SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (the "Agreement"), dated as
of March 6, 2000 is entered into by and between xxxxXxxx.xxx Inc., a Delaware
corporation (the "Company"), and the purchaser listed on the signature pages
hereof ("Purchaser").
WHEREAS, the Company desires to raise additional funds for
general corporate purposes;
WHEREAS, in order to provide the funds required for such
purposes the Company desires to raise funds by the sale of up to U.S.$2,500,000
in principal amount of its 8% Senior Subordinated Convertible Debentures
("Debentures"), each U.S.$0.25 of principal amount of which shall be convertible
into one share of its common stock, par value U.S.$0.001 per share ("Common
Stock") and one three-year warrant (a "Warrant") to purchase an additional share
of Common Stock at an exercise price of U.S.$0.50 per share, adjusted in each
case as provided therein; and
WHEREAS, the Purchaser desires to purchase such Debentures.
In consideration of the premises, mutual covenants and
agreements hereinafter contained and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
PURCHASE AND SALE OF SECURITIES
1.1 Commitments to Purchase and Fund. Subject to the terms and
conditions set forth herein and in reliance on the representations and
warranties of the parties contained herein, the Company agrees to sell and the
Purchaser agrees to purchase the principal amount of Debentures noted on
Schedule I attached hereto, which shall be convertible into that number of
shares of Common Stock set forth on Schedule I.
1.2 Fractional Interests. The Company shall not be required to
issue fractional shares of Common Stock or scrip representing fractional shares
of Common Stock upon consummation of the transactions contemplated by this
Agreement. The number of shares of Common Stock that are issuable upon any
conversion shall be rounded down to the nearest whole share. The Company may, at
its option, make a payment in cash in respect of any fractional shares which
might otherwise be issuable upon conversion of the Debentures, calculated by
multiplying the fractional share amount by the lowest sales price of one share
of the Company's Common Stock on the date of conversion as reported by the
principal United States Stock Exchange (including the Nasdaq Stock Market) on
which the Common Stock is then listed, or, if the Common Stock is not then
listed on a stock exchange but is quoted on the NASD OTC Bulletin Board, the
lowest price per share for the Common Stock quoted thereon on such date.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
To induce the Purchaser to purchase Debentures as herein provided, the
Company makes the following representations, warranties and covenants to the
Purchaser, each and all of which representations and warranties shall be true
and correct as of the date of the execution and delivery of this Agreement, and
all of which representations, warranties and covenants shall survive the
execution and delivery of this Agreement:
2.1 Corporate Existence. The Company (a) is duly organized and validly
existing under the laws of the jurisdiction of its organization, and (b) has all
requisite corporate power and authority to carry on its business as now being or
as proposed to be conducted. The Company has all requisite corporate power and
authority to consummate the transactions contemplated by this Agreement.
2.2 Authorization; Binding Agreement. The Company has all requisite
corporate power and authority to enter into this Agreement, issue the Debentures
as provided herein and perform its obligations hereunder and thereunder. The
execution, delivery and performance of this Agreement have been duly authorized
by all necessary corporate action on the part of the Company, and this Agreement
has been duly executed and delivered by the Company. This Agreement constitutes
the legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms subject, as to enforceability, to
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other laws of general applicability affecting the rights of creditors and to
general principles of equity.
2.3 No Conflict. The execution, delivery and performance by the Company
of this Agreement does not and will not (a) violate or contravene or be in
conflict with (i) any provision of the Articles of Incorporation or By-Laws of
the Company, (ii) any provision of any law, rule or regulation applicable to the
Company, or (iii) any order, judgment or decree of any court or other agency, or
(b) violate, result in a breach of or constitute a default under any term of any
material agreement to which the Company or any subsidiary of the Company is a
party or by which the Company or any subsidiary of the Company or any of their
property is bound.
2.4 Issuance. The Debentures to be issued and sold hereunder, the
Common Stock issuable upon conversion thereof and the Common Stock issuable upon
exercise of the Warrants, when issued and sold in accordance with the provisions
of this Agreement and the Debentures, as the case may be, will be duly
authorized, validly issued, fully paid and non-assessable.
2.5 Reservation of Shares. The Company shall at all times after April
1, 2000 reserve out of its authorized and unissued shares of Common Stock
sufficient shares to provide for the conversion of the Debentures and the
exercise of the Warrants issuable upon the conversion thereof.
