EXHIBIT 10.9
SECURITIES PURCHASE AGREEMENT
TABLE OF CONTENTS
PAGE
ARTICLE 1 DEFINITIONS...............................................1
1.1 Definitions...............................................1
ARTICLE 2 PURCHASE AND SALE.........................................3
2.1 Purchase and Sale of the Units............................3
2.2 Deliveries................................................3
2.3 Conditions to Closing.....................................4
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............4
3.1 Organization, Good Standing and Qualification.............4
3.2 Authorization.............................................5
3.3 Capitalization............................................5
3.4 No Conflicts..............................................5
3.5 Filings, Consents and Approvals...........................6
3.6 Issuance of the Securities................................6
3.7 Use of Proceeds...........................................6
3.8 SEC Reports; Financial Statements.........................6
3.9 Material Changes..........................................7
3.10 Litigation................................................7
3.11 Compliance................................................7
3.12 Labor Relations...........................................8
3.13 Regulatory Permits........................................8
3.14 Title to Assets...........................................8
3.15 Insurance.................................................8
3.16 Transactions with Affiliates and Employees................8
3.17 Private Placement.........................................8
3.18 Listing Requirements......................................8
3.19 Disclosure................................................9
3.20 Taxes.....................................................9
3.21 Brokers and Finders.......................................9
3.22 No General Solicitation...................................9
3.23 Form SB-2 Eligibility.....................................9
3.24 Xxxxxxxx-Xxxxx Compliance.................................9
3.25 Application of Takeover Protections......................10
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE INVESTORS..........10
4.1 Organization; Authority..................................10
4.2 Investment Intent........................................10
4.3 Investor Status..........................................11
4.4 Investment Experience....................................11
4.5 General Solicitation.....................................11
4.6 Short Sales..............................................11
4.7 Disclosure of Information................................11
4.8 Irrevocability of Subscription...........................12
4.9 Brokers and Finders......................................12
4.10 Restricted Securities....................................12
ARTICLE 5 COVENANTS AND AGREEMENTS.................................12
5.1 Transfer Restrictions....................................12
5.2 Integration..............................................14
5.3 Reservation of Common Stock..............................14
5.4 Trading of Underlying Shares.............................14
5.5 Exercise Procedures......................................14
5.6 Press Release and 8-K....................................14
5.7 No Material Non-Public Information.......................15
ARTICLE 6 INDEMNIFICATION..........................................15
6.1 Indemnification..........................................15
6.2 Conduct of Indemnification Proceedings...................15
ARTICLE 7 REGISTRATION RIGHTS......................................16
7.1 Registration Statement...................................16
7.2 Participation by Investors...............................17
7.3 Amendments and Supplements...............................17
7.4 Documents to Holders.....................................18
7.5 Registration Expenses....................................18
7.6 Indemnification by Company...............................18
7.7 Indemnification by Investors.............................18
7.8 Indemnification Procedures...............................18
ARTICLE 8 MISCELLANEOUS............................................19
8.1 Fees and Expenses........................................19
8.2 Entire Agreement.........................................19
8.3 Notices..................................................19
8.4 Amendments; Waivers......................................19
8.5 Construction.............................................19
8.6 Successors and Assigns...................................19
8.7 No Third-Party Beneficiaries.............................20
8.8 Governing Law; Attorneys' Fees...........................20
8.9 Execution................................................20
8.10 Severability.............................................20
8.11 Replacement of Securities................................20
8.12 Independent Nature of Investors' Obligations.............20
8.13 Expenses.................................................21
SCHEDULES
Schedule 3.3 Capitalization
Schedule 3.10 Litigation
Schedule 3.12 Broker Fee
EXHIBITS
Exhibit A Investors
Exhibit B Form of Common Stock Purchase Warrant
Exhibit C Form of Selling Securityholder Notice and Questionnaire
Exhibit D Form of Plan of Distribution
Exhibit E Legal Opinion
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this "Agreement") is dated as of
_______, by and between Lexington Resources, Inc., a Nevada corporation,
formerly known as Intergold Corporation (the "Company"), and the Investors
identified on the signature pages attached hereto (each an "Investor" and
collectively the "Investors").
WHEREAS, The Company and the Investors are executing and delivering
this Agreement in reliance upon the exemption from securities registration
afforded by the provisions of Regulation D ("Regulation D"), as promulgated by
the U.S. Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "Securities Act"), subject to the terms and conditions
set forth in this Agreement; and
WHEREAS, The Investors wish to purchase from the Company, and the
Company wishes to sell and issue to the Investors, upon the terms and conditions
stated in this Agreement, in the amounts set forth opposite such investors'
names on Exhibit A attached hereto, an aggregate of up to _______ Units, each
Unit consisting of one share of the Company's Common Stock, par value $0.00025
per share (the "Common Stock"), and one Warrant (as herein defined) to purchase
one share of Common Stock.
NOW THEREFORE, in consideration of the mutual covenants contained in
this Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and each Investor hereby
agrees as follows:
ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS. In addition to the terms defined elsewhere in this
Agreement, the following terms have the meanings indicated in this Section 1.1:
"Affiliate" means any Person that, directly or indirectly through one
or more intermediaries, controls or is controlled by or is under common control
with a Person, as such terms are used in and construed under Rule 144 under the
Securities Act.
"Closing" means the closing of the purchase and sale of the Securities
pursuant to Section 2.2 hereof.
"Closing Date" shall have the meaning ascribed to such term in Section
2.2 hereof.
"Control" means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" shall have the meaning ascribed to such term in Section 3.8 hereof.
"Holder" or "Holders" means the holder or holders, as the case may be,
from time to time of Registrable Securities.
"Material Adverse Effect" means a material adverse effect on (i) the
assets, liabilities, results of operations, condition (financial or otherwise),
business or prospects of the Company and its Subsidiaries taken as a whole, or
(ii) the ability of the Company to issue and sell the Securities contemplated
hereby and to perform its obligations under this Agreement and the Warrants.
"Nasdaq" means The Nasdaq Stock Market, Inc., its successors and
assigns.
"Person" means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof)
or other entity of any kind.
"Registrable Securities" means all of the Shares, the Warrant Shares
and any securities issued or issuable upon any stock split, dividend or other
distribution recapitalization or similar event with respect to the foregoing.
"Registration Statement" means the registration statement to be filed
by the Company pursuant to Section 7.1 hereof.
"Required Approvals" shall have the meaning ascribed to such term in
Section 3.5 hereof.
"SEC Reports" shall have the meaning ascribed to such term in Section
3.8 hereof.
"Securities" means the Shares, the Warrants and the Warrant Shares.
"Shares" shall mean shares of Common Stock of the Company sold
hereunder.
