ERXHIBIT 4.1
COMMON STOCK AND WARRANTS PURCHASE AGREEMENT
Between
XxxxxxxxXxx.xxx, Inc.
and
the Investors Signatory Hereto
COMMON STOCK AND WARRANTS PURCHASE AGREEMENT dated as of February 13,
2002 (the "Agreement"), between the Investors signatory hereto (each an
"Investor" and together the "Investors"), and XxxxxxxxXxx.xxx, Inc., a
corporation organized and existing under the laws of the State of Nevada (the
"Company").
WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to the Investors,
and the Investors shall purchase in the aggregate, up to (i) $7,000,000 of
Common Stock (as defined below) and (ii) Warrants (as defined below) to purchase
15% of the number of shares of Common Stock sold (as defined below) with an
exercise price of $1.00 per share.
WHEREAS, such investments will be made in reliance upon the provisions
of Section 4(2) ("Section 4(2)") and/or 4(6) of the United States Securities Act
of 1933, as amended (the "Securities Act") and/or Regulation D ("Regulation D")
and the other rules and regulations promulgated under the Securities Act, and/or
upon such other exemption from the registration requirements of the Securities
Act as may be available with respect to any or all of the investments in
securities to be made hereunder.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1 "Capital Shares" shall mean the Common Stock and any shares of any
other class of common stock whether now or hereafter authorized, having the
right to participate in the distribution of earnings and assets of the Company.
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Section 1.2 "Capital Shares Equivalents" shall mean any securities, rights, or
obligations that are convertible into or exchangeable for or give any right to
subscribe for any Capital Shares of the Company or any Warrants, options or
other rights to subscribe for or purchase Capital Shares or any such convertible
or exchangeable securities.
Section 1.3 "Closing" shall mean the closing of the purchase and sale of the
Common Stock and Warrants pursuant to Section 2.1.
Section 1.4 "Closing Date" shall mean the date on which all conditions to the
Closing have been satisfied (as defined in Section 2.1 (b) hereto) and the
Closing shall have occurred.
Section 1.5 "Common Stock" shall mean the Company's common stock, $.001 par
value per share.
Section 1.6 "Damages" shall mean any loss, claim, damage, judgment, penalty,
deficiency, liability, costs and expenses (including, without limitation,
reasonable attorney's fees and disbursements and reasonable costs and expenses
of expert witnesses and investigation; but excluding indirect or consequential
damages).
Section 1.7 "Effective Date" shall mean the date on which the SEC first declares
effective a Registration Statement registering the resale of the Registrable
Securities as set forth in the Registration Rights Agreement.
Section 1.8 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
Section 1.9 "Knowledge" of the Company, when modifying a representation or
warranty, means the Company has no actual knowledge that such representation or
warranty is not true and correct to the extent provided therein and that (i) the
Company has made appropriate inquiries of its executive officers and (ii)
nothing has come to the Company's attention in the course of such inquiries
which would cause the Company, in the exercise of due care, to believe that such
representation or warranty is not true and correct to the extent provided
therein.
Section 1.10 "Legend" shall mean the legend set forth in Section 8.1.
Section 1.11 "Material Adverse Effect" shall mean any effect on the business,
operations, properties, or financial condition of the Company that is material
and adverse to the Company and its subsidiaries and affiliates, taken as a
whole, and/or any condition, circumstance, or situation that would prohibit or
otherwise interfere with the ability of the Company to enter into and perform
any of its obligations under this Agreement, the Registration Rights Agreement,
or the Warrants in any material respect.
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Section 1.12 "Outstanding" when used with reference to shares of Common Stock or
Capital Shares, shall mean, at any date as of which the number of such shares is
to be determined, all issued and outstanding shares, and shall include all such
shares issuable in respect of outstanding scrip or any certificates representing
fractional interests in such shares; provided, however, that "Outstanding" shall
not mean any such shares then directly or indirectly owned or held by or for the
account of the Company.
Section 1.13 "Person" shall mean an individual, a corporation, a partnership, a
limited liability company, an association, a trust or other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
Section 1.14 "Principal Market" shall mean the American Stock Exchange, the New
York Stock Exchange, the NASDAQ National Market, or the NASDAQ Small-Cap Market,
whichever is at the time the principal trading exchange or market for the Common
Stock, based upon share volume.
Section 1.15 "Purchase Price" shall mean sixty-five cents ($0.65) per unit
consisting of one share of Common Stock and a Warrant to purchase 0.15 shares of
Common Stock.
Section 1.16 "Registrable Securities" shall mean the Common Stock and the
Warrant Shares until (i) the Registration Statement has been declared effective
by the SEC, and all shares of Common Stock and Warrant Shares have been disposed
of pursuant to the Registration Statement, (ii) all shares of Common Stock and
Warrant Shares have been sold under circumstances under which all of the
applicable conditions of Rule 144 (or any similar provision then in force) under
the Securities Act ("Rule 144") are met, (iii) all shares of Common Stock and
Warrant Shares have been otherwise transferred to holders who may trade such
shares without restriction under the Securities Act, and the Company has
delivered a new certificate or other evidence of ownership for such securities
not bearing a restrictive legend or (iv) such time as, in the opinion of counsel
to the Company, all shares of Common Stock and Warrant Shares may be sold at any
time, without volume or manner of sale limitations pursuant to Rule 144(k) (or
any similar provision then in effect) under the Securities Act.
Section 1.17 "Registration Rights Agreement" shall mean the agreement regarding
the filing of the Registration Statement for the resale of the Registrable
Securities, entered into between the Company and the Investors as of the Closing
Date in the form annexed hereto as Exhibit A.
Section 1.18 "Registration Statement" shall mean a registration statement on
Form S-1 (if use of such form is then available to the Company pursuant to the
rules of the SEC and, if not, on such other form promulgated by the SEC for
which the Company then qualifies and which counsel for the Company shall deem
appropriate, and which form shall be available for the resale by the Investors
of the Registrable Securities to be registered thereunder in accordance with the
provisions of this Agreement, the Registration Rights Agreement and in
accordance with the intended method of distribution of such securities), for the
registration of the resale by the Investors of the Registrable Securities under
the Securities Act.
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Section 1.19 "Regulation D" shall have the meaning set forth in the recitals of
this Agreement.
Section 1.20 "SEC" shall mean the Securities and Exchange Commission.
Section 1.21 "Section 4(2)" and "Section 4(6)" shall have the meanings set forth
in the recitals of this Agreement.
