Exhibit 10.52
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XXXXXXXXXXXXXXXXX.XXX, INC.,
GENESIS INTERMEDIA, INC.
AND
INFINITY OUTDOOR, INC.
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SECURITIES PURCHASE AGREEMENT
Dated as of June ___, 2000
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TABLE OF CONTENTS
SECTION 1 - ISSUANCE OF SECURITIES......................................1
Section 1.1 Authorization.........................................1
Section 1.2 Transfer of the Securities; the Closing...............1
Section 1.3 Representations and Warranties of the Company.........2
Section 1.4 Representations and Warranties of Infinity Outdoor....4
Section 1.5 Registration Rights...................................6
SECTION 2 - CONDITIONS TO OBLIGATIONS OF INFINITY OUTDOOR..............14
Section 2.1 Conditions to Closing................................14
SECTION 3 - RESTRICTIONS ON TRANSFERABILITY; COMPLIANCE WITH
SECURITIES ACT.........................................................15
Section 3.1 Restrictions on Transferability......................15
Section 3.2 Restrictive Legend...................................15
Section 3.3 Notice of Proposed Transfers.........................15
SECTION 4 - MISCELLANEOUS..............................................16
Section 4.1 Indemnification......................................16
Section 4.2 Reliance on and Survival of Representations..........17
Section 4.3 Successors and Assigns...............................17
Section 4.4 Notices..............................................17
Section 4.5 Counterparts.........................................18
Section 4.6 Amendments...........................................18
Section 4.7 Severability.........................................18
Section 4.8 Governing Law; Submission to Process.................18
Section 4.9 Entire Agreement.....................................19
Section 4.10 Further Assurances...................................19
Section 4.11 Headings.............................................19
Section 4.12 Waiver of Jury Trial.................................19
EXHIBIT A - WARRANT CERTIFICATE
EXHIBIT B - FORM OF GENESIS WARRANT CERTIFICATE
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SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT, dated as of June __, 2000
(this "Agreement"), is among XxxxxxxXxxxxxxxxx.xxx, Inc., a Delaware corporation
("Genesis"), Genesis Intermedia, Inc., a Florida corporation and wholly-owned
subsidiary of Genesis (the "Company"), and Infinity Outdoor, Inc., a Delaware
corporation ("Infinity Outdoor").
WHEREAS Genesis, the Company and Infinity Outdoor desire to
provide Infinity Outdoor with a warrant to purchase an equity interest in the
Company, exchangeable for a warrant to purchase an equity interest in Genesis as
an incentive to Infinity Outdoor to maximize its joint marketing efforts with
the Company.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, the parties hereto hereby agree as follows:
Section 1 ISSUANCE OF SECURITIES.
Section 1.1 Authorization. Genesis and the Company have,
respectively, duly authorized the issue of warrants substantially in the form of
Exhibit A (the "Subsidiary Warrant") and Exhibit B (the "Genesis Warrant")
hereto, to purchase 20 shares of the Company's common stock, or 322,580 shares
of the common stock of Genesis, respectively (either security issuable upon
exercise of the Subsidiary Warrant or the Genesis Warrant, as applicable,
referred herein from time to time as the "Warrant Shares"). The Subsidiary
Warrant, the Genesis Warrant, the Warrant Shares issuable upon exercise of the
Subsidiary Warrant or the Genesis Warrant and the certificates and other
instruments from time to time evidencing the same, are herein sometimes
collectively called the "Securities."
Section 1.2 Transfer of the Securities; the Closing. In
reliance upon the representations of Genesis and the Company contained in
Section 1.3 hereof and subject to the terms and conditions set forth herein,
Infinity Outdoor shall acquire the Subsidiary Warrant. The closing (the
"Closing") of Infinity Outdoor's purchase of the Subsidiary Warrant shall be
held at 10:00 a.m., Los Angeles time on June ____, 2000 (the "Closing Date"), by
facsimile transmission of documents, or at such other time or place as the
parties hereto may mutually agree.
On the Closing Date, the Company will tender to Infinity
Outdoor the Subsidiary Warrant, registered in Infinity Outdoor's name, duly
executed and dated the Closing Date, in consideration of Infinity Outdoor's
agreement to jointly market advertising with the Company.
Infinity Outdoor shall have certain rights to tender the
Subsidiary Warrant in exchange for the Genesis Warrant as set forth in and in
accordance with the terms of the Subsidiary Warrant. In the event Infinity
Outdoor so tenders the Subsidiary Warrant, Genesis will deliver to Infinity
Outdoor the Genesis Warrant, registered in Infinity Outdoor's name and duly
executed.
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In addition, in the event the assets comprising the Centerlinq
network are transferred by the Company to another entity controlled by Genesis,
the Subsidiary Warrant shall be exchanged for a like warrant to purchase
securities of such entity.
Section 1.3 Representations and Warranties of Genesis
and the Company.
Genesis and the Company represent and warrant to Infinity
Outdoor that on the date hereof and as of the Closing Date:
(a) Each of Genesis and the Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of its incorporation, and is duly qualified as a foreign
corporation in each jurisdiction in which the character of the properties owned
or held under lease by it or the nature of the business transacted by it
requires such qualification, except to the extent the failure to be so qualified
does not materially adversely affect it. Each of Genesis and the Company has all
requisite power to transact the business it transacts and proposes to transact,
to execute and deliver this Agreement, the Securities and all other documents
and agreements contemplated hereby and thereby, and to perform the provisions
hereof and thereof and to consummate the transactions contemplated hereby and
thereby.
(b) The execution, delivery and performance of
this Agreement, the Securities, and all other documents and agreements
contemplated hereby and thereby, and the consummation of the transactions
contemplated hereby or thereby, have been duly authorized and approved by each
of Genesis and the Company including, without limitation, by their respective
Boards of Directors. This Agreement, the Securities, and all other documents and
agreements contemplated hereby and thereby have each been duly authorized,
executed and delivered by, and each is the valid and binding obligation of, each
of Genesis and the Company, enforceable against each of Genesis and the Company
in accordance with its terms, except as may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium or other similar laws or by legal or
equitable principles relating to or limiting creditors' rights generally.
(c) Neither Genesis nor the Company has knowledge
of any fact that materially adversely affects, or could reasonably be expected
to materially adversely affect, its business, prospects, properties, assets,
operations or financial condition, or its ability to perform its respective
obligations under this Agreement, the Securities or any other documents or
agreements contemplated hereby and thereby.
(d) The consummation of the transactions
contemplated by this Agreement and the performance of the terms and provisions
of this Agreement, the Securities and any other documents or agreements
contemplated hereby and thereby will not (i) contravene, result in any breach
of, or constitute a default under any indenture, mortgage, deed of trust, bank
loan or credit agreement, corporate charter, by-laws or other material agreement
or instrument to which Genesis or the Company is a party or by which Genesis or
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the Company or any of their properties are bound, (ii) conflict with or result
in a breach of any of the terms, conditions or provisions of any order of any
court, arbitrator or federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign
(collectively, "Governmental Person") applicable to Genesis or the Company or
(iii) violate any material provision of any statute or other law, rule or
regulation of any Governmental Person applicable to Genesis or the Company.
(e) No consent, approval or authorization of, or
registration, filing or declaration with, any person or entity is required for
the issuance of the Securities or the valid execution and delivery of the
Securities or for the performance by Genesis and the Company of this Agreement,
the Securities, and any other documents or agreements contemplated hereby and
thereby, other than the filing required under Regulation D of the Securities Act
and any other filings, registrations or qualifications under the securities laws
or "blue sky" laws of any State that may be required to be made or obtained in
connection with the offer, issuance, sale or delivery of the Securities or any
interest therein, which filings will be made by each of Genesis and the Company,
as appropriate.
(f) Subject to the terms and provisions herein,
at the Closing, Infinity Outdoor shall acquire good and marketable title to the
Subsidiary Warrant free and clear of all covenants, conditions, restrictions,
liens, pledges, charges, encumbrances, options and adverse claims or rights of
any kind whatsoever and, upon exercise of the Subsidiary Warrant in accordance
with its terms, including payment of the Exercise Price therefore, Infinity
Outdoor shall acquire good and marketable title to the respective Securities
issuable upon such exercise, free and clear of all covenants, conditions,
restrictions, liens, pledges, charges, encumbrances, options and adverse claims
or rights of any kind whatsoever. In the event the Subsidiary Warrant is
tendered for the Genesis Warrant in accordance with the terms thereof, subject
to the terms and provisions herein, Infinity Outdoor shall acquire good and
marketable title to the Genesis Warrant free and clear of all covenants,
conditions, restrictions, liens, pledges, charges, encumbrances, options and
adverse claims or rights of any kind whatsoever and, upon exercise of the
Genesis Warrant in accordance with its terms, including payment of the Exercise
Price therefor, Infinity Outdoor shall acquire good and marketable title to the
respective Securities issuable upon such exercise, free and clear of all
covenants, conditions, restrictions, liens, pledges, charges, encumbrances,
options and adverse claims or rights of any kind whatsoever.
(g) The authorized capital stock of Genesis
consists of 25,000,000 shares of common stock, and 5,000,000 shares of preferred
stock. At May 5, 2000, Genesis had issued and outstanding 5,315,000 shares of
common stock and 146,858 shares of preferred stock. The authorized capital stock
of the Company consists of 1000 shares of common stock. The Company has issued
and outstanding 180 shares of common stock. The Company common stock issued and
outstanding as of the date hereof and the Warrant Shares issuable upon exercise
of the Subsidiary Warrant was, or will when issued be, duly and validly issued,
fully paid and nonassessable. There are no other outstanding options, warrants
or similar rights of any person to acquire any of the capital stock of the
Company and the Company has no contingent obligations to issue additional
shares. The Company is not subject to any obligation (contingent or otherwise)
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to repurchase or otherwise acquire or retire any of its capital stock or other
securities or obligation evidencing the right of any holder thereof to purchase
any of its capital stock or other securities. The common stock of Genesis issued
and outstanding as of May 5, 2000 and the Warrant Shares issuable upon exercise
of the Genesis Warrant was, or will when issued be, duly and validly issued,
fully paid and nonassessable. Except as set forth in Genesis' Quarterly Report
on Form 10-QSB for the quarter ended March 31, 2000, on March 31, 2000 there
were no other outstanding options, warrants or similar rights of any person to
acquire any of the capital stock of Genesis and Genesis had no contingent
obligations to issue additional shares. Since such date, Genesis has issued
additional securities and additional rights to purchase additional securities.
Except with respect to its outstanding preferred stock, Genesis is not subject
to any obligation (contingent or otherwise) to repurchase or otherwise acquire
or retire any of its capital stock or other securities or obligation evidencing
the right of any holder thereof to purchase any of its capital stock or other
securities.
(h) Except as provided in Genesis filings with
the Securities and Exchange Commission (the "SEC Documents"), there is no
action, suit, proceeding or investigation pending, or to the knowledge of each
of Genesis and the Company, threatened against either Genesis or the Company
that would have a material adverse effect on either the Company or Genesis and
there are no judgements, injunctions, writs, rulings or orders by any
Governmental Person against Genesis or the Company or its directors or officers
pertaining to Genesis or the Company that would have a material adverse effect
on either the Company or Genesis.
Section 1.4 Representations, Warranties and Covenants of
Infinity Outdoor.
(a) Infinity Outdoor represents and warrants to Genesis
and the Company that on the date hereof and as of the Closing Date:
(i) Infinity Outdoor is an "accredited
investor" within the meaning of Rule 501(a) of Regulation D under the Securities
Act of 1933, as amended, and the rules and regulations promulgated thereunder
and any successor provisions thereto (the "Securities Act"), and is acquiring
the Securities for investment for its own account, and not with a view to
distribution subject, nevertheless, to any requirement of law that the
disposition of its property shall at all times be within its control. Infinity
Outdoor has such knowledge and experience in financial and business matters that
it is capable of evaluating the merits and risks of purchasing the Securities.
Infinity Outdoor is aware that it may be required to bear the economic risk of
an investment in the Securities for an indefinite period, and it is able to bear
such risk for an indefinite period. Infinity Outdoor acknowledges (i) that the
Securities being and to be acquired by it are not being registered under the
Securities Act on the grounds that the issuance of such Securities is exempt
from registration pursuant to the exemption provided by Rule 506 of Regulation D
promulgated under Section 4(2) of the Securities Act as not involving any public
offering and (ii) that the Company's reliance on such exemption is predicated in
part on the representations made to the Company by Infinity Outdoor in this
Section 1.4.
(ii) Infinity Outdoor represents that (A) it
has good and sufficient power, authority and right to enter into and deliver
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this Agreement, and the execution, delivery and performance of this Agreement
have been duly authorized by all necessary action; (B) this Agreement
constitutes a valid and legally binding obligation of Infinity Outdoor,
enforceable against Infinity Outdoor in accordance with its terms subject to
applicable bankruptcy and insolvency laws and to equitable principles; and (C)
neither the entering into, nor the delivery of this Agreement, nor the
completion of the transactions contemplated hereby by Infinity Outdoor will
result in the violation or breach of any agreement or other instrument to which
Infinity Outdoor is a party or by which Infinity Outdoor is bound, or any
applicable law, rule or regulation.
(iii) Infinity Outdoor agrees that it will resell the
Securities only pursuant to registration or qualification under the Securities
Act and applicable state securities laws or pursuant to an available exemption
from such registration and qualification.
(iv) Infinity Outdoor has been given the
opportunity by Genesis and the Company to obtain any information and ask such
questions concerning Genesis and the Company, the Securities, and Infinity
Outdoor's investment as Infinity Outdoor deemed necessary or appropriate, and,
to the extent Infinity Outdoor availed itself of that opportunity, Infinity
Outdoor has received satisfactory information and answers. Infinity Outdoor has
examined Genesis' SEC Documents.
(v) In reaching the decision to invest in the
Securities, Infinity Outdoor has carefully evaluated its financial resources and
investment position and the risks associated with this investment. By electing
to participate in this investment, Infinity Outdoor realizes it may lose its
entire investment.
(b) Infinity Outdoor agrees for so long as Infinity
Outdoor is otherwise engaged in co-marketing efforts with the Company involving
the Centerlinq Network to use its best efforts to (all capitalized terms not
otherwise defined are defined in Section 1.5(a) hereof):
(i) establish Co-Marketed Sites generating aggregate
annual Gross Revenue in excess of $1,000,000 within twelve (12) months of the
date hereof;
(ii) market the Company's Kiosk Networks to
top-tier Infinity Outdoor Existing Sites, and where permitted by the terms of
Infinity Outdoor's agreements with its top-tier Infinity Outdoor Existing Sites,
to secure the opportunity for the installation of the Company's Kiosk Networks
under such agreements so as to establish Co-Marketed Sites at such Sites;
(iii) market the Company's Kiosk Networks to
Infinity Outdoor's affiliates, such as the Viacom network of companies, for
advertising placements; and
(iv) provide the Company with cost-free
Display Advertising services in or about mall locations and for the promotion of
the Centerlinq Network, on a space-available and case-by-case basis as
determined by Infinity Outdoor, provided that the Company shall pay all
reasonable and actual production expenses associated with such Display
Advertising services.
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Section 1.5 Registration Rights.
(a) Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
"Co-Marketed Sites" means any Prospective Site and any Existing
Company Site or Existing Infinity Outdoor Site where the parties' co-marketing
efforts hereunder are successful in producing additional Gross Revenue to the
other party.
"Display Advertising" means Infinity Outdoor's advertising
displays.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Existing Company Sites" means a Site where an installation of the
Company's Kiosk Networks is either planned or currently existing within the
Territory as of the date of this Agreement.
"Existing Infinity Outdoor Site" means a Site where an installation
of Infinity Outdoor Display Advertising is planned or currently existing within
the Territory as of the date of this Agreement.
"Gross Revenue" means the total revenue, net of any agency
commissions, generated as a result of the parties' co-marketing efforts under
this Agreement.
"Holder" shall mean Infinity Outdoor, provided Infinity Outdoor has
duly exercised the Warrant and holds Registrable Securities, and any person
holding Registrable Securities to whom the rights under this Section 1.5 have
been transferred in accordance with Section 1.5(h) hereof.
"Issuer" means either Genesis or the Company, as applicable.
"Kiosk Network" means the Company's interactive multimedia Kiosk
Networks comprising computers, computer monitors, television monitors,
keyboards, display cabinets and related equipment operated and
maintained by the Company, or its assigns or contractors.
"Prospective Site" means any Site that has no prior history of
business contact with either the Company or Infinity Outdoor.
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"Registrable Securities" means any Warrant Shares of Issuer issued
or issuable in respect of the Warrant or other securities issued or issuable
pursuant to the exercise of the Warrant upon any recapitalization, or any common
stock otherwise issued or issuable with respect to the Warrant Shares, provided,
however, that Warrant Shares or other securities shall only be treated as
Registrable Securities if and so long as they have not been (A) sold to or
through a broker or dealer or underwriter in a public distribution or a public
securities transaction, or (B) sold or are available for sale in the opinion of
counsel to Issuer in a single transaction exempt from the registration and
prospectus delivery requirements of the Securities Act so that all transfer
restrictions and restrictive legends with respect thereto are or may be removed
upon the consummation of such sale.
The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing with the Commission a registration
statement in compliance with the Securities Act, and the declaration or ordering
of the effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses, except Selling
Expenses as defined below, incurred by Issuer in complying with Section 1.5(b)
and 1.5(c) hereof, including, without limitation, all registration,
qualification and filing fees, printing expenses, escrow fees and disbursements
of counsel for Issuer, blue sky fees and expenses, the expense of any special
audits incident to or required by any such registration (but excluding the
compensation of regular employees of Issuer which shall be paid in any event by
Issuer) and the reasonable fees and disbursements of one counsel for all Holders
in the event of one Issuer registration pursuant to Section 1.5(b) or 1.5(c)
hereof.
"Restricted Securities" shall mean the securities of Issuer
required to bear the legend set forth in Section 3.2 hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended,
or any similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered by
the Holders and, except as set forth in the definition of Registration Expenses,
all fees and disbursements of counsel for any Holder.
"Site" means any retail site accessible to the public, including
but not limited to shopping malls, shopping centers, discount malls and retails
stores, and any other site mutually agreed upon in writing by the Coordination
Committee.
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"Territory" means the world.
"Warrant" means either the Subsidiary Warrant or the Genesis
Warrant, as applicable.
(b) Issuer Registration.
(i) Notice of Registration. From and after exercise of the Warrant,
if at any time or from time to time Issuer shall determine to register any of
its securities, either for its own account or the account of a security holder
or holders, other than a registration relating solely to employee benefit plans
or a registration relating solely to a Commission Rule 145 transaction, Issuer
will:
(A) promptly give to each Holder written notice thereof; and
(B) include in such registration (and any related qualification
under blue sky laws or other compliance), and in any underwriting involved
therein, all the Registrable Securities specified in a written request or
requests, made within 20 days after receipt of such written notice from Issuer,
by any Holder.
(ii) Underwriting. If the registration of which Issuer gives
notice is for a registered public offering involving an underwriting, Issuer
shall so advise the Holders as a part of the written notice given pursuant to
Section 1.5(b)(i)(A). In such event the right of any Holder to registration
pursuant to this Section 1.5(b) shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their securities through such underwriting shall
(together with Issuer and any other shareholders distributing their securities
through such underwriting) enter into an underwriting agreement in customary
form with the managing underwriter selected for such underwriting by Issuer.
Notwithstanding any other provision of this Section 1.5(b), if the managing
underwriter determines that marketing factors make advisable a limitation of the
number of shares to be underwritten, the managing underwriter may limit the
Registrable Securities to be included in such registration. Issuer shall so
advise all Holders and the number of shares of Registrable Securities that may
be included in the registration and underwriting shall be allocated among all
Holders in proportion, as nearly as practicable, to the respective amounts of
Registrable Securities held by such Holders at the time of filing the
registration statement. To facilitate the allocation of shares in accordance
with the above provisions, Issuer may round the number of shares allocated to
any Holder or other shareholder to the nearest 100 shares. If any Holder or
other shareholder disapproves of the terms of any such underwriting, it may
elect to withdraw therefrom by written notice to Issuer and the managing
underwriter. Any securities excluded or withdrawn from such underwriting shall
be withdrawn from such registration, and shall not be transferred in a public
distribution prior to 90 days after the effective date of the registration
statement relating thereto, or such other shorter period of time as the
underwriters may require. Issuer may include shares of common stock held by
shareholders other than Holders in a registration statement pursuant to this
Section 1.5(b) to the extent that the amount of Registrable Securities otherwise
includible in such registration statement would not thereby be diminished.
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(iii) Right to Terminate Registration. Issuer shall have the right to
terminate or withdraw any registration initiated by it under this Section 1.5(b)
prior to the effectiveness of such registration whether or not any Holder has
elected to include securities in such registration.
(iv) Subsidiaries. Notwithstanding anything to the contrary contained
in this Agreement, the registration rights of the Holder shall be subordinate to
the registration rights of holders of any currently outstanding preferred stock
issued by Genesis (or shares issuable upon conversion of such preferred stock or
issued in connection with or upon exercise or conversion of currently
outstanding securities issued in connection with such preferred stock).
(c) Requested Registration.
(i) Request for Registration. In the event (i) Holder has exercised the
Genesis Warrant and holds Warrant Shares of Genesis common stock, and Genesis
has not effectuated a registered public offering of its common stock within
eighteen (18) months of the date hereof, and Genesis shall receive from Holder a
written request that Genesis effect a registration under the Securities Act with
respect to not less than 250,000 shares (as adjusted for Recapitalizations) of
Registrable Securities, or (ii) Holder has exercised the Subsidiary Warrant and
holds Warrant Shares of Company common stock, the Company has effectuated its
initial underwritten public offering of its common stock (the "IPO"), the
Company has not effectuated a subsequent registered public offering of its
common stock within the greater of six (6) months of the date of the IPO or
eighteen (18) months of the date hereof, and the Company shall receive from
Holder a written request that the Company effect a registration under the
Securities Act with respect to not less than 20 shares (as adjusted for
recapitalizations) of Registrable Securities, Issuer will:
(A) promptly give written notice of the proposed registration,
qualification or compliance to all other Holders; and
(B) as soon as practicable, use its best efforts to effect such
registration (including, without limitation, appropriate qualification under
applicable blue sky or other state securities laws and appropriate compliance
with applicable regulations issued under the Securities Act and any other
governmental requirements or regulations) as may be so requested and as would
permit or facilitate the sale and distribution of all or such portion of such
Registrable Securities as are specified in such request, together with all or
such portion of the Registrable Securities of any Holder or Holders joining in
such request as are specified in a written request received by Issuer within 20
days after receipt of such written notice from Issuer;
Provided, however, that Issuer shall not be obligated to take any
action to effect any such registration, qualification or compliance pursuant to
this Section 1.5(c):
(I) In any particular jurisdiction in which Issuer would be required to
execute a general consent to service of process in effecting such registration,
qualification or compliance unless Issuer is already subject to service in such
jurisdiction and except as may be required by the Securities Act;
(II) During the period starting with the date sixty (60) days prior to
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Issuer's estimated date of filing of, and ending on the date six (6) months
immediately following the effective date of, any registration statement
pertaining to securities of Issuer (other than a registration of securities in a
Rule 145 transaction or with respect to an employee benefit plan), provided that
Issuer is actively employing in good faith all reasonable efforts to cause such
registration statement to become effective;
(III) After Issuer has effected one such registration pursuant to this
subparagraph 1.5(c)(i), and such registration has been declared or ordered
effective; or
(IV) If Issuer shall furnish to such Holders a certificate signed by
the President of Issuer stating that in the good faith judgment of the Board of
Directors of Issuer it would be seriously detrimental to Issuer or its
shareholders for a registration statement to be filed in the near future, in
which case Issuer's obligation to use its best efforts to register, qualify or
comply under this Section 1.5(c) shall be deferred for a period not to exceed
120 days from the date of receipt of the written request from the Holders.
Subject to the foregoing clauses (I) through (IV), Issuer shall file a
registration statement covering the Registrable Securities so requested to be
registered as soon as practicable after receipt of the request or requests of
the Holders.
(ii) Underwriting. In the event that a registration pursuant to
this Section 1.5(c) is for a registered public offering involving an
underwriting, Issuer shall so advise the Holders as part of the notice given
pursuant to Section 1.5(c)(i)(A). In such event, the right of any Holder to
registration pursuant to this Section 1.5(c) shall be conditioned upon such
Holder's participation in the underwriting arrangements required by this Section
1.5(c), and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent requested shall be limited as provided herein. Issuer
shall (together with all Holders proposing to distribute their securities
through such underwriting) enter into an underwriting agreement in customary
form with managing underwriter(s) selected for such underwriting by a majority
in interest of the Holders, but subject to Issuer's reasonable approval.
Notwithstanding any other provision of this Section 1.5(c), if the managing
underwriter(s) advise(s) the Holders in writing that marketing factors require a
limitation of the number of shares to be underwritten, then Issuer shall so
advise all Holders participating and the number of shares of Registrable
Securities that may be included in the registration and underwriting shall be
allocated among all Holders thereof in proportion, as nearly as practicable, to
the respective amounts of Registrable Securities held by such Holders at the
time of filing the registration statement. No Registrable Securities excluded
from the underwriting by reason of the underwriters' marketing limitation shall
be included in such registration. To facilitate the allocation of shares in
accordance with the above provisions, Issuer or the underwriters may round the
number of shares allocated to any Holder to the nearest 100 shares. If any
Holder disapproves of the terms of the underwriting, such person may elect to
withdraw therefrom by written notice to Issuer, the managing underwriter and the
Holders. The Registrable Securities so withdrawn shall also be withdrawn from
registration, and such Registrable Securities shall not be transferred in a
public distribution prior to 90 days after the effective date of such
registration, or such other shorter period of time as the underwriters may
require.
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(d) Expenses of Registration. All Registration Expenses
incurred in connection with one registration pursuant to Section 1.5(b) or
1.5(c) shall be borne by Issuer. Unless otherwise stated, all Selling Expenses
relating to securities registered on behalf of the Holders and all other
Registration Expenses shall be borne by the Holders of such securities pro rata
on the basis of the number of shares so registered.
(e) Registration Procedures. In the case of each
registration, qualification or compliance effected by Issuer pursuant to this
Section 1.5, Issuer will keep each Holder advised in writing as to the
initiation of each registration, qualification and compliance and as to the
completion thereof. At its expense Issuer will:
(i) Prepare and file with the Commission a
registration statement with respect to such securities and use its best efforts
to cause such registration statement to become and remain effective for at least
two hundred seventy (270) days, and prepare and file with the Commission such
amendments to such registration statement and supplements to the prospectus
contained therein as may be necessary to keep such registration statement
effective for at least two hundred seventy (270) days, provided that no such
registration shall constitute a shelf registration under Rule 415 promulgated by
the Commission under the Securities Act;
(ii) Enter into a written underwriting agreement
in customary form and substance reasonably satisfactory to Issuer, the
Holders and the managing underwriter or underwriters of the public offering of
such securities, if the offering is to be underwritten in whole or in part;
(iii) Furnish to the Holders participating in such
registration and to the underwriters of the securities being registered such
reasonable number of copies of the registration statement, preliminary
prospectus, final prospectus and such other documents as such underwriters may
reasonably request in order to facilitate the public offering of such
securities;
(iv) Use its best efforts to register or qualify
the securities covered by such registration statement under such state
securities or blue sky laws of such jurisdictions as such participating Holders
may reasonably request within ten (10) days prior to the original filing of such
registration statement, except that Issuer shall not for any purpose be required
to execute a general consent to service of process or to qualify to do business
as a foreign corporation in any jurisdiction where it is not so qualified;
(v) Notify the Holders (or if they have
appointed an attorney-in-fact, such attorney-in-fact) participating in such
registration, promptly after it shall receive notice thereof, of the time when
such registration statement has become effective or a supplement to any
prospectus forming a part of such registration statement has been filed;
(vi) Notify such Holders or their attorney-in-fact
promptly of any request by the Commission for the amending or supplementing of
such registration statement or prospectus or for additional information;
(vii) Prepare and file with the Commission
promptly upon the request of any such Holders, any amendments or supplements to
such registration statement or prospectus which, in the reasonable opinion of
11
counsel for such Holders, is required under the Securities Act or the rules and
regulations thereunder in connection with the distribution of the Registrable
Securities by such Holders;
(viii) Prepare and promptly file with the
Commission, and promptly notify such Holders or their attorney-in-fact of the
filing of, such amendment or supplement to such registration statement or
prospectus as may be necessary to correct any statements or omissions if, at the
time when a prospectus relating to such securities is required to be delivered
under the Securities Act, any event has occurred as the result of which any such
prospectus or any other prospectus as then in effect would include an untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein not misleading in light of the circumstances in
which they were made;
(ix) In case any of such Holders or any
underwriter for any such Holders is required to deliver a prospectus at a time
when the prospectus then in effect may no longer be used under the Securities
Act, prepare promptly upon request such amendment or amendments to such
registration statement and such prospectuses as may be necessary to permit
compliance with the requirements of the Securities Act;
(x) Advise such Holders or their
attorney-in-fact, promptly after it shall receive notice or obtain knowledge
thereof, of the issuance of any stop order by the Commission suspending the
effectiveness of such registration statement or the initiation or threatening of
any proceeding for that purpose and promptly use its best efforts to prevent the
issuance of any stop order or to obtain its withdrawal if such stop order should
be issued; and
(xi) .At the request of any such Holder, furnish
on the effective date of the registration statement and, if such registration
includes an underwritten public offering, at the closing provided for in the
underwriting agreement, (A) an opinion, dated each such date, of the counsel
representing Issuer for the purposes of such registration, addressed to the
underwriters, if any, and to the Holder or Holders making such request, covering
such matters with respect to the registration statement, the prospectus and each
amendment or supplement thereto, proceedings under state and federal securities
laws, other matters relating to Issuer, the securities being registered and the
offer and sale of such securities as are customarily the subject of opinions of
issuer's counsel provided to underwriters in underwritten public offerings, and
(B) to the extent Issuer's accounting firm is willing to do so, a letter dated
each such date, from the independent public accountants of Issuer, addressed to
the underwriters, if any, and to the Holder or Holders making such request,
stating that they are independent public accountants within the meaning of the
Securities Act and that in the opinion of such accountants the financial
statements and other financial data of Issuer included in the registration
statement or the prospectus or any amendment or supplement thereto comply in all
material respects with the applicable accounting requirements of the Securities
Act, and additionally covering such other financial matters, including
information as to the period ending not more than five (5) business days prior
to the date of such letter with respect to the registration statement and
prospectus, as the underwriters or such requesting Holder or Holders may
reasonably request.
(f) Information by Holder. The Holder or Holders of
Registrable Securities included in any registration shall furnish Issuer such
information regarding such Holder or Holders, the Registrable Securities held by
12
them and the distribution proposed by such Holder or Holders as Issuer may
request in writing and as shall be required in connection with any registration,
qualification or compliance referred to in this Section 1.5.
(g) Indemnification.
(i) Issuer will indemnify each Holder, each of
its officers, directors and partners, and each person controlling such Holder
within the meaning of Section 15 of the Securities Act, with respect to which
registration, qualification or compliance has been effected pursuant to this
Section 1.5, and each underwriter, if any, and each person who controls any
underwriter within the meaning of Section 15 of the Securities Act, against all
expenses, claims, losses, damages or liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they were made,
not misleading, or any violation by Issuer of the Securities Act or any rule or
regulation promulgated under the Securities Act applicable to Issuer in
connection with any such registration, qualification or compliance, and Issuer
will reimburse each such Holder, each of its officers and directors, and each
person controlling such Holder, each such underwriter and each person who
controls any such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating, preparing or defending any such
claim, loss, damage, liability or action, provided that Issuer will not be
liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement or
omission or alleged untrue statement or omission, made in reliance upon and in
conformity with written information furnished to Issuer by an instrument duly
executed by such Holder, controlling person or underwriter and stated to be
specifically for use therein.
(ii) Each Holder will, if Registrable Securities
held by such Holder are included in the securities as to which such
registration, qualification or compliance is being effected, indemnify Issuer,
each of its directors and officers, each underwriter, if any, of Issuer's
securities covered by such a registration statement, each person who controls
Issuer or such underwriter within the meaning of Section 15 of the Securities
Act, and each other such Holder, each of its officers and directors and each
person controlling such Holder within the meaning of Section 15 of the
Securities Act, against all claims, losses, damages and liabilities (or actions
in respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse
Issuer, such Holders, such directors, officers, persons, underwriters or control
persons for any legal or any other expenses reasonably incurred in connection
with investigating or defending any such claim, loss, damage, liability or
action, in each case to the extent, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or alleged omission) is
made in such registration statement, prospectus, offering circular or other
document in reliance upon and in conformity with written information furnished
to Issuer by an instrument duly executed by such Holder and stated to be
13
specifically for use therein. Notwithstanding the foregoing, the liability of
each Holder under this subsection (ii) shall be limited to an amount equal to
the initial public offering price of the shares sold by such Holder, unless such
liability arises out of or is based on willful conduct by such Holder.
(iii) Each party entitled to indemnification under
this Section 1.5(g) (the "Indemnified Party") shall give notice to the party
required to provide indemnification (the "Indemnifying Party") promptly after
such Indemnified Party has actual knowledge of any claim as to which indemnity
may be sought, and shall permit the Indemnifying Party to assume the defense of
any such claim or any litigation resulting therefrom, provided that counsel for
the Indemnifying Party, who shall conduct the defense of such claim or
litigation, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 1.5 unless the failure
to give such notice is materially prejudicial to an Indemnifying Party's ability
to defend such action and provided further, that the Indemnifying Party shall
not assume the defense for matters as to which there is a conflict of interest
or separate and different defenses. No Indemnifying Party, in the defense of any
such claim or litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation.
(h) Transfer of Registration Rights. The rights granted
Infinity Outdoor under Sections 1.5(b) and 1.5(c) may be assigned to a
transferee or assignee reasonably acceptable to Issuer in connection with any
transfer or assignment of Registrable Securities by Infinity Outdoor provided
that: (i) such transfer may otherwise be effected in accordance with applicable
securities laws, and (ii) such assignee or transferee acquires at least fifty
percent (50%) of the Warrant Shares (appropriately adjusted for any
recapitalization).
(i) Standoff Agreement. Each Holder agrees, so long as
such Holder holds at least one percent (1%) of Issuer's outstanding voting
equity securities, that, upon request of Issuer or the underwriters managing an
underwritten offering of Issuer's securities, it will not sell, make any short
sale of, loan, grant any option for the purchase of, or otherwise dispose of any
Registrable Securities (other than those included in the registration) without
the prior written consent of Issuer or such underwriters, as the case may be,
for such period of time (not to exceed ten (10) days) prior to nor not to exceed
one hundred eighty (180) days after the effective date of such registration as
may be requested by the underwriters; provided that the officers and directors
of Issuer who own stock of Issuer also agree to such restrictions.
(j) Termination of Registration Rights. The rights granted
pursuant to Section 1.5 of this Agreement shall terminate for any particular
Holder at such time as such Holder beneficially owns securities constituting
less than one percent (1%) of the outstanding voting stock of the Company and
such Holder is able to sell all such securities under Rule 144 promulgated under
the Securities Act within a three-month period.
14
Section 2 CONDITIONS TO OBLIGATIONS.
Section 2.1 Conditions to Closing. The obligations of
Infinity Outdoor to purchase and pay for the Securities on the Closing Date and
the obligations of the Company to issue and deliver the Securities shall be
subject to the satisfaction or waiver on or before the Closing Date of the
conditions hereinafter set forth:
(a) Proceedings Satisfactory. All proceedings
taken on or prior to the Closing Date in connection with the issuance of the
Securities and the consummation of the transactions contemplated hereby and all
documents and papers relating thereto shall be satisfactory in form and
substance to Infinity Outdoor and its counsel.
(b) Representations True. All representations
and warranties of the parties contained herein shall be true and correct in all
respects on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of the Closing Date; the
parties shall have performed in all respects all agreements on their respective
parts required to be performed under this Agreement on or prior to the Closing
Date.
(c) The Purchase by Infinity Outdoor Permitted
by Applicable Law. The issuance of the Subsidiary Warrant (i) shall not be
prohibited by any applicable law or governmental regulation, release,
interpretation or opinion, (ii) shall not subject any of the Company, Genesis or
Infinity Outdoor to any penalty under or pursuant to any applicable law or
governmental regulation, and (iii) shall be permitted by the laws and
regulations of the jurisdictions to which any of the Company, Genesis or
Infinity Outdoor is subject.
Section 3 RESTRICTIONS ON TRANSFERABILITY; COMPLIANCE WITH
SECURITIES ACT
Section 3.1 Restrictions on Transferability. None of the
Securities shall be sold, assigned, transferred or pledged except upon the
conditions specified in this section, which conditions are intended to ensure
compliance with the Securities Act. Infinity Outdoor will cause any proposed
purchaser, assignee, transferee, or pledgee of any of the Securities to agree to
take and hold such Securities subject to the provisions and upon the conditions
specified in this section.
Section 3.2 Restrictive Legend. For purposes of
Regulation D under the Securities Act, Infinity Outdoor acknowledges and agrees
that none of the Securities have been registered under the Securities Act and
none of the Securities may be offered or sold unless the Securities are
registered under the Securities Act, or an exemption from such registration is
available. Each certificate representing (i) the Securities and (ii) any other
securities issued in respect of the Securities upon any stock split, stock
dividend, recapitalization, merger, consolidation or similar event, shall
15
(unless otherwise permitted by the provisions of this section) be stamped or
otherwise imprinted with a legend required under applicable state securities
laws reading substantially as follows:
The securities represented hereby are subject to a Securities
Purchase Agreement, dated as of June ___, 2000, copies of
which are on file at the principal office of the issuer and
will be furnished to the holder on request to the Secretary of
the issuer. The securities represented hereby have not been
registered under the Securities Act of 1933, as amended (the
"Act"), or any state securities law, and such securities may
not be sold, transferred or otherwise disposed of or exercised
unless the same is registered and qualified in accordance with
the Act and any applicable state securities laws, or in the
opinion of counsel reasonably satisfactory to the issuer such
registration and qualification are not required under the Act.
Transfer of such securities is prohibited except pursuant to
registration under the Act, or pursuant to an available
exemption from registration; hedging transactions involving
such securities may not be conducted unless in compliance with
the Act.
Infinity Outdoor consents to the Company and Genesis making a notation on its
records and giving instructions to any transfer agent of the Securities in order
to implement the restrictions on transfer established in this section.
Section 3.3 Notice of Proposed Transfers. The holder of
each certificate evidencing or representing Securities by acceptance thereof
agrees to comply in all respects with the provisions of this section. Prior to
any proposed sale, assignment, transfer or pledge of any of the Securities
(other than a transfer not involving a change in beneficial ownership), unless
there is in effect a registration statement under the Securities Act covering
the proposed transfer or unless the Securities may be transferred pursuant to
Rule 144 or Rule 144A under the Securities Act, the holder thereof shall give
written notice to Genesis and the Company of such holder's intention to effect
such transfer, manner and circumstances of the proposed transfer, sale,
assignment or pledge in sufficient detail, and shall be accompanied, at such
holder's expense by either (a) an unqualified written opinion of legal counsel
reasonably satisfactory to Genesis and the Company addressed to Genesis and the
Company, to the effect that the proposed transfer of the Securities may be
effected without registration under the Securities Act, or (b) a "no action"
letter from the Commission to the effect that the transfer of such securities
without registration will not result in a recommendation by the staff of the
Commission that action be taken with respect thereto, whereupon the holder of
such Securities shall be entitled to transfer such Securities in accordance with
the terms of the notice delivered by the holder to Genesis and the Company. Each
certificate representing the Securities transferred as above provided shall
bear, except if such transfer is made pursuant to Rule 144, the appropriate
restrictive legend set forth in this section, except that such certificate shall
not bear such restrictive legend if in the opinion of counsel for such holder,
Genesis and the Company such legend is not required in order to establish
compliance with any provision of the Securities Act.
16
Section 4 MISCELLANEOUS.
Section 4.1 Indemnification.
(a) Each of Genesis and the Company agrees to indemnify,
defend and hold harmless Infinity Outdoor and its respective successors,
assigns, heirs, subsidiaries, affiliates and all of the officers, directors,
employees, partners and agents (including attorneys and accountants) of each of
the aforementioned persons or entities, and each of them, from and against any
and all losses, claims, damages, liabilities, expenses, demands, causes of
action, suits, debts, obligations, rights, promises, acts, agreements and
damages of any kind or nature whatsoever, whether at law or in equity, whether
known or unknown, foreseen or unforeseen, heretofore or hereafter arising out
of, relating to, connected with or incidental to the failure of any
representation or warranty made by Genesis or the Company or in any other
documents or agreements contemplated hereby or the failure of Genesis or the
Company to comply in all material respects with the covenants contained in this
Agreement or in any other documents or agreements contemplated hereby.
(b) Infinity Outdoor agrees to indemnify, defend and hold
harmless Genesis and the Company and its respective successors, assigns, heirs,
subsidiaries, affiliates and all of the officers, directors, employees, partners
and agents (including attorneys and accountants) of each of the aforementioned
persons or entities, and each of them, from and against any and all losses,
claims, damages, liabilities, expenses, demands, causes of action, suits, debts,
obligations, rights, promises, acts, agreements and damages of any kind or
nature whatsoever, whether at law or in equity, whether known or unknown,
foreseen or unforeseen, heretofore or hereafter arising out of, relating to,
connected with or incidental to the failure of any representation or warranty
made by Infinity Outdoor or in any other documents or agreements contemplated
hereby or the failure of Infinity Outdoor to comply in all material respects
with the covenants contained in this Agreement or in any other documents or
agreements contemplated hereby.
Section 4.2 Reliance on and Survival of Representations.
All representations, warranties, covenants and agreements of Genesis, the
Company and Infinity Outdoor herein shall survive the execution and delivery of
this Agreement and of the Securities, for so long as the Subsidiary Warrant or
the Genesis Warrant remains outstanding
Section 4.3 Successors and Assigns. This Agreement shall
bind and inure to the benefit of and be enforceable by Genesis, the Company,
Infinity Outdoor and each of their respective successors and assigns, and, in
addition, shall inure to the benefit of and be enforceable by each person who
shall from time to time be a holder of the Securities. Infinity Outdoor shall be
permitted to transfer the Securities in accordance with their terms and in
accordance with restrictions under applicable federal and state securities laws.
Section 4.4 Notices. All notices and other
communications provided for in this Agreement shall be in writing and delivered
17
by registered or certified mail, postage prepaid, or delivered by overnight
courier (for next business day delivery) or telecopied, addressed as follows, or
at such other address as any of the parties hereto may hereafter designate by
notice to the other parties given in accordance with this Section:
1) if to Genesis or the Company:
XxxxxxxXxxxxxxxxx.xxx, Inc.
0000 Xxxxxxxxx Xxxx. 0xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx X. El-Batrawi
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to:
Nida & Xxxxxxx, LLP
000 Xxxxxxx Xxxxxx
Xxxxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
2) if to Infinity Outdoor:
Infinity Outdoor, Inc.
0000 Xxxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Attn: Xxxx Xxxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
With a copy of to:
Infinity Outdoor, Inc.
0000 Xxxxx Xxxxx Xxxxxx Xxxxxxx
Xxxxxxx, XX 00000
Attn: Xxxx Xxxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Powell, Goldstein, Xxxxxx & Xxxxxx, LLP
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
18
Any such notice or communication shall be deemed to have been
duly given on the fifth day after being so mailed, the next business day after
delivery by overnight courier, when received when sent by telecopy or upon
receipt when delivered personally.
Section 4.5 Counterparts. This Agreement may be executed
in two or more counterparts, each of which shall be deemed an original but all
of which together shall constitute one and the same instrument. Signatures may
be exchanged by telecopy, with original signatures to follow. Each of the
parties hereto agrees that it will be bound by its own telecopied signature and
that it accepts the telecopied signatures of the other parties to this
Agreement.
Section 4.6 Amendments. This Agreement may only be amended
by a writing duly executed by the parties hereto.
Section 4.7 Severability. If any term or provision of
this Agreement or any other document executed in connection herewith shall be
determined to be illegal or unenforceable, all other terms and provisions hereof
and thereof shall nevertheless remain effective and shall be enforced to the
fullest extent permitted by applicable law.
Section 4.8 Governing Law; Submission to Process. EXCEPT
TO THE EXTENT THAT THE LAW OF ANOTHER JURISDICTION IS EXPRESSLY SELECTED IN A
DOCUMENT OR SECURITY, THIS AGREEMENT AND THE SECURITIES AND ALL AMENDMENTS,
SUPPLEMENTS, WAIVERS AND CONSENTS RELATING HERETO OR THERETO SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF GENESIS, THE COMPANY AND
INFINITY OUTDOOR HEREBY IRREVOCABLY SUBMITS ITSELF TO THE NON-EXCLUSIVE
JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE STATE OF CALIFORNIA
AND AGREES AND CONSENTS THAT SERVICE OF PROCESS MAY BE MADE UPON IT IN ANY LEGAL
PROCEEDINGS RELATING HERETO BY ANY MEANS ALLOWED UNDER CALIFORNIA OR FEDERAL
LAW. EACH OF GENESIS, THE COMPANY AND INFINITY OUTDOOR IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH
COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. EACH OF THE COMPANY AND INFINITY OUTDOOR SHALL
APPOINT AN AGENT FOR SERVICE OF PROCESS IN CALIFORNIA AND SHALL NOTIFY THE OTHER
OF ANY FUTURE CHANGE THEREIN.
19
Section 4.9 Entire Agreement. This Agreement contains
the entire Agreement of the parties hereto with respect to the transactions
contemplated hereby and supersedes all previous oral and written, and all
previous contemporaneous oral negotiations, commitments and understandings.
Section 4.10 Further Assurances. Each of the parties
hereto agrees promptly to execute and deliver such documents and to take such
other acts as are reasonably necessary to effectuate the purposes of this
Agreement.
Section 4.11 Headings. The headings contained herein are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 4.12 Waiver of Jury Trial. GENESIS, THE COMPANY
AND INFINITY OUTDOOR EACH HEREBY AGREE TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT, THE SECURITIES OR ANY OTHER AGREEMENTS RELATING TO THE SECURITIES OR
ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION.
NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT, THE SECURITIES OR ANY OTHER DOCUMENTS OR AGREEMENTS RELATING
TO THE SECURITIES.
[Signature page follows]
20
IN WITNESS WHEREOF, the parties hereto execute this Securities
Purchase Agreement as of the date first set forth above.
GENESIS:
XXXXXXXXXXXXXXXXX.XXX, INC.,
a Delaware corporation
By: ______________________________
Name:
Title:
THE COMPANY:
GENESIS INTERMEDIA, INC.,
a Florida corporation
By________________________________
Name:
Title:
INFINITY OUTDOOR, INC.,
a Delaware corporation
By: ______________________________
Name:
Title:
Exhibit A
WARRANT
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO A SECURITIES PURCHASE
AGREEMENT, DATED AS OF JUNE ___, 2000, COPIES OF WHICH ARE ON FILE AT THE
PRINCIPAL OFFICE OF THE COMPANY AND WILL BE FURNISHED TO THE HOLDER ON REQUEST
TO THE SECRETARY OF THE COMPANY. THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY
STATE SECURITIES LAW, AND SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF OR EXERCISED UNLESS THE SAME IS REGISTERED AND QUALIFIED
IN ACCORDANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR IN THE
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY SUCH REGISTRATION AND
QUALIFICATION ARE NOT REQUIRED UNDER THE ACT. TRANSFER OF SUCH SECURITIES IS
PROHIBITED EXCEPT PURSUANT TO REGISTRATION UNDER THE ACT, OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM REGISTRATION; HEDGING TRANSACTIONS INVOLVING SUCH
SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT.
No. IO-1 Dated June __, 2000
WARRANT CERTIFICATE
This WARRANT CERTIFICATE certifies that Infinity Outdoor, Inc.,
("Infinity Outdoor") or its assigns, is the registered holder of a warrant (the
"Warrant") to purchase the number of shares of common stock of Genesis
Intermedia, Inc., a Florida corporation (the "Company"), set forth in Section 1
of this Warrant Certificate, at an exercise price per share set forth in Section
1 of this Warrant Certificate, subject to the terms and conditions set forth
herein.
SECTION 1. Securities Purchase Agreement; Warrant Shares; Exercise Price.
This Warrant Certificate represents the Subsidiary Warrant issued
pursuant to the Securities Purchase Agreement dated as of June ___, 2000 between
XxxxxxxXxxxxxxxxx.xxx, Inc. ("Genesis"), the Company and Infinity Outdoor. Terms
used but not defined in this Warrant Certificate shall have the meanings, if
any, ascribed thereto in the Securities Purchase Agreement. This Warrant
Certificate represents the right to purchase 20 shares of common stock of the
Company (the "Common Stock") subject to the terms and conditions set forth
herein. The shares of common stock so issuable are referred to herein as
"Warrant Shares."
The per share exercise price (the "Exercise Price") of this Warrant
shall equal $250,000 subject to the terms and conditions set forth herein.
SECTION 2. Exercise; Expiration.
To exercise this Warrant, the Warrant holder must elect and sign the
exercise election attached to this Warrant Certificate and deliver to the
Company: (a) this Warrant Certificate and (b) cash or a check payable to the
Company for the aggregate Exercise Price for the Warrant Shares to be so
purchased upon exercise. This Warrant may be exercised at any time prior to
12:00 p.m., Los Angeles time on July __, 2001 (the "Term"), and to the extent
not exercised prior to the expiration of the Term, this Warrant shall become
void and all rights hereunder and all rights in respect hereof shall cease as of
such time, provided, however, that the Term of this Warrant shall be extended to
June __, 2003 if Infinity Outdoor's sales force shall have generated aggregate
gross revenue during the period of 12 consecutive calendar months commencing
July 1, 2000 in excess of $1,000,000 from any sites where the Company's
interactive kiosks networks and Infinity Outdoor's display advertising systems
are or have been jointly marketed. Notwithstanding the foregoing, at anytime
during the Term of this Warrant if the Company has not theretofore completed a
firm commitment underwritten public offering pursuant to an effective
registration statement under the Securities Act covering the offer and sale of
the Company's Common Stock to the public resulting in gross proceeds to the
Company of not less than $20,000,000, Holder shall have the option to tender
this Warrant to the Company in exchange for the Genesis Warrant, in the form
attached to the Securities Purchase Agreement as Exhibit B after giving effect
to all adjustments to the Exercise Price and/or the number of shares set forth
therein, as if the Genesis Warrant had originally been issued on the date
hereof. Upon Holder's tender of this Warrant, Genesis shall promptly issue the
Genesis Warrant.
This Warrant shall be exercisable at the election of any holder
thereof, either in full or from time to time in part (but in no event for less
than one whole Share) and, in the event that a certificate evidencing this
Warrant is exercised in respect of fewer than all of the Warrant Shares issuable
on such exercise at any time prior to the date of expiration of this Warrant, a
new Warrant Certificate evidencing the remaining Warrant with respect to whole
shares of Common Stock issuable upon exercise will be issued.
The Company covenants that all Warrant Shares which may be issued upon
exercise of this Warrant will, upon issue, be fully paid, nonassessable, free of
preemptive rights and free from all taxes, liens, charges and security interests
with respect to the issue thereof.
The Company will pay all documentary stamp taxes attributable to the
issuance of Warrant Shares upon the exercise of this Warrant.
The Company shall not be required to issue fractional Warrant Shares on
the exercise of this Warrant. If any fraction of a Warrant Share would be
issuable on the exercise of this Warrant (or specified portion hereof), such
fraction shall be payable in cash based upon the Exercise Price per share.
SECTION 3. Transfer or Exchange.
Subject to the restrictions on transfer set forth in the Securities
Purchase Agreement and applicable securities law, the Company shall from time to
time register the transfer of this Warrant Certificate upon the records to be
maintained by it for that purpose, upon surrender hereof accompanied (if so
required by it) by a written instrument or instruments of transfer in form
satisfactory to the Company, duly executed by the registered holder hereof or by
the duly appointed legal representative thereof or by a duly authorized
attorney. Upon any such registration of transfer, a new Warrant Certificate(s)
shall be issued to the transferee(s) and the surrendered Warrant Certificate
shall be canceled by the Company.
This Warrant Certificate may be exchanged at the option of the holder
hereof, when surrendered to the Company at its office for another Warrant
Certificate or other Warrant Certificates of like tenor and representing a
Warrant with respect to a like aggregate number of Warrant Shares. A Warrant
Certificate surrendered for exchange shall be canceled by the Company.
Subject to the payment of any taxes as provided herein, upon an
exercise of this Warrant, the Company shall issue and cause to be delivered with
all reasonable dispatch to or upon the written order of the holder and in such
name or names as the Warrant holder may designate, a certificate or certificates
for the number of full Warrant Shares issuable upon the exercise of this
Warrant. This Warrant shall be deemed to have been exercised as of the date of
the surrender of this Warrant Certificate (and payment of the aggregate Exercise
Price).
The Company may deem and treat the registered holder hereof as the
absolute owner of this Warrant (notwithstanding any notation of ownership or
other writing hereon made by anyone), for the purpose of any exercise hereof, of
any distribution to the holder hereof, and for all other purposes, and the
Company shall not be affected by any notice to the contrary. Nothing contained
in this Warrant Certificate shall be construed prior to the date of surrender of
the Warrant Certificate for exercise in accordance with the terms hereof as
conferring upon the holder hereof the right to vote or to consent or to receive
notice as members in respect of the meetings of members or the election of
directors of the Company or any other matter, or any rights whatsoever as
shareholders of the Company.
SECTION 4. Mutilated, Lost, Stolen or Destroyed Warrant Certificate.
In case this Warrant Certificate shall be mutilated, lost, stolen or
destroyed, the Company may in its discretion issue in exchange and substitution
for and upon cancellation of the mutilated Warrant Certificate, or in lieu of
and substitution for the Warrant Certificate lost, stolen or destroyed, a new
Warrant Certificate of like tenor and representing an equivalent Warrant, but
only upon receipt of evidence satisfactory to the Company of such loss, theft or
destruction of such Warrant Certificate and indemnity, if requested, also
satisfactory to the Company.
SECTION 5. Reservation of Shares for Issuance.
The Company will at all times reserve and keep available, free from
preemptive rights, out of the aggregate of its authorized but unissued common
stock, for the purpose of enabling it to satisfy any obligation to issue Warrant
Shares upon exercise of this Warrant, the maximum number of shares of Common
Stock which may then be issuable upon the exercise of this Warrant. The Company
or, if appointed, the transfer agent for the shares of Common Stock and every
subsequent transfer agent for any of the Company's capital securities issuable
upon the exercise of any of the rights of purchase aforesaid will be irrevocably
authorized and directed at all times to reserve such number of authorized shares
of Warrant Shares as shall be required for such purpose. The Company will keep a
copy of this Warrant Certificate on file with any such transfer agent for any of
the Company's capital securities issuable upon the exercise of the rights of
purchase represented by this Warrant Certificate.
SECTION 6. Effect of Subdivision, Reclassification, Merger, Etc.
(a) If the outstanding Common Stock shall be subdivided into a greater
number of shares of Common Stock, the Exercise Price in effect at the opening of
business on the day following the day upon which such subdivision becomes
effective shall be proportionately reduced, and, conversely, if the outstanding
Common Stock shall be combined into a smaller number of shares of Common Stock,
the Exercise Price in effect at the opening of business on the day following the
day upon which such combination becomes effective shall be proportionately
increased, such reduction or increase, as the case may be, to become effective
immediately after the opening of business on the day following the day upon
which such subdivision or combination becomes effective. Upon such adjustment in
the Exercise Price, a like and proportional adjustment shall be made in the
number of Warrant Shares issuable upon exercise of this Warrant.
If any of the following events occur: (i) any reclassification or
change of the outstanding shares of Common Stock (other than a change in par
value, or from par value to no par value, or from no par value to par value, or
as a result of a subdivision or combination), (ii) any consolidation, merger or
combination of the Company with another corporation as a result of which holders
of Common Stock shall be entitled to receive stock, securities or other property
or assets (including cash) with respect to or in exchange for such shares of
Common Stock, or (iii) any sale or conveyance of the properties and assets of
the Company as, or substantially as, an entirety to any other company or
corporation as a result of which holders of Common Stock shall be entitled to
receive stock, securities or other property or assets (including cash) with
respect to or in exchange for such shares of Common Stock, then the Company or
the successor or purchasing company or corporation, as the case may be, shall
provide that this Warrant shall be convertible into the kind and amount of
shares of stock and other securities or property or assets (including cash)
receivable upon such reclassification, change, consolidation, merger,
combination, sale or conveyance by a holder of a number of shares of Common
Stock issuable upon exercise of this Warrant (assuming, for such purposes, a
sufficient number of authorized shares of Common Stock available to issue upon
exercise of the entirety of this Warrant) immediately prior to such
reclassification, change, consolidation, merger, combination, sale or
conveyance. If: (A) the Company shall declare a dividend (or any other
distribution) on its Common Stock; or (B) the Company shall declare a special
nonrecurring cash dividend on or a redemption of its Common Stock; or (C) the
Company shall authorize the granting to all holders of the Common Stock rights
or warrants to subscribe for or purchase any shares of capital stock of any
class or of any rights; or (D) the approval of any stockholders of the Company
shall be required in connection with any reclassification of the Common Stock of
the Company, any consolidation or merger to which the Company is a party, any
sale or transfer of all or substantially all of the assets of the Company, or
any compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property; or (E) the Company shall authorize the voluntary
dissolution, liquidation or winding up of the affairs of the Company, then the
Company shall cause to be mailed to the holder of this Warrant at its last
address as it shall appear upon the Warrant register of the Company, at least 10
business days prior to the applicable record or effective date hereinafter
specified, a notice stating (x) the date on which a record is to be taken for
the purpose of such dividend, distribution, redemption, rights or warrants, or
if a record is not to be taken, the date as of which the holders of Common Stock
of record to be entitled to such dividend, distributions, redemption, rights or
warrants are to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected to become
effective or close, and the date as of which it is expected that holders of
Common Stock of record shall be entitled to exchange their shares of Common
Stock for securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer, share exchange,
dissolution, liquidation or winding up.
If, in the case of any such reclassification, change, consolidation,
merger, combination, sale or conveyance, the stock or other securities and
assets receivable thereupon by a holder of shares of Common Stock includes
shares of stock or other securities and assets of a corporation other than the
successor or purchasing company or corporation, as the case may be, in such
reclassification, change, consolidation, merger, combination, sale or
conveyance, then, to the extent necessary, an acknowledgment of the obligations
under this paragraph shall be executed by such other company or corporation. The
Company shall not effect any non-dissolution or non-liquidation transaction
described in Section 6 of this Warrant unless prior to or simultaneously with
the consummation of or the purchasing of the securities or assets in such
transaction thereof the successor person or entity (if other than the Company)
resulting from such transaction shall assume in writing the obligations of the
Company pursuant to this Warrant. The above provisions of this paragraph shall
similarly apply to successive reclassifications, changes, consolidations,
mergers, combinations, sales and conveyances.
(b) Exercise Price Adjustment. In the event that the
Company issues or sells any Common Stock or securities which are convertible
into or exchangeable for its Common Stock or any convertible securities, or any
warrants or other rights to subscribe for or to purchase or any options for the
purchase of its Common Stock or any such convertible securities (other than
shares or options issued or which may be issued pursuant to (i) the Company's
option plans (but not in excess of two percent (2%) of the fully diluted
outstanding Common Stock and not at a discount in excess of 15% from the
Exercise Price then in effect) or shares issued upon exercise of options,
warrants or rights outstanding on the date of the Securities Purchase Agreement,
(ii) acquisitions, mergers, or other business combination), at an effective
price per share which is less than the Exercise Price then in effect, then in
each such case, the Exercise Price in effect immediately prior to such issue or
sale shall be reduced effective concurrently with such issue or sale to an
amount determined by multiplying the Exercise Price then in effect by a
fraction, (x) the numerator of which shall be the sum of (1) the number of
shares of Common Stock outstanding immediately prior to such issue or sale, plus
(2) the number of shares of Common Stock which the aggregate consideration
received by the Company for such additional shares would purchase at the
Exercise Price then in effect; and (y) the denominator of which shall be the
number of shares of Common Stock of the Company outstanding immediately after
such issue or sale.
For the purposes of the foregoing adjustment, in the case of
the issuance of any convertible securities, warrants, options or other rights to
subscribe for or to purchase or exchange for, shares of Common Stock
("Convertible Securities"), the maximum number of shares of Common Stock
issuable upon exercise, exchange or conversion of such Convertible Securities
shall be deemed to be outstanding, provided that no further adjustment shall be
made upon the actual issuance of Common Stock upon exercise, exchange or
conversion of such Convertible Securities, unless any such Convertible
Securities shall expire or terminate unconverted, in which case an equitable
adjustment shall be made to reflect the reduction in the actual shares issued.
The number of shares which may be purchased hereunder shall be
increased proportionately to any reduction in Exercise Price pursuant to this
Section 6(b) so that after such adjustments the aggregate Exercise Price payable
hereunder for the increased number of shares shall be the same as the aggregate
Exercise Price in effect just prior to such adjustments.
(c) In the event of any adjustment in the number of
Warrant Shares issuable hereunder upon exercise, the Exercise Price shall be
inversely proportionately increased or decreased as the case may be, such that
aggregate purchase price for Warrant Shares upon full exercise of this Warrant
shall remain the same. Similarly, in the event of any adjustment in the Exercise
Price, the number of Warrant Shares issuable hereunder upon exercise shall be
inversely proportionately increased or decreased as the case may be, such that
aggregate purchase price for Warrant Shares upon full exercise of this Warrant
shall remain the same.
Upon any adjustment of the Exercise Price and number of shares of
Warrant Shares issuable upon exercise of this Warrant pursuant hereto, the
Company shall promptly thereafter cause to be given to the registered holder of
this Warrant Certificate at its address appearing on the Warrant register
maintained by the Company written notice of such adjustments by first-class
mail, postage prepaid. Failure to deliver such notice shall not affect the
legality or validity of any such adjustment.
Section 7. Miscellaneous.
This Warrant Certificate and Warrant shall be deemed to be a contract
made under the law of the State of California and for all purposes shall be
construed in accordance with the internal law of said State.
