SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT ("Agreement") is made as of
the 1st day of June, 1999, by and among XXXXXX HOLDING CORP., a Delaware
corporation ("Company"), and INDIVIDUAL INVESTOR GROUP, INC., a Delaware
corporation ("Investor").
WHEREAS, the Company and the Investor desire to enter into a
relationship concerning the Company's subsidiary, XxxxxxxXxxxxxx.xxx Inc.
("VentureHighway"), in accordance with the terms and conditions set forth in
that certain agreement of even date herewith between the Company, the Investor
and VentureHighway (the "VentureHighway Agreement") and in that certain
stockholder agreement of even date herewith between the Company, the Investor
and VentureHighway (the "Stockholder Agreement"); and
WHEREAS, in connection with the execution of the
VentureHighway Agreement and the Stockholder Agreement, the Company wishes to
sell to the Investor, and the Investor wishes to purchase from the Company, on
the terms and in the manner set forth in this Agreement, shares of the common
stock of the Company ("Common Stock").
IT IS AGREED:
1. Purchase and Sale of Common Stock and Warrants.
1.1. Subject to the terms and conditions of this Agreement, the
Investor hereby purchases from the Company, and the Company hereby sells to the
Investor, 150,000 shares ("Investor Shares") at a purchase price of $5.00 per
share, for an aggregate purchase price of $750,000.
1.2. Concurrently with the execution of this Agreement, the
Company is delivering to the Investor a certificate representing the Investor
Shares and the Investor is delivering to the Company a certified or official
bank check or a wire transfer in the amount of $750,000 in payment of the
purchase price, the receipt and adequacy of both of which are hereby
acknowledged by the parties.
2. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Investor that:
2.1. Corporate Existence. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is duly qualified to do business in each additional jurisdiction
where the failure to so qualify would have, either singly or in the aggregate, a
material adverse effect on the operations, business, properties, assets or
condition (financial or otherwise) of the Company (a "Material Adverse Effect").
2.2. Authorization; Binding Effect; Valid Issuance of Investor
Shares. The Company has all requisite corporate power and authority to (i)
execute and deliver this Agreement, (ii) to issue the Investor Shares, (iii) to
carry out and perform its obligations under the terms of this Agreement and (iv)
to own, lease and operate its properties and conduct its business as now being
conducted. This Agreement has been duly authorized, executed and delivered and
constitutes the legal, valid and binding obligations of the Company, enforceable
in accordance with its terms, except, as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or other laws
relating to or affecting the enforcement of creditors' rights generally in
effect from time to time and by general principles of equity, and except that
public policy may limit the Company's indemnification
obligations under Section 4.2(b) hereof. When issued in accordance with the
terms of this Agreement, the Investor Shares will be duly authorized, validly
issued, fully paid and nonassessable.
2.3. No Conflicts with Agreements, Etc. Neither the execution and
delivery of this Agreement nor the fulfillment of or compliance with the terms
and provisions hereof, nor the issuance of the Investor Shares, will conflict
with, or result in a breach or violation of any of the terms, conditions or
provisions of, or constitute a default under, the Company's Certificate of
Incorporation or By-laws or any contract, agreement, mortgage, indenture, lease,
instrument, order, judgment, statute, law, rule or regulation to which the
Company or any of its assets is subject, or result in the creation of any
security interest, mortgage, pledge, lien, claim, charge or encumbrance
(collectively "Liens") on any properties of the Company, except for such
conflicts, breaches, violations, defaults or Liens which would not have a
Material Adverse Effect. The issuance of the Investor Shares will not violate
any pre-emptive rights of any person.
2.4. Consents, Etc. No Approval from any governmental body,
office or agency or any nongovernmental person (including, without limitation,
any creditor of the Company) is required in connection with the execution or
delivery of this Agreement by the Company or the performance by the Company of
its obligations hereunder, including the issuance of the Investor Shares, or as
a condition to the legality, validity or enforceability of this Agreement or the
issuance of the Investor Shares.
2.5. Accuracy of Periodic Filings. The Company has delivered to
the Investor its Annual Report on Form 10-K for the fiscal year ended December
31, 1998 containing its audited financial statements at December 31, 1998 and
for the fiscal year then ended, and its Quarterly Report on Form 10-Q for the
fiscal quarter ended March 31, 1999, containing unaudited financial statements
as at and for the three-month period ended March 31, 1999 (collectively, the
"Reports"). The Reports do not contain any untrue statement of a material fact,
nor do the Reports omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. Since the respective dates as of which
information is given in the Reports, except as otherwise specifically stated
therein, (i) there has been no material adverse change in the condition,
financial or otherwise, or in the results of operations, business or business
prospects of the Company, including, whether or not covered by insurance, and
whether or not arising in the ordinary course of business and (ii) no events
have occurred that would require the Company to file a Form 8-K.
