EXHIBIT 99.1
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this "AGREEMENT") is dated as of
September 20, 2006, among X. Xxxxx-Food International Ltd., an Israeli company
(the "COMPANY"), and the investors identified on the signature pages hereto
(each, an "INVESTOR" and collectively, the "INVESTORS").
WHEREAS, subject to the terms and conditions set forth in this Agreement
and pursuant to Section 4(2) of the Securities Act (as defined below) and Rule
506 promulgated thereunder, the Company desires to issue and sell to each
Investor, and each Investor, severally and not jointly, desires to purchase from
the Company certain securities of the Company, as more fully described in this
Agreement.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and the Investors agree
as follows:
ARTICLE 1.
DEFINITIONS
1.1. DEFINITIONS. In addition to the terms defined elsewhere in this
Agreement, for all purposes of this Agreement, the following terms shall have
the meanings indicated in this Section 1.1:
"ACTION" means any action, suit, inquiry, notice of violation,
proceeding (including any partial proceeding such as a deposition) or
investigation pending or threatened in writing against or affecting the
Company, any Subsidiary or any of their respective properties before or by
any court, arbitrator, governmental or administrative agency, regulatory
authority (federal, state, county, local or foreign), stock market, stock
exchange or trading facility.
"AFFILIATE" means any Person that, directly or indirectly through one
or more intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed under Rule
144.
"BUSINESS DAY" means any day except Saturday, Sunday, Friday and any
day which is a federal legal holiday or a day on which banking institutions
in the State of New York or the city of Tel Aviv are authorized or required
by law or other governmental action to close.
"BUY-IN" has the meaning set forth in Section 4.1(c).
"CLOSING" means the closing of the purchase and sale of the Securities
pursuant to Article II.
"CLOSING DATE" means the Business Day on which all of the conditions
set forth in Sections 5.1 and 5.2 hereof are satisfied, or such other date
as the parties may agree.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" means the ordinary shares of the Company, NIS 0.10 par
value per share, and any securities into which such ordinary shares may
hereafter be reclassified.
"COMMON STOCK EQUIVALENTS" means any securities of the Company or any
Subsidiary which entitle the holder thereof to acquire Common Stock at any
time, including without limitation, any debt, preferred stock, rights,
options, warrants or other instrument that is at any time convertible into
or exchangeable for, or otherwise entitles the holder thereof to receive,
Common Stock or other securities that entitle the holder to receive,
directly or indirectly, Common Stock.
"COMPANY COUNSEL" means Gross, Kleinhendler, Hodak, Halevy, Xxxxxxxxx
& Co.
"COMPANY DELIVERABLES" has the meaning set forth in Section 2.2(a).
"DISCLOSURE MATERIALS" has the meaning set forth in Section 3.1(h).
"EFFECTIVE DATE" means the date that the Registration Statement
required by Section 2(a) of the Registration Rights Agreement is first
declared effective by the Commission.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"GAAP" means generally accepted accounting principles in Israel.
"INTELLECTUAL PROPERTY RIGHTS" has the meaning set forth in Section
3.1(p).
"INVESTMENT AMOUNT" means, with respect to each Investor, the
Investment Amount indicated on such Investor's signature page to this
Agreement.
"INVESTOR DELIVERABLES" has the meaning set forth in Section 2.2(b).
"INVESTOR PARTY" has the meaning set forth in Section 4.7.
"LIEN" means any lien, charge, encumbrance, security interest, right
of first refusal or other restrictions of any kind.
"MATERIAL ADVERSE EFFECT" means any of (i) a material and adverse
effect on the legality, validity or enforceability of any Transaction
Document, (ii) a material and adverse effect on the results of operations,
assets, business or condition (financial or otherwise) of the Company and
the Subsidiaries, taken as a whole, or (iii) an adverse impairment to the
Company's ability to perform on a timely basis its obligations under any
Transaction Document.
"NEW YORK COURTS" means the state and federal courts sitting in the
City of New York, Borough of Manhattan.
"NOTICE OF EFFECTIVENESS" has the meaning set forth in Section 4.1(c).
2
"OUTSIDE DATE" means October 18, 2006.
"PER UNIT PURCHASE PRICE" equals $6.05.
"PERSON" means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.
"PROCEEDING" means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding,
such as a deposition), whether commenced or threatened.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of the date of this Agreement, among the Company and
the Investors, in the form of EXHIBIT B hereto.
"REGISTRATION STATEMENT" means a registration statement meeting the
requirements set forth in the Registration Rights Agreement and covering
the resale by the Investors of the Shares and the Warrant Shares.
"RULE 144" means Rule 144 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"SEC REPORTS" has the meaning set forth in Section 3.1(h).
"SECURITIES" means the Shares, the Warrants and the Warrant Shares.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHARE DELIVERY DATE" has the meaning set forth in Section 4.1(c).
"SHARES" means the shares of Common Stock issued or issuable to the
Investors pursuant to this Agreement.
"SHORT SALES" include, without limitation, all "short sales" as
defined in Rule 200 promulgated under Regulation SHO under the Exchange Act
and all types of direct and indirect stock pledges, forward sale contracts,
options, puts, calls, swaps and similar arrangements (including on a total
return basis), and sales and other transactions through non-US broker
dealers or foreign regulated brokers.
"SUBSIDIARY" means any "significant subsidiary" as defined in Rule
1-02(w) of the Regulation S-X promulgated by the Commission under the
Exchange Act.
"TRADING DAY" means (i) a day on which the Common Stock is traded on a
Trading Market (other than the OTC Bulletin Board), or (ii) if the Common
Stock is not listed on a Trading Market (other than the OTC Bulletin
Board), a day on which the Common Stock is traded in the over-the-counter
market, as reported by the OTC Bulletin Board, or (iii) if the Common Stock
is not quoted on any Trading Market, a day on which the Common Stock is
quoted in the over-the-counter market as reported by the National Quotation
Bureau Incorporated (or any similar organization or agency succeeding to
its functions of reporting prices); provided, that in the event that the
Common Stock is not listed or quoted as set forth in (i), (ii) and (iii)
hereof, then Trading Day shall mean a Business Day.
3
"TRADING MARKET" means whichever of the New York Stock Exchange, the
American Stock Exchange, the NASDAQ Global Select Market, the NASDAQ Global
Market, the NASDAQ Capital Market or OTC Bulletin Board on which the Common
Stock is listed or quoted for trading on the date in question.
"TRANSACTION DOCUMENTS" means this Agreement, the Warrants, the
Registration Rights Agreement, and any other documents or agreements
executed in connection with the transactions contemplated hereunder.
"WARRANTS" means the Common Stock purchase warrants in the form of
EXHIBIT A, which are issuable to the Investors at the Closing.
