Exhibit 10.7
Solomon Technologies,
Inc.
1400 L & R Industrial
Boulevard
Tarpon Springs, Florida
34689
March 12, 2004
First Dunbar Securities Corporation
50 Congress Street Suite 632
Boston, MA 02109
Gentlemen:
Solomon Technologies, Inc. (the
“Company”), on the basis of the representations,
warranties, covenants and conditions contained herein, hereby
confirms the agreement made with respect to the retention of First
Dunbar Securities Corporation (the “Placement Agent”)
as the Placement Agent of the Company to offer and sell on a
“best efforts” basis, pursuant to the terms of this
Placement Agent Agreement (the “Agreement”), shares of
Series A Redeemable Convertible Preferred Stock
(“Preferred” or “Preferred Shares”) as set
forth in the Summary of Terms (“Term Sheet”) dated
March 4, 2004 attached hereto as Exhibit A (the
“Offering”). It is anticipated that the Preferred
Shares will not be registered under the Securities Act of 1933 (the
“Act”), although the shares obtainable upon conversion
of the Preferred (“Conversion Shares”), the shares
obtainable upon exercise of warrants issuable to the purchasers of
the Preferred and the shares obtainable upon exercise of the
warrants issuable in the event that the Company elects to accept
bridge financing as provided in the Term Sheet (collectively,
“Warrant Shares”) are subject to a Registration Rights
Agreement between the Company and each investor. The closing shall
occur as provided in the Term Sheet (“Closing
Date”).
The Company confirms the agreements
made by it with respect to the sale of the Preferred Shares by the
Placement Agent, as follows:
1. Representations and Warranties
of the Company. The Company represents and warrants to, and
agrees with the Placement Agent, as of the date hereof, and as of
the Closing Date (as hereinafter defined) that:
(a) A Confidential Private Placement
Memorandum dated March 4, 2004 (“Private Placement
Memorandum”) relating to the Offering, copies of which have
heretofore been delivered to Placement Agent, has been prepared by
the Company in order to consummate the Offering pursuant to an
exemption contained in, the Act, and the rules and regulations (the
“Rules and Regulations”) of the Securities and Exchange
Commission (the “Commission”) promulgated
thereunder.
(b) As of the date of the Private
Placement Memorandum (“Effective Date”) and at all
times subsequent thereto, neither the Private Placement Memorandum
nor any supplement or amendment thereto will include any untrue
statement of a material fact or omit to state any material fact
required to be stated therein, or necessary to make statements
therein, in light of the context in which they were made, not
misleading; provided, however, that the Company makes no
representations, warranties or agreements as to information
contained in or omitted from the Private Placement Memorandum in
reliance upon, and in conformity with, written information
furnished to the Company by the Placement Agent specifically for
use in the preparation of the Private Placement
Memorandum.
(c) The Company has been duly
incorporated and is validly existing as a corporation and in good
standing under the laws of the jurisdiction of its incorporation,
with full power and authority (corporate and other) to own its
properties and conduct its business as described in the Private
Placement Memorandum, and is duly qualified to do business as a
foreign corporation and is in good standing in all other
jurisdictions in which the nature of its business or the character
or location of its properties requires such qualification, except
where failure to so qualify will not materially affect the
Company’s business, properties or financial
condition.
(d) The authorized, issued and
outstanding securities of the Company as of the Closing Date is as
set forth in the Private Placement Memorandum; all of the issued
and outstanding securities of the Company have been, or will be
when issued as set forth in the Private Placement Memorandum, duly
authorized, validly issued, fully paid, and non-assessable; the
issuances and sales of all such securities complied in all material
respects with applicable Federal and state securities laws; the
holders thereof have no rights of rescission against the Company
with respect thereto; none of such securities were issued in
violation of the preemptive rights of any holders of any security
of the Company or similar contractual rights granted by the
Company; except as set forth in the Private Placement Memorandum,
no options, warrants or other rights to purchase, agreements or
other obligations to issue, or agreements or other rights to
convert any obligation into, any securities of the Company have
been granted or entered into by the Company; and all of the
securities of the Company, issued and to be issued as set forth in
the Private Placement Memorandum, conform to all statements
relating thereto contained in the Private Placement
Memorandum.
