EXHIBIT 10.6
SUBSCRIPTION AGREEMENT
BETWEEN
XXXXXXXXXXXXXXXX.XXX, INC.
AND
LAGUNA PACIFIC PARTNERS, L.P.
DATED AUGUST 1, 2000
THE SECURITIES DESCRIBED IN THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY
STATE, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT AND ANY APPLICABLE STATE LAWS, (ii) TO THE EXTENT APPLICABLE, RULE
144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE ACT RELATING TO THE DISPOSITION
OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE
REASONABLY SATISFACTORY TO COUNSEL TO THE ISSUER, THAT AN EXEMPTION FROM
REGISTRATION UNDER THE ACT AND APPLICABLE STATE LAW IS AVAILABLE.
SUBSCRIPTION AGREEMENT
This Subscription Agreement is made by and between XXXXXXXXXXXXXXXX.XXX,
INC., a Delaware corporation (the "Company") and RBC DOMINION (the "Investor")
(collectively, the "Parties").
The Parties hereto agree as follows:
ARTICLE 1
THE SECURITIES
Section 1.01. THE SECURITIES. The securities offered hereby
consist of one of the Company's Units (the "Units"), issuable at $250,000 per
Unit, each Unit consisting of one 6% Secured Note, $250,000 principal amount (a
"Unit Note"). The Unit Note shall be in substantially the form attached hereto
as Exhibit A, the terms of which are hereby incorporated herein as if such Unit
Note were fully set forth herein.
Section 1.02. COLLATERAL. The obligations of the Company with
respect to the Unit Notes, including, without limitation, the due and punctual
payment of interest and principal and the registration requirements with respect
to the securities underlying the Unit Note shall be secured pursuant to the
terms of Exhibit B (the "Stock Pledge Agreement"). The terms and conditions of
the Stock Pledge Agreement are hereby incorporated herein as if they were set
forth herein in their entirety.
Section 1.03. LEGENDS; REGISTRATION UNDER THE SECURITIES ACT OF
1933. As of the date of this Agreement, the Unit Note and the stock that is
subject to the Stock Pledge Agreement (collectively, the "Unit Securities') have
not been registered under the Securities Act of 1933, as amended (the "Act").
Each of the Unit Securities shall bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE
SECURITIES LAWS OF ANY STATE, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED,
PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE
LAWS, (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR ANY
SIMILAR RULE UNDER THE ACT RELATING TO THE DISPOSITION OF SECURITIES),
OR (iii) AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY
SATISFACTORY TO COUNSEL TO THE ISSUER, THAT AN EXEMPTION FROM
REGISTRATION UNDER THE ACT AND APPLICABLE STATE LAW IS AVAILABLE.
Certain registration rights with respect to the Unit Securities
are set forth in Exhibit A and Exhibit B attached hereto. This offering is not a
public offering and is intended to be made pursuant to Section 4(2) of the Act
and Regulation D as promulgated by the Securities and Exchange Commission
("SEC") under the Act. This offering is also intended to be exempt from the
registration requirements of various state securities laws. A substantial number
of state securities commissions and securities industry associations have
established investor suitability standards for marketing private offerings of
securities within their respective jurisdictions. Some have also established
minimum dollar levels for purchases in their states. The Company shall comply
with these restrictions to the extent applicable.
Section 1.04. RULE 144 REPORTING. With a view to making available
the benefits of certain rules and regulations of the SEC that may permit the
sale of certain of the Unit Notes, Unit Warrants, securities issuable under the
Unit Warrants (the "Unit Warrant Securities"), Additional Warrants and/or
securities issuable under the Additional Warrants (the "Additional Warrant
Securities") to the public without registration, the Company shall use its best
efforts to:
(a) Make and keep public information regarding the Company
available, as those terms are understood and defined in Rule 144 under the Act,
at all times following the Closing Date (as hereinafter defined);
(b) File with the SEC in a timely manner all reports and
other documents required of the Company or subsidiaries of the Company (the
"Subsidiaries") under the Act and the Securities Exchange Act of 1934, as
amended (the "Exchange Act");
(c) So long as an Investor owns any Xxxx Xxxxx, Xxxx
Xxxxxxxx, Xxxx Xxxxxxx Securities, Additional Warrants and/or Additional Warrant
Securities, furnish to the Investor forthwith upon written request a written
statement by the Company as to its compliance with the reporting requirements of
Rule 144, and of the Act and the Exchange Act, a copy of the most recent annual
or quarterly report of the Company and such other reports and documents so filed
as the Investor may reasonably request in availing itself of any rule or
regulation of the SEC allowing the Investor to sell any such securities without
registration.
