Exhibit 99.2
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "AGREEMENT"), dated as of August 31,
2000, by and among Celerity Systems, Inc., a Delaware corporation, with
headquarters located at 000 Xxxxxxxxx Xxxx Xxxxx, Xxxxxxxxx, Xxxxxxxxx (the
"COMPANY"), and the investor listed on the Schedule of Buyers attached hereto
(individually, a "BUYER" or collectively "BUYERS").
WHEREAS:
A. The Company and the Buyers are executing and delivering this
Agreement in reliance upon the exemption from securities registration pursuant
to Section 4(2) and/or Regulation D ("REGULATION D") as promulgated by the U.S.
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "1933 ACT");
B. The Company has authorized the following new series of its Preferred
Stock, $.001 par value per share (the "PREFERRED STOCK"): the Company's Series A
Convertible Preferred Stock (the "SERIES A PREFERRED Shares"), which shall be
convertible into shares of the Company's Common Stock, $.001 par value per share
(the "COMMON STOCK") (as converted, the "CONVERSION SHARES"), in accordance with
the terms of the Company Certificate of Designations, Preferences, and Rights of
the Series A Preferred Shares, substantially in the form attached hereto as
Exhibit "A" (the "CERTIFICATE OF DESIGNATIONS");
C. The Buyer wishes to purchase, upon the terms and conditions stated
in this Agreement, an aggregate amount of 41 shares of Series A Preferred Stock
in the respective amounts set forth opposite each Buyer's name on the Schedule
of Buyers;
D. Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement
substantially in the form attached hereto as Exhibit "B" (the "REGISTRATION
RIGHTS AGREEMENT") pursuant to which the Company has agreed to provide certain
registration rights under the 1933 Act and the rules and regulations promulgated
thereunder, and applicable state securities laws; and
E. As set forth in Section 4(l) hereof, the holders of Series A
Preferred Shares shall receive stock purchase warrants to acquire shares of
Common Stock substantially in the form attached herewith as Exhibit "C" (the
"WARRANTS")
F. The aggregate proceeds of the sale of the Series A Preferred Shares
contemplated hereby shall be held in escrow pursuant to the terms of an escrow
agreement substantially in the form of the Escrow Agreement attached hereto as
Exhibit "D" (the "Escrow Agreement").
NOW THEREFORE, the Company and the Buyer hereby agree as follows:
1. PURCHASE AND SALE OF SERIES A PREFERRED STOCK.
a. PURCHASE OF SERIES A PREFERRED STOCK. Subject to the
satisfaction (or waiver) of the conditions set forth in Sections 6 and
7 below, the Company shall issue and sell to the Buyers and the Buyers
shall purchase from the Company an aggregate principal amount of 41
shares of Series A Preferred Stock (the "CLOSING") for a purchase price
of $10,000 per share (the "PURCHASE PRICE").
b. CLOSING DATE. The date and time of the Closing (the
"CLOSING DATE") shall be 10:00 a.m. Eastern Standard Time, within five
(5) business days following the date hereof, subject to notification of
satisfaction (or waiver) of the conditions to the Closing set forth in
Sections 6 and 7 below (or such later date as is mutually agreed to by
the Company and the Buyer). The Closing shall occur on the Closing Date
at the offices of Xxxxxx Xxxxxxxx, LLP, 0000 Xxxxxxxxxx Xxxxxx, Xxxxx
0, Xxxxx, XX 00000.
c. ESCROW ARRANGEMENTS; FORM OF PAYMENT. Upon execution hereof
by Buyer and pending Closing, the aggregate proceeds of the sale of the
Series A Preferred Shares to the Buyers pursuant hereto shall be
deposited in a non-interest bearing escrow account with First Union
National Bank, as escrow agent ("Escrow Agent"), pursuant to the terms
of an escrow agreement between the Company, the Placement Agent and the
Escrow Agent in the form attached hereto as Exhibit "D". Subject to the
satisfaction of the terms and conditions of this Agreement, on the
Closing Date, (i) the Escrow Agent shall deliver to the Company in
accordance with the terms of the Escrow Agreement such aggregate gross
proceeds for the Series A Preferred Shares to be issued and sold to
such Buyers at the Closing, by wire transfer of immediately available
funds in accordance with the Company's written wire instructions, and
(ii) the Company shall deliver to each Buyer, Series A Preferred Stock
Certificates which such Buyer is purchasing in amounts indicated
opposite such Buyer's name on Schedule I, duly executed on behalf of
the Company.
2. BUYER'S REPRESENTATIONS AND WARRANTEES.
Each Buyer represents and warrants with respect to only itself
that:
a. INVESTMENT PURPOSE. Such Buyer (i) is acquiring the Series
A Preferred Shares, (ii) upon conversion of the Series A Preferred
Shares, will acquire the Conversion Shares then issuable and any
Warrants issuable pursuant to Section 4(l) hereof, (iii) upon exercise
of the Warrants, will acquire the shares of Common Stock issuable upon
exercise thereof (the "WARRANT SHARES"), for its own account for
investment only and not with a view towards, or for resale in
connection with, the public sale or distribution thereof, except
pursuant to sales registered or exempted under the 1933 Act; provided,
however, that by making the representations herein, such Buyer does not
agree to hold any Series A Preferred Shares, Conversion Shares,
Warrants, or Warrant Shares for any minimum or
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other specific term and reserves the right to dispose of Series A
Preferred Shares, Conversion Shares, Warrants, or Warrant Shares at
any time in accordance with or pursuant to a registration statement or
an exemption under the 1933 Act.
b. ACCREDITED INVESTOR STATUS. Such Buyer is an "accredited
investor" as that term is defined in Rule 501(a)(3) of Regulation D.
c. RELIANCE ON EXEMPTIONS. Such Buyer understands that the
Series A Preferred Shares, the Conversion Shares, the Warrants, or the
Warrant Shares are being offered and sold to it in reliance on specific
exemptions from the registration requirements of United States federal
and state securities laws and that the Company is relying in part upon
the truth and accuracy of, and such Buyer's compliance with, the
representations, warranties, agreements, acknowledgments and
understandings of such Buyer set forth herein in order to determine the
availability of such exemptions and the eligibility of such Buyer to
acquire such securities.
