Exhibit 99.2
Execution Copy
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this "Agreement") is dated as of
September 30, 2003 by and between Cadence Resources Corporation, a Utah
corporation (the "Company"), and each purchaser identified on the signature
pages hereto (each, a "Purchaser" and collectively, the "Purchasers").
WHEREAS, subject to the terms and conditions set forth in this
Agreement and pursuant to Section 4(2) of the Securities Act of 1933, as
amended, the Company desires to issue and sell to each Purchaser, and each
Purchaser, severally and not jointly, desires to purchase from the Company,
certain securities of the Company as more fully described in this Agreement.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in
this Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and each of the
Purchasers agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. In addition to the terms defined elsewhere in this
Agreement, the following terms have the meanings indicated:
"Affiliate" means any Person that, directly or indirectly
through one or more intermediaries, controls or is controlled by or is
under common control with a Person, as such terms are used in and
construed under Rule 144.
"Business Day" means any day other than Saturday, Sunday or
other day on which commercial banks in The City of New York are
authorized or required by law to remain closed.
"Closing" means the closing of the purchase and sale of the
Shares pursuant to Section 2.1.
"Closing Date" means the date of the Closing.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the common stock of the Company, par
value $0.01 per share.
"Common Stock Equivalents" means, collectively, Options and
Convertible Securities.
"Company Counsel" means Pedley, Zielke, Xxxxxxxxx & Xxxxx,
PLLC
"Convertible Securities" means any stock or securities (other
than Options) convertible into or exercisable or exchangeable for
Common Stock.
"Effective Date" means the date that the Registration
Statement is first declared effective by the Commission.
"Eligible Market" means any of the New York Stock Exchange,
the American Stock Exchange, the Nasdaq National Market, the Nasdaq
Small Cap Market or the OTC Bulletin Board.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Filing Date" means October 30, 2003.
"Lien" means any lien, charge, claim, security interest,
encumbrance, right of first refusal or other restriction.
"Losses" means any and all losses, claims, damages,
liabilities, settlement costs and expenses, including, without
limitation, costs of preparation and reasonable attorneys' fees.
"Options" means any rights, warrants or options to subscribe
for or purchase Common Stock or Convertible Securities.
"Person" means any individual or corporation, partnership,
trust, incorporated or unincorporated association, joint venture,
limited liability company, joint stock company, government (or an
agency or subdivision thereof) or any court or other federal, state,
local or other governmental authority or other entity of any kind.
"Post-Effective Amendment" means a post-effective amendment to
the Registration Statement.
"Post-Effective Amendment Filing Deadline" means the fifth
Trading Day after the Registration Statement ceases to be effective
pursuant to applicable securities laws due to the passage of time or
the occurrence of an event requiring the Company to file a
Post-Effective Amendment.
"Proceeding" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.
"Prospectus" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes
any information previously omitted from a prospectus filed as part of
an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by
any prospectus supplement, with respect to the terms of the offering of
any portion of the Registrable Securities covered by the Registration
Statement, and all other amendments and supplements to the Prospectus,
including post-effective amendments, and all material incorporated by
reference or deemed to be incorporated by reference in such Prospectus.
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"Registrable Securities" means any Common Stock issued or
issuable pursuant to the Transaction Documents, together with any
securities issued or issuable upon any stock split, dividend or other
distribution, recapitalization or similar event with respect to the
foregoing.
"Registration Statement" means each registration statement
required to be filed under Article VI, including (in each case) the
Prospectus, amendments and supplements to such registration statement
or Prospectus, including pre- and post-effective amendments, all
exhibits thereto, and all material incorporated by reference or deemed
to be incorporated by reference in such registration statement.
"Required Effectiveness Date" means December 14, 2003.
"Rule 144," "Rule 415," and "Rule 424" means Rule 144, Rule
415 and Rule 424, respectively, promulgated by the Commission pursuant
to the Securities Act, as such Rules may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission
having substantially the same effect as such Rule.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" means an aggregate of 500,000 shares of Common Stock,
which are being issued and sold to the Purchasers at the Closing.
"Subsidiary" means any Person in which the Company, directly
or indirectly, owns capital stock or holds an equity or similar
interest that are required to be listed in Schedule 3.1(a).
"Trading Day" means (a) any day on which the Common Stock is
listed or quoted and traded on its primary Trading Market, (b) if the
Common Stock is not then listed or quoted and traded on any Eligible
Market, then a day on which trading occurs on the NASDAQ Small Cap
Market (or any successor thereto), or (c) if trading does not occur on
the NASDAQ Small Cap Market (or any successor thereto), any Business
Day.
"Trading Market" means the OTC Bulletin Board or any other
Eligible Market on which the Common Stock is then listed or quoted.
"Transaction Documents" means this Agreement, the Transfer
Agent Instructions and any other documents or agreements executed in
connection with the transactions contemplated hereunder.
"Transfer Agent" means OTC Stock Transfer Company of Salt Lake
City, Utah, or any other transfer agent selected by the Company
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"Transfer Agent Instructions" means the Irrevocable Transfer
Agent Instructions, in the form of Exhibit C, executed by the Company
and delivered to and acknowledged in writing by the Transfer Agent.
ARTICLE II
PURCHASE AND SALE
2.1 Closing. Subject to the terms and conditions set forth in this
Agreement, at the Closing the Company shall issue and sell to each Purchaser,
and each Purchaser shall, severally and not jointly, purchase from the Company,
such number of Shares as indicated below such Purchaser's name on the signature
page of this Agreement, for an aggregate purchase price for such Purchaser as
indicated below such Purchaser's name on the signature page of this Agreement.
The Closing shall take place at the offices of Proskauer Rose LLP immediately
following the execution hereof, or at such other location or time as the parties
may agree.
2.2 Closing Deliveries.
(a) At the Closing, the Company shall deliver or cause to be
delivered to each Purchaser the following:
(i) one or more stock certificates, free and clear of
all restrictive and other legends (except as expressly
provided in Section 4.1(b) hereof), evidencing the number of
Shares indicated below such Purchaser's name on the signature
page of this Agreement, registered in the name of such
Purchaser;
(ii) a legal opinion of Company Counsel, in the form
of Exhibit A, executed by such counsel and delivered to the
Purchasers; and
(iii) duly executed Transfer Agent Instructions
acknowledged by the Transfer Agent.
(b) At the Closing, each Purchaser shall deliver or cause to
be delivered to the Company the purchase price indicated below such
Purchaser's name on the signature page of this Agreement, in United
States dollars and in immediately available funds, by wire transfer to
an account designated in writing by the Company for such purpose.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. The Company hereby
represents and warrants to each of the Purchasers as follows:
(a) Subsidiaries. The Company has no direct or indirect
Subsidiaries other than those listed in Schedule 3.1(a). Except as
disclosed in Schedule 3.1(a), the Company owns, directly or indirectly,
all of the capital stock or comparable equity interests of each
Subsidiary free and clear of any Lien, and all the issued and
outstanding shares of capital stock or comparable equity interests of
each Subsidiary are validly issued and are fully paid, non-assessable
and free of preemptive and similar rights.
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(b) Organization and Qualification. Except as disclosed in
Schedule 3.1(b) each of the Company and the Subsidiaries is an entity
duly organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation or organization (as applicable),
with the requisite power and authority to own and use its properties
and assets and to carry on its business as currently conducted. Neither
the Company nor any Subsidiary is in violation of any of the provisions
of its respective certificate or articles of incorporation, bylaws or
other organizational or charter documents. To the knowledge of the
Company, each of the Company and the Subsidiaries is duly qualified to
do business and is in good standing as a foreign corporation or other
entity in each jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary,
except where the failure to be so qualified or in good standing, as the
case may be, could not, individually or in the aggregate, (i) adversely
affect the legality, validity or enforceability of any Transaction
Document, (ii) have or result in a material adverse effect on the
results of operations, assets, prospects, business or condition
(financial or otherwise) of the Company and the Subsidiaries, taken as
a whole, or (iii) adversely impair the Company's ability to perform
fully on a timely basis its obligations under any of the Transaction
Documents (any of (i), (ii) or (iii), a "Material Adverse Effect").
(c) Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the
transactions contemplated by each of the Transaction Documents and
otherwise to carry out its obligations hereunder and thereunder. The
execution and delivery of each of the Transaction Documents by the
Company and the consummation by it of the transactions contemplated
hereby and thereby have been duly authorized by all necessary action on
the part of the Company and no further consent or action is required by
the Company, its Board of Directors or its stockholders. Each of the
Transaction Documents has been (or upon delivery will be) duly executed
by the Company and is, or when delivered in accordance with the terms
hereof, will constitute, the valid and binding obligation of the
Company enforceable against the Company in accordance with its terms.
