SECURITIES PURCHASE AGREEMENT EXHIBIT 4.7
BETWEEN
INTEGRAL TECHNOLOGIES, INC.
AND
THE INVESTOR(S) SIGNATORY HERETO
SECURITIES PURCHASE AGREEMENT (the "Agreement"), between the person
subscribing for Investment Securities by its signatures hereto (the "Investor"),
and Integral Technologies, Inc., a corporation organized and existing under the
laws of the State of Nevada (the "Company"), effective as of the date of
acceptance by the Company as set forth on the signature page hereof.
WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to the Investor,
and the Investor shall purchase the Investment Securities, as defined below.
WHEREAS, such investments will be made in reliance upon the provisions of
Section 4(2) ("Section 4(2)") or 4(6) of the United States Securities Act of
1933, as amended, and Regulation D ("Regulation D") and the other rules and
regulations promulgated thereunder (the "Securities Act"), and/or upon such
other exemption from the registration requirements of the Securities Act as may
be available with respect to any or all of the investments in the Company's
securities to be made hereunder.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1. "Affiliate" means, with respect to any specified Person, any
---------
other Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person, and includes any immediate family member of such Person, and any trust
established by or for the benefit of any one or more such persons exclusively.
Section 1.2. "Closing" shall mean the closing of the purchase and sale of
-------
the Investment Securities pursuant to Section 2.1.
Section 1.3. "Closing Date" shall mean the date on which all conditions to
-------------
the Closing have been satisfied (as defined in Section 2.1 hereto) and the
Closing shall have occurred.
Section 1.4. "Common Stock" shall mean the Company's $.001 par value common
------------
stock.
Section 1.5. "Damages" shall mean any loss, claim, damage, liability, costs
-------
and expenses (including, without limitation, reasonable attorney's fees and
disbursements and reasonable costs and expenses of expert witnesses and
investigation).
1 of 15
Section 1.6. "Exchange Act" shall mean the Securities Exchange Act of 1934,
------------
as amended, and the rules and regulations promulgated thereunder.
Section 1.7. "Legend" shall mean the legend set forth in Section 9.1.
------
Section 1.8. "Material Adverse Effect" shall mean any effect on the
-------------------------
business, operations, properties, prospects, or financial condition of the
Company that is material and adverse to the Company and its subsidiaries and
affiliates, taken as a whole, and/or any condition, circumstance, or situation
that would prohibit or otherwise interfere with the ability of the Company to
enter into and perform any of its obligations under this Agreement in any
material respect.
Section 1.9. "Outstanding" when used with reference to shares of Common
-----------
Stock, shall mean, at any date as of which the number of such shares is to be
determined, all issued and outstanding shares, and shall include all such shares
issuable in respect of outstanding scrip or any certificates representing
fractional interests in such shares; provided, however, that "Outstanding" shall
-------- -------
not mean any such shares then directly or indirectly owned or held by or for the
account of the Company.
Section 1.10. "Person" shall mean any individual, firm, corporation,
------
partnership, limited partnership, company, association, trust or other entity or
organization, as well as any syndicate or group that would be deemed to be a
Person under Section 13(d)(3) of the Exchange Act.
Section 1.11. "Investment Securities" shall mean the Investment Shares and
----------------------
the Investment Warrants.
Section 1.12. "Investment Shares" shall mean the 1,000,000 shares of the
------------------
Company's Common Stock being offered and sold by the Company and purchased by
the Investor under and pursuant to this Agreement.
Section 1.13. "Investment Warrant" shall mean a common stock purchase
-------------------
warrant to purchase up to 500,000 shares of Common Stock on or before two years
after the Closing Date at an exercise price of US$.75 per share, to be offered
and sold by the Company and purchased by the Investor simultaneously with the
purchase of the Investment Shares under and pursuant to this Agreement. The
Investment Warrant shall be in the form of Exhibit A attached hereto.
Section 1.14. "Principal Market" shall mean the OTC Bulletin Board, the
-----------------
American Stock Exchange, the New York Stock Exchange, the NASDAQ National
Market, or the NASDAQ Small-Cap Market, whichever is at the time the principal
trading exchange or market for the Common Stock.
Section 1.15. "Purchase Price" shall mean, (i) as to the Investment Shares,
--------------
fifty cents (US$.50) per Investment Share, and (ii) as to the Investment
Warrant, $.001 per share of Common Stock underlying the Investment Warrant.
Section 1.16. "Registrable Securities" shall mean the Investment Shares and
----------------------
the Warrant Shares until (i) the Registration Statement has been declared
effective by the SEC, and all Investment Shares and Warrant Shares have been
disposed of pursuant to the Registration Statement, (ii) all Investment Shares
and Warrant Shares have been sold under circumstances under which all of the
applicable conditions of Rule 144 (or any similar provision then in force) under
the Securities Act ("Rule 144") are met, (iii) all
2 of 15
Investment Shares and Warrant Shares have been otherwise transferred to holders
who may trade such shares without restriction under the Securities Act, and the
Company has delivered a new certificate or other evidence of ownership for such
securities not bearing a restrictive legend or (iv) such time as, in the opinion
of counsel to the Company, all Investment Shares and Warrant Shares may be sold
without any time, volume or manner limitations pursuant to Rule 144(k) (or any
similar provision then in effect) under the Securities Act.
