Exhibit 3.1
CONVERTIBLE NOTE PURCHASE AGREEMENT
This Convertible Note Purchase Agreement, dated as of December 13, 2004
(the "Effective Date") is entered into by and among CNH Holdings Company, a
Nevada corporation (the "Company") and each of the Purchasers of Notes and
Warrants whose names are set forth on Exhibit A hereto (individually, a
"Purchaser" and collectively, the "Purchasers").
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement:
"Agreement" means this agreement, as it may be amended or modified and
in effect from time to time.
"Article" means an article of this Agreement unless another document is
specifically referenced.
"Business Day" means a day (other than a Saturday or Sunday) on which
banks generally are open in Dallas for the conduct of substantially all of their
commercial lending activities.
"Capitalized Lease" of a Person means any lease of Property by such
Person as lessee which would be capitalized on a balance sheet of such Person
prepared in accordance with GAAP.
"Capitalized Lease Obligations" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be shown as a
liability on a balance sheet of such Person prepared in accordance with GAAP.
"Cash Equivalent Investments" means (i) short-term obligations of, or
fully guaranteed by, the United States of America, (ii) commercial paper rated
A-1 or better by S&P or P-1 or better by Moody's, (iii) demand deposit accounts
maintained in the ordinary course of business, and (iv) certificates of deposit
issued by and time deposits with commercial banks (whether domestic or foreign)
having capital and surplus in excess of $100,000,000; PROVIDED in each case that
the same provides for payment of both principal and interest (and not principal
alone or interest alone) and is not subject to any contingency regarding the
payment of principal or interest.
"Change in Control" means (i) the acquisition (other than as a result
of the exercise of the Warrants or the conversion of the Notes as set forth in
Article V) of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Securities Exchange Act of 1934) of twenty percent (20%) or more of
the outstanding shares of voting stock of the Company by any Person, or two or
more Persons acting in concert; provided that such Person or Persons did not
then have beneficial ownership of forty percent (40%) or more of the outstanding
shares of voting stock of the Company; (ii) the sale of all or substantially all
of the assets of the Company; or (iii) a merger or consolidation of the Company
with any other Person, after which the Company is not the surviving entity.
"Closing" is defined in Section 2.2.
"Closing Date" is defined in Section 2.2.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Company's common stock, par value $.001 per
share, or shares resulting from any subdivision or combination of such common
stock or, in the case of any reorganization, reclassification, merger,
consolidation or sale of the type referred to in Section 4.2, the stock or other
securities or property provided for in such Section.
"Company" means CNH Holdings Company, a Nevada corporation, and its
successors and assigns.
"Company SEC Documents" means all forms, reports, statements,
schedules, registration statements and other documents required to be filed with
the Commission.
"Company Stock Plans" means the Company's 2004 Long Term Incentive Plan
and any other of the Company's stock option plans that existed prior to December
31, 2000.
"Contingent Obligation" of a Person means any agreement, undertaking or
arrangement by which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide funds for the payment of, or otherwise becomes or
is contingently liable upon, the obligation or liability of any other Person, or
agrees to maintain the net worth or working capital or other financial condition
of any other Person, or otherwise assures any creditor of such other Person
against loss, including, without limitation, any comfort letter, operating
agreement, take-or-pay contract or the obligations of any such Person as general
partner of a partnership with respect to the liabilities of the partnership.
"Controlled Group" means all members of a controlled group of
corporations or other business entities and all trades or businesses (whether or
not incorporated) under common control which, together with the Company or any
of its Subsidiaries, are treated as a single employer under Section 414 of the
Code.
"Conversion Price Per Share" means the lesser of $1.30 per share, or a
25% discount to the average closing bid price of the Common Stock for the five
days including and immediately preceding the Interest Compounding Date, provided
that in no event shall the Conversion Price Per Share be less than $1.00 per
share.
"Default" means an event described in Article XI.
"Environmental Claim" means any written or oral notice, claim, demand,
action, suit, complaint, proceeding or other communication by any person
alleging liability or potential liability arising out of, relating to, based on
or resulting from (i) the presence, discharge, emission, release or threatened
release of any Hazardous Materials at any location, whether or not such property
is owned, leased or operated or (ii) circumstances forming the basis of any
violation or alleged violation of any Environmental Law or Environmental Permit
or (iii) otherwise relating to obligations or liabilities under any
Environmental Laws; provided, however, that the term "Environmental Claim" shall
not include any such claim, demand, action, suit, complaint, proceeding or other
communication under an insurance or reinsurance policy issued by the Company.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and other governmental restrictions relating to
(i) the protection of the environment, (ii) the effect of the environment on
human health, (iii) emissions, discharges or releases of pollutants,
contaminants, hazardous substances or wastes into surface water, ground water or
land, or (iv) the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of pollutants, contaminants, hazardous
substances or wastes or the clean-up or other remediation thereof.
"Environmental Permits" "Environmental Permits" means all permits,
licenses, registrations and other governmental authorizations required for an
entity and its facilities to conduct its business under Environmental Laws.
"Environmental Report" means any report, study, assessment, audit, or
other similar document that addresses any issue of noncompliance with, or
liability under, any Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any rule or regulation issued thereunder.
"Excluded Taxes" means, in the case of Purchasers, taxes imposed on its
overall net income, and franchise taxes imposed on it, by (i) the jurisdiction
under the laws of which Purchaser is incorporated or organized or resides or
(ii) the jurisdiction in which Purchaser's principal executive office is
located.
"Exhibit" refers to an exhibit to this Agreement, unless another
document is specifically referenced.
"GAAP" means generally accepted accounting principles as in effect from
time to time, applied in a manner consistent.
"Hazardous Materials" means any gasoline or petroleum (including crude
oil or any fraction thereof) or petroleum products, polychlorinated biphenyls,
urea-formaldehyde insulation, asbestos, pollutants, contaminants, radioactivity,
and any other substances of any kind, whether or not any such substance is
defined as hazardous or toxic under any Environmental Law, that is regulated
pursuant to or could give rise to liability under any Environmental Law.
"Purchaser" means the Person(s) listed on the signature page of this
Agreement as a "Purchaser" and its respective successors and assigns.
"Indebtedness" of a Person means such Person's (i) obligations for
borrowed money, (ii) obligations representing the deferred purchase price of
Property or services (other than accounts payable arising in the ordinary course
of such Person's business payable on terms customary in the trade), (iii)
obligations, whether or not assumed, secured by Liens or payable out of the
proceeds or production from Property now or hereafter owned or acquired by such
Person, (iv) obligations which are evidenced by notes, acceptances, or other
instruments, (v) obligations of such Person to purchase securities or other
Property arising out of or in connection with the sale of the same or
substantially similar securities or Property, (vi) Capitalized Lease Obligations
and (vii) any other obligation for borrowed money or other financial
accommodation which in accordance with GAAP would be shown as a liability on the
consolidated balance sheet of such Person.
"Interest Compounding Date" means each March 31, June 30, September 31,
and December 31 during the term of the Notes.
"Investment" of a Person means any loan, advance (other than
commission, travel and similar advances to officers and employees made in the
ordinary course of business), extension of credit (other than accounts
receivable arising in the ordinary course of business on terms customary in the
trade) or contribution of capital by such Person; stocks, bonds, mutual funds,
partnership interests, notes, debentures or other securities owned by such
Person; any deposit accounts and certificate of deposit owned by such Person;
and structured notes, derivative financial instruments and other similar
instruments or contracts owned by such Person.
"Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, the interest of a vendor or
lessor under any conditional sale, Capitalized Lease or other title retention
agreement).
"Loan Documents" means this Agreement, the Notes and Warrants issued
pursuant to Section 2.1 and the Registration Rights Agreement.
"Material Adverse Effect" means a material adverse effect on (i) the
business, Property, condition (financial or otherwise), results of operations,
or prospects of the Company and its Subsidiaries taken as a whole, (ii) the
ability of the Company to perform its obligations under the Loan Documents, or
(iii) the validity or enforceability of any of the Loan Documents or the rights
or remedies of Purchasers thereunder.
"Material Indebtedness" is any Indebtedness in excess of $50,000.
"Maturity Date" means, for each Note, the two (2) year anniversary of
the issuance date for such Note.
"Multiemployer Plan" means a Plan maintained pursuant to a collective
bargaining agreement or any other arrangement to which the Company or any member
of the Controlled Group is a party to which more than one employer is obligated
to make contributions.
"Notes" means the Senior Unsecured Convertible Promissory Notes, in the
form of Exhibit B, issued pursuant to Section 2.1.
"Other Taxes" is defined in Section 3.5.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"Person" means any natural person, corporation, firm, joint venture,
partnership, limited liability company, association, enterprise, trust or other
entity or organization, or any government or political subdivision or any
agency, department or instrumentality thereof.
"Plan" means an employee pension benefit plan which is covered by Title
IV of ERISA or subject to the minimum funding standards under Section 412 of the
Code as to which the Company or any member of the Controlled Group may have any
liability.
"Property" of a Person means any and all property, whether real,
personal, tangible, intangible, or mixed, of such Person, or other assets owned,
leased or operated by such Person.
"Qualified Financing" means the first sale to, or exchange with, any
third party any Qualified Securities, in a private transaction occurring after
the Effective Date and in which the Company receives gross proceeds of at least
$500,000; provided, that a Qualified Financing shall not include any transaction
involving (a) the Company's issuance of any Financing Securities (other than for
cash) in connection with a merger, acquisition or consolidation of the Company,
(ii) the Company's issuance of Financing Securities in connection with strategic
license agreements and other partnering arrangements so long as such issuances
are not for the purpose of raising capital, (iii) the Company's issuance of
Financing Securities in connection with bona fide firm underwritten public
offerings of its securities, (iv) the Company's issuance of Common Stock or the
issuance or grants of options to purchase Common Stock pursuant to the Company
Stock Plans, (v) as a result of the exercise of options or warrants or
conversion of convertible notes or preferred stock which are granted or issued
as of the date of this Agreement.
"Qualified Securities" means any securities convertible, exercisable or
exchangeable into Common Stock, including debt securities so convertible, issued
by the Company in a Qualified Financing.
"Registration Date" means the date that the Registration Statement
contemplated in the Registration Right Agreement is declared effective by the
Commission.
"Registration Rights Agreement" means the Registration Rights Agreement
dated as of the date of this Agreement, by and between the parties, as
contemplated under Section 7.1(a)(v).
"Reportable Event" means a reportable event as defined in Section 4043
of ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC has by regulation waived
the requirement of Section 4043(a) of ERISA that it be notified within 30 days
of the occurrence of such event, PROVIDED, HOWEVER, that a failure to meet the
minimum funding standard of Section 412 of the Code and of Section 302 of ERISA
shall be a Reportable Event regardless of the issuance of any such waiver of the
notice requirement in accordance with either Section 4043(a) of ERISA or Section
412(d) of the Code.
"Securities Act" means the Securities Act of 1933, as amended.
"Schedule" refers to a specific schedule to this Agreement, unless
another document is specifically referenced.
"Section" means a numbered section of this Agreement, unless another
document is specifically referenced.
"Subsidiary" of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries, or
(ii) any partnership, limited liability company, association, joint venture or
similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled.
Unless otherwise expressly provided, all references herein to a "Subsidiary"
shall mean a Subsidiary of the Company.
"Substantial Portion" means, with respect to the Property of the
Company and its Subsidiaries, Property which (i) represents more than 10% of the
consolidated assets of the Company and its Subsidiaries as would be shown in the
consolidated financial statements of the Company and its Subsidiaries as at the
beginning of the twelve-month period ending with the month in which such
determination is made, or (ii) is responsible for more than 10% of the
consolidated net sales or of the consolidated net income of the Company and its
Subsidiaries as reflected in the financial statements referred to in clause (i)
above.
"Taxes" means any and all present or future taxes, duties, levies,
imposts, deductions, charges or withholdings, and any and all liabilities with
respect to the foregoing, but EXCLUDING Excluded Taxes.
"Unmatured Default" means an event which but for the lapse of time or
the giving of notice, or both, would constitute a Default.
"Warrant" shall mean a warrant in the form attached hereto as Exhibit
C, issued to a Purchaser in accordance with Section 2.1
The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms.
ARTICLE II
ISSUANCE OF NOTES AND WARRANTS
2.1 Authorization and Issuance of the Notes and Warrants. Upon the following
terms and conditions, the Company has duly authorized the issuance and sale to
Purchasers of (a) up to $1,000,000 in aggregate principal amount of Notes, and
each Purchaser shall purchase from the Company, and (b) Warrants to purchase up
to an aggregate of 1,000,000 shares of Common Stock, at an exercise price of
$1.30 per share. The Company and the Purchasers are executing and delivering
this Agreement in accordance with and in reliance upon the exemption from
securities registration afforded by Rule 506 of Regulation D ("Regulation D") as
promulgated by the Commission under the Securities Act of 1933, as amended (the
"Securities Act") or Section 4(2) of the Securities Act.
2.2 The Closing. The Company shall hold an initial closing of the issuance and
sale of the Notes and Warrants (the "Initial Closing") at made at the offices of
Xxxxxxx Xxxxxx L.L.P., 0000 X. Xxxxxxx Xxxxxxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxx,
00000 (the "Closing") at 1:00 p.m. (central time) on the Effective Date (the
"Initial Closing Date"). The Company may hold additional interim closings after
the Initial Closing (each, an "Additional Closing") on one or more dates as
agreed upon between the Company and subsequent Purchasers (each, an "Additional
Closing Date") The Initial Closing Date and the Additional Closing Dates are
each hereinafter sometimes referred to as a "Closing Date." Delivery of the
Notes shall be made to Purchasers against payment therefor, by wire transfer of
immediately available funds on the applicable Closing Date, to an account
designated in writing by the Company. The Notes and Warrants shall be issued in
such name or names and in such permitted denomination or denominations as set
forth in Exhibit A.
2.3 The Conversion Shares. The Company has authorized and has reserved and
covenants to continue to reserve, free of preemptive rights and other similar
contractual rights of stockholders, such number of shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all of the
Notes and exercise of the Warrants then outstanding.
ARTICLE III
REPAYMENT OF THE NOTES
3.1 Interest Rates. Interest on the Notes shall be computed, at the rate of
eight percent (8%) per annum, for the actual number of days elapsed and on the
basis of a year consisting of 360 days, unless the maximum legal interest rate
would thereby be exceeded, in which event, to the extent necessary to avoid
exceeding such maximum rate, interest shall be computed on the basis of the
actual number of days elapsed in the applicable calendar year in which it
accrued. Interest on the Notes shall be compounded quarterly, on each Interest
Compounding Date.
3.2 Repayment of the Notes. The Company covenants and agrees that upon issuance
of the Notes, it will repay to Purchasers the unpaid principal balance of the
Notes in full, together with all accrued and unpaid interest, fees and other
amounts due hereunder, on the Maturity Date.
3.3 Prepayment. The Company may prepay the Notes, in whole or in part, upon
thirty (30) days prior written notice to Purchasers; provided that partial
prepayments may be made only in increments of $10,000. In the event of a
proposed prepayment by the Company, prior to such prepayment, Purchasers shall
have the right to convert the amount of the proposed prepayment into shares of
Common Stock in accordance with Article IV, regardless of the period of time
that the Notes have been outstanding.
3.4 Home Office Payment. The Company will pay all sums becoming due on Notes for
principal and interest to Purchasers in cash (by check or wire transfer to the
account(s) designated in writing by Purchasers) at the address specified below
for Purchasers, or by such other method or at such other address as Purchasers
shall have from time to time specified to the Company in writing for such
purpose, without the presentation or surrender of such Note or the making of any
notation thereon, except that upon written request of the Company made
concurrently with or reasonably promptly after payment or prepayment in full of
any Note, Purchasers shall surrender such Note for cancellation, reasonably
promptly after such request, to the Company at their principal executive office.
