EXHIBIT 99.2
INKSURE TECHNOLOGIES INC.
SUBSCRIPTION AGREEMENT ("Subscription Agreement") made as of this __
day of ________ 2002 between InkSure Technologies Inc., a corporation organized
under the laws of the State of Delaware with offices at 0 Xxxx Xxxxxxxx Xxxxxx,
Xxxxxxx, Xxx Xxxxxx 00000 (the "Company"), and the undersigned (the
"Subscriber").
WHEREAS, the Company desires to issue a minimum of 50 (the "Minimum
Offering") and a maximum of 60 (the "Maximum Offering") units ("Units") in a
private placement (the "Offering") on the terms and conditions set forth herein
and in the Confidential Private Placement Memorandum dated May 17, 2002
(together with all the Exhibits thereto, the "Memorandum"), and the Subscriber
desires to acquire the number of Units set forth on the signature page hereof;
WHEREAS, each Unit shall consist of: (i) 62,112 shares (the "Unit
Shares") of the Company's common stock, $.01 par value (the "Common Stock"), and
(ii) five-year warrants (the "Warrants") to purchase 21,739 shares of Common
Stock (the "Warrant Shares") at an exercise price of $2.17 per share;
WHEREAS, the Warrants shall be governed by a warrant agreement among
the Company and each of the subscribers in the Offering, the form of which is
attached as Exhibit C to the Memorandum (the "Warrant Agreement");
WHEREAS, the Unit Shares purchased by the Subscriber pursuant to this
Subscription Agreement and the Warrant Shares are entitled to registration
rights on the terms set forth in this Subscription Agreement;
WHEREAS, Commonwealth Associates, L.P. is acting as placement agent
(the "Placement Agent") for the Offering pursuant to a placement agency
agreement (the "Agency Agreement") by and between the Company and the Placement
Agent dated May 17, 2002;
WHEREAS, consummation of the Offering is subject to the Company
entering into a definitive agreement (the "Merger Agreement") to merge (the
"Merger") with Lil Marc, Inc. ("Lil Marc"), a publicly traded company that
currently has no operations and that trades on the over-the-counter market with
quotations published on the NASD OTC Bulletin Board; and
WHEREAS, the Subscriber is delivering simultaneously herewith a
completed confidential investor questionnaire (the "Questionnaire").
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereto do hereby agree as follows:
I. SUBSCRIPTION FOR UNITS AND REPRESENTATIONS BY AND COVENANTS
OF SUBSCRIBER
1.1 Subscription for Units. Subject to the terms and
conditions hereinafter set forth, the Subscriber hereby subscribes for and
agrees to purchase from the Company such number of Units as is set forth upon
the signature page hereof at a price equal to $100,000 per Unit and the Company
agrees to sell such Units to the Subscriber for said purchase price, subject to
the Company's right, in its sole discretion, and the Placement Agent's right, in
its sole discretion, to (a) sell to the Subscriber such lesser number of Units
as they may, in their sole discretion, deem necessary or desirable without any
prior notice to or further consent by the Subscriber or (b) reject this
subscription, in whole or in part, at any time prior to a Closing (as defined
below) with respect to this subscription. The purchase price is payable by
certified or bank check made payable to "First Republic Trust Company as escrow
agent for InkSure Technologies Inc." or by wire transfer of funds,
contemporaneously with the execution and delivery of this Subscription
Agreement. First Republic Trust Company (the "Escrow Agent") shall act as such
in accordance with the terms and conditions of an escrow agreement to be entered
into by and among the Placement Agent, the Company and the Escrow Agent. The
Common Stock and Warrants shall be delivered by the Company within five (5)
business days following the consummation of the Offering as set forth in Article
III hereof.
1.2 The Merger. The Subscriber acknowledges that the Offering
is subject to the execution of the Merger Agreement. The terms of the Merger
Agreement require the approval of the Merger by the stockholders of the Company.
In furtherance of the foregoing, the Subscriber hereby irrevocably constitutes
and appoints Xx. Xxx Xxxxxx (or such other designee of the Placement Agent) as
its proxy and attorney-in-fact with full power of substitution, and acknowledges
that the constitution and appointment of such proxy and attorney-in-fact are
coupled with an interest and are irrevocable, to vote such Subscriber's Units
Shares and Warrant Shares, if any, in favor of the Merger and execute and
deliver any written consents of stockholders, ballots and any other documents
necessary or desirable to approve the Merger and carry out the transactions
contemplated by the Merger Agreement. Accordingly, the Subscriber will not have
the appraisal rights set forth in Section 262 of the Delaware General
Corporation Law, a copy of which is attached hereto as Annex A, with respect to
the Merger. For the purposes of this Subscription Agreement, references to
"Common Stock" and "Warrants" shall be deemed, if applicable, to also refer to
the common stock and warrants of Lil Marc received in exchanged for the Common
Stock and Warrants of the Company pursuant to the Merger, unless the context
requires otherwise.
1.3 Reliance on Exemptions. The Subscriber acknowledges that
the Offering has not been reviewed by the United States Securities and Exchange
Commission (the "SEC") or any state agency because it is intended to be a
nonpublic offering exempt from the registration requirements of the Securities
Act of 1933, as amended (the "1933 Act"), and state securities laws. The
Subscriber understands that the Company is relying in part upon the truth and
accuracy of, and the Subscriber's compliance with, the representations,
warranties, agreements, acknowledgments and understandings of the Subscriber set
forth herein in order to determine the availability of such exemptions and the
eligibility of the Subscriber to acquire the Units.
1.4 Investment Purpose. The Subscriber represents that the
Unit Shares and Warrants comprising the Units are being purchased for its own
account, for investment purposes only and not for distribution or resale to
others in contravention of the registration requirements of the 1933 Act. The
Subscriber agrees that it will not sell or otherwise transfer the Unit Shares,
the Warrants or the Warrant Shares (collectively, the "Securities") unless they
are registered under the 1933 Act or unless an exemption from such registration
is available.
