Exhibit 10.1
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this "AGREEMENT") is dated as of
October 15, 2007, by and among Ivivi Technologies, Inc., a New Jersey
corporation (the "COMPANY"), and each purchaser identified on the signature
pages hereto (each, including its successors and assigns, a "PURCHASER" and
collectively, the "PURCHASERS").
RECITALS
A. The Company and each Purchaser is executing and delivering
this Agreement in reliance upon the exemption from securities registration
afforded by Section 4(2) of the Securities Act of 1933, as amended (the
"SECURITIES ACT"), and Rule 506 of Regulation D ("REGULATION D") as promulgated
by the United States Securities and Exchange Commission (the "COMMISSION") under
the Securities Act.
B. Each Purchaser, severally and not jointly, wishes to
purchase, and the Company wishes to sell, upon the terms and conditions stated
in this Agreement, that aggregate number of shares of common stock, no par value
per share (the "COMMON STOCK"), of the Company, set forth below such Purchaser's
name on the signature page of this Agreement (which aggregate amount for all
Purchasers together shall be 1,000,000 shares of Common Stock and shall be
collectively referred to herein as the "SHARES").
C. Contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement, substantially in the form attached hereto as EXHIBIT A (the
"REGISTRATION RIGHTS AGREEMENT"), pursuant to which, among other things, the
Company will agree to provide certain registration rights with respect to the
Shares under the Securities Act and the rules and regulations promulgated
thereunder and applicable state securities laws.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in
this Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and the Purchasers hereby
agree as follows:
ARTICLE I.
DEFINITIONS
1.1 DEFINITIONS. In addition to the terms defined elsewhere in this
Agreement, for all purposes of this Agreement, the following terms shall have
the meanings indicated in this Section 1.1:
"ACTION" means any action, suit, inquiry, notice of violation,
proceeding (including any partial proceeding such as a deposition) or
investigation pending or, to the Company's Knowledge, threatened in writing
against the Company or any of its properties before or by any federal, state,
county, local or foreign court, arbitrator, governmental or administrative
agency, regulatory authority, stock market, stock exchange or trading facility.
"AFFILIATE" means, with respect to any Person, any other
Person that, directly or indirectly through one or more intermediaries,
Controls, is controlled by or is under common control with such Person, as such
terms are used in and construed under Rule 144. With respect to a Purchaser, any
investment fund or managed account that is managed on a discretionary basis by
the same investment manager as such Purchaser will be deemed to be an Affiliate
of such Purchaser.
"AGREEMENT" shall have the meaning ascribed to such term in
the Preamble.
"BUSINESS DAY" means a day, other than a Saturday or Sunday,
on which banks in New York City are open for the general transaction of
business.
"CLOSING" means the closing of the purchase and sale of the
Shares pursuant to this Agreement.
"CLOSING BID PRICE" means, for any security as of any date,
the last closing price for such security on the Principal Trading Market, as
reported by Bloomberg, or, if the Principal Trading Market begins to operate on
an extended hours basis and does not designate the closing bid price then the
last bid price of such security prior to 4:00 p.m., New York City Time, as
reported by Bloomberg, or, if the Principal Trading Market is not the principal
securities exchange or trading market for such security, the last closing price
of such security on the principal securities exchange or trading market where
such security is listed or traded as reported by Bloomberg, or if the foregoing
do not apply, the last closing price of such security in the over-the-counter
market on the electronic bulletin board for such security as reported by
Bloomberg, or, if no closing bid price is reported for such security by
Bloomberg, the average of the bid prices of any market makers for such security
as reported in the "pink sheets" by Pink Sheets LLC (formerly the National
Quotation Bureau, Inc.). If the Closing Bid Price cannot be calculated for a
security on a particular 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 holder. All such determinations shall be
appropriately adjusted for any stock dividend, stock split, stock combination or
other similar transaction during the applicable calculation period.
"CLOSING DATE" means the Trading Day when all of the
Transaction Documents have been executed and delivered by the applicable parties
thereto, and all of the conditions set forth in Sections 2.1, 2.2, 5.1 and 5.2
hereof are satisfied, or such other date as the parties may agree.
"COMMISSION" has the meaning set forth in the Recitals.
"COMMON STOCK" has the meaning set forth in the Recitals, and
also includes any securities into which the Common Stock may hereafter be
reclassified or changed.
"COMMON STOCK EQUIVALENTS" means any securities of the Company
which would entitle the holder thereof to acquire at any time Common Stock,
including, without limitation, any debt, preferred stock, rights, options,
warrants or other instrument that is at any time convertible into or
exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock or other securities that entitle the holder to receive, directly or
indirectly, Common Stock.
"COMPANY COUNSEL" means Xxxxxxxxxx Xxxxxxx, PC.
"COMPANY DELIVERABLES" has the meaning set forth in Section
2.2(a).
"COMPANY'S KNOWLEDGE" means with respect to any statement made
to the knowledge of the Company, that the statement is based upon the actual
knowledge of the officers of the Company having responsibility for the matter or
matters that are the subject of the statement.
"CONTROL" (including the terms "controlling", "controlled by"
or "under common control with") means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
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"DISCLOSURE MATERIALS" has the meaning set forth in Section
3.1(h).
"EFFECTIVE DATE" means the date on which the Registration
Statement required by the Registration Rights Agreement is first declared
effective by the Commission.
"ENVIRONMENTAL LAWS" has the meaning set forth in Section
3.1(l).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, or any successor statute, and the rules and regulations promulgated
thereunder.
"GAAP" means U.S. generally accepted accounting principles,
as applied by the Company.
"INDEMNIFIED PERSON" has the meaning set forth in Section
4.7(b).
"INTELLECTUAL PROPERTY" has the meaning set forth in Section
3.1(r).
"LIEN" means any lien, charge, claim, encumbrance, security
interest, right of first refusal, preemptive right or other restrictions of any
kind.
"MATERIAL ADVERSE EFFECT" means any of (i) a material and
adverse effect on the legality, validity or enforceability of any Transaction
Document, (ii) a material and adverse effect on the results of operations,
assets, prospects, business or condition (financial or otherwise) of the Company
and the Subsidiaries, taken as a whole, or (iii) an material adverse impairment
to the Company's ability to perform on a timely basis its obligations under any
Transaction Document, except that the following shall not be deemed a Material
Adverse Effect, effects resulting from or relating to the announcement or
disclosure of the sale of the Shares or other transactions contemplated by this
Agreement.
"MATERIAL CONTRACT" means any contract of the Company that was
or should have been filed as an exhibit to the SEC Reports pursuant to Item
601(b)(4) or Item 601(b)(10) of Regulation S-K.
"MATERIAL PERMITS" has the meaning set forth in Section
3.1(p).
"NEW YORK COURTS" means the state and federal courts sitting
in the City of New York, Borough of Manhattan.
"OUTSIDE DATE" means October 31, 2007.
"PERSON" means an individual, corporation, partnership,
limited liability company, trust, business trust, association, joint stock
company, joint venture, sole proprietorship, unincorporated organization,
governmental authority or any other form of entity not specifically listed
herein.
"PRINCIPAL TRADING MARKET" means the Trading Market on which
the Common Stock is primarily listed on and quoted for trading, which, as of the
date of this Agreement and the Closing Date, shall be the American Stock
Exchange.
"PROCEEDING" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.
"PURCHASE PRICE" means $5.00 per Share.
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"PURCHASER DELIVERABLES" has the meaning set forth in Section
2.2(b).
"PURCHASER PARTY" has the meaning set forth in Section 4.7(a).
"REGISTRATION RIGHTS AGREEMENT" has the meaning set forth in
the Recitals.
"REGISTRATION STATEMENT" means a registration statement
meeting the requirements set forth in the Registration Rights Agreement and
covering the resale by the Purchasers of the Registrable Securities (as defined
in the Registration Rights Agreement).
"REQUIRED APPROVALS" has the meaning set forth in Section
3.1(e).
"RULE 144" means Rule 144 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"SEC REPORTs" has the meaning set forth in Section 3.1(h).
"SECRETARY'S CERTIFICATE" has the meaning set forth in Section
2.2(a)(vi).
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHORT SALES" include, without limitation, (i) all "short
sales" as defined in Rule 200 promulgated under Regulation SHO under the
Exchange Act, whether or not against the box, and all types of direct and
indirect stock pledges, forward sale contracts, options, puts, calls, short
sales, swaps, "put equivalent positions" (as defined in Rule 16a-1(h) under the
Exchange Act) and similar arrangements (including on a total return basis), and
(ii) sales and other transactions through non-U.S. broker dealers or foreign
regulated brokers.
"SUBSCRIPTION AMOUNT" means with respect to each Purchaser,
the aggregate amount to be paid for the Shares purchased hereunder as indicated
on such Purchaser's signature page to this Agreement next to the heading
"Aggregate Purchase Price (Subscription Amount)".
"SUBSIDIARY" means any entity in which the Company, directly
or indirectly, owns capital stock or holds an equity or similar interest.
"TRADING AFFILIATE" has the meaning set forth in Section
3.2(h).
"TRADING DAY" means (i) a day on which the Common Stock is
listed or quoted and traded on its Principal Trading Market (other than the OTC
Bulletin Board), or (ii) if the Common Stock is not listed on a Trading Market
(other than the OTC Bulletin Board), a day on which the Common Stock is traded
in the over-the-counter market, as reported by the OTC Bulletin Board, or (iii)
if the Common Stock is not quoted on any Trading Market, a day on which the
Common Stock is quoted in the over-the-counter market as reported in the "pink
sheets" by Pink Sheets LLC (or any similar organization or agency succeeding to
its functions of reporting prices); PROVIDED, that in the event that the Common
Stock is not listed or quoted as set forth in (i), (ii) and (iii) hereof, then
Trading Day shall mean a Business Day.
"TRADING MARKET" means whichever of the New York Stock
Exchange, the American Stock Exchange, the Nasdaq Global Select Market, the
Nasdaq Global Market, the Nasdaq Capital
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Market or the OTC Bulletin Board on which the Common Stock is listed or quoted
for trading on the date in question.
