SECURITIES PURCHASE AGREEMENT
Exhibit 99.1
0000 Xxxxxxx Xxxx Xxxxx, Xxxxx 000,
Xxxxx, Xxxxxxx 00000
Ladies & Gentlemen:
The undersigned, _________________________________(the “Investor”), hereby confirms its agreement with you as follows:
I. This Securities Purchase Agreement (the “Securities Purchase Agreement” and, together with Annex
I hereto, this “Agreement”) is made as of August ___, 2009 between nFinanSe Inc., a Nevada corporation (the “Company”), and the Investor.
II. The Company has authorized the sale and issuance (together with the Exchange (as defined below), the “Offering”) of up to (i) 4,666,666 shares
(the “Preferred Shares”) of Series D Convertible Preferred Stock of the Company, $0.001 par value per share (the rights and preferences of which are as provided in that certain Certificate of Designations, Rights and Preferences attached hereto as Exhibit A (the “Certificate”)) (the “Preferred
Stock”); and (ii) warrants (the form of which is attached hereto as Exhibit B) (the “Warrants”) to purchase up to 46,666,666 shares of Common Stock at an exercise price of $0.01 per share (the “Warrant Shares”), subject to the following adjustment:
Should the Investor, together with its affiliates, invest an amount equal to or greater than 25% of the amount such Investor has previously invested in the Company’s prior offerings of stock and those certain Accommodation Loans and Term Loans, then any warrants to purchase
common stock so held by Investor (“Prior Warrants”) shall be modified as follows:
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a. |
If the Investor acquires $100,000 or more of the Preferred Shares, then the exercise price of the Investor’s outstanding Prior Warrants shall be reduced to $0.30; and |
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b. |
If the Investor acquires $250,000 or more of the Preferred Shares, then the exercise price of the Investor’s outstanding Prior Warrants shall be reduced to $0.01. |
III. The Company has also authorized the exchange (the “Exchange”) of up to $5,400,000 in principal amount of those certain Accommodation Loans and Term
Loans plus approximately $300,000 of accrued interest (the “Notes”) in exchange for 1,900,000 shares of the Preferred Stock and Warrants to purchase up to 19,000,000 Warrant Shares, subject to the above adjustment, whereby the Notes (and the interest due and payable thereon) will be exchanged at the purchase price below.
IV. The Investor represents that, except as set forth below, (a) it has had no position, office or other material relationship within the past three years with the Company or persons known to it to be affiliates of the Company,
(b) neither it, nor any group of which it is a member or to which it is related, beneficially owns (including the right to acquire or vote) any securities of the Company and (c) it has no direct or indirect affiliation or association with any NASD member as of the date hereof. Exceptions:
_______________________________________________________________________________________
_______________________________________________________________________________________.
(If no exceptions, write “none.” If left blank, response will be deemed to be “none.”)
V. Pursuant to the Terms and Conditions for Purchase/Exchange of the Securities attached hereto as Annex I and incorporated herein
by reference as if fully set forth herein (the “Terms and Conditions”), the Company and the Investor agree that the Investor will purchase from the Company and the Company will issue and sell to the Investor:
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___________ Preferred Shares, for a purchase price of $3.00 per share; and |
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Warrants to purchase ____________ Warrant Shares, exercisable at $0.01 per Warrant Share. |
and/or
Pursuant to the Terms and Conditions, the Company and the Investor agree that the Investor will exchange _____ in principal amount of the Notes (and the interest due and payable thereon) in exchange for:
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· |
___________ Preferred Shares, for a purchase price of $3.00 per share; and |
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Warrants to purchase ____________ Warrant Shares, exercisable at $0.01 per Warrant Share. |
Unless otherwise requested by the Investor, certificates and warrant documents representing the Preferred Shares and Warrants purchased by the Investor will be registered in the Investor’s name and address as set forth below. The Preferred Shares and the Warrants are sometimes
referred to collectively herein as the “Securities.”
The Investor hereby confirms, by signing in the space provided below, that the foregoing correctly sets forth the agreement between the Investor and the Company with respect to the purchase of the Securities in the Offering.