"Subscription Amount" means, as to each Investor, the amount to be
paid for the Units hereunder, as set forth opposite such Investor's name on
Exhibit A attached hereto, in United States Dollars and in immediately available
funds.
"Subsidiary" means any subsidiary of the Company as set forth in the
Company's SEC Reports.
"Warrants" means collectively the warrants to purchase Common Stock,
in the form of Exhibit B attached hereto, delivered to the Investors at the
Closing in accordance with Section 2.2 hereof, with a term of exercise of six
months from the effective date of the Registration Statement.
"Warrant Shares" means the shares of Common Stock issuable upon
exercise of the Warrants.
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ARTICLE 2
PURCHASE AND SALE
2.1 PURCHASE AND SALE OF THE UNITS. Subject to the terms and conditions of
this Agreement, on the Closing Date, each of the Investors shall severally, and
not jointly, purchase, and the Company shall sell and issue to the Investors,
the Units in the respective amounts set forth opposite the Investors' names on
Exhibit A attached hereto in exchange for the Subscription Amount (reflecting a
per Unit purchase price of $1.47) as specified in Section 2.2 below. The Closing
Date shall occur within two business days of the date hereof, subject to the
deliveries to be made pursuant to Section 2.2 and satisfaction of the conditions
set forth in Section 2.3. The date that the Closing actually occurs shall be
known as the "Closing Date."
2.2 DELIVERIES
(a) At or prior to the Closing Date, unless otherwise indicated below,
the Company shall deliver or cause to be delivered to each Investor the
following:
(i) this Agreement duly executed by the Company;
(ii) a stock certificate for the number of shares for which the
Investor subscribed, registered in the name of the Investor;
(iii) a Warrant registered in the name of such Investor to
purchase up to a number of Warrant Shares equal to 100% of the number
of Shares to which such Investor subscribed, at the exercise price of
$1.68 per Warrant Share; and
(iv) a legal opinion of counsel to the Company in the form of
Exhibit E attached hereto.
(b) At or prior to the Closing Date, unless otherwise indicated below,
each Investor shall deliver or cause to be delivered to the Company the
following:
(i) this Agreement duly executed by such Investor; and
(ii) such Investor's Subscription Amount, by wire transfer to the
Company's account as follows:
Bank Name: Bank of America
Branch: Xxxxxx Xxxxxx
City/ State: Blaine, WA - USA
ABA: 000-000-000
Swift: BOFAUS3N
Account Name: Lexington Resources, Inc.
Account Number: 00000000
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2.3 Conditions to Closing.
(a) The obligations of the Company hereunder in connection with the
Closing are subject to the following conditions being met:
(i) the accuracy in all material respects when made and on the
Closing Date of the representation and warranties of the Investors
hereunder; and
(ii) all obligations, covenants and agreements of the Investors
required to be performed at or prior to the Closing Date shall have
been performed.
(b) The respective obligations of the Investors hereunder in
connection with the Closing are subject to the following conditions being
met:
(i) the accuracy in all material respects on the Closing Date of
the representations and warranties of the Company contained herein;
(ii) all obligations, covenants and agreements of the Company
required to be performed at or prior to the Closing Date shall have
been performed;
(iii) the delivery by the Company of the items set forth in
Section 2.2(a);
(iv) there shall have been no Material Adverse Effect with
respect to the Company since the date of this Agreement; and
(v) from the date hereof to the Closing Date, trading in the
Common Stock shall not have been suspended by the Securities and
Exchange Commission (except for any suspension of trading of limited
duration agreed to by the Company, which suspension shall be
terminated prior to the Closing), and, at any time prior to the
Closing Date, trading in securities generally as reported by Bloomberg
Financial Markets shall not have been suspended or limited, or minimum
prices shall not have been established on securities whose trades are
reported by such services; or on any trading day, nor shall a banking
moratorium have been declared either by the United States or the New
York authorities nor shall have there occurred any material outbreak
or escalation of hostilities or other material or international
calamity of such magnitude in its effect on, or any material adverse
change in, any financial market which, in each case, in the reasonable
judgment of each Investor, makes it impossible or inadvisable to
purchase Units at the Closing.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby makes the representations and warranties set forth below
to each Investor.
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. Each of the Company and
its Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority to carry on its business as now
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conducted and to own its properties. Each of the Company and its Subsidiaries is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction in which the conduct of its business or its ownership or
leasing of property makes such qualification necessary unless the failure to so
qualify has not and could not reasonably be expected to have a Material Adverse
Effect.
3.2 AUTHORIZATION. The Company has the requisite power and authority and
has taken all requisite action on the part of the Company, its officers,
directors and stockholders necessary for (i) the authorization, execution and
delivery of this Agreement and the Warrants, (ii) authorization of the
performance of all obligations of the Company hereunder or thereunder, and (iii)
the authorization, issuance (or reservation for issuance) and delivery of the
Securities. This Agreement and the Warrants constitute the legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability,
relating to or affecting creditors' rights generally.
3.3 CAPITALIZATION. Schedule 3.3 sets forth (a) the authorized capital
stock of the Company on the date hereof; (b) the number of shares of capital
stock issued and outstanding; (c) the number of shares of capital stock issuable
pursuant to the Company's stock plans; and (d) the number of shares of capital
stock issuable and reserved for issuance pursuant to securities (other than the
Shares and the Warrants) exercisable for, or convertible into or exchangeable
for any shares of capital stock of the Company. All of the issued and
outstanding shares of the Company's capital stock have been duly authorized and
validly issued and are fully paid, nonassessable and were issued in full
compliance with applicable law and any rights of third parties. Except as
disclosed on Schedule 3.3, no Person is entitled to pre-emptive or similar
statutory or contractual rights with respect to any securities of the Company.
Except as disclosed on Schedule 3.3, there are no outstanding warrants, options,
convertible securities or other rights, agreements or arrangements of any
character under which the Company is or may be obligated to issue any equity
securities of any kind, and except as contemplated by this Agreement, neither
the Company nor any Subsidiary is currently in negotiations for the issuance of
any equity securities of any kind. Except as disclosed on Schedule 3.3, there
are no voting agreements, buy-sell agreements, options or rights of first
purchase agreements or other agreements of any kind among the Company and any of
the security holders of the Company relating to the securities of the Company
held by them. Except as disclosed in Schedule 3.3, the Company has not granted
any Person the right to require the Company to register any securities of the
Company under the Securities Act, whether on a demand basis or in connection
with the registration of securities of the Company for its own account or for
the account of any other Person.
