EXHIBIT 10.9
PLACEMENT AGENT AGREEMENT
May 26, 2005
Sanders Morris Harris Inc.
320 Park Avenue, 17th Floor
New York, NY 10022
Dear Sirs:
1.
Introductory. Ronco Marketing Corporation, a Delaware corporation
(the
"Company"), has entered into an asset
purchase agreement dated December 10, 2004
(the "Asset Purchase Agreement") with Ronco
Inventions, LLC, Popeil Inventions,
Inc., RP Productions, Inc. (collectively,
the "Predecessor Entities") and RMP
Family Trust, Ronald M. Popeil, (taken
together with the Predecessor Entities,
the "Sellers"), whereby the Company has
agreed to purchase substantially all the
assets of the Predecessor Entities from the
Sellers for a total purchase price
of $55,000,000 (the "Purchase Price,"
consisting of $40,000,000 in cash and
$15,000,000 in promissory notes), subject
to adjustment as provided in the Asset
Purchase Agreement. In addition, the
Company has, or will prior to the closing
of the Ronco Asset Purchase (as defined
below), executed a series of agreements
with Mr. Popeil, including a multi-year
consulting agreement and a new product
development agreement, which ensure Mr.
Popeil's continued involvement and
financial interest in our business. Taken
together, the foregoing agreements and
arrangements represent the "Ronco Asset
Purchase." The Company has also entered
into a merger agreement (the "Merger
Agreement") with Fi-Tek VII, Inc., a
Delaware corporation ("FTK"), pursuant to
which (i) the Company will merge with
and into Ronco Acquisition Corporation, a
wholly-owned subsidiary of FTK, with
the Company continuing as the surviving
corporation and becoming a wholly-owned
subsidiary of FTK, and (ii) FTK will change
its name to "Ronco Corporation" (the
"Merger Transaction"). Upon consummation of
the Merger Transaction, Ronco
Corporation shall assume all of the
Company's rights and obligations under this
Agreement and all references to the Company
shall be deemed to be references to
Ronco Corporation. To fund the cash portion
of the Purchase Price of the Ronco
Asset Purchase, the Company proposes to
sell up to 13,262,600 shares (the
"Shares") of Common Stock, $0.00001 par
value per share (the "Common Stock"), of
Ronco Corporation at a purchase price of
$3.77 per share (the "Offering Price").
The consummation of the Ronco Asset
Purchase, Merger Transaction and sale of the
Shares shall occur contemporaneously and
shall be conditioned upon one another.
2.
Representations and Warranties of the Company.
(a) The
Company represents, warrants, and agrees that as of the date
hereof:
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(i) Except as disclosed on Schedule 2(a)(i), the Company has
not
incurred
any material liabilities or obligations, direct or contingent.
(ii) All action required to be taken by the Company necessary
for
the
authorization of this Agreement and the Related Agreements (as
hereinafter defined), the performance of all obligations of the
Company
hereunder
will have been taken.
(iii) The Asset Purchase Agreement and Merger Agreement
(collectively with the ancillary agreements related to each,
the
"Transaction Documents") are in full force and effect.
(iv) The Company is a corporation duly organized, validly
existing,
and in
good standing under the laws of the State of Delaware, and has
all
requisite
right, power, and authority to own or lease its properties, to
conduct its business
as described in the Private Placement Memorandum of
the
Company dated May 23, 2005 (the "PPM") and to carry out the
provisions
of this
Agreement, and the Related Agreements and to consummate the
transaction contemplated by the Transaction Documents. The Company
is duly
qualified
to do business and in good standing as a foreign corporation in
all other
jurisdictions in which its ownership or leasing of properties,
or the
conduct of its business requires or may require such
qualification
except
where the failure to be so qualified would not have a material
adverse
effect on the Company. The Company has complied in all material
respects
with all material laws, rules, and regulations, applicable to
the
Company's
business, operations, properties, assets, products, and
services,
and the Company is in possession of and operating in compliance
with all
material permits, licenses, and other authorization, required
to
conduct
its business as currently conducted.
