Form of RADIANT LOGISTICS, INC. Securities Purchase Agreement Common Stock CONFIDENTIAL
EXHIBIT
10.5
Form
of
_______________________________________
_____________________________________________
Common
Stock
_______________________
CONFIDENTIAL
NOTICE
TO OFFEREES
THE
SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF
1933, AS AMENDED, OR REGISTERED OR QUALIFIED UNDER THE APPLICABLE SECURITIES
LAWS OF ANY STATE OR OTHER JURISDICTION. THIS SECURITIES PURCHASE AGREEMENT
DOES
NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF AN OFFER TO BUY THE
SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE
UNLAWFUL. THERE IS NO ESTABLISHED MARKET FOR THE SECURITIES AND THERE CAN BE
NO
ASSURANCE THAT SUCH A MARKET WILL EVER DEVELOP OR, IF IT DOES, THAT IT WILL
CONTINUE.
THE
SECURITIES ARE BEING SOLD FOR INVESTMENT PURPOSES ONLY, WITHOUT A VIEW TO RESALE
OR DISTRIBUTION THEREOF, AND MAY NOT BE TRANSFERRED, RESOLD OR OFFERED FOR
RESALE EXCEPT PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT AND REGISTRATION
OR QUALIFICATION UNDER THE APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION
OR
QUALIFICATION.
NEITHER
THE SECURITIES AND EXCHANGE COMMISSION NOR THE SECURITIES COMMISSION OR OTHER
REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION HAS APPROVED OR
DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF
THIS
SECURITIES PURCHASE AGREEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
INVESTORS
MUST COMPLY WITH ALL APPLICABLE LAWS AND REGULATIONS IN FORCE IN ANY
JURISDICTION IN WHICH THEY PURCHASE, OFFER OR SELL THE SECURITIES AND MUST
OBTAIN ANY CONSENT, APPROVAL OR PERMISSION REQUIRED FOR THE PURCHASE, OFFER
OR
SALE BY IT OF THE SECURITIES UNDER THE LAWS AND REGULATIONS IN FORCE IN ANY
JURISDICTION TO WHICH IT IS SUBJECT OR IN WHICH IT MAKES SUCH PURCHASES, OFFERS
OR SALES. THE COMPANY SHALL NOT HAVE ANY RESPONSIBILITY WITH RESPECT TO INVESTOR
COMPLIANCE THEREWITH.
INVESTORS
ARE EXPECTED TO CONDUCT AN INDEPENDENT INVESTIGATION OF THE RISKS POSED BY
AN
INVESTMENT IN THE SECURITIES. AN OFFICER OF THE COMPANY IS AVAILABLE TO ANSWER
QUESTIONS CONCERNING THE COMPANY AND WILL, UPON REQUEST, MAKE AVAILABLE SUCH
OTHER INFORMATION AS QUALIFIED, POTENTIAL INVESTORS MAY REASONABLY REQUEST
AND
THAT CAN BE PROVIDED BY THE COMPANY WITHOUT UNREASONABLE EFFORT OR
EXPENSE.
INVESTORS
ARE EXPECTED TO CONSULT THEIR OWN INVESTMENT, LEGAL, TAX AND ACCOUNTING ADVISORS
TO DETERMINE WHETHER THE SECURITIES CONSTITUTE APPROPRIATE INVESTMENTS FOR
THEM
AND THE APPLICABLE LEGAL, TAX, REGULATORY AND ACCOUNTING TREATMENT OF THE
SECURITIES. IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR
OWN
EXAMINATION OF THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS
AND RISKS INVOLVED. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO
BEAR
THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF
TIME.
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CONFIDENTIALITY
By
receiving this Agreement, each investor acknowledges and agrees that all of
the
information contained herein is of a confidential nature and may be regarded
as
material non-public information under Regulation FD under the Securities
Exchange Act of 1934, as amended, and that this Agreement has been furnished
to
the investor by the Company solely for the purpose of enabling the investor
to
consider and evaluate an investment in the Company. Each investor further agrees
that he, she or it will treat such information in a confidential manner, will
not use such information for any purpose other than evaluating an investment
in
the Company, and will not, directly or indirectly, disclose or permit his,
her
or its agents or affiliates to disclose any of such information without the
prior written consent of the Company. Each investor also agrees to make his,
her
or its representatives aware of the terms of this paragraph and to be
responsible for any breach of this agreement by such representatives. Likewise,
without the prior written consent of the Company, no investor will, directly
or
indirectly, make any statements, any public announcements, or any release to
any
trade publication or to the press with respect to the subject matter of this
Agreement. If the investor decides to not pursue further investigation of the
Company, the investor agrees to promptly return this Agreement and any
accompanying documentation to the Company. Each investor understands that the
United States securities laws provide severe civil and criminal penalties for
those persons trading in securities of the Company while in possession of
material non-public information.
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CONFIDENTIAL
THIS
SECURITIES PURCHASE AGREEMENT (this “Agreement”), entered into as of the date
indicated on the signature page hereof, by and between RADIANT LOGISTICS, INC.,
a Delaware corporation (the “Company”), and the purchaser or purchasers
identified on the signature page hereof (“Purchaser”).
R
E C
I T A L S:
WHEREAS,
Purchaser desires to purchase and the Company desires to sell shares of common
stock on the terms and conditions set forth herein.
NOW,
THEREFORE, in consideration of the premises hereof and the agreements set forth
herein below, the parties hereto hereby agree as follows:
1. Restricted
Securities; Use of Proceeds.
