SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "AGREEMENT"), dated as of August
14, 2000, by and among 0-Xxxxxxxx.xxx, Inc., a Colorado corporation, with
headquarters located at 0000 Xxxx Xxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxx
00000 (the "COMPANY"), and each of the investors listed on the Schedule of
Buyers attached hereto (individually, a "BUYER" or collectively "BUYERS").
WHEREAS:
A. The Company and the Buyers are executing and delivering
this Agreement in reliance upon the exemption from securities registration
pursuant to Section 4(2) of the Securities Act of 1933, as amended (the "1933
ACT"), and/or Regulation D ("REGULATION D") as promulgated by the U.S.
Securities and Exchange Commission (the "SEC");
B. The Company has authorized the following new series of its
Preferred Stock, no par value per share (the "PREFERRED STOCK"): the
Company's Series A Convertible Preferred Stock (the "SERIES A PREFERRED
SHARES"), which shall be convertible into shares of the Company's Common
Stock, no par value per share (the "COMMON STOCK") (as converted, the
"CONVERSION SHARES"), in accordance with the terms of the Company's Articles
of Amendment to the Articles of Incorporation setting for the preferences and
rights of the Series A Convertible Preferred Stock of 0-Xxxxxxxx.xxx, Inc.,
substantially in the form attached hereto as Exhibit "A" (the "ARTICLES OF
AMENDMENT");
C. The Buyers wish to purchase, upon the terms and conditions
stated in this Agreement, an aggregate amount of up to 3,000 shares of Series
A Preferred Stock and warrants to acquire an aggregate of 600,000 shares of
Common Stock in the respective amounts set forth opposite each Buyer's name
on the Schedule of Buyers;
D. Contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration
Rights Agreement substantially in the form attached hereto as Exhibit "B"
(the "REGISTRATION RIGHTS AGREEMENT") pursuant to which the Company has
agreed to provide certain registration rights under the 1933 Act and the
rules and regulations promulgated thereunder, and applicable state securities
laws; and
E. In consideration of entering into this Agreement, each
Buyer shall at the Closing (as defined herein) receive purchase warrants to
acquire shares of Common Stock substantially in the form attached hereto as
Exhibit "C" (the "WARRANTS").
NOW THEREFORE, the Company and the Buyer hereby agree as follows:
1. PURCHASE AND SALE OF SERIES A PREFERRED STOCK AND WARRANTS.
a. PURCHASE OF SERIES A PREFERRED STOCK AND WARRANTS.
Subject to the satisfaction (or waiver) of the conditions set forth in
Sections 6 and 7 below, the Company shall issue and sell to the Buyers
and the Buyers shall purchase from the Company an aggregate of 3,000
shares of Series A Preferred Stock and Warrants to acquire an aggregate
of 600,000 shares of Common Stock, in the respective amounts and for
the purchase price set forth opposite each Buyer's name on the Schedule
of Buyers (the "Closing").
b. CLOSING DATE. The date and time of the Closing (the
"CLOSING DATE") shall be 10:00
a.m. Eastern Standard Time, within five (5) business days following
the date hereof, subject to notification of satisfaction (or waiver)
of the conditions to the Closing set forth in Sections 6 and 7 below
(or such later date as is mutually agreed to by the Company and the
Buyers). The Closing shall occur on the Closing Date at the offices
of Xxxx Xxxx Xxxxx & Xxxxx LLP, 000 Xxxxxxxxx Xxxx Xxxxxx, Xxxxx 000,
0000 Xxxxxxxxx Xxxx, X.X., Xxxxxxx, Xxxxxxx 00000.
c. FORM OF PAYMENT. On the Closing Date, (i) each Buyer
shall pay the purchase price to the Company for the Series A Preferred
Shares and Warrants to be issued and sold to such Buyer at the Closing,
by wire transfer of immediately available funds in accordance with the
Escrow Agreement, by and among the Company, The Bank of New York, and
X.X. Xxxxx Securities, Inc., dated August ___, 2000, and (ii) the
Company shall deliver to each Buyer, certificates representing such
Series A Preferred Stock which such Buyer is then purchasing (as
indicated opposite such Buyer's name on the Schedule of Buyers), duly
executed on behalf of the Company and registered in the name of such
Buyer or its designee (the "CERTIFICATES").
2. BUYER'S REPRESENTATIONS AND WARRANTEES.
Each Buyer represents and warrants with respect to only itself
that:
a. INVESTMENT PURPOSE. Such Buyer (i) is acquiring the
Series A Preferred Shares, (ii) upon conversion of the Series A
Preferred Shares, will acquire the Conversion Shares then issuable,
(iii) will acquire any Warrants, and (iv) upon exercise of the
Warrants, will acquire the shares of Common Stock issuable upon
exercise thereof (the "WARRANT SHARES") for its own account for
investment only and not with a view towards, or for resale in
connection with, the public sale or distribution thereof, except
pursuant to sales registered or exempted under the 1933 Act; provided,
however, that by making the representations herein, such Buyer does not
agree to hold any Series A Preferred Shares, Conversion Shares,
Warrants, or Warrant Shares for any minimum or other specific term and
reserves the right to dispose of Series A Preferred Shares, Conversion
Shares, Warrants, or Warrant Shares at any time in accordance with, or
pursuant to a registration statement or an exemption under, the 1933
Act.
b. ACCREDITED INVESTOR STATUS. Such Buyer is an
"accredited investor" as that term is defined in Rule 501(a)(3) of
Regulation D.
c. RELIANCE ON EXEMPTIONS. Such Buyer understands that
the Series A Preferred Shares, the Conversion Shares, the Warrants, or
the Warrant Shares are being offered and sold to it in reliance on
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 such Buyer's compliance with, the
representations, warranties, agreements, acknowledgments and
understandings of such Buyer set forth herein in order to determine the
availability of such exemptions and the eligibility of such Buyer to
acquire such securities.
d. INFORMATION. Such Buyer 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 Series A Preferred Shares, the Conversion Shares,
the Warrants, or the Warrant Shares, which have been requested by such
Buyer. Such Buyer and its advisors, if any, have been afforded the
opportunity to ask questions of the Company. Neither such inquiries nor
any other due diligence investigations conducted by such Buyer or its
advisors, if any, or its representatives shall modify, amend or affect
such Buyer's right to rely on the Company's representations and
warranties contained in Section 3 below. Such Buyer understands that
its investment in the Series A Preferred Shares, the Conversion Shares,
the Warrants, or the Warrant Shares involves a high degree of risk.
