EXHIBIT 10.30
COMMON STOCK PURCHASE AGREEMENT
This COMMON STOCK PURCHASE AGREEMENT (this "Agreement') is dated as of July
6, 2000 by and between Xxxxxxxxxx.xxx, Inc., a Delaware corporation (the
"Company"), and Gestrow Investments Limited (the "Purchaser").
The parties hereto agree as follows:
ARTICLE I
Definitions
Section 1.1 Certain Definitions.
(a) "Average Daily Price" shall be the price based on the VWAP of the
Company's Common Stock on the Principal Market.
(b) "Draw Down" shall have the meaning assigned to such term in Section
6.1(a) hereof.
(c) "Draw Down Exercise Date" shall have the meaning assigned to such term
in Section 6.1(b) hereof.
(d) "Draw Down Pricing Period" shall mean a period of twenty-two (22)
consecutive Trading Days preceding a Draw Down Exercise Date.
(e) "Effective Date" shall mean the date the Registration Statement of the
Company covering the Shares being subscribed for hereby is declared effective.
(f) "Material Adverse Effect" shall mean any effect on the business,
operations, properties or financial condition of the Company that is material
and adverse to the Company and its subsidiaries and affiliates, taken as a whole
and/or any condition, circumstance, or situation that would prohibit or
otherwise materially interfere with the ability of the Company to perform any of
its material obligations under this Agreement.
(g) "Principal Market" shall mean initially the OTC Bulletin Board, and
shall include the Nasdaq Stock Market, the American Stock Exchange or the New
York Stock Exchange if the Company is listed and trades on such market or
exchange.
(h) "Registration Statement" shall mean the registration statement or
statements under the Securities Act of 1933, as amended, to be filed with the
Securities and Exchange Commission for the registration of the Shares pursuant
to the Registration Rights Agreement attached hereto as Exhibit A, which such
Registration Rights Agreement shall be deemed for all purposes to have been
entered into in contemplation of this Agreement.
(i) "SEC Documents" shall mean the Company's most recent Form 10-K and all
subsequent reports filed pursuant to the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), through the relevant date in question.
(j) "Shares" shall mean, collectively, the shares of Common Stock of the
Company being subscribed for hereunder and those shares of Common Stock issuable
to the Purchaser upon exercise of the Warrants.
(k) "Threshold Price" is the lowest Average Daily Price at which the
Company will sell its Common Stock with respect to this Agreement if the Company
chooses to specify a Threshold Price in any Draw Down Notice under Section 6.1
hereof.
(l) "Trading Day" shall mean any day on which the Principal Market is open
for business.
(m) "VWAP" shall mean the daily volume weighted average price of the
Company on the Principal Market as reported by Bloomberg Financial using the AQR
function.
ARTICLE II
Purchase and Sale of Common Stock
Section 2.1 Purchase and Sale of Stock. Subject to the terms and conditions
of this Agreement, the Company shall issue and sell to the Purchaser and the
Purchaser shall purchase from the Company (i) up to Twenty-four Million Dollars
($24,000,000) of the Company's Common Stock, no par value per share (the "Common
Stock"), based on up to twelve (12) Draw Downs of up to Two Million Dollars
($2,000,000) per Draw Down, and (ii) the warrants in accordance with section
5.2(f).
Section 2.2 The Shares. The Company has authorized and has reserved and
covenants to continue to reserve, free of preemptive rights and other similar
contractual rights of stockholders, a sufficient number of its authorized but
unissued shares of its Common Stock to cover the Shares to be issued in
connection with all Draw Downs requested under this Agreement. Anything in this
Agreement to the contrary notwithstanding, (i) at no time will the Company
request a Draw Down which would result in the issuance of a number of shares of
Common Stock pursuant to this Agreement and the Warrants referred to in Section
5.2(f) which exceeds 19.9% of the number of shares of Common Stock issued and
outstanding on the Closing Date without obtaining stockholder approval of such
excess issuance, if required by the rules of the Principal Market, and (ii) the
Company may not make a Draw Down to the extent that, after such purchase by the
Purchaser, the sum of the number of shares of Common Stock beneficially owned by
the Purchaser and its affiliates would result in beneficial ownership by the
Purchaser and its affiliates of more than 9.9% of the then outstanding shares of
Common Stock. For purposes of the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Securities
and Exchange Act of 1934, as amended.
Section 2.3 Purchase Price and Closing. The Company agrees to issue and
sell to the Purchaser and, in consideration of and in express reliance upon the
representation, warranties,
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covenants, terms and conditions of this Agreement, the Purchaser agrees to
purchase that number of the Shares to be issued in connection with each Draw
Down. The closing under this Agreement shall take place at the offices of
Xxxxxxx Xxxxxx & Green, P.C., 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the
"Closing") on such date as the Purchaser and the Company may agree upon (the
"Closing Date"). Each party shall deliver all documents, instruments and
writings required to be delivered by such party pursuant to this Agreement at or
prior to the Closing.
ARTICLE III
Representations and Warranties
Section 3.1 Representation and Warranties of the Company. The Company
hereby makes the following representations and warranties to the Purchaser,
except as set forth on the Disclosure Schedule prepared by the Company and
attached hereto:
(a) Organization, Good Standing and Power. The Company is a corporation
duly incorporated and validly existing under the laws of Delaware and has the
requisite corporate power to own, lease and operate its properties and assets
and to conduct its business as it is now being conducted. The Company does not
have any subsidiaries except as set forth in the SEC Documents. The Company is
duly qualified as a foreign corporation to do business and is in good standing
in every jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary except for any jurisdiction in
which the failure to be so qualified will not have a Material Adverse Effect on
the Company's financial condition.
(b) Authorization, Enforcement. The Company has the requisite corporate
power and authority to enter into and perform this Agreement and to issue and
sell the Shares in accordance with the terms hereof. The execution, delivery and
performance of this Agreement by the Company and the consummation by it of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action, and no further consent or
authorization of the Company or its Board of Directors or stockholders is
required. This Agreement has been duly executed and delivered, and constitutes a
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation,
conservatorship, receivership or similar laws relating to, or affecting
generally the enforcement of, creditor's rights and remedies or by other
equitable principles of general application.
