UNIT PURCHASE AGREEMENT
AGREEMENT ("Agreement") dated as of the 20th day of December,
1996, by and among GLOBALINK, INC., a Delaware corporation (the "Company"), J.
XXXXXXX XXXXXXX, INC. ("JMR"), either on its own behalf or on behalf of other
investors, and the persons and entities listed on Exhibit A to this Agreement
(JMR and the persons and entities listed on Exhibit A annexed hereto being
referred to individually as an "Investor" and collectively as the "Investors").
W I T N E S S E T H :
WHEREAS, in reliance upon the representations, warranties, terms and
conditions hereinafter set forth, the Investors desire to purchase from the
Company, and the Company desires to sell to the Investors, a minimum of two
million five hundred thousand ($2,500,000) dollars and a maximum of six million
five hundred thousand ($6,500,000) dollars of units (the "Units") at the Unit
Purchase Price (as defined below) per Unit, each Unit consisting of: (a) one (1)
share of the Company's Eight (8%) Percent Convertible Redeemable Preferred Stock
("Preferred Stock"), each share of Preferred Stock being convertible into ten
(10) shares of the Company's common stock, par value $.01 per share ("Common
Stock"); and (b) one Redeemable Common Stock Purchase Warrant exercisable for
five (5) years (the "Warrant" and collectively, the "Warrants") to purchase ten
(10) shares of Common Stock at the Warrant Exercise Price (as defined below);
and
WHEREAS, the Units are being issued pursuant to the Company's
Confidential Private Placement Memorandum and Exhibits thereto dated December
11, 1996 (collectively, the "Memorandum"); and
WHEREAS, the Units are being issued pursuant to an exemption from the
registration requirements of the Securities Act of 1933, as amended (the "1933
Act").
NOW, THEREFORE, in consideration of the premises and the respective
promises hereinafter set forth, the Company and the Investors hereby agree as
follows:
1. Sale and Purchase of Units.
(a) Subject to the terms and conditions of this Agreement, the
Company shall sell to the Investors Units having a minimum aggregate Unit
Purchase Price of two million five hundred thousand ($2,500,000) dollars and a
maximum aggregate Unit Purchase Price of six million five hundred thousand
($6,500,000) dollars, and each Investor shall purchase from the Company the
number of Units as is set forth after the Investor's name on Exhibit A annexed
hereto for a consideration equal to the Unit Purchase Price per Unit. Forms of
the Preferred Stock and Warrants, which comprise the Units, are included in the
Memorandum. For purpose hereof, the terms: (i) "Unit Purchase Price" shall mean
ten (10) times the ten (10) consecutive trading day average of the closing bid
price on the American Stock Exchange ("ASE") for the
Company's Common Stock ending five (5) calendar days prior to the Initial
Closing Date (as defined below); and (ii)"Original Stock Price" shall mean
one-tenth (1/10th) of the Unit Purchase Price.
(b) The initial sale and purchase described in Paragraph 1(a)
of this Agreement shall take place at a closing at the offices of XXXXXXX &
XXXXXXX P.C., 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000 or such other place
as shall be acceptable to the Company and JMR on such date or dates as JMR shall
advise the Company on two (2) business days notice or such shorter notice as
shall be reasonably acceptable to the Company (the "Initial Closing Date"). In
no event, however, shall the Initial Closing Date be later than December 31,
1996. Subsequent sale and purchase of Units shall take place at one or more
closings held on such dates as the Company and JMR shall mutually determine
("Additional Closing Dates"). All Additional Closing Dates pursuant to this
Agreement shall occur not later than December 31, 1996, subject to the right of
JMR by written notice to the Company to extend such period up to and including
January 31, 1997. The closings that occur on the Initial Closing Date and the
Additional Closing Dates shall be referred to individually as "Closing" and
collectively as "Closings".
(c) As provided in the Warrants, the Warrants are exercisable
at an exercise price per share, subject to adjustment as provided in the
Warrant, equal to one hundred twenty-five (125%) percent of the Original Stock
Price (the "Warrant Exercise Price") until the fifth (5th) anniversary of the
Initial Closing Date. The Company can redeem all, but not less than all,
outstanding Warrants for one cent ($.01) per Warrant on not less than thirty
(30) days nor more than forty-five (45) days written notice to all of the record
holders of the Warrants provided that, at the time such notice is given, (A) the
Warrant Shares (as defined below) have been registered pursuant to the 1933 Act
as provided for in Paragraph 7 below and such registration is then currently
effective, and (B) the average closing bid price of the Common Stock as listed
on the ASE, or the National Association of Securities Dealers Automated
Quotation System ("NASDAQ"), or the New York Stock Exchange ("NYSE"), or
wherever the Common Stock is then traded, during the ten (10) consecutive
trading days ending five (5) business days prior to the date that written notice
of the Warrants redemption is given is at least two hundred (200%) percent of
the Warrant Exercise Price per share of Common Stock. In the event of any
conflict or inconsistency between the provisions of this Paragraph 1(c) and the
Warrants, the Warrants shall govern and be controlling.
(d) As provided in the Preferred Stock, each share of
Preferred Stock is convertible into ten (10) shares of Common Stock, subject to
adjustment as provided in the Preferred Stock, at the option of the holder. If
the Company's Common Stock trades at 200% or more of the Original Stock Price on
the ASE, NASDAQ, NYSE or wherever the Common Stock is then traded for ten (10)
consecutive trading days and the Company then has an effective registration
statement under the 1933 Act with respect to all shares of Common Stock
underlying the Preferred Stock, the Company has the right, upon no less than
thirty (30) days nor more than forty-five (45) days prior written notice to all
holders of record of the Preferred Stock, to redeem
all, but not less than all, of the Preferred Stock for cash at the Unit Purchase
Price per share of Preferred Stock plus accrued and unpaid dividends. On January
1, 2002, any shares of outstanding Preferred Stock shall automatically convert
into shares of Common Stock at the lesser of the Original Stock Price per share
or the average bid price per share for the Common Stock for ten (10) consecutive
trading days ending five (5) business days prior to January 1, 2002.
(e) As provided in the Preferred Stock, the Company shall pay
dividends of eight (8%) percent per annum, in arrears, on a cumulative basis to
the holders of the Preferred Stock on an annual basis on the first business day
of each calendar year commencing in January 1998. A pro rata dividend shall be
paid by the Company for any period that shares of Preferred Stock are
outstanding for less than a full calendar year. At the option of the Company,
dividends will be paid in cash or in shares of Preferred Stock valued at the
lesser of a per share price equal to the Unit Purchase Price or ten (10) times
the average closing bid price for shares of Common Stock for the last ten (10)
consecutive trading days prior to the end of the calendar year. In the event of
any conflict or inconsistency between the provisions of this Paragraph 1(e) and
the Preferred Stock, the Preferred Stock shall govern and be controlling.
