SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of
October 16, 2000, by and between Accesspoint Corporation, a Nevada corporation
(the "Company"), and RoyCap Inc., a Canadian corporation (the "Purchaser").
R E C I T A LS
WHEREAS, Purchaser desires to purchase a USD$450,000 Convertible Note
(the "Convertible Note") of the Company;
WHEREAS, Purchaser desires to purchase a warrant to purchase up to
1,200,000 shares of Common Stock, $0.001 par value per share of the Company (the
"Callable Warrant");
WHEREAS, Purchaser desires to purchase a warrant to purchase 70,000
shares of common stock (the "Common Stock"), of the Company (the "Common
Warrant"); and
WHEREAS, the Company desires to issue and sell to the Purchaser, and
Purchaser desires to purchase from the Company, the Callable Warrant and the
Common Warrant (collectively, the "Warrants") and the Convertible Note subject
to the terms and conditions set forth 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 are hereby acknowledged, the Company and the Purchaser agree as
follows:
1. SALE AND PURCHASE.
1.1. SALE AND PURCHASE. Subject to the terms and conditions hereof, at the
Closing (as defined in Section 2.1 hereof), the Company hereby agrees to issue
and sell to the Purchaser and the Purchaser agrees to purchase from the Company,
(i) the Convertible Note; (ii) the Callable Warrant; and (iii) the Common
Warrant, for an aggregate purchase price of Four Hundred Fifty Thousand Dollars
(USD$450,000) (the "Purchase Price"). The Purchase Price shall be paid in lawful
money of the United States of America at the Closing.
1.2. CERTAIN TERMS. For purposes of this Agreement, (i) "Business Day" shall
mean any day except Saturday, Sunday and any day which shall be a federal legal
holiday or a day on which banking institutions in the State of California and
the country of Canada generally are authorized or required by law or other
governmental action to close, and (ii) a "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. References to the
knowledge or belief of the Company mean the knowledge or belief of senior
management of the Company.
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2. CLOSING, DELIVERY AND PAYMENT.
2.1. CLOSING. The closing (the "Closing") of the sale and purchase of the
Convertible Note, the Callable Warrant and the Common Warrant (collectively
called the "Securities") shall take place on the date hereof at the offices of
00 Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxx, Xxxxxxxxxx, 00000, or at such other time
or place as the Company and Purchaser may mutually agree (such date is
hereinafter referred to as the "Closing Date").
2.2. DELIVERY; PAYMENT. At the Closing, subject to the terms and conditions
hereof, the Company will deliver to the Purchaser (i) the Convertible Note in
the form attached hereto as Exhibit A, (ii) the Callable Warrant in the form
attached hereto as Exhibit B, and (iii) the Common Warrant substantially in the
form attached hereto as Exhibit C, to be purchased at the Closing by the
Purchaser, against payment of the Purchase Price therefor by wire transfer made
payable to the order of the Company or as it shall direct, subject to a
deduction for fees incurred by the Purchaser as set out in section 6.1 hereof.
3. REPRESENTATIONS AND WARRANTIES.
3.1. Representations and Warranties of the Company. The Company hereby
makes the following representations and warranties to the Purchaser as of the
Closing Date:
(a) ORGANIZATION AND QUALIFICATION. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Nevada with the requisite corporate power and authority to own and use its
properties and assets and to carry on its business as currently conducted. The
Company has no subsidiaries other than Processing Source International, Inc. and
Black Sun Graphics, Inc. (the "Subsidiaries"). The Subsidiaries are entities,
duly organized, validly existing and in good standing under the laws of the
State of California, with the requisite corporate power and authority to own and
use its properties and assets and to carry on their business as currently
conducted. Each of the Company and the Subsidiaries are 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 them makes such qualification necessary, except in the state of
Illinois to the extent qualification might be necessary, and except where the
failure to be so qualified or in good standing, as the case may be, could not,
individually or in the aggregate, (x) adversely affect the legality, validity or
enforceability of the Securities or any of this Agreement, the Registration
Rights Agreement or the Transfer Agent Instructions (collectively, the
"Transaction Documents"), (y) have or result in a material adverse effect on the
results of operations, assets, or condition (financial or otherwise) of the
Company and the Subsidiaries, taken as a whole, or (z) adversely impair the
Company's ability to perform fully on a timely basis its obligations under any
of the Transaction Documents (any of (x), (y) or (z), a "Material Adverse
Effect").
(b) 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
thereunder. The execution and delivery of each of the Transaction Documents by
the Company and the consummation by it of the transactions contemplated thereby
have been duly authorized by all necessary corporate action on the part of the
Company and no further action is required by the Company. Each of the
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Transaction Documents has been duly executed by the Company and, when delivered
(or filed, as the case may be) in accordance with the terms hereof, will
constitute the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, moratorium or similar law affecting
creditors' rights generally, or by general principles of equity. Neither the
Company nor any Subsidiaries are in violation of any of the provisions of its
respective certificate of incorporation or by-laws.
(c) CAPITALIZATION. The Company's authorized capital stock consists of
25,000,000 shares of Common Stock and 5,000,000 shares of Preferred Stock, of
which 16,078,172 shares of Common Stock and are issued and outstanding as of
September 30, 2000. There are 6,122,352 shares of Common Stock underlying the
Company's outstanding options and warrants as of September 30, 2000. The Company
owns all of the capital stock of the Subsidiaries. No securities of the Company
or the Subsidiaries are entitled to preemptive or similar rights, nor is any
holder of securities of the Company or the Subsidiaries entitled to preemptive
or similar rights arising out of any agreement or understanding with the Company
or the Subsidiaries by virtue of any of the Transaction Documents. The SEC
Reports accurately reflect the Company's outstanding warrants and options. To
the best knowledge of the Company, except as specifically disclosed in the SEC
Reports or Schedule 3.1(c), no Person or group of related Persons beneficially
owns (as determined pursuant to Rule 13d-3 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), or has the right to
acquire by agreement with or by obligation binding upon the Company, beneficial
ownership of in excess of 5% of the Common Stock.
