EXHIBIT 10.1
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this "Agreement") is dated as of
March 15, 2006 among Catcher Holdings, Inc., a Delaware corporation (the
"Company"), Emerging Growth Equities, Ltd., a Pennsylvania limited partnership
(the "Placement Agent"), and the purchasers identified on the signature pages
hereto (each, including its successors and assigns, a "Purchaser" and
collectively the "Purchasers").
WHEREAS, subject to the terms and conditions set forth in this
Agreement, the Company desires to issue and sell to each Purchaser, and each
Purchaser, severally and not jointly, desires to purchase from the Company,
securities of the Company as more fully described in this Agreement.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in
this Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchaser agrees
as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. In addition to the terms defined elsewhere in this
Agreement, the following terms have the meanings indicated in this Section 1.1:
"Action" shall have the meaning ascribed to such term in Section
3.1(j).
"Affiliate" means any Person that, directly or indirectly through one
or more intermediaries, controls or is controlled by or is under common control
with a Person, as such terms are used in and construed under Rule 144 under the
Securities Act.
"Closings" means the Initial Closing and each Subsequent Closing.
"Closing Date" means the date of (i) the Initial Closing; and (ii) each
Subsequent Closing, respectively.
"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
converted or exchanged pursuant to a plan of recapitalization, reorganization,
merger, sale of assets or otherwise.
"Company Counsel" means Xxxxxxxx & Xxxxxxxx, LLP, 00000 Xxxx Xxxxx
Xxxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxxxxxx 00000.
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"Disclosure Schedules" shall have the meaning ascribed to such term in
Section 3.1 hereof.
"Escrow Agreement" means the Escrow Agreement, dated the date hereof,
among the Company, the Placement Agent and the Escrow Agent (as defined
therein), in the form of EXHIBIT A attached hereto.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" shall have the meaning ascribed to such term in Section 3.1(h)
hereof.
"Initial Closing" shall have the meaning ascribed to such term in
Section 2.1.
"Liens" shall have the meaning ascribed to such term in Section 3.1(a)
hereof.
"Losses" means any and all losses, claims, damages, liabilities,
settlement costs and expenses, including without limitation costs of preparation
and reasonable attorneys' fees.
"Material Adverse Effect" shall have the meaning assigned to such term
in Section 3.1(b) hereof.
"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 Agent" means Emerging Growth Equities, Ltd., a Pennsylvania
limited partnership with a principal place of business at Parkview Tower, 0000
Xxxxx Xxxxxx, Xxxxx 000, Xxxx xx Xxxxxxx, Xxxxxxxxxxxx 00000.
"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 $5.00 per Unit.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated the date hereof, among the Company and the Purchasers, in the
form of EXHIBIT B attached hereto.
"Registration Statement" means a registration statement meeting the
requirements set forth in the Registration Rights Agreement and covering the
resale of the Shares and the Warrant Shares by each Purchaser as provided for in
the Registration Rights Agreement.
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"Required Approvals" shall have the meaning ascribed to such term in
Section 3.1(e) hereof.
"Required Minimum" means, as of any date, the maximum aggregate number
of shares of Common Stock then issued or potentially issuable in the future upon
exercise or conversion in full of all Warrants, ignoring any conversion or
exercise limits set forth therein.
"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.
"SEC Reports" shall have the meaning ascribed to such term in Section
3.1(h) hereof.
"Securities" means the Shares, the Warrants and the Warrant Shares.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" means the shares of Common Stock issued and sold pursuant to
this Agreement, together with any shares of Common Stock issued upon a stock
split, dividend or other distribution, recapitalization or similar event with
respect to the foregoing following the Closing Date.
"Subscription Amount" means, as to each Purchaser, the aggregate amount
to be paid for Units purchased hereunder as specified below such Purchaser's
name on the signature page of this Agreement and next to the heading
"Subscription Amount," in United States Dollars.
"Subsequent Closing" shall have the meaning ascribed to such term in
Section 2.1.
"Subsidiary" means any subsidiary of the Company as set forth in the
SEC Reports.
"Trading Day" means any day during which the Trading Market shall be
open for business.
"Trading Market" means the following markets or exchanges on which the
Common Stock may be listed or quoted for trading on the date in question: OTC
Bulletin Board, the American Stock Exchange, the New York Stock Exchange, the
Nasdaq National Market or the Nasdaq SmallCap Market.
"Transaction Documents" means this Agreement, the Warrants and the
Registration Rights Agreement.
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"Unit" means two shares of Common Stock and a Warrant to purchase one
share of Common Stock.
"Warrants" means collectively the Common Stock purchase warrants, in
the form of EXHIBIT C delivered to the Purchasers at each Closing in accordance
with Section 2.2 hereof, which Warrants shall be exercisable immediately and for
a term of 5 years. Each Warrant will have an exercise price equal to $3.50, such
exercise price, and the number of shares for which it is exercisable, subject to
adjustment from time to time as set forth in the form of Warrant.
"Warrant Shares" means the shares of Common Stock issuable upon
exercise of the Warrants.
ARTICLE II
PURCHASE AND SALE
2.1 CLOSINGS. At each Closing, the Company agrees to issue and sell to
each Purchaser participating at such Closing, and, subject to the terms and
conditions contained herein, each such Purchaser severally agrees to purchase an
amount of the Units in the Subscription Amount set forth on the signature page
to this Agreement. The initial closing (the "Initial Closing") of the
transactions hereunder shall take place at the offices of Company Counsel or at
such other location as the Company and the Placement Agent shall mutually agree
after the receipt by the Company of subscriptions for Units from Purchasers with
an aggregate Purchase Price of at least $5,000,000 and after it has been
determined that all conditions in this Agreement and the Escrow Agreement have
been met in the sole and absolute discretion of the Company and the Placement
Agent. Following the Initial Closing, the Company may, at subsequent closings
(the "Subsequent Closings" and each a "Subsequent Closing"), accept additional
subscriptions for Units from Purchasers until such time as the Company has
issued Units with an aggregate Purchase Price equal to $15,000,000. At each
Closing, in accordance with the Escrow Agreement, funds equal to the
Subscription Amount of each Purchaser shall be delivered to the Company and the
Company shall deliver to each such Purchaser his, her or its respective Shares
and Warrants as provided herein and the other items set forth in Section 2.2
issuable at such Closing.
