▇▇▇▇▇▇.▇▇▇ INC.
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SUBSCRIPTION AGREEMENT
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INSTRUCTIONS
IMPORTANT: PLEASE READ CAREFULLY BEFORE SIGNING.
SIGNIFICANT REPRESENTATIONS ARE CONTAINED IN THIS DOCUMENT.
THERE ARE TWO AGREEMENTS ATTACHED. BOTH AGREEMENTS
NEED TO BE COMPLETED AND EXECUTED AS FOLLOWS:
1. Fill in the missing information on Page 1 (immediately following this page).
2. Individual Investors must complete Question 7.7 and sign the signature page
on Pages 4 and 8.
3. Entity Investors must complete Question 7.8 (certain persons affiliated with
the entity may be required to complete Question 7.7 and sign on Page 4) and
sign the signature page on Page 9.
DELIVER THE EXECUTED AGREEMENTS TO:
▇▇▇▇▇▇.▇▇▇ INC.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ATTENTION: ▇▇▇▇ ▇▇▇▇▇▇
TOGETHER WITH PAYMENT FOR THE UNITS SUBSCRIBED FOR.
Print Name of Subscriber ________________________
SUBSCRIPTION AGREEMENT
IMPORTANT: Please refer to Schedule 1 commencing on page 10 when reviewing this
document. The Schedule is incorporated herein and made a part hereof.
▇▇▇▇▇▇.▇▇▇ Inc. ("Worlds" or "Company") and the Investor hereby agree as
follows:
1. Subscription for Units. I (sometimes referred to herein as the
"Investor") hereby subscribe for and agree to purchase $__________ of the units
("Units") being offered by the Company described in the Company's Confidential
Private Placement Memorandum, dated December 28, 2000 ("Memorandum") upon the
terms and conditions of the offering ("Offering") described in this Agreement,
the Memorandum and Schedule 1.
2. Offering Period. The Units are currently being offered by the
Company through the date set forth on Schedule 1 ("Offering Termination Date").
3. Investor Delivery of Documents and Payment. I hereby tender to the
Company (i) the full purchase price by check or wire in accordance with the
instructions set forth on Schedule 1 and (ii) two manually executed copies of
this Subscription Agreement. Prior to the earlier of a Closing (as defined in
Section 5 hereof) on my Units or the Offering Termination Date, my check or wire
transfer will be held by the Company. If the Company does not have a Closing on
my Units as set forth on Schedule 1 by the Offering Termination Date, my payment
will be returned to me without interest or deduction.
4. Acceptance or Rejection of Subscription. The Company has the right
to reject this subscription for Units, in whole or in part for any reason and at
any time prior to the Closing, notwithstanding prior receipt by me of notice of
acceptance of my subscription. In the event of the rejection of this
subscription, my payment will be returned promptly to me without interest or
deduction and this Subscription Agreement will have no force or effect. The
Notes and Warrants comprising the Units subscribed for herein will not be deemed
issued to or owned by me until two copies of this Subscription Agreement have
been executed by me and countersigned by the Company and the Closing with
respect to my subscription has occurred.
5. Closing and Delivery of Securities. The initial closing of the
Offering ("Initial Closing" and such Initial Closing or any subsequent closing,
a "Closing") may occur at the Company's offices at any time prior to the
Offering Termination Date and after the receipt by the Company of subscriptions
for at least 13 Units from Insiders (as described on Schedule 1) and good funds
in payment thereof, as determined by the Company. Thereafter, the Company may
hold additional Closings on one or more additional subscriptions. In the event
my subscription is accepted and there is a Closing, my payment will be released
to the Company and the certificates representing the Notes and Warrants will be
delivered promptly to me, along with a fully executed version of this Agreement.
6. Offering to Accredited Investors. This Offering is limited to
accredited investors as defined in Section 2(15) of the Securities Act of 1933,
as amended ("Securities Act"), and Rule 501 promulgated thereunder, and is being
made without registration under the Securities Act in reliance upon the
exemptions contained in Sections 3(b), 4(2) and/or 4(6) of the Securities Act
and applicable state securities laws. As indicated by my responses on page 4 or
5 hereof, the Investor is an "accredited investor" within the meaning of Section
2(15) of the Securities Act and Rule 501 promulgated thereunder.
