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EXHIBIT 99.2
MASTER FACILITY AGREEMENT
MASTER FACILITY AGREEMENT (the "AGREEMENT"), dated as of July
5, 2000, by and between XXXXXXXX.XXX, INC., a Delaware corporation (the
"COMPANY"), and FUSION CAPITAL FUND II, LLC (together with its permitted
assigns, the "BUYER").
WHEREAS:
Subject to the terms and conditions set forth herein, the
Company has authorized the entering into with the Buyer of up to two Equity
Purchase Agreements (each an "EQUITY PURCHASE AGREEMENT" and collectively the
"EQUITY PURCHASE Agreements"), substantially in the form attached hereto as
EXHIBIT A, with each Equity Purchase Agreement having an aggregate available
amount of Twelve Million Dollars ($12,000,000). The available amount of each
Equity Purchase Agreement shall be settled into shares of the Company's common
stock, par value $0.001 per share (the "COMMON Stock") (as settled, the
"PURCHASE SHARES"), in accordance with the terms of each Equity Purchase
Agreement.
NOW THEREFORE, the Company and the Buyer hereby agree as follows:
1. ENTRY INTO EQUITY PURCHASE AGREEMENTS.
a. Execution and Delivery of the Equity Purchase
Agreements. Subject to the satisfaction (or waiver) of the conditions set forth
in Sections 6 and 7 below, the Company and the Buyer agree as follows: (i) the
execution and delivery of the first Equity Purchase Agreement to be entered into
under this Agreement (the "FIRST EQUITY PURCHASE AGREEMENT") shall take place
within five (5) Trading Days (as defined in the last sentence of this Section
1(a)) of the date that the Registration Statement referred to in the first
sentence of Section 4(a) hereof is declared effective under the Securities Act
of 1933, as amended (the "1933 ACT") by the United States Securities and
Exchange Commission (the "SEC") (the "FIRST CLOSING"); and (ii) the execution
and delivery of the second Equity Purchase Agreement to be entered into under
this Agreement (the "SECOND EQUITY PURCHASE AGREEMENT") shall take place within
five (5) Trading Days of the date that the Registration Statement referred to in
the second sentence of Section 4(a) hereof is declared effective under the 1933
Act by the SEC (the "SECOND CLOSING"), (each such execution and delivery of an
Equity Purchase Agreement, a "CLOSING"). It is agreed and acknowledged by the
parties hereto that entering into the Second Equity Purchase Agreement shall be
at the option of the Company in its sole discretion until such time as the
Company shall have delivered an irrevocable written notice (the "SECOND CLOSING
NOTICE") to the Buyer stating that the Company elects to enter into the Second
Equity Purchase Agreement under the terms and conditions provided herein. The
Second Equity Purchase Agreement may not be entered into until the aggregate
available amount of the First Equity Purchase Agreement is fully used to
purchase Common Stock. The Buyer is not obligated to enter into the Second
Equity Purchase Agreement unless the Company has delivered the Second Closing
Notice prior to the date that is twenty (20) Trading Days following the date on
which the aggregate amount of the First Equity Purchase Agreement is fully used
to purchase Common Stock. Upon delivery of the Second Closing Notice to the
Buyer, subject to the satisfaction (or waiver) of the conditions set forth in
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Sections 6 and 7 below, the Company and the Buyer shall be obligated to enter
into the Second Equity Purchase Agreement. For purposes of this Agreement,
"TRADING DAY" shall mean any day on which the Principal Market (as defined in
Section 4(d) hereof) is open for customary trading.
b. Closing Dates. The date of each Closing (each a
"CLOSING Date") shall be within five (5) Trading Days following the date of
satisfaction (or waiver) of the conditions to the Closing set forth in Sections
6 and 7 below (or such later date as is mutually agreed to by the Company and
the Buyer) with respect to the Closing of each Equity Purchase Agreement.
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
The Buyer represents and warrants to the Company that:
a. Investment Purpose. The Buyer is entering into the
Equity Purchase Agreements and acquiring the Commitment Shares (as defined in
Section 7(b) hereof) (collectively with the Equity Purchase Agreements referred
to herein as the "SECURITIES"), for its own account for investment only and not
with a view towards, or for resale in connection with, the public sale or
distribution thereof; provided however, by making the representations herein,
the Buyer does not agree to hold any of the Securities for any minimum or other
specific term.
b. Accredited Investor Status. The Buyer is an
"accredited investor" as that term is defined in Rule 501(a)(3) of Regulation D.
c. Reliance on Exemptions. The Buyer understands that
the Securities are being offered and sold to it in reliance on specific
exemptions from the registration requirements of United States federal and state
securities laws and that the Company is relying in part upon the truth and
accuracy of, and the Buyer's compliance with, the representations, warranties,
agreements, acknowledgments and understandings of the Buyer set forth herein in
order to determine the availability of such exemptions and the eligibility of
the Buyer to acquire the Securities.
d. Information. The Buyer has been furnished with all
materials relating to the business, finances and operations of the Company and
materials relating to the offer and sale of the Securities that have been
reasonably requested by the Buyer, including, without limitation, the SEC
Documents (as defined in Section 3(f) hereof). The Buyer understands that its
investment in the Securities involves a high degree of risk. The Buyer (i) is
able to bear the economic risk of an investment in the Securities including a
total loss, (ii) has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of the proposed
investment in the Securities and (iii) has had an opportunity to ask questions
of and receive answers from the officers of the Company concerning the financial
condition and business of the Company and others matters related to an
investment in the Securities. Neither such inquiries nor any other due diligence
investigations conducted by the Buyer or its representatives shall modify, amend
or affect the Buyer's right to rely on the Company's representations and
warranties contained in Section 3 below. The Buyer has sought
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such accounting, legal and tax advice as it has considered necessary to make an
informed investment decision with respect to its acquisition of the Securities.
e. No Governmental Review. The Buyer understands that no
United States federal or state agency or any other government or governmental
agency has passed on or made any recommendation or endorsement of the Securities
or the fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.
f. Transfer or Resale. The Buyer understands that except
as provided in the Registration Rights Agreement (as defined in Section 6(a)
hereof): (i) the Securities have not been and are not being registered under the
1933 Act or any state securities laws, and may not be offered for sale, sold,
assigned or transferred unless (A) subsequently registered thereunder or (B) an
exemption exists permitting such Securities to be sold, assigned or transferred
without such registration; (ii) any sale of the Securities made in reliance on
Rule 144 may be made only in accordance with the terms of Rule 144 and further,
if Rule 144 is not applicable, any resale of the Securities under circumstances
in which the seller (or the person through whom the sale is made) may be deemed
to be an underwriter (as that term is defined in the 0000 Xxx) may require
compliance with some other exemption under the 1933 Act or the rules and
regulations of the SEC thereunder; and (iii) neither the Company nor any other
person is under any obligation to register such securities under the 1933 Act or
any state securities laws or to comply with the terms and conditions of any
exemption thereunder.
