Exhibit 4.1 Securities Purchase Agreement
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT, dated as of the date of acceptance set
forth below, is entered into by and between XXXXXXXXXX.XXX HOLDINGS, INC., a
Colorado corporation, with headquarters located at Suite 500, 750 West Xxxxxx
Street, Vancouver, British Columbia, Canada V6C 2T7 (the "Company"), and each
entity named on a signature page hereto (each, a "Lender") (each agreement with
a Lender being deemed a separate and independent agreement between the Company
and such Lender, except that each Lender acknowledges and consents to the rights
granted to each other Lender under such agreement and the Transaction
Agreements, as defined below, referred to therein).
W I T N E S S E T H:
WHEREAS, the Company and the Lender are executing and delivering this
Agreement in accordance with and in reliance upon the exemption from securities
registration afforded, inter alia, by Rule 506 under Regulation D ("Regulation
D") as promulgated by the United States Securities and Exchange Commission (the
"SEC") under the Securities Act of 1933, as amended (the "1933 Act"), and/or
Section 4(2) of the 1933 Act; and
WHEREAS, the Lender wishes to lend funds to the Company, subject to and
upon the terms and conditions of this Agreement , the repayment of which will be
represented by 3% Convertible Debentures Series 00-1 of the Company (the
"Convertible Debentures"), which Convertible Debentures will be convertible into
shares of Common Stock, no par value per share, of the Company (the "Common
Stock"), upon the terms and subject to the conditions of such Debentures,
together with the Warrants (as defined below) exercisable for the purchase of
shares of Common Stock, and subject to acceptance of this Agreement by the
Company;
NOW THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. AGREEMENT TO PURCHASE; PURCHASE PRICE.
a. Purchase; Certain Definitions.
(i) Subject to the terms and conditions of this Agreement and the other
Transaction Agreements, the undersigned hereby agrees to loan to the Company the
principal amount set forth on the Lender's signature page of this Agreement (the
"Purchase Price"), out of the aggregate amount being loaned by all Lenders of
$500,000. The obligation to repay the loan shall be evidenced by the Company's
issuance of one or more Convertible Debentures to the Lender in such principal
amount (the Convertible Debentures issued to the Lender, the "Debentures"). Each
Debenture shall have the terms and conditions of, and be substantially in the
form attached hereto as, Annex I. The loan to be made by the Lender and the
issuance of the
Debentures to the Lender are sometimes referred to herein and in the other
Transaction Agreements as the purchase and sale of the Debentures.
(ii) The purchase price to be paid by the Lender (the "Purchase Price")
shall be equal to the face amount of the Debentures being purchased on the
Closing Date and shall be payable in United States Dollars.
b. Certain Definitions. As used herein, each of the following terms has the
meaning set forth below, unless the context otherwise requires:
(i) "Affiliate" means, with respect to a specific Person referred to in the
relevant provision, another Person who or which controls or is controlled by or
is under common control with such specified Person.
(ii) "Cap Amount" means, if the Cap Regulations are applicable to the
Company's issuance of shares in connection with the transactions contemplated by
the Transaction Agreements, the number of shares equal to 19.99% of the number
of outstanding shares of Common Stock on the date hereof (the number of such
outstanding shares is specified in Section 3(c) hereof).
(iii) "Cap Regulations" means the maximum number of shares that may be
issued in compliance with the applicable rules and regulations of its Principal
Trading Market, including, but not necessarily limited to, Nasdaq Rule
4310(c)(25)(H)(i) or Rule 4460(i)(1), as may be applicable, which would limit
the issuance of Common Stock on conversion of the all the Debentures in this
series to the Cap Amount.
(iv) "Certificates" means the Debentures and the Warrants, each duly
executed by the Company and issued on the Closing Date in the name of the
Lender.
(v) "Closing Date" means the date of the closing of the purchase and sale
of the Debentures, as provided herein.
(vi) "Conversion Shares" means the shares of Common Stock issuable upon
conversion of the Debentures (including, if relevant, accrued interest on the
Debentures so converted).
(vii) "Effective Date" means the effective date of the Registration
Statement covering the Registrable Securities (as those terms are defined in the
Registration Rights Agreement) relating to the Securities.
(viii) "Escrow Agent" means the escrow agent identified in the Joint Escrow
Instructions attached hereto as Annex II (the "Joint Escrow Instructions").
(ix) "Escrow Funds" means the Purchase Price delivered to the Escrow Agent
as contemplated 12/10/00 by Sections 1(c) and (d) hereof.
(x) "Escrow Property" means the Escrow Funds and the Certificates delivered
to the Escrow Agent as contemplated by Section 1(c) hereof.
(xi) "Holder" means the Person holding the relevant Securities.
(xii) "Last Audited Date" means December 31, 1999.
(xiii) "Lender's Allocable Share" means the fraction, of which the
numerator is the Purchase Price of the Lender's Debentures and the denominator
is $500,000.
(xiv) "Person" means any living person or any entity, such as, but not
necessarily limited to, a corporation, partnership or trust.
(xv) "Principal Trading Market" means The NASD/OTC Bulletin Board Market.
(xvi) "Registration Rights Agreement" means the Registration Rights
Agreement in the form annexed hereto as Annex IV, as executed by the Lender and
the Company simultaneously with the execution of this Agreement.
(xvii) "Reporting Service" means Bloomberg LP or if that service is not
then reporting the relevant information regarding the Common Stock, a comparable
reporting service of national reputation selected by the Holders of the
Debentures and reasonably acceptable to the Company.
(xviii) "Securities" means the Debentures, the Warrants, the Conversion
Shares and the Warrant Shares (as defined below).
(xix) "Shares" means the shares of Common Stock representing any or all of
the Conversion Shares and the Warrant Shares.
(xx) "Transaction Agreements" means the Securities Purchase Agreement, the
Debentures, the Joint Escrow Instructions, the Registration Rights Agreement,
and the Warrants and includes all ancillary documents referred to in those
agreements.
(xxi) "Warrants" means the Basic Warrants and the Additional Warrants (as
those terms are defined below).
(xxii) "Warrant Shares" means the shares of Common Stock issuable upon
exercise of the Warrants.
c. Form of Payment; Delivery of Certificates.
(i) The Lender shall pay the Purchase Price for the Debentures by
delivering immediately available good funds in United States Dollars to the
Escrow Agent no later than the date prior to the Closing Date.