7. Investor Representations and Warranties. I acknowledge, represent
and warrant to the Company as follows:
7.1 Obligations of the Company and the Investor. The
Company has no obligation to me other than as set forth in this Agreement,
including but not limited to the obligations described in Section 7.1 of
Schedule 1. I have read and agree to the restrictions set forth in Section 7.1
of Schedule 1. I am aware that, except for any rescission rights that may be
provided under applicable laws, I am not entitled to cancel, terminate or revoke
this subscription, and any agreements made in connection herewith will survive
my death or disability. In order to induce the Company to issue and sell the
Notes and Warrants to me, I represent and warrant that the information relating
to me stated herein is true and complete as of the date hereof and will be true
and complete as of the date on which my purchase of Notes and Warrants becomes
effective. If, prior to the final consummation of the offer and sale of the
Notes and Warrants, there should be any change in such information or any of
such information becomes incorrect or incomplete, I agree to notify the Company
and supply the Company promptly with corrective information.
7.2 Information About the Company.
(a) I have read the Memorandum and all exhibits
listed therein and fully understand the Memorandum, including the Section
entitled "Risk Factors" and its exhibits. I have been given access to full and
complete information regarding the Company and have utilized such access to my
satisfaction for the purpose of verifying the information included in the
Memorandum and exhibits thereto, and I have either met with or been given
reasonable opportunity to meet with officers of the Company for the purpose of
asking reasonable questions of such officers concerning the terms and conditions
of the offering of the Notes and Warrants and the business and operations of the
Company and all such questions have been answered to my full satisfaction. I
have also been given an opportunity to obtain any additional relevant
information to the extent reasonably available to the Company. I have received
all information and materials regarding the Company that I have reasonably
requested. After my reading of the materials about the Company, I understand
that there is no assurance as to the future performance of the Company. I have
not relied on information other than what can be found in the Memorandum in
making my decision to invest in the Notes and Warrants.
(b) I have received no representation or
warranty from the Company or any of its respective officers, directors,
employees or agents in respect of my investment in the Company. I am not
participating in the offer as a result of or subsequent to: (i) any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television, radio or the
Internet or (ii) any seminar or meeting whose attendees have been invited by any
general solicitation or general advertising.
7.3 Speculative Investment. I am aware that the Notes and
Warrants are a speculative investment that involves a high degree of risk
including, but not limited to, the risk of losses from operations of the Company
and the total loss of my investment. I have such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of an investment in the Notes and Warrants and have obtained, in my
judgment, sufficient information from the Company to evaluate the merits and
risks of an investment in the Company. I have not utilized any person as my
purchaser representative (as defined in Regulation D) in connection with
evaluating such merits and risks and have relied solely upon my own
investigation in making a decision to invest in the Company. I have been urged
to seek independent advice from my professional advisors relating to the
suitability of an investment in the Company in view of my overall financial
needs and with respect to the legal and tax implications of such investment. I
believe that the investment in the Notes and Warrants is suitable for me based
upon my investment objectives and financial needs, and I have adequate means for
providing for my current financial needs and contingencies and have no need for
liquidity with respect to my investment in the Company. The investment in the
Company does not constitute all or substantially all of my investment portfolio.
2
7.4 Restrictions on Transfer. I understand that (i) neither
the Notes or Warrants nor the shares of common stock underlying the Notes or
Warrants have been registered under the Securities Act or the securities laws of
certain states in reliance on specific exemptions from registration, (ii) no
securities administrator of any state or the federal government has recommended
or endorsed this Offering or made any finding or determination relating to the
fairness of an investment in the Company, and (iii) the Company is relying on my
representations and agreements for the purpose of determining whether this
transaction meets the requirements of the exemptions afforded by the Securities
Act and certain state securities laws. Although the Company has agreed to file a
Registration Statement covering the resale by me of the shares underlying the
Notes and Warrants, I acknowledge that there is no assurance that the Company
will do so, that such Registration Statement, if filed, will be declared
effective or, if declared effective, that the Company will be able to keep it
effective until I effect the resale of securities registered thereby.