(e) The shares of Convertible
Preferred Stock will be authorized at the closing of and when
issued and delivered to the holders, will be duly authorized,
validly issued, fully paid and non-assessable and free of
preemptive rights, and no personal liability will attach to the
ownership thereof. The shares of Common Stock acquirable upon
conversion of the Convertible Preferred Stock and exercise of the
Warrants have been duly authorized and reserved for such issuances,
and, when issued, will be validly issued, fully paid and
non-assessable and free of preemptive rights, and no personal
liability will attach to the ownership thereof.
(f) This Agreement has been duly and
validly authorized, executed and delivered by the Company, and
assuming due execution of this Agreement by the Placement Agent,
will constitute valid and binding obligations of the Company
enforceable against the Company in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency
or other laws affecting the rights of creditors generally. The
Company has full power and lawful authority to authorize, issue and
sell the Preferred on the terms and conditions set forth in the
Private Placement Memorandum, and no consent, approval,
authorization or order of any governmental authority is required in
connection with such authorization, execution and delivery, except
such as may be required under the Act or state securities
laws.
(g) Except as described in the
Private Placement Memorandum, the Company is not in material
violation, breach of or default under, and consummation of the
transactions herein contemplated and the fulfillment of the terms
of this Agreement will not conflict with, or result in a breach of,
or constitute a material default under, or result in the creation
or imposition of any lien, charge or encumbrance upon any of the
property or assets of the Company pursuant to the terms of any
indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company is a party or by which
the Company may be bound or to which any of the property or assets
of the Company is subject, nor will such action result in any
material violation of the provisions of the charter documents or
by-laws of the Company, as amended, or any statute or any order,
rule or regulation applicable to the Company of any court or of any
regulatory authority or other governmental body having jurisdiction
over the Company.
(h) Subject to the qualifications
stated in the Private Placement Memorandum, the Company has good
and marketable title to all properties and assets described in the
Private Placement Memorandum as owned by it, free and clear of all
liens, charges, encumbrances or restrictions, except such as are
not materially significant or important in relation to its
business; all of the material leases and subleases under which the
Company is the lessor or sublessor of properties or assets or under
which the Company holds properties or assets as lessee or sublessee
as described in the Private Placement Memorandum are in full force
and effect, and, except as described in the Private Placement
Memorandum, the Company is not in default in any material respect
with respect to any of the terms or provisions of any of such
leases or subleases, and no claim has been asserted by anyone
adverse to rights of the Company as lessor, sublessor, lessee, or
sublessee under any of the leases or subleases mentioned above, or
affecting or questioning the right of the Company to continued
possession of the leased or subleased premises or assets under any
such lease or sublease except as described or referred to in the
Private Placement Memorandum; and the Company owns or leases all
such properties described in the Private Placement Memorandum as
are necessary to its operations as now conducted and, except as
otherwise stated in the Private Placement Memorandum, as proposed
to be conducted as set forth in the Private Placement
Memorandum.
(i) Subsequent to the respective
dates as of which information is set forth in the Private Placement
Memorandum and to and including the Termination Date (as defined in
Section 9), except as set forth in or contemplated by the Private
Placement Memorandum, (i) the Company has not incurred and except
in the ordinary course of business, will not have incurred any
material liabilities or obligations, direct or contingent, and has
not entered into and will not have entered into any material
transactions other than as contemplated in the Private Placement
Memorandum, (ii) the Company has not and will not have paid or
declared any dividends or have made any other distribution on its
capital stock; (iii) there has not been any change in the capital
stock of, or any incurrence of long-term debt by, the Company; (iv)
the Company has not issued any warrants, options or other rights to
purchase any securities of the Company; and (v) there has not been
and will not have been any material adverse change in the business,
financial condition or results of operations of the Company, or in
the book value of the assets of the Company, arising for any reason
whatsoever.
(j) Except as set forth in the
Private Placement Memorandum, there is not now pending or, to the
knowledge of the Company, threatened, any action, suit, proceeding,
inquiry, arbitration or investigation against the Company or any of
the officers or directors of the Company.
