SECURITIES PURCHASE AGREEMENT
Exhibit 10.3
0000
Xxxxxxx Xxxx Xxxxx, Xxxxx 000
Xxxxx,
Xxxxxxx 00000
Ladies
& Gentlemen:
The
undersigned, __________________________(the “Investor”), hereby confirms
its agreement with you as follows:
I. This
Securities Purchase Agreement (the “Securities Purchase Agreement” and, together with
Annex I hereto, this
“Agreement”) is made as
of ___________ ___, 2010 between nFinanSe Inc., a Nevada
corporation (the “Company”), and the
Investor.
II. The
Company has authorized the sale and issuance (the “Offering”) of up to (i)
3,333,334 shares (the “Preferred Shares”) of Series E
Convertible Preferred Stock of the Company, $0.001 par value per share (the
rights and preferences of which are as provided in that certain Certificate of
Designations, Rights and Preferences attached hereto as Exhibit
A (the “Certificate”)) (the “Preferred
Stock”).
III. The
Investor represents that, except as set forth below, (a) it has had no position,
office or other material relationship within the past three years with the
Company or persons known to it to be affiliates of the Company, (b) neither it,
nor any group of which it is a member or to which it is related, beneficially
owns (including the right to acquire or vote) any securities of the Company and
(c) it has no direct or indirect affiliation or association with any NASD member
as of the date hereof. Exceptions:
_____________________________________________________________________________________________________________________________________________________________________________.
(If no
exceptions, write “none.” If left blank, response will be deemed to
be “none.”)
IV. Pursuant
to the Terms and Conditions for Purchase of the Securities attached hereto as
Annex I
and incorporated herein by reference as if fully set forth herein (the “Terms and Conditions”), the
Company and the Investor agree that the Investor will purchase from the Company
and the Company will issue and sell to the Investor:
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·
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___________
Preferred Shares, for a purchase price of $1.50 per
share.
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Unless otherwise requested by the
Investor, certificates representing the Preferred Shares purchased by the
Investor will be registered in the Investor’s name and address as set forth
below. The Preferred Shares are sometimes referred
to herein as the “Securities.”
The Investor hereby confirms, by
signing in the space provided below, that the foregoing correctly sets forth the
agreement between the Investor and the Company with respect to the purchase of
the Securities in the Offering.
AGREED AND
ACCEPTED:
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NFINANSE
INC
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Investor:
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_____________________________ | ||||
| _____________________________ | ||||||
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By:
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Xxxxxxx
X. Xxxxxxxx
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By:
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_____________________________ | |||
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Title:
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Executive
Vice President
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Print
Name:
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_____________________________ | |||||
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Title:
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_____________________________ | |||||
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Address:
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_____________________________ | |||||
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Tax
I.D. No:
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_____________________________ | |||||
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Contact
Name:
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_____________________________ | |||||
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Telephone:
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_____________________________ | |||||
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Fax:
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_____________________________ | |||||
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Email:*
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_____________________________ | |||||
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Name
in which shares should be registered (if different):
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| ____________ | _____________________________ | |||||
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ANNEX
I
TERMS
AND CONDITIONS FOR PURCHASE/EXCHANGE OF THE SECURITIES
1. Authorization and Sale of
the Securities. Subject to these Terms and Conditions, the
Company has authorized the sale of up to 3,333,334 Preferred
Shares. The Company reserves the right to increase or decrease this
number.
2. Agreement to Sell and
Purchase the Securities; Subscription Date.
2.1 At the
Closing (as defined in Section 3), the Company will sell to the Investor, and
the Investor will purchase from the Company, upon the terms and conditions
hereinafter set forth, the number of Preferred Shares set forth in
Article IV of the Securities Purchase Agreement to which these Terms and
Conditions are attached at the purchase price set forth thereon.
2.2 The
Company may enter into the same form of Securities Purchase Agreement, including
these Terms and Conditions, with certain other investors (the “Other Investors”) and expects
to complete sales of the Securities to them. (The Investor and the
Other Investors are hereinafter sometimes collectively referred to as the “Investors,” and the Securities
Purchase Agreements (including attached Terms and Conditions) executed by the
Other Investors are hereinafter sometimes collectively referred to as the “Agreements.”) The
Company may accept executed Agreements from Investors for the purchase of the
Securities commencing upon the date on which the Company provides the Investors
with the proposed purchase price and concluding upon the date (the “Subscription Date”) on which
the Company has notified Emerging Growth Equities, Ltd. in their capacity as
placement agent for this transaction (the “Placement Agent”), in writing
that it is no longer accepting additional Agreements from Investors for the
purchase of the Securities. The Company may not enter into any
Agreements after the Subscription Date.
3. The
Closing.
3.1 Delivery of the Securities
at Closing. The completion of the purchase and sale of the
Securities (the “Closing”) shall occur on
_______ ____, 2010 (the “Closing Date”), at the offices
of the Company’s counsel or at such other place as may be agreed upon by the
Company and the Placement Agent. On the Closing Date, the Company
shall deliver to the Investor, or a representative of the Investor the
following:
(a) this
Agreement duly executed by the Company;
(b) a legal
opinion of Company’s counsel in form and substance acceptable to the
Investor;
(c) evidence
of the filing of the Certificate with the Secretary of State of Nevada;
and
(d) within 5
days of Closing, one or more stock certificates representing the number of
Preferred Shares set forth in Article V of the Securities Purchase Agreement,
each such certificate and document to be registered in the name of the Investor
or, if so indicated on the signature page of the Securities Purchase Agreement,
in the name of a nominee designated by the Investor.
3.2 The Closing
Conditions.