7.5 Limited Market for Notes; No Market for Warrants. I am
purchasing the securities for my own account for investment and not with a view
to, or for sale in connection with, any subsequent distribution of the Notes or
Warrants, or the shares underlying them, nor with any present intention of
selling or otherwise disposing of all or any part of the securities. I
understand that there is no market for the Notes or Warrants, and that there is
a limited market at present (and there may not be any market in the future) for
the shares of the Company's common stock. I agree that (i) the purchase of the
Notes and Warrants is a long-term investment, (ii) I may have to bear the
economic risk of investment for an indefinite period of time because the Notes
and Warrants have not been registered under the Securities Act and neither the
Notes or Warrants nor the shares of Common Stock underlying the Notes or
Warrants may be resold, pledged, assigned, or otherwise disposed of unless they
are subsequently registered under the Securities Act and under applicable
securities laws of certain states or an exemption from such registration is
available. I understand that the Company is under no obligation to register the
Notes or Warrants or the shares underlying them, except as set forth in Section
7.1 of Schedule 1, or to assist me in complying with any exemption from such
registration under the Securities Act or any state securities laws. I hereby
authorize the Company to place a legend denoting the restrictions on the
certificates representing the Notes and Warrants.
7.6 Entity Authority. If the Investor is a corporation,
partnership, company, trust, employee benefit plan, individual retirement
account, ▇▇▇▇▇ Plan, or other tax-exempt entity, it is authorized and qualified
to become an investor in the Company and the person signing this Subscription
Agreement on behalf of such entity has been duly authorized by such entity to do
so.
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7.7 Accredited Investor Status For Individuals. (INVESTORS
THAT ARE CORPORATIONS, LIMITED LIABILITY COMPANIES, PARTNERSHIPS, REVOCABLE
TRUSTS, IRREVOCABLE TRUSTS, EMPLOYEE BENEFIT PLAN TRUSTS AND INDIVIDUAL
RETIREMENT ACCOUNTS SHOULD IGNORE THE FOLLOWING QUESTIONS AND PROCEED TO SECTION
7.8).
(a) I am an accredited investor within the meaning of Section
2(15) of the Securities Act and Rule 501 promulgated thereunder because (check
any boxes that apply):
|_| My individual annual income during each of the two most
recent years exceeded $200,000 and I expect my annual
income during the current year will exceed $200,000.
|_| If I am married, my joint annual income with my spouse
during each of the two most recent years exceeded
$300,000 and I expect my joint annual income with my
spouse during the current year will exceed $300,000.
|_| My individual or joint (together with my spouse) net
worth (including my home, home furnishings and
automobiles) exceeds $1,000,000.
(b) The aggregate value of my assets is approximately $______.
(c) My aggregate liabilities are approximately $___________.
(d) My current and expected income is:
YEAR INCOME
---- ------
2000 (estimated) $
1999 (Actual) $
1998 (Actual) $
Individual Investors may skip to Section 7.9 on page 5. Each person
associated with an Entity Investor who is required under Section 7.8 to
separately complete the questions in this Section 7.7 must sign the below
confirmation:
I hereby confirm the answers to Section 7.7 are true and
correct in all respects as of the date hereof and will be on
the date of the purchase of Units.
Executed this ____ day of ________, 200__.
Signature: __________________________________________
Print Name: __________________________________________
4
7.8 Accredited Investor Status for Entities. (INVESTORS
WHO ARE INDIVIDUALS SHOULD IGNORE THESE QUESTIONS.)
(a) The entity is a (check applicable box):
|_| Corporation
|_| Limited Liability Company
|_| Partnership
|_| Revocable Trust
|_| Irrevocable Trust (if the Investor is an Irrevocable
Trust, a supplemental questionnaire must be completed
by the person directing the decision for the trust.
Please contact ▇▇▇▇▇ ▇. ▇▇▇▇, Esq. at (▇▇▇) ▇▇▇-▇▇▇▇
for a copy of such supplemental questionnaire.) |_|
Employee Benefit Plan Trust
|_| Individual Retirement Account (If you are an ▇▇▇, skip
(b))
(b) Check all boxes which apply:
|_| The Entity was not formed for the specific purpose of
investing in the Company
|_| The Entity has total assets in excess of $5 million
dollars
|_| For Employee Benefit Plan Trusts Only: The decision to
invest in the Company was made by a plan fiduciary, as
defined in Section 3(21) of ERISA, who is either a
bank, insurance company or registered investment
advisor.
