Exhibit 4.16
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this "AGREEMENT") is dated as of
February ___, 2005 by and between Utix Group, Inc., a Delaware corporation (the
"COMPANY"), and each purchaser who has executed this Agreement on the signature
page hereto (each, a "PURCHASER" and collectively, the "PURCHASERS").
WHEREAS, subject to the terms and conditions set forth in this Agreement
and pursuant to Section 4(2) of the Securities Act of 1933, as amended, the
Company desires to issue and sell to each Purchaser, and each Purchaser,
severally and not jointly, desires to purchase from the Company, certain
securities of the Company as more fully described in this Agreement.
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 of the
Purchasers agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. In addition to the terms defined elsewhere in this
Agreement, the following terms have the meanings indicated:
1.1.1 "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.
1.1.2 "BUSINESS DAY" means any day other than Saturday, Sunday
or other day on which commercial banks in The City of New York are authorized or
required by law to remain closed.
1.1.3 "COMMISSION" OR "SEC" means the United States Securities
and Exchange Commission.
1.1.4 "COMMON STOCK" means the common stock of the Company,
par value $0.001 per share.
1.1.5 "COMMON STOCK EQUIVALENTS" means, collectively, Options
and Convertible Securities.
1.1.6 "COMPANY COUNSEL" means Xxxxxxx Xxxxxx Xxxxxxxxx Xxxx &
Xxxxxx XX.
1.1.7 "CONVERSION SHARES" means any Common Stock issuable upon
conversion of the Notes.
1.1.8 "EFFECTIVE DATE" means the date that the Registration
Statement is first declared effective by the Commission.
1.1.9 "ELIGIBLE MARKET" means any of the New York Stock
Exchange (the "NYSE"), the American Stock Exchange (the "AMEX"), the Nasdaq
National Market ("NASDAQ NNM"), the Nasdaq Small Cap Market ("NASDAQ SCM") or
the National Association of Securities Dealers, Inc. OTC Bulletin Board (the
"OTC BULLETIN BOARD").
1.1.10 "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended.
1.1.11 "LIEN" means any lien, charge, claim, security interest,
encumbrance, right of first refusal or other restriction.
1.1.12 "LOSSES" means any and all losses, claims, damages,
liabilities, settlement costs and expenses, including, without limitation, costs
of preparation and reasonable attorneys' fees.
1.1.13 "NOTES" means one or more 5% convertible promissory
notes aggregating $1,000,000 in principal amount, to be purchased at par by the
Purchasers on the Notes Closing Date; which Notes shall be in the form of
SCHEDULE 1.1.13.
1.1.14 "NOTES CLOSING DATE" means the date of closing of the
purchase of not less than $1,000,000 of the Notes, pursuant to Section 2.1.1.
1.1.15 "PERSON" means any 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 any court or other federal, state, local or other
governmental authority or other entity of any kind.
1.1.16 "PURCHASER DESIGNEE" shall mean Great Court Capital,
LLC, a New York limited liability company, or any other Person designated in
writing from time to time by the holders of a majority of the Notes and who
shall be reasonably acceptable to the Company.
1.1.17 "PROCEEDING" means an action, claim, suit, investigation
or proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.
1.1.18 "PROSPECTUS" means the prospectus included in the
Registration Statement (including, without limitation, a prospectus that
includes any information previously omitted from a prospectus filed as part of
an effective registration statement in reliance upon Rule 430A promulgated under
the Securities Act), as amended or supplemented by any prospectus supplement,
with respect to the terms of the offering of any portion of the Registrable
Securities covered by the Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.
1.1.19 "REGISTRABLE SECURITIES" means: (i) any Common Stock
issuable upon conversion of the Notes; and (ii) any securities issued or
issuable upon any stock split, dividend or other distribution, recapitalization
or similar event with respect to the foregoing.
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1.1.20 "REGISTRATION STATEMENT" means the registration
statement required to be filed under Article VI below, including (in each case)
the Prospectus, amendments and supplements to such registration statement or
Prospectus, including pre- and post-effective amendments, all exhibits thereto,
and all material incorporated by reference or deemed to be incorporated by
reference in such registration statement.
1.1.21 "REQUIRED EFFECTIVENESS DATE" means April 15, 2005,
unless such date shall be extended by mutual agreement of the Purchasers and the
Company.
1.1.22 "RULE 144," "RULE 415," and "RULE 424" means Rule 144,
Rule 415 and Rule 424, respectively, promulgated by the Commission pursuant to
the Securities Act, as such Rules may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
1.1.23 "SECURITIES" means the collective reference to the Notes
and the Conversion Shares.
1.1.24 "SECURITIES ACT" means the Securities Act of 1933, as
amended.
1.1.25 "SUBSIDIARY" means any Person in which the Company,
directly or indirectly, owns capital stock or holds an equity or similar
interest.
1.1.26 "TRADING DAY" means (a) any day on which the Common
Stock is listed or quoted and traded on any Eligible Market.
1.1.27 "TRADING MARKET" means any Eligible Market on which the
Common Stock is then listed or quoted.
1.1.28 "TRANSACTION DOCUMENTS" means this Agreement, the Notes
and any other documents or agreements executed in connection with the
transactions contemplated hereunder.
ARTICLE II
PURCHASE AND SALE OF SECURITIES
2.1 PURCHASE AND SALE OF THE NOTES.
2.1.1 NOTES CLOSING. Subject to the terms and conditions set
forth herein:
(a) On the Notes Closing Date, the Company shall
issue to each of those Purchasers listed on and who shall have executed the
signature page to this Agreement entitled "PURCHASERS SIGNATURE PAGE," and each
of such Purchasers shall purchase from the Company, severally and not jointly,
such principal amount of Notes as is indicated below such Purchaser's name on
the Purchasers Signature Page. On such Notes Closing Date, $1,000,000 in
principal amount of Notes shall be purchased and paid for by the Purchasers. The
closings of the sale of the Notes (collectively, the "NOTES CLOSING") shall take
place at the offices of Xxxxxxx Savage Xxxxxxxxx Xxxx & Xxxxxx XX, 000 Xxxx 00xx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at
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such other location or time as all parties may agree, on the date set forth in
Section 2.1.1(b) below.
(b) On a date that shall be not later than February
11, 2005 (the "NOTES CLOSING DATE") an aggregate of $1,000,000 in principal
amount of Notes shall be purchased and paid for by the Purchasers.
2.1.2 NOTES CLOSING DELIVERABLES.
(a) On the Notes Closing Date, the Company shall
deliver or cause to be delivered to each Purchaser, against payment by such
Purchaser of an amount in immediately available funds to an account designated
in writing by the Company equal to the principal amount of Notes purchased, the
following documents:
(i) Notes aggregating $1,000,000 in
principal amount, free and clear of all restriction and other legends (except as
expressly provided in Section 4.1.2);
(ii) a signed legal opinion of Company
Counsel, substantially in the form of SCHEDULE 2.1.2(b), adapted to reflect
transactions occurring on the Initial Notes Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to each of the Purchasers as follows:
3.1.1 SUBSIDIARIES. The Company has one Subsidiary, Corporate
Sports Incentives, Inc.
3.1.2 ORGANIZATION AND QUALIFICATION. The Company is an entity
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization (as applicable), with the
requisite power and authority to own and use its properties and assets and to
carry on its business as currently conducted. The Company is not in violation of
any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents. The Company
is duly qualified to do business and is in good standing as a foreign
corporation or other entity in each jurisdiction in which the nature of the
business conducted or property owned by it makes such qualification necessary,
except where the failure to be so qualified or in good standing, as the case may
be, could not, individually or in the aggregate, (i) adversely affect the
legality, validity or enforceability of any Transaction Document, (ii) have or
result in a material adverse effect on the results of operations, assets,
prospects, business or condition (financial or otherwise) of the Company, taken
as a whole, or (iii) adversely impair the Company's ability to perform fully on
a timely basis its obligations under any of the Transaction Documents (any of
(i), (ii) or (iii), a "MATERIAL ADVERSE EFFECT").
