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EXHIBIT 10.30
COMMON STOCK PURCHASE AGREEMENT
This COMMON STOCK PURCHASE AGREEMENT (this "Agreement") is
dated as of March 27, 2001 by and between MigraTEC, Inc., a Delaware corporation
(the "Company") and Ironhead Investments Inc. (the "Purchaser"), a British
Virgin Islands corporation.
WHEREAS, the parties desire that, upon the terms and subject
to the conditions contained herein, the Company shall issue and sell to
Purchaser from time to time as provided herein, and Purchaser shall purchase, up
to $20,000,000 of Common Stock and the Warrant; and
WHEREAS, such investments will be made by the Purchaser as
statutory underwriter of a registered indirect primary offering of such Common
Stock by the Company.
NOW, THEREFORE, in consideration of the foregoing premises,
and the promises and covenants herein contained, the receipt and sufficiency of
which are hereby acknowledged by the parties hereto, the parties, intending to
be legally bound, hereby agree as follows:
ARTICLE 1
PURCHASE AND SALE OF COMMON STOCK
Section 1.1. Purchase and Sale of Stock. Subject to the terms
and conditions of this Agreement, the Company may sell and issue to the
Purchaser and the Purchaser shall be obligated to purchase from the Company, up
to an aggregate of, $20,000,000 of Common Stock and the Warrant, subject to the
terms herein (the "Commitment Amount").
Section 1.2. Purchase Price and Initial Closing. The Company
agrees to issue and sell to the Purchaser and, in consideration of and in
express reliance upon the representations, warranties, covenants, terms and
conditions of this Agreement, the Purchaser agrees to purchase that number of
the Shares to be issued in connection with each Draw Down. The delivery of
executed documents under this Agreement and the other agreements referred to
herein and the payment of the fees set forth in Article I of the Escrow
Agreement, attached as Exhibit B hereto, (the "Initial Closing") shall take
place at the offices of Xxxxxxx Xxxxxx & Green, P.C., 000 Xxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000 (i) within fifteen (15) days from the date hereof, or (ii) such
other time and place or on such date as the Purchaser and the Company may agree
upon (the "Initial Closing Date"). 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 Initial Closing.
Section 1.3. Liquidated Damages. The parties hereto
acknowledge and agree that the sums payable pursuant to this Agreement for late
delivery of the Draw Down Shares and
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pursuant to the Registration Rights Agreement for a suspension of the
Registration Statement or the Purchaser's right to resell the Draw Down Shares
thereunder shall constitute liquidated damages and not penalties. The parties
further acknowledge that (a) the amount of loss or damages likely to be incurred
is incapable or is difficult to precisely estimate, (b) the amount specified in
such provisions bear a reasonable proportion and are not plainly or grossly
disproportionate to the probable loss likely to be incurred by the Purchaser in
connection with the failure of the Company to deliver the Draw Down Shares in a
timely manner or the suspension of the suspension of Purchaser's rights to
resell the Draw Down Shares under the Registration Statement, and (c) the
parties are sophisticated businesses and have been represented by sophisticated
and able legal and financial counsel and negotiated this Agreement at arm's
length.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
Section 2.1. Representation and Warranties of the Company. The
Company hereby makes the following representations and warranties to the
Purchaser:
(a) Organization, Good Standing and Power. The Company
is a corporation duly incorporated validly existing and in good
standing under the laws of Delaware and has all requisite corporate
authority to own, lease and operate its properties and assets and to
carry on its business as now being conducted. The Company does not have
any subsidiaries and does not own more than fifty percent (50%) of or
control any other business entity except as set forth in the SEC
Documents. The Company is duly qualified to do business and is in good
standing as a foreign corporation 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.
(b) Authorization, Enforcement. (i) The Company has
the requisite corporate power and corporate authority to enter into and
perform its obligations under the Transaction Documents and to issue
the Draw Down Shares pursuant to their respective terms, (ii) the
execution and delivery of the Transaction Documents by the Company and
the consummation by it of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action and
no further consent or authorization of the Company or its Board of
Directors or stockholders is required, and (iii) the Transaction
Documents have been duly executed and delivered by the Company and at
the Initial Closing shall constitute valid and binding obligations of
the Company enforceable against the Company in accordance with their
terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation,
conservatorship, receivership or similar laws relating to, or affecting
generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application.
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(c) Capitalization. The authorized capital stock of
the Company consists of 200,000,000 shares of Common Stock of which
92,180,113 shares are issued and outstanding and 50,000,000 shares of
preferred stock of which none are issued and outstanding. All of the
outstanding shares of the Company's Common Stock have been duly and
validly authorized and are fully paid and non-assessable, except as set
forth in the SEC Documents. Except as set forth in this Agreement, the
Registration Rights Agreement, or as set forth in the SEC Documents, or
on Schedule 2.1(c) hereto, no shares of Common Stock are entitled to
preemptive rights or registration rights and 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.
Furthermore, except as set forth in this Agreement, the SEC Documents,
or on Schedule 2.1(c), there are no contracts, commitments,
understandings, or arrangements by which the Company is or may become
bound to issue additional shares of the capital stock of the Company or
options, securities or rights convertible into shares of capital stock
of the Company. Except as set forth on Schedule 2.1(c), the Company is
not a party to any agreement granting registration rights to any person
with respect to any of its equity or debt securities. Except as set
forth on Schedule 2.1(c), the Company is not a party to, and it has no
knowledge of, any agreement restricting the voting or transfer of any
shares of the capital stock of the Company. Except as set forth in the
SEC Documents or on Schedule 2.1(c) hereto, the offer and sale of all
capital stock, convertible securities, rights, warrants, or options of
the Company issued prior to the Initial Closing complied with all
applicable federal and state securities laws, and no stockholder has a
right of rescission or damages with respect thereto which would have a
Material Adverse Effect. The Company has made available to the
Purchaser true and correct copies of the Company's articles or
certificate of incorporation as in effect on the date hereof (the
"Charter"), and the Company's bylaws as in effect on the date hereof
(the "Bylaws"). The Company has not received any notice from the
Principal Market questioning or threatening the continued inclusion of
the Common Stock on such market.
(d) Issuance of Shares. The Warrant Shares to be
issued upon exercise of the Warrant have been duly authorized by all
necessary corporate action and, when paid for and issued in accordance
with the terms hereof and the Warrant, the Warrant Shares shall be
validly issued and outstanding, fully paid and non-assessable, and the
Purchaser shall be entitled to all rights accorded to a holder of
Common Stock.
(e) No Conflicts. Except as set forth on Schedule
2.1(e), the execution, delivery and performance of this Agreement by
the Company and the consummation by the Company of the transactions
contemplated herein do not and will not (i) violate any provision of
the Company's Charter or Bylaws, (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, mortgage,
deed of trust, indenture, note, bond, license, lease agreement,
instrument or obligation to which the Company is a party, (iii) create
or impose a lien, charge or encumbrance on any property of the Company
under any
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agreement or any commitment to which the Company is a party or by which
the Company is bound or by which any of its respective properties or
assets are bound, or (iv) result in a violation of any federal, state,
local or other foreign statute, rule, regulation, order, judgment or
decree (including any federal or state securities laws and regulations)
applicable to the Company or by which any property or asset of the
Company is bound or affected, except, in all cases, for such conflicts,
defaults, termination, amendments, accelerations, cancellations and
violations as would not, individually or in the aggregate, have a
Material Adverse Effect. The business of the Company is not being
conducted in violation of any laws, ordinances or regulations of any
governmental entity, except for possible violations which singularly or
in the aggregate do not and will not have a Material Adverse Effect.
The Company is not required under any federal, state or local law, rule
or regulation to obtain any consent, authorization or order of, or make
any filing or registration with, any court or governmental agency in
order for it to execute, deliver or perform any of its obligations
under this Agreement, or issue and sell the Shares in accordance with
the terms hereof (other than any filings which may be required to be
made by the Company with the SEC or state securities administrators
subsequent to the Initial Closing and any registration statement which
may be filed pursuant hereto); provided, however, that for purpose of
the representations made in this sentence, the Company is assuming and
relying upon the accuracy of the relevant representations and
agreements of the Purchaser herein.
