Exhibit 4.1
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this "Agreement") is dated as of April
__, 2004, by and among DynTek, Inc. (the "Company"), and the purchasers listed
on Schedule 1 hereto (each a "Purchaser" and collectively, the "Purchasers").
WHEREAS, subject to the terms and conditions set forth in this Agreement
and pursuant to Section 4(2) of the Securities Act (as defined below), and Rule
506 promulgated thereunder, the Company desires to issue and sell to the
Purchasers, and the Purchasers, severally and not jointly, desire to purchase
from the Company the (i) number of shares of Common Stock, and (ii) Warrants set
forth opposite each Purchaser's name on Schedule 1 hereto (collectively, the
"Offering").
NOW, THEREFORE, in consideration of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchaser agrees
as follows:
ARTICLE I.
DEFINITIONS
1.1 Definitions. In addition to the terms defined elsewhere in this
Agreement, for all purposes of this Agreement, the following terms have the
meanings indicated in this Section 1.1:
"Action" shall have the meaning ascribed to such term in Section 3.1(j).
"Agent Shares" shall have the meaning ascribed to such term in Section 2.6
of this Agreement.
"Agent Warrant Agreement" shall mean the Placement Agent's Warrant
Agreement dated as of the Closing Date.
"Agent Warrants" shall have the meaning ascribed to such term in Section
2.6 of this Agreement.
"Affiliate" means any Person that, directly or indirectly through one or
more intermediaries, controls or is controlled by or is under common control
with a Person as such terms are used in and construed under Rule 144. With
respect to a Purchaser, any investment fund or managed account that is managed
on a discretionary basis by the same investment manager as such Purchaser will
be deemed to be an Affiliate of such Purchaser.
"Business Day" means any day except Saturday, Sunday and any day which
shall be a federal legal holiday or a day on which banking institutions in the
State of New York are authorized or required by law or other governmental action
to close.
"Closing" means the closing of the purchase and sale of the Common Stock
and the Warrants pursuant to Section 2.1 on April __, 2004, or such other date
as agreed to by the parties.
"Closing Date" means the date of the Closing.
"Closing Price" means on any particular date (a) the last reported closing
bid price per share of Common Stock on such date on the Trading Market (as
reported by Bloomberg L.P. at 4:15 p.m. (New York time) as the last reported
closing bid price for regular session trading on such day), or (b) if there is
no such price on such date, then the closing bid price on the Trading Market on
the date nearest preceding such date (as reported by Bloomberg L.P. at 4:15 p.m.
(New York time) as the closing bid price for regular session trading on such
day), or (c) if the Common Stock is not then listed or quoted on the Trading
Market and if prices for the Common Stock are then reported in the "pink sheets"
published by the National Quotation Bureau Incorporated (or a similar
organization or agency succeeding to its functions of reporting prices), the
most recent bid price per share of the Common Stock so reported, or (d) if the
shares of Common Stock are not then publicly traded the fair market value of a
share of Common Stock as determined by an appraiser selected in good faith by
the Purchasers of a majority in interest of the Shares then outstanding.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Class A common stock of the Company, par value
$.0001 per share, and any securities into which such Class A common stock may
hereafter be reclassified.
"Common Stock Equivalents" means any securities of the Company or the
Subsidiaries which would entitle the holder thereof to acquire at any time
Common Stock, including without limitation, any debt, preferred stock, rights,
options, warrants or other instrument that is at any time convertible into or
exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.
"Company Counsel" means Xxxxx Xxxxxxx LLP.
"Disclosure Schedules" means the Disclosure Schedules attached hereto.
"Effective Date" means the date that the Registration Statement is first
declared effective by the Commission.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Indemnified Party" shall have the meaning ascribed to such term Section
5.16(b).
"Indemnifying Party" shall have the meaning ascribed to such term in
Section 5.16(b).
"Intellectual Property Rights" shall have the meaning ascribed to such
term in Section 3.1(o).
"Investor Securities" means the Shares, the Warrants and the Warrant
Shares.
"Liens" means a lien, charge, security interest, encumbrance, right of
first refusal or other restriction.
-2-
"Material Adverse Effect" shall have the meaning ascribed to such term in
Section 3.1(b).
"Material Permits" shall have the meaning ascribed to such term in Section
3.1(m).
"Per Share Purchase Price" means $1.15, subject to adjustment for reverse
or forward stock splits, stock dividends, stock combinations and other similar
transactions of the Common Stock that occur after the date of this Agreement and
before the Closing.
"Person" means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof)
or other entity of any kind.
"Placement Agent" means Xxxxxx Capital LLC.
"Registration Statement" means a registration statement meeting the
requirements set forth in the Registration Rights Agreement and covering the
resale by the Purchasers of the Shares and the Warrant Shares and by the
Placement Agent of the Agent Shares.
"Registration Rights Agreement" means the Registration Rights Agreement,
dated as of the date of this Agreement, among the Company and each Purchaser, in
the form of EXHIBIT A hereto.
"Rule 144" means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
"SEC Reports" shall have the meaning ascribed to such term in Section
3.1(h).
"Securities Act" means the Securities Act of 1933, as amended.
"Series A Warrants" means the common stock purchase warrants in the form
of EXHIBIT B-1 hereto issuable to each Purchaser at Closing; such Series A
Warrants are exercisable to purchase up to the number of shares of Common Stock
equal to 30% of the aggregate number of Shares to be issued to such Purchaser at
the Closing, which shall have an exercise price equal to $1.75 per share and be
exercisable for a period of five years commencing on the date that is six months
from the Closing Date.
"Series B Warrants" means the common stock purchase warrants in the form
of EXHIBIT B-2 hereto issuable to each Purchaser at Closing; such Series B
Warrants are exercisable to purchase up to the number of shares of Common Stock
equal to 20% of the aggregate number of Shares to be issued to such Purchaser at
the Closing, which shall have an exercise price equal to $1.50 per share and be
exercisable for a period of 180 days commencing on the Effective Date.
"Shares" means the shares of Common Stock purchased by the Purchasers
pursuant to this Agreement.
-3-
"Subscription Amount" means as to each Purchaser, the amount set forth
below such Purchaser's signature block on the Signature Page of this Agreement
in United States Dollars and in immediately available funds.
"Subsidiary" shall have the meaning ascribed to such term in Section
3.1(a).
"Trading Day" means (i) a day on which the Common Stock is traded on a
Trading Market, or (ii) if the Common Stock is not quoted on a Trading Market, a
day on which the Common Stock is quoted in the over-the-counter market as
reported by the National Quotation Bureau Incorporated (or any similar
organization or agency succeeding to its functions of reporting price);
provided, that in the event that the Common Stock is not listed or quoted as set
forth in (i), and (ii) hereof, then Trading Day shall mean a Business Day.
"Trading Market" means the following markets or exchanges on which the
Common Stock is listed or quoted for trading on the date in question: the OTC
Bulletin Board, the American Stock Exchange, the New York Stock Exchange, the
Nasdaq National Market or the Nasdaq SmallCap Market.
"Transaction Documents" means this Agreement, the Registration Rights
Agreement, the Warrants, the Placement Agent Warrant Agreement, the Agent
Warrant(s) and any and all other documents or agreements executed in connection
with the transactions contemplated hereunder.
"Transaction Securities" means the Shares, the Warrants, the Warrant
Shares, the Agent Warrants and the Agent Shares.
"Warrants" means collectively the Series A Warrants and Series B Warrants
issuable to each Purchaser at Closing.
"Warrant Shares" means the shares of Common Stock issuable upon exercise
of the Warrants.
ARTICLE II.
PURCHASE AND SALE
2.1 Closing. On the terms and subject to the conditions set forth in this
Agreement, at the Closing, the Company shall sell and issue to each Purchaser
and each Purchaser shall purchase from the Company (i) the number of Shares set
forth opposite such Purchaser's name on Schedule I hereto. Each Purchaser shall
purchase from the Company, and the Company shall issue and sell to each
Purchaser, a number of Shares equal to such Purchaser's Subscription Amount
divided by the Per Share Purchase Price. The Warrants shall be issued, without
additional consideration, on the basis of one Warrant for each Share purchased.
Upon satisfaction of the conditions set forth in Section 2.2, the Closing shall
occur at the offices of Xxxxx Xxxxxxx, LLP, located at 000 Xxxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, or such other location as the parties shall mutually
agree.