(v) The authorized capital stock of the Company consists of
1,500,000
shares of Common Stock, $0.001 par value per share, of which
486,239
shares were issued and outstanding as of May 11, 2005. Except
as
contemplated by this Agreement or on Schedule 2(a)(v), (a) there is
no
commitment
by the Company to issue any shares of capital stock,
subscriptions, warrants, options, convertible securities, or other
similar
rights to
purchase or receive Company securities or to distribute to the
holders of
any of its equity securities any evidence of indebtedness,
cash, or
other assets, (b) the Company is under no obligation
(contingent
or
otherwise) to purchase, redeem, or otherwise acquire any of its
equity
or debt
securities or any interest therein, and (c) to the Company's
knowledge
there are no voting trusts or similar agreements, stockholders'
agreements, pledge agreements, buy-sell agreements, rights of
first
refusal,
preemptive rights, or proxies relating to any securities of the
Company.
All outstanding securities of the Company were issued in
compliance
with applicable Federal and state securities laws.
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(vi) Except as described on Schedule 2(a)(vi), there is no
pending
or, to the
knowledge of the Company, threatened (a) action, suit, claim,
proceeding, or investigation against the Company, at law or in
equity, or
before or
by any Federal, state, municipal, or other governmental
department, commission, board, bureau, agency or instrumentality,
domestic
or foreign
(each, a "Governmental Body"), (b) arbitration proceeding
against
the Company, (c) governmental inquiry against the Company, or
(d)
any action
or suit by or on behalf of the Company pending or threatened
against
others.
(vii) The Company is not in violation of its certificate of
incorporation or bylaws, or in default, or with the giving of
notice or
lapse of
time or both, would be in default, in the performance of any
material
obligation, agreement, or condition contained in any lease,
license,
material contract, indenture, or loan agreement or in any bond,
debenture,
note, or any other evidence of indebtedness, except for such
defaults
as would not have a material adverse effect on the Company. The
execution,
delivery, and performance of this Agreement, the Related
Agreements, the Transaction Documents and the Escrow Agreement
(as
hereinafter defined), the incurrence of the obligations herein, and
the
consummation of the transactions contemplated herein, have been
duly
authorized
by all requisite corporate action on the part of the Company
and (a) do
not and will not conflict with the Company's certificate of
incorporation or bylaws, (b) do not and will not, with or without
the
passage of
time or the giving of notice, result in the breach of, or
constitute
a default, cause the acceleration of performance, or require
any
consent under, or result in the creation of any lien, charge or
encumbrance upon any property assets of the Company pursuant to,
any
material
loan agreement, mortgage, deed of trust, indenture, or other
instrument
or agreement to which the Company is a party or by which the
Company or
its properties are bound, or (c) do not and will not result in
the
violation of any law, statute, order, rule, administrative
regulation,
or decree
of any court, or governmental agency or body having
jurisdiction
over the
Company or its properties.
(viii) This Agreement has been duly and validly executed and
delivered
by or on behalf of the Company and constitutes a legal, valid,
and
binding obligation of the Company enforceable in accordance with
its
terms,
except to the extent that its enforceability is limited by (a)
applicable
bankruptcy, insolvency, reorganization, moratorium, or other
laws of
general application relating to or affecting the enforcement of
creditors'
rights generally, and (b) laws relating to the availability of
specific
performance, injunctive relief, or other equitable remedies and
except as
enforceability of the indemnity and contribution provisions
contained
in Section 7 hereof may be limited by applicable law or
principles
of public policy.
(ix) The Escrow Agreement (the "Escrow Agreement") among the
Company,
you, and Sterling Bank (the "Escrow Agent") has been duly and
validly
executed and delivered by or on behalf of the Company and
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constitutes a legal, valid, and binding obligation of the
Company
enforceable in accordance with its terms, except as such
enforceability
may be
limited by (a) applicable bankruptcy, insolvency,
reorganization,
moratorium, or other laws of general application relating to or
affecting
enforcement of creditors' rights generally and (b) laws relating to
the
availability of specific performance, injunctive relief, or
other
equitable
remedies.
