SECURITIES PURCHASE AGREEMENT
Exhibit
10.1
This
Securities Purchase Agreement (this “Agreement”)
is
dated as of July 31, 2008, by and among CJPG, Inc., a Nevada corporation (the
“Company”),
and
each purchaser identified on the signature pages hereto (each, including its
successors and assigns, a “Purchaser”
and
collectively, the “Purchasers”).
RECITALS
A. The
Company and each Purchaser is executing and delivering this agreement in
reliance upon the exemption from securities registration afforded by Section
4(2) of the Securities Act of 1933, as amended (the “Securities
Act”),
and
Rule 506 of Regulation D (“Regulation
D”)
as
promulgated by the United States Securities and Exchange Commission under the
Securities Act.
B. The
Company desires to raise gross proceeds of up to $10,000,000, plus an additional
$3,000,000 to cover over-allotments, if any, pursuant to the issuance and sale
of (i) shares of the Common Stock, par value $0.001 per share (the “Common
Stock”),
of
the Company (which shares of Common Stock and shall be collectively referred
to
herein as the “Shares”),
and
(ii) and warrants, in substantially the form attached hereto as Exhibit
A
(the
“Warrants”).
C. Each
Purchaser, severally and not jointly, wishes to purchase, and the Company wishes
to sell, upon the terms and conditions stated in this Agreement, (i) that
aggregate number of Shares set forth below such Purchaser’s name on the
signature page of this Agreement, and (ii) Warrants to acquire up to that number
of additional shares of Common Stock equal to 50.0% of the number of Shares
purchased by such Purchaser (rounded up to the nearest whole share) (the shares
of Common Stock issuable upon exercise of or otherwise pursuant to the Warrants,
collectively, the “Warrant
Shares”).
D. Each
Purchaser shall be entitled to receive Adjustment Shares if and to the extent
set forth in Section 2.3, in the event the Company fails to generate the amount
of consolidated earnings before interest, taxes, depreciation and amortization
for calendar year ended December 31, 2009 set forth in Section 2.3.
D. The
Shares, the Warrants and the Warrant Shares issued pursuant to this Agreement
are collectively referred to herein as the “Securities”.
The
Adjustment Shares are also referred to herein as the “Adjustment Securities”.
E. The
Company has engaged Sterne Agee & Xxxxx, Inc., Feltl and Company, Inc. and
Xxxxxx & Xxxxxxx LLC as its placement agents (the “Placement
Agents”)
for
the offering of the Securities on a “best efforts” basis.
F. Contemporaneously
with the execution and delivery of this Agreement, the parties hereto are
executing and delivering a Registration Rights Agreement, in the form attached
hereto as Exhibit
B
(the
“Registration
Rights Agreement”),
pursuant to which, among other things, the Company will agree to provide certain
registration rights with respect to the Shares, the Warrant Shares and the
Adjustment Shares under the Securities Act and applicable state securities
laws.
G. Immediately
prior to the initial closing of the purchase and sale of the Shares and the
Warrants pursuant to this Agreement (such initial closing and any subsequent
closings are each referred to herein as a “Closing”),
and
as a condition to such Closing, the Company will consummate a reverse
acquisition of TableMAX Holdings, LLC, a California limited liability company
(“TableMAX”),
in
which the members of TableMAX will transfer to the Company prior to the initial
Closing a minimum of 98% of the outstanding capital securities of TableMAX
in
exchange for shares of Common Stock (the “Reverse
Acquisition”);
upon
consummation of the Reverse Acquisition, TableMAX will be at least a 98%-owned
subsidiary of the Company.
NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
and for other good and valuable consideration, the receipt and adequacy of
which
are hereby acknowledged, the Company and the Purchasers hereby agree as
follows:
ARTICLE
I.
DEFINITIONS
1.1 Definitions.
In
addition to the terms defined elsewhere in this Agreement, for all purposes
of
this Agreement, the following terms shall have the meanings indicated in this
Section 1.1:
“2009
Adjusted Income”
means
the consolidated net income of the Company for the twelve months ended December
31, 2009, before interest, taxes, depreciation and amortization (and before
adjustments for non-cash and cash charges related to the Adjustment Securities
or the other transactions contemplated in the Transaction Documents (including
any expenses of the exchange transactions between TableMAX and the Company
or
the offer, sale and registration for resale of the Securities), based on the
financial results reported in the Company’s periodic reports filed with the
Securities and Exchange Commission culminating with the quarterly report on
Form
10-Q for the fiscal quarter ended December 31, 2009.
“Action”
means
any action, suit, inquiry, notice of violation, proceeding (including any
partial proceeding such as a deposition) or investigation pending or, to the
Company’s Knowledge, threatened in writing against or affecting the Company or
any of their respective properties before or by any court, arbitrator,
governmental or administrative agency, regulatory authority (federal, state,
county, local or foreign), stock market, stock exchange or trading
facility.
“Adjustment
Factor”
means
a
fraction (i) the numerator of which is equal to the 2009 Adjusted Income, and
(ii) the denominator of which is equal to $8.114 million; provided,
however,
that,
the Adjusted Factor shall in no event be less than zero (0) nor greater than
two-tenths (0.2).
“Adjustment
Securities”
has
the
meaning set forth in the Recitals.
“Adjustment
Shares”
has
the
meaning set forth in Section 2.3.
“Affiliate”
means,
with respect to any Person, any other Person that, directly or indirectly
through one or more intermediaries, Controls, is controlled by or is under
common control with such Person, as such terms are used in and construed under
Rule 144. With respect to a Purchaser, any investment fund or managed account
that is managed on a discretionary basis by the same investment manager as
such
Purchaser will be deemed to be an Affiliate of such Purchaser.
“Amendment”
means
the filing of an amendment to the Company’s Articles of Incorporation with the
Nevada Secretary of State for purposes of increasing the Company’s authorized
Common Stock to an amount sufficient to provide for the Company’s issuance of
all of the Securities and Adjustment Securities pursuant to this Agreement.
“Bridge
Notes”
has the
meaning set forth on Schedule 3.1(a) attached hereto.
2
“Business
Day”
means
a
day, other than a Saturday or Sunday, on which banks in New York City are open
for the general transaction of business.
“Closing”
has
the
meaning set forth in the Recitals.
“Closing
Date”
means
the Business Day when all of the Transaction Documents have been executed and
delivered by the applicable parties thereto, and all of the conditions set
forth
in Sections 2.1, 2.2, 5.1 and 5.2 hereof are satisfied, or such other date
as
the parties may agree.
“Commission”
means
the United States Securities and Exchange Commission.
“Common
Stock”
has
the
meaning set forth in the Recitals, and also includes any securities into which
the Common Stock may hereafter be reclassified or changed.
“Company
Counsel”
means
Xxxxxxxxx Traurig, LLP
“Company
Deliverables”
has
the
meaning set forth in Section 2.2(a).
“Company’s
Knowledge”
means,
with respect to any statement, that such statement is based upon the actual
knowledge of the officers of the Company or officers of TableMAX, as applicable,
having responsibility for the matter or matters that are the subject of the
statement.
“Control”
(including the terms “controlling”, “controlled by” or “under common control
with”) means the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
“Disclosure
Materials”
means
the (i) Financial Statements; (ii) the Company’s pro forma draft of a
Registration Statement on Form S-1 dated June 26, 2008 prepared to give effect
to the Reverse Acquisition and the equity based transactions contemplated by
this Agreement or referred to in the schedules hereto; and (iii) the Company’s
pro forma Capitalization Schedule dated June 26, 2008 prepared to give effect
to
the equity based transactions contemplated by this Agreement or referred to
in
the schedules hereto.
“Effective
Date”
means
the date on which the initial Registration Statement required by Section 2(a)
of
the Registration Rights Agreement is first declared effective by the
Commission.
“Effectiveness
Deadline”
means
the date on which the initial Registration Statement is required to be declared
effective by the Commission under the terms of the Registration Rights
Agreement.
“Environmental
Laws”
has
the
meaning set forth in Section 3.1(l).
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended, or any successor statute,
and
the rules and regulations promulgated thereunder.
“Financial
Statements”
has
the
meaning set forth in Section 3.1(i).
“GAAP”
means
U.S. generally accepted accounting principles, as applied by the
Company.
“Intellectual
Property”
has
the
meaning set forth in Section 3.1(r).
“Lien”
means
any lien, charge, claim, encumbrance, security interest, right of first refusal,
preemptive right or other restrictions of any kind.
3
“Material
Adverse Effect”
means
any of (i) a material and adverse effect on the legality, validity or
enforceability of any Transaction Document, (ii) a material and adverse effect
on the consolidated results of operations, assets, prospects, business or
financial condition of the Company and TableMAX, or (iii) any material adverse
impairment to the Company's ability to perform in any material respect on a
timely basis its obligations under any Transaction Document.
“Material
Contract”
means
any contract of that is material to the consolidated business operations of
the
Company and TableMAX.
“Material
Permits”
has
the
meaning set forth in Section 3.1(p).
“New
York Courts”
means
the state and federal courts sitting in the City of New York, Borough of
Manhattan.
“Outside
Date”
means
July 31, 2008.
“Person”
means
an individual, corporation, partnership, limited liability company, trust,
business trust, association, joint stock company, joint venture, sole
proprietorship, unincorporated organization, governmental authority or any
other
form of entity not specifically listed herein.
“Principal
Trading Market”
means
the Trading Market on which the Common Stock is primarily listed on and quoted
for trading, which, as of the date of this Agreement and the Closing Date,
shall
be the electronic pink sheets of the U. S. Over-the-Counter (OTC)
market.
“Proceeding”
means
an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.
“Purchase
Price”
means
$0.405 per Share.
“Purchaser
Deliverables”
has
the
meaning set forth in Section 2.2(c).
“Registration
Rights Agreement”
has
the
meaning set forth in the Recitals.
“Registration
Statement”
means
a
registration statement meeting the requirements set forth in the Registration
Rights Agreement and covering the resale by the Purchasers of the Registrable
Securities (as defined in the Registration Rights Agreement).
“Required
Approvals”
has
the
meaning set forth in Section 3.1(e).
“Reverse
Acquisition”
has
the
meaning set forth in the Recitals.
“Rule
144”
means
Rule 144 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
“Secretary’s
Certificate”
has
the
meaning set forth in Section 2.2(a)(v).
“Securities
Act”
means
the Securities Act of 1933, as amended.
“Shareholder
Approval”
means
such approval from the shareholders of the Company as may be required under
the
Articles of Incorporation and bylaws of the Company and applicable Nevada law
with respect to the Amendment.
4
“Short
Sales”
include, without limitation, all “short sales” as defined in Rule 200
promulgated under Regulation SHO under the Exchange Act, whether or not against
the box, and all types of direct and indirect stock pledges, forward sale
contracts, options, puts, calls, short sales, swaps, “put equivalent positions”
(as defined in Rule 16a-1(h) under the Exchange Act) and similar arrangements
(including on a total return basis), and sales and other transactions through
non-US broker dealers or foreign regulated brokers.
“Subscription
Amount”
means
with respect to each Purchaser, the aggregate amount to be paid for the Shares
and the related Warrants purchased hereunder as indicated on such Purchaser’s
signature page to this Agreement next to the heading “Purchase Price
(Subscription Amount)”.
“TableMAX”
has
the
meaning set forth in the Recitals.
“Trading
Affiliate”
has
the
meaning set forth in Section 3.2(g).
“Trading
Day”
means
(i) a day on which the Common Stock is listed or quoted and traded on its
primary Trading Market (other than the OTC Bulletin Board), or (ii) if the
Common Stock is not listed on a Trading Market (other than the OTC Bulletin
Board), a day on which the Common Stock is traded in the over-the-counter
market, as reported by the OTC Bulletin Board, or (iii) if the Common Stock
is
not quoted on any Trading Market, a day on which the Common Stock is quoted
in
the over-the-counter market as reported by the Pink Sheets, LLC (or any similar
organization or agency succeeding to its functions of reporting prices);
provided,
that in
the event that the Common Stock is not listed or quoted as set forth in (i),
(ii) and (iii) hereof, then Trading Day shall mean a Business Day.
“Trading
Market”
means
whichever of the New York Stock Exchange, the American Stock Exchange, the
NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market
or the OTC Bulletin Board (including the electronic pink sheets) on which the
Common Stock is listed or quoted for trading on the date in
question.
“Transaction
Documents”
means
this Agreement, the schedules and exhibits attached hereto, the Warrants, the
Registration Rights Agreement and any other documents or agreements executed
in
connection with the transactions contemplated hereunder.
“Transfer
Agent”
means
Florida Atlantic Stock Transfer Inc. or any successor transfer agent for the
Company.
“Warrants”
has
the
meaning set forth in the Preamble to this Agreement. The Placement Agents and/or
their designees are also receiving placement agent warrants as compensation
for
services rendered in connection with the transactions set forth herein, which
warrants shall also constitute “Warrants” for all purposes
hereunder.
ARTICLE
II.
PURCHASE
AND SALE
2.1 Closing.
(a)
Subject to the terms and conditions set forth in this Agreement, at the initial
Closing, the Company shall issue and sell to each Purchaser, and each Purchaser
shall, severally and not jointly, purchase from the Company, such number of
Shares of Common Stock equal to the quotient resulting from dividing (i) the
aggregate purchase price for such Purchaser, as indicated below such Purchaser’s
name on the signature page of this Agreement (the “Subscription
Amount”)
by
(ii) the Purchase Price, rounded to the nearest whole Share. In addition, each
Purchaser shall receive a Warrant to purchase a number of Warrant Shares equal
to 50.0% of the number of Shares purchased by such Purchaser, as indicated
below
such Purchaser’s name on the signature page of this Agreement, rounded up to the
nearest whole share. The Warrants shall have an exercise price equal to 100%
of
the Purchase Price and shall be exercisable at any time prior to the third
anniversary of the date of issuance. In any subsequent Closing, the Company
may
sell additional Securities and related contingent rights to Adjustment
Securities subject to the terms and conditions of this Agreement provided that
the aggregate gross proceeds to the Company from such additional sales, when
added to the aggregate gross proceeds to the Company from all previous Closings,
shall not exceed $13,000,000.
5
(b) Each
Purchaser must complete and return a duly executed, unaltered copy of this
Agreement (including without limitation the completed Accredited Investor
Questionnaire and the Stock Certificate Questionnaire included as Exhibits
C-1
and C-2 hereto, respectively) to the Placement Agents and shall deposit the
amount of readily available funds equal to such Purchaser’s Subscription Amount
in a segregated escrow account (the “Escrow
Account”)
with
an escrow agent designated by the Placement Agents (the “Escrow
Agent”)
by
delivering a check made payable to “Private Bank Minnesota - CJPG, Inc. Escrow
Account or by wire transfer of immediately available funds pursuant to the
instructions provided below:
Private
Bank Minnesota
000
Xxxxx 0xx
Xxxxxx, 0000
XXX#:
000000000
ACCOUNT
#:0000000
FOR: CJPG,
INC. - TABLEMAX
Attn:
Xxxxxx X. Cardle, Vice President
Tel
#: (000) 000-0000
Fax
#:(000) 000-0000
The
Company and the Placement Agents retain complete discretion to accept or reject
any subscription unless and until the Company executes and delivers a
counterpart to this Agreement that includes such Purchaser’s signature.
(c) Each
Closing shall be held at a date and time designated by the Company and the
Placement Agents prior to 11:59 p.m. Pacific Daylight Time on the Outside Date
and shall occur at such location or remotely by facsimile transmission or other
electronic means as the parties may mutually agree. Upon satisfaction or waiver
of all conditions to the Closing, the Placement Agents and the Company shall
instruct the Escrow Agent to release the proceeds held in the Escrow Account
to
the Company, less fees and expenses due to the Placement Agents. Interest,
if
any, that has accrued with respect to the Subscription Amount while in escrow
shall also be distributed to the Company at the Closing and the Purchaser will
have no right to such interest, even if there is no Closing.
2.2 Closing
Deliveries.
(a) At
or
prior to the Closing, the Company shall issue, deliver or cause to be delivered
to each Purchaser the following (the “Company
Deliverables”):
(i) this
Agreement, duly executed by the Company;
(ii) a
copy of
irrevocable transfer agent instructions, to be delivered to the Transfer Agent
at the Closing, instructing the Transfer Agent to issued one or more stock
certificates, free and clear of all restrictive and other legends (except as
provided in Section 4.1(b) hereof), evidencing the Shares subscribed for by
Purchaser hereunder, registered in the name of such Purchaser as set forth
on
the Stock Certificate Questionnaire included as Exhibit C-2 hereto;
6
(iii) a
legal
opinion of Company Counsel, in a form reasonably acceptable to the Placement
Agents and counsel to the Placement Agents, executed by such counsel and
addressed to the Purchasers and the Placement Agents;
(iv) the
Registration Rights Agreement, duly executed by the Company;
(v) a
certificate of the Secretary of the Company (the “Secretary’s
Certificate”),
dated
as of the Closing Date, (a) certifying the resolutions adopted by the Board
of
Directors of the Company approving the transactions contemplated by this
Agreement and the other Transaction Documents and the issuance of the
Securities, (b) certifying the current versions of the certificate of
incorporation, as amended and by-laws of the Company, and (c) certifying as
to
the signatures and authority of persons signing the Transaction Documents and
related documents on behalf of the Company;
(vi) the
Compliance Certificate referred to in Section 5.1(h);
(vii) a
certificate evidencing the formation and good standing of the Company in the
State of Nevada issued by the Secretary of State (or comparable office) as
of a
date within 10 days of the Closing Date;
(viii) a
certified copy of the Company’s Articles of Incorporation, including the
Amendment, as certified by the Secretary of State of the State of Nevada within
ten (10) days of the Closing Date; and
(ix) copies
of
(i) the audited balance sheets of the Company as of September 30, 2007 and
2006
and the related audited statements of income, stockholders equity and cash
flow
for each of the twelve months then ended (the “Audited
Company Statements”);
and
(ii) the final version of the Interim Company Statements
(as such
term is defined in Section 3.1(i).
(b) within
three (3) Business Days following the Closing, the Company shall issue, deliver
or cause to be delivered to each Purchaser the following :
(i) in
accordance with the transfer agent instructions contemplated by Section
2.2(a)(ii),
one or
more stock certificates, free and clear of all restrictive and other legends
(except as provided in Section 4.1(b) hereof), evidencing the Shares subscribed
for by Purchaser hereunder, registered in the name of such Purchaser as set
forth on the Stock Certificate Questionnaire included as Exhibit C-2 hereto;
and
(ii) a
Warrant, executed by the Company and registered in the name of such Purchaser
as
set forth on the Stock Certificate Questionnaire included as Exhibit C-2 hereto,
pursuant to which such Purchaser shall have the right to acquire such number
of
Warrant Shares equal to 50.0% of the number of Shares issuable to such Purchaser
pursuant to Section 2.2(a)(ii), rounded up to the nearest whole share, on the
terms set forth therein;
(c) On
or
prior to the Closing, each Purchaser shall deliver or cause to be delivered
to
the Company the following (the “Purchaser
Deliverables”):
(i) this
Agreement, duly executed by such Purchaser;
(ii) its
Subscription Amount, in United States dollars and in immediately available
funds, in the amount set forth as the “Purchase Price” indicated below such
Purchaser’s name on the applicable signature page hereto by wire transfer to an
account designated in writing by the Company for such purpose, as set forth
on
Exhibit
D
attached
hereto;
7
(iii) the
Registration Rights Agreement, duly executed by such Purchaser;
(iv) a
fully
completed and duly executed Selling Stockholder Questionnaire in the form
attached as Annex
B
to the
Registration Rights Agreement; and
(v) a
fully
completed and duly executed Accredited Investor Questionnaire and Stock
Certificate Questionnaire in the forms attached hereto as Exhibits
C-1
and
C-2,
respectively.
2.3 Adjustment
Securities.
If the
Company generates less than $8.114 million of 2009 Adjusted Income, then the
Company shall issue to each Purchaser a number of additional shares of Common
Stock (the “Adjustment
Shares”)
equal
to the number of Shares issued to such Purchaser at the Closing multiplied
by
the Adjustment Factor. If applicable, the Company shall, within five Business
Days following filing of the Company’s quarterly report on Form 10-Q for the
fiscal quarter ended December 31, 2009, issue, deliver or cause to be delivered
to each Purchaser one or more stock certificates, free and clear of all
restrictive and other legends (except as provided in Section 4.1(b) hereof),
evidencing the Adjustment Shares to which such Purchaser is entitled, registered
in the name of such Purchaser as set forth on the Stock Certificate
Questionnaire included as Exhibit C-2 hereto. The number of Adjustment Shares
shall be subject to appropriate adjustment in the event of any stock splits,
stock dividends, stock combinations or other capital reorganizations of the
Company occurring between the Closing and any issuances required by this Section
2.3.
ARTICLE
III.
REPRESENTATIONS
AND WARRANTIES
3.1 Representations
and Warranties of the Company.
The
Company hereby represents and warrants to the Purchasers and to the Placement
Agents that, except as set forth in the Schedules delivered
herewith:
(a) Subsidiaries.
Immediately
prior to the Closing, and after giving effect to the Reverse Acquisition, the
Company owns at least 98% of the issued and outstanding membership interests
of
TableMAX. All
of
the outstanding membership interests of TableMAX are duly authorized, validly
issued, fully paid and non-assessable, have been issued in compliance in all
material respects with all applicable federal and state securities laws, and
none of such outstanding membership interests were issued in violation of any
preemptive rights or similar rights to subscribe for or purchase any capital
stock of the TableMAX. TableMAX has no other equity securities or securities
containing any equity features authorized, issued or outstanding. There are
no
agreements or other rights or arrangements existing which provide for the sale
or issuance of such securities and there are no rights, subscriptions, warrants,
options, conversion rights or agreements of any kind outstanding to purchase
or
otherwise acquire from TableMAX any securities of TableMAX. The capitalization
of TableMAX prior to the consummation of the Reverse Acquisition is set forth
in
Schedule
3.1(a).
With
the exception of TableMAX, the Company does not currently own or control,
directly or indirectly, any interest in any other corporation, partnership,
trust, joint venture, limited liability company, association, or other business
entity.
8
(b) Organization
and Qualification.
