EXHIBIT 10.15
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SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this "Agreement") is dated as
of November ___, 2003, among Pacific CMA Inc., a Colorado corporation
(the "Company"), and the purchasers listed on Schedule 1 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 (as
defined below), and Rule 506 promulgated thereunder, the Company
desires to issue and sell to the Purchasers, and the Purchasers,
severally and not jointly, desire to purchase from the Company the
number of (i) shares of Common Stock, and (ii) Warrants set forth
opposite each Purchaser's name on Schedule 1 hereto.
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 Purchaser agrees as follows:
ARTICLE I.
DEFINITIONS
1.1 Definitions. In addition to the terms defined elsewhere in
this Agreement, for all purposes of this Agreement, the following
terms have the meanings indicated in this Section 1.1:
"Action" shall have the meaning ascribed to such term in
Section 3.1(j).
"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. With respect to a Purchaser, any investment fund or
managed account that is managed on a discretionary basis by the same
investment manager as such Purchaser will be deemed to be an Affiliate
of such Purchaser.
"Business Day" means any day except Saturday, Sunday and any day
which shall be a federal legal holiday or a day on which banking
institutions in the State of New York are authorized or required by
law or other governmental action to close.
"Closing" means the closing of the purchase and sale of the
Common Stock and the Warrants pursuant to Section 2.1(a) as of
November ___, 2003, or such other date as agreed to by the parties.
"Closing Date" means the date of the Closing.
"Closing Price" means on any particular date (a) the last
reported closing bid price per share of Common Stock on such date on
the Trading Market (as reported by Bloomberg L.P. at 4:15 p.m. (New
York time) as the last reported closing bid price for regular session
trading on such day), or (b) if there is no such price on such date,
then the closing bid price on the Trading Market on the date nearest
preceding such date (as reported by Bloomberg L.P. at 4:15 p.m. (New
York time) as the closing bid price for regular session trading on
such day), or (c) if the Common Stock is not then listed or quoted on
the Trading Market and if prices for the Common Stock are then
reported in the "pink sheets" published by the National Quotation
Bureau Incorporated (or a similar organization or agency succeeding to
its functions of reporting prices), the most recent bid price per
share of the Common Stock so reported, or (d) if the shares of Common
Stock are not then publicly traded the fair market value of a share of
Common Stock as determined by an appraiser selected in good faith by
the Purchasers of a majority in interest of the Shares then
outstanding.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the common stock of the Company, no par
value per share, and any securities into which such common stock may
hereafter be reclassified.
"Common Stock Equivalents" means any securities of the Company or
the Subsidiaries which would entitle the holder thereof to acquire at
any time Common Stock, including without limitation, any debt,
preferred stock, rights, options, warrants or other instrument that is
at any time convertible into or exchangeable for, or otherwise
entitles the holder thereof to receive, Common Stock.
"Company Counsel" means Gusrae, Xxxxxx & Xxxxx, PLLC.
"Disclosure Schedules" means the Disclosure Schedules attached as
Annex I hereto.
"Effective Date" means the date that the Registration Statement
is first declared effective by the Commission.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Intellectual Property Rights" shall have the meaning ascribed to
such term in Section 3.1(o).
"Liens" means a lien, charge, security interest, encumbrance,
right of first refusal or other restriction.
"Material Adverse Effect" shall have the meaning ascribed to such
term in Section 3.1(b).
"Material Permits" shall have the meaning ascribed to such term
in Section 3.1(m).
"Per Share Purchase Price" equals $1.61, subject to adjustment
for reverse and forward stock splits, stock dividends, stock
combinations and other similar transactions of the Common Stock that
occur after the date of this Agreement and before the Closing.
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"Person" means an 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 other entity of any kind.
"Registration Statement" means a registration statement meeting
the requirements set forth in the Registration Rights Agreement and
covering the resale by the Purchasers of the Shares and the Warrant
Shares.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date of this Agreement, among the Company
and each Purchaser, in the form of Exhibit A hereto.
"Rule 144" means Rule 144 promulgated by the Commission pursuant
to the Securities Act, as such Rule 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.
"SEC Reports" shall have the meaning ascribed to such term in
Section 3.1(h).
"Securities" means the Shares, the Warrants and the Warrant
Shares.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" means the shares of Common Stock issued or issuable to
each Purchaser pursuant to this Agreement.
"Subscription Amount" means, as to each Purchaser and the
Closing, the amounts set forth below such Purchaser's signature block
on the signature page hereto, in United States dollars and in
immediately available funds.
"Subsidiary" shall have the meaning ascribed to such term in
Section 3.1(a).
