EXHIBIT 4.11
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this "AGREEMENT"), dated as of
February __, 2000 is made by and among XXXXXX.XXX, INC., a Delaware corporation,
with headquarters located at 000 Xxxxxxxx Xxxxx, Xxxxxxxx, XX 00000 (the
"COMPANY"), and the investor named on the signature page hereto, together with
his or her permitted transferees (the "INVESTOR").
RECITALS:
A. The Company and the Investor are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Section 4(2) of the Securities Act and Rule 506 under Regulation D.
B. The Investor desires, upon the terms and conditions stated in this
Agreement, to subscribe to purchase shares of the Company's Common Stock, for a
per share purchase price of $2.00. The Company is offering up to 2,000,000
shares of Common Stock (with the right exercisable by the Company in its sole
discretion to increase the offering by an additional 400,000 shares) until the
earlier of the date on which securities purchase agreements for all 2,000,000
shares of Common Stock have been executed by Investors and the Company or March
3, 2000, subject to acceptance or rejection of the subscriptions and to earlier
termination or extension of the offering period in the Company's sole discretion
(the date of termination of the offering being the "Termination Date"). Persons
who subscribe for the shares so offered shall execute and deliver an agreement
in the form of this Agreement (each such agreement, an "Agreement") and upon
acceptance of their respective subscriptions, the Company shall countersign and
deliver the Agreements to such persons.
C. Contemporaneously with the execution and delivery of this Agreement,
the Investor is executing and delivering a Registration Rights Agreement under
which, upon acceptance of the Investor's subscription at a Closing, the Company
shall agree to provide certain registration rights under the Securities Act, the
rules and regulations promulgated thereunder and applicable state securities
laws to the Investor.
D. The capitalized terms used herein and not otherwise defined have the
meanings given them in Article IX hereof.
In consideration of the premises and the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and the Investor hereby agree as
follows:
ARTICLE I
PURCHASE AND SALE OF SECURITIES
PURCHASE AND SALE OF SECURITIES. AT A CLOSING, SUBJECT TO THE TERMS OF THIS
AGREEMENT AND THE SATISFACTION OR WAIVER OF THE CONDITIONS SET FORTH IN ARTICLES
VI AND VII HEREOF, THE COMPANY WILL ISSUE AND SELL TO THE INVESTOR WHOSE
SUBSCRIPTION IS THEN BEING ACCEPTED BY THE COMPANY, AND THE INVESTOR WILL (ON A
SEVERAL AND NOT A JOINT BASIS) PURCHASE FROM THE COMPANY, THE AGGREGATE NUMBER
OF SHARES OF COMMON STOCK SET FORTH BENEATH THE INVESTOR'S NAME ON THE SIGNATURE
PAGE HEREOF. THE COMPANY HAS THE RIGHT TO REJECT ANY SUBSCRIPTION FOR
SECURITIES, IN WHOLE OR IN PART FOR ANY REASON AND AT ANY TIME PRIOR TO A
CLOSING, NOTWITHSTANDING RECEIPT BY THE INVESTOR OR ANY OTHER INVESTOR OF NOTICE
OF ACCEPTANCE OF A SUBSCRIPTION. IN THE EVENT OF A REJECTION OF A SUBSCRIPTION
BY THE INVESTOR, ANY PAYMENT OF THE PURCHASE PRICE MADE BY THE INVESTOR SHALL BE
RETURNED TO THE INVESTOR WITHOUT INTEREST OR DEDUCTION AND THIS AGREEMENT WITH
RESPECT TO THE INVESTOR SHALL HAVE NO FORCE OR EFFECT.
PAYMENT. UPON EXECUTION AND DELIVERY OF THIS AGREEMENT, THE INVESTOR SHALL PAY
THE PURCHASE PRICE FOR THE AGGREGATE NUMBER OF SECURITIES SET FORTH BENEATH ITS
NAME ON THE SIGNATURE PAGE HEREOF AT THE PER SHARE PRICE AS DESCRIBED ABOVE, BY
WIRE TRANSFER OF IMMEDIATELY AVAILABLE FUNDS IN ACCORDANCE WITH THE COMPANY'S
WRITTEN WIRE INSTRUCTIONS, AND IN THE EVENT THE SUBSCRIPTION BY THE INVESTOR FOR
SECURITIES IS ACCEPTED AND THERE IS A CLOSING, THE PURCHASE PRICE PAID BY THE
INVESTOR SHALL BECOME NON-REFUNDABLE AND THE CERTIFICATES REPRESENTING
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THE SECURITIES SO PURCHASED WILL BE DELIVERED TO THE INVESTOR. THE COMPANY MAY
CLOSE ON ANY SUBSCRIPTION IN WHOLE OR IN PART IN THE ABSENCE OF ANY OTHER
SUBSCRIPTIONS BEING ACCEPTED IN WHOLE OR IN PART.
CLOSING. SUBJECT TO THE SATISFACTION OR WAIVER OF THE CONDITIONS SET FORTH IN
ARTICLES VI AND VII HEREOF, THE INITIAL CLOSING WILL TAKE PLACE AT 10:00 A.M.
NEW YORK TIME ON FEBRUARY 14, 2000 OR AT ANOTHER DATE OR TIME AGREED UPON BY THE
PARTIES TO THIS AGREEMENT (THE "INITIAL CLOSING DATE"). AFTER THE INITIAL
CLOSING, SUBSEQUENT CLOSINGS WITH RESPECT TO THE SALE OF ADDITIONAL SECURITIES
MAY TAKE PLACE AT ANY TIME PRIOR TO THE TERMINATION DATE (EACH SUCH CLOSING,
TOGETHER WITH THE INITIAL CLOSING BEING REFERRED TO AS A "CLOSING" AND THE DATE
OF A CLOSING, A "CLOSING DATE") EACH CLOSING WILL BE HELD AT THE OFFICES OF
XXXXXX & XXXXXXX LLP, 000 XXXX XXXXXX, XXX XXXX, XXX XXXX XX AT SUCH OTHER PLACE
AS THE PARTIES AGREE.
ARTICLE II
INVESTOR'S REPRESENTATIONS AND WARRANTIES
The Investor represents and warrants to the Company, severally and
solely with respect to itself and its purchase hereunder and not with respect to
any other investor of Securities, that:
2.1. INVESTMENT PURPOSE. THE INVESTOR IS PURCHASING THE SECURITIES FOR
ITS OWN ACCOUNT AND NOT WITH A PRESENT VIEW TOWARD THE PUBLIC SALE OR
DISTRIBUTION THEREOF, EXCEPT PURSUANT TO SALES REGISTERED OR EXEMPTED FROM
REGISTRATION UNDER THE SECURITIES ACT; PROVIDED, HOWEVER, THAT BY MAKING THE
REPRESENTATION HEREIN, THE INVESTOR DOES NOT AGREE TO HOLD ANY OF THE SECURITIES
FOR ANY MINIMUM OR OTHER SPECIFIC TERM AND RESERVES THE RIGHT TO DISPOSE OF THE
SECURITIES AT ANY TIME IN ACCORDANCE WITH OR PURSUANT TO A REGISTRATION
STATEMENT OR AN EXEMPTION UNDER THE SECURITIES ACT.
2.2. ACCREDITED INVESTOR STATUS. THE INVESTOR IS AN "ACCREDITED
INVESTOR" AS DEFINED IN RULE 501(A) OF REGULATION D.
2.3. RELIANCE ON EXEMPTIONS. THE INVESTOR UNDERSTANDS THAT THE
SECURITIES ARE BEING OFFERED AND SOLD TO IT IN RELIANCE UPON SPECIFIC EXEMPTIONS
FROM THE REGISTRATION REQUIREMENTS OF UNITED STATES FEDERAL AND STATE SECURITIES
LAWS AND THAT THE COMPANY IS RELYING 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 EXEMPTIONS AND THE ELIGIBILITY OF THE
INVESTOR TO ACQUIRE THE SECURITIES.
