SECURITIES PURCHASE AND REGISTRATION AGREEMENT
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This SECURITIES PURCHASE AND REGISTRATION AGREEMENT (this "AGREEMENT"),
dated as of March 2, 2004, by and among xxxxxxxx.xxx, inc, a corporation
organized under the laws of the State of Delaware (the "COMPANY"), and the
purchasers (the "PURCHASERS") set forth on the execution pages hereof (the
"EXECUTION PAGES").
WHEREAS:
A. The Company and each Purchaser are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by the provisions of Regulation D ("REGULATION D"), as promulgated by the United
States Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "SECURITIES ACT").
B. Each Purchaser desires to purchase, severally and not jointly,
subject to the terms and conditions stated in this Agreement, certain securities
("UNITS") consisting of one hundred (100) shares of the Company's common stock,
$.001 par value (the "COMMON STOCK") and a warrant to acquire fifty (50) shares
of such Common Stock (the "WARRANT"), all as more particularly described herein.
C. The Company has agreed to provide certain registration rights under
the Securities Act and the rules and regulations promulgated thereunder, and
applicable state securities laws.
NOW, THEREFORE, the Company and the Purchasers hereby agree as follows:
1. CERTAIN DEFINITIONS.
For purposes of this Agreement, the following terms shall have the
meanings ascribed to them as provided below:
"BUSINESS DAY" shall be each Monday, Tuesday, Wednesday, Thursday and
Friday that is not a day on which the banking institutions in the State of
California are authorized or obligated by law or executive order to close or be
closed.
"INVESTMENT AMOUNT" shall mean the dollar amount to be invested in the
Company at the Closing pursuant to this Agreement by a Purchaser, as set forth
on the Execution Page hereto executed by such Purchaser.
"LATE FEE SHARES" shall mean any shares of Common Stock issued pursuant
to Section 5.b. hereof.
"MATERIAL ADVERSE EFFECT" shall mean any material adverse effect on (i)
the Shares, (ii) the ability of the Company to perform its obligations hereunder
(including the issuance of the Shares) or (iii) the business, operations,
properties or financial condition of the Company and its subsidiaries, taken as
a whole.
"PLACEMENT AGENT" shall mean Xxxxxxx Capital, Inc.
"PROSPECTUS" shall mean the prospectus included in a Resale
Registration Statement, as amended or supplemented by any prospectus supplement
and by all other amendments thereto, including post-effective amendments, and
all material incorporated by reference into such prospectus.
"PURCHASE PRICE" shall be $85.00 per Unit.
"REGISTRABLE SECURITIES" shall mean each of the shares of Common Stock
(including the Underlying Shares and any Late Fee Shares) issued or issuable
pursuant to this Agreement or as a result of any stock split, stock dividend,
recapitalization exchange or similar event without regard to any limitations on
conversions or exercises, until the earlier of:
(i) the date on which such share has been effectively registered under the
Securities Act and disposed of in accordance with the Resale Registration
Statement;
(ii) the date on which such share is transferred in compliance with Rule 144
under the Securities Act or may be sold or transferred by a person who is not an
affiliate of the Company pursuant to Rule 144(k) under the Securities Act (or
any other similar provision then in force); or
(iii) the date on which such share ceases to be outstanding (whether as a result
of redemption, repurchase and cancellation or otherwise).
"SECURITIES" means the Units, the Shares, the Warrants and the
Underlying Shares, together with any Late Fee Shares.
"SHARES" means the aggregate number of shares of Common Stock which are
being issued and sold to the Purchaser at the Closing(s).
"TERM SHEET" shall mean the Company's Confidential Private Placement
Term Sheet relating to the offering of the Shares dated on or about February 25,
2004, including the Subscription Booklet.
"TRADING DAY" shall mean a day during which trading in securities
generally occurs on the Nasdaq National Market or, if the Common Stock is not
quoted on the Nasdaq National Market, on the principal other national or
regional securities exchange on which the Common Stock then is listed or, if the
Common Stock is not listed on a national or regional securities exchange, on the
Over the Counter Bulletin Board or such other market on which the Common Stock
is then principally traded; provided, however, that "Trading Day" shall not
include any day (an "excluded day") during which trading in the Common Stock is
suspended for more than three hours between 9:30 a.m. (New York time) and 4:00
p.m. (New York time).
"UNDERLYING SHARES" means the shares of Common Stock issuable upon
exercise of the Warrants or any other securities issued in exchange for or in
respect of such shares.
"UNITS" means securities of the Company consisting of One Hundred (100)
shares of Common Stock and a Warrant to acquire Fifty (50) Shares of Common
Stock, for each such Unit.
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"WARRANTS" means, collectively, the Common Stock purchase warrants
issued and sold under this Agreement, in the form of Exhibit A.
2. PURCHASE AND SALE.
a. Generally. Except as otherwise provided in this Section 2 and
subject to the satisfaction (or waiver) of the conditions set forth in Section 7
and Section 8 below, each Purchaser shall purchase the number of Shares and a
Warrant determined as provided in this Section 2, and the Company shall issue
and sell such number of Shares and Warrant to each Purchaser for such
Purchaser's Investment Amount as provided below. The Company's agreement with
each of the Purchasers is a separate agreement, and the sale of the Securities
to each of the Purchasers is a separate sale.
b. Number of Closing Shares and Warrants; Form of Payment; Closing
Date.
(i) On the Closing Date (as defined below), the Company shall
sell and each Purchaser shall buy the number of Units as is equal to the
quotient of (A) such Purchaser's Investment Amount divided by (B) the Purchase
Price. On the Closing Date, each Purchaser shall pay the Company an amount equal
to such Purchaser's Investment Amount.
(ii) On the Closing Date, each Purchaser shall pay its
Investment Amount by wire transfer to the Company, in accordance with the
Company's written wiring instructions against delivery of certificates
representing the Shares and Warrants (based upon the number of Units) being
purchased by such Purchaser, and the Company shall deliver such Shares and
Warrants against delivery of such Purchaser's Investment Amount.
(iii) Subject to the satisfaction (or waiver) of the
conditions thereto set forth in Section 7 and Section 8 below, the date and time
of the sale of the Shares pursuant to this Agreement (the "CLOSING") shall be
10:00 a.m. Florida time on March __, 2004 or such other date or time as the
Placement Agent and the Company may mutually agree ("CLOSING DATE"). The Closing
shall occur at the Boca Raton, Florida offices of Proskauer Rose LLP ("PRLLP"),
or at such other place as the Placement Agent and the Company may otherwise
mutually agree. The Company may hold one or more Closings, each of which shall
be a Closing Date but only the Closing described in clause (iv) below shall also
be known as the "INITIAL CLOSING DATE."
(iv) The parties acknowledge that Wellington Management
Company, LLP ("Wellington"), on behalf of certain client accounts which it
manages or advises (the "Wellington client accounts"), has committed to invest
at least $15,000,000 in the Offering. As part of the closing of the investments
by the Wellington client accounts, the Company and Wellington may agree to
deviate from the foregoing payment and delivery requirements. For purposes of
this Agreement, the later of the date upon which the Company has issued and
delivered to Wellington all requisite stock certificates and Warrants and the
date upon which the Company has received immediately available funds for at
least $15,000,000 from the Wellington client accounts, shall be deemed the
Initial Closing and such date, the Initial Closing Date.
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3. THE PURCHASER'S REPRESENTATIONS AND WARRANTIES.