Nothing in this Warrant Certificate shall be construed to give to any
person or company other than the Company and the registered holder of this
Warrant Certificate any legal or equitable right, remedy or claim under this
Warrant Certificate; but this Warrant Certificate shall be for the sole and
exclusive benefit of the Company and the registered holder of this Warrant.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be signed by its duly authorized officer.
Dated: _________, 2000 GENESIS INTERMEDIA, INC.,
a Florida corporation
By: ____________________________
Name:
Title:
[Form of Election for Exercise]
The undersigned hereby irrevocably elects to exercise the
right, represented by this Warrant Certificate, to receive ___________ shares of
Warrant Shares and herewith tenders payment for such shares in the amount of
$______ in accordance with the terms of the Warrant Certificate dated _______,
2000. The undersigned requests that a certificate for such shares be registered
in the name of _______________________________________, whose address is
_________________________________________________ and that such shares be
delivered to____________________________________________________________ whose
address is ___________________________________. If said number of shares is less
than all of the shares of Warrant Shares purchasable hereunder, the undersigned
requests that a new Warrant Certificate representing the remaining balance of
such whole shares be registered in the name of _____________________, whose
address is _________________________________ and that such Warrant Certificate
be delivered to,________________________ whose address is
________________________________________________.
Signature: ____________________________
Date: ____________________________
Exhibit B
FORM OF GENESIS WARRANT
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO A SECURITIES PURCHASE
AGREEMENT, DATED AS OF JUNE ___, 2000, COPIES OF WHICH ARE ON FILE AT THE
PRINCIPAL OFFICE OF THE COMPANY AND WILL BE FURNISHED TO THE HOLDER ON REQUEST
TO THE SECRETARY OF THE COMPANY. THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY
STATE SECURITIES LAW, AND SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF OR EXERCISED UNLESS THE SAME IS REGISTERED AND QUALIFIED
IN ACCORDANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR IN THE
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY SUCH REGISTRATION AND
QUALIFICATION ARE NOT REQUIRED UNDER THE ACT. TRANSFER OF SUCH SECURITIES IS
PROHIBITED EXCEPT PURSUANT TO REGISTRATION UNDER THE ACT, OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM REGISTRATION; HEDGING TRANSACTIONS INVOLVING SUCH
SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT.
No. IO-1 Dated June __, 2000
WARRANT CERTIFICATE
This WARRANT CERTIFICATE certifies that Infinity Outdoor, Inc.,
Infinity Outdoor or its assigns, is the registered holder of a warrant (the
"Warrant") to purchase the number of shares of common stock of
XxxxxxxXxxxxxxxxx.xxx, Inc., a Delaware corporation (the "Company"), set forth
in Section 1 of this Warrant Certificate, at an exercise price per share set
forth in Section 1 of this Warrant Certificate, subject to the terms and
conditions set forth herein.
SECTION 1. Securities Purchase Agreement; Warrant Shares; Exercise Price.
This Warrant Certificate represents the Genesis Warrant issued pursuant
to the Securities Purchase Agreement dated as of June ___, 2000 between Genesis
Intermedia, Inc., a Florida corporation ("Subsidiary"), the Company and Infinity
Outdoor. Terms used but not defined in this Warrant Certificate shall have the
meanings, if any, ascribed thereto in the Securities Purchase Agreement. This
Warrant Certificate represents the right to purchase 322,580 shares of common
stock of the Company (the "Common Stock") subject to the terms and conditions
set forth herein. The shares of common stock so issuable are referred to herein
as "Warrant Shares."
The per share exercise price (the "Exercise Price") of this Warrant
shall equal $15.50 subject to the terms and conditions set forth herein.
SECTION 2. Exercise; Expiration.
To exercise this Warrant, the Warrant holder must elect and sign the
exercise election attached to this Warrant Certificate and deliver to the
Company: (a) this Warrant Certificate and (b) cash or a check payable to
XxxxxxxXxxxxxxxxx.xxx, Inc. for the aggregate Exercise Price for the Warrant
Shares to be so purchased upon exercise. This Warrant may be exercised at any
time prior to 12:00 p.m., Los Angeles time on July __, 2001 (the "Term"), and to
the extent not exercised prior to the expiration of the Term, this Warrant shall
become void and all rights hereunder and all rights in respect hereof shall
cease as of such time, provided, however, that the Term of this Warrant shall be
extended to June __, 2003 if Infinity Outdoor's sales force shall have generated
aggregate gross revenue during the period of 12 consecutive calendar months
commencing July 1, 2000 in excess of $1,000,000 from any sites where the
Company's interactive kiosks networks and Infinity Outdoor's display advertising
systems are or have been jointly marketed.
This Warrant shall be exercisable at the election of any holder
thereof, either in full or from time to time in part (but in no event for less
than one whole Share) and, in the event that a certificate evidencing this
Warrant is exercised in respect of fewer than all of the Warrant Shares issuable
on such exercise at any time prior to the date of expiration of this Warrant, a
new Warrant Certificate evidencing the remaining Warrant with respect to whole
shares of Common Stock issuable upon exercise will be issued.
The Company covenants that all Warrant Shares which may be issued upon
exercise of this Warrant will, upon issue, be fully paid, nonassessable, free of
preemptive rights and free from all taxes, liens, charges and security interests
with respect to the issue thereof.
The Company will pay all documentary stamp taxes attributable to the
issuance of Warrant Shares upon the exercise of this Warrant.
The Company shall not be required to issue fractional Warrant Shares on
the exercise of this Warrant. If any fraction of a Warrant Share would be
issuable on the exercise of this Warrant (or specified portion hereof), such
fraction shall be payable in cash based upon the Exercise Price per share.
SECTION 3. Transfer or Exchange.
Subject to the restrictions on transfer set forth in the Securities
Purchase Agreement and applicable securities law, the Company shall from time to
time register the transfer of this Warrant Certificate upon the records to be
maintained by it for that purpose, upon surrender hereof accompanied (if so
required by it) by a written instrument or instruments of transfer in form
satisfactory to the Company, duly executed by the registered holder hereof or by
the duly appointed legal representative thereof or by a duly authorized
attorney. Upon any such registration of transfer, a new Warrant Certificate(s)
shall be issued to the transferee(s) and the surrendered Warrant Certificate
shall be canceled by the Company.
This Warrant Certificate may be exchanged at the option of the holder
hereof, when surrendered to the Company at its office for another Warrant
Certificate or other Warrant Certificates of like tenor and representing a
Warrant with respect to a like aggregate number of Warrant Shares. A Warrant
Certificate surrendered for exchange shall be canceled by the Company.
Subject to the payment of any taxes as provided herein, upon an
exercise of this Warrant, the Company shall issue and cause to be delivered with
all reasonable dispatch to or upon the written order of the holder and in such
name or names as the Warrant holder may designate, a certificate or certificates
for the number of full Warrant Shares issuable upon the exercise of this
Warrant. This Warrant shall be deemed to have been exercised as of the date of
the surrender of this Warrant Certificate (and payment of the aggregate Exercise
Price).
The Company may deem and treat the registered holder hereof as the
absolute owner of this Warrant (notwithstanding any notation of ownership or
other writing hereon made by anyone), for the purpose of any exercise hereof, of
any distribution to the holder hereof, and for all other purposes, and the
Company shall not be affected by any notice to the contrary. Nothing contained
in this Warrant Certificate shall be construed prior to the date of surrender of
the Warrant Certificate for exercise in accordance with the terms hereof as
conferring upon the holder hereof the right to vote or to consent or to receive
notice as members in respect of the meetings of members or the election of
directors of the Company or any other matter, or any rights whatsoever as
shareholders of the Company.
SECTION 4. Mutilated, Lost, Stolen or Destroyed Warrant Certificate.
In case this Warrant Certificate shall be mutilated, lost, stolen or
destroyed, the Company may in its discretion issue in exchange and substitution
for and upon cancellation of the mutilated Warrant Certificate, or in lieu of
and substitution for the Warrant Certificate lost, stolen or destroyed, a new
Warrant Certificate of like tenor and representing an equivalent Warrant, but
only upon receipt of evidence satisfactory to the Company of such loss, theft or
destruction of such Warrant Certificate and indemnity, if requested, also
satisfactory to the Company.
SECTION 5. Reservation of Shares for Issuance.
The Company will at all times reserve and keep available, free from
preemptive rights, out of the aggregate of its authorized but unissued common
stock, for the purpose of enabling it to satisfy any obligation to issue Warrant
Shares upon exercise of this Warrant, the maximum number of shares of Common
Stock which may then be issuable upon the exercise of this Warrant. The Company
or, if appointed, the transfer agent for the shares of Common Stock and every
subsequent transfer agent for any of the Company's capital securities issuable
upon the exercise of any of the rights of purchase aforesaid will be irrevocably
authorized and directed at all times to reserve such number of authorized shares
of Warrant Shares as shall be required for such purpose. The Company will keep a
copy of this Warrant Certificate on file with any such transfer agent for any of
the Company's capital securities issuable upon the exercise of the rights of
purchase represented by this Warrant Certificate.
SECTION 6. Effect of Subdivision, Reclassification, Merger, Etc.
If the outstanding Common Stock shall be subdivided into a greater
number of shares of Common Stock, the Exercise Price in effect at the opening of
business on the day following the day upon which such subdivision becomes
effective shall be proportionately reduced, and, conversely, if the outstanding
Common Stock shall be combined into a smaller number of shares of Common Stock,
the Exercise Price in effect at the opening of business on the day following the
day upon which such combination becomes effective shall be proportionately
increased, such reduction or increase, as the case may be, to become effective
immediately after the opening of business on the day following the day upon
which such subdivision or combination becomes effective. Upon such adjustment in
the Exercise Price, a like and proportional adjustment shall be made in the
number of Warrant Shares issuable upon exercise of this Warrant.
If any of the following events occur: (i) any reclassification or
change of the outstanding shares of Common Stock (other than a change in par
value, or from par value to no par value, or from no par value to par value, or
as a result of a subdivision or combination), (ii) any consolidation, merger or
combination of the Company with another corporation as a result of which holders
of Common Stock shall be entitled to receive stock, securities or other property
or assets (including cash) with respect to or in exchange for such shares of
Common Stock, or (iii) any sale or conveyance of the properties and assets of
the Company as, or substantially as, an entirety to any other company or
corporation as a result of which holders of Common Stock shall be entitled to
receive stock, securities or other property or assets (including cash) with
respect to or in exchange for such shares of Common Stock, then the Company or
the successor or purchasing company or corporation, as the case may be, shall
provide that this Warrant shall be convertible into the kind and amount of
shares of stock and other securities or property or assets (including cash)
receivable upon such reclassification, change, consolidation, merger,
combination, sale or conveyance by a holder of a number of shares of Common
Stock issuable upon exercise of this Warrant (assuming, for such purposes, a
sufficient number of authorized shares of Common Stock available to issue upon
exercise of the entirety of this Warrant) immediately prior to such
reclassification, change, consolidation, merger, combination, sale or
conveyance. If: (A) the Company shall declare a dividend (or any other
distribution) on its Common Stock; or (B) the Company shall declare a special
nonrecurring cash dividend on or a redemption of its Common Stock; or (C) the
Company shall authorize the granting to all holders of the Common Stock rights
or warrants to subscribe for or purchase any shares of capital stock of any
class or of any rights; or (D) the approval of any stockholders of the Company
shall be required in connection with any reclassification of the Common Stock of
the Company, any consolidation or merger to which the Company is a party, any
sale or transfer of all or substantially all of the assets of the Company, or
any compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property; or (E) the Company shall authorize the voluntary
dissolution, liquidation or winding up of the affairs of the Company, then the
Company shall cause to be mailed to the holder of this Warrant at its last
address as it shall appear upon the Warrant register of the Company, at least 10
business days prior to the applicable record or effective date hereinafter
specified, a notice stating (x) the date on which a record is to be taken for
the purpose of such dividend, distribution, redemption, rights or warrants, or
if a record is not to be taken, the date as of which the holders of Common Stock
of record to be entitled to such dividend, distributions, redemption, rights or
warrants are to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected to become
effective or close, and the date as of which it is expected that holders of
Common Stock of record shall be entitled to exchange their shares of Common
Stock for securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer, share exchange,
dissolution, liquidation or winding up.
If, in the case of any such reclassification, change, consolidation,
merger, combination, sale or conveyance, the stock or other securities and
assets receivable thereupon by a holder of shares of Common Stock includes
shares of stock or other securities and assets of a corporation other than the
successor or purchasing company or corporation, as the case may be, in such
reclassification, change, consolidation, merger, combination, sale or
conveyance, then, to the extent necessary, an acknowledgment of the obligations
under this paragraph shall be executed by such other company or corporation. The
Company shall not effect any non-dissolution or non-liquidation transaction
described in Section 6 of this Warrant unless prior to or simultaneously with
the consummation of or the purchasing of the securities or assets in such
transaction thereof the successor person or entity (if other than the Company)
resulting from such transaction shall assume in writing the obligations of the
Company pursuant to this Warrant. The above provisions of this paragraph shall
similarly apply to successive reclassifications, changes, consolidations,
mergers, combinations, sales and conveyances.
Upon any adjustment of the Exercise Price and number of shares of
Warrant Shares issuable upon exercise of this Warrant pursuant hereto, the
Company shall promptly thereafter cause to be given to the registered holder of
this Warrant Certificate at its address appearing on the Warrant register
maintained by the Company written notice of such adjustments by first-class
mail, postage prepaid. Failure to deliver such notice shall not affect the
legality or validity of any such adjustment.
SECTION 7. Miscellaneous.
This Warrant Certificate and Warrant shall be deemed to be a contract
made under the law of the State of California and for all purposes shall be
construed in accordance with the internal law of said State.
Nothing in this Warrant Certificate shall be construed to give to any
person or company other than the Company and the registered holder of this
Warrant Certificate any legal or equitable right, remedy or claim under this
Warrant Certificate; but this Warrant Certificate shall be for the sole and
exclusive benefit of the Company and the registered holder of this Warrant.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be signed by its duly authorized officer.
Dated: ________, 2000 XXXXXXXXXXXXXXXXX.XXX, INC.,
a Delaware corporation
By: ____________________________
Name:
Title:
[Form of Election for Exercise]
The undersigned hereby irrevocably elects to exercise the
right, represented by this Warrant Certificate, to receive ___________ shares of
Warrant Shares and herewith tenders payment for such shares in the amount of
$______ in accordance with the terms of the Warrant Certificate dated _______,
2000. The undersigned requests that a certificate for such shares be registered
in the name of _______________________________________, whose address is
_________________________________________________ and that such shares be
delivered to____________________________________________________________ whose
address is ___________________________________. If said number of shares is less
than all of the shares of Warrant Shares purchasable hereunder, the undersigned
requests that a new Warrant Certificate representing the remaining balance of
such whole shares be registered in the name of _____________________, whose
address is _________________________________ and that such Warrant Certificate
be delivered to,________________________ whose address is
________________________________________________.
Signature: ____________________________
Date: ____________________________
Exhibit 10.53
RELEASE AGREEMENT
This RELEASE AGREEMENT (this "Agreement") is made as of September __, 2000, by
and between XxxxxxxXxxxxxxxxx.xxx, Inc., a Delaware corporation ("Genesis") and
Denmore Investments Ltd., a British Virgin Islands company ("Denmore")
RECITALS
A. Genesis and Denmore entered into a Securities Purchase Agreement
dated as of February 7, 2000 (the "Stock Purchase Agreement").
B. Genesis and Denmore dispute the proper interpretation of Section
6 of Stock Purchase Agreement, relating to the payment of
liquidated damages in connection with events occurring prior to
the date hereof (the "Liquidated Damages Dispute").
C. Genesis and Denmore wish to settle the Liquidated Damages
Dispute on the terms set forth herein.
D. Genesis and Denmore desire to provide for the release of
certain obligations as set forth herein.
E. Genesis acknowledges that the certain 15,000 shares of Genesis
Common Stock represented by stock certificates number LU 0189
were subscribed and paid for in full by Denmore on February 7,
2000 and that, notwithstanding the date on such stock
certificates, such shares have been issued and outstanding
since February 7, 2000.
NOW, THEREFORE, in consideration of the premises and of the respective
covenants, agreements, obligations, and promises set forth below, the parties
hereto agree as follows:
1. Payment of Settlement Amount.
(a) Genesis shall issue to Denmore warrants to purchase 50,000 shares
of common stock of Genesis at $16.00 per share, in the form attached hereto as
Exhibit A (the "Warrants"), concurrently with the execution and delivery by
Genesis and Denmore of this Agreement, in full and complete satisfaction of the
Liquidated Damages Dispute existing on the date hereof.
(b) Piggyback Registration.
Subject to the terms and conditions set forth in this Agreement, if
Genesis proposes to register shares of its common stock under the Securities Act
(other than on Form S-4 or Form S-8 promulgated under the Securities Act or any
successor forms thereto), it shall promptly give written notice to Denmore of
its intention to so register such shares and, upon the written request, given
within 10 days after delivery of such notice by Genesis, of Denmore to include
in such registration shares of the common stock of Genesis which would be
issuable upon exercise of the Warrants (the "Registrable Shares") (which request
shall specify the number of Registrable Shares proposed to be included in such
registration by Denmore and shall state the intended method of exercise of the
Warrants by Denmore), Genesis shall use its reasonable efforts to cause all such
Registrable Shares to be included in such registration on the same terms and
conditions as the securities otherwise being sold in such registration. In the
event that the written notice referred to above states (if known) that the
proposed registration by Genesis is an underwritten public offering of shares of
Genesis common stock, any request pursuant to this Paragraph 1(b) to register
Registrable Shares shall specify that such Registrable Shares are to be included
in the underwriting on the same terms and conditions as the shares of Genesis
common stock, if any, otherwise being sold through underwriters under such
registration; provided, however, that if the managing underwriter advises
Genesis in writing that the inclusion of all Registrable Shares and other
shares, if any, proposed to be included in such registration would interfere
with the successful marketing (including pricing) of authorized but unissued
shares of Genesis common stock (the "Primary Shares") or other shares proposed
to be registered by Genesis, then the number of Primary Shares, Registrable
Shares and other shares proposed to be included in such registration shall be
included in the following order:
(i) first, the (i) Primary Shares, and (ii) other shares that
are to be included by third parties in such registration pursuant to
the exercise of demand registration rights granted by Genesis to such
third parties; and
(ii) second, (i) any other shares of Genesis common stock held
by persons who exercise piggyback rights granted prior to the date of
this Agreement that obligate Genesis to register such shares prior to
the Registrable Shares, (ii) the Registrable Shares requested to be
included in such registration and (iii) at the absolute and sole
discretion of Genesis, other shares that are requested to be included
by third parties in such registration pursuant to the exercise of
"piggy-back" registration rights, pro rata among them based upon the
ratio that the number of shares then owned by each holder thereof bears
to the aggregate number of shares then owned by all such holders
requested to be included in such registration.
2. Release.
(a) Denmore hereby forever releases and discharges Genesis, and each
and all of its predecessors, successors, parents, and subsidiaries, and each and
all of their present and former employees, agents, representatives, officers,
directors, shareholders, attorneys, insurers, or reinsurers, and any other
person, firm, partnership, company or corporation now, previously, or hereafter
expressly and formerly affiliated in any manner with any of the above (the
"Released Parties") from any and all claims, demands, causes of action,
obligations, damages, and liabilities, in law or equity, whether or not known,
suspected or claimed, direct or indirect, fixed or contingent, whether now
- 2 -
existing or hereafter arising, that relate to, arise from, is connected with, or
in any manner concerns the Liquidated Damages Dispute existing on the date
hereof (the "Released Claims").
(b) It is expressly understood that the Released Claims include,
without limitation, any and all claims or causes of action against the Released
Parties based on theories of alter ego, principal-agent, conspiracy, successor
liability, fraudulent conveyance law, or the like.
(c) Denmore acknowledges that it is familiar with the provisions of
California Civil Code Section 1542, which provides as follows:
A general release does not extend to claims which the creditor
does not know or expect to exist in his favor at the time of
executing the release, which if known by him must have
materially affected his settlement with the debtor.
Denmore acknowledges that it may have sustained damages, losses, costs, or
expenses by reason of an act, failure to act, event, or matter that are
presently unknown and unsuspected and that such damages, losses, costs, or
expenses as may have been sustained may give rise to additional damages, losses,
costs, or expenses in the future. Nevertheless, Denmore hereby expressly waives
any and all rights it may have under California Civil Code Section 1542, or
under any other state or federal statute, or common law principle of similar
effect relating to the Released Claims.
3. No Oral Representations or Agreements. No oral representations or
agreements that are not expressly included in this written Agreement have been
made to, or relied upon by, any of the parties hereto in conjunction with this
Agreement. This Agreement constitutes the entire agreement of the parties on the
subject matter hereof, and it is expressly understood and agreed upon that this
Agreement shall not be altered, amended, modified, or otherwise changed by oral
communication of any kind or character.
4. Indemnity Regarding Assignment of Claims. Each of the parties hereto
hereby represents to the other parties hereto that they have not heretofore
assigned, sold, transferred, pledged, or hypothecated, or purported to assign,
sell, transfer, pledge, or hypothecate, to any entity or individual, any claims
related to this Agreement. Each of the parties hereto hereby agrees to indemnify
and hold harmless the other parties hereto against any claim, demand, debt,
loss, obligation, liability, cost, expense (including reasonable attorneys'
fees), right of action to cause of action, based solely on, arising solely out
of, or solely in connection with, any such transfer, assignment, sale, pledge,
or hypothecation, or purported transfer, assignment, sale, pledge, or
hypothecation by such party.
- 3 -
5. Costs and Expenses. Each of the parties hereto shall bear his, her,
or its own costs and expenses incurred in connection with the negotiation,
drafting, and consummation of this Agreement.
6. Successors, Subsidiaries, and Assigns. This Agreement shall bind and
inure to the benefit of the principals, agents, representatives, successors,
heirs, and assigns of the parties hereto.
7. Counterparts. This Agreement may be signed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same Agreement, which shall be binding on
the parties hereto and their successors, subsidiaries and assigns.
8. Construction. The terms and language of this Agreement are the
result of negotiations between the parties and there shall be no presumptions
that any ambiguities in this Agreement should be resolved against any party
hereto. Any controversy concerning the construction of this Agreement shall be
decided without regard to authorship.
9. Headings. Paragraph headings or captions contained in this Agreement
are used for reference only and shall not be deemed to govern or extend the
terms of this Agreement.
10. Necessary Acts. Each of the parties hereto agrees to any and all
acts necessary and/or reasonably required in order to effectuate the purposes of
this Agreement or to comply with its terms.
11. Governing Law. This Agreement shall be governed by and construed in
accordance with California law, without regard to the conflicts of laws
provision thereof.
[signature page follows]
- 4 -
IN WITNESS WHEREOF, the parties to this Agreement have executed this
Agreement as of the date first above written.
GENESIS
XxxxxxxXxxxxxxxxx.xxx, Inc.
By: ____________________________
Xxxx X. El-Batrawi
Chief Executive Officer
DENMORE
Denmore Investments Ltd.
By: ____________________________
Name:
Its:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES ISSUABLE UPON
EXERCISE HEREOF HAVE NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW, AND SUCH SECURITIES MAY NOT
BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS THE SAME ARE REGISTERED AND
QUALIFIED IN ACCORDANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS,
OR IN THE OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY SUCH
REGISTRATION AND QUALIFICATION ARE NOT REQUIRED (INCLUDING UNDER REGULATION S)
UNDER THE ACT. TRANSFER OF SUCH SECURITIES IS PROHIBITED EXCEPT IN ACCORDANCE
WITH THE PROVISIONS OF REGULATION S UNDER THE ACT (RULE 901 THROUGH 905, AND
PRELIMINARY NOTES), PURSUANT TO THE REGISTRATION UNDER THE ACT, OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM REGISTRATION; AND HEDGING TRANSACTIONS INVOLVING
SUCH SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT.
No. ___ Dated: As of September__, 2000
Warrant
XXXXXXXXXXXXXXXXX.XXX, INC.
This Warrant certifies that Denmore Investments Ltd., a British Virgin
Islands company, or registered assigns, is the registered holder of a warrant
(the "Warrant") to purchase 50,000 shares of common stock, par value $.001 per
share (the "Shares"), of XxxxxxxXxxxxxxxxx.xxx, Inc., a Delaware corporation
(the "Company"), at an exercise price of $16.00 (the "Exercise Price").
Section 1. Exercise; Expiration.
To exercise this Warrant, the Warrant holder must elect and sign the
exercise election form attached to this Warrant certificate and deliver to the
Company (i) this Warrant certificate and (ii) cash or a check payable to the
Company for the Exercise Price for the Warrant (unless exercised pursuant to
Section 2).
This Warrant may be exercised by any holder hereof at any time
following the issuance hereof until September ___, 2005, the date of the
expiration of this Warrant. To the extent that this Warrant has not been
exercised by the date of its expiration, this Warrant shall become void and all
rights hereunder and all rights in respect hereof shall cease as of such time.
This Warrant shall be exercisable at the election of any holder hereof,
either in full or from time to time in part (but in no event for less than one
whole Share) and, in the event that a certificate evidencing this Warrant is
exercised in respect of fewer than all of the Shares issuable on such exercise
at any time prior to the date of expiration of this Warrant, a new Warrant
certificate evidencing the remaining Warrant with respect to whole Shares
issuable upon exercise will be issued. No adjustment shall be made for any
dividends on any Shares issuable upon exercise of this Warrant.
The Company covenants that all Shares which may be issued upon exercise
of this Warrant will, upon issue, be fully paid, nonassessable, free of
preemptive rights and free from all taxes, liens, charges and security interests
with respect to the issue thereof.
The Company will pay all documentary stamp taxes attributable to the
issuance of Warrant Shares upon the exercise of this Warrant; provided, however,
that the Company shall not be required to pay any tax or taxes which may be
payable in respect of any transfer involved in the issue of any Warrant
certificates or any certificates for Warrant Shares in a name other than that of
the registered holder of this Warrant certificate surrendered upon the exercise
of this Warrant, and the Company shall not be required to issue or deliver such
Warrant certificates unless or until the person or persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.
The Company shall not be required to issue fractional Warrant Shares on
the exercise of this Warrant. If any fraction of a Warrant Share would be
issuable on the exercise of this Warrant (or specified portion hereof), the
Company shall pay an amount in cash equal to the Exercise Price on the day
immediately preceding the date this Warrant certificate is presented for
exercise, multiplied by such fraction.
This Warrant and any Shares may only be transferred by the holder in
accordance with the registration requirements of the Securities Act of 1933, as
amended (the "Securities Act") of an exemption there from.
Section 2. Cashless Exercise.
Notwithstanding the provisions of Section 1, the holder may elect to
exercise this Warrant, in whole or in part, by receiving Shares equal to the
value (as herein determined) of the portion of this Warrant then being
exercised, in which event the Company shall issue to the holder of this Warrant
the number of Shares determined by using the following formula:
X = Y(A-B)
------
A
Where: X = the number of Shares to be issued to the
holder under the provisions of this
Section 2
Y = the number of Shares that would otherwise be
issued upon an exercise for cash
A = the Current Fair Market Value (as
hereinafter defined) of one Share calculated
as of the last trading day immediately
preceding such exercise
B = the Exercise Price
As used herein, the "Current Fair Market Value" of the Shares of a
specified date shall mean with respect to each Share, (i) the average of the
closing prices of Shares sold on all securities exchanges on which the Shares
2
may at the time be listed, or (ii) if there have been no sales on any such
exchange on such day, the average highest bid and lowest asked prices on all
such exchanges at the end of such day, or (iii) if on such day the Shares are
not so listed, the average of representative bid and asked prices quoted in the
NASDAQ System as of 4:00 p.m., New York time, or (iv) if on such day Shares are
not quoted in the NASDAQ System, the average of the highest bid and lowest asked
prices on such day in the domestic over-the-counter market as reported by the
National Association of Securities Dealers, Inc. Over-the-Counter Bulletin Board
System or any similar successor organization, in each such case either (i)
calculated on the date which the form of exercise election specified in Section
1 herein is deemed to have been sent to the Company or (ii) averaged over a
period of five (5) days consisting of the day as of which the Current Fair
Market Value is being determined and the four (4) consecutive business days
prior to such day. The holder hereof shall determine in its sole discretion
which method of calculation to use. If on the date for which Current Fair Market
Value is to be determined Shares are not listed on any securities exchange or
quoted in the NASDAQ System or the over-the-counter market, the then Current
Fair Market Value of the Shares shall be the highest price per share which the
Company could then obtain from a willing buyer (not a current employee or
director) for Shares sold by the Company from authorized but unissued Shares, as
determined in good faith by the Board of Directors of the Company, unless prior
to such date the Company has become subject to a merger, consolidation,
reorganization, acquisition or other similar transaction pursuant to which the
Company is not the surviving entity, in which case the Current Fair Market Value
of the Shares shall be deemed to be the per share value received or to be
received in such transaction by the holders of Shares.
Section 3. Transfer or Exchange.
The Company shall from time to time register the transfer of this
Warrant certificate upon the records to be maintained by it for that purpose,
upon surrender hereof, accompanied (if so required by it) by a written
instrument or instruments of transfer in form satisfactory to the Company, duly
executed by the registered holder hereof or by the duly appointed legal
representative thereof or by a duly authorized attorney and an opinion of
counsel in form and substance satisfactory to the Company that such transfer may
be effected under the Securities Act. Upon any such registration of transfer, a
new Warrant certificate(s) shall be issued to the transferee(s) and the
surrendered Warrant certificate shall be canceled by the Company.
This Warrant certificate may be exchanged at the option of the holder
hereof, when surrendered to the Company at its office for another Warrant
certificate or other Warrant certificates of like tenor and representing a
Warrant with respect to a like aggregate number of Shares. A Warrant certificate
surrendered for exchange shall be cancelled by the Company.
Subject to the payment of any taxes as provided herein, upon an
exercise of this Warrant, the Company shall issue and cause to be delivered with
all reasonable dispatch to or upon the written order of the holder and in such
name or names as the Warrant holder may designate, a certificate or certificates
for the number of full Shares issuable upon the exercise of this Warrant. This
Warrant shall be deemed to have been exercised and any person so designated to
be named therein shall be deemed to have become a holder of record of such
Shares as of the date of the surrender of this Warrant certificate (and payment
of the Exercise Price or exercise pursuant to Section 2).
The Company may deem and treat the registered holder hereof as the
absolute owner of this Warrant (notwithstanding any notation of ownership or
3
other writing hereon made by anyone), for the purpose of any exercise hereof, of
any distribution to the holder hereof, and for all other purposes, and the
Company shall not be affected by any notice to the contrary. Nothing contained
in this Warrant certificate shall be construed prior to the date of surrender of
the Warrant certificate for exercise in accordance with the terms hereof as
conferring upon the holder hereof the right to vote or to consent or to receive
notice as stockholders in respect of the meetings of stockholders or the
election of directors of the Company or any other matter, or rights whatsoever
as stockholders of the Company.
Section 4. Mutilated, Lost, Stolen or Destroyed Warrant Certificate.
In case this Warrant certificate shall be mutilated, lost, stolen or
destroyed, the Company may in its discretion issue in exchange and substitution
for and upon cancellation of the mutilated Warrant certificate, or in lieu of
and in substitution for the Warrant certificate lost, stolen or destroyed, a new
Warrant certificate of like tenor and representing an equivalent Warrant, but
only upon receipt of evidence satisfactory to the Company of such loss, theft or
destruction of such Warrant certificate and indemnity, if requested, also
satisfactory to the Company.
Section 5. Reservation of Shares for Issuance.
The Company will at all times reserve and keep available, free from
preemptive rights, out of the aggregate of its authorized but unissued common
stock, for the purpose of enabling it to satisfy any obligation to issue Shares
upon exercise of this Warrant, the maximum number of Shares which may then be
issuable upon the exercise of this Warrant. The Company or, if appointed, the
transfer agent for the common stock and every subsequent transfer agent for any
of the Company's capital securities issuable upon the exercise of any of the
rights of purchase aforesaid will be irrevocably authorized and directed at all
times to reserve such number of authorized shares of common stock as shall be
required for such purpose. The Company will keep a copy of this Warrant
certificate on file with any such transfer agent for any of the Company's
capital securities issuable upon the exercise of the rights of purchase
represented by this Warrant certificate.
Section 6. Effect of Subdivision, Reclassification, Merger, Etc.
If the outstanding common stock shall be subdivided into a greater
number of shares of common stock, the Exercise Price in effect at the opening of
business on the day following the day upon which such subdivision becomes
effective shall be proportionately reduced, and, conversely, if the outstanding
common stock shall be combined into a smaller number of shares of common stock,
the Exercise Price in effect at the opening of business on the day following the
day upon which such combination becomes effective shall be proportionately
increased, such reduction or increase, as the case may be, to become effective
immediately after the opening of business on the day following the day upon
which such subdivision or combination becomes effective.
If any of the following events occur: (i) any reclassification or
change of the outstanding shares of common stock (other than a change in par
value, or from par value to no par value, or from no par value to par value, or
as a result of a subdivision or combination), (ii) any consolidation, merger or
combination of the Company with another corporation as a result of which holders
of common stock shall be entitled to receive stock, securities or other property
4
or assets (including cash) with respect to or in exchange for such common stock,
or (iii) any sale or conveyance of the properties and assets of the Company as,
or substantially as, an entirety to any other company or corporation as a result
of which holders of Shares shall be entitled to receive stock, securities or
other property or assets (including cash) with respect to or in exchange for
such common stock, then the Company or the successor or purchasing company or
corporation, as the case may be, shall provide that this Warrant shall be
convertible into the kind and amount of shares of stock and other securities or
property or assets (including cash) receivable upon such reclassification,
change, consolidation, merger, combination, sale or conveyance by a holder of a
number of Shares issuable upon exercise of this Warrant (assuming, for such
purposes, a sufficient number of authorized shares of common stock available to
issue upon exercise of the entirety of this Warrant) immediately prior to such
reclassification, change, consolidation, merger, combination, sale or conveyance
assuming such holder of common stock did not exercise his or her rights of
election, if any, as to the kind or amount of securities, cash or other property
receivable upon such consolidation, merger, statutory exchange, sale or
conveyance (provided that, if the kind or amount of securities, cash or other
property receivable upon such consolidation, merger, statutory exchange, sale or
conveyance is not the same for each share of common stock in respect of which
such rights of election have not been exercised ("non-electing share"), then,
for the purposes of paragraph, the kind and amount of securities, cash or other
property receivable upon such consolidation, merger, statutory exchange, sale or
conveyance for such non-electing share shall be deemed to be the kind and amount
so receivable per share of common stock by a plurality of the non-electing
shares). In any such case, the revenue calculation necessary for exercise of
this Warrant shall be calculated on the basis of the business entity or assets
so consolidated, merged, exchanged, sold or conveyed, whether in whole or
incorporated into another business entity, and it shall be the responsibility of
such successor or acquiror entity to perform such calculation, which calculation
shall be conclusive and binding on the holder of this Warrant. If, in the case
of any such reclassification, change, consolidation, merger, combination, sale
or conveyance, the stock or other securities and assets receivable thereupon by
a holder of common stock includes shares of stock or other securities and assets
of a corporation other than the successor or purchasing company or corporation,
as the case may be, in such reclassification, change, consolidation, merger,
combination, sale or conveyance, then an acknowledgement of the obligations
under this paragraph shall be executed by such other company or corporation. The
above provisions of this paragraph shall similarly apply to successive
reclassifications, changes, consolidations, mergers, combinations, sales and
conveyances.
Upon any adjustment of the Exercise Price pursuant hereto, the Company
shall promptly thereafter cause to be given to the registered holder of this
Warrant certificate at its address appearing on the Warrant register maintained
by the Company written notice of such adjustments by first-class mail, postage
prepaid. Failure to deliver such notice shall not affect the legality or
validity of any such adjustment.
Section 7. Miscellaneous.
This Warrant certificate and Warrant shall be deemed to be a contract
made under the law of the State of Delaware and for all purposes shall be
construed in accordance with the internal law of said State.
5
Nothing in this Warrant certificate shall be construed to give to any
person or company other than the Company and the registered holder of this
Warrant certificate any legal or equitable right, remedy or claim under this
Warrant certificate; but this Warrant certificate shall be for the sole and
exclusive benefit of the Company and the registered holder of this Warrant.
[Signature Page Follows]
6
IN WITNESS WHEREOF, XxxxxxxXxxxxxxxxx.xxx, Inc., a Delaware corporation,
has caused this Warrant certificate to be signed by its duly authorized officer.
Dated: September ___, 2000
XXXXXXXXXXXXXXXXX.XXX, INC., a
Delaware Corporation
By: __________________________
7
EXERCISE ELECTION
To be Executed by the Holder
in Order to Exercise the Warrant
The undersigned holder of the foregoing Warrant hereby irrevocably
elects to exercise the purchase rights represented by such Warrant, and to
purchase thereunder, ________ shares of common stock, $.001 par value
("Shares"), and (i) herewith makes payment of an aggregate of $___________
therefor and/or (ii) pursuant to Section 2 of such Warrant hereby tenders the
right to exercise such Warrant to the extent of ___________ Shares of the
Company. The undersigned requests that the certificates for Shares to be issued
in the name(s) of, and delivered to, the person(s) whose name(s) and address(es)
are set forth below:
__________________________________________
(Please type or print name and address)
__________________________________________
(Social Security or tax identification number, if applicable)
and delivered to _____________________________________________________________
(Please type or print name and address)
and, if such number of Shares shall not be all the Shares evidenced by this
Warrant, that a new Warrant of like tenor for the balance of the Shares subject
to the Warrant be registered in the name of, and delivered to, the holder at the
address stated below.
In full payment of the purchase price with respect to the portion of
the Warrant exercised and transfer taxes, if any, the undersigned hereby tenders
payment of $_________ by check or money order payable in United States currency
to the order of XxxxxxxXxxxxxxxxx.xxx, Inc., or its successor.
Dated: _____________________
_________________________________________
_________________________________________
(Address)
_________________________________________
_________________________________________
Signatures guaranteed by:
____________________________
EXHIBIT 10.54
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED PURSUANT TO THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAW, AND SUCH
SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS THE SAME
ARE REGISTERED AND QUALIFIED IN ACCORDANCE WITH THE SECURITIES ACT AND ANY
APPLICABLE STATE SECURITIES LAWS, OR AN EXEMPTION FROM SUCH REGISTRATION AND
QUALIFICATION IS AVAILABLE.
NOTE PURCHASE AGREEMENT
This NOTE PURCHASE AGREEMENT (this "Agreement") is entered into as of
the 16th day of October 2000, between Ultimate Holdings, Ltd., a Bermuda limited
company (the "Lender"), and XxxxxxxXxxxxxxxxx.xxx, Inc., a Delaware corporation
(the "Company").
WHEREAS the Company would like to borrow from the Lender up to
US$5,000,000 for use in connection with the Company's business; and the Lender
is willing to lend up to US$5,000,000 to the Company, on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound hereby, the parties hereto hereby agree as
follows:
Section 1 ISSUANCE OF NOTE.
Section 1.1 Authorization. The Company has duly authorized the
issuance to the Lender of a Promissory Note, in the maximum aggregate principal
amount of Five Million United States Dollars (US$5,000,000) (the "Note") payable
on October 16, 2005.
Section 1.2 Purchase and Sale of the Note. In reliance upon
the representations of the Company contained in Section 1.6 and of the
representations of the Lender contained in Section 1.7, and subject to the terms
and conditions set forth herein, the Company shall issue to the Lender the Note
and the Lender shall lend to the Company at the Closings (as defined in Section
1.4) up to the maximum aggregate principal amount of Five Million United States
Dollars (US$5,000,000) (the "Maximum Loan Commitment Amount").
Section 1.3 Form of Note. The Note shall mature, shall bear
interest, shall be payable and shall be otherwise as provided in the form of
Note attached hereto as Exhibit A.
Section 1.4 The Closings. The initial closing of the loan
transactions contemplated hereby (the "Initial Closing") shall be held at 12:00
noon, Pacific Time on the next business day after the date hereof or such other
date and time as the parties hereto may mutually agree (the "Initial Closing
Date"). Subsequent closings ("Subsequent Closings" and together with the Initial
Closing, the "Closings") shall take place at 12:00 p.m. Pacific Time on the
second business day following the date the Company shall deliver to the Lender a
Borrowing Certificate in the form attached hereto ("Subsequent Closing Dates"),
provided that such borrowing request, together with all prior borrowing requests
that have been funded, does not exceed the Maximum Loan Commitment Amount. The
Closings shall take place at the principal executive offices of the Company, in
Van Nuys, California or at such other place or in such other manner as the
parties hereto may mutually agree. These amounts advanced by the Lender pursuant
to such borrowing requests are referred to as the "Loans."
Section 1.5 General Payment Provisions. (a) The Company will
make each payment when due under the Note or this Agreement not later than 12:00
noon, Pacific Time, on the date such payment becomes due and payable, in lawful
money of the United States of America, without set-off, deduction or
counterclaim, and in immediately available funds sent by wire transfer to the
Lender at the address to be provided by the Lender. Any payment received by the
Lender after such time shall be deemed to have been made on the next following
business day. Should any such payment become due and payable on a day other than
a business day, the maturity of such payment shall be the next business day. Any
amount received by the Lender, whether as an interest payment, principal payment
or principal prepayment from or on behalf of the Company, shall be applied as
follows in descending order of priority: (i) to all previously invoiced costs,
fees and expenses of the Lender (including reasonable attorneys' fees) incurred
in connection with this Agreement or in enforcing any obligations of, or in
collecting any payments from, any obligor hereunder; (ii) to interest which has
accrued on past due payments under the Note; (iii) to interest that is currently
due and payable under the Note; (iv) to payment of principal under the Note
currently due and payable; (v) to the payment of past due principal under the
Note; and (vi) to the prepayment of principal due under the Note.
(b) Other than the tender of cash equal to such amount of the
Maximum Loan Commitment Amount as in determined by the parties to be tendered at
the Closings pursuant to the terms of this Agreement, which tenders are subject
to the terms and conditions hereof, and regardless of whether the Company has
repaid such amounts in whole or in part, the Lender will have no obligation
whatsoever to lend, advance or otherwise pay any other monies to or on behalf of
the Company.
Section 1.6 Representations, Warranties and Covenants of
the Company.
The Company makes the following representations and warranties
to the Lender as the date hereof, the Closing Date and the date of any
subsequent disbursement of funds.
2
(a) The Company is duly organized, validly existing and in
good standing under the laws of its state of formation and is duly qualified as
a foreign corporation in each jurisdiction in which the character of its
properties or the nature of its business requires such qualification. The
Company has all requisite power to transact the business it transacts and
proposes to transact, to execute and deliver this Agreement, the Note and all
other documents and agreements contemplated hereby and thereby, and to perform
the provisions hereof and thereof and to consummate the transactions
contemplated hereby and thereby.
(b) The execution, delivery and performance of this Agreement,
the Note and all other documents and agreements contemplated hereby or thereby
to be executed, delivered and performed by the Company, and the consummation of
the transactions contemplated hereby or thereby, have been duly authorized and
approved by the Company. This Agreement, the Note and all other documents and
agreements contemplated hereby or thereby to be executed and delivered by the
Company have been duly authorized, executed and delivered by, and are the valid
and binding obligations of the Company, enforceable against the Company in
accordance with their terms, except as may be limited by bankruptcy,
reorganization, insolvency, moratorium or other similar laws or by legal or
equitable principles relating to or limiting creditors' rights generally.
(c) Except as set forth in Schedule 1.6(c) hereto, the Company
has no knowledge of any fact that materially adversely affects, or could
reasonably be expected to materially adversely affect, the business, prospects,
properties, assets, operations or financial condition of the Company, or the
ability of the Company to perform its obligations under this Agreement or the
Note.
(d) The consummation of the transactions contemplated by this
Agreement and the Note, and the performance of the terms and provisions of this
Agreement and the Note, will not (i) contravene, result in any breach of, or
constitute a default under any indenture, mortgage, deed of trust, bank loan or
credit agreement, corporate charter, by-laws or other material agreement or
instrument to which the Company is a party or by which the Company or any of its
properties is bound, (ii) conflict with or result in a breach of any of the
terms, conditions or provisions of any order of any court, arbitrator or
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign (collectively,
"Governmental Person") applicable to the Company or (iii) violate any material
provision of any statute or other rule or regulation of any Governmental Person
applicable to the Company.
(e) No consent, approval or authorization of, or registration,
filing or declaration with, any person or entity is required for the transfer or
valid delivery of the Securities or for the performance by the Company of this
Agreement or the Note, other than the filings, registrations or qualifications
under securities laws or that may be required to be made or obtained in
connection with the offer, transfer, sale or delivery of the Securities or any
interest therein.
3
(f) Neither the Company nor anyone acting on its behalf has
taken or will take any action that would require the offer, issuance or sale of
the Note or any interest or participation therein to be registered under Section
5 of the Securities Act of 1933, as amended.
(g) No part of the proceeds of the loans hereunder will be
used, directly or indirectly, for the purpose of buying or carrying any "margin
stock" within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System (12 CFR part 221), or for the purpose of buying or
carrying or trading in any securities under such circumstances as to involve the
Company in a violation of Regulation X of said Board (12 CFR part 224) or to
involve any broker or dealer in a violation of Regulation T of said Board (12
CFR part 220). The assets of the Company do not include any margin stock, and
the Company does not have any present intention of acquiring any margin stock.
(h) The Company is not an investment company subject to
registration under the Investment Company Act of 1940, as amended.
(i) Except as described in the Company's documents filed with
the Securities and Exchange Commission, there are no material (i) actions, suits
or legal, equitable, arbitrative or administrative proceedings pending, or to
the knowledge of the Company, threatened against the Company or (ii) judgments,
injunctions, writs, rulings or orders by any Governmental Person against the
Company or its directors or officers.
Section 1.7 Representations and Warranties of the Lender.
The Lender represents, warrants and covenants to the Company
as of the date hereof, the Closing Date, the date of any subsequent disbursement
of funds, and the date of any transfer or exercise of the Securities:
(a) The Lender has all requisite power to execute and deliver
this Agreement and any other related documents and to perform the provisions
hereof and thereof and to consummate the transactions contemplated hereby and
thereby.
(b) The execution, delivery and performance of this Agreement
and any other related documents and the consummation of the transactions
contemplated hereby or thereby, have been duly authorized and approved by the
Lender. This Agreement has been duly authorized, executed and delivered by, and
is the valid and binding obligation of, the Lender enforceable against the
Lender in accordance with its terms, except as may be limited by applicable
bankruptcy, reorganization, insolvency, moratorium or other similar laws or by
legal or equitable principles relating to or limiting creditors' rights
generally.
4
(c) The Lender is an "accredited investor" within the meaning
of Regulation D under the Securities Act, and is acquiring the Note for
investment for its own account, and not with a view to distribution subject,
nevertheless, to any requirement of law that the disposition of its property
shall at all times be within its control. If the Lender is an entity funded for
the purposes of making the loans evidenced by the Note, the Lender further
represents and warrants that each of its constituents is an accredited investor.
The Lender has such knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of purchasing the Note.
The Lender is aware that it may be required to bear the economic risk of the
loans evidenced by the Note for an indefinite period, and it is able to bear
such risk for an indefinite period. The Lender acknowledges (i) that the Note
being acquired by it is not being registered under the Securities Act on the
grounds that (A) the Note does not constitute a security subject to registration
under the Securities Act, or (B) the issuance of the Note is exempt from
registration under Section 4(2) of the Securities Act as not involving any
public offering, or (C) such issuance is exempt from registration under
Regulation D and (ii) that the Company's reliance on such exemptions is
predicated in part on the representations made to the Company by the Lender in
this Section 1.7.
Section 2 CONDITIONS TO OBLIGATIONS OF THE LENDER. The obligation of
the Lender to advance any funds on any Closing Date or on the date of any
scheduled subsequent disbursement of funds shall be subject to the satisfaction
on or before such Closing Date of the conditions hereinafter set forth:
Section 2.1 Proceedings Satisfactory. All proceedings taken on
or prior to such date in connection with the making of such loan and the
issuance of the Note and the consummation of the transactions contemplated
hereby and all documents and papers relating thereto shall be satisfactory in
form and substance to the Lender and its counsel.
Section 2.2 Representations True. All representations and
warranties of the Company contained herein shall be true and correct in all
respects on and as of such date with the same effect as though such
representations and warranties had been made on and as of such date and the
Company shall have performed in all respects all agreements on its part required
to be performed under this Agreement on or prior to such date.
Section 2.3 The Loan by the Lender Permitted by Applicable
Laws. The loan by the Lender to the Company and the issuance of the Note (i)
shall not be prohibited by any applicable law or governmental regulation,
5
release, interpretation or opinion, (ii) shall not subject the Lender to any
penalty under or pursuant to any applicable law or governmental regulation, and
(iii) shall be permitted by the laws and regulations of the jurisdictions to
which the Lender is subject.
Section 2.4 Execution and Delivery of Documents. The Lender
shall have received the following, duly executed and delivered and in form and
substance satisfactory to the Lender and its counsel:
a) this Agreement;
b) the Note in the form of Exhibit A hereto; and
c) such other documents and information
as the Lender may reasonably request
in connection herewith.
The foregoing documents are referenced to herein as the "Basic Documents."
Section 3 COVENANTS.
Section 3.1 Covenants of the Company. The Company covenants
and agrees that:
(a) Corporate Existence. The Company will do or cause to be
done all things necessary to preserve and keep in full force and effect its
corporate existence in accordance with the rights (charter and statutory),
licenses and franchises of the Company; provided, however, that the foregoing
shall not restrict any merger involving the Company, as long as the Company is
the surviving corporation.
(b) Taxes. The Company will pay prior to delinquency all
taxes, assessments and governmental levies that may be imposed upon the Company,
except as contested in good faith and by appropriate proceedings.
(c) Compliance with Laws. The Company will comply in all
respects with all applicable laws, statutes and regulations of any Governmental
Person, a violation of which would have a material adverse effect on the
financial condition, operations, business, profits, prospects or properties of
the Company or the validity or enforceability of this Agreement or the Note, or
any of the transactions contemplated hereby or thereby.
(d) Payment of the Note. The Company will pay the principal of
and interest on the Note on the dates and in the manner provided in such
6
instrument and this Agreement. The obligation of the Company described in the
preceding sentence is absolute and unconditional, irrespective of any tax or
accounting treatment of such obligation including without limitation any
documentary stamp, transfer, ad valorem or other taxes assessed by any
jurisdiction in connection with this transaction.
(e) Payment of Expenses. In the event the transactions
contemplated by this Agreement are consummated, the Company will promptly pay to
the Lender all reasonable costs and out-of-pocket expenses of Lender, including
without limitation its reasonable attorneys' fees, incurred in connection with
the negotiation, preparation, execution and delivery of this Agreement and the
Note, and defense or enforcement costs related thereto.
(f) Stay, Extension and Usury Laws. The Company agrees (to the
extent it may lawfully do so) that it will not at any time insist upon, plead or
in any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury law or other law that would prohibit or forgive the
Company from paying all or a portion of the principal of, or interest on, the
Note as contemplated herein, wherever enacted, now or at any time hereinafter in
force, or that may materially affect the covenants or the performance of this
Agreement in any manner inconsistent with the provisions of this Agreement. The
Company expressly waives all benefit or advantage of any such law. If a court of
competent jurisdiction prescribes that the Company may not waive its rights to
take the benefit or advantage of any stay or extension law or any usury law or
other law in accordance with the prior sentence, then the obligation to pay
interest on the Note will be reduced to the maximum legal limit under applicable
law governing the interest payable in connection with the Note, and any amount
of interest paid by the Company that is deemed illegal shall be deemed to have
been a prepayment of principal on the Note.
(g) Limitation on Activities. The Company will not, and shall
not permit any of its 50% or greater owned subsidiaries to, engage in any
business or investment activities other than those necessary for, incident to,
connected with or arising out of the Company's principal activities in the
marketing, multimedia and internet industries.
(h) Limitations on Transactions with Affiliates. The Company
will not make any payment to or investment in, or enter into any transaction
with, any Affiliate, including without limitation the purchase, sale or exchange
of property or the rendering of any service, except transactions entered into
with Affiliates (a) prior to the date hereof, (b) contemplated under this
Agreement, (c) in the ordinary course of business, (d) on terms and conditions
substantially similar to those that the Company would have received in an "arm's
length" transaction with a third party and (e) related to the Company's
principal activities. For purposes of this Agreement, "Affiliate" shall mean any
other person controlling or controlled by or under common control with such
specified person. For the purposes of this definition, "control" when used with
respect to any specified person means the power to direct the management and
policies of such person, directly or indirectly, whether through the ownership
7
of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" shall have meanings correlative to the foregoing.
(i) Subordinated Indebtedness. The Company will not purchase,
redeem, retire or otherwise acquire for value, or set apart any money for a
sinking, defeasance or other analogous fund for, the purchase, redemption,
retirement or other acquisition of, or make any voluntary payment or prepayment
of the principal of or interest on, or any other amount owing in respect of, any
Subordinated Indebtedness, except for regularly scheduled (but not accelerated)
payments of principal and interest in respect of such Subordinated Indebtedness
required pursuant to the instruments evidencing such Subordinated Indebtedness;
provided, however, that no payment of principal or interest made pursuant to
acceleration of any Indebtedness or made with respect to Indebtedness that does
not amortize principal evenly over the terms of the Indebtedness shall be
permitted hereby. For purposes of this paragraph (i), "Subordinated
Indebtedness" means, other Indebtedness (a) for which the Company and/or any of
its subsidiaries is directly, primarily, contingently or otherwise obligated and
(ii) which has not, by its terms, been made expressly senior or prior to the
obligations of the Company under this Agreement on terms, and pursuant to
documentation containing other terms (including interest, amortization,
covenants and events of default), in form and substance to which the Lender has
consented in writing. For purposes of this paragraph (i), "Indebtedness" means,
for any person (without duplication): (a) obligations created, issued or
incurred by such person for borrowed money (whether by loan, the issuance and
sale of debt securities or the sale of property to another person subject to an
understanding or agreement, contingent or otherwise, to repurchase such property
from such person); (b) obligations of such person to pay the deferred purchase
or acquisition price of property or services, other than trade accounts payable
(other than for borrowed money) arising, and accrued expenses incurred, in the
ordinary course of business; (c) Indebtedness of others secured by a lien on the
property of such person, whether or not the respective indebtedness so secured
has been assumed by such person; (d) obligations of such person in respect of
letters of credit or similar instruments issued or accepted by banks and other
financial institutions for the account of such person; (e) capital lease
obligations of such person; and (f) Indebtedness of others guaranteed by such
person.
(j) Maintenance of Properties. The Company will maintain,
preserve, protect and keep its properties in good repair, working order and
condition (ordinary wear and tear and obsolescence or consideration excepted),
and make necessary and proper repairs, renewals and replacements so that its
business carried on in connection therewith may be properly conducted at all
times consistent with past practices of the Company.
8
Section 4. EVENTS OF DEFAULT; REMEDIES
Section 4.1 Events of Default Defined; Acceleration of
Maturity. If any of the following events ("Events of Default") shall occur and
be continuing (for any reason whatsoever and whether it shall be voluntary or
involuntary or by operation of law or otherwise):
(a) Default shall be made in the payment of the principal of,
or interest on, the Note when and as the same shall become due and payable,
whether at stated maturity, by acceleration, upon demand, upon a mandatory
prepayment due date, or otherwise;
(b) Default shall be made in the performance or observance of
any covenant, agreement or condition contained herein or in the Note, and such
default shall have continued for a period of fifteen (15) business days;
(c) The Company shall (i) apply for or consent to the
appointment of, or the taking of possession by, a receiver, custodian, trustee
or liquidator of itself or of all or a substantial part of its property and
assets, (ii) be generally unable to pay its debts as such debts become due,
(iii) make a general assignment for the benefit of its creditors, (iv) commence
a voluntary case under the United States Bankruptcy Code or similar law or
regulation (as now or hereafter in effect), (v) file a petition seeking to take
advantage of any other law providing for the relief of debtors, (vi) fail to
controvert in a timely or appropriate manner, or acquiesce in writing to, any
petition filed against it in an involuntary case under such Bankruptcy Code or
other law or regulation, (vii) dissolve, (viii) take any corporate action under
any applicable law analogous to any of the foregoing, or (ix) take any corporate
action for the purpose of effecting any of the foregoing;
(d) A proceeding or case shall be commenced, without the
application or consent of the Company in any court of competent jurisdiction,
seeking (i) the liquidation, reorganization, dissolution, winding up or
composition or readjustment of its debts, (ii) the appointment of a trustee,
receiver, custodian, liquidator or the like of it or for all or any substantial
part of its assets, or (iii) similar relief in respect of the Company, under any
law providing for the relief of debtors, and such proceeding or case shall
continue undismissed, or unstayed and in effect, for a period of sixty (60)
days; or an order for relief shall be entered in an involuntary case under the
United States Bankruptcy Code or other similar law or regulation, against the
Company; or action under the laws of any jurisdiction affecting the Company
analogous to any of the foregoing shall be taken with respect to the Company and
shall continue unstayed and in effect for any period of sixty (60) days;
(e) Final judgment for the payment of money shall be rendered
by a court of competent jurisdiction against the Company and the Company shall
not discharge the same or provide for its discharge in accordance with its
9
terms, or procure a stay of execution thereof within sixty (60) days from the
date of entry thereof and within said period of sixty (60) days, or such longer
period during which execution of such judgment shall have been stayed, appeal
therefrom and cause the execution thereof to be stayed during such appeal, and
such judgment together with all other such judgments shall exceed in the
aggregate US$500,000; or
(f) Any representation or warranty made by the Company in this
Agreement or in any instrument delivered hereunder or pursuant hereto or in
connection with any provision hereof shall be false or incorrect in any material
respect as of the date on which it was made or is deemed to have been made;
then (x) upon the occurrence of any Event of Default described in subsection (c)
or (d) the unpaid principal amount of the Note, together with the interest
accrued thereon and all other amounts payable by the Company hereunder, shall
automatically become immediately due and payable, without presentment, demand,
protest or other requirements of any kind, all of which are hereby expressly
waived by the Company or (y) upon the occurrence of any other Event of Default,
the Lender may, by notice to the Company, declare the unpaid principal amount of
the Note to be, and the same shall forthwith become, due and payable, together
with the interest accrued thereon and all other amounts payable by the Company
hereunder.
Section 4.2 Suits for Enforcement. If any Event of Default
shall have occurred and be continuing, the Lender may proceed to protect and
enforce its rights against the Company, either by suit in equity or by action at
law, or both, whether for the specific performance of any covenant or agreement
contained in this Agreement or in aid of the exercise of any power granted in
this Agreement, or, the Lender may proceed to enforce the payment by the Company
of all sums due upon the Note or to enforce any other legal or equitable right
of the Lender.
The Company covenants that, if it shall default in the making
of any payment due under the Note or in the performance or observance of any
agreement contained in this Agreement, it will pay to the Lender such further
amounts, to the extent lawful, to cover any reasonable costs and expenses of
collection or of otherwise enforcing their respective rights, including without
limitation the reasonable counsel fees and costs and expenses incurred in
connection with such collection. The obligations set forth in this paragraph
will survive the payment in full of the Note.
Section 4.3 Remedies Cumulative. No remedy herein conferred
upon the Lender is intended to be exclusive of any other remedy and each and
every such remedy will be cumulative and will be in addition to every other
remedy given hereunder or now or hereafter existing at law or in equity or by
statute or otherwise.
Section 4.4 Remedies Not Waived. No course of dealing between
the Company and any other person and no delay or failure in exercising any
10
rights hereunder or under the Note in respect thereof shall operate as a waiver
of any rights of the Lender.
Section 5 TAXES.
The Company will pay all taxes (including interest and
penalties), other than taxes imposed on the income of the Lender which may be
payable in respect of the execution and delivery of this Agreement or of the
execution and delivery of (but not the subsequent transfer of or interest or
principal payable under) the Note or of any amendment of, or waiver or consent
under or with respect to, this Agreement or of the Note and will save the Lender
and all subsequent holders of the Note harmless against any loss or liability
resulting from nonpayment or delay in payment of any such tax.
Section 6 MISCELLANEOUS.
Section 6.1 Indemnification. The Company agrees to indemnify,
defend and hold harmless the Lender, and its successors, assigns, heirs,
subsidiaries, affiliates and all of the officers, directors, employees, partners
and agents (including attorneys and accountants) of each of the aforementioned
persons or entities, and each of them, from and against any and all losses,
claims, damages, liabilities, expenses, demands, causes of action, suits, debts,
obligations, rights, promises, acts, agreements and damages of any kind or
nature whatsoever, whether at law or in equity, whether known or unknown,
foreseen or unforeseen, heretofore or hereafter arising out of, relating to,
connected with or incidental to the failure of any representation or warranty
made by the Company in this Agreement or the Note or the failure of the Company
to comply in all material respects with the covenants contained in this
Agreement or the Note, or the agreements contemplated hereby or thereby.
Section 6.2 Private Placement; Legends. The Lender
acknowledges and agrees that the Note has not been registered under the
Securities Act and, to the extent it constitutes a security subject to
registration under Section 5 of the Securities Act, may not be offered or sold
unless registered under the Securities Act, or an exemption from such
registration requirements is available. The Note shall bear a legend in
substantially the following form, unless counsel to the Company shall have
advised the Company that such legend is no longer needed:
The securities evidenced by this instrument have not been registered
under the Securities Act of 1933, as amended (the "Act"), or any state
securities law, and such securities may not be sold, transferred or
otherwise disposed of unless the same are registered and qualified in
accordance with the Act and any applicable state securities laws, or in
the opinion of counsel reasonably satisfactory to the Company such
registration and qualification are not required under the Act and
applicable state securities law.
11
Section 6.3 Reliance on and Survival of Representations. All
representations, warranties, covenants and agreements of the Company herein will
be deemed to be material and to have been relied upon by the Lender and will
survive the execution and delivery of this Agreement and the Note.
Section 6.4 Successors and Assigns. This Agreement will bind
and inure to the benefit of and be enforceable by the Company, the Lender and
each of their respective successors and assigns. The Lender shall be permitted
to transfer the Note in accordance with its terms and the terms of this
Agreement and in accordance with applicable restrictions under applicable
federal and state securities laws; provided, however, that upon any assignment
of the Note that results in more than one Note being outstanding, the rights of
all holders of Notes to enforce any right, take any enforcement action or do any
other thing or action with respect to any Basic Document shall only be done upon
the consent or action of the holders of not less than 66-2/3% in aggregate
principal amount of all Notes outstanding, which action, if taken, shall bind
the holders of all Notes.
