SECURITIES PURCHASE AGREEMENT
EXHIBIT
99.1
0000
Xxxxxxx Xxxx Xxxxx, Xxxxx 000
Xxxxx,
Xxxxxxx 00000
Ladies
& Gentlemen:
The
undersigned, _________________________________(the “Investor”), hereby confirms
its agreement with you as follows:
I. This
Securities Purchase Agreement (the “Agreement”) is made as of June
___, 2008 between nFinanSe Inc., a Nevada corporation (the “Company”), and the
Investor.
II. The
Company has authorized the sale and issuance of up to (i) 1,600,000 shares (the
“Common Shares”) of
Common Stock of the Company, $0.001 par value per share (the “Common Stock”), (ii) 4,100,000
shares (the “Preferred
Shares”) of Series C Preferred Stock of the Company, $0.001 par value per
share (the rights and preferences of which are as provided in that certain
Certificate of Designations, Rights and Preferences attached hereto as Exhibit
A) (the “Preferred
Stock”); and (iii) warrants (the form of which is attached hereto as
Exhibit
B) (the “Warrants”) to purchase up to
2,850,000 shares of Common Stock at an exercise price of $2.30 per share (the
“Warrant Shares”),
subject to adjustment by the Company, to the Investor and certain other
accredited investors in a private placement (the “Offering”), as
follows:
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a.
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For
those Investors investing $500,000 or less, each Investor shall
receive (i) Common Shares at the purchase price of $2.00 per Common Share,
and (ii) Warrants to purchase such number of Warrants Shares that is equal
to 50% of the Common Shares purchased; provided,
however, that at such time as the Investor, together with its
affiliates, owns 750,000 shares of Common Stock, each Investor shall
receive (i) Preferred Shares at the purchase price of $2.00 per Preferred
Share, and (ii) Warrants to purchase such number of Warrant Shares that is
equal to 50% of the Preferred Shares
purchased.
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b.
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For
those Investors investing over $500,000, each Investor shall
receive (i) Preferred Shares at the purchase price of $2.00 per Preferred
Share, and (ii) Warrants to purchase such number of Warrant Shares that is
equal to 50% of the Preferred Shares
purchased.
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The
Company has further authorized the issuance of an aggregate of 1,400,000 shares
of Common Stock and Preferred Stock, at the exchange price of $2.00 per share,
to certain accredited investors in exchange for the 1,120,000 shares of Common
Stock purchased by those accredited investors at the purchase price of $2.50 per
share pursuant to those certain Securities Purchase Agreements dated March 21,
2008, March 28, 2008, March 31, 2008 and May 16, 2008 (collectively, the “Previous Purchase
Agreements”); and (ii) 700,000 shares of Common Stock underlying
warrants, with an exercise price of $2.30 per share, that will replace those
warrants to purchase 560,000 shares of Common Stock at an exercise price of
$3.25 issued to those certain accredited investors party to the Previous
Purchase Agreements. The exchange transactions referenced in this
paragraph (the “Exchange”) will occur
simultaneously with closing of the Offering.
Amendment
to Certain Outstanding Warrants. In consideration for the
purchase of the Securities (as defined below) in the Offering, if the Investor
invests an amount equal to at least 50% of the Investor’s investment in the
Company’s June 29, 2007 offer and sale (to the extent the Investor participated
in such offer and sale) (the “June Offering”) of Common
Stock, Series B Stock (as defined below) and warrants to purchase an aggregate
of 1,511,600 shares of Common Stock (collectively, the “June 2007 Warrants”), the
Investor’s June 2007 Warrants shall be amended as of the Closing Date (as
defined below) such that the exercise price per share of the Investor’s June
2007 Warrants shall be reduced to $2.30 per share from $5.00 per
share. Any June 2007 Warrants owned by any other accredited investor
participating in the Offering shall be amended on the same terms and subject to
the same conditions if such Investor invests an amount equal to at least 50% of
such Investor’s investment in the June Offering. Except as set forth
in this paragraph, the June 2007 Warrants shall remain unchanged and in full
force and effect.
III. The
Investor represents that, except as set forth below, (a) it has had no position,
office or other material relationship within the past three years with the
Company or persons known to it to be affiliates of the Company, (b) neither it,
nor any group of which it is a member or to which it is related, beneficially
owns (including the right to acquire or vote) any securities of the Company and
(c) it has no direct or indirect affiliation or association with any NASD member
as of the date hereof. Exceptions:
_______________________________________________________________________________________
_______________________________________________________________________________________.
(If no exceptions, write
“none.” If left blank, response will be deemed to be
“none.”)
IV. Pursuant
to the Terms and Conditions for Purchase of the Securities attached hereto as
Annex I
and incorporated herein by reference as if fully set forth herein (the “Terms and Conditions”), the
Company and the Investor agree that the Investor will purchase from the Company
and the Company will issue and sell to the Investor:
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___________
units for a purchase price of $2.00 per unit, each unit consisting of one
Common Share and a Warrant to purchase one-half of one share of Common
Stock, or an aggregate of ______________ Common Shares and a Warrant to
purchase ____________ Warrant Shares, exercisable at $2.30 per Warrant
Share; or
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___________
units for a purchase price of $2.00 per unit, each unit consisting of one
Preferred Share, and a Warrant to purchase one-half of one share of Common
Stock, or an aggregate of ______________ Preferred Shares and a Warrant to
purchase ____________ Warrant Shares, exercisable at $2.30 per Warrant
Share.
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Unless otherwise requested by the
Investor, certificates and warrant documents representing the Common Shares,
Preferred Shares and Warrants purchased by the Investor will be registered in
the Investor’s name and address as set forth below. The Common
Shares, the Preferred Shares and the Warrants are sometimes referred to
collectively herein as the “Securities.” The
Investor hereby confirms, by signing in the space provided below, that the
foregoing correctly sets forth the agreement between the Investor and the
Company with respect to the purchase of the Securities in the
Offering. By executing this Agreement, the Investor acknowledges that
the Company may use the information in Article III above and the name and
address information below in preparation of the Registration Statement (as
defined in Annex 1) unless the Investor supplements the information in Article
III by written notice to the Company.
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AGREED AND ACCEPTED:
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Investor:
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By:
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By:
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Print
Name:
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Title:
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Title:
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Address:
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Tax
ID No.:
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Contact
name:
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Telephone:
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Fax:
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E-mail:*
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Name
in which shares should be registered (if different):
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*By
providing an e-mail address, the Investor hereby consents to electronic delivery
of the documents and notices required to be delivered pursuant to this
Agreement.
EX 99.1 -
Page 2
ANNEX
I
TERMS
AND CONDITIONS FOR PURCHASE OF THE SECURITIES
1. Authorization and Sale of
the Securities. Subject to these Terms and Conditions, the
Company has authorized the sale of up to 1,600,000 Common Shares, 4,100,000
Preferred Shares and 2,850,000 Warrants. The Company reserves the
right to increase or decrease this number.
2. Agreement to Sell and
Purchase the Securities; Subscription Date.
2.1 At
the Closing (as defined in Section 3), the Company will sell to the Investor,
and the Investor will purchase from the Company, upon the terms and conditions
hereinafter set forth, the number of Common Shares, Preferred Shares and
Warrants set forth in Article III of the Securities Purchase Agreement to which
these Terms and Conditions are attached at the purchase price set forth
thereon.
