EXHIBIT 4.21
COMMON STOCK PURCHASE AGREEMENT
THIS COMMON STOCK PURCHASE AGREEMENT (this "Agreement") is made as of
June 28, 1999, between XxXxx.xxx, Inc., a Delaware corporation (the "Company"),
and the person executing this Agreement on the signature page hereof (the
"Signature Page") as Purchaser (the "Purchaser"):
RECITALS:
WHEREAS, the Company has authorized the issuance and sale pursuant to
the terms and conditions hereof of shares of its Common Stock (the "Common
Stock"); and
WHEREAS, the Purchaser desires to purchase and the Company desires to
sell the Common Stock on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of these premises and the mutual
covenants and agreements herein contained and other valuable consideration, the
receipt and adequacy of which the parties hereto acknowledge, the parties agree
as follows:
1. PURCHASE AND SALE OF THE SHARES. The Company agrees to sell to
the Purchaser, and upon the basis of the representations and warranties, and
subject to the terms and conditions, set forth in this Agreement, the
Purchaser agrees to purchase from the Company shares of Common Stock (the
"Shares") in consideration for an aggregate purchase price (the "Purchase
Price") of US$_____________ . The purchase price per share (the "Purchase
Price Per Share") and the number of shares shall be determined as follows: A
benchmark price (the "Benchmark Price") shall be established which shall be
the average of: (i) the closing price of FiNet common stock on the date
following the date on which FiNet publicly announces its earnings for the
fiscal year ended April 30, 1999 (the "Date Following Announcement"); and
(ii) the simple average of closing prices of FiNet common stock on the five
(5) trading days immediately preceding and including the Date Following
Announcement. The purchase price per share shall equal 80% of the Benchmark
Price, but shall be not less than US$3.00 nor more than $5.00. The number of
shares of common stock purchased shall be the Purchase Price divided by the
Purchase Price Per Share, rounded to the nearest whole dollar.
2. CLOSING DATE; DELIVERY. The closing of the purchase and sale of
the Shares shall be held at the offices of the Company, 0000 Xxxxxx Xxxxxx,
Xxxxx 000, Xxxxxx Xxxxx, Xxxxxxxxxx on June 28, 1999, or at such other time
and place as the parties may agree upon (the "Closing"). At the Closing,
subject to the terms of this Agreement, the Purchaser shall deliver the
Purchase Price via wire transfer of immediately available funds to the
account of the Company's Placement Agent, BES Investmento, S.A., Chase
Manhattan Bank (CHASUSA 33), Account No. 400-920875, Swift Code XXXXXXXX. The
Placement Agent shall immediately deliver the net amount of the offering to
the
Company. At the Closing, the Company will deliver to the Purchaser
certificates (which may be temporary certificates) representing the Shares to
be purchased by the Purchaser from the Company. Within ten (10) days
following the Closing, the Company will deliver to the Purchaser permanent
certificates in exchange for any temporary certificates.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with, the Purchaser that:
(a) ORGANIZATION AND STANDING, ARTICLES AND BYLAWS. The Company
is a corporation duly organized and validly existing under, and by virtue of,
the laws of the State of Delaware and is in good standing under such laws.
The Company is qualified, licensed or domesticated as a foreign corporation
in all jurisdictions where the nature of its activities or of its properties
owned or leased makes such qualification, licensing or domestication
necessary at this time.
(b) CORPORATE POWER. The Company has now, or will have at the
Closing, all requisite legal and corporate power to enter into this
Agreement, to sell the Shares hereunder, and to carry out and perform its
obligations under the terms of this Agreement. All references to this
Agreement and the Shares to be issued hereunder shall for all purposes of the
Agreement, unless the context clearly requires otherwise, be deemed to
include the shares that may be issued pursuant to Section 8(g) hereof.
(c) AUTHORIZATION.
(i) All corporate action on the part of the Company,
its officers, directors, and stockholders necessary for the sale and issuance
of the Shares pursuant hereto and the performance of the Company's
obligations hereunder has been taken or will be taken prior to the Closing.
This Agreement is a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
of general application affecting enforcement of creditors' rights, and except
as limited by application of legal principles affecting the availability of
equitable remedies.
(ii) The Shares, when issued in compliance with the
provisions of this Agreement, will be validly issued, fully paid and
nonassessable and will be free of any liens or encumbrances; provided,
however, that such Shares may be subject to restrictions on transfer under
state and/or federal securities laws as set forth herein and as may be
required by future changes in such laws.
(iii) No shareholder of the Company has any right of
first refusal or any preemptive rights in connection with the issuance of the
Shares or of Common Stock by the Company.
