EXHIBIT 10.12
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made as of the 9th day of January,
2004, by and between VisiJet, Inc., a Delaware corporation (the "Company"), and
Trilogy Investment I LLC, a California limited liability company (the
"Purchaser").
IN CONSIDERATION of the mutual covenants contained in this Agreement,
the Company and the Purchaser hereby agree as follows:
SECTION 1. PURCHASE AND SALE. Subject to the terms and conditions of
this Agreement, the Company shall issue and sell to the Purchaser, and the
Purchaser shall purchase from the Company, 1,125,000 shares of the Company's
common stock (the "Shares"), par value $.001 per share (the "Common Stock"). The
Company has authorized and has reserved and covenants to continue to reserve,
free of preemptive rights and other similar contractual rights of stockholders,
a sufficient number of its authorized but unissued shares of its Common Stock to
cover the Shares which shall be issued pursuant to the terms of this Agreement.
SECTION 2. PURCHASE PRICE AND TRANCHES. The purchase price for the
Shares (the "Purchase Price") shall be an aggregate of $2,250,000. The Shares
shall be issued and purchased in three tranches (the "Tranches"), as follows:
(i) The First Tranche shall be 375,000 shares at $1.50 per
share (the "First Tranche Shares");
(ii) The Second Tranche shall be 375,000 shares at $2.00 per
share (the "Second Tranche Shares"); and
(iii) The Third Tranche shall be 375,000 shares at $2.50 per
share (the "Third Tranche Shares").
SECTION 3. CLOSING OF THE PURCHASE OF THE SHARES; ESCROW.
3.1 TRANCHE CLOSING DATES.
(a) Subject to the satisfaction or waiver of the conditions precedent
set forth in Sections 3.2 and 3.3, the closing of the purchase of the First
Tranche Shares by the Purchaser pursuant to this Agreement (the "First Tranche
Closing") shall occur at 10:00 a.m. on the second business day following the
date (the "Effective Date") on which the Registration Statement referred to in
Section 7 of this Agreement is declared effective under the Securities Act of
1933, as amended (the "Securities Act"), by the SEC, unless the Company and the
Purchaser have mutually agreed on a different time or date (the time and date of
such Closing is referred to herein as the "First Tranche Closing Date").
(b) Subject to the satisfaction or waiver of the conditions precedent
set forth in Sections 3.2 and 3.3, the closing of the purchase of the Second
Tranche Shares by the Purchaser pursuant to this Agreement (the "Second Tranche
Closing") shall occur at 10:00 a.m. on the tenth business day following the
First Tranche Closing Date, unless the Company and the Purchaser have mutually
agreed on a different time or date with respect to the Closing (the time and
date of the Closing is referred to herein as the "Second Tranche Closing Date").
(c) Subject to the satisfaction or waiver of the conditions precedent
set forth in Sections 3.2 and 3.3, the closing of the purchase of the Third
Tranche Shares by the Purchaser pursuant to this Agreement (the "Third Tranche
Closing") shall occur at 10:00 a.m. on the tenth business day following the
Second Tranche Closing Date, unless the Company and the Purchaser have mutually
agreed on a different time or date (the time and date of such Closing is
referred to herein as the "Third Tranche Closing Date").
(d) The First Tranche Closing Date, the Second Tranche Closing Date and
the Third Tranche Closing Dates shall be collectively referred to herein as the
"Closing Dates," and the First Tranche Closing, the Second Tranche Closing and
the Third Tranche Closing shall be collectively referred to herein as the
"Closings." The Company may defer any or all of the Closing Dates for up to
thirty calendar days from the date or dates specified herein, upon written
notice to Purchase delivered at least three business days before the Closing
Date to be so deferred. Unless otherwise agreed by the Company and the
Purchaser, the Closings shall occur at the offices of Xxxxxx & Xxxxxx LLP,
Newport Beach, California.
3.2 CONDITIONS TO OBLIGATIONS OF PURCHASER. The obligation of
the Purchaser to purchase the Shares at each Closing shall be subject to the
satisfaction of the following conditions, or the waiver of such conditions by
the Purchaser, at or prior to the relevant Closing Date:
(a) the representations and warranties of the Company set
forth in Section 4 of this Agreement shall be true and correct with the same
force and effect as though expressly made on and as of such Closing Date, except
for representations or warranties made as of a particular date, which
representations and warranties shall be true and correct as of such date;
(b) the Company shall have complied with all the agreements
hereunder and satisfied all the conditions on its part to be performed or
satisfied hereunder at or prior to such Closing Date;
(c) the Company shall have delivered to the Purchaser a
certificate executed by the Chairman of the Board or President and the chief
financial or accounting officer of the Company, dated as of such Closing Date,
to the effect that the conditions in clauses 3.2(a), 3.2(b), and 3.2(d) have
been satisfied;
(d) the Registration Statement covering the Shares shall have
been declared effective and shall not have been withdrawn, no stop order
suspending the effectiveness of the Registration Statement shall be in effect,
and no proceedings for the suspension of the effectiveness of the Registration
Statement shall have been instituted or threatened by the Securities and
Exchange Commission (the "SEC"); and
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(e) At the First Closing, Xxxxxx & Zepfel LLP, counsel to the
Company, shall have delivered its legal opinion to the Purchaser in form and
substance reasonably satisfactory to the Purchaser.