1.5 Accredited Investor. The Subscriber represents and
warrants that it is an "accredited investor" as such term is defined in Rule 501
of Regulation D promulgated under the 1933 Act, as indicated by its responses to
the Questionnaire, and that it is able to bear the economic risk of any
investment in the Units. The Subscriber further represents and warrants that the
information furnished in the Questionnaire is accurate and complete in all
material respects.
1.6 Risk of Investment. The Subscriber recognizes that the
purchase of Units involves a high degree of risk in that: (a) an investment in
the Company is highly speculative and only investors who can afford the loss of
their entire investment should consider investing in the Company and the
Securities; (b) transferability of the Securities is limited; and (c) the
Company may require substantial additional funds to operate its business and
there can be no assurance that the Maximum Offering will be completed, that the
Merger will be consummated or that any other funds will be available to the
Company, in addition to all of the other risks set forth in the Company's
Memorandum.
1.7 Prior Investment Experience. The Subscriber acknowledges
that he has prior investment experience, including investment in non-listed and
non-registered securities and that he recognizes the highly speculative nature
of this investment.
1.8 Information. The Subscriber acknowledges careful review
of: (a) the Memorandum, (b) this Subscription Agreement, and (c) all exhibits,
schedules and appendices which are part of the aforementioned documents
(collectively, the "Offering Documents"), and hereby represents that: (i) the
Subscriber has been furnished by the Company during the course of this
transaction with all information regarding the Company which it has requested;
(ii) that the Subscriber has been afforded the opportunity to ask questions of
and receive answers from duly authorized officers of the Company concerning the
terms and conditions of the Offering, and any additional information which it
has requested; and (iii) the Subscriber, if it has requested, has been given the
opportunity by the Placement Agent to review the Agency Agreement.
1.9 No Representations. The Subscriber hereby represents that,
except as expressly set forth in the Offering Documents, no representations or
warranties have been made to the Subscriber by the Company or any agent,
employee or affiliate of the Company, including the Placement Agent, and in
entering into this transaction the Subscriber is not relying on any information
other than that contained in the Offering Documents and the results of
independent investigation by the Subscriber.
1.10 Tax Consequences. The Subscriber acknowledges that the
Offering may involve tax consequences and that the contents of the Offering
Documents do not contain tax advice or information. The Subscriber acknowledges
that he must retain his own professional advisors to evaluate the tax and other
consequences of an investment in the Units.
1.11 Transfer or Resale. The Subscriber acknowledges that
there is no public market for any of the Company's securities. The Subscriber
further acknowledges that there is a limited public market for the securities of
Lil Marc and there can be no assurance that a more active public market for the
securities of Lil Marc will ever develop. The Subscriber understands that Rule
144 (the "Rule") promulgated under the 1933 Act requires, among other
conditions, a one-year holding period prior to the resale (in limited amounts)
of securities acquired in a non-public offering without having to satisfy the
registration requirements under the 1933 Act. The Subscriber understands that
the Company makes no representation or warranty regarding its fulfillment in the
future of any reporting requirements under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), or its dissemination to the public of any
current financial or other information concerning the Company, as is required by
the Rule as one of the conditions of its availability. The Subscriber
understands and hereby acknowledges that the Company is under no obligation to
register the securities comprising the Units under the 1933 Act, with the
exception of certain registration rights covering the resale of the Unit Shares
purchased by the Subscriber pursuant to this Subscription Agreement and the
Warrant Shares set forth in Article IV herein. The Subscriber consents that the
Company may, if it desires, permit the transfer of the Securities out of the
Subscriber's name only when the Subscriber's request for transfer is accompanied
by an opinion of counsel reasonably satisfactory to the Company that neither the
sale nor the proposed transfer results in a violation of the 1933 Act or any
applicable state "blue sky" laws.
1.12 Lock-up. The Subscriber understands and agrees that the
Unit Shares, the Warrants and the Warrant Shares are subject to a lock-up for a
period of at least six months following the closing of the Merger. In
furtherance of the foregoing, the Subscriber agrees that he, she, or it shall
not, directly or indirectly, offer, sell, pledge, contract to sell, transfer the
economic risk of ownership in, make any short sale, grant any option to purchase
or otherwise dispose of the Unit Shares, the Warrants or the Warrant Shares
purchased pursuant to this Subscription Agreement, or enter into any Hedging
Transaction (as defined below) relating to the foregoing securities (each of the
foregoing referred to as a "Disposition") for a period of at least six months
after the closing of the Merger (the "Lock-Up Period") unless the Company
otherwise agrees in writing. The foregoing restriction is expressly intended to
preclude the Subscriber from engaging in any Hedging Transaction or other
transaction which is designed to or reasonably expected to lead to or result in
a Disposition during the Lock-Up Period even if the securities would be disposed
of by someone other than the undersigned. In order to enforce the foregoing
covenants, the Subscriber hereby agrees that the Company may impose stop
transfer instructions with respect to the securities held by the Subscriber
until the end of such period.
1.13 No Hedging Transactions. The Subscriber hereby agrees not
to engage in any Hedging Transaction until such time as the Unit Shares,
Warrants and Warrant Shares, as applicable, have been registered for resale
under the 1933 Act or may otherwise be sold in the public market without an
effective registration statement under the 1933 Act. "Hedging Transaction" means
any short sale (whether or not against the box) or any purchase, sale or grant
of any right (including, without limitation, any put or call option) with
respect to any security (other than a broad-based market basket or index) that
includes, relates to or derives any significant part of its value from the
Company's Common Stock or any rights, warrants, options or other securities that
are convertible into, or exercisable or exchangeable for, Common Stock.
1.14 Placement Agent. The Subscriber agrees that neither the
Placement Agent nor any of its directors, officers, employees or agents shall be
liable to any Subscriber for any action taken or omitted to be taken by it in
connection therewith, except for willful misconduct or gross negligence.
1.15 Legends. The Subscriber understands that the certificates
representing the Securities, until such time as they have been registered under
the 1933 Act, shall bear a restrictive legend in substantially the following
form (and a stop-transfer order may be placed against transfer of such
certificates or other instruments):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE
OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
(I) IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS, OR (B) AN
OPINION OF COUNSEL, IN A REASONABLY ACCEPTABLE
FORM, THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT OR APPLICABLE STATE SECURITIES LAWS,
OR (II) UNLESS SOLD PURSUANT TO RULE 144 UNDER
SAID ACT.