Section 6.5 Notices. All notices and other communications
provided for in this Agreement shall be in writing and delivered by registered
or certified mail, postage prepaid, or delivered by overnight courier (for next
business day delivery) or telecopied, addressed as follows, or at such other
address as any of the parties hereto may hereafter designate by notice to the
other parties given in accordance with this Section 6.5:
1) if to the Company:
c/o Genesis Xxxxxxxxxx.xxx, Inc.
Fourth Floor
0000 Xxxxxxxxx Xxxxxxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Attn: Ramy El-Batrawi
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
With a copy of any notice to:
Nida & Xxxxxxx, LLP
000 Xxxxxxx Xxxxxx
Xxxxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
12
2) if to the Lender:
Ultimate Holdings, Ltd.
00 Xxxxxxxxxx Xx.
Xxxxxxxx, XX 00
Xxxxxxx
Xxxx: Xxxxxx Xxxxxxxx
Telephone: _______________
Telecopier: (000) 00-000-0000
Any such notice or communication shall be deemed to have been duly given on the
fifth (5th) day after being so mailed, the next business day after delivery by
overnight courier, when received when sent by telecopy or upon receipt when
delivered personally.
Section 6.6 Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument. Signatures may be
exchanged by telecopy, with original signatures to follow. Each of the parties
hereto agrees that it will be bound by its own telecopied signature and that it
accepts the telecopied signatures of the other parties to this Agreement. The
original signature pages shall be forwarded to the Company or its counsel and
the Company or its counsel will provide all of the parties hereto with a copy of
the entire Agreement.
Section 6.7 Amendments. This Agreement may only be amended by
a writing duly executed by all of the parties hereto.
Section 6.8 Severability. If any term or provision of this
Agreement or any other document executed in connection herewith shall be
determined to be illegal or unenforceable, all other terms and provisions hereof
and thereof shall nevertheless remain effective and shall be enforced to the
fullest extent permitted by applicable law.
Section 6.9 Governing Law. EXCEPT TO THE EXTENT THAT THE LAW
OF ANOTHER JURISDICTION IS EXPRESSLY SELECTED IN A DOCUMENT, THIS AGREEMENT, THE
NOTE AND ALL AMENDMENTS, SUPPLEMENTS, WAIVERS AND CONSENTS RELATING HERETO OR
THERETO SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF CALIFORNIA WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
13
Section 6.10 Entire Agreement. This Agreement and the Note
contain the entire agreement of the parties hereto with respect to the
transactions contemplated hereby and thereby and supersede all previous oral and
written, and all previous contemporaneous oral negotiations, commitments and
understandings.
Section 6.11 Further Assurances. Each party agrees promptly to
execute and deliver such documents and to take such other acts as are reasonably
necessary to effectuate the purposes of this Agreement.
Section 6.12 Headings. The headings contained herein are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 6.13 Waiver of Jury Trial. EACH PARTY HEREBY AGREES TO
WAIVE ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT AND THE NOTE OR AGREEMENTS RELATING TO THE NOTE OR
ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION.
NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT, THE NOTE OR ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE
NOTE.
Section 6.14 Assignments. The Company may not assign its
rights or obligations hereunder or under the Note without the prior written
consent of the Lender.
[Signature Page Follows]
14
IN WITNESS WHEREOF, the parties hereto execute this Agreement
as of the date first set forth above.
LENDER:
ULTIMATE HOLDINGS, LTD.
By: _____________________________
Name:
Title:
COMPANY:
XXXXXXXXXXXXXXXXX.XXX, INC.
By: _____________________________
Name:
Title:
15
EXHIBIT A
FORM OF NOTE
THE SECURITIES EVIDENCED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW, AND
SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS THE
SAME ARE REGISTERED AND QUALIFIED IN ACCORDANCE WITH THE ACT AND ANY APPLICABLE
STATE SECURITIES LAWS, OR IN THE OPINION OF COUNSEL REASONABLY SATISFACTORY TO
THE BORROWER SUCH REGISTRATION AND QUALIFICATION ARE NOT REQUIRED UNDER THE ACT
AND APPLICABLE STATE SECURITIES LAW.
PROMISSORY NOTE
US$5,000,000 October 16, 0000
Xxx Xxxx, Xxxxxxxxxx
FOR VALUE RECEIVED, XxxxxxxXxxxxxxxxx.xxx, Inc., a Delaware
corporation, (the "Company"), hereby promises to pay to the order of Ultimate
Holdings, Ltd., a Bermuda limited company ("Lender"), at Lender's principal
office, the principal sum of Five Million United States Dollars (US$5,000,000)
or such lesser amount as shall equal the unpaid principal amount of the Loans
made by the Lender to the Company under the Note Purchase Agreement (as defined
below) (this "Note"), in lawful money of the United States of America and in
immediately available funds, together with interest on the unpaid principal
amount for the period commencing on the date or dates of disbursement shown on
Schedule 1 attached hereto (some which may precede the date hereof) at the rate
of eleven and one-half percent (11.5%) per annum. Interest shall be paid on the
dates set forth on Schedule 1. The Maturity Date of this Note shall be
October 16, 2005.
The date, amount and interest payment dates of each Loan made
by the Lender to the Company, and each payment made on account of the principal
of such Loan, shall be recorded by the Lender on its books and, prior to any
transfer of this Note, endorsed by the Lender on Schedule 1 attached to this
Note or any continuation of Schedule 1, provided that the failure of the Lender
to make any such recordation or endorsement shall not affect the obligations of
the Company to make a payment when due of any amount owing under the Note
Purchase Agreement or under this Note in respect of the Loans made by the
Lender.
This Note is the Note referred to and is subject to the
further terms and conditions set forth in the Note Purchase Agreement of even
date herewith between the Company and the Lender (the "Note Purchase Agreement")
and is evidence of the Loans made by the Lender under the Note Purchase
Agreement. Except as otherwise indicated, capitalized terms used herein have the
meanings ascribed to them in the Note Purchase Agreement.
This Note may be prepaid in full or in part, at any time
without penalty. Principal and interest are payable in lawful money of the
United States of America.
Upon the occurrence of an Event of Default and without demand
or notice, Lender will have the option to declare the entire balance of
principal together with all accrued interest thereon immediately due and payable
and to exercise all rights and remedies available to it under any or all of the
Documents. Upon the occurrence of an Event of Default (and so long as such Event
of Default shall continue), the entire balance of principal together with all
accrued interest thereon shall bear interest at the then applicable rate plus
two percent (2%). No delay or omission on the part of Lender hereof in
exercising any right under this Note or the Note Purchase Agreement shall
operate as a waiver of such right. The application of this default rate shall
not be interpreted or deemed to extend any cure period set forth in the Note
Purchase Agreement or otherwise limit any of Lender's remedies hereunder or
thereunder.
The Company hereby waives diligence, presentment, protest and
demand, notice of protest, dishonor and nonpayment of this Note and expressly
agrees that, without in any way affecting the liability of the Company
hereunder, Lender may extend any maturity date or the time for payment of any
installment due hereunder, accept security, release any party liable hereunder
and release any security now or hereafter securing this Note. The Company
further waives, to the full extent permitted by law, the right to plead any and
all statutes of limitations as a defense to any demand on this Note, or on any
deed of trust, security agreement, lease assignment, guaranty or other
agreement, if any, now or hereafter securing this Note.
If this Note is not paid when due or if any Event of Default
occurs, the Company promises to pay all costs of enforcement and collection,
including but not limited to, Lender's reasonable attorneys' fees, whether or
not any action or proceeding is brought to enforce the provisions hereof.
Every provision of this Note is intended to be severable. In
the event any term or provision hereof is declared by a court of competent
jurisdiction to be illegal or invalid for any reason whatsoever, such illegality
or invalidity shall not affect the balance of the terms and provisions hereof,
which terms and provisions shall remain binding and enforceable.
It is the intent of the Company and Lender in the execution of
this Note and all other instruments securing this Note that the loan evidenced
hereby be exempt from the restrictions of applicable usury laws of any
jurisdiction. In the event that, for any reason, it should be determined that
any applicable usury law of any jurisdiction is applicable to this Note, Lender
and the Company stipulate and agree that none of the terms and provisions
contained herein or in the Note Purchase Agreement shall ever be construed to
create a contract for use, forbearance or detention of money requiring payment
2
of interest at a rate in excess of the maximum interest rate permitted to be
charged by such applicable laws. In such event, if any Lender of this Note shall
collect monies which are deemed to constitute interest which would otherwise
increase the effective interest rate on this Note to a rate in excess of the
maximum rate permitted to be charged by the applicable laws of such
jurisdiction, all such sums deemed to constitute interest in excess of such
maximum rate shall, at the option of Lender, be credited to the payment of the
sums due hereunder or returned to the Company.
In this Note, the singular shall include the plural and the
masculine shall include the feminine and neuter gender, and vice versa, if the
context so requires.
This Note shall be governed by, and construed in accordance
with, the law of the State of California applicable to contracts made and
performed within the State of California.
[Signature page follows]
3
IN WITNESS WHEREOF, the Company has caused this Note to be
executed by its duly authorized officer.
COMPANY:
XXXXXXXXXXXXXXXXX.XXX, INC.,
a Delaware corporation
By: ___________________________
Xxxx X. El-Batrawi
Chairman
4
SCHEDULE 1
SCHEDULE OF LOANS
This Note evidences Loans made under the Note Purchase Agreement to the
Company, on the dates, in the principal amounts, and having interest payment
dates or periods set forth below, subject to the payments and prepayments of
principal set forth below:
Interest Payment Dates
or Period (at Maturity
Date Made Principal Amount if left blank) Amount Paid Notation Made By
--------------------- ----------------- ------------------------- --------------- ------------------
BORROWING CERTIFICATE
Reference is made to the Note Purchase Agreement dated as of October
16, 2000 (as modified and supplemented and in effect from time to time, the
"Note Purchase Agreement"), between XxxxxxxXxxxxxxxxx.xxx, Inc., a Delaware
corporation (the "Company") and Ultimate Holdings, Ltd., a Bermuda limited
company. Capitalized terms used in this Certificate have the respective meanings
assigned to them in the Note Purchase Agreement.
Pursuant to Section 1.4 of the Note Purchase Agreement, the Company,
through the undersigned, its duly authorized [President] [Chief Financial
Officer], hereby certifies that:
(i) all representations and warrants of the Company contained
in the Note Purchase Agreement are true and correct as of the
date hereof;
(ii) all conditions precedent to the Company's borrowing under
the Note Purchase Agreement have been satisfied or waived;
(iii) by this Certificate the Company requests a further
advance of ____________ United States Dollars (US$_________);
and
(iv) that the requested amount set forth in the preceding
clause (iii), together with all amounts previously advanced
under the Note Purchase Agreement, does not exceed the Maximum
Loan Commitment Amount.
IN WITNESS WHEREOF, the undersigned has caused this certificate to be
duly executed as of the ______ day of ___________, 20___.
XXXXXXXXXXXXXXXXX.XXX, INC., a
Delaware corporation
By: __________________________
Name:
Title: [President][Chief
Financial Officer]
SCHEDULE 1.6(c)
Material Adverse Effects
None.
Exhibit 10.55
THE SECURITIES EVIDENCED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW, AND
SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS THE
SAME ARE REGISTERED AND QUALIFIED IN ACCORDANCE WITH THE ACT AND ANY APPLICABLE
STATE SECURITIES LAWS, OR IN THE OPINION OF COUNSEL REASONABLY SATISFACTORY TO
THE BORROWER SUCH REGISTRATION AND QUALIFICATION ARE NOT REQUIRED UNDER THE ACT
AND APPLICABLE STATE SECURITIES LAW.
PROMISSORY NOTE
US$5,000,000 October 16, 0000
Xxx Xxxx, Xxxxxxxxxx
FOR VALUE RECEIVED, XxxxxxxXxxxxxxxxx.xxx, Inc., a Delaware
corporation, (the "Company"), hereby promises to pay to the order of Ultimate
Holdings, Ltd., a Bermuda limited company ("Lender"), at Lender's principal
office, the principal sum of Five Million United States Dollars (US$5,000,000)
or such lesser amount as shall equal the unpaid principal amount of the Loans
made by the Lender to the Company under the Note Purchase Agreement (as defined
below) (this "Note"), in lawful money of the United States of America and in
immediately available funds, together with interest on the unpaid principal
amount for the period commencing on the date or dates of disbursement shown on
Schedule 1 attached hereto (some which may precede the date hereof) at the rate
of eleven and one-half percent (11.5%) per annum. Interest shall be paid on the
dates set forth on Schedule 1. The Maturity Date of this Note shall be October
16, 2005.
The date, amount and interest payment dates of each Loan made
by the Lender to the Company, and each payment made on account of the principal
of such Loan, shall be recorded by the Lender on its books and, prior to any
transfer of this Note, endorsed by the Lender on Schedule 1 attached to this
Note or any continuation of Schedule 1, provided that the failure of the Lender
to make any such recordation or endorsement shall not affect the obligations of
the Company to make a payment when due of any amount owing under the Note
Purchase Agreement or under this Note in respect of the Loans made by the
Lender.
This Note is the Note referred to and is subject to the
further terms and conditions set forth in the Note Purchase Agreement of even
date herewith between the Company and the Lender (the "Note Purchase Agreement")
and is evidence of the Loans made by the Lender under the Note Purchase
Agreement. Except as otherwise indicated, capitalized terms used herein have the
meanings ascribed to them in the Note Purchase Agreement.
This Note may be prepaid in full or in part, at any time
without penalty. Principal and interest are payable in lawful money of the
United States of America.
Upon the occurrence of an Event of Default and without demand
or notice, Lender will have the option to declare the entire balance of
principal together with all accrued interest thereon immediately due and payable
and to exercise all rights and remedies available to it under any or all of the
Documents. Upon the occurrence of an Event of Default (and so long as such Event
of Default shall continue), the entire balance of principal together with all
accrued interest thereon shall bear interest at the then applicable rate plus
two percent (2%). No delay or omission on the part of Lender hereof in
exercising any right under this Note or the Note Purchase Agreement shall
operate as a waiver of such right. The application of this default rate shall
not be interpreted or deemed to extend any cure period set forth in the Note
Purchase Agreement or otherwise limit any of Lender's remedies hereunder or
thereunder.
The Company hereby waives diligence, presentment, protest and
demand, notice of protest, dishonor and nonpayment of this Note and expressly
agrees that, without in any way affecting the liability of the Company
hereunder, Lender may extend any maturity date or the time for payment of any
installment due hereunder, accept security, release any party liable hereunder
and release any security now or hereafter securing this Note. The Company
further waives, to the full extent permitted by law, the right to plead any and
all statutes of limitations as a defense to any demand on this Note, or on any
deed of trust, security agreement, lease assignment, guaranty or other
agreement, if any, now or hereafter securing this Note.
If this Note is not paid when due or if any Event of Default
occurs, the Company promises to pay all costs of enforcement and collection,
including but not limited to, Lender's reasonable attorneys' fees, whether or
not any action or proceeding is brought to enforce the provisions hereof.
Every provision of this Note is intended to be severable. In
the event any term or provision hereof is declared by a court of competent
jurisdiction to be illegal or invalid for any reason whatsoever, such illegality
or invalidity shall not affect the balance of the terms and provisions hereof,
which terms and provisions shall remain binding and enforceable.
It is the intent of the Company and Lender in the execution of
this Note and all other instruments securing this Note that the loan evidenced
hereby be exempt from the restrictions of applicable usury laws of any
jurisdiction. In the event that, for any reason, it should be determined that
any applicable usury law of any jurisdiction is applicable to this Note, Lender
and the Company stipulate and agree that none of the terms and provisions
contained herein or in the Note Purchase Agreement shall ever be construed to
create a contract for use, forbearance or detention of money requiring payment
of interest at a rate in excess of the maximum interest rate permitted to be
charged by such applicable laws. In such event, if any Lender of this Note shall
collect monies which are deemed to constitute interest which would otherwise
increase the effective interest rate on this Note to a rate in excess of the
maximum rate permitted to be charged by the applicable laws of such
jurisdiction, all such sums deemed to constitute interest in excess of such
maximum rate shall, at the option of Lender, be credited to the payment of the
sums due hereunder or returned to the Company.
2
In this Note, the singular shall include the plural and the
masculine shall include the feminine and neuter gender, and vice versa, if the
context so requires.
This Note shall be governed by, and construed in accordance
with, the law of the State of California applicable to contracts made and
performed within the State of California.
[Signature page follows]
3
IN WITNESS WHEREOF, the Company has caused this Note to be
executed by its duly authorized officer.
COMPANY:
XXXXXXXXXXXXXXXXX.XXX, INC.,
a Delaware corporation
By: ___________________________
Xxxx X. El-Batrawi
Chairman
4
SCHEDULE 1
SCHEDULE OF LOANS
This Note evidences Loans made under the Note Purchase Agreement to the
Company, on the dates, in the principal amounts, and having interest payment
dates or periods set forth below, subject to the payments and prepayments of
principal set forth below:
Interest Payment Dates
or Period (at Maturity
Date Made Principal Amount if left blank) Amount Paid Notation Made By
--------------------- ----------------- ------------------------- --------------- ------------------
Exhibit 10.56
WARRANT AND REGISTRATION
RIGHTS AGREEMENT
Between
XXXXXXXXXXXXXXXXX.XXX, INC.
And
THE MACERICH PARTNERSHIP, L.P.
Dated as of November 2, 2000
THE WARRANT AND WARRANT SECURITIES TO BE RECEIVED UPON EXERCISE OF THE WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR QUALIFIED UNDER ANY STATE SECURITIES LAWS. THE WARRANT AND
WARRANT SECURITIES, AS THE CASE MAY BE, MAY NOT BE OFFERED, SOLD, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED, WHETHER OR NOT FOR CONSIDERATION, IN THE
ABSENCE OF (1) AN EFFECTIVE REGISTRATION STATEMENT AND QUALIFICATION IN EFFECT
WITH RESPECT TO THE WARRANT AND WARRANT SECURITIES, AS THE CASE MAY BE, UNDER
THE SECURITIES ACT AND UNDER ANY APPLICABLE STATE SECURITIES LAWS OR (2) AN
EXEMPTION FROM SUCH REGISTRATION AND QUALIFICATION.
WARRANT AGREEMENT
THIS WARRANT AND REGISTRATION RIGHTS AGREEMENT (this "Agreement") is
dated as of November 2, 2000, and executed by and between XXXXXXXXXXXXXXXXX.XXX,
INC., a Delaware corporation (the "Company"), and THE MACERICH PARTNERSHIP,
L.P., a Delaware limited partnership ("Macerich").
WHEREAS, pursuant to the Space Lease Agreements by and between the
Company and Macerich Management Company and Macerich Property Management
Company, as applicable, dated November 2, 2000 (the "Space Lease Agreements"),
the Company has agreed to grant to Macerich Management Company and Macerich
Property Management Company, as applicable, and/or their respective affiliates
or subsidiaries a common stock warrant in the form attached hereto as Exhibit A
hereto (the "Warrant") to acquire shares of the Company's common stock, $.001
par value per share. This Agreement sets forth certain rights and obligations of
the Company and Macerich with respect to the Warrant and the Warrant Securities
(as defined below).
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants, representations, warranties and agreements contained in this
Agreement, the parties hereto agree as follows:
I. DEFINITIONS
Section 1.01 Defined Terms. As used in this Agreement, the following
capitalized terms shall have the meanings respectively assigned to them below,
which meanings shall be applicable equally to the singular and plural forms of
the terms so defined. Terms not otherwise defined herein shall have the meanings
ascribed to such terms in the Space Lease Agreements.
"Change of Control" shall mean (i) the public announcement of an
agreement regarding the acquisition or the acquisition, directly or indirectly,
by a person, entity or group of beneficial ownership (as defined in Rule 13d-3
under the Exchange Act) of 25% or more of the outstanding voting securities of
the Company in the aggregate through one or a series of transactions (excluding
(A) any acquisition(s) within six months of the date hereof involving one
person, entity or group resulting in the beneficial ownership of up to 35% of
such securities in the aggregate (including any prior acquisitions), and (B) any
future acquisition(s) by Ramy El-Batrawi or Ultimate Holdings), (ii) the public
announcement of an agreement regarding the merger, consolidation or other
reorganization of the Company with or into another entity in a transaction in
which the Company is not the surviving entity or in which more than fifty
percent (50%) of the outstanding voting securities of the Company is
transferred, (iii) the public announcement of an agreement(s) regarding a sale,
conveyance, transfer or lease of all or substantially all of the Company's
assets or the assets of CenterlinQ, whether in one transaction or a series of
transactions, or (iv) at any time during any two-year period, directors who at
the beginning of such period constituted the Board of Directors of the Company
(together with any new director whose election by such Board or whose nomination
for election by the stockholders of the Company was approved by a vote of a
majority of the directors then still in office who were directors at the
beginning of such period, or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Board then in office. For purposes hereof, a person, entity or group will be
deemed to have beneficial ownership of all shares that any such person, entity
or group has the rights to acquire, whether such right is exercisable
immediately or only after passage of time or notice. If there is no public
announcement of the Change of Control event, it shall be deemed to have occurred
when the agreement was executed.
"Common Equity" shall mean the total equity interest in the Company
represented by the Common Stock and shall include Common Equity resulting from
any reorganization, reclassification or recapitalization or similar event.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder, and any successor
provisions thereto.
"Exercise Price" shall have the meaning given in the Warrant, as
adjusted from time to time pursuant to the terms of the Warrant and this
Agreement.
"Expiration Period" means the period commencing on the Vesting Date
through and including the fifth anniversary of the Vesting Date or, in the event
the fifth anniversary is not a Business Day (as hereinafter defined), the next
succeeding Business Day.
"Fair Value" as of a particular date shall mean the average last sale
price of the Common Stock as reported on a national securities exchange or on
the Nasdaq SmallCap or National Market System for the five trading days
immediately preceding such date or, if a last sale reporting quotation is not
available for the Common Stock, the average of the bid and asked prices of the
Common Stock as reported by Nasdaq or on the NASD's OTC Bulletin Board Service
for the five trading days immediately preceding such date, or if not so
reported, as listed in the Pink Sheets LLC's "Pink Sheets." If such quotations
are unavailable, or with respect to other appropriate security, property,
assets, business or entity, "Fair Value" shall mean the fair value of such item
as determined by mutual agreement reached by the Holder and the Company or, in
the event the parties are unable to agree, an opinion of an independent
investment banking firm or firms in accordance with the following procedure. In
the case of any event which gives rise to a requirement to determine "Fair
Value" pursuant to this Agreement, the Company shall be responsible for
initiating the process by which Fair Value shall be determined as promptly as
practicable, but in any event within sixty (60) days following such event and if
the procedures contemplated herein in connection with determining Fair Value
have not been complied with fully, then any such determination of Fair Value for
any purpose of this Agreement shall be deemed to be preliminary and subject to
adjustment pending full compliance with such procedures. Upon the occurrence of
an event requiring the determination of Fair Value, the Company shall give the
Holder(s) of the Warrant notice of such event, and the Company and the Holders
shall engage in direct good faith discussions to arrive at a mutually agreeable
determination of Fair Value.
2
In the event the Company and the Holder(s) (as hereinafter defined) are
unable to arrive at a mutually agreeable determination within thirty (30) days
of the notice, the Company and the Holder(s) of the Warrant (who, if more than
one, shall agree among themselves by a majority) shall each retain a separate
independent investment banking firm of national reputation (which firm, in
either case, may be the independent investment banking firm regularly retained
by the Company or any such Holder). Such firms shall jointly determine the Fair
Value of the security, property, assets, business or entity, as the case may be,
in question and deliver their opinion in writing to the Company and to such
Holder within thirty (30) days of their retention.
If such firms cannot jointly make such determination within such 30-day
period, then, unless otherwise directed by agreement of the Company and the
Holder(s) of a majority or more of the Warrant, such firms, in their sole
discretion, shall choose another independent investment banking firm of the
Company or such Holder(s), which firm shall make such determination and render
such an opinion. In either case, the determination so made shall be conclusive
and binding on the Company and such Holder(s). The fees and expenses of the
investment-banking firm retained by Holder(s) pursuant to this provision shall
be borne by Holder(s). The fees and expenses of all other investment-banking
firms retained pursuant to this provision shall be borne by the Company.
"Holder" or "Holders" shall mean the Person(s) then registered as the
owner(s) of the Warrant or Warrant Securities, as the case may be, on the books
and records of the Company.
"Installation of the CenterlinQ System" or any similar concept shall
have the meaning set forth in Section 23 of the Space Lease Agreements.
"Person" shall mean any individual, corporation, partnership, limited
liability company, association, joint-stock company, trust, estate,
unincorporated organization, joint venture, court or governmental or political
subdivision or agency thereof.
"Registrable Securities" shall have the meaning assigned to it in
Section 6.01 hereof.
"SEC" shall mean Securities Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder, and any successor provisions
thereto.
"Vesting Date" shall mean, with respect to the 66,666 shares of Common
Stock initially issuable upon exercise of the Warrant, the date of installation
of the CenterlinQ System at the eight malls listed on Exhibit A to the Space
Lease Agreements and, with respect to each additional 6,060 shares of Common
Stock (up to a total of an additional 127,260 shares of Common Stock) initially
issuable upon exercise of the Warrant, the date on which the CenterlinQ System
is installed in each of the additional 21 malls and, with respect to the final
6,074 shares of Common Stock initially issuable upon exercise of the Warrant,
the date on which the CenterlinQ System is installed in the 22nd mall.
Notwithstanding the above, if a Change of Control occurs then the "Vesting Date"
shall mean the date on which such Change of Control occurs provided however,
3
that this accelerated vesting provision will terminate if within 18 months after
installation of the CenterlinQ System at the eighth mall, the CenterlinQ System
is not installed at one additional mall. Thereafter, this accelerated vesting
provision will terminate if the CenterlinQ System is not installed at one
additional mall within one year after the last mall installation.
"Warrant Securities" shall mean the shares of Common Stock (or other
securities representing Common Stock) purchasable or purchased from time to time
under the Warrant or acquired upon any transfer of any such shares, together
with all additional securities received in payment of dividends or distributions
on or splits of those securities or received as a result of the adjustments
provided for in Article V hereof.
II. WARRANT
On the date hereof, the Company will grant to Macerich, for good and
valuable consideration, the Warrant in the form attached as Exhibit A hereto.
Macerich and any subsequent Holder of the Warrant and of Warrant Securities
shall have the rights and obligations provided for in the Warrant and in this
Agreement.
III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND MACERICH
Section 3.01. Representations and Warranties of the Company.
(a) The execution and delivery of this Agreement and the Warrant have
been duly and properly authorized by all requisite corporate action of the
Company and its board of directors, and no consent of any other Person is
required as a prerequisite to the validity and enforceability of this Agreement
and the Warrant that has not been obtained. The Company has the full legal
right, power and authority to execute and deliver this Agreement and the Warrant
and to perform its obligations hereunder and thereunder. When issued and
delivered pursuant to this Agreement, the Warrant will have been duly executed,
issued and delivered and will constitute valid and legally binding obligations
of the Company entitled to the benefits provided herein and therein.
(b) The Company is not a party to or otherwise subject to any contract
or agreement which restricts or otherwise affects its right or ability to
execute and deliver this Agreement or the Warrant or to perform any obligation
hereunder or thereunder (including, without limitation, issuance of the Warrant
Securities), except for contracts or agreements that the Company has received a
written consent and/or waiver from the other party or parties thereto and
delivered a copy of the same to Macerich. Neither the execution or delivery of
this Agreement or the Warrant, nor compliance therewith (including, without
limitation, issuance of the Warrant Securities), will conflict with, or result
in a breach of the terms, conditions or provisions of, or constitute a default
under, or result in any violation of, or result in the creation of any material
lien upon any properties of the Company under, or require any consent, approval,
or other action by, notice to or filing with any court or Governmental Person
4
pursuant to the Certificate of Incorporation or By-laws of the Company, as
currently in effect, any award of any arbitrator, or any material agreement,
instrument or law to which the Company is subject or by which it is bound.
(c) On November 7, 2000, the authorized capital stock of the Company
consists of 25,000,000 shares of Common Stock and 5,000,000 shares of preferred
stock. As of November 7, 2000, the Company has issued and outstanding 6,677,789
shares of Common Stock. The Common Stock and any Warrant Securities issued
pursuant to the Warrants will, when issued in accordance with the terms of the
Warrant, be duly and validly issued, fully paid and nonassessable, and free from
all taxes, liens and charges with respect to the issue thereof.
(d) Except as provided in this Agreement, the Company is not subject to
any obligation to repurchase or otherwise acquire or retire any shares of
capital stock. The issuance by the Company of the Warrant is not, and the
Warrant Securities will not be, subject to any preemptive or similar rights
pursuant to statute, contract or understanding.
(e) The Warrant is, and the Warrant Securities will be, issued by the
Company to Macerich in a transaction exempt from registration and qualification
under the applicable federal and state securities laws.
Section 3.02. Representations and Warranties of Macerich. Macerich
warrants it is an "accredited investor" as that term is defined in rule 501(a)
promulgated under the Securities Act; is acquiring the Warrant for investment
purposes only, for its own account and not with the view to any resale or
distribution thereof; is not participating, directly or indirectly, in an
underwriting of Warrant Securities; and will not take, or cause to be taken, any
action that would cause it or its stockholders, to be deemed an `underwriter,"
as defined in Section 2(a)(11) of the Securities Act.
IV. COVENANTS
Section 4.01 Covenants of the Company. The Company hereby covenants and
agrees that, during the term of this Agreement, unless all of the Holders of the
Warrant agree otherwise in writing:
(a) Each of the Warrant Securities issued and delivered upon the
exercise of the Warrant and payment of the Exercise Price will be duly and
validly authorized and issued, will be fully paid and nonassessable, and will
not be subject to any unpaid tax or any lien, whether respecting their issuance
to and purchase by the Holder of the Warrant or otherwise. The Company will take
all such actions as may be necessary to assure that all such shares of Common
Stock may be so issued without violation of any applicable law or governmental
regulation or any requirements of any domestic securities exchange upon which
shares of Common Stock may be listed.
(b) The Company shall reserve and at all times keep available for
issuance an authorized number of shares of Common Stock sufficient to permit the
5
full and immediate exercise of the Warrant and the full and immediate exercise,
exchange and conversion of all other securities, options, warrants and other
rights issued or granted by the Company.
(c) The Company shall not permit the par value of its Common Stock to
exceed, at any time, the Exercise Price and shall take all such actions as may
be necessary or appropriate to ensure that it does not do so.
(d) As soon as available, and in no event later than the dates filed
with any other Governmental Person or other regulatory authority, if such
documents are so filed, the Company shall deliver to the Holder(s) of the
Warrant and the Warrant Securities copies of (i) all annual, quarterly and
monthly financial statements made available by the Company to its stockholders,
(ii) all reports, notices and proxy or information statements sent or made
available generally by the Company to its stockholders, and (iii) all regular
and periodic reports and all registration statements, prospectuses and other
information filed by the Company with the Securities and Exchange Commission
(the "SEC"), relevant state authorities or any securities exchange, securities
quotation system or other self-regulatory organization. It is agreed that so
long as the Company is a participant in and duly files any such filing with the
SEC's XXXXX system, then such filing shall be deemed delivered under this
Section 4.01(d).
(e) The Company shall cooperate with the Holder(s) of the Warrant and
the Warrant Securities in supplying such information as may be reasonably
necessary for the Holder(s) to complete and file any information or other
reporting forms from time to time required by the SEC, relevant state
authorities or any securities exchange, securities quotation system or other
self-regulatory organization, including, without limitation, information
pertaining to or required for the availability of any exemption from the
securities laws for the sale, transfer or other disposition of the Warrant or
any of the Warrant Securities.
Section 4.02 Indemnification.
(a) In connection with any registration or qualification of Warrant
Securities hereunder, the Company agrees that Macerich and each other Holder of
the Warrant or any Warrant Securities purchased hereunder, any underwriter(s),
and their respective directors, officers, employees, attorneys and agents, as
well as each other Person (if any) controlling any of the foregoing Persons
within the meaning of Section 15 of the Securities Act, or Section 20 of the
Exchange Act, shall not incur any liability for acts and omissions arising out
of or related directly or indirectly to the Warrant, the Warrant Securities,
this Agreement, any registration statement or prospectus or any misstatement or
omission of a material fact therein; and the Company hereby expressly waives any
and all claims and actions which it now has or may hereafter at any time have
against Macerich and each other Holder of the Warrant or underlying Warrant
Securities, and their respective directors, officers, employees, attorneys and
agents, arising out of or related directly or indirectly to any and all of the
foregoing acts, omissions and circumstances, except insofar as such liability is
caused by untrue statements or alleged untrue statements or omissions or alleged
omissions and is based upon information furnished in writing by Holder expressly
for use therein and in such event such Holder shall indemnify the Company from
any claim or loss arising out of such Holder's untrue statement or omission.
6
(b) The Company agrees to defend, indemnify and hold harmless Macerich
and each other Holder of the Warrant, this Agreement, or any Warrant Security
purchased hereunder, any underwriter(s), and their respective directors,
officers, employees, attorneys and agents, as well as each other Person (if any)
controlling any of the foregoing Persons within the meaning of Section 15 of the
Securities Act, or Section 20 of the Exchange Act, from and against any and all
claims, damages, liabilities (joint or several), losses and expenses (including,
without limitation, the disbursements, expenses and fees of their respective
attorneys) that may be imposed upon, incurred by, or asserted against any of
them, any of their respective directors, officers, employees, attorneys and
agents, or any such control Person, under the Securities Act, the Exchange Act
or any other statute, any state securities laws or at common law, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof),
arise out of or are related directly or indirectly to: (i) any untrue statement
or alleged untrue statement of any material fact contained, on the effective
date thereof, in any registration statement under which such securities were
registered under the Securities Act or the Exchange Act, or in any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereto, or (ii) any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and (iii) any violation or alleged violation of the Securities
Act, the Exchange Act, any state securities laws or any rule or regulation
promulgated thereunder, and shall reimburse such Persons for any legal or any
other expenses reasonably incurred by such Persons in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon any alleged untrue statement or alleged omission made in such registration
statement, preliminary prospectus, prospectus or amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company through an instrument duly executed by such respective Person
specifically for use therein. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of any such
indemnified Person, and shall survive the transfer of such securities by such
Person. Promptly after receipt of notice of the commencement of any action in
respect of which indemnity may be sought against the Company, the Company shall
assume the defense of such action (including the employment of counsel, who
shall be counsel reasonably satisfactory to the party seeking indemnity
hereunder) and the payment of expenses insofar as such action shall relate to
any alleged liability in respect of which indemnity may be sought against the
Company; provided, however, the indemnified Person shall have the right to
retain separate counsel, with the fees and expenses to be paid by the Company,
if representations of such indemnified Person would in the reasonable opinion of
such counsel, be inappropriate due to actual or potential differing interests.
The Company shall not, except with the approval of each party being indemnified
under this Section 4.02, consent to entry of any judgment or enter into any
settlement that does not include as an unconditional term thereof the giving by
the claimant or plaintiff to the parties being so indemnified of a release from
all liability in respect to such claim or litigation.
7
(c) If the indemnification provided for in this Section 4.02 is held by
a court of competent jurisdiction to be unavailable to an indemnified Person
with respect to any loss, liability, claim, damage, or expense referred to
herein, then the indemnifying Person, in lieu of indemnifying such indemnified
Person hereunder, shall contribute to the amount paid or payable by such
indemnified Person as a result of such loss, liability, claim, damage, or
expense in such proportion as is appropriate to reflect the relative fault of
the indemnifying Person on the one hand, and of the indemnified Person on the
other, in connection with the statements or omissions that resulted in such
loss, liability, claim, damage, or expense as well as any other relevant
equitable considerations. The relative fault of the indemnifying Person and of
the indemnified Person shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying Person or by the indemnified Person and the Person's relative
intent, knowledge, access to information, and opportunity to correct or prevent
such statement or omission.
(d) The obligations of the Company and the Holder(s) under this Section
4.02 shall survive the completion of any offering of Registrable Securities in a
registration statement, and otherwise.
Section 4.03 Listing on the Securities Exchange. The Company shall, at
its expense, list on any securities exchange (including for this purpose Nasdaq)
where it lists its Common Stock, and maintain and increase when necessary such
listing of all outstanding Warrant Securities so long as any shares of Common
Stock shall be so listed. The Company shall also so list on each securities
exchange, and will maintain such listing of, any other securities which the
holder of the Warrant shall be entitled to receive upon the exercise thereof if
at the time any securities of the same class shall be listed on such securities
exchange by the Company.
V. ANTIDILUTION
Section 5.01 Adjustments of Exercise Price and Number of Warrant
Securities. The number of and kind of securities purchasable upon exercise of
the Warrant and the Exercise Price shall be subject to adjustment from time to
time as set forth in this Section 5.01.
(a) Subdivisions, Combinations, Stock Dividends and other Issuances. If
the Company shall, at any time while the Warrant is outstanding, (A) pay a stock
dividend or otherwise make a distribution or distributions on any equity
securities (including instruments or securities convertible into or exchangeable
for such equity securities) in shares of Common Stock, (B) subdivide outstanding
shares of Common Stock into a larger number of shares, or (C) combine
outstanding Common Stock into a smaller number of shares, then the effective
Exercise Price shall be multiplied by a fraction, the numerator of which shall
be the number of shares of Common Stock outstanding before such event and the
denominator of which shall be the number of shares of Common Stock outstanding
after such event. Any adjustment made pursuant to this Section 5.01(a) shall
become effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision or
combination. The number of shares which may be purchased hereunder shall be
8
increased or decreased proportionately to any decrease or increase,
respectively, in Exercise Price pursuant to this Section 5.01(a), so that after
such adjustments the aggregate Exercise Price payable hereunder for the Warrant
Securities shall be the same as the aggregate Exercise Price in effect just
prior to such adjustments.
(b) Other Distributions. If at any time after the date hereof the
Company distributes to holders of its Common Stock, other than as part of its
dissolution, liquidation or the winding up of its affairs, any shares of its
capital stock, any evidence of indebtedness or any of its assets (other than
Common Stock), then the number of Warrant Securities for which the Warrant is
exercisable shall be increased to equal: (i) the number of Warrant Securities
for which the Warrant is exercisable immediately prior to such event, (ii)
multiplied by a fraction, (A) the numerator of which shall be the Fair Value per
share of Common Stock on the record date for the dividend or distribution, and
(B) the denominator of which shall be the Fair Value per share of Common Stock
on the record date for the dividend or distribution minus the amount allocable
to one share of Common Stock of the value (as jointly determined in good faith
by the Board of Directors of the Company and the Holder) of any and all such
evidences of indebtedness, shares of capital stock, other securities or
property, so distributed. The Exercise Price shall be reduced to equal: (i) the
Exercise Price in effect immediately before the occurrence of any event (ii)
multiplied by a fraction, (A) the numerator of which is the number of Warrant
Securities for which the Warrant is exercisable immediately before the
adjustment, and (B) the denominator of which is the number of Warrant Securities
for which the Warrant is exercisable immediately after the adjustment.
(c) Merger, etc. If at any time after the date hereof there shall be a
merger or consolidation of the Company with or into or a transfer of all or
substantially all of the assets of the Company to another entity, then the
Holder shall be entitled to receive upon or after such transfer, merger or
consolidation becoming effective, and upon payment of the Exercise Price then in
effect, the number of shares or other securities or property of the Company or
of the successor corporation resulting from such merger or consolidation, which
would have been received by the Holder for the shares of stock subject to the
Warrant had the Warrant been exercised just prior to such transfer, merger or
consolidation becoming effective or to the applicable record date thereof, as
the case may be. The Company will not merge or consolidate with or into any
other corporation, or sell or otherwise transfer its property, assets and
business substantially as an entirety to another corporation, unless the
corporation resulting from such merger or consolidation (if not the Company), or
such transferee corporation, as the case may be, shall expressly assume in
writing the due and punctual performance and observance of each and every
covenant and condition of the Warrant to be performed and observed by the
Company.
(d) Reclassification, etc. If at any time after the date hereof there
shall be a reorganization or reclassification of the securities as to which
purchase rights under the Warrant exist into the same or a different number of
securities of any other class or classes, then the Holder shall thereafter be
9
entitled to receive upon exercise of the Warrant, during the period specified
herein and upon payment of the Exercise Price then in effect, the number of
shares or other securities or property resulting from such reorganization or
reclassification, which would have been received by the Holder for the shares of
stock subject to the Warrant had the Warrant at such time been exercised.
(e) Exercise Price Adjustment. In the event that the Company issues or
sells any Common Stock or securities which are convertible into or exchangeable
for its Common Stock or any convertible securities, or any warrants or other
rights to subscribe for or to purchase or any options for the purchase of its
Common Stock or any such convertible securities (other than shares or options
issued or which may be issued pursuant to the Company's current employee option
plans or shares issued upon exercise of options, warrants or rights outstanding
on the date hereof ) at an effective price per share which is less than the
Exercise Price then in effect, then in each such case, the Exercise Price in
effect immediately prior to such issue or sale shall be reduced effective
concurrently with such issue or sale to an amount determined by multiplying the
Exercise Price then in effect by a fraction, (x) the numerator of which shall be
the sum of (1) the number of shares of Common Stock outstanding immediately
prior to such issue or sale, plus (2) the number of shares of Common Stock which
the aggregate consideration received by the Company for such additional shares
would purchase at the Exercise Price then in effect; and (y) the denominator of
which shall be the number of shares of Common Stock of the Company outstanding
immediately after such issue or sale.
For the purposes of the foregoing adjustment, in the case of
the issuance of any convertible securities, warrants, options or other rights to
subscribe for or to purchase or exchange for, shares of Common Stock
("Convertible Securities"), the maximum number of shares of Common Stock
issuable upon exercise, exchange or conversion of such Convertible Securities
shall be deemed to be outstanding, provided that no further adjustment shall be
made upon the actual issuance of Common Stock upon exercise, exchange or
conversion of such Convertible Securities, unless any such Convertible
Securities shall expire or terminate unconverted, in which case an equitable
adjustment shall be made to reflect the reduction in the actual shares issued.
The number of shares which may be purchased hereunder shall be
increased proportionately to any reduction in Exercise Price pursuant to this
Section 5.01(e), so that after such adjustments the aggregate Exercise Price
payable hereunder for the increased number of shares shall be the same as the
aggregate Exercise Price in effect just prior to such adjustments.
(f) (i) The terms of any reorganization, consolidation, merger, sale,
transfer or share exchange shall include such terms so as to continue to give to
the holder hereof the right to receive the securities or property set forth in
this Section 5 upon any exercise following any such reclassification,
consolidation, merger, sale, transfer or share exchange.
(ii)In the event of any adjustment in the number of Warrant
Securities issuable hereunder upon exercise, the Exercise Price shall be
inversely proportionately increased or decreased as the case may be, such that
10
the aggregate purchase price for Warrant Securities upon full exercise of the
Warrant shall remain the same. Similarly, in the event of any adjustment in the
Exercise Price, the number of Warrant Securities issuable hereunder upon
exercise shall be inversely proportionately increased or decreased as the case
may be, such that the aggregate purchase price for Warrant Securities upon full
exercise of the Warrant shall remain the same.
VI. REGISTRATION RIGHTS
Section 6.01 "Piggyback" Registration Rights. If at any time the
Company shall determine to register under the Securities Act (including pursuant
to a demand of any security holder of the Company exercising registration
rights) any of its Common Stock (except securities to be issued solely in
connection with any acquisition of any entity or business, shares issuable
solely pursuant to employee benefit plans eligible for registration on SEC Form
S-8 or shares to be registered on any registration form that does not permit
secondary sales), it shall send to Macerich and to each of the Holder(s) written
notice of such determination at least thirty (30) days prior to each such filing
and, if within twenty (20) days after receipt of such notice, any Holder shall
so request in writing, the Company shall use its best efforts to include in such
registration statement (to the extent permitted by applicable regulation) all or
any part of the Warrant Securities, whether or not vested pursuant to the terms
of the Warrant (collectively referred to in this Article VI as "Registrable
Securities") that such Holder requests to be registered, provided, however, that
if, in connection with any offering involving an underwriting of Common Stock to
be issued by the Company, the managing underwriter shall impose a limitation on
the amount of Registrable Securities included in any such registration
statement, then, to the extent that any Registrable Securities remain available
for registration after the underwriter's cutback, the Company shall be obligated
to include in such registration statement with respect to each Holder requesting
inclusion only the product of (i) the number of Registrable Securities with
respect to which such Holder has requested inclusion hereunder and (ii) such
Holder's pro rata share, expressed as a percentage, of the sum of all
Registrable Securities permitted to be registered and all other securities of
the Company, the holders of which Registrable Securities and other securities
have requested that such securities be registered. Any Registrable Securities
which are included in any underwritten offering under this Section 6.01 shall be
sold upon such terms as the managing underwriters shall reasonably request but
in any event shall be upon terms not less favorable than those upon which any
other selling security holder shall sell any of its securities. If any Holder
disapproves of the terms of such underwriting, such Holder may elect to withdraw
therefrom by written notice to the Company and the underwriter. Notwithstanding
the provisions of this Section 6.01, the Company shall have the right, at any
time after it shall have given written notice pursuant to this Section 6.01
(irrespective of whether a written request for inclusion of Registrable
Securities shall have been made), to elect not to file any such proposed
registration statement or to withdraw the same after the filing and prior to the
effective date thereof.
In exercising Holder's piggyback registration rights hereunder, Holder
shall have the right to request the registration of any Registrable Securities
on a delayed or continuous basis using a shelf registration statement in lieu of
participating in any underwritten offering.
11
Section 6.02 Demand Registration Rights. In the event that prior to
August 2, 2001 the Holder shall not have been afforded the opportunity elected
to register (on one or more occasions) under Section 6.01 hereof (or have been
prevented from including Registrable Securities requested by the Holder to be
included in a registration statement by the underwriter pursuant to the terms of
this Agreement), all of the Registrable Securities, then the Holders shall have
the right to demand registration of any Registrable Securities not so registered
in accordance with this Section 6.02. If the Company shall be requested by the
Holders to effect a registration under the Securities Act of at least forty
percent (40%) of the then-outstanding Registrable Securities held by the
Holders, then the Company shall use its reasonable efforts to effect such
registration of the Registrable Securities that the Company has been so
requested by the Holders (which prior to the date on which notice is delivered
to the Company, shall have confirmed with all Holders the number of Registrable
Securities proposed to be included in such registration and shall have delivered
notice of the same to the Company); provided, however, that the Company shall
not be obligated to effect any registration under the Securities Act except in
accordance with the following provisions:
(a) the Company shall not be obligated to file (i) more than two
registration statements initiated pursuant to this Section 6.02 which becomes
effective or which is rescinded by the Holders without reimbursement. or (ii)
any registration statement during any period in which any other registration
statement (other than on Form S-4 or Form S-8 promulgated under the Securities
Act or any successor forms thereto) pursuant to which shares are to be or were
sold has been filed and not withdrawn or has been declared effective within the
prior 180 days;
(b) the Company shall not be obligated to effect any registration under
this Section 6.02 if Macerich has elected to register all of the Registrable
Securities pursuant to Section 6.01 of this Agreement;
(c) the Company may delay the filing or effectiveness of any
registration statement for a period not to exceed: (i) 90 days after the date of
a request for registration pursuant to this Section 6.02 if at the time of such
request the Company is engaged, or has fixed plans to engage within 60 days of
the time of such request, in a firm commitment underwritten public offering in
which the holders of Registrable Securities may, to the extent such registration
statement is in the registration process, include Registrable Securities
pursuant to Section 6.01 (including Holder requesting registration of any
Registrable Securities on a delayed or continuous basis) or (ii) the earlier of
the date upon which the material information described below is disclosed to the
public or ceases to be material or 90 days after the Board makes the good faith
determination described below if the Company shall furnish to the Holders
requesting such registration a certificate signed by the President of the
Company stating that, in the good faith judgment of the Board of Directors of
the Company, that (A) it would be seriously detrimental to the Company and its
shareholders for such registration statement to be filed or (B) there exists a
material development or a potential material development with respect to or
involving the Company that the Company would be obligated to disclose in the
prospectus or offering circular used in connection with the registration
statement, which disclosure would in the judgment of the Company be premature or
12
otherwise inadvisable at such time, and that it is therefore essential to defer
the filing of such registration statement; provided, however, that the Company
may not utilize this right under Section 6.02 (c) to delay the filing or
effectiveness of any registration statement for a period which in the aggregate
exceeds 105 days during any 12-month period; and
(d) with respect to any registration pursuant to this Section 6.02, the
Company may include in such registration any other shares of the Company;
provided, however, that if the managing underwriter advises the Company that the
inclusion of all Registrable Securities, and other shares proposed to be
included in such registration would interfere with the successful marketing
(including pricing) of all such securities, then the number of Registrable
Securities, and other shares proposed to be included in such registration shall
be included in the following order:
(i) first, the Registrable Securities; and
(ii) second, any other shares.
A requested registration under this Section 6.02 may be rescinded by written
notice to the Company by Holder; provided, however, that such rescinded
registration shall not count as a registration statement initiated pursuant to
this Section 6.02 for purposes of paragraph (a) above if Holder shall have
reimbursed the Company for all out-of-pocket expenses incurred by the Company in
connection with such rescinded registration. The Company may select any firm of
underwriters in connection with a registration under this Section 6.02, which
firm of underwriters shall be reasonably acceptable to the Holders including
Registrable Securities in a registration under this Article VI.
Section 6.03 Effectiveness. The Company shall use its best efforts to
maintain the effectiveness of the registration of the Registerable Securities
under Section 6.01 and/or Section 6.02 until the earlier of (i) the date on
which all of the Warrant Securities have been sold, or (ii) the date on which
all of the Warrant Securities may be sold without registration or restriction.
The Holder shall notify the Company promptly of the completion of the offering
of its Registrable Securities under any such effective registration statement.
(a) The Company shall not be required to effect a registration
statement pursuant to this Section 6.02 after the Company has previously
effected two (2) registrations pursuant to this Section 6.02, and such
registrations have been declared or ordered effective.
Section 6.04 Further Obligations of the Company. Whenever, under the
preceding Sections of this Article VI, the Company is required hereunder to
register Registrable Securities, it agrees that it shall also do the following:
(a) Prepare and file with the SEC a registration statement with respect
to such Registrable Securities in a form which will permit the disposition of
all Registerable Securities in the manner contemplated by Holder, including a
shelf registration statement and use its best efforts to cause such registration
statement to become effective.
13
(b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection therewith as
may be necessary to keep such registration statement effective and to comply
with the provisions of the Securities Act with respect to the disposition of all
Registrable Securities for such period of time provided in Section 6.03.
(c) Furnish to each selling Holder and any underwriter of such
Registrable Securities, such number of conformed copies of such registration
statement and of each such amendment and supplement thereto (in each case
including all exhibits), such copies of each preliminary and final prospectus in
conformity with the requirements of the Securities Act, such documents
incorporated by reference in such registration statement or prospectus, and any
other documents as such Holder or underwriter may reasonably request to
facilitate the offering of its Registrable Securities;
(d) Use its best efforts to register or qualify the Registrable
Securities to be registered pursuant to this Article VI under the applicable
securities or blue sky laws of such jurisdictions as any selling Holder or
underwriter may reasonably request, and do any and all other acts and things
which may be reasonably requested by such Holder or any underwriter to
consummate the disposition in such jurisdictions of the Registrable Securities
covered by such registration statement;
(e) Furnish and address to each selling Holder: (i) a signed
counterpart of an opinion of counsel for the Company, dated the effective date
of the registration statement; and (ii) a copy of any "comfort" letters signed
by the Company's independent public accountants who have examined and reported
on the Company's financial statements included in the registration statement,
covering substantially the same matters as are customarily covered in opinions
of issuer's counsel and in accountants' "comfort" letters delivered to the
underwriters in underwritten public offerings of securities;
(f) Permit each selling Holder or such Holder's counsel or other
representatives to inspect and copy such corporate documents and records as may
reasonably be requested by them in connection with such registration;
(g) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. Each Holder participating
in such underwriting shall also enter into and perform its obligations under
such an agreement;
(h) Furnish to each selling Holder, upon request, a copy of all
documents filed and all correspondence from or to the SEC in connection with any
such offering;
14
(i) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing and at
the request of such Holder prepare and furnish to such Holder as many copies of
a supplement to or an amendment of such prospectus as such Holder reasonably
requests so that, as thereafter delivered to the purchasers of such Registrable
Securities, such prospectus shall not include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading;
(j) Cause all such Registrable Securities registered pursuant hereunder
to be listed on each securities exchange on which similar securities issued by
the Company are then listed.
(k) In the event of any underwritten public offering, cooperate with
the selling Holders, the underwriters participating in the offering and their
counsel in any due diligence investigation reasonably requested by the selling
Holders or the underwriters in connection therewith, and participate, to the
extent reasonably requested by the managing underwriter for the offering or the
selling Holder, in efforts to sell the Registrable Securities under the offering
(including, without limitation, participating in "roadshow" meetings with
prospective investors) that would be customary for underwritten primary
offerings of a comparable amount of equity securities by the Company.
Section 6.05 Expenses. Except for underwriters' discounts and brokerage
commissions allocable to the Registrable Securities, the Company shall bear all
costs and expenses of each registration contemplated in this Article VI
including, but not limited to, printing, legal and accounting fees and expenses,
SEC and NASD filing fees and blue sky fees and expenses in any jurisdiction in
which the securities to be offered are to be registered or qualified.
Section 6.06 Transfer of Registration Rights. The registration rights
of the Holders of Registrable Securities under this Article VI shall inure to
the benefit of and be exercisable by any transferee of Registrable Securities.
VII. TRANSFER OF WARRANT AND WARRANT SECURITIES
Section 7.01 Transfer. Except as set forth in Section 7.02 below, the
Warrant and the Warrant Securities and all rights thereunder are transferable,
in whole or in part, on the books of the Company to be maintained for such
purpose, upon surrender of such Warrant at the office of the Company maintained
for such purpose, together with a written assignment of such Warrant duly
executed by the Holder hereof or its agent or attorney and payment of funds
sufficient to pay any stock transfer taxes payable upon the making of such
transfer. Upon such surrender and payment, the Company shall execute and deliver
a new Warrants or Warrant in the name of the assignee or assignees and in the
denominations specified in such instrument of assignment, and the Warrant shall
promptly be canceled. If and when the transferred Warrant is assigned in blank,
15
the Company may (but shall not be obliged to) treat the bearer thereof as the
absolute owner of such Warrant for all purposes and the Company shall not be
affected by any notice to the contrary. The transferred Warrant, if properly
assigned in compliance herewith, may be exercised by an assignee for the
purchase of shares of Common Stock without having a new Warrant issued. The
Company will not close its stock transfer books against a transfer of the
Warrant or the Warrant Securities or any exercise of the Warrant. Any such
transfer or exercise tendered while such stock transfer books shall be closed
shall be deemed effective immediately prior to such closure.
Subject to Section 7.02 below, the Warrant may be divided or combined
with other Warrants upon presentation at the aforesaid office of the Company,
together with a written notice specifying the names and denominations in which
new Warrants are to be issued, signed by the Holder thereof or its agent or
attorney. Subject to compliance with this, as to any transfer which may be
involved in such division or combination, the Company shall execute and deliver
a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided
or combined in accordance with such notice.
The Company shall pay all expenses, taxes (other than income taxes, if
any, of the transferee) and other charges incurred by the Company in the
performance of its obligations in connection with the preparation, issue and
delivery of Warrant under this Section. The Company agrees to maintain at its
aforesaid office books for the registration and transfer of the Warrant.
Notwithstanding any provision to the contrary contained herein, the Warrant and
the Warrant Securities shall be transferable only in compliance with the
provisions of the Securities Act and applicable state securities laws in respect
of the transfer of any Warrant or any Warrant Securities.
Section 7.02 Transfer Restrictions. Neither this Agreement, the Warrant
nor the Warrant Securities, when issued, have been registered under the
Securities Act or under the securities laws of any state. Neither this
Agreement, the Warrant nor the Warrant Securities, when issued, may be
transferred: (a) if such transfer would constitute a violation of any federal or
state securities laws or a breach of the conditions to any exemption from
registration thereunder and (b) unless and until one of the following has
occurred: (i) registration of this Agreement, the Warrant or the Warrant
Securities, as the case may be, under the Securities Act, and such registration
or qualification as may be necessary under the securities laws of any state,
have become effective, or (ii) the Holder has delivered evidence reasonably
satisfactory to the Company that such registration or qualification is not
required.
Each certificate for Warrant Securities issued upon exercise of a
Warrant and each certificate issued to a subsequent transferee, unless at the
time of exercise such Warrant Securities are registered under the Securities
Act, shall bear a legend substantially in the following form (and any additional
legends required by law) on the face thereof:
16
THE WARRANT SECURITIES TO BE RECEIVED UPON EXERCISE OF THE WARRANT HAS
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
QUALIFIED UNDER ANY STATE SECURITIES LAWS. THE WARRANT SECURITIES MAY
NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED,
WHETHER OR NOT FOR CONSIDERATION, IN THE ABSENCE OF (1) AN EFFECTIVE
REGISTRATION STATEMENT AND QUALIFICATION IN EFFECT WITH RESPECT TO THE
WARRANT SECURITIES UNDER THE SECURITIES ACT AND UNDER ANY APPLICABLE
STATE SECURITIES LAWS OR (2) AN EXEMPTION FROM SUCH REGISTRATION AND
QUALIFICATION.
Section 7.03 Replacement of Instruments. Upon receipt by the Company of
evidence reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any certificate or instrument evidencing any
Warrant or Warrant Securities, and (a) in the case of loss, theft or
destruction, upon receipt by the Company of indemnity reasonably satisfactory to
it (provided that, if the owner of the same is a commercial bank or an
institutional lender or investor, its own agreement of indemnity shall be deemed
to be satisfactory), or (b) in the case of mutilation, upon surrender and
cancellation thereof, the Company, at its expense, will execute, register and
deliver, in lieu thereof, a new certificate or instrument for (or covering the
purchase of) an equal number of Warrant or Warrant Securities.
Section 7.04 Conversion to Shares of CenterlinQ Entity. Pursuant to the
terms of the Space Lease Agreements, in the event the Company decides to
publicly offer shares of a separate entity that owns the assets of CenterlinQ
("CenterlinQ Entity"), the Holder will have the right to convert the Warrant, in
whole or in part, into warrants (the "Converted Warrants") to purchase
CenterlinQ Entity stock. The Converted Warrants shall entitle Holder to purchase
the number of shares of CenterlinQ Entity common stock equal to the quotient
obtained by dividing (1) the product of (a) the number of Warrant Securities
sought to be converted and (b) the higher of the exercise price or the average
closing price per share of Company Common Stock on Nasdaq or any other national
exchange for the ten consecutive trading days ending on the first trading day
preceding the date of Holder's election by (2) the price to the public in the
initial public offering ("IPO") of the CenterlinQ Entity stock if offered or the
average closing price per share of CenterlinQ Entity common stock on the
applicable exchange for the 20 consecutive trading days following a spin-off,
whichever is applicable (the "Effective Price"). The exercise price of the
Converted Warrants shall be the Effective Price. The Company will provide Holder
with at least 20 business days prior notice of any proposed IPO or spin-off. The
right to convert the Warrant to Converted Warrants shall expire 2 days after
Holder is provided notice of the price range for the IPO or within 3 days after
the Effective Price is determined if there is a spin-off. If the IPO price is
not within the proposed price range, Holder shall have the right to withdraw its
conversion election. In the event such IPO or spin-off is, for any reason, not
consummated, then the right to convert shall not expire. The Converted Warrants
will have the same terms as the Warrant except the expiration date will be
extended to reflect a five-year term from the date of issuance of the Converted
Warrants.
17
VIII. MISCELLANEOUS
Section 8.01 No Waiver Under Other Agreements. The terms and provisions
contained in this Agreement are not intended and shall not be construed to
waive, modify, repeal, stay, diminish or otherwise impair or affect in any
manner whatsoever any right or remedy of Macerich or the Holder(s) under the
Company's Certificate of Incorporation, By-laws or similar agreements.
Section 8.02 Reliance. Each party to this Agreement shall be entitled
to rely upon any notice, consent, certificate, affidavit, statement, paper,
document, writing or other communication reasonably believed by that party to be
genuine and to have been signed, sent or made by the proper Person or Persons.
Section 8.03 Notice. All notices and other communications provided for
in this Agreement shall be in writing and delivered by registered or certified
mail, postage prepaid, or delivered by overnight courier (for next Business Day
delivery) or telecopied, addressed as follows, or at such other address as any
of the parties hereto may hereafter designate by notice to the other parties
given in accordance with this Section:
1) if to Macerich:
The Macerich Partnership, L.P.
000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxx Xxxxxx, XX 00000
Attn: Xxxx Xxxxxx, Senior V.P
Telephone: 000-000-0000
Telecopier: 310/395-2791
With a copy of any notice to:
The Macerich Partnership, L.P.
000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxx Xxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxxx, V.P.
Telephone: 000-000-0000
Telecopier: 310/899-6036
2) if to the Company:
XxxxxxxXxxxxxxxxx.xxx, Inc.
0000 Xxxxxxxxx Xxxxxxxxx
Xxx Xxxx, XX 00000
18
Attn: Business Administration
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
With a copy of any notice to:
Nida & Xxxxxxx, LLP
000 Xxxxxxx Xxxxxx
Xxxxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxxxxxx X. Xxxxx
Telephone: 000-000-0000
Telecopier: 000-000-0000
Any such notice or communication shall be deemed to have been
duly given on the fifth day after being so mailed, the next Business Day after
delivery by overnight courier, when received when sent by telecopy or upon
receipt when delivered personally.
Section 8.04 Enforcement. The Company acknowledges that the Holders may
proceed to exercise or enforce any right, power, privilege, remedy or interest
that they may have under this Agreement or applicable law without notice, except
as otherwise expressly provided herein, without pursuing, exhausting or
otherwise exercising or enforcing any other right, power, privilege, remedy or
interest that they may have against or in respect of any other party, or any
other Person or thing, and without regard to any act or omission of such party
or any other Person.