2.4. INFORMATION. THE INVESTOR AND ITS ADVISORS, IF ANY, HAVE BEEN
FURNISHED WITH ALL MATERIALS RELATING TO THE BUSINESS, FINANCES AND OPERATIONS
OF THE COMPANY, AND MATERIALS RELATING TO THE OFFER AND SALE OF THE SECURITIES,
THAT HAVE BEEN REQUESTED BY THE INVESTOR OR ITS ADVISORS, IF ANY. THE INVESTOR
AND ITS ADVISORS, IF ANY, HAVE BEEN AFFORDED THE OPPORTUNITY TO ASK QUESTIONS OF
THE COMPANY. NEITHER SUCH INQUIRIES NOR ANY OTHER DUE DILIGENCE INVESTIGATION
CONDUCTED BY INVESTOR OR ANY OF ITS ADVISORS OR REPRESENTATIVES MODIFY, AMEND OR
AFFECT THE INVESTOR'S RIGHT TO RELY ON THE COMPANY'S REPRESENTATIONS AND
WARRANTIES CONTAINED IN ARTICLE III BELOW. THE INVESTOR ACKNOWLEDGES AND
UNDERSTANDS THAT ITS INVESTMENT IN THE SECURITIES INVOLVES A SIGNIFICANT DEGREE
OF RISK, INCLUDING THE RISKS REFLECTED IN THE SEC DOCUMENTS, COPIES OF WHICH
HAVE BEEN MADE AVAILABLE TO THE INVESTOR.
2.5. GOVERNMENTAL REVIEW. THE INVESTOR UNDERSTANDS THAT NO UNITED
STATES FEDERAL OR STATE AGENCY OR ANY OTHER GOVERNMENT OR GOVERNMENTAL AGENCY
HAS PASSED UPON OR MADE ANY RECOMMENDATION OR ENDORSEMENT OF THE SECURITIES OR
AN INVESTMENT THEREIN.
2.6. TRANSFER OR RESALE. THE INVESTOR UNDERSTANDS THAT:
(a) except as provided in the Registration Rights Agreement,
the Securities have not been and are not being registered under the Securities
Act or any applicable state securities laws and, consequently, the Investor may
have to bear the risk of owning the Securities for an indefinite period of time
because the Securities may not be transferred unless (i) the resale of the
Securities is registered pursuant to an effective registration statement under
the Securities Act; (ii) the Investor has delivered to the Company an opinion of
counsel (in form, substance and scope customary for opinions of counsel in
comparable transactions) to the effect that the Securities to be sold or
transferred may be sold or transferred pursuant to an exemption from such
registration; (iii) the Securities are sold or transferred pursuant to Rule 144
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or (iv) the Securities are sold or transferred to an affiliate (as defined in
Rule 144) of the Investor;
(b) any sale of the Securities made in reliance on Rule 144
may be made only in accordance with the terms of Rule 144 and, if Rule 144 is
not applicable, any resale of the Securities under circumstances in which the
seller (or the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the Securities Act) may require
compliance with some other exemption under the Securities Act or the rules and
regulations of the SEC thereunder; and
(c) except as set forth in the Registration Rights Agreement,
neither the Company nor any other person is under any obligation to register the
Securities under the Securities Act or any state securities laws or to comply
with the terms and conditions of any exemption thereunder.
2.7. LEGENDS. THE INVESTOR UNDERSTANDS THAT UNTIL SUCH TIME AS PROVIDED
IN SECTION 5.2, THE CERTIFICATES REPRESENTING THE SECURITIES WILL BEAR A
RESTRICTIVE LEGEND IN SUBSTANTIALLY THE FOLLOWING FORM (AND A STOP-TRANSFER
ORDER MAY BE PLACED AGAINST TRANSFER OF THE CERTIFICATES FOR SUCH SECURITIES):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES. THE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR
ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER APPLICABLE SECURITIES LAWS, OR UNLESS OFFERED, SOLD OR
TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THOSE LAWS.
2.8. AUTHORIZATION; ENFORCEMENT. THIS AGREEMENT AND THE REGISTRATION
RIGHTS AGREEMENT HAVE BEEN DULY AND VALIDLY AUTHORIZED, EXECUTED AND DELIVERED
ON BEHALF OF THE INVESTOR AND ARE VALID AND BINDING AGREEMENTS OF THE INVESTOR
ENFORCEABLE IN ACCORDANCE WITH THEIR TERMS, SUBJECT TO THE EFFECT OF ANY
APPLICABLE BANKRUPTCY, INSOLVENCY, REORGANIZATION, MORATORIUM OR SIMILAR LAWS
AFFECTING THE RIGHTS OF CREDITORS GENERALLY AND THE APPLICATION OF GENERAL
PRINCIPLES OF EQUITY.
2.9. RESIDENCY. THE INVESTOR IS A RESIDENT OF THE JURISDICTION SET
FORTH IMMEDIATELY BELOW THE INVESTOR'S NAME ON THE SIGNATURE PAGES HERETO.
2.10. NO BROKER OR PLACEMENT AGENT. THE INVESTOR HAS TAKEN NO ACTION,
WHICH WOULD GIVE RISE TO ANY CLAIM BY ANY PERSON FOR BROKERAGE COMMISSIONS,
FINDER'S FEES OR SIMILAR PAYMENTS RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Investor that:
3.1. ORGANIZATION AND QUALIFICATION. THE COMPANY IS DULY INCORPORATED,
VALIDLY EXISTING AND IN GOOD STANDING UNDER THE LAWS OF THE JURISDICTION IN
WHICH IT IS INCORPORATED, WITH FULL POWER AND AUTHORITY (CORPORATE AND OTHER) TO
OWN, LEASE, USE AND OPERATE ITS PROPERTIES AND TO CARRY ON ITS BUSINESS AS AND
WHERE NOW OWNED, LEASED, USED, OPERATED AND CONDUCTED. THE COMPANY IS DULY
QUALIFIED TO DO BUSINESS AND IS IN GOOD STANDING IN EVERY JURISDICTION IN WHICH
THE NATURE OF THE BUSINESS CONDUCTED BY IT MAKES SUCH QUALIFICATION NECESSARY,
EXCEPT WHERE THE FAILURE TO BE SO QUALIFIED OR IN GOOD STANDING WOULD NOT HAVE A
MATERIAL ADVERSE EFFECT.
3.2. AUTHORIZATION; ENFORCEMENT. (A) THE COMPANY HAS ALL REQUISITE
CORPORATE POWER AND AUTHORITY TO ENTER INTO AND TO PERFORM ITS OBLIGATIONS UNDER
THIS AGREEMENT AND THE REGISTRATION RIGHTS AGREEMENT, TO CONSUMMATE THE
TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY AND TO ISSUE THE SECURITIES IN
ACCORDANCE WITH THE TERMS HEREOF AND THEREOF; (B) THE EXECUTION, DELIVERY AND
PERFORMANCE OF THIS AGREEMENT AND THE REGISTRATION RIGHTS AGREEMENT BY THE
COMPANY AND THE CONSUMMATION BY IT OF THE TRANSACTIONS CONTEMPLATED HEREBY AND
THEREBY (INCLUDING WITHOUT LIMITATION THE ISSUANCE OF THE SECURITIES) HAVE BEEN
DULY AUTHORIZED BY THE COMPANY'S BOARD OF DIRECTORS AND NO FURTHER CONSENT OR
AUTHORIZATION OF THE COMPANY, ITS BOARD OR DIRECTORS, OR ITS SHAREHOLDERS IS
REQUIRED; (C) THIS AGREEMENT AND THE REGISTRATION RIGHTS AGREEMENT HAVE BEEN
DULY EXECUTED BY THE COMPANY; AND (D) EACH OF THIS AGREEMENT AND THE
REGISTRATION RIGHTS AGREEMENT CONSTITUTES A LEGAL, VALID AND BINDING OBLIGATION
OF THE COMPANY ENFORCEABLE AGAINST THE COMPANY IN ACCORDANCE WITH ITS TERMS,
SUBJECT TO THE EFFECT OF ANY APPLICABLE BANKRUPTCY, INSOLVENCY, REORGANIZATION,
OR
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MORATORIUM OR SIMILAR LAWS AFFECTING THE RIGHTS OF CREDITORS GENERALLY AND
THE APPLICATION OF GENERAL PRINCIPLES OF EQUITY.