(f) As provided in the Preferred Stock, if the average bid
price for Common Stock during any sixty (60) day period commencing on or after
January 1, 1998 is eighty (80%) percent or less of the Original Stock Price,
holders of a majority of the outstanding shares of Preferred Stock can elect, by
written notice to the Company signed by such holders, to have the dividend on
all of the Preferred Stock paid in cash for the balance of the life of the
Preferred Stock (the "Cash Election"). In the event that the Company cannot or
does not honor the Cash Election, (i) the Company must pay the dividend in
shares of Preferred Stock valued at the lesser of a per share price equal to the
Unit Purchase Price or ten (10) times the average closing bid price for shares
of Common Stock for the last ten (10) consecutive trading days prior to the end
of the respective calendar year, and (ii) holders of a majority of the
outstanding Preferred Stock shall have the right, by written notice to the
Company signed by such holders, to designate one (1) member to the Board of
Directors of the Company, the Company shall immediately take all steps necessary
to appoint such designee as a member of the Board of Directors of the Company
and the Company shall use its best efforts to cause the election of such
designee (or any substitute designee designated in writing by the holders of a
majority of the outstanding Preferred Stock) for so long as at least twenty-five
(25%) percent of the Preferred Stock remains outstanding. In the event of any
conflict or inconsistency between the provisions of this Paragraph 1(f) and the
Preferred Stock, the Preferred Stock shall govern and be controlling.
(g) The shares of Preferred Stock and Warrants provide for
adjustment to the conversion price and exercise price upon the happening of the
following:(i) any subdivision of the outstanding shares of Common Stock of the
Company into a greater number of shares of Common Stock; (ii) any declaration of
a dividend or making any other distribution by the Company upon its Common Stock
payable in shares of Common Stock; (iii) any capital reorganization or
reclassification of the capital stock of the Company; (iv) the issuance, sale or
distribution of shares of Common Stock by the Company for a consideration per
share in cash or property less than the Original Stock Price (the foregoing
provision does not apply to the issuance and sale of the Units); and (v) any
consolidation or merger of the Company with another entity.
2. Payment. At each Closing, the Company shall deliver to JMR, on
behalf of the Investors, the original executed and sealed certificates for the
shares of Preferred Stock and Warrants comprising the Units being purchased by
the Investors pursuant to Paragraph 1 of this Agreement, against its receipt of
payment therefor by certified or bank check drawn on a bank located in the
United States, or by Federal wire transfer, in the amount of the aggregate
purchase price for such Units as provided in Paragraph 1 of this Agreement, less
the amount of fees payable to JMR pursuant to Paragraph 10(a) of this Agreement.
All certificates for shares of Preferred Stock and Warrants comprising the Units
being purchased by the Investors shall be issued in the respective names of the
Investors in accordance with instructions provided by JMR not later than the
business day preceding the Closing.
3. Representations and Warranties of the Company. The Company hereby
represents and warrants to and covenants and agrees with each Investor and JMR,
as of the date hereof and as of the date of each Closing, as follows:
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and is
qualified and in good standing as a foreign corporation in each jurisdiction in
which the nature of the business conducted by the Company or the property owned
or leased by the Company requires such qualification. Except as set forth on the
disclosure schedule attached hereto as Exhibit C (the "Disclosure Schedule"),
the Company has no active subsidiaries and does not own any equity interest and
has not made any loans or advances to or guarantees of indebtedness to any
person, corporation, partnership or other entity.
(b) The authorized capital of the Company consists of twenty
million (20,000,000) shares of Common Stock and two hundred fifty thousand
(250,000) shares of preferred stock, of which, as of the date of this Agreement,
(i) 5,341,352 shares of Common Stock are issued and outstanding, (ii) no shares
of preferred stock are issued and outstanding (other than shares of Preferred
Stock issued at any prior Closing or Closings), (iii) 1,686,278 shares of Common
Stock have been reserved for issuance upon conversion of equity or debt
securities, exercise of outstanding options, warrants and other rights to
acquire Common Stock and upon the exercise of options granted or to be granted
pursuant to the Company's stock option plans and pursuant to other agreements,
excluding, however, (a) the shares of Common Stock issuable upon the conversion
of the Preferred Stock (the "Conversion Shares"), (b) the shares of Common Stock
issuable upon exercise of the Warrants (the "Warrant Shares"), (c) the shares of
Common Stock issuable upon the conversion of the Preferred Stock comprising part
of the Units purchasable by the Placement Agent upon the exercise of the
Placement Agent Warrants (as defined below), and (d) the shares of Common Stock
issuable upon the exercise of the Warrants
comprising part of the Units purchasable by the Placement Agent upon the
exercise of the Placement Agent Warrants, and (iv) 1,500 shares of preferred
stock designated "A-1" reserved for issuance upon the conversion of outstanding
prepaid warrants ("Prepaid Warrants"). Except as set forth in the Memorandum,
the Company is not a party to any agreement to issue, nor has it issued, any
warrants, options or rights or debentures, notes or other evidence of
indebtedness or other securities, instruments or agreements upon the exercise or
conversion of which or pursuant to the terms of which additional shares of
capital stock of the Company may become issuable. No holder of any of the
Company's securities has preemptive rights or contractual rights of first
refusal.
(c) The Company has the full right, power and authority to
execute, deliver and perform under this Agreement, the Preferred Stock, the
Warrants and the Placement Agent Warrants. This Agreement has been duly executed
by the Company and, at each Closing, the Preferred Stock, Warrants and the
Placement Agent Warrants being issued will have been duly executed by the
Company, and this Agreement, the Preferred Stock, the Warrants and the Placement
Agent Warrants and the transactions contemplated by this Agreement, the
Preferred Stock, the Warrants, and Placement Agent Warrants have been duly
authorized by all necessary corporate action and each constitute, the legal,
valid and binding obligations of the Company, enforceable in accordance with
their respective terms.
(d) All of the issued and outstanding shares of Common Stock
of the Company have been duly and validly authorized and issued and are fully
paid and nonassessable, with no personal liability attaching to the holders
thereof, and such shares of Common Stock have not been issued in violation of
the preemptive rights or rights of first refusal of any holder of securities of
the Company. All of the issued and outstanding shares of Common Stock have been
issued pursuant to either a current effective registration statement under the
1933 Act or an exemption from the registration requirements of the 1933 Act and
were issued in accordance with all applicable Federal and state securities laws.
(e) The shares of Common Stock included in the Conversion
Shares and the Warrant Shares and the shares of Common Stock issuable upon the
conversion of the Preferred Stock and exercise of the Warrants underlying the
Placement Agent Warrants have been validly authorized for issuance and, when
issued pursuant to this Agreement and the terms of the Preferred Stock, the
terms of the Warrants and the terms of the Preferred Stock and Warrants
underlying the Placement Agent Warrants, as the case may be, will be duly and
validly authorized and issued, fully paid and nonassessable and free from
preemptive rights or rights of first refusal held by any person.