2.2 The
Company may enter into the same form of Securities Purchase Agreement, including
these Terms and Conditions, with certain other investors (the “Other Investors”) and expects
to complete sales of the Securities to them. (The Investor and the
Other Investors are hereinafter sometimes collectively referred to as the “Investors,” and the Securities
Purchase Agreement to which these Terms and Conditions are attached and the
Securities Purchase Agreements (including attached Terms and Conditions)
executed by the Other Investors are hereinafter sometimes collectively referred
to as the “Agreements.”) The
Company may accept executed Agreements from Investors for the purchase of the
Securities commencing upon the date on which the Company provides the Investors
with the proposed purchase price, but in no event after June 13, 2008, and
concluding upon the date (the “Subscription Date”) on which
the Company has (i) executed Agreements with Investors for the purchase of at
least an aggregate of $7,500,000 of Common Shares, Preferred Shares and
Warrants, (which $7,500,000 aggregate amount includes the exchange rate for the
Common Stock issued pursuant to the Exchange) as the case may be, and (ii)
notified Emerging Growth Equities, Ltd. and Xxxxxxx Xxxxxxx LLC, in their shared
capacity as placement agent for this transaction (collectively, the “Placement Agent”), in writing
that it is no longer accepting additional Agreements from Investors for the
purchase of the Securities. The Company may not enter into any
Agreements after the Subscription Date.
3. The
Closing.
3.1 Delivery of the Securities
at Closing. The completion of the purchase and sale of the
Securities (the “Closing”) shall occur on June
____, 2008 (the “Closing
Date”), at the offices of the Company’s counsel or at such other place as
may be agreed upon by the Company and the Placement Agent. On the
Closing Date, the Company shall deliver to the Investor, or a representative of
the Investor the following:
(a) this
Agreement duly executed by the Company;
(b) a
legal opinion of Company’s counsel in form and substance acceptable to the
Investor;
(c) evidence
of the filing of the Certificate of Designation with the Secretary of State of
Nevada; and
(d) within
5 days of Closing, one or more stock certificates representing the number of
Common Shares and/or Preferred Shares and warrant documents representing
Warrants to purchase the number of Warrant Shares set forth in Article III of
the Securities Purchase Agreement, each such certificate and document to be
registered in the name of the Investor or, if so indicated on the signature page
of the Securities Purchase Agreement, in the name of a nominee designated by the
Investor.
3.2 The Closing
Conditions.
(a) The
Company’s obligation to issue the Securities to the Investor shall be subject to
the following conditions, any one or more of which may be waived by the
Company:
(i) prior
receipt by the Company of a certified or official bank check or wire transfer of
funds in the full amount of the purchase price for the Securities being
purchased hereunder as set forth in Article III of the Securities Purchase
Agreement;
(ii) completion
of the purchases and sales under the Agreements with the Other
Investors;
EX 99.1 -
Page 3
(iii) the
accuracy of the representations and warranties made by the Investors and the
fulfillment of those undertakings of the Investors to be fulfilled prior to the
Closing; and
(iv) the
execution of a line of credit between the Company and certain other third
parties in an amount of at least $15,000,000.
(b) The
Investor’s obligation to purchase the Securities shall be subject to the
following conditions, any one or more of which may be waived by the
Investor:
(i) representations
and warranties of the Company set forth herein being true and correct as of the
Closing Date in all material respects;
(ii) all
obligations, covenants and agreements of the Company required to be performed at
or prior to the Closing Date shall have been performed;
(iii) the
delivery by the Company of the items set forth in Section 3(a) of this
Agreement;
(iv) there
shall have been no Material Adverse Effect with respect to the Company since the
date hereof;
(v) the
execution of a line of credit between the Company and certain other third
parties in an amount of at least $15,000,000;
(vi) completion
of the purchases and sales under the Agreements with the Other Investors of not
less than $7,500,000, in the aggregate; and
(vii) from
the date hereof to the Closing Date, trading in the Common Stock shall not have
been suspended by the SEC or the Company’s principal Trading Market (except for
any suspension of trading of limited duration agreed to by the Company, which
suspension shall be terminated prior to the Closing), and, at any time prior to
the Closing Date, trading in securities generally as reported by Bloomberg L.P.
shall not have been suspended or limited, or minimum prices shall not have been
established on securities whose trades are reported by such service, or on any
Trading Market, nor shall a banking moratorium have been declared either by the
United States or New York State authorities nor shall there have occurred any
material outbreak or escalation of hostilities or other national or
international calamity of such magnitude in its effect on, or any material
adverse change in, any financial market which, in each case, in the reasonable
judgment of each Investor, makes it impracticable or inadvisable to purchase the
Securities at the Closing.
4. Representations, Warranties
and Covenants of the Company. The Company hereby represents
and warrants to, and covenants with, the Investor, as follows:
4.1 Organization. Each
of the Company and its subsidiaries is duly organized and validly existing in
good standing under the laws of the jurisdiction of its
organization. Each of the Company and its subsidiaries has full power
and authority to own, operate and occupy its properties and to conduct its
business as presently conducted and as described in the documents filed by the
Company under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), since the end
of its most recently completed fiscal year through the date hereof (the “Exchange Act Documents”),
including, without limitation, its report on Form 10-KSB for the year ended
December 29, 2007 and its report on Form 10-Q for the quarter ended March 29,
2008 and each of the Company and its subsidiaries is registered or qualified to
do business and in good standing in each jurisdiction in which the nature of the
business conducted by it or the location of the properties owned or leased by it
requires such qualification and where the failure to be so qualified would have
a material adverse effect upon the financial condition, earnings, business or
business prospects, properties or operations of the Company and its
subsidiaries, taken as a whole (a “Material Adverse Effect”), and
no proceeding has been instituted in any such jurisdiction, revoking, limiting
or curtailing, or seeking to revoke, limit or curtail, such power and authority
or qualification.
EX 99.1 -
Page 4
4.2 Due Authorization and Valid
Issuance. The Company has all requisite power and authority to
execute, deliver and perform its obligations under the Agreements and the
Warrants, and the Agreements and the Warrants have been duly authorized and
validly executed and delivered by the Company and constitute legal, valid and
binding agreements of the Company enforceable against the Company in accordance
with their terms, except as rights to indemnity and contribution may be limited
by state or federal securities laws or the public policy underlying such laws,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ and contracting
parties’ rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law). The Common Shares and Preferred
Shares being purchased by the Investors under the Agreements will, upon issuance
and payment therefor pursuant to the terms hereof and of the other Agreements,
be duly authorized, validly issued, fully-paid and nonassessable. The
Company has reserved from its duly authorized capital stock: (i) the number of
Common Shares and/or Preferred Shares issuable pursuant to the Agreements, (ii)
the number of shares of Common Stock issuable upon conversion of the Preferred
Stock (the “Conversion
Shares”), and (iii) the number of Warrant Shares issuable upon the
exercise of the Warrants. The Conversion Shares and the Warrant
Shares will, upon issuance and payment therefor pursuant to the terms thereof,
be duly authorized, validly issued, fully-paid and nonassessable.
