Exhibit 4.11
DIMENSIONAL VISIONS INCORPORATED
AMENDED AND RESTATED INVESTMENT AGREEMENT
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE OR OTHER SECURITIES AUTHORITIES. THEY
MAY NOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE FEDERAL
AND STATE SECURITIES LAWS.
THIS INVESTMENT AGREEMENT DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO PURCHASE, ANY OF THE SECURITIES DESCRIBED
HEREIN BY OR TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION WOULD BE UNLAWFUL. THESE SECURITIES HAVE NOT BEEN RECOMMENDED
BY ANY FEDERAL OR STATE SECURITIES AUTHORITIES, NOR HAVE SUCH AUTHORITIES
CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK. THE
INVESTOR MUST RELY ON ITS OWN ANALYSIS OF THE INVESTMENT AND ASSESSMENT OF
THE RISKS INVOLVED. SEE THE RISK FACTORS SET FORTH IN THE ATTACHED
DISCLOSURE DOCUMENTS AS EXHIBIT J.
SEE ADDITIONAL LEGENDS AT SECTIONS 4.7.
THIS AMENDED AND RESTATED INVESTMENT AGREEMENT (this "Agreement" or
"Investment Agreement") is made as of the 2nd day of March, 2001, by and between
Dimensional Visions Incorporated, a corporation duly organized and existing
under the laws of the State of Delaware (the "Company"), and the undersigned
Investor executing this Agreement ("Investor") and amends and restates the
Investment Agreement between the parties dated on or about December 22, 2000.
RECITALS:
WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue to the Investor, and the
Investor shall purchase from the Company, from time to time as provided herein,
shares of the Company's Common Stock, as part of an offering of Common Stock by
the Company to Investor, for a maximum aggregate offering amount of Twenty
Million Dollars ($20,000,000) (the "Maximum Offering Amount"); and
WHEREAS, the solicitation of this Investment Agreement and, if accepted by
the Company, the offer and sale of the Common Stock are being made in reliance
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upon the provisions of Regulation D ("Regulation D") promulgated under the Act,
Section 4(2) of the Act, and/or upon such other exemption from the registration
requirements of the Act as may be available with respect to any or all of the
purchases of Common Stock to be made hereunder.
TERMS:
NOW, THEREFORE, the parties hereto agree as follows:
1. CERTAIN DEFINITIONS. As used in this Agreement (including the recitals
above), the following terms shall have the following meanings (such meanings to
be equally applicable to both the singular and plural forms of the terms
defined):
"20% Approval" shall have the meaning set forth in Section 5.25.
"9.9% Limitation" shall have the meaning set forth in Section 2.3.1(f).
"Accredited Investor" shall have the meaning set forth in Section 3.1.
"Act" shall mean the Securities Act of 1933, as amended.
"Advance Put Notice" shall have the meaning set forth in Section 2.3.1(a),
the form of which is attached hereto as EXHIBIT E.
"Advance Put Notice Confirmation" shall have the meaning set forth in
Section 2.3.1(a), the form of which is attached hereto as EXHIBIT F.
"Advance Put Notice Date" shall have the meaning set forth in Section
2.3.1(a).
"Affiliate" shall have the meaning as set forth Section 6.4.
"Aggregate Issued Shares" equals the aggregate number of shares of Common
Stock issued to Investor pursuant to the terms of this Agreement or the
Registration Rights Agreement as of a given date, including Put Shares and
Warrant Shares.
"Agreed Upon Procedures Report" shall have the meaning set forth in Section
2.5.3(b).
"Agreement" shall mean this Investment Agreement.
"Automatic Termination" shall have the meaning set forth in Section 2.3.2.
"Bring Down Cold Comfort Letters" shall have the meaning set forth in
Section 2.3.7(b).
"Business Day" shall mean any day during which the Principal Market is open
for trading.
"Calendar Month" shall mean the period of time beginning on the numeric day
in question in a calendar month and for Calendar Months thereafter, beginning on
the earlier of (i) the same numeric day of the next calendar month or (ii) the
last day of the next calendar month. Each Calendar Month shall end on the day
immediately preceding the beginning of the next succeeding Calendar Month.
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"Cap Amount" shall have the meaning set forth in Section 2.3.11.
"Capital Raising Limitations" shall have the meaning set forth in Section
6.5.1.
"Capitalization Schedule" shall have the meaning set forth in Section
3.2.4, attached hereto as EXHIBIT K.
"Change in Control" shall have the meaning set forth within the definition
of Major Transaction, below.
"Closing" shall mean one of (i) the Investment Commitment Closing and (ii)
each closing of a purchase and sale of Common Stock pursuant to Section 2.
"Closing Bid Price" means, for any security as of any date, the last
closing bid price for such security during Normal Trading on the O.T.C. Bulletin
Board, or, if the O.T.C. Bulletin Board is not the principal securities exchange
or trading market for such security, the last closing bid price during Normal
Trading of such security on the principal securities exchange or trading market
where such security is listed or traded as reported by such principal securities
exchange or trading market, or if the foregoing do not apply, the last closing
bid price during Normal Trading of such security in the over-the-counter market
on the electronic bulletin board for such security, or, if no closing bid price
is reported for such security, the average of the bid prices of any market
makers for such security as reported in the "pink sheets" by the National
Quotation Bureau, Inc. If the Closing Bid Price cannot be calculated for such
security on such date on any of the foregoing bases, the Closing Bid Price of
such security on such date shall be the fair market value as mutually determined
by the Company and the Investor in this Offering. If the Company and the
Investor in this Offering are unable to agree upon the fair market value of the
Common Stock, then such dispute shall be resolved by an investment banking firm
mutually acceptable to the Company and the Investor in this offering and any
fees and costs associated therewith shall be paid by the Company.
"Commitment Evaluation Period" shall have the meaning set forth in Section
2.6.
"Commitment Period" shall have the meaning set forth in Section 2.3.2(d).
"Commitment Warrants" shall have the meaning set forth in Section 2.4.1,
the form of which is attached hereto as EXHIBIT U.
"Common Shares" shall mean the shares of Common Stock of the Company.
"Common Stock" shall mean the common stock of the Company.
"Company" shall mean Dimensional Visions Incorporated, a corporation duly
organized and existing under the laws of the State of Delaware.
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"Company Designated Maximum Put Dollar Amount" shall have the meaning set
forth in Section 2.3.1(a).
"Company Designated Minimum Put Share Price" shall have the meaning set
forth in Section 2.3.1(a).
"Company Termination" shall have the meaning set forth in Section 2.3.12.
"Conditions to Investment Commitment Closing" shall have the meaning as set
forth in Section 2.2.2.
"Delisting Event" shall mean any time during the term of this Investment
Agreement, that the Company's Common Stock is not listed for and actively
trading on the O.T.C. Bulletin Board, the Nasdaq Small Cap Market, the Nasdaq
National Market, the American Stock Exchange, or the New York Stock Exchange or
is suspended or delisted with respect to the trading of the shares of Common
Stock on such market or exchange.
"Disclosure Documents" shall have the meaning as set forth in Section
3.2.4.
"Due Diligence Review" shall have the meaning as set forth in Section 2.5.
"DWAC Put Shares" shall mean Put Shares, in electronic form, without
restriction on resale, that are delivered to the Depository Trust Company DWAC
account specified by the Investor for the Put Shares.
"Effective Date" shall have the meaning set forth in Section 2.3.1.
"Equity Securities" shall have the meaning set forth in Section 6.5.1.
"Evaluation Day" shall have the meaning set forth in Section 2.3.1(b).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Excluded Day" shall have the meaning set forth in Section 2.3.1(b).
"Extended Put Period" shall mean the period of time between the Advance Put
Notice Date until the Pricing Period End Date.
"Impermissible Put Cancellation" shall have the meaning set forth in
Section 2.3.1(e).
"Indemnified Liabilities" shall have the meaning set forth in Section 9.
"Indemnities" shall have the meaning set forth in Section 9.
"Indemnitor" shall have the meaning set forth in Section 9.
"Individual Put Limit" shall have the meaning set forth in Section 2.3.1
(b).
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"Ineffective Period" shall have the meaning given to it in the Registration
Rights Agreement.
"Ineffective Registration Payment" shall have the meaning given to it in
the Registration Rights Agreement.
"Intended Put Share Amount" shall have the meaning set forth in Section
2.3.1(a).
"Investment Commitment Closing" shall have the meaning set forth in Section
2.2.1.
"Investment Agreement" shall mean this Investment Agreement.
"Investment Commitment Opinion of Counsel" shall mean an opinion from
Company's independent counsel, substantially in the form attached as EXHIBIT B,
or such other form as agreed upon by the parties, as to the Investment
Commitment Closing.
"Investment Date" shall mean the date of the Investment Commitment Closing.
"Investor" shall have the meaning set forth in the preamble hereto.
"Key Employee" shall have the meaning set forth in Section 5.17, as set
forth in EXHIBIT N.
"Late Payment Amount" shall have the meaning set forth in Section 2.3.9.
"Legend" shall have the meaning set forth in Section 4.7.
"Major Transaction" shall mean and shall be deemed to have occurred at such
time upon any of the following events:
(i) a consolidation, merger or other business combination or event or
transaction following which the holders of Common Stock of the Company
immediately preceding such consolidation, merger, combination or event either
(i) no longer hold a majority of the shares of Common Stock of the Company or
(ii) no longer have the ability to elect the board of directors of the Company
(a "Change of Control");
(ii) the sale or transfer of a portion of in excess of $500,000 worth
of the Company's assets, not in the ordinary course of business;
(iii) the purchase of assets by the Company totaling more than
$500,000 in value, not in the ordinary course of business; or
(iv) a purchase, tender or exchange offer made to the holders of
outstanding shares of Common Stock such that following such purchase, tender or
exchange offer, a change in control shall have occurred.
"Market Price" shall equal the lowest Closing Bid Price for the Common
Stock on the Principal Market during the Pricing Period for the applicable Put.
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"Material Facts" shall have the meaning set forth in Section 2.3.7(a).
"Maximum Put Dollar Amount" shall mean the lesser of (i) the Company
Designated Maximum Put Dollar Amount, if any, specified by the Company in a Put
Notice, and (ii) $2 million.
"Maximum Offering Amount" shall mean have the meaning set forth in the
recitals hereto.
"NASD" shall have the meaning set forth in Section 6.9.
"Nasdaq 20% Rule" shall have the meaning set forth in Section 2.3.11.
"Non-Usage Fee" shall have the meaning set forth in Section 2.6.
"Normal Trading" shall mean trading that occurs between 9:30 AM and 4:00
PM, New York City Time, on any Business Day, and shall expressly exclude "after
hours" trading.
"Numeric Day" shall mean the numerical day of the month of the Investment
Date or the last day of the calendar month in question, whichever is less.
"NYSE" shall have the meaning set forth in Section 6.9.
"Offering" shall mean the Company's offering of Common Stock and Warrants
issued under this Investment Agreement.
"Officer's Certificate" shall mean a certificate, signed by an officer of
the Company, to the effect that the representations and warranties of the
Company in this Agreement required to be true for the applicable Closing are
true and correct in all material respects and all of the conditions and
limitations set forth in this Agreement for the applicable Closing are
satisfied.
"Opinion of Counsel" shall mean, as applicable, the Investment Commitment
Opinion of Counsel, the Put Opinion of Counsel, and the Registration Opinion.
"Payment Due Date" shall have the meaning set forth in Section 2.3.9.
"Pricing Period" shall mean, unless otherwise shortened under the terms of
this Agreement, the period beginning on the Business Day immediately following
the Put Date and ending on and including the date which is 20 Business Days
after such Put Date.
"Pricing Period End Date" shall mean the last Business Day of any Pricing
Period.
"Principal Market" shall mean the O.T.C. Bulletin Board, the Nasdaq Small
Cap Market, the Nasdaq National Market, the American Stock Exchange or the New
York Stock Exchange, whichever is at the time the principal trading exchange or
market for the Common Stock.
"Proceeding" shall have the meaning as set forth Section 5.1.
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"Purchase" shall have the meaning set forth in Section 2.3.8.
"Put" shall have the meaning set forth in Section 2.3.1(d).
"Put Closing" shall have the meaning set forth in Section 2.3.9.
"Put Closing Date" shall have the meaning set forth in Section 2.3.9.
"Put Date" shall mean the date that is specified by the Company in any Put
Notice for which the Company intends to exercise a Put under Section 2.3.1,
unless the Put Date is postponed pursuant to the terms hereof, in which case the
"Put Date" is such postponed date.
"Put Dollar Amount" shall be determined by multiplying the Put Share Amount
by the respective Put Share Prices with respect to such Put Shares, subject to
the limitations herein.
"Put Interruption Date" shall have the meaning set forth in Section 2.3.4.
"Put Interruption Event" shall have the meaning set forth in Section 2.3.4.
"Put Interruption Notice" shall have the meaning set forth in Section
2.3.4.
"Put Notice" shall have the meaning set forth in Section 2.3.1(d), the form
of which is attached hereto as EXHIBIT G.
"Put Notice Confirmation" shall have the meaning set forth in Section
2.3.1(d), the form of which is attached hereto as EXHIBIT H.
"Put Opinion of Counsel" shall mean an opinion from Company's independent
counsel, in the form attached as EXHIBIT I, or such other form as agreed upon by
the parties, as to any Put Closing.
"Put Share Amount" shall have the meaning as set forth Section 2.3.1(b).
"Put Share Price" shall have the meaning set forth in Section 2.3.1(c).
"Put Shares" shall mean shares of Common Stock that are purchased by the
Investor pursuant to a Put.
"Registrable Securities" shall have the meaning as set forth in the
Registration Rights Agreement.
"Registration Opinion" shall have the meaning set forth in Section
2.3.7(a), the form of which is attached hereto as EXHIBIT R.
"Registration Opinion Deadline" shall have the meaning set forth in Section
2.3.7(a).
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"Registration Rights Agreement" shall mean that certain registration rights
agreement entered into by the Company and Investor on even date herewith, in the
form attached hereto as EXHIBIT A, or such other form as agreed upon by the
parties.
"Registration Statement" shall have the meaning as set forth in the
Registration Rights Agreement.
"Regulation D" shall have the meaning set forth in the recitals hereto.
"Reporting Issuer" shall have the meaning set forth in Section 6.2.
"Restrictive Legend" shall have the meaning set forth in Section 4.7.
"Required Put Documents" shall have the meaning set forth in Section 2.3.6.
"Right of First Refusal" shall have the meaning set forth in Section 6.5.2.
"Risk Factors" shall have the meaning set forth in Section 3.2.4, attached
hereto as EXHIBIT J.
"Schedule of Exceptions" shall have the meaning set forth in Section 5, and
is attached hereto as Exhibit C.
"SEC" shall mean the Securities and Exchange Commission.
"Securities" shall mean this Investment Agreement, together with the Common
Stock of the Company, the Warrants and the Warrant Shares issuable pursuant to
this Investment Agreement.
"Share Authorization Increase Approval" shall have the meaning set forth in
Section 5.25.
"Stockholder 20% Approval" shall have the meaning set forth in Section
6.11.
"Supplemental Registration Statement" shall have the meaning set forth in
the Registration Rights Agreement.
"Term" shall mean the term of this Agreement, which shall be a period of
time beginning on the date of this Agreement and ending on the Termination Date.
"Termination Date" shall mean the earlier of (i) the date that is three (3)
years after the Effective Date, or (ii) the date that is thirty (30) Business
Days after the later of (a) the Put Closing Date on which the sum of the
aggregate Put Share Price for all Put Shares equal the Maximum Offering Amount,
(b) the date that the Company has delivered a Termination Notice to the
Investor, (c) the date of an Automatic Termination, and (d) the date that all of
the Warrants have been exercised.
"Termination Fee" shall have the meaning as set forth in Section 2.6.
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"Termination Notice" shall have the meaning as set forth in Section 2.3.12.
"Third Party Report" shall have the meaning set forth in Section 3.2.4.
"Trading Volume " shall mean the volume of shares of the Company's Common
Stock that trade between 9:30 AM and 4:00 PM, New York City Time, on any
Business Day, and shall expressly exclude any shares trading during "after
hours" trading.
"Transaction Documents" shall have the meaning set forth in Section 9.
"Transfer Agent" shall have the meaning set forth in Section 6.10.
"Transfer Agent Instructions" shall mean the Company's instructions to its
transfer agent, substantially in the form attached as EXHIBIT T, or such other
form as agreed upon by the parties.
"Trigger Price" shall have the meaning set forth in Section 2.3.1(b).
"Unlegended Share Certificates" shall mean a certificate or certificates
(or electronically delivered shares, as appropriate) (in denominations as
instructed by Investor) representing the shares of Common Stock to which the
Investor is then entitled to receive, registered in the name of Investor or its
nominee (as instructed by Investor) and not containing a restrictive legend or
stop transfer order, including but not limited to the Put Shares for the
applicable Put and Warrant Shares.
"Use of Proceeds Schedule" shall have the meaning as set forth in Section
3.2.4, attached hereto as EXHIBIT L.
"Volume Limitations" shall have the meaning set forth in Section 2.3.1(b).
"Warrant Antidilution Agreement" shall mean that certain Warrant
Antidilution Agreement entered into by the Company and Investor on even date
herewith, in the form attached hereto as EXHIBIT O, or such other form as agreed
upon by the parties.
"Warrant Shares" shall mean the Common Stock issued or issuable upon
exercise of the Warrants.
"Warrants" shall mean, the Commitment Warrants.
2. PURCHASE AND SALE OF COMMON STOCK.
2.1 OFFER TO SUBSCRIBE.
Subject to the terms and conditions herein and the satisfaction of the
conditions to closing set forth in Sections 2.2 and 2.3 below, Investor hereby
agrees to purchase such amounts of Common Stock as the Company may, in its sole
and absolute discretion, from time to time elect to issue and sell to Investor
according to one or more Puts pursuant to Section 2.3 below.
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2.2 INVESTMENT COMMITMENT.
2.2.1 INVESTMENT COMMITMENT CLOSING. The closing of this
Agreement (the "Investment Commitment Closing") shall be deemed to occur when
this Agreement, the Registration Rights Agreement, the Commitment Warrant and
the Warrant Antidilution Agreement have been duly executed by both Investor and
the Company, the Transfer Agent Instructions have been duly executed by both the
Company and the Transfer Agent, and the other Conditions to the Investment
Commitment Closing set forth in Section 2.2.2 below have been met.
2.2.2 CONDITIONS TO INVESTMENT COMMITMENT CLOSING. As a
prerequisite to the Investment Commitment Closing, all of the following (the
"Conditions to Investment Commitment Closing") shall have been satisfied prior
to or concurrently with the Company's execution and delivery of this Agreement:
(a) the following documents shall have been delivered to the
Investor: (i) the Registration Rights Agreement (executed by
the Company and Investor), (ii) the Commitment Warrant,
(iii) the Investment Commitment Opinion of Counsel (signed
by the Company's counsel), (iv) the Warrant Antidilution
Agreement (executed by the Company and Investor), (v) the
Transfer Agent Instructions (executed by the Company and the
Transfer Agent), and (vi) a Secretary's Certificate as to
(A) the resolutions of the Company's board of directors
authorizing this transaction, (B) the Company's Certificate
of Incorporation, and (C) the Company's Bylaws;
(b) this Investment Agreement, accepted by the Company, shall
have been received by the Investor;
(c) the Company's Common Stock shall be listed for trading and
actually trading on the O.T.C. Bulletin Board, the Nasdaq
Small Cap Market, the Nasdaq National Market, the American
Stock Exchange or the New York Stock Exchange;
(d) other than continuing losses described in the Risk Factors
set forth in the Disclosure Documents (provided for in
Section 3.2.4), up through the Investment Commitment Closing
there have been no material adverse changes in the Company's
business prospects or financial condition since the date of
the last balance sheet included in the Disclosure Documents,
including but not limited to incurring material liabilities;
and
(e) the representations and warranties of the Company in this
Agreement shall be true and correct in all material respects
and the Conditions to Investment Commitment Closing set
forth in this Section 2.2.2 shall have been satisfied on the
date of such Investment Commitment Closing; and the Company
shall deliver an Officer's Certificate, signed by an officer
of the Company, to such effect to the Investor.
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2.3 PUTS OF COMMON SHARES TO THE INVESTOR.
2.3.1 PROCEDURE TO EXERCISE A PUT. Subject to the Individual Put
Limit, the Maximum Offering Amount and the Cap Amount (if applicable), and the
other conditions and limitations set forth in this Agreement, at any time
beginning on the date on which the Registration Statement is declared effective
by the SEC (the "Effective Date"), the Company may, in its sole and absolute
discretion, elect to exercise one or more Puts according to the following
procedure, provided that each subsequent Put Date after the first Put Date shall
be no sooner than five (5) Business Days following the preceding Pricing Period
End Date:
(a) DELIVERY OF ADVANCE PUT XXXXXX.Xx least ten (10)
Business Days but not more than twenty (20) Business Days prior to any intended
Put Date, the Company shall deliver advance written notice (the "Advance Put
Notice," the form of which is attached hereto as EXHIBIT E, the date of such
Advance Put Notice being the "Advance Put Notice Date") to Investor stating the
Put Date for which the Company shall, subject to the limitations and
restrictions contained herein, exercise a Put and stating the number of shares
of Common Stock (subject to the Individual Put Limit and the Maximum Put Dollar
Amount) which the Company intends to sell to the Investor for the Put (the
"Intended Put Share Amount").
The Company may, at its option, also designate in any Advance Put Notice
(i) a maximum dollar amount of Common Stock, not to exceed $2,000,000, which it
shall sell to Investor during the Put (the "Company Designated Maximum Put
Dollar Amount") and/or (ii) a minimum purchase price per Put Share at which the
Investor may purchase shares of Common Stock pursuant to such Put Notice (a
"Company Designated Minimum Put Share Price"). The Company Designated Minimum
Put Share Price, if applicable, shall be no greater than the lesser of (i) 80%
of the Closing Bid Price of the Company's common stock on the Business Day
immediately preceding the Advance Put Notice Date, or (ii) the Closing Bid Price
of the Company's common stock on the Business Day immediately preceding the
Advance Put Notice Date minus $0.125. The Company may decrease (but not
increase) the Company Designated Minimum Put Share Price for a Put at any time
by giving the Investor written notice of such decrease not later than 12:00
Noon, New York City time, on the Business Day immediately preceding the Business
Day that such decrease is to take effect. A decrease in the Company Designated
Minimum Put Share Price shall have no retroactive effect on the determination of
Trigger Prices and Excluded Days for days preceding the Business Day that such
decrease takes effect, provided that the Put Share Price for all shares in a Put
shall be calculated using the lowest Company Designated Minimum Put Share Price,
as decreased.
Notwithstanding the above, if, at the time of delivery of an Advance Put
Notice, more than two (2) Calendar Months have passed since the date of the
previous Put Closing, such Advance Put Notice shall provide at least twenty (20)
Business Days notice of the intended Put Date, unless waived in writing by the
Investor. In order to effect delivery of the Advance Put Notice, the Company
shall (i) send the Advance Put Notice by facsimile on such date so that such
notice is received by the Investor by 6:00 p.m., New York, NY time, and (ii)
surrender such notice on such date to a courier for overnight delivery to the
Investor (or two (2) day delivery in the case of an Investor residing outside of
the U.S.). Upon receipt by the Investor of a facsimile copy of the Advance Put
Notice, the Investor shall, within two (2) Business Days, send, via facsimile, a
confirmation of receipt (the "Advance Put Notice Confirmation," the form of
which is attached hereto as EXHIBIT F) of the Advance Put Notice to the Company
specifying that the Advance Put Notice has been received and affirming the
intended Put Date and the Intended Put Share Amount.