3.1.3 AUTHORIZATION; ENFORCEMENT. The Company has the
requisite corporate power and authority to enter into and to consummate the
transactions contemplated by each of
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the Transaction Documents and otherwise to carry out its obligations hereunder
and thereunder. The execution and delivery of each of the Transaction Documents
by the Company and the consummation by it of the transactions contemplated
hereby and thereby have been duly authorized by all necessary action on the part
of the Company and no further consent or action is required by the Company, its
Board of Directors or its stockholders. Each of the Transaction Documents has
been (or upon delivery will be) duly executed by the Company and is, or when
delivered in accordance with the terms hereof, will constitute, the valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms.
3.1.4 NO CONFLICTS. The execution, delivery and performance of
the Transaction Documents by the Company and the consummation by the Company of
the transactions contemplated hereby and thereby 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, (ii)
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 (evidencing a Company debt or otherwise) or other understanding to
which the Company is a party or by which any property or asset of the Company is
bound or affected, except to the extent that such conflict, default or
termination right could not reasonably be expected to have a Material Adverse
Effect, 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 and the rules and regulations of any
self-regulatory organization to which the Company or its securities are
subject), or by which any property or asset of the Company is bound or affected.
3.1.5 ISSUANCE OF THE NOTES AND CONVERSION SHARES. The Notes
and Conversion Shares each are duly authorized and, when issued and paid for in
accordance with the Transaction Documents, will be duly and validly issued,
fully paid and nonassessable, free and clear of all Liens and shall not be
subject to preemptive rights or similar rights of stockholders.
3.1.6 CAPITALIZATION. The number of shares and type of all
authorized, issued and outstanding capital stock, options and other securities
of the Company (whether or not presently convertible into or exercisable or
exchangeable for shares of capital stock of the Company) is set forth on a
fully-diluted basis in SCHEDULE 3.1.6. All outstanding shares of capital stock
are duly authorized, validly issued, fully paid and nonassessable and have been
issued in compliance with all applicable securities laws. Except as disclosed in
SCHEDULE 3.1.6, there are no outstanding options, warrants, script rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities, rights or obligations convertible into or exercisable or
exchangeable for, or giving any Person any right to subscribe for or acquire,
any shares of Common Stock, or contracts, commitments, understandings or
arrangements by which the Company is or may become bound to issue additional
shares of Common Stock, or securities or rights convertible or exchangeable into
shares of Common Stock. Except as disclosed in SCHEDULE 3.1.6, there are no
anti-dilution or price adjustment provisions contained in any security issued by
the Company (or in any agreement providing rights to security holders) and the
issue and sale of the Securities will not obligate the Company to issue shares
of Common Stock or other securities to any Person (other than the Purchasers)
and will not result in a right of
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any holder of Company securities to adjust the exercise, conversion, exchange or
reset price under such securities. To the knowledge of the Company, except as
specifically disclosed in SCHEDULE 3.1.6, no Person or group of related Persons
beneficially owns (as determined pursuant to Rule 13d-3 under the Exchange Act),
or has the right to acquire, by agreement with or by obligation binding upon the
Company, beneficial ownership of in excess of 5% of the outstanding Common
Stock, ignoring for such purposes any limitation on the number of shares of
Common Stock that may be owned at any single time.
3.1.7 SEC REPORTS; FINANCIAL STATEMENTS. The Company has filed
all reports required to be filed by it under the Securities Act and the Exchange
Act, including pursuant to Section 13(a) or 15(d) thereof, since February 12,
2004 (the foregoing materials being collectively referred to herein as the "SEC
REPORTS" and, together with this Agreement and the Schedules to this Agreement,
the "DISCLOSURE MATERIALS") 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 delivered (or made available)
to the Purchasers true, correct and complete copies of all SEC Reports filed
within the ten (10) days preceding the date hereof. As of their respective
dates, 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
Commission 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 the light of the circumstances under which they were made, not
misleading. 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
United States 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 financial position of the Company and its consolidated
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. All material
agreements to which the Company or any Subsidiary is a party or to which the
property or assets of the Company or any Subsidiary is subject are included as
part of or specifically identified in the SEC Reports.
3.1.8 MATERIAL CHANGES. Since the date of the latest audited
financial statements included within the SEC Reports, except as specifically
disclosed in the SEC Reports or in the Company's registration statement on Form
SB-2 declared effective by the Commission on September 8, 2004, (i) there has
been no event, occurrence or development that, individually or in the aggregate,
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 Commission, (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 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
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pursuant to existing Company stock option plans; provided that the Company may
issue capital stock in accordance with Sections 5.3.4 and 5.3.5. At the time the
Registration Statement becomes effective, the Company will have all necessary
procedures in place that are required by the Commission and will be in
compliance with the Xxxxxxxx-Xxxxx Act of 2002, as amended, to the extent then
binding upon the Company as a matter of law.
3.1.9 ABSENCE OF LITIGATION. There is no action, suit, claim,
proceeding, inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body pending or, to the
knowledge of the Company, threatened against or affecting the Company that
could, individually or in the aggregate, have a Material Adverse Effect.
3.1.10 COMPLIANCE. Except in each case as could not
individually or in the aggregate share or result in a material adverse effect,
the Company (i) is not in default under or in violation of (and 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) is not or has not
been in violation of any statute, rule or regulation of any governmental
authority, including without limitation all foreign, federal, state and local
laws relating to taxes, environmental protection, occupational health and
safety, product quality and safety and employment and labor matters, except in
each case as could not, individually or in the aggregate, have or result in a
Material Adverse Effect.
3.1.11 TITLE TO ASSETS. Neither the Company nor any Subsidiary
owns any real property. The Company and the Subsidiary have good and marketable
title in all personal property owned by them that is material to their business,
in each case 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 or Subsidiary. Any
real property and facilities held under lease by the Company or the Subsidiary
is held by it under valid, subsisting and enforceable leases of which the
Company or any Subsidiary are in compliance.
3.1.12 CERTAIN FEES. Except for the fees and compensation set
forth on SCHEDULE 3.1.12 to this Agreement, no brokerage or finder's fees or
commissions are or will be payable by the Company to any broker, financial
advisor or consultant, finder, placement agent, investment banker, bank or other
Person with respect to the transactions contemplated by this Agreement, and the
Company has not taken any action that would cause any Purchaser to be liable for
any such fees or commissions.
3.1.13 PRIVATE PLACEMENT. Neither the Company nor any Person
acting on the Company's behalf has sold or offered to sell or solicited any
offer to buy the Notes by means of any form of general solicitation or
advertising. Neither the Company nor any of its Affiliates nor any Person acting
on the Company's behalf has, directly or indirectly, at any time within the past
six months, made any offer or sale of any security or solicitation of any offer
to buy any security
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under circumstances that would eliminate the availability of the exemption from
registration under Regulation D under the Securities Act in connection with the
offer and sale of the Notes as contemplated hereby. The Company is not, and is
not an Affiliate of, an "investment company" within the meaning of the
Investment Company Act of 1940, as amended. The Company is not a United States
real property holding corporation within the meaning of the Foreign Investment
in Real Property Tax Act of 1980.
3.1.14 TRADING. The Company's Common Stock currently is traded
on the NASD OTC-Bulletin Board.
3.1.15 REGISTRATION RIGHTS. Except as described in SCHEDULE
3.1.15, the Company has not granted or agreed to grant to any Person any rights
(including "piggy-back" registration rights) to have any securities of the
Company registered with the Commission or any other governmental authority that
have not been satisfied.
3.1.16 APPLICATION OF TAKEOVER PROTECTIONS. There is no control
share acquisition, business combination, poison pill (including any distribution
under a rights agreement) or other similar anti-takeover provision under the
Company's charter documents that is or could become applicable to any of the
Purchasers as a result of the Purchasers and the Company fulfilling their
obligations or exercising their rights under the Transaction Documents,
including, without limitation, as a result of the Company's issuance of the
Notes and the Purchasers' ownership of the Notes.