3.5 Taxes. Any and all payments by the Company hereunder or under the Notes or
other Loan Documents that are made to or for the benefit of Purchasers shall be
made free and clear of and without deduction for any and all Taxes. If the
Company shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder or under any Notes or other Loan Documents to Holder, the
sum payable shall be increased as may be necessary so that after making all
required deductions of Taxes (including deductions of Taxes applicable to
additional sums payable under this paragraph), Purchasers receive an amount
equal to the sum it would have received had no such deductions been made. The
Company shall make such deductions and the Company shall pay the full amount so
deducted to the relevant taxation authority or other authority in accordance
with applicable law. In addition, the Company agree to pay any present or future
stamp, documentary, excise, privilege, intangible or similar levies that arise
at any time or from time to time from any payment made under any and all Loan
Documents or from the execution or delivery by the Company or from the filing or
recording or maintenance of, or otherwise with respect to the exercise by
Purchasers of their respective rights under any and all Loan Documents
(collectively, "Other Taxes"). The Company will indemnify Purchasers for the
full amount of Taxes imposed on or with respect to amounts payable hereunder and
Other Taxes, and any liability (including penalties, interest and expenses)
arising there from or with respect thereto. Payment of this indemnification
shall be made within thirty (30) days from the date Holder provide the Company
with a certificate certifying and setting forth in reasonable detail the
calculation thereof as to the amount and type of such Taxes. Any such
certificates submitted by Purchasers in good faith to the Company shall, absent
manifest error, be final, conclusive and binding on all parties. The obligation
of the Company under this Section 3.5 shall survive the payment of the Notes and
the termination of this Agreement. Within thirty (30) days after the Company
having received a receipt for payment of Taxes and/or Other Taxes, the Company
shall furnish to the appropriate Holder, the original or certified copy of a
receipt evidencing payment.
3.6 Maximum Lawful Rate. This Agreement, the Notes and the other Loan Documents
are hereby limited by this Section 3.6. In no event, whether by reason of
acceleration of the maturity of the amounts due hereunder or otherwise, shall
interest and fees contracted for, charged, received, paid or agreed to be paid
to Holder exceed the maximum amount permissible under such applicable law. If,
from any circumstance whatsoever, interest and fees would otherwise be payable
to Purchasers in excess of the maximum amount permissible under applicable law,
the interest and fees shall be reduced to the maximum amount permitted under
applicable law. If from any circumstance, Purchasers shall have received
anything of value deemed interest by applicable law in excess of the maximum
lawful amount, an amount equal to any excess of interest shall be applied to the
reduction of the Aggregate Commitment or principal amount of the Notes, as the
case may be, in such manner as may be determined by Purchasers, and not to the
payment of fees or interest, or if such excessive interest exceeds the unpaid
balance of the Aggregate Commitment or principal amount of the Notes, as the
case may be, such excess shall be refunded to the Company.
3.7 Certain Waivers. The Company unconditionally waive (i) any rights to
presentment, demand, protest or (except as expressly required hereby) notice of
any kind, and (ii) any rights of recession, setoff, counterclaim or defense to
payment under the Notes or otherwise that the Company may have or claim against
any Holder or any prior Holder.
ARTICLE IV
CONVERSION OF NOTES
4.1 Conversion upon Qualified Financing. Subject to this Section 4.1, the
Purchasers shall have the right to convert the principal and accrued interest of
the Note, in whole or in part, into Qualified Securities, upon the same terms
and conditions as set forth in the Qualified Financing.
(a) The Company shall notify each Holder, in writing, at least ten (10) days
prior to the completion of any Qualified Financing of the terms and conditions
of the Qualified Financing. Holders electing to convert Notes, or portions of a
Note, into Qualified Securities, within five (5) days of the date of such
notice, notify the Company, in writing, of such election, specifying the
principal and accrued interest to be so converted, and shall surrender to the
Company, the Note, in the form specified in Section 4.4, to be so converted.
(b) All Notes submitted by Holders for conversion into Qualified Securities
shall be deemed to be converted on the date the Qualified Financing is
consummated by the Company.
4.2 Conversion into Common Stock. Holders shall have the right to convert, upon
thirty (30) days prior written notice, the principal and accrued interest of the
Note, in whole or in part, into shares of Common Stock at then current
Conversion Price Per Share, on any Interest Compounding Date occurring after the
Registration Date. All notices of conversion must be accompanied by surrender of
the Note, in the form specified in Section 4.4, to be so converted and shall be
deemed to be converted on the date set forth in the written notice; provided,
such notice is properly given.
(a) Subdivision or Combination of Common Stock. If the Company at any time
subdivides (by any stock split, stock dividend, recapitalization or otherwise)
one or more classes of its outstanding shares of Common Stock into a greater
number of shares, the Conversion Price Per Share in effect immediately prior to
such subdivision will be proportionately decreased. If the Company at any time
combines (by reverse stock split or otherwise) one or more classes of its
outstanding shares of Common Stock into a smaller number of shares, the
Conversion Price Per Share in effect immediately prior to such combination will
be proportionately increased.
(b) Reorganization, Reclassification, Consolidation, Merger or Sale. In case at
any time or from time to time, the Company shall (a) effect a capital
reorganization, reclassification or recapitalization, (b) consolidate with,
combine with or merge into any other Person, or (c) transfer all or
substantially all of its properties or assets to any other Person under any plan
or arrangement contemplating the dissolution of the Company, then in each such
case, Purchasers, at any time after the consummation of such reorganization,
recapitalization, consolidation or merger or the effective date of such
dissolution, as the case may be, shall receive, in lieu of the Common Stock (or
other securities) issuable upon conversion of the Notes, the stock and other
securities and property (including cash) to which Purchasers would have been
entitled upon such consummation or in connection with such dissolution, as the
case may be, if Purchasers had so converted the Note immediately prior thereto
at the Conversion Price Per Share in effect immediately prior thereto, all
subject to further adjustment thereafter as provided in this Article IV.
(c) Reclassification of Common Stock. In case of any reclassification or change
of outstanding shares of the Common Stock (other than a change in par value, or
from par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination), or in case of any consolidation or
merger in which the Company is the continuing corporation and which does not
result in any reclassification or change of outstanding shares of the Common
Stock), or in case of any sale or conveyance to another corporation of the
property of the Company as an entirety or substantially as an entirety,
Purchasers shall have the right thereafter to convert this Note into the kind
and amount of shares of stock of the Company or of such successor or purchasing
corporation and other securities and property receivable upon such
reclassification, change, consolidation, merger, sale, or conveyance by a holder
of the number of shares of Common Stock of the Company into which this Note
might have been converted immediately prior to such reclassification, change,
consolidation, merger, sale or conveyance. The provisions of this Section shall
similarly apply to successive reclassifications, changes, consolidations,
mergers, sales, or conveyances.
4.3 Issuance of Securities upon Conversion. As promptly as practicable after
conversion of a Note, the Company shall deliver a certificate or certificates
representing (a) the securities or debt into which the Note (or portion thereto)
is converted, if such conversion is pursuant to Section 4.1(a), or (b) the
number of fully paid and nonassessable shares of the Common Stock into which the
Note (or portion thereto) has been converted, if such conversion is pursuant to
Section 4.1(b). Upon conversion, all the rights of Purchasers as a holder
thereof shall cease with respect to the Note (or the portion thereof being
converted) at such time, and the person or persons entitled to receive the
securities, debt or shares of the Common Stock upon conversion of this Note
shall be treated for all purposes as having become the record holder or holders
of such Qualified Securities or shares of Common Stock at such time. Provided,
however, that no conversion on any date when the stock transfer books of the
Company shall be closed shall be effective to constitute the person or persons
entitled to receive the Qualified Securities or shares of Common Stock upon such
conversion as the record holder or holders of such Qualified Securities or
shares of Common Stock on such date, but such conversion shall be effective to
constitute the person or persons entitled to receive such Qualified Securities
or shares of Common Stock as the record holder or holders thereof for all
purposes immediately prior to the close of the business on the next succeeding
day on which such stock transfer books are open.
4.4 Endorsement; Re-Issue. Notes, when surrendered for conversion, shall be duly
endorsed, or be accompanied by a written instrument of transfer in a form
satisfactory to the Company duly executed by Purchasers. For convenience, the
conversion of all or a portion, as the case may be, of the principal and accrued
interest of this Note into the Common Stock is hereinafter sometimes referred to
as the conversion of this Note. In the event that this Note is converted in part
only, upon such conversion, the Company shall execute and deliver to Purchasers,
without service charge, a new Note, of any authorized denomination or
denominations as requested by Purchasers, in aggregate principal amount equal to
and in exchange for the unconverted portion of the Note so surrendered.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF COMPANY
The Company represents and warrants to Purchasers that the statements
contained in the Article V are true and correct, except as set forth in the
Schedules delivered by the Company to Purchasers concurrently herewith.
5.1 Organization. The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Nevada. The Company (i) is
qualified or licensed in all jurisdictions where such qualification or license
is required to own and operate its properties and conduct its business in the
manner and at the places presently conducted; (ii) holds all franchises, grants,
licenses, certificates, permits, consents and orders, all of which are valid and
in full force and effect, from all applicable United States and foreign
regulatory authorities necessary to own and operate its properties and to
conduct its business in the manner and at the places presently conducted; and
(iii) has full power and authority (corporate and other) to own, lease and
operate its properties and assets and to carry on its business as presently
conducted and as proposed to be conducted, except where the failure to be so
qualified or licensed or to hold such franchises, grants, licenses,
certificates, permits, consents and orders or to have such power and authority
would not, when taken together with all other such failures, reasonably be
expected to have a Material Adverse Effect with respect to the Company. The
Company does not directly or indirectly own any equity or similar interest in,
or any interest convertible into or exchangeable or exercisable for, any equity
or similar interest in, any corporation, partnership, joint venture or other
business association or entity.
5.2 Capital Structure.
(a) As of October 15, 2004, the authorized capital stock of the Company consists
of 10,000,000 shares of Common Stock and 1,000,000 shares of preferred stock. As
of October 15, 2004, (i) 3,958,358 shares of Common Stock were issued and
outstanding, (ii) no shares of Common Stock were held in the treasury of the
Company, (iii) 1,000,000 shares of Common Stock were reserved for issuance under
outstanding Company Stock Plans, including stock appreciation rights,
performance units and stock units, and (iv) no shares of preferred stock were
issued or outstanding. All the outstanding shares of the Company's capital stock
are duly authorized, validly issued, fully paid and non-assessable. There are no
bonds, debentures, notes or other indebtedness having voting rights (or
convertible or exchangeable into securities having such rights) ("Company Voting
Debt") of the Company issued and outstanding. The shares of Common Stock
issuable upon conversion of the Notes and exercise of the Warrants have been
reserved for issuance and, when issued upon conversion of the Notes or exercise
of the Warrants in accordance with the terms thereof, will be duly authorized,
validly issued and fully paid and nonassessable and not subject to preemptive
rights. Except as set forth above, in Schedule 5.2(a) or as described in the
Company SEC Documents, and for the transactions contemplated by this Agreement,
(i) there are no shares of capital stock of the Company authorized, issued or
outstanding and (ii) there are no existing (A) options, warrants, calls,
preemptive rights, subscriptions or other rights, convertible or exchangeable
securities, agreements, arrangements or commitments of any character, relating
to the issued or unissued capital stock of the Company, obligating the Company
to issue, transfer or sell or cause to be issued, transferred or sold any shares
of capital stock or Company Voting Debt of, or other equity interest in, the
Company, (B) securities convertible into or exchangeable for such shares or
equity interests or (C) obligations of the Company to grant, extend or enter
into any such option, warrant, call, preemptive right, subscription or other
right, convertible security, agreement, arrangement or commitment. The Company
does not own any equity securities of any other Person.
(b) There are no voting trusts, proxies or other agreements or understandings to
which the Company is a party with respect to the voting of the capital stock of
the Company. The Company is not a party to any agreement or obligation,
contingent or otherwise, to redeem, repurchase or otherwise acquire or retire
shares of capital stock of the Company, whether as a result of the transactions
contemplated by this Agreement or otherwise.
(c) Except as set forth on Schedule 5.2(c), since June 30, 2004, the Company has
not (i) made or agreed to make any stock split or stock dividend, or issued or
permitted to be issued any shares of capital stock, or securities exercisable
for or convertible into shares of capital stock, of the Company other than
pursuant to the Company Stock Option Plan or any outstanding Company Stock
Option, (ii) repurchased, redeemed or otherwise acquired any shares of capital
stock of the Company or (iii) declared, set aside, made or paid to the
shareholders of the Company dividends or other distributions on the outstanding
shares of capital stock of the Company.
(d) Notes and the Warrants to be issued at the Closing have been duly authorized
by all necessary corporate action. The shares of Common Stock issuable upon
conversion of the Notes and exercise of the Warrants, when issued pursuant to
the terms thereof, will be duly authorized by all necessary corporate action and
validly issued and outstanding, fully paid and nonassessable, and the holders
shall be entitled to all rights accorded to a holder of Common Stock.
5.3 Authorization and Validity. The Company has the power and authority and
legal right to execute and deliver the Loan Documents and to perform its
obligations thereunder. The execution and delivery by the Company of the Loan
Documents and the performance of its obligations thereunder have been duly
authorized by proper corporate proceedings, and the Loan Documents constitute
legal, valid and binding obligations of the Company enforceable against the
Company in accordance with their terms, except as enforceability may be limited
by bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally.
5.4 No Conflict; Government Consent. Neither the execution and delivery by the
Company of the Loan Documents, nor the consummation of the transactions therein
contemplated, nor compliance with the provisions thereof will violate (i) any
law, rule, regulation, order, writ, judgment, injunction, decree or award
binding on the Company or (ii) the Company's articles or certificate of
incorporation or by-laws, or (iii) the provisions of any indenture, instrument
or agreement to which the Company is a party or is subject, or by which it, or
its Property, is bound, or conflict with or constitute a default thereunder, or
result in, or require, the creation or imposition of any Lien in, of or on the
Property of the Company pursuant to the terms of any such indenture, instrument
or agreement. No order, consent, adjudication, approval, license, authorization,
or validation of, or filing, recording or registration with, or exemption by, or
other action in respect of any governmental or public body or authority, or any
subdivision thereof, which has not been obtained by the Company, is required to
be obtained by the Company in connection with the execution and delivery of the
Loan Documents, or the payment and performance by the Company of any of its
obligations under or the legality, validity, binding effect or enforceability of
any of the Loan Documents.
5.5 SEC Filings; Financial Statements.
(a) The Company has filed all forms, reports, statements, schedules,
registration statements and other documents required to be filed with the SEC
since April 1, 2003 (the "Company SEC Documents"), each of which complied in all
material respects with the applicable requirements of the Securities Act of
1933, as amended (the "Securities Act"), and the rules and regulations
promulgated thereunder, or the Exchange Act and the rules and regulations
promulgated thereunder, each as in effect on the date so filed. No Subsidiary of
the Company is required to file any form, report, statement, schedule,
registration statement or other document with the SEC. No Company SEC Document,
when filed (or, if amended or superseded by a filing prior to the Closing Date,
on the date of such filing) 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.
(b) Each of the audited and unaudited consolidated financial statements of the
Company (including any related notes thereto) included in the Company SEC
Documents have been prepared in accordance with United States generally accepted
accounting principles ("GAAP"), applied on a consistent basis during the
relevant periods (except as may be disclosed in the notes thereto), and present
fairly the consolidated financial position and consolidated results of
operations and changes in cash flows of the Company as of the respective dates
or for the respective periods reflected therein, except, in the case of the
unaudited interim financial statements, for normal and recurring year-end
adjustments that are not material.
(c) Except as set forth in Schedule 5.5(c) and on the consolidated balance sheet
of the Company and its Subsidiaries as of June 30, 2004 included in the Company
SEC Documents (the "Latest Balance Sheet"), or in the notes thereto, neither the
Company has any liabilities, debts, claims or obligations of any nature (whether
accrued, absolute, direct or indirect, contingent or otherwise, whether due or
to become due), and there is no existing condition or set of circumstances which
would reasonably be expected, individually or in the aggregate, to result in
such a liability, except for liabilities or obligations incurred in the ordinary
course of business consistent with past practice since June 30, 2004, none of
which would, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect with respect to the Company.
5.6 Material Adverse Change. Except as set forth on Schedule 5.6, since June 30,
2004 there has been no change in the business, Property, condition (financial or
otherwise) or results of operations of the Company which could reasonably be
expected to have a Material Adverse Effect.