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(b) PUT SHARE AMOUNT. The "Put Share Amount" is the number
of shares of Common Stock that the Investor shall be obligated to purchase in a
given Put, and shall equal the lesser of (i) the Intended Put Share Amount, and
(ii) the Individual Put Limit. The "Individual Put Limit" shall equal the lesser
of (A) 1,500,000 shares, (B) 15% of the sum of the aggregate daily reported
Trading Volumes in the outstanding Common Stock on the Company's Principal
Market, excluding any block trades of 20,000 or more shares of Common Stock, for
all Evaluation Days (as defined below) in the Pricing Period, (C) the number of
Put Shares which, when multiplied by their respective Put Share Prices, equals
the Maximum Put Dollar Amount, and (D) the 9.9% Limitation, but in no event
shall the Individual Put Limit exceed 15% of the sum of the aggregate daily
reported Trading Volumes in the outstanding Common Stock on the Company's
Principal Market, excluding any block trades of 20,000 or more shares of Common
Stock, for the twenty (20) Business Days immediately preceding the Advance Put
Notice Date (this limitation, together with the limitation in (B) immediately
above are collectively referred to herein as the "Volume Limitations"). Company
agrees not to trade Common Stock or arrange for Common Stock to be traded for
the purpose of artificially increasing the Volume Limitations.
For purposes of this Agreement:
"Trigger Price" for any Pricing Period shall mean the greater of (i)
the Company Designated Minimum Put Share Price, plus $.075, or (ii) the Company
Designated Minimum Put Share Price divided by .91.
An "Excluded Day" shall mean each Business Day during a Pricing Period
where the lowest intra-day trading price of the Common Stock is less than the
Trigger Price and each Business Day defined in Section 2.3.4 as an "Excluded
Day".
An "Evaluation Day" shall mean each Business Day during a Pricing
Period that is not an Excluded Day.
(c) PUT SHARE PRICE. The purchase price for the Put Shares
(the "Put Share Price") shall equal the lesser of (i) the Market Price for such
Put, minus $.075, or (ii) 91% of the Market Price for such Put, but shall in no
event be less than the Company Designated Minimum Put Share Price for such Put,
if applicable.
(d) DELIVERY OF PUT NOTICE. After delivery of an Advance Put
Notice, on the Put Date specified in the Advance Put Notice the Company shall
deliver written notice (the "Put Notice," the form of which is attached hereto
as EXHIBIT G) to Investor stating (i) the Put Date, (ii) the Intended Put Share
Amount as specified in the Advance Put Notice (such exercise a "Put"), (iii) the
Company Designated Maximum Put Dollar Amount (if applicable), and (iv) the
Company Designated Minimum Put Share Price (if applicable). In order to effect
delivery of the Put Notice, the Company shall (i) send the Put Notice by
facsimile on the Put Date so that such notice is received by the Investor by
6:00 p.m., New York, NY time, and (ii) surrender such notice on the Put Date to
a courier for overnight delivery to the Investor (or two (2) day delivery in the
case of an Investor residing outside of the U.S.). Upon receipt by the Investor
of a facsimile copy of the Put Notice, the Investor shall, within two (2)
Business Days, send, via facsimile, a confirmation of receipt (the "Put Notice
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Confirmation," the form of which is attached hereto as EXHIBIT H) of the Put
Notice to Company specifying that the Put Notice has been received and affirming
the Put Date and the Intended Put Share Amount.
(e) DELIVERY OF REQUIRED PUT DOCUMENTS. On or before the Put
Date for such Put, the Company shall deliver the Required Put Documents (as
defined in Section 2.3.6 below) to the Investor (or to an agent of Investor, if
Investor so directs). Unless otherwise specifically requested by the Investor,
the Put Shares shall be transmitted electronically pursuant to the Depository
Trust Company DWAC system or such other electronic delivery system as the
Investor shall request. If the Company has not delivered all of the Required Put
Documents to the Investor on or before the Put Date, the Put shall be
automatically cancelled (an "Impermissible Put Cancellation") and the Company
shall pay the Investor $5,000 for its reasonable due diligence expenses incurred
in preparation for the canceled Put and the Company may deliver an Advance Put
Notice for the subsequent Put no sooner than ten (10) Business Days after the
date that such Put was canceled. Also, in the event of a Put Interruption Notice
that occurs prior to the Put Date, the Company shall pay the Investor $5,000 for
its reasonable due diligence expenses incurred in preparation for the
interrupted Put.
(f) Limitation on Investor's Obligation to Purchase Shares.
Notwithstanding anything to the contrary in this Agreement, in no event shall
the Investor be required to purchase, and an Intended Put Share Amount may not
include, an amount of Put Shares, which when added to the number of Put Shares
acquired by the Investor pursuant to this Agreement during the 61 days preceding
the Put Date with respect to which this determination of the permitted Intended
Put Share Amount is being made, would exceed 9.9% of the number of shares of
Common Stock outstanding (on a fully diluted basis, to the extent that inclusion
of unissued shares is mandated by Section 13(d) of the Exchange Act) on the Put
Date for such Pricing Period, as determined in accordance with Section 13(d) of
the Exchange Act (the "Section 13(d) Outstanding Share Amount"). Each Put Notice
shall include a representation of the Company as to the Section 13(d)
Outstanding Share Amount on the related Put Date. In the event that the Section
13(d) Outstanding Share Amount is different on any date during a Pricing Period
than on the Put Date associated with such Pricing Period, then the number of
shares of Common Stock outstanding on such date during such Pricing Period shall
govern for purposes of determining whether the Investor, when aggregating all
purchases of Shares made pursuant to this Agreement in the 61 calendar days
preceding such date, would have acquired more than 9.9% of the Section 13(d)
Outstanding Share Amount. The limitation set forth in this Section 2.3.1(f) is
referred to as the "9.9% Limitation."
2.3.2 TERMINATION OF RIGHT TO PUT. The Company's right to
initiate subsequent Puts to the Investor shall terminate permanently (each, an
"Automatic Termination") upon the occurrence of any of the following:
(a) if, at any time, either the Company or any director or
executive officer of the Company has engaged in a transaction or conduct related
to the Company that has resulted in (i) a Securities and Exchange Commission
enforcement action, or (ii) a civil judgment or criminal conviction for fraud or
misrepresentation, or for any other offense that, if prosecuted criminally,
would constitute a felony under applicable law;
13
(b) on any date after a cumulative time period or series of
time periods, consisting only of Ineffective Periods and Delisting Events, that
lasts for an aggregate of four (4) months;
(c) if at any time the Company has filed for and/or is
subject to any bankruptcy, insolvency, reorganization or liquidation proceedings
or other proceedings for relief under any bankruptcy law or any law for the
relief of debtors instituted by or against the Company or any subsidiary of the
Company;
(d) after the sooner of (i) the date that is three (3) years
after the Effective Date, or (ii) the Put Closing Date on which the aggregate of
the Put Dollar Amounts for all Puts equal the Maximum Offering Amount (the
"Commitment Period");
(e) the Company has breached any covenant in Section 6- or
Section 9 hereof; or
(f) if no Registration Statement has been declared effective
by the date that is one (1) year after the date of this Agreement, the Automatic
Termination shall occur on the date that is one (1) year after the date of this
Agreement.
2.3.3 MAXIMUM OFFERING AMOUNT. The Investor shall not be
obligated to purchase any additional Put Shares once the aggregate Put Dollar
Amount paid by Investor equals the Maximum Offering Amount.
2.3.4 PUT INTERRUPTION. Once the Company delivers an Advance Put
Notice to the Investor, the Company may not cancel the Put. In the event of a
"Put Interruption Event" (as defined below), in each case during any Pricing
Period, then (A) the Company shall notify the Investor in writing (a "Put
Interruption Notice") as soon as possible by facsimile and overnight courier,
but no later than the end of the Business Day in which the Company becomes aware
of such facts, (B) the Pricing Period shall be extended or shortened, as
applicable, such that the Pricing Period End Date is the tenth (10th) Business
Day after the date of such Put Interruption Notice from the Company (the "Put
Interruption Date"), (C) each Business Day from and including the Put
Interruption Date through and including the Pricing Period End Date for the
applicable Put (as extended or shortened, if applicable), shall be considered to
be an "Excluded Day," as that term is used in this Agreement, and (D) the
Company Designated Minimum Put Share Price, if any, shall not apply to the
affected Put. In the event that a Put Interruption Event occurs after an Advance
Put Notice Date, but before the applicable Put Date, that Put shall be deemed to
be terminated, and the Company may deliver an Advance Put Notice for a new Put
anytime beginning on the following Business Day, if otherwise allowed under this
Agreement. A "Put Interruption Event" shall mean any of the following: (i) an
Automatic Termination, (ii) the failure of one of the items specified in Section
2.3.5 below to be true and correct on any day during an Extended Pricing Period,
or (iii) the occurrence of one of the following events:
(a) the Company has announced a subdivision or combination,
including a reverse split, of its Common Stock or has subdivided or combined its
Common Stock;
14
(b) the Company has paid a dividend of its Common Stock or
has made any other distribution of its Common Stock;
(c) the Company has made a distribution of all or any
portion of its assets or evidences of indebtedness to the holders of its Common
Stock;
(d) a Major Transaction has occurred; or
(e) the Company discovers the existence of Material Facts or
any Ineffective Period or Delisting Event occurs.
2.3.5 CONDITIONS PRECEDENT TO THE RIGHT OF THE COMPANY TO DELIVER
AN ADVANCE PUT NOTICE OR A PUT NOTICE. The right of the Company to deliver an
Advance Put Notice or a Put Notice is subject to the satisfaction, on the date
of delivery of such Advance Put Notice or Put Notice, of each of the following
conditions:
(a) the Company's Common Stock shall be listed for and
actively trading on the O.T.C. Bulletin Board, the
Nasdaq Small Cap Market, the Nasdaq National Market or
the New York Stock Exchange and the Put Shares shall be
so listed, and to the Company's knowledge there is no
notice of any suspension or delisting with respect to
the trading of the shares of Common Stock on such
market or exchange;
(b) the Company shall have satisfied any and all
obligations pursuant to the Registration Rights
Agreement, including, but not limited to, the filing of
the Registration Statement with the SEC with respect to
the resale of all Registrable Securities and the
requirement that the Registration Statement shall have
been declared effective by the SEC for the resale of
all Registrable Securities and the Company shall have
satisfied and shall be in compliance with any and all
obligations pursuant to this Agreement and the
Warrants;
(c) the representations and warranties of the Company in
Sections 5.1, 5.3, 5.4, 5.5, 5.6, 5.10, 5.13, 5.14,
5.15, 5.16, 5.18, 5.19, 5.21, and 5.25 hereof are true
and correct in all material respects as if made on such
date, the Company has satisfied its obligations under
Section 2.6 hereof and the conditions to Investor's
obligations set forth in this Section 2.3.5 are
satisfied as of such Closing, and the Company shall
deliver a certificate, signed by an officer of the
Company, to such effect to the Investor; (d) the
Company shall have reserved for issuance a sufficient
number of Common Shares for the purpose of enabling the
Company to satisfy any obligation to issue Common
Shares pursuant to any Put and to effect exercise of
the Warrants;
(e) the Registration Statement is not subject to an
Ineffective Period as defined in the Registration
Rights Agreement, the prospectus included therein is
current and deliverable, and to the Company's knowledge
there is no notice of any investigation or inquiry
concerning any stop order with respect to the
Registration Statement;
15
(f) if the Aggregate Issued Shares after the Closing of the
Put would exceed the Cap Amount, the Company shall have
obtained the Stockholder 20% Approval as specified in
Section 6.11, if the Company's Common Stock is listed
on the NASDAQ Small Cap Market or the NASDAQ National
Market System (the "NMS"), and such approval is
required by the rules of the NASDAQ;
(g) the Company shall have no knowledge of any event that,
in the Company's opinion, is more likely than not to
have the effect of causing any Registration Statement
to be suspended or otherwise ineffective (which event
is more likely than not to occur within the thirty
Business Days following the date on which such Advance
Put Notice and Put Notice is deemed delivered);
(h) there is not then in effect any law, rule or regulation
prohibiting or restricting the transactions
contemplated hereby, or requiring any consent or
approval which shall not have been obtained, nor is
there any pending or threatened proceeding or
investigation which may have the effect of prohibiting
or adversely affecting any of the transactions
contemplated by this Agreement;
(i) no statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered,
promulgated or adopted by any court or governmental
authority of competent jurisdiction that prohibits the
transactions contemplated by this Agreement, and no
actions, suits or proceedings shall be in progress,
pending or threatened by any person (other than the
Investor or any affiliate of the Investor), that seek
to enjoin or prohibit the transactions contemplated by
this Agreement. For purposes of this paragraph (i), no
proceeding shall be deemed pending or threatened unless
one of the parties has received written or oral
notification thereof prior to the applicable Closing
Date;
(j) the Put Shares delivered to the Investor are DTC
eligible and can be immediately converted into
electronic form; and
(k) the Company shall have obtained all permits and
qualifications (if any) required by any state
securities laws or Blue Sky laws for the offer and sale
of the Common Stock to the Investor and by the Investor
or shall have the availability of exemptions therefrom.
2.3.6 DOCUMENTS REQUIRED TO BE DELIVERED ON THE PUT DATE AS
CONDITIONS TO CLOSING OF ANY PUT. The Closing of any Put and Investor's
obligations hereunder shall additionally be conditioned upon the delivery to the
Investor of each of the following (the "Required Put Documents") on or before
the applicable Put Date:
16
(a) a number of DWAC Put Shares equal to the Intended Put
Share Amount shall have been delivered to the Depository Trust Company DWAC
account specified by the Investor for the Put Shares (unless the Investor has
requested physical stock certificates, in writing, in which case the Company
shall have delivered to the Investor a number of physical Unlegended Share
Certificates equal to the Intended Put Share Amount, in denominations of not
more than 50,000 shares per certificate);
(b) the following documents: Put Opinion of Counsel,
Officer's Certificate, Put Notice, Registration Opinion, and any report or
disclosure required under Section 2.3.7 or Section 2.5; and
(c) all documents, instruments and other writings required
to be delivered on or before the Put Date pursuant to any provision of this
Agreement in order to implement and effect the transactions contemplated herein.
2.3.7 ACCOUNTANT'S LETTER AND REGISTRATION OPINION.
(a) The Company shall have caused to be delivered to the
Investor, (i) whenever required by Section 2.3.7(b) or by Section 2.5.3, and
(ii) on the date that is three (3) Business Days prior to each Put Date (the
"Registration Opinion Deadline"), an opinion of the Company's independent
counsel, in substantially the form of EXHIBIT R (the "Registration Opinion"),
addressed to the Investor stating, inter alia, that no facts ("Material Facts")
have come to such counsel's attention that have caused it to believe that the
Registration Statement is subject to an Ineffective Period or to believe that
the Registration Statement, any Supplemental Registration Statement (as each may
be amended, if applicable), and any related prospectuses, contain an untrue
statement of material fact or omits a material fact required to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading. If a Registration Opinion cannot be delivered by the
Company's independent counsel to the Investor on the Registration Opinion
Deadline due to the existence of Material Facts or an Ineffective Period, the
Company shall promptly notify the Investor and as promptly as possible amend
each of the Registration Statement and any Supplemental Registration Statements,
as applicable, and any related prospectus or cause such Ineffective Period to
terminate, as the case may be, and deliver such Registration Opinion and updated
prospectus as soon as possible thereafter. If at any time after a Put Notice
shall have been delivered to Investor but before the related Pricing Period End
Date, the Company acquires knowledge of such Material Facts or any Ineffective
Period occurs, the Company shall promptly notify the Investor and shall deliver
a Put Interruption Notice to the Investor pursuant to Section 2.3.4 by facsimile
and overnight courier by the end of that Business Day.
(b) (i) the Company shall engage its independent auditors to
perform the procedures in accordance with the provisions of Statement on
Auditing Standards No. 71, as amended, as agreed to by the parties hereto, and
reports thereon (the "Bring Down Cold Comfort Letters") as shall have been
reasonably requested by the Investor with respect to certain financial
information contained in the Registration Statement and shall have delivered to
the Investor such a report addressed to the Investor, on the date that is three
(3) Business Days prior to each Put Date.
17
(ii) in the event that the Investor shall have
requested delivery of an Agreed Upon Procedures Report pursuant to Section
2.5.3, the Company shall engage its independent auditors to perform certain
agreed upon procedures and report thereon as shall have been reasonably
requested by the Investor with respect to certain financial information of the
Company and the Company shall deliver to the Investor a copy of such report
addressed to the Investor. In the event that the report required by this Section
2.3.7(b) cannot be delivered by the Company's independent auditors, the Company
shall, if necessary, promptly revise the Registration Statement and the Company
shall not deliver a Put Notice until such report is delivered.
2.3.8 INVESTOR'S OBLIGATION AND RIGHT TO PURCHASE SHARES. Subject
to the conditions set forth in this Agreement, following the Investor's receipt
of a validly delivered Put Notice, the Investor shall be required to purchase
(each a "Purchase") from the Company a number of Put Shares equal to the Put
Share Amount, in the manner described below.
2.3.9 MECHANICS OF PUT CLOSING. Each of the Company and the
Investor shall deliver all documents, instruments and writings required to be
delivered by either of them pursuant to this Agreement at or prior to each
Closing. Subject to such delivery and the satisfaction of the conditions set
forth in this Section 2, the closing of the purchase by the Investor of Shares
shall occur by 5:00 PM, New York City Time, on the date which is five (5)
Business Days following the applicable Pricing Period End Date (the "Payment Due
Date") at the offices of Investor. On each or before each Payment Due Date, the
Investor shall deliver to the Company, in the manner specified in Section 8
below, the Put Dollar Amount to be paid for such Put Shares, determined as
aforesaid. The closing (each a "Put Closing") for each Put shall occur on the
date that both (i) the Company has delivered to the Investor all Required Put
Documents, and (ii) the Investor has delivered to the Company such Put Dollar
Amount and any Late Payment Amount, if applicable (each a "Put Closing Date").
If the Investor does not deliver to the Company the Put Dollar Amount for
such Put Closing on or before the Payment Due Date, then the Investor shall pay
to the Company, in addition to the Put Dollar Amount, an amount (the "Late
Payment Amount") at a rate of X% per month, accruing daily, multiplied by such
Put Dollar Amount, where "X" equals one percent (1%) for the first month
following the date in question, and increases by an additional one percent (1%)
for each month that passes after the date in question, up to a maximum of five
percent (5%) per month; provided, however, that in no event shall the amount of
interest that shall become due and payable hereunder exceed the maximum amount
permissible under applicable law.
In addition to any other remedies the Company may have, in the event that
the Investor fails to make payment for any shares put to it by the Company under
this Agreement within five (5) Business Days of the date that the Company has
notified the Investor, in writing, that such payment is past due, and the
Company has complied with this Agreement in all material respects, neither the
Commitment Warrant nor any Purchase Warrants shall be exerciseable until such
payment is made.
2.3.10 LIMITATION ON SHORT SALES. The Investor and its affiliates
shall not engage in short sales of the Company's Common Stock; provided,
however, that the Investor may enter into any short exempt sale or any short
sale or other hedging or similar arrangement it deems appropriate with respect
18
to Put Shares after it receives a Put Notice with respect to such Put Shares so
long as such sales or arrangements do not involve more than the number of such
Put Shares specified in the Put Notice.
2.3.11 CAP AMOUNT. If the Company becomes listed on the Nasdaq
Small Cap Market or the Nasdaq National Market, then, unless the Company has
obtained Stockholder 20% Approval as set forth in Section 6.11 or unless
otherwise permitted by Nasdaq, in no event shall the Aggregate Issued Shares
exceed the maximum number of shares of Common Stock (the "Cap Amount") that the
Company can, without stockholder approval, so issue pursuant to Nasdaq Rule
4460(i)(1)(d)(ii) (or any other applicable Nasdaq Rules or any successor rule)
(the "Nasdaq 20% Rule").
2.3.12 INVESTMENT AGREEMENT TERMINATION. The Company may
terminate (a "Company Termination") its right to initiate future Puts by
providing written notice ("Termination Notice") to the Investor, by facsimile
and overnight courier, at any time other than during an Extended Put Period,
provided that such termination shall have no effect on the parties' other rights
and obligations under this Agreement, the Registration Rights Agreement or the
Warrants. Notwithstanding the above, any Put Interruption Notice occurring
during an Extended Put Period is governed by Section 2.3.4.
2.3.13 RETURN OF EXCESS COMMON SHARES. In the event that the
number of Shares purchased by the Investor pursuant to its obligations hereunder
is less than the Intended Put Share Amount, the Investor shall promptly return
to the Company any shares of Common Stock in the Investor's possession that are
not being purchased by the Investor.
2.4 WARRANTS.
2.4.1 COMMITMENT WARRANTS. In partial consideration hereof,
following the execution of the Letter of Agreement dated on or about September
5, 2000 between the Company and the Investor, the Company issued and delivered
to Investor warrants (the "Commitment Warrants") in the form attached hereto as
EXHIBIT U, or such other form as agreed upon by the parties, to purchase
1,309,000 shares of Common Stock. Each Commitment Warrant shall be immediately
exercisable in accordance with its terms, and shall have a term beginning on the
date of issuance and ending on date that is seven (7) years thereafter. The
Warrant Shares shall be registered for resale pursuant to the Registration
Rights Agreement. The Investment Commitment Opinion of Counsel shall cover the
issuance of the Commitment Warrant and the issuance of the common stock upon
exercise of the Commitment Warrant.
Notwithstanding any Termination or Automatic Termination of this Agreement,
regardless of whether or not the Registration Statement is or is not filed, and
regardless of whether or not the Registration Statement is approved or denied by
the SEC, the Investor shall retain full ownership of the Commitment Warrant as
partial consideration for its commitment hereunder.
2.4.2 [Intentionally Left Blank].
2.5 DUE DILIGENCE REVIEW. The Company shall make available for
inspection and review by the Investor (the "Due Diligence Review"), advisors to
and representatives of the Investor (who may or may not be affiliated with the
19
Investor and who are reasonably acceptable to the Company), any underwriter
participating in any disposition of Common Stock on behalf of the Investor
pursuant to the Registration Statement, any Supplemental Registration Statement,
or amendments or supplements thereto or any blue sky, NASD or other filing, all
financial and other records, all filings with the SEC, and all other 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 information reasonably requested by the Investor or
any such representative, advisor or underwriter in connection with such
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 Investor 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.
2.5.1 TREATMENT OF NONPUBLIC INFORMATION. The Company shall not
disclose nonpublic information to the Investor or to its advisors or
representatives unless prior to disclosure of such information the Company
identifies such information as being nonpublic information and provides the
Investor and such advisors and representatives with the opportunity to accept or
refuse to accept such nonpublic information for review. The Company may, as a
condition to disclosing any nonpublic information hereunder, require the
Investor and its advisors and representatives to enter into a confidentiality
agreement (including an agreement with such advisors and representatives
prohibiting them from trading in Common Stock during such period of time as they
are in possession of nonpublic information) in form reasonably satisfactory to
the Company and the Investor.
Nothing herein shall require the Company to disclose nonpublic information
to the Investor or its advisors or representatives, and the Company represents
that it does not disseminate nonpublic information 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, immediately notify the
advisors and representatives of the Investor 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
nonpublic information (whether or not requested of the Company specifically or
generally during the course of due diligence by and 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 2.5 shall be construed to mean
that such persons or entities other than the Investor (without the written
consent of the Investor prior to disclosure of such information) may not obtain
nonpublic information in the course of conducting due diligence in accordance
with the terms of this Agreement; provided, however, that in no event shall the
Investor's advisors or representatives disclose to the Investor the nature of
the specific event or circumstances constituting any nonpublic information
discovered by such advisors or representatives in the course of their due
diligence without the written consent of the Investor prior to disclosure of
such information.