(c) If you did not check the first two of the three boxes in
Question (b) or if the Entity is an Individual Retirement Account, a
Self-directed Employee Benefit Plan Trust or an Irrevocable Trust, list the name
of each person who:
(i) owns an equity interest in the Entity (i.e., each
shareholder if the Entity is a corporation, each member
if the Entity is a limited liability company and each
partner if the Entity is a partnership); or
(ii) is a grantor for the revocable trust or Individual
Retirement Account; or
(iii) is the person making the investment decision for a
self-directed Employee Benefit Plan Trust; or
(iv) is the person making the investment decisions for an
Irrevocable Trust.
____________________________ _______________________
____________________________ _______________________
EACH PERSON LISTED ABOVE MUST SEPARATELY COMPLETE AND SUBMIT TO THE
COMPANY THE ANSWERS TO QUESTION 7.7 AND SIGN THE WRITTEN
CONFIRMATION AT THE END OF SECTION 7.7.
5
7.9 No Offer Until Determination of Suitability. I acknowledge
that any delivery to me of the documents relating to the Offering prior to the
determination by the Company of my suitability will not constitute an offer of
the Notes or Warrants until such determination of suitability is made.
7.10 For Florida Residents. The Notes and Warrants have not
been registered under the Securities Act of 1933, as amended, or the Florida
Securities and Investor Protection Act ("Florida Securities Act"), by reason of
specific exemptions thereunder relating to the limited availability of the
Offering. The Notes and Warrants cannot be sold, transferred, or otherwise
disposed of to any person or entity unless subsequently registered under the
Securities Act of 1933, as amended, or the Florida Securities Act, if such
registration is required. Pursuant to Section 517.061(11) of the Florida
Securities Act, when sales are made to five (5) or more persons in Florida, any
sale made pursuant to Subsection 517.061(11) of the Florida Securities Act will
be voidable by such Florida purchaser either within three days after the first
tender of consideration is made by the purchaser to the issuer, an agent of the
issuer, or an escrow agent, or within three days after the availability of the
privilege is communicated to such purchaser, whichever occurs later. In
addition, as required by Section 517.061(11)(a)(3), Florida Statutes and by Rule
3-500.05(a) thereunder, if I am a Florida resident I may have, at the offices of
the Company, at any reasonable hour, after reasonable notice, access to the
materials set forth in the Rule that the Company can obtain without unreasonable
effort or expense.
8. Indemnification. I hereby agree to indemnify and hold harmless the
Company and its officers, directors, stockholders, employees, agents, and
attorneys against any and all losses, claims, demands, liabilities, and expenses
(including reasonable legal or other expenses incurred by each such person in
connection with defending or investigating any such claims or liabilities,
whether or not resulting in any liability to such person or whether incurred by
the indemnified party in any action or proceeding between the indemnitor and
indemnified party or between the indemnified party and any third party) to which
any such indemnified party may become subject, insofar as such losses, claims,
demands, liabilities and expenses (a) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact made by me and
contained herein, or (b) arise out of or are based upon any breach by me of any
representation, warranty, or agreement made by me contained herein.
9. Severability; Remedies. In the event any parts of this
Subscription Agreement are found to be void, the remaining provisions of this
Subscription Agreement are nevertheless binding with the same effect as though
the void parts were deleted.
10. Governing Law and Jurisdiction. This Subscription Agreement will
be deemed to have been made and delivered in New York City and will be governed
as to validity, interpretation, construction, effect and in all other respects
by the internal laws of the State of New York. Each of the Company and the
Investor hereby (i) agrees that any legal suit, action or proceeding arising out
of or relating to this Subscription Agreement will be instituted exclusively in
New York State Supreme Court, County of New York, or in the United States
District Court for the Southern District of New York, (ii) waives any objection
to the venue of any such suit, action or proceeding and the right to assert that
such forum is not a convenient forum for such suit, action or proceeding, (iii)
irrevocably consents to the jurisdiction of the New York State Supreme Court,
County of New York, and the United States District Court for the Southern
District of New York in any such suit, action or proceeding, (iv) agrees to
accept and acknowledge service of any and all process that may be served in any
such suit, action or proceeding in New York State Supreme Court, County of New
York or in the United States District Court for the Southern District of New
York and (v) agrees that service of process upon it mailed by certified mail to
its address set forth on my signature page will be deemed in every respect
effective service of process upon it in any suit, action or proceeding.
