EXHIBIT 10.7
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SECURITIES PURCHASE AGREEMENT
Between
EBASEONE CORP.
and
THE INVESTORS SIGNATORY HERETO
Dated as of November 15, 1999
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SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of November 15,
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1999, among EbaseOne Corp., a Delaware corporation (the "Company"), and the
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investors signatory hereto (each such investor is a "Purchaser" and all such
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investors are, collectively, the "Purchasers").
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WHEREAS, subject to the terms and conditions set forth in this Agreement,
the Company desires to issue and sell to the Purchasers and the Purchasers,
severally and not jointly, desire to purchase from the Company, shares of the
Company's common stock, $.001 par value per share (the "Common Stock"), and
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certain other securities of the Company as more fully described in this
Agreement.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy are hereby acknowledged, the Company and the Purchasers agree as
follows:
ARTICLE I
PURCHASE AND SALE
1.1 The Closing.
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(a) The Closing. (i) Subject to the terms and conditions set forth
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in this Agreement, the Company shall issue and sell to the Purchasers and the
Purchasers shall, severally and not jointly, purchase an aggregate of 2,083,333
shares of Common Stock (the "Shares") for an aggregate purchase price of
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$9,000,000. The closing of the purchase and sale of the Shares (the "Closing")
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shall take place at the offices of Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx & Xxxxxx
LLP ("Xxxxxxxx Xxxxxxxxx"), 1290 Avenue of the Americas, New York, New York
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10104, immediately following the execution hereof or such later date as the
parties shall agree. The date of the Closing is hereinafter referred to as the
"Closing Date."
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(ii) At the Closing, the parties shall deliver or shall cause to be
delivered the following: (A) the Company shall deliver to each Purchaser (1) the
number of Shares indicated below each Purchaser's name on the signature page of
this Agreement, registered in the name of each such Purchaser, (2) a Common
Stock purchase warrant, in the form of Exhibit A, registered in the name of such
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Purchaser, pursuant to which such Purchaser shall have the right to acquire
shares of Common Stock upon the terms and in such number as set forth therein
(each an "Adjustable Warrant"), (3) two Common Stock purchase warrants, in the
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forms of Exhibit B-1 and Exhibit B-2, respectively, registered in the name of
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such Purchaser, pursuant to which such Purchaser shall have the right to acquire
the number of shares of Common Stock indicated below such Purchaser's name on
the signature page of this Agreement, upon the terms and at the exercise price
set forth therein (collectively, the "Closing Warrants" and together with the
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Adjustable Warrants, the "Warrants"), (4) the legal opinion of Xxxxxx &
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Xxxxxxxxx, outside counsel to the Company, substantially in the form of Exhibit
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C, and (5) all other documents, instruments and writings required to be
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delivered at or prior to the Closing by the Company pursuant to this Agreement,
including an executed Registration Rights Agreement, dated the date hereof,
among the Company and the Purchasers, in the form of Exhibit D (the
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"Registration Rights Agreement"), and an escrow agreement among the Company,
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Cardinal Securities, LLC and The Bank of New York (the "Escrow Agent"), dated
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the
date hereof (the "Escrow Agreement") in the form of Exhibit E; and (B) each
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Purchaser shall deliver (1) to the Escrow Agent, for delivery in accordance with
the Escrow Agreement, the purchase price indicated below such Purchaser's name
on the signature page to this Agreement in United States dollars in immediately
available funds by wire transfer to an account designated for such purpose,
pursuant to the Escrow Agreement, and (2) to the Company, all documents,
instruments and writings required to have been delivered at or prior to the
Closing Date by such Purchaser pursuant to this Agreement, including an executed
Registration Rights Agreement.
(iii) On the second (2/nd/) Trading Day following the date that
Company notifies the Purchasers that the Underlying Shares Registration
Statement (as defined herein) is first declared effective by the Commission (as
defined herein), (A) the Company will, against delivery of the amounts set forth
in clause (B) in this paragraph, deliver to the Purchasers, the number of Shares
indicated below each Purchaser's name on the signature page of this Agreement,
registered in the name of each such Purchaser, and (B) each Purchaser will
deliver to the Escrow Agent, for delivery in accordance with the Escrow
Agreement, the purchase price indicated below such Purchaser's name on the
signature page to this Agreement in United States dollars in immediately
available funds by wire transfer to an account designated for such purpose,
pursuant to the Escrow Agreement
1.2 Certain Defined Terms. For purposes of this Agreement,"Trading
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Day" and "Per Share Market Value" shall have the meanings set forth in Exhibit A
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and "Business Day" shall mean any day except Saturday, Sunday and any day which
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shall be a federal legal holiday or a day on which banking institutions in the
State of New York or the State of Texas generally are authorized or required by
law or other governmental action to close. A "Person" means an individual or
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corporation, partnership, trust, incorporated or unincorporated association,
joint venture, limited liability company, joint stock company, government (or an
agency or subdivision thereof) or other entity of any kind.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations, Warranties and Agreements of the Company. The
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Company hereby makes the following representations and warranties to the
Purchasers:
(a) Organization and Qualification. The Company is a corporation
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duly incorporated, validly existing and in good standing under the laws of the
State of Delaware, with the requisite corporate power and authority to own and
use its properties and assets and to carry on its business as currently
conducted. The Company has no subsidiaries other than as set forth in Schedule
2.1(a) (collectively, the "Subsidiaries"). Each of the Subsidiaries is an
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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 and use its
properties and assets and to carry on its business as currently conducted. Each
of the Company and the Subsidiaries is duly qualified to do 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
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be so qualified or in good standing, as the case may be, could not, individually
or in the aggregate, (x) adversely affect the legality, validity or
enforceability of the Securities (as defined below) or any of this Agreement,
the Escrow Agreement, the Registration Rights Agreement or the Warrants
(collectively, the "Transaction Documents"), (y) have or result in a material
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adverse effect on the results of operations, assets, prospects, or condition
(financial or otherwise) of the Company and the Subsidiaries, taken as a whole,
or (z) adversely impair the Company's ability to perform fully on a timely basis
its obligations under any of the Transaction Documents (any of (x), (y) or (z),
a "Material Adverse Effect").
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(b) Authorization; Enforcement. The Company has the requisite
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corporate power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to carry out its
obligations thereunder. The execution and delivery of each of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated thereby have been duly authorized by all necessary action on the
part of the Company and no further action is required by the Company. Each of
the Transaction Documents has been duly executed by the Company and, when
delivered in accordance with the terms hereof, will constitute the valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms. Neither the Company nor any Subsidiary is in violation of any
of the provisions of its respective certificate of incorporation, by-laws or
other charter or organizational documents.
