EXHIBIT 10.47
NOTE AND WARRANT PURCHASE AGREEMENT
THIS SUBSCRIPTION IS EXECUTED IN RELIANCE UPON THE EXEMPTION PROVIDED BY SECTION
4(2) AND REGULATION D, RULE 506 FOR TRANSACTIONS NOT INVOLVING A PUBLIC OFFERING
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE NOTES
AND WARRANTS BEING OFFERED INVOLVE A HIGH DEGREE OF RISK.
THE NOTE AND WARRANTS THAT YOU PURCHASE IN THIS OFFERING ARE ONLY
CONVERTIBLE/EXERCISBALE INTO SHARES OF COMMON STOCK UPON SHAREHOLDER APPROVAL TO
INCREASE ITS AUTHORIZED SHARES TO 100,000,000 AND THE COMPANY CANNOT GIVE ANY
ASSURANCES THAT IT WILL RECEIVE SHAREHOLDER APPROVAL. IN THE EVENT THE COMPANY
DOES NOT RECEIVE SHAREHOLDER APPROVAL TO INCREASE ITS AUTHORIZED COMMON STOCK,
THE SECURITES THAT YOU PURCHASE IN THIS OFFERING WILL NOT BE A
CONVERTIBLE/EXERCISABLE INSTRUMENT.
This NOTE AND WARRANT PURCHASE AGREEMENT (this "Agreement"), dated as of
July 15, 2004 is made by and among Xxxxxx Xxxxxxx Promotions, Inc, (the
"Company"), and the Purchasers named on the signature pages hereto, together
with their permitted transferees (each, a "Purchaser" and collectively, the
"Purchasers").
RECITALS:
A. The Company and the Purchaser are executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by Section
4(2) of the Securities Act of 1933, as amended, (the "Securities Act).
B. The Purchasers desire, upon the terms and conditions stated in this
Agreement, to purchase, for an aggregate purchase price of a minimum of $10,000
and a maximum of up to $1,000,000, shares of Common Stock of the Company.
In consideration of the premises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and the Purchaser hereby agree as follows:
1. The Loan. Subject to the terms of this Agreement, ____________ the
undersigned Purchaser hereby agrees to loan Xxxxxx Xxxxxxx Promotions, Inc. (the
"Company") the principal amount set forth on the signature page hereof. The loan
shall be evidenced by a 10% promissory note in substantially the form attached
hereto as Exhibit A (the "Note").The term "Securities" when used in this
Agreement shall mean the Notes and/or Warrants. Notwithstanding anything herein
to the contrary, the Purchaser acknowledges and agrees that, pursuant to the
terms of the Note, in the event the principal amount of the Note, together with
accrued but unpaid interest, is not paid on or before the one hundred twentieth
(120th) calendar day after the date of the Note, the Company shall have an
additional thirty (30) calendar days in which to pay the principal and accrued
but unpaid interest. In the event the principal amount of the Note, together
with accrued but unpaid interest, is not paid on or before the one hundred and
fiftieth (150th) calendar day after the date of the Note, the Purchaser shall
have the right in its sole and absolute discretion to convert the outstanding
principal amount of the Note, together with accrued but unpaid interest, into
that number of shares of the Company's common stock equal to the outstanding
principal amount of the Note, together with accrued but unpaid interest, divided
by eighty-five percent (85%) of the five day average closing bid price of the
Company's common stock for the five trading day period immediately preceding the
Company's receipt of the Holder's notice to convert and the Note, with a maximum
conversion price of $0.50 per share and a minimum conversion price
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of $0.30 per share. Unless otherwise defined, the capitalized terms herein shall
have the meanings assigned to such terms in the Note.
The Purchaser acknowledges and agrees that the Note is one of a number of
other promissory notes, which are substantially the same as the Note, which such
Notes are being issued in connection with the offering of the Note. The Company
is seeking to raise gross proceeds in the minimum amount of $10,000 and the
gross maximum amount of $1,000,000 pursuant to the issuance of these Notes.
At the Closing, each Purchaser will pay the amount set forth beneath its name on
the signature page hereof by either check or wire transfer of immediately
available funds to Wachovia Bank, National Association in accordance with the
wire instructions set forth on the signature page. Wachovia Bank, National
Association shall act as escrow agent. The Company will deliver the Securities
to the Purchaser no later than ten (10) calendar days after the Company's
receipt of the net purchase price from escrow.