The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Registrable Security (as
defined herein) upon which it is stamped, if (a) such Registrable Securities are
being sold pursuant to a registration statement under the 1933 Act, (b) such
holder delivers to the Company an opinion of counsel, in a reasonably acceptable
form, to the Company that a disposition of the Registrable Securities is being
made pursuant to an exemption from such registration, or (c) such holder
provides the Company with reasonable assurance that a disposition of the
Registrable Securities may be made pursuant to the Rule without any restriction
as to the number of securities acquired as of a particular date that can then be
immediately sold.
1.16 No General Solicitation. The Subscriber represents that
the Subscriber was not induced to invest by any form of general solicitation or
general advertising including, but not limited to, the following: (a) any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over the news or radio; and
(b) any seminar or meeting whose attendees were invited by any general
solicitation or advertising.
1.17 Validity; Enforcement. If the Subscriber is a
corporation, partnership, trust or other entity, the Subscriber represents and
warrants that: (a) it is authorized and otherwise duly qualified to purchase and
hold the Units; and (b) that this Subscription Agreement has been duly and
validly authorized, executed and delivered and constitutes the legal, binding
and enforceable obligation of the undersigned. If the Subscriber is an
individual, the Subscriber represents and warrants that this Subscription
Agreement has been duly and validly executed and delivered and constitutes the
legal, binding and enforceable obligation of the undersigned.
1.18 Address. The Subscriber hereby represents that the
address of the Subscriber furnished by the Subscriber at the end of this
Subscription Agreement is the undersigned's principal residence if the
Subscriber is an individual or its principal business address if it is a
corporation or other entity.
1.19 Foreign Subscriber. If the Subscriber is not a United
States person, such Subscriber hereby represents that it has satisfied itself as
to the full observance of the laws of its jurisdiction in connection with any
invitation to subscribe for the Securities comprising the Units or any use of
this Subscription Agreement, including: (a) the legal requirements within its
jurisdiction for the purchase of the Units; (b) any foreign exchange
restrictions applicable to such purchase; (c) any governmental or other consents
that may need to be obtained; and (d) the income tax and other tax consequences,
if any, that may be relevant to the purchase, holding, redemption, sale or
transfer of the Securities comprising the Units. Such Subscriber's subscription
and payment for, and his or her continued beneficial ownership of the
Securities, will not violate any applicable securities or other laws of the
Subscriber's jurisdiction.
1.20 NASD Member. The Subscriber acknowledges that if it is a
Registered Representative of a NASD member firm, the Subscriber must give such
firm notice required by the NASD's Rules of Fair Practice, receipt of which must
be acknowledged by such firm on the signature page hereof.
1.21 Increase in Maximum Offering. The Subscriber acknowledges
that the Maximum Offering may be increased by up to 15 Units to a total of 75
Units ($7,500,000) without notice to Subscribers.
1.22 Entity Representation. If the undersigned Subscriber is a
partnership, corporation, trust or other entity, such partnership, corporation,
trust or other entity further represents and warrants that: (a) it was not
formed for the purpose of investing in the Company; (b) it is authorized and
otherwise duly qualified to purchase and hold the Units; and (c) that this
Subscription Agreement has been duly and validly authorized, executed and
delivered and constitutes the legal, binding and enforceable obligation of the
undersigned.
II. REPRESENTATIONS BY THE COMPANY
The Company represents and warrants to the Subscriber, except as set
forth in the disclosure schedules attached hereto:
2.1 Organization and Qualification. The Company is duly
organized and validly existing in good standing under the laws of the
jurisdiction in which it is organized, and has the requisite corporate power and
authority to own its properties and to carry on its business as now being
conducted. The Company is duly qualified as a foreign corporation to do business
and is in good standing in every jurisdiction in which its ownership of property
or the nature of the business conducted by it makes such qualification
necessary, except to the extent that the failure to be so qualified or be in
good standing would not have a Material Adverse Effect. As used in this
Subscription Agreement, "Material Adverse Effect" means any material adverse
effect on the business, properties, assets, operations, results of operations,
financial condition or prospects of the Company, or on the transactions
contemplated hereby, or by the other Offering Documents or the agreements and
instruments to be entered into in connection herewith or therewith, or on the
authority or ability of the Company to perform its obligations under the
Offering Documents. The Company does not have any operating subsidiaries other
than as set forth in the Offering Documents and all of the non-operating
subsidiaries are wholly-owned by the Company.
2.2 Authorization; Enforcement; Validity. The Company has the
requisite corporate power and authority to enter into and perform its
obligations under this Subscription Agreement and the other Offering Documents,
to perform its obligations under the Offering Documents, and to issue the
Securities in accordance with the terms of the Offering Documents. When executed
and delivered by the Company, the execution and delivery of the Offering
Documents by the Company and the consummation by the Company of the transactions
contemplated by the Offering Documents, including without limitation the
issuance of the Securities, will have been duly authorized by the Company's
board of directors and no further consent or authorization is required from the
Company's board of directors or its stockholders.
2.3 Issuance of Securities. The issuance, sale and delivery of
the Securities have been duly authorized by all requisite corporate action by
the Company and, upon issuance in accordance with the Offering Documents, shall
be (a) duly authorized, validly issued, fully paid and non-assessable, and (b)
free from all taxes, liens and charges with respect to the issue thereof.
2.4 No Conflicts. The execution, delivery and performance of
the Offering Documents by the Company and the consummation by the Company of the
transactions contemplated therein, will not (a) result in a violation of the
Company's Certificate of Incorporation, any certificate of designations,
preferences and rights of any outstanding series of preferred stock of the
Company, or the Company's bylaws, (b) conflict with, or constitute a default or
an event which 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 of, any material agreement, lease, license or instrument, or (c)
result in a violation of any law, rule, regulation, order, judgment or decree
(including Federal and state securities laws and regulations and the rules and
regulations of The Nasdaq Stock Market, Inc.) applicable to the Company or by
which any property or asset of the Company is bound or affected.