Such Buyer has sought such accounting, legal and tax advice as it has
considered necessary to make an informed investment decision with
respect to its acquisition of the Series A Preferred Shares, the
Conversion Shares, the Warrants, or the Warrant Shares.
e. NO GOVERNMENTAL REVIEW. Such Buyer understands that
no United States federal or state agency or any other government or
governmental agency has passed on or made any recommendation or
endorsement of the Series A Preferred Shares, the Conversion Shares,
the Warrants, or the Warrant Shares, or the fairness or suitability of
the investment in the Series A Preferred Shares, the Conversion Shares,
the Warrants, or the Warrant Shares, nor have such authorities passed
upon or endorsed the merits of the offering of the Series A Preferred
Shares, the Conversion Shares, the Warrants, or the Warrant Shares.
f. TRANSFER OR RESALE. Such Buyer understands that
except as provided in the Registration Rights Agreement: (i) the Series
A Preferred Share, the Conversion Shares, the Warrants or the Warrant
Shares have not been and are not being registered under the 1933 Act or
any state securities laws, and may not be offered for sale, sold,
assigned or transferred unless (a) subsequently registered thereunder,
(b) such Buyer shall have delivered to the Company an opinion of
counsel, in a generally acceptable form, to the effect that such
securities to be sold, assigned or transferred may be sold, assigned or
transferred pursuant to an exemption from such registration, or (c)
such Buyer provides the Company with reasonable assurance that such
securities can be sold, assigned or transferred pursuant to Rule 144
promulgated under the 1933 Act (or a successor rule thereto) ("RULE
144"); (ii) any sale of such securities made in reliance on Rule 144
may be made only in accordance with the terms of Rule 144 and further,
if Rule 144 is not applicable, any resale of such 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 0000 Xxx) may require compliance with some other exemption under
the 1933 Act or the rules and regulations of the SEC thereunder; and
(iii) except as provided in the Registration Rights Agreement, neither
the Company nor any other person is under any obligation to register
the sale of such securities under the 1933 Act or any state securities
laws or to comply with the terms and conditions of any exemption
thereunder.
g. LEGENDS. Such Buyer understands that the certificates
or other instruments representing the Series A Preferred Shares, the
Warrants and, until such time as the sale of the Conversion Shares has
been registered under the 1933 Act as contemplated by the Registration
Rights Agreement, the stock certificates representing the Conversion
Shares and the Warrant Shares shall bear a restrictive legend in
substantially the following form (and a stop-transfer order may be
placed against transfer of such stock certificates):
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 HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS,
OR AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM TO
THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT
OR APPLICABLE STATE SECURITIES LAWS OR 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 Series A
Preferred Shares, the Conversion Shares, the Warrants, or the Warrant
Shares, upon which it is stamped, if, unless otherwise required by
state securities laws, (i) the sale of the Conversion Shares or Warrant
Shares are registered under the 1933 Act, (ii) in connection with a
sale transaction, such holder provides the Company with an opinion of
counsel, reasonably satisfactory to the Company, to the effect that a
public sale, assignment or transfer of the Series A Preferred Shares,
the Conversion Shares, the Warrants, and the Warrant Shares may be made
without registration under the 1933 Act, or (iii) such holder provides
the Company with reasonable assurances that the Series A Preferred
Shares, the Conversion Shares, the Warrants, or the Warrant Shares can
be sold pursuant to Rule 144 without any restriction as to the number
of securities acquired as of a particular date that can then be
immediately sold.
h. AUTHORIZATION, ENFORCEMENT. This Agreement has been
duly and validly authorized, executed and delivered on behalf of such
Buyer and is a valid and binding agreement of such Buyer enforceable in
accordance with its terms, except as enforceability may be limited by
general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating
to, or affecting generally, the enforcement of applicable creditors'
rights and remedies.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the Buyers
that:
a. ORGANIZATION AND QUALIFICATION. The Company and its
subsidiaries are corporations duly organized and validly existing in
good standing under the laws of the jurisdiction in which they are
incorporated, and have the requisite corporate power to own their
properties and to carry on their business as now being conducted. Each
of the Company and its subsidiaries is duly qualified as a foreign
corporation 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 to the extent that the failure to
be so qualified or be in good standing would not have a material
adverse effect on the Company and its subsidiaries taken as a whole.
b. AUTHORIZATION, ENFORCEMENT, COMPLIANCE WITH OTHER
INSTRUMENTS. (i) The Company has the requisite corporate power and
authority to enter into and perform this Agreement, the Registration
Rights Agreement and any related agreements, and to issue the Series A
Preferred Shares, the Conversion Shares, the Warrants, and the Warrant
Shares, in accordance with the terms hereof and thereof, (ii) the
execution and delivery of this Agreement, the Registration Rights
Agreement and any related agreements by the Company and the
consummation by it of the transactions contemplated hereby and thereby,
including without limitation the issuance of the Series A Preferred
Shares and the Warrants and the reservation for issuance and the
issuance of the Conversion Shares and the Warrant Shares issuable upon
conversion or exercise thereof, have been duly authorized by the
Company's Board of Directors and no further consent or authorization is
required by the Company, its Board of Directors or its stockholders,
(iii) this Agreement and the Registration Rights Agreement and any
related agreements have been duly executed and delivered by the
Company, (iv) this Agreement, the Registration Rights Agreement and any
related agreements constitute the valid and binding obligations of the
Company enforceable against the Company in accordance with their terms,
except as such enforceability may be limited by general principles of
equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting
generally, the enforcement of creditors' rights and remedies, and (v)
prior to the Closing Date, the Articles of Amendment has been filed
with the Secretary of State of the State of Colorado and will be in
full force and effect, enforceable against the Company in accordance
with its terms.