g. Validity; Enforcement. This Agreement has been duly
and validly authorized, executed and delivered on behalf of the Buyer and is a
valid and binding agreement of the Buyer enforceable against the Buyer in
accordance with its terms, subject as to enforceability to general principles of
equity and to applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation and other similar laws relating to, or affecting generally, the
enforcement of applicable creditors' rights and remedies.
h. Residency. The Buyer is a resident of the State of
Illinois.
i. No Prior Short Selling. The Buyer represents and
warrants to the Company that at no time prior to the date of this Agreement has
any of the Buyer, its agents, representatives or affiliates engaged in or
effected, in any manner whatsoever, directly or indirectly, any (i) "short sale"
(as such term is defined in Rule 3b-3 of the 0000 Xxx) of the Common Stock or
(ii) hedging transaction, which establishes a net short position with respect to
the Common Stock.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to the Buyer that:
a. Organization and Qualification. The Company and its
"SUBSIDIARIES" (which for purposes of this Agreement means any entity in which
the Company, directly or indirectly, owns 50% or more of the voting stock or
capital stock or other similar equity
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interests) are corporations duly organized and validly existing in good standing
under the laws of the jurisdiction in which they are incorporated, and have the
requisite corporate power and authority to own their properties and to carry on
their business as now being conducted. Each of the Company and its Subsidiaries
is duly qualified as a foreign corporation to do business and is in good
standing in every jurisdiction in which its ownership of property or the nature
of the business conducted by it makes such qualification necessary, except to
the extent that the failure to be so qualified or be in good standing could not
reasonably be expected to have a Material Adverse Effect. As used in this
Agreement, "MATERIAL ADVERSE EFFECT" means any material adverse effect on any
of: (i) the business, properties, assets, operations, results of operations or
financial condition of the Company and its Subsidiaries, if any, taken as a
whole, (ii) the value of the Common Stock or the value of an Equity Purchase
Agreement, (iii) the transactions contemplated hereby or by the agreements and
instruments to be entered into in connection herewith or (iv) the authority or
ability of the Company to perform its obligations under the Transaction
Documents (as defined in Section 2(b) hereof). The Company has no Subsidiaries
except as set forth on Schedule 3(a).
b. Authorization; Enforcement; Validity. (i) The Company
has the requisite corporate power and authority to enter into and perform its
obligations under this Agreement, the Equity Purchase Agreements, the
Registration Rights Agreement (as defined in Section 6(a) hereof) and each of
the other agreements entered into by the parties hereto in connection with the
transactions contemplated by this Agreement (collectively, the "TRANSACTION
DOCUMENTS"), and to issue the Securities in accordance with the terms hereof and
thereof, (ii) the execution and delivery of the Transaction Documents by the
Company and the consummation by it of the transactions contemplated hereby and
thereby, including without limitation, the issuance of the Commitment Shares and
the reservation for issuance and the issuance of the Purchase Shares issuable
under each Equity Purchase Agreement, have been duly authorized by the Company's
Board of Directors and no further consent or authorization is required by the
Company, its Board of Directors or its shareholders, (iii) this Agreement has
been, and each other Transaction Document shall be at its respective Closing,
duly executed and delivered by the Company and (iv) this Agreement constitutes,
and each other Transaction Document shall constitute as of its respective
Closing, the valid and binding obligations of the Company enforceable against
the Company in accordance with their terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors' rights and remedies.
c. Capitalization. As of the date hereof, the authorized
capital stock of the Company consists of (i) 20,000,000 shares of Common Stock,
of which as of the date hereof, 8,284,665 shares are issued and outstanding,
none are held as treasury shares, 1,963,125 shares are reserved for issuance
pursuant to the Company's stock option plan of which only approximately 490,839
shares remain available and no warrants shares are issuable and reserved for
issuance pursuant to securities (other than the Equity Purchase Agreements or
stock options issued pursuant to the Company's stock option plans) exercisable
or exchangeable for, or convertible into, shares of Common Stock and (ii) 5,000
shares of Series A Preferred Stock, $0.001 par value with a $10,000 per share
liquidation preference, of which as of the date hereof 465 shares are issued and
outstanding, 200,000 shares of Series A Junior Participating Preferred
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Stock, $0.001 par value, of which as of the date hereof no shares are issued and
outstanding and 795,000 shares of preferred stock, $0.001 par value, of which as
of the date hereof no shares are issued and outstanding. All of such outstanding
shares have been, or upon issuance will be, validly issued and are fully paid
and nonassessable. Except as disclosed in Schedule 3(c), (i) no shares of the
Company's capital stock are subject to preemptive rights or any other similar
rights or any liens or encumbrances suffered or permitted by the Company, (ii)
there are no outstanding debt securities, (iii) there are no outstanding
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its Subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to issue additional shares of capital stock
of the Company or any of its Subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the
Company or any of its Subsidiaries, (iv) there are no agreements or arrangements
under which the Company or any of its Subsidiaries is obligated to register the
sale of any of their securities under the 1933 Act (except the Registration
Rights Agreement), (v) there are no outstanding securities or instruments of the
Company or any of its Subsidiaries which contain any redemption or similar
provisions, and there are no contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is or may become
bound to redeem a security of the Company or any of its Subsidiaries, (vi) there
are no securities or instruments containing anti-dilution or similar provisions
that will be triggered by the issuance of the Securities as described in this
Agreement and (vii) the Company does not have any stock appreciation rights or
"phantom stock" plans or agreements or any similar plan or agreement. The
Company has furnished to the Buyer true and correct copies of the Company's
Certificate of Incorporation, as amended and as in effect on the date hereof
(the "CERTIFICATE OF INCORPORATION"), and the Company's By-laws, as amended and
as in effect on the date hereof (the "BY-LAWS"), and summaries of the terms of
all securities convertible into or exercisable for Common Stock, if any, and
copies of any documents containing the material rights of the holders thereof in
respect thereto.
d. Issuance of Securities. The Commitment Shares have
been duly authorized and, upon issuance in accordance with the terms hereof,
shall be (i) validly issued, fully paid and non-assessable and (ii) free from
all taxes, liens and charges with respect to the issue thereof. 1,656,105 shares
of Common Stock have been duly authorized and reserved for issuance upon
purchase under each Equity Purchase Agreement. Upon issuance and payment
therefore in accordance with the terms and conditions of the Equity Purchase
Agreement, the Purchase Shares shall be validly issued, fully paid and
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof, with the holders being entitled to all rights accorded to a
holder of Common Stock.
e. No Conflicts. Except as disclosed in Schedule 3(e),
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 (including, without limitation, the reservation for issuance
and issuance of the Purchase Shares) will not (i) result in a violation of the
Certificate of Incorporation, any Certificate of Designations, Preferences and
Rights of any outstanding series of preferred stock of the Company or the
By-laws or (ii) conflict
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with, or constitute a default (or an event which 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 of, any agreement,
indenture or instrument to which the Company or any of its Subsidiaries is a
party, or result in a violation of any law, rule, regulation, order, judgment or
decree (including federal and state securities laws and regulations and the
rules and regulations of the Principal Market applicable to the Company or any
of its Subsidiaries) or by which any property or asset of the Company or any of
its Subsidiaries is bound or affected, except in the case of conflicts, defaults
and violations under clause (ii), which could not reasonably be expected to
result in a Material Adverse Effect. Except as disclosed in Schedule 3(e),
neither the Company nor its Subsidiaries is in violation of any term of or in
default under its Certificate of Incorporation, any Certificate of Designation,
Preferences and Rights of any outstanding series of preferred stock of the
Company or By-laws or their organizational charter or by-laws, respectively.