(d) FINANCIAL STATEMENTS. The Company's audited consolidated
balance sheet as of April 30, 1999, audited consolidated statement of
operations, stockholders' equity and cash flows for the fiscal year ended
April 30, 1999, unaudited
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consolidated balance sheet and statements of operations, stockholders' equity
and cash flows for the nine months ended January 31, 1999 (hereinafter
collectively referred to as the "Financial Statements") have been supplied by
the Company to the Purchaser and such Financial Statements are true and
correct, have been prepared in accordance with generally accepted accounting
principles consistently applied (except as disclosed therein and except that
the unaudited Financial Statements do not contain the footnotes required by
generally accepted accounting principles), and fairly present the financial
condition of the Company as of the date indicated and the results of the
operations of the Company for the period ended, as indicated.
(e) PUBLIC REPORTING. The Company is subject to the reporting
requirements of Section 13 or Section 15(d) of the Securities Exchange Act of
1934 (the "1934 Act"); the Company's (a) Annual Report on Form 10-KSB for the
fiscal year ended Xxxxx 00, 0000, (x) Annual Proxy Statement on Form 14A for
the fiscal year ended April 30, 1998, (c) Consent Statements dated December
18, 1998 (filed December 21, 1999) and April 23, 1999 (filed Xxxxx 00, 0000),
(x) Current Reports on Forms 8-K and 8-K/A dated May 15, 1998 (filed May 18,
1998), May 27, 1998 (filed May 28, 1998), October 8, 1998 (filed October 13,
1998), December 7, 1998 (filed December 7, 1998), December 22, 1998 (filed
January 5, 1999), January 19, 1999 (filed January 19, 1999), February 11,
1999 (filed February 11, 1999), February 19, 1999 (filed February 19, 1999),
June 1, 1999 (filed June 2, 1999), and June 24, 1999 (filed June 24, 1999),
and (e) Quarterly Reports on Forms 10-QSB and 10-QSB/A for the three months
ended July 31, 1998, the six months ended October 31, 1998, and the nine
months ended January 31, 1999 (collectively, the "Public Disclosure") filed
by the Company with the U.S. Securities and Exchange Commission (the "SEC")
have been so filed in a timely fashion (except for the amendment to the Form
8-K dated May 15, 1998 and the Quarterly Reports on form 10-QSB for the for
the periods ending July 31, 1998 and October 31, 1998) and include all
reports and other information required to be filed or furnished by the
Company under the 1934 Act and the Company has provided copies of all such
Public Disclosure to the Purchaser.
(f) VALIDITY OF MATERIAL CONTRACTS AND COMMITMENTS. All the
material contracts, mortgages, indentures, commitments, agreements, and
instruments to which the Company or any material subsidiary ("Material
Subsidiary") is a party (collectively, the "Company Agreements') are legal,
valid, binding, and in full force and effect and enforceable by the Company
or each Material Subsidiary, as the case may be, in accordance with their
terms except as limited by bankruptcy, insolvency, reorganization,
moratorium, or similar laws of general application affecting enforcement of
creditors' rights, and except as limited by application of legal principles
affecting the availability of equitable remedies. Neither the Company nor any
Material Subsidiary is in material default under any of such contracts which
would have, either singly or in the aggregate, a Material Adverse Effect
("Material Adverse Effect").
(g) COMPLIANCE WITH OTHER INSTRUMENTS, NONE BURDENSOME, ETC.
Neither the Company nor any Material Subsidiary is in violation of any term
of their
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respective Articles of Incorporation or Bylaws, or, except as disclosed to
Purchaser, any Company Agreement in any material respect of any mortgage,
indenture, contract, agreement, instrument, or, to the best knowledge of the
Company, any judgment, decree, order, statute, rule, or regulation applicable
to it which, either singly or in the aggregate, might result in any adverse
change in the business, prospects, conditions, affairs, or operations of the
Company, or in any of its properties or assets, or in any impairment of the
right or ability of the Company to carry on its business as proposed to be
conducted, or in any material liability on the part of the Company, or which
question the validity of this Agreement or any action taken or to be taken in
connection herewith (each, a Material Adverse Effect) The execution,
delivery, and performance by the Company of this Agreement, and the issuance
and sale of the Shares pursuant hereto, will not result in any such violation
or be in conflict with or constitute a default under any such Company
Agreement or cause the acceleration of maturity of any loan or material
obligation to which the Company or any Material Subsidiary is a party or by
which either of them are bound or with respect to which either of them is an
obligor or guarantor, or result in the creation or imposition of any material
lien, claim, charge, restriction, equity or encumbrance of any kind
whatsoever upon, or, to the best knowledge of the Company after due inquiry,
give to any other person any interest or right (including any right of
termination or cancellation) in or with respect to any of the material
properties, assets, business or agreements of the Company or any Material
Subsidiary. To the best knowledge of the Company after due inquiry, no such
Company Agreement materially adversely affects or in the future (so far as
can reasonably be foreseen by the Company at the date of this Agreement) may
materially adversely affect the business, property, prospects, condition,
affairs, or operations of the Company or any Material Subsidiary.