2.2 CONDITIONS TO CLOSING. Each Closing shall be subject to the
following conditions and deliveries being met on such Closing's Closing Date:
(a) At or prior to the Closing, unless otherwise indicated below,
the Company shall deliver or cause to be delivered to each Purchaser
participating in such Closing the following:
(i) a stock certificate evidencing the Shares purchased by
such Purchaser, registered in the name of such Purchaser;
(ii) a Warrant registered in the name of such Purchaser;
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(iii) the Registration Rights Agreement, duly executed by the
Company;
(iv) this Agreement, duly executed by the Company;
(v) at the Initial Closing only, a legal opinion of Company
Counsel, in the form of EXHIBIT D attached hereto; and
(vi) at the Initial Closing only, a lock-up letter, in the
form attached as EXHIBIT E, from each executive officer of the Company.
(b) At or prior to the Closing, each Purchaser participating in
such Closing shall deliver or cause to be delivered to the Company the
following:
(i) such Purchaser's Subscription Amount in accordance with
the Escrow Agreement;
(ii) this Agreement, duly executed by such Purchaser; and
(iii) the Registration Rights Agreement duly executed by such
Purchaser.
(c) It shall be a condition to the obligation of the Company, on
the one hand, to issue and sell the Shares and the Warrants to be issued and
sold at a Closing, and of the Purchasers participating in a Closing, on the
other hand, to purchase such Shares and Warrants, that all representations and
warranties of the other party(ies) contained herein shall remain true and
correct as of the Closing Date of such Closing and all covenants and obligations
of the other party(ies) shall have been fully performed or otherwise satisfied
or waived if due on or prior to such date, including the conditions to release
the funds held in escrow as set forth in Section 5 of the Escrow Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
makes the representations and warranties set forth below to each Purchaser:
(a) SUBSIDIARIES. The Company has no direct or indirect
Subsidiaries other than as specified in the SEC Reports. Except as specified in
the SEC Reports, the Company owns, directly or indirectly, all of the capital
stock or other equity interests of each Subsidiary free and clear of any lien,
charge, security interest, encumbrance, right of first refusal or other
restriction (collectively, "Liens"), and all the issued and outstanding shares
of capital stock of each Subsidiary are validly issued and are fully paid,
non-assessable and free of preemptive and similar rights.
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(b) ORGANIZATION AND QUALIFICATION. Each of the Company and the
Subsidiaries 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 and use its properties and assets and to carry on its business
as described in its SEC Reports. Neither the Company nor any Subsidiary is in
violation of any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents. Each of the
Company and the Subsidiaries is duly qualified to do business and is in good
standing as a foreign corporation or other entity in each jurisdiction in which
the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not, individually or in the aggregate: (i)
adversely affect the legality, validity or enforceability of any Transaction
Document, (ii) have or result in or be reasonably likely to have or result in a
material adverse effect on the results of operations, assets, prospects,
business or condition (financial or otherwise) of the Company and the
Subsidiaries, taken as a whole, or (iii) adversely impair the Company's ability
to perform fully on a timely basis its obligations under any of the Transaction
Documents (any of (i), (ii) or (iii), a "Material Adverse Effect").
(c) AUTHORIZATION; ENFORCEMENT. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to carry out its
obligations hereunder or thereunder. The execution and delivery of each of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby or thereby have been duly authorized by all
necessary action on the part of the Company and no further consent or action is
required by the Company other than Required Approvals. Each of the Transaction
Documents has been (or upon delivery will be) duly executed by the Company and,
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, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and general principles of equity.
Neither the Company nor any Subsidiary is in violation of any of the provisions
of its respective certificate or articles of incorporation, bylaws or other
organizational or charter documents except where such violation could not,
individually or in the aggregate, constitute a Material Adverse Effect.
(d) NO CONFLICTS. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated thereby do not and will not: (i) conflict with or
violate any provision of the Company's or any Subsidiary's certificate or
articles of incorporation, bylaws or other organizational or charter documents,
or (ii) subject to obtaining the Required Approvals, conflict with, or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time
or both) of, any agreement, credit facility, debt or other instrument
(evidencing a
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Company or Subsidiary debt or otherwise) or other understanding to which the
Company or any Subsidiary is a party or by which any property or asset of the
Company or any Subsidiary is bound or affected, or (iii) result, in a violation
of any law, rule, regulation, order, judgment, injunction, decree or other
restriction of any court or governmental authority to which the Company or a
Subsidiary is subject (including federal and state securities laws and
regulations), or by which any property or asset of the Company or a Subsidiary
is bound or affected; except in the case of each of clauses (ii) and (iii), such
as could not, individually or in the aggregate, have or result in a Material
Adverse Effect.
(e) FILINGS, CONSENTS AND APPROVALS. Neither the Company nor any
Subsidiary is 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, other than (i) the filing with the Commission of the
Registration Statement and the consent of the Commission to the effectiveness
thereof, (ii) the notice and/or application(s) to each applicable Trading Market
for the issuance of the Warrants and the listing of the Warrant Shares for
trading thereon in the time and manner required thereby and any required
approvals of such Trading Market thereof, (iii) the filing of Form D with the
Commission and applicable Blue Sky filings and (iv) the filings required
pursuant to Section 4.3 hereunder (collectively, the "Required Approvals").