3.3 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligation
of the Company to issue the Shares at each Closing shall be subject to the
satisfaction of the following conditions, or the waiver of such conditions by
the Company, at or prior to the relevant Closing Date:
(a) the representations and warranties of the Purchaser set
forth in Section 5 of this Agreement shall be true and correct with the same
force and effect as though expressly made on such Closing Date, except for
representations or warranties made as of a particular date, which
representations and warranties shall be true and correct as of such date;
(b) the Purchaser shall have complied with all the agreements
hereunder and satisfied all the conditions on its part to be performed or
satisfied hereunder at or prior to such Closing Date; and
(c) the Purchaser shall have delivered to the Company a
certificate executed by a duly authorized officer of the Purchaser, dated as of
such Closing Date, to the effect that the conditions in clauses 3.3(a) and
3.3(b) have been satisfied.
3.4 ESCROW AGREEMENT. Upon execution of this Agreement,
Purchaser and the Company shall execute and deliver an Escrow Agreement (the
"Escrow Agreement") and Purchaser shall deposit $50,000 into escrow, as
specified in the Escrow Agreement.
3.5 THE CLOSINGS. At each Closing, (i) each of the Company and
the Purchaser shall deliver to the other, as applicable, any documents required
to be delivered by Sections 3.2 or 3.3 which have not been delivered prior to
such Closing, (ii) the Purchaser shall pay to the Company, by wire transfer of
immediately available funds to an account designated in writing by the Company
at or prior to the Closing, the Purchase Price (less any amount theretofore
delivered under the Escrow Agreement, but without any other deduction) for the
Shares to be purchased at such Closing, and (iii) the Company shall deliver to
the Purchaser (A) a stock certificate or certificates representing the Shares to
be purchased at such Closing, or shall cause such Shares to be electronically
transferred to the Purchaser.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to the Purchaser as follows:
4.1 ORGANIZATION AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation and the Company is qualified to do business
as a foreign corporation in each jurisdiction in which qualification is
required, except where the failure to so qualify would not individually or in
the aggregate have a material adverse effect on the financial condition, results
of operations, properties or business of the Company taken as a whole. The
Company has all requisite power and authority, and all necessary consents,
authorizations, approvals, orders, licenses, certificates, and permits of and
from, and declarations and filings with, all federal, state, local, and other
governmental authorities and all courts and other tribunals, to own, lease,
license, and use its properties and assets and to carry on the businesses in
which it is now engaged and the businesses in which it contemplates engaging.
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4.2 SUBSIDIARIES. As of the date of this Agreement the Company
does not have any subsidiaries or hold any equity or equity derivative interest
in any other enterprise, including, without limitation, any corporation,
partnership, limited partnership, limited liability partnership, limited
liability company, trust, or other entity.
4.3 AUTHORIZED AND OUTSTANDING CAPITAL STOCK. The Company has
authorized capital of 50,000,000 shares of Common Stock, of which 21,202,345
shares are issued and outstanding as of the date of this Agreement, and
10,000,000 shares of Preferred Stock, none of which are issued or outstanding as
of the date of this Agreement. The Company's stock option plans provide for the
granting of options to the Company's employees, directors, consultants and
advisors, to purchase an aggregate of up to 3,000,000 shares of Common Stock, of
which, as of the date of this Agreement, options to purchase an aggregate of
1,115,000 shares of Common Stock are outstanding. In addition, as of the date of
this Agreement, there are outstanding warrants to purchase approximately
12,086,712 shares of Common Stock. Except for shares of Common Stock, options
and warrants described in this Section 4.3, there are no authorized or
outstanding options, warrants, convertible or exchangeable Shares, preemptive
rights, rights of first refusal or other rights to purchase any capital stock of
the Company or any equity or debt Shares convertible into or exchangeable or
exercisable for capital stock of the Company.
4.4 ISSUANCE, SALE AND DELIVERY OF THE SHARES. The Shares have
been duly authorized and, when issued and delivered against payment therefor in
the manner set forth in this Agreement, will be duly validly issued, fully paid
and nonassessable. Upon the issuance thereof, the Shares shall be free and clear
of any security interest, pledge, mortgage, lien (including, without limitation,
environmental and tax liens), charge, encumbrance, adverse claim, preferential
arrangement or restriction of any kind, including, without limitation, any
restriction on the use, voting, transfer, receipt of income or other exercise of
any attributes of ownership. The Shares are not subject to any options,
warrants, convertible Shares or other rights, agreements, arrangements or
commitments of any character relating to interests therein. There are no voting
trusts, member agreements, proxies, or other agreements or understandings in
effect with respect to the voting or transfer of any of the Shares. No further
approval or authority of the stockholders or the Board of Directors of the
Company will be required for the issuance and sale of the Shares.
