THE SECURITIES SUBSCRIBED FOR HEREBY HAVE NOT BEEN REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES (AS DEFINED IN
REGULATION S UNDER THE ACT) OR TO OR FOR THE ACCOUNT OR BENEFIT OF
U.S. PERSONS (AS DEFINED IN REGULATION S) EXCEPT PURSUANT TO
REGISTRATION UNDER OR AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT.
OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
This Offshore Securities Subscription Agreement (the "Agreement"),
dated July 17th, 1997, is entered into by and between The Xxxxx
Corporation, a company incorporated in the state of Delaware (the
"Company"), and _______________________________ (the "Buyer").
The Company has offered for sale outside the United States (as that
term is defined in Regulation S ("Regulation S") under the Act up
to $2,500,000 of an 8% Convertible Note due July 17th, 2000 (the
"Securities") convertible into common stock of the Company. Buyer
has been offered $ __________ in principal amount of the
Securities. Interest on the Securities will be payable as provided
in the form of Convertible Note attached hereto as Annex A. The
terms on which the Securities may be converted into shares of the
Company's common stock (such shares underlying the Securities being
referred to herein as "Shares") and the other terms of the
Securities are set forth in the Form of Convertible Note attached
as Annex A. Capitalized terms used herein and not defined herein
shall have the meanings given to them in Regulation S as the same
may be amended from time to time.
The parties hereto agree as follows:
1. Purchase and Sale of Securities. Upon the basis of the
representations and warranties, and subject to the terms and
conditions, set forth in this Agreement, the Company covenants and
agrees to sell to the Buyer on the Closing Date (as hereinafter
defined) $ 1,500,000 in principal amount of the Securities at a
price of 100% of the original principal amount, and upon the basis
of the representations and warranties, and subject to the terms and
conditions, set forth in this Agreement, the Buyer covenants and
agrees to purchase from the Company, on the Closing Date $
1,500,000 in principal amount of the Securities of the Company at
100% of the original principal amount.
2. Closing Instructions to Escrow Agent. (a) The closing of the
purchase and sale of the Securities pursuant to Section 1 hereof
shall take place on or before July 17th, 1997 (the "Closing Date")
after the Company has delivered to the offices of First Bermuda
Securities Limited (the "Escrow Agent") located at Xxxxxxx Xxxxx,
00 Xxxxxx Xxxxxx, Xxxxxxxx, XX 00 Xxxxxxx, 0 Convertible Notes
(each a "Convertible Note") representing the Securities in
denominations of not less than $25,000, registered in the name of
the Buyer (representing the maximum amount of Securities to be
purchased by the Buyer hereunder).
(b) The Company and the Buyer agree that they shall instruct
the Escrow Agent as provided in Annex B and as follows:
(i) On the Closing Date, for each Convertible Note
subscribed for and delivered to the Escrow Agent pursuant to
paragraph 2(a) above, the Escrow Agent shall, upon confirmation in
the form of a federal funds wire number that First Bermuda
Securities Limited has wired payment of the aggregate purchase
price for the Securities (less any fees the Company has authorized
Escrow Agent to deduct) in immediately available funds to the
Company's account as provided in the escrow instructions attached
as Annex B, release the
1
Securities described in paragraph 2(a) above. The Escrow Agent
shall return to the Company any Convertible Notes that the Buyer
does not purchase on the Closing Date. If the closing shall not
have taken place by July 17th, 1997, this Agreement shall
terminate.
(ii) The Escrow Agent will make delivery of the number
of Convertible Notes set forth in clause 2(a) above in accordance
with the instructions of the Buyer subject to customary settlement
procedures upon confirmation of the wiring of funds to the Company
as described in clause 2(b)(i) above, except that all such
Convertible Notes shall be delivered to a location outside the
United States and none of the Convertible Notes shall be delivered
to a U.S. Person (as defined in Regulation S).
3. Representations and Warranties of the Buyer: The Buyer
understands and represents and warrants to, and agrees with the
Company that:
(a) The Buyer understands that no federal or state agency has
passed on, or made any recommendation or endorsement of the
Securities.
