EXHIBIT 2.2
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AGREEMENT
This Agreement is dated as of the 13 day of November 2006 by and among
Semotus Solutions, Inc,, a Nevada corporation with its principal office at 000
Xxxxxxxxxx Xxx., Xxxxx 000, Xxx Xxxxx, XX 00000 (the "Company"), and Xxxxxxx X.
Xxxxxxxx (the "Investor").
WHEREAS, the Company and the Investor have been discussing a potential
investment by the Investor in the Company, the use of proceeds of that
investment is intended for the Company's general corporate purposes, including
increasing the Company's sales and marketing efforts; and
WHEREAS, it was the mutual desire of the Company and the Investor that
the Investor's investment in the Company would take the form of a promissory
note that would be convertible into shares of the Company's common stock at any
time at the option of the holder at a rate that would be agreed to by the
Company and the Investor; and
NOW THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto agree as follows.
1. PURCHASE OF CONVERTIBLE PROMISSORY NOTE.
Pursuant to the Convertible Promissory Note, dated the date hereof and attached
as Exhibit A, the Company has executed to the Investor the Convertible
Promissory Note. The Company's ability to issue the Common Shares and to pay
cash dividends for a reasonably foreseeable period into the future is not
prohibited by applicable provisions of law or the terms and provisions of any
agreement of the Company, including any agreement or instrument relating to its
indebtedness or the Company's Certificate of Incorporation or Bylaws, or if the
conversion would constitute a breach thereof, or a default thereunder, or if the
making of the conversion shall be restricted or prohibited by any applicable
law, rule or regulation.
2. RESTRICTIONS ON TRANSFERABILITY.
The Investor understands that the Common Shares to be issued upon conversion
will be restricted securities subject to the resale provisions of Rule 144.
3. FURTHER INVESTMENT.
The Investor and the Company agree to discuss, from time to time, possible
future investments by the Investor in the securities of the Company in
connection with future acquisition opportunities that the Company may identify.
The Company acknowledges that no Investor has made any commitment to make any
such future investment, and that the decision to make any such future investment
is in the sole discretion of each Investor. The Investor acknowledges that the
Company has made no commitment to offer any such future investment to any
Investor, and that the decision to make any such offer of future investment is
in the sole discretion of the Company.
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4. PUBLIC STATEMENTS OR RELEASES.
Neither the Company nor any Investor shall make any public announcement with
respect to the existence or terms of this Agreement or the transactions provided
for herein without the prior approval of the other parties, which shall not be
unreasonably withheld or delayed. Notwithstanding the foregoing, nothing in this
Section 3 shall prevent any party from making any public announcement it
considers necessary in order to satisfy its obligations under the law or the
rules of any national securities exchange or market, provided such party, to the
extent practicable, provides the other parties with an opportunity to review and
comment on any proposed public announcement before it is made.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER.
5.1 The Purchaser represents and warrants to, and covenants with, the
Company that:
(i) the Purchaser is knowledgeable, sophisticated and experienced
in making, and is qualified to make, decisions with respect to
investments in securities representing an investment decision
like that involved in the purchase of the Shares, including
investments in securities issued by the Company, and has
requested, received, reviewed and understood all information
it deems relevant in making an informed decision to purchase
the Shares, including, without limitation, the information
contained in the Information Documents;
(ii) it acknowledges that the offering of the Shares pursuant to
this Agreement has not been reviewed by the Commission or any
state or Canadian regulatory authority;
(iii) the Purchaser is acquiring the number of Shares set forth in
the signature page hereto, for its own account for investment
only and with no present intention of distributing any of the
Shares the distribution thereof;
(iv) the Purchaser will not, directly or indirectly, offer, sell,
pledge, transfer or otherwise dispose of (or solicit any
offers to buy, purchase or otherwise acquire or take a pledge
of) any of the Shares which form such Shares except in
compliance with the Securities Act, the Securities Act Rules
and Regulations and any applicable state securities or blue
sky laws;
(v) the Purchaser has completed or caused to be completed the
American Stock Exchange Questionnaire and the Stock
Certificate Questionnaire, attached hereto as Appendix I and
Appendix II, and the answers thereto are true and correct as
of the date hereof;
(vi) the Purchaser has, in connection with its decision to purchase
the number of Shares set forth on the signature page hereof,
not relied upon any representations or other information
(whether oral or written) other than as set forth in the
Information Documents and the representations and warranties
of the Company contained herein;
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(vii) the Purchaser has had an opportunity to discuss this
investment with representatives of the Company and ask
questions of them and such questions have been answered to the
full satisfaction of the Purchaser; and
(viii) the Purchaser is an "accredited investor" within the meaning
of Rule 501 of Regulation D promulgated under the Securities
Act because such Purchaser meets at least one of the
conditions set forth in Appendix III hereto.