20
2.5.2 DISCLOSURE OF MISSTATEMENTS AND OMISSIONS. The Investor's
advisors or representatives shall make complete disclosure to the Investor's
counsel of all events or circumstances constituting nonpublic information
discovered by such advisors or representatives in the course of their due
diligence upon which such advisors or representatives form the opinion 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 the light of the circumstances in
which they were made, not misleading. Upon receipt of such disclosure, the
Investor's counsel shall consult with the Company's independent counsel in order
to address the concern raised as to the existence of a material misstatement or
omission and to discuss appropriate disclosure with respect thereto; provided,
however, that such consultation shall not constitute the advice of the Company's
independent counsel to the Investor as to the accuracy of the Registration
Statement and related Prospectus.
2.5.3 PROCEDURE IF MATERIAL FACTS ARE REASONABLY BELIEVED TO BE
UNTRUE OR ARE Omitted. In the event after such consultation the Investor or the
Investor's counsel reasonably believes 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,
(a) the Company shall file with the SEC an amendment to the
Registration Statement responsive to such alleged untrue statement or omission
and provide the Investor, as promptly as practicable, with copies of the
Registration Statement and related Prospectus, as so amended, or
(b) if the Company disputes the existence of any such
material misstatement or omission, (i) the Company's independent counsel shall
provide the Investor's counsel with a Registration Opinion and (ii) in the event
the dispute relates to the adequacy of financial disclosure and the Investor
shall reasonably request, the Company's independent auditors shall provide to
the Company a letter ("Agreed Upon Procedures Report") outlining the performance
of such "agreed upon procedures" as shall be reasonably requested by the
Investor and the Company shall provide the Investor with a copy of such letter.
2.6 COMMITMENT PAYMENTS.
On the last Business Day of the first one year period following the
Effective Date (a "Commitment Evaluation Period"), if the Company has not Put at
least $500,000 in aggregate Put Dollar Amount during that Commitment Evaluation
Period, the Company, in consideration of Investor's commitment costs, including,
but not limited to, due diligence expenses, shall pay to the Investor an amount
(the "Non-Usage Fee") equal to the difference of (i) $50,000, minus (ii) 10% of
the aggregate Put Dollar Amount of the Put Shares purchased by Investor during
that Commitment Evaluation Period. On the last Business Day of the second one
year period and the third one year period following the Effective Date (each
such one year period also a "Commitment Evaluation Period"), if the Company has
not Put at least $1,000,000 in aggregate Put Dollar Amount during that
Commitment Evaluation Period, the Company, in consideration of Investor's
commitment costs, including, but not limited to, due diligence expenses, shall
pay to the Investor an amount (the "Non-Usage Fee") equal to the difference of
(i) $100,000, minus (ii) 10% of the aggregate Put Dollar Amount of the Put
Shares purchased by Investor during that Commitment Evaluation Period. In the
21
event that the Company delivers a Termination Notice to the Investor or an
Automatic Termination occurs, the Company shall pay to the Investor (the
"Termination Fee") the greater of (i) the Non-Usage Fee for the applicable
Commitment Evaluation Period, or (ii) the difference of (x) $200,000, minus (y)
10% of the aggregate Put Dollar Amount of the Put Shares put to Investor during
all Puts to date, and the Company shall not be required to pay the Non-Usage Fee
thereafter.
Each Non-Usage Fee or Termination Fee is payable, in cash, within five (5)
business days of the date it accrued. The Company shall not be required to
deliver any payments to Investor under this subsection until Investor has paid
all Put Dollar Amounts that are then due.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF INVESTOR. Investor hereby
represents and warrants to and agrees with the Company as follows:
3.1 ACCREDITED INVESTOR. Investor is an accredited investor
("Accredited Investor"), as defined in Rule 501 of Regulation D, and has checked
the applicable box set forth in Section 10 of this Agreement.
3.2 INVESTMENT EXPERIENCE; ACCESS TO INFORMATION; INDEPENDENT
INVESTIGATION.
3.2.1 ACCESS TO INFORMATION. Investor or Investor's professional
advisor has been granted the opportunity to ask questions of and receive answers
from representatives of the Company, its officers, directors, employees and
agents concerning the terms and conditions of this Offering, the Company and its
business and prospects, and to obtain any additional information which Investor
or Investor's professional advisor deems necessary to verify the accuracy and
completeness of the information received.
3.2.2 RELIANCE ON OWN ADVISORS. Investor has relied completely on
the advice of, or has consulted with, Investor's own personal tax, investment,
legal or other advisors and has not relied on the Company or any of its
affiliates, officers, directors, attorneys, accountants or any affiliates of any
thereof and each other person, if any, who controls any of the foregoing, within
the meaning of Section 15 of the Act for any tax or legal advice (other than
reliance on information in the Disclosure Documents as defined in Section 3.2.4
below and on the Opinion of Counsel). The foregoing, however, does not limit or
modify Investor's right to rely upon covenants, representations and warranties
of the Company in this Agreement.
3.2.3 CAPABILITY TO EVALUATE. Investor has such knowledge and
experience in financial and business matters so as to enable such Investor to
utilize the information made available to it in connection with the Offering in
order to evaluate the merits and risks of the prospective investment, which are
substantial, including without limitation those set forth in the Disclosure
Documents (as defined in Section 3.2.4 below).
3.2.4 DISCLOSURE DOCUMENTS. Investor, in making Investor's
investment decision to subscribe for the Investment Agreement hereunder,
represents that (a) Investor has received and had an opportunity to review (i)
the Company's Annual Report on Form 10-KSB for the year ended June 30, 2000,
(ii) the Company's quarterly report on Form 10-QSB for the quarters ended
December 31, 1999, and Xxxxx 00, 0000, (xxx) the Risk Factors, attached as
EXHIBIT J, (the "Risk Factors") (iv) the Capitalization Schedule, attached as
EXHIBIT K, (the "Capitalization Schedule") and (v) the Use of Proceeds Schedule,
attached as EXHIBIT L, (the "Use of Proceeds Schedule"); (b) Investor has read,
22
reviewed, and relied solely on the documents described in (a) above, the
Company's representations and warranties and other information in this
Agreement, including the exhibits, documents prepared by the Company which have
been specifically provided to Investor in connection with this Offering (the
documents described in this Section 3.2.4 (a) and (b) are collectively referred
to as the "Disclosure Documents"), and an independent investigation made by
Investor and Investor's representatives, if any; (c) Investor has, prior to the
date of this Agreement, been given an opportunity to review material contracts
and documents of the Company which have been filed as exhibits to the Company's
filings under the Act and the Exchange Act and has had an opportunity to ask
questions of and receive answers from the Company's officers and directors; and
(d) is not relying on any oral representation of the Company or any other
person, nor any written representation or assurance from the Company other than
those contained in the Disclosure Documents or incorporated herein or therein.
The foregoing, however, does not limit or modify Investor's right to rely upon
covenants, representations and warranties of the Company in Sections 5 and 6 of
this Agreement. Investor acknowledges and agrees that the Company has no
responsibility for, does not ratify, and is under no responsibility whatsoever
to comment upon or correct any reports, analyses or other comments made about
the Company by any third parties, including, but not limited to, analysts'
research reports or comments (collectively, "Third Party Reports"), and Investor
has not relied upon any Third Party Reports in making the decision to invest.
3.2.5 INVESTMENT EXPERIENCE; FEND FOR SELF. Investor has
substantial experience in investing in securities and it has made investments in
securities other than those of the Company. Investor acknowledges that Investor
is able to fend for Investor's self in the transaction contemplated by this
Agreement, that Investor has the ability to bear the economic risk of Investor's
investment pursuant to this Agreement and that Investor is an "Accredited
Investor" by virtue of the fact that Investor meets the investor qualification
standards set forth in Section 3.1 above. Investor has not been organized for
the purpose of investing in securities of the Company, although such investment
is consistent with Investor's purposes.
23
3.3 EXEMPT OFFERING UNDER REGULATION D.
3.3.1 NO GENERAL SOLICITATION. The Investment Agreement was not
offered to Investor through, and Investor is not aware of, any form of general
solicitation or general advertising, including, without limitation, (i) any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio, and
(ii) any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising.
3.3.2 RESTRICTED SECURITIES. Investor understands that the
Investment Agreement is, the Common Stock issued at each Put Closing will be,
and the Warrant Shares will be, characterized as "restricted securities" under
the federal securities laws inasmuch as they are being acquired from the Company
in a transaction exempt from the registration requirements of the federal
securities laws and that under such laws and applicable regulations such
securities may not be transferred or resold without registration under the Act
or pursuant to an exemption therefrom. In this connection, Investor represents
that Investor is familiar with Rule 144 under the Act, as presently in effect,
and understands the resale limitations imposed thereby and by the Act.
3.3.3 DISPOSITION. Without in any way limiting the
representations set forth above, Investor agrees that until the Securities are
sold pursuant to an effective Registration Statement or an exemption from
registration, they will remain in the name of Investor and will not be
transferred to or assigned to any broker, dealer or depositary. Investor further
agrees not to sell, transfer, assign, or pledge the Securities (except for any
bona fide pledge arrangement to the extent that such pledge does not require
registration under the Act or unless an exemption from such registration is
available and provided further that if such pledge is realized upon, any
transfer to the pledgee shall comply with the requirements set forth herein), or
to otherwise dispose of all or any portion of the Securities unless and until:
(a) There is then in effect a registration statement under
the Act and any applicable state securities laws covering such proposed
disposition and such disposition is made in accordance with such registration
statement and in compliance with applicable prospectus delivery requirements; or
(b) (i) Investor shall have notified the Company of the
proposed disposition and shall have furnished the Company with a statement of
the circumstances surrounding the proposed disposition to the extent relevant
for determination of the availability of an exemption from registration, and
(ii) if reasonably requested by the Company, Investor shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company, that
such disposition will not require registration of the Securities under the Act
or state securities laws. It is agreed that the Company will not require the
Investor to provide opinions of counsel for transactions made pursuant to Rule
144 provided that Investor and Investor's broker, if necessary, provide the
Company with the necessary representations for counsel to the Company to issue
an opinion with respect to such transaction.
The Investor is entering into this Agreement for its own account and
the Investor has no present arrangement (whether or not legally binding) at any
time to sell the Common Stock to or through any person or entity; provided,
24
however, that by making the representations herein, the Investor does not agree
to hold the Common Stock for any minimum or other specific term and reserves the
right to dispose of the Common Stock at any time in accordance with federal and
state securities laws applicable to such disposition.
3.4 DUE AUTHORIZATION.
3.4.1 AUTHORITY. The person executing this Investment Agreement,
if executing this Agreement in a representative or fiduciary capacity, has full
power and authority to execute and deliver this Agreement and each other
document included herein for which a signature is required in such capacity and
on behalf of the subscribing individual, partnership, trust, estate, corporation
or other entity for whom or which Investor is executing this Agreement. Investor
has reached the age of majority (if an individual) according to the laws of the
state in which he or she resides.
3.4.2 DUE AUTHORIZATION. Investor is duly and validly organized,
validly existing and in good standing as a limited liability company under the
laws of Georgia with full power and authority to purchase the Securities to be
purchased by Investor and to execute and deliver this Agreement.
3.4.3 PARTNERSHIPS. If Investor is a partnership, the
representations, warranties, agreements and understandings set forth above are
true with respect to all partners of Investor (and if any such partner is itself
a partnership, all persons holding an interest in such partnership, directly or
indirectly, including through one or more partnerships), and the person
executing this Agreement has made due inquiry to determine the truthfulness of
the representations and warranties made hereby.
3.4.4 REPRESENTATIVES. If Investor is purchasing in a
representative or fiduciary capacity, the representations and warranties shall
be deemed to have been made on behalf of the person or persons for whom Investor
is so purchasing.
4. ACKNOWLEDGMENTS. Investor is aware that:
4.1 RISKS OF INVESTMENT. Investor recognizes that an investment in the
Company involves substantial risks, including the potential loss of Investor's
entire investment herein. Investor recognizes that the Disclosure Documents,
this Agreement and the exhibits hereto do not purport to contain all the
information, which would be contained in a registration statement under the Act;
4.2 NO GOVERNMENT APPROVAL. No federal or state agency has passed upon
the Securities, recommended or endorsed the Offering, or made any finding or
determination as to the fairness of this transaction;
4.3 NO REGISTRATION, RESTRICTIONS ON TRANSFER. As of the date of this
Agreement, the Securities and any component thereof have not been registered
under the Act or any applicable state securities laws by reason of exemptions
from the registration requirements of the Act and such laws, and may not be
sold, pledged (except for any limited pledge in connection with a margin account
of Investor to the extent that such pledge does not require registration under
the Act or unless an exemption from such registration is available and provided
25
further that if such pledge is realized upon, any transfer to the pledgee shall
comply with the requirements set forth herein), assigned or otherwise disposed
of in the absence of an effective registration of the Securities and any
component thereof under the Act or unless an exemption from such registration is
available;
4.4 RESTRICTIONS ON TRANSFER. Investor may not attempt to sell,
transfer, assign, pledge or otherwise dispose of all or any portion of the
Securities or any component thereof in the absence of either an effective
registration statement or an exemption from the registration requirements of the
Act and applicable state securities laws;
4.5 NO ASSURANCES OF REGISTRATION. There can be no assurance that any
registration statement will become effective at the scheduled time, or ever, or
remain effective when required, and Investor acknowledges that it may be
required to bear the economic risk of Investor's investment for an indefinite
period of time;
4.6 EXEMPT TRANSACTION. Investor understands that the Securities are
being offered and sold in reliance on specific exemptions from the registration
requirements of federal and state law and that the representations, warranties,
agreements, acknowledgments and understandings set forth herein are being relied
upon by the Company in determining the applicability of such exemptions and the
suitability of Investor to acquire such Securities.
4.7 LEGENDS. The certificates representing the Put Shares shall not
bear a legend restricting the sale or transfer thereof ("Restrictive Legend").
The certificates representing the Warrant Shares shall not bear a Restrictive
Legend unless they are issued at a time when the Registration Statement is not
effective for resale. It is understood that the certificates evidencing any
Warrant Shares issued at a time when the Registration Statement is not effective
for resale, subject to legend removal under the terms of Section 6.8 below,
shall bear the following legend (the "Legend"):
"The securities represented hereby have not been registered under the
Securities Act of 1933, as amended, or applicable state securities
laws, nor the securities laws of any other jurisdiction. They may not
be sold or transferred in the absence of an effective registration
statement under those securities laws or pursuant to an exemption
therefrom."
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby makes
the following representations and warranties to Investor (which shall be true at
the signing of this Agreement, and as of any such later date as specified
hereunder) and agrees with Investor that, except as set forth in the "Schedule
of Exceptions" attached hereto as EXHIBIT C:
5.1 ORGANIZATION, GOOD STANDING, AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, USA and has all requisite corporate power and
authority to carry on its business as now conducted and as proposed to be
conducted. The Company is duly qualified to transact business and is in good
standing in each jurisdiction in which the failure to so qualify would, in the
Company's opinion, have a material adverse effect on the business or properties
of the Company and its subsidiaries taken as a whole. The Company is not the
subject of any pending, threatened or, to its knowledge, contemplated
investigation or administrative or legal proceeding (a "Proceeding") by the
26
Internal Revenue Service, the taxing authorities of any state or local
jurisdiction, or the Securities and Exchange Commission, the National
Association of Securities Dealers, Inc., the Nasdaq Stock Market, Inc. or any
state securities commission, or any other governmental entity, which have not
been disclosed in the Disclosure Documents. None of the disclosed Proceedings,
if any, will, in the Company's opinion, have a material adverse effect upon the
Company. The Company has the following subsidiaries: InfoPak, Inc.
5.2 CORPORATE CONDITION. The Company's condition is, in all material
respects, as described in the Disclosure Documents (as further set forth in any
subsequently filed Disclosure Documents, if applicable), except for changes in
the ordinary course of business and normal year-end adjustments that are not, in
the aggregate, materially adverse to the Company. Except for continuing losses,
there have been no material adverse changes to the Company's business, financial
condition, or prospects from the dates of such Disclosure Documents through the
date of the Investment Commitment Closing. The financial statements as contained
in the 10-KSB and 10-QSB have been prepared in accordance with generally
accepted accounting principles, consistently applied (except as otherwise
permitted by Regulation S-X of the Exchange Act, or Generally Accepted
Accounting Principles, as applicable), subject, in the case of unaudited interim
financial statements, to customary year end adjustments and the absence of
certain footnotes, and fairly present the financial condition of the Company as
of the dates of the balance sheets included therein and the consolidated results
of its operations and cash flows for the periods then ended. Without limiting
the foregoing, there are no material liabilities, contingent or actual, that are
not disclosed in the Disclosure Documents (other than liabilities incurred by
the Company in the ordinary course of its business, consistent with its past
practice, after the period covered by the Disclosure Documents). The Company has
paid all material taxes that are due, except for taxes that it reasonably
disputes. There is no material claim, litigation, or administrative proceeding
pending or, to the best of the Company's knowledge, threatened against the
Company, except as disclosed in the Disclosure Documents. This Agreement and the
Disclosure Documents do not contain any untrue statement of a material fact and
do not omit to state any material fact required to be stated therein or herein
necessary to make the statements contained therein or herein not misleading in
the light of the circumstances under which they were made. No event or
circumstance exists relating to the Company which, under applicable law,
requires public disclosure but which has not been so publicly announced or
disclosed.
5.3 AUTHORIZATION. All corporate action on the part of the Company by
its officers, directors and stockholders necessary for the authorization,
execution and delivery of this Agreement, the performance of all obligations of
the Company hereunder and the authorization, issuance and delivery of the Common
Stock being sold hereunder and the issuance (and/or the reservation for
issuance) of the Warrants and the Warrant Shares have been taken, and this
Agreement and the Registration Rights Agreement constitute valid and legally
binding obligations of the Company, enforceable in accordance with their terms,
except insofar as the enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, or other similar laws affecting creditors' rights
generally or by principles governing the availability of equitable remedies. The
Company has obtained all consents and approvals required for it to execute,
deliver and perform each agreement referenced in the previous sentence.
5.4 VALID ISSUANCE OF COMMON STOCK. The Common Stock and the Warrants,
when issued, sold and delivered in accordance with the terms hereof, for the
consideration expressed herein, will be validly issued, fully paid and
nonassessable and, based in part upon the representations of Investor in this
Agreement, will be issued in compliance with all applicable U.S. federal and
27
state securities laws. The Warrant Shares, when issued in accordance with the
terms of the Warrants, shall be duly and validly issued and outstanding, fully
paid and nonassessable, and based in part on the representations and warranties
of Investor, will be issued in compliance with all applicable U.S. federal and
state securities laws. The Put Shares, the Warrants and the Warrant Shares will
be issued free of any preemptive rights.
5.5 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in violation
or default of any provisions of its Certificate of Incorporation or Bylaws, each
as amended and in effect on and as of the date of the Agreement, or of any
material provision of any material instrument or material contract to which it
is a party or by which it is bound or of any provision of any federal or state
judgment, writ, decree, order, statute, rule or governmental regulation
applicable to the Company, which would, in the Company's opinion, have a
material adverse effect on the Company's business or prospects, or on the
performance of its obligations under this Agreement or the Registration Rights
Agreement. The execution, delivery and performance of this Agreement and the
other agreements entered into in conjunction with the Offering and the
consummation of the transactions contemplated hereby and thereby will not (a)
result in any such violation or be in conflict with or constitute, with or
without the passage of time and giving of notice, either a default under any
such provision, instrument or contract or an event which results in the creation
of any lien, charge or encumbrance upon any assets of the Company, which would,
in the Company's opinion, have a material adverse effect on the Company's
business or prospects, or on the performance of its obligations under this
Agreement, the Registration Rights Agreement, or (b) violate the Company's
Certificate of Incorporation or By-Laws or (c) violate any statute, rule or
governmental regulation applicable to the Company which violation would, in the
Company's opinion, have a material adverse effect on the Company's business or
prospects.
5.6 REPORTING COMPANY. The Company is subject to the reporting
requirements of the Exchange Act, has a class of securities registered under
Section 12 of the Exchange Act, and has filed all reports required by the
Exchange Act since the date the Company first became subject to such reporting
obligations. The Company undertakes to furnish Investor with copies of such
reports as may be reasonably requested by Investor prior to consummation of this
Offering and thereafter, to make such reports available, for the full term of
this Agreement, including any extensions thereof, and for as long as Investor
holds the Securities. The Common Stock is duly listed or approved for quotation
on the O.T.C. Bulletin Board. The Company is not in violation of the listing
requirements of the O.T.C. Bulletin Board and does not reasonably anticipate
that the Common Stock will be delisted by the O.T.C. Bulletin Board for the
foreseeable future. The Company has filed all reports required under the
Exchange Act. The Company has not furnished to the Investor any material
nonpublic information concerning the Company.
5.7 CAPITALIZATION. The capitalization of the Company as of the date
hereof, subject to exercise of any outstanding warrants and/or exercise of any
outstanding stock options, and after taking into account the offering of the
Securities contemplated by this Agreement and all other share issuances
occurring prior to this Offering, is as set forth in the Capitalization Schedule
as set forth in EXHIBIT K. There are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Securities. Except as disclosed in the Capitalization Schedule, as of the
date of this Agreement, (i) there are no outstanding options, warrants, scrip,
rights to subscribe for, calls or commitments of any character whatsoever
28
relating to, or securities or rights convertible into or exercisable or
exchangeable for, any shares of capital stock of the Company or any of its
subsidiaries, or arrangements by which the Company or any of its subsidiaries is
or may become bound to issue additional shares of capital stock of the Company
or any of its subsidiaries, and (ii) there are no agreements or arrangements
under which the Company or any of its subsidiaries is obligated to register the
sale of any of its or their securities under the Act (except the Registration
Rights Agreement).
5.8 INTELLECTUAL PROPERTY. The Company has valid, unrestricted and
exclusive ownership of or rights to use the patents, trademarks, trademark
registrations, trade names, copyrights, know-how, technology and other
intellectual property necessary to the conduct of its business. EXHIBIT M lists
all patents, trademarks, trademark registrations, trade names and copyrights of
the Company. The Company has granted such licenses or has assigned or otherwise
transferred a portion of (or all of) such valid, unrestricted and exclusive
patents, trademarks, trademark registrations, trade names, copyrights, know-how,
technology and other intellectual property necessary to the conduct of its
business as set forth in EXHIBIT M. The Company has been granted licenses,
know-how, technology and/or other intellectual property necessary to the conduct
of its business as set forth in EXHIBIT M. To the best of the Company's
knowledge after due inquiry, the Company is not infringing on the intellectual
property rights of any third party, nor is any third party infringing on the
Company's intellectual property rights. There are no restrictions in any
agreements, licenses, franchises, or other instruments that preclude the Company
from engaging in its business as presently conducted.
5.9 USE OF PROCEEDS. As of the date hereof, the Company expects to use
the proceeds from this Offering (less fees and expenses) for the purposes and in
the approximate amounts set forth on the Use of Proceeds Schedule set forth as
EXHIBIT L hereto. These purposes and amounts are estimates and are subject to
change without notice to any Investor.
5.10 NO RIGHTS OF PARTICIPATION. No person or entity, including, but
not limited to, current or former stockholders of the Company, underwriters,
brokers, agents or other third parties, has any right of first refusal,
preemptive right, right of participation, or any similar right to participate in
the financing contemplated by this Agreement which has not been waived.