(f) The Company has delivered to each Investor a copy of the
following financial statements of the Company (hereinafter collectively, the
"Financial Statements"): (1) (i) consolidated balance sheets as at December 31,
1995 and 1994, and (ii) consolidated statements of operations, stockholders'
equity (deficiency) and cash flows for the fiscal years ended December 31, 1995
and 1994, and the related notes thereto, which have been audited by Xxxxx
Xxxxxxxx LLP, independent certified public accountants, and (2) (i) unaudited
balance sheet as at September 30, 1996, and (ii) unaudited statement of
operations, stockholders' equity (deficiency) and cash flows for the fiscal
quarter ended September 30, 1996, and the related notes thereto, which have been
prepared by the Company. The Financial Statements, which are included in the
Company's Form 10-KSB Annual Report for the year ended December 31, 1995 ("Form
10-K") and the Company's Form 10-QSB Quarterly Report for the quarter ended
September 30, 1996 ("Form 10-Q"), were prepared in accordance with generally
accepted accounting principles consistently applied and present and reflect
fairly the financial position of the Company at the respective balance sheet
dates and the results of its operations, changes in stockholders' equity and
cash flows for the periods then ended. During the period of Xxxxx Xxxxxxxx LLP's
engagement as the Company's independent certified public accountant, there have
been no disagreements between the accounting firm and the Company on any matters
of accounting principles or practices, financial statement disclosure or
auditing scope or procedure and no reportable events relating to the
relationship between the Company and the accounting firm. The Company has made
and kept books and records and accounts which are in reasonable detail and which
fairly and accurately reflect the activities of the Company.
(g) Except as set forth on the Disclosure Schedule, the
Company has good and marketable title to all of its property and assets and none
of the property or assets of the Company is subject to any lien, mortgage,
pledge, encumbrance or other security interest.
(h) Since December 31, 1995, except as set forth in the
Memorandum and its Exhibits, there has not been any material adverse change in
the financial condition or in the operations, business or prospects of the
Company from that shown in the Financial Statements or any damage or
destruction, whether covered by insurance or not, which affects the business,
property or assets of the Company.
(i) The Company has delivered to each Investor (i) a copy of
the Company's Form 10-K; (ii) a copy of the Company's Form 10-Q; (iii) a copy of
the Company's annual report and proxy statement relating to the Company's 1996
annual meeting of stockholders held on June 18, 1996, (iv) a copy of the
Company's proxy statement relating to the Company's December 2, 1996 special
meeting of stockholders; (v) any Current Reports on Form 8-K or other reports
filed with the Securities and Exchange Commission (the "SEC") subsequent to
September 30, 1996; and (vi) such additional documents referred to in Exhibit B
annexed hereto.
(j) Neither the execution or delivery of this Agreement, the
Preferred Stock, the Warrants or the Placement Agent Warrants by the Company nor
the performance by the Company of the transactions contemplated by this
Agreement, the Preferred Stock, the Warrants or the Placement Agent Warrants:
(i) requires the consent, waiver, approval, license or authorization of or
filing with or notice to any person, entity or public authority (except any
filings required by Federal or state securities laws, which filings have been or
will be made by the Company on a timely basis); (ii) violates or constitutes a
default under or breach of any law, rule or regulation applicable to the
Company; (iii) conflicts with or results in a breach or
termination of any provision of, or constitutes a default under, or will result
in the creation of any lien, charge or encumbrance upon any of the property or
assets of the Company with or without the giving of notice, the passage of time
or both, pursuant to (A) the Company's certificate of incorporation or by-laws,
(B) any mortgage, deed of trust, indenture, note, loan agreement, security
agreement, contract, lease, license, alliance agreement, joint venture
agreement, or other agreement or instrument, or (C) any order, judgment, decree,
statute, regulation or any other restriction of any kind or character to which
the Company is a party or by which any of the assets of the Company may be
bound.
(k) The Company has no indebtedness to any officer, director,
5% stockholder or other Affiliate (as defined in the Rules and Regulations of
the SEC under the 0000 Xxx) of the Company.
(l) The Company is in compliance with all laws, rules and
regulations of all Federal, state and local government agencies having
jurisdiction over it or affecting its business, assets or properties, and the
Corporation possesses all licenses, permits, consents, approvals and agreements
which are required to be issued by any and all applicable Federal, state or
local authorities necessary for the operation of its business and/or in
connection with its assets or properties.
(m) The Company is not in default under any note, loan
agreement, security agreement, mortgage, contract, lease, alliance agreement,
joint venture agreement, agreement, license, permit, consent, approval or
instrument to which it is a party, and no event has occurred which, with or
without the lapse of time or giving of notice, or both, would constitute such
default thereof by the Company or would cause acceleration of any obligation of
the Company or would adversely affect the business, operations, financial
condition or prospects of the Company.
(n) To the best of the Company's knowledge, no officer,
director or 5% stockholder of the Company and no Affiliate of any such person
either (i) holds any interest in any corporation, partnership, business, trust,
sole proprietorship or any other entity which is engaged in a business similar
to that conducted by the Company (other than a passive immaterial interest in a
public company engaged in any such business) or (ii) engages in business with
the Company.
(o) There are no material (i.e., involving an asserted
liability in excess of ten thousand dollars ($10,000)) claims, actions, suits,
proceedings or labor disputes, inquiries or investigations (whether or not
purportedly on behalf of the Company), pending or, to the best of the Company's
knowledge, threatened, against the Company, at law or in equity or by or before
any Federal, state, county, municipal or other governmental department, SEC,
ASE, board, bureau, agency or instrumentality, domestic or foreign, whether
legal or administrative or in arbitration or mediation, nor is there any basis
for any such action or proceeding. Neither the Company nor any of its assets are
subject to, nor is the Company in default with respect to, any order, writ,
injunction, judgment or decree that could adversely affect the financial
condition, business, assets or prospects of the Company.
(p) The accounts receivable of the Company represent
receivables generated from the sale of goods and services in the ordinary course
of business. The Company knows of no material disputes concerning accounts
receivable, and the accounts receivable are collectible in the ordinary course
of business, subject to reserves reflected on the Financial Statements.
(q) Except as set forth in the Memorandum, the Company has (i)
no written employment contracts and no oral employment contracts not terminable
at will by the Company, with any officer, director or other employee of the
Company or any five (5%) percent shareholder of the Company, (ii) no consulting
agreement or other compensation agreement with any officer, director or other
employee of the Company or any five (5%) percent shareholder of the Company, and
(iii) no agreement or contract with any party that will result in the payment by
the Company, or the creation of any commitment or obligation (absolute or
contingent), of the Company to pay any severance, termination, "golden
parachute", or similar payment to any present or former personnel of the Company
following termination of employment. No director, executive officer or other key
employee of the Company has advised the Company in writing that he or she
intends to resign as director and/or executive officer of the Company or to
terminate his or her employment with the Company.
(r) The accounts payable of the Company represent bona fide
payables to third parties incurred in the ordinary course of business and
represent bona fide debts for services and/or good provided to the Company.
(s) The Company is not a party to a labor agreement with
respect to its employees with any labor organization, union, group or
association and there are no employee unions (nor any similar labor or employee
organizations). In the last five (5) years, the Company has not experienced any
attempt by organized labor or its representatives to make the Company conform to
demands of organized labor relating to its employees or to enter into a binding
agreement with organization labor that would cover any of the Company's
employees. There is no labor strike or labor stoppage or slowdown pending, or,
to the knowledge of the Company, threatened against the Company nor has the
Company experienced in the last five (5) years any work stoppage or other labor
difficulty. The Company is in compliance with all applicable laws, rules and
regulations regarding employment practices, employee documentation, terms or
conditions of employment and wage and hours and the Company is not engaged in
any unfair labor practices. There are no unfair labor practices charge or
complaint against the Company pending before the National Labor Relations Board
or any other governmental agency.