(b) The Buyer acknowledges that, in making the decision to
purchase the Securities, it has relied solely upon independent
investigations made by it and not upon any representations made by
the Company with respect to the Company or the Securities, except
for the representations and warranties in this Agreement, the
Convertible Note, the Registration Rights Agreement and the Officer
Certificate (as defined below), except that the Buyer has received,
reviewed and relied upon the Opinion of Counsel (as defined below)
and copies of the report on Form 10-Q for the quarter ended January
4, 1997, the report on Form 10-K for the year ended March 30, 1996,
filed by the Company pursuant to the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and all other filings,
including filings on Form 8-K, under the Exchange Act since March
30, 1996, which, together with any filings by Company after the
date hereof and prior the Closing, are defined as "Exchange Act
Reports".
(c) The Buyer understands that the Securities are being
offered and sold to it in reliance on specific exemptions from or
non-application of the registration requirements of federal and
state securities laws and that the Company is relying upon the
truth and accuracy of the representations, warranties, agreements,
acknowledgments and understandings of the Buyer set forth herein in
order to determine the applicability of such exemptions and the
suitability of the Buyer to acquire the Securities.
(d) The Buyer is not a U.S. Person (as defined in Regulation
S) and is not and will not be an affiliate (as defined in the
Exchange Act) of the Company. To enable the Company to avoid
withholding interest paid, the Buyer certifies under penalty of
perjury that it is neither a citizen nor a resident of the United
States and that its address set forth in the Escrow Agreement is
correct.
(e) No public offer or solicitation of the Securities or the
Shares issuable on conversion of the Securities was made to the
Buyer and no offer of the Securities or the Shares issuable on
conversion of the Securities was made to the Buyer while the Buyer
was present in the United States.
(f) At the time the buy order for the Securities was
originated the Buyer was located outside the United States and is
outside the United States on the date of the execution and delivery
of this agreement and will be outside the United States on the
Closing Date.
(g) The Buyer is aware that the Securities and the Shares
issuable upon exercise of conversion rights have not been and will
not be registered under the Act (except as may be required under
the Registration Rights Agreement) and may only be offered or
2
sold pursuant to registration under the Act or an available
exemption therefrom and Buyer has not, and will not, engage in any
public offering or distribution of the Securities or the Shares.
(h) The Buyer (i) will not, during the period commencing on
the Closing Date and ending 40 days after the Closing Date (the
"Restricted Period"), offer or sell or agree to sell the Securities
in the United States, to a U.S. Person or for the account or
benefit of a U.S. Person or other than in accordance with Rule 903
or 904, as applicable, of Regulation S, and (ii) will, after the
expiration of the Restricted Period, offer, sell, pledge or
otherwise transfer the Securities or the common stock issuable upon
the exercise of conversion rights only pursuant to registration
under the Act or an available exemption therefrom and, in any case,
in accordance with applicable federal and state securities laws.
(i) The Buyer and its affiliates have been advised of and are
familiar with, have complied, and will comply, with the offering
restrictions, and any other requirements, of Regulation S.
(j) The transactions contemplated by this Agreement (i) have
not been pre-arranged by the Buyer with a purchaser located in the
United States which is a U.S. Person, and (ii) are not part of a
plan or scheme by the Buyer to evade the registration provisions of
the Act.
(k) The Buyer is an "accredited investor" as defined in the
Act and will be purchasing the Securities for its account for the
purpose of investment and not (i) with a view to, or for sale in
connection with, any distribution thereof or (ii) for the account
or on behalf of any U.S. Person.
(l) Neither the Buyer nor any of its affiliates has entered,
has the intention of entering, or will during the Restricted Period
enter into, with any U.S. Person, any put option, short position or
other similar instrument or position with respect to the Securities
or securities into which the Securities are convertible or
participate in any other attempt designed to lower the trading
prices of the Company's common stock.
(m) The Buyer shall indemnify the Company against any loss,
cost or damages (including reasonable attorney's fees and expenses)
incurred as a result of the Buyer's breach of any representation,
warranty, covenant or agreement in this Agreement.