5.11 COMPANY ACKNOWLEDGMENT. The Company hereby acknowledges that
Investor may elect to hold the Securities for various periods of time, as
permitted by the terms of this Agreement, the Warrants, and other agreements
contemplated hereby, and the Company further acknowledges that Investor has made
no representations or warranties, either written or oral, as to how long the
Securities will be held by Investor or regarding Investor's trading history or
investment strategies.
5.12 NO ADVANCE REGULATORY APPROVAL. The Company acknowledges that
this Investment Agreement, the transaction contemplated hereby and the
Registration Statement contemplated hereby have not been approved by the SEC, or
any other regulatory body and there is no guarantee that this Investment
Agreement, the transaction contemplated hereby and the Registration Statement
contemplated hereby will ever be approved by the SEC or any other regulatory
body. The Company is relying on its own analysis and is not relying on any
representation by Investor that either this Investment Agreement, the
transaction contemplated hereby or the Registration Statement contemplated
hereby has been or will be approved by the SEC or other appropriate regulatory
body.
29
5.13 UNDERWRITER'S FEES AND RIGHTS OF FIRST REFUSAL. The Company is
not obligated to pay any compensation or other fees, costs or related
expenditures in cash or securities to any underwriter, broker, agent or other
representative in connection with this Offering.
5.14 AVAILABILITY OF SUITABLE FORM FOR REGISTRATION. The Company is
currently eligible and agrees to maintain its eligibility to register the resale
of its Common Stock on a registration statement on a suitable form under the
Act.
5.15 NO INTEGRATED OFFERING. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any of the Company's securities or
solicited any offers to buy any security under circumstances that would prevent
the parties hereto from consummating the transactions contemplated hereby
pursuant to an exemption from registration under Regulation D of the Act or
would require the issuance of any other securities to be integrated with this
Offering under the Rules of the SEC. The Company has not engaged in any form of
general solicitation or advertising in connection with the offering of the
Common Stock or the Warrants.
5.16 FOREIGN CORRUPT PRACTICES. Neither the Company, nor any of its
subsidiaries, nor any director, officer, agent, employee or other person acting
on behalf of the Company or any subsidiary has, in the course of its actions
for, or on behalf of, the Company, used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity; made any direct or indirect unlawful payment to any foreign
or domestic government official or employee from corporate funds; violated or is
in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977,
as amended; or made any bribe, rebate, payoff, influence payment, kickback or
other unlawful payment to any foreign or domestic government official or
employee.
5.17 KEY EMPLOYEES. As of the date of this Agreement, each "Key
Employee" (as defined in EXHIBIT N) is currently serving the Company in the
capacity disclosed in EXHIBIT N. No Key Employee, to the best knowledge of the
Company and its subsidiaries, is, or is now expected to be, in violation of any
material term of any employment contract, confidentiality, disclosure or
proprietary information agreement, non-competition agreement, or any other
contract or agreement or any restrictive covenant, and the continued employment
of each Key Employee does not subject the Company or any of its subsidiaries to
any liability with respect to any of the foregoing matters. No Key Employee has,
to the best knowledge of the Company and its subsidiaries, any intention to
terminate his employment with, or services to, the Company or any of its
subsidiaries.
5.18 REPRESENTATIONS CORRECT. The foregoing representations,
warranties and agreements are true, correct and complete in all material
respects, and shall survive any Put Closing and the issuance of the shares of
Common Stock thereby.
5.19 TAX STATUS. The Company has made or filed all federal and state
income and all other tax returns, reports and declarations required by any
jurisdiction to which it is subject (unless and only to the extent that the
Company has set aside on its books provisions reasonably adequate for the
payment of all unpaid and unreported taxes) and has paid all taxes and other
governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
30
being contested in good faith and has set aside on its books provision
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. There are no
unpaid taxes in any material amount claimed to be due by the taxing authority of
any jurisdiction, and the officers of the Company know of no basis for any such
claim.
5.20 TRANSACTIONS WITH AFFILIATES. Except as set forth in the
Disclosure Documents, none of the officers, directors, or employees of the
Company is presently a party to any transaction with the Company (other than for
services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any corporation, partnership, trust or other entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner.
5.21 APPLICATION OF TAKEOVER PROTECTIONS. The Company and its board of
directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination or other
similar anti-takeover provision under Delaware law which is or could become
applicable to the Investor as a result of the transactions contemplated by this
Agreement, including, without limitation, the issuance of the Common Stock, any
exercise of the Warrants and ownership of the Common Shares and Warrant Shares.
The Company has not adopted and will not adopt any "poison pill" provision that
will be applicable to Investor as a result of transactions contemplated by this
Agreement.
5.22 OTHER AGREEMENTS. The Company has not, directly or indirectly,
made any agreements with the Investor under a subscription in the form of this
Agreement for the purchase of Common Stock, relating to the terms or conditions
of the transactions contemplated hereby or thereby except as expressly set forth
herein, respectively, or in exhibits hereto or thereto.
5.23 MAJOR TRANSACTIONS. There are no other Major Transactions
currently pending or contemplated by the Company.
5.24 FINANCINGS. There are no other financings currently pending or
contemplated by the Company.
5.25 SHAREHOLDER AUTHORIZATION. The Company shall, at its next annual
shareholder meeting following its listing on either the Nasdaq Small Cap Market
or the Nasdaq National Market, or at a special meeting to be held as soon as
practicable thereafter, use its best efforts to obtain approval of its
shareholders to (i) authorize the issuance of the full number of shares of
Common Stock which would be issuable under this Agreement and eliminate any
prohibitions under applicable law or the rules or regulations of any stock
exchange, interdealer quotation system or other self-regulatory organization
with jurisdiction over the Company or any of its securities with respect to the
Company's ability to issue shares of Common Stock in excess of the Cap Amount
(such approvals being the "20% Approval") and (ii) increase the number of
authorized shares of Common Stock of the Company (the "Share Authorization
Increase Approval") such that at least 25,000,000 shares can be reserved for
this Offering. In connection with such shareholder vote, the Company shall use
its best efforts to cause all officers and directors of the Company to promptly
31
enter into irrevocable agreements to vote all of their shares in favor of
eliminating such prohibitions. As soon as practicable after the 20% Approval and
the Share Authorization Increase Approval, the Company agrees to use its best
efforts to reserve 25,000,000 shares of Common Stock for issuance under this
Agreement.
5.26 ACKNOWLEDGMENT OF LIMITATIONS ON PUT AMOUNTS. The Company
understands and acknowledges that the amounts available under this Investment
Agreement are limited, among other things, based upon the liquidity of the
Company's Common Stock traded on its Principal Market.
5.27 DILUTION. The number of shares of Common Stock issuable as Put
Shares may increase substantially in certain circumstances, including, but not
necessarily limited to, the circumstance wherein the trading price of the Common
Stock declines during the period between the Effective Date and the end of the
Commitment Period. The Company's executive officers and directors fully
understand the nature of the transactions contemplated by this Agreement and
recognize that they have a potential dilutive effect. The board of directors of
the Company has concluded, in its good faith business judgment, that such
issuance is in the best interests of the Company. The Company specifically
acknowledges that, whenever the Company elects to initiate a Put, its obligation
to issue the Put Shares is binding upon the Company and enforceable regardless
of the dilution such issuance may have on the ownership interests of other
shareholders of the Company.
6. COVENANTS OF THE COMPANY.
6.1 INDEPENDENT AUDITORS. The Company shall, until at least the
Termination Date, maintain as its independent auditors an accounting firm
authorized to practice before the SEC.
6.2 CORPORATE EXISTENCE AND TAXES; CHANGE IN CORPORATE ENTITY. The
Company shall, until at least the Termination Date, maintain its corporate
existence in good standing and, once it becomes a "Reporting Issuer" (defined as
a Company which files periodic reports under the Exchange Act), remain a
Reporting Issuer and shall pay all its taxes when due except for taxes which the
Company disputes. The Company shall not, at any time after the date hereof,
enter into any merger, consolidation or corporate reorganization of the Company
with or into, or transfer all or substantially all of the assets of the Company
to, another entity unless the resulting successor or acquiring entity in such
transaction, if not the Company (the "Surviving Entity"), (i) has Common Stock
listed for trading on the OTC Bulletin Board, Nasdaq or on another national
stock exchange and is a Reporting Issuer, (ii) assumes by written instrument the
Company's obligations with respect to this Investment Agreement, the
Registration Rights Agreement, the Transfer Agent Instructions, the Warrant
Antidilution Agreement, the Warrants and the other agreements referred to
herein, including but not limited to the obligations to deliver to the Investor
shares of Common Stock and/or securities that Investor is entitled to receive
pursuant to this Investment Agreement and upon exercise of the Warrants and
agrees by written instrument to reissue, in the name of the Surviving Entity,
any Warrants (each in the same terms, including but not limited to the same
reset provisions, as the applicable Warrant originally issued or required to be
issued by the Company) that are outstanding immediately prior to such
transaction, making appropriate proportional adjustments to the number of shares
represented by such Warrants and the exercise prices of such Warrants to
accurately reflect the exchange represented by the transaction.
32
6.3 REGISTRATION RIGHTS. The Company will enter into a registration
rights agreement covering the resale of the Common Shares and the Warrant Shares
substantially in the form of the Registration Rights Agreement attached as
EXHIBIT A.
6.4 ASSET TRANSFERS. The Company shall not (i) transfer, sell, convey
or otherwise dispose of any of its material assets to any subsidiary except for
a cash or cash equivalent consideration and for a proper business purpose or
(ii) transfer, sell, convey or otherwise dispose of any of its material assets
to any Affiliate, as defined below, during the Term of this Agreement. For
purposes hereof, "Affiliate" shall mean any officer of the Company, director of
the Company or owner of twenty percent (20%) or more of the Common Stock or
other securities of the Company.
6.5 CAPITAL RAISING LIMITATIONS AND RIGHTS OF FIRST REFUSAL.
6.5.1 CAPITAL RAISING LIMITATIONS. During the period from the
date of this Agreement until the date that is sixty (60) days after the
Termination Date, the Company shall not issue or sell, or agree to issue or sell
Equity Securities (as defined below), for cash in private capital raising
transactions without obtaining the prior written approval of the Investor of the
Offering (the limitations referred to in this subsection 6.5.1 are collectively
referred to as the "Capital Raising Limitations"). For purposes hereof, the
following shall be collectively referred to herein as, the "Equity Securities":
(i) Common Stock or any other equity securities, (ii) any debt or equity
securities which are convertible into, exercisable or exchangeable for, or carry
the right to receive additional shares of Common Stock or other equity
securities, or (iii) any securities of the Company pursuant to an equity line
structure or format similar in nature to this Offering.
6.5.2 INVESTOR'S RIGHT OF FIRST REFUSAL. For any private capital
raising transactions of Equity Securities which close after the date hereof and
on or prior to the date that is sixty (60) days after the Termination Date of
this Agreement, not including any warrants issued in conjunction with this
Investment Agreement, the Company agrees to deliver to Investor, at least ten
(10) days prior to the closing of such transaction, written notice describing
the proposed transaction, including the terms and conditions thereof, and
providing the Investor and its affiliates an option (the "Right of First
Refusal") during the ten (10) day period following delivery of such notice to
purchase the securities being offered in such transaction on the same terms as
contemplated by such transaction.
6.5.3 EXCEPTIONS TO CAPITAL RAISING LIMITATIONS AND RIGHTS OF
FIRST REFUSAL. Notwithstanding the above, neither the Capital Raising
Limitations nor the Rights of First Refusal shall apply to any transaction
involving issuances of securities by the Company to a company being acquired by
the Company, as payment to such company for such acquisition, or in connection
with the exercise of options by employees or directors of the Company, or a
primary underwritten offering of the Company's Common Stock. The Capital Raising
Limitations and Rights of First Refusal also shall not apply to (a) the issuance
33
of securities upon exercise or conversion of the Company's options, warrants or
other convertible securities outstanding as of the date hereof, (b) the grant of
additional options or warrants, or the issuance of additional securities, under
any Company stock option or restricted stock plan for the benefit of the
Company's employees or directors, or (c) the issuance of debt securities, with
no equity feature, incurred solely for working capital purposes.
6.6 FINANCIAL 00-XXX XXXXXXXXXX, ETC. AND CURRENT REPORTS ON FORM 8-K.
The Company shall deliver to the Investor copies of its annual reports on Form
10-KSB, and quarterly reports on Form 10-QSB and shall deliver to the Investor
current reports on Form 8-K within two (2) days of filing for the Term of this
Agreement.
6.7 OPINION OF COUNSEL. Investor shall, concurrent with the Investment
Commitment Closing, receive an opinion letter from the Company's legal counsel,
in the form attached as EXHIBIT B, or in such form as agreed upon by the
parties, and shall, concurrent with each Put Date, receive an opinion letter
from the Company's legal counsel, in the form attached as EXHIBIT I or in such
form as agreed upon by the parties.
6.8 REMOVAL OF LEGEND. If the certificates representing any Securities
are issued with a restrictive Legend in accordance with the terms of this
Agreement, the Legend shall be removed and the Company shall issue a certificate
without such Legend to the holder of any Security upon which it is stamped, and
a certificate for a security shall be originally issued without the Legend, if
(a) the sale of such Security is registered under the Act, or (b) such holder
provides the Company with an opinion of counsel, in form, substance and scope
customary for opinions of counsel in comparable transactions (the reasonable
cost of which shall be borne by the Investor), to the effect that a public sale
or transfer of such Security may be made without registration under the Act, or
(c) such holder provides the Company with reasonable assurances that such
Security can be sold pursuant to Rule 144. Each Investor agrees to sell all
Securities, including those represented by a certificate(s) from which the
Legend has been removed, or which were originally issued without the Legend,
pursuant to an effective registration statement and to deliver a prospectus in
connection with such sale or in compliance with an exemption from the
registration requirements of the Act.
6.9 LISTING. Subject to the remainder of this Section 6.9, the Company
shall ensure that its shares of Common Stock (including all Warrant Shares and
Put Shares) are listed and available for trading on the O.T.C. Bulletin Board.
Thereafter, the Company shall (i) use its best efforts to continue the listing
and trading of its Common Stock on the O.T.C. Bulletin Board or to become
eligible for and listed and available for trading on the Nasdaq Small Cap
Market, the NMS, or the New York Stock Exchange ("NYSE"); and (ii) comply in all
material respects with the Company's reporting, filing and other obligations
under the By-Laws or rules of the National Association of Securities Dealers
("NASD") and such exchanges, as applicable.
6.10 THE COMPANY'S INSTRUCTIONS TO TRANSFER AGENT. The Company will
instruct the Transfer Agent of the Common Stock (the "Transfer Agent"), by
delivering instructions in the form of EXHIBIT T hereto, to issue certificates,
registered in the name of each Investor or its nominee, for the Put Shares and
Warrant Shares in such amounts as specified from time to time by the Company
upon any exercise by the Company of a Put and/or exercise of the Warrants by the
holder thereof. Such certificates shall not bear a Legend unless issuance with a
Legend is permitted by the terms of this Agreement and Legend removal is not
permitted by Section 6.8 hereof and the Company shall cause the Transfer Agent
to issue such certificates without a Legend. Nothing in this Section shall
affect in any way Investor's obligations and agreement set forth in Sections
3.3.2 or 3.3.3 hereof to resell the Securities pursuant to an effective
registration statement and to deliver a prospectus in connection with such sale
or in compliance with an exemption from the registration requirements of
applicable securities laws. If (a) an Investor provides the Company with an
opinion of counsel, which opinion of counsel shall be in form, substance and
scope customary for opinions of counsel in comparable transactions, to the
34
effect that the Securities to be sold or transferred may be sold or transferred
pursuant to an exemption from registration or (b) an Investor transfers
Securities, pursuant to Rule 144, to a transferee which is an accredited
investor, the Company shall permit the transfer, and, in the case of Put Shares
and Warrant Shares, promptly instruct its transfer agent to issue one or more
certificates in such name and in such denomination as specified by such
Investor. The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to an Investor by vitiating the intent and
purpose of the transaction contemplated hereby. Accordingly, the Company
acknowledges that the remedy at law for a breach of its obligations under this
Section 6.10 will be inadequate and agrees, in the event of a breach or
threatened breach by the Company of the provisions of this Section 6.10, that an
Investor shall be entitled, in addition to all other available remedies, to an
injunction restraining any breach and requiring immediate issuance and transfer,
without the necessity of showing economic loss and without any bond or other
security being required.
6.11 STOCKHOLDER 20% APPROVAL. Prior to the closing of any Put that
would cause the Aggregate Issued Shares to exceed the Cap Amount, if required by
the rules of NASDAQ because the Company's Common Stock is listed on NASDAQ, the
Company shall obtain approval of its stockholders to authorize (i) the issuance
of the full number of shares of Common Stock which would be issuable pursuant to
this Agreement but for the Cap Amount and eliminate any prohibitions under
applicable law or the rules or regulations of any stock exchange, interdealer
quotation system or other self-regulatory organization with jurisdiction over
the Company or any of its securities with respect to the Company's ability to
issue shares of Common Stock in excess of the Cap Amount (such approvals being
the "Stockholder 20% Approval").
6.12 PRESS RELEASE. Any public announcement relating to this financing
(a "Press Release") shall be submitted to the Investor for review at least two
(2) business days prior to the planned release. The Company shall not disclose
the Investor's name in any press release or other public announcement without
the Investor's prior written approval. The Company shall obtain the Investor's
written approval of the Press Release prior to issuance by the Company.
6.13 CHANGE IN LAW OR POLICY. In the event of a change in law, or
policy of the SEC, as evidenced by a No-Action letter or other written
statements of the SEC or the NASD which causes the Investor to be unable to
perform its obligations hereunder, this Agreement shall be automatically
terminated and no Termination Fee shall be due, provided that notwithstanding
any termination under this section 6.13, the Investor shall retain full
ownership of the Commitment Warrant as partial consideration for its commitment
hereunder.
6.14. NOTICE OF CERTAIN EVENTS AFFECTING REGISTRATION; SUSPENSION OF
RIGHT TO MAKE A PUT. The Company shall immediately notify the Investor, but in
no event later than two (2) business days by facsimile and by overnight courier,
upon the occurrence of any of the following events in respect of a Registration
Statement or related prospectus in respect of an offering of Registrable
Securities: (i) receipt of any request for additional information by the SEC or
any other federal or state governmental authority during the period of
effectiveness of the Registration Statement for 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 a Registration Statement or the initiation of any
proceedings for that purpose; (iii) receipt of any notification with respect to
35
the suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; (iv) the happening of any event
that makes any statement made in such Registration Statement or related
prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires the making of any
changes in the Registration Statement, related prospectus or documents so that,
in the case of a Registration Statement, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
that in the case of the related prospectus, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; (v) the declaration by
the SEC of the effectiveness of a Registration Statement; and (vi) the Company's
reasonable determination that a post-effective amendment to the Registration
Statement would be appropriate, and the Company shall promptly make available to
the Investor any such supplement or amendment to the related prospectus. The
Company shall not deliver to the Investor any Put Notice during the continuation
of any of the foregoing events.
6.15 ACKNOWLEDGMENT REGARDING INVESTOR'S PURCHASE OF THE SECURITIES.
The Company acknowledges and agrees that the Investor is acting solely in the
capacity of arm's length purchaser with respect to the Transaction Documents and
the transactions contemplated hereby and thereby. The Company further
acknowledges that the Investor is not acting as a financial advisor or fiduciary
of the Company (or in any similar capacity) with respect to the Transaction
Documents and the transactions contemplated hereby and thereby and any advice
given by the Investor or any of its representatives or agents in connection with
the Transaction Documents and the transactions contemplated hereby and thereby
is merely incidental to the Investor's purchase of the Securities. The Company
further represents to the Investor that the Company's decision to enter into the
Transaction Documents has been based solely on the independent evaluation by the
Company and its representatives and advisors.
6.16. LIQUIDATED DAMAGES. The parties hereto acknowledge and agree
that the sums payable as Non-Usage Fees, Termination Fees and Ineffective
Registration Payments shall each give rise to liquidated damages and not
penalties. The parties further acknowledge that (a) the amount of loss or
damages likely to be incurred by the Investor is incapable or is difficult to
precisely estimate, (b) the amounts specified bear a reasonable proportion and
are not plainly or grossly disproportionate to the probable loss likely to be
incurred by the Investor, and (c) the parties are sophisticated business parties
and have been represented by sophisticated and able legal and financial counsel
and negotiated this Agreement at arm's length.
6.17. COPIES OF FINANCIAL STATEMENTS, REPORTS AND PROXY STATEMENTS.
Promptly upon the mailing thereof to the shareholders of the Company generally,
the Company shall deliver to the Investor copies of all financial statements,
reports and proxy statements so mailed and any other document generally
distributed to shareholders.
36
6.18. NOTICE OF CERTAIN LITIGATION. Promptly following the
commencement thereof, the Company shall provide the Investor written notice and
a description in reasonable detail of any litigation or proceeding to which the
Company or any subsidiary of the Company is a party, in which the amount
involved is $250,000 or more and which is not covered by insurance or in which
injunctive or similar relief is sought.
7. MISCELLANEOUS.
7.1 REPRESENTATIONS AND WARRANTIES SURVIVE THE CLOSING; SEVERABILITY.
Investor's and the Company's representations and warranties shall survive the
Investment Date and any Put Closing contemplated by this Agreement
notwithstanding any due diligence investigation made by or on behalf of the
party seeking to rely thereon. 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, or is altered by a term required by the Securities
Exchange Commission to be included in the Registration Statement, this Agreement
shall continue in full force and effect without said provision; provided that if
the removal of such provision materially changes the economic benefit of this
Agreement to the Investor, this Agreement shall terminate.
7.2 SUCCESSORS AND ASSIGNS. This Agreement shall not be assignable by
either party.
7.3 EXECUTION IN COUNTERPARTS PERMITTED. This Agreement may be
executed in any number of counterparts, each of which shall be enforceable
against the parties actually executing such counterparts, and all of which
together shall constitute one (1) instrument.
7.4 TITLES AND SUBTITLES; GENDER. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement. The use in this Agreement of a
masculine, feminine or neuter pronoun shall be deemed to include a reference to
the others.
7.5 WRITTEN NOTICES, ETC. Any notice, demand or request required or
permitted to be given by the Company or Investor pursuant to the terms of this
Agreement shall be in writing and shall be deemed given when delivered
personally, or by facsimile or upon receipt if by overnight or two (2) day
courier, addressed to the parties at the addresses and/or facsimile telephone
number of the parties set forth at the end of this Agreement or such other
address as a party may request by notifying the other in writing; provided,
however, that in order for any notice to be effective as to the Investor such
notice shall be delivered and sent, as specified herein, to all the addresses
and facsimile telephone numbers of the Investor set forth at the end of this
Agreement or such other address and/or facsimile telephone number as Investor
may request in writing.
7.6 EXPENSES. Except as set forth in the Registration Rights
Agreement, each of the Company and Investor shall pay all costs and expenses
that it respectively incurs, with respect to the negotiation, execution,
delivery and performance of this Agreement.
7.7 ENTIRE AGREEMENT; WRITTEN AMENDMENTS REQUIRED. This Agreement,
including the Exhibits attached hereto, the Common Stock certificates, the
Warrants, the Registration Rights Agreement, and the other documents delivered
pursuant hereto constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereof and thereof, and no party
shall be liable or bound to any other party in any manner by any warranties,
37
representations or covenants, whether oral, written, or otherwise except as
specifically set forth herein or therein. Except as expressly provided herein,
neither this Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the party against whom
enforcement of any such amendment, waiver, discharge or termination is sought.