4.3 Non-Contravention. The
execution and delivery of the Agreements, the issuance and sale of the
Securities, the Conversion Shares and the Warrant Shares under the Agreements,
the fulfillment of the terms of the Agreements and the consummation of the
transactions contemplated thereby will not (A) conflict with or constitute a
violation of, or default (with the passage of time or otherwise) under, (i) any
material bond, debenture, note or other evidence of indebtedness, lease,
contract, indenture, mortgage, deed of trust, loan agreement, joint venture or
other agreement or instrument to which the Company or any of its subsidiaries is
a party or by which they or any of their properties are bound, (ii) the
charter, by-laws or other organizational documents of each of the Company and
its subsidiaries, or (iii) any law, administrative regulation, ordinance or
order of any court or governmental agency, arbitration panel or authority
applicable to the Company and its subsidiaries or their respective properties,
except in the case of clauses (i) and (iii) for any such conflicts, violations
or defaults which are not reasonably likely to have a Material Adverse Effect or
(B) result in the creation or imposition of any lien, encumbrance, claim,
security interest or restriction whatsoever upon any of the material properties
or assets of the Company or any of its subsidiaries or an acceleration of
indebtedness pursuant to any obligation, agreement or condition contained in any
material bond, debenture, note or any other evidence of indebtedness or any
material indenture, mortgage, deed of trust or any other agreement or instrument
to which the Company or any of its subsidiaries is a party or by which any of
them is bound or to which any of the material property or assets of the Company
or its subsidiaries is subject except in cases not reasonably likely to have a
Material Adverse Effect. No consent, approval, authorization or other
order of, or registration, qualification or filing with, any regulatory body,
administrative agency, or other governmental body in the United States or any
other person is required for the execution and delivery of the Agreements and
the valid issuance and sale of the Securities, the Conversion Shares and the
Warrant Shares to be sold pursuant to the Agreements and the Preferred Shares
and the Warrants to be sold pursuant to the Agreements, other than such as have
been made or obtained, and except for any post-closing securities filings or
notifications required to be made under federal or state securities
laws.
4.4 Capitalization. The
entire authorized capital stock of the Company consists of (A) 200,000,000
shares of common stock, par value $0.001 per share (the “Common Stock”), of which,
including the Common Shares, ________________ are issued and outstanding, and
(B) 25,000,000 shares of preferred stock, of which, (i) 9,330,514 shares were
designated as Series A Convertible Preferred Stock, par value $0.001 (“Series A Stock”), of which
7,600,484 shares were issued and outstanding as of May 28, 2008, (ii) 1,000,010
shares were designated as Series B Convertible Preferred Stock, par value $0.001
(“Series B Stock”), of
which 1,000,000 shares were issued and outstanding as of May 28, 2008, and (iii)
pursuant to the Offering, _____________ shares were designated as Series C
Convertible Preferred Stock, par value $0.001 (“Series C Stock”), of which
______________ shares are issued and outstanding. All shares of the
Company’s issued and outstanding capital stock have been duly authorized, are
validly issued and outstanding, and are fully paid and
nonassessable. There are no dividends which have accrued or been
declared but are unpaid on the capital stock of the Company. No
person has any right of first refusal, preemptive right, right of participation
or any similar right to participate in the transactions contemplated by the
Agreements. Except as a result of the purchase and sale of the
Securities pursuant to the Offering, and except for the Company’s currently
outstanding shares of Series A Stock, Series B Stock and employee and director
stock options under the Company’s equity compensation plans and outstanding
warrants as disclosed in the Exchange Act Documents, there are no outstanding
options, warrants, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities, rights or obligations convertible into or
exchangeable for, or giving any person any right to subscribe for or acquire,
any shares of Common Stock, or contracts, commitments, understandings or
arrangements by which the Company is or may become bound to issue additional
shares of Common Stock, or securities or rights convertible or exchangeable into
shares of Common Stock. The issuance and sale of the Securities
pursuant to the Agreements will not obligate the Company to issue shares of
Common Stock or other securities to any person (other than the Investors) and
will not result in a right of any holder of Company securities to adjust the
exercise, conversion, exchange or reset price under such
securities.
EX 99.1 -
Page 5
4.5 Financial Statements;
Accountants. The consolidated financial statements of the
Company and the related notes contained in the Exchange Act Documents present
fairly in all material respects, in accordance with generally accepted
accounting principles, the financial position of the Company and its
subsidiaries as of the dates indicated, and the results of its operations and
cash flows of the Company and its subsidiaries for the periods therein specified
and are consistent with the books and records of the Company except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which are not expected to be material in
amount. Such financial statements (including the related notes) have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods therein specified, except
as may be included in the notes to such financial statements, or in the case of
unaudited statements, as may be permitted by the United States Securities and
Exchange Commission (the “SEC”) on Form 10-Q (and Form
10-QSB, to the extent applicable), under the Exchange Act and except as
disclosed in the Exchange Act Documents. The other financial
information contained in the Exchange Act Documents has been prepared on a basis
consistent with the financial statements of the Company and its subsidiaries
contained in the Exchange Act Documents. To the Company’s knowledge,
Xxxxxxx & Xxxxxx, P.A., who the Company expects will consent to the
inclusion in the Registration Statement referred to in Section 8.1 hereof of any
of its opinions with respect to the financial statements to be incorporated by
reference from the Company’s Exchange Act Documents into the Registration
Statement (as defined below) and the prospectus which forms a part thereof, are
independent accountants as required by the Securities Act of 1933, as amended
(the “Securities Act”),
and the rules and regulations promulgated thereunder.
4.6 Placement Agent; Board of
Directors. Emerging Growth Equities, Ltd. served as placement
agent for the Company’s offering of Series A Stock and, for its services as
placement agent, received a $117,000 fee and a warrant to purchase 320,000
shares of Common Stock, exercisable at $1.10 per share and expiring on December
27, 2011. Emerging Growth Equities, Ltd. served as placement agent
for the Company’s offering of Series B Stock and, for its services as placement
agent, received a $634,872 fee and a warrant to purchase 120,928 shares of
Common Stock, exercisable at $3.30 per share and expiring on June 29,
2012. The Placement Agent served as placement agent for the Company’s
offering pursuant to the Previous Purchase Agreements and, for its services as
placement agent, received a $113,000 fee and warrants to purchase 18,600 shares
of Common Stock, exercisable at $3.58 per share and expiring on March 31,
2013. In connection with the Offering, the Placement Agent will
receive a $___________ fee and a warrant to purchase ____________ shares of
Common Stock, exercisable at $____ per share and expiring on June ____,
2013. Xxxxxx X. Xxxxxxxxx, a former member of the Company’s Board of
Directors and a current stockholder of the Company, is a co-founder and director
of EGE Holdings, Ltd., a holding company with ownership interests in investment
banking, money management and venture capital, including a 100% ownership
interest in Emerging Growth Equities, Ltd. Xx. Xxxxxxxxx received no
compensation from EGE Holdings, Ltd. or Emerging Growth Equities, Ltd. related
to the transactions discussed in this Section 4.6, including the
Offering.
4.7 Company not an “Investment
Company”. The Company has been advised of the rules and
requirements under the Investment Company Act of 1940, as amended (the “Investment Company
Act”). The Company is not, and immediately after receipt of
payment for the Securities contemplated by the Offering will not be, an
“investment company” or an entity “controlled” by an “investment company” within
the meaning of the Investment Company Act and shall conduct its business in a
manner so that it will not become subject to the Investment Company
Act.
