May 30, 2006
Xxxxxx Equipment, Inc.
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
RE: MODIFICATION TO REGISTRATION RIGHTS AGREEMENT AND DIVIDEND PAYMENTS
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Ladies and Gentlemen:
Reference is made to the Securities Purchase Agreement dated as of April
19, 2005 (the "Purchase Agreement") among Xxxxxx Equipment, Inc., a Delaware
corporation (the "Company"), the undersigned (the "Investor") and certain other
parties, the Registration Rights Agreement dated as of April 19, 2005 among the
Company, the Investor and certain other parties (the "Registration Rights
Agreement"), and the Company's Amended and Restated Certificate of Designation
of Preferences, Rights and Limitations of Series A Convertible Preferred Stock
(the "Certificate of Designation"). Capitalized terms not otherwise defined
herein shall have the meanings ascribed to such terms in the Purchase Agreement.
The Investor purchased an aggregate ____ shares of Preferred Stock with an
aggregate purchase price of $________. The Company has requested that the
Investor accept certain payments of securities in lieu of amounts otherwise owed
to the Investor pursuant to the Registration Rights Agreement and the
Certificate of Designation, and waive certain provisions of the Registration
Rights Agreement and the Certificate of Designation and the Investor is willing
to do so on the terms and conditions set forth below.
Xxxxxxx Equity Partners, LLC, a Delaware limited liability company
("Xxxxxxx"), is the principal stockholder of the Company and is willing to
transfer certain shares of common stock of the Company (the "Common Stock") to
the Investor in consideration for a like number of shares of Common Stock to be
transferred from the Investor to Xxxxxxx.
In consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto hereby agree as follows:
1. Pursuant to Section 3 of the Certificate of Designation, the Investor
is entitled to receive cumulative dividends at the rate per share (as a
percentage of the Stated Value per share) of 5% per annum, payable quarterly on
March 30, June 30, September 30 and December 31. The Company is in arrears with
respect to such payments to the Investor for the periods payable on September
30, 2005, December 31, 2005 and March 31, 2006 in the aggregate amount of
$_________ (the "Dividend Payments").
2. Pursuant to Section 2(b) of the Registration Rights Agreement, the
Investor is entitled to receive in cash, as partial liquidated damages and not
as a penalty, an amount equal to 1% of the aggregate purchase price paid by the
Investor pursuant to the Purchase Agreement for any Registrable Securities (as
defined in the Registration Rights Agreement) held by the Investor for each
monthly period after the Effectiveness Date (as defined in the Registration
Rights Agreement) during which a Registration Statement (as defined in the
Registration Rights Agreement) was not effective. The Registration Statement was
not made effective by the SEC for an aggregate of 3.387 months after the
Effectiveness Date and accordingly the Investor is due an aggregate of
$_________ for partial liquidated damages (the "Liquidated Damages").
3. (a) In consideration for all amount due to the Investor for payment of
Dividend Payments and Liquidated Damages (collectively, the "Payment Amount"),
the Company shall issue to the Investor such number of shares of Common Stock as
equal the Payment Amount, divided by $1.92 (85% of the average closing price of
the Common Stock for the ten trading days immediately preceding the date of the
execution of this Agreement) (the "Payment Shares"). In addition, the Company
shall also issue to the Investor a common stock purchase warrant in the form of
Exhibit A attached hereto to purchase such number of shares of Common Stock as
equal 25% of the Payment Shares (the "Warrants"). The Warrants shall have an
exercise price of $3.00 per share and an exercise period of five years.
(b) The Payment Shares and the shares of Common Stock issuable upon
exercise of the Warrants (the "Warrant Shares") shall be subject to the
Registration Rights Agreement attached hereto as Exhibit B (the "New
Registration Rights Agreement").