2. Issuance of Warrant. For every $2.00 face amount of Note the Company shall
issue the Purchaser a warrant (the "Warrant") to purchase one (1) share of
common stock of the Company, with a term of 5 years and an exercise price equal
to $0.50. The Warrant shall be in substantially the form attached hereto as
Exhibit B. There will be no warrants for fractional shares. If fractional shares
would occur based upon the mathematical formula used in this Section to
calculate the number of shares to be issued upon the exercise of the Warrant,
the amount of shares will be rounded up to the next highest share.
NOTWITHSTANDING THE FOREGOING, THERE ARE NOT SUFFICIENT SHARES OF COMMON STOCK
OF THE COMPANY AUTHORIZED OR RESERVED TO ISSUE SUCH SHARES OF COMMON STOCK OF
THE COMPANY IF THE WARRANT WERE EXERCISED ON THE DATE HEREOF. IF SUCH NUMBER OF
SHARES OF COMMON STOCK OF THE COMPANY ARE FOR ANY REASON WHATSOEVER STILL NOT
AVAILABLE TO BE ISSUED BY THE COMPANY AT THE TIME OF THE EXERCISE OF THE
WARRANT, THE COMPANY SHALL SO ISSUE SUCH SHARES OF COMMON STOCK AS SOON AS
PRACTICABLE.
3. Acceptance of Subscription. The Purchaser understands and agrees that the
Company, in its sole discretion, reserves the right to accept or reject this or
any other subscription for Notes, in whole or in part, notwithstanding prior
receipt by the Purchaser of notice of acceptance of this subscription. The
Company shall have no obligation hereunder until the Company shall execute and
deliver to the Purchaser an executed copy of this Agreement. If this
subscription is rejected in whole, all funds received from the Purchaser will be
returned without interest, penalty, expense or deduction, and this Agreement
shall thereafter be of no further force or effect. If this subscription is
rejected in part, the funds for the rejected portion of this subscription will
be returned without interest, penalty, expense or deduction, and this Agreement
will continue in full force and effect to the extent this subscription was
accepted.
4. Representations and Warranties. The Purchaser hereby acknowledges,
represents, warrants and agrees as follows:
(a) None of the Notes or shares of common stock underlying the Notes or the
Warrant are registered under the Securities Act of 1933, as amended (the
"Securities Act"), or any state securities laws. The Purchaser understands that
the offering and sale of the Notes and Warrant is intended to be exempt from
registration under the Securities Act, by virtue of Section 4(2) thereof and the
provisions of Regulation D promulgated thereunder, based, in part, upon the
representations, warranties and agreements of the Purchaser contained in this
Agreement;
(b) The Purchaser and the Purchaser's attorney, accountant, purchaser
representative and/or tax advisor, if any (collectively, the "Advisors"), have
received all documents requested by Purchaser and its Advisors as they consider
necessary or appropriate to evaluate the risks and merits of an investment in
the Notes and Warrants, and have had access to all the Company's filings on the
Electronic Data Gathering and Retrieval System ("XXXXX"), (collectively, the
"SEC Documents"). Purchaser acknowledges that the Company is subject to the
periodic reporting requirements of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and the Purchaser has reviewed copies of all SEC
Documents deemed relevant by the Purchaser and its Advisors (including, without
limitation, any Risk Factors contained therein). The Purchaser and its Advisors
have carefully reviewed such documents and understand the information contained
therein. The Purchaser and its Advisors understand that the
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Company is not current with its XXXXX filings. The Company has not filed its
Form 10-QSB for the period ending March 31, 2004. The Purchaser and its Advisors
understand that the Company has been delisted from the over the counter bulletin
board and its securities are currently trading on the Pink Sheets. The Purchaser
and its Advisors understand that on March 24, 2004, the SEC brought a civil
action against Xxxxxx Xxxxxxx Promotions, Inc. and its officers and directors.
