INVESTMENT AGREEMENT
Exhibit
4.7
INVESTMENT
AGREEMENT
(the
"Agreement"),
dated
as of [DATE], by and among Xxxxx.xxx Holdings, Inc., a Delaware corporation
(the "Company"),
and
the buyers set forth on Schedule
A
hereto
(each, a "Buyer",
and
collectively, the "Buyers").
WHEREAS:
A. The
Company wishes to sell and each Buyer wishes to purchase, upon the terms and
conditions stated in this Agreement, that aggregate number of Units set forth
opposite such Buyer's name on Schedule
A
attached
hereto. As used herein, a "Unit"
shall
consist of (i) 15,105 shares of the Company's common stock, par value $0.0001
per share (the "Common
Stock")
at a
price per share equal to $3.31, and (ii) a warrant, in substantially the
form attached hereto as Exhibit
A
(a
“Warrant”)
to
acquire 7,553 shares of Common Stock at an exercise price of $4.14 per share.
Each Warrant shall be exercisable to purchase shares of Common Stock upon the
terms and conditions set forth in the Warrants. The shares of Common Stock
to be
issued hereto are referred to herein as the “Shares”
and
the
shares of Common Stock to be issued upon exercise of a Warrant are referred
to
herein as the “Warrant
Shares”.
B. The
Company and Buyer are executing and delivering this Agreement in reliance upon
the exemption from securities registration afforded by Section 4(2) of the
Securities Act of 1933, as amended (the "1933
Act"),
and
Rule 506 of Regulation D ("Regulation D")
as
promulgated by the United States Securities and Exchange Commission (the
"SEC")
under
the 1933 Act.
C. Certain
of the Buyers herein are holders of promissory notes from the Company (the
“Authorized
Promissory Notes”),
and
such Buyers are set forth on Schedule
B
hereto
(the “Authorized
Note Holders”)
along
with the amounts that the Company owes such Buyers pursuant to the Authorized
Promissory Notes.
D. Contemporaneously
with the Closing, the parties hereto will execute and deliver a Registration
Rights Agreement, substantially in the form attached hereto as Exhibit
B
(the
"Registration
Rights Agreement"),
pursuant to which the Company will agree to provide certain registration rights
with respect to the Registrable Securities (as defined in the Registration
Rights Agreement) under the 1933 Act and the rules and regulations promulgated
thereunder, and applicable state securities laws.
E. The
Company has entered into a Second Amended and Restated Stockholders Agreement,
dated on or about the date hereof, with certain stockholders of the Company
(the
“Stockholders’
Agreement”);
concurrently with the Closing, the Buyers hereto will execute and deliver a
signature page to the Stockholders’ Agreement and become Investors as set forth
therein.
X. Xxxxxxx
Securities, LLC (the “Placement
Agent”)
has
been retained by the Corporation as exclusive placement agent for the offer
and
sale of the Units for an amount up to $4,000,000. The Units will be offered
by
the Placement Agent on a "best efforts" basis.
G. The
Units, the Shares, the Warrants and the Warrant Shares collectively are referred
to herein as the "Securities".
NOW,
THEREFORE,
the
Company and Buyer hereby agree as follows:
1. PURCHASE
AND SALE OF UNIT.
(a) Purchase
of Unit.
(i) Units. Subject
to the satisfaction (or waiver) of the conditions set forth in Sections 7 and
8
below, the Company shall issue and sell to each Buyer, and each Buyer agrees
to
purchase from the Company on the Closing Date (as defined below), the
Units.
(ii) Initial
Closing.
The
date and time of the initial Closing shall be 10:00 a.m., Eastern Standard
Time,
on October 19, 2007 (or such later date as is mutually agreed to by the Company
and Buyer) after notification of satisfaction (or waiver) of the conditions
to
the Closing set forth in Sections 7 and 8 below (the “Initial
Closing Date”),
at
the offices of Rele & Xxxxxx LLC, 0000 Xxxxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx
Xxxx. Alternatively, the Closing can take place by the exchange of final
executed closing documents between legal counsel for the Company and Buyer.
(iii) Additional
Closings.
During
the period commencing on the Initial Closing Date and ending November 15, 2007
(the “Additional
Sale Period”),
the
Company may offer for sale and sell pursuant to this Agreement additional Units
(the “Additional
Units”),
up
until $4,000,000 of Units have been sold (including the Units sold on the
Initial Closing Date), on the terms and subject to the conditions set forth
in
this Agreement; provided;
however,
that no
such sale shall be consummated subsequent to the end of the Additional Sale
Period. The closing or closings hereunder during the Additional Sale Period
with
respect to the purchase and sale of Additional Units (each of said closings
being sometimes hereinafter referred to as an "Additional
Closing Date,"
and
together with the Initial Closing Date, the “Closing
Date”),
if
any, shall take place at the offices of Buyer’s or by the exchange of final
executed closing documents between legal counsel for the Company and Buyer
on a
business day mutually acceptable to the Company and Buyer.
(iv) Purchase
Price.
The
purchase price for each Unit (the "Purchase
Price")
shall
be Fifty Thousand Dollars ($50,000).
(b) Form
of Payment.
On the
Closing Date, subject to the satisfaction of the conditions to closing, (i)
each
Buyer shall deliver by wire transfer to an account designated by the Company,
no
later than the close of business on the Closing Date the aggregate Purchase
Price for the Units and (ii) each of the Authorized Note Holders shall deliver
their Authorized Promissory Notes to the Company.
(c) Delivery
of Common Stock and Warrant to the Buyers.
On the
Closing Date, the Company shall deliver to each Buyer (i) a stock certificate
representing that number of shares of Common Stock set forth opposite such
Buyer’s name on Schedule
A
hereto,
registered in the name of such Buyer and dated the Closing Date and (ii) a
Warrant for the number of shares set forth opposite such Buyer’s name on
Schedule
A
hereto,
against receipt by the Corporation of the consideration set forth in Section
1(b) above.
-2-
(d) Additional
Buyers.
(i) Upon
the
sale of Additional Units during the Additional Sale Period, such additional
Buyers shall be deemed a Buyer hereunder and under the Registration Rights
Agreement and Stockholders’ Agreement, bound by the applicable terms and
provisions of this Agreement, the Registration Rights Agreement and the
Stockholders’ Agreement, subject to all the obligations and duties imposed upon,
and entitled to all rights and benefits accorded to, the Buyers generally under
this Agreement, the Registration Rights Agreement, and the Stockholders’
Agreement to the same extent as if originally named herein and therein as a
Buyer.
(ii) In
connection with the sale and delivery of Additional Units, the Company and
each
additional Buyer shall execute and deliver a supplement to this Agreement (a
“Supplement”),
reflecting the name and address of such additional Buyer, the number of
Additional Units purchased thereunder and such other changes as are necessary
to
reflect the consummation of the transactions contemplated hereby and intervening
events between the date hereof and the date of such sale. Thereupon,
Schedule
A
hereto
shall be deemed automatically and without further action on the part of the
parties hereto amended to reflect the issuance of the Additional Units to such
additional Buyers.
2. BUYER'S
REPRESENTATIONS AND WARRANTIES.
Buyer
represents and warrants that:
(a) No
Sale or Distribution.