(f) ISSUANCE OF THE SHARES AND WARRANTS. The Shares and Warrants
are duly authorized and, when issued and paid for in accordance with the
applicable Transaction Documents, will be duly and validly issued, fully paid
and non-assessable, free and clear of all Liens. Any Warrant Shares, when issued
and paid for in accordance with the warrant certificate, will be duly authorized
and validly issued, fully paid and nonassessable, free and clear of all Liens.
The Company has reserved from its duly authorized capital stock a number of
shares of Common Stock for issuance of the Warrant Shares at least equal to the
Required Minimum on the date hereof. The Company has not, and to the knowledge
of the Company, no Affiliate of the Company has sold, offered for sale or
solicited offers to buy or otherwise negotiated in respect of any security (as
defined in Section 2 of the Securities Act) that would be integrated with the
offer or sale of the Shares in a manner that would require the registration
under the Securities Act of the sale of the Shares to the Purchasers, or that
would be integrated with the offer or sale of the Shares for purposes of the
rules and regulations of any Trading Market.
(g) CAPITALIZATION. The number of shares and type of all
authorized, issued and outstanding capital stock of the Company as of February
28, 2006, and all shares of Common Stock reserved for issuance under the
Company's various option and incentive plans as of February 28, 2006, is set
forth on SCHEDULE 3.1(g) of the Disclosure Schedules attached hereto. No Person
has any right of first refusal, preemptive right, right of participation, or any
similar right to participate in the transactions contemplated by the Transaction
Documents. Except as contemplated hereby and as set forth on SCHEDULE 3.1(g),
there are no outstanding options, warrants, script rights to subscribe to,
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calls or commitments of any character whatsoever relating to, or securities,
rights or obligations convertible into or exchangeable for, or giving any Person
any right to subscribe for or acquire, any shares of Common Stock, or contracts,
commitments, understandings or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of Common Stock, or
securities or rights convertible or exchangeable into shares of Common Stock.
The issuance and sale of the Shares and Warrant Shares will not obligate the
Company to issue shares of Common Stock or other securities to any Person (other
than the Purchasers) and will not result in a right of any holder of Company
securities to adjust the exercise, conversion, exchange or reset price under
such securities. Except as set forth on SCHEDULE 3.1(g), all of the outstanding
shares of capital stock of the Company are validly issued, fully paid and
nonassessable, have been issued in compliance with all 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 securities;
provided that this sentence shall be limited to the Company's knowledge with
respect to any shares of the Company's capital stock issued prior to May 4,
2005. No further approval or authorization of any stockholder, the Board of
Directors of the Company or others is required for the issuance and sale of the
Shares. Except as disclosed in the SEC Reports, there are no stockholders
agreements, voting agreements or other similar agreements with respect to the
Company's capital stock to which the Company is a party or, to the knowledge of
the Company, between or among any of the Company's stockholders. Except as set
forth on SCHEDULE 3.1(g) and as contemplated by the Transaction Documents, the
Company has not granted any registration or similar rights with respect to any
security of the Company requiring the Company to register such securities of the
Company.
(h) SEC REPORTS; FINANCIAL STATEMENTS. Except as otherwise
disclosed in the SEC Reports, the Company has filed all reports required to be
filed by it under the Exchange Act, including pursuant to Section 13(a) or 15(d)
thereof, preceding the date hereof (or such shorter period as the Company was
required by law to file such material) (the foregoing materials being
collectively referred to herein as the "SEC Reports") on a timely basis or has
received a valid extension of such time of filing and has filed any such SEC
Reports prior to the expiration of any such extension. All SEC Reports filed
within the 10 days preceding the date hereof have been made available to the
Purchasers. The SEC Reports filed since May 4, 2005 complied in all material
respects with the requirements of the Securities Act and the Exchange Act and
the rules and regulations of the Commission promulgated thereunder, and none of
the SEC Reports filed since May 4, 2005, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Reports comply in all material
respects with applicable accounting requirements and the rules and regulations
of the Commission with respect thereto as in effect at the time of filing. Such
financial statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
("GAAP"), except as may be otherwise specified in such financial statements or
the notes thereto, and fairly present in all material respects the financial
position of the Company and its consolidated
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subsidiaries as of and for the dates thereof and the results of operations and
cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal year-end audit adjustments.
(i) MATERIAL CHANGES. Since the date of the latest audited
financial statements included within the SEC Reports, except as specifically
disclosed in the SEC Reports: (i) there has been no event, occurrence or
development that has had or that could result in a Material Adverse Effect, (ii)
the Company has not incurred any liabilities (contingent or otherwise) other
than (A) trade payables and accrued expenses incurred in the ordinary course of
business consistent with past practice and (B) liabilities not required to be
reflected in the Company's financial statements pursuant to GAAP or required to
be disclosed in filings made with the Commission, (iii) the Company has not
altered its method of accounting or the identity of its auditors, (iv) the
Company has not declared or made any dividend or distribution of cash or other
property to its stockholders or purchased, redeemed or made any agreements to
purchase or redeem any shares of its capital stock, and (v) the Company has not
issued any equity securities to any officer, director or Affiliate, except
pursuant to existing Company stock option or similar plans.
(j) LITIGATION. There is no action, suit, inquiry, notice of
violation, proceeding or investigation pending or, to the knowledge of the
Company, threatened against or affecting the Company, any Subsidiary or any of
their respective properties before or by any court, arbitrator, governmental or
administrative agency or regulatory authority (federal, state, county, local or
foreign) (collectively, an "Action") which: (i) except as disclosed in the SEC
Reports, adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents or the Shares or (ii) could,
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 any Subsidiary, nor, to the knowledge of the Company, any director
or officer thereof, is or has been 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. Except for the request for confidential treatment
of information submitted to the Commission on October 4, 2005 and subsequently
amended on November 29, 2005 and December 13, 2005, the Company does not have
pending before the Commission any request for confidential treatment of
information. There has not been, and to the knowledge of the Company, there is
not pending or contemplated, any investigation by the Commission involving the
Company or any current or former director or officer of the Company. The
Commission has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company or any
Subsidiary under the Exchange Act or the Securities Act.