(h) LITIGATION, ETC. Other than as described in the Financial
Statements or the Public Disclosure and ongoing regulatory proceedings
relating to Mical Mortgage, Inc., there are no actions, proceedings or
investigations pending (or to the best of the Company's knowledge, any basis
therefor or threat thereof), which, either singly or in the aggregate, have a
Material Adverse Effect.
(i) GOVERNMENTAL CONSENT ETC. No consent, approval, or
authorization of, or designation, declaration, or filing with, any
governmental unit is required on the part of the Company in connection with
the valid execution and delivery of this Agreement, or the offer, sale or
issuance of the Shares, or the consummation of any other transaction
contemplated hereby (except qualification or exemption under the California
Corporate Securities Law, which exemption or qualification will be available
or obtained and will be effective at the Closing).
(j) OFFERING. The offer, sale and issuance of the Shares in
conformity with the terms of this Agreement (the "Offering") will not violate
the Securities Act of 1933, as amended ("Securities Act").
(k) INTEGRATION. The Company has not, directly or indirectly,
during the six month period prior to the Closing solicited any offer to buy
or offered to sell, and
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will not, directly or indirectly, during the six month period subsequent to
the Closing, solicit any offer to buy or offer to sell, in the United States
or to any United States person (as that term is defined in Regulation S under
the Securities Act), any security which is or would be integrated with the
sale of the Shares in a manner that would require the Shares to be registered
under the Securities Act.
(l) TITLE TO AND CONDITION OF PROPERTIES. The Company and each
Material Subsidiary has good and marketable title to all its respective
tangible and intangible property and assets, including those reflected in the
Public Disclosure and the Financial Statements (except such property or
assets as have since January 31, 1999, been sold or otherwise disposed of in
the ordinary course of business). Such property and assets are subject to no
mortgage or security interests, conditional sales contract, charge, lien or
encumbrance (except for the lien of current taxes not yet due and payable and
such imperfections of title, easements and encumbrances, if any, as are not
substantial in character, amount or extent and do not materially detract from
the value of, or interfere with the present use of the properties subject
thereto or affected thereby, or otherwise materially impair the business
operations of the Company and any Material Subsidiary). Subsequent to January
31, 1999, neither the Company nor any Material Subsidiary has sold or
disposed of any of its property and assets or obligated itself to do so
except in the ordinary course of business. Except for such minor defects as
are not substantial in character and which do not have a materially adverse
effect upon the validity thereof, all material real and personal property
leases to which the Company or the subsidiaries are a party are in good
standing, valid and effective, and there is not under any such lease any
existing material default or event which with notice or lapse of time or both
would constitute a material default and in respect of which the Company or
any Material Subsidiary has taken reasonable steps to prevent such a default
from occurring other than such defaults which would not have, either singly
or in the aggregate, a Material Adverse Effect.
(m) DISCLOSURE. This Agreement, the Confidential Term Sheet
related thereto, the Public Disclosure, the Financial Statements, and all
certificates delivered to Purchaser pursuant to this Agreement, when read
together, do not contain any untrue statement of a material fact and do not
omit to state a material fact necessary in order to make the statements
contained therein or herein not misleading, it being understood that the
information provided to the Purchaser regarding the Company contains
estimates and projections which constitute forward looking statements and
which have been made in good faith by the Company and no warranty of such
projections is expressed or implied hereby. There is, to the best of the
Company's knowledge, no fact which might have a Material Adverse Effect which
has not been set forth in this Agreement, the Confidential Term Sheet related
thereto, the Public Disclosure, the Financial Statements or the other
information provided to Purchaser.
(n) THE SHARES:
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(i) are free and clear of any security interests,
liens, claims, or other encumbrances;
(ii) have been duly and validly authorized and issued
and are, and at the Closing will be, fully paid and non-assessable;
(iii) will not have been, individually and collectively,
issued or sold in violation of any pre-emptive or other similar rights of the
holders of any securities of the Company; and
(iv) will not subject the holders thereof to personal
liability by reason of being such holders.