Buyer
is acquiring the Units, Shares, Warrant, and upon exercise of the Warrant,
will
acquire the Warrant Shares issuable upon exercise of the Warrant, as the case
may be, for its own account and not with a view towards, or for resale in
connection with, the public sale or distribution thereof, except pursuant to
sales registered or exempted under the 1933 Act; provided,
however,
that by
making the representations herein, Buyer 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 at any time and from time to time in accordance with
or pursuant to a registration statement or an exemption under the 1933 Act
and
pursuant to the applicable terms of the Transaction Documents (as defined in
Section 3(b)). Buyer is acquiring the Securities hereunder in the ordinary
course of its business. Buyer does not presently have any agreement or
understanding, directly or indirectly, with any Person to distribute any of
the
Securities.
(b) Accredited
Investor Status.
Buyer
is an "accredited investor" as that term is defined in Rule 501(a) of Regulation
D and has executed an accurate, true and complete Investor Suitability
Questionnaire in the form of Exhibit C hereto.
(c) Reliance
on Exemptions.
Buyer
understands that the Securities are being offered and sold to it in reliance
on
specific exemptions from the registration requirements of United States federal
and state securities laws and that the Company is relying in part upon the
truth
and accuracy of, and Buyer's compliance with, the representations, warranties,
agreements, acknowledgments and understandings of Buyer set forth herein in
order to determine the availability of such exemptions and the eligibility
of
Buyer to acquire the Securities.
-3-
(d) Information.
Buyer
and its advisors, if any, have been furnished with all materials relating to
the
business, finances and operations of the Company and materials relating to
the
offer and sale of the Securities that have been requested by Buyer. Buyer 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 Buyer or its advisors, if any, or its representatives shall modify,
amend or affect Buyer's right to rely on the Company's representations and
warranties contained herein. Buyer understands that its investment in the
Securities involves a high degree of risk and is able to afford a complete
loss
of such investment. Buyer has sought such accounting, legal and tax advice
as it
has considered necessary to make an informed investment decision with respect
to
its acquisition of the Securities.
(e) No
Governmental Review.
Buyer
understands that no United States federal or state agency or any other
government or governmental agency has passed on or made any recommendation
or
endorsement of the Securities 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.
(f) Transfer
or Resale.
Buyer
understands that except as provided in the Registration Rights Agreement: (i)
the Securities have not been and are not being registered under the 1933 Act
or
any state securities laws, and may not be offered for sale, sold, assigned
or
transferred unless (A) subsequently registered thereunder, (B) Buyer shall
have
delivered to the Company an opinion of counsel, in a generally acceptable form,
to the effect that such Securities to be sold, assigned or transferred may
be
sold, assigned or transferred pursuant to an exemption from such registration,
or (C) Buyer provides the Company with reasonable assurance that such Securities
can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A
promulgated under the 1933 Act, as amended (or a successor rule thereto)
(collectively, "Rule
144");
(ii)
any sale of the Securities made in reliance on Rule 144 may be made only in
accordance with the terms of Rule 144 and further, if Rule 144 is not
applicable, any resale of the Securities under circumstances in which the seller
(or the Person (as defined in Section 3(s)) through whom the sale is made)
may
be deemed to be an underwriter (as that term is defined in the 0000 Xxx) may
require compliance with some other exemption under the 1933 Act or the rules
and
regulations of the SEC thereunder; and (iii) neither the Company nor any other
Person is under any obligation to register the Securities under the 1933 Act
or
any state securities laws or to comply with the terms and conditions of any
exemption thereunder.
(g) Legends.
Buyer
understands that the Shares and the Warrant and, until such time as the resale
of the Shares or Warrant Shares have been registered under the 1933 Act as
contemplated by the Registration Rights Agreement, the stock certificates
representing the Shares and Warrant Shares, except as set forth below, shall
bear any legend as required by the "blue sky" laws of any state and a
restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of such stock certificates):
NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR
THE
SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
(I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL,
IN
FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY, THAT REGISTRATION
IS
NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE
144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES.
-4-
(h) Validity;
Enforcement.
This
Agreement and the Transaction Documents to which Buyer is a party have been
duly
and validly authorized, executed and delivered on behalf of Buyer and shall
constitute the legal, valid and binding obligations of Buyer enforceable against
Buyer in accordance with their respective terms, except as such enforceability
may be limited by general principles of equity or to applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation and other similar laws
relating to, or affecting generally, the enforcement of applicable creditors'
rights and remedies.
(i) No
Conflicts.
The
execution, delivery and performance by Buyer of this Agreement and the
Transaction Documents and the consummation by Buyer of the transactions
contemplated hereby and thereby will not (i) result in a violation of the
organizational documents of Buyer or (ii) conflict with, or constitute a default
(or an event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration
or
cancellation of, any agreement, indenture or instrument to which Buyer is a
party, or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws) applicable
to
Buyer, except in the case of clauses (ii) and (iii) above, for such conflicts,
defaults, rights or violations which would not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
ability of Buyer to perform its obligations hereunder.
3. REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.
The
Company represents and warrants to Buyer that, as of the date hereof and as
of
the Closing Date as follows (which representations and warranties shall be
deemed to apply, where noted, to each subsidiary of the Company:
(a) Organization
and Qualification.
The
Company and its Subsidiaries (as set forth on Schedule
3(a)
hereto)
are entities duly organized and validly existing and, to the extent legally
applicable, in good standing under the laws of the State of Delaware and have
the requisite power and authorization to own their properties and to carry
on
their business as now being conducted. Each of the Company and its Subsidiaries
is duly qualified as a foreign entity to do business and to the extent legally
applicable, is in good standing in every jurisdiction in which its ownership
of
property or the nature of the business conducted by it makes such qualification
necessary, except to the extent that the failure to be so qualified or be in
good standing would not reasonably be expected to have a Material Adverse
Effect. As used in this Agreement, "Material
Adverse Effect"
means
any material adverse effect on the business, properties, assets, operations,
results of operations, or condition (financial or otherwise) of the Company
and
its Subsidiaries, taken as a whole, or on the transactions contemplated hereby
and the other Transaction Documents or by the agreements and instruments to
be
entered into in connection herewith or therewith, or on the authority or ability
of the Company to perform its obligations under the Transaction Documents.
-5-
(b) Authorization;
Enforcement; Validity.
The
Company has the requisite corporate power and authority to enter into and
perform its obligations under this Agreement, the Registration Rights Agreement,
the Stockholders’ Agreement, the Warrant and each of the other agreements
entered into by the parties hereto in connection with the transactions
contemplated by this Agreement (collectively, the "Transaction
Documents")
and to
issue the Securities in accordance with the terms hereof and thereof. The
execution and delivery of the Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby,
including, without limitation, the issuance of the Units, the Shares and the
Warrant, and the reservation for issuance and the issuance of the Warrant Shares
issuable upon exercise of the Warrant, have been duly authorized by the
Company's Board of Directors and other than as set forth in Section 3(e), no
further filing, consent, or authorization is required by the Company, its Board
of Directors or its stockholders. This Agreement and the other Transaction
Documents of even date herewith have been duly executed and delivered by the
Company, and constitute the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective terms,
except as such enforceability may be limited by general principles of equity
or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
or
similar laws relating to, or affecting generally, the enforcement of applicable
creditors' rights and remedies.
