EXHIBIT 10.1
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (the "Agreement"), dated as of _________,
1997, is entered into by and between _______________________________, (the
"Purchaser") and XxxxxXxx Technologies, Inc., (the "Company"). This is the
Agreement referred to as the "Purchase Agreement" in the Registration Rights
Agreement (as defined in Section 6(b) hereof).
The parties hereto agree as follows:
1. Purchase and Sale of Convertible Notes. Upon the basis of the
representations and warranties, and subject to the terms and conditions, set
forth in this Agreement, the Company covenants and agrees to sell to the
Purchaser on the Closing Date, at a purchase price of $_______ (the "Purchase
Price"), (i) a convertible note in registered form in a principal amount of
$_______ and substantially in the form of Exhibit A hereto (the "Note"), such
Note convertible at the option of the holder thereof into a number of Note
Shares determined pursuant to Article 3 of the Note according to the terms and
conditions set forth in the Note, and (ii) a warrant to purchase ______ shares
of the Company's Common Stock, $.01 par value per share (the "Common Stock") in
substantially the form of Exhibit B hereto (the "Warrant") , and upon the basis
of the representations and warranties, and subject to the terms and conditions
set forth in this Agreement, the Purchaser covenants and agrees to purchase from
the Company on the Closing Date the Note and the Warrant at the Purchase Price.
All capitalized terms not otherwise defined herein shall have the meanings
attributed to them in the Note and the Warrant.
2. Closing. The closing of the purchase and sale of the Note pursuant
to Section 1 hereof shall take place on ________, 1997 at the offices of Morse,
Zelnick, Rose & Lander LLP, located at 000 Xxxx Xxxxxx, Xxxxx 000, Xxx Xxxx, Xxx
Xxxx 00000 or at such other date, time and place as the Purchaser and the
Company may agree upon in writing, or at such other time at which the Escrow
Agent shall have received all documents and instructions as it shall it its sole
judgment deem necessary and appropriate to consummate the transactions
contemplated hereby (such time and date for the closing, the "Closing Date").
The duly executed Note and Warrant to be purchased by the Purchaser shall be
delivered by, or on behalf of, the Company at the closing against payment of the
Purchase Price therefor in immediately available funds by, or on behalf of, the
Purchaser to the attorney trust account of Morse, Zelnick, Rose & Lander, LLP,
(the "Escrow Agent") (Chase Manhattan Bank, Account No. 967086639, ABA Routing
Number 000000000). The Escrow Agent shall receive from the Purchaser and the
Company written instructions of the Purchaser and the Company in substantially
the form of Exhibit C hereto (the "Closing Instructions"), instructing the
Escrow Agent with
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respect the closing and settlement procedures. Commencing on the second business
day after delivery to the Escrow Agent of the Purchase Price, the Purchaser, if
the Company is not ready, willing and able to consummate the transaction in
accordance with the terms of the Closing Instructions, may terminate the
proposed transaction by notice to the Company and the Escrow Agent, whereupon
the Escrow Agent shall redeliver the Purchase Price to the Purchaser as soon as
practicable in accordance with the written instructions of the Purchaser.
3. Representations. Warranties and Covenants of the Purchaser. The
Purchaser understands, and represents and warrants to, and agrees with, the
Company, that:
(a) The Note, the Note Shares, the Warrant and the shares issuable
upon exercise of the Warrant (the "Warrant Shares") (hereinafter, the Note, the
Note Shares, the Warrant and the Warrant Shares are collectively referred to as
the "Securities") have not been and, unless registered under the Securities Act
of 1933, as amended (the "Securities Act"), in accordance with the Registration
Rights Agreement (as defined in Section 6(b)), will not be registered under the
Securities Act, or any other applicable securities law, and, accordingly, may
not be offered, sold, transferred, pledged, hypothecated or otherwise disposed
of ("Transferred") unless registered under the Securities Act or Transferred in
a transaction exempt from registration under the Securities Act and any other
applicable securities law;
(b) The Purchaser is an "accredited investor" within the meaning
of Rule 501(a) under the Securities Act (an "Accredited Investor"), and is
acquiring or will acquire the Securities for its own account. The Purchaser has
such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of an investment in the Securities.
