SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT ("Agreement") is entered into this
____ day of _______________, 2000 by and between XML - GLOBAL TECHNOLOGIES,
INC., a Colorado corporation, ("Company") and XML FUND, LLC ("Buyer").
W I T N E S S E T H:
WHEREAS, Company and Buyer are executing and delivering this Agreement in
accordance with and in reliance upon the exemption from securities
registration afforded, inter alia, by Rule 506 under Regulation D ("Regulation
D" as promulgated by the United States Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended, (the "Securities
Act") and/or Section 4(2) of the Securities Act; and
WHEREAS, Buyer wishes to purchase, upon the terms and subject to the
conditions of this Agreement, shares of Common Stock, $.0001 par value per
share of Company (the "Common Stock"), and Common Stock purchase warrants (the
"Warrants") upon the terms and subject to the conditions of this Agreement
(the Common Stock and the Warrants sometimes referred to herein as the
"Securities").
NOW THEREFORE, in consideration of the promises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. AGREEMENT TO PURCHASE.
a. Units. Buyer hereby unconditionally and irrevocably agrees to
purchase from the Company one hundred thousand (100,000) Units (the "Units"),
at a price of $1.00 per Unit, for an aggregate purchase price of $100,000.
Each Unit consists of one (1) share of the Company's Common Stock and one (1)
Warrant (the "Warrant").
b. Warrants. Each Warrant shall entitle the Buyer to purchase one
(1) additional share of Common Stock at an exercise price of $4.00 per share.
Each Warrant shall be exercisable until December 31, 2000.
c. Payment. Buyer shall pay the purchase price for the Units
against delivery and tender of the purchase price in the amount of $100,000
concurrently with the execution of this Agreement.
2. BUYER REPRESENTATIONS AND WARRANTIES. Buyer represents and warrants
to, and covenants and agrees with, Company as follows:
a. Buyer is purchasing the Securities and will be acquiring the
shares of Common Stock issuable upon exercise of the Warrants for its own
account for investment only and not with a view towards the public sale or
distribution thereof;
b. Buyer is (i) an "accredited investor" as that term is defined
in Rule 501(a) of the General Rules and Regulations under the Securities Act
and summarized on Appendix H hereto, and (ii) experienced in making
investments of the kind described in this Agreement and the related documents,
(iii) able, by reason of the business and financial experience of its officers
(if an entity) and professional advisors (who are not affiliated with or
compensated in any way by Company or any of its affiliates or selling agents),
to protect its own interests in connection with the transactions described in
this Agreement, and the related documents, and (iv) able to afford the entire
loss of its investment in the Securities;
c. All subsequent offers and sales of the Securities and the
shares of Common Stock issuable upon exercise of the Warrants (the "Shares" or
"Common Stock") by Buyer shall be made pursuant to registration of the Shares
under the Securities Act or pursuant to an exemption from registration;
d. Buyer understands that the Securities are being offered and
sold to it in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and that
Company is relying upon the truth and accuracy of, and Buyer's compliance
with, the representations, warranties, agreements, acknowledgments and
understandings of Buyer set forth herein in order to determine the
availability of such exemptions and the eligibility of Buyer to acquire the
Securities and to receive an offer of the Shares;
e. Buyer and its advisors, if any, have been furnished with all
materials relating to the business, finances and operations of Company and
materials relating to the offer and sale of the Securities which have been
requested by Buyer. Buyer and its advisors, if any, have been afforded the
opportunity to ask questions of Company and have received complete and
satisfactory answers to any such inquiries.
f. Buyer understands that its investment in the Securities
involves a high degree of risk;
g. Buyer understands that no United States federal or state agency
or any other government or governmental agency has passed on or made any
recommendation or endorsement of the Securities;
h. This Agreement has been duly and validly authorized, executed
and delivered on behalf of Buyer and is a valid and binding agreement of Buyer
enforceable in accordance with its terms, subject as to enforceability to
general principles of equity and to bankruptcy, insolvency, moratorium and
other similar laws affecting the enforcement of creditors' rights generally.
i. Neither Buyer, nor any affiliate of Buyer, will enter into, any
put option, short position, or other similar position with respect to the
Securities or the Shares.