(c) Issuance
of Securities.
The
issuance, sale and delivery of the Shares and the Warrants have been duly
authorized by all requisite corporate action of the Company, and the Warrant
Shares have been reserved for issuance pursuant to this Agreement, and when
issued, sold and delivered in accordance with the terms of this Agreement,
the
Warrant and the Certificate of Incorporation, the Shares and the Warrant Shares
will be validly issued and outstanding, fully paid and nonassessable and will
not be subject to preemptive or other similar rights of the stockholders of
the
Corporation or others, except as set forth in this Agreement or in the
Stockholders’ Agreement, and will be free and clear of all liens, charges,
restrictions, claims and encumbrances imposed by the Company. Assuming the
accuracy of each of the representations and warranties set forth in Section
2 of
this Agreement, the offer and issuance by the Company of the Securities is
exempt from registration under the 1933 Act.
(d) No
Conflicts.
The
execution, delivery and performance of the Transaction Documents by the Company
and the consummation by the Company of the transactions contemplated hereby
and
thereby (including, without limitation, the issuance of the Unit, the Shares
and
the Warrant and reservation for issuance and issuance of the Warrant Shares)
will not (i) result in a violation of any certificate of incorporation,
certificate of formation, any certificate of designations or other constituent
documents of the Company or any of its Subsidiaries, any capital stock of the
Company or any of its Subsidiaries or bylaws of the Company or any of its
Subsidiaries or (ii) conflict with, or constitute a default or breach (or an
event which with notice or lapse of time or both would become a default or
breach) in any respect under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Company or any of its Subsidiaries is a party, or (iii)
result in a violation of any law, rule, regulation, order, judgment or decree
(including foreign, federal and state securities laws and regulations)
applicable to the Company or any of its Subsidiaries or by which any property
or
asset of the Company or any of its Subsidiaries is bound or affected, except
in
the case of clauses (ii) and (iii) above, to the extent that such violations
conflict, default or right would not reasonably be expected to have a Material
Adverse Effect.
-6-
(e) Consents.
Neither
the Company nor any of its Subsidiaries is required to obtain any consent,
authorization or order of, or make any filing or registration with, any court,
governmental agency or any regulatory or self-regulatory agency or any other
Person (as defined below) in order for it to execute, deliver or perform any
of
its obligations under or contemplated by the Transaction Documents, in each
case
in accordance with the terms hereof or thereof. "Person"
means
an individual, a limited liability company, a partnership, a joint venture,
a
corporation, a trust, an unincorporated organization and a government or any
department or agency thereof
(f) No
General Solicitation; Placement Agent's Fees.
Neither
the Company, nor any of its Subsidiaries or affiliates, nor any Person acting
on
its or their behalf, has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D) in connection with the offer
or
sale of the Securities. The Company shall be responsible for the payment of
the
Placement Agent's fees. Other than the Placement Agent, no person or entity
acting on behalf of or under the authority of the Company is or will be entitled
to any broker’s, finder’s or similar fee or commission in connection with the
transactions contemplated under this Agreement.
(g) No
Integrated Offering.
None of
the Company, its Subsidiaries, any of their affiliates, and any Person acting
on
their behalf has, directly or indirectly, made any offers or sales of any
security or solicited any offers to buy any security, under circumstances that
would require registration of any of the Securities under the 1933 Act or cause
this offering of the Securities to be integrated with prior offerings by the
Company such that registration of any Securities would be required under the
1933 Act.
(h) Dilutive
Effect.
The
Company understands and acknowledges that the number of Warrant Shares issuable
upon exercise of the Warrant will increase in certain circumstances as
explicitly provided under the terms of the Warrant. The Company further
acknowledges that its obligation to issue the Warrant Shares upon exercise
of
the Warrant in accordance with this Agreement and the terms of the Warrant
is
absolute and unconditional regardless of the dilutive effect that such issuance
may have on the ownership interests of other stockholders of the
Company.
(i) Financial
Statements.
The
Company has furnished to the Buyers true and complete copies of the Company’s
unaudited balance sheet as of and for the years ended December 31, 2005,
December 31, 2006 and the nine-month period ended September 30, 2007, and profit
and loss statements as of and for the years ended December 31, 2005, December
31, 2006 and the nine-month period ended September 30, 2007 (the “Financial
Statements”). The Financial Statements, together with any notes thereto, are
complete and correct in all respects and present fairly the consolidated
financial position of the Company as of the dates specified and the results
of
its operations and cash flows for the periods specified, in each case in
conformity with GAAP applied on a consistent basis during the periods involved,
except as indicated therein or in the notes thereto.
-7-
(j) Absence
of Certain Changes.
Except
as set forth on Schedule
3(j),
since
September 30, 2007, there has been no event, act, condition or occurrence which
has resulted in a Material Adverse Effect in the business, properties,
operations, condition (financial or otherwise), or results of operations the
Company or its Subsidiaries that has affected the Company in a manner materially
different than similarly-situated companies. Except as disclosed in Schedule
3(j),
since
September 30, 2007, the Company has not (i) declared or paid any dividends,
(ii)
sold any assets, individually or in the aggregate, in excess of $100,000 outside
of the ordinary course of business or (iii) had capital expenditures,
individually or in the aggregate, in excess of $250,000. Neither the Company
nor
any of its Subsidiaries has taken any steps to seek protection pursuant to
any
bankruptcy law nor does the Company have any knowledge that its creditors intend
to initiate involuntary bankruptcy proceedings or any actual knowledge of any
fact that would reasonably lead a creditor to do so.
(k) No
Undisclosed Liabilities.
Except
as set forth in the Financial Statements and except for the Authorized
Promissory Notes, neither the Company nor any of its Subsidiaries has incurred
any liabilities or obligations, whether known or unknown, asserted or
unasserted, accrued or unaccrued, matured or unmatured, liquidated or
unliquidated, contingent or otherwise, other than liabilities and obligations
that arose in the ordinary course of business.
(l) Conduct
of Business; Regulatory Permits.
Neither
the Company nor any of its Subsidiaries is in violation of any term of or in
default under its Certificate of Incorporation or the Bylaws or their
organizational charter or bylaws, respectively. Neither the Company nor any
of
its Subsidiaries is in violation of any judgment, decree or order or any
statute, ordinance, rule or regulation applicable to the Company or its
Subsidiaries, except for violations which could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. The Company
and its Subsidiaries possess all certificates, authorizations and permits issued
by the appropriate regulatory authorities necessary to conduct their respective
businesses, except where the failure to possess such certificates,
authorizations or permits would not have, individually or in the aggregate,
a
Material Adverse Effect, and neither the Company nor any such Subsidiary has
received any notice of proceedings relating to the revocation or modification
of
any such certificate, authorization or permit.
(m) Foreign
Corrupt Practices.
Neither
the Company nor any of its Subsidiaries nor any director, officer, agent,
employee or other Person acting on behalf of the Company or any of its
Subsidiaries has, in the course of its actions for, or on behalf of, the Company
or any of its Subsidiaries (i) used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity; (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds; (iii)
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate,
payoff, influence payment, kickback or other unlawful payment to any foreign
or
domestic government official or employee.
