AGREEMENT
THIS AGREEMENT (this "Agreement") is entered into this 6th day of March,
1996, by and among Xxxxxx Xxxxx Incorporated, a Nevada corporation (the
"Company"), and Xxxxx Xxxxxxxxx, Xxxxx Xxxxxx, Xxxxxxx Xxxxx, Xxxxxx Xxxx,
Xxxxxx Xxxxx, Xxxxxxx Xxxxx, Xxxxxxx Xxxxx, and Xxxxx Xxxxxxx, (collectively
referred to herein as "Holders"), based on the following premises.
Premises
A. The Company and the Holders entered into a Stock Purchase Agreement
dated April 7, 1995, as amended (the "Stock Purchase Agreement"), pursuant to
which the Holders acquired warrants (the "$4.50 A Warrants") to purchase an
aggregate of 500,000 shares of common stock of the Company, par value $0.001 per
share (the "Common Stock"), at $4.50 per share of Common Stock and the right to
acquire, under certain circumstances, warrants (the "$4.50 B Warrants") to
purchase an aggregate of 500,000 shares of Common Stock at $4.50 per share, and
warrants (the "$5.75 Warrants") to purchase an aggregate of 1,000,000 shares of
Common Stock at $5.75 per share.
B. The Company and the Holders have agreed to a repricing of the $4.50 A
Warrants and the issuance of other warrants as set forth herein in lieu of the
$4.50 B and $5.75 Warrants on the satisfaction of certain conditions and wish to
set forth such agreement in writing.
Agreement
NOW, THEREFORE, based on the stated premises, which are incorporated herein
by reference, and for and in consideration of the mutual covenants and
agreements hereinafter set forth and the mutual benefit to the parties to be
derived therefrom, and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, it is hereby agreed as follows:
Article I
Issuance of Warrants
1.1 Repricing and Issuance of Warrants. If the Holders meet the timely
exercise conditions set forth in section 1.2, the Company agrees to:
(a) reprice the $4.50 A Warrants to $3.25 per share of Common Stock
(as repriced, the "$3.25 A Warrants");
(b) issue warrants to acquire 500,000 shares of Common Stock at $3.25
per share at any time prior to November 1, 1996 (the "$3.25 B Warrants"),
in lieu of the Company's obligation to issue the $4.50 B Warrants; and
(c) issue warrants to acquire 1,000,000 shares of Common Stock at
$3.25 per share, 500,000 of which may be exercised at any time prior to
June 30, 1997 (the "$3.25 C Warrants"), and 500,000 of which may be
exercised at any time prior to December 31, 1997 (the "$3.25 D Warrants"),
in lieu of the Company's obligation to issue $5.75 Warrants.
The $3.25 A, B, C, and D Warrants are collectively referred to as the "Warrants"
or the "$3.25 Warrants."
1.2 Time of Exercise. The Company will file a registration statement (the
"Registration Statement") with the Securities and Exchange Commission (the
"SEC") covering the resale by the Holders of the Common Stock issued on the
exercise of the $3.25 Warrants or the $4.50 A, $4.50 B, and $5.75 Warrants, as
the case may be. As a condition precedent to the repricing and issuance of
$3.25 Warrants as set forth in section 1.1, the Holders shall (i) exercise, and
the Company shall receive good funds on such exercise, all of the $3.25 A
Warrants and at least 115,385 of the $3.25 B Warrants within 45 days of the
effective date of the Registration Statement; and (ii) exercise, and the Company
receive good funds on such exercise, the remaining $3.25 B Warrants within 90
days of the effectiveness of the Registration Statement.
1.3 Issuance of Warrants. As soon as practicable following the execution
of this Agreement, the Company shall issue and deliver the $3.25 B Warrants to
the Holders. The Company will, at any time following the execution of this
Agreement, accept $3.25 per share of Common Stock as payment of the exercise
price of the $4.50 A Warrants, as tentatively changed to $3.25 A Warrants
hereunder. As soon as practicable following the satisfaction of the timely
exercise commitments of section 1.2 by the Holders, the Company shall issue and
deliver the $3.25 C and $3.25 D Warrants to the Holders. Each Holder shall be
entitled to receive the number of Warrants set forth next to his or her name on
Exhibit "A" attached hereto and incorporated herein by this reference.