(c) Capitalization. The authorized capital stock of the company and the
shares thereof currently issued and outstanding are as set forth in the SEC
Documents or on Schedule 3.1(c) hereto. All of the outstanding shares of the
Company's Common Stock have been duly and validly authorized and are fully-paid
and non-assessable. Except as set forth in this Agreement and the Registration
Rights Agreement and as set forth in the SEC Documents, or on Schedule 3.1(c)
hereto, no shares of Common Stock are entitled to preemptive rights or
registration rights and there are no outstanding options, warrants, scrip,
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible
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into, any shares of capital stock of the Company. Furthermore, except as set
forth in this Agreement or as set forth in the SEC Documents or on Schedule
3.1(c), there are no contracts, commitments, understandings, or arrangements by
which the Company is or may become bound to issue additional shares of the
capital stock of the Company or options, securities or rights convertible into
shares of capital stock of the Company. Except as contemplated by this
agreement, or as set forth by the SEC documents or on Schedule 3.1(c) hereto,
the Company is not a party to any agreement granting any unfulfilled
registration rights to any person with respect to any of its equity or debt
securities. The Company is not a party to, and it has no knowledge of, any
agreement restricting the voting or transfer of any shares of the Common Stock
of the Company. Except as set forth in the SEC Documents or on Schedule 3.1(c)
hereto, the offer and sale of all capital stock, convertible securities, rights,
warrants, or options of the Company issued prior to the Closing complied in all
material respects with all applicable Federal and state securities laws, and no
stockholder has a right of rescission or damages with respect thereto which
would have a Material Adverse Effect on the Company's financial condition or
operating results. The Company has made available to the Purchaser true and
correct copies of the Company's Articles of Incorporation as in effect on the
date hereof (the "Articles"), and the Company's Bylaws as in effect on the date
hereof (the "Bylaws"). The Principal Market for the Common Stock is the OTCBB,
and the Company has not received any unresolved notice from such market
questioning or threatening the continued inclusion of the Common Stock on such
market.
(d) Issuance of Shares. The Shares to be issued under this Agreement have
been duly authorized by all necessary corporate action and, when paid for or
issued in accordance with the terms hereof, the Shares shall be validly issued
and outstanding, fully paid and non-assessable, and the Purchaser shall be
entitled to all rights accorded to a holder of Common Stock.
(e) No Conflicts. The execution, delivery and performance of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated herein do not and will not (i) violate any provision of the
Company's Articles or Bylaws, (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, mortgage, deed of trust, indenture, note, bond,
license, lease agreement, instrument or obligation to which the Company is a
party, (iii) create or impose a lien, charge or encumbrance on any property of
the Company under any agreement or any commitment to which the Company is a
party or by which the Company is bound or by which any of its respective
properties or assets are bound, or (iv) result in a violation of any Federal,
state, local or other foreign statute, rule, regulation, order, judgment or
decree (including any Federal and state securities laws and regulations)
applicable to the Company or any of its subsidiaries or by which any property or
asset of the Company or any of its subsidiaries are bound or affected, except,
in all cases, for such conflicts, defaults, termination, amendments,
accelerations, cancellations and violations as would not, individually or in the
aggregate, have a Material Adverse Effect. The business of the Company and its
subsidiaries is not being conducted in violation of any laws, ordinances or
regulations of any governmental entity, except for possible violations which
singularly or in the aggregate do not and will not have a Material Adverse
Effect. The Company is not required under any Federal, state or local law, rule
or regulation to obtain any consent, authorization or order of, or make any
filing or registration
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with, any court or governmental agency in order for it to execute, deliver or
perform any of its obligations under this Agreement, or issue and sell the
Shares in accordance with the terms hereof (other than any filings which may be
required to be made by the Company with any exchange or market on which the
Common Stock is listed, with the Securities and Exchange Commission (the
"Commission"), or state securities administrators subsequent to the Closing and
any registration statement which may be filed pursuant hereto); provided that,
for purpose of the representation made in this sentence, the Company is assuming
and relying upon the accuracy of the relevant representations and agreements of
the Purchaser herein.
(f) Commission Documents, Financial Statements. The Common Stock of the
Company is registered pursuant to Section 12(g) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and, except as disclosed in the SEC
Documents or on Schedule 3.1(f) hereto, the Company has filed all reports,
schedules, forms, statements and other documents required to be filed by it with
the Commission pursuant to the reporting requirements of the Exchange Act,
including material filed pursuant to Section 13(a) or 15(d) of the Exchange Act
and has timely filed all such reports required to be filed within the twelve
month period prior to the date of this Agreement (all of the foregoing including
filings incorporated by reference therein being referred to herein as the
"Commission Documents"). The Company has made available to the Purchaser true
and complete copies of the Commission Documents filed with the Commission since
December 31, 1998. The Company has not provided to the Purchaser any information
which, according to applicable law, rule or regulation, should have been
disclosed publicly by the Company but which has not been so disclosed, other
than with respect to the transactions contemplated by this Agreement. As of
their respective dates, the SEC Documents complied in all material respects with
the requirements of the Exchange Act and the rules and regulations of the
Commission promulgated thereunder applicable to such documents, and, as of their
respective dates the SEC Documents did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The financial statements of the
Company included in the Commission Documents comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the Commission or other applicable rules and regulations with
respect thereto. Such financial statements have been prepared in accordance with
generally accepted accounting principles ("GAAP") applied on a consistent basis
during the periods involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto or (ii) in the case of unaudited
interim statements, to the extent they may not include footnotes or may be
condensed or summary statements), and fairly present in all material respects
the financial position of the Company and its subsidiaries as of the dates
thereof and the results of operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments).
(g) No Material Adverse Change. Since March 31, 2000, the Company has not
experienced or suffered any Material Adverse Effect, except as disclosed in such
SEC Documents or on Schedule 3.1(g) hereof.
(h) No Undisclosed Liabilities. Except as disclosed in the SEC Documents or
on Schedule 3.1(h) hereto, the Company has no liabilities, obligations, claims
or losses (whether liquidated or unliquidated, secured or unsecured, absolute,
accrued, contingent or otherwise) that
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would be required to be disclosed on a balance sheet of the Company (including
the notes thereto) in conformity with GAAP which are not disclosed in the
Commission Documents, other than those incurred in the ordinary course of the
Company's business since such date and which, individually or in the aggregate,
do not or would not have a Material Adverse Effect on the Company.
(i) No Undisclosed Events or Circumstances. No event or circumstance has
occurred or exists with respect to the Company or its business, properties,
prospects, operations or financial condition, which, under applicable law, rule
or regulation, requires public disclosure or announcement by the Company but
which has not been so publicly announced or disclosed.
(j) Indebtedness. The SEC Documents or Schedule 3.1(j) hereto sets forth as
of the date hereof on a consolidated basis all outstanding secured and unsecured
Indebtedness of the Company, or for which the Company has commitments. For the
purposes of this Agreement, "Indebtedness" shall mean (a) any liabilities for
borrowed money or amounts owed in excess of $250,000 (other than trade accounts
payable incurred in the ordinary course of business), (b) all guaranties,
endorsements and contingent obligations in respect of Indebtedness of others,
whether or not the same are or should be reflected in the Company's balance
sheet (or the notes thereto), except guaranties by endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business; and (c) the present value of any lease payments in excess of
$250,000 due under leases required to be capitalized in accordance with GAAP.
The Company is not in default with respect to any Indebtedness.