The action alleges that Xxxxxx Xxxxxxx Promotions, Inc. and its officers and
directors violated Section 10(b) of the Securities Exchange Act of 1934 and
Exchange Rule 10b-5 thereunder. The staff also alleges that the officers
violated Section 302(a) of the Public Company Accounting Reform and Purchasers
Protection Act of 2002 and Exchange Act Rule 13a-14 thereunder. In addition, the
staff further alleges that the officers and directors aided and abetted Xxxxxx
Xxxxxxx Promotions, Inc.'s violation of the Exchange Act Sections 13(a), 13(b)
(2) (A), 13 (b) (2) (B) and Exchange Act Rules 12b-20 and 13a-1 thereunder;
(c) Neither the Securities and Exchange Commission nor any state securities
commission has approved the Notes, Warrant or shares of common stock underlying
the Notes or Warrant or passed upon or endorsed the merits of the offering or
confirmed the accuracy or determined the adequacy of the offering documents. The
offering documents have not been reviewed by any Federal, state, provincial or
other regulatory authority;
(d) All documents, records, and books pertaining to the investment in the Notes
or the Warrant have been made available for inspection by such Purchaser and the
Advisors, if any;
(e) The Purchaser and the Advisors, if any, have had a reasonable opportunity to
ask questions of and receive answers from a person or persons acting on behalf
of the Company concerning the offering of the Notes and the Warrant and the
business, financial condition, results of operations and prospects of the
Company, and all such questions have been answered to the full satisfaction of
the Purchaser and the Advisors, if any;
(f) In evaluating the suitability of an investment in the Company, the Purchaser
has not relied upon any representation or other information (oral or written)
other than as stated in the offering documents or as contained in documents or
answers to questions so furnished to the Purchaser or the Advisors by the
Company;
(g) The Purchaser is unaware of, is no way relying on, and did not become aware
of the offering of the Notes or the Warrant through or as a result of, any form
of general solicitation or general advertising including, without limitation,
any article, notice, advertisement or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio, in
connection with the offering and sale of the Notes and the Warrant and is not
subscribing for Notes or the Warrant and did not become aware of the offering of
the Notes and Warrant through or as a result of any seminar or meeting to which
the Purchaser was invited by, or any solicitation of a subscription by, a person
not previously known to the Purchaser in connection with investments in
securities generally;
(h) The Purchaser has taken no action which would give rise to any claim by any
person for brokerage commissions, finders' fees or the like relating to this
Agreement or the transactions contemplated hereby, except for the Finder's Fee
Agreement between the Company and Xxxxxxx Xxxxxxx & Company, Inc., a copy of
which is attached as Exhibit C;
(i) The Purchaser or the Purchaser's representative, as the case may be,
together with the Advisors, have such knowledge and experience in financial,
tax, and business matters, and, in particular, investments in securities, so as
to enable them to utilize the information made available to them in connection
with the offering of the Notes and the Warrant to evaluate the merits and risks
of an investment in the Notes and the Warrant and the Company and to make an
informed investment decision with respect thereto;
(j) The Purchaser is not relying on the Company, or any of its employees or
agents with respect to the legal, tax, economic and related considerations of an
investment in the Notes or the Warrant, and the Purchaser has relied on the
advice of, or has consulted with, only his own Advisors;
(k) The Purchaser is acquiring the Notes and the Warrant solely for such
Purchaser's own account for investment and not with a view to resale or
distribution thereof, in whole or in part. The Purchaser has no agreement
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or arrangement, formal or informal, with any person to sell or transfer all or
any part of the Notes or the Warrant, or the shares of Common Stock issuable
upon repayment or conversion of the Notes or exercise of the Warrant, and the
Purchaser has no plans to enter into any such agreement or arrangement;
(l) The Purchaser must bear the substantial economic risks of the investment in
the Notes and the Warrant indefinitely because the securities may not be sold,
hypothecated or otherwise disposed of unless subsequently registered under the
Securities Act and applicable state securities laws or an exemption from such
registration is available. Legends shall be placed on the Notes and the Warrant
to the effect that they have not been registered under the Securities Act or
applicable state securities laws and appropriate notations thereof will be made
in the Company's stock books. Stop transfer instructions will be placed with the
transfer agent of the securities constituting the Notes and the Warrant;
(m) The Purchaser has adequate means of providing for such Purchaser's current
financial needs and foreseeable contingencies and has no need for liquidity of
the investment in the Notes or the Warrant for an indefinite period of time;
(n) The Purchaser is aware that an investment in the Notes and the Warrant
involves a number of very significant risks, and, in particular, acknowledges
that the Company has had a limited operating history and is engaged in a highly
competitive business;
(o) The Purchaser meets the requirements of at least one of the suitability
standards for an "accredited investor" as set forth on the Accredited Investor
Certification contained herein;
(p) The Purchaser (i) if a natural person, represents that the Purchaser has
reached the age of 21 and has full power and authority to execute and deliver