(d) No Conflicts. The execution, delivery and performance of
the Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby do not and
will not (i) conflict with or violate any provision of the Company's or
any Subsidiary's certificate or articles of incorporation, bylaws or
other organizational or charter documents, (ii) conflict with, or
constitute a default (or an event that with notice or lapse of time or
both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, any agreement, credit facility, debt
or other instrument (evidencing a Company or Subsidiary debt or
otherwise) or other understanding to which the Company or any
Subsidiary is a party or by which any property or asset of the Company
or any Subsidiary is bound or affected, except to the extent that such
conflict, default or termination right could not reasonably be expected
to have a Material Adverse Effect, or (iii), to the knowledge of the
Company, result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or
governmental authority to which the Company or a
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Subsidiary is subject (including federal and state securities laws and
regulations and the rules and regulations of any self-regulatory
organization to which the Company or its securities are subject), or by
which any property or asset of the Company or a Subsidiary is bound or
affected. As used herein, the words "knowledge of the Company" (or any
substantially similar phrase) means the constructive knowledge after
reasonable investigation of the President of the Company and its Vice
President serving as its principal financial officer.
(e) Issuance of the Shares. The Shares are duly authorized
and, when issued and paid for in accordance with the Transaction
Documents, will be duly and validly issued, fully paid and
nonassessable, free and clear of all Liens and shall not be subject to
preemptive rights or similar rights of stockholders.
(f) Capitalization. The number of shares and type of all
authorized, issued and outstanding capital stock, options and other
securities of the Company (whether or not presently convertible into or
exercisable or exchangeable for shares of capital stock of the Company)
is set forth in Schedule 3.1(f). All outstanding shares of capital
stock are duly authorized, validly issued, fully paid and nonassessable
and have been issued in compliance with all applicable securities laws,
except where the failure to be so authorized, issued or in compliance
could not reasonably be expected to result in a Material Adverse Effect
(as defined below). Except as disclosed in Schedule 3.1(f), there are
no outstanding options, warrants, script rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities,
rights or obligations convertible into or exercisable or exchangeable
for, or giving any Person any right to subscribe for or acquire, any
shares of Common Stock, or contracts, commitments, understandings or
arrangements by which the Company or any Subsidiary is or may become
bound to issue additional shares of Common Stock, or securities or
rights convertible or exchangeable into shares of Common Stock. Except
as set forth in Schedule 3.1(f), there are no anti-dilution or price
adjustment provisions contained in any security issued by the Company
(or in any agreement providing rights to security holders) and the
issue and sale of the Shares will not obligate the Company to issue
shares of Common Stock or other securities to any Person (other than
the Purchasers) and will not result in a right of any holder of Company
securities to adjust the exercise, conversion, exchange or reset price
under such securities. To the knowledge of the Company, except as
specifically disclosed in Schedule 3.1(f), no Person or group of
related Persons beneficially owns (as determined pursuant to Rule 13d-3
under the Exchange Act), or has the right to acquire, by agreement with
or by obligation binding upon the Company, beneficial ownership of in
excess of 5% of the outstanding Common Stock, ignoring for such
purposes any limitation on the number of shares of Common Stock that
may be owned at any single time.
(g) SEC Reports; Financial Statements. The Company has filed
all reports required to be filed by it under the Securities Act and the
Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for
the two years preceding the date hereof (or such shorter period as the
Company was required by law to file such material) (the foregoing
materials being collectively referred to herein as the "SEC Reports"
and, together with this Agreement and the Schedules to this Agreement,
the "Disclosure Materials") on a timely basis or has received a valid
extension of such time of filing and has filed any such SEC Reports
prior to the expiration of any such extension. The Company has
delivered to the Purchasers true, correct and complete copies of all
SEC Reports filed within the ten (10) days preceding the date hereof.
As of their respective dates, the SEC Reports complied in all material
respects with the requirements of the Securities Act and the Exchange
Act and the rules and regulations of the Commission promulgated
thereunder, and none of the SEC Reports, when filed, contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading. The financial statements of the Company
included in the SEC Reports comply in all material respects with
applicable accounting requirements and the rules and
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regulations of the Commission with respect thereto as in effect at the
time of filing. Such financial statements have been prepared in
accordance with United States generally accepted accounting principles
applied on a consistent basis during the periods involved ("GAAP"),
except as may be otherwise specified in such financial statements or
the notes thereto, and fairly present in all material respects the
financial position of the Company and its consolidated subsidiaries as
of and for the dates thereof and the results of operations and cash
flows for the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial, year-end audit adjustments. All
material agreements to which the Company or any Subsidiary is a party
or to which the property or assets of the Company or any Subsidiary are
subject are included as part of or specifically identified in the SEC
Reports.
(h) Material Changes. Since the date of the latest audited
financial statements included within the SEC Reports, except as
specifically disclosed in the SEC Reports, (i) there has been no event,
occurrence or development that, individually or in the aggregate, has
had or that could result in a Material Adverse Effect, (ii) the Company
has not incurred any liabilities (contingent or otherwise) other than
(A) trade payables and accrued expenses incurred in the ordinary course
of business consistent with past practice and (B) liabilities not
required to be reflected in the Company's financial statements pursuant
to GAAP or required to be disclosed in filings made with the
Commission, (iii) the Company has not altered its method of accounting
or the identity of its auditors, (iv) the Company has not declared or
made any dividend or distribution of cash or other property to its
stockholders or purchased, redeemed or made any agreements to purchase
or redeem any shares of its capital stock, and (v) the Company has not
issued any equity securities to any officer, director or Affiliate,
except pursuant to existing Company stock option plans or as set forth
in Schedule 3.1(h).
(i) Absence of Litigation. Except as set forth in Schedule
3.1(i), there is no action, suit, claim, proceeding, inquiry or
investigation before or by any court, public board, government agency,
self-regulatory organization or body pending or, to the knowledge of
the Company, threatened against or affecting the Company or any of its
Subsidiaries that could, individually or in the aggregate, have a
Material Adverse Effect. Schedule 3.1(i) contains a complete list and
summary description of any pending or, to the knowledge of the Company,
threatened proceeding against or affecting the Company or any of its
Subsidiaries that could individually or in the aggregate, have a
Material Adverse Effect.
(j) Compliance. Neither the Company nor any Subsidiary (i) is
in default under or in violation of (and no event has occurred that has
not been waived that, with notice or lapse of time or both, would
result in a default by the Company or any Subsidiary under), nor has
the Company or any Subsidiary received notice of a claim that it is in
default under or that it is in violation of, any indenture, loan or
credit agreement or any other agreement or instrument to which it is a
party or by which it or any of its properties is bound (whether or not
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such default or violation has been waived), (ii) is in violation of any
order of any court, arbitrator or governmental body, or (iii) to the
knowledge of the Company, is or has been in violation of any statute,
rule or regulation of any governmental authority, including without
limitation all foreign, federal, state and local laws relating to
taxes, environmental protection, occupational health and safety,
product quality and safety and employment and labor matters, except in
each case as could not, individually or in the aggregate, have or
result in a Material Adverse Effect.
(k) Title to Assets. The Company and the Subsidiaries have
good and marketable title in all personal property owned by them that
is material to the business of the Company and the Subsidiaries, in
each case free and clear of all Liens, except for Liens as do not
materially affect the value of such property and do not materially
interfere with the use made and proposed to be made of such property by
the Company and the Subsidiaries. To the knowledge of the Company, any
real property and facilities held under lease by the Company and the
Subsidiaries are held by them under valid, subsisting and enforceable
leases of which the Company and the Subsidiaries are in compliance.
(l) Certain Fees. Except for the fees to Sunrise Securities
Corp. and described in Schedule 3.1(l), all of which are payable to
registered broker-dealers, no brokerage or finder's fees or commissions
are or will be payable by the Company to any broker, financial advisor
or consultant, finder, placement agent, investment banker, bank or
other Person with respect to the transactions contemplated by this
Agreement, and the Company has not taken any action that would cause
any Purchaser to be liable for any such fees or commissions.
(m) Private Placement. Neither the Company nor any Person
acting on the Company's behalf has sold or offered to sell or solicited
any offer to buy the Shares by means of any form of general
solicitation or advertising. To the knowledge of the Company, neither
the Company nor any of its Affiliates nor any Person acting on the
Company's behalf has, directly or indirectly, at any time within the
past six months, made any offer or sale of any security or solicitation
of any offer to buy any security under circumstances that would (i)
eliminate the availability of the exemption from registration under
Regulation D under the Securities Act in connection with the offer and
sale of the Shares as contemplated hereby or (ii) cause the offering of
the Shares pursuant to the Transaction Documents to be integrated with
prior offerings by the Company for purposes of any applicable law,
regulation or stockholder approval provisions, including, without
limitation, under the rules and regulations of any Trading Market. The
Company is not, and is not an Affiliate of, an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
The Company is not a United States real property holding corporation
within the meaning of the Foreign Investment in Real Property Tax Act
of 1980.