(a) Restricted
Securities.
The
shares (“Shares”) of common stock, $.001 par value per share (“Common Stock”),
offered by this Agreement are being offered in a private offering (the
“Offering”) intended to be exempt from the registration requirements of the
Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section
4(2) thereof and Rule 506 of Regulation D thereunder.
(b) Use
of
Proceeds.
The
Company intends to use the proceeds for general working capital purposes and
other general corporate purposes.
2. Sale
and Purchase of Shares.
(a) Sale
and Purchase of Shares.
Subject
to the terms and conditions hereof, the Company agrees to sell, and Purchaser
agrees to purchase, the number of Shares specified on the signature page of
this
Agreement at a purchase price of $.44 per Share. The aggregate purchase price
for the Shares shall be as set forth on the signature page hereto (the “Purchase
Price”) and shall be payable upon execution hereof by check or wire transfer of
immediately available funds.
(b) Subscription
Procedure.
In
order to purchase Shares, Purchaser shall deliver to the Company, at its
principal executive office identified in Section 16 hereof: (i) one completed
and duly executed copy of this Agreement; and (ii) immediately available funds
in an amount equal to the Purchase Price. Execution and delivery of this
Agreement shall constitute an irrevocable subscription for that number of Shares
set forth on the signature page hereto. Payment for the Shares may be made
by
wire transfer to an account designated by the Company or on behalf of the
Company or by check made payable to: Radiant Logistics, Inc., ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. This Agreement may be rejected
by
the Company, in whole or in part, in its sole discretion, in which event the
Purchase Price will be returned (by mail) to Purchaser within ten (10) business
days thereafter. Unless the Offering is otherwise terminated by the Company,
as
soon as possible after the receipt and acceptance by the Company of this
Agreement and collection of the funds paid therefor, the Company will issue
certificates for the Shares to Purchaser.
3. Representations
and Warranties of Purchaser.
Purchaser represents and warrants to the Company as follows:
(a) Organization
and Qualification.
(i) If
Purchaser is an entity, Purchaser is duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization, with the
corporate or other entity power and authority to own and operate its business
as
presently conducted, except where the failure to be or have any of the foregoing
would not have a material adverse effect on Purchaser, and Purchaser is duly
qualified as a foreign corporation or other entity to do business and is in
good
standing in each jurisdiction where the character of its properties owned or
held under lease or the nature of their activities makes such qualification
necessary, except for such failures to be so qualified or in good standing
as
would not have a material adverse effect on it.
(ii) If
Purchaser is an entity, the address of its principal place of business is as
set
forth on the signature page hereto, and if Purchaser is an individual, the
address of its principal residence is as set forth on the signature page
hereto.
(b) Authority;
Validity and Effect of Agreement.
(i) If
Purchaser is an entity, Purchaser has the requisite corporate or other entity
power and authority to execute and deliver this Agreement and perform its
obligations under this Agreement. The execution and delivery of this Agreement
by Purchaser, the performance by Purchaser of its obligations hereunder and
all
other necessary corporate or other entity action on the part of Purchaser have
been duly authorized by its board of directors or similar governing body, and
no
other corporate or other entity proceedings on the part of Purchaser is
necessary for Purchaser to execute and deliver this Agreement and perform its
obligations hereunder.
(ii) This
Agreement has been duly and validly authorized, executed and delivered by
Purchaser and, assuming it has been duly and validly executed and delivered
by
the Company, constitutes a legal, valid and binding obligation of Purchaser,
in
accordance with its terms.
(c) No
Conflict; Required Filings and Consents.
Neither
the execution and delivery of this Agreement by Purchaser nor the performance
by
Purchaser of its obligations hereunder will: (i) if Purchaser is an entity,
conflict with Purchaser’s articles of incorporation or bylaws, or other similar
organizational documents; (ii) violate any statute, law, ordinance, rule or
regulation, applicable to Purchaser or any of the properties or assets of
Purchaser; or (iii) violate, breach, be in conflict with or constitute a default
(or an event which, with notice or lapse of time or both, would constitute
a
default) under, or permit the termination of any provision of, or result in
the
termination of, the acceleration of the maturity of, or the acceleration of
the
performance of any obligation of Purchaser under, or result in the creation
or
imposition of any lien upon any properties, assets or business of Purchaser
under, any material contract or any order, judgment or decree to which Purchaser
is a party or by which it or any of its assets or properties is bound or
encumbered except, in the case of clauses (ii) and (iii), for such violations,
breaches, conflicts, defaults or other occurrences which, individually or in
the
aggregate, would not have a material adverse effect on its obligation to perform
its covenants under this Agreement.
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(d) Accredited
Investor.
Purchaser
is an “accredited investor” as that term is defined in Rule 501(a) of Regulation
D under the Securities Act. If Purchaser is an entity, Purchaser was not formed
for the specific purpose of acquiring the Shares, and, if it was, all of
Purchaser’s equity owners are “accredited investors” as defined
above.
(e) No
Government Review.
Purchaser understands that neither the United States Securities and Exchange
Commission (“SEC”) nor any securities commission or other governmental authority
of any state, country or other jurisdiction has approved the issuance of the
Shares or passed upon or endorsed the merits of the Shares, this Agreement,
the
Summary Investment Memorandum or any of the other documents relating to the
proposed Offering (collectively, the “Offering Documents”), or confirmed the
accuracy of, determined the adequacy of, or reviewed this Agreement, the Summary
Investment Memorandum or the other Offering Documents.