3.1.17 DISCLOSURE. The Company confirms that neither it nor any
other Person authorized to act on its behalf has provided any of the Purchasers
or their agents or counsel with any information that constitutes or might
constitute material, nonpublic information. The Company understands and confirms
that each of the Purchasers will rely on the foregoing representations in
effecting transactions in securities of the Company. All disclosure provided to
the Purchasers regarding the Company, its business and the transactions
contemplated hereby, including the Schedules to this Agreement, furnished by or
on behalf of the Company are true and correct and do not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. No event or circumstance has
occurred or information exists with respect to the Company or the Subsidiary or
its or their business, properties, prospects, operations or financial
conditions, which, under applicable law, rule or regulation, requires public
disclosure or announcement by the Company but which has not been so publicly
announced or disclosed. The Company acknowledges and agrees that no Purchaser
makes or has made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in
Section 3.2.
3.1.18 ACKNOWLEDGMENT REGARDING PURCHASERS' PURCHASE OF NOTES.
The Company acknowledges and agrees that each of the Purchasers is acting solely
in the capacity of an arm's length purchaser with respect to this Agreement and
the transactions contemplated hereby. The Company further acknowledges that no
Purchaser is acting as a financial advisor or fiduciary of the Company or any
other Purchaser (or in any similar capacity) with respect to this Agreement and
the transactions contemplated hereby and any advice given by any Purchaser or
any of their respective representatives or agents in connection with this
Agreement and the
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transactions contemplated hereby is merely incidental to such Purchaser's
purchase of the Notes. The Company further represents to each Purchaser that the
Company's decision to enter into this Agreement has been based solely on the
independent evaluation of the transactions contemplated hereby by the Company
and its representatives.
3.1.19 PATENTS AND TRADEMARKS. The Company and its Subsidiary
have, or have rights to use, all patents, patent applications, trademarks,
trademark applications, service marks, trade names, copyrights, licenses and
other similar rights that are necessary or material for use in connection with
their respective businesses as described in the SEC Reports and which the
failure to so have could have a Material Adverse Effect (collectively, the
"INTELLECTUAL PROPERTY RIGHTS"). Neither the Company nor its Subsidiary have
received a written notice that the Intellectual Property Rights used by them
violates or infringes upon the rights of any Person. To the knowledge of the
Company, all such Intellectual Property Rights are enforceable and there is no
existing infringement by another Person of any of the Intellectual Property
Rights.
3.1.20 INSURANCE. The Company and its Subsidiary are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which the
Company and Subsidiary are engaged. Neither the Company nor its Subsidiary have
reason to believe that they will not be able to renew their existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business without a
significant increase in cost.
3.1.21 REGULATORY PERMITS. The Company and its Subsidiary
possess all certificates, authorizations and permits issued by the appropriate
federal, state, local or foreign regulatory authorities necessary to conduct
their business as described in the SEC Reports, except where the failure to
possess such permits could not, individually or in the aggregate, have or result
in a Material Adverse Effect ("MATERIAL PERMITS"), and the Company and its
Subsidiary have not received any notice of proceedings relating to the
revocation or modification of any Material Permit.
3.1.22 TRANSACTIONS WITH AFFILIATES AND EMPLOYEES. Except as
set forth in SEC Reports, none of the officers or directors of the Company and,
to the knowledge of the Company, none of the employees of the Company is
presently a party to any transaction with the Company or its 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
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.
3.1.23 INTERNAL ACCOUNTING CONTROLS. The Company and its
Subsidiary maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in accordance with
management's general or specific
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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.
3.2 REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each Purchaser
hereby, as to itself only and for no other Purchaser, represents and warrants to
the Company as follows:
3.2.1 ORGANIZATION; AUTHORITY. Such Purchaser is an individual
or entity duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization with the requisite corporate or
partnership power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents and otherwise to carry out its
obligations hereunder and thereunder. The purchase by such Purchaser of the
Notes hereunder has been duly authorized by all necessary action on the part of
such Purchaser. This Agreement has been duly executed and delivered by such
Purchaser and constitutes the valid and binding obligation of such Purchaser,
enforceable against it in accordance with its terms.
3.2.2 INVESTMENT INTENT. Such Purchaser is acquiring the Notes
as principal for its own account for investment purposes only and not with a
view to or for distributing or reselling such Notes or any part thereof, without
prejudice, however, to such Purchaser's right, subject to the provisions of this
Agreement, at all times to sell or otherwise dispose of all or any part of such
Notes pursuant to an effective 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 such Purchaser to hold Notes for any period of
time. Such Purchaser does not have any agreement or understanding, directly or
indirectly, with any Person to distribute any of the Notes.
3.2.3 PURCHASER STATUS. At the time such Purchaser was offered
the Notes it was, and at the date hereof it is, an "accredited investor" as
defined in Rule 501(a) under the Securities Act.
3.2.4 EXPERIENCE OF SUCH PURCHASER. Such Purchaser, either
alone or together with its representatives, has such knowledge, sophistication
and experience in business and financial matters, including investments in
entities that are listed on the "Over the Counter Bulletin Board", so as to be
capable of evaluating the merits and risks of the prospective investment in the
Notes and has so evaluated the merits and risks of such investment. Such
Purchaser is (i) aware that the volume of the trading market for the Notes is
limited or may be non-existent for a period of time; and (ii) able to bear the
economic risk of an investment in the Notes, and, at the present time, is able
to afford a complete loss of such investment.
3.2.5 ACCESS TO INFORMATION. Such Purchaser acknowledges that
it has reviewed the Disclosure Materials and has been afforded (i) the
opportunity to ask such questions as it has deemed necessary of, and to receive
answers from, representatives of the Company concerning the terms and conditions
of the offering of the Notes and the merits and risks of investing in the Notes;
(ii) access to information about the Company and the Subsidiaries and their
respective financial condition, results of operations, business, properties,
management and prospects sufficient to enable it to evaluate its investment; and
(iii) the opportunity to obtain such additional information that the Company
possesses or can acquire without unreasonable effort or expense that is
necessary to make an informed investment decision with respect to the
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investment. Neither such inquiries nor any other investigation conducted by or
on behalf of such Purchaser or its representatives or counsel shall modify,
amend or affect such Purchaser's right to rely on the truth, accuracy and
completeness of the Disclosure Materials and the Company's representations and
warranties contained in the Transaction Documents.
ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES
4.1 TRANSFER RESTRICTIONS.
4.1.1 The Notes or Conversion Shares may only be disposed of
pursuant to an effective registration statement under the Securities Act or
pursuant to an available exemption from the registration requirements of the
Securities Act, and in compliance with any applicable state securities laws. In
connection with any transfer of the Notes or Conversion Shares other than
pursuant to an effective registration statement or to the Company or pursuant to
Rule 144(k), except as otherwise set forth herein, the Company may require the
transferor to provide to the Company an opinion of counsel selected by the
transferor (with the costs associated with the production of such opinion borne
by the Company), the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not require
registration under the Securities Act. Notwithstanding the foregoing, the
Company hereby consents to and agrees to register on the books of the Company
and with its Transfer Agent, without any such legal opinion, any transfer of
Notes or Conversion Shares by a Purchaser to an Affiliate of such Purchaser,
provided that the transferee certifies to the Company that it is an "accredited
investor" as defined in Rule 501(a) under the Securities Act. In addition, if a
Purchaser reasonably believes that a transfer may be made in compliance with the
rules and regulations of the Commission, the Purchaser may request a transfer of
Notes or Conversion Shares without obtaining such legal opinion, but the Company
(if it is unsure of transferability) may itself seek a legal opinion before
being required to take any action.
4.1.2 The Purchasers agree to the imprinting, so long as is
required by this SECTION 4.1.2, of the following legend on any Notes or any
certificate evidencing Conversion Shares:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR
IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
NOTWITHSTANDING THE FOREGOING, THESE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
11
LOAN OR FINANCING ARRANGEMENT SECURED BY SUCH SECURITIES.
Certificates evidencing Notes shall not be required to contain such legend or
any other legend (i) while a Registration Statement covering the resale of such
Notes is effective under the Securities Act, or (ii) following any sale of such
Notes pursuant to Rule 144, or (iii) if such Notes are eligible for sale under
Rule 144(k), or (iv) if (in the written opinion of competent securities counsel
rendered to the Company, with the costs associated with the production of such
opinion borne by the Company) such legend is not required under applicable
requirements of the Securities Act (including judicial interpretations and
pronouncements issued by the Staff of the Commission). The Company shall cause
Company Counsel to issue the legal opinion included in the Transfer Agent
Instructions to the Transfer Agent on the Effective Date. Following the
Effective Date or at such earlier time as a legend is no longer required for
certain Notes, the Company will no later than three Trading Days following the
delivery by a Purchaser to the Company or the Transfer Agent of a legended
certificate representing such Notes, deliver or cause to be delivered to such
Purchaser a certificate representing such Notes 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.