5.7 Taxes. The Company has filed all United States federal tax returns and all
other tax returns which are required to be filed and have paid all taxes due
pursuant to said returns or pursuant to any assessment received by the Company,
except such taxes, if any, as are being contested in good faith and as to which
adequate reserves have been provided in accordance with GAAP and as to which no
Lien exists. No tax liens have been filed and no claims are being asserted with
respect to any such taxes. The charges, accruals and reserves on the books of
the Company in respect of any taxes or other governmental charges are adequate.
5.8 Litigation and Contingent Obligations. Except as set forth on Schedule 5.8,
there is no litigation, arbitration, governmental investigation, proceeding or
inquiry pending or, to the knowledge of any of their officers, threatened
against or affecting the Company which could reasonably be expected to have a
Material Adverse Effect or which seeks to prevent, enjoin or delay the making of
any Loans. Other than any liability incident to any litigation, arbitration or
proceeding that could not reasonably be expected to have a Material Adverse
Effect, the Company has no material contingent obligations not provided for or
disclosed in the financial statements referred to in Section 5.5.
5.9 Labor and Employment. The Company and its Subsidiaries are and each of their
Plans are in compliance in all material respects with those provisions of ERISA,
the Code, the Age Discrimination in Employment Act, and the regulations and
published interpretations thereunder which are applicable to the Company or its
Subsidiaries or any such Plan. As of the date hereof, no Reportable Event has
occurred with respect to any Plan as to which any of the Company or its
Subsidiaries are or were required to file a report with the PBGC. No Plan has
any material amount of unfunded benefit liabilities (within the meaning of
Section 4001(a)(18) of ERISA) or any accumulated funding deficiency (within the
meaning of Section 302(a)(2) of ERISA), whether or not waived, and neither the
Company nor any member of the Controlled Group has incurred or expects to incur
any material withdrawal liability under Subtitle E of Title IV of ERISA to a
Multiemployer Plan. The Company is in compliance in all material respects with
all labor and employment laws, rules, regulations and requirements of all
applicable domestic and foreign jurisdictions. There are no pending or
threatened labor disputes, work stoppages or strikes.
5.10 Accuracy of Information. No information, exhibit or report furnished by the
Company to any Purchaser in connection with the negotiation of, or compliance
with, the Loan Documents contained any material misstatement of fact or omitted
to state a material fact or any fact necessary to make the statements contained
therein not misleading.
5.11 Material Agreements.
(a) All of the contracts of the Company that are required to be described in the
Company SEC Documents or to be filed as exhibits thereto (the "Company Material
Contracts") are described in the Company SEC Documents or filed as exhibits
thereto. Neither the Company nor any of its Subsidiaries nor, to the knowledge
of the Company, any other party thereto has violated any provision of, or
committed or failed to perform any act which with or without notice, lapse of
time or both would constitute a default under the provisions of any Company
Material Contract, except for such defaults that would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect with
respect to the Company.
(b) Except as set forth on Schedule 5.11(b), the Company is not party to any
agreement containing any provision or covenant limiting in any material respect
the ability of the Company or any of its Subsidiaries to (i) sell any products
or services of or to any other person, (ii) engage in any line of business in
any geographical area or (iii) compete with or obtain products or services from
any person or limiting the ability of any person to provide products or services
to the Company.
(c) The Company is not is a party to or bound by any contract, agreement or
arrangement which would cause the rights or obligations of any party thereto to
change upon the consummation of the transactions contemplated by the Loan
Documents.
5.12 Compliance With Laws. The Company has complied with all applicable
statutes, rules, regulations, orders and restrictions of any domestic or foreign
government or any instrumentality or agency thereof having jurisdiction over the
conduct of its businesses or the ownership of its Property except for any
failure to comply with any of the foregoing which could not reasonably be
expected to have a Material Adverse Effect.
5.13 Intellectual Property; Licenses. Except as set forth in Schedule 5.13, the
Company possesses all proprietary rights necessary to conduct its business and
operations as heretofore conducted or as proposed to be conducted by it. All
proprietary rights registered in the name of the Company and applications
therefor filed by the Company are listed on Schedule 5.13. No event has occurred
that permits, or after notice or lapse of time or both would permit, the
revocation or termination of any of the foregoing, which taken in isolation or
when considered with all other such revocations or terminations could have a
Material Adverse Effect. The Company does not have any notice or knowledge of
any facts or any past, present or threatened occurrence that could preclude or
impair the Company's ability to retain or obtain any authorization necessary for
the operation of its business.
5.14 Environmental Matters. Except to the extent that any inaccuracy in any of
the representations set forth in this Section 5.14, individually or in the
aggregate with any other inaccuracy under the representations set forth in this
Section 5.14, would not reasonably be expected to have a Material Adverse Effect
with respect to the Company is in compliance with all Environmental Laws
applicable to the properties, assets or businesses of the Company and possesses
and complies with and has possessed and complied with all Environmental Permits
required under such laws. The Company has not received any Environmental Claim
with respect to its properties, assets or businesses, and to the knowledge of
Company there are no threatened Environmental Claims or any Environmental Claims
pending or threatened against any entity for which the Company may be
responsible. The Company has not assumed, contractually or by operation of law,
any known liabilities or obligations under any Environmental Laws. To the
knowledge of the Company, there are no present or past events, conditions,
circumstances, practices, plans or legal requirements that would reasonably be
expected to (i) result in liability to the Company under Environmental Laws, or
(ii) prevent, or reasonably be expected to increase the burden on, the Company
in complying with Environmental Laws or in obtaining, renewing, or complying
with all Environmental Permits required to be obtained by the Company under such
laws. To the knowledge of the Company, there have been no Hazardous Materials or
other conditions at or from any property owned, operated or otherwise used by
the Company now or, to the best knowledge of the Company, in the past that would
reasonably be expected to give rise to liability of the Company under any
Environmental Law.
5.15 Investment Company Act. The Company is not an "investment company" or a
company "controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
5.16 Public Utility Holding Company Act. The Company is not a "holding company"
or a "subsidiary company" of a "holding company", or an "affiliate" of a
"holding company" or of a "subsidiary company" of a "holding company", within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
5.17 Broker's or Finder's Commissions. No broker's or finder's or placement fee
or commission will be payable to any broker or agent engaged by the Company or
any of their officers, directors or agents with respect to the issue of the
Notes or Warrants, or the transactions contemplated by this Agreement. The
Company agrees to indemnify the Purchasers and hold them harmless from and
against any claim, demand or liability for broker's or finder's or placement
fees or similar commissions, whether or not payable by the Company, alleged to
have been incurred in connection with such transactions, other than any broker's
or finder's fees payable to Persons engaged by Purchasers without the knowledge
of the Company.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASERS
Each of the Purchasers, with respect solely to itself and not with
respect to any other Purchaser, represents and warrants to the Company that the
statements contained in the Article VI are true and correct:
6.1 Organization and Standing of the Purchasers. If the Purchaser is an entity,
such Purchaser is a corporation or partnership duly incorporated or organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization.
6.2 Authorization and Validity. Each Purchaser has the power and authority and
legal right to execute and deliver the Loan Documents and to perform its
obligations thereunder. The execution and delivery by such Purchaser of the Loan
Documents and the performance of its obligations thereunder have been duly
authorized by proper corporate proceedings, and the Loan Documents constitute
legal, valid and binding obligations of such Purchaser enforceable against such
Purchaser in accordance with their terms, except as enforceability may be
limited by bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally.
6.3 No Conflict; Government Consent. Neither the execution and delivery by such
Purchaser of the Loan Documents, nor the consummation of the transactions
therein contemplated, nor compliance with the provisions thereof will violate
(i) any law, rule, regulation, order, writ, judgment, injunction, decree or
award binding on such Purchaser or (ii) if the Purchaser is an entity, such
Purchaser's articles or certificate of incorporation or by-laws, or (iii) the
provisions of any indenture, instrument or agreement to which such Purchaser is
a party or is subject, or by which it, or its Property, is bound, or conflict
with or constitute a default thereunder, or result in, or require, the creation
or imposition of any Lien in, of or on the Property of such Purchaser pursuant
to the terms of any such indenture, instrument or agreement. No order, consent,
adjudication, approval, license, authorization, or validation of, or filing,
recording or registration with, or exemption by, or other action in respect of
any governmental or public body or authority, or any subdivision thereof, which
has not been obtained by such Purchaser, is required to be obtained by such
Purchaser in connection with the execution and delivery of the Loan Documents,
or the payment and performance by such Purchaser of any of its obligations under
or the legality, validity, binding effect or enforceability of any of the Loan
Documents.
6.4 Acquisition for Investment. Each Purchaser is acquiring the Notes and the
Warrants solely for its own account for the purpose of investment and not with a
view to or for sale in connection with distribution. Each Purchaser does not
have a present intention to sell the Notes or the Warrants, nor a present
arrangement (whether or not legally binding) or intention to effect any
distribution of the Notes or the Warrants to or through any person or entity;
provided, however, that by making the representations herein, such Purchaser
does not agree to hold the Notes or the Warrants for any minimum or other
specific term and reserves the right to dispose of the Notes or the Warrants at
any time in accordance with Federal and state securities laws applicable to such
disposition. Each Purchaser acknowledges that it is able to bear the financial
risks associated with an investment in the Notes and the Warrants and that it
has been given full access to such records of the Company and the subsidiaries
and to the officers of the Company and the subsidiaries and received such
information as it has deemed necessary or appropriate to conduct its due
diligence investigation and has sufficient knowledge and experience in investing
in companies similar to the Company in terms of the Company's stage of
development so as to be able to evaluate the risks and merits of its investment
in the Company.
6.5 Status of Purchasers. Such Purchaser is an "accredited investor" as defined
in Regulation D promulgated under the Securities Act. Such Purchaser is not
required to be registered as a broker-dealer under Section 15 of the Exchange
Act and such Purchaser is not a broker-dealer.
6.6 Opportunities for Additional Information. Each Purchaser acknowledges that
such Purchaser has had the opportunity to ask questions of and receive answers
from, or obtain additional information from, the executive officers of the
Company concerning the financial and other affairs of the Company, and to the
extent deemed necessary in light of such Purchaser's personal knowledge of the
Company's affairs, such Purchaser has asked such questions and received answers
to the full satisfaction of such Purchaser, and such Purchaser desires to invest
in the Company.
6.7 No General Solicitation. Each Purchaser acknowledges that the Notes and the
Warrants were not offered to such Purchaser by means of any form of general or
public solicitation or general advertising, or publicly disseminated
advertisements or sales literature, including (a) any advertisement, article,
notice or other communication published in any newspaper, magazine, or similar
media, or broadcast over television or radio, or (b) any seminar or meeting to
which such Purchaser was invited by any of the foregoing means of
communications.
6.8 Rule 144. Such Purchaser understands that the Notes, Warrants and shares
issuable upon conversion of the Notes and upon exercise of the Warrants must be
held indefinitely unless such shares are registered under the Securities Act or
an exemption from registration is available. Such Purchaser acknowledges that
such Purchaser is familiar with Rule 144 of the rules and regulations of the
Commission, as amended, promulgated pursuant to the Securities Act ("Rule 144"),
and that such person has been advised that Rule 144 permits resales only under
certain circumstances. Such Purchaser understands that to the extent that Rule
144 is not available, such Purchaser will be unable to sell any Notes, Warrants
or shares issuable upon conversion of the Notes and upon exercise of the
Warrants without either registration under the Securities Act or the existence
of another exemption from such registration requirement.
6.9 General. Such Purchaser understands that the Notes and Warrants are being
offered and sold in reliance on a transactional exemption from the registration
requirement of Federal and state securities laws and the Company is relying upon
the truth and accuracy of the representations, warranties, agreements,
acknowledgments and understandings of such Purchaser set forth herein in order
to determine the applicability of such exemptions and the suitability of such
Purchaser to acquire the Shares,
6.10 Independent Investment. No Purchaser has agreed to act with any other
Purchaser for the purpose of acquiring, holding, voting or disposing of the
Shares purchased hereunder for purposes of Section 13(d) under the Exchange Act,
and each Purchaser is acting independently with respect to its investment in the
Shares.
6.11 Future Acquisition. Each Purchaser acknowledges that it is familiar with
the Company's plans regarding a potential acquisition of XBridge Software, Inc.,
a Delaware corporation and an Affiliate of the Company. Each Purchaser further
acknowledges that the Company may not be able to acquire XBridge upon the terms
desired by the Company and that such acquisition, if it occurs, may be on
substantially different terms than the anticipated terms disclosed to such
Purchaser.
ARTICLE VII
CLOSING
7.1 Closing Documents.
(a) At the Closing, the Company will deliver or cause to be delivered to
Purchasers all of the following documents in form and substance
satisfactory to Purchasers:
(i) a certificate of the secretary or assistant secretary of the Company,
certifying as to the names and true signatures of the officers of the
Company authorized to sign this Agreement and the other documents to be
delivered by the Company hereunder;
(ii) copies of the resolutions unanimously and duly adopted by the Company's
board of directors authorizing the execution, delivery and performance
by the Company of this Agreement and each of the other Loan Documents,
and the consummation of all of the other transactions hereunder and
thereunder, certified as of the Closing Date by the secretary or
assistant secretary of the Company;
(iii) the Notes;
(iv) the Warrants;
(v) the Registration Rights Agreement substantially in the form of Exhibit
D, executed by the Company; and
(vi) such other documents relating to the transactions contemplated by this
Agreement as Purchasers may reasonably request.
(b) At the Closing, the Purchasers will deliver or cause to be delivered to
the Company in accordance with Section 2.2, the purchase price for the
Notes and Warrants as set forth in Exhibit A.
ARTICLE VIII
TRANSFERS
8.1 Restricted Securities. Each of the Purchasers acknowledges that the Notes
and Warrants will not be registered under the Securities Act and may be resold
only if registered pursuant to the provisions of the Securities Act or if an
exemption from registration is available, and that, except as set forth in the
Registration Agreement attached hereto as Exhibit D, the Company is not required
to register the shares of Common Stock issuable upon conversion of the Notes or
the exercise of the Warrants.
8.2 Legends. The Company may place an appropriate legend on the Notes and
Warrants and the shares of Common Stock issuable upon conversion of the Notes or
the exercise of the Warrants concerning the restrictions set forth in this
Article VIII. Upon the assignment or transfer by Purchasers or any of its
successors or assignees of all or any part of the Notes, the term "Holder" as
used herein shall thereafter mean, to the extent thereof, the then holder or
holders of such Notes, or portion thereof.
8.3 Replacement of Lost Notes. Upon receipt of evidence reasonably satisfactory
to the Company of the mutilation, destruction, loss or theft of any Notes and
the ownership thereof, the Company shall, upon the written request of the holder
of such Notes, execute and deliver in replacement thereof new Securities in the
same form, in the same original principal amount and dated the same date as the
Notes so mutilated, destroyed, lost or stolen; and such Notes so mutilated,
destroyed, lost or stolen shall then be deemed no longer outstanding hereunder.
If the Notes being replaced have been mutilated, they shall be surrendered to
the Company; and if such replaced Notes have been destroyed, lost or stolen,
such holder shall furnish the Company with an indemnity in writing to save it
harmless in respect of such replaced Note.
8.4 No Other Representations Affected. Nothing contained in this Article VIII
shall limit the full force or effect of any representation, agreement or
warranty made herein or in connection herewith to Holder.