(n) Form SB-2 Eligibility. The Company is eligible to register
its Common Stock for resale by the Purchasers using Form SB-2
promulgated under the Securities Act.
(o) Listing and Maintenance Requirements. The Company is in
compliance with the listing or maintenance requirements of its Trading
Market and will take all steps necessary to have its shares continue to
be traded and listed on its Trading Market.
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The Company is, and has no reason to believe that it will not in the
foreseeable future continue to be, in compliance with all such listing
and maintenance requirements.
(p) Registration Rights. Except as described in Schedule
3.1(p), the Company has not granted or agreed to grant to any Person
any rights (including "piggy-back" registration rights) to have any
securities of the Company registered with the Commission or any other
governmental authority that have not been satisfied.
(q) Application of Takeover Protections. There is no control
share acquisition, business combination, poison pill (including any
distribution under a rights agreement) or other similar anti-takeover
provision under the Company's charter documents or the laws of its
state of incorporation that is or could become applicable to any of the
Purchasers as a result of the Purchasers and the Company fulfilling
their obligations or exercising their rights under the Transaction
Documents, including, without limitation, as a result of the Company's
issuance of the Shares and the Purchasers' ownership of the Shares. The
foregoing notwithstanding, the Company has authorized in its articles
of incorporation, blank check preferred stock.
(r) Disclosure. The Company confirms that neither it nor any
other Person acting on its behalf has provided any of the Purchasers or
their agents or counsel with any information that constitutes or might
constitute material, nonpublic information. The Company understands and
confirms that each of the Purchasers will rely on the foregoing
representations in effecting transactions in securities of the Company.
All disclosure provided to the Purchasers regarding the Company, its
business and the transactions contemplated hereby, including the
Schedules to this Agreement, furnished by or on behalf of the Company
are true and correct and do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to
make the statements made therein, in the light of the circumstances
under which they were made, not misleading. No event or circumstance
has occurred or information exists with respect to the Company or any
of its Subsidiaries or its or their business, properties, prospects,
operations or financial conditions, which, under applicable law, rule
or regulation, requires public disclosure or announcement by the
Company but which has not been so publicly announced or disclosed. The
Company acknowledges and agrees that no Purchaser makes or has made any
representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in Section
3.2.
(s) Acknowledgment Regarding Purchasers' Purchase of Shares.
The Company acknowledges and agrees that each of the Purchasers is
acting solely in the capacity of an arm's length purchaser with respect
to this Agreement and the transactions contemplated hereby. The Company
further acknowledges that no Purchaser is acting as a financial advisor
or fiduciary of the Company or any other Purchaser (or in any similar
capacity) with respect to this Agreement and the transactions
contemplated hereby and any advice given by any Purchaser or any of
their respective representatives or agents in connection with this
Agreement and the transactions contemplated hereby is merely incidental
to such Purchaser's purchase of the Shares. The Company further
represents to each Purchaser that the Company's decision to enter into
this Agreement has been based solely on the independent evaluation of
the transactions contemplated hereby by the Company and its
representatives.
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(t) Patents and Trademarks. The Company and the Subsidiaries
have, or have rights to use, all patents, patent applications,
trademarks, trademark applications, service marks, trade names,
copyrights, licenses and other similar rights that are necessary or
material for use in connection with their respective businesses as
described in the SEC Reports and which the failure to so have could
have a Material Adverse Effect (collectively, the "Intellectual
Property Rights"). Neither the Company nor any Subsidiary has received
a written notice that the Intellectual Property Rights used by the
Company or any Subsidiary violates or infringes upon the rights of any
Person. To the knowledge of the Company, all such Intellectual Property
Rights are enforceable and there is no existing infringement by another
Person of any of the Intellectual Property Rights.
(u) Regulatory Permits. To the knowledge of the Company, the
Company and the Subsidiaries possess all certificates, authorizations
and permits issued by the appropriate federal, state, local or foreign
regulatory authorities necessary to conduct their respective businesses
as described in the SEC Reports, except where the failure to possess
such permits could not, individually or in the aggregate, have or
result in a Material Adverse Effect ("Material Permits"), and neither
the Company nor any Subsidiary has received any notice of proceedings
relating to the revocation or modification of any Material Permit.
(v) Transactions With Affiliates and Employees. Except as set
forth below or in SEC Reports filed at least ten days prior to the date
hereof, none of the officers or directors of the Company and, to the
knowledge of the Company, none of the employees of the Company is
presently a party to any transaction with the Company or any Subsidiary
(other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or
personal property to or from, or otherwise requiring payments to or
from any officer, director or such employee or, to the knowledge of the
Company, any entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee
or partner.
(w) Solvency. Based on the financial condition of the Company
as of the Closing Date, and including the proceeds received from the
offering of not more than $4,500,000 worth of Common Stock to the
Purchasers listed in Schedule 3.1(w) or their Affiliates (the
"Offering"): (i) the Company's fair saleable value of its assets
exceeds the amount that will be required to be paid on or in respect of
the Company's existing debts and other liabilities (including known
contingent liabilities) as they mature; (ii) the Company's assets do
not constitute unreasonably small capital to carry on its business for
the current fiscal year as now conducted and as proposed to be
conducted including its capital needs taking into account the
particular capital requirements of the business conducted by the
Company, and projected capital requirements and capital availability
thereof; and (iii) the current cash flow of the Company, together with
the proceeds the Company would receive, were it to liquidate all of its
assets, after taking into account all anticipated uses of the cash,
would be sufficient to pay all amounts on or in respect of its debt
when such amounts are required to be paid. The Company does not intend
to incur debts beyond its ability to pay such debts as they mature
(taking into account the timing and amounts of cash to be payable on or
in respect of its debt).
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(x) Internal Accounting Controls. To the knowledge of the
Company. the Company and the Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or
specific authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with
management's general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to
any differences.
3.2 Representations and Warranties of the Purchasers. Each Purchaser
hereby, as to itself only and for no other Purchaser, represents and warrants to
the Company as follows:
(a) Organization; Authority. Such Purchaser is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the requisite corporate or
partnership power and authority to enter into and to consummate the
transactions contemplated by the Transaction Documents and otherwise to
carry out its obligations hereunder and thereunder. The purchase by
such Purchaser of the Shares hereunder has been duly authorized by all
necessary action on the part of such Purchaser. This Agreement has been
duly executed and delivered by such Purchaser and constitutes the valid
and binding obligation of such Purchaser, enforceable against it in
accordance with its terms.
(b) Investment Intent. Such Purchaser is acquiring the Shares
as principal for its own account for investment purposes only and not
with a view to or for distributing or reselling such Shares or any part
thereof, without prejudice, however, to such Purchaser's right, subject
to the provisions of this Agreement, at all times to sell or otherwise
dispose of all or any part of such Shares pursuant to an effective
registration statement under the Securities Act or under an exemption
from such registration and in compliance with applicable federal and
state securities laws. Nothing contained herein shall be deemed a
representation or warranty by such Purchaser to hold Shares for any
period of time. Such Purchaser does not have any agreement or
understanding, directly or indirectly, with any Person to distribute
any of the Shares.
(c) Purchaser Status. At the time such Purchaser was offered
the Shares it was, and at the date hereof it is, an "accredited
investor" as defined in Rule 501(a) under the Securities Act.
(d) Experience of such Purchaser. Such Purchaser, either alone
or together with its representatives, has such knowledge,
sophistication and experience in business and financial matters so as
to be capable of evaluating the merits and risks of the prospective
investment in the Shares, and has so evaluated the merits and risks of
such investment. Such Purchaser is able to bear the economic risk of an
investment in the Shares and, at the present time, is able to afford a
complete loss of such investment.
(e) Access to Information. Such Purchaser acknowledges that it
has reviewed the Disclosure Materials and has been afforded (i) the
opportunity to ask such
11
questions as it has deemed necessary of, and to receive answers from,
representatives of the Company concerning the terms and conditions of
the offering of the Shares and the merits and risks of investing in the
Shares; (ii) access to information about the Company and the
Subsidiaries and their respective financial condition, results of
operations, business, properties, management and prospects sufficient
to enable it to evaluate its investment; and (iii) the opportunity to
obtain such additional information that the Company possesses or can
acquire without unreasonable effort or expense that is necessary to
make an informed investment decision with respect to the investment.
Neither such inquiries nor any other investigation conducted by or on
behalf of such Purchaser or its representatives or counsel shall
modify, amend or affect such Purchaser's right to rely on the truth,
accuracy and completeness of the Disclosure Materials and the Company's
representations and warranties contained in the Transaction Documents.
ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES
4.1 Transfer Restrictions.
(a) Shares may only be disposed of pursuant to an effective
registration statement under the Securities Act or pursuant to an
available exemption from the registration requirements of the
Securities Act, and in compliance with any applicable state securities
laws. In connection with any transfer of Shares other than pursuant to
an effective registration statement or to the Company or pursuant to
Rule 144(k), except as otherwise set forth herein, the Company may
require the transferor to provide to the Company an opinion of counsel
selected by the transferor, the form and substance of which opinion
shall be reasonably satisfactory to the Company, to the effect that
such transfer does not require registration under the Securities Act.
Notwithstanding the foregoing, the Company hereby consents to and
agrees to register on the books of the Company and with its Transfer
Agent, without any such legal opinion, any transfer of Shares by a
Purchaser to an Affiliate of such Purchaser, provided that the
transferee certifies to the Company that it is an "accredited investor"
as defined in Rule 501(a) under the Securities Act.
(b) The Purchasers agree to the imprinting, so long as is
required by this Section 4.1(b), of the following legend on any
certificate evidencing Shares:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT
BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE
STATE SECURITIES LAWS. NOTWITHSTANDING THE FOREGOING, THESE SECURITIES
MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN OR FINANCING ARRANGEMENT SECURED BY SUCH SECURITIES.
12
Certificates evidencing Shares shall not be required to contain such legend or
any other legend (i) while a Registration Statement covering the resale of such
Shares is effective under the Securities Act, or (ii) following any sale of such
Shares pursuant to Rule 144, or (iii) if such Shares are eligible for sale under
Rule 144(k), or (iv) if such legend is not required under applicable
requirements of the Securities Act (including judicial interpretations and
pronouncements issued by the Staff of the Commission). The Company shall cause
its counsel to issue the legal opinion included in the Transfer Agent
Instructions to the Transfer Agent on the Effective Date. Following the
Effective Date or at such earlier time as a legend is no longer required for
certain Shares, the Company will no later than three Trading Days following the
delivery by a Purchaser to the Company or the Transfer Agent of a legended
certificate representing such Shares, deliver or cause to be delivered to such
Purchaser a certificate representing such Shares that is free from all
restrictive and other legends. The Company may not make any notation on its
records or give instructions to any transfer agent of the Company that enlarge
the restrictions on transfer set forth in this Section. For so long as any
Purchaser owns Shares, the Company will not effect or publicly announce its
intention to effect any exchange, recapitalization or other transaction that
effectively requires or rewards physical delivery of certificates evidencing the
Common Stock.
(c) The Company acknowledges and agrees that a Purchaser may
from time to time pledge or grant a security interest in some or all of
the Shares in connection with a bona fide margin agreement or other
loan or financing arrangement secured by the Shares and, if required
under the terms of such agreement, loan or arrangement, such Purchaser
may transfer pledged or secured Shares to the pledgees or secured
parties. Such a pledge or transfer would not be subject to approval of
the Company and no legal opinion of the pledgee, secured party or
pledgor shall be required in connection therewith. Further, no notice
shall be required of such pledge. At the appropriate Purchaser's
expense, the Company will execute and deliver such reasonable
documentation as a pledgee or secured party of Shares may reasonably
request in connection with a pledge or transfer of the Shares,
including the preparation and filing of any required prospectus
supplement under Rule 424(b)(3) of the Securities Act or other
applicable provision of the Securities Act to appropriately amend the
list of selling stockholders thereunder.
4.2 Furnishing of Information. As long as any Purchaser owns Shares,
the Company covenants to use its best efforts to timely file (or obtain
extensions in respect thereof and file within the applicable grace period) all
reports required to be filed by the Company after the date hereof pursuant to
the Exchange Act. Upon the request of any Purchaser, the Company shall deliver
to such Purchaser a written certification of a duly authorized officer as to
whether it has complied with the preceding sentence. As long as any Purchaser
owns Shares, if the Company is not required to file reports pursuant to such
laws, it will prepare and furnish to the Purchasers and make publicly available
in accordance with paragraph (c) of Rule 144 such information as is required for
the Purchasers to sell the Shares under Rule 144. The Company further covenants
that it will take such further action as any Purchaser or subsequent holder of
Shares may reasonably request to satisfy the provisions of Rule 144 applicable
to the issuer of securities
13
relating to transactions for the sale of securities pursuant to Rule 144, but
only to the extent that the Company, or counsel of the Company agree that the
Purchaser or subsequent holder is able to avail themselves of the exemption
created by Rule 144.
4.3 Integration. The Company shall not, and shall use its best efforts
to ensure that no Affiliate of the Company shall, sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Securities Act) that would be integrated with the
offer or sale of the Shares in a manner that would require the registration
under the Securities Act of the sale of the Shares to the Purchasers, or that
would be integrated with the offer or sale of the Shares for purposes of the
rules and regulations of any Trading Market.
4.4 Reservation and Listing of Shares.
(a) The Company shall maintain a reserve from its duly
authorized shares of Common Stock for issuance pursuant to the
Transaction Documents in such amount as may be required to fulfill its
obligations in full under the Transaction Documents. In the event that
at any time the then authorized shares of Common Stock are insufficient
for the Company to satisfy its obligations in full under the
Transaction Documents, the Company shall promptly take such actions as
may be required to increase the number of authorized shares.
(b) The Company shall take all steps necessary to cause its
Common Stock to be approved for listing on its Trading Market and
maintain the listing of such Common Stock on such Trading Market or
another Eligible Market. The Company covenants to promptly file any
listing application required by its Trading Market with respect to the
Shares.
4.5 Subsequent Placements.
(a) From the date hereof until 90 Trading Days following the
Effective Date (the "Blockout Period"), the Company will not, except
for the Offering or sales made pursuant to the Offering (including to
purchasers in the Offering after the date hereof), directly or
indirectly, offer, sell, grant any option to purchase, or otherwise
dispose of (or announce any offer, sale, grant or any option to
purchase or other disposition of) any of its or the Subsidiaries'
equity or equity equivalent securities, including without limitation
any debt, preferred stock or other instrument or security that is, at
any time during its life and under any circumstances, convertible into
or exchangeable or exercisable for Common Stock or Common Stock
Equivalents (any such offer, sale, grant, disposition or announcement
being referred to as a "Subsequent Placement(s)").
(b) The Blockout Period set forth in the preceding paragraph
(a) shall be extended for the number of Trading Days during such period
in which (i) trading in the Common Stock is suspended by any Trading
Market, (ii) the Registration Statement is not effective, or (iii) the
prospectus included in the Registration Statement may not be used by
the Purchasers for the resale of Registrable Securities thereunder.
4.6 Securities Laws Disclosure; Publicity. The Company shall, on or
before 9:30a.m., Eastern Standard Time, on September 30, 2003, issue a press
release acceptable to the Purchasers disclosing all material terms of the
transactions contemplated hereby. On the Closing Date, the Company shall file a
Current Report on Form 8-K with the Commission (the "8-K
14
Filing") describing the terms of the transactions contemplated by the
Transaction Documents and including as exhibits to such Current Report on Form
8-K this Agreement in the form required by the Exchange Act. Thereafter, the
Company shall timely file any filings and notices required by the Commission or
applicable law with respect to the transactions contemplated hereby and provide
copies thereof to the Purchasers promptly after filing. Except with respect to
the 8-K Filing and the press release referenced above (a copy of which will be
provided to the Purchasers for their review as early as practicable prior to its
filing), the Company shall, at least two Trading Days prior to the filing or
dissemination of any disclosure required by this paragraph, provide a copy
thereof to the Purchasers for their review. The Company and the Purchasers shall
consult with each other in issuing any press releases or otherwise making public
statements or filings and other communications with the Commission or any
regulatory agency or Trading Market with respect to the transactions
contemplated hereby, and neither party shall issue any such press release or
otherwise make any such public statement, filing or other communication without
the prior consent of the other, except if such disclosure is required by law, in
which case the disclosing party shall promptly provide the other party with
prior notice of such public statement, filing or other communication.
Notwithstanding the foregoing, the Company shall not publicly disclose the name
of any Purchaser, or include the name of any Purchaser in any filing with the
Commission or any regulatory agency or Trading Market, without the prior written
consent of such Purchaser, except to the extent such disclosure (but not any
disclosure as to the controlling Persons thereof) is required by law or Trading
Market regulations, in which case the Company shall provide the Purchasers with
prior notice of such disclosure. The Company shall not, and shall cause each of
its Subsidiaries and its and each of their respective officers, directors,
employees and agents not to, provide any Purchaser with any material nonpublic
information regarding the Company or any of its Subsidiaries from and after the
filing of the 8-K Filing without the express written consent of such Purchaser.
