EXHIBIT 10.6
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT ("Agreement") made as of the date set
forth at the end hereof by and between Xxxxxx Xxxxxx Communications,
Incorporated, a New York corporation (the "Company"), and each of the Purchasers
set forth on the signature pages affixed hereto (each a "Purchaser" and
collectively the "Purchasers").
RECITALS
A. The Company and the Purchasers are executing and delivering
this Agreement in reliance upon the exemption from securities registration
afforded by the provisions of Regulation D ("Regulation D"), as promulgated by
the U.S. Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended; and
B. The Purchasers wish to purchase, and the Company wishes to
sell and issue to the Purchasers, upon the terms and conditions stated in this
Agreement, that number of shares of the common stock of the Company, $0.01 par
value per share (the "Common Stock"), and that number of warrants to purchase
Common Stock in the form attached hereto as EXHIBIT A (the "Warrants"), having
an aggregate purchase price set forth on the signature page attached hereto and
executed by each such Purchaser.
In consideration of the mutual promises made herein and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
1. Definitions. In addition to those terms defined above and elsewhere
in this Agreement, for the purposes of this Agreement, the following terms shall
have the meanings here set forth:
1.1 "Affiliate" means, with respect to any Person, any other
Person which directly or indirectly controls, is controlled by, or is under
common control with, such Person.
1.2 "Agreements" means this Agreement and any other agreements
delivered in connection with this Agreement.
1.3 "Closing" means the consummation of the transactions
contemplated by this Agreement.
1.4 "Control" means the possession , direct or indirect, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
1.5 "Material Adverse Effect" means a material adverse effect
on the condition (financial or otherwise), business, assets, or results of
operations of the Company as a whole.
1.6 "Memorandum" means the Company's Confidential Private
Placement Memorandum, dated June 14, 2001, delivered to each of the Purchasers.
1.7 "Person" means an individual, corporation, partnership,
trust, business trust, association, joint stock company, joint venture, pool,
syndicate, sole proprietorship, unincorporated organization, governmental
authority or any other form of entity not specifically listed herein.
1.8 "Placement Agent" means Xxxxxx, Xxxxxxxx & Company,
Incorporated.
1.9 "Registrable Securities" means the Shares and the Warrant
Shares and any other securities issued or issuable with respect to or in
exchange for such Securities.
1.10 "SEC Filings" has the meaning set forth in Section 4.6.
1.11 "Securities" means the Shares, the Warrants and the
Warrant Shares (defined below).
1.12 "Shares" means the shares of Common Stock being purchased
by the Purchasers hereunder.
1.13 "Warrant Shares" means the shares of Common Stock
issuable upon exercise of or otherwise pursuant to the Warrants.
1.14 "1933 Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
1.15 "1934 Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
2. Purchase and Sale of the Shares and Warrants; Escrow Agreement.
(a) Subject to the terms and conditions of this Agreement,
each of the Purchasers hereby severally, and not jointly, agrees to purchase,
and the Company hereby agrees to sell and issue to the Purchasers, the number of
Shares and Warrants to purchase the number of shares of Common Stock set forth
on each such Purchaser's signature page attached hereto and with an aggregate
purchase price as reflected on such signature page. The number of Shares to be
purchased by each Purchaser shall be determined by dividing such Purchaser's
aggregate purchase price (as such aggregate purchase price is set forth on such
Purchaser's signature page attached hereto), by a per share purchase price equal
to $1.50 (the "Purchase Price"). Each Purchaser shall receive a warrant to
purchase one share of Common Stock for each two Shares purchased hereunder. The
Warrants shall be in whole numbers, and the Company shall not issue any Warrants
to purchase fractional shares. The Purchaser acknowledges that the Company
reserves the right, in its sole and absolute discretion, to accept or reject the
subscription for Securities provided in this Agreement, in whole or in part, and
that this subscription shall not be binding unless and until accepted by the
Company. The Purchaser agrees that subscriptions need not be accepted in the
order they are received.
(b) Pursuant to an escrow agreement (the "Escrow Agreement"),
the Purchase Price will be held in a segregated non-interest-bearing escrow
account (the "Escrow Account") maintained at Missouri State Bank and Trust
Company by the Placement Agent and the Company until such funds are released to
the Company at the Closing as provided in the Escrow Agreement.
3. Closing. The Closing shall occur as soon as practicable following
notification by the SEC to the Company of the SEC's willingness to declare
effective the registration statement to be filed by the Company pursuant to
Section 6.1 hereof (the "Registration Statement") at a place and time (the
"Closing Date") to be agreed upon by the Company and the Placement Agent. In the
absence of any such agreement, the Closing shall be held at the offices of Xxxxx
Xxxx LLP, counsel to the Placement Agent, at Xxx Xxxxxxxxxxxx Xxxxxx, Xxxxx
0000, Xx. Xxxxx, Xxxxxxxx 00000 at 10:00 a.m., local time, on the fifth business
day after the Company delivers written notice to the Placement Agent of receipt
of such notification from the SEC. The Company will promptly notify the
Purchasers by facsimile transmission or otherwise of the date, place and time of
the Closing.
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At the Closing, the Company shall deliver to each Purchaser one or more
certificates registered in the name of the Purchaser, or in such nominee name(s)
as designated by the Purchaser in writing, representing the number of Shares and
Warrants determined in accordance with Section 2 above and bearing an
appropriate legend referring to the fact that such Securities were sold in
reliance upon the exemption from registration under the 1933 Act, provided by
Section 4(2) thereof and Rule 506 thereunder. The Company will promptly
substitute one or more replacement certificates for the Shares without the
legend at such time as the Registration Statement becomes effective. The name(s)
in which the certificates are to be registered are set forth in each Purchaser's
Subscription Agreement relating to the Shares. The Company's obligation to
complete the purchase and sale of the Securities and deliver such certificate(s)
to each Purchaser at the Closing shall be subject to the following conditions,
any one or more of which may be waived by the Company in writing: (a) receipt by
the Company of same-day funds in the full amount of the purchase price for the
Securities being purchased hereunder; (b) completion of the purchases and sales
under the Agreements with all of the Purchasers in the offering for Securities
having purchase price of not less than $700,000 in the aggregate; (c) execution
and delivery to the Placement Agent of lock-up agreements from each of the
Company's directors and executive officers, in form and substance satisfactory
to counsel for the Placement Agent, providing that, for a period of 120 days
from the effective date of the Registration Statement, he or she will not,
without the Placement Agent's prior written consent, offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase or otherwise
transfer or dispose of, directly or indirectly, any shares of Common Stock or
any security convertible into or exchangeable or exercisable for shares of
Common Stock; and (d) the accuracy of the representations and warranties made by
the Purchasers and the fulfilment of those undertakings of the Purchasers to be
fulfilled prior to the Closing. Each Purchaser's obligation to accept delivery
of such certificate(s) and to pay for the Securities evidenced thereby shall be
subject to the following conditions, any one or more of which may be waived by
the Purchaser in writing: (a) the SEC has notified the Company of the SEC's
willingness to declare the Registration Statement effective on or prior to the
60th day after the date such Registration Statement was filed by the Company;
(b) completion by the Company of the purchases and sales under the Agreements
with all of the Purchasers in the offering for Securities having purchase price
of not less than $700,000 in the aggregate; and (c) the accuracy in all material
respects of the representations and warranties made by the Company herein and
the fulfilment in all material respects of those undertakings of the Company to
be fulfilled prior to Closing.
4. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Purchasers that:
4.1 Organization, Good Standing and Qualification. Except as
set forth on Schedule 4.1 hereto, each of the Company and its subsidiaries is a
corporation duly incorporated, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite corporate
power and authority to carry on its business as now conducted and own its
properties. Each of the Company and its subsidiaries is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
in which the conduct of its business or its ownership or leasing of property
makes such qualification or licensing necessary unless the failure to so qualify
would not have a Material Adverse Effect. The Company's subsidiaries are
reflected on Schedule 4.1 hereto.
4.2 Authorization. The Company has full power and authority
and has taken all requisite action on the part of the Company, its officers,
directors and stockholders necessary for (i) the authorization, execution and
delivery of the Agreements, (ii) authorization of the performance of all
obligations of the Company hereunder or thereunder, and (iii) the authorization,
issuance (or reservation for issuance) and delivery of the Securities. The
Agreements constitute the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent
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transfer, reorganization, moratorium and similar laws of general applicability,
relating to or affecting creditors' rights generally.
4.3 Capitalization. Set forth on Schedule 4.3 hereto is (a)
the authorized capital stock of the Company on the date hereof; (b) the number
of shares of capital stock issued and outstanding; (c) the number of shares of
capital stock issuable pursuant to the Company's stock plans; and (d) the number
of shares of capital stock issuable and reserved for issuance pursuant to
securities (other than the Shares and the Warrants) exercisable for, or
convertible into or exchangeable for any shares of capital stock. All of the
issued and outstanding shares of the Company's capital stock have been duly
authorized and validly issued and are fully paid, nonassessable and free of
preemptive rights. Except as set forth on Schedule 4.3, no Person is entitled to
preemptive or similar statutory or contractual rights with respect to any
securities of the Company. Except as set forth on Schedule 4.3, there are no
outstanding warrants, options, convertible securities or other rights,
agreements or arrangements of any character under which the Company or any of
its subsidiaries is or may be obligated to issue any equity securities of any
kind and except as contemplated by this Agreement, neither the Company nor any
of its subsidiaries is currently in negotiations for the issuance of any equity
securities of any kind. Except as set forth on Schedule 4.3, the Company has no
knowledge of any voting agreements, buy-sell agreements, option or right of
first purchase agreements or other agreements of any kind among any of the
securityholders of the Company relating to the securities of the Company held by
them. Except as set forth on Schedule 4.3, the Company has not granted any
Person the right to require the Company to register any securities of the
Company under the 1933 Act, whether on a demand basis or in connection with the
registration of securities of the Company for its own account or for the account
of any other Person.
4.4 Valid Issuance. The Company has reserved a sufficient
number of shares of Common Stock for the issuance of the Shares pursuant to this
Agreement and upon exercise of the Warrants. The Shares and the Warrants are
duly authorized, and such Securities, along with the Warrant Shares, when issued
in accordance herewith and with the terms of the Warrants, will be duly
authorized, validly issued, fully paid, non-assessable and free and clear of all
encumbrances and restrictions, except for restrictions on transfer imposed by
applicable securities laws.
4.5 Consents. The execution, delivery and performance by the
Company of the Agreements and the offer, issuance and sale of the Securities
require no consent of, action by or in respect of, or filing with, any Person,
governmental body, agency, or official other than filings that have been made
pursuant to applicable state securities laws and post-sale filings pursuant to
applicable state and federal securities laws and the requirements of the NASD
OTC Bulletin Board, which the Company undertakes to file within the applicable
time periods.
4.6 Delivery of SEC Filings; Business. The Company has
provided the Purchasers with copies of the Company's most recent (i) Annual
Report on Form 10-KSB for the fiscal year ended October 31, 2001, and (ii)
Quarterly Reports on Form 10-QSB for the period ended January 31, 2001 and the
period ended April 30, 2001, and has provided to the Placement Agent and made
available to the Purchasers all other reports filed by the Company pursuant to
the 1934 Act since the filing of the Quarterly Report on Form 10-QSB and prior
to the date hereof (collectively, the "SEC Filings"), which the Company hereby
represents and warrants are all filings required of the Company pursuant to the
1934 Act for such period. The Company is engaged only in the business described
in the SEC Filings and the SEC Filings contain a complete and accurate
description of the business of the Company.
4.7 Use of Proceeds. The proceeds of the sale of the
Securities hereunder shall be used by the Company for the purposes described in
the Memorandum.
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4.8 No Material Adverse Change. Since the filing of the
Company's most recent Annual Report on Form 10-KSB or as otherwise identified
and described in subsequent reports filed by the Company pursuant to the 1934
Act or as set forth on Schedule 4.8 hereto, there has not been:
(i) any change in the consolidated assets,
liabilities, financial condition or operating results of the Company
from that reflected in the financial statements included in the
Company's most recent Quarterly Report on Form 10-QSB, except changes
in the ordinary course of business which have not had, in the
aggregate, a Material Adverse Effect;
(ii) any declaration or payment of any dividend, or
any authorization or payment of any distribution, on any of the capital
stock of the Company, or any redemption or repurchase of any securities
of the Company;
(iii) any material damage, destruction or loss,
whether or not covered by insurance to any assets or properties of the
Company;
(iv) any waiver by the Company of a valuable right or
of a material debt owed to it not in the ordinary course of business;
(v) any satisfaction or discharge of any lien, claim
or encumbrance or payment of any obligation by the Company, except in
the ordinary course of business and which is not material to the
assets, properties, financial condition, operating results or business
of the Company taken as a whole (as such business is presently
conducted and as it is proposed to be conducted);
(vi) any material change or amendment to a material
contract or arrangement by which the Company or any of its assets or
properties is bound or subject;
(vii) any material labor difficulties or labor union
organizing activities with respect to employees of the Company;
(viii) any transaction entered into by the Company
other than in the ordinary course of business; or
(ix) any other event or condition of any character
that might have a Material Adverse Effect.
4.9 SEC Filings; Material Contracts.
(a) The SEC Filings complied as to form in all
material respects with the requirements of the 1934 Act and did not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading.
