EXHIBIT 10.14
SUBSCRIPTION AGREEMENT
BETWEEN
XXXXXXXXXXXXXXXX.XXX, INC.
AND
XXX XXXX AND XXXXX XXXX
DATED AUGUST 21, 2000
THE SECURITIES DESCRIBED IN THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY
STATE, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT AND ANY APPLICABLE STATE LAWS, (ii) TO THE EXTENT APPLICABLE, RULE
144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE ACT RELATING TO THE DISPOSITION
OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE
REASONABLY SATISFACTORY TO COUNSEL TO THE ISSUER, THAT AN EXEMPTION FROM
REGISTRATION UNDER THE ACT AND APPLICABLE STATE LAW IS AVAILABLE.
SUBSCRIPTION AGREEMENT
This Subscription Agreement is made by and between XXXXXXXXXXXXXXXX.XXX,
INC., a Delaware corporation (the "Company") and XXX XXXX AND XXXXX XXXX,
HUSBAND AND WIFE AS JOINT TENANTS WITH RIGHT OF SURVIVORSHIP (the "Investor")
(collectively, the "Parties").
The Parties hereto agree as follows:
ARTICLE 1
THE SECURITIES
Section 1.01. THE SECURITIES. The securities offered hereby
consist of one of the Company's Units (the "Units"), issuable at $250,000 per
Unit, each Unit consisting of one 6% Secured Note, $250,000 principal amount (a
"Unit Note"). The Unit Note shall be in substantially the form attached hereto
as Exhibit A, the terms of which are hereby incorporated herein as if such Unit
Note were fully set forth herein.
Section 1.02. SHARE ISSUANCE. In consideration of the
investment by Investor, Company agrees to issue 1,579,669 shares of common stock
of the Company to Investor (the "Shares").
Section 1.03. LEGENDS; REGISTRATION UNDER THE SECURITIES ACT OF
1933. As of the date of this Agreement, the Unit Note and the Shares
(collectively, the "Unit Securities') have not been registered under the
Securities Act of 1933, as amended (the "Act"). Each of the Unit Securities
shall bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE
SECURITIES LAWS OF ANY STATE, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED,
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE
LAWS, (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR ANY
SIMILAR RULE
UNDER THE ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN
OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO
COUNSEL TO THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER THE
ACT AND APPLICABLE STATE LAW IS AVAILABLE.
Certain registration rights with respect to the Unit Securities
are set forth in EXHIBIT A attached hereto. This offering is not a public
offering and is intended to be made pursuant to Section 4(2) of the Act and
Regulation D as promulgated by the Securities and Exchange Commission ("SEC")
under the Act. This offering is also intended to be exempt from the registration
requirements of various state securities laws. A substantial number of state
securities commissions and securities industry associations have established
investor suitability standards for marketing private offerings of securities
within their respective jurisdictions. Some have also established minimum dollar
levels for purchases in their states. The Company shall comply with these
restrictions to the extent applicable.
Section 1.04. RULE 144 REPORTING. With a view to making available
the benefits of certain rules and regulations of the SEC that may permit the
sale of the Unit Notes and the Shares, to the public without registration, the
Company shall use its best efforts to:
(a) Make and keep public information regarding the Company
available, as those terms are understood and defined in Rule 144 under the Act,
at all times following the Closing Date (as hereinafter defined);
(b) File with the SEC in a timely manner all reports and
other documents required of the Company or subsidiaries of the Company (the
"Subsidiaries") under the Act and the Securities Exchange Act of 1934, as
amended (the "Exchange Act");
(c) So long as an Investor owns any Unit Notes or Shares,
furnish to the Investor forthwith upon written request a written statement by
the Company as to its compliance with the reporting requirements of Rule 144,
and of the Act and the Exchange Act, a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed as
the Investor may reasonably request in availing itself of any rule or regulation
of the SEC allowing the Investor to sell any such securities without
registration.
Section 1.05. CLOSING DATE. The purchase and sale of the Unit
Notes will take place at one or more closings (each referred to herein as the
"Closing") at the offices of Xxxxxxx & Beam, Inc. Xxx Xxxxxxx Xxxxx, Xxxxx 000,
Xxxxxx, XX 00000 at 10:00 a.m., on a date as soon as practicable after all the
conditions set forth in Articles V and VI hereof have been satisfied (each, a
"Closing Date"), or at such other location as the Investors and the Company
shall agree.