The
Company is an entity duly incorporated or otherwise organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation
or
organization (as applicable), with the requisite power and authority to own
or
lease and use its properties and assets and to carry on its business as
currently conducted. The Company is not in violation of any of the provisions
of
its articles of incorporation, bylaws or other organizational or charter
documents. The Company is duly qualified to conduct business and is in good
standing as a foreign corporation or other entity in each jurisdiction in which
the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in
good
standing, as the case may be, could not have or reasonably be expected to have,
individually or in the aggregate, resulted in a Material Adverse Effect, and
no
Proceeding has been instituted in any such jurisdiction revoking, limiting
or
curtailing or seeking to revoke, limit or curtail such power and authority
or
qualification. TableMAX is an entity duly incorporated or otherwise organized,
validly existing and in good standing under the laws of the jurisdiction of
its
incorporation or organization (as applicable), with the requisite power and
authority to own or lease and use its properties and assets and to carry on
its
business as currently conducted. TableMAX is not in violation of any of the
provisions of its articles of organization, bylaws or other organizational
or
charter documents. TableMAX is duly qualified to conduct business and is in
good
standing as a foreign corporation or other entity in each jurisdiction in which
the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in
good
standing, as the case may be, could not have or reasonably be expected to have,
individually or in the aggregate, resulted in a Material Adverse Effect, and
no
Proceeding has been instituted in any such jurisdiction revoking, limiting
or
curtailing or seeking to revoke, limit or curtail such power and authority
or
qualification.
(c) Authorization;
Enforcement; Validity.
Subject
to obtaining Shareholder Approval and filing of the Amendment, the Company
has
the requisite corporate power and authority to enter into and to consummate
the
transactions contemplated by each of the Transaction Documents to which it
is a
party and otherwise to carry out its obligations hereunder and thereunder.
The
execution and delivery by the Company of each of the Transaction Documents
to
which it is a party and, subject to obtaining Shareholder Approval and filing
of
the Amendment, the consummation by it of the transactions contemplated hereby
and thereby have been duly authorized by all necessary corporate action on
the
part of the Company, and no further corporate action is required by the Company,
its Board of Directors or its shareholders in connection therewith other than
in
connection with the Required Approvals. Each of the Transaction Documents to
which it is a party has been (or upon delivery will have been) duly executed
by
the Company and is, or when delivered in accordance with the terms hereof,
will
constitute the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except as such enforceability may
be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the enforcement
of, creditors’ rights and remedies or by other equitable principles of general
application. There are no shareholder agreements, voting agreements, or other
similar arrangements with respect to the Company’s capital stock to which the
Company is a party or, to the Company’s Knowledge, between or among any of the
Company’s shareholders.
(d) No
Conflicts.
The
execution, delivery and performance by the Company of the Transaction Documents
to which it is a party and the consummation by the Company of the transactions
contemplated hereby or do not and will not (i) subject to obtaining Shareholder
Approval and filing of the Amendment, conflict with or violate any provision
of
the Company’s certificate of incorporation, bylaws or other organizational or
charter documents, (ii) conflict with, or constitute a default (or an event
that
with notice or lapse of time or both would become a default) under, result
in
the creation of any Lien upon any of the properties or assets of the Company
or
TableMAX or give to others any rights of termination, amendment, acceleration
or
cancellation (with or without notice, lapse of time or both) of, any agreement,
credit facility, debt or other instrument (evidencing a Company debt or
otherwise) or other understanding to which the Company or TableMAX is a party
or
by which any property or asset of the Company or TableMAX is bound or affected,
or (iii) subject to the Required Approvals, conflict with or result in a
violation of any law, rule, regulation, order, judgment, injunction, decree
or
other restriction of any court or governmental authority to which the Company
or
TableMAX is subject (including federal and state securities laws and regulations
and the rules and regulations, assuming the correctness of the representations
and warranties made by the Purchasers herein, of any self-regulatory
organization to which the Company or its securities are subject, including
all
applicable Trading Markets), or by which any property or asset of the Company
or
TableMAX is bound or affected, except in the case of clauses (ii) and (iii),
such as would not, individually or in the aggregate, have or reasonably be
expected to result in a Material Adverse Effect.
9
(e) Filings,
Consents and Approvals.
The
Company is not required to obtain any consent, waiver, authorization or order
of, give any notice to, or make any filing or registration with, any court
or
other federal, state, local or other governmental authority or other Person
in
connection with the execution, delivery and performance by the Company of the
Transaction Documents (including the issuance of the Securities and, if
applicable, the Adjustment Securities), other than (i) the filing of the
Amendment, (ii) the filing with the Commission of one or more Registration
Statements in accordance with the requirements of the Registration Rights
Agreement, (iii) filings required by applicable state securities laws, (iv)
the
filing of a Notice of Sale of Securities on Form D with the Commission under
Regulation D of the Securities Act, (v) the filing of any requisite notices
and/or application(s) to the Principal Trading Market for the issuance and
sale
of the Common Stock and the Warrants and the listing of the Common Stock for
trading or quotation, as the case may be, thereon in the time and manner
required thereby (except as disclosed on Schedule 3.1(e)), and (vi) those that
have been made or obtained prior to the date of this Agreement (collectively,
the “Required
Approvals”).
(f) Issuance
of the Securities.
Subject
to obtaining Shareholder Approval and filing of the Amendment, the Shares and
the Adjustment Shares have been duly authorized and, when issued and paid for
in
accordance with the terms of the Transaction Documents, will be duly and validly
issued, fully paid and nonassessable, free and clear of all Liens, other than
restrictions on transfer provided for in the Transaction Documents or imposed
by
applicable securities laws, and shall not be subject to preemptive or similar
rights of shareholders. Subject to obtaining Shareholder Approval and filing
of
the Amendment, the Warrants have been duly authorized and, when issued and
paid
for in accordance with the terms of the Transaction Documents, will be duly
and
validly issued, free and clear of all Liens, other than restrictions on transfer
provided for in the Transaction Documents or imposed by applicable securities
laws, and shall not be subject to preemptive or similar rights of shareholders.
Subject to obtaining Shareholder Approval and filing of the Amendment, the
Warrant Shares issuable upon exercise of the Warrants have been duly authorized
and, when issued and paid for in accordance with the terms of the Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free
and clear of all Liens, other than restrictions on transfer provided for in
the
Transaction Documents or imposed by applicable securities laws, and shall not
be
subject to preemptive or similar rights of shareholders. Assuming the accuracy
of the representations and warranties of the Purchasers in this Agreement,
the
Securities and, if applicable, the Adjustment Securities, will be issued in
compliance with all applicable federal and state securities laws. The Company
shall, so long as any of the Warrants are outstanding, take all action necessary
to reserve and keep available out of its authorized and unissued capital stock,
solely for the purpose of effecting the exercise thereof, 100% of the number
of
shares of Common Stock issuable upon exercise thereof.
10
(g) Capitalization.
Immediately prior to the Closing, and after giving effect to the Reverse
Acquisition, the receipt of Shareholder Approval and the filing of the
Amendment, the authorized capital stock of the Company will consist of 100
million shares of Common Stock and 10 million shares of $0.01 par value
preferred stock (“Preferred
Stock”),
of
which 17,477,215 shares of Common Stock and no shares of Preferred Stock are
issued and outstanding (without giving effect to Shares issued at previous
Closings, if any). All of the outstanding shares of capital stock of the Company
are duly authorized, validly issued, fully paid and non-assessable, have been
issued in compliance in all material respects with all applicable federal and
state securities laws, and none of such outstanding shares was issued in
violation of any preemptive rights or similar rights to subscribe for or
purchase any capital stock of the Company. Except for the Securities and
Adjustment Securities or as set forth on Schedule
3.1(g)
attached
hereto, the Company has no other equity securities or securities containing
any
equity features authorized, issued or outstanding and (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 options, warrants, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, or exercisable or exchangeable for, any shares of capital
stock of the Company, or contracts, commitments, understandings or arrangements
by which the Company is or may become bound to issue additional shares of
capital stock of the Company or options, warrants, rights to subscribe to,
calls
or commitments of any character whatsoever relating to, or securities or rights
convertible into, or exercisable or exchangeable for, any shares of capital
stock of the Company; (iii) there are no outstanding debt securities, notes,
credit agreements, credit facilities or other agreements, documents or
instruments evidencing indebtedness of the Company or by which the Company
is or
may become bound; (iv) there are no financing statements securing obligations
in
any material amounts, either singly or in the aggregate, filed in connection
with the Company; (v) there are no agreements or arrangements under which the
Company is obligated to register the sale of any of their securities under
the
Securities Act (except the Registration Rights Agreement); (vi) there are no
outstanding securities or instruments of the Company or which contain any
redemption or similar provisions, and there are no contracts, commitments,
understandings or arrangements by which the Company is or may become bound
to
redeem a security of the Company; and (vii) there are no securities or
instruments containing anti-dilution or similar provisions that will be
triggered by the issuance of the Securities or, if applicable, the Adjustment
Securities; (viii) the Company does not have any stock appreciation rights
or
“phantom stock” plans or agreements or any similar plan or
agreement.
(h) Material
Contracts. TableMAX
and, to the Company’s knowledge, each other party thereto, has performed all
material obligations required to be performed under the Material Contracts,
and
are not in default under any Material Contract which default would reasonably
be
expected to have a Material Adverse Effect. The Material Contracts are each
in
full force and effect and TableMAX has not waived or assigned to any other
person any of its rights thereunder. True, correct and complete copies of all
Material Contracts have been made available to the Purchasers.
(i) Financial
Statements. Referred
to on Schedule
3.1(i),
and
incorporated therein by reference to the draft Registration Statement on Form
S-1 dated June 26, 2008 included in the Disclosure Materials, are (i) the
unaudited balance sheets of the Company as of September 30, 2007 and 2006 and
the related unaudited statements of income, stockholders equity and cash flow
for each of the twelve months then ended (the “
Annual Company Statements”);
(ii)
the unaudited balance sheet of the Company as of March 31, 2008 and the related
unaudited statements of income and cash flow for the six month period then
ended
(the “Interim
Company Statements”;
and
collectively with the Annual
Company Statements, the “Company Financial Statements”);
(iii)
the audited consolidated balance sheets of TableMAX as of September 30, 2007
and
2006 and the related audited consolidated statements of income, members’ equity
and cash flow for each of the twelve month periods then ended (the “Audited
TableMAX Statements”);
and
(iv) the unaudited consolidated balance sheet of TableMAX as of March 31, 2008,
and the related unaudited consolidated statements of income and cash flow for
the six month period then ended (the “Interim
TableMAX Statements”;
and
collectively with the Audited TableMAX Statements as the “TableMAX Financial
Statements”)
(the
TableMAX Financial Statements and the Company Financial Statements collectively,
the “Financial Statements”). The TableMAX Financial Statements comply in all
material respects with accounting requirements and the rules and regulations
of
the Commission currently in effect with respect. Such TableMAX Financial
Statements have been prepared in accordance with GAAP applied on a consistent
basis during the periods involved, except as may be otherwise specified in
theTableMAX Financial Statements or the notes thereto and except that the
Interim TableMAX Statements may not contain all footnotes required by GAAP,
and
fairly present in all material respects the financial position of TableMAXas
of
the dates thereof and the results of operations and cash flows for the periods
then ended, subject, in the case of the Interim TableMAX Statements, to normal,
year-end audit adjustments.
11
The
Company Financial Statements have been prepared in accordance with good
accounting practices and fairly present in all material respects the financial
position of the Company, as applicable, as of the dates thereof and the results
of operations and cash flows for the periods then ended, subject, in the case
of
the Interim Company Financial Statements, to normal, year-end audit adjustments.
The Audited Annual Company Statements and the final version of the Interim
Company Statements to be delivered to the Purchaser prior to or at the Closing
will (i) comply in all material respects with accounting requirements and the
rules and regulations of the Commission currently in effect with respect; (ii)
have been prepared in accordance with GAAP applied on a consistent basis during
the periods involved, except as may be otherwise specified in therein or in
the
notes thereto and except that the Interim Company Statements may not contain
all
footnotes required by GAAP, (iii) fairly present in all material respects the
financial position of the Company as of the dates thereof and the results of
operations and cash flows for the periods then ended, subject, in the case
of
the Interim Company Statements, to normal, year-end audit adjustments; and
(iv)
not reflect any material adverse changes from the Company Financial Statements
included in the draft Registration Statement on Form S-1 dated June 26, 2008
included in the Disclosure Materials.
(j) Tax
Matters Except
as
set forth on Schedule
3.1(j),
each of
the Company and TableMAX (i) has accurately and timely prepared and filed all
foreign, federal and state income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject, (ii) 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, with respect to which adequate
reserves have been set aside on the books of the Company and (iii) has set
aside
on its books provisions reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or declarations
apply, except, in the case of clauses (i) and (ii) above, where the failure
to
so pay or file any such tax, assessment, charge or return would not result
in a
Material Adverse Effect. There are no unpaid taxes in any material amount
claimed to be due by the Company or TableMAX by the taxing authority of any
jurisdiction.
(k) Material
Changes.
Since
March 31, 2008, and except as contemplated by the Transaction Documents (i)
there have been no events, occurrences or developments that have had or that
could reasonably be expected to result, either individually or in the aggregate,
in a Material Adverse Effect, (ii) neither the Company nor TableMAX has incurred
any liabilities (contingent or otherwise) other than (A) trade payables, accrued
expenses and other liabilities incurred in the ordinary course of business
consistent with past practice and (B) liabilities not required to be reflected
in the Financial Statements pursuant to GAAP, (iii) neither the Company nor
TableMAX has altered its method of accounting or the manner in which it keeps
its accounting books and records, (iv) neither the Company nor TableMAX has
declared or made any dividend or distribution of cash or other property to
its
shareholders or members, as applicable, or purchased, redeemed or made any
agreements to purchase or redeem any shares of its capital stock or membership
interests, as applicable, and (v) there has not been any material change or
amendment to, or any waiver of any material right under, any contract under
which the Company or TableMAX, or any of their assets are bound or
subject.
(l) Environmental
Matters.
To the
Company’s Knowledge, neither the Company nor TableMAX (i) is in violation of any
statute, rule, regulation, decision or order of any governmental agency or
body
or any court, domestic or foreign, relating to the use, disposal or release
of
hazardous or toxic substances or relating to the protection or restoration
of
the environment or human exposure to hazardous or toxic substances
(collectively, “Environmental
Laws”),
(ii)
owns or operates any real property contaminated with any substance that is
in
violation of any Environmental Laws, (iii) is liable for any off-site disposal
or contamination pursuant to any Environmental Laws, and (iv) is subject to
any
claim relating to any Environmental Laws; which violation, contamination,
liability or claim has had or could reasonably be expected to have a Material
Adverse Effect, individually or in the aggregate; and there is no pending or,
to
the Company’s Knowledge, threatened investigation that might lead to such a
claim.
12
(m) Litigation.
Except
as set forth on Schedule
3.1(m),
there
is no Action which (i) adversely affects or challenges the legality, validity
or
enforceability of any of the Transaction Documents or (ii) would, if there
were
an unfavorable decision, individually or in the aggregate, have or reasonably
be
expected to result in a Material Adverse Effect. Neither the Company nor
TableMAX, nor the Company’s Knowledge, any current director or officer thereof
(in his or her capacity thereof), is or has been during the five-year period
prior to the Closing Date the subject of any Action involving a claim of
violation of or liability under federal or state securities laws or a claim
of
breach of fiduciary duty. There has not been and, to the Company’s Knowledge,
there is not pending or contemplated, any investigation by the Commission
involving the Company or TableMAX or, to the Company’s Knowledge, any current or
former director or officer thereof (in his or her capacity as such).
(n) Employment
Matters.
No
material labor dispute exists or, to the Company’s Knowledge, is imminent with
respect to any of the employees of the Company or TableMAX which could
reasonably be expected to result in a Material Adverse Effect. No employee
of
the Company or TableMAX is a member of a union that relates to such employee’s
relationship with the Company or TableMAX, and the neither the Company nor
TableMAX is a party to a collective bargaining agreement. To the Company’s
Knowledge, the Company’s and TableMAX’s relationships with their employees are
good. No executive officer of the Company or TableMAX, to the Company’s
Knowledge, is, or is now expected to be, in violation of any material term
of
any employment contract, confidentiality, disclosure or proprietary information
agreement or non-competition agreement, or any other contract or agreement
or
any restrictive covenant, and the continued employment of each such executive
officer does not subject the Company or TableMAX to any liability with respect
to any of the foregoing matters. The Company and TableMAX are in compliance
with
all U.S. federal, state, local and foreign laws and regulations relating to
employment and employment practices, terms and conditions of employment and
wages and hours, except where the failure to be in compliance could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(o) Compliance.
Except
as set forth on Schedule
3.1(o),
neither
the Company nor TableMAX is (i) in default under or in violation of (and no
event has occurred that has not been waived that, with notice or lapse of time
or both, would result in a default by the Company or TableMAX), or has received
notice of a claim that it is in default under or that it is in violation of,
any
indenture, loan or credit agreement or any other agreement or instrument to
which it is a party or by which it or any of its properties is bound (whether
or
not such default or violation has been waived), (ii) in violation of any order
of any court, arbitrator or governmental body having jurisdiction over the
Company, TableMAX or their respective properties or assets, or (iii) in
violation of, or in receipt of notice that it is in violation of, any statute,
rule or regulation of any governmental authority applicable to the Company
or
TableMAX, except in each case as could not, individually or in the aggregate,
have or reasonably be expected to result in a Material Adverse
Effect.
(p) Regulatory
Permits.
The
Company and TableMAX each possess all certificates, authorizations and permits
issued by the appropriate federal, state, local or foreign regulatory
authorities necessary to conduct their businesses as presently conducted, except
where the failure to possess such permits, individually or in the aggregate,
has
not and could not reasonably be expected to result in a Material Adverse Effect
(“Material
Permits”),
and
neither the Company nor TableMAX has received any notice of proceedings relating
to the revocation or modification of any such Material Permits.
(q) Title
to Assets.
Except
for property that is specifically the subject of, and covered by, other
representations and warranties as to ownership or title contained herein, the
Company and TableMAX each has good and marketable title in fee simple to all
real property owned by it that is material to its business and good and
marketable title in all personal property owned by it that is material to its
business, in each case free and clear of all Liens, except for Liens as do
not
materially affect the value of such property and do not materially interfere
with the use made and proposed to be made of such property by the Company or
TableMAX, as applicable, and Liens for the payment of federal, state or other
taxes, the payment of which is neither delinquent nor subject to penalties.
Any
real property and facilities held under lease by the Company or TableMAX are
held by it under valid, subsisting and enforceable leases of which the Company
or TableMAX, as applicable, is in material compliance.
13
(r) Patents
and Trademarks.
Each of
the Company and TableMAX owns, possesses, licenses or has other rights to use
all foreign and domestic patents, patent applications, trade and service marks,
trade and service xxxx registrations, trade names, copyrights, licenses,
inventions, trade secrets, technology, Internet domain names, know-how and
other
intellectual property (collectively, the “Intellectual
Property”)
necessary for the conduct of their respective businesses as now conducted or
as
proposed to be conducted. Except as set forth on Schedule
3.1(r)
attached
hereto, and except where such violations or infringements would not reasonably
be expected to result, either individually or in the aggregate, in a Material
Adverse Effect, (a) there are no rights of third parties to any such
Intellectual Property; (b) to the Company’s Knowledge, there is no infringement
by third parties of any such Intellectual Property; (c) there is no pending
or,
to the Company’s Knowledge, threatened action, suit, proceeding or claim by
others challenging rights of the Company or TableMAX, as applicable, in or
to
any such Intellectual Property, and, to the Company’s Knowledge, there are no
facts which would form a reasonable basis for any such claim; (d) there is
no
pending or, to the Company’s Knowledge, threatened action, suit, proceeding or
claim by others challenging the validity or scope of any such Intellectual
Property; and (e) there is no pending or, to the Company’s Knowledge, threatened
action, suit, proceeding or claim by others that the Company or TableMAX
infringes or otherwise violates any patent, trademark, copyright, trade secret
or other proprietary rights of others, and, to the Company’s Knowledge, there
are no facts which would form a reasonable basis for any such
claim.
(s) Insurance.
Each of
the Company and TableMAX is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the businesses and location in which the Company or TableMAX,
as applicable, is engaged. To the Company’s Knowledge, there exists no reasons
that the Company and TableMAX will be unable to renew their respective existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business
without a significant increase in cost.
(t) Transactions
With Affiliates and Employees.
Except
as set forth on Schedule
3.1(t)
attached
hereto, none of the officers, directors or employees of the Company or of
TableMAX is presently a party to any transaction with the Company or TableMAX
(other than for ordinary course services as employees, officers or 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 such
officer, director or employee or, to the Company’s Knowledge, any corporation,
partnership, trust or other entity in which any such officer, director, or
employee has a substantial interest or is an officer, director, trustee or
partner.
(u) Internal
Accounting Controls.
The
Company and TableMAX maintain systems of internal accounting controls sufficient
to provide reasonable assurance that, on a consolidated basis following the
Reverse Acquisition, (i) transactions will be executed in accordance with
management's general or specific authorizations, (ii) transactions will be
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability, (iii) access to
assets will be permitted only in accordance with management's general or
specific authorization, and (iv) the recorded accountability for assets will
be
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
14
(v) Xxxxxxxx-Xxxxx;
Disclosure Controls.
As of
the Closing Date, the Company will be in compliance in all material respects
with all of the provisions of the Xxxxxxxx-Xxxxx Act of 2002 which are
applicable to it and will maintain disclosure controls and procedures (as such
term is defined in Rule 13a-15(e) under the Exchange Act) that are effective
in
ensuring that information required to be disclosed by the Company in the reports
that it will submit under the Exchange Act (as contemplated by the Registration
Rights Agreement) is recorded, processed, summarized and reported, within the
time periods specified in the rules and forms of the Commission, including,
without limitation, controls and procedures designed in to ensure that
information is accumulated and communicated to the Company's management,
including its principal executive officer or officers and its principal
financial officer or officers, as appropriate, to allow timely decisions
regarding required disclosure.
(w) Certain
Fees.
No
person or entity will have, as a result of the transactions contemplated by
this
Agreement, any valid right, interest or claim against or upon the Company,
TableMAX or a Purchaser for any commission, fee or other compensation pursuant
to any agreement, arrangement or understanding entered into by or on behalf
of
the Company or TableMAX, other than the Placement Agents with respect to the
offer and sale of the Securities. Such Placement Agents’ fees and expenses are
set forth on Schedule
3.1(w)
hereto
and are being paid by the Company at the Closing. The Company shall pay, and
hold each Purchaser harmless against, any liability, loss or expense (including,
without limitation, attorneys’ fees and out-of-pocket expenses) arising in
connection with any such right, interest or claim.