d. INFORMATION. Such Buyer and its advisors, if any, have been
furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale
of the Series A Preferred Shares, the Conversion Shares, the Warrants,
or the Warrant Shares, which have been requested by such Buyer. Such
Buyer 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 such Buyer or its advisors, if
any, or its representatives shall modify, amend or affect such Buyer's
right to rely on the Company's representations and warranties contained
in Section 3 below. Such Buyer understands that its investment in the
Series A Preferred Shares, the Conversion Shares, the Warrants, or the
Warrant Shares involves a high degree of risk. Such Buyer has sought
such accounting, legal and tax advice as it has considered necessary to
make an informed investment decision with respect to its acquisition of
the Series A Preferred Shares, the Conversion Shares, the Warrants, or
the Warrant Shares.
e. NO GOVERNMENTAL REVIEW. Such Buyer 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 Series A Preferred Shares, the Conversion Shares,
the Warrants, or the Warrant Shares, or the fairness or suitability of
the investment in the Series A Preferred Shares, the Conversion Shares,
the Warrants, or the Warrant Shares, nor have such authorities passed
upon or endorsed the merits of the offering of the Series A Preferred
Shares, the Conversion Shares, the Warrants, or the Warrant Shares.
f. TRANSFER OR RESALE. Such Buyer understands that except as
provided in the Registration Rights Agreement: (i) the Series A
Preferred Shares, the Conversion Shares, the Warrants, or the Warrant
Shares have not been and are not being registered under the 1933 Act or
any state securities laws, and may not be offered for sale, sold,
assigned or transferred unless (a) subsequently registered thereunder,
(b) such Buyer shall have
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delivered to the Company an opinion of counsel, in a generally
acceptable form, to the effect that such securities to be sold,
assigned or transferred may be sold, assigned or transferred pursuant
to an exemption from such registration, or (c) such Buyer provides the
Company with reasonable assurance that such securities can be sold,
assigned or transferred pursuant to Rule 144 or promulgated under the
1933 Act (or a successor rule thereto); (ii) any sale of such
securities made in reliance on Rule 144 promulgated under the 1933 Act
(or a successor rule thereto) ("RULE 144") may be made only in
accordance with the terms of Rule 144 and further, if Rule 144 is not
applicable, any resale of such securities under circumstances in which
the seller (or the person through whom the sale is made) may be deemed
to be an underwriter (as that term is defined in the 0000 Xxx) may
require compliance with some other exemption under the 1933 Act or the
rules and regulations of the SEC thereunder; and (iii) neither the
Company nor any other person is under any obligation to register such
securities under the 1933 Act or any state securities laws or to
comply with the terms and conditions of any exemption thereunder.
g. LEGENDS. Such Buyer understands that the certificates or
other instruments representing the Series A Preferred Shares and the
Warrants and, until such time as the sale of the Conversion Shares and
the Warrant Shares have been registered under the 1933 Act as
contemplated by the Registration Rights Agreement, the stock
certificates representing the Conversion Shares and the Warrant Shares
shall bear a restrictive legend in substantially the following form
(and a stop transfer order may be placed against transfer of such stock
certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR
AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE
SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID
ACT.
The legend set forth above shall be removed and the Company shall issue
a certificate without such legend to the holder of the Series A
Preferred Shares, the Conversion Shares, the Warrants, or the Warrant
Shares, upon which it is stamped, if, unless otherwise required by
state securities laws, (i) the sale of the Conversion Shares or Warrant
Shares are registered under the 1933 Act, (ii) in connection with a
sale transaction, such holder provides the Company with an opinion of
counsel, in a generally acceptable form, to the effect that a public
sale, assignment or transfer of the Series A
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Preferred Shares, the Conversion Shares, the Warrants, or the Warrant
Shares may be made without registration under the 1933 Act, or (iii)
such holder provides the Company with reasonable assurances that the
Series A Preferred Shares, the Conversion Shares, the Warrants, or the
Warrant Shares can be sold pursuant to Rule 144 without any
restriction as to the number of securities acquired as of a particular
date that can then be immediately sold.
h. AUTHORIZATION, ENFORCEMENT. This Agreement has been duly
and validly authorized, executed and delivered on behalf of such Buyer
and is a valid and binding agreement of such Buyer enforceable in
accordance with its terms, subject as enforceability to general
principles of equity and to applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating
to, or affecting generally, the enforcement of applicable creditors'
rights and remedies.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the Buyers
that:
a. ORGANIZATION AND QUALIFICATION. The Company and its
subsidiaries are corporations duly organized and validly existing in
good standing under the laws of the jurisdiction in which they are
incorporated, and have the requisite corporate power to own their
properties and to carry on their business as now being conducted. Each
of the Company and its subsidiaries is duly qualified as a foreign
corporation to do business and is in good standing in every
jurisdiction in which the nature of the business conducted by it makes
such qualification necessary, except to the extent that the failure to
be so qualified or be in good standing would not have a material
adverse effect on the Company and its subsidiaries taken as a whole.
b. AUTHORIZATION, ENFORCEMENT, COMPLIANCE WITH OTHER
INSTRUMENTS. (i) The Company has the requisite corporate power and
authority to enter into and perform this Agreement, the Registration
Rights Agreement and any related agreements, and to issue the Series A
Preferred Shares, the Conversion Shares, the Warrants, or the Warrant
Shares in accordance with the terms hereof and thereof, (ii) the
execution and delivery of this Agreement, the Registration Rights
Agreement and any related agreements by the Company and the
consummation by it of the transactions contemplated hereby and thereby,
including without limitation the issuance of the Series A Preferred
Shares and the Warrants and the reservation for issuance and the
issuance of the Conversion Shares and the Warrant Shares issuable upon
conversion or exercise thereof, have been duly authorized by the
Company's Board of Directors and no further consent or authorization is
required by the Company, its Board of Directors or its stockholders,
(iii) this Agreement and the Registration Rights Agreement and any
related agreements have been duly executed and delivered by the
Company, (iv) this Agreement, the Registration Rights Agreement and any
related agreements constitute the valid and binding obligations of the
Company enforceable against the Company in accordance with their terms,
except as such enforceability may be limited by general principles of
equity or applicable
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bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally, the enforcement of
creditors' rights and remedies, and (v) prior to the Closing Date, the
Certificate of Designations has been filed with the Secretary of State
of the State of Delaware and will be in full force and effect,
enforceable against the Company in accordance with its terms.