4. Registration Rights. On or prior to the Closing Date, the
Company and Buyer agree to execute a Registration Rights Agreement
(the "Registration Rights Agreement") in the form substantially set
out in Annex C attached hereto, respectively.
5. Conversion of Securities The Securities may be converted into
the Shares, as herein defined, at the option of the holder thereof
under the terms set forth in the Form of Convertible Note, attached
hereto as Annex A.
6. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, the Buyer that:
(a) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of
Delaware.
(b) This Agreement has been duly authorized, executed and
delivered by the Company and is a valid and binding agreement
enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting
creditors' rights generally and to general principles of equity;
and the Company has full corporate power and authority
3
necessary to enter into this Agreement and to perform its
obligations thereunder.
(c) No consent, approval, authorization or order of any
court, governmental agency or body or arbitrator having
jurisdiction over the Company or any of its affiliates is required
for execution of this Agreement, including, without limitation, the
issuance and sale of the Securities, or the performance of its
obligations hereunder.
(d) Neither the sale of Securities pursuant to, nor the
performance of its obligations under this Agreement by the Company
will (i) violate, conflict with, result in a breach of, or
constitute a default (or an event which with the giving of notice
or the lapse of time or both would be reasonably likely to
constitute a default) under (A) the certificate of incorporation,
charter or by-laws of the Company or any of its affiliates, (B) any
decree, judgment, order, law, treaty, rule, regulation or
determination applicable to the Company or any of its affiliates of
any court, governmental agency or body, or arbitrator having
jurisdiction over the Company or any of its affiliates or over the
properties or assets of the Company or any of its affiliates, (C)
the terms of any bond, debenture, note or any other evidence of
indebtedness, or any material agreement, stock option or other
similar plan, indenture, lease, mortgage, deed of trust or other
material instrument to which the Company or any of its affiliates
is a party, by which the Company or any of its affiliates is bound,
or to which any of the properties of the Company or any of its
affiliates is subject, or (D) the terms of any "lock-up" or similar
provision of any underwriting or similar agreement to which the
Company or any of its affiliates is a party to; or (ii) result in
the creation or imposition of any lien, charge or encumbrance upon
the Securities or any of the assets of the Company or any of its
affiliates.
(e) The Company has an authorized capitalization consisting
of 15,000,000 shares of common stock, par value $1.00 per share
(the "Common Stock"), and 5,000,000 shares of Preferred Stock, par
value $.01 per share ("Preferred Stock"). The Company has issued
and outstanding 7,179,233 shares of Common Stock and 0 shares of
Preferred Stock as of July 17th, 1997. All of the issued shares of
capital stock of the Company have been duly and validly authorized
and issued, are fully paid and non-assessable; prior to the Closing
Date, the authorized capitalization shall include the Shares to be
issued upon conversion of the Securities. The shares of Common
Stock issuable upon conversion of the Securities, when issued and
delivered in accordance with the terms of the Securities, will be
duly and validly issued, fully paid and non-assessable. The
issuance of the Shares will not be in violation of any preemptive
or similar rights of the holders of any securities of the Company.
The Securities (i) are free and clear of any security interests,
liens, claims or other encumbrances, (ii) have been duly and
validly authorized and on the Closing Date will be duly and validly
issued, fully paid and non assessable, (iii) will not have been,
individually and collectively, issued or sold in violation of any
preemptive or other similar rights of the holders of any securities
of the Company and (iv) will not subject the holders thereof to
personal liability by reason of being such holders. The Common
Stock underlying the Securities is quoted on, and will be,
following the completion of the Restricted Period (if sold in
accordance with the provisions of this Agreement, applicable
securities law and Regulation S as then in effect), eligible for
trading on, The National Association of Securities Dealers Inc.
Electronic Bulletin Board ("NASDAQ").
