PREFERRED STOCK PURCHASE AGREEMENT
THIS PREFERRED STOCK PURCHASE AGREEMENT (the "Agreement") is made as of the
__ day of March, 2003, by and between xxxxxxxx.xxx, Inc., a Delaware corporation
(the "Company"), and E&C Capital Partners, LLLP, a Florida limited liability
limited partnership ("Investor").
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in consideration of the
premises and the mutual agreements, representations and warranties, provisions
and covenants contained herein, the parties hereto, intending to be legally
bound hereby, agree as follows:
1. Purchase of Shares, Issuance of Shares. On the Closing Date (as
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hereinafter defined), subject to the terms and conditions of this Agreement,
Investor hereby purchases and the Company hereby sells and issues to Investor
(i) Three Hundred Thirty Three Thousand Three Hundred and Thirty Three (333,333)
shares (the "Shares") of a newly created class of Series F Preferred Stock
having the rights, preferences and qualifications set forth on Exhibit A hereof
(the "Series F Preferred Stock") and (ii) warrants to acquire Three Million
Three Hundred Thirty Three Thousand Three Hundred and Thirty Three (3,333,333)
shares of the Company's common stock, $.001 par value (the "Common Stock") (the
"Warrants"), for an aggregate purchase price of $500,000 (the "Purchase Price").
The Warrants shall be exercisable, subject to certain adjustments, at the price
of Twelve and One-half Cents ($.125) per share and shall be issued in the form
of Exhibit B hereof.
2. The Closing. Subject to the conditions set forth below, the purchase and
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sale of the Shares and the Warrants shall take place at the offices of Proskauer
Rose LLP, 0000 Xxxxxx Xxxx, Xxxx Xxxxx, Xxxxxxx, 00000, on or before March 31,
2003, or at such other time and place as the Company and the Investor mutually
agree upon in writing (which time and place are designated as the "Closing" and
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the "Closing Date"). If the Closing does not occur prior to April 15, 2003,
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either party may terminate this Agreement by providing the other party written
notice of such termination. At the Closing, the Company shall deliver to the
Investor, stock certificates(s) representing the Shares (which shall have
endorsed thereon the legend referred to in Section 5.8 hereof) and a warrant
certificate representing the Warrants. At the Closing the Investor shall
deliver and wire to the Company (to an account designated by the Company) the
Purchase Price, in immediately available clearing house funds.
3. Closing Conditions. The obligation of the Investor to purchase the
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Shares to be purchased by it at the Closing is subject to the fulfillment, to
the Investor's reasonable satisfaction, prior to or at the Closing, of each of
the following conditions:
3.1 Representations and Warranties. The representations and
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warranties of the Company contained in this Agreement shall be true and correct
in all material respects on the date hereof and on and as of the Closing Date as
if made on and as of such date.
3.2 Amendment of Certificate of Incorporation. The Company's
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Certificate of
Incorporation shall have been amended so as to include the terms,
rights, preferences and qualifications of the Series F Preferred Stock, as
set forth on Exhibit A.
3.3 Resolution of Certain Outstanding Liabilities. The Company
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shall have negotiated settlements and received releases, on terms satisfactory
to the Investor, of the following liabilities: (i) liability in the approximate
amount of $60,000 due AT&T for telephone services; and (ii) tax liability in the
approximate amount of $40,000 due the State of Vermont.
3.4 Stock Certificates, Etc. At the Closing, the Company shall
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have tendered to the Investor certificate(s) representing the Shares and
Warrants.
3.5 No Actions. No action, proceeding, investigation, regulation
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or legislation shall have been instituted, threatened or proposed before any
court, governmental agency or authority or legislative body to enjoin, restrain,
prohibit, or obtain substantial damages in respect of, this Agreement or the
consummation of the transactions contemplated by this Agreement.
3.6 Proceedings and Documents. All proceedings in connection with
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the transactions contemplated hereby and all documents and instruments incident
to such transactions shall be satisfactory in substance and form to the Investor
and its counsel, and the Company shall have received all such counterpart
originals or certified or other copies of such documents as the Investor may
reasonably request.