Except as disclosed in Schedule 3(e), neither the Company nor any of its
Subsidiaries is in violation of any term of or in default under any material
contract, agreement, mortgage, indebtedness, indenture, instrument, judgment,
decree or order or any statute, rule or regulation applicable to the Company or
its Subsidiaries, except for possible conflicts, defaults, terminations or
amendments which could not reasonably be expected to have a Material Adverse
Effect. The business of the Company and its Subsidiaries is not being conducted,
and shall not be conducted, in violation of any law, ordinance, regulation of
any governmental entity, except for possible violations, the sanctions for which
either individually or in the aggregate could not reasonably be expected to have
a Material Adverse Effect. Except as specifically contemplated by this Agreement
and as required under the 1933 Act, the Company is not required to obtain any
consent, authorization or order of, or make any filing or registration with, any
court or governmental agency or any regulatory or self-regulatory agency in
order for it to execute, deliver or perform any of its obligations under or
contemplated by the Transaction Documents in accordance with the terms hereof or
thereof. Except as disclosed in Schedule 3(e), all consents, authorizations,
orders, filings and registrations which the Company is required to obtain
pursuant to the preceding sentence shall be obtained or effected on or prior to
the applicable Closing. Except as disclosed in Schedule 3(e), the Company is not
and has not been since January 1, 1998, in violation of the listing requirements
of the Principal Market.
f. SEC Documents; Financial Statements. Except as
disclosed in Schedule 3(f), since January 1, 1999, the Company has timely filed
all reports, schedules, forms, statements and other documents required to be
filed by it with the SEC pursuant to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "1934 ACT") (all of the
foregoing filed prior to the date hereof and all exhibits included therein and
financial statements and schedules thereto and documents incorporated by
reference therein being hereinafter referred to as the "SEC Documents"). As of
their respective dates (except as they have been correctly amended), the SEC
Documents complied in all material respects with the requirements of the 1934
Act and the rules and regulations of the SEC promulgated thereunder applicable
to the SEC Documents, and none of the SEC Documents, at the time they were filed
with the SEC (except as they may have been correctly amended), contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. As of
their respective dates (except as they have been correctly amended), the
financial statements of the Company included in the SEC Documents complied as to
form in all material
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respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements have been
prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto or (ii) in
the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments).
g. Absence of Certain Changes. Except as disclosed in
Schedule 3(g), since March 31, 2000, there has been no material adverse change
in the business, properties, operations, financial condition or results of
operations of the Company or its Subsidiaries. The Company has not taken any
steps, and does not currently expect to take any steps, to seek protection
pursuant to any bankruptcy law nor does the Company or any of its Subsidiaries
have any knowledge or reason to believe that its creditors intend to initiate
involuntary bankruptcy proceedings.
h. Absence of Litigation. There is no action, suit,
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 or any of its Subsidiaries, threatened against or
affecting the Company, the Common Stock or any of the Company's Subsidiaries or
any of the Company's or the Company's Subsidiaries' officers or directors in
their capacities as such, which could reasonably be expected to have a Material
Adverse Effect. A description of each action, suit, proceeding, inquiry or
investigation before or by any court, public board, government agency,
self-regulatory organization or body which, as of the date of this Agreement, is
pending or threatened in writing against or affecting the Company, the Common
Stock or any of the Company's Subsidiaries or any of the Company's or the
Company's Subsidiaries' officers or directors in their capacities as such, is
set forth in Schedule 3(h).
i. Acknowledgment Regarding Buyer's Purchase of the
Securities. The Company acknowledges and agrees that the Buyer is acting solely
in the capacity of arm's length purchaser with respect to the Transaction
Documents and the transactions contemplated hereby and thereby. The Company
further acknowledges that the Buyer is not acting as a financial advisor or
fiduciary of the Company (or in any similar capacity) with respect to the
Transaction Documents and the transactions contemplated hereby and thereby and
any advice given by the Buyer or any of its representatives or agents in
connection with the Transaction Documents and the transactions contemplated
hereby and thereby is merely incidental to the Buyer's purchase of the
Securities. The Company further represents to the Buyer that the Company's
decision to enter into the Transaction Documents has been based solely on the
independent evaluation by the Company and its representatives and advisors.
j. No General Solicitation. Neither the Company, nor any
of its affiliates, nor any person acting on its or their behalf, has engaged in
any form of general solicitation or general advertising (within the meaning of
Regulation D under the 0000 Xxx) in connection with the offer or sale of the
Securities.
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k. No Integrated Offering. Neither the Company, nor any
of its affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would require registration of any of
the Securities under the 1933 Act or cause this offering of the Securities to be
integrated with prior offerings by the Company for purposes of the 1933 Act or
any applicable shareholder approval provisions, including, without limitation,
under the rules and regulations of any exchange or automated quotation system on
which any of the securities of the Company are listed or designated, nor will
the Company or any of its Subsidiaries take any action or steps that would
require registration of any of the Securities under the 1933 Act or cause the
offering of the Securities to be integrated with other offerings.
l. Dilutive Effect. The Company understands and
acknowledges that the number of Purchase Shares purchasable under an Equity
Purchase Agreement will increase in certain circumstances. The Company further
acknowledges that its obligation to issue Purchase Shares under the Equity
Purchase Agreement in accordance with the term and conditions of the Equity
Purchase Agreements is absolute and unconditional regardless of the dilutive
effect that such issuance may have on the ownership interests of other
shareholders of the Company.