"WARRANT SHARES" means the shares of Common Stock issuable upon
exercise of the Warrants.
ARTICLE 2.
PURCHASE AND SALE
2.1. CLOSING. Subject to the terms and conditions set forth in this
Agreement, at the Closing the Company shall issue and sell to each Investor, and
each Investor shall, severally and not jointly, purchase from the Company, the
Shares and the Warrants representing such Investor's Investment Amount. The
Closing shall take place at the offices of Xxxxx Xxxx LLP, 0000 Xxxxxx xx xxx
Xxxxxxxx, Xxx Xxxx, XX 00000 on the Closing Date or at such other location or
time as the parties may agree.
2.2. CLOSING DELIVERIES. (a) At the Closing, the Company shall deliver or
cause to be delivered to each Investor the following (the "COMPANY
DELIVERABLES"):
(i) a certificate evidencing a number of Shares equal to such
Investor's Investment Amount divided by the Per Unit Purchase Price,
registered in the name of such Investor;
(ii) a Warrant, registered in the name of such Investor, pursuant
to which such Investor shall have the right to acquire the number of
shares of Common Stock equal to 30% of the number of Shares issuable
to such Investor pursuant to Section 2.2(a)(i);
(iii) the legal opinion of Company Counsel, in agreed form,
addressed to the Investors; and
(iv) the Registration Rights Agreement, duly executed by the
Company.
4
(b) At the Closing, each Investor shall deliver or cause to be
delivered to the Company the following (the "INVESTOR DELIVERABLES"):
(i) its Investment Amount, in United States dollars and in
immediately available funds, by wire transfer to an account designated
in writing by the Company for such purpose; and
(ii) the Registration Rights Agreement, duly executed by such
Investor.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES
3.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
makes the following representations and warranties to each Investor:
(a) SUBSIDIARIES. The Company has no direct or indirect Subsidiaries
other than as specified in the SEC Reports. Except as disclosed in SCHEDULE
3.1(A), the Company owns, directly or indirectly, all of the capital stock
of each Subsidiary free and clear of any and all Liens, and all the issued
and outstanding shares of capital stock of each Subsidiary are validly
issued and are fully paid, non-assessable and free of preemptive and
similar rights.
(b) ORGANIZATION AND QUALIFICATION. The Company and each Subsidiary
are duly incorporated or otherwise organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization (as applicable), with the requisite power and authority to own
and use its properties and assets and to carry on its business as currently
conducted. Neither the Company nor any Subsidiary is in violation of any of
the provisions of its respective certificate or articles of incorporation,
bylaws or other organizational or charter documents. The Company and each
Subsidiary are duly qualified to conduct its respective businesses and are
in good standing as a foreign corporation or other entity in each
jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary, except where the failure to
be so qualified or in good standing, as the case may be, would not,
individually or in the aggregate, have or reasonably be expected to result
in a Material Adverse Effect.
(c) AUTHORIZATION; ENFORCEMENT. The Company has the requisite
corporate power and authority to enter into and to consummate the
transactions contemplated by each of the Transaction Documents and
otherwise to carry out its obligations thereunder. The execution and
delivery of each of the Transaction Documents by the Company and the
consummation by it of the transactions contemplated thereby have been duly
authorized by all necessary action on the part of the Company and no
further action is required by the Company in connection therewith. Each
Transaction Document has been (or upon delivery will have been) duly
executed by the Company and, when delivered in accordance with the terms
hereof, will constitute the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies or
by other equitable principles of general application.
5
(d) NO CONFLICTS. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of
the transactions contemplated thereby do not and will not (i) conflict with
or violate any provision of the Company's or any Subsidiary's certificate
or articles of incorporation, bylaws or other organizational or charter
documents, or (ii) conflict with, or constitute a default (or an event that
with notice or lapse of time or both would become a default) under, or give
to others any rights of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of, any
agreement, credit facility, debt or other instrument (evidencing a Company
or Subsidiary debt or otherwise) or other understanding to which the
Company or any Subsidiary is a party or by which any property or asset of
the Company or any Subsidiary is bound or affected, or (iii) result in a
violation of any law, rule, regulation, order, judgment, injunction, decree
or other restriction of any court or governmental authority to which the
Company or a Subsidiary is subject (including federal and state securities
laws and regulations), or by which any property or asset of the Company or
a Subsidiary is bound or affected; except in the case of each of clauses
(ii) and (iii), such as would not, individually or in the aggregate, have
or reasonably be expected to result in a Material Adverse Effect.
(e) FILINGS, CONSENTS AND APPROVALS. The Company is not required to
obtain any consent, waiver, authorization or order of, give any notice to,
or make any filing or registration with, any court or other federal, state,
local or other governmental authority or other Person in connection with
the execution, delivery and performance by the Company of the Transaction
Documents, other than (i) the filing with the Commission of the
Registration Statement in accordance with the requirements of the
Registration Rights Agreement, (ii) filings required by state securities
laws, (iii) the filing of a Notice of Sale of Securities on Form D with the
Commission under Regulation D of the Securities Act, (iv) the filings
required in accordance with Section 4.5 and (v) those that have been made
or obtained prior to the date of this Agreement.
(f) ISSUANCE OF THE SECURITIES. The Securities have been duly
authorized and, when issued and paid for in accordance with the Transaction
Documents, will be duly and validly issued, fully paid and nonassessable,
free and clear of all Liens. The Company has reserved from its duly
authorized capital stock the shares of Common Stock issuable pursuant to
this Agreement and the Warrants in order to issue the Shares and the
Warrant Shares.
(g) CAPITALIZATION. The number of shares and type of all authorized,
issued and outstanding capital stock of the Company, and all shares of
Common Stock reserved for issuance under the Company's various option and
incentive plans, is specified in the SEC Reports. Except as specified in
the SEC Reports, no securities of the Company are entitled to preemptive or
similar rights, and no Person has any right of first refusal, preemptive
right, right of participation, or any similar right to participate in the
transactions contemplated by the Transaction Documents. Except as specified
in the SEC Reports, there are no outstanding options, warrants, scrip
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities, rights or obligations convertible into or
exchangeable for, or giving any Person any right to subscribe for or
acquire, any shares of Common Stock, or contracts, commitments,
understandings or arrangements by which the Company or any Subsidiary is or
may become bound to issue additional shares of Common Stock, or securities
or rights convertible or exchangeable into shares of Common Stock. The
issue and sale of the Securities will not, immediately or with the passage
of time, obligate the Company to issue shares of Common Stock or other
securities to any Person (other than the Investors) and will not result in
a right of any holder of Company securities to adjust the exercise,
conversion, exchange or reset price under such securities.