Section 1.22 "Securities Act" shall have the meaning set forth in the recitals
of this Agreement.
Section 1.23 "SEC Documents" shall mean the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 2000 and each report, proxy statement or
registration statement filed by the Company with the SEC pursuant to the
Exchange Act or the Securities Act since the filing of such Annual Report
through the date hereof, including any amendments thereto.
Section 1.24 "Shares" shall mean the shares of Common Stock being purchased
pursuant to -this Agreement.
Section 1.25 "Trading Day" shall mean any day during which the Principal Market
shall be open for business.
Section 1.26 "Warrants" shall mean the Warrants substantially in the form of
Exhibit B to be issued to the Investors hereunder.
Section 1.27 "Warrant Shares" shall mean all shares of Common Stock or other
securities issued or issuable pursuant to exercise of the Warrants.
ARTICLE II
PURCHASE AND SALE OF COMMON STOCK AND WARRANTS
Section 2.1 Investment.
(a) Upon the terms and subject to the conditions set forth herein, the
Company agrees to sell, and the Investors, severally and not jointly, agree to
purchase units consisting of separately transferable shares of Common Stock
together with the Warrants, on the basis of one share of Common Stock plus a
Warrant to purchase 0.15 shares of Common Stock (for each Investor, rounded down
to the nearest whole number of shares of Common Stock), at the Purchase Price on
the Closing Date as follows:
(1) Upon execution and delivery of this Agreement and the
Registration Rights Agreement by each Investor and the Company,
the Investors shall deliver to the Company immediately available
funds in their proportionate amount of the Purchase Price, as set
forth on the signature pages hereto, by wire transfer to the
Company account set forth on Appendix A hereto.
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(ii) Upon receipt of each wire transfer and this Agreement and the
Registration Rights Agreement duly executed by an Investor, the
Company shall deliver the Common Stock certificates and the
Warrants to the applicable Investor at the address indicated on
the signature pages hereto.
(b) The Closing is subject to the satisfaction or waiver by the party
to be benefited thereby of the following conditions:
(i) acceptance and execution by the Company and by each Investor,
severally, of this Agreement and the Registration Rights
Agreement;
(ii) payment by each Investor of immediately available funds in the
amount of the Purchase Price of the Common Stock and the
Warrants;
(iii)all representations and warranties of the Investors contained
herein shall remain true and correct in all material respects as
of the Closing Date (as a condition to the Company's
obligations);
(iv) all representations and warranties of the Company contained
herein shall remain true and correct in all material respects as
of the Closing Date, except to the extent that any such
representation or warranty expressly relates to another date (in
which case, shall be true and correct as of such other specified
date) (as a condition to the Investors' obligations);
(v) the Company shall have obtained all permits and qualifications
required by any state for the offer and sale of the Common Stock
and Warrants, or shall have the availability of exemptions
therefrom;
(vi) the sale and issuance of the Common Stock and the Warrants
hereunder, and the proposed issuance by the Company to the
Investors of the Common Stock underlying the Common Stock and the
Warrants upon the exercise thereof shall be legally permitted by
all laws and regulations to which the Investors and the Company
are subject and there shall be no ruling, judgment or writ of any
court prohibiting the transactions contemplated by this
Agreement;
(vii)delivery of the original fully executed Common Stock certificates
and Warrants, and Registration Rights Agreement to the Investors;
(viii) delivery to the Investors of opinions of Xxxxxxx, Xxxxxxx &
Xxxxxxxx LLP and Xxxxx Xxxxxx Xxxxxx & Xxxxxxxx LLP, counsels to
the Company, substantially in the form of Exhibit C hereto.
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Section 2.2 LIMITATION ON SHARES. In no event shall the aggregate of the number
of Shares sold hereunder and the Warrant Shares exceed 19.99% of the outstanding
shares of Common Stock of the Company.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF INVESTORS
Each Investor, severally and not jointly, represents and warrants to and agrees
with the Company that:
Section 3.1 INTENT. The Investor is entering into this Agreement for its own
account and not with a view to or for sale in connection with any distribution
of the Shares, the Warrants or any Warrant Shares. The Investor has no present
plan, intention or arrangement (whether or not legally binding) at any time to
sell the Shares, the Warrants, or any Warrant Shares to or through any person or
entity. The Investor understands that the Shares, the Warrants and the Warrant
Shares have not been registered under the Securities Act or any state securities
laws in reliance on exemptions therefrom, which exemptions may depend upon,
among other things, the bona fide nature of the Investor's investment intent as
expressed herein. Investor agrees that it will not, directly or indirectly,
offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to
purchase, transfer or otherwise acquire or take a pledge of) any of the Shares,
the Warrants or the Warrant Shares except in compliance with the Securities Act,
applicable state securities laws and the respective rules and regulations
thereunder. Notwithstanding the foregoing, the Investor is not agreeing to hold
the Shares, the Warrants or the Warrant Shares for any particular period of
time.
Section 3.2 SOPHISTICATED INVESTOR. The Investor is a sophisticated investor (as
described in Rule 506(b)(2)(ii) of Regulation D) and an "accredited investor"
(as defined in Rule 501 of Regulation D), and Investor has such experience in
business and financial matters that it has the capacity to protect its own
interests in connection with this transaction and is capable of evaluating the
merits and risks of an investment in the Common Stock and the Warrants. The
Investor acknowledges that an investment in the Common Stock and the Warrants is
speculative and involves a high degree of risk.
Section 3.3 AUTHORITY. This Agreement and the Registration Rights Agreement has
been duly authorized and validly executed and delivered by the Investor and is a
valid and binding agreement of the Investor enforceable against it in accordance
with its terms, subject to applicable bankruptcy, insolvency, or similar laws
relating to, or affecting generally the enforcement of, creditors' rights and
remedies or by other equitable principles of general application.
Section 3.4 NOT AN AFFILIATE. The Investor is not an officer, director or
"affiliate" (as that term is defined in Rule 405 of the Securities Act) of the
Company.