Each Purchaser severally and not jointly represents and warrants to the
Company as follows:
a. Purchase for Own Account. The Purchaser is purchasing the Securities
for the Purchaser's own account and not with a present view towards the
distribution thereof. The Purchaser understands that the Purchaser must bear the
economic risk of this investment indefinitely, unless the Securities are
registered pursuant to the Securities Act and any applicable state securities or
blue sky laws or an exemption from such registration is available, and that the
Company has no present intention of registering any such Securities other than
as contemplated by this Agreement. Notwithstanding anything in this Section 3(a)
to the contrary, by making the foregoing representation, the Purchaser does not
agree to hold the Securities for any minimum or other specific term and reserves
the right to dispose of the Securities at any time in accordance with or
pursuant to a registration statement or an exemption from registration under the
Securities Act and any applicable state securities laws.
b. Information. The Purchaser has been furnished all materials
(excluding any material nonpublic information) relating to the business,
finances and operations of the Company and its subsidiaries and materials
relating to the offer and sale of the Securities that have been requested by the
Purchaser, including without limitation, receipt of a copy of the Term Sheet.
The Purchaser has been afforded the opportunity to ask questions of the Company
and has received what the Purchaser believes to be satisfactory answers to any
inquiries. The Purchaser understands that its investment in the Securities
involves a high degree of risk. Neither such inquiries nor any other due
diligence investigation conducted by the Purchaser or its counsel or any of its
representatives shall modify, amend or affect the Purchaser's right to rely on
the Company's representations and warranties contained in Section 4 below.
c. Governmental Review. The Purchaser understands that no United States
federal or state agency or any other government or governmental agency has
passed upon or made any recommendation or endorsement of the Securities.
d. Authorization; Enforcement. The Purchaser has the requisite power
and authority to enter into and perform its obligations under this Agreement and
to purchase the Securities in accordance with the terms hereof. This Agreement
has been duly and validly authorized, executed and delivered on behalf of the
Purchaser and is a valid and binding agreement of the Purchaser enforceable
against the Purchaser in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
other laws affecting creditors' rights and remedies generally and to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).
e. Transfer or Resale. The Purchaser understands that (i) except as
provided in Section 5 of this Agreement, the Securities have not been and are
not being registered under the Securities Act or any state securities laws, and
may not be transferred unless (a) subsequently registered thereunder, or (b) the
Purchaser shall have delivered to the Company an opinion of counsel reasonably
acceptable to the Company (which opinion shall be in form, substance and scope
customary for opinions of counsel in comparable transactions) to the effect that
the Securities to be sold or transferred may be sold or transferred under an
exemption from such registration, and (ii) neither the Company nor any other
person is under any obligation to register such Securities under the Securities
Act or any state securities laws or to comply with the terms and conditions of
any exemption thereunder, in each case, other than pursuant to this Agreement.
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f. Legends. The Purchaser understands that, until the end of the
holding period under Rule 144(k) of the Securities Act (or any successor
provision) with respect to the Securities, any stock certificate representing
the Securities shall bear a legend in substantially the following form:
THE SECURITIES (AND ANY SECURITIES INTO WHICH THESE SECURITIES
ARE EXERCISABLE) REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE
SECURITIES REPRESENTED HEREBY MAY NOT BE OFFERED OR SOLD IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER APPLICABLE SECURITIES LAWS UNLESS OFFERED,
SOLD OR TRANSFERRED UNDER AN AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THOSE LAWS.
The legend set forth above shall be removed and the Company shall issue
the Securities without such legend to the holder of the Securities upon which it
is stamped, (i) if such Securities have been resold or transferred pursuant to
the registration statement contemplated by Section 5 of this Agreement and the
registration statement was effective at the time of such transfer, (ii) if, in
connection with a sale transaction, such holder provides the Company with an
opinion of counsel reasonably acceptable to the Company to the effect that a
public sale, assignment, pledge or transfer of the Securities may be made
without registration under the Securities Act, or (iii) upon expiration of the
two-year period under Rule 144(k) of the Securities Act (or any successor rule).
The Company shall not require such opinion of counsel for the sale of Securities
in accordance with Rule 144 of the Securities Act, provided that the seller
provides such representations that the Company shall reasonably request
confirming compliance with the requirements of Rule 144.
Such Purchaser understands that, in the event Rule 144(k) as
promulgated under the Securities Act (or any successor rule) is amended to
change the two-year period under Rule 144(k) (or the corresponding period under
any successor rule), (i) each reference in Section 3(f) of this Agreement to
"two (2) years" or the "two-year period" shall be deemed for all purposes of
this Agreement to be references to such changed period, and (ii) all
corresponding references in the Securities shall be deemed for all purposes to
be references to the changed period, provided that such changes shall not become
effective if they are otherwise prohibited by, or would otherwise cause a
violation of, the then-applicable federal securities laws.
g. Investor Status. The Purchaser is an "accredited investor" within
the meaning of Rule 501 Regulation D under the Securities Act. In the normal
course of its business, it invests in or purchases securities similar to the
Securities and it has such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of purchasing the
Securities. The information regarding the Purchaser in the Confidential
Offeree-Purchaser Questionnaire included with the Term Sheet is accurate and
complete.
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h. General Solicitation. Such Purchaser is not purchasing the
Securities as a result of any advertisement, article, notice or other
communication regarding the Securities published in any newspaper, magazine or
similar media or broadcast over television or radio or presented at any seminar
or any other general solicitation or general advertisement.
i. Residence. If such Purchaser is an individual, then such Purchaser
resides in the state or province identified in the address of such Purchaser set
forth on the signature page hereto; if such Purchaser is a partnership,
corporation, limited liability company or other entity, then the office or
offices of such Purchaser in which its investment decision was made is located
at the address or addresses of such Purchaser (or if a registered investment
advisor is used, the address of the main office of the Purchaser where
investment decisions are generally made) set forth on the signature page hereto.
j. No Trading Activity nor "Short Sales". Each Purchaser acknowledges
that applicable securities laws prohibit any person who has material, non-public
information concerning the matters which are the subject of this Agreement from
purchasing or selling securities of the Company (and options, warrants and
rights relating thereto) and from communicating such information to any other
person under circumstances in which it is reasonably foreseeable that such
person is likely to purchase or sell such securities. Each Purchaser agrees to
comply at all times with such securities laws. Without limiting the generality
of the foregoing, each Purchaser agrees not to purchase or sell (including
without limitation any "short sales", as such term is defined in Rule 3b-3
promulgated under the Exchange Act) any securities of the Company (other than
the Securities being purchased hereby) until at least one business day after the
Company has filed with the SEC a Current Report on Form 8-K or other appropriate
report disclosing the terms of this Agreement and the related offering of the
Securities. In addition, each Purchaser agrees not to sell (including without
limitation, any "short sales") any securities of the Company until the Resale
Registration Statement (as defined in Section 5.a. hereof) is declared effective
by the SEC.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each Purchaser as follows:
a. Organization and Qualification. Each of the Company and its
subsidiaries is a corporation duly organized and existing under the laws of the
jurisdiction in which it is incorporated, and has the requisite corporate power
to own its properties and to carry on its business as now being conducted. Each
of the Company and its subsidiaries is duly qualified as a foreign corporation
to do business and is in good standing in every jurisdiction in which the nature
of the business conducted by it makes such qualification necessary and where the
failure so to qualify would have a Material Adverse Effect.
b. Authorization; Enforcement. (i) The Company has the requisite
corporate power and authority to enter into and perform its obligations under
this Agreement, to issue and sell the Securities in accordance with the terms
hereof; (ii) the execution, delivery and performance of this Agreement by the
Company and the consummation by it of the transactions contemplated hereby
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(including, without limitation, the reservation for issuance and issuance of the
Securities; provided that the Company need not reserve for any Late Fee Shares
unless and until it shall determine to issue any such Shares) have been duly
authorized by the Company's Board of Directors and no further consent or
authorization of the Company, its Board of Directors or its shareholders is
required; (iii) this Agreement has been duly executed and delivered by the
Company; and (iv) this Agreement constitutes a valid and binding obligation of
the Company enforceable against the Company in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and other laws affecting creditors' rights and remedies
generally and to general principles of equity (regardless of whether enforcement
is sought in a proceeding at law or in equity).