(f) The Company is a Reporting Issuer (as defined in
Regulation S) because it has a class of securities registered
pursuant to Section 12(g) of the Exchange Act and has filed all the
material required to be filed pursuant to Section 13(a) of the
Exchange Act for a period of at least twelve (12) months preceding
the date of this Agreement. The Common Stock is listed on NASDAQ
and the Company has received no notice, oral or written, with
respect to its continued eligibility for such listing. The Company
hereby agrees, promptly following the Closing of the transactions
contemplated by this Agreement, to take such action as is necessary
to cause the Shares issued upon exercise of
4
conversion rights under the Convertible Notes to be listed on
NASDAQ upon such conversion following expiration of the Restricted
Period (subject, if required, to notice to NASDAQ of the actual
number of shares issued). The Company further agrees, if the
Company applies to have the Common Stock traded on any other
principal stock exchange or market, it will include in such
application the Shares and will take such other action as is
necessary or desirable to cause the Shares to be listed on such
other exchange or market upon expiration of the Restricted Period.
(g) The Exchange Act Reports are the only filings made by the
Company since March 30, 1996 pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act, and the Company will cause its
Common Stock to continue to be registered under Section 12(g) or
12(b) of the Securities Exchange Act of 1934, will comply in all
respects with its reporting and filing obligations under said Act,
and will not take any action or file any document (whether or not
permitted by said Act or the rules thereunder) to terminate or
suspend such registration or to terminate or suspend its reporting
and filing obligations under said Act. The Company will take all
action necessary to continue the listing and trading of its Common
Stock on NASDAQ and will comply in all respects with the Company's
reporting, filing and other obligations under the by-laws or rules
of the NASD and NASDAQ.
(h) The Company has the requisite corporate power to own its
properties and to carry on its business as now being conducted.
The Company is duly qualified as a foreign corporation to do
business and is in good standing in every jurisdiction in which the
nature of the business conducted or property owned by it makes such
qualification necessary other than those in which the failure so to
qualify would not have a Material Adverse Effect. "Material
Adverse Effect" means any adverse effect on the business,
operations, properties, prospects, or financial condition of the
entity with respect to which such term is used and which is
material to such entity.
(i) The Company has furnished or made available to the Buyer
true and correct copies of the Company's Certificate of
Incorporation as in effect on the date hereof (the "Certificate of
Incorporation"), and the Company's By-Laws, as in effect on the
date hereof (the "By-Laws").
(j) The Company has delivered or made available to the Buyer
true and complete copies of the Exchange Act Reports (including,
without limitation, proxy information and solicitation materials
excluding any preliminary proxy not distributed). The Company has
not provided to the Buyer any information which, according to
applicable law, rule or regulation, should have been disclosed
publicly by the Company but which has not been so disclosed. As of
their respective dates, the Exchange Act Reports complied in all
material respects with the requirements of the Exchange Act and the
rules and regulations of the SEC promulgated thereunder and other
federal, state and local laws, rules and regulations applicable to
such Exchange Act Reports, and none of the Exchange Act Reports
contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The financial
statements of the Company included in the Exchange Act Reports
comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of
the SEC or other applicable rules and regulations with respect
thereto. Such financial statements have been prepared in
accordance with generally accepted accounting principles applied on
a consistent basis during the periods involved (except (i) as may
be otherwise indicated in such financial statements or the notes
thereto or (ii) in the case of unaudited interim statements, to the
extent they may not include footnotes or may be condensed or
summary statements) and fairly present in all material respects the
financial position of the Company as of the dates thereof and the
results of operations and cash flows for the periods then ended
(subject, in the case of unaudited
5
statements, to normal year-end audit adjustments).
(k) Except as set forth in the financial statements and other
documents filed by the Company under the Exchange Act, the Company
has no liabilities, contingent or otherwise, other than (i)
liabilities incurred in the ordinary course of business subsequent
to January 4, 1997 and (ii) obligations under contracts and
commitments incurred in the ordinary course of business and not
required under generally accepted accounting principles to be
reflected in such financial statements, which individually or in
the aggregate, are not material to the financial condition or
operating results of the Company. The Company has not provided to
the Buyer any information which, according to applicable law, rule
or regulation, should have been disclosed publicly by the Company
but which has not been so disclosed.
(l) Since January 4, 1997 there has been no material adverse
change and no material adverse development in the business,
properties, operations, financial condition, results of operations
or prospects of the Company, except as disclosed in accordance with
the Exchange Act Reports.