2.5 Financial Statements. As of their respective dates, the
financial statements of the Company included in the Offering Documents complied
as to form in all material respects with applicable accounting requirements.
Such financial statements have been prepared in accordance with generally
accepted accounting principles, consistently applied, during the periods
involved (except (a) as may be otherwise indicated in such financial statements
or the notes thereto, or (b) in the case of unaudited interim statements, to the
extent they may exclude 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 that will not be material).
2.6 Absence of Litigation. Except as set forth in the Offering
Documents, there is no action, suit, proceeding, inquiry or investigation before
or by any court, public board, government agency, self-regulatory organization
or body, or arbitrator pending or, to the knowledge of the Company, threatened
against the Company or any of the Company's officers or directors in their
capacities as such which would have a Material Adverse Effect.
2.7 Securities Law Compliance. The offer, offer for sale, and
sale of the Units have not been registered with the SEC. The Units are to be
offered for sale and sold in reliance upon the exemptions from the registration
requirements of Section 5 of the 1933 Act. The Company will conduct the Offering
in compliance with the requirements of Regulation D under the 1933 Act.
2.8 Disclosure. None of the representations and warranties of
the Company appearing in this Subscription Agreement or any information
appearing in any of the Offering Documents, when considered together as a whole,
contains, or on any Closing Date (as defined in Section 3.1 below) will contain,
any untrue statement of a material fact or omits, or on any Closing Date will
omit, to state any material fact required to be stated herein or therein in
order for the statements herein or therein, in light of the circumstances under
which they were made, not to be misleading.
III. TERMS OF SUBSCRIPTION
3.1 Offering Period. The subscription period will begin as of
May 17, 2002 and will terminate at 11:59 PM Eastern time on June 16, 2002,
unless extended by mutual agreement of the Company and the Placement Agent for
up to an additional 30 days (the "Termination Date"). Provided that at least the
Minimum Offering shall have been subscribed for, funds representing the sale
thereof shall have cleared, all conditions to closing set forth in the Agency
Agreement have been satisfied or waived, and neither the Company nor the
Placement Agent have notified the other that they do not intend to effect a
closing of the Minimum Offering (the "Initial Closing"), the Initial Closing
shall take place at the offices of counsel to the Placement Agent, Xxxxxxxxx
Xxxxxxx, LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (but in no event later
than three days following the Termination Date, which closing date may be
accelerated or adjourned by agreement between the Company and the Placement
Agent). At the Initial Closing, payment for the Units to be issued and sold by
the Company shall be made against issuance and delivery of the Unit Shares and
Warrants comprising such Units. In addition, subsequent closings of the Offering
(if applicable) may be scheduled at the discretion of the Company and Placement
Agent, each of which shall be deemed a "Closing" hereunder. The date of the last
closing of the Offering is hereinafter referred to as the "Final Closing" and
the date of any Closing hereunder is hereinafter referred to as a "Closing
Date."
3.2 Expenses; Fees. Simultaneously with payment for and
delivery of the Units at each Closing, the Company shall pay to the Placement
Agent a cash fee equal to 8.5% of the gross proceeds of the Units sold and shall
issue to the Placement Agent and its designees five-year warrants (the "Agent's
Warrants") to purchase that number of shares of Common Stock as equals 10% of
the aggregate number of shares of Common Stock sold in the Offering on a
fully-diluted basis that gives effect to the exercise of the Warrants. The terms
and conditions of the Agent's Warrants shall be substantially similar to those
of the Warrants except that the Agent's Warrants shall have an exercise price of
$1.61 per share and shall not be redeemable by the Company. The Company shall
also reimburse the Placement Agent for actual out-of-pocket expenses incurred in
connection with the Offering up to an aggregate of $80,000 including, without
limitation, the reasonable fees and expenses of its counsel (Xxxxxxxxx Xxxxxxx,
LLP), due diligence investigation expenses, travel and mailing expenses. In
addition, the Company shall also pay all expenses in connection with the
qualification of the Securities under the blue sky laws of the states which the
Placement Agent shall reasonably designate, including legal fees (up to an
aggregate of $3,000), filing fees and disbursements of Placement Agent's counsel
in connection with such blue sky matters.
3.3 Escrow. Pending the sale of the Units, all funds paid
hereunder shall be deposited by the Company in escrow with the Escrow Agent. If
the Company shall not have obtained the Minimum Offering on or before the
Termination Date, then this subscription shall be void and all funds paid
hereunder by the Subscriber, without interest, shall be promptly returned to the
Subscriber, subject to Section 3.5 hereof.
3.4 Certificates. The Subscriber hereby authorizes and directs
the Company, at each Closing, to deliver the Common Stock and Warrants to be
issued to such Subscriber pursuant to this Subscription Agreement either (a) to
the Subscriber's address indicated in the Questionnaire, or (b) directly to the
Subscriber's account maintained with the Placement Agent, if any.
3.5 Return of Funds. The Subscriber hereby authorizes and
directs the Company to return any funds for unaccepted subscriptions to the same
account from which the funds were drawn, including any customer account
maintained with the Placement Agent.
IV. REGISTRATION RIGHTS
4.1 Automatic Registration. The Company hereby agrees with the
holders of the Securities or their transferees (other than a transferee who
acquires shares pursuant to Rule 144 or an effective registration statement)
(collectively, the "Holders") that no later than six months following the date
of the closing of the Merger, the Company shall prepare and file a registration
statement under the 1933 Act with the SEC covering the resale of the Unit Shares
and the Warrant Shares (the "Registrable Securities"), and the Company will use
its best efforts to cause such registration to become effective as soon as
practicable but no later than within nine months following the date of the
closing of the Merger. In the event that the Company's registration statement
has not been declared effective by the SEC within nine months following the date
of the closing of the Merger (or ten months to the extent necessary to comply
with comments by the SEC) or if the registration statement has been suspended
beyond 30 days during each year prior to the second anniversary of the closing
of the Merger or beyond 90 days in any year thereafter, the then current
exercise price for the Warrants shall be reduced by 5% for each month (or
portion thereof) until such time as the registration is effective or the
suspension ceases and the prospectus may be used. The Company's obligation to
keep the registration statement effective shall continue until the earlier of
the date that all of the Registrable Securities have been sold thereunder or are
eligible pursuant to Rule 144(k) under the 1933 Act (as evidenced by an opinion
of counsel).
