AXS-ONE INC.
UNIT SUBSCRIPTION AGREEMENT
COMMON STOCK
AND WARRANTS
UNIT SUBSCRIPTION AGREEMENT dated as of June 17, 2005 (this "Agreement"), among
AXS-One Inc., a Delaware corporation (the "Company"), and the persons who
execute this agreement as investors (each an "Investor" and collectively the
"Investors").
Background: The Company desires to sell to the Investors, and the Investors
desire to purchase, an aggregate of 4,534,461 shares of common stock, $.01 par
value per share, of the Company (the "Shares") in Units (as defined below) with
3-year warrants, in substantially the form attached hereto as Exhibit 1,
exercisable to purchase an aggregate of (i) 453,450 shares of Common Stock at
$1.90 per share (the "Class C Warrants"), and (ii) 453,442 shares of Common
Stock for an aggregate price of $2.15 (the "Class D Warrants", and together with
the Class C Warrants, the "Warrants"). The proceeds of the sale thereof will be
used in the development and continuance of the business of the Company and each
of its Subsidiaries.
In consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, the parties agree as follows:
Certain Definitions:
"Action" has the meaning set forth in Section 2.10.
"Affiliate" means, as to any Person, any other Person that, directly or
indirectly through one or more intermediaries, controls or is controlled by or
is under common control with such Person. As used in this definition, "control"
(including, with its correlative meanings, "controlled by" and "under common
control with") shall mean possession, directly or indirectly, of power to direct
or cause the direction of management or policies (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise).
"Blue Sky Laws" has the meaning set forth in Section 2.7(b).
"Business Day" means any day other than Saturday, Sunday or other day
on which commercial banks in The City of New York are authorized or required by
law to remain closed.
"Certificate of Incorporation" has the meaning set forth in Section
2.2(a).
"Closing Date" has the meaning set forth in Section 1.2.
"Closing" has the meaning set forth in Section 1.2.
"Common Stock" means the Company's Common Stock, $.01 par value per
share, authorized as of the date hereof, and any stock of any class or classes
(however designated) hereafter authorized upon reclassification thereof, which,
if the Board of Directors declares a dividend or distribution, has the right to
participate in the distribution of earnings and assets of the Company after the
payment of dividends or other distributions on any shares of capital stock of
the Company entitled to a preference and in the voting for the election of
directors of the Company.
"Company" has the meaning set forth at the head of this Agreement and
any corporation or other entity which shall succeed to or assume, directly or
indirectly, the obligations of the Company hereunder. The term "corporation"
shall include an association, joint stock company, business trust, limited
liability company or other similar organization.
"Company Disclosure Letter" means the disclosure letter dated June 17,
2005 delivered to the Investors prior to the execution of this Agreement, which
letter is incorporated in this Agreement.
"Company IP" has the meaning set forth in Section 2.12(a).
"Convertible Security" means any (i) option to purchase or right to
subscribe for Common Stock, (ii) security by its terms convertible into or
exchangeable for Common Stock or (iii) option to purchase or right to subscribe
for such convertible or exchangeable securities.
"Contemplated Transactions" has the meaning set forth in Section
2.1(b).
"Exchange Act" has the meaning set forth in Section 2.7(b).
"Form 10-K Financial Statements" has the meaning set forth in Section
2.9(d).
"Governmental Body" has the meaning set forth in Section 2.7(b).
"Indemnified Party" has the meaning set forth in Section 5.2(b).
"Indemnifying Party" has the meaning set forth in Section 5.2(c).
"Initial Closing" has the meaning set forth in Section 1.2.
"Initial Closing Date" has the meaning set forth in Section 1.2.
"Investor Rights Agreement" has the meaning set forth in Section
1.3(a).
"Knowledge" shall mean, with respect to a particular fact or other
matter, the actual current knowledge, after reasonable investigation, of the
Chief Executive Officer or Chief Financial Officer of the Company.
"Legal Requirement" has the meaning set forth in Section 2.8.
"Losses" has the meaning set forth in Section 5.2(b).
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"Material Adverse Effect" has the meaning set forth in Section 2.1(a).
"Material Agreement" has the meaning set forth in Section 2.7.
"Notice" has the meaning set forth in Section 6.6.
"Person" means any individual, sole proprietorship, partnership,
corporation, limited liability company, business trust, unincorporated
association, joint stock corporation, trust, joint venture or other entity, any
university or similar institution, or any government or any agency or
instrumentality or political subdivision thereof.
"Purchased Shares" has the meaning set forth in Section 1.1(a).
"Purchased Warrants" has the meaning set forth in Section 1.1(a).
"Rule 144" means Rule 144 promulgated under the Securities Act or any
successor or substitute rule, law or provision.
"SEC" means the Securities and Exchange Commission.
"SEC Documents" has the meaning set forth in Section 2.9(a).
"Second Closing" has the meaning set forth in Section 1.2.
"Second Closing Date" has the meaning set forth in Section 1.2.
"Securities" has the meaning set forth in Section 1.1(a).
"Securities Act" has the meaning set forth in Section 2.5.
"Specified Investor" has the meaning set forth in Section 1.2.
"Subsidiary" means any significant subsidiary (as defined under Rule
1.02(w) of Regulation S-X promulgated by the SEC) of the Company.
"Transaction Documents" has the meaning set forth in Section 1.3(a).
"Underlying Shares" means the shares of Common Stock issued or from
time to time issuable upon exercise of the Warrants.
"Unit" means (i) 10,000 Shares, (ii) Class C Warrants to purchase 1,000
shares of Common Stock at $1.90 per share and (iii) Class D Warrants to purchase
1,000 shares of Common Stock at $2.15 per share.
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1. Purchase and Sale of Stock.
1.1. Sale and Issuance of Securities.
(a) The Company shall sell to the Investors
and the Investors shall purchase from the Company, 453.45
Units at a price per Unit equal to $14,886, or a total of (i)
4,534,461 Shares (the "Purchased Shares") and (ii) Warrants to
purchase an aggregate of 906,892 shares of Common Stock (the
"Purchased Warrants" and collectively with the Purchased
Shares, the "Securities"), for an aggregate purchase price of
$6,750,000.
(b) The number of Purchased Shares and
Purchased Warrants to be purchased by each Investor from the
Company is set forth on Schedule 1.1(b) hereto, subject to
acceptance, in whole or in part, by the Company.
1.2. Closings. The initial closing (the "Initial
Closing") of the purchase and sale of the Securities hereunder (with
the exception of the Securities purchased by Investors who are
affiliated with or are directors or executive officers of the Company
(the "Specified Investors")) shall take place within four Business Days
of the date of this Agreement or such later date that the Company's
American Stock Exchange Additional Listing Application with respect to
the Securities is approved (the "Initial Closing Date"). The closing
(the "Second Closing") of the purchase and sale of the Securities
hereunder purchased by the Specified Investors shall take place within
four Business Days of the date that the investment of the Specified
Investors is approved by a majority of the disinterested stockholders
of the Company (the "Second Closing Date"). The Initial Closing and the
Second Closing are each referred to herein as a "Closing" and the
Initial Closing Date and the Second Closing Date are each referred to
herein as a "Closing Date". The Company agrees to prepare and file with
the Securities and Exchange Commission a proxy statement with respect
to stockholder approval of the purchase of Securities by the Specified
Investors not later than thirty (30) days after the date of the Initial
Closing and to proceed promptly thereafter with a special meeting of
the stockholders for such purpose. Each Closing shall take place at the
offices of Xxxxxxx Xxxxxx, LLP, the Investors' counsel, in New York,
New York, or at such other location as is mutually acceptable to the
Investors and the Company, subject to fulfillment of the conditions to
such Closing set forth in the Agreement. At each Closing:
(a) each Investor purchasing Securities at
the Closing shall deliver to the Company or its designees by
wire transfer or such other method of payment as the Company
shall approve, an amount equal to the purchase price of the
Securities purchased by such Investor hereunder, as set forth
opposite such Investor's name on the signature pages hereof.
(b) the Company shall authorize its transfer
agent to arrange delivery to each Investor of one or more
stock certificates registered in the name of the Investor, or
in such nominee name(s) as designated by the Investor in
writing,
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representing the number of Shares as set forth opposite such
Investor's name on Schedule 1.1(b) hereto and purchased at
such Closing; and
(c) the Company shall issue and deliver to
each Investor purchasing Securities at such Closing: (i) Class
C Warrants, registered in the name of such Investor, pursuant
to which such Investor shall have the right to acquire the
number of Underlying Shares as set forth opposite such
Investor's name on Schedule 1.1(b) hereto on the terms set
forth therein; and (ii) Class D Warrants, registered in the
name of such Investor, pursuant to which such Investor shall
have the right to acquire the number of Underlying Shares as
set forth opposite such Investor's name on the Schedule 1.1(b)
hereto on the terms set forth therein.