Section 1.17. "Registration Statement" shall mean a registration statement
-----------------------
on Form SB-2 (if use of such form is then available to the Company pursuant to
the rules of the SEC and, if not, on such other form promulgated by the SEC for
which the Company then qualifies and which counsel for the Company shall deem
appropriate, and which form shall be available for the resale of the Registrable
Securities to be registered thereunder in accordance with the provisions of this
Agreement and in accordance with the intended method of distribution of such
securities), for the registration of the resale by the Investor of the
Registrable Securities under the Securities Act.
Section 1.18. "Regulation D" shall have the meaning set forth in the
-------------
recitals of this Agreement.
Section 1.19. "SEC" shall mean the Securities and Exchange Commission.
---
Section 1.20. "Section 4(2)" shall have the meaning set forth in the
-------------
recitals of this Agreement.
Section 1.21. "Securities Act" shall have the meaning set forth in the
---------------
recitals of this Agreement.
Section 1.22. "SEC Documents" shall mean the Company's Form 10-KSB for the
--------------
fiscal year ended June 30, 2002, and each report or registration statement
subsequently filed by the Company with the SEC pursuant to the Exchange Act or
the Securities Act through the date hereof.
Section 1.23. "Warrant Shares" shall mean all shares of Common Stock
---------------
issuable pursuant to exercise of the Investment Warrant.
ARTICLE II
PURCHASE AND SALE OF INVESTMENT SECURITIES
Section 2.1. Investment.
----------
Upon the terms and subject to the conditions set forth herein, the Company
agrees to sell, and the Investor agrees to purchase, the Investment Securities
on the Closing Date as follows:
(a) Upon execution and delivery of this Agreement and in anticipation
of Closing, the Investor shall deliver the Purchase Price, and the Company shall
deliver the Investment Securities, as follows:
(i) Investment Shares. Upon execution and delivery of this
Agreement, the Investor shall deliver to the Company immediately
available funds in the amount of the aggregate Purchase Price for
the Investment Shares of $____________ and the
3 of 15
Company shall deliver the Investment Shares to the Investor upon
receipt of the funds by the Company.
(ii) Investment Warrant. Simultaneously with the purchase and
sale of the Investment Shares, the Investor shall deliver to the
Company immediately available funds in the amount of the
aggregate Purchase Price for the Investment Warrant of $________,
and the Company shall deliver the Investment Warrant to the
Investor upon receipt of the funds by the Company.
(b) The Closing Date, for purposes of this Agreement, shall be on the
date that all delivery requirements set forth in Section 2.1.(a) have been
completed; provided, however, that the Closing Date shall not be later than
December 31, 2002, unless otherwise agreed by the parties. The obligation of
the parties to consummate the purchase and sale of the Investment Securities on
the Closing Date is subject to the satisfaction of the following conditions:
(i) all representations and warranties of the Investor contained
herein shall remain true and correct as of the Closing Date (as a
condition to the Company's obligations);
(ii) all representations and warranties of the Company contained
herein shall remain true and correct as of the Closing Date (as a
condition to the Investor's obligations);
(iii) the Company shall have obtained all permits and qualifications
required by any state for the offer and sale of the Investment
Securities, or shall have the availability of exemptions
therefrom; and
(iv) the sale and issuance of the Investment Securities hereunder
shall be legally permitted by all laws and regulations to which
the Investor and the Company are subject and there shall be no
ruling, judgment or writ of any court prohibiting the
transactions contemplated by this Agreement.
Section 2.2. Registration Rights. (a) The Company agrees that it will
--------------------
prepare and file with the Commission, within sixty (60) days after the Closing
Date, a Registration Statement, at the sole expense of the Company (except as
provided below), in respect of all Registrable Securities, so as to permit a
public offering and resale of the Registrable Securities under the Act.
(b) The Company shall use its best efforts to cause the Registration
Statement to become effective within one-hundred-twenty (120) days from the
Closing Date, or, if earlier, within five (5) days of SEC clearance to request
acceleration of effectiveness. The Company will notify Investor of the
effectiveness of the Registration Statement within one business day of such
event.