c. CAPITALIZATION. As of the date hereof, the authorized
capital stock of the Company consists of 15,000,000 shares of Common
Stock, of which as of May 9, 2000 9,394808 shares were issued and
outstanding, and 3,000,000 shares of preferred stock, of which as of
the date hereof no shares were issued and outstanding. All of such
outstanding shares have been validly issued and are fully paid and
nonassessable. Except as disclosed in Schedule 3(c), no shares of
Common Stock are subject to preemptive rights or any other similar
rights or any liens or encumbrances suffered or permitted by the
Company. Except as disclosed in Schedule 3(c), as of the effective date
of this Agreement, (i) there are no outstanding options, warrants,
scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its subsidiaries, or
contracts, commitments, understandings or arrangements by which the
Company or any of its subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its
subsidiaries or options, warrants, scrip, rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities
or rights convertible into, any shares of capital stock of the Company
or any of its subsidiaries, (ii) there are no outstanding debt
securities and (iii) there are no agreements or arrangements under
which the Company or any of its subsidiaries is obligated to register
the sale of any of their securities under the 1933 Act (except the
Registration Rights Agreement). There are no securities or instruments
containing anti-dilution or similar provisions that will be triggered
by the issuance of the Series A Preferred Shares, the Conversion
Shares, the Warrants, or the Warrant Shares as described in this
Agreement. The Company has furnished to the Buyer true and correct
copies of the Company's Certificate of Incorporation, as amended and as
in effect on the date hereof (the "CERTIFICATE OF INCORPORATION"), and
the Company's By-laws, as in effect on the date hereof (the "BY-LAWS"),
and the terms of all securities convertible into or exercisable for
Common Stock and the material rights of the holders thereof in respect
thereto.
d. ISSUANCE OF SECURITIES. The Series A Preferred Shares are
duly authorized and, upon issuance in accordance with the terms hereof,
shall be (i) validly issued, fully paid and nonassessable, are free
from all taxes, liens and charges with respect to the issue thereof and
are entitled to the rights and preferences set forth in the Series A
Preferred Shares. The Conversion Shares issuable upon conversion of the
Series A Preferred Shares have been duly authorized and reserved for
issuance. Upon conversion or exercise in accordance with the
Certificate of Designations or the Warrants, the Conversion Shares and
the Warrant Shares will be validly issued, fully paid and nonassessable
and free from all taxes, liens and charges with respect to the issue
thereof, with the holders being entitled to all rights accorded to a
holder of Common Stock.
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e. NO CONFLICTS. Except as disclosed in Schedule 3(e), the
execution, delivery and performance of this Agreement by the Company
and the consummation by the Company of the transactions contemplated
hereby will not (i) result in a violation of the Certificate of
Incorporation, any Certificate of Designations, Preferences, and Rights
of any outstanding series of preferred stock of the Company or By-laws
or (ii) conflict with or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give
to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the
Company or any of its subsidiaries is a party, or result in a violation
of any law, rule, regulation, order, judgment or decree (including
federal and state securities laws and regulations and the rules and
regulations of the principal market or exchange on which the Common
Stock is traded or listed) applicable to the Company or any of its
subsidiaries or by which any property or asset of the Company or any of
its subsidiaries is bound or affected. Except as disclosed in Schedule
3(e), neither the Company nor its subsidiaries is in violation of any
term of or in default under its Certificate of Incorporation or By-laws
or their organizational charter or by-laws, respectively, or any
material contract, agreement, mortgage, indebtedness, indenture,
instrument, judgment, decree or order or any statute, rule or
regulation applicable to the Company or its subsidiaries. The business
of the Company and its subsidiaries is not being conducted, and shall
not be conducted in violation of any law, ordinance, regulation of any
governmental entity. Except as specifically contemplated by this
Agreement and as required under the 1933 Act and any applicable state
securities laws, the Company is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any
court or governmental agency in order for it to execute, deliver or
perform any of its obligations under or contemplated by this Agreement
or the Registration Rights Agreement in accordance with the terms
hereof or thereof Except as disclosed in Schedule 3(e), all consents,
authorizations, orders, filings and registrations which the Company is
required to obtain pursuant to the preceding sentence have been
obtained or effected on or prior to the date hereof. The Company and
its subsidiaries are unaware of any facts or circumstances which might
give rise to any of the foregoing.
f. SEC DOCUMENTS: FINANCIAL STATEMENTS. Since November, 1997,
the Company has filed all reports, schedules, forms, statements and
other documents required to be filed by it with the SEC pursuant to the
reporting requirements of the Securities Exchange Act of 1934, as
amended (the "1934 Act") (all of the foregoing filed prior to the date
hereof and all exhibits included therein and financial statements and
schedules thereto and documents incorporated by reference therein,
being hereinafter referred to as the "SEC DOCUMENTS"). The Company has
delivered to the Buyer or its representative, or made available through
the XXXXX Internet web site of the SEC, true and complete copies of the
SEC Documents. As of their respective dates, the financial statements
of the Company disclosed in the SEC Documents (the "FINANCIAL
STATEMENTS") complied as to form in all material respects with
applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements
have been prepared in accordance with generally accepted accounting
principles, consistently applied, during the periods involved (except
(i) as may be
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otherwise indicated in such financial statements or the notes thereto,
or (ii) in the case of unaudited interim statements, to the extent
they may exclude footnotes or may be condensed or summary statements)
and fairly present in all material respects the financial position of
the Company as of the dates thereof and the results of its operations
and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). No other
information provided by or on behalf of the Company to the Buyer which
is not included in the SEC Documents, including, without limitation,
information referred to in Section 2(d) of this Agreement, contains
any untrue statement of a material fact or omits to state any material
fact necessary in order to make the statements therein, in the light
of the circumstance under which they are or were made, not misleading.