(ii) No later than the Closing Date, but in any event promptly following
payment by the Lender to the Escrow Agent of the Purchase Price, the Company
shall deliver the Certificates, each duly executed on behalf of the Company and
issued in the name of the Lender, to the Escrow Agent.
(iii) By signing this Agreement, each of the Lender and the Company,
subject to acceptance by the Escrow Agent, agrees to all of the terms and
conditions of, and becomes a party to, the Joint Escrow Instructions, all of the
provisions of which are incorporated herein by this reference as if set forth in
full.
d. Method of Payment. Payment into escrow of the Purchase Price shall be
made by wire transfer of funds to:
Bank of New York
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
ABA# 000000000
For credit to the account of Xxxxxxx & Prager LLP
Account No.: [To be provided to the Lender by Xxxxxxx & Xxxxxx LLP]
Re: Xxxxxxxxxx.xxx Transaction
Not later than 3:00 p.m., New York time, on the date which is two (2) New York
Stock Exchange ("NYSE") trading days after both the Lender and the Company shall
have accepted this Agreement and each returned a signed counterpart of this
Agreement to the Escrow Agent by facsimile, the Lender shall deposit with the
Escrow Agent the Purchase Price in immediately available funds. Time is of the
essence with respect to such payment, and failure by the Lender to make such
payment, shall allow the Company to cancel this Agreement.
2. LENDER REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO INFORMATION;
INDEPENDENT INVESTIGATION.
The Lender represents and warrants to, and covenants and agrees with, the
Company as follows:
a. Without limiting Lender's right to sell the Securities pursuant to the
Registration Statement or otherwise in compliance with the 1933 Act, the Lender
is purchasing the Debentures and will be acquiring the Shares for its own
account for investment only and not with a view towards the public sale or
distribution thereof and not with a view to or for sale in connection with any
distribution thereof.
b. The Lender is (i) an "accredited investor" as that term is defined in
Rule 501 of the General Rules and Regulations under the 1933 Act by reason of
Rule 501(a)(3), (ii) experienced in making investments of the kind described in
this Agreement and the related documents, (iii) able, by reason of the business
and financial experience of its officers (if an entity) and professional
advisors (who are not affiliated with or compensated in any way by the
Company or any of its Affiliates or selling agents), to protect its own
interests in connection with the transactions described in this Agreement, and
the related documents, and (iv) able to afford the entire loss of its investment
in the Securities.
c. All subsequent offers and sales of the Securities by the Lender shall be
made pursuant to registration of the Shares under the 1933 Act or pursuant to an
exemption from registration.
d. The Lender understands that the Securities are being offered and sold to
it in reliance on specific exemptions from the registration requirements of the
1933 Act and state securities laws and that the Company is relying upon the
truth and accuracy of, and the Lender's compliance with, the representations,
warranties, agreements, acknowledgments and understandings of the Lender set
forth herein in order to determine the availability of such exemptions and the
eligibility of the Lender to acquire the Securities.
e. The Lender and its advisors, if any, have been furnished with all
materials relating to the business, finances and operations of the Company and
materials relating to the offer and sale of the Debentures and the offer of the
Shares which have been requested by the Lender, including those set forth on
Annex V hereto. The Lender and its advisors, if any, have been afforded the
opportunity to ask questions of the Company and have received complete and
satisfactory answers to any such inquiries. Without limiting the generality of
the foregoing, the Lender has also had the opportunity to obtain and to review
the Company's (1) Annual Report, as amended, on Form 10-K for the fiscal year
ended December 31, 1999, (2) Quarterly Reports on Form 10-Q for the fiscal
quarters ended March 31, 2000, June 30, 2000 and September 30, 2000; (3) Current
Reports on Form 8-K filed February 15, 2000 and April 18, 2000, (4) Registration
Statement on Form SB-2, as filed on My 26, 2000 and amended on August 1, 2000
and (5) Definitive Proxy Statement filed on October 16, 2000 (collectively, the
"Company's SEC Documents").
f. The Lender understands that its investment in the Securities involves a
high degree of risk.
g. The Lender understands that no United States federal or state agency or
any other government or governmental agency has passed on or made any
recommendation or endorsement of the Securities.
h. This Agreement and the other Transaction Agreements to which the Lender
is a party, and the transactions contemplated thereby, have been duly and
validly authorized, executed and delivered on behalf of the Lender and are valid
and binding agreements of the Lender enforceable in accordance with their
respective terms, subject as to enforceability to general principles of equity
and to bankruptcy, insolvency, moratorium and other similar laws affecting the
enforcement of creditors' rights generally.
3. COMPANY REPRESENTATIONS, ETC. The Company represents and warrants to the
Lender as of the date hereof and as of the Closing Date that, except as
otherwise provided in the Annex IV hereto or in the Company's SEC Documents:
a. Rights of Others Affecting the Transactions. There are no preemptive
rights of any shareholder of the Company, as such, to acquire the Debentures,
the Warrants or the Shares. No party other than a Lender has a currently
exercisable right of first refusal which
would be applicable to any or all of the transactions contemplated by the
Transaction Agreements.
b. Status. The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Colorado and has the
requisite corporate power to own its properties and to carry on its business as
now being conducted. The Company is duly qualified as a foreign corporation to
do business and is in good standing in each jurisdiction where the nature of the
business conducted or property owned by it makes such qualification necessary,
other than those jurisdictions in which the failure to so qualify would not have
a material adverse effect on the business, operations or financial condition or
results of operations of the Company and its subsidiaries taken as a whole. The
Company has registered its stock and is obligated to file reports pursuant to
Section 12 or Section 15(d) of the Securities and Exchange Act of 1934, as
amended (the "1934 Act"). The Common Stock is quoted and traded on the Principal
Trading Market. The Company has received no notice, either oral or written, with
respect to the continued eligibility of the Common Stock for such quotation on
the Principal Trading Market, and the Company has maintained all requirements on
its part for the continuation of such quotation.
c. Authorized Shares. The authorized capital stock of the Company consists
of (i) 50,000,000 shares of Common Stock, no par value per share, of which
8,479,676 shares are outstanding as of the date hereof and (ii) 5,000,000 shares
of Preferred Stock, non-voting, no par value, of which none are outstanding as
of the date hereof . All issued and outstanding shares of Common Stock have been
duly authorized and validly issued and are fully paid and non-assessable. The
Company has sufficient authorized and unissued shares of Common Stock as may be
necessary to effect the issuance of the Shares. The Shares have been duly
authorized and, when issued upon conversion of, or as interest on, the
Debentures or upon exercise of the Warrants, each in accordance with its
respective terms, will be duly and validly issued, fully paid and non-assessable
and will not subject the Holder thereof to personal liability by reason of being
such Holder.