In the event of a breach of the foregoing covenant by the Company, any of its
Subsidiaries, or any of its or their respective officers, directors, employees
and agents, in addition to any other remedy provided herein or in the
Transaction Documents, a Purchaser shall have the right to make a public
disclosure, in the form of a press release, public advertisement or otherwise,
of such material nonpublic information without the prior approval by the
Company, its Subsidiaries, or any of its or their respective officers,
directors, employees or agents. No Purchaser shall have any liability to the
Company, its Subsidiaries, or any of its or their respective officers,
directors, employees, stockholders or agents for any such disclosure. Subject to
the foregoing, neither the Company nor any Purchaser shall issue any press
releases or any other public statements with respect to the transactions
contemplated hereby; provided, however, that the Company shall be entitled,
without the prior approval of any Purchaser, to make any press release or other
public disclosure with respect to such transactions (i) in substantial
conformity with the 8-K Filing and contemporaneously therewith and (ii) as is
required by applicable law and regulations (provided that in the case of clause
(i) each Purchaser shall be consulted by the Company in connection with any such
press release or other public disclosure prior to its release). Each press
release disseminated during the 12 months preceding the date of this Agreement
did not at the time of release contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading
15
4.7 Use of Proceeds. The Company shall use the net proceeds from the
sale of the Shares hereunder in the following order: (i) first, pay any and all
expenses incurred in connection with the sale of the Shares hereunder and the
filing and maintaining of any registration statement required by this Agreement,
(ii) second, to fund the drilling and completion of four xxxxx in De Xxxx
Xxxxxx, Louisiana at an estimated cost of $450,000 per well, (iii) third, up to
$365,000 of net proceeds to repay existing loans made by a party related to two
principal shareholders of the Company, (iv) fourth, up to $600,000 of net
proceeds to repurchase limited partnership interests held by a principal
shareholder or by parties related to a principal shareholder, and (v) fifth, any
remaining proceeds to be used for general working capital requirements of the
Company.
4.8 Reimbursement. If any Purchaser or any of its Affiliates or any
officer, director, partner, controlling Person, employee or agent of a Purchaser
or any of its Affiliates (a "Related Person") becomes involved in any capacity
in any Proceeding brought by or against any Person in connection with or as a
result of the transactions contemplated by the Transaction Documents other than
one brought by the applicable Purchaser or a Related Person thereof, the Company
will indemnify and hold harmless such Purchaser or Related Person for its
reasonable legal and other expenses (including the costs of any investigation,
preparation and travel) and for any Losses incurred in connection therewith, as
such expenses or Losses are incurred, excluding only Losses that result directly
from such Purchaser's or Related Person's gross negligence or willful
misconduct. In addition, the Company shall indemnify and hold harmless each
Purchaser and Related Person from and against any and all Losses, as incurred,
arising out of or relating to any breach by the Company of any of the
representations, warranties or covenants made by the Company in this Agreement
or any other Transaction Document, or any allegation by a third party that, if
true, would constitute such a breach. The conduct of any Proceedings for which
indemnification is available under this paragraph shall be governed by Section
6.4(c) below. The indemnification obligations of the Company under this
paragraph shall be in addition to any liability that the Company may otherwise
have and shall be binding upon and inure to the benefit of any successors,
assigns, heirs and personal representatives of the Purchasers and any such
Related Persons. The Company also agrees that neither the Purchasers nor any
Related 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 transactions contemplated by the Transaction Documents, except to the
extent that any Losses incurred by the Company result from the gross negligence
or willful misconduct of the applicable Purchaser or Related Person in
connection with such transactions. If the Company breaches its obligations under
any Transaction Document, then, in addition to any other liabilities the Company
may have under any Transaction Document or applicable law, the Company shall pay
or reimburse the Purchasers on demand for all costs of collection and
enforcement (including reasonable attorneys fees and expenses) provided that the
maximum liability to the Purchaser of the Company, and any of its Officers,
Directors or Affiliates, including all claims of reimbursement and
indemnification, shall be no greater than an amount equal to 115% of the amount
of the purchase price paid by the Purchaser for the Shares (the "Limit").
Subject to the foregoing, the Company specifically agrees to reimburse the
Purchasers on demand for all costs of enforcing the indemnification obligations
in this paragraph.
16
ARTICLE V
CONDITIONS
5.1 Conditions Precedent to the Obligations of the Purchasers. The
obligation of each Purchaser to acquire Shares at the Closing is subject to the
satisfaction or waiver by such Purchaser, at or before the Closing, of each of
the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company contained herein shall be true and correct in
all material respects as of the date when made and as of the Closing as
though made on and as of such date; and
(b) Performance. The Company and each other Purchaser shall
have performed, satisfied and complied in all material respects with
all covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by it at or prior
to the Closing.
5.2 Conditions Precedent to the Obligations of the Company. The
obligation of the Company to sell Shares at the Closing is subject to the
satisfaction or waiver by the Company, at or before the Closing, of each of the
following conditions:
(a) Representations and Warranties. The representations and
warranties of the Purchasers contained herein shall be true and correct
in all material respects as of the date when made and as of the Closing
Date as though made on and as of such date; and
(b) Performance. The Purchasers shall have performed,
satisfied and complied in all material respects with all covenants,
agreements and conditions required by the Transaction Documents to be
performed, satisfied or complied with by the Purchasers at or prior to
the Closing.
ARTICLE VI
REGISTRATION RIGHTS
6.1 Shelf Registration
(a) As promptly as possible, and in any event on or prior to
the Filing Date, the Company shall prepare and file with the Commission
a "Shelf" Registration Statement covering the resale of all Registrable
Securities for an offering to be made on a continuous basis pursuant to
Rule 415. The Registration Statement shall be on Form SB-2 (except if
the Company is not then eligible to register for resale the Registrable
Securities on Form SB-2, in which case such registration shall be on
another appropriate form in accordance herewith as the Purchasers may
reasonably consent) and shall contain (except if otherwise directed by
the Purchasers) the "Plan of Distribution" attached hereto as Exhibit
B.
(b) The Company shall use its commercially reasonably efforts
to cause the Registration Statement to be declared effective by the
Commission as promptly as possible after the filing thereof, but in any
event prior to the Required Effectiveness Date, and shall use its best
efforts to keep the Registration Statement continuously effective under
the Securities Act until the third anniversary of the Effective Date or
such earlier date when either (i) all Registrable Securities of the
Purchaser covered by such Registration Statement have been sold (the
"Effectiveness Period") or (ii) all Registrable Securities owned by the
Purchaser may be sold pursuant to Rule 144k.
17
(c) The Company shall notify each Purchaser in writing
promptly (and in any event within one Trading Day) after receiving
notification from the Commission that the Registration Statement has
been declared effective.
(d) As promptly as possible, and in any event no later than
the Post-Effective Amendment Filing Deadline, the Company shall prepare
and file with the Commission a Post-Effective Amendment. The Company
shall use its best efforts to cause the Post-Effective Amendment to be
declared effective by the Commission as promptly as possible after the
filing thereof, but in any event prior to the fifteenth Trading Day
after the Post-Effective Amendment Filing Deadline. The Company shall
notify each Purchaser in writing promptly (and in any event within one
business day) after receiving notification from the Commission that the
Post-Effective Amendment has been declared effective.
(e) Upon the occurrence of any Event (as defined below) prior
to the 24-month anniversary of the Closing, and on every monthly
anniversary thereof occurring no later than the 24-month anniversary of
the Closing until the applicable Event is cured, as partial relief for
the damages suffered therefrom by the Purchasers (which remedy shall
not be exclusive of any other remedies available under this Agreement,
at law or in equity), the Company shall pay to each Purchaser an amount
in cash, as liquidated damages and not as a penalty, equal to 1% of the
aggregate purchase price paid by such Purchaser. The payments to which
a Purchaser shall be entitled pursuant to this Section 6.1(e) are
referred to herein as "Event Payments". Any Event Payments payable
pursuant to the terms hereof shall apply on a pro-rata basis for any
portion of a month prior to the cure of an Event. In the event the
Company fails to make Event Payments within 10 days of any demand
therefore, such Event Payments shall bear interest at the rate of 1.5%
per month (prorated for partial months) until paid in full.