6
(h) SEC REPORTS; FINANCIAL STATEMENTS. The Company has filed all
reports required to be filed by it under the Securities Act and the
Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the
twelve months preceding the date hereof (or such shorter period as the
Company was required by law to file such reports) (the foregoing materials
being collectively referred to herein as the "SEC REPORTS" and, together
with the Schedules to this Agreement (if any), the "DISCLOSURE MATERIALS")
on a timely basis or has timely filed a valid extension of such time of
filing and has filed any such SEC Reports prior to the expiration of any
such extension. As of their respective dates, the SEC Reports complied in
all material respects with the requirements of the Securities Act and the
Exchange Act and the rules and regulations of the Commission promulgated
thereunder, and none of the SEC Reports, when filed, 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 SEC Reports
complied in all material respects with applicable accounting requirements
and the rules and regulations of the Commission with respect thereto as in
effect at the time of filing. Such financial statements have been prepared
in accordance with GAAP applied on a consistent basis during the periods
involved and reconciled with generally accepted accounting principles in
the U.S., except as may be otherwise specified in such financial statements
or the notes thereto, and fairly present in all material respects the
financial position of the Company and its consolidated Subsidiaries as of
and for the dates thereof and the results of operations and cash flows for
the periods then ended, subject, in the case of unaudited statements, to
normal, immaterial, year-end audit adjustments.
(i) PRESS RELEASES. The press releases disseminated by the Company
during the twelve months preceding the date of this Agreement taken as a
whole do not contain any untrue statement of a material fact or omit 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 and when made, not misleading.
(j) MATERIAL CHANGES. Since the date of the latest audited financial
statements included within the SEC Reports, except as specifically
disclosed in the SEC Reports, (i) there has been no event, occurrence or
development that has had or that would reasonably be expected to result in
a Material Adverse Effect, (ii) the Company has not incurred any
liabilities (contingent or otherwise) other than (A) trade payables,
accrued expenses and other liabilities incurred in the ordinary course of
business consistent with past practice and (B) liabilities not required to
be reflected in the Company's financial statements pursuant to GAAP or
required to be disclosed in filings made with the Commission, (iii) the
Company has not altered its method of accounting or the identity of its
auditors, (iv) the Company has not declared or made any dividend or
distribution of cash or other property to its stockholders or purchased,
redeemed or made any agreements to purchase or redeem any shares of its
capital stock, and (v) the Company has not issued any equity securities to
any officer, director or Affiliate, except pursuant to existing Company
stock option plans. The Company does not have pending before the Commission
any request for confidential treatment of information.
7
(k) LITIGATION. There is no Action which (i) adversely affects or
challenges the legality, validity or enforceability of any of the
Transaction Documents or the Securities or (ii) except as specifically
disclosed in the SEC Reports, could, if there were an unfavorable decision,
individually or in the aggregate, have or reasonably be expected to result
in a Material Adverse Effect. Neither the Company nor any Subsidiary, nor
any director or officer thereof (in his or her capacity as such), is or has
been the subject of any Action involving a claim of violation of or
liability under federal or state securities laws or a claim of breach of
fiduciary duty, except as specifically disclosed in the SEC Reports. There
has not been, and to the knowledge of the Company, there is not pending any
investigation by the Commission involving the Company or any current or
former director or officer of the Company (in his or her capacity as such).
The Commission has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company or any
Subsidiary under the Exchange Act or the Securities Act.
(l) LABOR RELATIONS. No material labor dispute exists or, to the
knowledge of the Company, is imminent with respect to any of the employees
of the Company.
(m) COMPLIANCE. Neither the Company nor any Subsidiary (i) is in
default under or in violation of (and no event has occurred that has not
been waived that, with notice or lapse of time or both, would result in a
default by the Company or any Subsidiary under), nor has the Company or any
Subsidiary received notice of a claim that it is in default under or that
it is in violation of, any indenture, loan or credit agreement or any other
agreement or instrument to which it is a party or by which it or any of its
properties is bound (whether or not such default or violation has been
waived), (ii) is in violation of any order of any court, arbitrator or
governmental body, or (iii) is or has been in violation of any statute,
rule or regulation of any governmental authority, including without
limitation all foreign, federal, state and local laws relating to taxes,
environmental protection, occupational health and safety, product quality
and safety and employment and labor matters, except in each case as would
not, individually or in the aggregate, have or reasonably be expected to
result in a Material Adverse Effect. The Company is in compliance with all
effective requirements of the Xxxxxxxx-Xxxxx Act of 2002, as amended, and
the rules and regulations thereunder, that are applicable to it, except
where such noncompliance would not have or reasonably be expected to result
in a Material Adverse Effect.
(n) REGULATORY PERMITS. The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses as described in the SEC Reports, except where the
failure to possess such permits would not, individually or in the
aggregate, have or reasonably be expected to result in a Material Adverse
Effect, and neither the Company nor any Subsidiary has received any notice
of proceedings relating to the revocation or modification of any such
permits.
8
(o) TITLE TO ASSETS. The Company and the Subsidiaries have good and
marketable title to all real property owned by them that is material to
their respective businesses and good and marketable title in all personal
property owned by them that is material to their respective businesses, in
each case free and clear of all Liens, except for Liens as do not
materially affect the value of such property and do not materially
interfere with the use made and proposed to be made of such property by the
Company and the Subsidiaries. Any real property and facilities held under
lease by the Company and the Subsidiaries are held by them under valid,
subsisting and enforceable leases of which the Company and the Subsidiaries
are in compliance, except as would not, individually or in the aggregate,
have or reasonably be expected to result in a Material Adverse Effect.
(p) PATENTS AND TRADEMARKS. The Company and the Subsidiaries have, or
have rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, licenses and other
similar rights that are necessary or material for use in connection with
their respective businesses as described in the SEC Reports and which the
failure to so have could, individually or in the aggregate, have or
reasonably be expected to result in a Material Adverse Effect
(collectively, the "INTELLECTUAL PROPERTY RIGHTS"). Neither the Company nor
any Subsidiary has received a written notice that the Intellectual Property
Rights used by the Company or any Subsidiary violates or infringes upon the
rights of any Person. Except as set forth in the SEC Reports, to the
knowledge of the Company, all such Intellectual Property Rights are
enforceable and there is no existing infringement by another Person of any
of the Intellectual Property Rights.
(q) INSURANCE. The Company and the Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the businesses in
which the Company and the Subsidiaries are engaged. The Company has no
reason to believe that it will not be able to renew its and the
Subsidiaries' existing insurance coverage as and when such coverage expires
or to obtain similar coverage from similar insurers as may be necessary to
continue its business on terms consistent with market for the Company's and
such Subsidiaries' respective lines of business.