-8-
(n) Transactions
With Affiliates.
Other
than as set forth on Schedule
3(n),
none of
the officers, directors or, to the Company’s knowledge, employees of the Company
or any of its Subsidiaries is presently a party to any transaction with the
Company or any of its Subsidiaries (other than for ordinary course services
as
employees, officers or directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
to or from any such officer, director or employee or, to the knowledge of the
Company or any of its Subsidiaries, any corporation, partnership, trust or
other
entity in which any such officer, director, or employee has a substantial
interest or is an officer, director, trustee or partner.
(o) Equity
Capitalization.
The
authorized capital stock of the Company immediately prior to the Initial Closing
Date consists of 15,000,000 shares of Common Stock, $0.0001 par value, of which
7,866,767 are issued and outstanding, and 301,613 shares are reserved for
issuance upon exercise of outstanding options issued pursuant to the Company’s
2007 Equity Incentive Plan. Except as disclosed in Schedule
3(o)
or as
set forth in the Stockholders’ Agreement: (i) none of the Company's capital
stock is subject to preemptive rights or any other similar rights or any liens
or encumbrances suffered or permitted by the Company; (ii) there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, or exercisable or exchangeable for, any capital stock of
the
Company or any of its Subsidiaries, or contracts, commitments, understandings
or
arrangements by which the Company or any of its Subsidiaries is or may become
bound to issue additional capital stock of the Company or any of its
Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, or exercisable or exchangeable for, any capital stock of
the
Company or any of its Subsidiaries; (iii) there are no outstanding securities
or
instruments of the Company or any of its Subsidiaries which contain any
redemption or similar provisions, and there are no contracts, commitments,
understandings or arrangements by which the Company or any of its Subsidiaries
is or may become bound to redeem a security of the Company or any of its
Subsidiaries; (iv) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance
of
the Securities; and (v) the Company does not have any stock appreciation rights
or "phantom stock" plans or agreements or any similar plan or agreement, other
than those incurred in the ordinary course of the Company's or its Subsidiaries'
respective businesses and which, individually or in the aggregate, do not or
would not have a Material Adverse Effect. The Company has furnished to Buyer
true, correct and complete copies of the Company's Amended and Restated
Certificate of Incorporation, as amended and as in effect on the date hereof
(the "Certificate
of Incorporation"),
and
the Company's Bylaws, as amended and as in effect on the date hereof (the
"Bylaws"),
and
the terms of all securities convertible into, or exercisable or exchangeable
for, shares of Common Stock and the material rights of the holders thereof
in
respect thereto.
(p) Indebtedness
and Other Contracts.
Except
as set forth in the Financial Statements, disclosed in Schedule
3(p),
or
incurred in the ordinary course of business, neither the Company nor any of
its
Subsidiaries (i) has any outstanding Indebtedness (as defined below), (ii)
is a
party to any contract, agreement or instrument, the violation of which, or
default under which, by the other party(ies) to such contract, agreement or
instrument could reasonably be expected to result in a Material Adverse Effect,
(iii) is in violation of any term of or in default under any contract, agreement
or instrument relating to any Indebtedness, except where such violations and
defaults would not result, individually or in the aggregate, in a Material
Adverse Effect, or (iv) is a party to any contract, agreement or instrument
relating to any Indebtedness, the performance of which, in the judgment of
the
Company's officers, has or is expected to have a Material Adverse Effect. For
purposes of this Agreement: (x) "Indebtedness"
of any
Person means, without duplication (A) all indebtedness for borrowed money,
(B)
all obligations issued, undertaken or assumed as the deferred purchase price
of
property or services, including (without limitation) "capital leases" in
accordance with generally accepted accounting principles (other than trade
payables entered into in the ordinary course of business), (C) all reimbursement
or payment obligations with respect to letters of credit, surety bonds and
other
similar instruments, (D) all obligations evidenced by notes, bonds, debentures
or similar instruments, including obligations so evidenced incurred in
connection with the acquisition of property, assets or businesses, (E) all
indebtedness created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with respect
to
any property or assets acquired with the proceeds of such indebtedness (even
though the rights and remedies of the seller or bank under such agreement in
the
event of default are limited to repossession or sale of such property), (F)
all
monetary obligations under any leasing or similar arrangement which, in
connection with generally accepted accounting principles, consistently applied
for the periods covered thereby, is classified as a capital lease, (G) all
indebtedness referred to in clauses (A) through (F) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any mortgage, lien, pledge, charge, security
interest or other encumbrance upon or in any property or assets (including
accounts and contract rights) owned by any Person, even though the Person which
owns such assets or property has not assumed or become liable for the payment
of
such indebtedness, and (H) all Contingent Obligations in respect of indebtedness
or obligations of others of the kinds referred to in clauses (A) through (G)
above; and (y) "Contingent
Obligation"
means,
as to any Person, any direct or indirect liability, contingent or otherwise,
of
that Person with respect to any indebtedness, lease, dividend or other
obligation of another Person if the primary purpose or intent of the Person
incurring such liability, or the primary effect thereof, is to provide assurance
to the obligee of such liability that such liability will be paid or discharged,
or that any agreements relating thereto will be complied with, or that the
holders of such liability will be protected (in whole or in part) against loss
with respect thereto.
-9-
(q) Absence
of Litigation.
Except
as set forth in Schedule
3(q),
there
is no action, suit, proceeding, inquiry or investigation pending before any
court, public board, government agency, self-regulatory organization or body
or,
to the knowledge of the Company, threatened against the Company or any of its
Subsidiaries, the Common Stock of the Company or any of the Company's
Subsidiaries or any of the Company's or its Subsidiaries' officers or directors.
(r) Insurance.
Each
of
the
Company and its Subsidiaries has in full force and effect the insurance policies
set forth in Schedule
3(r).
Neither
the Company nor any such Subsidiary has been refused any insurance coverage
sought or applied for and neither the Company nor any such Subsidiary has any
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that
would not have a Material Adverse Effect.
-10-
(s) Employee
Relations.
(i) Neither
the Company nor any of its Subsidiaries is a party to any collective bargaining
agreement or employs any member of a union. The Company and its Subsidiaries
believe that their relations with their employees are good. No executive officer
of the Company or any of its Subsidiaries (as defined in Rule 501(f) of the
0000
Xxx) has notified the Company or any such Subsidiary that such officer intends
to leave the Company or any such Subsidiary or otherwise terminate such
officer's employment with the Company or any such Subsidiary. To the Company’s
knowledge, no executive officer of the Company or any of its Subsidiaries,
is in
violation of any material term of any employment contract, confidentiality,
disclosure or proprietary information agreement, non-competition agreement,
or
any other contract or agreement or any restrictive covenant, and the sole fact
that the executive officer continues to be employed by the Company does not
subject the Company or any of its Subsidiaries to any liability with respect
to
any of the foregoing matters.
(ii) The
Company and its Subsidiaries, to their knowledge, are in compliance with all
federal, state, local and foreign laws and regulations respecting labor,
employment and employment practices and benefits, terms and conditions of
employment and wages and hours, except where failure to be in compliance would
not, either individually or in the aggregate, reasonably be expected to result
in a Material Adverse Effect.
(t) Title.