d. Transaction Agreements and Stock. This Agreement and each of the other
Transaction Agreements, and the transactions contemplated thereby, have been
duly and validly authorized by the Company, this Agreement has been duly
executed and delivered by the Company and this Agreement is, and the Debentures,
the Warrants and each of the other Transaction Agreements, when executed and
delivered by the Company, will be, valid and binding agreements of the Company
enforceable in accordance with their respective terms, subject as to
enforceability to general principles of equity and to bankruptcy, insolvency,
moratorium, and other similar laws affecting the enforcement of creditors'
rights generally.
e. Non-contravention. The execution and delivery of this Agreement and each
of the other Transaction Agreements by the Company, the issuance of the
Securities, and the consummation by the Company of the other transactions
contemplated by this Agreement, the Debentures, the Warrants and the other
Transaction Agreements do not and will not conflict with or result in a breach
by the Company of any of the terms or provisions of, or constitute a default
under (i) the certificate of incorporation or by-laws of the Company, each as
currently in effect, (ii) any indenture, mortgage, deed of trust, or other
material agreement or instrument to which the Company is a party or by which it
or any of its properties or assets are bound, including any listing agreement
for the Common Stock except as herein set forth, or (iii) to its knowledge, any
existing applicable law, rule, or regulation or any applicable decree, judgment,
or order of any court, United States federal or state regulatory body,
administrative agency, or
other governmental body having jurisdiction over the Company or any of its
properties or assets, except such conflict, breach or default which would not
have a material adverse effect on the business, operations, financial condition
or results of operations of the Company and its subsidiaries taken as a whole,
or on the transactions contemplated herein.
f. Approvals. No authorization, approval or consent of any court,
governmental body, regulatory agency, self-regulatory organization, or stock
exchange or market or the shareholders of the Company is required to be obtained
by the Company for the issuance and sale of the Securities to the Lender as
contemplated by this Agreement, except such authorizations, approvals and
consents that have been obtained.
g. Filings. None of the Company's SEC Documents contained, at the time they
were filed, any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
made therein in light of the circumstances under which they were made, not
misleading. Since December 1, 1999, the Company has timely filed all requisite
forms, reports and exhibits thereto required to be filed by the Company with the
SEC.
h. Absence of Certain Changes. Since the Last Audited Date, there has been
no material adverse change and no material adverse effect on the business,
operations, financial condition or results of operations of the Company and its
subsidiaries taken as a whole, except as disclosed in the Company's SEC
Documents. Since the Last Audited Date, except as provided in the Company's SEC
Documents, the Company has not (i) incurred or become subject to any material
liabilities (absolute or contingent) except liabilities incurred in the ordinary
course of business consistent with past practices; (ii) discharged or satisfied
any material lien or encumbrance or paid any material obligation or liability
(absolute or contingent), other than current liabilities paid in the ordinary
course of business consistent with past practices; (iii) declared or made any
payment or distribution of cash or other property to shareholders with respect
to its capital stock, or purchased or redeemed, or made any agreements to
purchase or redeem, any shares of its capital stock; (iv) sold, assigned or
transferred any other tangible assets, or canceled any debts or claims, except
in the ordinary course of business consistent with past practices; (v) suffered
any substantial losses or waived any rights of material value, whether or not in
the ordinary course of business, or suffered the loss of any material amount of
existing business; (vi) made any changes in employee compensation, except in the
ordinary course of business consistent with past practices; or (vii) experienced
any material problems with labor or management in connection with the terms and
conditions of their employment.
i. Full Disclosure. There is no fact known to the Company (other than
general economic conditions known to the public generally or as disclosed in the
Company's SEC Documents) that has not been disclosed in writing to the Lender
that (i) would reasonably be expected to have a material adverse effect on the
business, operations, financial condition or results of operations of the
Company and its subsidiaries taken as a whole, (ii) would reasonably be expected
to materially and adversely affect the ability of the Company to perform its
obligations pursuant to any of the Transaction Agreements, or (iii) would
reasonably be expected to materially and adversely affect the value of the
rights granted to the Lender in the Transaction Agreements.
j. Absence of Litigation. There is no action, suit, proceeding, inquiry or
investigation before or by any court, public board or body pending or, to the
knowledge of the Company, threatened against or affecting the Company, wherein
an unfavorable decision, ruling
or finding would have a material adverse effect on the business, operations,
financial condition or results of operations of the Company and its subsidiaries
taken as a whole or the transactions contemplated by any of the Transaction
Agreements or which would adversely affect the validity or enforceability of, or
the authority or ability of the Company to perform its obligations under, any of
the Transaction Agreements.
k. Absence of Events of Default. Except as set forth in Section 3(e)
hereof, no Event of Default (or its equivalent term), as defined in the
respective agreement to which the Company is a party, and no event which, with
the giving of notice or the passage of time or both, would become an Event of
Default (or its equivalent term) (as so defined in such agreement), has occurred
and is continuing, which would have a material adverse effect on the business,
operations, financial condition or results of operations of the Company and its
subsidiaries taken as a whole.
l. Prior Issues. During the twelve (12) months preceding the date hereof,
the Company has not issued any stock option grants, convertible securities or
any shares of its Common Stock.
m. No Undisclosed Liabilities or Events. The Company has no liabilities or
obligations other than those disclosed in the Transaction Agreements or the
Company's SEC Documents or those incurred in the ordinary course of the
Company's business since the Last Audited Date, or which individually or in the
aggregate, do not or would not have a material adverse effect on the business,
operations, financial condition or results of operations of the Company and its
subsidiaries taken as a whole. No event or circumstances has occurred or exists
with respect to the Company or its properties, business, operations, condition
(financial or otherwise), or results of operations, which, under applicable law,
rule or regulation, requires public disclosure or announcement prior to the date
hereof by the Company but which has not been so publicly announced or disclosed.