(f) Investment
Intent.
The
Shares are being acquired for the Purchaser’s own account for investment
purposes only, not as a nominee or agent and not with a view to the resale
or
distribution of any part thereof, and Purchaser has no present intention of
selling, granting any participation in or otherwise distributing the same.
By
executing this Agreement, Purchaser further represents that Purchaser does
not
have any contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant participation to such person or third person with
respect to any of the Shares.
(g) Restrictions
on Transfer.
Purchaser understands that the Shares are “restricted securities” as such term
is defined in Rule 144 under the Securities Act and have not been registered
under the Securities Act or registered or qualified under any state securities
law, and may not be, directly or indirectly, sold, transferred, offered for
sale, pledged, hypothecated or otherwise disposed of without registration under
the Securities Act and registration or qualification under applicable state
securities laws or the availability of an exemption therefrom. In any case
where
such an exemption is relied upon by Purchaser from the registration requirements
of the Securities Act and the registration or qualification requirements of
such
state securities laws, Purchaser shall furnish the Company with an opinion
of
counsel stating that the proposed sale or other disposition of such securities
may be effected without registration under the Securities Act and will not
result in any violation of any applicable state securities laws relating to
the
registration or qualification of securities for sale, such counsel and opinion
to be satisfactory to the Company. Purchaser acknowledges that it is able to
bear the economic risks of an investment in the Shares for an indefinite period
of time, and that its overall commitment to investments that are not readily
marketable is not disproportionate to its net worth.
(h) Investment
Experience.
Purchaser has such knowledge, sophistication and experience in financial, tax
and business matters in general, and investments in securities in particular,
that it is capable of evaluating the merits and risks of this investment in
the
Shares, and Purchaser has made such investigations in connection herewith as
it
deemed necessary or desirable so as to make an informed investment decision
without relying upon the Company for legal or tax advice related to this
investment. In making its decision to acquire the Shares, Purchaser has not
relied upon any information other than information provided to Purchaser by
the
Company or its representatives and contained herein and in the other Offering
Documents.
-3-
(i) Access
to Information.
Purchaser acknowledges that it has had access to and has reviewed all documents
and records relating to the Company, including, but not limited to, the
Company’s filings with the SEC, that it has deemed necessary in order to make an
informed investment decision with respect to an investment in the Shares; that
it has had the opportunity to ask representatives of the Company certain
questions and request certain additional information regarding the terms and
conditions of such investment and the finances, operations, business and
prospects of the Company and has had any and all such questions and requests
answered to its satisfaction; and that it understands the risks and other
considerations relating to such investment.
(j) Reliance
on Representations. Purchaser
understands that the Shares
are
being offered and sold to it in reliance on specific exemptions from the
registration requirements of the federal and state securities laws and that
the
Company is relying in part upon the truth and accuracy of, and such Purchaser’s
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of such Purchaser set forth herein in order to determine
the
availability of such exemptions and the eligibility of such Purchaser to acquire
the Shares.
Purchaser
represents and warrants to the Company that any information that Purchaser
has
heretofore furnished or furnishes herewith to the Company is complete and
accurate, and further represents and warrants that it will notify and supply
corrective information to the Company immediately upon the occurrence of any
change therein occurring prior to the Company's issuance of the Shares. Within
five (5) days after receipt of a request from the Company, Purchaser will
provide such information and deliver such documents as may reasonably be
necessary to comply with any and all laws and regulations to which the Company
is subject.
(k) No
General Solicitation.
Purchaser is unaware of, and in deciding to participate in the Offering is
in no
way relying upon, and did not become aware of the Offering through or as a
result of, any form of general solicitation or general advertising including,
without limitation, any article, notice, advertisement or other communication
published in any newspaper, magazine or similar media, or broadcast over
television or radio or the internet, in connection with the
Offering.
(l) Placement
and Finder’s Fees.
No
agent, broker, investment banker, finder, financial advisor or other person
acting on behalf of Purchaser or under its authority is or will be entitled
to
any broker’s or finder’s fee or any other commission or similar fee, directly or
indirectly, in connection with the Offering, and no person is entitled to any
fee or commission or like payment in respect thereof based in any way on
agreements, arrangements or understanding made by or on behalf of
Purchaser.
(m) Investment
Risks.
Purchaser understands that purchasing Shares in the Offering will subject
Purchaser to certain risks.
(n) Legends.
The
certificates and agreements evidencing the Shares shall have endorsed thereon
the following legend (and appropriate notations thereof will be made in the
Company's stock transfer books), and
stop
transfer instructions reflecting these restrictions on transfer will be placed
with the transfer agent of the Shares:
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“THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT
OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE. THE SECURITIES
REPRESENTED HEREBY HAVE BEEN TAKEN BY THE REGISTERED OWNER FOR INVESTMENT,
AND
WITHOUT A VIEW TO RESALE OR DISTRIBUTION THEREOF, AND MAY NOT BE SOLD,
TRANSFERRED OR DISPOSED OF WITHOUT AN OPINION OF COUNSEL SATISFACTORY TO THE
ISSUER THAT SUCH TRANSFER OR DISPOSITION DOES NOT VIOLATE THE SECURITIES ACT
OF
1933, AS AMENDED, THE RULES AND REGULATIONS THEREUNDER OR OTHER APPLICABLE
SECURITIES LAWS.”
4. Representations
and Warranties of the Company.
The
Company represents and warrants to Purchaser as follows:
(a) Organization
and Qualification.