AGREED AND ACCEPTED:
NFINANSE INC. Investor:
____________________________________________
By: ________________________________________________
__________________________________________
By: Xxxxxxx X. Xxxxxxxx Print
Name: __________________________________________
Title: Executive Vice President
Title: _______________________________________________
Address: ____________________________________________
____________________________________________________
Tax ID No.: __________________________________________
Contact name: ________________________________________
Telephone: __________________________________________
Fax: ________________________________________________
E-mail:* ____________________________________________
Name in which shares should be registered (if different):
____________________________________________________
*By providing an e-mail address, the Investor hereby consents to electronic delivery of the documents and notices required to be delivered pursuant to this Agreement.
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ANNEX I
TERMS AND CONDITIONS FOR PURCHASE/EXCHANGE OF THE SECURITIES1
1. Authorization and Sale of the Securities. Subject to these Terms and Conditions, the Company has authorized the sale of up to 4,666,666 Preferred Shares and
46,666,666 Warrants. The Company reserves the right to increase or decrease this number.
2. Agreement to Sell and Purchase the Securities; Subscription Date.
2.1 At the Closing (as defined in Section 3), the Company will sell to the Investor, and the Investor will purchase from the Company, upon the terms and conditions hereinafter set forth, the number of Preferred Shares and Warrants set
forth in Article IV of the Securities Purchase Agreement to which these Terms and Conditions are attached at the purchase price set forth thereon.
2.2 The Company may enter into the same form of Securities Purchase Agreement, including these Terms and Conditions, with certain other investors (the “Other Investors”)
and expects to complete sales of the Securities to them. (The Investor and the Other Investors are hereinafter sometimes collectively referred to as the “Investors,” and the Securities Purchase Agreements (including attached Terms and Conditions) executed by the Other Investors are hereinafter sometimes collectively referred to as the “Agreements.”) The
Company may accept executed Agreements from Investors for the purchase of the Securities commencing upon the date on which the Company provides the Investors with the proposed purchase price and concluding upon the date (the “Subscription Date”) on which the Company has notified Emerging Growth Equities, Ltd. in their capacity as placement agent for this transaction (the “Placement Agent”),
in writing that it is no longer accepting additional Agreements from Investors for the purchase of the Securities. The Company may not enter into any Agreements after the Subscription Date.
3. The Closing.
3.1 Delivery of the Securities at Closing. The completion of the purchase and sale of the Securities (the “Closing”)
shall occur on August ____, 2009 (the “Closing Date”), at the offices of the Company’s counsel or at such other place as may be agreed upon by the Company and the Placement Agent. On the Closing Date, the Company shall deliver to the Investor, or a representative of the Investor the following:
(a) this Agreement duly executed by the Company;
(b) a legal opinion of Company’s counsel in form and substance acceptable to the Investor;
(c) evidence of the filing of the Certificate with the Secretary of State of Nevada; and
(d) within 5 days of Closing, one or more stock certificates representing the number of Preferred Shares and warrant documents representing Warrants to purchase the number of Warrant Shares set forth in Article V of the Securities Purchase
Agreement, each such certificate and document to be registered in the name of the Investor or, if so indicated on the signature page of the Securities Purchase Agreement, in the name of a nominee designated by the Investor.
3.2 The Closing Conditions.
(a) The Company’s obligation to issue the Securities to the Investor shall be subject to the following conditions, any one or more of which may be waived by the Company:
(i) prior receipt by the Company of a certified or official bank check or wire transfer of funds in the full amount of the purchase price for the Securities being purchased hereunder as set forth in Article V of the Securities Purchase
Agreement;
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(ii) completion of the purchases and sales under the Agreements with the Other Investors; and
(iii) the accuracy of the representations and warranties made by the Investors and the fulfillment of those undertakings of the Investors to be fulfilled prior to the Closing.
(b) The Investor’s obligation to purchase the Securities shall be subject to the following conditions, any one or more of which may be waived by the Investor:
(i) representations and warranties of the Company set forth herein being true and correct as of the Closing Date in all material respects;
(ii) all obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been performed;
(iii) the delivery by the Company of the items set forth in Section 3(a) of this Agreement;
(iv) there shall have been no Material Adverse Effect with respect to the Company since the date hereof; and
(v) from the date hereof to the Closing Date, trading in the Common Stock shall not have been suspended by the SEC or the Company’s principal trading market (except for any suspension of trading of limited duration agreed to by
the Company, which suspension shall be terminated prior to the Closing), and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by such service, or on any trading market, nor shall a banking moratorium have been declared either by the United States or New York State authorities nor shall there have occurred any material outbreak
or escalation of hostilities or other national or international calamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in each case, in the reasonable judgment of each Investor, makes it impracticable or inadvisable to purchase the Securities at the Closing.