The
Company and its Subsidiaries own no real property and have good and marketable
title to all personal property owned by them which is material to the business
of the Company and its Subsidiaries, free and clear of all liens, encumbrances
and defects except such as are described in Schedule
3(t)
or do
not materially affect the value of such property and do not interfere with
the
use made and proposed to be made of such property by the Company and any of
its
Subsidiaries. Any real property and facilities held under lease by the Company
and any of its Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings by
the
Company and its Subsidiaries.
(u) Intellectual
Property Rights.
The
Company and its Subsidiaries own or possess adequate rights or licenses to
use
all trademarks, service marks and all applications and registrations therefor,
trade names, patents, patent rights, copyrights, original works of authorship,
inventions, trade secrets and other intellectual property rights set forth
on
Schedule
3(u)
hereto
("Intellectual
Property Rights")
necessary to conduct their respective businesses as now conducted. None of
the
Company's registered, or applied for, Intellectual Property Rights have expired
or terminated or have been abandoned, or are expected to expire or terminate
or
expected to be abandoned, within three years from the date of this Agreement.
The Company does not have any knowledge of any infringement by the Company
or
its Subsidiaries of Intellectual Property Rights of others. There is no claim,
action or proceeding made or brought, or to the knowledge of the Company, being
threatened, against the Company or its Subsidiaries regarding its Intellectual
Property Rights. Neither the Company nor any of its Subsidiaries is aware of
any
facts or circumstances which might give rise to any of the foregoing
infringements or claims, actions or proceedings. The Company and its
Subsidiaries have taken reasonable security measures to protect the secrecy,
confidentiality and value of all of their Intellectual Property
Rights.
-11-
(v) Environmental
Laws.
The
Company and its Subsidiaries, to their knowledge, (i) are in compliance with
any
and all Environmental Laws (as hereinafter defined), (ii) have received all
permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are in
compliance with all terms and conditions of any such permit, license or approval
where, in each of the foregoing clauses (i), (ii) and (iii), the failure to
so
comply could be reasonably expected to have, individually or in the aggregate,
a
Material Adverse Effect. The term "Environmental
Laws"
means
all federal, state, local or foreign laws relating to pollution or protection
of
human health or the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata), including,
without limitation, laws relating to emissions, discharges, releases or
threatened releases of chemicals, pollutants, contaminants, or toxic or
hazardous substances or wastes (collectively, "Hazardous
Materials") into
the
environment, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous Materials,
as well as all authorizations, codes, decrees, demands or demand letters,
injunctions, judgments, licenses, notices or notice letters, orders, permits,
plans or regulations issued, entered, promulgated or approved
thereunder.
(w) Tax
Status.
The
Company and each of its Subsidiaries (i) has made or filed all foreign, federal
and state income and all other tax returns, reports and declarations required
by
any jurisdiction to which it is subject, (ii) has paid all taxes and other
governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and (iii) has set aside on its books provision
reasonably adequate for the payment of all taxes for periods subsequent to
the
periods to which such returns, reports or declarations apply except where the
failure to do so would not have a Material Adverse Effect on the Company or
its
Subsidiaries. There are no unpaid taxes in any material amount claimed to be
due
by the taxing authority of any jurisdiction, and the officers of the Company
know of no basis for any such claim.
(x) Investment
Company Status.
The
Company is not, and upon consummation of the sale of the Securities will not
be,
an "investment company," a company controlled by an "investment company" or
an
"affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company" as such terms are defined in the Investment Company Act
of
1940, as amended.
(y) Transfer
Taxes.
On the
Closing Date, all stock transfer or other taxes (other than income or similar
taxes) which are required to be paid in connection with the sale and transfer
of
the Securities to be sold to Buyer hereunder 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 complied with.
(z) Disclosure.
The
Company understands and confirms that Buyer will rely on the foregoing
representations in effecting transactions in securities of the Company. All
disclosure provided to Buyer regarding the Company or any of its Subsidiaries,
their business and the transactions contemplated hereby, including the Schedules
to this Agreement, furnished by or on behalf of the Company is true and correct
and does not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements made therein, in
the
light of the circumstances under which they were made, not misleading.
-12-
(aa) U.S.
Real Property Holding Corporation.
The
Company is not, nor has it ever been, a U.S. real property holding corporation
within the meaning of Section 897 of the Internal Revenue Code of 1986, as
amended, and the Company shall so certify upon any Buyer's request.
(bb) Off
Balance Sheet Arrangements.
There
is no transaction, arrangement, or other relationship between the Company and
an
unconsolidated or other off balance sheet entity not disclosed in the Financial
Statements or that otherwise would be reasonably likely to have a Material
Adverse Effect.
4. COVENANTS.
(a) Best
Efforts.
Each
party shall use its best efforts timely to satisfy each of the conditions to
be
satisfied by it as provided in Sections 7 and 8 of this Agreement.
(b) Form
D
and Blue Sky.
The
Company agrees to file a Form D (if required) with respect to the Securities
as
required under Regulation D and to provide a copy thereof to Buyer promptly
after such filing. The Company shall, on or before the Closing Date, take such
action as the Company shall reasonably determine is necessary in order to obtain
an exemption for or to qualify the Securities for sale to Buyer at the Closing
pursuant to this Agreement under applicable securities or "Blue Sky" laws of
the
states of the United States (or to obtain an exemption from such qualification),
and shall provide evidence of any such action so taken to Buyer on or prior
to
the Closing Date. The Company shall make all filings and reports relating to
the
offer and sale of the Securities required under applicable securities or "Blue
Sky" laws of the states of the United States following the Closing Date.
(c) Use
of
Proceeds.
The
Company will use the proceeds from the sale of the Securities for working
capital purposes for use in connection with the development and expansion if
its
business and for the repayment of up to $500,000 of indebtedness owed by the
Company to certain founders, officers and/or directors of the Company.
(d) Financial
Information.
Until
the earlier to occur of the following: (i) such time that the Company merges
with and into IPORUSSIA, Inc. or (ii) such time that the Company files financial
statements with periodic reports required by the Securities Exchange Act of
1934, as amended, the Company shall furnish the following information to the
Buyers:
(i) Within
ninety (90) days after the end of each fiscal year of the Company, a
consolidated balance sheet of the Company and its Subsidiaries as at the end
of
such fiscal year, and consolidated statements of income and cash flows of the
Company and its Subsidiaries for such fiscal year, prepared in accordance with
U.S. generally accepted accounting principles (“GAAP”),
applied on a consistent basis during the periods involved, except as indicated
therein or in the notes thereto, audited by a nationally recognized independent
accounting firm or any other independent accounting firm approved by the
Board.
(ii) Within
forty-five (45) days after the end of each of the first three (3) quarterly
accounting periods in each fiscal year, an unaudited consolidated balance sheet
of the Company and its Subsidiaries as at the end of such quarterly accounting
period, and unaudited [consolidated] statements of income and cash flows of
the
Company and its Subsidiaries for such fiscal period, prepared in accordance
with
GAAP, applied on a consistent basis during the periods involved, subject to
normal year-end audit adjustments.
-13-
(e) Fees.