(m) There is no material action, suit, proceeding, inquiry or
to the knowledge of the Company or any of its subsidiaries,
investigation before or by any court, public board, government
agency, self-regulatory organization or body pending, or to the
knowledge of the Company or any of its subsidiaries, threatened
against or affecting the Company or any of its subsidiaries other
than as set forth in the Exchange Act Reports, public announcements
made by the Company prior to the Closing Date and information
submitted to the Buyers in the letter dated June 30, 1997.
(n) Neither the Company, nor any or its affiliates, nor any
person acting on its or their behalf has, directly or indirectly,
made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would require
registration of the Securities under the Act.
(o) The Company has taken no action which would give rise to
any claim by any person for brokerage commissions, finder's fees or
similar payments by the Buyer relating to this Agreement or the
transactions contemplated hereby, except for dealings with First
Bermuda Securities Limited, whose commissions and fees will be paid
for by the Company.
(p) As of the date hereof, the Company has reserved and the
Company shall continue to reserve and keep available at all times,
free of preemptive rights, shares of Common Stock for the purpose
of enabling the Company to satisfy any obligation to issue shares
of its Common Stock upon conversion of the Securities; provided,
however, that the number of shares so reserved shall at all times
be at least 1,333,333 in aggregate for purposes of conversion of
the Securities. The number of shares so reserved may be reduced by
the number of shares actually delivered pursuant to the conversion
of the Securities (provided that in no event shall the number of
shares so reserved be less than the number required to satisfy the
remaining conversion rights on the unconverted Securities) and the
number of shares so reserved shall be increased to reflect stock
splits and stock dividends and distributions.
(q) No legend has been or shall be placed on the Securities
or share certificates representing the Securities or Shares and no
note or stock transfer instructions have been or shall be given to
the Company's transfer agent with respect thereto other than as set
forth in Section 10.
(r) Based upon the truth and accuracy of the representations
and warranties made by the Buyer, the sale of the Securities
pursuant to this Agreement will be made in
6
accordance with the provisions and requirements of Regulation S and
applicable state law.
(s) No offer to sell the Securities was made by the Company
to any person in the United States.
(t) None of the Company, any affiliate of the Company, or any
person acting on behalf of the Company or any such affiliate has
engaged, or will engage, in any Directed Selling Efforts as that
term is defined in Regulation S with respect to the Securities nor
any general solicitation of the Securities.
(u) The transactions contemplated by this Agreement (i) have
not been pre-arranged with a purchaser who is in the United States
or is a U.S. Person, and (ii) are not part of a plan or scheme to
evade the registration provisions of the Act.
(v) The Company undertakes and agrees to make all necessary
filings in connection with this offering as required by the laws
and regulations of all appropriate jurisdictions and securities
exchanges in the United States of America.
(w) The Company shall indemnify the Holder against any loss,
cost or damages (including reasonable attorney's fees and expenses)
incurred as a result of the Company's breach of any representation,
warranty, covenant or agreement in this Agreement.
7. Offering Materials. All offering materials and documents used
in connection with the offers and sales of the Securities prior to
the expiration of the Restricted Period shall include statements to
the effect that the Securities and the Shares issuable upon the
exercise of conversion rights have not been registered under the
Act and that the Buyer, may not directly or indirectly offer or
sell the Securities or such shares in the United States or to a
U.S. Persons (other than distributors) unless the Securities or
shares are registered under the Act, or an exemption from the
registration requirements of the Act is available. Such statements
shall appear (1) on the cover of any prospectus or offering
circular used in connection with the offer or sale of the
Securities and (2) in the placement section of any prospectus or
offering circular used in connection with the offer or sale of the
Securities. Buyer represents that all offering materials and
documents received by it in connection with the offers and sales of
the Securities prior to the Closing of the transactions
contemplated herein have complied with the foregoing. Nothing
contained in this Section 7 shall negate or detract from any of the
representations, warranties and agreements of Buyer contained in
Section 3 above.