"TRANSACTION DOCUMENTS" means this Agreement, the schedules
and exhibits attached hereto, the Registration Rights Agreement and any other
documents or agreements executed in connection with the transactions
contemplated hereunder.
"TRANSFER AGENT" means Computershare Trust Company, Inc.,
or any successor transfer agent for the Company.
ARTICLE II.
PURCHASE AND SALE
2.1 CLOSING.
(a) AMOUNT. Subject to the terms and conditions set forth in
this Agreement, at the Closing, the Company shall issue and sell to each
Purchaser, and each Purchaser shall, severally and not jointly, purchase from
the Company, such number of Shares equal to the quotient resulting from dividing
(i) the aggregate Subscription Amount for such Purchaser by (ii) the Purchase
Price, rounded down to the nearest whole Share.
(b) CLOSING. The Closing of the purchase and sale of the
Shares shall take place at the offices of Xxxxxxxxxx Xxxxxxx PC, 00 Xxxxxxxxxx
Xxxxxx, Xxxxxxxx, Xxx Xxxxxx, xx the Closing Date or at such other locations or
remotely by facsimile transmission or other electronic means as the parties may
mutually agree.
(c) FORM OF PAYMENT. On the Closing Date, (i) each Purchaser
shall wire the Purchase Price to an account designated by the Company and (ii)
the Company shall irrevocably instruct the Transfer Agent to deliver to each
Purchaser one or more stock certificates, free and clear of all restrictive and
other legends (except as expressly provided in Section 4.1(b) hereof) evidencing
the number of Shares such Purchaser is purchasing as is set forth on such
Purchaser's signature page to this Agreement next to the heading "Number of
Shares to be Acquired", within three (3) Business Days after the Closing, duly
executed on behalf of the Company and registered in the name of such Purchaser.
2.2 CLOSING DELIVERIES. (a) On or prior to the Closing, the
Company shall issue, deliver or cause to be delivered to each Purchaser the
following (the "COMPANY DELIVERABLES"):
(i) this Agreement, duly executed by the Company;
(ii) one or more stock certificates, free and clear
of all restrictive and other
legends (except as provided in Section 4.1(b) hereof), evidencing the Shares
subscribed for by Purchaser hereunder, registered in the name of such Purchaser
as set forth on the Stock Certificate Questionnaire included as EXHIBIT B-2
hereto;
(iii) a legal opinion of Company Counsel, in the form
attached hereto as EXHIBIT C,
executed by such counsel and addressed to the Purchasers;
(iv) the Registration Rights Agreement, duly executed
by the Company;
(v) a certificate of the Secretary of the Company
(the "SECRETARY'S CERTIFICATE"), dated as of the Closing Date, (a) certifying
the resolutions adopted by the Board of
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Directors of the Company or a duly authorized committee thereof approving the
transactions contemplated by this Agreement and the other Transaction Documents
and the issuance of the Shares, (b) certifying the current versions of the
certificate or articles of incorporation, as amended, and by-laws of the Company
and (c) certifying as to the signatures and authority of persons signing the
Transaction Documents and related documents on behalf of the Company, in the
form attached hereto as EXHIBIT D; and
(vi) the Compliance Certificate referred to in
Section 5.1(h);
(b) On or prior to the Closing, each Purchaser shall deliver
or cause to be delivered to the Company the following (the "PURCHASER
DELIVERABLES"):
(i) this Agreement, duly executed by such Purchaser;
(ii) its Subscription Amount, in United States
dollars and in immediately available funds, by wire transfer to an account
designated by the Company;
(iii) the Registration Rights Agreement, duly
executed by such Purchaser;
(iv) a fully completed and duly executed Selling
Stockholder Questionnaire in the form attached as Annex B to the Registration
Rights Agreement; and
(v) a fully completed and duly executed Accredited
Investor Questionnaire and Stock Certificate Questionnaire in the forms attached
hereto as EXHIBITS B-1 and B-2, respectively.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as set forth
in the Disclosure Schedules, which Disclosure Schedules shall be deemed a part
hereof, or disclosed in the SEC Reports, the Company hereby represents and
warrants as of the date hereof and the Closing Date (except for the
representations and warranties that speak as of a specific date, which shall be
made as of such date), to each of the Purchasers as follows:
(a) SUBSIDIARIES. The Company has no direct or indirect
subsidiaries.
(b) ORGANIZATION AND QUALIFICATION. The Company is an entity
duly incorporated or otherwise organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization (as
applicable), with the requisite power and authority to own or lease and use its
properties and assets and to carry on its business as currently conducted. The
Company is not in violation of any of the provisions of its certificate or
articles of incorporation, bylaws or other organizational or charter documents.
The Company is duly qualified to conduct business and is in good standing as a
foreign corporation or other entity in each jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing, as
the case may be, could not reasonably be expected to have a Material Adverse
Effect.
(c) AUTHORIZATION; ENFORCEMENT; VALIDITY. The Company has the
requisite corporate power and authority to enter into and to consummate the
transactions contemplated by each of the Transaction Documents to which it is a
party and otherwise to carry out its obligations hereunder and
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thereunder. The execution and delivery of each of the Transaction Documents to
which it is a party by the Company and the consummation by it of the
transactions contemplated hereby and thereby (including, but not limited to, the
sale and delivery of the Shares) have been duly authorized by all necessary
corporate action on the part of the Company, and no further corporate action is
required by the Company, its Board of Directors or its shareholders in
connection therewith other than in connection with the Required Approvals. Each
of the Transaction Documents to which it is a party has been (or upon delivery
will have been) duly executed by the Company and is, or when delivered in
accordance with the terms hereof, will constitute the legal, valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, except (i) as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally the enforcement of, creditors' rights and
remedies or by other equitable principles of general application or (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies. There are no shareholder agreements, voting
agreements, or other similar arrangements with respect to the Company's capital
stock to which the Company is a party or, to the Company's Knowledge, between or
among any of the Company's shareholders.
(d) NO CONFLICTS. The execution, delivery and performance by
the Company of the Transaction Documents to which it is a party and the
consummation by the Company of the transactions contemplated hereby or thereby
(including, without limitation, the issuance of the Shares) do not and will not
(i) violate any provision of the Company's certificate or articles of
incorporation, bylaws or other organizational or charter documents, (ii) subject
to the Required Approvals, breach or result in a default (or with notice or
lapse of time or both would result in a default) under, result in the creation
of any Lien upon any of the properties or assets of the Company or give to
others any rights of termination, amendment, acceleration or cancellation (with
or without notice, lapse of time or both) of, any Material Contract, or (iii)
result in a violation of any law, rule, regulation, order, judgment, injunction,
decree or other restriction of any court or governmental authority to which the
Company is subject (including federal and state securities laws and regulations
and the rules and regulations, assuming the correctness of the representations
and warranties made by the Purchasers herein, of any self-regulatory
organization to which the Company or its securities are subject, including all
applicable Trading Markets), or by which any property or asset of the Company is
bound or affected, except in the case of clause (iii) such as could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(e) FILINGS, CONSENTS AND APPROVALS. Neither the Company nor
any of its Subsidiaries is required to obtain any consent, waiver, authorization
or order of, give any notice to, or make any filing or registration with, any
court or other federal, state, local or other governmental authority or other
Person in connection with the execution, delivery and performance by the Company
of the Transaction Documents (including the issuance of the Shares), other than
(i) the filing with the Commission of a Registration Statement in accordance
with the requirements of the Registration Rights Agreement, (ii) filings
required by applicable state securities laws, (iii) the filing of a Notice of
Sale of Shares on Form D with the Commission under Regulation D of the
Securities Act, (iv) the filing of any requisite notices and/or application(s)
to the Principal Trading Market for the issuance and sale of the Common Stock
and the listing of the Common Stock for trading or quotation, as the case may
be, thereon in the time and manner required thereby, (v) the filings required in
accordance with Section 4.5 of this Agreement and (vi) those that have been made
or obtained prior to the date of this Agreement (collectively, the "REQUIRED
APPROVALS").
(f) ISSUANCE OF THE SHARES. The Shares have been duly
authorized and, when issued and paid for in accordance with the terms of the
Transaction Documents, will be duly and validly issued, fully paid and
nonassessable and free and clear of all Liens, other than restrictions on
transfer provided for in the Transaction Documents or imposed by applicable
securities laws and other than any Liens imposed by the Purchasers, and shall
not be subject to preemptive or similar rights. Assuming the
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accuracy of the representations and warranties of the Purchasers in this
Agreement, the Shares will be issued in compliance with all applicable federal
and state securities laws.
(g) CAPITALIZATION. The number of shares and type of all
authorized, issued and outstanding capital stock, options and other securities
of the Company (whether or not presently convertible into or exercisable or
exchangeable for shares of capital stock of the Company) has been set forth on
SCHEDULE 3(G). All of the outstanding shares of capital stock of the Company are
duly authorized, validly issued, fully paid and non-assessable, have been issued
in compliance in all material respects with all applicable federal and state
securities laws, and none of such outstanding shares was issued in violation of
any preemptive rights or similar rights to subscribe for or purchase any capital
stock of the Company. Except as specified on SCHEDULE 3(G): (i) no shares of the
Company's capital stock are subject to preemptive rights or any other similar
rights or any liens or encumbrances suffered or permitted by the Company; (ii)
other than the grant of stock options disclosed on SCHEDULE 3(G), there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, or exercisable or exchangeable for, any shares of capital
stock of the Company, or contracts, commitments, understandings or arrangements
by which the Company is or may become bound to issue additional shares of
capital stock of the Company or options, warrants, scrip, rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities
or rights convertible into, or exercisable or exchangeable for, any shares of
capital stock of the Company; (iii) there are no outstanding debt securities,
notes, credit agreements, credit facilities or other agreements, documents or
instruments evidencing indebtedness of the Company or by which the Company is or
may become bound; (iv) there are no financing statements securing obligations in
any material amounts, either singly or in the aggregate, filed in connection
with the Company; (v) there are no outstanding securities or instruments of the
Company or which contain any redemption or similar provisions, and there are no
contracts, commitments, understandings or arrangements by which the Company is
or may become bound to redeem a security of the Company; (vi) there are no
securities or instruments containing anti-dilution or similar provisions that
will be triggered by the issuance of the Shares; and (viii) the Company has no
liabilities or obligations required to be disclosed in the SEC Reports (as
defined herein) but not so disclosed in the SEC Reports, other than those
incurred in the ordinary course of the Company's businesses and which,
individually or in the aggregate, do not or could not reasonably be expected to
have a Material Adverse Effect.