2.2 Closing Conditions.
-4-
(a) At the Closing, as a condition to the Purchasers' obligations
hereunder, the Company shall deliver or cause to be delivered to:
(i) each Purchaser, an irrevocable instruction letter to the
Company's transfer agent authorizing the issuance of a restricted
stock certificate for such number of Shares set forth next to such
Purchaser's name on Schedule 1 hereto purchased by each Purchaser;
(ii) each Purchaser, a Series A Warrant and Series B Warrant,
registered in the name of such Purchaser, as duly executed by the
Company, entitling such Purchaser to purchase such amount of Warrant
Shares as are set forth next to such Purchaser's name on Schedule 1
hereto;
(iii) each Purchaser, the Registration Rights Agreement duly
executed by the Company;
(iv) each Purchaser, this Agreement duly executed by the
Company;
(v) each Purchaser and the Placement Agent, a legal opinion
from Company Counsel in form and substance reasonably satisfactory
to the Purchasers and Placement Agent;
(vi) the Placement Agent, a certificate of the Chief Executive
Officer of the Company stating, among other things, that (i) all the
conditions set forth in Section 2.2 of this Agreement have been
satisfied in all, (ii) except as set forth in any Schedule to this
Agreement, since December 31, 2003, there has been no event,
condition or circumstance that has had or could reasonably be
expected to have a Material Adverse Effect, and (iii) the Company
has complied in all material respects with all its covenants and
agreements set forth in the Transaction Documents; and
(vii) the Placement Agent, a certificate of the Secretary of
the Company containing, among other items true and complete copies
of the resolutions of the Board of Directors of the Company
approving Transaction Documents, Placement Agent compensation, the
Offering and all documents and matters relating thereto.
(b) At the Closing, as a condition to the Company's obligations
hereunder, each Purchaser shall deliver or cause to be delivered to the Company
the following:
(i) this Agreement duly executed by such Purchaser;
(ii) such Purchaser's payment for the Shares and Warrants
being purchased from the escrow account by wire transfer; and
(iii) the Registration Rights Agreement duly executed by such
Purchaser.
(c) At the Closing, as a condition to each party's obligations
hereunder, all representations and warranties of each of the parties herein
shall remain true and correct in all material respects as of the Closing Date.
-5-
(d) As of the Closing Date, as a condition to the Purchasers'
obligations hereunder, there shall have been no Material Adverse Effect with
respect to the Company since the date hereof.
(e) From the date hereof to the Closing Date, and as a condition to
the Purchasers' obligations, (i) trading in the Common Stock shall not have been
suspended by the Commission (except for any suspension of trading of limited
duration agreed to by the Company, which suspension shall be terminated prior to
Closing); (ii) trading in securities generally shall not have been suspended or
limited, or minimum prices shall not have been established on securities whose
trades are reported by such service, or on any Trading Market; and (iii) no
banking moratorium shall have been declared either by the United States or New
York State authorities.
2.3 Escrow Provisions. Pending the sale of the Shares and the Warrants,
all funds paid hereunder shall be deposited by the Company in escrow with
Continental Stock Transfer & Trust Company (the "Escrow Agent") pursuant to an
escrow agreement by and among the Escrow Agent, the Company, and the Placement
Agent (the "Escrow Agreement"). If a Closing has not occurred on or prior to
April __, 2004, or such later date mutually agreed by Company and Placement
Agent (the "Termination Date"), then this Agreement shall be void and all funds
paid hereunder by each Purchaser shall be promptly returned to each Purchaser
without interest and/or deduction, subject to Section 2.5 hereof. If a Closing
occurs on or prior to the Termination Date, then all net purchase price proceeds
shall promptly be paid over to the Company.
2.4 Certificates. Each Purchaser hereby authorizes and directs the
Company, upon the Closing, to deliver certificates representing the Shares and
Warrants to be issued to such Purchaser pursuant to this Agreement to each
Purchaser's address indicated in this Agreement.
2.5 Return of Funds. Each Purchaser hereby authorizes and directs the
Company and the Placement Agent to return any funds for unaccepted purchases to
the same account from which the funds were drawn.
2.6 Expenses; Fees. Simultaneously with payment for and delivery of the
Shares and Warrants, at the Closing, the Company shall: (i) pay to the Placement
Agent a cash fee equal to eight (8%) percent of the aggregate purchase price of
the Shares and Warrants sold for the portion of the aggregate purchase price
that is equal to or less than $5,000,000 and six (6%) percent for the portion of
the aggregate purchase price (if any) that is in excess of $5,000,000 (the "Cash
Fee"); (ii) reimburse the Placement Agent for its actual out-of-pocket expenses
incurred in connection with the Offering, including, without limitation, the
reasonable fees and expenses of its legal counsel, not to exceed legal fees of
[$________]; (iii) pay all expenses in connection with the qualification of the
Securities under the blue sky laws of the states which the Placement Agent shall
designate, including filing fees and disbursements in connection with such blue
sky matters; (iv) pay certain fees to the Escrow Agent for acting as escrow
agent; and (v) issue to the Placement Agent five year warrants (the "Agent
Warrants") to purchase such number of shares of Common Stock (the "Agent
Shares") as shall equal ten (10%) percent of the aggregate number of (a) Shares
sold in the Offering, and (b) Warrant Shares issuable upon exercise of the
Warrants as of the Closing, at a per share exercise price equal to the Per Share
Purchase Price. The Company also agrees to pay the Placement Agent a Cash Fee
upon its receipt of proceeds, if any, with exercise of the Series B Warrants by
Purchasers.
-6-
2.7 Placement Agent. The Investor Securities are being offered on a
"best-effort" basis by the Placement Agent. The Placement Agreement reserves the
right, but is under no obligation, to sell to its affiliates Shares and Warrants
on the terms provided herein.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. Except as set forth
under the corresponding section of the Disclosure Schedules delivered
concurrently herewith, the Company hereby makes the following representations
and warranties as of the date hereof and as of the Closing Date to each
Purchaser:
(a) Subsidiaries. Other than as disclosed in the SEC Reports, the
Company has no direct or indirect operating subsidiaries (a "Subsidiary" and
collectively, the "Subsidiaries"). The Company owns, directly or indirectly, all
of the capital stock of each Subsidiary free and clear of any Liens, and all the
issued and outstanding shares of capital stock of each Subsidiary are validly
issued and are fully paid, non-assessable and free of preemptive and similar
rights.
(b) Organization and Qualification. Each of the Company and the
Subsidiaries is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization (as applicable), with the requisite corporate
power and authority to own and use its properties and assets and to carry on its
business as currently conducted. Neither the Company nor any Subsidiary is in
violation of any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents. Each of the
Company and the Subsidiaries is duly qualified to conduct business and is in
good standing as a foreign corporation or other entity in each jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, would not result in (i) a material adverse effect
on the legality, validity or enforceability of any Transaction Document, (ii) a
material adverse effect on the results of operations, assets, business or
financial condition of the Company and the Subsidiaries, taken as a whole, or
(iii) a material adverse effect on the Company's ability to perform in any
material respect on a timely basis its obligations under any Transaction
Document (any of (i), (ii) or (iii), a "Material Adverse Effect").
(c) Authorization; Enforcement; Validity. The Company has the
requisite corporate power and authority to enter into and to consummate the
transactions contemplated by each of the Transaction Documents and otherwise to
carry out its obligations thereunder. The execution and delivery of each of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated thereby have been duly authorized by all necessary
action on the part of the Company and no further corporate action is required by
the Company in connection therewith. Each Transaction Document has been (or upon
delivery will have been) duly executed by the Company and, when delivered in
accordance with the terms hereof, will constitute the valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally, and (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or other
equitable remedies, and (iii) with respect to the
-7-
indemnification provisions set forth in the Registration Rights Agreement, as
limited by public policy.
(d) No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated thereby, do not and will not (i) conflict with or
violate any provision of the Company's or any Subsidiary's certificate or
articles of incorporation, certificates of designation (or similar document
related to preferred stock), bylaws and/or other organizational or charter
documents, or (ii) conflict with, or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation (with or
without notice, lapse of time or both) of, any agreement, credit facility, debt
or other instrument (evidencing a Company or Subsidiary debt or otherwise), or
other understanding to which the Company or any Subsidiary is a party or by
which any property or asset of the Company or any Subsidiary is bound or
affected, or (iii) result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company or a Subsidiary is subject (including federal and
state securities laws and regulations), or by which any property or asset of the
Company or a Subsidiary is bound or affected, except in the case of each of
clauses (ii) and (iii), such as would not result in a Material Adverse Effect.
