AZCO MINING INC.
PLACEMENT AGENT AGREEMENT
Dated as of: June __, 2002
Westrock Advisors, Inc.
230 Park Avenue, Floor 9
New York, New York 10169
Ladies and Gentlemen:
The undersigned, Azco Mining Inc., a Delaware corporation (the "Company"),
hereby agrees with Westrock Advisors, a New York Corporation, (the "Placement
Agent") and Cornell Capital Partners, LP, A Delaware Limited Partnership (the
"Investor") hereby agree as follows:
1. Offering. The Company hereby engages the Placement Agent to act as its
exclusive placement agent in connection with the Equity Line of Credit Agreement
dated the date hereof, (the "Equity Line of Credit 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 Five Million
Dollars ($5,000,000) of the Company's common stock (the "Commitment Amount"),
par value $0.002 per share (the "Common Stock"), at price per share equal to the
Purchase Price, as that term is defined in the Equity Line of Credit Agreement.
Pursuant to the terms hereof, the Placement Agent shall render consulting
services to the Company with respect to the Equity Line of Credit Agreement and
shall be available for consultation in connection with the advances to be
requested by the Company pursuant to the Equity Line of Credit Agreement
All capitalized terms used herein and not otherwise defined herein shall
have the same meaning ascribed to them as in the Equity Line of 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 (the "Registration
Rights Agreement"). The documents to be executed and delivered in connection
with the Offering, including, but not limited, to this Agreement, the Equity
Line of Credit Agreement, the Registration Rights Agreement, and the Escrow
Agreement with First Union National Bank (the "Escrow Agreement"), are referred
to sometimes hereinafter collectively as the "Offering Materials." The Company's
Common Stock is sometimes referred to hereinafter as the "Securities." The
Placement Agent shall not be obligated to sell any Securities and this Offering
by the Placement Agent shall be solely on a "best efforts basis."
2. Compensation.
A. Upon the execution of this Agreement the Company shall issue to the
Placement Agent or its designee an amount equal to __________ shares of the
Company's Common Stock (collectively, the "Placement Agent's Shares "). The
Placement Agent shall be entitled to "piggy-back" registration rights 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.
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 "1933 Act"), the Securities Exchange Act of 1934 (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. (v) The Placement Agent will 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. The
Placement Agent 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 the Placement Agent's obligations and the
accuracy of the Placement Agent'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. (vi) 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 compliance with all material rules and
regulations applicable to the Placement Agent generally and applicable to
the Placement Agent's participation in the Offering.
4. Representations and Warranties of the Company.
A. The Company represents and warrants as follows:
(i) The execution, delivery and performance of each of this Agreement,
the Equity Line of Credit 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
Equity Line of Credit 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 Equity Line of Credit
Agreement have been duly authorized and, when issued and paid for in
accordance with (x) this Agreement, the Equity Line of Agreement 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. (ii) The Company has a duly
authorized, issued and outstanding capitalization as set forth herein and
in the Equity Line of 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, the agreements described herein and as described
in the Equity Line of Credit 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. As of the date hereof, the authorized
capital stock of the Company consists of 100,000,000 shares of Common
Stock, par value $0.002 per share of which 30,050,621 shares of Common
Stock were issued and outstanding. (iii) The Common Stock to be issued in
accordance with this Agreement and the Equity Line of Credit Agreement has
been duly authorized and when issued and paid for in accordance with this
Agreement, the Equity Line of Credit Agreement 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 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 Equity Line of Credit 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. (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 Equity
Line of 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 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. (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
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. (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, 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 and the offer and sale
of the Securities comply, 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. (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
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. Representations, Warranties and Covenants of the Investor.
A. The Investor represents, warrants and covenants as follows:
(i) The Investor has the necessary power to enter into this Agreement
and to consummate the transactions contemplated hereby .
(ii) The execution and delivery by the Investor 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 Investor is a party or by which
the Investor or its properties are bound, or any judgment, decree, order
or, to the Investor's knowledge, any statute, rule or regulation applicable
to the Investor. This Agreement when executed and delivered by the
Investor, will constitute the legal, valid and binding obligations of the
Investor, 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) The Investor will promptly forward copies of any and all due
diligence questionnaires compiled by the Investor to the Placement Agent.
6. Certain Covenants and Agreements of the Company.
The Company covenants and agrees at its expense and without any expense to
the Placement Agent as follows:
A. To advise the Placement Agent 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 as soon as the Company
is either informed or becomes aware thereof. B. To use its commercially
reasonable efforts to cause the Common Stock issuable in connection with the
Equity Line of Credit to be qualified or registered for sale on terms consistent
with those stated in the Registration Rights Agreement and under the securities
laws of such jurisdictions as the Placement Agent and the Investor shall
reasonably request. 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 Placement Agent and the Investor 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 registration period of the
Equity Line Credit Agreement, to the Placement Agent upon the Placement Agent's
request, within forty five (45) days, 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 Offering Materials.
F. 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.
7. Indemnification.
A. The Company hereby agrees that it will indemnify and hold the Placement
Agent and each officer, director, shareholder, employee or representative of the
Placement Agent and each person controlling, controlled by or under common
control with the Placement Agent 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 the Placement Agent or such indemnified person of the
Placement Agent 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 the Placement Agent 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 the Placement Agent or such indemnified person
based upon specific finding of fact that the Placement Agent or such indemnified
person's gross negligence or willful misfeasance will be promptly repaid to the
Company.