(c) The Company will maintain the Registration Statement or post-effective
amendment until the earlier of (i) the date that all of the Registrable
Securities have been sold pursuant to the Registration Statement, (ii) the date
the Investor receives an opinion of counsel to the Company that the Registrable
Securities may be sold under the provisions of Rule 144 without limitation as to
volume, (iii) all Registrable Securities have been otherwise transferred to
Persons who may trade such shares without restriction under the Securities Act,
and the Company has delivered a new certificate or other evidence of ownership
for such securities not bearing a restrictive legend, or (iv) all Registrable
Securities may be
4 of 15
sold without any time, volume or manner limitations pursuant to Rule 144(k) or
any similar provision then in effect under the Securities Act in the opinion of
counsel to the Company.
(d) All fees, disbursements and out-of-pocket expenses and costs
incurred by the Company in connection with the preparation and filing of the
Registration Statement and in complying with applicable securities and Blue Sky
laws (including, without limitation, all attorneys' fees of the Company) shall
be borne by the Company. The Investor shall bear the cost of underwriting
and/or brokerage discounts, fees and commissions, if any, applicable to the
Registrable Securities being registered and the fees and expenses of its
counsel.
(e) No provision contained herein shall preclude the Company from
selling securities pursuant to any Registration Statement in which it is
required to include Registrable Securities pursuant to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF INVESTOR
The Investor represents and warrants to the Company that:
Section 3.1. Intent. The Investor is entering into this Agreement for its
------
own account and the Investor has no present arrangement (whether or not legally
binding) at any time to sell the Investment Securities to or through any person
or entity; provided, however, that by making the representations herein, the
Investor does not agree to hold such securities for any minimum or other
specific term and reserves the right to dispose of the Investment Securities at
any time in accordance with Article IX of this Agreement.
Section 3.2. Sophisticated and Accredited Investor. The Investor is a
----------------------------------------
sophisticated investor (as described in Rule 506(b)(2)(ii) of Regulation D) and
an accredited investor (as defined in Rule 501 of Regulation D), and Investor
has such experience in business and financial matters that it is capable of
evaluating the merits and risks of an investment in the Investment Securities.
The Investor acknowledges that an investment in the Investment Securities is
speculative and involves a high degree of risk.
Section 3.3. Authority. This Agreement and each agreement which is required
---------
to be executed by Investor has been duly authorized and validly executed and
delivered by the Investor and is a valid and binding agreement of the Investor
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, or similar laws relating to, or affecting generally the
enforcement of, creditors' rights and remedies or by other equitable principles
of general application.
Section 3.4. Absence of Conflicts. The execution and delivery of this
----------------------
Agreement and any other agreements executed in connection herewith, and the
consummation of the transactions contemplated thereby, and compliance with the
requirements thereof, will not violate any law, rule, regulation, order, writ,
judgment, injunction, decree or award binding on Investor or (a) violate any
provision of any indenture, instrument or agreement to which Investor is a party
or is subject, or by which Investor or any of its assets is bound; (b) conflict
with or constitute a material default thereunder; (c) result in the creation or
imposition of any lien pursuant to the terms of any such indenture, instrument
or agreement, or constitute a breach of any fiduciary duty owed by Investor to
any third party; or (d) require the approval of any third-party (which has not
been obtained) pursuant to any material contract, agreement, instrument,
5 of 15
relationship or legal obligation to which Investor is subject or to which any of
its assets, operations or management may be subject.
Section 3.5. Disclosure; Access to Information. The Investor has received
----------------------------------
all documents, records, books and other publicly available information
pertaining to Investor's investment in the Company that have been requested by
the Investor. The Company is subject to the periodic reporting requirements of
the Exchange Act, and the Investor has received copies of all SEC Documents that
have been requested by it.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Investor that, except as may be set
forth in any Schedule of Exceptions attached hereto or as set forth in the SEC
Documents:
Section 4.1. Organization of the Company. The Company is a corporation duly
---------------------------
incorporated and existing in good standing under the laws of the State of Nevada
and has all requisite corporate authority to own its properties and to carry on
its business as now being conducted. The Company does not have any subsidiaries
and does not own more that fifty percent (50%) of or control any other business
entity except as set forth in the SEC Documents. The Company is duly qualified
and is in good standing as a foreign corporation to do business in every
jurisdiction in which the nature of the business conducted or property owned by
it makes such qualification necessary, other than those in which the failure so
to qualify would not have a Material Adverse Effect.
Section 4.2. Authority. (i) The Company has the requisite corporate power
---------
and corporate authority to enter into and perform its obligations under this
Agreement and to issue the Investment Securities, (ii) the execution, issuance
and delivery of this Agreement and the Investment Securities by the Company and
the consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary corporate action and no further consent or
authorization of the Company or its Board of Directors or stockholders is
required, and (iii) this Agreement and the Investment Securities have been duly
executed and delivered by the Company and at the Closing shall constitute valid
and binding obligations of the Company enforceable against the Company in
accordance with their terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, or similar laws relating to, or affecting
generally the enforcement of, creditors' rights and remedies or by other
equitable principles of general application.