Section 1.05. CLOSING DATE. The purchase and sale of the Units
will take place at one or more closings (each referred to herein as the
"Closing") at the offices of Xxxxxxx & Beam, Inc. Xxx Xxxxxxx Xxxxx, Xxxxx 000,
Xxxxxx, XX 00000 at 10:00 a.m., on a date as soon as
practicable after all the conditions set forth in Articles V and VI hereof
have been satisfied (each, a "Closing Date"), or at such other location as
the Investors and the Company shall agree. It is anticipated that the initial
closing shall take place on or about July 31, 2000.
Section 1.06. DELIVERY. At the Closing, the Company shall deliver
to the Investor the Unit Notes and Unit Warrants that each Investor is
purchasing against payment of the purchase price therefor by check, wire
transfer, or such other form of payment as shall be mutually agreed upon by such
Investor and the Company. At the Closing, the Company shall also deliver to the
Investors a fully executed copy of the Security Agreement and all related
Closing Documents.
Section 1.07. EXPENSES. Irrespective of whether the Closing is
effected, the Company shall pay all costs and expenses that it incurs with
respect to the negotiation, execution, delivery, and performance of this
Agreement and the transactions contemplated hereby, including without
limitation, the cost of any required filings under the Act, the Exchange Act or
any "blue sky" laws, rules and regulations.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.01. INVESTOR REPRESENTATIONS AND WARRANTIES. The
Investor makes each and every one of the representations and warranties set
forth in Exhibit E hereto, as if such exhibit were set forth herein in its
entirety.
Section 2.02. COMPANY REPRESENTATIONS AND WARRANTIES. The
Company hereby represents, warrants and covenants to each of the Investors as
follows:
(a) The Company has been duly organized and is validly existing
as a corporation in good standing under the laws of its state of incorporation.
The Company has no subsidiaries. The Company is duly qualified or licensed and
in good standing as a foreign corporation in each jurisdiction in which its
ownership or leasing of any properties or the character of its operations
requires such qualification or licensing and where failure to so qualify would
have a material effect on the Company. The Company has all requisite corporate
power and authority, and all material and necessary authorizations, approvals,
orders, licenses, certificates and permits of and from all governmental
regulatory officials and bodies to own or lease its properties and conduct its
businesses as described in this Agreement and the Disclosure Documents (as
hereinafter defined), and the Company is doing business in compliance with all
such authorizations, approvals, orders, licenses, certificates and permits and
all federal, state and local laws, rules and regulations concerning the business
in which it is engaged except where the failure so to do business in compliance
would not have a material adverse effect on the business of the Company. The
disclosures herein and in the Disclosure Documents concerning the effects of
federal, state and local regulation on the Company's business as currently
conducted and as contemplated are correct in all material respects and do not
omit to state a material fact. The Company has all corporate power and authority
to enter into this Agreement, the Unit Notes, the Unit Warrants. and the
Security Agreement and to carry out the provisions and conditions hereof
and thereof, and all consents, authorizations, approvals and orders required
in connection herewith and therewith have been obtained or will have been
obtained prior to the Closing Date. No consent, authorization or order of,
and no filing with, any court, government agency or other body is required
for the issuance of the Units or any securities issuable upon conversion or
in respect of the Units pursuant to this Agreement except with respect to
applicable federal and state securities laws.