this Agreement and all other related agreements or certificates and to carry out
the provisions hereof and thereof; (ii) if a corporation, partnership, or
limited liability company or partnership, or association, joint stock company,
trust, unincorporated organization or other entity, represents that such entity
was not formed for the specific purpose of acquiring the Notes or the Warrant,
such entity is duly organized, validly existing and in good standing under the
laws of the state of its organization, the consummation of the transactions
contemplated hereby is authorized by, and will not result in a violation of
state law or its charter or other organizational documents, such entity has full
power and authority to execute and deliver this Agreement and all other related
agreements or certificates and to carry out the provisions hereof and thereof
and to purchase and hold the securities constituting the Notes and the Warrant,
the execution and delivery of this Agreement has been duly authorized by all
necessary action, this Agreement has been duly executed and delivered on behalf
of such entity and is a legal, valid and binding obligation of such entity; or
(iii) if executing this Agreement in a representative or fiduciary capacity,
represents that it has full power and authority to execute and deliver this
Agreement in such capacity and on behalf of the subscribing individual, xxxx,
partnership, trust, estate, corporation, or limited liability company or
partnership, or other entity for whom the Purchaser is executing this Agreement,
and such individual, partnership, xxxx, trust, estate, corporation, or limited
liability company or partnership, or other entity has full right and power to
perform pursuant to this Agreement and make an investment in the Company, and
represents that this Agreement constitutes a legal, valid and binding obligation
of such entity. The execution and delivery of this Agreement will not violate or
be in conflict with any order, judgment, injunction, agreement or controlling
document to which the Purchaser is a party or by which it is bound;
(q) The Purchaser and the Advisors, if any, have had the opportunity to obtain
any additional information, to the extent the Company had such information in
its possession or could acquire it without unreasonable effort or expense,
necessary to verify the accuracy of the information contained in the offering
documents and all documents received or reviewed in connection with the purchase
of the Notes and the Warrant and have had the opportunity to have
representatives of the Company provide them with such additional information
regarding the terms and conditions of this particular investment and the
financial condition, results of operations, business and prospects of the
Company deemed relevant by the Purchaser or the Advisors, if any, and all such
requested information, to the extent the Company had such information in its
possession or could acquire it without unreasonable effort or expense, has been
provided to the full satisfaction of the Purchaser and the Advisors, if any;
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(r) The Purchaser represents to the Company that any information which the
undersigned has heretofore furnished or furnishes herewith to the Company is
complete and accurate and may be relied upon by the Company in determining the
availability of an exemption from registration under Federal and state
securities laws in connection with the offering of the Notes and the Warrant.
The Purchaser further represents and warrants that it will notify and supply
corrective information to the Company immediately upon the occurrence of any
change therein occurring prior to the Company's issuance of the Notes and the
Warrant;
(s) The Purchaser is knowledgeable about investment considerations in
development-stage companies. The Purchaser has a sufficient net worth to sustain
a loss of its entire investment in the Company in the event such a loss should
occur. The Purchaser's overall commitment to investments, which are not readily
marketable, is not excessive in view of the Purchaser's net worth and financial
circumstances and the purchase of the Notes and the Warrant will not cause such
commitment to become excessive. The investment is a suitable one for the
Purchaser;
(t) The Purchaser is satisfied that the Purchaser has received adequate
information with respect to all matters which it or the Advisors, if any,
consider material to its decision to make this investment;
(u) THE PURCHASER ACKNOWLEDGES AND UNDERSTANDS THAT THE NOTE AND WARRANTS THAT
IT PURCHASES IN THIS OFFERING ARE ONLY CONVERTIBLE/EXERCISBALE INTO SHARES OF
COMMON STOCK UPON SHAREHOLDER APPROVAL TO INCREASE THE COMPANY'S AUTHORIZED
COMMON STOCK TO 100,000,000 SHARES AND THE COMPANY CANNOT GIVE ANY ASSURANCES
THAT IT WILL RECEIVE SHAREHOLDER APPROVAL. IN THE EVENT THE COMPANY DOES NOT
RECEIVE SHAREHOLDER APPROVAL TO INCREASE ITS AUTHORIZED COMMON STOCK, THE
SECURITES THAT YOU PURCHASE IN THIS OFFERING WILL NOT BE A
CONVERTIBLE/EXERCISABLE INSTRUMENT.
(v) THE NOTE AND WARRANT (AND ANY SECURITIES ISSUED UPON CONVERSION OF THE NOTE
OR EXERCISE OF THE WARRANT) OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF CERTAIN STATES AND
ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF SAID ACT AND SUCH LAWS. THE NOTE AND WARRANT (AND ANY SECURITIES
ISSUED UPON CONVERSION OF THE NOTE OR EXERCISE OF THE WARRANT) ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED UNDER SAID ACT AND SUCH LAWS PURSUANT TO REGISTRATION OR
EXEMPTION THEREFROM. THE NOTE AND WARRANT (AND ANY SECURITIES ISSUED UPON
CONVERSION OF THE NOTE OR EXERCISE OF THE WARRANT) HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES
COMMISSION OR ANY OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING
AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY
OR ADEQUACY OF ANY OFFERING DOCUMENTS. ANY REPRESENTATION TO THE CONTRARY IS
UNLAWFUL.