4. Representations, Warranties and Covenants of the Company. The Company hereby represents and warrants to, and covenants with, the Investor,
as follows:
4.1 Organization. Each of the Company and its subsidiaries is duly organized and validly existing in good standing under the laws of the jurisdiction of its organization. Each
of the Company and its subsidiaries has full power and authority to own, operate and occupy its properties and to conduct its business as presently conducted and as described in the documents filed by the Company under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), since the end of its most recently completed fiscal year through the date hereof (the “Exchange Act Documents”),
including, without limitation, its report on Form 10-K for fiscal year 2008 and its report on Form 10-Q for the Company’s most recently completed fiscal quarter and each of the Company and its subsidiaries is registered or qualified to do business and in good standing in each jurisdiction in which the nature of the business conducted by it or the location of the properties owned or leased by it requires such qualification and where the failure to be so qualified would have a material adverse effect upon
the financial condition, earnings, business or business prospects, properties or operations of the Company and its subsidiaries, taken as a whole (a “Material Adverse Effect”), and no proceeding has been instituted in any such jurisdiction, revoking, limiting or curtailing, or seeking to revoke, limit or curtail, such power and authority or qualification.
4.2 Due Authorization and Valid Issuance. The Company has all requisite power and authority to execute, deliver and perform its obligations under the Agreements
and the Warrants, and the Agreements and the Warrants have been duly authorized and validly executed and delivered by the Company and constitute legal, valid and binding agreements of the Company enforceable against the Company in accordance with their terms, except as rights to indemnity and contribution may be limited by state or federal securities laws or the public policy underlying such laws, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors’ and contracting parties’ rights generally and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). The Preferred Shares being purchased by the Investor hereunder will, upon issuance and payment therefore pursuant to the terms hereof, be duly authorized, validly issued, fully paid and nonassessable. The Company has reserved from its duly authorized
capital stock: (a) the number of Preferred Shares issuable pursuant to this Agreement, (b) the number of shares of Common Stock issuable upon conversion of the Preferred Stock the (“Conversion Shares”), and (c) the number of Warrant Shares issuable upon the exercise of the Warrants. The Conversion Shares and the Warrant Shares (referred to together as the “Underlying Shares”)
will, upon issuance and payment therefor pursuant to the terms thereof, be duly authorized, validly issued, fully paid and nonassessable.
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4.3 Non-Contravention. The execution and delivery of the Agreements, the issuance and sale of the Securities, the Conversion Shares and the Warrant Shares under
the Agreements, the fulfillment of the terms of the Agreements and the consummation of the transactions contemplated thereby will not (A) conflict with or constitute a violation of, or default (with the passage of time or otherwise) under, (i) any material bond, debenture, note or other evidence of indebtedness, lease, contract, indenture, mortgage, deed of trust, loan agreement, joint venture or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which they or any of
their properties are bound, (ii) the charter, by-laws or other organizational documents of each of the Company and its subsidiaries, or (iii) any law, administrative regulation, ordinance or order of any court or governmental agency, arbitration panel or authority applicable to the Company and its subsidiaries or their respective properties, except in the case of clauses (i) and (iii) for any such conflicts, violations or defaults which are not reasonably likely to have a Material Adverse Effect or (B) result
in the creation or imposition of any lien, encumbrance, claim, security interest or restriction whatsoever upon any of the material properties or assets of the Company or any of its subsidiaries or an acceleration of indebtedness pursuant to any obligation, agreement or condition contained in any material bond, debenture, note or any other evidence of indebtedness or any material indenture, mortgage, deed of trust or any other agreement or instrument to which the Company or any of its subsidiaries is a party
or by which any of them is bound or to which any of the material property or assets of the Company or its subsidiaries is subject except in cases not reasonably likely to have a Material Adverse Effect. No consent, approval, authorization or other order of, or registration, qualification or filing with, any regulatory body, administrative agency, or other governmental body in the United States or any other person is required for the execution and delivery of the Agreements and the valid issuance and
sale of the Securities, the Conversion Shares and the Warrant Shares to be sold pursuant to the Agreements, other than such as have been made or obtained, and except for any post-closing securities filings or notifications required to be made under federal or state securities laws.