(e) Filings, Consents and Approvals. The Company is not required to
obtain any consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any court or other federal, state, local
or other governmental authority or other Person in connection with the
execution, delivery and performance by the Company of the Transaction Documents,
other than the filing with the Commission of the Registration Statement, the
application(s) and approvals to each Trading Market for the listing of the
Shares, Warrant Shares and the Agent Shares for trading thereon in the time and
manner required thereby, applicable Blue Sky filings, and the filing of a
current report on Form 8-K under the Exchange Act.
(f) Issuance of the Securities. All of the Transaction Securities
have been duly authorized and, when issued and paid for in accordance with the
Transaction Documents, will be duly and validly issued, fully paid and
nonassessable, free and clear of all Liens. The Company has reserved from its
duly authorized capital stock such number of shares of Common Stock so as to
permit the issuance of the Shares, the Warrant Shares and the Agent Shares.
(g) Capitalization. Except as set forth in the SEC Reports, the
capitalization of the Company is as described in the Company's most recent
periodic report filed with the Commission. Except as set forth in the SEC
Reports, the Company has not issued any capital stock since such filing other
than pursuant to the exercise of employee stock options under the Company's
stock option plans and pursuant to the conversion or exercise of Common Stock
Equivalents outstanding on the date hereof. No Person has any right of first
refusal, preemptive right, right of participation, or any similar right to
participate in the transactions contemplated by the Transaction Documents.
Except as a result of the purchase and sale of the Securities, for employee
stock options under the Company's stock option plans, or otherwise as reflected
in the SEC Reports, there are no outstanding options, warrants, script rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities, rights or obligations convertible into or exchangeable for, or
giving any Person any right to subscribe for or acquire, any shares of Common
Stock, or contracts, commitments, understandings or arrangements by
-8-
which the Company or any Subsidiary is or may become bound to issue additional
shares of Common Stock, or securities or rights convertible or exchangeable into
shares of Common Stock. The issue and sale of the Securities will not obligate
the Company to issue shares of Common Stock or other securities to any Person
(other than the Purchasers) and will not result in a right of any holder of
Company securities to adjust the exercise, conversion, exchange or reset price
under such securities.
(h) SEC Reports; Financial Statements. The Company has filed all
reports required to be filed by it under the Securities Act and the Exchange
Act, including pursuant to Section 13(a) or Section 15(d) of the Exchange Act,
for the two (2) years preceding the date hereof (or such shorter period as the
Company was required by law to file such material) (the foregoing materials,
including the exhibits thereto, being collectively referred to herein as the
"SEC Reports" and, together with the Disclosure Schedules to this Agreement, the
"Disclosure Materials"). As of their respective dates, the SEC Reports complied
in all material respects with the requirements of the Securities Act and the
Exchange Act and the rules and regulations of the Commission promulgated
thereunder, as applicable, and none of the SEC Reports, when filed, contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the SEC Reports
comply in all material respects with applicable accounting requirements and the
rules and regulations of the Commission with respect thereto as in effect at the
time of filing. Such financial statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved ("GAAP"), except as may be otherwise specified in such
financial statements or the notes thereto and except that unaudited financial
statements may not contain all footnotes required by GAAP, and fairly present in
all material respects the financial position of the Company and its consolidated
subsidiaries as of and for the dates thereof and the results of operations and
cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial, year-end audit adjustments.
(i) Material Changes. Since the date of the latest audited financial
statements included within the SEC Reports, except as disclosed in the SEC
Reports, (i) there has been no event, occurrence or development that has had or
that could reasonably be expected to result in a Material Adverse Effect, (ii)
the Company has not incurred any material liabilities (contingent or otherwise)
other than (A) trade payables and accrued expenses incurred in the ordinary
course of business consistent with past practice and (B) liabilities not
required to be reflected in the Company's financial statements pursuant to GAAP
or required to be disclosed in filings made with the Commission, (iii) the
Company has not altered its method of accounting, (iv) the Company has not
declared or made any dividend or distribution of cash or other property to its
holders of Common Stock or purchased, redeemed or made any agreements to
purchase or redeem any shares of its capital stock and (v) the Company has not
issued any equity securities to any officer, director or Affiliate, except
pursuant to existing Company stock option plans. The Company does not have
pending before the Commission any request for confidential treatment of
information.
(j) Litigation. Except as disclosed in the SEC Reports, there is no
action, suit, inquiry, notice of violation, proceeding or investigation pending
or, to the knowledge of the Company, threatened against or affecting the
Company, any Subsidiary or any of their respective properties before or by any
court, arbitrator, governmental or administrative agency and/or
-9-
regulatory authority (federal, state, county, local or foreign) (collectively,
an "Action") which (i) adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents and/or the Transaction
Securities or (ii) could, if there were an unfavorable decision, have or
reasonably be expected to result in a Material Adverse Effect. Neither the
Company nor any Subsidiary, nor, to the knowledge of the Company, any director
or officer thereof, except as disclosed in the SEC Reports, is or has been the
subject of any Action involving a claim of violation of or liability under
federal or state securities laws or a claim of breach of fiduciary duty. Except
as disclosed in the SEC Reports, to the knowledge of the Company, there is not
pending or contemplated, any investigation by the Commission and/or other entity
involving the Company or any current or former director or officer of the
Company. The Commission has not issued any stop order or other order suspending
the effectiveness of any registration statement filed by the Company or any
Subsidiary under the Exchange Act or the Securities Act.
(k) Labor Relations. No material labor dispute exists or, to the
knowledge of the Company, is imminent with respect to any of the employees of
the Company which could reasonably be expected to result in a Material Adverse
Effect.
(l) Compliance. Except as disclosed in the SEC Reports, neither the
Company nor any Subsidiary (i) is in default under or in violation of (and no
event has occurred that has not been waived that, with notice or lapse of time
or both, would result in a default by the Company or any Subsidiary under), nor
has the Company or any Subsidiary received notice of a claim that it is in
default under or that it is in violation of, any indenture, loan or credit
agreement or any other agreement or instrument to which it is a party or by
which it or any of its properties is bound (whether or not such default or
violation has been waived), (ii) is in violation of any order of any court,
arbitrator or governmental body, or (iii) is or has been in violation of any
statute, rule or regulation of any governmental authority, including without
limitation all foreign, federal, state and local laws applicable to its
business, except in the case of clauses (i), (ii) and (iii) as would not result
in a Material Adverse Effect.
(m) Regulatory Permits. The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses as described in the SEC Reports, except where the failure
to possess such permits would not have or reasonably be expected to result in a
Material Adverse Effect ("Material Permits"), and neither the Company nor any
Subsidiary has received any notice of proceedings relating to the revocation or
modification of any Material Permit.
(n) Title to Assets. The Company and the Subsidiaries have good and
marketable title in fee simple to all real property owned by them that is
material to the business of the Company and the Subsidiaries, taken as a whole,
and good and marketable title in all personal property owned by them that is
material to the business of the Company and the Subsidiaries, taken as a whole,
in each case free and clear of all Liens, except for Liens as do not materially
affect the value of such property and do not materially interfere with the use
made and proposed to be made of such property by the Company and the
Subsidiaries and Liens for the payment of federal, state or other taxes, the
payment of which is neither delinquent nor subject to penalties. Any real
property and facilities held under lease by the Company and the Subsidiaries are
held by them under valid, subsisting and enforceable leases with which the
Company and the Subsidiaries are in material compliance.
-10-
(o) Patents and Trademarks. To the knowledge of the Company and each
Subsidiary, the Company and the Subsidiaries have, or have rights to use, all
patents, patent applications, trademarks, trademark applications, service marks,
trade names, copyrights, licenses and other similar rights that are necessary or
material for use in connection with their respective businesses as described in
the SEC Reports and which the failure to so have would result in a Material
Adverse Effect (collectively, the "Intellectual Property Rights"). Neither the
Company nor any Subsidiary has received a written notice that the Intellectual
Property Rights used by the Company or any Subsidiary violates or infringes the
rights of any Person. To the knowledge of the Company, all such Intellectual
Property Rights are enforceable.
(p) Transactions With Affiliates and Employees. Except as set forth
in the SEC Reports, none of the officers, directors and/or employees of the
Company and the Subsidiaries are, to the knowledge of the Company, a party to
any transaction with the Company or any Subsidiary (other than for services as
employees, officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
to or from any officer, director or such employee or, to the knowledge of the
Company, any entity in which any officer, director, or any such employee has a
substantial interest or is an officer, director, trustee or partner, in each
case in excess of $60,000 other than (a) for payment of salary or consulting
fees for services rendered, (b) reimbursement for expenses incurred on behalf of
the Company and (c) for other employee benefits, including stock option
agreements under any stock option plan of the Company.