5. The Company represents and warrants to the Purchasers that:
(a). Authorization; Enforcement. (i) The Company has all requisite
corporate power and authority to enter into and to perform its obligations under
this Agreement, to consummate the transactions contemplated hereby and thereby
and to issue the Securities in accordance with the terms hereof; (ii) the
execution, delivery and performance of this Agreement by the Company and the
consummation by it of the transactions contemplated hereby (including without
limitation the issuance of the Securities) have been duly authorized by the
Company's Board of Directors and no further consent or authorization of the
Company, its Board of Directors, or its shareholders is required; (iii) this
Agreement has been duly executed by the Company; and (iv) this Agreement
constitutes a legal, valid and binding obligation of the Company enforceable
against the Company in accordance
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with its terms, subject to the effect of any applicable bankruptcy, insolvency,
reorganization, or moratorium or similar laws affecting the rights of creditors
generally and the application of general principles of equity. A copy of the
company's Board Resolution authorizing this offering is attached hereto as
Exhibit D and the opinion letter of the company's counsel is attached hereto as
Exhibit E.
(b) Capitalization. As of July 15, 2004, the authorized capital stock of
the Company consists of (a) 15,000,000 shares of Common Stock, no par value per
share, all of which are issued and outstanding and 58,318,435 on fully diluted
basis. No shares of capital stock of the Company, including the Securities
issuable pursuant to this Agreement, are subject to preemptive rights or any
other similar rights of the stockholders of the Company or any liens or
encumbrances imposed through the actions or failure to act of the Company.
(c) Issuance of Securities. The Securities are duly authorized and, upon
issuance in accordance with the terms of this Agreement, will be validly issued,
fully paid and non-assessable, free from all taxes, liens, claims, encumbrances
and charges with respect to the issue thereof, will not be subject to preemptive
rights or other similar rights of stockholders of the Company, and will not
impose personal liability on the holders thereof.
(d) Brokers. Except as set forth below, 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 relating to this Agreement or the transactions
contemplated hereby.
(i) Upon the Closing of each investment (as defined below) in the
Offering, by an investor first introduced to the Company by Xxxxxxx,
Xxxxxxx & Company, Inc. (the "Xxxxxxx Xxxxxxx Purchasers"), Xxxxxxx,
Xxxxxxx & Company, Inc. will receive cash commissions equal to 10% of the
aggregate value of such investment and a Warrant to purchase one (1) share
of common stock for every $3.00 of Notes purchased by Xxxxxxx, Xxxxxxx
Purchasers and the COBRADesk filing fee, together with legal fees of
Xxxxxxx, Xxxxxxx 's counsel related to the COBRADesk filing. To ensure that
sufficient funds are allocated for the COBRADesk filing and legal fees, the
sum of $5,000 shall be held by counsel for Xxxxxxx, Xxxxxxx to cover such
fees.
(ii) The Company (upon breaking escrow of not less than $10,000 in
gross subscription proceeds) has agreed to pay $10,000 to Xxxxxxx, Xxxxxxx
& Company, Inc.'s counsel for all legal fees and costs of Xxxxxxx, Xxxxxxx
& Company, Inc. directly and necessarily incurred in connection with the
proposed Offering, including but not limited to, the costs of preparing and
the offering documents, review of any Registration Statement and
amendments, post-effective amendments and supplements thereto, if any; and
preparing, printing and delivering all selling documents, including but not
limited to this Agreement, stock and warrant certificates. Xxxxxxx, Xxxxxxx
& Company, Inc. will bear any and all other expenses it may incur in
connection with this Offering ("Charleston's Expenses"), with the exception
of the COBRADesk filing fee and related legal costs. The Company will bear
its own expenses incurred in connection with this offering, including those
expenses associated with any Registration Statement and amendments,
post-effective amendments and supplements thereto, if any; preparing,
printing and delivering exhibits thereto and copies of the preliminary,
final and supplemental prospectus as well as the cost expenses and filing
fees for the Form D and Blue Sky compliance (collectively, the "Company
Expenses").
(e) Form D; Blue Sky Laws. The Company will timely file a Notice of Sale of
Securities on Form D with respect to the Securities, as required by Form D and
on or before the Closing Date, take such action as it reasonably determines to
be necessary to qualify the Securities for sale to the Purchasers under this
Agreement under applicable securities (or "blue sky") laws of the states of the
United States (or to obtain an exemption from such qualification).