3.4 NO CONFLICTS. The execution, delivery and performance of this Agreement
and the Warrants by the Company and the consummation by the Company of the
transactions contemplated thereby do not and will not: (i) conflict with or
violate any provision of the Company's certificate or articles of incorporation,
bylaws or other organizational or charter documents, or (ii) subject to
obtaining the Required Approvals, conflict with, or constitute a default (or an
event that with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of, any agreement,
credit facility, debt or other instrument or other understanding to which the
Company is a party or by which any property or asset of the Company is bound or
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affected, or (iii) result, in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company is subject (including federal and state
securities laws and regulations), or by which any property or asset of the
Company is bound or affected; except in the case of each of the foregoing
clauses, such as could not, individually or in the aggregate, have or result in
a Material Adverse Effect.
3.5 FILINGS, CONSENTS AND APPROVALS. To the Company's actual knowledge, the
Company is not required to obtain any consent, waiver, authorization or order
of, give any notice to, or make any filing or registration with, any court or
other federal, state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by the Company of this
Agreement and the Warrants other than (i) the filing with the SEC of the
Registration Statement, (iii) any notice and/or application(s) to Nasdaq for the
issuance and sale of the Shares and Warrants and the listing of the Warrant
Shares for trading thereon in the time and manner required thereby, (iv) the
filing of Form D with the SEC and applicable state law filings, and (v)
obtaining of any necessary lender's consent in connection with the Company's
primary credit facility (collectively, the "Required Approvals").
3.6 ISSUANCE OF THE SECURITIES. The Securities are duly authorized and,
when issued and paid for in accordance with this Agreement and the Warrants,
will be duly and validly issued, fully paid and non-assessable, free and clear
of all liens. The Company has reserved from its duly authorized capital stock a
number of shares of Common Stock for issuance of the Shares and Warrant Shares.
The Company has not, and to the actual knowledge of the Company, no Affiliate of
the Company has sold, offered for sale or solicited offers to buy or otherwise
negotiated in respect of any security (as defined in Section 2 of the Securities
Act) that would be integrated with the offer or sale of the Securities in a
manner that would require the registration under the Securities Act of the sale
of the Securities to the Investors, or that would be integrated with the offer
or sale of the Securities for purposes of the rules and regulations of Nasdaq.
3.7 USE OF PROCEEDS. The proceeds of the sale of the Securities hereunder
shall be used by the Company for drilling and development on existing
properties, additional leasehold acquisition, and for general working capital or
general corporate purposes.
3.8 SEC REPORTS; FINANCIAL STATEMENTS. The Company has filed all reports
required to be filed by it under the Exchange Act, including pursuant to Section
13(a) or 15(d) thereof, for the two years preceding the date hereof (or such
shorter period as the Company was required by law to file such material) (the
foregoing materials being collectively referred to herein as the "SEC Reports")
on a timely basis or has received a valid extension of such time of filing and
has filed any such SEC Reports prior to the expiration of any such extension.
The Company has identified and made available to the Investors a copy of all SEC
Reports filed within the ten days preceding the date hereof. As of their
respective dates, to the actual knowledge of the Company, the SEC Reports
complied in all material respects with the requirements of the Securities Act
and the Exchange Act and the rules and regulations of the SEC promulgated
thereunder, and none of the SEC Reports, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. To the Company's
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actual knowledge, the financial statements of the Company included in the SEC
Reports comply in all material respects with applicable accounting requirements
and the rules and regulations of the Commission with respect thereto as in
effect at the time of filing. Such financial statements have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis during the periods involved ("GAAP"), except as may be otherwise specified
in such financial statements or the notes thereto, and fairly present in all
material respects the consolidated financial position of the Company and its
Subsidiaries as of and for the dates thereof and the results of operations and
cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial, year-end audit adjustments.
3.9 MATERIAL CHANGES. Since the date of the latest audited financial
statements included within the SEC Reports, except as specifically disclosed in
the SEC Reports: (i) there has been no event, occurrence or development that has
had or that could result in a Material Adverse Effect, (ii) the Company has not
incurred any liabilities (contingent or otherwise) other than (A) trade payables
and accrued expenses incurred in the ordinary course of business consistent with
past practice, and (B) liabilities not required to be reflected in the Company's
financial statements pursuant to GAAP or required to be disclosed in filings
made with the SEC, (iii) the Company has not altered its method of accounting or
the identity of its auditors, (iv) the Company has not declared or made any
dividend or distribution of cash or other property to its common stockholders or
purchased, redeemed or made any agreements to purchase or redeem any shares of
its capital stock, and (v) the Company has not issued any equity securities to
any officer, director or Affiliate, except pursuant to the Company's existing
stock option or similar plans.
3.10 LITIGATION. Except as set forth on Schedule 3.10, there is no action,
suit, inquiry, notice of violation, proceeding or investigation pending or, to
the actual knowledge of the Company, threatened against or affecting the
Company, any Subsidiary or any of their respective properties before or by any
court, arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an "Action") which:
(i) adversely affects or challenges the legality, validity or enforceability of
this Agreement or the Securities, or (ii) could, if there were an unfavorable
decision, individually or in the aggregate, have or reasonably be expected to
result in a Material Adverse Effect. There has not been, and to the actual
knowledge of the Company, there is not pending or contemplated, any
investigation by the Commission involving the Company or any current or former
director or officer of the Company. The SEC has not issued any stop order or
other order suspending the effectiveness of any registration statement filed by
the Company under the Exchange Act or the Securities Act.
3.11 COMPLIANCE. The Company: (i) is not in default under or in violation
of (and, to the Company's actual knowledge, no event has occurred that has not
been waived that, with notice or lapse of time or both, would result in a
default by the Company under), nor has the Company received notice of a claim
that it is in default under or that it is in violation of, any indenture, loan
or credit agreement or any other agreement or instrument to which it is a party
or by which it or any of its properties is bound (whether or not such default or
violation has been waived), (ii) is not in violation of any order of any court,
arbitrator or governmental body, or (iii) to the Company's actual knowledge, is
not in violation of any statute, rule or regulation of any governmental
authority, except in each case as could not, individually or in the aggregate,
have or result in a Material Adverse Effect.
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3.12 LABOR RELATIONS. No material labor dispute exists or, to the actual
knowledge of the Company, is imminent with respect to any of the employees of
the Company.
3.13 REGULATORY PERMITS. The Company possesses all certificates,
authorizations and permits issued by the appropriate federal, state, local or
foreign regulatory authorities necessary to conduct its businesses as described
in the SEC Reports, except where the failure to possess such permits could not,
individually or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect ("Material Permits"), and the Company has not received
any notice of proceedings relating to the revocation or modification of any
Material Permit.