(t) Except as set forth in the Memorandum, there are no
employee pension, retirement or other benefit plans, maintained, contributed to
or required to be contributed to by the Company covering any employee or former
employee of the Company. The Company has no liability or obligation of any kind
or nature, whether accrued or contingent, matured or unmatured, known or
unknown, under any provision of the Employee Retirement Income Security Act of
1974, as amended ("ERISA") or any provision of the Internal Revenue Code of
1986, as amended, specifically relating to persons subject to ERISA.
(u) The Company has timely filed with the appropriate taxing
authorities all returns in respect of taxes required to be filed through the
date hereof and has timely paid all taxes it is required to pay or has
established an adequate reserve therefor, except where the Company has timely
filed for extensions. There are no pending or, to the knowledge of the Company,
threatened audits, investigations or claims for or relating to any liability of
the Company in respect of taxes.
(v) The Company has no liabilities of any kind or nature
whether accrued or contingent, matured or unmatured, known or unknown, except as
set forth in the Financial Statements and those liabilities incurred by the
Company in the ordinary course of business since December 31, 1995.
(w) Except as set forth in the Disclosure Schedule, no
customer of the Company during fiscal year 1996 has accounted for more than five
(5%) percent of the revenues of the Company and to the best of the Company's
knowledge, no customer will account for more than five (5%) percent of the
Company's revenues during fiscal year 1997. None of the customers identified on
the Disclosure Schedule have advised the Company that they: (i) have or are
contemplating filing bankruptcy; (ii) desire to negotiate extended payment
terms; or (iii) have determined to discontinue the Company's products or to
materially reduce their product orders.
(x) There are no finder's fees or brokerage commissions
payable with respect to the transactions contemplated by this Agreement, except
as provided in Paragraph 10 of this Agreement, and the Company agrees to
indemnify and hold harmless each of the Investors from and against any and all
cost, damage, liability, judgment and expense (including reasonable fees and
expenses of counsel) arising out of or relating to claims for such fees or
commissions (and to pay JMR pursuant to a separate agreement between the Company
and JMR), except to the extent that any such fees or commissions have been
incurred by an Investor as a result of the actions of that Investor.
(y) The Company has not agreed to any terms and conditions
with respect to any merger, consolidation, acquisition, disposition or other
material business transaction with any party.
(z) The Company has the right to conduct its business in the
manner in which its business has been heretofore conducted. Except as set forth
in the Disclosure Schedule, neither the conduct of the Company's business nor
any of the Company's products violates or infringes upon the patent, copyright,
trade secret or other proprietary rights of any third party, and the Company has
received no notice of any claim of any such violation or infringement.
(aa) There is no legal or other impediment to the Company
filing a registration statement on Form S-3 with the SEC or to such filing
becoming effective. The Company
covenants and agrees to maintain such conditions.
(bb) The Company has delivered to each Investor a copy of the
Memorandum. The information contained in the Financial Statements and the
Memorandum, taken together, describe in all material respects the business and
financial condition of the Company, and such material, taken together, does not
contain any misstatement of a material fact or omit to state a material fact
necessary to make the information not misleading. The Investors shall be
entitled to rely on such material notwithstanding any investigation they or any
of them may have made.
4. Representations and Warranties of the Investors. Each Investor
(except for JMR, other than in its capacity as a purchaser of Units) hereby
represents and warrants to the Company and JMR as follows:
(a) Investor has the full right, power and authority to enter
into this Agreement and to carry out and consummate the transactions
contemplated herein. This Agreement constitutes the legal, valid and binding
obligation of the Investor.
(b) Investor acknowledges that Investor has received and
reviewed the Financial Statements and the Memorandum and has had an opportunity
to meet with and ask questions of the management of the Company.
(c) Investor is an Accredited Investor (as defined in Rule 501
promulgated by SEC under the 1933 Act), has the financial ability to bear the
economic risk of the Investor's investment, can afford to sustain a complete
loss of such investment and has adequate means of providing for the Investor's
current needs and personal contingencies, and has no need for liquidity in the
Investor's investment in the Company; and the amount invested in the Company by
the Investor does not constitute a substantial portion of the Investor's net
worth. The Investor has delivered to the Company and JMR a confidential investor
questionnaire, and all of the information set forth in the confidential investor
questionnaire is true and correct in all material respects.
(d) Investor is acquiring the Units being purchased for
investment and not with a view to the sale or distribution thereof, for such
Investor's own account and not on behalf of others and the Investor has not
granted any other person any right or option or any participation or beneficial
interest in any of the Units, Preferred Stock, Warrants, Conversion Shares or
Warrant Shares, except that JMR may acquire Units (but JMR has no obligation to
acquire Units) and thereafter transfer such Units to persons who qualify as
Investors pursuant to this Agreement and execute this Agreement as an Investor,
provided that JMR shall have delivered the Units being transferred to the
Company or its transfer agent prior to the effective date of the registration
statement to be filed by the Company pursuant to Paragraph 7(a) of this
Agreement. Investor acknowledges that the Preferred Stock and Warrants
comprising the Units constitute restricted securities within the meaning of Rule
144 of the SEC under the 1933 Act, and that neither such securities nor the
Conversion Shares nor Warrant Shares may be sold
except pursuant to an effective registration statement under the 1933 Act or in
a transaction exempt from registration under the 1933 Act, and the Investor
acknowledges that the Investor understands the meaning and effect of such
restriction. The Investor has sufficient knowledge and experience in financial
and business matters so that the Investor is capable of evaluating the risks and
merits of the purchase of the Units. The Investor is aware that no Federal or
state regulatory agency or authority has passed upon the sale of the Units or
the terms of the sale or the accuracy or adequacy of any material being provided
to the Investor and that the price of the Units was negotiated between the
Company and JMR and does not necessarily bear any relationship to the underlying
assets or value of the Company. INVESTOR UNDERSTANDS THAT AN INVESTMENT IN THE
UNITS BEING PURCHASED INVOLVES A HIGH DEGREE OF RISK.
(e) INVESTOR UNDERSTANDS THAT, IN CONNECTION WITH INVESTOR'S
EVALUATION OF THE COMPANY, INVESTOR HAS BEEN OR MAY HAVE BEEN PROVIDED WITH
ACCESS TO CERTAIN NON-MATERIAL INFORMATION CONCERNING THE COMPANY WHICH HAS NOT
BEEN PUBLICLY DISCLOSED. INVESTOR FURTHER UNDERSTANDS THAT ANY TRADING BY THE
INVESTOR IN SECURITIES OF THE COMPANY USING NON-PUBLIC INFORMATION COULD
CONSTITUTE A VIOLATION OF FEDERAL AND STATE SECURITIES LAWS AND OTHER LAWS AND
MAY SUBJECT THE INVESTOR TO CRIMINAL AND/OR CIVIL PENALTIES AND/OR LIABILITY. In
view of the foregoing, Investor agrees not to (i) purchase or sell, including a
short sale, any of the Company's securities or rights to purchase or sell such
securities as long as the Investor is in possession of material non-public
information or (ii) disclose any non-public information to any other person.
(f) There are no finder's fees or brokerage commissions
payable with respect to the purchase by the Investor of the Units, except as
provided in Paragraph 10 of this Agreement.