(c) Capitalization. The number of authorized, issued and
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outstanding capital stock of the Company is set forth in Schedule 2.1(c).
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Except as disclosed in Schedule 2.1(c), the Company owns all of the capital
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stock of each Subsidiary. No securities of the Company or any Subsidiary are
entitled to preemptive or similar rights, nor is any holder of securities of the
Company or any Subsidiary entitled to preemptive or similar rights arising out
of any agreement or understanding with the Company or any Subsidiary by virtue
of any of the Transaction Documents. Except as disclosed in Schedule 2.1(c),
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there are no outstanding options, warrants, script rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities, except as
a result of the purchase and sale of the Securities, or rights or obligations
convertible into or exchangeable for, or giving any Person any right to
subscribe for or acquire, any shares of Common Stock, or contracts, commitments,
understandings, or arrangements by which the Company or any Subsidiary is or may
become bound to issue additional shares of Common Stock, or securities or rights
convertible or exchangeable into shares of Common Stock. To the knowledge of
the Company, except as specifically disclosed in the Disclosure Materials (as
defined below) or Schedule 2.1(c), no Person or group of related Persons
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beneficially owns (as determined pursuant to Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")), or has the
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right to acquire by agreement with or by obligation binding upon the Company,
beneficial ownership of in excess of 5% of the Common Stock.
(d) Issuance of the Securities. The Securities are duly authorized
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and, when issued and paid for in accordance with the terms hereof and the
Warrants, shall have been duly and validly issued, fully paid and nonassessable,
free and clear of all liens, encumbrances and rights of first refusal of any
kind (collectively, "Liens"). The Company has reserved a number of duly
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authorized number of shares of Common Stock for issuance hereunder upon exercise
of the Warrants that is not less than the sum of (i) the aggregate number of
Shares to be issued hereunder, (ii) the
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maximum number of Underlying Shares (as defined below) issuable upon exercise of
the Adjustable Warrants during the first Vesting Date (as defined in the
Adjustable Warrant), assuming that on such date, each Purchaser holds the entire
number of Shares purchased by it hereunder and that the Per Share Market Value
utilized to determine the number of such Underlying Shares is 50% of the Per
Share Market Value on the Trading Day immediately preceding the Closing Date,
and (iii) the number of Underlying Shares issuable upon exercise in full of the
Closing Warrants (such number of shares of Common Stock contemplated in (i),
(ii) and (iii), the "Initial Minimum"). The shares of Common Stock issuable
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upon exercise of the Warrants are referred to herein as the "Underlying Shares."
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The Shares, the Warrants and the Underlying Shares are collectively referred to
herein as, the "Securities."
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(e) No Conflicts. The execution, delivery and performance of the
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Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated thereby do not and will not (i) conflict with or
violate any provision of the Company's or any Subsidiary's certificate of
incorporation, bylaws or other charter documents (each as amended through the
date hereof), or (ii) subject to obtaining the Required Approvals (as defined
below), 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 (with or without
notice, lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a Company or Subsidiary debt or otherwise) or other
understanding to which the Company or any Subsidiary is a party or by which any
property or asset of the Company or any Subsidiary is bound or affected, 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 or a Subsidiary is subject (including federal and state
securities laws and regulations), or by which any property or asset of the
Company or a Subsidiary is bound or affected; except in the case of each of
clauses (ii) and (iii), as could not, individually or in the aggregate, have or
result in a Material Adverse Effect. The business of the Company is not being
conducted in violation of any law, ordinance or regulation of any governmental
authority, except for violations which, individually or in the aggregate, could
not have or result in a Material Adverse Effect.
(f) Filings, Consents and Approvals. Neither the Company nor any
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Subsidiary 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, other than (i) the filings required pursuant to Section
3.10, (ii) the filing with the Securities and Exchange Commission (the
"Commission") of a registration statement meeting the requirements set forth in
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the Registration Rights Agreement and covering the resale of the Shares and the
Underlying Shares by the Purchasers (the "Underlying Shares Registration
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Statement"), (iii) the application(s) to the OTC Bulletin Board ("OTC") for the
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listing of the Underlying Shares for trading on the OTC (and with any other
national securities exchange, trading facility or market on which the Common
Stock is then listed), (iv) applicable Blue Sky filings, and (v) in all other
cases where the failure to obtain such consent, waiver, authorization or order,
or to give such notice or make such filing or registration could not have or
result in, individually or in the aggregate, a Material Adverse Effect (the
items described in clauses (i)-(v) are collectively, the "Required Approvals").
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(g) Litigation; Proceedings. Except as specified in Schedule 2.1(g),
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there is no action, suit, inquiry, notice of violation, proceeding or
investigation pending or, to the knowledge of the Company, threatened against or
affecting the Company or any of its Subsidiaries or any of their respective
properties before or by any court, arbitrator, governmental or administrative
agency or regulatory authority (federal, state, county, local or foreign)
(collectively, an "Action") which (i) adversely affects or challenges the
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legality, validity or enforceability of any of the Transaction Documents or the
Securities or (ii) could, individually or in the aggregate, have or result in a
Material Adverse Effect.
(h) No Default or Violation. Except as specified in Schedule 2.1(h),
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neither the Company nor any Subsidiary (i) is in default under or in violation
of (and no event has occurred which has not been waived which, with notice or
lapse of time or both, would result in a default by the Company or any
Subsidiary under), nor has the Company or any Subsidiary received notice of a
claim that it is in default under or that it is in violation of, any indenture,
loan or credit agreement or any other agreement or instrument to which it is a
party or by which it or any of its properties is bound (whether or not such
default or violation has been waived), (ii) is in violation of any order of any
court, arbitrator or governmental body, or (iii) is in violation of any statute,
rule or regulation of any governmental authority, except as could not
individually or in the aggregate, have or result in a Material Adverse Effect.
(i) Private Offering. Assuming the accuracy of the representations
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and warranties of the Purchasers set forth in Sections 2.2(b)-(g), the offer,
issuance and sale of the Securities to the Purchasers as contemplated hereby are
exempt from the registration requirements of the Securities Act of 1933, as
amended (the "Securities Act"). Neither the Company nor any Person acting on
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its behalf has taken or is, to the knowledge of the Company, contemplating
taking any action which could subject the offering, issuance or sale of the
Securities to the registration requirements of the Securities Act including
soliciting any offer to buy or sell the Securities by means of any form of
general solicitation or advertising.