Section 1.06. DELIVERY. At the Closing, the Company shall deliver
to the Investor the Unit Note and the Shares that Investor is purchasing against
payment of the purchase price therefor by check, wire transfer, or such other
form of payment as shall be mutually agreed upon by such Investor and the
Company. At the Closing, the Company shall also deliver to the Investor a fully
executed copy of the Security Agreement and all related Closing Documents.
Section 1.07. EXPENSES. Irrespective of whether the Closing is
effected, the Company shall pay all costs and expenses that it incurs with
respect to the negotiation, execution, delivery, and performance of this
Agreement and the transactions contemplated hereby, including without
limitation, the cost of any required filings under the Act, the Exchange Act or
any "blue sky" laws, rules and regulations.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.01. INVESTOR REPRESENTATIONS AND WARRANTIES. The
Investor makes each and every one of the representations and warranties set
forth in Exhibit B hereto, as if such exhibit were set forth herein in its
entirety.
Section 2.02. COMPANY REPRESENTATIONS AND WARRANTIES. The
Company hereby represents, warrants and covenants to the Investor as follows:
(a) The Company has been duly organized and is validly existing
as a corporation in good standing under the laws of its state of incorporation.
The Company has no subsidiaries. The Company is duly qualified or licensed and
in good standing as a foreign corporation in each jurisdiction in which its
ownership or leasing of any properties or the character of its operations
requires such qualification or licensing and where failure to so qualify would
have a material effect on the Company. The Company has all requisite corporate
power and authority, and all material and necessary authorizations, approvals,
orders, licenses, certificates and permits of and from all governmental
regulatory officials and bodies to own or lease its properties and conduct its
businesses as described in this Agreement and the Disclosure Documents (as
hereinafter defined), and the Company is doing business in compliance with all
such authorizations, approvals, orders, licenses, certificates and permits and
all federal, state and local laws, rules and regulations concerning the business
in which it is engaged except where the failure so to do business in compliance
would not have a material adverse effect on the business of the Company. The
disclosures herein and in the Disclosure Documents concerning the effects of
federal, state and local regulation on the Company's business as currently
conducted and as contemplated are correct in all material respects and do not
omit to state a material fact. The Company has all corporate power and authority
to enter into this Agreement, the Unit Note, and to carry out the provisions and
conditions hereof and thereof, and all consents, authorizations, approvals and
orders required in connection herewith and therewith have been obtained or will
have been obtained prior to the Closing Date. No consent, authorization or order
of, and no filing with, any court, government agency or other body is required
for the issuance of the Units or the Shares pursuant to this Agreement except
with respect to applicable federal and state securities laws.
(b) The authorized capital and the issued and outstanding
securities of the Company are as set forth in the Company's Form 10-SB ("Form
10") as filed with the Securities and Exchange Commission ("SEC") and the
Company's pending Registration Statement on Form SB-2 ("Form SB-2")
(collectively, the "Disclosure Documents"). Except as described in the
Disclosure Documents, and except for the transactions contemplated by this
Agreement and the Units there are (A) no outstanding warrants, options or rights
to subscribe for or purchase any capital stock or other securities from the
Company, (B) no voting trusts or voting agreements among, or irrevocable proxies
executed by, stockholders of the Company, (C) no existing rights of stockholders
to require the Company to register any securities of the Company or to
participate with the Company in any registration by the Company of its
securities, and (D) no agreements among stockholders providing for the purchase
or sale of the Company's capital stock.
(c) This Agreement and the Exhibits hereto (if applicable) have
been duly and validly authorized, executed and delivered by the Company and are
valid and binding agreements of the Company, enforceable in accordance with
their respective terms, except to the extent that the enforceability hereof or
thereof may be limited by (A) bankruptcy, insolvency, reorganization, moratorium
or similar laws from time to time in effect and affecting the rights of
creditors generally, (B) limitations upon the power of a court to grant specific
performance or any other equitable remedy, or (C) a finding by a court of
competent jurisdiction that the indemnification provisions herein are in
violation of public policy. The Unit Note and the Shares have been duly
authorized and, when issued in accordance herewith will be validly issued, fully
paid and non-assessable; the holders thereof are not and will not be subject to
personal liability solely by reason of being such holders; other than as
described in the Disclosure Documents, the Unit Note, are not and will not be
subject to the preemptive rights of any stockholder of the Company; and all
corporate action required to be taken for the authorization, issuance and sale
of the Unit Note, and the Shares have been duly and validly taken by the
Company.