(h) SEC REPORTS. The Company has filed all reports, schedules,
forms, statements and other documents required to be filed by it under the
Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the one
year preceding the date hereof (or such shorter period as the Company was
required by law or regulation to file such material) (the foregoing materials,
including the exhibits thereto and documents incorporated by reference therein,
being collectively referred to herein as the "SEC REPORTS" and together with
this Agreement and the Schedules to this Agreement, the "DISCLOSURE MATERIALS"),
on a timely basis or has received a valid extension of such time of filing and
has filed any such SEC Reports prior to the expiration of any such extension. As
of their respective dates, or to the extent corrected by a subsequent
restatement, the SEC Reports complied in all material respects with the
requirements of the Securities Act and the Exchange Act and the rules and
regulations of the Commission promulgated thereunder.
(i) FINANCIAL STATEMENTS. The financial statements of the
Company included in the SEC Reports comply in all material respects with
applicable accounting requirements and the rules and regulations of the
Commission with respect thereto as in effect at the time of filing (or to the
extent corrected by a subsequent restatement). Such financial statements have
been prepared in accordance with GAAP applied on a consistent basis during the
periods involved, except as may be otherwise specified in such financial
statements or the notes thereto and except that unaudited financial statements
may not contain all footnotes required by GAAP, and fairly present in all
material respects the financial position of
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the Company and its consolidated subsidiaries taken as a whole as of and for the
dates thereof and the results of operations and cash flows for the periods then
ended, subject, in the case of unaudited statements, to normal, year-end audit
adjustments.
(j) TAX MATTERS. The Company (i) has accurately and timely
prepared and filed all foreign, federal and state income and all other tax
returns, reports and declarations required by any jurisdiction to which it is
subject, (ii) 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 being contested in good faith, with
respect to which adequate reserves have been set aside on the books of the
Company and (iii) has set aside on its books provisions reasonably adequate for
the payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations apply, except, in the case of clauses (i) and
(ii) above, where the failure to so pay or file any such tax, assessment, charge
or return could not reasonably be expected to have a Material Adverse Effect.
(k) MATERIAL CHANGES. Since the date of the latest audited
financial statements included within the SEC Reports, except as specifically
disclosed in the SEC Reports or as set forth in SCHEDULE 3.1(K) hereto, (i)
there have been no events, occurrences or developments that have had or could,
either individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect, (ii) the Company has not incurred any material
liabilities (contingent or otherwise) other than (A) trade payables, accrued
expenses and other liabilities incurred in the ordinary course of business
consistent with past practice and (B) liabilities not required to be reflected
in the Company's financial statements pursuant to GAAP or required to be
disclosed in filings made with the Commission, (iii) the Company has not
materially altered its method of accounting or the manner in which it keeps its
accounting books and records, (iv) the Company has not declared or made any
dividend or distribution of cash or other property to its shareholders or
purchased, redeemed or made any agreements to purchase or redeem any shares of
its capital stock (other than in connection with repurchases of unvested stock
issued to employees of the Company), (v) the Company has not issued any equity
securities to any officer, director or Affiliate, except Common Stock issued
pursuant to existing Company stock option or stock purchase plans or executive
and director corporate arrangements disclosed in the SEC Reports or SCHEDULE
3(G) and (vi) there has not been any material change or amendment to, or any
waiver of any material right by the Company under, any Material Contract under
which the Company, any of its Subsidiaries, or any of their respective assets is
bound or subject.
(l) ENVIRONMENTAL MATTERS. To the Company's Knowledge, the
Company (i) is not in violation of any statute, rule, regulation, decision or
order of any governmental agency or body or any court, domestic or foreign,
relating to the use, disposal or release of hazardous or toxic substances or
relating to the protection or restoration of the environment or human exposure
to hazardous or toxic substances (collectively, "ENVIRONMENTAL LAWS"), (ii) does
not own or operate any real property contaminated with any substance that is in
violation of any Environmental Laws, (iii) is not liable for any off-site
disposal or contamination pursuant to any Environmental Laws, or (iv) is not
subject to any claim relating to any Environmental Laws; which violation,
contamination, liability or claim has had or could, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect; and there
is no pending or, to the Company's Knowledge, threatened investigation that
might lead to such a claim.
(m) LITIGATION. There is no Action which (i) adversely affects
or challenges the legality, validity or enforceability of any of the Transaction
Documents or the Shares or (ii) except as specifically disclosed in the SEC
Reports, could, if there were an unfavorable decision, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. The
Commission has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company or any of its
Subsidiaries under the Exchange Act or the Securities Act.
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(n) EMPLOYMENT MATTERS. No material labor dispute exists or,
to the Company's Knowledge, is imminent with respect to any of the employees of
the Company which could reasonably be expected to have a Material Adverse
Effect. No executive officer of the Company (as defined in Rule 501(f) of the
0000 Xxx) has notified the Company that such officer intends to leave the
Company or otherwise terminate such officer's employment with the Company. No
executive officer, to the Company's Knowledge, is in violation of any term of
any employment contract, confidentiality, disclosure or proprietary information
agreement or non-competition agreement, or any other contract or agreement or
any restrictive covenant which could reasonably be expected to have a Material
Adverse Effect, and the continued employment of each such executive officer does
not subject the Company to any liability with respect to any of the foregoing
matters. The Company is in compliance with all U.S. federal, state, local and
foreign laws and regulations relating to employment and employment practices,
terms and conditions of employment and wages and hours, except where the failure
to be in compliance could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(o) COMPLIANCE. The Company (i) is not in default under (and
no event has occurred that has not been waived that, with notice or lapse of
time or both, would result in a default by the Company under), nor has the
Company received written notice of a claim that it is in default under any
indenture, loan or credit agreement or any other Material Contract (whether or
not such default or violation has been waived), (ii) is in violation of any
order of any court, arbitrator or governmental body having jurisdiction over the
Company or its properties or assets, or (iii) is or has been in violation of, or
in receipt of written notice that it is in violation of, any statute, rule or
regulation of any governmental authority applicable to the Company, except in
each case as could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.
(p) REGULATORY PERMITS. The Company possesses all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct its
respective business as described in the SEC Reports, except where the failure to
possess such permits, individually or in the aggregate, has not and could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect ("MATERIAL PERMITS"), and (i) the Company has not received any
notice of proceedings relating to the revocation or modification of any such
Material Permits and (ii) the Company is not unaware of any facts or
circumstances that the Company would reasonably expect to give rise to the
revocation or modification of any Material Permits.
(q) TITLE TO ASSETS. The Company has good and marketable title
in fee simple to all real property. The Company has good and marketable title to
all personal property owned by it which is material to the business of the
Company, in each case free and clear of all Liens except such as do not
materially affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company. Any real property
and facilities held under lease by the Company is held by it under valid,
subsisting and enforceable leases with such exceptions as are not material and
do not interfere with the use made and proposed to be made of such property and
buildings by the Company.
(r) PATENTS AND TRADEMARKS. The Company owns, possesses,
licenses or has other rights to use all foreign and domestic patents, patent
applications, trade and service marks, trade and service xxxx registrations,
trade names, copyrights, licenses, inventions, trade secrets, technology,
Internet domain names, know-how and other intellectual property (collectively,
the "INTELLECTUAL PROPERTY") necessary for the conduct of their respective
businesses as now conducted or as proposed to be conducted. Except where such
violations or infringements could not reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect, (a) there are no
rights of third parties to any such Intellectual Property; (b) to the Company's
Knowledge, there is no infringement by third parties of any such Intellectual
Property; (c) there is no pending or, to the Company's Knowledge, threatened
10
action, suit, proceeding or claim by others challenging the Company's rights in
or to any such Intellectual Property; (d) there is no pending or, to the
Company's Knowledge, threatened action, suit, proceeding or claim by others
challenging the validity or scope of any such Intellectual Property; and (e) the
Company has not received a written notice that such Intellectual Property
violates or infringes upon the rights of any Person.
(s) INSURANCE. The Company is insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as the Company believes to be prudent and customary in the businesses
and locations in which the Company is engaged. The Company has not received any
notice of cancellation of any such insurance, nor does the Company have any
knowledge that it will be unable to renew its existing insurance coverage for
the Company as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business without a
significant increase in cost.
(t) TRANSACTIONS WITH AFFILIATES AND EMPLOYEES. None of the
officers, directors or employees of the Company is presently a party to any
transaction with the Company (other than for ordinary course services as
employees, officers or 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 such officer, director or employee or, to the Company's
Knowledge, any corporation, partnership, trust or other entity in which any such
officer, director, or employee has a substantial interest or is an officer,
director, trustee or partner.
(u) INTERNAL ACCOUNTING CONTROLS. The Company maintains a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with management's
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with GAAP and to
maintain asset and liability accountability, (iii) access to assets or
incurrence of liabilities is permitted only in accordance with management's
general or specific authorization, and (iv) the recorded accountability for
assets and liabilities is compared with the existing assets and liabilities at
reasonable intervals and appropriate action is taken with respect to any
differences. The Company has established disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and its
Subsidiaries and designed such disclosure controls and procedures to ensure that
material information relating to the Company, including its Subsidiaries, is
made known to the certifying officers by others within those entities,
particularly during the period in which the Company's Form 10-KSB or 10-QSB, as
the case may be, is being prepared. The Company's certifying officers have
evaluated the effectiveness of the Company's controls and procedures in
accordance with Item 307 of Regulation S-B under the Exchange Act for the
Company's most recently ended fiscal quarter or fiscal year-end (such date, the
"EVALUATION DATE"). The Company presented in its most recently filed Form 10-KSB
or Form 10-QSB the conclusions of the certifying officers about the
effectiveness of the disclosure controls and procedures based on their
evaluations as of the Evaluation Date. Since the Evaluation Date, there have
been no significant changes in the Company's or its Subsidiaries' internal
controls (as such term is defined in Item 308(c) of Regulation S-B under the
Exchange Act).
