
with (x) this Agreement, the Credit Agreement and the Placement Agent's Warrants
and the certificates/instruments representing such Securities, (y) will be valid
and binding obligations of the Company, enforceable in accordance with their
respective terms, except to the extent that (1) the enforceability thereof may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
from time to time in effect and affecting the rights of creditors generally, and
(2) the enforceability thereof is subject to general principles of equity. All
corporate action required to be taken for the authorization, issuance and sale
of the Securities has been duly and validly taken by the Company.
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(ii) The Company has a duly authorized, issued and
outstanding capitalization as set forth in the Credit Agreement. The Company is
not a party to or bound by any instrument, agreement or other arrangement
providing for it to issue any capital stock, rights, warrants, options or other
securities, except for this Agreement and the agreements described herein and as
described in the Credit Agreement. All issued and outstanding securities of the
Company, have been duly authorized and validly issued and are fully paid and
non-assessable; the holders thereof have no rights of rescission or preemptive
rights with respect thereto and are not subject to personal liability solely by
reason of being security holders; and none of such securities was issued in
violation of the preemptive rights of any holders of any security of the
Company. The Company has 20,000,000 shares of authorized Common Stock, 4,933,900
of which will be issued and outstanding as of the date hereof.
(iii) The Common Stock to be issued in accordance with
Credit Agreement has been duly authorized and when issued and paid for in
accordance with the this Agreement, the Credit Agreement, the Placement Agent's
Warrants and the certificates/instruments representing such Common Stock, will
be validly issued, fully-paid and non-assessable; the holders thereof will not
be subject to personal liability solely by reason of being such holders; such
securities are not and will not be subject to the preemptive rights of any
holder of any security of the Company.
(iv) The Company has good and marketable title to, or
valid and enforceable leasehold estates in, all items of real and personal
property necessary to conduct its business (including, without limitation any
real or personal property stated in the Offering Materials to be owned or leased
by the Company), free and clear of all liens, encumbrances, claims, security
interests and defects of any material nature whatsoever, other than those set
forth in the Offering Materials and liens for taxes not yet due and payable.
(v) There is no litigation or governmental proceeding
pending or, to the best of the Company's knowledge, threatened against, or
involving the properties or business of the Company, except as set forth in the
Offering Materials.
(vi) The Company has been duly organized and is
validly existing as a corporation in good standing under the laws of the State
of Nevada. Except as set forth in the Offering Materials, the Company does not
own or control, directly or indirectly, an interest in any other corporation,
partnership, trust, joint venture or other business entity. The Company is duly
qualified or licensed and in good standing as a foreign corporation in each
jurisdiction in which the character of its operations requires such
qualification or licensing and where failure to so qualify would have a material
adverse effect on the Company. The Company has all requisite corporate power and
authority, and all material and necessary authorizations, approvals, orders,
licenses, certificates and permits of and from all governmental regulatory
officials and bodies (domestic and foreign) to conduct its businesses (and
proposed business) as described in the Offering Materials. Any disclosures in
the Offering Materials concerning the effects of foreign, federal, state and
local regulation on the Company's businesses as currently conducted and as
contemplated are correct in all material respects and do not omit to state a
material fact. The Company has all corporate power and authority to enter into
this Agreement, the Credit Agreement, the Registration Rights Agreement, the
Escrow Agreement, the Placement Agent's Warrants and the Placement Agent's
Registration Rights Agreement to carry out the provisions and conditions hereof
and thereof, and all consents, authorizations, approvals and orders required in
connection herewith and therewith have been obtained. No consent, authorization
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or order of, and no filing with, any court, government agency or other body is
required by the Company for the issuance of the Securities or execution and
delivery of the Credit Agreement, Registration Rights Agreement, the Escrow
Agreement, the Placement Agent's Warrants and the Placement Agent's Registration
Rights Agreement except for applicable federal and state securities laws. The
Company, since its inception, has not incurred any liability arising under or as
a result of the application of any of the provisions of the 1933 Act, the 1934
Act or the Rules and Regulations.
(vii) There has been no material adverse change in the
condition or prospects of the Company, financial or otherwise, from the latest
dates as of which such condition or prospects, respectively, are set forth in
the Offering Materials, and the outstanding debt, the property and the business
of the Company conform in all material respects to the descriptions thereof
contained in the Offering Materials.