(k) Title to Assets. To the best knowledge of the Company, the Company has
the right to use all of its tangible assets, either through ownership, lease or
license from third parties, and there are no material defaults by the Company
under the terms of any lease or license which individually or in the aggregate,
would have a Material Adverse Effect.
(l) Actions Pending. There is no action, suit, claim, investigation or
proceeding pending or, to the knowledge of the Company, threatened against the
Company which questions the validity of this Agreement or the transactions
contemplated hereby or any action taken or to be taken pursuant hereto or
thereto. Except as set forth in the SEC Documents or on Schedule 3.1(l) hereto,
there is no action, suit, claim, investigation or proceeding pending or, to the
knowledge of the Company, threatened, against or involving the Company or any of
its properties or assets, which, individually or in the aggregate, if determined
adversely to the Company, could have a Material Adverse Effect. There are no
outstanding orders, judgments, injunctions, awards or decrees of any court,
arbitrator or governmental or regulatory body against the Company.
(m) Compliance with Law. The business of the Company has been and is
presently being conducted in accordance with all applicable Federal, state and
local governmental laws, rules, regulations and ordinances, except as set forth
in the SEC Documents or on Schedule 3.1(m) hereto or such that do not cause a
Material Adverse Effect. The Company has all franchises, permits, licenses,
consents and other governmental or regulatory authorizations and approvals
necessary for the conduct of its business as now being conducted unless the
failure to possess such franchises, permits, licenses, consents and other
governmental
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or regulatory authorizations and approvals, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect.
(n) Taxes. Except as set forth in the SEC Documents or on Schedule 3.1(n)
hereto, the Company has accurately prepared and filed all Federal, state and
other tax returns required by law to be filed by it, has paid or made provisions
for the payment of all taxes shown to be due and all additional assessments, and
adequate provision have been and are reflected in the financial statements of
the Company for all current taxes and other charges to which the Company is
subject and which are not currently due and payable. Except as disclosed on
Schedule 3.1(n) hereto, none of the Federal income tax returns of the Company
for the years subsequent to December 31, 1996 have been audited by the Internal
Revenue Service. The Company has no knowledge of any additional assessments,
adjustments or contingent tax liability (whether federal or state) pending or
threatened against the Company for any period, nor of any basis for any such
assessment, adjustment or contingency which, individually or in the aggregate,
could have a Material Adverse Effect.
(o) Certain Fees.Except for the fees of Ladenburg Xxxxxxxx & Co. Inc. or as
set forth on Schedule 3.1(o) hereto, no brokers, finders or financial advisory
fees or commissions will be payable by the Company with respect to the
transactions contemplated by this Agreement.
(p) Disclosure. To the best of the Company's knowledge, neither this
Agreement or the Schedules hereto nor any other documents, certificates or
instruments furnished to the Purchaser by or on behalf of the Company in
connection with the transactions contemplated by this Agreement contain any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements made herein or therein, in the light of the
circumstances under which they were made herein or therein, not misleading.
(q) Operation of Business. Except as set forth in Schedule 3.1(q), to the
best knowledge of the Company, the Company owns or possesses valid rights to use
all patents, trademarks, service marks, trade names, copyrights, licenses and
authorizations and all rights with respect to the foregoing, which are necessary
for the conduct of its business as now conducted, without, to the knowledge of
the Company, any conflict with the rights of others.
(r) Regulatory Compliance. Except as disclosed in the SEC Documents or on
Schedule 3.1(r) hereto, the Company has obtained all material approvals,
authorizations, certificates, consents, licenses, orders and permits or other
similar authorizations of all governmental authorities, or from any other
person, the failure of which to obtain could have a Material Adverse Effect on
the Company's business as currently conducted.
(s) Books and Records. The records and documents of the Company accurately
reflect in all material respects the information relating to the business of the
Company, the location and collection of its assets, and the nature of all
transactions giving rise to the obligations or accounts receivable of the
Company.
(t) Material Agreements. Except as set forth in the SEC Documents, or on
Schedule 3.1(t) hereto, neither the Company nor any subsidiary is a party to any
written or oral
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contract, instrument, agreement, commitment, obligation, plan or arrangement, a
copy of which would be required to be filed with the Commission as an exhibit to
a registration statement on Form S-1 or other applicable form (collectively,
"Material Agreements") if the Company were registering securities under the
Securities Act of 1933, as amended (the "Securities Act"). The Company has in
all material respects performed all the material obligations required to be
performed by it to date under the foregoing agreements, has received no notice
of default and, to the best of the Company's knowledge, is not presently in
default under any Material Agreement now in effect, the result of which could
cause a Material Adverse Effect. No written or oral contract, instruments,
agreement, commitment, obligation, plan or arrangement of the Company or of any
subsidiary limits or shall limit the payment of dividends on the Company's
Common Stock.
(u) Transactions with Affiliates. Except as set forth in the SEC Documents
or on Schedule 3.1(u) hereto, there are no loans, leases, agreements, contracts,
royalty agreements, management contracts or arrangements or other continuing
transactions exceeding $100,000 between (a) the Company, or any of its customers
or suppliers on the one hand, and (b) on the other hand, any officer, employee,
or director of the Company, or any person owning any capital stock of the
Company or any member of the immediate family of such officer, employee,
director or stockholder or any corporation or other entity controlled by such
officer, employee, director or stockholder, or a member of the immediate family
of such officer, employee, director or stockholder.
(v) Securities Act of 1933. The Company has complied and will comply with
all applicable United States Federal and state securities laws in connection
with the offer, issuance and sale of the Shares hereunder. Neither the Company
nor anyone acting on its behalf, directly or indirectly, has or will sell, offer
to sell or solicit offers to buy the Shares or similar securities to, or solicit
offers with respect thereto from, or enter into any preliminary conversations or
negotiations relating thereto with, any person (other than the Purchaser), so as
to bring the issuance and sale of the Shares and/or the Warrants under the
registration provisions of the Securities Act and applicable state securities
laws. Neither the Company nor any of its affiliates, nor any person acting on
its or their behalf, has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D under the Securities Act) in
connection with the offer or sale of the Shares.
(w) Governmental Approvals. Except as set forth in the SEC Documents or on
Schedule 3.1(w) hereto, and except for the filing of any notice or application
prior or subsequent to the Closing that may be required under applicable Federal
or state securities laws or pursuant to any requirement of the Principal Market
(which if required, shall be filed on a timely basis), including the filing of a
registration statement or statements pursuant to this Agreement, no
authorization, consent, approval, license, filing or registration with any court
or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, is or will be necessary for, or in
connection with, the execution or delivery of the Shares, or for the performance
by the Company of its obligations under this Agreement.