(x) Private
Placement; Registration Rights.
Assuming the accuracy of the Purchasers’ representations and warranties set
forth in Section 3.2 of this Agreement, no registration under the Securities
Act
is required for the offer and sale of the Securities and the Adjustment
Securities by the Company to the Purchasers under the Transaction Documents.
Other than each of the Purchasers, no Person has any right to cause the Company
to effect the registration under the Securities Act of any securities of the
Company other than as identified on Schedule
3.1(x)
attached
hereto.
(y) No
Directed Selling Efforts or General Solicitation.
Neither
the Company nor TableMAX, nor any of their respective Affiliates, nor any Person
acting on its or their behalf has conducted any “general solicitation” or
“general advertising” (as those terms are used in Regulation D) in connection
with the offer or sale of any of the Securities and the Adjustment
Securities.
(z) No
Integrated Offering.
Assuming the accuracy of the Purchasers’ representations and warranties set
forth in Section 3.2, neither the Company nor TableMAX, nor their respective
Affiliates, nor any Person acting on its or their behalf has, directly or
indirectly, at any time within the past six months, made any offers or sales
of
any Company security or solicited any offers to buy any security under
circumstances that would (i) eliminate the availability of the exemption from
registration under Regulation D under the Securities Act in connection with
the
offer and sale by the Company of the Securities Adjustment Securities as
contemplated hereby, or (ii) cause the offering of the Securities and the
Adjustment Securities pursuant to the Transaction Documents to be integrated
with prior offerings by the Company for purposes of any applicable law,
regulation or shareholder approval provisions, including, without limitation,
under the rules and regulations of any Trading Market on which any of the
securities of the Company are listed or designated.
(aa) Investment
Company The
Company is not required to be registered as, and is not an Affiliate of, and
immediately following the Closing will not be required to register as, an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended.
15
(bb) Questionable
Payments. Neither
the Company nor TableMAX, nor, to the Company’s Knowledge, any directors,
officers, employees, agents or other Persons acting on behalf of the Company
or
TableMAX has, in the course of its actions for, or on behalf of, the Company
or
TableMAX: (a) directly or indirectly, used any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
foreign or domestic political activity; (b) made any direct or indirect unlawful
payments to any foreign or domestic governmental officials or employees or
to
any foreign or domestic political parties or campaigns from corporate funds;
(c)
violated in any material respect any provision of the Foreign Corrupt Practices
Act of 1977, as amended, or (d) made any other unlawful bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to any foreign or domestic
government official or employee.
(cc) Application
of Takeover Protections; Rights Agreements.
The
Company and its board of directors have taken all necessary action, if any,
in
order to render inapplicable any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Company's charter documents
or the laws of its state of incorporation that is or could reasonably be
expected to become applicable to any of the Purchasers as a result of the
Purchasers and the Company fulfilling their obligations or exercising their
rights under the Transaction Documents.
(dd) Disclosure.
All
disclosure provided to the Purchasers regarding the Company, TableMAX, their
respective businesses and the transactions contemplated hereby furnished by
the
Company or authorized by the Company and furnished by the Placement Agents
on
behalf of the Company (including the Disclosure Materials and the Company’s
representations and warranties set forth in this Agreement) are true and correct
in all material respects and do not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.
(ee) Off
Balance Sheet Arrangements.
There
is no transaction, arrangement, or other relationship between either the Company
or TableMAX and an unconsolidated or other “off balance sheet”
entity.
(ff) Consultation
with Auditors.
The
Company has consulted its independent auditors concerning the accounting
treatment of the transactions contemplated by the Transaction Documents and
in
connection therewith has furnished such auditors complete copies of the
Transaction Documents. The Company intends to account for the gross proceeds
raised from the financing which is the subject of this Agreement as equity
in
its financial statements.
(gg) No
Additional Agreements. The
Company does not have any agreement or understanding with any Purchaser with
respect to the transactions contemplated by the Transaction Documents other
than
as specified in the Transaction Documents.
3.2 Representations
and Warranties of the Purchasers.
Each
Purchaser hereby, for itself and for no other Purchaser, represents and warrants
as of the date hereof and as of the Closing Date to the Company and the
Placement Agents as follows:
(a) Organization;
Authority.
If an
entity, such Purchaser is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization with the requisite
corporate or partnership power and authority to enter into and to consummate
the
transactions contemplated by the applicable Transaction Documents and otherwise
to carry out its obligations hereunder and thereunder. The execution, delivery
and performance by such Purchaser of the transactions contemplated by this
Agreement have been duly authorized by all necessary corporate or, if such
Purchaser is not a corporation, such partnership, limited liability company
or
other applicable like action, on the part of such Purchaser. Each of this
Agreement and the Registration Rights Agreement has been duly executed by such
Purchaser, and when delivered by such Purchaser in accordance with terms hereof,
will constitute the valid and legally binding obligation of such Purchaser,
enforceable against it in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors’ rights and remedies or by
other equitable principles of general application.
16
(b) Investment
Intent.
Such
Purchaser understands that the Securities and, if applicable, the Adjustment
Securities are “restricted securities” and have not been registered under the
Securities Act or any applicable state securities law and that such Purchaser
is
acquiring the Securities and, if applicable, the Adjustment Securities as
principal for its own account and not with a view to, or for distribution or
resale in violation of the Securities Act or any applicable state securities
laws, provided,
however,
that by
making the representations herein, such Purchaser does not agree to hold any
of
the Securities and, if applicable, the Adjustment Securities for any minimum
period of time and reserves the right, subject to the provisions of this
Agreement and the Registration Rights Agreement, at all times to sell or
otherwise dispose of all or any part of such Securities or, if applicable,
Adjustment Securities pursuant to an effective registration statement under
the
Securities Act or under an exemption from such registration and in compliance
with applicable federal and state securities laws. Such Purchaser does not
presently have any agreement, plan or understanding, directly or indirectly,
with any Person to distribute or effect any distribution of any of the
Securities or, if applicable, the Adjustment Securities (or any securities
which
are derivatives thereof) to or through any person or entity. Such Purchaser
is
not a registered broker-dealer under Section 15 of the Exchange Act or an entity
engaged in a business that would require it to be so registered as a
broker-dealer.
(c) Purchaser
Status.
At the
time such Purchaser was offered the Securities and the Adjustment Securities,
it
was, and at the date hereof it is, and on each date on which it exercises the
Warrants, it will be, an “accredited investor” as defined in Rule 501(a) under
the Securities Act.
(d) General
Solicitation. Such
Purchaser is not purchasing the Securities and, if applicable, the Adjustment
Securities as a result of any advertisement, article, notice or other
communication published in any newspaper, magazine or similar media or broadcast
over television or radio or presented at any seminar or any other general
advertisement.
(e) Experience
of Such Purchaser.
Such
Purchaser, either alone or together with its representatives, has such
knowledge, sophistication and experience in business and financial matters
so as
to be capable of evaluating the merits and risks of the prospective investment
in the Securities and, if applicable, the Adjustment Securities, and has so
evaluated the merits and risks of such investment. Such Purchaser is able to
bear the economic risk of an investment in the Securities and, if applicable,
the Adjustment Securities, and, at the present time, is able to afford a
complete loss of such investment.
(f) Access
to Information.
Such
Purchaser acknowledges that it has received and had the opportunity to review
the Disclosure Materials and has been afforded (i) the opportunity to ask such
questions as it has deemed necessary of, and to receive answers from,
representatives of the Company and TableMAX concerning the terms and conditions
of the offering of the Securities and the Adjustment Securities and the merits
and risks of investing therein; (ii) access to information about the Company
and
TableMAX and their financial condition, results of operations, business,
properties, management and prospects sufficient to enable it to evaluate its
investment; and (iii) the opportunity to obtain such additional information
that
the Company and TableMAX possesses or can acquire without unreasonable effort
or
expense that is necessary to make an informed investment decision with respect
to the investment. Neither such inquiries nor any other investigation conducted
by or on behalf of such Purchaser or its representatives or counsel shall
modify, amend or affect such Purchaser's right to rely on the truth, accuracy
and completeness of the Disclosure Materials and the Company's representations
and warranties contained in the Transaction Documents.
17
(g) Certain
Trading Activities.
Other
than with respect to the transactions contemplated herein, since the time that
such Purchaser was first contacted by the Company, the Placement Agents or
any
other Person regarding the transactions contemplated hereby, neither the
Purchaser nor any Affiliate of such Purchaser which (x) had knowledge of the
transactions contemplated hereby, (y) has or shares discretion relating to
such
Purchaser’s investments or trading or information concerning such Purchaser’s
investments, and (z) is subject to such Purchaser’s review or input concerning
such Affiliate’s investments or trading (collectively, “Trading
Affiliates”)
has
directly or indirectly, nor has any Person acting on behalf of or pursuant
to
any understanding with such Purchaser or Trading Affiliate, effected or agreed
to effect any transactions in the securities of the Company (including, without
limitation, any Short Sales involving the Company’s securities). Notwithstanding
the foregoing, in the case of a Purchaser and/or Trading Affiliate that is,
individually or collectively, a multi-managed investment vehicle whereby
separate portfolio managers manage separate portions of such Purchaser's or
Trading Affiliate’s assets and the portfolio managers have no direct knowledge
of the investment decisions made by the portfolio managers managing other
portions of such Purchaser's or Trading Affiliate’s assets, the representation
set forth above shall apply only with respect to the portion of assets managed
by the portfolio manager that have knowledge about the financing transaction
contemplated by this Agreement. Other than to other Persons party to this
Agreement, such Purchaser has maintained the confidentiality of all disclosures
made to it in connection with this transaction (including the existence and
terms of this transaction).
(h) Brokers
and Finders.
No
Person will have, as a result of the transactions contemplated by this
Agreement, any valid right, interest or claim against or upon the Company or
any
Purchaser for any commission, fee or other compensation pursuant to any
agreement, arrangement or understanding entered into by or on behalf of the
Purchaser.
(i) Independent
Investment Decision.
Such
Purchaser has independently evaluated the merits of its decision to purchase
Securities and, if applicable, Adjustment Securities pursuant to the Transaction
Documents, and such Purchaser confirms that it has not relied on the advice
of
any other Purchaser’s business and/or legal counsel in making such decision.
Such Purchaser understands that nothing in this Agreement or any other materials
presented by or on behalf of the Company to the Purchaser in connection with
the
purchase of the Securities and the Adjustment Securities constitutes legal,
tax
or investment advice. Such Purchaser has consulted such legal, tax and
investment advisors as it, in its sole discretion, has deemed necessary or
appropriate in connection with such purchase. Such Purchaser understands that
the Placement Agents have acted solely as the agent of the Company in this
placement of the Securities and the Adjustment Securities, and such Purchaser
has not relied on the business or legal advice of the Placement Agents or any
of
their agents, counsel or Affiliates in making its investment decision hereunder,
and confirms that none of such Persons has made any representations or
warranties to such Purchaser in connection with the transactions contemplated
by
the Transaction Documents.
(j) Reliance
on Exemptions.
Such
Purchaser understands that the Securities and, if applicable, the Adjustment
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
such Purchaser’s compliance with, the representations, warranties, agreements,
acknowledgements and understandings of such Purchaser set forth herein in order
to determine the availability of such exemptions and the eligibility of such
Purchaser to acquire the Securities and, if applicable, the Adjustment
Securities.
(k) No
Governmental Review.
Such
Purchaser 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 Adjustment Securities or the fairness
or
suitability of the investment in the Securities and the Adjustment Securities
nor have such authorities passed upon or endorsed the merits of the offering
of
the Securities and the Adjustment Securities.
18
The
Company acknowledges and agrees that no Purchaser has made or makes any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section
3.2.
ARTICLE
IV.
OTHER
AGREEMENTS OF THE PARTIES
4.1 (a) Compliance
with Laws.
Notwithstanding any other provision of this Article IV, each Purchaser covenants
that the Securities and, if applicable, the Adjustment Securities may be
disposed of only pursuant to an effective registration statement under, and
in
compliance with the requirements of, the Securities Act, or pursuant to an
available exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act, and in compliance with any applicable state
and federal securities laws. In connection with any transfer of the Securities
and, if applicable, the Adjustment Securities other than (i) pursuant to an
effective registration statement, (ii) to the Company, (iii) to an Affiliate
of
a Purchaser, (iv) pursuant to Rule 144 (provided
that the
Purchaser provides the Company with reasonable assurances (in the form of seller
and broker representation letters) that the securities may be sold pursuant
to
such rule) or Rule 144A, or (v) in connection with a bona fide pledge as
contemplated in Section 4.1(b), except as otherwise provided herein, the Company
may require the transferor thereof to provide to the Company an opinion of
counsel selected by the transferor and reasonably acceptable to the Company,
the
form and substance of which opinion shall be reasonably satisfactory to the
Company, to the effect that such transfer does not require registration under
the Securities Act. As a condition of transfer, any such transferee shall agree
in writing to be bound by the terms of this Agreement and shall have the rights
of a Purchaser under this Agreement and the Registration Rights Agreement.
(b) Legends.
Certificates evidencing the Securities and, if applicable, the Adjustment
Securities shall bear any legend as required by the “blue sky” laws of any state
and a restrictive legend in substantially the following form, until such time
as
they are not required under Section 4.1(c):
NEITHER
THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES
HAVE BEEN REGISTERED] [THESE SECURITIES HAVE NOT BEEN REGISTERED] WITH THE
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE
IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT
OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY.
The
Company acknowledges and agrees that a Purchaser may from time to time pledge,
and/or grant a security interest in, some or all of the legended Securities
or
Adjustment Securities in connection with applicable securities laws, pursuant
to
a bona fide margin agreement in compliance with a bona fide margin loan. Such
a
pledge would not be subject to approval or consent of the Company and no legal
opinion of legal counsel to the pledgee, secured party or pledgor shall be
required in connection with the pledge, but such legal opinion shall be required
in connection with a subsequent transfer or foreclosure following default by
the
Purchaser’s transferee of the pledge. No notice shall be required of such
pledge, but Purchaser’s transferee shall promptly notify the Company of any such
subsequent transfer or foreclosure. Each Purchaser acknowledges that the Company
shall not be responsible for any pledges relating to, or the grant of any
security interest in, any of the Securities or the Adjustment Securities or
for
any agreement, understanding or arrangement between any Purchaser and its
pledgee or secured party. At the appropriate Purchaser’s expense, the Company
will execute and deliver such reasonable documentation as a pledgee or secured
party of Shares or the Adjustment Shares may reasonably request in connection
with a pledge or transfer of such securities, including the preparation and
filing of any required prospectus supplement under Rule 423(b)(3) of the
Securities Act or other applicable provision of the Securities Act to
appropriately amend the list of Selling Stockholders thereunder. Each Purchaser
acknowledges and agrees that, except as otherwise provided in Section 4.1(c),
any Shares or Adjustment Shares subject to a pledge or security interest as
contemplated by this Section 4.1(b) shall continue to bear the legend set forth
in this Section 4.1(b) and be subject to the restrictions on transfer set forth
in Section 4.1(a).
19
(c) Removal
of Legends.
The
legend set forth in Section 4.1(b) above shall be removed and the Company shall
issue a certificate without such legend to the holder of the Securities and,
if
applicable, the Adjustment Securities upon which it is stamped or issue to
such
holder by electronic delivery at the applicable balance account at The
Depository Trust Company (“DTC”),
if
(i) such securities are registered for resale under the Securities Act, or
(ii)
such securities are sold or transferred pursuant to Rule 144 (assuming the
transferor is not an Affiliate of the Company) or Rule 144A. Any fees (with
respect to the Transfer Agent, counsel to the Company or otherwise) associated
with the issuance of a legal opinion require for the removal of such legend
shall be borne by the Company. If any portion of the Warrant is exercised at
a
time when there is an effective registration statement to cover the resale
of
the Warrant Shares, then such Warrant Shares shall be issued free of all
legends. Following the Effective Date, or at such earlier time as a legend
is no
longer required for certain Securities or, if applicable, Adjustment Securities,
the Company will no later than three (3) Trading Days following the delivery
by
a Purchaser to the Transfer Agent (with notice to the Company) of (i) a legended
certificate representing such Shares or Warrant Shares and, if applicable,
Adjustment Shares (endorsed or with stock powers attached, signatures
guaranteed, and otherwise in form necessary to affect the reissuance and/or
transfer) or (ii) an Exercise Notice in the manner stated in the Warrants to
effect the exercise thereof in accordance with its terms and an opinion of
counsel to the extent required by Section 4.1(a), deliver or cause to be
delivered to such Purchaser a certificate representing such Securities that
is
free from all restrictive and other legends. The Company may not make any
notation on its records or give instructions to the Transfer Agent that enlarge
the restrictions on transfer set forth in this Section.
(d) Acknowledgement.
Each
Purchaser hereunder acknowledges its primary responsibilities under the
Securities Act and accordingly will not sell the Shares, the Warrant Shares,
and, if applicable, the Adjustment Shares, or any interest therein without
complying with the requirements of the Securities Act. While the
above-referenced registration statement remains effective, each Purchaser
hereunder may sell the shares in accordance with the plan of distribution
contained in the Registration Statement and if it does so it will comply
therewith and with the related prospectus delivery requirements unless an
exemption therefrom is available. Each Purchaser, severally and not jointly
with
the other Purchasers, agrees that if it is notified by the Company at any time
after the date any legend is removed pursuant to Section
4.1(c)
hereof
that the Registration Statement registering the resale of the Shares, the
Warrant Shares, or, if applicable, the Adjustment Shares, is not effective
or
that the prospectus included in such Registration Statement no longer complies
with the requirements of Section 10 of the Securities Act, the Purchaser will
refrain from selling such securities until such time as the Purchaser is
notified by the Company that such registration statement is effective or such
prospectus is compliant with Section 10 of the Exchange Act, unless such
Purchaser is able to, and does, sell such securities pursuant to an available
exemption from the registration requirements of Section 5 of the Securities
Act.
Each Purchaser, severally and not jointly with the other Purchasers, agrees
to
indemnify the Company for any damages or losses resulting to the Company from
the Purchaser’s breach of its covenants set forth in the preceding
sentence.
20
4.2 Reservation
of Common Stock.
The
Company shall take all action necessary to at all times have authorized, and
reserved for the purpose of issuance from and after the Closing Date, no less
than 100% of the number of shares of Common Stock issuable upon exercise of
the
Warrants. Subject to the determination regarding issuance of the Adjustment
Shares, the Company shall take all action necessary to at all times have
authorized, and reserved for the purpose of issuance no less than the maximum
number of shares of Common Stock that may be issued as Adjustment Shares.
4.3 Form
D
and Blue Sky.
The
Company agrees to file a Form D with respect to the Securities and the
Adjustment Securities as required under Regulation D. The Company, on or before
the Closing Date, shall take such action as the Company shall reasonably
determine is necessary in order to obtain an exemption for or to qualify the
Securities and the Adjustment Securities for sale to the Purchasers at the
Closing pursuant to this Agreement under applicable securities or “Blue Sky”
laws of the states of the United States (or to obtain an exemption from such
qualification), and shall provide evidence of any such action so taken to the
Purchasers on or prior to the Closing Date. The Company shall make all filings
and reports relating to the offer and sale of the Securities and the Adjustment
Securities required under applicable securities or “Blue Sky” laws of the states
of the United States following the Closing Date.
4.4 No
Integration.
The
Company shall not, and shall use its best efforts to ensure that no Affiliate
of
the Company shall, sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in Section 2 of the Securities
Act) that will be integrated with the offer or sale of the Securities and the
Adjustment Securities in a manner that would require the registration under
the
Securities Act of the sale thereof to the Purchasers, or that will be integrated
with the offer or sale of the Securities or the Adjustment Securities for
purposes of the rules and regulations of any Trading Market such that it would
require shareholder approval prior to the closing of such other transaction
unless shareholder approval is obtained before the closing of such subsequent
transaction.
4.5 Publicity.
The
Company shall not publicly disclose the name of any Purchaser or an Affiliate
of
any Purchaser, or include the name of any Purchaser or an Affiliate of any
Purchaser in any press release or filing with the Commission (other than the
Registration Statement) or any regulatory agency or Trading Market, without
the
prior written consent of such Purchaser, except to the extent such disclosure
is
required by law, request of the Staff of the Commission or Trading Market
regulations. Each Purchaser, severally and not jointly with the other
Purchasers, covenants that until such time as the transactions contemplated
by
this Agreement are publicly disclosed by the Company, such Purchaser will
maintain the confidentiality of all disclosures made to it in connection with
this transaction (including the existence and terms of this transaction)
and that
neither it nor any Affiliate acting on its behalf or pursuant to any
understanding with it will engage in any purchases or sales of, including any
short sales, the securities of the Company until twenty-four (24) hours after
the time that the transactions contemplated by this Agreement are first publicly
announced by dissemination of the press release by the Company. The Company
shall issue a press release reasonably acceptable to the Placement Agents
disclosing all material terms of the transactions contemplated herein within
two
business days following the initial Closing.
4.6 Listing
of Securities.
If
following the date hereof the Company applies to have its Common Stock or other
securities listed on any Trading Market, it shall include in such application
the Shares, the Warrant Shares and, if applicable, the Adjustment Shares, and
will take such other action as is necessary to cause such securities to be
listed on such other Trading Market as promptly as practicable.
4.7 Reverse
Stock Split.
Within
fifteen (15) Business Days following the initial Closing Date, the Company
shall
effect a reverse stock split that results in each Purchaser holding the number
of Shares that would have been issued to such Purchaser on the initial Closing
Date had the Purchase Price been equal to $2.50.
21
4.8 TableMAX
Unit Holders.
The
Company shall use its commercially reasonable efforts to cause all members
of
TableMAX that do not transfer their capital securities of TableMAX to the
Company in the Reverse Acquisition to do so on the same terms and conditions
applicable to the Reverse Acquisition as soon as practicable following the
initial Closing Date. To the extent that all members of TableMAX have not
transferred their TableMAX capital securities to the Company in accordance
with
the preceding sentence within thirty (30) Business Days following the initial
Closing Date, then the Company shall effect a merger between TableMAX and the
Company or a wholly-owned subsidiary of the Company in which the capital
securities of such TableMAX members will be exchanged for securities of the
Company on the same terms and conditions applicable to the Reverse Acquisition,
subject to any dissenters’ rights to which such TableMAX members may be entitled
as a result of the transaction..