1.3. Investors' Conditions to Closing. The obligation
of the Investors to complete the purchase of the Securities at the
applicable Closing is subject to fulfillment of the following
conditions:
(a) the Company shall have executed and
delivered to the Investors an Investor Rights Agreement, dated
the Initial Closing Date, in the form attached as Exhibit 2
with respect to the Purchased Shares and the Underlying Shares
(the "Investor Rights Agreement", and with the Agreement and
the Warrants, the "Transaction Documents");
(b) the Company shall deliver to the applicable
Investors an opinion of counsel, dated the applicable
Closing Date and reasonably satisfactory to counsel for the
Investors, with respect to the matters set forth on Exhibit 3;
(c) the representations and warranties of the
Company set forth in this Agreement shall be true and
correct in all material respects as of the date of this
Agreement and as of the applicable Closing Date as though
made on and as of such Closing Date (except to the extent
such representations and warranties speak as of an earlier
date, in which case such representations and warranties
shall be true and correct in all material respects as of
such earlier date), and the Company shall have performed in
all material respects all covenants and other obligations
required to be performed by it under this Agreement at or
prior to the applicable Closing Date, and the applicable
Investors shall have received a certificate signed on behalf
of the Company by an authorized officer of the Company to
such effect;
(d) the Company shall have delivered to the
applicable Investors a certified copy of its Certificate of
Incorporation and by-laws and a Certificate of Good Standing
from the Secretary of State of the State of Delaware; and
(e) the Company shall have executed and
delivered all other documents reasonably requested by counsel
for the Investors.
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1.4 Company's Conditions to Closing. The obligation
of the Company to complete the sale of the Securities at the Closing is
subject to fulfillment of the following conditions:
(a) the Investors shall execute and deliver
to the Company the Investor Rights Agreement; and
(b) the representations and warranties of
the Investors set forth in this Agreement shall be true and
correct as of the date of this Agreement and as of the
applicable Closing Date as though made on and as of such
Closing Date (except to the extent such representations and
warranties speak as of an earlier date), in which case such
representations and warranties shall be true and correct in
all material respects as of such earlier date), and the
Investors shall have performed in all material respects all
covenants and other obligations required to be performed by
them under this Agreement, if any, at or prior to the
applicable Closing Date.
2. Representations and Warranties of the Company. The Company
hereby represents and warrants to each of the Investors as follows:
2.1. Corporate Organization; Authority; Due
Authorization.
(a) The Company (i) is a corporation duly
organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, (ii) has the
corporate power and authority to own or lease its properties
as and in the places where its business is now conducted and
to carry on its business as now conducted, and (iii) is duly
qualified as a foreign corporation authorized to do business
in every jurisdiction where the failure to so qualify,
individually or in the aggregate, would have a material
adverse effect on the operations, assets, liabilities,
financial condition or business of the Company and its
Subsidiaries taken as a whole (a "Material Adverse Effect").
Set forth in Section 2.1(a) of the Company Disclosure Letter
is a complete and correct list of all Subsidiaries. Each
Subsidiary is duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation
and is qualified to do business as a foreign corporation in
each jurisdiction in which qualification is required, except
where failure to so qualify would not have, individually or in
the aggregate, a Material Adverse Effect.
(b) The Company (i) has the requisite corporate
power and authority to execute, deliver and perform this
Agreement and the other Transaction Documents to which it is
a party and to incur the obligations herein and therein and
(ii) has been authorized by all necessary corporate action
to execute, deliver and perform this Agreement and the other
Transaction Documents to which it is a party and to
consummate the transactions contemplated hereby and thereby
(the "Contemplated Transactions"). This Agreement is and
each of the other Transaction Documents will be on the
Closing Date a valid and binding obligation of the Company
enforceable in accordance with its terms except as limited
by applicable bankruptcy, reorganization, insolvency,
moratorium or similar laws affecting the
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enforcement of creditors' rights and the availability of
equitable remedies (regardless of whether such enforceability
is considered in a proceeding at law or equity).
2.2. Capitalization.
(a) As of June 17, 2005, the authorized capital
stock of the Company consisted of (i) 50,000,000 shares of
Common Stock, of which 29,498,616 shares of Common Stock
were outstanding and (ii) 5,000,000 shares of Preferred
Stock, $.01 par value, of which no shares were outstanding.
All outstanding shares of capital stock of the Company were
issued in compliance with all applicable Federal and state
securities laws, and the issuance of such shares was duly
authorized by all necessary corporate action on the part of
the Company. Except as contemplated by this Agreement or as
set forth in the SEC Documents or in Section 2.2(a) of the
Company Disclosure Letter, there are (A) no outstanding
subscriptions, warrants, options, conversion privileges or
other rights or agreements obligating the Company to
purchase or otherwise acquire or issue any shares of capital
stock of the Company (or shares reserved for such purpose),
(B) no preemptive rights contained in the Company's
Certificate of Incorporation, as amended (the "Certificate
of Incorporation"), the By-laws of the Company or contracts
to which the Company is a party or rights of first refusal
with respect to the issuance of additional shares of capital
stock of the Company (other than as set forth in the
Investor Rights Agreement), including without limitation the
Securities and the Underlying Shares, and (C) no commitments
or understandings (oral or written) of the Company to issue
any shares, warrants, options or other rights to acquire any
equity securities of the Company. To the Company's
Knowledge, except as set forth in the SEC Documents or in
Section 2.2(a) of the Company Disclosure Letter, none of the
shares of Common Stock are subject to any stockholders'
agreement, voting trust agreement or similar arrangement or
understanding. Except as set forth in the SEC Documents or
in Section 2.2(a) of the Company Disclosure Letter, the
Company has no outstanding bonds, debentures, notes or other
obligations the holders of which have the right to vote (or
which are convertible into or exercisable for securities
having the right to vote) with the stockholders of the
Company on any matter.
(b) With respect to each Subsidiary, except as set
forth in Section 2.2(b) of the Company Disclosure Letter, (i)
all the issued and outstanding shares of each Subsidiary's
capital stock have been duly authorized and validly issued,
are fully paid and nonassessable, have been issued in
compliance with applicable Federal and state securities laws,
were not issued in violation of or subject to any preemptive
rights or other rights to subscribe for or purchase
securities, and (ii) there are no outstanding options to
purchase, or any preemptive rights or other rights to
subscribe for or to purchase, any securities or obligations
convertible into, or any contracts or commitments to issue or
sell, shares of any Subsidiary's capital stock or any such
options, rights, convertible securities or obligations. Except
as disclosed in the SEC Documents or Section 2.2(b) of the
Company Disclosure Letter, the Company beneficially owns 100%
of the outstanding equity securities of each Subsidiary.
2.3. Validity of Securities. The issuance of the
Securities has been duly authorized by all necessary corporate action
on the part of the Company and, when issued to,
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delivered to, and paid for by the Investors in accordance with this
Agreement, the Purchased Shares will be validly issued, fully paid and
non-assessable.
2.4. Underlying Shares. The issuance of the
Underlying Shares upon exercise of the Purchased Warrants has been duly
authorized, and the Underlying Shares have been, and at all times prior
to such exercise will have been, duly reserved for issuance upon such
exercise and, when so issued, will be validly issued, fully paid and
non-assessable.
2.5. Private Offering. Neither the Company nor anyone
acting on its behalf has within the last 12 months issued, sold or
offered any security of the Company (including, without limitation, any
Common Stock or warrants of similar tenor to the Purchased Warrants) to
any Person under circumstances that would cause the issuance and sale
of the Securities, as contemplated by this Agreement, to be subject to
the registration requirements of Section 5 of the Securities Act of
1933, as amended (the "Securities Act"). The Company agrees that
neither the Company nor anyone acting on its behalf will offer the
Securities or any part thereof or any similar securities for issuance
or sale to, or solicit any offer to acquire any of the same from,
anyone so as to make the issuance and sale of the Securities subject to
the registration requirements of Section 5 of the Securities Act.
2.6. Brokers and Finders. Except as set forth in
Section 2.6 of the Company Disclosure Letter, the Company has not
retained any broker, investment banker or finder in connection with the
Contemplated Transactions.
2.7. No Conflict; Required Filings and Consents.
(a) The execution, delivery and performance
of this Agreement and the other Transaction Documents by the
Company do not, and the consummation by the Company of the
Contemplated Transactions will not, (i) conflict with or
violate the Certificate of Incorporation or the By-laws of the
Company or its Subsidiaries, (ii) conflict with or violate any
law, rule, regulation, order, judgment or decree applicable to
the Company or its Subsidiaries or by which any property or
asset of the Company or its Subsidiaries is bound or affected,
or (iii) result in any breach of or constitute a default (or
an event which with notice or lapse of time or both would
become a default) under, result in the loss of a material
benefit under, or give to others any right of purchase or
sale, or any right of termination, amendment, acceleration,
increased payments or cancellation of, or result in the
creation of a lien or other encumbrance on any property or
asset of the Company or of any of its Subsidiaries pursuant
to, any material note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company or any of its
Subsidiaries is a party or by which the Company or of any of
its Subsidiaries or any property or asset of the Company or of
any of its Subsidiaries is bound or affected (the "Material
Agreements"); except, in the case of clauses (ii) and (iii)
above, for any such conflicts, violations, breaches, defaults
or other occurrences that would not prevent or delay
consummation of any of the Contemplated Transactions in any
material respect or otherwise prevent the
8
Company from performing its obligations under this Agreement
or any of the other Transaction Documents in any material
respect, and would not, individually or in the aggregate,
have a Material Adverse Effect.