(j) Disclosure Materials; Financial Statements. The Company has
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provided the Purchasers with copies of (y) its audited financial statements for
the fiscal year ending September 30, 1999 (the "Financial Statements") and (z)
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certain balance sheets, budgets and projections prepared by the management of
the Company (the "Company Projections" and together with the Financial
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Statements and the Schedules to this Agreement, the "Disclosure Materials"). To
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the Company's knowledge, the assumptions underlying the Company Projections are
reasonable and the Company Projections are based upon good faith and diligent
estimates of the anticipated assets and liabilities of the Company as well as
the anticipated operating results, financial conditions and prospects of the
Company following the consummation of the transactions contemplated by this
Agreement. To the Company's knowledge, no event has occurred and no
circumstance has arisen since the date of such Company Projections which would
render such Company Projections or the assumptions underlying the same
misleading or no longer reasonable. None of the Disclosure Materials contain
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The Financial Statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved ("GAAP"), except as may be otherwise specified in such
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financial statements or
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the notes thereto, and fairly present in all material respects the financial
position of the Company and its consolidated subsidiaries 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, immaterial,
year-end audit adjustments. Since June 30, 1999, except as specifically
disclosed in the Disclosure Materials, (a) there has been no event, occurrence
or development that has or that could result in a Material Adverse Effect, (b)
the Company has not incurred any liabilities (contingent or otherwise) other
than (x) liabilities incurred in the ordinary course of business consistent with
past practice and (y) liabilities not required to be reflected in the Financial
Statements pursuant to GAAP, (c) the Company has not altered its method of
accounting or the identity of its auditors and (d) the Company has not declared
or made any payment or distribution of cash or other property to its
stockholders or officers or directors (other than in compliance with existing
Company stock or stock option plans) with respect to its capital stock, or
purchased, redeemed (or made any agreements to purchase or redeem) any shares of
its capital stock.
(k) Investment Company. The Company is not, and is not an
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Affiliate (as defined in Rule 405 under the Securities Act) of, an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
(l) Certain Fees. Except as are payable to Cardinal Securities,
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LLC, no fees or commissions will be payable by the Company to any broker,
financial advisor or consultant, finder, placement agent, investment banker,
bank or other Person, with respect to the transactions contemplated by this
Agreement. The Purchasers shall have no obligation with respect to any fees or
with respect to any claims made by or on behalf of other Persons for fees of a
type contemplated in this Section that may be due in connection with the
transactions contemplated by this Agreement. The Company shall indemnify and
hold harmless the Purchasers, their employees, officers, directors, agents, and
partners, and its respective Affiliates, from and against all claims, losses,
damages, costs (including the costs of preparation and attorney's fees) and
expenses suffered in respect of any such claimed or existing fees, as such fees
and expenses are incurred.
(m) Solicitation Materials. Neither the Company nor any Person acting
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on the Company's behalf has solicited any offer to buy or sell the Securities by
means of any form of general solicitation or advertising.
(n) Form S-1 Eligibility. The Company is eligible to register its
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Common Stock for resale under Form S-1 promulgated under the Securities Act.
(o) Listing and Maintenance Requirements. The Company has not, in
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the two years preceding the date hereof received notice (written or oral) from
the OTC or any other stock exchange, market or trading facility on which the
Common Stock is or has been listed (or on which it has been quoted) to the
effect that the Company is not in compliance with the listing or maintenance
requirements of such exchange, market or trading facility. The Company is, and
has no reason to believe that it will not in the foreseeable future continue to
be, in compliance with all such listing and maintenance requirements, provided
the Company becomes a reporting company on or before February 20, 2000.
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(p) Patents and Trademarks. The Company and its Subsidiaries have,
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or have rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, licenses and rights which
are necessary or material for use in connection with their respective business
as described in the Disclosure Materials (collectively, the "Intellectual
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Property Rights") and which the failure to so have would have a Material Adverse
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Effect. Neither the Company nor any Subsidiary has received a written notice
that the Intellectual Property Rights used by the Company or its Subsidiaries
violates or infringes upon the rights of any Person, to the best knowledge of
the Company. All such Intellectual Property Rights are enforceable and there is
no existing infringement by another Person of any of the Intellectual Property
Rights.
(q) Regulatory Permits. The Company and its Subsidiaries possess
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all certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses as described in the Disclosure Materials, except where the failure to
possess such permits could not, individually or in the aggregate, have or result
in a Material Adverse Effect ("Material Permits"), and neither the Company nor
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any such Subsidiary has received any notice of proceedings relating to the
revocation or modification of any Material Permit.
(r) Title. Except as set forth on Schedule 2.1(r), the Company and
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the Subsidiaries have good and marketable title in fee simple to all real
property and personal property owned by them which is material to the business
of the Company and its Subsidiaries, in each case free and clear of all Liens,
except for Liens as do not 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 and its Subsidiaries. Any real property and facilities held under lease
by the Company and its Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not
materially interfere with the use made and proposed to be made of such property
and buildings by the Company and its Subsidiaries.
(s) Registration Rights; Rights of Participation. Except as set forth
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on Schedule 2.1(s), the Company has not granted or agreed to grant to any Person
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any rights (including "piggy-back" registration rights) to have any securities
of the Company registered with the Commission or any other governmental
authority which has not been satisfied. No Person, has any right of first
refusal, preemptive right, right of participation, or any similar right to
participate in the transactions contemplated by the Transaction Documents.
(t) Absence of Certain Proceedings. Except as described in the
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Disclosure Materials, (i) there is no Action pending or, to the knowledge of the
Company, threatened against the Company, in any such case wherein an unfavorable
decision, ruling or finding could have or result in a Material Adverse Effect;
(ii) neither the Company nor any Subsidiary, nor any director or officer
thereof, is or has been the subject of any Action involving (A) a claim of
violation of or liability under federal or state securities laws or (B) a claim
of breach of fiduciary duty; (iii) the Company does not have pending before the
Commission any request for confidential treatment of information and the Company
has no knowledge of any expected such request that would be made prior to the
Effectiveness Date (as defined in the Registration Rights Agreement); and (iv)
there has not been, and to the best of the Company's knowledge there is not
pending or contemplated, any
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investigation by the Commission involving the Company or any current or former
director or officer of the Company.
(u) Labor Relations. No material labor problem exists or, to the
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knowledge of the Company, is imminent with respect to any of the employees of
the Company.
(v) Disclosure. The Company confirms that neither it nor any Person
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acting on its behalf has provided the Purchasers or their agents or counsel with
any information that constitutes or might constitute material non-public
information. The Company understands and confirms that the Purchasers shall be
relying on the foregoing representations in effecting transactions in securities
of the Company. All disclosure provided to the Purchasers regarding the Company,
its business and the transactions contemplated hereby, including the Schedules
to this Agreement, furnished by or on behalf of the Company 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.