4.5 DUE EXECUTION, DELIVERY AND PERFORMANCE OF THE AGREEMENTS.
The Company has full legal right, corporate power and authority to enter into
this Agreement and the Escrow Agreement (together, the "Transaction Documents")
and to perform the transactions contemplated hereby. Each of the Transaction
Documents has been duly authorized, executed and delivered by the Company. The
Company has taken all requisite corporate action required to approve the
Transaction Documents and the execution, delivery, and performance thereof by
the Company. The execution, delivery and performance of the Transaction
Documents by the Company and the consummation of the transactions herein
contemplated will not violate any provision of the organizational documents of
the Company and will not result in the creation of any lien, charge, security
interest or encumbrance upon any assets or property of the Company pursuant to
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the terms or provisions of, or will not conflict with, result in the breach or
violation of, or constitute, either by itself or upon notice or the passage of
time or both, a default under any agreement, mortgage, deed of trust, lease,
franchise, license, indenture, permit or other instrument to which the Company
is a party or by which the Company or any of its assets or properties may be
bound or affected, or any statute or any authorization, judgment, decree, order,
rule or regulation of any court or any regulatory body, administrative agency or
other governmental body applicable to the Company or any of its properties. No
consent, approval, authorization or other order of any court, regulatory body,
administrative agency or other governmental body is required for the execution,
delivery and performance of this Agreement or the consummation by the Company of
the transactions contemplated hereby, except for compliance with the Blue Sky
laws and federal Shares laws applicable to the offering of the Shares. Assuming
the valid execution by the Purchaser of such of the Transaction Documents as to
which it is a party, each of the Transaction Documents will constitute the
legal, valid and binding obligation of the Company, enforceable in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally and except as enforceability may be subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and except as the
indemnification agreements of the Company in Section 7.3 and choice of law
provisions hereof may be legally unenforceable.
4.6 NO ACTIONS. There are no legal or governmental actions,
suits or proceedings pending or, to the Company's knowledge, threatened, to
which the Company is or may be a party which seeks to prevent or restrain the
transactions contemplated by this Agreement or to recover damages as a result of
the consummation of such transactions.
4.7 INVESTMENT COMPANY. The Company is not an "investment
company" or an "affiliated person" of, or "promoter" or "principal underwriter"
for an investment company, within the meaning of the Investment Company Act of
1940, as amended.
4.8 BROKERS. There is no broker, finder or other party that is
entitled to receive from the Company any brokerage or finder's fee or other fee
or commission as a result of any transactions contemplated by this Agreement.
4.9 BOOKS AND RECORDS; FINANCIAL STATEMENTS.
(a) The books, records and accounts of the Company accurately
and fairly reflect, in reasonable detail, the transactions in, and dispositions
of, the assets of, and the results of operations of, the Company, all to the
extent required by generally accepted accounting principles. The Company
maintains a system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management's general
or specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
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(b) The financial statements of the Company included in the
documents (the "SEC Documents") filed by the Company with the SEC are true,
correct, and complete in all material respects and are in accordance with the
rules and regulations of the SEC and in accordance with generally accepted
accounting principles in the United States consistently applied. Each such
balance sheet presents fairly the financial condition, assets, liabilities, and
stockholders' equity of the Company as of its respective date; each such
statement of income and statement of stockholders' equity presents fairly the
results of operations of the Company for the period indicated; and each such
statement of cash flows presents fairly the information purported to be shown
therein. The financial statements referred to herein are in accordance with the
books and records of the Company. Since the last financial statements of Company
included in the SEC Documents:
(i) There has at no time been a material adverse
change in the financial condition, results of operations,
businesses, properties, assets, liabilities, or future
prospects of the Company.
(ii) The Company has not authorized, declared, paid,
or effected any dividend or liquidating or other distribution
in respect of its capital stock or any direct or indirect
redemption, purchase, or other acquisition of any stock of the
Company.
(iii) The operations and businesses of the Company
have been conducted in all respects only in the ordinary
course, except as discussed in the SEC Documents.
There is no fact known to the Company which materially adversely affects or in
the future (as far as the Company can reasonably foresee) may materially
adversely affect the financial condition, results of operations, businesses,
properties, assets, liabilities, or future prospects of the Company; provided,
however, that the Company expresses no opinion as to political or economic
matters of general applicability. The Company has made known, or caused to be
made known, to the accountants or auditors who have prepared, reviewed, or
audited the aforementioned consolidated financial statements all material facts
and circumstances which could affect the preparation, presentation, accuracy, or
completeness thereof.
4.10 FOREIGN CORRUPT PRACTICES ACT. Neither the Company, nor
any director, officer, agent, employee, or other person associated with, or
acting on behalf of, the Company, nor any stockholder of the Company has,
directly or indirectly: used any corporate funds for unlawful contributions,
gifts, entertainment, or other unlawful expenses relating to political activity;
made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns from
corporate funds; violated any provision of the Foreign Corrupt Practices Act of
1977, as amended; or made any bribe, rebate, payoff, influence payment,
kickback, or other unlawful payment.
4.11 TRADING MATTERS. At the date hereof and at the date of
each Closing:
(a) the Common Stock is and shall be traded and
quoted in the over-the-counter market;
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(b) the Company has and shall have performed or
satisfied all of its undertakings to, and of its obligations
and requirements with, the SEC;
(c) the Company has not, and shall not have taken any
action that would preclude, or otherwise jeopardize, the
inclusion of the Common Stock for quotation on the OTC
Bulletin Board.