11. Counterparts. This Subscription Agreement may be executed in one
or more counterparts, each of which will be deemed an original but all of which
together will constitute one and the same instrument. The execution of this
Subscription Agreement may be by actual or facsimile signature.
12. Benefit. This Subscription Agreement is binding upon and inures
to the benefit of the parties hereto and their respective heirs, executors,
personal representatives, successors and assigns.
6
13. Notices. All notices, offers, acceptance and any other acts under
this Subscription Agreement (except payment) must be in writing, and is
sufficiently given if delivered to the addressees in person, by overnight
courier service, or, if mailed, postage prepaid, by certified mail (return
receipt requested), and will be effective three days after being placed in the
mail if mailed, or upon receipt or refusal of receipt, if delivered personally
or by courier or confirmed telecopy, in each case addressed to a party. All
communications to me should be sent to my preferred address on the signature
page hereto. All communications to the Company should be sent to the addresses
set forth on Schedule 1. Each party may designate another address by notice to
the other parties.
14. Oral Evidence. This Subscription Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior oral and written agreements between the parties hereto with
respect to the subject matter hereof. This Subscription Agreement may not be
changed, waived, discharged, or terminated orally, but rather, only by a
statement in writing signed by the party or parties against which enforcement or
the change, waiver, discharge or termination is sought.
15. Section Headings. Section headings herein have been inserted for
reference only and will not bedeemed to limit or otherwise affect, in any
matter, or be deemed to interpret in whole or in part, any of the terms or
provisions of this Subscription Agreement.
16. Survival of Representations, Warranties and Agreements. The
representations, warranties and agreements contained herein will survive the
delivery of, and the payment for, the Units.
17. Acceptance of Subscription. The Company may accept this
Subscription Agreement at any time for all or any portion of the Units
subscribed for by executing a copy hereof as provided and notifying me within a
reasonable time thereafter.
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SIGNATURE PAGE FOR INDIVIDUAL INVESTORS - COMPLETE ALL INFORMATION
Name: ________________________ Name of Joint Investor (if any): ___________
Residence Address: __________________________________________________________
Telephone: (H) ___________________ (W) ____________________ Fax ______________
Occupation: ____________________________ Employer: __________________________
Business Address: _____________________________________________________________
Send communications to:
|_| Home |_| Office |_| E-Mail:
E-mail address: _________________________________________________
Age: _______________
Social Security Number: ____________________
Check manner in which Notes and Warrants are to be held:
|_| Individual |_| Tenants in |_| Joint Tenants with
Ownership Common Right of Survivorship
(both parties must sign)
|_| Community
Property |_| Other (please indicate)
_______________________
ALL INVESTORS MUST SIGN AND PRINT The foregoing subscription is
NAME BELOW: accepted and the Company hereby
Signature: ______________________________ agrees to be bound by its terms.
Print Name: ______________________________ ▇▇▇▇▇▇.▇▇▇ INC.
Signature: ______________________________ By:__________________________
Print Name:_______________________________ Name:
Title:
Date:
8
SIGNATURE PAGE FOR ENTITY INVESTORS - COMPLETE ALL INFORMATION
Name of Entity: _______________________________________________________________
Address of Principal Office: _________________________________________________
Telephone: ________________________ Fax: ____________________________
Taxpayer Identification Number: ________________________________
Check type of Entity:
|_| Employee Benefit |_| Limited |_| General |_| Individual
Plan Trust Partnership Partnership Retirement Account
|_| Limited Liability |_| Trust |_| Corporation |_| Other (please
Company indicate)
__________________
Date of Formation or incorporation: ___________ State of Formation or
incorporation: __________
Describe the business of the Entity: __________________________________________
_______________________________________________________________________________
List the names and positions of the executive officers, managing members,
partners or trustees authorized to act with respect to investments by the Entity
generally and specify who has the authority to act with respect to this
investment.
Name Position Authority for this investment
(yes or no)
---------------------- ---------------------- -------------------------------
---------------------- ---------------------- -------------------------------
---------------------- ---------------------- -------------------------------
---------------------- ---------------------- -------------------------------
ALL INVESTORS MUST SIGN AND PRINT The foregoing subscription is accepted and
NAME BELOW: the Company hereby agrees to be bound by
its terms.