(q) Internal Accounting Controls. The Company and each of its
subsidiaries maintains a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization, and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. The Company has established disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the Company
and designed such disclosure controls and procedures to ensure that material
information relating to the Company, including its Subsidiaries, is made known
to the certifying officers by others within those entities, particularly during
the period in which the Company's Form 10-K or 10-Q, as the case may be, is
being prepared.
(r) Certain Fees. Except for payments payable to the Placement Agent
by the Company, the Company has not entered into an agreement to pay any
brokerage or finder's fees or commissions to any person including, but not
limited to, any broker, financial advisor or consultant, finder, placement
agent, investment banker, bank or other Person with respect to the transactions
contemplated by this Agreement. The Purchasers shall have no obligation with
respect to any fees or with respect to any claims made by or on behalf of other
Persons for fees of a type contemplated in this Section that may be due in
connection with the transactions contemplated by this Agreement, except to the
extent a Purchaser made an agreement to make any such payment.
-11-
(s) Private Placement. Assuming the accuracy of the Purchasers
representations and warranties set forth in Section 3.2, no registration under
the Securities Act is required for the offer and sale of the Investor Securities
by the Company to the Purchasers as contemplated hereby. The issuance and sale
of the Transaction Securities hereunder does not contravene the rules and
regulations of the Trading Market.
(t) Investment Company. The Company is not, and is not an Affiliate
of, an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
(u) Listing and Maintenance Requirements. The Company has not, in
the twelve (12) months preceding the date hereof, received notice from any
Trading Market on which the Common Stock is or has been listed or quoted to the
effect that the Company is not in compliance with the listing or maintenance
requirements of such Trading Market, other than a letter from the Trading Market
on which the Common Stock is or has been listed or quoted notifying the Company
that its securities would be delisted if the trading price did not increase
above One Dollar ($1.00) per share. The Company is, and has no reason to believe
that it will not in the foreseeable future continue to be, in compliance with
all such listing and maintenance requirements, other than potential trading
price issues concerning such Trading Market's rules and regulations.
(v) Application of Takeover Protections. The Company and its Board
of Directors have taken all necessary action, if any is available, in order to
render inapplicable any control share acquisition, business combination, poison
pill (including any distribution under a rights agreement) or other similar
anti-takeover provision under the Company's Certificate of Incorporation (or
similar charter documents) or the laws of its state of incorporation that is or
could become applicable to the Purchasers as a result of the Purchasers and the
Company fulfilling their obligations or exercising their rights under the
Transaction Documents, including without limitation the Company's issuance of
the Transaction Securities and the Purchasers' ownership of the Investor
Securities.
(w) No General Solicitation. Neither the Company, its Subsidiaries,
any of their affiliates nor any person acting on their behalf, has engaged in
any form of general solicitation or general advertising (within the meaning of
Regulation D under the Securities Act) in connection with the offer or sale of
the Transaction Securities.
(x) No Integrated Offering. Neither the Company, its Subsidiaries,
any of their affiliates nor any person acting on their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would require registration of any of
the Transaction Securities under the Securities Act or cause the Offering to be
integrated with prior offerings by the Company for purposes of the Securities
Act or any applicable stockholder approval provisions, including without
limitation, under the rules and regulations of any exchange or automated
quotation system on which any of the securities of the Company are listed or
designated. None of the Company, its Subsidiaries, their affiliates and any
person acting on their behalf will take any action or steps referred to in the
preceding sentence that would require registration of any of the Transaction
Securities under the Securities Act or cause the Offering to be integrated with
other offerings.
-12-
(y) Registration Rights. Except with respect to Purchasers and the
Placement Agent and except as provided on Schedule 3.1(y) hereto, no person has
any right to cause the Company to effect the registration under the Securities
Act of any securities of the Company.
(z) Right of First Refusal. Except with regard to the Placement
Agreement and Xxxxxx Capital, LLC, no person, firm or other business entity is a
party to any agreement, contract or understanding, written or oral entitling
such party to a right of first refusal with respect to offerings of securities
by the Company.
(aa) Disclosure. The Company confirms that, neither the Company nor
any other Person acting on its behalf has provided any of the Purchasers or
their agents or counsel with any information that constitutes or might
constitute material, non-public information. The Company understands and
confirms that the Purchasers will rely on the foregoing representations and
covenants in effecting transactions in securities of the Company. All disclosure
provided to the Purchasers regarding the Company, its business and the
transactions contemplated hereby, including the Disclosure Schedules to this
Agreement, furnished by or on behalf of the Company are true and correct and do
not contain any untrue statement of a material 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.
(bb) Insurance. Each of the Company and its Subsidiaries maintain
insurance of the types and in the amounts deemed adequate for its business,
including, but not limited to, product liability insurance, insurance covering
real and personal property owned or leased by the Company and its subsidiaries
against theft, damage, destruction, acts of vandalism and all other risks
customarily insured against, all of which insurance is in full force and effect.
(cc) Conduct of Business. Since December 31, 2003 and except as
otherwise stated in the SEC Reports, the Company has not (a) incurred any debts,
obligations or liabilities, absolute, accrued, contingent or otherwise, whether
due or to become due, except current liabilities incurred in the usual and
ordinary course of business, having a Material Adverse Effect, (b) made or
suffered any changes in its contingent obligations by way of guaranty,
endorsement (other than the endorsement of checks for deposit in the usual and
ordinary course of business), indemnity, warranty or otherwise, (c) discharged
or satisfied any liens other than those securing, or paid any obligation or
liability other than, current liabilities shown on the balance sheet dated as at
December 31, 2003 and forming part of the SEC Reports, and current liabilities
incurred since December 31, 2003, in each case in the usual and ordinary course
of business, (d) mortgaged, pledged or subjected to lien any of its assets,
tangible or intangible, (e) sold, transferred or leased any of its assets except
in the usual and ordinary course of business, (f) cancelled or compromised any
debt or claim, or waived or released any right, of material value, (g) suffered
any physical damage, destruction or loss (whether or not covered by insurance)
adversely affecting the properties or business of the Company, (h) entered into
any transaction other than in the usual and ordinary course of business except
for this Agreement and the related agreements referred to herein, (i)
encountered any labor difficulties or labor union organizing activities, (j)
made or granted any wage or salary increase or entered into any employment
agreement, (k) issued or sold any shares of capital stock or other securities or
granted any options with respect thereto, or modified any equity security of the
Company, (l) declared or paid any dividends on or made any other distributions
with respect to, or purchased or redeemed, any of its outstanding equity
securities, (m) suffered or experienced any change in,
-13-
or condition affecting, its condition (financial or otherwise), properties,
assets, liabilities, business operations or results of operations other than
changes, events or conditions in the usual and ordinary course of its business,
having (either by itself or in conjunction with all such other changes, events
and conditions) a Material Adverse Effect, (n) made any change in the accounting
principles, methods or practices followed by it or depreciation or amortization
policies or rates theretofore adopted, or (o) entered into any agreement or
otherwise obligated itself, to do any of the foregoing other than its
agreements, currently held in escrow subject to meeting closing conditions, with
Young and Xxxxxxxx, PC and its affiliates for the management and related
transactions related to the Company's child support enforcement business.
3.2 Representations and Warranties of the Purchasers. Each Purchaser
hereby, for itself and for no other Purchaser, represents and warrants as of the
date hereof and as of the Closing Date to the Company, acknowledging that the
Company is relying upon the accuracy and completeness of the representations and
warranties set forth herein to, among other things, ensure that registration
under Section 5 of the Securities Act is not required in connection with the
sale of the Securities hereby, as follows:
(a) Organization; Authority. Such Purchaser, if not a natural
person, is an entity duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization with full right, corporate or
partnership power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents and otherwise to carry out its
obligations thereunder. The execution, delivery and performance by such
Purchaser of the transactions contemplated by this Agreement has been duly
authorized by all necessary corporate or similar action on the part of such
Purchaser. Each Transaction Document to which it is a party has been duly
executed by such Purchaser, and when delivered by such Purchaser in accordance
with the terms hereof, will constitute the valid and legally binding obligation
of such Purchaser, enforceable against it in accordance with its terms.