There are no proposals currently under consideration or currently anticipated to
be under consideration by the Board of Directors or the executive officers of
the Company which proposal would (x) change the certificate of incorporation or
other charter document or by-laws of the Company, each as currently in effect,
with or without shareholder approval, which change would reduce or otherwise
adversely affect the rights and powers of the shareholders of the Common Stock
or (y) materially or substantially change the business, assets or capital of the
Company, including its interests in subsidiaries.
n. No Default. Neither the Company nor any of its subsidiaries is in
default in the performance or observance of any material obligation, agreement,
covenant or condition contained in any material indenture, mortgage, deed of
trust or other material instrument or agreement to which it is a party or by
which it or its property is bound.
o. No Integrated Offering. Neither the Company nor any of its Affiliates
nor any person acting on its or their behalf has, directly or indirectly, at any
time since December 1, 1999, made any offer or sales of any security or
solicited any offers to buy any security under circumstances that would
eliminate the availability of the exemption from registration under Regulation D
in connection with the offer and sale of the Securities as contemplated hereby.
p. Dilution. The number of Shares issuable upon conversion of the
Debentures may increase substantially in certain circumstances, including, but
not necessarily limited to, the circumstance wherein the trading price of the
Common Stock declines prior to the conversion of the Debentures. The Company's
executive officers and directors have studied and
fully understand the nature of the Securities being sold hereby and recognize
that they have a potential dilutive effect. The board of directors of the
Company has concluded, in its good faith business judgment, that such issuance
is in the best interests of the Company. The Company specifically acknowledges
that its obligation to issue the Shares upon conversion of the Debentures and
upon exercise of the Warrants is binding upon the Company and enforceable
regardless of the dilution such issuance may have on the ownership interests of
other shareholders of the Company, and the Company will honor every Notice of
Conversion (as defined in the Debentures) relating to the conversion of the
Debentures, and every Notice of Exercise (as contemplated by the Warrants),
unless the Company is subject to an injunction (which injunction was not sought
by the Company) prohibiting the Company from doing so.
r. Fees to Brokers, Finders and Others. Neither the Company nor the Lender
has taken any action which would give rise to any claim by any person for
brokerage commission, finder's fees or similar payments by the Lender relating
to this Agreement or the transactions contemplated hereby. Each of the Company,
on the one hand, and the Lender, on the other (each of them, a "Fee
Indemnitor"), shall indemnify and hold harmless the other (and its employees,
officers, directors, agents, and partners, and their respective Affiliates;
each, including the Company or the Lender, as the case may be, a "Fee
Indemnitee") from and against all claims, losses, damages, costs (including the
costs of preparation and attorney's fees) and expenses suffered in respect of
any such claimed or existing fees, as and when incurred, by any party claiming
the payment from a Fee Indemnitee on account of an agreement made by the
relevant Fee Indemnitor.
4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
a. Transfer Restrictions. The Lender acknowledges that (1) the Securities
have not been and are not being registered under the provisions of the 1933 Act
and, except as provided in the Registration Rights Agreement or otherwise
included in an effective registration statement,, the Shares have not been and
are not being registered under the 1933 Act, and may not be transferred unless
(A) subsequently registered thereunder or (B) the Lender shall have delivered to
the Company an opinion of counsel, reasonably satisfactory in form, scope and
substance to the Company, to the effect that the Securities to be sold or
transferred may be sold or transferred pursuant to an exemption from such
registration; (2) any sale of the Securities made in reliance on Rule 144
promulgated under the 1933 Act may be made only in accordance with the terms of
said Rule and further, if said Rule is not applicable, any resale of such
Securities under circumstances in which the seller, or the Person through whom
the sale is made, may be deemed to be an underwriter, as that term is used in
the 1933 Act, may require compliance with some other exemption under the 1933
Act or the rules and regulations of the SEC thereunder; and (3) neither the
Company nor any other Person is under any obligation to register the Securities
(other than pursuant to the Registration Rights Agreement) under the 1933 Act or
to comply with the terms and conditions of any exemption thereunder.
b. Restrictive Legend. The Lender acknowledges and agrees that the
Securities and, until such time as the Common Stock has been registered under
the 1933 Act as contemplated by the Registration Rights Agreement and sold in
accordance with an effective Registration Statement or otherwise in accordance
with another effective registration statement, certificates and other
instruments representing any of the Securities shall bear a restrictive legend
in substantially the following form (and a stop-transfer order may be placed
against transfer of any such Securities):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR
OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES OR AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
c. Filings. The Company undertakes and agrees to make all necessary filings
in connection with the sale of the Securities to the Lender under any United
States laws and regulations applicable to the Company, or by any domestic
securities exchange or trading market, and to provide a copy thereof to the
Lender promptly after such filing.
d. Reporting Status. So long as the Lender beneficially owns any of the
Securities, the Company shall file all reports required to be filed with the SEC
pursuant to Section 13 or 15(d) of the 1934 Act, shall take all reasonable
action under its control to ensure that adequate current public information with
respect to the Company, as required in accordance with Rule 144(c)(2) of the
1933 Act, is publicly available, and shall not terminate its status as an issuer
required to file reports under the 1934 Act even if the 1934 Act or the rules
and regulations thereunder would permit such termination. The Company will take
all reasonable action under its control to maintain the continued quotation and
trading of its Common Stock (including, without limitation, all Registrable
Securities) on the Principal Trading Market and will comply in all material
respects with the Company's reporting, filing and other obligations under the
by-laws or rules of the National Association of Securities Dealers, Inc.
applicable to it.
e. Use of Proceeds. The Company will use the proceeds from the sale of the
Debentures (excluding amounts paid by the Company for legal and escrow fees in
connection with the sale of the Securities) for internal working capital
purposes, and, unless specifically consented to in advance in each instance by
the Lender, the Company shall not, directly or indirectly, use such proceeds for
any loan to or investment in any other corporation, partnership enterprise or
other Person or for the repayment of any outstanding loan by the Company to any
other party.
f. Warrants. The Company agrees to issue to the Lender on the Closing Date
(i) transferable warrants (the "Basic Warrants") for the purchase of a number of
shares equal to 500,000 multiplied by the Lender's Allocable Share at an
exercise price of $1.00 per share and (ii) transferable warrants (the
"Additional Warrants") for the purchase of a number of shares of Common Stock
equal to 300,000 multiplied by the Lender's Allocable Share at an exercise price
of $2.00 per share. The Warrants will expire on the last day of the calendar
month in which the fourth anniversary of the Closing Date occurs. Each of the
Warrants shall be in the form annexed hereto as Annex VI, and shall have (x)
registration rights as provided in the Registration Rights Agreement and (y)
piggy-back registration rights after the effectiveness of the Registration
Statement expires, as contemplated by the Registration Rights Agreement.
g. Certain Agreements.