c. Capitalization. The capitalization of the Company and each of its
subsidiaries as of February 20, 2004 is set forth on Schedule 4(c), including
the authorized capital stock, the number of shares issued and outstanding, the
number of shares issuable and reserved for issuance pursuant to the Company's
stock option plans, the number of shares issuable and reserved for issuance
pursuant to securities exercisable for, or convertible into or exchangeable for
any shares of capital stock. All of such outstanding shares of the Company's
capital stock have been, or upon issuance will be, validly issued, fully paid
and nonassessable. Except as set forth on Schedule 4(c), no shares of capital
stock of the Company (including the Securities) or any of the subsidiaries are
subject to preemptive rights or any other similar rights of the shareholders of
the Company or any liens or encumbrances created by the Company. Except for the
Securities and as disclosed in Schedule 4(c), as of the date of this Agreement,
(i) there are no outstanding options, warrants, scrip, rights to subscribe to,
calls or commitments of any character whatsoever to which the Company or any of
the subsidiaries is a party relating to the issuance by the Company or any of
its subsidiaries of securities or rights convertible into or exercisable or
exchangeable for, any shares of capital stock of the Company or any of its
subsidiaries, or arrangements by which the Company or any of its subsidiaries is
or may become bound to issue additional shares of capital stock of the Company
or such subsidiaries, and (ii) there are no agreements or arrangements under
which the Company or any of its subsidiaries is obligated to register the sale
of any of its or their securities under the Securities Act (except as
contemplated by this Agreement). Except as set forth on Schedule 4(c), there are
no securities or instruments containing antidilution or similar provisions that
may be triggered by the issuance of the Securities in accordance with the terms
of this Agreement. The Company has made available to each Purchaser true and
correct copies of the Company's Certificate of Incorporation as in effect on the
date hereof ("CERTIFICATE OF INCORPORATION"), the Company's By-laws as in effect
on the date hereof (the "BY-LAWS") and all other instruments and agreements
governing securities convertible into or exercisable or exchangeable for capital
stock of the Company, except for stock options granted under any benefit plan of
the Company.
d. Issuance of 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 non-assessable, and free from all taxes, liens, claims and
encumbrances (other than those imposed through acts or omissions of the
Purchaser thereof), and will not be subject to preemptive rights or other
similar rights of shareholders of the Company and will not impose personal
liability upon the holder thereof.
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e. No Conflicts. The execution, delivery and performance of this
Agreement by the Company, and the consummation by the Company of the
transactions contemplated hereby (including, without limitation, the reservation
for issuance and issuance of the Securities) will not (i) conflict with or
result in a violation of the Certificate of Incorporation or By-laws or (ii)
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 of any agreement, indenture
or instrument to which the Company or any of its subsidiaries is a party, or
result in a violation of any law, rule, regulation, order, judgment or decree
(assuming the accuracy of the representations and warranties of the Purchasers)
of the United States federal and state securities laws and regulations
applicable to the Company or any of its subsidiaries or by which any property or
asset of the Company or any of its subsidiaries is bound or affected (except,
with respect to clause (ii), for such conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations as would not,
individually or in the aggregate, have a Material Adverse Effect). Neither the
Company nor any of its subsidiaries is in violation of its Certificate of
Incorporation, By-laws and other organizational documents and neither the
Company nor any of its subsidiaries is in default (and no event has occurred
which, with notice or lapse of time or both, would put the Company or any of its
subsidiaries in default) under, nor has there occurred any event giving others
(with notice or lapse of time or both) any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which
the Company or any of its subsidiaries is a party, except for actual or possible
violations, defaults or rights as would not, individually or in the aggregate,
have a Material Adverse Effect. The businesses of the Company and its
subsidiaries are not being conducted in violation of any law, ordinance or
regulation of any governmental entity, except for actual or possible violations,
if any, the sanctions for which either singly or in the aggregate would not have
a Material Adverse Effect. Except as specifically contemplated by this Agreement
and as required under the Securities Act and any applicable state securities
laws, the Company is not required to obtain any consent, approval, authorization
or order of, or make any filing or registration with, any court or governmental
agency or any regulatory or self regulatory agency in order for it to execute,
deliver or perform any of its obligations under this Agreement in accordance
with the terms hereof.
f. SEC Documents; Financial Statements. Since January 1, 2003, the
Company has timely filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and has filed all
registration statements and other documents required to be filed by it with the
SEC pursuant to the Securities Act (all of the foregoing filed prior to the date
hereof, (including without limitation all voluntary reports on Form 8-K), and
all exhibits included therein and financial statements and schedules thereto and
documents incorporated by reference therein, being hereinafter referred to as
the "SEC DOCUMENTS"). The Company has made available to each Purchaser true and
complete copies of the SEC Documents, except for the exhibits and schedules
thereto and the documents incorporated therein. As of their respective dates,
the SEC Documents complied as to form with the requirements of the Exchange Act
or the Securities Act, as the case may be, and the rules and regulations of the
SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC
Documents, at the time they were filed with the SEC, 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. Any statements
made in any such SEC Documents that are or were required to be updated or
amended under applicable law have been so updated or amended. As of their
respective dates, the financial statements of the Company included in the SEC
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Documents complied as to form with applicable accounting requirements and the
published rules and regulations of the SEC applicable with respect thereto. Such
financial statements have been prepared in accordance with United States
generally accepted accounting principles, consistently applied, during the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may not include footnotes or may be condensed or
summary statements) and fairly present the consolidated financial position of
the Company and its subsidiaries as of the dates thereof and the results of
their operations and cash flows for the periods then ended (subject, in the case
of unaudited statements, to normal and recurring year-end audit adjustments).
Except as set forth in the SEC Documents, the Company has no liabilities,
contingent or otherwise, other than (i) liabilities incurred in the ordinary
course of business subsequent to the date of such SEC Documents and (ii)
obligations under contracts and commitments incurred in the ordinary course of
business and not required under generally accepted accounting principles to be
reflected in such SEC Documents, which liabilities and obligations referred to
in clauses (i) and (ii), individually or in the aggregate, would not have a
Material Adverse Effect.
g. Absence of Certain Changes. Except as disclosed in the SEC
Documents, since January 1, 2003, there has been no change or development which
individually or in the aggregate has had or could have a Material Adverse
Effect.
h. Absence of Litigation. Except as disclosed in Schedule 4(h) or the
SEC Documents, there is no action, suit, proceeding, inquiry or investigation
before or by any court, public board, government agency, self-regulatory
organization or body pending or, to the knowledge of the Company, threatened
against or affecting the Company, or any of its subsidiaries, or any of their
directors or officers in their capacities as such which would have a Material
Adverse Effect.
i. Intellectual Property. Except as disclosed in Schedule 4(i) or the
SEC Documents, the Company and each of its subsidiaries owns or is licensed to
use all patents, patent applications, trademarks, trademark applications, trade
names, service marks, copyrights, copyright applications, licenses, permits,
know-how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures) and other
similar rights and proprietary knowledge (collectively, "INTANGIBLES") necessary
for the conduct of its business as now being conducted and as proposed to be
conducted, the failure of which to have would have a Material Adverse Effect.
Other than as disclosed in the Company's SEC Documents, neither the Company nor
any of its subsidiaries has received written notice that it is infringing upon
or in conflict with any third party Intangibles. Other than as disclosed in the
Company's SEC Documents, neither the Company nor any of its subsidiaries has
entered into any consent, indemnification, forbearance to xxx or settlement
agreements with respect to the validity of the Company's or such subsidiary's
ownership or right to use its Intangibles. The Intangibles are valid and
enforceable, and no registration relating thereto has lapsed, expired or been
abandoned or canceled or is the subject of cancellation or other adversarial
9
proceedings, and all applications therefor are pending and in good standing. The
Company has complied with its contractual obligations relating to the protection
of the Intangibles used pursuant to licenses. To the Company's knowledge, no
person is infringing on or violating the Intangibles owned or used by the
Company.
j. Acknowledgment Regarding the Purchasers' Purchase of the Securities.