4.8 Transfer
Taxes. On the Closing Date, all stock transfer or other taxes
(other than income taxes) which are required to be paid in connection with the
sale and transfer of the Securities to be sold to the Investors under the
Agreements and the Conversion Shares and Warrant Shares to be issued pursuant to
the Preferred Shares and Warrants sold to the Investors under the Agreements
will be, or will have been, fully paid or provided for by the Company and all
laws imposing such taxes will be or will have been fully complied
with.
4.9 Private
Offering. Assuming (i) the correctness of the representations
and warranties of the Investors set forth in Section 5 hereof, (ii) the
correctness of the information provided in the Investor Questionnaire submitted
by each of the Investors and (iii) that Placement Agent’s activities are
consistent with the activities permissible under Rule 506 of Regulation D of the
Securities Act, the offer and sale of the Securities hereunder is exempt from
registration under the Securities Act.
EX 99.1 -
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5. Representations, Warranties
and Covenants of the Investor.
5.1 The
Investor represents and warrants to, and covenants with, the Company that: (i)
the Investor is an “accredited investor” as defined in Regulation D under the
Securities Act and the Investor is also knowledgeable, sophisticated and
experienced in making, and is qualified to make, decisions with respect to
investments in shares presenting an investment decision like that involved in
the purchase of the Securities, including investments in securities issued by
the Company and investments in comparable companies, and has requested,
received, reviewed and considered all information it deemed relevant in making
an informed decision to purchase the Securities; (ii) the Investor is acquiring
the number of Common Shares, Preferred Shares and Warrants set forth in Article
III of the attached Securities Purchase Agreement in the ordinary course of its
business and for its own account for investment only and with no present
intention of distributing any of the Securities or any arrangement or
understanding with any other persons regarding the distribution of such
Securities; (iii) the Investor will not, directly or indirectly, offer, sell,
pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase
or otherwise acquire or take a pledge of) any of the Securities except in
compliance with the Securities Act, applicable state securities laws and the
respective rules and regulations promulgated thereunder; (iv) the Investor has
answered all questions on the Investor Questionnaire for use in preparation of
the Registration Statement and the answers thereto are true, correct and
complete as of the date hereof and will be true, correct and complete as of the
Closing Date; (v) the Investor will notify the Company immediately of any change
in any of such information until such time as the Investor has sold all of its
Common Shares, Conversion Shares and Warrant Shares or until the Company is
otherwise no longer required to keep the Registration Statement effective; and
(vi) the Investor has, in connection with its decision to purchase the number of
Common Shares, Preferred Shares and Warrants set forth in Article III of the
attached Securities Purchase Agreement, relied only upon the Exchange Act
Documents and the representations and warranties of the Company contained
herein. The Investor understands that neither the Offering nor the
acquisition of the Securities have been registered under the Securities Act or
registered or qualified under any state securities law in reliance on specific
exemptions therefrom, which exemptions may depend upon, among other things, the
bona fide nature of the Investor’s investment intent as expressed herein and the
information provided in the Investor’s Investor
Questionnaire. Investor has completed or caused to be completed and
delivered to the Company the Investor Questionnaire, which questionnaire is
true, correct and complete in all material respects.
5.2 The
Investor (other than individuals) is an entity duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization with
full power and authority to enter into and to consummate the transactions
contemplated by this Agreement and otherwise to carry out its obligations
hereunder. The execution, delivery and performance by the Investor of
the transactions contemplated by this Agreement to be performed by the Investor
have been duly authorized by all necessary corporate or similar action on the
part of the Investor. This Agreement has been duly executed by the
Investor, and when delivered by the Investor in accordance with the terms
hereof, will constitute the valid and legally binding obligation of the
Investor, enforceable against it in accordance with its terms, except (i) as
limited by laws of general application relating to bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors’ and
contracting parties’ rights generally, (ii) as limited by rules of law governing
specific performance, injunctive relief, or other equitable remedies, (iii) as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law)
and (iv) to the extent the indemnification and contribution provisions contained
in this Agreement may be limited by applicable federal or state securities laws
or the public policy underlying such laws.
5.3 The
Investor 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.
5.4 The
Investor is (i) acquiring the Securities and (ii) the shares of Common Stock
receivable upon conversion or exercise thereof, in each case, for its own
account and not with a view towards, or for resale in connection with, the
public sale or distribution thereof in violation of the Securities Act;
provided, however, that by making the representations herein, the Investor does
not agree to hold any of the Securities for any minimum or other specific term
and reserves the right to dispose of the Securities under an exemption under the
Securities Act and reserves the right to dispose of the Common Shares,
Conversion Shares and Warrant Shares at any time in accordance with or pursuant
to a registration statement or an exemption under the Securities
Act. The Investor is acquiring the Securities hereunder in the
ordinary course of its business.
5.5 The
Investor understands that the Securities are being offered and sold to it in
reliance on specific exemptions from the registration requirements of United
States federal and state securities laws and that the Company is relying in part
upon the truth and accuracy of, and the Investor’s compliance with, the
representations, warranties, agreements, acknowledgments and understandings of
the Investor set forth herein in order to determine the availability of such
exemptions and the eligibility of the Investor to acquire the
Securities.
EX 99.1 -
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5.6 The
Investor and its advisors, if any, have been furnished with all publicly
available materials relating to the business, finances and operations of the
Company and such other publicly available materials relating to the offer and
sale of the Securities as have been requested by the Investor. The
Investor and its advisors, if any, have been afforded the opportunity to ask
questions of the Company. Neither such inquiries nor any other due
diligence investigations conducted by the Investor or its advisors, if any, or
its representatives shall modify, amend or affect the Investor’s right to rely
on the Company’s representations and warranties contained herein. The
Investor understands that its investment in the Securities involves a high
degree of risk.
5.7 The
Investor understands that no United States federal or state agency or any other
government or governmental agency has passed on or made any recommendation or
endorsement of the Securities or the fairness or suitability of the investment
in the Securities, nor have such authorities passed upon or endorsed the merits
of the offering of the Securities.
6. Survival of Representations,
Warranties and Agreements. All covenants, agreements,
representations and warranties made by the Company and the Investor herein shall
survive the execution of this Agreement, the delivery to the Investor of the
Securities being purchased and the payment therefor.
7. Transfer
Restrictions.
7.1 The
Securities may only be disposed of in compliance with state and federal
securities laws. The Investor will not, directly or indirectly,
offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to
buy, purchase or otherwise acquire or take pledge of) any of the Securities
except in compliance with the Securities Act, applicable state securities laws
and the respective rules and regulations promulgated thereunder. In
connection with any transfer of the Securities other than pursuant to an
effective registration statement, to the Company, to an affiliate of the
Investor (who is an accredited investor and executes a customary representation
letter) or in connection with a pledge as contemplated in Section 7.2 hereof,
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 of such transferred Securities under the Securities Act, provided,
however, that in the case of a transfer pursuant to Rule 144, no opinion shall
be required if the transferor provides the Company with a customary seller’s
representation and broker’s representation letter reasonably satisfactory to the
Company. Any such transferee that agrees in writing to be bound by
the terms of this Agreement shall have the rights of an Investor under this
Agreement, including the rights of a “Selling Stockholder” in Section 8
hereof. The Company shall reissue certificates evidencing the
Securities upon surrender of certificates evidencing the Securities being
transferred in accordance with this Section 7.1.