3. COMPANY REPRESENTATIONS AND WARRANTIES. Company represents and
warrants to Buyer that:
a. Concerning the Shares. There are no preemptive rights of any
stockholder of Company, as such, to acquire the Common Stock.
b. Reporting Company Status. Company is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Colorado, and has the requisite corporate power to own its properties and
to carry on its business as now being conducted. Company is duly qualified as
a foreign corporation to do business and is in good standing in each
jurisdiction where the nature of the business conducted or property owned by
it makes such qualification necessary other than those jurisdictions in which
the failure to so qualify would not have a material and adverse effect on the
business, operations, properties, prospects or condition (financial or
otherwise) of Company. Company has registered its Common Stock pursuant to
Section 12 of the Exchange Act.
c. Authorized Shares. Company has sufficient authorized and
unissued Shares as may be reasonably necessary to effect the exercise of the
Warrants. The Shares have been duly authorized and, when issued upon exercise
of the Securities, will be duly and validly issued, fully paid and non-
assessable and will not subject the holder thereof to personal liability by
reason of being such holder.
d. Securities Purchase Agreement. This Agreement, and the
transactions contemplated thereby, have been duly and validly authorized by
Company, this Agreement has been duly executed and delivered by Company and
this Agreement is the valid and binding agreement of Company enforceable in
accordance with their respective terms, subject as to enforceability to
general principles of equity and to bankruptcy, insolvency, moratorium, and
other similar laws affecting the enforcement of creditors' rights generally;
and the Securities will be duly and validly authorized and, when executed and
delivered on behalf of Company in accordance with this Agreement, will be a
valid and binding obligation of Company in accordance with its terms, subject
to general principles of equity and to bankruptcy, insolvency, moratorium, or
other similar laws affecting the enforcement of creditors' rights generally.
e. Non-contravention. The execution and delivery of this
Agreement by Company, the issuance of the Securities, and the consummation by
Company of the other transactions contemplated by this Agreement, do not and
will not conflict with or result in a breach by Company of any of the terms or
provisions of, or constitute a default under (i) the articles of incorporation
or by-laws of Company, (ii) any indenture, mortgage, deed of trust, or other
material agreement or instrument to which Company is a party or by which it or
any of its properties or assets are bound, including any listing agreement for
the Common Stock except as herein set forth, (iii) to its knowledge, any
existing applicable law, rule, or regulation or any applicable decree,
judgment, or (iv) to its knowledge, order of any court, United States federal
or state regulatory body, administrative agency, or other governmental body
having jurisdiction over Company or any of its properties or assets, except
such conflict, breach or default which would not have a material adverse
effect on the transactions contemplated herein. Company is not in violation of
any material laws, governmental orders, rules, regulations or ordinances to
which its property, real, personal, mixed, tangible or intangible, or its
businesses related to such properties, are subject.
f. Approvals. No authorization, approval or consent of any court,
governmental body, regulatory agency, self-regulatory organization, or stock
exchange or market is required to be obtained by Company for the issuance and
sale of the Securities to Buyer as contemplated by this Agreement, except such
authorizations, approvals and consents that have been obtained.
g. SEC Documents, Financial Statements. The Common Stock of
Company is registered pursuant to Section 12(g) of the Exchange Act. Buyer
has had the opportunity to obtain on Buyer's behalf true and complete copies
of the SEC Documents (except for exhibits and incorporated documents).
Company has not provided to Buyer any information which, according to
applicable law, rule or regulation, should have been disclosed publicly by
Company but which has not been so disclosed, other than with respect to the
transactions contemplated by this Agreement.
As of their respective dates, all of Company's reports,
statements and other filings with the Commission (the "SEC Documents")
complied in all material respects with the requirements of the Act or the
Exchange Act as the case may be and the rules and regulations of the
Commission promulgated thereunder and other federal, state and local laws,
rules and regulations applicable to such SEC Documents, and none of the SEC
Documents 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 Company included in
the SEC Documents comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the
Commission or other applicable rules and regulations with respect thereto.
Such financial statements have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto or (ii) in the case of unaudited interim
statements, to the extent they may not include footnotes or may be condensed
or summary statements) and fairly present in all material respects the
financial position of Company as of 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).
h. Absence of Litigation. There is no action, suit, proceeding,
inquiry or investigation before or by any court, public board or body pending
or, to the knowledge of Company, threatened against or affecting Company,
wherein an unfavorable decision, ruling or finding would have a material
adverse effect on the business or financial condition of Company or the
transactions contemplated by this Agreement or any of the documents
contemplated hereby or which would adversely affect the validity or
enforceability of, or the authority or ability of Company to perform its
obligations under, this Agreement or any of such other documents.
i. Absence of Events of Default. No Event of Default, as defined
in the respective agreement to which Company is a party, and no event which,
with the giving of notice or the passage of time or both, would become an
Event of Default (as so defined), has occurred and is continuing, which would
have a material adverse effect on Company's financial condition or results of
operations.