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Section 3.5 ABSENCE OF CONFLICTS. The execution and delivery of this Agreement
and the Registration Rights Agreement, and the consummation of the transactions
contemplated hereby and thereby, and compliance with the requirements hereof and
thereof by the Investor, will not violate any law, rule, regulation, order,
writ, judgment, injunction, decree or award binding on Investor or (a) violate
any provision of any indenture, instrument or agreement to which Investor is a
party or is subject, or by which Investor or any of its assets is bound; (b)
conflict with or constitute a material default thereunder; (c) result in the
creation or imposition of any lien pursuant to the terms of any such indenture,
instrument or agreement, or constitute a breach of any fiduciary duty owed by
Investor to any third party; or (d) require the approval of any third-party
(which has not been obtained) pursuant to any material contract, agreement,
instrument, relationship or legal obligation to which Investor is subject or to
which any of its assets, operations or management may be subject.
Section 3.6 DISCLOSURE; ACCESS TO INFORMATION. The Investor has received all
documents, records, books and other publicly available information pertaining to
Investor's investment in the Company that have been requested by the Investor.
The Company is subject to the periodic reporting requirements of the Exchange
Act, and the Investor has reviewed copies of all SEC Documents deemed relevant
by Investor. The Investor further represents that it has had an opportunity to
ask questions and receive answers from the Company regarding the terms and
conditions of the offering of the Shares and the business, properties, prospects
and financial condition of the Company. The Investor understands that some of
such information, including information contained in the Disclosure Schedules
described in the preamble to Article IV of this Agreement, may constitute
material non-public information for purposes of the Exchange Act, and agrees
that the information contained in the Disclosure Schedules constitutes
confidential information of the Company. The Investor agrees to maintain the
confidentiality of the information set forth in the Disclosure Schedules with
the same degree of care with which it maintains its own confidential business
information, and in no event less than a reasonable standard of care, and not to
disseminate any of such information to any person outside of Investor's own
organization or their counsel, and then only on a need to know basis. Such
obligation of confidentiality shall remain until public disclosure of such
information as described in Section 5.1.
Section 3.7 MANNER OF SALE. At no time was Investor presented with or solicited
by or through any leaflet, public promotional meeting, or television
advertisement or, to the Investor's knowledge, with any other form of
communication which appeared to Investor to constitute general solicitation or
advertising.
Section 3.8 FOREIGN INVESTOR. If the Investor is not a United States person,
such Investor hereby represents that it has satisfied itself as to the full
observance of the laws of its jurisdiction in connection with any invitation to
subscribe for the Shares or any use of this Agreement, including (i) the legal
requirements within its jurisdiction for the purchase of the Shares, (ii) any
foreign exchange restrictions applicable to such purchase, (iii) any
governmental or other consents that may need to be obtained, (iv) the income tax
and other tax consequences, if any, that may be relevant to the purchase,
holding, redemption, sale or transfer of the Shares. Such Investor's
subscription and payment for, and its continued beneficial ownership of the
Shares, will not violate any applicable securities or other laws of its
jurisdiction.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Investors, subject to such exceptions
as are specifically disclosed in the disclosure letter delivered separately by
the Company to the Investors (the "Disclosure Schedules") dated the date of this
Agreement, and except as otherwise set forth in the SEC Documents, that:
Section 4.1 ORGANIZATION OF THE COMPANY. The Company is a corporation duly
incorporated and existing in good standing under the laws of the State of Nevada
and has all requisite corporate authority to own its properties and to carry on
its business as now being conducted. The Company does not have any subsidiaries
and does not own more than fifty percent (50%) of or control any other business
entity. The Company is duly qualified and is in good standing as a foreign
corporation to do business in every jurisdiction in which the nature of the
business conducted or property owned by it makes such qualification necessary,
other than those in which the failure so to qualify would not have a Material
Adverse Effect.
Section 4.2 AUTHORITY. (i) The Company has the requisite corporate power and
corporate authority to enter into and perform its obligations under this
Agreement, the Registration Rights Agreement and the Warrants and to issue the
Shares, the Warrants and the Warrant Shares pursuant to their respective terms,
(ii) the execution, issuance and delivery of this Agreement, the Registration
Rights Agreement, the Common Stock certificates representing the Shares and the
Warrants by the Company and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
and no further consent or authorization of the Company or its Board of Directors
or stockholders is required, and (iii) this Agreement, the Registration Rights
Agreement, the Common Stock certificates representing the Shares and the
Warrants have been duly executed and delivered by the Company and at the Closing
shall constitute valid and binding obligations of the Company enforceable
against the Company in accordance with their terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, or similar
laws relating to, or affecting generally the enforcement of, creditors' rights
and remedies or by other equitable principles of general application. The
Company has duly and validly authorized and reserved for issuance shares of
Common Stock sufficient in number for the exercise of the Warrants.
Section 4.3 CAPITALIZATION. As of the date hereof, the authorized capital stock
of the Company consists of: (a) 190,000,000 shares of Common Stock, par value
$0.001 per share (the "Common Stock"), of which 78,372,254 shares were
outstanding at February 11, 2002; (b) 5,000,000 shares of Preferred Stock, none
of which are outstanding; (c) options to purchase an aggregate of 7,172,844
shares of Common Stock (with an additional 4,072,761 shares available for grant
at December 31, 2001) and (d) warrants to purchase an aggregate of 3,994,446
shares of Common Stock at February 11, 2002. Except as set forth above, and
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except for the Company's equity line of credit with Fusion Capital Fund II, LLC,
the Shares, the Warrants and the Warrant Shares, there are no outstanding
Capital Shares Equivalents nor any agreements or understandings pursuant to
which any Capital Shares Equivalents may become outstanding. The Company is not
a party to any agreement granting registration or anti-dilution rights to any
person (other than the Investors herein) with respect to any of its equity or
debt securities. All of the outstanding shares of Common Stock of the Company
have been duly and validly authorized and issued and are fully paid and
non-assessable.
Section 4.4 COMMON STOCK; S-3 ELIGIBILITY. The Company has registered its Common
Stock pursuant to Section 12(b) or (g) of the Exchange Act and is in full
compliance with all reporting requirements of the Exchange Act, and the Company
is in compliance with all requirements for the continued listing or quotation of
its Common Stock, and such Common Stock is currently listed or quoted on, the
Principal Market. As of the date hereof, the Principal Market is the Nasdaq
National Market, and the Company has not received any notice regarding, and to
its knowledge there is no threat, of the termination or discontinuance of the
eligibility of the Common Stock for such listing. The Company expects to become
eligible to register the Shares and the Warrant Shares for resale by the
Investors by amending the Form S-1 Registration Statement post-effectively onto
Form S-3 after June 30, 2002.