3.3. CAPITALIZATION. AS OF FEBRUARY 9, 2000, THE AUTHORIZED CAPITAL
STOCK OF THE COMPANY CONSISTS OF (A) 50,000,000 SHARES OF COMMON STOCK, $.01 PAR
VALUE PER SHARE, OF WHICH 13,974,238 SHARES ARE ISSUED AND OUTSTANDING,
1,400,000 SHARES ARE RESERVED FOR ISSUANCE UNDER THE COMPANY'S STOCK OPTION
PLANS, AND 4,007,902 ARE RESERVED FOR ISSUANCE PURSUANT TO SECURITIES
EXERCISABLE FOR, OR CONVERTIBLE INTO OR EXCHANGEABLE FOR SHARES OF COMMON STOCK;
(B) 5,000,000 SHARES OF PREFERRED STOCK, PAR VALUE $0.01 PER SHARE, OF WHICH NO
SHARES ARE DESIGNATED AND NONE ARE ISSUED AND OUTSTANDING. ALL OF SUCH
OUTSTANDING SHARES OF CAPITAL STOCK ARE, OR UPON ISSUANCE WILL BE, DULY
AUTHORIZED, VALIDLY ISSUED, FULLY PAID AND NONASSESSABLE. NO SHARES OF CAPITAL
STOCK OF THE COMPANY, INCLUDING THE SECURITIES ISSUABLE PURSUANT TO THIS
AGREEMENT, ARE SUBJECT TO PREEMPTIVE RIGHTS OR ANY OTHER SIMILAR RIGHTS OF THE
STOCKHOLDERS OF THE COMPANY OR ANY LIENS OR ENCUMBRANCES IMPOSED THROUGH THE
ACTIONS OR FAILURE TO ACT OF THE COMPANY. EXCEPT AS DISCLOSED IN SCHEDULE 3.3
AND EXCEPT FOR THE TRANSACTIONS CONTEMPLATED HEREBY, (I) THERE ARE NO
OUTSTANDING OPTIONS, WARRANTS, SCRIP, RIGHTS TO SUBSCRIBE FOR, PUTS, CALLS,
RIGHTS OF FIRST REFUSAL, AGREEMENTS, UNDERSTANDINGS, CLAIMS OR OTHER COMMITMENTS
OR RIGHTS OF ANY CHARACTER WHATSOEVER RELATING TO, OR SECURITIES OR RIGHTS
CONVERTIBLE INTO, EXERCISABLE FOR, OR EXCHANGEABLE FOR ANY SHARES OF CAPITAL
STOCK OF THE COMPANY, OR ARRANGEMENTS BY WHICH THE COMPANY IS OR MAY BECOME
BOUND TO ISSUE ADDITIONAL SHARES OF CAPITAL STOCK OF THE COMPANY; (II) THERE ARE
NO AGREEMENTS OR ARRANGEMENTS (OTHER THAN THE REGISTRATION RIGHTS AGREEMENT)
UNDER WHICH THE COMPANY IS OBLIGATED TO REGISTER THE SALE OF ANY OF ITS
SECURITIES UNDER THE SECURITIES ACT; AND (III) THERE ARE NO ANTI-DILUTION OR
PRICE ADJUSTMENT PROVISIONS CONTAINED IN ANY SECURITY ISSUED BY THE COMPANY (OR
IN ANY AGREEMENT PROVIDING RIGHTS TO SECURITY HOLDERS) THAT WILL BE TRIGGERED BY
THE ISSUANCE OF THE SECURITIES.
3.4. ISSUANCE OF SECURITIES. THE SECURITIES ARE DULY AUTHORIZED AND,
UPON ISSUANCE IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT, WILL BE VALIDLY
ISSUED, FULLY PAID AND NON-ASSESSABLE, FREE FROM ALL TAXES, LIENS, CLAIMS,
ENCUMBRANCES AND CHARGES WITH RESPECT TO THE ISSUE THEREOF, WILL NOT BE SUBJECT
TO PREEMPTIVE RIGHTS OR OTHER SIMILAR RIGHTS OF STOCKHOLDERS OF THE COMPANY, AND
WILL NOT IMPOSE PERSONAL LIABILITY ON THE HOLDERS THEREOF.
3.5. NO CONFLICTS; NO VIOLATION.
(a) The execution, delivery and performance of this Agreement
and the Registration Rights Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby (including, without
limitation, the issuance of the Securities) will not (i) conflict with or result
in a violation of any provision of the Certificate of Incorporation or By-laws
or (ii) violate or conflict with, or result in a breach of any provision of, or
constitute a default (or an event which with notice or lapse of time or both
could become a default) under, or give to others any rights of termination,
amendment (including without limitation, the triggering of any anti-dilution
provision), acceleration or cancellation of, any agreement, indenture, or
instrument to which the Company is a party, or (iii) result in a violation of
any law, rule, regulation, order, judgment or decree (including U.S. federal and
state securities laws and regulations and regulations of any self-regulatory
organizations to which the Company or its securities are subject) applicable to
the Company or by which any property or asset of the Company is bound or
affected (except for such conflicts, breaches, defaults, terminations,
amendments, accelerations, cancellations and violations as would not,
individually or in the aggregate, have a Material Adverse Effect).
(b) The Company is not in violation of its Certificate of
Incorporation, By-laws or other organizational documents and the Company is not
in default (and no event has occurred which with notice or lapse of time or both
could put the Company in default) under any agreement, indenture or instrument
to which the Company is a party or by which any property or assets of the
Company is bound or affected, except for possible defaults as would not,
individually or in the aggregate, have a Material Adverse Effect.
(c) Except as specifically contemplated by this Agreement and
as required under the Securities Act and any applicable state securities laws or
any listing agreement with any securities exchange or automated quotation
system, the Company is not required to obtain any consent, authorization or
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order of, or make any filing or registration with, any court or governmental
agency or any regulatory or self regulatory agency in order for it to execute,
deliver or perform any of its obligations under this Agreement or the
Registration Rights Agreement, in each case in accordance with the terms hereof
or thereof, or to issue and sell the Securities in accordance with the terms
hereof. All consents, authorizations, orders, filings and registrations which
the Company is required to obtain pursuant to the preceding sentence shall be
obtained or effected as required.
3.6. SEC DOCUMENTS, FINANCIAL STATEMENTS. SINCE JUNE 30, 1999, THE
COMPANY ( OR ITS PREDECESSOR, HEALTHCORE MEDICAL SOLUTIONS, INC.) HAS TIMELY
FILED ALL REPORTS, SCHEDULES, FORMS, STATEMENTS AND OTHER DOCUMENTS REQUIRED TO
BE FILED BY IT WITH THE SEC PURSUANT TO THE REPORTING REQUIREMENTS OF THE
EXCHANGE ACT (ALL OF THE FOREGOING FILED PRIOR TO THE DATE HEREOF AND ALL
EXHIBITS INCLUDED THEREIN AND FINANCIAL STATEMENTS AND SCHEDULES THERETO AND
DOCUMENTS (OTHER THAN EXHIBITS) INCORPORATED BY REFERENCE THEREIN, BEING
HEREINAFTER REFERRED TO HEREIN AS THE "SEC DOCUMENTS"). THE COMPANY HAS
DELIVERED TO THE INVESTOR, OR THE INVESTOR HAS HAD ACCESS TO, TRUE AND COMPLETE
COPIES OF THE SEC DOCUMENTS, EXCEPT FOR SUCH EXHIBITS AND INCORPORATED
DOCUMENTS. AS OF THEIR RESPECTIVE DATES, THE SEC DOCUMENTS COMPLIED IN ALL
MATERIAL RESPECTS WITH THE REQUIREMENTS OF THE EXCHANGE ACT OR THE SECURITIES
ACT, AS THE CASE MAY BE, AND THE RULES AND REGULATIONS OF THE SEC PROMULGATED
THEREUNDER APPLICABLE TO THE SEC DOCUMENTS, AND NONE OF THE SEC DOCUMENTS, AT
THE TIME THEY WERE FILED WITH THE SEC, 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. AS OF THEIR RESPECTIVE
DATES, THE FINANCIAL STATEMENTS OF THE COMPANY INCLUDED IN THE SEC DOCUMENTS
COMPLIED AS TO FORM IN ALL MATERIAL RESPECTS WITH APPLICABLE ACCOUNTING
REQUIREMENTS AND THE PUBLISHED RULES AND REGULATIONS OF THE SEC WITH RESPECT
THERETO. SUCH FINANCIAL STATEMENTS HAVE BEEN PREPARED IN ACCORDANCE WITH U.S.