▇▇▇▇▇▇.▇▇▇ INC.
----------------------------------
Signature of Authorized Signatory:
Name:
Title: By:_______________________________________
Name:
Title:
Date:
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SCHEDULE 1
1. Subscription. The Company is offering Units, each consisting of a $50,000
principal amount 6% convertible promissory note ("Note") and warrants
("Warrants") to purchase 50,000 shares of the common stock of the Company
("Common Stock"). Each Unit shall be sold for $50,000. The Company reserves
the right to sell fractional Units in its sole discretion.
2. Offering Period. The Company will sell up to 30 Units ($1,500,000) only to
accredited investors during the period beginning on December 28, 2000 and
ending on January 31, 2001 unless such ending date is extended without
notice to the investor, by the Company to a date not later than an
additional thirty (30) days thereafter ("Offering Termination Date"). The
Company reserves the right to sell additional Units in the event this
Offering is over-subscribed. Certain officers, directors and affiliates of
the Company (collectively, the "Insiders") have agreed to purchase an
aggregate of at least thirteen Units in this offering ($650,000) and
reserve the right to purchase more. All or a portion of the purchases made
by the Insiders may be funded through the conversion of up to $500,000 of
indebtedness and other obligations owed by the Company to such Insiders.
The Company will not receive any cash in connection with any purchase of
Units made in the foregoing manner.
3. Purchase. If you are tendering a check, please make it payable to
"▇▇▇▇▇▇.▇▇▇ Inc." If you are paying by wire transfer, please instruct your
bank to wire funds to:
The Bank of New York
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
ABA Routing Number: ▇▇▇▇▇▇▇▇▇
DDA Number: 8900275847
Attn: BNY ▇▇▇▇▇▇▇▇ Money Fund, ▇▇▇▇▇▇▇▇ Shares
Ref: (59-8316, ▇▇▇▇▇▇.▇▇▇, Inc., ▇▇-▇▇▇▇▇▇▇)
All wires should stipulate the name of the subscriber, including those sent
by brokers or other agents.
Prior to wiring funds, investors should contact ▇▇▇▇ ▇▇▇▇▇▇ at (203)
409-2100 and give him the following information:
(1) when the money will be wired;
(2) the name and address of the bank from which the money is being wired;
and
(3) the exact dollar amount being wired.
4.-5. Not applicable
6. Closings. As soon as practicable after the Company receives subscriptions,
together with all necessary paperwork and funds (or conversions), for at
least 13 Units, the Company shall hold an initial closing ("Initial
Closing"). Thereafter, the Company shall hold additional closings from time
to time on subscriptions received and accepted after the Initial Closing
and on or prior to the Offering Termination Date.
7. Obligations of ▇▇▇▇▇▇.▇▇▇ and the Investor
A. Registration Rights.
(1) Our Obligation to Register. Within 90 days after the date of
the Initial Closing, the Company shall file a Registration Statement,
or include the Registrable Securities (as defined below) in a
registration statement already filed by the Company but not yet
10
declared effective (in either case, "Registration Statement") under
the Securities Act of 1933 ("Securities Act") with the Securities and
Exchange Commission ("SEC") registering for resale the shares of
Common Stock issuable upon conversion of the Notes and upon exercise
of the Warrants ("Registrable Securities") purchased in the Offering.
The Company shall use its best efforts to have the Registration
Statement declared effective by the SEC and be kept current and
effective until all the Registrable Securities are sold or can be sold
freely under an appropriate exemption, without limitation.
(2) Fees and Expenses. In any registration statement in which
Registrable Securities are included pursuant to this Section, the
Company shall bear all expenses and pay all fees incurred in
connection therewith, excluding underwriting discounts and commissions
payable with respect to the Registrable Securities and the fees and
expenses of any professionals engaged by holders of the Registrable
Securities ("Holders"), but including the expenses of providing a
reasonable number of copies of the prospectus contained therein to the
Holders.
(3) Indemnification by Company.