7.8 ACTIONS AT LAW OR EQUITY; JURISDICTION AND VENUE. The parties
acknowledge that any and all actions, whether at law or at equity, and whether
or not said actions are based upon this Agreement between the parties hereto,
shall be filed in any state or federal court sitting in Atlanta, Georgia.
Georgia law shall govern both the proceeding as well as the interpretation and
construction of the Transaction Documents and the transaction as a whole. In any
litigation between the parties hereto, the prevailing party, as found by the
court, shall be entitled to an award of all attorney's fees and costs of court.
Should the court refuse to find a prevailing party, each party shall bear its
own legal fees and costs.
7.9 REPORTING ENTITY FOR THE COMMON STOCK. The reporting entity relied
upon for the determination of the trading price or trading volume of the Common
Stock on the Principal Market on any given Trading Day for the purposes of this
Agreement shall be the Bloomberg L.P. The written mutual consent of the Investor
and the Company shall be required to employ any other reporting entity.
8. SUBSCRIPTION AND WIRING INSTRUCTIONS; IRREVOCABILITY.
(a) WIRE TRANSFER OF SUBSCRIPTION FUNDS. Investor shall deliver Put
Dollar Amounts (as payment towards any Put Share Price) by wire
transfer, to the Company pursuant to a wire instruction letter to
be provided by the Company, and signed by the Company.
(b) IRREVOCABLE SUBSCRIPTION. Investor hereby acknowledges and
agrees, subject to the provisions of any applicable laws
providing for the refund of subscription amounts submitted by
Investor, that this Agreement is irrevocable and that Investor is
not entitled to cancel, terminate or revoke this Agreement or any
other agreements executed by such Investor and delivered pursuant
hereto, and that this Agreement and such other agreements shall
survive the death or disability of such Investor and shall be
binding upon and inure to the benefit of the parties and their
heirs, executors, administrators, successors, legal
representatives and assigns. If the Securities subscribed for are
to be owned by more than one person, the obligations of all such
owners under this Agreement shall be joint and several, and the
agreements, representations, warranties and acknowledgments
herein contained shall be deemed to be made by and be binding
upon each such person and his heirs, executors, administrators,
successors, legal representatives and assigns.
38
9. INDEMNIFICATION AND REIMBURSEMENT.
(a) INDEMNIFICATION. In consideration of the Investor's execution
and delivery of the Investment Agreement, the Registration Rights Agreement and
the Warrants (the "Transaction Documents") and acquiring the Securities
thereunder and in addition to all of the Company's other obligations under the
Transaction Documents, the Company shall defend, protect, indemnify and hold
harmless Investor and all of its stockholders, officers, directors, employees
and direct or indirect investors and any of the foregoing person's agents,
members, partners or other representatives (including, without limitation, those
retained in connection with the transactions contemplated by this Agreement)
(collectively, the "Indemnitees") from and against any and all actions, causes
of action, suits, claims, losses, costs, penalties, fees, liabilities and
damages, and expenses in connection therewith (irrespective of whether any such
Indemnitee is a party to the action for which indemnification hereunder is
sought), and including reasonable attorney's fees and disbursements (the
"Indemnified Liabilities"), incurred by any Indemnitee as a result of, or
arising out of, or relating to (a) any misrepresentation or breach of any
representation or warranty made by the Company in the Transaction Documents or
any other certificate, instrument or documents contemplated hereby or thereby,
(b) any breach of any covenant, agreement or obligation of the Company contained
in the Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby, (c) any cause of action, suit or claim,
derivative or otherwise, by any stockholder of the Company based on a breach or
alleged breach by the Company or any of its officers or directors of their
fiduciary or other obligations to the stockholders of the Company, or (d) claims
made by third parties against any of the Indemnitees based on a violation of
Section 5 of the Securities Act caused by the integration of the private sale of
common stock to the Investor and the public offering pursuant to the
Registration Statement.
To the extent that the foregoing undertaking by the Company may be
unenforceable for any reason, the Company shall make the maximum contribution to
the payment and satisfaction of each of the Indemnified Liabilities which it
would be required to make if such foregoing undertaking was enforceable which is
permissible under applicable law.
Promptly after receipt by an Indemnified Party of notice of the
commencement of any action pursuant to which indemnification may be sought, such
Indemnified Party will, if a claim in respect thereof is to be made against the
other party (hereinafter "Indemnitor") under this Section 9, deliver to the
Indemnitor a written notice of the commencement thereof and the Indemnitor shall
have the right to participate in and to assume the defense thereof with counsel
reasonably selected by the Indemnitor, provided, however, that an Indemnified
Party shall have the right to retain its own counsel, with the reasonably
incurred fees and expenses of such counsel to be paid by the Indemnitor, if
representation of such Indemnified Party by the counsel retained by the
Indemnitor would be inappropriate due to actual or potential conflicts of
interest between such Indemnified Party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
Indemnitor within a reasonable time of the commencement of any such action, if
prejudicial to the Indemnitor's ability to defend such action, shall relieve the
Indemnitor of any liability to the Indemnified Party under this Section 9, but
the omission to so deliver written notice to the Indemnitor will not relieve it
of any liability that it may have to any Indemnified Party other than under this
Section 9 to the extent it is prejudicial.
(b) REIMBURSEMENT. If (i) the Investor, other than by reason of
its gross negligence or willful misconduct, becomes involved in any capacity in
any action, proceeding or investigation brought by any stockholder of the
Company, in connection with or as a result of the consummation of the
39
transactions contemplated by the Transaction Documents, or if the Investor is
impleaded in any such action, proceeding or investigation by any person or
entity, or (ii) the Investor, other than by reason of its gross negligence or
willful misconduct, becomes involved in any capacity in any action, proceeding
or investigation brought by the SEC against or involving the Company or in
connection with or as a result of the consummation of the transactions
contemplated by the Transaction Documents, or if the Investor is impleaded in
any such action, proceeding or investigation by any person or entity, then in
any such case, the Company will reimburse the Investor for its reasonable legal
and other expenses (including the cost of any investigation and preparation )
incurred in connection therewith, as such expenses are incurred. In addition,
other than with respect to any matter in which the Investor is a named party,
the Company will pay the Investor the charges, as reasonably determined by the
Investor, for the time of any officers or employees of the Investor devoted to
appearing and preparing to appear as witnesses, assisting in preparation for
hearing, trials or pretrial matters, or otherwise with respect to inquiries,
hearing, trials, and other proceedings relating to the subject matter of this
Agreement. The reimbursement obligations of the Company under this paragraph
shall be in addition to any liability which the Company may otherwise have,
shall extend upon the same terms and conditions to any Affiliates of the
Investor who are actually named in such action, proceeding or investigation, and
partners, directors, agents, employees and controlling persons (if any), as the
case may be, of the Investor and any such Affiliate, and shall be binding upon
and inure to the benefit of any successors, assigns, heirs and personal
representatives of the Company, the Investor and any such Affiliate and any such
person or entity. The Company also agrees that neither the Investor nor any such
Affiliate, partners, directors, agents, employees or controlling persons shall
have any liability to the Company or any person asserting claims on behalf of or
in right of the Company in connection with or as a result of the consummation of
the Transaction Documents except to the extent that any losses, claims, damages,
liabilities or expenses incurred by the Company result from the gross negligence
or willful misconduct of the Investor or any inaccuracy in any representation or
warranty of the Investor contained herein or any breach by the Investor of any
of the provisions hereof.
40
10. ACCREDITED INVESTOR. Investor is an "accredited investor" because
(check all applicable boxes):
(a) [ ] it is an organization described in Section 501(c)(3) of the
Internal Revenue Code, or a corporation, limited duration
company, limited liability company, business trust, or
partnership not formed for the specific purpose of acquiring
the securities offered, with total assets in excess of
$5,000,000.
(b) [ ] any trust, with total assets in excess of $5,000,000, not
formed for the specific purpose of acquiring the securities
offered, whose purchase is directed by a sophisticated
person who has such knowledge and experience in financial
and business matters that he is capable of evaluating the
merits and risks of the prospective investment.
(c) [ ] a natural person, who
[ ] is a director, executive officer or general partner of the
issuer of the securities being offered or sold or a
director, executive officer or general partner of a general
partner of that issuer.
[ ] has an individual net worth, or joint net worth with that
person's spouse, at the time of his purchase exceeding
$1,000,000.
[ ] had an individual income in excess of $200,000 in each of
the two most recent years or joint income with that person's
spouse in excess of $300,000 in each of those years and has
a reasonable expectation of reaching the same income level
in the current year.
(d) [ ] an entity each equity owner of which is an entity described
in a - b above or is an individual who could check one (1)
of the last three (3) boxes under subparagraph (c) above.
(e) [ ] other [specify] ___________________________________________.
41
The undersigned hereby subscribes the Maximum Offering Amount and
acknowledges that this Agreement and the subscription represented hereby shall
not be effective unless accepted by the Company as indicated below.
IN WITNESS WHEREOF, the undersigned Investor does represent and certify
under penalty of perjury that the foregoing statements are true and correct and
that Investor by the following signature(s) executed this Agreement.
Dated this 2nd day of MARCH, 2001.
XXXXXX PRIVATE EQUITY, LLC
By: /s/ Xxxx X. Xxxxxx
--------------------------------
Xxxx X. Xxxxxx, Manager
SECURITY DELIVERY INSTRUCTIONS:
Xxxxxx Private Equity, LLC
c/o Xxxx X. Xxxxxx
000 Xxxxxxxx Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
THIS AGREEMENT IS ACCEPTED BY THE COMPANY IN THE AMOUNT OF THE MAXIMUM OFFERING
AMOUNT ON THE 2ND DAY OF MARCH, 2001.
DIMENSIONAL VISIONS INCORPORATED
By: /s/ Xxxx X. XxXxxxxxx
-------------------------------------
Xxxx X. XxXxxxxxx, President
Address:
Attn: Xxxx X. XxXxxxxxx, President
0000 X. Xxxxxx Xxx., Xxx. 000
Xxxxxxx, XX 00000
Telephone (000) 000-0000
Facsimile (000) 000-0000
42
ADVANCE PUT NOTICE
DIMENSIONAL VISIONS INCORPORATED (the "Company") hereby intends, subject to the
Individual Put Limit (as defined in the Investment Agreement), to elect to
exercise a Put to sell the number of shares of Common Stock of the Company
specified below, to _____________________________, the Investor, as of the
Intended Put Date written below, all pursuant to that certain Investment
Agreement (the "Investment Agreement") by and between the Company and Xxxxxx
Private Equity, LLC dated on or about March 2, 2001.
Date of Advance Put Notice: ___________________
Intended Put Date: ____________________________
Intended Put Share Amount: ____________________
Company Designation Maximum Put Dollar Amount (Optional):
--------------------------------------------------------.
Company Designation Minimum Put Share Price (Optional):
--------------------------------------------------------.
DIMENSIONAL VISIONS INCORPORATED
By:
-------------------------------------
Xxxx X. XxXxxxxxx, President
Address:
Attn: Xxxx X. XxXxxxxxx, President
0000 X. Xxxxxx Xxx., Xxx. 000
Xxxxxxx, XX 00000
Telephone (000) 000-0000
Facsimile (000) 000-0000
43
EXHIBIT E
CONFIRMATION of ADVANCE PUT NOTICE
_________________________________, the Investor, hereby confirms receipt of
DIMENSIONAL VISIONS INCORPORATED's (the "Company") Advance Put Notice on the
Advance Put Date written below, and its intention to elect to exercise a Put to
sell shares of common stock ("Intended Put Share Amount") of the Company to the
Investor, as of the intended Put Date written below, all pursuant to that
certain Investment Agreement (the "Investment Agreement") by and between the
Company and Xxxxxx Private Equity, LLC dated on or about March 2, 2001.
Date of Confirmation: _____________________
Date of Advance Put Notice: _______________
Intended Put Date: ________________________
Intended Put Share Amount: ________________
Company Designation Maximum Put Dollar Amount (Optional):
------------------------------------------------------------.
Company Designation Minimum Put Share Price (Optional):
------------------------------------------------------------.
INVESTOR(S)
----------------------------------------
Investor's Name
By:
-------------------------------------
(Signature)
Address:
--------------------------------
--------------------------------
--------------------------------
Telephone No.:
--------------------------
Facsimile No.:
--------------------------
44
EXHIBIT F
PUT NOTICE
DIMENSIONAL VISIONS INCORPORATED (the "Company") hereby elects to exercise a Put
to sell shares of common stock ("Common Stock") of the Company to
_____________________________, the Investor, as of the Put Date, at the Put
Share Price and for the number of Put Shares written below, all pursuant to that
certain Investment Agreement (the "Investment Agreement") by and between the
Company and Xxxxxx Private Equity, LLC dated on or about March 2, 2001.
Put Date: _________________
Intended Put Share Amount (from Advance Put Notice):
_________________ Common Shares
Company Designation Maximum Put Dollar Amount (Optional):
------------------------------------------------------------.
Company Designation Minimum Put Share Price (Optional):
------------------------------------------------------------.
Note: Capitalized terms shall have the meanings ascribed to them in this
Investment Agreement.
DIMENSIONAL VISIONS INCORPORATED
By:
-------------------------------------
Xxxx X. XxXxxxxxx, President
Address:
Attn: Xxxx X. XxXxxxxxx, President
0000 X. Xxxxxx Xxx., Xxx. 000
Xxxxxxx, XX 00000
Telephone (000) 000-0000
Facsimile (000) 000-0000
45
CONFIRMATION of PUT NOTICE
_________________________________, the Investor, hereby confirms receipt of
Dimensional Visions Incorporated (the "Company") Put Notice and election to
exercise a Put to sell ___________________________ shares of common stock
("Common Stock") of the Company to Investor, as of the Put Date, all pursuant to
that certain Investment Agreement (the "Investment Agreement") by and between
the Company and Xxxxxx Private Equity, LLC dated on or about March 2, 2001.
Date of Confirmation: _____________________
Date of Advance Put Notice: _______________
Put Date: _________________________________
Intended Put Share Amount: ________________
Company Designation Maximum Put Dollar Amount (Optional):
------------------------------------------------------------.
Company Designation Minimum Put Share Price (Optional):
------------------------------------------------------------.
INVESTOR(S)
----------------------------------------
Investor's Name
By:
-------------------------------------
(Signature)
Address:
--------------------------------
--------------------------------
--------------------------------
Telephone No.:
--------------------------
Facsimile No.:
--------------------------
46
EXHIBIT G
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK. HOLDERS MUST
RELY ON THEIR OWN ANALYSIS OF THE INVESTMENT AND ASSESSMENT OF THE RISKS
INVOLVED.
Warrant to Purchase
1,190,000 shares
WARRANT TO PURCHASE COMMON STOCK
OF
DIMENSIONAL VISIONS INCORPORATED
THIS CERTIFIES that Xxxxxx Private Equity, LLC or any subsequent holder
hereof pursuant to Section 8 hereof ("Holder"), has the right to purchase from
DIMENSIONAL VISIONS INCORPORATED, a Delaware corporation (the "Company"), up to
1,190,000 fully paid and nonassessable shares of the Company's common stock,
$.001 par value per share ("Common Stock"), subject to adjustment as provided
herein, at a price equal to the Exercise Price as defined in Section 3 below, at
any time beginning on the Date of Issuance (defined below) and ending at 5:00
p.m., New York, New York time the date that is seven (7) years after the Date of
Issuance (the "Exercise Period").
Holder agrees with the Company that this Warrant to Purchase Common Stock
of the Company (this "Warrant") is issued and all rights hereunder shall be held
subject to all of the conditions, limitations and provisions set forth herein.
1. DATE OF ISSUANCE AND TERM.
This Warrant shall be deemed to be issued on September 5, 2000 ("Date of
Issuance"). The term of this Warrant is seven (7) years from the Date of
Issuance.
Of this Warrant to purchase one million one hundred ninety thousand
(1,190,000) shares of Common Stock of the Company, the Warrant is exercisable as
to three hundred ninety-six thousand (396,000) shares of Common Stock of the
Company after the fifteen (15) business day document review period (the "Review
Period") referenced in the Equity Line Letter of Agreement dated on or about
September 5, 2000, between Holder and Company (the "Letter of Agreement") has
ended, shall be further exercisable as to an additional three hundred ninety-six
thousand (396,000) shares of Common Stock of the Company upon the execution by
the Company and Xxxxxx Private Equity, LLC of an Investment Agreement, pursuant
to the Letter of Agreement ("Investment Agreement") and shall be further
exercisable as to the remaining three hundred ninety-eight (398,000) shares of
Common Stock of the Company upon the earlier of (i) the date of effectiveness of
Company's registration statement (the "Registration Statement") to be filed
pursuant to the Investment Agreement and related documents, or (ii) March 5,
2001.
Anything in this Warrant to the contrary notwithstanding, if the
Company delivers written notice to Xxxxxx Private Equity, LLC prior to the
expiration of the Review Period that the legal documents for the transaction are
unacceptable and the Company wishes to terminate the transaction (a "Company
Termination Notice"), Holder shall return this Warrant to the Company and all of
Holder's rights under this Warrant shall be null and void and of no effect,
provided that, if the Company has not delivered a Company Termination Notice to
Xxxxxx Private Equity, LLC, prior to the expiration of the Review Period,
ownership of this Warrant shall irrevocably vest to the Holder, regardless of
whether a Company Termination Notice is delivered anytime thereafter.
Notwithstanding anything to the contrary herein, the applicable portion of
this Warrant shall not be exercisable during any time that, and only to the
extent that, the number of shares of Common Stock to be issued to Holder upon
such exercise, when added to the number of shares of Common Stock, if any, that
the Holder otherwise beneficially owns at the time of such exercise, would equal
or exceed 4.99% of the number of shares of Common Stock then outstanding, as
determined in accordance with Section 13(d) of the Exchange Act (the "4.99%
Limitation"). The 4.99% Limitation shall be conclusively satisfied if the
applicable Exercise Notice includes a signed representation by the Holder that
the issuance of the shares in such Exercise Notice will not violate the 4.99%
Limitation, and the Company shall not be entitled to require additional
documentation of such satisfaction.
2. EXERCISE.
(a) MANNER OF EXERCISE. During the Exercise Period, this Warrant may be
exercised as to all or any lesser number of full shares of Common Stock covered
hereby (the "Warrant Shares") upon surrender of this Warrant, with the Exercise
Form attached hereto as Exhibit A (the "Exercise Form") duly completed and
executed, together with the full Exercise Price (as defined below) for each
share of Common Stock as to which this Warrant is exercised, at the office of
the Company, Attention: Xxxx X. XxXxxxxxx, President, Dimensional Visions
Incorporated, 0000 X. Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, XX 00000; Telephone:
(000) 000-0000, Facsimile: (000) 000-0000, or at such other office or agency as
the Company may designate in writing, by overnight mail, with an advance copy of
the Exercise Form sent to the Company and its Transfer Agent by facsimile (such
surrender and payment of the Exercise Price hereinafter called the "Exercise of
this Warrant").
(b) DATE OF EXERCISE. The "Date of Exercise" of the Warrant shall be
defined as the date that the advance copy of the completed and executed Exercise
Form is sent by facsimile to the Company, provided that the original Warrant and
Exercise Form are received by the Company as soon as practicable thereafter.
Alternatively, the Date of Exercise shall be defined as the date the original
Exercise Form is received by the Company, if Holder has not sent advance notice
by facsimile.
2
(c) DELIVERY OF SHARES OF COMMON STOCK UPON EXERCISE. Upon any exercise of
this Warrant, the Company shall use its reasonable best efforts to deliver, or
shall cause its transfer agent to deliver, a stock certificate or certificates
representing the number of shares of Common Stock into which this Warrant was
exercised, within three (3) trading days of the date that all of the following
have been received by the Company: (i) the original completed and executed
Exercise Form, (ii) the original Warrant and (iii) the Exercise Price (if
applicable)(collectively, the "Receipt Date"). Such stock certificates shall not
contain a legend restricting transfer if a registration statement covering the
resale of such shares of Common Stock is in effect at the time of such exercise
or if such shares of Common Stock may be resold pursuant to an exemption from
registration, including but not limited to Rule 144 under the Securities Act of
1933.
(d) ECONOMIC LOSS DUE TO LATE DELIVERY OF SHARES. If the Company fails for
any reason to deliver the requisite number of shares of Common Stock
(unlegended, if so required by the terms of this Warrant)(the "Warrant Shares")
to a Holder upon an exercise of this Warrant within fifteen (15) business days
of the Receipt Date (the "Late Delivery Deadline"), the Company shall pay such
Holder (in addition to any other remedies available to Holder) an amount equal
to ("Non-Delivery Payment") the number of Warrant Shares for which delivery is
late, multiplied by the difference of:
(x) the highest closing price for the Company's Common Stock for any
trading day during the period beginning on and including the Date of
Exercise and ending on the earlier of (i) the date that the Investor
receives from the Company certificates (unlegended, if so required by
the terms of this Warrant) representing the Warrant Shares of Common
Stock issuable in conjunction with such Exercise, or (ii) the date
that the Investor receives the full amount of the Non-Delivery
Payment, whichever is earlier,
minus
(y) the Exercise Price per share (which, in the case of a Cashless
Exercise, shall be deemed to equal zero), or, if the Investor has
received the Warrant Shares (unlegended, if so required by the terms
of this Warrant) from the Company prior to the payment of the
Non-Delivery Payment, the lowest closing price of the Company's Common
Stock for the five (5) trading days immediately preceding the date
that such Warrant Shares are delivered to the Holder.
Non-Delivery Payments shall be payable, in cash or cash equivalent,
within five (5) business days of the Late Delivery Deadline.
(e) LIQUIDATED DAMAGES. The parties hereto acknowledge and agree that the
sums payable as Non-Delivery Payments shall give rise to liquidated damages and
not penalties. The parties further acknowledge that (i) the amount of loss or
damages likely to be incurred by the Holder is incapable or is difficult to
precisely estimate, (ii) the amounts specified bear a reasonable proportion and
3
are not plainly or grossly disproportionate to the probable loss likely to be
incurred by the Investor, and (iii) the parties are sophisticated business
parties and have been represented by sophisticated and able legal and financial
counsel and negotiated this Agreement at arm's length.
(f) CANCELLATION OF WARRANT. This Warrant shall be canceled upon the
Exercise of this Warrant, and, as soon as practical after the Date of Exercise,
Holder shall be entitled to receive Common Stock for the number of shares
purchased upon such Exercise of this Warrant, and if this Warrant is not
exercised in full, Holder shall be entitled to receive a new Warrant (containing
terms identical to this Warrant) representing any unexercised portion of this
Warrant in addition to such Common Stock.
(g) HOLDER OF RECORD. Each person in whose name any Warrant for shares of
Common Stock is issued shall, for all purposes, be deemed to be the Holder of
record of such shares on the Date of Exercise of this Warrant, irrespective of
the date of delivery of the Common Stock purchased upon the Exercise of this
Warrant. Nothing in this Warrant shall be construed as conferring upon Holder
any rights as a stockholder of the Company.
3. PAYMENT OF WARRANT EXERCISE PRICE.
The Exercise Price per share ("Exercise Price") shall initially equal (the
"Initial Exercise Price") the lowest Closing Price for the five (5) trading days
immediately preceding September 5, 2000, which is $0.375. If the lowest Closing
Price of the Company's Common Stock for the five (5) trading days immediately
preceding the date, if any, that Xxxxxx Private Equity, LLC executes an
Investment Agreement pursuant to the Letter of Agreement (the "Closing Market
Price") is less than the Initial Exercise Price, the Exercise Price shall be
reset to equal the Closing Market Price, or, if the Date of Exercise is more
than six (6) months after the Date of Issuance, the Exercise Price shall be
reset to equal the lesser of (i) the Exercise Price then in effect, or (ii) the
"Lowest Reset Price," as that term is defined below. The Company shall calculate
a "Reset Price" on each six-month anniversary date of the Date of Issuance which
shall equal the lowest Closing Price of the Company's Common Stock for the five
(5) trading days ending on such six-month anniversary date of the Date of
Issuance. The "Lowest Reset Price" shall equal the lowest Reset Price determined
on any six-month anniversary date of the Date of Issuance preceding the Date of
Exercise, taking into account, as appropriate, any adjustments made pursuant to
Section 5 hereof.