(b) During the preceding two years, each registration
statement and any amendment thereto filed by the Company or its predecessor(s)
pursuant to the 1933 Act and the rules and regulations thereunder, as of the
date such statement or amendment became effective, complied as to form in all
material respects with the 1933 Act and did not contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading; and each prospectus
filed pursuant to Rule 424(b) under the 1933 Act, as of its issue date and as of
the closing of any sale of securities pursuant thereto did
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not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading.
(c) Except as set forth on Schedule 4.3 hereto, there
are no agreements or instruments currently in force and effect that constitute a
warrant, option, convertible security or other right, agreement or arrangement
of any character under which the Company is or may be obligated to issue any
material amounts of any equity security of any kind, or to transfer any material
amounts of any equity security of any kind.
4.10 Form S-3 Eligibility. The Company is currently eligible
to register the resale of its Common Stock on a registration statement on Form
S-3 under the 1933 Act.
4.11 No Conflict, Breach, Violation or Default. The execution,
delivery and performance of the Agreements by the Company and the issuance and
sale of the Securities will not conflict with or result in a breach or violation
of any of the terms and provisions of, or constitute a default under (i) the
Company's Certificate of Incorporation or the Company's Bylaws, both as in
effect on the date hereof (copies of which have been provided to the Purchasers
before the date hereof), or (ii) except where it would not have a Material
Adverse Effect, (a) any statute, rule, regulation or order of any governmental
agency or body or any court, domestic or foreign, having jurisdiction over the
Company or any of its properties, or (b) except as set forth on Schedule 4.11,
any agreement or instrument to which the Company is a party or by which the
Company is bound or to which any of the properties of the Company is subject.
4.12 Tax Matters. The Company has timely prepared and filed
all tax returns required to have been filed by the Company with all appropriate
governmental agencies and timely paid all taxes owed by it. The charges,
accruals and reserves on the books of the Company in respect of taxes for all
fiscal periods are adequate in all material respects, and there are no material
unpaid assessments against the Company nor, to the knowledge of the Company, any
basis for the assessment of any additional taxes, penalties or interest for any
fiscal period or audits by any federal, state or local taxing authority except
such as which are not material. All material taxes and other assessments and
levies that the Company is required to withhold or to collect for payment have
been duly withheld and collected and paid to the proper governmental entity or
third party when due. There are no tax liens or claims pending or threatened
against the Company or any of its respective assets or property. There are no
outstanding tax sharing agreements or other such arrangements between the
Company and any other corporation or entity.
4.13 Title to Properties. Except as disclosed in the SEC
Filings or Schedule 4.13, the Company has good and marketable title to all real
properties and all other properties and assets owned by it, in each case free
from liens, encumbrances and defects that would materially affect the value
thereof or materially interfere with the use made or currently planned to be
made thereof by them; and except as disclosed in the SEC Filings, the Company
holds any leased real or personal property under valid and enforceable leases
with no exceptions that would materially interfere with the use made or
currently planned to be made thereof by them.
4.14 Certificates, Authorities and Permits. The Company
possesses adequate certificates, authorities or permits issued by appropriate
governmental agencies or bodies necessary to conduct the business now operated
by it and has not received any notice of proceedings relating to the revocation
or modification of any such certificate, authority or permit that, if determined
adversely to the Company, would individually or in the aggregate have a Material
Adverse Effect.
4.15 No Labor Disputes. No material labor dispute with the
employees of the Company exists or, to the knowledge of the Company, is
imminent.
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4.16 Intellectual Property. The Company has sufficient title
or adequate rights or licenses to the inventions, know-how, patents, copyrights,
trademarks, trade names, confidential information and other intellectual
property (collectively, "Intellectual Property Rights"), free and clear of any
material liens, security interests, charges, encumbrances, equities and other
adverse claims, necessary to conduct the business now operated by it, or
presently employed by it, and presently contemplated to be operated by it, and
the Company has not received any notice of infringement of or conflict with
asserted rights of others with respect to any Intellectual Property Rights. The
Company's patents and other Intellectual Property Rights and the present
activities of the Company do not infringe any patent, copyright, trademark,
trade name or other proprietary rights of any third party.
4.17 Environmental Matters. The Company is not in violation of
any statute, rule, regulation, decision or order of any governmental agency or
body or any court, domestic or foreign, relating to the use, disposal or release
of hazardous or toxic substances or relating to the protection or restoration of
the environment or human exposure to hazardous or toxic substances
(collectively, "Environmental Laws"), does not own or operate any real property
contaminated with any substance that is subject to any Environmental Laws, is
not liable for any off-site disposal or contamination pursuant to any
Environmental Laws, and is not subject to any claim relating to any
Environmental Laws, which violation, contamination, liability or claim would
individually or in the aggregate have a Material Adverse Effect; and the Company
is not aware of any pending investigation that might lead to such a claim.
4.18 Litigation. Except as disclosed in the SEC Filings or on
Schedule 4.18 hereto, there are no pending actions, suits or proceedings against
or affecting the Company, its subsidiaries or any of its or their properties
that, if determined adversely to the Company or such subsidiary, would
individually or in the aggregate have a Material Adverse Effect or would
materially and adversely affect the ability of the Company to perform its
obligations under this Agreement, or which are otherwise material in the context
of the sale of the Shares; and to the Company's knowledge, no such actions,
suits or proceedings are threatened or contemplated.
4.19 Financial Statements. The financial statements included
in each SEC Filings present fairly and accurately in all material respects the
consolidated financial position of the Company as of the dates shown and its
consolidated results of operations and cash flows for the periods shown, and
such financial statements have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis ("GAAP"). The
financial statements of the Company included in the SEC Filings comply as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC or other applicable rules and
regulations with respect thereto. Except as set forth in the financial
statements of the Company included in the SEC Filings filed prior to the date
hereof, the Company has no liabilities, obligations, claims or losses (whether
liquidated or unliquidated, secured or unsecured, absolute, accrued, contingent
or otherwise) that would be required to be disclosed on a balance sheet of the
Company or any subsidiary including the notes thereto) in conformity with GAAP
other than those which, individually or in the aggregate, would not have a
Material Adverse Effect.
4.20 Insurance Coverage. The Company maintains in full force
and effect insurance coverage that is customary for comparably situated
companies for the business being conducted and properties owned or leased by the
Company, and the Company reasonably believes such insurance coverage to be
adequate against all liabilities, claims and risks against which it is customary
for comparably situated companies to insure.
4.21 Predecessor Entities. The transactions by which the
Company and its subsidiaries were organized and succeeded to the assets,
liabilities, properties and business of its and their respective predecessors
were duly authorized and consummated in accordance with applicable law, with the
effect of making the Company and its subsidiaries the effective successors to
the assets, liabilities, properties an business of their respective
predecessors. The representations and warranties set forth in this Agreement,
the Exhibits hereto, the
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SEC Filings and the Memorandum disclose all information relating to such
transactions which might have a Material Adverse Effect.