(o) FURNISHING OF FINANCIAL STATEMENTS AND INFORMATION. The
Company will deliver to the Purchaser:
(i) as soon as practicable, but in any event within 90
days after the end of each fiscal year, a consolidated balance sheet of the
Company and its subsidiaries, as of the end of such fiscal year, together
with the related consolidated statements of operations, shareholders' equity
and cash flow for such fiscal year, setting forth in comparative form figures
for the previous fiscal year, all in reasonable detail and duly certified by
the Company's independent public accountants, which accountants shall have
given the Company an opinion, unqualified as to the scope of the audit,
regarding such statements.
(ii) with reasonable promptness, such other financial
data relating to the business, affairs, results of operations and financial
condition of the Company and any subsidiaries as is available to the Company
and as from time to time the Purchasers may reasonably request.
(p) INSPECTION. The Company will permit each Purchaser and any
of its partners, officers or employees, or any outside representatives
designated by such Purchaser, to visit and inspect at such Purchaser's
expense any of the properties of the Company or the subsidiaries, including
their books and records (and to make photocopies thereof or make extracts
therefrom), and to discuss their affairs, finances, and accounts with their
officers, lawyers and accountants, except with respect to trade secrets and
similar confidential information, all to such reasonable extent and at such
reasonable times and intervals as such Purchaser may reasonably request.
Except as otherwise required by laws or regulations applicable to a
Purchaser, the Purchasers shall maintain, and shall require their
representatives to maintain, all information obtained pursuant to Sections
3(p) and 3(q) hereof on a confidential basis.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
represents and warrants to, and agrees with, the Company:
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(a) No consent, approval, authorization, or order of any
court, governmental agency or body, or arbitrator having jurisdiction over
the Purchaser is required for execution of this Agreement, including, without
limitation, the purchase of the Shares or the performance of the Purchaser's
obligations hereunder.
(b) The Purchaser understands that no federal or state agency
has passed on or made any recommendation or endorsement of the Shares.
(c) The Company has given the Purchaser the opportunity to
have answered all of the Purchaser's questions concerning the Company and its
business and has made available to the Purchaser all information requested by
the Purchaser which is reasonably necessary to verify the accuracy of other
information furnished by the Company. The Purchaser has received and
evaluated all information about the Company and its business which the
Purchaser deems necessary to formulate an investment decision and does not
desire any further information.
(d) The Purchaser understands that the Shares are being
offered and sold to it in reliance on specific exemptions or non-application
from the registration requirements of federal and state securities laws and
that the Company is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments, and understandings of the Purchaser
set forth herein in order to determine the applicability of such exemptions
or non-applications and the suitability of the Purchaser to acquire the Shares.
(e) The Purchaser is aware that the Shares have not been
registered under the Securities Act of 1933 ("Securities Act") by reason of
their issuance in a transaction exempt from the registration and prospectus
delivery requirements of the Securities Act pursuant to Section 4(2) and
Regulation D thereof and that the Shares must be held by the Purchaser
indefinitely, and the Purchaser must therefore bear the economic risk of such
investment indefinitely unless a subsequent disposition thereof is registered
under the Securities Act or is exempt from registration.
(f) Each instrument representing the Shares is to be endorsed
with the following legends:
(i) THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT
BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS
MADE IN ACCORDANCE WITH RULE 144 UNDER THE ACT, OR THE COMPANY RECEIVES AN
OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY
TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION
IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH
ACT.
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(ii) Any other legend required by California or other
state securities laws.
The Company need not register a transfer of legended Shares and may
instruct its transfer agent not to register the transfer of the Shares unless
one of the conditions specified in the foregoing legend is satisfied.
(g) Any legend endorsed on an instrument pursuant to Section
4(f) hereof and the stop transfer instructions with respect to such Shares
shall be removed, and the Company shall issue an instrument without such
legend to the holder of such Shares if such Shares are registered under the
Securities Act and a prospectus meeting the requirements of Section 10 of the
Securities Act is available or if such holder provides the Company with an
opinion of counsel for such holder of the Shares, reasonably satisfactory to
the Company, to the effect that a public sale, transfer or assignment of such
Shares may be made without registration.
(h) The Purchaser is either (i) acquiring the Shares for the
Purchaser's own account; or (ii) for the account of another for which the
Purchaser acts as a fiduciary, in which case the Purchaser will so advise the
Company. If acting as a fiduciary, the Purchaser makes the representations,
warranties, and covenants as set forth herein on its own behalf and as agent
for and on behalf of such other party. The Purchaser is acquiring the Shares
for investment and without any present intention to engage in a distribution
thereof.
(i) The Purchaser has the knowledge and experience in financial
and business matters to evaluate the merits and risks of the proposed
investment.