5.2 The Purchase acknowledges that
(i) the Shares have not been and are not being registered under
the provisions of the 1933 Act, and may not be transferred
unless the Purchaser shall have delivered to the Company an
opinion of counsel, reasonably satisfactory in form, scope and
substance to the Company, to the effect that the Shares to be
sold or transferred may be sold or transferred pursuant to
Rule 144 promulgated under the 1933 Act;
(ii) any sale of the Shares made in reliance on Rule 144
promulgated under the 1933 Act may be made only in accordance
with the terms of said Rule and further, if said Rule is not
applicable, any resale of such Shares 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 used in
the 1933 Act, may require compliance with some other exemption
under the 1933 Act or the rules and regulations of the
Securities and Exchange Commission ("Commission" or the "SEC")
thereunder; and
(iii) neither the Company nor any other person is under any
obligation to register the Shares under the 0000 Xxx.
5.3 The Purchaser further represents and warrants to, and covenants with,
the Company that
(i) the Purchaser has full right, power, authority and capacity to
enter into this Agreement and to consummate the transactions
contemplated hereby and has taken all necessary action to
authorize the execution, delivery and performance of this
Agreement,
(ii) the Purchaser is duly organized, validly existing and in good
standing under the laws of the its jurisdiction of
organization, and
(iii) upon the execution and delivery of this Agreement, this
Agreement shall constitute a valid and binding obligation of
the Purchaser enforceable in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws
affecting creditors' and contracting parties' rights generally
and except as enforceability
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may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in
equity or at law).
5.4 The Purchaser recognizes that an investment in the Shares is speculative and
involves a high degree of risk, including a risk of total loss of the
Purchaser's investment. The Investor can bear the economic risk of this
investment and can afford a complete loss thereof. The Investor has such
knowledge and prior substantial investment experience in financial and business
matters, including investment in non-listed and non-registered securities, and
has had the opportunity to read the SEC Documents and to evaluate the merits and
risks of investment in the Company and the Shares.
5.5 All of the information provided to the Company or its agents or
representatives concerning the Purchaser's suitability to invest in the Company
and the representations and warranties contained herein, are complete, true and
correct as of the date hereof. The Purchaser understands that the Company is
relying on the statements contained herein to establish an exemption from
registration under U.S. federal and state securities laws.
5.6 The address set forth in the signature page hereto is the Purchaser's true
and correct domicile.
5.7 Prior to the execution of this Purchase Agreement, the Purchaser and any
affiliates of Purchaser have not participated in any hedging transactions
involving the Company's Common Stock and have not sold short any of the
Company's Common Stock. The Investor does not have a present intention to sell
the Shares, nor a present arrangement or intention to effect any distribution of
any of the Shares to or through any person or entity for purposes of selling,
offering, distributing or otherwise disposing of any of the Shares.
5.8 The Purchaser understands and agrees that each certificate or other document
evidencing any of the Shares shall be endorsed with the legend in substantially
the form set forth below, as well as any other legends required by applicable
law, and the Purchaser covenants that the Purchaser shall not transfer the
Shares represented by any such certificate without complying with the
restrictions on transfer described in the legends endorsed on such certificates:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("SECURITIES ACT"), OR
REGISTERED OR QUALIFIED UNDER ANY APPLICABLE STATE SECURITIES LAWS OR
CANADIAN SECURITIES LAWS. THESE SECURITIES MAY NOT BE TRANSFERRED
UNLESS (A) COVERED BY AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND REGISTERED OR QUALIFIED UNDER APPLICABLE STATE LAW
AND, IF APPLICABLE, CANADIAN SECURITIES LAWS OR (B) EXEMPTIONS FROM
SUCH REGISTRATION OR QUALIFICATION REQUIREMENTS ARE AVAILABLE. AS A
CONDITION TO PERMITTING ANY TRANSFER OF THESE SECURITIES, THE COMPANY
MAY REQUIRE THAT IT BE FURNISHED WITH AN OPINION OF COUNSEL ACCEPTABLE
TO THE COMPANY TO THE EFFECT THAT NO REGISTRATION OR QUALIFICATIONS IS
LEGALLY REQUIRED FOR SUCH TRANSFER.