Section 4.5 SEC DOCUMENTS. The Company has not provided to the Investors any
information that, according to applicable law, rule or regulation, should have
been disclosed publicly prior to the date hereof by the Company, but which has
not been so disclosed. As of their respective dates, the SEC Documents complied
in all material respects with the requirements of the Exchange Act or the
Securities Act, as applicable, and rules and regulations of the SEC promulgated
thereunder and the SEC Documents did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The financial statements of the
Company included in the SEC Documents complied in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC or other applicable rules and regulations with respect thereto at the
time of such inclusion. Such financial statements have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis during the periods involved (except (i) as may be otherwise indicated in
such financial statements or the notes thereto or (ii) in the case of unaudited
interim statements, to the extent they exclude footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of operations
and cash flows for the periods then ended (subject, in the case of unaudited
interim statements, to normal year-end audit adjustments). Neither the Company
nor any of its subsidiaries has any material indebtedness, obligations or
liabilities of any kind (whether accrued, absolute, contingent or otherwise, and
whether due or to become due) that would have been required to be reflected in,
reserved against or otherwise described in the financial statements or in the
notes thereto in accordance with GAAP, which was not fully reflected in,
reserved against or otherwise described in the financial statements or the notes
thereto included in the SEC Documents or was not incurred in the ordinary course
of business consistent with the Company's past practices since the last date of
such financial statements.
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Section 4.6 EXEMPTION FROM REGISTRATION; VALID ISSUANCES. Subject to the
accuracy of the Investors' representations in Article III, the sale of the
Shares, the Warrants and the Warrant Shares will not require registration under
the Securities Act and/or any applicable state securities law. When issued and
paid for in accordance with the Warrants, the Warrant Shares will be duly and
validly issued, fully paid, and non-assessable. Neither the sales of the Shares,
the Warrants or the Warrant Shares pursuant to, nor the Company's performance of
its obligations under, this Agreement, the Registration Rights Agreement or the
Warrants will (i) result in the creation or imposition by the Company of any
liens, charges, claims or other encumbrances upon the Shares, the Warrants or
the Warrant Shares or any of the assets of the Company, or (ii) entitle the
holders of Outstanding Capital Shares to preemptive or other rights to subscribe
for or acquire the Capital Shares or other securities of the Company. The
Shares, the Warrants and the Warrant Shares shall not subject the Investors to
personal liability to the Company or its creditors by reason of the possession
thereof.
Section 4.7 NO GENERAL SOLICITATION OR ADVERTISING IN REGARD TO THIS
TRANSACTION. Neither the Company nor any of its affiliates nor, to the knowledge
of the Company, any person acting on its or their behalf (i) has conducted or
will conduct any general solicitation (as that term is used in Rule 502(c) of
Regulation D) or general advertising with respect to the sale of the Shares or
the Warrants, or (ii) made any offers or sales of any security or solicited any
offers to buy any security under any circumstances that would require
registration of the Shares, the Warrants or the Warrant Shares under the
Securities Act.
Section 4.8 NO CONFLICTS. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby, including without limitation the issuance of the Shares,
the Warrants and the Warrant Shares, do not and will not (i) result in a
violation of the Company's Certificate of Incorporation or By-Laws or (ii)
conflict with, or constitute a material default (or an event that with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any material
agreement, indenture or instrument, or any "lock-up" or similar provision of any
underwriting or similar agreement to which the Company is a party, or (iii)
result in a violation of any federal, state or local law, rule, regulation,
order, judgment or decree (including federal and state securities laws and
regulations) applicable to the Company or by which any material property or
asset of the Company is bound or affected, nor is the Company otherwise in
violation of, conflict with or default under any of the foregoing (except in
each case for such conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations as would not have, individually or in the
aggregate, a Material Adverse Effect). The business of the Company is not being
conducted in violation of any law, ordinance or regulation of any governmental
entity, except for possible violations that either singly or in the aggregate
would not have a Material Adverse Effect. The Company is not required under any
Federal, state or local law, rule or regulation to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency in order for it to execute, deliver or perform any of its
obligations under this Agreement or issue and sell the Common Stock or the
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Warrants in accordance with the terms hereof (other than any SEC, Principal
Market or state securities filings that may be required to be made by the
Company subsequent to Closing and any registration statement that may be filed
pursuant hereto); provided that, for purposes of the representation made in this
sentence, the Company is assuming and relying upon the accuracy of the relevant
representations and agreements of the Investors herein.
Section 4.9 NO MATERIAL ADVERSE CHANGE. Since September 30, 2001, no event or
development has occurred or exists with respect to the Company that resulted in
a Material Adverse Effect, except as disclosed in the SEC Documents.
Section 4.10 NO UNDISCLOSED EVENTS OR CIRCUMSTANCES. Since September 30, 2001,
no event or circumstance has occurred or exists with respect to the Company or
its businesses, properties, prospects, operations or financial condition, that,
under applicable law, rule or regulation, requires public disclosure or
announcement prior to the date hereof by the Company but which has not been so
publicly announced or disclosed in the SEC Documents.
Section 4.11 LITIGATION AND OTHER PROCEEDINGS. Except as disclosed in the SEC
Documents, there are no lawsuits or proceedings pending or, to the knowledge of
the Company, threatened, against the Company or any subsidiary, nor has the
Company received any written or oral notice of any such action, suit, proceeding
or investigation, which could reasonably be expected to have a Material Adverse
Effect. Except as set forth in the SEC Documents, no judgment, order, writ,
injunction or decree or award has been issued by or, to the knowledge of the
Company, requested of any court, arbitrator or governmental agency which could
result in a Material Adverse Effect.
Section 4.12 MATERIAL NON-PUBLIC INFORMATION. The Company has not disclosed to
the Investors any material non-public information that according to applicable
law, rule or regulation, should have been disclosed publicly by the Company
prior to the date hereof but which has not been so disclosed.
Section 4.13 PROPERTY. Neither the Company nor any of its subsidiaries owns any
real property. Each of the Company and its subsidiaries has good and marketable
title to all personal property owned by it, free and clear of all liens,
encumbrances and defects except such as do not materially affect the value of
such property and do not materially interfere with the use made and proposed to
be made of such property by the Company; and to the Company's knowledge any real
property, mineral or water rights, and buildings held under lease by the Company
as tenant are held by it under valid, subsisting and enforceable leases with
such exceptions as are not material and do not interfere with the use made and
intended to be made of such property, mineral or water rights, and buildings by
the Company.