(b) The execution and delivery of this Agreement
and the other Transaction Documents by the Company do not,
and the performance of this Agreement and the other
Transaction Documents and the consummation by the Company of
the Contemplated Transactions will not, require, on the part
or in respect of the Company, any consent, approval,
authorization or permit of, or filing with or notification
to, any Governmental Body (as hereinafter defined) except
for the filing of a Form D with the SEC and applicable
requirements, if any, of the Securities Exchange Act of
1934, as amended (the "Exchange Act") or any state
securities or "blue sky" laws (collectively, "Blue Sky
Laws"), and any approval required by applicable rules of the
markets in which the Company's securities are traded. For
purposes of this Agreement, "Governmental Body" shall mean
any: (i) nation, state, commonwealth, province, territory,
county, municipality, district or other jurisdiction of any
nature; (ii) federal, state, local, municipal, foreign or
other government; or (iii) governmental or
quasi-governmental authority of any nature (including any
governmental division, department, agency, commission,
instrumentality, official, organization, unit, body or
entity and any court or other tribunal).
2.8. Compliance. Except as set forth in the SEC
Documents or in Section 2.8 of the Company Disclosure Letter, neither
the Company nor any Subsidiary is in conflict with, or in default or
violation of (i) any law, rule, regulation, order, judgment or decree
applicable to the Company or such Subsidiary or by which any property
or asset of the Company or such Subsidiary is bound or affected ("Legal
Requirement"), or (ii) any Material Agreement, in each case except for
any such conflicts, defaults or violations that would not, individually
or in the aggregate, have a Material Adverse Effect. Neither the
Company nor any Subsidiary has received any written notice or other
communication from any Governmental Body regarding any actual or
possible violation of, or failure to comply with, any Legal
Requirement, except any such violations or failures that would not,
individually or in the aggregate, have a Material Adverse Effect.
2.9. SEC Documents; Financial Statements.
(a) The information contained in the following
documents, did not, as of the date of the applicable document,
include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances in which they were made, not misleading, as of
their respective filing dates or, if amended, as so amended
(the following documents, collectively, the "SEC Documents"),
provided that the representation in this sentence shall not
apply to any misstatement or omission in any SEC Document
filed prior to the date of this Agreement which was superseded
by a subsequent SEC Document filed prior to the date of this
Agreement: (i) the Company's Annual Report on Form 10-K for
the year ended
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December 31, 2004; (ii) the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 2005; (iii) the
Company's definitive Proxy Statement with respect to its
2005 Annual Meeting of Stockholders, filed with the
Commission on April 25, 2005; and (iv) the Company's Current
Reports on Form 8-K filed January 5, 2005 and May 27, 2005.
(b) In addition, as of the date of this
Agreement, the Company Disclosure Letter, when read together
with the SEC Documents and the information, qualifications and
exceptions contained in this Agreement, does not include any
untrue statement of a material fact.
(c) The Company has filed all forms, reports
and documents required to be filed by it with the SEC for the
12 months preceding the date of this Agreement, including
without limitation the SEC Documents. As of their respective
dates, the SEC Documents filed prior to the date hereof
complied as to form in all material respects with the
applicable requirements of the Securities Act, the Exchange
Act, and the rules and regulations thereunder.
(d) The Company's Annual Report on Form 10-K
for the year ended December 31, 2004, includes consolidated
balance sheets as of December 31, 2003 and 2004 and
consolidated statements of income for the one year periods
then ended (collectively, the "Form 10-K Financial
Statements").
(e) The Form 10-K Financial Statements
(including the related notes and schedules thereto) fairly
present in all material respects the consolidated financial
position, the results of operations, retained earnings or cash
flows, as the case may be, of the Company for the periods set
forth therein (subject, in the case of unaudited statements,
to normal year-end audit adjustments that would not be
material in amount or effect), in each case in accordance with
generally accepted accounting principles consistently applied
during the periods involved, except as may be noted therein.
2.10. Litigation. Except as set forth in the SEC
Documents or in Section 2.10 of the Company Disclosure Letter, there
are no claims, actions, suits, investigations, inquiries or proceedings
(each, an "Action") pending against the Company or any of its
Subsidiaries or, to the Knowledge of the Company, threatened against
the Company or any of its Subsidiaries, at law or in equity, or before
or by any court, tribunal, arbitrator, mediator or any federal or state
commission, board, bureau, agency or instrumentality, that,
individually or in the aggregate, would reasonably be expected to have
a Material Adverse Effect. Except as set forth in the SEC Documents or
in Section 2.10 of the Company Disclosure Letter, neither the Company
nor any of its Subsidiaries is a party to or subject to the provisions
of any order, writ, injunction, judgment or decree of any court or
government agency or instrumentality that, individually or in the
aggregate, would reasonably be expected to have a Material Adverse
Effect.
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2.11. Absence of Certain Changes. Except as
specifically contemplated by this Agreement or as set forth in Section
2.11 of the Company Disclosure Letter or in the SEC Documents, since
December 31, 2004, there has not been (a) any Material Adverse Effect;
(b) any dividends or other distribution of assets to stockholders of
the Company; (c) any acquisition (by merger, consolidation, acquisition
of stock and/or assets or otherwise) of any Person by the Company; or
(d) any transactions, other than in the ordinary course of business,
consistent in all material respects with past practices, with any of
its officers, directors or principal stockholders or any of their
respective Affiliates.
2.12. Intellectual Property.
(a) The Company and its Subsidiaries own, or
have the right to use, sell or license all intellectual
property reasonably required for the conduct of their
respective businesses as presently conducted (collectively,
the "Company IP") except for any failure to own or have the
right to use, sell or license the Company IP that would not
have a Material Adverse Effect.
(b) The execution, delivery and performance
of this Agreement and the consummation of the transactions
contemplated hereby will not constitute a breach of any
instrument or agreement governing any Company IP, will not
cause the forfeiture or termination or give rise to a right of
forfeiture or termination of any Company IP or impair the
right of Company and its Subsidiaries to use, sell or license
any Company IP, except for the occurrence of any such breach,
forfeiture, termination or impairment that would not,
individually or in the aggregate, result in a Material Adverse
Effect.
(c) (i) None of the manufacture, marketing,
license, sale and use of any product currently licensed or
sold by the Company or any of its Subsidiaries violates any
license or agreement between the Company or any of its
Subsidiaries and any third party or, to the Knowledge of the
Company, infringes any intellectual property right of any
other party; and (ii) there is no pending or, to the Knowledge
of the Company, threatened claim or litigation contesting the
validity, ownership or right to use, sell, license or dispose
of any Company IP; except, with respect to clauses (i) and
(ii), for any violations, infringements, claims or litigations
that would not, individually or in the aggregate, have a
Material Adverse Effect.
2.13 No Adverse Actions. Except as set forth in the
SEC Documents or in Section 2.13 of the Company Disclosure Letter,
there is no existing, pending or, to the Knowledge of the Company,
threatened termination, cancellation, limitation, modification or
change in the business relationship of the Company or any of its
Subsidiaries, with any supplier, customer or other Person except such
as would not reasonably be expected, individually or in the aggregate,
to have a Material Adverse Effect.
2.14. Registration Rights. Except as set forth in the
Investor Rights Agreement, in the SEC Documents or in Section 2.14 of
the Company Disclosure Letter, the Company is not under any obligation
to register under the Securities Act any of its currently
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outstanding securities or any securities issuable upon exercise or
conversion of its currently outstanding securities nor is the Company
obligated to register or qualify any such securities under any Blue
Sky Laws.
2.15. Corporate Documents. The Company's Certificate
of Incorporation and By-laws, each as amended to date, which have been
requested and previously provided to the Investors are true, correct
and complete and contain all amendments thereto.
2.16. Disclosure. On or before 5:30 p.m., New York
City Time, on the fourth Business Day after date of this Agreement, the
Company shall file with the SEC a Current Report on Form 8-K describing
the material terms of the Contemplated Transactions, and attaching as
exhibits to such Form 8-K copies of this Agreement and the other
Transaction Documents. Except for information that may be provided to
the Investors pursuant to this Agreement, the Company shall not, and
shall use commercially reasonable efforts to cause each of its
officers, directors, employees and agents not to, provide any Investor
(other than a Specified Investor) with any material nonpublic
information regarding the Company from and after the filing of such
Form 8-K without the express written consent of such Investor.
2.17. Use of Proceeds. The net proceeds received by
the Company from the sale of the Securities shall be used by the
Company for working capital and general corporate purposes, including
without limitation to support the operations of each of the
Subsidiaries.