ARTICLE IX
DEFAULT
9.1 Events of Default. An Event of Default shall mean the occurrence of one or
more of the following
described events:
(a) the Company shall default in the payment of any principal of or interest on
the Notes when due, whether at maturity, upon any scheduled payment date or by
acceleration or otherwise and such failure shall continue for a period of five
(5) days after the Company's receipt of written notice from Purchasers of such
failure;
(b) the Company shall default under any agreement under which any Material
Indebtedness is created in a manner entitling the holder of such Indebtedness to
accelerate the maturity of such Indebtedness, and such default shall not be
remedied to Purchasers' reasonable satisfaction for a period of thirty (30) days
from the earlier of (i) written notice from a Holder of such default or (ii)
actual knowledge by the Company of such default;
(c) any representation or warranty herein made by the Company, or any
certificate or financial statement furnished pursuant to the provisions hereto
shall prove to have been false or misleading in any material respect as of the
time made or furnished or deemed made or furnished;
(d) the Company shall default in the performance of any other covenant,
condition or provision of this Agreement, the Notes or the other Loan Documents,
and such default shall not be remedied to Purchasers' reasonable satisfaction
for a period of thirty (30) days from the earlier of (i) written notice from a
Holder of such default or (ii) actual knowledge by the Company of such default;
(e) a proceeding shall have been instituted in a court having jurisdiction in
the premises seeking a decree or order for relief in respect of the Company in
an involuntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or for the appointment of a receiver,
liquidator, assignee, custodian, "trustee, sequestrator (or similar official) of
the Company or for any substantial part of its property, or for the winding-up
or liquidation of their affairs, and such proceeding shall remain undismissed or
unstayed and in effect for a period of sixty (60) days;
(f) the Company shall commence a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, shall consent to the
entry of an order for relief in an involuntary case under any such law, or shall
consent to the appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator (or other similar official) of the
Company or for any substantial part of their property, or shall make a general
assignment for the benefit of creditors, or shall fail generally to pay their
debts as they become due, or shall take any action in furtherance of any of the
foregoing; and
(g) a final judgment which, with other undischarged final judgments against any
the Company, exceeds an aggregate of $100,000, shall have been entered against
the Company if, within thirty (30) days after the entry thereof, such judgment
shall not have been discharged or execution thereof stayed pending appeal, or
if, within thirty (30) days after the expiration of any such stay, such judgment
shall not have been discharged.
9.2 Consequences of Event of Default.
(a) Bankruptcy. If an Event of Default specified in paragraphs (e) or (f) of
Section 9.1 hereof shall occur, the unpaid balance of the Notes and interest
accrued thereon and all other liabilities of the Company to the holders thereof
hereunder and thereunder shall be immediately due and payable, without
presentment, demand, protest or (except as expressly required hereby) notice of
any kind, all of which are hereby expressly waived.
(b) Other Defaults. If any other Event of Default shall occur, Purchasers may at
their option, by written notice to the Company, declare the entire unpaid
balance of the Notes, and interest accrued thereon and all other liabilities of
the Company hereunder and thereunder to be forthwith due and payable, and the
same shall thereupon become immediately due and payable, without presentment,
demand, protest or (except as expressly required hereby) notice of any kind, all
of which are hereby expressly waived; provided, that in the case of a default
specified in paragraph (a) of Section 9.1 hereof shall occur, any holder of a
Note may declare the entire unpaid balance of such Note and other amounts due
hereunder and there under with regard to such Note to become immediately due and
payable.
(c) Penalty Interest. Following the occurrence and during the continuance of any
Event of Default, the holders of the Notes shall be entitled to receive, to the
extent permitted by applicable law, interest on the outstanding principal of,
and overdue interest, if any, on, the Notes at a rate per annum equal to the
highest rate permitted by applicable law.
9.3 Security. Payments of principal of, and premium, if any, and interest on,
the Notes and all other obligations of the Company under this Agreement or the
Notes are secured pursuant to the terms of the Security Agreement.
ARTICLE X
OTHER AGREEMENTS
10.1 Indemnification. The Company hereby further agrees to indemnify Purchasers,
and their respective heirs, assigns, successors, agents, directors, employees,
attorneys and representatives against all losses, claims, damages, penalties,
judgments, liabilities and expenses (including, without limitation, all expenses
of litigation or preparation therefor whether or not the Purchaser is a party
thereto) which Purchasers may pay or incur arising out of or relating to this
Agreement, the other Loan Documents, the transactions contemplated hereby or the
direct or indirect application or proposed application of the proceeds of any
Note issued hereunder.
ARTICLE XI
GENERAL PROVISIONS
11.1 Headings. Section headings in the Loan Documents are for convenience of
reference only, and shall not
govern the interpretation of any of the provisions of the Loan Documents.
11.2 Entire Agreement. The Loan Documents embody the entire agreement and
understanding among the Company and Purchasers and supersede all prior
agreements and understandings among the Company and Purchasers relating to the
subject matter thereof.
11.3 Benefits of this Agreement. This Agreement shall not be construed so as to
confer any right or benefit upon any Person other than the parties to this
Agreement and their respective successors and assigns.
11.4 Amendment. No amendment or modification to this Agreement or any of the
Loan Documents shall be effective, unless in writing and signed by all the
parties to the Loan Documents:
13.7 Expenses. The Company agrees to reimburse Purchasers for any
costs and out-of-pocket expenses (including reasonable attorneys' fees) paid or
incurred by any Holder in connection with the collection and enforcement of the
Loan Documents.
11.5 Severability. Any provision in any Loan Document that is held to be
inoperative, unenforceable, or invalid in any jurisdiction shall, as to that
jurisdiction, be inoperative, unenforceable, or invalid without affecting the
remaining provisions in that jurisdiction or the operation, enforceability, or
validity of that provision in any other jurisdiction, and to this end the
provisions of all Loan Documents are declared to be severable.
11.6 Nonliability of Holder. The relationship between the Company on the one
hand and Purchasers on the other hand shall be solely that of borrower and
lender. Purchasers shall not have any fiduciary responsibilities to the Company.
Purchasers do not undertake any responsibility to the Company to review or
inform the Company of any matter in connection with any phase of the Company's
business or operations. The Company agrees that Purchasers shall have no
liability to the Company (whether sounding in tort, contract or otherwise) for
losses suffered by the Company in connection with, arising out of, or in any way
related to, the transactions contemplated and the relationship established by
the Loan Documents, or any act, omission or event occurring in connection
therewith, unless it is determined in a final non-appealable judgment by a court
of competent jurisdiction that such losses resulted from the gross negligence or
willful misconduct of the party from which recovery is sought. Purchasers shall
not have any liability with respect to, and the Company hereby waives, releases
and agrees not to xxx for, any special, indirect or consequential damages
suffered by the Company in connection with, arising out of, or in any way
related to the Loan Documents or the transactions contemplated thereby.
11.7 Confidentiality. Each of the Purchasers agrees to hold any confidential
information which it may receive from the Company pursuant to this Agreement in
confidence, except for disclosure (a) to legal counsel, accountants, and other
professional advisors to Purchasers, (b) to regulatory officials, (c) to any
Person as requested pursuant to or as required by law, regulation, or legal
process, (d) to any Person in connection with any legal proceeding to which
Purchasers is a party, (e) to Purchaser's direct or indirect contractual
counterparties in swap agreements or to legal counsel, accountants and other
professional advisors to such counterparties.
11.8 Notices. All notices, requests and other communications to any party
hereunder shall be in writing (including electronic transmission, facsimile
transmission or similar writing) and shall be given to such party at (a) its
address or facsimile number set forth on the signature pages hereof or (b) such
other address or facsimile number as such party may hereafter specify. Each such
notice, request or other communication shall be effective (i) if given by
facsimile transmission, when transmitted to the facsimile number specified in
this Section and confirmation of receipt is received, (ii) if given by mail, 72
hours after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid, or (iii) if given by any other means,
when delivered (or, in the case of electronic transmission, received) at the
address specified in this Section.
11.9 Choice Of Law. THE LOAN DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO ITS CHOICE OF LAWS
PROVISIONS.
11.10 Venue. THE EXCLUSIVE JURISDICTION FOR ANY CLAIM OR CONTROVERSY ARISING OUT
OF OR RELATING TO ANY LOAN DOCUMENTS SHALL BE IN THE STATE AND FEDERAL COURTS
LOCATED IN DALLAS COUNTY, TEXAS AND EACH PARTY HERETO IRREVOCABLY WAIVES ANY
OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION
OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT
FORUM.
11.11 Waiver Of Jury Trial. THE COMPANY AND EACH HOLDER HEREBY WAIVE TRIAL BY
JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED
THEREUNDER.
11.12 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and
any of the parties hereto may execute this Agreement by signing any such
counterpart.
IN WITNESS WHEREOF, the Company and Purchasers have executed this
Agreement as of the date first above written.
CNH HOLDINGS COMPANY
By:_______________________________
Name: Xxxxx Xxxxx
Title: President
Address: 00000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Telephone: 000-000-0000
Fax: 000-000-0000
PURCHASERS:
By:_______________________________________________
Name: ____________________________________________
Title: ___________________________________________
Address: _________________________________________
-----------------------------------
Telephone: _______________________________________
Fax:______________________________________________
SSN/Taxid: _______________________
Email: ___________________________
SCHEDULE 5.2(A)
-------------------------------------------------- ----------------------
NAME OUTSTANDING OPTIONS
@ FROM $1.10 THRU
$1.30
-------------------------------------------------- ----------------------
-------------------------------------------------- ----------------------
Xxxxx X Xxxxx 275,000
-------------------------------------------------- ----------------------
-------------------------------------------------- ----------------------
Xxxxxxx T Royal 275,000
-------------------------------------------------- ----------------------
-------------------------------------------------- ----------------------
Xxxxxxx X Xxxx 275,000
-------------------------------------------------- ----------------------
-------------------------------------------------- ----------------------
Xxxxxx Xxxxxxxx 40,000
-------------------------------------------------- ----------------------
-------------------------------------------------- ----------------------
Xxxxx Xxxxxx 40,000
-------------------------------------------------- ----------------------
-------------------------------------------------- ----------------------
Xxx Xxxxxx 30,000
-------------------------------------------------- ----------------------
-------------------------------------------------- ----------------------
Xxxx Xxxxxxxx 15,000
-------------------------------------------------- ----------------------
-------------------------------------------------- ----------------------
Xxxxxx Xxxxxx 10,000
-------------------------------------------------- ----------------------
-------------------------------------------------- ----------------------
Xxxxx Xxxxx 10,000
-------------------------------------------------- ----------------------
-------------------------------------------------- ----------------------
Xxxx Xxxxx 10,000
-------------------------------------------------- ----------------------
-------------------------------------------------- ----------------------
Xxxx Xxxxxx 10,000
-------------------------------------------------- ----------------------
-------------------------------------------------- ----------------------
Xxxxxxx Xxxxxxx 10,000
-------------------------------------------------- ----------------------
-------------------------------------------------- ----------------------
Xxxxxx Xxxxxxxx 10,000
-------------------------------------------------- ----------------------
-------------------------------------------------- ----------------------
Xxxxxxxxx Xxxxxx 5,000
-------------------------------------------------- ----------------------
-------------------------------------------------- ----------------------
NAME OUTSTANDING OPTIONS
@ $2.00
-------------------------------------------------- ----------------------
-------------------------------------------------- ----------------------
Xxxxxxx Xxxxxxx 400,000
-------------------------------------------------- ----------------------
-------------------------------------------------- ----------------------
Xxxx X Xxxxxx 400,000
-------------------------------------------------- ----------------------
SCHEDULE 5.2 (C)
NONE
SCHEDULE 5.6
NONE
SCHEDULE 5.8
NONE
SCHEDULE 5.11(B)
SOFTWARE LICENSE AGREEMENT WITH XBRIDGE SOFTWARE DATED 05/05/2003
SCHEDULE 5.13
SOFTWARE LICENSE AGREEMENT WITH XBRIDGE SOFTWARE DATED 05/05/2003
EXHIBIT A
PURCHASERS
------- ----------------------------------------------- -------------- ----------------------------
NAME TOTAL TOTAL NUMBER OF WARRANTS
PURCHASE
------- ----------------------------------------------- -------------- ----------------------------
1. Xxxxxx Xxxxxxx $50,000 50,000
------- ----------------------------------------------- -------------- ----------------------------
2. Xxxxx Xxx $25,000 25,000
------- ----------------------------------------------- -------------- ----------------------------
3. Xxxxxxx X. Xxxxxxxx $15,000 15,000
------- ----------------------------------------------- -------------- ----------------------------
4. Xxxxxx X. Xxxxxxx $15,000 15,000
------- ----------------------------------------------- -------------- ----------------------------
5. Xxxxxx or Xxxx Xxxxx Xxxxxxxxx $10,000 10,000
------- ----------------------------------------------- -------------- ----------------------------
6. Xxxx X. & Xxxxx X. Xxxxx $15,000 15,000
------- ----------------------------------------------- -------------- ----------------------------
7. Xxxxx Xxxxxxx $30,000 30,000
------- ----------------------------------------------- -------------- ----------------------------
8. Xxxxxxx Family Trust Dated January 9, 1989 $15,000 15,000
------- ----------------------------------------------- -------------- ----------------------------
9. Xxx Xxxxxxxxx $20,000 20,000
------- ----------------------------------------------- -------------- ----------------------------
10. Xxxx Family Limited Partnership $50,000 50,000
------- ----------------------------------------------- -------------- ----------------------------
11. Xxxxxxxxx X. Xxxx or Xxxxxxx Xxxx $59,000 59,000
------- ----------------------------------------------- -------------- ----------------------------
12. Xxxxx X. Xxxxxxxx Trustee of Xxxxx X. $50,000 50,000
Xxxxxxxx Trust UDT dated May 9, 2001
------- ----------------------------------------------- -------------- ----------------------------
13. Xxxx Xxxxxxxxx $20,000 20,000
------- ----------------------------------------------- -------------- ----------------------------
14. Xxxxxxxx X. Xxxxxx $22,000 22,000
------- ----------------------------------------------- -------------- ----------------------------
15. Xxxxx Xxxxx $10,000 10,000
------- ----------------------------------------------- -------------- ----------------------------
16. Xxxx Xxxxxxx $50,000 50,000
------- ----------------------------------------------- -------------- ----------------------------
17. Xxxxxx Xxxxxx $26,000 26,000
------- ----------------------------------------------- -------------- ----------------------------
18. Xxxxxx Xxxx II or Xxxxxxx Xxxx $15,000 15,000
------- ----------------------------------------------- -------------- ----------------------------
19. Mellon Bank of New England Xxxxx X. Xxxxxxxx $50,000 50,000
XXX
------- ----------------------------------------------- -------------- ----------------------------
20. Xxxxxxx X. Xxxxx $45,000 40,000
------- ----------------------------------------------- -------------- ----------------------------
21. American Corp Register Inc $50,000 50,000
------- ----------------------------------------------- -------------- ----------------------------
22. Xxxxxxxxx Xxxx XXX Xxxxxxx Xxxxxx & Co Inc. $15,000 15,000
SEP-XXX DTD 04/07/98
------- ----------------------------------------------- -------------- ----------------------------
23. Xxxxxxxx X. Xxxxxx XXX Contributory Xxxxxxx $20,000 20,000
Schwab Custodian
------- ----------------------------------------------- -------------- ----------------------------
24. Xxxxxxx X. Xxxxxxxx Xx. and Xxxxx X. Xxxxxxxx $15,000 15,000
Family Trust dated 12/20/90
------- ----------------------------------------------- -------------- ----------------------------
25. Xxxx Xxxxxx $15,000 15,000
------- ----------------------------------------------- -------------- ----------------------------
26. Xxxxxxx X. Xxxxxxx $15,000 15,000
------- ----------------------------------------------- -------------- ----------------------------
27. Xxxxxxx xx Xxxxxxxxx $100,000 100,000
------- ----------------------------------------------- -------------- ----------------------------
28. Xxx Xxxx $81,000 81,000
------- ----------------------------------------------- -------------- ----------------------------
29. Xxxxx Xxxxxx $20,000 20,000
------- ----------------------------------------------- -------------- ----------------------------
30. Xxxxxx X. Xxxxxxx Trustee for 2004 Xxxxxx X. $15,000 15,000
Xxxxxxx Revocable Trust
------- ----------------------------------------------- -------------- ----------------------------
31. Rocky Mountain Customer Services, Inc. $110,000 110,000
------- ----------------------------------------------- -------------- ----------------------------
32. T.C.R LP Trust $50,000 50,000
------- ----------------------------------------------- -------------- ----------------------------
33. Xxxxx or Kon Cherewan $15,000 15,000
------- ----------------------------------------------- -------------- ----------------------------
34. X. X. Xxxxxxxx $15,000 15,000
------- ----------------------------------------------- -------------- ----------------------------
35. Xxxxxxx Xxxx MD $13,000 13,000
------- ----------------------------------------------- -------------- ----------------------------
36. Xxxx Xxxxxxxx $30,000 30,000
------- ----------------------------------------------- -------------- ----------------------------
EXHIBIT B
SENIOR UNSECURED CONVERTIBLE PROMISSORY NOTE
CNH HOLDINGS COMPANY
SENIOR UNSECURED CONVERTIBLE PROMISSORY NOTE
$________ December 13, 2004 THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE
BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION. WITHOUT SUCH REGISTRATION, SUCH SECURITIES MAY NOT BE SOLD,
PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED, EXCEPT UPON DELIVERY TO CNH
HOLDINGS COMPANY (THE "COMPANY") OF AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT REGISTRATION IS NOT REQUIRED FOR SUCH TRANSFER OR THE SUBMISSION TO
THE COMPANY OF SUCH OTHER EVIDENCE AS MAY BE SATISFACTORY TO IT TO THE EFFECT
THAT ANY SUCH TRANSFER SHALL NOT BE IN VIOLATION OF THE SECURITIES ACT OF 1933,
AS AMENDED, OR APPLICABLE STATE OR FOREIGN SECURITIES LAWS OR ANY RULE OR
REGULATION PROMULGATED THEREUNDER.