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, CONSISTENTLY APPLIED, DURING THE
PERIODS INVOLVED (EXCEPT (I) AS MAY BE OTHERWISE INDICATED IN SUCH FINANCIAL
STATEMENTS OR THE NOTES THERETO, OR (II) IN THE CASE OF UNAUDITED INTERIM
STATEMENTS, TO THE EXTENT THEY MAY NOT INCLUDE FOOTNOTES OR MAY BE CONDENSED OR
SUMMARY STATEMENTS) AND FAIRLY PRESENT IN ALL MATERIAL RESPECTS THE FINANCIAL
POSITION OF THE COMPANY AS OF THE DATES THEREOF AND THE RESULTS OF ITS
OPERATIONS AND CASH FLOWS FOR THE PERIODS THEN ENDED (SUBJECT, IN THE CASE OF
UNAUDITED STATEMENTS, TO NORMAL YEAR-END AUDIT ADJUSTMENTS). EXCEPT AS SET FORTH
IN THE FINANCIAL STATEMENTS INCLUDED IN THE SEC DOCUMENTS OR IN THE COMPANY'S
PRESS RELEASES OR IN SCHEDULE 3.6, THE COMPANY HAS NO LIABILITIES, CONTINGENT OR
OTHERWISE, OTHER THAN LIABILITIES INCURRED IN THE ORDINARY COURSE OF BUSINESS
SUBSEQUENT TO JUNE 30, 1999, AND LIABILITIES OF THE TYPE NOT REQUIRED UNDER
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES TO BE REFLECTED IN SUCH FINANCIAL
STATEMENTS. SUCH LIABILITIES INCURRED SUBSEQUENT TO JUNE 30, 1999, ARE NOT, IN
THE AGGREGATE, MATERIAL TO THE FINANCIAL CONDITION OR OPERATING RESULTS OF THE
COMPANY.
3.7. ABSENCE OF CERTAIN CHANGES. EXCEPT AS DISCLOSED IN THE SEC
DOCUMENTS, IN THE COMPANY'S PRESS RELEASES OR IN SCHEDULE 3.6, SINCE JUNE 30,
1999, THERE HAS BEEN NO MATERIAL ADVERSE CHANGE IN THE ASSETS, LIABILITIES,
BUSINESS, PROPERTIES, OPERATIONS, FINANCIAL CONDITION, OR RESULTS OF OPERATIONS
OF THE COMPANY.
3.8. ABSENCE OF LITIGATION. THERE IS NO ACTION, SUIT, CLAIM,
PROCEEDING, INQUIRY OR INVESTIGATION BEFORE OR BY ANY COURT, PUBLIC BOARD,
GOVERNMENT AGENCY, SELF-REGULATORY ORGANIZATION OR BODY PENDING OR, TO THE
KNOWLEDGE OF THE COMPANY, THREATENED AGAINST OR AFFECTING THE COMPANY OR ANY OF
ITS OFFICERS OR DIRECTORS ACTING AS SUCH THAT COULD, INDIVIDUALLY OR IN THE
AGGREGATE, HAVE A MATERIAL ADVERSE EFFECT.
3.9. TAX STATUS. THE COMPANY HAS MADE OR FILED ALL FEDERAL, STATE AND
FOREIGN INCOME AND ALL OTHER TAX RETURNS, REPORTS AND DECLARATIONS REQUIRED BY
ANY JURISDICTION TO WHICH IT IS SUBJECT (UNLESS AND ONLY TO THE EXTENT THAT THE
COMPANY HAS SET ASIDE ON ITS BOOKS PROVISIONS REASONABLY ADEQUATE FOR THE
PAYMENT OF ALL UNPAID AND UNREPORTED TAXES) AND HAS PAID ALL TAXES AND OTHER
GOVERNMENTAL ASSESSMENTS AND CHARGES THAT ARE MATERIAL IN AMOUNT, SHOWN OR
DETERMINED TO BE DUE ON SUCH RETURNS, REPORTS AND DECLARATIONS, EXCEPT THOSE
BEING CONTESTED IN GOOD FAITH, AND HAS SET ASIDE ON ITS BOOKS PROVISIONS
REASONABLY ADEQUATE FOR THE PAYMENT OF ALL TAXES FOR PERIODS SUBSEQUENT TO THE
PERIODS TO WHICH SUCH RETURNS, REPORTS OR DECLARATIONS APPLY. TO THE KNOWLEDGE
OF THE COMPANY, THERE ARE NO UNPAID TAXES IN ANY MATERIAL AMOUNT CLAIMED TO BE
DUE BY THE TAXING AUTHORITY OF ANY JURISDICTION, AND THE OFFICERS OF THE COMPANY
KNOW OF NO BASIS FOR ANY SUCH CLAIM. THE COMPANY HAS NOT EXECUTED A WAIVER WITH
RESPECT TO THE STATUTE OF LIMITATIONS RELATING TO THE ASSESSMENT OR COLLECTION
OF ANY FOREIGN, FEDERAL, STATE OR LOCAL TAX. NONE OF THE COMPANY'S TAX RETURNS
IS PRESENTLY BEING AUDITED BY ANY TAXING AUTHORITY.
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3.10. NO BROKERS. THE COMPANY HAS TAKEN NO ACTION, WHICH WOULD GIVE
RISE TO ANY CLAIM BY ANY PERSON FOR BROKERAGE COMMISSIONS, FINDER'S FEES OR
SIMILAR PAYMENTS RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
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ARTICLE IV
COVENANTS
4.1. BEST EFFORTS. EACH PARTY WILL USE ITS BEST EFFORTS TO SATISFY IN A
TIMELY FASHION EACH OF THE CONDITIONS TO BE SATISFIED BY IT UNDER ARTICLES VI
AND VII OF THIS AGREEMENT
4.2. FORM D; BLUE SKY LAWS. THE COMPANY WILL FILE A NOTICE OF SALE OF
SECURITIES ON FORM D WITH RESPECT TO THE SECURITIES, AS REQUIRED UNDER
REGULATION D, AND TO PROVIDE A COPY THEREOF TO THE INVESTOR PROMPTLY AFTER SUCH
FILING. THE COMPANY WILL TAKE SUCH ACTION AS IT REASONABLY DETERMINES TO BE
NECESSARY TO QUALIFY THE SECURITIES FOR SALE ON SUCH CLOSING DATE TO THE
INVESTORS UNDER THIS AGREEMENT UNDER APPLICABLE SECURITIES (OR "BLUE SKY") LAWS
OF THE STATES OF THE UNITED STATES (OR TO OBTAIN AN EXEMPTION FROM SUCH
QUALIFICATION), AND WILL PROVIDE EVIDENCE OF ANY SUCH ACTION SO TAKEN TO THE
INVESTORS ON OR PRIOR TO SUCH CLOSING DATE. THE COMPANY WILL FILE WITH THE SEC A
CURRENT REPORT ON FORM 8-K DISCLOSING THIS AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED HEREBY WITHIN 10 BUSINESS DAYS AFTER THE INITIAL CLOSING DATE AND
EACH ADDITIONAL CLOSING DATE.