4. Representations and Warranties of the Company. The Company hereby
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represents and warrants to Investor that:
4.1 Organization, Good Standing and Qualification. The Company is
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a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. The Company is duly qualified to transact
business and is in good standing in each jurisdiction in which the failure to so
qualify would have a material adverse effect on its business or properties.
4.2 Capitalization and Voting Rights. The authorized capital of
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the Company as of the date hereof consists of:
(a) Preferred Stock. 3,000,000 shares of Preferred Stock, par
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value $0.001 per share (the "Preferred Stock"), of which 425,000shares have been
designated as Series F Preferred Stock, none of which are presently issued and
outstanding.
(b) Common Stock. 100,000,000shares of common stock, par value
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$0.001 per share ("Common Stock"), of which 30,369,647 shares are issued and
outstanding.
4.3 Authorization.All corporate action on the part of the Company,
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its officers, directors and stockholders necessary for the authorization,
execution and delivery of this Agreement and the performance of all obligations
of the Company hereunder, and the authorization (or reservation for issuance),
sale and issuance of the Shares and the Warrants have been taken on or prior to
the date hereof.
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4.4 Valid Issuance of the Shares. The Shares when issued and
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delivered in accordance with the terms of this Agreement for the consideration
expressed herein, will be duly and validly issued, fully paid and nonassessable
and will be free of restrictions on transfer, other than restrictions on
transfer under this Agreement and under applicable state and federal securities
laws.
4.5 Offering. Subject to the truth and accuracy of Investor's
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representations set forth in Section 5 of this Agreement, the offer and issuance
of the Shares and Warrants as contemplated by this Agreement are exempt from the
registration requirements of the Securities Act of 1933, as amended (the "1933
Act") and the qualification or registration requirements of state securities
laws or other applicable blue sky laws. Neither the Company nor any authorized
agent acting on its behalf will take any action hereafter that would cause the
loss of such exemptions.
4.6 Public Reports.The Company is current in its filing
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obligations under the Securities Act of 1934, as amended (the "1934 Act"),
including without limitation as to its filings of Annual Reports on Form 10-K
and Quarterly Reports on Form 10-Q (collectively, the "Public Reports"). The
Public Reports do not contain any untrue statement of a material fact or omit to
state any fact necessary to make any statement therein not misleading. The
financial statements included within the Public Reports for the fiscal year
ended December 31, 2001, for each quarterly period thereafter, and for the
fiscal year ended December 31, 2002 (the "Financial Statements") have been
prepared in accordance with generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods indicated and with each
other, except that unaudited Financial Statements may not contain all footnotes
required by generally accepted accounting principles. The Financial Statements
fairly present, in all material respects, the financial condition and operating
results of the Company as of the dates, and for the periods, indicated therein,
subject in the case of unaudited Financial Statements to normal year-end audit
adjustments.
4.7 Compliance With Laws. Neither the Company nor any subsidiary
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has violated any law or any governmental regulation or requirement which
violation has had or would reasonably be expected to have a material adverse
effect on its business or prospects, and neither the Company nor any subsidiary
has received written notice of any such violation.
4.8 Violations. The consummation of the transactions contemplated
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by this Agreement and all other documents and instruments required to be
delivered in connection herewith and therewith will not result in or constitute
any of the following: (a) a violation of any provision of the certificate of
incorporation, bylaws or other governing documents of the Company; (b) a
violation of any provisions of any applicable law or of any writ or decree of
any court or governmental instrumentality; (c) a default or an event that, with
notice or lapse of time or both, would be a default, breach, or violation of a
lease, license, promissory note, conditional sales contract, commitment,
indenture, mortgage, deed of trust, or other agreement, instrument, or
arrangement to which the Company is a party or by which the Company or its
property is bound; (d) an event that would permit any party to terminate any
agreement or to accelerate the maturity of any indebtedness or other obligation
of the Company; or (e) the creation or imposition of any lien, pledge, option,
security agreement, equity, claim, charge, encumbrance or
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other restriction or limitation on the capital stock or on any of the properties
or assets of the Company.