2
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASERS
3.1 Purchaser Acknowledgements. The Purchaser understands and
acknowledges that:
(a) the offering and sale of Debentures hereunder, the
issuance of Common Stock and Warrants upon conversion thereof and the
issuance of the Common Stock upon exercise of the Warrants, are
intended to be exempt from registration under the Securities Act of
1933, as amended (the "Securities Act"), by virtue of the provisions of
either Section 4(2) of the Securities Act, Regulation S promulgated
under the Securities Act or Regulation D ("Regulation D") promulgated
under the Securities Act and the Company's reliance on such exemption
is based in part upon the representations made by the Purchaser herein;
(b) none of the Debentures to be issued and sold
hereunder, the Common Stock and Warrants to be issued upon conversion
thereof or the Common Stock to be issued upon exercise of the Warrants,
has been registered under the Securities Act or any securities or "Blue
Sky" laws of any state;
(c) there is no existing public or other market for
the Debentures, the Warrants or the Common Stock and there can be no
assurance that the Purchaser will be able to sell or dispose of any of
the Debentures, the Warrants or shares of Common Stock acquired by the
Purchaser hereunder or thereunder;
(d) neither the Debentures to be issued and sold
hereunder, nor the Common Stock or Warrants issuable upon conversion
thereof, nor the Common Stock issuable upon exercise of the Warrants
may be offered, sold, transferred, pledged, hypothecated or otherwise
assigned unless they are registered under the Securities Act or an
exemption from such registration is available, in each case in
accordance with any applicable securities or "Blue Sky" laws of any
state; and
(e) the Debentures to be purchased hereunder, the
certificates representing any Warrants or Common Stock acquired upon
conversion thereof, the certificates representing any Common Stock
issued upon exercise of the Warrants and each Debenture or certificate
issued to any subsequent transferee thereof shall bear legends in
substantially the following form:
The securities represented by this
certificate have not been registered under the Securities Act
of 1933, as amended (the "Act"), or any state securities laws
and neither such securities nor any interest therein may be
offered, sold, pledged, assigned or otherwise transferred
unless (1) a registration statement with respect thereto is
effective under the Act and any applicable state securities
laws or (2) the Company receives an opinion of counsel to the
holder of such securities, which counsel and opinion are
reasonably satisfactory to the Company, that such securities
may
3
be offered, sold, pledged, assigned or transferred in the
manner contemplated without an effective registration
statement under the Act or applicable state securities laws.
Hedging transactions involving the securities represented by
this certificate may not be conducted unless in compliance
with the Act.
3.2 Purchaser Representations and Warranties. The Purchaser represents
and warrants to the Company that:
(a) the Debentures to be acquired by it pursuant to
this Agreement and any Warrants or Common Stock to acquired by it upon
conversion of the Debentures or exercise of the Warrants, as the case
may be, are or will be acquired for its own account, not as a nominee
or agent for any other Person, and without a view to the distribution
or resale of such shares or any interest therein in violation of the
Securities Act; and
(b) the Purchaser is an "accredited investor" within
the meaning of Rule 501(a) under Regulation D, as presently in effect,
and alone, or together with such Purchaser's "purchaser representative"
within the meaning of Rule 501(h) under Regulation D, as presently in
effect, has such knowledge and experience in financial and business
matters so as to be capable of evaluating the merits and risks of an
investment in the Debentures, the Warrants and the Common Stock, as the
case may be, and the Purchaser is capable of bearing the economic risks
of such investment and is able to bear the complete loss of an
investment in such Debentures, Warrants and Common Stock.
3.3 Authorization; Binding Agreement. The Purchaser further represents
that the execution, delivery, and performance of this Agreement is within the
Purchaser's powers (corporate or otherwise) and has been duly authorized by all
requisite action (corporate or otherwise) and that this Agreement constitutes
the legal, valid and binding obligation of the Purchaser, enforceable against
the Purchaser in accordance with its terms subject, as to enforceability, to
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other laws of general applicability affecting the rights of creditors and to
general principles of equity.
3.4 Residence. If the Purchaser is an individual, the Purchaser's
principal place of residence is in the state or other jurisdiction so designated
below his name on his signature page hereto, and if the Purchaser is not an
individual, the Purchaser's principal place of business is in the state or other
jurisdiction so designated below its name on its signature page hereto.
3.5 Information. The Purchaser acknowledges that he has been afforded
the opportunity to ask such questions as he has deemed necessary of, and to
receive answers from, representatives of the Company concerning the terms and
conditions of the offering of the Debentures and the merits and risks of
investing in the Debentures, the Warrants and the Common Stock. The Purchaser
further represents and warrants that the Purchaser has received all documents
and information relating to an investment in the Debentures, the Warrants and
the Common Stock requested by or on behalf of the Purchaser, including such
information relating to the Company as the Purchaser has deemed appropriate in
making a decision to invest in the Debentures, the Warrants and the Common
Stock.