(a) The Company shall indemnify the Holder of the
Registrable Securities to be sold pursuant to any registration
statement hereunder and any underwriter or person deemed to be an
underwriter under the Act and each person, if any, who controls such
Holder or underwriters or persons deemed to be underwriters within the
meaning of Section 15 of the Act or Section 20(a) of the Securities
Exchange Act of 1934, as amended ("Exchange Act"), against all loss,
claim, damage, expense or liability (including all reasonable
attorneys' fees and other expenses reasonably incurred in
investigating, preparing or defending against any claim whatsoever) to
which the Holder may become subject under the Act, the Exchange Act or
otherwise, arising from such registration statement. The Holder of the
Registrable Securities to be sold pursuant to such registration
statement, and their successors and assigns, shall indemnify the
Company, against all loss, claim, damage, expense or liability
(including all reasonable attorneys' fees and other expenses
reasonably incurred in investigating, preparing or defending against
any claim whatsoever) to which the Company may become subject under
the Act, the Exchange Act or otherwise, arising from information
furnished by or on behalf of the Holder, in writing, for specific
inclusion in such registration statement.
(b) If any action is brought against a party hereto,
("Indemnified Party") in respect of which indemnity may be sought
against the other party ("Indemnifying Party"), such Indemnified Party
shall promptly notify Indemnifying Party in writing of the institution
of such action and Indemnifying Party shall assume the defense of such
action, including the employment and fees of counsel reasonably
satisfactory to the Indemnified Party. Such Indemnified Party shall
have the right to employ its or their own counsel in any such case,
but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party unless (i) the employment of such counsel shall
have been authorized in writing by Indemnifying Party in connection
with the defense of such action, or (ii) Indemnifying Party shall not
have employed counsel to defend such action, or (iii) such Indemnified
Party shall have been advised by counsel that there may be one or more
legal defenses available to it which may result in a conflict between
the Indemnified Party and Indemnifying Party (in which case
Indemnifying Party shall not have the right to direct the defense of
such action on behalf of the Indemnified Party), in any of which
events, the reasonable fees and expenses of not more than one
additional firm of attorneys designated in writing by the Indemnified
Party shall be borne by Indemnifying Party. Notwithstanding anything
to the contrary contained herein, if Indemnified Party shall assume
the defense of such action as provided above, Indemnifying Party shall
not be liable for any settlement of any such action effected without
its written consent.
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(c) If the indemnification or reimbursement provided for
hereunder is finally judicially determined by a court of competent
jurisdiction to be unavailable to an Indemnified Party (other than as
a consequence of a final judicial determination of willful misconduct,
bad faith or gross negligence of such Indemnified Party), then
Indemnifying Party agrees, in lieu of indemnifying such Indemnified
Party, to contribute to the amount paid or payable by such Indemnified
Party (i) in such proportion as is appropriate to reflect the relative
benefits received, or sought to be received, by Indemnifying Party on
the one hand and by such Indemnified Party on the other or (ii) if
(but only if) the allocation provided in clause (i) of this sentence
is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in
such clause (i) but also the relative fault of Indemnifying Party and
of such Indemnified Party; provided, however, that in no event shall
the aggregate amount contributed by the Holder exceed the profit, if
any, earned by the Holder as a result of the exercise by him of the
Warrants and the sale by him of the underlying shares of Common Stock.
(d) The rights accorded to Indemnified Parties hereunder
shall be in addition to any rights that any Indemnified Party may have
at common law, by separate agreement or otherwise.
(4) Elimination of Registration Rights. Notwithstanding
anything to the contrary in Sections 1 and 2 above, no Holder of
Registrable Securities shall be entitled to have such securities
registered under the Securities Act in accordance with the provisions
of such Sections if, (a) in the opinion of our counsel, they may be
sold without restriction pursuant to Rule 144(k) promulgated under the
Securities Act and any restrictive legends under the Securities Act
are removed from the certificates representing such securities and any
stop transfer order for such certificates is removed; or (b) the
Holder has not complied with the Company's request for information
typically included in registration statements with respect to the
sellers of securities and their ownership of securities.
(5) Successors and Assigns. The registration and other rights
granted to the Investors in this Section shall inure to the benefit of
the Investor's successors, heirs, pledges, assignees, transferees and
purchasers of the Notes, Warrants and Registrable Securities.
8.-12. Not applicable.
13. Notices. All communications to us should be sent to:
▇▇▇▇▇▇.▇▇▇ Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇▇▇▇ Mollen & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Esq.
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
14.-17. Not applicable.
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