4.2 Registration Procedures. To the extent required by
Section 4.1, the Company will:
(a) prepare and file with the SEC a registration statement
with respect to such securities, and use its best efforts to cause such
registration statement to become and remain effective;
(b) prepare and file with the SEC such amendments to such
registration statement and supplements to the prospectus contained therein as
may be necessary to keep such registration statement effective;
(c) furnish to the Holders participating in such registration
and to the underwriters of the securities being registered such reasonable
number of copies of the registration statement, preliminary prospectus, final
prospectus and such other documents as such underwriters may reasonably request
in order to facilitate the public offering of such securities;
(d) use its best efforts to register or qualify the securities
covered by such registration statement under such state securities or blue sky
laws of such jurisdictions as the Holders may reasonably request in writing
within 20 days following the original filing of such registration statement,
except that the Company shall not for any purpose be required to execute a
general consent to service of process or to qualify to do business as a foreign
corporation in any jurisdiction wherein it is not so qualified or subject itself
to general taxation in any such jurisdiction;
(e) notify the Holders, promptly after it shall receive notice
thereof, of the time when such registration statement has become effective or a
supplement to any prospectus forming a part of such registration statement has
been filed;
(f) notify the Holders promptly of any request by the SEC for
the amending or supplementing of such registration statement or prospectus or
for additional information;
(g) prepare and file with the SEC, promptly upon the request
of any Holders, any amendments or supplements to such registration statement or
prospectus which, in the opinion of counsel for such Holders (and concurred in
by counsel for the Company), is required under the 1933 Act or the rules and
regulations thereunder in connection with the distribution of Common Stock by
such Holders;
(h) prepare and promptly file with the SEC and promptly notify
such Holders of the filing of such amendment or supplement to such registration
statement or prospectus as may be necessary to correct any statements or
omissions if, at the time when a prospectus relating to such securities is
required to be delivered under the 1933 Act, any event shall have occurred the
result of which is that any such prospectus or any other prospectus as then in
effect would include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances in which they were made, not misleading; and
(i) advise the Holders, promptly after it shall receive notice
or obtain knowledge thereof, of the issuance of any stop order by the SEC
suspending the effectiveness of such registration statement or the initiation or
threatening of any proceeding for that purpose and promptly use its best efforts
to prevent the issuance of any stop order or to obtain its withdrawal if such
stop order should be issued.
The Holders shall cooperate with the Company in providing the
information necessary to effect the registration of their Registrable
Securities, including completion of customary questionnaires. Failure to do so
may result in exclusion of such Holders' Registrable Securities from the
registration statement.
4.3 Expenses.
(a) With respect to any registration required pursuant to
Section 4.1 hereof, the fees, costs and expenses of and incidental to such
registration, inclusion and public offering (as specified in paragraph (b)
below) shall be borne by the Company.
(b) The fees, costs and expenses of registration to be borne
by the Company as provided in paragraph (a) above shall include, without
limitation, all registration, filing, and NASD fees, printing expenses, fees and
disbursements of counsel and accountants for the Company, and all legal fees and
disbursements and other expenses of complying with state securities or blue sky
laws of any jurisdictions in which the securities to be offered are to be
registered and qualified. Fees and disbursements of one counsel for all the
Holders shall be borne by the Company; provided, that such fees and
disbursements shall be limited to $25,000. Fees and disbursements of accountants
for the Holders and any other expenses incurred by the Holders not expressly
included above (including, without limitation, underwriting discounts and
commissions) shall be borne by the Holders.
4.4 Indemnification.
(a) The Company will indemnify and hold harmless each Holder
of Registrable Securities that are included in a registration statement pursuant
to the provisions of Sections 4.1 hereof, its directors and officers, and any
underwriter (as defined in the 0000 Xxx) for such Holder and each person, if
any, who controls such Holder or such underwriter within the meaning of the 1933
Act, from and against, and will reimburse such Holder and each such underwriter
and controlling person with respect to, any and all loss, damage, liability,
cost and expense to which such Holder or any such underwriter or controlling
person may become subject under the 1933 Act or otherwise, insofar as such
losses, damages, liabilities, costs or expenses are caused by any untrue
statement or alleged untrue statement of any material fact contained in such
registration statement, any prospectus contained therein or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading; provided, however, that the Company will not be
liable in any such case to the extent that any such loss, damage, liability,
cost or expenses arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission so made in conformity with
information furnished by or on behalf of such Holder, such underwriter or such
controlling person in writing specifically for use in the
preparation thereof. Notwithstanding anything to the contrary contained herein,
the Company shall not be required to indemnify or hold harmless any such person
with respect to any such loss, damage, liability, cost or expense arising out of
or based upon (A) (i) any failure by such person to give any purchaser of
Registrable Securities at or prior to the written confirmation of such sale, a
copy of the most recent prospectus, (ii) any prospectus used after such time as
the Company advised such person that the filing of a post effective amendment or
supplement thereto was required, except the prospectus as so amended or
supplemented, or (iii) any prospectus used after such time as the Company's
obligation to keep the Registration Statement effective and current has expired
or been suspended hereunder, provided, that the Company has so advised such
person; (B) shall not apply to amounts paid in settlement of any claim if such
settlement is effected without the prior written consent of the Company, which
consent shall not be unreasonably withheld; and (C) with respect to any
preliminary prospectus, shall not inure to the benefit of any such person if the
untrue statement or omission of material fact contained in the preliminary
prospectus was corrected on a timely basis in the prospectus, as then amended or
supplemented, if such corrected prospectus was timely made available by the
Company pursuant to the terms of this Agreement, and such person was promptly
advised in writing not to use the incorrect prospectus prior to the use giving
rise to a claim and such person, notwithstanding such advice, used it.