g. ABSENCE OF CERTAIN CHANGES. Except as disclosed in Schedule
3(g), since the Annual Report on Form 10-QSB for the year ended March
31, 2000 filed May 15, 2000, there has been no material adverse change
and no material adverse development in the business, properties,
operations, financial condition, results of operations or prospects of
the Company or its subsidiaries. The Company has not taken any steps,
and does not currently expect to take any steps, to seek protection
pursuant to any bankruptcy law nor does the Company or its subsidiaries
have any knowledge or reason to believe that its creditors intend to
initiate involuntary bankruptcy proceedings.
h. ABSENCE OF LITIGATION. There is no action, suit,
proceeding, inquiry or investigation before or by any court, public
board, government agency, self-regulatory organization or body pending
or, to the knowledge of the Company or any of its subsidiaries,
threatened against or affecting the Company, the Common Stock or any of
the Company's subsidiaries, wherein an unfavorable decision, ruling or
finding would (i) have a material adverse effect on the transactions
contemplated hereby (ii) adversely affect the validity or
enforceability of, or the authority or ability of the Company to
perform its obligations under this Agreement or any of the documents
contemplated herein or (iii), except as expressly disclosed in the SEC
Documents, have a material adverse effect on the business, operations,
properties, financial condition or results of operations of the Company
and its subsidiaries taken as a whole.
i. ACKNOWLEDGMENT REGARDING BUYER'S PURCHASE OF SERIES A
PREFERRED SHARES. The Company acknowledges and agrees that the Buyer is
acting solely in the capacity of an arm's length purchaser with respect
to this Agreement and the transactions contemplated hereby. The Company
further acknowledges that the Buyer is not acting as a financial
advisor or fiduciary of the Company (or in any similar capacity) with
respect to this Agreement and the transactions contemplated hereby and
any advice given by the Buyer or any of their respective
representatives or agents in connection with this Agreement and the
transactions contemplated hereby is merely incidental to such Buyer's
purchase of the Series A Preferred Shares, the Conversion Shares, the
Warrants, or the Warrant Shares. The Company further represents to the
Buyer that the Company's decision to enter into this Agreement has been
based solely on the independent evaluation by the Company and its
representatives.
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j. NO UNDISCLOSED EVENTS, LIABILITIES, DEVELOPMENTS OR
CIRCUMSTANCES. No event, liability, development or circumstance has
occurred or exists, or is contemplated to occur, with respect to the
Company or its subsidiaries or their respective business, properties,
prospects, operations or financial condition, which could be material
but which has not been publicly announced or disclosed in writing to
the Buyer.
k. NO GENERAL SOLICITATION. Neither the Company, nor any of
its affiliates, nor any person acting on its or their behalf, has
engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D under the 0000 Xxx) in connection
with the offer or sale of the Series A Preferred Shares, the Conversion
Shares, the Warrants, or the Warrant Shares.
l. NO INTEGRATED OFFERING. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf has, directly
or indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would require
registration of the Series A Preferred Shares, the Conversion Shares,
the Warrants, or the Warrant Shares under the 1933 Act or cause this
offering of Series A Preferred Shares, the Conversion Shares, the
Warrants, or the Warrant Shares to be integrated with prior offerings
by the Company for purposes of the 1933 Act or any applicable
stockholder approval provisions.
m. EMPLOYEE RELATIONS. Neither the Company nor any of its
subsidiaries is involved in any labor dispute nor, to the knowledge of
the Company or any of its subsidiaries, is any such dispute threatened.
None of the Company's or its subsidiaries' employees is a member of a
union and the Company and its subsidiaries believe that their relations
with their employees are good.
n. INTELLECTUAL PROPERTY RIGHTS. The Company and its
subsidiaries own or possess adequate rights or licenses to use all
trademarks, trade names, service marks, service xxxx registrations,
service names, patents, patent rights, copyrights, inventions,
licenses, approvals, governmental authorizations, trade secrets and
rights necessary to conduct their respective businesses as now
conducted. Except as set forth on Schedule 3(n), none of the Company's
trademarks, trade names, service marks, service xxxx registrations,
service names, patents, patent rights, copyrights, inventions,
licenses, approvals, government authorizations, trade secrets, or other
intellectual property rights have expired or terminated, or are
expected to expire or terminate in the near future. The Company and its
subsidiaries do not have any knowledge of any infringement by the
Company or its subsidiaries of trademark, trade name rights, patents,
patent rights, copyrights, inventions, licenses, service names, service
marks, service xxxx registrations, trade secret or other similar rights
of others, or of any such development of similar or identical trade
secrets or technical information by others and, except as set forth on
Schedule 3(n), there is no claim, action or proceeding being made or
brought against, or to the Company's knowledge, being threatened
against, the Company or its subsidiaries regarding trademark, trade
name, patents, patent rights, invention, copyright, license,
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service names, service marks, service xxxx registrations, trade secret
or other infringement; and the Company and its subsidiaries are
unaware of any facts or circumstances which might give rise to any of
the foregoing. The Company and its subsidiaries have taken reasonable
security measures to protect the secrecy, confidentiality and value of
all of their intellectual properties.
o. ENVIRONMENTAL LAWS. The Company and its subsidiaries are
(i) in compliance with any and all applicable foreign, federal, state
and local laws and regulations relating to the protection of human
health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("ENVIRONMENTAL LAWS"), (ii) have
received all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective
businesses and (iii) are in compliance with all terms and conditions of
any such permit, license or approval.
p. TITLE. The Company and its subsidiaries have good and
marketable title in fee simple to all real property and good and
marketable title to all 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, encumbrances and defects except such
as are described in Schedule 3(p) or such as do not materially affect
the value of such property and do not interfere with the use made and
proposed to be made of such property by the Company 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 interfere with the use made and proposed to be made of such
property and buildings by the Company and its subsidiaries.