(r) TRANSACTIONS WITH AFFILIATES AND EMPLOYEES. Except as set forth in
the SEC Reports, none of the officers or directors of the Company and, to
the knowledge of the Company, none of the employees of the Company is
presently a party to any material transaction with the Company or any
Subsidiary (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of the Company, any
entity in which any officer, director, or any such employee has a
substantial interest or is an officer, director, trustee or partner.
(s) INTERNAL ACCOUNTING CONTROLS. The Company and the Subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management's general or
specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences. The Company has
established disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure
controls and procedures to ensure that material information relating to the
Company, including its Subsidiaries, is made known to the certifying
officers by others within those entities, particularly during the period in
which the Company's Form 20-F is being prepared. The Company's certifying
officers have evaluated the effectiveness of the Company's controls and
procedures for the Company's most recently ended fiscal year (such date,
the "EVALUATION DATE"). The Company presented in its most recently filed
Form 20-F the conclusions of the certifying officers about the
effectiveness of the disclosure controls and procedures based on their
evaluations as of the Evaluation Date. Since the Evaluation Date, there
have been no significant changes in the Company's internal controls (as
such term is defined in Exchange Act Rule 13a-15 or, to the Company's
knowledge, in other factors that could significantly affect the Company's
internal controls.
9
(t) SOLVENCY. Based on the financial condition of the Company as of
the Closing Date (and assuming that the Closing shall have occurred), (i)
the Company's assets do not constitute unreasonably small capital to carry
on its business for the current fiscal year as now conducted and as
proposed to be conducted including its capital needs taking into account
the particular capital requirements of the business conducted by the
Company, and projected capital requirements and capital availability
thereof, and (ii) the current cash flow of the Company, together with the
proceeds the Company would receive, were it to liquidate all of its assets,
after taking into account all anticipated uses of the cash, would be
sufficient to pay all amounts on or in respect of its debt when such
amounts are required to be paid. The Company does not intend to incur debts
beyond its ability to pay such debts as they mature (taking into account
the timing and amounts of cash to be payable on or in respect of its debt).
(u) CERTAIN FEES. Except as described in SCHEDULE 3.1(U), no brokerage
or finder's fees or commissions are or will be payable by the Company to
any broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the transactions
contemplated by this Agreement. The Investors shall have no obligation with
respect to any fees or with respect to any claims (other than such fees or
commissions owed by an Investor pursuant to written agreements executed by
such Investor which fees or commissions shall be the sole responsibility of
such Investor) 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 by this Agreement.
(v) CERTAIN REGISTRATION MATTERS. Assuming the accuracy of the
Investors' representations and warranties set forth in Section 3.2(b)-(e),
no registration under the Securities Act is required for the offer and sale
of the Shares and Warrants and the offer of the Warrant Shares by the
Company to the Investors under the Transaction Documents. The Company is
eligible to register its Common Stock for resale by the Investors under
Form F-3 promulgated under the Securities Act. Except as specified in
SCHEDULE 3.1(V), the Company has not granted or agreed to grant to any
Person any rights (including "piggy-back" registration rights) to have any
securities of the Company registered with the Commission or any other
governmental authority that have not been satisfied.
10
(w) LISTING AND MAINTENANCE REQUIREMENTS. Except as specified in the
SEC Reports, the Company has not, in the two years preceding the date
hereof, received notice from any Trading Market to the effect that the
Company is not in compliance with the listing or maintenance requirements
thereof. The Company is, and has no reason to believe that it will not in
the foreseeable future continue to be, in compliance with the listing and
maintenance requirements for continued listing of the Common Stock on the
Trading Market on which the Common Stock is currently listed or quoted. The
issuance and sale of the Securities under the Transaction Documents does
not contravene the rules and regulations of the Trading Market on which the
Common Stock is currently listed or quoted, and no approval of the
shareholders of the Company thereunder is required for the Company to issue
and deliver to the Investors the Securities contemplated by Transaction
Documents.
(x) INVESTMENT COMPANY. The Company is not, and is not an Affiliate
of, and immediately following the Closing will not have become, an
"investment company" within the meaning of the Investment Company Act of
1940, as amended.
(y) APPLICATION OF TAKEOVER PROTECTIONS. The Company has taken all
necessary action, if any, in order to render inapplicable any control share
acquisition, business combination, poison pill (including any distribution
under a rights agreement) or other similar anti-takeover provision under
the Company's Articles of Association or the laws of its state of
incorporation that is or could become applicable to the Investors as a
result of the Investors and the Company fulfilling their obligations or
exercising their rights under the Transaction Documents, including without
limitation the Company's issuance of the Securities and the Investors'
ownership of the Securities.
(z) NO ADDITIONAL AGREEMENTS. The Company does not have any agreement
or understanding with any Investor with respect to the transactions
contemplated by the Transaction Documents other than as specified in the
Transaction Documents.
(aa) DISCLOSURE. The Company confirms that neither it nor any Person
acting on its behalf, other than Xxxx Capital Partners, LLC, has provided
any Investor or its respective agents or counsel on behalf of the Company
with any information that the Company believes constitutes material,
non-public information except insofar as the existence and terms of the
proposed transactions hereunder may constitute such information. The
Company understands and confirms that the Investors will rely on the
foregoing representations and covenants in effecting transactions in
securities of the Company. All disclosure provided to the Investors
regarding the Company, its business and the transactions contemplated
hereby, furnished by or on behalf of the Company (including the Company's
representations and warranties set forth in this Agreement) are true and
correct and do not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
11
3.2. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS. Each Investor hereby,
for itself and for no other Investor, represents and warrants to the Company as
follows:
(a) ORGANIZATION; AUTHORITY. Such Investor is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the requisite corporate or
partnership power and authority to enter into and to consummate the
transactions contemplated by the applicable Transaction Documents and
otherwise to carry out its obligations thereunder. The execution, delivery
and performance by such Investor of the transactions contemplated by this
Agreement, including the purchase of the Securities, has been duly
authorized by all necessary corporate or, if such Investor is not a
corporation, such partnership, limited liability company or other
applicable like action, on the part of such Investor. Each of this
Agreement and the Registration Rights Agreement has been duly executed by
such Investor, and when delivered by such Investor in accordance with the
terms hereof, will constitute the valid and legally binding obligation of
such Investor, enforceable against it in accordance with its terms, except
as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies or
by other equitable principles of general application. The execution,
delivery and performance of the Transaction Documents by the Investor and
the consummation by the Investor of the transactions contemplated thereby
do not and will not (i) conflict with or violate any provision of the
Investor's certificate or articles of incorporation, bylaws or other
organizational or charter documents, or (ii) conflict with, or constitute a
default (or an event that with notice or lapse of time or both would become
a default) under, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or
both) of, any material agreement, credit facility, debt or other instrument
or other understanding to which the Investor is a party or by which any
property or asset of the Investor is bound or affected, or (iii) result in
a violation of any law, rule, regulation, order, judgment, injunction,
decree or other restriction of any court or governmental authority to which
the Investor is subject and which is known by the Investor, or by which any
property or asset of the Investor is bound or affected.