The
Company is duly organized, validly existing and in good standing under the
laws
of its jurisdiction of organization, with the corporate power and authority
to
own and operate its business as presently conducted, except where the failure
to
be or have any of the foregoing would not have a material adverse effect on
the
Company. The Company is duly qualified as a foreign corporation or other entity
to do business and is in good standing in each jurisdiction where the character
of its properties owned or held under lease or the nature of their activities
makes such qualification necessary, except for such failures to be so qualified
or in good standing as would not have a material adverse effect on the
Company.
(b) Authority;
Validity and Effect of Agreement.
(i) The
Company has the requisite corporate power and authority to execute and deliver
this Agreement, perform its obligations under this Agreement, and conduct the
Offering. The execution and delivery of this Agreement by the Company, the
performance by the Company of its obligations hereunder, the Offering and all
other necessary corporate action on the part of the Company have been duly
authorized by its board of directors, and no other corporate proceedings on
the
part of the Company are necessary to authorize this Agreement or the Offering.
This Agreement has been duly and validly executed and delivered by the Company
and, assuming that it has been duly authorized, executed and delivered by
Purchaser, constitutes a legal, valid and binding obligation of the Company,
in
accordance with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors’ rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
(ii) The
Shares have been duly authorized and, when issued and paid for in accordance
with this Agreement, will be validly issued, fully paid and non-assessable
shares of Common Stock with no personal liability resulting solely from the
ownership of such shares and will be free and clear of all liens, charges,
restrictions, claims and encumbrances imposed by or through the
Company.
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(c) No
Conflict; Required Filings and Consents.
Neither
the execution and delivery of this Agreement by the Company nor the performance
by the Company of its obligations hereunder will: (i) conflict with the
Company’s certificate of incorporation or bylaws; (ii) violate any statute, law,
ordinance, rule or regulation, applicable to the Company or any of the
properties or assets of the Company; or (iii) violate, breach, be in conflict
with or constitute a default (or an event which, with notice or lapse of time
or
both, would constitute a default) under, or permit the termination of any
provision of, or result in the termination of, the acceleration of the maturity
of, or the acceleration of the performance of any obligation of the Company,
or
result in the creation or imposition of any lien upon any properties, assets
or
business of the Company under, any material contract or any order, judgment
or
decree to which the Company is a party or by which it or any of its assets
or
properties is bound or encumbered except, in the case of clauses (ii) and (iii),
for such violations, breaches, conflicts, defaults or other occurrences which,
individually or in the aggregate, would not have a material adverse effect
on
its obligation to perform its covenants under this Agreement.
5. Indemnification.
Purchaser agrees to indemnify, defend and hold harmless the Company and its
respective affiliates and agents from and against any and all demands, claims,
actions or causes of action, judgments, assessments, losses, liabilities,
damages or penalties and reasonable attorneys' fees and related disbursements
incurred by the Company that arise out of or result from a breach of any
representations or warranties made by Purchaser herein, and Purchaser agrees
that in the event of any breach of any representations or warranties made by
Purchaser herein, the Company may, at its option, forthwith rescind the sale
of
the Shares to Purchaser.
6. Registration
Rights.
Purchaser shall be entitled to the rights and subject to the obligations set
forth below:
6.1 For
the
purpose of this Section 6, the following definitions shall apply:
(a) “Exchange
Act”
shall
mean the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the SEC thereunder, all as the same shall be in effect at the
time.
(b) “Person”
shall
mean an individual, partnership (general or limited), corporation, limited
liability company, joint venture, business trust, cooperative, association
or
other form of business organization, whether or not regarded as a legal entity
under applicable law, a trust (inter vivos or testamentary), an estate of a
deceased, insane or incompetent person, a quasi-governmental entity, a
government or any agency, authority, political subdivision or other
instrumentality thereof, or any other entity.
(c) “Register,”
“registered,”
and
“registration”
shall
refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act, and the declaration or order
of
effectiveness of such registration statement or document by the
SEC.
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(d) “Registration
Statement”
shall
mean any registration statement of the Company filed with the SEC pursuant
to
the provisions of Section 6.2 of this Agreement, which covers the resale of
the
Restricted Stock on an appropriate form then permitted by the SEC to be used
for
such registration and the sales contemplated to be made thereby under the
Securities Act, or any similar rule that may be adopted by the SEC, and all
amendments and supplements to such registration statement, including any pre-
and post- effective amendments thereto, in each case including the prospectus
contained therein, all exhibits thereto and all materials incorporated by
reference therein.
(e) “Restricted
Stock”
shall
mean (i) the Shares; and (ii) any additional shares of Common Stock of the
Company issued or issuable after the date hereof in respect of any of the
foregoing securities, by way of a stock dividend or stock split; provided that
as to any particular shares of Restricted Stock, such securities shall cease
to
constitute Restricted Stock when (x) a Registration Statement with respect
to
the sale of such securities shall have become effective under the Securities
Act
and such securities shall have been disposed of thereunder, (y) such securities
are permitted to be transferred pursuant to Rule 144(k) (or any successor
provision to such rule) under the Securities Act or (z) such securities are
otherwise freely transferable to the public without further registration under
the Securities Act.
(f) “Selling
Stockholders”
shall
mean Purchaser and any other purchaser of Shares in the Offering, and their
respective successors and assigns.
6.2. Registration
of the Shares.