THIS NOTE WAS ORIGINALLY ISSUED ON December 13, 2004
THIS NOTE WAS ISSUED PURSUANT TO A NOTE PURCHASE AGREEMENT, DATED AS OF December
13, 2004 (AS FROM TIME TO TIME AMENDED, THE "PURCHASE AGREEMENT"), AND IS
ENTITLED TO THE BENEFITS THEREOF. ALL TERMS USED HEREIN UNLESS OTHERWISE DEFINED
HEREIN SHALL HAVE THE MEANINGS ASCRIBED TO THEM IN THE PURCHASE AGREEMENT. EACH
HOLDER OF THIS NOTE WILL BE DEEMED, BY ITS ACCEPTANCE HEREOF, TO HAVE AGREED TO
THE TERMS AND CONDITIONS SET FORTH IN THE PURCHASE AGREEMENT.
CNH HOLDINGS COMPANY, a Nevada corporation (the "Company"), for value
received hereby promises to pay to ________________ or registered assigns (the
"Holder"), the principal amount of $_________ with interest on the unpaid
principal of this Note, from the date hereof, at the rate of eight percent (8%)
per annum, compounded quarterly on each Interest Compounding Date, except as
otherwise may be provided herein. All payments hereunder are payable in lawful
money of the United States of America at the place the Holder may designate in
writing to the Company.
Interest on this Note shall be computed for the actual number of days
elapsed and on the basis of a year consisting of 360 days, unless the maximum
legal interest rate would thereby be exceeded, in which event, to the extent
necessary to avoid exceeding such maximum rate, interest shall be computed on
the basis of the actual number of days elapsed in the applicable calendar year
in which it accrued. It is the intention of the Company and the Holder to
conform strictly to applicable usury laws. It is therefore agreed that (i) the
aggregate of all interest and other charges constituting interest under
applicable law and contracted for, chargeable or receivable under this Note or
otherwise in connection with this loan transaction, shall never exceed the
maximum amount of interest, nor produce a rate in excess of the maximum contract
rate of interest the Holder may charge the Company under applicable law and in
regard to which the Company may not successfully assert the claim or defense of
usury, and (ii) if any excess interest is provided for, it shall be deemed a
mistake and the same shall be refunded to the Company or credited on the unpaid
principal balance hereof and this Note shall be automatically deemed reformed so
as to permit only the collection of the maximum legal contract rate and amount
of interest.
The unpaid principal and accrued interest of this Note shall be due and
payable on the date that is two (2) years from the date of this Note.
The Company may prepay the Notes, in whole or in part, upon thirty (30)
days prior written notice to Purchasers; provided that partial prepayments may
be made only in increments of $10,000. In the event of a proposed prepayment by
the Company, prior to such prepayment, Purchasers shall have the right to
convert the amount of the proposed prepayment into shares of Common Stock in
accordance with Article IV, regardless of the period of time that the Notes have
been outstanding. In the event of a Change in Control, this Note shall become
immediately due and payable.
If any payment of principal or interest on this Note shall become due
on a Saturday, Sunday or any other day on which national banks are not open for
business, such payment shall be made on the next succeeding Business Day.
Any check, draft, money order or other instrument given in payment of
all or any portion of this Note may be accepted by the Holder or any other
holder hereof and handled in collection in the customary manner, but the same
shall not constitute payment hereunder or diminish any rights of the Holder or
any other holder hereof, except to the extent that actual cash proceeds of such
instrument are unconditionally received by the Holder or any other holder hereof
and applied to the indebtedness as herein provided.
The Holder of this Note may convert all or any part of the principal
and accrued interest of this Note into Qualified Securities or shares of Common
Stock pursuant to Article IV of the Purchase Agreement. This Note, when
surrendered for conversion, shall be duly endorsed, or be accompanied by a
written instrument of transfer in a form satisfactory to the Company duly
executed by the Holder of this Note. For convenience, the conversion of all or a
portion, as the case may be, of this Note is hereinafter sometimes referred to
as the conversion of this Note. In the event that this Note is converted in part
only, upon such conversion, the Company shall execute and deliver to the Holder,
without service charge, a new Note, of any authorized denomination or
denominations as requested by the Holder, in aggregate principal amount equal to
and in exchange for the unconverted portion of the principal of this Note so
surrendered.
No fractional shares or scrip representing fractional securities shall
be issued upon the conversion of this Note. If the conversion of this Note
results in a fraction, in lieu of such fractional securities, the Company shall
pay to the Holder in cash an amount equal to such fraction.
If an Event of Default as defined in the Purchase Agreement occurs and
is continuing, the unpaid principal and accrued interest of this Note may be
declared or otherwise immediately become due and payable in the manner, at the
price, including all costs of enforcement (including reasonable attorneys' fees)
and with the effect provided in the Purchase Agreement.
Except as provided herein, the Company waives all demands for payment,
presentations for payment, notices of intention to accelerate maturity, notices
of acceleration of maturity, protests, notices of protest, grace, and diligence
in the collection of this Note, and in filing suit hereon, and agrees that its
liability for the payment hereof shall not be affected or impaired by any
release or change in the security or by any extension or extensions of time of
payment.
The undersigned hereby agrees to pay all expenses incurred by the
Holder, including reasonable attorneys' fees, all of which shall become a part
of the principal hereof, if this Note is placed in the hands of an attorney for
collection, or if it is collected by suit or through any probate, bankruptcy or
any other legal proceedings.
If this Note is not paid at maturity, however maturity may be brought
about, all principal due on the date of such maturity shall bear interest from
the date of such maturity at the maximum contract rate of interest which the
Holder may charge the Company under applicable law.
No provision of this Note shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
interest on this Note at the times, places and rates, and in the coin or
currency, herein prescribed.
This Note and the rights and obligations of the parties hereto shall be
deemed to be contracts under the laws of the State of Texas and for all purposes
shall be governed by and construed and enforced in accordance with the laws of
said State, except for its rules relating to the conflict of laws.
IN WITNESS WHEREOF, the Company has duly executed this Note as of the
date first above written.
CNH HOLDINGS COMPANY
By:_______________________________________________
Xxxxx Xxxxx, President
EXHIBIT C
WARRANT
WARRANT TO PURCHASE
SHARES OF COMMON STOCK OF
CNH HOLDINGS COMPANY
No. A-_____ December 13, 2004 THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. WITHOUT SUCH
REGISTRATION, SUCH SECURITIES MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR
OTHERWISE TRANSFERRED, EXCEPT UPON DELIVERY TO CNH HOLDINGS COMPANY, A NEVADA
CORPORATION (THE "COMPANY") OF AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT REGISTRATION IS NOT REQUIRED FOR SUCH TRANSFER OR THE SUBMISSION TO THE
COMPANY OF SUCH OTHER EVIDENCE AS MAY BE SATISFACTORY TO IT TO THE EFFECT THAT
ANY SUCH TRANSFER SHALL NOT BE IN VIOLATION OF THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE OR FOREIGN SECURITIES LAWS OR ANY RULE OR
REGULATION PROMULGATED THEREUNDER.
THIS WARRANT WAS ISSUED IN CONNECTION WITH THAT CERTAIN CONVERTIBLE NOTE
PURCHASE AGREEMENT DATED AS OF December 13, 2004 (AS FROM TIME TO TIME AMENDED,
THE "PURCHASE AGREEMENT") AND IS SUBJECT TO THE BENEFITS THEREOF. ALL TERMS USED
HEREIN UNLESS OTHERWISE DEFINED HEREIN SHALL HAVE THE MEANINGS ASCRIBED TO THEM
IN THE PURCHASE AGREEMENT. EACH HOLDER OF THIS WARRANT WILL BE DEEMED, BY ITS
ACCEPTANCE HEREOF, TO HAVE AGREED TO THE TERMS AND CONDITIONS SET FORTH IN THE
PURCHASE AGREEMENT. THIS WARRANT IS SUBJECT TO REDEMPTION UNDER TO SECTION 2
HEREOF.
1._______GRANT, EXERCISE PRICE, EXPIRATION DATE. This certifies that to
_____________ (the "HOLDER"), is entitled to purchase from CNH Holdings Company,
a Nevada corporation (the "COMPANY"), subject to the terms set forth below, a
maximum of __________ (________) fully paid and nonassessable shares ("WARRANT
SHARES") (subject to adjustment as provided herein) of the Company's common
stock, $.001 par value per share Common Stock ("COMMON STOCK") at the time of
the exercise of this Warrant, for a cash exercise price of One Dollar and Thirty
Cents ($1.30) per share (the "EXERCISE PRICE") (subject to adjustment as
provided herein) at any time or from time to time up to and including 5:00 p.m.
(central time) on December 13, 2009 (the "EXPIRATION DATE") upon surrender to
the Company at its principal office (or at such other location as the Company
may advise the Holder in writing) of this Warrant properly endorsed with the
Form of Subscription attached hereto duly filled in and signed and upon payment
in cash or by check of the aggregate Exercise Price for the number of shares for
which this Warrant is being exercised determined in accordance with the
provisions hereof. Cashless exercise of this Warrant is not permitted. The
Exercise Price and Warrant Shares are subject to adjustment as provided in
Section 4 of this Warrant. This Warrant is issued subject to the following terms
and conditions:
2._______REDEMPTION. This Warrant may be redeemed by the Company, in whole and
not in part, upon thirty (30) days prior written notice to Holder, at any time
after the Registration Date, if the Common Stock closes at a bid price of at
least $3.50 for any ten (10) out of fifteen (15) consecutive trading days, at a
redemption price of $0.10 per share. The closing of such redemption and payment,
in cash, therefore shall take place on the date set forth in the Company's
written, provided that Holder has not then properly and irrevocably exercised
this Warrant.
3._______EXERCISE, ISSUANCE OF CERTIFICATES. This Warrant is exercisable at the
option of the Holder of record hereof on or prior to the Expiration Date, at any
time or from time to time following its issuance, for all or any part of the
Warrant Shares (but not for a fraction of a share) which may be purchased
hereunder, as that number may be adjusted pursuant to Section 4 of this Warrant.
The Company agrees that the Warrant Shares purchased under this Warrant shall be
and are deemed to be issued to the Holder hereof as the record owner of such
Warrant Shares as of the close of business on the date on which this Warrant
shall have been surrendered, properly endorsed, the completed and executed Form
of Subscription delivered, and payment made for such Warrant Shares.
Certificates for the Warrant Shares so purchased, together with any other
securities or property to which the Holder hereof is entitled upon such
exercise, shall be delivered to the Holder hereof by the Company at the
Company's expense as soon as practicable after the rights represented by this
Warrant have been so exercised. In case of a purchase of less than all the
Warrant Shares which may be purchased under this Warrant, the Company shall
cancel this Warrant and execute and deliver to the Holder hereof within a
reasonable time a new Warrant or Warrants of like tenor for the balance of the
Warrant Shares purchasable under the Warrant surrendered upon such purchase.
Each stock certificate so delivered shall be registered in the name of such
Holder.
4._______SHARES TO BE FULLY PAID; RESERVATION OF SHARES. The Company covenants
and agrees that all Warrant Shares, will, upon issuance and, if applicable,
payment of the applicable Exercise Price, in cash or by check, be duly
authorized, validly issued, fully paid and nonassessable, and free of all
preemptive rights, liens and encumbrances, except for restrictions on transfer
provided for herein or under applicable federal and state securities laws. The
Company shall at all times reserve and keep available out of its authorized and
unissued Common Stock, solely for the purpose of providing for the exercise of
the rights to purchase all Warrant Shares granted pursuant to this Warrant, such
number of shares of Common Stock as shall, from time to time, be sufficient
therefor.
5._______ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES. The provisions of
this Section 5 shall apply in the event that any of the events described in this
Section 5 shall occur with respect to the Common Stock at any time on or after
the original issuance date of this Warrant:
5.1______STOCK SPLITS AND COMBINATIONS. If the Company shall at any time
subdivide or combine its outstanding shares of Common Stock, this
Warrant shall, after that subdivision or combination, evidence the
right to purchase the number of shares of Common Stock that would have
been issuable as a result of that change with respect to the Shares
which were purchasable under this Warrant immediately before that
subdivision or combination. If the Company shall at any time subdivide
the outstanding shares of Common Stock, the Exercise Price then in
effect immediately before that subdivision shall be proportionately
decreased, and, if the Company shall at any time combine the
outstanding shares of Common Stock, the Exercise Price then in effect
immediately before that combination shall be proportionately increased.
Any adjustment under this Section shall become effective at the time
that such subdivision or combination becomes effective.
5.2 RECLASSIFICATION, EXCHANGE AND SUBSTITUTION. If the Common Stock
issuable upon exercise of this Warrant shall be changed into the same
or a different number of shares of any other class or classes of stock,
whether by capital reorganization, reclassification, or otherwise
(other than a subdivision or combination of shares provided for above),
the Holder shall, on its exercise, be entitled to purchase for the same
aggregate consideration, in lieu of the Common Stock which the Holder
would have become entitled to purchase but for such change, the number
of shares of such other class or classes of stock equivalent to the
number of shares of Common Stock that would have been subject to
purchase by the Holder on exercise of this Warrant immediately before
that change.
5.3 REORGANIZATIONS, MERGERS, CONSOLIDATIONS OR SALE OF ASSETS. If at any
time there shall be a capital reorganization of the Common Stock (other
than a combination, reclassification, exchange, or subdivision of
shares provided for elsewhere above) then, as a part of such
reorganization, lawful provision shall be made so that the Holder shall
thereafter be entitled to receive upon exercise of this Warrant, during
the period specified in this Warrant and upon payment of the Exercise
Price then in effect, the number of shares of Common Stock or other
securities or property of the Company to which a holder of the Common
Stock deliverable upon exercise of this Warrant would have been
entitled in such capital reorganization if this Warrant had been
exercised immediately before that capital reorganization. In any such
case, appropriate adjustment (as determined in good faith by the
Company's Board of Directors) shall be made in the application of the
provisions of this Warrant with respect to the rights and interests of
the Holder of this Warrant after the reorganization to the end that the
provisions of this Warrant (including adjustment of the Exercise Price
then in effect and number of Shares purchasable upon exercise of this
Warrant) shall be applicable after that event, as near as reasonably
may be, in relation to any shares or other property deliverable after
that event upon exercise of this Warrant.
5.4 COMMON STOCK DIVIDENDS; DISTRIBUTIONS. In the event the Company should
at any time prior to the expiration of this Warrant fix a record date
for the determination of the holders of Common Stock entitled to
receive a dividend or other distribution payable in additional shares
of Common Stock or other securities or rights convertible into or
entitling the holder thereof to receive, directly or indirectly,
additional shares of Common Stock (hereinafter referred to as the
"Common Stock Equivalents") without payment of any consideration by
such holder for the additional shares of Common Stock or Common Stock
Equivalents (including the additional shares of Common Stock issuable
upon conversion or exercise thereof), then, as of such record date (or
the date of such distribution, split or subdivision if no record date
is fixed), the Exercise Price shall be appropriately decreased and the
number of shares of Common Stock issuable upon exercise of the Warrant
shall be appropriately increased in proportion to such increase of
outstanding shares.