3.14 TITLE TO ASSETS. The Company has good and marketable title in and to
all property owned by the Company and that is material to its business, free and
clear of all liens, except for liens as do not materially affect the value of
such property and do not materially interfere with the use made and proposed to
be made of such property by the Company. Any property and facilities held under
lease by the Company and the Subsidiaries are held under valid, subsisting and
enforceable leases concerning which the Company is in compliance.
3.15 INSURANCE. The Company's oil and gas operator, Oakhills Energy, Inc.,
an Oklahoma corporation maintain in full force and effect insurance coverage
that is customary for comparably situated companies for the business being
conducted as they relate to the development of properties owned or leased by the
Company or its subsidiary interests. In addition, the Company maintains a
$2,000,000 per year limit policy on bodily injury with regard to 25 xxxxx. Such
policy includes coverage for pollution, environmental damage and chemical
spills. The Company reasonably believes that the insurance coverage carried by
Oakhills Energy, Inc. and the Company provides reasonable, prudent and customary
coverage against all liabilities, claims and risks against which it is customary
for comparably situated companies to insure.
3.16 TRANSACTIONS WITH AFFILIATES AND EMPLOYEES. Except as disclosed in the
SEC Reports, none of the officers or directors of the Company and, to the actual
knowledge of the Company, none of the employees of the Company is presently a
party to any transaction with the Company or any Subsidiary (other than for
services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
actual knowledge of the Company, any entity in which any officer, director, or
any such employee has a substantial interest or is an officer, director, trustee
or partner.
3.17 PRIVATE PLACEMENT. Assuming the accuracy of the representations and
warranties of the Investors set forth in Article IV hereof, the offer, issuance
and sale of the Securities to the Investors as contemplated hereby will be
exempt from the registration requirements of the Securities Act.
3.18 LISTING REQUIREMENTS. The Company's Common Stock currently trades on
the Nasdaq Over-the Counter Bulletin Board ("OTCBB"). The Company is, and has no
reason to believe that it will not in the foreseeable future continue to be, in
compliance with the periodic SEC reporting requirements necessary to maintain
trading on the OTCBB.
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3.19 DISCLOSURE. To the actual knowledge of the Company, neither the
Company nor any Person acting on its behalf has provided the Investors or their
agents or counsel with any information that constitutes or might constitute
material, non-public information. The written information relating to the
Company, its business, the Subsidiaries and the transactions contemplated hereby
delivered to the Investors in connection with the transactions contemplated by
this Agreement does not contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading.
3.20 TAXES. The Company has made or filed all federal, state and foreign
income and all other tax returns, reports and declarations required by any
jurisdiction to which it is subject (unless and only to the extent that the
Company has set aside on its books provisions reasonably adequate for the
payment of all unpaid and unreported taxes) and has paid all taxes and other
governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and has set aside on its books provisions
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. There are no
unpaid taxes in any material amount claimed to be due by the taxing authority of
any jurisdiction, and the officers of the Company have no actual knowledge of
any basis for any such claim. The Company has not executed a waiver with respect
to the statute of limitations relating to the assessment or collection of any
foreign, federal, statue or local tax. None of the Company's tax returns is
presently being audited by any taxing authority.
3.21 BROKERS AND FINDERS. No Person will have, as a result of the
transactions contemplated by this Agreement, any valid right, interest or claim
against or upon the Company or an Investor for any commission, fee or other
compensation pursuant to any agreement, arrangement or understanding entered
into by or on behalf of the Company, other than as described in Schedule 3.21.
3.22 NO GENERAL SOLICITATION. Neither the Company nor any Person acting on
its behalf has conducted any general solicitation or general advertising (as
those terms are used in Regulation D) in connection with the offer or sale of
any of the Securities.
3.23 FORM SB-2 ELIGIBILITY. The Company is eligible to register the resale
of its Common Stock by the Investors under Form SB-2 promulgated under the
Securities Act and the Company hereby covenants and agrees to use its best
efforts to maintain its eligibility to use Form SB-2 until the Registration
Statement covering the resale of the Shares shall have been filed with, and
declared effective by, the SEC.
3.24 XXXXXXXX-XXXXX COMPLIANCE. To the Company's actual knowledge, the
Company is in material compliance with all provisions of the Xxxxxxxx-Xxxxx Act
of 2002 which are applicable to it as of the Closing Date, except that the
Company's audit committee is comprised of three directors, only two of whom are
independent pursuant to the requirements of such Act that require independent
directors to comprise such committee. The Company and its Subsidiaries maintain
a system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with management's
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with GAAP and to
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maintain asset accountability, (iii) access to assets is permitted only in
accordance with management's general or specific authorization, and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. The Company has established disclosure controls and procedures as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the Company and
designed such disclosure controls and procedures with the purpose of ensuring
that material information relating to the Company, including its Subsidiaries,
is made known to the certifying officers by others within those entities,
particularly during the period in which the Company's most recently filed SEC
Report, as the case may be, is being prepared. The Company's certifying officers
have evaluated the effectiveness of the Company's controls and procedures as of
the date prior to the filing date of the most recently filed SEC Report (such
date, the "Evaluation Date"). The Company presented in its most recently filed
SEC Report the conclusions of the certifying officers about the effectiveness of
the disclosure controls and procedures based on their evaluations as of the
Evaluation Date. Since the Evaluation Date, there have been no significant
changes in the Company's internal controls (as such term is defined in Item
307(b) of Regulation S-K under the Exchange Act) or, to the Company's actual
knowledge, in other factors that could significantly affect the Company's
internal controls.
3.25 APPLICATION OF TAKEOVER PROTECTIONS. The Company and its Board of
Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under the Company's Articles of Incorporation (or
similar charter documents) or the laws of its state of incorporation that is or
could become applicable to the Investors as a result of the Investors and the
Company fulfilling their obligations or exercising their rights under this
Agreement and the Warrants, including without limitation the Company's issuance
of the Securities and the Investors' ownership of the Securities.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
Each Investor hereby, for itself and for no other Investor, represents and
warrants to the Company as follows:
4.1 ORGANIZATION; AUTHORITY. Investor, if not an individual, is an entity
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the requisite power and authority to enter
into and to consummate the transactions contemplated by this Agreement and
otherwise to carry out its obligations hereunder. The purchase by Investor of
the Securities hereunder has been duly authorized by all necessary action on the
part of Investor. This Agreement has been duly executed by Investor, and when
delivered by Investor in accordance with the terms hereof, will constitute the
valid and legally binding obligation of Investor, enforceable against it in
accordance with its terms.