m. Intellectual Property Rights. The Company and its
Subsidiaries own or possess adequate rights or licenses to use all material
trademarks, trade names, service marks, service xxxx registrations, service
names, patents, patent rights, copyrights, inventions, licenses, approvals,
governmental authorizations, trade secrets and rights necessary to conduct their
respective businesses as now conducted. Except as set forth on Schedule 3(m),
none of the Company's material trademarks, trade names, service marks, service
xxxx registrations, service names, patents, patent rights, copyrights,
inventions, licenses, approvals, government authorizations, trade secrets or
other intellectual property rights have expired or terminated, or, by the terms
and conditions thereof, could expire or terminate within two years from the date
of this Agreement. The Company and its Subsidiaries do not have any knowledge of
any infringement by the Company or its Subsidiaries of any material trademark,
trade name rights, patents, patent rights, copyrights, inventions, licenses,
service names, service marks, service xxxx registrations, trade secret or other
similar rights of others, or of any such development of similar or identical
trade secrets or technical information by others and, except as set forth on
Schedule 3(m), there is no claim, action or proceeding being made or brought
against, or to the Company's knowledge, being threatened against, the Company or
its Subsidiaries regarding trademark, trade name, patents, patent rights,
invention, copyright, license, service names, service marks, service xxxx
registrations, trade secret or other infringement, which could reasonably be
expected to have a Material Adverse Effect.
n. Environmental Laws. The Company and its Subsidiaries
(i) are in compliance with any and all applicable foreign, federal, state and
local laws and regulations relating to the protection of human health and
safety, the environment or hazardous or toxic substances or wastes, pollutants
or contaminants ("ENVIRONMENTAL Laws"), (ii) have received all permits, licenses
or other approvals required of them under applicable Environmental Laws to
conduct their respective businesses and (iii) are in compliance with all terms
and conditions of any such permit, license or approval, except where, in each of
the three foregoing clauses, the
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failure to so comply could not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect.
o. Title. The Company and its Subsidiaries have good and
marketable title in fee simple to all real property and good and marketable
title to all personal property owned by them which is material to the business
of the Company and its Subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in Schedule 3(o) or such
as do not materially affect the value of such property and do not interfere with
the use made and proposed to be made of such property by the Company and any of
its Subsidiaries. Any real property and facilities held under lease by the
Company and any of its Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings by the
Company and its Subsidiaries.
p. Insurance. The Company and each of its Subsidiaries
are insured by insurers of recognized financial responsibility against such
losses and risks and in such amounts as management of the Company believes to be
prudent and customary in the businesses in which the Company and its
Subsidiaries are engaged. Neither the Company nor any such Subsidiary has been
refused any insurance coverage sought or applied for and neither the Company nor
any such Subsidiary has any reason to believe that it will not be able to renew
its 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 at a cost that would not materially and adversely affect the condition,
financial or otherwise, or the earnings, business or operations of the Company
and its Subsidiaries, taken as a whole.
q. Regulatory Permits. The Company and its Subsidiaries
possess all material certificates, authorizations and permits issued by the
appropriate federal, state or foreign regulatory authorities necessary to
conduct their respective businesses, and neither the Company nor any such
Subsidiary has received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit.
r. Tax Status. The Company and each of its Subsidiaries
has made or filed all federal and state income and all other material tax
returns, reports and declarations required by any jurisdiction to which it is
subject (unless and only to the extent that the Company and each of its
Subsidiaries has set aside on its books provisions reasonably adequate for the
payment of all unpaid and unreported taxes) and has paid all taxes and other
governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and has set aside on its books provision
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. There are no
unpaid taxes in any material amount claimed to be due by the taxing authority of
any jurisdiction, and the officers of the Company know of no basis for any such
claim.
s. Transactions With Affiliates. Except as set forth on
Schedule 3(s) and other than the grant or exercise of stock options disclosed on
Schedule 3(c), none of the officers, directors, or employees of the Company is
presently a party to any transaction with the Company
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or any of its Subsidiaries (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 corporation,
partnership, trust or other entity in which any officer, director, or any such
employee has an interest or is an officer, director, trustee or partner.
t. Application of Takeover Protections. The Company and
its board of directors have taken or will take prior to each Closing all
necessary action, if any, in order to render inapplicable any control share
acquisition, business combination, poison pill (including any distribution under
a rights agreement) or other similar anti-takeover provision under the
Certificate of Incorporation or the laws of the state of its incorporation which
is or could become applicable to the Buyer as a result of the transactions
contemplated by this Agreement, including, without limitation, the Company's
issuance of the Securities and the Buyer's ownership of the Securities.
u. Rights Agreement. [Intentionally Omitted.]
v. Foreign Corrupt Practices. Neither the Company, nor
any of its Subsidiaries, nor any director, officer, agent, employee or other
person acting on behalf of the Company or any of its Subsidiaries has, in the
course of its actions for, or on behalf of, the Company, used any corporate
funds for any unlawful contribution, gift, entertainment or other unlawful
expenses relating to political activity; made any direct or indirect unlawful
payment to any foreign or domestic government official or employee from
corporate funds; violated or is in violation of any provision of the U.S.
Foreign Corrupt Practices Act of 1977, as amended; or made any unlawful bribe,
rebate, payoff, influence payment, kickback or other unlawful payment to any
foreign or domestic government official or employee.
4. COVENANTS.
a. Filing Registration Statement. The Company shall
within five (5) Trading Days from the date hereof file a new Registration
Statement covering the sale of at least 1,656,105 Purchase Shares underlying the
First Equity Purchase Agreement and First Closing Commitment Shares (as defined
in Section 7(b)). The Company shall also within ten (10) Trading Days from the
date of the delivery to the Buyer of the Second Closing Notice: (i) file a new
Registration Statement covering the sale of a reasonable estimate of the number
of Purchase Shares underlying the Second Equity Purchase Agreement and a
reasonable estimate of the number of Second Closing Commitment Shares (as
defined in Section 7(b)). The Buyer and its counsel shall have a reasonable
opportunity to review and comment upon each such registration statement or
amendment to such registration statement and any related prospectus prior to its
filing with the SEC. The Company shall use its best efforts to have such
registration statements or amendments declared effective by the SEC at the
earliest possible date.
b. Blue Sky. The Company shall, on or before the Closing
Date, take such action, if any, as the Company shall reasonably determine is
necessary in order to obtain an exemption for or to qualify the Commitment
Shares and the Purchase Shares for sale to the Buyer pursuant to this Agreement
or the Equity Purchase Agreement under applicable securities
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or "Blue Sky" laws of the states of the United States, and shall provide
evidence of any such action so taken to the Buyer on or prior to the Closing
Date. The Company shall make all filings and reports relating to the offer and
sale of the Commitment Shares and the Purchase Shares required under applicable
securities or "Blue Sky" laws of the states of the United States following the
Closing Date.