(x) Employees. The Company does not have any collective bargaining
arrangements covering any of its employees, except as set forth in the SEC
Documents or on Schedule 3(x) hereto. Except as set forth in the SEC Documents
or on Schedule 3(x) hereto, to
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the best of its knowledge, the Company is not in material breach of any
employment contract, agreement regarding proprietary information, noncompetition
agreement, nonsolicitation agreement, confidentiality agreement, or any other
similar contract or restrictive covenant, relating to the right of any officer,
employee or consultant to be employed or engaged by the Company. No officer,
consultant or key employee of the Company whose termination, either individually
or in the aggregate, could have a Material Adverse Effect, has terminated or, to
the knowledge of the Company, has any present intention of terminating his or
her employment or engagement with the Company.
(y) Absence of Certain Developments. Except as provided in SEC Documents or
in Schedule 3.1(y) hereto, since March 31, 2000 the Company has not:
(i) issued any stock, bonds or other corporate securities or any
rights, options or warrants with respect thereto;
(ii) borrowed any amount or incurred or become subject to any
liabilities (absolute or contingent) except current liabilities incurred in the
ordinary course of business which are comparable in nature and amount to the
current liabilities incurred in the ordinary course of business during the
comparable portion of its prior fiscal year, as adjusted to reflect the current
nature and volume of the Company's business;
(iii) discharged or satisfied any lien or encumbrance or paid any
obligation or liability (absolute or contingent), other than current liabilities
paid in the ordinary course of business;
(iv) declared or made any payment or distribution of cash or other
property to stockholders with respect to its stock, or purchased or redeemed, or
made any agreements so to purchase or redeem, any shares of its capital stock;
(v) sold, assigned or transferred any other tangible assets, or
canceled any debts or claims, except in the ordinary course of business;
(vi) sold, assigned or transferred any patent rights, trademarks,
trade names, copyrights, trade secrets or other intangible assets or
intellectual property rights, or disclosed any proprietary confidential
information to any person except to customers in the ordinary course of business
or to the Purchaser or its representatives;
(vii) suffered any substantial losses or waived any rights of material
value, whether or not in the ordinary course of business, or suffered the loss
of any material amount of prospective business;
(viii) made any changes in employee compensation except in the
ordinary course of business and consistent with past practices;
(ix) made capital expenditures or commitments therefor that aggregate
in excess of $ 2,000,000;
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(x) entered into any other material transaction, whether or not in the
ordinary course of business;
(xi) suffered any material damage, destruction or casualty loss,
whether or not covered by insurance;
(xii) experienced any material problems with labor or management in
connection with the terms and conditions of their employment; or
(xiii) effected any two or more events of the foregoing kind which in
the aggregate would be material to the Company.
(z) Use of Proceeds. The proceeds from the sale of the Shares will be used
by the Company for general corporate purposes.
(aa) Acknowledgment Regarding Purchaser's Purchase of Shares. Company
acknowledges and agrees that Purchaser is acting solely in the capacity of arm's
length purchaser with respect to this Agreement and the transactions
contemplated hereunder. The Company further acknowledges that the Purchaser is
not acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to this Agreement and the transactions contemplated
hereunder and any advice given by the Purchaser or any of its representatives or
agents in connection with this Agreement and the transactions contemplated
hereunder is merely incidental to the Purchaser's purchase of the Shares. The
Company further represents to the Purchaser that the Company's decision to enter
into this Agreement has been based solely on the independent evaluation by the
Company and its own representatives and counsel.
Section 3.2 Representations and Warranties of the Purchaser. The Purchaser
hereby makes the following representations and warranties to the Company:
(a) Organization and Standing of the Purchaser. The Purchaser is a
corporation duly incorporated, validly existing and in good standing under the
laws of the British Virgin Islands.
(b) Authorization and Power. The Purchaser has the requisite power and
authority to enter into and perform this Agreement and to purchase the Shares
being sold to it hereunder. The execution, delivery and performance of this
Agreement by Purchaser and the consummation by it of the transactions
contemplated hereby, including without limitation, consenting to being named as
an underwriter in the Registration Statement, have been duly authorized by all
necessary corporate action.
(c) No Conflicts. The execution, delivery and performance of this Agreement
and the consummation by the Purchaser of the transactions contemplated hereby or
relating hereto do not and will not (i) result in a violation of such
Purchaser's charter documents or bylaws or (ii) conflict with, or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of any agreement, indenture or instrument to which
the Purchaser is a party, or result in a violation of any law, rule, or
regulation, or any order, judgment or decree of any court or governmental agency
applicable to the Purchaser or its properties (except for such
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conflicts, defaults and violations as would not, individually or in the
aggregate, have a Material Adverse Effect on Purchaser). The Purchaser is not
required to obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it to execute,
deliver or perform any of its obligations under this Agreement or to purchase
the Shares in accordance with the terms hereof, including, without limitation,
registering or qualifying as a broker-dealer in any jurisdiction, provided that
for purposes of the representation made in this sentence, the Purchaser is
assuming and relying upon the accuracy of the relevant representations and
agreements of the Company herein.
(d) Financial Risks. The Purchaser acknowledges that it is able to bear the
financial risks associated with an investment in the Shares and that it has been
given full access to such records of the Company and the subsidiaries and to the
officers of the Company and the subsidiaries as it has deemed necessary or
appropriate to conduct its due diligence investigation. The Purchaser is capable
of evaluating the risks and merits of an investment in the Shares by virtue of
its experience as an investor and its knowledge, experience, and sophistication
in financial and business matters and the Purchaser is capable of bearing the
entire loss of its investment in the Shares.
(e) Accredited Investor. The Purchaser is an "accredited investor" as
defined in Regulation D promulgated under the Securities Act.
(f) General. The Purchaser understands that the Company is relying upon the
truth and accuracy of the representations, warranties, agreements,
acknowledgments and understandings of the Purchaser set forth herein in order to
determine the suitability of the Purchaser to acquire the Shares.
(g) Disclosure. To the best of Purchaser's knowledge, neither this
Agreement nor any other documents, certificates or instruments furnished to the
Company by or on behalf of the Purchaser in connection with the transactions
contemplated by this Agreement contain any untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements made
herein or therein, in light of the circumstances under which they were made
herein or therein, not misleading.
ARTICLE IV
Covenants
Section 4.1 Covenants of the Company. The Company covenants with the
Purchaser as follows:
(a) Securities Compliance. The Company shall take all necessary action and
proceedings as may be required and permitted by applicable law, rule and
regulation, for the legal and valid issuance of the Shares and the Warrants to
the Purchaser or subsequent holders.
(b) Registration and Listing. The Company will cause its Common Stock to
continue to be registered under Sections 12(b) or 12(g) of the Exchange Act,
will comply in all respects with its reporting and filing obligations under the
Exchange Act, will comply with all requirements related to any registration
statement filed pursuant to this Agreement, and will not
11
take any action or file any document (whether or not permitted by the Securities
Act or the rules promulgated thereunder) to terminate or suspend such
registration or to terminate or suspend its reporting and filing obligations
under the Exchange Act or Securities Act, except as permitted herein. The
Company will take all action necessary to continue the listing or trading of its
Common Stock on the Principal Market and will comply in all respects with the
Company's reporting, filing and other obligations under the bylaws or rules of
the NASD and the Principal Market.