4.22 Brokers and Finders. The Purchasers shall have no
liability or responsibility for the payment of any commission or finder's fee to
any third party in connection with or resulting from this agreement or the
transactions contemplated by this Agreement by reason of any agreement of or
action taken by the Company. The Purchasers acknowledge that the Company is
obligated to pay a commission to the Placement Agent equal to 5% of the gross
proceeds of sales made pursuant to the Agreements with the Purchasers.
4.23 No Directed Selling Efforts or General Solicitation.
Neither the Company nor any Person acting on its behalf has conducted any
general solicitation or general advertising (as those terms are used in
Regulation D) in connection with the offer or sale of any of the Securities.
4.24 No Integrated Offering. Neither the Company nor any of
its Affiliates, nor any Person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would adversely affect reliance by
the Company on Section 4(2) for the exemption from registration for the
transactions contemplated hereby or would require registration of the Shares
under the 0000 Xxx.
4.25 Disclosures. Neither the Memorandum, this Agreement or
the Exhibits hereto nor any other documents, certificates or instruments
furnished to the Purchasers by or on behalf of the Company or any subsidiary in
connection with the transactions contemplated by this Agreement contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements contained herein, in light of the circumstances under
which the statements were made, not misleading.
5. Representations and Warranties of the Purchaser. Each of the
Purchasers hereby severally, and not jointly, represents and warrants to the
Company that:
5.1 Organization and Existence. The Purchaser is either (i) an
individual, in which case he or she has the requisite power and authority to
invest in the Securities pursuant to this Agreement, or (ii) a validly existing
corporation, partnership or limited liability company, in which case Purchaser
has all requisite corporate, partnership or limited liability company power and
authority, as the case may be, to invest in the Securities pursuant to this
Agreement.
5.2 Authorization. The execution, delivery and performance by
the Purchaser of the Agreements have been duly authorized and the Agreements
will each constitute the valid and legally binding obligation of the Purchaser,
enforceable against the Purchaser in accordance with their terms.
5.3 Purchase Entirely for Own Account. The Securities to be
received by the Purchaser hereunder will be acquired for the Purchaser's own
account, not as nominee or agent, and not with a view to the resale or
distribution of any part thereof, and the Purchaser has no present intention of
selling, granting any participation in, or otherwise distributing the same. The
Purchaser is not a registered broker dealer or an entity engaged in the business
of being a broker dealer.
5.4 Investment Experience. The Purchaser acknowledges that it
can bear the economic risk and complete loss of its investment in the Securities
and has such knowledge and experience in financial or business matters that it
is capable of evaluating the merits and risks of the investment contemplated
hereby.
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5.5 Disclosure of Information. The Purchaser has received the
Memorandum and has had an opportunity to ask questions of and receive answers
from the Company regarding the Company, its business and the terms and
conditions of the offering of the Securities. The Purchaser acknowledges receipt
of the SEC Filings and any other filings which it requested made by the Company
with the SEC. Neither such inquiries nor any other due diligence investigation
conducted by the Purchaser shall modify, amend or affect the Purchaser's right
to rely on the Company's representations and warranties contained in this
Agreement.
5.6 Restricted Securities. The Purchaser understands that the
Securities are characterized as "restricted securities" under the U.S. 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 securities may be resold without registration under
the 1933 Act only in certain limited circumstances.
5.7 Legends. It is understood that, until registration for
resale pursuant to the Registration Statement, certificates evidencing the
Securities may bear one or all of the following legends:
(a) "The securities represented by this certificate
(the "Securities") have not been registered under the United States Securities
Act of 1933, as amended, or any other securities or other regulatory authority
of any state of the United States of America or foreign jurisdiction. The
Securities have been acquired for investment and may not be offered, sold or
transferred in the absence of an effective registration statement for the
Securities under the Securities Act of 1933, as amended, or applicable state
securities laws, or an opinion of counsel, in a generally acceptable form, that
registration is not required under said Act or applicable state securities laws
or unless sold pursuant to Rule 144 under said Act."
(b) If required by the authorities of any state in
connection with the issuance of sale of the Securities, the legend required by
such state authority.
Upon registration for resale pursuant to the Registration
Statement or upon Rule 144(k) becoming available, the Company shall promptly
cause certificates evidencing the Shares previously issued hereunder to be
replaced with certificates which do not bear such restrictive legends, and all
Warrant Shares subsequently issued shall not bear such restrictive legends. When
the Company is required to cause unlegended certificates to replace previously
issued legended certificates, if unlegended certificates are not delivered to an
Purchaser within fifteen (15) business days of submission by that Purchaser of
legended stock certificate(s) to the Company's transfer agent, the Company shall
be liable to the Purchaser for a penalty equal to 2% of the aggregate Purchase
Price of the Shares evidenced by such certificate(s) for each thirty day period
(or portion thereof) beyond such fifteen days that the unlegended certificates
have not been so delivered.
5.8 Accredited Investor. The Purchaser is an accredited
investor as defined in Rule 501(a) of Regulation D, as amended, under the 0000
Xxx.
5.9 No General Solicitation. The Purchaser did not learn of
the investment in the Securities as a result of any public advertising or
general solicitation.
5.10 Investor Questionnaires. The Purchaser represents that
the representations and responses to the questions in the Investor Questionnaire
set forth on Schedule I-A and the Registration Statement Questionnaire set forth
on Schedule I-B, each delivered herewith by the Purchaser, are true and correct.
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SECTION 6. Registration of the Registrable Securities;
Compliance with the Securities Act.