Section 4.3. Capitalization. The authorized capital stock of the Company
--------------
consists of 50,000,000 shares of Common Stock, of which approximately 30,787,562
shares are issued and outstanding as of September 30, 2002; and 20,000,000
shares of preferred stock, par value $0.001 per share, 1,000,000 of which have
been designated as Series A Convertible Preferred Stock, of which 439,610 shares
are issued and outstanding as of September 30, 2002. All of the outstanding
shares of Common Stock and Series A Convertible Preferred Stock of the Company
have been duly and validly authorized and issued and are fully paid and
non-assessable.
Section 4.4. SEC Documents. The Company has delivered or made available to
-------------
the Investor true and complete copies of the SEC Documents. The Company has not
provided to the Investor any information that, according to applicable law, rule
or regulation, should have been disclosed publicly prior to the date hereof by
the Company, but which has not been so disclosed. As of their respective dates,
the SEC Documents complied in all material respects with the requirements of the
Exchange Act, and rules and
6 of 15
regulations of the SEC promulgated thereunder and the SEC Documents did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the SEC
Documents complied in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC or other
applicable rules and regulations with respect thereto at the time of such
inclusion. Such financial statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto or (ii) in the case of unaudited interim
statements, to the extent they exclude footnotes or may be condensed or summary
statements) and fairly present in all material respects the financial position
of the Company as of the dates thereof and the results of operations and cash
flows for the periods then ended (subject, in the case of unaudited interim
statements, to normal year-end audit adjustments). Neither the Company nor any
of its subsidiaries has any material indebtedness, obligations or liabilities of
any kind (whether accrued, absolute, contingent or otherwise, and whether due or
to become due) that would have been required to be reflected in, reserved
against or otherwise described in the financial statements or in the notes
thereto in accordance with GAAP, which was not fully reflected in, reserved
against or otherwise described in the financial statements or the notes thereto
included in the SEC Documents or was not incurred in the ordinary course of
business consistent with the Company's past practices since the last date of
such financial statements.
Section 4.5. Exemption from Registration; Valid Issuances. Subject to the
---------------------------------------------
accuracy of the Investor's representations in Article III, the sale of the
Investment Securities will not require registration under the Securities Act
and/or any applicable state securities law. When issued and paid for the
Investment Securities will be duly and validly issued, fully paid, and
non-assessable. Neither the sales of the Investment Securities pursuant to, nor
the Company's performance of its obligations under, this Agreement will (i)
result in the creation or imposition by the Company of any liens, charges,
claims or other encumbrances upon the Investment Securities or any of the assets
of the Company, or (ii) entitle the holders of Outstanding Common Stock to
preemptive or other rights to subscribe to or acquire the Investment Securities
or other securities of the Company. The Investment Securities shall not subject
the Investor to personal liability to the Company or its creditors by reason of
the possession thereof.
Section 4.6. Corporate Documents. The Company has furnished or made
--------------------
available to the Investor true and correct copies of the Company's Certificate
of Incorporation, as amended and in effect on the date hereof (the
"Certificate"), and the Company's By-Laws, as amended and in effect on the date
hereof (the "By-Laws").
Section 4.7. 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 issuance of the Investment
Securities, do not and will not (i) result in a violation of the Company's
Certificate of Incorporation or By-Laws or (ii) conflict with, or constitute a
material default (or an event that with notice or lapse of time or both would
become a default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any material agreement, indenture or
instrument, or any "lock-up" or similar provision of any underwriting or similar
agreement to which the Company is a party, or (iii) result in a violation of any
federal, state or local law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations) applicable to the
Company or by which any material property or asset of the Company is bound or
affected, nor is the Company otherwise in violation of, conflict with or default
under any of the foregoing (except in each case for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as would
not have, individually or in the aggregate, a Material Adverse Effect). The
7 of 15
business of the Company is not being conducted in violation of any law,
ordinance or regulation of any governmental entity, except for possible
violations that either singly or in the aggregate would not have a Material
Adverse Effect. The Company is not required under federal, state or local law,
rule or regulation to obtain any consent, authorization or order of, or make any
filing or registration with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under this Agreement or issue
and sell the Investment Securities in accordance with the terms hereof (other
than any SEC, Principal Market or state securities filings that may be required
to be made by the Company subsequent to Closing and any registration statement
that may be filed pursuant hereto); provided that, for purposes of the
representation made in this sentence, the Company is assuming and relying upon
the accuracy of the relevant representations and agreements of the Investor
herein.
Section 4.8. No Material Adverse Change. Since the date of filing of the SEC
--------------------------
Documents, no Material Adverse Effect has occurred or exists, and no facts have
arisen that would be reasonably expected to result in or constitute a Material
Adverse Effect, with respect to the Company.