(f) SEC Documents, Financial Statements. The Common
Stock of the Company is registered pursuant to Section 12(g) of the
Exchange Act, and, except as disclosed in the SEC Documents or on
Schedule 2.1(f) hereto, the Company has timely 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
Exchange Act, including material filed pursuant to Section 13(a) or
15(d) of the Exchange Act. The Company has delivered or made available
to the Purchaser, through the XXXXX system or otherwise, true and
complete copies of the SEC Documents filed with the SEC since December
31, 1999. The Company has not provided to the Purchaser any information
which, according to applicable law, rule or regulation, should have
been disclosed publicly by the Company but which has not been so
disclosed, other than with respect to the transactions contemplated by
this Agreement. As of their respective filing dates, the SEC Documents
complied in all material respects with the requirements of the Exchange
Act or the Securities Act, as applicable, and the rules and regulations
of the SEC promulgated thereunder applicable to such documents, and, as
of their respective filing dates, none of the SEC Documents contained
any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading. The financial statements of the Company included
in the SEC Documents comply as to form in all material respects with
applicable accounting requirements under GAAP and the published rules
and regulations of the SEC or other applicable rules and regulations
with respect thereto. Such financial statements have been prepared in
accordance with GAAP applied on a consistent basis 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
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interim statements, to the extent they may not include footnotes or may
be condensed or summary statements), and fairly present in all material
respects the financial position of the Company and its subsidiaries as
of the dates thereof and the results of operations and cash flows for
the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments).
(g) Subsidiaries. The Company has no subsidiaries.
(h) No Material Adverse Effect. Since the date of the
financial statement contained in the most recently filed Form 10-Q (or
10-QSB) or Form 10-K (or 10-KSB), whichever is most current, no
Material Adverse Effect has occurred or exists with respect to the
Company, except as disclosed in the SEC Documents or on Schedule 2.1(h)
hereto.
(i) No Undisclosed Liabilities. Except as disclosed in
the SEC Documents or on Schedule 2.1(i) hereto, neither the Company nor
any of its subsidiaries has any liabilities, obligations, claims or
losses (whether liquidated or unliquidated, secured or unsecured,
absolute, accrued, contingent or otherwise) that would be required to
be disclosed on a balance sheet of the Company or any subsidiary
(including the notes thereto) in conformity with GAAP which are not
disclosed in the SEC Documents, other than those incurred in the
ordinary course of the Company's or its subsidiaries' respective
businesses since such date and which, individually or in the aggregate,
do not or would not have a Material Adverse Effect on the Company or
its subsidiaries.
(j) No Undisclosed Events or Circumstances. Since the
date of the financial statement contained in the most recently filed
Form 10- Q (or 10-QSB) or Form 10-K (or 10-KSB), whichever is most
current, no event or circumstance has occurred or exists with respect
to the Company or its businesses, properties, prospects, operations or
financial condition, that, under applicable law, rule or regulation,
requires public disclosure or announcement prior to the date hereof by
the Company but which has not been so publicly announced or disclosed
in the SEC Documents.
(k) Indebtedness. The SEC Documents or Schedule 2.1(k)
hereto sets forth as of the date hereof all outstanding secured and
unsecured Indebtedness of the Company or any subsidiary, or for which
the Company or any subsidiary has commitments. For the purposes of this
Agreement, "Indebtedness" shall mean (A) any liabilities for borrowed
money or amounts owed in excess of $500,000 (other than trade accounts
payable incurred in the ordinary course of business), (B) all
guaranties, endorsements and contingent obligations in respect of
Indebtedness of others, whether or not the same are or should be
reflected in the Company's balance sheet (or the notes thereto), except
guaranties by endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business;
and (C) the present value of any lease payments in excess of $500,000
due under leases required to be capitalized in accordance with GAAP.
Neither the Company nor any subsidiary is in default with respect to
any Indebtedness.
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(l) Title to Assets. Each of the Company and the
subsidiaries has good and marketable title to all of its real and
personal property reflected in the SEC Documents, free of any
mortgages, pledges, charges, liens, security interests or other
encumbrances, except for those indicated in the SEC Documents or on
Schedule 2.1(1) hereto or such that do not cause a Material Adverse
Effect. All said leases of the Company and each of its subsidiaries are
valid and subsisting and in full force and effect.
(m) Actions Pending. There is no action, suit, claim,
investigation or proceeding pending or, to the knowledge of the
Company, threatened against the Company or any subsidiary which
questions the validity of this Agreement or the transactions
contemplated hereby or any action taken or to be taken pursuant hereto
or thereto. Except as set forth in the SEC Documents or on Schedule
2.1(m) hereto, there is no action, suit, claim, investigation or
proceeding pending or, to the knowledge of the Company, threatened,
against or involving the Company, any subsidiary or any of their
respective properties or assets. There are no outstanding orders,
judgments, injunctions, awards or decrees of any court, arbitrator or
governmental or regulatory body against the Company or any subsidiary.
(n) Compliance with Law. The Company and each of its
subsidiaries have all franchises, permits, licenses, consents and other
governmental or regulatory authorizations and approvals necessary for
the conduct of their respective businesses as now being conducted by
them unless the failure to possess such franchises, permits, licenses,
consents and other governmental or regulatory authorizations and
approvals, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
(o) Taxes. The Company and each subsidiary has filed
all Tax Returns which it is required to file under applicable laws; all
such Tax Returns are true and accurate and have been prepared in
compliance with all applicable laws; the Company has paid all Taxes due
and owing by it or any subsidiary (whether or not such Taxes are
required to be shown on a Tax Return) and has withheld and paid over to
the appropriate taxing authorities all Taxes which it is required to
withhold from amounts paid or owing to any employee, stockholder,
creditor or other third parties; and since December 31, 1999, the
charges, accruals and reserves for Taxes with respect to the Company
(including any provisions for deferred income taxes) reflected on the
books of the Company are adequate to cover any Tax liabilities of the
Company if its current tax year were treated as ending on the date
hereof.
No claim has been made by a taxing authority in a
jurisdiction where the Company does not file tax returns that the
Company or any subsidiary is or may be subject to taxation by that
jurisdiction. There are no foreign, federal, state or local tax audits
or administrative or judicial proceedings pending or being conducted
with respect to the Company or any subsidiary; no information related
to Tax matters has been requested by any foreign, federal, state or
local taxing authority; and, except as disclosed above, no written
notice indicating an intent to open an audit or other review has been
received by the Company or any subsidiary from any foreign, federal,
state or local taxing
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authority. There are no material unresolved questions or claims
concerning the Company's Tax liability. The Company (A) has not
executed or entered into a closing agreement pursuant to Section 7121
of the Internal Revenue Code or any predecessor provision thereof or
any similar provision of state, local or foreign law; and (B) has not
agreed to or is required to make any adjustments pursuant to Section
481 (a) of the Internal Revenue Code or any similar provision of state,
local or foreign law by reason of a change in accounting method
initiated by the Company or any of its subsidiaries or has any
knowledge that the IRS has proposed any such adjustment or change in
accounting method, or has any application pending with any taxing
authority requesting permission for any changes in accounting methods
that relate to the business or operations of the Company. The Company
has not been a United States real property holding corporation within
the meaning of Section 897(c)(2) of the Internal Revenue Code during
the applicable period specified in Section 897(c)(1)(A)(ii) of the
Internal Revenue Code.
The Company has not made an election under Section
341(f) of the Internal Revenue Code. The Company is not liable for the
Taxes of another person that is not a subsidiary of the Company under
(A) Treas. Reg. Section 1.1502-6 (or comparable provisions of state,
local or foreign law), (B) as a transferee or successor, (C) by
contract or indemnity or (D) otherwise. The Company is not a party to
any tax sharing agreement. The Company has not made any payments, is
not obligated to make payments nor is it a party to an agreement that
could obligate it to make any payments that would not be deductible
under Section 280G of the Internal Revenue Code.