(a) The
Company’s obligation to issue the Securities to the Investor shall be subject to
the following conditions, any one or more of which may be waived by the
Company:
(i) prior
receipt by the Company of a certified or official bank check or wire transfer of
funds in the full amount of the purchase price for the Securities being
purchased hereunder as set forth in Article V of the Securities Purchase
Agreement;
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(ii) completion
of the purchases and sales under the Agreements with the Other Investors;
and
(iii) the
accuracy of the representations and warranties made by the Investors and the
fulfillment of those undertakings of the Investors to be fulfilled prior to the
Closing.
(b) The
Investor’s obligation to purchase the Securities shall be subject to the
following conditions, any one or more of which may be waived by the
Investor:
(i) representations
and warranties of the Company set forth herein being true and correct as of the
Closing Date in all material respects;
(ii) all
obligations, covenants and agreements of the Company required to be performed at
or prior to the Closing Date shall have been performed;
(iii) the
delivery by the Company of the items set forth in Section 3(a) of this
Agreement;
(iv) there
shall have been no Material Adverse Effect with respect to the Company since the
date hereof; and
(v) from the
date hereof to the Closing Date, trading in the Common Stock shall not have been
suspended by the SEC or the Company’s principal trading market (except for any
suspension of trading of limited duration agreed to by the Company, which
suspension shall be terminated prior to the Closing), and, at any time prior to
the Closing Date, trading in securities generally as reported by Bloomberg L.P.
shall not have been suspended or limited, or minimum prices shall not have been
established on securities whose trades are reported by such service, or on any
trading market, nor shall a banking moratorium have been declared either by the
United States or New York State authorities nor shall there have occurred any
material outbreak or escalation of hostilities or other national or
international calamity of such magnitude in its effect on, or any material
adverse change in, any financial market which, in each case, in the reasonable
judgment of each Investor, makes it impracticable or inadvisable to purchase the
Securities at the Closing.
4. Representations, Warranties
and Covenants of the Company. The Company hereby represents
and warrants to, and covenants with, the Investor, as follows:
4.1 Organization. Each
of the Company and its subsidiaries is duly organized and validly existing in
good standing under the laws of the jurisdiction of its
organization. Each of the Company and its subsidiaries has full power
and authority to own, operate and occupy its properties and to conduct its
business as presently conducted and as described in the documents filed by the
Company under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), since the end
of its most recently completed fiscal year through the date hereof (the “Exchange Act Documents”),
including, without limitation, its report on Form 10-K for fiscal year 2009 and
its report on Form 10-Q for the Company’s most recently completed fiscal quarter
and each of the Company and its subsidiaries is registered or qualified to do
business and in good standing in each jurisdiction in which the nature of the
business conducted by it or the location of the properties owned or leased by it
requires such qualification and where the failure to be so qualified would have
a material adverse effect upon the financial condition, earnings, business or
business prospects, properties or operations of the Company and its
subsidiaries, taken as a whole (a “Material Adverse Effect”), and
no proceeding has been instituted in any such jurisdiction, revoking, limiting
or curtailing, or seeking to revoke, limit or curtail, such power and authority
or qualification.
4.2 Due Authorization and Valid
Issuance. The Company has all requisite power and authority to
execute, deliver and perform its obligations under the Agreements , and the
Agreements have been duly authorized and validly executed and
delivered by the Company and constitute legal, valid and binding agreements of
the Company enforceable against the Company in accordance with their terms,
except as rights to indemnity and contribution may be limited by state or
federal securities laws or the public policy underlying such laws, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ and contracting
parties’ rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law). The Preferred Shares being
purchased by the Investor hereunder will, upon issuance and payment therefore
pursuant to the terms hereof, be duly authorized, validly issued, fully paid and
nonassessable. The Company has reserved from its duly authorized
capital stock: (a) the number of Preferred Shares issuable pursuant to this
Agreement, and (b) the number of shares of Common Stock issuable upon conversion
of the Preferred Stock the (“Conversion
Shares”).
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4.3 Non-Contravention. The
execution and delivery of the Agreements, the issuance and sale of the
Securities and the Conversion Shares under the Agreements, the fulfillment of
the terms of the Agreements and the consummation of the transactions
contemplated thereby will not (A) conflict with or constitute a violation of, or
default (with the passage of time or otherwise) under, (i) any material bond,
debenture, note or other evidence of indebtedness, lease, contract, indenture,
mortgage, deed of trust, loan agreement, joint venture or other agreement or
instrument to which the Company or any of its subsidiaries is a party or by
which they or any of their properties are bound, (ii) the charter, by-laws
or other organizational documents of each of the Company and its subsidiaries,
or (iii) any law, administrative regulation, ordinance or order of any court or
governmental agency, arbitration panel or authority applicable to the Company
and its subsidiaries or their respective properties, except in the case of
clauses (i) and (iii) for any such conflicts, violations or defaults which are
not reasonably likely to have a Material Adverse Effect or (B) result in the
creation or imposition of any lien, encumbrance, claim, security interest or
restriction whatsoever upon any of the material properties or assets of the
Company or any of its subsidiaries or an acceleration of indebtedness pursuant
to any obligation, agreement or condition contained in any material bond,
debenture, note or any other evidence of indebtedness or any material indenture,
mortgage, deed of trust or any other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which any of them is bound
or to which any of the material property or assets of the Company or its
subsidiaries is subject except in cases not reasonably likely to have a Material
Adverse Effect. No consent, approval, authorization or other order
of, or registration, qualification or filing with, any regulatory body,
administrative agency, or other governmental body in the United States or any
other person is required for the execution and delivery of the Agreements and
the valid issuance and sale of the Securities and the Conversion Shares to be
sold pursuant to the Agreements, other than such as have been made or obtained,
and except for any post-closing securities filings or notifications required to
be made under federal or state securities laws.