(j) The Purchaser is an "Accredited Investor" as that term is
defined under Rule 501 adopted pursuant to the Securities Act.
5. NEGATIVE COVENANTS OF THE COMPANY. The Company further
covenants and agrees that without the prior written approval of a majority in
interest of the Purchasers, it will not:
(a) Engage in any business other than the business engaged in
or proposed to be engaged in by the Company or any Material Subsidiary on the
date hereof, in each case as set forth in the Public Disclosure, and any
businesses or activities substantially similar or related thereto or to the
financial services business;
(b) Invest, directly or indirectly, in any business or
enterprise, other than in connection with the operation of its business;
provided, however, pending the use of the net proceeds from the sale of the
Shares in its businesses, the Company may invest such net proceeds in short
term interest bearing deposits and securities; or
(c) By amendment of its articles of incorporation through
voluntary reorganization or recapitalization, or through any transfer of its
assets, consolidation,
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merger, dissolution, issue or sale of securities, or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the
terms to be observed or performed hereunder by the Company.
6. CONDITIONS PRECEDENT TO THE PURCHASER'S OBLIGATIONS. The
obligations of the Purchaser hereunder are subject to the performance by the
Company of its obligations hereunder and to the satisfaction of the following
conditions precedent on or before the Closing:
(a) The representations and warranties made by the Company in
this Agreement shall, unless waived by the Purchaser, be true and correct as
of the date hereof and at the Closing, with the same force and effect as if
they had been made on and as of the Closing; and
(b) After the date hereof until the Closing, there shall not
have occurred:
(i) any change, or any development involving a
prospective change, in either (A) the condition, financial or otherwise, or
in the earnings, business or operations, or in or affecting the properties of
the Company, or (B) the financial or market conditions or circumstances in
the United States, in either case which, in the Purchaser's judgment, is
material and adverse and makes it impractical or inadvisable to proceed with
the offering, sale, or delivery of the Shares;
(ii) an imposition of a new legal or regulatory
restriction not in effect on the date hereof, or any change in the
interpretation of existing legal or regulatory restrictions, that materially
and adversely affects the offering, sale, or delivery of the Shares; or
(iii) a suspension or material limitation of trading (A)
generally on or by the New York Stock Exchange or NASDAQ or (B) of any
securities of the Company on any exchange or in any over-the-counter market.
(c) The Company shall have delivered to Purchaser an officer's
certificate attesting to the satisfaction as of the Closing of each of the
conditions precedent set forth in this Section 6.
(d) At the Closing the Purchasers shall have received the
favorable opinion, dated the Closing, of Xxxxxxxx & Xxxxxx, A Professional
Corporation, counsel to the Company, in form and substance satisfactory to
the Purchasers to the effect set forth below:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the Sate
of Delaware;
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(ii) The Shares have been duly authorized for issuance
and sale to the Purchaser pursuant to this Agreement and, when issued and
delivered by the Company pursuant to this Agreement against payment of the
consideration set forth herein, will be validly issued and fully paid and
non-assessable and no holder of the Shares is or will be subject to personal
liability by reason of being such a holder;
(iii) The Company has corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Public Disclosure and to enter into and perform its
obligations under this Agreement;
(iv) This Agreement has been duly authorized, executed
and delivered by the Company;
(v) Neither the Company nor any subsidiary is in
violation of its charter or by-laws and, to the knowledge of such counsel, no
default by the Company or any subsidiary, other than Mical Mortgage and
Coastal Mortgage, exists in the due performance or observance of any Company
Agreement, other than such defaults that would not, either singly or in the
aggregate, have a Material Adverse Effect;
(vi) The Shares have been duly authorized for issuance
and sale to the Purchasers pursuant to this Agreement and, when issued and
delivered by the Company pursuant to this Agreement against payment of the
consideration set forth herein, will be validly issued and fully paid and
non-assessable and no holder of the Shares is or will be subject to personal
liability by reason of being such a holder;
(vii) The authorized, issued and outstanding capital
stock of the Company is as set forth in the opinion and that the shares of
issued and outstanding capital stock of the Company have been duly authorized
and validly issued and are fully paid and non-assessable; and
(viii) The issuance of the Shares is not subject to
preemptive or other similar rights of any security holder of the Company.
7. CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATIONS. The
obligations of the Company hereunder are subject to the performance by the
Purchaser of its obligations hereunder, and the satisfaction of the condition
that the representations and warranties made by the Purchaser in this
Agreement shall, unless waived by the Company, be true and correct at the
Closing, with the same force and effect as if they had been made on and as
of, the Closing.