(i) Except to the extent specifically provided below, but in each such
event subject to compliance with all of the other provisions of this Agreement,
the Company covenants and agrees that it will not, without the prior written
consent of the Lender, enter into any subsequent or further offer or sale of
Common Stock or securities convertible into Common Stock
(collectively, "New Common Stock") to or with any third party pursuant to a
transaction in which the purchase price per share or the exercise price per
share, as applicable, of New Common Stock is less than the Fixed Conversion
Price (as defined in the Debentures) on any date which is earlier than ninety
(90) days after the filing of the Registration Statement.
(ii) If, at any time after the expiration of the period contemplated by
Section 4(g)(i) hereof (or prior thereto with the consent of the Lender) and
through and including the date which is eight (8) months after the Effective
Date, the Company enters into a transaction (a "New Transaction") with a third
party on terms providing for either (A) a sale price (the "New Transaction
Price") equal to or computed based on, or a determination of a conversion price
(howsoever defined or computed) based on, a lower percentage of the then current
market price (howsoever defined or computed) than provided in the Debentures for
determining the Conversion Price and/or (B) an exercise price (an "Actual
Exercise Price") for a warrant or other purchase right lower than the Exercise
Price of the Basic Warrants, then (x) the terms of any unissued or unconverted
Debenture shall be modified to reduce the Fixed Conversion Price and the
percentage used in computing the Variable Conversion Price to be equal to that
provided in the New Transaction as so consummated (all such adjustments,
collectively, the "New Conversion Price"), (y) the exercise price for each
unexercised Warrant as of such date shall be reduced to the lower of the Actual
Exercise Price, if any, or the adjusted Fixed Conversion Price, and (z) in the
event that the New Transaction Price is lower then the Minimum Conversion Price,
the Minimum Conversion Price will be reduced to be equal to the New Transaction
Price.
(iii) The foregoing provisions of Section 4(g) do not apply to the issuance
of New Common Stock (a) to Deephaven Private Placement Trading Ltd. or to Amro
International S.A. in connection with either such party's exercise of conversion
or other rights it may have under documents executed and transactions
consummated prior to the date of this Agreement or (b) pursuant to an Employee
Stock Option Plan ("ESOP") of the Company, such ESOP having been properly
approved by the shareholders of the Company prior to the date of this Agreement.
(iv) By the Closing Date, the Company shall obtain the agreement (each, a
_Principal_s Agreement_) of each of its Principals (as defined below) that,
without the prior written consent of the Lender in each instance, such Principal
will not sell or otherwise transfer or offer to sell or otherwise transfer any
shares of Common Stock directly or indirectly held by such Principal during the
period commencing on the date of this Agreement and continuing through and
including the date which is ninety (90) days after the Effective Date. Each such
Principal_s Agreement shall (w) specify that it is entered into as an inducement
to the Lender_s execution, delivery and performance of this Agreement, (x) name
the Lender as a third party beneficiary thereof, (y) acknowledge that the
Company_s transfer agent will be provided with instructions that transfers by a
Principal require the consent of the Company and the Lender, and (z) contemplate
that, in addition to any other damages or remedies that may be appropriate, the
Principal_s Agreement shall be enforceable by injunction sought by the Company
and the Lender or any one or more of them. A _Principal_ is a Person who meets
any one or more of the following criteria: (A) each Person who is a director or
principal officer of the Company or who, directly or indirectly, holds in excess
of five (5%) percent of the outstanding shares of Common Stock of the Company
(each, a "Company Principal"), (B) a spouse of a Company Principal (a
_Principal_s Spouse_) who, directly or indirectly, holds any shares of Common
Stock of the Company, (C) a parent, sibling or child of a Company Principal who
resides in the household of a Company Principal or of a Principal_s Spouse
(each, a _Principal_s Relative_) and who, directly or indirectly, holds any
shares of Common Stock, or (D) any other Person or entity, including, without
limitation, for profit or non-profit corporations, partnerships and trusts,
whose
voting rights regarding Common Stock of the Company is subject to the direction,
control or other influence of any Company Principal, Principal_s Spouse, or
Principal_s Relative.
h. Reimbursement. If (i) any Lender, other than by reason of its gross
negligence or willful misconduct, becomes involved in any capacity in any
action, proceeding or investigation brought by any stockholder of the Company,
in connection with or as a result of the consummation of the transactions
contemplated by the Transaction Agreements, or if such Lender is impleaded in
any such action, proceeding or investigation by any Person, or (ii) any Lender,
other than by reason of its gross negligence or willful misconduct or by reason
of its trading of the Common Stock in a manner that is illegal under the federal
securities laws, becomes involved in any capacity in any action, proceeding or
investigation brought by the SEC against or involving the Company or in
connection with or as a result of the consummation of the transactions
contemplated by the Transaction Agreements, or if such Lender is impleaded in
any such action, proceeding or investigation by any Person, then in any such
case, the Company will reimburse such Lender for its reasonable legal and other
expenses (including the cost of any investigation and preparation) incurred in
connection therewith, as such expenses are incurred. In addition, other than
with respect to any matter in which such Lender is a named party, the Company
will pay such Lender the charges, as reasonably determined by such Lender, for
the time of any officers or employees of such Lender devoted to appearing and
preparing to appear as witnesses, assisting in preparation for hearings, trials
or pretrial matters, or otherwise with respect to inquiries, hearing, trials,
and other proceedings relating to the subject matter of this Agreement. The
reimbursement obligations of the Company under this paragraph shall be in
addition to any liability which the Company may otherwise have, shall extend
upon the same terms and conditions to any Affiliates of the Lender who are
actually named in such action, proceeding or investigation, and partners,
directors, agents, employees and controlling persons (if any), as the case may
be, of the Lender and any such Affiliate, and shall be binding upon and inure to
the benefit of any successors, assigns, heirs and personal representatives of
the Company, the Lender and any such Affiliate and any such Person. The Company
also agrees that neither any Lender nor any such Affiliate, partners, directors,
agents, employees or controlling persons shall have any liability to the Company
or any person asserting claims on behalf of or in right of the Company in
connection with or as a result of the consummation of the Transaction Agreements
except to the extent that any losses, claims, damages, liabilities or expenses
incurred by the Company result from the gross negligence or willful misconduct
of such Lender.