Section 4.9. No Undisclosed Events or Circumstances. Since the date of
------------------------------------------
filing of the SEC Documents, no event or circumstance has occurred or exists
with respect to the Company or its businesses, properties, prospects, operations
or financial condition, that, under applicable law, rule or regulation, requires
public disclosure or announcement prior to the date hereof by the Company but
which has not been so publicly announced or disclosed in the SEC Documents.
Section 4.10. No Misleading or Untrue Communication. The Company and, to
---------------------------------------
the knowledge of the Company, any person representing the Company, or any other
person selling or offering to sell the Investment Securities in connection with
the transaction contemplated by this Agreement, have not made, at any time, any
oral communication in connection with the offer or sale of the same which
contained any untrue statement of a material fact or omitted to state any
material fact necessary in order to make the statements, in the light of the
circumstances under which they were made, not misleading.
Section 4.11. Material Non-Public Information. The Company has not
---------------------------------
disclosed to the Investor any material non-public information that (i) if
disclosed, would, or could reasonably be expected to have, a material effect on
the price of the Common Stock or (ii) according to applicable law, rule or
regulation, should have been disclosed publicly by the Company prior to the date
hereof but which has not been so disclosed.
Section 4.12. No Misrepresentation. No representation or warranty of the
---------------------
Company contained in this Agreement, any schedule, annex or exhibit hereto or
any agreement, instrument or certificate furnished by the Company to the
Investor pursuant to this Agreement, contains any untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein, not misleading.
Section 4.13. Additional Investors. The Company expressly reserves the
---------------------
right to offer additional Investment Securities, in any amount, provided that
the Purchase Price and other material terms remain the same as set forth in this
Agreement, to additional investors at any time prior to the Closing Date.
8 of 15
ARTICLE V
COVENANTS OF THE INVESTOR
Section 5.1. Compliance with Law. The Investor's trading activities with
---------------------
respect to shares of the Company's Common Stock will be in compliance with all
applicable state and federal securities laws, rules and regulations and rules
and regulations of the Principal Market on which the Company's Common Stock is
listed.
Section 5.2. No Short Positions. The Investor agrees that neither the
--------------------
Investor nor any of his, her or its affiliates has entered, has the intention of
entering, or will, at any time during which the Investor holds any equity
securities of the Company, enter into any put option, short position or other
similar instrument or position with respect to the Common Stock of the Company.
ARTICLE VI
COVENANTS OF THE COMPANY
Section 6.1. Listing of Common Stock. The Company hereby agrees to maintain
-----------------------
the listing of the Common Stock on a Principal Market, and as soon as reasonably
practicable following the Closing (but in any event prior to the effective date
of the Registration Statement) to list the Registrable Securities on the
Principal Market, if required by such market. The Company further agrees, if
the Company applies to have the Common Stock traded on any other Principal
Market, it will include in such application the Registrable Securities, and will
take such other action as is necessary or desirable in the opinion of the
Investor to cause the Common Stock to be listed on such other Principal Market
as promptly as possible. The Company will take all action to continue the
listing and trading of its Common Stock on a Principal Market (including,
without limitation, maintaining sufficient net tangible assets) and will comply
in all respects with the Company's reporting, filing and other obligations under
the bylaws or rules of the Principal Market and shall provide Investor with
copies of any correspondence to or from such Principal Market which questions or
threatens delisting of the Common Stock, within three (3) business days of the
Company's receipt thereof, until the Investor has disposed of all of its
Registrable Securities.
Section 6.2. Exchange Act Reporting. The Company will use its best efforts
----------------------
to comply in all respects with its reporting and filing obligations under the
Exchange Act, and will not take any action or file any document (whether or not
permitted by the Exchange Act or the rules thereunder) to terminate or suspend
such registration or to terminate or suspend its reporting and filing
obligations under said Act until the Investor has disposed of all of its
Registrable Securities.
Section 6.3. Corporate Existence. The Company will take all steps necessary
-------------------
to preserve and continue the corporate existence of the Company.
Section 6.4. Consolidation; Merger. The Company shall not, at any time
----------------------
after the date hereof, effect any merger or consolidation of the Company with or
into, or a transfer of all or substantially all of the assets of the Company to,
another entity (a "Consolidation Event") unless the resulting successor or
acquiring entity (if not the Company) assumes by written instrument or by
operation
9 of 15
of law the obligation to deliver to the Investor such shares of stock and/or
securities as the Investor is entitled to receive pursuant to this Agreement.
Section 6.5. Issuance of Investment Securities. The sale of the Investment
---------------------------------
Securities shall be made in accordance with the provisions and requirements of
Section 4(2) and Regulation D and any applicable state securities law. The
Company shall make all necessary SEC and "blue sky" filings required to be made
by the Company in connection with the sale of the Investment Securities to the
Investor as required by all applicable Laws, and, upon request, shall provide a
copy thereof to the Investor promptly after such filing.