(b) Investment Intent. Such Purchaser understands that the Investor
Securities are "restricted securities" and have not been registered under the
Securities Act or any applicable state securities law and is acquiring the
Investor Securities as principal for its own account for investment purposes
only and not with a view to or for distributing or reselling such Investor
Securities or any part thereof, has no present intention of distributing any of
such Investor Securities and has no arrangement or understanding with any other
persons regarding the distribution of such Investor Securities (this
representation and warranty not limiting such Purchaser's right to sell the
Investor Securities pursuant to the Registration Statement or otherwise in
compliance with applicable federal and state securities laws). Such Purchaser is
acquiring the Investor Securities hereunder in the ordinary course of its
business. Such Purchaser does not have any agreement or understanding, directly
or indirectly, with any Person to distribute any of the Investor Securities.
(c) Purchaser Status. At the time such Purchaser was offered the
Shares and Warrants, it was, and at the date hereof it is an "accredited
investor" as defined in Rule 501(a) under the Securities Act. Such Purchaser is
not, and is not required to be, registered as a broker-dealer under Section 15
of the Exchange Act. In making an investment decision as to whether to purchase
the Shares and Warrants offered hereby, each Purchaser has relied solely upon
the SEC Reports and the representation and warranties of the Company contained
herein. Each Purchaser has had the opportunity to ask questions of, and receive
answers from,
-14-
representatives of the Company concerning the Company and the officers and all
such questions have been asked and answered by the Company to the satisfaction
of the Purchaser.
(d) Experience of Such Purchaser. Each Purchaser, either alone or
together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Investor Securities,
and has so evaluated the merits and risks of such investment. Such Purchaser is
able to bear the economic risk of an investment in the Investor Securities and,
at the present time, is able to afford a complete loss of such investment.
(e) General Solicitation. Such Purchaser is not purchasing the
Shares and Warrants as a result of any advertisement, article, notice or other
communication regarding the Securities published in any newspaper, magazine or
similar media or broadcast over television or radio or presented at any seminar
or any other general solicitation or general advertisement.
(f) Compliance with the Securities Laws. Such Purchaser agrees to
comply with the requirements of Regulation M, if applicable, with respect to the
resale of the Shares by the Purchaser. Such Purchaser hereby confirms its
understanding that it may not cover short sales made prior to the Effective Date
with shares of Common Stock registered for resale on the Registration Statement.
(g) No Conflicts. Neither the execution and delivery of this
Agreement and/or any Transaction Document, nor the consummation of the
Transactions contemplated hereby, will violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which Purchaser
is subject or any provision of its organizational documents or other similar
governing instruments.
(h) No Advice. Purchaser understands that nothing in this Agreement
or any other materials presented to Purchaser in connection with the purchase
and sale of the Investor Securities constitutes legal, tax or investment advice.
Purchaser has consulted such legal, tax and investment advisors as it, in its
sole discretion, has deemed necessary or appropriate in connection with its
purchase of the Investor Securities.
(i) No Litigation, Etc. There is no action, suit, proceeding,
judgment, claim or investigation pending or, to the knowledge of the Purchaser,
threatened against the Purchaser which could reasonably be expected in any
manner to challenge or seek to prevent, enjoin, alter or materially delay any of
the transactions contemplated by the Transaction Documents.
(j) Approvals. The execution, delivery and performance by the
Purchaser of this Agreement and the Transaction Documents to which it is a
party, and the consummation of the transactions set forth herein require no
material action by or in respect of, or material filing with, any governmental
body, agency, official or authority, by the Purchaser other than (i) any
filings, authorizations, consents and approvals as may be required under the
Xxxx-Xxxxx-Xxxxxx Improvements Act of 1976, as amended; (ii) the filing by the
Purchaser with the Commission of such reports under the Exchange Act as may be
required in connection with this Agreement, the Transaction Documents and the
transactions contemplated hereby, and (iii) any filings required by the
securities or blue sky laws of the various states.
-15-
(k) Placement Agent. Each Purchaser agrees that neither the
Placement Agent nor any of its respective directors, officers, affiliates,
employees or agents shall be liable to the Purchaser for any action taken or
omitted to be taken by it in connection therewith, except for willful misconduct
or gross negligence.
The Company acknowledges and agrees that each Purchaser does not make or
has not made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Section 3.2
and Section 4.1.
ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
4.1 Transfer Restrictions.
(a) The Investor Securities may only be disposed of in compliance
with state and federal securities laws. In connection with any transfer of
Investor Securities other than pursuant to an effective registration statement,
pursuant to Rule 144(k), pursuant to Rule 144 (if customary documentation is
provided satisfactory to legal counsel to the Company), or in connection with a
pledge as contemplated in Section 4.1(b) hereof, the Company may require the
transferor thereof to provide to the Company an opinion of counsel selected by
the transferor, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not require
registration of such transferred Investor Securities under the Securities Act.
As a condition of transfer, any such transferee shall agree in writing to be
bound by the terms of this Agreement and shall have the rights of a Purchaser
under this Agreement and the Registration Rights Agreement.
(b) The Purchasers agree to the imprinting, so long as is required
by this Section 4.1(b), of a legend on any of the Investor Securities in the
following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE
OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A
FINANCIAL INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN
RULE 501(a) UNDER THE SECURITIES ACT.
-16-
The Company acknowledges and agrees that a Purchaser may from time to time
pledge pursuant to a bona fide margin agreement with a registered broker-dealer
or grant a security interest in some or all of the Investor Securities to a
financial institution that is an "accredited investor" as defined in Rule 501(a)
under the Securities Act and, if required under the terms of such arrangement,
such Purchaser may transfer pledged or secured Investor Securities to the
pledgees or secured parties. Such a pledge or transfer would not be subject to
approval of the Company and no legal opinion of legal counsel of the pledgee,
secured party or pledgor shall be required in connection with the grant of the
pledge. Further, no notice shall be required of grant of the pledge. At the
appropriate Purchaser's expense, the Company will execute and deliver such
reasonable documentation as a pledgee or secured party of Transaction Securities
may reasonably request in connection with a pledge or transfer of the Investor
Securities, including the preparation and filing of any required prospectus
supplement under Rule 424(b)(3) under the Securities Act or other applicable
provision of the Securities Act to appropriately amend the list of selling
stockholders thereunder. Notwithstanding anything to the contrary, any such
pledgee shall not be entitled to any rights under any of the Transaction
Documents unless and until such pledgee executes a written agreement to be bound
by Purchasers' obligations under the Transaction Documents.
(c) Subject to compliance with all laws, rules and regulations
including, but not limited to, the Securities Act and the Exchange Act,
certificates evidencing the Shares and Warrant Shares shall not contain any
legend (including the legend set forth in Section 4.1(b)), (i) following any
sale of the Shares or Warrant Shares pursuant to a registration statement
(including the Registration Statement) covering the resale of such security, or
(ii) following any sale of the Shares or Warrant Shares pursuant to Rule 144, or
(iii) if such Shares or Warrant Shares are eligible for sale under Rule 144(k)
and appropriate documentation is provided satisfactory to legal counsel to the
Company, or (iv) if such legend is not required under applicable regulation of
the Securities Act (including judicial interpretations and pronouncements issued
by the Staff of the Commission). Subject to compliance with all laws, rules and
regulations including, but not limited to, the Securities Act and the Exchange
Act, the Company shall cause its counsel to issue a legal opinion to the
Company's transfer agent promptly after the Effective Date if required by the
Company's transfer agent to effect the removal of the legend hereunder. If all
or any portion of a Warrant is exercised at a time when there is an effective
registration statement to cover the resale of the Warrant Shares, such Warrant
Shares shall be issued free of all legends. The Company agrees that at such time
as such legend is no longer required under and pursuant to this Section 4.1(c),
it will, upon written request from the Purchaser and following the submission to
the Company counsel of such materials as shall be reasonably requested by such
counsel therefore, no later than four (4) Trading Days following the delivery by
a Purchaser to the Company or the Company's transfer agent of a certificate
representing Shares and/or Warrant Shares, as the case may be, issued with a
restrictive legend, deliver or cause to be delivered to such Purchaser (i) a
certificate representing such securities that is free from all restrictive and
other legends, or (ii) in lieu of delivering physical certificates representing
the Shares and/or Warrant Shares, and provided that the Company's transfer agent
is participating in the Depository Trust Company ("DTC") Fast Automated
Securities Transfer (or FAST) program, upon request of the Purchaser, the
Company shall use its reasonable commercial efforts to cause its transfer agent
to electronically transmit the Shares and/or Warrant Shares by crediting the
account of the Purchaser's prime broker with DTC through its Deposit Withdrawal
Agent Commission (or DWAC) system. The Company
-17-
may not make any notation on its records or give instructions to any transfer
agent of the Company that enlarge the restrictions on transfer set forth in this
Section.
