Exhibit 3
ELECTRIC AQUAGENICS
UNLIMITED, INC.
PLACEMENT AGENT AGREEMENT
Dated as of: October __,
2004
Spencer Clarke LLC
505 Park Avenue
New York, NY 1002
Attention:
Victor Greene
Ladies and Gentlemen:
The undersigned,
Electric Aquagenics Unlimited, Inc., a Delaware corporation (the "
Company "), hereby agrees with Spencer Clarke LLC (the "
Placement Agent ") and Cornell Capital Partners, LP, a
Delaware Limited Partnership (the " Investor "), as
follows:
Offering. The Company hereby engages the Placement Agent to
act as its exclusive placement agent in connection with the Standby
Equity Distribution Agreement dated the date hereof (the "Standby
Equity Distribution Agreement"), pursuant to which the Company
shall issue and sell to the Investor, from time to time, and the
Investor shall purchase from the Company (the "Offering") up to Ten
Million U.S. Dollars ($10,000,000) of the Company's common stock
(the "Commitment Amount"), par value US$0.0001 per share (the
"Common Stock"), at price per share equal to the Purchase Price, as
that term is defined in the Standby Equity Distribution Agreement.
The Placement Agent services shall consist of reviewing the terms
of the Standby Equity Distribution Agreement and advising the
Company with respect to those terms.
All capitalized
terms used herein and not otherwise defined herein shall have the
same meaning ascribed to them as in the Standby Equity Distribution
Agreement. The Investor will be granted certain registration rights
with respect to the Common Stock as more fully set forth in the
Registration Rights Agreement between the Company and the Investor
dated the date hereof (the " Registration Rights Agreement
"). The documents to be executed and delivered in connection with
the Offering, including, but not limited, to the SEC Documents (as
such term is defined in the Standby Equity Distribution Agreement
of even date herewith), and Company's registration statement on
Form SB-2 as contemplated in the Standby Equity Distribution
Agreement of even date herewith to be filed with the United States
Securities and Exchange Commission, this Agreement, the Standby
Equity Distribution Agreement, the Registration Rights Agreement,
and the Escrow Agreement dated the date hereof (the " Escrow
Agreement "), are referred to sometimes hereinafter
collectively as the " Offering Materials ." The Company's
Common Stock purchased by the Investor hereunder are sometimes
referred to hereinafter as the " Securities ." The Placement
Agent shall not be obligated to sell any Securities.
Compensation.
Upon the execution of this Agreement, the Company shall issue
to the Placement Agent or its designee shares of the Company's
Common Stock in an amount equal to Ten Thousand U.S. Dollars
(US$10,000) divided by the volume weighted average price of the
Company's Common Stock, as quoted by Bloomberg, LP, on the date
hereof (the "Placement Agent's Shares"). The Placement Agent shall
be entitled to "piggy-back" registration rights, which shall be
triggered upon registration of any shares of Common Stock by the
Investor with respect to the Placement Agent's Shares pursuant to
the Registration Rights Agreement dated the date hereof.
Representations, Warranties and Covenants of the Placement
Agent.
The Placement Agent represents, warrants and covenants as
follows:
The Placement Agent has the necessary power to enter into
this Agreement and to consummate the transactions contemplated
hereby.
The execution and delivery by the Placement Agent of this
Agreement and the consummation of the transactions contemplated
herein will not result in any violation of, or be in conflict with,
or constitute a default under, any agreement or instrument to which
the Placement Agent is a party or by which the Placement Agent or
its properties are bound, or any judgment, decree, order or, to the
Placement Agent's knowledge, any statute, rule or regulation
applicable to the Placement Agent. This Agreement when executed and
delivered by the Placement Agent, will constitute the legal, valid
and binding obligations of the Placement Agent, enforceable in
accordance with their respective terms, except to the extent that
(a) the enforceability hereof or thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
from time to time in effect and affecting the rights of creditors
generally, (b) the enforceability hereof or thereof is subject to
general principles of equity, or (c) the indemnification
provisions hereof or thereof may be held to be in violation of
public policy.
Upon receipt and execution of this Agreement, the Placement
Agent will promptly forward copies of this Agreement to the Company
or its counsel and the Investor or its counsel.