"Trading Day" means (i) a day on which the Common Stock is traded
on a Trading Market, or (ii) if the Common Stock is not listed on a
Trading Market, a day on which the Common Stock is traded on the
over-the-counter market, as reported by the OTC Bulletin Board, or
(iii) if the Common Stock is not quoted on the OTC Bulletin Board, a
day on which the Common Stock is quoted in the over-the-counter market
as reported by the National Quotation Bureau Incorporated (or any
similar organization or agency succeeding to its functions of
reporting prices); provided, that in the event that the Common Stock
is not listed or quoted as set forth in (i), (ii) and (iii) hereof,
then Trading Day shall mean a Business Day.
"Trading Market" means the following markets or exchanges on
which the Common Stock is listed or quoted for trading on the date in
question: the OTC Bulletin Board, the American Stock Exchange, the New
York Stock Exchange, the Nasdaq National Market or the Nasdaq SmallCap
Market.
"Transaction Documents" means this Agreement, the Registration
Rights Agreement, the Warrant and any other documents or agreements
executed in connection with the transactions contemplated hereunder.
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"Warrants" means the Common Stock Purchase Warrants, in the form
of Exhibit B, issuable to the Purchasers at Closing, which warrants
shall be exercisable immediately and have an exercise price equal to
$1.61 for 50% of the Warrant Shares owed and $2.17 for the remaining
50% of the Warrant Shares owed and a term of exercise of five (5)
years.
"Warrant Shares" means the shares of Common Stock issuable upon
exercise of the Warrants.
ARTICLE II.
PURCHASE AND SALE
2.1 Closing. On the terms and subject to the conditions set
forth in this Agreement, at the Closing, the Company shall sell and
issue to each Purchaser and each Purchase shall purchase from the
Company (i) the number of Shares set forth opposite each Purchaser's
name on Schedule 1 hereto, and (ii) the number of Warrants set forth
opposite each Purchaser's name on Schedule 1 hereto. The Company shall
have the right to increase the number of shares of Common Stock and
Warrants offered for sale without the consent of any Purchaser. Each
Purchaser shall purchase from the Company, and the Company shall issue
and sell to each Purchaser, a number of Shares equal to such
Purchaser's Subscription Amount divided by the Per Share Purchase
Price. The Warrants shall be issued, without additional consideration,
on the basis of one Warrant for each Share purchased. Upon
satisfaction of the conditions set forth in Section 2.2, the Closing
shall occur at the offices of Gusrae, Xxxxxx & Bruno, PLLC, or such
other location as the parties shall mutually agree.
2.2 Closing Conditions.
(a) At the Closing, the Company shall deliver or cause to
be delivered to each Purchaser (except as otherwise provided below):
(i) a stock certificate representing the number
of Shares purchased by each Purchaser;
(ii) within three (3) Trading Days of the
Closing Date, a Warrant, registered in the name of such
Purchaser, pursuant to which such Purchaser shall have the
right to acquire up to the number of shares of Common Stock
equal to 50% of the Shares to be issued to such Purchaser
at such Closing; andthe Registration Rights Agreement duly
executed by the Company.
(b) At the Closing each Purchaser shall deliver or cause
to be delivered to the Company the following: this Agreement duly
executed by such Purchaser;
(ii) such Purchaser's Subscription Amount as to
such Closing by wire transfer to the account of the Company
as provided to the Purchasers in writing prior to the
Closing Date; and
(iii) the Registration Rights Agreement duly
executed by such Purchaser.
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(c) All representations and warranties of each of the
parties herein shall remain true and correct as of the Closing Date.
(d) As of the Closing Date, there shall have been no
Material Adverse Effect with respect to the Company since the date
hereof.
(e) From the date hereof to the Closing Date, trading in
the Common Stock shall not have been suspended by the Commission
(except for any suspension of trading of limited duration agreed to by
the Company, which suspension shall be terminated prior to the
Closing), and, at any time prior to the Closing Date, trading in
securities generally as reported by Bloomberg Financial Markets shall
not have been suspended or limited, or minimum prices shall not have
been established on securities whose trades are reported by such
service, or on any Trading Market, nor shall a banking moratorium have
been declared either by the United States or New York State
authorities.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. Except as
set forth under the corresponding section of the Disclosure Schedules
delivered concurrently herewith, the Company hereby makes the
following representations and warranties as of the date hereof and as
of the Closing Date to each Purchaser:
(a) Subsidiaries. Other than as disclosed in the SEC
Reports, the Company has no direct or indirect subsidiaries (a
"Subsidiary" and collectively, the "Subsidiaries"). The Company owns,
directly or indirectly, all of the capital stock of its Subsidiary
free and clear of any lien, charge, security interest, encumbrance,
right of first refusal or other restriction (collectively, "Liens"),
and all the issued and outstanding shares of capital stock of each
Subsidiary are validly issued and are fully paid, non-assessable and
free of preemptive and similar rights.
(b) Organization and Qualification. Each of the Company
and the Subsidiaries is an entity duly incorporated or otherwise
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization (as applicable),
with the requisite corporate 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.