c. No Variable Priced Financing. Other than pursuant to
this Agreement, the Company agrees that beginning on the date of this Agreement
and ending on the date of termination of this Agreement (as provided in Section
9(k) hereof), neither the Company nor any of its Subsidiaries shall, without the
prior written consent of the Buyer, contract for any equity financing (including
any debt financing with an equity component) or issue any equity securities of
the Company or any Subsidiary or securities convertible or exchangeable into or
for equity securities of the Company or any Subsidiary (including debt
securities with an equity component) which, in any case (i) are convertible into
or exchangeable for an indeterminate number of shares of common stock, (ii) are
convertible into or exchangeable for Common Stock at a price which varies with
the market price of the Common Stock, (iii) directly or indirectly provide for
any "re-set" or adjustment of the purchase price, conversion rate or exercise
price or (iv) contain any "make-whole" provision based upon, directly or
indirectly, the market price of the Common Stock, in each case, other than
reasonable and customary anti-dilution adjustments for such things as stock
splits, stock dividends, recapitalizations and the issuance of shares of Common
Stock at a price which is below the then current market price of the Common
Stock.
d. Listing. The Company shall promptly secure the
listing of all of the Purchase Shares and Commitment Shares upon each national
securities exchange and automated quotation system, if any, upon which shares of
Common Stock are then listed (subject to official notice of issuance) and shall
maintain, so long as any other shares of Common Stock shall be so listed, such
listing of all such securities from time to time issuable under the terms of the
Transaction Documents. The Company shall maintain the Common Stock's
authorization for quotation on The Nasdaq National Market (the "PRINCIPAL
MARKET"). Neither the Company nor any of its Subsidiaries shall take any action
that would be reasonably expected to result in the delisting or suspension of
the Common Stock on the Principal Market. The Company shall promptly, and in no
event later than the following Trading Day, provide to the Buyer copies of any
notices it receives from the Principal Market regarding the continued
eligibility of the Common Stock for listing on such automated quotation system
or securities exchange. The Company shall pay all fees and expenses in
connection with satisfying its obligations under this Section.
e. Limitation on Short Sales and Hedging Transactions.
The Buyer agrees that beginning on the date of this Agreement and ending on the
date of termination of this Agreement as provided in Section 9(k), the Buyer and
its agents, representatives and affiliates shall not in any manner whatsoever
enter into or effect, directly or indirectly, any (i) "short sale" (as such term
is defined in Rule 3b-3 of the 0000 Xxx) of the Common Stock or (ii) hedging
transaction, which establishes a net short position with respect to the Common
Stock; provided, however, that such restrictions shall not apply (i) if the
Buyer promptly submits after a sale of shares of Common Stock a Purchase Notice
(as defined in the Equity Purchase Agreement) entitling the Buyer to receive a
number of shares of Common Stock at least equal to the number
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of shares so sold or (ii) if an Event of Default (as defined the Equity Purchase
Agreement) has occurred under the Equity Purchase Agreement including any
failure by the Company to timely issue any Purchase Shares pursuant to the
Equity Purchase Agreement.
f. Limitation on Sales of Commitment Shares. The Buyer
agrees that beginning on the date of this Agreement and ending on the date of
termination of this Agreement as provided in Section 9(k), the Buyer shall not
transfer or sell (i) the First Closing Commitment Shares (as defined in Section
7(b) hereof) until the Maturity Date (as defined in the First Equity Purchase
Agreement) or such date as the First Equity Purchase Agreement has been
terminated or has been fully performed and (ii) the Second Closing Commitment
Shares (as defined in Section 7(b) hereof) until the Maturity Date (as defined
in the Second Equity Purchase Agreement) or such date as the Second Equity
Purchase Agreement has been terminated or has been fully performed; provided,
however, that such restrictions shall not apply: (i) in connection with any
transfers to or among affiliates (as defined in the Securities Exchange Act of
1934, as amended) so long as the transferee agrees in writing to be bound by the
restriction set forth in this Section 4(f), (ii) in connection with any pledge
in connection with a bona fide loan or margin account, or (iii) if an Event of
Default has occurred, or any event which, after notice and/or lapse of time,
would become an Event of Default, under the Equity Purchase Agreements including
any failure by the Company to timely issue Purchase Shares under an Equity
Purchase Agreement. Notwithstanding the forgoing, the Buyer may transfer
Commitment Shares to a third party in order to settle a sale made by the Buyer
where the Buyer reasonably expects the Company to deliver Purchase Shares to
Buyer under the Equity Purchase Agreement so long as the Buyer maintains
ownership of the same overall number of shares of Common Stock by "replacing"
the Commitment Shares so transferred with Purchase Shares when the Purchase
Shares are actually issued by the Company to the Buyer.
h. Due Diligence. The Buyer shall have the right, from
time to time as the Buyer may reasonably deem appropriate, to perform reasonable
due diligence on the Company during normal business hours. The Company and its
officers and employees shall reasonably cooperate with the Buyer in connection
with any reasonable request by the Buyer related to the Buyer's due diligence of
the Company.
5. TRANSFER AGENT INSTRUCTIONS.
The Company shall issue irrevocable instructions to its
transfer agent, and any subsequent transfer agent, to issue certificates,
registered in the name of the Buyer or its respective nominee(s), for the
Purchase Shares (the "IRREVOCABLE TRANSFER AGENT INSTRUCTIONS"). The Company
warrants to the Buyer that no instruction other than the Irrevocable Transfer
Agent Instructions referred to in this Section 5, will be given by the Company
to its transfer agent with respect to the Purchase Shares and that the
Commitment Shares and the Purchase Shares shall otherwise be freely transferable
on the books and records of the Company as and to the extent provided in this
Agreement, the applicable Equity Purchase Agreement and the Registration Rights
Agreement subject to the provisions of Section 4(f) in the case of the
Commitment Shares. So long as a Registration Statement is available for the sale
of Commitment Shares and the Purchase Shares or if the Buyer provides the
Company with an opinion of counsel, in a generally acceptable form, to the
effect that a public sale, assignment or
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transfer of the Commitment Shares or the Purchase Shares may be made without
registration under the 1933 Act, the Company shall promptly instruct its
transfer agent to issue one or more certificates representing such shares in
such name and in such denominations as specified by the Buyer and without any
restrictive legend. The Buyer hereby confirms it shall comply with all
securities laws and regulations applicable to it including applicable prospectus
delivery requirements upon sale of the Commitment Shares or the Purchase Shares.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO ENTER INTO THE
EQUITY PURCHASE AGREEMENTS.
The obligation of the Company hereunder to enter into each
Equity Purchase Agreement with the Buyer at the respective Closing is subject to
the satisfaction, at or before the respective Closing Date, of each of the
following conditions, provided that these conditions are for the Company's sole
benefit and may be waived by the Company at any time in its sole discretion by
providing the Buyer with prior written notice thereof:
a. The Buyer shall have executed each of the Transaction
Documents to which it is a party and delivered the same to the Company
applicable to the respective closing including: (i) the Equity Purchase
Agreement substantially in the form of EXHIBIT A hereto and (ii) the
Registration Rights Agreement substantially in the form of EXHIBIT B hereto (the
"REGISTRATION RIGHTS AGREEMENT").
b. Subject to the Company's compliance with Section
4(a), a Registration Statement covering the sale of the respective Commitment
Shares and the Purchase Shares underlying the Equity Purchase Agreement shall
have been declared effective under the 1933 Act by the SEC and no stop order
with respect to the Registration Statement shall be pending or threatened by the
SEC.
c. The representations and warranties of the Buyer shall
be true and correct in all material respects as of the date when made and as of
each Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date), and the Buyer shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Buyer at or prior to the Closing Date.