4.1.3 The Company acknowledges and agrees that a Purchaser may
from time to time pledge or grant a security interest in some or all of the
Notes in connection with a bona fide margin agreement or other loan or financing
arrangement secured by the Notes and, if required under the terms of such
agreement, loan or arrangement, such Purchaser may transfer pledged or secured
Notes to the pledgees or secured parties. Such a pledge or transfer would not be
subject to approval of the Company and no legal opinion of the pledgee, secured
party or pledgor shall be required in connection therewith. Further, no notice
shall be required of such pledge. At the appropriate Purchaser's expense, the
Company will execute and deliver such reasonable documentation as a pledgee or
secured party of Notes may reasonably request in connection with a pledge or
transfer of the Notes, including the preparation and filing of any required
prospectus supplement under Rule 424(b)(3) of the Securities Act or other
applicable provision of the Securities Act to appropriately amend the list of
selling stockholders thereunder.
4.2 FURNISHING OF INFORMATION. As long as any Purchaser owns Notes,
the Company covenants to timely file (or obtain extensions in respect thereof
and file within the applicable grace period) all reports required to be filed by
the Company after the date hereof pursuant to the Exchange Act. Upon the request
of any Purchaser, the Company shall deliver to such Purchaser a written
certification of a duly authorized officer as to whether it has complied with
the preceding sentence. As long as any Purchaser owns Notes, if the Company is
not required to file reports pursuant to such laws, it will prepare and furnish
to the Purchasers and make publicly available in accordance with paragraph (c)
of Rule 144 such information as is required for the Purchasers to sell the Notes
under Rule 144. The Company further covenants that it will take such further
action as any holder of Notes may reasonably request to satisfy the provisions
of Rule 144 applicable to the issuer of securities relating to transactions for
the sale of securities pursuant to Rule 144.
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4.3 RESERVATION AND LISTING OF COMMON STOCK; BLUE SKY.
4.3.1 The Company shall maintain a reserve from its duly
authorized shares of Common Stock for issuance pursuant to the Transaction
Documents in such amount as may be required to fulfill its obligations in full
under the Transaction Documents. In the event that at any time the then
authorized shares of Common Stock are insufficient for the Company to satisfy
its obligations in full under the Transaction Documents, the Company shall
promptly take such actions as may be required to increase the number of
authorized shares.
4.3.2 Following the Notes Closing, the Company shall use
commercially reasonable best efforts to maintain the listing of its Common Stock
on an Eligible Market.
4.4 SECURITIES LAWS DISCLOSURE; PUBLICITY. The Company shall, on the
Final Notes Closing Date or as soon as reasonably practicable, issue a press
release reasonably acceptable to the Purchasers disclosing all material terms of
the transactions contemplated hereby. Not later than five days after the Final
Notes Closing Date, the Company shall file a Current Report on Form 8-K with the
Commission (the "8-K FILING") describing the material terms of the transactions
contemplated by the Transaction Documents and including as exhibits to such
Current Report on Form 8-K this Agreement in the form required by the Exchange
Act. Thereafter, the Company shall timely file any filings and notices required
by the Commission or applicable law with respect to the transactions
contemplated hereby and provide copies thereof to the Purchasers promptly after
filing. Except with respect to the 8-K Filing and the press release referenced
above, the Company shall, at least two Trading Days prior to the filing or
dissemination of any disclosure required by this paragraph, provide a copy
thereof to the Purchasers for their review. The Company and the Purchasers shall
consult with each other in issuing any press releases or otherwise making public
statements or filings and other communications with the Commission or any
regulatory agency or Trading Market with respect to the transactions
contemplated hereby, and neither party shall issue any such press release or
otherwise make any such public statement, filing or other communication without
the prior consent of the other, except if such disclosure is required by law, in
which case the disclosing party shall promptly provide the other party with
prior notice of such public statement, filing or other communication.
Notwithstanding the foregoing, the Company shall not publicly disclose the name
of any Purchaser, or include the name of any Purchaser in any filing with the
Commission or any regulatory agency or Trading Market, without the prior written
consent of such Purchaser, except to the extent such disclosure (but not any
disclosure as to the controlling Persons thereof) is required by law or Trading
Market regulations, in which case the Company shall provide the Purchasers with
prior notice of such disclosure. The Company shall not, and shall cause each of
its Subsidiaries and its and each of their respective officers, directors,
employees and agents not to, provide any Purchaser with any material nonpublic
information regarding the Company or any of its Subsidiaries from and after the
filing of the 8-K Filing without the express written consent of such Purchaser.
In the event of a breach of the foregoing covenant by the Company, any of its
Subsidiaries, or any of its or their respective officers, directors, employees
and agents, in addition to any other remedy provided herein or in the
Transaction Documents, a Purchaser shall have the right to make a public
disclosure, in the form of a press release, public advertisement or otherwise,
of such material nonpublic information without the prior approval by the
Company, its Subsidiaries, or any of its or their respective officers,
directors, employees or agents. No Purchaser shall have any liability to the
Company,
13
its Subsidiaries, or any of its or their respective officers, directors,
employees, stockholders or agents for any such disclosure. Subject to the
foregoing, neither the Company nor any Purchaser shall issue any press releases
or any other public statements with respect to the transactions contemplated
hereby; provided, however, that the Company shall be entitled, without the prior
approval of any Purchaser, to make any press release or other public disclosure
with respect to such transactions (i) in substantial conformity with the 8-K
Filing and contemporaneously therewith and (ii) as is required by applicable law
and regulations (provided that in the case of clause (i) each Purchaser shall be
consulted by the Company in connection with any such press release or other
public disclosure prior to its release). Each press release disseminated during
the 12 months preceding the date of this Agreement did not at the time of
release contain any untrue statement of a material fact or omit 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 are made, not
misleading.
4.5 REIMBURSEMENT. If any Purchaser or any of its Affiliates or any
officer, director, partner, controlling Person, employee or agent of a Purchaser
or any of its Affiliates (a "RELATED PERSON") becomes involved in any capacity
in any Proceeding brought by or against any Person in connection with or as a
result of the transactions contemplated by the Transaction Documents, the
Company will indemnify and hold harmless such Purchaser or Related Person for
its reasonable legal and other expenses (including the costs of any
investigation, preparation and travel) and for any Losses incurred in connection
therewith, as such expenses or Losses are incurred, excluding only Losses that
result directly from such Purchaser's or Related Person's negligence or willful
misconduct. In addition, the Company shall indemnify and hold harmless each
Purchaser and Related Person from and against any and all Losses, as incurred,
arising out of or relating to any breach by the Company of any of the
representations, warranties or covenants made by the Company in this Agreement
or any other Transaction Document, or any allegation by a third party that, if
true, would constitute such a breach. The conduct of any Proceedings for which
indemnification is available under this paragraph shall be governed by Section
6.4(c) below. The indemnification obligations of the Company under this
paragraph shall be in addition to any liability that the Company may otherwise
have and shall be binding upon and inure to the benefit of any successors,
assigns, heirs and personal representatives of the Purchasers and any such
Related Persons. The Company also agrees that neither the Purchasers nor any
Related Persons shall have any liability to the Company or any Person asserting
claims on behalf of or in right of the Company in connection with or as a result
of the transactions contemplated by the Transaction Documents, except to the
extent that any Losses incurred by the Company result from the negligence or
willful misconduct of the applicable Purchaser or Related Person in connection
with such transactions. If the Company breaches its obligations under any
Transaction Document, then, in addition to any other liabilities the Company may
have under any Transaction Document or applicable law, the Company shall pay or
reimburse the Purchasers on demand for all costs of collection and enforcement
(including reasonable attorneys fees and expenses). Without limiting the
generality of the foregoing, the Company specifically agrees to reimburse the
Purchasers on demand for all costs of enforcing the indemnification obligations
in this paragraph.