4.9 Consents; Waivers. No consent, waiver, approval or authority
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of any nature, or other formal action, by any person, firm or corporation, or
any agency, bureau or department of any government or any subdivision thereof,
not already obtained, is required in connection with the execution and delivery
of this Agreement by the Company or the consummation by the Company of the
transactions provided for herein and therein.
5. Representations and Warranties of Investor. Investor hereby
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represents, warrants and covenants that:
5.1 Authorization. Investor has full power and authority to enter
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into this Agreement, and such agreement constitutes the valid and legally
binding obligation of Investor, enforceable in accordance with its terms.
5.2 Purchase Entirely for Own Account. This Agreement is made
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with Investor in reliance upon Investor's representation to the Company, which
by Investor's execution of this Agreement, Investor hereby confirms, that the
Shares to be received by Investor will be acquired for investment for Investor's
own account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and that Investor has no present intention of
selling, granting any participation in or otherwise distributing the same. By
executing this Agreement, Investor further represents that Investor does not
have any contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant participations to such person or to any third person,
with respect to any of the Shares or the Warrants.
5.3 Disclosure of Information. Investor believes it has received
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all the information it considers necessary or appropriate for deciding whether
to purchase the Shares. Investor further represents that he has had an
opportunity to ask questions and receive answers from the Company regarding the
terms and conditions of the offering of the Shares and the business, properties,
prospects and financial condition of the Company. The foregoing, however, does
not limit or modify the representations and warranties of the Company in Section
4 of this Agreement or the right of Investor to rely thereon.
5.4 Investment Experience. Investor can bear the economic risk of
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its investment, and has such knowledge and experience in financial or business
matters that it is capable of evaluating the merits and risks of the investment
in the Shares and Warrant.
5.5 Accredited Investor. Investor is an "accredited investor"
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within the meaning of the Securities and Exchange Commission ("SEC") Rule 501 of
Regulation D, as presently in effect; by virtue of all of the equity owners
thereof being natural persons whom are "accredited" by virtue of falling within
one or more of the following categories: (a) a natural person whose individual
net worth (or joint net worth with his spouse) at the time of purchase exceeds
$1,000,000; or (b) a natural person who had individual income in excess of
$200,000 or joint income with his
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spouse in excess of $300,000 in each of the two most recent years and reasonably
expects to have individual income in excess of $200,000 or joint income with his
spouse in excess of $300,000 in the current year; or (c) an executive officer or
director of the Company.
5.6 Restricted Securities. Investor understands that the Shares
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(and the shares of Common Stock issueable upon exercise of the Warrants) it is
purchasing are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such Shares may be resold without registration under the
933 Act only in certain limited circumstances. In the absence of an effective
registration statement covering the Shares or an available exemption from
registration under the 1933 Act, the Shares must be held indefinitely. Investor
represents that it is familiar with SEC Rule 144, as presently in effect, and
understands the resale limitations imposed thereby and by the 1933 Act,
including without limitation the Rule 144 condition that current information
about the Company be available to the public.
5.7 Further Limitations on Disposition. Without in any way
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limiting the representations set forth above, Investor shall not make any
disposition of all or any portion of the Shares or Warrant unless and until the
transferee has agreed in writing for the benefit of the Company to be bound by
this Section 5, and:
(a) there is then in effect a registration statement under the
1933 Act covering such proposed disposition and such disposition is made in
accordance with such registration statement; or
(b) Investor shall have notified the Company of the proposed
disposition and shall have furnished the Company with a detailed statement of
the circumstances surrounding the proposed disposition, and if requested by the
Company, the Investor shall have furnished the Company with an opinion of
counsel, reasonably satisfactory to the Company, that such disposition will not
require registration of the Shares or Warrants under the 0000 Xxx.