8. REGISTRATION RIGHTS.
(a) RIGHTS TO REGISTRATION. The Company shall file with the SEC
as promptly as practicable, but not later than July 2, 1999, and thereafter
shall use its best efforts to cause to be declared effective within ninety
(90) days from the date of the Closing a "shelf" registration statement on
the appropriate form under the Securities Act
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providing for the registration of, and the sale on a continuous or delayed
basis by the holders of, all of the Shares, pursuant to Rule 415 or any
similar rule that may be adopted by the SEC (the "Shelf Registration
Statement").
The Company shall use its best efforts to keep the Shelf
Registration Statement continuously effective in order to permit the
prospectus forming part thereof to be usable by Purchasers for a period
ending on the earlier of (i) (x) the second anniversary of the Closing, (y)
the expiration of the period following the Closing after which Rule 144(k)
under the Securities Act becomes available to the Purchasers or (z) in the
event the Company has at any time suspended the use of the prospectus
contained in the Shelf Registration Statement pursuant to this paragraph, the
date beyond the earlier of the periods referred to in clauses (x) and (y)
that reflects an additional period of days equal to the number of days during
all of the periods from and including the dates the Company gives notice of
such suspension pursuant to this paragraph to and including the date when
holders of Shares receive an amended or supplemented prospectus necessary to
permit resales of Shares under the Shelf Registration Statement or to and
including the date on which the Company gives a resumption notice or (ii)
such time as all of the Shares covered by the Shelf Registration Statement
have been sold pursuant to the Shelf Registration Statement or pursuant a
transaction exempt from registration (in any such case, such period being
called the "Shelf Registration Period"). The Company shall be deemed not to
have used its best efforts to keep the Shelf Registration Statement effective
during the requisite period if it voluntarily takes any action that would
result in holders of Shares covered thereby not being able to offer and sell
Shares during that period, unless such action, in the opinion of the Company
after consulting with legal counsel, is required by applicable law.
Notwithstanding any other provisions hereof, the Company
will ensure that (i) any Shelf Registration Statement and any amendment
thereto and any prospectus forming part thereof and any supplement thereto
complies in all material respects with the Securities Act and the rules and
regulations thereunder, (ii) any Shelf Registration Statement and any
amendment thereto does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated herein or necessary to make the statements therein not misleading and
(iii) any prospectus forming part of any Shelf Registration Statement, and
any supplement to such prospectus does not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
In addition, if, at any time during the period after the
Closing and ending ten (10) years thereafter, the Company shall determine to
register under the Securities Act any shares of Common Stock to be offered
for cash by it or others, pursuant to a registration statement on Form S-1
(or its equivalent) or any other form permitting such registration (the "S-1
Registration Statement" and, together with the Shelf Registration Statement,
the "Registration Statements"), the Company will (i) promptly give written
notice to Purchaser of its intention to file such S-1 Registration
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Statement and (ii) at the Company's expense (which shall include, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel and independent accountants for the Company, and
fees and expenses incident to compliance with state securities law, but shall
not include fees and disbursements of counsel for Purchaser) include among
the securities covered by the S-1 Registration Statement such portions of the
Shares then held by Purchaser as shall be specified in a written request to
the Company within ten (10) days after the date on which the Company gave the
notice described in (i) above. Upon receipt of such written request and of
the Shares specified in the request (any shareholder requesting registration
being individually called a "Selling Shareholder"), the Company shall (i) use
its reasonable best efforts to effect the registration, qualification or
compliance of the Shares under the Securities Act and under any other
applicable federal law and any applicable securities or blue sky laws of
jurisdictions within the United States; (ii) furnish each Selling Shareholder
such number of copies of the prospectus contained in the S-1 Registration
Statement filed under the Securities Act (including preliminary prospectus)
in conformity with the requirements of the Securities Act, and such other
documents as the Selling Shareholder may reasonably request in order to
facilitate the disposition of the Shares covered by the S-1 Registration
Statement; (iii) notify each Selling Shareholder, at any time when a
prospectus relating to the Shares covered by such S-1 Registration Statement
is required to be delivered under the Securities Act, of the happening of any
event as a result of which the prospectus forming a part of such S-1
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading; and (iv)
at the request of the Selling Shareholder, prepare and furnish to the Selling
Shareholder any reasonable number of copies of any supplement to or amendment
of such prospectus as may be necessary so that, as thereafter delivered to
purchasers of the Shares, such prospectus shall not include 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 not misleading.