4.12 FEDERAL SECURITIES MATTERS. The Common Stock has been
registered under Section 12 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") and the Company is subject to the periodic reporting
requirements of Section 13 of the Exchange Act. Each of the documents (the "SEC
Documents") filed by the Company with the SEC was when filed, and, except to the
extent superseded or corrected by more recently filed SEC Documents, is at the
date hereof, true, complete, and correct in all material respects and complies
in all respects with the rules and regulations of the SEC. No SEC Document
contained when filed, or currently contains (except as superseded by more
recently filed SEC Documents), an untrue statement of material fact or omits to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading.
4.12 COMPLIANCE WITH LAWS. The Company is in material
compliance with and is not in violation of applicable federal, state, local or
foreign statutes, laws and regulations (including without limitation, any
applicable building, zoning or other law, ordinance or regulation) affecting its
properties or the operation of its business. The Company is not subject to any
order, decree, judgment or other sanction of any court, administrative agency or
other tribunal.
4.13 REPRESENTATIONS AND WARRANTIES. No representation or
warranty by the Company in this Agreement contains or, and at the date of any
Closing will contain, an untrue statement of material fact or omits or, at such
Closing Date, will omit to state a material fact required to be stated therein
or necessary to make the statements made not misleading. Except for the
representations and warranties contained in this Section 4, the Company makes no
representation or warranty to the Purchaser, express or implied, in connection
with the transactions contemplated by this Agreement.
SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER.
The Purchaser represents and warrants to the Company as follows:
5.1 ORGANIZATION AND QUALIFICATION. The Purchaser is a limited
liability company duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization.
5.2 DUE EXECUTION, DELIVERY AND PERFORMANCE OF THE AGREEMENTS.
The Purchaser has full legal right, power and authority to enter into this
Agreement and to perform the transactions contemplated hereby. This Agreement
has been duly authorized, executed and delivered by the Purchaser. The
execution, delivery and performance of this Agreement by the Purchaser and the
consummation of the transactions herein contemplated will not violate any
provision of the organizational documents of the Purchaser and will not result
in the creation of any lien, charge, security interest or encumbrance upon any
assets or property of the Purchaser pursuant to the terms or provisions of, or
will not conflict with, result in the breach or violation of, or constitute,
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either by itself or upon notice or the passage of time or both, a default under
any agreement, mortgage, deed of trust, lease, franchise, license, indenture,
permit or other instrument to which the Purchaser is a party or by which the
Purchaser or any of its assets or properties may be bound or affected, or any
statute or any authorization, judgment, decree, order, rule or regulation of any
court or any regulatory body, administrative agency or other governmental body
applicable to the Purchaser or any of its properties. No consent, approval,
authorization or other order of any court, regulatory body, administrative
agency or other governmental body is required for the execution, delivery and
performance of this Agreement or the consummation by the Purchaser of the
transactions contemplated hereby. Assuming the valid execution hereof by the
Company, this Agreement will constitute the legal, valid and binding obligation
of the Purchaser, enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
and except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) and except as the indemnification and choice of law provisions
of the Purchaser in Section 7.3 hereof may be legally unenforceable.
5.3 NO ACTIONS. There are no legal or governmental actions,
suits or proceedings pending or, to the Purchaser's knowledge, threatened to
which the Purchaser is or may be a party which seeks to prevent or restrain the
transactions contemplated by this Agreement or to recover damages as a result of
the consummation of such transactions. To the knowledge of the Purchaser, the
Purchaser has not been and is not currently the subject of an investigation or
inquiry by the SEC, the NASD, or any state securities commission.
5.4 NATURE OF PURCHASER. The Purchaser is knowledgeable,
sophisticated and experienced in making, and is qualified to make, decisions
with respect to investments in shares representing an investment decision like
that involved in the purchase of the Shares, including investments in Shares
issued by the Company. The Purchaser is an "accredited investor" within the
meaning of Rule 501(a) of Regulation D promulgated under the Securities Act. The
Purchaser is not a "dealer" within the meaning of the Securities Act or a
"broker" or "dealer" within the meaning of the "Exchange Act." The Purchaser is
able to bear the economic risk of loss of the Purchaser's entire investment in
the Shares.
5.5 ACCESS TO INFORMATION. The Purchaser has requested,
received, reviewed and considered all information it deems relevant in making an
informed decision to purchase the Shares. The Purchaser understands that the
Company is still in the development stage and does not have operating revenues.
5.6 INVESTMENT INTENT. The Purchaser is acquiring the Shares
in the ordinary course of its business and for its own account for investment
only and with no present intention of distributing any of such Shares or
entering into any arrangement or understanding with any other person regarding
the distribution of such Shares (it being understood that the foregoing does not
limit the Purchaser's right to sell Shares pursuant to the Registration
Statement) other than in accordance with the Securities Act. Neither Purchaser
nor any entity under its control has, prior to the execution of this Agreement,
and will not, for a period of eighteen (18) months following the execution of
this Agreement, carry a net short position in the Common Stock, participate in
any short selling activities, recommendations, or collusion, directly or
indirectly, as such activities relate to the Common Stock. A net short position
will include any derivative instruments such as a put option, collar, swap or
any other instrument which would result in a net short position.