Section 4.14 INTELLECTUAL PROPERTY. Each of the Company and its subsidiaries
owns or possesses adequate and enforceable rights to use all material patents,
patent applications, trademarks, trademark applications, trade names, service
marks, copyrights, copyright applications, licenses, know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures) and other similar rights and proprietary
knowledge (collectively, "Intangibles") necessary for the conduct of its
business as now being conducted in all material respects. To the Company's
knowledge, except as disclosed in the SEC Documents neither the Company nor any
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of its subsidiaries is infringing upon or in conflict with any right of any
other person with respect to any Intangibles. Except as disclosed in the SEC
Documents, no adverse claims have been asserted by any person to the ownership
or use of any Intangibles and the Company has no knowledge of any basis for such
claim.
Section 4.15 INTERNAL CONTROLS AND PROCEDURES. The Company maintains books and
records and internal accounting controls which provide reasonable assurance that
(i) all transactions to which the Company or any subsidiary is a party or by
which its properties are bound are executed with management's authorization;
(ii) the recorded accounting of the Company's consolidated assets is compared
with existing assets at regular intervals; (iii) access to the Company's
consolidated assets is permitted only in accordance with management's
authorization; and (iv) all transactions to which the Company or any subsidiary
is a party or by which its properties are bound are recorded as necessary to
permit preparation of the financial statements of the Company in accordance with
U.S. generally accepted accounting principles.
Section 4.16 PAYMENTS AND CONTRIBUTIONS. Neither the Company, any subsidiary,
nor any of its directors, officers or, to its knowledge, other employees has (i)
used any Company funds for any unlawful contribution, endorsement, gift,
entertainment or other unlawful expense relating to political activity; (ii)
made any direct or indirect unlawful payment of Company funds to any foreign or
domestic government official or employee; (iii) violated or is in violation of
any provision of the Foreign Corrupt Practices Act of 1977, as amended; or (iv)
made any bribe, rebate, payoff, influence payment, kickback or other similar
payment to any person with respect to Company matters.
Section 4.17 NO MISREPRESENTATION. The representations and warranties of the
Company contained in this Agreement, any schedule, annex or exhibit hereto and
any agreement, instrument or certificate furnished by the Company to the
Investors pursuant to this Agreement, do not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
ARTICLE V
COVENANTS OF THE COMPANY AND THE INVESTORS
Section 5.1 REGISTRATION RIGHTS.The Company shall cause the Registration Rights
Agreement to remain in full force and effect as provided therein and the Company
shall comply in all material respects with the terms thereof. The Company shall
include in its next-filed Form 10-K or the initial filing of such Registration
Statement, whichever is filed first with the SEC, all information set forth on
the Disclosure Schedules which the Company considers to be material within the
provisions of Section 3.6, and, if one of such filings is not made by April 1,
2002, any Investor may immediately thereafter make public disclosure of the
contents of the Disclosure Schedules by any means available to any such
Investor. The Company shall not file any registration statement in respect of
the Common Stock Purchase Agreement between the Company and Fusion Capital Fund
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II, LLC until at least thirty (30) days after the Effective Date, or, if such
delay would constitute a default under any agreement with Fusion Capital Fund
II, LLC, then the Company shall take such affirmative action as may be necessary
to not sell any shares of Common Stock to Fusion Capital Fund II, LLC until at
least thirty (30) days after the Effective Date.
Section 5.2 RESERVATION OF COMMON STOCK. As of the date hereof, the Company has
reserved and the Company shall continue to reserve and keep available at all
times, free of preemptive rights, shares of Common Stock for the purpose of
enabling the Company to issue the Warrant Shares pursuant to any exercise of the
Warrants.
Section 5.3 LISTING OF COMMON STOCK. The Company hereby agrees to use its
reasonable best efforts to maintain the listing of the Common Stock on a
Principal Market, and as soon as reasonably practicable following the Closing to
list the Shares and the Warrant Shares on the Principal Market. The Company
further agrees, if the Company applies to have the Common Stock traded on any
other Principal Market, it will include in such application the Shares and the
Warrant Shares, and will take such other action as is necessary or desirable in
the opinion of the Investors to cause the Shares and Warrant Shares to be listed
on such other Principal Market as promptly as possible. The Company will take
all action reasonably necessary to continue the listing and trading of its
Common Stock on a Principal Market (including, without limitation, maintaining
sufficient net tangible assets) and will comply in all respects with the
Company's reporting, filing and other obligations under the bylaws or rules of
the Principal Market and shall provide Investors with copies of any
correspondence to or from such Principal Market which questions or threatens
delisting of the Common Stock, within three (3) Trading Days of the Company's
receipt thereof, until the Investors have disposed of all of their Registrable
Securities.
Section 5.4 EXCHANGE ACT REGISTRATION. The Company will cause its Common Stock
to continue to be registered under Section 12(b) or (g) of the Exchange Act,
will use its best efforts to comply in all respects with its reporting and
filing obligations under the Exchange Act, and will not take any action or file
any document (whether or not permitted by the Exchange Act or the rules
thereunder) to terminate or suspend such registration or to terminate or suspend
its reporting and filing obligations under said Act until the Investors have
disposed of all of their Registrable Securities.
Section 5.5 LEGENDS. The certificates evidencing the Registrable Securities
shall be free of legends, except as set forth in Article VIII and except as may
be required by state securities laws.
Section 5.6 CORPORATE EXISTENCE; CONFLICTING AGREEMENTS. The Company will take
all steps necessary to preserve and continue the corporate existence of the
Company. The Company shall not enter into any agreement, the terms of which
agreement would restrict or impair the right or ability of the Company to
perform any of its obligations under this Agreement or any of the other
agreements attached as exhibits hereto.
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Section 5.7 SECURITIES FILINGS. The Company shall make any necessary SEC and
"blue sky" filings required to be made by the Company in connection with the
sale of the Securities to the Investors as required by all applicable laws, and
shall provide a copy thereof to the Investors promptly after such filing.
Section 5.8 NO MANIPULATION OF STOCK. Neither the Company nor the Investor
(severally and not jointly) has taken and will not take any action outside the
ordinary course of business designed to or that might reasonably be expected to
cause or result in unlawful manipulation of the price of the Common Stock to
facilitate the sale or resale of the Shares.