(d) The Company has good and marketable title to, or valid and
enforceable leasehold estates in, all items of real and personal property owned
or leased by it, free and clear of all liens, claims, encumbrances, security
interests and defects of any material nature whatsoever.
(e) There is no litigation or governmental proceeding pending or
threatened against, or involving the properties or business of, the Company
which might materially adversely affect the value or the operation of the
properties or the business of the Company, except as set forth in the Disclosure
Documents, specifically a Cross-Complaint by Xxxxxxx Xxxxxxx against the
Company.
(f) The financial statements of the Company contained in the
Disclosure Documents fairly present the financial position and the results of
operations of the Company at the dates and for the periods to which they apply;
and such financial statements have been prepared in conformity with generally
accepted accounting principles, consistently applied throughout the periods
involved.
(g) There has been no material adverse change in the condition or
prospects for commercialization of the Company, financial or otherwise, as of
the latest dates as of which such condition or prospects, respectively, are set
forth in this Agreement and the Disclosure Documents; and the outstanding debt,
the property and the business of the Company each conforms in all material
respects to the descriptions thereof contained herein and therein.
(h) The Unit Note, conform in all respects to all statements in
relation thereto contained herein or in the Unit Note or the Disclosure
Documents.
(i) The Company is not in violation of its Articles of
Incorporation or By-Laws. Neither the execution and delivery of this Agreement,
the Unit Notes, the Unit Warrants, or the Security Agreement, nor the issuance
of the Unit Note, in respect of the Unit Note, nor the consummation of any of
the transactions contemplated herein or in the Unit Note, nor the compliance by
the Company with the terms and provisions contained herein or in the Unit Note,
has conflicted with or will conflict with, or has resulted in or will result in
a breach of, any of the terms and provisions of, or has constituted or will
constitute a default under, or has resulted in or will result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company pursuant to the terms of any indenture, mortgage, deed of trust, note,
loan or credit agreement or any other agreement or instrument evidencing an
obligation for borrowed money, or any other agreement or instrument to which the
Company is subject; nor will such action result in any violation of the
provisions of the Certificate of Incorporation or the By-Laws of the Company, or
any statute or any order, rule or regulation applicable to the Company of any
court or of any federal, state or other regulatory authority or other government
body having jurisdiction over the Company; except for any conflict, breach,
default, lien, charge or encumbrance which does not have a material and adverse
effect on the Company, any of its business, property or assets, or any
transactions contemplated hereby or by the Unit Note.
(j) All taxes which are due and payable from the Company have
been paid in full, and the Company does not have any material tax deficiency or
claim outstanding, assessed or proposed against it.
(k) Subsequent to the dates as of which information is given in
this Agreement or the Disclosure Documents, and except as may otherwise be
indicated or contemplated herein or therein, the Company has not (A) issued any
securities or incurred any liability or obligation, direct or contingent, for
borrowed money, in excess of $20,000 in the aggregate, or (B) entered into any
transaction other than in the ordinary course of business, or (C) declared or
paid any dividend or made any other distribution on or in respect of its capital
stock.
(l) There are no claims for service in the nature of a finder's
or origination fee with respect to the sale of the securities hereunder.
(m) The Company owns or possesses, free and clear of all liens or
encumbrances and rights thereto or therein by third parties, the requisite
licenses or other rights to use all trademarks, service marks, copyrights,
service names, trade names, patents, patents applications and licenses necessary
to conduct and material to its business (including, without limitation any
such licenses or rights described herein or in the Disclosure Documents as
being owned or possessed by the Company), and there is no material claim or
action by any person pertaining to, or proceeding, pending or threatened,
which challenges the exclusive rights of the Company with respect to any
trademarks, service marks, copyrights, service names, trade names, patents,
patent applications and licenses used in the conduct of the Company's
businesses (including, without limitation, any such licenses or rights
described herein or in the Disclosure Documents as being owned or possessed
by the Company); the Company's current products, services and processes do
not and will not infringe on any patents currently held by third parties.