(b) REGISTRATION OF UNDERWRITTEN OFFERING. If the offering of
Common Stock to be registered by the Company pursuant to either of the S-1
Registration Statements is underwritten, each Selling Shareholder shall sell
the Shares to or through the underwriter(s) of the Common Stock being
registered for the account of the Company or others upon the same terms
applicable to the Company or others. If the managing underwriter(s)
reasonably determine that all or any portion of the Shares held by the
Selling Shareholder should not be included in either of the Registration
Statements, then notwithstanding anything to the contrary in this Section,
the determination of such underwriter(s) shall be conclusive; provided,
however, that if such underwriter(s) determine that some but not all of the
Shares of the Selling Shareholder shall be included in the Registration
Statement, the number of Shares owned by each Selling Shareholder to be
included in the Registration Statement will be proportionately reduced in
accordance with the respective written requests given as provided above.
(c) INDEMNIFICATION. In the event that the Shares are included
in a Registration Statement under this Section 8, the Company will indemnify
and hold
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harmless each Selling Shareholder and each other person, if any, who controls
such Selling Shareholder within the meaning of Section 15 of the Securities
Act, against any losses, claims, damages or liabilities, joint or several, to
which such Selling Shareholder or controlling person may become subject under
the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact
contained, in either of the Registration Statements pursuant to which the
Shares were registered under the Securities Act, any preliminary prospectus
or final prospectus contained therein, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, or arise out of or are based
upon the failure by the Company to file any amendment or supplement thereto
that was required to be filed under the Securities Act, and will reimburse
such Selling Shareholder and each such controlling person for any legal or
any other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action.
Notwithstanding the foregoing, the Company will not be liable in any such
case to a Selling Shareholder to the extent that any such loss, claim,
damage, or liability arises out of or is based upon an untrue statement or
omission made in such Registration Statement, preliminary prospectus, final
prospectus or amendment or supplement in reliance upon and in conformity with
written information furnished to the Company through an instrument duly
executed by or on behalf of that Selling Shareholder specifically for use in
the preparation of such Registration Statement, preliminary prospectus, final
prospectus, or amendment or supplement. It shall be a condition precedent to
the obligation of the Company to take any action pursuant to this Section
that the Company shall have received an undertaking satisfactory to it from
each Selling Shareholder to indemnify and hold harmless the Company (in the
same manner and to the same extent as set forth in this Section), each
director of the Company, each officer who shall sign such registration
statement, and any persons who control the Company within the meaning of the
Securities Act, with respect to any statement or omission from such
registration statement, preliminary prospectus, or any final prospectus
contained therein, or any amendment or supplement thereto, if such statement
or omission was made in reliance upon and in conformity with written
information furnished to the Company through an instrument duly executed by
the indemnifying party specifically for use in the preparation of such
registration statement, preliminary prospectus, final prospectus, or
amendment or supplement. Promptly following receipt by an indemnified party
of notice of the commencement of any action involving a claim referred to
above in this Section 8(c), such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party, give written
notice to the latter of the commencement of such action, provided, however,
that any failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve
it from any liability which it may have otherwise than on account of this
indemnity agreement. An indemnifying party may participate at its own expense
in the defense of any such action; provided, however, that counsel to the
indemnifying party shall not (except with the consent of the indemnified
party) also be counsel to the
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indemnified party. In no event shall the indemnifying parties be liable for
fees and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection
with any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding
by any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be
sought under this Section 8 or Section 9 hereof (whether or not the
indemnified parties are actual or potential parties thereto), unless such
settlement, compromise or consent (i) includes an unconditional release of
each indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a statement as
to or an admission of fault, culpability or a failure to act by or on behalf
of any indemnified party.
(d) BINDING PROVISIONS. The provisions of this Section 8 shall
be binding on the successors of the Company. In the event of a merger or
consolidation in which the Company or the Purchaser is not the survivor, the
Company or the Purchaser, as the case may be, shall assign and transfer, and
successor shall assume, the provisions of this Section 8.
(e) CONFLICTS. To the extent that the Company's compliance
with the obligations set forth in Sections 8(a) through 8(d) above would
conflict with or otherwise cause a breach of or default under any of its
existing obligations pursuant to any other agreements to which it currently
is a party, the Company's failure to comply with those obligations under such
other agreements shall not be deemed a breach of this Agreement.
(f) TRANSFER OF REGISTRATION RIGHTS. The rights granted to the
Purchaser by the Company under Section 8 may be assigned by the Purchaser to
a transferee or assignee of any of the Purchaser's Shares, provided that the
Company is given written notice by the Purchaser at the time of or within a
reasonable time after said transfer, stating the name and address of said
transferee or assignee and identifying the Shares with respect to which such
registration rights are being assigned.