(x) No consent, approval, authorization, or order of any court
or
governmental authority or agency is required for the consummation
by the
Company of
the transactions contemplated by this Agreement.
(xi) Except as would not have a material adverse effect on the
business,
assets, results of operation, or condition of the Company, the
Company
has filed, or caused to be filed, on a timely basis, all tax
returns
(including payroll, unemployment, and other taxes related to
its
employees
and independent contractors) required to be filed with any
Governmental Body and has paid or caused to be paid all taxes,
levies,
assessments, tariffs, duties or other fees imposed, assessed, or
collected
by any
Governmental Body that may have become due and payable pursuant
to
those tax
returns or otherwise except taxes being disputed by the Company
in good
faith. No deficiency assessment with respect to or proposed
adjustment
of any of the Company's Federal, state, municipal, or local tax
returns
has occurred or is threatened. There has been no tax lien
imposed
by any
Governmental Body outstanding against the Company's assets or
properties, except the lien for current taxes not yet due. The
charges,
accruals,
and reserves on the books of the Company with respect to taxes
for all
fiscal periods are adequate, in the opinion of the Company, and
the
Company does not know of any actual or proposed tax assessment for
any
fiscal
period or of any basis therefor against which adequate reserves
have not
been set up. The Company has not been advised that any Federal
income tax
return of the Company has been, or will be, examined or audited
by the
Internal Revenue Service.
(xii) Neither the Company nor any of its affiliates is or has
been
subject to
any order, judgment, or decree of any court of competent
jurisdiction temporarily, preliminarily, or permanently enjoining
such
person for
failure to comply with Rule 503 under Regulation D.
(xiii) The execution, delivery, and performance by the Company
of
this
Agreement and the Related Agreements require no consent of, action
by
or in
respect of, or filing with, any person or Governmental Body
other
than those
consents that have been obtained.
(xiv) All disclosure provided to you regarding the Company, its
business
and the transactions contemplated hereby, furnished by or on
behalf of
the Company (including the disclosure in the PPM and the
Company's
representations and warranties set forth in this Agreement) are
true and
correct and do not contain any untrue statement of a material
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fact or
omit to state any material fact necessary in order to make the
statements
made therein, in light of the circumstances under which they
were made,
not misleading.
(xv) There are no brokers, representatives or other persons
which
have an
interest in commissions or other compensation payable by the
Company in
connection with the transactions contemplated hereunder other
than as
set forth in that certain engagement letter dated May 20, 2005
by
and among
the Company, Copper Beech Equity Partners LLC, Copperfield
Equity
Partners LLC, Coll International LLC, and Content Holding LLC
(the
"Engagement Letter").
(b) The
Company represents, warrants, and agrees that upon the
consummation of the Merger Transaction and
Ronco Asset Purchase, the following
are true, correct and complete at and as of
the date of Closing:
(i) All reports and statements required to be filed by the
Company
with the
Securities and Exchange Commission (the "Commission") under the
Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the
rules and
regulations thereunder, due at or prior to the date of this
Agreement
have been made. Such filings, together with all documents
incorporated by reference therein, are referred to as "Exchange
Act
Documents." Each Exchange Act Document, as amended, conformed in
all
material
respects to the requirements of the Exchange Act and the rules
and
regulations thereunder, and no Exchange Act Document, as amended,
at
the time
each such document was filed, included any untrue statement of
a
material
fact or omitted 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.