(c) Registration Statement. The Company shall cause to be filed the
Registration Statement, which Registration Statement shall provide for the
resale by the Purchaser to the public in the United States in accordance with
this Agreement. The Company shall use commercially reasonable efforts to cause
such Registration Statement to be declared effective by the Commission as
expeditiously as practicable. Before the Purchaser shall be obligated to accept
a Draw Down request from the Company, the Company shall have caused a sufficient
number of shares of Common Stock to be registered to cover the Shares to be
issued in connection with such Draw Down.
(d) Escrow Arrangement. The Company and the Purchaser have previously
entered into an escrow arrangement with Xxxxxxx Xxxxxx & Green, P.C. (the
"Escrow Agent") attached as Exhibit B hereto respecting payment against delivery
of the Shares and the Warrants.
(e) Compliance with Laws. The Company shall comply, and cause each
subsidiary to comply, with all applicable laws, rules, regulations and orders,
noncompliance with which could have a Material Adverse Effect.
(f) Keeping of Records and Books of Account. The Company shall keep and
cause each subsidiary to keep adequate records and books of account, in which
complete entries will be made in accordance with United States GAAP consistently
applied, reflecting all financial transactions of the Company and its
subsidiaries, and in which, for each fiscal year, all proper reserves for
depreciation, depletion, obsolescence, amortization, taxes, bad debts and other
purposes in connection with its business shall be made.
(g) Amendments. The Company shall not amend or waive any provision of the
Articles of Incorporation or Bylaws of the Company subsequent to the Closing in
any way that would adversely affect the dividend rights or voting rights of the
holders of the Shares.
(h) Other Agreements. The Company shall not enter into any agreement the
terms of which such agreement would restrict or impair the right of the Company
to perform under this Agreement or the Articles of Incorporation of the Company.
(i) Notice of Certain Events Affecting Registration; Suspension of Right to
Request a Draw Down. The Company will immediately notify the Purchaser upon the
occurrence of any of the following events in respect of the Registration
Statement or related prospectus in respect of the Shares: (i) receipt of any
request for additional information from the Commission or any other Federal or
state governmental authority during the period of effectiveness of the
Registration Statement the response to which would require any amendments or
supplements to the Registration Statement or related prospectus; (ii) the
issuance by the Commission or any other Federal or state governmental authority
of any stop order suspending
12
the effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose; (iii) receipt of any notification with respect to
the suspension of the qualification or exemption from qualification of any of
the Shares for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; (iv) the happening of any event that makes any
statement made in the Registration Statement or related prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue
in any material respect or that requires the making of any changes in the
Registration Statement, related prospectus or documents so that, in the case of
the Registration Statement, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and that in the case
of the related prospectus, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and (v) the Company's reasonable
determination that a post-effective amendment to the Registration Statement
would be appropriate; and the Company will promptly make available to the
Purchaser any such supplement or amendment to the related prospectus. The
Company shall not deliver to the Purchaser any Draw Down Notice during the
continuation of any of the foregoing events.
(j) Consolidation; Merger. The Company shall not, at any time after the
date hereof, effect any merger or consolidation of the Company with or into, or
a transfer of all or substantially all of the assets of the Company to, another
entity (a "Consolidation Event") unless the resulting successor or acquiring
entity (if not the Company) assumes by written instrument or by operation of law
the obligation to deliver to the Purchaser such shares of stock and/or
securities as the Purchaser is entitled to receive pursuant to this Agreement.
(k) Limitation on Future Financing. The Company agrees that, except as set
forth below, it will not enter into any sale of its securities for cash at a
discount to the current market price until the earlier of (i) one year from the
effective date of the Registration Statement or (ii) sixty (60) days after the
entire $24,000,000 of Shares has been purchased by Purchaser. The foregoing
shall not prevent or limit the Company from engaging in any sale of securities
(i) in a registered public offering by the Company which is underwritten by one
or more established investment banks, (ii) in one or more private placements
where the purchasers do not have registration rights, (iii) pursuant to any
presently existing or future employee benefit plan which plan has been or is
approved by the Company's stockholders, (iv) pursuant to any compensatory plan
for a full-time employee or key consultant, (v) in connection with a strategic
partnership or other business transaction, the principal purpose of which is not
simply to raise money, or (vi) to which Purchaser gives its written approval.
The purchaser shall have a right of first refusal, exercisable within five
Trading Days of notice from the Company of the material terms of such other
transaction, to purchase all or any part elected by the Purchaser in any
transaction under (ii) or (vi) above.
Section 4.2 Covenant of Purchaser. The Purchaser covenants with the Company
that the Purchaser's, (including its affiliates), and any entity managed by the
Purchaser trading and distribution activities with respect to the Shares will be
in compliance with all applicable state and Federal securities laws, rules and
regulations and the rules and regulations of the Principal Market. The
Purchaser, its affiliates, and any entity managed by the Purchaser shall not
engage
13
in any short sales of the Company's Common Stock (as defined in SEC Rule 3b-3)
during the term of this Agreement.
ARTICLE V
Conditions to Closing and Draw Downs
Section 5.1 Conditions Precedent to the Obligation of the Company to Sell
the Shares. The obligation hereunder of the Company to issue and sell the Shares
to the Purchaser is subject to the satisfaction or waiver, at or before the
Closing, of each of the conditions set forth below. These conditions are for the
Company's sole benefit and may be waived by the Company at any time in its sole
discretion.
(a) Accuracy of the Purchaser's Representations and Warranties. The
representations and warranties of the Purchaser shall be true and correct in all
material respects as of the date when made and as of the Closing and as of each
Draw Down Exercise Date as though made at that time, except for representations
and warranties that speak as of a particular date.
(b) Performance by the Purchaser. The Purchaser shall have performed,
satisfied and complied in all material respects with all material covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Purchaser at or prior to the Closing and as of each Draw
Down Exercise Date.
(c) No Injunction. No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or governmental authority of competent jurisdiction which prohibits
the consummation of any of the transactions contemplated by this Agreement.
Section 5.2 Conditions Precedent to the Obligation of the Purchaser to
Close. The obligation hereunder of the Purchaser to enter this Agreement is
subject to the satisfaction or waiver, at or before the Closing, of each of the
conditions set forth below. These conditions are for the Purchaser's sole
benefit and may be waived by the Purchaser at any time in its sole discretion.
(a) Accuracy of the Company's Representations and Warranties. Each of the
representations and warranties of the Company shall be true and correct in all
material respects as of the date when made and as of the Closing as though made
at that time (except for representations and warranties that speak as of a
particular date).