The Purchaser is aware that it may be required to bear the economic risk of an
investment in the Securities for an indefinite period, and it is able to bear
such risk for an indefinite period;
(c) The Purchaser is acquiring or will acquire the Securities for
its own account for investment purposes and not with a view to, or for offer or
sale in connection with, any distribution thereof. The Purchaser agrees to
offer, sell or otherwise transfer the Securities only (i) in accordance with the
terms of this Agreement, the Note and the Warrant, as applicable, and (ii)
pursuant to registration under the Securities Act or an exemption from
registration under the Securities Act and any other applicable securities law;
and
(d) The Purchaser acknowledges that the Company and others will
rely upon the truth and accuracy of the foregoing acknowledgments,
representations and agreements and further agrees that if any of the
acknowledgments, representations and agreements deemed to have been made by the
Purchaser by its
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acquisition of the Securities are no longer accurate, it shall promptly notify
the Company.
(e) The Company has furnished or made available to the Purchaser a
full and complete set of its most recent definitive proxy statement in
connection with its 1996 Special meeting of stockholders, its Annual Report on
Form 10-KSB for its most recently completed fiscal year, its Form 10-QSB's for
each of its fiscal quarters since the end of its most recently completed fiscal
year and any Form 8-K's filed during its current fiscal year (collectively, the
"SEC Documents"), which the Company has filed pursuant to the Securities
Exchange Act of 1934, as amended.
4. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, the Purchaser that:
(a) The Company has been duly incorporated and is validly existing
as a corporation under the laws of Delaware.
(b) This Agreement and the Registration Rights Agreement (as
defined in Section 6(b)) have been duly authorized, executed and delivered by
the Company and constitute valid and binding agreements, enforceable in
accordance with their respective terms, and the Company has full corporate power
and authority necessary to enter into such agreements and to perform its
obligations thereunder.
(c) No consent, approval, authorization or order of any court,
governmental agency or body or arbitrator having jurisdiction over the Company
or any of its affiliates is required for execution of this Agreement or the
Registration Rights Agreement (as defined in Section 6(b)) and the performance
of its obligations under such agreements, including, without limitation, the
issuance and sale of the Securities (except for the registration of the Note
Shares and the Warrant Shares under the Securities Act pursuant to the
Registration Rights Agreement as defined in Section 6(b)).
(d) Neither the sale of the Note and Warrant pursuant to this
Agreement, nor the performance of its obligations under this Agreement, the
Note, the Warrant or the Registration Rights Agreement by the Company will:
(i) violate, conflict with, result in a breach of, or
constitute a default (or an event which with the giving of notice or the lapse
of time or both would be reasonably likely to constitute a default) under (A)
the certificate of incorporation or by-laws of the Company, (B) any decree,
judgment, order, law, treaty, rule, regulation or determination applicable to
the Company of any court, governmental agency or body, or arbitrator having
jurisdiction over the Company or over the properties or assets of the Company,
or (C) the terms of any bond, debenture, note or any other evidence of
indebtedness, or any agreement, stock option or other similar plan, indenture,
lease, mortgage, deed of trust or other instrument to
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which the Company is a party, by which the Company is bound, or to which any of
the properties of the Company is subject; or
(ii) result in the creation or imposition of any lien, claim or
other encumbrance upon any of the assets of the Company.
(e) The Note and Warrant, when issued and delivered pursuant to
this Agreement, will have been duly authorized, executed, issued and delivered
and will constitute a legal, valid, binding and enforceable obligation of the
Company.
(f) The Note Shares and Warrant Shares, when issued, (i) will be
free and clear of any security interests, liens, claims or other encumbrances,
(ii) will be duly and validly authorized and issued, (iii) will be fully paid
and nonassessable, (iv) will not have been issued or sold in violation of any
preemptive or other similar rights of the holders of any securities of the
Company, and (v) will not subject the holders thereof to personal liability by
reason of being such holders.
(g) Except as set forth in the SEC Documents, there is no pending
or, to the best knowledge of the Company, threatened action, suit, proceeding or
investigation before any court, governmental agency or body, or arbitrator
having jurisdiction over the Company or any of its subsidiaries or affiliates
that would materially affect the results of operations of the Company or the
execution by the Company of, or the performance by the Company of its
obligations under, this Agreement, the Note, the Warrant or the Registration
Rights Agreement.