4.4 Capitalization. The entire authorized capital stock of the Company consists of (a) 200,000,000 shares of common stock, par value $0.001 per share (the “Common
Stock”), of which 9,542,887 are issued and outstanding, and (b) 25,000,000 shares of preferred stock, of which, (i) 9,330,514 shares were designated as Series A Convertible Preferred Stock, par value $0.001 (“Series A Stock”), of which 7,500,484 shares were issued and outstanding as of August 1, 2009, (ii) 1,00,010 shares were designated as Series B Convertible Preferred Stock, par value $0.001 (“Series
B Stock”), of which 1,000,000 shares were issued and outstanding as of August 1, 2009, (iii) 4,100,000 shares were designated as Series C Convertible Preferred Stock, par value $0.001 (“Series C Stock”), of which 4,037,500 shares were issued and outstanding as of August 1, 2009, and (iv) pursuant to the Offering, 4,666,666 shares were designated as the Preferred Stock, of which up to 4,666,666 shares will be issued and outstanding
as of the Closing. All shares of the Company’s issued and outstanding capital stock have been duly authorized, are validly issued and outstanding, and are fully paid and nonassessable. There are no dividends which have accrued or been declared but are unpaid on the capital stock of the Company. No person has any right of first refusal, preemptive right, right of participation or any similar right to participate in the transactions contemplated by the Agreements. Except
as a result of the purchase and sale of the Securities pursuant to the Offering, and except for the Company’s currently outstanding shares of Series A Stock, Series B Stock, Series C Stock and employee and director stock options under the Company’s equity compensation plans and outstanding warrants as disclosed in the Exchange Act Documents, there are no outstanding options, warrants, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations
convertible into or exchangeable for, or giving any person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company is or may become bound to issue additional shares of Common Stock, or securities or rights convertible or exchangeable into shares of Common Stock. The issuance and sale of the Securities pursuant to the Agreements will not obligate the Company to issue shares of Common Stock or other securities to
any person (other than the Investors) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under such securities.
4.5 Financial Statements; Accountants. The consolidated financial statements of the Company and the related notes contained in the Exchange Act Documents present
fairly in all material respects, in accordance with generally accepted accounting principles, the financial position of the Company and its subsidiaries as of the dates indicated, and the results of its operations and cash flows of the Company and its subsidiaries for the periods therein specified and are consistent with the books and records of the Company except that the unaudited interim financial statements were or are subject to normal and recurring year-end adjustments which are not expected to be material
in amount. Such financial statements (including the related notes) have been prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout the periods therein specified, except as may be included in the notes to such financial statements, or in the case of unaudited statements, as may be permitted by the United States Securities and Exchange Commission (the “SEC”) on Form 10-Q (and Form
10-QSB, to the extent applicable), under the Exchange Act and except as disclosed in the Exchange Act Documents. The other financial information contained in the Exchange Act Documents has been prepared on a basis consistent with the financial statements of the Company and its subsidiaries contained in the Exchange Act Documents. To the Company’s knowledge, Xxxxxxx & Xxxxxx, P.A. are independent accountants as required by the Securities Act of 1933, as amended (the “Securities
Act”), and the rules and regulations promulgated thereunder.
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4.6 Placement Agent; Board of Directors. Emerging Growth Equities, Ltd. served as placement agent for the Company’s offering of Series A Stock and, for
its services as placement agent, received a $117,000 fee and a warrant to purchase 320,000 shares of Common Stock, exercisable at $1.10 per share and expiring on December 27, 2011. Emerging Growth Equities, Ltd. served as placement agent for the Company’s offering of Series B Stock and, for its services as placement agent, received a $634,872 fee and a warrant to purchase 120,928 shares of Common Stock, exercisable at $3.30 per share and expiring on June 29, 2012. Xxxxxxx Xxxxxxx LLC
and Emerging Growth Equities, Ltd. served as placement agents for the Company’s offering of Series C Stock and, for its services as placement agent, shared equally a $535,600 fee and a warrant to purchase 109,150 shares of Common Stock, exercisable at $2.53 per share and expiring on June 12, 2013. In connection with the Offering, the Placement Agent will receive a 5% fee on the aggregate amount paid by Investors introduced to the Company that are not existing shareholders. Xxxxxx X. Xxxxxxxxx,
a former member of the Company’s Board of Directors and a current stockholder of the Company, is a co-founder and director of EGE Holdings, Ltd., a holding company with ownership interests in investment banking, money management and venture capital, including a 100% ownership interest in Emerging Growth Equities, Ltd. Xx. Xxxxxxxxx received no compensation from EGE Holdings, Ltd. or Emerging Growth Equities, Ltd. related to the transactions discussed in this Section 4.6, including the Offering.