(k) COMPLIANCE. Neither the Company nor any Subsidiary: (i) is 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 any Subsidiary under), nor has the Company or any Subsidiary
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
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properties is bound (whether or not such default or violation has been waived),
(ii) is in violation of any order of any court, arbitrator or governmental body,
or (iii) is or has been in violation of any statute, rule or regulation of any
governmental authority, except in each case as could not, individually or in the
aggregate, have or result in a Material Adverse Effect.
(l) LABOR RELATIONS. No material labor dispute exists or, to the
knowledge of the Company, is imminent with respect to any of the employees of
the Company.
(m) REGULATORY PERMITS. Except as otherwise described in the SEC
Reports, the Company and the Subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state, local or
foreign regulatory authorities necessary to conduct their respective businesses,
except where the failure to possess such permits could not, individually or in
the aggregate, have or reasonably be expected to result in a Material Adverse
Effect ("Material Permits"), and neither the Company nor any Subsidiary has
received any notice of proceedings relating to the revocation or modification of
any Material Permit.
(n) TITLE TO ASSETS. The Company and the Subsidiaries have good
and marketable title in fee simple to all real property owned by them that is
material to the business of the Company and the Subsidiaries and good and
marketable title in all personal property owned by them that is material to the
business of the Company and the Subsidiaries, 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 and the Subsidiaries. Any real property and
facilities held under lease by the Company and the Subsidiaries are held under
valid, subsisting and enforceable leases of which the Company and the
Subsidiaries are in compliance.
(o) PATENTS AND TRADEMARKS. The Company and the Subsidiaries have,
or have rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, licenses and other similar
rights necessary or material for use in connection with their respective
businesses as described in the SEC Reports and which the failure to so have
could have a Material Adverse Effect (collectively, the "Intellectual Property
Rights"). Neither the Company nor any Subsidiary has received a written notice
that the Intellectual Property Rights used by the Company or any Subsidiary
violates or infringes upon the rights of any Person. To the knowledge of the
Company, all such Intellectual Property Rights are enforceable and there is no
existing infringement by another Person of any of the Intellectual Property
Rights.
(p) INSURANCE. The Company and the Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary for companies similarly
situated with the Company in the businesses in which the Company and the
Subsidiaries are engaged. To
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the Company's knowledge, such insurance contracts and policies are accurate and
complete. Neither the Company nor any Subsidiary has any reason to believe it
will not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business without a significant increase in cost.
(q) TRANSACTIONS WITH AFFILIATES AND EMPLOYEES. Except as required
to be set forth in the SEC Reports, none of the officers or directors of the
Company and, to the knowledge of the Company, none of the employees of the
Company is presently a party to any transaction with the Company or any
Subsidiary (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner.
(r) CERTAIN FEES. Except for the Company's agreement with the
Placement Agent, the Company has not engaged or retained any broker, financial
advisor or consultant, finder, placement agent, investment banker, bank or other
Person and has not agreed to pay any commissions or other fees to any of the
same with respect to the transactions contemplated by this Agreement.
(s) PRIVATE PLACEMENT. Assuming the accuracy of the
representations and warranties of the Purchasers set forth in Sections
3.2(b)-(f), the offer, issuance and sale of the Shares and Warrants to the
Purchasers as contemplated hereby are exempt from the registration requirements
of the Securities Act and do not contravene the rules and regulations of the
Trading Market.
(t) LISTING AND MAINTENANCE REQUIREMENTS. The Company's Common
Stock is registered pursuant to Section 12(g) of the Exchange Act, and the
Company has taken no action designed to, or which to its knowledge is likely to
have the effect of, terminating the registration of the Common Stock under the
Exchange Act nor has the Company received any notification that the Commission
is contemplating terminating such registration. The Company has not received
notice from any Trading Market on which the Common Stock is or has been listed
or quoted to the effect that the Company is not in compliance with the listing
or maintenance requirements of such Trading Market. The Company is, and has no
reason to believe that it will not in the foreseeable future continue to be, in
compliance with all such listing and maintenance requirements.
(u) TAX STATUS. The Company and each of its Subsidiaries has made
or filed all federal, state and foreign income and all other tax returns,
reports and declarations required by any jurisdiction to which it is subject
(unless and only to the extent that the Company and each of its Subsidiaries has
set aside on its books provisions reasonably adequate for the payment of all
unpaid and unreported taxes) and has paid all taxes and other governmental
assessments and charges that are material in amount,
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shown or determined to be due on such returns, reports and declarations, except
those being contested in good faith and has set aside on its books provisions
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. There are no
unpaid taxes in any material amount claimed to be due by the taxing authority of
any jurisdiction, and the officers of the Company know of no basis for any such
claim. The Company has not executed a waiver with respect to the statute of
limitations relating to the assessment or collection of any foreign, federal,
statue or local tax. None of the Company's tax returns is presently being
audited by any taxing authority.
(v) NO GENERAL SOLICITATION OR ADVERTISING IN REGARD TO THIS
TRANSACTION. Neither the Company nor, to the knowledge of the Company, any of
its directors or officers (i) has conducted or will conduct any general
solicitation (as that term is used in Rule 502(c) of Regulation D) or general
advertising with respect to the sale and issuance of the Shares or the Warrants,
or (ii) made any offers or sales of any security or solicited any offers to buy
any security under any circumstances that would require registration of the
Shares, the Warrant Shares or the Warrants under the Securities Act or made any
"directed selling efforts" as defined in Rule 902 of Regulation S.