Section 8.05 Interpretation; Headings; Severability.
(a) The parties acknowledge and agree that since each party and its
counsel have reviewed and negotiated the terms and provisions of this Agreement
and have contributed to its revision, the normal rule of construction to the
effect that any ambiguities are resolved against the drafting party shall not be
employed in the interpretation of this Agreement, and its terms and provisions
shall be construed fairly as to all parties hereto and not in favor of or
against any party, regardless of which party was generally responsible for the
preparation of this Agreement.
(b) The Section and other headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
(c) In the event that any term or provision of this Agreement shall be
finally determined to be superseded, invalid, illegal or otherwise unenforceable
pursuant to applicable law by a governmental authority having jurisdiction and
venue, determination shall not impair or otherwise affect the validity, legality
or enforceability: (i) by or before that authority of the remaining terms and
provisions of this Agreement, which shall be enforced as if the unenforceable
term or provision were deleted, or (ii) by or before any other authority of any
of the terms and provisions of this Agreement.
19
(d) If any period of time specified in this Agreement expires on a day
that is not a Business Day, that period shall be extended to and expire on the
next succeeding Business Day.
Section 8.06 Survival of Covenants. Each of the covenants and other
agreements of the parties contained in this Agreement shall be absolute and,
except as otherwise expressly provided, unconditional, shall survive the
execution and delivery of this Agreement and shall continue in full force and
effect until the term of this Agreement has expired, and thereafter with respect
to events occurring prior thereto.
Section 8.07 No Required Exercise. No term or provision of the Warrant
or this Agreement is intended to require, nor shall any such term or provision
be construed as requiring, any Holder of the Warrant to exercise or put the
Warrant.
Section 8.08 Binding Effect. This Agreement shall be binding upon and
enforceable against the parties hereto and their respective successors and
assigns.
Section 8.09 No Waiver by Action. The failure or delay of a party at
any time or times to require performance of, or to exercise its rights with
respect to, any term or provision of this Agreement (except as otherwise
expressly provided herein) shall not affect its right at a later time to enforce
any such provision.
Section 8.10 Waiver; Modification; Amendment. Each and every
modification to and amendment of this Agreement shall be in writing and signed
by the Company, Macerich (if at that time Macerich is a Holder) and by the
Holders of a majority in interest of all issued and unissued Warrant Securities.
Each and every waiver of and consent to any departure from any term or provision
hereof (except as otherwise provided herein) shall be in writing and signed by
Macerich (if at that time it is a Holder) and by the Holders of a majority in
interest of all issued and unissued Warrant Securities and by each party against
whom enforcement of the waiver or consent may be sought.
Section 8.11 Entire Agreement. This Agreement and the Warrant contain
the entire agreement of the parties and supersede all other representations,
warranties, agreements and understandings, oral or otherwise, among the parties
hereto with respect to the matters contained herein, except as otherwise
provided herein.
Section 8.12 No Inconsistent Agreements or Rights. The Company shall
not enter into any agreement with respect to its securities that is inconsistent
with the rights granted to the Holders in this Agreement.
20
Section 8.13 Governing Law; Consent to Jurisdiction; Waiver of Jury
Trial. THIS AGREEMENT, THE WARRANT AND THE WARRANT SECURITIES AND ALL
AMENDMENTS, SUPPLEMENTS, WAIVERS AND CONSENTS RELATING HERETO OR THERETO SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
CALIFORNIA WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THE COMPANY HEREBY
IRREVOCABLY SUBMITS ITSELF TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE AND
FEDERAL COURTS SITTING IN THE STATE OF CALIFORNIA AND AGREES AND CONSENTS THAT
SERVICE OF PROCESS MAY BE MADE UPON IT IN ANY LEGAL PROCEEDINGS RELATING HERETO
BY ANY MEANS ALLOWED UNDER CALIFORNIA OR FEDERAL LAW. THE COMPANY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH PROCEEDING BROUGHT
IN SUCH COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM. THE COMPANY HAS APPOINTED AN AGENT FOR
SERVICE OF PROCESS IN CALIFORNIA AND SHALL NOTIFY MACERICH OF ANY CHANGE
THEREIN. THE COMPANY AND MACERICH EACH HEREBY AGREES TO WAIVE ITS RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS AGREEMENT. NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, THIS WAIVER
IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO THIS AGREEMENT, THE WARRANT, THE WARRANT SECURITIES OR ANY
OTHER DOCUMENTS OR AGREEMENTS RELATING THERETO.
[Signature page to follow.]
21
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
MACERICH:
THE MACERICH PARTNERSHIP, L.P.,
a Delaware limited partnership
By: ___________________________
Name:
Title:
THE COMPANY:
XXXXXXXXXXXXXXXXX.XXX, INC.,
a Delaware corporation
By: ___________________________
Name:
Title:
22
Exhibit A
to
Warrant Agreement
Warrant
23
Exhibit 10.57
Lease Agreement
THIS Lease Agreement ("Agreement") is entered into by and between MACERICH
PROPERTY MANAGEMENT COMPANY, a _____________ corporation ("OWNER"), and
XXXXXXXXXXXXXXXXX.XXX, INC., a Delaware corporation ("GENESIS") (collectively,
the "Parties" or individually, a "Party").
RECITALS
A. OWNER is the owner/manager of certain shopping centers (the "Centers"),
which shall include those centers as more particularly described on Exhibit
"A" attached hereto and incorporated herein by this reference.
B. GENESIS is the owner, developer and operator of a network of directory and
communication-system kiosks, ("Kiosks") and video monitors ("Monitors")
commonly and collectively hereinafter known as the "CenterlinQ System."
C. OWNER and GENESIS desire to enter into this Agreement in order to permit
GENESIS to install, operate and maintain CenterlinQ System at the Center.
TERMS
NOW THEREFORE, in consideration of the mutual covenants herein contained, the
Parties agree as follows:
ARTICLE I - DEFINITIONS
1.1 Definitions. In addition to those terms defined hereinabove, the following
terms shall have the following meanings:
a) "ADA" has the meaning set forth in Section 7.5(b) hereof.
b) "Affiliate" means, with respect to each Party, an entity which
controls, is controlled by, or which is under common control
with the applicable Party, and with respect to OWNER, the term
shall also include each and every general partner of OWNER.
c) "Business Hours" has the meaning set forth in Section 3.2(a) hereof.
d) "CenterlinQ System" means the interactive kiosks, monitor
networks, and all components related thereto, individually,
collectively, or any combination thereof developed and
installed by GENESIS and approved by OWNER.
e) "Commencement Date" has the meaning set forth in Section 6.1 hereof.
f) "Core Service Features" has the meaning set forth in Section 3.2(a)
hereof.
g) "Frequent Shopper Program" has the meaning set forth in Section 4.4(c)
hereof.
h) "Frequent Shopper Software" has the meaning set forth in Section
3.2(a)(3) hereof.
i) "Gross Revenue" has the meaning set forth in Section 4.3 hereof.
j) "Kiosk(s)" has the meaning set forth in Section 3.1.(d) hereof.
k) "Kiosk Site" has the meaning set forth in Section 3.1(b) hereof.
l) "Lease Fees" has the meaning set forth in Section 4.1 (a) hereof.
m) "Lender" has the meaning set forth in Section 7.3 hereof.
n) "Mortgage" has the meaning set forth in Section 7.3 hereof.
o) "Options" have the meaning set forth in Section 3.1 hereof.
p) "Orientation Schedule" has the meaning set forth in Section 3.1(b)
hereof.
q) "Monitor Site" has the meaning set forth in Section 3.1(b) hereof.
r) "Termination Date" has the meaning set forth in Section 6.1 hereof.
s) "Proprietary Xxxx" means a trademark, servicemark or other proprietary
name, xxxx, logo or symbol of a Party.
1.2 Construction. Unless the context clearly indicates otherwise, terms used in
the singular include the plural, and terms used in the plural include the
singular.
ARTICLE II - LEASE TO INSTALL AND OPERATE KIOSKS
2.1 Grant of Lease. Subject to the terms and conditions of this Agreement, OWNER
hereby grants to GENESIS a lease for the purpose of installing, operating and
maintaining the CenterlinQ System as an interactive communication and
sponsorship system in the Centers, and for such other purposes as are reasonably
related thereto. GENESIS shall have the right to place interactive technology
and video in the common areas of the Center. OWNER represents and warrants that
2
it has the right and authority to grant the Lease set forth herein. In addition,
OWNER represents and warrants to GENESIS, for purposes of inducing GENESIS to
enter into this Agreement, that it is the OWNER of the Centers, and to the best
of its knowledge, it has not granted nor will it grant for the term of the
Agreement the rights described in this Section 2.1 to any other party, and the
terms and conditions of this Section 2.1 do not conflict with any other
agreement to which OWNER is a party. The core features of the CenterlinQ System
to which OWNER is granted a lease in this Section 2.1 are as follows:
o Video Advertising o Coupons
o Sales Events o Calendar of Events
o Internet Access o Advertising
o Frequent Shopper Program o Research
o Email o Shopping Directory
o Plasma Screens
GENESIS grants no such lease for movie or similar trailers, for static plasma
screens, or for hospitality rooms in Center that are not generally used by
center patrons.
2.2 Operation of CenterlinQ System. In consideration of, and subject to the
terms and conditions set forth in this Agreement, GENESIS agrees to install,
operate and maintain the CenterlinQ System, in order to provide an interactive
communication system which provides sponsorship opportunities for national and
local campaigns, as well as informational and entertaining applications for
Center patrons. Without limiting the foregoing, no advertisement or
communication from any sponsor, advertiser or user (i) shall include any
advertising for illegal drugs or any products which may not legally be sold
within the municipality, county, or state in which the Center is located, or
(ii) shall contain or depict any matter which could be reasonably considered
obscene, immoral or offensive to the majority or a substantial portion of the
citizens in the community, or shoppers or occupants of the Center. GENESIS shall
not accept advertising from any competing shopping centers, stores located in
any competing shopping centers, or any developers of shopping centers. For
purposes of this Section, 2.2, a competing shopping center shall be a shopping
center which is located within a radius of one (1) mile from the Center.
2.3 Video Advertising. OWNER agrees that for as long as this Agreement is in
effect, no other providers of interactive or video equipment which advertise
products, services or sponsors (excluding all ATM machines provided that any
advertising at or by such ATM machines shall be incidental to its primary
purpose of performing banking functions) shall be allowed in the common areas of
the Center.
3
ARTICLE III - INSTALLATION, OPERATION, RELOCATION, REPLACEMENT AND REMOVAL
OF KIOSKS
3.1 Installation. Installation of the CenterlinQ System shall be effectuated in
accordance with a three-phase schedule which shall be mutually agreed upon by
the parties, and in accordance with the terms herein below. It is the intention
of the parties that Phase 1 Malls shall be completed and operational on or
before November 15, 2000; provided, that a final contract is completed by July
15, 2000. Further, Phase 2 Malls shall be installed and operational on or before
July 31, 2001. Phase 3 Malls shall be installed and operational on or before
December 31, 2001. All of the dates for Phases 2 and 3 are subject to change by
mutual agreement of the parties. Any installation for a particular center will
commence 60 days after GENESIS receives a separate signed document by the OWNER
depicting all pertinent installation information; provided in the orientation
kit.
As an additional incentive to complete installation and operation of the
CenterlinQ System, OWNER and GENESIS shall enter into an option agreement
whereby OWNER shall be granted options effective the date of this Agreement to
purchase 200,000 shares of GENESIS Common Stock at an exercise price of $15.00
per share (the "Options"). The options shall vest ratably based on the
percentage of Centers listed on Exhibit A that have the CenterlinQ System
initially installed and operational. Therefore, by way of example, if the
parties agree that each Phase shall constitute an equal one third percentage of
the total number of Centers, then at the time the CenterlinQ System is installed
and operational in all phase 1 malls, options to purchase one third, or
66,666.67 shares of OWNER's GENESIS Common Stock shall have vested. Then when
Phase 2 is complete, another 66,666.67 would have vested. Finally when Phase 3
is completed the remainder of OWNER's GENESIS shares will have vested. To the
extent the Options have vested, they shall be convertible into options to
purchase GenesisIntermedia, Inc., a Florida corporation (dba CenterlinQ) common
stock ("Conversion Shares") in the event GenesisIntermedia, Inc. makes an
initial public offering. Upon issuance, such Conversion Shares shall be issued
in an amount equal in value to the value of the Options on the date of
conversion.
(a) Location. OWNER and GENESIS shall mutually determine the initial CenterlinQ
component locations. It is the intent of the Parties that each Kiosk Site have a
high traffic location, and shall be of sufficient size for convenient customer
access and use without interfering with the activities conducted at the Kiosk or
activities at the Center.
(b) Selection of Kiosk and Monitor Sites. GENESIS will promptly submit an
Orientation Schedule to OWNER, that describes the location of up to three Kiosk
locations, any Monitor Sites in the food courts that GENESIS chooses to install,
and that includes a schedule containing the time and date of installation
thereof; it being understood that at least one of such unit shall be at the
Customer service desk for use by mall staff. In the event that OWNER and GENESIS
cannot agree on locations, the Parties shall seek dispute resolution by a
neutral third party mutually acceptable to the Parties.
4
The Orientation Schedule will outline the following: the positioning of the
kiosks, available dedicated power sources, available dedicated
telecommunications sources, help desk specifics, management interface specifics,
permits, assembly area and information required to implement a state of the art
system in a professional and timely manner. This information shall be provided
to GENESIS by the OWNER within fifteen (15) business days of its receipt of the
Operation Schedule from GENESIS.
(c) Preparation of the Installation Sites. OWNER shall clear the space
designated for the Installation Sites not less than thirty days prior to the
installation date designated by GENESIS.
(d) Installation of Kiosks. Within ninety (90) days after the Kiosk Sites are
ready, GENESIS shall deliver, install and make operational, the Kiosk Sites with
all related equipment ("Kiosks") subject to any reasonable delays with regard to
the installation of telephone lines and the availability of an electrical hookup
at each Kiosk Site. It shall be understood and agreed that the location of such
sites shall be suitable for the intended purposes, and shall be subject to
GENESIS's reasonable approval.
(e) Installation of Monitors. GENESIS shall have the option to install a network
of video monitors of specified sizes in designated areas approved by OWNER. It
shall be understood and agreed that the location of such sites shall be suitable
for the intended purposes, and shall be subject to GENESIS's reasonable
approval.
(f) Removal of Equipment. In the event the parties agree that Monitors and
kiosks shall be relocated or removed, GENESIS shall bear all costs associated
with such relocation or removal absent an agreement to the contrary.
(g) Construction and Software. Commencement of the project timeline of the
scheduled construction and installation of equipment by GENESIS and/or its
installation teams will be based on information that must be submitted by the
Center to GENESIS. Time is of the essence and if the following criterion set out
herein below, namely, Construction Details and Software Customization Details,
are not met and agreed upon by both parties, the initial project timeline will
be invalidated and indefinitely postponed until a new installation window is
available at GENESIS' discretion.
Construction Details - Within 14 days after the initial on-site consultation
with CENTERLINQ's construction Project Manager and Mall Management, the OWNER
shall supply the following construction details:
(1) The number of kiosks to be placed in a mall with the exact
locations defined.
(2) The number of video monitors, each not to exceed 52" measured
diagonally, and the exact locations defined.
5
(3) Provision to CENTERLINQ of a description and/or map detailing the
locations of the mall electrical rooms each designated with a unique
room numbers and where possible, panel number. Define where available
dedicated power for the kiosk systems can be drawn from.
a. Power required for each version 3.7 model kiosk is one
120V, 20 amp dedicated circuit
b. Power required for each version 4.0 model kiosk core is a
240V, 50 amp circuit AND four 120V, 20amp circuits
c. Power required for each 4.0 satellite model kiosk is two
120V, 20 amp circuits
(4) Provision to CENTERLINQ of a description and/or map detailing the
location of the TELCO Room or closet that is nearest to the CENTERLINQ
Equipment Room housing the server. A room number, panel number or other
specific designation in a format recognizable to the telephone company
is required. If version 4.0 model kiosk are being installed, the TELCO
Room should be nearest to the center court where the version 4.0 model
kiosk core will likely be located.
Software Customization Details Within 30 days after the delivery of Microsoft
Excel spreadsheet to Mall Marketing Manager by CENTERLINQ Client Services
Manager, the OWNER shall supply the following materials These materials contain
the exact explanation of how the requested information is to be entered into the
Excel format supplied. No changes may be made to this information until AFTER
the mall installation completion.
(1) Mall Logo - [Digital format required]
(2) Contest Rules [If applicable]
(3) Prize or Reward Giveaway details and artwork
(4) (10) ten copies of pre-printed Mall Directory
(5) Mall Information including but not limited to:
a. Mall management staff names and business phone numbers
b. Mall event information [date, event name, and description]
c. Locations of ATMs, faxes, photocopiers, handicap
accessibility, information center, lockers, lost & found, mall
hours, play area, public safety services, restrooms, stroller
& wheelchairs, telephones, valet and visitor welcome center
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(6) Stores and Categories
a. Each store name
b. Store manager's name
c. Store phone number
d. Map location
e. Store category i.e. clothing, shoes, beauty, jewelry, etc.
3.2 Operation.
(a) Operation of CenterlinQ System. (i) GENESIS agrees that it shall be
responsible for continuously operating the CenterlinQ System during all regular
business hours of the Center as determined by OWNER from time to time or such
additional business hours of the Center as agreed upon between OWNER and GENESIS
(hereinafter "Business Hours"), so that it is available for the use of merchants
and patrons of OWNER, and that content, whether advertising in nature or
otherwise, shall be continuously displayed during all Business Hours. In
operating the CenterlinQ System, GENESIS shall display aesthetically pleasing
advertising in a professional manner. Without limiting the foregoing, GENESIS
agrees to use reasonable control to ensure that the CenterlinQ System will be
fully functional except during periods of unanticipated interruptions of utility
service, force majeures (as defined in Section 7.5 (f), below), or other
circumstances beyond GENESIS' reasonable control, in which event, GENESIS shall
use its reasonable best efforts to minimize the impact of such lapse or
interruption of service. Subject to the foregoing, GENESIS warrants that the
CenterlinQ System shall be available and fully operational (exclusive of
interruptions due to Internet Service Provider ("ISP") problems, problems with
hardware and paper jams) for the use of merchants and patrons for a minimum of
90% of the regular business hours of each Center where initial installation and
operation has been established. The 90% minimum shall be calculated over a
30-day period. "Core Service Features" for the purposes of this Agreement shall
mean the applications delivered on the interactive main screen of each Kiosk,
including, without limitation:
1) Mall Directory - an application that allows shoppers to obtain
directions to a Center tenant by either store name or product category
(as further described in Section 4.4 (a) hereof);
2) Calendar of Events - an application that provides the ability for OWNER
to maintain and update, and shoppers to obtain information about events
at the Center and special dates of interest (as further described in
Section 4.4 (b)(ii) hereof);
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3) Frequent Shopper Software - an application that tracks consumer
activity at the center and provides demographic information back to the
OWNER;
4) Help - an application that provides a current listing of services and
information available to shoppers at the center;
5) Coupons- an application that provides coupons to the consumers;
6) Transactions- the ability for consumers to conduct transactions on the
interactive kiosk; and
7) Advertising and Sponsorship - the ability to display advertising and
sponsorship campaigns that include undefined needs.
(b) Responsibilities of GENESIS. The responsibilities of GENESIS with respect to
the Kiosks, Monitors and Electrical Equipment Room shall include, but shall not
be limited to:
(i) the maintenance, update and repair of the CenterlinQ System
including, without limitation all hardware and software, and
development of software, as directed and approved by OWNER, for OWNER's
frequent shopper program (as initially developed and supplemented,
modified or revised from time to time, the "Frequent Shopper
Software");
(ii) the operation, maintenance and repair of the wiring/telephone and
other related lines installed by GENESIS to the extent such maintenance
and repair is not due to material or service defects per the
installation; and
(iii) the continuous electronic monitoring of the operation of the
Kiosks and Monitors.
(c) Responsibilities of OWNER. OWNER's responsibilities with respect to the
CenterlinQ System shall be as follows:
(i) the continuous supply of electricity for the Kiosks, video monitors
(if applicable) and the routine surface dusting of the exterior portion
of the Kiosks and monitors and, removal, on a daily basis, of trash
generated in the ordinary course of business. If Center managers or
personnel are not available to service the paper replacement and the
fixing of paper jams, GENESIS will service;
(ii) reasonable access to the installation sites, including access to the
telephone and communications lines and electrical facilities supporting
the CenterlinQ System, during those hours which OWNER advises GENESIS
in writing are to be available to GENESIS to perform its obligations
hereunder.
8
(d) Eminent Domain. In the event the Center shall be appropriated or taken
under the power of eminent domain by any public or quasi-public authority,
this agreement shall terminate as of the date of such taking, and OWNER
and GENESIS shall each thereupon be released from any liability thereafter
accruing hereunder. GENESIS's right to receive compensation or damages for
its fixtures and personal property shall not be affected in any manner
hereby. For the purpose of this Article only, a voluntary sale or
conveyance in lieu of condemnation, but under threat of condemnation,
shall be deemed an appropriation or taking under the power of eminent
domain.
(e) Regulatory Compliance. GENESIS shall be responsible for compliance with
all laws, regulations and ordinances applicable to the installation,
operation and security of each CenterlinQ component and OWNER shall
reasonably cooperate with GENESIS to effect such compliance. GENESIS
hereby warrants to comply with all appropriate agencies, and to observe
all necessary leases with ASCAP, BMI and other similar agencies regarding
the playing of music from any CenterlinQ component. GENESIS shall furnish
OWNER with timely notice of any requirement under such laws, regulations
and ordinances which would require modification to the CenterlinQ
components or modification in the manner in which the components are
operated. GENESIS shall bear any and all costs for such modification to
the CenterlinQ components.
(f) CenterlinQ System/ Hardware Ownership. GENESIS is the sole owner of all
hardware and the software for the system, including all proprietary
authoring tools created therefore.
3.3 Replacement. GENESIS may from time to time, upon prior notice to OWNER,
replace the system components provided that such replacement:
(i) is equal to or better than the existing equipment;
(ii) does not result in the system being unavailable to merchants or
patrons for more than forty eight (48) hours, without the prior
consent of OWNER; or
(iii) does not unreasonably disrupt the operation of the Center.
All technology enhancements and replacement components are subject to OWNER's
construction and signage criteria, and shall take place at such times as
designated by OWNER, in its sole discretion (which times may be during times
that the Center is closed to the public for business).
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3.4 Access to Kiosks and Removal. OWNER hereby authorizes GENESIS and its agents
to enter the Center where the system is located, at such times as permitted by
OWNER, and OWNER will provide to GENESIS and its agents access to the system
promptly upon demand if there is a security problem related to the system.
3.5 GENESIS agrees to abide by all rules and regulations issued by OWNER from
time to time for tenants at the Center including, without limitation the rules
and regulations contained in "Rider One" of this Agreement.
ARTICLE IV - FEES AND COSTS
4.1 Lease Fees.
(a) Upon installation of the CenterlinQ System in each Center,
and until the termination of this Agreement, GENESIS shall pay and OWNER shall
receive for each Center, the percentage of Gross Revenue set forth below as
lease fees for such Center (the "Lease Fees"). If the Gross Revenue for a
particular Center does not exceed $250,000 for any year this Agreement is in
effect, then the Lease Fees for such year shall be equal to 25% of Gross Revenue
for such year. To the extent the Gross Revenue for a particular Center exceeds
$250,000 for any year this Agreement is in effect, then the Lease Fees for such
year shall be equal to 30% of Gross Revenue for such year. To the extent the
Gross Revenue for a particular Center exceeds $350,000 for any year this
Agreement is in effect, then the Lease Fees for such year shall be equal to 35%
of Gross Revenue for such year.
(b) Minimum Yearly Rent. In the event the Lease Fees for a
particular Center do not exceed the minimum set forth on Exhibit A for that
Center for any year this Agreement is in effect, GENESIS shall pay to OWNER the
difference between the Lease Fees calculated pursuant to Section 4.1(a) above
and the minimum amount listed for that particular Center on Exhibit A (the
"Minimum Rent"). The Minimum Rent set forth on Exhibit A shall increase 5% on
each one year anniversary of the Commencement Date for that particular Center.
If on the two year anniversary of the Commencement Date GENESIS does not
generate Gross Revenues in excess of $250,000 for a particular Center, the
Minimum Rent set forth on Exhibit A will be increased 10% for that Center.
Minimum Yearly Rent shall be counted against Lease Fees, not in addition to
Lease Fees.
(c) Reduction in Lease Fees/Termination. In the event a
particular Center loses one of its anchor tenants or substantially reduces its
occupancy after the date of this Agreement, then at the election of GENESIS,
GENESIS may either (i) be granted a proportional reduction in Lease Fees/Minimum
Rent for the period of such loss of tenant or reduction of occupancy exists in
such Center, or (ii) terminate the Agreement with regard to that particular
Center. Upon termination of the Agreement for a particular Center pursuant to
the provisions set forth in this Section 4.1(c), this Agreement shall have no
further force or effect for the Center and the Parties shall have no further
obligations owing to the other with regard to the Center, except that OWNER
shall return to GENESIS any and all CenterlinQ System components, and/or any
other materials which may have been installed, or which may remain in the
Center.
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4.2 Owner-Obtained Sponsors. In the event OWNER is required to pay a third party
commission for obtaining a sponsor, and OWNER, solely on its own account, caused
such sponsor to sign up as a sponsor in the CenterlinQ System, in addition to
the Lease Fees set forth in Section 4.1 above, OWNER shall receive fifteen
percent (15%) of all Gross Revenue resulting from advertising sales attributable
to such Owner-obtained sponsor.
4.3 Gross Revenue. For purposes of this Agreement, "Gross Revenue" shall mean
the entire amount of consideration received for all sales of goods and services
and all other income and receipts whatsoever of all business conducted in
connection with the CenterlinQ System at the Center, including, without
limitation, all funds recovered as a result of the operation of the Frequent
Shopper Software and the Frequent Shopper Program, payments from sponsors,
advertisers or other users for advertising on the CenterlinQ System, but
excluding all costs (including agency commissions) of production of
advertisements for such sponsors, advertisers or users and excluding any
products or services given in kind by any sponsor as consideration for
advertising on the CenterlinQ System. It shall be understood and agreed that
Gross Revenues shall not include bad debts or any amounts which GENESIS does not
actually collect within the relevant reporting period. Within 30 days after the
end of each month following the installation of the system, GENESIS shall
deliver to OWNER a statement certified by GENESIS of GENESIS' gross sales for
the month, together with the amount of any Lease Fees due for the month. Gross
sales shall be measured by the amounts due according to the sales contract for
advertising or sponsorship elements actually run and not by actual receipts for
said advertising. GENESIS shall, within 30 days after the end of the first year,
furnish OWNER a statement certified by GENESIS of GENESIS' gross sales for the
year, together with the amount of any additional Lease Fees due. OWNER shall
have the right no more than once during each four calendar year period to audit
GENESIS's gross revenues, and GENESIS shall make available all information OWNER
reasonably requires to accomplish such audit.
4.4 System Costs
(a) Kiosk Directory. GENESIS shall place all Center merchants on the
Kiosk directory system at GENESIS's sole cost. All new merchants shall be added
to the directory by the OWNER's marketing department. Said merchants shall have
the option to request special logos or other enhanced capabilities, which
request(s) shall be performed by GENESIS at a reasonable cost determined by
GENESIS, to be billed directly to the merchants.
(b) Allocation of Other Costs. GENESIS shall develop, maintain, and
operate certain programs and features on its CenterlinQ System in the Center
that shall incur certain costs, including the Frequent Shopper Software,
calendar of events, and other related reporting and updating costs.
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(c) Frequent Shopper Program. OWNER and GENESIS shall work jointly to
develop a Frequent Shopper Program and software that tracks consumer activity at
the Center and provides demographic information back to the OWNER. Such Frequent
Shopper Program shall be in accordance with the terms of a separate agreement
between the Parties substantially in the form attached at Exhibit 4.4(c) hereto.
The OWNER and GENESIS agree that any frequent shopper programs developed by
groups other than OWNER or GENESIS shall not be implemented at the Center, for
the term of this Agreement. OWNER and GENESIS agree that the information
collected in the Frequent Shopper Software shall be owned by OWNER and GENESIS
jointly. In the event GENESIS ceases to conduct business or files for
bankruptcy, OWNER shall have the option to lease the CenterlinQ System software
and Frequent Shopper Program information from GENESIS on terms mutually
acceptable to the Parties. If on the three year anniversary of the Commencement
Date (as defined below) for a particular Center, a minimum of 30,000 customers
are not enrolled in the Frequent Shopper Program for that Center, the base rent
for that Center shall be increased an additional 10%.
ARTICLE V - USE OF PROPRIETARY MARKS AND ADVERTISING
5.1 Network Proprietary Marks. Owner acknowledges that GENESIS owns the
"CenterlinQ" Proprietary Xxxx. Neither OWNER nor any of its affiliates shall
gain or claim any proprietary right with respect to the "CenterlinQ" Proprietary
Xxxx except as specifically granted by the Agreement. GENESIS agrees that OWNER
shall be entitled to use the "CenterlinQ" Proprietary Xxxx in advertising and
promotional materials designed to inform customers of the system. OWNER shall
not use any other Proprietary Xxxx of GENESIS in advertising without the prior
written approval of GENESIS. Any promotion, advertising or publicity developed
solely by GENESIS for the system shall be approved by OWNER in advance and shall
be the property of and belong exclusively to GENESIS.
5.2 Owner Service Xxxx. GENESIS acknowledges that the names of the Centers and
"Macerich" are the Proprietary Marks owned by the OWNER and/or its management
company and as such OWNER and/or such management company own the commercial
rights of promotion and publicity in connection with such marks including the
popularity and goodwill vested therein and emanating from the public's
identification therewith. Neither GENESIS nor any of its affiliates shall gain
or claim any proprietary right with respect to the aforementioned Proprietary
Marks except as may be specifically granted herein.
OWNER grants to GENESIS a royalty-free, non-exclusive, non-transferable
right to use, with no right to sublease, assign, transfer, etc. and subject to
all the terms and conditions herein, the Proprietary Xxxx for the name of each
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Center solely in connection with GENESIS's CenterlinQ System at the Center.
GENESIS shall use the Proprietary Xxxx for such Center only with the appropriate
trade or service xxxx appended. GENESIS shall not use the Proprietary Marks for
the Center in advertising without the prior approval of OWNER and solely in
connection with GENESIS's promotion of the CenterlinQ System located at Center.
5.3 Patent, Copyright and Trademark Protection. GENESIS agrees to indemnify,
defend and hold OWNER (including its lender, property manager and general
partners) harmless from any claim, suit or proceeding brought against OWNER, its
affiliates, subsidiaries, agents, or the employees, officers or customers of
each of them for alleged patent, copyright or trademark infringement and related
claims, including, but not limited to, trade secret appropriation, unfair
competition and/or interference with prospective advantage, resulting from the
services furnished by GENESIS hereunder. OWNER shall give GENESIS notice in
writing of any such claim, suit or proceeding brought against OWNER. The
indemnification, defense and hold harmless provided herein includes any and all
losses, liability, damage or expenses, including, but not limited to, court
costs and attorneys' fees arising out of or resulting from such claim, suit, or
proceeding.
5.4 Directional Signage. At OWNER's discretion, OWNER may place directional
signage at the Center for the various interactive kiosk site(s) as agreed upon
between the Parties. This will be included in the orientation package sent back
to GENESIS by OWNER.
5.5 GENESIS Trade Name. GENESIS shall conduct business at the Center solely
under the names "CenterlinQ" or "Genesis Intermedia". Any directory signs, maps
or other promotional materials shall be in the name of "CenterlinQ".
ARTICLE VI -TERM
6.1 Term. This Agreement shall be effective as of the date preceding the
signature lines of this Agreement and shall continue for a period of five (5)
years from the date of completed installation of the CenterlinQ System in Center
(the "Commencement Date"), as evidenced by a letter setting forth the actual
date of completion signed and authorized by an agent of GENESIS and OWNER. This
Agreement shall terminate on the five-year anniversary of the Commencement Date
(the "Termination Date") subject to the renewal provisions in Sections 6.2 and
6.3 below. Notwithstanding the forgoing, in the event GENESIS is prevented, for
reasons beyond its reasonable control, satisfactory use of the Center for its
intended purposes as of the Commencement Date, this Agreement shall not
terminate, however, the Commencement Date and the Termination Date shall be
extended by the number of days in which GENESIS is so prevented from enjoying
the satisfactory use of the Center for its intended purposes.
6.2 Renewal. OWNER hereby grants to GENESIS two (2) successive options to renew
this Agreement on the terms and conditions set forth herein. The first renewal
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option shall be for a renewal term of five (5) years commencing at the
expiration of the initial five (5) year term. The second option shall be for a
renewal term of five (5) additional years, to commence at the expiration of the
preceding renewal term. Each renewal term shall be subject to all of the
provisions of this Agreement. The failure of GENESIS to exercise its option for
the first renewal term shall nullify the option of GENESIS to renew the term for
the second renewal. If GENESIS is in default, pursuant to the provisions of
Section 7.4 of this Agreement, and does not cure such default for a period of 30
days during any term of this Agreement, then GENESIS's right of renewal under
this Section 6.2 shall terminate.
6.3 Exercise of Renewal Options. The right of GENESIS to exercise its renewal
options is subject to the following conditions precedent:
A. The Agreement shall be in effect at the time notice of exercise is
given and on the last day of the existing term or renewal term; and
B. Not more than 360 days, but not less than 90 days, before the last
day of the existing term or renewal term, GENESIS shall have given OWNER written
notice of exercise of option. Following delivery of such notice of exercise, it
shall be irrevocable and binding on OWNER and GENESIS.
ARTICLE VII - GENERAL PROVISIONS
7.1 Hold Harmless.
(a) Each party shall indemnify, defend and hold harmless the other party , its
directors, officers, partners, agents and employees, against all loss, damage,
expense and liability or loss resulting from personal injury or property damage
resulting from or arising out of or in any way connected with the other party's
performance of its rights and obligations under this License, excepting,
however, such claims or damages as may be due to or caused by the gross
negligence and/or willful acts of the indemnifying party or that of such
indemnifying party's directors, officers, partners, or employees. GENESIS shall
additionally indemnify OWNER against any and all claims from advertisers,
included in advertising contracts, in the event of a loss of exposure on the
system due to termination of this Agreement. The Indemnifying party shall, upon
request by the other party, defend any suit asserting a claim covered by this
obligation to indemnify. The indemnifying party shall pay any and all costs that
may be incurred by the non-indemnifying party in enforcing this obligation to
indemnify, including reasonable attorneys' fees. The provisions of this Section
7.1.(a) shall survive the termination of this Agreement.
(b) Insurance. GENESIS covenants and agrees that it will carry and maintain,
during the entire term hereof, at GENESIS's sole cost and expense, the following
types of insurance, in the amounts specified and in the form hereinafter
provided:
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(i). Commercial General Liability and Property Damage Insurance:
GENESIS shall procure and maintain in full force and effect, at
its sole cost, commercial general liability insurance with limits
of not less than Two Million Dollars ($2,000,000) for each
occurrence and in the aggregate insuring against any and all
liability of GENESIS with respect to the CenterlinQ System or
arising out of the maintenance, use or occupancy thereof. Such
insurance shall include worker's compensation insurance as
required by statute and employer's liability insurance in an
amount of at least $500,000 per occurrence. GENESIS also agrees to
procure and maintain property damage liability insurance with a
limit of not less than Five Hundred Thousand Dollars ($500,000)
per accident or occurrence. All such insurance shall specifically
insure the performance by GENESIS of the indemnity provisions set
forth in this Agreement. All such insurance shall name OWNER and
The Mall Developer Co. as additional insured parties. GENESIS
shall provide a certificate of such insurance to OWNER no less
than 15 days prior to the installation of any part of the
CenterlinQ System.
(ii).Notice and Participation in Defense. Each Party shall promptly
notify the other Party of any suit or threat of suit of which that
Party becomes aware (except with respect to a threat of suit
either Party might institute against the other) which may give
rise to a right of indemnification pursuant to this Agreement. The
indemnifying party shall control the settlement or defense thereof
with counsel reasonably satisfactory to the indemnified Party,
provided that any settlement without the indemnified Party's
consent will not subject the indemnified Party to continued
liability for the liability for which it is being indemnified
following settlement. The failure to furnish such notification by
a Party shall constitute a waiver by such Party of the right of
indemnification to which it may be entitled pursuant to the
Agreement. In any case, the indemnifying Party and the indemnified
Party shall cooperate (at no cost to the indemnified Party) in the
settlement or defense of any such claim, demand, suit or
proceeding.
7.2 Confidentiality; Unfair Competition.
(a) Transaction Records. Each Party expressly acknowledges the responsibility it
has to protect the confidentiality of all records, if any, pertaining to the
transactions by users of the system. Each Party agrees to take all such
reasonable and necessary precautions to prevent any unauthorized disclosure of
information regarding transactions of such users. In addition, OWNER agrees that
it shall not engage in any unfair competition with GENESIS, which for purposes
hereof includes, but is not limited to terminating the Agreement with GENESIS,
and subsequently installing a system similar or substantially similar to the
CenterlinQ System in which it is an investor.
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(b) Survival. The terms of this Section 7.2 shall survive the expiration or
termination of this Agreement for a period of one year following such
termination.
(c) Transaction Terms. It is acknowledged by both OWNER and GENESIS that the
terms and conditions of this agreement are in all respects confidential in
nature, and that any disclosure or use of same by either party, except as
provided heretofore, may cause serious harm or damage to GENESIS, and its owners
and officers. Therefore, both parties agree that neither party will use the
information in this agreement for any purpose other than as stated above, and
agree that neither will either directly or indirectly by agent, employee, or
representative, disclose this information, either in whole or in part, to any
third party; provided, however that (a) information furnished may be disclosed
only to those directors and officers of OWNER and/or GENESIS and to OWNER's
representatives who need such information for the purposes of this agreement (it
being understood that those directors, officers and representatives shall be
informed by both parties of the confidential nature of such information and
shall be directed by both parties to treat such information confidentially), and
(b) any disclosure of information may be made to which GENESIS consents in
writing.
7.3 Subordination. This Agreement is subject and subordinate to all mortgages,
deeds of trust and ground Agreements now or hereafter placed upon the Center (a
"Mortgage"), and all other encumbrances and matters of public record applicable
to the Center, including without limitation, any reciprocal easement or
operating agreements, covenants, conditions and restrictions (and GENESIS shall
not act or permit the CenterlinQ components to be operated in violation
thereof). If any foreclosure or power of sale proceedings are initiated by any
Lender (the term "Lender" shall mean the holder of any Mortgage at the time in
question, and where such Mortgage is a ground lease, such term shall refer to
the ground lessor) or a deed in lieu is granted (or if any ground lease is
terminated), GENESIS shall, upon written request of any such Lender or any
purchaser at such sale, attorn and pay Lease fees to such party and to execute
and deliver any instruments necessary or appropriate to evidence or effectuate
such attornment so long as such Lender does not terminate GENESIS' lease so long
as GENESIS is not in default. In the event of attornment, no Lender shall be:
(i) liable for any act or omission of OWNER, or subject to any offsets or
defenses which GENESIS might have against OWNER (prior to such Lender becoming
OWNER under such attornment), (ii) liable for any security deposit or bound by
any prepaid Lease fees not actually received by such Lender, or (iii) bound by
any future modification of this Agreement not consented to by such Lender. Any
Lender may elect to make this Agreement prior to the lien of its Mortgage, and
if the Lender under any prior Mortgage shall require, this Agreement shall be
prior to any subordinate Mortgage; such election to be effective upon written
notice to GENESIS. GENESIS agrees to give any Lender by certified mail, return
receipt requested, a copy of any notice of default served by GENESIS upon OWNER,
provided that prior to such notice GENESIS has been notified in writing (by way
of service on GENESIS of a copy of an assignment of leases, or otherwise) of the
name and address of such Lender. GENESIS further agrees that if OWNER shall have
failed to cure such default within the time permitted OWNER for cure under this
Agreement, any such Lender whose address has been provided to GENESIS shall have
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an additional period of thirty (60) days in which to cure (or such additional
time as may be required due to causes beyond such Lender's control, including
time to obtain possession of the Center by power of sale or judicial action).
The provisions of this Paragraph shall be self-operative; however, GENESIS shall
execute such documentation as OWNER or any Lender may request from time to time
in order to confirm the matters set forth in this Paragraph in recordable form.
To the extent not expressly prohibited by law, GENESIS waives the provisions of
any law now or hereafter adopted which may give or purport to give GENESIS any
right or election to terminate or otherwise adversely affect this Agreement or
GENESIS's obligations hereunder if such foreclosure or power of sale proceedings
are initiated, prosecuted or completed.
7.4 Defaults. If (i) GENESIS shall fail to pay when due any installment of Lease
fees or other sum of money due hereunder and shall fail to make such payment
thirty (30) days after written notice, or (ii) if the CenterlinQ System is not
available and fully operational for the use of merchants and patrons for a
minimum of 90% of the regular business hours of each Center where initial
installation and operation has been established more than 10 months of any 36
months this Agreement is in effect, or (iii) if GENESIS shall fail to perform or
comply with any other term, condition or covenant on the part of GENESIS to be
observed herein and fails to cure such default within ninety (90) days after
written notice, or (iv) if GENESIS or any guarantor of this Agreement shall make
any assignment for the benefit of creditors, commit any act of bankruptcy or
file a petition under any bankruptcy or insolvency law, or (v) if a bankruptcy
petition is filed against GENESIS or any guarantor of this Agreement and such
petition is not dismissed within sixty (60) days after filing thereof, or (vi)
if GENESIS or any guarantor of this Agreement generally fails to pay, or admits
its inability to pay, debts as they become due, or otherwise becomes insolvent,
then, in any such event, GENESIS shall be in breach hereunder.
At any time after a breach and after the cure period, of this Agreement by
GENESIS, OWNER, at its option, may terminate this Agreement by notice to GENESIS
and, upon service of said notice, this Agreement and the term hereunder shall be
terminated as to the specific center with respect to which the breach or default
occurred, and GENESIS shall immediately vacate the applicable Center in
accordance with the provisions of this Agreement. Following any such breach as
to one Center, all of Genesis' rights under all remaining Centers shall remain
in full force and effect, and shall be unaffected by Genesis' breach as to any
one Center. Upon a breach by GENESIS hereunder OWNER shall also have all other
rights available to it at law or equity. All rights and remedies of OWNER herein
created or otherwise existing at law or equity are cumulative and may be
exercised concurrently, whenever and as often as deemed desirable, and the
exercise of one shall not be taken to exclude or waive the right to the exercise
of any other, and the election of OWNER to terminate this Agreement after breach
and/or to re-enter and dispossess GENESIS shall be without prejudice to any
claims or actions of OWNER against GENESIS arising hereunder, including, without
limitation, claims for back Lease fees.
7.5 Miscellaneous Terms.
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(a) Estoppel Certificates. At any time, and from time to time, GENESIS agrees,
within fifteen (15) days after written request by OWNER, to execute, acknowledge
and deliver to OWNER a statement in writing certifying that this Agreement is
unmodified and in full force and effect (or if there have been modifications
stating the modifications), that OWNER is not in default under any provisions of
this Agreement (or, if in default, the nature thereof in detail) and the amounts
and dates to which the Lease fees and other fees and charges have been paid.
(b) ADA Compliance. The parties acknowledge that the Americans With Disabilities
Act of 1990 (42 U.S.C. ss. 12101 et seq.) and regulations and guidelines
promulgated thereunder, as all of the same may be amended and supplemented from
time to time (collectively referred to herein as the "ADA"), establish
requirements for business operations, accessibility and barrier removal, and
that such requirements may or may not apply to the CenterlinQ components and
Center depending on, among other things: (1) whether GENESIS's business is
deemed a "public accommodation" or "commercial facility", (2) whether such
requirements are "readily achievable", and (3) whether a given alteration
affects a "primary function area" or triggers "path of travel" requirements. The
parties hereby agree that GENESIS shall be responsible for ADA Title III
compliance with respect to the CenterlinQ components, including any leasehold
improvements or other work to be performed with respect to any of the CenterlinQ
components under or in connection with this Agreement. GENESIS shall be solely
responsible for requirements under Title I of the ADA relating to GENESIS's
employees.
(c) Assignment. OWNER shall have the right to assign this Agreement to any party
who becomes an owner of the Center or otherwise obtains an interest in the
Center and, upon such assignment, the assignee shall be deemed to have fully
assumed all liabilities and obligations of OWNER hereunder accruing after the
date of assignment, including all obligations with respect to any security
deposit hereunder, and the original OWNER shall be free from all liabilities and
obligations accruing after the date of said assignment. OWNER shall also have
the right to collaterally assign this Agreement to any lender or for other
security purposes. GENESIS shall have the right to assign this Agreement with
OWNER's approval, which shall not be unreasonably withheld, and upon such
assignment, absent an agreement between the Parties stating otherwise, the
assignee shall be deemed to have fully assumed all liabilities and obligations
of GENESIS hereunder, and GENESIS shall be free from all liabilities and
obligations accruing after the date of said assignment.
(d) Limitation of Liability. Any liability of a party to this Agreement to
another party shall be limited as follows: (a) as to OWNER (including without
limitation OWNER's partners, directors, officers, affiliates, agents and
employees), any liability to GENESIS shall be limited to the interest of OWNER
in the Center, and GENESIS agrees to look solely to such interest for the
recovery of any judgment, and (b) as to GENESIS (including without limitation
GENESIS's partners, directors, officers, affiliates, agents and employees), any
liability shall be limited to the then-current capital of GENESIS; it being
intended that neither party shall be personally liable for any deficiency or
judgment, and that neither party shall be required to pay consequential damages
for any breach of this Agreement.
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(e) Premises. OWNER reserves the right at any time to add or remove buildings,
structures or common areas; change the number and location of buildings and
structures; provide subterranean and multiple level parking decks; convert
common areas into leasable areas or construct temporary or permanent buildings
or improvements in the common areas; change the location or character of or make
alterations in or additions to the common areas and otherwise alter, repair or
reconstruct the common areas or change the use thereof; and expand the size of
the Center by acquiring or making available additional land; provided, however,
that no such changes shall deny reasonable ingress to and egress from the
CenterlinQ components, and that such changes shall not unreasonably interfere
with GENESIS' rights and obligations under this Agreement.
(d) Governing Law; Forum. This Agreement shall be governed by and construed in
accordance with the laws of the State of California without regard to conflict
of law rules. Any action pursuant to this Agreement shall be brought in the
State of California.
(e) Relationship of the Parties. The Parties agree that in performing their
responsibilities pursuant to this Agreement, they are in the position of
independent contractors. The Agreement is not intended to create, nor does it
create and shall not be construed to create, a relationship of partner or joint
venturer or any association for profit between the Parties.
(f) Force Majeure. In the event that either party fails to perform its
obligations under this Agreement in whole or in part and such failure arises
from causes beyond the reasonable control and without the fault or negligence of
such Party as a consequence of acts of God, fire, explosion, public utility
failure, accident, labor disputes, floods, embargoes, war, nuclear disaster or
riot, such failure to perform shall not be considered a breach of this Agreement
during the period of such disability. In the event of any force majeure
occurrences as set forth in this Section 7.5 (f), the affected Party shall use
its reasonable and diligent efforts to meet its obligations as set forth in this
Agreement. The affected Party shall promptly and in writing advise the other
Party if it is unable to perform due to a force majeure event, the expected
duration of such inability to perform and of any developments (or changes
therein) that appear likely to affect the ability of the Party to perform any of
its obligations hereunder in whole or in part. If the Party claiming the force
majeure event is not, or will not, be expected to resume performance under this
Agreement within fifteen (15) days of the force majeure event, the other Party
may upon notice to the nonperforming Party terminate this Agreement.
(g) Non-Exclusive Remedy. No remedy or election under this Agreement shall be
deemed exclusive, but shall, wherever possible, be cumulative with all other
remedies at law or in equity.
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(h) Subcontractors. Each Party acknowledges that the other Party may utilize
affiliated or non-affiliated subcontractors in connection with performing its
obligations under this Agreement. Upon the request of a Party, each Party will
furnish the other Party with the names of the subcontractors which it is
utilizing. Each Party shall be solely responsible for the performance of
subcontractors which it employs; provided that neither Party shall be
responsible for the activities of telephone, telecommunication or utility
companies.
(i) Notices. All notices, requests and approvals required by this Agreement (i)
shall be in writing; (ii) shall be addressed to the Parties as indicated below
unless notified in writing of a change in address; and (iii) shall be deemed to
have been given either when delivered personally or by means of courier or, if
sent by mail, three (3) days after postmarked, in which event it shall be sent
postage prepaid. The addresses of the Parties are as follows:
If to OWNER:
Macerich Property Management Company
000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxx Xxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxx
If to GENESIS:
XxxxxxxXxxxxxxxxx.xxx, Inc.
0000 Xxxxxxxxx Xxxx., 0xx Xxxxx
Xxx Xxxx, XX 00000
attn: Xxxxxx Xxxxx
(j) Modifications and Changes. This Agreement, together with any exhibits
hereto, constitutes the entire agreement between the Parties relating to the
subject matter herein and supersedes any and all prior offers, negotiations and
agreements. In the event of conflict with any other documents, the terms and
conditions of this document prevail. This Agreement may only be amended by a
written document signed by both parties.
(k) Assignment; Specific Performance. This Agreement and the rights and
obligations created under it shall be binding upon and inure solely to the
benefit of the Parties hereto and their respective successors and permitted
assigns. A change in the ownership interest in OWNER or the affiliate to which
it may be assigned shall not be deemed an assignment for purposes of this
Section. Changes in the composition of the partnership which is GENESIS,
including changes in the respective ownership shares of the entities which
comprise the partnership, or the incorporation of GENESIS, shall not be deemed
to have caused an assignment or transfer of this Agreement for purposes of this
Section. Notwithstanding the foregoing, GENESIS shall not be in default of this
20
Section as a result of any sale of any of the ownership interest in GENESIS to
any party disclosed to OWNER no later than the date of this Agreement.
(l) Waivers. Failure or delay on the part of a Party to exercise any right,
remedy, power, or privilege under this Agreement shall not operate as a waiver
of any other right, remedy, power or privilege. Neither of the Parties shall be
deemed to have waived any of its rights, powers or remedies, or the performance
of the other Party hereunder, unless such waiver is made expressly and in
writing by the waiving Party. A written waiver of default shall not operate as a
waiver of any other default or of the same type default on a future occasion.
(m) Severability. If a provision or portion of this Agreement is capable of two
constructions, one of which would render it void and the other of which would
render it valid, then the provision shall have the construction which renders it
valid. If any provision or portion thereof contained in this Agreement is
determined by a court decision, administrative rule or other governmental
tribunal or agency to be invalid, illegal, void or unenforceable by reason of
any rule of law, administrative or judicial provision or public policy, and such
provision or portion thereof is not material to this Agreement, all other
provisions of this Agreement shall nevertheless remain in full force and effect.
If any provision of this Agreement which is held to be unenforceable is
determined to be material to this Agreement, the Parties shall in good faith
negotiate and attempt to reach agreement on a substitute provision which will
give each Party the economic equivalent of what it may have lost by the
determination.
(n) Headings. The headings contained herein are for convenience of reference
only and are not intended to define, limit, expand or describe the scope or
intent of any provision of this Agreement.
(o) Publication of Location. GENESIS is authorized to publish, and to authorize
others to publish, the location and availability of the system for informational
purposes subject to the restrictions contained herein. GENESIS is authorized to
publish the location and availability of the Kiosk for purposes of promoting the
use of the system.
(p) Authority. Both Parties covenant that the individual(s) executing this
document by and on behalf of such Party is duly authorized to execute this
Agreement for that Party.
(q) Attorneys' Fees/Expert Witness Fees. In the event either Party commences any
legal proceeding to enforce any of the terms or provisions of this Agreement,
then the prevailing party shall be entitled to recover all costs of such action,
including actual attorneys' fees and expert witness fees.
21
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed on their respective behalf, by their respective officers thereunto duly
authorized, in multiple originals, all as of the day and year first above
written.
XXXXXXXXXXXXXXXXX.XXX, INC.,
a Delaware corporation
By:_______________________________
Name: Ramy El-Batrawi
Title: President
MACERICH PROPERTY
MANAGEMENT COMPANY,
a ______________ corporation
By:_______________________________
Name:
Title:
22
EXHIBIT 10.58
WARRANT
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR REGISTERED OR QUALIFIED UNDER ANY
STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY
NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED EXCEPT IN COMPLIANCE
WITH THE SECURITIES ACT OF 1933, AS AMENDED, THE RULES AND REGULATIONS
PROMULGATED THEREUNDER AND ALL APPLICABLE STATE SECURITIES LAWS.
No. ___ Dated: November 2, 2000
Warrant
XXXXXXXXXXXXXXXXX.XXX, INC.
This Warrant certifies that The Macerich Partnership, L.P.
("Macerich"), or registered assigns, is the registered holder of a warrant (the
"Warrant") to purchase up to 200,000 shares of common stock, par value $.001 per
share (each share, a "Warrant Share"), of XxxxxxxXxxxxxxxxx.xxx, Inc., a
Delaware corporation (the "Company"), at an exercise price per share of common
stock issuable upon the exercise of this Warrant equal to $15.00 per share (the
"Exercise Price"), (as adjusted pursuant to Section 5 hereof) subject to the
provisions and upon the terms and conditions hereinafter set forth.
SECTION 1. Exercise; Expiration; Vesting.
The purchase rights represented by this Warrant must be exercised by
the holder hereof, in whole or in part, by the surrender of this Warrant (with
the notice of exercise form attached hereto duly executed) at the principal
office of the Company, and by the payment to the Company, by certified,
cashier's or other check acceptable to the Company, of an amount equal to the
aggregate Exercise Price of the Warrant Shares being purchased.
Any portion of this Warrant shall not be exercised by any holder hereof
after 5:00 p.m., Los Angeles time on the date which is the five year anniversary
of the date such portion of this Warrant vested in accordance with the following
paragraph. To the extent that any portion of this Warrant has not been exercised
by the date and time of its respective expiration date, such portion of the
Warrant shall become void and all rights associated therewith shall cease as of
such time. Any portion of the Warrant which remains unvested as of December 31,
2005 shall expire and shall become void thereafter.
This Warrant will vest and only become exercisable according to the
following schedule:
(i) this Warrant shall vest and become exercisable with
respect to 66,666 Warrant Shares upon installation of the CenterlinQ System (as
defined in the Space Lease Agreements between Genesis and Macerich Management
Company and Macerich Property Management, as applicable, dated November 2, 2000
(the "Space Lease Agreements")) in the eight malls listed on Exhibit A to the
Space Lease Agreements.
(ii) this Warrant shall vest and become exercisable with
respect to an additional 6,060 Warrant Shares upon each installation of the
CenterlinQ System in one of the additional contemplated 21 malls, and with
respect to an additional 6,074 Warrant Shares upon the installation of the
CenterlinQ System in the 22nd mall.
Notwithstanding the above, if a Change of Control occurs, all unvested
portions of the Warrant will immediately become fully vested and exercisable
subject to the exception below. This accelerated vesting provision will
terminate if within 18 months after installation of the CenterlinQ System at the
eighth mall, the CenterlinQ System is not installed at one additional mall.
Thereafter, this accelerated vesting provision will terminate if the CenterlinQ
System is not installed at one additional mall within one year after the last
mall installation. For purposes of this Warrant "installation of the CenterlinQ
System" or any similar concept means Macerich Management Company has performed
all of its obligations which are required for installation of the CenterlinQ
System at the applicable mall as set forth in the Space Lease Agreements.
"Change of Control" shall mean (i) the public announcement of an agreement
regarding the acquisition or the acquisition, directly or indirectly, by a
person, entity or group of beneficial ownership (as defined in Rule 13d-3 under
the Securities and Exchange Act of 1934, as amended, except as noted below) 25%
or more of the outstanding voting securities of the Company in the aggregate
through one or a series of transactions (excluding (A) any acquisition(s) within
six months of the date hereof involving one person, entity or group resulting in
the beneficial ownership of up to 35% of such securities in the aggregate
(including any prior acquisitions), and (B) any future acquisition(s) by Ramy
El-Batrawi or Ultimate Holdings), (ii) the public announcement of an agreement
regarding the merger, consolidation or other reorganization of the Company with
or into another entity in a transaction in which the Company is not the
surviving entity or in which more than fifty percent (50%) of the outstanding
voting securities of the Company is transferred, (iii) the public announcement
of an agreement(s) regarding a sale, conveyance, transfer or lease of all or
substantially all of the Company's assets or the assets of CenterlinQ, whether
in one transaction or a series of transactions or (iv) at any time during any
two-year period directors who at the beginning of such period constituted the
Board of Directors of the Company (together with any new director whose election
by such Board or whose nomination for election by the stockholders of the
Company was approved by a vote of a majority of the directors then still in
office who were directors at the beginning of such period, or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board then in office. For purposes hereof, a
person, entity or group will be deemed to have beneficial ownership of all
shares that any such person, entity or group has the rights to acquire, whether
such right is exercisable immediately or only after passage of time or notice.
If there is no public announcement of the Change of Control event, it shall be
deemed to have occurred when the agreement was executed.
This Warrant shall be exercisable at the election of any holder
thereof, either in full or from time to time in part (but in no event for less
than one whole Warrant Share) and, in the event that a certificate evidencing
this Warrant is exercised in respect of fewer than all of the Warrant Shares
issuable on such exercise at any time prior to the date of expiration of this
Warrant, a new Warrant certificate evidencing the remaining Warrant with respect
to whole Warrant Shares issuable upon exercise will be issued. No adjustment
shall be made for any dividends on any Warrant Shares issuable upon exercise of
this Warrant.
The Company covenants that all Warrant Shares which may be issued upon
exercise of this Warrant will, upon issue, be fully paid, nonassessable, free of
preemptive rights and free from all taxes, liens, charges and security interests
with respect to the issue thereof.
All representations and warranties and covenants made by the Company in
that certain Warrant and Registration Rights Agreement dated as of November 2,
2000, between the Company and Macerich, are true and correct as of the date
hereof and are incorporated herein by reference.
The Company will pay all taxes, including documentary stamp taxes,
attributable to the issuance of Warrant Shares upon the exercise of this
Warrant; provided, however, that the Company shall not be required to pay any
tax or taxes which may be payable in respect of any transfer involved in the
issue of any Warrant certificates or any certificates for Warrant Shares in a
name other than that of the registered holder of this Warrant certificate
surrendered upon the exercise of this Warrant, and the Company shall not be
required to issue or deliver such Warrant certificates unless or until the
person or persons requesting the issuance thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.
The Company shall not be required to issue fractional Warrant Shares on
the exercise of this Warrant. If any fraction of a Warrant Share would be
issuable on the exercise of this Warrant (or specified portion hereof), the
Company shall pay an amount in cash equal to the Exercise Price on the day
immediately preceding the date this Warrant certificate is presented for
exercise, multiplied by such fraction.
SECTION 2. Transfer or Exchange.
This Warrant and any Warrant Shares may only be transferred by the
holder in accordance with the registration requirements of the Securities Act of
1933, as amended (the "Securities Act") or an exemption therefrom.
Subject to compliance with the preceding paragraph, the Company shall
from time to time register the transfer of this Warrant certificate upon the
records to be maintained by it for that purpose, upon surrender hereof
accompanied (if so required by it) by a written instrument or instruments of
transfer in form satisfactory to the Company, duly executed by the registered
holder hereof or by the duly appointed legal representative thereof or by a duly
authorized attorney and an opinion of counsel in form and substance reasonably
satisfactory to the Company that such transfer may be effected under the
Securities Act. Upon any such registration of transfer, a new Warrant
certificate(s) shall be issued to the transferee(s) and the surrendered Warrant
certificate shall be canceled by the Company.
2
This Warrant certificate may be exchanged at the option of the holder
hereof, when surrendered to the Company at its office for another Warrant
certificate or other Warrant certificates of like tenor and representing a
Warrant with respect to a like aggregate number of Warrant Shares. A Warrant
certificate surrendered for exchange shall be canceled by the Company.
Subject to the payment of any taxes as provided herein, upon an
exercise of this Warrant, the Company shall issue and cause to be delivered with
all reasonable dispatch to or upon the written order of the holder and in such
name or names as the Warrant holder may designate, a certificate or certificates
for the number of full Warrant Shares issuable upon the exercise of this
Warrant. This Warrant shall be deemed to have been exercised and any person so
designated to be named therein shall be deemed to have become a holder of record
of such Warrant Shares as of the date of the surrender of this Warrant
certificate (and payment of the Exercise Price).
The Company may deem and treat the registered holder hereof as the
absolute owner of this Warrant (notwithstanding any notation of ownership or
other writing hereon made by anyone), for the purpose of any exercise hereof, of
any distribution to the holder hereof, and for all other purposes, and the
Company shall not be affected by any notice to the contrary. Nothing contained
in this Warrant certificate shall be construed prior to the date of surrender of
the Warrant certificate for exercise in accordance with the terms hereof as
conferring upon the holder hereof the right to vote or to consent or to receive
notice as stockholders in respect of the meetings of stockholders or the
election of directors of the Company or any other matter, or any rights
whatsoever as stockholders of the Company.
SECTION 3. Mutilated, Lost, Stolen or Destroyed Warrant Certificate.
In case this Warrant certificate shall be mutilated, lost, stolen or
destroyed, the Company will issue in exchange and substitution for and upon
cancellation of the mutilated Warrant certificate, or in lieu of and
substitution for the Warrant certificate lost, stolen or destroyed, a new
Warrant certificate of like tenor and representing an equivalent Warrant, but
only upon receipt of evidence reasonably satisfactory to the Company of such
loss, theft or destruction of such Warrant certificate and indemnity, if
requested, also reasonably satisfactory to the Company.
SECTION 4. Reservation of Warrant Shares for Issuance.