(viii) Except as set forth in the Offering Materials,
the Company is not in breach of, or in default under, any term or provision of
any material indenture, mortgage, deed of trust, lease, note, loan or credit
agreement or any other material agreement or instrument evidencing an obligation
for borrowed money, or any other material agreement or instrument to which it is
a party or by which it or any of its properties may be bound or affected. The
Company is not in violation of any provision of its charter or by-laws or in
violation of any franchise, license, permit, judgment, decree or order, or in
violation of any material statute, rule or regulation. Neither the execution and
delivery of this Agreement, the Credit Agreement, the Registration Rights
Agreement, the Escrow Agreement, the Placement Agent's Warrants, the Placement
Agent's Registration Rights Agreement nor the issuance and sale or delivery of
the Securities, nor the consummation of any of the transactions contemplated
herein or in the Credit Agreement, the Registration Rights Agreement, the Escrow
Agreement, the Placement Agent's Warrants, or the Placement Agent's Registration
Rights Agreement, nor the compliance by the Company with the terms and
provisions hereof or thereof, has conflicted with or will conflict with, or has
resulted in or will result in a breach of, any of the terms and provisions of,
or has constituted or will constitute a default under, or has resulted in or
will result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or pursuant to the terms of any
indenture, mortgage, deed of trust, note, loan or credit agreement or any other
agreement or instrument evidencing an obligation for borrowed money, or any
other agreement or instrument to which the Company may be bound or to which any
of the property or assets of the Company is subject except (a) where such
default, lien, charge or encumbrance would not have a material adverse effect on
the Company and (b) as described in the Offering Materials; nor will such action
result in any violation of the provisions of the charter or the by-laws of the
Company or, assuming the due performance by May Davis of its obligations
hereunder, any material statute or any material order, rule or regulation
applicable to the Company of any court or of any foreign, federal, state or
other regulatory authority or other government body having jurisdiction over the
Company.
(ix) Subsequent to the dates as of which information
is given in the Offering Materials, and except as may otherwise be indicated or
contemplated herein or therein, the Company has not (a) issued any securities or
incurred any liability or obligation, direct or contingent, for borrowed money,
or (b) entered into any transaction other than in the ordinary course of
business, or (c) declared or paid any dividend or made any other distribution on
or in respect of its capital stock. Except as described in the Offering
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Materials, the Company has no outstanding obligations to any officer or director
of the Company.
(x) There are no claims for services in the nature of
a finder's or origination fee with respect to the sale of the Common Stock or
any other arrangements, agreements or understandings that may affect May Davis's
compensation, as determined by the National Association of Securities Dealers,
Inc.
(xi) The Company owns or possesses, free and clear of
all liens or encumbrances and rights thereto or therein by third parties, the
requisite licenses or other rights to use all trademarks, service marks,
copyrights, service names, trade names, patents, patent applications and
licenses necessary to conduct its business (including, without limitation, any
such licenses or rights described in the Offering Materials as being owned or
possessed by the Company) and, except as set forth in the Offering Materials,
there is no claim or action by any person pertaining to, or proceeding, pending
or threatened, which challenges the exclusive rights of the Company with respect
to any trademarks, service marks, copyrights, service names, trade names,
patents, patent applications and licenses used in the conduct of the Company's
businesses (including, without limitation, any such licenses or rights described
in the Offering Materials as being owned or possessed by the Company) except any
claim or action that would not have a material adverse effect on the Company;
the Company's current products, services or processes do not infringe or will
not infringe on the patents currently held by any third party.
(xii) Except as described in the Offering Materials,
the Company is not under any obligation to pay royalties or fees of any kind
whatsoever to any third party with respect to any trademarks, service marks,
copyrights, service names, trade names, patents, patent applications, licenses
or technology it has developed, uses, employs or intends to use or employ, other
than to their respective licensors.
(xiii) Subject to the performance by May Davis of its
obligations hereunder, the Credit Agreement and the offer and sale of the
Securities comply, and will continue to comply, up to the Commitment Period (as
defined in the Credit Agreement) in all material respects with the requirements
of Rule 506 of Regulation D promulgated by the SEC pursuant to the 1933 Act and
any other applicable federal and state laws, rules, regulations and executive
orders. Neither the Offering Materials nor any amendment or supplement thereto
nor any documents prepared by the Company in connection with the Offering will
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. All
statements of material facts in the Offering Materials are true and correct as
of the date of the Offering Materials and will be true and correct on the date
of the Closing.