7. CONDITIONS TO THE BUYER'S OBLIGATION TO ENTER INTO THE EQUITY
PURCHASE AGREEMENTS.
The obligation of the Buyer hereunder to enter into each
Equity Purchase Agreement at the respective Closing is subject to the
satisfaction, at or before the respective Closing Date, of each of the following
conditions, provided that these conditions are for the Buyer's sole benefit and
may be waived by the Buyer at any time in its sole discretion by providing the
Company with prior written notice thereof:
a. The Company shall have executed each of the
Transaction Documents and delivered the same to the Buyer applicable to the
respective closing including: (i) the Equity
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Purchase Agreement and (ii) the Registration Rights Agreement substantially in
the form of EXHIBIT B hereto.
b. On the Closing Date for the First Closing the Company
shall have delivered to the Buyer a number of shares of Common Stock (the "FIRST
CLOSING COMMITMENT SHARES") equal to 12% of $12,000,000 divided by the lower of
(A) the arithmetic average of the Closing Bid Prices (as defined in the Equity
Purchase Agreement) of the Common Stock for the five (5) consecutive Trading
Days immediately preceding the Trading Day which is two (2) Trading Days prior
to the First Closing and (B) the arithmetic average of the Closing Bid Prices of
the Common Stock for the five (5) consecutive Trading Days immediately preceding
the date hereof. On the Closing Date for the Second Closing the Company shall
have delivered to the Buyer a number of shares of Common Stock (the "SECOND
CLOSING COMMITMENT SHARES" and together with the First Closing Commitment
Shares, the "COMMITMENT SHARES") equal to 8% of $12,000,000 divided by the lower
of (A) the arithmetic average of the Closing Bid Prices (as defined in the
Equity Purchase Agreement) of the Common Stock for the five (5) consecutive
Trading Days immediately preceding the Trading Day which is two (2) Trading Days
prior to the Second Closing and (B) the arithmetic average of the Closing Bid
Prices of the Common Stock for the five (5) consecutive Trading Days immediately
preceding the date of the Second Closing Notice. The number of Commitment Shares
shall be appropriately adjusted for any reorganization, recapitalization,
non-cash dividend, stock split or other similar transaction.
c. The Common Stock shall be authorized for quotation on
the Principal Market, trading in the Common Stock shall not have been within the
last 365 days suspended by the SEC or the Principal Market and the Purchase
Shares and the Commitment Shares shall be approved for listing upon the
Principal Market.
d. The Buyer shall have received the opinions of the
Company's legal counsel dated as of the Closing Date substantially in the form
of EXHIBIT C attached hereto. Certain of such opinions may come from in-house
legal counsel as the Buyer may reasonably determine.
e. The representations and warranties of the Company
shall be true and correct in all material respects (except to the extent that
any of such representations and warranties is already qualified as to
materiality in Section 3 above, in which case, such representations and
warranties shall be true and correct without further qualification) as of the
date when made and as of the respective Closing Date as though made at that time
(except for representations and warranties that speak as of a specific date) and
the Company shall have performed, satisfied and complied with the covenants,
agreements and conditions required by the Transaction Documents to be performed,
satisfied or complied with by the Company at or prior to the Closing Date. The
Buyer shall have received a certificate, executed by the CEO, President or CFO
of the Company, dated as of the Closing Date, to the foregoing effect in the
form attached hereto as EXHIBIT D.
f. The Board of Directors of the Company shall have
adopted resolutions in the form attached hereto as EXHIBIT E which shall be in
full force and effect without any amendment or supplement thereto as of the
Closing Date.
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g. As of the Closing Date, the Company shall have
reserved out of its authorized and unissued Common Stock, solely for the purpose
of effecting issuances under the Equity Purchase Agreement, at least 1,656,105
shares of Common Stock.
h. The Irrevocable Transfer Agent Instructions, in the
form of EXHIBIT F attached hereto, shall have been delivered to and acknowledged
in writing by the Company and the Company's transfer agent.
i. The Company shall have delivered to the Buyer a
certificate evidencing the incorporation and good standing of the Company in the
State of Delaware issued by the Secretary of State of the State of Delaware as
of a date within ten (10) Trading Days of the Closing Date.
j. The Company shall have delivered to the Buyer a
certified copy of the Certificate of Incorporation as certified by the Secretary
of State of the State of Delaware within ten (10) Trading Days of the Closing
Date.
k. The Company shall have delivered to the Buyer a
secretary's certificate executed by the Secretary of the Company, dated as of
the respective Closing Date, in the form attached hereto as EXHIBIT G.
l. A Registration Statement covering the sale of all of
the respective Commitment Shares and Purchase Shares underlying the Equity
Purchase Agreement shall have been declared effective under the 1933 Act by the
SEC and no stop order with respect to the Registration Statement shall be
pending or threatened by the SEC. The Company shall have prepared and delivered
to the Buyer a final form of Prospectus to be used by the Buyer in connection
with any sales of any Commitment Shares or any Purchase Shares. The Company
shall have made all filings under all applicable federal and state securities
laws necessary to consummate the issuance of the Commitment Shares and the
Purchase Shares pursuant to this Agreement and the Equity Purchase Agreement in
compliance with such laws.
m. No Event of Default (as defined in the Equity
Purchase Agreement) has occurred, or any event which, after notice and/or lapse
of time, would become an Event of Default under the Equity Purchase Agreement
has occurred.
n. On or prior to each Closing, the Company shall take
all necessary action, if any, and such actions as reasonably requested by the
Buyer, in order to render inapplicable any control share acquisition, business
combination, shareholder rights plan or poison pill (including any distribution
under a rights agreement) or other similar anti-takeover provision under the
Certificate of Incorporation or the laws of the state of its incorporation which
is or could become applicable to the Buyer as a result of the transactions
contemplated by this Agreement, including, without limitation, the Company's
issuance of the Securities and the Buyer's Ownership of the Securities.
o. On or prior to the First Closing, the Company shall
have entered into an agreement with Bank of America, N.A., in form and substance
reasonably acceptable to the Buyer, to (1) extend the Company's existing Credit
Facility with Bank of America to at least December 31, 2000, (2) waive any
defaults under such Credit Facility, including the cash collection requirements
and (3) such other matters as the Buyer shall reasonably request with respect to
such Credit Facility.