The Company acknowledges and agrees that no Purchaser is acting as a financial
advisor or is acting as a fiduciary of the Company (or in any similar capacity)
with respect to this Agreement or the transactions contemplated hereby, and the
relationship between the Company and the Purchasers is "arms length" and that
any statement made by any Purchaser or any of its representatives or agents in
connection with this Agreement and the transactions contemplated hereby is not
advice or a recommendation and is merely incidental to such Purchaser's purchase
of Securities and has not been relied upon by the Company, its officers or
directors in any way. The Company further represents to the Purchaser that the
Company's decision to enter into this Agreement has been based solely on an
independent evaluation by the Company and its representatives.
k. No Brokers. Except for the Placement Agent, the Company has not
engaged any person to which or to whom brokerage commissions, finder's fees,
financial advisory fees or similar payments are or will become due in connection
with this Agreement or the transactions contemplated hereby.
l. Tax Status. The Company and each of its subsidiaries has made or
filed all material federal, state and local income and all other tax returns,
reports and declarations required by any jurisdiction to which it is subject
(unless and only to the extent that the Company or the applicable subsidiary has
set aside on its books provisions adequate for the payment of all unpaid and
unreported taxes) and has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and has set aside on its books provisions adequate for the payment of all taxes
for periods subsequent to the periods to which such returns, reports or
declarations apply. There are no material unpaid taxes claimed to be due by the
taxing authority of any jurisdiction. The Company has not executed a waiver with
respect to any statute of limitations relating to the assessment or collection
of any federal, state or local tax. None of the Company's tax returns have been
or is being audited by any taxing authority.
m. No General Solicitation. Neither the Company nor any person
participating on the Company's behalf in the transactions contemplated hereby
has conducted any "general solicitation" or "general advertising" as such terms
are used in Regulation D, with respect to any of the Securities being offered
hereby.
n. Securities Laws. Neither the Company, nor any of its affiliates, nor
any person acting on its or their behalf, has, directly or indirectly, made any
offers or sales of any security or solicited any offers to buy any security
under circumstances that would require registration of the Securities being
offered hereby under the Securities Act or cause this offering of Securities to
be integrated with any prior offering of securities of the Company for purposes
of the Securities Act. Assuming the truth and accuracy of the representations
and warranties of the Purchasers set forth in Section 3 of this Agreement, the
Purchasers will not be statutory underwriters within the meaning of Section
2(a)(11) of the Securities Act.
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o. Form SB-2 or S-2 Eligibility. The Company is currently eligible to
register the resale of its Common Stock on a registration statement on either or
both of Form SB-2 under the Securities Act or Form S-2 under the Securities Act.
As to whichever form the Company shall elect to file (be that Form SB-2 or Form
S-2), there exist no facts or circumstances (including without limitation any
required approvals or waivers of any circumstances that may delay or prevent the
obtaining of accountant's consents) that would prohibit or delay the preparation
and filing of a registration statement on such Form with respect to the
Registrable Securities.
p. Disclosure. The Company confirms that neither it nor any other
person acting on its behalf has provided any of the Purchasers or its agents or
counsel with any information that constitutes or might constitute material
non-public information (other than information necessary to consummate the
transaction contemplated by this Agreement). The Company understands and
confirms that the Purchasers shall be relying on the foregoing representations
in effecting transactions in securities of the Company. All disclosure provided
to the Purchasers regarding the Company, its business and the transactions
contemplated hereby, including the Schedules to this Agreement, furnished by or
on behalf of the Company are true and correct and do not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading.
q. Internal Accounting Controls. The Company maintains a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization, and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
r. Insurance. The Company will continue to be insured by insurers of
recognized financial responsibility against such property and casualty losses
and risks and in such amounts as are commensurate with similarly situated
companies engaged in businesses similar to those of the Company.
s. Regulatory Permits. The Company possess all material certificates,
authorizations and permits issued by the appropriate federal, state, local or
foreign regulatory authorities necessary to conduct their respective businesses
as currently conducted (the "PERMITS"), the failure of which to have and
maintain could reasonably be expected to have a Material Adverse Effect, and the
Company has not received any written notice of proceedings relating to the
revocation or modification of any such Permit.
5. REGISTRATION RIGHTS.
a. The Company shall:
(i) as promptly as practicable, but not later than forty five
(45) days after the Initial Closing Date of this Agreement (the "FILING
DEADLINE"), cause to be filed with the SEC a registration statement on Form SB-2
(or, at the Company's option, on Form S-2) pursuant to Rule 415 under the
Securities Act (the "RESALE REGISTRATION STATEMENT"), which Resale Registration
Statement shall provide for the offer and sale of all Registrable Securities
held by Purchasers that have provided the information required pursuant to the
terms of Section 5(b) hereof;
11
(ii) use its reasonable best efforts to cause the Resale
Registration Statement to be declared effective by the SEC as promptly as
practicable, but not later than: (x) 90 days after the Initial Closing Date in
the event that the SEC shall provide notice to the Company that such Resale
Registration Statement is cleared to become effective and will not be reviewed
by the SEC or (y) 120 days after the Initial Closing Date in the event the SEC
determines to review the Resale Registration Statement (as applicable, the
"EFFECTIVENESS DEADLINE"); and
(iii) use its reasonable best efforts to keep the Resale
Registration Statement continuously effective, supplemented and amended subject
to the provisions of Section 5(d) hereof (subject to the right of the Company to
suspend the use of the Resale Registration Statement by delivery of a Suspension
Notice in accordance with Section 5(d) hereof) to the extent necessary to ensure
that it (A) is available for resales of Registrable Securities by the Purchasers
to the benefit of this Agreement and (B) conforms with the requirements of this
Agreement and the Securities Act and the rules and regulations of the SEC
promulgated thereunder as announced from time to time, for a period (the
"EFFECTIVENESS PERIOD") ending on the earlier of (A) the second anniversary date
of the Initial Closing Date, (B) the date on which all Registrable Securities
purchased by the Purchasers pursuant to this Agreement have been sold thereunder
or (C) the date on which the Registrable Securities can be sold by
non-affiliates of the Company pursuant to Rule 144(k) promulgated under the
Securities Act.
b. The Company hereby agrees to promptly pay damages ("Late Fees") to
each Purchaser for each consecutive thirty (30) day period following (i) the
Filing Deadline (in the event the Company fails to file the Resale Registration
Statement on or before that date) and (ii) the Effectiveness Deadline (in the
event the Resale Registration Statement is not declared effective on or before
that date) in an amount determined as follows: (x) with respect to the initial
such 30 day period, an amount equal to five percent (5%) of such Purchaser's
Investment Amount, and (y) with respect to each successive 30 day period
thereafter, an amount equal to five percent (5%) of such Purchaser's Investment
Amount; provided, however, that no Late Fees shall be payable pursuant to this
Section 5(b) after such date that the Resale Registration Statement is filed
with the SEC or the Resale Registration Statement is declared effective, as
applicable, and further provided that in no event shall the aggregate Late Fees
payable hereunder exceed twenty five percent (25%) of such Purchaser's
Investment Amount. Notwithstanding anything to the contrary in this Agreement,
each Purchaser acknowledges and agrees that Wellington shall have the sole power
and authority to (i) grant the Company an extension or waiver of the Filing
Deadline and Effectiveness Deadline and (ii) waive or reduce, in whole or in
part, any or all of the Late Fees which would otherwise be payable to any
Purchaser pursuant to the provisions of this Section 5.b. Late Fees shall be
payable, at the option of the Company, in (i) cash or other immediately
available funds, (ii) by the issuance of additional shares of Common Stock
("Late Fee Shares"), or (iii) any combination of the methods in the foregoing
clauses (i) and (ii). In the event the Company shall elect to deliver Late Fee
Shares, each such Share shall be valued for purposes of payment of the Late Fee
at Fifty Seven Cents ($.57) per share (as adjusted for any stock split, reverse
stock split, stock combination or similar event).