4.7 Company not an “Investment Company”. The Company has been advised of the rules and requirements under the Investment Company Act of 1940, as amended
(the “Investment Company Act”). The Company is not, and immediately after receipt of payment for the Securities will not be, an “investment company” or an entity “controlled” by an “investment company” within the meaning of the Investment Company Act and shall conduct its business in a manner so that it will not become subject to the Investment Company Act.
4.8 Transfer Taxes. On the Closing Date, all stock transfer or other taxes (other than income taxes) which are required to be paid in connection with the sale
and transfer of the Securities to be sold to the Investor hereunder will be, or will have been, fully paid or provided for by the Company and all laws imposing such taxes will be or will have been fully complied with.
4.9 Private Offering. Assuming (a) the correctness of the representations and warranties of the Investors set forth in Section 5 hereof, (b) the correctness of
the information provided in the Investor Questionnaire submitted by each of the Investors and (c) that Placement Agent’s activities are consistent with the activities permissible under Rule 506 of Regulation D of the Securities Act, the offer and sale of the Securities hereunder is exempt from registration under the Securities Act.
5. Representations, Warranties and Covenants of the Investor.
5.1 The Investor represents and warrants to, and covenants with, the Company that (a) the Investor is an “accredited investor” as defined in Regulation D under the Securities Act and the Investor is also knowledgeable, sophisticated
and experienced in making, and is qualified to make, decisions with respect to investments in shares presenting an investment decision like that involved in the purchase of the Securities, including investments in securities issued by the Company and investments in comparable companies, and has requested, received, reviewed and considered all information it deemed relevant in making an informed decision to purchase the Securities; (b) the Investor is acquiring the number of Preferred Shares and Warrants set forth
in Article V of the attached Securities Purchase Agreement in the ordinary course of its business and for its own account for investment only and with no present intention of distributing any of the Securities or any arrangement or understanding with any other persons regarding the distribution of such Securities; (c) the Investor will not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of) any of the
Securities except in compliance with the Securities Act, applicable state securities laws and the respective rules and regulations promulgated thereunder; (d) the Investor has answered all questions on the Investor Questionnaire and the answers thereto are true, correct and complete as of the date hereof and will be true, correct and complete as of the Closing Date; (e) the Investor will notify the Company immediately of any change in any of such information until such time as the Investor has sold all of its
Conversion Shares and Warrant Shares; and (f) the Investor has, in connection with its decision to purchase the number of Preferred Shares and Warrants set forth in Article V of the attached Securities Purchase Agreement, relied only upon the Exchange Act Documents and the representations and warranties of the Company contained herein. The Investor understands that neither the Offering nor the acquisition of the Securities have been registered under the Securities Act or registered or qualified under
any state securities law in reliance on specific exemptions therefrom, which exemptions may depend upon, among other things, the bona fide nature of the Investor’s investment intent as expressed herein and the information provided in the Investor’s Investor Questionnaire. Investor has completed or caused to be completed and delivered to the Company the Investor Questionnaire, which questionnaire is true, correct and complete in all material respects.
5.2 The Investor (other than individuals) is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with full power and authority to enter into and to consummate the transactions
contemplated by this Agreement and otherwise to carry out its obligations hereunder. The execution, delivery and performance by the Investor of the transactions contemplated by this Agreement to be performed by the Investor have been duly authorized by all necessary corporate or similar action on the part of the Investor. This Agreement has been duly executed by the Investor, and when delivered by the Investor in accordance with the terms hereof, will constitute the valid and legally binding
obligation of the Investor, enforceable against it in accordance with its terms, except (i) as limited by laws of general application relating to bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ and contracting parties’ rights generally, (ii) as limited by rules of law governing specific performance, injunctive relief, or other equitable remedies, (iii) as enforceability may be subject to general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law) and (iv) to the extent the indemnification and contribution provisions contained in this Annex I to the Securities Purchase Agreement may be limited by applicable federal or state securities laws or the public policy underlying such laws.