5.9 The Investor may be required to bear the economic risk of the investment
indefinitely because none of the Shares may be sold, hypothecated or otherwise
disposed of unless
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subsequently registered under the Securities Act and applicable state securities
laws or an exemption from registration is available. Any resale of any of the
Shares can be made only pursuant to (i) a registration statement under the
Securities Act which is effective and current at the time of sale or (ii) a
specific exemption from the registration requirements of the Securities Act. In
claiming any such exemption, the Investor will, prior to any offer or sale or
distribution of any Shares advise the Company and, if requested, provide the
Company with a favorable written opinion of counsel, in form and substance
satisfactory to counsel to the Company, as to the applicability of such
exemption to the proposed sale or distribution.
5.10 The Investor understands that the exemption afforded by Rule 144
promulgated by the Commission under the Securities Act ("Rule 144") will not
become available for at least one year from the date of payment for the Shares
and any sales in reliance on Rule 144, if then available, can be made only in
accordance with the terms and conditions of that rule, including, among other
things, a requirement that the Company then be subject to, and current, in its
periodic filing requirements under the Exchange Act, and, among other things, a
limitation on the amount of shares of Common Stock that may be sold in specified
time periods and the manner in which the sale can be made; that, while the
Company's Common Stock is registered under the Exchange Act and the Company is
presently subject to the periodic reporting requirements of the Exchange Act,
there can be no assurance that the Company will remain subject to such reporting
obligations or current in its filing obligations; and that, in case Rule 144 is
not applicable to a disposition of the Shares, compliance with the registration
provisions of the Securities Act or some other exemption from such registration
provisions will be required.
5.11 The Investor has taken no action which would give rise to any claim by any
person for brokerage commission, finder's fees or similar payments by Investor
relating to this Purchase Agreement or the transactions contemplated hereby. The
Company shall have no obligation with respect to such fees or with respect to
any claims made by or on behalf of other persons for fees of a type contemplated
in this Section that may be due in connection with the transactions contemplated
hereby. The Investor shall indemnify and hold harmless the Company, its
employees, officers, directors, agents, and partners, and their respective
affiliates, from and against all claims, losses, damages, costs (including the
costs of preparation and attorney's fees) and expenses suffered in respect of
any such claimed or existing fees, as and when incurred.
5.12 The execution, delivery and performance of this Purchase Agreement by the
Investor, and the consummation of the transactions contemplated hereby, will not
(i) violate any provision of the Investor's corporate organizational documents,
(ii) violate, conflict with or result in the breach of any of the terms of,
result in a material modification of the effect of, otherwise, give any other
contracting party the right to terminate, or constitute (or with notice or lapse
of time or both) a default under, any contract or other agreement to which the
Investor is a party or by or to which the Investor or any of the Investor's
assets or properties may be bound or subject, (iii) violate any order, judgment,
injunction, award or decree of any court, arbitrator or governmental or
regulatory body by which the Investor, or the assets or properties of the
Investor are bound and (iv) to the Investor's knowledge, violate any statute,
law or regulation, including but not limited to the USA Patriot Act.
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6. SURVIVAL OF REPRESENTATIVES, WARRANTIES AND AGREEMENTS.
Notwithstanding any investigation made by any party to this Agreement, all
covenants, agreements, representations and warranties made by the Company and
the Purchaser herein and in any certificates or documents delivered pursuant
hereto or in connection herewith shall survive following the delivery to the
Purchaser of the Shares being purchased and the payment therefor.
7. CAPTIONS.
The captions and paragraph headings of this Agreement are solely for the
convenience of reference and shall not affect its interpretation.
8. SEVERABILITY.
Should any part or provision of this Agreement be held unenforceable or in
conflict with the applicable laws or regulations of any jurisdiction, the
invalid or unenforceable part or provisions shall be replaced with a provision
which accomplishes, to the extent possible, the original business purpose of
such part or provision in a valid and enforceable manner, and the remainder of
this Agreement shall remain binding upon the parties hereto.
9. GOVERNING LAW.
This Agreement shall be governed by, and construed in accordance with, the laws
of the State of California, without giving effect to conflict of law principles
thereof, except with respect to matters of law concerning the internal corporate
affairs of any corporate entity which is a party to or the subject of this
Agreement, and as to those matters the law of the jurisdiction under which the
respective entity derives its powers shall govern.
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10. COUNTERPARTS.
This Agreement may be signed in one or more counterparts, each of which shall be
an original, but all of which together shall constitute one instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement under seal
as of the day and year first above written.
SEMOTUS SOLUTIONS, INC.
By: /s/ Xxxxxxx XxXxxx
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Name: Xxxxxxx XxXxxx
Title: CEO
INVESTOR:
By: /s/ Xxxxxxx X. Xxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxx
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