(b) Performance by the Company. The Company shall have performed, satisfied
and complied in all material respects with all covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to the Closing.
(c) No Injunction. No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or
14
governmental authority of competent jurisdiction which prohibits the
consummation of any of the transactions contemplated by this Agreement.
(d) No Proceedings or Litigation. No action, suit or proceeding before any
arbitrator or any governmental authority shall have been commenced, and no
investigation by any governmental authority shall have been threatened, against
the Purchaser or the Company or any subsidiary, or any of the officers,
directors or affiliates of the Company or any subsidiary seeking to restrain,
prevent or change the transactions contemplated by this Agreement, or seeking
damages in connection with such transactions.
(e) Opinions of Counsel, Etc. At the Closing, the Purchaser shall have
received opinions of counsel to the Company, dated the date of Closing,
substantially in the form of Exhibit C hereto, and such other certificates and
documents as the Purchaser or its counsel shall reasonably require incident to
the Closing.
(f) Warrants. In lieu of any minimum drawdown commitment by the Company,
the Purchaser shall receive warrants to purchase shares of Common Stock (the
"Warrants") at the Closing. The Warrants shall be substantially in the form of
Exhibit D hereto and shall represent warrant coverage of 5% of the total
commitment.
Section 5.3 Conditions Precedent to the Obligation of the Purchaser to
Accept a Draw Down and Purchase the Shares. The obligation hereunder of the
Purchaser to accept a Draw Down request and to acquire and pay for the Shares is
subject to the satisfaction or waiver, at or before each Draw Down Exercise
Date, of each of the conditions set forth below. The conditions are for the
Purchaser's sole benefit and may be waived by the Purchaser at any time in its
sole discretion.
(a) Satisfaction of Conditions to Closing. The Company shall have
satisfied, or the Purchaser shall have waived, the conditions set forth in
Section 5.2(b), (c) and (d) hereof and there shall have been no Material Adverse
Effect which has not been publicly reported since the date of the most recent
prior Draw Down.
(b) Effective Registration Statement. The Registration Statement
registering a sufficient number of the Shares to cover the Shares to be issued
in connection with such Draw Down shall have been declared effective by the
Commission and shall remain effective on each Draw Down Exercise Date.
(c) No Suspension. Trading in the Company's Common Stock is not suspended
by the Commission or the Principal Market (except for any suspension of trading
of limited duration, which suspension shall be terminated prior to each Draw
Down request), and, at any time prior to such request, trading in securities
generally as reported by Nasdaq shall not have been suspended or limited, or
minimum prices shall not have been established on securities whose trades are
reported by Nasdaq.
(d) Opinion of Counsel. The Purchaser shall have received a "down-to-date"
letter from the Company's counsel, confirming that there is no material change
from the counsel's previously delivered opinion, or else specifying with
particularity the reason for any change.
15
(e) Future Financing. The Company shall have not completed any financing
prohibited by Section 4.11 unless, prior to the Company delivering a Draw Down
Notice after any such financing, the Company pays the Purchaser the sum of
$100,000.
16
ARTICLE VI
Draw Down Terms
Section 6.1 Draw Down Terms. Subject to the satisfaction of the conditions
set forth in this Agreement, the parties agree as follows:
(a) The Company, may, in its sole discretion, issue and exercise a draw
down (a "Draw Down") during each Draw Down Pricing Period, which Draw Down the
Purchaser will be obligated to accept.
(b) Only one Draw Down shall be allowed in each Draw Down Pricing Period.
The price per share paid by the Purchaser shall be based on the Average Daily
Price on each separate Trading Day during the Draw Down Pricing Period. The
number of shares of Common Stock purchased by the Purchaser with respect to each
Draw Down shall be determined on a daily basis during each Draw Down Pricing
Period and settled at the election of the Purchaser on a weekly basis or on the
Draw Down Exercise Date, which shall be the first Trading Day following the end
of the Draw Down Pricing Period. If the Average Daily Price is less than the
Threshold Price on any Trading Day within the Draw Down Pricing Period, the
Company shall not sell the Shares otherwise to be sold for such day.
(c) There shall be a maximum of twelve (12) Draw Downs during the term of
this Agreement.
(d) The Company shall have the right to issue and exercise a Draw Down of
up to $2,000,000 of the Company's Common Stock per Draw Down, subject to the
limitations set forth immediately below. The minimum Draw Down shall be $250,000
unless otherwise agreed by Purchaser.
(e) The maximum dollar amount of each Draw Down during any Draw Down
Pricing Period shall be limited pursuant to the following formula: Average Stock
Price: Average of the Average Daily Prices for the 45 Trading Days prior to the
Draw Down Notice date. Average Trading Volume: Average daily trading volume for
the 45 Trading Days prior to the Draw Down Notice date. Maximum dollar amount of
each Draw Down: 20% of (Average Stock Price x (Average Trading Volume x 22)).
The number of Shares of Common Stock to be issued in connection with each Draw
Down shall be equal to the sum of the quotients (for each trading day within the
Draw Down Pricing Period) of (x) 1/22nd of the Draw Down amount and (y) 88% of
the Average Daily Price of the Common Stock on each Trading Day within the Draw
Down Pricing Period. If the Average Daily Price on a given Trading Day is less
than the Threshold Price, if any, then the Purchaser's Draw Down payment will be
reduced by 1/22nd and that day shall be withdrawn from the Draw Down Pricing
Period.
(f) The Company must inform the Purchaser via facsimile transmission as to
the amount of the Draw Down the Company wishes to exercise before the first day
of the Draw Down Pricing Period (the "Draw Down Notice"). The Company may set
the Threshold Price, if
17
any, prior to each Draw Down request. At no time shall the Purchaser be required
to purchase more than the scheduled Draw Down amount for a given Draw Down
Pricing Period so that if the Company chooses not to exercise the maximum
permitted Draw Down in a given Draw Down Pricing Period the Purchaser is not
obligated to purchase more than the scheduled maximum amount in a subsequent
Draw Down Pricing Period; provided, however, that the Purchaser's maximum
commitment to purchase up to $24,000,000 of Shares shall not be affected by the
Company's election, from Drawn Down to Draw Down, to Draw Down less than the
maximum $2,000,000 for any one Draw Down; provided further, that the Company's
right to Draw Down the entire $24,000,000 commitment shall never entitle the
Company to Draw Down more than $2,000,000 during any Draw Down Pricing Period
nor to extend the termination date of this Agreement.
(g) On or before three Trading Days after each Settlement date, the Shares
purchased by the Purchaser shall be delivered to The Depository Trust Company
("DTC") on the Purchaser's behalf. The Shares shall be credited by the Company
to the DTC account designated by the Purchaser upon receipt by the Escrow Agent
of payment for the Draw Down into the Escrow Agent's trust account as provided
in the Escrow Agreement. The delivery of the Shares into the Purchaser's DTC
account in exchange for payment therefor shall be referred to herein as
"Settlement".