(b) INVESTMENT INTENT. Such Investor is acquiring the Securities as
principal for its own account for investment purposes only and not with a
view to or for distributing or reselling such Securities or any part
thereof, without prejudice, however, to such Investor's right at all times
to sell or otherwise dispose of all or any part of such Securities in
compliance with applicable federal and state securities laws. Subject to
the immediately preceding sentence, nothing contained herein shall be
deemed a representation or warranty by such Investor to hold the Securities
for any period of time. Such Investor is acquiring the Securities hereunder
in the ordinary course of its business. Such Investor does not have any
agreement or understanding, directly or indirectly, with any Person to
distribute any of the Securities.
(c) INVESTOR STATUS. At the time such Investor was offered the
Securities, it was, and at the date hereof it is, and on each date on which
it exercises Warrants it will be, an "accredited investor" as defined in
Rule 501(a) under the Securities Act. Such Investor is not a registered
broker-dealer under Section 15 of the Exchange Act. The Investor
acknowledges that it (i) has such knowledge, sophistication and experience
in financial and business matters such that Investor is capable of
evaluating the merits and risks of Investor's investment in the Company,
(ii) is able to bear the financial risks associated with an investment in
the Securities and is able to afford loss of such investment, and (iii) has
reviewed or has had the opportunity to review the SEC Reports and any other
filings made by the Company which are available to the public, set forth in
the SEC Reports.
12
(d) GENERAL SOLICITATION. Such Investor is not purchasing the
Securities as a result of, and such Investor is not aware of, any
advertisement, article, notice or other communication regarding the
Securities published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar or any other
general solicitation or general advertisement.
(e) ACCESS TO INFORMATION. Such Investor acknowledges that it has
reviewed the Disclosure Materials and has been afforded (i) the opportunity
to ask such questions as it has deemed necessary of, and to receive answers
from, representatives of the Company concerning the terms and conditions of
the offering of the Shares and the merits and risks of investing in the
Securities; (ii) access to information about the Company and the
Subsidiaries and their respective financial condition, results of
operations, business, properties, management and prospects sufficient to
enable it to evaluate its investment; and (iii) the opportunity to obtain
such additional information that the Company possesses or can acquire
without unreasonable effort or expense that is necessary to make an
informed investment decision with respect to the investment. Neither such
inquiries nor any other investigation conducted by or on behalf of such
Investor or its representatives or counsel shall modify, amend or affect
such Investor's right to rely on the truth, accuracy and completeness of
the Disclosure Materials and the Company's representations and warranties
contained in the Transaction Documents.
(f) CERTAIN TRADING ACTIVITIES. Such Investor has not directly or
indirectly, nor has any Person acting on behalf of or pursuant to any
understanding with such Investor, engaged in any transactions in the
securities of the Company (including, without limitations, any Short Sales
involving the Company's securities) since the earlier to occur of (1) the
time that such Investor was first contacted by the Company or Xxxx Capital
Partners, LLC regarding an investment in the Company and (2) the 30th day
prior to the date of this Agreement. Such Investor covenants that neither
it nor any Person acting on its behalf or pursuant to any understanding
with it will engage in any transactions in the securities of the Company
(including Short Sales) prior to the time that the transactions
contemplated by this Agreement are publicly disclosed.
(g) RELIANCE. Such Investor understands and acknowledges that (i) the
Securities to be acquired hereunder are being offered and sole to it
without registration under the Securities Act in a private placement that
is exempt from the registration provisions of the Securities Act and (ii)
the availability of such exemption, depends in part on, and the Company
will rely upon the accuracy and truthfulness of, the foregoing
representations and the such Investor hereby consents to such reliance.
(h) INDEPENDENT INVESTMENT DECISION. Such Investor has independently
evaluated the merits of its decision to purchase Securities pursuant to the
Transaction Documents, and such Investor confirms that it has not relied on
the advice of any other Investor's business and/or legal counsel in making
such decision. Such Investor has not relied on the business or legal advice
of Xxxx Capital Partners, LLC or any of its agents, counsel or Affiliates
in making its investment decision hereunder, and confirms that none of such
Persons has made any representations or warranties to such Investor in
connection with the transactions contemplated by the Transaction Documents.
13
(i) LIMITED OWNERSHIP. The purchase by such Investor of the Securities
issuable to it at the Closing will not result in such Investor
(individually or together with any other Person with whom such Investor has
identified, or will have identified, itself as part of a "group" in a
public filing made with the Commission involving the Company's securities)
acquiring, or obtaining the right to acquire, in excess of 19.999% of the
outstanding shares of Common Stock or the voting power of the Company on a
post transaction basis that assumes that the Closing shall have occurred.
Such Investor does not presently intend to, alone or together with others,
make a public filing with the Commission to disclose that it has (or that
it together with such other Persons have) acquired, or obtained the right
to acquire, as a result of the Closing (when added to any other securities
of the Company that it or they then own or have the right to acquire), in
excess of 19.999% of the outstanding shares of Common Stock or the voting
power of the Company on a post transaction basis that assumes that the
Closing shall have occurred.
The Company acknowledges and agrees that no Investor has made or makes any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 3.2.
ARTICLE 4.
OTHER AGREEMENTS OF THE PARTIES
4.1. (a) Securities may only be disposed of in compliance with state and
federal securities laws. In connection with any transfer of the Securities other
than pursuant to an effective registration statement, to the Company, to an
Affiliate of an Investor or in connection with a pledge as contemplated in
Section 4.1(b), the Company may require the transferor thereof to provide to the
Company an opinion of counsel selected by the transferor, the form and substance
of which opinion shall be reasonably satisfactory to the Company, to the effect
that such transfer does not require registration of such transferred Securities
under the Securities Act.
(b) Certificates evidencing the Securities will contain the following
legend, until such time as they are not required under Section 4.1(c):
[NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF
THESE SECURITIES HAVE BEEN REGISTERED] [THESE SECURITIES HAVE NOT BEEN
REGISTERED] WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION 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 ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED
BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE
SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
[THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES] [THESE SECURITIES] MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT SECURED BY SUCH SECURITIES.