2.2 Representations and Warranties of the Purchasers. Each Purchaser
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hereby for itself and for no other Purchaser, represents and warrants to the
Company as follows:
(a) Organization; Authority. If such Purchaser is an entity, such
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Purchaser is 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 Transaction Documents and otherwise to carry out its
obligations thereunder. If such Purchaser is an entity, the purchase by such
Purchaser of the Securities hereunder has been duly authorized by all necessary
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.
(b) Investment Intent. Such Purchaser is acquiring the Securities
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as principal for its own account for investment purposes only and not with a
view to or for distributing or reselling such Securities or any part thereof,
without prejudice, however, to such Purchaser's 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 Securities pursuant to an effective
registration statement under the Securities Act and in compliance with
applicable federal and state securities laws or under an exemption from such
registration. Nothing contained herein shall be deemed a representation or
warranty by such Purchaser to hold Securities for any amount of time.
(c) Purchaser Status. At the time such Purchaser was offered the
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Securities, it was, and at the date hereof it is, and at each exercise date
under the Warrants, it will be, an "accredited investor" as defined in Rule
501(a) under the Securities Act.
(d) Experience of such Purchaser. Such Purchaser, either alone or
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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 Securities, and has so
evaluated the merits and risks of such investment.
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(e) Ability of Purchaser to Bear Risk of Investment. Such
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Purchaser is able to bear the economic risk of an investment in the Securities
and, at the present time, is able to afford a complete loss of such investment.
(f) Access to Information. Such Purchaser acknowledges that it has
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reviewed 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 Securities and the merits and risks of investing in the
Securities; (ii) access to information about the Company and the Company's
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 which 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.
(g) General Solicitation. Such Purchaser is not purchasing the
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Securities as a result of or subsequent to any advertisement, article, notice or
other communication regarding the Securities published in any newspaper,
magazine or similar media or broadcast over television or radio or presented at
any seminar or any other general solicitation or general advertisement.
(h) Reliance. Such Purchaser understands and acknowledges that (i)
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the Securities are being offered and sold to it without registration under the
Securities Act in a private placement that is exempt from the registration
provisions of the Securities Act and (ii) the availability of such exemption,
depends in part on, and the Company will rely upon the accuracy and truthfulness
of, the foregoing representations and such Purchaser hereby consents to such
reliance.
The Company acknowledges and agrees that no Purchaser makes or has
made representations or warranties with respect to the sale of the Securities
contemplated hereby other than those specifically set forth in this Section 2.2.
ARTICLE III
OTHER AGREEMENTS OF THE PARTIES
3.1 Transfer Restrictions. (a) Securities may only be disposed of
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pursuant to an effective registration statement under the Securities Act, to the
Company 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 federal and state securities laws. In connection
with any transfer of Securities other than pursuant to an effective registration
statement or to the Company, except as otherwise set forth herein, the Company
may require the transferor thereof to provide to the Company an opinion of
counsel selected by the transferor, the form and substance of which opinion
shall be reasonably satisfactory to the Company, to the effect that such
transfer does not require registration under the Securities Act.
Notwithstanding the foregoing, the Company, without
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requiring a legal opinion as described in the immediately preceding sentence,
hereby consents to and agrees to register on the books of the Company and with
any transfer agent for the securities of the Company any transfer of Securities
by a Purchaser to an Affiliate of such Purchaser or to one or more funds or
managed accounts under common management with such Purchaser, and any transfer
among any such Affiliates or one or more funds or managed accounts, provided
that the transferee certifies to the Company that it is an "accredited investor"
within the meaning of Rule 501(a) under the Securities Act and that it is
acquiring the Securities solely for investment purposes (subject to the
qualifications hereof). 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) The Purchasers agree to the imprinting, so long as is required by
applicable law, of the following legend on the Securities:
[NEITHER] THESE SECURITIES [NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE EXERCISABLE] HAVE BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER 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 ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
Neither Shares nor Underlying Shares shall contain the legend set
forth above nor any other legend at any time when such legend is not required
under the Securities Act (including judicial interpretations and pronouncements
issued by the staff of the Commission). The Company agrees that if any Shares
or Underlying Shares are issued with a legend in accordance with this Section
3.1(b), it will, within three Trading Days after request therefor by a Purchaser
and the surrender by such Purchaser of the certificate representing the
applicable Shares or Underlying Shares, provide such Purchaser with a
certificate or certificates representing such Shares or Underlying Shares, free
from such legend at such time as such legend is no longer required under the
Securities Act.
3.2 Acknowledgment of Dilution. The Company acknowledges that the
--------------------------
issuance of Underlying Shares upon exercise of the Warrants will 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 obligation to issue Underlying Shares upon exercise of the Warrants
pursuant to the terms thereof is unconditional and absolute regardless of the
effect of any such dilution.
3.3 Furnishing of Information. As long as the Purchasers own Securities,
-------------------------
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. So long as the
Purchasers own Securities, if the Company is not required to file reports
-10-
pursuant to such laws, it will prepare and furnish to the Purchasers and make
publicly available in accordance with Rule 144(c) promulgated under the
Securities Act such information as is required for the Purchasers to sell the
Securities under Rule 144 promulgated under the Securities Act. The Company
further covenants that it will take such further action as any holder of
Securities may reasonably request, all to the extent required from time to time
to enable such Person to sell Underlying Shares without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144
promulgated under the Securities Act, including the legal opinion referenced
above in this Section. Upon the request of any such Person, the Company shall
deliver to such Person a written certification of a duly authorized officer as
to whether it has complied with such requirements.
3.4 Integration. The Company shall not, and shall use its best efforts
-----------
to ensure that, no Affiliate of the Company shall, 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 would be integrated with the
offer or sale of the Securities in a manner that would require the registration
under the Securities Act of the sale of the Securities to the Purchasers.