c. CAPITALIZATION. As of the date hereof, the authorized
capital stock of the Company consists of 300,000,000 shares of Common
Stock, of which as of the date hereof 86,576,339 shares were issued and
outstanding, and no shares of Preferred Stock were authorized, issued
and outstanding. All of such outstanding shares have been validly
issued and are fully paid and nonassessable. Except as disclosed in
Schedule 3(c), no shares of Common Stock or preferred stock are subject
to preemptive rights or any other similar rights or any liens or
encumbrances suffered or permitted by the Company. Except as disclosed
in Schedule 3(c), as of the effective date of this Agreement, (i) there
are no outstanding options, warrants, scrip, rights to subscribe to,
calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of
the Company or any of its subsidiaries, or contracts, commitments,
understandings or arrangements by which the Company or any of its
subsidiaries is or may become bound to issue additional shares of
capital stock of the Company or any of its subsidiaries or options,
warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible
into, any shares of capital stock of the Company or any of its
subsidiaries, (ii) there are no outstanding debt securities, (iii)
there are no agreements or arrangements under which the Company or any
of its subsidiaries is obligated to register the sale of any of their
securities under the 1933 Act (except the Registration Rights
Agreement), and (iv) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the
issuance of the Series A Preferred Shares or the Conversion Shares, as
described in this Agreement. The Company has furnished to the Buyers
true and correct copies of the Company's Articles of Incorporation, as
amended and as in effect on the date hereof (the "ARTICLES OF
INCORPORATION"), and the Company's By-laws, as in effect on the date
hereof (the "BY-LAWS"), and the terms of all securities convertible
into or exercisable for Common Stock and the material rights of the
holders thereof in respect thereto.
d. ISSUANCE OF SECURITIES. The Series A Preferred Shares
are duly authorized and, upon issuance in accordance with the terms
hereof, shall be (i) validly issued, fully paid and non-assessable, are
free from all taxes, liens and charges with respect to the issue
thereof and are entitled to the rights and preferences set forth in the
Series A Preferred Shares. The Conversion Shares issuable upon
conversion of the Series A Preferred Shares have been duly authorized
and reserved for issuance. Upon conversion or exercise in accordance
with the Articles of Amendment, the Conversion Shares will be validly
issued, fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issue thereof, with the holders being
entitled to all rights accorded to a holder of Common Stock.
e. NO CONFLICTS. Except as disclosed in Schedule 3(e),
the execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the transactions
contemplated hereby will not (i) result in a violation of the Articles
of Incorporation or Bylaws or (ii) 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 agreement, indenture or
instrument to which the Company or any of its subsidiaries is a party,
or 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 principal market or exchange on
which the Common Stock is traded or listed) applicable to the Company
or any of its subsidiaries or by which any property or asset of the
Company or any of its subsidiaries is bound or affected. Except as
disclosed in Schedule 3(e), neither the Company nor any of its
subsidiaries is in violation of any term of or in default under its
Articles of Incorporation or By-laws or their organizational charter or
by-laws, respectively, or any material contract, agreement, mortgage,
indebtedness, indenture, instrument, judgment, decree or order or any
statute, rule or regulation applicable to the Company or its
subsidiaries. The business of the Company and its
subsidiaries is not being conducted in violation of any law, ordinance,
regulation of any governmental entity. Except as specifically
contemplated by this Agreement and as required under the 1933 Act and
any applicable state securities laws, the Company is not required to
obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under or
contemplated by this Agreement or the Registration Rights Agreement in
accordance with the terms hereof or thereof. Except as disclosed in
Schedule 3(e), all consents, authorizations, orders, filings and
registrations which the Company is required to obtain pursuant to the
preceding sentence have been obtained or effected on or prior to the
date hereof. The Company and its subsidiaries are unaware of any facts
or circumstances, which might give rise to any of the foregoing.
f. SEC DOCUMENTS: FINANCIAL STATEMENTS. Since January 1,
2000, the Company has 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 Securities Exchange Act of 1934, as
amended (the "1934 ACT") (all of the foregoing filed prior to the date
hereof and all exhibits included therein and financial statements and
schedules thereto and documents incorporated by reference therein,
being hereinafter referred to as the "SEC DOCUMENTS"). The Company has
delivered to the Buyers or their representatives true and complete
copies of the SEC Documents. As of their respective dates, the
financial statements of the Company attached as Schedule 3(f) hereto
(the "FINANCIAL STATEMENTS") 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 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 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). No other information provided by or on behalf of
the Company to the Buyers which is not included in the SEC Documents,
including, without limitation, information referred to in Section 2(d)
of this Agreement, contains any untrue statement of a material fact or
omits to state any material fact necessary in order to make the
statements therein, in the light of the circumstance under which they
are or were made, not misleading.
g. ABSENCE OF CERTAIN CHANGES. Except as disclosed in
Schedule 3(g), since January 1, 2000, there has been no material
adverse change and no material adverse development in the business,
properties, operations, financial condition, results of operations or
prospects of the Company or its subsidiaries. The Company has not taken
any steps, and does not currently expect to take any steps, to seek
protection pursuant to any bankruptcy law nor does the Company or its
subsidiaries have any knowledge or reason to believe that its creditors
intend to initiate involuntary bankruptcy proceedings.
h. ABSENCE OF LITIGATION. There is no action, suit,
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 or any of its subsidiaries,
threatened against or affecting the Company, the Common Stock or any of
the Company's subsidiaries, wherein an unfavorable decision, ruling or
finding would (i) have a material adverse effect on the transactions
contemplated hereby (ii) adversely affect the validity or
enforceability of, or the authority or ability of the Company to
perform its obligations under, this Agreement or any of the documents
contemplated herein or (iii), except as expressly set forth in Schedule
3(h), have a material adverse effect on the business, operations,
properties, financial condition or results of operation of the Company
and its subsidiaries taken as a whole.