(a) The
Company shall notify all Selling Stockholders in writing at least ten
(10) days
prior to the filing of any registration statement under the Securities Act
for
purposes of registering securities of the Company, excluding registration
statements on SEC Forms ▇-▇, ▇-▇ or any similar or successor forms, and will
afford each such Selling Stockholder an opportunity to include in such
registration statement all or part of such Restricted Stock held by such Selling
Stockholder. Each Selling Stockholder desiring to include in any such
registration statement all or any part of the Restricted Stock held by it shall,
within five (5) days after the above-described notice from the Company, so
notify the Company in writing. Such notice shall state the intended method
of
disposition of the Restricted Stock by such Selling Stockholder. If a Selling
Stockholder decides not to include all of its Restricted Stock in any
registration statement thereafter filed by the Company, such Selling Stockholder
shall nevertheless continue to have the right to include any Restricted Stock
in
any subsequent registration statement or registration statements as may be
filed
by the Company with respect to offerings of its securities, all upon the terms
and conditions set forth herein. The Company may, without the consent of the
Selling Stockholders, withdraw such registration statement prior to its becoming
effective if the proposal to register the securities proposed to be registered
thereby is abandoned.
(b) In
the
event that any registration pursuant to Section 6.2(a) shall be, in whole or
in
part, an underwritten public offering of Common Stock on behalf of the Company,
all Purchasers proposing to distribute their Restricted Stock through such
underwriting shall enter into an underwriting agreement in customary form with
the underwriter or underwriters selected for such underwriting by the Company.
If the managing underwriter thereof advises the Company in writing that in
its
opinion the number of securities requested to be included in such registration
exceeds the number which can be sold in an orderly manner in such offering
within a price range acceptable to the Company, the Company shall include in
such registration (i) first, the securities the Company proposes to sell, (ii)
second, securities held by person with demand or mandatory registration rights,
and (iii) third, the Restricted Stock and any other securities eligible and
requested to be included in such registration to the extent that the number
of
shares to be registered under this clause (iii) will not, in the opinion of
the
managing underwriter, adversely affect the offering of the securities pursuant
to clause (i) or (ii). In such a case, shares shall be registered pro rata
among
the holders of such Restricted Stock and registrable securities on the basis
of
the number of shares eligible for registration that are owned by all such
holders and requested to be included in such registration.
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(c) Notwithstanding
anything to the contrary contained herein, the Company's obligation in Sections
6.2(a) and 6.2(b) above shall extend only to the inclusion of the Restricted
Stock in a Registration Statement. The Company shall have no obligation to
assure the terms and conditions of distribution, to obtain a commitment from
an
underwriter relative to the sale of the Restricted Stock or to otherwise assume
any responsibility for the manner, price or terms of the distribution of the
Restricted Stock.
(d) The
Company shall have the right to terminate or withdraw any registration initiated
by it under this Section 6.2 prior to the effectiveness of such registration
without thereby incurring liability to the holders of the Restricted Stock,
regardless of whether any holder has elected to include securities in such
registration. The Registration Expenses (as defined in Section 6.5) of such
withdrawn registration shall be borne by the Company in accordance with
Section 6.4 hereof.
6.3. Registration
Procedures.
Whenever it is obligated to register any Restricted Stock pursuant to this
Agreement, the Company shall:
(a) prepare
and file with the SEC a Registration Statement with respect to the Restricted
Stock in the manner set forth in Section 6.2 hereof and use its reasonable
best
efforts to cause such Registration Statement to become effective as promptly
as
possible and to remain effective until the earlier of (i) the sale of all shares
of Restricted Stock covered thereby, (ii) the availability under Rule 144 for
the Selling Stockholder to immediately, freely resell without restriction all
Restricted Stock covered thereby, or (iii) two (2) years from the date of this
Agreement;
(b) prepare
and file with the SEC such amendments (including post-effective amendments)
and
supplements to such Registration Statement and the prospectus used in connection
therewith as may be necessary to keep such Registration Statement effective
for
the period specified in Section 6.3(a) above and to comply with the provisions
of the Act with respect to the disposition of all Restricted Stock covered
by
such Registration Statement in accordance with the intended method of
disposition set forth in such Registration Statement for such
period;
(c) furnish
to the Selling Stockholders such number of copies of the Registration Statement
and the prospectus included therein (including each preliminary prospectus)
as
such person may reasonably request in order to facilitate the public sale or
other disposition of the Restricted Stock covered by such Registration
Statement;
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(d) use
its
reasonable best efforts to register or qualify the Restricted Stock covered
by
such Registration Statement under the state securities laws of such
jurisdictions as any Selling Stockholder shall reasonably request; provided,
however,
that
the Company shall not for any such purpose be required to qualify generally
to
transact business as a foreign corporation in any jurisdiction where it is
not
so qualified or to consent to general service of process in any such
jurisdiction;
(e) in
the
event of any underwritten public offering, enter into and perform its
obligations under an underwriting agreement, in usual and customary form, with
the managing underwriter(s) of such offering. Each Selling Stockholder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement, as described in Section
6.2(b);
(f) immediately
notify each Selling Stockholder at any time when a prospectus relating thereto
is required to be delivered under the Act, of the happening of any event as
a
result of which the prospectus contained in such Registration Statement, as
then
in effect, includes an untrue statement of a material fact or omits to state
a
material fact required or necessary to be stated therein in order to make the
statements contained therein not misleading in light of the circumstances under
which they were made. The Company will use reasonable efforts to amend or
supplement such prospectus in order to cause such prospectus not to include
any
untrue statement of a material fact or omit to state a material fact required
to
be stated therein or necessary to make the statements therein not misleading
in
the light of the circumstances under which they were made;
(g) prepare
and file with the SEC such amendments and supplements to such Registration
Statement and the prospectus used in connection with such Registration Statement
as may be necessary to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such Registration
Statement;
(h) use
its
reasonable best efforts to list the Restricted Stock covered by such
Registration Statement on each exchange or automated quotation system on which
similar securities issued by the Company are then listed (with the listing
application being made at the time of the filing of such Registration Statement
or as soon thereafter as is reasonably practicable);
(i) notify
each Selling Stockholder of any threat by the SEC or state securities commission
to undertake a stop order with respect to sales under the Registration
Statement; and
(j) cooperate
in the timely removal of any restrictive legends from the shares of Restricted
Stock in connection with the resale of such shares covered by an effective
Registration Statement.