q. INSURANCE. The Company and each of its subsidiaries are
insured by insurers of recognized financial responsibility against such
losses and risks and in such amounts as management of the Company
believes to be prudent and customary in the businesses in which the
Company and its subsidiaries are engaged. Neither the Company nor any
such subsidiary has been refused any insurance coverage sought or
applied for and neither the Company nor any such subsidiary has any
reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue
its business at a cost that would not materially and adversely affect
the condition, financial or otherwise, or the earnings, business or
operations of the Company and its subsidiaries, taken as a whole.
r. REGULATORY PERMITS. The Company and its subsidiaries
possess all certificates, authorizations and permits issued by the
appropriate federal, state or foreign regulatory authorities necessary
to conduct their respective businesses, and neither the Company nor any
such subsidiary has received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or
permit.
s. INTERNAL ACCOUNTING CONTROLS. The Company and each of its
subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable
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assurance that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain asset accountability, (iii) access to assets is permitted
only in accordance with management's general or specific authorization
and (iv) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
t. NO MATERIALLY ADVERSE CONTRACTS, ETC. Except as set forth
in the SEC Documents, neither the Company nor any of its subsidiaries
is subject to any charter, corporate or other legal restriction, or any
judgment, decree, order, rule or regulation which in the judgment of
the Company's officers has or is expected in the future to have a
material adverse effect on the business, properties, operations,
financial condition, results of operations or prospects of the Company
or its subsidiaries. Neither the Company nor any of its subsidiaries is
a party to any contract or agreement which in the judgment of the
Company's officers has or is expected to have a material adverse effect
on the business, properties, operations, financial condition, results
of operations or prospects of the Company or its subsidiaries.
u. TAX STATUS. The Company and each of its subsidiaries has
made or filed all federal and state income and all other tax returns,
reports and declarations required by any jurisdiction to which it is
subject (unless and only to the extent that the Company and each of its
subsidiaries has set aside on its books provisions reasonably adequate
for the payment of all unpaid and unreported taxes) and has paid all
taxes and other governmental assessments and charges that are material
in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and has set
aside on its books provision reasonably adequate for the payment of all
taxes for periods subsequent to the periods to which such returns,
reports or declarations apply. There are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any
jurisdiction, and the officers of the Company know of no basis for any
such claim.
v. CERTAIN TRANSACTIONS. Except as set forth on Schedule 3(v)
and in the SEC Documents and except for arm's length transactions
pursuant to which the Company makes payments in the ordinary course of
business upon terms no less favorable than the Company could obtain
from third parties and other than the grant of stock options disclosed
on Schedule 3(c), none of the officers, directors, or employees of the
Company is presently a party to any transaction with the Company (other
than for services as employees, officers and directors), including any
contract, agreement or other arrangement providing for the furnishing
of services to or by, providing for rental of real or personal property
to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any
corporation, partnership, trust or other entity in which any officer,
director, or any such employee has a substantial interest or is an
officer, director, trustee or partner.
11
w. DILUTIVE EFFECT. The Company understands and acknowledges
that the number of Conversion Shares issuable upon conversion of the
Series A Preferred Shares will increase in certain circumstances and
that the number of Warrant Shares issuable upon exercise of the
Warrants will increase in certain circumstances. The Company further
acknowledges that its obligation to issue Conversion Shares upon
conversion of the Series A Preferred Shares in accordance with this
Agreement and the Certificate of Designations and the Series A
Preferred Shares is absolute and unconditional regardless of the
dilutive effect that such issuance may have on the ownership interests
of other stockholders of the Company.
x. FEES AND RIGHTS OF FIRST REFUSAL. The Company is not
obligated to offer the securities offered hereunder on a right of first
refusal basis or otherwise to any third parties including, but not
limited to, current or former shareholders of the Company,
underwriters, brokers, agents or other third parties.
4. COVENANTS.
a. BEST EFFORTS. Each party shall use its best efforts timely
to satisfy each of the conditions to be satisfied by it as provided in
Sections 6 and 7 of this Agreement.
b. FORM D. The Company agrees to file a Form D with respect to
the Series A Preferred Shares and the Conversion Shares as required
under Regulation D and to provide a copy thereof to each Buyer promptly
after such filing. The Company shall, on or before the Closing Date,
take such action as the Company shall reasonably determine is necessary
to qualify the Series A Preferred Shares and the Conversion Shares for,
or obtain exemption for the Series A Preferred Shares and the
Conversion Shares for, sale to the Buyers at the Closing pursuant to
this Agreement under applicable securities or "Blue Sky" laws of the
states of the United States, and shall provide evidence of any such
action so taken to the Buyers on or prior to the Closing Date.
c. REPORTING STATUS. Until the earlier of (i) the date as of
which the Investors (as that term is defined in the Registration Rights
Agreement) may sell all of the Conversion Shares and the Warrant Shares
without restriction pursuant to Rule 144(k) promulgated under the 1933
Act (or successor thereto), or (ii) the date on which (A) the Investors
shall have sold all the Conversion Shares and (B) none of the Series A
Preferred Shares or Warrants is outstanding (the "REGISTRATION
PERIOD"), the Company shall file all reports required to be filed with
the SEC pursuant to the 1934 Act, and the Company shall not terminate
its status as an issuer required to file reports under the 1934 Act
even if the 1934 Act or the rules and regulations thereunder would
otherwise permit such termination.
d. USE OF PROCEEDS. The Company will use the proceeds from the
sale of the Series A Preferred Shares for substantially the same
purposes and in substantially the same amounts as indicated in Schedule
4(d).