(d) ISSUANCE OF THE SECURITIES. The Securities are duly authorized and, when
issued and paid for in accordance with the terms hereof, will be validly issued,
fully paid and nonassessable, free and clear of all liens, encumbrances and
rights of first refusal of any kind (collectively, "Liens"). The Company will
reserve 1,500,000 shares of Common Stock for issuance hereunder upon conversion
of the Convertible Note and upon exercise of the Callable Warrant and the Common
Warrant. The shares of Common Stock issueable upon conversion of the Convertible
Note and upon exercise of the Warrants, are referred to herein as the
"Underlying Common Shares."
(e) 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 the Subsidiaries' certificate of incorporation or
bylaws (each as amended through the date hereof), or (ii) subject to obtaining
the Required Approvals (as defined below), conflict with, or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of,
any agreement, credit facility, debt or other instrument (evidencing a Company
or Subsidiaries debt or otherwise) or other understanding to which the Company
or the Subsidiaries are a party or by which any property or asset of the Company
or the Subsidiaries are 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 the Subsidiaries
are subject (including federal
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and state securities laws and regulations), or by which any property or asset of
the Company or the Subsidiaries are bound or affected; except, in the case of
each of clauses (ii) and (iii), as could not, individually or in the aggregate,
have or result in a Material Adverse Effect. To the Company's knowledge, the
business of the Company is not being conducted in violation of any law,
ordinance or regulation of any governmental authority, except for violations
which, individually or in the aggregate, could not have or result in a Material
Adverse Effect.
(f) FILINGS, CONSENTS AND APPROVALS. Neither the Company nor the Subsidiaries
are 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 filings required pursuant to Section 4.10, (ii)
the filing with the Securities and Exchange Commission (the "Commission") of one
or more registration statements meeting the requirements set forth in the
Registration Rights Agreement and covering the resale of the Underlying Common
Shares by the Purchaser (the "Underlying Shares Registration Statement"), (iii)
the application(s), if any, to the Nasdaq or the Over-the-Counter Bulletin Board
for the listing or quotation of the Underlying Common Shares any securities
exchange, market or quotation service on which the Common Stock is then listed,
traded or quoted in the time and manner required thereby, (iv) applicable Blue
Sky filings, and (v) in all other cases where the failure to obtain such
consent, waiver, authorization or order, or to give such notice or make such
filing or registration could not have or result in, individually or in the
aggregate, a Material Adverse Effect (the items described in clauses (i)-(vi)
are collectively, the "Required Approvals").
(g) LITIGATION; PROCEEDINGS. Except as set forth on Schedule 3.1(g) and
specified in the SEC Reports, there is no action, suit, notice of violation,
proceeding or investigation pending or, to the knowledge of the Company,
threatened against or affecting the Company or the Subsidiaries or any of their
respective properties before or by any court, governmental or administrative
agency or regulatory authority (federal, state, county, local or foreign) which
(i) adversely affects or challenges the legality, validity or enforceability of
any of the Transaction Documents or the Securities or (ii) could, individually
or in the aggregate, have or result in a Material Adverse Effect.
(h) NO DEFAULT OR VIOLATION. Neither the Company nor the Subsidiaries (i) is in
default under or in violation of (and no event has occurred which has not been
waived which, with notice or lapse of time or both, would result in a default by
the Company or the Subsidiaries under), nor has the Company or the Subsidiaries
received notice of a claim that it is in default under or that it is in
violation of, any indenture, loan or credit agreement or any other agreement or
instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) is in
violation of any order of any court, arbitrator or governmental body, or (iii)
is in violation of any statute, rule or regulation of any governmental
authority, except as could not individually or in the aggregate, have or result
in a Material Adverse Effect.
(i) EXEMPTION FROM REGISTRATION. Assuming the accuracy of the representations
and warranties of the Purchaser set forth in Sections 3.2(b)-(g), the offer,
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issuance and sale of the Preferred Shares and the Warrants to the Purchaser as
contemplated hereby are exempt from the registration requirements of the
Securities Act of 1933, as amended (the "Securities Act").
(j) SEC REPORTS; FINANCIAL STATEMENTS. The Company has filed all reports
required to be filed by it under the Securities Act and the Exchange Act for the
lesser of one year preceding the date hereof or since the date its reporting
obligations arose (the foregoing materials being collectively referred to herein
as the "SEC Reports" and, together with the Schedules to this Agreement, the
"Disclosure Materials") on a timely basis. As of their respective dates, the SEC
Reports 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, 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. All material agreements to which the Company is a party or to which
the property or assets of the Company are subject (other than this Agreement and
the other Transaction Documents which will be filed as Exhibits to the
Underlying Shares Registration Statement) which are required by the SEC to be
filed have been filed as exhibits to the SEC Reports. 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 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, immaterial,
year-end audit adjustments. Except as specifically disclosed in the SEC Reports,
(a) there has been no event, occurrence or development that has or that could
reasonably be expected to result in a Material Adverse Effect, (b) the Company
has not incurred any liabilities (contingent or otherwise) other than (x)
liabilities incurred in the ordinary course of business consistent with past
practice and (y) 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, (c) the Company has not altered its method of
accounting or the accounting firm serving as its financial auditors and (d) the
Company has not declared or made any payment or distribution of cash or other
property to its stockholders or officers or directors (other than in compliance
with existing Company stock or stock option plans and existing agreements and
terms of employment) with respect to its capital stock, or purchased, redeemed
(or made any agreements to purchase or redeem) any shares of its capital stock.
(k) INVESTMENT COMPANY. The Company is not, and is not an Affiliate
(as defined in Rule 405 under the Securities Act) of, an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
(l) CERTAIN FEES. Except for fees paid to Xxxxx Xxxxxxx or any affiliate
thereof, or as otherwise disclosed by the Company to the Purchaser, nof fees or
commissions will be payable by the Company to any broker, financial advisor or
consultant, finder, placement
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agent, investment banker, bank or other person, with respect to the transactions
contemplated by this Agreement.
(m) FORM S-3 ELIGIBILITY. The Company is not expected to be eligible to register
the Underlying Common Shares for resale under Form S-3 promulgated under the
Securities Act.