The Company will at all times reserve and keep available, free from
preemptive rights and other similar rights, out of the aggregate of its
authorized but unissued common stock, for the purpose of enabling it to satisfy
any obligation to issue Warrant Shares upon exercise of this Warrant, the
maximum number of Warrant Shares which may then be issuable upon the exercise of
this Warrant. The Company or, if appointed, the transfer agent for the common
stock and every subsequent transfer agent for any of the Company's capital
securities issuable upon the exercise of any of the rights of purchase aforesaid
will be irrevocably authorized and directed at all times to reserve such number
of authorized shares of common stock as shall be required for such purpose. The
Company will keep a copy of this Warrant certificate on file with any such
transfer agent for any of the Company's capital securities issuable upon the
exercise of the rights of purchase represented by this Warrant certificate.
SECTION 5. Effect of Subdivision, Reclassification, Dividends, Merger, Etc.
The number of and kind of securities purchasable upon exercise of the
Warrant and the Exercise Price shall be subject to adjustment from time to time
as set forth in this Section 5.
(a) Subdivisions, Combinations, Stock Dividends and other Issuances. If
the Company shall, at any time while the Warrant is outstanding, (A) pay a stock
dividend or otherwise make a distribution or distributions on any equity
securities (including instruments or securities convertible into or exchangeable
for such equity securities) in shares of common stock, (B) subdivide outstanding
shares of common stock into a larger number of shares, or (C) combine
outstanding common stock into a smaller number of shares, then the effective
Exercise Price shall be multiplied by a fraction, the numerator of which shall
be the number of shares of common stock outstanding before such event and the
denominator of which shall be the number of shares of common stock outstanding
after such event. Any adjustment made pursuant to this Section 5(a) shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision or
combination. The number of Warrant Shares which may be purchased hereunder shall
be increased or decreased proportionately to any decrease or increase,
respectively, in Exercise Price pursuant to this Section 5(a), so that after
such adjustments the aggregate Exercise Price payable hereunder for the Warrant
Shares shall be the same as the aggregate Exercise Price in effect just prior to
such adjustments.
3
(b) Other Distributions. If at any time after the date hereof the
Company distributes to holders of its common stock, other than as part of its
dissolution, liquidation or the winding up of its affairs, any shares of its
capital stock, any evidence of indebtedness or any of its assets (other than
common stock), then the number of Warrant Shares for which the Warrant is
exercisable shall be increased to equal: (i) the number of Warrant Shares for
which the Warrant is exercisable immediately prior to such event, (ii)
multiplied by a fraction, (A) the numerator of which shall be the Fair Value (as
such term is defined in the Space Lease Agreements dated November 2, 2000, by
and between the Company and Macerich Management Company and Macerich Property
Management Company, as applicable) per share of common stock on the record date
for the dividend or distribution, and (B) the denominator of which shall be the
Fair Value per share of common stock on the record date for the dividend or
distribution minus the amount allocable to one share of common stock of the
value (as jointly determined in good faith by the Board of Directors of the
Company and the holder of this Warrant) of any and all such evidences of
indebtedness, shares of capital stock, other securities or property, so
distributed. The Exercise Price shall be reduced to equal: (i) the Exercise
Price in effect immediately before the occurrence of any event (ii) multiplied
by a fraction, (A) the numerator of which is the number of Warrant Shares for
which the Warrant is exercisable immediately before the adjustment, and (B) the
denominator of which is the number of Warrant Shares for which the Warrant is
exercisable immediately after the adjustment.
(c) Merger, etc. If at any time after the date hereof there shall be a
merger or consolidation of the Company with or into or a transfer of all or
substantially all of the assets of the Company to another entity, then the
holder of this Warrant shall be entitled to receive upon or after such transfer,
merger or consolidation becoming effective, and upon payment of the Exercise
Price then in effect, the number of shares or other securities or property of
the Company or of the successor corporation resulting from such merger or
consolidation, which would have been received by the holder of this Warrant for
the shares of stock subject to the Warrant had the Warrant been exercised just
prior to such transfer, merger or consolidation becoming effective or to the
applicable record date thereof, as the case may be. The Company will not merge
or consolidate with or into any other corporation, or sell or otherwise transfer
its property, assets and business substantially as an entirety to another
corporation, unless the corporation resulting from such merger or consolidation
(if not the Company), or such transferee corporation, as the case may be, shall
expressly assume in writing the due and punctual performance and observance of
each and every covenant and condition of the Warrant to be performed and
observed by the Company.
(d) Reclassification, etc. If at any time after the date hereof there
shall be a reorganization or reclassification of the securities as to which
purchase rights under the Warrant exist into the same or a different number of
securities of any other class or classes, then the holder of this Warrant shall
thereafter be entitled to receive upon exercise of the Warrant, during the
period specified herein and upon payment of the Exercise Price then in effect,
the number of shares or other securities or property resulting from such
reorganization or reclassification, which would have been received by the holder
of this Warrant for the shares of stock subject to the Warrant had the Warrant
at such time been exercised.
(e) Exercise Price Adjustment. In the event that the Company issues or
sells any common stock or securities which are convertible into or exchangeable
for its common stock or any convertible securities, or any warrants or other
rights to subscribe for or to purchase or any options for the purchase of its
common stock or any such convertible securities (other than shares or options
issued or which may be issued pursuant to the Company's current employee option
plans or shares issued upon exercise of options, warrants or rights outstanding
on the date hereof ) at an effective price per share which is less than the
Exercise Price then in effect, then in each such case, the Exercise Price in
effect immediately prior to such issue or sale shall be reduced effective
concurrently with such issue or sale to an amount determined by multiplying the
Exercise Price then in effect by a fraction, (x) the numerator of which shall be
the sum of (1) the number of shares of common stock outstanding immediately
prior to such issue or sale, plus (2) the number of shares of common stock which
the aggregate consideration received by the Company for such additional shares
would purchase at the Exercise Price then in effect; and (y) the denominator of
which shall be the number of shares of common stock of the Company outstanding
immediately after such issue or sale.
For the purposes of the foregoing adjustment, in the case of
the issuance of any convertible securities, warrants, options or other rights to
subscribe for or to purchase or exchange for, shares of common stock
("Convertible Securities"), the maximum number of shares of common stock
issuable upon exercise, exchange or conversion of such Convertible Securities
shall be deemed to be outstanding, provided that no further adjustment shall be
made upon the actual issuance of common stock upon exercise, exchange or
conversion of such Convertible Securities, unless any such Convertible
Securities shall expire or terminate unconverted, in which case an equitable
adjustment shall be made to reflect the reduction in the actual shares issued.
4
The number of Warrant Shares which may be purchased hereunder
shall be increased proportionately to any reduction in Exercise Price pursuant
to this Section 5(e), so that after such adjustments the aggregate Exercise
Price payable hereunder for the increased number of Warrant Shares shall be the
same as the aggregate Exercise Price in effect just prior to such adjustments.
(f) (i) The terms of any reorganization, consolidation, merger, sale,
transfer or share exchange shall include such terms so as to continue to give to
the holder hereof the right to receive the securities or property set forth in
this Section 5 upon any exercise following any such reclassification,
consolidation, merger, sale, transfer or share exchange.
(ii) In the event of any adjustment in the number of Warrant
Shares issuable hereunder upon exercise, the Exercise Price shall be inversely
proportionately increased or decreased as the case may be, such that the
aggregate purchase price for Warrant Shares upon full exercise of the Warrant
shall remain the same. Similarly, in the event of any adjustment in the Exercise
Price, the number of Warrant Shares issuable hereunder upon exercise shall be
inversely proportionately increased or decreased as the case may be, such that
the aggregate purchase price for Warrant Shares upon full exercise of the
Warrant shall remain the same.
Upon any adjustment of the Exercise Price pursuant hereto, the Company
shall promptly thereafter cause to be given to the registered holder of this
Warrant certificate at its address appearing on the Warrant register maintained
by the Company written notice of such adjustments by first-class mail, postage
prepaid. Failure to deliver such notice shall not affect the legality or
validity of any such adjustment.
SECTION 6. Miscellaneous.
This Warrant certificate and Warrant shall be deemed to be a contract
made under the law of the State of Delaware and for all purposes shall be
construed in accordance with the internal law of said State.
Nothing in this Warrant certificate shall be construed to give to any
person or company other than the Company and the registered holder of this
Warrant certificate any legal or equitable right, remedy or claim under this
Warrant certificate; but this Warrant certificate shall be for the sole and
exclusive benefit of the Company and the registered holder of this Warrant.
IN WITNESS WHEREOF, XxxxxxxXxxxxxxxxx.xxx, Inc., a Delaware
corporation, has caused this Warrant certificate to be signed by its duly
authorized officer.
Dated: November 2, 2000
XXXXXXXXXXXXXXXXX.XXX, INC., a
Delaware corporation
By: ______________________________
Ramy El-Batrawi, President
5
Election for Exercise
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant certificate, to receive ______ shares of common
stock par value $.001 per share and herewith tenders payment for such shares in
the amount of $___________ in accordance with the terms of this Warrant
certificate. The undersigned requests that a certificate for such shares be
registered in the name of ___________________, whose address is
___________________________________ and that such shares be delivered to
___________________ whose address is ______________________________________. If
said number of shares is less than all of the shares of common stock purchasable
hereunder, the undersigned requests that a new Warrant certificate representing
the remaining balance of such whole shares be registered in the name of
_____________________, whose address is _________________________________ and
that such Warrant certificate be delivered to______________ whose address is
________________________________________________.
Signature: ______________________________
Date:
Signature Guaranty:
Exhibit 10.59
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT ("Agreement") dated as of March ______,
2001 between XxxxxxxXxxxxxxxxx.xxx, Inc., a Delaware corporation (the
"Company"), and Xxxxxxx Associates, L.P., a Delaware limited partnership, and
Xxxxxxx International, L.P., a Cayman Islands limited partnership (individually
and collectively, the "Purchaser").
W I T N E S S E T H:
WHEREAS, the Company desires to sell and issue to the Purchaser, and
the Purchaser wishes to purchase from the Company, (i) an aggregate of $3
million in principal amount of the Company's 7% Convertible Debentures in the
form attached hereto as Exhibit A (the "Debentures"), and (ii) warrants (the
"Warrants") to purchase an aggregate of 100,000 Common Shares (as defined below)
in the form of attached hereto as Exhibit B, on the terms and conditions set
forth herein; and
WHEREAS, the Debentures will be convertible into shares ("Common
Shares") of common stock, par value $0.001, of the Company ("Common Stock"),
pursuant to the terms of the Debentures, and the Purchaser will have
registration rights with respect to the Common Shares issuable upon conversion
of the Debentures and exercise of the Warrants, pursuant to the terms of that
certain Registration Rights Agreement to be entered into between the Company and
the Purchaser substantially in the form of Exhibit C hereto ("Registration
Rights Agreement");
NOW, THEREFORE, in consideration of the foregoing premises and the
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
Article I
Purchase and Sale of Debentures and Warrants
Section 1.1 Issuance of Debentures and Warrants. Upon the following
terms and conditions, the Company shall issue and sell to each Purchaser, and
each Purchaser shall purchase from the Company, the principal amount of
Debentures and number of Warrants indicated next to the Purchaser's name on
Schedule I attached hereto.
Section 1.2 Purchase Price. The purchase price for the Debentures and
Warrants to be acquired by each Purchaser (the "Purchase Price") shall be the
Purchase Price set forth next to such Purchaser's name on Schedule I.
Section 1.3 The Closing.
(a) Timing. Subject to the fulfillment or waiver of the conditions set
forth in Article V hereof, the purchase and sale of the Debentures and Warrants
shall take place at a closing (the "Closing"), on or about the date hereof or
such other date as the Purchasers and the Company may agree upon (the "Closing
Date").
(b) Form of Payment and Closing. On the Closing Date, the Company shall
deliver to the Purchasers all of the Debentures and Warrants purchased
hereunder, each registered in the name of each such Purchaser or its nominee.
The Debentures and Warrants shall be issued in accordance with the number and
denomination of Debentures and Warrants requested by the Purchasers. On the
Closing Date the Purchasers shall deliver (on a pro-rata basis) by wire transfer
on account of the aggregate Purchase Price hereunder an aggregate of $3,000,000
to an account designated in writing by the Company. In addition, each party
shall deliver all documents, instruments and writings required to be delivered
by such party pursuant to this Agreement at or prior to the Closing. The
Debentures and Warrants will be fully owned and paid for by the Purchasers as of
the Closing Date. For purposes of the Transaction Documents, the following terms
shall have the following meanings:
"Effective Registration" shall mean: (i) the Company has complied with
its material obligations under all the Transaction Documents in all material
respects and has not made any material misrepresentations under any of the
Transaction Documents or under any other agreements between the Company and the
Purchaser, except for those breaches or defaults which are capable of being
cured and have been so cured within a reasonable time following notice of such
breach or default (not to exceed 5 business days); (ii) a Registration Statement
covering the resale of all Registrable Securities (as defined in the
Registration Rights Agreement) was declared effective by the SEC on or prior to
the 120th day following the Closing Date, and at all times after such
Registration Statement was declared effective by the SEC ("Effective Time") such
Registration Statement was not subject to any suspension or stop orders; (iii)
after the Effective Time the resale of such Registrable Securities may be
effected pursuant to a current and deliverable prospectus that is not subject to
any blackout or similar circumstance; (iv) such Registrable Securities are
listed, or approved for listing prior to issuance, on an Approved Market and are
not subject to any trading suspension (nor shall trading generally have been
suspended on such exchange or market), and the Company shall not have been
notified of any pending or threatened proceeding or other action to delist or
suspend the Common Stock on the Approved Market on which the Common Stock is
then traded or listed; (v) the requisite number of shares of Common Stock shall
have been duly authorized and reserved for issuance as required by the terms of
the Transaction Documents; (vi) no Interfering Event (as described in the
Registration Rights Agreement) then exists; (vii) the Market Price (as defined
in the Debentures) determined as of such time shall be greater than $15.00
(which figure shall be appropriately and equitably adjusted for any stock
splits, stock dividends, recapitalizations and the like); (viii) there shall not
have occurred a Change in Control Transaction (as defined in the Debentures) or
the public announcement of a pending Change in Control Transaction which has not
been abandoned or terminated; and (vii) none of the Company or any direct or
indirect subsidiary of the Company is subject to any Bankruptcy Event (as
defined below).
"Bankruptcy Event" means any of the following events: (a) the Company
or any subsidiary commences a case or other proceeding under any bankruptcy,
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction relating to the
Company or any subsidiary thereof; (b) there is commenced against the Company or
any subsidiary any such case or proceeding that is not dismissed within 60 days
after commencement; (c) the Company or any subsidiary is adjudicated insolvent
or bankrupt or any order of relief or other order approving any such case or
proceeding is entered; (d) the Company or any subsidiary suffers any appointment
of any custodian or the like for it or any substantial part of its property that
is not discharged or stayed within 60 days; (e) the Company or any subsidiary
makes a general assignment for the benefit of creditors; (f) the Company or any
subsidiary fails to pay, or states that it is unable to pay or is unable to pay,
its debts generally as they become due; (g) the Company or any subsidiary calls
a meeting of its creditors with a view to arranging a composition, adjustment or
restructuring of its debts; or (h) the Company or any subsidiary, by any act or
failure to act, expressly indicates its consent to, approval of or acquiescence
in any of the foregoing or takes any corporate or other action for the purpose
of effecting any of the foregoing.
Article II
Representations and Warranties
Section 2.1 Representations and Warranties of the Company. The Company
hereby makes the following representations and warranties to the Purchaser as of
the date hereof and the Closing Date:
(a) Organization and Qualification; Material Adverse Effect. The
Company is a corporation duly incorporated and existing in good standing under
the laws of the State of Delaware and has the requisite corporate power to own
its properties and to carry on its business as now being conducted. The Company
does not have any subsidiaries other than the subsidiaries listed on Schedule
2.1(a) attached hereto ("Subsidiaries"). Except where specifically indicated to
the contrary, all references in this Agreement to subsidiaries shall be deemed
to refer to all direct and indirect subsidiaries of the Company. The Company is
duly qualified as a foreign corporation to do business and is in good standing
in every jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary other than those in which the
failure so to qualify would not have a Material Adverse Effect. "Material
Adverse Effect" means any adverse effect on the business, operations,
properties, prospects or financial condition of the Company and its
subsidiaries, if any, and which is (either alone or together with all other
adverse effects) material to the Company and its Subsidiaries, if any, taken as
a whole, and any material adverse effect on the transactions contemplated under
this Agreement, the Debentures, the Warrants and the Registration Rights
Agreement, or any other agreement or document contemplated hereby or thereby.
(b) Authorization; Enforcement. (i) The Company has all requisite
corporate power and authority to enter into and perform this Agreement, the
Debentures, the Registration Rights Agreement and the Warrants ("Transaction
Documents") and to issue the Debentures and the Warrants in accordance with the
terms hereof, (ii) the execution and delivery of this Agreement, the
Registration Rights Agreement, the Warrants and the Debentures by the Company
and the consummation by it of the transactions contemplated hereby and thereby,
including the issuance of the Debentures and Warrants, have been duly authorized
by all necessary corporate action, and no further consent or authorization of
the Company or its Board of Directors (or any committee or subcommittee thereof)
or stockholders is required, (iii) this Agreement, the Registration Rights
Agreement, the Debentures and the Warrants have been duly executed and delivered
by the Company, (iv) this Agreement, the Debentures, the Registration Rights
Agreement and the Warrants constitute valid and binding obligations of the
Company enforceable against the Company in accordance with their terms, except
(A) as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of creditors' rights and remedies or by
other equitable principles of general application, and (B) to the extent the
indemnification provisions contained in this Agreement and the Registration
Rights Agreement may be limited by applicable federal or state securities laws
and (v) the Debentures, the Warrants and the Common Shares issuable upon the
conversion and/or exercise thereof have been duly authorized and, upon issuance
thereof and payment therefor in accordance with the terms of this Agreement, the
Debentures, the Warrants and the Common Shares issuable upon the conversion
and/or exercise thereof will be validly issued, fully paid and non-assessable,
free and clear of any and all liens, claims and encumbrances.
(c) Capitalization. As of the date hereof, the authorized capital stock
of the Company consists of (i) 25,000,000 shares of Common Stock, of which as of
the date hereof, 6,990,520 shares are issued and outstanding, 1,400,000 shares
are issuable and reserved for issuance pursuant to the Company's stock option
and purchase plans and 2,246,260 shares are issuable and reserved for issuance
pursuant to securities exercisable or exchangeable for, or convertible into,
shares of Common Stock, and (ii) 5,000,000 shares of preferred stock, of which
as of the date hereof no shares designated as Series A Convertible Preferred
Stock are issued and outstanding and 4,000 preferred shares have been designated
as Series B Cumulative Convertible Preferred Stock. All of such outstanding
shares have been, or upon issuance will be, validly issued, fully paid and
nonassessable. As of the date hereof, except as disclosed in Schedule 2.1(c),
(i) no shares of the Company's capital stock are subject to preemptive rights or
any other similar rights or any liens or encumbrances suffered or permitted by
the Company, (ii) there are no outstanding debt securities, (iii) there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any of its
Subsidiaries, or contracts, commitments, understandings or arrangements by which
the Company or any of its Subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its Subsidiaries or
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its Subsidiaries, (iv) there
are no agreements or arrangements under which the Company or any of its
Subsidiaries is obligated to register the sale of any of their securities under
the Securities Act of 1933, as amended ("Securities Act" or "1933 Act") (except
the Registration Rights Agreement), (v) there are no outstanding securities of
the Company or any of its Subsidiaries which contain any redemption or similar
provisions, and there are no contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is or may become
bound to redeem a security of the Company or any of its Subsidiaries, (vi) there
are no securities or instruments containing anti-dilution or similar provisions
that will be triggered by the issuance of the Debentures or the Warrants as
described in this Agreement, the Debentures or the Warrants, and (vii) the
Company does not have any stock appreciation rights or "phantom stock" plans or
agreements or any similar plan or agreement. The Company has furnished to the
Purchaser true and correct copies of the Company's Certificate of Incorporation,
as amended and as in effect on the date hereof (the "Certificate of
Incorporation"), and the Company's By-laws, as in effect on the date hereof (the
"By-laws"), and the terms of all securities convertible or exchangeable into or
exercisable for Common Stock and the material rights of the holders thereof in
respect thereto. All restrictions upon the shares of Common Stock contained in
Article FOURTH, Sections B(1)(b), B(1)(c) and B(1)(d) of the Company's
Certificate of Incorporation have lapsed and are of no further force and effect
pursuant to Article FOURTH, Section B(1)(f)(i) thereof. Schedule 2.1(c) also
lists all outstanding debt of the Company with sufficient detail acceptable to
Purchaser.
(d) Issuance of Shares. Upon issuance in accordance with this Agreement
and the terms of the Debentures and Warrants, the Debentures, Warrants and
Common Shares will be validly issued, fully paid and nonassessable and free from
all taxes, liens and charges with respect to the issue thereof.
(e) No Conflicts. Except as disclosed in Schedule 2.1(e), the
execution, delivery and performance of the Transaction Documents by the Company
and the consummation by the Company of the transactions contemplated hereby and
thereby and issuance of the Debentures, the Warrants and the Common Shares
underlying the Debentures or the Warrants will not (i) result in a violation of
the Certificate of Incorporation, any certificate of designations, preferences
and rights of any outstanding series of preferred stock of the Company or the
By-laws; (ii) conflict with, or constitute a default (or an event which 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 of, any
agreement, indenture or instrument to which the Company or any of its
Subsidiaries is a party, or (iii) result in a violation of any law, rule,
regulation, order, judgment or decree (including United States federal and state
securities laws and regulations and the rules and regulations of the Nasdaq
National Market ("Principal Market") or principal securities exchange or trading
market on which the Common Stock is traded or listed) applicable to the Company
or any of its Subsidiaries or by which any property or asset of the Company or
any of its Subsidiaries is bound or affected. Except as disclosed in Schedule
2.1(e), neither the Company nor its Subsidiaries is in violation of any term of,
or in default under, (x) its certificate of incorporation, any certificate of
designations, preferences and rights of any outstanding series of preferred
stock or By-laws or their organizational charter or by-laws, respectively, (y)
any material contract, agreement, mortgage, indebtedness, indenture, instrument,
or (z) any judgment, decree or order or any statute, rule or regulation
applicable to the Company or its Subsidiaries, the non-compliance with which (in
the case of (z) only), would be material to the Company or its Subsidiaries or
interfere with the performance of its obligations under the Transaction
Documents. Except as specifically contemplated by this Agreement and as required
under the 1933 Act, the Company is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court,
governmental agency or any regulatory or self-regulatory agency in order for it
to execute, deliver or perform any of its obligations under, or contemplated by,
the Transaction Documents or the issuance of the Debentures, the Warrants and
the Common Shares underlying the Debentures or the Warrants in accordance with
the terms hereof or thereof. Except as disclosed in Schedule 2.1(e), all
consents, authorizations, orders, filings and registrations which the Company is
required to obtain pursuant to the preceding sentence have been obtained or
effected on or prior to the date hereof. The Company complies with and is not in
violation of the listing requirements of the Principal Market as in effect on
the date hereof and on each of the Closing Dates and is not aware of any facts
which would reasonably lead to delisting or suspension of the Common Stock by
the Principal Market in the foreseeable future.
(f) SEC Documents; Financial Statements. Since June 14, 1999, the
Company has filed all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC pursuant to the reporting requirements
of the Securities Exchange Act of 1934, as amended (the "1934 Act") (all of the
foregoing filed prior to the date hereof and all exhibits included therein and
financial statements and schedules thereto and documents incorporated by
reference therein being hereinafter referred to as the "SEC Documents"). The
Company has delivered to the Purchaser or its representatives true and complete
copies of any SEC Documents that were not filed electronically via XXXXX. As of
their respective dates, the SEC Documents complied in all material respects with
the requirements of the 1934 Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents, and none of the SEC
Documents, at the time they were filed with the SEC, 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. As of their
respective dates, the financial statements of the Company included in the SEC
Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto. Such financial statements have been prepared in accordance with
generally accepted accounting principles, consistently applied, during the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). No other written
information provided by or on behalf of the Company to the Purchaser which is
not included in the SEC Documents, including, without limitation, information
referred to in Section 2.2(b) of this Agreement, contains any untrue statement
of a material fact or omits to state any material fact necessary in order to
make the statements therein, in the light of the circumstance under which they
are or were made, not misleading. Neither the Company nor any of its
Subsidiaries or any of their officers, directors, employees or agents have
provided the Purchaser with any material, nonpublic information which was not
publicly disclosed prior to the date hereof.
(g) Absence of Certain Changes. Except as disclosed in Schedule 2.1(g)
or the SEC Documents filed at least thirty (30) days prior to the date hereof,
since December 31, 1999 there has been no adverse change or adverse development
in the business, properties, assets, operations, financial condition, prospects,
liabilities or results of operations of the Company or its Subsidiaries which
has had or, to the knowledge of the Company or its Subsidiaries, is reasonably
likely to have a Material Adverse Effect. The Company has not taken any steps,
and does not currently expect to take any steps, to seek protection pursuant to
any bankruptcy law nor does the Company or its Subsidiaries have any knowledge
or reason to believe that its creditors intend to initiate involuntary
bankruptcy proceedings. Schedule 2.1(g) lists all material events, transactions
and agreements which have occurred or been entered into affecting the Company
since December 31, 1999.
(h) Absence of Litigation. There is no action, suit, proceeding,
inquiry or investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the knowledge of the
Company or any of its Subsidiaries, threatened against or affecting the Company,
the Common Stock or any of the Company's Subsidiaries or any of the Company's or
the Company's Subsidiaries' officers or directors in their capacities as such,
(i) except as set forth in SEC Documents which were filed at least 10 days
before the date hereof, (ii) except as set forth in Schedule 2.1(h), and (iii)
except which individually and in the aggregate, respectively, would be
reasonably likely to result in liability to the Company in excess of $50,000 and
$100,000, respectively.
(i) Acknowledgment Regarding Purchaser's Purchase of Shares. The
Company acknowledges and agrees that the Purchaser is acting solely in the
capacity of arm's length purchaser with respect to the Transaction Documents and
the transactions contemplated hereby and thereby. The Company further
acknowledges that the Purchaser is not acting as a financial advisor or
fiduciary of the Company (or in any similar capacity) with respect to the
Transaction Documents and the transactions contemplated hereby and thereby, and
any advice given by the Purchaser or any of its respective representatives or
agents in connection with the Transaction Documents and the transactions
contemplated hereby and thereby is merely incidental to the Purchaser's purchase
of the Debentures and the Warrants. The Company further represents to the
Purchaser that the Company's decision to enter into the Transaction Documents
has been based solely on the independent evaluation by the Company and its
representatives.
(j) No Undisclosed Events, Liabilities, Developments or Circumstances.
No event, liability, development or circumstance has occurred or exists with
respect to the Company or its Subsidiaries or their respective business,
properties, prospects, operations or financial condition, that would be required
to be disclosed by the Company under applicable securities laws on a
registration statement filed with the SEC relating to an issuance and sale by
the Company of its Common Stock and which has not been publicly disclosed.
(k) No Inside Information. The Company has not provided and, the
Company shall not provide, any Purchaser with any non-public information.
(l) No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or 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 cause this offering of
Debentures and Warrants to the Purchaser to be integrated with prior offerings
by the Company for purposes of the 1933 Act or any applicable shareholder
approval provisions, including, without limitation, under the rules and
regulations of the Principal Market or other Approved Market, nor will the
Company or any of its Subsidiaries take any action or steps that would cause the
offering of the Debentures to be integrated with other offerings.
(m) Employee Relations. Neither the Company nor any of its Subsidiaries
is involved in any labor dispute nor, to the knowledge of the Company or any of
its Subsidiaries, is any such dispute threatened, the effect of which would be
reasonably likely to result in a Material Adverse Effect. Neither the Company
nor any of its Subsidiaries is a party to a collective bargaining agreement. The
Company and its Subsidiaries believe that relations between the Company and its
Subsidiaries and their respective employees are good. No executive officer (as
defined in Rule 501(f) of the 0000 Xxx) whose departure would be adverse to the
Company has notified the Company that such officer intends to leave the Company
or otherwise terminate such officer's employment with the Company.
(n) Intellectual Property Rights. The Company and its Subsidiaries own
or possess adequate rights or licenses to use all trademarks, trade names,
service marks, service xxxx registrations, service names, patents, patent
rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and rights necessary to conduct their respective
businesses as now conducted. Except as set forth on Schedule 2.1(n), none of the
Company's trademarks, trade names, service marks, service xxxx registrations,
service names, patents, patent rights, copyrights, inventions, licenses,
approvals, government authorizations, trade secrets or other intellectual
property rights have expired or terminated, or are expected to expire or
terminate within two (2) years from the date of this Agreement. The Company and
its Subsidiaries do not have any knowledge of any infringement by the Company or
its Subsidiaries of trademark, trade name rights, patents, patent rights,
copyrights, inventions, licenses, service names, service marks, service xxxx
registrations, trade secret or other similar rights of others, or of any such
development of similar or identical trade secrets or technical information by
others and, except as set forth on Schedule 2.1(n), there is no claim, action or
proceeding being made or brought against, or to the Company's knowledge, being
threatened against, the Company or its Subsidiaries regarding trademarks, trade
name rights, patents, patent rights, inventions, copyrights, licenses, service
names, service marks, service xxxx registrations, trade secrets or other
infringement. The Company and its Subsidiaries have taken reasonable security
measures to protect the secrecy, confidentiality and value of all of their
intellectual properties.
(o) Environmental Laws. The Company and its Subsidiaries (i) are in
compliance with any and all applicable foreign, federal, state and local laws
and regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval where such noncompliance or
failure to receive permits, licenses or approvals referred to in clauses (i),
(ii) or (iii) above could have, individually or in the aggregate, a Material
Adverse Effect.
(p) Title. The Company and its Subsidiaries have good and marketable
title in fee simple to all real property and good and marketable title to all
personal property owned by them which is material to the business of the Company
and its Subsidiaries, in each case free and clear of all liens, encumbrances and
defects except such as are described in Schedule 2.1(p) or such as do not
materially and adversely affect the value of such property and do not interfere
with the use made and proposed to be made of such property by the Company or any
of its Subsidiaries. Any real property and facilities held under lease by the
Company or any of its Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings by the
Company and its Subsidiaries.
(q) Insurance. The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company and its Subsidiaries are
engaged. Neither the Company nor any such Subsidiary has been refused any
insurance coverage sought or applied for and neither the Company nor any such
Subsidiary has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not materially and adversely affect the condition,
financial or otherwise, or the earnings, business or operations of the Company
and its Subsidiaries taken as a whole.
(r) Regulatory Permits. The Company and its Subsidiaries possess all
material certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities, necessary to conduct their
respective businesses, and neither the Company nor any such Subsidiary has
received any notice of proceedings relating to the revocation or modification of
any such certificate, authorization or permit.
(s) Internal Accounting Controls. The Company and each of its
Subsidiaries maintain 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 generally accepted accounting principles 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.
(t) Foreign Corrupt Practices Act. Neither the Company, nor any
director, officer, agent, employee or other person acting on behalf of the
Company or any Subsidiary has, in the course of acting for, or on behalf of, the
Company, directly or indirectly used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity; directly or indirectly made any direct or indirect unlawful
payment to any foreign or domestic government official or employee from
corporate funds; violated or is in violation of any provision of the U.S.
Foreign Corrupt Practices Act of 1977, as amended, or any similar treaties of
the United States; or directly or indirectly made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to any foreign or domestic
government or party official or employee.
(u) Tax Status. The Company and each of its Subsidiaries has made or
filed all United States federal and state income and all other tax returns,
reports and declarations required by any jurisdiction to which it is subject and
(i) has paid all taxes and other governmental assessments and charges, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and (ii) has set aside on its books provisions
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. There are no
unpaid taxes claimed to be due by the taxing authority of any jurisdiction, and
the Company is not aware of any basis for any such claim.
(v) Certain Transactions. Except as set forth on Schedule 2.1(v) and in
the SEC Documents filed on XXXXX at least thirty (30) Trading Days prior to the
date hereof and except for arm's length transactions pursuant to which the
Company makes payments in the ordinary course of business upon terms no less
favorable than the Company could obtain from third parties and other than the
grant of stock options disclosed on Schedule 2.1(c), none of the officers,
directors or employees of the Company is presently a party to any transaction
with the Company or any of its Subsidiaries (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 corporation, partnership, trust or other entity in which any
officer, director or any such employee has a substantial interest or is an
officer, director, trustee or partner.
(w) Dilutive Effect. The Company understands and acknowledges that the
number of Common Shares issuable upon conversion of Debentures and exercise of
the Warrants purchased pursuant to this Agreement will increase in certain
circumstances. The Company further acknowledges that, subject to such
limitations as are expressly set forth in the Transaction Documents, its
obligation to issue Common Shares upon conversion of Debentures and exercise of
the Warrants purchased pursuant to this Agreement, is absolute and unconditional
regardless of the dilutive effect that such issuance may have on the ownership
interests of other shareholders of the Company.
(x) Application of Takeover Protections. There are no anti-takeover
provisions contained in the Company's Certificate of Incorporation or otherwise
which will or could be triggered as a result of the transactions contemplated by
this Agreement, including, without limitation, the Company's issuance of the
Common Shares and the Purchaser's ownership of the Common Shares.
(y) Rights Plan. Neither the Company nor any of its Subsidiaries has
adopted a shareholder rights plan or similar arrangement relating to
accumulations of beneficial ownership of Common Stock or a change in control of
the Company. The Company confirms that no provision of such plan will, under any
present or future circumstances, delay, prevent or interfere with the
performance of any of the Company's obligations under the Transaction Documents
and such plan will not be "triggered" by such performance.
(z) [Intentionally Deleted].
(aa) Obligations Absolute. Each of the Company and the Purchaser agrees
that, subject only to the conditions, qualifications and exceptions (if any)
specifically set forth in the Transaction Documents, its obligations under the
Transaction Documents are unconditional and absolute. Except to the extent (if
any) specifically set forth in the Transaction Documents, each party's
obligations thereunder are not subject to any right of set off, counterclaim,
delay or reduction.
(bb) Issuance of Common Shares. The Common Shares are duly authorized
and reserved for issuance and, upon conversion of Debentures or exercise of the
Warrants in accordance with the terms thereof, such Common Shares will be
validly issued, fully paid and non-assessable, free and clear of any and all
liens, claims and encumbrances, and entitled to be traded on the Pacific
Exchange and the Principal Market or the New York Stock Exchange or the American
Stock Exchange, or the Nasdaq Small Cap Market (collectively with the Principal
Market, the "Approved Markets"), and the holders of such Common Shares shall be
entitled to all rights and preferences accorded to a holder of Common Stock. As
of the date of this Agreement, the outstanding shares of Common Stock are
currently listed on the Principal Market and the Pacific Exchange.
(cc) Form S-3. The Company is eligible to file the Registration
Statement (as defined in the Registration Rights Agreement) for secondary
offerings on Form S-3 (as in effect on the date of this Agreement) under the
1933 Act and rules promulgated thereunder, and Form S-3 (as in effect on the
date of this Agreement) will be permitted to be used for the transactions
contemplated hereby under the 1933 Act and rules promulgated thereunder.
(dd) Brokers. The Company has taken no action which would give rise to
any claim by any person for brokerage commissions, finder's fees or similar
payments by the Company or the Purchaser relating to this Agreement or the
transactions contemplated hereby, provided that any such fees shall be paid by
the Company.
Section 2.2 Representations and Warranties of the Purchaser. The
Purchaser hereby makes the following representations and warranties to the
Company as of the date hereof and the Closing Date:
(a) Accredited Investor Status; Sophisticated Purchaser. The Purchaser
is an "accredited investor" as that term is defined in Rule 501(a) of Regulation
D under the 1933 Act. The Purchaser has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of the purchase of the Debentures, the Warrants and Common Shares.
(b) Information. The Purchaser and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company which have been requested and materials relating to the offer and
sale of the Debentures, the Warrants and Common Shares which have been requested
by the Purchaser. The Purchaser and its advisors, if any, have been afforded the
opportunity to ask questions of the Company. Neither such inquiries nor any
other due diligence investigations conducted by the Purchaser or its advisors,
if any, or its representatives shall modify, amend or affect the Purchaser's
right to rely on the Company's representations and warranties contained in
Section 2.1 above. The Purchaser understands that its purchase of the
Debentures, the Warrants and Common Shares involves a high degree of risk. The
Purchaser has sought such accounting, legal and tax advice as it has considered
necessary to make an informed investment decision with respect to its
acquisition of the Debentures, the Warrants and Common Shares.
(c) No Governmental Review. The Purchaser understands that no United
States federal or state agency or any other government or governmental agency
has passed on or made any recommendation or endorsement of the Debentures, the
Warrants and Common Shares or the fairness or suitability of the investment in
the Debentures, the Warrants and Common Shares nor have such authorities passed
upon or endorsed the merits of the offering of the Debentures, the Warrants and
Common Shares.
(d) Legends. The Company shall issue the Debentures, the Warrants and
certificates for the Common Shares to the Purchaser without any legend except as
described in Article VI below. The Purchaser covenants that, in connection with
any transfer of Common Shares by the Purchaser pursuant to the registration
statement contemplated by the Registration Rights Agreement, it will comply with
the applicable prospectus delivery requirements of the 1933 Act, provided that
copies of a current prospectus relating to such effective registration statement
are or have been supplied to the Purchaser.
(e) Authorization; Enforcement. Each of this Agreement and the
Registration Rights Agreement have been duly and validly authorized, executed
and delivered on behalf of the Purchaser and is a valid and binding agreement of
the Purchaser enforceable against the Purchaser in accordance with their terms,
subject as to enforceability to general principles of equity and to applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation and other
similar laws relating to, or affecting generally, the enforcement of applicable
creditors' rights and remedies. The Purchaser has the requisite corporate power
and authority to enter into and perform its obligations under this Agreement and
the Registration Rights Agreement and each other agreement entered into by the
parties hereto in connection with the transactions contemplated by this
Agreement.
(f) Residency. The Purchaser is a resident of the jurisdiction
indicated on Schedule I.
(g) No Conflicts. The execution, delivery and performance of this
Agreement and the Registration Rights Agreement by the Purchaser and the
consummation by the Purchaser of the transactions contemplated hereby and
thereby will not (i) result in a violation of the certificate of incorporation,
by-laws or other documents of organization of the Purchaser, (ii) conflict with,
or constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Purchaser is bound, or (iii) result in a violation of
any law, rule, regulation or decree applicable to the Purchaser.
(h) Investment Representation. The Purchaser is purchasing the
Debentures and the Warrants for its own account and not with a view to
distribution in violation of any securities laws. The Purchaser has been advised
and understands that neither the Debentures, the Warrants nor the shares of
Common Stock issuable upon conversion or exercise thereof have been registered
under the 1933 Act or under the "blue sky" laws of any jurisdiction and may be
resold only if registered pursuant to the provisions of the 1933 Act or if an
exemption from registration is available, except under circumstances where
neither such registration nor such an exemption is required by law. The
Purchaser has been advised and understands that the Company, in issuing the
Debentures and Warrants, is relying upon, among other things, the
representations and warranties of the Purchaser contained in this Section 2.2 in
concluding that such issuance is a "private offering" and is exempt from the
registration provisions of the 1933 Act.
(i) Rule 144. The Purchaser understands that there is no public trading
market for the Debentures or the Warrants, that none is expected to develop, and
that the Debentures and Warrants must be held indefinitely unless and until such
Debentures, Warrants or Common Shares received upon conversion or exercise
thereof are registered under the 1933 Act or an exemption from registration is
available. The Purchaser has been advised or is aware of the provisions of Rule
144 promulgated under the 1933 Act.
(j) Brokers. The Purchaser has taken no action which would give rise to
any claim by any person for brokerage commissions, finder's fees or similar
payments by the Company or the Purchaser relating to this Agreement or the
transactions contemplated hereby except for the broker's fee of Shoreline which
shall be paid by the Company out of the Closing proceeds.
(k) Reliance by the Company. The Purchaser understands that the
Debentures and Warrants are being offered and sold in reliance on a
transactional exemption from the registration requirements of Federal and state
securities laws and that the Company is relying upon the truth and accuracy of
the representations, warranties, agreements, acknowledgments and understandings
of the Purchaser set forth herein in order to determine the applicability of
such exemptions and the suitability of the Purchaser to acquire the Debentures
and Warrants.
Article III
Covenants
Section 3.1 Registration and Listing; Effective Registration. Until
such time as no Debentures or Warrants are outstanding, the Company will cause
the Common Stock to continue at all times to be registered under Sections 12(b)
or (g) of the Exchange Act, will comply in all material respects with its
reporting and filing obligations under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and will not take any action or file any document
(whether or not permitted by the Exchange Act or the rules thereunder) to
terminate or suspend such reporting and filing obligations. Until such time as
no Debentures or Warrants are outstanding, the Company shall continue the
listing or trading of the Common Stock on the Principal Market or one of the
other Approved Markets and comply in all material respects with the Company's
reporting, filing and other obligations under the bylaws or rules of the
Approved Market on which the Common Stock is listed. The Company shall cause the
Common Shares to be listed on the Pacific Exchange and the Principal Market or
one of the other Approved Markets no later than the effectiveness of the
registration of the Common Shares under the Act, and shall continue such
listing(s) on one of the Approved Markets, for so long as any Debentures or
Warrants are outstanding.
Section 3.2 Certificates on Conversion. Upon any conversion by the
Purchaser (or then holder of Debentures) of the Debentures pursuant to the terms
thereof, the Company shall issue and deliver to the Purchaser (or holder) within
three (3) trading days of the conversion date a new Debenture or Debentures for
the aggregate principal amount of Debentures which the Purchaser (or holder) has
not yet elected to convert but which are evidenced in part by the Debentures
submitted to the Company in connection with such conversion (with the
denominations of such new Debenture(s) designated by the Purchaser or holder).
Section 3.3 Replacement Debentures. The Debenture(s) held by any
Purchaser (or then holder) may be exchanged by the Purchaser (or such holder) at
any time and from time to time for Debenture(s) with different denominations
representing an equal aggregate principal amount of Debenture(s), as requested
by the Purchaser (or such holder) upon surrendering the same. No service charge
will be made for such registration or transfer or exchange.
Section 3.4 Securities Compliance. The Company shall notify the SEC and
the Principal Market, in accordance with their requirements, of the transactions
contemplated by this Agreement, the Debentures, the Warrants and the
Registration Rights Agreement, and shall take all other necessary action and
proceedings as may be required and permitted by applicable law, rule and
regulation, for the legal and valid issuance of the Debentures and Warrants
hereunder and the Common Shares issuable upon conversion or exercise thereof.
Section 3.5 Notices. The Company agrees to provide all holders of
Debentures and Warrants with copies of all notices and information, including
without limitation notices and proxy statements in connection with any meetings,
that are provided to the holders of shares of Common Stock, contemporaneously
with the delivery of such notices or information to such Common Stock holders.
Section 3.6 Use of Proceeds. The Company agrees that the net proceeds
received by the Company from the sale of the Debentures and Warrants hereunder
and payment of the exercise price of the Warrants shall be used only for legally
permitted corporate purposes.
Section 3.7 Reservation of Shares; Stock Issuable Upon Conversion.
(a) So long as any Debentures issued hereunder remain outstanding, the
Company shall not issue any Debentures except to Purchasers.
(b) The Company shall at all times reserve and keep available out of
its authorized but unissued shares of Common Stock, solely for the purpose of
effecting the conversion of the Debentures and exercise of the Warrants, such
number of its shares of Common Stock as shall from time to time be sufficient to
effect the conversion of all Debentures and exercise of all of the Warrants, and
if at any time the number of authorized but unissued shares of Common Stock
shall not be sufficient to effect the conversion of all the then outstanding
Debentures and all of the then outstanding Warrants, the Company will take such
corporate action as may be necessary to expeditiously increase its authorized
but unissued shares of Common Stock to such number of shares as shall be
sufficient for such purpose, including without limitation engaging in best
efforts to obtain the requisite shareholder approval and taking the actions
described in the Debentures. Without in any way limiting the foregoing, the
Company agrees to reserve and at all times keep available solely for purposes of
conversion of Debentures and exercise of the Warrants, such number of authorized
but unissued shares of Common Stock that is at least equal to 200% of the number
of Common Shares issuable upon conversion of all Debentures and exercise of all
of the Warrants, computed as if all Debentures are convertible at the Conversion
Price (as defined in the Debentures) and all Warrants are exercisable at the
Exercise Price (as defined in the Warrants), without regard to any limitations
on beneficial ownership contained therein. If at any time the number of
authorized but unissued shares of Common Stock is not sufficient to effect such
issuance, conversion, or exercise, respectively, up to the Maximum Common Stock
Issuance (as defined in Section 3(i)(C) of the Debentures), of all the then
outstanding Debentures and the Warrants, the Purchaser shall be entitled to,
inter alia, the redemption rights provided in the Registration Rights Agreement.
Section 3.8 Best Efforts. The parties shall use their best efforts to
satisfy timely each of the conditions described in Article V of this Agreement.
Section 3.9 Form D; Blue Sky Laws. The Company agrees to file a Form D
with respect to the Debentures, the Warrants and Common Shares, as required
under Regulation D and to provide a copy thereof to the Purchaser promptly after
such filing. The Company shall, on or before the Closing Date, take such action
as the Company shall have reasonably determined is necessary to qualify the
Debentures, the Warrants and Common Shares for sale to the Purchaser under
applicable securities or "blue sky" laws of the states of the United States (or
to obtain an exemption from such qualification), and shall provide evidence of
any such action so taken to the Purchaser on or prior to the Closing Date;
provided, however, that the Company shall not be required in connection
therewith to register or qualify as a foreign corporation in any jurisdiction
where it is not now so qualified or to take any action that would subject it to
service of process in suits or taxation, in each case, in any jurisdiction where
it is not now so subject.
Section 3.10 Publicity. The Company shall, immediately upon the
Closing, issue a press release with respect to such transactions, in the form of
press release attached as Exhibit D hereto.
Section 3.11 Shareholder Rights Plan. None of the acquisitions of
Debentures, Warrants or Common Shares nor the deemed beneficial ownership of
shares of Common Stock prior to, or the acquisition of such shares pursuant to,
the conversion of Debentures or exercise of the Warrants will in any event under
any circumstances trigger the poison pill provisions of any stockholders' rights
or similar agreements, or a substantially similar occurrence under any successor
or similar plan.
Section 3.12 Financial Information. The Company agrees to send the
following to the Purchaser for so long as any Debentures or Warrants are
outstanding: (i) on the same day as the release thereof, facsimile or e-mail
copies of all press releases issued by the Company or any of its Subsidiaries;
and (ii) copies of any notices and other information made available or given to
the shareholders of the Company generally, contemporaneously with the making
available or giving thereof to the shareholders.
Section 3.13 Transactions With Affiliates. The Company agrees that any
transaction or arrangement between it or any of its subsidiaries and any
affiliate or employee of the Company shall be effected on an arms' length basis
in accordance with customary commercial practice and, except with respect to
grants of options and stock to service providers, including employees, shall be
approved by a majority of the Company's outside directors.
Section 3.14 [Intentionally Left Blank]
Section 3.15 Trading Restrictions. So long as any Debentures or
Warrants remain outstanding and there is Effective Registration, if the closing
bid price on any Trading Day is less than $23.00 (which figure shall be
appropriately and equitably adjusted for any stock splits, stock dividends,
recapitalizations and the like), then each Purchaser agrees it will not sell on
the Principal Market more than $150,000 of shares of Common Stock (based on net
proceeds of shares actually sold) on the following Trading Day (any such
following day hereinafter referred to as a "Limitation Day"); provided, however,
that if at any time and from time to time on such Limitation Day a sale of
Common Stock on the Principal Market occurs at a price which is greater than
120% of the then applicable Market Price (as defined in the Debentures), then
the limitation contained in this sentence shall no longer apply and the
Purchaser may sell or continue to sell shares of Common Stock during such
Limitation Day on the Principal Market, provided that if from time to time
during the Limitation Day a later sale occurs below 120% of such Market Price,
then the limitation contained in this sentence shall apply again.
Article IV
Transfer Agent Instructions
The Company shall issue irrevocable instructions to its transfer agent,
and any subsequent transfer agent, to issue certificates, registered in the name
of the Purchaser or its respective nominee(s), for the Common Shares in such
amounts as specified from time to time by the Purchaser to the Company upon
delivery of a conversion or exercise notice or repayment of any portion of the
Debenture in Common Stock (the "Irrevocable Transfer Agent Instructions"). The
Company warrants that no instruction relating to the Common Shares other than
the Irrevocable Transfer Agent Instructions referred to in this Article IV will
be given by the Company to its transfer agent and that the Common Shares shall
be freely transferable on the books and records of the Company as contemplated
by Article VI below when the legend referred to therein may be removed. Nothing
in this Article IV shall affect in any way the Purchaser's obligations and
agreements set forth in Section 2.2(d) to comply with all applicable prospectus
delivery requirements, if any, upon resale of the Common Shares. The Company
shall instruct its transfer agent to issue one or more certificates in such name
and in such denominations as specified by the Purchaser and without any
restrictive legends. The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the Purchaser by vitiating
the intent and purpose of the transaction contemplated hereby. Accordingly, the
Company acknowledges that the remedy at law for a breach of its obligations
under this Section will be inadequate and agrees, in the event of a breach or
threatened breach by the Company of the provisions of this Section, that the
Purchaser shall be entitled, in addition to all other available remedies, to an
injunction restraining any breach and requiring immediate issuance and transfer,
without the necessity of showing economic loss and without any bond or other
security being required.
Article V
Conditions to Closings
Section 5.1 Conditions Precedent to the Obligation of the Company to
Sell the Debentures and Warrants. The obligation hereunder of the Company to
issue and/or sell the Debentures and the Warrants to the Purchaser at the
Closing is subject to the satisfaction, at or before the Closing, of each of the
applicable conditions set forth below. These conditions are for the Company's
sole benefit and may be waived by the Company at any time in its sole
discretion.
(a) Accuracy of the Purchaser's Representations and Warranties. The
representations and warranties of the Purchaser will be true and correct in all
material respects as of the date when made and as of the Closing Date, as though
made at that time.
(b) Performance by the Purchaser. The Purchaser shall have performed
all agreements and satisfied all conditions required to be performed or
satisfied by the Purchaser at or prior to the Closing, including payment of the
purchase price set forth on Schedule I to the Company as provided herein.
(c) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement or the Registration Rights Agreement or the Debentures.
(d) Certificate. The Purchaser shall have delivered a certificate to
the Company certifying that the representations and warranties of the Purchaser
contained in Section 2.2 are true and correct in all material respects as of the
Closing Date.
Section 5.2 Conditions Precedent to the Obligation of the Purchaser to
Purchase the Debentures. The obligation hereunder of the Purchaser to acquire
and pay for the Debentures at the Closing is subject to the satisfaction, at or
before the Closing, of each of the applicable conditions set forth below. These
conditions are for the Purchaser's benefit and may be waived by the Purchaser at
any time in its sole discretion.
(a) Accuracy of the Company's Representations and Warranties. The
representations and warranties of the Company shall be true and correct in all
material respects as of the date when made and as of the Closing Date as though
made at that time (except for representations and warranties as of an earlier
date, which shall be true and correct in all material respects as of such date).
(b) Performance by the Company. The Company shall have performed all
agreements and satisfied all conditions required to be performed or satisfied by
the Company at or prior to the Closing, including, without limitation, delivery
of the Debentures and Warrants issued to Purchaser.
(c) Nasdaq Trading. From the date hereof to the Closing Date, trading
in the Company's Common Stock shall not have been suspended by the SEC and
trading in securities generally as reported by the Principal Market (or other
Approved Market) shall not have been suspended or limited, and the Common Stock
shall be listed on the Principal Market or another Approved Market.
(d) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement, the Warrants, the Registration Rights Agreement or the Debentures.
The NASD shall not have objected or indicated that it may object to the
consummation of any of the transactions contemplated by this Agreement.
(e) Opinion of Counsel. At the Closing, the Purchaser shall have
received an opinion of counsel to the Company in the form attached hereto as
Exhibit E and such other opinions, certificates and documents as the Purchaser
or their counsel shall reasonably require incident to the Closing.
(f) Registration Rights Agreement. The Company and the Purchaser shall
have executed and delivered the Registration Rights Agreement in the form and
substance of Exhibit C attached hereto.
(g) Officer's Certificate. The Company shall have delivered to the
Purchaser a certificate in form and substance satisfactory to the Purchaser and
the Purchaser's counsel, executed by an officer of the Company, certifying as to
satisfaction of closing conditions, incumbency of signing officers, and the
true, correct and complete nature of the Certificate of Incorporation, By-Laws,
good standing and authorizing resolutions of the Company.
(h) Miscellaneous. The Company shall have delivered to the Purchaser
such other documents relating to the transactions contemplated by this Agreement
or the Purchaser or its counsel may reasonable request.
Article VI
Legend and Stock
Upon payment therefor as provided in this Agreement, the Company will
issue one or more Debentures and Warrants in the name the Purchaser or its
designees and in such denominations to be specified by the Purchaser prior to
(or from time to time subsequent to) Closing. Each Debenture and Warrant and any
certificate representing Common Shares issued upon conversion or exercise
thereof, prior to such Common Shares being registered under the 1933 Act for
resale or available for resale under Rule 144 under the 1933 Act, shall be
stamped or otherwise imprinted with a legend substantially in substantially the
following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED FOR OFFER OR SALE UNDER THE
SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR
OFFERED FOR SALE EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
SAID ACT AND ANY APPLICABLE STATE SECURITIES LAW OR AN APPLICABLE EXEMPTION FROM
SUCH REGISTRATION REQUIREMENTS.
The Company agrees to reissue Debentures, Warrants and/or Common Shares
issuable upon conversion of Debentures or exercise of Warrants, without the
legend set forth above, at such time as (i) the holder thereof is permitted to
dispose of such Debentures or Warrants and/or Common Shares issuable upon
conversion of the Debentures or exercise of the Warrants pursuant to Rule 144(k)
under the 1933 Act, or (ii) such securities are sold to a purchaser or
purchasers who (in the opinion of counsel to the seller or such purchaser(s), in
form and substance reasonably satisfactory to the Company and its counsel) are
able to dispose of such shares publicly without registration under the 1933 Act,
or (iii) such securities have been registered under the 1933 Act.
Prior to the Registration Statement (as defined in the Registration
Rights Agreement) being declared effective, any Common Shares issued pursuant to
conversion of Debentures or exercise of the Warrants shall bear a legend in the
same form as the legend indicated above; provided that such legend shall be
removed from the Common Shares and the Company shall issue new certificates
without such legend if (i) the holder has sold or disposed of such Common Shares
pursuant to Rule 144(k) under the 1933 Act, or the holder is permitted to
dispose of such Common Shares pursuant to Rule 144(k) under the 1933 Act, (ii)
such Common Shares are registered for resale under the 1933 Act, or (iii) such
Common Shares are sold to a purchaser or purchasers who (in the opinion of
counsel to the seller or such purchaser(s), in form and substance reasonably
satisfactory to the Company and it counsel) are able to dispose of such shares
publicly without registration under the 1933 Act. Upon such Registration
Statement becoming effective, the Company agrees to promptly, but no later than
three (3) business days thereafter, issue new certificates representing such
Common Shares without such legend. Any Common Shares issued after the
Registration Statement has become effective shall be free and clear of any
legends, transfer restrictions and stop orders. Notwithstanding the removal of
such legend, the Purchaser agrees to sell the Common Shares represented by the
new certificates in accordance with the applicable prospectus delivery
requirements (if copies of a current prospectus are provided to the Purchaser by
the Company) or in accordance with an exemption from the registration
requirements of the 1933 Act.
Nothing herein shall limit the right of any holder to pledge these
securities pursuant to a bona fide margin account or lending arrangement entered
into in compliance with law, including applicable securities laws.
Article VII
Termination
Section 7.1 Termination by Mutual Consent. This Agreement may be
terminated at any time prior to the Closing by the mutual written consent of the
Company and the Purchaser.
Section 7.2 Other Termination. This Agreement may be terminated by
action of the Board of Directors of the Company or by the Purchaser at any time
if the Closing shall not have been consummated by the third business day
following the date of this Agreement; provided, however, that the party (or
parties) prepared to close shall retain its (or their) right to xxx for any
breach by the other party (or parties).
Article VIII
Indemnification
In consideration of the Purchaser's execution and delivery of the this
Agreement and the Registration Rights Agreement and acquiring the Debentures
hereunder and in addition to all of the Company's other obligations under the
Transaction Documents, the Company shall defend, protect, indemnify and hold
harmless the Purchaser and all of its partners, officers, directors, employees,
members and direct or indirect investors and any of the foregoing person's
agents or other representatives (including, without limitation, those retained
in connection with the transactions contemplated by this Agreement)
(collectively, the "Indemnitees") from and against any and all actions, causes
of action, suits, claims, losses, costs, penalties, fees, liabilities and
damages, and expenses in connection therewith (irrespective of whether any such
Indemnitee is a party to the action for which indemnification hereunder is
sought), and including reasonable attorneys' fees and disbursements (the
"Indemnified Liabilities"), incurred by any Indemnitee as a result of, or
arising out of, or relating to (a) any misrepresentation or breach of any
representation or warranty made by the Company in the Transaction Documents or
any other certificate or document contemplated hereby or thereby, (b) any breach
of any covenant, agreement or obligation of the Company contained in the
Transaction Documents or any other certificate or document contemplated hereby
or thereby, (c) any cause of action, suit or claim brought or made against such
Indemnitee by a third party and arising out of or resulting from (i) the
execution, delivery, performance, breach by the Company or enforcement of the
Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby, (ii) any transaction financed or to be financed
in whole or in part, directly or indirectly, with the proceeds of the issuance
of the Debentures or (iii) the status of the Purchaser or holder of the
Debentures or Warrants as an investor in the Company and (d) the enforcement of
this Section. Notwithstanding the foregoing, Indemnified Liabilities shall not
include any liability of any Indemnitee arising solely out of such Indemnitee's
willful misconduct or fraudulent action(s). To the extent that the foregoing
undertaking by the Company may be unenforceable for any reason, the Company
shall make the maximum contribution to the payment and satisfaction of each of
the Indemnified Liabilities which is permissible under applicable law. Except as
otherwise set forth herein, the mechanics and procedures with respect to the
rights and obligations under this Article VIII shall be the same as those set
forth in Section 6 (other than Section 6(b)) of the Registration Rights
Agreement, including, without limitation, those procedures with respect to the
settlement of claims and Company's right to assume the defense of claims.
1
Article IX
Governing Law, Miscellaneous
Section 9.1 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICT OF LAWS. EACH PARTY HEREBY IRREVOCABLY SUBMITS TO
THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY
OF NEW YORK, BOROUGH OF MANHATTAN, FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER
OR IN CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR
DISCUSSED HEREIN, AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN ANY
SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE
JURISDICTION OF ANY SUCH COURT, THAT SUCH SUIT, ACTION OR PROCEEDING IS BROUGHT
IN AN INCONVENIENT FORUM OR THAT THE VENUE OF SUCH SUIT, ACTION OR PROCEEDING IS
IMPROPER. EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND
CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY
MAILING A COPY THEREOF TO SUCH PARTY AT THE ADDRESS FOR SUCH NOTICES TO IT UNDER
THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT
SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN SHALL BE DEEMED
TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW.
IF ANY PROVISION OF THIS AGREEMENT SHALL BE INVALID OR UNENFORCEABLE IN ANY
JURISDICTION, SUCH INVALIDITY OR UNENFORCEABILITY SHALL NOT AFFECT THE VALIDITY
OR ENFORCEABILITY OF THE REMAINDER OF THIS AGREEMENT IN THAT JURISDICTION OR THE
VALIDITY OR ENFORCEABILITY OF ANY PROVISION OF THIS AGREEMENT IN ANY OTHER
JURISDICTION. EACH PARTY HERETO IRREVOCABLY WAIVES ANY RIGHT TO TRIAL BY JURY.
Section 9.2 Counterparts. This Agreement may be executed in two or more
identical counterparts, all of which 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; provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.
Section 9.3 Headings. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
Section 9.4 Severability. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
Section 9.5 Entire Agreement; Amendments; Waivers.
(a) This Agreement supersedes all other prior oral or written
agreements between the Purchaser, the Company, their affiliates and persons
acting on their behalf with respect to the matters discussed herein, and this
Agreement and the instruments referenced herein (including the other Transaction
Documents) contain the entire understanding of the parties with respect to the
matters covered herein and therein and, except as specifically set forth herein
or therein, neither the Company nor the Purchaser makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision of
this Agreement may be amended other than by an instrument in writing signed by
the Company and the Purchaser, and no provision hereof may be waived other than
by an instrument in writing signed by the party against whom enforcement is
sought.
(b) The Purchaser may at any time elect, by notice to the Company, to
waive (whether permanently or temporarily, and subject to such conditions, if
any, as the Purchaser may specify in such notice) any of its rights under any of
the Transaction Documents to acquire shares of Common Stock from the Company, in
which event such waiver shall be binding against the Purchaser in accordance
with its terms; provided, however, that the voluntary waiver contemplated by
this sentence may not reduce the Purchaser's obligations to the Company under
the Transaction Documents.
Section 9.6 Notices. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Agreement must be in writing, must be delivered by (i) courier, mail or hand
delivery or (ii) facsimile, and will be deemed to have been delivered upon
receipt. The addresses and facsimile numbers for such communications shall be:
If to the Company:
XxxxxxxXxxxxxxxxx.xxx, Inc.
0000 Xxxxxxxxx Xxxxxxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Ramy El-Batrawi
With a copy to:
Nida & Xxxxxxx, LLP
000 Xxxxxxx Xxxxxx
Xxxxx Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxxx
If to the Transfer Agent:
U.S. Stock Transfer Corporation
0000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Syed Hussaimi
If to the Purchaser:
Xxxxxxx Associates, L.P.
c/x Xxxxxxx Management Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000 and (000) 000-0000
Attention: Xxxxx Xxxxx
and
Xxxxxxx International, L.P.
c/x Xxxxxxx Management Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000 and (000) 000-0000
Attention: Xxxxx Xxxxx
With a copy to:
Kleinberg, Kaplan, Xxxxx & Xxxxx, P.C.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: 000-000-0000
Facsimile: 212-986-8866
Attention: Xxxxxxx X. Xxxxxxx
Each party shall provide five (5) days prior written notice to the
other party of any change in address, telephone number or facsimile number.