12
e. FINANCIAL INFORMATION. The Company agrees to send the
following to each Buyer during the Registration Period: (i) within five
(5) days after the filing thereof with the SEC, a copy of its Annual
Reports on Form 10-K, its Quarterly Reports on Form 10-Q, any Current
Reports on Form 8-K and any registration statements or amendments filed
pursuant to the 1933 Act; (ii) within one (1) day after release
thereof, copies of all press releases issued by the Company or any of
its subsidiaries and (ii) copies of the same notices and other
information given to the stockholders of the Company generally,
contemporaneously with the giving thereof to the stockholders.
f. RESERVATION OF SHARES. The Company shall take all action
reasonably necessary to at all times have authorized, and reserved for
the purpose of issuance, such number of Shares of Common Stock as shall
from time to time be sufficient to affect the conversion of all of the
Conversion Shares and the Warrant Shares then outstanding, provided
that the number of Shares of Common Stock so authorized and reserved
shall be no less than 1,000,000 Shares of Common Stock.
g. LISTINGS. The Company shall promptly secure the listing of
the Conversion Shares upon each national securities exchange or
automated quotation system, if any, upon which shares of Common Stock
are then listed (subject to official notice of issuance) and shall
maintain, so long as any other shares of Common Stock shall be so
listed, such listing of all Conversion Shares from time to time
issuable under the terms of this Agreement and the Registration Rights
Agreement. The Company shall maintain the Common Stock's authorization
for quotation in the over-the counter market. The Company shall
promptly provide to each Buyer copies of any notices it receives
regarding the continued eligibility of the Common Stock for trading in
the over-the-counter market.
h. EXPENSES. Each of the Company and the Buyer shall pay all
costs and expenses incurred by such party in connection with the
negotiation, investigation, preparation, execution and delivery of this
Agreement and the Registration Rights Agreement. The costs and expenses
of the May Xxxxx Group, Inc., and its counsel shall be paid for by the
Company at Closing.
i. AUTHORIZED SHARES OF COMMON STOCK, RESERVATION OF SHARES.
The Company shall at all times, so long as any of the Series A
Preferred Shares are outstanding, reserve and keep available out of its
authorized and unissued Common Stock, solely for the purpose of
effecting the conversion of the Series A Preferred Shares and Warrant
Shares, such number of shares of Common Stock as shall from time to
time be sufficient to effect the conversion or exercise of all of the
Series A Preferred Shares or Warrants which are then outstanding.
j. CORPORATE EXISTENCE. So long as any Series A Preferred
Shares remain outstanding, the Company shall not directly or indirectly
consummate any merger, reorganization, restructuring, consolidation,
sale of all or substantially all of the
13
Company's assets or any similar transaction or related transactions
(each such transaction, a "SALE OF THE COMPANY") unless, prior to the
consummation of a Sale of the Company, the Company makes appropriate
provision (in form and substance reasonably satisfactory to the
holders of a majority of the Series A Preferred Shares then
outstanding) to insure that, upon the consummation of such Sale of the
Company, each of the holders of the Series A Preferred Shares will
thereafter have the right to acquire and receive in lieu of the Series
A Preferred Shares, such shares of stock, securities or assets as may
be issued or payable with respect to or in exchange for the number of
shares of Common Stock immediately theretofore acquirable and
receivable upon the conversion of such holder's Series A Preferred
Shares had such Sale of the Company not taken place. In any such case,
the Company will make appropriate provision (in form and substance
reasonably satisfactory to the holders of a majority of the Series A
Preferred Shares then outstanding) with respect to such holders'
rights and interests to insure that the provisions of this Section
4(j) will thereafter be applicable to the Series A Preferred Shares.
k. TRANSACTIONS WITH AFFILIATES. So long as (i) any Series A
Preferred Shares are outstanding or (ii) any Buyer owns Conversion
Shares and Warrant Shares with a market value equal to or greater than
$200,000, the Company shall not, and shall cause each of its
subsidiaries not to, enter into, amend, modify or supplement, or permit
any subsidiary to enter into, amend, modify or supplement any
agreement, transaction, commitment, or arrangement with any of its or
any subsidiary's officers, directors, person who were officers or
directors at any time during the previous two years, stockholders who
beneficially own 5% or more of the Common Stock, or affiliates or with
any individual related by blood, marriage, or adoption to any such
individual or with any entity in which any such entity or individual
owns a 5% or more beneficial interest (each a "RELATED PARTY"), except
for (a) customary employment arrangements and benefit programs on
reasonable terms, (b) any agreement, transaction, commitment, or
arrangement on an arms-length basis on terms no less favorable than
terms which would have been obtainable from a person other than such
Related Party, (c) any agreement transaction, commitment, or
arrangement which is approved by a majority of the disinterested
directors of the Company, for purposes hereof, any director who is also
an officer of the Company or any subsidiary of the Company shall not be
disinterested director with respect to any such agreement, transaction,
commitment, or arrangement. "AFFILIATE" for purposes hereof means, with
respect to any person or entity, another person or entity that,
directly or indirectly, (i) has a 5% or more equity interest in that
person or entity, (ii) has 5% or more common ownership with that person
or entity, (iii) controls that person or entity, or (iv) shares common
control with that person or entity. "CONTROL" or "controls" for
purposes hereof means that a person or entity has the power, direct or
indirect, to conduct or govern the policies of another person or
entity.
l. TRANSFER AGENT. The Company covenants and agrees that, in the event
that the Company's agency relationship with the transfer agent should
be terminated for any reason prior to a date which is two (2) years
after the Closing Date, the Company shall
14
immediately appoint a new transfer agent and shall require that the
transfer agent execute and agree to be bound by the terms of the
Irrevocable Instructions to Transfer Agent.