5.5 ADJUSTMENTS OF OTHER DISTRIBUTIONS. In the event the Company shall
declare a distribution payable in securities of other persons,
evidences of indebtedness issued by the Company or other persons,
assets (excluding cash dividends) or options or rights not referred to
in subsection 5.4, then, in each such case for the purpose of this
subsection 5.5, upon exercise of this Warrant the Holder hereof shall
be entitled to a proportionate share of any such distribution as though
such Holder was the holder of the number of shares of Common Stock into
which this Warrant may be exercised as of the record date fixed for the
determination of the holders of Common Stock entitled to receive such
distribution.
5.6 CERTIFICATE AS TO ADJUSTMENTS. In the case of each adjustment or
readjustment of the Exercise Price pursuant to this Section 5, the
Company will promptly compute such adjustment or readjustment in
accordance with the terms hereof and cause a certificate setting forth
such adjustment or readjustment and showing in detail the facts upon
which such adjustment or readjustment is based, to be delivered to the
Holder. The Company will, upon the written request at any time of the
Holder, furnish or cause to be furnished to such Holder a certificate
setting forth: (a) such adjustments and readjustments; (b) the Exercise
Price at the time in effect; and (c) the number of shares of Common
Stock issuable upon exercise of the Warrant and the amount, if any, of
other property at the time receivable upon the exercise of the Warrant.
6. NO VOTING OR DIVIDEND RIGHTS. Nothing contained in this Warrant shall be
construed as conferring upon the Holder the right to vote or to consent to
receive notice as a stockholder of the Company on any other matters or any
rights whatsoever as a shareholder of the Company. No dividends or interest
shall be payable or accrued in respect of this Warrant or the interest
represented hereby or the shares purchasable hereunder until, and only to the
extent that, this Warrant shall have been exercised.
7. Compliance with Securities Act: Transferability of Warrant, Disposition of
Shares of Common Stock.
7.1 COMPLIANCE WITH SECURITIES ACT. The Holder of this Warrant, by
acceptance hereof, agrees that this Warrant and the Warrant Shares to
be issued upon exercise hereof are being acquired for investment and
that it will not offer, sell, or otherwise dispose of this Warrant or
any Warrant Shares except under circumstances which will not result in
a violation of the Act or any applicable state securities laws. This
Warrant and all Warrant Shares (unless registered under the Securities
Act of 1933, as amended (the "Act")) shall be stamped or imprinted with
a legend in substantially the following form:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). ANY
TRANSFER OF SUCH SECURITIES SHALL BE INVALID UNLESS A
REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO SUCH
TRANSFER OR SUCH REGISTRATION IS UNNECESSARY FOR SUCH TRANSFER
TO COMPLY WITH THE ACT."
7.2 WARRANT TRANSFERABLE. Subject to compliance with applicable federal and
state securities laws under which this Warrant was purchased, this
Warrant and all rights hereunder are transferable, in whole or in part,
without charge to the Holder (except for transfer taxes), upon
surrender of this Warrant properly endorsed.
7.3 DISPOSITION OF WARRANT SHARES AND COMMON STOCK. With respect to any
offer, sale, or other disposition of the Warrant or any Warrant Shares,
the Holder hereof and each subsequent Holder of this Warrant agrees to
give written notice to the Company prior thereto, describing briefly
the manner thereof and indicating whether or not under the Act
certificates for such Warrant or Warrant Shares to be sold or otherwise
disposed of require any restrictive legend as to applicable
restrictions on transferability in order to insure compliance with the
Act. Promptly upon receiving such written notice, the Company, as
promptly as practicable, shall notify such Holder that such Holder may
sell or otherwise dispose of such Warrant or Warrant Shares, all in
accordance with the terms of the notice delivered to the Company.
Notwithstanding the foregoing, such Warrant or Warrant Shares may be
offered, sold or otherwise disposed of in accordance with Rule 144
under the Act, provided that the Company shall have been furnished with
such information as the Company may request to provide reasonable
assurance that the provisions of Rule 144 have been satisfied. Each
certificate representing the Warrant or Warrant Shares thus transferred
(except a transfer pursuant to Rule 144) shall bear a legend as to the
applicable restrictions on transferability in order to insure
compliance with the Act, unless such legend is not required in order to
insure compliance with the Act. The Company may issue stop transfer
instructions to its transfer agent in connection with such
restrictions.
8. MODIFICATION AND WAIVER. This Warrant and any provision hereof may be
changed, waived, discharged, or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
9. NOTICES. Any notice, request, or other document required or permitted to be
given or delivered to the Holder hereof or the Company shall be delivered by
hand or messenger or shall be sent by certified mail, postage prepaid, or by
overnight courier to each such Holder at its address as shown on the books of
the Company or to the Company at the address indicated therefor in the first
paragraph of this Warrant or such other address as either may from time to time
provide to the other. Each such notice or other communication shall be treated
as effective or having been given (a) when delivered if delivered personally,
(b) if sent by registered or certified mail, at the earlier of its receipt or
three business days after the same has been registered or certified as
aforesaid, or (c) if sent by overnight courier, on the next business day after
the same has been deposited with a nationally recognized courier service.
10. OTHER NOTICES. If at any time:
(a) the Company shall declare any cash dividend upon its
Common Stock;
(b) the Company shall declare any dividend upon its Common
Stock payable in stock or make any special dividend or other distribution to the
holders of its Common Stock;
(c) the Company shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any class or other
rights;
(d) there shall be any capital reorganization or
reclassification of the capital stock of the Company, or consolidation or merger
of the Company with, or sale of all or substantially all of its assets to,
another corporation; or
(e) there shall be a voluntary or involuntary dissolution,
liquidation, or winding-up of the Company;
then, in any one or more of said cases, the Company shall give, by first class
mail, postage prepaid, addressed to the Holder of this Warrant at the address of
such Holder as shown on the books of the Company, (a) at least 10 days' prior
written notice of the date on which the books of the Company shall close or a
record shall be taken for such dividend, distribution, or subscription rights or
for determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation, or
winding-up, and (b) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding-up, at least 10
days' prior written notice of the date when the same shall take place; provided,
however, that the Holder shall use its best commercial efforts to respond to
such notice as early as possible after the receipt thereof. Any notice given in
accordance with the foregoing clause (a) shall also specify, in the case of any
such dividend, distribution, or subscription rights, the date on which the
holders of Common Stock shall be entitled thereto. Any notice given in
accordance with the foregoing clause (b) shall also specify the date on which
the holders of Common Stock shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation,
winding-up or conversion, as the case may be.
11. GOVERNING LAW. This Warrant shall be construed and enforced in accordance
with, and the rights of the parties shall be governed by, the laws of the State
of Nevada, without regard to its choice of laws principles.
12. LOST OR STOLEN WARRANT. Upon receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction, or mutilation of this Warrant and,
in the case of any such loss, theft or destruction, upon receipt of an indemnity
reasonably satisfactory to the Company, or in the case of any such mutilation,
upon surrender and cancellation of such Warrant, the Company, at its expense,
will make and deliver a new Warrant, of like tenor, in lieu of the lost, stolen,
destroyed or mutilated Warrant.
13. FRACTIONAL SHARES. No fractional shares shall be issued upon exercise of
this Warrant. The Company shall, in lieu of issuing any fractional share, pay
the Holder entitled to such fraction a sum in cash equal to such fraction
(calculated to the nearest 1/100th of a share) multiplied by the then effective
Exercise Price on the date the Form of Subscription is received by the Company.
14. NO IMPAIRMENT. The Company will not, by charter amendment or by
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities, or any other voluntary action, avoid or seek to avoid the
observance or performance of any terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of all
such action as may be necessary or appropriate in order to protect the rights of
the Holder against impairment. Upon the request of the Holder, the Company will
at any time during the period this Warrant is outstanding acknowledge in
writing, in form satisfactory to Holder, the continued validity of this Warrant
and the Company's obligations hereunder.
15. SUCCESSORS AND ASSIGNS. This Warrant and the rights evidenced hereby shall
inure to the benefit of and be binding upon the successors of the Company and
the Holder. The provisions of this Warrant are intended to be for the benefit of
all Holders from time to time of this Warrant, and shall be enforceable by any
such Holder.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its officer, thereunto duly authorized as of this ___ day of
December, 2004.
CNH HOLDINGS COMPANY
By:
----------------------------------------------------
Name: Xxxxx Xxxxx
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Title: President/CEO
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FORM OF SUBSCRIPTION
(To be signed only upon exercise of Warrant)
To: CNH HOLDINGS COMPANY
[Please xxxx one box]
? The undersigned, the holder of the attached Common Stock Warrant,
hereby irrevocably elects to exercise the purchase right represented by
such Warrant for, and to purchase thereunder, _____________ shares of
Common Stock of CNH HOLDINGS COMPANY (the "COMPANY") and herewith makes
payment of $_________ therefor.
? The undersigned, the holder of the attached Common Stock Warrant,
hereby irrevocably elects to exercise the purchase right represented by
such Warrant for, and to purchase thereunder, ________________ shares
of Common Stock of the Company and herewith elects to pay for such
shares by reducing the number of shares issuable thereunder in
accordance with Section 1 thereof. The undersigned hereby authorizes
the Company to make the required calculation under Section 1 of the
Warrant.
The undersigned represents that it is acquiring such Common Stock for its own
account for investment and not with a view to or for sale in connection with any
distribution thereof. The undersigned requests that certificates for such shares
be issued in the name of, and delivered to:
whose address is:
DATED:
--------------------------------------
(Signature must conform in all respects to name of Holder as
specified on the face of the Warrant)
Name:
------------------------------------------------
Title:
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EXHIBIT D
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made
and entered into as of December __, 2004, by and among CNH Holdings Company, a
Nevada corporation (the "Company"), and the purchasers listed on Schedule I
hereto (the "Purchasers").
This Agreement is being entered into pursuant to the Note
Purchase Agreement dated as of the date hereof among the Company and the
Purchasers (the "Purchase Agreement").
The Company and the Purchasers hereby agree as follows:
1. Definitions.
Capitalized terms used and not otherwise defined herein shall
have the meanings given such terms in the Purchase Agreement. As used in this
Agreement, the following terms shall have the following meanings:
"Advice" shall have meaning set forth in Section 3(l).
"Affiliate" means, with respect to any Person, any other
Person that directly or indirectly controls or is controlled by or under common
control with such Person. For the purposes of this definition, "control," when
used with respect to any Person, means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise; and the terms of "affiliated," "controlling" and "controlled" have
meanings correlative to the foregoing.
"Board" shall have meaning set forth in Section 3(m).
"Business Day" means any day except Saturday, Sunday and any
day which shall be a legal holiday or a day on which banking institutions in the
state of New York generally are authorized or required by law or other
government actions to close.
"Closing Date" means the date of the last closing of the
purchase and sale of the Notes and Warrants pursuant to the Purchase Agreement.
"Commission" means the Securities and Exchange Commission.
----------
"Common Stock" means the Company's Common Stock, par value
$.001 per share.
"Effectiveness Date" means with respect to the Registration
Statement the earlier of the date which is within five (5) days of the date on
which the Commission informs the Company that the Commission (i) will not review
the Registration Statement or (ii) that the Company may request the acceleration
of the effectiveness of the Registration Statement and the Company makes such
request.
"Effectiveness Period" shall have the meaning set forth in
Section 2.
"Event" shall have the meaning set forth in Section 7(d).
"Event Date" shall have the meaning set forth in Section 7(d).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Filing Date" means the earlier of (a) one hundred and
eightieth (180th) day following the Closing Date, and (b) May 31, 2005.
"Holder" or "Holders" means the holder or holders, as the case
may be, from time to time of Registrable Securities.
"Indemnified Party" shall have the meaning set forth in
Section 5(c).
"Indemnifying Party" shall have the meaning set forth in
Section 5(c).
"Losses" shall have the meaning set forth in Section 5(a).
"Note" means the Senior Unsecured Convertible Promissory Notes
issued pursuant to the Agreement.
"Person" means an individual or a corporation, partnership,
trust, incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or political
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.
"Prospectus" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by the Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference in such Prospectus.
"Registrable Securities means the shares of Common Stock
issuable upon conversion of the Notes and the shares of Common Stock issuable
upon exercise of the Warrants.
"Registration Statement" means the registration statements and
any additional registration statements contemplated by Section 2, including (in
each case) the Prospectus, amendments and supplements to such registration
statement or Prospectus, including pre- and post-effective amendments, all
exhibits thereto, and all material incorporated by reference in such
registration statement.
"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.
"Rule 158" means Rule 158 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.
"Rule 415" means Rule 415 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.
"Securities Act" means the Securities Act of 1933, as amended.
2. Resale Registration.
On or prior to the Filing Date the Company shall prepare and
file with the Commission a "resale" Registration Statement covering all
Registrable Securities for an offering to be made on a continuous basis pursuant
to Rule 415. The Registration Statement shall be on Form SB-2 or other
appropriate form in accordance herewith). The Company shall (i) not permit any
securities other than the Registrable Securities and the securities listed on
Schedule II hereto to be included in the Registration Statement and (ii) use its
best efforts to cause the Registration Statement to be declared effective under
the Securities Act as promptly as possible after the filing thereof, but in any
event prior to the Effectiveness Date, and to keep such Registration Statement
continuously effective under the Securities Act until such date as is the
earlier of (x) the date when all Registrable Securities covered by such
Registration Statement have been sold or (y) the date on which the Registrable
Securities may be sold without any restriction pursuant to Rule 144 as
determined by the counsel to the Company pursuant to a written opinion letter,
addressed to the Company's transfer agent to such effect (the "Effectiveness
Period"). If at any time and for any reason, an additional Registration
Statement is required to be filed because at such time the actual number of
shares of Common Stock into which the Notes are convertible and the Warrants are
exercisable exceeds the number of shares of Registrable Securities remaining
under the Registration Statement, the Company shall have twenty (20) Business
Days to file such additional Registration Statement, and the Company shall use
its best efforts to cause such additional Registration Statement to be declared
effective by the Commission as soon as possible, but in no event later than
sixty (60) days after filing.
3. Registration Procedures.
In connection with the Company's registration obligations
hereunder, the Company shall:
(a) Prepare and file with the Commission, on or prior to the
Filing Date, a Registration Statement on Form SB-2 (or other appropriate form in
accordance herewith) in accordance with the method or methods of distribution
thereof as specified by the Holders (except if otherwise directed by the
Holders) and in accordance with applicable law, and cause the Registration
Statement to become effective and remain effective as provided herein; provided,
however, that not less than three (3) Business Days prior to the filing of the
Registration Statement or any related Prospectus or any amendment or supplement
thereto, the Company shall (i) furnish to the Holders, copies of all such
documents proposed to be filed, which documents will be subject to the review of
such Holders, and (ii) cause its officers and directors, counsel and independent
certified public accountants to respond to such inquiries as shall be necessary,
to conduct a reasonable review of such documents. The Company shall not file the
Registration Statement or any such Prospectus or any amendments or supplements
thereto to which the Holders of a majority of the Registrable Securities shall
reasonably object in writing within three (3) Business Days of their receipt
thereof.
(b) (i) Prepare and file with the Commission such amendments,
including post-effective amendments, to the Registration Statement as may be
necessary to keep the Registration Statement continuously effective as to the
applicable Registrable Securities for the Effectiveness Period and prepare and
file with the Commission such additional Registration Statements in order to
register for resale under the Securities Act all of the Registrable Securities;
(ii) cause the related Prospectus to be amended or supplemented by any required
Prospectus supplement, and as so supplemented or amended to be filed pursuant to
Rule 424 (or any similar provisions then in force) promulgated under the
Securities Act; (iii) respond as promptly as possible, but in no event later
than ten (10) Business Days, to any comments received from the Commission with
respect to the Registration Statement or any amendment thereto and as promptly
as possible provide the Holders true and complete copies of all correspondence
from and to the Commission relating to the Registration Statement; and (iv)
comply in all material respects with the provisions of the Securities Act and
the Exchange Act with respect to the disposition of all Registrable Securities
covered by the Registration Statement during the Effectiveness Period in
accordance with the intended methods of disposition by the Holders thereof set
forth in the Registration Statement as so amended or in such Prospectus as so
supplemented.