i. ACKNOWLEDGMENT REGARDING BUYERS' PURCHASE OF SERIES A
PREFERRED SHARES. The
Company acknowledges and agrees that the Buyers are acting solely in
the capacity of arm's length purchasers with respect to this Agreement
and the transactions contemplated hereby. The Company further
acknowledges that the Buyers are not acting as financial advisors or
fiduciaries of the Company (or in any similar capacity) with respect to
this Agreement and the transactions contemplated hereby and any advice
given by the Buyers or any of their respective representatives or
agents in connection with this Agreement and the transactions
contemplated hereby is merely incidental to the Buyers' purchase of the
Series A Preferred Shares, the Conversion Shares, the Warrants, and the
Warrant Shares. The Company further represents to the Buyers that the
Company's decision to enter into this Agreement has been based solely
on the independent evaluation by the Company and its representatives.
j. NO UNDISCLOSED EVENTS, LIABILITIES, DEVELOPMENTS OR
CIRCUMSTANCES. No event, liability, development or circumstance has
occurred or exists, or is contemplated to occur, with respect to the
Company or its subsidiaries or their respective business, properties,
prospects, operations or financial condition, which could be material
but which has not been publicly announced or disclosed in writing to
the Buyer.
k. NO GENERAL SOLICITATION. Neither the Company, nor any
of its affiliates, nor any person acting on its or their behalf, has
engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D under the 0000 Xxx) in connection
with the offer or sale of the Series A Preferred Shares, the Conversion
Shares, the Warrants, and the Warrant Shares.
1. NO INTEGRATED OFFERING. Neither the Company, nor any
of its affiliates, nor any person acting on its or their behalf has,
directly or indirectly, made any offers or sales of any security or
solicited any offers to buy any security, under circumstances that
would require registration of the Series A Preferred Shares, the
Conversion Shares, the Warrants, and the Warrant Shares, under the 1933
Act or cause this offering of the Series A Preferred Shares, the
Conversion Shares, the Warrants, and the Warrant Shares, to be
integrated with prior offerings by the Company for purposes of the 1933
Act or any applicable stockholder approval provisions.
m. EMPLOYEE RELATIONS. Neither the Company nor any of
its subsidiaries is involved in any labor dispute nor, to the knowledge
of the Company or any of its subsidiaries, is any such dispute
threatened. None of the Company's or its subsidiaries' employees is a
member of a union and the Company and its subsidiaries believe that
their relations with their employees are good.
n. INTELLECTUAL PROPERTY RIGHTS. The Company and its
subsidiaries own or possess adequate rights or licenses to use all
trademarks, trade names, service marks, service xxxx registrations,
service names, patents, patent rights, copyrights, inventions,
licenses, approvals, governmental authorizations, trade secrets and
rights necessary to conduct their respective businesses as now
conducted. Except as set forth on Schedule 3(n), none of the Company's
trademarks, trade names, service marks, service xxxx registrations,
service names, patents, patent rights, copyrights, inventions,
licenses, approvals, government authorizations, trade secrets, or other
intellectual property rights have expired or terminated, or are
expected to expire or terminate in the near future. The Company and its
subsidiaries do not have any knowledge of any infringement by the
Company or its subsidiaries of trademark, trade name rights, patents,
patent rights, copyrights, inventions, licenses, service names, service
marks, service xxxx registrations, trade secret or other similar rights
of others, or of any such development of similar or identical trade
secrets or technical information by others and, except as set forth on
Schedule 3(n), there is no claim, action or proceeding being made or
brought against, or to the Company's knowledge, being threatened
against, the Company or its subsidiaries regarding trademark, trade
name, patents, patent rights, invention, copyright, license, service
names, service marks, service xxxx registrations, trade secret or other
infringement; and the Company and its
subsidiaries are unaware of any facts or circumstances which might
give rise to any of the foregoing. The Company and its subsidiaries
have taken reasonable security measures to protect the secrecy,
confidentiality and value of all of their intellectual properties.
o. ENVIRONMENTAL LAWS. The Company and its subsidiaries
are (i) in compliance with any and all applicable foreign, federal,
state and local laws and regulations relating to the protection of
human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("ENVIRONMENTAL
LAWS"), (ii) have received all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval.
p. TITLE. The Company and its subsidiaries have good and
marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them which is
material to the business of the Company and its subsidiaries, in each
case free and clear of all liens, encumbrances and defects except such
as are described in Schedule 3(p) or such as do not materially affect
the value of such property and do not interfere with the use made and
proposed to be made of such property by the Company and its
subsidiaries. Any facilities held under lease by the Company and its
subsidiaries are held by them under valid, subsisting and enforceable
leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and
buildings by the Company and its subsidiaries.
q. INSURANCE. The Company and each of its subsidiaries
are insured by insurers of recognized financial responsibility against
such losses and risks and in such amounts as management of the Company
believes to be prudent and customary in the businesses in which the
Company and its subsidiaries are engaged. Neither the Company nor any
such subsidiary has been refused any insurance coverage sought or
applied for and neither the Company nor any such subsidiary has any
reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue
its business at a cost that would not materially and adversely affect
the condition, financial or otherwise, or the earnings, business or
operations of the Company and its subsidiaries, taken as a whole.
r. REGULATORY PERMITS. The Company and its subsidiaries
possess all certificates, authorizations and permits issued by the
appropriate federal, state or foreign regulatory authorities necessary
to conduct their respective businesses, and neither the Company nor any
such subsidiary has received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or
permit.
s. INTERNAL ACCOUNTING CONTROLS. The Company and each of
its subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with
management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to
any differences.
t. NO MATERIALLY ADVERSE CONTRACTS, ETC. Neither the
Company nor any of its subsidiaries is subject to any charter,
corporate or other legal restriction, or any judgment, decree, order,
rule or regulation which in the judgment of the Company's officers has
or is expected in the future to have a material adverse effect on the
business, properties, operations, financial condition,
results of operations or prospects of the Company or its subsidiaries.