ARTICLE VII
Termination
Section 7.1 Termination by Mutual Consent. The term of this Agreement shall
be twelve (12) months from the initial Draw Down. This Agreement may be
terminated at any time by mutual consent of the parties.
Section 7.2 Other Termination. (a) The Purchaser may terminate this
Agreement upon one (1) Trading Day's notice if (i) an event resulting in a
Material Adverse Effect has occurred, (ii) the Common Stock is de-listed from
the Principal Market unless such de-listing is in connection with the listing of
the Common Stock on the New York or American Stock Exchanges or the Nasdaq Stock
Market, and (iii) the Company files for protection from creditors under any
applicable law.
(b) The Company may terminate this Agreement upon one (1) Trading Day's
notice if the Purchaser shall fail to fund any properly noticed Draw Down within
three (3) Trading Days of the date payment for such Draw Down is due.
Section 7.3 Effect of Termination. In the event of termination by the
company or the Purchaser, written notice thereof shall forthwith be given to the
other party and the transactions contemplated by this Agreement shall be
terminated without further action by either party. If this Agreement is
terminated as provided in Section 7.1 or 7.2 herein, this Agreement shall become
void and of no further force and effect, except for Sections 9.1 and 9.2, and
Article VIII herein. Nothing in this Section 7.3 shall be deemed to release the
Company or the Purchaser from any liability for any breach under this Agreement,
or to impair the rights to the Company
18
and the Purchaser to compel specific performance by the other party of its
obligations under this Agreement.
ARTICLE VIII
Indemnification
Section 8.1 Survival. The representations, warranties and covenants made by
each of the Company and the Purchaser in this Agreement, the schedules and
exhibits hereto and in each instrument, agreement and certificate entered into
and delivered by them pursuant to this Agreement, shall survive the Closing and
the consummation of the transactions contemplated hereby until the expiration of
six months from the date of the Draw Down to which such claim applies. In the
event of a breach or violation of any of such representations, warranties or
covenants, the party to whom such representations, warranties or covenants have
been made shall have all rights and remedies for such breach or violation
available to it under the provisions of this Agreement, irrespective of any
investigation made by or on behalf of such party on or prior to the Closing
Date.
Section 8.2 General Indemnity. The Company agrees to indemnify and hold
harmless the Purchaser (and its directors, officers, affiliates, agents,
successors and assigns) from and against any and all losses, liabilities,
deficiencies, costs, damages and expenses (including, without limitation,
reasonable attorney's fees, charges and disbursements) incurred by the Purchaser
to any third party as a result of any inaccuracy in or breach of the
representations, warranties or covenants made by the Company herein. The
Purchaser agrees to indemnify and hold harmless the Company and its directors,
officers, affiliates, agents, successors and assigns from and against any and
all losses, liabilities, deficiencies, costs, damages and expenses (including,
without limitation, reasonable attorneys fees, charges and disbursements)
incurred by the Company to any third party as result of any inaccuracy in or
breach of the representations, warranties or covenants made by the Purchaser
herein. The indemnification against such third-party claims shall survive any
expiration of this Agreement.
Section 8.3 Indemnification Procedure. Any party entitled to
indemnification under this Article VIII (an "indemnified party") will give
written notice to the indemnifying party of any matters giving rise to a claim
for indemnification; provided, that the failure of any party entitled to
indemnification hereunder to give notice as provided herein shall not relieve
the indemnifying party of its obligations under this Article VIII except to the
extent that the indemnifying party is actually prejudiced by such failure to
give notice. In case any action, proceeding or claim is brought against an
indemnified party in respect of which indemnification is sought hereunder, the
indemnifying party shall be entitled to participate in and, unless in the
reasonable judgment of counsel to the indemnified party a conflict of interest
between it and the indemnifying party may exist with respect of such action,
proceeding or claim, to assume the defense thereof with counsel reasonably
satisfactory to the indemnified party. In the event that the indemnifying party
advises an indemnified party that it will contest such a claim for
indemnification hereunder, or fails, within thirty (30) days of receipt of any
indemnification notice to notify, in writing, such person of its election to
defend, settle or compromise, at its sole cost and expense, any action,
proceeding or claim (or discontinues its defense at any time after it
19
commences such defense), then the indemnified party may, at its option, defend,
settle or otherwise compromise or pay such action or claim. In any event, unless
and until the indemnifying party elects in writing to assume and does so assume
the defense of any such claim, proceeding or action, the indemnified party's
costs and expenses arising out of the defense, settlement or compromise of any
such action, claim or proceeding shall be losses subject to indemnification
hereunder. The indemnified party shall cooperate fully with the indemnifying
party in connection with any settlement negotiations or defense of any such
action or claim by the indemnifying party and shall furnish to the indemnifying
party all information reasonably available to the indemnified party which
relates to such action or claim. The indemnifying party shall keep the
indemnified party fully apprised at all times as to the status of the defense or
any settlement negotiations with respect thereto. If the indemnifying party
elects to defend any such action or claim, then the indemnified party shall be
entitled to participate in such defense with counsel of its choice at its sole
cost and expense. The indemnifying party shall not be liable for any settlement
of any action, claim or proceeding effected without its prior written consent.
Notwithstanding anything in this Article VIII to the contrary, the indemnifying
party shall not, without the indemnified party's prior written consent, settle
or compromise any claim or consent to entry of any judgment in respect thereof
which imposes any future obligation on the indemnified party or which does not
include, as an unconditional term thereof, the giving by the claimant or the
plaintiff to the indemnified party of a release from all liability in respect of
such claim. The indemnification required by this Article VIII shall be made by
periodic payments of the amount thereof during the course of investigation or
defense, within ten business days of when bills are received or expense, loss,
damage or liability is incurred, so long as the indemnified party irrevocably
agrees to refund such moneys if it is ultimately determined by a court of
competent jurisdiction that such party was not entitled to indemnification. The
indemnity agreements contained herein shall be in addition to (a) any cause of
action or similar rights of the indemnified party against the indemnifying party
or others, and (b) any liabilities the indemnifying party may be subject to.
ARTICLE IX
Miscellaneous
Section 9.1 Fees and Expenses. The Company shall pay all of its own fees
and expenses related to the transactions contemplated by this Agreement;
provided, that the Company shall also pay, at the Closing, attorneys' and escrow
fees and expenses (inclusive of disbursements and out-of-pocket expenses)
incurred by the Purchaser of $35,000 in connection with the preparation,
negotiation, execution and delivery of this Agreement and the transactions
contemplated hereunder, plus $1,500 in connection with each Draw Down. In
addition, the Company shall pay all reasonable fees and expenses incurred by the
Purchaser in connection with any amendments, modifications or waivers of this
Agreement or the Registration Rights Agreement or incurred in connection with
the enforcement of this Agreement and the Registration Rights Agreement,
including, without limitation, all reasonable attorneys fees and expenses. The
Company shall pay all stamp or other similar taxes and duties levied in
connection with issuance of the Shares pursuant hereto.
