EXHIBIT 10.5
INNOVA HOLDINGS, INC.
PLACEMENT AGENT AGREEMENT
Dated as of: June 14, 2005
Monitor Capital Inc.
9171 Towne Centre Drive, Suite 465
San Diego, CA 92122
Ladies and Gentlemen:
The
undersigned, Innova Holdings, Inc., a Delaware corporation (the
"Company"), hereby agrees with Monitor
Capital, Inc. (the "Placement Agent") and
Cornell Capital Partners, LP, a Delaware
Limited Partnership (the "Investor"),
as follows:
1.
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 Dollars ($10,000,000) of the
Company's common stock (the "Commitment
Amount"), par value $0.001 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 Company's latest Annual
Report on Form 10-KSB and Quarterly Report
on Form 10-QSB as 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 is sometimes referred to
hereinafter as the "Securities." The
Placement Agent shall not be obligated to
sell any Securities.
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2.
Compensation. Upon the execution of this Agreement, the Company
shall
issue to the Placement Agent or its
designee 289,855 shares of the Company's
Common Stock (the "Placement Agent's
Shares"). The Placement Agent shall be
entitled to "piggy-back" registration
rights with respect to the Placement
Agent's Shares, which shall be triggered
upon registration of any shares of
Common Stock by the Company pursuant to the
Registration Rights Agreement dated
the date hereof.
3.
Representations, Warranties and Covenants of the Placement
Agent.
A. The Placement Agent represents, warrants and covenants as
follows:
(i) The Placement Agent has the necessary power to enter into
this Agreement and to consummate the
transactions contemplated hereby.
(ii) 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.
(iii) 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.
(iv) 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 "Securities Act"), the
Securities Exchange Act of 1934 (the
"Exchange Act"), the respective rules and
regulations promulgated thereunder (the
"Rules and Regulations") or applicable
"Blue Sky" laws of any state or
jurisdiction.
(v) The Placement Agent is a member of the National
Association of Securities Dealers, Inc.,
and is a broker-dealer registered as
such under the Exchange 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.
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4.
Representations, Warranties and Covenants of the Company.
A. The Company represents, warrants and covenants as follows:
(i) The execution, delivery and performance of each of this
Agreement, the Standby Equity Distribution
Agreement, the Escrow Agreement, and
the Registration Rights Agreement have 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.
(ii) 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.
(iii) 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, 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
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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 validly exists 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 Securities
Act, the Exchange 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 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
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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.
(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 and the
securities offered pursuant to the
Standby Equity Distribution Agreement, 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.
(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 the Placement
Agent'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,
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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 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 Securities 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