Written confirmation of receipt (A) given by the recipient of such notice,
consent, waiver or other communication, (B) mechanically or electronically
generated by the sender's facsimile machine containing the time, date, recipient
facsimile number and an image of the first page of such transmission or (C)
provided by a nationally recognized overnight delivery service, shall be
rebuttable evidence of personal service, receipt by facsimile or receipt from a
nationally recognized overnight delivery service in accordance with clause (i),
(ii) or (iii) above, respectively.
Section 9.7 Successors and Assigns. Except as otherwise provided
herein, this Agreement shall be binding upon and inure to the benefit of the
parties and their respective successors and assigns, including any Permitted
Assignee (as defined below). The Company shall not assign this Agreement or any
rights or obligations hereunder without the prior written consent of the
Purchaser, including by merger or consolidation. The Purchaser may assign some
or all of its rights hereunder to any assignee of the Debentures, Warrants or
Common Shares (in each case, a "Permitted Assignee"); provided, however, that
any such assignment shall not release the Purchaser from its obligations
hereunder unless such obligations are assumed by such assignee and the Company
has consented to such assignment and assumption. Notwithstanding anything to the
contrary contained in the Transaction Documents, the Purchaser shall be entitled
to pledge the Debentures, Warrants or Common Shares in connection with a bona
fide margin account.
Section 9.8 No Third Party Beneficiaries. This Agreement is intended
for the benefit of the parties hereto and their respective permitted successors
and assigns, and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.
Section 9.9 Survival. The representations, warranties and agreements of
the Company and the Purchaser contained in the Agreement shall survive the
Closing.
Section 9.10 Further Assurances. Each party shall do and perform, or
cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
Section 9.11 Placement Agent. The Purchaser and the Company each
acknowledges and warrants that it has not engaged any placement agent in
connection with the sale of the Debentures and the Warrants, provided that any
such fees will be paid exclusively by the Company. The Company and the Purchaser
shall each be responsible for the payment of any other fees or commissions of
placement agents or brokers engaged, directly or indirectly, by the Company or
the Purchaser, respectively, in connection with the purchase of the Debentures
and the Warrants by the Purchaser. The Company and the Purchaser shall pay, and
hold the other party harmless against, any liability, loss or expense
(including, without limitation, reasonable attorneys' fees and out-of-pocket
expenses) arising in connection with any such claim.
Section 9.12 No Strict Construction. 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.
Section 9.13 Remedies. The Purchaser and each Permitted Assignee shall
have all rights and remedies set forth in this Agreement and the Registration
Rights Agreement and all rights and remedies which such holders have been
granted at any time under any other agreement or contract and all of the rights
which such holders have under any law. Any person having any rights under any
provision of this Agreement or the Registration Rights Agreement shall be
entitled to enforce such rights specifically (without posting a bond or other
security), to recover damages by reason of any breach of any provision of this
Agreement or the Registration Rights Agreement and to exercise all other rights
granted by law. The Purchaser and each Permitted Assignee without prejudice may
withdraw, revoke or suspend its pursuit of any remedy at any time prior to its
complete recovery as a result of such remedy.
Section 9.14 Payment Set Aside. To the extent that the Company makes a
payment or payments to the Purchaser hereunder or under the Registration Rights
Agreement or the Purchaser enforces or exercises its rights hereunder or
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 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.
Section 9.15 Days. Unless the context refers to "business days" or
"Trading Days", all references herein to "days" shall mean calendar days.
Section 9.16 Rescission and Withdrawal Right. Notwithstanding anything
to the contrary contained in (and without limiting any similar provisions of)
the Transaction Documents, wherever the Purchaser exercises a right, election,
demand or option under a Transaction Document and the Company does not fully
perform its related obligations within the periods therein provided, then the
Purchaser in its sole discretion may rescind or withdraw from time to time any
relevant notice, demand or election in whole or in part without prejudice to its
future actions and rights.
* * * * *
[Signature Page Follows]
IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed as of the date and year first above
written.
COMPANY: INVESTORS:
XXXXXXXXXXXXXXXXX.XXX, INC. XXXXXXX INTERNATIONAL, L.P.
By: XXXXXXX INTERNATIONAL
CAPITAL ADVISORS INC.,
as attorney-in-fact
By: ________________________ By: ________________________
Name: Ramy El-Batrawi Name: Xxxx X. Xxxxxx
Title: President Title: President
XXXXXXX ASSOCIATES, L.P.
By: ________________________
Name: Xxxx X. Xxxxxx
Title: General Partner
List of Schedules
Schedule 2.1(a) Subsidiaries
Schedule 2.1(c) Capitalization
Schedule 2.1(e) No Conflicts
Schedule 2.1(g) Certain Changes
Schedule 2.1(h) Litigation
Schedule 2.1(n) Intellectual Property Rights
Schedule 2.1(p) Title
Schedule 2.1(v) Certain Transactions
Schedule I Purchasers
List of Exhibits
EXHIBIT A Form of Debenture
EXHIBIT B Form of Warrant
EXHIBIT C Registration Rights Agreement
EXHIBIT D Form of Press Release
EXHIBIT E Opinion of Counsel
SCHEDULE I
Jurisdiction of Principal Amount Number of
Purchaser Organization of Debentures Warrants Purchase Price
--------- ----------------- ---------------- --------- ---------------
Xxxxxxx Associates, L.P. Delaware, U.S.A. $1,500,000 50,000 $1,500,000
$1,500,000
Xxxxxxx International, L.P. Cayman Islands, B.W.I. 50,000 $1,500,000
EXHIBIT 10.60
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION 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.
THIS DEBENTURE DOES NOT REQUIRE PHYSICAL SURRENDER OF THE DEBENTURE IN THE EVENT
OF A PARTIAL REDEMPTION OR CONVERSION. AS A RESULT, FOLLOWING ANY REDEMPTION OR
CONVERSION OF ANY PORTION OF THIS DEBENTURE, THE OUTSTANDING PRINCIPAL AMOUNT
REPRESENTED BY THIS DEBENTURE MAY BE LESS THAN THE PRINCIPAL AMOUNT AND ACCRUED
INTEREST SET FORTH BELOW.
7% CONVERTIBLE DEBENTURE DUE DECEMBER 31, 2001
OF
XXXXXXXXXXXXXXXXX.XXX, INC.
Debenture No.: 1 Original Principal Amount: $1,500,000
Issuance Date: March ___, 0000 Xxx Xxxx, Xxx Xxxx
THIS DEBENTURE ("Debenture") is one of a duly authorized issue of
debentures of XxxxxxxXxxxxxxxxx.xxx, Inc., a corporation duly organized and
existing under the laws of the State of Delaware (the "Company"), designated as
the Company's 7% Convertible Debentures Due December 31, 2001 ("Maturity Date")
in an aggregate principal amount (when taken together with the original
principal amounts of all other Debentures) which does not exceed Three Million
U.S. Dollars (U.S. $3,000,000) (the "Debentures").
FOR VALUE RECEIVED, the Company hereby promises to pay to the order of
XXXXXXX ASSOCIATES, L.P. or its registered assigns or successors-in-interest
("Holder") the principal sum of One Million Five Hundred Thousand Dollars (U.S.
$1,500,000), together with all accrued but unpaid interest thereon, if any, on
the Maturity Date, to the extent such principal amount and interest has not been
converted into the Company's Common Stock, $0.001 par value per share (the
"Common Stock"), in accordance with the terms hereof. Interest on the unpaid
principal balance hereof shall accrue at the rate of 7% per annum from the date
of original issuance hereof (the "Issuance Date") until the same becomes due and
payable on the Maturity Date, or such earlier date upon acceleration or by
conversion or redemption in accordance with the terms hereof or of the other
Transaction Documents. Interest on this Debenture shall accrue daily commencing
on the Issuance Date, shall be compounded semi-annually and shall be computed on
the basis of a 360-day year, 30-day months and actual days elapsed and shall be
payable in accordance with Section 1 hereof. Notwithstanding anything contained
herein, this Debenture shall bear interest on the due and unpaid Principal
Amount from and after the occurrence and during the continuance of an Event of
Default pursuant to Section 4(a), at the rate (the "Default Rate") equal to the
lower of twenty percent (20%) per annum or the highest rate permitted by law.
Unless otherwise agreed or required by applicable law, payments will be applied
first to any unpaid collection costs, then to unpaid interest and fees and any
remaining amount to principal.
All payments of principal and interest on this Debenture shall be made
in lawful money of the United States of America by wire transfer of immediately
available funds to such account as the Holder may from time to time designate by
written notice in accordance with the provisions of this Debenture or by Company
check. This Debenture may not be prepaid in whole or in part except as otherwise
provided herein or in the Transaction Documents. Whenever any amount expressed
to be due by the terms of this Debenture is due on any day which is not a
Business Day (as defined below), the same shall instead be due on the next
succeeding day which is a Business Day.
Capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the Securities Purchase Agreement dated on or about the
Issuance Date pursuant to which the Debentures were originally issued (the
"Purchase Agreement"). For purposes hereof the following terms shall have the
meanings ascribed to them below:
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which commercial banks in the City of New York are authorized or required
by law or executive order to remain closed.
"Change in Control Transaction" will be deemed to exist if (i) there
occurs any consolidation, merger or other business combination of the Company
with or into any other corporation or other entity or person (whether or not the
Company is the surviving corporation), or any other corporate reorganization or
transaction or series of related transactions in which in any of such events the
voting stockholders of the Company prior to such event cease to own 50% or more
of the voting stock, or corresponding voting equity interests, of the surviving
corporation after such event (including without limitation any "going private"
transaction under Rule 13e-3 promulgated pursuant to the Exchange Act or tender
offer by the Company under Rule 13e-4 promulgated pursuant to the Exchange Act
for 20% or more of the Company's Common Stock), (ii) any person (as defined in
Section 13(d) of the Exchange Act), together with its affiliates and associates
(as such terms are defined in Rule 405 under the Act), beneficially owns or is
deemed to beneficially own (as described in Rule 13d-3 under the Exchange Act
without regard to the 60-day exercise period) in excess of 50% of the Company's
voting power, (iii) there is a replacement of more than one-half of the members
of the Company's Board of Directors which is not approved by those individuals
who are members of the Company's Board of Directors on the date thereof, or (iv)
in one or a series of related transactions, there is a sale or transfer of all
or substantially all of the assets of the Company, determined on a consolidated
basis, or (v) the execution by the Company of an agreement to which the Company
is a party or which it is bound providing for an event set forth in (i), (ii),
(iii) or (iv) above.
"Conversion Ratio" means, at any time, a fraction, of which the
numerator is the entire outstanding Principal Amount of this Debenture (or such
portion thereof that is being redeemed or repurchased), and of which the
denominator is the Market Price for the full calendar month immediately
preceding such time.
2
"Conversion Price" shall equal $20.50, provided that if the arithmetic
mean of the closing bid price ("Average Price") as reported by the Principal
Market over the five (5) Trading Days immediately preceding the 30th calendar
day following the Closing Date is less than $19.50, then the Conversion Price
shall instead equal 105% of the Average Price (which Conversion Price shall be
subject to adjustment as set forth herein, and the closing bid prices used to
determine the Conversion Price shall be appropriately and equitably adjusted for
any stock splits, stock dividends, recapitalizations and the like).
"Convertible Securities" means any convertible securities, warrants,
options or other rights to subscribe for or to purchase or exchange for, shares
of Common Stock.
"Effective Date" means the date on which a Registration Statement
covering all the Underlying Shares and other Registrable Securities (as defined
in the Registration Rights Agreement) is declared effective by the SEC.
"Effective Registration" shall have the meaning set forth in the
Purchase Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Market Price" shall equal the lesser of (i) the Conversion Price and
(ii) 90% of the arithmetic mean of the ten (10) lowest closing prices of the
Common Stock as reported by the Principal Market during the twenty-two (22)
Trading Days immediately preceding the date on which such Market Price is being
determined.
"MFN Transaction" shall mean a transaction in which the Company issues
or sells any securities in a capital raising transaction or series of related
transactions (the "MFN Offering") which grants to the investor (the "MFN
Investor") the right to receive additional securities based upon future capital
raising transactions of the Company on terms more favorable than those granted
to the MFN Investor in the MFN Offering.
"Per Share Selling Price" shall include the amount actually paid by
third parties for each share of Common Stock in a sale or issuance by the
Company. In the event a fee is paid by the Company in connection with such
transaction directly or indirectly to such third party or its affiliates, any
such fee shall be deducted from the selling price pro rata to all shares sold in
the transaction to arrive at the Per Share Selling Price. A sale of shares of
Common Stock shall include the sale or issuance of rights, options, warrants or
convertible, exchangeable or exercisable securities under which the Company is
or may become obligated to issue shares of Common Stock, and in such
circumstances the Per Share Selling Price of the Common Stock covered thereby
shall also include the exercise, exchange or conversion price thereof (in
addition to the consideration received by the Company upon such sale or issuance
less the fee amount as provided above). In case of any such security issued in a
Variable Rate Transaction or an MFN Transaction, the Per Share Selling Price
shall be deemed to be the lowest conversion or exercise price at which such
securities are converted or exercised or might have been converted or exercised
in the case of a Variable Rate Transaction, or the lowest adjustment price in
the case of an MFN Transaction, over the life of such securities. If shares are
issued for a consideration other than cash, the Per Share Selling Price shall be
the fair value of such consideration as determined in good faith by independent
certified public accountants mutually acceptable to the Company and the
Purchaser. In the event the Company directly or indirectly effectively reduces
3
the conversion, exercise or exchange price for any Convertible Securities which
are currently outstanding (other than pursuant to the terms of the transaction
documentation for such securities as in effect on the date hereof), then the Per
Share Selling Price shall equal such effectively reduced conversion, exercise or
exchange price.
"Principal Amount" shall refer to the sum of (i) the original principal
amount of this Debenture, (ii) all accrued but unpaid interest hereunder, and
(iii) any default payments owing under the Transaction Documents but not
previously paid or added to the Principal Amount.
"Principal Market" shall mean the NASDAQ National Market System or such
other principal market or exchange on which the Common Stock is then listed for
trading.
"Registration Statement" shall have the meaning set forth in the
Registration Rights Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Trading Day" shall mean a day on which there is trading on the NASDAQ
National Market System or such other market or exchange on which the Common
Stock is then principally traded.
"Underlying Shares" means the shares of Common Stock into which the
Debentures are convertible (including repayment in Common Stock as set forth
herein) in accordance with the terms hereof and the Purchase Agreement.
"Variable Rate Transaction" shall mean a transaction in which the
Company issues or sells (a) any debt or equity securities that are convertible
into, exchangeable or exercisable for, or include the right to receive
additional shares of Common Stock either (x) at a conversion, exercise or
exchange rate or other price that is based upon and/or varies with the trading
prices of or quotations for the Common Stock at any time after the initial
issuance of such debt or equity securities, or (y) with a fixed conversion,
exercise or exchange price that is subject to being reset at some future date
after the initial issuance of such debt or equity security or upon the
occurrence of specified or contingent events directly or indirectly related to
the business of the Company or the market for the Common Stock (but excluding
standard stock split anti-dilution provisions), or (b) any securities of the
Company pursuant to an "equity line" structure which provides for the sale, from
time to time, of securities of the Company which are registered for resale
pursuant to the Securities Act.
The following terms and conditions shall apply to this Debenture:
Section 1. Payments of Principal and Interest.
(a) Monthly Payments. Subject to the terms of this Section 1, the
Company shall repay one-third (1/3) of the original principal amount of this
Debenture (to the extent such amount has not been converted pursuant to Section
3(a) below), together with interest accrued to date on such portion of the
original principal amount plus any and all default payments owing under the
Transaction Documents but not previously paid (collectively, "Monthly Amount"),
in accordance with subsection 1(b) below, on the first business day of each
consecutive calendar month (each a "Repayment Date") beginning on the first such
day which occurs following the 31st day after the Effective Date.
4
(b) Cash or Common Stock. Subject to the terms hereof, the Company
shall have the right to satisfy payment of the Monthly Amount in full on each
Repayment Date either in cash or in shares of Common Stock (but not both) at the
Company's option. The Company shall deliver to all the holders of Debentures a
written irrevocable notice in the form of Exhibit B attached hereto electing to
pay such Monthly Amount in full on such Repayment Date in either cash or Common
Stock ("Repayment Election Notice"). Such Repayment Election Notice shall be
delivered at least thirty (30) days prior to the applicable Repayment Date but
no more than sixty (60) days prior to such Repayment Date (the date of such
notice being hereinafter referred to as the "Notice Date"). If such Repayment
Election Notice is not delivered within the prescribed period set forth in the
preceding sentence, then the repayment shall be made in either cash or shares of
Common Stock on the same terms hereunder at the Holder's sole option. If the
Company elects or is required to repay any Monthly Amount in cash on a Repayment
Date, then on such Repayment Date the Company shall pay to the Holder an amount
equal to 105% of such Monthly Amount in satisfaction of such obligation. If the
Company elects or is required to repay any Monthly Amount in shares of Common
Stock, the number of such shares to be issued for such Repayment Date shall be
the number determined by dividing (x) the Monthly Amount, by (y) the Market
Price as of such Repayment Date. Such shares shall be issued and delivered
within three (3) Trading Days following such Repayment Date and shall be duly
authorized, validly issued, fully paid, non-assessable and free and clear of all
encumbrances, restrictions and legends. If any Holder does not receive the
requisite number of shares of Common Stock in the form required above within
such three Trading Day period, the Holder shall have the option of either (a)
requiring the Company to issue and deliver all or a portion of such shares or
(b) canceling such election (whether by the Company or Holder) to pay the
Monthly Amount in Common Stock (in whole or in part), in which case the Company
shall immediately pay in cash the full Monthly Amount due hereunder or such
portion as the Holder specifies is to be paid in cash instead of Common Stock.
Except as otherwise provided in this Section 1, all holders of Debentures must
be treated equally with respect to such payment of the Monthly Amount in shares
of Common Stock.
(c) No Effective Registration. Notwithstanding anything to the contrary
herein, the Company shall be prohibited from exercising its right to repay the
Monthly Amount in shares of Common Stock (and must deliver cash in respect
thereof) on the applicable Repayment Date if at any time from the Notice Date
until the time at which the Holders receive such shares there fails to exist
Effective Registration or an Event of Default hereunder exists or occurs, unless
otherwise waived in writing by the Holder in whole or in part at the Holder's
option.
(d) Ownership/Issuance Limitations. Notwithstanding anything to the
contrary herein, the Company shall be prohibited from exercising its right to
repay the Monthly Amount in shares of Common Stock (and must deliver cash in
respect thereof) on the applicable Repayment Date to the extent, and only to the
extent, that such repayment in shares of Common Stock would result in the Holder
hereof exceeding the limitations contained in Section 3(i) below. In such event,
then (i) the Company on the Repayment Date shall repay such portion of the
Monthly Amount in shares of Common Stock as may be effected without exceeding
such limitations, (ii) the Repayment Date for the balance of the Monthly Amount
shall be extended until such time as such stock payment can be made without
violating Section 3(i), provided that if such stock payment cannot be made only
5
because it would violate Section 3(i)(C) below, then at the Holder's option
the Company shall redeem such Monthly Amount portion of this Debenture at
a redemption price equal to 120% of such Monthly Amount. If any portion of any
Monthly Amount remains unpaid as of the Maturity Date hereof, such amount shall
be repaid in cash on the Maturity Date (unless accelerated hereunder pursuant to
Section 4 below).
(e) Deemed Conversions. Any repayment of the Monthly Amount in shares
of Common Stock pursuant to the terms hereof shall constitute and be deemed a
conversion of such portion of the Principal Amount of this Debenture for all
purposes under this Debenture and the other Transaction Documents (except that
such conversion shall be at the Market Price and except as otherwise provided
herein).
Section 2. [Intentionally Deleted]
Section 3. Conversion.
(a) Conversion Right. Subject to the terms hereof and restrictions and
limitations contained herein, the Holder shall have the right, at such Holder's
option, at any time and from time to time to convert the outstanding Principal
Amount under this Debenture in whole or in part by delivering to the Company a
fully executed notice of conversion in the form of conversion notice attached
hereto as Exhibit A (the "Conversion Notice"), which may be transmitted by
facsimile. Notwithstanding anything to the contrary herein, this Debenture and
the outstanding Principal Amount hereunder shall not be convertible into Common
Stock to the extent that such conversion would result in the Holder hereof
exceeding the limitations contained in, or otherwise violating the provisions
of, Section 3(i) below. In the event of any conversions of the outstanding
Principal Amount under this Debenture in part pursuant to this Section 3(a),
such conversions shall be deemed to constitute conversions of outstanding
Principal Amount applying to Monthly Amounts for the Repayment Dates in
chronological order. For example, if the original principal amount under this
Debenture were $5,000,000 and the Holder converted $1,500,000 of such original
principal amount prior to the first Repayment Date, then (1) the principal
amount of the Monthly Amount due on the first Repayment Date would equal $0, (2)
the principal amount of the Monthly Amount due on the second Repayment Date
would equal $500,000, and (3) the principal amount of the Monthly Amount due on
the third, fourth and fifth Repayment Dates would equal $1,000,000 each.
(b) Common Stock Issuance Upon Conversion.
(i) Conversion Date Procedures. Upon conversion of this Debenture
pursuant to Section 3(a) above, the outstanding Principal Amount hereunder shall
be converted into such number of fully paid, validly issued and non-assessable
shares of Common Stock, free of any liens, claims and encumbrances, as is
determined by dividing the outstanding Principal Amount being converted by the
then applicable Conversion Price, provided, however, that for any such
conversions with a Conversion Date (as defined below) after delivery of a
Repayment Election Notice electing repayment in Common Stock but before the
applicable Repayment Date, such outstanding Principal Amount being converted, up
to an amount equal to the Monthly Amount, shall be divided by the then
applicable Market Price instead of the Conversion Price to determine the number
of Underlying Shares issuable. The date of any Conversion Notice hereunder and
any Repayment Date shall be referred to herein as the "Conversion Date". If a
6
conversion under this Debenture cannot be effected in full for any reason, or if
the Holder is converting less than all of the outstanding Principal Amount
hereunder pursuant to a Conversion Notice, the Company shall promptly deliver to
the Holder (but no later than five Trading Days after the Conversion Date) a
Debenture for such outstanding Principal Amount as has not been converted if
this Debenture has been surrendered to the Company for partial conversion. The
Holder shall not be required to physically surrender this Debenture to the
Company upon any conversion or payment for the Monthly Amount hereunder unless
the full outstanding Principal Amount represented by this Debenture is being
converted or repaid. The Holder and the Company shall maintain records showing
the outstanding Principal Amount so converted and repaid and the dates of such
conversions or repayments or shall use such other method, reasonably
satisfactory to the Holder and the Company, so as not to require physical
surrender of this Debenture upon each such conversion or repayment.
(ii) Stock Certificates or DWAC. The Company will deliver to the Holder
not later than three (3) Trading Days after the Conversion Date, a certificate
or certificates which shall be free of restrictive legends and trading
restrictions, representing the number of shares of Common Stock being acquired
upon the conversion of this Debenture. In lieu of delivering physical
certificates representing the shares of Common Stock issuable upon conversion of
this Debenture, provided the Company's transfer agent is participating in the
Depository Trust Company ("DTC") Fast Automated Securities Transfer ("FAST")
program, upon request of the Holder, the Company shall use commercially
reasonable efforts to cause its transfer agent to electronically transmit such
shares issuable upon conversion to the Holder (or its designee), by crediting
the account of the Holder's (or such designee's) prime broker with DTC through
its Deposit Withdrawal Agent Commission system (provided that the same time
periods herein as for stock certificates shall apply). If in the case of any
conversion hereunder, such certificate or certificates are not delivered to or
as directed by the Holder by the third Trading Day after the Conversion Date,
the Holder shall be entitled by written notice to the Company at any time on or
before its receipt of such certificate or certificates thereafter, to rescind
such conversion, in which event the Company shall immediately return this
Debenture tendered for conversion. If the Company fails to deliver to the Holder
such certificate or certificates (or shares through DTC) pursuant to this
Section 3(b) (free of any restrictions on transfer) in accordance herewith,
prior to the fifth Trading Day after the Conversion Date, the Company shall pay
to the Holder, in cash, an amount equal to 2% of the Principal Amount per month.
(c) Conversion Price Adjustments.
(i) Stock Dividends, Splits and Combinations. If the Company or any of
its subsidiaries, at any time while the Debentures are outstanding (A) shall pay
a stock dividend or otherwise make a distribution or distributions on any equity
securities (including instruments or securities convertible into or exchangeable
for such equity securities) in shares of Common Stock, (B) subdivide outstanding
Common Stock into a larger number of shares, or (C) combine outstanding Common
Stock into a smaller number of shares, then each Affected Conversion Price (as
defined below) shall be multiplied by a fraction, the numerator of which shall
be the number of shares of Common Stock outstanding before such event and the
denominator of which shall be the number of shares of Common Stock outstanding
after such event. Any adjustment made pursuant to this Section 3(c)(i) shall
become effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision or
combination.
7
As used herein, the Affected Conversion Prices (each an "Affected
Conversion Price") shall refer to: (i) the Conversion Price; (ii) each reported
daily closing price of the Common Stock on the Principal Market occurring on any
Trading Day included in the period used for determining the Market Price or
Conversion Price, as the case may be, which Trading Day occurred before the
record date in the case of events referred to in clause (A) of this subparagraph
3(c)(i) and before the effective date in the case of the events referred to in
clauses (B) and (C) of this subparagraph 3(c)(i).
(ii) Distributions. If the Company or any of its subsidiaries, at any
time while the Debentures are outstanding, shall distribute to all holders of
Common Stock evidences of its indebtedness or assets or cash or rights or
warrants to subscribe for or purchase any security of the Company or any of its
subsidiaries (excluding those referred to in Section 3(c)(i) above), then
concurrently with such distributions to holders of Common Stock, the Company
shall distribute to holders of the Debentures the amount of such indebtedness,
assets, cash or rights or warrants which the holders of Debentures would have
received had all their Debentures been converted into Common Stock at the then
applicable Market Price immediately prior to the record date for such
distribution.
(iii) Common Stock Issuances. In the event that the Company or any of
its subsidiaries (A) issues or sells any Common Stock or securities which are
convertible into or exercisable or exchangeable for Common Stock (other than
Debentures or Warrants issued under the Purchase Agreement), or any warrants or
other rights to subscribe for or to purchase or any options for the purchase of
its Common Stock or (B) directly or indirectly effectively reduces the
conversion, exercise or exchange price for any Convertible Securities which are
currently outstanding (other than pursuant to terms existing on the date
hereof), at or to an effective Per Share Selling Price which is less than $21.00
(which such figure shall be appropriately and equitably adjusted for stock
splits, stock dividends, recapitalizations and similar events), then in each
such case, the Conversion Price in effect immediately prior to such issue or
sale or record date, as applicable, shall be reduced effective concurrently with
such issue or sale to an amount determined by multiplying the Conversion Price
then in effect by a fraction, (x) the numerator of which shall be the sum of (1)
the number of shares of Common Stock outstanding immediately prior to such issue
or sale, plus (2) the number of shares of Common Stock which the aggregate
consideration received by the Company for such additional shares would purchase
at such Conversion Price, and (y) the denominator of which shall be the number
of shares of Common Stock of the Company outstanding immediately after such
issue or sale.
For the purposes of the foregoing adjustments, in the case of the
issuance of any Convertible Securities, the maximum number of shares of Common
Stock issuable upon exercise, exchange or conversion of such Convertible
Securities shall be deemed to be outstanding, provided that no further
adjustment shall be made upon the actual issuance of Common Stock upon exercise,
exchange or conversion of such Convertible Securities.
For purposes of this Section 3(c)(iii), if an event occurs that
triggers more than one of the above adjustment provisions, then only one
adjustment shall be made and the calculation method which yields the greatest
downward adjustment in the Conversion Price shall be used.
8
(iv) Rounding of Adjustments. All calculations under this Section 3 or
Section 1 shall be made to the nearest cent or the nearest 1/100th of a share,
as the case may be.
(v) Notice of Adjustments. Whenever any Affected Conversion Price is
adjusted pursuant to Section 3(c)(ii) or (iii) above, the Company shall promptly
deliver to each holder of the Debentures, a notice setting forth the Affected
Conversion Price after such adjustment and setting forth a brief statement of
the facts requiring such adjustment, provided that any failure to so provide
such notice shall not affect the automatic adjustment hereunder.
(vi) Change in Control Transactions. In case of any Change in Control
Transaction, the Holder shall have the right thereafter to, at its option, (A)
convert this Debenture, in whole or in part, at the then applicable Market Price
into the shares of stock and other securities, cash and/or property receivable
upon or deemed to be held by holders of Common Stock following such Change in
Control Transaction, and the Holder shall be entitled upon such event to receive
such amount of securities, cash or property as the shares of the Common Stock of
the Company into which this Debenture could have been converted immediately
prior to such Change in Control Transaction would have been entitled if such
conversion were permitted, subject to such further applicable adjustments set
forth in this Section 3 or (B) require the Company or its successor to redeem
this Debenture, in whole or in part, at a redemption price equal to the greater
of (i) the outstanding Principal Amount being redeemed and (ii) the product of
(x) the arithmetic mean of the Fair Market Price for the five (5) Trading Days
immediately preceding the Holder's election to have its Debentures redeemed and
(y) the Conversion Ratio. The terms of any such Change in Control Transaction
shall include such terms so as to continue to give to the Holders the right to
receive the amount of securities, cash and/or property upon any conversion or
redemption following such Change in Control Transaction to which a holder of the
number of shares of Common Stock deliverable upon such conversion would have
been entitled in such Change in Control Transaction, and interest payable
hereunder shall be in cash or such new securities and/or property, at the
Holder's option. This provision shall similarly apply to successive
reclassifications, consolidations, mergers, sales, transfers or share exchanges.
(vii) Notice of Certain Events. If:
A. the Company shall declare a dividend (or any other
distribution) on its Common Stock; or
B. the Company shall declare a special nonrecurring cash dividend
on or a redemption of its Common Stock; or
C. the Company shall authorize the granting to all holders of the
Common Stock rights or warrants to subscribe for or purchase
any shares of capital stock of any class or of any rights; or
9
D. the approval of any stockholders of the Company shall be
required in connection with any reclassification of the Common
Stock of the Company, any consolidation or merger to which the
Company is a party, any sale or transfer of all or
substantially all of the assets of the Company, of any
compulsory share of exchange whereby the Common Stock is
converted into other securities, cash or property; or
E. the Company shall authorize the voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the
Company;
then the Company shall cause to be filed at each office or agency maintained for
the purpose of conversion of this Debenture, and shall cause to be mailed to the
Holder at its last address as it shall appear upon the books of the Company, on
or prior to the date notice to the Company's stockholders generally is given, a
notice stating (x) the date on which a record is to be taken for the purpose of
such dividend, distribution, redemption, rights or warrants, or if a record is
not to be taken, the date as of which the holders of Common Stock of record to
be entitled to such dividend, distributions, redemption, rights or warrants are
to be determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of Common Stock of
record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange.
(d) Reservation and Issuance of Underlying Securities. The Company
covenants that it will at all times reserve and keep available out of its
authorized and unissued Common Stock solely for the purpose of issuance upon
conversion of this Debenture (including repayments in stock), free from
preemptive rights or any other actual contingent purchase rights of persons
other than the holders of the Debentures, not less than such number of shares of
Common Stock as shall (subject to any additional requirements of the Company as
to reservation of such shares set forth in the Purchase Agreement) be issuable
(taking into account the adjustments under this Section 3 but without regard to
any ownership limitations contained herein) upon the conversion of this
Debenture hereunder in Common Stock (including repayments in stock). The Company
covenants that all shares of Common Stock that shall be so issuable shall, upon
issue, be duly authorized, validly issued, fully paid, nonassessable and freely
tradeable.
(e) No Fractions. Upon a conversion hereunder the Company shall not be
required to issue stock certificates representing fractions of shares of Common
Stock, but may if otherwise permitted, make a cash payment in respect of any
final fraction of a share based on the closing price of a share of Common Stock
at such time. If the Company elects not, or is unable, to make such a cash
payment, the Holder shall be entitled to receive, in lieu of the final fraction
of a share, one whole share of Common Stock.
(f) Charges, Taxes and Expenses. Issuance of certificates for shares of
Common Stock upon the conversion of this Debenture (including repayment in
stock) shall be made without charge to the holder hereof for any issue or
transfer tax or other incidental expense in respect of the issuance of such
certificate, all of which taxes and expenses shall be paid by the Company, and
such certificates shall be issued in the name of the Holder or in such name or
names as may be directed by the Holder; provided, however, that in the event
certificates for shares of Common Stock are to be issued in a name other than
10
the name of the Holder, this Debenture when surrendered for conversion shall be
accompanied by an assignment form; and provided further, that the Company shall
not be required to pay any tax or taxes which may be payable in respect of any
such transfer.
(g) Cancellation. After all of the Principal Amount (including accrued
but unpaid interest and default payments at any time owed on this Debenture)
have been paid in full or converted into Common Stock, this Debenture shall
automatically be deemed canceled and the Holder shall promptly surrender the
Debenture to the Company at the Company's principal executive offices.
(h) Notices Procedures. Any and all notices or other communications or
deliveries to be provided by the Holder hereunder, including, without
limitation, any Conversion Notice, shall be in writing and delivered personally,
by confirmed facsimile, or by a nationally recognized overnight courier service
to the Company at the facsimile telephone number or address of the principal
place of business of the Company as set forth in the Purchase Agreement. Any and
all notices or other communications or deliveries to be provided by the Company
hereunder shall be in writing and delivered personally, by facsimile, or by a
nationally recognized overnight courier service addressed to the Holder at the
facsimile telephone number or address of the Holder appearing on the books of
the Company, or if no such facsimile telephone number or address appears, at the
principal place of business of the Holder. Any notice or other communication or
deliveries hereunder shall be deemed delivered (i) upon receipt, when delivered
personally, (ii) when sent by facsimile, upon receipt if received on a Business
Day prior to 5:00 p.m. (Eastern Time), or on the first Business Day following
such receipt if received on a Business Day after 5:00 p.m. (Eastern Time) or
(iii) upon receipt, when deposited with a nationally recognized overnight
courier service.
(i) Conversion Limitations.
(A) 9.9% Limitation. Notwithstanding anything to the contrary
contained herein, the number of shares of Common Stock that may be
acquired by the Holder upon conversion pursuant to the terms hereof
shall not exceed a number that, when added to the total number of
shares of Common Stock deemed beneficially owned by such Holder (other
than by virtue of the ownership of securities or rights to acquire
securities (including the Debentures) that have limitations on the
Holder's right to convert, exercise or purchase similar to the
limitation set forth herein), together with all shares of Common Stock
deemed beneficially owned at such time (other than by virtue of the
ownership of securities or rights to acquire securities that have
limitations on the right to convert, exercise or purchase similar to
the limitation set forth herein) by the holder's "affiliates" at such
time (as defined in Rule 144 of the Act) ("Aggregation Parties") that
would be aggregated for purposes of determining whether a group under
Section 13(d) of the Securities Exchange Act of 1934 as amended,
exists, would exceed 9.9% of the total issued and outstanding shares of
the Common Stock (the "Restricted Ownership Percentage"). Each holder
shall have the right (w) at any time and from time to time to reduce
its Restricted Ownership Percentage immediately upon notice to the
Company and (x) (subject to waiver) at any time and from time to time,
to increase its Restricted Ownership Percentage immediately in the
event of the announcement as pending or planned, of a Change in Control
Transaction.
11
(B) Limitation Covenants. The Holder covenants at all times on
each day (each such day being referred to as a "Covenant Day") as
follows: During the balance of such Covenant Day and the succeeding
sixty-one (61) days (the balance of such Covenant Day and the
succeeding 61 days being referred to as the "Covenant Period") such
Holder will not acquire shares of Common Stock pursuant to any right
(including conversion of Debentures) existing at the commencement of
the Covenant Period to the extent the number of shares so acquired by
such Holder and its Aggregation Parties (ignoring all dispositions)
would exceed:
(x) the Restricted Ownership Percentage of the
total number of shares of Common Stock
outstanding at the commencement of the
Covenant Period, minus
(y) the number of shares of Common Stock
actually owned by such Holder and its
Aggregation Parties at the commencement of
the Covenant Period.
A new and independent covenant will be deemed to be given by the Holder
as of each moment of each Covenant Day. No covenant will terminate,
diminish or modify any other covenant. The Holder agrees to comply with
each such covenant. This Section 3(i)(B) controls in the case of any
conflict with any other provision of the Purchase Agreement or any
agreement entered into in connection therewith.
The Company's obligation to issue shares of Common Stock which would
exceed such limits referred to in this Section 3(i) shall be suspended
to the extent necessary until such time, if any, as shares of Common
Stock may be issued in compliance with such restrictions.
(C) Overall Limit on Common Stock Issuable. Notwithstanding
anything contained herein to the contrary, the number of shares of
Common Stock issuable by the Company and acquirable by the Holders of
Debentures, together the number of shares issued under the Warrants,
shall not exceed 19.9% of the number of shares of Common Stock
outstanding on the Closing Date, subject to appropriate adjustment for
stock splits, stock dividends, or other similar recapitalizations
affecting the Common Stock (the "Maximum Common Stock Issuance"),
unless the issuance of shares hereunder in excess of the Maximum Common
Stock Issuance shall first be approved by the Company's shareholders in
accordance with applicable law and the By-laws and Articles of
Incorporation of the Company. If at any point in time and from time to
time (each a "Trigger Date") the number of Common Shares issued
pursuant to conversion of the Debentures and exercise of the Warrants,
together with the number of Common Shares that would then be issuable
by the Company in the event of conversion of all the Debentures and
exercise of all the Warrants then outstanding, would exceed the Maximum
Common Stock Issuance but for this Section 3(i)(C), then the Company
shall, at the Company's election, either (A) promptly call a
shareholders meeting to obtain shareholder approval for the issuance of
Common Shares hereunder in excess of the Maximum Common Stock Issuance,
which such shareholder approval shall be obtained within 60 days of the
Trigger Date, or (B) purchase from the holders of Debentures and
Warrants on a pro rata basis such Principal Amount of Debentures and
12
number of Warrants which cannot be converted or exercised due to such
Maximum Common Stock Issuance limitation ("Shortfall") at a redemption
price equal to the "Mandatory Repurchase Price" (as defined in the
Registration Rights Agreement), which such redemption price shall be
paid within three (3) Trading Days after a Trigger Date if this clause
(B) is elected. The Company shall make such election with two (2) days
following the Trigger Date by giving written notice to all holders of
Debentures and Warrants. If the Company fails to timely make such
election, or elects clause (A) but then fails to obtain such
shareholder approval within 60 days following the Trigger Date, then
the Company shall purchase the Shortfall at the Mandatory Repurchase
Price within three (3) Trading Days following any such failure.
Section 4. Defaults and Remedies.
(a) Events of Default. An "Event of Default" is: (i) a default in
payment of the Principal Amount or accrued but unpaid interest thereon
of any of the Debentures on or after the date such payment is due (to
the extent such principal and/or amount has not been converted into
Common Stock in accordance with the terms hereof), which default
continues for 5 business days after written notice of such non-payment
has been received by the Company; (ii) a default in the timely issuance
of Underlying Shares upon and in accordance with terms hereof, which
default continues for five business days after the Company has received
written notice informing the Company that it has failed to issue shares
or deliver stock certificates within the fifth day following the
Conversion Date; (iii) failure by the Company for thirty (30) days
after written notice has been received by the Company to comply with
any material provision of any of the Debentures, the Purchase
Agreement, the Registration Rights Agreement or the Warrants (including
without limitation the failure to issue the requisite number of shares
of Common Stock upon conversion hereof and the failure to redeem
Debentures upon the Holder's request following a Change in Control
Transaction pursuant to Section 3(c)(vi), (iv) a material breach by the
Company of its representations or warranties in the Purchase Agreement,
Registration Rights Agreement or Warrants; (v) any default after any
cure period under, or acceleration prior to maturity of, any mortgage,
indenture or instrument under which there may be issued or by which
there may be secured or evidenced any indebtedness for money borrowed
by the Company for in excess of $1 million or for money borrowed the
repayment of which is guaranteed by the Company for in excess of $1
million, whether such indebtedness or guarantee now exists or shall be
created hereafter; or (vi) if the Company is subject to any Bankruptcy
Event.
(b) Remedies. If an Event of Default occurs and is continuing
with respect to any of the Debentures, the Holder may declare all of
the then outstanding Principal Amount of this Debenture and all other
Debentures held by the Holder, including any interest due thereon, to
be due and payable immediately, except that in the case of an Event of
Default arising from events described in clauses (v) and (vi) of
Section 4(a), this Debenture shall become due and payable without
further action or notice. In the event of such acceleration, the amount
due and owing to the Holder shall be the greater of (1) 125% of the
outstanding Principal Amount of the Debentures held by the Holder (plus
all accrued and unpaid interest, if any) and (2) the product of (A) the
highest closing price for the five (5) Trading days immediately
preceding the Holder's acceleration and (B) the Conversion Ratio. In
either case the Company shall pay interest on such amount in cash at
the Default Rate to the Holder if such amount is not paid within 7 days
of Holder's request. The remedies under this Debenture shall be
cumulative.
13
Section 5. General.
(a) Payment of Expenses. The Company agrees to pay all reasonable
charges and expenses, including attorneys' fees and expenses, which may be
incurred by the Holder in successfully enforcing this Debenture and/or
collecting any amount due under this Debenture.
(b) Savings Clause. In case any provision of this Debenture is held by
a court of competent jurisdiction to be excessive in scope or otherwise invalid
or unenforceable, such provision shall be adjusted rather than voided, if
possible, so that it is enforceable to the maximum extent possible, and the
validity and enforceability of the remaining provisions of this Debenture will
not in any way be affected or impaired thereby. In no event shall the amount of
interest paid hereunder exceed the maximum rate of interest on the unpaid
principal balance hereof allowable by applicable law. If any sum is collected in
excess of the applicable maximum rate, the excess collected shall be applied to
reduce the principal debt. If the interest actually collected hereunder is still
in excess of the applicable maximum rate, the interest rate shall be reduced so
as not to exceed the maximum allowable under law.
(c) Amendment. Neither this Debenture nor any term hereof may be
amended, waived, discharged or terminated other than by a written instrument
signed by the Company and Holders of 75% of the Principal Amount of all
Debentures.
(d) Assignment, Etc. The Holder may assign or transfer this Debenture
to any transferee only with the prior written consent of the Company, which may
not be unreasonably withheld or delayed, provided that (i) the Holder may assign
or transfer this Debenture to any of such Holder's affiliates without the
consent of the Company and (ii) upon any Event of Default, the Holder may assign
or transfer this Note without the consent of the Company. The Holder shall
notify the Company of any such assignment or transfer promptly. This Debenture
shall be binding upon the Company and its successors and shall inure to the
benefit of the Holder and its successors and permitted assigns.
(e) No Waiver. No failure on the part of the Holder to exercise, and no
delay in exercising any right, remedy or power hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise by the Holder of any
right, remedy or power hereunder preclude any other or future exercise of any
other right, remedy or power. Each and every right, remedy or power hereby
granted to the Holder or allowed it by law or other agreement shall be
cumulative and not exclusive of any other, and may be exercised by the Holder
from time to time.
(f) Governing Law; Jurisdiction.
(i) Governing Law. THIS DEBENTURE WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ANY
CONFLICTS OF LAWS PROVISIONS THEREOF THAT WOULD OTHERWISE REQUIRE THE
APPLICATION OF THE LAW OF ANY OTHER JURISDICTION.
(ii) Jurisdiction. The Company irrevocably submits to the exclusive
jurisdiction of any State or Federal Court sitting in the State of New York,
County of New York, or San Jose, California, over any suit, action, or
14
proceeding arising out of or relating to this Debenture. The Company irrevocably
waives, to the fullest extent permitted by law, any objection which it may now
or hereafter have to the laying of the venue of any such suit, action, or
proceeding brought in such a court and any claim that suit, action, or
proceeding has been brought in an inconvenient forum.
The Company agrees that the service of process upon it mailed by
certified or registered mail (and service so made shall be deemed complete three
days after the same has been posted as aforesaid) or by personal service shall
be deemed in every respect effective service of process upon it in any such suit
or proceeding. Nothing herein shall affect Holder's right to serve process in
any other manner permitted by law. The Company agrees that a final
non-appealable judgement in any such suit or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on such judgment or in any other
lawful manner.
(iii) NO JURY TRIAL. THE COMPANY HERETO KNOWINGLY AND VOLUNTARILY
WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY
LITIGATION BASED ON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
DEBENTURE.
(g) Replacement Debentures. This Debenture may be exchanged by Holder
at any time and from time to time for a Debenture or Debentures with different
denominations representing an equal aggregate outstanding Principal Amount, as
reasonably requested by Holder, upon surrendering the same. No service charge
will be made for such registration or exchange. In the event that Holder
notifies the Company that this Debenture has been lost, stolen or destroyed, a
replacement Debenture identical in all respects to the original Debenture
(except for registration number and Principal Amount, if different than that
shown on the original Debenture), shall be issued to the Holder, provided that
the Holder executes and delivers to the Company an agreement reasonably
satisfactory to the Company to indemnify the Company from any loss incurred by
it in connection with the Debenture.
[Signature Page Follows]
15
IN WITNESS WHEREOF, the Company has caused this Debenture to be duly
executed on the day and in the year first above written.
XxxxxxxXxxxxxxxxx.xxx, Inc.
By: _______________________
Name:
Title:
Attest:
Sign: ___________________________
Print Name:
16
EXHIBIT A
FORM OF CONVERSION NOTICE
(To be Executed by the Holder
in order to Convert a Debenture)
The undersigned hereby elects to convert the aggregate outstanding Principal
Amount (as defined in the Debenture) indicated below of this Debenture into
shares of Common Stock, $0.001 par value per share (the "Common Stock"), of
XxxxxxxXxxxxxxxxx.xxx, Inc. (the "Company") according to the conditions hereof,
as of the date written below. If shares are to be issued in the name of a person
other than undersigned, the undersigned will pay all transfer taxes payable with
respect thereto and is delivering herewith such certificates and opinions as
reasonably requested by the Company in accordance therewith. No fee will be
charged to the holder for any conversion, except for such transfer taxes, if
any. The undersigned represents as of the date hereof that, after giving effect
to the conversion of this Debenture pursuant to this Conversion Notice, the
undersigned will not exceed the "Restricted Ownership Percentage" contained in
Section 3(i)(A) of this Debenture and will remain in compliance with Section
3(i)(B) of this Debenture.
Conversion information:
-------------------------------------------------------
Date to Effect Conversion
-------------------------------------------------------
Aggregate Principal Amount of Debenture Being Converted
-------------------------------------------------------
Number of shares of Common Stock to be Issued
-------------------------------------------------------
Applicable Conversion Price
-------------------------------------------------------
Signature
-------------------------------------------------------
Name
-------------------------------------------------------
Address
17
EXHIBIT B
FORM OF REPAYMENT ELECTION NOTICE
To: [Holder at Holder's Address]
Pursuant to Section 1(b) of Debenture No. ______ of
XxxxxxxXxxxxxxxxx.xxx, Inc. issued on March __, 2001, we hereby notify you that
we are irrevocably electing to repay the outstanding Monthly Amount (as defined
in the Debenture) due on the Repayment Date (as defined in the Debenture) which
occurs on _____________, 2001 (check one):
____________ In full in cash on such Repayment Date.
____________ In full in shares of the Company's Common
Stock within three (3) Trading Days following such
Repayment Date.
XxxxxxxXxxxxxxxxx.xxx, Inc.
By: ______________________
Name:
Title:
EXHIBIT 10.61
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION 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.
THIS DEBENTURE DOES NOT REQUIRE PHYSICAL SURRENDER OF THE DEBENTURE IN THE EVENT
OF A PARTIAL REDEMPTION OR CONVERSION. AS A RESULT, FOLLOWING ANY REDEMPTION OR
CONVERSION OF ANY PORTION OF THIS DEBENTURE, THE OUTSTANDING PRINCIPAL AMOUNT
REPRESENTED BY THIS DEBENTURE MAY BE LESS THAN THE PRINCIPAL AMOUNT AND ACCRUED
INTEREST SET FORTH BELOW.
7% CONVERTIBLE DEBENTURE DUE DECEMBER 31, 2001
OF
XxxxxxxXxxxxxxxxx.xxx, Inc.
Debenture No.: 2 Original Principal Amount: $1,500,000
Issuance Date: March ___, 0000 Xxx Xxxx, Xxx Xxxx
THIS DEBENTURE ("Debenture") is one of a duly authorized issue of
debentures of XxxxxxxXxxxxxxxxx.xxx, Inc., a corporation duly organized and
existing under the laws of the State of Delaware (the "Company"), designated as
the Company's 7% Convertible Debentures Due December 31, 2001 ("Maturity Date")
in an aggregate principal amount (when taken together with the original
principal amounts of all other Debentures) which does not exceed Three Million
U.S. Dollars (U.S. $3,000,000) (the "Debentures").
FOR VALUE RECEIVED, the Company hereby promises to pay to the order of
XXXXXXX INTERNATIONAL, L.P. or its registered assigns or successors-in-interest
("Holder") the principal sum of One Million Five Hundred Thousand Dollars (U.S.
$1,500,000), together with all accrued but unpaid interest thereon, if any, on
the Maturity Date, to the extent such principal amount and interest has not been
converted into the Company's Common Stock, $0.001 par value per share (the
"Common Stock"), in accordance with the terms hereof. Interest on the unpaid
principal balance hereof shall accrue at the rate of 7% per annum from the date
of original issuance hereof (the "Issuance Date") until the same becomes due and
payable on the Maturity Date, or such earlier date upon acceleration or by
conversion or redemption in accordance with the terms hereof or of the other
Transaction Documents. Interest on this Debenture shall accrue daily commencing
on the Issuance Date, shall be compounded semi-annually and shall be computed on
the basis of a 360-day year, 30-day months and actual days elapsed and shall be
payable in accordance with Section 1 hereof. Notwithstanding anything contained
herein, this Debenture shall bear interest on the due and unpaid Principal
Amount from and after the occurrence and during the continuance of an Event of
Default pursuant to Section 4(a), at the rate (the "Default Rate") equal to the
lower of twenty percent (20%) per annum or the highest rate permitted by law.
Unless otherwise agreed or required by applicable law, payments will be applied
first to any unpaid collection costs, then to unpaid interest and fees and any
remaining amount to principal.
All payments of principal and interest on this Debenture shall be made
in lawful money of the United States of America by wire transfer of immediately
available funds to such account as the Holder may from time to time designate by
written notice in accordance with the provisions of this Debenture or by Company
check. This Debenture may not be prepaid in whole or in part except as otherwise
provided herein or in the Transaction Documents. Whenever any amount expressed
to be due by the terms of this Debenture is due on any day which is not a
Business Day (as defined below), the same shall instead be due on the next
succeeding day which is a Business Day.
Capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the Securities Purchase Agreement dated on or about the
Issuance Date pursuant to which the Debentures were originally issued (the
"Purchase Agreement"). For purposes hereof the following terms shall have the
meanings ascribed to them below:
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which commercial banks in the City of New York are authorized or required
by law or executive order to remain closed.
"Change in Control Transaction" will be deemed to exist if (i) there
occurs any consolidation, merger or other business combination of the Company
with or into any other corporation or other entity or person (whether or not the
Company is the surviving corporation), or any other corporate reorganization or
transaction or series of related transactions in which in any of such events the
voting stockholders of the Company prior to such event cease to own 50% or more
of the voting stock, or corresponding voting equity interests, of the surviving
corporation after such event (including without limitation any "going private"
transaction under Rule 13e-3 promulgated pursuant to the Exchange Act or tender
offer by the Company under Rule 13e-4 promulgated pursuant to the Exchange Act
for 20% or more of the Company's Common Stock), (ii) any person (as defined in
Section 13(d) of the Exchange Act), together with its affiliates and associates
(as such terms are defined in Rule 405 under the Act), beneficially owns or is
deemed to beneficially own (as described in Rule 13d-3 under the Exchange Act
without regard to the 60-day exercise period) in excess of 50% of the Company's
voting power, (iii) there is a replacement of more than one-half of the members
of the Company's Board of Directors which is not approved by those individuals
who are members of the Company's Board of Directors on the date thereof, or (iv)
in one or a series of related transactions, there is a sale or transfer of all
or substantially all of the assets of the Company, determined on a consolidated
basis, or (v) the execution by the Company of an agreement to which the Company
is a party or which it is bound providing for an event set forth in (i), (ii),
(iii) or (iv) above.
"Conversion Ratio" means, at any time, a fraction, of which the
numerator is the entire outstanding Principal Amount of this Debenture (or such
portion thereof that is being redeemed or repurchased), and of which the
denominator is the Market Price for the full calendar month immediately
preceding such time.
2
"Conversion Price" shall equal $20.50, provided that if the arithmetic
mean of the closing bid price ("Average Price") as reported by the Principal
Market over the five (5) Trading Days immediately preceding the 30th calendar
day following the Closing Date is less than $19.50, then the Conversion Price
shall instead equal 105% of the Average Price (which Conversion Price shall be
subject to adjustment as set forth herein, and the closing bid prices used to
determine the Conversion Price shall be appropriately and equitably adjusted for
any stock splits, stock dividends, recapitalizations and the like).
"Convertible Securities" means any convertible securities, warrants,
options or other rights to subscribe for or to purchase or exchange for, shares
of Common Stock.
"Effective Date" means the date on which a Registration Statement
covering all the Underlying Shares and other Registrable Securities (as defined
in the Registration Rights Agreement) is declared effective by the SEC.
"Effective Registration" shall have the meaning set forth in the
Purchase Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Market Price" shall equal the lesser of (i) the Conversion Price and
(ii) 90% of the arithmetic mean of the ten (10) lowest closing prices of the
Common Stock as reported by the Principal Market during the twenty-two (22)
Trading Days immediately preceding the date on which such Market Price is being
determined.
"MFN Transaction" shall mean a transaction in which the Company issues
or sells any securities in a capital raising transaction or series of related
transactions (the "MFN Offering") which grants to the investor (the "MFN
Investor") the right to receive additional securities based upon future capital
raising transactions of the Company on terms more favorable than those granted
to the MFN Investor in the MFN Offering.
"Per Share Selling Price" shall include the amount actually paid by
third parties for each share of Common Stock in a sale or issuance by the
Company. In the event a fee is paid by the Company in connection with such
transaction directly or indirectly to such third party or its affiliates, any
such fee shall be deducted from the selling price pro rata to all shares sold in
the transaction to arrive at the Per Share Selling Price. A sale of shares of
Common Stock shall include the sale or issuance of rights, options, warrants or
convertible, exchangeable or exercisable securities under which the Company is
or may become obligated to issue shares of Common Stock, and in such
circumstances the Per Share Selling Price of the Common Stock covered thereby
shall also include the exercise, exchange or conversion price thereof (in
addition to the consideration received by the Company upon such sale or issuance
less the fee amount as provided above). In case of any such security issued in a
Variable Rate Transaction or an MFN Transaction, the Per Share Selling Price
shall be deemed to be the lowest conversion or exercise price at which such
securities are converted or exercised or might have been converted or exercised
in the case of a Variable Rate Transaction, or the lowest adjustment price in
the case of an MFN Transaction, over the life of such securities. If shares are
issued for a consideration other than cash, the Per Share Selling Price shall be
the fair value of such consideration as determined in good faith by independent
certified public accountants mutually acceptable to the Company and the
3
Purchaser. In the event the Company directly or indirectly effectively reduces
the conversion, exercise or exchange price for any Convertible Securities which
are currently outstanding (other than pursuant to the terms of the transaction
documentation for such securities as in effect on the date hereof), then the Per
Share Selling Price shall equal such effectively reduced conversion, exercise or
exchange price.
"Principal Amount" shall refer to the sum of (i) the original principal
amount of this Debenture, (ii) all accrued but unpaid interest hereunder, and
(iii) any default payments owing under the Transaction Documents but not
previously paid or added to the Principal Amount.
"Principal Market" shall mean the NASDAQ National Market System or such
other principal market or exchange on which the Common Stock is then listed for
trading.
"Registration Statement" shall have the meaning set forth in the
Registration Rights Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Trading Day" shall mean a day on which there is trading on the NASDAQ
National Market System or such other market or exchange on which the Common
Stock is then principally traded.
"Underlying Shares" means the shares of Common Stock into which the
Debentures are convertible (including repayment in Common Stock as set forth
herein) in accordance with the terms hereof and the Purchase Agreement.
"Variable Rate Transaction" shall mean a transaction in which the
Company issues or sells (a) any debt or equity securities that are convertible
into, exchangeable or exercisable for, or include the right to receive
additional shares of Common Stock either (x) at a conversion, exercise or
exchange rate or other price that is based upon and/or varies with the trading
prices of or quotations for the Common Stock at any time after the initial
issuance of such debt or equity securities, or (y) with a fixed conversion,
exercise or exchange price that is subject to being reset at some future date
after the initial issuance of such debt or equity security or upon the
occurrence of specified or contingent events directly or indirectly related to
the business of the Company or the market for the Common Stock (but excluding
standard stock split anti-dilution provisions), or (b) any securities of the
Company pursuant to an "equity line" structure which provides for the sale, from
time to time, of securities of the Company which are registered for resale
pursuant to the Securities Act.
The following terms and conditions shall apply to this Debenture:
Section 1. Payments of Principal and Interest.
(a) Monthly Payments. Subject to the terms of this Section 1, the
Company shall repay one-third (1/3) of the original principal amount of this
Debenture (to the extent such amount has not been converted pursuant to Section
3(a) below), together with interest accrued to date on such portion of the
original principal amount plus any and all default payments owing under the
Transaction Documents but not previously paid (collectively, "Monthly Amount"),
in accordance with subsection 1(b) below, on the first business day of each
consecutive calendar month (each a "Repayment Date") beginning on the first such
day which occurs following the 31st day after the Effective Date.
4
(b) Cash or Common Stock. Subject to the terms hereof, the Company
shall have the right to satisfy payment of the Monthly Amount in full on each
Repayment Date either in cash or in shares of Common Stock (but not both) at the
Company's option. The Company shall deliver to all the holders of Debentures a
written irrevocable notice in the form of Exhibit B attached hereto electing to
pay such Monthly Amount in full on such Repayment Date in either cash or Common
Stock ("Repayment Election Notice"). Such Repayment Election Notice shall be
delivered at least thirty (30) days prior to the applicable Repayment Date but
no more than sixty (60) days prior to such Repayment Date (the date of such
notice being hereinafter referred to as the "Notice Date"). If such Repayment
Election Notice is not delivered within the prescribed period set forth in the
preceding sentence, then the repayment shall be made in either cash or shares of
Common Stock on the same terms hereunder at the Holder's sole option. If the
Company elects or is required to repay any Monthly Amount in cash on a Repayment
Date, then on such Repayment Date the Company shall pay to the Holder an amount
equal to 105% of such Monthly Amount in satisfaction of such obligation. If the
Company elects or is required to repay any Monthly Amount in shares of Common
Stock, the number of such shares to be issued for such Repayment Date shall be
the number determined by dividing (x) the Monthly Amount, by (y) the Market
Price as of such Repayment Date. Such shares shall be issued and delivered
within three (3) Trading Days following such Repayment Date and shall be duly
authorized, validly issued, fully paid, non-assessable and free and clear of all
encumbrances, restrictions and legends. If any Holder does not receive the
requisite number of shares of Common Stock in the form required above within
such three Trading Day period, the Holder shall have the option of either (a)
requiring the Company to issue and deliver all or a portion of such shares or
(b) canceling such election (whether by the Company or Holder) to pay the
Monthly Amount in Common Stock (in whole or in part), in which case the Company
shall immediately pay in cash the full Monthly Amount due hereunder or such
portion as the Holder specifies is to be paid in cash instead of Common Stock.
Except as otherwise provided in this Section 1, all holders of Debentures must
be treated equally with respect to such payment of the Monthly Amount in shares
of Common Stock.
(c) No Effective Registration. Notwithstanding anything to the contrary
herein, the Company shall be prohibited from exercising its right to repay the
Monthly Amount in shares of Common Stock (and must deliver cash in respect
thereof) on the applicable Repayment Date if at any time from the Notice Date
until the time at which the Holders receive such shares there fails to exist
Effective Registration or an Event of Default hereunder exists or occurs, unless
otherwise waived in writing by the Holder in whole or in part at the Holder's
option.
(d) Ownership/Issuance Limitations. Notwithstanding anything to the
contrary herein, the Company shall be prohibited from exercising its right to
repay the Monthly Amount in shares of Common Stock (and must deliver cash in
respect thereof) on the applicable Repayment Date to the extent, and only to the
extent, that such repayment in shares of Common Stock would result in the Holder
hereof exceeding the limitations contained in Section 3(i) below. In such event,
then (i) the Company on the Repayment Date shall repay such portion of the
Monthly Amount in shares of Common Stock as may be effected without exceeding
such limitations, (ii) the Repayment Date for the balance of the Monthly Amount
shall be extended until such time as such stock payment can be made without
violating Section 3(i), provided that if such stock payment cannot be made only
because it would violate Section 3(i)(C) below, then at the Holder's option the
5
Company shall redeem such Monthly Amount portion of this Debenture at a
redemption price equal to 120% of such Monthly Amount. If any portion of any
Monthly Amount remains unpaid as of the Maturity Date hereof, such amount shall
be repaid in cash on the Maturity Date (unless accelerated hereunder pursuant to
Section 4 below).
(e) Deemed Conversions. Any repayment of the Monthly Amount in shares
of Common Stock pursuant to the terms hereof shall constitute and be deemed a
conversion of such portion of the Principal Amount of this Debenture for all
purposes under this Debenture and the other Transaction Documents (except that
such conversion shall be at the Market Price and except as otherwise provided
herein).
Section 2. [Intentionally Deleted]
Section 3. Conversion.