ARTICLE
V.
CONDITIONS
PRECEDENT TO CLOSING
5.1 Conditions
Precedent to the Obligations of the Purchasers to Purchase
Securities.
The
obligation of each Purchaser to acquire Securities (and contingent rights to
acquire the Adjustment Securities) at the Closing is subject to the fulfillment
to such Purchaser’s satisfaction, on or prior to the Closing Date, of each of
the following conditions, any of which may be waived by such Purchaser (as
to
itself only):
(a) Representations
and Warranties.
The
representations and warranties of the Company contained herein shall be true
and
correct in all material respects as of the date when made and as of the Closing
Date, as though made on and as of such date except for representations and
warranties that speak as of a specific date;
(b) Performance.
The
Company shall have performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by it at or prior to
the
Closing;
(c) Receipt
of Minimum Subscriptions.
The
Company shall have received subscriptions in the offering contemplated by this
Agreement that result in aggregate gross proceeds to the Company of at least
of
at least $3,000,000 (inclusive of gross proceeds received at previous Closings,
if any);
(d) Conversion
of TableMAX Bridge Notes.
The
holders of at least 85% of the aggregate outstanding principal amount of the
Bridge Notes shall have agreed to the automatic conversion upon the initial
Closing of the outstanding principal and accrued interest therunder into Common
Stock and warrants to purchase Common Stock (with 50% warrant coverage) at
70%
of the Purchase Price.
(e) No
Injunction.
No
statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction that prohibits the consummation of any
of
the transactions contemplated by the Transaction Documents;
(f) Consents.
The
Company shall have obtained in a timely fashion any and all consents, permits,
approvals, registrations and waivers necessary or appropriate for consummation
of the purchase and sale of the Securities and the Adjustment Securities, all
of
which shall be and remain so long as necessary in full force and
effect;
(g) Adverse
Changes.
Since
the date of execution of this Agreement, no event or series of events shall
have
occurred that has resulted or reasonably could result in a Material Adverse
Effect;
22
(h) Reverse
Acquisition.
The
Company shall have consummated the Reverse Acquisition in accordance with the
terms of the Unit Exchange Agreement attached as Exhibit
E
hereto.
(i) Company
Deliverables.
The
Company shall have delivered the Company Deliverables in accordance with Section
2.2(a);
(j) Compliance
Certificate.
The
Company shall have delivered to each Purchaser a certificate, dated as of the
Closing Date and signed by its Chief Executive Officer or its Chief Financial
Officer, dated as of the Closing Date, certifying to the fulfillment of the
conditions specified in Sections 5.1(a), (b), (c), (d), (e), (f) and (h);
and
(k) Termination. This
Agreement shall not have been terminated as to such Purchaser in accordance
with
Section 6.16 herein.
5.2 Conditions
Precedent to the Obligations of the Company to sell Securities.
The
Company's obligation to sell and issue the Securities (and contingent rights
to
the Adjustment Securities) at the Closing is subject to the fulfillment to
the
satisfaction of the Company on or prior to the Closing Date of the following
conditions, any of which may be waived by the Company:
(a) Representations
and Warranties.
The
representations and warranties made by the Purchasers in Section
3.2
hereof
shall be true and correct in all material respects as of the date when made,
and
as of the Closing Date as though made on and as of such date (except for
representations and warranties that speak as of a specific date);
(b) Performance.
The
Purchasers shall have performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by the Purchasers at
or
prior to the Closing Date;
(c) Receipt
of Minimum Subscriptions.
The
Company shall have received subscriptions in the offering contemplated by this
Agreement that result in aggregate gross proceeds to the Company of at least
of
at least $3,000,000 (inclusive of gross proceeds received at previous Closings,
if any);
(d) Conversion
of TableMAX Bridge Notes.
The
holders of at least 85% of the aggregate outstanding principal amount of the
Bridge Notes shall have agreed to the automatic conversion upon the initial
Closing of the outstanding principal and accrued interest therunder into Common
Stock and warrants to purchase Common Stock (with 50% warrant coverage) at
70%
of the Purchase Price.
(e) No
Injunction.
No
statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction that prohibits the consummation of any
of
the transactions contemplated by the Transaction Documents;
(f) Consents.
The
Company shall have obtained in a timely fashion any and all consents, permits,
approvals, registrations and waivers necessary or appropriate for consummation
of the purchase and sale of the Securities and the Adjustment Securities, all
of
which shall be and remain so long as necessary in full force and
effect;
(g) Reverse
Acquisition.
The
Company shall have consummated the Reverse Acquisition in accordance with the
terms of the Unit Exchange Agreement attached as Exhibit
E
hereto.
23
(h) Purchasers
Deliverables.
Each
Purchaser shall have delivered its Purchaser Deliverables in accordance with
Section 2.2(c); and
(i) Termination. This
Agreement shall not have been terminated as to such Purchaser in accordance
with
Section 6.16 herein.
ARTICLE
VI.
MISCELLANEOUS
6.1 Fees
and Expenses.
The
Company acknowledges its obligation by way of a separate placement agency
agreement to provide the Placement Agents with an aggregate accountable expense
allowance of up to $70,000, which is intended to reimburse the Placement Agents
for fees and expenses incurred by them in connection with the transactions
contemplated by this Agreement. The Company and the Purchasers shall each pay
the fees and expenses of their respective advisers, counsel, accountants and
other experts, if any, and all other expenses incurred by such party in
connection with the negotiation, preparation, execution, delivery and
performance of this Agreement. The Company shall pay all Transfer Agents’ fees,
stamp taxes and other taxes and duties levied in connection with the sale and
issuance of the Securities to the Purchasers. Each party acknowledges that
Xxxxxx Xxxxxxx Xxxxxx & Brand, LLP, Minneapolis, Minnesota, has rendered
legal advice to certain of the Placement Agents and not to such party in
connection with the transactions contemplated hereby, and that such party has
relied for such matters on the advice of its own respective
counsel.
6.2 Entire
Agreement.
The
Transaction Documents, together with the Exhibits and Schedules thereto, contain
the entire understanding of the parties with respect to the subject matter
hereof and supersede all prior agreements, understandings, discussions and
representations, oral or written, with respect to such matters, which the
parties acknowledge have been merged into such documents, exhibits and
schedules. At or after the Closing, and without further consideration, the
Company and the Purchasers will execute and deliver to the other such further
documents as may be reasonably requested in order to give practical effect
to
the intention of the parties under the Transaction Documents.
6.3 Notices.
Any and
all notices or other communications or deliveries required or permitted to
be
provided hereunder shall be in writing and shall be deemed given and effective
on the earliest of (a) the date of transmission, if such notice or communication
is delivered via facsimile (provided the sender receives a machine-generated
confirmation of successful transmission) at the facsimile number specified
in
this Section prior to 5:00 p.m. (prevailing Pacific time) on a Business Day,
(b)
the next Business Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified
in
this Section on a day that is not a Business Day or later than 5:00 p.m.
(prevailing Pacific time) on any Business Day, (c) the Business Day following
the date of mailing, if sent by U.S. nationally recognized overnight courier
service with next day delivery specified, or (d) upon actual receipt by the
party to whom such notice is required to be given. The address for such notices
and communications shall be as follows:
If
to the
Company: CJPG,
Inc.
0000
Xxxx
Xxxx Xxxxxx, Xxxxx 000
Xxx
Xxxxx, XX 00000
Facsimile:
(000) 000-0000
Attention:
Xxxxxxx Xxxxxxx, CEO
With
copies to:
Xxxxxxxxx
Xxxxxxx, LLP
0000
Xxxxxxxxx Xxxxx, Xxxxx 0000
00
Xxxxxx,
XX 00000
Facsimile
No.: (000) 000-0000
Attention:
Xxx Xxxxxxx
If
to a
Purchaser:
To
the
address set forth under such Purchaser’s name on the signature page
hereof;
or
such
other address as may be designated in writing hereafter, in the same manner,
by
such Person.
6.4 Amendments;
Waivers; No Additional Consideration.
No
provision of this Agreement may be waived or amended except in a written
instrument signed, in the case of an amendment, by the Company and each of
the
Purchasers or, in the case of a waiver, by the party against whom enforcement
of
any such waiver is sought. No waiver of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be
a
continuing waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of either party to exercise any right hereunder in any manner
impair the exercise of any such right. No consideration shall be offered or
paid
to any Purchaser to amend or consent to a waiver or modification of any
provision of any Transaction Document unless the same consideration is also
offered to all Purchasers who then hold Securities.
6.5 Construction.
The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof. The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party. This Agreement shall be
construed as if drafted jointly by the parties, and no presumption or burden
of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement or any of the Transaction
Documents.
6.6 Successors
and Assigns.
The
provisions of this Agreement shall inure to the benefit of and be binding upon
the parties and their successors and permitted assigns. This Agreement, or
any
rights or obligations hereunder, may not be assigned by the Company without
the
prior written consent of the Purchasers. Any Purchaser may assign its rights
hereunder in whole or in part to any Person to whom such Purchaser assigns
or
transfers any Securities in compliance with this Agreement and applicable law,
provided
such
transferee shall agree in writing to be bound, with respect to the transferred
Securities, by the terms and conditions of this Agreement that apply to the
“Purchasers”.
6.7 No
Third-Party Beneficiaries.
This
Agreement is intended for the benefit of the parties hereto and their respective
successors and permitted assigns and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person, except the Placement Agents
are intended third party beneficiaries of Article III hereof and each Placement
Agent may enforce the provisions of such Sections directly against the parties
with obligations thereunder.
25
6.8 Governing
Law.
All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each party agrees that all Proceedings
concerning the interpretations, enforcement and defense of the transactions
contemplated by this Agreement and any other Transaction Documents (whether
brought against a party hereto or its respective Affiliates, employees or
agents) shall be commenced exclusively in the New York Courts. Each party hereto
hereby irrevocably submits to the exclusive jurisdiction of the New York Courts
for the adjudication of any dispute hereunder or in connection herewith or
with
any transaction contemplated hereby or discussed herein (including with respect
to the enforcement of any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any Proceeding, any claim that it is not
personally subject to the jurisdiction of any such New York Court, or that
such
Proceeding has been commenced in an improper or inconvenient forum. Each party
hereto hereby irrevocably waives personal service of process and consents to
process being served in any such Proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to limit
in
any way any right to serve process in any manner permitted by law. EACH
PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
If
either party shall commence a Proceeding to endorse any provisions of a
Transaction Document, then the prevailing party in such Proceeding shall be
reimbursed by the other party for its reasonable attorney’s fees and other costs
and expenses uncured with the investigation preparation and prosecution of
such
Proceeding.
6.9 Survival.
Subject
to applicable statute of limitations, the representations, warranties,
agreements and covenants contained herein shall survive the Closing and the
delivery of the Securities.
6.10 Execution.
This
Agreement may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to
the
other party, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by facsimile
transmission, or by e-mail delivery of a “.pdf” format data file, such signature
shall create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect as if such
facsimile signature page were an original thereof.
6.11 Severability.
If any
provision of this Agreement is held to be invalid or unenforceable in any
respect, the validity and enforceability of the remaining terms and provisions
of this Agreement shall not in any way be affected or impaired thereby and
the
parties will attempt to agree upon a valid and enforceable provision that is
a
reasonable substitute therefor, and upon so agreeing, shall incorporate such
substitute provision in this Agreement.
6.12 Rescission
and Withdrawal Right.
Notwithstanding anything to the contrary contained in (and without limiting
any
similar provisions of) the Transaction Documents, whenever any Purchaser
exercises a right, election, demand or option under a Transaction Document
and
the Company does not timely perform its related obligations within the periods
therein provided, then such Purchaser may rescind or withdraw, in its sole
discretion from time to time upon written notice to the Company, any relevant
notice, demand or election in whole or in part without prejudice to its future
actions and rights.
6.13 Replacement
of Securities.
If any
certificate or instrument evidencing any Securities or, if applicable, any
Adjustment Securities is mutilated, lost, stolen or destroyed, the Company
shall
issue or cause to be issued in exchange and substitution for and upon
cancellation thereof, or in lieu of and substitution therefor, a new certificate
or instrument, but only upon receipt of evidence reasonably satisfactory to
the
Company and the Transfer Agent of such loss, theft or destruction and the
execution by the holder thereof of a customary lost certificate affidavit of
that fact and an agreement to indemnify and hold harmless the Company and the
Transfer Agent for any losses in connection therewith or, if required by the
Transfer Agent, a bond in such form and amount as is reasonably required by
the
Transfer Agent. The applicants for a new certificate or instrument under such
circumstances shall also pay any reasonable third-party costs associated with
the issuance of such replacement securities. If a replacement certificate or
instrument evidencing any Securities or, if applicable, any replacement
securities is requested due to a mutilation thereof, the Company may require
delivery of such mutilated certificate or instrument as a condition precedent
to
any issuance of a replacement.
26
6.14 Adjustments
in Share Numbers and Prices.
In the
event of any stock split, subdivision, dividend or distribution payable in
shares of Common Stock (or other securities or rights convertible into, or
entitling the holder thereof to receive directly or indirectly shares of Common
Stock), combination or other similar recapitalization or event occurring after
the date hereof, each reference in any Transaction Document to a number of
shares or a price per share shall be deemed to be amended to appropriately
account for such event.
6.15 Independent
Nature of Purchasers' Obligations and Rights.
The
obligations of each Purchaser under any Transaction Document are several and
not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. The decision of each Purchaser to
purchase Securities pursuant to the Transaction Documents has been made by
such
Purchaser independently of any other Purchaser and independently of any
information, materials, statements or opinions as to the business, affairs,
operations, assets, properties, liabilities, results of operations, condition
(financial or otherwise) or prospects of the Company which may have been made
or
given by any other Purchaser or by any agent or employee of any other Purchaser,
and no Purchaser and any of its agents or employees shall have any liability
to
any other Purchaser (or any other Person) relating to or arising from any such
information, materials, statement or opinions. Nothing contained herein or
in
any Transaction Document, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association,
a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Documents.
Each
Purchaser acknowledges that no other Purchaser has acted as agent for such
Purchaser in connection with making its investment hereunder and that no
Purchaser will be acting as agent of such Purchaser in connection with
monitoring its investment in the Securities or enforcing its rights under the
Transaction Documents. Each Purchaser shall be entitled to independently protect
and enforce its rights, including without limitation the rights arising out
of
this Agreement or out of the other Transaction Documents, and it shall not
be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose. The Company acknowledges that each of the
Purchasers has been provided with the same Transaction Documents for the purpose
of closing a transaction with multiple Purchasers and not because it was
required or requested to do so by any Purchaser. The Company’s obligations to
each Purchaser under this Agreement are identical to its obligations to each
other Purchaser other than such differences resulting solely from the number
of
Securities purchased by such Purchaser, but regardless of whether such
obligations are memorialized herein or in another agreement between the Company
and a Purchaser.
6.16 Termination.
This
Agreement may be terminated and the sale and purchase of the Shares and the
Warrants abandoned at any time prior to the Closing by either the Company or
any
Purchaser (with respect to itself only) upon written notice to the other, if
the
Closing has not been consummated on or prior to 5:00 p.m. (prevailing Pacific
time) on the Outside Date; provided,
however,
that
the right to terminate this Agreement under this Section
6.16
shall
not be available to any Person whose failure to comply with its obligations
under this Agreement has been the cause of or resulted in the failure of the
Closing to occur on or before such time. Nothing in this Section
6.16
shall be
deemed to release any party from any liability for any breach by such party
of
the terms and provisions of this Agreement or the other Transaction Documents
or
to impair the right of any party to compel specific performance by any other
party of its obligations under this Agreement or the other Transaction
Documents. In the event of a termination pursuant to this Section, the Company
shall promptly notify all non-terminating Purchasers. Upon a termination in
accordance with this Section, the Company and the terminating Purchaser(s)
shall
not have any further obligation or liability (including arising from such
termination) to the other, and no Purchaser will have any liability to any
other
Purchaser under the Transaction Documents as a result therefrom.
27
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as
of
the date first indicated above.
|
CJPG,
INC.
|
||
|
By:
|
/s/
Xxxxxxx Xxxxxxx
|
|
|
Name:
Xxxxxxx Xxxxxxx
|
||
|
Title:
Chief Executive Officer
|
||
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURE
PAGES FOR PURCHASERS FOLLOW]
28
| NAME OF PURCHASER: ____________________________ | ||
|
By:
|
||
|
Name:
|
||
|
Title:
|
||
|
Purchase
Price (Subscription Amount): $________________
|
|
|
Number
of Shares to be acquired: ______________________
|
|
|
Underlying
Shares subject to Warrant:__________________
|
|
|
(50.0%
of the number of Shares to be acquired)
|
|
|
Tax
ID No.: ______________________________________
|
|
|
Address
for Notice:
|
|
|
Telephone
No.:_____________________________________
|
|
|
Facsimile
No.: _____________________________________
|
|
|
Attention:___________________________________________
|
Delivery
Instructions:
(if
different than above)
|
Street:_____________________________________________
|
|
| __________________________________________ | |
|
City/State/Zip:_______________________________________
|
|
|
Attention:__________________________________________
|
|
|
Telephone
No.:______________________________________
|
29
EXHIBITS:
A:
Form
of
Warrant
B:
Form
of
Registration Rights Agreement
C-1:
Accredited
Investor Questionnaire
C-2: Stock
Certificate Questionnaire
D:
Wire
Instructions
D:
Unit
Exchange Agreement
SCHEDULES:
3.1(a)
Subsidiaries
3.1(g)
Capitalization
3.1(i)
Financial Statements
3.1(j)
Tax Matters
3.1(m)
Litigation
3.1(o)
Compliance
3.1(r)
Patents and Trademarks
3.1(t)
Transactions with Affiliates
3.1(w)
Certain Fees
3.1(x)
Private Placement; Registration Rights
30
EXHIBIT
A
Form
of
Warrant
NEITHER
THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”)
AND APPLICABLE STATE SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD EXCEPT PURSUANT TO (I) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR (II) AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS. THESE
SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES MAY
BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED
BY
SUCH SECURITIES.
CJPG,
INC.
WARRANT
TO PURCHASE COMMON STOCK
|
Warrant
No. [_________]
|
|
Original
Issue Date:
[ ],
2008
|
CJPG,
Inc., a Nevada corporation (the “Company”),
hereby certifies that, for value received,
[ ] or
its permitted registered assigns (the “Holder”),
is
entitled to purchase from the Company up to a total of
[ ]
shares of common stock, $0.001 par value (the “Common
Stock”),
of
the Company (each such share, a “Warrant
Share”
and
all
such shares, the “Warrant
Shares”)
at an
exercise price per share equal to $[ ] (as adjusted from time to time as
provided in Section 9 herein, the “Exercise
Price”),
at
any time and from time to time from on or after the date hereof (the “Trigger
Date”) and through and including 5:00 P.M., prevailing Pacific time, on
[ ],
2011 (the “Expiration
Date”),
and
subject to the following terms and conditions:
This
Warrant (this “Warrant”)
is one
of a series of similar warrants issued pursuant to that certain Securities
Purchase Agreement, dated [ ], 2008, by and among the Company and the Purchasers
identified therein (the “Purchase
Agreement”).
All
such warrants are referred to herein, collectively, as the “Warrants.”
1.
Definitions.
In
addition to the terms defined elsewhere in this Warrant, capitalized terms
that
are not otherwise defined herein have the meanings given to such terms in the
Purchase Agreement.
2. Registration
of Warrants.
The
Company shall register this Warrant, upon records to be maintained by the
Company for that purpose (the “Warrant
Register”),
in
the name of the record Holder (which shall include the initial Holder or, as
the
case may be, any registered assignee to which this Warrant is permissibly
assigned hereunder) from time to time. The Company may deem and treat the
registered Holder of this Warrant as the absolute owner hereof for the purpose
of any exercise hereof or any distribution to the Holder, and for all other
purposes, absent actual notice to the contrary.
31
3.
Registration
of Transfers.
Subject
to the restrictions on transfer set forth in Section 4.1 of the Purchase
Agreement and compliance with all applicable securities laws, the Company shall
register the transfer of all or any portion of this Warrant in the Warrant
Register, upon (i) surrender of this Warrant, with the Form of Assignment
attached as Schedule
2
hereto
duly completed and signed, to the Company’s transfer agent or to the Company at
its address specified herein (ii) delivery, at the request of the Company,
of an
opinion of counsel reasonably satisfactory to the Company to the effect that
the
transfer of such portion of this Warrant may be made pursuant to an available
exemption from the registration requirements of the Securities Act and all
applicable state securities or blue sky laws and (iii) delivery by the
transferee of a written statement to the Company certifying that the transferee
is an “accredited investor” as defined in Rule 501(a) under the Securities Act
and making the representations and certifications set forth in Section 3.2(b),
(c) and (d) of the Purchase Agreement, to the Company at its address specified
in the Purchase Agreement. Upon any such registration or transfer, a new warrant
to purchase Common Stock in substantially the form of this Warrant (any such
new
warrant, a “New
Warrant”)
evidencing the portion of this Warrant so transferred shall be issued to the
transferee, and a New Warrant evidencing the remaining portion of this Warrant
not so transferred, if any, shall be issued to the transferring Holder. The
acceptance of the New Warrant by the transferee thereof shall be deemed the
acceptance by such transferee of all of the rights and obligations of a Holder
of a Warrant.
4.
Exercise
and Duration of Warrants.
(a)
All
or
any part of this Warrant shall be exercisable by the registered Holder at any
time and from time to time on or after the Trigger Date and through and
including 5:00 P.M. prevailing Pacific time on the Expiration Date. At 5:00
P.M., prevailing Pacific time, on the Expiration Date, the portion of this
Warrant not exercised prior thereto shall be and become void and of no value
and
this Warrant shall be terminated and no longer outstanding.
(b) The
Holder may exercise this Warrant by delivering to the Company (i) an exercise
notice, in the form attached as Schedule 1 hereto (the “Exercise
Notice”),
appropriately completed and duly signed, (ii) payment of the Exercise Price
for
the number of Warrant Shares as to which this Warrant is being exercised (which
may take the form of a “cashless exercise” if so indicated in the Exercise
Notice and if a “cashless exercise” may occur at such time pursuant to Section
10 below), and the date such items are delivered to the Company (as determined
in accordance with the notice provisions hereof) is an “Exercise
Date.”