ARTICLE VII
SURVIVAL; INDEMNIFICATION
Section 7.1. Survival. The representations, warranties and covenants made
--------
by each of the Company and the Investor in this Agreement, the annexes,
schedules and exhibits hereto and in each instrument, agreement and certificate
entered into and delivered by them pursuant to this Agreement, shall survive the
Closing and the consummation of the transactions contemplated hereby. In the
event of a breach or violation of any of such representations, warranties or
covenants, the party to whom such representations, warranties or covenants have
been made shall have all rights and remedies for such breach or violation
available to it under the provisions of this Agreement or otherwise, whether at
law or in equity, irrespective of any investigation made by or on behalf of such
party on or prior to the Closing Date.
Section 7.2. Indemnity. (a) The Company hereby agrees to indemnify and hold
---------
harmless the Investor, its Affiliates and their respective officers, directors,
partners and members (collectively, the "Investor Indemnitees"), from and
against any and all losses, claims, Damages, judgments, penalties, liabilities
and deficiencies (collectively, "Losses"), and agrees to reimburse the Investor
Indemnitees for all reasonable out-of-pocket expenses (including the reasonable
fees and expenses of legal counsel), in each case promptly as incurred by the
Investor Indemnitees and to the extent arising out of or in connection with:
(i) any misrepresentation, omission of fact or breach of any of
the Company's representations or warranties contained in this Agreement,
the annexes, schedules or exhibits hereto or any instrument, agreement or
certificate entered into or delivered by the Company pursuant to this
Agreement; or
(ii) any failure by the Company to perform in any material respect
any of its covenants, agreements, undertakings or obligations set forth in
this Agreement, the annexes, schedules or exhibits hereto or any
instrument, agreement or certificate entered into or delivered by the
Company pursuant to this Agreement.
(b) The Investor hereby agrees to indemnify and hold harmless the
Company, its Affiliates and their respective officers, directors, partners and
members (collectively, the "Company Indemnitees"), from and against any and all
Losses, and agrees to reimburse the Company Indemnitees for reasonable all
out-of-pocket expenses (including the reasonable fees and expenses of legal
counsel), in each case promptly as incurred by the Company Indemnitees and to
the extent arising out of or in connection with:
(i) any misrepresentation, omission of fact, or breach of any of
the Investor's representations or warranties contained in this Agreement,
the annexes, schedules or exhibits
10 of 15
hereto or any instrument, agreement or certificate entered into or
delivered by the Investor pursuant to this Agreement; or
(ii) any failure by the Investor to perform in any material
respect any of its covenants, agreements, undertakings or obligations set
forth in this Agreement or any instrument, certificate or agreement entered
into or delivered by the Investor pursuant to this Agreement.
Section 7.3. Notice. Promptly after receipt by either party hereto seeking
------
indemnification pursuant to Section 7.2 (an "Indemnified Party") of written
notice of any investigation, claim, proceeding or other action in respect of
which indemnification is being sought (each, a "Claim"), the Indemnified Party
promptly shall notify the party against whom indemnification pursuant to Section
7.2 is being sought (the "Indemnifying Party") of the commencement thereof; but
the omission to so notify the Indemnifying Party shall not relieve it from any
liability that it otherwise may have to the Indemnified Party, except to the
extent that the Indemnifying Party is materially prejudiced and forfeits
substantive rights and defenses by reason of such failure. In connection with
any Claim as to which both the Indemnifying Party and the Indemnified Party are
parties, the Indemnifying Party shall be entitled to assume the defense thereof.
Notwithstanding the assumption of the defense of any Claim by the Indemnifying
Party, the Indemnified Party shall have the right to employ separate legal
counsel and to participate in the defense of such Claim, and the Indemnifying
Party shall bear the reasonable fees, out-of-pocket costs and expenses of such
separate legal counsel to the Indemnified Party if (and only if): (x) the
Indemnifying Party shall have agreed to pay such fees, out-of-pocket costs and
expenses, (y) the Indemnified Party and the Indemnifying Party reasonably shall
have concluded that representation of the Indemnified Party and the Indemnifying
Party by the same legal counsel would not be appropriate due to actual or, as
reasonably determined by legal counsel to the Indemnified Party, potentially
differing interests between such parties in the conduct of the defense of such
Claim, or if there may be legal defenses available to the Indemnified Party that
are in addition to or disparate from those available to the Indemnifying Party,
or (z) the Indemnifying Party shall have failed to employ legal counsel
reasonably satisfactory to the Indemnified Party within a reasonable period of
time after notice of the commencement of such Claim. If the Indemnified Party
employs separate legal counsel in circumstances other than as described in
clauses (x), (y) or (z) above, the fees, costs and expenses of such legal
counsel shall be borne exclusively by the Indemnified Party. Except as provided
above, the Indemnifying Party shall not, in connection with any Claim in the
same jurisdiction, be liable for the fees and expenses of more than one firm of
legal counsel for the Indemnified Party (together with appropriate local
counsel). The Indemnifying Party shall not, without the prior written consent
of the Indemnified Party (which consent shall not unreasonably be withheld),
settle or compromise any Claim or consent to the entry of any judgment that does
not include an unconditional release of the Indemnified Party from all
liabilities with respect to such Claim or judgment.