For purposes of this Section 2.1(o):
"IRS" means the United States Internal Revenue
Service.
"Tax" or "Taxes" means federal, state, county, local,
foreign, or other income, gross receipts, ad valorem,
franchise, profits, sales or use, transfer,
registration, excise, utility, environmental,
communications, real or personal property, capital
stock, license, payroll, wage or other withholding,
employment, social security, severance, stamp,
occupation, alternative or add-on minimum, estimated
and other taxes of any kind whatsoever (including,
without limitation, deficiencies, penalties, additions
to tax, and interest attributable thereto) whether
disputed or not.
"Tax Return" means any return, information report or
filing with respect to Taxes, including any schedules
attached thereto and including any amendment thereof.
(p) Certain Fees. Except as set forth on Schedule
2.1(p) hereto and the fees paid to GKN Securities Corp. pursuant to the
Escrow Agreement, no brokers, finders or financial advisory fees or
commissions will be payable by the Company or any subsidiary with
respect to the transactions contemplated by this Agreement.
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(q) Disclosure. To the best of the Company's
knowledge, neither this Agreement or the Schedules hereto nor any other
documents, certificates or instruments furnished to the Purchaser by or
on behalf of the Company or any subsidiary in connection with the
transactions contemplated by this Agreement contains any untrue
statement of a material fact or omits to state a material fact
necessary in order to make the statements made herein or therein, in
the light of the circumstances under which they were made herein or
therein, not misleading.
(r) Operation of Business. The Company and each of the
subsidiaries owns or possesses all patents, trademarks, service marks,
trade names, copyrights, licenses and authorizations as set forth in
the SEC Documents or on Schedule 2.1(r) hereto, and all rights with
respect to the foregoing, which are necessary for the conduct of its
business as now conducted without any conflict with the rights of
others.
(s) Insurance. Except as disclosed in the SEC
Documents or on Schedule 2.1(s) hereto, the Company carries or will
have the benefit of insurance in such amounts and covering such risks
as is adequate for the conduct of its business and the value of its
properties and as is customary for companies engaging in similar
businesses and similar industries.
(t) Books and Records. The records and documents of
the Company and its subsidiaries accurately reflect in all material
respects the information relating to the business of the Company and
the subsidiaries, the location and collection of their assets, and the
nature of all transactions giving rise to the obligations or accounts
receivable of the Company or any subsidiary.
(u) Material Agreements. Except as set forth in the
SEC Documents, or on Schedule 2.1(u) hereto, neither the Company nor
any subsidiary is a party to any written or oral contract, instrument,
agreement, commitment, obligation, plan or arrangement, a copy of which
would be required to be filed with the SEC as an exhibit to a
registration statement on Form S-1 or other applicable form
(collectively, "Material Agreements") if the Company or any subsidiary
were registering securities under the Securities Act. Except as set
forth on Schedule 2.1(u), the Company and each of its subsidiaries has
in all material respects performed all the obligations required to be
performed by them to date under the foregoing agreements, have received
no notice of default and, to the best of the Company's knowledge are
not in default under any Material Agreement now in effect, the result
of which could cause a Material Adverse Effect. Except as set forth in
the SEC Documents, no written or oral contract, instrument, agreement,
commitment, obligation, plan or arrangement of the Company or of any
subsidiary limits or shall limit the payment of dividends on the
Company's Common Stock.
(v) Transactions with Affiliates. Except as set forth
in the SEC Documents or on Schedule 2.1(v) hereto, there are no loans,
leases, agreements, contracts, royalty agreements, management contracts
or arrangements or other continuing transactions exceeding $100,000
between (A) the Company, any subsidiary or any of their
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respective customers or suppliers on the one hand, and (B) on the other
hand, any officer, employee, consultant or director of the Company, or
any of its subsidiaries, or any person owning 5% or more of the capital
stock of the Company or any subsidiary or any member of the immediate
family of such officer, employee, consultant, director or stockholder
or any corporation or other entity controlled by such officer,
employee, consultant, director or stockholder, or a member of the
immediate family of such officer, employee, consultant, director or
stockholder.
(w) Securities Laws. The Company has complied and will
comply with all applicable federal and state securities laws in
connection with the offer, issuance and sale of the Shares hereunder.
Neither the Company nor anyone acting on its behalf, directly or
indirectly, has or will sell, offer to sell or solicit offers to buy
the Shares or similar securities to, or solicit offers with respect
thereto from, or enter into any preliminary conversations or
negotiations relating thereto with, any person (other than the
Purchaser), so as to bring the issuance and sale of the Shares under
the registration provisions of the Securities Act and applicable state
securities laws. Neither the Company nor any of its affiliates, nor any
person acting on its or their behalf, has engaged in any form of
general solicitation or general advertising (within the meaning of
Regulation D under the Securities Act) in connection with the offer or
sale of the Shares.
(x) Employees. Neither the Company nor any subsidiary
has any collective bargaining arrangements or agreements covering any
of its employees. Except as set forth in the SEC Documents or on
Schedule 2.1(x) hereto, neither the Company nor any subsidiary is in
breach of any employment contract, agreement regarding proprietary
information, noncompetition agreement, nonsolicitation agreement,
confidentiality agreement, or any other similar contract or restrictive
covenant, relating to the right of any officer, employee or consultant
to be employed or engaged by the Company or such subsidiary. Since the
date of the December 31, 2000 Form 10-K (or 10-KSB), no officer,
consultant or key employee of the Company or any subsidiary whose
termination, either individually or in the aggregate, could have a
Material Adverse Effect, has terminated or, to the knowledge of the
Company, has any present intention of terminating his or her employment
or engagement with the Company or any subsidiary.
(y) Absence of Certain Developments. Except as
disclosed in SEC Documents or on Schedule 2.1(y) hereto, since the date
of the financial statement contained in the most recently filed Form
10-Q (or 10-QSB) or Form 10-K (or 10KSB), whichever is most current,
neither the Company nor any subsidiary has:
(i) issued any stock, bonds or other corporate
securities or any rights, options or warrants with respect
thereto;
(ii) borrowed any amount or incurred or become
subject to any liabilities (absolute or contingent) except
current liabilities incurred in the ordinary course of
business which are comparable in nature and amount to the
current liabilities incurred in the ordinary course of
business during the
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comparable portion of its prior fiscal year, as adjusted to
reflect the current nature and volume of the Company's or such
subsidiary's business;
(iii) discharged or satisfied any lien or
encumbrance or paid any obligation or liability (absolute or
contingent), other than current liabilities paid in the
ordinary course of business;
(iv) declared or made any payment or distribution
of cash or other property to stockholders with respect to its
stock, or purchased or redeemed, or made any agreements so to
purchase or redeem, any shares of its capital stock;
(v) sold, assigned or transferred any other
tangible assets, or canceled any debts or claims, except in
the ordinary course of business;
(vi) sold, assigned or transferred any patent
rights, trademarks, trade names, copyrights, trade secrets or
other intangible assets or intellectual property rights, or
disclosed any proprietary confidential information to any
person except to customers in the ordinary course of business
or to the Purchaser or its representatives;
(vii) suffered any material losses (except for
anticipated losses consistent with prior quarters) or waived
any rights of material value, whether or not in the ordinary
course of business, or suffered the loss of any material
amount of prospective business;
(viii) made any changes in employee compensation
except in the ordinary course of business and consistent with
past practices;
(ix) made capital expenditures or commitments
therefor that aggregate in excess of $500,000;
(x) entered into any other material transaction,
whether or not in the ordinary course of business;
(xi) suffered any material damage, destruction or
casualty loss, whether or not covered by insurance;
(xii) experienced any material problems with labor
or management in connection with the terms and conditions of
their employment; or
(xiii) effected any two or more events of the
foregoing kind which in the aggregate would be material to the
Company or its subsidiaries.