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8. INDEMNIFICATION. In consideration of the Buyer's execution and
delivery of the Transaction Documents and acquiring the Securities thereunder
and in addition to all of the Company's other obligations under the Transaction
Documents, the Company shall defend, protect, indemnify and hold harmless the
Buyer and each other holder of the Securities and all of their shareholders,
officers, directors, employees and direct or indirect investors and any of the
foregoing person's agents or other representatives (including, without
limitation, those retained in connection with the transactions contemplated by
this Agreement) (collectively, the "INDEMNITEES") from and against any and all
actions, causes of action, suits, claims, losses, costs, penalties, fees,
liabilities and damages, and expenses in connection therewith (irrespective of
whether any such Indemnitee is a party to the action for which indemnification
hereunder is sought), and including reasonable attorneys' fees and disbursements
(the "INDEMNIFIED LIABILITIES"), incurred by any Indemnitee as a result of, or
arising out of, or relating to (a) any misrepresentation or breach of any
representation or warranty made by the Company in the Transaction Documents or
any other certificate, instrument or document contemplated hereby or thereby,
(b) any breach of any covenant, agreement or obligation of the Company contained
in the Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby, or (c) any cause of action, suit or claim
brought or made against such Indemnitee and arising out of or resulting from the
execution, delivery, performance or enforcement of the Transaction Documents or
any other certificate, instrument or document contemplated hereby or thereby. To
the extent that the foregoing undertaking by the Company may be unenforceable
for any reason, the Company shall make the maximum contribution to the payment
and satisfaction of each of the Indemnified Liabilities which is permissible
under applicable law.
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9. GOVERNING LAW; MISCELLANEOUS.
a. Governing Law; Jurisdiction; Jury Trial. The
corporate laws of the State of Delaware shall govern all issues concerning the
relative rights of the Company and its shareholders. All other questions
concerning the construction, validity, enforcement and interpretation of this
Agreement and the other Transaction Documents shall be governed by the internal
laws of the State of Illinois, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of Illinois or any other
jurisdictions) that would cause the application of the laws of any jurisdictions
other than the State of Illinois. Each party hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in the City of
Chicago, for the adjudication of any dispute hereunder or under the other
Transaction Documents or in connection herewith or therewith, or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of 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 to such
party at the address for such 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. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT
OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
b. Counterparts. This Agreement may be executed in two
or more identical counterparts, all of which 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; provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.
c. Headings. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
d. Severability. If any provision of this Agreement
shall be invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
e. Entire Agreement; Amendments. This Agreement
supersedes all other prior oral or written agreements between the Buyer, the
Company, their affiliates and persons acting on their behalf with respect to the
matters discussed herein, and this Agreement, the Other Transaction Documents
and the instruments referenced herein contain the entire understanding of the
parties with respect to the matters covered herein and therein and, except as
specifically
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set forth herein or therein, neither the Company nor the Buyer makes any
representation, warranty, covenant or undertaking with respect to such matters.
No provision of this Agreement may be amended other than by an instrument in
writing signed by the Company and the Buyer, and no provision hereof may be
waived other than by an instrument in writing signed by the party against whom
enforcement is sought.
f. Notices. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered: (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by facsimile
(provided confirmation of transmission is mechanically or electronically
generated and kept on file by the sending party); or (iii) one Trading Day after
deposit with a nationally recognized overnight delivery service, in each case
properly addressed to the party to receive the same. The addresses and facsimile
numbers for such communications shall be:
If to the Company:
Xxxxxxxx.xxx, Inc
Two Piedmont Center, Suite 400
0000 Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Xxxxx X. Xxxx
With a copy to:
Xxxxxx & Bird LLP
One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Telephone: 000-000-0000
Facsimile: 404-881-7777
Attention: Xxxx X. Xxxxxx
If to the Buyer:
Fusion Capital Fund II, LLC
000 Xxxxxxxxxxx Xxxx Xxxxx, Xxxxx 0-000
Xxxxxxx, Xxxxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Xxxxxx X. Xxxxxx
If to the Transfer Agent:
SunTrust Bank
Stock Transfer Department, Room 225
00 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Telephone:
Facsimile:
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Attention: Xxxxxxx Xxxxxxx
or at such other address and/or facsimile number and/or to the attention of such
other person as the recipient party has specified by written notice given to
each other party three (3) Trading Days prior to the effectiveness of such
change. Written confirmation of receipt (A) given by the recipient of such
notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender's facsimile machine containing the time,
date, recipient facsimile number and an image of the first page of such
transmission or (C) provided by a nationally recognized overnight delivery
service, shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.
g. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and assigns, including any transferee of an Equity Purchase
Agreement. The Company shall not assign this Agreement or any rights or
obligations hereunder without the prior written consent of the Buyer, including
by merger or consolidation. The Buyer may not assign its rights under this
Agreement without the consent of the Company, other than to an affiliate of the
Buyer controlled by Xxxxxx X. Xxxxxx or Xxxxxx X. Xxxxxxxxxx. Notwithstanding
anything to the contrary contained in the Transaction Documents, the Buyer shall
be entitled to pledge the Commitment Shares and the Purchase Shares in
connection with a bona fide loan or margin account.
h. No Third Party Beneficiaries. This Agreement is
intended for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision
hereof be enforced by, any other person.
i. Publicity. The Company and the Buyer shall have the
right to approve before issuance any press releases or any other public
disclosure (including any filings with the SEC) with respect to the transactions
contemplated hereby; provided, however, that the Company shall be entitled,
without the prior approval of any Buyer, to make any press release or other
public disclosure (including any filings with the SEC) with respect to such
transactions as is required by applicable law and regulations (although the
Buyer shall be consulted by the Company in connection with any such press
release or other public disclosure prior to its release and shall be provided
with a copy thereof).
j. Further Assurances. Each party shall do and perform,
or cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
k. Termination; Survival. This Agreement may be
terminated only as follows:
(i) By the Buyer any time after an Event of Default (as
defined in the Equity Purchase Agreement) has occurred.
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(ii) In the event that the First Closing shall not have
occurred, the Company shall have the option to terminate this Agreement
for any reason or for no reason without liability of any party to any
other party. If this Agreement is terminated pursuant to this Section
9(k)(ii), the Company shall issue to the Buyer the First Closing
Commitment Shares immediately prior to the termination hereof. In the
such case, the number of First Closing Commitment Shares shall be equal
to 12% of $12,000,000 divided by the lower of (A) the arithmetic
average of the Closing Bid Prices of the Common Stock for the five (5)
consecutive Trading Days immediately preceding the Trading Day which is
two (2) Trading Days prior to the date of termination of this Agreement
and (B) the arithmetic average of the Closing Bid Prices of the Common
Stock for the five (5) consecutive Trading Days immediately preceding
the date hereof. The number of First Closing Commitment Shares shall be
appropriately adjusted for any reorganization, recapitalization,
non-cash dividend, stock split or other similar transaction.