(k) Except as disclosed in the
Private Placement Memorandum, the Company has filed all necessary
income and franchise tax returns and has paid all taxes shown as
due thereon; and there is no tax deficiency which has been or to
the knowledge of the Company might be asserted against the Company
that has not been provided for in the financial
statements.
(l) The Company has sufficient
licenses, permits and other governmental authorizations currently
required for the conduct of its business or the ownership of its
property as described in the Private Placement Memorandum and is in
all material respects complying therewith and owns or possesses
adequate right to use all material patents, patent applications
trademarks, service marks, trade-names, trademark registrations,
service mark registrations, copyrights, and licenses necessary for
the conduct of such business and has not received any notice of
conflict with the asserted rights of others in respect thereof. To
the best knowledge of the Company, none of the activities or
business of the Company are in violation of, or cause the Company
to violate, any law, rule, regulation or order, the violation of
which would have a material adverse impact upon the condition
(financial or otherwise), business, property, prospective results
of operations, or net worth of the Company.
(m) The Company has no subsidiary
corporations nor has it any equity interest in any partnership,
joint venture, association or other entity, except as disclosed in
the Private Placement Memorandum.
(n) Other than as set forth in the
Private Placement Memorandum and Schedule A hereto, the Company has
not entered into any agreement pursuant to which any person is
entitled, either directly or indirectly, to compensation from the
Company, from the Placement Agent, or from any other person, for
services as a finder in connection with the Offering, and the
Company agrees to indemnify and hold harmless the Placement Agent
against any losses, claims, damages or liabilities, joint or
several, which shall include, but not be limited to, all costs to
defend against any such claim, so long as such claim arises out of
agreements made or allegedly made by the Company.
(o) Based upon written
representations received from the officers and directors of the
Company, except as disclosed in the Private Placement Memorandum,
during the past five years, none of the officers or directors of
the Company or each subsidiary have been:
(1) Subject of a petition under the
Federal bankruptcy laws or any state insolvency law filed by or
against them, or by a receiver, fiscal agent or similar officer
appointed by a court for their business or property, or any
partnership in which any of them was a general partner at or within
two years before the time of such filing, or any corporation or
business association of which any of them was an executive officer
at or within two years before the time of such filing;
(2) Convicted in a criminal
proceeding or a named subject of a pending criminal proceeding
(excluding traffic violations and other minor offenses);
(3) The subject of any order,
judgment, or decree not subsequently reversed, suspended or
vacated, of any court of competent jurisdiction, permanently or
temporarily enjoining any of them from, or otherwise limiting, any
of the following activities:
(i) acting as a futures commission
merchant, introducing broker, commodity trading advisor commodity
pool operator, floor broker, leverage transaction merchant, any
other person regulated by the Commodity Futures Trading Commission,
or an associated person of any of the foregoing, or as an
investment adviser, underwriter, broker or dealer in securities, or
as an affiliated person, director or employee of any investment
company, escrow agent, savings and loan association or insurance
company, or engaging in or continuing any conduct or practice in
connection with any such activity;
(ii) engaging in any type of
business practice; or
(iii) engaging in any activity in
connection with the purchase or sale of any security or commodity
or in connection with any violation of Federal or State securities
law or Federal Commodity laws.
(4) The subject of any order,
judgment or decree, not subsequently reversed, suspended or vacated
of any Federal or State authority barring,
suspending or otherwise limiting for
more than sixty (60) days either of their right to engage in any
activity described in paragraph (3) (i) above, or be associated
with persons engaged in any such activity;
(5) Found by any court of competent
jurisdiction in a civil action or by the Commission to have
violated any Federal or State securities law, and the judgment in
such civil action or finding by the Commission has not been
subsequently reversed, suspended or vacated; or
(6) Found by a court of competent
jurisdiction in a civil action or by the Commodity Futures Trading
Commission to have violated any Federal Commodities Law, and the
judgment in such civil action or finding by the Commodity Futures
Trading Commission has not been subsequently reversed, suspended or
vacated.
(p) Based upon written
representations received from the officers and directors of the
Company, each of the officers and directors of the Company has
reviewed the sections in the Private Placement Memorandum relating
to their biographical data and equity ownership position in the
Co