4.4 Capitalization. The
entire authorized capital stock of the Company consists of (a) 200,000,000
shares of common stock, par value $0.001 per share (the “Common Stock”), of which
21,244,410 are issued and outstanding, and (b) 25,000,000 shares of preferred
stock, of which, (i) 9,330,514 shares were designated as Series A Convertible
Preferred Stock, par value $0.001 (“Series A Stock”), of which
7,500,484 shares were issued and outstanding as of June 15, 2010, (ii) 1,00,010
shares were designated as Series B Convertible Preferred Stock, par value $0.001
(“Series B Stock”), of
which 1,000,000 shares were issued and outstanding as of June 15, 2010, (iii)
4,100,000 shares were designated as Series C Convertible Preferred Stock, par
value $0.001 (“Series C
Stock”), of which 4,037,500 shares were issued and outstanding as of June
15, 2010, (iv) 4,666,666 shares were designated as Series D Convertible
Preferred Stock, par value $0.001 (“Series D
Stock”) of which 4,331,818 shares were issued and
outstanding as of June 15, 2010, and (v) pursuant to the Offering, 3,333,334
shares were designated as the Preferred Stock, of which up to 3,333,334 shares
will be issued and outstanding as of the Closing. All shares of the
Company’s issued and outstanding capital stock have been duly authorized, are
validly issued and outstanding, and are fully paid and
nonassessable. There are no dividends which have accrued or been
declared but are unpaid on the capital stock of the Company. No
person has any right of first refusal, preemptive right, right of participation
or any similar right to participate in the transactions contemplated by the
Agreements. Except as a result of the purchase and sale of the
Securities pursuant to the Offering, and except for the Company’s currently
outstanding shares of Series A Stock, Series B Stock, Series C Stock, Series D
Stock and employee and director stock options under the Company’s equity
compensation plans and outstanding warrants as disclosed in the Exchange Act
Documents, there are no outstanding options, warrants, rights to subscribe to,
calls or commitments of any character whatsoever relating to, or securities,
rights or obligations convertible into or exchangeable for, or giving any person
any right to subscribe for or acquire, any shares of Common Stock, or contracts,
commitments, understandings or arrangements by which the Company is or may
become bound to issue additional shares of Common Stock, or securities or rights
convertible or exchangeable into shares of Common Stock. The issuance
and sale of the Securities pursuant to the Agreements will not obligate the
Company to issue shares of Common Stock or other securities to any person (other
than the Investors) and will not result in a right of any holder of Company
securities to adjust the exercise, conversion, exchange or reset price under
such securities.
4.5 Financial Statements;
Accountants. The consolidated financial statements of the
Company and the related notes contained in the Exchange Act Documents present
fairly in all material respects, in accordance with generally accepted
accounting principles, the financial position of the Company and its
subsidiaries as of the dates indicated, and the results of its operations and
cash flows of the Company and its subsidiaries for the periods therein specified
and are consistent with the books and records of the Company except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which are not expected to be material in
amount. Such financial statements (including the related notes) have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods therein specified, except
as may be included in the notes to such financial statements, or in the case of
unaudited statements, as may be permitted by the United States Securities and
Exchange Commission (the “SEC”) on Form 10-Q, under the
Exchange Act and except as disclosed in the Exchange Act
Documents. The other financial information contained in the Exchange
Act Documents has been prepared on a basis consistent with the financial
statements of the Company and its subsidiaries contained in the Exchange Act
Documents. To the Company’s knowledge, Xxxxxxx, Xxxxxxxx & Co.,
P.A. are independent accountants as required by the Securities Act of 1933, as
amended (the “Securities
Act”), and the rules and regulations promulgated thereunder.
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4.6 Placement Agent; Board of
Directors. Emerging Growth Equities, Ltd. served as placement
agent for the Company’s offering of Series A Stock and, for its services as
placement agent, received a $117,000 fee and a warrant to purchase 320,000
shares of Common Stock, exercisable at $1.10 per share and expiring on December
27, 2011. Emerging Growth Equities, Ltd. served as placement agent
for the Company’s offering of Series B Stock and, for its services as placement
agent, received a $634,872 fee and a warrant to purchase 120,928 shares of
Common Stock, exercisable at $3.30 per share and expiring on June 29,
2012. Xxxxxxx Xxxxxxx LLC and Emerging Growth Equities, Ltd. served
as placement agents for the Company’s offering of Series C Stock and, for its
services as placement agent, shared equally a $535,600 fee and a warrant to
purchase 109,150 shares of Common Stock, exercisable at $2.53 per share and
expiring on June 12, 2013. Emerging Growth Equities, Ltd. served as placement
agent for the Company’s offering of Series D Stock and, for its services as
placement agent, received a $34,400 fee. In connection with the Offering, the
Placement Agent will receive a 5% fee on the aggregate amount paid by Investors
introduced to the Company that are not existing shareholders of the Company.
Xxxxxx X. Xxxxxxxxx, a former member of the Company’s Board of Directors and a
current stockholder of the Company, is a co-founder and director of EGE
Holdings, Ltd., a holding company with ownership interests in investment
banking, money management and venture capital, including a 100% ownership
interest in Emerging Growth Equities, Ltd. Xx. Xxxxxxxxx received no
compensation from EGE Holdings, Ltd. or Emerging Growth Equities, Ltd. related
to the transactions discussed in this Section 4.6, including the
Offering.
4.7 Company not an “Investment
Company”. The Company has been advised of the rules and
requirements under the Investment Company Act of 1940, as amended (the “Investment Company
Act”). The Company is not, and immediately after receipt of
payment for the Securities will not be, an “investment company” or an entity
“controlled” by an “investment company” within the meaning of the Investment
Company Act and shall conduct its business in a manner so that it will not
become subject to the Investment Company Act.
4.8 Transfer
Taxes. On the Closing Date, all stock transfer or other taxes
(other than income taxes) which are required to be paid in connection with the
sale and transfer of the Securities to be sold to the Investor hereunder will
be, or will have been, fully paid or provided for by the Company and all laws
imposing such taxes will be or will have been fully complied with.