j. Capitalization. The authorized capital stock of the Company
consists entirely of 500,000,000 shares of Common Stock having a par value of
$.0001 per share and 100,000,000 shares of Preferred Stock having a par value
of $.01 per share. As of the date of this Agreement, 20,830,000 shares of
Common Stock and no shares of Preferred Stock are issued and outstanding. In
addition, there are issued and outstanding options and warrants exercisable to
purchase, in the aggregate, 6,660,000 shares of Common Stock. Other than the
foregoing, there are no other equity securities of the Company authorized,
issued or outstanding, and there are no authorized, issued or outstanding
subscriptions, options, warrants, contracts, calls, commitments or other
purchase rights of any nature or character relating to any of the Company's
capital stock, equity securities, debt or other securities convertible into
stock or equity securities of the Company.
4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
a. Transfer Restrictions. Buyer acknowledges that (1) the
Securities have not been and are not being registered under the provisions of
the Securities Act and the Securities have not been and are not being
registered under the Securities Act, and may not be transferred unless (A)
subsequently registered thereunder or (B) Buyer shall have delivered to
Company an opinion of counsel, reasonably satisfactory in form, scope and
substance to Company, to the effect that the Securities to be sold or
transferred may be sold or transferred pursuant to an exemption from such
registration; (2) any sale of the Securities made in reliance on Rule 144
promulgated under the Securities Act may be made only in accordance with the
terms of said Rule and further, if said Rule is not applicable, any resale of
such Securities under circumstances in which the seller, or the person through
whom the sale is made, may be deemed to be an underwriter, as that term is
used in the Securities Act, may require compliance with some other exemption
under the Securities Act or the rules and regulations of the Commission
thereunder; and (3) neither Company nor any other person is under any
obligation to register the Securities under the Securities Act or to comply
with the terms and conditions of any exemption thereunder.
b. Restrictive Legend. Buyer acknowledges and agrees that the
Securities issued to Buyer shall bear a restrictive legend in substantially
the following form (and a stop-transfer order may be placed against transfer
of the Securities):
THESE SECURITIES (THE "SECURITIES") HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD
OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES OR AN OPINION OF COUNSEL OR OTHER
EVIDENCE ACCEPTABLE TO THE CORPORATION THAT SUCH REGISTRATION
IS NOT REQUIRED.
c. Filings. Company undertakes and agrees to make all necessary
filings in connection with the sale of the Securities to Buyer under any
United States laws and regulations, or by any domestic securities exchange or
trading market, and to provide a copy thereof to Buyer promptly after such
filing.
d. Reporting Status. So long as Buyer beneficially owns any of
the Securities, Company shall file all reports required to be filed with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act, and Company
shall not terminate its status as an issuer required to file reports under the
Exchange Act even if the Exchange Act or the rules and regulations thereunder
would permit such termination.
5. REGISTRATION RIGHTS.
a. Subject to the various provisions of this paragraph, if at any
time within one (1) year of the date of this Agreement the Company proposes to
register any of its Common Stock under the Act in connection with the public
offering of such securities solely for cash on a form that would also permit
the registration of the Common Stock issued as part of the Units or issuable
upon exercise of the Warrants (hereafter collectively the "Registrable
Securities"), the Company shall promptly give Buyer written notice of such
determination, and the Company, subject to the provisions of this Paragraph 6,
shall use its best efforts to cause to be registered under the Act all of the
Registrable Securities.
b. In connection with any offering involving an underwriting of
shares being issued by the Company as described in Paragraph 6a above, the
Company shall not be required under Paragraph 6a hereof to include Buyer's
Registrable Securities in such underwriting unless it accepts the terms of the
underwriting as agreed upon between the Company and the underwriters selected
by it, and then only in such quantity as will not, in the written opinion of
the underwriters, jeopardize the success of the offering by the Company. If
the total number of shares of Registrable Securities to be included in such
offering is an amount of securities that the underwriters state in their
written opinion jeopardizes the success of the offering, the Company shall
only be required to include in the offering so many of the shares of
Registrable Securities as the underwriters opine (in writing) will not
jeopardize the success of the offering, subject to the following provisions
and exceptions:
c. Except as provided in Paragraph 6d below, all limitations on
the number of shares of Registrable Securities to be included in the
applicable underwriting shall be pro rata with respect to the number of shares
of Registrable Securities reserved for issuance pursuant to outstanding
Warrants of the same class as the Warrants represented by this Certificate.