6.1. Registration Procedures and Expenses. The Company shall:
(a) as soon as practicable, prepare and file with the SEC
the Registration Statement on Form S-3 relating to
the resale of the Registrable Securities by the
Purchasers from time to time through the NASD OTC
Bulletin Board, the automated quotation system of the
NASDAQ National Market or the NASDAQ SmallCap Market
or the facilities of any national securities exchange
on which the Company's Common Stock is then traded or
in privately-negotiated transactions, in an amount
equal to the number of Shares issued to Purchasers on
the Closing Date plus the number of Shares Common
Stock necessary to permit in full the exercise of the
Warrants, plus to the extent allowable under the 1933
Act, such indeterminate number of additional shares
of Common Stock resulting from stock splits, stock
dividends or similar transactions with respect to the
Registrable Securities;
(b) use its reasonable efforts, subject to receipt of
necessary information from the Purchasers, to cause
the SEC to notify the Company of the SEC's
willingness to declare the Registration Statement
effective within 60 days after the Registration
Statement is filed by the Company;
(c) prepare and file with the SEC such amendments and
supplements to the Registration Statement and the
prospectus used in connection therewith as may be
necessary to keep the Registration Statement
effective until the earlier of (i) twenty-four months
after the effective date of the Registration
Statement or (ii) the date on which the Registrable
Securities may be resold by the Purchasers without
registration by reason of Rule 144(k) under the
Securities Act or any other rule of similar effect;
(d) permit counsel designated by the Placement Agent to
review each Registration Statement and all amendments
and supplements thereto no fewer than five (5) days
prior to their filing with the SEC and not file any
document to which such counsel reasonably objects;
(e) furnish to the Placement Agent and its legal counsel
promptly after the same is prepared and publicly
distributed, filed with the SEC, or received by the
Company, one copy of any Registration Statement and
any amendment thereto, each preliminary prospectus
and prospectus and each amendment or supplement
thereto, and each letter written by or on behalf of
the Company to the SEC or the staff of the SEC, and
each item of correspondence from the SEC or the staff
of the SEC, in each case relating to such
Registration Statement (other than any portion of any
thereof which contains information for which the
Company has sought confidential treatment);
(f) furnish to each Purchaser with respect to the
Registrable Securities registered under the
Registration Statement, to the Placement Agent, and
to each underwriter, if any, for the resale of such
Registrable Securities, such reasonable number of
copies of prospectuses in order to facilitate the
public sale or other disposition of all or any of the
Registrable Securities by the Purchaser; provided,
however, that the obligation of the Company to
deliver copies of prospectuses to the Purchaser shall
be subject to the receipt by the Company of
reasonable assurances from the Purchaser that the
Purchaser will comply with the applicable provisions
of the Securities Act and of such other securities or
blue sky laws as may be applicable in connection with
any use of such prospectuses;
10
(g) file documents required of the Company for normal
blue sky clearance in states specified in writing by
the Purchaser; provided, however, that the Company
shall not be required to qualify to do business or
consent to service of process in any jurisdiction in
which it is not now so qualified or has not so
consented; and
(h) bear all expenses in connection with the procedures
in paragraphs (a) through (h) of this Section 6.1 and
the registration of the Registrable Securities
pursuant to the Registration Statement, other than
fees and expenses, if any, of counsel or other
advisers to the Purchaser or the Other Purchasers or
underwriting discounts, brokerage fees and
commissions incurred by the Purchasers.
6.2. Transfer of Registrable Securities After Registration.
The Purchaser agrees that it will not effect any disposition of the Registrable
Securities or its right to purchase the Registrable Securities that would
constitute a sale within the meaning of the Securities Act, except as
contemplated in the Registration Statement referred to in Section 6.1, and that
it will promptly notify the Company of any changes in the information set forth
in the Registration Statement regarding the Purchaser or its Plan of
Distribution.
6.3. Indemnification. For the purpose of this Section 6.3:
(i) the term "Purchaser/Affiliate" shall include the
Purchaser and any affiliate of the Purchaser and any
person who controls the Purchaser or any affiliate of
the Purchaser within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act; and
(ii) the term "Registration Statement" shall include any
final prospectus, exhibit, supplement or amendment
included in or relating to the Registration Statement
referred to in Section 6.1.
(a) The Company agrees to indemnify and hold harmless each
Purchaser and each Purchaser/Affiliate against any losses, claims, damages,
liabilities or expenses, joint or several, to which such Purchaser or
Purchaser/Affiliate may become subject, under the Securities Act, the Exchange
Act, or any other federal or state statutory law or regulation, or at common law
or otherwise (including in settlement of any litigation, if such settlement is
effected with the written consent of the Company), insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof as
contemplated below) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement, including the prospectus, financial statements and schedules, and all
other documents filed as a part thereof, as amended at the time of effectiveness
of the Registration Statement, including any information deemed to be a part
thereof as of the time of effectiveness pursuant to paragraph (b) of Rule 430A,
or pursuant to Rule 434, of the Rules and Regulations, or the prospectus, in the
form first filed with the SEC pursuant to Rule 424(b) of the Regulations, or
filed as part of the Registration Statement at the time of effectiveness if no
Rule 424(b) filing is required (the "Prospectus"), or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state in any of them a material fact required to be stated therein
or necessary to make the statements in any of them, in the light of the
circumstances under which they were made, not misleading, or arise out of or are
based in whole or in part on any material inaccuracy in the representations and
warranties of the Company contained in this Agreement, or any failure of the
Company to perform its obligations hereunder or under law, and will reimburse
each Purchaser and each such Purchaser/Affiliate for any legal and other
expenses as such expenses are reasonably incurred by such Purchaser or such
Purchaser/Affiliate in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action; provided, however, that the Company will not be liable in
11
any such case to the extent that any such loss, claim, damage, liability or
expense arises out of or is based upon (i) an untrue statement or alleged untrue
statement or omission or alleged omission made in the Registration Statement,
the Prospectus or any amendment or supplement thereto in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
such Purchaser expressly for use therein, or (ii) the failure of such Purchaser
to comply with the covenants and agreements contained in Sections 5(b) or 6.2
hereof respecting sale of the Registrable Securities, or (iii) the inaccuracy of
any representations or warranties made by such Purchaser herein, or (iv) or any
failure of such Purchaser to perform its obligations hereunder or under law, or
(v) any statement or omission in any Prospectus that is corrected in any
subsequent Prospectus that was delivered to such Purchaser prior to the
pertinent sale or sales by such Purchaser.
(b) Each Purchaser will severally indemnify and hold harmless
the Company, each of its directors, each of its officers who signed the
Registration Statement and each person, if any, who controls the Company within
the meaning of the Securities Act, against any losses, claims, damages,
liabilities or expenses to which the Company, each of its directors, each of its
officers who signed the Registration Statement or controlling person may become
subject, under the Securities Act, the Exchange Act, or any other federal or
state statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of such Purchaser) insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof as contemplated below) arise out of
or are based upon (i) any failure to comply with the covenants and agreements
contained in Sections 5(b) or 6.2 hereof respecting the sale of the Registrable
Securities or (ii) the inaccuracy of any representation or warranty made by such
Purchaser herein or (iii) any failure of such Purchaser to perform its
obligations hereunder or under law or (iv) any untrue or alleged untrue
statement of any material fact contained in the Registration Statement, the
Prospectus, or any amendment or supplement thereto, 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 to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in the
Registration Statement, the Prospectus, or any amendment or supplement thereto,
in reliance upon and in conformity with written information furnished to the
Company by or on behalf of such Purchaser expressly for use therein, and will
reimburse the Company, each of its directors, each of its officers who signed
the Registration Statement or controlling person for any legal and other expense
reasonably incurred by the Company, each of its directors, each of its officers
who signed the Registration Statement or controlling person in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action.
(c) Promptly after receipt by an indemnified party under this
Section 6.3 of notice of the threat or commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party under this Section 6.3 promptly notify the indemnifying party
in writing thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party for
contribution or otherwise than under the indemnity agreement contained in this
Section 6.3 or to the extent it is not prejudiced as a result of such failure.