7.2 The
Investors agree to the imprinting, so long as is required by this Section 7, of
a legend on any of the Securities in substantially the following
form:
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND ARE SUBJECT TO RESTRICTIONS
ON TRANSFERABILITY AS SET FORTH IN THIS CERTIFICATE. THE SECURITIES
REPRESENTED HEREBY MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF
COUNSEL, REASONABLY ACCEPTABLE TO THE COMPANY, TO THE EFFECT THAT THE PROPOSED
SALE, TRANSFER OR DISPOSITION MAY BE AFFECTED WITHOUT REGISTRATION UNDER THE
ACT.
The
Company acknowledges and agrees that the Investor may from time to time pledge
pursuant to a bona fide margin agreement with a registered broker-dealer or
grant a security interest in some or all of the Securities, the Conversion
Shares and the Warrant Shares, in accordance with all applicable securities
laws, to a financial institution that is an “accredited investor” as defined in
Rule 501(a) under the Securities Act and, if required under the terms of such
arrangement, the Investor may transfer pledged or secured Securities to the
pledgees or secured parties; provided that the Investor shall provide the
Company with such documentation as is reasonably requested by the Company to
ensure that the pledge is pursuant to a bona fide margin agreement with a
registered broker-dealer or a security interest in some or all of the Securities
to a financial institution that is an “accredited investor” as defined in Rule
501(a) under the Securities Act.
EX 99.1 -
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7.3 Upon
delivery by the Investor to the Company’s transfer agent, with a copy to the
Company, of the Representation Letter substantially in the form attached hereto
as Exhibit
C, the certificates evidencing the Underlying Shares shall not contain
any legend (including the legend set forth in Section 7.2 hereof): (i) while a
registration statement (including the Registration Statement) covering the
resale of such security is effective under the Securities Act, (ii) following
any sale of such Underlying Shares pursuant to Rule 144, (iii) if such
Underlying Shares are eligible for sale under Rule 144, without the requirement
for the Company to be in compliance with the current public information required
under Rule 144 as to such Underlying Shares and without volume or manner-of-sale
restrictions or (iv) if such legend is not required under applicable
requirements of the Securities Act (including judicial interpretations and
pronouncements issued by the staff of the SEC). The Company shall cause its
counsel to issue a legal opinion to the Transfer Agent promptly after the
Effective Date if required by the Transfer Agent to effect the removal of the
legend hereunder. If all or any shares of Preferred Stock are converted or any
portion of a Warrant is exercised at a time when there is an effective
registration statement to cover the resale of the Underlying Shares, or if such
Underlying Shares may be sold under Rule 144, without the requirement for the
Company to be in compliance with the current public information required under
Rule 144 as to such Underlying Shares and without volume or manner-of-sale
restrictions or if such legend is not otherwise required under applicable
requirements of the Securities Act (including judicial interpretations and
pronouncements issued by the staff of the SEC) then such Underlying Shares shall
be issued free of all legends. The Company agrees that following the
Effective Date or at such time as such legend is no longer required under this
Section 7.3, it will, no later than three Trading Days (as defined below)
following the delivery by a Investor to the Company or the Transfer Agent of a
certificate representing Underlying Shares, as applicable, issued with a
restrictive legend, deliver or cause to be delivered to such Investor a
certificate representing such shares that is free from all restrictive and other
legends. The Company may not make any notation on its records or give
instructions to the Transfer Agent that enlarge the restrictions on transfer set
forth in this Section 4. Certificates for Underlying Shares subject
to legend removal hereunder shall be transmitted by the Transfer Agent to the
Investor by crediting the account of the Investor’s prime broker with the
Depository Trust Company System as directed by such
Investor. “Trading Day” means a day on which the principal Trading
Market is open for trading.
7.4 The
Investor agrees that the removal of the restrictive legend from certificates
representing Securities as set forth in this Section 7 is predicated upon the
Company’s reliance on, and the Investor’s agreement that, the Investor will not
sell any Securities except pursuant to either the registration requirements of
the Securities Act, including any applicable prospectus delivery requirements,
or an exemption from such registration or prospectus delivery
requirements.
8. Registration of Common
Shares, Conversion Shares and Warrant Shares; Compliance with the Securities
Act.
8.1 Registration Procedures and
Other Matters. The Company shall:
(a) upon
request from the Investor, subject to receipt of necessary information from the
Investor after prompt request from the Company to the Investor to provide such
information, prepare and file with the SEC, within 90 days of such request, a
registration statement on such form as is then available to the Company (the
“Registration
Statement”) to enable the resale of the Common Shares, Conversion Shares
and the Warrant Shares (referred to collectively herein as, the “Registrable Securities”) by
the Investors from time to time through the OTC Bulletin Board or in
privately-negotiated transactions or through the facilities of any securities
exchange or securities trading platform through which the Common Stock is
traded, quoted or otherwise included for offer or sale;
(b) use
its reasonable commercial efforts, subject to receipt of necessary information
from the Investors after prompt request from the Company to the Investor to
provide such information, to cause the Registration Statement to become
effective;
(c) use
its commercially reasonable efforts to prepare and file with the SEC such
amendments and supplements to the Registration Statement and the prospectus used
in connection therewith as may be necessary to keep the Registration Statement
current, effective and free from any material misstatement or omission to state
a material fact for a period not exceeding, with respect to each Investor’s
Securities purchased hereunder, the earlier of the date that (i) all Registrable
Securities covered by such Registration Statement have been sold, (ii) all
Registrable Securities may be sold without volume or manner-of-sale restrictions
pursuant to Rule 144, without the requirement for the Company to be in
compliance with the current public information requirement under Rule 144, as
determined by the counsel to the Company pursuant to a written opinion letter to
such effect, addressed and acceptable to the transfer agent and the affected
Investors, or (iii) the second anniversary of the Closing Date;
EX 99.1 -
Page 9
(d) furnish
(which may be furnished electronically) to the Investor with respect to the
Registrable Securities registered under the Registration Statement such number
of copies of the Registration Statement, prospectuses and preliminary
prospectuses in conformity with the requirements of the Securities Act and such
other documents as the Investor may reasonably request, in order to facilitate
the public sale or other disposition of all or any of the Registrable Securities
by the Investor; provided, however, that the obligation of the Company to
deliver copies of prospectuses or preliminary prospectuses to the Investor shall
be subject to the receipt by the Company of reasonable assurances from the
Investor that the Investor will comply with the applicable provisions of the
Securities Act and of such other securities or blue sky laws as may be
applicable in connection with any use of such prospectuses or preliminary
prospectuses;
(e) file
documents required of the Company for normal blue sky clearance in states
specified in writing by the Investor and use its commercially reasonable efforts
to maintain such blue sky qualifications during the period the Company is
required to maintain the effectiveness of the Registration Statement pursuant to
Section 8.1(c); provided, however, that the Company shall not be required to
qualify to do business or consent to service of process in any jurisdiction in
which it is not now so qualified or has not so consented;
(f) bear
all expenses in connection with the procedures in paragraph (a) through (e) of
this Section 8.1 and the registration of the Registrable Securities pursuant to
the Registration Statement except with respect to any legal or attorney fees
incurred by any of the Investors in connection with the Registration Statement
and any amendments thereto, the Company shall be required to bear the fees and
expenses of only one such legal counsel for all of the Investors and the amount
of such fees and expenses for which the Company is responsible shall not exceed
$10,000; and
(g) advise
the Investor (which advisement may occur electronically), promptly after it
shall receive notice or obtain knowledge of the issuance of any stop order by
the SEC delaying or suspending the effectiveness of the Registration Statement
or of the initiation or threat of any proceeding for that purpose; and it will
promptly use its commercially reasonable efforts to prevent the issuance of any
stop order or to obtain its withdrawal at the earliest possible moment if such
stop order should be issued.