(v) XXXXXXXX-XXXXX; DISCLOSURE CONTROLS. The Company is in
compliance in all material respects with all of the provisions of the
Xxxxxxxx-Xxxxx Act of 2002 which are applicable to it, except where such
noncompliance could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect. The Company maintains disclosure controls
and procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under
the Exchange Act).
(w) CERTAIN FEES. No person or entity will have, as a result
of the transactions contemplated by this Agreement, any valid right, interest or
claim against or upon the Company or a
11
Purchaser for any commission, fee or other compensation pursuant to any
agreement, arrangement or understanding entered into by or on behalf of the
Company with respect to the offer and sale of the Shares. The Company shall
indemnify, pay, and hold each Purchaser harmless against, any liability, loss or
expense (including, without limitation, attorneys' fees and out-of-pocket
expenses) arising in connection with any such right, interest or claim.
(x) PRIVATE PLACEMENT. Assuming the accuracy of the
Purchasers' representations and warranties set forth in Section 3.2 of this
Agreement and the accuracy of the information disclosed in the Accredited
Investor Questionnaires, no registration under the Securities Act is required
for the offer and sale of the Shares by the Company to the Purchasers under the
Transaction Documents.
(y) REGISTRATION RIGHTS. Other than each of the Purchasers or
as set forth in SCHEDULE 3.1(Y) hereto, no Person has any right to cause the
Company to effect the registration under the Securities Act of any securities of
the Company other than those securities which are currently registered on an
effective registration statement on file with the Commission.
(z) NO DIRECTED SELLING EFFORTS OR GENERAL SOLICITATION.
Neither the Company, nor any of its Affiliates, nor any Person acting on its or
their behalf has conducted any "general solicitation" or "general advertising"
(as those terms are used in Regulation D) in connection with the offer or sale
of any of the Shares.
(aa)NO INTEGRATED OFFERING. Assuming the accuracy of the
Purchasers' representations and warranties set forth in Section 3.2, neither the
Company nor any of its Affiliates, nor any Person acting on its or their behalf
has, directly or indirectly, at any time within the past six months, made any
offers or sales of any Company security or solicited any offers to buy any
security under circumstances that would (i) eliminate the availability of the
exemption from registration under Regulation D under the Securities Act in
connection with the offer and sale by the Company of the Shares as contemplated
hereby or (ii) cause the offering of the Shares pursuant to the Transaction
Documents to be integrated with prior offerings by the Company for purposes of
any applicable law, regulation or shareholder approval provisions, including,
without limitation, under the rules and regulations of any Trading Market on
which any of the securities of the Company are listed or designated.
(bb)LISTING AND MAINTENANCE REQUIREMENTS. The Company's Common
Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and
the Company has taken no action designed to terminate (or which would reasonably
be expected to have the effect of terminating) the registration of the Common
Stock under the Exchange Act nor has the Company received any notification that
the Commission is contemplating terminating such registration. The Company has
not, in the 12 months preceding the date hereof, received written notice from
any Trading Market on which the Common Stock is or has been listed or quoted to
the effect that the Company is not in compliance with the listing or maintenance
requirements of such Trading Market. The Company is, and has no reason to
believe that it will not in the foreseeable future continue to be, in compliance
in all material respects with the listing and maintenance requirements for
continued trading of the Common Stock on the Principal Trading Market.
(cc)PRESS RELEASES. The press releases disseminated by the
Company during the twelve months preceding the date of this Agreement taken as a
whole do not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made and
when made, not misleading.
12
(dd)SOLVENCY. Based on the financial condition of the Company
as of the Closing Date (and assuming that the Closing shall have occurred), (i)
the Company's fair saleable value of its assets exceeds the amount that will be
required to be paid on or in respect of the Company's existing debts and other
liabilities (including known contingent liabilities) as they mature, (ii) the
Company's assets do not constitute unreasonably small capital to carry on its
business for the current fiscal year as now conducted and as proposed to be
conducted including its capital needs taking into account the particular capital
requirements of the business conducted by the Company, and projected capital
requirements and capital availability thereof, and (iii) the current cash flow
of the Company, together with the proceeds the Company would receive, were it to
liquidate all of its assets, after taking into account all anticipated uses of
the cash, would be sufficient to pay all amounts on or in respect of its debt
when such amounts are required to be paid. The Company does not intend to incur
debts beyond its ability to pay such debts as they mature (taking into account
the timing and amounts of cash to be payable on or in respect of its debt).
(ee)INVESTMENT COMPANY. The Company is not, and is not an
Affiliate of, and immediately following the Closing will not have become, an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
(ff)NO ADDITIONAL AGREEMENTS. The Company does not have any
agreement or understanding with any Purchaser with respect to the transactions
contemplated by the Transaction Documents other than as specified in the
Transaction Documents.
(gg)FOREIGN CORRUPT PRACTICES ACT. Neither the Company, nor to
the knowledge of the Company, any agent or other person acting on behalf of the
Company, has, directly or indirectly, (i) used any funds, or will use any
proceeds from the sale of the Shares, for unlawful contributions, gifts,
entertainment or other unlawful expenses related to foreign or domestic
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to any foreign or domestic political
parties or campaigns from corporate funds, (iii) failed to disclose fully any
contribution made by the Company (or made by any Person acting on their behalf
of which the Company is aware) which is in violation of law, or (iv) has
violated in any material respect any provision of the Foreign Corrupt Practices
Act of 1977, as amended, and the rules and regulations thereunder.
(hh)PFIC. The Company is not nor intends to become a "passive
foreign investment company" within the meaning of Section 1297 of the U.S.
Internal Revenue Code of 1986, as amended.
(ii)OFAC. Neither the Company nor, to the knowledge of the
Company, any director, officer, agent, employee, Affiliate or Person acting on
behalf of the Company is currently subject to any U.S. sanctions administered by
the Office of Foreign Assets Control of the U.S. Treasury Department ("OFAC");
and the Company will not directly or indirectly use the proceeds of the sale of
the Shares, or lend, contribute or otherwise make available such proceeds to any
Subsidiary, joint venture partner or other Person or entity, towards any sales
or operations in Cuba, Iran, Syria, Sudan, Myanmar or any other country
sanctioned by OFAC or for the purpose of financing the activities of any Person
currently subject to any U.S. sanctions administered by OFAC.
(jj)MONEY LAUNDERING LAWS. The operations of each of the
Company are and have been conducted at all times in material compliance with the
money laundering statutes of applicable jurisdictions, the rules and regulations
thereunder and any related or similar rules, regulations or guidelines, issued,
administered or enforced by any applicable governmental agency (collectively,
the "MONEY LAUNDERING LAWS") and no action, suit or proceeding by or before any
court or governmental agency, authority or body or any arbitrator involving the
Company with respect to the Money Laundering Laws is pending or, to the best
knowledge of the Company, threatened.
13
(kk)DISCLOSURE. The Company confirms that neither it nor any
Person acting on its behalf has provided any Purchaser or its respective agents
or counsel with any information that the Company believes constitutes material,
non-public information concerning the Company or its business, except insofar as
the existence and terms of the proposed transactions contemplated hereunder may
constitute such information. The Company understands and confirms that the
Purchasers will rely on the foregoing representations and covenants in effecting
transactions in securities of the Company. All disclosure provided to the
Purchasers regarding the Company, or its business and the transactions
contemplated hereby, furnished by or on behalf of the Company (including the
Company's representations and warranties set forth in this Agreement) are true
and correct and do not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
3.2 REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each Purchaser
hereby, for itself and for no other Purchaser, represents and warrants as of the
date hereof and as of the Closing Date to the Company as follows:
(a) ORGANIZATION; AUTHORITY. Such Purchaser is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the requisite corporate or partnership
power and authority to enter into and to consummate the transactions
contemplated by the applicable Transaction Documents and otherwise to carry out
its obligations hereunder and thereunder. The execution, delivery and
performance by such Purchaser of the transactions contemplated by this Agreement
have been duly authorized by all necessary corporate or, if such Purchaser is
not a corporation, such partnership, limited liability company or other
applicable like action, on the part of such Purchaser. Each of this Agreement
and the Registration Rights Agreement has been duly executed by such Purchaser,
and when delivered by such Purchaser in accordance with the terms hereof, will
constitute the valid and legally binding obligation of such Purchaser,
enforceable against it in accordance with its terms, except (i) as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application or (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or other
equitable remedies.
(b) NO CONFLICTS. The execution, delivery and performance by
such Purchaser of this Agreement and the Registration Rights Agreement and the
consummation by such Purchaser of the transactions contemplated hereby and
thereby will not (i) result in a violation of the organizational documents of
such Purchaser, (ii) conflict with, or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of,
any agreement, indenture or instrument to which such Purchaser is a party, or
(iii) result in a violation of any law, rule, regulation, order, judgment or
decree (including federal and state securities laws) applicable to such
Purchaser, except in the case of clauses (ii) and (iii) above, for such
conflicts, defaults, rights or violations which could not, individually or in
the aggregate, reasonably be expected to have a material adverse effect on the
ability of such Purchaser to perform its obligations hereunder.