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4.6 FUTURE EQUITY OFFERINGS.
(a) Subject to the exceptions described in Section 4.6(b)
below, for a period of six (6) months following the Notes Closing Date, the
Company will not, without the prior written consent of the Purchaser Designee,
sell, offer to sell or contract with any Person to obtain proceeds from the sale
of Equity Equivalents that involves:
(i) the issuance of shares of Common Stock at a
price per share that shall be less than $0.40 (unless in such
connection, the Company shall offer to reduce the conversion price of
the Notes to such lower conversion price), or
(ii) the issuance of Equity Equivalents that are
convertible into or exercisable for an indeterminate number of shares of
Common Stock, or
(iii) are not subject to restrictions on the public
resale or distribution thereof of for at least six (6) months following
the effective date of the Registration Statement
(the limitations referred to in this Section 4.6(a) are referred to as the
"CAPITAL RAISING LIMITATIONS").
(b) The Capital Raising Limitations set forth in Section
4.6(a) shall NOT apply to any transaction or series of transactions
involving issuances of securities:
(i) to employees, directors or consultants of the
Company pursuant to a Company stock option plan;
(ii) upon the exercise or conversion, as the case may
be, of currently outstanding options, warrants or convertible
securities;
(iv) upon the conversion of the Notes issued pursuant
to the Transaction Documents;
(v) in connection with any business acquisitions,
mergers or strategic partnerships;
(vi) Persons who purchase, in a private placement
exempt from the registration requirements of the Securities Act, not
more than $3,000,000 of shares of Company Common Stock or other Equity
Equivalents at a per share purchase price, conversion price and/or
exercise price of not less than $0.40 per share (unless, in each such
case, the Company shall offer to reduce the conversion price of the
Notes to such lower conversion price); or
(vii) Persons who purchase shares of Company Common
Stock or other Equity Equivalents, pursuant to any public offering of
securities for the account of the Company now or hereafter registered
under the Securities Act, at per share prices that shall be equal to or
greater than $0.40 per share (unless, in each such case, the Company
shall offer to reduce the conversion price of the Notes to such lower
conversion price).
15
ARTICLE V
CONDITIONS
5.1 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PURCHASERS. The
obligation of each Purchaser to acquire Notes on the Notes Closing Date is
subject to the satisfaction or waiver by such Purchaser, on or before each of
the Notes Closing Date, of each of the following conditions:
5.1.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained herein shall be true and correct in all
material respects as of the date when made on the Notes Closing Date, as though
made on such date; and
5.1.2 PERFORMANCE. The Company and each other Purchaser shall
have performed, satisfied and complied in all material respects with all
covenants, agreements and conditions required by the Transaction Documents to be
performed, satisfied or complied with by it at or prior to the Notes Closing
Date.
5.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANY. The
obligation of the Company to sell Notes at the Notes Closing is subject to the
satisfaction or waiver by each Purchaser, at or before each such Closing, of
each of the following conditions:
5.2.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Purchasers contained herein shall be true and correct in all
material respects as of the date when made and as of the applicable Closing Date
as though made on and as of such date; and
5.2.2 PERFORMANCE. The Purchasers shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by the Transaction Documents to be performed, satisfied
or complied with by the Purchasers at or prior to such Closing.
ARTICLE VI
REGISTRATION RIGHTS
6.1 REGISTRATION
6.1.1 Not later than February 11, 2005, the Company shall have
prepared and filed with the Commission the Registration Statement covering the
sale to the Purchasers, and the resale by the Purchasers of all Registrable
Securities for an offering to be made on a continuous basis pursuant to Rule
415. The Company shall have the right to include in such Registration Statement,
securities of the Company previously issued or committed to be issued, to the
extent and to the Persons disclosed on SCHEDULE 3.1.15.
6.1.2 The Company shall promptly respond to all letters of
comment that the Company shall receive from the staff of the SEC with respect to
such Registration Statement and shall use its commercially reasonable best
efforts to cause the Registration Statement to be declared effective by the SEC
as soon as practicable thereafter; provided, that the Purchasers acknowledge
that such registration efforts may be delayed in the event that the Company
enters into any agreement or commitment for the acquisition of any assets or
securities of any Person
16
prior to the effectiveness of such Registration Statement, and is required to
cause an audit to be conducted in accordance with the rules and regulations
promulgated by the SEC.
6.1.3 The Company shall use its commercially reasonable best
efforts to keep the Registration Statement continuously effective under the
Securities Act until the second anniversary of the Effective Date or such
earlier date when all Registrable Securities covered by such Registration
Statement have been sold (the "EFFECTIVENESS PERIOD").
6.1.4 The company shall deliver to each Purchaser at his or
its last known address, a final prospectus promptly after receiving notification
from the Commission that the Registration Statement has been declared effective.
6.1.5 Upon the occurrence of any Event (as defined below) and
on every monthly anniversary thereof until the applicable Event is cured, as
partial relief for the damages suffered therefrom by any Purchaser (which remedy
shall not be exclusive of any other remedies available under this Agreement, at
law or in equity), the Company shall pay or issue, as the case may be, to each
Purchaser as to which an Event relates, as liquidated damages and not as a
penalty, cash or, upon the payment of the par value thereof, such number of
shares of Common Stock as shall equal three percent (3%) of the aggregate
outstanding principal amount of the Notes purchased by such Purchasers at the
Notes Closing. Such additional shares are designated "EVENT SHARES" and will be
treated by all parties, after issuance, in the same manner as all other Shares
of Common Stock and shall thereafter be included in the definition of
"Registrable Securities." Event Shares will be issued on a pro-rata basis for
any portion of a month prior to the cure of an Event.
For such purposes, each of the following if occurring prior to or during the
Effectiveness Period shall constitute an "EVENT":
(i) the Registration Statement shall not be filed
with the Commission on or prior to February 11, 2005; or
(ii) the Registration Statement is not declared
effective by the Commission on or prior to the Required Effectiveness Date,
provided, however, that if the effectiveness of such Registration Statement
shall be delayed as a result of a pending acquisition or other material
transaction that requires public disclosure, for so long as the Company is using
its best effects to accelerate the effectiveness of such Registration Statement,
the Required Effectiveness Date may be extended on one occasion only by the
Company for up to an additional 45 days.
(iii) after the Effective Date, a Purchaser (without
fault on the part of any Purchaser) is not permitted to sell Registrable
Securities under the Registration Statement (or a subsequent Statement filed in
replacement thereof) for any reason for five or more Trading Days (whether or
not consecutive), unless due to circumstances beyond the reasonable control of
the Company; or
(iv) after the Effective Date, any Registrable
Securities covered by such Registration Statement are not listed on an Eligible
Market, unless due to circumstances beyond the reasonable control of the
Company; or
17
(v) after the Effective Date, the Common Stock is
not listed or quoted, or is suspended from trading, on an Eligible Market for a
period of three Trading Days (which need not be consecutive Trading Days);
unless due to circumstances beyond the reasonable control of the Company; or
(vi) the Company fails for any reason to deliver a
certificate evidencing any Shares of Common Stock to a Purchaser within three
Trading Days after delivery of such certificate is required pursuant to any
Transaction Document or the exercise rights of the Purchasers pursuant to the
Transaction Documents are otherwise suspended for any reason.
In connection with the foregoing, it is understood that the Company will, at all
times, use its reasonable best efforts to comply with covenants and agreements
contained in this Article VI.
6.2 REGISTRATION PROCEDURES. In connection with the Company's
registration obligations hereunder, the Company shall:
6.2.1 Not less than three Trading Days prior to the filing of
a Registration Statement or any related Prospectus or any amendment or
supplement thereto (including any document that would be incorporated or deemed
to be incorporated therein by reference), the Company shall (i) furnish to each
Purchaser and any counsel designated by any Purchaser (each, a "PURCHASER
COUNSEL"), copies of all such documents proposed to be filed, which documents
(other than those incorporated or deemed to be incorporated by reference) will
be subject to the review of such Purchasers and each Purchaser Counsel, and (ii)
cause its officers and directors, counsel and independent certified public
accountants to respond to such inquiries as shall be necessary, in the
reasonable opinion of each Purchaser Counsel, to conduct a reasonable
investigation within the meaning of the Securities Act. The Company shall not
file a Registration Statement or any such Prospectus or any amendments or
supplements thereto to which Purchasers holding a majority of the Registrable
Securities shall reasonably object.