2.6. Litigation. There is no action, suit, proceeding or
investigation pending, or to the Company's knowledge currently threatened,
against the Company which, if determined adversely to the Company, would
reasonably be expected to have a Material Adverse Effect. The Company is not a
party or subject to the provisions of any order, writ, injunction, judgment or
decree of any court or government agency or instrumentality. There is no action,
suit, proceeding or investigation by the Company currently pending or that the
Company intends to initiate.
2.7. Compliance with Laws, Other Instruments, Etc. The Company is
not in violation or default in any material respect of any provision of its
Certificate of Incorporation or bylaws, or in any material respect of any
instrument, judgment, order, writ, decree or contract to which it is a party or
by which it is bound, or, to the best of its knowledge, of any provision of any
federal or state statute, rule or regulation applicable to the Company, except
where such violation or default would not reasonably be expected to have a
Material Adverse Effect.
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3. Representations and Warranties of the Investor. The Investor hereby
represents and warrants to the Company that:
3.1. Corporate Existence. The Investor is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is duly qualified to do business in each additional jurisdiction
where the failure to so qualify would have, either singly or in the aggregate, a
material adverse effect on the operations, business, properties, assets or
condition (financial or otherwise) of the Investor (an "Investor Material
Adverse Effect").
3.2. Authorization; Binding Effect. The Investor has all
requisite corporate power and authority to (i) execute and deliver this
Agreement and (ii) to carry out and perform its obligations under the terms of
this Agreement. This Agreement has been duly authorized, executed and delivered
and constitutes the legal, valid and binding obligations of the Investor,
enforceable in accordance with its terms, except, as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium, or
other laws relating to or affecting the enforcement of creditors' rights
generally in effect from time to time and by general principles of equity, and
except that public policy may limit the Investor's indemnification obligations
under Section 4.2(b) hereof.
3.3. No Conflicts with Agreements, Etc. Neither the execution and
delivery of this Agreement nor the fulfillment of or compliance with the terms
and provisions hereof will conflict with, or result in a breach or violation of
any of the terms, conditions or provisions of, or constitute a default under,
the Investor's Certificate of Incorporation or By-laws or any contract,
agreement, mortgage, indenture, lease, instrument, order, judgment, statute,
law, rule or regulation to which the Investor or any of its assets is subject,
or result in the creation of any security interest, mortgage, pledge, lien,
claim, charge or encumbrance (collectively "Liens") on any properties of the
Investor, except for such conflicts, breaches, violations, defaults or Liens
which would not have an Investor Material Adverse Effect.
3.4. Consents, Etc. No Approval from any governmental body,
office or agency or any nongovernmental person (including, without limitation,
any creditor of the Investor) is required in connection with the execution or
delivery of this Agreement by the Investor or the performance by the Investor of
its obligations hereunder, or as a condition to the legality, validity or
enforceability of this Agreement.
3.5. Purchase for Own Account. The Investor Shares will be
acquired for investment for the Investor's own account, not as a nominee or
agent, and not with a view to the resale or distribution of any part thereof,
and the Investor has no present intention of selling, granting any participation
in, or otherwise distributing the same. The Investor does not have any contract,
undertaking, agreement, or arrangement with any person to sell, transfer, or
grant participations to such person or to any third person, with respect to any
of the Investor Shares. The Investor understands that the Investor Shares are
characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the Securities Act of
1933, as amended ("Act"), only in certain limited circumstances. The Investor is
familiar with Securities and Exchange Commission Rule 144 ("Rule 144"), as
presently in effect, and understands the resale limitations imposed thereby and
by the Act. The Investor understands that it cannot make any disposition of all
or any portion of the Investor Shares unless there is then in effect a
registration statement under the Act covering such proposed disposition and such
disposition is made in accordance with such registration statement; or it shall
have notified the Company of the proposed disposition and shall have furnished
the Company with a statement of the circumstances surrounding the proposed
disposition, and, if reasonably
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requested by the Company, he shall have furnished the Company with an opinion of
counsel, reasonably satisfactory to the Company, that such disposition will not
require registration of such shares under the Act. The Investor understands that
the certificates evidencing the Investor Shares shall bear the legends set forth
below:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
("ACT"), OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE
SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT WITH RESPECT THERETO UNDER THE ACT OR
PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
SAID ACT AND COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES
LAW, OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL,
REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT
SUCH REGISTRATION IS NOT REQUIRED.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
AN AGREEMENT DATED AS OF JUNE 1, 1999 BETWEEN THE COMPANY AND
THE HOLDER (A COPY OF WHICH IS ON FILE AT THE OFFICES OF THE
COMPANY) AND MAY ONLY BE SOLD OR OTHERWISE TRANSFERRED IN
ACCORDANCE THEREWITH.