h. Available Shares. The Company shall have at all times authorized and
reserved for issuance, free from preemptive rights, a number of shares (the
"Minimum Available Shares") at least equal to the sum of (x) two hundred percent
(200%) of the number of shares of Common Stock issuable as may be required to
satisfy the conversion rights of the Holders of all outstanding Convertible
Debentures (whether originally issued to the Lender or to other Lenders), plus
(y) the number of shares issuable upon exercise of all outstanding Warrants held
by all Holders (in each case, whether such Convertible Debentures or Warrants
were originally issued to the Lender or to any other Lender). For the purposes
of such calculations, the Company should assume that all such Debentures were
then convertible and all Warrants were then exercisable without regard to any
restrictions which might limit any Lender's right to convert any of the
Convertible Debentures or exercise any of the Warrants held by any Lender.
i. Limitation on Issuance of Shares; Redemption Amount. If, at any time
while the Debentures or the Warrants are outstanding, the Cap Regulations apply
to limit the number of shares of Common Stock which the Company may issue to the
Lenders, or if the Company breaches the provisions of Section 4(g) hereof (the
Cap Regulations and such breach,
collectively referred to as the "Issuance Limitations"), Without limiting the
other provisions of the Securities Purchase Agreement or this Debenture, the
Company will take all steps reasonably necessary to be in a position to issue
shares of Common Stock on conversion of all the Convertible Debentures without
violating the Issuance Limitations. If, despite taking such steps, the Company
still can not issue such shares of Common Stock without violating the Issuance
Limitations, , the Holder of a Debenture (to the extent the same can not be
converted in compliance with the Issuance Limitations, an "Unconverted
Debenture"), shall have the option, exercisable in such Holder's sole and
absolute discretion, to elect either of the following remedies:
(i) if permitted by the Cap Regulations, require the Company to issue
shares of Common Stock in accordance with such Holder's Notice of
Conversion at a conversion purchase price equal to the average of the
closing price per share of Common Stock for any five (5) consecutive
trading days (subject to certain equitable adjustments for certain events
occurring during such period) during the sixty (60) trading days
immediately preceding the date of Notice of Conversion; or
(y) require the Company to redeem each Unconverted Debenture for an
amount (the "Redemption Amount"), payable in cash, equal to:
V x M
---
CP
where:
"V" means the principal of an Unconverted Debenture plus any accrued
but unpaid interest thereon;
"CP" means the Conversion Price in effect on the date of redemption
(the "Redemption Date") specified in the notice from the Holder of the
Unconverted Debentures electing this remedy; and
"M" means the highest closing price per share of the Common Stock
during the period beginning on the Redemption Date and ending on the
trading date immediately preceding date of payment of the Redemption
Amount.
The notice of exercise of this provision by the Holder shall specify the date on
which the Redemption Amount shall be paid, which date shall be at least five (5)
business days after the Redemption Date; provided, however, that the Company
shall have the right to accelerate the date of such payment. The Holder of an
Unconverted Debenture may elect one of the above remedies with respect to a
portion of such Unconverted Debenture and the other remedy with respect to other
portions of the Unconverted Debenture. If the Redemption Amount is not timely
paid by the Company, the Redemption Amount computed as of such date will bear
interest at the rate of eighteen percent (18%) or the highest rate allowed by
law, whichever is lower, from the date it was due until and including the date
actually paid. The Debentures shall contain provisions substantially consistent
with the above terms, with such additional provisions as may be consented to by
the Lender. The provisions of this paragraph are not intended to limit the scope
of the provisions otherwise included in the Debentures.
5. TRANSFER AGENT INSTRUCTIONS.
a. The Company warrants that, with respect to the Securities, other than
the stop transfer instructions to give effect to Section 4(a) hereof, it will
give its transfer agent no instructions inconsistent with instructions to issue
Common Stock from time to time upon conversion of the Debentures in such amounts
as specified from time to time by the Company to the transfer agent, bearing the
restrictive legend specified in Section 4(b) of this Agreement prior to
registration of the Shares under the 1933 Act, registered in the name of the
Lender or its nominee and in such denominations to be specified by the Lender in
connection with each conversion of the Debentures. Except as so provided, the
Shares shall otherwise be freely transferable on the books and records of the
Company as and to the extent provided in this Agreement, the Registration Rights
Agreement, and applicable law. Nothing in this Section shall affect in any way
the Lender's obligations and agreement to comply with all applicable securities
laws upon resale of the Securities. If the Lender provides the Company with an
opinion of counsel reasonably satisfactory to the Company that registration of a
resale by the Lender of any of the Securities in accordance with clause (1)(B)
of Section 4(a) of this Agreement is not required under the 1933 Act, the
Company shall (except as provided in clause (2) of Section 4(a) of this
Agreement) permit the transfer of the Securities and, in the case of the
Conversion Shares, promptly instruct the Company's transfer agent to issue one
or more certificates for Common Stock without legend in such name and in such
denominations as specified by the Lender.
b. Subject to the provisions of this Agreement, the Company will permit the
Lender to exercise its right to convert the Debentures in the manner
contemplated by the Debentures.
c. The Company understands that a delay in the issuance of the Shares of
Common Stock beyond the Delivery Date (as defined in the Debentures) could
result in economic loss to the Lender. As compensation to the Lender for such
loss, the Company agrees to pay late payments to the Lender for late issuance of
Shares upon Conversion in accordance with the following schedule (where "No.
Business Days Late" is defined as the number of business days which is two (2)
business days beyond the Delivery Date):
Late Payment For Each $10,000
of Debenture Principal or Interest
No. Business Days Late Amount Being Converted
---------------------------------------------------------------------
1 $100
2 $200
3 $300
4 $400
5 $500
6 $600
7 $700
8 $800
9 $900
10 $1,000
>10 $1,000
+$200 for each Business Day Late beyond 10 days
The Company shall pay any payments incurred under this Section in immediately
available funds upon demand as the Lender's exclusive remedy (other than the
following provisions of this Section 5(c) and the provisions of the immediately
following Section 5(d) of this Agreement) for such delay. Furthermore, in
addition to any other remedies which may be available to the Lender, in the
event that the Company fails for any reason to effect delivery of such shares of
Common Stock by close of business on the Delivery Date, the Lender will be
entitled to revoke the relevant Notice of Conversion by delivering a notice to
such effect to the Company, whereupon the Company and the Lender shall each be
restored to their respective positions immediately prior to delivery of such
Notice of Conversion; provided, however, that any payments contemplated by this
Section 5(c) which have accrued through the date of such revocation notice shall
remain due and owing to the Converting Holder notwithstanding such revocation..