If Buyer disapproves of the terms of any such underwriting, it may elect to
withdraw therefrom by written notice to the Company and the underwriter, and
any shares excluded or withdrawn from such underwriting shall be withdrawn
from registration.
d. Notwithstanding any provision to the contrary elsewhere herein;
(i) if Directors and Officers of the Company elect to include any shares of
Common Stock held by them in any registration effected by the Company as
described in Paragraph 6a hereof, then such shares, subject to the
underwriter's opinion and percentage limitations described in Paragraph 6d(ii)
immediately following, shall be considered entitled to "piggyback
registration" rights under Paragraph 6c and (ii) if the underwriter for an
underwriting contemplated under Paragraph 6a hereof determines that marketing
factors permit the registration of securities other than those offered for the
Company's account in such underwriting ("Piggybacked Securities"), the
registration rights granted elsewhere herein to the Buyer shall apply to such
number of the registrable securities requested to be registered by such
Directors and Officers.
e. In connection with the preparation and filing of the
Registration Statement, the Company agrees to (i) use its best efforts to
cause such Registration Statement to become and remain effective; (ii) prepare
and file with the SEC such amendments and supplements to such Registration
Statement as may be necessary to keep such Registration Statement effective
until the Expiration Date; (iii) furnish to the Buyer such number of copies of
a prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act of 1933, as amended (the "Act"), and such
other documents as Buyer may reasonably request in order to facilitate the
disposition of the shares of Common Stock; and (iv) use its best efforts to
register and qualify the shares of Common Stock covered by such Registration
Statement under such other securities or Blue Sky laws of such jurisdictions
as shall be identified by the warrant Buyers for the distribution of the
securities covered by the Registration Statement.
f. All expenses incurred in connection with the registration,
offering and distribution of the shares of Common Stock underlying this
Warrant including fees and disbursements of counsel, shall be borne by the
Company, including, without limitation, Securities and Exchange Commission
filing fees, Blue Sky filing fees, printing costs, accounting fees costs,
transfer agent fees, and any other miscellaneous costs and disbursements.
Each Buyer participating in the Registration shall be liable for any and all
underwriting discounts, brokerage commissions or other fees or expenses
incurred in connection with the sale or other disposition by Buyer of the
shares of Common Stock covered by the Registration Statement.
g. To the extent permitted by law, Buyer will indemnify and hold
harmless the Company, and its directors, officers, employees, agents and
representatives, as well as its controlling persons (within the meaning of the
Act) against any losses, claims, damages, liabilities, or expenses, including
without limitation, attorney's fees and disbursements, which arise out of or
are based upon any violation by Buyer of the Act or under the Securities
Exchange Act of 1934, or any rule or regulation promulgated thereunder
applicable to Buyer, or arise out of or are based upon any untrue statement or
omission of Buyer in the Subscription Agreement between the Company and Buyer,
or arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, but only to the extent that such untrue
statement or alleged untrue statement or omission, or alleged omission was
made in such Registration Statement in reliance upon and in conformity with
information furnished by Buyer in writing, expressly for use in connection
with such Registration Statement.
h. To the extent permitted by law, the Company will indemnify and
hold harmless Buyer, including its officers, directors, employees, agents, and
representatives, against any losses, claims, damages, liabilities, or
expenses, including without limitation attorney's fees and disbursements, to
which Buyer may become subject under the Act to the extent that such losses,
claims, damages or liabilities arise out of or are based upon any violation by
the Company of the Act or under the Securities Exchange Act of 1934, or any
rule or regulation promulgated thereunder applicable to the Company, or arise
out of or are based upon any untrue or alleged untrue statement of any
material fact contained in the Registration Statement, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or arise out of any violation by the Company of any rule or
regulation promulgated under the Act applicable to the Company and relating to
action or inaction required of the Company in connection with such
Registration Statement; provided, however, that the indemnity agreement
contained in this paragraph shall not apply to any loss, damage or liability
to the extent that same arises out of or is based upon an untrue statement or
omission made in connection with such Registration Statement in reliance upon
and in conformity with information furnished in writing expressly for use in
connection with such Registration Statement by Buyer.
i. Buyer undertakes to comply with all applicable laws governing
the distribution of securities in connection with Buyer's sale of Common Stock
of the Company acquired pursuant to the exercise of this Warrant, including,
without limitation, Regulation M under the Securities Exchange Act of 1934,
and to notify the Company of any changes in Buyer's plan of distribution,
including the determination of the public offering price and any dealer
concession or discount so that the Company can sticker or amend the
Registration Statement as the Company deems appropriate in its sole
discretion.