The Investor acknowledges that the
Company may include on the Registration Statement; shares of Common Stock of the
Company for resale by certain other stockholders of the Company, and that the
Company may file a subsequent registration statement for the resale of shares of
Common Stock by certain other stockholders of the
Company. Until
such time as the Company has included the Investor’s Registrable
Securities in a Registration Statement, if the Company determines to file a
subsequent registration statement under the Securities Act, in each such
instance, the Company shall give the Investor notice of its plans to file such
registration statement no
less than 5 days and no
more than 60 days prior to the filing thereof, shall afford the Investor the opportunity to have any of its
Registrable Securities registered for resale pursuant to such registration
statement and, upon the request of the Investor by notice to the Company, shall
include in such registration statement such of the Investor’s Registrable Securities as the
Investor so requests be so included
therein. For purposes of this Agreement, the all references to the
term “Registration Statement” shall include each of such registration statements
which purport to register Registrable Securities of the Investor.
8.2 Transfer of Registrable
Securities After Registration; Suspension.
(a) The
Investor agrees that it will not effect any disposition of the Registrable
Securities or its right to purchase the Registrable Securities that would
constitute a sale within the meaning of the Securities Act except as
contemplated in the Registration Statement referred to in Section 8.1 and as
described below or as otherwise permitted by law, and that it will promptly
notify the Company of any changes in the information set forth in the
Registration Statement regarding the Investor or its plan of
distribution.
(b) Except
in the event that paragraph (c) below applies, the Company shall (i) if deemed
necessary by the Company, use commercially reasonable efforts to prepare and
file from time to time with the SEC a post-effective amendment to the
Registration Statement or a supplement to the related prospectus or a supplement
or amendment to any document incorporated therein by reference or file any other
required document so that such Registration Statement will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
so that, as thereafter delivered to purchasers of the Registrable Securities
being sold thereunder, such prospectus will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; (ii) provide the Investor (which may
occur electronically) upon its request copies of any documents filed pursuant to
Section 8.2(b)(i); and (iii) inform each Investor that the Company has
complied with its obligations in Section 8.2(b)(i) (or that, if the Company has
filed a post-effective amendment to the Registration Statement which has not yet
been declared effective, the Company will notify the Investor to that effect,
will use its commercially reasonable efforts to secure the effectiveness of such
post-effective amendment as promptly as possible and will promptly notify the
Investor when the amendment has become effective).
EX 99.1 -
Page 10
(c) Subject
to paragraph (d) below, in the event (i) of any request by the SEC or any other
federal or state governmental authority during the period of effectiveness of
the Registration Statement for amendments or supplements to a Registration
Statement or related prospectus or for additional information; (ii) of the
issuance by the SEC or any other federal or state governmental authority of any
stop order suspending the effectiveness of a Registration Statement or the
initiation of any proceedings for that purpose; (iii) of the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose; or (iv) of any event or circumstance which, upon the advice of its
counsel, necessitates the making of any changes in the Registration Statement or
prospectus, or any document incorporated or deemed to be incorporated therein by
reference, so that, in the case of the Registration Statement, it will not
contain any untrue statement of a material fact or any omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and that in the case of the prospectus, it will not
contain any untrue statement of a material fact or any omission to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; then the Company shall deliver a certificate in writing (which may
be delivered electronically) to the Investor (the “Suspension Notice”) to the
effect of the foregoing and, upon receipt of such Suspension Notice, the
Investor will refrain from selling any Registrable Securities pursuant to the
Registration Statement (a “Suspension”) until the
Investor’s receipt of copies of a supplemented or amended prospectus prepared
and filed by the Company, or until it is advised in writing by the Company that
the current prospectus may be used, and has received copies of any additional or
supplemental filings that are incorporated or deemed incorporated by reference
in any such prospectus. In the event of any Suspension, the Company
will use its commercially reasonable efforts to cause the use of the prospectus
so suspended to be resumed as soon as reasonably practicable after the delivery
of a Suspension Notice to the Investor.
(d) Provided
that a Suspension is not then in effect, the Investor may sell Registrable
Securities under the Registration Statement, provided that it arranges for
delivery of a current prospectus to the transferee of such Registrable
Securities to the extent required by the Securities Act and the rules and
regulations thereunder.
8.3 Indemnification. For
the purpose of this Section 8.3:
(i) the
term “Selling
Stockholder” shall include the Investor and any affiliate of such
Investor;
(ii) the
term “Registration
Statement” shall include the prospectus in the form first filed with the
SEC pursuant to Rule 424(b) of the Securities Act or filed as part of the
Registration Statement at the time of effectiveness if no Rule 424(b) filing is
required, and any exhibit, supplement or amendment included in or relating to
the Registration Statement referred to in Section 8.1 hereof; and
(iii) the
term “untrue statement”
shall include any untrue statement or alleged untrue statement, or any omission
or alleged omission to state in the Registration Statement a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading.
(a) The
Company agrees to indemnify and hold harmless each Selling Stockholder from and
against any losses, claims, damages or liabilities to which such Selling
Stockholder may become subject (under the Securities Act or otherwise) insofar
as such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of, or are based upon (i) any failure by the Company
to comply with the covenants and agreements contained in this Agreement, or (ii)
any untrue statement of a material fact contained in the Registration Statement
as amended at the time of effectiveness or any omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and the Company will reimburse such Selling Stockholder for any
reasonable and documented legal expenses and any other actual, accountable
out-of–pocket documented expenses reasonably incurred in investigating,
defending or preparing to defend any such action, proceeding or claim, or
preparing to defend any such action, proceeding or claim, provided, however, that the
Company shall not be liable in any such case to the extent that such loss,
claim, damage or liability arises out of, or is based upon, an untrue statement
made in such Registration Statement or any omission of a material fact required
to be stated therein or necessary to make the statements therein not misleading
in reliance upon and in conformity with written information furnished to the
Company by or on behalf of such Selling Stockholder specifically for use in
preparation of the Registration Statement or the failure of such Selling
Stockholder to comply with its covenants and agreements contained in this
Agreement. The Company shall reimburse each Selling Stockholder for
the amounts provided for herein within a reasonable period of time after demand
thereof.