14
The Company acknowledges and agrees that an Investor may from time to
time pledge, and/or grant a security interest in some or all of the
Securities pursuant to a bona fide margin agreement in connection with a
bona fide margin account and, if required under the terms of such agreement
or account, such Investor may transfer pledged or secured Securities to the
pledgees or secured parties. Such a pledge or transfer would not be subject
to approval or consent of the Company and no legal opinion of legal counsel
to the pledgee, secured party or pledgor shall be required in connection
with the pledge, but such legal opinion may be required in connection with
a subsequent transfer following default by the Investor transferee of the
pledge. No notice shall be required of such pledge. At the appropriate
Investor's expense, the Company will execute and deliver such reasonable
documentation as a pledgee or secured party of Securities may reasonably
request in connection with a pledge or transfer of the Securities including
the preparation and filing of any required prospectus supplement under Rule
424(b)(3) of the Securities Act or other applicable provision of the
Securities Act to appropriately amend the list of Selling Stockholders
thereunder. Except as otherwise provided in Section 4.1(c), any Shares
subject to a pledge or security interest as contemplated by this Section
4.1(b) shall continue to bear the legend set forth in this Section 4.1(b)
and be subject to the restrictions on transfer set forth in Section 4.1(a).
(c) Certificates evidencing Shares and Warrant Shares shall not
contain any legend (including the legend set forth in Section 4.1(b)): (i)
while a registration statement (including the Registration Statement)
covering such Shares or Warrant Shares is then effective, or (ii) following
a sale or transfer of such Securities pursuant to Rule 144 (assuming the
transferor is not an Affiliate of the Company), or (iii) while such
Securities are eligible for sale under Rule 144(k). By the third Business
Day following the Effective Date, the Company shall provide written notice
(a "NOTICE OF EFFECTIVENESS") to each Investor notifying them that the
Registration Statement has been declared effective by the Commission and
directing each of the Investors to deliver to the Company's transfer agent
all certificates representing Shares, together with written instructions
indicating the DTC account information for such purpose, in exchange for
delivery of an equal number of Shares to be deposited or credited in the
Investor's or its designee's balance account with DTC through DTC's Deposit
Withdrawal Agent Commission System (or the successor thereto, if any). If,
during the period from the Effective Date until the tenth Trading Day
following the deemed receipt of the Notice of Effectiveness, an Investor
should (x) sell or transfer some or all of its Shares and (y) shall have
complied with the Share delivery and notification process described above
(the date of such sale or transfer and Share delivery being the "SHARE
DELIVERY DATE") and (1) the Company shall fail to deliver or cause to be
delivered to such Investor a certificate representing such Shares that is
free from all restrictive or other legends by the third Trading Day
following the Share Delivery Date and (2) following such third Trading Day
after the Share Delivery Date and prior to the time such Shares are
received free from restrictive legends, the Investor, or any third party on
behalf of such Investor, purchases (in an open market transaction or
otherwise) shares of Common Stock to deliver in satisfaction of a sale by
the Investor of such Shares (a "BUY IN"), then the Company shall pay in
cash to the Investor (for costs incurred either directly by such Investor
or on behalf of a third party) the amount by which the total purchase price
paid for Common Stock as a result of the Buy-In (including brokerage
commissions, if any) exceed the proceeds received by such Investor as a
result of the sale to which such Buy-In relates. The Investor shall provide
the Company written notice indicating the amounts payable to the Investor
in respect of the Buy In. The Company may not make any notation on its
records or give instructions to any transfer agent of the Company that
enlarge the restrictions on transfer set forth in this Section.
Notwithstanding the foregoing, an Investor may elect to retain physical
Share certificates, but would not be entitled to Buy-In relief under this
Section in such case.
15
4.2. FURNISHING OF INFORMATION. As long as any Investor owns the
Securities, the Company covenants to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to the
Exchange Act. As long as any Investor owns Securities, if the Company is not
required to file reports pursuant to such laws, it will prepare and furnish to
the Investors and make publicly available in accordance with Rule 144(c) such
information as is required for the Investors to sell the Shares and Warrant
Shares under Rule 144. The Company further covenants that it will take such
further action as any holder of Securities may reasonably request, all to the
extent required from time to time to enable such Person to sell the Shares and
Warrant Shares without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144.
4.3. INTEGRATION. The Company shall not, and shall use its best efforts to
ensure that no Affiliate of the Company shall, sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the Securities in a manner that would require the registration under the
Securities Act of the sale of the Securities to the Investors, or that would be
integrated with the offer or sale of the Securities to the Investors for
purposes of the rules and regulations of any Trading Market in a manner that
would require stockholder approval of the sale of the securities to the
Investors.
4.4. SUBSEQUENT REGISTRATIONS. Other than pursuant to the Registration
Statement, prior to the Effective Date, the Company may not file any
registration statement (other than on Form [S-8] or a post-effective amendment
to the Company's existing Form F-3 (selling shareholder prospectus) as a result
of the issuance of a stock dividend in December 2004) with the Commission with
respect to any securities of the Company.
4.5. SECURITIES LAWS DISCLOSURE; PUBLICITY. On the Trading Day following
the execution of this Agreement, and on the Trading Day following the Closing
Date, the Company shall issue press releases disclosing the transactions
contemplated hereby and the Closing. On the Trading Day following the execution
of this Agreement the Company will file a Current Report on Form 6-K disclosing
the material terms of the Transaction Documents (and attach as exhibits thereto
the Transaction Documents), and on the Trading Day following the Closing Date
the Company will file an additional Current Report on Form 6-K to disclose the
Closing. In addition, the Company will make such other filings and notices in
the manner and time required by the Commission and the Trading Market on which
the Common Stock is listed. Notwithstanding the foregoing, the Company shall not
publicly disclose the name of any Investor, or include the name of any Investor
in any filing with the Commission (other than the Registration Statement and any
exhibits to filings made in respect of this transaction in accordance with
periodic filing requirements under the Exchange Act) or any regulatory agency or
Trading Market, without the prior written consent of such Investor, except to
the extent such disclosure is required by law or Trading Market regulations.
16
4.6. LIMITATION ON ISSUANCE OF FUTURE PRICED SECURITIES. During the six
months following the Closing Date, the Company shall not issue any "Future
Priced Securities" as such term is described by NASD IM-4350-1.
4.7. INDEMNIFICATION OF INVESTORS. In addition to the indemnity provided in
the Registration Rights Agreement, the Company will indemnify and hold the
Investors and their directors, officers, shareholders, partners, employees and
agents (each, an "INVESTOR PARTY") harmless from any and all losses,
liabilities, obligations, claims, contingencies, damages, costs and expenses,
including all judgments, amounts paid in settlements, court costs and reasonable
attorneys' fees and costs of investigation (collectively, "LOSSES") that any
such Investor Party may suffer or incur as a result of or relating to any
misrepresentation, breach or inaccuracy of any representation or warranty made
by the Company in any Transaction Document. In addition to the indemnity
contained herein, the Company will reimburse each Investor Party for its
reasonable legal and other expenses (including the cost of any investigation,
preparation and travel in connection therewith) incurred in connection
therewith, as such expenses are incurred.