4.3. REPORTING STATUS; ELIGIBILITY TO USE FORM S-3. THE COMPANY'S
COMMON STOCK IS REGISTERED UNDER SECTION 12 OF THE EXCHANGE ACT. THROUGHOUT THE
REGISTRATION PERIOD (AS DEFINED IN THE REGISTRATION RIGHTS AGREEMENT), THE
COMPANY WILL TIMELY FILE ALL REPORTS, SCHEDULES, FORMS, STATEMENTS AND OTHER
DOCUMENTS REQUIRED TO BE FILED BY IT WITH THE SEC UNDER THE REPORTING
REQUIREMENTS OF THE EXCHANGE ACT. THE COMPANY CURRENTLY MEETS THE "REGISTRANT
ELIGIBILITY" REQUIREMENTS SET FORTH IN THE GENERAL INSTRUCTIONS TO FORM S-3.
4.4. EXPENSES. THE COMPANY AND THE INVESTOR IS LIABLE FOR, AND WILL
PAY, ITS OWN EXPENSES INCURRED IN CONNECTION WITH THE NEGOTIATION, PREPARATION,
EXECUTION AND DELIVERY OF THIS AGREEMENT AND THE OTHER AGREEMENTS TO BE EXECUTED
IN CONNECTION HEREWITH, INCLUDING, WITHOUT LIMITATION, ATTORNEYS' AND
CONSULTANTS' FEES AND EXPENSES.
4.5. FINANCIAL INFORMATION. THE FINANCIAL STATEMENTS OF THE COMPANY
WILL BE PREPARED IN ACCORDANCE WITH UNITED STATES GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES, CONSISTENTLY APPLIED, AND WILL FAIRLY PRESENT IN ALL MATERIAL
RESPECTS THE CONSOLIDATED FINANCIAL POSITION OF THE COMPANY AND RESULTS OF ITS
OPERATIONS AND CASH FLOWS FOR THE PERIODS THEN ENDED (SUBJECT, IN THE CASE OF
UNAUDITED STATEMENTS, TO NORMAL YEAR-END AUDIT ADJUSTMENTS).
4.6. LISTING. ON OR BEFORE THE TENTH BUSINESS DAY AFTER THE DATE OF
THIS AGREEMENT, THE COMPANY WILL SECURE THE LISTING OF THE SECURITIES UPON EACH
NATIONAL SECURITIES EXCHANGE OR AUTOMATED QUOTATION SYSTEM, IF ANY, UPON WHICH
SHARES OF COMMON STOCK ARE THEN LISTED (SUBJECT TO OFFICIAL NOTICE OF ISSUANCE)
AND, SO LONG AS ANY INVESTOR OWNS ANY OF THE SECURITIES, WILL MAINTAIN SUCH
LISTING OF THE SECURITIES. THE COMPANY WILL USE ITS BEST EFFORTS TO OBTAIN AND,
SO LONG AS ANY INVESTOR OWNS ANY OF THE SECURITIES, MAINTAIN THE LISTING AND
TRADING OF ITS COMMON STOCK ON NASDAQ, THE AMERICAN STOCK EXCHANGE OR THE NEW
YORK STOCK EXCHANGE AND WILL COMPLY IN ALL RESPECTS WITH THE COMPANY'S
REPORTING, FILING AND OTHER OBLIGATIONS UNDER THE BYLAWS OR RULES OF THE
NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. AND SUCH EXCHANGES, AS
APPLICABLE. UNTIL THE INVESTOR TRANSFERS, ASSIGNS OR SELLS ALL OF THE SECURITIES
OWNED BY IT, THE COMPANY WILL PROMPTLY PROVIDE TO THE INVESTOR COPIES OF ANY
NOTICES IT RECEIVES REGARDING THE CONTINUED ELIGIBILITY OF THE COMMON STOCK FOR
LISTING ON NASDAQ OR OTHER PRINCIPAL EXCHANGE OR QUOTATION SYSTEM ON WHICH THE
COMMON STOCK IS LISTED OR TRADED.
4.7. SALES BY INVESTORS. THE INVESTOR WILL SELL ANY SECURITIES SOLD BY
IT IN COMPLIANCE WITH APPLICABLE PROSPECTUS DELIVERY REQUIREMENTS, IF ANY, OR
OTHERWISE IN COMPLIANCE WITH THE REQUIREMENTS FOR AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER.
NO INVESTOR WILL MAKE ANY SALE, TRANSFER OR OTHER DISPOSITION OF THE SECURITIES
IN VIOLATION OF FEDERAL OR STATE SECURITIES LAWS.
4.8. DEBT REPAYMENT RESTRICTIONS. FOR A PERIOD OF 120 DAYS FOLLOWING
THE INITIAL CLOSING DATE, THE COMPANY SHALL NOT REPAY ANY AFFILIATE ANY PORTION
OF THE PRINCIPAL DUE UNDER ANY INDEBTEDNESS OWED TO SUCH AFFILIATE WITHOUT THE
CONSENT OF THE INVESTORS; PROVIDED, HOWEVER, THAT SUCH REPAYMENT SHALL BE
PERMITTED (A) FROM THE PROCEEDS RECEIVED BY THE COMPANY UPON EXERCISE OF
OUTSTANDING WARRANTS OR (B) TO THE EXTENT OF THE COMPANY'S POSITIVE EBITDA FOR
ANY CALENDAR QUARTER COMMENCING WITH THE THREE MONTHS ENDING MARCH 31, 2000.
EBITDA SHALL MEAN EARNINGS BEFORE INCOME TAXES, DEPRECIATION AND AMORTIZATION.
E-11
ARTICLE V
TRANSFER AGENT INSTRUCTIONS; REMOVAL OF LEGENDS
5.1. ISSUANCE OF CERTIFICATES. THE COMPANY WILL INSTRUCT ITS TRANSFER
AGENT TO ISSUE CERTIFICATES, REGISTERED IN THE NAME OF THE INVESTOR OR ITS
NOMINEE, FOR THE SECURITIES. ALL SUCH CERTIFICATES WILL BEAR THE RESTRICTIVE
LEGEND DESCRIBED IN SECTION 2.7, EXCEPT AS OTHERWISE SPECIFIED IN THIS ARTICLE
V. THE COMPANY WILL NOT GIVE TO ITS TRANSFER AGENT ANY INSTRUCTION OTHER THAN AS
DESCRIBED IN THIS ARTICLE V AND STOP TRANSFER INSTRUCTIONS TO GIVE EFFECT TO
SECTION 2.7 HEREOF (PRIOR TO REGISTRATION OF THE SECURITIES UNDER THE SECURITIES
ACT). NOTHING IN THIS SECTION WILL AFFECT IN ANY WAY THE INVESTOR'S OBLIGATIONS
AND AGREEMENT SET FORTH IN SECTION 2.7 HEREOF TO COMPLY WITH ALL APPLICABLE
PROSPECTUS DELIVERY REQUIREMENTS, IF ANY, UPON RESALE OF THE SECURITIES.
5.2. UNRESTRICTED SECURITIES. IF, UNLESS OTHERWISE REQUIRED BY
APPLICABLE STATE SECURITIES LAWS, (A) THE SECURITIES REPRESENTED BY A
CERTIFICATE HAVE BEEN REGISTERED UNDER AN EFFECTIVE REGISTRATION STATEMENT FILED
UNDER THE SECURITIES ACT AND SOLD UNDER SUCH REGISTRATION STATEMENT, (B) SUCH
HOLDER PROVIDES THE COMPANY AND THE TRANSFER AGENT WITH REASONABLE ASSURANCES
THAT SUCH SECURITIES CAN BE SOLD UNDER RULE 144, OR (C) THE SECURITIES
REPRESENTED BY A CERTIFICATE CAN BE SOLD WITHOUT RESTRICTION AS TO THE NUMBER OF
SECURITIES SOLD UNDER RULE 144(K), THE COMPANY WILL PERMIT THE TRANSFER OF THE
APPLICABLE SECURITIES, AND THE TRANSFER AGENT WILL ISSUE ONE OR MORE
CERTIFICATES, FREE FROM ANY RESTRICTIVE LEGEND, IN SUCH NAME AND IN SUCH
DENOMINATIONS AS SPECIFIED BY SUCH HOLDER. NOTWITHSTANDING ANYTHING HEREIN TO
THE CONTRARY, THE SECURITIES MAY BE PLEDGED AS COLLATERAL IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT OR OTHER LENDING ARRANGEMENT; PROVIDED THAT SUCH PLEDGE
WILL NOT ALTER THE PROVISIONS OF THIS ARTICLE V WITH RESPECT TO THE REMOVAL OF
RESTRICTIVE LEGENDS.