The Placement Agent will not intentionally take any action
that it reasonably believes would cause the Offering to violate the
provisions of the Securities Act of 1933, as amended (the "1933
Act"), the Securities Exchange Act of 1934 (the "1934 Act"), the
respective rules and regulations promulgated thereunder (the "Rules
and Regulations") or applicable "Blue Sky" laws of any state or
jurisdiction.
The Placement Agent is a member of the National Association
of Securities Dealers, Inc., and is a broker-dealer registered as
such under the 1934 Act and under the securities laws of the states
in which the Securities will be offered or sold by the Placement
Agent unless an exemption for such state registration is available
to the Placement Agent. The Placement Agent is in material
compliance with the rules and regulations applicable to the
Placement Agent generally and applicable to the Placement Agent's
participation in the Offering.
Representations and Warranties of the Company.
The Company represents and warrants as follows:
The execution, delivery and performance of each of this
Agreement, the Standby Equity Distribution Agreement, the Escrow
Agreement, and the Registration Rights Agreement has been or will
be duly and validly authorized by the Company and is, or with
respect to this Agreement, the Standby Equity Distribution
Agreement, the Escrow Agreement, and the Registration Rights
Agreement, will be a valid and binding agreement of the Company,
enforceable in accordance with its respective terms, except to the
extent that (a) the enforceability hereof or thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar
laws from time to time in effect and affecting the rights of
creditors generally, (b) the enforceability hereof or thereof is
subject to general principles of equity or (c) the
indemnification provisions hereof or thereof may be held to be in
violation of public policy. The Securities to be issued pursuant to
the transactions contemplated by this Agreement and the Standby
Equity Distribution Agreement have been duly authorized and, when
issued and paid for in accordance with this Agreement, the Standby
Equity Distribution Agreement and the certificates/instruments
representing such Securities, will be valid and binding obligations
of the Company, enforceable in accordance with their respective
terms, except to the extent that (1) the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws from time to time in effect and
affecting the rights of creditors generally, and (2) the
enforceability thereof is subject to general principles of equity.
All corporate action required to be taken for the authorization,
issuance and sale of the Securities has been duly and validly taken
by the Company.
The Company has a duly authorized, issued and outstanding
capitalization as set forth herein and in the Standby Equity
Distribution Agreement. The Company is not a party to or bound by
any instrument, agreement or other arrangement providing for it to
issue any capital stock, rights, warrants, options or other
securities, except for this Agreement, the agreements described
herein and as described in the Standby Equity Distribution
Agreement, dated the date hereof and the agreements described
therein. All issued and outstanding securities of the Company, have
been duly authorized and validly issued and are fully paid and
non-assessable; the holders thereof have no rights of rescission or
preemptive rights with respect thereto and are not subject to
personal liability solely by reason of being security holders; and
none of such securities were issued in violation of the preemptive
rights of any holders of any security of the Company.
The Common Stock to be issued in accordance with this
Agreement and the Standby Equity Distribution Agreement has been
duly authorized and, when issued and paid for in accordance with
this Agreement and the Standby Equity Distribution Agreement of
even date herewith, 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.
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.
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.
The Company has been duly organized and is validly existing
as a corporation in good standing under the laws of the State of
Delaware. Except as set forth in the Offering Materials, the
Company does not own or control, directly or indirectly, an
interest in any other corporation, partnership, trust, joint
venture or other business entity. The Company is duly qualified or
licensed and in good standing as a foreign corporation in each
jurisdiction in which the character of its operations requires such
qualification or licensing and where failure to so qualify would
have a material adverse effect on the Company. The Company has all
requisite corporate power and authority, and all material and
necessary authorizations, approvals, orders, licenses, certificates
and permits of and from all governmental regulatory officials and
bodies (domestic and foreign) to conduct its businesses (and
proposed business) as described in the Offering Materials. Any
disclosures in the Offering Materials concerning the effects of
foreign, federal, state and local regulation on the Company's
businesses as currently conducted and as contemplated are correct
in all material respects and do not omit to state a material fact.
The Company has all corporate power and authority to enter into
this Agreement, the Standby Equity Distribution Agreement, the
Registration Rights Agreement, and the Escrow Agreement, to carry
out the provisions and conditions hereof and thereof, and all
consents, authorizations, approvals and orders required in
connection herewith and therewith have been obtained. No consent,
authorization or order of, and no filing with, any court,
government agency or other body is required by the Company for the
issuance of the Securities or execution and delivery of the
Offering Materials except for applicable federal and state
securities laws. The Company, since its inception, has not incurred
any liability arising under or as a result of the application of
any of the provisions of the 1933 Act, the 1934 Act or the Rules
and Regulations.