4.8. NON-PUBLIC INFORMATION. The Company covenants and agrees that neither
it nor any other Person acting on its behalf will provide any Investor or its
agents or counsel with any information that the Company believes constitutes
material non-public information, unless prior thereto such Investor shall have
executed a written agreement regarding the confidentiality and use of such
information. The Company understands and confirms that each Investor shall be
relying on the foregoing representations in effecting transactions in securities
of the Company.
4.9. LISTING OF SECURITIES. The Company agrees, (i) if the Company applies
to have the Common Stock traded on any other Trading Market, it will include in
such application the Shares and Warrant Shares, and will take such other action
as is necessary or desirable to cause the Shares and Warrant Shares to be listed
on such other Trading Market as promptly as possible, and (ii) it will take all
action reasonably necessary to continue the listing and trading of its Common
Stock on a Trading Market and will take all action reasonably necessary to
comply in all material respects with the Company's reporting, filing and other
obligations under the bylaws or rules of the Trading Market.
4.10. USE OF PROCEEDS. The Company will use the net proceeds from the sale
of the Securities hereunder for working capital purposes and not for the
satisfaction of any portion of the Company's debt (other than payment of trade
payables and accrued expenses in the ordinary course of the Company's business
and consistent with prior practices), or to redeem any Common Stock or Common
Stock Equivalents.
17
4.11. SHORT SALES. Each Investor covenants that neither it nor any Person
acting on its behalf or pursuant to any understanding with it will engage in any
Short Sales with respect to the Common Stock prior to the Effective Date.
ARTICLE 5.
CONDITIONS PRECEDENT TO CLOSING
5.1. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE INVESTORS TO PURCHASE
SECURITIES. The obligation of each Investor to acquire Securities at the Closing
is subject to the satisfaction or waiver by such Investor, at or before the
Closing, of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Company contained herein shall be true and correct in all material
respects as of the date when made and as of the Closing as though made on
and as of such date;
(b) PERFORMANCE. The Company shall have performed, satisfied and
complied in all material respects with all covenants, agreements and
conditions required by the Transaction Documents to be performed, satisfied
or complied with by it at or prior to the Closing;
(c) NO INJUNCTION. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated
or endorsed by any court or governmental authority of competent
jurisdiction that prohibits the consummation of any of the transactions
contemplated by the Transaction Documents;
(d) ADVERSE CHANGES. Since the date of execution of this Agreement, no
event or series of events shall have occurred that reasonably could have or
result in a Material Adverse Effect;
(e) NO SUSPENSIONS OF TRADING IN COMMON STOCK; LISTING. Trading in the
Common Stock shall not have been suspended by the Commission or any Trading
Market (except for any suspensions of trading of not more than one Trading
Day solely to permit dissemination of material information regarding the
Company) at any time since the date of execution of this Agreement, and the
Common Stock shall have been at all times since such date listed for
trading on a Trading Market;
(f) COMPANY DELIVERABLES. The Company shall have delivered the Company
Deliverables in accordance with Section 2.2(a);
(g) NASDAQ LISTING. If applicable, the Nasdaq Stock Market shall have
waived application of the 15 day prior notice contained in NASD Marketplace
Rule 4310(c)(17)(D) or such timeframe shall have expired without objection;
and
(h) TERMINATION. This Agreement shall not have been terminated as to
such Investor in accordance with Section 6.5.
18
5.2. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANY TO SELL
SECURITIES. The obligation of the Company to sell Securities at the Closing is
subject to the satisfaction or waiver by the Company, at or before the Closing,
of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of each Investor contained herein shall be true and correct in all material
respects as of the date when made and as of the Closing Date as though made
on and as of such date;
(b) PERFORMANCE. Each Investor shall have performed, satisfied and
complied in all material respects with all covenants, agreements and
conditions required by the Transaction Documents to be performed, satisfied
or complied with by such Investor at or prior to the Closing;
(c) NO INJUNCTION. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated
or endorsed by any court or governmental authority of competent
jurisdiction that prohibits the consummation of any of the transactions
contemplated by the Transaction Documents;
(d) INVESTORS DELIVERABLES. Each Investor shall have delivered its
Investors Deliverables in accordance with Section 2.2(b);
(e) NASDAQ LISTING. If applicable, the Nasdaq Stock Market shall have
waived application of the 15 day prior notice contained in NASD Marketplace
Rule 4310(c)(17)(D) or such timeframe shall have expired without objection;
and
(f) TERMINATION. This Agreement shall not have been terminated as to
such Investor in accordance with Section 6.5.
ARTICLE 6.
MISCELLANEOUS
6.1. FEES AND EXPENSES. Each party shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of the Transaction Documents. The Company shall pay all
stamp and other taxes and duties levied in connection with the issuance of the
Securities.
6.2. ENTIRE AGREEMENT. The Transaction Documents, together with the
Exhibits and Schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements,
understandings, discussions and representations, oral or written, with respect
to such matters, which the parties acknowledge have been merged into such
documents, exhibits and schedules.
6.3. NOTICES. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile (provided the sender
receives a machine-generated confirmation of successful transmission) at the
facsimile number specified in this Section prior to 6:30 p.m. (New York City
time) on a Business Day, (b) the next Business Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section on a day that is not a Business Day
or later than 6:30 p.m. (New York City time) on any Business Day, (c) the third
Business Day following the date of mailing, if sent by recognized international
courier service, or (d) upon actual receipt by the party to whom such notice is
required to be given. The address for such notices and communications shall be
as follows:
19
If to the Company: X. Xxxxx-Food International Ltd.
0 Xxxxx Xxxx Xxxxxx
Xxxxxxxx Xxxxxxxxxx Xxxx
Xxxxx, 00000
Israel
Attn: Chief Executive Officer
Facsimile: 972 8 932 2277
With a copy to:
Gross, Kleinhendler, Hodak, Halevy,
Xxxxxxxxx & Co.
One Azrieli Center
Xxx Xxxx 00000
Xxxxxx
Attention: Xxxxx Xxxxxx, Adv.
Telephone: x000 (0) 000-0000
Facsimile: x000 (0) 000-0000
If to an Investor: To the address set forth under such Investor's
name on the signature pages hereof;
or such other address as may be designated in writing hereafter, in the same
manner, by such Person.
6.4. AMENDMENTS; WAIVERS; NO ADDITIONAL CONSIDERATION. No provision of this
Agreement may be waived or amended except in a written instrument signed by the
Company and the Investors holding a majority of the Shares. No waiver of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of either party to exercise
any right hereunder in any manner impair the exercise of any such right. No
consideration shall be offered or paid to any Investor to amend or consent to a
waiver or modification of any provision of any Transaction Document unless the
same consideration is also offered to all Investors who then hold Shares.