(b) Each Holder of Registrable Securities that are included in
a registration statement pursuant to the provisions of Section 4.1 hereof will
indemnify and hold harmless the Company, its directors and officers, any
controlling person and any underwriter from and against, and will reimburse the
Company, its directors and officers, any controlling person and any underwriter
with respect to, any and all loss, damage, liability, cost or expense to which
the Company or any controlling person and/or any underwriter may become subject
under the 1933 Act or otherwise, insofar as such losses, damages, liabilities,
costs or expenses are caused by any untrue statement or alleged untrue statement
of any material fact contained in such registration statement, any prospectus
contained therein or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading, in each case
to the extent that such untrue statement or alleged untrue statement or omission
or alleged omission was so made in reliance upon and in strict conformity with
written information furnished by or on behalf of such Holder specifically for
use in the preparation thereof.
(c) Promptly after receipt by an indemnified party pursuant to
the provisions of paragraph (a) or (b) of this Section 4.4 of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions such indemnified party will, if a claim thereof is to be
made against the indemnifying party pursuant to the provisions of said paragraph
(a) or (b), promptly notify the indemnifying party of the commencement thereof;
but the omission to so notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise under this
Section except to the extent the defense of the claim is prejudiced. In case
such action is brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party shall
have the right to participate in, and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such
indemnified party, provided, however, if counsel for the indemnifying party
concludes that a single counsel cannot under applicable legal and ethical
considerations, represent both the indemnifying party and the indemnified party,
the indemnified party or parties have the right to select separate counsel to
participate in the defense of such action on behalf of such indemnified party or
parties; provided that there shall be no more than one such separate counsel.
After notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party pursuant to the provisions of said paragraph
(a) or (b) for any legal or other expense subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation, unless (i) the indemnified party shall have employed
counsel in accordance with the provisions of the preceding sentence, (ii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after the notice of the commencement of the action or (iii) the
indemnifying party has, in its sole discretion, authorized the employment of
counsel for the indemnified party at the expense of the indemnifying party.
V. MISCELLANEOUS
5.1 Notice. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Subscription Agreement must be in writing and will be deemed to have been
delivered: (a) upon receipt, when delivered personally, (b) upon receipt, when
sent by facsimile (provided confirmation of transmission is mechanically or
electronically generated and kept on file by the sending party), or (c) one (1)
business day after deposit with an overnight courier service, in each case
properly addressed to the party to receive the same. The addresses and facsimile
numbers for such communications shall be:
If to the Company:
InkSure Technologies Inc.
0 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Chief Executive Officer
With a copy to:
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
Chrysler Center
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: 000-000-0000
Facsimile: 212-983-3115
Attention: Xxxxxxx Xxxx, Esq.
If to the Subscriber, to its address and facsimile number set forth at the end
of this Subscription Agreement, or to such other address and/or facsimile number
and/or to the attention of such other person as specified by written notice
given to the Company five (5) days prior to the effectiveness of such change.
Written confirmation of receipt (a) given by the recipient of such notice,
consent, waiver or other communication, (b) mechanically or electronically
generated by the sender's facsimile machine containing the time, date, recipient
facsimile number and an image of the first page of such transmission, or (c)
provided by an overnight courier service shall be rebuttable evidence of
personal service, receipt by facsimile or receipt from an overnight courier
service in accordance with clause (a), (b) or (c) above, respectively.
5.2 Entire Agreement; Amendment. This Subscription Agreement
supersedes all other prior oral or written agreements between the Subscriber,
the Company, their affiliates and persons acting on their behalf with respect to
the matters discussed herein, and this Subscription Agreement and the
instruments referenced herein contain the entire understanding of the parties
with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor the Subscriber
makes any representation, warranty, covenant or undertaking with respect to such
matters. No provision of this Subscription Agreement may be amended or waived
other than by an instrument in writing signed by the Company and the holders of
at least a majority of the Securities then outstanding (determined on an as
converted to Common Stock basis) (or if prior to the Closing, the Subscribers
purchasing at least a majority of the Units to be purchased at the Closing). No
such amendment shall be effective to the extent that it applies to less than all
of the holders of the Securities then outstanding.
5.3 Severability. If any provision of this Subscription
Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or enforceability of the
remainder of this Subscription Agreement in that jurisdiction or the validity or
enforceability of any provision of this Subscription Agreement in any other
jurisdiction.
5.4 Governing Law; Jurisdiction; Waiver of Jury Trial. All
questions concerning the construction, validity, enforcement and interpretation
of this Subscription Agreement shall be governed by the internal laws of the
State of New York, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of New York. Each party hereby irrevocably submits to the non-exclusive
jurisdiction of the state and Federal courts sitting in the Southern District of
New York, for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein, and
hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such suit, action or proceeding is brought in an
inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Subscription Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law. Each party hereby irrevocably waives any right it may have,
and agrees not to request, a jury trial for the adjudication of any dispute
hereunder or in connection with or arising out of this Subscription Agreement or
any transaction contemplated hereby.
5.5 Headings. The headings of this Subscription Agreement are
for convenience of reference and shall not form part of, or affect the
interpretation of, this Subscription Agreement.
5.6 Successors And Assigns. This Subscription Agreement shall
be binding upon and inure to the benefit of the parties and their respective
successors and assigns. The Company shall not assign this Subscription Agreement
or any rights or obligations hereunder without the prior written consent of the
holders of at least a majority the Securities then outstanding, except by merger
or consolidation. The Subscriber shall not assign its rights hereunder without
the consent of the Company, which consent shall not be unreasonably withheld.
5.7 No Third Party Beneficiaries. This Subscription Agreement
is intended for the benefit of the parties hereto 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.
5.8 Survival. The representations and warranties of the
Company and the Subscriber contained in Articles I and II and the agreements set
forth this Article V shall survive the Final Closing for a period of two years.
5.9 Further Assurances. Each party shall do and perform, or
cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Subscription Agreement and the
consummation of the transactions contemplated hereby.