(n) LISTING AND MAINTENANCE REQUIREMENTS. The Company has not, in the one year
preceding the date hereof received notice (written or oral) from the Nasdaq or
any other stock exchange, market or trading facility on which the Common Stock
is or has been listed (or on which it has been quoted) to the effect that the
Company is not in compliance with the listing or maintenance requirements of
such exchange, market or trading facility. 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.
(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 rights
(collectively, the "Intellectual Property Rights") which the Company believes
are necessary or material for use in connection with their respective businesses
as described in the SEC Reports and as currently conducted, and the failure to
have which could reasonably be expected to have a Material Adverse Effect.
Neither the Company nor the Subsidiaries have received a written notice that any
of the Intellectual Property Rights used by the Company or the Subsidiaries
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) REGULATORY PERMITS. The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses as described in the SEC Reports, except where the failure to possess
such permits could not, individually or in the aggregate, have or result in a
Material Adverse Effect ("Material Permits"), and neither the Company nor the
Subsidiaries have received any notice of proceedings relating to the revocation
or modification of any Material Permit.
(q) TITLE. Neither the Company nor the Subsidiaries own any real property.
Except as set forth in Schedule 3.1(q), the Company and the Subsidiaries have
good and marketable title to all personal property owned by them which is
material to the business of the Company and the Subsidiaries, in each case free
and clear of all Liens, except for Liens that do not materially affect the value
of such property and do not materially interfere with the use of such property
by the Company or the Subsidiaries. Any real property and facilities held under
lease by the Company and the Subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not material and
do not materially interfere with the use of such property and buildings by the
Company and the Subsidiaries.
(r) DISCLOSURE. The Company confirms that it has not provided the Purchaser or
their agents or counsel with any information that constitutes or might
constitute material non-public information. This Agreement, including the
Schedules to this Agreement, are true and
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correct and do not contain any untrue statement of a material fact or omit to
state any 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.
3.2. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
hereby makes the following representations and warranties to the Company as of
the Closing Date:
(a) ORGANIZATION; AUTHORITY. The Purchaser is an entity duly organized, validly
existing and in good standing under the laws of the Province of Ontario, Canada
and have the requisite corporate power and authority to enter into and to
consummate the transactions contemplated by the Transaction Documents and
otherwise to carry out its obligations thereunder. The purchase of the
Securities hereunder has been duly authorized by all necessary action on the
part of the Purchaser. Each of this Agreement and the Registration Rights
Agreement has been duly executed, and when delivered by the Purchaser in
accordance with the terms hereof, will constitute the valid and legally binding
obligation of the Purchaser, enforceable against it in accordance with its
terms, except as such enforcement may be limited by bankruptcy, insolvency,
moratorium or similar law affecting creditors' rights generally, or by general
principles of equity.
(b) INVESTMENT INTENT. The Purchaser is acquiring the Securities as principal
for its own account for investment purposes only and not with a view to or for
distributing or reselling the Securities or any part thereof. It has no present
intention of selling or granting any participation in, or otherwise distributing
the Securities. It is not party to any agreement or arrangement with any person
to distribute any of the Securities.
(c) PURCHASER STATUS. At the time the Purchaser was offered the Securi-
ties, it was, and at the date hereof it is, an "Accredited Investor" as defined
in Rule 501(a) under the Securities Act. The Purchaser has not been formed
solely for the purpose of acquiring the Securities.
(d) EXPERIENCE OF SUCH PURCHASER. The 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.
(e) ABILITY OF SUCH PURCHASER TO BEAR RISK OF INVESTMENT. The 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.
(f) ACCESS TO INFORMATION. The Purchaser acknowledges that it has reviewed the
Disclosure Materials and has been afforded (i) the opportunity to ask such
questions as it has deemed necessary of, and to receive answers from,
representatives of the Company concerning the terms and conditions of the
offering of the Securities and the merits and risks of investing in the
Securities; (ii) access to information about the Company and the Company's
financial condition, results of operations, business, properties, management and
prospects sufficient to enable it to evaluate its investment; and (iii) the
opportunity to obtain such additional information which the Company possesses or
can acquire without unreasonable effort or expense
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that is necessary to make an informed investment decision with respect to the
investment. Neither such inquiries nor any other investigation conducted by or
on behalf of the Purchaser or its representatives or counsel shall modify, amend
or affect the Purchaser's right to rely on the truth, accuracy and completeness
of the Disclosure Materials and the Company's representations and warranties
contained in the Transaction Documents.
(g) GENERAL SOLICITATION. The Purchaser is not purchasing the Securities as a
result of or subsequent to any advertisement, article, notice or other
communication regarding the Securities published in any newspaper, magazine,
website or similar media or broadcast over television or radio or presented at
any seminar or any other general solicitation or general advertisement.
(h) RELIANCE. The Purchaser understands and acknowledges that (i) the Preferred
Shares and Warrants are being offered and sold to it without registration under
the Securities Act in a private placement that is exempt from the registration
provisions of the Securities Act and (ii) the availability of such exemption,
depends in part on, and the Company will rely upon the accuracy and truthfulness
of, the foregoing representations of the Purchaser and the Purchaser hereby
consents to such reliance.
(i) CERTAIN FEES. The Purchaser has not engaged or contracted with, and owes no
fees or commissions to, any broker, financial advisor or consultant, finder,
placement agent, investment banker, bank or other person, with respect to the
transactions contemplated by this Agreement.
4. ADDITIONAL AGREEMENTS.
4.1. NO OTHER REPRESENTATIONS. The Company acknowledges and agrees that
the Purchaser does not make or has not made any representations or warranties
with respect to the transactions contemplated hereby other than those
specifically set forth in Section 3.2.
4.2. TRANSFER RESTRICTIONS.
(a) The Securities may only be disposed of pursuant to an
effective registration statement under the Securities Act, to the Company or
pursuant to an available exemption from or in a transaction not subject to the
registration requirements of the Securities Act, and in compliance with any
applicable federal and state securities laws. In connection with any transfer of
Securities other than pursuant to an effective registration statement or to the
Company, except as otherwise set forth herein, the Company may require the
transferor thereof to provide to the Company an opinion of counsel selected by
the transferor and reasonably acceptable to the Company, the form and substance
of which opinion shall be reasonably satisfactory to the Company, to the effect
that such transfer does not require registration under the Securities Act.