20
Section 9.2 Specific Enforcement, Consent to Jurisdiction.
(a) The Company and the Purchaser acknowledge and agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent or cure breaches of the provisions of this
Agreement and to enforce specifically the terms and provisions hereof or
thereof, this being in addition to any other remedy to which any of them may be
entitled by law or equity.
(b) Each of the Company and the Purchaser (i) hereby irrevocably submits to
the jurisdiction of the United States District Court and other courts of the
United States sitting in the Southern District of New York solely for the
purposes of any suit, action or proceeding arising out of or relating to this
Agreement and (ii) hereby waives, and agrees not to assert in any such suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of such court, that the suit, action or proceeding is brought in an
inconvenient forum or that the venue of the suit, action or proceeding is
improper. Each of the Company and the Purchaser consents to process being served
in any such suit, action or proceeding by mailing a copy thereof by certified
mail, return receipt requested, to such party at the address in effect for
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing in this
Section shall affect or limit any right to serve process in any other manner
permitted by law.
Section 9.3 Entire Agreement; Amendment. This Agreement, together with the
Registration Rights Agreement, the Warrants and the Escrow Agreement contains
the entire understanding of the parties with respect to the matters covered
hereby and, except as specifically set forth herein, neither the Company nor the
Purchaser makes any representations, warranty, covenant or undertaking with
respect to such matters. No provision of this Agreement may be waived or amended
other than by a written instrument signed by the party against whom enforcement
of any such amendment or waiver is sought.
Section 9.4 Notices. Any notice, demand, request, waiver or other
communication required or permitted to be given hereunder shall be in writing
and shall be effective (a) upon hand delivery or facsimile at the address or
number designated below (if delivered on a business day during normal business
hours where such notice is to be received), or the first business day following
such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (b) on the second business day
following the date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing, whichever
shall first occur. The addresses for such communications shall be:
If to the Company: Xxxxxxxxxx.xxx, Inc.
00 Xxxxxxxx, Xxxxx X
Xxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxx XxXxxxx
21
with a copy to: Xxxxxx & Whitney LLP
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxxx Xxx, Esq.
If to Purchaser:
C/o Dr. Xx. Xxxxxxxx & Partner
Xxxxxxxxxxxx 00
XX-0000 Xxxxx, Xxxxxxxxxxxxx
Telephone Number: 000-00-00-0000-000
Fax: 000-00-00-0000-000
Attention: Xxxx Xxxxxxx
with a copy to: Xxxxxxx Xxxxxx & Green, P.C.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone Number: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxxx Xxxxxxx
Any party hereto may from time to time change its address for notices by giving
written notice of such changed address to the other party hereto in accordance
herewith.
Section 9.5 Waivers. No waiver by either party of any default with respect
to any provision, condition or requirement of this Agreement shall be deemed to
be a continuing waiver in the future or a waiver of any other provisions,
condition or requirement hereof, nor shall any delay or omission of any party to
exercise any right hereunder in any manner impair the exercise of any such right
accruing to it thereafter.
Section 9.6 Headings. The article, section and subsection headings in this
Agreement are for convenience only and shall not constitute a part of this
Agreement for any other purpose and shall not be deemed to limit or affect any
of the provisions hereof.
Section 9.7 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties and their successors and assigns. The
rights and obligations of the parties hereto may not be assigned to any other
person without the prior written consent of the other party, which consent shall
not be unreasonably withheld or delayed. The parties hereto may not amend this
Agreement or any rights or obligations hereunder without the prior written
consent of the Company and each Purchaser to be affected by the amendment. After
Closing, the assignment by a party to this Agreement of any rights hereunder
shall not affect the obligations of such party under this Agreement.
Section 9.8 No Third Party Beneficiaries. This Agreement is intended for
the benefit of the parties hereto and their respective permitted successors and
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
22
Section 9.9 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York, without
giving effect to the choice of law provisions.
Section 9.10 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and shall become effective when counterparts have been signed by each
party and delivered to the other parties hereto, it being understood that all
parties need not sign the same counterpart. Execution may be made by delivery by
facsimile.
Section 9.11 Publicity. Prior to the Closing, neither the Company nor the
Purchaser shall issue any press release or otherwise make any public statement
or announcement with respect to this Agreement or the transactions contemplated
hereby or the existence of this Agreement except as required by law or
regulation. After the Closing, the Company may issue a press release or
otherwise make a public statement or announcement with respect to this Agreement
or the transactions contemplated hereby or the existence of this Agreement;
provided, that prior to issuing any such press release, making any such public
statement or announcement, unless otherwise required by law or regulation, the
Company obtains the prior consent of the Purchaser, which consent shall not be
unreasonably withheld or delayed.
Section 9.12 Severability. The provisions of this Agreement are severable
and, in the event that any court of competent jurisdiction shall determine that
any one or more of the provisions or part of the provisions contained in this
Agreement shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision or part of a provision of this Agreement and this Agreement
shall be reformed and construed as if such invalid or illegal or unenforceable
provision, or part of such provision, had never been contained herein, so that
such provisions would be valid, legal and enforceable to the maximum extent
possible.
Section 9.13 Further Assurances. From and after the date of this Agreement,
upon the request of the Purchaser or the Company, each of the Company and the
Purchaser shall execute and deliver such instruments, documents and other
writings as may be reasonably necessary or desirable to confirm and carry out
and to effectuate fully the intent and purposes of this Agreement.
Section 9.14 Effectiveness of Agreement. This Agreement shall become
effective only upon satisfaction of the conditions precedent to the Initial
Closing set forth in Article I of the Escrow Agreement.
23
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorize officer as of this 6 day of July,
2000.
Xxxxxxxxxx.xxx, Inc.
By: /s/ Xxxx XxXxxxx
---------------------------------------
Name: Xxxx XxXxxxx
Title: CEO
Gestrow Investments Limited
By:
---------------------------------------
Xxxx Xxxxxxx, Authorized Signatory
24
This Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one and the same instrument and shall become
effective when counterparts have been signed by each party and delivered to the
other parties hereto, it being understood that all parties need not sign the
same counterpart. Execution may be made by delivery by facsimile.
If the foregoing correctly sets forth our understanding and agreement,
please so indicate by signing where indicated below.
Xxxxxxxxxx.xxx, Inc.
By:
---------------------------------------
Xxxx XxXxxxx, CEO
ACCEPTED AND AGREED TO:
GESTROW INVESTMENTS LIMITED
By: /s/ illegible
---------------------------------------
Authorized Signatory