2.18. Securities Compliance. To the Company's
knowledge, it is in material compliance with all requirements currently
applicable to it under the Xxxxxxxx-Xxxxx Act of 2002 and the
Securities Exchange Act of 1934, as amended.
3. Representations and Warranties of the Investors. Each
Investor represents and warrants to the Company as follows:
3.1. Authorization. If an entity, such Investor (i)
is duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization, and (ii) has the power and
authority to own and hold the Units. Such Investor (i) has full power
and authority to execute, deliver and perform this Agreement and the
other Transaction Documents to which it is a party and to incur the
obligations herein and therein and (ii) if applicable has been
authorized by all necessary corporate or equivalent action to execute,
deliver and perform this Agreement and the other Transaction Documents
and to consummate the Contemplated Transactions. This Agreement is and
each of the other Transaction Documents will be on the applicable
Closing Date, a valid and binding obligation of such Investor
enforceable in accordance with its terms, except as limited by
applicable bankruptcy, reorganization, insolvency, moratorium or
similar laws affecting the enforcement of creditors' rights and the
availability of equitable remedies (regardless of whether such
enforceability is considered in a proceeding at law or equity).
12
3.2. Brokers and Finders. Such Investor has not
retained any investment banker, broker or finder in connection with the
Contemplated Transactions.
3.3 No Governmental Review. Such Investor understands
that no United States Federal or state agency or any other Governmental
Body has passed on or made any recommendation or endorsement of the
Securities or the fairness or suitability of the investment in the
Securities nor has any agency or other Governmental Body passed upon or
endorsed the merits of the offering of the Securities.
3.4. No Conflict; Required Filings and Consents.
(a) The execution, delivery and performance of
this Agreement and the other Transaction Documents by each
Investor do not, and the consummation by such Investor of the
Contemplated Transactions will not, (i) if such Investor is
an entity, conflict with or violate the Certificate of
Incorporation or the By-laws (or equivalent or comparable
documents) of such Investor, (ii) conflict with or violate
any law, rule, regulation, order, judgment or decree
applicable to such Investor or by which any property or asset
of such Investor is bound or affected, or (iii) result in any
breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default)
under, result in the loss of a material benefit under, or
give to others any right of purchase or sale, or any right of
termination, amendment, acceleration, increased payments or
cancellation of, or result in the creation of a lien or other
encumbrance on any property or asset of such Investor
pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other
instrument or obligation to which such Investor is a party or
by which such Investor or any property or asset of such
Investor is bound or affected; except, for any such
conflicts, violations, breaches, defaults or other
occurrences that would not prevent or delay consummation of
any of the Contemplated Transactions in any material respect
or otherwise prevent such Investor from performing its
obligations under this Agreement or any of the other
Transaction Documents in any material respect.
(b) The execution and delivery of this Agreement
and the other Transaction Documents by each Investor do not,
and the performance of this Agreement and the other
Transaction Documents and the consummation by such Investor
of the Contemplated Transactions will not, require, on the
part or in respect of such Investor, any consent, approval,
authorization or permit of, or filing with or notification
to, any Governmental Body.
4. Securities Laws.
4.1. Securities Laws Representations and Covenants of
Investors.
(a) Each Investor represents and warrants to the
Company that: this Agreement is made by the Company with such
Investor in reliance upon such
13
Investor's representation to the Company, which by such
Investor's execution of this Agreement such Investor hereby
confirms, that the Securities to be received by such
Investor will be acquired for investment for such Investor's
own account, not as a nominee or agent, and not with a view
to the resale or distribution of any part thereof such that
such Investors would constitute an "underwriter" under the
Securities Act; provided that this representation and
warranty shall not (i) limit the Investor's right to sell
the Underlying Shares pursuant to the Investor Rights
Agreement or in compliance with an exemption from
registration under the Securities Act and in compliance with
all applicable Federal Securities laws and Blue Sky Laws or
(ii) the Investor's right to indemnification under this
Agreement, if any, or the Investor Rights Agreement, if any.
(b) Each Investor understands and acknowledges
that (i) the offering of the Securities pursuant to this
Agreement will not be registered under the Securities Act or
qualified under any Blue Sky Laws on the grounds that the
offering and sale of the Securities are exempt from
registration and qualification, respectively, under the
Securities Act and the Blue Sky Laws, (ii) nothing in this
Agreement or any of the other Transaction Documents or in any
other materials presented by or on behalf of the Company to
such Investor in connection with the purchase of Securities
constitutes legal, tax or investment advice, (iii) such
Investor has consulted such legal, tax and investment
advisors as it, in its sole discretion, has deemed necessary
or appropriate in connection with its purchase of Securities,
(iv) the Company has not undertaken to register the
Securities pursuant to the Securities Act and, except as
provided in the Investor Rights Agreement, will have no
obligation to effect on behalf of any Investor any
registration or qualification under the Securities Act or
under any Blue Sky Laws or to assist any Investor in
complying with any exemption from registration or
qualification under the Securities Act or under any Blue Sky
Laws and (v) if the Securities have not been registered under
the Securities Act and Rule 144 is not applicable, any resale
of the 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 Securities
Act) may require compliance with some other exemption under
the Securities Act or the rules and regulations of the SEC
thereunder.
(c) Each Investor covenants that, unless the
Purchased Shares, the Purchased Warrants, the Underlying
Shares or any other shares of capital stock of the Company
received in respect of the foregoing have been registered
pursuant to the Investor Rights Agreement being entered into
among the Company and the Investors, such Investor will not
dispose of such securities unless and until such Investor
shall have notified the Company of the proposed disposition
and shall have furnished the Company with an opinion of
counsel reasonably satisfactory in form and substance to the
Company to the effect that (x) such disposition will not
require registration under the Securities Act and (y)
appropriate action necessary for compliance with the
Securities Act, all applicable Blue Sky Laws and any other
applicable state, local or foreign law has been taken;
provided, however, that an Investor may dispose of such
securities without providing the opinion referred to
14
above if the sale of the securities is made in reliance on,
and in accordance with the terms of Rule 144.
(d) Each Investor represents to the Company
that: (i) such Investor is able to fend for itself in the
Contemplated Transactions; (ii) such Investor has such
knowledge and experience in financial and business matters as
to be capable of evaluating the merits and risks of such
Investor's prospective investment in the Securities and has
so evaluated the merits and risks of such investment; (iii)
such Investor has the ability to bear the economic risks of
such Investor's prospective investment and can afford the
complete loss of such investment; (iv) such Investor has been
furnished with and has reviewed the SEC Documents and the
Company Disclosure Letter; (v) such Investor has been
furnished with and has had access to such information as is
in the SEC Documents and in the Company Disclosure Letter,
together with the opportunity to obtain such additional
information as it requested to verify the accuracy of the
information contained therein or otherwise supplied to such
Investor so that such Investor can make an informed
investment decision with respect to an investment in the
Securities; (vi) such Investor has had access to officers of
the Company and an opportunity to ask questions of and
receive answers from such officers and has had all questions
that have been asked by such Investor satisfactorily answered
by the Company; and (vii) such Investor is not subscribing to
purchase the Securities as a result of or subsequent to any
advertisement, article, notice or other communication
published in any newspaper, magazine or similar media or
broadcast over television or radio, or presented at any
seminar or meeting, or any solicitation of a subscription by
a Person not previously known to such Investor in connection
with investments in securities generally.
(e) Each Investor represents to the Company
that: (i) such Investor (A) was qualified at the time such
Investor was offered the securities, (B) qualifies on the
date hereof, and (C) will qualify on the Closing Date, as an
"accredited investor" as such term is defined under Rule 501
promulgated under the Securities Act. Any Investor that is a
corporation, a partnership, a limited liability company, a
trust or other business entity further represents to the
Company that it has not been organized for the purpose of
purchasing the Securities.
(f) By acceptance hereof, each Investor
acknowledges that the Purchased Shares, the Purchased
Warrants, the Underlying Shares and any shares of capital
stock of the Company received in respect of the foregoing
held by it may not be sold by such Investor without
registration under the Securities Act or an exemption
therefrom, and therefore such Investor may be required to
hold such securities for an indeterminate period.
(g) In connection with any transfer of
Securities made by each Investor in compliance with the
provisions of this Agreement, such Investor will cause each
proposed transferee of such Securities to agree and take hold
of such Securities subject to the provisions of this
Agreement.
15
4.2. Legends. All certificates for the Purchased
Shares, Purchased Warrants and the Underlying Shares, and each
certificate representing any shares of capital stock of the Company
received in respect of the foregoing, whether by reason of a stock
split or share reclassification thereof, a stock dividend thereon or
otherwise and each certificate for any such securities issued to
subsequent transferees of any such certificate (unless otherwise
permitted herein) shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED ("THE SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH
APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS."