8. Covenants of the Company. (a) The Company covenants and
agrees that during the period beginning on the date hereof and
ending 90 days following the Closing Date, the Company will not,
without the prior written consent of a "Majority-in-interest" of
the Buyers, negotiate or contract with any party to obtain
additional equity financing (including debt financing with an
equity component) pursuant to the exemption from the registration
requirements of Regulation S (the "Future Offerings"). In
addition, the Company will not conduct any Future Offerings during
the period beginning on the 90th day following the date hereof and
ending 180 days following the Closing Date unless it shall have
first delivered to the Buyer at least ten (10) business days prior
to the closing of such Future Offering, written notice describing
the proposed Future Offering, including the terms and conditions
thereof, and providing the Buyer an option during such ten (10) day
period to purchase all or any portion of its "pro-rata" share of
the securities being offered in the Future Offerings on the same
terms as contemplated by such Future Offering (the limitations
referred to in this and the immediately preceding sentence are
collectively referred to as the "Capital Raising Limitation"). The
Capital Raising Limitation shall not apply to any transaction
involving the Company's commercial banking arrangements or
issuances of securities in connection with a merger, consolidation
or sale of assets, or in
7
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 (so long as the securities so
issued are "restricted securities" within the meaning of Rule 144
under the 1933 Act and do not carry registration or piggy back
rights for at least 360 days from the date of this Agreement), the
issuance of securities to settle securities litigation, or exercise
of options by or the grant of performance shares to employees,
consultants or directors. The terms (i) "majority-in-interest"
means Holders of 8% Convertible Notes holding more than 50% of the
Common Stock underlying the Securities (treating the Securities on
an as converted basis) and (ii) "pro-rata share" means the
principal amount of the Securities initially purchased divided by
the aggregate principal amount of all Securities sold hereunder.
(b) The parties shall use their best efforts timely to
satisfy each of the conditions described in Section 9 of this
Agreement.
(c) So long as the Buyer beneficially owns any of the
Securities, the Company shall timely file all reports required to
be filed with the SEC pursuant to the Exchange Act, and the Company
shall not terminate its status as an issuer required to file
reports under the Exchange Act even if the Exchange Act or the
rules and regulations thereunder would permit such termination,
except in the event of a merger, consolidation or sale of all or
substantially all of the Company's assets, as long as the surviving
or successor entity in such transaction (i) assumes the Company's
obligations hereunder and under the agreements and instruments
entered into in connection herewith and (ii) is a publicly traded
corporation whose Common Stock is listed for trading on the AMEX,
the NYSE or the NASDAQ.
(d) At Buyer's request, the Company agrees to send the
following reports to Buyer until Buyer transfers, assigns, or sells
all of the Securities: (i) within ten (10) days after the filing
with the SEC, a copy of its Annual Report on Form 10-K, its
Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K;
and (ii) within two (2) business days after release, copies of all
press releases issued by the Company or any of its subsidiaries.
(e) The Company shall at all times have authorized, and
reserved for the purpose of issuance, a sufficient number of shares
of Common Stock to provide for the full conversion of the
outstanding Securities and issuance of the Shares in connection
therewith (based on the conversion price of the Securities in
effect from time to time). In that regard, on the Closing Date,
the Company shall have at least 1,333,333 shares reserved for
issuance upon conversion of the Securities (subject to adjustment
in order to comply with the immediately preceding sentence);
provided that the Company shall not reduce the number of shares of
Common Stock reserved for issuance upon conversion of the
Securities without the consent of a majority-in-interest of the
buyers of the Securities, which consent will not be unreasonably
withheld.
(f) So long as the Buyer beneficially owns any Securities,
the Company shall maintain its corporate existence, except in the
event of a merger, consolidation or sale of all or substantially
all of the Company's assets, as long as the surviving or successor
entity in such transaction (i) assumes the Company's obligations
hereunder and under the agreements and instruments entered into in
connection herewith and (ii) is a publicly traded corporation whose
Common Stock is listed for trading on the AMEX, the NYSE or the
NASDAQ.
(g) The Company and the Buyer agree that the Closing Date,
when certified by Escrow Agent as the Closing shall be deemed to be
a conclusion of the offering of the Securities contemplated hereby.