1.4 Termination of Agreement. If the Holders fail to meet the timely
exercise condition of section 1.2, this Agreement shall become null and void and
the parties shall continue to have the rights set forth in the Stock Purchase
Agreement. Any amounts previously received by the Company on the exercise of
the $3.25 A or B Warrants shall be deemed to be payment for the exercise of the
$4.50 A Warrants or $4.50 B Warrants and the number of shares of Common Stock to
be delivered to the Holders reduced accordingly. The balance of any unexercised
$4.50 A and $4.50 B Warrants shall remain exercisable in accordance with their
terms prior to modification hereunder.
1.5 Exercise of Warrants. To exercise the Warrants in accordance with the
terms hereof, the Holders desiring to exercise shall present and surrender to
the Company the Warrant, with the purchase form attached thereto duly executed,
and shall pay to the Company the exercise price for the number of shares being
purchased in cash or immediately available funds by wire transfer, certified or
official bank check, or other means of payment acceptable to the Company.
1.6 Delivery of Common Stock. The Company will promptly issue a
certificate representing the shares of Common Stock acquired by a Holder on
exercise of the Warrants. Until such time as the timely exercise conditions of
the Holders under section 1.2 are satisfied, the Company shall hold such
certificates. Thereafter, the Company shall deliver such certificates, and all
certificates representing subsequently acquired Common Stock, to the Holders.
Notwithstanding the preceding sentences, if such conditions have not been
satisfied and the time for satisfying such conditions has expired, or the
Holders have waived their right to satisfy such conditions, the certificates
shall be returned to the transfer agent of the Company and the number of shares
represented thereby reduced to represent the number of shares that would have
been acquired at an exercise price of $4.50 per share. Such certificates shall
thereafter be promptly delivered to the Holders.
Article II
Representations, Covenants, and Warranties of the Company
As an inducement to, and to obtain the reliance of, Holders, the Company
represents and warrants as follows:
2.1 Organization of the Company. The Company is a corporation duly
organized, validly existing, and in good standing under laws of the state of
Nevada, and has the corporate power and is duly authorized, qualified,
franchised, and licensed under all applicable laws, regulations, ordinances, and
orders of public authorities to own all of its properties and assets and to
carry on its business in all material respects as it is now being conducted.
The execution and delivery of this Agreement does not, and the consummation of
the transactions contemplated by this Agreement in accordance with the terms
hereof will not, violate any provision of the Company's certificate of
incorporation or bylaws. The Company has taken all action required by law, its
certificate of incorporation, its bylaws, or otherwise to authorize the
execution and delivery of this Agreement and the consummation of the
transactions herein contemplated.
2.2 Approval of Agreement. The board of directors of the Company have
authorized the execution and delivery of this Agreement by the Company and has
approved the consummation of the transactions contemplated hereby. This
Agreement is the legal, valid, and binding agreement of the Company enforceable
between the parties in accordance with its terms.
2.3 Financial Information. Each of the financial statements contained in
the information referred to in section 2.4 present fairly the financial
condition of the Company as of the date of such financial statement and the
results of its operations for the periods indicated. All such audited and
unaudited financial statements have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved as explained in the notes to such financial statements and have been
presented in accordance with the requirements of Regulation S-X promulgated by
the Securities and Exchange Commission (the "SEC") regarding the form and
content of and requirements for financial statements to be filed with the SEC.
2.4 Information. The information concerning the Company set forth in this
Agreement, in the schedules delivered by the Company pursuant to the Stock
Purchase Agreement and this Agreement, the annual report on form 10-KSB filed
with the SEC for the year ended June 30, 1995, and all amendments thereto, and
the quarterly report on form 10-QSB for the quarter ended September 30, 1995,
is, as of the date of the respective reports, complete and accurate in all
material respects and did not contain any untrue statement of a material fact or
omit to state a material fact required to make the statements made, in light of
the circumstances under which they were made, not misleading.
2.5 Third-Party Consents. None of the contracts, agreements, leases, or
other commitments, written or oral, to which the Company is a party or to which
any of its properties or assets are subject require the consent of any other
party in order to consummate the transactions herein contemplated, except where
the failure to obtain such consent would not have a material adverse effect on
the transactions contemplated herein. Except for the satisfaction of
requirements of federal and state securities and corporation laws, no
authorization, approval, consent, or order of, or registration, declaration, or
filing with, any court or other governmental body is required in connection with
the execution and delivery by the Company of this Agreement and the consummation
by the Company of the transactions contemplated hereby.
2.6 No Conflict With Other Instruments. The execution of this Agreement
and the consummation of the transactions contemplated by this Agreement will not
result in the breach of any term or provision of, or constitute an event of
default under, any indenture, mortgage, deed of trust, lease, or other contract,
agreement, or instrument to which the Company is a party or to which any of its
properties or operations are subject and the breach of which would have a
material adverse effect on the Company.