(n) The Company is not under any obligation to pay any material
royalties or fees of any kind whatsoever to any third party with respect to
technology it has developed, used, employs or intends to use or employ.
(o) Neither this Agreement nor the Unit Note, or the Disclosure
Documents contains any untrue statement of a material fact or omits to state any
material fact required to be stated herein or therein or necessary to make the
statements herein or therein, in light of the circumstances under which they
were made, not misleading. All statements of material facts herein or therein
(including, without limitation, any Exhibit or Schedule hereto or thereto) are
true and correct as of the date hereof and will be true and correct on the
Closing Date and each additional Closing Date, if any.
(p) The Company shall use the proceeds from the sale of the Units
as described herein.
(q) Neither the Company, nor any of its respective officers,
employees or agents, nor any other person acting on behalf of the Company has,
directly or indirectly, given or agreed to give any money, gift or similar
benefit (other than legal price concessions to customers in the ordinary course
of business) to any customer, supplier, employee or agent of a customer or
supplier, or official or employee of a customer or supplier, or official or
employee of any governmental agency or instrumentality of any government
(domestic or foreign) or any political party or candidate for office (domestic
or foreign) or other person who is or may be in a position to help or hinder the
business of the Company (or assist it in connection with any actual or proposed
transaction) which (A) might subject the Company to any damage or penalty in any
civil, criminal or governmental litigation or proceeding, (B) if not given in
the past, might have had a materially adverse effect on the assets, business
operations of the Company as reflected in any of the financial statements
delivered to the Investor, or (C) if not continued in the future, might
adversely affect the assets, business, operations or prospects of the Company.
(r) The minute books of the Company contain a complete summary of
all meetings and actions of the directors and stockholders of the Company since
the time of its incorporation (and of any predecessor to the Company) and
reflects all transactions referred to in such minutes accurately in all
respects.
ARTICLE III
USE OF PROCEEDS
Section 3.01. USE OF PROCEEDS. The closing of this
transaction (the "Closing") shall occur immediately upon execution of this
Agreement and funds shall be released to the Company as soon as practicable
thereafter. The Company shall use the proceeds for legitimate business and
corporate purposes.
ARTICLE IV
CONDITIONS TO THE INVESTOR'S OBLIGATIONS
Section 4.01. CONDITIONS. The obligation of the Investor to
purchase the Units at the Closing is subject to the following conditions:
(a) The representations and warranties of the Company
contained herein shall be true and correct in all material respects on and as of
the Closing Date.
(b) There shall be no preliminary or permanent injunction
or other order, decree or ruling issued by a court of competent jurisdiction or
by a governmental, regulatory or administrative agency or commission, nor any
statute, rule, regulation or order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining the sale or purchase of the
Units.
(c) At the Closing, the Investor shall be reasonably
satisfied that:
The Company has been duly organized and is validly existing as
a corporation in good standing under the laws of the State
of its incorporation and is duly qualified to do business
and is in good standing in all jurisdictions in which the
failure to so qualify would have a material adverse effect
on the business of the Company. To the best knowledge of
the Company, no consent, authorization or order of, and no
filing with, any court, government agency or other body is
required for the issuance of the Unit Notes or for the
issuance by the Company of the underlying Shares or such
Unit Note, or otherwise in accordance with the terms of
the Agreement, the Unit Note, except for compliance with
any applicable federal and/or state securities laws.
This Agreement and the Exhibits hereto have each been duly and
validly authorized, executed and delivered by the Company.
The Unit Note and the Shares have been duly authorized and
are, upon the exercise of and payment therefor, validly
issued, fully paid and non-assessable; all corporate
action required to be taken for the authorization, issue
and sale of such securities has been duly and validly
taken; to the best knowledge of the Company, the Unit
Note, and the Shares are not and will not be subject to
the preemptive rights of any stockholder of the Company.
The authorized capital stock of the Company and the
outstanding Securities of the
Company are as set forth in the Disclosure Documents.