4.3. Certain Trading Activities. Each Investor agrees
that since the execution of a confidentiality agreement with respect to
the transactions contemplated by this Agreement (i) except for the
purchase of the Securities, during the period ending on the date that
the Company files with the SEC a Current Report on Form 8-K describing
the material terms of the Contemplated Transactions, and attaching as
exhibits to such Form 8-K copies of the Transaction Documents, there
have been and will be no trades in the Common Stock entered into in the
name or on behalf of, or in conjunction with, such Investor and (ii)
during the period ending on the earlier of 30 days after the Closing
Date or the filing of the Registration Statement (as defined in the
Investor Rights Agreement), such Investor has not engaged and shall not
engage in any short sales of securities of the Company.
5. Additional Covenants of the Company.
5.1. Reports, Information, Shares.
(a) The Company shall cooperate with each
Investor in supplying such information as may be reasonably
requested by such Investor to complete and file any
information reporting forms presently or hereafter required
by the SEC as a condition to the availability of an exemption
pursuant to Rule 144 for the sale of any of the Purchased
Shares, the Purchased Warrants, the Underlying Shares and
shares of capital stock of the Company received in respect of
the foregoing.
(b) The Company shall keep reserved for issuance
a sufficient number of authorized but unissued shares of
Common Stock (or other securities into which the Purchased
Warrants are then exercisable) so that the Purchased Warrants
16
may be converted or exercised to purchase Common Stock (or
such other securities) at any time.
5.2. Expenses; Indemnification.
(a) The Company agrees to pay on the Closing
Date and save the Investors harmless against liability for
(i) the payment of any stamp or similar taxes (including
interest and penalties, if any) that may be determined to be
payable in respect of the execution and delivery of this
Agreement, and the issue and sale of any Securities and the
Underlying Shares, (ii) the expense of preparing and issuing
the certificates for the Securities and the Underlying
Shares, and (iii) the cost of delivering the Securities and
the Underlying Shares of each Investor to such Investor's
address, insured in accordance with customary practice. Each
Investor shall be responsible for its out-of-pocket expenses
arising in connection with the Contemplated Transactions,
except that the Company shall pay fees and disbursements of
counsel to the Investors as set forth in Section 6.9.
(b) The Company hereby agrees and acknowledges
that the Investors have been induced to enter into this
Agreement and to purchase the Securities hereunder, in part,
based upon the representations, warranties, agreements and
covenants of the Company contained herein. The Company hereby
agrees to pay, indemnify and hold harmless the Investors and
any director, officer, partner, member, employee or other
affiliate of any Investor (each, an "Indemnified Party")
against all claims, losses and damages resulting from any and
all legal or administrative proceedings, including without
limitation, reasonable attorneys' fees and expenses incurred
in connection therewith (but in no event for more than one
law firm for all the Investors)(collectively, "Losses"),
resulting from a breach by the Company of any representation
or warranty of the Company contained herein or the failure of
the Company to perform any agreement or covenant made herein;
provided, however, that the Company's liability under this
Section 5.2(b) shall be limited to the aggregate purchase
price of the Securities.
(c) As soon as reasonably practicable after
receipt by any Indemnified Party of notice of any Losses in
respect of which the Company (the "Indemnifying Party") may
be required to provide indemnification thereof under this
Section 5.2, the Indemnified Party shall give written notice
thereof to the Indemnifying Party. The Indemnified Party may,
at its option, claim indemnity under this Section 5.2 as soon
as a claim has been threatened by a third party, regardless
of whether any actual Losses have been suffered, so long as
counsel for such Indemnified Party shall in good faith
determine that such claim is not frivolous and that the
Indemnifying Party may be required to provide indemnification
therefore as a result thereof and shall give notice of such
determination to the Indemnifying Party. The Indemnified
Party shall permit the Indemnifying Party at the Indemnifying
Party's option and expense, to assume the defense of any such
claim by counsel mutually and reasonably satisfactory to the
Indemnifying Party and a majority in interest of the
Indemnified Parties and to settle or otherwise dispose of
17
the same; provided, however, that each Indemnified Party may
at all times participate in such defense at such Indemnified
Party's expense; and provided further, however that the
Indemnifying Party shall not, in defense of any such claim,
except with the prior written consent of the Indemnified
Party, consent to the entry of any judgment or settlement
that does not include as an unconditional term thereof the
giving by the claimant or plaintiff in question to such
Indemnified Party of a release of all liabilities in respect
of such claim. If the Indemnifying Party does not promptly
assume the defense of such claim or if any such counsel is
unable to represent one or more of the Indemnified Parties
due to a conflict of interest, then an Indemnified Party may
assume, to the extent separable, the defense of such portion
of the claim as to which the conflict arose (and, if not
separable, the entire claim) and be entitled to
indemnification and prompt reimbursement from the
Indemnifying Party for such Indemnified Party's reasonable
costs and expenses incurred in connection therewith,
including without limitation, reasonable attorneys' fees and
expenses (not to exceed the cost of more than one law firm
for all Investors). Such fees and expenses shall be
reimbursed to the Indemnified Parties as soon as practicable
after submission of invoices to the Indemnifying Party.
5.3. Issuance of Certain Securities. Without the
prior written consent of the Investors, during the one year period
following the Closing Date, the Company shall not issue for cash any
(a) Convertible Securities or similar securities that contain a
provision that provides for any change or determination of the
applicable conversion price, conversion rate, or exercise price (or a
similar provision which might have a similar effect) based on any
determination of the market price of the Company's Common Stock, (b)
any preferred stock, debt instruments or similar securities or
investment instruments providing for (i) preferences or other payments
substantially in excess of the original investment by purchasers
thereof or (ii) dividends, interest or similar payments other than
dividends, interest or similar payments computed on an annual basis and
not in excess, directly or indirectly, of the lesser of a rate equal to
(A) twice the interest rate on 10 year US Treasury Notes and (B) 20%.
5.4. Right of First Refusal. In addition, subject to
the exceptions described below, the Company will not conduct any equity
financing (including debt with an equity component) ("Future
Offerings") during the period beginning on the Closing Date and ending
one (1) year after the date of this Agreement unless it shall have
first delivered to each Investor other than the Specified Investors, at
least ten (10) business days prior to the closing of such Future
Offering, written notice describing the proposed Future Offering,
including the material terms and conditions thereof, and providing each
Investor an option during the ten (10) day period following delivery of
such notice to purchase its pro rata share (based on the ratio that the
aggregate amount of Securities purchased by it hereunder bears to the
aggregate amount of Securities purchased hereunder by all such
Investors) of the securities being offered in the Future Offering on
the same terms as contemplated by such Future Offering (the limitations
referred to in this sentence and the preceding sentence are
collectively referred to as the "Capital Raising Limitations"). Upon
receipt of an affirmative response from any such Investor(s) the
Company and such Investors shall proceed in good faith with the
preparation of definitive transaction agreements. In the event
18
the material terms and conditions of a proposed Future Offering are
materially amended after delivery of the notice to the Investors
concerning the proposed Future Offering, the Company shall deliver a
new notice to each such Investor describing the amended terms and
conditions of the proposed Future Offering and each such Investor
thereafter shall have an option during the five (5) day period
following delivery of such new notice to purchase its pro rata share
of the securities being offered on the same terms as contemplated by
such proposed Future Offering, as amended. The foregoing sentence
shall apply to successive material amendments to the material terms
and conditions of any proposed Future Offering. The Capital Raising
Limitations shall not apply to any transaction involving issuances of
securities as consideration for a merger, consolidation or purchase of
assets, or in connection with any strategic partnership or joint
venture (the primary purpose of which is not to raise equity capital),
or in connection with the disposition or acquisition of a business,
product or license by the Company, or any bank or lease financing
transaction. The Capital Raising Limitations also shall not apply to
the issuance of securities upon exercise or conversion of the
Company's options, warrants or other convertible securities
outstanding as of the date hereof or to the grant of additional
options or warrants, or the issuance of additional securities, under
any Company stock option or restricted stock plan approved by the
shareholders of the Company. Notwithstanding anything in this Section
5.4 to the contrary, in the event the Company's Board of Directors
decides, in good faith, to enter into a transaction or relationship in
which the Company issues shares of Common Stock or other securities of
the Company to a person or any entity which is, itself or through its
subsidiaries, an operating company in a business synergistic with the
business of the Company, the Company shall be permitted to do so
without any Capital Raising Limitations.
6. Miscellaneous.
6.1. Entire Agreement; Successors and Assigns. This
Agreement and the other Transaction Documents constitute the entire
contract between the parties relative to the subject matter hereof and
thereof, and no party shall be liable or bound to the other in any
manner by any warranties or representations (express or implied) or
agreements or covenants except as specifically set forth herein or
therein. This Agreement and the other Transaction Documents supersede
any previous agreement among the parties with respect to the subject
matter hereof and thereof. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective
executors, administrators, heirs, successors and assigns of the
parties. Nothing in this Agreement, expressed or implied, is intended
to confer upon any party, other than the parties hereto, any rights,
remedies, obligations or liabilities under or by reason of this
Agreement.