ARTICLE VI
SURVIVAL; INDEMNIFICATION
Section 6.1 SURVIVAL. The representations, warranties and covenants made by each
of the Company and each Investor in this Agreement, the exhibits hereto and in
each instrument, agreement and certificate entered into and delivered by them
pursuant to this Agreement, shall survive the Closing and the consummation of
the transactions contemplated hereby. In the event of a breach or violation of
any of such representations, warranties or covenants, the party to whom such
representations, warranties or covenants have been made shall have all rights
and remedies for such breach or violation available to it under the provisions
of this Agreement, irrespective of any investigation made by or on behalf of
such party on or prior to the Closing Date.
Section 6.2 INDEMNITY. (a) The Company hereby agrees to indemnify and hold
harmless the Investors, their respective Affiliates and their respective
officers, directors, partners and members (collectively, the "Investor
Indemnitees"), from and against any and all Damages, and agrees to reimburse the
Investor Indemnitees for all reasonable out-of-pocket expenses (including the
reasonable fees and expenses of legal counsel), in each case promptly as
incurred by the Investor Indemnitees and to the extent arising out of or in
connection with:
(i) any material misrepresentation, omission of any material fact or
breach of any of the Company's representations or warranties
contained in this Agreement, the annexes, schedules or exhibits
hereto or any instrument, agreement or certificate entered into
or delivered by the Company pursuant to this Agreement; or
(ii) any failure by the Company to perform in any material respect any
of its covenants, agreements, undertakings or obligations set
forth in this Agreement, the annexes, schedules or exhibits
hereto or any instrument, agreement or certificate entered into
or delivered by the Company pursuant to this Agreement; or
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(iii)any action instituted against the Investors, or any of them, by
any stockholder of the Company who is not an Affiliate of an
Investor, with respect to any of the transactions contemplated by
this Agreement, except for any claim arising out of a breach by
any Investor of this Agreement or the misuse by any Investor of
any non-public information with respect to the Company.
(b) Each Investor, severally and not jointly, hereby agrees to
indemnify and hold harmless the Company, its Affiliates and their respective
officers, directors, partners and members (collectively, the "Company
Indemnitees"), from and against any and all Damages, and agrees to reimburse the
Company Indemnitees for reasonable all out-of-pocket expenses (including the
reasonable fees and expenses of legal counsel), in each case promptly as
incurred by the Company Indemnitees and to the extent arising out of or in
connection with any material misrepresentation, omission of a material fact, or
breach of any of the Investor's representations or warranties contained in this
Agreement, the annexes, schedules or exhibits hereto or any instrument,
agreement or certificate entered into or delivered by the Investor pursuant to
this Agreement. Notwithstanding anything to the contrary herein, the Investor
shall be liable under this Section 6.2(b) for only that amount as does not
exceed the net proceeds to such Investor as a result of the sale of Registrable
Securities pursuant to the Registration Statement (including any amount that
could be received by such Investor for Registrable Securities not yet sold).
Section 6.3 NOTICE. Promptly after receipt by either party hereto seeking
indemnification pursuant to Section 6.2 (an "Indemnified Party") of written
notice of any investigation, claim, proceeding or other action in respect of
which indemnification is being sought (each, a "Claim"), the Indemnified Party
promptly shall notify the party from whom indemnification pursuant to Section
6.2 is being sought (the "Indemnifying Party") of the commencement thereof; but
the omission so to notify the Indemnifying Party shall not relieve it from any
liability that it otherwise may have to the Indemnified Party, except to the
extent that the Indemnifying Party is actually prejudiced by such omission or
delay. In connection with any Claim as to which both the Indemnifying Party and
the Indemnified Party are parties, the Indemnifying Party shall be entitled to
assume the defense thereof. Notwithstanding the assumption of the defense of any
Claim by the Indemnifying Party, the Indemnified Party shall have the right to
employ separate legal counsel and to participate in the defense of such Claim,
and the Indemnifying Party shall bear the reasonable fees, out-of-pocket costs
and expenses of such separate legal counsel to the Indemnified Party if (and
only if): (x) the Indemnifying Party shall have agreed to pay such fees,
out-of-pocket costs and expenses, (y) the Indemnified Party reasonably shall
have concluded that representation of the Indemnified Party and the Indemnifying
Party by the same legal counsel would not be appropriate due to actual or, as
reasonably determined by legal counsel to the Indemnified Party, potentially
differing interests between such parties in the conduct of the defense of such
Claim, or if there may be legal defenses available to the Indemnified Party that
are in addition to or disparate from those available to the Indemnifying Party,
or (z) the Indemnifying Party shall have failed to employ legal counsel
reasonably satisfactory to the Indemnified Party within a reasonable period of
time after notice of the commencement of such Claim. If the Indemnified Party
employs separate legal counsel in circumstances other than as described in
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clauses (x), (y) or (z) above, the fees, costs and expenses of such legal
counsel shall be borne exclusively by the Indemnified Party. Except as provided
above, the Indemnifying Party shall not, in connection with any Claim in the
same jurisdiction, be liable for the fees and expenses of more than one firm of
legal counsel for the Indemnified Party (together with appropriate local
counsel). The Indemnifying Party shall not, without the prior written consent of
the Indemnified Party (which consent shall not unreasonably be withheld), settle
or compromise any Claim or consent to the entry of any judgment that does not
include an unconditional release of the Indemnified Party from all liabilities
with respect to such Claim or judgment.
All fees and expenses of the Indemnified Party (including reasonable
costs of defense and investigation in a manner not inconsistent with this
Section and, except as otherwise provided above, all reasonable attorneys' fees
and expenses) shall be paid to the Indemnified Party, as incurred, within ten
(10) Trading Days of written notice thereof to the Indemnifying Party
(regardless of whether it is ultimately determined that an Indemnified Party is
not entitled to indemnification hereunder; provided, that the Indemnifying Party
may require such Indemnified Party to undertake to reimburse all such fees and
expenses, with interest at market rates, to the extent it is finally judicially
determined that such Indemnified Party is not entitled to indemnification
hereunder).
Section 6.4 DIRECT CLAIMS. In the event one party hereunder should have a claim
for indemnification that does not involve a claim or demand being asserted by a
third party, the Indemnified Party promptly shall deliver notice of such claim
to the Indemnifying Party. If the Indemnifying Party disputes the claim, such
dispute shall be resolved by mutual agreement of the Indemnified Party and the
Indemnifying Party or by binding arbitration conducted in accordance with the
procedures and rules of the American Arbitration Association as set forth in
Article IX. Judgment upon any award rendered by any arbitrators may be entered
in any court having competent jurisdiction thereof.