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5.7 SOLE REPRESENTATIONS AND WARRANTIES. Except for the
representations and warranties contained in this Section 5, the Purchaser makes
no representation or warranty to the Company, express or implied, in connection
with the transactions contemplated by this Agreement.
SECTION 6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Notwithstanding any investigation made by any party to this Agreement, all
covenants, agreements, representations and warranties made by the Company and
the Purchaser herein and in the certificates delivered pursuant hereto shall
survive the execution of this Agreement, the delivery to the Purchaser of the
Shares being purchased and the payment therefor.
SECTION 7. REGISTRATION OF THE SHARES; COMPLIANCE WITH THE SECURITIES
ACT.
7.1 REGISTRATION PROCEDURES AND EXPENSES.
(a) As soon as practicable, but in any event no later than
forty- five (45) days following the date of this Agreement, the Company shall
prepare and file with the SEC a registration statement on Form SB-2 or other
applicable form as determined by the Company (the "Registration Statement") for
the purpose of registering the sale of the Shares by the Purchaser from time to
time on the facilities of any Shares exchange or trading system on which the
Common Stock is then traded or in privately-negotiated transactions, which
Registration Statement shall contain all material non-public information
disclosed to the Purchaser by the Company in connection with the issuance and
sale of the Shares. For purposes of this Section 7, the term "Shares" shall
include the Shares, and any other shares of the Company issued in exchange for,
or in respect of, the Shares, as a dividend on the Shares or in connection with
a stock split or other reorganization transaction affecting the Shares. The
Company shall use its commercially reasonable efforts to cause the Registration
Statement to become effective as soon as practicable.
(b) The Company shall prepare and file with the SEC such
amendments and supplements to the Registration Statement and the prospectus
forming a part thereof as may be necessary in the reasonable discretion of the
Purchaser or the Company to keep the Registration Statement effective until the
earliest date, after the date on which all of the Shares have been purchased
pursuant to this Agreement or the obligation of the Purchaser to purchase the
Shares pursuant to this Agreement has been terminated, on which (i) all the
Shares have been disposed of pursuant to the Registration Statement, (ii) all of
the Shares then held by the Purchaser may be sold under the provisions of Rule
144 without limitation as to volume, whether pursuant to Rule 144(k) or
otherwise, or (iii) the Company has determined that all Shares then held by the
Purchaser may be sold without restriction under the Securities Act and has
removed any stop transfer instructions relating to such Shares and offered to
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cause to be removed any restrictive legends on the certificates, if any,
representing such Shares (the period between the Effective Date and the earliest
of such dates is referred to herein as the "Registration Period"). At any time
after the end of the Registration Period, the Company may withdraw the
Registration Statement and its obligations under this Section 7 (other than its
obligations under Section 7.3) shall automatically terminate.
(c) The Purchaser agrees to comply with all federal and state
securities laws and the rules and regulations promulgated thereunder in
connection with any sale by it of the Shares, whether or not such sale is
pursuant to the Registration Statement. In connection with the sale of any
Shares pursuant to the Registration Statement, but without limiting the
generality of the foregoing sentence, the Purchaser shall (i) comply with the
provisions of Regulation M promulgated under the Exchange Act, and (ii) deliver
to each purchaser of Shares the prospectus forming a part of the Registration
Statement and all relevant supplements thereto which have been provided by the
Company to the Purchaser on or prior to the applicable delivery date.
(d) The Company shall not be obligated to prepare and file a
post- effective amendment or supplement to the Registration Statement or the
prospectus constituting a part thereof during the continuance of a Blackout
Event. A "Blackout Event" means any of the following: (a) the possession by the
Company of material information that is not ripe for disclosure in a
registration statement or prospectus, as determined in good faith by the Chief
Executive Officer or the Board of Directors of the Company or that disclosure of
such information in the Registration Statement or the prospectus constituting a
part thereof would be detrimental to the business and affairs of the Company; or
(b) any material engagement or activity by the Company which would, in the good
faith determination of the Chief Executive Officer or the Board of Directors of
the Company, be adversely affected by disclosure in a registration statement or
prospectus at such time.
(e) At least five (5) days prior to the filing with the SEC of
the Registration Statement (or any amendment thereto) or the prospectus forming
a part thereof (or any supplement thereto), the Company shall provide draft
copies thereof to the Purchaser and shall consider incorporating into such
documents such comments as the Purchaser (and its counsel) may propose to be
incorporated therein. Notwithstanding the foregoing, no prospectus supplement,
the form of which has previously been provided to the Purchaser, need be
delivered in draft form to the Purchaser.
(f) The Company shall promptly notify the Purchaser upon the
occurrence of any of the following events in respect of the Registration
Statement or the prospectus forming a part thereof: (i) receipt of any request
for additional information from the SEC or any other federal or state
governmental authority during the Registration Period, the response to which
would require any amendments or supplements to the Registration Statement or
related prospectus; (ii) the issuance by the SEC or any other federal or state
governmental authority of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose; or
(iii) receipt of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Shares for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose.