5. TRANSFER AGENT INSTRUCTIONS.
The Company shall issue irrevocable instructions to its
transfer agent to issue certificates, registered in the name of the Buyer or its
respective nominee(s), for the Conversion Shares and the Warrant Shares in such
amounts as specified from time to time by the Buyer to the Company upon
conversion of the Series A Preferred Shares or the exercise of the Warrants (the
"IRREVOCABLE TRANSFER AGENT INSTRUCTIONS"), except as provided in Section 4(l)
herein. Prior to registration of the Conversion Shares and the Warrant Shares
under the 1933 Act, all such certificates shall bear the restrictive legend
specified in Section 2(g) of this Agreement. The Company warrants that no
instruction other than the Irrevocable Transfer Agent Instructions referred to
in this Section 5, and stop transfer instructions to give effect to Section 2(f)
hereof (in the case of the Conversion Shares or the Warrant Shares, prior to
registration of such shares under the 0000 Xxx) will be given by the Company to
its transfer agent and that the Series A Preferred Shares, the Conversion
Shares, the Warrants, or the Warrant Shares shall otherwise be freely
transferable on the books and records of the Company as and to the extent
provided in this Agreement and the Registration Rights Agreement. Nothing in
this Section 5 shall affect in any way the Buyer's obligations and agreement to
comply with all applicable securities laws upon resale of the Series A Preferred
Shares, the Conversion Shares, the Warrants, or the Warrant Shares. If the Buyer
provides the Company with an opinion of counsel, reasonably satisfactory in
form, and substance to the Company, that registration of a resale by the Buyer
of any of the Series A Preferred Shares, the Conversion Shares, the Warrants, or
the Warrant Shares is not required under the 1933 Act, the Company shall permit
the transfer, and, in the case of the Conversion Shares or the Warrant Shares,
promptly instruct its transfer agent to issue one or more certificates in such
name and in such denominations as specified by the Buyer. The Company
acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the Buyer by vitiating the intent and purpose of the
transaction contemplated hereby. Accordingly, the Company acknowledges that the
remedy at law for a breach of its obligations under this Section 5 will be
inadequate and agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Section 5, that the Buyer shall be entitled,
in addition to all other available remedies, to an injunction restraining any
breach and requiring immediate issuance and transfer, without the necessity of
showing economic loss and without any bond or other security being required.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to issue and sell the
Series A Preferred Shares to the Buyer at the Closing is subject to the
satisfaction, at or before the Closing Date, of each of the following
conditions, provided that these conditions are for the Company's sole benefit
and may be waived by the Company at any time in its sole discretion:
15
a. The Buyer shall have executed this Agreement and the
Registration Rights Agreement and delivered the same to the Company.
b. The Certificate of Designations shall have been filed with
the Secretary of State of the State of Delaware.
c. The Buyer shall have delivered to the Company the Purchase
Price for the Series A Preferred Shares being purchased by the Buyer at
the Closing by wire transfer of immediately available funds pursuant to
the wire instructions provided by the Company.
d. The representations and warranties of the Buyer shall be
true and correct in all material respects as of the date when made and
as of the Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date), and
the Buyer shall have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Buyer at
or prior to the Closing Date.
7. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The obligation of the Buyer hereunder to purchase the Series A
Preferred Shares at the Closing is subject to the satisfaction, at or before the
Closing Date, of each of the following conditions, provided that these
conditions are for the Buyer's sole benefit and may be waived by the Buyer at
any time in its sole discretion:
a. The Company shall have executed this Agreement and the
Registration Rights Agreement, and delivered the same to the Buyer.
b. The Common Stock shall be authorized for quotation on the
electronic bulletin board, over-the-counter market, AMEX the NASDAQ
National Market or The New York Stock Exchange, Inc., trading in the
Common Stock shall not have been suspended for any reason and all of
the Conversion Shares issuable upon conversion of the Series A
Preferred Shares shall be approved for listing on the electronic
bulletin board, over-the-counter market, AMEX, the NASDAQ National
Market or The New York Stock Exchange, Inc.
c. The representations and warranties of the Company shall be
true and correct in all material respects (except to the extent that
any of such representations and warranties is already qualified as to
materiality in Section 3 above, in which case, such representations and
warranties shall be true and correct without further qualification) as
of the date when made and as of the Closing Date as though made at that
time (except for representations and warranties that speak as of a
specific date) and the Company shall have performed, satisfied and
complied in all material respects with the covenants, agreements and
conditions required by this Agreement to be performed, satisfied or
complied with by the Company at or prior to the Closing Date. The Buyer
shall have received a certificate, executed by the Chief Executive
Officer of the Company, dated as
16
of the Closing Date, to the foregoing effect and as to such other
matters as may be reasonably requested by the Buyer including, without
limitation an update as of the Closing Date regarding the
representation contained in Section 3(c) above.
d. The Buyer shall have received the opinion of the Company's
counsel dated as of the Closing Date, in form, scope and substance
reasonably satisfactory to the Buyer and in substantially the form of
Exhibit "D" attached hereto.
e. The Company shall have executed and delivered to the Buyer
the Certificates (in such denominations as the Buyer shall request) for
the Series A Preferred Shares being purchased by the Buyer at the
Closing.
f. The Board of Directors of the Company shall have adopted
the resolutions in substantially the form of Exhibit "E" attached
hereto.
g. As of the Closing Date, the Company shall as of the Closing
Date have reserved out of its authorized and unissued Common Stock,
solely for the purpose of effecting the conversion of the Series A
Preferred Shares and permitting the exercise of the Warrants, such
number of shares of Common Stock as shall from time to time be
sufficient to effect the conversion of all of the Series A Preferred
Shares and the exercise of all the Warrants then outstanding.
h. The Irrevocable Transfer Agent Instructions, in form and
substance satisfactory to the Buyer, shall have been delivered to and
acknowledged in writing by the Company's transfer agent.
8. INDEMNIFICATION.
In consideration of the Buyer's execution and delivery of this
Agreement and acquiring the Series A Preferred Shares, the Conversion Shares,
the Warrants, or the Warrant Shares hereunder and in addition to all of the
Company's other obligations under this Agreement, the Company shall defend,
protect, indemnify and hold harmless the Buyer and each other holder of the
Series A Preferred Shares, the Conversion Shares, the Warrants, or the Warrant
Shares and all of their officers, directors, employees and agents (including,
without limitation, those retained in connection with the transactions
contemplated by this Agreement) (collectively, the "INDEMNITEES") from and
against any and all actions, causes of action, suits, claims, losses, costs,
penalties, fees, liabilities and damages, and expenses in connection therewith
(irrespective of any such Indemnitee is a party to the action for which
indemnification hereunder is sought), and including reasonable attorneys' fees
and disbursements (the "INDEMNIFIED LIABILITIES"), incurred by the Indemnitees
or any of them as a result of, or arising out of, or relating to (a) any
misrepresentation or breach of any representation or warranty made by the
Company in this Agreement, the Warrants, the Series A Preferred Shares or the
Registration Rights Agreement or any other certificate, instrument or document
contemplated hereby or thereby, (b) any breach of any covenant, agreement or
obligation of the Company contained in this Agreement, the Warrants, the
Certificate of Designations, or the Registration Rights Agreement or any other
17
certificate, instrument or document contemplated hereby or thereby, or (c) any
cause of action, suit or claim brought or made against such Indemnitee and
arising out of or resulting from the execution, delivery, performance or
enforcement of this Agreement or any other instrument, document or agreement
executed pursuant hereto by any of the Indemnities, any transaction financed or
to be financed in whole or in part, directly or indirectly, with the proceeds of
the issuance of the Series A Preferred Shares or the status of the Buyer or
holder of the Series A Preferred Shares, the Conversion Shares, the Warrants, or
the Warrant Shares, as an investor in the Company. To the extent that the
foregoing undertaking by the Company may be unenforceable for any reason, the
Company shall make the maximum contribution to the payment and satisfaction of
each of the Indemnified Liabilities which is permissible under applicable law.