6. Anti-Money Laundering.
(a) In General. Purchaser acknowledges that due to anti-money laundering
requirements operating in the United States, as well as Xxxxxxx, Xxxxxxx &
Company, Inc.'s own internal anti-money laundering policies, Xxxxxxx, Xxxxxxx &
Company, Inc. may require further identification of the Purchaser and the source
of purchase funds before this Agreement can be processed and purchase monies
accepted. Xxxxxxx, Xxxxxxx & Company, Inc. shall be held harmless and
indemnified against any loss arising as a result of a failure to process this
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Agreement if such information has been required by Xxxxxxx, Xxxxxxx & Company,
Inc. and has not been satisfactorily provided by the Purchaser. Purchaser
represents that all purchase payments transferred to the Company pursuant to
this Agreement originated directly from a bank or brokerage account in the name
of Purchaser. Purchaser represents and warrants that acceptance by the Company
and Xxxxxxx, Xxxxxxx & Company, Inc. of this Agreement, together with acceptance
of the appropriate remittance, will not breach any applicable rules and
regulations designed to avoid money laundering. Specifically, Purchaser
represents and warrants that all evidence of identity provided to Xxxxxxx,
Xxxxxxx & Company, Inc. is genuine and all related information furnished and to
be furnished to Xxxxxxx, Xxxxxxx & Company, Inc. is accurate.
(b) Beneficial Ownership. Purchaser represents and warrants that it is
subscribing for the Securities for Purchaser's own account and own risk, and,
unless Purchaser advises Xxxxxxx, Xxxxxxx & Company, Inc. to the contrary in
writing and identifies with specificity each beneficial owner on whose behalf
Purchaser is acting, Purchaser represents that it is not acting as a nominee for
any other person or entity. Purchaser also represents that it does not have the
intention or obligation to sell, distribute or transfer the Securities, directly
or indirectly, to any other person or entity or to any nominee account.
(c) Prohibited Purchaser. Purchaser further represents and warrants that
neither it, nor any person controlling, controlled by, or under common control
with it, nor any person having a beneficial or economic interest in it, is a
Prohibited Purchaser (defined in (e) below) and Purchaser is not and will not
purchase the Securities on behalf or for the benefit of any Prohibited
Purchaser.
(d) Suspension of Purchase Rights. Purchaser acknowledges that if,
following its purchase of Securities pursuant to this Agreement, Xxxxxxx,
Xxxxxxx & Company, Inc. reasonably believes that Purchaser is a Prohibited
Purchaser or has otherwise breached its representations and warranties herein,
Xxxxxxx, Xxxxxxx & Company, Inc. and the Company may be obligated to
retroactively terminate this purchase (if possible), by rejecting this Agreement
(even after full execution) and not completing this transaction, freezing such
Purchaser's funds forwarded by such Purchaser pursuant to this Agreement, and
stopping the delivery of Securities in accordance with applicable regulations,
and it shall have no claim against Xxxxxxx, Xxxxxxx & Company, Inc. or the
Company for any form of damages or liabilities as a result of any of the
aforementioned actions.
(e) Prohibited Purchaser means (i) a person or entity whose name appears on
the List of Specially Designated Nationals and Blocked Persons maintained by the
U.S. Office of Foreign Assets Control ("OFAC") (refer to
xxxx://xxx.xxxxxxx.xxx/xxxx); (ii) a Foreign Shell Bank; or (iii) a person or
entity resident in or organized or chartered under the laws of a Non-Cooperative
Jurisdiction or whose purchase funds are transferred from or through a Foreign
Shell Bank, a bank organized or chartered under the laws of a Non-Cooperative
Jurisdiction or a Sanctioned Regime.
7. Indemnification. The Purchaser agrees to indemnify and hold harmless the
Company, and its officers, directors, employees, agents, control persons and
affiliates from and against all losses, liabilities, claims, damages, costs,
fees and expenses whatsoever (including, but not limited to, any and all
expenses incurred in investigating, preparing or defending against any
litigation commenced or threatened) based upon or arising out of any actual or
alleged false acknowledgment, representation or warranty, or misrepresentation
or omission to state a material fact, or breach by the Purchaser of any covenant
or agreement made by the Purchaser herein or in Exhibit A, B or C delivered in
connection with this Agreement.