6.2.2 (i) Prepare and file with the Commission such
amendments, including post-effective amendments, to each 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 Effectiveness Period and prepare and file with the Commission
such additional Registration Statements in order to register for resale under
the Securities Act all of the Registrable Securities; (ii) cause the related
Prospectus to be amended or supplemented by any required Prospectus supplement,
and as so supplemented or amended to be filed pursuant to Rule 424; (iii)
respond as promptly as reasonably possible, and in any event within ten days, to
any comments received from the Commission with respect to the Registration
Statement or any amendment thereto and as promptly as reasonably possible
provide the Purchasers true and complete copies of all correspondence from and
to the Commission relating to the Registration Statement; and (iv) 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 with the
intended methods of disposition by the Purchasers thereof set forth in the
Registration Statement as so amended or in such Prospectus as so supplemented.
18
6.2.3 Notify the Purchasers of Registrable Securities to be
sold and each Purchaser Counsel as promptly as reasonably possible, and (if
requested by any such Person) confirm such notice in writing no later than one
Trading Day thereafter, of any of the following events: (i) the Commission
notifies the Company whether there will be a "review" of any Registration
Statement; (ii) the Commission comments in writing on any Registration Statement
(in which case the Company shall deliver to each Purchaser a copy of such
comments and of all written responses thereto); (iii) any Registration Statement
or any post-effective amendment is declared effective; (iv) the Commission or
any other Federal or state governmental authority requests any amendment or
supplement to any Registration Statement or Prospectus or requests additional
information related thereto; (v) the Commission issues any stop order suspending
the effectiveness of any Registration Statement or initiates any Proceedings for
that purpose; (vi) the Company receives notice of any suspension of the
qualification or exemption from qualification of any Registrable Securities for
sale in any jurisdiction, or the initiation or threat of any Proceeding for such
purpose; or (vii) the financial statements included in any Registration
Statement become ineligible for inclusion therein or any statement made in any
Registration Statement or Prospectus or any document incorporated or deemed to
be incorporated therein by reference is untrue in any material respect or any
revision to a Registration Statement, Prospectus or other document is required
so that it will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
6.2.4 Use its commercially reasonable best efforts to avoid
the issuance of or, if issued, obtain the withdrawal of (i) any order suspending
the effectiveness of any Registration Statement, or (ii) any suspension of the
qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, at the earliest practicable moment.
6.2.5 Furnish to each Purchaser and each Purchaser Counsel,
without charge, at least one conformed copy of each Registration Statement and
each amendment thereto, including financial statements and schedules, all
documents incorporated or deemed to be incorporated therein by reference, and
all exhibits to the extent requested by such Person (including those previously
furnished or incorporated by reference) promptly after the filing of such
documents with the Commission.
6.2.6 Promptly deliver to each Purchaser and each Purchaser
Counsel, without charge, as many copies of the Prospectus or Prospectuses
(including each form of prospectus) and each amendment or supplement thereto as
such Persons may reasonably request. The Company hereby consents to the use of
such Prospectus and each amendment or supplement thereto by each of the selling
Purchasers in connection with the offering and sale of the Registrable
Securities covered by such Prospectus and any amendment or supplement thereto.
6.2.7 Once applicable: (i) in the time and manner required by
each Trading Market, prepare and file with such Trading Market an additional
shares listing application covering all of the Registrable Securities; (ii) take
all steps necessary to cause such Registrable Securities to be approved for
listing on each Trading Market as soon as possible thereafter; (iii) provide to
the Purchasers evidence of such listing; and (iv) maintain the listing of such
Registrable Securities on each such Trading Market or another Eligible Market.
19
6.2.8 Prior to any public offering of Registrable Securities,
use its best efforts to register or qualify or cooperate with the selling
Purchasers and each applicable Purchaser Counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the
securities or blue sky laws of such jurisdictions within the United States as
any Purchaser requests in writing, to keep each such registration or
qualification (or exemption therefrom) effective during the Effectiveness Period
and to do any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered by a
Registration Statement; PROVIDED, HOWEVER, that the Company shall not be
obligated to file any general consent to service of process or to qualify as a
foreign corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or to subject itself to taxation in any jurisdiction in
which it is not otherwise subject.
6.2.9 Cooperate with the Purchasers to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be delivered to a transferee pursuant to a Registration Statement, which
certificates shall be free, to the extent permitted by this Agreement, of all
restrictive legends, and to enable such Registrable Securities to be in such
denominations and registered in such names as any such Purchasers may request.
6.2.10 Upon the occurrence of any event described in Section
6.2.3(vii), as promptly as reasonably possible, prepare a supplement or
amendment, including a post-effective amendment, to the Registration Statement
or a supplement to the related Prospectus or any document incorporated or deemed
to be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, neither the Registration Statement nor such
Prospectus will contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
6.2.11 Cooperate with any due diligence investigation
undertaken by the Purchasers in connection with the sale of Registrable
Securities, including without limitation by making available any documents and
information; provided that the Company will not deliver or make available to any
Purchaser material, nonpublic information unless such Purchaser specifically
requests in advance to receive material, nonpublic information in writing and
agrees to utilize such information in a manner consistent with applicable law.
6.2.12 If Holders of a majority of the Registrable Securities
being offered pursuant to a Registration Statement select underwriters for the
offering, the Company shall enter into and perform its obligations under an
underwriting agreement, in usual and customary form, including, without
limitation, by providing customary legal opinions, comfort letters and
indemnification and contribution obligations.
6.2.13 Comply with all applicable rules and regulations of the
Commission.
6.3 REGISTRATION EXPENSES. The Company shall pay (or reimburse the
Purchasers for) all fees and expenses incident to the performance of or
compliance with this Agreement by the Company, including without limitation (a)
all registration and filing fees and expenses, including without limitation
those related to filings with the Commission, any Trading Market and in
20
connection with applicable state securities or Blue Sky laws, (b) printing
expenses (including without limitation expenses of printing certificates for
Registrable Securities and of printing prospectuses requested by the
Purchasers), (c) messenger, telephone and delivery expenses, (d) fees and
disbursements of counsel for the Company and up to $10,000 in the aggregate for
the fees and expenses of one legal counsel designated by the Purchasers, (e)
fees and expenses of all other Persons retained by the Company in connection
with the consummation of the transactions contemplated by this Agreement, and
(f) all listing fees to be paid by the Company to the Trading Market.
6.4 INDEMNIFICATION
6.4.1 INDEMNIFICATION BY THE COMPANY. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold harmless
each Purchaser, the officers, directors, partners, members, agents, brokers
(including brokers who offer and sell Registrable Securities as principal as a
result of a pledge or any failure to perform under a margin call of Common
Stock), investment advisors and employees of each of them, each Person who
controls any such Purchaser (within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act) and the officers, directors, partners,
members, agents and employees of each such controlling Person, to the fullest
extent permitted by applicable law, from and against any and all Losses, as
incurred, arising out of or relating to any untrue or alleged untrue statement
of a material fact contained in the Registration Statement, any Prospectus or
any form of prospectus or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or relating to any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in the light of the circumstances under which they were
made) not misleading, except to the extent, but only to the extent, that (i)
such untrue statements, alleged untrue statements, omissions or alleged
omissions are based solely upon information regarding such Purchaser furnished
in writing to the Company by such Purchaser expressly for use therein, or to the
extent that such information relates to such Purchaser or such Purchaser's
proposed method of distribution of Registrable Securities and was reviewed and
expressly approved in writing by such Purchaser expressly for use in the
Registration Statement, such Prospectus or such form of Prospectus or in any
amendment or supplement thereto or (ii) in the case of an occurrence of an event
of the type specified in Section 6.2.3(v)-(vii), the use by such Purchaser of an
outdated or defective Prospectus after the Company has notified such Purchaser
in writing that the Prospectus is outdated or defective and prior to the receipt
by such Purchaser of the Advice contemplated in Section 6.5. The Company shall
notify the Purchasers promptly of the institution, threat or assertion of any
Proceeding of which the Company is aware in connection with the transactions
contemplated by this Agreement.