5.10 No Strict Construction. The language used in this
Subscription 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.
5.11 Legal Representation. The Subscriber acknowledges that:
(a) it has read this Subscription Agreement and the exhibits hereto; (b) it
understands that the Company has been represented in the preparation,
negotiation, and execution of this Subscription Agreement by Mintz, Levin, Cohn,
Ferris, Glovsky and Popeo, P.C., counsel to the Company; (c) it understands that
the Placement Agent has been represented by Xxxxxxxxx Xxxxxxx, LLP, counsel to
the Placement Agent, and that such counsel has not represented and is not
representing the Subscriber; (d) it has either been represented in the
preparation, negotiation, and execution of this Subscription Agreement by legal
counsel of its own choice, or has chosen to forego such representation by legal
counsel after being advised to seek such legal representation; and (e) it
understands the terms and consequences of this Subscription Agreement and is
fully aware of its legal and binding effect.
5.12 Expenses of Enforcement. The Company shall pay all fees
and expenses (including reasonable fees and expenses of counsel and other
professionals) incurred by the Subscriber or any successor holder of Securities
in enforcing any of its rights and remedies under this Subscription Agreement.
5.13 Confidentiality. The Subscriber acknowledges that the
information contained in the Offering Documents is of a confidential nature and
that the Subscriber shall treat it in a confidential manner, and that it will
not, directly or indirectly, disclose or permit, if applicable, its affiliates
or representatives to disclose any of such information to any other person or
e-mail or reproduce any of the Offering Documents, or to make accessible to
anyone, the confidential information concerning or relating to the business or
financial affairs of the Company contained in the Offering Documents to which it
has become privy by reason of this Subscription Agreement until such information
has been publicly disclosed by the Company or until such information is no
longer material, in whole or in part without the prior written consent of the
Company. The Subscriber further acknowledges that its confidentiality and other
obligations shall apply to any non-public information relating to the Company or
the Units which is provided to the Subscriber subsequent to the delivery of the
Offering Documents.
5.14 Counterparts. This Subscription Agreement may be executed
in two or more identical counterparts, all of which shall be considered one and
the same agreement and shall become effective when counterparts have been signed
by each party and delivered to the other party; provided that a facsimile
signature shall be considered due execution and shall be binding upon the
signatory thereto with the same force and effect as if the signature were an
original, not a facsimile signature.
IN WITNESS WHEREOF, the parties have executed this Subscription
Agreement as of the day and year first written above.
------------------------------------------ ------------------------------------------
Signature of Subscriber Signature of Co-Subscriber
------------------------------------------ ------------------------------------------
Name of Subscriber Name of Co-Subscriber
[please print] [please print]
------------------------------------------ ------------------------------------------
Address of Subscriber Address of Co-Subscriber
------------------------------------------ ------------------------------------------
Social Security or Taxpayer Identification Social Security or Taxpayer Identification
Number of Subscriber Number of Co-Subscriber
------------------------------------------
Subscriber's Account Number at
Commonwealth Associates
------------------------------------------
Dollar Amount of Units Subscribed For
*If Subscriber is a Registered Representative
with an NASD member firm, have the following
acknowledgment signed by the appropriate party:
The undersigned NASD member firm Subscription Accepted:
acknowledges receipt of the notice required by
Rule 3040 of the NASD Conduct Rules. INKSURE TECHNOLOGIES INC.
--------------------------------------
Name of NASD Member By:_______________________________________
Name:
Title:
By:___________________________________ __________________________________________
Authorized OfficerAccepted Dollar Amount of Subscription Accepted
ANNEX A
Delaware General Corporations Law ss.262. Appraisal rights.
(a) Any stockholder of a corporation of this State who holds shares of stock on
the date of the making of a demand pursuant to subsection (d) of this section
with respect to such shares, who continuously holds such shares through the
effective date of the merger or consolidation, who has otherwise complied with
subsection (d) of this section and who has neither voted in favor of the merger
or consolidation nor consented thereto in writing pursuant to ss. 228 of this
title shall be entitled to an appraisal by the Court of Chancery of the fair
value of the stockholder's shares of stock under the circumstances described in
subsections (b) and (c) of this section. As used in this section, the word
"stockholder" means a holder of record of stock in a stock corporation and also
a member of record of a nonstock corporation; the words "stock" and "share" mean
and include what is ordinarily meant by those words and also membership or
membership interest of a member of a nonstock corporation; and the words
"depository receipt" mean a receipt or other instrument issued by a depository
representing an interest in one or more shares, or fractions thereof, solely of
stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or series of
stock of a constituent corporation in a merger or consolidation to be effected
pursuant to ss. 251 (other than a merger effected pursuant to ss. 251(G) of this
title), ss. 252, ss. 254, ss. 257, ss. 258, ss. 263 or ss. 264 of this title:
(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock, which stock,
or depository receipts in respect thereof, at the record date fixed to determine
the stockholders entitled to receive notice of and to vote at the meeting of
stockholders to act upon the agreement of merger or consolidation, were either
(i) listed on a national securities exchange or designated as a national market
system security on an interdealer quotation system by the National Association
of Securities Dealers, Inc. or (ii) held of record by more than 2,000 holders;
and further provided that no appraisal rights shall be available for any shares
of stock of the constituent corporation surviving a merger if the merger did not
require for its approval the vote of the stockholders of the surviving
corporation as provided in subsection (f) of ss. 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series of
stock of a constituent corporation if the holders thereof are required by the
terms of an agreement of merger or consolidation pursuant to xx.xx. 252, 254,
257, 258, 263 and 264 of this title to accept for such stock anything except:
a. Shares of stock of the corporation surviving or resulting
from such merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository
receipts in respect thereof, which shares of stock (or depository receipts in
respect thereof) or depository receipts at the effective date of the merger or
consolidation will be either listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or held of record
by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this paragraph;
or
d. Any combination of the shares of stock, depository receipts
and cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under ss. 253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall be
available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting, shall
notify each of its stockholders who was such on the record date for such meeting
with respect to shares for which appraisal rights are available pursuant to
subsection (b) or (c) hereof that appraisal rights are available for any or all
of the shares of the constituent corporations, and shall include in such notice
a copy of this section. Each stockholder electing to demand the appraisal of