The
Company shall be responsible for the payment of the Placement Agent's fees,
if
any, arising out of the transactions contemplated hereby. The Company shall
pay,
and hold Buyer harmless against, any liability, loss or expense (including,
without limitation, reasonable attorney's fees and out-of-pocket expenses)
arising in connection with any claim relating to any such payment. Each party
shall pay all its own costs and expenses that it incurs with respect to the
negotiation, execution, delivery and performance of this Agreement and the
other
Transaction Documents.
(f) Reservation
of Shares.
The
Company shall take all action necessary to at all times have authorized, and
reserved for the purpose of issuance the number of shares of Common Stock
issuable upon exercise of the Warrant issued at the Closing.
(g) Conduct
of Business.
The
business of the Company and its Subsidiaries shall not be conducted in violation
of any law, ordinance or regulation of any governmental entity, except where
such violations would not result, either individually or in the aggregate,
in a
Material Adverse Effect.
(h) D&O
Insurance.
As soon
as practicable, the Company shall use reasonable commercial efforts to retain
directors and officers insurance coverage for its directors and officers in
coverage and amounts presently in force.
5. REGISTER
AND TRANSFER OF SECURITIES.
(a) Register.
The
Company shall maintain at its principal executive offices (or such other office
or agency of the Company as it may designate by notice to each holder of
Securities), a register for the Unit and the Shares and the Warrant that
comprise the Unit in which the Company shall record the name and address of
the
Person in whose name the Unit, Shares and Warrant
have been issued (including the name and address of each transferee) and the
number of Warrant Shares issuable upon exercise of the Warrant held by such
Person. The Company shall keep the register open and available at all times
during business hours for inspection of Buyer or its legal
representatives.
(b) Restrictions
on Transfer.
Each
Buyer acknowledges that the Shares, the Warrants, and the Warrant Shares have
not been and will not be registered under the 1933 Act, that such shares and
Warrants are being or will be issued pursuant to an exemption from registration
under the 1933 Act and that such Shares, Warrants and Warrant Shares constitute
“restricted securities” under Rule 144. Accordingly, the Shares, Warrants and
Warrant Shares held by the Buyers shall not be sold, transferred, assigned,
pledged, encumbered or otherwise disposed of (each, a “Transfer”) except upon
the conditions specified in this Section 5 (which provides for certain
additional restrictions on transfer), which conditions are intended to ensure
compliance with the provisions of the 1933 Act and this Agreement.
-14-
(c) Restrictive
Legend.
Each
certificate for Shares, Warrants or Warrant Shares to be held by the Buyers
and
each certificate for any such securities issued to subsequent transferees of
any
such certificate shall (unless otherwise permitted by the provisions of Sections
5(d) and 5(e)) be stamped or otherwise imprinted with a legend in substantially
the following form:
“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR ANY
APPLICABLE STATE SECURITIES OR “BLUE-SKY” LAWS. THESE SECURITIES MAY NOT BE SOLD
OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM
UNDER SAID ACT OR LAWS. ADDITIONALLY, THE TRANSFER OF THESE SECURITIES IS
SUBJECT TO THE CONDITIONS SPECIFIED IN SECTION 5 OF THE INVESTMENT AGREEMENT
AMONG XXXXX.XXX HOLDINGS, INC. AND THE OTHER PARTIES THERETO, AND NO TRANSFER
OF
THESE SECURITIES SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN
FULFILLED. UPON THE FULFILLMENT OF ALL APPLICABLE CONDITIONS, XXXXX.XXX
HOLDINGS, INC. HAS AGREED TO DELIVER TO THE HOLDER HEREOF A NEW CERTIFICATE,
NOT
BEARING THIS LEGEND, FOR THE SECURITIES REPRESENTED HEREBY REGISTERED IN THE
NAME OF THE HOLDER HEREOF.”
(d) Notice
of Transfer.
Each
Buyer agrees, prior to any Transfer of the Shares, the Warrants or the Warrant
Shares to give written notice to the Company of such Buyer’s intention to effect
such Transfer and to comply in all other respects with the provisions of this
Section 5. Each such notice shall describe the manner and circumstances of
the
proposed Transfer and shall be accompanied by the written opinion, addressed
to
the Company, of counsel for the holder of such shares, stating that in the
opinion of such counsel (which opinion and counsel shall be reasonably
satisfactory to the Company), such proposed Transfer does not involve any
transaction requiring registration or qualification of such shares under the
Securities Act or the securities or “blue-sky” laws of any relevant state of the
United States; provided,
however,
that no
such opinion of counsel shall be necessary for a Transfer by a Buyer that is
a
partnership to a partner, retired partner or entity thereof upon an approved
distribution thereto under the applicable partnership agreement. Such Buyer
shall thereupon be entitled to Transfer such shares in accordance with the
terms
of the notice delivered by it to the Company. Each certificate or other
instrument evidencing the securities issued upon the Transfer of any such shares
(and each certificate or other instrument evidencing any untransferred balance
of such shares) shall bear the legend set forth in Section 5 unless (a) in
such
opinion of counsel registration of any future Transfer is not required by the
applicable provisions of the Securities Act and applicable state securities
or
“blue-sky” laws or (b) the Company shall have waived the requirement of such
legends; provided,
however,
that
such legend shall not be required on any certificate or other instrument
evidencing the securities issued upon such Transfer in the event such Transfer
shall be made as reasonably determined by the Company in compliance with the
requirements of Rule 144. No Buyer shall Transfer any Shares, Warrants or
Warrant Shares until such opinion of counsel has been given (unless waived
by
the Company or unless such opinion is not required in accordance with the
provisions of this Section 5).
-15-
(e) Removal
of Legends, Etc.
Notwithstanding the foregoing provisions of this Section 5, the restrictions
imposed by this Section 5 upon the transferability of any shares of the capital
stock of the Company held by the Buyers shall cease and terminate when (a)
any
such shares are sold or otherwise disposed of pursuant to an effective
registration statement under the 1933 Act or as otherwise contemplated by
Section 5(d) and, pursuant to Section 5(d), the securities so transferred are
not required to bear the legend set forth in Section 5(d) or (b) the holder
of
such shares has met the requirements for Transfer of such shares pursuant to
subparagraph (k) of Rule 144 within any consecutive three (3) month period
without volume or manner of sale limitations. Whenever the restrictions imposed
by this Section 5 shall terminate, as herein provided, each Buyer holding shares
as to which such restrictions have terminated shall be entitled to receive
from
the Company, without expense, a new certificate not bearing the restrictive
legend set forth in Section 5(c) and not containing any other reference to
the
restrictions imposed by this Section 5.
6. CONFIDENTIALITY.
Each
Buyer agrees to and shall keep strictly confidential and will not disclose,
use
or divulge any confidential, proprietary or secret information which such Buyer
has obtained in the course of the negotiation and consummation of the
transactions contemplated hereby or may obtain from the Company, including,
by
way of example and not in limitation thereof, the terms of this Agreement and
the Stockholders’ Agreement, Registration Rights Agreement, financial
statements, reports and other information and materials submitted by the Company
as required hereunder, unless required to be disclosed by law or pursuant to
any
judgment, order, subpoena or decree of any court having competent jurisdiction;
provided
the
Buyer gives the Company reasonable notice prior to such disclosure and shall
comply with any applicable protective order or equivalent and only disclose
the
confidential information necessary to comply with such judgment, order, subpoena
or decree, or unless such information is already known to the Buyer or is or
becomes publicly known, or unless the Company provides its written consent
to
the Investor’s release of such information, except that no such written consent
shall be required (and Buyer shall be free to release such information) if
such
information is to be provided to an Buyer ‘s lawyer or accountant, or in the
case of a Buyer that is a limited partnership, to such Buyer’s limited partners
(except that the information provided to such limited partners shall be limited
to summary financial data of the Company and a general description of the
Company’s business performance); provided
such
recipient is advised of the confidential nature of such information. Each Buyer
acknowledges that such information is for its use solely in connection with
evaluating its investment in the Company.