4.2 INVESTMENT INTENT. Investor is acquiring the Securities as principal
for its own account and not with a view to or for distributing or reselling such
Securities or any part thereof, without prejudice, however, to Investor's right,
subject to the provisions of this Agreement, at all times to sell or otherwise
dispose of all or any part of such Securities pursuant to an effective
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registration statement under the Securities Act or under an exemption from such
registration and in compliance with applicable federal and state securities
laws. Nothing contained herein shall be deemed a representation or warranty by
Investor to hold Securities for any period of time. Investor is acquiring the
Securities hereunder in the ordinary course of its business. Investor does not
have any agreement or understanding, directly or indirectly, with any Person to
distribute any of the Securities.
4.3 INVESTOR STATUS. At the time Investor was offered the Securities, it
was, and at the date hereof it is, and on each date on which it exercises any
Warrants, an "accredited investor" as defined in Rule 501(a) under the
Securities Act, and has completed an Accredited Investor Questionnaire in the
form attached herein immediately after the Investor's signature page. Investor
has not been formed solely for the purpose of acquiring the Securities. Investor
is not a registered broker-dealer under Section 15 of the Exchange Act.
4.4 INVESTMENT EXPERIENCE. Investor, either alone or together with its
representatives, has such knowledge, sophistication and experience in business
and financial matters so as to be capable of evaluating the merits and risks of
the prospective investment in the Securities, and has so evaluated the merits
and risks of such investment. Investor recognizes that investment in the
Securities involves substantial risks, including loss of the entire amount of
such investment, and Investor is able to bear the economic risk of investment in
the Securities and to afford a complete loss of such investment.
4.5 GENERAL SOLICITATION. Investor is not purchasing the Securities as a
result of any advertisement, article, notice or other communication regarding
the Securities published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar or any other
general solicitation or general advertisement.
4.6 SHORT SALES. Investor represents and warrants that, during the period
of time beginning 90 days prior to the date of this Agreement and ending upon
the date that the press release is issued pursuant to Section 5.6 of this
Agreement, Investor and its Affiliates have not entered, and will not enter,
into any "put equivalent position" as such term is defined in Rule 16a-1 under
the Exchange Act or short sale positions with respect to the Common Stock of the
Company.
4.7 DISCLOSURE OF INFORMATION. Investor has received, read, carefully
considered, and fully understands this Agreement, the SEC Reports and all
documents related to the Company and its operations required by and furnished to
such Investor. In making its decision to invest in the Securities, Investor has
relied upon the independent investigations made by Investor and by Investor's
own professional advisors. Investor and its advisors, if any, have been given
the opportunity to obtain information and to examine this Agreement and certain
other information regarding the Company and to ask questions of, and to receive
answers from the Company or any Person acting on the Company's behalf concerning
the Securities, the Company, and terms and conditions of this investment, and to
obtain any additional information to verify the accuracy of any information
previously furnished. All such questions have been answered to Investor's full
satisfaction.
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4.8 IRREVOCABILITY OF SUBSCRIPTION. Subject to satisfaction or waiver of
all conditions to Closing set forth in Section 2.3 of this Agreement, Investor
agrees that the Investor's subscription shall be irrevocable by Investor, and
that, except as required by applicable law, Investor shall not be otherwise
entitled to cancel, terminate or revoke this Agreement or any of Investor's
obligations hereunder.
4.9 BROKERS AND FINDERS. No Person will have, as a result of the
transactions contemplated by this Agreement, any valid right, interest or claim
against or upon the Company or an Investor for any commission, fee or other
compensation pursuant to any agreement, arrangement or understanding entered
into by or on behalf of an Investor.
4.10 RESTRICTED SECURITIES. Investor understands that (i) the Securities
have not been registered under the Securities Act because of their issuance in a
transaction exempt from the registration requirements of the Securities Act,
(ii) the Securities must be held by Investor indefinitely (without limiting the
Company's obligation hereunder to file the Registration Statement) unless a
subsequent disposition thereof is registered under the Securities Act or is
exempt from such registration, and (iii) the Securities will bear the legends to
such effect set forth in Section 5.1(b) hereof.
ARTICLE 5
COVENANTS AND AGREEMENTS
5.1 TRANSFER RESTRICTIONS.
(a) The Securities may only be disposed of in compliance with state
and federal securities laws. In connection with any transfer of Securities,
other than pursuant to an effective registration statement or a transfer to
the Company or to an Affiliate of an Investor, the Company may require the
transferor thereof to provide to the Company an opinion of counsel selected
by the transferor and reasonably acceptable to the Company, the form and
substance of such opinion to be reasonably satisfactory to the Company, to
the effect that such transfer does not require registration of such
transferred Securities under the Securities Act. As a condition of any
transfer, Investor shall have notified the Company of any of the terms
concerning the proposed disposition and the identity of the transferee, and
any such transferee shall agree in writing to be bound by the terms of this
Agreement and shall have the rights of an Investor under this Agreement.
(b) Investor agrees to the imprinting of the following legend on any
certificate evidencing the Securities:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE
SECURITIES LAWS OF CERTAIN STATES. THE SECURITIES REPRESENTED HEREBY
ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT
BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND ANY
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APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR
EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF
THE SECURITIES TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS
IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS."
(c) An Investor may from time to time pledge pursuant to a bona fide
margin account or grant a security interest in some or all of the
Securities, provided the pledge or secured party is an accredited investor
and, if required under the terms of such transaction, such Investor may
transfer possession of the pledged or secured Securities to the pledgees or
secured parties. Notice of such pledge or transfer shall be given to the
Company, but such pledge or transfer will not be subject to approval or
consent of the Company and no legal opinion of legal counsel to the
pledgee, secured party or pledgor shall be required in connection with the
pledge, but the legend set forth in Section 5.1(b) hereof shall remain on
the pledged Securities, and such legal opinion may be required in
connection with a foreclosure by the pledgee or secured party or a
subsequent transfer following default by the Investor.
(d) Certificates evidencing the Shares and Warrant Shares shall not
contain any legend including the legend set forth in Section 5.1(b), (i)
while a registration statement (including the Registration Statement)
covering the resale of such security is effective under the Securities Act,
or (ii) following any sale of such Shares or Warrant Shares pursuant to
Rule 144, or (iii) if such Shares or Warrant Shares are eligible for sale
under Rule 144(k), or (iv) if such legend is not required under applicable
requirements of the Securities Act (including judicial interpretations and
pronouncements issued by the Staff of the Commission). If all or any
portion of a Warrant is exercised at a time when there is an effective
registration statement to cover the resale of the Warrant Shares, such
Warrant Shares shall be issued free of all legends, so long as such Warrant
is not exercised by an Investor, but rather has been acquired by the holder
after being traded from an Investor. The certificate representing Warrant
Shares issued to an Investor upon exercise of a Warrant that has not been
traded shall bear the legend set forth in Section 5.1(b). The Company
agrees that following the Effective Date or at such time as such legend is
no longer required under this Section 5.1(d), it will, no later than five
business days following the delivery by an Investor to the Company or the
Company's transfer agent of a certificate representing Shares or Warrant
Shares, as the case may be, issued with a restrictive legend (such date,
the "Legend Removal Date"), deliver or cause to be delivered to such
Purchaser a certificate representing such Securities that is free from all
restrictive and other legends. The Company may not make any notation on its
records or give instructions to any transfer agent of the Company that
enlarge the restrictions on transfer set forth in this Section 5.1.