The
delivery by (or on behalf of) the Holder of the Exercise Notice and the
applicable Exercise Price as provided above shall constitute the Holder’s
certification to the Company that its representations contained in Section
3.2(b), (c) and (d) of the Purchase Agreement are true and correct as of the
Exercise Date as if remade in their entirety (or, in the case of any transferee
Holder that is not a party to the Purchase Agreement, such transferee Holder’s
certification to the Company that such representations are true and correct
as
to such assignee Holder as of the Exercise Date). The Holder shall not be
required to deliver the original Warrant in order to effect an exercise
hereunder. Execution and delivery of the Exercise Notice shall have the same
effect as cancellation of the original Warrant and issuance of a New Warrant
evidencing the right to purchase the remaining number of Warrant
Shares.
32
5.
Delivery
of Warrant Shares.
Upon
exercise of this Warrant, the Company shall promptly (but in no event later
than
three Trading Days after the Exercise Date) issue or cause to be issued and
cause to be delivered to or upon the written order of the Holder and in such
name or names as the Holder may designate (provided that, if the Registration
Statement is not effective and the Holder directs the Company to deliver a
certificate for the Warrant Shares in a name other than that of the Holder
or an
Affiliate of the Holder, it shall deliver to the Company on the Exercise Date
an
opinion of counsel reasonably satisfactory to the Company to the effect that
the
issuance of such Warrant Shares in such other name may be made pursuant to
an
available exemption from the registration requirements of the Securities Act
and
all applicable state securities or blue sky laws), a certificate for the Warrant
Shares issuable upon such exercise, free of restrictive legends, unless a
registration statement covering the resale of the Warrant Shares and naming
the
Holder as a selling stockholder thereunder is not then effective or the Warrant
Shares are not freely transferable without volume restrictions pursuant to
Rule
144 under the Securities Act. The Holder, or any Person permissibly so
designated by the Holder to receive Warrant Shares, shall be deemed to have
become the holder of record of such Warrant Shares as of the Exercise Date.
If
the Warrant Shares are to be issued free of all restrictive legends, the Company
shall, upon the written request of the Holder, use its best efforts to deliver,
or cause to be delivered, Warrant Shares hereunder electronically through The
Depository Trust Company or another established clearing corporation performing
similar functions, if available; provided, that, the Company may, but will
not
be required to, change its transfer agent if its current transfer agent cannot
deliver Warrant Shares electronically through such a clearing
corporation.
6.
Charges,
Taxes and Expenses.
Issuance and delivery of certificates for shares of Common Stock upon exercise
of this Warrant shall be made without charge to the Holder for any issue or
transfer tax, transfer agent fee or other incidental tax or expense in respect
of the issuance of such certificates, all of which taxes and expenses shall
be
paid by the Company; provided,
however,
that
the Company shall not be required to pay any tax which may be payable in respect
of any transfer involved in the registration of any certificates for Warrant
Shares or Warrants in a name other than that of the Holder or an Affiliate
thereof. The Holder shall be responsible for all other tax liability that may
arise as a result of holding or transferring this Warrant or receiving Warrant
Shares upon exercise hereof.
7.
Replacement
of Warrant.
If this
Warrant is mutilated, lost, stolen or destroyed, the Company shall issue or
cause to be issued in exchange and substitution for and upon cancellation
hereof, or in lieu of and substitution for this Warrant, a New Warrant, but
only
upon receipt of evidence reasonably satisfactory to the Company of such loss,
theft or destruction (in such case) and, in each case, a customary and
reasonable indemnity (which shall not include a surety bond), if requested.
Applicants for a New Warrant under such circumstances shall also comply with
such other reasonable regulations and procedures and pay such other reasonable
third-party costs as the Company may prescribe. If a New Warrant is requested
as
a result of a mutilation of this Warrant, then the Holder shall deliver such
mutilated Warrant to the Company as a condition precedent to the Company’s
obligation to issue the New Warrant.
8.
Reservation
of Warrant Shares.
The
Company covenants that it will at all times reserve and keep available out
of
the aggregate of its authorized but unissued and otherwise unreserved Common
Stock, solely for the purpose of enabling it to issue Warrant Shares upon
exercise of this Warrant as herein provided, the number of Warrant Shares which
are then issuable and deliverable upon the exercise of this entire Warrant,
free
from preemptive rights or any other contingent purchase rights of persons other
than the Holder (taking into account the adjustments and restrictions of
Section
9).
The
Company covenants that all Warrant Shares so issuable and deliverable shall,
upon issuance and the payment of the applicable Exercise Price in accordance
with the terms hereof, be duly and validly authorized, issued and fully paid
and
nonassessable. The Company will take all such action as may be necessary to
assure that such shares of Common Stock may be issued as provided herein without
violation of any applicable law or regulation, or of any requirements of any
securities exchange or automated quotation system upon which the Common Shares
may be listed.
33
9.
Certain
Adjustments.
The
Exercise Price and number of Warrant Shares issuable upon exercise of this
Warrant are subject to adjustment from time to time as set forth in this
Section
9.
(a) Stock
Dividends and Splits.
If the
Company, at any time while this Warrant is outstanding, (i) pays a stock
dividend on its Common Stock or otherwise makes a distribution on any class
of
capital stock that is payable in shares of Common Stock, (ii) subdivides its
outstanding shares of Common Stock into a larger number of shares, or (iii)
combines its outstanding shares of Common Stock into a smaller number of shares,
then in each such case the Exercise Price shall be multiplied by a fraction,
the
numerator of which shall be the number of shares of Common Stock outstanding
immediately before such event and the denominator of which shall be the number
of shares of Common Stock outstanding immediately after such event. Any
adjustment made pursuant to clause (i) of this paragraph shall become effective
immediately after the record date for the determination of stockholders entitled
to receive such dividend or distribution, and any adjustment pursuant to clause
(ii) or (iii) of this paragraph shall become effective immediately after the
effective date of such subdivision or combination.
(b) Fundamental
Transactions.
If, at
any time while this Warrant is outstanding (i) the Company effects any merger
or
consolidation of the Company with or into another Person, in which the Company
is not the survivor, (ii) the Company effects any sale of all or substantially
all of its assets or a majority of its Common Stock is acquired by a third
party, in each case, in one or a series of related transactions, (iii) any
tender offer or exchange offer (whether by the Company or another Person) is
completed pursuant to which all or substantially all of the holders of Common
Stock are permitted to tender or exchange their shares for other securities,
cash or property, or (iv) the Company effects any reclassification of the Common
Stock or any compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash or property
(other than as a result of a subdivision or combination of shares of Common
Stock covered by Section 9(a) above) (in any such case, a “Fundamental
Transaction”),
then
the Holder shall have the right thereafter to receive, upon exercise of this
Warrant, the same amount and kind of securities, cash or property as it would
have been entitled to receive upon the occurrence of such Fundamental
Transaction if it had been, immediately prior to such Fundamental Transaction,
the holder of the number of Warrant Shares then issuable upon exercise in full
of this Warrant without regard to any limitations on exercise contained herein
(the “Alternate
Consideration”).
The
Company shall not effect any such Fundamental Transaction unless prior to or
simultaneously with the consummation thereof, any successor to the Company,
surviving entity or the corporation purchasing or otherwise acquiring such
assets or other appropriate corporation or entity shall assume the obligation
to
deliver to the Holder, such Alternate Consideration as, in accordance with
the
foregoing provisions, the Holder may be entitled to purchase and/or receive
(as
the case may be), and the other obligations under this Warrant. The provisions
of this paragraph (c) shall similarly apply to subsequent transactions analogous
to a Fundamental Transaction.
(c)
Number
of Warrant Shares.
Simultaneously with any adjustment to the Exercise Price pursuant to paragraph
(a) of this Section, the number of Warrant Shares that may be purchased upon
exercise of this Warrant shall be increased or decreased proportionately, so
that after such adjustment the aggregate Exercise Price payable hereunder for
the increased or decreased number of Warrant Shares shall be the same as the
aggregate Exercise Price in effect immediately prior to such
adjustment.
34
(d)
Calculations.
All
calculations under this Section
9
shall be
made to the nearest cent or the nearest 1/100th
of a
share, as applicable. The number of shares of Common Stock outstanding at any
given time shall not include shares owned or held by or for the account of
the
Company, and the sale or issuance of any such shares shall be considered an
issue or sale of Common Stock.
(e)
Notice
of Adjustments.
Upon
the occurrence of each adjustment pursuant to this Section
9,
the
Company at its expense will, at the written request of the Holder, promptly
compute such adjustment, in good faith, in accordance with the terms of this
Warrant and prepare a certificate setting forth such adjustment, including
a
statement of the adjusted Exercise Price and adjusted number or type of Warrant
Shares or other securities issuable upon exercise of this Warrant (as
applicable), describing the transactions giving rise to such adjustments and
showing in detail the facts upon which such adjustment is based. Upon written
request, the Company will promptly deliver a copy of each such certificate
to
the Holder and to the Company’s transfer agent.
(f)
Notice
of Corporate Events.
If,
while this Warrant is outstanding, the Company (i) declares a dividend or any
other distribution of cash, securities or other property in respect of its
Common Stock, including, without limitation, any granting of rights or warrants
to subscribe for or purchase any capital stock of the Company, (ii) authorizes
or approves, enters into any agreement contemplating or solicits stockholder
approval for any Fundamental Transaction or (iii) authorizes the voluntary
dissolution, liquidation or winding up of the affairs of the Company, then,
except if such notice and the contents thereof shall be deemed to constitute
material non-public information, the Company shall deliver to the Holder a
notice describing the material terms and conditions of such transaction at
least
ten (10) Trading Days prior to the applicable record or effective date on which
a Person would need to hold Common Stock in order to participate in or vote
with
respect to such transaction, and the Company will take all steps reasonably
necessary in order to insure that the Holder is given the practical opportunity
to exercise this Warrant prior to such time so as to participate in or vote
with
respect to such transaction; provided,
however,
that
the failure to deliver such notice or any defect therein shall not affect the
validity of the corporate action required to be described in such notice.
10.
Payment
of Exercise Price.
The
Holder shall pay the Exercise Price in immediately available funds; provided,
however,
that
if, on any Exercise Date the shares issuable upon exercise of this Warrant
are
not freely resalable without restriction under the Securities Act, the Holder
may, in its sole discretion, satisfy its obligation to pay the Exercise Price
through a “cashless exercise”, in which event the Company shall issue to the
Holder the number of Warrant Shares determined as follows:
X
= Y
[(A-B)/A]
where:
X
= the
number of Warrant Shares to be issued to the Holder.
Y
= the
total number of Warrant Shares with respect to which this Warrant is being
exercised.
35
A
= the
average of the Closing Sale Prices of the shares of Common Stock (as reported
by
Bloomberg Financial Markets) for the five Trading Days ending on the date
immediately preceding the Exercise Date.
B
= the
Exercise Price then in effect for the applicable Warrant Shares at the time
of
such exercise.
For
purposes of this Warrant, “Closing
Sale Price”
means,
for any security as of any date, the last trade price for such security on
the
principal securities exchange or trading market for such security, as reported
by Bloomberg Financial Markets, or, if such exchange or trading market begins
to
operate on an extended hours basis and does not designate the last trade price,
then the last trade price of such security prior to 4:00:00 p.m., New York
Time,
as reported by Bloomberg Financial Markets, or if the foregoing do not apply,
the last trade price of such security in the over-the-counter market on the
electronic bulletin board for such security as reported by Bloomberg Financial
Markets, or, if no last trade price is reported for such security by Bloomberg
Financial Markets, the average of the bid prices, or the ask prices,
respectively, of any market makers for such security as reported in the "pink
sheets" by Pink Sheets LLC. If the Closing Sale Price cannot be calculated
for a
security on a particular date on any of the foregoing bases, the Closing Sale
Price of such security on such date shall be the fair market value as mutually
determined by the Company and the Holder. If the Company and the Holder are
unable to agree upon the fair market value of such security, then the Company
shall, within two business days submit via facsimile (a) the disputed
determination of the Warrant Exercise Price to an independent, reputable
investment bank selected by the Company and approved by the Holder or (b) the
disputed arithmetic calculation of the Warrant Shares to the Company's
independent, outside accountant. The Company shall cause at its expense the
investment bank or the accountant, as the case may be, to perform the
determinations or calculations and notify the Company and the Holder of the
results no later than ten business days from the time it receives the disputed
determinations or calculations. Such investment bank's or accountant's
determination or calculation, as the case may be, shall be binding upon all
parties absent demonstrable error. All such determinations to be appropriately
adjusted for any stock dividend, stock split, stock combination or other similar
transaction during the applicable calculation period
For
purposes of Rule 144 promulgated under the Securities Act, it is intended,
understood and acknowledged that the Warrant Shares issued in a cashless
exercise transaction shall be deemed to have been acquired by the Holder, and
the holding period for the Warrant Shares shall be deemed to have commenced,
on
the date this Warrant was originally issued pursuant to the Purchase Agreement
(provided that the Commission continues to take the position that such treatment
is proper at the time of such exercise).
11.
No
Fractional Shares.
No
fractional Warrant Shares will be issued in connection with any exercise of
this
Warrant. In lieu of any fractional shares which would otherwise be issuable,
the
number of Warrant Shares to be issued shall be rounded up to the next whole
number.
12.
Notices.
Any and
all notices or other communications or deliveries hereunder (including, without
limitation, any Exercise Notice) shall be in writing and shall be deemed given
and effective on the earliest of (i) the date of transmission, if such notice
or
communication is delivered via facsimile at the facsimile number specified
in
the Purchase Agreement prior to 5:00 p.m. (prevailing Pacific time) on a Trading
Day, (ii) the next Trading Day after the date of transmission, if such notice
or
communication is delivered via facsimile at the facsimile number specified
in
the Purchase Agreement on a day that is not a Trading Day or later than 5:00
p.m. (prevailing Pacific time) on any Trading Day, (iii) the Trading Day
following the date of mailing, if sent by nationally recognized overnight
courier service specifying next business day delivery, or (iv) upon actual
receipt by the party to whom such notice is required to be given, if by hand
delivery. The address and facsimile number of a party for such notices or
communications shall be as set forth in the Purchase Agreement unless changed
by
such party by two Trading Days’ prior notice to the other party in accordance
with this Section 12.
36
13.
Warrant
Agent.
The
Company shall serve as warrant agent under this Warrant. Upon thirty (30) days’
notice to the Holder, the Company may appoint a new warrant agent. Any
corporation into which the Company or any new warrant agent may be merged or
any
corporation resulting from any consolidation to which the Company or any new
warrant agent shall be a party or any corporation to which the Company or any
new warrant agent transfers substantially all of its corporate trust or
shareholders services business shall be a successor warrant agent under this
Warrant without any further act. Any such successor warrant agent shall promptly
cause notice of its succession as warrant agent to be mailed (by first class
mail, postage prepaid) to the Holder at the Holder’s last address as shown on
the Warrant Register.
14.
Miscellaneous.
6.17 The
Holder, solely in such Person's capacity as a holder of this Warrant, shall
not
be entitled to vote or receive dividends or be deemed the holder of share
capital of the Company for any purpose, nor shall anything contained in this
Warrant be construed to confer upon the Holder, solely in such Person's capacity
as the Holder of this Warrant, any of the rights of a stockholder of the Company
or any right to vote, give or withhold consent to any corporate action (whether
any reorganization, issue of stock, reclassification of stock, consolidation,
merger, amalgamation, conveyance or otherwise), receive notice of meetings,
receive dividends or subscription rights, or otherwise, prior to the issuance
to
the Holder of the Warrant Shares which such Person is then entitled to receive
upon the due exercise of this Warrant. In addition, nothing contained in this
Warrant shall be construed as imposing any liabilities on the Holder to purchase
any securities (upon exercise of this Warrant or otherwise) or as a stockholder
of the Company, whether such liabilities are asserted by the Company or by
creditors of the Company. Notwithstanding this Section 14(a), the Company shall
provide the Holder with copies of the same notices and other information given
to the shareholders of the Company, contemporaneously with the giving thereof
to
the shareholders.
6.18 Subject
to the restrictions on transfer set forth on the first page hereof and in
Section 4.1 of the Purchase Agreement, and compliance with applicable securities
laws, this Warrant may be assigned by the Holder. This Warrant may not be
assigned by the Company except to a successor in the event of a Fundamental
Transaction. This Warrant shall be binding on and inure to the benefit of the
parties hereto and their respective successors and assigns. Subject to the
preceding sentence, nothing in this Warrant shall be construed to give to any
Person other than the Company and the Holder any legal or equitable right,
remedy or cause of action under this Warrant. This Warrant may be amended only
in writing signed by the Company and the Holder, or their successors and
assigns.
37
6.19 GOVERNING
LAW; VENUE; WAIVER OF JURY TRIAL. ALL QUESTIONS CONCERNING THE CONSTRUCTION,
VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS WARRANT SHALL BE GOVERNED
BY
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF. EACH PARTY HEREBY
IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL
COURTS SITTING IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN, FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR WITH ANY
TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH RESPECT
TO
THE ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS), AND HEREBY IRREVOCABLY
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 IMPROPER. EACH PARTY HEREBY IRREVOCABLY
WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN
ANY
SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR
CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY
AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT AND AGREES
THAT
SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE
THEREOF. NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT
TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW. THE COMPANY HEREBY WAIVES
ALL
RIGHTS TO A TRIAL BY JURY.
(d)
The
headings herein are for convenience only, do not constitute a part of this
Warrant and shall not be deemed to limit or affect any of the provisions hereof.
(e)
In
case
any one or more of the provisions of this Warrant shall be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Warrant shall not in any way be affected or
impaired thereby, and the parties will attempt in good faith to agree upon
a
valid and enforceable provision which shall be a commercially reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.
(f)
Except
as
otherwise set forth herein, prior to exercise of this Warrant, the Holder hereof
shall not, by reason of by being a Holder, be entitled to any rights of a
stockholder with respect to the Warrant Shares.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK,
SIGNATURE
PAGE FOLLOWS]
38
IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by
its
authorized officer as of the date first indicated above.
|
CJPG,
INC.
|
||
|
By:
|
||
|
Name:
|
||
|
Title:
|
||
39
SCHEDULE
1
FORM
OF
EXERCISE NOTICE
(To
be
executed by the Holder to exercise the right to purchase shares of Common Stock
under the foregoing Warrant)
Ladies
and Gentlemen:
(1) The
undersigned is the Holder of Warrant No. __________ (the “Warrant”) issued by
CJPG, Inc. a Nevada corporation (the “Company”). Capitalized terms used herein
and not otherwise defined herein have the respective meanings set forth in
the
Warrant.
(2) The
undersigned hereby exercises its right to purchase __________ Warrant Shares
pursuant to the Warrant.
(3) The
Holder intends that payment of the Exercise Price shall be made as (check
one):
¨ Cash
Exercise
¨ “Cashless
Exercise” under Section 10
(4) If
the
Holder has elected a Cash Exercise, the Holder shall pay the sum of $_______
in
immediately available funds to the Company in accordance with the terms of
the
Warrant.
(5) Pursuant
to this Exercise Notice, the Company shall deliver to the Holder _____________
Warrant Shares in accordance with the terms of the Warrant.
Dated:_______________,
_____
Name
of
Holder: ___________________________
By:__________________________________
Name:
_______________________________
Title:
_______________________________
(Signature
must conform in all respects to name of Holder as specified on the face of
the
Warrant)
40
SCHEDULE
2
CJPG,
INC.
FORM
OF
ASSIGNMENT
[To
be
completed and signed only upon transfer of Warrant]
FOR
VALUE
RECEIVED, the undersigned hereby sells, assigns and transfers unto
(the
“Transferee” the right represented by the within Warrant to purchase
shares
of Common Stock of CJPG, Inc. (the “Company”) to which the within Warrant
relates and appoints
attorney
to transfer said right on the books of the Company with full power of
substitution in the premises. In connection therewith, the undersigned
represents, warrants, covenants and agrees to and with the Company
that:
|
(a)
|
the
offer and sale of the Warrant contemplated hereby is being made in
compliance with Section 4(1) of the United States Securities Act
of 1933,
as amended (the “Securities Act”) or another valid exemption from the
registration requirements of Section 5 of the Securities Act and
in
compliance with all applicable securities laws of the states of the
United
States;
|
|
(b)
|
the
undersigned has not offered to sell the Warrant by any form of general
solicitation or general advertising, including, but not limited to,
any
advertisement, article, notice or other communication published in
any
newspaper, magazine or similar media or broadcast over television
or
radio, and any seminar or meeting whose attendees have been invited
by any
general solicitation or general
advertising;
|
|
(c)
|
the
undersigned has read the Transferee’s investment letter included herewith,
and to its actual knowledge, the statements made therein are true
and
correct; and
|
|
(d)
|
the
undersigned understands that the Company may condition the transfer
of the
Warrant contemplated hereby upon the delivery to the Company by the
undersigned or the Transferee, as the case may be, of a written opinion
of
counsel (which opinion shall be in form, substance and scope customary
for
opinions of counsel in comparable transactions) to the effect that
such
transfer may be made without registration under the Securities Act
and
under applicable securities laws of the states of the United
States.
|
|
Dated:__________,
_______
|
|
|
|
|
|
(Signature
must conform in all respects to name of holder as specified on the
face of
the Warrant)
|
|
|
|
|
|
|
|
Address
of Transferee
|
|
|
|
|
|
|
|
|
|
In
the presence of:
|
|
|
|
|
41
EXHIBIT
B
FORM
OF
REGISTRATION RIGHTS AGREEMENT
This
Registration Rights Agreement (this “Agreement”)
is
made and entered into as of _______________, 2008 by and among CJPG, Inc.,
a
Nevada corporation (the “Company”),
and
the several purchasers signatory hereto (each a “Purchaser”
and
collectively, the “Purchasers”).
This
Agreement is made pursuant to the Securities Purchase Agreement, dated as of
the
date hereof between the Company and each Purchaser (the “Purchase
Agreement”).
NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
and for other good and valuable consideration, the receipt and adequacy of
which
are hereby acknowledged, the Company and the Purchasers agree as follows:
ARTICLE
VII.Definitions.
Capitalized terms used and not otherwise defined herein that are defined in
the
Purchase Agreement shall have the meanings given such terms in the Purchase
Agreement. As used in this Agreement, the following terms shall have the
respective meanings set forth in this Section 1:
“Adjustment
Shares”
means
any additional shares of Common Stock issued or issuable to the Purchasers
pursuant to Section 2.3 of the Purchase Agreement.
“Adjustment
Warrants”
means
any additional warrants issued or issuable to the Purchasers pursuant to Section
2.3 of the Purchase Agreement.