(d) Each Purchaser severally and not jointly agrees that the removal
of the restrictive legend from certificates representing the Shares and the
Warrant Shares as set forth in this Section 4.1 is predicated upon the Company's
reliance that the Purchaser will sell any Investor Securities pursuant to either
the registration requirements of the Securities Act, including any applicable
prospectus delivery requirements, or an exemption therefrom.
4.2 Furnishing of Information. Until the date no Purchaser owns any
Investor Securities, the Company covenants and agrees to timely file (or obtain
extensions in respect thereof and file within the applicable grace period) all
reports required to be filed by the Company after the date hereof pursuant to
the Exchange Act. Upon the request of any such holder of Investor Securities,
the Company shall deliver to such holder a written certification of a duly
authorized officer as to whether it has complied with the preceding sentence.
Until the date no Purchaser owns any Investor Securities, if the Company is not
required to file reports pursuant to the Exchange Act, it will prepare and
furnish to the Purchasers and make publicly available in accordance with Rule
144(c) such information as is required for the Purchasers to sell any Shares and
Warrant Shares under Rule 144. The Company further covenants and agrees that it
will take such further action as any holder of Investor Securities may
reasonably request, all to the extent required from time to time to enable such
person to sell any Shares and Warrant Shares without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144.
4.3 Integration. The Company shall not sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of any of the Transaction Securities in a manner that would require the
registration under the Securities Act of the sale of the Investor Securities to
the Purchasers or that would be integrated with the offer or sale of the
Investor Securities for purposes of the rules and regulations of any Trading
Market.
4.4 Securities Laws Disclosure; Publicity. The Company shall use its best
efforts to by 9:00 a.m., Eastern Daylight Time, on the first Business following
this Agreement issue a press release (which shall be followed by a Form 8-K
filing within one (1) Business Day of the Closing) and, in any event, by the end
of business on the Business Day following the Closing issue a press release
(which shall be followed by a Form 8-K filing within two (2) Business Days
thereafter), in either case disclosing the transactions contemplated hereby and
make such other filings and notices in the manner and time required by the
Commission. The Company and the Placement Agent shall consult with each other in
issuing any press releases with respect to the transactions contemplated hereby,
and neither the Company nor the Placement Agent shall issue any such press
release or otherwise make any such public statement without the prior consent of
the Company, with respect to any press release of the Placement Agent, or
without the prior consent of the Placement Agent, with respect to any press
release of the Company, which consent shall not unreasonably be withheld or
delayed, except if such disclosure is required by law, in which case the
disclosing party shall promptly provide the other party with prior notice of
such public statement or communication. Notwithstanding the foregoing, the
Company shall not publicly disclose the name of any Purchaser, or include the
name of any Purchaser in any filing with the Commission or any regulatory agency
or Trading Market, without the prior written consent of such Purchaser, except
(i) as required by federal securities law in connection with the
-18-
registration statement contemplated by the Registration Rights Agreement and
(ii) to the extent such disclosure is required by law or Trading Market
regulations, in which case the Company shall provide the Purchasers with prior
notice of such disclosure permitted under subclause (i) or (ii).
4.5 Shareholders Rights Plan. No claim will be made or enforced by the
Company or any other Person that any Purchaser is an "Acquiring Person" under
any shareholders rights plan or similar plan or arrangement in effect or
hereafter adopted by the Company, or that any Purchaser could be deemed to
trigger the provisions of any such plan or arrangement, by virtue of receiving
Investor Securities under the Transaction Documents or under any other agreement
between the Company and the Purchasers.
4.6 Non-Public Information. The Company covenants and agrees that neither
it nor any other Person acting on its behalf will provide any Purchaser or its
agents or counsel with any information that the Company believes constitutes
material non-public information, unless prior thereto such Purchaser shall have
executed a written agreement regarding the confidentiality and use of such
information. The Company understands and confirms that each Purchaser shall be
relying on the foregoing representations in effecting transactions in securities
of the Company.
4.7 Use of Proceeds. The Company covenants and agrees that all of the net
proceeds that it receives from the sale of the Shares and Warrants pursuant to
this Agreement, although distributed, allocated and expended by the Company in
its sole discretion, shall be used for general working capital and corporate
purposes.
4.8 Reimbursement. If any Purchaser becomes involved in any capacity in
any Proceeding by or against any Person who is a stockholder of the Company
(except as a result of sales, pledges, margin sales and similar transactions by
such Purchaser to or with any current stockholder), solely as a result of such
Purchaser's acquisition of the Securities under this Agreement, and provided any
such person has complied with all laws, rules and regulations and is not in
breach of any of its representations, warranties, or agreements made in any of
the Transaction Documents, the Company will reimburse such Purchaser for its
reasonable legal and other expenses (including the cost of any investigation
preparation and travel in connection therewith) incurred in connection
therewith, as such expenses are incurred. The reimbursement obligations of the
Company under this paragraph shall be in addition to any liability which the
Company may otherwise have, shall extend upon the same terms and conditions to
any Affiliates of the Purchasers who are actually named in such action,
proceeding or investigation, and partners, directors, agents, employees and
controlling persons (if any), as the case may be, of the Purchasers and any such
Affiliate, and shall be binding upon and inure to the benefit of any successors,
assigns, heirs and personal representatives of the Company, the Purchasers and
any such Affiliate and any such Person. The Company also agrees that neither the
Purchasers nor any such Affiliates, partners, directors, agents, employees or
controlling persons shall have any liability to the Company or any Person
asserting claims on behalf of or in right of the Company solely as a result of
acquiring the Securities under this Agreement, provided such person has complied
with all laws, rules and regulations and is not in breach of any of its
representations, warranties and agreements made in any of the Transaction
Documents.
4.9 Form D and Blue Sky. The Company shall file a Form D with respect to
the Transaction Securities as required under Regulation D under the Securities
Act and, upon written request, provide a copy thereof to the Placement Agent for
distribution to the Purchasers
-19-
promptly after such filing. The Company shall, on or before the Closing, take
such action as the Company shall reasonably determine is necessary in order to
obtain an exemption for or to qualify any Transaction Securities for sale to the
Purchasers and/or the Placement Agent pursuant to this Agreement under
applicable securities or "Blue Sky" laws of the states of the United States, and
shall provide evidence of any such action so taken to the Purchasers on or prior
to the Closing by providing copies of such filings to the Placement Agent. The
Company shall make all filings and reports relating to the offer and sale of the
Transaction Securities required under applicable securities or "Blue Sky" laws
of the states of the United States following the Closing.
4.10 Reservation of Common Stock. As of the date hereof, the Company has
reserved and the Company shall continue to reserve and keep available at all
times, free of preemptive rights, a sufficient number of shares of Common Stock
for the purpose of enabling the Company to issue the Shares, the Warrant Shares
and the Agent Shares.
4.11 Listing of Common Stock. The Company hereby agrees to use its best
efforts to maintain the listing of the Common Stock on its current Trading
Market, and promptly file with the Trading Market to list the applicable Shares,
Warrant Shares and Agent Shares on the Trading Market. The Company further
agrees, if the Company applies to have the Common Stock traded on any other
Trading Market, it will include in such application the Shares, Warrant Shares
and Agent Shares and will take such other action as is necessary or desirable in
the opinion of the Purchasers to cause the Shares, Warrant Shares and Agent
Shares to be listed on such other Trading Market as promptly as possible. The
Company will take all action reasonably necessary to continue the listing and
trading of its Common Stock on its current Trading Market and will use its best
efforts to comply in all material respects with the Company's reporting, filing
and other obligations under the bylaws or rules of the Trading Market.
4.12 Indemnification by the Purchasers. Each of the Purchasers severally
and not jointly agrees to indemnify and hold harmless the Company and its
officers, directors, agents, representatives, shareholders and employees and
each of their respective affiliates, from and against any and all losses,
liabilities, obligations, claims, contingencies, damages, costs and expenses,
including all judgments, amounts paid in settlements, court costs and reasonable
attorneys' fees and costs of investigation that any such party may suffer or
incur which are caused by or arise out of (i) any material misrepresentation or
material breach or default in the performance by it of any covenant or agreement
made by it in this Agreement or in any of the Transaction Documents; or (ii) any
material misrepresentation or material breach of warranty or representation made
by it in this Agreement or in any of the Transaction Documents. Notwithstanding
anything to the contrary provided herein or elsewhere, the liability of each
Purchaser under this Section 4.10 shall be limited to the amount paid by the
Purchaser pursuant hereto to purchase the Investor Securities, and the
procedures and timing for indemnification by the Purchasers under this Section
4.10 shall follow the procedures and provisions of Sections 5.16(b) and (c),
mutatis mutandis, with respect to indemnification by the Company of the
Purchasers.