(w) FOREIGN CORRUPT PRACTICES. Neither the Company, nor to the
knowledge of the Company, any agent or other person acting on behalf of the
Company, has (i) directly or indirectly, used any corrupt funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to
foreign or domestic political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to any foreign or
domestic political parties or campaigns from corporate funds, (iii) failed to
disclose fully any contribution made by the Company (or made by any person
acting on its behalf of which the Company is aware) which is in violation of
law, or (iv) violated in any material respect any provision of the Foreign
Corrupt Practices Act of 1977, as amended.
(x) XXXXXXXX-XXXXX. The Company is in material compliance with all
provisions of the Xxxxxxxx-Xxxxx Act of 2002 which are applicable to it as of
each Closing Date, and the rules and regulations promulgated thereunder.
(y) INVESTMENT COMPANY. The Company is not, and is not an
Affiliate of, and immediately after receipt of payment for the Shares and
Warrants, will not be or be an Affiliate of an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
(z) NO INTEGRATED OFFERING. Assuming the accuracy of the
Purchasers' representations and warranties set forth in Section 3.2, neither the
Company nor any of its Affiliates, nor any Person acting on its or their behalf
has, directly or indirectly, made any offers or sales of any security or
solicited any offers to buy any security, under circumstances that would cause
this offering of the Securities to be integrated with prior offerings by the
Company for purposes of the Securities Act or any applicable shareholder
approval provisions, including, without limitation, under the rules and
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regulations of any exchange or automated quotation system on which any of the
securities of the Company are listed or designated.
3.2 REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each Purchaser
hereby, for itself and for no other Purchaser, represents and warrants to the
Company as follows:
(a) ORGANIZATION; AUTHORITY. If the Purchaser is not an
individual, such Purchaser is an entity duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization with the
requisite corporate or partnership power and authority to enter into and to
consummate the transactions contemplated by the Transaction Documents and
otherwise to carry out its obligations thereunder. If the Purchaser is not an
individual, the purchase by such Purchaser of the Shares hereunder has been duly
authorized by all necessary action on the part of such Purchaser. Each of this
Agreement and the Registration Rights Agreement has been duly executed by such
Purchaser if the Purchaser is not an individual, and when delivered by such
Purchaser in accordance with the terms hereof, will constitute the valid and
legally binding obligation of such Purchaser, enforceable against it in
accordance with its terms except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors' rights generally and (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or other
equitable remedies.
(b) INVESTMENT INTENT. Such Purchaser is acquiring the Securities
as principal for its own account and not with a view to or for distributing or
reselling such Securities or any part thereof, without prejudice, however, to
such Purchaser's right, subject to the provisions of this Agreement, at all
times to sell or otherwise dispose of all or any part of such 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. Nothing contained herein shall be deemed a
representation or warranty by such Purchaser to hold Securities for any period
of time or limit such Purchaser's right to sell the Securities pursuant to the
Registration Statement or otherwise in compliance with applicable federal and
state securities laws. Such Purchaser is acquiring the Securities hereunder in
the ordinary course of its business. Such Purchaser does not have any agreement
or understanding, directly or indirectly, with any Person to distribute any of
the Securities.
(c) PURCHASER STATUS. At the time such Purchaser was offered the
Securities, it was, and at the date hereof it is, and currently anticipates that
on each date on which it exercises any Warrants it will be, an "accredited
investor" as defined in Rule 501(a) under the Securities Act. If the Purchaser
is not an individual, such Purchaser has not been formed solely for the purpose
of acquiring the Securities. Such Purchaser is not a registered broker-dealer
under Section 15 of the Exchange Act. Each Purchaser has delivered to the
Company a complete and accurate Purchaser Questionnaire, the form of which is
attached hereto as EXHIBIT F.
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(d) 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 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, at the present
time, is able to afford a complete loss of such investment.
(e) GENERAL SOLICITATION. Such Purchaser is not purchasing the
Securities as a result of any advertisement, article, notice or other
communication regarding the Securities published in any newspaper, magazine or
similar media or broadcast over television or radio or presented at any seminar
or any other general solicitation or general advertisement.
(f) SEC REPORTS. Such Purchaser has read and reviewed the
Company's SEC Reports and has had the opportunity to ask questions of Company
representatives regarding the contents of such SEC Reports. Each Purchaser has
relied on the SEC Reports in conjunction with its investment decision-making
process.
(g) ADDITIONAL DISCLOSURE. Such Purchaser has read and reviewed
the Executive Summary attached hereto as EXHIBIT G, the risk factors relating to
the Company and this offering attached hereto as EXHIBIT H, the information
contained under the heading "Additional Considerations" attached hereto as
EXHIBIT I, and the Company's most recent filing on Form 10-QSB with the
Commission for the quarter ended September 30, 2005, attached hereto as EXHIBIT
J. Each Purchaser has had the opportunity to ask questions of Company
representatives regarding the contents of such materials.
(h) CERTAIN FEES. Such Purchaser has not engaged or retained any
broker, financial advisor or consultant, finder, placement agent, investment
banker, bank or other Person and has not agreed to pay any commissions or other
fees to any of the same with respect to the transactions contemplated by this
Agreement.
ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES
4.1 TRANSFER RESTRICTIONS.
(a) The Securities may only be disposed of in compliance with
state and federal securities laws. In connection with any transfer of Securities
other than pursuant to an effective registration statement or Rule 144, to the
Company or in a non-sale transaction to an Affiliate of a Purchaser, 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
-14-
reasonably satisfactory to the Company, to the effect that such transfer does
not require registration of such transferred Securities under the Securities
Act.
(b) Each Purchaser, severally and not jointly with the other
Purchasers, agrees to the imprinting, so long as is required by this Section
4.1(b), of the following legend on any certificate evidencing Securities:
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 AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR REASONABLY ACCEPTABLE TO THE COMPANY TO SUCH EFFECT, THE
SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.