E-12
ARTICLE VI
CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL
The obligation of the Company to issue and sell the Securities to the
Investor at a Closing is subject to the satisfaction by the Investor, on or
before the Closing Date of such Closing, of each of the following conditions.
These conditions are for the Company's sole benefit and may be waived by the
Company at any time in its sole discretion:
6.1. THE INVESTOR WILL HAVE EXECUTED THIS AGREEMENT AND THE REGISTRATION RIGHTS
AGREEMENT AND WILL HAVE DELIVERED THOSE AGREEMENTS TO THE COMPANY.
6.2. THE INVESTOR WILL HAVE DELIVERED THE PURCHASE PRICE FOR THE SECURITIES TO
THE COMPANY IN ACCORDANCE WITH THIS AGREEMENT.
6.3. THE REPRESENTATIONS AND WARRANTIES OF THE INVESTOR MUST BE TRUE AND CORRECT
IN ALL MATERIAL RESPECTS AS OF SUCH CLOSING DATE AS THOUGH MADE AT THAT TIME
(EXCEPT FOR REPRESENTATIONS AND WARRANTIES THAT SPEAK AS OF A SPECIFIC DATE,
WHICH REPRESENTATIONS AND WARRANTIES MUST BE CORRECT AS OF SUCH DATE), AND THE
INVESTOR WILL HAVE PERFORMED AND COMPLIED IN ALL MATERIAL RESPECTS WITH THE
COVENANTS AND CONDITIONS REQUIRED BY THIS AGREEMENT TO BE PERFORMED OR COMPLIED
WITH BY THE INVESTOR AT OR PRIOR TO SUCH CLOSING.
6.4. NO STATUTE, RULE, REGULATION, EXECUTIVE ORDER, DECREE, RULING OR INJUNCTION
WILL HAVE BEEN ENACTED, ENTERED, PROMULGATED OR ENDORSED BY OR IN ANY COURT OR
GOVERNMENTAL AUTHORITY OF COMPETENT JURISDICTION OR ANY SELF-REGULATORY
ORGANIZATION HAVING AUTHORITY OVER THE MATTERS CONTEMPLATED HEREBY WHICH
PROHIBITS THE CONSUMMATION OF ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT.
ARTICLE VII
CONDITIONS TO THE INVESTOR'S OBLIGATION TO PURCHASE
The obligation of the Investor hereunder to purchase the Securities
from the Company at a Closing is subject to the satisfaction, on or before the
Closing Date of such Closing, of each of the following conditions. These
conditions are for the Investor's respective benefit and may be waived by any
Investor at any time in its sole discretion:
7.1. THE COMPANY WILL HAVE EXECUTED THIS AGREEMENT AND THE REGISTRATION RIGHTS
AGREEMENT AND WILL HAVE DELIVERED THOSE AGREEMENTS TO THE INVESTOR
7.2. THE COMPANY WILL HAVE DELIVERED TO THE INVESTORS DULY EXECUTED CERTIFICATES
REPRESENTING THE SECURITIES IN THE AMOUNTS SPECIFIED IN SECTION 1.1 HEREOF.
7.3. THE REPRESENTATIONS AND WARRANTIES OF THE COMPANY MUST BE TRUE AND CORRECT
IN ALL MATERIAL RESPECTS AS OF SUCH CLOSING AS THOUGH MADE AT THAT TIME (EXCEPT
FOR REPRESENTATIONS AND WARRANTIES THAT SPEAK AS OF A SPECIFIC DATE, WHICH
REPRESENTATIONS AND WARRANTIES MUST BE TRUE AND CORRECT AS OF SUCH DATE) AND THE
COMPANY MUST HAVE PERFORMED AND COMPLIED IN ALL MATERIAL RESPECTS WITH THE
COVENANTS AND CONDITIONS REQUIRED BY THIS AGREEMENT TO BE PERFORMED OR COMPLIED
WITH BY THE COMPANY AT OR PRIOR TO SUCH CLOSING. THE INVESTOR MUST HAVE RECEIVED
A CERTIFICATE OR CERTIFICATES DATED AS OF THE CLOSING DATE AND EXECUTED BY THE
CHIEF EXECUTIVE OFFICER OR THE CHIEF FINANCIAL OFFICER OF THE COMPANY CERTIFYING
AS TO THE MATTERS IN CONTAINED IN THIS SECTION 7.3 AND AS TO SUCH OTHER MATTERS
AS MAY BE REASONABLY REQUESTED BY THE INVESTOR, INCLUDING, BUT NOT LIMITED TO,
THE COMPANY'S CERTIFICATE OF INCORPORATION, BY-LAWS, BOARD OF DIRECTORS'
RESOLUTIONS RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY AND THE INCUMBENCY
AND SIGNATURES OF EACH OF THE OFFICERS OF THE COMPANY WHO MAY EXECUTE ON BEHALF
OF THE COMPANY ANY DOCUMENT DELIVERED AT SUCH CLOSING.
7.4. NO LITIGATION, STATUTE, RULE, REGULATION, EXECUTIVE ORDER, DECREE, RULING
OR INJUNCTION WILL HAVE BEEN ENACTED, ENTERED, PROMULGATED OR ENDORSED BY OR IN
ANY COURT OR GOVERNMENTAL AUTHORITY OF COMPETENT JURISDICTION OR ANY
SELF-REGULATORY ORGANIZATION HAVING AUTHORITY OVER THE MATTERS CONTEMPLATED
HEREBY WHICH PROHIBITS THE CONSUMMATION OF ANY OF THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT.
7.5. TRADING AND LISTING OF THE COMMON STOCK ON NASDAQ MUST NOT HAVE BEEN
SUSPENDED BY THE SEC OR NASDAQ.
7.6. THE IRREVOCABLE TRANSFER AGENT INSTRUCTIONS, IN FORM AND SUBSTANCE
SATISFACTORY TO THE INVESTORS, WILL HAVE BEEN DELIVERED TO THE COMPANY'S
TRANSFER AGENT AND ACKNOWLEDGED IN WRITING BY SUCH TRANSFER AGENT.
E-13
ARTICLE VIII
INDEMNIFICATION
In consideration of the Investor's execution and delivery of this
Agreement and its acquisition of the Securities hereunder, and in addition to
all of the Company's other obligations under this Agreement and the Registration
Rights Agreement, the Company will defend, protect, indemnify and hold harmless
the Investor and each other holder of the Securities and all of their
stockholders, officers, directors, employees and direct or indirect investors
and any of the foregoing person's agents or other representatives (including,
without limitation, those retained in connection with the transactions
contemplated by this Agreement) (collectively, the "INDEMNITEES") from and
against any and all actions, causes of action, suits, claims, losses, costs,
penalties, fees, liabilities and damages, and expenses in connection therewith
(regardless of whether any such Indemnitee is a party to the action for which
indemnification hereunder is sought), and including reasonable attorneys' fees
and disbursements (the "INDEMNIFIED LIABILITIES"), incurred by an Indemnitee as
a result of, or arising out of, or relating to (a) any breach of any
representation or warranty made by the Company herein or in any other
certificate, instrument or document contemplated hereby or thereby, (b) any
breach of any covenant, agreement or obligation of the Company contained herein
or in any other certificate, instrument or document contemplated hereby or
thereby or (c) any cause of action, suit or claim brought or made against such
Indemnitee and arising out of or resulting from the execution, delivery,
performance, breach or enforcement of this Agreement or the Registration Rights
Agreement by the Company. To the extent that the foregoing undertaking by the
Company is unenforceable for any reason, the Company will make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities that is permissible under applicable law.