Neither the Company nor any of its subsidiaries is a party to any
contract or agreement which in the judgment of the Company's officers
has or is expected to have a material adverse effect on the business,
properties, operations, financial condition, results of operations or
prospects of the Company or its subsidiaries.
u. TAX STATUS. Except as set forth on Schedule 3(u), the
Company and each of its subsidiaries has made or filed all federal and
state 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 and each of its subsidiaries 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 provision reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or
declarations apply. 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.
v. CERTAIN TRANSACTIONS. Except as set forth on Schedule
3(v) and in the SEC Documents and except for arm's length transactions
pursuant to which the Company makes payments in the ordinary course of
business upon terms no less favorable than the Company could obtain
from third parties and other than the grant of stock options disclosed
on Schedule 3(c), none of the officers, directors, or employees of the
Company is presently a party to any transaction with the Company (other
than for services as employees, officers and directors), including any
contract, agreement or other arrangement providing for the furnishing
of services to or by, providing for rental of real or personal property
to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any
corporation, partnership, trust or other entity in which any officer,
director, or any such employee has a substantial interest or is an
officer, director, trustee or partner.
w. DILUTIVE EFFECT. The Company understands and
acknowledges that the number of Conversion Shares issuable upon
conversion of the Series A Preferred Shares will increase in certain
circumstances. The Company further acknowledges that its obligation to
issue Conversion Shares upon conversion of the Series A Preferred
Shares in accordance with this Agreement and the Articles of Amendment
and the conversion of the Series A Preferred Shares is absolute and
unconditional regardless of the dilutive effect that such issuance may
have on the ownership interests of other shareholders of the Company.
x. FEES AND RIGHTS OF FIRST REFUSAL. The Company is not
obligated to offer the securities offered hereunder on a right of first
refusal basis or otherwise to any third parties including, but not
limited to, current or former shareholders of the Company,
underwriters, brokers, agents or other third parties.
4. COVENANTS.
a. BEST EFFORTS. Each party shall use its best efforts
timely to satisfy each of the conditions to be satisfied by it as
provided in Sections 6 and 7 of this Agreement.
b. FORM D. The Company agrees to file a Form D with
respect to the Series A Preferred Shares, the Conversion Shares, the
Warrants, and the Warrant Shares as required under Regulation D and to
provide a copy thereof to each Buyer promptly after such filing. The
Company shall, on or before the Closing Date, take such action as the
Company shall reasonably determine is
necessary to qualify the Series A Preferred Shares, the Conversion
Shares, the Warrants, and the Warrant Shares for, or obtain exemption
for the Series A Preferred Shares, the Conversion Shares, the Warrants,
and the Warrant Shares for, sale to the Buyers at the Closing pursuant
to this Agreement under applicable securities or "Blue Sky" laws of
the states of the United States, and shall provide evidence of any such
action so taken to the Buyers on or prior to the Closing Date.
c. REPORTING STATUS. Until the earlier of (i) the date
as of which the Investors (as that term is defined in the Registration
Rights Agreement) may sell all of the Conversion Shares without
restriction pursuant to Rule 144(k) promulgated under the 1933 Act (or
successor thereto), or (ii) the date on which (A) the Investors shall
have sold all the Conversion Shares and (B) none of the Series A
Preferred Shares is outstanding (the "REGISTRATION PERIOD"), the
Company shall file all reports required to be filed with the SEC
pursuant to the 1934 Act, and the Company shall not terminate its
status as an issuer required to file reports under the 1934 Act even if
the 1934 Act or the rules and regulations thereunder would otherwise
permit such termination.
d. USE OF PROCEEDS. The Company will use the proceeds
from the sale of the Series A Preferred Shares for substantially the
same purposes and in substantially the same amounts as indicated in
Schedule 4(d).
e. FINANCIAL INFORMATION. The Company agrees to send the
following to each Buyer during the Registration Period: (i) within five
(5) days after the filing thereof with the SEC, a copy of its Annual
Reports on Form 10-K, its Quarterly Reports on Form 10-Q, any Current
Reports on Form 8-K and any registration statements or amendments filed
pursuant to the 1933 Act; (ii) within one (1) day after release
thereof, copies of all press releases issued by the Company or any of
its subsidiaries and (ii) copies of the same notices and other
information given to the stockholders of the Company generally,
contemporaneously with the giving thereof to the stockholders.
f. RESERVATION OF SHARES. The Company shall take all
action necessary to at all times have authorized, and reserved for the
purpose of issuance, 200% of the number of Shares of Common Stock as
shall from time to time be sufficient to affect the conversion of all
of the Conversion Shares then outstanding, provided that the number of
Shares of Common Stock so authorized and reserved shall initially be no
less than12,164,704 Shares of Common Stock.
g. LISTINGS. The Company shall promptly secure the
listing of the Conversion Shares 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
shall maintain, so long as any other shares of Common Stock shall be so
listed, such listing of all Conversion Shares from time to time
issuable under the terms of this Agreement and the Registration Rights
Agreement. The Company shall maintain the Common Stock's authorization
for quotation in the over-the counter market. The Company shall
promptly provide to each Buyer copies of any notices it receives
regarding the continued eligibility of the Common Stock for trading in
the over-the-counter market.
h. EXPENSES. Each of the Company and the Buyers shall
pay all costs and expenses incurred by such parties in connection with
the negotiation, investigation, preparation, execution and delivery of
this Agreement and the Registration Rights Agreement. The reasonable
costs and expenses of X.X. Xxxxx Securities, Inc. and its counsel not
to exceed $10,000.00 shall be paid for by the Company at Closing.
i. AUTHORIZED SHARES OF COMMON STOCK, RESERVATION OF
SHARES. The Company shall at all times, so long as any of the Series A
Preferred Shares are outstanding, reserve and keep available out of its
authorized and unissued Common Stock, solely for the purpose of
effecting the conversion
of the Series A Preferred Shares, such number of shares of Common Stock
equal to or greater than 200% of the number of shares of Common Stock
for which are issuable upon conversion of all of the then outstanding
Series A Preferred Shares which are then outstanding or which could be
issued at any time under this Agreement or the Series A Preferred
Shares.