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(g) The Company shall furnish to the Purchaser with respect to
the Shares registered under the Registration Statement (and to each underwriter,
if any, of such Shares) such number of copies of prospectuses and such other
documents as the Purchaser may reasonably request, in order to facilitate the
public sale or other disposition of all or any of the Shares by the Purchaser
pursuant to the Registration Statement.
(h) The Company shall file or cause to be filed such documents
as are required to be filed by the Company for normal blue sky clearance in
states specified in writing by the Purchaser; provided, however, that the
Company shall not be required to qualify to do business or consent to service of
process in any jurisdiction in which it is not now so qualified or has not so
consented.
(i) With a view to making available to the Purchaser the
benefits of Rule 144, the Company agrees, throughout the Registration Period and
so long as the Purchaser owns Shares purchased pursuant to this Agreement, to:
(A) comply with the provisions of paragraph (c) (1) of
Rule 144; and
(B) file with the SEC in a timely manner all reports and
other documents required to be filed by the Company pursuant to Section 13 or
15(d) under the Exchange Act; and, if at any time it is not required to file
such reports but in the past had been required to or did file such reports, it
will, upon the request of the Purchaser, make available other information as
required by, and so long as necessary to permit sales of its Shares pursuant to,
Rule 144.
(j) The Company shall bear all expenses incurred by it in
connection with the procedures in paragraphs (a) through (i) of this Section 7.1
and the registration of the Shares pursuant to the Registration Statement. The
Company shall not be responsible for any expenses incurred by the Purchaser in
connection with its sale of the Shares or its participation in the procedures in
paragraphs (a) through (i) of this Section 7.1 including, without limitation,
any fees and expenses of counsel or other advisers to the Purchaser and any
underwriting discounts, brokerage fees and commissions incurred by the
Purchaser.
7.2 COVENANTS OF THE PURCHASER.
(a) The Purchaser acknowledges and understands that the Shares
are "restricted Shares" as defined in Rule 144. The Purchaser hereby agrees not
to offer or sell (as such terms are defined in the Securities Act and the rules
and regulations promulgated thereunder) any Shares unless such offer or sale is
made (a) pursuant to an effective registration of the sale or the resale of the
Shares under the Securities Act, or (b) pursuant to an available exemption from
the registration requirements of the Securities Act. The Purchaser agrees that
it will not engage in hedging transactions with regard to the Shares other than
in compliance with the Securities Act. A proposed transfer shall be deemed to
comply with this Section 7.2(a) if the Purchaser delivers to the Company a legal
opinion in form and substance satisfactory to the Purchaser from counsel
satisfactory to the Purchaser to the effect that such transfer complies with
this Section 7.2(a).
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(b) If at any time or from time to time after the Effective
Date, the Company notifies the Purchaser in writing that the Registration
Statement or the prospectus forming a part thereof (taking into account any
prior amendments or supplements thereto) contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
therein, in light of the circumstances under which they are made, not
misleading, the Purchaser shall not offer or sell any Shares or engage in any
other transaction involving or relating to the Shares (other than purchases of
Shares pursuant to this Agreement), from the time of the giving of notice with
respect to such untrue statement or omission until the Purchaser receives
written notice from the Company that such untrue statement or omission no longer
exists or has been corrected or disclosed in an effective post-effective
amendment to the Registration Statement or a valid prospectus supplement to the
prospectus forming a part thereof. Notwithstanding the foregoing, such period
during which the Purchaser is restricted from selling Shares pursuant to the
Registration Statement shall not continue for more than 30 days and not more
frequently than twice annually.
(c) In connection with the sale of any Shares pursuant to the
Registration Statement, the Purchaser shall deliver to the purchaser thereof the
prospectus forming a part of the Registration Statement and all relevant
supplements thereto which have been provided by the Company to the Purchaser on
or prior to the applicable delivery date, all in accordance with the
requirements of the Securities Act and the rules and regulations promulgated
thereunder and any applicable blue sky laws.
(d) The Company may refuse to register (or permit its transfer
agent to register) any transfer of any Shares not made in accordance with this
Section 7.2 and for such purpose may place stop order instructions with its
transfer agent with respect to the Shares.
(e) The Purchaser will cooperate with the Company in all
respects in connection with the performance by the Company of its obligations
under Section 7.1, including timely supplying all information reasonably
requested by the Company (which shall include all information regarding the
Purchaser, and any person who beneficially owns Shares held by the Purchaser
within the meaning of Rule 13d-3 promulgated under the Exchange Act, and the
proposed manner of sale of the Shares required to be disclosed in the
Registration Statement) and executing and returning all documents reasonably
requested in connection with the registration and sale of the Shares. The
Purchaser hereby consents to be named as an underwriter in the Registration
Statement, if applicable, in accordance with current SEC policy and, if
necessary, to join in the request of the Company for the acceleration of the
effectiveness of the Registration Statement.
7.3 INDEMNIFICATION. For the purpose of this Section 7.3, (i)
the term "Purchaser Affiliate" shall mean any person who controls the Purchaser
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, and (ii) the term "Registration Statement" shall include any final
prospectus, exhibit, supplement or amendment included in or relating to the
Registration Statement referred to in Section 7.1.