Article III
Representations, Covenants, and Warranties of Holders
As an inducement to, and to obtain the reliance of the Company, each Holder
represents and warrants as follows:
3.1 Binding Agreement. This Agreement is the legal, valid, and binding
obligation of each Holder enforceable in accordance with its terms.
3.2 Third-Party Consents. None of the contracts, agreements, leases, or
other commitments, written or oral, to which any Holder is a party or to which
any of its properties or assets are subject require the consent of any other
party in order to consummate the transactions herein contemplated, except where
the failure to obtain such consent would not have a material adverse effect on
the transactions contemplated herein. No authorization, approval, consent, or
order of, or registration, declaration, or filing with, any court or other
governmental body is required in connection with the execution and delivery by
any Holder of this Agreement and the consummation by any Holder of the
transactions contemplated hereby.
3.3 No Conflict With Other Instruments. The execution of this Agreement
and the consummation of the transactions contemplated hereby, will not result in
the breach of any term or provision of, constitute an event of default under, or
require the consent or approval of any third-party pursuant to, any material
contract, agreement, or instrument to which any Holder is a party or to which
any of their respective properties or operations are subject.
3.4 Information. The information concerning Holders set forth in this
Agreement and in the schedules delivered by Holders pursuant hereto is complete
and accurate in all material respects and does not contain any untrue statement
of a material fact or omit to state a material fact required to make the
statements made, in light of the circumstances under which they were made, not
misleading.
Article IV
Special Covenants
4.1 Indemnification by Holders. Each Holder will indemnify and hold
harmless the Company and its directors and officers, and each person, if any,
who controls the Company within the meaning of the Securities Act of 1933, as
amended (the "Securities Act"), from and against any and all losses, claims,
damages, expenses, liabilities, or actions to which any of them may become
subject under applicable law (including the Securities Act and the Exchange Act)
and will reimburse them for any legal or other expenses reasonably incurred by
them in connection with investigating or defending any claims or actions,
whether or not resulting in liability, insofar as such losses, claims, damages,
expenses, liabilities, or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in any
application or statement filed with a governmental body or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein, or necessary in order to make the statements
therein not misleading, but only insofar as any such statement or omission was
made in reliance upon and in conformity with information furnished in writing by
any Holder expressly for use therein. Holders agree at any time upon the
request of the Company to furnish to it a written letter or statement confirming
the accuracy of the information with respect to Holders contained in any report
or other application or statement referred to in this Article IV, or in any
draft of any such documents, and confirming that the information with respect to
Holders contained in such document or draft was furnished by Holders, indicating
the inaccuracies or omissions contained in such document or draft or indicating
the information not furnished by Holders expressly for use therein. The
indemnity agreement contained in this section 4.1 shall remain operative and in
full force and effect, regardless of any investigation made by or on behalf of
the Company and shall survive the consummation of the transactions contemplated
by this Agreement.
4.2 Indemnification by the Company. The Company will indemnify and hold
harmless Holders from and against any and all losses, claims, damages, expenses,
liabilities, or actions to which any of them may become subject under applicable
law (including the Securities Act and the Exchange Act) and will reimburse them
for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any claims or actions, whether or not resulting in
liability, insofar as such losses, claims, damages, expenses, liabilities, or
actions arise out of or are based upon any breach of this Agreement or any
untrue statement or alleged untrue statement of a material fact contained in any
application or statement filed with a governmental body or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein, or necessary in order to make the statements
therein not misleading, but only insofar as any such statement or omission was
made in reliance upon and in conformity with information furnished in writing by
the Company expressly for use therein. The Company agrees at any time upon the
request of Holders to furnish to them a written letter or statement confirming
the accuracy of the information with respect to the Company contained in any
report or other application or statement referred to in this Article IV, or in
any draft of any such document, and confirming that the information with respect
to the Company contained in such document or draft was furnished by the Company,
indicating the inaccuracies or omissions contained in such document or draft or
indicating the information not furnished by the Company expressly for use
therein. The indemnity agreement contained in this section 4.2 shall remain
operative and in full force and effect, regardless of any investigation made by
or on behalf of Holders and shall survive the consummation of the transactions
contemplated by this Agreement.
4.3 The Acquisition of Purchased Stock. The consummation of this
Agreement and the issuance of Common Stock to Holders contemplated herein
constitutes the offer and sale of securities as those terms are defined under
the Securities Act and applicable state statutes. Such transactions shall be
consummated in reliance on certain exemptions from the registration requirements
of federal and state securities laws, which depend, among other items, on the
circumstances under which such securities are acquired.