j. CORPORATE EXISTENCE. So long as any Series A
Preferred Shares remain outstanding, the Company shall not directly or
indirectly consummate any merger, reorganization, restructuring,
consolidation, sale of all or substantially all of the Company's assets
or any similar transaction or related transactions (each such
transaction, a "SALE OF THE COMPANY") except if the surviving or
successor entity in such transaction (i) expressly assumes, in writing,
the Company's obligations hereunder and under the Registration Rights
Agreement, the Series A Preferred Shares and any other agreements and
instruments entered into or delivered by the Company in connection
herewith and (ii) is a publicly traded corporation whose Common Stock
is listed for trading on the New York Stock Exchange, Inc., the
American Stock Exchange, the NASDAQ National Market or the NASDAQ
OTCBB.
k. TRANSACTIONS WITH AFFILIATES. So long as (i) any
Series A Preferred Shares are outstanding or (ii) any Buyer owns
Conversion Shares with a market value equal to or greater than
$200,000, the Company shall not, and shall cause each of its
subsidiaries not to, enter into, amend, modify or supplement, or permit
any subsidiary to enter into, amend, modify or supplement any
agreement, transaction, commitment, or arrangement with any of its or
any subsidiary's officers, directors, person who were officers or
directors at any time during the previous two years, stockholders who
beneficially own 5% or more of the Common Stock, or affiliates or with
any individual related by blood, marriage, or adoption to any such
individual or with any entity in which any such entity or individual
owns a 5% or more beneficial interest (each a "RELATED PARTY"), except
for (a) customary employment arrangements and benefit programs on
reasonable terms, (b) any agreement, transaction, commitment, or
arrangement on an arms-length basis on terms no less favorable than
terms which would have been obtainable from a person other than such
Related Party, (c) any agreement transaction, commitment, or
arrangement which is approved by a majority of the disinterested
directors of the Company, for purposes hereof, any director who is also
an officer of the Company or any subsidiary of the Company shall not be
disinterested director with respect to any such agreement, transaction,
commitment, or arrangement. "AFFILIATE" for purposes hereof means, with
respect to any person or entity, another person or entity that,
directly or indirectly, (i) has a 5% or more equity interest in that
person or entity, (ii) has 5% or more common ownership with that person
or entity, (iii) controls that person or entity, or (iv) share common
control with that person or entity. "Control" or "controls" for
purposes hereof means that a person or entity has the power, direct or
indirect, to conduct or govern the policies of another person or
entity.
l. The Company covenants and agrees that, in the event
that the Company's agency relationship with the transfer agent should
be terminated for any reason prior to a date which is two (2) years
after the Closing Date, the Company shall immediately appoint a new
transfer agent and shall require that the transfer agent execute and
agree to be bound by the terms of the Irrevocable Transfer Agent
Instructions.
m. NASDAQ LISTING. The Company covenants and agrees as
soon as practicable after the Company is qualified to have its Common
Stock (including all shares of Common Stock eligible for issuance
pursuant to the Series A Preferred Stock) quoted on the NASDAQ National
Market or the NASDAQ SmallCap Market to so apply for quotation of its
shares.
n. SHAREHOLDER APPROVAL. The Company covenants to submit
to its shareholders at its next shareholder meeting a proposal for
ratification of the issuance of the Series A Preferred Shares,
the Conversion Shares, the Warrants, and the Warrant Shares, if and as
required by the rules of the NASD applicable to the transaction.
5. TRANSFER AGENT INSTRUCTIONS.
The Company shall issue irrevocable instructions to its
transfer agent to issue certificates, registered in the name of each Buyer or
its respective nominee(s), for the Conversion Shares in such amounts as
specified from time to time by such Buyer to the Company upon conversion of
the Series A Preferred Shares (the "IRREVOCABLE TRANSFER AGENT
INSTRUCTIONS"), except as provided in Section 4(l) herein. Prior to
registration of the Conversion Shares under the 1933 Act, all such
certificates shall bear the restrictive legend specified in Section 2(g) of
this Agreement. The Company warrants that no instruction other than the
Irrevocable Transfer Agent Instructions referred to in this Section 5, and
stop transfer instructions to give effect to Section 2(f) hereof (in the case
of the Conversion Shares, prior to registration of such shares under the 0000
Xxx) will be given by the Company to its transfer agent and that the Series A
Preferred Shares, the Conversion Shares, the Warrants, and the Warrant
Shares, shall otherwise be freely transferable on the books and records of
the Company as and to the extent provided in this Agreement and the
Registration Rights Agreement. Nothing in this Section 5 shall affect in any
way the Buyers' obligations and agreement to comply with all applicable
securities laws upon resale of the Series A Preferred Shares, the Conversion
Shares, the Warrants, and the Warrant Shares. If a Buyer provides the Company
with an opinion of counsel, reasonably satisfactory in form, and substance to
the Company, that registration of a resale by such Buyer of any of the Series
A Preferred Shares, the Conversion Shares, the Warrants, and the Warrant
Shares, is not required under the 1933 Act, the Company shall permit the
transfer, and, in the case of the Conversion Shares, promptly instruct its
transfer agent to issue one or more certificates in such name and in such
denominations as specified by such Buyer. The Company acknowledges that a
breach by it of its obligations hereunder will cause irreparable harm to the
Buyers by vitiating the intent and purpose of the transaction contemplated
hereby. Accordingly, the Company acknowledges that the remedy at law for a
breach of its obligations under this Section 5 will be inadequate and agrees,
in the event of a breach or threatened breach by the Company of the
provisions of this Section 5, that the Buyers shall be entitled, in addition
to all other available remedies, to an injunction restraining any breach and
requiring immediate issuance and transfer, without the necessity of showing
economic loss and without any bond or other security being required.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to issue and sell
the Series A Preferred Shares to the Buyers at the Closing is subject to the
satisfaction, at or before the Closing Date, of each of the following
conditions, provided that these conditions are for the Company's sole benefit
and may be waived by the Company at any time in its sole discretion:
a. The Buyers shall have executed this Agreement and the
Registration Rights Agreement and delivered the same to the Company.
b. The Articles of Amendment shall have been filed with
the Secretary of State of the State of Colorado.
c. Each Buyer shall have delivered to the Company the
purchase price for the Series A Preferred Shares being purchased by
that Buyer at the Closing by wire transfer of immediately available
funds pursuant to the wire instructions provided by the Company.
d. The representations and warranties of the Buyers
shall be true and correct in all material respects as of the date when
made and as of the Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date), and
the Buyers shall have
performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Buyers at or prior to the
Closing Date.
7. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The obligation of the Buyers hereunder to purchase the
Series A Preferred Shares at the Closing is subject to the satisfaction, at
or before the Closing Date, of each of the following conditions, provided
that these conditions are for the Buyers' sole benefit and may be waived by
the Buyers at any time in its sole discretion:
a. The Company shall have executed this Agreement and
the Registration Rights Agreement, and delivered the same to the
Buyers.
b. The Common Stock shall be authorized for quotation on
the electronic bulletin board, over-the-counter market, AMEX the NASDAQ
National Market or The New York Stock Exchange, Inc., trading in the
Common Stock shall not have been suspended for any reason and all of
the Conversion Shares issuable upon conversion of the Series A
Preferred Shares shall be approved for listing on the electronic
bulletin board, over-the-counter market, AMEX, the NASDAQ National
Market or The New York Stock Exchange, Inc.
c. The representations and warranties of the Company
shall be true and correct in all material respects (except to the
extent that any of such representations and warranties is already
qualified as to materiality in Section 3 above, in which case, such
representations and warranties shall be true and correct without
further qualification) as of the date when made and as of the Closing
Date as though made at that time (except for representations and
warranties that speak as of a specific date) and the Company shall have
performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Company at or prior to the
Closing Date. The Buyers shall have received a certificate, executed by
the Chief Executive Officer of the Company, dated as of the Closing
Date, to the foregoing effect and as to such other matters as may be
reasonably requested by the Buyer including, without limitation an
update as of the Closing Date regarding the representation contained in
Section 3(c) above.
d. The Buyers shall have received the opinion of the
Company's counsel dated as of the Closing Date, in form, scope and
substance reasonably satisfactory to the Buyer and in substantially the
form of Exhibit "D" attached hereto.
e. The Company shall have executed and delivered to the
Buyers the Certificates (in such denominations as the Buyers shall
request) for the Series A Preferred Shares being purchased by the
Buyers at the Closing.
f. The Board of Directors of the Company shall have
adopted the resolutions in substantially the form of Exhibit "E"
attached hereto.
g. As of the Closing Date, the Company shall as of the
Closing Date have reserved out of its authorized and unissued Common
Stock, solely for the purpose of effecting the conversion of the Series
A Preferred Shares, such number of shares of Common Stock equal to or
greater than 100% of the number of shares of Common Stock for which are
issuable upon conversion of all of the Series A Preferred Shares which
could be issued at any time under this Agreement or the Series A
Preferred Shares.
h. The Irrevocable Transfer Agent Instructions, in form
and substance satisfactory to the Buyers, shall have been delivered to
and acknowledged in writing by the Company's transfer agent.
8. INDEMNIFICATION.
a. In consideration of the Buyers' execution and
delivery of this Agreement and acquiring the Series A Preferred Shares,
the Conversion Shares, the Warrants, and the Warrant Shares, hereunder
and in addition to all of the Company's other obligations under this
Agreement, the Company shall defend, protect, indemnify and hold
harmless the Buyers and each other holder of the Series A Preferred
Shares, the Conversion Shares, the Warrants, and the Warrant Shares,
and all of their officers, directors, employees and agents (including,
without limitation, those retained in connection with the transactions
contemplated by this Agreement) (collectively, the "BUYER 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 (irrespective 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 "BUYER
INDEMNIFIED LIABILITIES"), incurred by any of the Buyer Indemnitees as
a result of, or arising out of, or relating to (a) any
misrepresentation or breach of any representation or warranty made by
the Company in this Agreement, the Series A Preferred Shares or the
Registration Rights Agreement or any other certificate, instrument or
document contemplated hereby or thereby, (b) any breach of any
covenant, agreement or obligation of the Company contained in this
Agreement, the Articles of Amendment, or the Registration Rights
Agreement or any other certificate, instrument or document contemplated
hereby or thereby, or (c) any cause of action, suit or claim brought or
made against such Buyer Indemnitee and arising out of or resulting from
the execution, delivery, performance or enforcement of this Agreement
or any other instrument, document or agreement executed pursuant hereto
by any of the Buyer Indemnities, any transaction financed or to be
financed in whole or in part, directly or indirectly, with the proceeds
of the issuance of the Series A Preferred Shares or the status of the
Buyers or holder of the Series A Preferred Shares, the Conversion
Shares, the Warrants, and the Warrant Shares, as an investor in the
Company. To the extent that the foregoing undertaking by the Company
may be unenforceable for any reason, the Company shall make the maximum
contribution to the payment and satisfaction of each of the Buyer
Indemnified Liabilities which is permissible under applicable law.
b. In consideration of the Company's execution and
delivery of this Agreement and selling the Series A Preferred Shares,
the Conversion Shares, the Warrants, and the Warrant Shares, hereunder
and in addition to all of the Buyer's other obligations under this
Agreement, each Buyer shall defend, protect, indemnify and hold
harmless the Company and all of its officers, directors, employees and
agents (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) (collectively,
the "COMPANY 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 (irrespective of
whether any such Company Indemnitee is a party to the action for which
indemnification hereunder is sought), and including reasonable
attorneys' fees and disbursements (the "COMPANY INDEMNIFIED
LIABILITIES"), incurred by the Company Indemnitees or any of them as a
result of, or arising out of, or relating to (a) any misrepresentation
or breach of any representation or warranty made by such Buyer in this
Agreement, the Series A Preferred Shares or the Registration Rights
Agreement or any other certificate, instrument or document contemplated
hereby or thereby, (b) any breach of any covenant, agreement or
obligation of such Buyer contained in this Agreement, or the
Registration Rights Agreement or any other certificate, instrument or
document contemplated hereby or thereby, or (c) any cause of action,
suit or
claim brought or made against such Company Indemnitee and arising out
of or resulting from the execution, delivery, performance or
enforcement of this Agreement or any other instrument, document or
agreement executed pursuant hereto by any of the Company Indemnitees,
any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of the issuance of the Series
A Preferred Shares or the status of the Company as an issuer of the
Series A Preferred Shares, the Conversion Shares, the Warrants, and the
Warrant Shares. To the extent that the foregoing undertaking by a Buyer
may be unenforceable for any reason, such Buyer shall make the maximum
contribution to the payment and satisfaction of each of the Company
Indemnified Liabilities, which is permissible under applicable law.