(iii) In the event that the First Closing shall not have
occurred on or before October 31, 2000, due to the failure to satisfy
the conditions set forth in Sections 6 and 7 above with respect to the
Closing (and the nonbreaching party's failure to waive such unsatisfied
condition(s)), the nonbreaching party shall have the option to
terminate this Agreement at the close of business on such date without
liability of any party to any other party. If this Agreement is
terminated pursuant to this Section 9(k)(iii) prior to the Closing
other than solely as a result of any material breach of the Buyer's
obligation hereunder, the Company shall issue to the Buyer the First
Closing Commitment Shares immediately upon the termination hereof. In
the such case, the number of First Closing Commitment Shares shall be
equal to 12% of $12,000,000 divided by the lower of (A) the arithmetic
average of the Closing Bid Prices of the Common Stock for the five (5)
consecutive Trading Days immediately preceding the Trading Day which is
two (2) Trading Days prior to the date of termination of this Agreement
and (B) the arithmetic average of the Closing Bid Prices of the Common
Stock for the five (5) consecutive Trading Days immediately preceding
the date hereof. The number of First Closing Commitment Shares shall be
appropriately adjusted for any reorganization, recapitalization,
non-cash dividend, stock split or other similar transaction.
(iv) If the First Equity Purchase Agreement has been
entered into as provided herein, by the Company any time after the date
the First Equity Purchase Agreement has been fully performed but prior
to the delivery to the Buyer of the Second Closing Notice.
(v) If the First Equity Purchase Agreement has been
entered into as provided herein, by either the Company or the Buyer if
the First Equity Purchase Agreement has been fully performed and the
Company has not delivered a Second Closing Notice to the Buyer on or
prior to the twentieth (20th) Trading Day after the First Equity
Purchase Agreement has been fully performed.
(vi) If the First Equity Purchase Agreement has been
entered into as provided herein, the First Equity Purchase Agreement
has been fully performed and the Company has delivered a Second Closing
Notice to the Buyer, in the event that the Second Closing
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shall not have occurred on or before sixty (60) Trading Days from the
date of the Second Closing Notice due to the failure to satisfy the
conditions set forth in Sections 6 and 7 above with respect to the
Second Closing (and the nonbreaching party's failure to waive such
unsatisfied condition(s)), the nonbreaching party shall have the option
to terminate this Agreement at the close of business on such date
without liability of any party to any other party. If this Agreement is
terminated pursuant to this Section 9(k)(vi) prior to the Second
Closing other than solely as a result of a material breach of the
Buyer=s obligation hereunder, the Company shall issue to the Buyer the
Second Closing Commitment Shares immediately upon the termination
hereof. In the such case, the number of Second Closing Commitment
Shares shall be equal to 8% of $12,000,000 divided by the lower of (A)
the arithmetic average of the Closing Bid Prices of the Common Stock
for the five (5) consecutive Trading Days immediately preceding the
Trading Day which is two (2) Trading Days prior to the date of
termination of this Agreement and (B) the arithmetic average of the
Closing Bid Prices of the Common Stock for the five (5) consecutive
Trading Days immediately preceding the date of the Second Closing
Notice. The number of Second Closing Commitment Shares shall be
appropriately adjusted for any reorganization, recapitalization,
non-cash dividend, stock split or other similar transaction.
(vii) If either Equity Purchase Agreement is terminated by
either party pursuant to its terms without using the full available
amount to purchase Common Stock, this Agreement shall automatically
terminate at such time or this Agreement shall automatically terminate
on the date the available amount under the Second Equity Purchase
Agreement has been fully used to purchase Common Stock.
Except for termination of this Agreement under Section 9(k)(vii), any
termination of this Agreement pursuant to this Section 9(k) shall be effected by
written notice from the Company to the Buyer, or the Buyer to the Company, as
the case may be, setting forth the basis for the termination hereof. A
termination of this Agreement under Section 9(k)(vii) shall automatically occur
on such date as the Equity Purchase Agreement has been terminated by either
party pursuant to its terms without fully using the available amount to purchase
shares of Common Stock or on such date as the aggregate available amount of the
Second Equity Purchase Agreement has been fully used to purchase shares of
Common Stock, in each case, without any action or notice on the part of any
party. Except as expressly set forth in this Agreement, the representations and
warranties of the Company and the Buyer contained in Sections 2 and 3 hereof,
the indemnification provisions set forth in Section 8 hereof and the agreements
and covenants set forth in Section 9, shall survive the Closing and any
termination hereof.
l. Financial Advisor. The Company acknowledges that it
has engaged SunTrust Equitable Securities Corporation as its financial advisor
in connection with the transactions contemplated hereby. The Company shall be
responsible for the payment of any fees or commissions, if any, of its financial
advisor or any placement agent, broker or finder relating to or arising out of
the transactions contemplated hereby. The Company shall pay, and hold the Buyer
harmless against, any liability, loss or expense (including, without limitation,
attorneys' fees and out of pocket expenses) arising in connection with any such
claim.
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m. No Strict Construction. 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.
n. Remedies. The Buyer shall have all rights and
remedies set forth in the Transaction Documents and all of the rights and
remedies available under applicable laws. Any person having any rights under any
provision of the Transaction Documents shall be entitled to enforce such rights
specifically (without posting a bond or other security), to recover damages by
reason of any breach of any provision of the Transaction Documents and to
exercise all other rights granted by law.
o. Payment of Expenses. The Company has paid to the
Buyer $35,000 as the Buyer's full expense reimbursement amount in connection
with consummation of the transaction, including any due diligence expenses and
legal fees. In the event the Buyer incurs expenses in excess of $35,000, the
Company shall not be required to reimburse the Buyer for any additional amounts
in connection with consummation of the transaction, including any due diligence
expenses or legal fees.
* * * * * *
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IN WITNESS WHEREOF, the Buyer and the Company have caused this Master
Facility Agreement to be duly executed as of the date first written above.
THE COMPANY:
XXXXXXXX.XXX, INC.
By: /s/ Xxxx X. Xxxxxx
--------------------------------
Name: Xxxx X. Xxxxxx
Title: Chief Executive Officer
BUYER:
FUSION CAPITAL FUND II, LLC
BY: FUSION CAPITAL PARTNERS II, LLC
BY: SGM HOLDINGS CORP.
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
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SCHEDULES
Schedule 3(a) Subsidiaries
Schedule 3(c) Capitalization
Schedule 3(e) Conflicts
Schedule 3(f) 1934 Act Filings
Schedule 3(g) Material Changes
Schedule 3(h) Litigation
Schedule 3(m) Intellectual Property
Schedule 3(o) Liens
Schedule 3(s) Certain Transactions
EXHIBITS
Exhibit A Form of Equity Purchase Agreement
Exhibit B Form of Registration Rights Agreement
Exhibit C Form of Company Counsel Opinion
Exhibit D Form of Officer's Certificate
Exhibit E Form of Resolutions of Board of Directors of the Company
Exhibit F Form of Irrevocable Transfer Agent Instructions
Exhibit G Form of Secretary's Certificate