Each of the Company and the Subsidiaries is duly qualified to conduct
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, would not have or reasonably be expected to result in
(i) a material adverse effect on the legality, validity or
enforceability of any Transaction Document, (ii) a material adverse
effect on the results of operations, assets, business or financial
condition of the Company and the Subsidiaries, taken as a whole, or
(iii) a material adverse effect on the Company's ability to perform in
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any material respect on a timely basis its obligations under any
Transaction Document (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 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. 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, and (iii) with respect to the indemnification
provisions set forth in the Registration Rights Agreement, as limited
by public policy.
(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 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, 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) 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; except in the case
of each of clauses (ii) and (iii), such as would not have or
reasonably be expected to result in a Material Adverse Effect.
(e) 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
(a) the filing with the Commission of the Registration Statement, the
application(s) to each Trading Market, if necessary, for the listing
of the Shares and Warrant Shares for trading thereon in the time and
manner required thereby, and applicable Blue Sky filings, (b) such as
have already been obtained or such exemptive filings as are required
to be made under applicable securities laws, and (c) such other
filings as may be required following the Closing Date under the
Securities Act, the Exchange Act and corporate law.
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(f) Issuance of the Securities. The Securities 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. The Company has reserved
from its duly authorized capital stock the maximum number of shares of
Common Stock issuable pursuant to this Agreement and the Warrants.
(g) Capitalization. The capitalization of the Company is
as described in the Company's most recent periodic report filed with
the Commission. The Company has not issued any capital stock since
such filing other than pursuant to the exercise of employee stock
options under the Company's stock option plans and pursuant to the
conversion or exercise of Common Stock Equivalents outstanding on the
date hereof. No Person has any right of first refusal, preemptive
right, right of participation, or any similar right to participate in
the transactions contemplated by the Transaction Documents. Except as
set forth in Section 3.2(k) of this Agreement and as a result of the
purchase and sale of the Securities and except for employee stock
options under the Company's stock option plans, 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 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. The issue and sale of the
Securities 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.
(h) 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
Section 15(d) of the Exchange Act, for the two (2) years preceding the
date hereof (or such shorter period as the Company was required by law
to file such material) (the foregoing materials, including the
exhibits thereto, being collectively referred to herein as the "SEC
Reports" and, together with the Disclosure 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. 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, as applicable, 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 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 regulations
of the Commission with respect thereto as in effect at the time of
filing. Such financial statements have been prepared in accordance
with 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 except
that unaudited financial statements may not contain all footnotes
required by GAAP, and fairly present in all material respects the
financial position of the Company and its consolidated subsidiaries as
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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.
(i) Material Changes. Since the date of the latest
audited financial statements included within the SEC Reports, except as
disclosed in the SEC Reports, (i) there has been no event, occurrence
or development that has had or that could reasonably be expected to
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, (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. The Company does not
have pending before the Commission any request for confidential
treatment of information.
(j) Litigation. Except as disclosed in the SEC Reports,
there is no action, suit, inquiry, notice of violation, proceeding or
investigation pending or, to the knowledge of the Company, threatened
against or affecting the Company, any Subsidiary or any of their
respective properties before or by any court, arbitrator, governmental
or administrative agency or regulatory authority (federal, state,
county, local or foreign) (collectively, an "Action") which
(i) adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents or the Securities
or (ii) could, if there were an unfavorable decision, have or
reasonably be expected to result in a Material Adverse Effect. Neither
the Company nor any Subsidiary, nor, to the knowledge of the Company,
any director or officer thereof, is or has been the subject of any
Action involving a claim of violation of or liability under federal or
state securities laws or a claim of breach of fiduciary duty. There
has not been, and to the knowledge of the Company, there is not
pending or contemplated, any investigation by the Commission involving
the Company or any current or former director or officer of the
Company. The Commission has not issued any stop order or other order
suspending the effectiveness of any registration statement filed by
the Company or any Subsidiary under the Exchange Act or the Securities
Act.
(k) Labor Relations. No material labor dispute exists or,
to the knowledge of the Company, is imminent with respect to any of
the employees of the Company which could reasonably be expected to
result in a Material Adverse Effect.
(l) Compliance. Except as disclosed in the SEC Reports,
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 such default or
violation has been waived), (ii) is in violation of any order of any
court, arbitrator or governmental body, or (iii) is or has been in
violation of any statute, rule or regulation of any governmental
authority, including without limitation all foreign, federal, state
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and local laws applicable to its business, except in the case of
clauses (i), (ii) and (iii) as would not have or reasonably be
expected to result in a Material Adverse Effect.
(m) Regulatory Permits. 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 would
not have or reasonably be expected to 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.