(z) Governmental Approvals. Except as set forth in the
SEC Documents or on Schedule 2.1(z) hereto, and except for the filing
of any notice prior or subsequent to any Settlement Date that may be
required under applicable federal or state securities laws (which if
required, shall be filed on a timely basis), including the filing of
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a registration statement or post-effective amendment pursuant to this
Agreement, no authorization, consent, approval, license, exemption of,
filing or registration with any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or
foreign, is or will be necessary for, or in connection with, the
delivery of the Shares, or for the performance by the Company of its
obligations under this Agreement.
(aa) Acknowledgment Regarding Purchaser's Purchase of
Shares. Company acknowledges and agrees that Purchaser is acting solely
in the capacity of arm's length purchaser with respect to this
Agreement and the transactions contemplated hereunder. 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 this Agreement and the transactions contemplated hereunder.
The Company further represents to the Purchaser that the Company's
decision to enter into this Agreement has been based solely on (a) the
Purchaser's representations and warranties in Section 3.2, and (b) the
independent evaluation by the Company and its own representatives and
counsel.
Section 2.2. Representations and Warranties of the Purchaser.
The Purchaser hereby makes the following representations and warranties to the
Company:
(a) Organization and Standing of the Purchaser. The
Purchaser is a corporation duly incorporated, validly existing and in
good standing under the laws of the British Virgin Islands.
(b) Authorization and Power. The Purchaser has the
requisite power and authority to enter into and perform the Transaction
Documents and to purchase the Shares being sold to it hereunder. The
execution, delivery and performance of the Transaction Documents by
Purchaser and the consummation by it of the transactions contemplated
hereby have been duly authorized by all necessary corporate action and
at the Initial Closing shall constitute valid and binding obligations
of the Purchaser enforceable against the Purchaser in accordance with
their terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation,
conservatorship, receivership or similar laws relating to, or affecting
generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application
(c) No Conflicts. The execution, delivery and
performance of this Agreement and the consummation by the Purchaser of
the transactions contemplated hereby or relating hereto do not and will
not (i) result in a violation of the Purchaser's charter documents or
bylaws or (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 Purchaser is a party, or result in a violation of any law,
rule, or regulation, or any order, judgment or decree of any court or
governmental agency applicable to the Purchaser or its properties
(except for such conflicts, defaults and violations as would not,
individually or in the aggregate, have a
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Material Adverse Effect on Purchaser). The Purchaser is not required to
obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under this Agreement
or to purchase the Shares in accordance with the terms hereof.
(d) Financial Risks. The Purchaser acknowledges that
it is able to bear the financial risks associated with an investment in
the Shares and that it has been given full access to such records of
the Company and the subsidiaries and to the officers of the Company and
the subsidiaries as it has deemed necessary or appropriate to conduct
its due diligence investigation. The Purchaser is capable of evaluating
the risks and merits of an investment in the Shares by virtue of its
experience as an investor and its knowledge, experience, and
sophistication in financial and business matters and the Purchaser is
capable of bearing the entire loss of its investment in the Shares.
(e) Accredited Investor. The Purchaser is an
"accredited investor" as defined in Regulation D promulgated under the
Securities Act.
(f) General. The Purchaser understands 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 suitability of the
Purchaser to acquire the Shares.
ARTICLE 3
COVENANTS
The Company covenants with the Purchaser as follows:
Section 3.1. The Shares. As of the date of each applicable
Draw Down, the Company will have authorized and reserved, free of preemptive
rights and other similar contractual rights of stockholders, a sufficient number
of its authorized but unissued shares of its Common Stock to cover the Draw Down
Shares to be issued in connection with such Draw Down requested under this
Agreement. The Draw Down Shares to be issued under this Agreement, when paid for
and issued in accordance with the terms hereof, shall be duly and validly issued
and outstanding, fully paid and non-assessable, and the Purchaser shall be
entitled to all rights accorded to a holder of Common Stock. Anything in this
Agreement to the contrary notwithstanding, the Company may not make a Draw Down
to the extent that, after such purchase by the Purchaser, the sum of the number
of shares of Common Stock beneficially owned by the Purchaser and its affiliates
would result in beneficial ownership by the Purchaser and its affiliates of more
than 9.9% of the then outstanding shares of Common Stock. For purposes of the
immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the Exchange Act.
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Section 3.2. Securities Compliance. If applicable, the Company
shall notify the Principal Market, in accordance with its rules and regulations,
of the transactions contemplated by this 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 Shares to the
Purchaser or subsequent holders.
Section 3.3. Registration and Listing. The Company will cause
its Common Stock to continue to be registered under Sections 12(b) or 12(g) of
the Exchange Act, will comply in all respects with its reporting and filing
obligations under the Exchange Act, will comply with all requirements related to
any registration statement filed pursuant to this Agreement, and will not take
any action or file any document (whether or not permitted by the Securities Act
or the Exchange Act or the rules promulgated thereunder) to terminate or suspend
such registration or to terminate or suspend its reporting and filing
obligations under the Exchange Act or Securities Act, except as permitted
herein. The Company will take all action necessary to continue the listing or
trading of its Common Stock on the Principal Market and will comply in all
respects with the Company's reporting, filing and other obligations under the
bylaws or rules of the Principal Market and shall provide the Purchaser with
copies of any correspondence to or from such Principal Market which questions or
threatens delisting of the Common Stock, within three (3) Trading Days of the
Company's receipt thereof, until the Purchaser has disposed of all of the
Shares.
Section 3.4. Escrow Arrangement. The Company and the Purchaser
shall enter into an escrow arrangement with Xxxxxxx Xxxxxx & Green, P.C. (the
"Escrow Agent") in the form of Exhibit B hereto respecting payment against
delivery of the Shares.
Section 3.5. Registration Rights Agreement. The Company and
the Purchaser shall enter into the Registration Rights Agreement in the Form of
Exhibit A hereto. Before the Purchaser shall be obligated to accept a Draw Down
request from the Company, the Company shall have caused a sufficient number of
shares of Common Stock to be registered to cover the Shares to be issued in
connection with such Draw Down.
Section 3.6. Accuracy of Registration Statement.On each
Settlement Date, the Registration Statement and the prospectus therein shall not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein not misleading in light of the circumstances under which they were made;
and on such Settlement Date or date of filing the Registration Statement and the
prospectus therein will not include any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading;
provided, however, the Company makes no representations or warranties as to the
information contained in or omitted from the Registration Statement and the
prospectus therein in reliance upon and in conformity with the information
furnished in writing to the Company by the Purchaser specifically for inclusion
in the Registration Statement and the prospectus therein.
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Section 3.7. Compliance with Laws. The Company shall comply,
and cause each subsidiary to comply, with all applicable laws, rules,
regulations and orders, noncompliance with which could have a Material Adverse
Effect.
Section 3.8. Keeping of Records and Books of Account. The
Company shall keep and cause each subsidiary to keep adequate records and books
of account, in which complete entries will be made in accordance with GAAP
consistently applied, reflecting all financial transactions of the Company and
its subsidiaries, and in which, for each fiscal year, all proper reserves for
depreciation, depletion, obsolescence, amortization, taxes, bad debts and other
purposes in connection with its business shall be made.
Section 3.9. Other Agreements. The Company shall not enter
into any agreement the terms of which such agreement would restrict or impair
the ability of the Company to perform its obligations under this Agreement.