(b) The authorized capital and the issued and outstanding
securities of the Company are as set forth in the Company's Form 10-SB ("Form
10") as filed with the Securities and Exchange Commission ("SEC") and the
Company's pending Registration Statement on Form SB-2 ("Form SB-2")
(collectively, the "Disclosure Documents"). Except as described in the
Disclosure Documents, and except for the transactions contemplated by this
Agreement and the Units there are (A) no outstanding warrants, options or rights
to subscribe for or purchase any capital stock or other securities from the
Company, (B) no voting trusts or voting agreements among, or irrevocable proxies
executed by, stockholders of the Company, (C) no existing rights of stockholders
to require the Company to register any securities of the Company or to
participate with the Company in any registration by the Company of its
securities, and (D) no agreements among stockholders providing for the purchase
or sale of the Company's capital stock.
(c) This Agreement and the Exhibits hereto (if applicable) have
been duly and validly authorized, executed and delivered by the Company and are
valid and binding agreements of the Company, enforceable in accordance with
their respective terms, except to the extent that the enforceability hereof or
thereof may be limited by (A) bankruptcy, insolvency, reorganization, moratorium
or similar laws from time to time in effect and affecting the rights of
creditors generally, (B) limitations upon the power of a court to grant specific
performance or any other equitable remedy, or (C) a finding by a court of
competent jurisdiction that the indemnification provisions herein are in
violation of public policy. The Note Securities and the Warrant Securities have
been duly authorized and, when issued in accordance with the Unit Notes or the
Unit Warrants, will be validly issued, fully paid and non-assessable; the
holders thereof are not and will not be subject to personal liability solely by
reason of being such holders; other than as described in the Disclosure
Documents, the Unit Notes, the Unit Warrants and the Warrant Securities are not
and will not be subject to the preemptive rights of any stockholder of the
Company; and all corporate action required to be taken for the authorization,
issuance and sale of the Unit Notes, the Unit Warrants and the Warrant
Securities has been duly and validly taken by the Company.
(d) The Company has good and marketable title to, or valid and
enforceable leasehold estates in, all items of real and personal property owned
or leased by it, free and clear of all liens, claims, encumbrances, security
interests and defects of any material nature whatsoever.
(e) There is no litigation or governmental proceeding pending or
threatened against, or involving the properties or business of, the Company
which might materially adversely affect the value or the operation of the
properties or the business of the Company,
except as set forth in the Disclosure Documents, specifically a
Cross-Complaint by Xxxxxxx Xxxxxxx against the Company.
(f) The financial statements of the Company contained in the
Disclosure Documents fairly present the financial position and the results of
operations of the Company at the dates and for the periods to which they apply;
and such financial statements have been prepared in conformity with generally
accepted accounting principles, consistently applied throughout the periods
involved.
(g) There has been no material adverse change in the condition or
prospects for commercialization of the Company, financial or otherwise, as of
the latest dates as of which such condition or prospects, respectively, are set
forth in this Agreement and the Disclosure Documents; and the outstanding debt,
the property and the business of the Company each conforms in all material
respects to the descriptions thereof contained herein and therein.
(h) The Unit Notes, the Unit Warrants, the Note Securities and
the Warrant Securities conform in all respects to all statements in relation
thereto contained herein or in the Unit Notes, the Unit Warrants or the
Disclosure Documents.
(i) The Company is not in violation of its Articles of
Incorporation or By-Laws. Neither the execution and delivery of this Agreement,
the Unit Notes, the Unit Warrants, or the Security Agreement, nor the issuance
of the Unit Notes, the Unit Warrants, or the Warrant Securities upon conversion
or in respect of the Unit Notes or the Unit Warrants, nor the consummation of
any of the transactions contemplated herein or in the Unit Notes, the Unit
Warrants, or the Security Agreement, nor the compliance by the Company with the
terms and provisions contained herein or in the Unit Notes, the Unit Warrants,
or the Security Agreement has conflicted with or will conflict with, or has
resulted in or will result in a breach of, any of the terms and provisions of,
or has constituted or will constitute a default under, or has resulted in or
will result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company pursuant to the terms of any
indenture, mortgage, deed of trust, note, loan or credit agreement or any other
agreement or instrument evidencing an obligation for borrowed money, or any
other agreement or instrument to which the Company is subject; nor will such
action result in any violation of the provisions of the Certificate of
Incorporation or the By-Laws of the Company, or any statute or any order, rule
or regulation applicable to the Company of any court or of any federal, state or
other regulatory authority or other government body having jurisdiction over the
Company; except for any conflict, breach, default, lien, charge or encumbrance
which does not have a material and adverse effect on the Company, any of its
business, property or assets, or any transactions contemplated hereby or by the
Unit Notes, the Unit Warrants, or the Security Agreement.