There are no other securities issued and outstanding,
or if such securities do exist, that such securities
have been duly authorized and are non-assessable; all
issued and outstanding securities of the Company have
been duly authorized and validly issued and are fully
paid and non-assessable. To the best knowledge of the
Company other than as set forth in the Disclosure
Documents, the holders thereof have no rights of
rescission with respect thereto. To the best knowledge
of the Company, except for transactions contemplated by
the Subscription Agreement, and the Unit Note, and
except as otherwise described in the Subscription
Agreement, the Schedules and other documents delivered
in connection therewith, there are (A) no voting trusts
or agreements among, or irrevocable proxies executed
by, stockholders of the Company, (B) no existing rights
of stockholders to require the Company to register any
securities of the Company or to participate with the
Company in any registration by the Company of its
securities, and (C) no outstanding warrants, options or
rights to subscribe for or purchase any capital stock
or other securities from the Company .
To the best knowledge of the Company, other than as disclosed
in the Disclosure Documents, there is no litigation or
government proceeding pending against, or involving the
properties or business of the Company which might
materially and adversely affect the value or the operation
of the properties or the business of the Company.
Neither the execution and delivery of this Agreement nor the
Exhibits hereto, nor the issue and sale of the Unit Note,
or the Shares nor the consummation of any of the
transactions contemplated therein, nor the compliance by
the Company with the terms and provisions thereof, has
conflicted with or will conflict with, or has resulted in
or will result in any violation of the provisions of the
Certificate of Incorporation or the Bylaws of the Company,
or, to the best knowledge of the Company, constituted or
will constitute a default under, or has resulted in or
will result in the creation or imposition of any lien,
charge or encumbrance upon any material property or assets
of the Company pursuant to the terms of any indenture,
mortgage, deed of trust, note, loan or credit agreement
known to the Company, or any other agreement or instrument
evidencing an obligation for borrowed money known to the
Company or any other material agreement or instrument
known to the Company, to which the Company is a party or
by which the Company may be bound, the violation of which
would have a material adverse effect on the Company, other
than as described in the Disclosure Documents.
(d) On or prior to the Closing Date, the Investor shall
have been furnished such documents, certificates and opinions as they may
reasonably require for the purpose of enabling them to review or pass upon the
matters set forth herein, or in order to evidence the
accuracy, completeness or satisfaction of any of the representations,
warranties or conditions herein contained.
(e) Prior to the Closing, (i) there shall have been no
material adverse change nor development involving a prospective change in the
condition, prospects or the business activities, financial or otherwise, of the
Company as a whole, from the latest dates as of which such condition is set
forth in this Subscription Agreement and the Disclosure Documents; (ii) there
shall have been no transaction, not in the ordinary course of business, entered
into by the Company from the latest date as of which the financial condition of
the Company is set forth in this Subscription Agreement and the Disclosure
Documents which is material to the company and which has not been disclosed to
the Investors in writing; (iii) the Company shall not be in default in any
material respect under any provision of any instrument relating to any
outstanding indebtedness; (iv) no material amount of the assets of the Company
shall have been pledged or mortgaged; and (v) no action, suit or proceeding, at
law or in equity, shall have been pending or threatened against the Company or
affecting any of its respective properties or businesses before or by any court
of federal or state commission, board or other administrative agency wherein an
unfavorable decision, ruling or finding could materially adversely affect the
business, operations, prospects or financial condition or income of the Company.
ARTICLE V
CONDITIONS TO THE COMPANY'S OBLIGATIONS
Section 5.01. CONDITIONS. The obligation of the Company to sell
the Units at the Closing is subject to the following conditions:
(a) The representations and warranties of each of the
Investors contained in Exhibit B hereto shall be true and correct in material
respects on and as of the Closing Date.
(b) There shall be no preliminary or permanent injunction
or other order, decree or ruling issued by a court of competent jurisdiction or
by a governmental, regulatory or administrative agency or commission, nor any
statute, rule, regulation or order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining the sale or purchase of the
Units.
ARTICLE VI
INDEMNIFICATION
Section 6.01. INDEMNIFICATION.