(g) ADDITIONAL SHARES. In the event that the Company shall
fail to cause the Shelf Registration Statement with respect to the Shares to
be declared effective by the SEC within ninety (90) days from the date of the
Closing as provided in Section 8(a), the Company shall pay to the Purchaser
for each month or portion thereafter until such Shelf Registration Statement
becomes effective an amount equal to one percent (1%) of the greater of (i)
the purchase price paid for the Purchase Shares pursuant to this Agreement,
or (ii) the value of the Purchase Shares measured by the average closing bid
price of a share of the Company's Common Stock on the five trading days
immediately preceding the date that is ninety (90) days following the date of
the Closing. Such payments shall be paid by the delivery to the Purchaser of
shares of Common Stock valued in the same manner as in (ii) above. Provided
that the Company shall continue to
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use its reasonable best efforts to cause such Shelf Registration Statement to
become effective as promptly as practicable, the delivery of such Common
Stock shall be in full satisfaction of any liability on the part of the
Company for failing to register the Shares as provided herein; provided
further however, that such delivery shall not excuse the Company from the
obligation to register all of such Shares which obligation shall continue.
Any shares of Common Stock issued pursuant to this Section 8(g) shall be
subject to the same registration rights provided in this Section 8.
9. CONTRIBUTION
(a) If the indemnification provided for in Section 8 hereof is
for any reason unavailable to or insufficient to hold harmless an indemnified
party in respect of any losses, liabilities, claims, damages or expenses
referred to therein, then each indemnifying party shall contribute to the
aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Selling
Shareholder on the one hand and the Company on the other hand from the offer
and sale of the Purchase Shares pursuant to this Agreement or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Selling
Shareholder on the one hand and of the Company on the other hand in
connection with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
(b) The relative fault of the Company on the one hand and the
Selling shareholder on the other hand shall be determined by reference to,
among other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact
relates to information supplied by the Company or by the Selling Shareholder
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
(c) The Company and the Selling Shareholder agree that it
would not be just and equitable if a contribution pursuant to this Section 9
were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to
above. The aggregate amount of losses, liabilities, claims, damages and
expenses incurred by an indemnified party and referred to above in this
Section 9 shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever
based upon any such untrue or alleged untrue statement or omission or alleged
omission.
(d) 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.
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(e) For purposes of this Section 9, each person, if any, who
controls the Selling Shareholder within the meaning of Section 15 of the
Securities Act or Section 20 of the 1934 Act shall have the same rights to
contribution as such Selling Shareholder, and each director of the Company,
each officer of the Company, and each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act or Section 20
of the 1934 Act shall have the same rights to contribution as the Company.
10. FEES AND EXPENSES. The Purchaser and the Company each agrees to
pay its own expenses incident to the performance of its obligations hereunder.
11. SURVIVAL OF THE REPRESENTATIONS, WARRANTIES, ETC. The
respective agreements, representations, warranties, indemnities, and other
statements made by or on behalf of the Company and Purchaser pursuant to this
Agreement shall remain in full force and effect, regardless of any
investigation made by or on behalf of the other party to this Agreement or
any officer, director, or employee, or person controlling or under common
control with, such party, and will survive delivery of any payment of the
Shares.
12. NOTICES. All communications hereunder shall be in writing and,
if sent to the Purchasers, shall be sufficient in all respects if delivered,
sent by registered mail, or by telecopy and confirmed to the Purchasers at
the address set forth on the Signature Page or, if sent to the Company, shall
be delivered, sent by registered mail, or by telecopy and confirmed to the
Company at:
XxXxx.xxx, Inc.
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: Chief Financial Officer
Tel: (000) 000-0000
Fax: (000) 000-0000
13. MISCELLANEOUS.
(a) This Agreement may be executed in one or more counterparts
and it is not necessary that signatures of all parties appear on the same
counterpart, but such counterparts together shall constitute but one and the
same agreement.
(b) This Agreement shall inure to the benefit of and be
binding upon the parties hereto, their respective successors and, with
respect to Section 8 hereof, the officers, directors, and controlling persons
thereof and each person under common control therewith, and no other person
shall have any right or obligation hereunder.
(c) This Agreement shall be construed in accordance with and
governed by the laws of the State of California.
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(d) The headings of the sections of this document have been
inserted for convenience of reference only and shall not be deemed to be a
part of this Agreement.
IN WITNESS HEREOF, the parties hereto have duly executed and delivered
this Agreement, all as of the day and year first above written.
COMPANY:
XxXXX.XXX, INC.
By
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Its
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By
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Its Chief Financial Officer
PURCHASER:
--------------------------------
By:
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Shares: Its
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Total Purchase Price: By:
------------ ----------------------------
Its
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Address
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Telephone Number
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