(c) INVESTMENT INTENT. Such Purchaser understands that the
Shares are "restricted securities" and have not been registered under the
Securities Act or any applicable state securities law and is acquiring the
Shares as principal for its own account and not with a view to, or for
distributing or reselling such Shares or any part thereof in violation of the
Securities Act or any applicable state securities laws; PROVIDED, HOWEVER, that
by making the representations herein, such Purchaser does not agree to hold any
of the Shares for any minimum period of time and reserves the right, subject to
the provisions of this Agreement and the Registration Rights Agreement, at all
times to sell or otherwise dispose of all or any part of such Shares pursuant to
an effective registration statement under the
14
Securities Act or under an exemption from such registration and in compliance
with applicable federal and state securities laws. Such Purchaser is acquiring
the Shares hereunder in the ordinary course of its business. Such Purchaser does
not presently have any agreement, plan or understanding, directly or indirectly,
with any Person to distribute or effect any distribution of any of the Shares
(or any securities which are derivatives thereof) to or through any person or
entity; such Purchaser is not a registered broker-dealer under Section 15 of the
Exchange Act or an entity engaged in a business that would require it to be so
registered as a broker-dealer.
(d) PURCHASER STATUS. At the time such Purchaser was offered
the Shares, it was, and at the date hereof it is an "accredited investor" as
defined in Rule 501(a) under the Securities Act.
(e) GENERAL SOLICITATION. Such Purchaser is not purchasing the
Shares as a result of any advertisement, article, notice or other communication
regarding the Shares published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar or any other
general advertisement.
(f) EXPERIENCE OF SUCH PURCHASER. Such Purchaser, either alone
or together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Shares, and has so
evaluated the merits and risks of such investment. Such Purchaser is able to
bear the economic risk of an investment in the Shares and, at the present time,
is able to afford a complete loss of such investment.
(g) ACCESS TO INFORMATION. Such Purchaser acknowledges that it
has had the opportunity to review the Disclosure Materials and has been afforded
(i) the opportunity to ask such questions as it has deemed necessary of, and to
receive answers from, representatives of the Company concerning the terms and
conditions of the offering of the Shares and the merits and risks of investing
in the Shares; (ii) access to information about the Company and the Subsidiaries
and their respective financial condition, results of operations, business,
properties, management and prospects sufficient to enable it to evaluate its
investment; and (iii) the opportunity to obtain such additional information that
the Company possesses or can acquire without unreasonable effort or expense that
is necessary to make an informed investment decision with respect to the
investment. Neither such inquiries nor any other investigation conducted by or
on behalf of such Purchaser or its representatives or counsel shall modify,
amend or affect such Purchaser's right to rely on the truth, accuracy and
completeness of the Disclosure Materials and the Company's representations and
warranties contained in the Transaction Documents. Such Purchaser has sought
such accounting, legal and tax advice as it has considered necessary to make an
informed decision with respect to its acquisition of the Shares.
(h) CERTAIN TRADING ACTIVITIES. Other than with respect to the
transactions contemplated herein, since the earlier to occur of (1) the time
that such Purchaser was first contacted by the Company or any other Person
regarding the transactions contemplated hereby and (2) the tenth (10th) day
prior to the date of this Agreement, neither the Purchaser nor any Affiliate of
such Purchaser which (x) had knowledge of the transactions contemplated hereby,
(y) has or shares discretion relating to such Purchaser's investments or trading
or information concerning such Purchaser's investments, including in respect of
the Shares, and (z) is subject to such Purchaser's review or input concerning
such Affiliate's investments or trading (collectively, "TRADING AFFILIATEs") has
directly or indirectly, nor has any Person acting on behalf of or pursuant to
any understanding with such Purchaser or Trading Affiliate, effected or agreed
to effect any transactions in the securities of the Company (including, without
limitation, any Short Sales involving the Company's securities). Notwithstanding
the foregoing, in the case of a Purchaser and/or Trading Affiliate that is,
individually or collectively, a multi-managed investment vehicle whereby
separate portfolio managers manage separate portions of such Purchaser's or
Trading Affiliate's assets and the portfolio managers have no direct knowledge
of the investment decisions made
15
by the portfolio managers managing other portions of such Purchaser's or Trading
Affiliate's assets, the representation set forth above shall apply only with
respect to the portion of assets managed by the portfolio manager that have
knowledge about the financing transaction contemplated by this Agreement. Other
than to other Persons party to this Agreement, such Purchaser has maintained the
confidentiality of all disclosures made to it in connection with this
transaction (including the existence and terms of this transaction).
Notwithstanding the foregoing, no Purchaser makes any representation, warranty
or covenant hereby that it will not engage in Short Sales in the securities of
the Company after the time that the transactions contemplated by this Agreement
are first publicly announced as described in Section 4.5.
(i) BROKERS AND FINDERS. No Person will have, as a result of
the transactions contemplated by this Agreement, any valid right, interest or
claim against or upon the Company or any Purchaser for any commission, fee or
other compensation pursuant to any agreement, arrangement or understanding
entered into by or on behalf of the Purchaser.
(j) INDEPENDENT INVESTMENT DECISION. Such Purchaser has
independently evaluated the merits of its decision to purchase Shares pursuant
to the Transaction Documents, and such Purchaser confirms that it has not relied
on the advice of any other Purchaser's business and/or legal counsel in making
such decision. Such Purchaser understands that nothing in this Agreement or any
other materials presented by or on behalf of the Company to the Purchaser in
connection with the purchase of the Shares constitutes legal, tax or investment
advice. Such Purchaser has consulted such legal, tax and investment advisors as
it, in its sole discretion, has deemed necessary or appropriate in connection
with its purchase of the Shares.
(k) RELIANCE ON EXEMPTIONS. Such Purchaser understands that
the Shares 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
such Purchaser's compliance with, the representations, warranties, agreements,
acknowledgements and understandings of such Purchaser set forth herein in order
to determine the availability of such exemptions and the eligibility of such
Purchaser to acquire the Shares.
(l) NO GOVERNMENTAL REVIEW. Such Purchaser 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 Shares or
the fairness or suitability of the investment in the Shares nor have such
authorities passed upon or endorsed the merits of the offering of the Shares.
(m) REGULATION M. Such Purchaser is aware that the
anti-manipulation rules of Regulation M under the Exchange Act may apply to
sales of Common Stock and other activities with respect to the Common Stock by
the Purchasers.
(n) RESIDENCY. Such Purchaser's principal executive offices
are in the jurisdiction set forth immediately below Purchaser's name on the
applicable signature page attached hereto.
(o) LIMITED OWNERSHIP. The purchase by such Purchaser of the
Shares issuable to it at the Closing will not result in such Purchaser
(individually or together with any other Person with whom such Purchaser has
identified, or will have identified, itself as part of a "group" in a public
filing made with the Commission involving the Company's securities) acquiring,
or obtaining the right to acquire, in excess of 19.999% of the outstanding
shares of Common Stock or the voting power of the Company on a post transaction
basis that assumes that the Closing shall have occurred. Such Purchaser does not
presently intend to, alone or together with others, make a public filing with
the Commission to disclose that it has (or that it together with such other
Persons have) acquired, or obtained the right to acquire, as a result of the
Closing (when added to any other securities of the Company that it or they then
own or have
16
the right to acquire), in excess of 19.999% of the outstanding shares of Common
Stock or the voting power of the Company on a post transaction basis that
assumes that the Closing shall have occurred.
The Company and each of the Purchasers acknowledge and agree that no party to
this Agreement has made or makes any representations or warranties with respect
to the transactions contemplated hereby other than those specifically set forth
in this Article III and the Transaction Documents.
ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
4.1 TRANSFER RESTRICTIONS.
(a) COMPLIANCE WITH LAWS. Notwithstanding any other provision
of this Article IV, each Purchaser covenants that the Shares may be disposed of
only pursuant to an effective registration statement under, and in compliance
with the requirements of, the Securities Act, or pursuant to an available
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act, and in compliance with any applicable state
and federal securities laws. In connection with any transfer of the Shares other
than (i) pursuant to an effective registration statement, (ii) to the Company,
(iii) pursuant to Rule 144 (PROVIDED that the Purchaser provides the Company
with reasonable assurances (in the form of seller and broker representation
letters) that the securities may be sold pursuant to such rule) or (iv) pursuant
to Rule 144(k) following the applicable holding period (PROVIDED that the
Purchaser provides the Company with reasonable assurances in a representation
letter that the securities may be sold pursuant to such rule), the Company may
require the transferor thereof to provide to the Company and the Transfer Agent
an opinion of counsel selected by the transferor and reasonably acceptable to
the Company and the Transfer Agent, the form and substance of which opinion
shall be reasonably satisfactory to the Company and the Transfer Agent, to the
effect that such transfer does not require registration of such transferred
Shares under the Securities Act. As a condition of transfer, any such transferee
shall agree in writing to be bound by the terms of this Agreement and shall have
the rights of a Purchaser under this Agreement and the Registration Rights
Agreement.
(b) LEGENDS. Certificates evidencing the Shares shall bear any
legend as required by the "blue sky" laws of any state and a restrictive legend
in substantially the following form, until such time as they are not required
under Section 4.1(c):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR APPLICABLE
STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR
SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A)
AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
THE SECURITIES ACT OR (B) AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS OR BLUE SKY LAWS AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY AND
ITS TRANSFER AGENT OR (II) UNLESS SOLD PURSUANT TO RULE 144
UNDER SAID ACT. THESE SECURITIES MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT SECURED BY SUCH SECURITIES.
17
The Company acknowledges and agrees that a Purchaser may from
time to time pledge, and/or grant a security interest in, some or all of the
legended Shares in connection with applicable securities laws, pursuant to a
bona fide margin agreement in compliance with a bona fide margin loan. Such a
pledge would not be subject to approval or consent of the Company and no legal
opinion of legal counsel to the pledgee, secured party or pledgor shall be
required in connection with the pledge, but such legal opinion shall be required
in connection with a subsequent transfer or foreclosure following default by the
Purchaser transferee of the pledge. No notice shall be required of such pledge,
but Purchaser's transferee shall promptly notify the Company of any such
subsequent transfer or foreclosure. Each Purchaser acknowledges that the Company
shall not be responsible for any pledges relating to, or the grant of any
security interest in, any of the Shares or for any agreement, understanding or
arrangement between any Purchaser and its pledgee or secured party. At the
appropriate Purchaser's expense, the Company will execute and deliver such
reasonable documentation as a pledgee or secured party of Shares may reasonably
request in connection with a pledge or transfer of the Shares, including the
preparation and filing of any required prospectus supplement under Rule
424(b)(3) of the Securities Act or other applicable provision of the Securities
Act to appropriately amend the list of Selling Stockholders thereunder. Each
Purchaser acknowledges and agrees that, except as otherwise provided in Section
4.1(c), any Shares subject to a pledge or security interest as contemplated by
this Section 4.1(b) shall continue to bear the legend set forth in this Section
4.1(b) and be subject to the restrictions on transfer set forth in Section
4.1(a).