The Company acknowledges and agrees that a Purchaser may from time to
time pledge pursuant to a bona fide margin agreement or grant a security
interest in some or all of the Securities to a financial institution that is an
"accredited investor" as defined in Rule 501(a) under the Securities Act and, if
required under the terms of such arrangement, such Purchaser may transfer
pledged or secured Securities to the pledgees or secured parties. Such pledge or
transfer would not be subject to approval of the Company and no legal opinion of
legal counsel of the pledgee, secured party or pledgor shall be required in
connection therewith. Further, no notice shall be required of such pledge. At
the appropriate Purchaser's expense, the Company will execute and deliver such
reasonable documentation as a pledgee or secured party of Securities may
reasonably request in connection with a pledge or transfer of the Securities,
including the preparation and filing of any required prospectus supplement under
Rule 424(b)(3) of the Securities Act or other applicable provision of the
Securities Act to appropriately amend the list of Selling Stockholders
thereunder.
(c) The Company agrees that following such time as such legend is
no longer required, it will, no later than ten Trading Days following the
delivery by a Purchaser to the Company or the Company's transfer agent of a
certificate representing the Shares, or the Warrant Shares, as applicable,
issued with a restrictive legend (such third Trading Day, the "Legend Removal
Date"), together with all necessary documentation relating to the legend removal
request, deliver or cause to be delivered to such Purchaser a certificate
representing such shares that is free from all restrictive and other legends.
The Company may not make any notation on its records or give
-15-
instructions to any transfer agent of the Company that enlarge the restrictions
on transfer set forth in this Section.
4.2 EXERCISE PROCEDURES. The form of Notice of Exercise included in the
Warrants set forth the totality of the procedures required of the Purchasers in
order to exercise the Warrants. No additional legal opinion or other information
or instructions shall be required of the Purchasers to exercise their Warrants.
The Company shall honor exercises of the Warrants and shall deliver Warrant
Shares in accordance with the terms, conditions and time periods set forth in
the Transaction Documents.
4.3 SECURITIES LAWS DISCLOSURE; PUBLICITY. The Company shall issue a
press release or file a Current Report on Form 8-K reasonably acceptable to the
Placement Agent disclosing all material terms of the transactions contemplated
hereby. The Company and the Placement Agent shall consult with each other in
issuing any press release with respect to the transactions contemplated hereby,
and the Placement Agent shall have the right to review and comment on the
contents of any such press release prior to its release by the Company.
Notwithstanding the foregoing, the Company shall be entitled to make any filing
and press release that it determines is required in order to comply with any
applicable law. Notwithstanding the foregoing, other than in any registration
statement filed pursuant to the Registration Rights Agreement and filings
related thereto, the Company shall not publicly disclose the name of any
Purchaser, or include the name of any Purchaser in any filing with the
Commission or any regulatory agency or Trading Market, without the prior written
consent of such Purchaser, except to the extent such disclosure is required by
law or Trading Market regulations, in which case the Company shall provide each
Purchaser with prior notice of such disclosure.
4.4 USE OF PROCEEDS. The Company shall use the net proceeds from the
sale of the Shares hereunder as set forth in EXHIBIT F.
4.5 CONFIDENTIALITY. Each Purchaser agrees that he, she or it will keep
confidential and will not disclose, divulge or use for any purpose other than to
monitor his, her or its investment in the Company any confidential, proprietary
or secret information which such Purchaser may obtain from the Company pursuant
to financial statements, reports and other materials submitted by the Company to
such Purchaser pursuant to this Agreement or otherwise (but not including the
SEC Reports) ("Confidential Information"), unless such Confidential Information
is known, or until such Confidential Information becomes known, to the public
(other than as a result of a breach of this Section 4.5 by such Purchaser);
PROVIDED, HOWEVER, that a Purchaser may disclose Confidential Information (i) to
his, her or its attorneys, accountants, consultants, and other professionals to
the extent necessary to obtain their services in connection with monitoring his,
her or its investment in the Company, or (ii) as may otherwise be required by
law, provided that the Purchaser takes reasonable steps to minimize the extent
of any such required disclosure.
4.6 PLACEMENT AGENT. In consideration for services rendered by the
Placement Agent in placing the Units, the Company has agreed to pay the
Placement Agent on each
-16-
Closing Date a cash payment equal to eight percent (8%) (the "Commission
Percentage") of the gross proceeds from the sale of the Units at each such
Closing sold pursuant to this Agreement and to issue to the Placement Agent on
the last Closing Date a warrant, exercisable for (a) shares of the Company's
Common Stock in an amount equal to the Commission Percentage of the total number
of Shares issued pursuant to this Agreement and (b) a Warrant, in the form
attached as EXHIBIT C (the same Warrant being received by the Purchasers
pursuant to Section 2.2 hereof) exercisable for shares of the Company's Common
Stock in an amount equal to the Commission Percentage of the total number of
Shares issued pursuant to this Agreement; provided, however, that the Commission
Percentage will automatically be reduced to four percent (4%) with respect to
the consideration to be paid to the Placement Agent arising from the sale of
Units to the investors specified on Schedule 4.6 hereto. The Company has further
agreed to pay the Placement Agent a cash payment equal to two percent (2%) of
the gross proceeds received by the Company from the exercise of the Warrants
issued pursuant to this Agreement.
4.7 FURNISHING OF INFORMATION. As long as any Purchaser owns
Securities, the Company covenants to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to the
Exchange Act.
ARTICLE V
MISCELLANEOUS
5.1 FEES AND EXPENSES. The parties shall be responsible for their own
legal and other expenses, if any, in connection with this transaction.
5.2 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 and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.