(a) In order to provide documentation for reliance upon such
exemptions, the Holders make the following representations and warranties:
(i) Each Holder acknowledges that neither the SEC nor the
securities commission of any state or other federal agency has made
any determination as to the merits of acquiring the Warrants or the
shares of Common Stock issuable on exercise of the Warrants, and that
this transaction involves certain risks.
(ii) Each Holder has received and read this Agreement and
understands the risks related to the consummation of the transactions
herein contemplated.
(iii) Each Holder has such knowledge and experience in
business and financial matters that he or she is capable of evaluating
the Company and its business operations.
(iv) Each Holder has adequate means of providing for his or her
current needs and possible personal contingencies and has no need now,
and anticipates no need in the foreseeable future, to sell any of the
Warrants or the shares of Common Stock issuable on exercise of the
Warrants. Each Holder is able to bear the economic risks of this
investment, and, consequently, without limiting the generality of the
foregoing, is able to hold the Warrants and the shares of Common Stock
issuable on exercise of the Warrants for an indefinite period of time,
and has a sufficient net worth to sustain a loss of the entire
investment, in the event such loss should occur.
(v) The Holders have been provided with all information
contained in the Company's annual report on form 10-K for the year
ended June 30, 1994, and all subsequent interim reports filed by the
Company with the Securities and Exchange Commission. The Holders'
representatives, including their legal counsel, have personally met
with the officers and directors of the Company and have investigated
the intellectual property assets of the Company. Each Holder and
their representatives have been given the opportunity to meet with and
ask questions of the officers and directors of the Company and to
obtain any additional information they consider material to the
acquisition of the Warrants and the shares of Common Stock issuable on
exercise of the Warrants.
(vi) Each Holder is acquiring the Warrants and the shares of
Common Stock issuable on exercise of the Warrants for his or her own
account and not for resale to others.
(vii) Each Holder confirms that he or she is an "accredited
investor" as defined under rule 501 of regulation D promulgated under
the Securities Act. Each Holder confirms that his or her individual
net worth, or joint net worth with that person's spouse, at the time
of his or her purchase exceeds $1,000,000, or he or she had an
individual income in excess of $200,000 in each of the two most recent
years or joint income with that person's spouse in excess of $300,000
in each of those years and has a reasonable expectation of reaching
the same income level in the current year.
(viii) The Holder is a resident of the state set forth in the
address below the Holder's name on the signature pages hereto.
(ix) Each Holder understands that none of the Warrants or the
shares of Common Stock issuable on exercise of the Warrants has been
registered, but is being acquired by reason of a specific exemption
under the Securities Act as well as under certain state statutes for
transactions by an issuer not involving any public offering and that
any disposition of the Warrants and the shares of Common Stock
issuable on exercise of the Warrants may, under certain circumstances,
be inconsistent with this exemption and may make the Holder an
"underwriter" within the meaning of the Securities Act. Each Holder
further acknowledges that the Warrants and the shares of Common Stock
issuable on exercise of the Warrants must be held and may not be sold,
transferred, or otherwise disposed of for value unless it is
subsequently registered under the Securities Act or an exemption from
such registration is available; the Company is under no obligation to
register the Warrants or the shares of Common Stock issuable on
exercise of the Warrants under the Securities Act or under section 12
of the Exchange Act, except as provided herein or as may be expressly
agreed to by it in writing; if rule 144 is available, and no assurance
is given that it will be, initially only routine sales of the Warrants
and the shares of Common Stock issuable on exercise of the Warrants in
limited amounts can be made in reliance on rule 144 in accordance with
the terms and conditions of that rule; the Company is under no
obligation to the undersigned to make rule 144 available, except as
may be expressly agreed to by it in writing; in the event rule 144 is
not available, compliance with regulation A or some other exemption
may be required before any Holder can sell, transfer, or otherwise
dispose of the Warrants or the shares of Common Stock issuable on
exercise of the Warrants without registration under the Securities
Act; the Company's registrar and transfer agent will maintain a stop
transfer order against the registration of transfer of the Warrants
and the shares of Common Stock issuable on exercise of the Warrants;
and the certificate(s) representing the Warrants and the shares of
Common Stock issuable on exercise of the Warrants will bear a legend
in substantially the following form so restricting the sale of the
Warrants and the shares of Common Stock issuable on exercise of the
Warrants:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND ARE "RESTRICTED SECURITIES" WITHIN
THE MEANING OF RULE 144 PROMULGATED UNDER THE SECURITIES
ACT. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND
MAY NOT BE SOLD OR TRANSFERRED WITHOUT COMPLYING WITH RULE
144 IN THE ABSENCE OF AN EFFECTIVE REGISTRATION OR OTHER
COMPLIANCE UNDER THE SECURITIES ACT.