For such purposes, each of the following shall constitute an "Event":
(i) the Registration Statement is not filed on or prior to the
Filing Date or is not declared effective on or prior to the Required
Effectiveness Date;
(ii) after the Effective Date, a Purchaser is not permitted to
sell Registrable Securities under the Registration Statement (or a
subsequent Registration Statement filed in replacement thereof) for any
reason for either (A) ten or more consecutive Trading Days or (B)
thirty Trading Days, whether or not consecutive, in any 365-day period;
(iii) a Post-Effective Amendment is not filed on or prior to
the Post-Effective Amendment Filing Deadline or is not declared
effective on or prior to the twenty-first Trading Day after the
Post-Effective Amendment Filing Deadline;
(iv) after the Effective Date, a Purchaser is not permitted to
sell Registrable Securities under the Registration
18
Statement (or a subsequent Registration Statement filed in replacement
thereof) for any reason (other than the requirement of the Company to
file a Post-Effective Amendment and for such Post-Effective Amendment
to be declared effective) for either (A) 10 or more consecutive Trading
Days or (B) 30 Trading Days, whether or not consecutive, in any 365-day
period); provided, however, that none of the foregoing shall constitute
an "Event" if the delay is caused by any act of war, terrorism, natural
disaster or power failure.
(f) The Company shall not, prior to the Effective Date of the
Registration Statement, prepare and file with the Commission a
registration statement relating to an offering for its own account or
the account of others under the Securities Act of any of its equity
securities.
6.2 Registration Procedures. In connection with the Company's
registration obligations hereunder, the Company shall:
(a) Not less than three Trading Days prior to the filing of a
Registration Statement or any related Prospectus or any amendment or
supplement thereto (including any document that would be incorporated
or deemed to be incorporated therein by reference), the Company shall
(i) furnish to each Purchaser and any counsel designated by any
Purchaser (each, a "Purchaser Counsel", and Smithfield Fiduciary LLC
has initially designated Proskauer Rose LLP) copies of all such
documents proposed to be filed, which documents (other than those
incorporated or deemed to be incorporated by reference) will be subject
to the review of such Purchasers and each Purchaser Counsel, and (ii)
cause its officers and directors, counsel and independent certified
public accountants to respond to such inquiries as shall be necessary,
in the reasonable opinion of each Purchaser Counsel, to conduct a
reasonable investigation within the meaning of the Securities Act. The
Company shall not file a Registration Statement or any such Prospectus
or any amendments or supplements thereto to which Purchasers holding a
majority of the Registrable Securities shall reasonably object.
However, any objection to the filing of such registration statement or
other document enumerated above, shall suspend from occurring any of
the "Events" listed above in Section 6.1 ((e) i.-iv.) for the period of
time during which the objection remains, but in no case will the period
of suspension exceed ten Trading Days.
(b) (i) Prepare and file with the Commission such amendments,
including post-effective amendments, to each Registration Statement and
the Prospectus used in connection therewith as may be necessary to keep
the Registration Statement continuously effective as to the applicable
Registrable Securities for the Effectiveness Period and prepare and
file with the Commission such additional Registration Statements in
order to register for resale under the Securities Act all of the
Registrable Securities; (ii) cause the related Prospectus to be amended
or supplemented by any required Prospectus supplement, and as so
supplemented or amended to be filed pursuant to Rule 424; (iii) respond
as promptly as reasonably possible, and in any event within ten days,
to any comments received from the Commission with respect to the
Registration Statement or any amendment thereto and as promptly as
reasonably possible provide the Purchasers true and complete copies of
all correspondence from and to the Commission relating to the
Registration Statement; and (iv) comply in all material respects with
the provisions of the Securities Act and the Exchange Act with respect
to the disposition of all Registrable Securities covered by the
Registration Statement during the applicable period in accordance with
the intended methods of disposition by the Purchasers thereof set forth
in the Registration Statement as so amended or in such Prospectus as so
supplemented
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(c) Notify the Purchasers of Registrable Securities to be sold
and each Purchaser Counsel as promptly as reasonably possible, and (if
requested by any such Person) confirm such notice in writing no later
than one Trading Day thereafter, of any of the following events: (i)
the Commission notifies the Company whether there will be a "review" of
any Registration Statement; (ii) the Commission comments in writing on
any Registration Statement (in which case the Company shall deliver to
each Purchaser a copy of such comments and of all written responses
thereto); (iii) any Registration Statement or any post-effective
amendment is declared effective; (iv) the Commission or any other
Federal or state governmental authority requests any amendment or
supplement to any Registration Statement or Prospectus or requests
additional information related thereto; (v) the Commission issues any
stop order suspending the effectiveness of any Registration Statement
or initiates any Proceedings for that purpose; (vi) the Company
receives notice of any suspension of the qualification or exemption
from qualification of any Registrable Securities for sale in any
jurisdiction, or the initiation or threat of any Proceeding for such
purpose; or (vii) the financial statements included in any Registration
Statement become ineligible for inclusion therein or any statement made
in any Registration Statement or Prospectus or any document
incorporated or deemed to be incorporated therein by reference is
untrue in any material respect or any revision to a Registration
Statement, Prospectus or other document is required so that it will not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.
(d) Use its reasonable efforts to avoid the issuance of or, if
issued, obtain the withdrawal of (i) any order suspending the
effectiveness of any Registration Statement, or (ii) any suspension of
the qualification (or exemption from qualification) of any of the
Registrable Securities for sale in any jurisdiction, at the earliest
practicable moment.
(e) Furnish to each Purchaser and each Purchaser Counsel,
without charge, at least one conformed copy of each Registration
Statement and each amendment thereto, including financial statements
and schedules, all documents incorporated or deemed to be incorporated
therein by reference, and all exhibits to the extent requested by such
Person (including those previously furnished or incorporated by
reference) promptly after the filing of such documents with the
Commission.
(f) Promptly deliver to each Purchaser and each Purchaser
Counsel, without charge, as many copies of the Prospectus or
Prospectuses (including each form of prospectus) and each amendment or
supplement thereto as such Persons may reasonably request. The Company
hereby consents to the use of such Prospectus and each amendment or
supplement thereto by each of the selling Purchasers in connection with
the offering and sale of the Registrable Securities covered by such
Prospectus and any amendment or supplement thereto.
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(g) (i) In the time and manner required by each Trading
Market, prepare and file with such Trading Market an additional shares
listing application covering all of the Registrable Securities; (ii)
take all steps necessary to cause such Registrable Securities to be
approved for listing on each Trading Market as soon as possible
thereafter; (iii) provide to the Purchasers evidence of such listing;
and (iv) maintain the listing of such Registrable Securities on each
such Trading Market or another Eligible Market.
(h) Prior to any public offering of Registrable Securities,
use its best efforts to register or qualify or cooperate with the
selling Purchasers and each applicable Purchaser Counsel in connection
with the registration or qualification (or exemption from such
registration or qualification) of such Registrable Securities for offer
and sale under the securities or blue sky laws of such jurisdictions
within the United States as any Purchaser requests in writing, to keep
each such registration or qualification (or exemption therefrom)
effective during the Effectiveness Period and to do any and all other
acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by a Registration
Statement; provided, however, that the Company shall not be obligated
to file any general consent to service of process or to qualify as a
foreign corporation or as a dealer in securities in any jurisdiction in
which it is not so qualified or to subject itself to taxation in
respect of doing business in any jurisdiction in which it is not
otherwise subject.
(i) Cooperate with the Purchasers to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities to be delivered to a transferee pursuant to a Registration
Statement, which certificates shall be free, to the extent permitted by
this Agreement, of all restrictive legends, and to enable such
Registrable Securities to be in such denominations and registered in
such names as any such Purchasers may request.
(j) Upon the occurrence of any event described in Section
6.2(c)(vii), as promptly as reasonably possible, prepare a supplement
or amendment, including a post-effective amendment, to the Registration
Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, and
file any other required document so that, as thereafter delivered,
neither the Registration Statement nor such Prospectus will contain an
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, in the light of the circumstances under which they were made,
not misleading.
(k) Reasonably cooperate with any due diligence investigation
undertaken by the Purchasers in connection with the sale of Registrable
Securities, including without limitation by making available any
documents and information; provided that the Company will not deliver
or make available to any Purchaser material, nonpublic information
unless such Purchaser specifically requests in advance to receive
material, nonpublic information in writing.
(l) If Holders of a majority of the Registrable Securities
being offered pursuant to a Registration Statement select underwriters
for the offering, the Company shall enter into and perform its
obligations under an underwriting agreement, in usual and customary
form, including, without limitation, by providing customary legal
opinions, comfort letters and indemnification and contribution
obligations; provided, that no such agreement shall obligate the
Company to pay any amount not otherwise contemplated by this Article
VI.
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(m) Comply with all applicable rules and regulations of the
Commission.