(g) If an Investor is a resident of the Commonwealth of
Pennsylvania, the Investor acknowledges and agrees that (a) the securities
purchased by Investor cannot be sold for a period of twelve (12) months from the
date of purchase except as permitted under Section 204.011 of the Pennsylvania
Securities Regulations, and (b) pursuant to Section 207(m) of the Pennsylvania
Securities Act, each Pennsylvania resident who accepts an offer to purchase
securities exempted from registration under Section 203(d) of the Pennsylvania
Securities Act directly from an issuer or an affiliate of an issuer has the
right to withdraw his acceptance without incurring any liability to the seller,
underwriter, if any, or any other person within two (2) business days from the
date of receipt by the issuer of his written binding contract of purchase or, in
the case of a transaction in which there is no written binding contract of
purchase, within two (2) business days after he makes the initial payment for
the securities being offered.
5. Use of Proceeds. The net proceeds from the sale of the Units
will be used by the Company for research and development, product development,
marketing of new products, and
may be used for a short term secured loan to the Company's Chief Executive
Officer and the repurchase of the Prepaid Warrants, and general working capital
and other general corporate purposes, as disclosed in the Memorandum. If the
above mentioned secured loan and/or repurchase of Prepaid Warrants does not
occur, additional proceeds will be used as general working capital.
6. Unregistered Securities. The Units, Preferred Stock, Warrants,
Conversion Shares and Warrant Shares have not been registered under the 1933
Act, in reliance upon the applicability of Section 3(b), 4(2), 4(6) and/or
Regulation D of the 1933 Act to the transactions contemplated hereby. The
Investor acknowledges that the Company is relying in part on such Investor's
representations in Paragraph 4 of this Agreement and in the confidential
investor questionnaire to establish such exemption. In furtherance of such
reliance, the certificates representing the Preferred Stock and Warrants will
bear an investment legend and Conversion Shares and Warrant Shares issued prior
to their respective registration under Paragraph 7 below will also bear an
investment legend.
7. Registration Rights and "Piggy-Back" Registration Rights.
(a) As soon as possible after the last Closing, but in no
event later than three (3) months after the Initial Closing Date (regardless of
whether the maximum number of Units shall have been sold), the Company shall, at
its sole cost and expense, file a registration statement on Form S-3 with the
SEC ("Form S-3") covering all of the Conversion Shares, Warrant Shares and the
shares of Common Stock issuable upon the conversion of the Preferred Stock and
exercise of the Warrants underlying the Placement Agent Warrants and such
additional shares of Common Stock that may be issued pursuant to the conversion
of Preferred Stock that may be issued by the Company in payment of dividends on
Preferred Stock, the anti-dilution rights contained in the Preferred Stock,
Warrants and securities comprising the Placement Agent Warrants (collectively,
the "Registrable Securities"), time being of the essence. The Company will use
its best efforts to have the Form S-3 declared effective as soon as possible
thereafter, and shall keep the Form S-3 current and effective for at least five
(5) years from the effective date thereof or until such earlier date as all of
the Registrable Securities registered pursuant to such registration statement
shall have been sold or otherwise transferred. If after using its best efforts,
the Company is not able to have declared effective a Form S-3, or, such form
having been declared effective, the Form S-3 is not maintained current and
effective as provided above, holders of 25% or more of the outstanding
Registrable Securities, by written notice to the Company, can demand that the
Company file a registration statement on Form S-1 or such other form as is then
available for use by the Company with the SEC (collectively, "Form S-1")
covering the then unsold Registrable Securities. Upon receipt of such demand,
the Company shall, as expeditiously as possible, at its sole cost and expense,
prepare and file the Form S-1 and use its best efforts to have the Form S-1
declared effective as soon as possible thereafter, and shall keep the Form S-1
current and effective until five (5) years from the effective date thereof or,
if earlier, a period of time such that the Form S-3 and the Form S-1
registration statements were current and effective for at least five (5) years
in total. Notwithstanding anything to the
contrary contained herein, if the Form S-3 shall not be filed within three (3)
months after the Initial Closing Date (regardless of whether the maximum number
of Units shall have been sold), then the Conversion Price on the Preferred Stock
will be reduced (and the number of shares of Common Stock issuable upon
conversion of the Preferred Stock will be concomitantly increased) by two (2%)
percent per month, or part thereof, up to six (6%) percent in the aggregate.
(b) In the event the Company effects any registration under
the 1933 Act of any Registrable Securities pursuant to Paragraphs 7(a) above or
7(g) below, the Company shall indemnify, to the extent permitted by law, and
hold harmless any registered holder whose Registrable Securities are included in
such registration statement (each, a "Seller"), any underwriter, any officer,
director, employee or agent of any Seller or underwriter, and each other person,
if any, who controls any Seller or underwriter within the meaning of Section 15
of the 1933 Act, against any losses, claims, damages or liabilities, judgment,
fines, penalties, costs and expenses, joint or several, or actions in respect
thereof (collectively, the "Claims"), to which each such indemnified party
becomes subject, under the 1933 Act or otherwise, insofar as such Claims arise
out of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the registration statement or prospectus or any
amendment or supplement thereto or any document filed under a state securities
or blue sky law (collectively, the "Registration Documents") or insofar as such
Claims arise out of or are based upon the omission or alleged omission to state
in any Registration Document a material fact required to be stated therein or
necessary to make the statements made therein not misleading, and will reimburse
any such indemnified party for any legal or other expenses reasonably incurred
by such indemnified party in investigating or defending any such Claim; provided
that the Company shall not be liable in any such case to the extent such Claim
is based upon an untrue statement or alleged untrue statement of a material fact
or omission or alleged omission of a material fact made in any Registration
Document in reliance upon and in conformity with written information furnished
to the Company by or on behalf of any indemnified party specifically for use in
the preparation of such Registration Document.
(c) In connection with any registration statement in which any
Seller is participating, each Seller, severally and not jointly, shall
indemnify, to the extent permitted by law, and hold harmless the Company, each
of its directors, each of its officers who have signed the registration
statement, each other person, if any, who controls the Company within the
meaning of Section 15 of the 1933 Act, each other Seller and each underwriter,
any officer, director, employee or agent of any such other Seller or underwriter
and each other person, if any, who controls such other Seller or underwriter
within the meaning of Section 15 of the 1933 Act against any Claims to which
each such indemnified party may become subject under the 1933 Act or otherwise,
insofar as such Claims (or actions in respect thereof) are based upon any untrue
statement or alleged untrue statement of any material fact contained in any
Registration Document, or insofar as any Claims are based upon the omission or
alleged omission to state in any Registration Document a material fact required
to be stated therein or necessary to make the statements made therein not
misleading, and will reimburse any such indemnified party for any legal or other
expenses reasonably incurred by such indemnified party in investigating or
defending any such claim; provided, however, that such indemnification or
reimbursement shall be payable only if, and to the extent that, any such Claim
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in any Registration Document in reliance
upon and in conformity with written information furnished to the Company by the
Seller specifically for use in the preparation thereof.