3.5 Increase in Authorized Shares. If on any date the Company would be,
-----------------------------
if a notice of exercise were to be delivered on such date, precluded from
issuing the sum of (i) 200% of the number of Underlying Shares then issuable
upon exercise in full of the Adjustable Warrants and (ii) the number of
Underlying Shares issuable upon exercise in full of the Closing Warrants (the
"Current Required Minimum") due to the unavailability of a sufficient number of
------------------------
authorized but unissued or reserved shares of Common Stock, then the Board of
Directors of the Company shall promptly (and in any case, within 30 Business
Days from such date) prepare and mail to the stockholders of the Company proxy
materials requesting authorization to amend the Company's articles of
incorporation to increase the number of shares of Common Stock which the Company
is authorized to issue to at least such number of shares as is reasonably
adequate to enable the Company to comply with its issuance, exercise and
reservation of shares obligations as set forth in this Agreement and the
Warrants (the sum of (x) the number of shares of Common Stock then outstanding
plus all shares of Common Stock issuable upon exercise of all outstanding
options, warrants and convertible instruments other than the Warrants, and (y)
the Current Required Minimum, shall be a reasonable number). In connection
therewith, the Board of Directors shall (a) adopt proper resolutions authorizing
such increase, (b) recommend to and otherwise use its best efforts to promptly
and duly obtain stockholder approval to carry out such resolutions (and hold a
special meeting of the stockholders no later than the earlier to occur of the
60/th/ day after delivery of the proxy materials relating to such meeting and
the 90/th/ day after request by a holder of Warrants to issue the number of
Underlying Shares in accordance with the terms hereof) and (c) within five (5)
Business Days of obtaining such stockholder authorization, file an appropriate
amendment to the Company's articles of incorporation to evidence such increase.
3.6 Listing of Underlying Shares. The Company shall (a) not later than
----------------------------
the fifth (5/th/) Business Day following the Closing Date prepare and file with
the OTC (and such other national securities exchange or market or trading or
quotation facility on which the Common Stock is then listed) an additional
shares listing application covering a number of shares of Common Stock which is
not less than the Initial Minimum, (b) take all steps necessary to cause such
shares of Common Stock to be approved for listing in the OTC (as well as on any
such other national
-11-
securities exchange or market or trading or quotation facility on which the
Common Stock is then listed) as soon as possible thereafter, and (c) provide to
the Purchaser evidence of such listing, and the Company shall maintain the
listing of its Common Stock thereon. If the number of Underlying Shares issuable
upon conversion in full of the then outstanding Shares, as payment of dividends
thereon, and upon exercise of the then unexercised portion of the Warrants
exceed the number of Underlying Shares previously listed on account thereof with
OTC (and any such other required exchanges), then the Company shall take the
necessary actions to immediately list a number of Underlying Shares as equals no
less than the then Current Required Minimum
3.7 Exercise Procedures. The Transfer Agent Instructions and Form of
-------------------
Election to Purchase under the Warrants set forth the totality of the procedures
with respect to the exercise of the Warrants, including the form of legal
opinion, if necessary, that shall be rendered to the Company's transfer agent
and such other information and instructions as may be reasonably necessary to
enable the Purchasers to exercise the Warrants.
3.8 Notice of Breaches. Each of the Company and the Purchasers shall
------------------
give prompt written notice to the other of any breach by it of any
representation, warranty or other agreement contained in any Transaction
Document, as well as any events or occurrences arising after the date hereof
which would reasonably be likely to cause any representation or warranty or
other agreement of such party, as the case may be, contained therein to be
incorrect or breached as of the Closing Date. However, no disclosure by a party
pursuant to this Section shall be deemed to cure any breach of any
representation, warranty or other agreement contained in any Transaction
Document.
3.9 Subsequent Financing; Right of First Refusal. (a) During the period
--------------------------------------------
commencing on the Closing Date and ending on the later to occur of (x) the
90/th/ day after the date the Underlying Shares Registration Statement is first
declared effective by the Commission (such date, the "Effective Date") (such
--------------
date will be extended by the number of days after the Effective Date during
which a Purchaser is not permitted or unable to utilize the prospectus or
otherwise to resell Shares or Underlying Shares under the Underlying Shares
Registration Statement) and (y) the 180/th/ day after the Closing Date (such
period, the "Restricted Period"), except for (i) the issuance of shares of
-----------------
Common Stock in connection with the acquisition of assets or stock whereby the
Company does not grant any registration rights thereon, (ii) the issuance of
shares of Common Stock at a price greater than $4.32 per share of Common Stock,
and (iii) the granting of options or warrants to employees, consultants
rendering technical services to the Company, officers and directors of the
Company, and the issuance of shares upon exercise of options granted under any
stock option plan heretofore or hereinafter duly adopted by the Company, the
Company shall not, directly or indirectly, without the prior written consent of
the Purchasers, offer, sell, grant any option to purchase, or otherwise dispose
of (or announce any offer, sale, grant or any option to purchase or other
disposition) any of its or its Affiliates' equity or equity-equivalent
securities (including the issuance of any debt or other instrument at any time
over the life thereof convertible into or exchangeable for Common Stock), or any
other transaction intended to be exempt or not subject to registration under the
Securities Act.
(b) During the Restricted Period, the Company shall not issue shares of
Common Stock, at a price per share equal to or in excess of $4.32 per share of
Common Stock (a "Subsequent Placement") unless (A) the Company delivers to the
--------------------
Purchasers a written notice (the "Subsequent
-12-
Placement Notice") of its intention to effect such Subsequent Placement within
no less than ten (10) Business Days, which Subsequent Placement Notice shall
describe in reasonable detail the proposed terms of such Subsequent Placement,
the amount of proceeds intended to be raised thereunder, the Person with whom
such Subsequent Placement shall be effected, and attached to which shall be a
term sheet or similar document relating thereto and (B) the Purchasers shall not
have notified the Company by 5:00 p.m. (New York City time) on the fifth (5th)
Business Day after their receipt of the Subsequent Placement Notice of their
willingness to cause the Purchasers to provide (or to cause its sole designee to
provide), subject to completion of mutually acceptable documentation, financing
to the Company on the same terms set forth in the Subsequent Placement Notice.
If the Purchasers shall fail to notify the Company of their intention to enter
into such negotiations within such time period, the Company may effect the
Subsequent Placement substantially upon the terms and to the Persons (or
Affiliates of such Persons) set forth in the Subsequent Placement Notice;
provided, that the Company shall provide the Purchasers with a second Subsequent
--------
Placement Notice, and the Purchasers shall again have the right of first refusal
set forth above in this paragraph (a), if the Subsequent Placement subject to
the initial Subsequent Placement Notice shall not have been consummated for any
reason on the terms set forth in such Subsequent Placement Notice within thirty
(30) Trading Days after the date of the initial Subsequent Placement Notice with
the Person (or an Affiliate of such Person) identified in the Subsequent
Placement Notice. If the Purchasers shall indicate a willingness to provide
financing in excess of the amount set forth in the Subsequent Placement Notice,
then each Purchaser shall be entitled to provide financing pursuant to such
Subsequent Placement Notice up to an amount equal to such Purchaser's pro-rata
portion of the aggregate number of Shares purchased by such Purchaser under this
Agreement, but the Company shall not be required to accept financing from the
Purchasers in an amount in excess of the amount set forth in the Subsequent
Placement Notice.