Section 7.4. Direct Claims. In the event one party hereunder should have a
-------------
claim for indemnification that does not involve a claim or demand being asserted
by a third party, the Indemnified Party promptly shall deliver notice of such
claim to the Indemnifying Party. If the Indemnified Party disputes the claim,
such dispute shall be resolved by mutual agreement of the Indemnified Party and
the Indemnifying Party or by binding arbitration conducted in accordance with
the procedures and rules of the American Arbitration Association as set forth in
Article X. Judgment upon any award rendered by any arbitrators may be entered
in any court having competent jurisdiction thereof.
11 of 15
ARTICLE VIII
DUE DILIGENCE REVIEW; NON-DISCLOSURE OF NON-PUBLIC INFORMATION.
Section 8.1. Due Diligence Review. Subject to Section 8.2, the Company
----------------------
shall make available for inspection and review by the Investor, advisors to and
representatives of the Investor (who may or may not be affiliated with the
Investor and who are reasonably acceptable to the Company). All SEC Documents
and other filings with the SEC, and all other publicly available corporate
documents and properties of the Company as may be reasonably necessary for the
purpose of such review, and cause the Company's officers, directors and
employees to supply all such publicly available information reasonably requested
by the Investor or any such representative or advisor.
Section 8.2. Non-Disclosure of Non-Public Information. (a) The Company shall
----------------------------------------
not disclose material non-public information to the Investor, advisors to or
representatives of the Investor unless prior to disclosure of such information
the Company identifies such information as being non-public information and
provides the Investor, such advisors and representatives with the opportunity to
accept or refuse to accept such non-public information for review. The Company
may, as a condition to disclosing any non-public information hereunder, require
the Investor's advisors and representatives to enter into a confidentiality
agreement in form reasonably satisfactory to the Company and the Investor.
(b) Nothing herein shall require the Company to disclose material
non-public information to the Investor or its advisors or representatives, and
the Company represents that it does not disseminate material non-public
information to any investors who purchase stock in the Company in a public
offering, to money managers or to securities analysts.
ARTICLE IX
LEGENDS
Section 9.1. Legends. Unless otherwise provided below, each certificate
-------
representing Investment Securities, the Investment Warrant and Registrable
Securities will bear the following legend or equivalent (the "Legend"):
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY OTHER
APPLICABLE SECURITIES LAWS AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN
MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED, HYPOTHECATED
OR OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO A TRANSACTION THAT IS EXEMPT FROM, OR
NOT SUBJECT TO, SUCH REGISTRATION.
Section 9.2. No Other Legend or Stock Transfer Restrictions. No legend
--------------------------------------------------
other than the one specified in Section 9.1 has been or shall be placed on the
Investment Warrant or the share certificates representing
12 of 15
the Investment Securities and Registrable Securities and no instructions or
"stop transfer orders," so called, "stock transfer restrictions," or other
restrictions have been or shall be given to the Company's transfer agent with
respect thereto other than as expressly set forth in this Article IX. The
Company will not engage an independent transfer agent with respect to the
Investment Securities or the Investment Warrant.
Section 9.3. Investor's Compliance. Nothing in this Article shall affect in
---------------------
any way the Investor's obligations to comply with all applicable securities laws
upon resale of the Investment Securities, the Investment Warrant and the
Registrable Securities.
ARTICLE X
CHOICE OF LAW
Section 10.1. Governing Law/Arbitration. This Agreement shall be governed
--------------------------
by and construed in accordance with the laws of the State of Colorado applicable
to contracts made in Nevada by persons domiciled in Colorado and without regard
to its principles of conflicts of laws. Any dispute under this Agreement or any
Exhibit attached hereto shall be submitted to arbitration under the American
Arbitration Association (the "AAA") in Denver, Colorado, and shall be finally
and conclusively determined by the decision of a board of arbitration consisting
of three (3) members (hereinafter referred to as the "Board of Arbitration")
selected as according to the rules governing the AAA. The Board of Arbitration
shall meet on consecutive business days in Denver, Colorado, and shall reach and
render a decision in writing (concurred in by a majority of the members of the
Board of Arbitration) with respect to the amount, if any, which the losing party
is required to pay to the other party in respect of a claim filed. In
connection with rendering its decisions, the Board of Arbitration shall adopt
and follow the laws of the State of Colorado. To the extent practical,
decisions of the Board of Arbitration shall be rendered no more than thirty (30)
calendar days following commencement of proceedings with respect thereto. The
Board of Arbitration shall cause its written decision to be delivered to all
parties involved in the dispute. Any decision made by the Board of Arbitration
(either prior to or after the expiration of such thirty (30) calendar day
period) shall be final, binding and conclusive on the parties to the dispute,
and entitled to be enforced to the fullest extent permitted by law and entered
in any court of competent jurisdiction. The non-prevailing party to any
arbitration (as determined by the Board of Arbitration) shall pay the expenses
of the prevailing party including reasonable attorney's fees, in connection with
such arbitration.