Section 3.10. Notice of Certain Events Affecting Registration;
Suspension of Right to Request a Draw Down. THE COMPANY WILL PROMPTLY NOTIFY THE
PURCHASER IN WRITING AND OBTAIN AN ACKNOWLEDGMENT FROM PURCHASER UPON THE
OCCURRENCE OF ANY OF THE FOLLOWING EVENTS IN RESPECT OF THE REGISTRATION
STATEMENT OR RELATED PROSPECTUS IN RESPECT OF THE SHARES: (i) receipt of any
request for additional information from the SEC or any other federal or state
governmental authority during the period of effectiveness of the Registration
Statement the response to which would require any amendments or supplements to
the Registration Statement or related prospectus; (ii) the issuance by the SEC
or any other federal or state governmental authority of any stop order
suspending the effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose; (iii) receipt of any notification with respect
to the suspension of the qualification or exemption from qualification of any of
the Shares for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; (iv) the happening of any event that makes any
statement made in the Registration Statement or related prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue
in any material respect or that requires the making of any changes in the
Registration Statement, related prospectus or documents so that, in the case of
the Registration Statement, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and that in the case
of the related prospectus, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and (v) the filing of a
post-effective amendment or withdrawal to the Registration Statement. The
Company shall not deliver to the Purchaser any Draw Down Notice during the
continuation of any of the foregoing events. The Company shall promptly make
available to the Purchaser any such supplements or amendments to the related
prospectus, at which time, provided that the registration statement and any
supplements and amendments thereto are then effective, the Company may
recommence the delivery of Draw Down Notices.
Section 3.11. Consolidation; Merger. The Company shall not, at
any time after the date hereof, effect any 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 (a "Consolidation Event")
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unless the resulting successor or acquiring entity (if not the Company) assumes
by written instrument or by operation of law the obligation to deliver to the
Purchaser any Draw Down Shares to be issued pursuant to a pending Draw Down and
Warrant Shares to this Agreement.
Section 3.12. Limitation on Future Financing. The Company
agrees that, except as set forth below, it will not enter into any sale of its
securities for cash at a discount to the current market price until the earlier
of (i) 20 months from the Effective Date, or (ii) sixty (60) days after the
entire Commitment Amount has been purchased by the Purchaser. The foregoing
shall not prevent or limit the Company from engaging in any sale of securities
(i) in a registered public offering by the Company which is underwritten by one
or more established investment banks (not including an equity line type of
financing), (ii) in one or more private placements where the purchasers do not
have demand registration rights, (iii) pursuant to any presently existing or
future employee benefit plan which plan has been or is approved by the Company's
stockholders, (iv) pursuant to any compensatory plan for a full-time employee or
key consultant, (v) in connection with a strategic partnership or other business
transaction, the principal purpose of which is not simply to raise money, or
(vi) to which Purchaser gives its prior written consent.
Section 3.13. Use of Proceeds. The proceeds from the sale of
the Shares will be used by the Company and its subsidiaries for general
corporate purposes.
The Purchaser covenants with the Company as follows:
Section 3.14. Compliance with Law. The Purchaser agrees that
its trading activities with respect to shares of the Company's Common Stock will
be in compliance with all applicable state and federal securities laws, rules
and regulations and rules and regulations of the Principal Market on which the
Company's Common Stock is listed. Without limiting the generality of the
foregoing, the Purchaser agrees that it will, whenever required by federal
securities laws, deliver the prospectus included in the Registration Statement
to any purchaser of Shares from the Purchaser.
ARTICLE 4
CONDITIONS TO INITIAL CLOSING AND DRAW DOWNS
Section 4.1. Conditions Precedent to the Obligation of the
Company to Sell the Shares. The obligation hereunder of the Company to proceed
to close this Agreement and to issue and sell the Shares to the Purchaser is
subject to the satisfaction or waiver, at or before the Initial Closing, and as
of each Settlement Date of each of the 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 shall
be true and correct in all material respects as of the date when made
and as of the Initial Closing and as of each Settlement
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Date as though made at that time, except for representations and
warranties that speak as of a particular date.
(b) Performance by the Purchaser. The Purchaser shall
have performed, satisfied and complied in all material respects with
all material covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Purchaser
at or prior to the Initial Closing and as of each Settlement Date.
(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.
Section 4.2. Conditions Precedent to the Obligation of the
Purchaser to Close. The obligation hereunder of the Purchaser to perform its
obligations under this Agreement and to purchase the Shares is subject to the
satisfaction or waiver, at or before the Initial Closing, of each of the
conditions set forth below. These conditions are for the Purchaser's sole
benefit and may be waived by the Purchaser at any time in its sole discretion.
(a) Accuracy of the Company's Representations and
Warranties. Each of 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 Initial Closing as though made at that time (except
for representations and warranties that speak as of a particular date).
(b) Performance by the Company. The Company shall have
performed, satisfied and complied in all respects with all covenants,
agreements and conditions required by this Agreement to be performed,
satisfied or complied with by the Company at or prior to the Initial
Closing.
(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.
(d) No Proceedings or Litigation. No action, suit or
proceeding before any arbitrator or any governmental authority shall
have been commenced, and no investigation by any governmental authority
shall have been threatened, against the Purchaser or the Company or any
subsidiary, or any of the officers, directors or affiliates of the
Company or any subsidiary seeking to restrain, prevent or change the
transactions contemplated by this Agreement, or seeking damages in
connection with such transactions.
(e) Opinion of Counsel, Etc. At the Initial Closing,
the Purchaser shall have received an opinion of counsel to the Company,
dated as of the Initial Closing Date, in the form of Exhibit C hereto.
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(f) Warrant. On the Initial Closing Date, the Company
shall issue to the Purchaser a warrant certificate to purchase up to
325,000 shares of Common Stock. The Warrant shall have a term from its
initial date of exercise of 5 years. The exercise price of the Warrant
shall be 110% of the average of the closing bid prices during the
fifteen (15) Trading Days immediately prior to the Initial Closing
Date. The Common Stock underlying the Warrant will be registered in the
Registration Statement referred to in Section 4.3 hereof. The Warrant
shall be in the form of Exhibit E hereto.
Section 4.3. Conditions Precedent to the Obligation of the
Purchaser to Accept a Draw Down and Purchase the Shares. The obligation
hereunder of the Purchaser to accept a Draw Down request and to acquire and pay
for the Shares is subject to the satisfaction at or before each Settlement Date,
of each of the conditions set forth below.
(a) Satisfaction of Conditions to Initial Closing. The
Company shall have satisfied, or the Purchaser shall have waived at the
Initial Closing, the conditions set forth in Section 4.2 hereof
(b) Effective Registration Statement. The Registration
Statement registering the Shares shall have been declared effective by
the SEC and shall remain effective on each Settlement Date.
(c) No Suspension. Trading in the Company's Common
Stock shall not have been suspended by the SEC or the Principal Market
(except for any suspension of trading of limited duration agreed to by
the Company, which suspension shall be terminated prior to the delivery
of each Draw Down Notice), and, at any time prior to such Draw Down
Notice, trading in securities generally as reported on the Principal
Market shall not have been suspended or limited, or minimum prices
shall not have been established on securities whose trades are reported
on the Principal Market unless the general suspension or limitation
shall have been terminated prior to the delivery of such Draw Down
Notice.
(d) Material Adverse Effect. No Material Adverse
Effect and no Consolidation Event where the successor entity has not
agreed to perform the Company's obligations shall have occurred.
(e) Opinion of Counsel. The Purchaser shall have
received (i) a "down-to-date" letter from the Company's counsel,
confirming that there is no change from the counsel's previously
delivered opinion, or else specifying with particularity the reason for
any change and an opinion as to the additional items specified in
Exhibit C hereto, and (ii) any other items set forth in the Escrow
Agreement.
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ARTICLE 5
DRAW DOWN TERMS
Section 5.1. Draw Down Terms. Subject to the satisfaction of
the conditions set forth in this Agreement, the parties agree as follows:
(a) The Company, may, in its sole discretion, issue
and exercise draw downs (each a "Draw Down") during the Commitment
Period, which Draw Downs the Purchaser shall be obligated to accept
during the Commitment Period, subject to the terms and conditions
herein.