12
c. No Purchaser may include any of its Registrable Securities in the
Resale Registration Statement pursuant to this Agreement unless such Purchaser
furnishes to the Company in writing, prior to or on the 10th Business Day after
such Purchaser's receipt from the Company of the Purchaser Questionnaire (such
applicable deadline, the "QUESTIONNAIRE DEADLINE"), such information regarding
the Purchaser and the distribution of Registrable Securities as the Company may
reasonably request for use in connection with the Resale Registration Statement
or Prospectus or preliminary Prospectus included therein and in any application
to be filed with or under state securities laws (the form of which request is
attached as Appendix A hereto regarding the sale of the Shares to the Purchasers
and is referred to herein as the "PURCHASER QUESTIONNAIRE"). In connection with
all requests for information from the Purchasers with respect to inclusion of
Registrable Securities in the Resale Registration Statement, the Company shall
notify such Purchasers of the requirements set forth in the preceding sentence.
The Company agrees and undertakes that it shall distribute a Purchaser
Questionnaire no later than 10 Business Days prior to the initial effectiveness
of the Resale Registration Statement to each Purchaser. Purchasers that do not
complete the Purchaser Questionnaire and timely deliver it to the Company shall
not be named as selling security holders in the Prospectus or preliminary
Prospectus included in the Resale Registration Statement and therefore shall not
be permitted to sell any Registrable Securities pursuant to the Resale
Registration Statement. Notwithstanding the foregoing, upon request from a
Purchaser that did not return a Purchaser Questionnaire on a timely basis
because it was a subsequent transferee of Registrable Securities after the
Company distributed the Purchaser Questionnaire, (i) the Company shall
distribute a Purchaser Questionnaire to such Purchaser at the address set forth
in the request and (ii) upon receipt of a properly completed Purchaser
Questionnaire from such Purchaser, the Company shall use its reasonable efforts
to name such Purchaser as a selling security holder by means of an amendment or,
if permitted by the SEC, by means of a Prospectus supplement to the Resale
Registration Statement. Each Purchaser as to which the Resale Registration
Statement is being effected agrees to furnish promptly to the Company all
information required to be disclosed in order to make information previously
furnished to the Company by such Purchaser not materially misleading.
d. In connection with the Resale Registration Statement, the Company
shall use its reasonable best efforts to effect such registration to permit the
sale of the Registrable Securities, and pursuant thereto, shall prepare and file
with the SEC a Resale Registration Statement relating to the registration of the
Registrable Securities.
In connection with the Resale Registration Statement and any
Prospectus required by this Agreement to permit the sale or resale of
Registrable Securities, the Company shall:
(i) Subject to any notice by the Company of the existence of
any fact or event of the kind described in Section 5(e) and the Company's right
to invoke a Suspension Period in the manner described in this Section 5(d)(i),
use commercially reasonable efforts to keep the Resale Registration Statement
continuously effective during the Effectiveness Period; upon the occurrence of
any event that would cause the Resale Registration Statement or the Prospectus
contained therein to (A) contain a material misstatement or omission or (B) not
be effective and usable for resale of Registrable Securities during the
Effectiveness Period, unless a Suspension Period is then in effect, the Company
shall file promptly an appropriate amendment to the Resale Registration
Statement, a supplement to the Prospectus or a report filed with the SEC
13
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, in the case
of clause (A), correcting any such misstatement or omission, and, in the case of
either clause (A) or (B), use commercially reasonable efforts to cause such
amendment to be declared effective and the Resale Registration Statement and the
related Prospectus to become usable for their intended purposes as soon as
practicable thereafter. Notwithstanding the foregoing, the Company may suspend
the effectiveness of the Resale Registration Statement by written notice to the
Purchasers for a period not to exceed an aggregate of 60 days in any 360-day
period (each such period, a "SUSPENSION PERIOD"); provided that the Company
shall promptly notify each Purchaser in writing of the date on which the
Suspension Period will begin and the date on which the Suspension Period ends
and no single Suspension Period shall exceed 30 days.
(ii) Prepare and file with the SEC such amendments and
post-effective amendments to the Resale Registration Statement as may be
necessary to keep the Resale Registration Statement effective during the
Effectiveness Period; cause the Prospectus to be supplemented by any required
Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424
(it being understood that the Company shall not be required to file a Prospectus
supplement pursuant to Rule 424(b) with respect to any Purchaser that failed to
submit their Purchaser Questionnaire by the Questionnaire Deadline) under the
Securities Act, and to comply fully with the applicable provisions of Rules 424
and 430A under the Securities Act in a timely manner; and comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities covered by the Resale Registration Statement during the
applicable period in accordance with the intended method or methods of
distribution by the sellers thereof set forth in the Resale Registration
Statement or a supplement to the Prospectus.
e. Each Purchaser agrees that, upon receipt of any notice (a
"SUSPENSION NOTICE") from the Company of the existence of any fact or the
happening of any event, during the Effectiveness Period, that makes any
statement of a material fact made in the Resale Registration Statement, the
Prospectus, any amendment or supplement thereto, or any document incorporated by
reference therein untrue, or that requires the making of any additions to or
changes in the Resale Registration Statement or the Prospectus in order to make
the statements therein not misleading, such Purchaser shall discontinue
disposition of Registrable Securities pursuant to the Resale Registration
Statement and any use of the associated Prospectus until:
(i) such Purchaser has received copies of the supplemented or
amended Prospectus contemplated by Section 5(d) hereof; or
(ii) such Purchaser is advised in writing by the Company that
the use of the Prospectus may be resumed, and has received copies of any
additional or supplemental filings that are part of or incorporated by reference
in the Prospectus.
Each Purchaser agrees to keep the receipt of a Suspension Notice and
its contents confidential. If so directed by the Company, each Purchaser will
deliver to the Company all copies, other than permanent file copies then in such
Purchaser's possession, of the Prospectus covering such Registrable Securities
that was current at the time of receipt of such Suspension Notice.
14
The Company agrees that the Suspension Notice shall not include any
material non-public information other than such information necessary to inform
the Purchasers that a Suspension Period has been implemented.
f. All expenses incident to the Company's performance of or compliance
with Section 5 of this Agreement shall be borne by the Company regardless of
whether a Resale Registration Statement becomes effective, including, without
limitation:
(i) all registration and filing fees and expenses;
(ii) all fees and expenses of compliance with federal and
state securities laws;
(iii) all expenses of printing (including printing of
Prospectuses and certificates for the Common Stock) and the Company's expenses
for messenger and delivery services and telephone;
(iv) all fees and disbursements of counsel to the Company and
all transfer agent fees;
(v) all application and filing fees in connection with listing
(or authorizing for quotation) the Common Stock on a national securities
exchange or automated quotation system pursuant to the requirements hereof; and
(vi) all fees and disbursements of independent certified
public accountants of the Company.
Each Purchaser shall bear all costs associated with selling
commissions, discounts and expenses of any financial or legal advisors engaged
to review the Resale Registration Statement.
The Company shall permit the Purchasers and their legal counsel to
review and comment upon the Resale Registration Statement at least two Business
Days prior to their filing with the SEC, and not file any document in a form to
which Purchasers reasonably object in a timely manner.
g. Each Purchaser acknowledges and agrees that the Company may include
for registration in the Resale Registration Statement additional or other
securities held by other parties (including for this purpose any Purchasers whom
have also previously acquired securities from the Company) pursuant to
registration rights granted to such parties.
h. The Company covenants and agrees that it will not cause to become
effective any other registration statement (other than a registration statement
on Forms S-4 or S-8 or any successor form to such Forms) relating to its
securities prior to the date that the Resale Registration Statement is declared
effective.