For purposes hereof, the term "Closing Price" shall mean the closing price
on the Nasdaq Small Cap Market, the National Market System ("NMS"), the New York
Stock Exchange, or the O.T.C. Bulletin Board, or if no longer traded on the
Nasdaq Small Cap Market, the National Market System ("NMS"), the New York Stock
Exchange, or the O.T.C. Bulletin Board, the "Closing Price" shall equal the
closing price on the principal national securities exchange or the
over-the-counter system on which the Common Stock is so traded and, if not
available, the mean of the high and low prices on the principal national
securities exchange on which the Common Stock is so traded.
Payment of the Exercise Price may be made by either of the following, or a
combination thereof, at the election of Holder:
4
(i) CASH EXERCISE: cash, bank or cashiers check or wire transfer; or
(ii) CASHLESS EXERCISE: The Holder, at its option, may exercise this
Warrant in a cashless exercise transaction. In order to effect a Cashless
Exercise, the Holder shall surrender this Warrant at the principal office of the
Company together with notice of cashless election, in which event the Company
shall issue Holder a number of shares of Common Stock computed using the
following formula:
X = Y (A-B)/A
where: X = the number of shares of Common Stock to be issued to Holder.
Y = the number of shares of Common Stock for which this Warrant is
being exercised.
A = the Market Price of one (1) share of Common Stock (for
purposes of this Section 3(ii), the "Market Price" shall be
defined as the average Closing Price of the Common Stock for the
five (5) trading days prior to the Date of Exercise of this
Warrant (the "Average Closing Price"), as reported by the O.T.C.
Bulletin Board, National Association of Securities Dealers
Automated Quotation System ("Nasdaq") Small Cap Market, or if the
Common Stock is not traded on the Nasdaq Small Cap Market, the
Average Closing Price in any other over-the-counter market;
provided, however, that if the Common Stock is listed on a stock
exchange, the Market Price shall be the Average Closing Price on
such exchange for the five (5) trading days prior to the date of
exercise of the Warrants. If the Common Stock is/was not traded
during the five (5) trading days prior to the Date of Exercise,
then the closing price for the last publicly traded day shall be
deemed to be the closing price for any and all (if applicable)
days during such five (5) trading day period.
B = the Exercise Price.
For purposes of Rule 144 and sub-section (d)(3)(ii) thereof, it is
intended, understood and acknowledged that the Common Stock issuable upon
exercise of this Warrant in a cashless exercise transaction shall be deemed to
have been acquired at the time this Warrant was issued. Moreover, it is
intended, understood and acknowledged that the holding period for the Common
Stock issuable upon exercise of this Warrant in a cashless exercise transaction
shall be deemed to have commenced on the date this Warrant was issued.
4. TRANSFER AND REGISTRATION.
(a) TRANSFER RIGHTS. Subject to the provisions of Section 8 of this
Warrant, this Warrant may be transferred on the books of the Company, in whole
or in part, in person or by attorney, upon surrender of this Warrant properly
completed and endorsed. This Warrant shall be canceled upon such surrender and,
as soon as practicable thereafter, the person to whom such transfer is made
5
shall be entitled to receive a new Warrant or Warrants as to the portion of this
Warrant transferred, and Holder shall be entitled to receive a new Warrant as to
the portion hereof retained.
(b) REGISTRABLE SECURITIES. In addition to any other registration rights of
the Holder, if the Common Stock issuable upon exercise of this Warrant is not
registered for resale at the time the Company proposes to register (including
for this purpose a registration effected by the Company for stockholders other
than the Holders) any of its Common Stock under the Act (other than a
registration relating solely for the sale of securities to participants in a
Company stock plan or a registration on Form S-4 promulgated under the Act or
any successor or similar form registering stock issuable upon a
reclassification, upon a business combination involving an exchange of
securities or upon an exchange offer for securities of the issuer or another
entity)(a "Piggyback Registration Statement"), the Company shall cause to be
included in such Piggyback Registration Statement ("Piggyback Registration") all
of the Common Stock issuable upon the exercise of this Warrant ("Registrable
Securities") to the extent such inclusion does not violate the registration
rights of any other securityholder of the Company granted prior to the date
hereof. Nothing herein shall prevent the Company from withdrawing or abandoning
the Piggyback Registration Statement prior to its effectiveness.
(c) LIMITATION ON OBLIGATIONS TO REGISTER UNDER A PIGGYBACK REGISTRATION.
In the case of a Piggyback Registration pursuant to an underwritten public
offering by the Company, if the managing underwriter determines and advises in
writing that the inclusion in the registration statement of all Registrable
Securities proposed to be included would interfere with the successful marketing
of the securities proposed to be registered by the Company, then the number of
such Registrable Securities to be included in the Piggyback Registration
Statement, to the extent such Registrable Securities may be included in such
Piggyback Registration Statement, shall be allocated among all Holders who had
requested Piggyback Registration pursuant to the terms hereof, in the proportion
that the number of Registrable Securities which each such Holder seeks to
register bears to the total number of Registrable Securities sought to be
included by all Holders. If required by the managing underwriter of such an
underwritten public offering, the Holders shall enter into a reasonable
agreement limiting the number of Registrable Securities to be included in such
Piggyback Registration Statement and the terms, if any, regarding the future
sale of such Registrable Securities.
5. ANTI-DILUTION ADJUSTMENTS.
(a) STOCK DIVIDEND. If the Company shall at any time declare a dividend
payable in shares of Common Stock, then Holder, upon Exercise of this Warrant
after the record date for the determination of holders of Common Stock entitled
to receive such dividend, shall be entitled to receive upon Exercise of this
Warrant, in addition to the number of shares of Common Stock as to which this
Warrant is exercised, such additional shares of Common Stock as such Holder
would have received had this Warrant been exercised immediately prior to such
record date and the Exercise Price will be proportionately adjusted.
6
(b) RECAPITALIZATION OR RECLASSIFICATION.
(i) Stock Split. If the Company shall at any time effect a
recapitalization, reclassification or other similar transaction of such
character that the shares of Common Stock shall be changed into or become
exchangeable for a larger number of shares (a "Stock Split"), then upon the
effective date thereof, the number of shares of Common Stock which Holder shall
be entitled to purchase upon Exercise of this Warrant shall be increased in
direct proportion to the increase in the number of shares of Common Stock by
reason of such recapitalization, reclassification or similar transaction, and
the Exercise Price shall be proportionally decreased.
(ii) Reverse Stock Split. If the Company shall at any time effect a
recapitalization, reclassification or other similar transaction of such
character that the shares of Common Stock shall be changed into or become
exchangeable for a smaller number of shares (a "Reverse Stock Split"), then upon
the effective date thereof, the number of shares of Common Stock which Holder
shall be entitled to purchase upon Exercise of this Warrant shall be
proportionately decreased and the Exercise Price shall be proportionally
increased. The Company shall give Holder the same notice it provides to holders
of Common Stock of any transaction described in this Section 5(b).
(c) DISTRIBUTIONS. If the Company shall at any time distribute for no
consideration to holders of Common Stock cash, evidences of indebtedness or
other securities or assets (other than cash dividends or distributions payable
out of earned surplus or net profits for the current or preceding years) then,
in any such case, Holder shall be entitled to receive, upon Exercise of this
Warrant, with respect to each share of Common Stock issuable upon such exercise,
the amount of cash or evidences of indebtedness or other securities or assets
which Holder would have been entitled to receive with respect to each such share
of Common Stock as a result of the happening of such event had this Warrant been
exercised immediately prior to the record date or other date fixing shareholders
to be affected by such event (the "Determination Date") or, in lieu thereof, if
the Board of Directors of the Company should so determine at the time of such
distribution, a reduced Exercise Price determined by multiplying the Exercise
Price on the Determination Date by a fraction, the numerator of which is the
result of such Exercise Price reduced by the value of such distribution
applicable to one share of Common Stock (such value to be determined by the
Board of Directors of the Company in its discretion) and the denominator of
which is such Exercise Price.
(d) NOTICE OF CONSOLIDATION OR MERGER AND WARRANT EXCHANGE. The Company
shall not, at any time after the date hereof, effect a merger, consolidation,
exchange of shares, recapitalization, reorganization, or other similar event, as
a result of which shares of Common Stock shall be changed into the same or a
different number of shares of the same or another class or classes of stock or
securities or other assets of the Company or another entity or there is a sale
of all or substantially all the Company's assets (a "Corporate Change"), unless
the resulting successor or acquiring entity (the "Resulting Entity") assumes by
written instrument the Company's obligations under this Warrant, including but
not limited to the Exercise Price reset provisions as provided herein during the
term of the resultant warrants, and agrees in such written instrument that this
Warrant shall be exerciseable into such class and type of securities or other
assets of the Resulting Entity as Holder would have received had Holder
7
exercised this Warrant immediately prior to such Corporate Change, and the
Exercise Price of this Warrant shall be proportionately increased (if this
Warrant shall be changed into or become exchangeable for a warrant to purchase a
smaller number of shares of Common Stock of the Resulting Entity) or shall be
proportionately decreased (if this Warrant shall be changed or become
exchangeable for a warrant to purchase a larger number of shares of Common Stock
of the Resulting Entity); provided, however, that Company may not affect any
Corporate Change unless it first shall have given thirty (30) days notice to
Holder hereof of any Corporate Change.
(e) EXERCISE PRICE ADJUSTED. As used in this Warrant, the term "Exercise
Price" shall mean the purchase price per share specified in Section 3 of this
Warrant, until the occurrence of an event stated in subsection (a), (b), (c) or
(d) of this Section 5, and thereafter shall mean said price as adjusted from
time to time in accordance with the provisions of this Warrant. No such
adjustment under this Section 5 shall be made unless such adjustment would
change the Exercise Price at the time by $0.01 or more; provided, however, that
all adjustments not so made shall be deferred and made when the aggregate
thereof would change the Exercise Price at the time by $0.01 or more.
(f) ADJUSTMENTS: ADDITIONAL SHARES, SECURITIES OR ASSETS. In the event that
at any time, as a result of an adjustment made pursuant to this Section 5,
Holder shall, upon Exercise of this Warrant, become entitled to receive shares
and/or other securities or assets (other than Common Stock) then, wherever
appropriate, all references herein to shares of Common Stock shall be deemed to
refer to and include such shares and/or other securities or assets; and
thereafter the number of such shares and/or other securities or assets shall be
subject to adjustment from time to time in a manner and upon terms as nearly
equivalent as practicable to the provisions of this Section 5.
6. FRACTIONAL INTERESTS.
No fractional shares or scrip representing fractional shares shall be
issuable upon the Exercise of this Warrant, but on Exercise of this Warrant,
Holder may purchase only a whole number of shares of Common Stock. If, on
Exercise of this Warrant, Holder would be entitled to a fractional share of
Common Stock or a right to acquire a fractional share of Common Stock, such
fractional share shall be disregarded and the number of shares of Common Stock
issuable upon exercise shall be the next higher number of shares.
7. RESERVATION OF SHARES.
The Company shall at all times reserve for issuance such number of
authorized and unissued shares of Common Stock (or other securities substituted
therefor as herein above provided) as shall be sufficient for the Exercise of
this Warrant and payment of the Exercise Price. The Company covenants and agrees
that upon the Exercise of this Warrant, all shares of Common Stock issuable upon
such exercise shall be duly and validly issued, fully paid, nonassessable and
not subject to preemptive rights, rights of first refusal or similar rights of
any person or entity.
8
8. RESTRICTIONS ON TRANSFER.
(a) REGISTRATION OR EXEMPTION REQUIRED. This Warrant has been issued in a
transaction exempt from the registration requirements of the Act by virtue of
Regulation D and exempt from state registration under applicable state laws. The
Warrant and the Common Stock issuable upon the Exercise of this Warrant may not
be pledged, transferred, sold or assigned except pursuant to an effective
registration statement or unless the Company has received an opinion from the
Company's counsel to the effect that such registration is not required, or the
Holder has furnished to the Company an opinion of the Holder's counsel, which
counsel shall be reasonably satisfactory to the Company, to the effect that such
registration is not required; the transfer complies with any applicable state
securities laws; and, if no registration covering the resale of the Warrant
Shares is effective at the time the Warrant Shares are issued, the Holder
consents to a legend being placed on certificates for the Warrant Shares stating
that the securities have not been registered under the Securities Act and
referring to such restrictions on transferability and sale.
(b) ASSIGNMENT. If Holder can provide the Company with reasonably
satisfactory evidence that the conditions of (a) above regarding registration or
exemption have been satisfied, Holder may sell, transfer, assign, pledge or
otherwise dispose of this Warrant, in whole or in part. Holder shall deliver a
written notice to Company, substantially in the form of the Assignment attached
hereto as Exhibit B, indicating the person or persons to whom the Warrant shall
be assigned and the respective number of warrants to be assigned to each
assignee. The Company shall effect the assignment within ten (10) days, and
shall deliver to the assignee(s) designated by Holder a Warrant or Warrants of
like tenor and terms for the appropriate number of shares.
9. BENEFITS OF THIS WARRANT.
Nothing in this Warrant shall be construed to confer upon any person other
than the Company and Holder any legal or equitable right, remedy or claim under
this Warrant and this Warrant shall be for the sole and exclusive benefit of the
Company and Holder.
10. APPLICABLE LAW.
This Warrant is issued under and shall for all purposes be governed by and
construed in accordance with the laws of the state of Georgia, without giving
effect to conflict of law provisions thereof.
11. LOSS OF WARRANT.
Upon receipt by the Company of evidence of the loss, theft, destruction or
mutilation of this Warrant, and (in the case of loss, theft or destruction) of
indemnity or security reasonably satisfactory to the Company, and upon surrender
and cancellation of this Warrant, if mutilated, the Company shall execute and
deliver a new Warrant of like tenor and date.
9
12. NOTICE OR DEMANDS.
Notices or demands pursuant to this Warrant to be given or made by Holder to or
on the Company shall be sufficiently given or made if sent by certified or
registered mail, return receipt requested, postage prepaid, and addressed, until
another address is designated in writing by the Company, to the address set
forth in Section 2(a) above. Notices or demands pursuant to this Warrant to be
given or made by the Company to or on Holder shall be sufficiently given or made
if sent by certified or registered mail, return receipt requested, postage
prepaid, and addressed, to the address of Holder set forth in the Company's
records, until another address is designated in writing by Holder.
IN WITNESS WHEREOF, the undersigned has executed this Warrant as of the
13th day of October, 2000.
DIMENSIONAL VISIONS INCORPORATED
By: /s/ Xxxx X. XxXxxxxxx
------------------------------------
Xxxx X. XxXxxxxxx, President
10
EXHIBIT A
EXERCISE FORM FOR WARRANT
TO: DIMENSIONAL VISIONS INCORPORATED
The undersigned hereby irrevocably exercises the right to purchase
____________ of the shares of Common Stock (the "Common Stock") of DIMENSIONAL
VISIONS INCORPORATED a Delaware corporation (the "Company"), evidenced by the
attached warrant (the "Warrant"), and herewith makes payment of the exercise
price with respect to such shares in full, all in accordance with the conditions
and provisions of said Warrant.
1. The undersigned agrees not to offer, sell, transfer or otherwise dispose of
any of the Common Stock obtained on exercise of the Warrant, except in
accordance with the provisions of Section 8(a) of the Warrant.
2. The undersigned requests that stock certificates for such shares be issued
free of any restrictive legend, if appropriate, and a warrant representing any
unexercised portion hereof be issued, pursuant to the Warrant in the name of the
undersigned and delivered to the undersigned at the address set forth below:
Dated: _________
--------------------------------------------------------------------------------
Signature
--------------------------------------------------------------------------------
Print Name
--------------------------------------------------------------------------------
Address
--------------------------------------------------------------------------------
NOTICE
The signature to the foregoing Exercise Form must correspond to the name as
written upon the face of the attached Warrant in every particular, without
alteration or enlargement or any change whatsoever.
--------------------------------------------------------------------------------
11
EXHIBIT B
ASSIGNMENT
(To be executed by the registered holder
desiring to transfer the Warrant)
FOR VALUE RECEIVED, the undersigned holder of the attached warrant (the
"Warrant") hereby sells, assigns and transfers unto the person or persons below
named the right to purchase _______ shares of the Common Stock of DIMENSIONAL
VISIONS INCORPORATED, evidenced by the attached Warrant and does hereby
irrevocably constitute and appoint _______________________ attorney to transfer
the said Warrant on the books of the Company, with full power of substitution in
the premises.
Dated: ________________________________________
Signature
Fill in for new registration of Warrant:
-----------------------------------
Name
-----------------------------------
Address
-----------------------------------
Please print name and address of assignee
(including zip code number)
--------------------------------------------------------------------------------
NOTICE
The signature to the foregoing Assignment must correspond to the name as written
upon the face of the attached Warrant in every particular, without alteration or
enlargement or any change whatsoever.
--------------------------------------------------------------------------------
12
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK. HOLDERS MUST
RELY ON THEIR OWN ANALYSIS OF THE INVESTMENT AND ASSESSMENT OF THE RISKS
INVOLVED.
Warrant to Purchase
119,000 shares
WARRANT TO PURCHASE COMMON STOCK
OF
DIMENSIONAL VISIONS INCORPORATED
THIS CERTIFIES that XXXXXX PRIVATE EQUITY, LLC, or any subsequent holder
hereof pursuant to Section 8 hereof ("Holder"), has the right to purchase from
DIMENSIONAL VISIONS INCORPORATED, a Delaware corporation (the "Company"), up to
119,000 fully paid and nonassessable shares of the Company's common stock,
$0.001 par value per share ("Common Stock"), subject to adjustment as provided
herein, at a price equal to the Exercise Price, as defined in Section 3 below,
at any time beginning on the Date of Issuance (defined below) and ending at 5:00
p.m., New York, New York time, on the date that is seven (7) years after the
Date of Issuance (the "Exercise Period").
Holder agrees with the Company that this Warrant to Purchase Common Stock
of the Company (this "Warrant") is issued and all rights hereunder shall be held
subject to all of the conditions, limitations and provisions set forth herein.
This Warrant is issued in addition to, and not in the place of, the Warrant to
Xxxxxx Private Equity, LLC for 1,190,000 shares issued on or about September 5,
2000.
1. DATE OF ISSUANCE AND TERM.
This Warrant shall be deemed to be issued on March 2, 2001 ("Date of
Issuance"). The term of this Warrant is seven (7) years from the Date of
Issuance.
Of this Warrant to purchase one hundred nineteen thousand (119,000) shares
of Common Stock of the Company, the Warrant is exercisable as to seventy-nine
thousand three hundred thirty-four (79,334) shares of Common Stock of the
Company anytime during the Exercise Period and shall be further exercisable as
to the remaining thirty-nine thousand six hundred sixty-six (39,666) shares of
Common Stock of the Company upon the earlier of (i) the date of effectiveness of
Company's registration statement (the "Registration Statement") to be filed
pursuant to the Amended and Restated Investment Agreement executed by the
Company and Xxxxxx Private Equity, LLC ("Xxxxxx") pursuant to the Equity Line
Letter of Agreement dated on or about September 5, 2000, between the Company and
Xxxxxx, or (ii) March 5, 2001.
Notwithstanding anything to the contrary herein, the applicable portion of
this Warrant shall not be exercisable during any time that, and only to the
extent that, the number of shares of Common Stock to be issued to Holder upon
such exercise, when added to the number of shares of Common Stock, if any, that
the Holder otherwise beneficially owns at the time of such exercise, would equal
or exceed 4.99% of the number of shares of Common Stock then outstanding, as
determined in accordance with Section 13(d) of the Exchange Act (the "4.99%
Limitation"). The 4.99% Limitation shall be conclusively satisfied if the
applicable Exercise Notice includes a signed representation by the Holder that
the issuance of the shares in such Exercise Notice will not violate the 4.99%
Limitation, and the Company shall not be entitled to require additional
documentation of such satisfaction.
2. EXERCISE.
(a) MANNER OF EXERCISE. During the Exercise Period, this Warrant may be
exercised as to all or any lesser number of full shares of Common Stock covered
hereby (the "Warrant Shares") upon surrender of this Warrant, with the Exercise
Form attached hereto as EXHIBIT A (the "Exercise Form") duly completed and
executed, together with the full Exercise Price (as defined below) for each
share of Common Stock as to which this Warrant is exercised, at the office of
the Company, Attention: Xxxx X. XxXxxxxxx, President, Dimensional Visions
Incorporated, 0000 X. Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, XX 00000; Telephone:
(000) 000-0000, Facsimile: (000) 000-0000, or at such other office or agency as
the Company may designate in writing, by overnight mail, with an advance copy of
the Exercise Form sent to the Company and its Transfer Agent by facsimile (such
surrender and payment of the Exercise Price hereinafter called the "Exercise of
this Warrant").
(b) DATE OF EXERCISE. The "Date of Exercise" of the Warrant shall be
defined as the date that the advance copy of the completed and executed Exercise
Form is sent by facsimile to the Company, provided that the original Warrant and
Exercise Form are received by the Company as soon as practicable thereafter.
Alternatively, the Date of Exercise shall be defined as the date the original
Exercise Form is received by the Company, if Holder has not sent advance notice
by facsimile.
(c) DELIVERY OF SHARES OF COMMON STOCK UPON EXERCISE. Upon any exercise of
this Warrant, the Company shall use its reasonable best efforts to deliver, or
shall cause its transfer agent to deliver, a stock certificate or certificates
representing the number of shares of Common Stock into which this Warrant was
exercised, within three (3) trading days of the date that all of the following
have been received by the Company: (i) the original completed and executed
Exercise Form, (ii) the original Warrant and (iii) the Exercise Price (if
applicable)(collectively, the "Receipt Date"). Such stock certificates shall not
contain a legend restricting transfer if a registration statement covering the
resale of such shares of Common Stock is in effect at the time of such exercise
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or if such shares of Common Stock may be resold pursuant to an exemption from
registration, including but not limited to Rule 144 under the Securities Act of
1933.
(d) ECONOMIC LOSS DUE TO LATE DELIVERY OF SHARES. If the Company fails for
any reason to deliver the requisite number of shares of Common Stock
(unlegended, if so required by the terms of this Warrant)(the "Warrant Shares")
to a Holder upon an exercise of this Warrant within fifteen (15) business days
of the Receipt Date (the "Late Delivery Deadline"), the Company shall pay such
Holder (in addition to any other remedies available to Holder) an amount equal
to ("Non-Delivery Payment") the number of Warrant Shares for which delivery is
late, multiplied by the difference of:
(x) the highest closing price for the Company's Common Stock for any
trading day during the period beginning on and including the Date of
Exercise and ending on the earlier of (i) the date that the Investor
receives from the Company certificates (unlegended, if so required by
the terms of this Warrant) representing the Warrant Shares of Common
Stock issuable in conjunction with such Exercise, or (ii) the date
that the Investor receives the full amount of the Non-Delivery
Payment, whichever is earlier,
minus
(y) the Exercise Price per share (which, in the case of a Cashless
Exercise, shall be deemed to equal zero), or, if the Investor has
received the Warrant Shares (unlegended, if so required by the terms
of this Warrant) from the Company prior to the payment of the
Non-Delivery Payment, the lowest closing price of the Company's Common
Stock for the five (5) trading days immediately preceding the date
that such Warrant Shares are delivered to the Holder.