ARTICLE VII
DUE DILIGENCE REVIEW; NON-DISCLOSURE OF NON-PUBLIC INFORMATION.
Section 7.1 DUE DILIGENCE REVIEW. Subject to Section 7.2, the Company shall make
available for inspection and review by the Investors, advisors to and
representatives of the Investors (who may or may not be affiliated with the
Investors and who are reasonably acceptable to the Company), and any underwriter
participating in any disposition of the Registrable Securities on behalf of the
Investors pursuant to the Registration Statement, upon the request of the
Investors, any such registration statement or amendment or supplement thereto or
any blue sky, Nasdaq or other filing, all publicly available SEC Documents and
other filings with the SEC, and all other publicly available corporate documents
and properties of the Company as may be reasonably necessary for the purpose of
such review, and cause the Company's officers, directors and employees to supply
all such publicly available information reasonably requested by the Investors or
any such representative, advisor or underwriter in connection with such
16
Registration Statement (including, without limitation, in response to all
questions and other inquiries reasonably made or submitted by any of them),
prior to and from time to time after the filing and effectiveness of the
Registration Statement for the sole purpose of enabling the Investors and such
representatives, advisors and underwriters and their respective accountants and
attorneys to conduct initial and ongoing due diligence with respect to the
Company and the accuracy of the Registration Statement.
Section 7.2 NON-DISCLOSURE OF NON-PUBLIC INFORMATION.
(a) The Company shall not disclose material non-public information
to the Investors, advisors to or representatives of the Investors unless prior
to disclosure of such information the Company identifies such information as
being non-public information and provides the Investors, such advisors and
representatives with the opportunity to accept or refuse to accept such
non-public information for review. The Company may, as a condition to disclosing
any non-public information hereunder, require the Investors and their respective
advisors and representatives to enter into a confidentiality agreement in form
and content reasonably satisfactory to the Company and the Investors.
(b) Nothing herein shall require the Company to disclose material
non-public information to the Investors or their advisors or representatives,
and the Company represents that it does not disseminate material non-public
information in violation of Regulation FD promulgated by the Commission, to any
investors who purchase stock in the Company in a public offering, to money
managers or to securities analysts; provided, however, that notwithstanding
anything herein to the contrary, the Company will, as hereinabove provided,
promptly notify the advisors and representatives of the Investors and, if any,
underwriters, of any event or the existence of any circumstance (without any
obligation to disclose the specific event or circumstance) of which it becomes
aware, constituting material non-public information (whether or not requested of
the Company specifically or generally during the course of due diligence by such
persons or entities), which, if not disclosed in the prospectus included in the
Registration Statement would cause such prospectus to include a material
misstatement or to omit a material fact required to be stated therein in order
to make the statements, therein in light of the circumstances in which they were
made, not misleading. Nothing contained in this Section 7.2 shall be construed
to mean that such persons or entities other than the Investors (without the
written consent of the Investors prior to disclosure of such information as set
forth in Section 7.2(a)) may not obtain non-public information in the course of
conducting due diligence in accordance with the terms of this Agreement and
nothing herein shall prevent any such persons or entities from notifying the
Company of their opinion that based on such due diligence by such persons or
entities, that the Registration Statement contains an untrue statement of a
material fact or omits a material fact required to be stated in the Registration
Statement or necessary to make the statements contained therein, in light of the
circumstances in which they were made, not misleading.
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ARTICLE VIII
LEGENDS; TRANSFER AGENT INSTRUCTIONS
Section 8.1 LEGENDS. Unless otherwise provided below, each certificate
representing Registrable Securities will bear the following legend or equivalent
(the "Legend"), and such other legends as may be required under state securities
laws:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY OTHER
APPLICABLE SECURITIES LAWS AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN
MAY BE SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED, OR OTHERWISE DISPOSED
OF, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO A TRANSACTION THAT IS EXEMPT FROM SUCH REGISTRATION.
Section 8.2 NO OTHER LEGEND OR STOCK TRANSFER RESTRICTIONS. No legend other than
the ones specified in Section 8.1 has been or shall be placed on the share
certificates representing the Registrable Securities and no instructions or
"stop transfer orders," "stock transfer restrictions," or other restrictions
have been or shall be given to the Company's transfer agent with respect thereto
other than as expressly set forth in this Article VIII. The Company will provide
its transfer agent with instructions and any necessary legal opinions to enable
the transfer agent to issue or re-issue all of the Shares without such
restrictive legends upon effectiveness of the Registration Statement.
Section 8.3 INVESTORS' COMPLIANCE. Nothing in this Article shall affect in any
way each Investor's obligations to comply with all applicable securities laws,
including prospectus delivery requirements, upon resale of the Common Stock.
ARTICLE IX
CHOICE OF LAW; ARBITRATION
Section 9.1 GOVERNING LAW/ARBITRATION. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made in New York by persons domiciled in New York City and without
regard to its principles of conflicts of laws. Any dispute under this Agreement
shall be submitted to arbitration under the American Arbitration Association
(the "AAA") in New York City, New York, and shall be finally and conclusively
determined by the decision of a board of arbitration consisting of three (3)
members (hereinafter referred to as the "Board of Arbitration") selected
according to the rules governing the AAA. The Board of Arbitration shall meet on
consecutive business days in New York City, New York, and shall reach and render
a decision in writing (concurred in by a majority of the members of the Board of
18
Arbitration) with respect to the amount, if any, which the losing party is
required to pay to the other party in respect of a claim filed. In connection
with rendering its decisions, the Board of Arbitration shall adopt and follow
the laws of the State of New York unless the matter at issue is the corporation
law of the company's state of incorporation, in which event the corporation law
of such jurisdiction shall govern such issue. To the extent practical, decisions
of the Board of Arbitration shall be rendered no more than thirty (30) calendar
days following commencement of proceedings with respect thereto. The Board of
Arbitration shall cause its written decision to be delivered to all parties
involved in the dispute. Any decision made by the Board of Arbitration (either
prior to or after the expiration of such thirty (30) calendar day period) shall
be final, binding and conclusive on the parties to the dispute, and entitled to
be enforced to the fullest extent permitted by law and entered in any court of
competent jurisdiction. The Board of Arbitration shall be authorized and is
hereby directed to enter a default judgment against any party failing to
participate in any proceeding hereunder within the time periods set forth in the
AAA rules. The non-prevailing party to any arbitration (as determined by the
Board of Arbitration) shall pay the expenses of the prevailing party, including
reasonable attorney's fees, in connection with such arbitration. Any party shall
be entitled to seek injunctive relief from a court in any case where such relief
is available, and the non-prevailing party to any such injunctive proceeding
shall pay the expenses of the prevailing party, including reasonable attorney's
fees, in connection with such proceeding.