(a) The Company hereby agrees to indemnify and hold harmless each
Investor, its stockholders, directors, partners, employees, agents and each
person, if any, who controls such Investor within the meaning of the Act,
against any and all losses, claims, damages or liabilities to which such
Investor or any such stockholder, director, partner, employee, agent or
controlling person may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained
herein, in the Unit Note, the Disclosure Documents, or in any statement made
to or in any filing with the SEC or to or with any state securities
commission, bureau or office (including any amendments thereto), or arise out
of or based upon the omission or alleged omission to state herein or therein
a material fact required to be stated herein or therein or necessary to make
the statements herein or therein not misleading (unless such statements are
made or omitted in reliance upon and in conformity with written information
furnished to the Company with respect to such Investor by such Investor
expressly for use herein or therein or any amendment hereof or supplement
hereto), or any violation by the Company of the Act or state "blue sky" laws,
or any breach by the Company of its obligations, representations or
warranties hereunder or under the Unit Note.
(b) Each Investor hereby agrees to indemnify and hold harmless
the Company and its respective stockholders, directors, employees, agents and
each person, if any, who controls any of the foregoing within the meaning of the
Act, against any and all losses, claims, damages or liabilities, to which the
Company or any of the Company's stockholders, directors, employees, agents or
controlling persons may become subject, under the Act or otherwise, insofar as
such losses, claims, damages, or liabilities (or actions in respect thereof)
arise out of or are based upon any authorized written statement with respect to
the offering made by the Investor, its stockholders, directors, partners, agents
or employees, or any breach by such Investor of its obligations, representations
or warranties hereunder.
(c) Promptly after receipt by an indemnified party under either
subparagraph (a) or (b), as the case may be, of the notice of commencement of
any action covered by subparagraph (a) or (b), such indemnified party shall
within five (5) business days notify the indemnifying party of the commencement
thereof; the omission by one indemnified party to so notify such indemnifying
party shall not relieve the indemnifying party of its obligations hereunder
except to the extent such indemnifying part has been materially prejudiced by
such omission, shall not relieve the indemnifying party of its obligation to
indemnify any other indemnified party that has given such notice and shall not
relieve the indemnifying party of any liability outside of this indemnification.
In the event that any action is brought against the indemnified party, and it
shall notify the indemnifying party in a timely manner, the indemnifying party
will be entitled to participate in such action and, to the extent it may desire,
to assume and control the defense thereof with counsel chosen by it. After
notice from the indemnifying party to such indemnified party of its election to
so assume the defense thereof, the indemnifying party will not be liable to such
indemnified party under such subparagraph for any legal or other expense
subsequently incurred by such indemnified party in connection with the defense
thereof, but the indemnified party may, at its own expenses, participate in such
defense by counsel chosen by it without, however, impairing the indemnifying
party's control of the defense. Notwithstanding anything to the contrary
contained herein, the indemnified party shall have the right to choose its own
counsel and control the defense of any action, all at the reasonable expense of
the indemnifying party, if (i) the employment of such counsel shall have been
authorized in writing by the indemnifying party in connection with the defense
of such action at the expense of the indemnifying party, (ii) the indemnifying
party shall not have employed counsel reasonably satisfactory to such
indemnified party to have charge of the defense of such action within a
reasonable time after notice of commencement of the action, or (iii) such
indemnified party shall have reasonably conclude that there may be defenses
available
to such indemnified party that differ from the defenses available to the
indemnifying party (in which case the indemnifying party shall not have the
right to direct the defense of such action on behalf of such indemnified
party), in any of which events such reasonable fees and expenses of one
additional counsel (for all indemnified parties) shall be borne by the
indemnifying party (in the case of the investors, one additional counsel for
Investor. No settlement of any action or proceeding against an indemnified
party shall be made without the consent of the indemnified party, which
consent shall not be unreasonably withheld.