(c) REMOVAL OF LEGENDS. The legend set forth in Section 4.1(b)
above shall be removed and the Company shall issue a certificate without such
legend or any other legend to the holder of the applicable Shares upon which it
is stamped or issue to such holder by electronic delivery at the applicable
balance account at the Depository Trust Company ("DTC"), if (i) such Shares are
registered for resale under the Securities Act, (ii) such Shares are sold or
transferred pursuant to Rule 144 (assuming the transferor is not an Affiliate of
the Company), or (iii) such Shares are eligible for sale under Rule 144(k). The
Company shall cause Company Counsel to issue the legal opinion to the Company's
transfer agent on the Effective Date. Any fees (with respect to the Transfer
Agent, Company Counsel or otherwise) associated with the issuance of such
opinion or the removal of such legend shall be borne by the Company. Following
the Effective Date, or at such earlier time as a legend is no longer required
for certain Shares, the Company will use its best efforts to cause the Transfer
Agent, no later than three (3) Trading Days following the delivery by a
Purchaser to the Transfer Agent (with notice to the Company) of a legended
certificate representing such Shares (endorsed or with stock powers attached,
signatures guaranteed, and otherwise in form necessary to affect the reissuance
and/or transfer) (such third Trading Day, the "LEGEND REMOVAL DATE"), to deliver
or cause to be delivered to such Purchaser a certificate representing such
Shares that is free from all restrictive and other legends. Should the Company
fail to deliver or cause to be delivered to such Purchaser a certificate
representing such Shares that is free from all restrictive or other legends by
the third Trading Day following the Legend Removal Date and (2) following such
third Trading Day after the Legend Removal Date and prior to the time such
Shares are received free from restrictive legends, the Purchaser, or any third
party on behalf of such Purchaser, purchases (in an open market transaction or
otherwise) shares of Common Stock to deliver in satisfaction of a sale by the
Purchaser of such Shares (a "BUY-IN"), then the Company shall pay in cash to the
Purchaser (for costs incurred either directly by such Purchaser or on behalf of
a third party) the amount by which the total purchase price paid for Common
Stock as a result of the Buy-In (including brokerage commissions, if any) exceed
the proceeds received by such Purchaser as a result of the sale to which such
Buy-In relates. The Purchaser shall provide the Company written notice
indicating the amounts payable to the Purchaser in respect of the Buy-In. 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. Certificates for Shares subject to legend removal hereunder may be
transmitted by the Transfer Agent to the Purchasers by crediting the account of
the Purchaser's prime broker with DTC.
18
(d) ACKNOWLEDGEMENT. Each Purchaser hereunder acknowledges its
primary responsibilities under the Securities Act and accordingly will not sell
the Shares or any interest therein without complying with the requirements of
the Securities Act. While the above-referenced registration statement remains
effective, each Purchaser hereunder may sell the shares in accordance with the
plan of distribution contained in the registration statement and if it does so
it will comply therewith and with the related prospectus delivery requirements
unless an exemption therefrom is available. Each Purchaser, severally and not
jointly with the other Purchasers, agrees that if it is notified by the Company
in writing at any time after the date any legend is removed pursuant to Section
4.1(c) hereof that the registration statement registering the resale of the
Shares is not effective or that the prospectus included in such registration
statement no longer complies with the requirements of Section 10 of the
Securities Act, the Purchaser will refrain from selling such Shares until such
time as the Purchaser is notified by the Company that such registration
statement is effective or such prospectus is compliant with Section 10 of the
Exchange Act, unless such Purchaser is able to, and does, sell such Shares
pursuant to an available exemption from the registration requirements of Section
5 of the Securities Act. Both the Company and its Transfer Agent, and their
respective directors, officers, employees and agents, may rely on this
subsection (e) and each Purchaser hereunder will indemnify and hold harmless
each of such persons from any breaches or violations of this paragraph.
4.2 ACKNOWLEDGMENT OF DILUTION. The Company acknowledges that the
issuance of the Shares may result in dilution of the outstanding shares of
Common Stock, which dilution may be substantial under certain market conditions.
The Company further acknowledges that its obligations under the Transaction
Documents, including without limitation its obligation to issue the Shares
pursuant to the Transaction Documents, are unconditional and absolute and not
subject to any right of set off, counterclaim, delay or reduction, regardless of
the effect of any such dilution or any claim the Company may have against any
Purchaser and regardless of the dilutive effect that such issuance may have on
the ownership of the other shareholders of the Company.
4.3 FORM D AND BLUE SKY. The Company agrees to timely file a Form D
with respect to the Shares as required under Regulation D. The Company, on or
before the Closing Date, shall take such action as the Company shall reasonably
determine is necessary in order to obtain an exemption for or to qualify the
Shares for sale to the Purchasers at the Closing pursuant to this Agreement
under applicable securities or "Blue Sky" laws of the states of the United
States (or to obtain an exemption from such qualification). The Company shall
make all filings and reports relating to the offer and sale of the Shares
required under applicable securities or "Blue Sky" laws of the states of the
United States following the Closing Date.
4.4 NO INTEGRATION. The Company shall not sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Securities Act) that will be integrated with the
offer or sale of the Shares in a manner that would require the registration
under the Securities Act of the sale of the Shares to the Purchasers, or that
will be integrated with the offer or sale of the Shares for purposes of the
rules and regulations of any Trading Market such that it would require
shareholder approval prior to the closing of such other transaction unless
shareholder approval is obtained before the closing of such subsequent
transaction.
4.5 SECURITIES LAWS DISCLOSURE; PUBLICITY. By 9:00 a.m., New York City
time, on each of the Trading Day immediately following the execution of this
Agreement and the Trading Day immediately following the Closing Date , the
Company shall issue a press release disclosing all material terms of the
transactions contemplated hereby and the closing, respectively. On the Trading
Day following the execution of this Agreement, the Company will file a Current
Report on Form 8-K with the Commission describing the terms of the Transaction
Documents (and including as exhibits to such Current Report on Form 8-K the
material Transaction Documents (including, without limitation, this Agreement
19
and the Registration Rights Agreement)). Notwithstanding the foregoing, the
Company shall not publicly disclose the name of any Purchaser or an Affiliate of
any Purchaser, or include the name of any Purchaser or an Affiliate of any
Purchaser in any press release or filing with the Commission (other than the
Registration Statement) or any regulatory agency or Trading Market, without the
prior written consent of such Purchaser, except (i) as required by federal
securities law in connection with (A) any registration statement contemplated by
the Registration Rights Agreement and (B) the filing of final Transaction
Documents (including signature pages thereto) with the Commission and (ii) to
the extent such disclosure is required by law, request of the Staff of the
Commission or Trading Market regulations, in which case the Company shall
provide the Purchasers with prior written notice of such disclosure permitted
under this subclause (ii). Each Purchaser, severally and not jointly with the
other Purchasers, covenants that until such time as the transactions
contemplated by this Agreement are publicly disclosed by the Company as
described in this Section 4.5, such Purchaser will maintain the confidentiality
of all disclosures made to it in connection with this transaction (including the
existence and terms of this transaction).
4.6 INDEMNIFICATION.
(a) INDEMNIFICATION OF PURCHASERS. In addition to the
indemnity provided in the Registration Rights Agreement, the Company will
indemnify and hold each Purchaser and its directors, officers, shareholders,
members, partners, employees and agents (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding a
lack of such title or any other title), each Person who controls such Purchaser
(within the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act), and the directors, officers, shareholders, agents, members,
partners or employees (and any other Persons with a functionally equivalent role
of a Person holding such titles notwithstanding a lack of such title or any
other title) of such controlling person (each, a "PURCHASER PARTY") harmless
from any and all losses, liabilities, obligations, claims, contingencies,
damages, costs and expenses, including all judgments, amounts paid in
settlements, court costs and reasonable attorneys' fees and costs of
investigation that any such Purchaser Party may suffer or incur as a result of
or relating to third party claims against such Purchaser relating to any breach
of any of the representations, warranties, covenants or agreements made by the
Company in this Agreement or in the other Transaction Documents. The Company
will not be liable to any Purchaser Party under this Agreement to the extent,
but only to the extent that a loss, claim, damage or liability is attributable
to any Purchaser Party's breach of any of the representations, warranties,
covenants or agreements made by such Purchaser Party in this Agreement or in the
other Transaction Documents or any agreements or understandings such Purchaser
may have with any shareholder or any violations by the Purchaser of state or
federal securities laws or any conduct by such Purchaser which constitutes
fraud, gross negligence, willful misconduct or malfeasance.