“Adjustment
Warrant Shares”
means
the shares of Common Stock issued or issuable upon exercise of any Adjustment
Warrants.
“Advice”
shall
have the meaning set forth in Section 6(d).
“Affiliate”
means,
with respect to any person, any other person which directly or indirectly
controls, is controlled by, or is under common control with, such
person.
“Business
Day”
means
a
day, other than a Saturday or Sunday, on which banks in New York City are open
for the general transaction of business.
“Closing”
has
the
meaning set forth in the Purchase Agreement.
“Closing
Date”
has
the
meaning set forth in the Purchase Agreement.
“Commission”
means
the Securities and Exchange Commission.
“Common
Stock”
means
the common stock of the Company, par value $0.001 per share, and any securities
into which such common stock may hereinafter be reclassified.
“Effective
Date”
means
the date that the Registration Statement filed pursuant to Section 2(a) is
first
declared effective by the Commission.
42
“Effectiveness
Deadline”
means,
with respect to the Registration Statement required to be filed to cover the
resale by the Holders of the Registrable Securities, the earlier of: (i) the
90th
calendar
day following the applicable Filing Deadline, and (ii) the fifth (5th)
Trading
Day following the date on which the Company is notified by the Commission that
the Registration Statement will not be reviewed or is no longer subject to
further review and comments and the effectiveness of the applicable Registration
Statement may be accelerated; provided,
however,
that if
the Effective Deadline falls on a Saturday, Sunday or other day that the
Commission is closed for business, the Effectiveness Deadline shall be extended
to the next business day on which the Commission is open for business.
“Effectiveness
Period”
shall
have the meaning set forth in Section 2(b).
“Event”
shall
have the meaning set forth in Section 2(c).
“Event
Date”
shall
have the meaning set forth in Section 2(c).
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
“Filing
Deadline”
means,
with respect to the Registration Statement required to be filed pursuant to
Section 2(a): (i) the 30h
calendar
day following the Closing Date with respect to all Registrable Securities other
than the Adjustment Shares and the Adjustment Warrant Shares, or (ii) the
30th
calendar
day following issuance of the Adjustment Shares with respect to such Adjustment
Shares and the Adjustment Warrant Shares.
“Holder”
or
“Holders”
means
the holder or holders, as the case may be, from time to time of Registrable
Securities.
“Indemnified
Party”
shall
have the meaning set forth in Section 5(c).
“Indemnifying
Party”
shall
have the meaning set forth in Section 5(c).
“Losses”
shall
have the meaning set forth in Section 5(a).
“New
York Courts”
means
the state and federal courts sitting in the City of New York, Borough of
Manhattan.
“Person”
means
an individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any
kind.
“Placement
Agents”
means
Sterne, Agee & Xxxxx Inc., Xxxxx and Company, Inc. and Xxxxxx & Xxxxxxx,
LLC, and any permitted assigns.
“Principal
Trading Market”
means
the Trading Market on which the Common Stock is primarily listed on and quoted
for trading, which, as of the Closing Date, shall be the electronic pink sheets
of the U. S. Over-the-Counter (OTC) market.
“Proceeding”
means
an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.
43
“Prospectus”
means
the prospectus included in a Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from
a
prospectus filed as part of an effective registration statement in reliance
upon
Rule 430A promulgated under the Securities Act), as amended or supplemented
by
any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by a Registration Statement,
and
all other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
“Register,”
“registered”
and
“registration”
refer
to a registration made by preparing and filing a Registration Statement or
similar document in compliance with the Securities Act and pursuant to Rule
415,
and the declaration or ordering of effectiveness of such Registration Statement
or document.
“Registrable
Securities”
means
all of (i) the Shares, (ii) the Warrant Shares issued or issuable upon the
exercise of the Warrants, (iii) the Adjustment Shares, (iv) the Adjustment
Warrant Shares issuable upon exercise of the Adjustment Warrants, (v) any
additional shares issuable in connection with any anti-dilution provisions
in
the Warrants (without giving effect to any limitations on exercise set forth
in
the Warrant) and (vi) any securities issued or issuable on Registrable
Securities listed in (i) through (v) above upon any stock split, dividend or
other distribution, recapitalization or similar event; provided,
that
the Holder has completed and delivered to the Company a Selling Shareholder
Questionnaire; and provided,
further,
that a
Holder’s security shall cease to be Registrable Security upon the earliest to
occur of the following: (A) sale pursuant to a Registration Statement or Rule
144 under the Securities Act (in which case, only such security sold shall
cease
to be a Registrable Security); or (B) such security becoming eligible for sale
by the Holder without volume restrictions pursuant to Rule 144 pursuant to
Rule
144.
“Registration
Statements”
means
any one or more registration statements of the Company filed under the
Securities Act that covers the resale of any of the Registrable Securities
pursuant to the provisions of this Agreement (including without limitation
the
Initial Registration Statement, the New Registration Statement and any Remainder
Registration Statements), amendments and supplements to such Registration
Statements, including post-effective amendments, all exhibits and all material
incorporated by reference or deemed to be incorporated by reference in such
Registration Statements.
“Rule
144”
means
Rule 144 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
“Rule
415”
means
Rule 415 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
“Rule
424”
means
Rule 424 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
“Securities
Act”
means
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“Selling
Shareholder Questionnaire”
means
a
questionnaire in the form attached as Annex
B
hereto,
or such other form of questionnaire as may reasonably be adopted by the Company
from time to time.
“Shares”
means
the shares of Common Stock issued or issuable to the Purchasers pursuant to
Section 2.1 of the Purchase Agreement.
44
“Subscription
Amount”
means
$0.405 (as subject to adjustment for stock splits and stock dividends affecting
the Shares), being the per security purchase price paid by each Purchaser for
the securities purchased by such Purchaser pursuant to the Purchase
Agreement.
“Trading
Day”
means
(i) a day on which the Common Stock is listed or quoted and traded on its
primary Trading Market (other than the OTC Bulletin Board), or (ii) if the
Common Stock is not listed on a Trading Market (other than the OTC Bulletin
Board), a day on which the Common Stock is traded in the over-the-counter
market, as reported by the OTC Bulletin Board, or (iii) if the Common Stock
is
not quoted on any Trading Market, a day on which the Common Stock is quoted
in
the over-the-counter market as reported by the National Quotation Bureau
Incorporated (or any similar organization or agency succeeding to its functions
of reporting prices); provided,
that in
the event that the Common Stock is not listed or quoted as set forth in (i),
(ii) and (iii) hereof, then Trading Day shall mean a Business Day.
“Trading
Market”
means
whichever of the New York Stock Exchange, the American Stock Exchange, the
NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market
or OTC Bulletin Board on which the Common Stock is listed or quoted for trading
on the date in question.
“Warrants”
means
the Warrants issued pursuant to the Purchase Agreement.
“Warrant
Shares”
means
the shares of Common Stock issued or issuable upon exercise of the
Warrants.
ARTICLE
VIII.Registration.
8.1 On
or
prior to the applicable Filing Deadline, the Company shall prepare and file
with
the Commission a Registration Statement covering the resale of all Registrable
Securities not already covered by an existing and effective Registration
Statement for an offering to be made on a continuous basis pursuant to Rule
415
(the “Initial
Registration Statement”).
The
Initial Registration Statement shall be on Form S-3 (except if the Company
is
not then eligible to register for resale the Registrable Securities on Form
S-3,
in which case such registration shall be on another appropriate form in
accordance with the Securities Act) and shall contain (except if otherwise
required pursuant to written comments received from the Commission upon a review
of such Registration Statement) the “Plan of Distribution” attached hereto as
Annex A. Notwithstanding the registration obligations set forth in this
subsection (a) and subsections (b) and (c) of this Section 2, in the event
the
Commission informs the Company that all of the Registrable Securities cannot,
as
a result of the application of Rule 415, be registered for resale on a single
registration statement, the Company agrees to promptly (i) inform each of the
holders thereof and use its reasonable best efforts to file amendments to the
Initial Registration Statement as required by the Commission and/or (ii)
withdraw the Initial Registration Statement and file a new registration
statement (a “New
Registration Statement”),
in
either case covering the maximum number of Registrable Securities permitted
to
be registered by the Commission on Form S-3 or such other form available to
register for resale the Registrable Securities. In the event the Company amends
the Initial Registration Statement or files a New Registration Statement, as
the
case may be, under clauses (i) or (ii) above, the Company will use its
reasonable best efforts to file with the Commission, as promptly as allowed
by
Commission or staff guidance provided to the Company or to registrants of
securities in general, one or more registration statements on Form S-3 or such
other form available to register for resale those Registrable Securities that
were not registered for resale on the Initial Registration Statement, as
amended, or the New Registration Statement (the “Remainder
Registration Statements”).
45
8.2 The
Company shall use its best efforts to cause each Registration Statement to
be
declared effective by the Commission as soon as practicable and, with respect
to
the Initial Registration Statement or the New Registration Statement, as
applicable, no later than the Effectiveness Deadline (including filing with
the
Commission a request for acceleration of effectiveness in accordance with Rule
461 promulgated under the Securities Act within five (5) Business Days after
the
date that the Company is notified (orally or in writing, whichever is earlier)
by the Commission that such Registration Statement will not be “reviewed,” or
not be subject to further review and the effectiveness of such Registration
Statement may be accelerated) and shall use its reasonable best efforts to
keep
each Registration Statement continuously effective under the Securities Act
until the earlier of (i) such time as all of the Registrable Securities covered
by such Registration Statement have been publicly sold by the Holders, (ii)
the
date that all Registrable Securities covered by such Registration Statement
may
be sold by non-affiliates without volume restrictions pursuant to Rule 144
as
determined by counsel to the Company pursuant to a written opinion letter to
such effect, addressed and acceptable to the Company's transfer agent and the
affected Holders, or (iii) two (2) years following the applicable Effective
Date
(the “Effectiveness
Period”).
The
Company shall ensure that each Registration Statement (including any amendments
or supplements thereto and prospectuses contained therein) shall not contain
any
untrue statement of a material fact or omit to state a material fact required
to
be stated therein, or necessary to make the statements therein (in the case
of
prospectuses, in the light of the circumstances in which they were made) not
misleading. Each Registration Statement shall also cover, to the extent
allowable under the Securities Act and the rules promulgated thereunder
(including Rule 416), such indeterminate number of additional shares of Common
Stock resulting from stock splits, stock dividends or similar transactions
with
respect to the Registrable Securities. The Company shall telephonically request
effectiveness of a Registration Statement as of 5:00 pm Eastern Time on a
Trading Day. The Company shall promptly notify the Holders via facsimile or
e-mail of the effectiveness of a Registration Statement on the same Trading
Day
that the Company telephonically confirms effectiveness with the Commission,
which shall be the date requested for effectiveness of a Registration Statement.
The Company shall, by 9:30 am Eastern Time on the Trading Day after the
Effective Date (as defined in the Purchase Agreement), file a final Prospectus
with the Commission pursuant to Rule 424.
8.3
If: (i)
the Initial Registration Statement is not filed on or prior to the applicable
Filing Deadline, (ii) the Initial Registration Statement or the New Registration
Statement, as applicable, is not declared effective by the Commission (or
otherwise does not become effective) on or prior to its Effectiveness Deadline
or (iii) after its Effective Date, such Registration Statement ceases for any
reason (including without limitation by reason of a stop order, or the Company’s
failure to update the Registration Statement), but excluding the inability
of
any Holder to sell the Registrable Securities covered thereby due to market
conditions, to remain continuously effective and available to the Holders as
to
all Registrable Securities to which it is required to cover at any time prior
to
the expiration of the Effectiveness Period for (A) an aggregate of more than
20
consecutive Trading Days or for more than an aggregate of 40 Trading Days in
any
12-month period (which need not be consecutive) if the Registration Statement
is
filed on Form S-3, or (B) an aggregate of more than 30 consecutive Trading
Days
or for more than an aggregate of 60 Trading Days in any 12-month period (which
need not be consecutive) if the Registration Statement is filed on a form other
than Form S-3 (any such failure or breach in clauses (i), (ii) or (iii) above
being referred to as an “Event,”
and,
for purposes of clauses (i) or (ii), the date on which such Event occurs, or
for
purposes of clause (iii), the date which such consecutive or Trading Day period
(as applicable) is exceeded, being referred to as “Event
Date”),
then
in addition to any other rights available to the Holders: (x) on such Event
Date
the Company shall pay to each Holder an amount in cash, as partial liquidated
damages and not as a penalty, equal to 1.0% of the aggregate purchase price
paid
by such Holder pursuant to the Purchase Agreement for any Registrable Securities
then held by such Holder (which remedy shall not be exclusive of any other
remedies available under this Agreement); and (y) on each monthly anniversary
of
each such Event Date thereof (if the applicable Event shall not have been cured
by such date) until the applicable Event is cured, the Company shall pay to
each
Holder an amount in cash, as partial liquidated damages and not as a penalty,
equal to 1.0% of the aggregate purchase price paid by such Holder pursuant
to
the Purchase Agreement for any Registrable Securities then held by such Holder
(which remedy shall not be exclusive of any other remedies available under
this
Agreement). The parties agree that the Company will not be liable for liquidated
damages under this Section 2(c) in respect of the Warrants, the Warrant Shares,
the Adjustment Warrants or the Adjustment Warrant Shares. If the Company fails
to pay any partial liquidated damages pursuant to this Section in full within
seven days after the date payable, the Company will pay interest thereon at
a
rate of 10% per annum (or such lesser maximum amount that is permitted to be
paid by applicable law) to the Holder, accruing daily from the date such partial
liquidated damages are due until such amounts, plus all such interest thereon,
are paid in full. The partial liquidated damages pursuant to the terms hereof
shall apply on a daily pro-rata basis for any portion of a month prior to the
cure of an Event, except in the case of the first Event Date. Notwithstanding
the foregoing, the maximum payment to a Holder associated with all Events in
the
aggregate shall not exceed (i) in any 30-day period, an aggregate of 1.0% of
the
purchase price paid by such Holder for its Registrable Securities (plus interest
accrued thereon, if applicable) and (ii) 10.0% of the purchase paid by such
Holder for its Registrable Securities.
46
(d) Each
Holder agrees to furnish to the Company a completed and executed Selling
Shareholder Questionnaire. The Company shall not be required to include the
Registrable Securities of a Holder in a Registration Statement and shall not
be
required to pay any liquidated or other damages under Section 2(c) to any Holder
who fails to furnish to the Company a fully completed and executed Selling
Shareholder Questionnaire at least two Trading Days prior to the Filing
Deadline, or if sooner, five Trading Days after the Company furnishes copies
of
the sections of the Prospectus, as contemplated by Section 3(a).
(e) The
Company shall cooperate with the Placement Agents in connection with any filing
required to be made by the Placement Agents with the Financial Industry
Regulatory Authority (“FINRA”)
Corporate Financing Department pursuant to FINRA Rule 2710(b)(10)(A)(i) with
respect to the public offering contemplated by the Registration Statements
(a
“FINRA
Filing”)
and
pay the filing fee required by such FINRA Filing. The Company shall use
commercially reasonable efforts to cooperate with the Placements Agents and
to
assist them in pursuing the FINRA Filing until FINRA issues a letter confirming
that it does not object to the terms of the offering contemplated by the
Registration Statement.
(f) In
the
event that Form S-3 is not available for the registration of the resale of
Registrable Securities hereunder, the Company shall
(i)
register the resale of the Registrable Securities on another appropriate form
reasonably acceptable to the Holders and (ii) undertake to register the
Registrable Securities on Form S-3 as soon as such form is available, provided
that the Company shall maintain the effectiveness of the Registration Statement
then in effect until such time as a Registration Statement on Form S-3 covering
the Registrable Securities has been declared effective by the Commission.
ARTICLE
IX.Registration
Procedures
In
connection with the Company's registration obligations hereunder, the Company
shall:
9.1 Not
less
than five Trading Days prior to the filing of a Registration Statement or any
related Prospectus or any amendment or supplement thereto, furnish to each
Holder copies of the “Selling Stockholders’ section of such document, the “Plan
of Distribution” and any risk factor contained in such document that addresses
specifically this transaction or the Holders, as proposed to be filed, which
sections will be subject to the review of such Holder (it being acknowledged
and
agreed that if a Holder does not object to or comment on the aforementioned
documents within such five Trading Day period, then the Holder shall be deemed
to have consented to and approved the use of such documents). The Company shall
not file a Registration Statement, any Prospectus or any amendments or
supplements thereto in which the “Selling Stockholder” section thereof differs
from the disclosure received from a Holder in its Selling Shareholder
Questionnaire (as amended or supplemented), except as may otherwise be required
by applicable securities law or the Commission.
47
9.2 (i)
Prepare and file with the Commission such amendments, including post-effective
amendments, to each Registration Statement and the Prospectus used in connection
therewith as may be necessary to keep such Registration Statement continuously
effective as to the applicable Registrable Securities for its Effectiveness
Period and prepare and file with the Commission such additional Registration
Statements in order to register for resale under the Securities Act all of
the
Registrable Securities; (ii) cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement, and as so supplemented
or
amended to be filed pursuant to Rule 424; (iii) respond as promptly as
reasonably practicable to any comments received from the Commission with respect
to each Registration Statement or any amendment thereto and, as promptly as
reasonably possible upon request, provide the Holders true and complete copies
of all correspondence from and to the Commission relating to such Registration
Statement that pertains to the Holders as Selling Stockholders but not any
comments that would result in the disclosure to the Holders of material and
non-public information concerning the Company; and (iv) comply with the
provisions of the Securities Act and the Exchange Act with respect to the
disposition of all Registrable Securities covered by each Registration
Statement.
9.3 Notify
the Holders as promptly as reasonably possible (and, in the case of (i)(A)
below, not less than three Trading Days prior to such filing, in the case of
(iii) and (iv) below, not more than one Trading Day after such issuance or
receipt and, in the case of (v) below, not less than three Trading Days prior
to
the financial statements in any Registration Statement becoming ineligible
for
inclusion therein) and (if requested by any such Person) confirm such notice
in
writing no later than one Trading Day following the day (i)(A) when a Prospectus
or any Prospectus supplement or post-effective amendment to a Registration
Statement is proposed to be filed; (B) when the Commission notifies the Company
whether there will be a “review” of such Registration Statement and whenever the
Commission comments in writing on any Registration Statement (in which case
the
Company shall provide true and complete copies thereof and all written responses
thereto to each of the Holders that pertain to the Holders as a Selling
Stockholder or to the Plan of Distribution, but not information which the
Company believes would constitute material and non-public information); and
(C)
with respect to each Registration Statement or any post-effective amendment,
when the same has become effective; (ii) of any request by the Commission or
any
other Federal or state governmental authority for amendments or supplements
to a
Registration Statement or Prospectus or for additional information that pertains
to the Holders as Selling Stockholders or the Plan of Distribution; (iii) of
the
issuance by the Commission or any other federal or state governmental authority
of any stop order suspending the effectiveness of a Registration Statement
covering any or all of the Registrable Securities or the initiation of any
Proceedings for that purpose; (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; (v) of the occurrence of any event or passage of time that makes the
financial statements included in a Registration Statement ineligible for
inclusion therein or any statement made in such Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein
by
reference untrue in any material respect or that requires any revisions to
such
Registration Statement, Prospectus or other documents so that, in the case
of
such Registration Statement or the Prospectus, as the case may be, it will
not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
(in the case of any Prospectus, form of prospectus or supplement thereto, in
light of the circumstances under which they were made), not misleading; and
(vi)
of a pending proceeding against the Company under Section 8A of the Securities
Act in connection with the offering of Registrable Securities.
48
9.4 Use
reasonable best efforts to avoid the issuance of, or, if issued, obtain the
withdrawal of (i) any order suspending the effectiveness of a Registration
Statement, or (ii) any suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities for sale in any
jurisdiction, as soon as practicable.
9.5 If
requested by a Holder, furnish to such Holder, without charge, at least one
conformed copy of each Registration Statement and each amendment thereto and
all
exhibits to the extent requested by such Person (including those previously
furnished or incorporated by reference) promptly after the filing of such
documents with the Commission; provided, that the Company shall have no
obligation to provide any document pursuant to this clause that is available
on
the Commission’s XXXXX system.
9.6 Upon
notification by the Commission that a Registration Statement will not be
reviewed or is no longer subject to further review and comments, the Company
shall request acceleration of such Registration Statement within five (5)
Business Days after receipt of such notice such that it becomes effective no
later than 5:00 p.m. New York City time on the Effective Date and file a
prospectus supplement for any Registration Statement, whether or not it is
required under Rule 424 (or otherwise), by 9:00 a.m. New York City time the
day
after the Effective Date.
9.7 Prior
to
any public offering of Registrable Securities, use its best efforts to register
or qualify or cooperate with the selling Holders in connection with the
registration or qualification (or exemption therefrom) of such Registrable
Securities for offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as any Holder reasonably requests in
writing, to keep each such registration or qualification (or exemption
therefrom) effective during the Effectiveness Period and to do any and all
other
acts or things reasonably necessary to enable the disposition in such
jurisdictions of the Registrable Securities covered by the Registration
Statements; provided,
that
the
Company shall not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action that would
subject the Company to general service of process in any jurisdiction where
it
is not then so subject or subject the Company to any material tax in any such
jurisdiction where it is not then so subject.
9.8 If
requested by the Holders, cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities
to
be delivered to a transferee pursuant to the Registration Statement, which
certificates shall be free, to the extent permitted by the Purchase Agreement
and under law, of all restrictive legends, and to enable such Registrable
Securities to be in such denominations and registered in such names as any
such
Holders may reasonably request. In connection therewith, if required by the
Company’s transfer agent, the Company shall promptly after the effectiveness of
the Registration Statement cause an opinion of counsel as to the effectiveness
of the Registration Statement to be delivered to and maintained with its
transfer agent, together with any other authorizations, certificates and
directions required by the transfer agent, which authorize and direct the
transfer agent to issue such Registrable Securities without legend upon sale
by
the holder of such shares of Registrable Securities under the Registration
Statement.
9.9 Following
the occurrence of any event contemplated by Section 3(c)(v), as promptly as
reasonably possible, prepare a supplement or amendment, including a
post-effective amendment, to the affected Registration Statements or a
supplement to the related Prospectus or any document incorporated or deemed
to
be incorporated therein by reference, and file any other required document
so
that, as thereafter delivered, no Registration Statement nor any Prospectus
will
contain an untrue statement of a material fact or omit to state a material
fact
required to be stated therein or necessary to make the statements therein (in
the case of any Prospectus, form of prospectus or supplement thereto, in light
of the circumstances under which they were made), not
misleading.