4.9 Private
Offering. Assuming (a) the correctness of the representations
and warranties of the Investors set forth in Section 5 hereof, (b) the
correctness of the information provided in the Investor Questionnaire submitted
by each of the Investors and (c) that Placement Agent’s activities are
consistent with the activities permissible under Rule 506 of Regulation D of the
Securities Act, the offer and sale of the Securities hereunder is exempt from
registration under the Securities Act.
5.
Representations, Warranties and Covenants of
the Investor.
5.1 The
Investor represents and warrants to, and covenants with, the Company that (a)
the Investor is an “accredited investor” as defined in Regulation D under the
Securities Act and the Investor is also knowledgeable, sophisticated and
experienced in making, and is qualified to make, decisions with respect to
investments in shares presenting an investment decision like that involved in
the purchase of the Securities, including investments in securities issued by
the Company and investments in comparable companies, and has requested,
received, reviewed and considered all information it deemed relevant in making
an informed decision to purchase the Securities; (b) the Investor is acquiring
the number of Preferred Shares set forth in Article V of the attached
Securities Purchase Agreement in the ordinary course of its business and for its
own account for investment only and with no present intention of distributing
any of the Securities or any arrangement or understanding with any other persons
regarding the distribution of such Securities; (c) the Investor will not,
directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of
(or solicit any offers to buy, purchase or otherwise acquire or take a pledge
of) any of the Securities except in compliance with the Securities Act,
applicable state securities laws and the respective rules and regulations
promulgated thereunder; (d) the Investor has answered all questions on the
Investor Questionnaire and the answers thereto are true, correct and complete as
of the date hereof and will be true, correct and complete as of the Closing
Date; (e) the Investor will notify the Company immediately of any change in any
of such information until such time as the Investor has sold all of its
Conversion Shares; and (f) the Investor has, in connection with its decision to
purchase the number of Preferred Shares set forth in Article V of the attached
Securities Purchase Agreement, relied only upon the Exchange Act Documents and
the representations and warranties of the Company contained
herein. The Investor understands that neither the Offering nor the
acquisition of the Securities have been registered under the Securities Act or
registered or qualified under any state securities law in reliance on specific
exemptions therefrom, which exemptions may depend upon, among other things, the
bona fide nature of the Investor’s investment intent as expressed herein and the
information provided in the Investor’s Investor
Questionnaire. Investor has completed or caused to be completed and
delivered to the Company the Investor Questionnaire, which questionnaire is
true, correct and complete in all material respects.
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5.2 The
Investor (other than individuals) is an entity duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization with
full power and authority to enter into and to consummate the transactions
contemplated by this Agreement and otherwise to carry out its obligations
hereunder. The execution, delivery and performance by the Investor of
the transactions contemplated by this Agreement to be performed by the Investor
have been duly authorized by all necessary corporate or similar action on the
part of the Investor. This Agreement has been duly executed by the
Investor, and when delivered by the Investor in accordance with the terms
hereof, will constitute the valid and legally binding obligation of the
Investor, enforceable against it in accordance with its terms, except (i) as
limited by laws of general application relating to bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors’ and
contracting parties’ rights generally, (ii) as limited by rules of law governing
specific performance, injunctive relief, or other equitable remedies, (iii) as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law)
and (iv) to the extent the indemnification and contribution provisions contained
in this Annex I to the Securities Purchase Agreement may be limited by
applicable federal or state securities laws or the public policy underlying such
laws.
5.3 The
Investor is not purchasing the Securities as a result of any advertisement,
article, notice or other communication regarding the Securities published in any
newspaper, magazine or similar media or broadcast over television or radio or
presented at any seminar or any other general solicitation or general
advertisement.
5.4 The
Investor is (i) acquiring the Securities and (ii) the shares of Common Stock
receivable upon conversion thereof, in each case, for its own account and not
with a view towards, or for resale in connection with, the public sale or
distribution thereof in violation of the Securities Act; provided, however, that
by making the representations herein, the Investor does not agree to hold any of
the Securities for any minimum or other specific term and reserves the right to
dispose of the Securities under an exemption under the Securities Act and
reserves the right to dispose of the Conversion Shares at any time in
accordance with or pursuant to a registration statement or an exemption under
the Securities Act. The Investor is acquiring the Securities
hereunder in the ordinary course of its business.
5.5 The
Investor understands that the Securities are being offered and sold to it in
reliance on specific exemptions from the registration requirements of United
States federal and state securities laws and that the Company is relying in part
upon the truth and accuracy of, and the Investor’s compliance with, the
representations, warranties, agreements, acknowledgments and understandings of
the Investor set forth herein in order to determine the availability of such
exemptions and the eligibility of the Investor to acquire the
Securities.
5.6 The
Investor and its advisors, if any, have been furnished with all publicly
available materials relating to the business, finances and operations of the
Company and such other publicly available materials relating to the offer and
sale of the Securities as have been requested by the Investor. The
Investor and its advisors, if any, have been afforded the opportunity to ask
questions of the Company. Neither such inquiries nor any other due
diligence investigations conducted by the Investor or its advisors, if any, or
its representatives shall modify, amend or affect the Investor’s right to rely
on the Company’s representations and warranties contained herein. The
Investor understands that its investment in the Securities involves a high
degree of risk.
5.7 The
Investor understands that no United States federal or state agency or any other
government or governmental agency has passed on or made any recommendation or
endorsement of the Securities or the fairness or suitability of the investment
in the Securities, nor have such authorities passed upon or endorsed the merits
of the offering of the Securities.
6. Survival of Representations,
Warranties and Agreements. All covenants, agreements,
representations and warranties made by the Company and the Investor herein shall
survive the execution of this Agreement, the delivery to the Investor of the
Securities being purchased and the payment therefor.
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7. Transfer
Restrictions.