5.8 Legends. It is understood that the certificates evidencing
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the Shares and Warrants may bear one or all of the following legends:
(a) "These securities have not been registered under the
Securities Act of 1933, as amended. They may not be sold, offered for sale,
pledged or hypothecated in the absence of a registration statement in effect
with respect to the securities under such Act or an opinion of counsel
satisfactory to the Company that such registration is not required."
(b) Any legend required by state securities laws.
5.9 Tax Advisors. Investor has reviewed with Investor's own tax
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advisors the federal, state and local tax consequences of this investment, where
applicable, and the transactions contemplated by this Agreement. Investor is
relying solely on such advisors and not on any statements or representations of
the Company (except the representations and covenants of the Company set forth
in this Agreement) or any of its agents and understands that Investor (and not
the Company) shall be responsible for Investor's own tax liability that may
arise as a result of this investment or the transactions contemplated by this
Agreement, except where such
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liability arises as a result of a failure of a representation of the Company set
forth in this Agreement to be true or a breach by the Company of a covenant of
the Company set forth in this Agreement.
5.10 Investor Counsel. Investor acknowledges that it has had the
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opportunity to review this Agreement, the exhibits and the schedules attached
hereto and the transactions contemplated by this Agreement with Investor's own
legal counsel. Investor is relying solely on its legal counsel and not on any
statements or representations of the Company or any of the Company's agents for
legal advice with respect to this investment or the transactions contemplated by
this Agreement.
6. Registration Rights.
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6.1 Demand Registration. At any time the holders (the "Holders")
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of a majority of the Registerable Securities (as hereinafter defined), shall be
entitled to deliver written notice to the Company demanding the registration of
all Registerable Securities or such lesser number as the Holders may elect.
Upon the written request of such Holders, the Company shall use its best
efforts to cause to be registered under the 1933 Act all of such Registerable
Shares. The Holders whom elect to participate in the registration are called
"Participating Holders." The term "Registrable Securities" shall mean shares of
the Series F Preferred Stock, all shares of Common Stock issuable upon
conversion of the Series F Preferred Stock and all shares of Common Stock
issuable upon exercise of the Warrants, together with any shares of Common Stock
issued or issuable by way of a stock dividend or stock split or in connection
with any recapitilization, merger, consolidation or other reorganization. The
Holders of the Registerable Securities may exercise the rights described in this
Section 6.1 a total of two times.
6.2 Furnish Information. It shall be a condition precedent to the
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obligations of the Company to take any action pursuant to this Agreement with
respect to the Registrable Securities that each of the Participating Holders
furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities
as shall be required to effect the registration of the Registrable Securities.
6.3 Expenses of Registration. The Company shall bear and pay all
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expenses incurred in connection with any registration, filing or qualification
of Registrable Securities with respect to the registrations pursuant to Section
6.1 for the Investor, including without limitation all registration, filing and
qualification fees, printers' and accounting fees relating or apportionable
thereto and the fees and disbursements of its counsel. The Participating
Holders shall be responsible for payment of any underwriter's or broker's fee or
commission with respect to the sale of their Registerable Securities.