(c) At the Closing, the Company shall deliver the legal opinion of Company
Counsel, in the form of Exhibit C attached hereto; and
(d) At the Closing, the Company shall reimburse the Investor for its
actual, reasonable, out-of-pocket legal fees and expenses in an amount not to
exceed $5,000. The Company shall pay all transfer agent fees, stamp taxes and
other taxes and duties levied in connection with the issuance of any Payment
Shares or shares issued in connection with the Warrants other than income taxes
of the Investor that may be incurred in connection with the transactions
contemplated hereby.
(e) The consummation of the transactions contemplated hereby are expressly
conditioned upon (i) receipt by the Company of approval from the American Stock
Exchange to the additional listing application with respect to the Payment
Shares and the Warrant Shares, and (ii) the filing of the post-effective
amendment to the Xxxxxxx Registration Statement (as defined below) contemplated
by Section 4 below.
(f) The closing of the transactions contemplated hereby (the "Closing")
shall occur at 10:00 a.m., New York time, on the first business day following
the satisfaction of the conditions set forth in clause (e) above or at such
other time as shall be agreed to by each of the parties hereto.
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4. (a) At the Closing, Xxxxxxx shall exchange with the Investor such
number of shares of Common Stock registered in the name of Xxxxxxx as equals the
Payment Shares (the "Xxxxxxx Shares"). The Xxxxxxx Shares are subject to an
effective registration statement (file number 333-124217) (the "Xxxxxxx
Registration Statement") pursuant to which such shares may be sold without
restriction. On or prior to the Closing, the Company shall file a post-effective
amendment to such registration statement pursuant to which the Investor is named
as the selling stockholder of the Xxxxxxx Shares and the Company agrees to use
commercially reasonable best efforts to seek effectiveness of such registration
statement as soon as practicable.
(b) The Company agrees to prepare and file with the Commission (as defined
below) such amendments to the Xxxxxxx Registration Statement and the prospectus
used in connection therewith as may be necessary to keep the Xxxxxxx
Registration Statement continuously effective until all Xxxxxxx Shares covered
by such Xxxxxxx Registration Statement have been sold or may be sold without
volume restrictions pursuant to Rule 144(k) as determined by the counsel to the
Company pursuant to a written opinion letter to such effect, addressed and
acceptable to the Company's transfer agent and the Investor.
(c) The Company agrees to promptly notify the Investor as soon as
reasonably practicable of (i) the issuance by the Commission or any other
federal or state governmental authority of any stop order suspending the
effectiveness of the Xxxxxxx Registration Statement or the initiation of any
proceedings for that purpose, (ii) the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Xxxxxxx Shares for sale in any jurisdiction or
the initiation or threatening of any proceeding for such purpose and (iii) the
occurrence of any event or passage of time that makes the financial statements
included in the Xxxxxxx Registration Statement ineligible for inclusion therein
or any statement made in the Xxxxxxx Registration Statement or prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue
in any material respect or that requires any revisions to the Xxxxxxx
Registration Statement or prospectus or any document incorporated therein so
that, in the case of the Xxxxxxx Registration Statement or the prospectus, as
the case may be, 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 light of the circumstances under which they were
made, not misleading.
(d) The Company agrees to use its best efforts to avoid the issuance of,
or, if issued, obtain the withdrawal of (i) any order suspending the
effectiveness of the Xxxxxxx Registration Statement or (ii) any suspension of
the qualification (or exemption from qualification) of any of the Xxxxxxx Shares
for sale in any jurisdiction, at the earliest practicable moment.
(e) The Company agrees to deliver to the Investor, without charge, as many
copies of the prospectus included in the Xxxxxxx Registration Statement and each
amendment or supplement thereto as the Investor may reasonably request in
connection with resales by the Investor of the Xxxxxxx Shares.
(e) The Company agrees to cooperate with the Investor to facilitate timely
preparation and delivery of certificates representing the Xxxxxxx Shares to be
delivered to a transferee pursuant to the Xxxxxxx Registration Statement, which
certificates shall be free, to the extent permitted by the Purchase Agreement,
of all restrictive legends, and to enable such Xxxxxxx Shares to be in such
denominations and registered in such names as the Investor may request.
