Exhibit 10.21
ADM TRONICS UNLIMITED, INC.
AND ITS MAJORITY-OWNED SUBSIDIARY
IVIVI TECHNOLOGIES, INC.
UNSECURED 6% JOINT AND SEVERAL CONVERTIBLE PROMISSORY NOTE AND CLASS A COMMON
STOCK WARRANTS
SUBSCRIPTION AGREEMENT
______ __, 2005
[INVESTOR NAME]
Ladies and Gentlemen:
ADM Tronics Unlimited, Inc. ("ADM"), a Delaware corporation and Ivivi
Technologies, Inc. ("IVIVI"), a New Jersey corporation, hereby confirm their
agreement with _________ (the "PURCHASER") and Maxim Group LLC ("MAXIM"), acting
as broker in the transactions contemplated herein, as set forth below. ADM and
Ivivi shall be collectively referred to herein as the "COMPANY."
1. The Securities. Subject to the terms and conditions herein
contained, the Company proposes to issue and sell to the Purchaser an aggregate
of: (i) $______ principal amount unsecured 6% joint and several convertible
promissory note ("NOTE"); ________ Class A Warrants of ADM (the "ADM WARRANTS");
and ____ Class A Warrants of Ivivi (the "IVIVI WARRANTS"). The Note shall be
convertible into either shares of ADM common stock, $0.0005 par value per share
("ADM COMMON STOCK"), or Ivivi common stock, no par value per share ("IVIVI
COMMON STOCK"), as the case may be, in accordance with the terms of the Note
attached hereto as Exhibit A. The ADM Warrants are exercisable into shares of
ADM's Common Stock and the Ivivi Warrants are exercisable into shares of Ivivi
Common Stock, each in accordance with the respective terms of the ADM Warrant
attached hereto as Exhibit B and the Ivivi Warrant attached hereto as Exhibit C.
The Note, ADM Warrants, Ivivi Warrants and the securities issuable
upon the exercise or conversion of each of the foregoing, as the case may be,
are sometimes herein collectively referred to as the "SECURITIES." This
Agreement, the Note, the ADM Warrant and the Ivivi Warrant are sometimes herein
collectively referred to as the "TRANSACTION DOCUMENTS."
The Securities will be offered and sold to the Purchaser without such
offers and sales being registered under the Securities Act of 1933, as amended
(together with the rules and regulations of the Securities and Exchange
Commission (the "SEC") promulgated thereunder, the "SECURITIES ACT"), in
reliance on exemptions therefrom.
In connection with the sale of the Securities, the Company has made
available (including electronically via the SEC's ▇▇▇▇▇ system) to Purchaser and
the Purchaser has reviewed ADM's periodic and current reports, forms, schedules,
proxy statements and other documents (including exhibits and all other
information incorporated by reference) filed with the SEC under the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"). These reports, forms,
schedules, statements, documents, filings and amendments, are collectively
referred to as the "DISCLOSURE DOCUMENTS." All references in this Agreement to
financial statements and schedules and other information which is "contained,"
"included" or "stated" in the Disclosure Documents (or other references of like
import) shall be deemed to mean and include all such financial statements and
schedules, documents, exhibits and other information which is incorporated by
reference in the Disclosure Documents.
2. Representations and Warranties of the Company. ADM and Ivivi,
jointly and severally, hereby represent, warrant, covenant and agree with and to
Purchaser as follows:
(a) ADM has been validly formed and legally exists as a corporation in good
standing under the laws of the State of Delaware and Ivivi has been validly
formed and legally exists as a corporation in good standing under the laws of
the State of New Jersey. Each of ADM and Ivivi have full corporate power and
authority to conduct their businesses as currently conducted, and are in good
standing in each jurisdiction in which the conduct of their businesses or the
nature of their properties requires such qualification or authorization, except
where the failure to be so qualified or authorized and in good standing could
not reasonably be expected to have a material adverse effect on the business and
financial condition of either ADM or Ivivi or any other Subsidiary (as defined
below) of ADM, each taken as a whole (a "MATERIAL ADVERSE EFFECT"). As of the
date hereof, ADM does not have, directly or indirectly, any subsidiaries other
than Ivivi or as disclosed in the Company's filings with the SEC (each, a
"SUBSIDIARY" and collectively, the "SUBSIDIARIES"). Except for Sonotron Medical
Systems, Inc., each Subsidiary has been duly organized, is validly existing and
in good standing under the laws of the jurisdiction of its organization, has the
power and authority to own its properties and to conduct its business and is
duly qualified and authorized to transact business and is in good standing in
each jurisdiction in which the conduct of its business or the nature of its
properties requires such qualification or authorization, except where the
failure to be so qualified or authorized and in good standing could not
reasonably be expected to have a Material Adverse Effect. 75.7% of the issued
and outstanding capital stock of Ivivi is owned by ADM, and, except as set forth
on Schedule 2(a), all of the issued and outstanding capital stock of each other
Subsidiary is owned by ADM, free and clear of any liens, and each of such shares
of capital stock has been duly authorized and validly issued, and is
non-assessable.