(b) Only one Draw Down shall be allowed in each Draw
Down Pricing Period. There shall be a minimum of five (5) Trading Days
between Draw Down Pricing Periods. The number of shares of Common Stock
purchased by the Purchaser with respect to each Draw Down shall be
determined as set forth in Section 5.1(e) herein and settled on:
(i) as to the 1st through the 11th Trading Days
during the Draw Down Pricing Period, on or before the 13th
Trading Day after such Draw Down Pricing Period commences; and
(ii) as to the 12th through the 22nd Trading Days
during the Draw Down Pricing Period commences, on or before
the 24th Trading Day after such Draw Down Pricing Period (such
settlement periods and such settlement dates in subsection (i)
and this subsection (ii) each referred to as a "Settlement
Period" and a "Settlement Date", respectively).
(c) In connection with each Draw Down Pricing Period,
the Company may set the Threshold Price in the Draw Down Notice.
(d) The minimum Investment Amount for any Draw Down
shall be $100,000 and the maximum Investment Amount as to each Draw
Down shall be the lesser of (i) $5,000,000, and (ii) 6.5% of the EQY
weighted average price field (as reported on Bloomberg Financial L.P.
using the BLPH function), for the Common Stock for the ninety (90)
calendar days immediately prior to the applicable Commencement Date
(defined below) multiplied by the total trading volume in respect of
the Common Stock for such period. Notwithstanding anything herein to
the contrary, in the event the minimum Investment Amount is greater
than the maximum Investment Amount, as to such Draw Down only, the
minimum Investment Amount shall equal the maximum Investment Amount,
but in no event shall the minimum Investment Amount be less than
$50,000 such that if the maximum Investment Amount is less than
$50,000, then the Company may not exercise a Draw Down at such time.
(e) The number of Shares of Common Stock to be issued
on each Settlement Date shall be a number of shares equal to the sum of
the quotients (for each
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trading day within the Settlement Period) of (x) 1/22nd of the
Investment Amount, and (y) the Purchase Price on each Trading Day
within the Settlement Period, subject to the following adjustments:
(i) if the VWAP on a given Trading Day is less
than the Threshold Price, then that portion of the immediately
pending Investment Amount to be paid on the Settlement Date
shall be reduced by 1/22nd of the Investment Amount and such
Trading Day shall be withdrawn from the Settlement Period;
(ii) if during any Trading Day during the
Settlement Period trading of the Common Stock on the Principal
Market is suspended for more than three (3) hours, in the
aggregate, or if any Trading Day during the Settlement Period
is shortened because of a public holiday, then that portion of
the immediately pending Investment Amount to be paid on the
Settlement Date shall be reduced by 1/22nd of the Investment
Amount and such Trading Day shall be withdrawn from the
Settlement Period; and
(iii) if sales of Draw Down Shares pursuant to the
Registration Statement are suspended by the Company in
accordance with Section 3(j) herein or Section 5(e) of the
Registration Rights Agreement for more than three (3) hours,
in the aggregate, during the Settlement Period, then that
portion of the immediately pending Investment Amount to be
paid on the Settlement Date shall be reduced by 1/22nd of the
Investment Amount and such Trading Day shall be withdrawn from
the Settlement Period.
(f) The Company must inform the Purchaser by
delivering a draw down notice, in the form of Exhibit D hereto (the
"Draw Down Notice"), via facsimile transmission in accordance with
Section 8.4 as to the amount of the Draw Down (the "Investment Amount")
the Company wishes to exercise, before the first day of the Draw Down
Pricing Period (the "Commencement Date"). If the Commencement Date is
to be the date of the Draw Down Notice, the Draw Down Notice must be
delivered to and receipt confirmed by the Purchaser at least one (1)
hour before trading commences on such date. At no time shall the
Purchaser be required to purchase more than the maximum Investment
Amount for a given Draw Down Pricing Period so that if the Company
chooses not to exercise the maximum Investment Amount in a given Draw
Down Pricing Period the Purchaser is not obligated to and shall not
purchase more than the scheduled maximum Investment Amount in a
subsequent Draw Down Pricing Period.
(g) On or before each Settlement Date, the Shares
purchased by the Purchaser shall be delivered to The Depository Trust
Company ("DTC") account of the Purchaser or its designees via the
Deposit Withdrawal Agent Commission ("DWAC") system upon receipt by the
Escrow Agent of payment for the Draw Down Shares into the Escrow
Agent's master escrow account, as further provided in the Escrow
Agreement. The Escrow Agent shall be directed to pay the aggregate
Purchase Price to the Company, net of one thousand dollars ($1,000) per
Settlement as escrow expenses to the Escrow
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Agent and any additional fees as set forth in the Escrow Agreement. The
Company understands that a delay in the delivery of the Draw Down
Shares into the Purchaser's DTC account beyond three (3) Trading Days
after the dates set forth herein and in the Escrow Agreement could
result in economic loss to the Purchaser. Notwithstanding anything
herein to the contrary, as compensation to the Purchaser for such loss,
the Company agrees to pay late payments to the Purchaser for late
delivery after three (3) Trading Days from such dates in accordance
with the following schedule (where "No. Trading Days Late" is defined
as the number of Trading Days beyond three (3) Trading Days from the
dates set forth herein and in the Escrow Agreement on which such Draw
Down Shares are to be delivered into the Purchaser's DTC account):
Late Payment for Each
$5,000 of Draw Down Shares
No. Trading Days Late Being Purchased
------------------------------------------------------------ ---------------------------------------------------------
1 $100
2 $200
3 $300
4 $400
5 $500
6 $600
7 $700
8 $800
9 $900
10 $1,000
More than 10 $1,000 +$200 for each Trading Day
Late beyond 10 Trading Days
The Company shall pay any payments incurred under
this Section 5.1(g) in immediately available funds upon demand. Nothing
herein shall limit the Purchaser's right to pursue injunctive relief
and/or actual damages for the Company's failure to issue and deliver
the Draw Down Shares to the Company, including, without limitation, the
Purchaser's actual losses occasioned by any "buy-in" of Common Stock
necessitated by such late delivery.
ARTICLE 6
TERMINATION
Section 6.1. Term. The term of this Agreement shall begin on
the date hereof and shall end 20 months from the Effective Date or as otherwise
set forth in Section 6.2.
Section 6.2. Other Termination.
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(a) This Agreement shall terminate upon one (1)
Trading Day's notice if (i) an event resulting in a Material Adverse
Effect has occurred and has not been cured for a period of thirty (30)
days after giving notice thereof, (ii) the Common Stock is de-listed
from the Principal Market unless such de-listing is in connection with
the Company's subsequent listing of the Common Stock on the Nasdaq
National Market, Nasdaq SmallCap Market, the American Stock Exchange or
the New York Stock Exchange, or (iii) the Company files for protection
from creditors under any applicable law.
(b) The Company may terminate this Agreement upon one
(1) Trading Day's notice if the Purchaser shall fail to fund more than
one properly noticed Draw Down within five (5) Trading Days of the end
of the applicable Settlement Period.
Section 6.3. Effect of Termination. In the event of
termination of this Agreement pursuant to Section 6.2 herein, written notice
thereof shall forthwith be given to the other party and the transactions
contemplated by this Agreement shall be terminated without further action by
either party. If this Agreement is terminated as provided in Section 6.1 or 6.2
herein, this Agreement shall become void and of no further force and effect,
except for Sections 8.1, 8.2 and 8.9, and Article 7 herein. Nothing in this
Section 6.3 shall be deemed to release the Company or the Purchaser from any
liability for any breach under this Agreement, or to impair the rights of the
Company or the Purchaser to compel specific performance by the other party of
its obligations under this Agreement.
ARTICLE 7
INDEMNIFICATION
Section 7.1. General Indemnity.
(a) The Company agrees to indemnify and hold harmless
the Purchaser (and its directors, officers, affiliates, agents,
successors and assigns) from and against any and all losses,
liabilities, deficiencies, costs, damages and expenses (including,
without limitation, reasonable attorneys' fees, charges and
disbursements) incurred by the Purchaser as a result of any material
inaccuracy in or breach of the representations, warranties or covenants
made by the Company herein.