The Company acknowledges and agrees that, for purposes of
clarifying and specifying the applicable Restricted Period under
Regulation S,
8
the Buyer intends to observe as the Restricted Period (as defined
in Regulation S) for the Securities, the period of 40 days
commencing on the Closing Date and ending 40 days thereafter.
(h) The Shares issued upon conversion of the Securities and
the certificates evidencing the same shall at all times be free of
legends (except as provided in Section 10 below), "stock transfer
restrictions," or other restrictions, except as expressly set forth
in this Agreement and the Convertible Note.
9. Conditions Precedent to the Buyer's Obligation. The
obligations of the Buyer hereunder are subject to the performance
by the Company of the following additional conditions precedent:
(a) The Buyer shall receive, on the Closing Date, an opinion
of counsel to the Company, dated the Closing Date, as to the
representations made by the Company in Sections 6(a) through and
including 6(f) and in Sections 6(m) and 6(n) hereof, and such other
matters as Buyer reasonably requests (collectively, the "Opinion of
Counsel"). The form of the Opinion of Counsel shall be as set
forth in Exhibit 1 hereof.
(b) Delivery of the notes representing the Securities with
restrictive legend to the Escrow Agent as set forth herein.
(c) The Company shall have delivered to the Buyer a
certificate (the "Officer Certificate") in form and substance
reasonably satisfactory to the Buyer, executed by an executive
officer of the Company, to the effect that all the conditions to
the Closing shall have been satisfied and the representations and
warranties of the Company herein are true and correct as of the
date when made and as of the Closing Date, and certifying as to the
Company's Certificate of Incorporation, By-Laws, resolutions
authorizing transaction, and incumbency of Company officers.
(d) The Company and the Buyer shall have entered into the
Registration Rights Agreement as contemplated by Section 4.
10. Legends. (a) The certificates representing the Securities,
and the Shares issued during the Restricted Period, shall bear the
following legend (the "Legend"):
"The securities represented hereby have been issued pursuant
to Regulation S promulgated under the Securities Act of 1933,
as amended (the "1933 Act"), and have not been registered
under the 1933 Act. Such securities may not be transferred,
offered or sold prior to the end of the forty (40) day period
(the "Restricted Period") commencing on July 17th, 1997 unless
such transfer, offer or sale is made in an "offshore
transaction" and not to or for the account of or benefit of a
"U.S. Person" (as such terms are defined in Regulation S) and
is otherwise in accordance with the requirements of Regulation
S. Following the expiration of the Restricted Period, the
securities represented hereby may not be offered, sold or
otherwise transferred in the United States or to a U.S. Person
unless the securities are registered under the 1933 Act and
applicable state securities laws, or such offers, sales and
transfers are made pursuant to an available exemption or safe-
harbor from the registration requirements of those laws."
(b) Following the expiration of the Restricted Period, and
subject to Section 10(d) below, the Company will remove or will
promptly instruct its transfer agent to remove the Legend from the
Shares issued during the Restricted Period (and will instruct its
transfer agent to issue without the Legend, the Shares issuable
upon any conversion or exercise occurring after the Restricted
Period), if the Buyer holding such Securities or any other person
in whose name the certificates have been or are to be validly and
legally
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issued shall have delivered a certificate (a "Removal Certificate")
to the Company to the following effect:
"The undersigned acknowledges that the securities to which
this certificate relates have not been registered under
Securities Act of 1933, as amended (the "1933 Act") and that
offers, sales or other transfer of such securities must be
made in compliance with Regulation S promulgated under the
1933 Act, pursuant to an effective registration statement
under the 1933 Act or pursuant to an available exemption from
registration, and the undersigned certifies that the
undersigned has not made, nor will the undersigned make or
cause to be made, any offer, sale or other transfer of such
securities, in violation of the 1933 Act, other applicable
securities laws or the rules and regulations of the Securities
and Exchange Commission."
(c) Upon the submission, at any time after the expiration of
the Restricted Period, by Buyer of a written request for legend
removal for the purpose of a bona fide pledge or deposit of the
Shares with a margin account, together with the certificates for
which the legend removal is being requested and a Removal
Certificate signed by both the Buyer and the pledgee or other
holder of the Shares, the Company will reissue or will promptly
instruct its transfer agent to reissue the certificates
representing the Shares to be so pledged or deposited without the
Legend.