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6.4 Registration Procedures. Whenever the Holders of
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Registrable Securities have requested that any Registrable Securities be
registered pursuant to this Agreement, the Company shall use its best efforts in
good faith to effect the registration and the sale of such Registrable
Securities in accordance with the intended method of disposition thereof, and in
furtherance hereof, the Company shall as expeditiously as possible:
(a) prepare and file with the Securities and Exchange
Commission a registration statement with respect to such Registrable Securities
and use its best efforts in good faith to cause such registration statement to
become and remain effective; provided, that before filing a registration
statement or prospectus or any amendments or supplements thereto, the Company
shall furnish to the counsel selected by the Participating Holders of a majority
of the Registrable Securities covered by such registration statement copies of
all such documents proposed to be filed, which documents shall be subject to the
review and comment of such counsel;
(b) notify each Participating Holder of the effectiveness of
each registration statement filed hereunder and prepare and file with the
Securities and Exchange Commission such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective for a period of not less
than 180 days and comply with the provisions of the 1933 Act with respect to the
disposition of all securities covered by such registration statement during such
period in accordance with the intended methods of disposition by the sellers
thereof set forth in such registration statement;
(c) furnish to each Participating Holder such number of
copies of such registration statement, each amendment and supplement thereto (in
each case including all exhibits thereto), the prospectus included in such
registration statement (including each preliminary prospectus) and such other
documents as such seller may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such Holder;
(d) use its best efforts in good faith to register or qualify
such Registrable Securities under such other securities or blue sky laws of such
jurisdictions as any Participating Holder reasonably requests and do any and all
other acts and things which may be reasonably necessary or advisable to enable
such seller to consummate the disposition in such jurisdictions of the
Registrable Securities owned by such Holder (provided that the Company shall not
be required to (i) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this subsection, (ii) subject
itself to taxation in any such jurisdiction or (iii) consent to general service
of process in any such jurisdiction);
(e) notify each Participating Holder, at any time when a
prospectus relating thereto is required to be delivered under the 1933 Act, of
the happening of any event as a result of which the prospectus included in such
registration statement contains an untrue statement of a material fact or omits
any fact necessary to make the statements therein not misleading, and, at the
request of any such seller or by its own initiative, the Company shall prepare a
supplement or amendment to such prospectus so that, as thereafter delivered to
the purchasers of such Registrable Securities, such prospectus shall not contain
an untrue statement
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of a material fact or omit to state any fact necessary to make the statements
therein not misleading;
(f) cause all such Registrable Securities to be listed on
each securities exchange on which similar securities issued by the Company are
then listed or, if not so listed, then on at least one securities exchange or
quotation system on which securities of companies similar to the Company are
then listed, and, if listed on the NASD automated quotation system, use its best
efforts in good faith to secure designation of all such Registrable Securities
covered by such registration statement as a NASDAQ "national market system
security" within the meaning of Rule 11Aa2-1 of the Securities and Exchange
Commission or, failing that, to secure NASDAQ authorization for such Registrable
Securities and, without limiting the generality of the foregoing, to arrange for
at least two market makers to register as such with respect to such Registrable
Securities with the NASD;
(g) furnish to each Participating Holder a signed
counterpart, addressed to such Participating Holder, of (i) an opinion of
counsel for the Company, dated the effective date of the registration statement,
and (ii) a "comfort" letter signed by the independent public accountants who
have certified the Company's financial statements included in the registration
statement, covering substantially the same matters with respect to the
registration statement (and the prospectus included therein) and (in the case of
the comfort letter, with respect to events subsequent to the date of the
financial statements), as are customarily covered (at the time of such
registration) in opinions of issuer's counsel and in comfort letters delivered
to the underwriters in underwritten public offerings of securities. If and to
the extent that any registration relates to an underwritten public offering,
such opinion and comfort letter shall be sufficient if it is in the form
acceptable to the managing underwriter thereof.
(h) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such registration
statement;
(i) enter into such customary agreements (including
underwriting agreements in customary form) and take all such other actions as
the Participating Holders of a majority of the Registrable Securities being sold
or the underwriters, if any, reasonably request in order to expedite or
facilitate the disposition of such Registrable Securities;
(j) in the event of the issuance of any stop order suspending
the effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any Common Stock included in such registration statement for sale in any
jurisdiction, the Company shall use its best efforts in good faith promptly to
obtain the withdrawal of such order.
6.5 Selection of Underwriter. The holders of a majority of the
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Registrable Securities initially requesting registration hereunder shall have
the right to select the investment banker(s) and manager(s) to administer the
offering, subject to the Company's approval which shall not be unreasonably
withheld or delayed.