4.13 Reporting Obligations. So long as any Purchaser beneficially owns any
Investor Securities, the Company shall continue to file or furnish pursuant to
the Exchange Act or the Securities Act, and the Company shall use commercially
reasonable best efforts to maintain its status as an issuer required to file
such reports under the Exchange Act. In addition, during such
-20-
same period, the Company shall take all actions necessary to continue to meet
the "registrant eligibility" requirements set forth in the general instructions
to Form S-3 or any successor form thereto, to continue to be eligible to
register the resale of the Shares, the Warrant Shares and the Agent Shares under
the Securities Act on such Form.
ARTICLE V.
MISCELLANEOUS
5.1 Fees and Expenses. Except as otherwise set forth in this Agreement,
each party shall pay the fees and expenses of its advisers, counsel, accountants
and other experts, if any, and all other expenses incurred by such party
incident to the negotiation, preparation, execution, delivery and performance of
this Agreement; provided, however, that the Company shall pay a maximum of
[$_________] for the aggregate fees and expenses of counsel to the Placement
Agent. The Company shall pay all stamp and other taxes and duties levied in
connection with the sale of the Securities.
5.2 Entire Agreement. The Transaction Documents, together with the
exhibits and schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.
5.3 Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on (a) the next Business Day, if sent by U.S.
nationally recognized overnight courier service for next day priority delivery,
or (b) upon actual receipt by the party to whom such notice is required to be
given. The address for such notices and communications to the Company shall be
as set forth below and for each Purchaser shall be as set forth on the signature
pages attached hereto.
If to the Company:
DynTek, Inc.
00000 Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, XX 00000
Attention: Xx. Xxxxxx Xxxx, President
Telephone: (000) 000-0000
-21-
With a copy to:
Xxxxx Peabody LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
Telephone: 000-000-0000
Fax: 000-000-0000
5.4 Amendments; Waivers. No provision of this Agreement may be waived or
amended except in a written instrument signed, in the case of an amendment, by
the Company and each Purchaser or, in the case of a waiver, by the party against
whom enforcement of any such waiver is sought. No waiver of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of either party to exercise any right hereunder in
any manner impair the exercise of any such right.
5.5 Construction. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.
5.6 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their successors and permitted assigns. The
Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of each Purchaser. Any Purchaser, however, may
assign any or all of its Investor Securities and/or rights under this Agreement
to any Person, provided such transferee agrees in writing to be bound, with
respect to the transferred Investor Securities and otherwise, by the provisions
hereof that apply to the "Purchasers."
5.7 No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.
5.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York without regard to the
conflicts of laws principles thereof. The parties hereto hereby irrevocably
agree that any suit or proceeding arising directly and/or indirectly pursuant to
or under this Agreement, shall be brought solely in a federal or state court
located in the City, County and State of New York. By its execution hereof, the
parties hereby covenant and irrevocably submit to the in personam jurisdiction
of the federal and state courts located in the City, County and State of New
York and agree that any process in any such action may be served upon any of
them personally, or by certified mail or registered mail upon them or their
agent, return receipt requested, with the same full force and effect as if
personally served upon them in New York City. The parties hereto waive any claim
that any such jurisdiction is not a convenient forum for any such suit or
proceeding and any defense or lack of in personam jurisdiction with respect
thereto. In the event of any such action or proceeding, the
-22-
party prevailing therein shall be entitled to payment from the other party
hereto of its reasonable counsel fees and disbursements.
5.9 Survival. The representations, warranties, agreements and covenants
contained herein shall survive the Closing and delivery of the Shares and
Warrants for a period of twelve (12) months.
5.10 Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.
5.11 Severability. If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.
5.12 Replacement of Investor Securities. If any certificate or instrument
evidencing any Investor Securities is mutilated, lost, stolen or destroyed, the
Company shall issue or cause to be issued in exchange and substitution for and
upon cancellation thereof, or in lieu of and substitution therefor, a new
certificate or instrument, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and customary and
reasonable indemnity, if requested. The applicants for a new certificate or
instrument under such circumstances shall also pay any reasonable third-party
costs associated with the issuance of such replacement Investor Securities.
5.13 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchasers and the Company will be entitled to specific performance under the
Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in
any action for specific performance of any such obligation the defense that a
remedy at law would be adequate.
5.14 Payment Set Aside. To the extent that the Company makes a payment or
payments to any Purchaser pursuant to any Transaction Document or a Purchaser
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall, to the
extent permissible under applicable law, be revived and continued in full force
and effect as if such payment had not been made or such enforcement or setoff
had not occurred.
-23-
5.15 Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or in any
Transaction Document, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Document. Each
Purchaser shall be entitled to independently protect and enforce its rights,
including without limitation, the rights arising out of this Agreement or out of
the other Transaction Documents, and it shall not be necessary for any other
Purchaser to be joined as an additional party in any proceeding for such
purpose. Each Purchaser represents that it has been represented by its own
separate legal counsel in their review and negotiation of the Transaction
Documents. The Company has elected to provide all Purchasers with the same terms
and Transaction Documents for the convenience of the Company and not because it
was required or requested to do so by the Purchasers.
5.16 Indemnification by the Company.
(a) The Company shall, notwithstanding any termination of this
Agreement, indemnify and hold harmless each Purchaser, the officers, directors,
agents and employees of each of them, each Person who controls any such
Purchaser (within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act) and the officers, directors, agents and employees of each
such controlling Person, to the fullest extent permitted by applicable law, from
and against any and all losses, claims, damages, liabilities, costs (including,
without limitation, reasonable attorneys' fees) and expenses (including the cost
(including without limitation, reasonable attorneys' fees) and expenses relating
to an Indemnified Party's (as defined below) actions to enforce the provisions
of this Section 5.16) (collectively, "Losses"), as incurred, to the extent
arising out of or relating to (i) any material misrepresentation or material
breach of any representation or warranty made by the Company in the Transaction
Documents, or, (ii) any material breach of any covenant, agreement or obligation
of the Company contained in the Transaction Documents, or (iii) any cause of
action, suit or claim brought or made against such Indemnified Party and arising
out of or resulting from the execution, delivery, performance or enforcement of
the Transaction Documents executed pursuant hereto by any of the Indemnified
Parties. If the indemnification provided for in this Section 5.16 is held by a
court of competent jurisdiction to be unavailable to an Indemnified Party with
respect to any Losses, then the Indemnifying Party (as defined below), in lieu
of indemnifying such Indemnified Party hereunder, shall contribute to the amount
paid or payable by such Indemnified Party as a result of Losses in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party on the one hand and of the Indemnified Party on the other in connection
with the actions or omissions that resulted in such Losses as well as any other
relevant equitable considerations. The Company shall notify the Purchasers
promptly of the institution, threat or assertion of any proceeding of which the
Company is aware in connection with the transactions contemplated by this
Agreement.
(b) Conduct of Indemnification Proceedings. If any proceeding shall
be brought or asserted against any Person entitled to indemnity hereunder (an
"Indemnified Party"), such Indemnified Party shall promptly notify the Company
(the "Indemnifying Party") in writing,
-24-
and the Indemnifying Party shall have the right to assume the defense thereof,
including the employment of counsel reasonably satisfactory to the Indemnified
Party and the payment of all fees and expenses incurred in connection with
defense thereof; provided, however, that the failure of any Indemnified Party to
give such notice shall not relieve the Indemnifying Party of its obligations or
liabilities pursuant to this Agreement, except (and only) to the extent that it
shall be finally judicially determined by a court of competent jurisdiction
(which determination is not subject to appeal or further review) that such
failure shall have materially and adversely prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate counsel in
any such proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party or
Parties unless: (1) the Indemnifying Party has agreed in writing to pay such
fees and expenses; (2) the Indemnifying Party shall have failed promptly to
assume the defense of such proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such proceeding; or (3) the named
parties to any such proceeding (including any impleaded parties) include both
such Indemnified Party and the Indemnifying Party, and such Indemnified Party
shall have been advised by counsel that a conflict of interest is likely to
exist if the same counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and the reasonable fees and expenses of one
separate counsel for all Indemnified Parties in any matters related on a factual
basis shall be at the expense of the Indemnifying Party). The Indemnifying Party
shall not be liable for any settlement of any such proceeding affected without
its written consent, which consent shall not be unreasonably withheld. No
Indemnifying Party shall, without the prior written consent of the Indemnified
Party, effect any settlement of any pending proceeding in respect of which any
Indemnified Party is a party, unless such settlement includes an unconditional
release of such Indemnified Party from all liability on claims that are the
subject matter of such proceeding.