Notwithstanding the foregoing, the Company, without requiring a legal opinion as
described in the immediately preceding sentence, hereby consents to and agrees
to register on the books of the Company and with any transfer agent for the
securities of the Company any transfer of Securities by a Purchaser to an
Affiliate of such Purchaser or to one or more funds or managed accounts under
common management with such Purchaser, and any transfer among any such
Affiliates or one or more funds or managed accounts, provided (i) that
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the transferee certifies to the Company that it is an "accredited investor"
within the meaning of Rule 501(a) under the Securities Act, (ii) that it is
acquiring the Securities solely for investment purposes (subject to the
qualifications hereof), and (iii) that any such transferee shall agree in
writing to be bound by the terms of this Agreement and shall have the rights and
obligations of the Purchaser under this Agreement and the Registration Rights
Agreement.
(b) The Purchaser understands and agrees that the certificates
for the Preferred Shares and the Underlying Common Shares shall bear the
following legend, or a similar legend to the same effect, until (i) such
Underlying Common Shares shall have been registered under the Securities Act and
for the Underlying Common Shares effectively been disposed of in accordance with
a registration statement that has been declared effective; or (ii) in the
opinion of counsel for the Company such Underlying Common Shares be may sold
without registration under the Securities Act or any applicable "Blue Sky" or
state securities laws:
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE [CONVERTIBLE] [EXERCISABLE] HAVE BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), AND, 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.
The Company may not make any notation on its records or give instructions to any
transfer agent of the Company which enlarge the restrictions of transfer set
forth in this Section. The Purchaser will comply with the prospectus delivery
requirements of the Securities Act as applicable to it in connection with sales
of Registrable Securities (as defined in the Registration Rights Agreement)
pursuant to an Underlying Shares Registration Statement.
4.3. ACKNOWLEDGMENT OF DILUTION. The Company acknowledges that the issuance of
the Underlying Common Shares will result in dilution of the outstanding shares
of Common Stock, which dilution may be substantial under certain market
conditions. The Company further acknowledges that its obligation to issue
Underlying Common Shares is unconditional and absolute, subject to the
limitations set forth herein in the Certificate or pursuant to the Warrants,
regardless of the effect of any such dilution.
4.4. FURNISHING OF INFORMATION. As long as the Purchaser owns any Securities,
the Company covenants to file timely (or obtain extensions in respect thereof
and file within the applicable extension period) all reports required to be
filed by the Company after the date hereof
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pursuant to the Exchange Act. So long as the Purchaser owns any Securities, if
the Company is not required to file reports pursuant to such laws, it will
prepare and furnish to the Purchaser and make publicly available in accordance
with Rule 144(c) promulgated under the Securities Act such information as is
required for the Purchaser to sell the Securities under Rule 144 promulgated
under the Securities Act. The Company further covenants that it will take such
further action as any holder of Securities may reasonably request, all to the
extent required from time to time to enable such Person to sell Underlying
Common Shares without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144 promulgated under the
Securities Act, including the legal opinion referenced above in this Section.
Upon the request of any such Person, the Company shall deliver to such Person a
written certification of a duly authorized officer as to whether it has complied
with such requirements.
4.5. INTEGRATION. The Company shall not, and shall use its best efforts to
ensure that, no Affiliate shall, sell, offer for sale or solicit offers to buy
or otherwise negotiate in respect of any security (as defined in Section 3 of
the Securities Act) that would be integrated with the offer or sale of the
Securities in a manner that would require the registration under the Securities
Act of the sale of the Preferred Shares and the Warrants to the Purchaser or
that would be integrated with the offer or sale of the Preferred Shares and the
Warrants for purposes of the rules and regulations of the American Stock
Exchange.
4.6. INCREASE IN AUTHORIZED SHARES. If on any date the Company would be, if a
notice of conversion or exercise (as the case may be) were to be delivered on
such date, precluded from issuing the number of Underlying Common Shares as
would then be issuable upon a conversion in full of the Convertible Note,
Callable Warrant and Common Warrant (the "Required Minimum") due to the
unavailability of a sufficient number of authorized but unissued or reserved
Common Stock, then the Board of Directors of the Company shall, subject to any
required SEC approval, promptly (and in any case, within sixty (60) Business
Days from such date) prepare and mail to the stockholders of the Company proxy
materials requesting authorization to amend the Company's certificate of
incorporation to increase the number of shares of Common Stock which the Company
is authorized to issue to at least such number of shares as is reasonably
adequate to enable the Company to comply with its issuance, conversion, exercise
and reservation of shares obligations as set forth in this Agreement, the
Certificate and the Warrants. In connection therewith, the Company shall cause
its Board of Directors to (a) adopt proper resolutions authorizing such
increase, (b) recommend to and otherwise use its best efforts to promptly and
duly obtain stockholder approval to carry out such resolutions (and hold a
special meeting of the stockholders no later than the earlier to occur of the
sixtieth (60th) day after delivery of the proxy materials relating to such
meeting and the ninetieth (90th) day after request by a holder of Securities to
issue the number of Underlying Common Shares in accordance with the terms
hereof) and (c) within five (5) Business Days of obtaining such stockholder
authorization and compliance with any applicable SEC rules, file an appropriate
amendment to the Company's certificate of incorporation to evidence such
increase.
4.7. RESERVATION AND LISTING OF UNDERLYING COMMON SHARES.
(a) The Company shall (i) in the time and manner required, if
so required, by Nasdaq and such other national securities exchange or market or
trading or quotation facility on
-10-
which the Common Stock is then listed for trading, prepare and file with Nasdaq
(and such other national securities exchange or market or trading or quotation
facility on which the Common Stock is then listed for trading) an additional
shares listing application covering a number of shares of Common Stock which is
not less than the Required Minimum as of the Closing Date, (ii) take all steps
necessary to cause such shares of Common Stock to be approved for listing in the
Nasdaq Bulletin Board (as well as on any such other national securities exchange
or market or trading or quotation facility on which the Common Stock is then
listed) as soon as possible thereafter, and (iii) provide to the Purchaser
evidence of such listing or quotation, to the extent applicable, and the Company
shall, to the extent it is subject to a listing agreement, maintain the listing
of its Common Stock thereon.