(n) Title to Assets. The Company and the Subsidiaries
have good and marketable title in fee simple to all real property owned
by them that is material to the business of the Company and the
Subsidiaries, taken as a whole, and good and marketable title in all
personal property owned by them that is material to the business of
the Company and the Subsidiaries, taken as a whole, 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 and Liens for the payment of federal, state or other
taxes, the payment of which is neither delinquent nor subject to
penalties. Any real property and facilities held under lease by the
Company and the Subsidiaries are held by them under valid, subsisting
and enforceable leases with which the Company and the Subsidiaries are
in material compliance.
(o) Patents and Trademarks. To the knowledge of the
Company and each Subsidiary, 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 or reasonably
be expected to result in 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 the rights of any Person. To the knowledge of the Company,
all such Intellectual Property Rights are enforceable.
(p) Transactions With Affiliates and Employees. Except
as set forth in the SEC Reports, 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, in each case in excess of $60,000 other
than (a) for payment of salary or consulting fees for services
rendered, (b) reimbursement for expenses incurred on behalf of the
Company and (c) for other employee benefits, including stock option
agreements under any stock option plan of the Company.
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(q) Internal Accounting Controls. The Company and each
of its subsidiaries maintains 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 GAAP 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. The
Company has established disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the Company and designed
such disclosure controls and procedures to ensure that material
information relating to the Company, including its subsidiaries, is
made known to the certifying officers by others within those entities,
particularly during the period in which the Company's Form 10-K or 10-
Q, as the case may be, is being prepared.
(r) Certain Fees. Except as provided in Section 4.7
hereof and for payments payable to members of the National Association
of Securities Dealers, Inc. ("Broker/Dealers"), which fees shall be
paid by the Company, 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. The Purchasers shall have no obligation with respect to any
fees or with respect to any claims made by or on behalf of other
Persons for fees of a type contemplated in this Section that may be
due in connection with the transactions contemplated by this
Agreement.
(s) Private Placement. Assuming the accuracy of the
Purchasers representations and warranties set forth in Section 3.2, no
registration under the Securities Act is required for the offer and
sale of the Securities by the Company to the Purchasers as
contemplated hereby. The issuance and sale of the Securities hereunder
does not contravene the rules and regulations of the Trading Market.
(t) Investment Company. 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.
(u) Listing and Maintenance Requirements. The Company
has not, in the twelve (12) months preceding the date hereof, received
notice from any Trading Market on which the Common Stock is or has
been listed or quoted to the effect that the Company is not in
compliance with the listing or maintenance requirements of such
Trading Market. 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.
(v) Application of Takeover Protections. The Company
and its Board of Directors have taken all necessary action, if any, in
order to render inapplicable any control share acquisition, business
combination, poison pill (including any distribution under a rights
agreement) or other similar anti-takeover provision under the
Company's Certificate of Incorporation (or similar charter documents)
or the laws of its state of incorporation that is or could become
applicable to 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 the Company's
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issuance of the Securities and the Purchasers' ownership of the
Securities.
(w) Disclosure. The Company confirms that, neither the
Company 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, non-public information. The
Company understands and confirms that the Purchasers will rely on the
foregoing representations and covenants 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 Disclosure 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 light of the circumstances under which they were made, not
misleading.
(x) Solvency. Based on the financial condition of the
Company as of the Closing Date, (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 including the anticipated proceeds of the
sale of the Securities; 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).
3.2 Representations and Warranties of the Purchasers. Each
Purchaser hereby, for itself and for no other Purchaser, represents
and warrants as of the date hereof and as of the Closing Date to the
Company that the Company is relying upon the accuracy and completeness
of the representations and warranties set forth herein to, among other
things, ensure registration under Section 5 of the Securities Act is
not required in connection with the sale of the Securities and as
follows:
(a) Organization; Authority. Such Purchaser, if not a
natural person, is an entity duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization
with full right, 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
thereunder. The execution, delivery and performance by such Purchaser
of the transactions contemplated by this Agreement has been duly
authorized by all necessary corporate or similar action on the part of
such Purchaser. Each Transaction Document to which it is a party has
been duly executed by such Purchaser, and when delivered by such
Purchaser in accordance with the terms hereof, will constitute the
valid and legally binding obligation of such Purchaser, enforceable
against it in accordance with its terms.
11
(b) Investment Intent. Such Purchaser understands that
the Securities are "restricted securities" and have not been registered
under the Securities Act or any applicable state securities law and is
acquiring the Securities as principal for its own account for
investment purposes only and not with a view to or for distributing or
reselling such Securities or any part thereof, has no present
intention of distributing any of such Securities and has no
arrangement or understanding with any other persons regarding the
distribution of such Securities (this representation and warranty not
limiting such Purchaser's right to sell the Securities pursuant to the
Registration Statement or otherwise in compliance with applicable
federal and state securities laws). Such Purchaser is acquiring the
Securities hereunder in the ordinary course of its business. Such
Purchaser does not have any agreement or understanding, directly or
indirectly, with any Person to distribute any of the Securities.