(h) The Company, any person representing the Company, and, to the
best knowledge of the Company, any other person selling or offering to sell the
Securities in connection with the transaction contemplated by this Agreement,
have not made, at any time, any oral communication in connection with the offer
or sale of the Securities which contained any untrue statement of a material
fact or omitted to state any material fact necessary in order to make the
statements, in the light of the circumstances under which they were made, not
misleading.
(i) Assuming the accuracy of, and compliance with, the
representations, warranties and covenants of the Purchaser in this Agreement,
the sale of the Securities pursuant to this Agreement, the Note and the Warrant
has been made in accordance with the provisions and requirements of Section 4(2)
under the Securities Act ("Section 4(2)") and any applicable state law.
(j) None of the Company, any affiliate of the Company, or any
person acting on behalf of the Company or any such affiliate has engaged, or
will engage, in any general solicitation or general advertising with respect to
the Note and the Warrant.
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(k) The Company is duly qualified as a foreign corporation in all
jurisdictions in which the failure to so qualify would have a material adverse
effect on the Company and its subsidiaries taken as a whole. The Company has
registered its Common Stock pursuant to Section 12 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and the Common Stock is listed and
trades on the Nasdaq Small Cap Market. The Company has not received any notices
for the delisting of the Common Stock. The Company has filed all materials
required to be filed pursuant to all reporting obligations under either Section
13(a) or 15(d) of the Exchange Act for the twelve (12) months immediately
preceding the offer or sale of the Notes and Warrants, and has received no
notice, either oral or written, with respect to the continued eligibility for
such listing. The Company has timely made all filings required under the
Exchange Act during the twelve month period preceding the date hereof and is
eligible to use Form S-3 to register the Note Shares and Warrant Shares.
(l) The Company undertakes and agrees to make all necessary
filings in connection with the sale of the Notes and Warrants and issuance of
the Note Shares and the Warrant Shares as required by the United States laws and
the regulations or any domestic securities exchange or trading market.
(m) Since May 31, 1996, there has been no material adverse
development in the assets, liabilities, business properties, operations,
financial condition or results of operations of the Company and its subsidiaries
taken as a whole, except as disclosed in the filings of the Company with the
SEC.
(n) None of the filings of the Company with the SEC since June 1,
1996 contained, at the time they were filed, any untrue statement of a material
fact or omitted to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The Company has since June 1, 1996 timely
filed all requisite forms, reports and exhibits thereto with the SEC.
(o) There is no known fact to the Company or any subsidiary (other
than general economic conditions generally known to the public) that has not
been disclosed in writing to the Purchaser that (i) could reasonably be expected
to have a material adverse effect on the condition (financial or otherwise) or
in the earnings, business affairs, business prospects, properties or assets of
the Company or any subsidiary, or (ii) could reasonably be expected to
materially and adversely affect the ability of the Company or any subsidiary to
perform its obligations pursuant to this Agreement.
5. Covenants of the Company. The Company covenants and agrees with the
Purchaser:
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(a) to comply with all requirements of Section 4(2) with respect
to the issuance and sale of the Securities including but not limited to the
filing of a Form D with the Securities and Exchange Commission;
(b) to notify the Purchaser promptly if at any time during the
period beginning on the date of this Agreement and ending on the Closing Date
(i) any event shall have occurred as a result of which any oral communication
made by the Company, any person representing the Company, or, to the best
knowledge of the Company, by any other person in connection with the
transactions contemplated by this Agreement would include an untrue statement of
a material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, or (ii) there is any public disclosure of material
information regarding the Company or its financial condition or results of
operation;
(c) to cause the Note Shares and Warrant Shares to be, when
converted and exercised in accordance with the terms of the Note and the
Warrant, upon delivery, fully paid, nonassessable, free of preemptive rights and
free from all taxes, liens, charges, security interests or other encumbrances;
and
(d) have at all times authorized and reserved for issuance, free
from preemptive rights, a sufficient number of shares of Common Stock to yield a
number of Note Shares and Warrant Shares sufficient to satisfy the conversion
rights of the Purchaser pursuant to the terms and conditions of the Note and the
Warrant.
(e) use its best efforts to maintain the listing of the Common
Stock on Nasdaq Small Cap Market.
6. Conditions Precedent to the Purchaser's Obligations. The obligations
of the Purchaser hereunder are subject to the performance by the Company of its
obligations hereunder and to the satisfaction of the following additional
conditions precedent:
(a) The representations and warranties made by the Company in this
Agreement shall, unless waived by the Purchaser, be true and correct in all
material respects as of the date hereof and at the Closing Date, with the same
force and effect as if they had been made on and as of the Closing Date.