Non-Delivery Payments shall be payable, in cash or cash equivalent,
within five (5) business days of the Late Delivery Deadline.
(e) LIQUIDATED DAMAGES. The parties hereto acknowledge and agree that the
sums payable as Non-Delivery Payments shall give rise to liquidated damages and
not penalties. The parties further acknowledge that (i) the amount of loss or
damages likely to be incurred by the Holder is incapable or is difficult to
precisely estimate, (ii) the amounts specified bear a reasonable proportion and
are not plainly or grossly disproportionate to the probable loss likely to be
incurred by the Investor, and (iii) the parties are sophisticated business
parties and have been represented by sophisticated and able legal and financial
counsel and negotiated this Agreement at arm's length.
(f) CANCELLATION OF WARRANT. This Warrant shall be canceled upon the
Exercise of this Warrant, and, as soon as practical after the Date of Exercise,
Holder shall be entitled to receive Common Stock for the number of shares
purchased upon such Exercise of this Warrant, and if this Warrant is not
exercised in full, Holder shall be entitled to receive a new Warrant (containing
terms identical to this Warrant) representing any unexercised portion of this
Warrant in addition to such Common Stock.
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(g) HOLDER OF RECORD. Each person in whose name any Warrant for shares of
Common Stock is issued shall, for all purposes, be deemed to be the Holder of
record of such shares on the Date of Exercise of this Warrant, irrespective of
the date of delivery of the Common Stock purchased upon the Exercise of this
Warrant. Nothing in this Warrant shall be construed as conferring upon Holder
any rights as a stockholder of the Company.
3. PAYMENT OF WARRANT EXERCISE PRICE.
The Exercise Price per share ("Exercise Price") shall initially equal
$0.125 (the "Initial Exercise Price"). If the Date of Exercise is more than six
(6) months after the Date of Issuance, the Exercise Price shall be reset to
equal the lesser of (i) the Exercise Price then in effect, or (ii) the "Lowest
Reset Price," as that term is defined below. The Company shall calculate a
"Reset Price" on each six-month anniversary date of the Date of Issuance which
shall equal the lowest Closing Price of the Company's Common Stock for the five
(5) trading days ending on such six-month anniversary date of the Date of
Issuance. The "Lowest Reset Price" shall equal the lowest Reset Price determined
on any six-month anniversary date of the Date of Issuance preceding the Date of
Exercise, taking into account, as appropriate, any adjustments made pursuant to
Section 5 hereof.
For purposes hereof, the term "Closing Price" shall mean the closing price
on the Nasdaq Small Cap Market, the National Market System ("NMS"), the New York
Stock Exchange, or the O.T.C. Bulletin Board, or if no longer traded on the
Nasdaq Small Cap Market, the National Market System ("NMS"), the New York Stock
Exchange, or the O.T.C. Bulletin Board, the "Closing Price" shall equal the
closing price on the principal national securities exchange or the
over-the-counter system on which the Common Stock is so traded and, if not
available, the mean of the high and low prices on the principal national
securities exchange on which the Common Stock is so traded.
Payment of the Exercise Price may be made by either of the following, or a
combination thereof, at the election of Holder:
(i) CASH EXERCISE: cash, bank or cashiers check or wire transfer; or
(ii) CASHLESS EXERCISE: The Holder, at its option, may exercise this
Warrant in a cashless exercise transaction. In order to effect a Cashless
Exercise, the Holder shall surrender this Warrant at the principal office of the
Company together with notice of cashless election, in which event the Company
shall issue Holder a number of shares of Common Stock computed using the
following formula:
X = Y (A-B)/A
where: X = the number of shares of Common Stock to be issued to Holder.
Y = the number of shares of Common Stock for which this Warrant is
being exercised.
A = the Market Price of one (1) share of Common Stock (for
purposes of this Section 3(ii), the "Market Price" shall be
defined as the average Closing Price of the Common Stock for the
five (5) trading days prior to the Date of Exercise of this
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Warrant (the "Average Closing Price"), as reported by the O.T.C.
Bulletin Board, National Association of Securities Dealers
Automated Quotation System ("Nasdaq") Small Cap Market, or if the
Common Stock is not traded on the Nasdaq Small Cap Market, the
Average Closing Price in any other over-the-counter market;
provided, however, that if the Common Stock is listed on a stock
exchange, the Market Price shall be the Average Closing Price on
such exchange for the five (5) trading days prior to the date of
exercise of the Warrants. If the Common Stock is/was not traded
during the five (5) trading days prior to the Date of Exercise,
then the closing price for the last publicly traded day shall be
deemed to be the closing price for any and all (if applicable)
days during such five (5) trading day period.
B = the Exercise Price.
For purposes of Rule 144 and sub-section (d)(3)(ii) thereof, it is
intended, understood and acknowledged that the Common Stock issuable upon
exercise of this Warrant in a cashless exercise transaction shall be deemed to
have been acquired at the time this Warrant was issued. Moreover, it is
intended, understood and acknowledged that the holding period for the Common
Stock issuable upon exercise of this Warrant in a cashless exercise transaction
shall be deemed to have commenced on the date this Warrant was issued.
4. TRANSFER AND REGISTRATION.
(a) TRANSFER RIGHTS. Subject to the provisions of Section 8 of this
Warrant, this Warrant may be transferred on the books of the Company, in whole
or in part, in person or by attorney, upon surrender of this Warrant properly
completed and endorsed. This Warrant shall be canceled upon such surrender and,
as soon as practicable thereafter, the person to whom such transfer is made
shall be entitled to receive a new Warrant or Warrants as to the portion of this
Warrant transferred, and Holder shall be entitled to receive a new Warrant as to
the portion hereof retained.
(b) REGISTRABLE SECURITIES. In addition to any other registration rights of
the Holder, if the Common Stock issuable upon exercise of this Warrant is not
registered for resale at the time the Company proposes to register (including
for this purpose a registration effected by the Company for stockholders other
than the Holders) any of its Common Stock under the Act (other than a
registration relating solely for the sale of securities to participants in a
Company stock plan or a registration on Form S-4 promulgated under the Act or
any successor or similar form registering stock issuable upon a
reclassification, upon a business combination involving an exchange of
securities or upon an exchange offer for securities of the issuer or another
entity)(a "Piggyback Registration Statement"), the Company shall cause to be
included in such Piggyback Registration Statement ("Piggyback Registration") all
of the Common Stock issuable upon the exercise of this Warrant ("Registrable
Securities") to the extent such inclusion does not violate the registration
5
rights of any other securityholder of the Company granted prior to the date
hereof. Nothing herein shall prevent the Company from withdrawing or abandoning
the Piggyback Registration Statement prior to its effectiveness.
(c) LIMITATION ON OBLIGATIONS TO REGISTER UNDER A PIGGYBACK REGISTRATION.
In the case of a Piggyback Registration pursuant to an underwritten public
offering by the Company, if the managing underwriter determines and advises in
writing that the inclusion in the registration statement of all Registrable
Securities proposed to be included would interfere with the successful marketing
of the securities proposed to be registered by the Company, then the number of
such Registrable Securities to be included in the Piggyback Registration
Statement, to the extent such Registrable Securities may be included in such
Piggyback Registration Statement, shall be allocated among all Holders who had
requested Piggyback Registration pursuant to the terms hereof, in the proportion
that the number of Registrable Securities which each such Holder seeks to
register bears to the total number of Registrable Securities sought to be
included by all Holders. If required by the managing underwriter of such an
underwritten public offering, the Holders shall enter into a reasonable
agreement limiting the number of Registrable Securities to be included in such
Piggyback Registration Statement and the terms, if any, regarding the future
sale of such Registrable Securities.
5. ANTI-DILUTION ADJUSTMENTS.
(a) STOCK DIVIDEND. If the Company shall at any time declare a dividend
payable in shares of Common Stock, then Holder, upon Exercise of this Warrant
after the record date for the determination of holders of Common Stock entitled
to receive such dividend, shall be entitled to receive upon Exercise of this
Warrant, in addition to the number of shares of Common Stock as to which this
Warrant is exercised, such additional shares of Common Stock as such Holder
would have received had this Warrant been exercised immediately prior to such
record date and the Exercise Price will be proportionately adjusted.
(b) RECAPITALIZATION OR RECLASSIFICATION.
(i) STOCK SPLIT. If the Company shall at any time effect a
recapitalization, reclassification or other similar transaction of such
character that the shares of Common Stock shall be changed into or become
exchangeable for a LARGER number of shares (a "Stock Split"), then upon the
effective date thereof, the number of shares of Common Stock which Holder shall
be entitled to purchase upon Exercise of this Warrant shall be increased in
direct proportion to the increase in the number of shares of Common Stock by
reason of such recapitalization, reclassification or similar transaction, and
the Exercise Price shall be proportionally decreased.
(ii) REVERSE STOCK SPLIT. If the Company shall at any time effect a
recapitalization, reclassification or other similar transaction of such
character that the shares of Common Stock shall be changed into or become
exchangeable for a SMALLER number of shares (a "Reverse Stock Split"), then upon
the effective date thereof, the number of shares of Common Stock which Holder
shall be entitled to purchase upon Exercise of this Warrant shall be
proportionately decreased and the Exercise Price shall be proportionally
increased. The Company shall give Holder the same notice it provides to holders
of Common Stock of any transaction described in this Section 5(b).
6
(c) DISTRIBUTIONS. If the Company shall at any time distribute for no
consideration to holders of Common Stock cash, evidences of indebtedness or
other securities or assets (other than cash dividends or distributions payable
out of earned surplus or net profits for the current or preceding years) then,
in any such case, Holder shall be entitled to receive, upon Exercise of this
Warrant, with respect to each share of Common Stock issuable upon such exercise,
the amount of cash or evidences of indebtedness or other securities or assets
which Holder would have been entitled to receive with respect to each such share
of Common Stock as a result of the happening of such event had this Warrant been
exercised immediately prior to the record date or other date fixing shareholders
to be affected by such event (the "Determination Date") or, in lieu thereof, if
the Board of Directors of the Company should so determine at the time of such
distribution, a reduced Exercise Price determined by multiplying the Exercise
Price on the Determination Date by a fraction, the numerator of which is the
result of such Exercise Price reduced by the value of such distribution
applicable to one share of Common Stock (such value to be determined by the
Board of Directors of the Company in its discretion) and the denominator of
which is such Exercise Price.
(d) NOTICE OF CONSOLIDATION OR MERGER AND WARRANT EXCHANGE. The Company
shall not, at any time after the date hereof, effect a merger, consolidation,
exchange of shares, recapitalization, reorganization, or other similar event, as
a result of which shares of Common Stock shall be changed into the same or a
different number of shares of the same or another class or classes of stock or
securities or other assets of the Company or another entity or there is a sale
of all or substantially all the Company's assets (a "Corporate Change"), unless
the resulting successor or acquiring entity (the "Resulting Entity") assumes by
written instrument the Company's obligations under this Warrant, including but
not limited to the Exercise Price reset provisions as provided herein during the
term of the resultant warrants, and agrees in such written instrument that this
Warrant shall be exerciseable into such class and type of securities or other
assets of the Resulting Entity as Holder would have received had Holder
exercised this Warrant immediately prior to such Corporate Change, and the
Exercise Price of this Warrant shall be proportionately increased (if this
Warrant shall be changed into or become exchangeable for a warrant to purchase a
smaller number of shares of Common Stock of the Resulting Entity) or shall be
proportionately decreased (if this Warrant shall be changed or become
exchangeable for a warrant to purchase a larger number of shares of Common Stock
of the Resulting Entity); provided, however, that Company may not affect any
Corporate Change unless it first shall have given thirty (30) days notice to
Holder hereof of any Corporate Change.
(e) EXERCISE PRICE ADJUSTED. As used in this Warrant, the term "Exercise
Price" shall mean the purchase price per share specified in Section 3 of this
Warrant, until the occurrence of an event stated in subsection (a), (b), (c) or
(d) of this Section 5, and thereafter shall mean said price as adjusted from
time to time in accordance with the provisions of this Warrant. No such
adjustment under this Section 5 shall be made unless such adjustment would
change the Exercise Price at the time by $0.01 or more; provided, however, that
all adjustments not so made shall be deferred and made when the aggregate
thereof would change the Exercise Price at the time by $0.01 or more.
7
(f) ADJUSTMENTS: ADDITIONAL SHARES, SECURITIES OR ASSETS. In the event that
at any time, as a result of an adjustment made pursuant to this Section 5,
Holder shall, upon Exercise of this Warrant, become entitled to receive shares
and/or other securities or assets (other than Common Stock) then, wherever
appropriate, all references herein to shares of Common Stock shall be deemed to
refer to and include such shares and/or other securities or assets; and
thereafter the number of such shares and/or other securities or assets shall be
subject to adjustment from time to time in a manner and upon terms as nearly
equivalent as practicable to the provisions of this Section 5.
6. FRACTIONAL INTERESTS.
No fractional shares or scrip representing fractional shares shall be
issuable upon the Exercise of this Warrant, but on Exercise of this Warrant,
Holder may purchase only a whole number of shares of Common Stock. If, on
Exercise of this Warrant, Holder would be entitled to a fractional share of
Common Stock or a right to acquire a fractional share of Common Stock, such
fractional share shall be disregarded and the number of shares of Common Stock
issuable upon exercise shall be the next higher number of shares.
7. RESERVATION OF SHARES.
The Company shall at all times reserve for issuance such number of
authorized and unissued shares of Common Stock (or other securities substituted
therefor as herein above provided) as shall be sufficient for the Exercise of
this Warrant and payment of the Exercise Price. The Company covenants and agrees
that upon the Exercise of this Warrant, all shares of Common Stock issuable upon
such exercise shall be duly and validly issued, fully paid, nonassessable and
not subject to preemptive rights, rights of first refusal or similar rights of
any person or entity.
8. RESTRICTIONS ON TRANSFER.
(a) REGISTRATION OR EXEMPTION REQUIRED. This Warrant has been issued in a
transaction exempt from the registration requirements of the Act by virtue of
Regulation D and exempt from state registration under applicable state laws. The
Warrant and the Common Stock issuable upon the Exercise of this Warrant may not
be pledged, transferred, sold or assigned except pursuant to an effective
registration statement or unless the Company has received an opinion from the
Company's counsel to the effect that such registration is not required, or the
Holder has furnished to the Company an opinion of the Holder's counsel, which
counsel shall be reasonably satisfactory to the Company, to the effect that such
registration is not required; the transfer complies with any applicable state
securities laws; and, if no registration covering the resale of the Warrant
Shares is effective at the time the Warrant Shares are issued, the Holder
consents to a legend being placed on certificates for the Warrant Shares stating
that the securities have not been registered under the Securities Act and
referring to such restrictions on transferability and sale.
8
(b) ASSIGNMENT. If Holder can provide the Company with reasonably
satisfactory evidence that the conditions of (a) above regarding registration or
exemption have been satisfied, Holder may sell, transfer, assign, pledge or
otherwise dispose of this Warrant, in whole or in part. Holder shall deliver a
written notice to Company, substantially in the form of the Assignment attached
hereto as EXHIBIT B, indicating the person or persons to whom the Warrant shall
be assigned and the respective number of warrants to be assigned to each
assignee. The Company shall effect the assignment within ten (10) days, and
shall deliver to the assignee(s) designated by Holder a Warrant or Warrants of
like tenor and terms for the appropriate number of shares.
9. BENEFITS OF THIS WARRANT.
Nothing in this Warrant shall be construed to confer upon any person other
than the Company and Holder any legal or equitable right, remedy or claim under
this Warrant and this Warrant shall be for the sole and exclusive benefit of the
Company and Holder.
10. APPLICABLE LAW.
This Warrant is issued under and shall for all purposes be governed by and
construed in accordance with the laws of the state of Georgia, without giving
effect to conflict of law provisions thereof.
11. LOSS OF WARRANT.
Upon receipt by the Company of evidence of the loss, theft, destruction or
mutilation of this Warrant, and (in the case of loss, theft or destruction) of
indemnity or security reasonably satisfactory to the Company, and upon surrender
and cancellation of this Warrant, if mutilated, the Company shall execute and
deliver a new Warrant of like tenor and date.
12. NOTICE OR DEMANDS.
Notices or demands pursuant to this Warrant to be given or made by Holder to or
on the Company shall be sufficiently given or made if sent by certified or
registered mail, return receipt requested, postage prepaid, and addressed, until
another address is designated in writing by the Company, to the address set
forth in Section 2(a) above. Notices or demands pursuant to this Warrant to be
given or made by the Company to or on Holder shall be sufficiently given or made
9
if sent by certified or registered mail, return receipt requested, postage
prepaid, and addressed, to the address of Holder set forth in the Company's
records, until another address is designated in writing by Holder.
IN WITNESS WHEREOF, the undersigned has executed this Warrant as of the 2nd
day of March, 2001.
DIMENSIONAL VISIONS INCORPORATED
By: /s/ Xxxx X. Xxxxxxxxx
------------------------------------
Xxxx X. XxXxxxxxx, President
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EXHIBIT A
EXERCISE FORM FOR WARRANT
TO: DIMENSIONAL VISIONS INCORPORATED
The undersigned hereby irrevocably exercises the right to purchase
____________ of the shares of Common Stock (the "Common Stock") of DIMENSIONAL
VISIONS INCORPORATED a Delaware corporation (the "Company"), evidenced by the
attached warrant (the "Warrant"), and herewith makes payment of the exercise
price with respect to such shares in full, all in accordance with the conditions
and provisions of said Warrant.
1. The undersigned agrees not to offer, sell, transfer or otherwise dispose of
any of the Common Stock obtained on exercise of the Warrant, except in
accordance with the provisions of Section 8(a) of the Warrant.
2. The undersigned requests that stock certificates for such shares be issued
free of any restrictive legend, if appropriate, and a warrant representing any
unexercised portion hereof be issued, pursuant to the Warrant in the name of the
undersigned and delivered to the undersigned at the address set forth below:
Dated: _________
--------------------------------------------------------------------------------
Signature
--------------------------------------------------------------------------------
Print Name
--------------------------------------------------------------------------------
Address
--------------------------------------------------------------------------------
NOTICE
The signature to the foregoing Exercise Form must correspond to the name as
written upon the face of the attached Warrant in every particular, without
alteration or enlargement or any change whatsoever.
--------------------------------------------------------------------------------
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EXHIBIT B
ASSIGNMENT
(To be executed by the registered holder
desiring to transfer the Warrant)
FOR VALUE RECEIVED, the undersigned holder of the attached warrant (the
"Warrant") hereby sells, assigns and transfers unto the person or persons below
named the right to purchase _______ shares of the Common Stock of DIMENSIONAL
VISIONS INCORPORATED, evidenced by the attached Warrant and does hereby
irrevocably constitute and appoint _______________________ attorney to transfer
the said Warrant on the books of the Company, with full power of substitution in
the premises.
Dated: ________________________________________
Signature
Fill in for new registration of Warrant:
-----------------------------------
Name
-----------------------------------
Address
-----------------------------------
Please print name and address of assignee
(including zip code number)
--------------------------------------------------------------------------------
NOTICE
The signature to the foregoing Assignment must correspond to the name as written
upon the face of the attached Warrant in every particular, without alteration or
enlargement or any change whatsoever.
--------------------------------------------------------------------------------
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AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
THIS AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this "Agreement")
is entered into as of March 2, 2001, by and among Dimensional Visions
Incorporated, a corporation duly incorporated and existing under the laws of the
State of Delaware (the "Company"), and the investor as named on the signature
page hereto (hereinafter referred to as "Investor") and amends and restates the
Registration Rights Agreement between the parties dated on or about December 22,
2000.
RECITALS:
WHEREAS, pursuant to the Company's offering ("Offering") of up to Twenty
Million Dollars ($20,000,000) of Common Stock of the Company, pursuant to that
certain Amemded and Restated Investment Agreement of even date herewith (the
"Investment Agreement") between the Company and the Investor, the Company has
agreed to sell and the Investor has agreed to purchase, from time to time as
provided in the Investment Agreement, shares of the Company's Common Stock for a
maximum aggregate offering amount as described above;
WHEREAS, pursuant to the terms of the Investment Agreement, the Company has
agreed to issue to the Investor the Commitment Warrants and in certain events
Additional Warrants (as defined in the Warrant Antidilution Agreement between
the Company and the Investor) to purchase a number of shares of Common Stock,
exercisable for ten (10) years from their respective dates of issuance
(collectively, the "Warrants"); and
WHEREAS, pursuant to the terms of the Investment Agreement, the Company has
agreed to provide the Investor with certain registration rights with respect to
the Common Stock to be issued in the Offering and the Common Stock issuable upon
exercise of the Warrants as set forth in this Agreement.
TERMS:
NOW, THEREFORE, in consideration of the mutual promises, representations,
warranties, covenants and conditions set forth in this Agreement and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. CERTAIN DEFINITIONS. As used in this Agreement (including the Recitals
above), the following terms shall have the following meanings (such meanings to
be equally applicable to both singular and plural forms of the terms defined):
"Additional Registration Statement" shall have the meaning set forth
in Section 3(b).
"Additional Warrants" shall have the meaning ascribed to it the
Warrant Antidilution Agreement between the Company and the Investor.
"Additional Warrant Shares" shall mean shares of Common Stock issuable
upon exercise of any Additional Warrant.
1
"Amended Registration Statement" shall have the meaning set forth in
Section 3(b).
"Business Day" shall have the meaning set forth in the Investment
Agreement.
"Closing Bid Price" shall have the meaning set forth in the Investment
Agreement.
"Commitment Warrant" shall have the meaning as set forth in the
Investment Agreement.
"Common Stock" shall mean the common stock, par value $0.01, of the
Company.
"Due Date" shall mean the date that is one hundred twenty (120) days
after the date of this Agreement.
"Effective Date" shall have the meaning set forth in Section 2.3.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, together with the rules and regulations promulgated thereunder.
"Filing Deadline" shall mean March 7, 2001.
"Ineffective Period" shall mean any period of time after the Effective
Date during the term hereof that the Registration Statement or any Supplemental
Registration Statement (each as defined herein) becomes ineffective or
unavailable for use for the sale or resale, as applicable, of any or all of the
Registrable Securities (as defined herein) for any reason (or in the event the
prospectus under either of the above is not current and deliverable).
"Investment Agreement" shall have the meaning set forth in the
Recitals hereto.
"Investor" shall have the meaning set forth in the preamble to this
Agreement.
"Holder" shall mean Investor, and any other person or entity owning or
having the right to acquire Registrable Securities or any permitted assignee.
"Piggyback Registration" and "Piggyback Registration Statement" shall
have the meaning set forth in Section 4.
"Put" shall have the meaning as set forth in the Investment Agreement.
"Register," "Registered," and "Registration" shall mean and refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act and pursuant to Rule 415
under the Securities Act or any successor rule, and the declaration or ordering
of effectiveness of such registration statement or document.
"Registrable Securities" shall have the meaning set forth in Section
2.1.
2
"Registration Statement" shall have the meaning set forth in Section
2.2.
"Rule 144" shall mean Rule 144, as amended, promulgated under the
Securities Act.
"Securities Act" shall mean the Securities Act of 1933, as amended,
together with the rules and regulations promulgated thereunder.
"Supplemental Registration Statement" shall have the meaning set forth
in Section 3(b).
"Warrants" shall have the meaning set forth in the above Recitals.
"Warrant Shares" shall mean shares of Common Stock issuable upon
exercise of any Warrant.