EX 99.1 -
Page 11
(b) The
Investor agrees to indemnify and hold harmless the Company (and each person, if
any, who controls the Company within the meaning of Section 15 of the Securities
Act, each officer of the Company who signs the Registration Statement and each
director of the Company) from and against any losses, claims, damages or
liabilities to which the Company (or any such officer, director or controlling
person) may become subject (under the Securities Act or otherwise), insofar as
such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of, or are based upon, (i) any failure by the
Investor to comply with the covenants and agreements contained in this
Agreement, or (ii) any untrue statement of a material fact contained in the
Registration Statement or any omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading if such
untrue statement or omission was made in reliance upon and in conformity with
written information furnished by or on behalf of the Investor specifically for
use in preparation of the Registration Statement, and the Investor will
reimburse the Company (or such officer, director or controlling person), as the
case may be, for any reasonable and documented legal expenses or other actual,
accountable out-of–pocket documented expenses reasonably incurred in
investigating, defending or preparing to defend any such action, proceeding or
claim. In no event shall the liability of any Selling Stockholder
hereunder be greater in amount than the dollar amount of the net proceeds
received by such Selling Stockholder upon the sale of the Registrable Securities
giving rise to such indemnification obligation.
(c) Promptly
after receipt by any indemnified person of a notice of a claim or the beginning
of any action in respect of which indemnity is to be sought against an
indemnifying person pursuant to this Section 8.3, such indemnified person
shall notify the indemnifying person in writing of such claim or of the
commencement of such action, but the omission to so notify the indemnifying
person will not relieve it from any liability which it may have to any
indemnified person under this Section 8.3 (except to the extent that such
omission materially and adversely affects the indemnifying person’s ability to
defend such action) or from any liability otherwise than under this
Section 8.3. Subject to the provisions hereinafter stated, in
case any such action shall be brought against an indemnified person, the
indemnifying person shall be entitled to participate therein, and, to the extent
that it shall elect by written notice delivered to the indemnified person
promptly after receiving the aforesaid notice from such indemnified person,
shall be entitled to assume the defense thereof. After notice from
the indemnifying person to such indemnified person of its election to assume the
defense thereof, such indemnifying person shall not be liable to such
indemnified person for any legal expenses subsequently incurred by such
indemnified person in connection with the defense thereof, provided, however, that if
there exists or shall exist a conflict of interest that would make it
inappropriate, in the opinion of counsel to the indemnified person, for the same
counsel to represent both the indemnified person and such indemnifying person or
any affiliate or associate thereof, the indemnified person shall be entitled to
retain its own counsel at the expense of such indemnifying person; provided,
however, that no indemnifying person shall be responsible for the fees and
expenses of more than one separate counsel (together with appropriate local
counsel) for all indemnified parties. In no event shall any
indemnifying person be liable in respect of any amounts paid in settlement of
any action unless the indemnifying person shall have approved the terms of such
settlement; provided that such
consent shall not be unreasonably withheld. No indemnifying person
shall, without the prior written consent of the indemnified person, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified person is or could have been a party and indemnification could have
been sought hereunder by such indemnified person, unless such settlement
includes an unconditional release of such indemnified person from all liability
on claims that are the subject matter of such proceeding.
(d) If
the indemnification provided for in this Section 8.3 is unavailable to or
insufficient to hold harmless an indemnified person under subsection (a) or (b)
above in respect of any losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) referred to therein, then each indemnifying
person shall contribute to the amount paid or payable by such indemnified person
as a result of such losses, claims, damages or liabilities (or actions in
respect thereof) in such proportion as is appropriate to reflect the relative
fault of the Company on the one hand and each Investor on the other in
connection with the statements or omissions or other matters which resulted in
such losses, claims, damages or liabilities (or actions in respect thereof), as
well as any other relevant equitable considerations. The relative
fault shall be determined by reference to, among other things, in the case of an
untrue statement, whether the untrue statement relates to information supplied
by the Company on the one hand or an Investor or other Selling Stockholder on
the other and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement. The Company
and the Investor agree that it would not be just and equitable if contribution
pursuant to this subsection (d) were determined by pro rata allocation (even if
the Investor and other Selling Stockholders were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to above in this subsection
(d). The amount paid or payable by an indemnified person as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified person in connection with
investigating or defending any such action or claim. Notwithstanding
the provisions of this subsection (d), the Investor shall not be required to
contribute any amount in excess of the amount by which the net amount received
by the Investor from the sale of the Registrable Securities to which such loss
relates exceeds the amount of any damages which such Investor has otherwise been
required to pay by reason of such untrue statement. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Investor’s
obligations in this subsection to contribute shall be in proportion to its
Investor sale of Registrable Securities to which such loss relates and shall not
be joint with any other Selling Stockholders. In no event shall the
liability of any Selling Stockholder hereunder be greater in amount than the
dollar amount of the net proceeds received by such Selling Stockholder upon the
sale of the Registrable Securities giving rise to such indemnification
obligation.
EX 99.1 -
Page 12
(e) The
Investor hereby acknowledges that it is a sophisticated business person who was
represented by counsel during the negotiations regarding the provisions hereof
including, without limitation, the provisions of this Section 8.3, and is
fully informed regarding said provisions. The Investor further
acknowledges that the provisions of this Section 8.3 fairly allocate the
risks involved in the Offering. The Investor and the Company are
advised that federal or state public policy as interpreted by the courts in
certain jurisdictions may be contrary to certain of the provisions of this
Section 8.3, and the Investor and the Company hereto hereby expressly waive
and relinquish any right or ability to assert such public policy as a defense to
a claim under this Section 8.3 and further agree not to attempt to assert
any such defense.
8.4 Termination of Conditions
and Obligations. The conditions precedent imposed by Section 5
or this Section 8 upon the transferability of the Registrable Securities shall
cease and terminate as to any particular number of the Registrable Securities
when such Registrable Securities shall have been effectively registered under
the Securities Act and sold or otherwise disposed of in accordance with the
intended method of disposition set forth in the Registration Statement covering
such Registrable Securities or at such time as an opinion of counsel reasonably
satisfactory to the Company shall have been rendered to the effect that such
conditions are not necessary in order to comply with the Securities
Act.
8.5 Information
Available. So long as the Registration Statement is effective
covering the resale of Registrable Securities owned by the Investor, the Company
will furnish to the Investor:
(a) as
soon as practicable after it is available, one copy of (i) its Annual
Report to Stockholders (which Annual Report shall contain financial statements
audited in accordance with generally accepted accounting principles by a
national firm of certified public accountants), (ii) its Annual Report on
Form 10-K and (iii) its Quarterly Reports on Form 10-Q (the foregoing,
in each case, excluding exhibits);
(b) upon
the reasonable request of the Investor, an adequate number of copies of the
prospectuses to supply to any other party requiring such prospectuses;
and
(c) if
agreed to by the Investor on the signature page to this Agreement, the documents
required to be delivered by the Company pursuant to this Agreement, except for
the prospectus or preliminary prospectus required to be delivered pursuant to
Section 8.1(d) herein, shall be delivered to the Investor in electronic form to
the e-mail address provided by the Investor on the signature page of the
Securities Purchase Agreement.
9. Other
Agreements.
9.1 Public
Information.
(a) If
the Common Stock is not registered under Section 12(b) or 12(g) of the Exchange
Act on the date hereof, the Company agrees to cause the Common Stock to be
registered under Section 12(g) of the Exchange Act on or before the 90th
calendar day following the date hereof. Until the earliest of the time that no
Investor owns Securities, the Company covenants to maintain the registration of
the Common Stock under Section 12(b) or 12(g) of the Exchange Act and to timely
file (or obtain extensions in respect thereof and file within the applicable
grace period) all reports required to be filed by the Company after the date
hereof pursuant to the Exchange Act. The Company covenants that it
will use commercially reasonable efforts to timely file the reports required to
be filed by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder (or, if the Company is not required to
file such reports, it will, upon the request of any Investor holding the
Securities purchased hereunder made after the first anniversary of the Closing
Date, make publicly available such information as necessary to permit sales
pursuant to Rule 144(c)(2) under the Securities Act). The Company
further covenants that it will take such further action as any holder of
Securities may reasonably request, to the extent required from time to time to
enable such Person to sell such Securities without registration under the
Securities Act within the requirements of the exemption provided by Rule
144.