(xiv) All material taxes which are due and payable from
the Company have been paid in full or adequate provision has been made for such
taxes on the books of the Company except for those taxes disputed in good faith
the Company does not have any tax deficiency or claim outstanding assessed or
proposed against it.
(xv) None of the Company nor any of its officers,
directors, employees or agents, nor any other person acting on behalf of the
Company, has, directly or indirectly, given or agreed to give any money, gift or
similar benefit (other than legal price concessions to customers in the ordinary
course of business) to any customer, supplier, employee or agent of a customer
or supplier, or official or employee of any governmental agency or
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instrumentality of any government (domestic or foreign) or any political party
or candidate for office (domestic or foreign) or other person who is or may be
in a position to help or hinder the business of the Company (or assist it in
connection with any actual or proposed transaction) which (A) might subject the
Company to any damage or penalty in any civil, criminal or governmental
litigation or proceeding, or (B) if not given in the past, might have had a
materially adverse effect on the assets, business or operations of the Company
as reflected in any of the financial statements contained in the Offering
Materials, or (C) if not continued in the future, might adversely affect the
assets, business, operations or prospects of the Company in the future.
5. CERTAIN COVENANTS AND AGREEMENTS OF THE COMPANY.
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The Company covenants and agrees at its expense and without any
expense to May Davis as follows:
A. To advise May Davis of any material adverse change in the
Company's financial condition, prospects or business or of any development
materially affecting the Company or rendering untrue or misleading any material
statement in the Offering Materials occurring at any time prior to any Advance
Date as soon as the Company is either informed or becomes aware thereof.
B. To use its best efforts to cause the Common Stock issuable
in connection with the Credit Agreement and upon exercise of the Placement
Agent's Warrants to be qualified or registered for sale on terms consistent with
those stated in the Investor's Registration Rights Agreement and the Placement
Agent's Registration Rights Agreement, respectively, and under the securities
laws of such jurisdictions as May Davis and the Investor shall reasonably
request, provided that such states and jurisdictions do not require the Company
to qualify as a foreign corporation. Qualification, registration and exemption
charges and fees shall be at the sole cost and expense of the Company.
C. Upon written request, to provide and continue to provide
the to each holder of Securities, copies of all quarterly financial statements
and audited annual financial statements prepared by or on behalf of the Company,
other reports prepared by or on behalf of the Company for public disclosure and
all documents delivered to the Company's stockholders.
D. To deliver, during the Commitment Period, to May Davis,
upon May Davis's request, in the manner provided in Section 10(B) of this
Agreement, within forty five (45) days after the end of each of the first three
quarters of each fiscal year of the Company, commencing with the first quarter
ending after the Commitment Period, a statement of its income for each such
quarterly period, and its balance sheet and a statement of changes in
stockholders' equity as of the end of such quarterly period, all in reasonable
detail, certified by its principal financial or accounting officer; (ii) within
ninety (90) days after the close of each fiscal year, its balance sheet as of
the close of such fiscal year, together with a statement of income, a statement
of changes in stockholders' equity and a statement of cash flow for such fiscal
year, such balance sheet, statement of income, statement of changes in
stockholders' equity and statement of cash flow to be in reasonable detail and
accompanied by a copy of the certificate or report thereon of independent
auditors if audited financial statements are prepared; and (iii) a copy of all
documents, reports and information furnished to its stockholders at the time
that such documents, reports and information are furnished to its stockholders.
E. To comply with the terms of the Credit Agreement, the
Registration Rights Agreement, the Escrow Agreement, the Placement Agent's
Warrants and the Placement Agent's Registration Rights Agreement.
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F. To keep available out of its authorized Common Stock solely
for the purpose of issuance upon the exercise of the Placement Agent's Warrant,
such number of shares of Common Stock as shall then be issuable upon the
exercise or conversion thereof.
G. To issue to May Davis, or May Davis's designee, upon the
execution of the Credit Agreement, the Placement Agent Warrants to purchase
1,000,000 shares of Common Stock in the form substantially as annexed hereto.
H. To ensure that any transactions between or among the Company, or
any of its officers, directors and affiliates be on terms and conditions that
are no less favorable to the Company, than the terms and conditions that would
be available in an "arm's length" transaction with an independent third party.