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6.4. Delay
of Registration.
No
Selling Stockholder shall have any right to obtain or seek an injunction
restraining or otherwise delaying any such registration as the result of any
controversy that might arise with respect to the interpretation or
implementation of this Section 6.
6.5 Expenses.
(a) For
the
purposes of this Section 6.5, the term “Registration Expenses” shall mean: all
expenses incurred by the Company in complying with Section 6.2 of this
Agreement, including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel and independent public
accountants for the Company, fees under state securities laws, fees of the
National Association of Securities Dealers, Inc. (“NASD”), fees and expenses of
listing shares of Restricted Stock on any securities exchange or automated
quotation system on which the Company's shares are listed and fees of transfer
agents and registrars. The term “Selling Expenses” shall mean: all underwriting
discounts and selling commissions applicable to the sale of Restricted Stock
and
all accountable or non-accountable expenses paid to any underwriter in respect
of such sale.
(b) Except
as
otherwise provided herein, the Company will pay all Registration Expenses in
connection with the Registration Statements filed pursuant to Section 6.2 of
this Agreement. All Selling Expenses in connection with any Registration
Statements filed pursuant to Section 6.1 of this Agreement shall be borne by
the
Selling Stockholders pro rata on the basis of the number of shares registered
by
each Selling Stockholder whose shares of Restricted Stock are covered by such
Registration Statement, or by such persons other than the Company (except to
the
extent the Company may be a seller) as they may agree.
6.6. Obligations
of the Selling Stockholders.
(a) In
connection with each registration hereunder, each Selling Stockholder will
furnish to the Company in writing such information with respect to it and the
securities held by it and the proposed distribution by it, as shall be
reasonably requested by the Company in order to assure compliance with
applicable federal and state securities laws as a condition precedent to
including the Selling Stockholder's Restricted Stock in the Registration
Statement. Each Selling Stockholder shall also promptly notify the Company
of
any changes in such information included in the Registration Statement or
prospectus as a result of which there is an untrue statement of material fact
or
an omission to state any material fact required or necessary to be stated
therein in order to make the statements contained therein not misleading in
light of the circumstances under which they were made.
(b) In
connection with the filing of the Registration Statement, each Selling
Stockholder shall furnish to the Company in writing such information and
affidavits as the Company reasonably requests for use in connection with such
Registration Statement or prospectus.
(c) In
connection with each registration pursuant to this Agreement, each Selling
Stockholder agrees that it will not effect sales of any Restricted Stock until
notified by the Company of the effectiveness of the Registration Statement,
and
thereafter will suspend such sales after receipt of telegraphic or written
notice from the Company to suspend sales to permit the Company to correct or
update a Registration Statement or prospectus. At the end of any period during
which the Company is obligated to keep a Registration Statement current, each
Selling Stockholder shall discontinue sales of Restricted Stock pursuant to
such
Registration Statement upon receipt of notice from the Company of its intention
to remove from registration the Restricted Stock covered by such Registration
Statement that remains unsold, and each Selling Stockholder shall notify the
Company of the number of shares registered which remain unsold immediately
upon
receipt of such notice from the Company.
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6.7. Information
Blackout and Holdbacks.
(a) At
any
time when a Registration Statement effected pursuant to Section 6.2 is
effective, upon written notice from the Company to Purchaser that the Company
has determined in good faith that the sale of Restricted Stock pursuant to
the
Registration Statement would require disclosure of non-public material
information, each Selling Stockholder shall suspend sales of Restricted Stock
pursuant to such Registration Statement until such time as the Company notifies
the Selling Stockholders that such material information has been disclosed
to
the public or has ceased to be material, or that sales pursuant to such
Registration Statement may otherwise be resumed.
(b) Notwithstanding
any other provision of this Agreement, in the event that the Company undertakes
a primary offering of shares of its unissued Common Stock, which may also
include other securities (a “Primary Offering”), in which all of the shares of
Restricted Stock are not included, the Investor shall not sell, transfer, make
any short sale of, grant any option for the purchase of, or enter into any
hedging or similar transaction with the same economic effect as a sale of,
any
Common Stock (or other securities) of the Company held by such Investor (except
for shares included in the Primary Offering), during the thirty (30) days prior
to the commencement of any such Primary Offering and ending one hundred fifty
(150) days after completion of any such Primary Offering, unless the Company,
in
the case of a non-underwritten Primary Offering, or the managing underwriter,
in
the case of an underwritten Primary Offering, otherwise agree in writing. The
Company may impose stop-transfer instructions with respect to the shares of
Common Stock (or other securities) subject to the foregoing restriction until
the end of said one hundred fifty (150) day period.