ARTICLE X
ASSIGNMENT
Section 10.1 ASSIGNMENT. Neither this Agreement nor any rights of the Investors
or the Company hereunder may be assigned by either party to any other person.
Notwithstanding the foregoing, (a) the provisions of this Agreement shall inure
to the benefit of, and be enforceable by, any permitted transferee of any of the
Shares or Warrants purchased or acquired by any Investor hereunder with respect
to the Shares or Warrants held by such person, and (b) upon the prior written
consent of the Company, which consent shall not unreasonably be withheld or
delayed, each Investor's interest in this Agreement may be assigned at any time,
in whole or in part, to an Affiliate of the Investor or any other person or
entity who purchases substantially all of the Shares of such Investor, provided
that in each case such transferee shall agree to make the representations and
warranties contained in Article III and shall agree to be bound by the terms of
this Agreement.
ARTICLE XI
NOTICES
Section 11.1 NOTICES. All notices, demands, requests, consents, approvals, and
other communications required or permitted hereunder shall be in writing and,
unless otherwise specified herein, shall be (i) hand delivered, (ii) deposited
in the mail, registered or certified, return receipt requested, postage prepaid,
19
(iii) delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by facsimile, addressed as set forth below or to such other address
as such party shall have specified most recently by written notice. Any notice
or other communication required or permitted to be given hereunder shall be
deemed effective (a) upon hand delivery or delivery by facsimile, with accurate
confirmation generated by the transmitting facsimile machine, at the address or
number designated below (if delivered on a business day during normal business
hours where such notice is to be received), or the first business day following
such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (b) on the first business day
following the date of sending by reputable courier service, fully prepaid,
addressed to such address, or (c) upon actual receipt of such mailing, if
mailed. The addresses for such communications shall be:
If to the Company: XxxxxxxxXxx.xxx, Inc.
0000 Xxxx Xxxxxxxx Xxxxxx
Xxx Xxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx, CEO
Phone: 000-000-0000
Fax: 000-000-0000
with a copy to (shall not Xxxxxxx X. Xxxxxxx, Esq.
constitute notice): Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
00000 Xx Xxxxxx Xxxx
Xxx Xxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
if to the Investors: As set forth on the signature pages hereto
Either party hereto may from time to time change its address or facsimile number
for notices under this Section 11.1 by giving written notice of such changed
address or facsimile number to the other party hereto as provided in this
Section 11.1.
ARTICLE XII
MISCELLANEOUS
Section 12.1 COUNTERPARTS/FACSIMILE/ AMENDMENTS. This Agreement may be executed
in multiple counterparts, each of which may be executed by less than all of the
parties and shall be deemed to be an original instrument which shall be
enforceable against the parties actually executing such counterparts and all of
which together shall constitute one and the same instrument. Except as otherwise
stated herein, in lieu of the original documents, a facsimile transmission or
copy of the original documents shall be as effective and enforceable as the
original. This Agreement may be amended only by a writing executed by all
parties.
20
Section 12.2 ENTIRE AGREEMENT. This Agreement and the agreements attached as
Exhibits hereto, which include the Warrants and the Registration Rights
Agreement, set forth the entire agreement and understanding of the parties
relating to the subject matter hereof and supersede all prior and
contemporaneous agreements, negotiations and understandings between the parties,
both oral and written relating to the subject matter hereof. The terms and
conditions of all Exhibits to this Agreement are incorporated herein by this
reference and shall constitute part of this Agreement as if fully set forth
herein.
Section 12.3 SEVERABILITY. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that such severability shall be ineffective if
it materially changes the economic benefit of this Agreement to any party.
Section 12.4 HEADINGS. The headings used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.
Section 12.5 NUMBER AND GENDER. There may be one or more Investor parties to
this Agreement, which Investors may be natural persons or entities. All
references to plural Investors shall apply equally to a single Investor if there
is only one Investor, and all references to an Investor as "it" shall apply
equally to a natural person.
Section 12.6 REPLACEMENT OF CERTIFICATES. Upon (i) receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of a certificate representing the Shares or Warrants or any Warrant
Shares and (ii) in the case of any such loss, theft or destruction of such
certificate, upon delivery by the Investor of an indemnity agreement or security
reasonably satisfactory in form to the Company (which shall not include the
posting of any bond other than that required by the Company's transfer agent) or
(iii) in the case of any such mutilation, on surrender and cancellation of such
certificate, the Company at its expense will execute and deliver, in lieu
thereof, a new certificate of like tenor.
Section 12.7 FEES AND EXPENSES. Each of the Company and the Investors agrees to
pay its own expenses incident to the performance of its obligations hereunder.
Section 12.8 BROKERAGE. Each of the parties hereto represents that it has had no
dealings in connection with this transaction with any finder or broker who will
demand payment of any fee or commission from the other party except for
Ladenburg Xxxxxxxx & Co. Inc., whose fee shall be paid by the Company. The
Company on the one hand, and the Investors, on the other hand, agree to
indemnify the other against and hold the other harmless from any and all
liabilities to any person claiming brokerage commissions or finder's fees on
account of services purported to have been rendered on behalf of the
indemnifying party in connection with this Agreement or the transactions
contemplated hereby.
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Section 12.9 PUBLICITY. Except as contemplated by this Agreement and the
Registration Rights Agreement and except as required by applicable law, the
Company agrees that it will issue a press release describing the transaction
contemplated by this Agreement within one business day of Closing, and shall
file a Form 8-K with respect to the same within five business days of Closing.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by the undersigned, thereunto duly authorized, as of the date first set
forth above.
XXXXXXXXXXX.XXX, INC.
By:
-----------------------
Name:
-----------------------
Title:
------------------------
[signature pages continued]
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Delivery Address: Investor:
Fax: By:_________________________
Name:
Authorized Signatory
Number of Units:
Total Purchase Price:
23
APPENDIX A
Company Wire Instructions
24