(ii) The audited financial statements, together with the
related
notes of
the Company at June 30, 2003 and June 30, 2004, and for the
years
then ended, included
in the Company's Annual Report on Form 10-KSB for the
year ended
June 30, 2004, and the audited financial statements of the
Company at
December 31, 2004, and for the six months then ended included
in the
Company's Quarterly Report on Form 10-QSB for the quarter ended
December
31, 2004, respectively, fairly present in all material
respects,
on the
basis stated therein and on the date thereof, the financial
position
of the Company at the respective dates therein specified and
its
results of
operations and cash flows for the periods then ended (subject
to, in the
case of the unaudited financial statements, normal audit
adjustments). The audited financial statements, together with the
related
notes of
the Predecessor Entities, at December 31 for each of the years
then ended
for 2000 through 2003 included in the PPM, and the audited
financial
statements of the Predecessor Entities at September 30, 2004
for
the nine
months then ended included in the PPM, respectively, fairly
present in
all material respects, on the basis stated therein and on the
date
thereof, the financial position of the Predecessor Entities at
the
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respective
dates therein specified and their results of operations and
cash flows
for the periods then ended. To the knowledge of the Company,
such
statements and related notes have been prepared in accordance
with
generally
accepted accounting principles in the United States applied on
a
consistent
basis except as expressly noted therein (provided that the
unaudited
financial statements lack footnotes and other presentation
items).
(iii) Except as disclosed on Schedule 2(b)(iii), subsequent to
September
30, 2004, the Company has not incurred any material liabilities
or
obligations, direct or contingent, except in the ordinary course
of
business
and except for liabilities or obligations reflected or reserved
against on
the Company's balance sheet dated September 30, 2004, and there
has not
been any material adverse change, or to the actual knowledge of
the
Company, any development involving a prospective material
adverse
change, in
the condition (financial or otherwise), business, or results of
operations
of the Company or any change in the capital or material
increase
in the long-term debt of the Company, nor has the Company
declared,
paid, or made any dividend or distribution of any kind on its
capital
stock.
(iv) All action required to be taken by the Company necessary
for
the
authorization of this Agreement and the Related Agreements, the
performance of all obligations of the Company hereunder and
thereunder at
the
Closing (as hereinafter defined), and as a condition to the due
and
proper
authorization, issuance, sale, and delivery of the Shares to
subscribers therefor in accordance with the terms of this Agreement
has
been, or
prior to the Closing Date, will have been taken and upon the
payment of
the consideration for the Shares specified herein, the Shares
will be
duly and validly issued, fully paid, and non-assessable with no
personal
liability attaching to the ownership thereof and free and clear
of all
liens imposed by or through the Company.
(v) The Company is a corporation duly organized, validly
existing,
and in
good standing under the laws of the State of Delaware and has
all
requisite
right, power, and authority to own or lease its properties, to
conduct
its business as described in the Exchange Act Documents and
PPM,
and to
execute, deliver, and perform this Agreement, the Subscription
Agreements
between the Company and the purchasers of the Common Stock in
the form
attached as Exhibit A hereto (the "Subscription Agreements"),
the
Registration Rights Agreement in the form attached as Exhibit B
hereto
(the
"Registration Rights Agreement" and together with the
Subscription
Agreements, the "Related Agreements"), to issue and sell the Shares
and to
carry out
the provisions of this Agreement, and the Related Agreements
and
to carry
on its business as presently conducted. The Company is duly
qualified
to do business and in good standing as a foreign corporation in
all other
jurisdictions in which its ownership or leasing of properties,
or the
conduct of its business requires or may require such
qualification
except
where the failure to be so qualified would not have a material
adverse
effect on the Company. The Company has complied in all material
respects
with all material laws, rules, regulations, applicable to the
6
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Company's
business, operations, properties, assets, products, and
services,
and the Company is in possession of and operating in compliance
with all
material permits, licenses, and other authorization, required
to
conduct
its business as currently conducted.