8. Irrevocability; Binding Effect. The Purchaser hereby acknowledges and agrees
that the subscription hereunder is irrevocable by the Purchaser, except as
required by applicable law, and that this Agreement shall survive the death or
disability of the Purchaser and shall be binding upon and inure to the benefit
of the parties and their heirs, executors, administrators, successors, legal
representatives, and permitted assigns. If the Purchaser is more than one
person, the obligations of the Purchaser hereunder shall be joint and several
and the agreements, representations, warranties, and acknowledgments herein
shall be deemed to be made by and be binding upon each such person and such
person's heirs, executors, administrators, successors, legal representatives,
and permitted assigns.
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9. Modification. This Agreement shall not be modified or waived except by an
instrument in writing signed by the party against whom any such modification or
waiver is sought.
10. Notices. Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be mailed by certified mail, return
receipt requested, or delivered against receipt to the party to whom it is to be
given (a) if to the Company, at the address set forth above, or (b) if to the
Purchaser, at the address set forth on the signature page hereof (or, in either
case, to such other address as the party shall have furnished in writing in
accordance with the provisions of this Section 9). Any notice or other
communication given by certified mail shall be deemed given at the time of
certification thereof, except for a notice changing a party's address which
shall be deemed given at the time of receipt thereof.
11. Assignability. This Agreement and the rights, interests and obligations
hereunder are not transferable or assignable by the Purchaser and the transfer
or assignment of the Notes or Warrant or the shares of Common Stock issuable
upon conversion of the Notes or exercise of the Warrant shall be made only in
accordance with all applicable laws.
12. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York relating to contracts entered
into and to be performed wholly within such State. Each party hereto hereby
irrevocably submits to the jurisdiction of any Xxx Xxxx Xxxxx xxxxx xx Xxxxxx
Xxxxxx Federal court sitting in New York County over any action or proceeding
arising out of or relating to this Agreement or any agreement contemplated
hereby, and each party hereby irrevocably agrees that all claims in respect of
such action or proceeding may be heard and determined in such New York State or
Federal court. Each party hereto further waives any objection to venue in such
State and any objection to an action or proceeding in such State on the basis of
a non-convenient forum. The Purchaser further agrees that any action or
proceeding brought against the Company shall be brought only in New York State
or United States Federal courts sitting in New York County. EACH PARTY HERETO
AGREES TO WAIVE ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DOCUMENT OR AGREEMENT CONTEMPLATED
HEREBY.
13. Blue Sky Qualification. The purchase of Notes and the Warrant under this
Agreement is expressly conditioned upon the exemption from qualification of the
offer and sale of the Notes and Warrant from applicable Federal, state and
provincial securities laws. The Company shall not be required to qualify this
transaction under the securities laws of any jurisdiction and, should
qualification be necessary, the Company shall be released from any and all
obligations to maintain its offer,, may rescind any sale contracted and shall
return all monies paid by Purchaser, in the jurisdiction.
14. Use of Pronouns. All pronouns and any variations thereof used herein shall
be deemed to refer to the masculine, feminine, neuter, singular or plural as the
identity of the person or persons referred to may require.
15. Confidentiality. The Purchaser acknowledges and agrees that any information
or data the Purchaser has acquired from or about the Company, not otherwise
properly in the public domain, was received in confidence. The Purchaser agrees
not to divulge, communicate or disclose, except as may be required by law or for
the performance of this Agreement, or use to the detriment of the Company or for
the benefit of any other person or persons, or misuse in any way, any
confidential information of the Company, including any scientific, technical,
trade or business secrets of the Company and any scientific, technical, trade or
business materials that are treated by the Company as confidential or
proprietary, including, but not limited to, ideas, discoveries, inventions,
developments and improvements belonging to the Company and confidential
information obtained by or given to the Company about or belonging to third
parties.
16. Miscellaneous.
(a) This Agreement constitutes the entire agreement between the Purchaser and
the Company with respect to the subject matter hereof and supersedes all prior
oral or written agreements and understandings, if any, relating to the subject
matter hereof. The terms and provisions of this Agreement may be waived, or
consent for the departure
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therefrom granted, only by a written document executed by the party entitled to
the benefits of such terms or provisions.
(b) The Purchaser's representations and warranties made in this Agreement shall
survive the execution and delivery hereof and delivery of the Notes and the
Warrant.
(c) Each of the parties hereto shall pay its own fees and expenses (including
the fees of any attorneys, accountants, appraisers or others engaged by such
party) in connection with this Agreement and the transactions contemplated
hereby whether or not the transactions contemplated hereby are consummated.