6.8. Indemnification.
(a) To
the
extent permitted by law, the Company shall indemnify, each Selling Stockholder,
such Selling Stockholder’s respective partners, officers, directors,
underwriters and each Person who controls any Selling Stockholder (within the
meaning of the Securities Act) against all losses, claims, damages, liabilities
and expenses caused by (i) any untrue statement of or alleged untrue statement
of material fact contained in the Registration Statement, prospectus or
preliminary prospectus or any amendment or supplement thereto, (ii) any omission
of or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, or (iii) any violation
or alleged violation by the Company of the Securities Act, the Exchange Act,
any
state securities law or any rule or regulation promulgated under the Securities
Act, the Exchange Act or any state securities law in connection with the
offering covered by such registration statement (“Violations”); provided,
however,
that
the indemnity agreement contained in this Section 6.8(a) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Company, which consent
shall not be unreasonably withheld, nor shall the Company be liable in for
any
loss, claim, damage, liability or action to the extent that it arises out of
or
is based upon a Violation which occurs in reliance upon and in conformity with
written information furnished expressly for use in connection with such
registration by such Selling Stockholder, partner, officer, director,
underwriter or controlling person of such Selling Stockholder occurs as a result
of any failure to deliver a copy of the prospectus relating to such Registration
Statement, or occurs as a result of any disposition of the Restricted Stock
in a
manner that fails to comply with the permitted methods of distribution
identified within the Registration Statement.
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(b) To
the
extent permitted by law, each Selling Stockholder shall indemnify and hold
harmless the Company, each of its directors, its officers and each person,
if
any, who controls the Company within the meaning of the Securities Act, any
underwriter and any other Selling Stockholder selling securities under such
registration statement or any of such other Selling Stockholder’s partners,
directors or officers or any person who controls such Selling Stockholder,
against any losses, claims, damages or liabilities (joint or several) to which
the Company or any such director, officer, controlling person, underwriter
or
other such Selling Stockholder, or partner, director, officer or controlling
person of such other Selling Stockholder, may become subject under the
Securities Act, the Exchange Act or other federal or state law, insofar as
such
losses, claims, damages or liabilities (or actions in respect thereto) arise
out
of or are based upon any Violation, in each case to the extent (and only to
the
extent) that such Violation (i) occurs in reliance upon and in conformity with
written information furnished by such Selling Stockholder to the Company for
use
in connection with such registration, (ii) occurs as a result of any failure
to
deliver a copy of the prospectus relating to such Registration Statement, or
(iii) occurs as a result of any disposition of the Restricted Stock in a manner
that fails to comply with the permitted methods of distribution identified
within the Registration Statement.
(c) Any
Person entitled to indemnification hereunder shall (i) give prompt written
notice to the indemnifying party of any claim with respect to which it seeks
indemnification (provided that the failure to give prompt notice shall not
impair any Person's right to indemnification hereunder to the extent such
failure has not prejudiced the indemnifying party), and (ii) unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such defense is assumed,
the indemnifying party shall not be subject to any liability for any settlement
made by the indemnified party without its consent (but such consent shall not
be
unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim shall not be obligated to pay the fees
and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to
such
claim.
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(d) If
the
indemnification provided for in this Section 6.8 is held by a court of
competent jurisdiction to be unavailable to an indemnified party with respect
to
any losses, claims, damages or liabilities referred to herein, the indemnifying
party, in lieu of indemnifying such indemnified party thereunder, shall to
the
extent permitted by applicable law contribute to the amount paid or payable
by
such indemnified party as a result of such loss, claim, damage or liability
in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other
in
connection with the violation(s) described in Section 6.8(a) that resulted
in
such loss, claim, damage or liability, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by a court of law by reference to, among
other things, whether the untrue or alleged untrue statement of a material
fact
or the omission to state a material fact relates to information supplied by
the
indemnifying party or by the indemnified party and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission; provided,
that in
no event shall any contribution by a Selling Stockholder hereunder exceed the
net proceeds from the offering received by such Selling
Stockholder.
(e) The
indemnification provided for under this Agreement shall remain in full force
and
effect regardless of any investigation made by or on behalf of the indemnified
party or any officer, director or controlling Person of such indemnified party
and shall survive the transfer of securities. The Company also agrees to make
such provisions as are reasonably requested by any indemnified party for
contribution to such party in the event the Company's indemnification is
unavailable for any reason.
7. Confidentiality.
Purchaser acknowledges and agrees that:
(a) All
of
the information contained herein is of a confidential nature and may be regarded
as material non-public information under Regulation FD of the Securities
Act.
(b) This
Agreement has been furnished to Purchaser by the Company for the sole purpose
of
enabling Purchaser to consider and evaluate an investment in the Company, and
will be kept confidential by Purchaser and not used for any other
purpose.
(c) The
information contained herein shall not, without the prior written consent of
the
Company, be disclosed by Purchaser to any person or entity, other than
Purchaser’s personal financial and legal advisors for the sole purpose of
evaluating an investment in the Company, and Purchaser will not, directly or
indirectly, disclose or permit Purchaser’s personal financial and legal advisors
to disclose, any of such information without the prior written consent of the
Company.
(d) Purchaser
shall make its representatives aware of the terms of this section and to be
responsible for any breach of this Agreement by such representatives.
(e) Purchaser
shall not, without the prior written consent of the Company, directly or
indirectly, make any statements, public announcements or release to trade
publications or the press with respect to the subject matter of this Agreement
and the other Offering Documents.
(f) If
Purchaser decides to not pursue further investigation of the Company or to
not
participate in the Offering, Purchaser will promptly return this Agreement
and
any accompanying documentation to the Company.