3.6. Accredited Investor Status. The Investor is an "accredited
investor" within the meaning of Rule 501(a) of Regulation D, promulgated under
the Act.
4. Covenants of the Company. The Company covenants and agrees as
follows:
4.1. Use of Proceeds. Promptly following the execution of this
Agreement, the Company shall contribute the proceeds received from the sale of
the Investor Shares to the Company's subsidiary, VentureHighway, as contemplated
by the VentureHighway Agreement.
4.2. Registration Rights
(a) Unless not permissible under applicable law or policy of
the Securities and Exchange Commission, the Company shall (i) cause to be filed
with the Commission as soon as practicable after the date hereof, but in no
event later than 60 days after the date hereof, a registration statement under
the Act relating to the resale of the Investor Shares (the "Registration
Statement"), (ii) use its best efforts to cause such Registration Statement to
become effective at the earliest possible time, and (iii) in connection with the
foregoing, file all pre-effective amendments to such registration statement as
may be necessary in order to cause such Registration Statement to become
effective. The Company shall bear all fees and expenses attendant to registering
the resale of the Investor Shares, but the Investor shall pay any and all
commissions in connection with the resale of the Investor Shares and the fees,
if any, of any professional engaged by the Investor in connection therewith.
Once the Registration Statement is declared effective, the Company shall use its
best efforts to cause the
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Registration Statement to remain effective continuously until such time as the
Investor Shares are freely saleable under an exemption from the registration
requirements of the Act.
(b) Registration Indemnification. The Company shall
indemnify the Investor and its affiliates and their respective officers,
directors and employees against all loss, claim, damage, expense or liability
(including all reasonable attorneys' fees and other expenses reasonably incurred
in investigating, preparing or defending against any claim whatsoever) to which
they may become subject under the Act, the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or otherwise, arising from material misstatements
and omissions in such Registration Statement, except those arising from material
misstatements or omissions in the Investor Information (defined below). The
Investor shall indemnify the Company and its affiliates and their respective
officers, directors and employees against all loss, claim, damage, expense or
liability (including all reasonable attorneys' fees and other expenses
reasonably incurred in investigating, preparing or defending against any claim
whatsoever) to which they may become subject under the Act, the Exchange Act or
otherwise, arising from material misstatements or omissions in information
regarding the Investor's ownership of Investor Shares and plan of distribution
with respect thereto furnished by or on behalf of the Investor or its successors
or assigns, in writing, for specific inclusion in such registration statement
("Investor Information").
5. Nasdaq Additional Listing Application. The Company shall promptly
file the appropriate additional listing application with the Nasdaq stock market
with respect to the Investor Shares.
6. Brokerage of Resale of Investor Shares. Any sale on the open market
of the Investor Shares shall be made through Xxxxxx Securities, Inc., a wholly
owned subsidiary of the Company ("KSI"). KSI shall charge the Investor standard
commissions for all such sales. In connection with any such sales, KSI, in its
capacity as a broker-dealer, shall have the same obligations to Investor as KSI
would have to any of its general brokerage customers.
7. Put Right. In the event the Investor elects to terminate the
VentureHighway Agreement in accordance with Section 11.7 thereof, the Investor
shall have the right to require the Company (or a designee of the Company as
provided below) to purchase all the Investor Shares then owned by the Investor
and its affiliates. In order to exercise this "put" right, the Investor shall
furnish the Company with written notice of such intent within five business days
of the termination of the VentureHighway Agreement. A closing shall then take
place within five business days of receipt of such notice, at which time the
Investor shall deliver to the Company all Investor Shares being purchased by the
Company and the Company shall deliver to the Investor, by certified or official
bank check or wire transfer, payment for such Investor Shares. The amount so
payable by the Company to the Investor shall be equal to (i) $750,000 less (ii)
amounts realized by Investor (and affiliates to whom it transferred shares) on
all sales of Investor Shares prior thereto (with interest added to the amounts
in clauses (i) and (ii) at an interest rate of 10% per annum). The Company may
assign the obligation to make such payment to a designee; provided, however,
that the Company guarantees in full the payment of such designee.