ARTICLE XI
ASSIGNMENT
Section 11.1. Assignment. Neither this Agreement nor any rights of the
----------
Investor or the Company hereunder may be assigned by either party to any other
person.
ARTICLE XII
NOTICES
Section 12.1. Notices. All notices, demands, requests, consents, approvals,
-------
and other communications required or permitted hereunder shall be in writing
and, unless otherwise specified herein, shall be
13 of 15
deemed to have been given or made upon receipt and shall be (i) personally
served, (ii) deposited in the mail, registered or certified, return receipt
requested, postage prepaid, or (iii) delivered by reputable air courier service
with charges prepaid. In all cases, at the same time any such communication is
made or given, a copy shall be delivered by facsimile, and the receiving party
shall promptly acknowledge receipt by return facsimile. The addresses for such
communications shall be:
If to the Company: Integral Technologies, Inc.
0000 Xxxx Xxxxxx Xxxxxx, Xxxxx #0
Xxxxxxxxx, X.X., Xxxxxx X0X 0X0
Attention: Xxxxxxx X. Xxxxxxxx, CEO
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to: Futro & Xxxxxxxxxxx LLC
(shall not constitute notice) 0000 Xxxxxxxxxxx Xxxxxx
00xx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
if to the Investor: As set forth on the signature page
Either party hereto may from time to time change its address or facsimile number
for notices under this Section 12.1 by giving written notice of such changed
address or facsimile number to the other party hereto as provided in this
Section 12.1.
ARTICLE XIII
MISCELLANEOUS
Section 13.1. Counterparts/ Facsimile/ Amendments. This Agreement may be
-------------------------------------
executed in multiple counterparts, each of which may be executed by less than
all of the parties and shall be deemed to be an original instrument which shall
be enforceable against the parties actually executing such counterparts and all
of which together shall constitute one and the same instrument. Except as
otherwise stated herein, in lieu of the original documents, a facsimile
transmission or copy of the original documents shall be as effective and
enforceable as the original. This Agreement may be amended only by a writing
executed by all parties.
Section 13.2. Entire Agreement. This Agreement sets forth the entire
-----------------
agreement and understanding of the parties relating to the subject matter hereof
and supersedes all prior and contemporaneous agreements, negotiations and
understandings between the parties, both oral and written relating to the
subject matter hereof. The terms and conditions of any exhibits to this
Agreement are incorporated herein by this reference and shall constitute part of
this Agreement as is fully set forth herein.
Section 13.3. Severability. In the event that any provision of this
------------
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full
14 of 15
force and effect without said provision; provided that such severability shall
be ineffective if it materially changes the economic benefit of this Agreement
to any party.
Section 13.4. Headings. The headings used in this Agreement are used for
--------
convenience only and are not to be considered in construing or interpreting this
Agreement.
Section 13.5. Replacement of Certificates. Upon (i) receipt of evidence
-----------------------------
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of the Investment Warrant or a certificate representing the
Investment Securities or the Registrable Securities and (ii) in the case of any
such loss, theft or destruction of such certificate, upon delivery of an
indemnity agreement or security reasonably satisfactory in form and amount to
the Company (which shall not exceed that required by the Company's transfer
agent in the ordinary course) or (iii) in the case of any such mutilation, on
surrender and cancellation of such certificate, the Company at its expense will
execute and deliver, in lieu thereof, a new certificate of like tenor.
Section 13.6. Fees and Expenses. Each of the Company and the Investor agrees
-----------------
to pay its own expenses incident to the performance of its obligations
hereunder.
Section 13.7. Brokerage. Each of the parties hereto represents that it has
---------
had no dealings in connection with this transaction with any finder or broker
who will demand payment of any fee or commission from the other party. The
Company on the one hand, and the Investor, on the other hand, agree to indemnify
the other against and hold the other harmless from any and all liabilities to
any person claiming brokerage commissions or finder's fees on account of
services purported to have been rendered on behalf of the indemnifying party in
connection with this Agreement or the transactions contemplated hereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by the undersigned, thereunto duly authorized, as of the dates set
forth below.
Address: INVESTOR:
_______________________________ _________________________________________
Name of Investor
_______________________________ By:______________________________________
_______________________________ Print Name:_____________________________
Telephone:_____________________ Title:___________________________________
Fax:___________________________ Date:____________________________________
================================================================================
ACCEPTED: INTEGRAL TECHNOLOGIES, INC.
DATED:_______________________ By: __________________________________
Xxxxxxx X. Xxxxxxxx, CEO
15 of 15