(a) Conversion Right. Subject to the terms hereof and restrictions and
limitations contained herein, the Holder shall have the right, at such Holder's
option, at any time and from time to time to convert the outstanding Principal
Amount under this Debenture in whole or in part by delivering to the Company a
fully executed notice of conversion in the form of conversion notice attached
hereto as Exhibit A (the "Conversion Notice"), which may be transmitted by
facsimile. Notwithstanding anything to the contrary herein, this Debenture and
the outstanding Principal Amount hereunder shall not be convertible into Common
Stock to the extent that such conversion would result in the Holder hereof
exceeding the limitations contained in, or otherwise violating the provisions
of, Section 3(i) below. In the event of any conversions of the outstanding
Principal Amount under this Debenture in part pursuant to this Section 3(a),
such conversions shall be deemed to constitute conversions of outstanding
Principal Amount applying to Monthly Amounts for the Repayment Dates in
chronological order. For example, if the original principal amount under this
Debenture were $5,000,000 and the Holder converted $1,500,000 of such original
principal amount prior to the first Repayment Date, then (1) the principal
amount of the Monthly Amount due on the first Repayment Date would equal $0, (2)
the principal amount of the Monthly Amount due on the second Repayment Date
would equal $500,000, and (3) the principal amount of the Monthly Amount due on
the third, fourth and fifth Repayment Dates would equal $1,000,000 each.
(b) Common Stock Issuance Upon Conversion.
(i) Conversion Date Procedures. Upon conversion of this Debenture
pursuant to Section 3(a) above, the outstanding Principal Amount hereunder shall
be converted into such number of fully paid, validly issued and non-assessable
shares of Common Stock, free of any liens, claims and encumbrances, as is
determined by dividing the outstanding Principal Amount being converted by the
then applicable Conversion Price, provided, however, that for any such
conversions with a Conversion Date (as defined below) after delivery of a
Repayment Election Notice electing repayment in Common Stock but before the
applicable Repayment Date, such outstanding Principal Amount being converted, up
to an amount equal to the Monthly Amount, shall be divided by the then
applicable Market Price instead of the Conversion Price to determine the number
of Underlying Shares issuable. The date of any Conversion Notice hereunder and
any Repayment Date shall be referred to herein as the "Conversion Date". If a
6
conversion under this Debenture cannot be effected in full for any reason, or if
the Holder is converting less than all of the outstanding Principal Amount
hereunder pursuant to a Conversion Notice, the Company shall promptly deliver to
the Holder (but no later than five Trading Days after the Conversion Date) a
Debenture for such outstanding Principal Amount as has not been converted if
this Debenture has been surrendered to the Company for partial conversion. The
Holder shall not be required to physically surrender this Debenture to the
Company upon any conversion or payment for the Monthly Amount hereunder unless
the full outstanding Principal Amount represented by this Debenture is being
converted or repaid. The Holder and the Company shall maintain records showing
the outstanding Principal Amount so converted and repaid and the dates of such
conversions or repayments or shall use such other method, reasonably
satisfactory to the Holder and the Company, so as not to require physical
surrender of this Debenture upon each such conversion or repayment.
(ii) Stock Certificates or DWAC. The Company will deliver to the Holder
not later than three (3) Trading Days after the Conversion Date, a certificate
or certificates which shall be free of restrictive legends and trading
restrictions, representing the number of shares of Common Stock being acquired
upon the conversion of this Debenture. In lieu of delivering physical
certificates representing the shares of Common Stock issuable upon conversion of
this Debenture, provided the Company's transfer agent is participating in the
Depository Trust Company ("DTC") Fast Automated Securities Transfer ("FAST")
program, upon request of the Holder, the Company shall use commercially
reasonable efforts to cause its transfer agent to electronically transmit such
shares issuable upon conversion to the Holder (or its designee), by crediting
the account of the Holder's (or such designee's) prime broker with DTC through
its Deposit Withdrawal Agent Commission system (provided that the same time
periods herein as for stock certificates shall apply). If in the case of any
conversion hereunder, such certificate or certificates are not delivered to or
as directed by the Holder by the third Trading Day after the Conversion Date,
the Holder shall be entitled by written notice to the Company at any time on or
before its receipt of such certificate or certificates thereafter, to rescind
such conversion, in which event the Company shall immediately return this
Debenture tendered for conversion. If the Company fails to deliver to the Holder
such certificate or certificates (or shares through DTC) pursuant to this
Section 3(b) (free of any restrictions on transfer) in accordance herewith,
prior to the fifth Trading Day after the Conversion Date, the Company shall pay
to the Holder, in cash, an amount equal to 2% of the Principal Amount per month.
(c) Conversion Price Adjustments.
(i) Stock Dividends, Splits and Combinations. If the Company or any of
its subsidiaries, at any time while the Debentures are outstanding (A) shall pay
a stock dividend or otherwise make a distribution or distributions on any equity
securities (including instruments or securities convertible into or exchangeable
for such equity securities) in shares of Common Stock, (B) subdivide outstanding
Common Stock into a larger number of shares, or (C) combine outstanding Common
Stock into a smaller number of shares, then each Affected Conversion Price (as
defined below) shall be multiplied by a fraction, the numerator of which shall
be the number of shares of Common Stock outstanding before such event and the
denominator of which shall be the number of shares of Common Stock outstanding
after such event. Any adjustment made pursuant to this Section 3(c)(i) shall
become effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision or
combination.
7
As used herein, the Affected Conversion Prices (each an "Affected
Conversion Price") shall refer to: (i) the Conversion Price; (ii) each reported
daily closing price of the Common Stock on the Principal Market occurring on any
Trading Day included in the period used for determining the Market Price or
Conversion Price, as the case may be, which Trading Day occurred before the
record date in the case of events referred to in clause (A) of this subparagraph
3(c)(i) and before the effective date in the case of the events referred to in
clauses (B) and (C) of this subparagraph 3(c)(i).
(ii) Distributions. If the Company or any of its subsidiaries, at any
time while the Debentures are outstanding, shall distribute to all holders of
Common Stock evidences of its indebtedness or assets or cash or rights or
warrants to subscribe for or purchase any security of the Company or any of its
subsidiaries (excluding those referred to in Section 3(c)(i) above), then
concurrently with such distributions to holders of Common Stock, the Company
shall distribute to holders of the Debentures the amount of such indebtedness,
assets, cash or rights or warrants which the holders of Debentures would have
received had all their Debentures been converted into Common Stock at the then
applicable Market Price immediately prior to the record date for such
distribution.
(iii) Common Stock Issuances. In the event that the Company or any of
its subsidiaries (A) issues or sells any Common Stock or securities which are
convertible into or exercisable or exchangeable for Common Stock (other than
Debentures or Warrants issued under the Purchase Agreement), or any warrants or
other rights to subscribe for or to purchase or any options for the purchase of
its Common Stock or (B) directly or indirectly effectively reduces the
conversion, exercise or exchange price for any Convertible Securities which are
currently outstanding (other than pursuant to terms existing on the date
hereof), at or to an effective Per Share Selling Price which is less than $21.00
(which such figure shall be appropriately and equitably adjusted for stock
splits, stock dividends, recapitalizations and similar events), then in each
such case, the Conversion Price in effect immediately prior to such issue or
sale or record date, as applicable, shall be reduced effective concurrently with
such issue or sale to an amount determined by multiplying the Conversion Price
then in effect by a fraction, (x) the numerator of which shall be the sum of (1)
the number of shares of Common Stock outstanding immediately prior to such issue
or sale, plus (2) the number of shares of Common Stock which the aggregate
consideration received by the Company for such additional shares would purchase
at such Conversion Price, and (y) the denominator of which shall be the number
of shares of Common Stock of the Company outstanding immediately after such
issue or sale.
For the purposes of the foregoing adjustments, in the case of the
issuance of any Convertible Securities, the maximum number of shares of Common
Stock issuable upon exercise, exchange or conversion of such Convertible
Securities shall be deemed to be outstanding, provided that no further
adjustment shall be made upon the actual issuance of Common Stock upon exercise,
exchange or conversion of such Convertible Securities.
For purposes of this Section 3(c)(iii), if an event occurs that
triggers more than one of the above adjustment provisions, then only one
8
adjustment shall be made and the calculation method which yields the greatest
downward adjustment in the Conversion Price shall be used.
(iv) Rounding of Adjustments. All calculations under this Section 3 or
Section 1 shall be made to the nearest cent or the nearest 1/100th of a share,
as the case may be.
(v) Notice of Adjustments. Whenever any Affected Conversion Price is
adjusted pursuant to Section 3(c)(ii) or (iii) above, the Company shall promptly
deliver to each holder of the Debentures, a notice setting forth the Affected
Conversion Price after such adjustment and setting forth a brief statement of
the facts requiring such adjustment, provided that any failure to so provide
such notice shall not affect the automatic adjustment hereunder.
(vi) Change in Control Transactions. In case of any Change in Control
Transaction, the Holder shall have the right thereafter to, at its option, (A)
convert this Debenture, in whole or in part, at the then applicable Market Price
into the shares of stock and other securities, cash and/or property receivable
upon or deemed to be held by holders of Common Stock following such Change in
Control Transaction, and the Holder shall be entitled upon such event to receive
such amount of securities, cash or property as the shares of the Common Stock of
the Company into which this Debenture could have been converted immediately
prior to such Change in Control Transaction would have been entitled if such
conversion were permitted, subject to such further applicable adjustments set
forth in this Section 3 or (B) require the Company or its successor to redeem
this Debenture, in whole or in part, at a redemption price equal to the greater
of (i) the outstanding Principal Amount being redeemed and (ii) the product of
(x) the arithmetic mean of the Fair Market Price for the five (5) Trading Days
immediately preceding the Holder's election to have its Debentures redeemed and
(y) the Conversion Ratio. The terms of any such Change in Control Transaction
shall include such terms so as to continue to give to the Holders the right to
receive the amount of securities, cash and/or property upon any conversion or
redemption following such Change in Control Transaction to which a holder of the
number of shares of Common Stock deliverable upon such conversion would have
been entitled in such Change in Control Transaction, and interest payable
hereunder shall be in cash or such new securities and/or property, at the
Holder's option. This provision shall similarly apply to successive
reclassifications, consolidations, mergers, sales, transfers or share exchanges.
(vii) Notice of Certain Events. If:
A. the Company shall declare a dividend
(or any other distribution) on
its Common Stock; or
B. the Company shall declare a special
nonrecurring cash dividend on or a
redemption of its Common Stock; or
C. the Company shall authorize the
granting to all holders of the Common
Stock rights or warrants to subscribe
for or purchase any shares of capital
stock of any class or of any rights;
or
9
D. the approval of any stockholders of
the Company shall be required in
connection with any reclassification
of the Common Stock of the Company,
any consolidation or merger to which
the Company is a party, any sale or
transfer of all or substantially all
of the assets of the Company, of any
compulsory share of exchange whereby
the Common Stock is converted into
other securities, cash or property;
or
E. the Company shall authorize the
voluntary or involuntary dissolution,
liquidation or winding up of the
affairs of the Company;
then the Company shall cause to be filed at each office or agency maintained for
the purpose of conversion of this Debenture, and shall cause to be mailed to the
Holder at its last address as it shall appear upon the books of the Company, on
or prior to the date notice to the Company's stockholders generally is given, a
notice stating (x) the date on which a record is to be taken for the purpose of
such dividend, distribution, redemption, rights or warrants, or if a record is
not to be taken, the date as of which the holders of Common Stock of record to
be entitled to such dividend, distributions, redemption, rights or warrants are
to be determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of Common Stock of
record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange.
(d) Reservation and Issuance of Underlying Securities. The Company
covenants that it will at all times reserve and keep available out of its
authorized and unissued Common Stock solely for the purpose of issuance upon
conversion of this Debenture (including repayments in stock), free from
preemptive rights or any other actual contingent purchase rights of persons
other than the holders of the Debentures, not less than such number of shares of
Common Stock as shall (subject to any additional requirements of the Company as
to reservation of such shares set forth in the Purchase Agreement) be issuable
(taking into account the adjustments under this Section 3 but without regard to
any ownership limitations contained herein) upon the conversion of this
Debenture hereunder in Common Stock (including repayments in stock). The Company
covenants that all shares of Common Stock that shall be so issuable shall, upon
issue, be duly authorized, validly issued, fully paid, nonassessable and freely
tradeable.
(e) No Fractions. Upon a conversion hereunder the Company shall not be
required to issue stock certificates representing fractions of shares of Common
Stock, but may if otherwise permitted, make a cash payment in respect of any
final fraction of a share based on the closing price of a share of Common Stock
at such time. If the Company elects not, or is unable, to make such a cash
payment, the Holder shall be entitled to receive, in lieu of the final fraction
of a share, one whole share of Common Stock.
(f) Charges, Taxes and Expenses. Issuance of certificates for shares of
Common Stock upon the conversion of this Debenture (including repayment in
stock) shall be made without charge to the holder hereof for any issue or
transfer tax or other incidental expense in respect of the issuance of such
certificate, all of which taxes and expenses shall be paid by the Company, and
such certificates shall be issued in the name of the Holder or in such name or
names as may be directed by the Holder; provided, however, that in the event
10
certificates for shares of Common Stock are to be issued in a name other than
the name of the Holder, this Debenture when surrendered for conversion shall be
accompanied by an assignment form; and provided further, that the Company shall
not be required to pay any tax or taxes which may be payable in respect of any
such transfer.
(g) Cancellation. After all of the Principal Amount (including accrued
but unpaid interest and default payments at any time owed on this Debenture)
have been paid in full or converted into Common Stock, this Debenture shall
automatically be deemed canceled and the Holder shall promptly surrender the
Debenture to the Company at the Company's principal executive offices.
(h) Notices Procedures. Any and all notices or other communications or
deliveries to be provided by the Holder hereunder, including, without
limitation, any Conversion Notice, shall be in writing and delivered personally,
by confirmed facsimile, or by a nationally recognized overnight courier service
to the Company at the facsimile telephone number or address of the principal
place of business of the Company as set forth in the Purchase Agreement. Any and
all notices or other communications or deliveries to be provided by the Company
hereunder shall be in writing and delivered personally, by facsimile, or by a
nationally recognized overnight courier service addressed to the Holder at the
facsimile telephone number or address of the Holder appearing on the books of
the Company, or if no such facsimile telephone number or address appears, at the
principal place of business of the Holder. Any notice or other communication or
deliveries hereunder shall be deemed delivered (i) upon receipt, when delivered
personally, (ii) when sent by facsimile, upon receipt if received on a Business
Day prior to 5:00 p.m. (Eastern Time), or on the first Business Day following
such receipt if received on a Business Day after 5:00 p.m. (Eastern Time) or
(iii) upon receipt, when deposited with a nationally recognized overnight
courier service.
(i) Conversion Limitations.
(A) 9.9% Limitation. Notwithstanding anything to the contrary contained
herein, the number of shares of Common Stock that may be acquired by
the Holder upon conversion pursuant to the terms hereof shall not
exceed a number that, when added to the total number of shares of
Common Stock deemed beneficially owned by such Holder (other than by
virtue of the ownership of securities or rights to acquire securities
(including the Debentures) that have limitations on the Holder's right
to convert, exercise or purchase similar to the limitation set forth
herein), together with all shares of Common Stock deemed beneficially
owned at such time (other than by virtue of the ownership of securities
or rights to acquire securities that have limitations on the right to
convert, exercise or purchase similar to the limitation set forth
herein) by the holder's "affiliates" at such time (as defined in Rule
144 of the Act) ("Aggregation Parties") that would be aggregated for
purposes of determining whether a group under Section 13(d) of the
Securities Exchange Act of 1934 as amended, exists, would exceed 9.9%
of the total issued and outstanding shares of the Common Stock (the
"Restricted Ownership Percentage"). Each holder shall have the right
(w) at any time and from time to time to reduce its Restricted
Ownership Percentage immediately upon notice to the Company and (x)
(subject to waiver) at any time and from time to time, to increase its
Restricted Ownership Percentage immediately in the event of the
announcement as pending or planned, of a Change in Control Transaction.
11
(B) Limitation Covenants. The Holder covenants at all times on each day
(each such day being referred to as a "Covenant Day") as follows:
During the balance of such Covenant Day and the succeeding sixty-one
(61) days (the balance of such Covenant Day and the succeeding 61 days
being referred to as the "Covenant Period") such Holder will not
acquire shares of Common Stock pursuant to any right (including
conversion of Debentures) existing at the commencement of the Covenant
Period to the extent the number of shares so acquired by such Holder
and its Aggregation Parties (ignoring all dispositions) would exceed:
(x) the Restricted Ownership Percentage of the
total number of shares of Common Stock
outstanding at the commencement of the
Covenant Period, minus
(y) the number of shares of Common Stock
actually owned by such Holder and its
Aggregation Parties at the commencement of
the Covenant Period.
A new and independent covenant will be deemed to be given by the Holder
as of each moment of each Covenant Day. No covenant will terminate,
diminish or modify any other covenant. The Holder agrees to comply with
each such covenant. This Section 3(i)(B) controls in the case of any
conflict with any other provision of the Purchase Agreement or any
agreement entered into in connection therewith.
The Company's obligation to issue shares of Common Stock which would
exceed such limits referred to in this Section 3(i) shall be suspended
to the extent necessary until such time, if any, as shares of Common
Stock may be issued in compliance with such restrictions.
(C) Overall Limit on Common Stock Issuable. Notwithstanding anything
contained herein to the contrary, the number of shares of Common Stock
issuable by the Company and acquirable by the Holders of Debentures,
together the number of shares issued under the Warrants, shall not
exceed 19.9% of the number of shares of Common Stock outstanding on the
Closing Date, subject to appropriate adjustment for stock splits, stock
dividends, or other similar recapitalizations affecting the Common
Stock (the "Maximum Common Stock Issuance"), unless the issuance of
shares hereunder in excess of the Maximum Common Stock Issuance shall
first be approved by the Company's shareholders in accordance with
applicable law and the By-laws and Articles of Incorporation of the
Company. If at any point in time and from time to time (each a "Trigger
Date") the number of Common Shares issued pursuant to conversion of the
Debentures and exercise of the Warrants, together with the number of
Common Shares that would then be issuable by the Company in the event
of conversion of all the Debentures and exercise of all the Warrants
then outstanding, would exceed the Maximum Common Stock Issuance but
for this Section 3(i)(C), then the Company shall, at the Company's
election, either (A) promptly call a shareholders meeting to obtain
shareholder approval for the issuance of Common Shares hereunder in
excess of the Maximum Common Stock Issuance, which such shareholder
approval shall be obtained within 60 days of the Trigger Date, or (B)
purchase from the holders of Debentures and Warrants on a pro rata
basis such Principal Amount of Debentures and number of Warrants which
cannot be converted or exercised due to such Maximum Common Stock
13
Issuance limitation ("Shortfall") at a redemption price equal to the
"Mandatory Repurchase Price" (as defined in the Registration Rights
Agreement), which such redemption price shall be paid within three (3)
Trading Days after a Trigger Date if this clause (B) is elected. The
Company shall make such election with two (2) days following the
Trigger Date by giving written notice to all holders of Debentures and
Warrants. If the Company fails to timely make such election, or elects
clause (A) but then fails to obtain such shareholder approval within 60
days following the Trigger Date, then the Company shall purchase the
Shortfall at the Mandatory Repurchase Price within three (3) Trading
Days following any such failure.
Section 4. Defaults and Remedies.
(a) Events of Default. An "Event of Default" is: (i) a default in
payment of the Principal Amount or accrued but unpaid interest thereon of any of
the Debentures on or after the date such payment is due (to the extent such
principal and/or amount has not been converted into Common Stock in accordance
with the terms hereof), which default continues for 5 business days after
written notice of such non-payment has been received by the Company; (ii) a
default in the timely issuance of Underlying Shares upon and in accordance with
terms hereof, which default continues for five business days after the Company
has received written notice informing the Company that it has failed to issue
shares or deliver stock certificates within the fifth day following the
Conversion Date; (iii) failure by the Company for thirty (30) days after written
notice has been received by the Company to comply with any material provision of
any of the Debentures, the Purchase Agreement, the Registration Rights Agreement
or the Warrants (including without limitation the failure to issue the requisite
number of shares of Common Stock upon conversion hereof and the failure to
redeem Debentures upon the Holder's request following a Change in Control
Transaction pursuant to Section 3(c)(vi), (iv) a material breach by the Company
of its representations or warranties in the Purchase Agreement, Registration
Rights Agreement or Warrants; (v) any default after any cure period under, or
acceleration prior to maturity of, any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
indebtedness for money borrowed by the Company for in excess of $1 million or
for money borrowed the repayment of which is guaranteed by the Company for in
excess of $1 million, whether such indebtedness or guarantee now exists or shall
be created hereafter; or (vi) if the Company is subject to any Bankruptcy Event.
(b) Remedies. If an Event of Default occurs and is continuing with
respect to any of the Debentures, the Holder may declare all of the then
outstanding Principal Amount of this Debenture and all other Debentures held by
the Holder, including any interest due thereon, to be due and payable
immediately, except that in the case of an Event of Default arising from events
described in clauses (v) and (vi) of Section 4(a), this Debenture shall become
due and payable without further action or notice. In the event of such
acceleration, the amount due and owing to the Holder shall be the greater of (1)
125% of the outstanding Principal Amount of the Debentures held by the Holder
(plus all accrued and unpaid interest, if any) and (2) the product of (A) the
highest closing price for the five (5) Trading days immediately preceding the
Holder's acceleration and (B) the Conversion Ratio. In either case the Company
shall pay interest on such amount in cash at the Default Rate to the Holder if
such amount is not paid within 7 days of Holder's request. The remedies under
this Debenture shall be cumulative.
13
Section 5. General.
(a) Payment of Expenses. The Company agrees to pay all reasonable
charges and expenses, including attorneys' fees and expenses, which may be
incurred by the Holder in successfully enforcing this Debenture and/or
collecting any amount due under this Debenture.
(b) Savings Clause. In case any provision of this Debenture is held by
a court of competent jurisdiction to be excessive in scope or otherwise invalid
or unenforceable, such provision shall be adjusted rather than voided, if
possible, so that it is enforceable to the maximum extent possible, and the
validity and enforceability of the remaining provisions of this Debenture will
not in any way be affected or impaired thereby. In no event shall the amount of
interest paid hereunder exceed the maximum rate of interest on the unpaid
principal balance hereof allowable by applicable law. If any sum is collected in
excess of the applicable maximum rate, the excess collected shall be applied to
reduce the principal debt. If the interest actually collected hereunder is still
in excess of the applicable maximum rate, the interest rate shall be reduced so
as not to exceed the maximum allowable under law.
(c) Amendment. Neither this Debenture nor any term hereof may be
amended, waived, discharged or terminated other than by a written instrument
signed by the Company and Holders of 75% of the Principal Amount of all
Debentures.
(d) Assignment, Etc. The Holder may assign or transfer this Debenture
to any transferee only with the prior written consent of the Company, which may
not be unreasonably withheld or delayed, provided that (i) the Holder may assign
or transfer this Debenture to any of such Holder's affiliates without the
consent of the Company and (ii) upon any Event of Default, the Holder may assign
or transfer this Note without the consent of the Company. The Holder shall
notify the Company of any such assignment or transfer promptly. This Debenture
shall be binding upon the Company and its successors and shall inure to the
benefit of the Holder and its successors and permitted assigns.
(e) No Waiver. No failure on the part of the Holder to exercise, and no
delay in exercising any right, remedy or power hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise by the Holder of any
right, remedy or power hereunder preclude any other or future exercise of any
other right, remedy or power. Each and every right, remedy or power hereby
granted to the Holder or allowed it by law or other agreement shall be
cumulative and not exclusive of any other, and may be exercised by the Holder
from time to time.
(f) Governing Law; Jurisdiction.
(i) Governing Law. THIS DEBENTURE WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ANY
CONFLICTS OF LAWS PROVISIONS THEREOF THAT WOULD OTHERWISE REQUIRE THE
APPLICATION OF THE LAW OF ANY OTHER JURISDICTION.
(ii) Jurisdiction. The Company irrevocably submits to the exclusive
jurisdiction of any State or Federal Court sitting in the State of New York,
County of New York, or San Jose, California, over any suit, action, or
14
proceeding arising out of or relating to this Debenture. The Company irrevocably
waives, to the fullest extent permitted by law, any objection which it may now
or hereafter have to the laying of the venue of any such suit, action, or
proceeding brought in such a court and any claim that suit, action, or
proceeding has been brought in an inconvenient forum.
The Company agrees that the service of process upon it mailed by
certified or registered mail (and service so made shall be deemed complete three
days after the same has been posted as aforesaid) or by personal service shall
be deemed in every respect effective service of process upon it in any such suit
or proceeding. Nothing herein shall affect Holder's right to serve process in
any other manner permitted by law. The Company agrees that a final
non-appealable judgement in any such suit or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on such judgment or in any other
lawful manner.
(iii) NO JURY TRIAL. THE COMPANY HERETO KNOWINGLY AND VOLUNTARILY
WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY
LITIGATION BASED ON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
DEBENTURE.
(g) Replacement Debentures. This Debenture may be exchanged by Holder
at any time and from time to time for a Debenture or Debentures with different
denominations representing an equal aggregate outstanding Principal Amount, as
reasonably requested by Holder, upon surrendering the same. No service charge
will be made for such registration or exchange. In the event that Holder
notifies the Company that this Debenture has been lost, stolen or destroyed, a
replacement Debenture identical in all respects to the original Debenture
(except for registration number and Principal Amount, if different than that
shown on the original Debenture), shall be issued to the Holder, provided that
the Holder executes and delivers to the Company an agreement reasonably
satisfactory to the Company to indemnify the Company from any loss incurred by
it in connection with the Debenture.
[Signature Page Follows]
15
IN WITNESS WHEREOF, the Company has caused this Debenture to be duly
executed on the day and in the year first above written.
XxxxxxxXxxxxxxxxx.xxx, Inc.
By: ___________________________
Name:
Title:
Attest:
Sign: ___________________________
Print Name:
16
EXHIBIT A
FORM OF CONVERSION NOTICE
(To be Executed by the Holder
in order to Convert a Debenture)
The undersigned hereby elects to convert the aggregate outstanding Principal
Amount (as defined in the Debenture) indicated below of this Debenture into
shares of Common Stock, $0.001 par value per share (the "Common Stock"), of
XxxxxxxXxxxxxxxxx.xxx, Inc. (the "Company") according to the conditions hereof,
as of the date written below. If shares are to be issued in the name of a person
other than undersigned, the undersigned will pay all transfer taxes payable with
respect thereto and is delivering herewith such certificates and opinions as
reasonably requested by the Company in accordance therewith. No fee will be
charged to the holder for any conversion, except for such transfer taxes, if
any. The undersigned represents as of the date hereof that, after giving effect
to the conversion of this Debenture pursuant to this Conversion Notice, the
undersigned will not exceed the "Restricted Ownership Percentage" contained in
Section 3(i)(A) of this Debenture and will remain in compliance with Section
3(i)(B) of this Debenture.
Conversion information:
-------------------------------------------------------
Date to Effect Conversion
-------------------------------------------------------
Aggregate Principal Amount of Debenture Being Converted
-------------------------------------------------------
Number of shares of Common Stock to be Issued
-------------------------------------------------------
Applicable Conversion Price
-------------------------------------------------------
Signature
-------------------------------------------------------
Name
-------------------------------------------------------
Address
17
EXHIBIT B
FORM OF REPAYMENT ELECTION NOTICE
To: [Holder at Holder's Address]
Pursuant to Section 1(b) of Debenture No. ______ of
XxxxxxxXxxxxxxxxx.xxx, Inc. issued on March __, 2001, we hereby notify you that
we are irrevocably electing to repay the outstanding Monthly Amount (as defined
in the Debenture) due on the Repayment Date (as defined in the Debenture) which
occurs on _____________, 2001 (check one):
______________ In full in cash on such Repayment Date.
______________ In full in shares of the Company's Common
Stock within three (3) Trading Days following such
Repayment Date.
XxxxxxxXxxxxxxxxx.xxx, Inc.
By: __________________________
Name:
Title:
EXHIBIT 10.62
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER REGULATION D PROMULGATED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"). THIS WARRANT SHALL NOT CONSTITUTE AN OFFER
TO SELL NOR A SOLICITATION OF AN OFFER TO BUY THE SECURITIES IN ANY JURISDICTION
IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. THE SECURITIES ARE
"RESTRICTED" AND MAY NOT BE RESOLD OR TRANSFERRED EXCEPT AS PERMITTED UNDER THE
ACT PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
COMMON STOCK PURCHASE WARRANT
To Purchase Shares of $0.001 Par Value Common Stock ("Common Stock") of
XXXXXXXXXXXXXXXXX.XXX, INC.
THIS CERTIFIES that, for value received, XXXXXXX ASSOCIATES, L.P. (the
"PURCHASER" or "HOLDER") is entitled, upon the terms and subject to the
conditions hereinafter set forth, at any time on or after the date hereof and on
or prior to 8:00 p.m. New York City Time on March __, 2004 (the "TERMINATION
DATE"), but not thereafter, to subscribe for and purchase from
XxxxxxxXxxxxxxxxx.xxx, Inc., a Delaware corporation (the "Company"), 50,000
shares of Common Stock (the "WARRANT SHARES") at an Exercise Price equal to
$23.00 per share (as adjusted from time to time pursuant to the terms hereof,
the "EXERCISE PRICE"). The Exercise Price and the number of shares for which the
Warrant is exercisable shall be subject to adjustment as provided herein. This
Warrant is being issued in connection with the Securities Purchase Agreement
dated March , 2001 (the "PURCHASE AGREEMENT") entered into between the Company
and the Purchaser. Capitalized terms used herein and not otherwise defined shall
have the meaning ascribed thereto in the Purchase Agreement.
1. Title of Warrant. Prior to the expiration hereof and subject to
compliance with applicable laws, this Warrant and all rights hereunder
are transferable, in whole or in part, at the office or agency of the
Company by the Holder hereof in person or by duly authorized attorney,
upon surrender of this Warrant together with (a) the Assignment Form
annexed hereto properly endorsed, and (b) any other documentation
reasonably necessary to satisfy the Company that such transfer is in
compliance with all applicable securities laws. The term "HOLDER" shall
refer to the Purchaser or any subsequent transferee of this Warrant.
2. Authorization of Shares. The Company covenants that all shares of
Common Stock which may be issued upon the exercise of rights
represented by this Warrant will, upon exercise of the rights
represented by this Warrant and payment of the Exercise Price as set
forth herein will be duly authorized, validly issued, fully paid and
nonassessable and free from all taxes, liens and charges in respect of
the issue thereof (other than taxes in respect of any transfer
occurring contemporaneously with such issue or otherwise specified
herein).
3. Exercise of Warrant.
(a) The Holder may exercise this Warrant, in whole or in part, at any time
and from time to time, by delivering to the offices of the Company or
any transfer agent for the Common Stock this Warrant, together with a
Notice of Exercise in the form annexed hereto specifying the number of
Warrant Shares with respect to which this Warrant is being exercised,
together with payment to the Company of the Exercise Price therefor.
In the event that the Warrant is not exercised in full, the number of
Warrant Shares shall be reduced by the number of such Warrant Shares
for which this Warrant is exercised and/or surrendered, and the
Company, at its expense, shall within three (3) Trading Days (as
defined below) issue and deliver to the Holder a new Warrant of like
tenor in the name of the Holder or as the Holder (upon payment by
Holder of any applicable transfer taxes) may request, reflecting such
adjusted Warrant Shares.
Certificates for shares of Common Stock purchased hereunder shall be
delivered to the Holder hereof within two (2) Trading Days after the
date on which this Warrant shall have been exercised as aforesaid. The
Holder may withdraw its Notice of Exercise at any time if the Company
fails to timely deliver the relevant certificates to the Holder as
provided in this Agreement. A Notice of Exercise shall be deemed sent
on the date of delivery if delivered before 8:00 p.m. Eastern Time on
such date, or the day following such date if delivered after 8:00 p.m.
Eastern Time; provided that the Company is only obligated to deliver
Warrant Shares against delivery of the Exercise Price from the holder
hereof and surrender of this Warrant (or appropriate affidavit and/or
indemnity in lieu thereof).
In lieu of delivering physical certificates representing the Warrant
Shares issuable upon conversion of this Warrant, provided the Company's
transfer agent is participating in the Depository Trust Company ("DTC")
Fast Automated Securities Transfer ("FAST") program, upon request of
the Holder, the Company shall use its best efforts to cause its
transfer agent to electronically transmit the Warrant Shares issuable
upon exercise to the Holder, by crediting the account of the Holder's
prime broker with DTC through its Deposit Withdrawal Agent Commission
("DWAC") system. The time periods for delivery described above shall
apply to the electronic transmittals through the DWAC system. The
Company agrees to coordinate with DTC to accomplish this objective.
Notwithstanding the foregoing provision regarding payment of the
Exercise Price in cash, during any time that the Warrant Shares are not
subject to an effective Registration Statement after the Effectiveness
Commencement Date (as such terms are defined in the Registration Rights
Agreement, which is defined in the Purchase Agreement) as required by
the terms of the Registration Rights Agreement, the Holder may elect to
receive a reduced number of Warrant Shares in lieu of tendering the
Exercise Price in cash. In such case, the number of Warrant Shares to
be issued to the Holder shall be computed using the following formula:
X = Y x (A-B)
-------------
A
where: X = the number of Warrant Shares to be issued to the Holder;
Y = the number of Warrant Shares to be exercised under this
Warrant Certificate;
A = the Market Value (defined below) of one share of Common
Stock; and
B = the Exercise Price.
(b) The term "TRADING DAY" means (x) if the Common Stock is not listed on
the New York or American Stock Exchange but sale prices of the Common
Stock are reported on Nasdaq National Market or another automated
quotation system, a day on which trading is reported on the principal
automated quotation system on which sales of the Common Stock are
reported, (y) if the Common Stock is listed on the New York Stock
Exchange or the American Stock Exchange, a day on which there is
trading on such stock exchange, or (z) if the foregoing provisions are
inapplicable, a day on which quotations are reported by National
Quotation Bureau Incorporated.
The term "MARKET VALUE" means the closing bid price of the Common Stock
(as reported by Bloomberg, L.P.) on the day before the Notice of
Exercise and this Warrant are duly surrendered to the Company for a
full or partial exercise hereof. Notwithstanding the foregoing
definition, if the Common Stock is not listed on a national securities
exchange or quoted in the Nasdaq System at the time said Notice of
Exercise is submitted to the Company in the foregoing manner, the
Market Value of the Common Stock shall be as reasonably determined in
good faith by the Board of Directors of the Company and such Holder,
unless the Company shall become subject to a merger, acquisition, or
other consolidation pursuant to which the Company is not the surviving
entity, in which case the Market Value of the Common Stock shall be
deemed to be the value received by the Company's common shareholders
pursuant to the Company's acquisition (subject to Section 12 below).
4. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of
this Warrant. In lieu of issuance of a fractional share upon any
exercise hereunder, the Company will either round up to nearest whole
number of shares or pay the cash value of that fractional share
calculated on the basis of the Market Value.
5. Charges, Taxes and Expenses. Issuance of certificates for shares of
Common Stock upon the exercise of this Warrant shall be made without
charge to the Holder hereof for any issue or transfer tax or other
incidental expense in respect of the issuance of such certificate, all
of which taxes and expenses shall be paid by the Company, and such
certificates shall be issued in the name of the Holder of this Warrant
or in such name or names as may be directed by the Holder of this
Warrant; provided, however, that in the event certificates for shares
of Common Stock are to be issued in a name other than the name of the
Holder of this Warrant, this Warrant when surrendered for exercise
shall be accompanied by the Assignment Form attached hereto duly
executed by the Holder hereof; and provided further, that the Company
shall not be required to pay any tax or taxes which may be payable in
respect of any transfer involved in the issuance of any Warrant
certificates or any certificates for the Warrant Shares other than the
issuance of a Warrant Certificate to the Holder in connection with the
Holder's surrender of a Warrant Certificate upon the exercise of all or
less than all of the Warrants evidenced thereby.
6. Closing of Books. The Company will at no time close its shareholder
books or records in any manner which interferes with the timely
exercise of this Warrant.
7. No Rights as Shareholder until Exercise. Subject to Section 12 of this
Warrant and the provisions of any other written agreement between the
Company and the Purchaser, the Purchaser shall not be entitled to vote
or receive dividends or be deemed the holder of Warrant Shares or any
other securities of the Company that may at any time be issuable on the
exercise hereof for any purpose, nor shall anything contained herein be
construed to confer upon the Purchaser, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting
thereof, or to give or withhold consent to any corporate action
(whether upon any recapitalization, issuance of stock, reclassification
of stock, change of par value, or change of stock to no par value,
consolidation, merger, conveyance or otherwise) or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise
until the Warrant shall have been exercised as provided herein.
However, at the time of the exercise of this Warrant pursuant to
Section 3 hereof, the Warrant Shares so purchased hereunder shall be
deemed to be issued to such Holder as the record owner of such shares
as of the close of business on the date on which this Warrant shall
have been exercised.
8. Assignment and Transfer of Warrant. This Warrant may be assigned by the
surrender of this Warrant and the Assignment Form annexed hereto duly
executed at the office of the Company (or such other office or agency
of the Company or its transfer agent as the Company may designate by
notice in writing to the registered Holder hereof at the address of
such Holder appearing on the books of the Company); provided, however,
that this Warrant may not be resold or otherwise transferred except (i)
in a transaction registered under the Securities Act of 1933, as
amended (the "ACT"), or (ii) in a transaction pursuant to an exemption,
if available, from registration under the Act and whereby, if
reasonably requested by the Company, an opinion of counsel reasonably
satisfactory to the Company is obtained by the Holder of this Warrant
to the effect that the transaction is so exempt. If this Warrant is
duly assigned in accordance with the terms hereof, then the Company
agrees, upon the request of the assignee, to amend or supplement
promptly any effective registration statement covering the Warrant
Shares so that the direct assignee of the original holder is added as a
selling stockholder thereunder.
9. Loss, Theft, Destruction or Mutilation of Warrant; Exchange. The
Company represents warrants and covenants that (a) upon receipt by the
Company of evidence and/or indemnity reasonably satisfactory to it of
the loss, theft, destruction or mutilation of any Warrant or stock
certificate representing the Warrant Shares, and in case of loss, theft
or destruction, of indemnity reasonably satisfactory to it, and (b)
upon surrender and cancellation of such Warrant or stock certificate,
if mutilated, the Company will make and deliver a new Warrant or stock
certificate of like tenor and dated as of such cancellation, in lieu of
this Warrant or stock certificate, without any charge therefor. This
Warrant is exchangeable at any time for an equal aggregate number of
Warrants of different denominations, as requested by the holder
surrendering the same, or in such denominations as may be requested by
the Holder following determination of the Exercise Price. No service
charge will be made for such registration or transfer, exchange or
reissuance.
10. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the
taking of any action or the expiration of any right required or granted
herein shall be a Saturday, Sunday or a legal holiday, then such action
may be taken or such right may be exercised on the next succeeding day
not a legal holiday.
11. Effect of Certain Events. If at any time while this Warrant or any
portion thereof is outstanding and unexpired there shall be a
transaction (by merger or otherwise) in which more than 50% of the
voting power of the Company is disposed of (collectively, a "SALE OR
MERGER TRANSACTION"), the Holder of this Warrant shall have the right
thereafter to purchase, by exercise of this Warrant and payment of the
aggregate Exercise Price in effect immediately prior to such action,
the kind and amount of shares and other securities and property which
it would have owned or have been entitled to receive after the
happening of such transaction had this Warrant been exercised
immediately prior thereto, subject to further adjustment as provided in
Section 12.
12. Adjustments of Exercise Price and Number of Warrant Shares.
The number of and kind of securities purchasable upon exercise of this
Warrant and the Exercise Price shall be subject to adjustment from time
to time as set forth in this Section 12.
(a) Subdivisions, Combinations, Stock Dividends and other Issuances. If the
Company shall, at any time while this Warrant is outstanding, (A) pay a
stock dividend or otherwise make a distribution or distributions on any
equity securities (including instruments or securities convertible into
or exchangeable for such equity securities) in shares of Common Stock,
(B) subdivide outstanding shares of Common Stock into a larger number
of shares, or (C) combine outstanding Common Stock into a smaller
number of shares, then the Exercise Price shall be multiplied by a
fraction, the numerator of which shall be the number of shares of
Common Stock outstanding before such event and the denominator of which
shall be the number of shares of Common Stock outstanding after such
event. Any adjustment made pursuant to this Section 12(a) shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution and
shall become effective immediately after the effective date in the case
of a subdivision or combination. The number of shares which may be
purchased hereunder shall be increased proportionately to any reduction
in Exercise Price pursuant to this paragraph 12(a), so that after such
adjustments the aggregate Exercise Price payable hereunder for the
increased number of shares shall be the same as the aggregate Exercise
Price in effect just prior to such adjustments.
(b) Other Distributions. If at any time after the date hereof the Company
distributes to holders of its Common Stock, other than as part of its
dissolution, liquidation or the winding up of its affairs, any shares
of its capital stock, any evidence of indebtedness or any of its assets
(other than Common Stock), then the number of Warrant Shares for which
this Warrant is exercisable shall be increased to equal: (i) the number
of Warrant Shares for which this Warrant is exercisable immediately
prior to such event, (ii) multiplied by a fraction, (A) the numerator
of which shall be the Fair Market Value (as defined below) per share of
Common Stock on the record date for the dividend or distribution, and
(B) the denominator of which shall be the Fair Market Value price per
share of Common Stock on the record date for the dividend or
distribution minus the amount allocable to one share of Common Stock of
the value (as jointly determined in good faith by the Board of
Directors of the Company and the Holder) of any and all such evidences
of indebtedness, shares of capital stock, other securities or property,
so distributed. For purposes of this Warrant, "FAIR MARKET VALUE" shall
equal the 5 Trading Day average closing trading price of the Common
Stock on the Principal Market (as defined in the Purchase Agreement)
for the 5 Trading Days preceding the date of determination or, if the
Common Stock is not listed or admitted to trading on any Principal
Market, and the average price cannot be determined as contemplated
above, the Fair Market Value of the Common Stock shall be as reasonably
determined in good faith by the Company's Board of Directors and the
Holder. The Exercise Price shall be reduced to equal: (i) the Exercise
Price in effect immediately before the occurrence of any event (ii)
multiplied by a fraction, (A) the numerator of which is the number of
Warrant Shares for which this Warrant is exercisable immediately before
the adjustment, and (B) the denominator of which is the number of
Warrant Shares for which this Warrant is exercisable immediately after
the adjustment.
(c) Merger, etc. If at any time after the date hereof there shall be a
merger or consolidation of the Company with or into or a transfer of
all or substantially all of the assets of the Company to another
entity, then the Holder shall be entitled to receive upon or after such
transfer, merger or consolidation becoming effective, and upon payment
of the Exercise Price then in effect, the number of shares or other
securities or property of the Company or of the successor corporation
resulting from such merger or consolidation, which would have been
received by the Holder for the shares of stock subject to this Warrant
had this Warrant been exercised just prior to such transfer, merger or
consolidation becoming effective or to the applicable record date
thereof, as the case may be. The Company will not merge or consolidate
with or into any other corporation, or sell or otherwise transfer its
property, assets and business substantially as an entirety to another
corporation, unless the corporation resulting from such merger or
consolidation (if not the Company), or such transferee corporation, as
the case may be, shall expressly assume in writing the due and punctual
performance and observance of each and every covenant and condition of
this Warrant to be performed and observed by the Company.
(d) Reclassification, etc. If at any time after the date hereof there shall
be a reorganization or reclassification of the securities as to which
purchase rights under this Warrant exist into the same or a different
number of securities of any other class or classes, then the Holder
shall thereafter be entitled to receive upon exercise of this Warrant,
during the period specified herein and upon payment of the Exercise
Price then in effect, the number of shares or other securities or
property resulting from such reorganization or reclassification, which
would have been received by the Holder for the shares of stock subject
to this Warrant had this Warrant at such time been exercised.
(e) Exercise Price Adjustment. In the event that the Company issues or
sells any Common Stock or securities which are convertible into or
exchangeable for its Common Stock or any convertible securities, or any
warrants or other rights to subscribe for or to purchase or any options
for the purchase of its Common Stock or any such convertible securities
(other than shares or options issued or which may be issued pursuant to
(i) the Company's current employee option plans or shares issued upon
exercise of options, warrants or rights outstanding on the date of the
Agreement and listed in the Company's most recent periodic report filed
under the Exchange Act or in the Purchase Agreement, or (ii)
arrangements with the Purchaser) at an effective price per share which
is less than $21.00 (which figure shall be appropriately and equitably
adjusted for stock splits, stock dividends, recapitalizations and
similar events), then in each such case, the Exercise Price in effect
immediately prior to such issue or sale shall be reduced effective
concurrently with such issue or sale to an amount determined by
multiplying the Exercise Price then in effect by a fraction, (x) the
numerator of which shall be the sum of (1) the number of shares of
Common Stock outstanding immediately prior to such issue or sale, plus
(2) the number of shares of Common Stock which the aggregate
consideration received by the Company for such additional shares would
purchase at such $21.00 figure (as adjusted); and (y) the denominator
of which shall be the number of shares of Common Stock of the Company
outstanding immediately after such issue or sale.
For the purposes of the foregoing adjustment, in the case of the
issuance of any convertible securities, warrants, options or other
rights to subscribe for or to purchase or exchange for, shares of
Common Stock ("CONVERTIBLE SECURITIES"), the maximum number of shares
of Common Stock issuable upon exercise, exchange or conversion of such
Convertible Securities shall be deemed to be outstanding, provided that
no further adjustment shall be made upon the actual issuance of Common
Stock upon exercise, exchange or conversion of such Convertible
Securities.
The number of shares which may be purchased hereunder shall be
increased proportionately to any reduction in Exercise Price pursuant
to this paragraph 12(e), so that after such adjustments the aggregate
Exercise Price payable hereunder for the increased number of shares
shall be the same as the aggregate Exercise Price in effect just prior
to such adjustments.
In the event of any such issuance for a consideration which is less
than such Fair Market Value and also less than the Exercise Price then
in effect, than there shall be only one such adjustment by reason of
such issuance, such adjustment to be that which results in the greatest
reduction of the Exercise Price computed as aforesaid.
(f) (i) The terms of any reorganization, consolidation, merger, sale,
transfer or share exchange shall include such terms so as to continue
to give to the holder hereof the right to receive the securities or
property set forth in this Section 12 upon any exercise following any
such reclassification, consolidation, merger, sale, transfer or share
exchange.
(ii) In the event of any adjustment in the number of Warrant Shares
issuable hereunder upon exercise, the Exercise Price shall be inversely
proportionately increased or decreased as the case may be, such that
aggregate purchase price for Warrant Shares upon full exercise of this
Warrant shall remain the same. Similarly, in the event of any
adjustment in the Exercise Price, the number of Warrant Shares issuable
hereunder upon exercise shall be inversely proportionately increased or
decreased as the case may be, such that aggregate purchase price for
Warrant Shares upon full exercise of this Warrant shall remain the
same.
13. Voluntary Adjustment by the Company. The Company may at its option, at
any time during the term of this Warrant, reduce but not increase the
then current Exercise Price to any amount and for any period of time
deemed appropriate by the Board of Directors of the Company.
14. Notice of Adjustment; Notice of Events. (i) Whenever the number of
Warrant Shares or number or kind of securities or other property
purchasable upon the exercise of this Warrant or the Exercise Price is
adjusted, the Company shall promptly mail to the Holder of this Warrant
a notice setting forth the number of Warrant Shares (and other
securities or property) purchasable upon the exercise of this Warrant
and the Exercise Price of such Warrant Shares after such adjustment and
setting forth the computation of such adjustment and a brief statement
of the facts requiring such adjustment. (ii) If: (A) the Company shall
declare a dividend (or any other distribution) on its Common Stock; or
(B) the Company shall declare a special nonrecurring cash dividend on
or a redemption of its Common Stock; or (C) the Company shall authorize
the granting to all holders of the Common Stock rights or warrants to
subscribe for or purchase any shares of capital stock of any class or
of any rights; or (D) the approval of any stockholders of the Company
shall be required in connection with any reclassification of the Common
Stock of the Company, any consolidation or merger to which the Company
is a party, any sale or transfer of all or substantially all of the
assets of the Company, or any compulsory share exchange whereby the
Common Stock is converted into other securities, cash or property; or
(E) the Company shall authorize the voluntary dissolution, liquidation
or winding up of the affairs of the Company, then the Company shall
cause to be mailed to each Warrant holder at their last addresses as
they shall appear upon the Warrant register of the Company, at least 30
calendar days prior to the applicable record or effective date
hereinafter specified (or such lesser time as is equal to the period
between the date of fixing such record or effective date and such
record or effective date, but in no event less than 10 days), a notice
stating (x) the date on which a record is to be taken for the purpose
of such dividend, distribution, redemption, rights or warrants, or if a
record is not to be taken, the date as of which the holders of Common
Stock of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the date on
which such reclassification, consolidation, merger, sale, transfer or
share exchange is expected to become effective or close, and the date
as of which it is expected that holders of Common Stock of record shall
be entitled to exchange their shares of Common Stock for securities,
cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution,
liquidation or winding up.
15. Authorized Shares. The Company covenants that during the period the
Warrant is outstanding and exercisable, it will reserve from its
authorized and unissued Common Stock a sufficient number of shares to
provide for the issuance of the Warrant Shares upon the exercise of any
and all purchase rights under this Warrant. The Company further
covenants that its issuance of this Warrant shall constitute full
authority to its officers who are charged with the duty of executing
stock certificates to execute and issue the necessary certificates for
the Warrant Shares upon the exercise of the purchase rights under this
Warrant. The Company will take all such reasonable action as may be
necessary to assure that such Warrant Shares may be issued as provided
herein without violation of any applicable law, regulation, or rule of
any applicable market or exchange.
16. 9.9% and 19.9% Limitations.
(a) Notwithstanding anything to the contrary contained herein, the number
of shares of Common Stock that may be acquired by the Holder upon
exercise pursuant to the terms hereof shall not exceed a number that,
when added to the total number of shares of Common Stock deemed
beneficially owned by such Holder at such time (other than by virtue of
the ownership of securities or rights to acquire securities (including
the Warrant Shares) that have limitations on the Holder's right to
convert, exercise or purchase similar to the limitation set forth
herein), together with all shares of Common Stock deemed beneficially
owned (other than by virtue of the ownership of securities or rights to
acquire securities that have limitations on the right to convert,
exercise or purchase similar to the limitation set forth herein) by the
Holder's "affiliates" at such time (as defined in Rule 144 of the Act)
("AGGREGATION PARTIES") that would be aggregated for purposes of
determining whether a group under Section 13(d) of the Securities
Exchange Act of 1934 as amended, exists, would exceed 9.9% of the total
issued and outstanding shares of the Common Stock (the "RESTRICTED
OWNERSHIP PERCENTAGE"). Each Holder shall have the right (w) at any
time and from time to time to reduce its Restricted Ownership
Percentage immediately upon notice to the Corporation and (x) (subject
to waiver) at any time and from time to time, to increase its
Restricted Ownership Percentage immediately in the event of the
announcement as pending or planned, of a change of control transaction
(including without limitation a transaction that would result in a
transfer of more than 50% of the Company's voting power or equity, or a
transaction that would result in a person or "group" being deemed the
beneficial owner of 50% or more of the Company's voting power or
equity).
(b) The Holder covenants at all times on each day (each such day being
referred to as a "COVENANT DAY") as follows: During the balance of such
Covenant Day and the succeeding sixty-one (61) days (the balance of
such Covenant Day and the succeeding 61 days being referred to as the
"COVENANT PERIOD") such Holder will not acquire shares of Common Stock
pursuant to any right (including exercise of Warrants) existing at the
commencement of the Covenant Period to the extent the number of shares
so acquired by such Holder and its Aggregation Parties (ignoring all
dispositions) would exceed:
(x) the Restricted Ownership Percentage of the total number
of shares of Common Stock outstanding at the
commencement of the Covenant Period, minus
(y) the number of shares of Common Stock actually owned by
such Holder and its Aggregation Parties at the
commencement of the Covenant Period.
A new and independent covenant will be deemed to be given by the Holder
as of each moment of each Covenant Day. No covenant will terminate,
diminish or modify any other covenant. The Holder agrees to comply with
each such covenant. This Section 16 controls in the case of any
conflict with any other provision of the Purchase Agreement or any
agreement entered into in connection therewith.
The Company's obligation to issue Common Stock which would exceed such
limits referred to in this Section 16 shall be suspended to the extent
necessary until such time, if any, as shares of Common Stock may be
issued in compliance with such restrictions and the Holder notifies the
Company thereof.
(c) Notwithstanding anything contained herein, in no event shall the
Company issue shares of Common Stock hereunder to the extent that the
total number of shares issued or deemed issued to the Purchasers (when
added to the Underlying Shares and Warrant Shares) under the Purchase
Agreement would exceed 19.9% of the Company's issued and outstanding
shares of Common Stock on the date hereof. Instead, the Company shall
redeem this Warrant to the extent necessary at such consideration
required to place the Purchasers in the same economic position they
would have been if not for such limitation. Only shares acquired
pursuant to the Purchase Agreement will be included in determining
whether the limitation would be exceeded for purposes of this
paragraph.
17. Compliance with Securities Laws. (a) The Holder hereof acknowledges
that the Warrant Shares acquired upon the exercise of this Warrant, if
not registered (or if no exemption from registration exists), will have
restrictions upon resale imposed by state and federal securities laws.
Each certificate representing the Warrant Shares issued to the Holder
upon exercise (if not registered, for resale or otherwise, or if no
exemption from registration exists) will bear substantially the
following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE 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, TRANSFERRED, SOLD OR OTHERWISE
DISPOSED OF 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.
(b) Without limiting the Purchaser's right to transfer, assign or otherwise
convey the Warrant or Warrant Shares in compliance with all applicable
securities laws, the Holder of this Warrant, by acceptance hereof,
acknowledges that this Warrant and the Warrant Shares to be issued upon
exercise hereof are being acquired solely for the Purchaser's own
account and not as a nominee for any other party, and that the
Purchaser will not offer, sell or otherwise dispose of this Warrant or
any Warrant Shares to be issued upon exercise hereof except under
circumstances that will not result in a violation of applicable federal
and state securities laws.
18. Miscellaneous.
(a) Issue Date; Choice of Law; Venue; Jurisdiction. The provisions of this
Warrant shall be construed and shall be given effect in all respects as
if it had been issued and delivered by the Company on the date hereof.
This Warrant shall be binding upon any successors or assigns of the
Company. This Warrant will be construed and enforced in accordance with
and governed by the laws of the State of New York, except for matters
arising under the Act, without reference to principles of conflicts of
law. Each of the parties consents to the exclusive jurisdiction of the
Federal and State Courts sitting in the County of New York in the State
of New York in connection with any dispute arising under this Warrant
and hereby waives, to the maximum extent permitted by law, any
objection, including any objection based on forum non conveniens or
venue, to the bringing of any such proceeding in such jurisdiction.
Each party hereby agrees that if the other party to this Warrant
obtains a judgment against it in such a proceeding, the party which
obtained such judgment may enforce same by summary judgment in the
courts of any country having jurisdiction over the party against whom
such judgment was obtained, and each party hereby waives any defenses
available to it under local law and agrees to the enforcement of such a
judgment. Each party to this Warrant irrevocably consents to the
service of process in any such proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to such party
at its address in accordance with Section 18(c). Nothing herein shall
affect the right of any party to serve process in any other manner
permitted by law.
(b) Modification and Waiver. This Warrant and any provisions hereof may be
changed, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of the same is
sought. Any amendment effected in accordance with this paragraph shall
be binding upon the Purchaser, each future holder of this Warrant and
the Company. No waivers of, or exceptions to, any term, condition or
provision of this Warrant, in any one or more instances, shall be
deemed to be, or construed as, a further or continuing waiver of any
such term, condition or provision.
(c) Notices. Any notice, request or other document required or permitted to
be given or delivered to the Purchaser or future holders hereof or the
Company shall be personally delivered or shall be sent by certified or
registered mail, postage prepaid, to the Purchaser or each such holder
at its address as shown on the books of the Company or to the Company
at the address set forth in the Purchase Agreement. All notices under
this Warrant shall be deemed to have been given when received.
A party may from time to time change the address to which notices to it
are to be delivered or mailed hereunder by notice in accordance with
the provisions of this Section 18(c).
(d) Severability. Whenever possible, each provision of this Warrant shall
be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant is held to be
invalid, illegal or unenforceable in any respect under any applicable
law or rule in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect the validity, legality or
enforceability of any other provision of this Warrant in such
jurisdiction or affect the validity, legality or enforceability of any
provision in any other jurisdiction, but this Warrant shall be
reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained
herein.
(e) No Impairment. The Company will not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times
in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order
to protect the rights of the Holder against impairment. Without
limiting the generality of the foregoing, the Company (a) will not
increase the par value of any Warrant Shares above the amount payable
therefor on such exercise, and (b) will take all such action as may be
reasonably necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable Warrant Shares
on the exercise of this Warrant.
(f) Specific Enforcement. The Company and the Holder acknowledge and agree
that irreparable damage would occur in the event that any of the
provisions of this Warrant were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed
that the parties shall he entitled to an injunction or injunctions to
prevent or cure breaches of the provisions of this Warrant and to
enforce specifically the terms and provisions hereof, this being in
addition to any other remedy to which either of them may be entitled by
law or equity.
[Signature Page Follows]
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its officers thereunto duly authorized.
Dated: March _______, 2001
XXXXXXXXXXXXXXXXX.XXX, INC.
By: ___________________________
Name: Ramy El-Batrawi
Title: President
ATTEST:
------------------------
Print Name:
NOTICE OF EXERCISE
To: XxxxxxxXxxxxxxxxx.xxx, Inc.
(1) The undersigned hereby elects to exercise the attached Warrant for and to
purchase thereunder, ______ shares of Common Stock, and herewith makes payment
therefor of $_______, or elects to use the cashless exercise option of the
Warrant in the event Warrant Shares are not registered as required in the
Registration Rights Agreement.
(2) Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below:
-------------------------------
(Name)
-------------------------------
(Address)
-------------------------------
(3) Please issue a new Warrant for the unexercised portion of the attached
Warrant in the name of the undersigned or in such other name as is specified
below:
-----------------------------------
(Name)
-------------------- -----------------------------------
(Date) (Signature)
-----------------------------------
(Address)
Dated:
------------------------------
Signature
ASSIGNMENT FORM
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
_______________________________________________ whose address is
---------------------------------------------------------------.
---------------------------------------------------------------
Dated: ______________,
Holder's Signature: _____________________________
Holder's Address: _____________________________
_____________________________
Signature Guaranteed: ___________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in an fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing
Warrant.
EXHIBIT 10.63
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER REGULATION D PROMULGATED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"). THIS WARRANT SHALL NOT CONSTITUTE AN OFFER
TO SELL NOR A SOLICITATION OF AN OFFER TO BUY THE SECURITIES IN ANY JURISDICTION
IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. THE SECURITIES ARE
"RESTRICTED" AND MAY NOT BE RESOLD OR TRANSFERRED EXCEPT AS PERMITTED UNDER THE
ACT PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
COMMON STOCK PURCHASE WARRANT
To Purchase Shares of $0.001 Par Value Common Stock ("Common Stock") of
XXXXXXXXXXXXXXXXX.XXX, INC.
THIS CERTIFIES that, for value received, XXXXXXX INTERNATIONAL, L.P.
(the "PURCHASER" or "HOLDER") is entitled, upon the terms and subject to the
conditions hereinafter set forth, at any time on or after the date hereof and on
or prior to 8:00 p.m. New York City Time on March __, 2004 (the "TERMINATION
DATE"), but not thereafter, to subscribe for and purchase from
XxxxxxxXxxxxxxxxx.xxx, Inc., a Delaware corporation (the "Company"), 50,000
shares of Common Stock (the "WARRANT SHARES") at an Exercise Price equal to
$23.00 per share (as adjusted from time to time pursuant to the terms hereof,
the "EXERCISE PRICE"). The Exercise Price and the number of shares for which the
Warrant is exercisable shall be subject to adjustment as provided herein. This
Warrant is being issued in connection with the Securities Purchase Agreement
dated March , 2001 (the "PURCHASE AGREEMENT") entered into between the Company
and the Purchaser. Capitalized terms used herein and not otherwise defined shall
have the meaning ascribed thereto in the Purchase Agreement.
1. Title of Warrant. Prior to the expiration hereof and subject to
compliance with applicable laws, this Warrant and all rights hereunder
are transferable, in whole or in part, at the office or agency of the
Company by the Holder hereof in person or by duly authorized attorney,
upon surrender of this Warrant together with (a) the Assignment Form
annexed hereto properly endorsed, and (b) any other documentation
reasonably necessary to satisfy the Company that such transfer is in
compliance with all applicable securities laws. The term "HOLDER" shall
refer to the Purchaser or any subsequent transferee of this Warrant.
2. Authorization of Shares. The Company covenants that all shares of
Common Stock which may be issued upon the exercise of rights
represented by this Warrant will, upon exercise of the rights
represented by this Warrant and payment of the Exercise Price as set
forth herein will be duly authorized, validly issued, fully paid and
nonassessable and free from all taxes, liens and charges in respect of
the issue thereof (other than taxes in respect of any transfer
occurring contemporaneously with such issue or otherwise specified
herein).
3. Exercise of Warrant.
(a) The Holder may exercise this Warrant, in whole or in part, at any time
and from time to time, by delivering to the offices of the Company or
any transfer agent for the Common Stock this Warrant, together with a
Notice of Exercise in the form annexed hereto specifying the number of
Warrant Shares with respect to which this Warrant is being exercised,
together with payment to the Company of the Exercise Price therefor.
In the event that the Warrant is not exercised in full, the number of
Warrant Shares shall be reduced by the number of such Warrant Shares
for which this Warrant is exercised and/or surrendered, and the
Company, at its expense, shall within three (3) Trading Days (as
defined below) issue and deliver to the Holder a new Warrant of like
tenor in the name of the Holder or as the Holder (upon payment by
Holder of any applicable transfer taxes) may request, reflecting such
adjusted Warrant Shares.
Certificates for shares of Common Stock purchased hereunder shall be
delivered to the Holder hereof within two (2) Trading Days after the
date on which this Warrant shall have been exercised as aforesaid. The
Holder may withdraw its Notice of Exercise at any time if the Company
fails to timely deliver the relevant certificates to the Holder as
provided in this Agreement. A Notice of Exercise shall be deemed sent
on the date of delivery if delivered before 8:00 p.m. Eastern Time on
such date, or the day following such date if delivered after 8:00 p.m.
Eastern Time; provided that the Company is only obligated to deliver
Warrant Shares against delivery of the Exercise Price from the holder
hereof and surrender of this Warrant (or appropriate affidavit and/or
indemnity in lieu thereof).