such stockholder's shares shall deliver to the corporation, before the taking of
the vote on the merger or consolidation, a written demand for appraisal of such
stockholder's shares. Such demand will be sufficient if it reasonably informs
the corporation of the identity of the stockholder and that the stockholder
intends thereby to demand the appraisal of such stockholder's shares. A proxy or
vote against the merger or consolidation shall not constitute such a demand. A
stockholder electing to take such action must do so by a separate written demand
as herein provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each
stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become effective;
or
(2) If the merger or consolidation was approved pursuant to ss. 228 or
ss. 253 of this title, then either a constituent corporation before the
effective date of the merger or consolidation or the surviving or resulting
corporation within 10 days thereafter shall notify each of the holders of any
class or series of stock of such constituent corporation who are entitled to
appraisal rights of the approval of the merger or consolidation and that
appraisal rights are available for any or all shares of such class or series of
stock of such constituent corporation, and shall include in such notice a copy
of this section. Such notice may, and, if given on or after the effective date
of the merger or consolidation, shall, also notify such stockholders of the
effective date of the merger or consolidation. Any stockholder entitled to
appraisal rights may, within 20 days after the date of mailing of such notice,
demand in writing from the surviving or resulting corporation the appraisal of
such holder's shares. Such demand will be sufficient if it reasonably informs
the corporation of the identity of the stockholder and that the stockholder
intends thereby to demand the appraisal of such holder's shares. If such notice
did not notify stockholders of the effective date of the merger or
consolidation, either (i) each such constitutent corporation shall send a second
notice before the effective date of the merger or consolidation notifying each
of the holders of any class or series of stock of such constitutent corporation
that are entitled to appraisal rights of the effective date of the merger or
consolidation or (ii) the surviving or resulting corporation shall send such a
second notice to all such holders on or within 10 days after such effective
date; provided, however, that if such second notice is sent more than 20 days
following the sending of the first notice, such second notice need only be sent
to each stockholder who is entitled to appraisal rights and who has demanded
appraisal of such holder's shares in accordance with this subsection. An
affidavit of the secretary or assistant secretary or of the transfer agent of
the corporation that is required to give either notice that such notice has been
given shall, in the absence of fraud, be prima facie evidence of the facts
stated therein. For purposes of determining the stockholders entitled to receive
either notice, each constitutent corporation may fix, in advance, a record date
that shall be not more than 10 days prior to the date the notice is given,
provided, that if the notice is given on or after the effective date of the
merger or consolidation, the record date shall be such effective date. If no
record date is fixed and the notice is given prior to the effective date, the
record date shall be the close of business on the day next preceding the day on
which the notice is given.
(e) Within 120 days after the effective date of the merger or consolidation, the
surviving or resulting corporation or any stockholder who has complied with
subsections (a) and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a determination
of the value of the stock of all such stockholders. Notwithstanding the
foregoing, at any time within 60 days after the effective date of the merger or
consolidation, any stockholder shall have the right to withdraw such
stockholder's demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the merger
or consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not voted
in favor of the merger or consolidation and with respect to which demands for
appraisal have been received and the aggregate number of holders of such shares.
Such written statement shall be mailed to the stockholder within 10 days after
such stockholder's written request for such a statement is received by the
surviving or resulting corporation or within 10 days after expiration of the
period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which shall
within 20 days after such service file in the office of the Register in Chancery
in which the petition was filed a duly verified list containing the names and
addresses of all stockholders who have demanded payment for their shares and
with whom agreements as to the value of their shares have not been reached by
the surviving or resulting corporation. If the petition shall be filed by the
surviving or resulting corporation, the petition shall be accompanied by such a
duly verified list. The Register in Chancery, if so ordered by the Court, shall
give notice of the time and place fixed for the hearing of such petition by
registered or certified mail to the surviving or resulting corporation and to
the stockholders shown on the list at the addresses therein stated. Such notice
shall also be given by 1 or more publications at least 1 week before the day of
the hearing, in a newspaper of general circulation published in the City of
Wilmington, Delaware or such publication as the Court deems advisable. The forms
of the notices by mail and by publication shall be approved by the Court, and
the costs thereof shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the stockholders
who have complied with this section and who have become entitled to appraisal
rights. The Court may require the stockholders who have demanded an appraisal
for their shares and who hold stock represented by certificates to submit their
certificates of stock to the Register in Chancery for notation thereon of the
pendency of the appraisal proceedings; and if any stockholder fails to comply
with such direction, the Court may dismiss the proceedings as to such
stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court shall
appraise the shares, determining their fair value exclusive of any element of
value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted
such stockholder's certificates of stock to the Register in Chancery, if such is
required, may participate fully in all proceedings until it is finally
determined that such stockholder is not entitled to appraisal rights under this
section.
(i) The Court shall direct the payment of the fair value of the shares, together
with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed upon
the parties as the Court deems equitable in the circumstances. Upon application
of a stockholder, the Court may order all or a portion of the expenses incurred
by any stockholder in connection with the appraisal proceeding, including,
without limitation, reasonable attorney's fees and the fees and expenses of
experts, to be charged pro rata against the value of all the shares entitled to
an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the effective date of the merger or consolidation); provided, however, that
if no petition for an appraisal shall be filed within the time provided in
subsection (e) of this section, or if such stockholder shall deliver to the
surviving or resulting corporation a written withdrawal of such stockholder's
demand for an appraisal and an acceptance of the merger or consolidation, either
within 60 days after the effective date of the merger or consolidation as
provided in subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court
of Chancery shall be dismissed as to any stockholder without the approval of the
Court, and such approval may be conditioned upon such terms as the Court deems
just.
(l) The shares of the surviving or resulting corporation to which the shares of
such objecting stockholders would have been converted had they assented to the
merger or consolidation shall have the status of authorized and unissued shares
of the surviving or resulting corporation.