ARTICLE IX
DEFINITIONS
9.1. "CLOSING" MEANS A CLOSING OF THE PURCHASE AND SALE OF THE SECURITIES
UNDER THIS AGREEMENT.
9.2. "CLOSING DATE" HAS THE MEANING SET FORTH IN SECTION 1.3.
9.3. "COMMON STOCK" MEANS THE COMMON STOCK, PAR VALUE $.01 PER SHARE, OF
THE COMPANY.
9.4. "COMPANY" MEANS XXXXXX.XXX, INC.
9.5. "EXCHANGE ACT" MEANS THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
9.6. "INDEMNIFIED LIABILITIES" HAS THE MEANING SET FORTH IN ARTICLE VIII.
9.7. "INDEMNITEES" HAS THE MEANING SET FORTH IN ARTICLE VIII.
9.8. "INVESTORS" MEANS THE INVESTORS WHOSE NAMES ARE SET FORTH ON THE
SIGNATURE PAGES OF THIS AGREEMENT, AND THEIR PERMITTED TRANSFEREES.
9.9. "MATERIAL ADVERSE EFFECT" MEANS A MATERIAL ADVERSE EFFECT ON (A) THE
BUSINESS, OPERATIONS, ASSETS, PROSPECTS OR FINANCIAL CONDITION OF THE
COMPANY OR
(B) THE ABILITY OF THE COMPANY TO PERFORM ITS OBLIGATIONS PURSUANT TO THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR UNDER THE AGREEMENTS OR
INSTRUMENTS TO BE ENTERED INTO OR FILED IN CONNECTION HEREWITH.
9.10. "NASDAQ" MEANS THE NASDAQ SMALLCAP MARKET.
9.11. "REGISTRATION RIGHTS AGREEMENT" MEANS THE REGISTRATION RIGHTS AGREEMENT,
DATED AS OF THE DATE OF THIS AGREEMENT AND AMONG THE PARTIES TO THIS AGREEMENT,
IN THE FORM ATTACHED HERETO AS EXHIBIT A.
9.12. "REGULATION D" MEANS REGULATION D AS PROMULGATED UNDER BY THE SEC UNDER
THE SECURITIES ACT.
9.13. "RULE 144" AND "RULE 144(K)" MEAN RULE 144 AND RULE 144(K), RESPECTIVELY,
PROMULGATED UNDER THE SECURITIES ACT, OR ANY SUCCESSOR RULE.
9.14. "SEC" MEANS THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.
9.15. "SEC DOCUMENTS" HAS THE MEANING SET FORTH IN SECTION 3.8.
9.16. "SECURITIES" MEANS THE COMMON STOCK SOLD PURSUANT TO THIS AGREEMENT.
9.17. "SECURITIES ACT" MEANS THE SECURITIES ACT OF 1933, AS AMENDED, AND THE
RULES AND REGULATIONS THEREUNDER, OR ANY SIMILAR SUCCESSOR STATUTE.
ARTICLE X
GOVERNING LAW; MISCELLANEOUS
10.1. GOVERNING LAW; JURISDICTION. THIS AGREEMENT WILL BE GOVERNED BY AND
INTERPRETED IN
E-14
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICT OF LAWS. THE PARTIES HERETO HEREBY SUBMIT TO THE
EXCLUSIVE JURISDICTION OF THE UNITED STATES FEDERAL AND STATE COURTS LOCATED IN
THE STATE OF NEW YORK WITH RESPECT TO ANY DISPUTE ARISING UNDER THIS AGREEMENT,
THE AGREEMENTS ENTERED INTO IN CONNECTION HEREWITH OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
10.2. COUNTERPARTS; SIGNATURES BY FACSIMILE. THIS AGREEMENT MAY BE EXECUTED IN
TWO OR MORE COUNTERPARTS, ALL OF WHICH ARE CONSIDERED ONE AND THE SAME AGREEMENT
AND WILL BECOME EFFECTIVE WHEN COUNTERPARTS HAVE BEEN SIGNED BY EACH PARTY AND
DELIVERED TO THE OTHER PARTIES. THIS AGREEMENT, ONCE EXECUTED BY A PARTY, MAY BE
DELIVERED TO THE OTHER PARTIES HERETO BY FACSIMILE TRANSMISSION OF A COPY OF
THIS AGREEMENT BEARING THE SIGNATURE OF THE PARTY SO DELIVERING THIS AGREEMENT.
10.3. HEADINGS. THE HEADINGS OF THIS AGREEMENT ARE FOR CONVENIENCE OF REFERENCE
ONLY, ARE NOT PART OF THIS AGREEMENT AND DO NOT AFFECT ITS INTERPRETATION.
10.4. SEVERABILITY. IF ANY PROVISION OF THIS AGREEMENT IS INVALID OR
UNENFORCEABLE UNDER ANY APPLICABLE STATUTE OR RULE OF LAW, THEN SUCH PROVISION
WILL BE DEEMED MODIFIED IN ORDER TO CONFORM WITH SUCH STATUTE OR RULE OF LAW.
Any provision hereof that may prove invalid or unenforceable under any
law will not affect the validity or enforceability of any other provision
hereof.
10.5. ENTIRE AGREEMENT; AMENDMENTS. THIS AGREEMENT AND THE REGISTRATION RIGHTS
AGREEMENT (INCLUDING ALL SCHEDULES AND EXHIBITS THERETO) CONSTITUTE THE ENTIRE
AGREEMENT AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND
THEREOF. THERE ARE NO RESTRICTIONS, PROMISES, WARRANTIES OR UNDERTAKINGS, OTHER
THAN THOSE SET FORTH OR REFERRED TO HEREIN OR THEREIN. THIS AGREEMENT SUPERSEDES
ALL PRIOR AGREEMENTS AND UNDERSTANDINGS AMONG THE PARTIES HERETO WITH RESPECT TO
THE SUBJECT MATTER HEREOF. NO PROVISION OF THIS AGREEMENT MAY BE WAIVED OR
AMENDED OTHER THAN BY AN INSTRUMENT IN WRITING SIGNED BY THE PARTY TO BE CHARGED
WITH ENFORCEMENT.
NOTICES. ANY NOTICES REQUIRED OR PERMITTED TO BE GIVEN UNDER THE TERMS
OF THIS AGREEMENT MUST BE SENT BY CERTIFIED OR REGISTERED MAIL (RETURN
RECEIPT REQUESTED) OR DELIVERED PERSONALLY OR BY COURIER (INCLUDING A
RECOGNIZED OVERNIGHT DELIVERY SERVICE) OR BY FACSIMILE AND WILL BE
EFFECTIVE FIVE DAYS AFTER BEING PLACED IN THE MAIL, IF MAILED BY
REGULAR U.S. MAIL, OR UPON RECEIPT, IF DELIVERED PERSONALLY, BY COURIER
(INCLUDING A RECOGNIZED OVERNIGHT DELIVERY SERVICE) OR BY FACSIMILE, IN
EACH CASE ADDRESSED TO A PARTY. THE ADDRESSES FOR SUCH COMMUNICATIONS
ARE:
IF TO THE COMPANY: XXXXXX.XXX, INC.
000 Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: Chief Executive Officer
FACSIMILE: (000) 000-0000
With a copy to: Xxxxxx & Xxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
If to the Investor: To the address set forth immediately below the
Investor's name on the signature pages hereto. Each party will provide written
notice to the other parties of any change in its address.