6. INDEMNIFICATION.
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A. The Company hereby agrees that it will indemnify and hold
May Davis and each officer, director, shareholder, employee or representative of
May Davis, and each person controlling, controlled by or under common control
with May Davis within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act or the SEC's rules and regulations promulgated there under (the
"Rules and Regulations"), harmless from and against any and all loss, claim,
damage, liability, cost or expense whatsoever (including, but not limited to,
any and all reasonable legal fees and other expenses and disbursements incurred
in connection with investigating, preparing to defend or defending any action,
suit or proceeding, including any inquiry or investigation, commenced or
threatened, or any claim whatsoever or in appearing or preparing for appearance
as a witness in any action, suit or proceeding, including any inquiry,
investigation or pretrial proceeding such as a deposition) to which May Davis or
such indemnified person of May Davis may become subject under the 1933 Act, the
1934 Act, the Rules and Regulations, or any other federal or state law or
regulation, common law or otherwise, arising out of or based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in (a)
Section 4 of this Agreement, (b) the Offering Materials (except those written
statements relating to May Davis given by an indemnified person for inclusion
therein), (c) any application or other document or written communication
executed by the Company or based upon written information furnished by the
Company filed in any jurisdiction in order to qualify the Common Stock under the
securities laws thereof, or any state securities commission or agency; (ii) the
omission or alleged omission from documents described in clauses (a), (b) or (c)
above of a material fact required to be stated therein or necessary to make the
statements therein not misleading; or (iii) the breach of any representation,
warranty, covenant or agreement made by the Company in this Agreement. The
Company further agrees that upon demand by an indemnified person, at any time or
from time to time, it will promptly reimburse such indemnified person for any
loss, claim, damage, liability, cost or expense actually and reasonably paid by
the indemnified person as to which the Company has indemnified such person
pursuant hereto. Notwithstanding the foregoing provisions of this Paragraph
6(A), any such payment or reimbursement by the Company of fees, expenses or
disbursements incurred by an indemnified person in any proceeding in which a
final judgment by a court of competent jurisdiction (after all appeals or the
expiration of time to appeal) is entered against May Davis or such indemnified
person as a direct result of May Davis or such person's gross negligence or
willful misfeasance will be promptly repaid to the Company.
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B. May Davis hereby agrees that it will indemnify and hold the
Company and each officer, director, shareholder, employee or representative of
the Company, and each person controlling, controlled by or under common control
with the Company within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act or the Rules and Regulations, harmless from and against any and
all loss, claim, damage, liability, cost or expense whatsoever (including, but
not limited to, any and all reasonable legal fees and other expenses and
disbursements incurred in connection with investigating, preparing to defend or
defending any action, suit or proceeding, including any inquiry or
investigation, commenced or threatened, or any claim whatsoever or in appearing
or preparing for appearance as a witness in any action, suit or proceeding,
including any inquiry, investigation or pretrial proceeding such as a
deposition) to which the Company or such indemnified person of the Company may
become subject under the 1933 Act, the 1934 Act, the Rules and Regulations, or
any other federal or state law or regulation, common law or otherwise, arising
out of or based upon (i) the conduct of May Davis or its officers, employees or
representatives in its acting as Placement Agent for the Offering or (ii) the
breach of any representation, warranty, covenant or agreement made by May Davis
in this Agreement (iii) any false or misleading information provided to the
Company by one of the May Davis indemnified persons. C. Promptly after receipt
by an indemnified party of notice of commencement of any action covered by
Section 6(A) or 6(B), the party to be indemnified shall, within five (5)
business days, notify the indemnifying party of the commencement thereof; the
omission by one indemnified party to so notify the indemnifying party shall not
relieve the indemnifying party of its obligation to indemnify any other
indemnified party that has given such notice and shall not relieve the
indemnifying party of any liability outside of this indemnification if not
materially prejudiced thereby. In the event that any action is brought against
the indemnified party, the indemnifying party will be entitled to participate
therein and, to the extent it may desire, to assume and control the defense
thereof with counsel chosen by it which is reasonably acceptable to the
indemnified party. After notice from the indemnifying party to such indemnified
party of its election to so assume the defense thereof, the indemnifying party
will not be liable to such indemnified party under such Section 6(A) or 6(B) for
any legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof, but the indemnified party may, at its own
expense, participate in such defense by counsel chosen by it, without, however,
impairing the indemnifying party's control of the defense. Subject to the
proviso of this sentence and notwithstanding any other statement to the contrary
contained herein, the indemnified party or parties shall have the right to
choose its or their own counsel and control the defense of any action, all at
the expense of the indemnifying party if, (i) the employment of such counsel
shall have been authorized in writing by the indemnifying party in connection
with the defense of such action at the expense of the indemnifying party, or
(ii) the indemnifying party shall not have employed counsel reasonably
satisfactory to such indemnified party to have charge of the defense of such
action within a reasonable time after notice of commencement of the action, or
(iii) such indemnified party or parties shall have reasonably concluded that
there may be defenses available to it or them which are different from or
additional to those available to one or all of the indemnifying parties (in
which case the indemnifying parties shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties), in any of
which events such fees and expenses of one additional counsel shall be borne by
the indemnifying party; provided, however, that the indemnifying party shall
not, in connection with any one action or separate but substantially similar or
related
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actions in the same jurisdiction arising out of the same general allegations or
circumstance, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys at any time for all such indemnified parties. No
settlement of any action or proceeding against an indemnified party shall be
made without the consent of the indemnifying party.