(j) All taxes which are due and payable from the Company have
been paid in full, and the Company does not have any material tax deficiency or
claim outstanding, assessed or proposed against it.
(k) Subsequent to the dates as of which information is given in
this Agreement or the Disclosure Documents, and except as may otherwise be
indicated or contemplated herein or therein, the Company has not (A) issued any
securities or incurred any liability or obligation, direct or contingent, for
borrowed money, in excess of $20,000 in the aggregate, or (B) entered into any
transaction other than in the ordinary course of business, or (C) declared or
paid any dividend or made any other distribution on or in respect of its capital
stock.
(l) There are no claims for service in the nature of a finder's
or origination fee with respect to the sale of the securities hereunder.
(m) The Company owns or possesses, free and clear of all liens or
encumbrances and rights thereto or therein by third parties, the requisite
licenses or other rights to use all trademarks, service marks, copyrights,
service names, trade names, patents, patents applications and licenses necessary
to conduct and material to its business (including, without limitation any such
licenses or rights described herein or in the Disclosure Documents as being
owned or possessed by the Company), and there is no material claim or action by
any person pertaining to, or proceeding, pending or threatened, which challenges
the exclusive rights of the Company with respect to any trademarks, service
marks, copyrights, service names, trade names, patents, patent applications and
licenses used in the conduct of the Company's businesses (including, without
limitation, any such licenses or rights described herein or in the Disclosure
Documents as being owned or possessed by the Company); the Company's current
products, services and processes do not and will not infringe on any patents
currently held by third parties.
(n) The Company is not under any obligation to pay any material
royalties or fees of any kind whatsoever to any third party with respect to
technology it has developed, used, employs or intends to use or employ.
(o) Neither this Agreement nor the Unit Notes, the Unit Warrants,
the Security Agreement, or the Disclosure Documents contains any untrue
statement of a material fact or omits to state any material fact required to be
stated herein or therein or necessary to make the statements herein or therein,
in light of the circumstances under which they were made, not misleading. All
statements of material facts herein or therein (including, without limitation,
any Exhibit or Schedule hereto or thereto) are true and correct as of the date
hereof and will be true and correct on the Closing Date and each additional
Closing Date, if any.
(p) The Company shall use the proceeds from the sale of the Units
as described herein.
(q) Neither the Company, nor any of its respective officers,
employees or agents, nor any other person acting on behalf of the Company has,
directly or indirectly, given or agreed to give any money, gift or similar
benefit (other than legal price concessions to customers in the ordinary course
of business) to any customer, supplier, employee or agent of a customer or
supplier, or official or employee of a customer or supplier, or official or
employee of any governmental agency or instrumentality of any government
(domestic or foreign) or any political
party or candidate for office (domestic or foreign) or other person who is or
may be in a position to help or hinder the business of the Company (or assist
it in connection with any actual or proposed transaction) which (A) might
subject the Company to any damage or penalty in any civil, criminal or
governmental litigation or proceeding, (B) if not given in the past, might
have had a materially adverse effect on the assets, business operations of
the Company as reflected in any of the financial statements delivered to the
Investor, or (C) if not continued in the future, might adversely affect the
assets, business, operations or prospects of the Company.
(r) The minute books of the Company contain a complete summary of
all meetings and actions of the directors and stockholders of the Company since
the time of its incorporation (and of any predecessor to the Company) and
reflects all transactions referred to in such minutes accurately in all
respects.
ARTICLE III
USE OF PROCEEDS
Section 3.01. USE OF PROCEEDS. The closing of this
transaction (the "Closing") shall occur immediately upon execution of this
Agreement and funds shall be released to the Company as soon as practicable
thereafter. The Company shall use the proceeds for legitimate business and
corporate purposes.