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5.3 The Investor is not purchasing the Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or
radio or presented at any seminar or any other general solicitation or general advertisement.
5.4 The Investor is (i) acquiring the Securities and (ii) the shares of Common Stock receivable upon conversion or exercise thereof, in each case, for its own account and not with a view towards, or for resale in connection with, the
public sale or distribution thereof in violation of the Securities Act; provided, however, that by making the representations herein, the Investor does not agree to hold any of the Securities for any minimum or other specific term and reserves the right to dispose of the Securities under an exemption under the Securities Act and reserves the right to dispose of the Conversion Shares and Warrant Shares at any time in accordance with or pursuant to a registration statement or an exemption under the Securities Act. The
Investor is acquiring the Securities hereunder in the ordinary course of its business.
5.5 The Investor understands that the Securities are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying
in part upon the truth and accuracy of, and the Investor’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Investor set forth herein in order to determine the availability of such exemptions and the eligibility of the Investor to acquire the Securities.
5.6 The Investor and its advisors, if any, have been furnished with all publicly available materials relating to the business, finances and operations of the Company and such other publicly available materials relating to the offer and
sale of the Securities as have been requested by the Investor. The Investor and its advisors, if any, have been afforded the opportunity to ask questions of the Company. Neither such inquiries nor any other due diligence investigations conducted by the Investor or its advisors, if any, or its representatives shall modify, amend or affect the Investor’s right to rely on the Company’s representations and warranties contained herein. The Investor understands that its
investment in the Securities involves a high degree of risk.
5.7 The Investor understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of the
investment in the Securities, nor have such authorities passed upon or endorsed the merits of the offering of the Securities.
6. Survival of Representations, Warranties and Agreements. All covenants, agreements, representations and warranties made by the Company and the Investor herein
shall survive the execution of this Agreement, the delivery to the Investor of the Securities being purchased and the payment therefor.
7. Transfer Restrictions.
7.1 The Securities may only be disposed of in compliance with state and federal securities laws. The Investor will not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to
buy, purchase or otherwise acquire or take pledge of) any of the Securities except in compliance with the Securities Act, applicable state securities laws and the respective rules and regulations promulgated thereunder. In connection with any transfer of the Securities other than pursuant to an effective registration statement, to the Company, to an affiliate of the Investor (who is an accredited investor and executes a customary representation letter) or in connection with a pledge as contemplated
in Section 7.2 hereof, the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Securities under the Securities Act, provided, however, that in the case of a transfer pursuant to Rule 144, no opinion shall be required if the transferor
provides the Company with a customary seller’s representation and broker’s representation letter reasonably satisfactory to the Company. Any such transferee that agrees in writing to be bound by the terms of this Agreement shall have the rights of an Investor under this Agreement. The Company shall reissue certificates evidencing the Securities upon surrender of certificates evidencing the Securities being transferred in accordance with this Section 7.1.
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7.2 The Investors agree to the imprinting, so long as is required by this Section 7, of a legend on any of the Securities in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AS SET FORTH IN THIS CERTIFICATE. THE SECURITIES REPRESENTED HEREBY MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED
OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF COUNSEL, REASONABLY ACCEPTABLE TO THE COMPANY, TO THE EFFECT THAT THE PROPOSED SALE, TRANSFER OR DISPOSITION MAY BE AFFECTED WITHOUT REGISTRATION UNDER THE ACT.
The Company acknowledges and agrees that the Investor may from time to time pledge pursuant to a bona fide margin agreement with a registered broker-dealer or grant a security interest in some or all of the Securities, the Conversion Shares and the Warrant Shares, in accordance with all applicable securities laws, to a financial institution
that is an “accredited investor” as defined in Rule 501(a) under the Securities Act and, if required under the terms of such arrangement, the Investor may transfer pledged or secured Securities to the pledgees or secured parties; provided that the Investor shall provide the Company with such documentation as is reasonably requested by the Company to ensure that the pledge is pursuant to a bona fide margin agreement with a registered broker-dealer or a security interest in some or all of the Securities
to a financial institution that is an “accredited investor” as defined in Rule 501(a) under the Securities Act.