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(f) The Company agrees upon the occurrence of any event contemplated by
clause (c) of this Section 4, as promptly as reasonably possible under the
circumstances taking into account the Company's good faith assessment of any
adverse consequences to the Company and its stockholders of the premature
disclosure of such event, to prepare a supplement or amendment to the Xxxxxxx
Registration Statement or a supplement to the related prospectus or any document
incorporated or deemed incorporated therein by reference, and file any other
required document so that, as thereafter delivered, neither the Xxxxxxx
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 light of the circumstances under
which they were made, not misleading. If the Company notifies the Investor to
suspend the use of any prospectus until the requisite changes to such prospectus
have been made the Investor shall suspend use of such prospectus. The Company
will use its best efforts to ensure that the use of the prospectus may be
resumed as promptly as is practicable. The Company shall be entitled to exercise
its right under this clause (f) to suspend the availability of the Xxxxxxx
Registration Statement and prospectus for a period not to exceed 60 days (which
need not be consecutive days) in any 12-month period.
(g) Indemnification
(i) Indemnification by the Company. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold
harmless the Investor, the officers, directors, agents, brokers (including
brokers who offer and sell Xxxxxxx Shares 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 the Investor, each person or entity
who controls the Investor (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) and the officers,
directors, agents and employees of each such controlling person, to the
fullest extent permitted by applicable law, from and against any and all
losses, claims, damages, liabilities, costs (including, without
limitation, reasonable attorneys' fees) and expenses (collectively,
"Losses"), as incurred, arising out of or relating to any untrue or
alleged untrue statement of a material fact contained in the Xxxxxxx
Registration Statement, any related 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 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 or omissions are based solely
upon information regarding the Investor furnished in writing to the
Company by the Investor expressly for use therein, or to the extent that
such information relates to the Investor or the Investor's proposed method
of distribution of Xxxxxxx Shares and was reviewed and expressly approved
in writing by the Investor expressly for use in the Xxxxxxx Registration
Statement, such prospectus or such form of prospectus or in any amendment
or supplement thereto or (ii) the use by the Investor of an outdated or
defective prospectus after the Company has notified the Investor in
writing that the prospectus is outdated or defective and prior to the
Investor is advised in writing by the Company that the use of the
applicable prospectus may be resumed. The Company shall notify the
Investor promptly of the institution, threat or assertion of any legal
proceeding arising from or in connection with the transactions
contemplated by this Agreement of which the Company is aware.
(ii) Indemnification by the Investor. The Investor shall indemnify
and hold harmless the Company, its directors, officers, agents and
employees, each person or entity 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 incurred, to the extent arising out of or based
solely upon: (x) the Investor's failure to comply with the prospectus
delivery requirements of the Securities Act or (y) any untrue or alleged
untrue statement of a material fact contained in the Xxxxxxx Registration
Statement, any related 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 not misleading (i) to the extent, but only to the
extent, that such untrue statement or omission is contained in any
information so furnished in writing by the Investor to the Company
specifically for inclusion in the Xxxxxxx Registration Statement or such
prospectus or (ii) to the extent that (1) such untrue statements or
omissions are based solely upon information regarding the Investor
furnished in writing to the Company by the Investor expressly for use
therein, or to the extent that such information relates to the Investor or
the Investor's proposed method of distribution of Xxxxxxx Shares and was
reviewed and expressly approved in writing by the Investor expressly for
use in the Xxxxxxx Registration Statement, such prospectus or such form of
prospectus or in any amendment or supplement thereto or (2) in the case of
the use by the Investor of an outdated or defective prospectus after the
Company has notified the Investor in writing that the prospectus is
outdated or defective and prior to the Investor is advised in writing by
the Company that the use of the applicable prospectus may be resumed. In
no event shall the liability of the Investor hereunder be greater in
amount than the dollar amount of the net proceeds received by the Investor
upon the sale of the Xxxxxxx Shares giving rise to such indemnification
obligation.