(b) The authorized capital stock of ADM consists of 155,000,000 shares of
capital stock, of which: (i) 150,000,000 are classified as ADM Common Stock, par
value $0.0005 per share, and (ii) 5,000,000 are classified as "blank check"
preferred stock, par value $0.0005 per share. As of the date hereof and as of
the Closing Date (except for issuances contemplated by this Agreement),
51,882,037 shares of ADM Common Stock, no shares of preferred stock and no other
shares of capital stock of ADM are or will be issued and outstanding, and all
such shares of capital stock are, as the case may be, duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive rights. The
authorized capital stock of Ivivi consists of 10,000,000 shares of Ivivi Common
Stock, no par value per share. As of the date
hereof and as of the date on which the Securites are fully paid for by Purchaser
("CLOSING DATE") (except for the issuances contemplated by this Agreement),
2,641,000 shares of Ivivi Common Stock are or will be issued and outstanding,
and all such shares of common stock are, as the case may be, duly authorized,
validly issued, fully paid and nonassessable and not subject to preemptive
rights.
(c) This Agreement has been duly authorized, executed and delivered by each
of ADM and Ivivi and constitutes the legal, valid and binding obligation of ADM
and Ivivi, enforceable against ADM and Ivivi in accordance with its terms,
except insofar as enforcement of the indemnification or contribution provisions
hereof may be limited by applicable laws or principles of public policy and
except further as to enforcement, to the availability of equitable remedies and
limitations imposed by bankruptcy, insolvency, reorganization and other similar
laws and related court decisions relating to or affecting creditors' rights
generally.
(d) None of the Subscription Agreement, Note, ADM Warrant, Ivivi Warrant,
or other documents required in connection with the sale of Securities hereunder
(collectively, the "SUBSCRIPTION DOCUMENTS"), nor any of the Disclosure
Documents contain or will contain any untrue statement of a material fact, and
the Disclosure Documents will not omit to state any material fact necessary in
order to make the statements made, in light of the circumstances under which
they were made, not misleading. If, at any time before the Closing Date, there
should be any change which would cause the Disclosure Documents not to comply
with this Section 2(d), the Company will promptly advise Purchaser thereof and
make any necessary corrective filings with the SEC and prepare and furnish
Purchaser with copies of such supplements or amendments to the Subscription
Documents as will cause the Subscription Documents, as so supplemented or
amended, to comply with this Section 2(d).
(e) The issuance, sale and delivery of Securities have been duly authorized
by all requisite corporate action of the ADM and Ivivi. When so issued, sold and
delivered in accordance with the terms hereof, the Transaction Documents will be
duly executed, issued and delivered and will constitute valid and legal
obligations of ADM and Ivivi enforceable in accordance with their respective
terms and, in each case, will not be subject to preemptive or other similar
rights, shall be free and clear of all liens, encumbrances and rights of first
refusal of any kind (collectively, "LIENS"). ADM and Ivivi will, at all times
while the Notes, ADM Warrants, Ivivi Warrants and Agent Warrants (as defined
herein) are outstanding, maintain an adequate reserve of duly authorized shares
of common stock equal to the number of shares of common stock issuable upon
conversion in full of the securities underlying the Notes, ADM Warrants, Ivivi
Warrants and Agent Warrants (as defined herein) and in payment of interest
thereon. The shares of ADM Common Stock or Ivivi Common Stock, as the case may
be, when issued in accordance with the Notes, ADM Warrants, Ivivi Warrants or
Agent Warrants (as defined herein), as the case may be, and upon receipt by ADM
or Ivivi, as the case may be, of the consideration set forth therein, shall have
been duly authorized, validly issued, fully paid and non-assessable, free and
clear of all Liens
(f) The execution, delivery and performance of this Agreement and all other
documents to be entered into by the Company, and the consummation of the
transactions contemplated hereby and thereby, have been or will be prior to such
execution, delivery, performance or consummation, as the case may be, duly and
validly authorized by the
Company and do not and will not: (i) constitute, or result in, a breach or
violation of any of the terms, provisions or conditions of the Certificate or
Articles of Incorporation, Bylaws or other governing documents of either ADM,
Ivivi or any of the Subsidiaries, (ii) constitute, or result in, a material
violation of any applicable statute, law, ordinance or regulation of any state,
territory or other jurisdiction, or (iii) violate, constitute, or result in, a
default under (or an event which with the passing of time or the giving of
notice or both would constitute a default under) or breach of the terms,
provisions or conditions of any material indenture, note, contract, commitment,
instrument or document to which ADM, Ivivi or any of the Subsidiaries is or will
be a party or by which ADM, Ivivi, any of the Subsidiaries or any of their
respective properties are bound, or any award, judgment, decree, rule or
regulation of any court or governmental or regulatory agency or body having
jurisdiction over ADM, Ivivi or any of the Subsidiaries or their respective
activities or properties.