(c) Purchaser Status. At the time such Purchaser was
offered the Securities, it was, and at the date hereof it is an
"accredited investor" as defined in Rule 501(a) under the Securities
Act. Such Purchaser is not, and is not required to be, registered as a
broker-dealer under Section 15 of the Exchange Act. In making an
investment decision as to whether to purchase the Securities offered
hereby, each Purchaser has relied solely upon the SEC Reports and the
representation and warranties of the Seller contained herein.
(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 Securities, 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 Securities and, at the present time, is
able to afford a complete loss of such investment.
(e) General Solicitation. Such Purchaser is not
purchasing the Securities as a result of any advertisement, article,
notice or other communication regarding the Securities published in
any newspaper, magazine or similar media or broadcast over television
or radio or presented at any seminar or any other general solicitation
or general advertisement.
(f) Compliance with the Securities Laws. Such Purchaser
agrees to comply with the requirements of Regulation M, if applicable,
with respect to the sale of the Shares by the Purchaser. Such
Purchaser hereby confirms its understanding that it may not cover
short sales made prior to the Effective Date with Shares registered
for resale on the Registration Statement. The Purchaser acknowledges
that it does not intend to cover short positions made by it before the
Effective Date with Shares held by it and registered on the
Registration Statement.
(g) No Conflicts. Neither the execution and delivery
of this Agreement and/or any Transaction Document, nor the consummation
of the Transactions contemplated hereby, will violate any constitute,
statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental
agency, or court to which Purchaser is subject or any provision of its
organizational documents or other similar governing instruments.
(h) No Advice. Purchaser understands that nothing in
this Agreement or any other materials presented to Purchaser in
connection with the purchase and sale of the Securities constitutes
12
legal, tax or investment advice. Purchaser has consulted such legal,
tax and investment advisors as it, in its sole discretion, has deemed
necessary or appropriate in connection with its purchase of the
Securities.
(i) No Litigation, Etc. There is no action, suit,
proceeding, judgment, claim or investigation pending or, to the
knowledge of the Purchaser, threatened against the Purchaser which
could reasonably be expected in any manner to challenge or seek to
prevent, enjoin, alter or materially delay any of the Transactions.
(j) Approvals. The execution, delivery and performance
by the Purchaser of this Agreement and the Transaction Documents to
which it is a party, and the consummation of the transactions set forth
herein require no material action by or in respect of, or material
filing with, any governmental body, agency, official or authority, by
the Purchaser other than (i) any filings, authorizations, consents and
approvals as may be required under the Xxxx-Xxxxx-Xxxxxx Improvements
Act of 1976, as amended; (ii) the filing by the Purchaser with the SEC
of such reports under the Exchange Act as may be required in
connection with this Agreement, the Transaction Documents and the
transactions contemplated hereby, and (iii) any filings required by
the securities or blue sky laws of the various states.
(k) Possible Stock Issuances. To provide compensation
to certain key employees of a subsidiary of the Company, the Company
may issue to a number of such employees shares of Common Stock not to
exceed ten (10%) percent of the issued and outstanding Common Stock
following the Closing Date. Although such shares of Common Stock may
not be sold by such persons for a period of two (2) years from any
such issuance, without the Company's consent, and no registration
rights have been issued in connection therewith, any such issuances
could, among other adverse consequences, have an adverse material
effect on the Company's earnings and stock price.
The Company acknowledges and agrees that each Purchaser does not
make or has not made any representations or warranties with respect to
the transactions contemplated hereby other than those specifically set
forth in this Section 3.2.
ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
4.1 Transfer Restrictions.
(a) The Securities may only be disposed of in
compliance with state and federal securities laws. In connection with
any transfer of Securities other than pursuant to an effective
registration statement, to the Company, to an Affiliate of a Purchaser
or in connection with a pledge as contemplated in Section 4.1(b), the
Company may require the transferor thereof 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 of such transferred Securities under the Securities Act.
As a condition of transfer, any such transferee shall agree in writing
to be bound by the terms of this Agreement and shall have the rights
of a Purchaser under this Agreement and the Registration Rights
Agreement.
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(b) The Purchasers agree to the imprinting, so long
as is required by this Section 4.1(b), of a legend on any of the
Securities in the following form:
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
AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE
TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE
REASONABLY ACCEPTABLE TO THE COMPANY. THESE SECURITIES MAY
BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A
FINANCIAL INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS
DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT.
The Company acknowledges and agrees that a Purchaser may from time to
time pledge pursuant to a bona fide margin agreement with a registered
broker-dealer or grant a security interest in some or all of the
Securities to a financial institution that is an "accredited investor"
as defined in Rule 501(a) under the Securities Act and, if required
under the terms of such arrangement, such Purchaser may transfer
pledged or secured Securities 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 legal counsel 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 Securities may
reasonably request in connection with a pledge or transfer of the
Securities, including the preparation and filing of any required
prospectus supplement under Rule 424(b)(3) under the Securities Act or
other applicable provision of the Securities Act to appropriately
amend the list of Selling Stockholders thereunder.