(d) Any person entitled to indemnification under Paragraphs
7(b) or 7(c) above shall notify promptly the indemnifying party in writing of
the commencement of any Claim if a claim for indemnification in respect thereof
is to be made against an indemnifying party under this Paragraph 7(d), but the
omission of such notice shall not relieve the indemnifying party from any
liability which it may have to any indemnified party otherwise than under
Paragraph 7(b) or 7(c) above, except to the extent that such failure shall
materially adversely affect any indemnifying party or its rights hereunder. In
case any action is brought against the indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate in, and, to the extent that it chooses, to assume the
defense thereof with counsel reasonably satisfactory to the indemnified party;
and, after notice from the indemnifying party to the indemnified party that it
so chooses, the indemnifying party shall not be liable for any legal or other
expenses subsequently incurred by the indemnified party in connection with the
defense thereof other than reasonable costs of investigation; provided, however,
that (i) if the indemnifying party fails to take reasonable steps necessary to
defend diligently the Claim within twenty (20) days after receiving notice from
the indemnified party that the indemnified party believes it has failed to do
so; (ii) if the indemnified party who is a defendant in any action or proceeding
which is also brought against the indemnifying party reasonably shall have
concluded that there are legal defenses available to the indemnified party which
are not available to the indemnifying party; or (iii) if representation of both
parties by the same counsel is otherwise inappropriate under applicable
standards of professional conduct, the indemnified party shall have the right to
assume or continue its own defense as set forth above (but with no more than one
firm of counsel for all indemnified parties in each jurisdiction, except to the
extent any indemnified party or parties reasonably shall have concluded that
there are legal defenses available to such party or parties which are not
available to the other indemnified parties or to the extent representation of
all indemnified parties by the same counsel is otherwise inappropriate under
applicable standards of professional conduct) and the indemnifying party shall
be liable for any reasonable expenses therefor; provided, that no indemnifying
party shall be subject to any liability for any settlement of a Claim made
without its consent (which may not be unreasonably withheld, delayed or
conditioned). If the indemnifying party assumes the defense of any Claim
hereunder, such indemnifying party shall not enter into any settlement without
the consent of the indemnified party if such settlement attributes liability to
the indemnified party (which consent may not be unreasonably withheld, delayed
or conditioned).
(e) If for any reason the indemnity provided in Paragraphs
7(b) or 7(c) above is unavailable, or is insufficient to hold harmless, an
indemnified party, then the indemnifying party shall contribute to the amount
paid or payable by the indemnified party as a result of any
Claim in such proportion as is appropriate to reflect the relative benefits
received by the indemnifying party on the one hand and the indemnified party on
the other from the transactions contemplated by this Agreement. If, however, the
allocation provided in the immediately preceding sentence is not permitted by
applicable law, or if the indemnified party failed to give the notice required
by Paragraph 7(d) above, then each indemnifying party shall contribute to the
amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the indemnifying party and the indemnified party as well as any other
relevant equitable considerations. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the indemnifying party or by the indemnified
party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount paid or
payable in respect of any Claim shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such Claim. Notwithstanding the foregoing, no
underwriter or controlling person thereof, if any, shall be required to
contribute, in respect of such underwriter's participation as an underwriter in
the offering, any amount in excess of the amount by which the total price at
which the Registrable Securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which such
underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 0000
Xxx) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The obligation of any underwriters to
contribute pursuant to this paragraph (e) shall be several in proportion to
their respective underwriting commitments and not joint.
(f) The provisions of Paragraphs 7(b) through 7(e) of this
Agreement shall be in addition to any other rights to indemnification or
contribution which any indemnified party may have pursuant to law or contract
and shall remain operative and in full force and effect regardless of any
investigation made or omitted by or on behalf of any indemnified party and shall
survive the transfer of the Registrable Securities by any such party.
(g) Investor shall have certain "piggy-back" registration
rights with respect to the Registrable Securities as hereinafter provided:
A. If, at any time, after the Initial Closing
Date, the Company shall file with the SEC a registration statement under the
1933 Act (other than on Form S-4 or Form S- 8 or any successor form thereto)
registering any shares of Common Stock owned by any person or entity, the
Company shall give written notice to Investor thereof prior to such filing.
B. Within thirty (30) days after such notice
from the Company, Investor shall give written notice to the Company whether or
not the Investor desires to have all of the Investor's Registrable Securities
included in the registration statement. If Investor fails to
give such notice within such period, Investor shall not have the right to have
Investor's Registrable Securities registered pursuant to such registration
statement. If Investor gives such notice, then the Company shall include the
Registrable Securities in the registration statement, at the Company's sole cost
and expense, subject to the remaining terms of this Paragraph 7(g).
C. If the registration statement relates to an
underwritten offering, and the underwriter shall determine in writing that the
total number of shares of Common Stock to be included in the offering, including
the Registrable Securities, shall exceed the amount which the underwriter deems
to be appropriate for the offering, the number of shares of the Registrable
Securities shall be reduced in the same proportion as the remainder of the
shares in the offering and each Investor's Registrable Securities included in
such registration statement will be reduced proportionately. For this purpose,
if other securities in the registration statement are derivative securities,
their underlying shares shall be included in the computation.
D. Investor shall have two (2) opportunities to
have the Registrable Securities registered under this Paragraph 7(g).
E. Investor shall furnish in writing to the
Company such information as the Company shall reasonably require in connection
with a registration statement.
(h) If and whenever the Company is required by the provisions
of this Paragraph 7 to use its best efforts to register any Registrable
Securities under the 1933 Act, the Company shall, as expeditiously as possible
under the circumstances:
A. Prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use its best efforts
to cause such registration statement to become effective as soon as possible and
remain effective.
B. Prepare and file with the SEC such
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such registration
statement current and to comply with the provisions of the 1933 Act, and any
regulations promulgated thereunder, with respect to the sale or disposition of
all Registrable Securities covered by the registration statement required to
effect the distribution of the securities, but in no event shall the Company be
required to do so for a period of more than three (3) years following the
effective date of the registration statement.
C. Furnish to the Sellers participating in the
offering, copies (in reasonable quantities) of summary, preliminary, final,
amended or supplemented prospectuses, in conformity with the requirements of the
1933 Act and any regulations promulgated thereunder, and other documents as
reasonably may be required in order to facilitate the disposition of the
securities, but only while the Company is required under the provisions hereof
to keep the registration statement current.
D. Use its best efforts to register or qualify the Registrable Securities
covered by such registration statement under such other securities or blue sky
laws of such jurisdictions of the United States as the Sellers participating in
the offering shall reasonably request, and do any and all other acts and things
which may be reasonably necessary to enable each participating Seller to
consummate the disposition of the Registrable Securities in such jurisdictions.
E. Notify each Seller selling Registrable
Securities, at any time when a prospectus relating to any such Registrable
Securities covered by such registration statement is required to be delivered
under the 1933 Act, of the Company's becoming aware that the prospectus included
in such registration statement, as then in effect, includes an untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances then existing, and promptly prepare and furnish to each
such Seller selling Registrable Securities a reasonable number of copies of a
prospectus supplemented or amended so that, as thereafter delivered to the
purchasers of such Registrable Securities, such prospectus shall not include 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 not misleading in
the light of the circumstances then existing.
F. As soon as practicable after the effective
date of the registration statement, and in any event within eighteen (18) months
thereafter, make generally available to Sellers participating in the offering an
earnings statement (which need not be audited) covering a period of at least
twelve (12) consecutive months beginning after the effective date of the
registration statement which earnings statement shall satisfy the provisions of
Section 11(a) of the 1933 Act, including, at the Company's option, Rule 158
thereunder. To the extent that the Company files such information with the SEC
in satisfaction of the foregoing, the Company need not deliver the above
referenced earnings statement to Seller.