6.3 Registration Expenses. The Company shall pay (or reimburse the
Purchasers for) all fees and expenses incident to the performance of or
compliance with this Agreement by the Company, including without limitation (a)
all registration and filing fees and expenses, including without limitation
those related to filings with the Commission, any Trading Market and in
connection with applicable state securities or Blue Sky laws, (b) printing
expenses (including without limitation expenses of printing certificates for
Registrable Securities and of printing prospectuses requested by the
Purchasers), (c) messenger, telephone and delivery expenses, (d) fees and
disbursements of counsel for the Company and up to $5,000 in the aggregate for
the Purchaser Counsels (incurred in preparing the initial filing of the
registration statement for the Registrable Securities and all amendments thereto
prior to it being declared effective), (e) fees and expenses of all other
Persons retained by the Company in connection with the consummation of the
transactions contemplated by this Agreement, and (f) all listing fees to be paid
by the Company to the Trading Market. In all events, the Purchasers shall be
solely responsible for paying all brokerage fees, underwriter commissions or
similar compensation relating to their sale of Registrable Securities and any
income taxes resulting from any such sale of Registrable Securities.
6.4 Indemnification
(a) Indemnification by the Company. Subject to the Limit as
set forth in Section 4.8, the Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless each
Purchaser, the officers, directors, partners, members, agents, brokers
(including brokers who offer and sell Registrable Securities as
principal as a result of a pledge or any failure to perform under a
margin call of Common Stock), investment advisors and employees of each
of them, each Person who controls any such Purchaser (within the
meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) and the officers, directors, partners, members, agents
and employees of each such controlling Person, to the fullest extent
permitted by applicable law, from and against any and all Losses, as
incurred, arising out of or relating to any untrue or alleged untrue
statement of a material fact contained in the Registration Statement,
any Prospectus or any form of prospectus or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out of
or relating to any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements
therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in the light of the circumstances under which they
were made) not misleading, except to the extent, but only to the
extent, that (i) such untrue statements, alleged untrue statements,
omissions or alleged omissions are based solely upon information
regarding such Purchaser furnished in writing to the Company by such
Purchaser expressly for use therein, or to the extent that such
information relates to such Purchaser or such Purchaser's proposed
method of distribution of Registrable Securities and was reviewed and
expressly approved in writing by such Purchaser expressly for use in
the Registration
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Statement, such Prospectus or such form of Prospectus or in any
amendment or supplement thereto or (ii) in the case of an occurrence of
an event of the type specified in Section 6.2(c)(v)-(vii), the use by
such Purchaser of an outdated or defective Prospectus after the Company
has notified such Purchaser in writing that the Prospectus is outdated
or defective and prior to the receipt by such Purchaser of the Advice
contemplated in Section 6.5. The Company shall notify the Purchasers
promptly of the institution, threat or assertion of any Proceeding of
which the Company is aware in connection with the transactions
contemplated by this Agreement.
(b) Indemnification by Purchasers. Each Purchaser shall,
severally and not jointly, indemnify and hold harmless the Company, its
directors, officers, agents and employees, each Person who controls the
Company (within the meaning of Section 15 of the Securities Act and
Section 20 of the Exchange Act), and the directors, officers, agents or
employees of such controlling Persons, to the fullest extent permitted
by applicable law, from and against all Losses (as determined by a
court of competent jurisdiction in a final judgment not subject to
appeal or review) arising solely out of any untrue statement of a
material fact contained in the Registration Statement, any Prospectus,
or any form of prospectus, or in any amendment or supplement thereto,
or arising solely out of any omission of a material fact required to be
stated therein or necessary to make the statements therein (in the case
of any Prospectus or form of prospectus or supplement thereto, in the
light of the circumstances under which they were made) not misleading
to the extent, but only to the extent, that such untrue statement or
omission is contained in any information so furnished in writing by
such Purchaser to the Company specifically for inclusion in such
Registration Statement or such Prospectus or to the extent that (i)
such untrue statements or omissions are based solely upon information
regarding such Purchaser furnished in writing to the Company by such
Purchaser expressly for use therein, or to the extent that such
information relates to such Purchaser or such Purchaser's proposed
method of distribution of Registrable Securities and was reviewed and
expressly approved in writing by such Purchaser expressly for use in
the Registration Statement, such Prospectus or such form of Prospectus
or in any amendment or supplement thereto or (ii) in the case of an
occurrence of an event of the type specified in Section
6.2(c)(v)-(vii), the use by such Purchaser of an outdated or defective
Prospectus after the Company has notified such Purchaser in writing
that the Prospectus is outdated or defective and prior to the receipt
by such Purchaser of the Advice contemplated in Section 6.5. In no
event shall the liability of any selling Purchaser hereunder be greater
in amount than the dollar amount of the net proceeds received by such
Purchaser upon the sale of the Registrable Securities giving rise to
such indemnification obligation.
(c) Conduct of Indemnification Proceedings. If any Proceeding
shall be brought or asserted against any Person entitled to indemnity
hereunder (an "Indemnified Party"), such Indemnified Party shall
promptly notify the Person from whom indemnity is sought (the
"Indemnifying Party") in writing, and the Indemnifying Party shall
assume the defense thereof, including the employment of counsel
reasonably satisfactory to the Indemnified Party and the payment of all
fees and expenses incurred in connection with defense thereof;
provided, that the failure of any Indemnified Party to give such notice
shall not relieve the Indemnifying Party of its obligations or
liabilities pursuant to this Agreement, except (and only) to the extent
that it shall be finally determined by a court of competent
jurisdiction (which determination is not subject to appeal or further
review) that such failure shall have proximately and materially
adversely prejudiced the Indemnifying Party.
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An Indemnified Party shall have the right to employ separate counsel in
any such Proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party or
Parties unless: (i) the Indemnifying Party has agreed in writing to pay such
fees and expenses; or (ii) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (iii) the
named parties to any such Proceeding (including any impleaded parties) include
both such Indemnified Party and the Indemnifying Party, and such Indemnified
Party shall have been advised by counsel that a conflict of interest is likely
to exist if the same counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and such counsel shall be at the expense of
the Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent, which
consent shall not be unreasonably withheld. No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such Proceeding.
All fees and expenses of the Indemnified Party (including reasonable
fees and expenses to the extent incurred in connection with investigating or
preparing to defend such Proceeding in a manner not inconsistent with this
Section) shall be paid to the Indemnified Party, as incurred, within ten Trading
Days of written notice thereof to the Indemnifying Party (regardless of whether
it is ultimately determined that an Indemnified Party is not entitled to
indemnification hereunder; provided, that the Indemnifying Party may require
such Indemnified Party to undertake to reimburse all such fees and expenses to
the extent it is finally judicially determined that such Indemnified Party is
not entitled to indemnification hereunder).
(d) Contribution. Subject to the Limit set forth in Section 4.8, tf a
claim for indemnification under Section 6.4(a) or (b) is unavailable to an
Indemnified Party (by reasons other than the specified exclusions to
indemnification), then each Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in Section 6.4(c), any reasonable attorneys' or
other reasonable fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees or
expenses if the indemnification provided for in this Section was available to
such party in accordance with its terms.
24
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6.4(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 6.4(d), no Purchaser shall be
required to contribute, in the aggregate, any amount in excess of the amount by
which the proceeds actually received by such Purchaser from the sale of the
Registrable Securities subject to the Proceeding exceeds the amount of any
damages that such Purchaser has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this Section are
in addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.
6.5 Dispositions. Each Purchaser agrees that it will comply with the
prospectus delivery requirements of the Securities Act as applicable to it in
connection with sales of Registrable Securities pursuant to the Registration
Statement. Each Purchaser further agrees that, upon receipt of a notice from the
Company of the occurrence of any event of the kind described in Sections
6.2(c)(v), (vi) or (vii), such Purchaser will discontinue disposition of such
Registrable Securities under the Registration Statement until such Purchaser's
receipt of the copies of the supplemented Prospectus and/or amended Registration
Statement contemplated by Section 6.2(j), or until it is advised in writing (the
"Advice") by the Company that the use of the applicable Prospectus may be
resumed, and, in either case, has received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated by
reference in such Prospectus or Registration Statement. The Company may provide
appropriate stop orders to enforce the provisions of this paragraph.
6.6 No Piggyback on Registrations. Except as set forth on Schedule 6.6,
neither the Company nor any of its security holders (other than the Purchasers
in such capacity pursuant hereto) may include securities of the Company in the
Registration Statement other than Common Stock issuable pursuant to the Offering
or the Registrable Securities. In addition, the Company shall not after the date
hereof enter into any agreement providing any such right to any of its security
holders.
6.7 Piggy-Back Registrations. If at any time during the Effectiveness
Period there is not an effective Registration Statement covering all of the
Registrable Securities and the Company shall determine to prepare and file with
the Commission a registration statement relating to an offering for its own
account or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in
25
connection with stock option or other employee benefit plans, then the Company
shall send to each Purchaser written notice of such determination and if, within
fifteen days after receipt of such notice, any such Purchaser shall so request
in writing, the Company shall include in such registration statement all or any
part of such Registrable Securities such Purchaser requests to be registered.
