AGREEMENT TO ISSUE WARRANTS
THIS AGREEMENT TO ISSUE WARRANTS (this "Agreement") is entered into as of
this 9th day of January, 1997, by and among XXXXXX XXXXX INCORPORATED, a Nevada
corporation (the "Company"), and XXXXX XXXXXXXXX ("Huberfeld") and XXXXX XXXXXX
("Xxxxxx"), based on the following premises.
Premises
X. Xxxxxxxxx and Xxxxxx each hold warrants (the "Outstanding Warrants")
to acquire shares of common stock of the Company, par value $0.001 per share
(the "Common Stock").
X. Xxxxxxxxx and Xxxxxx have agreed to the early exercise of the
Outstanding Warrants currently held by them and the modification of the
Company's registration obligations with respect to the shares of Common Stock
underlying the Outstanding Warrants in consideration of the Company's agreement
to reduce the exercise price of the Outstanding Warrants and to grant them
additional warrants to acquire shares of Common Stock on the terms and
conditions set forth in this Agreement.
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
Warrants
1.1 Outstanding Warrants. Huberfeld and Xxxxxx each hold Outstanding
Warrants to acquire 300,208 shares, or an aggregate of 600,416 shares, of Common
Stock. The Outstanding Warrants currently have an exercise price of $6.25 per
share of Common Stock. The parties agree to reduce the exercise price of the
Outstanding Warrants to $5.30 per share; provided that, the Outstanding Warrants
are exercised on the timetable and other terms and conditions set forth in this
Agreement.
1.2 Exercise of Outstanding Warrants. Huberfeld and Xxxxxx each agree to
deliver to the Company $712,002 (an aggregate of $1,424,004) on or before
January 31, 1997, as payment of the exercise price of a portion of the
Outstanding Warrants. Huberfeld and Xxxxxx each agree to deliver an additional
$879,100.40 (an aggregate of $1,758,200.80) to the Company on or before April
16, 1997, as payment of the exercise price for their remaining Outstanding
Warrants. On receipt of the first payment on or before January 31, 1997, the
Company agrees to immediately provide irrevocable written instructions to its
transfer agent to issue certificates representing 227,840 shares of Common
Stock, 113,920 shares to be registered in the name of Xxxxx Xxxxxxxxx and
113,920 shares to be registered in the name of Xxxxx Xxxxxx, and to deliver such
certificates to Huberfeld and Xxxxxx. An additional 40,840 shares (20,420
shares each) shall be held in reserve and issued on the timely payment of the
second amount on or before April 16, 1997. On receipt of the second payment on
or before April 16, 1997, the reserved shares shall be issued and an additional
331,736 shares (165,868 shares each) shall be issued and delivered to Xx.
Xxxxxxxxx and Xxxxxx.
1.3 Failure to Make Payments. In the event that either Xxxxxx or
Huberfeld fails to make the payment due by January 31, 1997, this Agreement
shall be null and void as to such individual and the parties shall be governed
by the prior agreements between the parties concerning the Outstanding Warrants.
In the event that either Xxxxxx or Xxxxxxxxx makes the payment due on or before
January 31, 1997, and then fails to timely make the payment due on or before
April 16, 1997, the exercise price of all of the Outstanding Warrants (including
those exercised on or before January 31, 1997) held by such individual shall be
$6.25 per share of Common Stock and the 20,420 shares of stock reserved for such
individual under the provisions of paragraph 1.2 shall not be issued.
1.4 Issuance of Additional Warrants. On exercise of the Outstanding
Warrants on or before April 16, 1997, the Company agrees to issue warrants to
Huberfeld and Xxxxxx to acquire a like number of shares of Common Stock at an
exercise price of $10.75 per share of Common Stock (the "$10.75 Warrants"). The
$10.75 Warrants shall be exercisable at any time after August 1, 1997, and prior
to the close of business on April 16, 1999. The $10.75 Warrants shall be in the
form attached hereto as Exhibit "A" and incorporated herein by this reference.