In case any such action is brought against any indemnified party and such
indemnified party seeks or intends to seek indemnity from an indemnifying party,
the indemnifying party will be entitled to participate in, and, to the extent
that it may wish, jointly with all other indemnifying parties similarly
notified, to assume the defense thereof with counsel reasonably satisfactory to
such indemnified party; provided, however, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be a conflict
between the positions of the indemnifying party and the indemnified party in
conducting the defense of any such action or that there may be legal defenses
available to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party, the indemnified party
or parties shall have the right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of such action on behalf of
such indemnified party or parties. Upon receipt of notice from the indemnifying
party to such indemnified party of its election so to assume the defense of such
12
action and approval by the indemnified party of the indemnifying party's
counsel, the indemnifying party will not be liable to such indemnified party
under this Section 6.3 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed such counsel in connection with the
assumption of legal defenses in accordance with the proviso to the preceding
sentence (it being understood, however, that the indemnifying party shall not be
liable for the expenses of more than one separate counsel, approved by such
indemnifying party in the case of paragraph (a), representing all of the
indemnified parties who are parties to such action) or (ii) the indemnified
party shall not have employed counsel reasonably satisfactory to the
indemnifying party to represent the indemnified party within a reasonable time
after notice of commencement of action, in each of which cases the reasonable
fees and expenses of counsel shall be at the expense of the indemnifying party.
(d) If the indemnification provided for in this Section 6.3 is
required by its terms but is for any reason held to be unavailable to or
otherwise insufficient to hold harmless an indemnified party under paragraphs
(a), (b) or (c) of this Section 6.3 in respect to any losses, claims, damages,
liabilities or expenses referred to herein, then each applicable indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as a result of any losses, claims, damages, liabilities or expenses referred to
herein (i) in such proportion as is appropriate to reflect the relative benefits
received by the Company and such Purchaser from the placement of Common Stock or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but the relative fault of the
Company and such Purchaser in connection with the statements or omissions or
inaccuracies in the representations and warranties in this Agreement which
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative benefits received by
the Company on the one hand and such Purchaser on the other shall be deemed to
be in the same proportion as the amount paid by such Purchaser to the Company
pursuant to this Agreement for the Registrable Securities purchased by such
Purchaser that were sold pursuant to the Registration Statement bears to the
difference (the "Difference") between the amount such Purchaser paid for the
Registrable Securities that were sold pursuant to the Registration Statement and
the amount received by such Purchaser from such sale. The relative fault of the
Company on the one hand and such Purchaser on the other shall be determined by
reference to, among other things, whether the untrue or alleged statement of a
material fact or the omission or alleged omission to state a material fact or
the inaccurate or the alleged inaccurate representation and/or warranty relates
to information supplied by the Company or by such Purchaser and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set forth in
paragraph (c) of this Section 6.3, any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
any action or claim. The provisions set forth in paragraph (c) of this Section
6.3 with respect to the notice of the threat or commencement of any threat or
action shall apply if a claim for contribution is to be made under this
paragraph (d); provided, however, that no additional notice shall be required
with respect to any threat or action for which notice has been given under
paragraph (c) for purposes of indemnification. The Company and such Purchaser
agree that it would not be just and equitable if contribution pursuant to this
Section 6.3 were determined solely by pro rata allocation (even if each
Purchaser were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to in this paragraph. The liability of each Purchaser hereunder shall be limited
to an amount equal to the Purchaser's purchase price for the Registrable
Securities. Notwithstanding the provisions of this Section 6.3, no Purchaser
shall be required to contribute any amount in excess of the amount by which the
Difference exceeds the amount of any damages that such Purchaser has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Purchaser's obligations to contribute pursuant to this
Section 6.3 are several and not joint.
13
6.4. Termination of Conditions and Obligations. The
restrictions imposed by Section 5 or this Section 6 upon the transferability of
the Registrable Securities shall cease and terminate as to any particular number
of the Registrable Securities upon the passage of twenty-four months from the
effective date of the Registration Statement covering such Registrable
Securities or at such time as an opinion of counsel reasonably satisfactory in
form and substance to the Company shall have been rendered to the effect that
such conditions are not necessary in order to comply with the Securities Act.
6.5. Information Available. So long as the Registration
Statement is effective covering the resale of Registrable Securities owned by
the Purchaser, the Company will furnish to the Purchaser:
(a) as soon as practicable after available (but in the
case of the Company's Annual Report to Stockholders,
within 120 days after the end of each fiscal year of
the Company), one copy of (i) its Annual Report to
Stockholders (which Annual Report shall contain
financial statements audited in accordance with
generally accepted accounting principles by a
national firm of certified public accountants), (ii)
if not included in substance in the Annual Report to
Stockholders, its Annual Report on Form 10-KSB, (iii)
if not included in substance in its Quarterly Reports
to Shareholders, its quarterly reports on Form 10-Q,
and (iv) a full copy of the particular Registration
Statement covering the Registrable Securities (the
foregoing, in each case, excluding exhibits);
(b) upon the request of the Purchaser, a reasonable
number of copies of the prospectuses to supply to any
other party requiring such prospectuses;
and the Company, upon the reasonable request of the Purchaser, will meet with
the Purchaser or a representative thereof at the Company's headquarters to
discuss information relevant for disclosure in the Registration Statement
covering the Registrable Securities and will otherwise cooperate with any
Purchaser conducting an investigation for the purpose of reducing or eliminating
such Purchaser's exposure to liability under the Securities Act, including the
reasonable production of information at the Company's headquarters, subject to
appropriate confidentiality limitations.
7. Covenants and Agreements of the Company.
7.1 Limitations on Transactions.
(a) From the date of this Agreement until the date which is
120 days following effectiveness of the Registration Statement covering the
Registrable Securities as contemplated by Section 6.1 (the "Restricted Period"),
and subject to the exclusions contained in Section 7.1(d) below, without the
prior written consent of the Placement Agent (which consent may be withheld in
the Placement Agent's discretion), the Company shall not issue or sell or agree
to issue or sell for cash any shares of its Common Stock at a Per Share Selling
Price (as defined below) lower than the Purchase Price per share provided in
Section 2 hereof.
(b) For the purposes of this Section 7.1, the term "Per Share
Selling Price" as used in this Section 7.1 shall include the amount actually
paid by third parties for each share of Common Stock. In the event a fee in
excess of 5.0% is paid by the Company in connection with such transaction, any
such excess amount shall be deducted from the selling price pro rata to all
shares sold in the transaction to arrive at the Per Share Selling Price. A sale
in a capital raising transaction of shares of Common Stock shall include the
sale or issuance of rights, options, warrants or convertible securities under
which the Company is or may become obligated to issue shares of Common Stock,
and in such circumstances the Per Share Selling Price of the Common Stock
covered thereby shall also include the exercise or conversion price thereof (in
addition to the
14
consideration received by the Company upon such sale or issuance less the excess
fee amount as provided above). If shares are issued for a consideration other
than cash, the Per Share Selling Price shall be the fair value of such
consideration as determined in good faith by independent certified public
accountants mutually acceptable to the Company and the Purchasers.