D. In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in Section 6(A) or 6(B)
is due in accordance with its terms but is for any reason held by a court to be
unavailable on grounds of policy or otherwise, the Company and May Davis shall
contribute to the aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in connection with the investigation
or defense of same) which the other may incur in such proportion so that May
Davis shall be responsible for such percent of the aggregate of such losses,
claims, damages and liabilities as shall equal the percentage of the gross
proceeds paid to May Davis and the Company shall be responsible for the balance;
provided, however, that no person guilty of fraudulent misrepresentation within
the meaning of Section 11(f) of the 1933 Act shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation. For
purposes of this Section 6(D), any person controlling, controlled by or under
common control with May Davis, or any partner, director, officer, employee,
representative or any agent of any thereof, shall have the same rights to
contribution as May Davis and each person controlling, controlled by or under
common control with the Company within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act and each officer of the Company and each director
of the Company shall have the same rights to contribution as the Company. Any
party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may be made against the other party under this
Section 6(D), notify such party from whom contribution may be sought, but the
omission to so notify such party shall not relieve the party from whom
contribution may be sought from any obligation they may have hereunder or
otherwise if the party from whom contribution may be sought is not materially
prejudiced thereby. The indemnity and contribution agreements contained in this
Section 6 shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any indemnified person or any termination
of this Agreement.
7. PAYMENT OF EXPENSES.
-------------------
The Company hereby agrees to bear all of the expenses in connection
with the Offering, including, but not limited to the following: filing fees,
printing and duplicating costs, advertisements, postage and mailing expenses
with respect to the transmission of Offering Materials, registrar and transfer
agent fees, Escrow Agent fees and expenses, fees of the Company's counsel and
accountants, issue and transfer taxes, if any, and counsel fees and expenses
(such counsel fees not to exceed $25,000 plus out of pocket expenses).
8. CONDITIONS OF EACH CLOSING
--------------------------
Each Closing shall be held at the offices of May Davis or its
counsel. The obligations of May Davis hereunder shall be subject to the
continuing accuracy of the representations and warranties of the Company herein
as of the date hereof and as of each Advance Date with respect to the Company as
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if it had been made on and as of such Advance Date; the accuracy on and as of
each Advance Date of the statements of the officers of the Company made pursuant
to the provisions hereof; and the performance by the Company on and as of each
Closing of its covenants and obligations hereunder and to the following further
conditions:
A. At each Closing, May Davis shall receive the opinion of
Kirkpatrick & Lockhart_, dated as of the date of the Closing, which opinion
shall be in form and substance reasonably satisfactory to counsel for May Davis.
B. At or prior to each Closing, counsel for May Davis shall
have been furnished such documents, certificates and opinions as they may
reasonably require for the purpose of enabling them to review or pass upon the
matters referred to in this Agreement and the Offering Materials, or in order to
evidence the accuracy, completeness or satisfaction of any of the
representations, warranties or conditions herein contained.
C. At and prior to each Closing, (i) there shall have been no
material adverse change nor development involving a prospective change in the
condition or prospects or the business activities, financial or otherwise, of
the Company from the latest dates as of which such condition is set forth in the
Offering Materials; (ii) there shall have been no transaction, not in the
ordinary course of business, entered into by the Company which has not been
disclosed in the Offering Materials or to May Davis in writing; (iii) except as
set forth in the Offering Materials, the Company shall not be in default under
any provision of any instrument relating to any outstanding indebtedness for
which a waiver or extension has not been otherwise received; (iv) except as set
forth in the Offering Materials, the Company shall not have issued any
securities (other than those to be issued as provided in the Offering Materials)
or declared or paid any dividend or made any distribution of its capital stock
of any class and there shall not have been any change in the indebtedness (long
or short term) or liabilities or obligations of the Company (contingent or
otherwise); (v) no material amount of the assets of the Company shall have been
pledged or mortgaged, except as indicated in the Offering Materials; and (v) no
action, suit or proceeding, at law or in equity, against the Company or
affecting any of its properties or businesses shall be pending or threatened
before or by any court or federal or state commission, board or other
administrative agency, domestic or foreign, wherein an unfavorable decision,
ruling or finding could materially adversely affect the businesses, prospects or
financial condition or income of the Company, except as set forth in the
Offering Materials.