(c) Timing of Payments. All reasonable fees and expenses of the
Indemnified Party (including reasonable fees and expenses to the extent incurred
in connection with investigating or preparing to defend such proceeding in a
manner not inconsistent with this Section 5.16 shall be paid to the Indemnified
Party, as incurred, within ten (10) Trading Days of written notice thereof to
the Indemnifying Party; provided, however, that the Indemnified Party shall
promptly reimburse the Indemnifying Party for that portion of such fees and
expenses applicable to such actions for which such Indemnified Party is not
entitled to indemnification hereunder, determined based upon the relative faults
of the parties.
(Remainder of Page Intentionally Left Blank)
-25-
IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
DYNTEK, INC.
By:
-----------------------------------
Xxxxxx Xxxx
Chief Executive Officer
-26-
PURCHASERS SIGNATURE PAGE
------------------------------------
By:
---------------------------------
Name:
Title:
------------------------------------
Address
------------------------------------
Facsimile Number
------------------------------------
Tax Id #:
Subscription Amount:$
---------------
------------------------------------
By:
---------------------------------
Name:
Title:
------------------------------------
Address
------------------------------------
Facsimile Number
------------------------------------
Tax Id #:
Subscription Amount:$
---------------
------------------------------------
By:
---------------------------------
Name:
Title:
------------------------------------
Address
------------------------------------
Facsimile Number
------------------------------------
Tax Id #:
Subscription Amount:$
---------------
-27-
INDEX OF EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit A - Form of Registration Rights Agreement
Exhibit B-2 - Form of Series A Warrant
Exhibit B-2 - Form of Series B Warrant
SCHEDULES
Schedule 1 - List of Purchasers and Securities Received
Schedule 3.1(y) Registration Rights Agreement
EXHIBIT A
FORM OF REGISTRATION RIGHTS AGREEMENT
EXHIBIT B-1
FORM OF SERIES A WARRANT
EXHIBIT B-2
FORM OF SERIES B WARRANT
SCHEDULE 1
LIST OF PURCHASERS AND AMOUNTS
Name of Purchaser Amount of Shares and Warrant Shares Purchased
----------------- ---------------------------------------------
1._________________________ _____ Shares ______ Series A Warrant Shares
______ Series B Warrant Shares
2._________________________ _____ Shares ______ Series A Warrant Shares
______ Series B Warrant Shares
3._________________________ _____ Shares ______ Series A Warrant Shares
______ Series B Warrant Shares
4._________________________ _____ Shares ______ Series A Warrant Shares
______ Series B Warrant Shares
5._________________________ _____ Shares ______ Series A Warrant Shares
______ Series B Warrant Shares
6._________________________ _____ Shares ______ Series A Warrant Shares
______ Series B Warrant Shares
7._________________________ _____ Shares ______ Series A Warrant Shares
______ Series B Warrant Shares
8._________________________ _____ Shares ______ Series A Warrant Shares
______ Series B Warrant Shares
SCHEDULE 3.1 (y)
Form S-3 Selling Stockholders
Name Shares
----------------------------------------------- ---------
21st Century Investor LLC 120,000
Xxxxx, Xxxxxx 1,440,000
Xxxxxx, Xxxxxxx 840,000
Xxxx Xxxxxxxx Irrevocable Trust 138,000
Xxxxxxxx, Xxxxxxx M 240,000
Xxxxxxx, Xxxxxxx J 300,000
Xxxxxxxx, Xxxxx J 60,000
Barnet Xxxxxxx Trust 120,000
Xxxxxx, Xxxxxx 60,000
Xxx-Xxxxxx, Xxxx 180,000
Xxxx, Xxxx 120,000
Xxxxxxxxx, Xxx 60,000
Xxxxxxxx, Xxxxx R 60,000
Xxxxxxxxxx, Xxxxx 24,000
Xxxxxxx, Xxxxxxx 60,000
Broadband Capital Management 360,000
Brunnschweiler, Christian and Xxxxx 153,000
C. Xxxxx Xxxxx Revocable Trust 237,600
Xxxxxx, Xxxxxxx P 60,000
Xxxxxxxx, Xxxxxxxxx 68,000
Xxxxxx, Xxxxxxx 60,000
Xxxxxxxxxxx, Xxxxx 48,000
Xxxxx, Xxxxxxx (South West Securities as XXX Custodian) 345,600
Xxxxx, Xxxxxxx and Xxxxx 771,800
Xxxxx, Xxxxx (South West Securities as XXX Custodian) 64,800
Xxxxx, Xxxxxxx 240,000
Xxxxxxxxx, Xxxxxx 000,000
Xx Xxxxxxxx, Xx 24,000
XxXxxxxx, Xxxxxxxx 414,400
Xxxxx, Xxxxxx 240,000
Xxxxxxx, Xxx 71,400
Xxxxxx Capital LLC 466,667
Xxxxxxxx, Xxxx 60,000
Xxxxx, Xxxxxxx 60,000
Xxxxxx, X. Xxxxxx 120,000
Xxxxxxx, Xxxx 34,000
Xxxxxxxx, Xxxxxx 37,400
Xxxxxxxx, Xxxx and Xxxxxxx 60,000
X.X. Xxxxxxxx 75,758
Xxxxxx, X. Xxxxx 60,000
Xxxxx, Xxxxxxx X 240,000
Xxxx, Xxxxxxx 100,800
Xxxxxx, Xxxxxx 60,000
Xxxxxxx, Xxxxx 90,000
Name Shares
----------------------------------------------- ---------
Xxxxxx Xxxxxxxx Irrevocable Trust 138,000
Xxxx, Xxxxxxxxxxx and Xxxxxxx 261,830
Xxxxx, Xxxxxx and Claire 60,000
Laurus Master Fund, Ltd. 4,313,889
Leviticus Partners LP 600,000
Xxxxxxxxx, Xxxxxxxxx 84,000
Xxxxx , Xxxxx 120,000
Xxxxxx, Xxxxxxx 24,000
Xxxxxxx, Xxxxxx 204,000
Xxxxx, Xxxxxxx 14,000
XxXxxxxx, Xxx 102,000
Xxxxxx, Xxxxxxx 120,000
Xxxxxxxxxx, Xxxxxx 78,000
MSR Consultants 227,273
Xxxxxxx, Xxxxxx 60,000
Onischenko,Tarras 24,000
Page, Xxxx 36,000
Xxxxxxxxx, Xxxxx 24,000
Xxxxxx X. Xxxxxx Trust 60,000
Xxxxxx, Xxxxxxxxx J 300,000
Xxxxxx, Jr., Xxxxx 420,000
Puma, Xxxxxx 1,071,200
Xxxxxx, Xxxxx and Xxxxxxx Xxxxxxx 24,000
RBD Limited 240,000
Realty Appraisal Defined Benefit Pension Plan 78,000
XX Xxxxx & Co. 2,067,692
Xxxxxxxxx, Xxxxxx 48,000
Xxxxxxxxx, Xxxxxxx 480,000
Xxxxxxxx, Xxxxx 600,000
Xxxxxxxx, Xxxxx and Victoria 227,273
Xxxx, Xxxxxxx and Xxxxxx 78,000
Xxxx, Xxxxx 12,000
Xxxxxxxxxxx, Xxxx 720,000
Xxxxxxx, Xxxxxx and Xxxxx 251,600
Xxxxxxx, Xxxxxxx 60,000
Silvaslian, Xxxxx K 120,000
Silvaslian, Xxxxx X. and Xxxxxxx 290,000
Xxxxxxxxx Xxxxx MD Trust 120,000
Xxxxxxx, Xxxxxxx X. and Xxxxxxx I 120,000
Trust for the Young Family 120,000
Xxxxx, Xxxxxx J 189,600
Xxxx, Xxxxxxx 69,600
Xxxxxx, Xxx 120,000
Xxxxx, Xxxxxxx 347,854
Xxxxxxx Xxxxxxxx Trust 240,000
Xxxxxxxxxx, Xxx A 360,000
Total 23,871,036
==========