d. If, by the relevant Delivery Date, the Company fails for any reason to
deliver the Shares to be issued upon conversion of a Debenture and after such
Delivery Date, the Holder of the Debentures being converted (a "Converting
Holder") purchases, in an arm's-length open market transaction or otherwise,
shares of Common Stock (the "Covering Shares") in order to make delivery in
satisfaction of a sale of Common Stock by the Converting Holder (the "Sold
Shares"), which delivery such Converting Holder anticipated to make using the
Shares to be issued upon such conversion (a "Buy-In"), the Converting Holder
shall the right, to require the Company to pay to the Converting Holder, in
addition to and not in lieu of the amounts due under Section 5(c) hereof (but in
addition to all other amounts contemplated in other provisions of the
Transaction Agreements, and not in lieu of any such other amounts), the Buy-In
Adjustment Amount (as defined below). The "Buy-In Adjustment Amount" is the
amount equal to the excess, if any, of (x) the Converting Holder's total
purchase price (including brokerage commissions, if any) for the Covering Shares
over (y) the net proceeds (after brokerage commissions, if any) received by the
Converting Holder from the sale of the Sold Shares. The Company shall pay the
Buy-In Adjustment Amount to the Company in immediately available funds
immediately upon demand by the Converting Holder. By way of illustration and not
in limitation of the foregoing, if the Converting Holder purchases shares of
Common Stock having a total purchase price (including brokerage commissions) of
$11,000 to cover a Buy-In with respect to shares of Common Stock it sold for net
proceeds of $10,000, the Buy-In Adjustment Amount which Company will be required
to pay to the Converting Holder will be $1,000.
e. In lieu of delivering physical certificates representing the Common
Stock issuable upon conversion, provided the Company's transfer agent is
participating in the Depository Trust Company ("DTC") Fast Automated Securities
Transfer program, upon request of the Holder and its compliance with the
provisions contained in this paragraph, so long as the certificates therefor do
not bear a legend and the Holder thereof is not obligated to return such
certificate for the placement of a legend thereon, the Company shall use its
best efforts to cause its transfer agent to electronically transmit the Common
Stock issuable upon conversion to the Holder by crediting the account of
Holder's Prime Broker with DTC through its Deposit Withdrawal Agent Commission
system.
f. The holder of any Debentures shall be entitled to exercise its
conversion privilege with respect to the Debentures notwithstanding the
commencement of any case under 11 U.S.C.ss.101 et seq. (the "Bankruptcy Code").
In the event the Company is a debtor under the Bankruptcy Code, the Company
hereby waives, to the fullest extent permitted, any rights to relief it may have
under 11 U.S.C.ss.362 in respect of such holder's conversion privilege. The
Company hereby waives, to the fullest extent permitted, any rights to relief it
may have under 11 U.S.C.ss.362 in respect of the conversion of the Debentures.
The Company agrees, without cost
or expense to such holder, to take or to consent to any and all action necessary
to effectuate relief under 11 U.S.C.ss.362.
g. The Company will authorize its transfer agent to give information
relating to the Company directly to the Lender or the Lender's representatives
upon the request of the Lender or any such representative, to the extent such
information relates to (i) the status of shares of Common Stock issued or
claimed to be issued to the Lender in connection with a Notice of Conversion or
exercise of a Warrant, or (ii) the number of outstanding shares of Common Stock
of all shareholders as of a current or other specified date. The Company will
provide the Lender with a copy of the authorization so given to the transfer
agent.
6. CLOSING DATE.
a. The Closing Date shall occur on the first practicable trading day (other
than a bank holiday) for the release of the Escrow Property after each of the
conditions contemplated by Sections 7 and 8 hereof shall have either been
satisfied or been waived by the party in whose favor such conditions run.
b. The closing of the purchase and issuance of Debentures shall occur on
the Closing Date at the offices of the Escrow Agent and shall take place no
later than 3:00 P.M., New York time, on such day or such other time as is
mutually agreed upon by the Company and the Lender.
c. Notwithstanding anything to the contrary contained herein, the Escrow
Agent will be authorized to release the Escrow Property on the Closing Date upon
satisfaction of the conditions set forth in Sections 7 and 8 hereof and as
provided in the Joint Escrow Instructions.
7. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The Lender understands that the Company's obligation to sell the Debentures
to the Lender pursuant to this Agreement on the Closing Date is conditioned
upon:
a. The execution and delivery of this Agreement and the Registration Rights
Agreement by the Lender;
b. Delivery by the Lender to the Escrow Agent of good funds as payment in
full of an amount equal to the Purchase Price for the Securities in accordance
with this Agreement;
c. The accuracy on the Closing Date of the representations and warranties
of the Lender contained in this Agreement, each as if made on such date, and the
performance by the Lender on or before such date of all covenants and agreements
of the Lender required to be performed on or before such date; and
d. There shall not be in effect any law, rule or regulation prohibiting or
restricting the transactions contemplated hereby, or requiring any consent or
approval which shall not have been obtained.
8. CONDITIONS TO THE LENDER'S OBLIGATION TO PURCHASE.
The Company understands that the Lender's obligation to purchase the
Debentures on the Closing Date is conditioned upon:
a. The execution and delivery of this Agreement and the other Transaction
Agreements by the Company;
b. Delivery by the Company to the Escrow Agent of the Certificates in
accordance with this Agreement;
c. The accuracy in all material respects on the Closing Date of the
representations and warranties of the Company contained in this Agreement, each
as if made on such date, and the performance by the Company on or before such
date of all covenants and agreements of the Company required to be performed on
or before such date;
d. On the Closing Date, the Registration Rights Agreement shall be in full
force and effect and the Company shall not be in default thereunder;
e. On the Closing Date, the Lender shall have received an opinion of
counsel for the Company, dated the Closing Date, in form, scope and substance
reasonably satisfactory to the Lender, substantially to the effect set forth in
Annex III attached hereto;
f. There shall not be in effect any law, rule or regulation prohibiting or
restricting the transactions contemplated hereby, or requiring any consent or
approval which shall not have been obtained;
g. From and after the date hereof to and including the Closing Date, each
of the following conditions will remain in effect: (i) the trading of the Common
Stock shall not have been suspended by the SEC or on the Principal Trading
Market; (ii) trading in securities generally on the Principal Trading Market
shall not have been suspended or limited; (iii), no minimum prices shall been
established for securities traded on the Principal Trading Market; (iv) there
shall not have been any outbreak or escalation of hostilities involving the
United States; (v) there shall not have been any material adverse change in any
financial market that, in the reasonable judgment of the Lender, makes it
impracticable or inadvisable to purchase the Debentures.