5.3 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 or electronic mail at
the facsimile number or the electronic mail address specified on the signature
page attached hereto prior to 5:30 p.m. Eastern time on a Trading Day and, with
respect to a notice delivered via facsimile, an electronic confirmation of
delivery is received by the sender, (b) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile or
electronic mail at the facsimile number or electronic mail address specified in
this Section on a day that is not a Trading Day or later than 5:30 p.m. Eastern
time on any Trading Day, (c) the next Trading Day following the date of mailing,
if sent by U.S. nationally recognized overnight courier service, or (d) upon
actual receipt by the party to
-17-
whom such notice is required to be given. The addresses for such notices and
communications are those set forth on the signature pages hereof, or such other
address as may be designated in writing hereafter, in the same manner, by such
Person.
5.4 AMENDMENTS; WAIVERS. No provision of this Agreement may be waived
or amended except in a written instrument signed by the Company and the
Purchasers holding, together, a Majority of the Shares and Warrant Shares
(assuming for such purpose the exercise or conversion of all outstanding
Warrants into Warrant Shares). 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.
5.5 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.
5.6 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Purchasers. Any Purchaser may assign
its rights under this Agreement and the Registration Rights Agreement to any
Person to whom such Purchaser assigns or transfers any Securities as long as
such Purchaser provides prompt notice to the Company.
5.7 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.
5.8 GOVERNING LAW; VENUE; WAIVER OF JURY TRIAL. All questions
concerning the construction, validity, enforcement and interpretation of the
Transaction Documents shall be governed by and construed and enforced in
accordance with the internal laws of the State of Delaware, without regard to
the principles of conflicts of law thereof. Each party agrees that all legal
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, directors,
officers, shareholders, employees or agents) shall be commenced exclusively in
the state and federal courts sitting in the City of Wilmington. Each party
hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in the City of Wilmington, County of New Castle, 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
-18-
claim that it is not personally subject to the jurisdiction of any such court,
that such suit, action or proceeding is improper or inconvenient venue for such
proceeding. 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 parties hereby waive all rights to a trial by jury. If
either party shall commence an action or proceeding to enforce any provisions of
the Transaction Documents, then the prevailing party in such action or
proceeding shall be reimbursed by the other party for its attorneys' fees and
other costs and expenses incurred with the investigation, preparation and
prosecution of such action or proceeding.
5.9 SURVIVAL. The representations and warranties contained herein
shall survive for a period of two years following the Closing.
5.10 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, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) such document with the same force and effect as if such facsimile
signature page were an original thereof.
5.11 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 therefore, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.
5.12 REPLACEMENT OF SECURITIES. If any certificate or instrument
evidencing any 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 of such loss, theft or destruction and customary and reasonable
indemnity, if requested.
5.13 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. 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
-19-
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 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. Each Purchaser has been represented by its own
separate legal counsel in their review and negotiation of the Transaction
Documents. The Company has elected to provide all Purchasers with the same terms
and Transaction Documents for the convenience of the Company and not because it
was required or requested to do so by the Purchasers.
(Signature Pages Follow)
-20-
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.
CATCHER HOLDINGS, INC. Address for Notice:
By:___________________________ 0000 Xxxxx Xxxxxx
Name: Suite 101
Title: Xxxxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
e-mail: xxxxxxxx@xxxxxxxxxx.xxx
With a copy to (which shall not constitute notice):
Xxxxxx X. Xxxxxx, Esq.
Xxxxxxxx & Xxxxxxxx, LLP
00000 Xxxx Xxxxx Xxxxx
Xxxxx 000
Xxx Xxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
e-mail: xxxxxxx@xxxx.xxx
PLACEMENT AGENT
EMERGING GROWTH EQUITIES, LTD. Address for Notice:
By:___________________________ Parkview Tower
Name: 0000 Xxxxx Xxx., Xxxxx 000
Title: King of Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
e-mail: xxxxxxxxxx@xxxxxxxxxx.xxx
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[PURCHASER SIGNATURE PAGES TO SECURITIES PURCHASE AGREEMENT]
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
Name of Investing Entity or Individual:_________________________________________
Signature of Authorized Signatory of Investing Entity: _________________________
Name of Authorized Signatory if not an Individual:______________________________
Title of Authorized Signatory if not an Individual______________________________
Email Address of Authorized Entity or Individual:_______________________________
Address for Notice of Investing Entity or Individual:
Address for Delivery of Securities for Investing Entity or Individual (if not
same as above):
Subscription Amount:
Shares:
Warrant Shares:
EIN or SSN Number: [PROVIDE THIS UNDER SEPARATE COVER]
[SIGNATURE PAGES CONTINUE]
-22-
EXHIBIT A
ESCROW AGREEMENT
- 1 -
EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
- 1 -
EXHIBIT C
FORM OF WARRANT
- 1 -
EXHIBIT D
LEGAL OPINION OF COMPANY COUNSEL
- 1 -
EXHIBIT E
FORM OF LOCK-UP AGREEMENT
- 1 -
EXHIBIT F
PURCHASER QUESTIONNAIRE
THE PURCHASER REPRESENTS AND WARRANTS THAT HE, SHE OR IT COMES WITHIN
ONE CATEGORY MARKED BELOW, AND THAT FOR ANY CATEGORY MARKED, HE, SHE OR IT HAS
TRUTHFULLY SET FORTH, WHERE APPLICABLE, THE FACTUAL BASIS OR REASON THE
PURCHASER COMES WITHIN THAT CATEGORY. ALL INFORMATION IN RESPONSE TO THIS
SECTION WILL BE KEPT STRICTLY CONFIDENTIAL. THE UNDERSIGNED AGREES TO FURNISH
ANY ADDITIONAL INFORMATION WHICH THE COMPANY DEEMS NECESSARY IN ORDER TO VERIFY
THE ANSWERS SET FORTH BELOW.