6.2. Survival of Representations and Warranties.
Notwithstanding any right of the Investors fully to investigate the
affairs of the Company and notwithstanding any knowledge of facts
determined or determinable by any Investor pursuant to such right of
investigation, each Investor has the right to rely fully upon the
representations, warranties, covenants and agreements of the Company
contained in this Agreement or in any documents delivered pursuant to
this Agreement. All such representations and warranties of the Company
contained in this Agreement shall survive the execution and delivery of
this Agreement and the Closing hereunder and shall continue in full
force and effect until the
19
earlier of (a) the date that is one year after the applicable Closing
and (b) the sale of all of the Shares pursuant to Rule 144 under the
Securities Act or an effective registration statement under the
Securities Act. All representations and warranties of the Investors
contained in this Agreement shall survive the execution and delivery
of this Agreement and the Closing hereunder. The covenants of the
Investors (to the extent set forth in Section 4.1(c) and (g) and 4.3)
and the Company set forth in this Agreement shall survive the
applicable Closing.
6.3. Governing Law; Jurisdiction. This Agreement
shall be governed by and construed in accordance with the laws of the
State of New York without regard to principles of conflicts of law.
Each party hereby irrevocably consents and submits to the jurisdiction
of any New York State or United States Federal Court sitting in the
State of New York, County of New York, over any action or proceeding
arising out of or relating to this Agreement and irrevocably consents
to the service of any and all process in any such action or proceeding
in the manner for the giving of Notices at its address specified in
Section 6.6. Each party further waives any objection to venue in the
State of New York, County of New York and any objection to an action or
proceeding in such state and county on the basis of forum non
conveniens. Each party also waives any right to trial by jury.
6.4. Counterparts. This Agreement may be executed
(including by facsimile transmission) with counterpart signature pages
or in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
6.5. Headings. The headings of the sections of this
Agreement are for convenience and shall not by themselves determine the
interpretation of this Agreement.
6.6. Notices. Any notice or other communication
required or permitted to be given hereunder (each a "Notice") shall be
given in writing and shall be made by personal delivery or sent by
courier or certified or registered first-class mail (postage prepaid),
addressed to a party at its address shown below or at such other
address as such party may designate by three days advance Notice to the
other parties.
Any Notice to any of the Investors shall be sent to the addresses for
such Investor set forth on the signature pages hereof, with a copy to:
Xxxxxxx Xxxxxx, LLP
000 Xxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxx Xxxxxx, Esq.
Any Notice to the Company shall be sent to:
AXS-One Inc.
000 Xxxxx 00 Xxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
20
Attention: Chief Financial Officer
with a copy to:
Xxxxxx and Xxxx LLP
000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx, Esq.
Each Notice shall be deemed given and effective upon receipt (or
refusal of receipt).
6.7. Rights of Transferees. Any and all rights and
obligations of each of the Investors herein incident to the ownership
of Securities or the Underlying Shares shall pass successively to all
subsequent transferees of such securities until extinguished pursuant
to the terms hereof; provided, however, that no Investor may transfer
or assign its rights under this Agreement (other than to an Affiliate)
between the date of this Agreement and the applicable Closing Date.
6.8. Severability. Whenever possible, each provision
of this Agreement shall be interpreted in such a manner as to be
effective and valid under applicable law, but if any provision of this
Agreement shall be deemed prohibited or invalid under such applicable
law, such provision shall be ineffective to the extent of such
prohibition or invalidity, and such prohibition or invalidity shall not
invalidate the remainder of such provision or any other provision of
this Agreement.
6.9. Fees and Expenses
(a) Subject to Section 6.9(b), irrespective of
whether any Closing is effected, the Company shall pay all costs and
expenses that it incurs with respect to the negotiation, execution,
delivery and performance of this Agreement.
(b) Each party shall be responsible for all
costs and expenses incurred by such party in connection with the
negotiation, execution, delivery and performance of this Agreement
including, but not limited to, legal fees and expenses, except that the
Company shall pay at the Initial Closing an aggregate of up to $30,000
for the legal fees and expenses of Xxxxxxx Xxxxxx, LLP (the "Legal
Fee"), as counsel to the Investors.
(c) If any action at law or in equity is
necessary to enforce or interpret any of the terms of this Agreement,
the prevailing party shall be entitled to reasonable attorney's fees,
costs and necessary disbursements in addition to any other relief to
which such party may be entitled.
6.10. Amendments and Waivers. Unless a particular
provision or section of this Agreement requires otherwise explicitly in
a particular instance, any provision of this Agreement may be amended
and the observance of any provision of this Agreement may be waived
(either generally or in a particular instance and either retroactively
or prospectively),
21
only with the written consent of the Company and the holders of a
majority of the Purchased Shares (not including for this purpose any
Purchased Shares which have been sold to the public pursuant to a
registration statement under the Securities Act or an exemption there
from). Any amendment or waiver effected in accordance with this
Section 6.10 shall be binding upon each Investor, each holder of any
Securities at the time outstanding (including without limitation
securities into which any such Securities are convertible or
exercisable), each future holder thereof, and the Company.
6.11. Company Disclosure Letter. Information
disclosed in any section of the Company Disclosure Letter shall be
deemed to be disclosed with respect to the corresponding numbered
section of this Agreement, as well as to such other sections of this
Agreement to which such disclosure shall reasonably pertain to in light
of the form and substance of the disclosure made.
6.12. Construction. Words (including capitalized
terms defined herein) in the singular shall be held to include the
plural and vice versa as the context requires. The words "herein,"
"hereinafter," "hereunder" and words of similar import used in this
Agreement shall, unless otherwise stated, refer to this Agreement as a
whole and not to any particular provision of this Agreement. All
references to "$" in this Agreement and the other agreements
contemplated hereby shall refer to United States dollars (unless
otherwise specified expressly). Any reference to any gender includes
the other genders.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
22
SIGNATURE PAGE
TO
AXS-ONE INC.
UNIT SUBSCRIPTION AGREEMENT
IF the INVESTOR is a PARTNERSHIP, CORPORATION, LIMITED LIABILITY
COMPANY, TRUST or OTHER ENTITY, please complete the following:
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of
the date first above written
Amount of Subscription
$3,000,000
Number of Units to be Purchased:
201.5316, including
2,418,379 Purchased Shares and related
Purchased Warrants
RIT Capital Partners PLC
Print Full Legal Name of Partnership,
Company, Limited Liability Company, Trust
or Other Entity
By: /s/ X. X. Xxxxx
---------------
(Authorized Signatory)
Name: X. X. Xxxxx
Title:
Address and Fax Number:
00 Xx. Xxxxx'x Xxxxx
Xxxxxx XXXX 0XX
Taxpayer Identification Number:
Date and State of Incorporation or Organization:
Date on which Taxable Year Ends:
E-mail Address: ________________________
Accepted and Agreed as of the date first
above written:
AXS-ONE INC.
By: /s/ Xxxxxx Xxxxx
-----------------
Name: Xxxxxx Xxxxx
Title: Chief Financial Officer
Dated: June 17, 2005
SIGNATURE PAGE
TO
AXS-ONE INC.
UNIT SUBSCRIPTION AGREEMENT
IF the INVESTOR is a PARTNERSHIP, CORPORATION, LIMITED LIABILITY
COMPANY, TRUST or OTHER ENTITY, please complete the following:
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of
the date first above written
Amount of Subscription
$1,000,000
Number of Units to be Purchased:
67.177, including
806,126 Purchased Shares and related
Purchased Warrants
Rathbone Trusters Jersey Limited and
Novatrust Limited as Co-Trustees of the Sirius Trust
------------------------------------------------------
Print Full Legal Name of Partnership,
Company, Limited Liability Company, Trust or Other
Entity
By: /s/ Xxxxxx Xxxxxx
-----------------
(Authorized Signatory)
Name: Xxxxxx Xxxxxx
Title: Director-Corporate Co-Trustee
Address and Fax Number:
Oak Walk, St. Xxxxx
Jersey JE3 7EF, Channel Islands
Taxpayer Identification Number:
Date and State of Incorporation or Organization:
Date on which Taxable Year Ends:
E-mail Address: ________________________
Accepted and Agreed as of the date first
above written:
AXS-ONE INC.
By: /s/ Xxxxxx Xxxxx
-----------------
Name: Xxxxxx Xxxxx
Title: Chief Financial Officer
Dated: June 17, 2005
SIGNATURE PAGE
TO
AXS-ONE INC.
UNIT SUBSCRIPTION AGREEMENT
IF the INVESTOR is a PARTNERSHIP, CORPORATION, LIMITED LIABILITY
COMPANY, TRUST or OTHER ENTITY, please complete the following:
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of
the date first above written
Amount of Subscription
$750,000
Number of Units to be Purchased:
50.3829, including
604,595 Purchased Shares and related
Purchased Warrants
Emancipation Capital Master, Ltd.