(vi) The authorized capital stock of the Company consists of
500,000,000 shares of Common Stock, $0.00001 par value per share,
of which
455,140
shares on a post reverse stock split basis, were issued and
outstanding as of May 11, 2005, and 20,000,000 shares of preferred
stock,
$0.00001
par value per share, of which no shares were designated, issued
or
outstanding as of May 20, 2005. Except as contemplated by this
Agreement,
or as described in the Exchange Act Documents or on Schedule
2(b)(vi),
(a) there is no commitment by the Company to issue any shares
of
capital
stock, subscriptions, warrants, options, convertible
securities,
or other
similar rights to purchase or receive Company securities or to
distribute
to the holders of any of its equity securities any evidence of
indebtedness, cash, or other assets, (b) the Company is under
no
obligation
(contingent or otherwise) to purchase, redeem, or otherwise
acquire
any of its equity or debt securities or any interest therein,
and
(c) to the
Company's knowledge there are no voting trusts or similar
agreements, stockholders' agreements, pledge agreements,
buy-sell
agreements, rights of first refusal, preemptive rights, or
proxies
relating
to any securities of the Company. Except as set forth in the
Exchange
Act Documents or filings with the Commission made by third
parties
pursuant to Schedule 13D or 13G or Form 3 or 4, and to the
knowledge
of the Company, no person holds of record or beneficially, 5%
or
more of
the outstanding shares of the capital stock of the Company. All
outstanding
securities of the Company were issued in compliance with
applicable
Federal and state securities laws.
(vii) Except as disclosed in the Exchange Act Documents or as
described
on Schedule 2(b)(vii), there is no pending or, to the knowledge
of the
Company, threatened (a) action, suit, claim, proceeding, or
investigation against the Company, at law or in equity, or before
or by
any
Federal, state, municipal, or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or
foreign
Governmental Body, (b) arbitration proceeding against the Company,
(c)
governmental inquiry against the Company, or (d) any action or suit
by or
on behalf
of the Company pending or threatened against others.
(viii) The Company is not in violation of its certificate of
incorporation or bylaws, or in default, or with the giving of
notice or
lapse of
time or both, would be in default, in the performance of any
material
obligation, agreement, or condition contained in any lease,
license,
material contract, indenture, or loan agreement or in any bond,
debenture,
note, or any other evidence of indebtedness, except for such
defaults
as would not have a material adverse effect on the Company. The
execution,
delivery, and performance of this Agreement, the Related
Agreements, the Transaction Documents, and the Escrow Agreement,
the
incurrence
of the obligations herein, the issuance, sale, and delivery of
the
Shares, and the consummation of the transactions contemplated
herein,
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<PAGE>
have been
duly authorized by all requisite corporate action on the part
of
the Company and (a) do not
and will not conflict with the Company's
certificate of incorporation or bylaws, (b) do not and will not,
with or
without
the passage of time or the giving of notice, result in the
breach
of, or
constitute a default, cause the acceleration of performance, or
require
any consent under, or result in the creation of any lien,
charge
or
encumbrance upon any property assets of the Company pursuant to,
any
material
loan agreement, mortgage, deed of trust, indenture, or other
instrument
or agreement to which the Company is a party or by which the
Company or
its properties are bound, except such consents as have been
obtained
as of the date hereof or to the extent that the same have been,
or prior
to the Closing Date will be, waived or cured, and as may be
required
by the National Association of Securities Dealers, Inc.
("NASD")
OTC
Bulletin Board, which the Company undertakes to obtain as promptly
as
practicable, or (c) do not and will not result in the violation of
any
law,
statute, order, rule, administrative regulation, or decree of
any
court, or
governmental agency or body having jurisdiction over the
Company
or its
properties. The Transaction Documents are in full force and
effect.
(ix) Except as disclosed in the Exchange Act Documents or as
described
on Schedule 2(b)(ix), there are no pre-emptive rights or other
rights to
subscribe for or to purchase, or any restriction upon the
voting
or
transfer of, shares of Common Stock pursuant to the Company's
certificate of incorporation, bylaws, or any agreement or other
instrument
to which
the Company is a party. Except as disclosed on Schedule
2(b)(ix),
the issuance of
the Shares is not subject to any preemptive right of any
stockholder of the Company or to any right of first refusal or
other right
in favor
of any person.