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8. Non-Public
Information. Purchaser
acknowledges that information concerning the matters that are the subject matter
of this Agreement may constitute material non-public information under United
States federal securities laws, and that United States federal securities laws
prohibit any person who has received material non-public information relating
to
the Company from purchasing or selling securities of the Company, or from
communicating such information to any person under circumstances in which it
is
reasonably foreseeable that such person is likely to purchase or sell securities
of the Company. Accordingly, until such time as any such non-public information
has been adequately disseminated to the public, Purchaser shall not purchase
or
sell any securities of the Company, or communicate such information to any
other
person.
9. Entire
Agreement.
This
Agreement contains the entire agreement between the parties and supersedes
all
prior agreements and understandings, both written and oral, between the parties
with respect to the subject matter hereto, and no party shall be liable or
bound
to any other party in any manner by any warranties, representations, guarantees
or covenants except as specifically set forth in this Agreement. 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.
10. Amendment
and Modification.
This
Agreement may not be amended, modified or supplemented except by an instrument
or instruments in writing signed by the party against whom enforcement of any
such amendment, modification or supplement is sought.
11. Extensions
and Waivers.
At any
time prior to the Closing, the parties hereto entitled to the benefits of a
term
or provision may (a) extend the time for the performance of any of the
obligations or other acts of the parties hereto, (b) waive any inaccuracies
in
the representations and warranties contained herein or in any document,
certificate or writing delivered pursuant hereto, or (c) waive compliance with
any obligation, covenant, agreement or condition contained herein. Any agreement
on the part of a party to any such extension or waiver shall be valid only
if
set forth in an instrument or instruments in writing signed by the party against
whom enforcement of any such extension or waiver is sought. No failure or delay
on the part of any party hereto in the exercise of any right hereunder shall
impair such right or be construed to be a waiver of, or acquiescence in, any
breach of any representation, warranty, covenant or agreement.
12. Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, provided, however, that no party
hereto may assign its rights or delegate its obligations under this Agreement
without the express prior written consent of the other party hereto. Except
as
provided in Sections 5 and 6, nothing in this Agreement is intended to confer
upon any person not a party hereto (and their successors and assigns) any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.
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13. Survival
of Representations, Warranties and Covenants.
The
representations and warranties contained herein shall survive the Closing and
shall thereupon terminate 18 months from the Closing, except that the
representations contained in Sections 3(a), 3(b), 4(a), and 4(b) shall survive
indefinitely. All covenants and agreements contained herein which by their
terms
contemplate actions following the Closing shall survive the Closing and remain
in full force and effect in accordance with their terms. All other covenants
and
agreements contained herein shall not survive the Closing and shall thereupon
terminate.
14. Headings;
Definitions.
The
Section headings contained in this Agreement are inserted for convenience of
reference only and will not affect the meaning or interpretation of this
Agreement. All references to Sections contained herein mean Sections of this
Agreement unless otherwise stated. All capitalized terms defined herein are
equally applicable to both the singular and plural forms of such
terms
15. Severability.
If any
provision of this Agreement or the application thereof to any person or
circumstance is held to be invalid or unenforceable to any extent, the remainder
of this Agreement shall remain in full force and effect and shall be reformed
to
render the Agreement valid and enforceable while reflecting to the greatest
extent permissible the intent of the parties.
16. Notices.
All
notices hereunder shall be sufficiently given for all purposes hereunder if
in
writing and delivered personally, sent by documented overnight delivery service
or, to the extent receipt is confirmed, telecopy, telefax or other electronic
transmission service to the appropriate address or number as set forth
below:
If
to
the Company:
▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇ ▇. ▇▇▇▇▇
Chief
Executive Officer
With
a
Copy to:
Fox
Rothschild LLP
c/o
▇▇▇▇▇▇▇
▇
▇▇▇▇▇▇, Esq.
Princeton
Pike Corp. Center
▇▇▇
▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
-15-
If
to
Purchaser:
To
that
address indicated on the signature page hereof.
17. Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
Commonwealth of Pennsylvania, without regard to the laws that might otherwise
govern under applicable principles of conflicts of laws thereof, except to
the
extent that the General Corporation Law of the State of Delaware shall apply
to
the internal corporate governance of the Company.
18. Arbitration. If
a
dispute arises as to the interpretation of this Agreement, it shall be decided
in an arbitration proceeding conforming to the Rules of the American Arbitration
Association applicable to commercial arbitration then in effect at the time
of
the dispute. The arbitration shall take place in Philadelphia, Pennsylvania.
The
decision of the arbitrators shall be conclusively binding upon the parties
and
final, and such decision shall be enforceable as a judgment in any court of
competent jurisdiction. The parties shall share equally the costs of the
arbitration.
19. Counterparts.
This
Agreement may be executed and delivered by facsimile in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same agreement.
[Remainder
of page intentionally left blank]
-16-
IN
WITNESS WHEREOF, intending to be legally bound, the parties hereto have caused
this Agreement to be executed as of the date set forth below.
|
Date:
January 11, 2006
|
PURCHASER
______________________________________
By:____________________________________
Name:______________________________
Title:_______________________________
Address:____________________________
|
|
Number
of Shares Purchased: _____________
Purchase
Price
@
$.44 per Share: $_______________________
|
|
|
Date:
January 11, 2006
|
By:
____________________________________
▇▇▇▇
▇. ▇▇▇▇▇
Chief
Executive Officer
|
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