(c) Subject to compliance with all laws, rules and
regulations including, but not limited to, the Securities Act and the
Exchange Act, certificates evidencing the Shares and Warrant Shares
shall not contain any legend (including the legend set forth in
Section 4.1(b)), (i) while a registration statement (including the
Registration Statement) covering the resale of such security is
effective under the Securities Act, or (ii) following any sale of such
Shares or Warrant Shares pursuant to Rule 144, or (iii) if such Shares
or Warrant Shares are eligible for sale under Rule 144(k), or (iv) if
such legend is not required under applicable regulation of the
Securities Act (including judicial interpretations and pronouncements
issued by the Staff of the Commission). Subject to compliance with all
laws, rules and regulations including, but not limited to, the
Securities Act and the Exchange Act, the Company shall cause its
counsel to issue a legal opinion to the Company's transfer agent
promptly after the Effective Date if required by the Company's
14
transfer agent to effect the removal of the legend hereunder. If all
or any portion of a Warrant is exercised at a time when there is an
effective registration statement to cover the resale of the Warrant
Shares, such Warrant Shares shall be issued free of all legends. The
Company agrees that at such time as such legend is no longer required
under this Section 4.1(c), it will, upon written request from the
Purchaser, no later than three (3) Trading Days following the delivery
by a Purchaser to the Company or the Company's transfer agent of a
certificate representing Shares or Warrant Shares, as the case may be,
issued with a restrictive legend, deliver or cause to be delivered to
such Purchaser a certificate representing such Securities 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.
(d) Each Purchaser severally and not jointly agrees
that the removal of the restrictive legend from certificates
representing Securities as set forth in this Section 4.1 is predicated
upon the Company's reliance that the Purchaser will sell any Securities
pursuant to either the registration requirements of the Securities
Act, including any applicable prospectus delivery requirements, or an
exemption therefrom.
4.2 Furnishing of Information. As long as any Purchaser owns
Securities, the Company covenants 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 such holder of
Securities, the Company shall deliver to such holder a written
certification of a duly authorized officer as to whether it has
complied with the preceding sentence. As long as any Purchaser owns
Securities, if the Company is not required to file reports pursuant to
the Exchange Act, it will prepare and furnish to the Purchasers and
make publicly available in accordance with Rule 144(c) such
information as is required for the Purchasers to sell the Securities
under Rule 144. The Company further covenants that it will take such
further action as any holder of Securities may reasonably request, all
to the extent required from time to time to enable such Person to sell
such Securities without registration under the Securities Act within
the limitation of the exemptions provided by Rule 144.
4.3 Integration. The Company shall not 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 Securities in a manner that
would require the registration under the Securities Act of the sale of
the Securities to the Purchasers or that would be integrated with the
offer or sale of the Securities for purposes of the rules and
regulations of any Trading Market.
4.4 Securities Laws Disclosure; Publicity. The Company shall,
by 8:30 a.m. Eastern time on the second (2nd) Business Day following
the date of this Agreement, issue a press release or file a Current
Report on Form 8-K, in each case reasonably acceptable to each
Purchaser disclosing the transactions contemplated hereby and make
such other filings and notices in the manner and time required by the
Commission. The Company and each Purchaser shall consult with each
other in issuing any press releases with respect to the transactions
contemplated hereby, and neither the Company nor any Purchaser shall
issue any such press release or otherwise make any such public
statement without the prior consent of the Company, with respect to
15
any press release of any Purchaser, or without the prior consent of
each Purchaser, with respect to any press release of the Company,
which consent shall not unreasonably be withheld, 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 or 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 (i) as required by federal
securities law in connection with the registration statement
contemplated by the Registration Rights Agreement and (ii) to the
extent such disclosure is required by law or Trading Market
regulations, in which case the Company shall provide the Purchasers
with prior notice of such disclosure permitted under subclause (i) or
(ii).
4.5 Shareholders Rights Plan. No claim will be made or enforced
by the Company or any other Person that any Purchaser is an "Acquiring
Person" under any shareholders rights plan or similar plan or
arrangement in effect or hereafter adopted by the Company, or that any
Purchaser could be deemed to trigger the provisions of any such plan
or arrangement, by virtue of receiving Securities under the
Transaction Documents or under any other agreement between the Company
and the Purchasers.
4.6 Non-Public Information. The Company covenants and agrees
that neither it nor any other Person acting on its behalf will provide
any Purchaser or its agents or counsel with any information that the
Company believes constitutes material non-public information, unless
prior thereto such Purchaser shall have executed a written agreement
regarding the confidentiality and use of such information. The Company
understands and confirms that each Purchaser shall be relying on the
foregoing representations in effecting transactions in securities of
the Company.