EX 99.1 -
Page 13
(b) At
any time during the period commencing from the six (6) month anniversary of the
date hereof and ending at such time that all of the Securities may be sold
without the requirement for the Company to be in compliance with Rule 144(c)(1)
and otherwise without restriction or limitation pursuant to Rule 144, if the
Company shall fail for any reason to satisfy the current public information
requirement under Rule 144(c) (a “Public Information Failure”)
then, in addition to such Investor’s other available remedies, the Company shall
pay to a Investor, in cash, as partial liquidated damages and not as a penalty,
by reason of any such delay in or reduction of its ability to sell the
Securities, an amount in cash equal to one percent (1.0%) of the aggregate
Subscription Amount of such Investor’s Securities on the day of a Public
Information Failure and on every thirtieth (30th) day (pro rated for periods
totaling less than thirty days) thereafter until the earlier of (a) the date
such Public Information Failure is cured and (b) such time that such public
information is no longer required for the Investors to transfer the Underlying
Shares pursuant to Rule 144. The payments to which a Investor shall
be entitled pursuant to this Section 9.1(b) are referred to herein as “Public Information Failure
Payments.” Public Information Failure Payments shall be paid
on the earlier of (i) the last day of the calendar month during which such
Public Information Failure Payments are incurred and (ii) the third (3rd)
Business Day after the event or failure giving rise to the Public Information
Failure Payments is cured. Nothing herein shall limit such Investor’s
right to pursue actual damages for the Public Information Failure, and such
Investor shall have the right to pursue all remedies available to it at law or
in equity including, without limitation, a decree of specific performance and/or
injunctive relief.
9.2 Securities Laws Disclosure;
Publicity. The Company shall issue a Current Report on Form
8-K, disclosing the material terms of the transactions contemplated hereby, and
including the Transaction Documents as exhibits thereto, in accordance with the
provisions of the Exchange Act. The Company and each Investor shall
consult with each other in issuing any press releases with respect to the
transactions contemplated hereby, and neither the Company nor any Investor shall
issue any such press release nor otherwise make any such public statement with
respect to the transactions contemplated hereby without the prior consent of the
Company, with respect to any press release of any Investor, or without the prior
consent of each Investor, with respect to any press release of the Company,
which consent shall not unreasonably be withheld or delayed, except if such
disclosure is required by law, in which case the disclosing party shall promptly
provide the other party with prior notice of such public statement or
communication.
10. Notices. All
notices, requests, consents and other communications hereunder shall be in
writing, shall be mailed (A) if within the United States by first-class
registered or certified airmail, or nationally recognized overnight express
courier, postage prepaid, by facsimile or e-mail (if agreed to by the Investor),
or (B) if delivered from outside the United States, by international
express courier, facsimile or e-mail (if agreed to by the Investor), and shall
be deemed given (i) if delivered by first-class registered or certified
mail, five business days after so mailed, (ii) if delivered by nationally
recognized overnight carrier, one business day after so mailed, (iii) if
delivered by International Federal Express, two business days after so mailed,
(iv) if delivered by facsimile or e-mail, upon electronic confirmation of
receipt and shall be delivered as addressed as follows:
(a) if
to the Company, to:
0000
Xxxxxxx Xxxx Xxxxx, Xxxxx 000
Xxxxx,
Xxxxxxx 00000
Attn:
Xxxxxxx X. Xxxxxxxx, Chief Financial Officer
(b) with
a copy to:
Xxxxxx,
Xxxxx & Bockius LLP
0000
Xxxxxx Xxxxxx
Xxxxxxxxxxxx,
XX 00000
Attention:
Xxxxxx X. Xxxxxx, Esq.
|
|
(c)
|
if
to the Investor, at its mail or e-mail address on the signature page
hereto, or at such other address or addresses as may have been furnished
to the Company in writing.
|
11. Changes. This
Agreement may not be modified or amended except pursuant to an instrument in
writing signed by the Company and the Investor; provided, however, the
provisions of Section 8.1 may not be amended without the prior written consent
of at least a majority in interest of the Registrable Securities.
12. Headings. The
headings of the various sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed to be part of this
Agreement and do not affect its interpretation.
EX 99.1 -
Page 14
13. Severability. In
case any provision contained in this Agreement should be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby.
14. Governing
Law. This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of Florida, without giving
effect to the principles of conflicts of law.
15. Counterparts. This
Agreement may be executed in two or more counterparts, including facsimile
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties.
16. Confidential
Information. The Investor represents to the Company that, at
all times during the Company’s offering of the Securities, the Investor has
maintained in confidence all non-public information regarding the Company
received by the Investor from the Company or its agents, including information
about the Offering of the Securities and covenants that it will continue to
maintain in confidence such information until such date that the transactions
contemplated hereunder are publicly disclosed pursuant to this
Agreement.
17. Independent Nature of
Investors’ Obligations and Rights. The obligations of each
Investor under any Transaction Document are several and not joint with the
obligations of any other Investor, and no Investor shall be responsible in any
way for the performance or non-performance of the obligations of any other
Investor under any Transaction Document. Nothing contained herein or
in any other Transaction Document, and no action taken by any Investor pursuant
thereto, shall be deemed to constitute the Investors as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Investors are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the
Transaction Documents. Each Investor shall be entitled to
independently protect and enforce its rights, including, without limitation, the
rights arising out of this Agreement or out of the other Transaction Documents,
and it shall not be necessary for any other Investor to be joined as an
additional party in any proceeding for such purpose.
EX 99.1 -
Page 15
Exhibit
A
See
attached.
EX 99.1 -
Page 16
Exhibit
B
See
attached.
EX 99.1 -
Page 17
Exhibit
C
REPRESENTATION
LETTER
[Transfer
Agent Name]
[Transfer
Agent Address]
[Transfer
Agent Address]
|
|
RE:
|
Securities
of nFinanSe Inc. (the “Company”)
|
Dear
Sir/Madam:
The
undersigned hereby certifies that at the time of the sale of its securities in
the Company, it will either (i) sell the securities pursuant to the Company’s
Prospectus dated _____________ (the “Prospectus”) in a manner described under
the caption “Plan of Distribution” in the Prospectus in compliance with all
securities laws applicable to the undersigned, including, without limitation,
the prospectus delivery requirements of the Securities Act of 1933, as amended;
or (ii) sell the securities in compliance with Rule 144 of the Securities Act of
1933, as amended.
Selling
Shareholder (the beneficial
owner):_____________________________________
Record
Holder (e.g., if held in name of
nominee):_________________________________
Restricted
Stock Certificate
No.(s):___________________________________________
Number of
Shares:_______________________________________________________
|
Very
truly yours,
|
|||||
|
Dated:
|
By:
|
||||
|
Print
Name:
|
|||||
|
Title:
|
|||||
EX 99.1 -
Page 18