7.1 The
Securities may only be disposed of in compliance with state and federal
securities laws. The Investor will not, directly or indirectly,
offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to
buy, purchase or otherwise acquire or take pledge of) any of the Securities
except in compliance with the Securities Act, applicable state securities laws
and the respective rules and regulations promulgated thereunder. In
connection with any transfer of the Securities other than pursuant to an
effective registration statement, to the Company, to an affiliate of the
Investor (who is an accredited investor and executes a customary representation
letter) or in connection with a pledge as contemplated in Section 7.2 hereof,
the Company may require the transferor thereof to provide to the Company an
opinion of counsel selected by the transferor and reasonably acceptable to the
Company, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not require
registration of such transferred Securities under the Securities Act, provided,
however, that in the case of a transfer pursuant to Rule 144, no opinion shall
be required if the transferor provides the Company with a customary seller’s
representation and broker’s representation letter reasonably satisfactory to the
Company. Any such transferee that agrees in writing to be bound by
the terms of this Agreement shall have the rights of an Investor under this
Agreement. The Company shall reissue certificates evidencing the
Securities upon surrender of certificates evidencing the Securities being
transferred in accordance with this Section 7.1.
7.2 The
Investors agree to the imprinting, so long as is required by this Section 7, of
a legend on any of the Securities in substantially the following
form:
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND ARE SUBJECT TO RESTRICTIONS
ON TRANSFERABILITY AS SET FORTH IN THIS CERTIFICATE. THE SECURITIES
REPRESENTED HEREBY MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF
COUNSEL, REASONABLY ACCEPTABLE TO THE COMPANY, TO THE EFFECT THAT THE PROPOSED
SALE, TRANSFER OR DISPOSITION MAY BE AFFECTED WITHOUT REGISTRATION UNDER THE
ACT.
The
Company acknowledges and agrees that the Investor may from time to time pledge
pursuant to a bona fide margin agreement with a registered broker-dealer or
grant a security interest in some or all of the Securities, the Conversion
Shares, in accordance with all applicable securities laws, to a financial
institution that is an “accredited investor” as defined in Rule 501(a) under the
Securities Act and, if required under the terms of such arrangement, the
Investor may transfer pledged or secured Securities to the pledgees or secured
parties; provided that the Investor shall provide the Company with such
documentation as is reasonably requested by the Company to ensure that the
pledge is pursuant to a bona fide margin agreement with a registered
broker-dealer or a security interest in some or all of the Securities to a
financial institution that is an “accredited investor” as defined in Rule 501(a)
under the Securities Act.
7.3 Upon
delivery by the Investor to the Company’s transfer agent, with a copy to the
Company, of the Representation Letter substantially in the form attached hereto
as Exhibit
B, the certificates evidencing the Conversion Shares shall not contain
any legend (including the legend set forth in Section 7.2 hereof): (a) while a
registration statement covering the resale of such security is effective under
the Securities Act, (b) following any sale of such Conversion Shares pursuant to
Rule 144, (c) if such Conversion Shares are eligible for sale under Rule 144,
without the requirement for the Company to be in compliance with the current
public information required under Rule 144 as to such Conversion Shares and
without volume or manner-of-sale restrictions or (d) if such legend is not
required under applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the SEC). The Company
shall cause its counsel to issue a legal opinion to the Transfer Agent promptly
after the Effective Date if required by the Transfer Agent to effect the removal
of the legend hereunder. If all or any shares of Preferred Stock are converted
at a time when there is an effective registration statement to cover the resale
of the Conversion Shares, or if such Conversion Shares may be sold under Rule
144, without the requirement for the Company to be in compliance with the
current public information required under Rule 144 as to such Conversion Shares
and without volume or manner-of-sale restrictions or if such legend is not
otherwise required under applicable requirements of the Securities Act
(including judicial interpretations and pronouncements issued by the staff of
the SEC) then such Conversion Shares shall be issued free of all
legends. The Company agrees that following the Effective Date or at
such time as such legend is no longer required under this Section 7.3, it will,
no later than three Trading Days (as defined below) following the delivery by a
Investor to the Company or the Transfer Agent of a certificate representing
Conversion Shares, as applicable, issued with a restrictive legend, deliver or
cause to be delivered to such Investor a certificate representing such shares
that is free from all restrictive and other legends. The Company may
not make any notation on its records or give instructions to the Transfer Agent
that enlarge the restrictions on transfer set forth in this Section
7. Certificates for Conversion Shares subject to legend removal
hereunder shall be transmitted by the Transfer Agent to the Investor by
crediting the account of the Investor’s prime broker with the Depository Trust
Company System as directed by such Investor. “Trading Day” means a
day on which the principal trading market is open for trading.
7.4 The
Investor agrees that the removal of the restrictive legend from certificates
representing Securities as set forth in this Section 7 is predicated upon the
Company’s reliance on, and the Investor’s agreement that, the Investor will not
sell any Securities except pursuant to either the registration requirements of
the Securities Act, including any applicable prospectus delivery requirements,
or an exemption therefrom.
-8-
8. Other
Agreements.
8.1 Public
Information.
(a) If the
Common Stock is not registered under Section 12(b) or 12(g) of the Exchange Act
on the date hereof, the Company agrees to cause the Common Stock to be
registered under Section 12(g) of the Exchange Act on or before the 90th
calendar day following the date hereof. Until the earliest of the time that no
Investor owns Securities, the Company covenants to maintain the registration of
the Common Stock under Section 12(b) or 12(g) of the Exchange Act and to timely
file (or obtain extensions in respect thereof and file within the applicable
grace period) all reports required to be filed by the Company after the date
hereof pursuant to the Exchange Act. The Company covenants that it
will use commercially reasonable efforts to timely file the reports required to
be filed by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder (or, if the Company is not required to
file such reports, it will, upon the request of any Investor holding the
Securities purchased hereunder made after the first anniversary of the Closing
Date, make publicly available such information as necessary to permit sales
pursuant to Rule 144(c)(2) under the Securities Act). The Company
further covenants that it will take such further action as any holder of
Securities may reasonably request, to the extent required from time to time to
enable such Person to sell such Securities without registration under the
Securities Act within the requirements of the exemption provided by Rule
144.