6.5. TERMINATION. This Agreement may be terminated prior to Closing:
(a) by written agreement of the Investors and the Company; and
(b) by the Company or an Investor (as to itself but no other Investor)
upon written notice to the other, if the Closing shall not have taken place
by 6:30 p.m. Eastern time on the Outside Date; PROVIDED, that the right to
terminate this Agreement under this Section 6.5(b) shall not be available
to any Person whose failure to comply with its obligations under this
Agreement has been the cause of or resulted in the failure of the Closing
to occur on or before such time.
20
In the event of a termination pursuant to this Section, the Company shall
promptly notify all non-terminating Investors. Upon a termination in accordance
with this Section 6.5, the Company and the terminating Investor(s) shall not
have any further obligation or liability (including as arising from such
termination) to the other and no Investor will have any liability to any other
Investor under the Transaction Documents as a result therefrom.
6.6. CONSTRUCTION. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party. This Agreement
shall be construed as if drafted jointly by the parties, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement or any of the Transaction
Documents.
6.7. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of the parties and their successors and permitted assigns. The
Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Investors. Any Investor may assign any
or all of its rights under this Agreement to any Person to whom such Investor
assigns or transfers any Securities, provided such transferee agrees in writing
to be bound, with respect to the transferred Securities, by the provisions
hereof that apply to the "Investors." The assignment by a party to this
Agreement of any rights hereunder shall not affect the obligations of such party
under this Agreement. In addition, prior to Closing, and subject to Sections
4.1(a) and (b), the Investors may assign the Securities and its rights under
this Agreement and the other Transaction Documents and any other rights hereto
and thereto without the consent of the Company so long as the transferee is an
"accredited investor" as defined in Regulation D under the Securities Act.
6.8. NO THIRD-PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in Section 4.7 (as to each
Investor Party).
6.9. GOVERNING LAW. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof. Each party
agrees that all Proceedings concerning the interpretations, enforcement and
defense of the transactions contemplated by this Agreement and any other
Transaction Documents (whether brought against a party hereto or its respective
Affiliates, employees or agents) shall be commenced exclusively in the New York
Courts. Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the New York Courts for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein (including with respect to the enforcement of the any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any Proceeding, any claim that it is not personally subject to the
jurisdiction of any such New York Court, or that such Proceeding has been
commenced in an improper or inconvenient forum. Each party hereto hereby
irrevocably waives personal service of process and consents to process being
served in any such Proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. Each party hereto hereby
irrevocably waives, to the fullest extent permitted by applicable law, any and
all right to trial by jury in any legal proceeding arising out of or relating to
this Agreement or the transactions contemplated hereby. If either party shall
commence a Proceeding to enforce any provisions of a Transaction Document, then
the prevailing party in such Proceeding shall be reimbursed by the other party
for its reasonable attorneys' fees and other costs and expenses incurred with
the investigation, preparation and prosecution of such Proceeding.
21
6.10. SURVIVAL. The representations, warranties, agreements and covenants
contained herein shall survive the Closing and the delivery of the Securities.
6.11. EXECUTION. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.
6.12. SEVERABILITY. If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.
6.13. RESCISSION AND WITHDRAWAL RIGHT. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) the
Transaction Documents, whenever any Investor exercises a right, election, demand
or option under a Transaction Document and the Company does not timely perform
its related obligations within the periods therein provided, then such Investor
may rescind or withdraw, in its sole discretion from time to time upon written
notice to the Company, any relevant notice, demand or election in whole or in
part without prejudice to its future actions and rights.
6.14. REPLACEMENT OF SECURITIES. If any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon
cancellation thereof, or in lieu of and substitution therefor, a new certificate
or instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested. The applicants for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party costs
associated with the issuance of such replacement Securities. If a replacement
certificate or instrument evidencing any Securities is requested due to a
mutilation thereof, the Company may require delivery of such mutilated
certificate or instrument as a condition precedent to any issuance of a
replacement.
22
6.15. REMEDIES. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Investors and the Company will be entitled to specific performance under the
Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in
any action for specific performance of any such obligation the defense that a
remedy at law would be adequate.
6.16. PAYMENT SET ASIDE. To the extent that the Company makes a payment or
payments to any Investor pursuant to any Transaction Document or an Investor
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.
6.17. INDEPENDENT NATURE OF INVESTORS' OBLIGATIONS AND RIGHTS. The
obligations of each Investor under any Transaction Document are several and not
joint with the obligations of any other Investor, and no Investor shall be
responsible in any way for the performance of the obligations of any other
Investor under any Transaction Document. The decision of each Investor to
purchase Securities pursuant to the Transaction Documents has been made by such
Investor independently of any other Investor. Nothing contained herein or in any
Transaction Document, and no action taken by any Investor pursuant thereto,
shall be deemed to constitute the Investors as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Investors are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Documents. Each
Investor acknowledges that no other Investor has acted as agent for such
Investor in connection with making its investment hereunder and that no Investor
will be acting as agent of such Investor in connection with monitoring its
investment in the Securities or enforcing its rights under the Transaction
Documents. Each Investor shall be entitled to independently protect and enforce
its rights, including without limitation the rights arising out of this
Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other Investor to be joined as an additional party in any
proceeding for such purpose. The Company acknowledges that each of the Investors
has been provided with the same Transaction Documents for the purpose of closing
a transaction with multiple Investors and not because it was required or
requested to do so by any Investor.
23
6.18. LIMITATION OF LIABILITY. Notwithstanding anything herein to the
contrary, the Company acknowledges and agrees that the liability of an Investor
arising directly or indirectly, under any Transaction Document of any and every
nature whatsoever shall be satisfied solely out of the assets of such Investor,
and that no trustee, officer, other investment vehicle or any other Affiliate of
such Investor or any investor, shareholder or holder of shares of beneficial
interest of such a Investor shall be personally liable for any liabilities of
such Investor, other than losses resulting from such other Person's fraud or
illegality.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOLLOW]
24
IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
X. XXXXX-FOOD INTERNATIONAL LTD.
/s/ GIL HOCHBOIN
----------------
Gil Hochboin
Chief Financial Officer
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOR INVESTORS FOLLOW]
25
IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
NAME OF INVESTOR
_________________________________________
By: ____________________________________
Name:
Title:
Investment Amount: $____________________
Tax ID No.:______________________________
ADDRESS FOR NOTICE
c/o:_____________________________________
Street:__________________________________
City/State/Zip:__________________________
Attention:_______________________________
Tel:_____________________________________
Fax:_____________________________________
DELIVERY INSTRUCTIONS
(if different from above)
c/o:_____________________________________
Street:__________________________________
City/State/Zip:__________________________
Attention:_______________________________
Tel:_____________________________________
26