ARTICLE IV
CONDITIONS TO THE INVESTOR'S OBLIGATIONS
Section 4.01. CONDITIONS. The obligation of the Investor to
purchase the Units at the Closing is subject to the following conditions:
(a) The representations and warranties of the Company
contained herein shall be true and correct in all material respects on and as of
the Closing Date.
(b) There shall be no preliminary or permanent injunction
or other order, decree or ruling issued by a court of competent jurisdiction or
by a governmental, regulatory or administrative agency or commission, nor any
statute, rule, regulation or order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining the sale or purchase of the
Units.
(c) At the Closing, the Investor shall be reasonably
satisfied that:
The Company has been duly organized and is validly
existing as a corporation in good standing under the laws
of the State of its incorporation and is duly qualified to
do business and is in good standing in all jurisdictions
in which the failure to so qualify would have a material
adverse effect on the business of the Company. To the best
knowledge of the Company, no consent, authorization or
order of, and no filing with, any court, government agency
or other body is required for the issuance of the Unit
Notes or the Unit Warrants by the Company, or for the
issuance
by the Company of the underlying Warrant Securities upon
conversion of the Units or such Unit Notes, exercise of
such Unit Warrants or otherwise in accordance with the
terms of the Agreement, the Unit Notes, the Unit
Warrants, or the Security Agreement, except for
compliance with any applicable federal and/or state
securities laws.
This Agreement and the Exhibits hereto have each been duly
and validly authorized, executed and delivered by the
Company.
The Unit Notes, the Unit Warrants and the Warrant
Securities have been duly authorized and are, or in the
case of the Warrant Securities, will be, upon the exercise
of and payment therefor, validly issued, fully paid and
non-assessable; all corporate action required to be taken
for the authorization, issue and sale of such securities
has been duly and validly taken; to the best knowledge of
the Company, the Unit Notes, the Unit Warrants, and the
Warrant Securities are not and will not be subject to the
preemptive rights of any stockholder of the Company.
The authorized capital stock of the Company and the
outstanding Securities of the Company are as set forth in
the Disclosure Documents. There are no other securities
issued and outstanding, or if such securities do exist,
that such securities have been duly authorized and are
non-assessable; all issued and outstanding securities of
the Company have been duly authorized and validly issued
and are fully paid and non-assessable. To the best
knowledge of the Company other than as set forth in the
Disclosure Documents, the holders thereof have no rights
of rescission with respect thereto. To the best knowledge
of the Company, except for transactions contemplated by
the Subscription Agreement, the Unit Notes, the Unit
Warrants and the Security Agreement and except as
otherwise described in the Subscription Agreement, the
Schedules and other documents delivered in connection
therewith, there are (A) no voting trusts or agreements
among, or irrevocable proxies executed by, stockholders of
the Company, (B) no existing rights of stockholders to
require the Company to register any securities of the
Company or to participate with the Company in any
registration by the Company of its securities, and (C) no
outstanding warrants, options or rights to subscribe for
or purchase any capital stock or other securities from the
Company .
To the best knowledge of the Company, other than as
disclosed in the Disclosure Documents, there is no
litigation or government proceeding pending against, or
involving the properties or business of the Company which
might materially and adversely affect the value or the
operation of the properties or the business of the
Company.
Neither the execution and delivery of this Agreement nor
the Exhibits
hereto, nor the issue and sale of the Unit Notes, the
Unit Warrants, or the Warrant Securities, nor the
consummation of any of the transactions contemplated
therein, nor the compliance by the Company with the
terms and provisions thereof, has conflicted with or
will conflict with, or has resulted in or will result
in any violation of the provisions of the Certificate
of Incorporation or the Bylaws of the Company, or, to
the best knowledge of the Company, constituted or will
constitute a default under, or has resulted in or will
result in the creation or imposition of any lien,
charge or encumbrance upon any material property or
assets of the Company pursuant to the terms of any
indenture, mortgage, deed of trust, note, loan or
credit agreement known to the Company, or any other
agreement or instrument evidencing an obligation for
borrowed money known to the Company or any other
material agreement or instrument known to the Company,
to which the Company is a party or by which the Company
may be bound, the violation of which would have a
material adverse effect on the Company, other than as
described in the Disclosure Documents.