(b) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Promptly after
receipt by any Person (the "INDEMNIFIED PERSON") of notice of any demand, claim
or circumstances which would or might give rise to a claim or the commencement
of any action, proceeding or investigation in respect of which indemnity may be
sought pursuant to Section 4.7(a), such Indemnified Person shall promptly notify
the Company in writing and the Company shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to such Indemnified
Person, and shall assume the payment of all fees and expenses; PROVIDED,
HOWEVER, that the failure of any Indemnified Person so to notify the Company
shall not relieve the Company of its obligations hereunder except to the extent
that the Company is actually and materially prejudiced by such failure to
notify. In any such proceeding, any Indemnified Person shall have the right to
retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Person unless: (i) the Company and the
Indemnified Person shall have mutually agreed to the retention of such counsel;
(ii) the Company shall have failed promptly to assume the defense of such
proceeding and to employ counsel reasonably satisfactory to such Indemnified
Person in such proceeding; or (iii) in the reasonable judgment of counsel to
such Indemnified Person, representation of
20
both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. The Company shall not be liable for
any settlement of any proceeding effected without its written consent, which
consent shall not be unreasonably withheld, delayed or conditioned. Without the
prior written consent of the Indemnified Person, which consent shall not be
unreasonably withheld, delayed or conditioned, the Company shall not effect any
settlement of any pending or threatened proceeding in respect of which any
Indemnified Person is or could have been a party and indemnity could have been
sought hereunder by such Indemnified Party, unless such settlement includes an
unconditional release of such Indemnified Person from all liability arising out
of such proceeding.
4.7 LISTING OF SECURITIES. Prior to the execution of this Agreement or
promptly following the date hereof, the Company shall have taken or shall take
all necessary action to cause the Shares to be listed upon the Principal Trading
Market, if any, upon which shares of Common Stock are then listed (subject to
official notice of issuance) and shall maintain, so long as any other shares of
Common Stock shall be so listed, such listing. Further, if the Company applies
to have its Common Stock or other securities listed on any other Trading Market,
it shall include in such application the Shares and will take such other action
as is necessary to cause the Shares to be listed on such other Trading Market as
promptly as practicable.
4.8 USE OF PROCEEDS. The Company intends to use the net proceeds from
the sale of the Shares hereunder for working capital and general corporate
purposes.
4.9 SHORT SALES AFTER THE DATE HEREOF. Such Purchaser shall not, and
shall cause its Trading Affiliates not to, engage, directly or indirectly, in
any Short Sales involving the Company's securities during the period from the
date hereof until the earlier of such time as (i) the transactions contemplated
by this Agreement are first publicly announced as described in Section 4.5 or
(ii) this Agreement is terminated in full pursuant to Section 6.18.
Notwithstanding the foregoing, in the case of a Purchaser that is a
multi-managed investment vehicle whereby separate portfolio managers manage
separate portions of such Purchaser's assets and the portfolio managers have no
direct knowledge of the investment decisions made by the portfolio managers
managing other portions of such Purchaser's assets, the representation set forth
above shall apply only with respect to the portion of assets managed by the
portfolio manager that have knowledge about the financing transaction
contemplated by this Agreement. Each Purchaser understands and acknowledges,
severally and not jointly with any other Purchaser, that the Commission
currently takes the position that covering a short position established prior to
effectiveness of a resale registration statement with shares included in such
registration statement would be a violation of Section 5 of the Securities Act,
as set forth in Item 65, Section 5 under Section A, of the Manual of Publicly
Available Telephone Interpretations, dated July 1997, compiled by the Office of
Chief Counsel, Division of Corporation Finance.
4.10 FURNISHING OF INFORMATION. As long as any Purchaser owns the
Shares, the Company covenants 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. As long
as any Purchaser owns Shares, if the Company is not required to file reports
pursuant to such laws, it will prepare and furnish to the Purchasers and make
publicly available in accordance with Rule 144(c) such information as is
required for the Purchasers to sell the Shares under Rule 144. The Company
further covenants that it will take such further action as any holder of Shares
may reasonably request, all to the extent required from time to time to enable
such Person to sell the Shares without registration under the Securities Act
within the limitation of the exemptions provided by Rule 144.
4.11 SUBSEQUENT REGISTRATIONS. The Company may not file any
registration statement (other than on Form S-8) with the Commission with respect
to any securities of the Company prior to the time
21
that all Shares are registered pursuant to one or more effective Registration
Statement(s), and the prospectuses forming a portion of such Registration
Statement(s) is available for the resale of all Shares.
4.12 LIMITATION ON ISSUANCE OF FUTURE PRICED SECURITIES. During the six
months following the Closing Date, the Company shall not issue any "Future
Priced Securities" as such term is described by NASD IM-4350-1.
4.13 NON-PUBLIC INFORMATION. The Company covenants and agrees that
neither it nor any other Person acting on its behalf will provide any Purchaser
or its agents or counsel with any information that the Company believes
constitutes material non-public information, unless prior thereto such Purchaser
shall have executed a written agreement regarding the confidentiality and use of
such information. The Company understands and confirms that each Purchaser shall
be relying on the foregoing representations in effecting transactions in
securities of the Company.
ARTICLE V.
CONDITIONS PRECEDENT TO CLOSING
5.1 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PURCHASERS TO
PURCHASE SHARES. The obligation of each Purchaser to acquire Shares at the
Closing is subject to the fulfillment to such Purchaser's satisfaction, on or
prior to the Closing Date, of each of the following conditions, any of which may
be waived by such Purchaser (as to itself only):
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained herein shall be true and correct in all
material respects (except for those representations and warranties which are
qualified as to materiality, in which case such representations and warranties
shall be true and correct in all respects) as of the date when made and as of
the Closing Date, as though made on and as of such date, except for such
representations and warranties that speak as of a specific date.
(b) PERFORMANCE. The Company shall have performed, satisfied
and complied in all material respects with all covenants, agreements and
conditions required by the Transaction Documents to be performed, satisfied or
complied with by it at or prior to the Closing.
(c) NO INJUNCTION. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction that prohibits the consummation of any of the transactions
contemplated by the Transaction Documents.
(d) CONSENTS. The Company shall have obtained in a timely
fashion any and all consents, permits, approvals, registrations and waivers
necessary or appropriate for consummation of the purchase and sale of the Shares
at the Closing (including all Required Approvals), all of which shall be and
remain so long as necessary in full force and effect.
(e) ADVERSE CHANGES. Since the date of execution of this
Agreement, no event or series of events shall have occurred that has had or
could reasonably be expected to have a Material Adverse Effect.
(f) NO SUSPENSIONS OF TRADING IN COMMON STOCK; LISTING. The
Common Stock (i) shall be designated for quotation or listed on the Principal
Trading Market
22
and (ii) shall not have been suspended, as of the Closing Date, by the
Commission or the Principal Trading Market from trading on the Principal Trading
Market nor shall suspension by the Commission or the Principal Trading Market
have been threatened, as of the Closing Date, either (A) in writing by the
Commission or the Principal Trading Market or (B) by falling below the minimum
listing maintenance requirements of the Principal Trading Market.
(g) COMPANY DELIVERABLES. The Company shall have delivered the
Company Deliverables in accordance with Section 2.2(a).
(h) COMPLIANCE CERTIFICATE. The Company shall have delivered
to each Purchaser a certificate, dated as of the Closing Date and signed by its
Chief Executive Officer or its Chief Financial Officer, dated as of the Closing
Date, certifying to the fulfillment of the conditions specified in Sections
5.1(a) and (b) in the form attached hereto as EXHIBIT E.
(i) AMERICAN STOCK EXCHANGE APPROVAL. The American Stock
Exchange shall have approved the American Stock Exchange Additional Listing
Application submitted by the Company with respect to the transactions
contemplated by the Transaction Documents.
(j) TERMINATION. This Agreement shall not have been terminated
as to such Purchaser in accordance with Section 6.18 herein.
5.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANY TO SELL
SHARES. The Company's obligation to sell and issue the Shares at the Closing is
subject to the fulfillment to the satisfaction of the Company on or prior to the
Closing Date of the following conditions, any of which may be waived by the
Company:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by the Purchasers in Section 3.2 hereof shall be true and
correct in all material respects as of the date when made, and as of the Closing
Date as though made on and as of such date, except for representations and
warranties that speak as of a specific date.
(b) PERFORMANCE. The Purchasers shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by the Transaction Documents to be performed, satisfied
or complied with by the Purchasers at or prior to the Closing Date.
(c) NO INJUNCTION. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction that prohibits the consummation of any of the transactions
contemplated by the Transaction Documents.
(d) CONSENTS. The Company shall have obtained in a timely
fashion any and all consents, permits, approvals, registrations and waivers
necessary or appropriate for consummation of the purchase and sale of the
Shares, all of which shall be and remain so long as necessary in full force and
effect.
(e) PURCHASERS DELIVERABLES. Each Purchaser shall have
delivered its Purchaser Deliverables in accordance with Section 2.2(b).
(f) AMERICAN STOCK EXCHANGE APPROVAL. The American Stock
Exchange shall have approved the American Stock Exchange Additional Listing
Application submitted by the Company with respect to the transactions
contemplated by the Transaction Documents.
23
(g) TERMINATION. This Agreement shall not have been terminated
as to such Purchaser in accordance with Section 6.18 herein.
ARTICLE VI.
MISCELLANEOUS
6.1 FEES AND EXPENSES. At the Closing, the Company shall pay to Xxxxx
Xxxx LLP $15,000 as reimbursement of The Pinnacle Fund, L.P. for its legal fees
in connection with the Transaction Documents (The Pinnacle Fund, L.P. may deduct
such amount from the Investment Amount deliverable to the Company at Closing),
it being understood that Xxxxx Xxxx LLP has only rendered legal advice to The
Pinnacle Fund, L.P., and not to the Company or any other Purchaser in connection
with the transactions contemplated hereby, and that each of the Company and any
other Purchaser has relied for such matters on the advice of its own respective
counsel. Except as specified in the immediately preceding sentence, the Company
and the Purchasers shall each pay the fees and expenses of their respective
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party in connection with the negotiation, preparation,
execution, delivery and performance of this Agreement. The Company shall pay all
Transfer Agent fees, stamp taxes and other taxes and duties levied in connection
with the sale and issuance of the Shares to the Purchasers.
6.2 ENTIRE AGREEMENT. The Transaction Documents, together with the
Exhibits and Schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements,
understandings, discussions and representations, oral or written, with respect
to such matters, which the parties acknowledge have been merged into such
documents, exhibits and schedules.