(c) Notify the Holders of Registrable Securities as promptly
as possible (and, in the case of (i)(A) below, not less than three (3) days
prior to such filing) and (if requested by any such Person) confirm such notice
in writing no later than two (2) Business Days following the day (i)(A) when a
Prospectus or any Prospectus supplement or post-effective amendment to the
Registration Statement is filed; (B) when the Commission notifies the Company
whether there will be a "review" of such Registration Statement and whenever the
Commission comments in writing on such Registration Statement and (C) with
respect to the Registration Statement or any post-effective amendment, when the
same has become effective; (ii) of any request by the Commission or any other
Federal or state governmental authority for amendments or supplements to the
Registration Statement or Prospectus or for additional information; (iii) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement covering any or all of the Registrable Securities or the
initiation or threatening of any Proceedings for that purpose; (iv) if at any
time any of the representations and warranties of the Company contained in any
agreement contemplated hereby ceases to be true and correct in all material
respects; (v) of the receipt by the Company of any notification with respect to
the suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction, or the initiation of
any Proceeding for such purpose; and (vi) of the occurrence of any event that
makes any statement made in the Registration Statement or Prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue
in any material respect or that requires any revisions to the Registration
Statement, Prospectus or other documents so that, in the case of the
Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
(d) Use its best efforts to avoid the issuance of, or, if
issued, obtain the withdrawal of, as promptly as possible, (i) any order
suspending the effectiveness of the Registration Statement or (ii) any
suspension of the qualification (or exemption from qualification) of any of the
Registrable Securities for sale in any jurisdiction.
(e) If requested by the Holders of a majority in interest of
the Registrable Securities, (i) promptly incorporate in a Prospectus supplement
or post-effective amendment to the Registration Statement such information as
the Company reasonably agrees should be included therein and (ii) make all
required filings of such Prospectus supplement or such post-effective amendment
as soon as practicable after the Company has received notification of the
matters to be incorporated in such Prospectus supplement or post-effective
amendment.
(f) If requested by any Holder, furnish to such Holder, without charge, at least
one conformed copy of each Registration Statement and each amendment thereto,
including financial statements and schedules, all documents incorporated or
deemed to be incorporated therein by reference, and all exhibits to the extent
requested by such Person (including those previously furnished or incorporated
by reference) promptly after the filing of such documents with the Commission.
(g) Promptly deliver to each Holder, without charge, as many copies of the
Prospectus or Prospectuses (including each form of prospectus) and each
amendment or supplement thereto as such Persons may reasonably request; and
subject to the provisions of Sections 3(l) and 3(m), the Company hereby consents
to the use of such Prospectus and each amendment or supplement thereto by each
of the selling Holders in connection with the offering and sale of the
Registrable Securities covered by such Prospectus and any amendment or
supplement thereto.
(h) Prior to any public offering of Registrable Securities, use its best efforts
to register or qualify or cooperate with the selling Holders in connection with
the registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States as
any Holder requests in writing, to keep each such registration or qualification
(or exemption therefrom) effective during the Effectiveness Period and to do any
and all other acts or things necessary or advisable to enable the disposition in
such jurisdictions of the Registrable Securities covered by a Registration
Statement; provided, however, that the Company shall not be required to qualify
generally to do business in any jurisdiction where it is not then so qualified
or to take any action that would subject it to general service of process in any
such jurisdiction where it is not then so subject or subject the Company to any
material tax in any such jurisdiction where it is not then so subject.
(i) Cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold pursuant to a Registration Statement, which certificates, to the extent
permitted by the Purchase Agreement and applicable federal and state securities
laws, shall be free of all restrictive legends, and to enable such Registrable
Securities to be in such denominations and registered in such names as any
Holder may request in connection with any sale of Registrable Securities.
(j) Upon the occurrence of any event contemplated by Section
3(c)(vi), as promptly as possible, prepare a supplement or amendment, including
a post-effective amendment, to the Registration Statement or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and file any other required document so that, as
thereafter delivered, neither the Registration Statement nor such Prospectus
will contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
(k) Comply in all material respects with all applicable rules
and regulations of the Commission and make generally available to its security
holders all documents filed or required to be filed with the Commission.
(l) The Company may require each selling Holder to furnish to
the Company information regarding such Holder and the distribution of such
Registrable Securities as is required by law to be disclosed in the Registration
Statement, Prospectus, or any amendment or supplement thereto, and the Company
may exclude from such registration the Registrable Securities of any such Holder
who unreasonably fails to furnish such information within a reasonable time
after receiving such request.
Each Holder covenants and agrees that (i) it will not sell any
Registrable Securities under the Registration Statement until it has received
copies of the Prospectus as then amended or supplemented as contemplated in
Section 3(g) and notice from the Company that such Registration Statement and
any post-effective amendments thereto have become effective as contemplated by
Section 3(c) and (ii) it and its officers, directors or Affiliates, if any, will
comply with the prospectus delivery requirements of the Securities Act as
applicable to them in connection with sales of Registrable Securities pursuant
to the Registration Statement.
Each Holder agrees by its acquisition of such Registrable
Securities that, upon receipt of a notice from the Company of the occurrence of
any event of the kind described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv),
3(c)(v), 3(c)(vi) or 3(m), such Holder will forthwith discontinue disposition of
such Registrable Securities under the Registration Statement until such Holder's
receipt of the copies of the supplemented Prospectus and/or amended Registration
Statement contemplated by Section 3(j), or until it is advised in writing (the
"Advice") by the Company that the use of the applicable Prospectus may be
resumed, and, in either case, has received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated by
reference in such Prospectus or Registration Statement.
(m) If (i) there is material non-public information regarding
the Company which the Company's Board of Directors (the "Board") reasonably
determines not to be in the Company's best interest to disclose and which the
Company is not otherwise required to disclose, or (ii) there is a significant
business opportunity (including, but not limited to, the acquisition or
disposition of assets (other than in the ordinary course of business) or any
merger, consolidation, tender offer or other similar transaction) available to
the Company which the Board reasonably determines not to be in the Company's
best interest to disclose, then the Company may postpone or suspend filing or
effectiveness of a registration statement for a period not to exceed 20
consecutive days, provided that the Company may not postpone or suspend its
obligation under this Section 3(m) for more than 45 days in the aggregate during
any 12 month period; provided, however, that no such postponement or suspension
shall be permitted for consecutive 20 day periods, arising out of the same set
of facts, circumstances or transactions.
4. Registration Expenses.
All fees and expenses incident to the performance of or
compliance with this Agreement by the Company, except as and to the extent
specified in Section 4, shall be borne by the Company whether or not the
Registration Statement is filed or becomes effective and whether or not any
Registrable Securities are sold pursuant to the Registration Statement. The fees
and expenses referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filing fees (including, without limitation,
fees and expenses (A) with respect to filings required to be made with each
securities exchange or market on which Registrable Securities are required
hereunder to be listed, (B) with respect to filing fees required to be paid by
the Company to the National Association of Securities Dealers, Inc. and the NASD
Regulation, Inc. and (C) in compliance with state securities or Blue Sky laws
(including, without limitation, fees and disbursements of counsel for the
Holders in connection with Blue Sky qualifications of the Registrable Securities
and determination of the eligibility of the Registrable Securities for
investment under the laws of such jurisdictions as the Holders of a majority of
Registrable Securities may designate)), (ii) printing expenses (including,
without limitation, expenses of printing certificates for Registrable Securities
and of printing prospectuses if the printing of prospectuses is requested by the
holders of a majority of the Registrable Securities included in the Registration
Statement), (iii) messenger, telephone and delivery expenses, (iv) fees and
disbursements of counsel for the Company, (v) Securities Act liability
insurance, if the Company so desires such insurance, and (vi) fees and expenses
of all other Persons retained by the Company in connection with the consummation
of the transactions contemplated by this Agreement, including, without
limitation, the Company's independent public accountants (including the expenses
of any comfort letters or costs associated with the delivery by independent
public accountants of a comfort letter or comfort letters). In addition, the
Company shall be responsible for all of its internal expenses incurred in
connection with the consummation of the transactions contemplated by this
Agreement (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense of
any annual audit, the fees and expenses incurred in connection with the listing
of the Registrable Securities on any securities exchange as required hereunder.
5. Indemnification.
(a) Indemnification by the Company. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold harmless
each Holder, the officers, directors, agents, brokers (including brokers who
offer and sell Registrable Securities as principal as a result of a pledge or
any failure to perform under a margin call of Common Stock), investment advisors
and employees of each of them, each Person who controls any such Holder (within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act) and the officers, directors, agents and employees of each such controlling
Person, to the fullest extent permitted by applicable law, from and against any
and all losses, claims, damages, liabilities, costs (including, without
limitation, costs of preparation and attorneys' fees) and expenses
(collectively, "Losses"), as incurred, arising out of or based upon any untrue
or alleged untrue statement of a material fact contained in the Registration
Statement, any Prospectus or any form of prospectus or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out of or based
upon any omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein (in the case of any
Prospectus or form of prospectus or supplement thereto), in the light of the
circumstances under which they were made, not misleading, except to the extent,
but only to the extent, that such untrue statements or omissions arise out of or
are based upon information regarding the Holders or such other Indemnified Party
furnished in writing to the Company by a Holder expressly for use therein, which
information was reasonably relied on by the Company for use therein or to the
extent that such information relates to a Holder or such Holder's proposed
method of distribution of Registrable Securities and was reviewed and expressly
approved in writing by a Holder expressly for use in the Registration Statement,
such Prospectus or such form of Prospectus or in any amendment or supplement
thereto. The Company shall notify the Holders promptly of the institution,
threat or assertion of any Proceeding of which the Company is aware in
connection with the transactions contemplated by this Agreement.
(b) Indemnification by Holders. Each Holder shall, severally
and not jointly, indemnify and hold harmless the Company, its directors,
officers, agents and employees, each Person who controls the Company (within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act),
and the directors, officers, agents or employees of such controlling Persons, to
the fullest extent permitted by applicable law, from and against all Losses, as
incurred, arising out of or based upon any untrue or alleged untrue statement of
a material fact contained in the Registration Statement, any Prospectus, or any
form of prospectus, or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or based upon any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto), in the light of the circumstances under which they were
made, not misleading, to the extent, but only to the extent, that such untrue
statement or omission is contained in any information so furnished in writing by
such Holder or other Indemnified Party to the Company expressly for use therein
and that such information was reasonably relied upon by the Company for use
therein, or to the extent that such information relates to such Holder or such
Holder's proposed method of distribution of Registrable Securities and was
reviewed and expressly approved in writing by such Holder expressly for use in
the Registration Statement, such Prospectus or such form of Prospectus or any
amendment or supplement thereto. Notwithstanding anything to the contrary
contained herein, the Holders shall be liable under this Section 5(b) for only
that amount as does not exceed the net proceeds to such Holder as a result of
the sale of Registrable Securities pursuant to such Registration Statement.
(c) Conduct of Indemnification Proceedings. If any Proceeding
shall be brought or asserted against any Person entitled to indemnity hereunder
(an "Indemnified Party"), such Indemnified Party promptly shall notify the
Person from whom indemnity is sought (the "Indemnifying Party) in writing, and
the Indemnifying Party shall be entitled to assume the defense thereof,
including the employment of counsel reasonably satisfactory to the Indemnified
Party and the payment of all fees and expenses incurred in connection with
defense thereof; provided, that the failure of any Indemnified Party to give
such notice shall not relieve the Indemnifying Party of its obligations or
liabilities pursuant to this Agreement, except (and only) to the extent that it
shall be finally determined by a court of competent jurisdiction (which
determination is not subject to appeal or further review) that such failure
shall have proximately and materially adversely prejudiced the Indemnifying
Party.
An Indemnified Party shall have the right to employ separate
counsel in any such Proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in
writing to pay such fees and expenses; or (2) the Indemnifying Party shall have
failed promptly to assume the defense of such Proceeding and to employ counsel
reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3)
the named parties to any such Proceeding (including any impleaded parties)
include both such Indemnified Party and the Indemnifying Party, and such parties
shall have been advised by counsel that a conflict of interest is likely to
exist if the same counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and such counsel shall be at the expense of
the Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent, which
consent shall not be unreasonably withheld or delayed. No Indemnifying Party
shall, without the prior written consent of the Indemnified Party, effect any
settlement of any pending or threatened Proceeding in respect of which any
Indemnified Party is a party and indemnity has been sought hereunder, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such Proceeding.
All fees and expenses of the Indemnified Party (including
reasonable fees and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within ten (10) Business Days of written notice thereof to the
Indemnifying Party (regardless of whether it is ultimately determined that an
Indemnified Party is not entitled to indemnification hereunder; provided, that
the Indemnified Party shall reimburse all such fees and expenses to the extent
it is finally judicially determined that such Indemnified Party is not entitled
to indemnification hereunder).
(d) Contribution. If a claim for indemnification under Section
5(a) or 5(b) is due but unavailable to an Indemnified Party because of a failure
or refusal of a governmental authority to enforce such indemnification in
accordance with its terms (by reason of public policy or otherwise), then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying
Party and Indemnified Party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a material fact,
has been taken or made by, or relates to information supplied by, such
Indemnifying, Party or Indemnified Party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any Losses shall be deemed to include, subject to the limitations set forth
in Section 5(c), any reasonable attorneys' or other reasonable fees or expenses
incurred by such party in connection with any Proceeding to the extent such
party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party in
accordance with its terms.
The parties hereto agree that it would not be just and equitable
if contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
No Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this
Section are in addition to any liability that the Indemnifying Parties may have
to the Indemnified Parties pursuant to the law.
6. Rule 144.
As long as any Holder owns the Notes Warrants or any Registrable
Shares, 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 Section 13(a) or 15(d) of
the Exchange Act. As long as any Holder owns Notes, Warrants or Regstrable
Shares, if the Company is not required to file reports pursuant to Section 13(a)
or 15(d) of the Exchange Act, it will prepare and furnish to the Holders and
make publicly available in accordance with Rule 144(c) promulgated under the
Securities Act annual and quarterly financial statements, together with a
discussion and analysis of such financial statements in form and substance
substantially similar to those that would otherwise be required to be included
in reports required by Section 13(a) or 15(d) of the Exchange Act, as well as
any other information required thereby, in the time period that such filings
would have been required to have been made under the Exchange Act. The Company
further covenants that it will take such further action as any Holder may
reasonably request, all to the extent required from time to time to enable such
Person to sell the Registrable Shares without registration under the Securities
Act within the limitation of the exemptions provided by Rule 144 promulgated
under the Securities Act, including providing any legal opinions relating to
such sale pursuant to Rule 144. Upon the request of any Holder, the Company
shall deliver to such Holder a written certification of a duly authorized
officer as to whether it has complied with such requirements.
7. Miscellaneous.
(a) Remedies. In the event of a breach by the Company or by a
Holder, of any of their obligations under this Agreement, such Holder or the
Company, as the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement. The
Company and each Holder agree that monetary damages would not provide adequate
compensation for any losses incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the event of any
action for specific performance in respect of such breach, it shall waive the
defense that a remedy at law would be adequate.
(b) No Inconsistent Agreements. Neither the Company nor any of
its subsidiaries has, as of the date hereof entered into and currently in
effect, nor shall the Company or any of its subsidiaries, on or after the date
of this Agreement, enter into any agreement with respect to its securities that
is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. Except as disclosed in Schedule
2.1(c) of the Purchase Agreement, neither the Company nor any of its
subsidiaries has previously entered into any agreement currently in effect
granting any registration rights with respect to any of its securities to any
Person. Without limiting the generality of the foregoing, without the written
consent of the Holders of a majority of the then outstanding Registrable
Securities, the Company shall not grant to any Person the right to request the
Company to register any securities of the Company under the Securities Act
unless the rights so granted are subject in all respects to the prior rights in
full of the Holders set forth herein, and are not otherwise in conflict with the
provisions of this Agreement.
(c) No Piggyback on Registrations. Neither the Company nor any
of its security holders (other than the Holders in such capacity pursuant hereto
or as disclosed in Schedule 2.1(c) of the Purchase Agreement or Schedule II
hereto) may include securities of the Company in the Registration Statement, and
the Company shall not after the date hereof enter into any agreement providing
such right to any of its securityholders, unless the right so granted is subject
in all respects to the prior rights in full of the Holders set forth herein, and
is not otherwise in conflict with the provisions of this Agreement.