6.4.2 INDEMNIFICATION BY PURCHASERS. Each Purchaser shall,
severally and not jointly, indemnify and hold harmless the Company, its
directors, officers, agents and employees, each Person who controls the Company
(within the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act), and the directors, officers, agents or employees of such
controlling Persons, to the fullest extent permitted by applicable law, from and
against all Losses (as determined by a court of competent jurisdiction in a
final judgment not subject to appeal or review) arising solely out of any untrue
statement of a material fact contained in the Registration
21
Statement, any Prospectus, or any form of prospectus, or in any amendment or
supplement thereto, or arising solely out of any omission of a material fact
required to be stated therein or necessary to make the statements therein (in
the case of any Prospectus or form of prospectus or supplement thereto, in the
light of the circumstances under which they were made) not misleading to the
extent, but only to the extent, that such untrue statement or omission is
contained in any information so furnished in writing by such Purchaser to the
Company specifically for inclusion in such Registration Statement or such
Prospectus or to the extent that (i) such untrue statements or omissions are
based solely upon information regarding such Purchaser furnished in writing to
the Company by such Purchaser expressly for use therein, or to the extent that
such information relates to such Purchaser or such Purchaser's proposed method
of distribution of Registrable Securities and was reviewed and expressly
approved in writing by such Purchaser expressly for use in the Registration
Statement, such Prospectus or such form of Prospectus or in any amendment or
supplement thereto or (ii) in the case of an occurrence of an event of the type
specified in SECTION 6.2.3(v)-(vii), the use by such Purchaser of an outdated or
defective Prospectus after the Company has notified such Purchaser in writing
that the Prospectus is outdated or defective and prior to the receipt by such
Purchaser of the Advice contemplated in SECTION 6.5. In no event shall the
liability of any selling Purchaser hereunder be greater in amount than the
dollar amount of the net proceeds, in excess of the amount paid for such
Registrable Securities, received by such Purchaser upon the sale of the
Registrable Securities giving rise to such indemnification obligation.
6.4.3 CONDUCT OF INDEMNIFICATION PROCEEDINGS. If any
Proceeding shall be brought or asserted against any Person entitled to indemnity
hereunder (an "INDEMNIFIED PARTY"), such Indemnified Party shall promptly notify
the Person from whom indemnity is sought (the "INDEMNIFYING PARTY") in writing,
and the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Party and the
payment of all fees and expenses incurred in connection with defense thereof;
provided, that the failure of any Indemnified Party to give such notice shall
not relieve the Indemnifying Party of its obligations or liabilities pursuant to
this Agreement, except (and only) to the extent that it shall be finally
determined by a court of competent jurisdiction (which determination is not
subject to appeal or further review) that such failure shall have proximately
and materially adversely prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate
counsel in any such Proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
Indemnified Party or Parties unless: (i) the Indemnifying Party has agreed in
writing to pay such fees and expenses; or (ii) the Indemnifying Party shall have
failed promptly to assume the defense of such Proceeding and to employ counsel
reasonably satisfactory to such Indemnified Party in any such Proceeding; or
(iii) the named parties to any such Proceeding (including any impleaded parties)
include both such Indemnified Party and the Indemnifying Party, and such
Indemnified Party shall have been advised by counsel that a conflict of interest
is likely to exist if the same counsel were to represent such Indemnified Party
and the Indemnifying Party (in which case, if such Indemnified Party notifies
the Indemnifying Party in writing that it elects to employ separate counsel at
the expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and such counsel shall be at the expense of
the Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent, which
22
consent shall not be unreasonably withheld. No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such Proceeding.
All fees and expenses of the Indemnified Party (including
reasonable fees and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within ten calendar days of written notice thereof to the Indemnifying
Party (regardless of whether it is ultimately determined that an Indemnified
Party is not entitled to indemnification hereunder; provided, that the
Indemnifying Party may require such Indemnified Party to undertake to reimburse
all such fees and expenses to the extent it is finally judicially determined
that such Indemnified Party is not entitled to indemnification hereunder).
6.4.4 CONTRIBUTION. If a claim for indemnification under
SECTION 6.4.1 or .2 is unavailable to an Indemnified Party (by reasons other
than the specified exclusions to indemnification), then each Indemnifying Party,
in lieu of indemnifying such Indemnified Party, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such Losses, in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party and Indemnified Party in connection with the actions, statements or
omissions that resulted in such Losses as well as any other relevant equitable
considerations. The relative fault of such Indemnifying Party and Indemnified
Party shall be determined by reference to, among other things, whether any
action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission of a material fact, has been taken
or made by, or relates to information supplied by, such Indemnifying Party or
Indemnified Party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action, statement or
omission. The amount paid or payable by a party as a result of any Losses shall
be deemed to include, subject to the limitations set forth in SECTION 6.4.3, any
reasonable attorneys' or other reasonable fees or expenses incurred by such
party in connection with any Proceeding to the extent such party would have been
indemnified for such fees or expenses if the indemnification provided for in
this Section was available to such party in accordance with its terms.
The parties hereto agree that it would not be just and equitable
if contribution pursuant to this SECTION 6.4.4 were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this SECTION 6.4.4, no Purchaser shall be
required to contribute, in the aggregate, any amount in excess of the amount by
which the net proceeds actually received by such Purchaser from the sale of the
Registrable Securities subject to the Proceeding exceeds the amount of any
damages that such Purchaser has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
23
The indemnity and contribution agreements contained in this
Section are in addition to any liability that the Indemnifying Parties may have
to the Indemnified Parties.
6.5 DISPOSITIONS. Each Purchaser agrees that it will comply with the
prospectus delivery requirements of the Securities Act as applicable to it in
connection with sales of Registrable Securities pursuant to the Registration
Statement. Each Purchaser further agrees that, upon receipt of a notice from the
Company of the occurrence of any event of the kind described in SECTIONS
6.2.3(v), (vi) or (vii), such Purchaser will discontinue disposition of such
Registrable Securities under the Registration Statement until such Purchaser's
receipt of the copies of the supplemented Prospectus and/or amended Registration
Statement contemplated by SECTION 6.2.10, or until it is advised in writing (the
"ADVICE") by the Company that the use of the applicable Prospectus may be
resumed, and, in either case, has received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated by
reference in such Prospectus or Registration Statement. The Company may provide
appropriate stop orders to enforce the provisions of this paragraph.
6.6 PURCHASERS' PIGGY-BACK REGISTRATIONS. If at any time during the
Effectiveness Period there is not an effective Registration Statement covering
all of the Registrable Securities and the Company shall determine to prepare and
file with the Commission a registration statement relating to an offering for
its own account or the account of others under the Securities Act of any of its
equity securities, other than on Form S-4 or Form S-8 (each as promulgated under
the Securities Act) or their then equivalents relating to equity securities to
be issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans, then the Company shall send to each Purchaser written notice of
such determination and if, within fifteen days after receipt of such notice, any
such Purchaser shall so request in writing, the Company shall include in such
registration statement all or any part of such Registrable Securities such
Purchaser requests to be registered. In such event, the following provisions of
this Agreement shall apply: Sections 6.2.5, 6.2.6, 6.4 and 6.5.
ARTICLE VII
MISCELLANEOUS
7.1 TERMINATION. Unless otherwise agreed by the Company, this
Agreement shall automatically terminate and be of no further force if Purchasers
fail to purchase $1,000,000 of the Notes by February 11, 2005. In the event of
such termination no party hereto shall have any further liability to the other.
7.2 FEES AND EXPENSES. On the Notes Closing Date, the Company shall
pay to counsel for all Purchasers $25,000 for legal fees and expenses incurred
in connection with the preparation and negotiation of the Transaction Documents.
Except as otherwise set forth herein, the Company shall have no further
obligation to pay fees of counsel for any Purchaser at any other time. Except as
expressly set forth in the Transaction Documents 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
24
Agent fees, stamp taxes and other taxes and duties levied in connection with the
issuance of the Notes.