----------------------------------------------------
Print Full Legal Name of Partnership,
Company, Limited Liability Company, Trust or Other
Entity
By: /s/ Xxxxxxxx Xxxxxxxxxx
-----------------------
(Authorized Signatory)
Name: Xxxxxxxx Xxxxxxxxxx
Title: Member of General Partner
Address and Fax Number:
000 X. 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Taxpayer Identification Number:
Date and State of Incorporation or Organization:
Date on which Taxable Year Ends:
E-mail Address: ________________________
Accepted and Agreed as of the date first
above written:
AXS-ONE INC.
By: /s/ Xxxxxx Xxxxx
----------------
Name: Xxxxxx Xxxxx
Title: Chief Financial Officer
Dated: June 17, 2005
SIGNATURE PAGE
TO
AXS-ONE INC.
UNIT SUBSCRIPTION AGREEMENT
IF the INVESTOR is a PARTNERSHIP, CORPORATION, LIMITED LIABILITY
COMPANY, TRUST or OTHER ENTITY, please complete the following:
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of
the date first above written
Amount of Subscription
$551,000
Number of Units to be Purchased:
37.0146 including
444,176 Purchased Shares and related
Purchased Warrants
Potomac Capital Partners, LP
-----------------------------------------------------
Print Full Legal Name of Partnership,
Company, Limited Liability Company, Trust or Other
Entity
By: /s/ Xxxxxxx Xxxxxx
(Authorized Signatory)
Name: Xxxxxxx Xxxxxx
Title: Chief Financial Officer of Investment Manager
Address and Fax Number:
c/o Potomac Capital Management
000 X. 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 000000
Taxpayer Identification Number:
Date and State of Incorporation or Organization:
Date on which Taxable Year Ends:
E-mail Address: ________________________
Accepted and Agreed as of the date first
above written:
AXS-ONE INC.
By: /s/ Xxxxxx Xxxxx
-----------------
Name: Xxxxxx Xxxxx
Title: Chief Financial Officer
Dated: June 17, 2005
SIGNATURE PAGE
TO
AXS-ONE INC.
UNIT SUBSCRIPTION AGREEMENT
IF the INVESTOR is a PARTNERSHIP, CORPORATION, LIMITED LIABILITY
COMPANY, TRUST or OTHER ENTITY, please complete the following:
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of
the date first above written
Amount of Subscription
$334,000
Number of Units to be Purchased:
22.4371 including
269,246 Purchased Shares and related
Purchased Warrants
Potomac Capital International, Ltd.
--------------------------------------------------------
Print Full Legal Name of Partnership,
Company, Limited Liability Company, Trust or Other
Entity
By: /s/ Xxxxxxx Xxxxxx
(Authorized Signatory)
Name: Xxxxxxx Xxxxxx
Title: Chief Financial Officer of Investment Manager
Address and Fax Number:
c/o Potomac Capital Management
000 X. 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 000000
Taxpayer Identification Number:
Date and State of Incorporation or Organization:
Date on which Taxable Year Ends:
E-mail Address: ________________________
Accepted and Agreed as of the date first
above written:
AXS-ONE INC.
By: /s/ Xxxxxx Xxxxx
----------------
Name: Xxxxxx Xxxxx
Title: Chief Financial Officer
Dated: June 17, 2005
SIGNATURE PAGE
TO
AXS-ONE INC.
UNIT SUBSCRIPTION AGREEMENT
IF the INVESTOR is a PARTNERSHIP, CORPORATION, LIMITED LIABILITY
COMPANY, TRUST or OTHER ENTITY, please complete the following:
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of
the date first above written
Amount of Subscription
$365,000
Number of Units to be Purchased:
24.5196 including
294,236 Purchased Shares and related
Purchased Warrants
Pleiades Investment Partners-R, LP.
-----------------------------------------------------
Print Full Legal Name of Partnership,
Company, Limited Liability Company, Trust or Other
Entity
By: /s/ Xxxxxxx Xxxxxx
------------------
(Authorized Signatory)
Name: Xxxxxxx Xxxxxx
Title: Chief Financial Officer of Investment Manager
Address and Fax Number:
c/o Potomac Capital Management
000 X. 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 000000
Taxpayer Identification Number:
Date and State of Incorporation or Organization:
Date on which Taxable Year Ends:
E-mail Address: ________________________
Accepted and Agreed as of the date first above written:
AXS-ONE INC.
By: /s/ Xxxxxx Xxxxx
----------------
Name: Xxxxxx Xxxxx
Title: Chief Financial Officer
Dated: June 17, 2005
SIGNATURE PAGE
TO
AXS-ONE INC.
UNIT SUBSCRIPTION AGREEMENT
IF the INVESTOR is a PARTNERSHIP, CORPORATION, LIMITED LIABILITY
COMPANY, TRUST or OTHER ENTITY, please complete the following:
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of
the date first above written
Amount of Subscription
$75,000.00
Number of Units to be Purchased:
5.0383 including
60,460 Purchased Shares and related
Purchased Warrants
Exponential Capital LP
------------------------------------------------------
Print Full Legal Name of Partnership,
Company, Limited Liability Company, Trust or Other
Entity
By: /s/ Xxxxxx Xxxxxxxxxx
(Authorized Signatory)
Name: Xxxxxx Xxxxxxxxxx
Title: Managing Partner
Address and Fax Number:
0000 Xxxxxxx Xxxx
Xxxxxxxx, XX 00000
Taxpayer Identification Number: __________
Date and State of Incorporation or Organization:
Date on which Taxable Year Ends:
E-mail Address: ________________________
Accepted and Agreed as of the date first
above written:
AXS-ONE INC.
By: /s/ Xxxxxx Xxxxx
----------------
Name: Xxxxxx Xxxxx
Title: Chief Financial Officer
Dated: June 17, 2005
SIGNATURE PAGE
TO
AXS-ONE INC.
UNIT SUBSCRIPTION AGREEMENT
IF the INVESTOR is a PARTNERSHIP, CORPORATION, LIMITED LIABILITY
COMPANY, TRUST or OTHER ENTITY, please complete the following:
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of
the date first above written
Amount of Subscription
$ 235,000
Number of Units to be Purchased:
15.7866, including
189,439 Purchased Shares and related Purchased Warrants
Xxxxx Partners
--------------------------------------------------------
Print Full Legal Name of Partnership,
Company, Limited Liability Company, Trust or Other
Entity
By: /s/ Xxxxxxx Xxxxx
(Authorized Signatory)
Name: Xxxxxxx Xxxxx
Title: Chairman & CEO
Address and Fax Number:
0000 Xxxxx Xxxxx Xxxx.
Xxxx Xxxxxx, XX 00000
Taxpayer Identification Number: __________
Date and State of Incorporation or Organization:
-----------------
Date on which Taxable Year Ends:
-
E-mail Address: ________________________
Accepted and Agreed as of the date first
above written:
AXS-ONE INC.
By: /s/ Xxxxxx Xxxxx
----------------
Name: Xxxxxx Xxxxx
Title: Chief Financial Officer
Dated: June 17, 2005
SIGNATURE PAGE
TO
AXS-ONE INC.
UNIT SUBSCRIPTION AGREEMENT
IF the INVESTOR is an INDIVIDUAL, please complete the following:
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of
the date first above written.
<TABLE>
Amount of Subscription:
$100,000 Xxxxx X. Xxxxx Living Trust dated 6/19/03
-----------------------------------------
Print Name
Number of Units to be Purchased:
6.7177, including /s/ Xxxxx X. Xxxxx
80,612 Purchased Shares and related Purchased Warrants ------------------
Signature of Investor
----------------------
Social Security Number
0 Xxxxxxxx Xx.
X. Xxxxxxxxx, XX 00000
Address and Fax Number
-----------------------------------
E-mail Address
</TABLE>
Accepted and Agreed to as of the date first above written:
AXS-ONE INC.
By: /s/ Xxxxxxx Xxxxx
----------------------------
Dated: June 17, 2005
SIGNATURE PAGE
TO
AXS-ONE INC.
UNIT SUBSCRIPTION AGREEMENT
IF the INVESTOR is an INDIVIDUAL, please complete the following:
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of
the date first above written.
<TABLE>
Amount of Subscription:
$30,000.00 Xxxxxxx X. Xxx
--------------
Print Name
Number of Units to be Purchased:
2.0153, including /s/ Xxxxxxx X. Xxx
24,184 Purchased Shares and related Purchased Warrants ------------------
Signature of Investor
---------------------
Social Security Number
000 Xxxxxx Xxxx Xxxxx
Xxx Xxxxx, XX 00000
Address and Fax Number
-----------------------------------
E-mail Address
</TABLE>
Accepted and Agreed to as of the date first
above written:
AXS-ONE INC.
By: /s/ Xxxxxx Xxxxx
-----------------
Dated: June 17, 2005
SIGNATURE PAGE
TO
AXS-ONE INC.
UNIT SUBSCRIPTION AGREEMENT
IF the INVESTOR is an INDIVIDUAL, please complete the following:
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of
the date first above written.