(d) Notwithstanding the provisions of this Section 10, if
with respect to the Company's receipt of a Removal Certificate from
any person, prior to any removal of the Legend, there shall have
been after the date hereof any amendment to the Act or Regulation
S or any no action letter, interpretative release or other advice
from the Securities and Exchange Commission after the date hereof
which disallows the removal of the Legend under the circumstances
in which the request that it be removed is being made, then the
Company shall have no obligation to remove or to instruct its
transfer agent to remove the Legend, unless the Company shall have
received from the person requesting such removal a written letter
of counsel to such person reasonably acceptable to the Company and
its counsel confirming that the Legend may be so removed or share
certificates may be so issued without the Legend without violation
of the Act. If the person requesting a removal of the Legend is
unable to supply the legal opinion referred to above then the
Company shall, upon demand of such person, be obligated to register
the Common Stock for resale pursuant to the terms of the
Registration Rights Agreement.
11. Transfer Agent Instructions. The Company's transfer agent
will be instructed to reserve for issuance such number of shares of
the Company's Common Stock as would be issuable if the Convertible
Notes were converted on the Closing Date and such additional number
of shares as, from time to time, shall be necessary to provide for
the issuance of Shares upon the conversion of the Convertible
Notes. Additionally, the Company shall deliver to its transfer
agent promptly after closing irrevocable instructions substantially
in the form set forth in Annex E attached hereto, pursuant to which
the transfer agent shall be instructed to issue upon conversion the
number of shares provided for in the Convertible Note being
converted on the terms provided for therein without restrictive
legend, registered in the names provided by the Holders, subject to
the terms and conditions in this Agreement and in the Convertible
Note. The Company warrants and covenants that no instructions
restricting the transferability of the Shares other than the
instructions in the immediately preceding sentence and instructions
for a "stop transfer" instruction until the end of the Restricted
Period have been given, or shall be given, to the transfer agent,
and that the Shares shall otherwise be freely transferable on the
books and records of the Company, subject to the restrictions in
this Agreement and in the Convertible Note. Nothing in this
section, however, shall affect in any way the obligations and
agreement of the Buyer to comply with all applicable federal, state
and foreign securities laws upon resale of the Securities.
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12. Miscellaneous. (a) This Agreement may be executed in one or
more counterparts and it is not necessary that signatures of all
parties appear on the same counterpart, but such counterparts
together shall constitute but one and the same agreement.
(b) Notices. Any notice or other communication given or
permitted under this Agreement shall be in writing and shall be
deemed to have been duly given if personally delivered or sent by
registered or certified mail, return receipt requested, postage
prepaid or by air courier, (a) if to Buyer, at its address
hereinabove set forth, (b) if to the Company, at its address
hereinabove set forth, and (c) if to a holder other than Buyer, at
the address thereof furnished by like notice to the Company, or (d)
to any such addresses at such other address or addresses as shall
be so furnished to the other parties by like notice.
(c) This agreement shall inure to the benefit of and be
binding upon the parties hereto, their respective successors, and
no other person shall have any right or obligation hereunder. This
Agreement shall not be assignable by either party without the prior
written consent of the other, and any assignment in violation
hereof shall be void. Notwithstanding the foregoing, the Buyer may
assign its rights in this Agreement subject to the terms and
conditions of this Agreement and the Convertible Note, and the
provisions of this Agreement shall then inure to the benefit of,
and be enforceable by, any transferee of any of the Securities or
Shares.
(d) This Agreement together with the Convertible Note and the
Registration Rights Agreement constitutes the entire agreement of
the parties with respect to the subject matter hereof and
supersedes all prior oral or written proposals or agreements
related thereto. This Agreement may not be amended or any
provision hereof waived, in whole or in part, except by a written
amendment signed by both of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have duly executed
and delivered this Agreement, all as of the day and year above
written.
THE XXXXX CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx, Chairman & Chief Executive Officer
__________________________
By: ____________________________________________________
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