G. Upon request, deliver promptly to counsel of
each Seller participating in the offering copies of all correspondence between
the SEC and the Company, its counsel or auditors and all memoranda relating to
discussions with the SEC or its staff with respect to the registration statement
and permit each such Seller to do such investigation at such Seller's sole cost
and expense, upon reasonable advance notice, with respect to information
contained in or omitted from the registration statement as it deems reasonably
necessary. Each Seller agrees that it will use its best efforts not to interfere
unreasonably with the Company's business when conducting any such investigation.
H. Provide a transfer agent and registrar
located in the United States for all such Registrable Securities covered by such
registration statement not later than the effective date of such registration
statement.
I. List the Registrable Securities covered by
such registration statement on the ASE or such other exchanges and/or on the
NASDAQ as the Common Stock is then currently listed upon.
J. Pay all Registration Expenses incurred in
connection with a registration of Registrable Securities, whether or not such
registration statement shall become effective; provided that each Seller shall
pay all underwriting discounts, commissions and transfer taxes, if any, relating
to the sale or disposition of such Seller's Registrable Securities pursuant to a
registration statement. As used herein, "Registration Expenses" means any and
all reasonable and customary expenses incident to performance of or compliance
with the registration rights set forth herein, including, without limitation,
(i) all SEC and stock exchange or National Association of Securities Dealers,
Inc. registration and filing fees, (ii) all fees and expenses of complying with
state securities or blue sky laws (including reasonable fees and disbursements
of counsel for the underwriters in connection with blue sky qualifications of
the Registrable Securities but no other expenses of the underwriters or their
counsel), (iii) all printing, messenger and delivery expenses, and (iv) the
reasonable fees and disbursements of counsel for the Company and the Company's
independent public accountants.
(i) The Company acknowledges that there is no adequate remedy
at law for failure by it to comply with the provisions of this Paragraph 7 and
that such failure would not be adequately compensable in damages, and therefore
agrees that its agreements contained in this Paragraph 7 may be specifically
enforced. In the event that the Company shall fail to file such registration
statement when required pursuant to Paragraph 7(a) above or to keep any
registration statement effective as provided in this Paragraph or otherwise
fails to comply with its obligations and agreements in this Paragraph 7, then,
in addition to any other rights or remedies Investors may have at law or in
equity, including without limitation, the right of rescission, the Company shall
indemnify and hold harmless the Investors from and against any and all manner or
loss which they may incur as a result of such failure. In addition, the Company
shall also reimburse the Investors for any and all reasonable legal fees and
expenses incurred by them in enforcing their rights pursuant to this Paragraph
7, regardless of whether any litigation was commenced; provided, however, that
the Company shall not be liable for the fees and expenses of more than one law
firm, which firm shall be designated by JMR.
8. Conditions. The obligations of the Investors to purchase the
Units are subject to the satisfaction or fulfillment prior thereto on the date
of each Closing, unless otherwise provided, of each of the following conditions:
(a) The Company shall have delivered to JMR, on behalf of the
Investors, at the Initial Closing, (i) a currently-dated long-form good standing
certificate or telegram from the Secretary of State of Delaware and each other
jurisdiction in which the Company is qualified to do business as a foreign
corporation; (ii) the certificate of incorporation of the Company, as currently
in effect, certified by the Secretary of State of the State of Delaware; (iii)
by-laws of the Company certified by the secretary of the Company; and (iv)
certified resolutions of the Company's Board of Directors approving this
Agreement, the issuance of the Units, Preferred Stock, Warrants and Placement
Agent Warrants, the registration of the Conversion Shares,
Warrant Shares and other Registrable Securities and the other transactions
contemplated by this Agreement.
(b) There shall have occurred no material adverse event
affecting the Company its business, assets, prospects or the Company's
securities since the date of the Memorandum.
(c) No litigation or administrative proceeding shall have been
threatened or commenced against the Company which (i) seeks to enjoin or
otherwise prohibit or restrict the consummation of the transactions contemplated
by this Agreement or (ii) if adversely determined, would have an adverse effect
upon the Company's business, assets or prospects or the Company's securities,
except as set forth in the Disclosure Schedule.
(d) The Company shall have delivered to JMR, on behalf of the
Investors, a certificate of its principal executive and operating officers as to
the matters set forth in Paragraphs 8(a), (b) and (c) of this Agreement and to
the further effect that (i) the Company is not in default, in any respect, under
any note, loan agreement, security agreement, mortgage, deed of trust,
indenture, contract, alliance agreement, lease, license, joint venture
agreement, agreement or other instrument to which it is a party, except as
disclosed in the Financial Statements or the Memorandum; (ii) the Memorandum is
true and accurate in all respects, and does not contain any misstatement of a
material fact or omit to state a material fact necessary to make the statements
set forth therein not misleading; (iii) the Company's representations and
warranties contained in this Agreement are true and correct in all respects on
such date with the same force and effect as if made on such date; (iv) there has
been no amendment or changes to the Company's certificate of incorporation or
by-laws or authorizing resolutions from those delivered pursuant to Paragraph
8(a) of this Agreement; (v) no event has occurred which, with or without the
lapse of time or giving of notice, or both, would constitute a breach or default
thereof by the Company or would cause acceleration of any obligation of the
Company, or could adversely affect the business, operations, financial condition
or prospects of the Company; (vi) the Company has not agreed to any terms and
conditions with respect to any acquisition, disposition or other material
business transaction with any party; and (vii) no proceedings for the
liquidation or dissolution of the Company is pending or contemplated.
(e) JMR, on behalf of the Investors, shall have received the
opinion of The Xxxxxxxxxx Law Firm, counsel for the Company, dated as of the
date of Closing, in form and substance satisfactory to JMR and its counsel.
(f) The Company shall have prepared and filed or delivered to
counsel for filing with the SEC and any states in which such filing is required,
a Form D relating to the sale of the Units and such other documents and
certificates as are required.
(g) Units having an aggregate value of not less than two
million five hundred thousand ($2,500,000) dollars shall have been subscribed
for.
(h) In addition to the right of JMR to terminate this
Agreement and not consummate the transaction contemplated by this Agreement as a
result of the failure of the Company to comply with any of its obligations set
forth in this Agreement, this Agreement may be terminated by JMR by written
notice to the Company at any time prior to the Initial Closing Date if, in JMR'
sole judgment, (i) the Company shall have sustained a loss that is material to
the Company, whether or not insured, by reason of fire, earthquake, flood,
accident or other calamity, or from any labor dispute or court or government
action, order or decree; (ii) trading in securities on any exchange or system
shall have been suspended or limited either generally or specifically with
respect to the Company's Common Stock; (iii) material governmental restrictions
have been imposed on trading in securities generally or specifically with
respect to the Company's Common Stock (not in force and effect on the date of
this Agreement); (iv) a banking moratorium shall have been declared by Federal
or New York State authorities; (v) an outbreak of major international
hostilities or other national or international calamity shall have occurred;
(vi) the Congress of the United States or any state legislative body shall have
passed or taken any action or measure, or such bodies or any governmental body
or any authoritative accounting institute, or board, or any governmental
executive shall have adopted any orders, rules or regulations, which JMR
believes is likely to have an adverse effect on the business, financial
condition or financial statements of the Company or the market for the Units;
(vii) the Common Stock shall have been delisted from ASE or the Company shall
have received notice from ASE advising the Company of its intention to have the
Common Stock delisted from ASE, whether conditional or otherwise, or the Company
shall fail to meet the requirements for continued listing on ASE; or (viii)
there shall have been, in JMR's judgment, a material decline in the Dow Xxxxx
Industrial Index or the market price of the Common Stock at any time subsequent
to the date of the Memorandum.