6.3 NOTICES. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile (provided the sender
receives a machine-generated confirmation of successful transmission) at the
facsimile number specified in this Section or if such notice or communication is
delivered via e-mail to the e-mail address specified in this Section, in each
case prior to 5:00 p.m., New York City time, on a Trading Day, (b) the next
Trading Day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile number specified in this Section or by
e-mail to the e-mail address specified in this Section on a day that is not a
Trading Day or later than 5:00 p.m., New York City time, on any Trading Day, (c)
the Trading Day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service with next day delivery specified, or (d)
upon actual receipt by the party to whom such notice is required to be given.
The address for such notices and communications shall be as follows:
If to the Company: Ivivi Technologies, Inc.
000-X. Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Andre' XxXxxx, Co-CEO
Email: xxxxx@xxxxxxxxxxxxxxxxx.xxx
With a copy to: Xxxxxxxxxx Xxxxxxx PC
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
24
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Email: xxxxxxxxx@xxxxxxxxxx.xxx
If to a Purchaser: To the address set forth under such
Purchaser's name on the signature page
hereof;
or such other address as may be designated in writing hereafter, in the same
manner, by such Person.
6.4 AMENDMENTS; WAIVERS; NO ADDITIONAL CONSIDERATION. No provision of
this Agreement may be waived or amended except in a written instrument signed,
in the case of an amendment, by the Company and each of the Purchasers holding
or having the right to acquire a majority of the Shares on a fully-diluted basis
at the time of such amendment or, in the case of a waiver, by the party against
whom enforcement of any such waiver is sought. No waiver of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of either party to exercise any right hereunder in
any manner impair the exercise of any such right. No consideration shall be
offered or paid to any Purchaser to amend or consent to a waiver or modification
of any provision of any Transaction Document unless the same consideration is
also offered to all Purchasers who then hold Shares.
6.5 CONSTRUCTION. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party. This Agreement
shall be construed as if drafted jointly by the parties, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement or any of the Transaction
Documents.
6.6 SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall
inure to the benefit of and be binding upon the parties and their successors and
permitted assigns. This Agreement, or any rights or obligations hereunder, may
not be assigned by the Company without the prior written consent of the
Purchasers. Any Purchaser may assign its rights hereunder in whole or in part to
any Person to whom such Purchaser assigns or transfers any Shares in compliance
with the Transaction Documents and applicable law, provided such transferee
shall agree in writing to be bound, with respect to the transferred Shares, by
the terms and conditions of this Agreement that apply to the "Purchasers".
6.7 NO THIRD-PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except each Purchaser Party is an intended third party
beneficiary of Section 4.7 and each Purchaser Party may enforce the provisions
of such Section directly against the parties with obligations thereunder.
6.8 GOVERNING LAW. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof. Each party
agrees that all Proceedings concerning the interpretations, enforcement and
defense of the transactions contemplated by this Agreement and any other
Transaction Documents (whether brought against a party hereto or its respective
Affiliates, employees or agents) shall be commenced exclusively in the New York
Courts. Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the New York Courts for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein (including with respect to the enforcement of any of
25
the Transaction Documents), and hereby irrevocably waives, and agrees not to
assert in any Proceeding, any claim that it is not personally subject to the
jurisdiction of any such New York Court, or that such Proceeding has been
commenced in an improper or inconvenient forum. Each party hereto hereby
irrevocably waives personal service of process and consents to process being
served in any such Proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. EACH PARTY HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
6.9 SURVIVAL. The representations, warranties, agreements and covenants
contained herein shall survive the Closing.
6.10 EXECUTION. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, or by e-mail delivery of a ".pdf" format
data file, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile signature page were an original thereof.
6.11 SEVERABILITY. If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.
6.12 RESCISSION AND WITHDRAWAL RIGHT. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) the
Transaction Documents, whenever any Purchaser exercises a right, election,
demand or option under a Transaction Document and the Company does not timely
perform its related obligations within the periods therein provided, then such
Purchaser may rescind or withdraw, in its sole discretion from time to time upon
written notice to the Company, any relevant notice, demand or election in whole
or in part without prejudice to its future actions and rights
6.13 REPLACEMENT OF SHARES. If any certificate or instrument evidencing
any Shares is mutilated, lost, stolen or destroyed, the Company shall issue or
cause to be issued in exchange and substitution for and upon cancellation
thereof, or in lieu of and substitution therefor, a new certificate or
instrument, but only upon receipt of evidence reasonably satisfactory to the
Company and the Transfer Agent of such loss, theft or destruction and the
execution by the holder thereof of a customary lost certificate affidavit of
that fact and an agreement to indemnify and hold harmless the Company and the
Transfer Agent for any losses in connection therewith. The applicants for a new
certificate or instrument under such circumstances shall also pay any reasonable
third-party costs associated with the issuance of such replacement Shares. If a
replacement certificate or instrument evidencing any Shares is requested due to
a mutilation thereof, the Company may require delivery of such mutilated
certificate or instrument as a condition precedent to any issuance of a
replacement.
6.14 REMEDIES. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchasers and the Company will be entitled to
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specific performance under the Transaction Documents. The parties agree that
monetary damages may not be adequate compensation for any loss incurred by
reason of any breach of obligations described in the foregoing sentence and
hereby agree to waive in any action for specific performance of any such
obligation (other than in connection with any action for a temporary restraining
order) the defense that a remedy at law would be adequate.
6.15 PAYMENT SET ASIDE. To the extent that the Company makes a payment
or payments to any Purchaser pursuant to any Transaction Document or a Purchaser
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.
6.16 ADJUSTMENTS IN SHARE NUMBERS AND PRICES. In the event of any stock
split, subdivision, dividend or distribution payable in shares of Common Stock
(or other securities or rights convertible into, or entitling the holder thereof
to receive directly or indirectly shares of Common Stock), combination or other
similar recapitalization or event occurring after the date hereof, each
reference in any Transaction Document to a number of shares or a price per share
shall be deemed to be amended to appropriately account for such event.
6.17 INDEPENDENT NATURE OF PURCHASERS' OBLIGATIONS AND RIGHTS. The
obligations of each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. The decision of each Purchaser to
purchase Shares pursuant to the Transaction Documents has been made by such
Purchaser independently of any other Purchaser and independently of any
information, materials, statements or opinions as to the business, affairs,
operations, assets, properties, liabilities, results of operations, condition
(financial or otherwise) or prospects of the Company which may have been made or
given by any other Purchaser or by any agent or employee of any other Purchaser,
and no Purchaser and any of its agents or employees shall have any liability to
any other Purchaser (or any other Person) relating to or arising from any such
information, materials, statement or opinions. Nothing contained herein or in
any Transaction Document, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Purchasers 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
Purchaser acknowledges that no other Purchaser has acted as agent for such
Purchaser in connection with making its investment hereunder and that no
Purchaser will be acting as agent of such Purchaser in connection with
monitoring its investment in the Shares or enforcing its rights under the
Transaction Documents. Each Purchaser 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 Purchaser to be joined as an additional party in any
proceeding for such purpose. The Company acknowledges that each of the
Purchasers has been provided with the same Transaction Documents for the purpose
of closing a transaction with multiple Purchasers and not because it was
required or requested to do so by any Purchaser. The Company's obligations to
each Purchaser under this Agreement are identical to its obligations to each
other Purchaser other than such differences resulting solely from the number of
Shares purchased by such Purchaser, but regardless of whether such obligations
are memorialized herein or in another agreement between the Company and a
Purchaser.
27
6.18 TERMINATION. This Agreement may be terminated and the sale and
purchase of the Shares abandoned at any time prior to the Closing by either the
Company or any Purchaser (with respect to itself only) upon written notice to
the other, if the Closing has not been consummated on or prior to 5:00 p.m., New
York City time, on the Outside Date; PROVIDED, HOWEVER, that the right to
terminate this Agreement under this Section 6.18 shall not be available to any
Person whose failure to comply with its obligations under this Agreement has
been the cause of or resulted in the failure of the Closing to occur on or
before such time. Nothing in this Section 6.18 shall be deemed to release any
party from any liability for any breach by such party of the terms and
provisions of this Agreement or the other Transaction Documents or to impair the
right of any party to compel specific performance by any other party of its
obligations under this Agreement or the other Transaction Documents. Upon a
termination in accordance with this Section, the Company and the terminating
Purchaser(s) shall not have any further obligation or liability (including
arising from such termination) to the other, and no Purchaser will have any
liability to any other Purchaser under the Transaction Documents as a result
therefrom.
6.19 LIMITATION OF LIABILITY. Notwithstanding anything herein to the
contrary, the Company acknowledges and agrees that the liability of a Purchaser
arising directly or indirectly, under any Transaction Document of any and every
nature whatsoever shall be satisfied solely out of the assets of such Purchaser,
and that no trustee, officer, other investment vehicle or any other Affiliate of
such Purchaser or any investor, shareholder or holder of shares of beneficial
interest of such a Purchaser shall be personally liable for any liabilities of
such Purchaser.
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IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
IVIVI TECHNOLOGIES, INC.
By: /s/ Andre' XxXxxx
------------------------------------
Name: Andre' XxXxxx
Title: Vice Chairman & Co-CEO
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURE PAGES FOR PURCHASERS FOLLOW]
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NAME OF PURCHASER: The Pinnacle Fund, L.P.
By: /s/ Xxxxx X. Xxxx
----------------------------------------------
Xxxxx X. Xxxx
Sole Member, Pinnacle Fund Management, LLC
the General partner of Pinnacle Advisers, L.P.
the General Partner of The Pinnacle Fund, L.P.
Aggregate Purchase Price (Subscription
Amount): $5,000,000
Number of Shares to be Acquired: 1,000,000
Tax ID No.: ____________________
Address for Notice:
0000 Xxxxxxx Xxxx Xxxx., Xxxxx 000
Xxxxx, XX 00000
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
Email Address: xx@xxxxxxxxxxxx.xxx
Attention: Xxxxx X. Xxxx
Delivery Instructions:
(if different than above)
c/o _______________________________
Street: ____________________________
City/State/Zip: ______________________
Attention: __________________________
Telephone No.: ____________________________
30