3.10 Subsequent Registrations. Except for Shares, Underlying Shares and
------------------------
other "Registrable Securities" (as such term is defined in the Registration
Rights Agreement) to be registered, and securities of the Company as set forth
in Schedule 2.1(s) to be registered, in the Underlying Shares Registration
---------------
Statement in accordance with the Registration Rights Agreement the Company shall
not, other than registrations on Form S-8 (as promulgated under the Securities
Act), during the Restricted Period, the Company shall not, without the prior
written consent of the Purchasers, (i) issue or sell any of its or any of its
Affiliates' equity or equity-equivalent securities pursuant to Regulation S
promulgated under the Securities Act, or (ii) file a registration statement for
the issuance or resale of any securities of the Company.
3.11 Certain Securities Laws Disclosures; Publicity. The Company shall:
----------------------------------------------
(i) on the Closing Date, issue a press release acceptable to the Purchasers
disclosing the transactions contemplated hereby and (ii) timely file with the
Commission a Form D promulgated under the Securities Act as required under
Regulation D promulgated under the Securities Act and provide a copy thereof to
the Purchasers promptly after the filing thereof. The Company shall, no less
than one (1) Business Days prior to the filing of any disclosure required by
clause (ii) above, provide a copy thereof to the Purchasers. The Company and
the Purchasers shall consult with each other in issuing any press releases or
otherwise making public statements or filings and other communications with the
Commission or any regulatory agency or stock market or trading facility with
respect to the transactions contemplated hereby and neither party shall issue
any such press release or otherwise make any such public statement, filings or
other communications pertaining to
-13-
the transactions contemplated hereby without the prior written consent of the
other, which consent shall not be unreasonably withheld or delayed, except that
no prior consent shall be required if such disclosure is required by law and
such consent can not reasonably be expected to be received prior to the time
required to complete such filing or make such statement in accordance with such
applicable law, in which such case the disclosing party shall provide the other
party with prior notice of such public statement, filing or other communication.
Notwithstanding the foregoing and other than in the Underlying Shares
Registration Statement, the Company shall not publicly disclose the name of a
Purchaser, or include the name of a Purchaser in any filing with the Commission,
or any regulatory agency, trading facility or stock market without the prior
written consent of such Purchaser, except to the extent such disclosure (but not
any disclosure as to the controlling Persons thereof) is required by law, in
which case the Company shall provide such Purchaser with prior notice of such
disclosure.
3.12 Transfer of Intellectual Property Rights. Except in connection with
----------------------------------------
the sale of all or substantially all of the assets of the Company, the Company
shall not transfer, sell or otherwise dispose of any Intellectual Property
Rights, or allow any of the Intellectual Property Rights to become subject to
any Liens, or fail to renew such Intellectual Property Rights (if renewable and
it would otherwise lapse if not renewed), without the prior written consent of
the Purchasers.
3.13 Use of Proceeds. The Company shall use the net proceeds from the sale
---------------
of the Securities hereunder for working capital purposes and not for the
satisfaction of any portion of the Company's debt (excluding payment of trade
payables in the ordinary course of the Company's business and prior practices),
to redeem any Company equity or equity-equivalent securities or to settle any
outstanding litigation. Pending application of the proceeds of this placement in
the manner permitted hereby, the Company will invest such proceeds in interest
bearing accounts and/or short-term, investment grade interest bearing securities
3.14 Reimbursement. If any Purchaser, other than by reason of its gross
-------------
negligence or willful misconduct, becomes involved in any capacity in any
action, proceeding or investigation brought by or against any Person, including
stockholders of the Company, in connection with or as a result of the
consummation of the transactions contemplated by Transaction Documents, the
Company will reimburse such Purchaser for its reasonable legal and other
expenses (including the cost of any investigation and preparation and travel in
connection therewith) incurred in connection therewith, as such expenses are
incurred. In addition, other than with respect to any matter in which any of
the Purchasers is a named party, the Company will pay such Purchaser the
charges, as reasonably determined by such Purchaser, for the time of any
officers or employees of such Purchaser devoted to appearing and preparing to
appear as witnesses, assisting in preparation for hearings, trials or pretrial
matters, or otherwise with respect to inquiries, hearings, trials, and other
proceedings relating to the subject matter of this Agreement. The reimbursement
obligations of the Company under this paragraph shall be in addition to any
liability which the Company may otherwise have, shall extend upon the same terms
and conditions to any Affiliates of the Purchasers who are actually named in
such action, proceeding or investigation, and partners, directors, agents,
employees and controlling persons (if any), as the case may be, of the
Purchasers and any such Affiliate, and shall be binding upon and inure to the
benefit of any successors, assigns, heirs and personal representatives of the
Company, the Purchasers and any such Affiliate and any such Person. The Company
also agrees that neither the Purchasers nor any such Affiliates, partners,
directors,
-14-
agents, employees or controlling persons shall have any liability to the Company
or any Person asserting claims on behalf of or in right of the Company in
connection with or as a result of the consummation of the Transaction Documents
except to the extent that any losses, claims, damages, liabilities or expenses
incurred by the Company result from the gross negligence or willful misconduct
of the applicable Purchaser or entity in connection with the transactions
contemplated by this Agreement.
3.15 Redemption at the Option of the Company.
---------------------------------------
(a) If (i) during the Vesting Period (as defined in the Adjustable
Warrant), the average Per Share Market Values for any thirty (30) consecutive
Trading Days is lower than $1.00, or (ii) on any Trading Day after the 60/th/
day following the Effective Date, the Per Share Market Value is lower than $4.32
(each an "Optional Redemption Event"), subject to the provisions of this
-------------------------
Section, the Company shall have the right, upon notice to the Purchasers (an
"Optional Redemption Notice" and the date such notice is received by the
---------------------------
Purchasers, the "Notice Date"), delivered no later than the 10/th/ Trading Day
-----------
immediately following the Optional Redemption Event, to redeem all or a portion
of the Shares then held by the Purchasers, at a cash price equal to the
Optional Redemption Price (as defined below). The Company may only deliver an
Optional Redemption Notice to the Purchasers if, on the Notice Date: (i) either
there is an effective Underlying Shares Registration Statement pursuant to which
the Purchasers are permitted to utilize the prospectus thereunder to sell Shares
or Shares may be sold without volume restrictions pursuant to Rule 144
promulgated under the Securities Act, as determined by counsel to the Company
pursuant to a written opinion letter, addressed and delivered prior to the
Notice Date to the Company's transfer agent in the form and substance acceptable
to the Purchasers and such transfer agent and (ii) the Common Stock is listed
for trading on the OTC or on a Subsequent Market (as defined in the Adjustable
Warrants). If any of the foregoing conditions shall cease to be in effect
during the period between the Notice Date and the date the Optional Redemption
Payment is paid in full, then the Purchasers subject to such redemption may
elect, by written notice to the Company given at any time after any of the
foregoing conditions shall cease to be in effect, to invalidate ab initio such
---------
redemption, notwithstanding anything herein contained to the contrary. The
Purchasers may sell any portion of the Shares subject to an Optional Redemption
Notice and such Shares shall be included in the Applicable Share Number (as
defined in the Adjustable Warrants) in connection with the vesting of any
Warrant Shares (as defined in the Adjustable Warrants) which take place prior to
the date that the Optional Redemption Price is due and paid in full.