10.6. SUCCESSORS AND ASSIGNS. THIS AGREEMENT IS BINDING UPON AND INURES TO THE
BENEFIT OF THE PARTIES AND THEIR SUCCESSORS AND ASSIGNS. THE COMPANY WILL NOT
ASSIGN THIS AGREEMENT OR ANY RIGHTS OR OBLIGATIONS HEREUNDER WITHOUT THE PRIOR
WRITTEN CONSENT OF THE INVESTORS, AND NO INVESTOR MAY ASSIGN THIS AGREEMENT OR
ANY RIGHTS OR OBLIGATIONS HEREUNDER WITHOUT THE PRIOR WRITTEN CONSENT OF THE
COMPANY. NOTWITHSTANDING THE FOREGOING, THE INVESTOR MAY ASSIGN ALL OR PART OF
ITS RIGHTS AND OBLIGATIONS HEREUNDER TO ANY OF ITS "AFFILIATES," AS THAT TERM IS
DEFINED UNDER THE SECURITIES ACT, WITHOUT THE CONSENT OF THE COMPANY SO LONG AS
THE AFFILIATE IS AN ACCREDITED INVESTOR (WITHIN THE MEANING OF REGULATION D
UNDER THE SECURITIES ACT) AND AGREES IN WRITING TO BE BOUND BY THIS AGREEMENT.
THIS PROVISION DOES NOT LIMIT THE INVESTOR'S RIGHT TO TRANSFER THE SECURITIES
PURSUANT TO THE TERMS OF THIS AGREEMENT OR TO ASSIGN THE INVESTOR'S RIGHTS
HEREUNDER TO ANY SUCH TRANSFEREE PURSUANT TO THE TERMS OF THIS AGREEMENT.
10.7. THIRD PARTY BENEFICIARIES. THIS AGREEMENT IS INTENDED FOR THE
BENEFIT OF THE PARTIES HERETO
E-15
AND THEIR RESPECTIVE PERMITTED SUCCESSORS AND ASSIGNS, AND IS NOT FOR THE
BENEFIT OF, NOR MAY ANY PROVISION HEREOF BE ENFORCED BY, ANY OTHER PERSON.
10.8. SURVIVAL. THE REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
AGREEMENTS AND COVENANTS SET FORTH HEREIN WILL SURVIVE THE CLOSING HEREUNDER.
THE COMPANY MAKES NO REPRESENTATIONS OR WARRANTIES IN ANY ORAL OR WRITTEN
INFORMATION PROVIDED TO INVESTORS, OTHER THAN THE REPRESENTATIONS AND WARRANTIES
INCLUDED HEREIN.
10.9. FURTHER ASSURANCES. EACH PARTY WILL DO AND PERFORM, OR CAUSE TO BE DONE
AND PERFORMED, ALL SUCH FURTHER ACTS AND THINGS, AND WILL EXECUTE AND DELIVER
ALL OTHER AGREEMENTS, CERTIFICATES, INSTRUMENTS AND DOCUMENTS, AS ANOTHER 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.
10.10. NO STRICT CONSTRUCTION. THE LANGUAGE USED IN THIS AGREEMENT IS 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.
10.11. EQUITABLE RELIEF. THE COMPANY RECOGNIZES THAT, IF IT FAILS TO PERFORM OR
DISCHARGE ANY OF ITS OBLIGATIONS UNDER THIS AGREEMENT, ANY REMEDY AT LAW MAY
PROVE TO BE INADEQUATE RELIEF TO THE INVESTORS. THE COMPANY THEREFORE AGREES
THAT THE INVESTORS ARE ENTITLED TO TEMPORARY AND PERMANENT INJUNCTIVE RELIEF IN
ANY SUCH CASE WITHOUT THE NECESSITY OF PROVING ACTUAL DAMAGES.
[The remainder of this page has been intentionally left blank]
E-16
IN WITNESS WHEREOF, the undersigned Investors and the Company have
caused this Agreement to be duly executed as of the date first above written.
COMPANY:
XXXXXX.XXX, INC.
By: _______________________
Name:
Title:
[SIGNATURES CONTINUED ON NEXT PAGE]
E-17
INVESTOR:
--------------------------
[NAME OF INVESTOR]
By: _______________________
Name:
Its: Chairman
AGGREGATE SUBSCRIPTION AMOUNT: $__________
Number of Shares of Common Stock: ___________
RESIDENCE:
ADDRESS:
----------------------------------
----------------------------------
----------------------------------
E-18
Exhibit 4.11
SCHEDULE 3.3
CAPITALIZATION
As of February 9, 2000, there were 13,974,238 shares of common stock issued and
outstanding, 1,400,000 shares reserved for issuance under the Company's stock
options plans, and 4,007,902 are reserved for issuance pursuant to outstanding
warrants or unit purchase options:
Registered Warrants IPO *** 3,174,000
Registered Xxxx Xxxxx 142,000
Unregistered Levitin 15,000
** X. X. Xxxxx *** 176,000
** X. X. Xxxxx *** 176,000
Xxxxxxx 12,500
* Jesup & Xxxxxx 200,000
* Jesup & Xxxxxx 112,402
--------------
Total Warrants 4,007,902
==============
* Have piggyback registration rights.
** Have demand and piggyback registration rights.
***Subject to adjustment as a result of a financing at below fair market value,
such as this private placement offering.
E-19
EXHIBIT 4.11
SCHEDULE 3.6
------------
ABSENCE OF CHANGES
In addition to the disclosures made in the Company's SEC Documents and press
releases, investors should be aware of the following risks:
HISTORICAL AND FUTURE LOSSES OF THE COMPANY: Since its inception, the business
of Adatom, Inc. ("AI") has incurred significant losses, and as of September 30,
1999, had an approximate accumulated deficit of $3,846,000. As a result, there
is an uncertainty about the Company's ability to continue as a going concern.
Additionally, because AI was a development stage company prior to consummation
of the merger, the acquisition of AI through the consummation of the Merger may
result in the surviving Company being classified as a development stage company.
The Company is expected to incur substantial operating losses for the
foreseeable future due to a high level of expenditures in the areas of
operations, research and development and other investments designed to enhance
the Company's products and services and establish Internet capabilities. The
Company intends to substantially increase marketing and promotional spending in
an effort to increase revenues. However, there can be no assurance that the
Company will generate sufficient revenues to ever achieve profitability or
otherwise sustain its profitability in the future.
NEED FOR ADDITIONAL FINANCING: The Company is dependent upon raising additional
capital to finance its current operations and future plans for expansion. The
Company does not currently have on hand working capital sufficient to sustain
its business without additional capital.
Between December 1999 and February 2000 Mr. Xxxxxxx Xxxxxx the President made
short-term non interest-bearing loans in the amount of $200,000 and $500,000 to
the Company for working capital purposes. On February 10, 2000 the Company
agreed to repay the working capital loans of $500,000 from Xx. Xxxxxx with
common stock of the Company based on the closing market price of the common
stock on that date of $2.906 per share, accordingly the Company will issue
172,057 shares of common stock to Xx. Xxxxxx. Further the $200,000 loan from Xx.
Xxxxxx remains outstanding.
The Company estimates that it will require a minimum of $8,000,000 to implement
its business plan and sustain its sales and marketing activities through
December 31, 2000. Additional funds will be needed, particularly in light of the
existence of a number of well financed competitors and the possibility that
there may be a shift in the type of internet services that are developed and
ultimately receive consumer acceptance. Adequate funds for these and other
purposes on terms acceptable to the Company, whether through additional equity
financing, debt financing or other sources, may not be available when needed or
may result in significant dilution to existing stockholders. Furthermore, the
Company's lack of tangible assets to pledge as security for debt financing could
prevent the Company from obtaining bank or similar debt financing. Failure to
obtain adequate financing would have a material adverse effect on the Company
and could result in cessation of the Company's business.
The Company believes that the net proceeds of this Offering, together with its
available cash, cash equivalents, short-term investments and investment income
will be sufficient to meets its operating expenses and capital expenditures
through the next six months. The Company anticipates that it will have to raise
additional capital during 2000. The Company can give no assurance that it will
be able to raise such capital or that the terms thereof will be favorable to the
Company.
E-20