7.3 ENTIRE AGREEMENT. The Transaction Documents, together with 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, exhibits and schedules. At or
after the Notes Closing Date, and without further consideration, the parties
will execute and deliver to each other such further documents as may be
reasonably requested in order to give practical effect to the intention of the
parties under the Transaction Documents.
7.4 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 in this Section prior to 6:30 p.m. (New York City
time) on a Trading Day, (b) the next Trading Day after the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile
number specified in this Section on a day that is not a Trading Day or later
than 6:30 p.m. (New York City time) on any Trading Day, (c) the Trading Day
following the date of mailing, if sent by U.S. nationally recognized overnight
courier service, or (d) upon actual receipt by the party to whom such notice is
required to be given. The addresses and facsimile numbers for such notices and
communications are those set forth on the signature pages hereof, or such other
address or facsimile number as may be designated in writing hereafter, in the
same manner, by such Person. Any party providing notice to the Company
simultaneously shall provide a copy of that notice and all accompanying
materials to Xxxxxxx Xxxxxx Xxxxxxxxx Xxxx & Marcus, LP, at the address shown on
the signature page hereto.
7.5 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 Purchasers 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. Notwithstanding the foregoing, a waiver or consent to depart from the
provisions hereof with respect to a matter that relates exclusively to the
rights of Purchasers under ARTICLE VI and that does not directly or indirectly
affect the rights of other Purchasers may be given by Purchasers holding at
least a majority of the Registrable Securities to which such waiver or consent
relates.
7.6 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.
25
7.7 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 Purchasers. Any Purchaser may assign
its rights under this Agreement to any Person to whom such Purchaser assigns or
transfers any Notes, provided such transferee agrees in writing to be bound,
with respect to the transferred Notes, by the provisions hereof that apply to
the "Purchasers." Notwithstanding anything to the contrary herein, Notes may be
assigned to any Person in connection with a bona fide margin account or other
loan or financing arrangement secured by such Notes.
7.8 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 that each Related Person is an intended third party
beneficiary of Section 4.8 and each Indemnified Party is an intended third party
beneficiary of Section 6.4 and (in each case) may enforce the provisions of such
Sections directly against the parties with obligations thereunder.
7.9 GOVERNING LAW; VENUE; WAIVER OF JURY TRAIL. all questions
concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by and construed and enforced in accordance with the
laws of the STATE OF NEW YORK. THE COMPANY AND PURCHASERS Hereby Irrevocably
Submit To The Exclusive Jurisdiction Of The State And Federal Courts Sitting In
The CITY OF NEW YORK, STATE OF NEW YORK, For The Adjudication Of Any Dispute
BROUGHT BY THE COMPANY OR ANY PURCHASER Hereunder, In Connection Herewith Or
With Any Transaction Contemplated Hereby Or Discussed Herein (Including With
Respect To The Enforcement Of Any Of The Transaction Documents), And Hereby
Irrevocably Waive, And Agree Not To Assert In Any Suit, Action Or ProceedinG
BROUGHT BY THE COMPANY OR ANY PURCHASER, Any Claim That It Is Not Personally
Subject To The Jurisdiction Of Any Such Court, OR That Such Suit, Action Or
Proceeding Is Improper. Each party Hereby Irrevocably Waives Personal Service Of
Process And Consents To Process Being Served In Any Such Suit, Action Or
Proceeding By Mailing A Copy Thereof 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. The Company AND PURCHASERS Hereby Waive All
Rights To A Trial By Jury.
7.10 SURVIVAL. The representations, warranties, agreements and
covenants contained herein shall survive all Closings hereunder, including
without limitation the delivery of the Notes and the exercise of all Warrants,
as applicable.
26
7.11 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.
7.12 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.
7.13 REPLACEMENT OF NOTES OR CONVERSION SHARES. If any certificate or
instrument evidencing any Notes or Conversion Shares 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 a new
certificate or instrument under such circumstances shall also pay any reasonable
third-party costs associated with the issuance of such replacement.
7.14 REMEDIES. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchasers and the Company will be entitled to specific performance under the
Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in
any action for specific performance of any such obligation the defense that a
remedy at law would be adequate. The parties further agree that no bond or other
security shall be required in obtaining such equitable relief and the parties
hereby consent to the ordering of specific performance. The parties also
understand that other action may be taken and remedies enforced against the
breaching party.
7.15 PAYMENT SET ASIDE. To the extent that the Company makes a
payment or payments to any Purchaser hereunder or any Purchaser enforces or
exercises its rights hereunder or thereunder, and such payment or payments or
the proceeds of such enforcement or exercise or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside,
recovered from, disgorged by or are required to be refunded, repaid or otherwise
restored to the Company by a trustee, receiver or any other Person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.
7.16 ADJUSTMENTS IN SHARE NUMBERS AND PRICES. In the event of any
stock split, subdivision, dividend or distribution payable in shares of Common
Stock (or other securities or
27
rights convertible into, or entitling the holder thereof to receive directly or
indirectly shares of Common Stock), combination or other similar
recapitalization or event occurring after the date hereof, each reference in any
Transaction Document to a number of shares or a price per share shall be amended
to appropriately account for such event.
7.17 INDEPENDENT NATURE OF PURCHASERS' OBLIGATIONS AND RIGHTS. The
obligations of each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. The decision of each Purchaser to
purchase Notes pursuant to this Agreement has been made by such Purchaser
independently of any other Purchaser and independently of any information,
materials, statements or opinions as to the business, affairs, operations,
assets, properties, liabilities, results of operations, condition (financial or
otherwise) or prospects of the Company which may have been made or given by any
other Purchaser or by any agent or employee of any other Purchaser, and no
Purchaser or any of its agents or employees shall have any liability to any
other Purchaser (or any other Person) relating to or arising from any such
information, materials, statements or opinions. Nothing contained herein or in
any Transaction Document, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Document. Each
Purchaser acknowledges that no other Purchaser has acted as agent for such
Purchaser in connection with making its investment hereunder and that no other
Purchaser will be acting as agent of such Purchaser in connection with
monitoring its investment hereunder. Each Purchaser shall be entitled to
independently protect and enforce its rights, including without limitation the
rights arising out of this Agreement or out of the other Transaction Documents,
and it shall not be necessary for any other Purchaser to be joined as an
additional party in any proceeding for such purpose.
[THE BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK]
28
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.
UTIX GROUP, INC.
By: _______________________________
Name: Xxxxxxx X. Xxxx
Title: President and CEO
AS TO THE PROVISIONS OF SECTION 6.1.2 ONLY:
___________________________________
Xxxxxxx X. Xxxx
Address for Notice:
Xxxxxxx X. Xxxx
Utix Group, Inc.
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Facsimile No.: 000-000-0000
Telephone No.: 000-000-0000
With a copy to: Xxxxxxx Savage Xxxxxxxxx
Wolf & Marcus LP
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: 212-980-5192
Telephone No.: 000-000-0000
Attn: Xxxxxxx X. Xxxxx, Esq.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOR PURCHASERS FOLLOW]
PURCHASER SIGNATURE PAGE
Intergroup Corporation
By:______________________________________
Name and Title
Intergroup Corporation
Address:
000 Xxxxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
$500,000
Dollar Amount of Notes Purchased
PURCHASER SIGNATURE PAGE
______________________________________
XXXX XXXXXXXX
Address:
____________________________
____________________________
$500,000
Dollar Amount of Notes Purchased
SCHEDULES:
---------------- ---------------------------------------------------------------
NUMBER DESCRIPTION
---------------- ---------------------------------------------------------------
1.1.14 Form of Note
---------------- ---------------------------------------------------------------
1.1.18 Form of Warrant
---------------- ---------------------------------------------------------------
2.1.2(b) Opinion of Company's Counsel
---------------- ---------------------------------------------------------------
3.1.6 Capitalization
---------------- ---------------------------------------------------------------
3.1.12 Certain Finders Fee Agreements
---------------- ---------------------------------------------------------------
3.1.15 Existing Registration Rights
---------------- ---------------------------------------------------------------