7.3 Upon delivery by the Investor to the Company’s transfer agent, with a copy to the Company, of the Representation Letter substantially in the form attached hereto as Exhibit
C, the certificates evidencing the Underlying Shares shall not contain any legend (including the legend set forth in Section 7.2 hereof): (a) while a registration statement covering the resale of such security is effective under the Securities Act, (b) following any sale of such Underlying Shares pursuant to Rule 144, (c) if such Underlying Shares are eligible for sale under Rule 144, without the requirement for the Company to be in compliance with the current public information required under Rule 144
as to such Underlying Shares and without volume or manner-of-sale restrictions or (d) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the SEC). The Company shall cause its counsel to issue a legal opinion to the Transfer Agent promptly after the Effective Date if required by the Transfer Agent to effect the removal of the legend hereunder. If all or any shares of Preferred Stock are converted or any
portion of a Warrant is exercised at a time when there is an effective registration statement to cover the resale of the Underlying Shares, or if such Underlying Shares may be sold under Rule 144, without the requirement for the Company to be in compliance with the current public information required under Rule 144 as to such Underlying Shares and without volume or manner-of-sale restrictions or if such legend is not otherwise required under applicable requirements of the Securities Act (including judicial interpretations
and pronouncements issued by the staff of the SEC) then such Underlying Shares shall be issued free of all legends. The Company agrees that following the Effective Date or at such time as such legend is no longer required under this Section 7.3, it will, no later than three Trading Days (as defined below) following the delivery by a Investor to the Company or the Transfer Agent of a certificate representing Underlying Shares, as applicable, issued with a restrictive legend, deliver or cause to be delivered
to such Investor a certificate representing such shares that is free from all restrictive and other legends. The Company may not make any notation on its records or give instructions to the Transfer Agent that enlarge the restrictions on transfer set forth in this Section 7. Certificates for Underlying Shares subject to legend removal hereunder shall be transmitted by the Transfer Agent to the Investor by crediting the account of the Investor’s prime broker with the Depository Trust
Company System as directed by such Investor. “Trading Day” means a day on which the principal trading market is open for trading.
7.4 The Investor agrees that the removal of the restrictive legend from certificates representing Securities as set forth in this Section 7 is predicated upon the Company’s reliance on, and the Investor’s
agreement that, the Investor will not sell any Securities except pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom.
8. Other Agreements.
8.1 Public Information.
(a) If the Common Stock is not registered under Section 12(b) or 12(g) of the Exchange Act on the date hereof, the Company agrees to cause the Common Stock to be registered under Section 12(g) of the Exchange Act on or before the 90th
calendar day following the date hereof. Until the earliest of the time that no Investor owns Securities, the Company covenants to maintain the registration of the Common Stock under Section 12(b) or 12(g) of the Exchange Act and to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act. The Company covenants that it will use commercially reasonable efforts to
timely file the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the SEC thereunder (or, if the Company is not required to file such reports, it will, upon the request of any Investor holding the Securities purchased hereunder made after the first anniversary of the Closing Date, make publicly available such information as necessary to permit sales pursuant to Rule 144(c)(2) under the Securities Act). The Company further covenants
that it will take such further action as any holder of Securities may reasonably request, to the extent required from time to time to enable such Person to sell such Securities without registration under the Securities Act within the requirements of the exemption provided by Rule 144.
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(b) At any time during the period commencing from the six (6) month anniversary of the date hereof and ending at such time that all of the Securities may be sold without the requirement for the Company to be in compliance with Rule 144(c)(1)
and otherwise without restriction or limitation pursuant to Rule 144, if the Company shall fail for any reason to satisfy the current public information requirement under Rule 144(c) (a “Public Information Failure”) then, in addition to such Investor’s other available remedies, the Company shall pay to a Investor, in cash, as partial liquidated damages and not as a penalty, by reason of any such delay in or reduction of its ability to sell
the Securities, an amount in cash equal to one percent (1.0%) of the aggregate Subscription Amount of such Investor’s Securities on the day of a Public Information Failure and on every thirtieth (30th) day (pro rated for periods totaling less than thirty days) thereafter until the earlier of (a) the date such Public Information Failure is cured and (b) such time that such public information is no longer required for the Investors to transfer the Underlying Shares pursuant to Rule 144. The payments
to which a Investor shall be entitled pursuant to this Section 9.1(b) are referred to herein as “Public Information Failure Payments.” Public Information Failure Payments shall be paid on the earlier of (i) the last day of the calendar month during which such Public Information Failure Payments are incurred and (ii) the third (3rd) Business Day after the event or failure giving rise to the Public Information Failure Payments is cured. Nothing
herein shall limit such Investor’s right to pursue actual damages for the Public Information Failure, and such Investor shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief.