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(a) The Company agrees to indemnify and hold harmless the
Purchaser, and each Purchaser Affiliate, against any losses, claims, damages,
liabilities or expenses (including reasonable fees and disbursements of
counsel), joint or several, to which such Purchaser or such Purchaser Affiliate
may become subject, under the Securities Act, the Exchange Act, or any other
federal or state statutory law or regulation, or at common law or otherwise
(including in settlement of any litigation, if such settlement is effected with
the written consent of the Company), insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof as contemplated below)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement, as
amended as of the Effective Date, including any information deemed to be a part
thereof as of the time of effectiveness pursuant to paragraph (b) of Rule 430A,
or pursuant to Rule 434 promulgated under the Securities Act, or the prospectus,
in the form first filed with the SEC pursuant to Rule 424(b) of the Regulations,
or filed as part of the Registration Statement at the time of effectiveness if
no Rule 424(b) filing is required (the "Prospectus"), or any amendment or
supplement thereto, (ii) the omission or alleged omission to state in the
Registration Statement a material fact required to be stated therein or
necessary to make the statements in the Registration Statement or any
post-effective amendment or supplement thereto, or in the Prospectus or any
amendment or supplement thereto, not misleading, in each case in the light of
the circumstances under which the statements contained therein were made, or
(iii) any inaccuracy in the representations and warranties of the Company
contained in this Agreement, or any failure of the Company to perform its
obligations hereunder, and will reimburse the Purchaser and each such Purchaser
Affiliate for any legal and other expenses as such expenses which are reasonably
incurred by the Purchaser or such Purchaser Affiliate in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action; provided, however, that the Company will
not be liable in any such case to the extent that any such loss, claim, damage,
liability or expense arises out of or is based upon (i) an untrue statement or
alleged untrue statement or omission or alleged omission made in the
Registration Statement, the Prospectus or any amendment or supplement thereto in
reliance upon and in conformity with written information furnished to the
Company by the Purchaser expressly for use therein, or (ii) the failure of the
Purchaser to comply with the covenants and agreements contained in Section 7.2
hereof respecting the sale of the Shares, or (iii) the inaccuracy of any
representations made by the Purchaser herein or (iv) any statement or omission
in any Prospectus that is corrected or disclosed in any subsequent Prospectus
that was delivered to the Purchaser prior to the pertinent sale or sales by the
Purchaser.
(b) The Purchaser will indemnify and hold harmless the
Company, each of its directors, each of its officers who signed the Registration
Statement and each person, if any, who controls the Company within the meaning
of the Securities Act and the Exchange Act, against any losses, claims, damages,
liabilities or expenses to which the Company, each of its directors, each of its
officers who signed the Registration Statement or controlling person may become
subject, under the Securities Act, the Exchange Act, or any other federal or
state statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of such Purchaser) insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof as contemplated below) arise out of
or are based upon (i) any failure to comply with the covenants and agreements
contained in Section 7.2 hereof respecting the sale of the Shares, (ii) the
inaccuracy of any representation made by the Purchaser herein, or (iii) any (x)
untrue or alleged untrue statement of any material fact contained in the
Registration Statement, the Prospectus, or any amendment or supplement thereto,
or (y) omission or alleged omission to state in the Registration Statement, the
Prospectus or any amendment or supplement thereto a material fact required to be
13
stated therein or necessary to make the statements in the Registration Statement
or any amendment or supplement thereto, or in the Prospectus or any amendment or
supplement thereto, not misleading, in each case in the light of the
circumstances under which they were made; provided, that the Purchaser's
indemnification obligation under this clause (iii) shall apply to the extent,
and only to the extent, that such untrue statement or alleged untrue statement
or omission or alleged omission was made in the Registration Statement, the
Prospectus, or any amendment or supplement thereto, in reliance upon and in
conformity with written information furnished to the Company by the Purchaser
expressly for use therein, and will reimburse the Company, each of its
directors, each of its officers who signed the Registration Statement or
controlling person for any legal and other expense reasonably incurred by the
Company, each of its directors, each of its officers who signed the Registration
Statement or controlling person in connection with investigating, defending,
settling, compromising or paying any such loss, claim, damage, liability,
expense or action.
(c) Promptly after receipt by an indemnified party under this
Section 7.3 of notice of the threat or commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party under this Section 7.3, promptly notify the indemnifying
party in writing thereof; provided, the omission so to notify the indemnifying
party will not relieve it from any liability which it may have to any
indemnified party for contribution (except as provided in paragraph (d)) other
than under the indemnity agreement contained in this Section 7.3 or to the
extent it is materially prejudiced as a result of such failure. In case any such
action is brought against any indemnified party and such indemnified party seeks
or intends to seek indemnity from an indemnifying party, the indemnifying party
will be entitled to participate in, and, to the extent that it may wish, jointly
with all other indemnifying parties similarly notified, to assume the defense
thereof with counsel reasonably satisfactory to such indemnified party. Upon
receipt of notice from the indemnifying party to such indemnified party of its
election so to assume the defense of such action and approval by the indemnified
party of counsel, the indemnifying party will not be liable to such indemnified
party under this Section 7.3 for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof unless
the indemnified party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after notice of commencement of action, in which case the reasonable fees
and expenses of counsel shall be at the expense of the indemnifying party. In
the event that the indemnifying party shall not assume the defense thereof at
its expense, the indemnified party shall assume the defense thereof at the
expense of the indemnifying party.