(b) The Company and the Purchaser shall have entered into a
Registration Rights Agreement (the "Registration Rights Agreement") in a form
satisfactory to the Purchaser.
(c) The Company will provide an opinion or opinions of counsel in
substantially the form of Exhibit D hereto.
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(d) None of the following shall have occurred: (i) any general
suspension of trading in, or limitation on prices listed for, the Common Stock
on the NASDAQ, (ii) a declaration of a banking moratorium or any suspension of
payments in respect to banks in the United States, (iii) a commencement of a
war, armed hostilities or other international or national calamity directly or
indirectly involving the United States, (iv) in the case of the foregoing
existing at the date of this Agreement, a material acceleration or worsening
thereof, (v) at any time up to and including the day before the Closing Date,
the Company's Common Stock shall trade on the NASDAQ at a price below $.75 per
share, or (vi) any limitation by the federal or state authorities on the
extension of credit by lending institutions that materially and adversely
affects the Purchaser.
7. Conditions Precedent to the Company's Obligations. The obligations
of the Company hereunder are subject to the performance by the Purchaser of its
obligations hereunder and to the satisfaction of the condition precedent that
the representations and warranties made by the Purchaser in this Agreement
shall, unless waived by the Company, be true and correct in all material
respects as of the date hereof and at the Closing Date, with the same force and
effect as if they had been made on and as of the Closing Date.
8. Transfer of Securities.
(a) Securities Act Legend. Each certificate evidencing the Note,
the Note Shares, the Warrant, the Warrant Shares and any certificates issued
upon transfer or exchange of the Note, the Note Shares, the Warrant or the
Warrant Shares shall be stamped or imprinted with a legend substantially as
follows:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY
STATE; AND MAY NOT BE SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR OTHERWISE
DISPOSED OF EXCEPT IN COMPLIANCE WITH, OR PURSUANT TO AN EXEMPTION FROM,
THE REQUIREMENTS OF SUCH ACT OR SUCH LAWS.
(b) Securities Act Compliance. Each holder (a "Holder") of a
certificate evidencing the Note, the Note Shares, the Warrant or the Warrant
Shares which bears the restrictive legend set forth in Section 8(a) above (the
"Restricted Securities"), and who proposes to Transfer (as defined in Section
3(a) of this Agreement) any Restricted Securities, shall give written notice to
the Company of such Holder's intention to effect such Transfer. Each such notice
shall describe the manner and circumstances of the proposed sale or other
disposition in sufficient detail and may be accompanied by an opinion of legal
counsel to the Holder. Promptly upon receipt of such notice, the Company shall
present a copy thereof (together with any
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accompanying opinion of legal counsel to the Holder) to its legal counsel, and
the following provisions shall apply:
(i) If, in the opinion of legal counsel to such Holder,
satisfactory in form and substance to the Company and its legal counsel, or if
such notice was not accompanied by an opinion of legal counsel to the Holder,
then, if, in the opinion of legal counsel to the Company, the proposed sale or
other disposition may be effected without registering the Restricted Securities
involved under the Securities Act or under state securities laws, such Holder
shall be entitled to Transfer such Restricted Securities in accordance with the
terms of the notice delivered to the Company. The Company will advise the
Holder, within five (5) business days after submission of such notice, whether
such Holder is entitled to so Transfer the Restricted Securities. If the Holder
is entitled to so Transfer, he shall submit the stock certificate or
certificates evidencing the Restricted Securities to be Transferred to the
Company in proper form for Transfer and accompanied by appropriate instruments
of Transfer. Restricted Securities thus Transferred (and each of the
certificates evidencing any untransferred balance of the Securities not so
transferred) shall bear the restrictive legend set forth in Section 8(a),
unless, in the opinion of both such legal counsel (or legal counsel to the
Company if the Holder did not present an opinion of its legal counsel), such
legend is not required by the applicable provisions of the Securities Act or
state securities laws; and
(ii) If in the reasonable opinion of either of such legal
counsel (or legal counsel to the Company if the Holder did not present an
opinion of its legal counsel), the proposed Transfer cannot be effected without
registering the Securities involved under the Securities Act or state securities
laws, such Holder shall not offer to Transfer or Transfer such Restricted
Securities unless and until such Restricted Securities have been registered
under the Securities Act or state securities laws for such purpose or an
exemption from such registration becomes available pursuant to Section 8(b)(i)
above. The Company has obligated itself to register the Note Shares and the
Warrant Shares pursuant to the terms of the Registration Rights Agreement, a
copy of which is attached hereto and made a part hereof.