(b) In order to more fully document reliance on the exemptions as
provided herein, each Holder shall execute and deliver to the Company such
further letters of representation, acknowledgment, suitability, or the
like, as the Company and its counsel may reasonably request in connection
with reliance on exemptions from registration under such securities laws.
(c) The Company and Holders acknowledge that the basis for relying on
exemptions from registration or qualifications are factual, depending on
the conduct of the various parties, and that no legal opinion or other
assurance will be required or given to the effect that the transactions
contemplated hereby are in fact exempt from registration or qualification.
Article V
Registration Rights
5.1 Demand Registration. The Company shall use its best efforts to
prepare and file with the SEC as soon as practicable within 20 days from the
date of this Agreement, but in any event within 40 days of the date of this
Agreement, a Registration Statement that includes the shares of Common Stock
issuable on exercise of all the $3.25 Warrants, or the $4.50 A , $4.50 B, and
$5.75 Warrants, as the case may be, and thereafter to use its best efforts to
cause such Registration Statement to become effective as soon as is practicably
possible and remain effective as provided herein. The Company further agrees
to:
(a) Prepare and file with the SEC such amendments and post-effective
amendments to the Registration Statement as may be necessary to keep the
Registration Statement effective for a period of not less than two (2)
years, or such shorter period which will terminate when all securities
covered by such Registration Statement have been sold or withdrawn; cause
the prospectus which is part of the Registration Statement to be
supplemented by any required prospectus supplement, and as so supplemented
to be filed pursuant to Rule 424 under the Securities Act; and comply with
the provisions of the Securities Act applicable to it with respect to the
disposition of all securities covered by such Registration Statement during
the applicable period in accordance with the intended methods of
disposition by the sellers thereof set forth in such Registration Statement
or supplement to the prospectus;
(b) Notify Holders at any time when a prospectus relating to
securities of any Selling Shareholder included in a Registration Statement
is required to be delivered under the Securities Act, when the Company
becomes aware of the happening of any event as a result of which the
prospectus included in such Registration Statement (as then in effect)
contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein (in the case of the
prospectus or any preliminary prospectus, in light of the circumstances
under which they were made) not misleading and, as promptly as practicable
thereafter, prepare and file with the SEC and furnish to Holders a
supplement or amendment to such prospectus so that, as thereafter delivered
to the purchasers of such securities, such prospectus will not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading;
(c) Enter into customary agreements (including an underwriting
agreement in customary form) and take such other actions as are reasonably
required in order to expedite or facilitate the disposition of such
securities;
(d) Use its best efforts to cause all securities of Holders included
in such Registration Statement to be listed, by the date of the first sale
of securities pursuant to such Registration Statement, on each securities
exchange on which the Company's securities of the same class are then
listed or proposed to be listed, if any;
(e) On or prior to the date on which the Registration Statement is
declare effective, use its best efforts to register or qualify, and
cooperate with Holders, the underwriter or underwriters, if any, and their
counsel, in connection with the registration or qualification of, the
securities of Holders covered by the Registration Statement for offer and
sale under the securities or blue sky laws of each state and other
jurisdiction of the United States as Holders or the underwriter reasonably
requests in writing, to use its best efforts to keep each such registration
or qualification effective, including through new filings, or amendment or
renewals, during the period such Registration Statement is required to be
keep effective and to do any and all other acts or things necessary or
advisable to enable the disposition in all such jurisdictions of the
securities of Holders covered by the Registration Statement; provided that
the Company will not be required to (1) qualify generally to do business in
any jurisdiction where it would not otherwise be required to qualify but
for this paragraph (e), (2) consent to general service of process in any
such jurisdiction, or (3) subject itself to general taxation in any such
jurisdiction;
(f) Cooperate with Holders and the managing underwriter or
underwriters, if any, to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legends) representing securities
to be sold by Holders under the Registration Statement, and enable such
securities to be in such denominations and registered in such names as the
managing underwriter or underwriters, if any, or Holders may request; and
(g) Use it best efforts to cause the securities of Holders covered by
the Registration Statement to be registered with or approved by such other
governmental agencies or authorities within the United States as may be
necessary to enable Holders or the underwriter or underwriters, if any, to
consummate the disposition of such securities.