Notwithstanding the foregoing, in no event shall the Company
Indemnified Liabilities exceed the net proceeds to such Buyer as a
result of a sale of Conversion Shares pursuant to the Registration
Statement.
9. GOVERNING LAW: MISCELLANEOUS.
a. GOVERNING LAW. This Agreement shall be governed by
and interpreted in accordance with the laws of the Georgia without
regard to the principles of conflict of laws. Accordingly, upon such
breach, Buyer, at its election and without limitation of its other
remedies, shall be entitled to pursue a claim for specific performance
of this Agreement, and Company hereby waives the right to assert any
defense thereto that Purchaser has an adequate remedy at law. The
parties further agree that any action between them shall be heard
exclusively in the state or federal courts located in Xxxxxx County,
Xxxxxxx
x. COUNTERPARTS. This 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. In the
event any signature page is delivered by facsimile transmission, the
party using such means of delivery shall cause four (4) additional
original executed signature pages to be physically delivered to the
other party within five (5) days of the execution and delivery hereof
c. HEADINGS. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
d. SEVERABILITY. If any provision of this Agreement
shall be invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or enforceability of
the remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other
jurisdiction.
e. ENTIRE AGREEMENT, AMENDMENTS. This Agreement
supersedes all other prior oral or written agreements between the
Buyers, the Company, their affiliates and persons acting on their
behalf with respect to the matters discussed herein, and this 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 any Buyer makes any representation, warranty, covenant or
undertaking with respect to such matters. 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.
f. NOTICES. Any notices, consents, waivers, or other
communications required or permitted to be given under the terms of
this Agreement must be in writing and will be deemed to have been
delivered (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile, provided a copy is mailed by U.S.
certified mail, return receipt requested; (iii) three (3) days after
being sent by U.S. certified mail, return receipt requested, or (iv)
one (1) day after deposit with a nationally recognized overnight
delivery 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:
0-Xxxxxxxx.xxx, Inc.
0000 Xxxx Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxx
Telephone Number: (000) 000-0000
Facsimile Number: (000) 000-0000
If to the Transfer Agent:
Securities Transfer Corporation
X.X. Xxx 000000
Xxxxxx, Xxxxx 00000-0000
Attn: __________________________
Telephone: (____) ___________________
Facsimile: (____) ___________________
If to a Buyer, to its address and facsimile number on the Schedule of
Buyers, with copies to the Buyer's counsel as set forth on the Schedule
of Buyers. Each party shall provide five (5) days' prior written notice
to the other party of any change in address or facsimile number.
g. SUCCESSORS AND ASSIGNS. This 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
Agreement or any rights or obligations hereunder without the prior
written consent of the Buyers. The Buyers may assign its rights
hereunder without the consent of the Company, provided, however, that
any such assignment shall not release the Buyers from their obligations
hereunder unless such obligations are assumed by such assignee and the
Company has consented to such assignment and assumption.
h. NO THIRD PARTY BENEFICIARIES. This 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.
i. SURVIVAL. Unless this Agreement is terminated under
Section 9(l), the representations and warranties of the Company and the
Buyer contained in Sections 2 and 3, the agreements and covenants set
forth in Sections 4, 5 and 9, the indemnification provisions set forth
in Section 8, shall survive the Closing. The Buyers shall be
responsible only for their own representations, warranties, agreements
and covenants hereunder.
j. PUBLICITY. The Company and the Buyers shall have the
right to approve before issuance any press releases or any other public
statements with respect to the transactions contemplated hereby;
provided, however, that the Company shall be entitled, without the
prior approval of the Buyers, to make any press release or other public
disclosure with respect to such transactions as is required by
applicable law and regulations (although the Buyers shall be consulted
by the Company in connection with any such press release or other
public disclosure prior to its release and shall be provided with a
copy thereof).
k. 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
Agreement and the consummation of the transactions contemplated hereby.
1. TERMINATION. In the event that the Closing shall not
have occurred with respect to the Buyers on or before five (5) business
days from the date hereof due to the Company's or the Buyers' failure
to satisfy the conditions set forth in Sections 6 and 7 above (and the
nonbreaching party's failure to waive such unsatisfied condition(s)),
the nonbreaching party shall have the option to terminate this
Agreement with respect to such breaching party at the close of business
on such date without liability of any party to any other party-
provided, however, that if this Agreement is terminated pursuant to
this Section 9(l), the Company shall remain obligated to reimburse the
Buyer for the expenses described in Section 4(h) above.
m. FINDER. The Company acknowledges that it has engaged
X.X. Xxxxx Securities, Inc. as a placement agent in connection with the
sale of the Series A Preferred Shares. The Company shall be responsible
for the payment of any placement agent fees (which includes cash to
purchase Common Stock) relating to or arising out of the transactions
contemplated hereby.
n. NO STRICT CONSTRUCTION. The language used in this
Agreement will be deemed to be the language chosen by the parties to
express their mutual intent, and no rules of strict construction will
be applied against any party.
IN WITNESS WHEREOF, the Buyer and the Company have caused this
Securities Purchase Agreement to be duly executed as of the date first written
above.
"COMPANY"
0-XXXXXXXX.XXX, INC.
By: /s/ Xxxxx X. Xxxxxx
----------------------
Name: Xxxxx X. Xxxxxx
Its: Chairman of the Board, Chief Executive
Officer and President
"BUYER"
CACHE CAPITAL "USA" LP
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------
Name: Xxxxxx X. Xxxxxxx
Its: Investment Manager