B. The Placement Agent 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 the Placement Agent or its officers,
employees or representatives in its acting as Placement Agent for the Offering
or (ii) the material breach of any representation, warranty, covenant or
agreement made by the Placement Agent in this Agreement (iii) any false or
misleading information provided to the Company by one of the Placement Agent's
indemnified persons.
C. The Investor hereby agrees that it will indemnify and hold the Placement
Agent and each officer, director, shareholder, employee or representative of the
Placement Agent, and each person controlling, controlled by or under common
control with the Placement Agent 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 Placement Agent or such indemnified person of the
Placement Agent 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 the Investor or its
officers, employees or representatives in its acting as the Investor for the
Offering or (ii) the material breach of any representation, warranty, covenant
or agreement made by the Investor in the Offering Materials (iii) any false or
misleading information provided to the Placement Agent by one of the Investor's
indemnified persons.
D. The Placement Agent hereby agrees that it will indemnify and hold the
Investor and each officer, director, shareholder, employee or representative of
the Investor, and each person controlling, controlled by or under common control
with the Investor 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 Investor or such indemnified person of the Investor 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 the Placement Agent or its officers,
employees or representatives in its acting as the Placement Agent for the
Offering or (ii) the material breach of any representation, warranty, covenant
or agreement made by the Placement Agent in this Agreement (iii) any false or
misleading information provided to the Investor by one of the Placement Agent's
indemnified persons.
E. Promptly after receipt by an indemnified party of notice of commencement
of any action covered by Section 6(A), (B), (C) or (D), the party to be
indemnified shall, within five (5) business days, notify the indemnifying party
of the commencement thereof; the omission by one (1) 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), (B), (C), or (D) 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
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.
F. 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 the Placement
Agent 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 the Placement Agent 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 the Placement Agent 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(F), any person
controlling, controlled by or under common control with the Placement Agent, or
any partner, director, officer, employee, representative or any agent of any
thereof, shall have the same rights to contribution as the Placement Agent 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.
8. 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.
9. Conditions of Closing
The Closing shall be held at the offices of the Investor or its counsel.
The obligations of the Placement Agent 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 the Date of Closing (the "Closing Date") with
respect to the Company as if it had been made on and as of such Closing Date;
the accuracy on and as of the Closing 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 the Closing Date of its covenants and obligations hereunder
and to the following further conditions: A. Upon the effectiveness of a
registration statement covering the Equity Line of Credit Agreement, the
Placement Agent shall receive the opinion of Counsel to the Company, dated as of
the date thereof, which opinion shall be in form and substance reasonably
satisfactory to the Investor, their counsel and the Placement Agent. B. At or
prior to the Closing, the Placement Agent shall have been furnished such
documents, certificates and opinions as it 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 the 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 except the transactions pursuant to the
Securities Purchase Agreement dated the date hereof entered into by the Company
which has not been disclosed in the Offering Materials or to the Placement Agent
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) and trade payable debt; (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 Closing, the Placement Agent shall
receive a certificate of the Company signed by an executive officer and chief
financial officer, dated as of the applicable Closing, to the effect that the
conditions set forth in subparagraph (C) above have been satisfied and that, as
of the applicable closing, the representations and warranties of the Company set
forth herein are true and correct.
10. Termination.
This Agreement shall be co-terminus with, and terminate upon the same terms
and conditions as those set forth in, the Equity Line of Credit Agreement. The
rights of the Investor and the obligations of the Company under the Registration
Rights Agreement, and the rights of the Placement Agent and the obligations of
the Company shall survive the termination of this Agreement unabridged.
11. 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:
If to Placement Agent, to: Westrock Advisors, Inc.
230 Park Avenue, Floor 9
New York, New York 10169
With Copy to:
If to the Company, to: Azco Mining Inc.
7239 N. EL Mirage Road
Glendale, AZ 85307
Attention: Ryan Modesto, Vice President-Finance
Telephone: (623) 935-0774
Facsimile: (623) 935 0781
With a copy to: Kirkpatrick & Lockhart, LLP
Miami Center - 20th Floor
201 South Biscayne Boulevard
Miami, FL 33131-2399
Attention: Clayton E. Parker, Esq.
Telephone: (305) 539-3306
Facsimile: (305) 358-7095
If to the Investor: Cornell Capital Partners, LP
101 Hudson Street - Suite 3606
Jersey City, NJ 07302
Attention: Mark A. Angelo
Portfolio Manager
Telephone: (201) 985-8300
Facsimile: (201) 985-8266
With Copies to: Butler Gonzalez LLP
1000 Stuyvesant Aveneue _ Suite No.: 6
Union, NJ 07083
Attention: David Gonzalez, Esq.
Telephone: (908) 810-8588
Facsimile: (908) 810-0973
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 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.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
COMPANY:
AZCO MINING INC.
By:
Name: Ryan Modesto
Title: Vice President-Finance
PLACEMENT AGENT:
WESTROCK ADVISORS, INC.
By:
Name:
Title:
INVESTOR:
CORNELL CAPITAL PARTNERS, LP
By: Yorkville Advisors, LLC
Its: General Partner
By:_________________________________
Name: Mark A. Angelo
Title: Portfolio Manager