49
9.10 (i)
In
the time and manner required by the Principal Trading Market, prepare and file
with such Trading Market an additional shares listing application covering
all
of the Registrable Securities, (ii) take all steps necessary to cause such
Registrable Securities to be approved for listing on the Principal Trading
Market as soon as possible thereafter, (iii) if requested by any Holder, provide
such Holder evidence of such listing, and (iv) during the Effectiveness Period,
maintain the listing of such Registrable Securities on the Principal Trading
Market.
9.11 In
order
to enable the Holders to sell Shares or Warrant Shares under Rule 144, for
a
period of two years from the Closing, the Company shall use its commercially
reasonable efforts to timely file (or obtain extensions in respect thereof
and
file within the applicable grace period) all reports required to be filed by
the
Company after the date hereof pursuant to Section 13(a) or 15(d) of the Exchange
Act. During such two year period, if the Company is not required to file reports
pursuant to Section 13(a) or 15(d) of the Exchange Act, it will prepare and
furnish to the Holders and make publicly available in accordance with Rule
144(c) promulgated under the Securities Act annual and quarterly financial
statements, together with a discussion and analysis of such financial statements
in form and substance substantially similar to those that would otherwise be
required to be included in reports required by Section 13(a) or 15(d) of the
Exchange Act, as well as any other information required thereby, in the time
period that such filings would have been required to have been made under the
Exchange Act. The Company further covenants that it will take such further
action as any Holder may reasonably request, all to the extent required from
time to time to enable such Person to sell Shares and Warrant Shares without
registration under the Securities Act within the limitation of the exemptions
provided by Rule 144 promulgated under the Securities Act, including compliance
with the provisions of the Purchase Agreement relating to the transfer of the
Shares and Warrant Shares.
9.12 The
Company may require each selling Holder to furnish to the Company a certified
statement as to the number of shares of Common Stock beneficially owned by
such
Holder and any Affiliate thereof and as to any FINRA affiliations and of any
natural persons who have the power to vote or dispose of the Common Stock,
and
the Company has the right to include such information in any Registration
Statement and to otherwise provide such information to the Commission.
ARTICLE
X.Registration
Expenses.
All
fees and expenses incident to the Company’s performance of or compliance with
its obligations under this Agreement (excluding any underwriting discounts
and
selling commissions and all legal fees and expenses of legal counsel for any
Holder) shall be borne by the Company whether or not any Registrable Securities
are sold pursuant to a Registration Statement. The fees and expenses referred
to
in the foregoing sentence shall include, without limitation, (i) all
registration and filing fees (including, without limitation, fees and expenses
(A) with respect to filings required to be made with the securities exchanges
on
which the Common Stock is then listed for trading, and (B) in compliance with
applicable state securities or Blue Sky laws), (ii) messenger, telephone and
delivery expenses, (iii) fees and disbursements of counsel for the Company,
(iv)
Securities Act liability insurance, if the Company so desires such insurance,
and (v) fees and expenses of all other Persons retained by the Company in
connection with the consummation of the transactions contemplated by this
Agreement. In addition, the Company shall be responsible for all of its internal
expenses incurred in connection with the consummation of the transactions
contemplated by this Agreement (including, without limitation, all salaries
and
expenses of its officers and employees performing legal or accounting duties),
the expense of any annual audit and the fees and expenses incurred in connection
with the listing of the Registrable Securities on any securities exchange as
required hereunder. In no event shall the Company be responsible for any broker
or similar commissions or any legal fees or other costs of the
Holders.
50
ARTICLE
XI.Indemnification.
11.1 Indemnification
by the Company.
The
Company shall, notwithstanding any termination of this Agreement, indemnify
and
hold harmless each Holder, the officers, directors, agents, partners, members,
managers, shareholders, Affiliates and employees of each of them, each Person
who controls any such Holder (within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act) and the officers, directors, partners,
members, managers, shareholders, agents and employees of each such controlling
Person, to the fullest extent permitted by applicable law, from and against
any
and all losses, claims, damages, liabilities, costs (including, without
limitation, reasonable costs of preparation and investigation and reasonable
attorneys' fees) and expenses (collectively, “Losses”),
as
incurred that arise out of or are based upon: (i) any untrue or alleged untrue
statement of a material fact contained in any Registration Statement, any
Prospectus or any form of prospectus or in any amendment or supplement thereto
(it being understood that the Holder has approved Annex
A
hereto
for this purpose) or in any preliminary prospectus if used prior to the
effective date of such Registration Statement or arising out of or relating
to
any omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein (in the case of any
Prospectus or form of prospectus or supplement thereto, in light of the
circumstances under which they were made) not misleading, or (ii) any violation
or alleged violation by the Company of the Securities Act, Exchange Act or
any
state securities law, or any rule or regulation thereunder, in connection with
the performance of its obligations under this Agreement, except to the extent,
but only to the extent, that (A) such untrue statements, alleged untrue
statements, omissions or alleged omissions are based upon information regarding
such Holder furnished in writing to the Company by such Holder expressly for
use
therein, or to the extent that such information relates to such Holder or such
Holder's proposed method of distribution of Registrable Securities and was
reviewed and approved by such Holder expressly for use in the Registration
Statement, such Prospectus or such form of Prospectus or in any amendment or
supplement thereto (it being understood that each Holder has approved
Annex
A
hereto
for this purpose) or (B) in the case of an occurrence of an event of the type
specified in Section 3(c)(ii)-(v), the use by a Holder of an outdated or
defective Prospectus after the Company has notified such Holder in writing
that
the Prospectus is outdated or defective and prior to the receipt by such Holder
of Advice (as defined in Section 6(d)
below),
but only if and to the extent that following the receipt of the Advice the
misstatement or omission giving rise to such Loss would have been corrected;
provided,
however,
that
the indemnity agreement contained in this Section 5(a) shall not apply to
amounts paid in settlement of any Losses if such settlement is effected without
the prior written consent of the Company, which consent shall not be
unreasonably withheld. Each Holder shall notify the Company promptly of the
institution, threat or assertion of any Proceeding of which the Holder is aware
in connection with the transactions contemplated by this Agreement. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of an Indemnified Party (as defined in Section 5(c)) and
shall survive the transfer of the Registrable Securities by the
Holders.
11.2 Indemnification
by Holders.
Each
Holder shall, notwithstanding any termination of this Agreement, severally
and
not jointly, indemnify and hold harmless the Company, its directors, officers,
agents and employees, each Person who controls the Company (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act), and
the
directors, officers, agents or employees of such controlling Persons, to the
fullest extent permitted by applicable law, from and against all Losses, as
incurred, arising out of or based upon any untrue or alleged untrue statement
of
a material fact contained in any Registration Statement, any Prospectus, or
any
form of prospectus, or in any amendment or supplement thereto, or arising solely
out of or based solely upon any omission or alleged omission of a material
fact
required to be stated therein or necessary to make the statements therein (in
the case of any Prospectus, or any form of prospectus or supplement thereto,
in
light of the circumstances under which they were made) not misleading to the
extent, but only to the extent that, such untrue statements or omissions are
based upon information regarding such Holder furnished in writing to the Company
by such Holder expressly for use therein, or to the extent that such information
relates to such Holder or such Holder’s proposed method of distribution of
Registrable Securities and was reviewed and approved by such Holder expressly
for use in the Registration Statement (it being understood that the Holder
has
approved Annex
A
hereto
for this purpose), such Prospectus or such form of Prospectus or in any
amendment or supplement thereto; provided,
however,
that
the indemnity agreement contained in this Section 5(b) shall not apply to
amounts paid in settlement of any Losses if such settlement is effected without
the prior written consent of the Holder, which consent shall not be unreasonably
withheld. In no event shall the liability of any selling Holder hereunder be
greater in amount than the dollar amount of the net proceeds received by such
Holder upon the sale of the Registrable Securities giving rise to such
indemnification obligation.
51
11.3 Conduct
of Indemnification Proceedings.
If any
Proceeding shall be brought or asserted against any Person entitled to indemnity
hereunder (an “Indemnified
Party”),
such
Indemnified Party shall promptly notify the Person from whom indemnity is sought
(the “Indemnifying
Party”)
in
writing, and the Indemnifying Party shall have the right to assume the defense
thereof, including the employment of counsel reasonably satisfactory to the
Indemnified Party and the payment of all reasonable fees and expenses incurred
in connection with defense thereof; provided,
that
the failure of any Indemnified Party to give such notice shall not relieve
the
Indemnifying Party of its obligations or liabilities pursuant to this Agreement,
except (and only) to the extent that it shall be finally determined by a court
of competent jurisdiction (which determination is not subject to appeal or
further review) that such failure shall have proximately and materially
adversely prejudiced the Indemnifying Party.
An
Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (1) the Indemnifying Party has agreed in writing to pay such fees and
expenses; (2) the Indemnifying Party shall have failed promptly to assume the
defense of such Proceeding and to employ counsel reasonably satisfactory to
such
Indemnified Party in any such Proceeding; or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified
Party
and the Indemnifying Party, and such Indemnified Party shall have been advised
by counsel that a conflict of interest is likely to exist if the same counsel
were to represent such Indemnified Party and the Indemnifying Party (in which
case, if such Indemnified Party notifies the Indemnifying Party in writing
that
it elects to employ separate counsel at the expense of the Indemnifying Party,
the Indemnifying Party shall not have the right to assume the defense thereof
and such counsel shall be at the expense of the Indemnifying Party); provided,
that the Indemnifying Party shall not be liable for the fees and expenses of
more than one separate firm of attorneys at any time for all Indemnified
Parties. The Indemnifying Party shall not be liable for any settlement of any
such Proceeding effected without its written consent, which consent shall not
be
unreasonably withheld, delayed or conditioned. No Indemnifying Party shall,
without the prior written consent of the Indemnified Party, effect any
settlement of any pending Proceeding in respect of which any Indemnified Party
is a party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter
of
such Proceeding.
All
fees
and expenses of the Indemnified Party (including reasonable fees and expenses
to
the extent incurred in connection with investigating or preparing to defend
such
Proceeding in a manner not inconsistent with this Section) shall be paid to
the
Indemnified Party, as incurred, within twenty Trading Days of written notice
thereof to the Indemnifying Party.
11.4 Contribution.
If a
claim for indemnification under Section 5(a) or 5(b) is unavailable to an
Indemnified Party (by reason of public policy or otherwise), then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying
Party and Indemnified Party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a material
fact,
has been taken or made by, or relates to information supplied by, such
Indemnifying Party or Indemnified Party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any Losses shall be deemed to include, subject to the limitations set forth
in Section 5(c), any reasonable attorneys' or other reasonable fees or expenses
incurred by such party in connection with any Proceeding to the extent such
party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party in
accordance with its terms.
52
The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5(d) were determined by pro rata allocation or by
any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 5(d), no Holder shall be required
to contribute, in the aggregate, any amount in excess of the amount by which
the
net proceeds actually received by such Holder from the sale of the Registrable
Securities subject to the Proceeding exceeds the amount of any damages that
such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
The
indemnity and contribution agreements contained in this Section are in addition
to any liability that the Indemnifying Parties may have to the Indemnified
Parties and are not in diminution or limitation of the indemnification
provisions under the Purchase Agreement.
ARTICLE
XII.Miscellaneous
12.1 Remedies.
In the
event of a breach by the Company or by a Holder of any of their obligations
under this Agreement, each Holder or the Company, as the case may be, in
addition to being entitled to exercise all rights granted by law and under
this
Agreement, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement. The Company and each Holder
agree that monetary damages would not provide adequate compensation for any
losses incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense
that
a remedy at law would be adequate.
12.2 Entire
Agreement.
This
Agreement is intended by the parties as a final expression of their agreement
and intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter, except for, and as
provided in the Transaction Documents.
12.3 Compliance.
Each
Holder covenants and agrees that it will comply with the prospectus delivery
requirements of the Securities Act as applicable to it (unless an exemption
therefrom is available) in connection with sales of Registrable Securities
pursuant to the Registration Statement and shall sell the Registrable Securities
only in accordance with a method of distribution described in the Registration
Statement.
12.4 Discontinued
Disposition.
Each
Holder further agrees by its acquisition of such Registrable Securities that,
upon receipt of a notice from the Company of the occurrence of any event of
the
kind described in Section 3(c)(ii)-(v), such Holder will forthwith discontinue
disposition of such Registrable Securities under the Registration Statement
until it is advised in writing (the “Advice”)
by the
Company that the use of the applicable Prospectus may be resumed, and, in either
case, has received copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such Prospectus or
Registration Statement. The Company may provide appropriate stop orders to
enforce the provisions of this paragraph.
53
12.5 Amendments
and Waivers.
This
Agreement may be amended only by a writing signed by Holders of at least 75%
of
the Registrable Securities; provided,
however,
that an
amendment that has a material and adverse affect on the registration obligations
of the Company hereunder shall require a writing signed by all of the parties
hereto. The Company may take any action herein prohibited that pertains to
or
effects a Purchaser, or omit to perform any act herein required to be performed
by it that pertains to or effects a Purchaser, only if the Company shall have
obtained the written consent to such amendment, action or omission to act,
of
such Purchaser. No consideration shall be offered or paid to any Holder to
amend
or consent to a waiver or modification of any provision of this Agreement unless
the same consideration also is offered to all of the Holders. Failure of any
party to exercise any right or remedy under this Agreement or otherwise or
delay
by a party in exercising such right or remedy shall not operate as a waiver
thereof.
12.6 Notices.
Any and
all notices or other communications or deliveries required or permitted to
be
provided hereunder shall be in writing and shall be deemed given and effective
on the earliest of (i) the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number specified in this Section
prior to 5:00 p.m. (New York City time) on a Trading Day, (ii) the next Trading
Day after the date of transmission, if such notice or communication is delivered
via facsimile or e-mail to the facsimile number or e-mail addressed specified
in
this Section on a day that is not a Trading Day or later than 5:00 p.m. (New
York City time) on any Trading Day, (iii) the Business Day following the date
of
mailing, if sent by nationally recognized overnight courier service with next
day delivery specified, or (iv) upon actual receipt by the party to whom such
notice is required to be given.
The
address for such notices and communications shall be as follows:
|
If
to the Company:
|
|
CJPG,
Inc.
|
|
0000
Xxxx Xxxx Xxxxxx, Xxxxx 000
|
||
|
Xxx
Xxxxx, XX 00000
|
||
|
Facsimile:
(000) 000-0000
|
||
|
Attn:
Xxxxxxx Xxxxxxx, CEO
|
||
|
With
a copy to:
|
Xxxxxxxxx
Traurig, LLP
|
|
|
0000
Xxxxxxxxx Xxxxx, Xxxxx 0000
|
||
|
Xxxxxx,
XX 00000
|
||
|
Facsimile:
(000) 000-0000
|
||
|
Attn:
Xxx Xxxxxxx
|
||
|
If
to a Purchaser:
|
To
the address set forth under such Purchaser's name on the signature
pages
hereto.
|
|
|
If
to any other Person who is then the registered Holder:
|
To
the address of such Holder as it appears in the stock transfer books
of
the Company or such other address as may be designated in writing
hereafter, in the same manner, by such
Person.
|
54
provided,
that any party may change its address for notices by providing written notice
to
the other parties in the manner prescribed by this Section.
12.7 Successors
and Assigns.
This
Agreement shall inure to the benefit of and be binding upon the successors
and
permitted assigns of each of the parties and shall inure to the benefit of
each
Holder. The Company may not assign its rights or obligations hereunder without
the prior written consent of each Holder. The rights of the Holders hereunder,
including the right to have the Company register Registrable Securities pursuant
to this Agreement, may be assigned by each Holder to transferees or assignees
of
all or any portion of the Registrable Securities, but only if (i) the Holder
agrees in writing with the transferee or assignee to assign such rights, and
a
copy of such agreement is furnished to the Company within a reasonable time
after such assignment, (ii) the Company is, within a reasonable time after
such
transfer or assignment, furnished with written notice of the name and address
of
such transferee or assignee and the securities with respect to which such
registration rights are being transferred or assigned, (iii) at or before the
time the Company received the written notice contemplated by clause (ii) of
this
sentence, the transferee or assignee agrees in writing with the Company to
be
bound by all of the provisions contained herein and (iv) the transferee is
an
“accredited investor,” as that term is defined in Rule 501 of Regulation
D.
12.8 Execution
and Counterparts.
This
Agreement may be executed in any number of counterparts, each of which when
so
executed shall be deemed to be an original and, all of which taken together
shall constitute one and the same Agreement. In the event that any signature
is
delivered by facsimile transmission, such signature shall create a valid binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
were the original thereof.
12.9 Governing
Law.
All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each party agrees that all Proceedings
concerning the interpretations, enforcement and defense of the transactions
contemplated by this Agreement (whether brought against a party hereto or its
respective Affiliates, employees or agents) will be commenced in the New York
Courts. Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the New York Courts for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert
in
any Proceeding, any claim that it is not personally subject to the jurisdiction
of any New York Court, or that such Proceeding has been commenced in an improper
or inconvenient forum. Each party hereto hereby irrevocably waives personal
service of process and consents to process being served in any such Proceeding
by mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law. EACH
PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY PROCEEDING ARISING
OUT
OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
If
either party shall commence a Proceeding to endorse any provisions of a
Transaction Document, then the prevailing party in such Proceeding shall be
reimbursed by the other party for its reasonable attorney’s fees and other costs
and expenses incured with the investigation preparation and prosecution of
such
Proceeding.
55
12.10 Cumulative
Remedies.
The
remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
12.11 Severability.
If any
term, provision, covenant or restriction of this Agreement is held by a court
of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their reasonable efforts to
find and employ an alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms, provisions, covenants
and restrictions without including any of such that may be hereafter declared
invalid, illegal, void or unenforceable.
12.12 Headings.
The
headings in this Agreement are for convenience of reference only and shall
not
limit or otherwise affect the meaning hereof.
12.13 Independent
Nature of Purchasers' Obligations and Rights.
The
obligations of each Purchaser under this Agreement are several and not joint
with the obligations of any other Purchaser hereunder, and no Purchaser shall
be
responsible in any way for the performance of the obligations of any other
Purchaser hereunder. The decision of each Purchaser to purchase Securities
pursuant to the Transaction Documents has been made independently of any other
Purchaser. Nothing contained herein or in any other agreement or document
delivered at any closing, and no action taken by any Purchaser pursuant hereto
or thereto, shall be deemed to constitute the Purchasers as a partnership,
an
association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert with respect
to
such obligations or the transactions contemplated by this Agreement. Each
Purchaser acknowledges that no other Purchaser has acted as agent for such
Purchaser in connection with making its investment hereunder and that no
Purchaser will be acting as agent of such Purchaser in connection with
monitoring its investment in the Securities or enforcing its rights under the
Transaction Documents. Each Purchaser shall be entitled to protect and enforce
its rights, including, without limitation, the rights arising out of this
Agreement, and it shall not be necessary for any other Purchaser to be joined
as
an additional party in any Proceeding for such purpose. The Company acknowledges
that each of the Purchasers has been provided with the same Registration Rights
Agreement for the purpose of closing a transaction with multiple Purchasers
and
not because it was required or requested to do so by any Purchaser.
12.14 Currency. Unless
otherwise indicated, all dollar amounts referred to in this Agreement are in
United States Dollars. All amounts owing under this Agreement are in United
States Dollars. All amounts denominated in other currencies shall be converted
in the United States dollar equivalent amount in accordance with the applicable
exchange rate in effect on the date of calculation.
12.15 Further
Assurances.
The
parties shall execute and deliver all such further instruments and documents
and
take all such other actions as may reasonably be required to carry out the
transactions contemplated hereby and to evidence the fulfillment of the
agreements herein contained.
56
IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
as
of the date first written above.
|
CJPG,
INC.
|
|||
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
|||
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGES OF HOLDERS TO FOLLOW]
57
IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
as
of the date first written above.
|
NAME
OF INVESTING ENTITY
|
||
|
AUTHORIZED
SIGNATORY
|
||
|
By:
|
||
|
Name:
|
||
|
Title:
|
||
|
ADDRESS
FOR NOTICE
|
||
|
c/o:
_____________________________________________
|
||
|
Street:
___________________________________________
|
||
|
City/State/Zip:
____________________________________
|
||
|
Attention:
________________________________________
|
||
|
Tel:
_____________________________________________
|
||
|
Fax:
_____________________________________________
|
||
|
Email:
___________________________________________
|
||
58
Annex
A
PLAN
OF DISTRIBUTION
We
are
registering the shares of Common Stock issued to the selling shareholders and
issuable upon exercise of the warrants to permit the resale of these shares
of
Common Stock by the holders of the shares of Common Stock and warrants from
time
to time after the date of this prospectus. We will not receive any of the
proceeds from the sale by the selling shareholders of the shares of Common
Stock. We will bear all fees and expenses incident to our obligation to register
the shares of Common Stock.
The
selling shareholders may sell all or a portion of the shares of Common Stock
beneficially owned by them and offered hereby from time to time directly or
through one or more underwriters, broker-dealers or agents. If the shares of
Common Stock are sold through underwriters or broker-dealers, the selling
shareholders will be responsible for underwriting discounts or commissions
or
agent's commissions. The shares of Common Stock may be sold in one or more
transactions at fixed prices, at prevailing market prices at the time of the
sale, at varying prices determined at the time of sale, or at negotiated prices.
These sales may be effected in transactions, which may involve crosses or block
transactions. The Selling Stockholders may use any one or more of the following
methods when selling shares:
|
·
|
on
any national securities exchange or quotation service on which the
securities may be listed or quoted at the time of
sale;
|
|
·
|
in
the over-the-counter market;
|
|
·
|
in
transactions otherwise than on these exchanges or systems or in the
over-the-counter market;
|
|
·
|
through
the writing of options, whether such options are listed on an options
exchange or otherwise;
|
|
·
|
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
|
|
·
|
block
trades in which the broker-dealer will attempt to sell the shares
as agent
but may position and resell a portion of the block as principal to
facilitate the transaction;
|
|
·
|
purchases
by a broker-dealer as principal and resale by the broker-dealer for
its
account;
|
|
·
|
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
|
·
|
privately
negotiated transactions;
|
|
·
|
settlement
of short sales entered into after the effective date of the registration
statement of which this prospectus is a
part;
|
|
·
|
broker-dealers
may agree with the selling securityholders to sell a specified number
of
such shares at a stipulated price per
share;
|
|
·
|
a
combination of any such methods of sale;
and
|
|
·
|
any
other method permitted pursuant to applicable
law.
|
The
selling stockholders may also sell shares under Rule 144 under the Securities
Act, if available, rather than under this prospectus.