7. CONDITIONS
TO THE COMPANY'S OBLIGATION TO SELL.
The
obligation of the Company hereunder to issue and sell the Units to Buyer at
the
Closing is subject to the satisfaction, at or before the Closing Date, of each
of the following conditions, provided that these conditions are for the
Company's sole benefit and may be waived by the Company at any time in its
sole
discretion by providing Buyer with prior written notice thereof:
(i) Buyer
shall have executed each of the Transaction Documents to which it is a party
and
delivered the same to the Company.
-16-
(ii) The
representations and warranties of Buyer shall be true and correct in all
material respects (except for those representations and warranties that are
qualified by materiality or Material Adverse Effect, which shall be true and
correct in all respects) as of the date when made and as of the Closing Date
as
though made at that time (except for representations and warranties that speak
as of a specific date, which shall be true and correct as of such specified
date), and Buyer shall have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by Buyer at or prior
to
the Closing Date.
(iii) Each
Buyer shall have delivered the full consideration payable by each Buyer
hereunder as specified in Section 1 herein.
8. CONDITIONS
TO BUYER'S OBLIGATION TO PURCHASE.
The
obligation of Buyer hereunder to purchase the Units at the Closing is subject
to
the satisfaction, at or before the Closing Date, of each of the following
conditions, provided that these conditions are for Buyer's sole benefit and
may
be waived by Buyer at any time in its sole discretion by providing the Company
with prior written notice thereof:
(i) The
Company shall have duly executed and delivered to Buyer (i) each of the
Transaction Documents, (ii) the Shares, and (iii) the Warrant being purchased
by
Buyer at the Closing pursuant to this Agreement.
(ii) The
Company shall have delivered to Buyer a certificate evidencing the formation
and
good standing of the Company and each of its Subsidiaries in such entity's
jurisdiction of formation issued by the Secretary of State (or comparable
office) of such jurisdiction, as of a date within 10 days of the Initial Closing
Date.
(iii) The
Company shall have delivered to Buyer a certificate evidencing the Company's
qualification as a foreign corporation and good standing issued by the Secretary
of State (or comparable office) of each jurisdiction in which the Company
conducts business, as of a date within 10 days of the Initial Closing
Date.
(iv) The
Company shall have delivered to Buyer a certified copy of the Certificate of
Incorporation as certified by the Secretary of State of the State of Delaware
within ten (10) days of the Initial Closing Date.
(v) The
Company shall have delivered to Buyer a certificate, executed by the Secretary
of the Company and dated as of the Initial Closing Date, as to (i) the
resolutions consistent with Section 3(b) as adopted by the Company's Board
of
Directors in a form reasonably acceptable to Buyer, (ii) the Certificate of
Incorporation and (iii) the Bylaws, each as in effect at the Initial Closing,
in
the form attached hereto as Exhibit D.
(vi) Other
than as set forth in the applicable Supplement, the representations and
warranties of the Company shall be true and correct in all material respects
(except for those representations and warranties that are qualified by
materiality or Material Adverse Effect, which shall be true and correct in
all
respects) as of the date when made and as of the Closing Date as though made
at
that time (except for representations and warranties that speak as of a specific
date, which shall be true and correct as of such specified date) and the Company
shall have performed, satisfied and complied in all material respects with
the
covenants, agreements and conditions required by the Transaction Documents
to be
performed, satisfied or complied with by the Company at or prior to the Closing
Date.
-17-
(vii) The
Company shall have obtained all governmental, regulatory or third party consents
and approvals, if any, necessary for the sale of the Securities.
9. MISCELLANEOUS.
(a) Governing
Law; Jurisdiction; Jury Trial.
All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of New
York, without giving effect to any choice of law or conflict of law provision
or
rule (whether of the State of New York or any other jurisdictions) that would
cause the application of the laws of any jurisdictions other than the State
of
New York. Each party hereby irrevocably submits to the exclusive jurisdiction
of
the state and federal courts sitting in The City of New York, Borough of
Manhattan, for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein, and
hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction
of
any such court, that such suit, action or proceeding is brought in an
inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process
and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it
under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
EACH
PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.
(b) Counterparts.
This
Agreement may be executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party;
provided that a facsimile signature shall be considered due execution and shall
be binding upon the signatory thereto with the same force and effect as if
the
signature were an original, not a facsimile signature.
(c) Headings.
The
headings of this Agreement are for convenience of reference and shall not form
part of, or affect the interpretation of, this Agreement.
(d) Severability.
If any
provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or
the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.
-18-
(e) Entire
Agreement; Amendments.
This
Agreement and the other Transaction Documents supersede all other prior oral
or
written agreements between Buyer, the Company, their affiliates and Persons
acting on their behalf with respect to this transaction and this Agreement,
the
other Transaction Documents and the instruments referenced herein and therein
contain the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or
therein, neither the Company nor Buyer makes any representation, warranty,
covenant or undertaking with respect to such matters. No provision of this
Agreement may be amended other than by an instrument in writing signed by the
Company and the holders of at least a majority of the aggregate number of
Securities issued and issuable hereunder, and any amendment to this Agreement
made in conformity with the provisions of this section shall be binding on
Buyer
and holders of Securities as applicable. No provision hereof may be waived
other
than by an instrument in writing signed by the party against whom enforcement
is
sought. No such amendment shall be effective to the extent that it applies
to
less than all of the holders of the applicable Securities then outstanding.
No
consideration shall be offered or paid to any Person to amend or consent to
a
waiver or modification of any provision of any of the Transaction Documents
unless the same consideration also is offered to all of the parties to the
Transaction Documents, and the holders of the Warrants. The Company has not,
directly or indirectly, made any agreements with Buyer relating to the terms
or
conditions of the transactions contemplated by the Transaction Documents except
as set forth in the Transaction Documents.
(f) Notices.
Any
notices, consents, waivers or other communications required or permitted to
be
given under the terms of this Agreement must be in writing and will be deemed
to
have been delivered: (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile (provided confirmation of transmission is
mechanically or electronically generated and kept on file by the sending party);
or (iii) one Business Day after deposit with an overnight courier service,
in
each case properly addressed to the party to receive the same. The addresses
and
facsimile numbers for such communications shall be:
If
to
Company:
Xxxxx.xxx
Holdings, Inc.
0000
X.
Xxxxxxx Xxxxxxx
Xxxxx
000X
Xxxx
Xxxxx, XX 00000
Attn:
Xxxx Xxxxx IV
with
a
copy to:
Rele
& Xxxxxx LLC
0000
Xxxxxxxx, Xxxxx 0000
Xxx
Xxxx,
XX 00000
Attn:
Xxxxx Xxxxxx, Esq.