Category A __ The undersigned is an individual (not a partnership,
corporation, etc.) whose individual net worth, or joint net
worth with his or her spouse, presently exceeds $1,000,000.
Explanation: In calculating net worth you may include equity
in personal property and real estate, including your principal
residence, cash, short-term investments, stock and securities.
Equity in personal property and real estate should be based on
the fair market value of such property less debt secured by
such property.
Category B __ The undersigned is an individual (not a partnership,
corporation, etc.) who had an income in excess of $200,000 in
each of the two most recent years, or joint income with his or
her spouse in excess of $300,000 in each of those years (in
each case including foreign income, tax exempt income and full
amount of capital gains and losses but excluding any income of
other family members and any unrealized capital appreciation)
and has a reasonable expectation of reaching the same income
level in the current year.
Category C __ The undersigned is a director or executive officer of the
Company which is issuing and selling the Securities.
Category D __ The undersigned is a bank; a savings and loan association;
insurance registered investment company; registered business
development company; led small business investment company
("SBIC"); or employee benefit plan the meaning of Title 1 of
ERISA and (a) the investment decision is made by a plan
fiduciary which is either a bank, savings and loan
association, insurance company or registered investment
advisor, or (b) the plan has total assets in excess of
$5,000,000 or (c) is a self directed plan with investment
decisions to be made solely by persons that are accredited
investors, describe (entity)
Category E __ The undersigned is a private business development company as
defined in section 202(a)(22) of the Investment Advisors Act
of 1940. (describe entity)
Category F __ The undersigned is either a corporation, partnership,
Massachusetts business trust, or non-profit organization
within the meaning of Section 501(c)(3) of the Internal
Revenue Code, in each case not formed for the specific purpose
of acquiring the Common Stock and with total assets in excess
of $5,000,000. (describe entity)
-1-
Category G__ The undersigned is a trust with total assets in excess of
$5,000,000, not formed for the specific purpose of acquiring
the Securities, where the purchase is directed by a
"sophisticated investor" as defined in Regulation
506(b)(2)(ii) under the Act.
Category H__ The undersigned is an entity (other than a trust) in which all
of the equity owners are "accredited investors" within one or
more of the above categories. If relying upon this Category
alone, each equity owner must complete a separate copy of this
Agreement. (describe entity)
Category I __ The undersigned is not within any of the categories above and
is therefore not an accredited investor.
The undersigned agrees that the undersigned will notify the
Company at any time on or prior to the Closing in the event
that the representations and warranties in this Agreement
shall cease to be true, accurate and complete.
SUITABILITY (please answer each question)
(a) For an individual Purchaser, please describe your current employment,
including the company by which you are employed and its principal
business:
(b) For an individual Purchaser, please describe any college or graduate
degrees held by you:
(c) For all Purchasers, please list types of prior investments:
(d) For all Purchasers, please state whether you have participated in other
PRIVATE PLACEMENTS before:
YES NO
(e) If your answer to question (d) above was "YES", please indicate
frequency of such prior participation in PRIVATE PLACEMENTS of:
Public Private Public or Private VoIP or other
Companies Companies Communications Companies
Frequently
Occasionally
Never
(f) For individual Purchasers, do you expect your current level of income
to significantly decrease in the foreseeable future:
YES NO
-2-
(g) For trust, corporate, partnership and other institutional Purchasers,
do you expect your total assets to significantly decrease in the
foreseeable future:
YES NO
(h) For all Purchasers, do you have any other investments or contingent
liabilities which you reasonably anticipate could cause you to need
sudden cash requirements in excess of cash readily available to you:
YES NO
(i) For all Purchasers, are you familiar with the risk aspects and the
non-liquidity of investments such as the securities for which you seek
to subscribe?
YES NO
(j) For all Purchasers, do you understand that there is no guarantee of
financial return on this investment and that you run the risk of losing
your entire investment?
YES NO
MANNER IN WHICH TITLE IS TO BE HELD, (circle one)
(a) Individual Ownership
(b) Community Property
(c) Joint Tenant with Right of Survivorship (both parties must sign)
(d) Partnership*
(e) Tenants in Common
(f) Company*
(g) Trust*
(h) Other*
*If Securities are being subscribed for by an entity, the attached
Certificate of Signatory must also be completed.
NASD AFFILIATION.
Are you affiliated or associated with an NASD member firm (please check one):
YES NO
If Yes, please describe:
*If Purchaser is a Registered Representative with an NASD member firm, have the
following acknowledgment signed by the appropriate party:
-3-
The undersigned NASD member firm acknowledges receipt of the notice required by
Article 3, Sections 28(a) and (b) of the Rules of Fair Practice.
Name of NASD Member Firm
By:________________________________________
Authorized Officer
Date:_____________________________________
The above information is true, complete and accurate in all material respects
and the undersigned recognizes that the Company is relying on the truth,
completeness and accuracy of such information in determining whether the
offering of the Shares meets the requirements for the exemption from
registration contained in Section 4(2) of the U.S. Securities Act of 1933, as
amended, and/or Regulation D promulgated by the Securities and Exchange
Commission, and similar exemptions under applicable state securities laws or the
applicable laws of other relevant jurisdictions.
The undersigned agrees to notify the Company promptly of any material changes in
the foregoing information or any event resulting in the omission of any
statement required to be made herein that occurs prior to the acceptance of the
subscription to which this Questionnaire relates.
Executed at ___________________________________, on _____________________, 2006.
_____________________________________
Print Name: _________________________
-4-
EXHIBIT G
EXECUTIVE SUMMARY
- 1 -
EXHIBIT H
RISK FACTORS
- 1 -
EXHIBIT I
ADDITIONAL CONSIDERATIONS
- 1 -
EXHIBIT J
FORM 10-QSB FOR QUARTER ENDING SEPTEMBER 30, 2005