(b) The Purchaser agrees to indemnify and hold
harmless the Company and its directors, officers, affiliates, agents,
successors and assigns from and against any and all losses,
liabilities, deficiencies, costs, damages and expenses (including,
without limitation, reasonable attorneys' fees, charges and
disbursements) incurred by the Company as result of any material
inaccuracy in or breach of the representations, warranties or covenants
made by the Purchaser herein. Notwithstanding anything to the contrary
herein, the Purchaser shall be liable under this Section 7.1(b) for
only that amount as does not exceed the net proceeds to the Purchaser
as a result of the sale of the Shares.
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Section 7.2. Indemnification Procedure. Any party entitled to
indemnification under this Article 7 (an "Indemnified Party") will give written
notice to the indemnifying party of any matters giving rise to a claim for
indemnification; provided, that the failure of any party entitled to
indemnification hereunder to give notice as provided herein shall not relieve
the indemnifying party of its obligations under this Article 7 except to the
extent that the indemnifying party is actually prejudiced by such failure to
give notice. In case any action, proceeding or claim is brought against an
Indemnified Party in respect of which indemnification is sought hereunder, the
indemnifying party shall be entitled to participate in and, unless in the
reasonable judgment of counsel to the Indemnified Party a conflict of interest
between it and the indemnifying party may exist with respect of such action,
proceeding or claim, to assume the defense thereof with counsel reasonably
satisfactory to the Indemnified Party. In the event that the indemnifying party
advises an Indemnified Party that it will contest such a claim for
indemnification hereunder, or fails, within thirty (30) days of receipt of any
indemnification notice to notify, in writing, such person of its election to
defend, settle or compromise, at its sole cost and expense, any action,
proceeding or claim (or discontinues its defense at any time after it commences
such defense), then the Indemnified Party may, at its option, defend, settle or
otherwise compromise or pay such action or claim. In any event, unless and until
the indemnifying party elects in writing to assume and does so assume the
defense of any such claim, proceeding or action, the Indemnified Party's costs
(including reasonable attorneys' fees, charges and disbursements) and expenses
arising out of the defense, settlement or compromise of any such action, claim
or proceeding shall be losses subject to indemnification hereunder. The
Indemnified Party shall cooperate fully with the indemnifying party in
connection with any settlement negotiations or defense of any such action or
claim by the indemnifying party and shall furnish to the indemnifying party all
information reasonably available to the Indemnified Party, which relates to such
action or claim. The indemnifying party shall keep the Indemnified Party fully
apprised at all times as to the status of the defense or any settlement
negotiations with respect thereto. If the indemnifying party elects to defend
any such action or claim, then the Indemnified Party shall be entitled to
participate in such defense with counsel of its choice at its sole cost and
expense. The indemnifying party shall not be liable for any settlement of any
action, claim or proceeding effected without its prior written consent.
Notwithstanding anything in this Article 7 to the contrary, the indemnifying
party shall not, without the Indemnified Party's prior written consent, settle
or compromise any claim or consent to entry of any judgment in respect thereof
which imposes any future obligation on the Indemnified Party or which does not
include, as an unconditional term thereof, the giving by the claimant or the
plaintiff to the Indemnified Party of a release from all liability in respect of
such claim. The indemnity agreements contained herein shall be in addition to
(a) any cause of action or similar rights of the Indemnified Party against the
indemnifying party or others, and (b) any liabilities to which the indemnifying
party may be subject.
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ARTICLE 8
MISCELLANEOUS
Section 8.1. Fees and Expenses. Each of the parties to this
Agreement shall pay its own fees and expenses related to the transactions
contemplated by this Agreement; except that, the Company shall pay, at the
Initial Closing, a non-accountable expense allowance of $10,000 for the
Purchaser's legal, administrative and due diligence costs and expenses and any
other additional fees as set forth in the Escrow Agreement. In addition, the
Company shall pay all reasonable fees and expenses incurred by the Purchaser in
connection with any subsequent amendments, modifications or waivers of this
Agreement, the Escrow Agreement or the Registration Rights Agreement or incurred
in connection with the enforcement of this Agreement, the Escrow Agreement and
the Registration Rights Agreement, including, without limitation, all reasonable
attorneys' fees and expenses if such subsequent amendment, modification or
waiver is at the request of the Company. The Company shall pay all stamp or
other similar taxes and duties levied in connection with issuance of the Shares
pursuant hereto.
Section 8.2. Specific Enforcement. 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 or thereof, this being in addition to any other
remedy to which any of them may be entitled by law or equity.
Section 8.3. Entire Agreement; Amendment. The Transaction
Documents contain the entire understanding of the parties with respect to the
matters covered in the Transaction Documents. No provision of this Agreement may
be waived or amended other than by a written instrument signed by the party
against whom enforcement of any such amendment or waiver is sought and no
condition to closing any Draw Down in favor of the Purchaser may be waived by
the Purchaser.
Section 8.4. Notices. Any notice, demand, request, waiver or
other communication required or permitted to be given hereunder shall be in
writing and shall be effective (a) upon hand delivery or facsimile at the
address or number designated below (if delivered on a business day during normal
business hours where such notice is to be received), or the first business day
following such delivery (if delivered other than on a business day during normal
business hours where such notice is to be received) or (b) on the second
business day following the date of mailing by express courier service, fully
prepaid, addressed to such address, or upon actual receipt of such mailing,
whichever shall first occur. The addresses for such communications shall be:
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If to the Company: 00000 Xxxx Xxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000-0000
Attn: Xxxxxx Xxxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
With copies to: Xxxxxxxx Xxxxxxxx & Xxxxxx P.C.
(which shall not constitute 5400 Renaissance Tower
notice) 0000 Xxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxx Xxxxxxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
If to Purchaser: x/x Xxxxxx Xxxxxxx Xxxxxxxxxx
Xxxxxxx Xxxxx, 0xx Xxxxx
Xxxxxxxxxx Drive
Attn: Xxxxx Xxxx
Fax: (000) 000-0000
with copies to: Xxxxxxx Xxxxxx & Green P.C.
(which shall not constitute 000 Xxxx Xxxxxx
xxxxxx) Xxx Xxxx, XX 00000-0000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxx
Any party hereto may from time to time change its address for
notices by giving written notice of such changed address to the other party
hereto in accordance herewith.
Section 8.5. Waivers. No waiver by either 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 provisions, 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.
Section 8.6. Headings. The article, section and subsection
headings in this Agreement are for convenience only and shall not constitute a
part of this Agreement for any other purpose and shall not be deemed to limit or
affect any of the provisions hereof.
Section 8.7. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties and their successors and
assigns. The parties hereto may not amend this Agreement or any rights or
obligations hereunder without the prior written consent of the Company and each
Purchaser to be affected by the amendment. After Initial Closing, the assignment
by a party to this Agreement of any rights hereunder shall not affect the
obligations of such party under this Agreement.
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Section 8.8. 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 8.9. Governing Law/Arbitration. This Agreement shall
be governed by and construed in accordance with the internal laws of the State
of New York, without giving effect to the choice of law provisions. The Company
and the Purchaser agree to submit themselves to the in personam jurisdiction of
the state and federal courts situated within the Southern District of the State
of New York with regard to any controversy arising out of or relating to this
Agreement. Any dispute under this Agreement or any Exhibit attached hereto shall
be submitted to arbitration under the American Arbitration Association (the
"AAA") in New York City, New York, and shall be finally and conclusively
determined by the decision of a board of arbitration consisting of three (3)
members (hereinafter referred to as the "Board of Arbitration") selected as
according to the rules governing the AAA. The Board of Arbitration shall meet on
consecutive business days in New York City, New York, and shall reach and render
a decision in writing (concurred in by a majority of the members of the Board of
Arbitration) with respect to the amount, if any, which the losing party is
required to pay to the other party in respect of a claim filed. In connection
with rendering its decisions, the Board of Arbitration shall adopt and follow
the laws of the State of New York. To the extent practical, decisions of the
Board of Arbitration shall be rendered no more than thirty (30) calendar days
following commencement of proceedings with respect thereto. The Board of
Arbitration shall cause its written decision to be delivered to all parties
involved in the dispute. The Board of Arbitration shall be authorized and is
directed to enter a default judgment against any party refusing to participate
in the arbitration proceeding within thirty days of any deadline for such
participation. Any decision made by the Board of Arbitration (either prior to or
after the expiration of such thirty (30) calendar day period) shall be final,
binding and conclusive on the parties to the dispute, and entitled to be
enforced to the fullest extent permitted by law and entered in any court of
competent jurisdiction. The prevailing party shall be awarded its costs,
including attorneys' fees, from the non-prevailing party as part of the
arbitration award. Any party shall have the right to seek injunctive relief from
any court of competent jurisdiction in any case where such relief is available.