Article II
Representations, Covenants, and Warranties of the Company
As an inducement to, and to obtain the reliance of, Huberfeld and Xxxxxx,
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 has
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 respective dates of such financial statements
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 the rules and regulations
promulgated by 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, the annual report on Form 10-KSB filed with the SEC for the year
ended June 30, 1996, and the quarterly report on Form 10-QSB for the quarter
ended September 30, 1996, is, or was, 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 Huberfeld and Xxxxxx
As an inducement to, and to obtain the reliance of the Company, Huberfeld
and Xxxxxx represent and warrant as follows:
3.1 Binding Agreement. This Agreement is the legal, valid, and binding
obligation of each of Huberfeld and Xxxxxx 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 Huberfeld or Xxxxxx is a party or
to which any of their 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 Huberfeld and Xxxxxx of this Agreement and the
consummation by Huberfeld and Xxxxxx 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 Huberfeld or Xxxxxx is a party or to
which any of their respective properties or assets are subject.
3.4 Information. The information concerning Huberfeld or Xxxxxx set forth
in this Agreement 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 Huberfeld and Xxxxxx. Xxxxxxxxx and Xxxxxx agree
to jointly and severally 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 Huberfeld or Xxxxxx
expressly for use therein. Huberfeld and Xxxxxx 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 Huberfeld and Xxxxxx 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 Huberfeld and Xxxxxx contained in such document or draft was
furnished by Huberfeld or Xxxxxx, indicating the inaccuracies or omissions
contained in such document or draft or indicating the information not furnished
by Huberfeld or Xxxxxx 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 Huberfeld and Xxxxxx from and against any and all losses, claims,
damages, expenses, liabilities, or actions to which either 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 Huberfeld or Xxxxxx 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 Huberfeld and Xxxxxx 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 $10.75 Warrants to Huberfeld and Xxxxxx
contemplated herein and the issuance of Common Stock on the exercise of the
Outstanding Warrants 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, Huberfeld and Xxxxxx make the following representations and
warranties:
(i) Huberfeld and Xxxxxx acknowledge 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) Huberfeld and Xxxxxx have received and read this Agreement
and understand the risks related to the consummation of the
transactions herein contemplated.
(iii) Huberfeld and Xxxxxx have such knowledge and experience
in business and financial matters that each of them is capable of
evaluating the Company and its business operations.
(iv) Huberfeld and Xxxxxx have adequate means of providing for
their current needs and possible personal contingencies and have 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. Huberfeld and Xxxxxx are each able to bear the
economic risks of this investment, and, consequently, without limiting
the generality of the foregoing, are able to hold the Warrants and the
shares of Common Stock issuable on exercise of the Warrants for an
indefinite period of time, and have a sufficient net worth to sustain
a loss of the entire investment, in the event such loss should occur.
(v) Huberfeld and Xxxxxx have each been provided with all
information contained in the Company's annual report on Form 10-K for
the year ended June 30, 1996, and all subsequent interim reports filed
by the Company with the Securities and Exchange Commission.
Huberfeld's and Xxxxxx'x 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 of Huberfeld and Xxxxxx 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 of Huberfeld and Xxxxxx is acquiring the Warrants and
the shares of Common Stock issuable on exercise of the Warrants for
her own account and not for resale to others.
(vii) Each of Huberfeld and Xxxxxx confirms that she is an
"accredited investor" as defined under rule 501 of regulation D
promulgated under the Securities Act. Each of Huberfeld and Xxxxxx
confirms that her individual net worth, or joint net worth with her
spouse, at the time of her purchase exceeds $1,000,000, or that she
had an individual income in excess of $200,000 in each of the two most
recent years or joint income with her 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) Each of Huberfeld and Xxxxxx is a resident of the New
York.
(ix) Each of Huberfeld and Xxxxxx understands that none of the
Warrants or the shares of Common Stock issuable on exercise of the
Warrants has been registered, but are 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 of Huberfeld and Xxxxxx 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 they are 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 in this Agreement 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 of Huberfeld and Xxxxxx 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 parties to this Agreement acknowledge that the basis for
relying on exemptions from registration or qualification 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 Registration of Common Stock. On or before April 30, 1997, the
Company shall prepare and file with the Securities and Exchange Commission (the
"SEC"), a registration statement (the "Registration Statement") that includes
resale of the shares of Common Stock issuable on exercise of the Outstanding
Warrants and the $10.75 Warrants subject to this Agreement. Thereafter, the
Company shall use its best efforts to cause such Registration Statement to
become effective as soon as is practicably possible and to keep such
Registration Statement effective as provided herein. The Company further agrees
to:
(a) Prepare and file with the SEC such amendments and post-effective
amendments to the New Registration Statement as may be necessary to keep
the New Registration Statement effective for a period of not less than two
(2) years from the date of exercise of the $10.75 Warrants, 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 any holder of Common Stock covered by the Registration
Statement (the "Selling Shareholders") when a prospectus 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 Selling Shareholders 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 Selling
Shareholders 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 or trading 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 Selling Shareholders, the underwriter or underwriters, if
any, and their counsel, in connection with the registration or
qualification of, the securities of Selling Shareholders 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 Selling
Shareholders 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 Selling
Shareholders covered by the New 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 Selling Shareholders 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 Selling Shareholders under the New 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 Selling Shareholders may request; and
(g) Use it best efforts to cause the securities of Selling
Shareholders 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 Selling Shareholders or the
underwriter or underwriters, if any, to consummate the disposition of such
securities.