(b) The Company shall maintain a reserve of shares of Common
Stock for issuance upon conversion in full of the Convertible Note and exercise
in full of the Callable Warrant and Common Warrant in accordance with this
Agreement, the Certificate and the Warrants, respectively, in such amount as may
be required to fulfill its obligations in full under the Transaction Documents.
4.8. CONVERSION AND EXERCISE PROCEDURES. The Notice of Exercise under the
Convertible Note and the Warrants set forth the totality of the procedures with
respect to the conversion of the Convertible Note and exercise of the Warrants,
including the information and instructions as may be reasonably necessary to
enable the Purchaser to convert the Convertible Note and exercise its Warrants
as contemplated in the Convertible Note and the Warrants (as applicable).
4.9. NOTICE OF BREACHES. Each of the Company and the Purchaser shall give prompt
written notice to the other of any breach by it of any representation, warranty
or other agreement contained in any Transaction Document, as well as any events
or occurrences arising after the date hereof which would reasonably be likely to
cause any representation or warranty or other agreement of such party, as the
case may be, contained therein to be incorrect or breached as of the Closing
Date. However, no disclosure by a party pursuant to this Section shall be deemed
to cure any breach of any representation, warranty or other agreement contained
in any Transaction Document.
4.10. CERTAIN SECURITIES LAWS ISSUES; PUBLICITY.
The Company shall: (i) on or immediately following the Closing
Date, issue a press release reasonably acceptable to the Purchaser disclosing
the transactions contemplated hereby, (ii) file with the Commission a Report on
Form 8-K or Form 10-Q (as applicable) disclosing the transactions contemplated
hereby within the required time periods therefor, and (iii) timely file with the
Commission a Form D promulgated under the Securities Act as required under
Regulation D promulgated under the Securities Act and provide a copy thereof to
the Purchaser promptly after the filing thereof. The Company shall, no less than
two (2) Business Days prior to the filing of any disclosure required by clauses
(ii) and (iii) above, provide a copy thereof to the Purchaser. The Company and
the Purchaser shall consult with each other in issuing any press releases or
otherwise making public statements or filings and other communications with the
Commission or any regulatory agency or stock market or trading facility with
respect to
-11-
the transactions contemplated hereby and neither party shall issue any such
press release or otherwise make any such public statement, filings or other
communications pertaining to the transactions contemplated hereby without the
prior written consent of the other, which consent shall not be unreasonably
withheld or delayed, except that no prior consent shall be required if such
disclosure is required by law or such consent can not reasonably be expected to
be received prior to the time required to complete such filing or make such
statement in accordance with such applicable law, in which such case the
disclosing party shall provide the other party with prior notice of such public
statement, filing or other communication. Notwithstanding the foregoing, the
Company shall not publicly disclose the name of the Purchaser, or include the
name of the Purchaser in any filing with the Commission, or any regulatory
agency, trading facility or stock market without the prior written consent of
the Purchaser, except to the extent such disclosure is required by law, in which
case the Company shall provide the Purchaser with a copy of such disclosure. A
party shall be deemed to have consented or given a written consent hereunder if
such party fails to give its consent, orally or in writing where so required,
within two (2) business days of receipt of the request for consent.
4.11. TRANSFER OF INTELLECTUAL PROPERTY RIGHTS. Except in connection with the
sale of all or substantially all of the assets of the Company, and except as set
forth in Section 4.16, the Company shall not sell or otherwise dispose of any
Intellectual Property Rights or allow any of the Intellectual Property Rights to
become subject to any Liens, without the prior written consent of the Purchaser.
Notwithstanding the foregoing, the Company may alienate, hypothecate, encumber
and license the right to promote and use its Intellectual Property Rights in the
ordinary course of its business without the prior consent of the Purchaser.
4.12. USE OF PROCEEDS. The Company shall use the net proceeds from the
sale of Securities hereunder for working capital purposes.
4.13. REIMBURSEMENT. If the Purchaser, other than by reason of its gross
negligence or willful misconduct, becomes involved in any capacity in any
action, proceeding or investigation brought by or against any Person, including
stockholders of the Company, in connection with or as a result of the
consummation of the transactions contemplated by Transaction Documents, the
Company will reimburse the Purchaser for its reasonable legal and other expenses
(including the cost of any investigation and preparation and travel in
connection therewith) incurred in connection therewith, as such expenses are
incurred. In addition, other than with respect to any matter in which any of the
Purchaser is a named party, the Company will pay the Purchaser the charges, as
reasonably determined by the Purchaser, for the time of any officers or
employees of such Purchaser devoted to appearing and preparing to appear as
witnesses, assisting in preparation for hearings, trials or pretrial matters, or
otherwise with respect to inquiries, hearings, trials, and other proceedings
relating to the subject matter of this Agreement. The reimbursement obligations
of the Company under this paragraph shall be in addition to any liability which
the Company may otherwise have, shall extend upon the same terms and conditions
to any Affiliates of the Purchaser who are actually named in such action,
proceeding or investigation, and partners, directors, agents, employees and
controlling persons (if any), as the case may be, of the Purchaser and any such
Affiliate, and shall be binding upon and inure to the benefit of any successors,
assigns, heirs and personal representatives of the Company, the Purchaser and
any such Affiliate and any such Person. The Company also agrees that neither the
-12-
Purchaser nor any such Affiliates, partners, directors, agents, employees or
controlling persons shall have any liability to the Company or any Person
asserting claims on behalf of or in right of the Company in connection with or
as a result of the consummation of the Transaction Documents except to the
extent that any losses, claims, damages, liabilities or expenses incurred by the
Company result from the gross negligence or willful misconduct of the Purchaser
or entity in connection with the transactions contemplated by this Agreement.