(d) In order to provide for just and equitable contribution under
the Act in any case in which (i) any indemnified party makes a claim for
indemnification pursuant to this paragraph but it is judicially determined (by
entry of a final judgement or decree by a court of competent jurisdiction and
the expiration of the time to appeal or the denial of the last right of appeal)
that such indemnification may not be enforced in such case, notwithstanding the
fact the this paragraph provides for indemnification in such case, or (ii)
contribution under the Act is required on the part of any such person in
circumstances for which indemnification is provided under this paragraph, then,
in each such case, the relevant Investor shall contribute to the aggregate
losses, claims, damages or liabilities to which it may be subject (after any
contributions from others) in the same proportion as the amount of the Units
purchased by such Investor pursuant to the Subscription Agreement bears to the
aggregate offering of the Units, and the Company shall be responsible for the
remaining portion thereof; provided, that in any such case, no person guilty of
a fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
ARTICLE VII
NOTICES
Section 7.01. NOTICES. All notices provided for in this Agreement
shall be in writing signed by the party giving such notice, and, except as
expressly provided in Section 4.01(b) hereof, delivered personally or sent by
overnight courier or messenger or sent by registered or certified mail (air mail
if overseas), return receipt requested, or by telex, facsimile transmission,
telegram or similar means of communication. Notices shall be deemed to have been
received on the date of personal delivery, telex, facsimile transmission,
telegram or similar means of communication, or if sent by overnight courier or
messenger, shall be deemed to have been received on the next delivery day after
deposit with the courier or messenger, or if sent by certified or registered
mail, return receipt requested, shall be deemed to have been received on the
third business day after the date of mailing. Notices shall be sent to the
addresses set forth below:
If to the Company: xxxxxxxxxxxxxxxx.xxx
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Facsimile No.: 949/631-2544
Attn: Xxxxxx Xxxxxxxx, Vice President, CFO
If to the Investor: Les and Xxxxx Xxxx
STN LCD 1
31 Pinnacle ridge Drive, SW
R.R. #12
Calgary, Alberta
T3B 6W3 Canada
And to Investor at: x/x 0000 - 0xx Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxxx
Via Fax: (000) 000-0000
And to Investor: Via Fax: (000) 000-0000.
With Copies To: Xxxxxxx & Xxxx
Xxx Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Facsimile No: 949/453-0300
Attn: Xxxxxxxx X. Xxxxxxx
ARTICLE VIII
MISCELLANEOUS
Section 8.01.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED ENTIRELY THEREIN, WITHOUT GIVING EFFECT TO
THE RULES OF CONFLICTS OF LAW.
(b) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
(c) This Agreement represents the entire agreement between
the parties relating to the subject matter hereof, superseding any and all prior
to contemporaneous oral and prior written agreements and understandings. This
Agreement may not be modified or amended nor may any right be waived except by a
writing signed by the party against whom the modification or waiver is sought to
be enforced.
(d) The warranties, representations and covenants of the
Company and the Investors contained in or made pursuant to this Agreement shall
survive the execution and delivery of this Agreement and the Closing.
(e) The captions and headings contained herein are solely
for convenience of reference and do not constitute a part of this Agreement.
(f) There are no finder fees or commissions owed in
connection with the sale of the Units.
(g) Each of the Exhibits attached hereto is hereby
incorporated herein as if each of such Exhibits were fully set forth herein in
its entirety. Each of such Exhibits is hereby expressly made a part of this
Agreement.
(h) The terms of the offering and of the Units may only be
amended or modified by the agreement of Investors subscribing for and/or holders
of a majority of the Units.
(i) This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(j) The Parties hereto acknowledge that Strawberry
Canyon Capital is a General Partner of the Investor, Laguna Pacific Partners,
L.P., and that Xx. Xxxxxxxx X. Xxxxxxx is the sole shareholder of Strawberry
Canyon Capital as well as senior counsel of Xxxxxxx & Beam ("H&B"). The Parties
hereto waive any action they may have against H&B, Strawberry Canyon Capital,
Laguna Pacific Partners, L.P., and Xxxxxxxx X. Xxxxxxx, an individual, regarding
such conflict.
SIGNATURE PAGE FOLLOWS
IN WITNESS WHEREOF, intending to be legally bound, the parties
hereto have executed this Agreement and as of the 21st day of August, 2000.
COMPANY:
xxxxxxxxxxxxxxxx.xxx, Inc.
a Delaware corporation
/s/ Xxx Xxxxxxxx
---------------------------------
By: Xxx Xxxxxxxx
Its: COO
INVESTOR:
/s/ Xxx Xxxx
---------------------------------
Xxx Xxxx
/s/ Xxxxx Xxxx
---------------------------------
Xxxxx Xxxx
EXHIBIT INDEX
Exhibit A - Unit Note
Exhibit B Investor Representations and Warranties