(e) In addition to each Investor's other available remedies, the
Company shall pay to an Investor, in cash, as partial liquidated damages
and not as a penalty, for each $1,000 worth of Shares or Warrant Shares
(based on the closing price of the Common Stock on the date such Securities
are submitted to the Company's transfer agent) subject to Section 5.1(d),
$10 per business day (increasing to $20 per business day beginning five
business days after such damages have begun to accrue) for each business
day after the Legend Removal Date until such certificate is delivered
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without legend in accordance with Section 5.1(d) hereof. Nothing herein
shall limit such Investor's right to pursue actual damages for the
Company's failure to deliver certificates representing any Securities as
required by this Agreement and the Warrants, and such Investor shall have
the right to pursue all remedies available to it at law or in equity
including, without limitation, a decree of specific performance and/or
injunctive relief.
(f) Each Investor, severally and not jointly with the other Investors,
agrees that the removal of the restrictive legend from certificates
representing Securities as set forth in this Section 5.1 is predicated upon
the Company's reliance upon the Investor's agreement to offer and sell any
Securities pursuant to either the registration requirements of the
Securities Act, including any applicable prospectus delivery requirements,
or an exemption therefrom.
5.2 INTEGRATION. The Company shall not, and shall use commercially
reasonable efforts to ensure that no Affiliate of the Company shall, sell, offer
for sale or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in Section 2 of the Securities Act) that will be integrated
with the offer or sale of the Securities in a manner that would require the
registration under the Securities Act of the sale of the Securities to the
Investors, or that would be integrated with the offer or sale of the Securities
for purposes of the rules and regulations of Nasdaq.
5.3 RESERVATION OF COMMON STOCK. The Company shall at all times reserve and
keep available out of its authorized but unissued shares of Common Stock, solely
for the purpose of providing for the exercise of the Warrants, such number of
shares of Common Stock as shall from time to time equal the number of Warrant
Shares sufficient to permit the exercise of the Warrants issued pursuant to this
Agreement in accordance with their respective terms.
5.4 TRADING OF UNDERLYING SHARES. Promptly following the date hereof, the
Company shall take all necessary action to cause the Shares and the Warrant
Shares to be traded on the OTCBB. Further, if the Company applies to have its
Common Stock or other securities traded on any other principal stock exchange or
market, it shall include in such application the Shares and the Warrant Shares
and will take such other action as is necessary to cause such Common Stock to be
so traded. The Company will use commercially reasonable efforts to continue the
trading of its Common Stock with the OTCBB and, in accordance, therewith, will
use commercially reasonable efforts to comply in all respects with the Company's
reporting, filing and other obligations under the bylaws or rules of such market
or exchange, as applicable.
5.5 EXERCISE PROCEDURES. The Warrants set forth the totality of the
procedures required of the Investors in order to exercise the Warrants. No
additional legal opinion or other information or instructions shall be required
of the Investors to exercise the Warrants. The Company shall honor exercises of
the Warrants and shall deliver Warrant Shares in accordance with the terms,
conditions and time periods set forth in the Warrants.
5.6 PRESS RELEASE AND 8-K. Within two business days following the Closing
Date, the Company shall issue a press release reasonably acceptable to the
Investors disclosing the material terms of the transactions contemplated hereby
and file a Current Report on Form 8-K disclosing the transactions contemplated
hereby and including this Agreement and the form of Warrant as exhibits to such
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Form 8-K. In addition, the Company will make such other filings and notices in
the manner and time required by the SEC and Nasdaq.
5.7 NO MATERIAL NON-PUBLIC INFORMATION. The Company covenants and agrees
that neither it nor any other Person acting on its behalf will provide any
Investor or its agents or counsel with any information that the Company believes
constitutes material non-public information, unless prior thereto such Investor
shall have executed a written agreement regarding the confidentiality and use of
such information. The Company understands and confirms that each Investor shall
be relying on the foregoing representations in effecting transactions in the
Securities of the Company.
ARTICLE 6
INDEMNIFICATION
6.1 INDEMNIFICATION. Each party (the "Indemnifying Party") will indemnify,
defend and hold the other parties and their directors, officers, shareholders,
partners, employees and agents (each, an "Indemnified Party") harmless from any
and all losses, liabilities, obligations, claims, contingencies, damages, costs
and expenses, including all judgments, amounts paid in settlements, court costs
and reasonable attorneys' fees and costs of investigation, that any such
Indemnified Party may suffer or incur as a result of or relating to any breach
of any of the representations, warranties, covenants or agreements made by the
Indemnifying Party in this Agreement or in the Warrants.
6.2 CONDUCT OF INDEMNIFICATION PROCEEDINGS. If any action shall be brought
against any Indemnified Party in respect of which indemnity may be sought
pursuant to this Agreement, such Indemnified Party shall promptly notify the
Indemnifying Party in writing, and the Indemnifying Party shall have the right
to assume the defense thereof with counsel of its own choosing. Any Indemnified
Party shall have the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party except to the extent that (i)
the employment thereof has been specifically authorized by the Indemnifying
Party in writing, (ii) the Indemnifying Party has failed after a reasonable
period of time to assume such defense and to employ counsel, or (iii) in such
action there is, in the reasonable opinion of such separate counsel, a material
conflict on any material issue between the position of the Indemnifying Party
and the position of such Indemnified Party. The Indemnifying Party will not be
liable to any Indemnified Party under this Agreement (i) for any settlement by
an Indemnified Party effected without the Indemnifying Party's prior written
consent, which shall not be unreasonably withheld or delayed, or (ii) to the
extent, but only to the extent that a loss, claim, damage or liability is
attributable to any Indemnified Party's breach of any of its representations,
warranties, covenants or agreements in this Agreement or in the Warrants.