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(iii) Conduct of Indemnification Proceedings. If any legal
proceeding shall be brought or asserted against any person or entity
entitled to indemnity hereunder (an "Indemnified Party"), such Indemnified
Party shall promptly notify the person or entity from whom indemnity is
sought (the "Indemnifying Party") in writing, and the Indemnifying Party
shall have the right to 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 prejudiced the Indemnifying Party. An Indemnified Party
shall have the right to employ separate counsel in any such legal
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: (1) the Indemnifying Party has agreed in writing to pay
such fees and expenses; (2) the Indemnifying Party shall have failed
promptly to assume the defense of such legal proceeding and to employ
counsel reasonably satisfactory to such Indemnified Party in any such
legal proceeding; or (3) the named parties to any such legal proceeding
(including any impleaded parties) include both such Indemnified Party and
the Indemnifying Party, and such Indemnified Party shall reasonably
believe that a material 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 the reasonable fees and expenses of one
separate counsel shall be at the expense of the Indemnifying Party). The
Indemnifying Party shall not be liable for any settlement of any such
legal 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 legal 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 legal proceeding. Subject to the terms of this Agreement, all
reasonable 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 legal 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; provided, that the Indemnified Party shall promptly
reimburse the Indemnifying Party for that portion of such fees and
expenses applicable to such actions for which such Indemnified Party is
not entitled to indemnification hereunder, determined based upon the
relative faults of the parties.
(iv) Contribution. If a claim for indemnification under clause (i)
or (ii) above is unavailable to an Indemnified Party (by reason of public
policy or otherwise), 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 this Agreement,
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. The parties hereto agree that it would not
be just and equitable if contribution pursuant to this clause (iv) were
determined by pro rata allocation or by any other method of allocation
that does not take into account the equitable considerations referred to
above. Notwithstanding the provisions of this clause (iv), the Investor
shall not be required to contribute, in the aggregate, any amount in
excess of the amount by which the proceeds actually received by the
Investor from the sale of the Xxxxxxx Shares subject to the legal
proceeding exceeds the amount of any damages that the Investor has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission, except in the case of fraud by
the Investor. 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.
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5. Upon consummation of the transactions contemplated in Sections 3 and 4
(a) above, the Investor waives and agrees not to seek enforcement of any
Triggering Event (as defined in the Certificate of Designation) pursuant to the
Certificate of Designation which exists or otherwise arose on or prior to the
date hereof which was based upon the circumstances described in Sections 1 and 2
above.
6. Representations of Investor. The Investor hereby makes, as of the date
hereof and as of the Closing, the representations and warranties set forth below
to the Company:
6.1 RELIANCE ON EXEMPTIONS. The Investor acknowledges that this
transaction has not been reviewed by the United States Securities and Exchange
Commission or any state agency because it is intended to be a nonpublic offering
exempt from the registration requirements of the Securities Act of 1933, as
amended (the "Securities Act"), and state securities laws. The Investor
understands that the Company is relying in part upon the truth and accuracy of,
and the Investor's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Investor set forth herein in order to
determine the availability of such exemption and the eligibility of the Investor
to acquire the Payment Shares and the Warrants.
6.2 INVESTMENT PURPOSE. Except as otherwise provided in Section 4
(a) above, Investor represents that the Payment Shares and the Warrants are
being acquired for its own account, for investment purposes only and not for
distribution or resale to others in contravention of the registration
requirements of the Securities Act. The Investor agrees that it will not sell or
otherwise transfer the Payment Shares, the Warrants and the Warrant Shares
unless they are registered under the Securities Act or unless an exemption from
such registration is available.