(c) Capital Adjustments. In case of any stock split or reverse
stock split, stock dividend, reclassification of the common stock,
recapitalization, merger or consolidation, or like capital adjustment affecting
the Common Stock of the Company, the provisions of Section 7.1 shall be applied
in a fair, equitable and reasonable manner so as to give effect, as nearly as
may be, to the purposes hereof.
(d) Exclusions. Section 7.1(a) shall not apply to:
(i) issuances of options to acquire or shares of Common Stock
by the Company pursuant to the provisions of any existing
shareholder-approved option or similar employee benefit plan heretofore
adopted by the Company; or
(ii) sales of shares of Common Stock by the Company upon
conversion or exercise of any convertible securities, options or
warrants outstanding prior to the date hereof; or
(iii) issuances by the Company of shares of Common Stock (A)
as consideration for the acquisition by the Company of one or more
privately or publicly held entities; (B) to corporate strategic
partners of the Company in connection with the formation of joint
ventures or marketing agreements; and (C) to consultants of the Company
in consideration for services to be rendered to the Company.
7.2 Opinion of Counsel. On or prior to the Closing Date, the
Company will deliver to the Purchasers the opinion of legal counsel to the
Company, in form and substance reasonably acceptable to the Placement Agent and
its legal counsel.
7.3 Reports. For so long as the Purchasers beneficially own
any of the Securities, the Company will furnish to the Purchasers the following
reports, each of which shall be provided to the Purchasers by mail (within one
week of filing with the SEC, in the case of SEC filings):
(a) Quarterly Reports. The Company's quarterly report
on Form 10-QSB or, in the absence of such report, consolidated balance sheets of
the Company as at the end of such period and the related consolidated statements
of operations, stockholders' equity and cash flows for such period and for the
portion of the Company's fiscal year ended on the last day of such quarter, all
in reasonable detail and certified by a principal financial officer of the
Company to have been prepared in accordance with generally accepted accounting
principles, subject to year-end and audit adjustments.
(b) Annual Reports. The Company's Form 10-KSB or, in
the absence of a Form 10-KSB, consolidated balance sheets of the Company as at
the end of such year and the related consolidated statements of earnings,
stockholders' equity and cash flows for such year, all in reasonable detail and
accompanied by the report on such consolidated financial statements of an
independent certified public accountant selected by the Company and reasonably
satisfactory to the Purchaser.
(c) Securities Filings. Copies of (i) all notices,
proxy statements, financial statements, reports and documents as the Company
shall send or make available generally to its stockholders or to financial
analysts, promptly after providing same to the stockholders and (ii) all
periodic and special reports, documents and registration statements (other than
on Form S-8) which the Company furnishes or files, or any officer or director of
the Company (in such person's capacity as such) furnishes or files with the SEC.
15
(d) Other Information. Such other information
relating to the Company as from time to time may reasonably be requested by the
Purchasers provided the Company produces such information in its ordinary course
of business, and further provided that the Company, solely in its own
discretion, determines that such information is not confidential in nature and
disclosure to the Purchaser would not be harmful to the Company.
7.4 No Conflicting Agreements. The Company will not take any
action, enter into any agreement or make any commitment that would conflict or
interfere in any material respect with the obligations to the Purchasers under
the Agreements.
7.5 Insurance. So long as the Purchasers beneficially own any
Securities, the Company shall not materially reduce the insurance coverages set
forth in Schedule 4.20.
7.6 Compliance with Laws. So long as the Purchasers
beneficially own any Securities, the Company will use reasonable efforts to
comply with all applicable laws, rules, regulations, orders and decrees of all
governmental authorities, except to the extent non-compliance (in one instance
or in the aggregate) would not have a Material Adverse Effect.
8. Survival. All representations, warranties, covenants and agreements
contained in this Agreement shall be deemed to be representations, warranties,
covenants and agreements as of the date hereof and shall survive the execution
and delivery of this Agreement for a period of three years from the date of this
Agreement; provided, however, that the provisions contained in Section 7 hereof
shall survive in accordance therewith.
9. Miscellaneous.
9.1 Successors and Assigns. This Agreement may not be assigned
by a party hereto without the prior written consent of the other party hereto,
except that without the prior written consent of the Company, but after notice
duly given, a Purchaser may assign its rights and delegate its duties hereunder
in whole or in part to an Affiliate or to a third party acquiring some portion
or all of its Securities in a private transaction. The terms and conditions of
this Agreement shall inure to the benefit of and be binding upon the respective
permitted successors and assigns of the parties. 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.
9.2 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.3 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.
9.4 Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given only upon delivery to each party to be notified by (i)
personal delivery, (ii) facsimile, upon receipt of confirmation of complete
transmittal, or (iii) an internationally recognized overnight air courier,
addressed to the party to be notified at the address as follows, or at such
other address as such party may designate by ten days' advance written notice to
the other party:
16
If to the Company:
Xxxxxx Xxxxxx Communications, Incorporated
0000 Xxxxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxxx
Chief Financial Officer
with a copy to:
Xxxxxx X. xxx Xxxxxx, Esq.
Xxxxxxxxx Xxxxxxxx LLP
Xxx Xxxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xx. Xxxxx, Xxxxxxxx 00000
If to the Purchasers, to the addresses set forth on
the signature pages hereto, with copies to:
Xxxxxx, Xxxxxxxx & Company, Incorporated
One Financial Plaza
000 X. Xxxxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Vice President/Investment Banking
and to:
Xxxxx X. Xxxxx, Xx., Esq.
Xxxxx Xxxx LLP
Xxx Xxxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xx. Xxxxx, Xxxxxxxx 00000
9.5 Expenses. The parties hereto shall pay their own costs and
expenses in connection herewith.
9.6 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 Company and the Purchasers.
Any amendment or waiver effected in accordance with this paragraph shall be
binding upon each holder of any Securities purchased under this Agreement at the
time outstanding, each future holder of all such securities, and the Company.
9.7 Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of this Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
9.8 Entire Agreement. This Agreement, including the Exhibits
and Schedules hereto, constitute the entire agreement among the parties hereof
with respect to the subject matter hereof and thereof and supersede all prior
agreements and understandings, both oral and written, between the parties with
respect to the subject matter hereof and thereof.
17
9.9 Further Assurances. The parties shall execute and deliver
all such further instruments and documents and take all such other actions as
may reasonably be required to carry out the transactions contemplated hereby and
to evidence the fulfilment of the agreements herein contained.
9.10 Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Missouri without regard
to principles of conflicts of laws.