4.14. STOCKHOLDERS RIGHTS PLAN. In the event that a stockholders rights plan is
adopted by the Company, no claim will be made or enforced by the Company or any
other Person that the Purchaser is an "Acquiring Person" under any such plan or
in any way could be deemed to trigger the provisions of such plan by virtue of
receiving Underlying Common Shares under the Transaction Documents.
4.15. FEES. The Purchaser shall have no obligation with respect to any fees or
with respect to any claims made by or on behalf of other Persons for fees or
commissions to any broker, financial advisor or consultant, finder, placement
agent, investment banker or bank that may be due in connection with the
transactions contemplated by this Agreement. The Company shall indemnify and
hold harmless the Purchaser, its employees, officers, directors, agents, and
partners, and its respective Affiliates, from and against all claims, losses,
damages, costs (including the costs of preparation and attorney's fees) and
expenses suffered in respect of any such claimed or existing fees, as such fees
and expenses are incurred.
4.16. ADDITIONAL SECURITY INTERESTS.
The Company covenants that it will not create, incur, assume
or permit any mortgage, pledge, lien, security interest or other preferential
arrangement, charge or encumbrance of any nature upon or with respect to the
assets of the Company or the Subsidiaries, except for asset secured instruments
such as operating lines of credit secured by receivables and inventory or senior
term debt secured by the Company's assets and all security interests and other
liens granted pursuant to any lease financing arrangements undertaken by the
Company in the ordinary course of business.
4.17. REGISTRATION RIGHTS AGREEMENT. The Company shall perform all of its
obligations under the Registration Rights Agreement in a timely fashion.
5. CONDITIONS TO CLOSING.
5.1. CONDITIONS TO PURCHASER'S OBLIGATIONS AT THE CLOSINGS. The obligation of
the Purchaser to consummate the transactions contemplated herein to be
consummated on the Closing Date is subject to the satisfaction, on or prior to
the Closing Date of the conditions set forth below and applicable thereto, any
of which may be waived in writing by the Purchaser:
(a) REPRESENTATIONS AND WARRANTIES TRUE; PERFORMANCE OF OBLIGATIONS. Each of the
representations and warranties of the Company contained herein shall be true and
correct, in all material respects, on and as of the Closing Date. The Company
shall have performed and complied, in all material respects, with the covenants
and provisions of this Agreement required to be performed or complied with by it
at or prior to the Closing Date.
-13-
(b) LEGAL INVESTMENT. On the Closing Date, the sale and issuance of the
Convertible Note, the Warrants and the proposed issuance of the Underlying
Common Shares shall be legally permitted by all laws and regulations to which
Purchaser and the Company are subject.
(c) CORPORATE DOCUMENTS. The Company shall have delivered to Purchaser
or its counsel, copies of all corporate documents of the Company as Purchaser
shall reasonably request.
(d) RESERVATION OF UNDERLYING COMMON SHARES. The Underlying Common Shares
issuable upon conversion of the Convertible Note and the exercise of the
Warrants shall have been duly authorized and reserved for issuance.
(e) PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in connection
with the transactions contemplated at the Closings and all documents and
instruments incident to such transactions shall be reasonably satisfactory in
substance and form to the Purchaser and its counsel, and the Purchaser and its
counsel shall have received all such counterpart originals or certified or other
copies of such documents as they may reasonably request.
(f) DELIVERY OF DOCUMENTS AT THE CLOSING. The Company shall have executed and
delivered to the Purchaser the following documents on or prior to the Closing
Date each of which shall be in a form satisfactory to the Purchaser:
(i) the Registration Rights Agreement;
(ii) the Convertible Note;
(iii) the Callable Warrant;
(iv) the Common Warrant;
(v) SECRETARY'S CERTIFICATE. A Certificate of the Secretary of the Company
attaching (A) the Certificate of Incorporation of the Company in effect at the
Closing, (B) the Bylaws of the Company in effect at the Closing, (C) copies of
resolutions by the Board of Directors authorizing and approving this Agreement,
the issuance and delivery of the Convertible Note and the Warrants; and (D)
certifying as to the incumbency of the officers entering into this Agreement,
the Related Agreements and any other documents contemplated by this Agreement;
(vi) ADDITIONAL DOCUMENTS. The other agreements, instruments and docu-
ments referred to in this Article 5 hereof and such other agreements,
instruments and documents as the Purchaser or its counsel, including an opinion
of the Company's counsel, may reasonably request;
5.2. CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligation of the Company to
consummate the transactions contemplated herein to be on the Closing Date is
subject to the
-14-
satisfaction, on or prior to the Closing Date, of the conditions set forth below
and expressly applicable thereto, any of which may be waived in writing by the
Company:
(a) REPRESENTATIONS AND WARRANTIES TRUE. Each of the representations and
warranties of the Purchaser contained herein shall be true and correct on and as
of the Closing Date. The Purchaser shall have performed and complied with the
covenants and provisions of this Agreement required to be performed or complied
with by it at or prior to the Closing Date.
(b) DELIVERIES BY PURCHASER TO THE COMPANY AT THE CLOSING. At the Clos-
ing, Purchaser shall deliver, or cause to be delivered, to the Company the
following:
(i) an executed Registration Rights Agreement;
(ii) PURCHASE PRICE. Immediately available funds in the aggregate amount
of Four Hundred Fifty Thousand Dollars ($450,000) by wire transfer as provided
in Section 1.1 hereof;
(iii) ADDITIONAL DOCUMENTS. The other agreements, instruments and documents
referred to in this Section 5.2 and such other agreements, instruments and
documents as the Company or its counsel may reasonably request.
6. MISCELLANEOUS.
6.1. FEES AND EXPENSES. Except as otherwise set forth in the Registration Rights
Agreement, each party shall pay the fees and expenses of its advisers, counsel,
accountants and other experts, if any, and all other expenses incurred by such
party incident to the negotiation, preparation, execution, delivery and
performance of this Agreement, except that the Company shall pay Purchaser's
legal expenses incurred with respect to the transactions contemplated herein in
an amount equal to Seven Thousand Four Hundred and Ninety ($7,490.00) Dollars.