6. COVENANTS.
a. Satisfaction of Conditions. The parties shall use their best efforts
to satisfy in a timely manner each of the conditions set forth in Section 7 and
Section 8 of this Agreement.
15
b. Form D; Blue Sky Laws. The Company agrees to file a Form D with
respect to the Shares as required under Regulation D and to provide a copy
thereof to each Purchaser promptly after such filing. The Company shall, on or
before the Closing Date, take such action as the Company shall reasonably
determine is necessary to qualify the Shares for sale to the Purchasers pursuant
to this Agreement under applicable securities or "blue sky" laws of the states
of the United States or obtain exemption therefrom, and shall provide evidence
of any such action so taken to each Purchaser on or prior to the Closing Date.
c. Reporting Status. So long as a Purchaser beneficially owns any
Shares or has the right to acquire any Shares pursuant to this Agreement, the
Company shall timely file all reports required to be filed with the SEC pursuant
to the Exchange Act, and 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.
d. Use of Proceeds. The Company shall use the net proceeds from the
sale of the Shares for general business purposes, but in no event shall the
Company use such net proceeds to repurchase any outstanding securities of the
Company.
e. Listing. On the Closing Date, the Company shall have applied for the
listing of the Shares, in each case, upon each national securities exchange and
automated quotation system, if any, upon which shares of Common Stock are then
listed or quoted and shall maintain, so long as any other shares of Common Stock
shall be so listed, such listing of all Shares from time to time issuable
hereunder. The Parties acknowledge that as of the Closing Date, the Company does
not have any shares of Common Stock so listed or quoted and that the shares of
Common Stock currently trade on the over-the-counter bulletin board.
f. No Integrated Offerings. The Company shall not make any offers or
sales of any security (other than the Shares) under circumstances that would
require registration of the Shares being offered or sold hereunder under the
Securities Act or cause this offering of Shares to be integrated with any other
offering of securities by the Company for any purposes, including for purposes
of any shareholder approval provision applicable to the Company or its
securities.
g. Securities Laws Disclosure; Publicity. The Company shall issue a
press release reasonably acceptable to the Purchasers disclosing the
transactions contemplated hereby and file a Current Report on Form 8-K
disclosing the material terms of the transactions contemplated hereby. In
addition, the Company will make such other filings and notices in the manner and
time required by the SEC and the trading market on which the Shares are listed.
Notwithstanding the foregoing, the Company shall not publicly disclose the name
of any Purchaser, or include the name of any Purchaser in any filing with the
SEC (other than the Resale Registration Statement and any exhibits to filings
made in respect of this transaction in accordance with periodic filing
requirements under the Exchange Act) or any regulatory agency or trading market,
without the prior written consent of such Purchaser, except to the extent such
disclosure is required by law or trading market regulations, in which case the
Company shall provide the Purchaser with prior notice of such disclosure.
16
7. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to issue and sell Shares to a
Purchaser at the Closing hereunder is subject to the satisfaction, at or before
the Closing Date, of each of the following conditions thereto; provided,
however, that these conditions are for the Company's sole benefit and may be
waived by the Company at any time in its sole discretion.
a. The applicable Purchaser shall have executed the signature page to
this Agreement and delivered the same to the Company.
b. The applicable Purchaser shall have delivered such Purchaser's
Investment Amount in accordance with Section 2(b) above.
c. The representations and warranties of the applicable Purchaser shall
be true and correct as of the date when made and as of the Closing Date as
though made at that time (except for representations and warranties that speak
as of a specific date, which representations and warranties shall be true and
correct as of such date), and the applicable Purchaser shall have performed,
satisfied and complied in all material respects with the covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by the applicable Purchaser at or prior to the Closing Date.
d. No statute, rule, regulation, executive order, decree, ruling,
injunction, action, proceeding or interpretation shall have been enacted,
entered, promulgated, endorsed or adopted by any court or governmental authority
of competent jurisdiction or any self-regulatory organization, or the staff of
any thereof, having authority over the matters contemplated hereby which
questions the validity of, or challenges or prohibits the consummation of, any
of the transactions contemplated by this Agreement.
8. CONDITIONS TO EACH PURCHASER'S OBLIGATION TO PURCHASE.
The obligation of each Purchaser hereunder to purchase Shares to be
purchased by it hereunder is subject to the satisfaction, at or before the
Closing Date, of each of the following conditions, provided that these
conditions are for such Purchaser's sole benefit and may be waived by such
Purchaser at any time in such Purchaser's sole discretion:
a. The Company shall have executed the signature pages to this
Agreement and delivered the same to the Purchaser.
b. the representations and warranties of the Company shall be true and
correct as of the date when made and as of the Closing Date as though made at
that time (except for representations and warranties that speak as of a specific
date, which representations and warranties shall be true and correct as of such
date) and the Company shall have performed, satisfied and complied in all
material respects with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Company at or prior
to the Closing Date. The Purchaser shall have received a certificate, executed
on behalf of the Company by its Chief Financial Officer, dated as of the Closing
Date, to the foregoing effect and attaching true and correct copies of the
resolutions adopted by the Company's Board of Directors authorizing the
execution, delivery and performance by the Company of its obligations under this
Agreement.
17
c. No statute, rule, regulation, executive order, decree, ruling,
injunction, action, proceeding or interpretation shall have been enacted,
entered, promulgated, endorsed or adopted by any court or governmental authority
of competent jurisdiction or any self-regulatory organization, or the staff of
any thereof, having authority over the matters contemplated hereby which
questions the validity of, or challenges or prohibits the consummation of, any
of the transactions contemplated by this Agreement.
d. As of the Closing Date, there shall not have occurred any Material
Adverse Effect; and
e. The Purchaser shall have received an opinion of the Company's
counsel, dated as of the Closing Date.
9. GOVERNING LAW MISCELLANEOUS.
a. Governing Law; Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed in the State of Delaware. Each of the parties
irrevocably consents to the nonexclusive jurisdiction of the United States
federal court in the Southern District of Florida s and the state courts located
in Broward County, Florida in any suit or proceeding based on or arising under
this Agreement and irrevocably agrees that all claims in respect of such suit or
proceeding may be determined in such courts. Each of the parties, irrevocably
waives the defense of an inconvenient forum to the maintenance of such suit or
proceeding. Each of the parties further agrees that service of process upon such
party mailed by first class mail to the address set forth in Section 9(f) shall
be deemed in every respect effective service of process upon such party in any
such suit or proceeding. Nothing herein shall affect the right of any Purchaser
to serve process in any other manner permitted by law. Each of the parties,
agrees that a final non-appealable judgment in any such suit or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on such
judgment or in any other lawful manner.
b. Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party. This Agreement, once executed by a party, may be
delivered to the other parties hereto by facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this Agreement.
In the event any signature is delivered by facsimile transmission, the party
using such means of delivery shall cause the manually executed Execution Page(s)
hereof to be physically delivered to the other party within five (5) days of the
execution hereof.
c. Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
d. Severability. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement or the
validity or enforceability of this Agreement in any other jurisdiction.