(d) This Agreement may be executed in one or more counterparts each of which
shall be deemed an original, but all of which shall together constitute one and
the same instrument.
(e) Each provision of this Agreement shall be considered separable and, if for
any reason any provision or provisions hereof are determined to be invalid or
contrary to applicable law, such invalidity or illegality shall not impair the
operation of or affect the remaining portions of this Agreement.
(f) Paragraph titles are for descriptive purposes only and shall not control or
alter the meaning of this Agreement as set forth in the text.
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ACCREDITED INVESTOR QUESTIONNAIRE
The Purchaser represents and warrants in all material respects to the
Company, with the intent that the Company will rely thereon in accepting this
subscription, that:
Accredited Investor. The Purchaser is an "accredited investor" as that term
is defined in Regulation D promulgated under the Securities Act by virtue
of being (CHECK all applicable responses)
____ A small business investment company licensed by the U.S.
Small Business Administration under the Small Business Investment
Company Act of 1958,
____ A business development company as defined in the Investment
Company Act of 1940,
____ A national or state-chartered commercial bank, whether acting in an
individual or fiduciary capacity,
____ An insurance company as defined in Section 2(13) of the Securities
Act,
____ An investment company registered under the Investment Company Act of
1940,
____ An employee benefit plan within the meaning of Title I of the Employee
Retirement Income Security Act of 1974, where the investment decision
is made by a plan fiduciary, as defined in Section 3(21) of such Act,
which is either a bank, insurance company, or registered investment
advisor, or an employee benefit plan which has total assets in excess
of $5,000,000,
____ A private business development company as defined in Section 202(a)
(22) of the Investment Advisors Act of 1940,
____ An organization described in Section 501(c)(3) of the Internal
Revenue Code, a corporation or a partnership with total assets in
excess of $5,000,000,
____ A natural person (as opposed to a corporation, partnership, trust or
other legal entity) whose net worth, or joint net worth together with
his/her spouse, exceeds $1,000,000,
____ Any trust, with total assets in excess of $5,000,000, not formed for
the specific purpose of acquiring the securities offered, whose
purchase is directed by a sophisticated person as described in
Section 506(b)(2)(ii) of Regulation D,
____ A natural person (as opposed to a corporation, partnership, trust or
other legal entity) whose individual income was in excess of $200,000
in each of the two most recent years (or whose joint income with such
person's spouse was at least $300,000 during such years) and who
reasonably expects an income in excess of such amount in the current
year, or
____ A corporation, partnership, trust or other legal entity (as opposed
to a natural person) and all of such entity's equity owners fall into
one or more of the categories enumerated above;
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XXXXXX XXXXXXX PROMOTIONS, INC.
OMNIBUS SIGNATURE PAGE
Purchaser hereby elects to subscribe under the Note and Warrant Purchase
Agreement for a total of $________________ principal amount of 10% Convertible
Promissory Notes (NOTE: to be completed by Purchaser).
Date (NOTE: To be completed by Purchaser): _____________, 2004
Please indicate (circle one) whether the purchaser is investing as a(n):
INDIVIDUAL
JOINT TENANTS
TENANTS IN COMMON
COMMUNITY PROPERTY
PARTNERSHIP
CORPORATION
LIMITED LIABILITY COMPANY
TRUST
Please fill out this section if the purchaser is an INDIVIDUAL, and if purchased
as JOINT TENANTS, as TENANTS IN COMMON, or as COMMUNITY PROPERTY (If the
investment is being made as JOINT TENANTS, TENANTS IN COMMON, or as COMMUNITY
PROPERTY, please be sure to fill out this section for all purchasers named):
Print Name(s) Social Security Number(s)
____________________________ ______________________________
Print Name(s) (if more than Social Security Number(s)
1 individual)
____________________________ ______________________________
Signature(s) of Investor(s) Signature
July ____, 2004 ______________________________
Date Address
Please fill out this section if the purchaser is a PARTNERSHIP, CORPORATION,
LIMITED LIABILITY COMPANY or TRUST:
____________________________ ______________________________
Name of Partnership, Federal Taxpayer
Corporation, Limited Identification Number
Liability Company or
Trust
By:_________________________ ______________________________
Name: State of Organization
Title:________________________ Address_______________________
SUBSCRIPTION FOR $_________________ PRINCIPAL AMOUNT OF 10% CONVERTIBLE
PROMISSORY NOTES, ACCEPTED AND AGREED TO this ___ day of __________, 2004
Xxxxxx Xxxxxxx Promotions, Inc.
By:_______________________
Name: Xxxxxx Xxxxxxx
Title: President
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