(b) The Optional Redemption Price is due on the tenth (10/th/)
Trading Day following the Notice Date. If any portion of the Optional Redemption
Price shall not be paid by the Company by expiration of such tenth (10/th/)
Trading Day, interest shall accrue thereon at the rate of 18% per annum (or the
maximum rate permitted by applicable law, whichever is less) until the Optional
Redemption Price plus all such interest is paid in full. In addition, if any
portion of the Optional Redemption Price remains unpaid after such date, the
Purchasers subject to such redemption may elect, by written notice to the
Company given at any time thereafter, to invalidate ab initio such redemption,
---------
notwithstanding anything herein contained to the contrary. If a Purchaser elects
to invalidate such redemption the Company shall promptly, and, in any event, not
later than three (3) Trading Days from receipt of such Purchaser's notice of
such election, return to such Purchaser all of the Shares for which the Optional
Redemption Price shall not have been paid in full.
-15-
(c) The "Optional Redemption Price" for each Share to be redeemed
-------------------------
shall equal the sum of (i) (A) in case of an Optional Redemption Event under
Section 3.15(a)(i), the average of the Per Share Market Value for the five (5)
Trading Days preceding such Optional Redemption Event, or (B) in case of an
Optional Redemption Event Section 3.15(a)(ii), $5.31, and (ii) all other
amounts, costs, expenses and liquidated damages due in respect of such Shares.
3.16 Redemption at the Option of the Purchasers. If the Company shall
------------------------------------------
fail to file the Underlying Shares Registration Statement on of before Filing
Date (as defined in the Registration Rights Agreement), each Purchaser shall
have the right, exercisable at the sole option of such Purchaser at any time on
or after the Filing Date, to require the Company to redeem all of the Shares
issued and sold to such Purchaser on the Closing Date for a redemption price, in
cash, equal to the Mandatory Redemption Price (as defined below). The Mandatory
Redemption Price shall be due and payable within two (2) Trading Days of the
date on which the notice for the payment therefor is provided by a Purchaser.
If the Company fails to pay the Mandatory Redemption Price hereunder in full
pursuant to this Section on the date such amount is due in accordance with this
Section, the Company will pay interest thereon at a rate of 18% per annum (or
the lesser amount permitted by applicable law), accruing daily from such date
until the Mandatory Redemption Price, plus all such interest thereon, is paid in
full. Each Purchaser shall, upon receipt of the entire Mandatory Redemption
Price, return to the Company for cancellation the Shares subject to a redemption
hereunder and the Warrants issued to it on the Closing Date. The "Mandatory
Redemption Price" for each Share to be redeemed shall equal the sum of (i) $4.32
and (ii) all other amounts, costs, expenses and liquidated damages due in
respect of such Shares.
3.17 Limitations on Short Sales. Each Purchaser agrees that it will not
--------------------------
enter into any Short Sales (as hereinafter defined) from the period commencing
on the Closing Date and ending on the second year anniversary of the Closing
Date to the extent that a Short Sale on a Trading Day would exceed the greater
of 15% of (i) the trading volume of the Common Stock on such Trading Day and
(ii) the average of the trading volume of the Common Stock for the five (5)
Trading Days immediately preceding such Trading Day. For purposes of this
Section 3.17, a "Short Sale" by a Purchaser shall mean a sale of Common Stock by
such Purchaser that is marked as a short sale and that is made at a time when
there is no equivalent offsetting long position in Common Stock held by the
Purchaser. For purposes of determining whether there is an equivalent
offsetting long position in Common Stock held by a Purchaser, Warrant Shares
that have not yet been issued on exercise of the Warrants held by a Purchaser
shall be deemed to be held long by such Purchaser.
ARTICLE IV
MISCELLANEOUS
4.1 Fees and Expenses. At the Closing the Company shall reimburse
-----------------
the Purchasers for their legal fees and expenses incurred in connection with the
preparation and negotiation of the Transaction Documents by paying to Xxxxxxxx
Xxxxxxxxx $30,000 for the preparation and negotiation of the Transaction
Documents. Other than the amounts contemplated in the immediately preceding
sentence, and except as otherwise set forth in the Registration Rights
Agreement, each party shall pay the fees and expenses of its advisers, counsel,
accountants and other experts, if any, and all other expenses incurred by such
party incident to the negotiation, preparation,
-16-
execution, delivery and performance of this Agreement. The Company shall pay all
stamp and other taxes and duties levied in connection with the issuance of the
Securities.
4.2 Entire Agreement; Amendments. 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 and understandings, oral or written, with respect
to such matters, which the parties acknowledge have been merged into such
documents, exhibits and schedules.
4.3 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 (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Section prior to 6:30 p.m. (New
York City time) on a Business Day, (ii) the Business Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Agreement later than 6:30 p.m. (New
York City time) on any date and earlier than 11:59 p.m. (New York City time) on
such date, (iii) the Business Day following the date of mailing, if sent by
nationally recognized overnight courier service, or (iv) 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: EbaseOne Corp.
0000 Xxxxxxxx
Xxxxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxx Xxxxxxx
With copies to: Breward & Xxxxxxxxx
1111 Xxxxx, 00/xx/ Xxxxx
Xxxxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxxxx
If to a Purchaser: To the address set forth under such
Purchaser's name on the signature
pages hereto.
or such other address as may be designated in writing hereafter, in the same
manner, by such Person.
4.4 Amendments; Waivers. No provision of this Agreement may be
-------------------
waived or amended except in a written instrument signed, in the case of an
amendment, by both the Company and the Purchasers 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 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 accruing to it thereafter.
-17-
4.5 Headings. 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.
4.6 Successors and Assigns. This Agreement shall be binding upon
----------------------
and inure to the benefit of the parties and their successors and permitted
assigns. The Company may not assign this Agreement or any rights or obligations
hereunder without the prior written consent of the Purchasers. Except as set
forth in Section 3.1(a), the Purchasers may not assign this Agreement or any of
the rights or obligations hereunder without the consent of the Company. This
provision shall not limit any Purchaser's right to transfer securities or
transfer or assign rights under the Registration Rights Agreement.