18
e. Entire Agreement; Amendments; Waiver. This Agreement and the
instruments referenced herein contain the entire understanding of the parties
with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor the Purchasers
make any representation, warranty, covenant or undertaking with respect to such
matters. No provision of this Agreement may be waived or amended other than by
an instrument in writing signed by the Company and, by the Purchasers as
provided in Section 9(l) hereof. Any waiver by the Purchasers, on the one hand,
or the Company, on the other hand, of a breach of any provision of this
Agreement shall not operate as or be construed to be a waiver of any other
breach of such provision of or any breach of any other provision of this
Agreement. The failure of the Purchasers, on the one hand, or the Company, on
the other hand to insist upon strict adherence to any term of this Agreement on
one or more occasions shall not be considered a waiver or deprive that party of
the right thereafter to insist upon strict adherence to that term or any other
term of this Agreement.
f. Notices. Any notices required or permitted to be given under the
terms of this Agreement shall be sent by certified or registered mail (return
receipt requested) or delivered personally or by courier or by confirmed
telecopy, and shall be effective five days after being placed in the mail, if
mailed, or upon receipt or refusal of receipt, if delivered personally or by
courier or confirmed telecopy, in each case addressed to a party. The addresses
for such communications shall be:
If to the Company:
xxxxxxxx.xxx, inc.
000 Xxxx Xxxxxxx Xxxx. Xxxxx 0000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Telephone No.: (954) 769-
Facsimile No.: (000) 000-0000
Attention: Xxxxxx Xxxxxxxx
With a copy to:
Proskauer Rose, LLP
0000 Xxxxxx Xxxx
Xxxxx 000X
Xxxx Xxxxx, Xxxxxxx 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx X. "Rocky" Xxxxxxxx, II, Esq.
19
If to the Purchaser, to the address set forth under the Purchaser's
name on the Execution Page hereto executed by such Purchaser, with a copy to:
Xxxxxxx Capital, Inc.
0000 Xxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxx Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx Xxxxxxx
Each party hereto may from time to time change its address or facsimile
number for notices under this Section 9 by giving at least ten (10) days' prior
written notice of such changed address or facsimile number, in the case of the
Purchasers to the Company, and in the case of the Company to all of the
Purchasers.
g. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns. The
Company shall not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Purchasers.
h. Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by any other person.
i. Survival. The representations and warranties of the Company and the
agreements and covenants of the Company shall survive the Closing
notwithstanding any due diligence investigation conducted by or on behalf of the
Purchasers. Moreover, none of the representations and warranties made by the
Company herein shall act as a waiver of any rights or remedies a Purchaser may
have under applicable federal or state securities laws. The Company agrees to
indemnify and hold harmless each Purchaser and each of such Purchaser's
officers, directors, employees, partners, members, agents and affiliates for
loss or damage relating to the Shares purchased hereunder arising as a result of
or related to any breach by the Company of any of its representations or
covenants set forth herein.
j. Further Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
k. Equitable Relief. Each party acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the other parties by
vitiating the intent and purpose of the transactions contemplated hereby.
Accordingly, each party acknowledges that the remedy at law for a breach of its
obligations hereunder will be inadequate and agrees, in the event of a breach or
threatened breach by such party of the provisions of this Agreement, that the
other parties shall be entitled, in addition to all other available remedies, to
an injunction restraining any breach and requiring immediate issuance and
transfer, without the necessity of showing economic loss and without any bond or
other security being required.
l. Determinations. Prior to the Initial Closing Date, except as set
forth in Section 5.b. hereof, all consents, approvals and other determinations
to be made by the Purchasers pursuant to this Agreement and all waivers and
amendments to or of any provisions in this Agreement to be binding upon a
Purchaser shall be made by such Purchaser. After the Initial Closing Date,
20
except as set forth in Section 5.b. hereof, all consents, approvals and other
determinations to be made by the Purchasers pursuant to this Agreement and all
waivers and amendments to or of any provisions in this Agreement after the
Initial Closing Date shall be made by Purchasers that have invested more than
fifty percent (50%) of the aggregate Investment Amounts invested by all
Purchasers, and shall be binding and enforceable as to all Purchasers.
m. Independent Nature of Investors' Obligations and Rights. The
obligations of each Purchaser are several and not joint with the obligations of
any other Purchaser, and no Purchaser shall be responsible for the performance
of obligations of any other Purchaser under this Agreement. Nothing contained
herein, and no action taken by any Purchaser hereunder shall be deemed to
constitute the Purchasers as a partnership, an association, a joint venture or
any other kind of entity, or create a presumption that the Purchasers are in any
way acting in concert or as a group with respect to such obligations or the
transactions contemplated by this Agreement. Each Purchaser shall be entitled to
independently protect and enforce its rights, including without limitation the
rights arising out of this Agreement and it shall not be necessary for any other
Purchaser to be joined as an additional party in any proceeding for such
purpose.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
21
IN WITNESS WHEREOF, the undersigned Purchaser and the Company have
caused this Agreement to be duly executed as of the date first above written.
COMPANY:
xxxxxxxx.xxx, inc.
By:
---------------------------------
Name: Xxxxxx X. Xxxxxxxx
------------------------------
Title: President
-----------------------------
[Separate signature pages will be set up for each Purchaser]
THE PURCHASER:
[----------------------------]
By:
----------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
Investment Amount: $
------------------------
Residence:
---------------------------------
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Address:
-----------------------------------
Telephone No.: ( )
-----------------------
Telecopy No.: ( )
-----------------------
Attention:
---------------------------------
with copies of all notices to:
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Telephone No.: ( )
-----------------------
Telecopy No.: ( )
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Attention:
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APPENDIX A
__________, 2004
XXXXXXXX.XXX, INC.
FORM OF SELLING SECURITYHOLDER NOTICE AND QUESTIONNAIRE
The undersigned beneficial Purchaser of Units consisting of 100 shares
of Common Stock, $.001 par value (the "Shares") and warrants ("Warrants") to
acquire 50,000 shares of Common Stock (the "Underlying Shares"), of
xxxxxxxx.xxx, inc ("theglobe" or "Registrant"), issued or issuable pursuant to
that certain Stock Purchase and Registration Agreement dated _________, 2004
(the "Purchase Agreement") understands that the Registrant has filed or intends
to file with the Securities and Exchange Commission (the "Commission") a
registration statement on either Form S-2 or Form SB-2 (the "Resale Registration
Statement") for the registration and resale under Rule 415 of the Securities Act
of 1933, as amended (the "Securities Act" ), of the Shares and the Underlying
Shares (collectively, the "Registrable Securities"), in accordance with the
terms of the Purchase Agreement.
Each capitalized term not otherwise defined herein shall have the
meaning ascribed thereto in the Purchase Agreement. Each beneficial owner of
Registrable Securities is entitled to the benefits of the Purchase Agreement. In
order to sell or otherwise dispose of any Registrable Securities pursuant to the
Resale Registration Statement, a beneficial owner of Registrable Securities
generally will be required to be named as a selling securityholder in the
related prospectus, deliver a prospectus to purchasers of Registrable Securities
and be bound by those provisions of the Purchase Agreement applicable to such
beneficial owner. Beneficial owners that do not complete this Notice and
Questionnaire and deliver it to theglobe within 10 Business Days of the date of
this Notice and Questionnaire as provided below will not be named as selling
securityholders in the prospectus and therefore will not be permitted to sell
any Registrable Securities pursuant to the Resale Registration Statement.
Beneficial owners are encouraged to complete and deliver this Notice and
Questionnaire prior to the effectiveness of the Resale Registration Statement so
that such beneficial owners may be named as selling securityholders in the
related prospectus at the time of effectiveness. BENEFICIAL OWNERS THAT DO NOT
COMPLETE THIS NOTICE AND QUESTIONNAIRE AND TIMELY DELIVER IT TO THEGLOBE SHALL
NOT BE NAMED AS SELLING SECURITYHOLDERS IN THE PROSPECTUS INCLUDED IN THE RESALE
REGISTRATION STATEMENT AND THEREFORE SHALL NOT BE PERMITTED TO SELL ANY
REGISTRABLE SECURITIES PURSUANT TO THE RESALE REGISTRATION STATEMENT.
Certain legal consequences arise from being named as a selling
securityholder in the Resale Registration Statement and the related prospectus.