9. Fees and Expenses. Each of the Purchaser and the Company agrees to
pay its own expenses incident to the performance of its obligations hereunder,
including, but not limited to, the fees, expenses and disbursements of such
party's counsel.
10. Survival of the Representations. Warranties. etc. The respective
agreements, representations, warranties, indemnities and other statements made
by or on behalf of the Company and the Purchaser, respectively, pursuant to this
Agreement, shall remain in full force and effect, regardless of any
investigation made by or on behalf of the other party to this Agreement or any
officer, director or employee of, or person controlling or under common control
with, such party and will survive delivery of any payment for the Securities.
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11. Notices. All notices, requests and other communications hereunder
must be in writing and delivered to the parties at the following addresses or
facsimile numbers:
If to the Purchaser, to:
Telecopy:
If to the Company, to:
XxxxxXxx Technologies Inc.
0 Xxxxxxx Xxxx
Xxxxxxxx X
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx
Telecopy: (000) 000-0000
with copy to:
Xxxxxxxx & Worcester, LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn.: Xxxx X. Xxxxxxxx, Esq.
Telecopy: (000) 000-0000
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section, be deemed given upon receipt, and (iii) if delivered
by mail or reputable courier service in the manner described above to the
address as provided in this Section, be deemed given upon receipt (in each case
regardless of whether such notice, request or other communication is received by
any other Person to whom a copy of such notice is to be delivered pursuant to
this Section). Any party from time to time may change its address, facsimile
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number or other information for the purpose of notices to that party by giving
notice specifying such change to the other parties hereto.
12. Third Party Beneficiary. Any permitted transferee of any part of
the Securities shall be a third party beneficiary of the Company's obligations
under this Agreement, the Note, the Warrant and the Registration Rights
Agreement. Such erson shall have all the rights of a third party beneficiary
with respect to the enforcement against the Company of any provision of this
Agreement, the Note, the Warrant and the Registration Rights Agreement.
13. Miscellaneous.
(a) This Agreement may be executed in one or more counterparts and
it is not necessary that signatures of all parties appear on the same
counterpart, but such counterparts together shall constitute but one and the
same agreement.
(b) This Agreement shall inure to the benefit of and be binding
upon the parties hereto, their respective successors and permitted assigns.
(c) This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York (without giving effect to
conflicts of laws principles). With respect to any suit, action or proceedings
relating to this Agreement, each of the Company and the Purchaser irrevocably
submits to the exclusive jurisdiction of the courts of the State of New York and
the United States District Court located in the Borough of Manhattan in the City
of New York and hereby waives to the fullest extent permitted by applicable law
any claim that any such suit, action or proceeding has been brought in an
inconvenient forum. Subject to applicable law, the Company agrees that final
judgment against it in any legal action or proceeding arising out of or relating
to this Agreement, the Note or the Warrant shall be conclusive and may be
enforced in any other jurisdiction within or outside the United States by suit
on the judgment, a certified copy of which judgment shall be conclusive evidence
thereof and the amount of its indebtedness, or by such other means provided by
law.
(d) The headings of the sections of this document have been
inserted for convenience of reference only and shall not be deemed to be a part
of this Agreement.
(e) The provisions of this Agreement are severable, and if any
clause or provision shall be held invalid, illegal or unenforceable in whole or
in part in any jurisdiction, then such invalidity or unenforceability shall
affect in that jurisdiction only such clause or provision, or part thereof, and
shall not in any manner affect such clause or provision in any other
jurisdiction or any other clause or provision of this Agreement in any
jurisdiction.
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(f) This Agreement, including the schedules and exhibits hereto,
constitutes the sole and entire agreement of the parties with respect to the
subject matter hereof.
14. Time of Essence. Time shall be of the essence in this Agreement.
15. Escrow Agent. The Escrow Agent shall not be liable for any action
taken or omitted by it in good faith and its liability hereunder shall be
limited to liability for gross negligence or willful misconduct on its part. The
Company and the Purchaser agree to save harmless, indemnify and defend the
Escrow Agent for, from and against any loss, damage, liability, judgment, cost
and expense whatsoever, by reason of, or on account of, any misrepresentation
made to it or its status or activities as Escrow Agent under this Agreement
except for any loss, damage, liability, judgment, cost or expense resulting from
gross negligence or willful misconduct on the part of the Escrow Agent.