6.3 ACCREDITED INVESTOR. The Investor represents and warrants that
it is an "accredited investor" as such term is defined in Rule 501 of Regulation
D promulgated under the Securities Act.
7. Representations of Company. The Company hereby makes, as of the date
hereof and as of the Closing, the representations and warranties set forth below
to the Investor:
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7.1 Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by each of this Agreement, the Warrant and the New Registration
Rights Agreement (the "Transaction Documents") and otherwise to carry out its
obligations thereunder. The execution and delivery of each of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated thereby have been duly authorized by all necessary action on the
part of the Company and no further action is required by the Company in
connection therewith other than in connection with the Required Approvals (as
defined below). Each Transaction Document has been (or upon delivery will have
been) duly executed by the Company and, 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 except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors' rights
generally and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies.
7.2 No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
other transactions contemplated 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,
or (ii) conflict with, or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, result in the creation of
any Lien upon any of the properties or assets of the Company or any Subsidiary
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, or (iii) subject to the Required Approvals, conflict with or
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 Subsidiary is subject (including federal and state securities laws
and regulations), or by which any property or asset of the Company or a
Subsidiary is bound or affected.
7.3 Filings, Consents and Approvals. The Company is not required to
obtain any consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any court or other federal, state, local
or other governmental authority or other Person in connection with the
execution, delivery and performance by the Company of the Transaction Documents,
other than (i) the filing of a Current Report on Form 8-K, (ii) the filing with
Securities and Exchange Commission (the "Commission") of the a registration
statement meeting the requirements set forth in the New Registration Rights
Agreement and covering the resale of the Warrant Shares by the Investor as
provided for in the New Registration Rights Agreement, (iii) the notice and/or
application(s) to each applicable Trading Market (as defined in the Purchase
Agreement) for the issuance and sale of the Payment Shares and Warrants and the
listing of the Warrants Shares for trading thereon in the time and manner
required thereby and (iv) the filing of Form D with the Commission and such
filings as are required to be made under applicable state securities laws
(collectively, the "Required Approvals").
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7.4 Listing and Maintenance Requirements. The Company's Common Stock
is registered pursuant to Section 12(b) of the Securities Exchange Act of 1934
and is listed on the American Stock Exchange. The Company has not received any
notification that the Commission is contemplating terminating such listing. 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. The Company has filed all required notices and or applications
with the American Stock Exchange for the issuance and sale of the Payment Shares
and the Warrant Shares and the listing of the Payment Shares and the Warrant
Shares for trading thereon.
7.5 Issuance of the Securities. The Payment Shares and Warrants are
duly authorized and, when issued and paid for in accordance with the applicable
Transaction Documents, will be duly and validly issued, fully paid and
nonassessable, free and clear of all Liens imposed by the Company other than
restrictions on transfer provided for in the Transaction Documents. The Warrant
Shares, when issued in accordance with the terms of the Transaction Documents,
will be validly issued, fully paid and non-assessable, free and clear of all
Liens imposed by the Company. The Company has reserved from its duly authorized
capital stock a number of shares of Common Stock for issuance of the Warrant
Shares at least equal to the maximum aggregate number of shares of Common Stock
then issued or potentially issuable in the future pursuant to the Transaction
Documents, on the date hereof. The Company has not, and to the knowledge of the
Company, no Affiliate of the Company has sold, offered for sale or solicited
offers to buy or otherwise negotiated 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 Payment Shares and Warrants in a manner that would require the
registration under the Securities Act of the sale of the Payment Shares and
Warrants to the Investor, or that would be integrated with the offer or sale of
the Payment Shares and Warrants for purposes of the rules and regulations of any
Trading Market.
7.6 Private Placement. Assuming the accuracy of the Investor
representations and warranties set forth in Section 6, no registration under the
Securities Act is required for the issuance of the Payment Shares and Warrants
by the Company to the Investors as contemplated hereby. The issuance and sale of
the Payment Shares and Warrants hereunder does not contravene the rules and
regulations of the Trading Market.