(d) Failure to File Registration Statement and Other Events.
The Company and the Purchasers agree that the Holders will suffer damages if the
Registration Statement is not filed on or prior to the Filing Date and not
declared effective by the Commission on or prior to the Effectiveness Date and
maintained in the manner contemplated herein during the Effectiveness Period or
if certain other events occur. The Company and the Holders further agree that it
would not be feasible to ascertain the extent of such damages with precision.
Accordingly, if, except as set forth in Section 3(m), (i) the Registration
Statement is not filed on or prior to the Filing Date, or (ii) the Registration
Statement is not declared effective by the Commission on or prior to the
Effectiveness Date (or in the event an additional Registration Statement is
filed because the actual number of shares of Common Stock into which the Note is
convertible and the Warrants are exercisable exceeds the number of shares of
Common Stock initially registered is not filed and declared effective with the
time periods set forth in Section 2), or (iii) the Company fails to file with
the Commission a request for acceleration in accordance with Rule 461
promulgated under the Securities Act within five (5) days of the date that the
Company is notified (orally or in writing, whichever is earlier) by the
Commission that a Registration Statement will not be "reviewed," or is not
subject to further review, or (iv) the Registration Statement is filed with and
declared effective by the Commission but thereafter ceases to be effective as to
all Registrable Securities at any time prior to the expiration of the
Effectiveness Period, without being succeeded immediately by a subsequent
Registration Statement filed with and declared effective by the Commission in
accordance with Section 2 hereof or (v) the Company has breached Section 3(m)
(any such failure or breach being referred to as an "Event," and for purposes of
clauses (i) and (ii) the date on which such Event occurs, or for purposes of
clause (iii) the date on which such five Business Day period is exceeded, or for
purposes of clause (iv) after more than twenty Business Days, or for purposes of
clause (v) the date on which such three Business Day period is exceeded, being
referred to as "Event Date"), the Company shall pay an amount as liquidated
damages to each Holder equal to 1.0% per calendar month (prorated for shorter
periods) of the outstanding principal and accrued interest on the Note held by
such Holder, from the Event Date (provided that, with respect to the Event
described in clause (ii), the first calendar month shall be deemed to commence
on the 30th day prior to the applicable Event Date), less any amount that has
been converted and sold by such Holder, until the applicable Event is cured.
Notwithstanding anything to the contrary in this paragraph (e), if (I) any of
the Events described in clauses (i), (ii or (iii) shall have occurred, (II) on
or prior to the applicable Event Date, the Company shall have exercised its
rights under Section 3(m) hereof and (III) the postponement or suspension
permitted pursuant to such Section 3(m) shall remain effective as of such
applicable Event Date, then the applicable Event Date shall be deemed instead to
occur on the second Business Day following the termination of such postponement
or suspension.
(f) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the same shall be in writing and signed by the Company
and the Holders of seventy-five percent (75%) of the Registrable Securities
outstanding.
(g) 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 earlier of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified for notice prior to 5:00 p.m., Dallas time,
on a Business Day, (ii) the Business Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile telephone
number specified for notice later than 5:00 p.m., Dallas time, on any date and
earlier than 11:59 p.m., Dallas time, on such date, (iii) the Business Day
following the date of mailing, if sent by overnight delivery by nationally
recognized overnight courier service or (iv) actual receipt by the party to whom
such notice is required to be given. The addresses for such communications shall
be with respect to each Holder at its address set forth under its name on
Schedule I attached hereto, or with respect to the Company, addressed to:
CNH Holdings Company
00000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxx
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
or to such other address or addresses or facsimile number or numbers as any such
party may most recently have designated in writing to the other parties hereto
by such notice. Copies of notices to the Company shall be sent to Xxxxxxx Xxxxxx
L.L.P., 0000 X. Xxxxxxx Xxxxxxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxx, 00000,
Attention: Xxxxxx X. Xxxxxxxx, Telephone No.: (000) 000-0000, Facsimile No.:
(000) 000-0000.
(h) Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their successors and permitted
assigns and shall inure to the benefit of each Holder and its successors and
assigns. The Company may not assign this Agreement or any of its rights or
obligations hereunder without the prior written consent of each Holder. Each
Purchaser may assign its rights hereunder in the manner and to the Persons as
permitted under the Purchase Agreement.
(i) Assignment of Registration Rights. The rights of each
Holder hereunder, including the right to have the Company register for resale
Registrable Securities in accordance with the terms of this Agreement, shall be
automatically assignable by each Holder to any Affiliate of such Holder or any
other Holder or Affiliate of any other Holder of all or a portion of the Notes
or the Registrable Securities if: (1) the Holder agrees in writing with the
transferee or assignee to assign such rights, and a copy of such agreement is
furnished to the Company within a reasonable time after such assignment, (2) the
Company is, within a reasonable time after such transfer or assignment,
furnished with written notice of (a) the name and address of such transferee or
assignee, and (b) the securities with respect to which such registration rights
are being transferred or assigned, (3) following such transfer or assignment the
further disposition of such securities by the transferee or assignees is
restricted under the Securities Act and applicable state securities laws, (4) at
or before the time the Company receives the written notice contemplated by
clause (2) of this Section, the transferee or assignee agrees in writing with
the Company to be bound by all of the provisions of this Agreement, and (5) such
transfer shall have been made in accordance with the applicable requirements of
the Purchase Agreement. In addition, each Holder shall have the right to assign
its rights hereunder to any other Person with the prior written consent of the
Company, which consent shall not be unreasonably withheld. The rights to
assignment shall apply to the Holders (and to subsequent) successors and
assigns.
(j) Counterparts. This Agreement may be executed in any number
of counterparts, each of which when so executed shall be deemed to be an
original and, all of which taken together shall constitute one and the same
Agreement. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding obligation of the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature were the original
thereof.
(k) Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Texas, without
giving effect to any of the conflicts of law principles which would result in
the application of the substantive law of another jurisdiction. This Agreement
shall not be interpreted or construed with any presumption against the party
causing this Agreement to be drafted.
(l) Cumulative Remedies. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.
(m) Severability. If any term, provision, covenant or
restriction of this Agreement is held to be invalid, illegal, void or
unenforceable in any respect, the remainder of the terms, provisions, covenants
and restrictions set forth herein shall remain in full force and effect and
shall in no way be affected, impaired or invalidated, and the parties hereto
shall use their reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
(n) Headings. 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.
(o) Shares Held by the Company and its Affiliates. Whenever
the consent or approval of Holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by the Company or
its Affiliates (other than any Holder or transferees or successors or assigns
thereof if such Holder is deemed to be an Affiliate solely by reason of its
holdings of such Registrable Securities) shall not be counted in determining
whether such consent or approval was given by the Holders of such required
percentage.
(p) Independent Nature of Purchasers. The Company acknowledges
that the obligations of each Purchaser under the Loan Documents are several and
not joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under the Loan Documents. The Company acknowledges that the decision
of each Purchaser to purchase securities pursuant to the Purchase Agreement has
been made by such Purchaser independently of any other purchase and
independently of any information, materials, statements or opinions as to the
business, affairs, operations, assets, properties, liabilities, results of
operations, condition (financial or otherwise) or prospects of the Company or of
its Subsidiaries which may have made or given by any other Purchaser or by any
agent or employee of any other Purchaser, and no Purchaser or any of its agents
or employees shall have any liability to any Purchaser (or any other person)
relating to or arising from any such information, materials, statements or
opinions. The Company acknowledges that nothing contained herein, or in any
Transaction Document, and no action taken by any Purchaser pursuant hereto or
thereto (including, but not limited to, the (i) inclusion of a Purchaser in the
Registration Statement and (ii) review by, and consent to, such Registration
Statement by a Purchaser) shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert or as
a group with respect to such obligations or the transactions contemplated by the
Loan Documents. The Company acknowledges that each Purchaser 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 Loan Documents, and
it shall not be necessary for any other Purchaser to be joined as an additional
party in any proceeding for such purpose. The Company acknowledges that for
reasons of administrative convenience only, the Loan Documents have been
prepared by counsel for one of the Purchasers and such counsel does not
represent all of the Purchasers but only such Purchaser and the other Purchasers
have retained their own individual counsel with respect to the transactions
contemplated hereby. The Company acknowledges that it has elected to provide all
Purchasers with the same terms and Loan Documents for the convenience of the
Company and not because it was required or requested to do so by the Purchasers.
The Company acknowledges that such procedure with respect to the Loan Documents
in no way creates a presumption that the Purchasers are in any way acting in
concert or as a group with respect to the Loan Documents or the transactions
contemplated hereby or thereby.
IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be duly executed by their respective authorized persons as
of the date first indicated above.
CNH HOLDINGS COMPANY
By:_____________________________________
Name: Xxxxx Xxxxx
Title: President
PURCHASER:
-------------------------------------
Print Name:_____________________________
Schedule I
Purchasers
------- ----------------------------------------------- -------------- ----------------------------
NAME TOTAL TOTAL NUMBER OF WARRANTS
PURCHASE
------- ----------------------------------------------- -------------- ----------------------------
------- ----------------------------------------------- -------------- ----------------------------
1. Xxxxxx Xxxxxxx $50,000 50,000
------- ----------------------------------------------- -------------- ----------------------------
------- ----------------------------------------------- -------------- ----------------------------
2. Xxxxx Xxx $25,000 25,000
------- ----------------------------------------------- -------------- ----------------------------
------- ----------------------------------------------- -------------- ----------------------------
3. Xxxxxxx X. Xxxxxxxx $15,000 15,000
------- ----------------------------------------------- -------------- ----------------------------
------- ----------------------------------------------- -------------- ----------------------------
4. Xxxxxx X. Xxxxxxx $15,000 15,000
------- ----------------------------------------------- -------------- ----------------------------
------- ----------------------------------------------- -------------- ----------------------------
5. Xxxxxx or Xxxx Xxxxx Xxxxxxxxx $10,000 10,000
------- ----------------------------------------------- -------------- ----------------------------
------- ----------------------------------------------- -------------- ----------------------------
6. Xxxx X. & Xxxxx X. Xxxxx $15,000 15,000
------- ----------------------------------------------- -------------- ----------------------------
------- ----------------------------------------------- -------------- ----------------------------
7. Xxxxx Xxxxxxx $30,000 30,000
------- ----------------------------------------------- -------------- ----------------------------
------- ----------------------------------------------- -------------- ----------------------------
8. Xxxxxxx Family Trust Dated January 9, 1989 $15,000 15,000
------- ----------------------------------------------- -------------- ----------------------------
------- ----------------------------------------------- -------------- ----------------------------
9. Xxx Xxxxxxxxx $20,000 20,000
------- ----------------------------------------------- -------------- ----------------------------
------- ----------------------------------------------- -------------- ----------------------------
10. Xxxx Family Limited Partnership $50,000 50,000
------- ----------------------------------------------- -------------- ----------------------------
------- ----------------------------------------------- -------------- ----------------------------
11. Xxxxxxxxx X. Xxxx or Xxxxxxx Xxxx $59,000 59,000
------- ----------------------------------------------- -------------- ----------------------------
------- ----------------------------------------------- -------------- ----------------------------
12. Xxxxx X. Xxxxxxxx Trustee of Xxxxx X. $50,000 50,000
Xxxxxxxx Trust UDT dated May 9, 2001
------- ----------------------------------------------- -------------- ----------------------------
------- ----------------------------------------------- -------------- ----------------------------
13. Xxxx Xxxxxxxxx $20,000 20,000
------- ----------------------------------------------- -------------- ----------------------------
------- ----------------------------------------------- -------------- ----------------------------
14. Xxxxxxxx X. Xxxxxx $22,000 22,000
------- ----------------------------------------------- -------------- ----------------------------
------- ----------------------------------------------- -------------- ----------------------------
15. Xxxxx Xxxxx $10,000 10,000
------- ----------------------------------------------- -------------- ----------------------------
------- ----------------------------------------------- -------------- ----------------------------
16. Xxxx Xxxxxxx $50,000 50,000
------- ----------------------------------------------- -------------- ----------------------------
------- ----------------------------------------------- -------------- ----------------------------
17. Xxxxxx Xxxxxx $26,000 26,000
------- ----------------------------------------------- -------------- ----------------------------
------- ----------------------------------------------- -------------- ----------------------------
18. Xxxxxx Xxxx II or Xxxxxxx Xxxx $15,000 15,000
------- ----------------------------------------------- -------------- ----------------------------
------- ----------------------------------------------- -------------- ----------------------------
19. Mellon Bank of New England Xxxxx X. Xxxxxxxx $50,000 50,000
XXX
------- ----------------------------------------------- -------------- ----------------------------
------- ----------------------------------------------- -------------- ----------------------------
20. Xxxxxxx X. Xxxxx $45,000 40,000
------- ----------------------------------------------- -------------- ----------------------------
------- ----------------------------------------------- -------------- ----------------------------
21. American Corp Register Inc $50,000 50,000
------- ----------------------------------------------- -------------- ----------------------------
------- ----------------------------------------------- -------------- ----------------------------
22. Xxxxxxxxx Xxxx XXX Xxxxxxx Xxxxxx & Co Inc. $15,000 15,000
SEP-XXX DTD 04/07/98
------- ----------------------------------------------- -------------- ----------------------------
------- ----------------------------------------------- -------------- ----------------------------
23. Xxxxxxxx X. Xxxxxx XXX Contributory Xxxxxxx $20,000 20,000
Schwab Custodian
------- ----------------------------------------------- -------------- ----------------------------
------- ----------------------------------------------- -------------- ----------------------------
24. Xxxxxxx X. Xxxxxxxx Xx. and Xxxxx X. Xxxxxxxx $15,000 15,000
Family Trust dated 12/20/90
------- ----------------------------------------------- -------------- ----------------------------
------- ----------------------------------------------- -------------- ----------------------------
25. Xxxx Xxxxxx $15,000 15,000
------- ----------------------------------------------- -------------- ----------------------------
------- ----------------------------------------------- -------------- ----------------------------
26. Xxxxxxx X. Xxxxxxx $15,000 15,000
------- ----------------------------------------------- -------------- ----------------------------
------- ----------------------------------------------- -------------- ----------------------------
27. Xxxxxxx xx Xxxxxxxxx $100,000 100,000
------- ----------------------------------------------- -------------- ----------------------------
------- ----------------------------------------------- -------------- ----------------------------
28. Xxx Xxxx $81,000 81,000
------- ----------------------------------------------- -------------- ----------------------------
------- ----------------------------------------------- -------------- ----------------------------
29. Xxxxx Xxxxxx $20,000 20,000
------- ----------------------------------------------- -------------- ----------------------------
------- ----------------------------------------------- -------------- ----------------------------
30. Xxxxxx X. Xxxxxxx Trustee for 2004 Xxxxxx X. $15,000 15,000
Xxxxxxx Revocable Trust
------- ----------------------------------------------- -------------- ----------------------------
------- ----------------------------------------------- -------------- ----------------------------
31. Rocky Mountain Customer Services, Inc. $110,000 110,000
------- ----------------------------------------------- -------------- ----------------------------
------- ----------------------------------------------- -------------- ----------------------------
32. T.C.R LP Trust $50,000 50,000
------- ----------------------------------------------- -------------- ----------------------------
------- ----------------------------------------------- -------------- ----------------------------
33. Xxxxx or Kon Cherewan $15,000 15,000
------- ----------------------------------------------- -------------- ----------------------------
------- ----------------------------------------------- -------------- ----------------------------
34. X. X. Xxxxxxxx $15,000 15,000
------- ----------------------------------------------- -------------- ----------------------------
------- ----------------------------------------------- -------------- ----------------------------
35. Xxxxxxx Xxxx MD $13,000 13,000
------- ----------------------------------------------- -------------- ----------------------------
------- ----------------------------------------------- -------------- ----------------------------
36. Xxxx Xxxxxxxx $30,000 30,000
------- ----------------------------------------------- -------------- ----------------------------
Schedule II
Other Securities to be Included on the Registration Statement
All shares of common stock to be issued by CNH in connection with the
acquisition of XBridge Software, Inc., as contemplated in Section 6.11 of the
Purchase Agreement, including but not limited to any shares issued as payment
for any obligations of XBridge Software, Inc. outstanding at the time of the
acquisition.