9. GOVERNING LAW: MISCELLANEOUS.
a. GOVERNING LAW. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of New York
without regard to the principles of conflict of laws. Accordingly, upon
such breach, Buyer, at its election and without limitation of its other
remedies, shall be entitled to pursue a claim for specific performance
of this Agreement, and Company hereby waives the right to assert any
defense thereto that Purchaser has an adequate remedy at law. The
parties further agree that any action between them shall be heard in
New York City, New York, and expressly consent to the jurisdiction and
venue of the Supreme Court of New York and the United States District
Court for the Southern District of New York for the adjudication of any
civil action asserted pursuant to this Paragraph.
b. COUNTERPARTS. This Agreement may be executed in two or more
identical counterparts, all of which 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. In the event any
signature page is delivered by facsimile transmission, the party using
such means of delivery shall cause four (4) additional original
executed signature pages to be physically delivered to the other party
within five (5) days of the execution and delivery hereof
c. HEADINGS. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
d. SEVERABILITY. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other
jurisdiction.
e. ENTIRE AGREEMENT, AMENDMENTS. This Agreement supersedes all
other prior oral or written agreements between the Buyer, the Company,
their affiliates and persons acting on their behalf with respect to the
matters discussed herein, and this Agreement and the instruments
referenced herein contain the entire understanding of the
18
parties with respect to the matters covered herein and therein and,
except as specifically set forth herein or therein, neither the
Company nor any Buyer makes any representation, warranty, covenant or
undertaking with respect to such matters. No provision of this
Agreement may be waived or amended other than by an instrument in
writing signed by the party to be charged with enforcement.
f. NOTICES. Any notices, consents, waivers, or other
communications required or permitted to be given under the terms of
this Agreement must be in writing and will be deemed to have been
delivered (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile, provided a copy is mailed by U.S.
certified mail, return receipt requested; (iii) three (3) days after
being sent by U.S. certified mail, return receipt requested, or (iv)
one (1) day after deposit with a nationally recognized overnight
delivery service, in each case properly addressed to the party to
receive the same. The addresses and facsimile numbers for such
communications shall be:
If to the Company:
000 Xxxxxxxxx Xxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx, 00000
Attn: President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Transfer Agent:
_______________________________
_______________________________
_______________________________
_______________________________
Attn: __________________________
Telephone: (____)_______________________________
Facsimile: (____)_______________________________
If to the Buyer, to its address and facsimile number on the Schedule of
Buyers, with copies to the Buyer's counsel as set forth on the Schedule
of Buyers. Each party shall provide five (5) days' prior written notice
to the other party of any change in address or facsimile number.
g. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective
successors and assigns. The Company shall not assign this Agreement or
any rights or obligations hereunder without the prior written consent
of the Buyer. The Buyer may assign its rights hereunder without the
consent of the Company, provided, however, that any such assignment
shall not release
19
the Buyer from its obligations hereunder unless such obligations are
assumed by such assignee and the Company has consented to such
assignment and assumption.
h. NO THIRD PARTY BENEFICIARIES. This Agreement is intended
for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other person.
i. SURVIVAL. Unless this Agreement is terminated under Section
9(l), the representations and warranties of the Company and the Buyer
contained in Sections 2 and 3, the agreements and covenants set forth
in Sections 4, 5 and 9, the indemnification provisions set forth in
Section 8, shall survive the Closing. The Buyer shall be responsible
only for its own representations, warranties, agreements and covenants
hereunder.
j. PUBLICITY. The Company and the Buyer shall have the right
to approve, before issuance any press releases or any other public
statements with respect to the transactions contemplated hereby;
provided, however, that the Company shall be entitled, without the
prior approval of the Buyer, to make any press release or other public
disclosure with respect to such transactions as is required by
applicable law and regulations (although the Buyer shall be consulted
by the Company in connection with any such press release or other
public disclosure prior to its release and shall be provided with a
copy thereof).
k. FURTHER ASSURANCES. Each party shall do and perform, or
cause to be done and performed, all such further acts and things, and
shall execute and deliver all such other agreements, certificates,
instruments and documents, as the other party may reasonably request in
order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated hereby.
l. TERMINATION. In the event that the Closing shall not have
occurred with respect to the Buyer on or before five (5) business days
from the date hereof due to the Company's or the Buyer's failure to
satisfy the conditions set forth in Sections 6 and 7 above (and the
nonbreaching party's failure to waive such unsatisfied condition(s)),
the nonbreaching party shall have the option to terminate this
Agreement with respect to such breaching party at the close of business
on such date without liability of any party to any other party;
provided, however, that if this Agreement is terminated pursuant to
this Section 9(l), the Company shall remain obligated to reimburse the
Buyer for the expenses described in Section 4(h) above.
m. FINDER. The Company acknowledges that it has engaged The
May Xxxxx Group, Inc. as a placement agent in connection with the sale
of the Series A Preferred Shares. The Company shall be responsible for
the payment of any placement agent fees (which includes cash and
warrants to purchase Common Stock) relating to or arising out of the
transactions contemplated hereby.
20
n. NO STRICT CONSTRUCTION. The language used in this Agreement
will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be
applied against any party.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
21
IN WITNESS WHEREOF, the Buyer and the Company have caused this
Securities Purchase Agreement to be duly executed as of the date first written
above.
CELERITY SYSTEMS, INC.
By:___________________________
Name: Xxxxxxx X. Van Meter
Title: President & Chief Executive Officer
BUYER
By: ___________________________
Name:
22