8. Indemnification. The Company shall indemnify and hold harmless the
Investor and its affiliates and their officers, directors and employees and
their successors and assigns, from and against any losses, damages, expenses or
liabilities, including, without limitation, reasonable attorneys' fees, which
may be sustained, suffered or incurred by the Investor and its affiliates and
their
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officers, directors and employees and their successors and assigns, arising from
or in connection with the breach of any the Company's covenants,
representations, warranties, agreements, obligations or undertakings hereunder.
The Investor shall indemnify and hold harmless the Company and its affiliates
and their officers, directors and employees and their successors and assigns,
from and against any losses, damages, expenses or liabilities, including,
without limitation, reasonable attorneys' fees, which may be sustained, suffered
or incurred by the Company and its affiliates and their officer, directors and
employees and their successors and assigns arising from or in connection with
the breach of any the Investor's covenants, representations, warranties,
agreements, obligations or undertakings hereunder.
9. Miscellaneous.
9.1. Survival. The representations, warranties and covenants of the
Company and the Investor contained in or made pursuant to this Agreement shall
survive the execution and delivery of this Agreement and shall in no way be
affected by any investigation of the subject matter thereof made by or on behalf
of the Investor or the Company.
9.2. Successors and Assigns. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the signatories hereto
any rights, remedies, obligations, or liabilities under or by reason of this
Agreement. The rights granted to the Investor under Section 4 and its
obligations under Section 5 shall inure to benefit of any affiliates of Investor
to whom it transfers Investor Shares.
9.3. Governing Law; Venue. This Agreement shall be governed by and
construed under the law of the State of New York, disregarding any principles of
conflicts of law that would otherwise provide for the application of the
substantive law of another jurisdiction. The Company and the Investor each (i)
agrees that any legal suit, action or proceeding arising out of or relating to
this Agreement shall be instituted exclusively in New York State Supreme Court,
County of New York, or in the United States District Court for the Southern
District of New York, (ii) waives any objection to the venue of any such suit,
action or proceeding and the right to assert that such forum is not a convenient
forum, and (iii) irrevocably consents to the jurisdiction of the New York State
Supreme Court, County of New York, and the United States District Court for the
Southern District of New York in any such suit, action or proceeding. Each of
the foregoing persons further agrees to accept and acknowledge service of any
and all process which may be served in any such suit, action or proceeding in
the New York State Supreme Court, County of New York, or in the United States
District Court for the Southern District of New York and agrees that service of
process upon it mailed by certified mail to its address set forth herein shall
be deemed in every respect effective service of process upon it in any such
suit, action or proceeding.
9.4. Counterparts and Facsimile Signatures. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument. A
signature received via facsimile shall be deemed an original for all purposes.
9.5. Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
9.6. Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing, shall be sent by
facsimile to the party to be notified and shall be deemed effectively given upon
personal delivery to the party to be notified, or four days after deposit with
the United States Post Office, by registered or certified mail, postage prepaid
and addressed to the party to be notified. Any notice to the Company or the
Investor shall be sent to their respective facsimile numbers and addresses set
forth on the signature pages hereof, or at such other facsimile number
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or address as a party may designate by ten (10) days' advance written notice to
the other parties, with a copy for the Company to Xxxxx Xxxx Xxxxxx, Esq.,
Xxxxxxxx Mollen & Xxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000, fax
no. (000) 000-0000, and with a copy for the Investor to Xxxxxxx X. Xxxxx, Esq.,
Xxxxx Xxxxxxxxxx Xxxxxxxx & Xxxxxxxx, P.C., Xxx Xxxxx Xxxxxxxxx Xxxxxx, Xxxxx
Xxxxxx, Xxx Xxxx 00000, fax no. (000) 000-0000.
9.7. Entire Agreement; Amendments and Waivers. This Agreement
constitutes the full and entire understanding and agreement between the parties
with regard to the subjects hereof. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with the written consent of the Company and the Investor.
9.8. Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
remaining terms.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
XXXXXX HOLDING CORP.
By:_________________________________
Name:
Title:
Address: 0000 Xxxxxxx Xxxxxxxx
Xxxxxxx, Xxx Xxxx 00000
Fax: 516/000-0000
INDIVIDUAL INVESTOR GROUP, INC.
By:__________________________________
Name:
Title:
Address: 000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
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