5.2 Piggyback Registration. If at any time prior to the date that is
three years from the acquisition of Common Stock by the Holders pursuant to the
exercise of the $3.25 Warrants the Company elects to file a registration
statement and the resale by the Holders of the Common Stock acquired on the
exercise of the $3.25 Warrants is not then covered by an effective registration
statement, the Company shall give the Holders notice of its intent to do so.
The Holders shall have ten days subsequent to such notice to elect to have
shares of Common Stock acquired on the exercise of the $3.25 Warrants then held
by them included in such registration statement; provided that, such shares
shall not be included if, in the judgment of the head underwriter involved in
the transaction, the inclusion of such shares would adversely affect the
underwriting or the completion of the proposed financing. The provisions of
this paragraph shall not apply to a registration statement filed on forms X-0,
X-0, or similar forms.
5.3 Cooperation by Holders.
(a) Holders shall furnish to the Company in writing such information
and affidavits as the Company may reasonably require from Holders in
connection with any registration, qualification or compliance with respect
to such securities. It shall be a condition precedent to the obligations of
the Company to take any action pursuant to this Agreement with respect to
the securities of any selling Holder that such Holder shall furnish to the
Company such information regarding the Holder, the securities to be
registered and other securities in the Company held, and the intended
method of disposition of such securities as shall be required to effect the
registration of such Holder's securities.
(b) By exercising their Warrants, Holders shall be deemed to have
confirmed at the time of such exercise the continuing accuracy of the
information respecting their status as accredited investors and the
suitability of an investment in the Common Stock for them that is contained
herein, all except as such investors may then advise the Company in
writing. The Company may also require, as a condition precedent to
exercise, that the Holder complete and deliver to the Company a suitability
letter containing representations and warranties regarding suitability of
the investment of like tenor to those contained herein.
(c) Holders, upon receipt of any notice from the Company of the
happening of any event of the kind described in paragraph (b) of section
5.1, will forthwith discontinue disposition of the securities until
Holders' receipt of the copies of the supplemented or amended prospectus
contemplated by paragraph (b) of section 5.1 or until they are advised in
writing (the "Advice") by the Company that the use of the prospectus may be
resumed, and have received copies of any additional or supplemental filings
which are incorporated by reference in the prospectus, and, if so directed
by the Company, Holders will, or will request the managing underwriter or
underwriters, if any, to, deliver to the Company all copies, other than
permanent file copies then in Holders' possession, of the prospectus
covering such securities current at the time of receipt of such notice. In
the event the Company shall give any such notice, the time period mentioned
in paragraph (a) of section 5.1 shall be extended by the number of days
during the period from and including the date of the giving of such notice
to and including the date when Holders shall have received the copies of
the supplemented or amended prospectus contemplated by paragraph (b) of
section 5.1 hereof or the Advice.
(d) At the end of any period during which the Company is obligated to
keep any Registration Statement current and effective as provided by
section 5.1 hereof (and any extensions thereof required by paragraph (c) of
this section 5.2), Holders shall discontinue sales of securities pursuant
to such Registration Statement upon receipt of notice from the Company of
its intention to remove from registration the securities covered by such
Registration Statement which remain unsold, and Holders shall notify the
Company of the number of securities registered which remain unsold promptly
after receipt of such notice from the Company.
(e) The Holders acknowledge that the registration of the resale of
the securities or the availability of an exemption from registration in
certain states may impose certain limitations and conditions on the manner
and nature of such sales. The Company shall advise the Holder in writing
of such registration or exemption and the related limitations and
conditions from time to time. The Holders shall be solely responsible for
such Holders' own compliance with such limitations and conditions.
5.4 Holdback Agreement. Holders, if requested by the managing underwriter
or underwriters for any underwritten piggyback registration in which the Holders
chose to have shares included, agree not to effect any public sale or
distribution of securities, including a sale pursuant to Rule 144 (or any
similar provision then in force) under the Securities Act, during the 15 days
prior to, and during the 90-day period commencing on the effective date of such
registration (except as part of such registration). In the event Holders are
prohibited from effecting a sale of securities pursuant to this section 5.3, the
time period in paragraph (a) of section 5.1 shall be extended by the number of
days Holders are so prohibited.
5.5 Registration and Selling Expenses. All of the costs and expenses of
registration provided for herein will be borne by the Company, including the
fees and expenses of the counsel and accountants for the Company (including the
expenses of any special audit and "cold comfort" letters required by or incident
to such performance), and all other costs and expenses of the Company incident
to the preparation, printing, and filing under the Securities Act of the
Registration Statement (and all amendments and supplements thereto) and
furnishing copies thereof and of the prospectus included therein, and the costs
and expenses incurred by the Company in connection with the qualification of the
Purchased Stock and shares of Common Stock received on exercise of Warrants
under the state securities or blue sky laws of various jurisdictions; provided
that the Company shall not bear the costs and expenses of Holders comprising
underwriters' commissions, brokerage fees, transfer taxes, or the fees and
expenses of any counsel, accountant, or other representative retained by
Holders.