4.7 Compensation; Use of Proceeds. The Company has agreed to
pay in connection with the sale of Securities herein (i) a commission
equal to ten (10%) percent of the gross proceeds received by each
Purchaser from the sale of the Securities, and (ii) 5-year warrants to
purchase ten (10%) percent of any Shares and Warrant Shares issued
pursuant hereto at the Closing Price on the date of Closing. All
shares of Common Stock underlying such warrants shall have piggyback
registration rights. The Company shall use the net proceeds from the
sale of the Securities hereunder for (i) general working capital
purposes, (ii) potential acquisitions, and (iii) not for the
satisfaction of any portion of the Company's debt (other than payment
of trade payables in the ordinary course of the Company's business and
prior practices), to redeem any Company equity or equity-equivalent
securities or to settle any outstanding litigation, or to make any
payment to any director or officer, other than salary and
reimbursement of expenses in accordance with past practice.
4.8 Reimbursement. If any Purchaser becomes involved in any
capacity in any Proceeding by or against any Person who is a
stockholder of the Company (except as a result of sales, pledges,
margin sales and similar transactions by such Purchaser to or with any
current stockholder), solely as a result of such Purchaser's
acquisition of the Securities under this Agreement, and provided any
such person has complied with all laws, rules and regulations, the
Company will reimburse such Purchaser for its reasonable legal and
other expenses (including the cost of any investigation preparation
and travel in connection therewith) incurred in connection therewith,
as such expenses are incurred. The reimbursement obligations of the
16
Company under this paragraph shall be in addition to any liability
which the Company may otherwise have, shall extend upon the same terms
and conditions to any Affiliates of the Purchasers who are actually
named in such action, proceeding or investigation, and partners,
directors, agents, employees and controlling persons (if any), as the
case may be, of the Purchasers and any such Affiliate, and shall be
binding upon and inure to the benefit of any successors, assigns,
heirs and personal representatives of the Company, the Purchasers and
any such Affiliate and any such Person. The Company also agrees that
neither the Purchasers nor any such Affiliates, partners, directors,
agents, employees or controlling persons shall have any liability to
the Company or any Person asserting claims on behalf of or in right of
the Company solely as a result of acquiring the Securities under this
Agreement, provided such person has complied with all laws, rules and
regulations.
4.9 Indemnification of Purchasers. The Company will indemnify
and hold the Purchasers and their directors, officers, shareholders,
partners, employees and agents (each, a "Purchaser Party") harmless
from any and all losses, liabilities, obligations, claims,
contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys'
fees and costs of investigation that any such Purchaser Party may
suffer or incur ("Indemnification Liabilities"), as a result of or
relating to any misrepresentation, breach or inaccuracy, or any
allegation by the Company that, if true, would constitute a material
breach or inaccuracy, of any of the representations, warranties,
covenants or agreements made by the Company in this Agreement or in
the other Transaction Documents, provided, however, the Company shall
have no indemnification obligation hereunder if such indemnification
resulted from information provided to the Company by the Purchaser for
inclusion in the Company's PPM and/or the willful and/or intentional
behavior and/or acts of the Purchaser.
4.10 Reservation of Common Stock. As of the date hereof, the
Company has reserved and the Company shall continue to reserve and
keep available at all times, free of preemptive rights, a sufficient
number of shares of Common Stock for the purpose of enabling the
Company to issue Shares pursuant to this Agreement and Warrant Shares
pursuant to the Warrants.
4.11 Listing of Common Stock. The Company hereby agrees to use
commercially reasonable efforts to maintain the listing of the Common
Stock on the Trading Market, and as soon as reasonably practicable
following the Closing (but not later than the earlier of the Effective
Date and the first anniversary of the Closing Date) to list the
applicable Shares and Warrant Shares on the Trading Market. The
Company further agrees, if the Company applies to have the Common
Stock traded on any other Trading Market, it will include in such
application the Shares and Warrant Shares, and will take such other
action as is necessary or desirable in the opinion of the Purchasers
to cause the Shares and Warrant Shares to be listed on such other
Trading Market as promptly as possible. The Company will take all
action reasonably necessary to continue the listing and trading of its
Common Stock on a Trading Market and will comply in all respects with
the Company's reporting, filing and other obligations under the bylaws
or rules of the Trading Market.
4.12 Prohibition of Short Sales. Each Purchaser agrees that it
shall not directly and/or indirectly effect any "short sale" of the
Common Stock. Each Purchaser acknowledges and agrees that, in the
event of an actual or threatened breach of any of the provisions of
17
this Agreement by such party, the harm to the others will be
immediate, substantial and irreparable and the monetary damages will
be inadequate. Accordingly, each Purchaser agrees that, in such event,
the others will be entitled to equitable relief, including an
injunction and an order of specific performance, in addition to any
and all other remedies oat law or in equity.