(d) If the indemnification provided for in this Section 7.3 is
required by its terms but is for any reason held to be unavailable to or
otherwise insufficient to hold harmless an indemnified party under paragraphs
(a) or (b) of this Section 7.3 in respect to any losses, claims, damages,
liabilities or expenses referred to herein (subject to the limitation of
paragraph (c) of this Section 7.3), then each applicable indemnifying party
shall contribute to the amount paid or payable by such indemnified party as a
result of any losses, claims, damages, liabilities or expenses referred to
14
herein (i) in such proportion as is appropriate to reflect the relative benefits
received by the Company and the Purchaser from the placement of the Common Stock
contemplated by this Agreement or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
the relative fault of the Company and the Purchaser in connection with the
statements or omissions or inaccuracies in the representations and warranties in
this Agreement that resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and the Purchaser on the other
shall be deemed to be in the same proportion as the amount paid by the Purchaser
to the Company pursuant to this Agreement for the Shares purchased by the
Purchaser that were sold pursuant to the Registration Statement bears to the
difference (the "Difference") between the amount such Purchaser paid for the
Shares that were sold pursuant to the Registration Statement and the amount
received by such Purchaser from such sale. The relative fault of the Company on
the one hand and the Purchaser on the other shall be determined by reference to,
among other things, whether the untrue or alleged statement of a material fact
or the omission or alleged omission to state a material fact or the inaccurate
or the alleged inaccurate representation and/or warranty relates to information
supplied by the Company or by the Purchaser and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement, omission or inaccuracy. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set forth in
paragraph (c) of this Section 7.3, any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
any action or claim. The provisions set forth in paragraph (c) of this Section
7.3 with respect to the notice of the threat or commencement of any threat or
action shall apply if a claim for contribution is to be made under this
paragraph (d); provided, however, that no additional notice shall be required
with respect to any threat or action for which notice has been given under
paragraph (c) for purposes of indemnification. The Company and each Purchaser
agree that it would not be just and equitable if contribution pursuant to this
Section 7.3 were determined solely by pro rata allocation or by any other method
of allocation which does not take account of the equitable considerations
referred to in this paragraph. Notwithstanding the provisions of this Section
7.3, the Purchaser shall not be required to contribute any amount in excess of
the amount by which the Difference exceeds the amount of any damages that such
Purchaser has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
7.4 INFORMATION AVAILABLE. Until the Purchaser has sold all of
the Shares, the Company will furnish to the Purchaser, upon written request:
(a) as soon as practicable after available, one copy of (i)
its Annual Report to Stockholders (which Annual Report shall contain financial
statements audited in accordance with generally accepted accounting principles
by a firm of certified public accountants), (ii) its Annual Report on Form
10-KSB, (iii), its Quarterly Reports on Form 10-QSB, (iv) its Current Reports on
Form 8-K, and (v) a full copy of the Registration Statement, including exhibits.
15
SECTION 8. NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing, shall be mailed by first-class
registered or certified airmail, confirmed facsimile or nationally recognized
overnight express courier postage prepaid, and shall be deemed given when so
mailed and shall be delivered as addressed as follows:
(a) if to the Company, to:
000 Xxxxxxxxxx, Xxxxx X
Xxxxxx, XX 00000
Phone: 000.000.0000
Facsimile: 949.453.9652
Attn: Xxxxxxxx X. Xxxxxxxxx
or to such other person at such other place as the Company shall designate to
the Purchaser in writing; and
(b) if to the Purchaser, to:
1901 Avenue of the Stars
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Facsimile: 509o 694o 8692
or to such other person at such other place as the Purchaser shall designate to
the Company in writing.
SECTION 9. ASSIGNMENT. Neither party hereto may assign or delegate any
of such party's rights or obligations under or in connection with this
Agreement, and any attempted assignment or delegation of such rights or
obligations shall be void. Except as expressly provided in Section 7.3 with
respect to Purchaser Affiliates, directors and controlling persons of the
Company and officers of the Company who signed the Registration Statement, no
person, including without limitation any person who purchases or otherwise
acquires or receives any Shares from the Purchaser, is an intended third party
beneficiary of this Agreement, and no party to this Agreement shall have any
obligation arising under this Agreement to any person other than the other party
hereto and, to the extent expressly provided in Section 7.3, Purchaser
Affiliates, directors and controlling persons of the Company and officers of the
Company who signed the Registration Statement.
SECTION 10. AMENDMENTS. This Agreement may not be modified or amended
except pursuant to an instrument in writing signed by the Company and the
Purchaser.
SECTION 11. HEADINGS. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be part of this Agreement.
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SECTION 12. SEVERABILITY. In case any provision contained in this
Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
SECTION 13. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California, without regard
to its conflicts of law principles.
SECTION 14. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
Trilogy Investment I LLC
By: /S/ X.X. XXXXXXXXX
--------------------------------
X.X. Xxxxxxxxx
VisiJet, Inc.
By /S/ XXXXXXXX X. XXXXXXXXX
--------------------------------
Xxxxxxxx X. Xxxxxxxxx
17