7.7 Xxxxxxx Registration Statement. The Xxxxxxx Shares are
registered under the Xxxxxxx Registration Statement and may be sold without
restriction. The Xxxxxxx Registration Statement has been declared effective by
the Commission and is effective as of the date hereof. The Company has not
received any notification that the Commission is contemplating terminating or
suspending the effectiveness of the Xxxxxxx Registration Statement. The Xxxxxxx
Registration Statement does 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 light of the circumstances under which they
made, not misleading.
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7.8 Non-Public Information. The Company has not provided the
Investor or its agents or counsel with any information that the Company believes
constitutes material non-public information about the Company.
8. Representations of Xxxxxxx. Xxxxxxx hereby makes, as of the date hereof
and as of the Closing, the representations and warranties set forth below to the
Investor:
8.1 Investment Purpose. Xxxxxxx represents that the Payment Shares
being acquired by it in exchange for the Xxxxxxx Shares are being acquired for
its own account, for investment purposes only and not for distribution or resale
to others in contravention of the registration requirements of the Securities
Act. Xxxxxxx agrees that it will not sell or otherwise transfer the Payment
Shares acquired by it in exchange for the Xxxxxxx Shares unless they are
registered under the Securities Act or unless an exemption from such
registration is available.
8.2 Accredited Investor; Investment Experience. Xxxxxxx represents
and warrants that it is an "accredited investor" as such term is defined in Rule
501 of Regulation D promulgated under the Securities Act, and that it is able to
bear the economic risk of any investment in the Payment Shares. Xxxxxxx
recognizes that its investment in the Payment Shares involves a high degree of
risk in that: (a) an investment in the Company is highly speculative and only
investors who can afford the loss of their entire investment should consider
investing in the Company and the Securities; and (b) transferability of the
Payment Shares is limited. Xxxxxxx acknowledges that it has prior investment
experience and that it recognizes the highly speculative nature of the Payment
Shares.
8.3 Legends. Xxxxxxx understands that the certificates representing
the Payment Shares, until such time as they have been registered under the
Securities Act, shall bear a restrictive legend in substantially the following
form (and a stop-transfer order may be placed against transfer of such
certificates or other instruments):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS, OR (B) AN OPINION OF
COUNSEL, IN A REASONABLY ACCEPTABLE FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
APPLICABLE STATE SECURITIES LAWS, OR (II) UNLESS SOLD
PURSUANT TO RULE 144 UNDER SAID ACT.
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8.4 Information. Xxxxxxx has been given the opportunity to ask
questions of, and receive answers from, the Company concerning the terms and
conditions of this Agreement and to obtain such additional information, to the
extent the Company possesses such information or can acquire it without
unreasonable effort or expense, necessary to verify the accuracy of same as the
Investor reasonably desires in order to evaluate the investment in the Payment
Shares. Xxxxxxx understands this Agreement, and Xxxxxxx has had the opportunity
to discuss any questions regarding this Agreement with its counsel or other
advisors. Xxxxxxx does not desire to receive any further information.
8.5 Status of Xxxxxxx Shares. Xxxxxxx is the sole beneficial owner
of the Xxxxxxx Shares, and owns the Xxxxxxx Shares, free and clear of all
mortgages, pledges, restrictions, liens, charges, encumbrances, security
interests, obligations or other claims.
8.6 Xxxxxxx Registration Statement. The Xxxxxxx Shares are
registered under the Xxxxxxx Registration Statement and may be sold without
restriction.
8.7 Non-Public Information. Xxxxxxx has not provided the Investor or
its agents or counsel with any information that Xxxxxxx believes constitutes
material non-public information about the Company.