ARTICLE VII
MISCELLANEOUS
7.1 Termination. This Agreement may be terminated by the Company or any
Purchaser, by written notice to the other parties, if the Closing has not been
consummated by the third Trading Day following the date of this Agreement;
provided that no such termination will affect the right of any party to xxx for
any breach by the other party (or parties).
7.2 Fees and Expenses. At the Closing, and only upon Closing, the
Company shall pay to Smithfield Fiduciary LLC an aggregate of $5,000 for their
legal fees and expenses incurred in connection with the preparation and
negotiation of the Transaction Documents. In lieu of the foregoing payment,
Smithfield Fiduciary LLC may retain such amount at the Closing or require the
Company to pay such amount directly to Proskauer Rose LLP. Except as expressly
set forth in the Transaction Documents to the contrary, each party shall pay the
fees and expenses of its advisers, counsel, accountants and other experts, if
any, and all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement. The Company
shall pay all Transfer Agent fees, stamp taxes and other taxes and duties levied
in connection with the issuance of the Shares.
7.3 Entire Agreement. The Transaction Documents, together with the
Exhibits and Schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules. At or
after the Closing, and without further consideration, the Company will execute
and deliver to the Purchasers such further documents as may be reasonably
requested in order to give practical effect to the intention of the parties
under the Transaction Documents. Notwithstanding anything to the contrary
herein, Shares may be assigned to any Person in connection with a bona fide
margin account or other loan or financing arrangement secured by such Company
Shares.
7.4 Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
specified in this Section prior to 6:30 p.m. (New York City time) on a Trading
Day, (b) the next Trading Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified in
this Section on a day that is not a Trading Day or later than 6:30 p.m. (New
York City time) on any Trading Day, (c) the Trading Day following the date of
mailing, if sent by U.S. nationally recognized overnight courier service, or (d)
upon actual receipt by the party to whom such notice is required to be given.
The addresses and facsimile numbers for such notices and communications are
those set forth on the signature pages hereof, or such other address or
facsimile number as may be designated in writing hereafter, in the same manner,
by such Person.
26
7.5 Amendments; Waivers. No provision of this Agreement may be waived
or amended except in a written instrument signed, in the case of an amendment,
by the Company and each of the Purchasers or, in the case of a waiver, by the
party against whom enforcement of any such waiver is sought. No waiver of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of either party to exercise
any right hereunder in any manner impair the exercise of any such right.
Notwithstanding the foregoing, a waiver or consent to depart from the provisions
hereof with respect to a matter that relates exclusively to the rights of
Purchasers under Article VI and that does not directly or indirectly affect the
rights of other Purchasers may be given by Purchasers holding at least a
majority of the Registrable Securities to which such waiver or consent relates.
7.6 Construction. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.
7.7 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Purchasers. Any Purchaser may assign
its rights (except those of indemnification or reimbursement) under this
Agreement to any Person to whom such Purchaser assigns or transfers any Shares,
provided such transferee agrees in writing to be bound, with respect to the
transferred Shares, by the provisions hereof that apply to the "Purchasers."
Notwithstanding anything to the contrary herein, Shares may be assigned to any
Person in connection with a bona fide margin account or other loan or financing
arrangement secured by such Shares.
7.8 No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except that each Related Person is an intended third party
beneficiary of Section 4.8 and each Indemnified Party is an intended third party
beneficiary of Section 6.4 and (in each case) may enforce the provisions of such
Sections directly against the parties with obligations thereunder.
7.9 Governing Law; Venue; Waiver Of Jury Trail. ALL QUESTIONS
CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK. THE COMPANY AND PURCHASERS HEREBY IRREVOCABLY
SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN
THE CITY OF NEW YORK, BOROUGH OF MANHATTAN FOR THE ADJUDICATION OF ANY DISPUTE
BROUGHT BY THE COMPANY OR ANY PURCHASER HEREUNDER, IN CONNECTION HEREWITH OR
WITH ANY
27
TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH RESPECT TO
THE ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS), AND HEREBY IRREVOCABLY
WAIVE, AND AGREE NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING BROUGHT BY THE
COMPANY OR ANY PURCHASER, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE
JURISDICTION OF ANY SUCH COURT, OR THAT SUCH SUIT, ACTION OR PROCEEDING IS
IMPROPER. EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND
CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY
MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY
(WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES
TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD
AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN
SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER
PERMITTED BY LAW. THE COMPANY AND PURCHASERS HEREBY WAIVE ALL RIGHTS TO A TRIAL
BY JURY.
7.10 Survival. The representations, warranties, agreements and
covenants contained herein shall survive the Closing and the delivery and/or
exercise of the Shares, as applicable.
7.11 Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.
7.12 Severability. If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.
7.13 Rescission and Withdrawal Right. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) the
Transaction Documents, whenever any Purchaser exercises a right, election,
demand or option under a Transaction Document and the Company does not timely
perform its related obligations within the periods therein provided, then such
Purchaser may rescind or withdraw, in its sole discretion from time to time upon
written notice to the Company, any relevant notice, demand or election in whole
or in part without prejudice to its future actions and rights.
7.14 Replacement of Shares. If any certificate or instrument evidencing
any Shares is mutilated, lost, stolen or destroyed, the Company shall issue or
cause to be issued in exchange and substitution for and upon cancellation
thereof, or in lieu of and substitution therefor, a new certificate or
instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if
28
requested. The applicants for a new certificate or instrument under such
circumstances shall also pay any reasonable third-party costs associated with
the issuance of such replacement Shares. The Purchaser agrees that the loss,
mutilation, theft, or destruction of any certificate shall not trigger the
occurrence of an Event as defined in Section 6.1 (e) sections i-iv, unless such
loss, mutilation, theft, or destruction is directly caused by the negligence of
the Company. The phrase "directly" specifically excludes any persons or parties
who are agents of the Company.
7.15 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchasers and the Company will be entitled to specific performance under the
Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in
any action for specific performance of any such obligation the defense that a
remedy at law would be adequate.
7.16 Payment Set Aside. To the extent that the Company makes a payment
or payments to any Purchaser hereunder or any Purchaser enforces or exercises
its rights hereunder or thereunder, and such payment or payments or the proceeds
of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company by a trustee, receiver or any other Person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.
7.17 Adjustments in Share Numbers and Prices. In the event of any stock
split, subdivision, dividend or distribution payable in shares of Common Stock
(or other securities or rights convertible into, or entitling the holder thereof
to receive directly or indirectly shares of Common Stock), combination or other
similar recapitalization or event occurring after the date hereof, each
reference in any Transaction Document to a number of shares or a price per share
shall be amended to appropriately account for such event.
7.18 Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. The decision of each Purchaser to
purchase Shares pursuant to this Agreement has been made by such Purchaser
independently of any other Purchaser and independently of any information,
materials, statements or opinions as to the business, affairs, operations,
assets, properties, liabilities, results of operations, condition (financial or
otherwise) or prospects of the Company or of the Subsidiary which may have been
made or given by any other Purchaser or by any agent or employee of any other
Purchaser, and no Purchaser or any of its agents or employees shall have any
liability to any other Purchaser (or any other Person) relating to or arising
from any such information, materials, statements or opinions. Nothing contained
herein or in any Transaction Document, and no action taken by any Purchaser
pursuant thereto, shall be deemed to constitute the Purchasers as a partnership,
an association, a joint venture or any other kind of entity, or
29
create a presumption that the Purchasers are in any way acting in concert or as
a group with respect to such obligations or the transactions contemplated by the
Transaction Document. Each Purchaser acknowledges that no other Purchaser has
acted as agent for such Purchaser in connection with making its investment
hereunder and that no other Purchaser will be acting as agent of such Purchaser
in connection with monitoring its investment hereunder. Each Purchaser shall be
entitled to independently protect and enforce its rights, including without
limitation the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Purchaser to
be joined as an additional party in any proceeding for such purpose.
[Signature pages to follow]
30
IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
CADENCE RESOURCES CORPORATION
By:__________________________
Name:
Title:
Address for Notice:
0 Xxxx Xxxx Xxxxxx
X.X. Xxx 0000
Xxxxx Xxxxx, XX 00000
Facsimile No.:
Telephone No.: (000) 000-0000
Attn:
With a copy to: Pedley, Zielke, Xxxxxxxxx & Xxxxx, PLLC
2000 Xxxxxxxxx Tower
000 Xxxxx 0xx Xxxxxx
Xxxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attn: Xxxxx X. Xxxxxx
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOR PURCHASERS FOLLOW]
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Exhibits:
A Opinion of Company Counsel
B Plan of Distribution
C Transfer Agent Instructions
32