Broker-dealers
engaged by the selling stockholders may arrange for other brokers-dealers to
participate in sales. If the selling shareholders effect such transactions
by
selling shares of Common Stock to or through underwriters, broker-dealers or
agents, such underwriters, broker-dealers or agents may receive commissions
in
the form of discounts, concessions or commissions from the selling shareholders
or commissions from purchasers of the shares of Common Stock for whom they
may
act as agent or to whom they may sell as principal. Such commissions will be
in
amounts to be negotiated, but, except as set forth in a supplement to this
Prospectus, in the case of an agency transaction will not be in excess of a
customary brokerage commission in compliance with FINRA Rule 2440; and in the
case of a principal transaction a markup or markdown in compliance with FINRA
IM-2440.
In
connection with sales of the shares of Common Stock or otherwise, the selling
shareholders may enter into hedging transactions with broker-dealers or other
financial institutions, which may in turn engage in short sales of the shares
of
Common Stock in the course of hedging in positions they assume. The selling
shareholders may also sell shares of Common Stock short and if such short sale
shall take place after the date that this Registration Statement is declared
effective by the Commission, the selling stockholders may deliver shares of
Common Stock covered by this prospectus to close out short positions and to
return borrowed shares in connection with such short sales. The selling
shareholders may also loan or pledge shares of Common Stock to broker-dealers
that in turn may sell such shares. The selling stockholders may also enter
into
option or other transactions with broker-dealers or other financial institutions
or the creation of one or more derivative securities which require the delivery
to such broker-dealer or other financial institution of shares offered by this
prospectus, which shares such broker-dealer or other financial institution
may
resell pursuant to this prospectus (as supplemented or amended to reflect such
transaction).
The
selling shareholders may pledge or grant a security interest in some or all
of
the warrants or shares of Common Stock owned by them and, if they default in
the
performance of their secured obligations, the pledgees or secured parties may
offer and sell the shares of Common Stock from time to time pursuant to this
prospectus or any amendment to this prospectus under Rule 424(b)(3) or other
applicable provision of the Securities Act of 1933, as amended, amending, if
necessary, the list of selling shareholders to include the pledgee, transferee
or other successors in interest as selling shareholders under this prospectus.
The selling shareholders also may transfer and donate the shares of Common
Stock
in other circumstances in which case the transferees, donees, pledgees or other
successors in interest will be the selling beneficial owners for purposes of
this prospectus.
The
selling shareholders and any broker-dealer participating in the distribution
of
the shares of Common Stock may be deemed to be “underwriters” within the meaning
of the Securities Act, and any commission paid, or any discounts or concessions
allowed to, any such broker-dealer may be deemed to be underwriting commissions
or discounts under the Securities Act. At the time a particular offering of
the
shares of Common Stock is made, a prospectus supplement, if required, will
be
distributed which will set forth (i) the name of each such selling stockholder
and of the participating broker-dealer(s), (ii) the number of shares involved,
(iii) the price at which such the shares of Common Stock were sold, (iv) the
commissions paid or discounts or concessions allowed to such broker-dealer(s),
where applicable, (v) that such broker-dealer(s) did not conduct any
investigation to verify the information set out or incorporated by reference
in
this prospectus, and (vi) other facts material to the transaction. In no event
shall any broker-dealer receive fees, commission and markups which, in the
aggregate, would exceed eight percent (8%). In addition, upon the Company being
notified in writing by a Selling Stockholder that a donee or pledgee intends
to
sell more than 500 shares of Common Stock, a supplement to this prospectus
will
be filed if then required in accordance with applicable securities
law.
Under
the
securities laws of some states, the shares of Common Stock may be sold in such
states only through registered or licensed brokers or dealers. In addition,
in
some states the shares of Common Stock may not be sold unless such shares have
been registered or qualified for sale in such state or an exemption from
registration or qualification is available and is complied with.
There
can
be no assurance that any selling shareholder will sell any or all of the shares
of Common Stock registered pursuant to the shelf registration statement, of
which this prospectus forms a part.
We
have
advised each selling stockholder that it may not use shares registered on the
registration statement of which this prospectus is a part to cover short sales
of common stock made prior to the date on which the registration statement
shall
have been declared effective by the SEC. If a selling stockholder uses this
prospectus for any sale of shares of our common stock, it will be subject to
the
prospectus delivery requirements of the Securities Act. The selling shareholders
and any other person participating in such distribution will be subject to
applicable provisions of the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder, including, without limitation, Regulation
M of the Exchange Act, which may limit the timing of purchases and sales of
any
of the shares of Common Stock by the selling shareholders and any other
participating person. Regulation M may also restrict the ability of any person
engaged in the distribution of the shares of Common Stock to engage in
market-making activities with respect to the shares of Common Stock. All of
the
foregoing may affect the marketability of the shares of Common Stock and the
ability of any person or entity to engage in market-making activities with
respect to the shares of Common Stock.
We
will
pay all expenses of the registration of the shares of Common Stock pursuant
to
the registration rights agreement, including, without limitation, Securities
and
Exchange Commission filing fees and expenses of compliance with state securities
or “blue sky” laws; provided,
however,
that a
selling shareholder will pay all underwriting discounts and selling commissions,
if any and any related legal expenses incurred by it. We will indemnify the
selling shareholders against liabilities, including some liabilities under
the
Securities Act, in accordance with the registration rights agreements, or the
selling shareholders will be entitled to contribution. We may be indemnified
by
the selling shareholders against civil liabilities, including liabilities under
the Securities Act, that may arise from any written information furnished to
us
by the selling shareholder specifically for use in this prospectus, in
accordance with the related registration rights agreements, or we may be
entitled to contribution.
Annex
B
CJPG,
Inc.
Selling
Securityholder Notice and Questionnaire
The
undersigned beneficial owner of common stock, $0.001 par value per share (the
“Common
Stock”),
of
CJPG, Inc. (the “Company”),
(the
“Registrable
Securities”)
understands that the Company has filed or intends to file with the Securities
and Exchange Commission (the “Commission”)
a
registration statement (the “Registration
Statement”)
for
the registration and resale under Rule 415 of the Securities Act of 1933, as
amended (the “Securities
Act”),
of
the Registrable Securities, in accordance with the terms of the Registration
Rights Agreement, dated as of ______________, 2008 (the “Registration
Rights Agreement”),
among
the Company and the Purchasers named therein. The purpose of this Questionnaire
is to facilitate the filing of the Registration Statement under the Act that
will permit you to resell the Registrable Securities in the future. The
information supplied by you will be used in preparing the Registration
Statement. A copy of the Registration Rights Agreement is available from the
Company upon request as follows: ___________________________; Attention: Xxxxxxx
Xxxxxxx, CEO. All capitalized terms not otherwise defined herein shall have
the
meanings ascribed thereto in the Registration Rights Agreement.
Certain
legal consequences arise from being named as a selling securityholder in the
Registration Statement and the related prospectus. Accordingly, holders and
beneficial owners of Registrable Securities are advised to consult their own
securities law counsel regarding the consequences of being named or not being
named as a selling securityholder in the Registration Statement and the related
prospectus.
NOTICE
The
undersigned beneficial owner (the “Selling
Securityholder”)
of
Registrable Securities hereby elects to include the Registrable Securities
owned
by it and listed below in Item 3 (unless otherwise specified under such Item
3)
in the Registration Statement.
QUESTIONNAIRE
1. Name.
|
(a)
|
Full
Legal Name of Selling
Securityholder
|
|
(b)
|
Full
Legal Name of Registered Holder (if not the same as (a) above) through
which Registrable Securities Listed in Item 3 below are
held:
|
|
(c)
|
Full
Legal Name of Natural Control Person (which means a natural person
who
directly or indirectly alone or with others has power to vote or
dispose
of the securities covered by the
questionnaire):
|
2.
Address for Notices to Selling Securityholder:
|
Telephone:_____________________________________________________________________________________________
|
|
Fax:___________________________________________________________________________________________________
|
|
Contact Person:_____________________________________________________________________________________________
|
|
E-mail
address of Contact
Person:________________________________________________
|
3.
Beneficial Ownership of Registrable Securities:
|
(a)
|
Type
and Number of Registrable Securities beneficially
owned:
|
4.
Broker-Dealer Status:
|
(a)
|
Are
you a broker-dealer?
|
Yes
¨ No
¨
|
Note:
|
If
yes, the Commission’s staff has indicated that you should be identified as
an underwriter in the Registration
Statement.
|
|
(b)
|
Are
you an affiliate of a
broker-dealer?
|
Yes
¨ No
¨
|
Note:
|
If
yes, provide a narrative explanation
below:
|
|
(c)
|
If
you are an affiliate of a broker-dealer, do you certify that you
bought
the Registrable Securities in the ordinary course of business, and
at the
time of the purchase of the Registrable Securities to be resold,
you had
no agreements or understandings, directly or indirectly, with any
person
to distribute the Registrable
Securities?
|
Yes
¨ No
¨
|
Note:
|
If
no, the Commission’s staff has indicated that you should be identified as
an underwriter in the Registration
Statement.
|
5.
Beneficial Ownership of Other Securities of the Company Owned by the Selling
Securityholder.
Except
as set forth below in this Item 5, the undersigned is not the beneficial or
registered owner of any securities of the Company other than the Registrable
Securities listed above in Item 3.
|
(a)
|
As
of ___________, 2008, the Selling Securityholder owned outright (including
shares registered in Selling Securityholder's name individually or
jointly
with others, shares held in the name of a bank, broker, nominee,
depository or in "street name" for its account), _________ shares
of the
Company's capital stock (excluding the Registrable Securities). If
"zero,"
please so state.
|
|
(b)
|
In
addition to the number of shares Selling Securityholder owned outright
as
indicated in Item 5(a) above, as of ________________, 2008, the Selling
Securityholder had or shared voting power or investment power, directly
or
indirectly, through a contract, arrangement, understanding, relationship
or otherwise, with respect to ______________ shares of the Company's
capital stock (excluding the Registrable Securities). If "zero,"
please so
state.
|
|
If
the answer to Item 7(b) is not "zero," please complete the following
tables:
|
|
Sole
|
Voting
|
Power:
|
||
|
Number of Shares
|
Nature of Relationship Resulting in Sole
Voting Power
|
|||
|
Shared
|
Voting
|
Power:
|
||||
|
Number of Shares
|
With Whom
Shared
|
Nature of
Relationship
|
||||
|
Investment
|
power:
|
||||
|
Number of Shares
|
Nature of Relationship Resulting in Sole
Investment power
|
||||
|
Shared
|
Investment
|
power:
|
||||
|
Number of Shares
|
With Whom
Shared
|
Nature of
Relationship
|
||||
|
(c)
|
As
of _____________, 2008, the Selling Securityholder had the right
to
acquire the following shares of the Company's common stock pursuant
to the
exercise of outstanding stock options, warrants or other rights (excluding
the Registrable Securities). Please describe the number, type and
terms of
the securities, the method of ownership, and whether the undersigned
holds
sole or shared voting and investment power. If "none", please so
state.
|
6.
Relationships with the Company:
Except
as set forth below, neither the undersigned nor any of its affiliates, officers,
directors or principal equity holders (owners of 5% of more of the equity
securities of the undersigned) has held any position or office or has had any
other material relationship with the Company (or its predecessors or affiliates)
during the past three years.
State
any
exceptions here:
7.
Plan of Distribution:
The
undersigned has reviewed the form of Plan of Distribution attached
as
Exhibit A
to
the Registration Rights Agreement, and hereby confirms that, except as set
forth
below, the information contained therein regarding the undersigned and its
plan
of distribution is correct and complete.
State
any
exceptions here:
***********
The
undersigned agrees to promptly notify the Company of any inaccuracies or changes
in the information provided herein that may occur subsequent to the date hereof
and prior to the effective date of any applicable Registration Statement filed
pursuant to the Registration Rights Agreement.
By
signing below, the undersigned consents to the disclosure of the information
contained herein in its answers to Items 1 through 7 and the inclusion of such
information in each Registration Statement filed pursuant to the Registration
Rights Agreement and each related prospectus. The undersigned understands that
such information will be relied upon by the Company in connection with the
preparation or amendment of any such Registration Statement and the related
prospectus.
By
signing below, the undersigned acknowledges that it understands its obligation
to comply, and agrees that it will comply, with the provisions of the Exchange
Act and the rules and regulations thereunder, particularly Regulation M. The
undersigned also acknowledges that it understands that the answers to this
Questionnaire are furnished for use in connection with Registration Statements
filed pursuant to the Registration Rights Agreement and any amendments or
supplements thereto filed with the Commission pursuant to the Securities
Act.
I
confirm
that, to the best of my knowledge and belief, the foregoing statements
(including without limitation the answers to this Questionnaire) are
correct.
IN
WITNESS WHEREOF the undersigned, by authority duly given, has caused this
Questionnaire to be executed and delivered either in person or by its duly
authorized agent.
|
Dated:___________________________________
|
Beneficial Owner:______________________________________________
|
||
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
|||
Instruction
Sheet for Exhibits C
(to
be
read in conjunction with the entire Securities Purchase Agreement and
Registration Rights Agreement)
A.
Complete
the following items in the Securities Purchase Agreement and/or Registration
Rights Agreement:
| 1. |
Provide
the information regarding the Purchaser requested on the signature
page.
The
Securities
Purchase Agreement must be executed by an individual authorized to
bind
the
Purchaser.
|
| 2. |
Exhibit
C-1–
Accredited Investor Questionnaire:
|
Provide
the information requested by the
Accredited Investor Questionnaire
| 3. |
Exhibit
C-2
-
Stock Certificate Questionnaire
|
Provide
the information requested by the
Stock
Certificate Questionnaire
| 4. |
Annex
B
to
the Registration Rights Agreement—Selling
Securityholder Notice and
Questionnaire
|
Provide
the information requested by the Selling Securityholder Notice and
Questionnaire
| 5. |
Return
the signed Securities Purchase Agreement and Registration Rights
Agreement
to:
|
|
Tel:____________________________________________________
|
|
Fax:___________________________________________________
|
|
Email:___________________________________________________
|
|
B.
|
Instructions
regarding the transfer of funds for the purchase of Securities is
set
forth on Exhibit
D
to
the Securities Purchase Agreement.
|
EXHIBIT
C-1
ACCREDITED
INVESTOR QUESTIONNAIRE
(ALL
INFORMATION WILL BE TREATED CONFIDENTIALLY)
To: CJPG,
Inc.
This
Investor Questionnaire (“Questionnaire”)
must
be completed by each potential investor in connection with the offer and sale
of
the shares of the common stock, par value $0.001 per share, and shares of common
stock that may be issued upon exercise of certain warrants (collectively, the
“Securities”),
of
CJPG, Inc., a Nevada corporation (the “Corporation”).
The
Securities are being offered and sold by the Corporation without registration
under the Securities Act of 1933, as amended (the “Act”),
and
the securities laws of certain states, in reliance on the exemptions contained
in Section 4(2) of the Act and on Regulation D promulgated thereunder and
in reliance on similar exemptions under applicable state laws. The Corporation
must determine that a potential investor meets certain suitability requirements
before offering or selling Securities to such investor. The purpose of this
Questionnaire is to assure the Corporation that each investor will meet the
applicable suitability requirements. The information supplied by you will be
used in determining whether you meet such criteria, and reliance upon the
private offering exemptions from registration is based in part on the
information herein supplied.
This
Questionnaire does not constitute an offer to sell or a solicitation of an
offer
to buy any security. Your answers will be kept strictly confidential. However,
by signing this Questionnaire, you will be authorizing the Corporation to
provide a completed copy of this Questionnaire to such parties as the
Corporation deems appropriate in order to ensure that the offer and sale of
the
Securities will not result in a violation of the Act or the securities laws
of
any state and that you otherwise satisfy the suitability standards applicable
to
purchasers of the Securities. All potential investors must answer all applicable
questions and complete, date and sign this Questionnaire. Please print or type
your responses and attach additional sheets of paper if necessary to complete
your answers to any item.
PART
A. BACKGROUND
INFORMATION
|
Name of Beneficial Owner of the Securities:____________________________________________________________________________________________
|
||
|
Business Address:_____________________________________________________________________________________________________________
|
||
|
(Number and Street)
|
||
|
(City)
|
(State)
|
(Zip Code)
|
|
Telephone Number: (___)
________________________________________________________________________________________________________
|
||
If
a corporation, partnership, limited liability company, trust or other
entity:
|
Type of entity:________________________________________________________________________________________________________________
|
||
|
State of formation:________________________________________
|
Approximate Date of formation:_____________________________________________
|
|
C-1-1
Set
forth
in the space provided below the (i) state(s), if any, in the United States
in which you maintained your principal office during the past two years and
the
dates during which you maintained your office in each state, and
(ii) state(s), if any, in which you pay income taxes:
Were
you
formed for the purpose of investing in the securities being
offered?
Yes
____ No
____
If
an individual:
|
Residence Address:_____________________________________________________________________________________________________________
|
||
|
(Number and Street)
|
||
|
(City)
|
(State)
|
(Zip Code)
|
|
|
||
|
Telephone Number: (___) _____________________________________________________________________________________________
|
||
|
Age:
______________
|
Citizenship:
____________
|
Where
registered to vote: _______________
|
Set
forth
in the space provided below the state(s), if any, in the United States in which
you maintained your residence during the past two years and the dates during
which you resided in each state:
Are
you a
director or executive officer of the Corporation?
Yes
____ No
____
PART
B. ACCREDITED
INVESTOR QUESTIONNAIRE
In
order
for the Company to offer and sell the Securities in conformance with state
and
federal securities laws, the following information must be obtained regarding
your investor status. Please initial
each category applicable
to you as a Purchaser of Securities of the Company.
| __(1) |
A
bank as defined in Section 3(a)(2) of the Securities Act, or any
savings
and loan association
or other institution as defined in Section 3(a)(5)(A) of the Securities
Act whether
acting in its individual or fiduciary capacity;
|
| __(2) |
A
broker or dealer registered pursuant to Section 15 of the Securities
Exchange Act of
1934;
|
| __(3) |
An
insurance company as defined in Section 2(13) of the Securities
Act;
|
C-1-2
|
__
(4)
|
An
investment company registered under the Investment Company Act of
1940 or
a business development company as defined in Section 2(a)(48) of
that Act;
|
|
__
(5)
|
A
Small Business Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958;
|
|
__
(6)
|
A
plan established and maintained by a state, its political subdivisions,
or
any agency or instrumentality of a state or its political subdivisions,
for the benefit of its employees, if such plan has total assets in
excess
of $5,000,000;
|
|
__
(7)
|
An
employee benefit plan within the meaning of the Employee Retirement
Income
Security Act of 1974, if the investment decision is made by a plan
fiduciary, as defined in Section 3(21) of such act, which is either
a
bank, savings and loan association, insurance company, or registered
investment adviser, or if the employee benefit plan has total assets
in
excess of $5,000,000 or, if a self-directed plan, with investment
decisions made solely by persons that are accredited investors;
|
|
__
(8)
|
A
private business development company as defined in Section 202(a)(22)
of
the Investment Advisers Act of
1940;
|
|
__
(9)
|
An
organization described in Section 501(c)(3) of the Internal Revenue
Code,
a corporation, Massachusetts or similar business trust, or partnership,
not formed for the specific purpose of acquiring the Securities,
with
total assets in excess of $5,000,000;
|
| __(10) |
A
trust, with total assets in excess of $5,000,000, not formed for
the
specific purpose of acquiring the Securities, whose purchase is directed
by a sophisticated person who has such knowledge and experience in
financial and business matters that such person is capable of evaluating
the merits and risks of investing in the
Company;
|
| ___(11) |
A
natural person whose individual net worth, or joint net worth with
that
person’s spouse,
at the time of his purchase exceeds
$1,000,000;
|
| ___(12) |
A
natural person who had an individual income in excess of $200,000
in each
of the two
most recent years, or joint income with that person’s spouse in excess
of $300,000,
in each of those years, and has a reasonable expectation of reaching
the
same
income level in the current year;
|
|
___(13)
|
An
executive officer or director of the
Company
|
| ___(14) |
An
entity in which all of the equity owners qualify under any of the
above
subparagraphs. If the undersigned belongs to this investor category
only,
list the equity owners of the undersigned, and the investor category
which
each such equity owner satisfies:
|
(Continue
on a separate piece of paper, if necessary.)
C-1-3
A. FOR
EXECUTION BY AN INDIVIDUAL:
| _______________ |
By ___________________________________________
|
|
|
Date
|
||
|
Print Name: _________________________________________
|
B. FOR
EXECUTION BY AN ENTITY:
|
Entity
Name: ____________________________________
|
||
| _________________ |
By ___________________________________________
|
|
|
Date
|
||
|
Print Name:___________________________________________
|
||
|
Title: ________________________________________________
|
||
C. ADDITIONAL
SIGNATURES (if required by partnership, corporation or trust
document):
|
Entity
Name: ____________________________________
|
||
| _________________ |
By ___________________________________________
|
|
|
Date
|
||
|
Print Name:___________________________________________
|
||
|
Title: ________________________________________________
|
||
|
Entity
Name: ____________________________________
|
||
| _________________ |
By ___________________________________________
|
|
|
Date
|
||
|
Print Name:___________________________________________
|
||
|
Title: ________________________________________________
|
||
C-1-4
EXHIBIT
C-2
Stock
Certificate Questionnaire
Pursuant
to Section 2.2(c) of the Agreement, please provide us with the following
information:
|
1.
|
The
exact name that the Securities are to be registered in (this is the
name
that will appear on the stock certificate(s)). You may use a nominee
name
if appropriate:
|
|
|
2.
|
The
relationship between the Purchaser of the Securities and the Registered
Holder listed in response to Item 1 above:
|
|
|
3.
|
The
mailing address, telephone and telecopy number of the Registered
Holder
listed in response to Item 1 above:
|
|
|
4.
|
The
Tax Identification Number (or, if an individual, the Social Security
Number) of the Registered Holder listed in response to Item 1
above:
|
EXHIBIT
D
WIRE
INSTRUCTIONS
EXHIBIT
E
UNIT
EXCHANGE AGREEMENT