8.8 Authorization; Enforcement. Xxxxxxx has the requisite limited
liability company power and authority to enter into and to consummate the
transactions contemplated by this Agreement and otherwise to carry out its
obligations thereunder. The execution and delivery of this Agreement by Xxxxxxx
and the consummation by it of the transactions contemplated thereby have been
duly authorized by all necessary action on the part of Xxxxxxx and no further
action is required by Xxxxxxx in connection therewith. This Agreement has been
duly executed by Xxxxxxx and constitutes the valid and binding obligation of
Xxxxxxx enforceable against Xxxxxxx in accordance with its terms except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors' rights
generally and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies.
8.9 No Conflicts. The execution, delivery and performance of this
Agreement by Xxxxxxx and the consummation by Xxxxxxx of the other transactions
contemplated hereby do not and will not: (i) conflict with or violate any
provision of Xxxxxxx'x certificate of formation, limited liability company
agreement or other organizational or charter documents, or (ii) conflict with,
or constitute a default (or an event that with notice or lapse of time or both
would become a default) under, result in the creation of any Lien upon any of
the properties or assets of Xxxxxxx 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 Xxxxxxx debt or otherwise) or other understanding to which Xxxxxxx
is a party or by which any property or asset of Xxxxxxx is bound or affected, or
(iii) conflict with or result in a violation of any law, rule, regulation,
order, judgment, injunction, decree or other restriction of any court or
governmental authority to which Xxxxxxx is subject (including federal and state
securities laws and regulations), or by which any property or asset of Xxxxxxx
is bound or affected.
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9. Miscellaneous
9.1 ENTIRE AGREEMENT; AMENDMENT. This Agreement, the Warrant and the
Registration Rights Agreement supersede all other prior oral or written
agreements between the Investor, the Company and Xxxxxxx with respect to the
matters discussed herein and therein, and this Agreement the Warrant and the
Registration Rights Agreement contain the entire understanding of the parties
with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company, Xxxxxxx nor the
Investor makes any representation, warranty, covenant or undertaking with
respect to such matters. No provision of this Agreement may be amended or waived
other than by an instrument in writing signed by the Company, the Investor and
Xxxxxxx.
9.2 SEVERABILITY. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
9.3 GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL. All questions
concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New York or any other jurisdictions) that would cause
the application of the laws of any jurisdictions other than the State of New
York. Each party hereby irrevocably submits to the non-exclusive jurisdiction of
the state and federal courts sitting in New York County, New York for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of 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 to such
party at the address for such notices to it at the end of 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. Each party hereby
irrevocably waives any right it may have, and agrees not to request, a jury
trial for the adjudication of any dispute hereunder or in connection with or
arising out of this Agreement or any transaction contemplated hereby.
9.4 HEADINGS. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
9.5 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns
and may not be assigned without the written consent of all other parties hereto.
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9.6 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.
9.7 FURTHER ASSURANCES. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
any other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
9.8 COUNTERPARTS. This Agreement may be executed in one or more
identical counterparts, all of which 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 parties; provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.
9.9 SURVIVAL AND INDEMNIFICATION. The representations and warranties
contained herein shall survive the consummation of the transactions contemplated
by this Agreement for the applicable statute of limitations. Each party agrees
to indemnify and hold harmless the other parties from any and all losses,
claims, damages, liabilities, costs (including, without limitations, reasonable
attorneys' fees) and expenses incurred by such other parties as a result of any
breach of the representations, warranties and covenants made by such party. All
covenants contained herein which, by their terms, are not fully performed on the
date of the consummation of the transactions contemplated by this Agreement
shall survive such date until fully performed.
INVESTOR:
----------------------------------------
By:
------------------------------------
Name:
Title:
Address:
--------------------------------
--------------------------------
--------------------------------
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CONSENTED AND AGREED TO:
XXXXXX EQUIPMENT, INC.
By:
-------------------------------
Name: Xxxxx Xxxxx
Title: Chairman
XXXXXXX EQUITY PARTNERS, LLC 0000 X. Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
By:
-------------------------------
Name: Xxxxx Xxxxx
Title: Managing Member
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