The Escrow Agent shall not be responsible for any failure or inability
of any of the parties to perform or comply with the provisions of this
Agreement, or the agreements delivered in connection herewith.
In the performance of its duties hereunder, the Escrow Agent shall be
entitled to rely in good faith upon any document (including facsimile
transmitted copies of documents), instrument or signature believed by it in good
faith to be genuine and to be signed by any party hereto or an authorized
officer or agent thereof, and shall not be required to investigate the truth or
accuracy of any statement contained in any such document or instrument. The
Escrow Agent may assume in good faith that any person purporting to give any
notice in accordance with the provisions hereof has been duly authorized to do
so.
Each party hereto acknowledges that (a) the Escrow Agent is not acting
as legal counsel to such party in any manner or respect in connection with the
transactions contemplated by this Agreement, and (b) the Escrow Agent is serving
as an accommodation to the parties hereto. Each party further acknowledges that
the Escrow Agent has acted, and acts, as legal counsel in certain matters to
X.X. Xxxxxx & Co., Inc. ("Xxxxxx") Each party hereto waives all claims in the
nature of conflict of interest against the Escrow Agent and further agrees that
in the event of any dispute which arises hereunder, or otherwise between a party
and Xxxxxx, the Escrow Agent shall be free to represent Xxxxxx.
It is understood and further agreed that the Escrow Agent shall:
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(a) be under no duty to enforce payment of any subscription that is to
be paid to and held by it hereunder;
(b) promptly notify the Purchaser and the Company of any discrepancy
between the amounts set forth on any statement delivered by the Purchaser and/or
the Company and the sum or sums delivered to it therewith;
(c) be under no duty to accept funds, checks, drafts or instruments for
the payment of money from anyone other than the Company or the Purchaser, or to
give any receipt therefor except to the Company or the Purchaser, with a copy in
each case to the Company;
(d) be protected in acting upon any notice, request, certificate,
approval, consent or other paper reasonably believed by it to be genuine and to
be signed by the proper party or parties (including, but not limited to, copies
of documents transmitted by facsimile);
(e) be permitted to consult with counsel of its choice, and shall not
be liable for any action taken, suffered, or omitted by it in accordance with
the advice of such counsel; provided, however, that nothing in this subsection
(e), nor any action taken by the Escrow Agent, or suffered or omitted by it in
accordance with the advice of any counsel, shall relieve the Escrow Agent from
liability for any claims that are occasioned by its gross negligence or willful
misconduct;
(f) not be bound by any modification, amendment, termination,
cancellation, or recission of this Agreement, unless the same shall be in
writing and signed by it;
(g) be entitled to refrain from taking any action other than to keep
all property held in escrow if it (i) shall be uncertain concerning its duties
or rights hereunder, or (ii) shall have received claims or demands from any
party, or (iii) shall have received instructions from the Purchaser and/or the
Company which, in the Escrow Agent's opinion, are in conflict with any of the
provisions of this Agreement, until it shall have received a final judgment by a
court of competent jurisdiction;
(h) have no liability for following the instructions herein or
expressly provided for herein, or the written instructions given by the
Purchaser and/or the Company; and
(i) have the right, at any time, to resign hereunder by giving written
notice of its resignation to all other parties hereto at least three (3)
business days prior to the date specified for such resignation to take effect,
and upon the effective date of such resignation all cash and other payments and
all other property then held by the Escrow Agent hereunder shall be delivered by
it to such person as may be designated in writing by the other parties executing
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this Agreement, whereupon the Escrow Agent's obligations hereunder shall cease
and terminate. If no such person has been designated by such date, all
obligations of the Escrow Agent hereunder shall, nevertheless, cease and
terminate. The Escrow Agent's sole responsibility thereafter shall be to keep
safely all property then held by it and to deliver the same to a person
designated by the other parties executing this Agreement or in accordance with
the directions of a final order or judgment of a court of competent
jurisdiction.
16. Right of First Refusal. For a period of twelve (12) months
following the Closing, the Purchaser shall have a five (5) day right of first
refusal (together with any other purchasers in this offering to the extent of
their original investment in this Note) to purchase any debt or equity
securities of the Company which the Company proposes to issue in a private
placement transaction (excluding sales to employees).