4
3.6 Condition to Conversion and Exercise. The Purchaser covenants and
acknowledges that as a condition precedent to the conversion of the Debentures
or exercise of the Warrants, the Company may require of the holder thereof, as
of the date of such conversion or exercise, to make such representations and
warranties, in the Company's view upon advice of counsel reasonably necessary to
establish that such conversion or exercise is a transaction exempt from Section
5 of the Securities Act or any successor provision thereto.
ARTICLE IV
MISCELLANEOUS
4.1 Notices. Any notice or other communication required or permitted to
be given hereunder shall be in writing and shall be mailed by certified mail,
return receipt requested, or by Federal Express, Express Mail or similar
overnight delivery or courier service or delivered (in person or by facsimile)
against receipt to the party to whom it is to be given, addressed as follows (or
at such other address as may be substituted by notice given as herein provided):
If to the Company:
xxxxXxxx.xxx Inc.
00 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. XxxXxxxxx
With copies to (which shall not constitute notice):
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
If to the Purchaser, at its address listed on the signature
pages hereof.
In either case, the addresses provided for notice above shall be
changed to any other address as the party shall have furnished in writing in
accordance with the provisions of this Section 4.1. Notice to the estate of any
party shall be sufficient if addressed to the party as provided in this Section
4.1. Any notice or other communication shall be deemed to have been duly given
and received when delivered in person, three days after the date when posted by
certified mail, the next business day when posted via Federal Express, Express
Mail or similar overnight delivery or courier service, on the date of delivery
if delivered during normal business hours and, otherwise, the next business day
when transmitted by facsimile, except for a notice changing a party's address,
which shall be deemed given at the time of receipt thereof. Any notice given by
other means permitted by this Section 4.1 shall be deemed given at the time of
receipt thereof.
5
4.2 Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.
(a) This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York applicable to
contracts made and to be wholly performed within such State, without reference
to principles of conflicts of laws.
(b) The parties hereto irrevocably and unconditionally submit
to the exclusive jurisdiction of any State or Federal court sitting in the State
of New York, over any suit, action or proceeding arising out of or relating to
this Agreement, any document or instrument delivered pursuant to, in connection
with or simultaneously with this Agreement, or a breach of this Agreement or any
such document or instrument. In any such action or proceeding, each party hereto
waives personal service of any summons, complaint or other process and agrees
that service thereof may be made in accordance with Section 4.1. Within 30 days
after such service, or such other time as may be mutually agreed upon in writing
by the attorneys for the parties to such action or proceeding, the party so
served shall appear or answer such summons, complaint or other process. The
parties hereto irrevocably and unconditionally waive any objection to the laying
of venue of any such suit, action or proceeding brought in any such court and
any claim that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum. A final judgment in any suit, action or
proceeding brought in any such court shall be conclusive and binding upon the
parties and may be enforced in any other court to whose jurisdiction a party is
or may be subject, by suit upon such judgment.
(c) The parties hereto hereby unconditionally waive trial by
jury in any suit, action or proceeding relating to this Agreement.
4.3 Successors and Assigns. This Agreement shall be binding upon the
Company, the Purchaser and each of their respective successors and assigns.
4.4 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original and all of which taken together shall constitute one agreement. This
Agreement may be delivered by facsimile transmission with the same effect as if
delivered in person.
4.5 Severability. In case any provision in this Agreement shall be held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and the
remaining provisions shall not in any way be affected or impaired thereby.
4.6 No Waiver; Amendments.
(a) No failure or delay on the part of the Company or the
Purchaser in exercising any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy at law, in equity or otherwise.
(b) Any provision of this Agreement may be amended if, but
only if, such amendment is in writing and is signed by the Company and the
Purchaser.
6
(c) Any provision of this Agreement may be waived if, but only
if, such waiver is in writing and is signed by the Company or the other party
against which such waiver is operative.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
7
IN WITNESS WHEREOF, the parties hereto have caused this
Securities Purchase Agreement to be duly executed as of the date first written
above.
XXXXXXXX.XXX INC. [Name of Purchaser]
By: ____________________ [By]: ______________________
Name: __________________ [Name]: ____________________
Title: ___________________ [Title]: ____________________
Social Security Number or other
Taxpayer Identification Number:
-----------------------------
Address:_____________________
-----------------------------
-----------------------------
-----------------------------
Facsimile: __________________
If the Debentures will be
held as joint tenants,
tenants in common, or
community property, please
complete the following:
-----------------------------
Print name of spouse or other
co-subscriber
-----------------------------
Signature of spouse or other
co-subscriber
-----------------------------
Print manner in which Debentures
will be held
-----------------------------
Social Security Number
SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT
8
Schedule I
Name
Date of Issuance Principal Amount of Debentures No. of Common Shares
---------------- ----------------------------- --------------------
9
Schedule 2.4
Warrant Holder Date of Issue Number Exercise Term
-------------- ------------- ------ -------- ----
10