9. Covenants of the Company. The Company agrees at all times as long as
the Preferred Stock, Warrants and securities underlying the Placement Agent
Warrants may be converted or exercised, to keep reserved from the authorized and
unissued Common Stock, such number of shares of Common Stock as may be, from
time to time, issuable upon conversion of the Preferred Stock or the exercise of
the Warrants and the conversion of the Preferred Stock and exercise of the
Warrants underlying the Placement Agent Warrants.
10. Fees.
(a) Upon the receipt by the Company of the payments from the
Investors provided for in Paragraph l of this Agreement, the Company shall pay
to JMR a fee equal to seven (7%) percent of the aggregate Unit Purchase Price
paid on at such Closing, a portion of which may be paid by JMR to other
registered broker-dealers. Such amount may be deducted by JMR from the payment
being made to the Company pursuant to Paragraph 2 of this Agreement. In
addition, as set forth in the Placement Agreement, the Company shall issue at
the last Closing, five (5) year warrants to purchase an amount of Units equal to
ten (10%) percent of all of the Units sold in the private placement pursuant to
the Memorandum at an exercise price equal to
one hundred ten (110%) percent of the Unit Purchase Price, subject to adjustment
(the "Placement Agent Warrants"). Regardless of whether the private placement
pursuant to the Memorandum closes, the Company shall pay such other fees to JMR
and reimburse JMR for such expenses, including the reasonable fees and expenses
of Xxxxxxx & Xxxxxxx P.C., counsel to JMR, as are set forth in the Placement
Agreement. The Company has also agreed with Prudential Securities Incorporated
("PSI"), in connection with obtaining a letter from PSI whereby PSI agreed that
it would not be entitled to any cash compensation in connection with the sale by
the Company of the Units, to issue to PSI warrants to purchase 20,000 shares of
Common Stock at the Original Stock Price per share.
(b) The Company shall pay any fees required in connection with
the qualification of the sale of the Units under the state securities or blue
sky laws of any state which JMR reasonably deems necessary and any other
out-of-pocket expenses incurred by the Company in connection with the
transaction contemplated by this Agreement.
11. Notices. All notices provided for in this Agreement shall be in
writing signed by the party giving such notice, and delivered personally or sent
by overnight courier or messenger against receipt thereof or sent by registered
or certified mail (air mail if overseas), return receipt requested, or by
facsimile transmission, if confirmed by mail as provided in this Paragraph 11.
Notices shall be deemed to have been received on the date of personal delivery
or facsimile or, if sent by certified or registered mail, return receipt
requested, shall be deemed to be delivered on the third business day after the
date of mailing. Notices shall be sent to the following addresses:
To the Company:
GLOBALINK, INC.
0000 Xxx Xxxxxxx
Xxxxxxx, XX 00000
Telecopier:
Attention: Xx. Xxxx X. XxXxxxxx, III
Vice President and General Counsel
With a copy to:
THE XXXXXXXXXX LAW FIRM
0000 Xxx Xxxxxx Xxxx, Xxxxx 000
XxXxxx, XX 00000
Telecopier: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxxx, Esq.
To the Investors:
at the addresses set forth in Exhibit A to this Agreement
With copies to:
J. XXXXXXX XXXXXXX, INC.
0000 Xxxx Xxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxx Xxxxxxxxxx, XX 00000
Telecopier: (000) 000-0000
Attention: Xx. Xxxxxx X. Xxxxx
and
XXXXXXX & XXXXXXX P.C.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Telecopier: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
or to such other address as any party shall designate in the manner provided in
this Paragraph 11.
12. Miscellaneous.
(a) This Agreement constitutes the entire agreement between
the parties relating to the subject matter hereof, superseding any and all prior
or contemporaneous oral and prior written agreements and understandings. This
Agreement may not be modified or amended nor may any right be waived except by a
writing which expressly refers to this Agreement, states that it is a
modification, amendment or waiver and is signed by all parties with respect to a
modification or amendment or the party granting the waiver with respect to a
waiver. No course of conduct or dealing and no trade custom or usage shall
modify any provisions of this Agreement.
(b) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed entirely within such State. Each party hereby consents to
the exclusive jurisdiction of the Federal and state courts situated in New York
County, New York, in connection with any action arising out of or based upon
this Agreement and the transactions contemplated by this Agreement.
(c) This Agreement shall be binding upon and inure to the
benefit of the parties hereto, and their respective personal representatives,
successors and permitted assigns.
(d) In the event that any provision of this Agreement becomes
or is declared by a court of competent jurisdiction to be illegal, unenforceable
or void, this Agreement shall
continue in full force and effect without said provision.
(e) Each party shall, without payment of any additional
consideration by any other party, at any time on or after the date of any
Closing take such further action and execute such other and further documents
and instruments as the other party may request in order to provide the other
party with the benefits of this Agreement.
(f) The captions and headings contained herein are solely for
convenience and reference and do not constitute a part of this Agreement.
(g) All references to any gender shall be deemed to include
the masculine, feminine or neuter gender, the singular shall include the plural
and the plural shall include the singular.
(h) This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same document.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and
year first aforesaid.
GLOBALINK, INC. J. XXXXXXX XXXXXXX, INC.
By:________________________________ By:_________________________________
Xxxx X. XxXxxxxx, III, Xxxxxx X. Xxxxx,
Vice President Managing Director
TO BE COMPLETED BY INVESTOR
-------------------------------------
Print Name
Signature for Individual Investor Signature of Investor Other than Individual
_________________________________ By:_________________________________
Signature Name:
Title:
-------------------------------------
Address
-------------------------------------
City State Zip Code
-------------------------------------
Number of Units
-------------------------------------
Aggregate Amount of Subscription
-------------------------------------
Social Security or Employer Identification
Number
EXHIBIT A
Names, addresses and
Social Security or
Employer Identification Number of
Numbers of Investors Units
EXHIBIT B
Memorandum and Information Concerning the Company*
1. Form of 8% Preferred Stock.
2. Form of Warrant.
3. Form 10-K Annual Report for the year ended December 31, 1995.
4. Form 10-Q Quarterly Report for the quarter ended September 30, 1996.
5. The Company's annual report to stockholders and proxy statement
relating to the Company's 1996 annual meeting of stockholders.
6. The Company's proxy statement relating to the Company's December 2,
1996 special meeting of stockholders.
7. No Current Reports on Form 8-K or other reports filed with the SEC
subsequent to September 30, 1996.
---------------------------
* The exhibits to the documents filed with the SEC are not included in
the package of documents for Investors, but are available from JMR or
the Company on request.
EXHIBIT C
Disclosure Schedule
(see attached)