5.2 Cooperation by Huberfeld and Xxxxxx.
(a) Huberfeld and Xxxxxx shall furnish to the Company in writing such
information and affidavits as the Company may reasonably require 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 Shareholder that such Selling Shareholder
shall furnish to the Company such information regarding the Selling
Shareholder, 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 securities.
(b) By exercising their Warrants, Huberfeld and Xxxxxx 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 Huberfeld or Xxxxxx, as the case may be, 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) Huberfeld and Xxxxxx, upon receipt of any notice from the Company
of the happening of any event of the kind described in paragraph (b) of
section 5.2, will forthwith discontinue disposition of the securities until
their receipt of copies of the supplemented or amended prospectus
contemplated by paragraph (b) of section 5.2 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, Huberfeld and Xxxxxx 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 their 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 5.2 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 Huberfeld and Xxxxxx shall
have received the copies of the supplemented or amended prospectus
contemplated by paragraph (b) of section 5.2 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 (and any required
extensions), Huberfeld and Xxxxxx 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 Huberfeld and
Xxxxxx shall notify the Company of the number of securities registered
which remain unsold promptly after receipt of such notice from the Company.
(e) Huberfeld and Xxxxxx 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 Huberfeld and Xxxxxx in writing of such registration or exemption
and the related limitations and conditions from time to time. Huberfeld
and Xxxxxx shall be solely responsible for their own compliance with such
limitations and conditions.
5.3 Holdback Agreement. Huberfeld and Xxxxxx, if requested by the
managing underwriter or underwriters for any underwritten, registered offering
of the securities of the Company, 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 120-day period commencing on the effective date of such
registration (except as part of such registration). In the event Huberfeld and
Xxxxxx are prohibited from effecting a sale of securities pursuant to this
section 5.5, the time period in paragraph (a) of section 5.2 shall be extended
by the number of days Huberfeld and Xxxxxx are so prohibited.
5.4 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 any
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
Warrants 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 Huberfeld and Xxxxxx comprising
underwriters' commissions, brokerage fees, transfer taxes, or the fees and
expenses of any counsel, accountant, or other representative retained by
Huberfeld and Xxxxxx.
5.5 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 Huberfeld or Xxxxxx, will
furnish them with such information generated by the Company in the ordinary
course of business as may be reasonably necessary to enable them 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.
5.6 Participation in Underwritten Registrations. Huberfeld and Xxxxxx may
not participate in any underwritten piggyback registration in which they chose
to have stock included unless Huberfeld and Xxxxxx (a) agree to sell shares of
Common Stock received on exercise of Warrants on the basis provided in any
underwriting arrangements approved by the Company and the underwriter, 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. Huberfeld, Bodner, 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. Huberfeld, Bodner,
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 Huberfeld
or Xxxxxx, to: Xx. Xxxxx Xxxxxxxxx
Xx. Xxxxx Xxxxxx
c/o Broad Capital Associates, Inc.
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile Transmission: (000) 000-0000
Confirmation: (000) 000-0000
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 such
party, or an officer or director of such party, after reasonable investigation,
does not have any current actual knowledge that would make such representation
untrue.
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. To the extent inconsistent therewith,
this Agreement supersedes all earlier agreements governing the Outstanding
Warrants, including the Agreement to Issue Warrants between the parties dated
May 15, 1996, as amended, and the warrant certificates representing the
Outstanding Warrants. There are no other courses of dealing, understandings,
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 Huberfeld and Xxxxxx for breaches of this Agreement shall not
exceed the aggregate exercise price of the Warrants covered hereby.
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
parties hereto 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 /s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx, President
Huberfeld:
/s/ Xxxxx Xxxxxxxxx
Xxxxx Xxxxxxxxx
Address: 000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxxxx:
/s/ Xxxxx Xxxxxx
Xxxxx Xxxxxx
Address: 000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