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.
Except as set forth in the Offering Materials, the Company is
not in breach of, or in default under, any term or provision of any
material indenture, mortgage, deed of trust, lease, note, loan or
Standby Equity Distribution Agreement or any other material
agreement or instrument evidencing an obligation for borrowed
money, or any other material agreement or instrument to which it is
a party or by which it or any of its properties may be bound or
affected. The Company is not in violation of any provision of its
charter or by-laws or in violation of any franchise, license,
permit, judgment, decree or order, or in violation of any material
statute, rule or regulation. Neither the execution and delivery of
the Offering Materials nor the issuance and sale or delivery of the
Securities, nor the consummation of any of the transactions
contemplated in the Offering Materials nor the compliance by the
Company with the terms and provisions hereof or thereof, has
conflicted with or will conflict with, or has resulted in or will
result in a breach of, any of the terms and provisions of, or has
constituted or will constitute a default under, or has resulted in
or will result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or pursuant
to the terms of any indenture, mortgage, deed of trust, note, loan
or any other agreement or instrument evidencing an obligation for
borrowed money, or any other agreement or instrument to which the
Company may be bound or to which any of the property or assets of
the Company is subject except (a) where such default, lien, charge
or encumbrance would not have a material adverse effect on the
Company and (b) as described in the Offering Materials; nor will
such action result in any violation of the provisions of the
charter or the by-laws of the Company or, assuming the due
performance by the Placement Agent of its obligations hereunder,
any material statute or any material order, rule or regulation
applicable to the Company of any court or of any foreign, federal,
state or other regulatory authority or other government body having
jurisdiction over the Company.
Subsequent to the dates as of which information is given in
the Offering Materials, and except as may otherwise be indicated or
contemplated herein or therein and the securities offered pursuant
to the Securities Purchase Agreement dated the date hereof, the
Company has not (a) issued any securities or incurred any liability
or obligation, direct or contingent, for borrowed money, or (b)
entered into any transaction other than in the ordinary course of
business, or (c) declared or paid any dividend or made any other
distribution on or in respect of its capital stock. Except as
described in the Offering Materials, the Company has no outstanding
obligations to any officer or director of the Company.
There are no claims for services in the nature of a finder's
or origination fee with respect to the sale of the Common Stock or
any other arrangements, agreements or understandings that may
affect the Placement Agent's compensation, as determined by the
National Association of Securities Dealers, Inc.
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.
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.
Subject to the performance by the Placement Agent of its
obligations hereunder the offer and sale of the Securities
complies, and will continue to comply, in all material respects
with the requirements of Rule 506 of Regulation D promulgated by
the SEC pursuant to the 1933 Act and any other applicable federal
and state laws, rules, regulations and executive orders. Neither
the Offering Materials nor any amendment or supplement thereto nor
any documents prepared by the Company in connection with the
Offering will contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. All
statements of material facts in the Offering Materials are true and
correct as of the date of the Offering Materials.
All material taxes which are due and payable from the Company
have been paid in full or adequate provision has been made for such
taxes on the books of the Company, except for those taxes disputed
in good faith by the Company.
None of the Company nor any of its officers, directors,
employees or agents, nor any other person acting on behalf of the
Company, has, directly or indirectly, given or agreed to give any
money, gift or similar benefit (other than legal price concessions
to customers in the ordinary course of business) to any customer,
supplier, employee or agent of a customer or supplier, or official
or employee of any governmental agency or instrumentality of any
government (domestic or foreign) or any political party or
candidate for office (domestic or foreign) or other person who is
or may be in a position to help or hinder the business of the
Company (or assist it in connection with any actual or proposed
transaction) which (A) might subject the Company to any damage or
penalty in any civil, criminal or governmental litigation or
proceeding, or (B) if not given in the past, might have had a
materially adverse effect on the assets, business or operations of
the Company as reflected in any of the financial statements
contained in the Offering Materials, or (C) if not continued in the
future, might adversely affect the assets, business, operations or
prospects of the Company in the future.
Representations, Warranties and Covenants of the
Investor.
The Investor represents, warrants and covenants a