2. REQUIRED REGISTRATION.
2.1 REGISTRABLE SECURITIES. "Registrable Securities" shall mean those
shares of the Common Stock of the Company together with any capital stock issued
in replacement of, in exchange for or otherwise in respect of such Common Stock,
that are: (i) issuable or issued to the Investor pursuant to the Investment
Agreement, or (ii) issuable or issued upon exercise of the Commitment Warrants;
provided, however, that notwithstanding the above, the following shall not be
considered Registrable Securities:
(a) any Common Stock which would otherwise be deemed to be
Registrable Securities, if and to the extent that those shares of Common Stock
may be resold in a public transaction without volume limitations or other
material restrictions without registration under the Securities Act, including
without limitation, pursuant to Rule 144 under the Securities Act; and
(b) any shares of Common Stock which have been sold in a private
transaction in which the transferor's rights under this Agreement are not
assigned.
2.2 FILING OF INITIAL REGISTRATION STATEMENT. The Company shall, by
the Filing Deadline, file a registration statement ("Registration Statement") on
Form SB-2 (or other suitable form, at the Company's discretion, but subject to
the reasonable approval of Investor), covering the resale of a number of shares
of Common Stock as Registrable Securities equal to at least Twenty Five Million
(25,000,000) shares of Common Stock and shall cover, to the extent allowed by
applicable law, such indeterminate number of additional shares of Common Stock
that may be issued or become issuable as Registrable Securities by the Company
pursuant to Rule 416 of the Securities Act. In the event that the Company has
not filed the Registration Statement by the Filing Deadline, then the Company
shall pay to INVESTOR an amount equal to $500, in cash, FOR EACH BUSINESS DAY
AFTER THE FILING DEADLINE until such Registration Statement is filed, payable
within ten (10) BUSINESS DAYS following the end of each calendar month in which
such payments accrue. In addition, anytime the Company has issued Additional
Warrants to the Investor totaling 250,000 shares which are not registered for
resale, the Company shall promptly file a registration statement (on Form SB-2,
or other suitable form, at the Company's discretion, but subject to the
reasonable approval of Investor), covering the resale of a number of shares of
3
Common Stock as Registrable Securities equal to at least the number of
Additional Warrant shares that are not registered for resale and shall cover, to
the extent allowed by applicable law, such indeterminate number of additional
shares of Common Stock that may be issued or become issuable as Registrable
Securities by the Company pursuant to Rule 416 of the Securities Act.
2.3 REGISTRATION EFFECTIVE DATE. The Company shall use its best
efforts to have the Registration Statement declared effective by the SEC (the
date of such effectiveness is referred to herein as the "Effective Date") by the
Due Date.
2.4 SHELF REGISTRATION. The Registration Statement shall be prepared
as a "shelf" registration statement under Rule 415, and shall be maintained
effective until all Registrable Securities are resold pursuant to the
Registration Statement.
2.5 SUPPLEMENTAL REGISTRATION STATEMENT. Anytime the Registration
Statement does not cover a sufficient number of shares of Common Stock to cover
all outstanding Registrable Securities, the Company shall promptly prepare and
file with the SEC such Supplemental Registration Statement and the prospectus
used in connection with such registration statement as may be necessary to
comply with the provisions of the Securities Act with respect to the disposition
of all such Registrable Securities and shall use its best efforts to cause such
Supplemental Registration Statement to be declared effective as soon as
possible.
3. OBLIGATIONS OF THE COMPANY. Whenever required under this Agreement to
effect the registration of any Registrable Securities, the Company shall, as
expeditiously and reasonably possible:
(a) Prepare and file with the Securities and Exchange Commission
("SEC") a Registration Statement with respect to such Registrable Securities and
use its best efforts to cause such Registration Statement to become effective
and to remain effective until the earlier of (i) the date that all Registrable
Securities are resold pursuant to such Registration Statement, or (ii) the date
that is one (1) year after the Termination Date (as defined in the Investment
Agreement).
(b) Prepare and file with the SEC such amendments and supplements to
such Registration Statement and the prospectus used in connection with such
Registration Statement ("Amended Registration Statement") or prepare and file
any additional registration statement ("Additional Registration Statement,"
together with the Amended Registration Statement, "Supplemental Registration
Statements") as may be necessary to comply with the provisions of the Securities
Act with respect to the disposition of all securities covered by such
Supplemental Registration Statements or such prior registration statement and to
cover the resale of all Registrable Securities.
(c) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus (if applicable), in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.
(d) Use its best efforts to register and qualify the securities
covered by such Registration Statement under such other securities or Blue Sky
laws of the jurisdictions in which the Holders are located, of such other
4
jurisdictions as shall be reasonably requested by the Holders of the Registrable
Securities covered by such Registration Statement and of all other jurisdictions
where legally required, provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states or
jurisdictions.
(e) [Intentionally Left Blank].
(f) As promptly as practicable after becoming aware of such event,
notify each Holder of Registrable Securities of the happening of any event of
which the Company has knowledge, as a result of which the prospectus included in
the Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, use its best efforts promptly to prepare a
supplement or amendment to the Registration Statement to correct such untrue
statement or omission, and deliver a number of copies of such supplement or
amendment to each Holder as such Holder may reasonably request.
(g) Provide Holders with notice of the date that a Registration
Statement or any Supplemental Registration Statement registering the resale of
the Registrable Securities is declared effective by the SEC, and the date or
dates when the Registration Statement is no longer effective.
(h) Provide Holders and their representatives the opportunity and a
reasonable amount of time, based upon reasonable notice delivered by the
Company, to conduct a reasonable due diligence inquiry of Company's pertinent
financial and other records and make available its officers and directors for
questions regarding such information as it relates to information contained in
the Registration Statement.
(i) Provide Holders and their representatives the opportunity to
review the Registration Statement and all amendments or supplements thereto
prior to their filing with the SEC by giving the Holder at least five (5)
business days advance written notice prior to such filing.
(j) Provide each Holder with prompt notice of the issuance by the SEC
or any state securities commission or agency of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any proceeding
for such purpose. The Company shall use its best efforts to prevent the issuance
of any stop order and, if any is issued, to obtain the removal thereof at the
earliest possible date.
(k) Use its best efforts to list the Registrable Securities covered by
the Registration Statement with all securities exchanges or markets on which the
Common Stock is then listed and prepare and file any required filing with the
NASD, American Stock Exchange, NYSE and any other exchange or market on which
the Common Stock is listed.
4. INEFFECTIVE PERIOD.
(a) Ineffective Period Payment. Within five (5) Business Days of the
last day of any Ineffective Period, the Company will pay to the Investor in cash
("Ineffective Period Payments"), as liquidated damages for such suspension and
5
not as a penalty, an amount equal to the number of shares of Common Stock issued
to the Investor in any Put with a Pricing Period End Date (as defined in the
Investment Agreement) that is thirty (30) business days or less prior to the
date that the Ineffective Period commences, multiplied by the difference of
(i) the highest closing price of the Company's Common Stock for
any trading day during the Ineffective Period,
minus
(ii) the lowest closing price of the Company's Common Stock for
the five (5) trading days including and immediately following the last
trading day of such Ineffective Period.
(b) LIQUIDATED DAMAGES. The parties hereto acknowledge and agree that
the sums payable as Ineffective Period Payments shall give rise to liquidated
damages and not penalties. The parties further acknowledge that (i) the amount
of loss or damages likely to be incurred by the Holder is incapable or is
difficult to precisely estimate, (ii) the amounts specified bear a reasonable
proportion and are not plainly or grossly disproportionate to the probable loss
likely to be incurred by the Investor, and (iii) the parties are sophisticated
business parties and have been represented by sophisticated and able legal and
financial counsel and negotiated this Agreement at arm's length.
5. PIGGYBACK REGISTRATION. If anytime prior to the date that the
Registration Statement is declared effective or during any Ineffective Period
(as defined in the Investment Agreement) the Company proposes to register
(including for this purpose a registration effected by the Company for
shareholders other than the Holders) any of its Common Stock under the
Securities Act in connection with the public offering of such securities solely
for cash (other than a registration relating solely for the sale of securities
to participants in a Company stock plan or a registration on Form S-4
promulgated under the Securities Act or any successor or similar form
registering stock issuable upon a reclassification, upon a business combination
involving an exchange of securities or upon an exchange offer for securities of
the issuer or another entity), the Company shall, at such time, promptly give
each Holder written notice of such registration (a "Piggyback Registration
Statement"). Upon the written request of each Holder given by fax within ten
(10) days after mailing of such notice by the Company, the Company shall cause
to be included in such registration statement under the Securities Act all of
the Registrable Securities that each such Holder has requested to be registered
("Piggyback Registration") and all of the Additional Warrant Shares that are
then unregistered, in each case to the extent such inclusion does not violate
the registration rights of any other security holder of the company granted
prior to the date hereof; provided, however, that nothing herein shall prevent
the Company from withdrawing or abandoning such registration statement prior to
its effectiveness.
6. LIMITATION ON OBLIGATIONS TO REGISTER UNDER A PIGGYBACK REGISTRATION. In
the case of a Piggyback Registration pursuant to an underwritten public offering
by the Company, if the managing underwriter determines and advises in writing
that the inclusion in the related Piggyback Registration Statement of all
Registrable Securities proposed to be included would interfere with the
successful marketing of the securities proposed to be registered by the Company,
then the number of such Registrable Securities to be included in such Piggyback
Registration Statement, to the extent any such Registrable Securities may be
included in such Piggyback Registration Statement, shall be allocated among all
6
Holders who had requested Piggyback Registration pursuant to the terms hereof,
in the proportion that the number of Registrable Securities which each such
Holder seeks to register bears to the total number of Registrable Securities
sought to be included by all Holders. If required by the managing underwriter of
such an underwritten public offering, the Holders shall enter into an agreement
limiting the number of Registrable Securities to be included in such Piggyback
Registration Statement and the terms, if any, regarding the future sale of such
Registrable Securities.
7. DISPUTE AS TO REGISTRABLE SECURITIES. In the event the Company believes
that shares sought to be registered under Section 2 or Section 5 by Holders do
not constitute "Registrable Securities" by virtue of Section 2.1 of this
Agreement, and the status of those shares as Registrable Securities is disputed,
the Company shall provide, at its expense, an Opinion of Counsel, reasonably
acceptable to the Holders of the Securities at issue (and satisfactory to the
Company's transfer agent to permit the sale and transfer), that those securities
may be sold immediately, without volume limitation or other material
restrictions, without registration under the Securities Act, by virtue of Rule
144 or similar provisions.
8. FURNISH INFORMATION. At the Company's request, each Holder shall furnish
to the Company such information regarding Holder, the Registrable Securities
held by it, and the intended method of disposition of such securities to the
extent required to effect the registration of its Registrable Securities or to
determine that registration is not required pursuant to Rule 144 or other
applicable provision of the Securities Act. The Company shall include all
information provided by such Holder pursuant hereto in the Registration
Statement, substantially in the form supplied, except to the extent such
information is not permitted by law.
9. EXPENSES. All expenses, other than commissions and fees and expenses of
counsel to the selling Holders, incurred in connection with registrations,
filings or qualifications pursuant hereto, including (without limitation) all
registration, filing and qualification fees, printers' and accounting fees, fees
and disbursements of counsel for the Company, shall be borne by the Company.
10. INDEMNIFICATION. In the event any Registrable Securities are included
in a Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Holder, the officers, directors, partners, legal counsel, and
accountants of each Holder, any underwriter (as defined in the Securities Act,
or as deemed by the Securities Exchange Commission, or as indicated in a
registration statement) for such Holder and each person, if any, who controls
such Holder or underwriter within the meaning of Section 15 of the Securities
Act or the Exchange Act, against any losses, claims, damages, or liabilities
(joint or several) to which they may become subject under the Securities Act,
the Exchange Act or other federal or state law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of or are
based upon any of the following statements or omissions: (i) any untrue
statement or alleged untrue statement of a material fact contained in such
registration statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, or (ii) the omission
or alleged omission to state therein a material fact required to be stated
therein, or necessary to make the statements therein not misleading, and the
Company will reimburse each such Holder, officer or director, underwriter or
controlling person for any legal or other expenses reasonably incurred by them
7
in connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this subsection 10(a) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability, or action if such settlement is effected
without the consent of the Company (which consent shall not be unreasonably
withheld), nor shall the Company be liable in any such case for any such loss,
claim, damage, liability, or action to the extent that it arises out of or is
based upon a violation which occurs in reliance upon and in conformity with
written information furnished expressly for use in connection with such
registration by any such Holder, officer, director, underwriter or controlling
person; provided however, that the above shall not relieve the Company from any
other liabilities which it might otherwise have.
(b) Promptly after receipt by an indemnified party under this Section
10 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 10, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume, the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the reasonably incurred fees and
expenses of one such counsel to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential conflicting
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if materially prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under
this Section 10, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 10.
(c) To the extent that the foregoing undertaking by the Company may be
unenforceable for any reason, the Company shall make the maximum contribution to
the payment and satisfaction of each of the indemnified liabilities which it
would be required to make if such foregoing undertaking was enforceable which is
permissible under applicable law.
(d) The obligations of the Company and Holders under this Section 10
shall survive the resale, if any, of the Common Stock, the completion of any
offering of Registrable Securities in a Registration Statement under this
Agreement, and otherwise.
11. REPORTS UNDER EXCHANGE ACT. With a view to making available to the
Holders the benefits of Rule 144 promulgated under the Securities Act and any
other rule or regulation of the SEC that may at any time permit a Holder to sell
securities of the Company to the public without registration, the Company agrees
to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144; and
(b) use its best efforts to file with the SEC in a timely manner all
reports and other documents required of the Company under the Securities Act and
the Exchange Act.
8
12. AMENDMENTS TO REGISTRATION RIGHTS. Any provision of this Agreement may
be amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the written consent of each Holder affected
thereby. Any amendment or waiver effected in accordance with this paragraph
shall be binding upon each Holder, each future Holder, and the Company. The
Company will provide the Investor five (5) business days notice prior to filing
any amendment to the Registration Statement or any amendment or supplement to
the Prospectus and shall give the Investor the opportunity to review and comment
on any such amendment or supplement. Failure of the Investor to comment within
five (5) business days shall not preclude the Company from filing such amendment
or supplement after such notice period has expired.
13. NOTICES. All notices required or permitted under this Agreement shall
be made in writing signed by the party making the same, shall specify the
section under this Agreement pursuant to which it is given, and shall be
addressed if to (i) the Company at: Dimensional Visions Incorporated, Attn: Xxxx
X. XxXxxxxxx, President, 0000 X. Xxxxxx Xxx., Xxx. 000, Xxxxxxx, XX 00000;
Telephone: (000) 000-0000, Facsimile: (000) 000-0000, (or at such other location
as directed by the Company in writing) and (ii) the Holders at their respective
last address as the party as shown on the records of the Company. Any notice,
except as otherwise provided in this Agreement, shall be made by fax and shall
be deemed given at the time of transmission of the fax.
14. TERMINATION. This Agreement shall terminate on the date all Registrable
Securities cease to exist (as that term is defined in Section 2.1 hereof); but
without prejudice to (i) the parties' rights and obligations arising from
breaches of this Agreement occurring prior to such termination (ii) other
indemnification obligations under this Agreement.
15. ASSIGNMENT. No assignment, transfer or delegation, whether by operation
of law or otherwise, of any rights or obligations under this Agreement by the
Company or any Holder, respectively, shall be made without the prior written
consent of the majority in interest of the Holders or the Company, respectively;
provided that the rights of a Holder may be transferred to a subsequent holder
of the Holder's Registrable Securities (provided such transferee shall provide
to the Company, together with or prior to such transferee's request to have such
Registrable Securities included in a Registration, a writing executed by such
transferee agreeing to be bound as a Holder by the terms of this Agreement), and
the Company hereby agrees to file an amended registration statement including
such transferee as a selling security holder thereunder; and provided further
that the Company may transfer its rights and obligations under this Agreement to
a purchaser of all or a substantial portion of its business if the obligations
of the Company under this Agreement are assumed in connection with such
transfer, either by merger or other operation of law (which may include without
limitation a transaction whereby the Registrable Securities are converted into
securities of the successor in interest) or by specific assumption executed by
the transferee.
16. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Georgia applicable to agreements made
in and wholly to be performed in that jurisdiction, except for matters arising
under the Securities Act or the Exchange Act, which matters shall be construed
and interpreted in accordance with such laws. Any dispute arising out of or
relating to this Agreement or the breach, termination or validity hereof shall
be finally settled by the federal or state courts located in XXXXXX COUNTY,
GEORGIA.
9
17. EXECUTION IN COUNTERPARTS PERMITTED. This Agreement may be executed in
any number of counterparts, each of which shall be enforceable against the
parties actually executing such counterparts, and all of which together shall
constitute one (1) instrument.
18. SPECIFIC PERFORMANCE. The Holder shall be entitled to the remedy of
specific performance in the event of the Company's breach of this Agreement, the
parties agreeing that a remedy at law would be inadequate.
19. INDEMNITY. Each party shall indemnify each other party against any and
all claims, damages (including reasonable attorney's fees), and expenses arising
out of the first party's breach of any of the terms of this Agreement.
20. ENTIRE AGREEMENT; WRITTEN AMENDMENTS REQUIRED. This Agreement,
including the Exhibits attached hereto, the Investment Agreement, the Common
Stock certificates, and the other documents delivered pursuant hereto constitute
the full and entire understanding and agreement between the parties with regard
to the subjects hereof and thereof, and no party shall be liable or bound to any
other party in any manner by any warranties, representations or covenants except
as specifically set forth herein or therein. Except as expressly provided
herein,
[INTENTIONALLY LEFT BLANK]
10
neither this Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the party against whom
enforcement of any such amendment, waiver, discharge or termination is sought.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of this
2nd day of MARCH, 2001.
DIMENSIONAL VISIONS INCORPORATED
By: /s/ Xxxx X. Xxxxxxxxx
------------------------------------
Xxxx X. XxXxxxxxx, President
Address: 0000 X. Xxxxxx Xxx.
Xxxxx 000
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
INVESTOR:
XXXXXX PRIVATE EQUITY, LLC.
By: /s/ Xxxx X. Xxxxxx
------------------------------------
Xxxx X. Xxxxxx, Manager
Address: 000 Xxxxxxxx Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
11
AMENDED AND RESTATED WARRANT ANTIDILUTION AGREEMENT
THIS AMENDED AND RESTATED WARRANT ANTIDILUTION AGREEMENT (the "Agreement")
is entered into as of March 2, 2001, by and among DIMENSIONAL VISIONS
INCORPORATED, a corporation duly organized and existing under the laws of the
State of Delaware (the "Company") and Xxxxxx Private Equity, LLC (hereinafter
referred to as "Xxxxxx"), and amends and restates the Warrant Antidilution
Agreement between the parties dated on or about December 22, 2000.
RECITALS:
WHEREAS, pursuant to the Company's offering ("Equity Line") of up to Twenty
Million Dollars ($20,000,000), excluding any funds paid upon exercise of the
Warrants, of Common Stock of the Company pursuant to that certain Amended and
Restated Investment Agreement (the "Investment Agreement") between the Company
and Xxxxxx dated on or about March 2, 2001, the Company has agreed to sell and
Xxxxxx has agreed to purchase, from time to time as provided in the Investment
Agreement, shares of the Company's Common Stock for a maximum aggregate offering
amount of Twenty Million Dollars ($20,000,000); and
WHEREAS, pursuant to the terms of the Investment Agreement, the Company has
agreed, among other things, to issue to Xxxxxx Commitment Warrants, as defined
in the Investment Agreement, to purchase a number of shares of Common Stock,
exercisable for seven (7) years from their respective dates of issuance.
TERMS:
NOW, THEREFORE, in consideration of the mutual promises, representations,
warranties, covenants and conditions set forth in Agreement and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. ISSUANCE OF COMMITMENT WARRANTS. As compensation for entering into the Equity
Line, Xxxxxx received a warrant convertible into 1,309,000 shares of the
Company's Common Stock, in the form attached hereto as EXHIBIT A (the
"Commitment Warrants").
2. ISSUANCE OF ADDITIONAL WARRANTS. On each six month anniversary of the date of
execution by the Company and the Investor of the initial Commitment Warrants
(each, a "Six Month Anniversary Date"), the Company shall issue to the Investor
additional warrants (the "Additional Warrants"), to purchase a number of shares
of Common Stock, if necessary, such that the sum of the number of Commitment
Warrants and the number of Additional Warrants issued to Investor shall equal at
least "Y%" of the number of fully diluted shares of Common Stock of the Company
on such Six Month Anniversary Date (not including any shares issued or issuable
to Xxxxxx), where "Y" shall equal 7% for the first Six Month Anniversary Date,
and shall be reduced by 0.5% for each Six Month Anniversary Date beginning on
and following the second Six Month Anniversary Date. The Additional Warrants
shall be in the form of EXHIBIT A hereto, and shall initially be exerciseable at
the same price as the Commitment Warrants (as most recently reset), shall have
the same reset provisions as the Commitment Warrants (which resets shall occur
1
on each six month anniversary of the date of issuance of the applicable
Additional Warrant throughout the term of the applicable Additional Warrant),
shall have piggyback registration rights and shall have a 7-year term.
3. OPINION OF COUNSEL. Concurrently with the issuance and delivery of the
Commitment Opinion (as defined in the Investment Agreement) to the Investor, or
on the date that is six (6) months after the date of this Agreement, whichever
is sooner, the Company shall deliver to the Investor an Opinion of Counsel
(signed by the Company's independent counsel) covering the issuance of the
Commitment Warrants and the Additional Warrants, and the issuance and resale of
the Common Stock issuable upon exercise of the Warrants and the Additional
Warrants.
4. CHANGE IN CORPORATE ENTITY. The Company shall not, at any time after the date
hereof, enter into any merger, consolidation or corporate reorganization of the
Company with or into, or transfer all or substantially all of the assets of the
Company to, another entity unless the resulting successor or acquiring entity in
such transaction, if not the Company (the "Surviving Entity"), (i) has Common
Stock listed for trading on Nasdaq or on another national stock exchange and is
a Reporting Issuer, (ii) assumes by written instrument the Company's obligations
with respect to this Warrant Antidilution Agreement and the Additional Warrants,
including but not limited to the obligations to deliver to the Investor shares
of Common Stock and/or securities that Investor is entitled to receive pursuant
to this Investment Agreement and upon exercise of the Additional Warrants and
agrees by written instrument to reissue, in the name of the Surviving Entity,
any Additional Warrants (each in the same terms, including but not limited to
the same reset provisions, as the Commitment Warrants originally issued or
required to be issued by the Company) that are outstanding immediately prior to
such transaction, making appropriate proportional adjustments to the number of
shares represented by such Warrants and the exercise prices of such Warrants to
accurately reflect the exchange represented by the transaction.
5. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Georgia applicable to agreements made
in and wholly to be performed in that jurisdiction, except for matters arising
under the Act or the Securities Exchange Act of 1934, which matters shall be
construed and interpreted in accordance with such laws.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of this
2nd day of March, 2001.
DIMENSIONAL VISIONS SUBSCRIBER:
INCORPORATED XXXXXX PRIVATE EQUITY, LLC.
By: /s/ Xxxx X. Xxxxxxxxx By: /s/ Xxxx X. Xxxxxx
------------------------------ ------------------------------------
Xxxx X. XxXxxxxxx, President Xxxx X. Xxxxxx, Manager
0000 X. Xxxxxx Xxx. 000 Xxxxxxxx Xxxxxx Xxxxxxx
Xxxxx 000 Xxxxx 000
Xxxxxxx, XX 00000 Xxxxxxx, XX 00000
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
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