(d) On or prior to the Closing Date, the Investor shall
have been furnished such documents, certificates and opinions as they may
reasonably require for the purpose of enabling them to review or pass upon the
matters set forth herein, or in order to evidence the accuracy, completeness or
satisfaction of any of the representations, warranties or conditions herein
contained.
(e) Prior to the Closing, (i) there shall have been no
material adverse change nor development involving a prospective change in the
condition, prospects or the business activities, financial or otherwise, of the
Company as a whole, from the latest dates as of which such condition is set
forth in this Subscription Agreement and the Disclosure Documents; (ii) there
shall have been no transaction, not in the ordinary course of business, entered
into by the Company from the latest date as of which the financial condition of
the Company is set forth in this Subscription Agreement and the Disclosure
Documents which is material to the company and which has not been disclosed to
the Investors in writing; (iii) the Company shall not be in default in any
material respect under any provision of any instrument relating to any
outstanding indebtedness; (iv) no material amount of the assets of the Company
shall have been pledged or mortgaged; and (v) no action, suit or proceeding, at
law or in equity, shall have been pending or threatened against the Company or
affecting any of its respective properties or businesses before or by any court
of federal or state commission, board or other administrative agency wherein an
unfavorable decision, ruling or finding could materially adversely affect the
business, operations, prospects or financial condition or income of the Company.
ARTICLE V
CONDITIONS TO THE COMPANY'S OBLIGATIONS
Section 5.01. CONDITIONS. The obligation of the Company to sell
the Units at the Closing is subject to the following conditions:
(a) The representations and warranties of each of the
Investors contained in Exhibit E hereto shall be true and correct in material
respects on and as of the Closing Date.
(b) There shall be no preliminary or permanent injunction
or other order, decree or ruling issued by a court of competent jurisdiction or
by a governmental, regulatory or administrative agency or commission, nor any
statute, rule, regulation or order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining the sale or purchase of the
Units.
ARTICLE VI
INDEMNIFICATION
Section 6.01. INDEMNIFICATION.
(a) The Company hereby agrees to indemnify and hold harmless each
Investor, its stockholders, directors, partners, employees, agents and each
person, if any, who controls such Investor within the meaning of the Act,
against any and all losses, claims, damages or liabilities to which such
Investor or any such stockholder, director, partner, employee, agent or
controlling person may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained herein, in the Unit Notes, the Unit Warrants, in
the Security Agreement, in the Disclosure Documents, or in any statement made to
or in any filing with the SEC or to or with any state securities commission,
bureau or office (including any amendments thereto), or arise out of or based
upon the omission or alleged omission to state herein or therein a material fact
required to be stated herein or therein or necessary to make the statements
herein or therein not misleading (unless such statements are made or omitted in
reliance upon and in conformity with written information furnished to the
Company with respect to such Investor by such Investor expressly for use herein
or therein or any amendment hereof or supplement hereto), or any violation by
the Company of the Act or state "blue sky" laws, or any breach by the Company of
its obligations, representations or warranties hereunder or under the Unit
Notes, the Unit Warrants or the Security Agreement.
(b) Each Investor hereby agrees to indemnify and hold harmless
the Company and its respective stockholders, directors, employees, agents and
each person, if any, who controls any of the foregoing within the meaning of the
Act, against any and all losses, claims, damages or liabilities, to which the
Company or any of the Company's stockholders, directors, employees, agents or
controlling persons may become subject, under the Act or otherwise, insofar as
such losses, claims, damages, or liabilities (or actions in respect thereof)
arise out of or are based upon any authorized written statement with respect to
the offering made by the Investor, its stockholders, directors, partners, agents
or employees, or any breach by such Investor of its obligations, representations
or warranties hereunder.