8.2 Securities Laws Disclosure; Publicity. The Company shall issue a Current Report on Form 8-K, disclosing the material terms of the transactions contemplated
hereby, and including the agreements related to the Offering (the “Transaction Documents”) as exhibits thereto, in accordance with the provisions of the Exchange Act. The Company and each Investor shall consult with each other in issuing any press releases with respect to the transactions contemplated hereby, and neither the Company nor any Investor shall issue any such press release nor otherwise make any such public statement with
respect to the transactions contemplated hereby without the prior consent of the Company, with respect to any press release of any Investor, or without the prior consent of each Investor, with respect to any press release of the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement or communication.
9. Notices. All notices, requests, consents and other communications hereunder shall be in writing, shall be mailed (A) if within the United States by first-class
registered or certified airmail, or nationally recognized overnight express courier, postage prepaid, by facsimile or e-mail (if agreed to by the Investor), or (B) if delivered from outside the United States, by international express courier, facsimile or e-mail (if agreed to by the Investor), and shall be deemed given (i) if delivered by first-class registered or certified mail, three business days after so mailed, (ii) if delivered by nationally recognized overnight carrier, one business day
after so mailed, (iii) if delivered by International Federal Express, two business days after so mailed, (iv) if delivered by facsimile or e-mail, upon electronic confirmation of receipt and shall be delivered as addressed as follows:
(a) if to the Company, to:
0000 Xxxxxxx Xxxx Xxxxx, Xxxxx 000,
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx, Chief Financial Officer
(b) with a copy to:
Xxxxxx, Xxxxx & Bockius LLP
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
|
(c) |
if to the Investor, at its mail or e-mail address on the signature page hereto, or at such other address or addresses as may have been furnished to the Company in writing. |
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10. Changes. This Agreement may not be modified or amended except pursuant to an instrument in writing signed by the Company and the Investor.
11. Headings. The headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be part of
this Agreement and do not affect its interpretation.
12. Severability. In case any provision contained in this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability
of the remaining provisions contained herein shall not in any way be affected or impaired thereby.
13. Governing Law. This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of Florida, without giving effect to
the principles of conflicts of law.
14. Counterparts. This Agreement may be executed in two or more counterparts, including facsimile counterparts, each of which shall constitute an original, but
all of which, when taken together, shall constitute but one instrument, and shall become effective when one or more counterparts have been signed by each party hereto and delivered to the other parties.
15. Rule 144. The Company covenants that it will use commercially reasonable efforts to timely file the reports required to be filed by it under the Securities
Act and the Exchange Act and the rules and regulations adopted by the SEC thereunder (or, if the Company is not required to file such reports, it will, upon the request of any Investor holding the Securities purchased hereunder made after the first anniversary of the Closing Date, make publicly available such information as necessary to permit sales pursuant to Rule 144 under the Securities Act), and it will use commercially reasonable efforts to take such further action as any such Investor may reasonably request,
all to the extent required from time to time to enable such Investor to sell the Securities purchased hereunder without registration under the Securities Act within the limitation of the exemptions provided by (a) Rule 144 under the Securities Act, as such rule may be amended from time to time, or (b) any similar rule or regulation hereafter adopted by the SEC.
16. Confidential Information. The Investor represents to the Company that, at all times during the Company’s offering of the Securities, the Investor has
maintained in confidence all non-public information regarding the Company received by the Investor from the Company or its agents, including information about the Offering of the Securities and covenants that it will continue to maintain in confidence such information until such date that the transactions contemplated hereunder are publicly disclosed pursuant to this Agreement.
17. Independent Nature of Investors’ Obligations and Rights. The obligations of each Investor under any Transaction Document are several and not joint with
the obligations of any other Investor, and no Investor shall be responsible in any way for the performance or non-performance of the obligations of any other Investor under any Transaction Document. Nothing contained herein or in any other Transaction Document, and no action taken by any Investor pursuant thereto, shall be deemed to constitute the Investors as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Investors are in any way acting
in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. Each Investor shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Investor to be joined as an additional party in any proceeding for such purpose.
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