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ARTICLE 7
REGISTRATION RIGHTS
7.1 REGISTRATION STATEMENT.
(a) Within 45 days after the Closing Date, the Company shall prepare
and file with the SEC a "Registration Statement (the "Registration
Statement") covering the resale of the Registrable Securities for an
offering to be made on a continuous basis pursuant to Rule 415 under the
Securities Act. The Registration Statement shall be on Form SB-2. Subject
to the terms of this Agreement, the Company shall use its best efforts to
cause the Registration Statement to be declared effective under the
Securities Act within 120 days after such filing, and to keep the
Registration Statement continuously effective until the earliest of (i) the
date all Registrable Securities covered by such Registration Statement have
been sold, (ii) the date the Registrable Securities are eligible for resale
under Rule 144(k) under the Securities Act (as reasonably determined by the
Company), or (iii) two years following the Closing Date; provided, however,
that the Company may voluntarily suspend the effectiveness of the
Registration Statement for a limited time, if the Company has been advised
by counsel or underwriters to the Company that the offering of the
Registrable Securities pursuant to the Registration Statement would have a
Material Adverse Effect, or would be improper in view of (or improper
without disclosure in a prospectus) a proposed financing, reorganization,
recapitalization, merger, consolidation, or similar transaction involving
the Company.
(b) Except to the extent that the relevant delay is caused by an
Investor's or Holder's failure to provide information in accordance with
Section 7.2 hereof, if: (i) a Registration Statement is not filed within 45
days after the Closing Date, or (ii) the Company fails to file with the SEC
a request for acceleration in accordance with Rule 461 promulgated under
the Securities Act, within five business days of the date that the Company
is notified (orally or in writing, whichever is earlier) by the SEC that a
Registration Statement will not be "reviewed," or is not subject to further
review, or (iii) prior to the date when such Registration Statement is
first declared effective by the SEC, the Company fails to file a
pre-effective amendment and otherwise respond in writing to comments made
by the SEC in respect of such Registration Statement as promptly as
reasonably practical after the receipt of comments by or notice from the
SEC that such amendment is required in order for a Registration Statement
to be declared effective, or (iv) a Registration Statement filed or
required to be filed hereunder is not declared effective by the SEC within
120 days after its filing, or (v) after a Registration Statement is first
declared effective by the SEC, it ceases for any reason to remain
continuously effective as to all Registrable Securities for which it is
required to be effective, or the Holders are not permitted to utilize the
prospectus therein to resell such Registrable Securities, for in any such
case, 45 calendar days during any 12-month period (which need not be
consecutive days)(any such failure or breach being referred to as an
"Event," and for purposes of clause (i) or (iv) the date on which such
Event occurs, or for purposes of clause (ii) the date on which such five
business day period is exceeded, or for purposes of clause (v) the date on
which such 45 calendar day period is exceeded, being referred to as "Event
Date"), then in addition to any other rights the Holders may have hereunder
or under applicable law: (x) 30 days following each such Event Date, and on
each succeeding monthly anniversary of each such Event Date (if the
applicable Event shall not have been cured by such date) until the
applicable Event is cured, the Company shall pay to each Holder an amount
in cash, as partial liquidated damages and not as a penalty, equal to one
D-16
percent of the Subscription Amount for any Registrable Securities then held
by such Holder. If the Company fails to pay any partial liquidated damages
pursuant to this Subsection 7.1(b) in full within ten days after the date
payable, the Company will pay interest thereon at a rate of 12% per annum
(or such lesser maximum amount that is permitted to be paid by applicable
law) to the Holder, accruing daily from the date such partial liquidated
damages became due until such amounts, plus all such interest thereon, are
paid in full. The partial liquidated damages pursuant to the terms hereof
shall apply on a daily pro-rata basis for any portion of a month prior to
the cure of an Event.
7.2 PARTICIPATION BY INVESTORS. The Investors or Holders shall furnish to
the Company such information regarding the Investors' or Holders' offerings of
Registrable Securities and the proposed manner of distribution thereof as the
Company may reasonably request and as shall be required in connection with the
Registration Statement and any related prospectus, or any amendment thereof or
supplement thereto. For the purpose of providing such information, each Holder
agrees to furnish to the Company a completed Questionnaire in the form attached
hereto as Exhibit C (a "Selling Holder Questionnaire") not more than ten
business days following the date on which such Holder receives a written request
therefor from the Company. Each Holder also agrees with the terms and conditions
of the Plan of Distribution in the form attached hereto as Exhibit D for
purposes of inclusion in the prospectus related to the Registration Statement.
The Company shall, (i) not less than five business days prior to the filing of
the Registration Statement or any related prospectus or any amendment or
supplement thereto, furnish to each Holder then holding ten percent or more of
the outstanding Shares (a "Participating Holder") copies of all such documents
proposed to be filed (including documents incorporated or deemed incorporated by
reference to the extent requested by such Participating Holder) which documents
will be subject to the review by such Participating Holder, and (ii) cause the
Company's officers and directors, counsel and independent certified public
accountants to respond to such inquiries as shall be necessary, in the
reasonable opinion of respective counsel to conduct a reasonable investigation
within the meaning of the Securities Act.
7.3 AMENDMENTS AND SUPPLEMENTS. The Company shall prepare and file with the
SEC such amendments and supplements, including post-effective amendments, to the
Registration Statement and the prospectus used in connection therewith as may be
necessary to keep the Registration Statement continuously effective as to the
applicable Registrable Securities for the period of time set forth in Section
7.1 hereof. The Company shall respond as promptly as reasonably practicable to
any comments received from the SEC with respect to the Registration Statement,
the prospectus or any amendment thereof or supplement thereto, and as promptly
as reasonably practicable provide the Holders true and complete copies of all
correspondence from and to the SEC relating to the Registration Statement. To
the extent within the control of the Company, the Company shall comply in all
material respects with the provisions of the Securities Act and the Exchange Act
with respect to the disposition of all Registrable Securities covered by the
Registration Statement during the applicable period in accordance (subject to
the terms of this Agreement) with the intended methods of disposition by the
Holders set forth in the Registration Statement or the prospectus, as amended or
supplemented.
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7.4 DOCUMENTS TO HOLDERS. The Company will, at the expense of the Company,
furnish to a Holder such number of copies of the Registration Statement,
prospectuses, amendments, supplements and other documents incident to any
registration or qualification of the Registrable Securities as a Holder may from
time to time reasonably request.
7.5 REGISTRATION EXPENSES. The Company will bear all costs and expenses
related to the Registration Statement, other than the expenses incurred by the
Holders for brokers' or underwriters' commissions and discounts or legal fees
incurred by the Holders.
7.6 INDEMNIFICATION BY COMPANY. The Company agrees to indemnify, defend and
hold harmless, to the extent permitted by law, each Investor and its officers,
directors, stockholders, employees, agents and representatives, and any other
person deemed to control the Investor within the meaning of the Securities Act
against all losses, claims, damages, liabilities and expenses caused by (i) any
violation or alleged violation by the Company of the Securities Act, the
Exchange Act or any other federal or state securities law, rule or regulation
applicable to the Company, or (ii) any untrue statement of material fact
contained in the Registration Statement, the prospectus or any amendment thereof
or supplement thereto or any omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as the same are caused by or contained in any information furnished in
writing to the Company by such Investor expressly for use therein or by such
Investor's failure to deliver information reasonably requested by the Company
for preparation of the Registration Statement, the prospectus or any amendments
or supplements thereto.