<TABLE>
Amount of Subscription:
$10,000 Xxxx Xxxxxxxxxx
Print Name
Number of Units to be Purchased:
0.6717, including /s/ Xxxx Xxxxxxxxxx
8,062 Purchased Shares and related Purchased Warrants Signature of Investor
-------------------
Social Security Number
000 Xxxxx Xx.
Xxxx Xxxxxxx, XX 00000
Address and Fax Number
-----------------------------------
E-mail Address
</TABLE>
Accepted and Agreed to as of the date first above written:
AXS-ONE INC.
By: /s/ Xxxxxx Xxxxx
----------------
Dated: June 17, 2005
SIGNATURE PAGE
TO
AXS-ONE INC.
UNIT SUBSCRIPTION AGREEMENT
IF the INVESTOR is a PARTNERSHIP, CORPORATION, LIMITED LIABILITY
COMPANY, TRUST or OTHER ENTITY, please complete the following:
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of
the date first above written
Amount of Subscription
$100,000
Number of Units to be Purchased:
6.7177 including
80,612 Purchased Shares and related Purchased Warrants
Vendome Family Limited Partnership
--------------------------------------------------
Print Full Legal Name of Partnership,
Company, Limited Liability Company, Trust or Other
Entity
By: /s/ Gennaro Vendome
--------------------
(Authorized Signatory)
Name: Gennaro Vendome
Title: _________________________________
Address and Fax Number: 00 Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Taxpayer Identification Number:
Date and State of Incorporation or Organization:
Date on which Taxable Year Ends:
E-mail Address: ________________________
Accepted and Agreed as of the date first above written:
AXS-ONE INC.
By: /s/ Xxxxxx Xxxxx
-----------------
Name: Xxxxxx Xxxxx
Title: Chief Financial Officer
Dated: June 17, 2005
SIGNATURE PAGE
TO
AXS-ONE INC.
UNIT SUBSCRIPTION AGREEMENT
IF the INVESTOR is an INDIVIDUAL, please complete the following:
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of
the date first above written.
<TABLE>
Amount of Subscription:
$150,000.00 Xxxxxx X. Xxxxxxxxxx
--------------------
Print Name
Number of Units to be Purchased:
10.0766, including /s/ Xxxxxx X. Xxxxxxxxxx
120,919 Purchased Shares and related Purchased Warrants ------------------------
Signature of Investor
-------------------
Social Security Number
00 Xxxxxx Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Address and Fax Number
-----------------------------------
E-mail Address
</TABLE>
Accepted and Agreed to as of the date first above written:
AXS-ONE INC.
By: /s/ Xxxxxx Xxxxx
----------------
Dated: June 17, 2005
SIGNATURE PAGE
TO
AXS-ONE INC.
UNIT SUBSCRIPTION AGREEMENT
IF the INVESTOR is an INDIVIDUAL, please complete the following:
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of
the date first above written.
<TABLE>
Amount of Subscription:
$50,000.00 Xxxxxx X. Xxxxx
---------------
Print Name
Number of Units to be Purchased:
3.3589, including /s/ Xxxxxx X. Xxxxx
40,307 Purchased Shares and related Purchased Warrants -------------------
Signature of Investor
--------------------
Social Security Number
c/o MacKenzie Partners, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Address and Fax Number
-----------------------------------
E-mail Address
</TABLE>
Accepted and Agreed to as of the date first above written:
AXS-ONE INC.
By: /s/ Xxxxxx Xxxxx
----------------
Name: Xxxxxx Xxxxx
Title: Chief Financial Officer
SCHEDULE 1.1(B)
INVESTORS
<TABLE>
Investor Purchased Purchased Purchased
Name and Address Common Stock Class C Warrants Class D Warrants Purchase Price
---------------- ------------ ---------------- ---------------- --------------
RIT Capital Partners plc 2,015,316 201,532 201,531 $3,000,000
00 Xx. Xxxxx'x Xxxxx
Xxxxxx XX0X 0XX
XXXXXXX
The Sirius Trust 671,772 67,177 67,177 $1,000,000
x/x Xxxxxxxxx
Xxx Xxxx
Xx. Xxxxx
Xxxxxx XX0 0XX
CHANNEL ISLANDS
Emancipation Capital 503,829 50,383 50,383 $ 750,000
Master, Ltd.
000 X. 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Potomac Capital 370,146 37,015 37,015 $ 551,000
Partners, LP
c/o Potomac Capital
Management LLC
000 X. 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Potomac Capital 224,372 22,437 22,437 $ 334,000
International Ltd.
c/o Potomac Capital
Management LLC
000 X. 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Pleiades Investment 245,197 24,520 24,519 $ 365,000
Partners-R, LP
c/o Potomac Capital
Management LLC
000 X. 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
</TABLE>
<TABLE>
Exponential Capital LP 50,383 5,039 5,038 $ 75,000
0000 Xxxxxxx Xxxx
Xxxxxxxx, XX 00000
Xxxxx Partners 157,866 15,787 15,786 $ 235,000
0000 X. Xxxxx Xxxxxxxxx
Xxxx Xxxxxx, XX 00000
Xxxxx X. Xxxxx Living 67,177 6,718 6,717 $ 100,000
Trust DTD June 19, 2003
0 Xxxxxxxx Xxxxx
Xxxx Xxxxxxxxx, XX 00000
Xxxxxxx Xxx 20,153 2,016 2,015 $ 30,000
000 Xxxxxx Xxxx Xxxxx
Xxx Xxxxx, XX 00000
Xxxx Xxxxxxxxxx 6,718 672 672 $ 10,000
000 Xxxxx Xxxx
Xxxx Xxxxxxx, XX 00000
Vendome Family 67,177 6,718 6,717 $ 100,000
Limited Partnership
00 Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Xxxxxx Xxxxxxxxxx 100,766 10,077 10,076 $ 150,000
00 Xxxxxx Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Xxxxxx Xxxxx 33,589 3,359 3,359 $ 50,000
c/o MacKenzie Partners, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
--------- ---------- ---------- ----------
TOTAL 4,534,461 453,450 453,442 $6,750,000
</TABLE>
EXHIBITS AND SCHEDULES TO THE UNIT SUBSCRIPTION AGREEMENT
Schedule 1.1(b) Investors
Exhibit 1: Form of Warrants
Exhibit 2: Form of Investor Rights Agreement
Exhibit 3: Form of Legal Opinion- Xxxxxx and Xxxx LLP
EXHIBIT 3
FORM OF LEGAL OPINION- XXXXXX AND XXXX LLP
The opinion will be subject to standard qualifications and exceptions,
reasonably acceptable to counsel for the Investors.
(i) The Company is validly existing as a corporation and is in good
standing under the law of the State of Delaware and has the requisite corporate
power and authority to own, lease and operate its business and assets, and to
carry on its business as currently conducted.
(ii) The Company has the requisite corporate power and authority to
execute and deliver the Transaction Documents, to sell and issue the Securities
under the Unit Subscription Agreement, to issue Common Stock upon exercise of
the Warrants and to perform its obligations under the Transaction Documents.
(iii) The authorized capital stock of the Company consists of
50,000,000 shares of Common Stock and 5,000,000 shares of preferred stock.
(iv) The execution, delivery and performance by the Company of the
Transaction Documents have been duly authorized by all necessary corporate
action on part of the Company and will not, with or without the giving of notice
or the passage of time, or both, violate: (a) the provisions of the Charter and
Bylaws, (b) any laws of the State of New York, the General Corporation Law of
the State of Delaware or Federal laws of the United States of America, or (c) to
our knowledge, any judgment, decree, order or award of any court binding upon
the Company. Each of the Transaction Documents has been duly executed and
delivered by the Company and constitutes a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms.
(v) The Securities, when issued and paid for and when certificates
representing the Securities have been issued to the Investors, all in compliance
with the provisions of the Unit Subscription Agreement and the Warrants, will be
validly issued, fully paid and nonassessable and free of any adverse claims
within the meaning of Section 8-303 of the New York Uniform Commercial Code
(assuming the Investors take the Securities with no notice of any adverse claims
and obtain control of the Securities in New York), other than any adverse claims
created by or imposed upon the holders thereof; provided, however, that the
Securities may be subject to restrictions on transfer under applicable state and
federal securities laws.
(vi) Based solely on a certificate of an officer of the Company as to
factual matters, the Company is not, and, immediately after giving effect to the
sale of the Securities in accordance with the Transaction Documents and the
application of the proceeds as described in Section 2.17 of the Unit
Subscription Agreement, will not, be required to be registered as an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
(vii) Subject to the accuracy of the Investors' representations and
warranties in the Unit Subscription Agreement, and upon the filing of Form D in
compliance with Regulation D under the Securities Act, the issuance of the
Securities in conformity with the terms of the Unit Subscription
Agreement constitute transactions exempt from the registration requirements of
Section 5 of the Securities Act.
(viii) Based solely upon our review of the resolutions of the Board of
Directors of the Company relating to the Transaction Documents, the Common Stock
issuable upon exercise of the Warrants has been validly reserved for issuance.