4.13 Indemnification by the Purchasers. Each of the Purchasers
(severally, but not jointly) agrees to indemnify and hold harmless the
Company and its officers, directors, agents, representatives,
shareholders and employees of their respective affiliates, and each of
their indemnities, from and against any Indemnified Liabilities which
are caused by or arise out of (i) any breach or default in the
performance by it of any covenant or agreement made by it in this
Agreement or in any of the Related Documents; (ii) any breach of
warranty or representation made by it in this Agreement or in any of
the Transaction Documents, or (iii) any other action of the Purchaser
that results in an Indemnification Liability to the Company.
ARTICLE V.
MISCELLANEOUS
5.1 Fees and Expenses. Except as otherwise set forth in this
Agreement, 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 stamp and other taxes and duties levied in connection
with the sale of the Securities.
5.2 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.
5.3 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 on the
signature pages attached hereto 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 on the signature pages attached
hereto 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 address for such notices and
5.4 communications to the Company shall be as set forth below
and for each Purchaser shall be as set forth on the signature pages
attached hereto.
18
If to the Company:
000 Xxxxxx Xxxxxx, Xxx. 0X
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxx Xxxxxxxxxxx
Telephone: (000) 000-0000
With a copy to:
Gusrae, Xxxxxx & Bruno, PLLC
000 Xxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
5.5 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 Purchaser 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.
5.6 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.
5.7 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
each Purchaser. Any Purchaser may assign any or all of its rights
under this Agreement to any Person, provided such transferee agrees in
writing to be bound, with respect to the transferred Securities, by
the provisions hereof that apply to the "Purchasers."
5.8 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.
5.9 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New
York without regard to the conflicts of laws principles thereof. The
parties hereto hereby irrevocably agree that any suit or proceeding
arising directly and/or indirectly pursuant to or under this
Agreement, shall be brought solely in a federal or state court located
in the City, County and State of New York. By its execution hereof,
the parties hereby covenant and irrevocably submit to the in personam
19
jurisdiction of the federal and state courts located in the City,
County and State of New York and agree that any process in any such
action may be served upon any of them personally, or by certified mail
or registered mail upon them or their agent, return receipt requested,
with the same full force and effect as if personally served upon them
in New York City. The parties hereto waive any claim that any such
jurisdiction is not a convenient forum for any such suit or proceeding
and any defense or lack of in personam jurisdiction with respect
thereto. In the event of any such action or proceeding, the party
prevailing therein shall be entitled to payment from the other party
hereto of its reasonable counsel fees and disbursements in an amount
judicially determined.
5.10 Survival. The representations, warranties, agreements and
covenants contained herein shall survive the Closing and delivery of
the Securities for a period of twelve (12) months.
5.11 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.
5.12 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 therefore, and upon so agreeing, shall
incorporate such substitute provision in this Agreement.
5.13 Replacement of Securities. If any certificate or
instrument evidencing any Securities 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 therefore, 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
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 Securities.
5.14 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.
5.15 Payment Set Aside. To the extent that the Company makes a
payment or payments to any Purchaser pursuant to any Transaction
Document or a Purchaser enforces or exercises its rights thereunder,
and such payment or payments or the proceeds of such enforcement or
exercise or any part thereof are subsequently invalidated, declared to
20
be fraudulent or preferential, set aside, recovered from, disgorged by
or are required to be refunded, repaid or otherwise restored to the
Company, 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, to the extent permissible under
applicable law, 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.
5.16 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.
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 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 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. Each
Purchaser has been represented by its own separate legal counsel in
their review and negotiation of the Transaction Documents. The Company
has elected to provide all Purchasers with the same terms and
Transaction Documents for the convenience of the Company and not
because it was required or requested to do so by the Purchasers.
[Remainder of page intentionally left blank]
21
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.
PACIFIC CMA, INC.
By:______________________________
Name:
Title:
Accepting Subscriptions:
(i) of $________ aggregate purchase price
(ii) from:_______________________________
22
PURCHASERS SIGNATURE PAGE
______________________________
By:___________________________
Name:
Title:
______________________________
Address
______________________________
Facsimile Number
Subscription Amount: $________
______________________________
By:___________________________
Name:
Title:
______________________________
Address
______________________________
Facsimile Number
Subscription Amount: $________
______________________________
By:___________________________
Name:
Title:
______________________________
Address
______________________________
Facsimile Number
Subscription Amount: $________
SCHEDULE 1
----------
TO
COMMON STOCK AND WARRANTS PURCHASED
Name of Purchaser Amount of Shares and Warrants So Purchased
1. __________________________ _________ Shares _________ Warrants
2. __________________________ _________ Shares _________ Warrants
3. __________________________ _________ Shares _________ Warrants
4. __________________________ _________ Shares _________ Warrants
5. __________________________ _________ Shares _________ Warrants
6. __________________________ _________ Shares _________ Warrants
7. __________________________ _________ Shares _________ Warrants
8. __________________________ _________ Shares _________ Warrants