The Company shall pay all stamp and other taxes and duties levied in connection
with the issuance of the Securities.
6.2. ENTIRE AGREEMENT; AMENDMENTS. 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.
6.3. NOTICES. Any and all notices or other communications or deliveries required
or permitted to be provided hereunder shall be in writing and shall be deemed
given and effective on the earliest of (i) the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile telephone
number specified in this Section prior to 2:00 p.m. (Pacific Standard Time) on a
Business Day, (ii) the Business Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile telephone
number specified in this Agreement later than 2:00 p.m. (Pacific Standard Time)
on any date and earlier than 11:59 p.m. (Pacific Standard Time) on such date,
(iii) the Business Day following the date of mailing, if sent by nationally
recognized overnight courier service, or (iv) if sent other than by the
-15-
methods set forth in (i)-(iii) of this Section 4.3, upon actual receipt by the
party to whom such notice is required to be given. The address for such notices
and communications shall be as follows:
If to the Company: Accesspoint Corporation
00 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx
00000
X.X.X.
With copies to: Floratos, Loll & Xxxxxx
00000 Xxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
If to the Purchaser: RoyCap, Inc.
0000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx X0X 0X0
Attn: Xxxxxx Xxxxx
Tel: (000)-000-0000
Fax: (000) 000-0000
With copies to: Fogler, Xxxxxxxx, XXX
Xxxxx 0000 Xxxxx Xxxxx Xxxxx
Xxxxxxx Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Attn: Xxxxxxx Xxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
or such other address as may be designated in writing hereafter, in the same
manner, by such Person.
6.4. AMENDMENTS; WAIVERS. No provision of this Agreement may be waived or
amended except in a written instrument signed, in the case of an amendment, by
both the Company and the Purchaser or, in the case of a waiver, by the party
against whom enforcement of any such waiver is sought. No waiver of any default
with respect to any provision, condition or requirement of this Agreement shall
be deemed to be a continuing waiver in the future or a waiver of any 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 accruing to it thereafter.
6.5. HEADINGS. The headings herein are for convenience only, do not con-
stitute a part of this Agreement and shall not be deemed to limit or affect any
of the provisions hereof.
-16-
6.6. 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 Purchaser. Except as set forth in
Section 4.2(a), the Purchaser may not assign this Agreement or any of the rights
or obligations hereunder without the consent of the Company.
6.7. NO THIRD-PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.
6.8. GOVERNING LAW; JURISDICTION. This Agreement shall be governed in all
respects by the laws of the State of California without regard to the conflicts
of laws principles of any jurisdiction. The Company and the Purchaser hereby
irrevocably submit to the exclusive jurisdiction of the state and federal courts
sitting in the county of Orange, State of California, the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein, and hereby irrevocably waive, and agree not to
assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, or that such suit, action or
proceeding is improper. Each of the Company and the Purchaser hereby irrevocably
waives personal service of process and consents to the process being served in
any such suit, action or proceeding by receiving a copy thereof sent to the
Company at the address in effect for notices to it under this instrument 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.
6.9. SURVIVAL. The truth and accuracy as of the Closing Date of the repre-
sentations, warranties, agreements and covenants contained herein shall survive
for a period of two (2) years after the Closing Date. The Company shall have no
duty to update the representations, warranties, agreements or covenants
contained herein.
6.10. EXECUTION. This Agreement may be executed in two or more counterparts, all
of which when taken together shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
6.11. SEVERABILITY. In case any one or more of the provisions of this Agreement
shall 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 which shall be a reasonable substitute
therefor, and upon so agreeing, shall incorporate such substitute provision in
this Agreement.
6.12. REMEDIES. In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages the Purchaser will be
entitled to specific
-17-
performance of the obligations of the Company under the Transaction Documents.
Each of the Company and the Purchaser agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of its
obligations described in the foregoing sentence and hereby agrees to waive in
any action for specific performance of any such obligation the defense that a
remedy at law would be adequate.
IN WITNESS WHEREOF, the parties hereto have caused this
Securities Purchase Agreement to be duly executed by their respective authorized
signatories dated as of the date first indicated above.
ACCESSPOINT CORPORATION
By: /s/ XXX X. XXXXXXXXX
-------------------------------------------
Name: Xxx X. Xxxxxxxxx
Title: Chief Executive Officer
ROYCAP INC.
By: /s/ XXXXX XXXXX
------------------------------------------
Xxxxx Xxxxx,
President
-18-
SCHEDULE 3.1(G)
LITIGATION; PROCEEDINGS
TASQ TECHNOLOGY, INC., A CALIFORNIA CORPORATION V. PROCESSING SOURCE INTERNA-
TIONAL, INC., A CALIFORNIA CORPORATION; XXXXXX XXXXXX; AND DOES ONE THROUGH TEN,
INCLUSIVE Filed June 16, 0000, Xxxxxxxx Xxxxx xx Xxxxxxxxxx, Xxxxxx of Placer,
as case number SCV10185.
-19-
SCHEDULE 3.1(Q)
TITLE
EXHIBIT A
CERTIFICATE OF INCORPORATION
EXHIBIT B
CONVERTIBLE NOTE
EXHIBIT C
CALLABLE WARRANT
EXHIBIT D
CALLABLE WARRANT
SECURITIES PURCHASE AGREEMENT
BY AND BETWEEN
ACCESSPOINT CORPORATION
AND
ROYCAP INC.