9. GOVERNING LAW: MISCELLANEOUS.
a. This Agreement shall be governed by and interpreted in accordance with
the laws of the State of New York for contracts to be wholly performed in such
state and without giving effect to the principles thereof regarding the conflict
of laws. Each of the parties consents to the exclusive jurisdiction of the
federal courts whose districts encompass any part of the City of New York or the
state courts of the State of New York sitting in the City of New York in
connection with any dispute arising under this Agreement and hereby waives, to
the maximum extent permitted by law, any objection, including any objection
based on forum non conveniens, to the bringing of any such proceeding in such
jurisdictions. To the extent determined by such court, the Company shall
reimburse the Lender for any reasonable legal fees and disbursements
incurred by the Lender in enforcement of or protection of any of its rights
under any of the Transaction Agreements.
b. Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
c. This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties hereto.
d. All pronouns and any variations thereof refer to the masculine, feminine
or neuter, singular or plural, as the context may require.
e. A facsimile transmission of this signed Agreement shall be legal and
binding on all parties hereto.
f. This Agreement may be signed in one or more counterparts, each of which
shall be deemed an original.
g. The headings of this Agreement are for convenience of reference and
shall not form part of, or affect the interpretation of, this Agreement.
h. If any provision of this Agreement shall be invalid or unenforceable in
any jurisdiction, such invalidity or unenforceability shall not affect the
validity or enforceability of the remainder of this Agreement or the validity or
enforceability of this Agreement in any other jurisdiction.
i. This Agreement may be amended only by an instrument in writing signed by
the party to be charged with enforcement thereof.
j. This Agreement supersedes all prior agreements and understandings among
the parties hereto with respect to the subject matter hereof.
10. NOTICES. Any notice required or permitted hereunder shall be given in
writing (unless otherwise specified herein) and shall be deemed effectively
given on the earliest of
(a) the date delivered, if delivered by personal delivery as against
written receipt therefor or by confirmed facsimile transmission,
(b) the seventh business day after deposit, postage prepaid, in the United
States Postal Service by registered or certified mail, or
(c) the third business day after mailing by domestic or international
express courier, with delivery costs and fees prepaid,
in each case, addressed to each of the other parties thereunto entitled at the
following addresses (or at such other addresses as such party may designate by
ten (10) days' advance written notice similarly given to each of the other
parties hereto):
COMPANY: XXXXXXXXXX.XXX HOLDINGS, INC.
Xxxxx 000
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx, XXXXXX X0X 0X0
Attn: Marcus New
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
with a copy to:
Xxxxxxxx & Company, LLP
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
Lender: At the address set forth on the signature page of this Agreement.
with a copy to:
Xxxxxxx & Xxxxxx LLP, Esqs.
00 Xxxxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopier No. (000) 000-0000
ESCROW AGENT: Xxxxxxx & Xxxxxx LLP
00 Xxxxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxxx, Xxx.
Xxx Xxxx, Xxx Xxxx 00000
Telephone No.: (000) 000-0000
Telecopier No. (000) 000-0000
11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The Company's and the
Lender's representations and warranties herein shall survive the execution and
delivery of this Agreement and the delivery of the Certificates and the payment
of the Purchase Price, and shall inure to the benefit of the Lender and the
Company and their respective successors and assigns.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK.]
IN WITNESS WHEREOF, this Agreement has been duly executed by the Lender (if
an entity, by one of its officers thereunto duly authorized) as of the date set
forth below.
AMOUNT AND PURCHASE PRICE OF DEBENTURES: $
SIGNATURES FOR ENTITIES
IN WITNESS WHEREOF, the undersigned represents that the foregoing
statements are true and correct and that it has caused this Securities Purchase
Agreement to be duly executed on its behalf this day of , 2000.
--------------------------------
Address Printed Name of Lender
--------------------------------
By:
Telecopier No. ----------------- (Signature of Authorized Person)
-------------------------------------
Printed Name and Title
Jurisdiction of Incorporation
or Organization
As of the date set forth below, the undersigned hereby accepts this Agreement
and represents that the foregoing statements are true and correct and that it
has caused this Securities Purchase Agreement to be duly executed on its behalf.
XXXXXXXXXX.XXX HOLDINGS, INC.
By:
Title:
Date: , 2000
ANNEX I FORM OF DEBENTURE
ANNEX II JOINT ESCROW INSTRUCTIONS
ANNEX III OPINION OF COUNSEL
ANNEX IV REGISTRATION RIGHTS AGREEMENT
ANNEX V COMPANY DISCLOSURE MATERIALS
ANNEX VI FORM OF WARRANT
ANNEX V
TO
SECURITIES PURCHASE AGREEMENT
COMPANY DISCLOSURE
Page Section Disclosure
-------------------------------------------------------------------------------
5, 7 3.a., 3.f. Amro International S.A. and Deephaven Capital
Management LLC have right of first refusal pursuant
to agreement dated March 31, 2000. Their right of
first refusal expires on December 14, 2000.
6 3.c., 3.h.(iii) 12,000 shares issued to Xxxxxxx Xxxxxxx are not fully
paid, and will be canceled before December 31, 2000
8 3.l. Employees and Directors under 1999 Stock option plan.
A total of 689,000 stock options have been issued to
employees and Directors under this plan since
December 1, 1999, of which 501,300 remain outstanding
and unexercised.
8 3.l. Xxxxx Xxxxx issued 5,000 options at $2.50 on Dec 31
1999 for services
8 3.l. Xxxx Xxxx issued 15,000 options at $1.50 on Jul 10,
2000 for services
8 3.l. Continental Capital issued 100,000 shares on Aug 24,
2000 for services valued at $1.6250
8 3.l. Continental Capital issued 100,000 options at $4.00
on Aug 24, 2000 for services
8 3.l. MediaStream issued 116,935 shares at $3.72 pursuant
to a private placement in April 2000
8 3.l. Deephaven Private Placement Trading was issued a
$2,000,000 Convertible Note March 31, 2000, plus
121,212 options at $3.30 of which $500,000 has been
repaid to date.
8 3.l. Amro International S.A. was issued a $1,000,000
Convertible Note March 31, 2000, plus 60,606 options
at $3.30, of which $250,000 has been repaid to date.
8 3.l. Amro International was issued 67,741 shares at
$0.7755 on November 20, 2000, pursuant to a
conversion under their Convertible Note
8 3.l. Jesup & Xxxxxx was issued 90,909 options for
Investment Banking services on March 31, 2000.
8 3.m. The Company plans to increase the authorized share
capital from 50,000,000 to 75,000,000 at the next AGM