In lieu of delivering physical certificates representing the Warrant
Shares issuable upon conversion of this Warrant, provided the Company's
transfer agent is participating in the Depository Trust Company ("DTC")
Fast Automated Securities Transfer ("FAST") program, upon request of
the Holder, the Company shall use its best efforts to cause its
transfer agent to electronically transmit the Warrant Shares issuable
upon exercise to the Holder, by crediting the account of the Holder's
prime broker with DTC through its Deposit Withdrawal Agent Commission
("DWAC") system. The time periods for delivery described above shall
apply to the electronic transmittals through the DWAC system. The
Company agrees to coordinate with DTC to accomplish this objective.
Notwithstanding the foregoing provision regarding payment of the
Exercise Price in cash, during any time that the Warrant Shares are not
subject to an effective Registration Statement after the Effectiveness
Commencement Date (as such terms are defined in the Registration Rights
Agreement, which is defined in the Purchase Agreement) as required by
the terms of the Registration Rights Agreement, the Holder may elect to
receive a reduced number of Warrant Shares in lieu of tendering the
Exercise Price in cash. In such case, the number of Warrant Shares to
be issued to the Holder shall be computed using the following formula:
X = Y x (A-B)
-------------
A
where: X = the number of Warrant Shares to be issued to the Holder;
Y = the number of Warrant Shares to be exercised under this
Warrant Certificate;
A = the Market Value (defined below) of one share of Common
Stock; and
B = the Exercise Price.
(b) The term "TRADING DAY" means (x) if the Common Stock is not listed on
the New York or American Stock Exchange but sale prices of the Common
Stock are reported on Nasdaq National Market or another automated
quotation system, a day on which trading is reported on the principal
automated quotation system on which sales of the Common Stock are
reported, (y) if the Common Stock is listed on the New York Stock
Exchange or the American Stock Exchange, a day on which there is
trading on such stock exchange, or (z) if the foregoing provisions are
inapplicable, a day on which quotations are reported by National
Quotation Bureau Incorporated.
The term "MARKET VALUE" means the closing bid price of the Common Stock
(as reported by Bloomberg, L.P.) on the day before the Notice of
Exercise and this Warrant are duly surrendered to the Company for a
full or partial exercise hereof. Notwithstanding the foregoing
definition, if the Common Stock is not listed on a national securities
exchange or quoted in the Nasdaq System at the time said Notice of
Exercise is submitted to the Company in the foregoing manner, the
Market Value of the Common Stock shall be as reasonably determined in
good faith by the Board of Directors of the Company and such Holder,
unless the Company shall become subject to a merger, acquisition, or
other consolidation pursuant to which the Company is not the surviving
entity, in which case the Market Value of the Common Stock shall be
deemed to be the value received by the Company's common shareholders
pursuant to the Company's acquisition (subject to Section 12 below).
4. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of
this Warrant. In lieu of issuance of a fractional share upon any
exercise hereunder, the Company will either round up to nearest whole
number of shares or pay the cash value of that fractional share
calculated on the basis of the Market Value.
5. Charges, Taxes and Expenses. Issuance of certificates for shares of
Common Stock upon the exercise of this Warrant shall be made without
charge to the Holder hereof for any issue or transfer tax or other
incidental expense in respect of the issuance of such certificate, all
of which taxes and expenses shall be paid by the Company, and such
certificates shall be issued in the name of the Holder of this Warrant
or in such name or names as may be directed by the Holder of this
Warrant; provided, however, that in the event certificates for shares
of Common Stock are to be issued in a name other than the name of the
Holder of this Warrant, this Warrant when surrendered for exercise
shall be accompanied by the Assignment Form attached hereto duly
executed by the Holder hereof; and provided further, Company shall not
be required to pay any tax or taxes which may be payable in respect of
any transfer involved in the issuance of any Warrant certificates or
any certificates for the Warrant Shares other than the issuance of a
Warrant Certificate to the Holder in connection with the Holder's
surrender of a Warrant Certificate upon the exercise of all or less
than all of the Warrants evidenced thereby.
6. Closing of Books. The Company will at no time close its shareholder
books or records in any manner which interferes with the timely
exercise of this Warrant.
7. No Rights as Shareholder until Exercise. Subject to Section 12 of this
Warrant and the provisions of any other written agreement between the
Company and the Purchaser, the Purchaser shall not be entitled to vote
or receive dividends or be deemed the holder of Warrant Shares or any
other securities of the Company that may at any time be issuable on the
exercise hereof for any purpose, nor shall anything contained herein be
construed to confer upon the Purchaser, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting
thereof, or to give or withhold consent to any corporate action
(whether upon any recapitalization, issuance of stock, reclassification
of stock, change of par value, or change of stock to no par value,
consolidation, merger, conveyance or otherwise) or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise
until the Warrant shall have been exercised as provided herein.
However, at the time of the exercise of this Warrant pursuant to
Section 3 hereof, the Warrant Shares so purchased hereunder shall be
deemed to be issued to such Holder as the record owner of such shares
as of the close of business on the date on which this Warrant shall
have been exercised.
8. Assignment and Transfer of Warrant. This Warrant may be assigned by the
surrender of this Warrant and the Assignment Form annexed hereto duly
executed at the office of the Company (or such other office or agency
of the Company or its transfer agent as the Company may designate by
notice in writing to the registered Holder hereof at the address of
such Holder appearing on the books of the Company); provided, however,
that this Warrant may not be resold or otherwise transferred except (i)
in a transaction registered under the Securities Act of 1933, as
amended (the "ACT"), or (ii) in a transaction pursuant to an exemption,
if available, from registration under the Act and whereby, if
reasonably requested by the Company, an opinion of counsel reasonably
satisfactory to the Company is obtained by the Holder of this Warrant
to the effect that the transaction is so exempt. If this Warrant is
duly assigned in accordance with the terms hereof, then the Company
agrees, upon the request of the assignee, to amend or supplement
promptly any effective registration statement covering the Warrant
Shares so that the direct assignee of the original holder is added as a
selling stockholder thereunder.
9. Loss, Theft, Destruction or Mutilation of Warrant; Exchange. The
Company represents warrants and covenants that (a) upon receipt by the
Company of evidence and/or indemnity reasonably satisfactory to it of
the loss, theft, destruction or mutilation of any Warrant or stock
certificate representing the Warrant Shares, and in case of loss, theft
or destruction, of indemnity reasonably satisfactory to it, and (b)
upon surrender and cancellation of such Warrant or stock certificate,
if mutilated, the Company will make and deliver a new Warrant or stock
certificate of like tenor and dated as of such cancellation, in lieu of
this Warrant or stock certificate, without any charge therefor. This
Warrant is exchangeable at any time for an equal aggregate number of
Warrants of different denominations, as requested by the holder
surrendering the same, or in such denominations as may be requested by
the Holder following determination of the Exercise Price. No service
charge will be made for such registration or transfer, exchange or
reissuance.
10. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the
taking of any action or the expiration of any right required or granted
herein shall be a Saturday, Sunday or a legal holiday, then such action
may be taken or such right may be exercised on the next succeeding day
not a legal holiday.
11. Effect of Certain Events. If at any time while this Warrant or any
portion thereof is outstanding and unexpired there shall be a
transaction (by merger or otherwise) in which more than 50% of the
voting power of the Company is disposed of (collectively, a "SALE OR
MERGER TRANSACTION"), the Holder of this Warrant shall have the right
thereafter to purchase, by exercise of this Warrant and payment of the
aggregate Exercise Price in effect immediately prior to such action,
the kind and amount of shares and other securities and property which
it would have owned or have been entitled to receive after the
happening of such transaction had this Warrant been exercised
immediately prior thereto, subject to further adjustment as provided in
Section 12.
12. Adjustments of Exercise Price and Number of Warrant Shares.
The number of and kind of securities purchasable upon exercise of this
Warrant and the Exercise Price shall be subject to adjustment from time
to time as set forth in this Section 12.
(a) Subdivisions, Combinations, Stock Dividends and other Issuances. If the
Company shall, at any time while this Warrant is outstanding, (A) pay a
stock dividend or otherwise make a distribution or distributions on any
equity securities (including instruments or securities convertible into
or exchangeable for such equity securities) in shares of Common Stock,
(B) subdivide outstanding shares of Common Stock into a larger number
of shares, or (C) combine outstanding Common Stock into a smaller
number of shares, then the Exercise Price shall be multiplied by a
fraction, the numerator of which shall be the number of shares of
Common Stock outstanding before such event and the denominator of which
shall be the number of shares of Common Stock outstanding after such
event. Any adjustment made pursuant to this Section 12(a) shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution and
shall become effective immediately after the effective date in the case
of a subdivision or combination. The number of shares which may be
purchased hereunder shall be increased proportionately to any reduction
in Exercise Price pursuant to this paragraph 12(a), so that after such
adjustments the aggregate Exercise Price payable hereunder for the
increased number of shares shall be the same as the aggregate Exercise
Price in effect just prior to such adjustments.
(b) Other Distributions. If at any time after the date hereof the Company
distributes to holders of its Common Stock, other than as part of its
dissolution, liquidation or the winding up of its affairs, any shares
of its capital stock, any evidence of indebtedness or any of its assets
(other than Common Stock), then the number of Warrant Shares for which
this Warrant is exercisable shall be increased to equal: (i) the number
of Warrant Shares for which this Warrant is exercisable immediately
prior to such event, (ii) multiplied by a fraction, (A) the numerator
of which shall be the Fair Market Value (as defined below) per share of
Common Stock on the record date for the dividend or distribution, and
(B) the denominator of which shall be the Fair Market Value price per
share of Common Stock on the record date for the dividend or
distribution minus the amount allocable to one share of Common Stock of
the value (as jointly determined in good faith by the Board of
Directors of the Company and the Holder) of any and all such evidences
of indebtedness, shares of capital stock, other securities or property,
so distributed. For purposes of this Warrant, "FAIR MARKET VALUE" shall
equal the 5 Trading Day average closing trading price of the Common
Stock on the Principal Market (as defined in the Purchase Agreement)
for the 5 Trading Days preceding the date of determination or, if the
Common Stock is not listed or admitted to trading on any Principal
Market, and the average price cannot be determined as contemplated
above, the Fair Market Value of the Common Stock shall be as reasonably
determined in good faith by the Company's Board of Directors and the
Holder. The Exercise Price shall be reduced to equal: (i) the Exercise
Price in effect immediately before the occurrence of any event (ii)
multiplied by a fraction, (A) the numerator of which is the number of
Warrant Shares for which this Warrant is exercisable immediately before
the adjustment, and (B) the denominator of which is the number of
Warrant Shares for which this Warrant is exercisable immediately after
the adjustment.
(c) Merger, etc. If at any time after the date hereof there shall be a
merger or consolidation of the Company with or into or a transfer of
all or substantially all of the assets of the Company to another
entity, then the Holder shall be entitled to receive upon or after such
transfer, merger or consolidation becoming effective, and upon payment
of the Exercise Price then in effect, the number of shares or other
securities or property of the Company or of the successor corporation
resulting from such merger or consolidation, which would have been
received by the Holder for the shares of stock subject to this Warrant
had this Warrant been exercised just prior to such transfer, merger or
consolidation becoming effective or to the applicable record date
thereof, as the case may be. The Company will not merge or consolidate
with or into any other corporation, or sell or otherwise transfer its
property, assets and business substantially as an entirety to another
corporation, unless the corporation resulting from such merger or
consolidation (if not the Company), or such transferee corporation, as
the case may be, shall expressly assume in writing the due and punctual
performance and observance of each and every covenant and condition of
this Warrant to be performed and observed by the Company.
(d) Reclassification, etc. If at any time after the date hereof there shall
be a reorganization or reclassification of the securities as to which
purchase rights under this Warrant exist into the same or a different
number of securities of any other class or classes, then the Holder
shall thereafter be entitled to receive upon exercise of this Warrant,
during the period specified herein and upon payment of the Exercise
Price then in effect, the number of shares or other securities or
property resulting from such reorganization or reclassification, which
would have been received by the Holder for the shares of stock subject
to this Warrant had this Warrant at such time been exercised.
(e) Exercise Price Adjustment. In the event that the Company issues or
sells any Common Stock or securities which are convertible into or
exchangeable for its Common Stock or any convertible securities, or any
warrants or other rights to subscribe for or to purchase or any options
for the purchase of its Common Stock or any such convertible securities
(other than shares or options issued or which may be issued pursuant to
(i) the Company's current employee option plans or shares issued upon
exercise of options, warrants or rights outstanding on the date of the
Agreement and listed in the Company's most recent periodic report filed
under the Exchange Act or in the Purchase Agreement, or (ii)
arrangements with the Purchaser) at an effective price per share which
is less than $21.00 (which figure shall be appropriately and equitably
adjusted for stock splits, stock dividends, recapitalizations and
similar events), then in each such case, the Exercise Price in effect
immediately prior to such issue or sale shall be reduced effective
concurrently with such issue or sale to an amount determined by
multiplying the Exercise Price then in effect by a fraction, (x) the
numerator of which shall be the sum of (1) the number of shares of
Common Stock outstanding immediately prior to such issue or sale, plus
(2) the number of shares of Common Stock which the aggregate
consideration received by the Company for such additional shares would
purchase at such $21.00 figure (as adjusted); and (y) the denominator
of which shall be the number of shares of Common Stock of the Company
outstanding immediately after such issue or sale.
For the purposes of the foregoing adjustment, in the case of the
issuance of any convertible securities, warrants, options or other
rights to subscribe for or to purchase or exchange for, shares of
Common Stock ("CONVERTIBLE SECURITIES"), the maximum number of shares
of Common Stock issuable upon exercise, exchange or conversion of such
Convertible Securities shall be deemed to be outstanding, provided that
no further adjustment shall be made upon the actual issuance of Common
Stock upon exercise, exchange or conversion of such Convertible
Securities.
The number of shares which may be purchased hereunder shall be
increased proportionately to any reduction in Exercise Price pursuant
to this paragraph 12(e), so that after such adjustments the aggregate
Exercise Price payable hereunder for the increased number of shares
shall be the same as the aggregate Exercise Price in effect just prior
to such adjustments.
In the event of any such issuance for a consideration which is less
than such Fair Market Value and also less than the Exercise Price then
in effect, than there shall be only one such adjustment by reason of
such issuance, such adjustment to be that which results in the greatest
reduction of the Exercise Price computed as aforesaid.
(f) (i) The terms of any reorganization, consolidation, merger, sale,
transfer or share exchange shall include such terms so as to continue
to give to the holder hereof the right to receive the securities or
property set forth in this Section 12 upon any exercise following any
such reclassification, consolidation, merger, sale, transfer or share
exchange.
(ii) In the event of any adjustment in the number of Warrant Shares
issuable hereunder upon exercise, the Exercise Price shall be inversely
proportionately increased or decreased as the case may be, such that
aggregate purchase price for Warrant Shares upon full exercise of this
Warrant shall remain the same. Similarly, in the event of any
adjustment in the Exercise Price, the number of Warrant Shares issuable
hereunder upon exercise shall be inversely proportionately increased or
decreased as the case may be, such that aggregate purchase price for
Warrant Shares upon full exercise of this Warrant shall remain the
same.
13. Voluntary Adjustment by the Company. The Company may at its option, at
any time during the term of this Warrant, reduce but not increase the
then current Exercise Price to any amount and for any period of time
deemed appropriate by the Board of Directors of the Company.
14. Notice of Adjustment; Notice of Events. (i) Whenever the number of
Warrant Shares or number or kind of securities or other property
purchasable upon the exercise of this Warrant or the Exercise Price is
adjusted, the Company shall promptly mail to the Holder of this Warrant
a notice setting forth the number of Warrant Shares (and other
securities or property) purchasable upon the exercise of this Warrant
and the Exercise Price of such Warrant Shares after such adjustment and
setting forth the computation of such adjustment and a brief statement
of the facts requiring such adjustment. (ii) If: (A) the Company shall
declare a dividend (or any other distribution) on its Common Stock; or
(B) the Company shall declare a special nonrecurring cash dividend on
or a redemption of its Common Stock; or (C) the Company shall authorize
the granting to all holders of the Common Stock rights or warrants to
subscribe for or purchase any shares of capital stock of any class or
of any rights; or (D) the approval of any stockholders of the Company
shall be required in connection with any reclassification of the Common
Stock of the Company, any consolidation or merger to which the Company
is a party, any sale or transfer of all or substantially all of the
assets of the Company, or any compulsory share exchange whereby the
Common Stock is converted into other securities, cash or property; or
(E) the Company shall authorize the voluntary dissolution, liquidation
or winding up of the affairs of the Company, then the Company shall
cause to be mailed to each Warrant holder at their last addresses as
they shall appear upon the Warrant register of the Company, at least 30
calendar days prior to the applicable record or effective date
hereinafter specified (or such lesser time as is equal to the period
between the date of fixing such record or effective date and such
record or effective date, but in no event less than 10 days), a notice
stating (x) the date on which a record is to be taken for the purpose
of such dividend, distribution, redemption, rights or warrants, or if a
record is not to be taken, the date as of which the holders of Common
Stock of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the date on
which such reclassification, consolidation, merger, sale, transfer or
share exchange is expected to become effective or close, and the date
as of which it is expected that holders of Common Stock of record shall
be entitled to exchange their shares of Common Stock for securities,
cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution,
liquidation or winding up.
15. Authorized Shares. The Company covenants that during the period the
Warrant is outstanding and exercisable, it will reserve from its
authorized and unissued Common Stock a sufficient number of shares to
provide for the issuance of the Warrant Shares upon the exercise of any
and all purchase rights under this Warrant. The Company further
covenants that its issuance of this Warrant shall constitute full
authority to its officers who are charged with the duty of executing
stock certificates to execute and issue the necessary certificates for
the Warrant Shares upon the exercise of the purchase rights under this
Warrant. The Company will take all such reasonable action as may be
necessary to assure that such Warrant Shares may be issued as provided
herein without violation of any applicable law, regulation, or rule of
any applicable market or exchange.
16. 9.9% and 19.9% Limitations.
(a) Notwithstanding anything to the contrary contained herein, the number
of shares of Common Stock that may be acquired by the Holder upon
exercise pursuant to the terms hereof shall not exceed a number that,
when added to the total number of shares of Common Stock deemed
beneficially owned by such Holder at such time (other than by virtue of
the ownership of securities or rights to acquire securities (including
the Warrant Shares) that have limitations on the Holder's right to
convert, exercise or purchase similar to the limitation set forth
herein), together with all shares of Common Stock deemed beneficially
owned (other than by virtue of the ownership of securities or rights to
acquire securities that have limitations on the right to convert,
exercise or purchase similar to the limitation set forth herein) by the
Holder's "affiliates" at such time (as defined in Rule 144 of the Act)
("AGGREGATION PARTIES") that would be aggregated for purposes of
determining whether a group under Section 13(d) of the Securities
Exchange Act of 1934 as amended, exists, would exceed 9.9% of the total
issued and outstanding shares of the Common Stock (the "RESTRICTED
OWNERSHIP PERCENTAGE"). Each Holder shall have the right (w) at any
time and from time to time to reduce its Restricted Ownership
Percentage immediately upon notice to the Corporation and (x) (subject
to waiver) at any time and from time to time, to increase its
Restricted Ownership Percentage immediately in the event of the
announcement as pending or planned, of a change of control transaction
(including without limitation a transaction that would result in a
transfer of more than 50% of the Company's voting power or equity, or a
transaction that would result in a person or "group" being deemed the
beneficial owner of 50% or more of the Company's voting power or
equity).
(b) The Holder covenants at all times on each day (each such day being
referred to as a "COVENANT DAY") as follows: During the balance of such
Covenant Day and the succeeding sixty-one (61) days (the balance of
such Covenant Day and the succeeding 61 days being referred to as the
"COVENANT PERIOD") such Holder will not acquire shares of Common Stock
pursuant to any right (including exercise of Warrants) existing at the
commencement of the Covenant Period to the extent the number of shares
so acquired by such Holder and its Aggregation Parties (ignoring all
dispositions) would exceed:
(x) the Restricted Ownership Percentage of the total
number of shares of Common Stock outstanding at the
commencement of the Covenant Period, minus
(y) the number of shares of Common Stock actually owned
by such Holder and its Aggregation Parties at the
commencement of the Covenant Period.
A new and independent covenant will be deemed to be given by the Holder
as of each moment of each Covenant Day. No covenant will terminate,
diminish or modify any other covenant. The Holder agrees to comply with
each such covenant. This Section 16 controls in the case of any
conflict with any other provision of the Purchase Agreement or any
agreement entered into in connection therewith.
The Company's obligation to issue Common Stock which would exceed such
limits referred to in this Section 16 shall be suspended to the extent
necessary until such time, if any, as shares of Common Stock may be
issued in compliance with such restrictions and the Holder notifies the
Company thereof.
(c) Notwithstanding anything contained herein, in no event shall the
Company issue shares of Common Stock hereunder to the extent that the
total number of shares issued or deemed issued to the Purchasers (when
added to the Underlying Shares and Warrant Shares) under the Purchase
Agreement would exceed 19.9% of the Company's issued and outstanding
shares of Common Stock on the date hereof. Instead, the Company shall
redeem this Warrant to the extent necessary at such consideration
required to place the Purchasers in the same economic position they
would have been if not for such limitation. Only shares acquired
pursuant to the Purchase Agreement will be included in determining
whether the limitation would be exceeded for purposes of this
paragraph.
17. Compliance with Securities Laws. (a) The Holder hereof acknowledges
that the Warrant Shares acquired upon the exercise of this Warrant, if
not registered (or if no exemption from registration exists), will have
restrictions upon resale imposed by state and federal securities laws.
Each certificate representing the Warrant Shares issued to the Holder
upon exercise (if not registered, for resale or otherwise, or if no
exemption from registration exists) will bear substantially the
following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE 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, TRANSFERRED, SOLD OR OTHERWISE
DISPOSED OF 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.
(b) Without limiting the Purchaser's right to transfer, assign or otherwise
convey the Warrant or Warrant Shares in compliance with all applicable
securities laws, the Holder of this Warrant, by acceptance hereof,
acknowledges that this Warrant and the Warrant Shares to be issued upon
exercise hereof are being acquired solely for the Purchaser's own
account and not as a nominee for any other party, and that the
Purchaser will not offer, sell or otherwise dispose of this Warrant or
any Warrant Shares to be issued upon exercise hereof except under
circumstances that will not result in a violation of applicable federal
and state securities laws.
18. Miscellaneous.
(a) Issue Date; Choice of Law; Venue; Jurisdiction. The provisions of this
Warrant shall be construed and shall be given effect in all respects as
if it had been issued and delivered by the Company on the date hereof.
This Warrant shall be binding upon any successors or assigns of the
Company. This Warrant will be construed and enforced in accordance with
and governed by the laws of the State of New York, except for matters
arising under the Act, without reference to principles of conflicts of
law. Each of the parties consents to the exclusive jurisdiction of the
Federal and State Courts sitting in the County of New York in the State
of New York in connection with any dispute arising under this Warrant
and hereby waives, to the maximum extent permitted by law, any
objection, including any objection based on forum non conveniens or
venue, to the bringing of any such proceeding in such jurisdiction.
Each party hereby agrees that if the other party to this Warrant
obtains a judgment against it in such a proceeding, the party which
obtained such judgment may enforce same by summary judgment in the
courts of any country having jurisdiction over the party against whom
such judgment was obtained, and each party hereby waives any defenses
available to it under local law and agrees to the enforcement of such a
judgment. Each party to this Warrant irrevocably consents to the
service of process in any such proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to such party
at its address in accordance with Section 18(c). Nothing herein shall
affect the right of any party to serve process in any other manner
permitted by law.
(b) Modification and Waiver. This Warrant and any provisions hereof may be
changed, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of the same is
sought. Any amendment effected in accordance with this paragraph shall
be binding upon the Purchaser, each future holder of this Warrant and
the Company. No waivers of, or exceptions to, any term, condition or
provision of this Warrant, in any one or more instances, shall be
deemed to be, or construed as, a further or continuing waiver of any
such term, condition or provision.
(c) Notices. Any notice, request or other document required or permitted to
be given or delivered to the Purchaser or future holders hereof or the
Company shall be personally delivered or shall be sent by certified or
registered mail, postage prepaid, to the Purchaser or each such holder
at its address as shown on the books of the Company or to the Company
at the address set forth in the Purchase Agreement. All notices under
this Warrant shall be deemed to have been given when received.
A party may from time to time change the address to which notices to it
are to be delivered or mailed hereunder by notice in accordance with
the provisions of this Section 18(c).
(d) Severability. Whenever possible, each provision of this Warrant shall
be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant is held to be
invalid, illegal or unenforceable in any respect under any applicable
law or rule in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect the validity, legality or
enforceability of any other provision of this Warrant in such
jurisdiction or affect the validity, legality or enforceability of any
provision in any other jurisdiction, but this Warrant shall be
reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained
herein.
(e) No Impairment. The Company will not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times
in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order
to protect the rights of the Holder against impairment. Without
limiting the generality of the foregoing, the Company (a) will not
increase the par value of any Warrant Shares above the amount payable
therefor on such exercise, and (b) will take all such action as may be
reasonably necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable Warrant Shares
on the exercise of this Warrant.
(f) Specific Enforcement. The Company and the Holder acknowledge and agree
that irreparable damage would occur in the event that any of the
provisions of this Warrant were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed
that the parties shall he entitled to an injunction or injunctions to
prevent or cure breaches of the provisions of this Warrant and to
enforce specifically the terms and provisions hereof, this being in
addition to any other remedy to which either of them may be entitled by
law or equity.
[Signature Page Follows]
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its officers thereunto duly authorized.
Dated: March _______, 2001
XXXXXXXXXXXXXXXXX.XXX, INC.
By: __________________________
Name: Ramy El-Batrawi
Title: President
ATTEST:
------------------------
Print Name:
NOTICE OF EXERCISE
To: XxxxxxxXxxxxxxxxx.xxx, Inc.
(1) The undersigned hereby elects to exercise the attached Warrant for and to
purchase thereunder, ______ shares of Common Stock, and herewith makes payment
therefor of $_______, or elects to use the cashless exercise option of the
Warrant in the event Warrant Shares are not registered as required in the
Registration Rights Agreement.
(2) Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below:
-------------------------------
(Name)
-------------------------------
(Address)
-------------------------------
(3) Please issue a new Warrant for the unexercised portion of the attached
Warrant in the name of the undersigned or in such other name as is specified
below:
-----------------------------------
(Name)
-------------------- -----------------------------------
(Date) (Signature)
-----------------------------------
(Address)
Dated:
------------------------------
Signature
ASSIGNMENT FORM
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
_______________________________________________ whose address is
---------------------------------------------------------------.
---------------------------------------------------------------
Dated: ______________,
Holder's Signature: _____________________________
Holder's Address: _____________________________
_____________________________
Signature Guaranteed: ___________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in an fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing
Warrant.
Exhibit 10.64
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement ("Agreement") is entered into as of
March __, 2001, between XxxxxxxXxxxxxxxxx.xxx, Inc., a Delaware corporation with
offices at 0000 Xxxxxxxxx Xxxxxxxxx, Xxx Xxxx, Xxxxxxxxxx 00000 (the "Company")
and Xxxxxxx Associates, L.P., a Delaware limited partnership, and Xxxxxxx
International, L.P., a Cayman Islands limited partnership (individually and
collectively, the "Purchaser").
W I T N E S S E T H:
Whereas, pursuant to that certain Securities Purchase Agreement, dated
on or about the date hereof, by and between the Company and the Purchaser (the
"Purchase Agreement"), the Company has agreed to sell and issue to the
Purchaser, and the Purchaser has agreed to purchase from the Company, an
aggregate of $3,000,000 in principal of the Company's 7% Convertible Debentures
(the "Debentures") and Warrants (the "Warrants") to purchase shares of the
Company's Common Stock, par value $0.001 per share (the "Common Stock") subject
to the terms and conditions set forth therein; and
Whereas, the Purchase Agreement contemplates that the Debentures and
Warrants will be convertible and exercisable into shares (the "Common Shares")
of Common Stock pursuant to the terms and conditions set forth in the Debentures
and Warrants; and
Now, Therefore, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in the Purchase
Agreement and this Agreement, the Company and the Purchasers agree as follows:
1. Certain Definitions. Capitalized terms used herein and not otherwise
defined shall have the meaning ascribed thereto in the Purchase Agreement or the
Debentures. As used in this Agreement, the following terms shall have the
following respective meanings:
"Closing" and "Closing Date" shall have the meanings ascribed to such
terms in the Purchase Agreement.
"Commission" or "SEC" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Securities Act.
"Holder" and "Holders" shall include the Purchaser and any transferee
or transferees of Registrable Securities, Debentures and/or Warrants which have
not been sold to the public to whom the registration rights conferred by this
Agreement have been transferred in compliance with this Agreement and the
Purchase Agreement.
The terms "register", "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.
"Registrable Securities" shall mean: (i) the Common Shares (without
regard to any limitations on beneficial ownership contained in the Debentures or
Warrants) or other securities issued or issuable to each Holder or its permitted
transferee or designee (a) upon conversion of the Debentures and/or upon
exercise of the Warrants, or (b) upon any distribution with respect to, any
exchange for or any replacement of such Debentures or Warrants or (c) upon any
conversion, exercise or exchange of any securities issued in connection with any
such distribution, exchange or replacement; (ii) securities issued or issuable
upon any stock split, stock dividend, recapitalization or similar event with
respect to the foregoing; and (iii) any other security issued as a dividend or
other distribution with respect to, in exchange for or in replacement of the
securities referred to in the preceding clauses.
"Registration Expenses" shall mean all expenses to be incurred by the
Company in connection with each Holder's registration rights under this
Agreement, including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel for the Company, blue sky
fees and expenses, reasonable fees and disbursements of counsel to Holders
(using a single counsel selected by a majority in interest of the Holders) for a
review of the Registration Statement and related documents, and the expense of
any special audits incident to or required by any such registration (but
excluding the compensation of regular employees of the Company, which shall be
paid in any event by the Company).
"Registration Statement" shall have the meaning set forth in Section
2(a) herein.
"Regulation D" shall mean Regulation D as promulgated pursuant to the
Securities Act, and as subsequently amended.
"Securities Act" or "Act" shall mean the Securities Act of 1933, as
amended.
"Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities and all fees and
disbursements of counsel for Holders not included within "Registration
Expenses".
2. Registration Requirements. The Company shall use its best efforts to
effect the registration of the Registrable Securities (including, without
limitation, the execution of an undertaking to file post-effective amendments,
appropriate qualification under applicable blue sky or other state securities
laws and appropriate compliance with applicable regulations issued under the
Securities Act) as would permit or facilitate the sale or distribution of all
the Registrable Securities in the manner (including manner of sale) and in all
states reasonably requested by the Holder. Such best efforts by the Company
shall include, without limitation, the following:
(a) The Company shall, as expeditiously as possible after the Closing
Date:
(i) But in any event within 20 days of the Closing, prepare and
file a registration statement with the Commission pursuant to Rule 415
under the Securities Act on Form S-3 under the Securities Act (or in
the event that the Company is ineligible to use such form, such other
form as the Company is eligible to use under the Securities Act
provided that such other form shall be converted into an S-3 as soon as
Form S-3 becomes available to the Company) covering resales by the
Holders as selling stockholders (not underwriters) of the Registrable
Securities and, to the extent practicable, no other securities
("Registration Statement"), which Registration Statement, to the extent
allowable under the Securities Act and the rules promulgated thereunder
(including Rule 416), shall state that such Registration Statement also
covers such indeterminate number of additional shares of Common Stock
as may become issuable upon conversion of the Debentures and exercise
of the Warrants. The number of shares of Common Stock initially
included in such Registration Statement shall be no less than the sum
of two times the number of Common Shares that are then issuable upon
conversion of the Debentures and the number of shares issuable upon
exercise of the Warrants (assuming full conversion or exercise,
respectively, at the then applicable Market Price (as defined in the
Debentures) or Exercise Price (as defined in the Warrant). Nothing in
the preceding sentence will limit the Company's obligations to reserve
shares of Common Stock pursuant to Section 3.7 of the Purchase
Agreement. Thereafter the Company shall use its best efforts to cause
such Registration Statement and other filings to be declared effective
as soon as possible, and in any event prior to 80 days following the
Closing Date. Without limiting the foregoing, the Company will promptly
respond to all SEC comments, inquiries and requests, and shall request
acceleration of effectiveness at the earliest possible date. The
Company shall provide the Holders reasonable opportunity to review any
such Registration Statement or amendment or supplement thereto prior to
filing.
(ii) Prepare and file with the SEC such amendments and
supplements to such Registration Statement and the prospectus used in
connection with such Registration Statement as may be necessary to
comply with the provisions of the Act with respect to the disposition
of all securities covered by such Registration Statement and notify the
Holders of the filing and effectiveness of such Registration Statement
and any amendments or supplements.
(iii) Furnish to each Holder such numbers of copies of a current
prospectus conforming with the requirements of the Act, copies of the
Registration Statement, any amendment or supplement thereto and any
documents incorporated by reference therein and such other documents as
such Holder may reasonably require in order to facilitate the
disposition of Registrable Securities owned by such Holder.
(iv) Register and qualify the securities covered by such
Registration Statement under the securities or "Blue Sky" laws of all
domestic jurisdictions; provided that the Company shall not be required
in connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any such
states or jurisdictions.
(v) Notify each Holder immediately of the happening of any event
(but not the substance or details of any such events unless
specifically requested by a Holder) as a result of which the prospectus
(including any supplements thereto or thereof) included in such
Registration Statement, as then in effect, includes an untrue statement
of material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing, and use its
best efforts to promptly update and/or correct such prospectus.
(vi) Notify each Holder immediately of the issuance by the
Commission or any state securities commission or agency of any stop
order suspending the effectiveness of the Registration Statement or the
threat or initiation of any proceedings for that purpose. The Company
shall use its best efforts to prevent the issuance of any stop order
and, if any stop order is issued, to obtain the lifting thereof at the
earliest possible time.
(vii) Permit counsel to the Holders to review the Registration
Statement and all amendments and supplements thereto within a
reasonable period of time (but not less than 5 full Trading Days (as
defined in the Debentures)) prior to each filing, and shall not file
any document in a form to which such counsel reasonably objects and
will not request acceleration of the Registration Statement without
prior notice to such counsel.
(viii) List the Registrable Securities covered by such
Registration Statement with all securities exchange(s) and/or markets
on which the Common Stock is then listed and prepare and file any
required filings with the Nasdaq National Market and Pacific Exchange
or any exchange or market where the Common Shares are traded.
(ix) Take all steps necessary to enable Holders to avail
themselves of the prospectus delivery mechanism set forth in Rule 153
(or successor thereto) under the Act.
(b) Set forth below in this Section 2(b) are (I) events that may arise
that the Purchasers consider will interfere with the full enjoyment of their
rights under this Agreement, the Purchase Agreement, the Debentures and the
Warrants (the "Interfering Events"), and (II) certain remedies applicable in
each of these events.
Paragraphs (i) through (iv) of this Section 2(b) describe the
Interfering Events, provide a remedy to the Purchasers if an Interfering Event
occurs and provide that the Purchasers may require that the Company repurchase
outstanding Debentures and Warrants at a specified price if certain Interfering
Events are not timely cured.
Paragraph (v) provides, inter alia, that if default adjustments
required as the remedy in the case of certain of the Interfering Events are not
provided when due, the Company may be required by the Purchasers to redeem
outstanding Debentures and Warrants at a specified price.
Paragraph (vi) provides, inter alia, that the Purchasers have the right
to specific performance.
The preceding paragraphs in this Section 2(b) are meant to serve only
as an introduction to this Section 2(b), are for convenience only, and are not
to be considered in applying, construing or interpreting this Section 2(b).
(i) Delay in Effectiveness of Registration Statement.
(A) In the event that such Registration Statement has not been
declared effective within 80 days from the Closing Date, or the Company
at any time fails to issue unlegended Registrable Securities as
required by Article VI of the Purchase Agreement, then the Company
shall pay each Holder a Monthly Delay Payment (as defined below) for
each 30-day period (or portion thereof) that effectiveness of the
Registration Statement is delayed or failure to issue such unlegended
Registrable Securities persists. In addition to the foregoing, if the
Registration Statement has not been declared effective within 120 days
after the Closing Date, then each Holder shall have the right to sell,
at any time after the 120th day after the Closing Date, any or all of
its Debentures and Warrants to the Company for consideration (the
"Mandatory Repurchase Price") equal to (I) for the Debentures, the
greater of (x) 125% of the outstanding Principal Amount of all such
Debentures being sold to the Company, or (y) the Conversion Ratio (as
defined in the Debentures) multiplied by the greater of the last
closing price of the Common Stock on (i) the date a Holder exercises
its option pursuant to this Section 2(b) to require repurchase of the
Debentures or (ii) the date on which the event triggering Holder's
remedies under this Section 2(b) first occurred, in each case payable
in cash and (II) for the Warrants, 125% of the product of (a) the
difference between the greater of clauses (i) or (ii) above and the
exercise price of the Warrants, multiplied by (b) the number of
Warrants being sold to the Company, payable in cash.
(B) As used in this Agreement, a "Monthly Delay Payment" shall be
a cash payment equal to 1% of the aggregate Purchase Price paid by a
Holder, payable on the date on which the specified condition in this
Section 2(b) has not been fulfilled or the specified deficiency has not
been remedied, 2% of the aggregate Purchase Price for the next 30-day
period (or portion thereof) that the specified condition in this
Section 2(b) has not been fulfilled or the specified deficiency has not
been remedied, and 3% of the aggregate Purchase Price thereafter for
each subsequent 30-day period (or portion thereof) that the specified
condition in this Section 2(b) has not been fulfilled or the specified
deficiency has not been remedied (prorated in each case as
appropriate). Payment of the Monthly Delay Payments and Mandatory
Repurchase Price shall be due and payable from the Company to such
Holder within 5 business days of demand therefor. Without limiting the
foregoing, if cash payment of the Mandatory Repurchase Price is not
made within such 5 business day period, the Holder may revoke and
withdraw its election to cause the Company to make such mandatory
purchase at any time prior to its receipt of such cash. At the option
of the Holder, Monthly Delay Payments may be added to the outstanding
Principal Amount of the Debentures held by it.
(C) Notwithstanding the foregoing, there shall be excluded from
the calculation of the number of days that the Registration Statement
has not been declared effective the delays which are solely
attributable to delays in the Purchaser providing information required
for the Registration Statement.
(ii) No Listing; Premium Price Redemption for Delisting of Class
of Shares.
(A) In the event that the Company fails, refuses or for any other
reason is unable to cause the Registrable Securities covered by the
Registration Statement to be listed with the Pacific Exchange and the
Nasdaq National Market or one of the other Approved Markets (as defined
in the Purchase Agreement) at all times during the period ("Listing
Period") from the date ("Effectiveness Commencement Date") which is the
earlier of the effectiveness of the Registration Statement and the 80th
day following the Closing Date until such time as the registration
period specified in Section 5 terminates, then the Company shall
provide to each Holder a Monthly Delay Payment, for each 30 day period
or portion thereof during which such listing is not in effect. In
addition to the foregoing, following the 10th day that such listing is
not in effect, each Holder shall have the right to sell to the Company
any or all of its Debentures and Warrants at the Mandatory Repurchase
Price. The provisions of Section 2(b)(i)(B) shall apply to this Section
2(b)(ii)(A).
(B) In the event that shares of Common Stock of the Company are
not listed on any of the Approved Markets at all times following the
Closing Date, or are otherwise suspended from trading and remain
unlisted or suspended for 3 consecutive days, then the Company shall
provide to each Holder a Monthly Delay Payment for each 30-day period
or portion thereof (appropriately prorated) during which such listing
is not in effect. In addition to the foregoing, following the 5th day
that the shares are not so listed or are otherwise suspended, at the
option of each Holder and to the extent such Holder so elects, each
Holder shall have the right to sell to the Company the Debentures and
the Warrants held by such Holder, in whole or in part, for the
Mandatory Repurchase Price on the terms set forth in Section 2(b)(i)(B)
above.
(iii) Blackout Periods. In the event any Holder's ability to sell
Registrable Securities under the Registration Statement is suspended for
more than (i) five (5) consecutive days or (ii) twenty (20) days in any
calendar year ("Suspension Grace Period"), including without limitation by
reason of any suspension or stop order with respect to the Registration
Statement or the fact that an event has occurred as a result of which the
prospectus (including any supplements thereto) included in such Registration
Statement then in effect includes an untrue statement of material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances
then existing (a "Blackout"), then the Company shall provide to each Holder
a Monthly Delay Payment for each 30-day period or portion thereof
(appropriately prorated) from and after the expiration of the Suspension
Grace Period, on the terms set forth in Section 2(b)(i)(B) above. In
addition, at any time following the expiration of the Suspension Grace
Period if the Blackout continues for more than five (5) additional
consecutive days, a Holder shall have the right to sell to the Company its
Debentures and/or Warrants in whole or in part for the Mandatory Repurchase
Price on the terms set forth in Section 2(b)(i)(B) above.
(iv) Redemption for Conversion Deficiency. In the event that the
Company does not have a sufficient number of Common Shares available to
satisfy the Company's obligations to any Holder upon receipt of a Conversion
Notice (as defined in the Debentures) or exercise of the Warrants or upon a
Repayment Date (as defined in the Debentures) or is otherwise unable or
unwilling for any reason to issue such Common Shares (other than failure of
the Holder to comply with the conversion notice and delivery requirements of
Section 3 of the Debentures) (each, a "Conversion/Exercise Deficiency") in
accordance with the terms of the Debentures, Purchase Agreement and Warrants
for any reason after receipt of a Conversion Notice or exercise notice from
any Holder or upon a Repayment Date, then:
(A) The Company shall provide to each Holder a Monthly Delay
Payment for each 30-day period or portion thereof (appropriately
prorated) following the Conversion/Exercise Deficiency on all
outstanding Debentures and Warrants, on the terms set forth in Section
2(b)(i)(B) above.
(B) At any time five days after the commencement of the running
of the first 30-day period described above in clause (A) of this
paragraph (iv), at the request of any Holder, the Company promptly
shall purchase from such Holder, for the Mandatory Repurchase Price and
on the terms set forth in Section 2(b)(i)(B) above, any and all
outstanding Debentures and/or Warrants, if the failure to issue Common
Shares results from the lack of a sufficient number thereof and shall
purchase all of such Holder's Debentures and/or Warrants (or such
portion requested by such Holder) for such consideration and on such
terms if the failure to issue Common Shares results from any other
cause, or is without cause.
(C) The Holder shall have the right to withdraw any request for
redemption hereunder at any time prior to its receipt of the Mandatory
Repurchase Price.
(v) Mandatory Purchase Price for Defaults.
(A) Th Company acknowledges that any failure, refusal or
inability by the Company to perform the obligations described in the
foregoing paragraphs (i) through (iv) will cause the Holders to suffer
damages in an amount that will be difficult to ascertain, including
without limitation damages resulting from the loss of liquidity in the
Registrable Securities and the additional investment risk in holding
the Debentures, Warrants and Registrable Securities. Accordingly, the
parties agree, after consulting with counsel, that it is appropriate to
include in this Agreement the foregoing provisions for Monthly Delay
Payments and mandatory redemptions in order to compensate the Holders
for such damages. The parties acknowledge and agree that the Monthly
Delay Payments and mandatory redemptions set forth above represent the
parties' good faith effort to quantify such damages and, as such, agree
that the form and amount of such payments and mandatory redemptions are
reasonable and will not constitute a penalty.
(B) In the event that the Company fails to pay any Monthly Delay
Payment within 5 business days of demand therefor, each Holder shall
have the right to sell to the Company any or all of its Debentures
and/or Warrants at the Mandatory Repurchase Price on the terms set
forth in Section 2(b)(i)(B) above.
(C) The Holder shall have the right to withdraw any request for
redemption hereunder at any time prior to its receipt of the Mandatory
Repurchase Price.
(vi) Cumulative Remedies. The Monthly Delay Payments and mandatory
purchases provided for above are in addition to and not in lieu or
limitation of any other rights the Holders may have at law, in equity or
under the terms of the Debentures, the Purchase Agreement, the Warrants and
this Agreement, including without limitation the right to monetary contract
damages and specific performance. Each Holder shall be entitled to specific
performance of any and all obligations of the Company in connection with the
registration rights of the Holders hereunder.
(vii) Remedies for Registrable Securities. In any case in which a
Holder of Debentures and/or Warrants has the right to cause the purchase of
its securities under this Section 2(b), it shall also have the right to
cause the purchase of the Registrable Securities that it owns, in whole or
in part at the Holder's option, as follows: such shares shall be purchased
at a price ("Common Purchase Price") equal to the Mandatory Repurchase Price
of the Debentures which were converted into Common Shares or Warrants which
were exercised for Common Shares.
In the case in which a Holder of Debentures or Warrants would have the
right to receive Monthly Delay Payments with respect to Debentures or Warrants
under Section 2(b), it shall also have the right to receive payments with
respect to Registrable Securities owned by it in an amount at the rate of the
Monthly Delay Payments that would have applied to the Debentures or Warrants
converted into or exercised for Common Shares had such Debentures or Warrants
not been converted or exercised.
(c) If the Holder(s) intend to distribute the Registrable Securities by
means of an underwriting, the Holder(s) shall so advise the Company. Any such
underwriting may only be administered by nationally or regionally recognized
investment bankers reasonably satisfactory to the Company.
(d) The Company shall enter into such customary agreements for
secondary offerings (including a customary underwriting agreement with the
underwriter or underwriters, if any) and take all such other reasonable actions
reasonably requested by the Holders in connection therewith in order to expedite
or facilitate the disposition of such Registrable Securities and in such
connection, whether or not an underwriting agreement is entered into and whether
or not the Registrable Securities are to be sold in an underwritten offering:
(i) make such representations and warranties to the Holders and
the underwriter or underwriters, if any, in form, substance and scope
as are customarily made by issuers to underwriters in secondary
offerings;
(ii) cause to be delivered to the sellers of Registrable
Securities and the underwriter or underwriters, if any, opinions of
independent counsel to the Company, on and dated as of the effective
day (or in the case of an underwritten offering, dated the date of
delivery of any Registrable Securities sold pursuant thereto) of the
Registration Statement, and within ninety (90) days following the end
of each fiscal year thereafter, which counsel and opinions (in form,
scope and substance) shall be reasonably satisfactory to the Holders
and the underwriter(s), if any, and their counsel and covering, without
limitation, such matters as the due authorization and issuance of the
securities being registered and compliance with securities laws by the
Company in connection with the authorization, issuance and registration
thereof and other matters that are customarily given to underwriters in
underwritten offerings, addressed to the Holders and each underwriter,
if any;
(iii) cause to be delivered, immediately prior to the
effectiveness of the Registration Statement (and, in the case of an
underwritten offering, at the time of delivery of any Registrable
Securities sold pursuant thereto), and at the beginning of each fiscal
year following a year during which the Company's independent certified
public accountants shall have reviewed any of the Company's books or
records, a "comfort" letter from the Company's independent certified
public accountants addressed to each underwriter, if any, stating that
such accountants are independent public accountants within the meaning
of the Securities Act and the applicable published rules and
regulations thereunder, and otherwise in customary form and covering
such financial and accounting matters as are customarily covered by
letters of the independent certified public accountants delivered in
connection with secondary offerings; such accountants shall have
undertaken in each such letter to update the same during each such
fiscal year in which such books or records are being reviewed so that
each such letter shall remain current, correct and complete throughout
such fiscal year; and each such letter and update thereof, if any,
shall be reasonably satisfactory to such underwriters;
(iv) if an underwriting agreement is entered into, the same shall
include customary indemnification and contribution provisions to and
from the underwriters and procedures for secondary underwritten
offerings; and
(v) deliver such documents and certificates as may be reasonably
requested by the Holders of the Registrable Securities being sold or
the managing underwriter or underwriters, if any, to evidence
compliance with clause (i) above and with any customary conditions
contained in the underwriting agreement, if any.
(e) The Company shall make available for inspection by the Holders,
representative(s) of all the Holders together, any underwriter participating in
any disposition pursuant to a Registration Statement, and any attorney or
accountant retained by any Holder or underwriter, all financial and other
records customary for purposes of the Holders' due diligence examination of the
Company and review of any Registration Statement, all SEC Documents (as defined
in the Purchase Agreement) filed subsequent to the Closing, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors and employees to supply all information reasonably requested by any
such representative, underwriter, attorney or accountant in connection with such
Registration Statement, provided that such parties agree to keep such
information confidential.
(f) Subject to Section 2(b) above, the Company may suspend the use of
any prospectus used in connection with the Registration Statement only in the
event, and for such period of time as, such a suspension is required by the
rules and regulations of the Commission. The Company will use its best efforts
to cause such suspension to terminate at the earliest possible date.
(g) The Company shall file a Registration Statement with respect to any
newly authorized and/or reserved Registrable Securities consisting of Common
Shares described in clause (i) of the definition of Registrable Securities
within five (5) business days of any stockholders meeting authorizing same and
shall use its best efforts to cause such Registration Statement to become
effective within sixty (60) days of such stockholders meeting. If the Holders
become entitled, pursuant to an event described in clause (ii) and (iii) of the
definition of Registrable Securities, to receive any securities in respect of
Registrable Securities that were already included in a Registration Statement,
subsequent to the date such Registration Statement is declared effective, and
the Company is unable under the securities laws to add such securities to the
then effective Registration Statement, the Company shall promptly file, in
accordance with the procedures set forth herein, an additional Registration
Statement with respect to such newly Registrable Securities. The Company shall
use its best efforts to (i) cause any such additional Registration Statement,
when filed, to become effective under the Securities Act, and (ii) keep such
additional Registration Statement effective during the period described in
Section 5 below and cause such Registration Statement to become effective within
30 days of that date that the need to file the Registration Statement arose. All
of the registration rights and remedies under this Agreement shall apply to the
registration of such newly reserved shares and such new Registrable Securities,
including without limitation the provisions providing for default payments and
mandatory redemptions contained herein.
3. Expenses of Registration. All Registration Expenses in connection
with any registration, qualification or compliance with registration pursuant to
this Agreement shall be borne by the Company, and all Selling Expenses of a
Holder shall be borne by such Holder.
4. Registration on Form S-3. The Company shall use its best efforts to
remain qualified for registration on Form S-3 or any comparable or successor
form or forms, or in the event that the Company is ineligible to use such form,
such form as the Company is eligible to use under the Securities Act, provided
that if such other form is used, the Company shall convert such other form to a
Form S-3 as soon as the Company becomes so eligible.
5. Registration Period. In the case of the registration effected by the
Company pursuant to this Agreement, the Company shall keep such registration
effective until the later of (a) the date on which all the Holders have
completed the sales or distribution described in the Registration Statement
relating thereto or, if earlier, until such Registrable Securities may be sold
by the Holders under Rule 144(k) (provided that the Company's transfer agent has
accepted an instruction from the Company to such effect), or (b) the second
(2nd) anniversary of the Closing Date.
6. Indemnification.
(a) Company Indemnity. The Company will indemnify each Holder, each of
its officers, directors, agents and partners, and each person controlling each
of the foregoing, within the meaning of Section 15 of the Securities Act and the
rules and regulations thereunder with respect to which registration,
qualification or compliance has been effected pursuant to this Agreement, and
each underwriter, if any, and each person who controls, within the meaning of
Section 15 of the Securities Act and the rules and regulations thereunder, any
underwriter, against all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any prospectus, offering
circular or other document (including any related registration statement,
notification or the like) incident to any such registration, qualification or
compliance, or based on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances under which they were made,
or any violation by the Company of the Securities Act or any state securities
law or in either case, any rule or regulation thereunder applicable to the
Company and relating to action or inaction required of the Company in connection
with any such registration, qualification or compliance, and will reimburse each
Holder, each of its officers, directors, agents and partners, and each person
controlling each of the foregoing, each such underwriter and each person who
controls any such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating and defending any such claim, loss,
damage, liability or action, provided that the Company will not be liable in any
such case to a Holder to the extent that any such claim, loss, damage, liability
or expense arises out of or is based on any untrue statement or omission based
upon written information furnished to the Company by such Holder or the
underwriter (if any) therefor and stated to be specifically for use therein. The
indemnity agreement contained in this Section 6(a) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company (which consent will
not be unreasonably withheld).
(b) Holder Indemnity. Each Holder will, severally and not jointly, if
Registrable Securities held by it are included in the securities as to which
such registration, qualification or compliance is being effected, indemnify the
Company, each of its directors, officers, agents and partners, and each
underwriter, if any, of the Company's securities covered by such a registration
statement, each person who controls the Company or such underwriter within the
meaning of Section 15 of the Securities Act and the rules and regulations
thereunder, each other Holder (if any), and each of their officers, directors
and partners, and each person controlling such other Holder(s) against all
claims, losses, damages and liabilities (or actions in respect thereof) arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement, prospectus, offering
circular or other document, or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statement therein not misleading in light of the circumstances under which they
were made, and will reimburse the Company and such other Holder(s) and their
directors, officers and partners, underwriters or control persons for any legal
or any other expenses reasonably incurred in connection with investigating and
defending any such claim, loss, damage, liability or action, in each case to the
extent, but only to the extent, that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in reliance upon and
in conformity with written information furnished to the Company by such Holder
and stated to be specifically for use therein, and provided that the maximum
amount for which such Holder shall be liable under this indemnity shall not
exceed the net proceeds received by such Holder from the sale of the Registrable
Securities pursuant to the registration statement in question. The indemnity
agreement contained in this Section 6(b) shall not apply to amounts paid in
settlement of any such claims, losses, damages or liabilities if such settlement
is effected without the consent of such Holder (which consent shall not be
unreasonably withheld).
(c) Procedure. Each party entitled to indemnification under this
Section 6 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim in any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not be unreasonably withheld), and the Indemnified Party
may participate in such defense at its own expense, and provided further that
the failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this Section 6 except to
the extent that the Indemnifying Party is materially and adversely affected by
such failure to provide notice. No Indemnifying Party, in the defense of any
such claim or litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation. Each Indemnified Party shall furnish such
non-privileged information regarding itself or the claim in question as an
Indemnifying Party may reasonably request in writing and as shall be reasonably
required in connection with the defense of such claim and litigation resulting
therefrom.
7. Contribution. If the indemnification provided for in Section 6
herein is unavailable to the Indemnified Parties in respect of any losses,
claims, damages or liabilities referred to herein (other than by reason of the
exceptions provided therein), then each such Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such losses, claims, damages or
liabilities as between the Company on the one hand and any Holder on the other,
in such proportion as is appropriate to reflect the relative fault of the
Company and of such Holder in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative fault of the Company on the one
hand and of any Holder on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company or by such Holder.
In no event shall the obligation of any Indemnifying Party to
contribute under this Section 7 exceed the amount that such Indemnifying Party
would have been obligated to pay by way of indemnification if the
indemnification provided for under Section 6(a) or 6(b) hereof had been
available under the circumstances.
The Company and the Holders agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Holders or the underwriters were treated as one entity
for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraphs. The amount paid or payable by an Indemnified Party as a result of
the losses, claims, damages and liabilities referred to in the immediately
preceding paragraphs shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such Indemnified
Party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this section, no Holder or underwriter shall
be required to contribute any amount in excess of the amount by which (i) in the
case of any Holder, the net proceeds received by such Holder from the sale of
Registrable Securities pursuant to the registration statement in question or
(ii) in the case of an underwriter, the total price at which the Registrable
Securities purchased by it and distributed to the public were offered to the
public exceeds, in any such case, the amount of any damages that such Holder or
underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
8. Survival. The indemnity and contribution agreements contained in
Sections 6 and 7 and the representations and warranties of the Company referred
to in Section 2(d)(i) shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement or the Purchase Agreement or
any underwriting agreement, (ii) any investigation made by or on behalf of any
Indemnified Party or by or on behalf of the Company, and (iii) the consummation
of the sale or successive resales of the Registrable Securities.
9. Information by Holders. Each Holder shall furnish to the Company
such information regarding such Holder and the distribution and/or sale proposed
by such Holder as the Company may reasonably request in writing and as shall be
reasonably required in connection with any registration, qualification or
compliance referred to in this Agreement. The intended method or methods of
disposition and/or sale (Plan of Distribution) of such securities as so provided
by such Purchaser shall be included without alteration in the Registration
Statement covering the Registrable Securities and shall not be changed without
written consent of such Holder.
10. Replacement Certificates. The certificate(s) representing the
Registrable Securities held by any Purchaser (or then Holder) may be exchanged
by such Purchaser (or such Holder) at any time and from time to time for
certificates with different denominations representing an equal aggregate number
of Common Shares, as reasonably requested by such Purchaser (or such Holder)
upon surrendering the same. No service charge will be made for such registration
or transfer or exchange. Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of any
Debentures or Warrants, or certificates for the underlying Common Shares of any
of the foregoing, and, in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it, or upon surrender and cancellation of such
certificate if mutilated, the Company will make and deliver a new Debenture,
Warrant or certificate of like tenor and dated as of such cancellation at no
charge to the holder.
11. Transfer or Assignment. Except as otherwise provided herein, this
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns. The rights granted to the Purchaser by
the Company under this Agreement to cause the Company to register Registrable
Securities may be transferred or assigned (in whole or in part) to a transferee
or assignee of Debentures, Warrants or Registrable Securities, and all other
rights granted to the Purchaser by the Company hereunder may be transferred or
assigned to any transferee or assignee of any Debentures, Warrants or
Registrable Securities; provided in each case that the Company must be given
written notice by the Purchaser at the time of or within a reasonable time after
said transfer or assignment, stating the name and address of said transferee or
assignee and identifying the securities with respect to which such registration
rights are being transferred or assigned; and provided further that the
transferee or assignee of such rights agrees in writing to be bound by the
registration provisions of this Agreement.
12. Miscellaneous.
(a) Remedies. The Company and the Purchaser acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent or cure breaches of the provisions of
this Agreement and to enforce specifically the terms and provisions hereof, this
being in addition to any other remedy to which any of them may be entitled by
law or equity.
(b) Jurisdiction. Each of the Company and the Purchaser (i) hereby
irrevocably submits to the exclusive jurisdiction of the United States District
Court, the New York State courts and other courts of the United States sitting
in the Borough of Manhattan, New York County, New York State for the purposes of
any suit, action or proceeding arising out of or relating to this Agreement and
(ii) hereby waives, and agrees not to assert in any such suit action or
proceeding, any claim that it is not personally subject to the jurisdiction of
such court, that the suit, action or proceeding is brought in an inconvenient
forum or that the venue of the suit, action or proceeding is improper. The
Company and the Purchaser consent to process being served in any such suit,
action or proceeding by mailing a copy thereof to such party at the address in
effect for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing in
this paragraph shall affect or limit any right to serve process in any other
manner permitted by law.
(c) Notices. Any notice or other communication required or permitted to
be given hereunder shall be in writing by facsimile, mail or personal delivery
and shall be effective upon actual receipt of such notice. The addresses for
such communications shall be:
to the Company:
XxxxxxxXxxxxxxxxx.xxx, Inc.
0000 Xxxxxxxxx Xxxxxxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Ramy El-Batrawi
with a copy to:
Nida & Xxxxxxx, LLP
000 Xxxxxxx Xxxxxx
Xxxxx Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxxx
to the Purchaser:
Xxxxxxx Associates, L.P.
c/x Xxxxxxx Management Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000 and (000) 000-0000
Attention: Xxxxx Xxxxx
and
Xxxxxxx International, L.P.
c/x Xxxxxxx Management Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000 and (000) 000-0000
Attention: Xxxxx Xxxxx
with a copy to:
Kleinberg, Kaplan, Xxxxx & Xxxxx, P.C.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: 000-000-0000
Facsimile: 212-986-8866
Attention: Xxxxxxx X. Xxxxxxx
Any party hereto may from time to time change its address for notices by giving
at least five days' written notice of such changed address to the other parties
hereto.
(d) Indemnity. Each party shall indemnify each other party against any
loss, cost or damages (including reasonable attorney's fees) incurred as a
result of such parties' breach of any representation, warranty, covenant or
agreement in this Agreement, including, without limitation, any enforcement of
this indemnity.
(e) Waivers. No waiver by any party 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 other provision, condition or
requirement hereof, nor shall any delay or omission of any party to exercise any
right hereunder in any manner impair the exercise of any such right accruing to
it thereafter. The representations and warranties and the agreements and
covenants of the Company and each Purchaser contained herein shall survive the
Closing.
(f) Execution in Counterpart. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement,
it being understood that all parties need not sign the same counterpart.
(g) Signatures. Facsimile signatures shall be valid and binding on each
party submitting the same.
(h) Entire Agreement; Amendment. This Agreement, together with the
Purchase Agreement, the Certificate, the Warrants and the agreements and
documents contemplated hereby and thereby, contains the entire understanding and
agreement of the parties, and may not be amended, modified or terminated except
by a written agreement signed by the Company plus the Holders of 75% of the
outstanding Principal Amount of Debentures issued under the Purchase Agreement
to that date; provided that for the purposes of this Section 12(h) the Holders
of Common Shares still entitled to registration rights under this Agreement will
be deemed to still be Holders of that amount of Debentures which were converted
into such number of Common Shares issued upon conversion which are still held by
them.
(i) Governing Law. This Agreement and the validity and performance of
the terms hereof shall be governed by and construed in accordance with the laws
of the State of New York applicable to contracts executed and to be performed
entirely within such state, except to the extent that the law of the State of
Delaware regulates the Company's issuance of securities.
(j) Jury Trial. EACH PARTY HERETO WAIVES THE RIGHT TO A TRIAL BY JURY.
(k) Titles. The titles used in this Agreement are used for convenience
only and are not to be considered in construing or interpreting this Agreement.
(l) No Strict Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rule of strict construction will be applied against any party.
[Signature Page Follows]
In Witness Whereof, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
XXXXXXXXXXXXXXXXX.XXX, INC.
By: _________________________
Name: Ramy El-Batrawi
Title: President
XXXXXXX INTERNATIONAL, L.P.
By: XXXXXXX INTERNATIONAL CAPITAL
ADVISORS INC., as
attorney-in-fact
By:
Name: Xxxx X. Xxxxxx
Title: President
XXXXXXX ASSOCIATES, L.P.
By:
Name: Xxxx X. Xxxxxx
Title: General Partner