(b) At any
time during the period commencing from the six (6) month anniversary of the date
hereof and ending at such time that all of the Securities may be sold without
the requirement for the Company to be in compliance with Rule 144(c)(1) and
otherwise without restriction or limitation pursuant to Rule 144, if the Company
shall fail for any reason to satisfy the current public information requirement
under Rule 144(c) (a “Public
Information Failure”) then, in addition to such Investor’s other
available remedies, the Company shall pay to a Investor, in cash, as partial
liquidated damages and not as a penalty, by reason of any such delay in or
reduction of its ability to sell the Securities, an amount in cash equal to one
percent (1.0%) of the aggregate subscription amount of such Investor’s
Securities on the day of a Public Information Failure and on every thirtieth
(30th) day (pro rated for periods totaling less than thirty days) thereafter
until the earlier of (a) the date such Public Information Failure is cured and
(b) such time that such public information is no longer required for the
Investors to transfer the Conversion Shares pursuant to Rule 144. The
payments to which an Investor shall be entitled pursuant to this Section 9.1(b)
are referred to herein as “Public Information Failure
Payments.” Public Information Failure Payments shall be paid
on the earlier of (i) the last day of the calendar month during which such
Public Information Failure Payments are incurred and (ii) the third (3rd)
Business Day after the event or failure giving rise to the Public Information
Failure Payments is cured. Nothing herein shall limit such Investor’s
right to pursue actual damages for the Public Information Failure, and such
Investor shall have the right to pursue all remedies available to it at law or
in equity including, without limitation, a decree of specific performance and/or
injunctive relief.
8.2 Securities Laws Disclosure;
Publicity. The Company shall issue a Current Report on Form
8-K, disclosing the material terms of the transactions contemplated hereby, and
including the agreements related to the Offering (the “Transaction Documents”) as
exhibits thereto, in accordance with the provisions of the Exchange
Act. The Company and each Investor shall consult with each other in
issuing any press releases with respect to the transactions contemplated hereby,
and neither the Company nor any Investor shall issue any such press release nor
otherwise make any such public statement with respect to the transactions
contemplated hereby without the prior consent of the Company, with respect to
any press release of any Investor, or without the prior consent of each
Investor, with respect to any press release of the Company, which consent shall
not unreasonably be withheld or delayed, except if such disclosure is required
by law, in which case the disclosing party shall promptly provide the other
party with prior notice of such public statement or communication.
9. Notices. All
notices, requests, consents and other communications hereunder shall be in
writing, shall be mailed (A) if within the United States by first-class
registered or certified airmail, or nationally recognized overnight express
courier, postage prepaid, by facsimile or e-mail (if agreed to by the Investor),
or (B) if delivered from outside the United States, by international
express courier, facsimile or e-mail (if agreed to by the Investor), and shall
be deemed given (i) if delivered by first-class registered or certified
mail, three business days after so mailed, (ii) if delivered by nationally
recognized overnight carrier, one business day after so mailed, (iii) if
delivered by International Federal Express, two business days after so mailed,
(iv) if delivered by facsimile or e-mail, upon electronic confirmation of
receipt and shall be delivered as addressed as follows:
(a) if to the
Company, to:
0000
Xxxxxxx Xxxx Xxxxx, Xxxxx 000
Xxxxx,
Xxxxxxx 00000
Attn:
Xxxxxxx X. Xxxxxxxx, Chief Financial Officer
(b) with a
copy to:
Xxxxxx,
Xxxxx & Bockius LLP
0000
Xxxxxx Xxxxxx
Xxxxxxxxxxxx,
XX 00000
Attention:
Xxxxxx X. Xxxxxx, Esq.
(c) if to the
Investor, at its mail or e-mail address on the signature page hereto, or at such
other address or addresses as may have been furnished to the Company in
writing.
-9-
10. Changes. This
Agreement may not be modified or amended except pursuant to an instrument in
writing signed by the Company and the Investor.
11. Headings. The
headings of the various sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed to be part of this
Agreement and do not affect its interpretation.
12. Severability. In
case any provision contained in this Agreement should be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby.
13. Governing
Law. This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of Florida, without giving
effect to the principles of conflicts of law.
14. Counterparts. This
Agreement may be executed in two or more counterparts, including facsimile
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties.
15. Rule
144. The Company covenants that it will use commercially
reasonable efforts to timely file the reports required to be filed by it under
the Securities Act and the Exchange Act and the rules and regulations adopted by
the SEC thereunder (or, if the Company is not required to file such reports, it
will, upon the request of any Investor holding the Securities purchased
hereunder made after the first anniversary of the Closing Date, make publicly
available such information as necessary to permit sales pursuant to Rule 144
under the Securities Act), and it will use commercially reasonable efforts to
take such further action as any such Investor may reasonably request, all to the
extent required from time to time to enable such Investor to sell the Securities
purchased hereunder without registration under the Securities Act within the
limitation of the exemptions provided by (a) Rule 144 under the Securities Act,
as such rule may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the SEC.
16. Confidential
Information. The Investor represents to the Company that, at
all times during the Company’s offering of the Securities, the Investor has
maintained in confidence all non-public information regarding the Company
received by the Investor from the Company or its agents, including information
about the Offering of the Securities and covenants that it will continue to
maintain in confidence such information until such date that the transactions
contemplated hereunder are publicly disclosed pursuant to this
Agreement.
17. Independent Nature of
Investors’ Obligations and Rights. The obligations of each
Investor under any Transaction Document are several and not joint with the
obligations of any other Investor, and no Investor shall be responsible in any
way for the performance or non-performance of the obligations of any other
Investor under any Transaction Document. Nothing contained herein or
in any other Transaction Document, and no action taken by any Investor pursuant
thereto, shall be deemed to constitute the Investors as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Investors are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the
Transaction Documents. Each Investor shall be entitled to
independently protect and enforce its rights, including, without limitation, the
rights arising out of this Agreement or out of the other Transaction Documents,
and it shall not be necessary for any other Investor to be joined as an
additional party in any proceeding for such purpose.