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6.6 Indemnification. In the event any Registrable Securities are
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included in a registration statement under this Section 6:
(a) The Company will indemnify and hold harmless the Participating
Holders, the partners or officers, directors and shareholders of the
Participating Holders, legal counsel and accountants for the Participating
Holders, against any losses, claims, damages or liabilities (joint or several)
to which they may become subject under the 1933 Act, the 1934 Act or any state
securities laws, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively a "Violation"): (i) any untrue
statement or alleged untrue statement of a material fact contained in such
registration statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, (ii) the omission or
alleged omission to state therein a material fact required to be stated therein,
or necessary to make the statements therein not misleading, or (iii) any
violation or alleged violation by the Company of the 1933 Act, the 1934 Act, any
state securities laws or any rule or regulation promulgated under the 1933 Act,
the 1934 Act or any state securities laws. The Company will reimburse each
Participating Holder for any legal or other expenses reasonably incurred by it
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this subsection 6.6 (a) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Company (which consent shall not be unreasonably
withheld), nor shall the Company be liable for any such loss, claim, damage,
liability or action to the extent that it arises out of or is based upon a
Violation that occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
such Participating Holder; provided further, however, that the foregoing
indemnity agreement with respect to any preliminary prospectus shall not inure
to the benefit a Participating Holder, from whom the person asserting any such
losses, claims, damages or liabilities purchased shares in the offering, if a
copy of the prospectus (as then amended or supplemented if the Company shall
have furnished any amendments or supplements thereto) was not sent or given by
or on behalf of such Participating Holder to such person, if required by law so
to have been delivered, at or prior to the written confirmation of the sale of
the shares to such person, and if the prospectus (as so amended or supplemented)
would have cured the defect giving rise to such loss, claim, damage or
liability.
(b) Each Participating Holder will indemnify and hold harmless the
Company, each of its directors, each of its officers who has signed the
registration statement, each person, if any, who controls the Company within the
meaning of the 1933 Act, legal counsel and accountants for the Company and any
underwriter, against any losses, claims, damages or liabilities (joint or
several) to which any of the foregoing persons may become subject under the 1933
Act, the 1934 Act or any state securities laws, insofar as such losses, claims,
damages or liabilities (or actions in respect thereto) arise out of or are based
upon any Violation, in each case to the extent (and only to the extent) that
such Violation occurs in reliance upon and in conformity with written
information furnished by such Participating Holder expressly for use in
connection with such registration; and such Participating Holder will reimburse
any person intended to be indemnified pursuant to this subsection, for any legal
or other expenses reasonably incurred by such person in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the indemnity agreement contained in
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this subsection 6.6(b) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of such Participating Holder (which consent shall not be
unreasonably withheld).
(c) Promptly after receipt by an indemnified party under this
Section 6.6 of notice of the commencement of any action (including any action by
a governmental authority), such indemnified party (the "Indemnified Party")
will, if a claim in respect thereof is to be made against any indemnifying party
(the "Indemnifying Party") under this Section 6.6, deliver to the Indemnifying
Party a written notice of the commencement thereof and the Indemnifying Party
shall have the right to participate in, and, to the extent the Indemnifying
Party so desires, jointly with any other indemnifying party similarly noticed,
to assume the defense thereof with counsel mutually satisfactory to the parties;
provided, however, that an Indemnified Party (together with all other
indemnified parties that may be represented without conflict by one counsel)
shall have the right to retain one separate counsel, with the fees and expenses
to be paid by the Indemnifying Party, if representation of such Indemnified
Party by the counsel retained by the Indemnifying Party would be inappropriate
due to actual or potential differing interests between such Indemnified Party
and any other party represented by such counsel in such proceeding. No
Indemnifying Party shall, without the consent of the Indemnified Party, consent
to entry of any judgment or enter into any settlement of any such action which
does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a complete and full release from all
liability in respect of such claim or litigation. No Indemnified Party shall
consent to entry of any judgment or enter into any settlement of any such action
the defense of which has been assumed by an Indemnifying Party without the
consent of such Indemnifying Party.