Accordingly, Purchasers and beneficial owners of Registrable Securities are
advised to consult their own securities law counsel regarding the consequences
of being named or not being named as a selling securityholder in the Resale
Registration Statement and the related prospectus.
NOTICE
The undersigned beneficial owner (the "Selling Securityholder") of
Registrable Securities hereby gives notice to Theglobe of its intention to sell
or otherwise dispose of Registrable Securities beneficially owned by it and
listed below in Item 3 (unless otherwise specified under Item 3) pursuant to the
Resale Registration Statement. The undersigned, by signing and returning this
Notice and Questionnaire, understands that it will be bound by the terms and
conditions of this Notice and Questionnaire and the Purchase Agreement.
Upon any sale of Registrable Securities pursuant to the Resale
Registration Statement, the undersigned will be required to deliver to theglobe
the Notice of Transfer (completed and signed) set forth in Exhibit 1 attached
hereto and hereby undertakes to do so.
The undersigned hereby provides the following information to theglobe
and represents and warrants that such information is accurate and complete:
QUESTIONNAIRE
1. (a) Full Legal Name of Selling Securityholder:
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(b) Full Legal Name of Registered Purchaser (if not the same as (a)
above) through which Registrable Securities listed in Item 3 below are
held:
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(c) Full Legal Name of DTC Participant (if applicable and if not the
same as (b) above) through which Registrable Securities listed in Item
3 below are held:
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2. Address for Notices to Selling Securityholder:
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Telephone:
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Fax:
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Contact Person:
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3. Beneficial Ownership of Registrable Securities:
(a) Type and Principal Amount of Registrable Securities beneficially
owned:
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(b) CUSIP No(s). of such Registrable Securities beneficially owned:
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4. Beneficial Ownership of other securities of theglobe owned by Selling
Securityholder:
Except as set forth below in this Item 4, the undersigned is not the
beneficial or registered owner of any securities of theglobe other than
the Registrable Securities listed above in Item 3.
(a) Type and Amount of other securities beneficially owned by the
Selling Securityholder:
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(b) CUSIP No(s). of such other securities beneficially owned:
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5. Relationships with theglobe:
Except as set forth below, neither the undersigned nor any of its
affiliates, officers, directors or principal equity holders (5% or
more) has held any position or office or has had any other material
relationship with theglobe (or its predecessors or affiliates) during
the past three years.
State any exceptions here: --------------------------------------------
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6. Plan of Distribution:
Except as set forth below, the undersigned (including its donees or
pledgees) intends to distribute the Registrable Securities listed above
in Item 3 pursuant to the Resale Registration Statement only as follows
(if at all): Such Registrable Securities may be sold from time to time
directly by the undersigned or, alternatively, through underwriters,
broker-dealers or agents. If the Registrable Securities are sold
through underwriters or broker-dealers, the Selling Securityholder will
be responsible for underwriting discounts or commissions or agent's
commissions. Such Registrable Securities may be sold in one or more
transactions at fixed prices, at prevailing market prices at the time
of sale, at varying prices determined at the time of sale, or at
negotiated prices. Such sales may be effected in transactions (which
may involve block transactions) (i) on any national securities exchange
or quotation service on which the Registrable Securities may be listed
or quoted at the time of sale, (ii) in the over-the-counter market,
(iii) in transactions otherwise than on such exchanges or services or
in the over-the-counter market, (iv) in ordinary brokers' transactions,
(v) in purchasers by brokers, dealers or underwriters as principal and
resale by the Selling Securityholders for their own accounts pursuant
to this prospectus, (vi) "at the risk of the market," to or through
market makers, or into an existing market the Registrable Securities,
(vii) in other ways not involving market makers or established trading
markets, including direct sales to purchasers or sales effected through
agents, (viii) through transactions in swaps or other derivatives
(whether exchange-listed or otherwise), (ix) to cover short sales or
(x) through the writing of options. In connection with sales of the
Registrable Securities or otherwise, the undersigned may enter into
hedging transactions with broker-dealers, which may in turn engage in
short sales of the Registrable Securities in the course of hedging
positions they assume. The undersigned may also sell Registrable
Securities short and deliver Registrable Securities to close out short
positions, or loan or pledge Registrable Securities to broker-dealers
that in turn may sell such securities.
State any exceptions here: --------------------------------------------
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Note: In no event will such method(s) of distribution take the form of an
underwritten offering of the Registrable Securities without the prior written
agreement of theglobe.
The undersigned acknowledges that it understands its obligation to
comply with the provisions of the Exchange Act and the rules thereunder relating
to stock manipulation, particularly Regulation M thereunder (or any successor
rules or regulations), in connection with any offering of Registrable Securities
pursuant to the Purchase Agreement. The undersigned agrees that neither it nor
any person acting on its behalf will engage in any transaction in violation of
such provisions.
In accordance with the undersigned's obligation under the Purchase
Agreement, the undersigned agrees to promptly notify theglobe of any
inaccuracies or changes in the information provided herein that may occur
subsequent to the date hereof at any time while the Resale Registration
Statement remains effective. All notices hereunder and pursuant to the Purchase
Agreement shall be made in writing at the address set forth below.
In the event that the undersigned transfers all or any portion of the
Registrable Securities listed in Item 3 above after the date on which such
information is provided to theglobe, the undersigned agrees to notify the
transferee(s) at the time of transfer of its rights and obligations under this
Notice and Questionnaire and the Purchase Agreement.
By signing below, the undersigned consents to the disclosure of the
information contained herein in, its answers to Items 1 through 6 above and the
inclusion of such information in the Resale Registration Statement and the
related prospectus. The undersigned understands that such information will be
relied upon by theglobe in connection with the preparation or amendment of the
Resale Registration Statement and the related prospectus.
Once this Notice and Questionnaire is executed by the undersigned and
received by theglobe, the terms of this Notice and Questionnaire, and the
representations and warranties contained herein, shall be binding on, shall
inure to the benefit of and shall be enforceable by the respective successors,
heirs, personal representatives, and assigns of theglobe and the undersigned
with respect to the Registrable Securities beneficially owned by the undersigned
and listed in Item 3 above. This Agreement shall be governed in all respects by
the laws of the State of Florida.
IN WITNESS WHEREOF, the undersigned, by authority duly given, has
caused this Notice and Questionnaire to be executed and delivered either in
person or by its duly authorized agent.
Date:
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Beneficial Owner
By:
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Name:
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Title:
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PLEASE RETURN T HE COMPLETED AND EXECUTED NOTICE AND
QUESTIONNAIRE TO THEGLOBE, INC. AT:
theglobe, inc.
000 Xxxx Xxxxxxx Xxxx., Xxxxx 0000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, President
EXHIBIT 1
NOTICE OF TRANSFER PURSUANT TO REGISTRATION STATEMENT
Proskauer Rose, LLP
0000 Xxxxxx Xxxx, Xxxxx 000 Xxxx
Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. "Rocky" Xxxxxxxx, II
Phone:(000) 000-0000
Fax: (000) 000-0000
RE: THEGLOBE, INC. (THE "COMPANY") COMMON STOCK TRANSFER
Dear Sirs:
Please be advised that __________ has transferred ___________ shares of
the Company's Common Stock pursuant to the Registration Statement on Form SB-2
(or S-2, as applicable) (File No. 33-______) filed by the Company.
We hereby certify that the prospectus delivery requirements, if any, of
the Securities Act of 1933, as amended, have been satisfied with respect to the
transfer described above and that the above-named beneficial owner of the Common
Stock is named as a selling securityholder in the Prospectus dated __________,
2004 or in amendments or supplements thereto, and that the number of shares of
Common Stock transferred are all/a portion (please circle as appropriate) of the
Common Stock listed for resale in such Prospectus as amended or supplemented
opposite such owner's name.
Very truly yours,
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(Name)
By:
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(Authorized Signature)