4.7 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.
4.8 Governing Law. The corporate laws of the State of Delaware
-------------
shall govern all issues concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents 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 hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in the City of New York, borough of Manhattan, 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 the any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper. Each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof 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.
4.9 Survival. The representations, warranties, agreements and
--------
covenants contained herein shall survive the Closing and the delivery and
exercise of the Warrants.
4.10 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, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
4.11 Severability. In case any one or more of the provisions of this
------------
Agreement shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining
-18-
terms and provisions of this Agreement shall not in any way be affecting or
impaired thereby and the parties will attempt to agree upon a valid and
enforceable provision which shall be a reasonable substitute therefor, and upon
so agreeing, shall incorporate such substitute provision in this Agreement.
4.12 Remedies. In addition to being entitled to exercise all
--------
rights provided herein or granted by law, including recovery of damages, the
Purchasers will be entitled to specific performance of the obligations of the
Company under the Transaction Documents. Each of the Company and the Purchasers
agree that monetary damages may not be adequate compensation for any loss
incurred by reason of any breach of its obligations described in the foregoing
sentence and hereby agrees to waive in any action for specific performance of
any such obligation the defense that a remedy at law would be adequate.
4.13 Independent Nature of Purchasers' Obligations and Rights. The
--------------------------------------------------------
obligations of each Purchaser under any Transaction Document is 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. 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 with respect to such obligations or
the transactions contemplated by the Transaction Document. 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 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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOLLOWS]
-19-
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.
EBASEONE CORP.
By:_____________________________________
Name:
Title:
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOR PURCHASERS FOLLOW]
DEEPHAVEN PRIVATE PLACEMENT
TRADING LTD.
By:_____________________________________
Name:
Title:
Warrant Shares underlying each Closing
--------------------------------------
Warrant: 127,314
-------
Payment and Issuance on the Closing Date:
----------------------------------------
Purchase Price: $1,750,000
Number of Shares to be issued: 405,092
Payment and Issuance on the second Trading Day following the
------------------------------------------------------------
Effective Date:
---------------
Purchase Price: $1,000,000
Number of Shares to be issued: 231,481
Address for Notice:
Deephaven Private Placement Trading Ltd.
c/o Deephaven Capital Management LLC
000 Xxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxx Xxxxxxxxx
With copies to:
Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx &
Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000 and (000) 000-0000
Attn: Xxxxxxx X. Xxxxxxxxx, Esq.
Xxxx X. Xxxxx, Esq.
DEEPHAVEN OPPORTUNITY TRADING FUND L.P.
By:_____________________________________
Name:
Title:
Warrant Shares underlying each Closing
--------------------------------------
Warrant: 34,722
-------
Payment and Issuance on the Closing Date:
----------------------------------------
Purchase Price: $625,000
Number of Shares to be issued: 144,675
Payment and Issuance on the second Trading Day following the
------------------------------------------------------------
Effective Date:
--------------
Purchase Price: $125,000
Number of Shares to be issued: 28,935
Address for Notice:
Deephaven Opportunity Trading Fund L.P.
c/o Deephaven Capital Management LLC
000 Xxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxx Xxxxxxxxx
With copies to:
Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx &
Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000 and (000) 000-0000
Attn: Xxxxxxx X. Xxxxxxxxx, Esq.
Xxxx X. Xxxxx, Esq.
-00-
XXX XXXXXXXX XXXXXXXXX LLC
By:_____________________________________
Name:
Title:
Warrant Shares underlying each Closing
--------------------------------------
Warrant: 180,555
-------
Payment and Issuance on the Closing Date:
----------------------------------------
Purchase Price: $2,625,000
Number of Shares to be issued: 607,639
Payment and Issuance on the second Trading Day following the
------------------------------------------------------------
Effective Date:
--------------
Purchase Price: $1,275,000
Number of Shares to be issued: 295,138
Address for Notice:
New Crescent Investors LLC
c/o WEC Asset Management LLC
Xxx Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxx Xxxxxxxx
With copies to:
Rosenman & Colin, LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxx Xxxxxx, Esq.
Xxxxxxx Press, Esq.
-23-
XXXXXX XXXX
_____________________________________
Warrant Shares underlying each Closing
--------------------------------------
Warrant: 26,389
-------
Payment and Issuance on the Closing Date:
----------------------------------------
Purchase Price: $0
Number of Shares to be issued: 0
Payment and Issuance on the second Trading Day following the
------------------------------------------------------------
Effective Date:
--------------
Purchase Price: $570,000
Number of Shares to be issued: 131,944
Address for Notice:
Xxxxxx Xxxx
0000 Xxxxxxxx Xxxxx
Xxxxxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
-24-
XXXXXXX XXXXX KHALIFA
_____________________________________
Warrant Shares underlying each Closing
--------------------------------------
Warrant: 11,574
-------
Payment and Issuance on the Closing Date:
----------------------------------------
Purchase Price: $250,000
Number of Shares to be issued: 57,870
Payment and Issuance on the second Trading Day following the
------------------------------------------------------------
Effective Date:
--------------
Purchase Price: $0
Number of Shares to be issued: 0
Address for Notice:
Xxxxxxx Xxxxx Khalifa
X.X.X. 0000
Xxxxxxx, Xxxxxx Xxxx Xxxxxxxx
Facsimile No.: (011-971-6-5) 000 000
-00-
XXXXXXXXX XXXXX
_____________________________________
Warrant Shares underlying each Closing
--------------------------------------
Warrant: 32,407
-------
Payment and Issuance on the Closing Date:
----------------------------------------
Purchase Price: $700,000
Number of Shares to be issued: 162,037
Payment and Issuance on the second Trading Day following the
------------------------------------------------------------
Effective Date:
--------------
Purchase Price: $0
Number of Shares to be issued: 0
Address for Notice:
Tajunnisa Owesh
6 Bilal Manzil 0/xx/ Xxxx
Xxxxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxx, Xxxxx
-26-
XXXXXXXXXXXX FAMILY REVOCABLE TRUST
_____________________________________
Warrant Shares underlying each Closing
--------------------------------------
Warrant: 3,704
-------
Payment and Issuance on the Closing Date:
----------------------------------------
Purchase Price: $50,000
Number of Shares to be issued: 11,574
Payment and Issuance on the second Trading Day following the
------------------------------------------------------------
Effective Date:
--------------
Purchase Price: $30,000
Number of Shares to be issued: 6,945
Address for Notice:
Xxxxx Xxxx Chandani
0000 Xxxxxxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
-27-