(d) If the indemnification provided for in this Section 6.6 is
held by a court of competent jurisdiction to be unavailable to an Indemnified
Party with respect to any loss, liability, claim, damage or expense referred to
herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party hereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and of the indemnified party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage or expense, as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(e) No Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 0000 Xxx) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
Notwithstanding anything to the contrary in this Section 6.6, no indemnified
party shall be required, pursuant to this Section 6.6, to contribute any amount
in excess of the net proceeds received by such indemnifying party from the sale
of securities in the offering to which the losses, claims, damages, liabilities
or expenses of the indemnified party relate.
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6.7 Successors and Assigns. The covenants and agreements in
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this Section 6 by or on behalf of any of the parties hereto shall bind and inure
to the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not. In addition, whether or not any express assignment
has been made, the provisions of this Agreement which are for the benefit of
purchasers or holders of Registrable Securities are also for the benefit of, and
enforceable by, any subsequent holder of Registrable Securities.
7. Miscellaneous
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7.1 Successors andAssigns. Except as otherwise provided herein,
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the terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of the Shares). Nothing in this Agreement, express or implied, is
intended to confer upon any party, other than the parties hereto or their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
7.2 Governing Law. This Agreement shall be governed by and
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construed under the laws of the State of Delaware without giving effect to its
conflict of laws provisions.
7.3 Titles and Subtitles. The titles and subtitles used in this
----------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
7.4 Notices. All notices required or permitted hereunder shall be
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in writing and shall be deemed effectively given: (a) upon personal delivery to
the party to be notified, (b) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient; if not, then on the next business
day, (c) five (5) business days after having been sent by registered or
certified mail, return receipt requested, postage prepaid, or (d) one (1) day
after deposit with a nationally recognized overnight courier, specifying next
day delivery, with written verification of receipt. All communications shall be
sent to the party to be notified at the address as set forth on the signature
page or exhibit pages hereof or at such other address as such party may
designate by ten (10) days advance written notice to the other parties hereto.
7.5 Finder's Fees. Each party represents that it neither is nor
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will be obligated for any finders' fee or commission in connection with this
transaction. Investor shall indemnify and hold harmless the Company from any
liability for any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending against such liability or asserted
liability) for which Investor or any of its officers, partners, employees or
representatives is responsible. The Company shall indemnify and hold harmless
Investor from any liability for any commission or compensation in the nature of
a finders' fee (and the costs and expenses of defending against such liability
or asserted liability) for which the Company or any of its officers, employees
or representatives is responsible.
7.6 Amendments and Waivers. Any term of this Agreement may be
------------------------
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the
11
Company and Investor. Any amendment or waiver effected in accordance with this
paragraph shall be binding upon Investor, each future holder of the Shares and
the Company, provided that no such amendment shall be binding on a holder that
does not consent thereto to the extent such amendment treats such party
differently than any party that does consent thereto.
7.7 Severability. If one or more provisions of this Agreement are
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held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
7.8 Entire Agreement. This Agreement and the documents referred
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to herein constitute the entire agreement among the parties and no party shall
be liable or bound to any other party in any manner by any warranties,
representations or covenants except as specifically set forth herein or therein.
7.9 Counterparts. This Agreement may be executed in two or more
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counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.10 Interpretation. Unless the context of this Agreement clearly
--------------
requires otherwise, (a) references to the plural include the singular, the
singular the plural, the part the whole, (b) references to any gender include
all genders, (c) "including" has the inclusive meaning frequently identified
with the phrase "but not limited to" and (d) references to "hereunder" or
"herein" relate to this Agreement.
[SIGNATURE PAGE FOLLOWING]
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IN WITNESS WHEREOF, the parties have executed this Preferred Stock Purchase
Agreement as of the date first above written.
E&C Capital Partners, LLLP
xxxxxxxx.xxx, inc. By: E&C Capital Ventures, Inc., its general
partner
By:_____________________________
Name: By:________________________________
Title: Name:
Address:________________________ Title:
________________________ Address:___________________________
________________________ ___________________________
___________________________
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EXHIBIT A
FORM OF AMENDMENT TO CERTIFICATE OF INCORPORATION,
INCLUDING THE TERMS OF THE SERIES F PREFERRED STOCK
EXHIBIT B
FORM OF WARRANT