DATED
OCTOBER ___, 2000
TABLE OF CONTENTS
PAGE
1. SALE AND PURCHASE.....................................................1
1.1. SALE AND PURCHASE..................................................1
---- -----------------
1.2. CERTAIN TERMS......................................................1
---- -------------
2. CLOSING, DELIVERY AND PAYMENT.........................................2
2.1. CLOSING............................................................2
---- -------
2.2. DELIVERY; PAYMENT..................................................2
---- -----------------
3. REPRESENTATIONS AND WARRANTIES........................................2
3.1. Representations and Warranties of the Company......................2
(A) ORGANIZATION AND QUALIFICATION..................................2
--- ------------------------------
(B) AUTHORIZATION; ENFORCEMENT......................................2
--- --------------------------
(C) CAPITALIZATION..................................................3
--- --------------
(D) ISSUANCE OF THE SECURITIES......................................3
--- --------------------------
(E) NO CONFLICTS....................................................3
--- ------------
(F) FILINGS, CONSENTS AND APPROVALS.................................4
--- -------------------------------
(G) LITIGATION; PROCEEDINGS.........................................4
--- -----------------------
(H) NO DEFAULT OR VIOLATION.........................................4
--- -----------------------
(I) EXEMPTION FROM REGISTRATION.....................................4
--- ---------------------------
(J) SEC REPORTS; FINANCIAL STATEMENTS...............................5
--- ---------------------------------
(K) INVESTMENT COMPANY..............................................5
--- ------------------
(L) CERTAIN FEES. Except for fees paid to Xxxxx Xxxxxxx or any
affiliate thereof, or as otherwise
--- ------------
disclosed by the Company to the Purchaser, n..........................5
(M) FORM S-3 ELIGIBILITY............................................6
--- --------------------
(N) LISTING AND MAINTENANCE REQUIREMENTS............................6
--- ------------------------------------
(O) PATENTS AND TRADEMARKS..........................................6
--- ----------------------
(P) REGULATORY PERMITS..............................................6
--- ------------------
(Q) TITLE...........................................................6
--- -----
(R) DISCLOSURE......................................................6
--- ----------
3.2. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER....................7
---- -----------------------------------------------
(A) ORGANIZATION; AUTHORITY.........................................7
--- -----------------------
(B) INVESTMENT INTENT...............................................7
--- -----------------
(C) PURCHASER STATUS................................................7
--- ----------------
(D) EXPERIENCE OF SUCH PURCHASER....................................7
--- ----------------------------
(E) ABILITY OF SUCH PURCHASER TO BEAR RISK OF INVESTMENT............7
--- ----------------------------------------------------
(F) ACCESS TO INFORMATION...........................................7
--- ---------------------
(G) GENERAL SOLICITATION............................................8
--- --------------------
(H) RELIANCE........................................................8
--- --------
(I) CERTAIN FEES....................................................8
--- ------------
4. ADDITIONAL AGREEMENTS.................................................8
4.1. NO OTHER REPRESENTATIONS. The Company acknowledges and agrees that
the Purchaser does not make or has
---- ------------------------
not made any representations or warranties with respect to the trans-
actions contemplated hereby other that those specifically set forth in
Section 3.2..............................................................8
4.2. TRANSFER RESTRICTIONS...............................................8
---- ---------------------
-i-
4.3. ACKNOWLEDGMENT OF DILUTION..........................................9
---- --------------------------
4.4. FURNISHING OF INFORMATION...........................................9
---- -------------------------
4.5. INTEGRATION........................................................10
---- -----------
4.6. INCREASE IN AUTHORIZED SHARES......................................10
---- -----------------------------
4.7. RESERVATION AND LISTING OF UNDERLYING COMMON SHARES................10
---- ---------------------------------------------------
4.8. CONVERSION AND EXERCISE PROCEDURES.................................11
---- ----------------------------------
4.9. NOTICE OF BREACHES.................................................11
---- ------------------
4.10. CERTAIN SECURITIES LAWS ISSUES; PUBLICITY.......................11
----- -----------------------------------------
4.11. TRANSFER OF INTELLECTUAL PROPERTY RIGHTS........................12
----- ----------------------------------------
4.12. USE OF PROCEEDS.................................................12
----- ---------------
4.13. REIMBURSEMENT...................................................12
----- -------------
4.14. STOCKHOLDERS RIGHTS PLAN........................................13
----- ------------------------
4.15. FEES............................................................13
----- ----
4.16. ADDITIONAL SECURITY INTERESTS...................................13
----- -----------------------------
4.17. REGISTRATION RIGHTS AGREEMENT. The Company shall perform all
of its obligations under the
----- -----------------------------
Registration Rights Agreement in a timely fashion........................13
5. CONDITIONS TO CLOSING.................................................13
5.1. CONDITIONS TO PURCHASER'S OBLIGATIONS AT THE CLOSINGS..............13
---- -----------------------------------------------------
(A) REPRESENTATIONS AND WARRANTIES TRUE; PERFORMANCE OF OBLIGATIONS.13
--- ---------------------------------------------------------------
(B) LEGAL INVESTMENT................................................14
--- ----------------
(C) CORPORATE DOCUMENTS.............................................14
--- -------------------
(D) RESERVATION OF UNDERLYING COMMON SHARES.........................14
--- ---------------------------------------
(E) PROCEEDINGS AND DOCUMENTS.......................................14
--- -------------------------
(F) DELIVERY OF DOCUMENTS AT THE CLOSING............................14
--- ------------------------------------
5.2. CONDITIONS TO OBLIGATIONS OF THE COMPANY...........................14
---- ----------------------------------------
(A) REPRESENTATIONS AND WARRANTIES TRUE.............................15
--- -----------------------------------
(B) DELIVERIES BY PURCHASER TO THE COMPANY AT THE CLOSING...........15
--- -----------------------------------------------------
6. MISCELLANEOUS.........................................................15
6.1. FEES AND EXPENSES..................................................15
---- -----------------
6.2. ENTIRE AGREEMENT; AMENDMENTS.......................................15
---- ----------------------------
6.3. NOTICES............................................................15
---- -------
6.4. AMENDMENTS; WAIVERS................................................16
---- -------------------
6.5. HEADINGS...........................................................16
---- --------
6.6. SUCCESSORS AND ASSIGNS.............................................17
---- ----------------------
6.7. NO THIRD-PARTY BENEFICIARIES.......................................17
---- ----------------------------
6.8. GOVERNING LAW; JURISDICTION........................................17
---- ---------------------------
6.9. SURVIVAL...........................................................17
---- --------
6.10. EXECUTION.......................................................17
----- ---------
6.11. SEVERABILITY....................................................17
----- ------------
6.12. REMEDIES........................................................17
----- --------
-ii-