If
to a
Buyer, to its address and facsimile number set forth on Schedule
A
attached
hereto, with copies to such Buyer's representatives as set forth on Schedule
A,
or to such other address and/or facsimile number and/or to the attention of
such
other Person as the recipient party has specified by written notice given to
each other party five (5) days prior to the effectiveness of such change.
Written confirmation of receipt (A) given by the recipient of such notice,
consent, waiver or other communication, (B) mechanically or electronically
generated by the sender's facsimile machine containing the time, date, recipient
facsimile number and an image of the first page of such transmission or (C)
provided by a courier or overnight courier service shall be rebuttable evidence
of personal service, receipt by facsimile or receipt from a nationally
recognized overnight delivery service in accordance with clause (i), (ii) or
(iii) above, respectively.
-19-
(g) Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and assigns, including any purchasers of Shares
or
Warrants. The Company shall not assign this Agreement or any rights or
obligations hereunder without the prior written consent of the holders of at
least a majority of the aggregate number of Registrable Securities issued and
issuable hereunder, including by way of a Fundamental Transaction (unless the
Company is in compliance with the applicable provisions governing Fundamental
Transactions set forth in the Warrants). Buyer may assign some or all of its
rights hereunder without the consent of the Company, in which event such
assignee shall be deemed to be Buyer hereunder with respect to such assigned
rights.
(h) No
Third Party Beneficiaries.
This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person.
(i) Survival.
Unless
this Agreement is terminated under Section 8, the representations and warranties
of the Company and Buyer contained in Sections 2 and 3, and the agreements
and
covenants set forth in Sections 4, 5, 6 and 9(k) shall survive the Closing.
(j) Further
Assurances.
Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as any other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.
(k) Indemnification.
(i) In
consideration of Buyer's execution and delivery of the Transaction Documents
and
acquiring the Securities thereunder and in addition to all of the Company's
other obligations under the Transaction Documents, the Company shall defend,
protect, indemnify and hold harmless Buyer and each other holder of the
Securities and all of their stockholders, partners, members, officers,
directors, employees and direct or indirect investors and any of the foregoing
Persons' agents or other representatives (including, without limitation, those
retained in connection with the transactions contemplated by this Agreement)
(collectively, the "Indemnitees")
from
and against any and all actions, causes of action, suits, claims, losses, costs,
penalties, fees, liabilities and damages, and expenses in connection therewith
(irrespective of whether any such Indemnitee is a party to the action for which
indemnification hereunder is sought), and including reasonable attorneys' fees
and disbursements (the "Indemnified
Liabilities"),
incurred by any Indemnitee as a result of, or arising out of, or relating to
any
misrepresentation or breach of any representation, warranty, or covenant made
by
the Company in the Transaction Documents or any other certificate, instrument
or
document contemplated hereby or thereby. To the extent that the foregoing
undertaking by the Company may be unenforceable for any reason, the Company
shall make the maximum contribution to the payment and satisfaction of each
of
the Indemnified Liabilities that is permissible under applicable
law.
-20-
(ii) In
consideration of Company’s execution and delivery of the Transaction Documents,
each of the Buyers shall, severally and not jointly, defend, protect, indemnify
and hold harmless Company and all of its stockholders, partners, members,
officers, directors, employees and direct or indirect investors and any of
the
foregoing Persons' agents or other representatives (including, without
limitation, those retained in connection with the transactions contemplated
by
this Agreement) (collectively, the "Company
Indemnitees")
from
and against any and all actions, causes of action, suits, claims, losses, costs,
penalties, fees, liabilities and damages, and expenses in connection therewith
(irrespective of whether any such Company Indemnitee is a party to the action
for which indemnification hereunder is sought), and including reasonable
attorneys' fees and disbursements (the "Company
Indemnified Liabilities"),
incurred by any Company Indemnitee as a result of, or arising out of, or
relating to any misrepresentation or breach of any representation, warranty,
or
covenant made by the Buyers in the Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby. To the
extent that the foregoing undertaking by the Buyers may be unenforceable for
any
reason, the Buyers shall make the maximum contribution to the payment and
satisfaction of each of the Company Indemnified Liabilities that is permissible
under applicable law.
Except
as otherwise set forth herein, the mechanics and procedures with respect to
the
rights and obligations under this Section 9(k) shall be the same as those set
forth in Section 6 of the Registration Rights Agreement.
(l) No
Strict Construction.
The
language used in this Agreement will be deemed to be the language chosen by
the
parties to express their mutual intent, and no rules of strict construction
will
be applied against any party.
(m) Remedies.
Buyer
and each holder of the Securities shall have all rights and remedies set forth
in the Transaction Documents and all rights and remedies which such holders
have
been granted at any time under any other agreement or contract and all of the
rights which such holders have under any law. Any Person having any rights
under
any provision of this Agreement shall be entitled to enforce such rights
specifically (without posting a bond or other security), to recover damages
by
reason of any breach of any provision of this Agreement and to exercise all
other rights granted by law. Furthermore, the Company recognizes that in the
event that it fails to perform, observe, or discharge any or all of its
obligations under the Transaction Documents, any remedy at law may prove to
be
inadequate relief to Buyer. The Company therefore agrees that Buyer shall be
entitled to seek temporary and permanent injunctive relief in any such case
without the necessity of proving actual damages and without posting a bond
or
other security.
(n) Rescission
and
Withdrawal Right.
Notwithstanding anything to the contrary contained in (and without limiting
any
similar provisions of) the Transaction Documents, whenever Buyer exercises
a
right, election, demand or option under a Transaction Document and the Company
does not timely perform its related obligations within the periods therein
provided, then Buyer may rescind or withdraw, in its sole discretion from time
to time upon written notice to the Company, any relevant notice, demand or
election in whole or in part without prejudice to its future actions and
rights.
-21-
(o) Agent
for Service of Process The
Corporation Trust Company is currently the Company’s agent for the receipt of
service of process, located at Corporation Trust Center, 1209 Orange Street,
Wilmington, Delaware in the County of New Castle. The Company agrees that any
document may be effectively served in connection with any action, suit or
proceeding in the United States by service on its agent. Buyer consents and
agrees that the Company may, in its reasonable discretion, appoint a substitute
agent for the receipt of service of process located within the Untied States
with notice to the Secretary of State of Delaware, and that upon such
appointment, the appointment of The Corporation Trust Company as agent may
be
revoked.
(p) Currency.
As used
herein, "Dollar", "US Dollar" and "$" each mean the lawful money of the United
States.
-22-
IN
WITNESS WHEREOF,
Buyer
and the Company have caused their respective signature page to this Investment
Agreement to be duly executed as of the date first written above.
|
COMPANY:
XXXXX.XXX
HOLDINGS, INC.
|
||
| |
|
|
| By: | /s/ Xxxx Xxxxx IV | |
|
Name:
Xxxx Xxxxx IV
|
||
|
Title:
Chief Executive Officer
|
||
-23-
IN
WITNESS WHEREOF,
Buyer
and the Company have caused their respective signature page to this Investment
Agreement to be duly executed as of the date first written above.
|
BUYER:
|
||
| |
|
|
| By: | ||
|
Name: |
||
|
Title:
|
||
-24-