6. GOVERNING LAW: MISCELLANEOUS. This Agreement shall be governed by
and interpreted in accordance with the laws of the State of Colorado. Each of
the parties consents to the jurisdiction of the federal courts whose districts
encompass any part of the City of and County of Boulder, State of Colorado in
connection with any dispute arising under this Agreement and hereby waives, to
the maximum extent permitted by law, any objection, including any objection
based on forum non conveniens, to the bringing of any such proceeding in such
jurisdictions. A facsimile transmission of this signed Agreement shall be
legal and binding on all parties hereto. This Agreement may be signed in one
or more counterparts, each of which shall be deemed an original. The headings
of this Agreement are for convenience of reference and shall not form part of,
or affect the interpretation of, this Agreement. If any provision of this
Agreement shall be invalid or unenforceable in any jurisdiction, such
invalidity or unenforceability shall not affect the validity or enforceability
of the remainder of this Agreement or the validity or enforceability of this
Agreement in any other jurisdiction. This Agreement may be amended only by an
instrument in writing signed by the party to be charged with enforcement.
This Agreement supersedes all prior agreements and understandings among the
parties hereto with respect to the subject matter hereof.
7. NOTICES. Any notice required or permitted hereunder shall be given
in writing (unless otherwise specified herein) and shall be deemed effectively
given, (i) on the date delivered, (a) by personal delivery, or (b) if advance
copy is given by fax, (ii) seven business days after deposit in the United
States Postal Service by regular or certified mail, or (iii) three business
days mailing by international express courier, with postage and fees prepaid,
addressed to the other party thereunto entitled at the following addresses, or
at such other addresses as a party may designate by ten days' advance written
notice to each of the other party hereto:
COMPANY: XML - GLOBAL TECHNOLOGIES, INC.
ATTN: Xxxxx Xxxxxxx, Chief Executive Officer
0000 Xxxxx Xxxxxx
Xxxxxxxxx, X.X. X0X 0X0, Xxxxxx
Fax No. (000) 000-0000
with a copy to: Xxxxxxxx X. Xxxxxx, Esq.
Xxxxxx & Xxxxxxx, LLC
0000 Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Fax No. (000) 000-0000
BUYER: XML FUND, LLC
ATTN: Xxxxx Xxxx, Esq.
000 000xx Xxxxxx, X.X., Xxxxx 0000
Xxxxxxxx, XX 00000
Fax No._________________
8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Company's
representations and warranties shall survive the execution and delivery hereof
of this Agreement and the delivery of the Securities and the Purchase Price,
and shall inure to the benefit of their respective successors and assigns.
9. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
as of the date first above written.
COMPANY: XML - GLOBAL TECHNOLOGIES, INC.
By:
----------------------------
Authorized Agent
BUYER: XML FUND, LLC
By:
----------------------------
Authorized Agent
APPENDIX A
The term "Accredited Investor" refers to any person or entity who comes
within any of the following categories or who we reasonably believe comes
within any of the following categories, at the time of the sale of the Units
to such Investor:
1. Any bank as defined in Section 3(a)(2) of the Act, or any savings
and loan association or other institution as defined in Section 3(a)(5)(A) of
the Act whether acting in its individual or fiduciary capacity; any broker or
dealer registered pursuant to Section 15 of the Securities Exchange Act of
1934; insurance company as defined in Section 2(13) of the Act; investment
company registered under the Investment Company Act of 1940 or a business
development company as defined in Section 2(a)(48) of the Investment Company
Act of 1940; 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; any 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 employees, if such plan has total
assets in excess of $5,000,000; employee benefit plan within the meaning of
Title I of the Employee Retirement Income Security Act of 1974 ("ERISA"), if
the investment decision is made by a plan fiduciary, as defined in
Section 3(2) of ERISA, which is either a bank, a savings and loan association,
insurance company, registered investment advisor, 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;
2. Any private business development company as defined in
Section 202(a)(22) of the Investment Advisors Act of 1940;
3. Any organization described in Section 501(c)(3) of the Internal
Revenue Code, corporation, Massachusetts or similar business trust, or
partnership not formed for the specific purpose of acquiring the securities
offered, with total assets in excess of $5,000,000;
4. Any Director or executive officer of XML - Global Technologies,
Inc.;
5. Any trust, with total assets in excess of $5,000,000 not formed for
the specific purpose of acquiring the securities offered, whose purchase is
directed by a sophisticated person as described in Rule 506 of Regulation D;
6. Any 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;
7. Any 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 in the current year; and
8. Any entity in which all of the equity owners are accredited
investors.