(c) Promptly after receipt by an indemnified party under either
subparagraph (a) or (b), as the case may be, of the notice of commencement of
any action covered by
subparagraph (a) or (b), such indemnified party shall within five (5)
business days notify the indemnifying party of the commencement thereof; the
omission by one indemnified party to so notify such indemnifying party shall
not relieve the indemnifying party of its obligations hereunder except to the
extent such indemnifying part has been materially prejudiced by such
omission, shall not relieve the indemnifying party of its obligation to
indemnify any other indemnified party that has given such notice and shall
not relieve the indemnifying party of any liability outside of this
indemnification. In the event that any action is brought against the
indemnified party, and it shall notify the indemnifying party in a timely
manner, the indemnifying party will be entitled to participate in such action
and, to the extent it may desire, to assume and control the defense thereof
with counsel chosen by it. After notice from the indemnifying party to such
indemnified party of its election to so assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under such
subparagraph for any legal or other expense subsequently incurred by such
indemnified party in connection with the defense thereof, but the indemnified
party may, at its own expenses, participate in such defense by counsel chosen
by it without, however, impairing the indemnifying party's control of the
defense. Notwithstanding anything to the contrary contained herein, the
indemnified party shall have the right to choose its own counsel and control
the defense of any action, all at the reasonable expense of the indemnifying
party, if (i) the employment of such counsel shall have been authorized in
writing by the indemnifying party in connection with the defense of such
action at the expense of the indemnifying party, (ii) the indemnifying party
shall not have employed counsel reasonably satisfactory to such indemnified
party to have charge of the defense of such action within a reasonable time
after notice of commencement of the action, or (iii) such indemnified party
shall have reasonably conclude that there may be defenses available to such
indemnified party that differ from the defenses available to the indemnifying
party (in which case the indemnifying party shall not have the right to
direct the defense of such action on behalf of such indemnified party), in
any of which events such reasonable fees and expenses of one additional
counsel (for all indemnified parties) shall be borne by the indemnifying
party (in the case of the investors, one additional counsel for Investor. No
settlement of any action or proceeding against an indemnified party shall be
made without the consent of the indemnified party, which consent shall not be
unreasonably withheld.
(d) In order to provide for just and equitable contribution under
the Act in any case in which (i) any indemnified party makes a claim for
indemnification pursuant to this paragraph but it is judicially determined (by
entry of a final judgement or decree by a court of competent jurisdiction and
the expiration of the time to appeal or the denial of the last right of appeal)
that such indemnification may not be enforced in such case, notwithstanding the
fact the this paragraph provides for indemnification in such case, or (ii)
contribution under the Act is required on the part of any such person in
circumstances for which indemnification is provided under this paragraph, then,
in each such case, the relevant Investor shall contribute to the aggregate
losses, claims, damages or liabilities to which it may be subject (after any
contributions from others) in the same proportion as the amount of the Units
purchased by such Investor pursuant to the Subscription Agreement bears to the
aggregate offering of the Units, and the Company shall be responsible for the
remaining portion thereof; provided, that in any such case, no person guilty of
a fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
ARTICLE VII
NOTICES
Section 7.01. NOTICES. All notices provided for in this Agreement
shall be in writing signed by the party giving such notice, and, except as
expressly provided in Section 4.01(b) hereof, delivered personally or sent by
overnight courier or messenger or sent by registered or certified mail (air mail
if overseas), return receipt requested, or by telex, facsimile transmission,
telegram or similar means of communication. Notices shall be deemed to have been
received on the date of personal delivery, telex, facsimile transmission,
telegram or similar means of communication, or if sent by overnight courier or
messenger, shall be deemed to have been received on the next delivery day after
deposit with the courier or messenger, or if sent by certified or registered
mail, return receipt requested, shall be deemed to have been received on the
third business day after the date of mailing. Notices shall be sent to the
addresses set forth below:
If to the Company: xxxxxxxxxxxxxxxx.xxx
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Facsimile No.: 949/631-2544
Attn: Xxxxxx Xxxxxxxx, Vice President, CFO
If to the Investor: Laguna Pacific Partners, L.P.
0000 Xxxxxx Xxx Xxx Xxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Facsimile No: 000-000-0000
Attn: Xxxxxx Xxxxxxx
With Copies To: Xxxxxxx & Xxxx
Xxx Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Facsimile No: 949/453-0300
Attn: Xxxxxxxx X. Xxxxxxx
ARTICLE VIII
ISSUANCE OF ADDITIONAL SECURITIES/INDEBTEDNESS
Section 8.01. ISSUANCE OF ADDITIONAL SECURITIES/INDEBTEDNESS.