(x) This Agreement has been duly and validly executed and
delivered
by or on
behalf of the Company and constitutes a legal, valid, and
binding
obligation
of the Company enforceable in accordance with its terms, except
to the
extent that its enforceability is limited by (a) applicable
bankruptcy, insolvency, reorganization, moratorium, or other laws
of
general
application relating to or affecting the enforcement of
creditors'
rights
generally, and (b) laws relating to the availability of
specific
performance, injunctive relief, or other equitable remedies and
except as
enforceability of the indemnity and contribution provisions
contained in
Section 7
hereof may be limited by applicable law or principles of public
policy.
(xi) The Escrow Agreement has been duly and validly executed
and
delivered
by or on behalf of the Company and constitutes a legal, valid,
and
binding obligation of the Company enforceable in accordance with
its
terms,
except as such enforceability may be limited by (a) applicable
bankruptcy, insolvency, reorganization, moratorium, or other laws
of
general
application relating to or affecting enforcement of creditors'
rights
generally and (b) laws relating to the availability of specific
performance,
injunctive relief, or other equitable remedies.
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<PAGE>
(xii) No consent, approval, authorization, or order of any court
or
governmental authority or agency is required for the consummation
by the
Company of
the transactions contemplated by this Agreement, except such as
may be
required by the NASD, the Securities Act of 1933, as amended
(the
"Act"), or
the rules and regulations thereunder or state securities or
Blue Sky
laws.
(xiii) Except as would not have a material adverse effect on
the
business,
assets, results of operation, or condition of the Company, the
Company
has filed, or caused to be filed, on a timely basis, all tax
returns (including payroll,
unemployment, and other taxes related to its
employees
and independent contractors) required to be filed with any
Governmental Body and has paid or caused to be paid all taxes,
levies,
assessments, tariffs, duties or other fees imposed, assessed, or
collected
by any
Governmental Body that may have become due and payable pursuant
to
those tax
returns or otherwise except taxes being disputed by the Company
in good
faith. Except as disclosed on Schedule 2(b)(xiii), no
deficiency
assessment
with respect to or proposed adjustment of any of the Company's
Federal,
state, municipal, or local tax returns has occurred or is
threatened. There has been no tax lien imposed by any Governmental
Body
outstanding against the Company's assets or properties, except the
lien
for
current taxes not yet due. The charges, accruals, and reserves on
the
books of
the Company with respect to taxes for all fiscal periods are
adequate,
in the opinion of the Company, and the Company does not know of
any actual
or proposed tax assessment for any fiscal period or of any
basis
therefor against which adequate reserves have not been set up.
Except as
disclosed on Schedule 2(b)(xiii), the Company has not been
advised
that any Federal income tax return of the Company has been, or
will be,
examined or audited by the Internal Revenue Service.
(xiv) The Common Stock is registered pursuant to Section 12(b)
of
the
Exchange Act and is listed for quotation with the symbol "FYTK.OB"
on
the NASD
OTC Bulletin Board.
(xv) The Company has not during the past six months offered or
sold
any
security by or for the Company that is of the same or a similar
class
as the
Shares, other than offers of securities made solely to
accredited
investors
or otherwise under an employee benefit plan as defined in Rule
405 under
the Act, securities issued in connection with acquisitions, or
other
securities that will not invalidate the exemption from
registration
relied on
to offer and sell the Shares.
(xvi) Neither the Company nor any of its affiliates is or has
been
subject to
any order, judgment, or decree of any court of competent
jurisdiction temporarily, preliminarily, or permanently enjoining
such
person for
failure to comply with Rule 503 under Regulation D.
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(xvii) The execution, delivery, and performance by the Company
of
this
Agreement and the Related Agreements, and the offer and sale of
the
Shares
require no consent of, action by or in respect of, or filing
with,
any person
or Governmental Body other than those consents that have been
obtained
and filings that have been made pursuant to applicable state
securities
laws and post-sale filings pursuant to applicable state and
federal
securities laws, which the Company undertakes to file within
the
applicable
time period.
(xviii) All disclosure provided to you regarding the Company,
its
business
and the transactions contemplated hereby, furnished by or on
behalf of
the Comp