D. At each Closing, May Davis shall have received a
certificate of the Company signed by an executive officer and chief financial
officer, dated as of the applicable Advance Date, to the effect that the
conditions set forth in subparagraph (C) above have been satisfied and that, as
of the applicable Advance Date, the representations and warranties of the
Company set forth herein are true and correct.
E. At the initial Closing, the Company shall have duly
executed and delivered to May Davis, or its designees, the Placement Agent's
Warrants, in the names and denominations specified by May Davis.
9. TERMINATION.
-----------
This Agreement shall be co-terminus with, and terminate upon the same
terms and conditions as those set forth in, the Credit Agreement. The rights of
the Investor and the obligations of the Company under the Registration Rights
Agreement, and the rights of May Davis and the obligations of the Company under
the Placement Agent's Warrants and the Placement Agent's Registration Rights
Agreement shall survive the termination of this Agreement unabridged.
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<PAGE>
10. MISCELLANEOUS.
-------------
A. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all which
shall be deemed to be one and the same instrument.
B. Any notice required or permitted to be given hereunder
shall be given in writing and shall be deemed effective when deposited in the
United States mail, postage prepaid, or when received if personally delivered or
faxed ( upon confirmation of receipt received by the sending party), addressed
as follows:
To May Davis:
May Davis Group, Inc.
One World Trade Center - Suite 8735
New York, New York 10048
Attention: Michael Jacobs
with a copy to:
Butler Gonzalez LLP
1000 Stuyvesant Avenue
Suite #6
Union, NJ 07083
Fax: (908) 810-0973
Attention: David Gonzalez, Esq.
To the Company:
European Micro Holdings, Inc.
6073 N.W. 167th Street
Unit C-25
Miami, Fl 33015
Attention: John B. Gallagher
with copy to:
Kirkpatrick & Lockhart
201 Biscayne Blvd.
Suite 2000
Miami, Fl 33131
Attention: Clayton Parker, Esq.
or to such other address of which written notice is given to the others.
C. This Agreement shall be governed by and construed in all
respects under the laws of the State of New York, without reference to its
conflict of laws rules or principles. Any suit, action, proceeding or litigation
arising out of or relating to this Agreement shall be brought and prosecuted in
such federal or state court or courts located within the State of New York as
provided by law. The parties hereby irrevocably and unconditionally consent to
the jurisdiction of each such court or courts located within the State of New
York and to service of process by registered or certified mail, return receipt
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<PAGE>
requested, or by any other manner provided by applicable law, and hereby
irrevocably and unconditionally waive any right to claim that any suit, action,
proceeding or litigation so commenced has been commenced in an inconvenient
forum.
D. This Agreement and the other agreements referenced herein
contain the entire understanding between the parties hereto and may not be
modified or amended except by a writing duly signed by the party against whom
enforcement of the modification or amendment is sought.
E. If any provision of this Agreement shall be held to be
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provision of this Agreement.
[SIGNATURE PAGE TO FOLLOW]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first written above.
EUROPEAN MICRO HOLDINGS, INC.
By: /s/ John B. Gallagher
-------------------------------
Name: John B. Gallagher
Title: Co-President
MAY DAVIS GROUP, INC.
By: /s/ Michael Jacobs
-------------------------------
Name: Michael Jacobs
Title:ManagingDirector
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<PAGE>
SCHEDULE A
CLASS A WARRANTS
----------------
NAME AMOUNT
---- ------
Mark Angelo 113,000
Hunter Singer 113,000
Joseph Donahue 113,000
Robert Farrell 113,000
Persia Consulting 48,000
CLASS B WARRANTS
----------------
NAME AMOUNT
---- ------
Mark Angelo 113,000
Hunter Singer 113,000
Joseph Donahue 113,000
Robert Farrell 113,000
Persia Consulting 48,000
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