18
Purchase Agreement Signature Page
IN WITNESS WHEREOF, the undersigned has executed this
Agreement on the ______ day of ______________________, 2001.
A. TOTAL INVESTMENT AMOUNT FOR UNDERSIGNED PURCHASER: = $ ____________
B. PRICE PER SHARE OF COMMON STOCK = $1.50
C. NUMBER OF SHARES (A. DIVIDED BY $1.50) = ____________
D. NUMBER OF WARRANTS (ONE PER EVERY TWO SHARES PURCHASED) = ____________
E. EXERCISE PRICE OF WARRANTS = $2.50
(Please make all checks payable to "Missouri State Bank and Trust Company/Xxxxxx
Xxxxxx Communications, Incorporated".
INDIVIDUAL INVESTORS:
---------------------------------------
Signature
---------------------------------------
Name (Typed or Printed)
---------------------------------------
Signature (if more than one individual
subscriber)
---------------------------------------
Name (Typed or Printed)
ENTITY INVESTORS:
---------------------------------------
Signature
---------------------------------------
Name (Typed or Printed) and Title
---------------------------------------
Name of Entity
Accepted by the Company:
Dated ________________, 2001
XXXXXX XXXXXX COMMUNICATIONS, INCORPORATED
By:
---------------------------------------
Name:
Title:
19
SCHEDULE I-A
THE QUESTIONS THAT FOLLOW ARE DESIGNED TO ASSIST THE COMPANY IN DETERMINING
WHETHER THE SUBSCRIBER IS AN ACCREDITED INVESTOR. INITIAL ALL APPROPRIATE SPACES
ON THE FOLLOWING PAGES, INDICATING THE BASIS UPON WHICH THE SUBSCRIBER MAY
QUALIFY TO PURCHASE SHARES. FAILING TO INITIAL ALL SPACES APPLICABLE TO THE
SUBSCRIBER MAY RESULT IN THE COMPANY NOT HAVING ENOUGH INFORMATION TO DETERMINE
IF THE SUBSCRIBER IS AN ACCREDITED INVESTOR.
The Subscriber represents that:
FOR INDIVIDUALS (PLEASE INITIAL ANY OF THE FOLLOWING WHICH ARE APPLICABLE):
[ ] a. The Subscriber has an individual net worth*, or together with
the Subscriber's spouse a combined net worth, in excess of
$1,000,000, or
[ ] b. The Subscriber had an individual income** (exclusive of any
income attributable to the Initial Subscriber's spouse) in
excess of $200,000 in each of the last two calendar years and
it reasonably expects to have an individual income in excess
of $200,000 during the current calendar year, or
[ ] c. The Subscriber, together with the Subscriber's spouse, had a
combined income in excess of $300,000 in each of the last two
calendar years and it reasonably expects to have a combined
income in excess of $300,000 during the current calendar year.
* "Net worth" means the excess of total assets at fair market value,
including home, home furnishings and automobiles, over total
liabilities. For purposes of determining "net worth," the principal
residence owned by an individual must be valued either at (A) cost,
including the cost of improvements, net of current encumbrances upon the
property, or (B) the appraised value of the property as determined by a
written appraisal used by an institutional lender making a loan to the
individual secured by the property, including the cost of subsequent
improvements, net of current encumbrances, upon the property.
** For purposes of this Subscription Agreement, individual income means
gross income, as reported for income tax purposes, less any income
attributable to a spouse or to property owned by a spouse, increased by
the following amounts (but not including any amounts attributable to a
spouse or to property owned by a spouse): (1) the amount of any
tax-exempt interest income received under Xxxxxxx 000 xx xxx Xxxxxx
Xxxxxx Internal Revenue Code of 1986, as amended (the "Code"), (2) the
amount of losses claimed as a limited partner in a limited partnership
as reported on Schedule E of Form 1040 and (3) any deduction claimed for
depletion under Section 611 et seq. of the Code.
FOR CORPORATIONS OR PARTNERSHIPS (PLEASE INITIAL EITHER OF THE FOLLOWING, OR
BOTH, IF APPLICABLE):
[ ] d. The Subscriber is a corporation, similar business trust,
limited liability company or partnership, not formed for the
specific purpose of acquiring Securities, with total assets in
excess of $5,000,000.
[ ] e. All of the equity owners of the Subscriber have (i) an
individual net worth, or together with spouse a combined net
worth, in excess of $1,000,000; or (ii) an individual income
(exclusive of any income attributable to spouse) in excess of
$200,000 in each of the last two calendar years and a
reasonable expectation of having an individual income in
excess of $200,000 during the current calendar year; or (iii)
a combined income together with spouse in excess of $300,000
in each of the last two calendar years and a reasonable
expectation of having a combined income in excess of $300,000
during the current calendar year. Please list below the names
of all equity owners of the Subscriber and the manner in which
they qualify.
Names of All Equity Owners (attach
additional sheets if necessary) Individual Income Minimum Net Worth
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20
FOR TRUSTS OTHER THAN EMPLOYEE BENEFIT TRUSTS (PLEASE INITIAL EITHER OF THE
FOLLOWING, OR BOTH, IF APPLICABLE):
[ ] f. The Subscriber has total assets in excess of $5,000,000 and
that the investment in the Company is being directed by a
sophisticated person, which, for purposes of this
representation, means a person who has such knowledge and
experience in financial and business matters that the person
is capable of evaluating the merits and risks of the
prospective investment in the Company.
[ ] g. The Subscriber is (a) a bank as defined in Section 3(a)(2) of
the Securities Act, (b) acting in its fiduciary capacity as
trustee and (c) subscribing for the purpose of the securities
being offered on behalf of a trust.
[ ] h. The Subscriber is a revocable trust that may be amended or
revoked at any time by its grantors and that all of its
grantors meet the standard set out in Statements a, b or c
above. Please list below the names of all grantors and the
manner in which they qualify.
Names of All Equity Owners (attach
additional sheets if necessary) Individual Income Minimum Net Worth
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Exact Name in which Securities are to be registered:
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Address of registered owner:
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Relationship of registered owner to Purchase, if different:
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Social Security Number or Taxpayer ID
Number for each Registered Holder:
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Telephone number: ( ) Fax number: ( ) Email address:
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21
Schedule X-X
XXXXXX XXXXXX COMMUNICATIONS, INCORPORATED
REGISTRATION STATEMENT QUESTIONNAIRE
1. Pursuant to the "Selling Shareholder" section of the
Registration Statement, please state your or you organization's name exactly as
it should appear in the Registration Statement:
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2. Please provide the number of shares that you or your
organization will own immediately after Closing, including those Securities
purchased by you or your organization pursuant to this
Purchase Agreement and
those Securities purchased by you or your organization through other
transactions:
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3. Have you or your organization had any position, or other
material relationship within the past three years with the Company or its
affiliates?
______ Yes ______ No
If yes, please indicate the nature of any such relationships below:
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