Commencing with the date of the issuance of the Units and ending upon the
earlier of (x) the satisfaction in full of all obligations under the Unit Notes
and the sale or redemption of all of the Unit Warrants or (y) 30 days after the
expiration or release of the Underwriter's Holdback with respect to the Warrant
Securities (provided that the Warrant Securities have been registered and are
tradeable
during such 30 day period), other than disclosed in the Disclosure Documents
hereof, the Company will not issue any additional securities (other than
those to be issued in the underwritten public offering currently proposed by
the Company) or incur any additional indebtedness (except in the ordinary
course of business or in connection with leases and/or secured notes to
finance equipment from third parties in arms-length transactions in the
ordinary course of business) without the prior written consent of the holders
of a majority of the Units.
ARTICLE IX
MISCELLANEOUS
Section 9.01.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED ENTIRELY THEREIN, WITHOUT GIVING EFFECT TO
THE RULES OF CONFLICTS OF LAW.
(b) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
(c) This Agreement represents the entire agreement between
the parties relating to the subject matter hereof, superseding any and all prior
to 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 signed by the party against whom the modification or waiver is sought to
be enforced.
(d) The warranties, representations and covenants of the
Company and the Investors contained in or made pursuant to this Agreement shall
survive the execution and delivery of this Agreement and the Closing.
(e) The captions and headings contained herein are solely
for convenience of reference and do not constitute a part of this Agreement.
(f) There are no finder fees or commissions owed in
connection with the sale of the Units.
(g) Each of the Exhibits attached hereto is hereby
incorporated herein as if each of such Exhibits were fully set forth herein in
its entirety. Each of such Exhibits is hereby expressly made a part of this
Agreement.
(h) The terms of the offering and of the Units may only
be amended or modified by the agreement of Investors subscribing for and/or
holders of a majority of the Units.
(i) 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 instrument.
(j) The Parties hereto agree and acknowledge that
Xxxxxxx &Beam ("H&B" or "the Firm") has been representing both the Company and
the Investor in connection with various legal matters. The Parties hereby give
their informed consent to the Firm representing both Parties in various legal
matters. The Parties hereto further acknowledge that they have been informed of
the inherent conflict of interest associated with the drafting of this Agreement
by H&B and waive any action they may have against H&B regarding such conflict.
All parties to this Agreement have been given the opportunity to consult with
counsel of their choice regarding their rights under this Agreement.
(k) The Parties hereto acknowledge that Strawberry
Canyon Capital is a General Partner of the Investor, Laguna Pacific Partners,
L.P., and that Xx. Xxxxxxxx X. Xxxxxxx is the sole shareholder of Strawberry
Canyon Capital as well as senior counsel of H&B. The Parties hereto waive any
action they may have against H&B, Strawberry Canyon Capital, Laguna Pacific
Partners, L.P., and Xxxxxxxx X. Xxxxxxx, an individual, regarding such conflict.
SIGNATURE PAGE FOLLOWS
IN WITNESS WHEREOF, intending to be legally bound, the parties
hereto have executed this Agreement and as of the 1st day of August, 2000.
COMPANY:
xxxxxxxxxxxxxxxx.xxx, Inc.
a Delaware corporation
/s/ Xxx Xxxxxxxx
------------------------------------
By: Xxx Xxxxxxxx
Its: COO
INVESTOR:
LAGUNA PACIFIC PARTNERS, L.P.,
a Delaware limited partnership
By: THE MANHATTAN NETWORK, INC.,
a California corporation
Its: General Partner
/s/ Xxxxxx Xxxxxxx
------------------------------------
By: Xxxxxx Xxxxxxx
Its: President
By: STRAWBERRY CANYON CAPITAL, INC.
a California corporation
Its: General Partner
/s/ Xxxxxxxx X. Xxxxxxx
------------------------------------
By: Xxxxxxxx X. Xxxxxxx
Its: President
EXHIBIT INDEX
Exhibit A - Unit Note
Exhibit B - Unit Warrant
Exhibit C - Security Agreement
Exhibit D Investor Representations and Warranties