5.6 Rule 144. The Company agrees that it will use its best efforts to
file in a timely manner all reports required to be filed by it pursuant to the
Exchange Act and, at any time and upon request of Holders, will furnish Holders
with such information generated by the Company in the ordinary course of
business as may be reasonably necessary to enable Holders to effect sales of
Common Stock received on exercise of Warrants without registration pursuant to
Rule 144 under the Securities Act. Notwithstanding the foregoing, the Company
may deregister any class of its securities under section 12 of the Exchange Act
or suspend its duty to file reports with respect to any class of its securities
pursuant to section 15(d) of the Exchange Act if it is then permitted to do so
pursuant to the Exchange Act and the rules and regulations thereunder.
5.7 Participation in Underwritten Registrations. Holders may not
participate in any underwritten piggyback registration in which they chose to
have stock included unless Holders (a) agree to sell shares of Common Stock
received on exercise of Warrants on the basis provided in any underwriting
arrangements approved by the persons entitled hereunder to approve such
arrangements, and (b) complete and execute all questionnaires, powers of
attorney, underwriting agreements and other documents customarily required under
the terms of such underwriting arrangements.
Article VI
Miscellaneous
6.1 No Brokers. Holders and the Company agree that no third person has in
any way brought the parties together or been instrumental in the negotiation,
execution, or consummation of this Agreement. Notwithstanding the foregoing,
the Company has agreed to pay a three percent finder's fee to Xxxx X. Xxxxxxxx
and Xxxxxxx Xxxxxxx, who were instrumental in the prior transaction between the
parties, on the exercise of the $3.25 A Warrants. Holders and the Company each
agree to indemnify the other against any claim by any third person for any
commission, brokerage, finder's fee, or other payment with respect to this
Agreement or the transactions contemplated hereby based upon any alleged
agreement or understanding between such party and such third person, whether
expressed or implied, arising from the actions of such party. The covenants set
forth in this section 6.1 shall survive the date hereof and the consummation of
the transactions herein contemplated.
6.2 Governing Law. This Agreement shall in all respects, including all
matters of construction, validity, and performance, be governed by, and
construed and enforced in accordance with, the laws of the state of Utah
applicable to contracts entered into in that state between citizens of that
state and to be performed wholly within that state without reference to any
rules governing conflicts of laws
6.3 Notices. All notices, demands, requests, or other communications
required or authorized hereunder shall be deemed given sufficiently if in
writing and if personally delivered; if sent by facsimile transmission,
confirmed with a written copy thereof sent by overnight express delivery; if
sent by registered mail or certified mail, return receipt requested and postage
prepaid; or if sent by overnight express delivery:
If to the Company, to: Xxxxxx Xxxxx Incorporated
Attn.: Xxxxx X. Xxxxxx, President
0000 Xxxx 000 Xxxxx
Xxxxx, Xxxx 00000
Facsimile Transmission: (000) 000-0000
Confirmation: (000) 000-0000
With copies to: Xxxxx X. Xxxx, Esq.
Xxxxx, Xxxxx & Xxxxxxx, L.L.C.
Eighth Floor, Bank Xxx Xxxxx
00 Xxxx Xxxxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Facsimile Transmission: (000) 000-0000
Confirmation: (000) 000-0000
If to Holders: At the address set forth below their respective names
on the signature pages hereto.
With copies to: Xxxxxxx Xxxxxxx, Esq.
Xxxxxxx Xxxxxxxx & Xxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile Transmission: (000) 000-0000
Confirmation: (000) 000-0000
or such other addresses and facsimile numbers as shall be furnished in writing
by any party in the manner for giving notices hereunder, and any such notice,
demand, request, or other communication shall be deemed to have been given as of
the date personally delivered or on the first business day after a legible copy
sent by facsimile transmission is received, three days after the date mailed by
registered or certified mail, or on the first business day after the date sent
by overnight delivery.
6.4 Attorneys' Fees. In the event that any party institutes and prevails
in any action or suit to enforce this Agreement or to secure relief from any
default hereunder or breach hereof, the defaulting or breaching party or parties
shall reimburse the nonbreaching party or parties for all costs, including
reasonable attorneys' fees, incurred in connection therewith and in enforcing or
collecting any judgment rendered therein.