The prevailing party in such injunctive action shall be awarded its costs,
including reasonable attorneys' fees, from the non-prevailing party.
Section 8.10. Counterparts. This Agreement may be executed in
any number of counterparts, all of which taken together shall constitute one and
the same instrument and shall become effective when counterparts have been
signed by each party and delivered to the other parties hereto, it being
understood that all parties need not sign the same counterpart. Execution may be
made by delivery by facsimile.
Section 8.11. Publicity. Neither the Company nor the Purchaser
shall issue any press release or otherwise make any public statement or
announcement with respect to this Agreement or the transactions contemplated
hereby or the existence of this Agreement, without the prior written consent of
the other party. After the Initial Closing, the Company may issue a press
release or otherwise make a public statement or announcement with respect to
this Agreement or the transactions contemplated hereby or the existence of this
Agreement; provided, however, that prior to issuing any such press release,
making any such public statement or
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announcement, the Company obtains the prior consent of the Purchaser, which
consent shall not be unreasonably withheld or delayed.
Section 8.12. Severability. The provisions of this Agreement
are severable and, in the event that The Board of Arbitration or any court or
officials of any regulatory agency of competent jurisdiction shall determine
that any one or more of the provisions or part of the provisions contained in
this Agreement shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision or part of a provision of this Agreement
and this Agreement shall be reformed and construed as if such invalid or illegal
or unenforceable provision, or part of such provision, had never been contained
herein, so that such provisions would be valid, legal and enforceable to the
maximum extent possible, so long as such construction does not materially
adversely effect the economic rights of either party hereto.
Section 8.13. Further Assurances. From and after the date of
this Agreement, upon the request of the Purchaser or the Company, each of the
Company and the Purchaser shall execute and deliver such instruments, documents
and other writings as may be reasonably necessary or desirable to confirm and
carry out and to effectuate fully the intent and purposes of this Agreement.
Section 8.14. Effectiveness of Agreement. This Agreement shall
become effective only upon satisfaction of the conditions precedent to the
Initial Closing set forth in Article I of the Escrow Agreement.
ARTICLE 9
DEFINITIONS
Section 9.1. Certain Definitions.
(a) "Commencement Date" shall have the meaning
assigned to such term in Section 5.1(f) hereof.
(b) "Commitment Amount" shall have the meaning
assigned to such term in Section 1.1 hereof.
(c) "Commitment Period" shall mean the period of 20
consecutive months commencing immediately after the Effective Date.
(d) "Common Stock" shall mean the Company's common
stock, $0.001 par value per share.
(e) "Draw Down" shall have the meaning assigned to
such term in Section 5.1(a) hereof.
(f) "Draw Down Notice" shall have the meaning assigned
to such term in Section 5.1(f) hereof.
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(g) "Draw Down Pricing Period" shall mean a period of
twenty-two (22) consecutive Trading Days beginning on the date
specified in the Draw Down Notice (as defined in Section 5.1(f)
herein); provided, however, the Draw Down Pricing Period shall not
begin before the day on which receipt of such notice is confirmed by
the Purchaser.
(h) "Effective Date" shall mean the date the
Registration Statement of the Company covering the Shares being
subscribed for hereby is declared effective by the SEC.
(i) "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated
thereunder.
(j) "GAAP" shall mean the United States Generally
Accepted Accounting Principles as those conventions, rules and
procedures are determined by the Financial Accounting Standards Board
and its predecessor agencies.
(k) "Initial Closing" shall have the meaning assigned
to such term in Section 1.2 hereof.
(l) "Initial Closing Date" shall have the meaning
assigned to such term in Section 1.2 hereof.
(m) "Investment Amount" shall have the meaning
assigned to such term in Section 5.1(f) hereof.
(n) "Material Adverse Effect" shall mean any adverse
effect on the business, operations, properties, prospects or financial
condition of the Company that is material and adverse to the Company
and its subsidiaries and affiliates, taken as a whole and/or any
condition, circumstance, or situation that would prohibit or otherwise
materially interfere with the ability of the Company to perform any of
its material obligations under this Agreement or the Registration
Rights Agreement or to perform its obligations under any other
Material Agreement (as defined in Section 2.1(u)).
(o) "Principal Market" shall mean initially the OTC
Bulletin Board and shall include the American Stock Exchange, Nasdaq
National Market, the Nasdaq Small-Cap Market and the New York Stock
Exchange if the Company becomes listed and trades on such market or
exchange after the date hereof.
(p) "Purchase Price" shall mean, with respect to
Shares purchased during each applicable Settlement Period, 94% of the
VWAP on the date in question.
(q) "Registration Statement" shall mean the
registration statement under the Securities Act, to be filed with the
Securities and Exchange Commission for the registration of the Shares
pursuant to the Registration Rights Agreement attached hereto as
Exhibit A (the "Registration Rights Agreement).
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(r) "SEC" shall mean the Securities and Exchange
Commission.
(s) "SEC Documents" shall mean the Company's latest
Form 10-K or Form 10-KSB as of the time in question, all Forms 10-Q or
10-QSB and 8-K filed thereafter, and the Proxy Statement for its
latest fiscal year as of the time in question until such time as the
Company no longer has an obligation to maintain the effectiveness of a
Registration Statement as set forth in the Registration Rights
Agreement.
(t) "Securities Act" shall mean the Securities and
Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
(u) "Settlement" shall mean the delivery of the Draw
Down Shares into the Purchaser's DTC account in exchange for payment
therefor.
(v) "Settlement Date" shall have the meaning assigned
to such term in Section 5.1(b).
(w) "Settlement Period" shall have the meaning
assigned to such term in Section 5.1(b).
(x) "Shares" shall mean, collectively, the shares of
Common Stock of the Company being subscribed for hereunder (the "Draw
Down Shares") and the shares of Common Stock issuable upon exercise of
the Warrant (the "Warrant Shares").
(y) "Threshold Price" shall mean the price per Share
designated by the Company as the lowest VWAP during any Draw Down
Pricing Period at which the Company shall sell its Common Stock in
accordance with the Agreement.
(z) "Trading Day" shall mean any day on which the
Principal Market is open for business.
(aa) "Transaction Documents" shall mean this
Agreement, the Registration Rights Agreement and the Escrow Agreement.
(bb) "VWAP" shall mean the daily volume weighted
average price of the Company's Common Stock on the Principal Market as
reported by Bloomberg Financial L.P. (based on a trading day from 9:30
a.m. Eastern Time to 4:02 p.m. Eastern Time) using the VAP function on
the date in question.
(cc) "Warrant" shall mean the warrant issued to the
Purchaser pursuant to Section 4.2(f) hereof.
[SIGNATURE PAGE FOLLOWS]
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[SIGNATURE PAGE TO COMMON STOCK PURCHASE AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorize officer as of this
27th day of March, 2001.
MIGRATEC, INC.
By: /s/ X. Xxxxxx Xxxxxxxxx
--------------------------------------
X. Xxxxxx Brechbuhl, President, Chief
Financial Officer and Secretary
IRONHEAD INVESTMENTS INC.
By: /s/ XXXXX XXXX
--------------------------------------
Xxxxx Xxxx, Authorized Signatory
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