-10-
INVESTOR
QUESTIONNAIRE
To: nFinanSe
Inc.
0000 Xxxxxxx Xxxx Xxxxx, Xxxxx
000,
Xxxxx,
Xxxxxxx 00000
This
Investor Questionnaire (“Questionnaire”) must be
completed by each potential investor in connection with the offer and sale by
nFinanSe Inc. (the “Company”) of Series E
Preferred Stock, $0.001 par value per share (the “Securities”), to certain
investors in a private placement (the “Offering”).
The
Securities are being offered and sold by the Company (i) without registration
under the Securities Act of 1933, as amended (the “Act”) or the securities laws
of certain states, and (ii) in reliance on the exemptions contained in (A)
Section 4(2) of the Act, (B) Regulation D promulgated under the Act, and (C) on
similar exemptions available under applicable state laws. The Company
must determine that a potential investor meets certain suitability requirements
before offering or selling the Securities to such investor; the purpose of this
Questionnaire is to assure the Company that each investor will meet the
applicable suitability requirements. The information supplied by you
will be used in determining whether you meet such criteria, and reliance upon
the private offering exemption from registration is based in part on the
information supplied herein.
This
Questionnaire does not constitute an offer to sell or a solicitation of an offer
to buy any security. Your answers will be kept strictly confidential,
except as required by applicable laws, regulations or any securities exchange
market or markets on which the Company’s securities are traded, listed or
quoted. However, by executing this Questionnaire you authorize the
Company to provide a completed copy of this Questionnaire to such parties as the
Company deems appropriate in order to ensure that the offer and sale of the
Securities will not result in a violation of the Act or the securities laws of
any state and that you otherwise satisfy the suitability requirements applicable
to purchasers of the Securities. All potential investors must answer
all applicable questions and complete, date and sign this
Questionnaire. Please print or type your responses to each item below
and attach additional sheets of paper as necessary.
A. BACKGROUND
INFORMATION
Name:
____________________________________________________________________________________________
Business
Address:
_________________________________________________________________________________
(Number and Street)
_________________________________________________________________________________________________
(City) (State) (Zip
Code)
Telephone
Number: (___)_____________________________________________________________________________
Fax: (___)_________________________________________________________________________________________
E-mail:
___________________________________________________________________________________________
Residence
Address:
________________________________________________________________________________
(Number and Street)
_________________________________________________________________________________________________
(City) (State) (Zip
Code)
Telephone
Number: (___)_____________________________________________________________________________
-11-
If an
individual:
Age: ___________
Citizenship: ______________ Where
registered to
vote: __________________
If a
corporation, partnership, limited liability company, trust or other
entity:
Type of
entity: ______________________________________
State of
formation: _____________________
Date of formation:
___________________________________
Social
Security or Taxpayer Identification
No.:
Send all
correspondence to (check one): ____ Residence
Address ____
Business Address
Current
ownership of securities of the Company:
__________ shares of Series A
Convertible Preferred Stock
__________ shares of Series B
Convertible Preferred Stock
__________ shares of Series C
Convertible Preferred Stock
__________ shares of Series D
Convertible Preferred Stock
__________ shares of Common
Stock
Warrants to purchase _________ shares
of Common Stock
Options to purchase __________ shares
of Common Stock
B. STATUS AS ACCREDITED
INVESTOR
The
undersigned is an “accredited investor” as such term is defined in Regulation D
promulgated under the Act, and at the time of the sale of the Securities the
undersigned falls within one or more of the following categories (Please initial one or more,
as applicable):1
____ (1) a
bank as defined in Section 3(a)(2) of the Act, or a savings and loan association
or other institution as defined in Section 3(a)(5)(A) of the Act, whether acting
in its individual or fiduciary capacity; a broker or dealer registered pursuant
to Section 15 of the Securities Exchange Act of 1934; an insurance company as
defined in Section 2(13) of the Act; an investment company registered under the
Investment Corporation Act of 1940 or a business development company as defined
in Section 2(a)(48) of such Act; a Small Business Investment Corporation
licensed by the U.S. Small Business Administration under Section 301(c) or (d)
of the Small Business Investment Act of 1958; a plan established and maintained
by a state, its political subdivisions or any agency or instrumentality of a
state or its political subdivisions for the benefit of its employees, if such
plan has total assets in excess of $5,000,000; or an employee benefit plan
within the meaning of the Employee Retirement Income Security Act of 1974, if
the investment decision is made by a plan fiduciary, as defined in Section 3(21)
of such Act, which is either a bank, savings and loan association, insurance
company or registered investment adviser, or if the employee benefit plan has
total assets in excess of $5,000,000 or, if a self-directed plan, with the
investment decisions made solely by persons that are accredited
investors;
1 As
used in this Questionnaire, the term “net worth” means the excess of total
assets over total liabilities. In computing net worth for the
purposes of subsection (4) herein, the principal residence of the investor must
be valued (i) at cost, including the cost of improvements, or (ii) at a recently
appraised value by an institutional lender making a secured loan, net of
encumbrances. In determining income, the investor should add to the
investor’s adjusted gross income any amounts attributable to tax exempt income
received, losses claimed as a limited partner in any limited partnership,
deductions claimed for depiction, contributions to an XXX or XXXXX retirement
plan, alimony payments and any amount by which income from long-term capital
gains has been reduced in arriving at adjusted gross
income.