6.5 Best Knowledge. Whenever any representation is made to the "best
knowledge" of any party, it shall be deemed to be a representation that an
officer or director of such party, after reasonable investigation, has any
current actual knowledge of such matters.
6.6 Entire Agreement. This Agreement, together with the documents to be
delivered pursuant hereto, represents the entire agreement between the parties
relating to the subject matter hereof. There are no other courses of dealing,
understanding, agreements, representations, or warranties, written or oral,
except as set forth herein.
6.7 Survival; Termination. The representations, warranties, and covenants
of the respective parties as set forth in this Agreement shall survive the
closing and consummation of the transactions contemplated by this Agreement for
a period of two years from the date of this Agreement. The Company's cumulative
liability to Holders for breaches of this Agreement shall not exceed the
Purchase Price.
6.8 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which taken
together shall be but a single instrument.
6.9 Amendment or Waiver. Every right and remedy provided herein shall be
cumulative with every other right and remedy, whether conferred herein, at law,
or in equity, and may be enforced concurrently herewith, and no waiver by any
party of the performance of any obligation by the other shall be construed as a
waiver of the same or any other default then, theretofore, or thereafter
occurring or existing. This Agreement may be amended by a writing signed by all
parties hereto, with respect to any of the terms contained herein, and any term
or condition of this Agreement may be waived or the time for performance thereof
may be extended by a writing signed by the party or parties for whose benefit
the provision is intended.
6.10 Third-Party Beneficiaries. This Agreement is solely between the
Company and Holders and no director, officer, stockholder, employee, agent,
independent contractor, or any other person or entity shall be deemed to be a
third-party beneficiary of this Agreement.
6.11 No Public Announcement. None of the parties to this Agreement shall,
without the approval of each other party, make any press release or other public
announcement concerning the transactions contemplated by this Agreement without
first providing a copy of such press release or public announcement to the other
parties to this Agreement at least five days prior to release. Nothing
contained herein shall prohibit any party from making any pubic disclosure or
announcement which is required by law.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
The Company:
Xxxxxx Xxxxx Incorporated
By
Xxxxx X. Xxxxxx, President
Holders:
Xxxxx Xxxxxxxxx
Address: 000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxxx Xxxxxx
Address: 000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxxxxx Xxxxx
Address: 000 Xxxxxxxx Xxxxxx
Xxxx Xxxxxxxx, Xxx Xxxx 00000
Xxxxxx Xxxx
Address: 000 Xxxxxxxx Xxxxxx
Xxxx Xxxxxxxx, Xxx Xxxx 00000
Xxxxxx Xxxxx
Address: 000 Xxxxxxxx Xxxxxx
Xxxx Xxxxxxxx, Xxx Xxxx 00000
(signatures continued on following page)
Xxxxxxx Xxxxx
Address: 000 Xxxxxxxx Xxxxxx
Xxxx Xxxxxxxx, Xxx Xxxx 00000
Xxxxxxx Xxxxx
Address: 000 Xxxxxxxx Xxxxxx
Xxxx Xxxxxxxx, Xxx Xxxx 00000
Xxxxx Xxxxxxx
Address: 000 Xxxxxxxx Xxxxxx
Xxxx Xxxxxxxx, Xxx Xxxx 00000
Exhibit A
Allocation of Warrants among Holders
Number of Number of Combined
$3.25 A and $3.25 B Number of
B Warrants to $3.25 C and
Number of Warrants to be D
$4.50 A be Exercised Warrants to
Name Warrants Exercised Within be
Held Within 90 Days of Issued on
45 Days of Effectivene Timely
Effectivene ss Exercise
ss
Xxxxx 200,104 246,282 153,926 400,208(1)
Xxxxxxxxx
Xxxxx 200,104 246,283 153,925 400,208(1)
Xxxxxx
Xxxxxxx 24,948 30,705 19,191 49,896
Xxxxx
Xxxxxx Xxxx 8,316 10,235 6,397 16,632
Xxxxxx 41,580 51,175 31,985 83,160
Xxxxx
Xxxxxxx 8,316 10,235 6,397 16,632
Xxxxx
Xxxxxxx 8,316 10,235 6,397 16,632
Xxxxx
Xxxxx 8,316 10,235 6,397 16,632
Zimberg
Total 500,000 615,385 384,615 1,000,000
(1) Xxx. Xxxxxxxxx and Xxx. Xxxxxx have each previously gifted their respective
rights to receive 370,208 of these warrants to charitable organizations and
the warrants, if and when issued, will be issued directly to such
organizations.