7.7 INDEMNIFICATION BY INVESTORS. If any Investor is participating in the
Registration Statement, such Investor will furnish to the Company in writing
such information as the Company reasonably requests for use in connection with
the Registration Statement, prospectus or any amendments or supplements thereto,
and to the extent permitted by law, such Investor will indemnify, defend and
hold harmless the Company, its directors, officers, stockholders, employees,
agents and representatives, and any other person deemed to control the Company
against any losses, claims, damages, liabilities and expenses resulting from any
untrue statement or material fact contained in the Registration Statement,
prospectus or any amendment thereof or supplement thereto or any omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but only to the extent the same are caused by or
contained in any information furnished in writing to the Company by such
Investor expressly for use therein or by such Investor's failure to deliver
information reasonably requested by the Company for preparation of the
Registration Statement, the prospectus or any amendments or supplements thereto.
In no event shall the liability of any selling Holder hereunder be greater in
amount than the dollar amount of the net proceeds received by such Holder upon
the sale of the Registrable Securities giving rise to such indemnification
obligation.
7.8 INDEMNIFICATION PROCEDURES. The application of the indemnities set
forth in Sections 7.6 and 7.7 hereof shall be in accordance with the procedures
set forth in Section 6.2 hereof.
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ARTICLE 8
MISCELLANEOUS
8.1 FEES AND EXPENSES. Except as expressly set forth in this Agreement and
the Warrants to the contrary, each party shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement. The Company shall pay all transfer
agent fees, stamp taxes and other taxes and duties levied in connection with the
issuance of any Securities.
8.2 ENTIRE AGREEMENT. This Agreement, the Warrants, and the exhibits and
schedules thereto, contain the entire understanding of the parties with respect
to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents.
8.3 NOTICES. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
specified herein, (b) seven business days following the date of mailing, if sent
by U.S. mail prepaid or a nationally recognized overnight courier service, or
(c) upon actual receipt by the party to whom such notice is required to be
given. The addresses for such notices and communications are those set forth on
the signature pages hereof, or such other address as may be designated in
writing hereafter.
8.4 AMENDMENTS; WAIVERS. No provision of this Agreement may be waived or
amended except in a written instrument signed, in the case of an amendment, by
the Company and each of the Investors or, in the case of a waiver, by the party
against whom enforcement of any such waiver is sought. No waiver of any default
with respect to any provision, condition or requirement of this Agreement shall
be deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of either party to exercise any right hereunder in
any manner impair the exercise of any such right.
8.5 CONSTRUCTION. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.
8.6 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of the parties and their successors and permitted assigns. The
Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Investors. Any Investor may assign its
rights under this Agreement to any Person to whom such Investor assigns or
transfers any Securities in accordance with the provisions of this Agreement.
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8.7 NO THIRD-PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in the indemnities under
Sections 6.1, 7.6 and 7.7 hereof.
8.8 GOVERNING LAW; ATTORNEYS' FEES. All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by and construed and enforced in accordance with the internal laws
of the State of Nevada, without regard to the principles of conflicts of law
thereof. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law. If either party shall commence an action or proceeding to
enforce any provisions of this Agreement, then the prevailing party in such
action or proceeding shall be reimbursed by the other party for its court costs
and reasonable attorneys' fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or proceeding. The
parties hereby waive all rights to a trial by jury.
8.9 EXECUTION. This Agreement may be executed in two or more counterparts,
all of which when taken together shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.
8.10 SEVERABILITY. If any provision of this Agreement is held to be invalid
or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.
8.11 REPLACEMENT OF SECURITIES. If any certificate or instrument evidencing
any Securities is mutilated, lost, stolen or destroyed, the Company shall issue
or cause to be issued in exchange and substitution for and upon cancellation
thereof, or in lieu of and substitution therefor, a new certificate or
instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested. The applicants for any new certificate or instrument
under such circumstances shall also pay any reasonable third-party costs
associated with the issuance of such replacement Securities.
8.12 INDEPENDENT NATURE OF INVESTORS' OBLIGATIONS. The obligations of each
Investor under this Agreement and the Warrants are several and not joint with
the obligations of any other Investor, and no Investor shall be responsible in
any way for the performance of the obligations of any other Investor under this
Agreement or the Warrants. Nothing contained herein or the Warrants, and no
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action taken by any Investor pursuant thereto, shall be deemed to constitute the
Investors as a partnership, an association, a joint venture or any other kind of
entity, or create a presumption that the Investors are in any way acting in
concert or as a group with respect to such obligations or the transactions
contemplated by this Agreement or the Warrants. Each Investor shall be entitled
to independently protect and enforce its rights, including without limitation,
the rights arising out of this Agreement or the Warrants, and it shall not be
necessary for any other Investor to be joined as an additional party in any
proceeding for such purpose. Each Investor has been represented by its own
separate legal counsel in their review and negotiation of this Agreement and the
Warrants. The Company has elected to provide all Investors with the same terms
and this Agreement for the convenience of the Company and not because it was
required or requested to do so by the Investors.
8.13 EXPENSES. The parties hereto shall pay their own costs and expenses in
connection herewith except that the Company shall reimburse X. X. Xxxxxx &
Company, Inc. for their reasonable fees and expenses of legal counsel actually
incurred by X. X. Xxxxxx & Company, Inc., not to exceed $30,000 in the
aggregate, such reimbursement to occur at Closing.
IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
LEXINGTON RESOURCES, INC.
By
________________________________
Name: Xxxxx Xxxxxx
Title: President
ADDRESS FOR NOTICE:
0000 Xxxx Xxxx Xxxx Xxxx
Xxx Xxxxx, Xxxxxx 00000
Attn: Xxxxx Xxxxxx, President
Tel: 000-000-0000 or 000-000-0000
Fax: 000-000-0000
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR INVESTOR FOLLOWS]
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INVESTOR'S SIGNATURE PAGE
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
Investor Name:
___________________________
Signature:
___________________________
Name of Signatory:
___________________________
Title of Signatory:
___________________________
Subscription Amount: $_______________ for _______________ Units
Address for Notice:
___________________________
___________________________
Fax Number:
___________________________
Telephone Number:
___________________________
E-Mail Address:
___________________________
With a copy to:
(which shall not constitute notice)
___________________________ ___________________________
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