-12-
____ (2) a
private business development company as defined in Section 202(a)(22) of the
Investment Adviser Act of 1940;
____ (3) an
organization described in Section 501(c)(3) of the Internal Revenue Code of
1986, as amended; a corporation; or a Massachusetts or similar business trust or
a partnership not formed for the specific purpose of acquiring the Securities
offered and having total assets in excess of $5,000,000;
____ (4) a
natural person whose individual net worth, or joint net worth with that person’s
spouse, at the time of such person’s purchase of the Securities exceeds
$1,000,000;
____ (5) a
natural person who 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;
____ (6) a
trust, with total assets in excess of $5,000,000 not formed for the specific
purpose of acquiring the Securities offered and whose purchase is directed by a
sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D;
or
____ (7) an
entity in which all of the equity owners are accredited investors (as defined
above).
C. REPRESENTATIONS AND
WARRANTIES
The
undersigned hereby represents and warrants to the Company as
follows:
1. Any
purchase of the Securities is made solely for the account of the undersigned and
is not for the account of any other person or with a view to any resale,
fractionalization, division or distribution thereof.
2. The
information contained herein is complete and accurate and may be relied upon by
the Company; the undersigned shall immediately notify the Company of any
material changes to such information occurring prior to the closing of the
Securities Purchase Agreement to which this Questionnaire is attached (the
“Securities Purchase
Agreement”), if any, or any other information relating to the purchase of
the Securities by the undersigned or any co-purchaser.
3. There are
no suits, pending litigation or claims against the undersigned that could
materially affect the net worth of the undersigned as reported in this
Questionnaire.
4. The
undersigned acknowledges that there may occasionally be times when the Company
determines that it must suspend the use of the prospectus forming a part of a
registration statement applicable to the Securities, if any. The
undersigned is aware that, in such an event, the Securities shall not be subject
to ready liquidation and that the Securities purchased by the undersigned would
have to be held by the undersigned during such suspension.
5. The
overall commitment of the undersigned to investments which are not readily
marketable is not excessive in view of the undersigned’s net worth and financial
circumstances, and any purchase of the Securities shall not cause such
commitment to become excessive.
6. The
undersigned is able to bear the economic risk of an investment in the
Securities.
7. The
undersigned has carefully considered the potential risks relating to the Company
and a purchase of the Securities, including, among others, each of the risks
identified under the caption “Risk Factors” in the Exchange Act Documents (as
such term is defined in the Securities Purchase Agreement). The
undersigned fully understands that the Securities are a speculative investment
which involves a high degree of risk of loss of the undersigned’s entire
investment.
-13-
IN
WITNESS WHEREOF, the undersigned has executed this Investor Questionnaire this
____ day of ________, 2010, and declares under oath that it is truthful and
correct.
_______________________________________________
Print
Name
By:
____________________________________________
Signature
Title:
___________________________________________
(Required for any purchaser that
is a corporation, partnership, trust or other entity)
-14-
Exhibit
A
The
Certificate
See
attached.
-15-
Exhibit
B
REPRESENTATION
LETTER
[Transfer
Agent Name]
[Transfer
Agent Address]
[Transfer
Agent Address]
|
|
RE:
|
Securities
of nFinanSe Inc. (the “Company”)
|
Dear
Sir/Madam:
The
undersigned hereby certifies that at the time of the sale of its securities in
the Company, it will either (i) sell the securities pursuant to the Company’s
Prospectus dated _____________ (the “Prospectus”) in a manner described under
the caption “Plan of Distribution” in the Prospectus in compliance with all
securities laws applicable to the undersigned, including, without limitation,
the prospectus delivery requirements of the Securities Act of 1933, as amended;
or (ii) sell the securities in compliance with Rule 144 of the Securities Act of
1933, as amended.
Selling
Shareholder (the beneficial
owner):_____________________________________
Record
Holder (e.g., if held in name of
nominee):_________________________________
Restricted
Stock Certificate
No.(s):___________________________________________
Number of
Shares:_______________________________________________________
Very
truly yours,
Dated:_____________________
By:__________________________
Print
Name:___________________
Title:_________________________
-16-
ADDENDUM
TO
SECURITIES
PURCHASE AGREEMENT
This Addendum to Securities Purchase
Agreement (this “Addendum”), is made and
entered into as of the 3rd day of July, 2010 by and between _______________ (the
“Investor”) and nFinanSe
Inc., a Nevada corporation (the “Company”). All terms used but
not defined herein shall have the meanings ascribed to them in the Purchase
Agreement (as defined below).
WITNESSETH:
WHEREAS, Investor and the
Company are parties to that certain Securities Purchase Agreement, dated as of
the 3rd day of July 2010 (the “Purchase Agreement”), pursuant
to which the Company agreed to sell _________ shares (the “Series E Preferred Shares”) of
Series E Convertible Preferred Stock of the Company, $0.001 par value per share
(the “Series E Preferred
Stock”), to the Investor.
WHEREAS, Investor and the
Company desire to amend the Purchase Agreement.
NOW, THEREFORE, in
consideration of the mutual covenants hereinafter contained and other good and
valuable consideration, the receipt of which is hereby acknowledged, the parties
hereto agree for themselves, their successors, legal representatives and
assignees, as follows:
1. Temporary Issuance of Series D
Preferred Stock. Investor hereby agrees to the issuance by the
Company of ________ shares of Series D Convertible Preferred Stock of the
Company, $0.001 par value per share (the “Series D Preferred Stock”), in
lieu of the Series E Preferred Shares.
2. Exchange of Preferred
Shares. Investor and the Company hereby agree and covenant
that the Series D Preferred Stock shall be exchanged for the Series E Preferred
Shares as soon as practical following the filing by the Company of that certain
Certificate of Designations, Rights and Preferences of Series E Convertible
Preferred Stock.
All other terms and conditions of the
Purchase Agreement not inconsistent herewith shall remain in full force and
effect.
[Signatures
follow.]
-17-
IN WITNESS WHEREOF, the parties hereto
have executed this Addendum as of the date first written above.
By:_________________________________
Name:
Title:
INVESTOR:
_________________________________
Name:
-18-