17. Shorting Position. The Purchaser has no existing short position
with respect to the Common Stock and agrees not to enter into any short sales or
other hedging transactions with respect to the Common Stock at any time during
the first sixty (60) days after the closing of this Agreement. Purchaser further
agrees that, at all times after the execution of this Agreement by the Purchaser
and prior to conversion of all principal amount of the Notes acquired by
Purchaser, it will keep its purchase of the Note and Warrant confidential,
except as required by law and except as necessary in the ordinary course of
Purchaser's business.
18. Delivery of Stock. The Company will permit the Purchaser to
exercise its right to convert the Note and exercise the Warrant by telecopying
an executed and completed Conversion Notice or Notice of Exercise, as the case
may be, to the Company and delivering within three business days thereafter, the
original Conversion Notice and Note or Notice of Exercise and Warrant by express
courier. Each date on which a Conversion Notice or Notice of Exercise is
telecopied to and received by the Company in accordance with the provisions
hereof shall be deemed a conversion date. The Company will transmit the
certificates representing the Note Shares or Warrant Shares and the newly issued
Note representing the amount of the Note which remains unconverted, or the newly
issued Warrant representing that portion of the Warrant that is not exercised,
to the Purchaser via express courier within three business days after receipt by
the Company of the original Conversion Notice and the Note or the Notice of
Exercise and the Warrant.
19. Liquidated Damages for Failure to Deliver. The Company understands
that a delay beyond the deadline for delivery, specified in paragraph 18, could
result in economic loss to the Purchaser. As compensation to the Purchaser for
such loss, the Company agrees to pay late payments to the Purchaser for the late
issuance of shares issuable at conversion of the Note or exercise of the
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Warrant in accordance with the following schedule (where "No. Business Days
Late" is defined as the number of business days beyond three business days after
receipt by the Company of the original Conversion Notice and the Note or the
original Notice of Exercise and the Warrant, together with immediately available
funds for the entire purchase of the Warrant Shares:
No. Business Days Xxxx Xxxx Payment for Each $10,000 of
Note Principal Amount
Being Converted
1 $50.00
2 $100.00
3 $150.00
4 $200.00
5 $250.00
6 $300.00
7 $350.00
8 $400.00
9 $450.00
10 $500.00
>10 $500.00 + $100.00 for each Business
Day Late Beyond 10 Days
The Company shall make any payments incurred under this Section in
immediately available funds upon demand. Nothing herein shall limit a
Purchaser's right to pursue actual damages for the Company's failure to issue
and deliver Note Shares or Warrant Shares to the Purchaser. Furthermore, in
addition to any other remedy which may be available to the Purchaser, in the
event that the Company fails for any reason to effect delivery of Note Shares or
Warrant Shares within five business days after the Delivery Date, the Purchaser
will be entitled to revoke the relevant Conversion Notice or Notice of Exercise
by delivering a notice to such effect to the Company whereupon the Company and
the Purchaser shall each be restored to their respective positions immediately
prior to such Conversion Notice or Notice of Exercise.
20. Non-delivery of the Note Shares or Warrant Shares. If, within ten
(10) business days of the date after receipt by the Company of the original
Conversion Notice and the original Note or the Notice of Exercise and the
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Warrant, as the case may be, the Company shall fail to (i) issue the Note Shares
or Warrant Shares, and (ii) deliver to the Purchaser the Note Shares or Warrant
Shares, for any reason other than failure by the Purchaser to comply with its
obligations hereunder, then the Company shall:
(a) hold the Purchaser harmless against any loss, claim or damage
arising from or as a result of such failure by the Company (including, without
limitation, any such loss, claim or damage resulting from an obligation to
resell the Note Shares or Warrant Shares); and
(b) reimburse the Purchaser for all of its out-of-pocket expenses
reasonably incurred, including fees and disbursements of its counsel, incurred
by the Purchaser in connection with this Agreement and the transactions
contemplated herein; provided however, that the Company shall then have no
further liability to the Purchaser except as provided for in this Section 20.
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officer(s) of each party hereto as of the date
first above written.
XxxxxXxx Technologies, Inc.
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Name:
Title:
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Name:
Title:
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EXHIBIT A
CONVERTIBLE NOTE
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