(g) Neither ADM, Ivivi nor any Subsidiary is required to obtain any
consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any court or other federal, state, local or other
governmental authority or other Person (as defined herein) in connection with
the execution, delivery and performance by the Company of the Transaction
Documents, other than the filing of: (i) one or more registration statements
with the SEC meeting the requirements set forth in this Agreement and covering
the resale of the shares of common stock of either ADM or Ivivi, as the case may
be, (ii) the applications to a securities exchange, market or other quotation
system for the listing therewith of the ADM or Ivivi Common Stock, as the case
may be, (iii) applicable blue sky filings and (iv) in all other cases where the
failure to obtain such consent, waiver, authorization or order, or to give such
notice or make such filing or registration could not have or result in,
individually or in the aggregate, a Material Adverse Effect (the consents,
waivers, authorizations, orders, notices and filings referred to in (i)-(v) of
this Section are, collectively, the "REQUIRED APPROVALS"). A "PERSON" means an
individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any kind.
(h) Except as specifically disclosed in ADM's Form 10-KSB or as otherwise
disclosed on Schedule 2(h) attached hereto, neither ADM, Ivivi nor any
Subsidiary: (i) is in default under or in violation of (and no event has
occurred which has not been waived which, with notice or lapse of time or both,
would result in a default by ADM, Ivivi or any Subsidiary under), nor has ADM,
Ivivi or any Subsidiary received notice of a claim that it is in default under
or that it is in violation of, any indenture, loan or credit agreement or any
other agreement or instrument to which it is a party or by which it or any of
its properties is bound, (ii) is in violation of any order of any court,
arbitrator or governmental body, or (iii) is in violation of any law, statute,
rule, regulation, ordinance, directive, judgement or decree of any governmental
authority, foreign and domestic, except as could not, individually or in the
aggregate, have or result in a Material Adverse Effect or, except in the case of
clause (i) above as has not been waived pursuant to an effective waiver.
(i) The Company has filed all reports required to be filed by it under the
Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two
years preceding the date hereof (or such shorter period as the Company was
required by law to file such material) (the foregoing materials being
collectively referred to herein as the "SEC REPORTS" and, shall also
be referred to and included as part of the Disclosure Documents); on a timely
basis or has received a valid extension of such time of filing and has filed any
such SEC Reports prior to the expiration of any such extension. As of their
respective filing dates, the SEC Reports complied in all material respects with
the requirements of the Act and the Exchange Act and, the rules and regulations
promulgated thereunder, and none of the SEC Reports, when filed, contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. None of
the statements made in any such SEC Reports is currently required to be updated
or amended under applicable law (except for such statements as have been amended
or updated by subsequent SEC Reports prior to the date of this Subscription
Agreement). All material agreements to which the Company is a party or to which
the property or assets of the Company are subject have been filed as exhibits to
the SEC Reports to the extent required. The financial statements of the Company
included in the SEC Reports have been prepared in accordance with U.S. generally
accepted accounting principles ("GAAP"), consistently applied, and the rules and
regulations of the SEC with respect thereto as in effect at the time of filing
(except as may be otherwise specified in such financial statements or the notes
thereto), and fairly present, in all material respects the financial position of
ADM and its consolidated subsidiaries as of and for the dates thereof and the
results of operations and cash flows for the periods then ended, subject, in the
case of unaudited statements, to normal, immaterial, year-end audit adjustments.
Since September 30, 2004, except as specified in the SEC Reports, (i) there has
been no event, occurrence or development that has had or that could have or
result in a Material Adverse Effect, (ii) the Company has not incurred any
liabilities (contingent or otherwise) other than (x) liabilities incurred in the
ordinary course of business consistent with past practice, (y) liabilities
incurred in connection with the sale of securities in the 2004 Private Offering
(as defined herein), and (z) liabilities not required to be reflected in the
Company's financial statements pursuant to GAAP or required to be disclosed in
filings made with the SEC, in each case that, individually or in the aggregate,
are not material to the financial condition, business, operations, properties,
operating results or prospects of ADM or Ivivi, (iii) the Company has not
altered its method of accounting or the identity of its auditors and (iv) the
Company has not declared or made any payment or distribution of cash or other
property to its stockholders or officers or directors (other than in compliance
with existing Company stock option plans) with respect to its capital stock, or
purchased, redeemed (or made any agreements to purchase or redeem) any shares of
its capital stock or debt convertible into shares of common stock.
(j) Except as disclosed in the Disclosure Documents, there is no judicial,
regulatory, arbitral or other legal or governmental proceeding or other
litigation or arbitration, domestic or foreign, pending to which ADM, Ivivi or
any Subsidiary is a party or of which any property, operations or assets of ADM,
Ivivi or any Subsidiary is the subject which, individually or in the aggregate,
if determined adversely to ADM, Ivivi or any Subsidiary, could reasonably be
expected to have a Material Adverse Effect. To the best of ADM's knowledge, no
such proceeding, litigation or arbitration is threatened or contemplated, and
the defense of all such proceedings, litigation and arbitration against or
involving ADM, Ivivi or any Subsidiary could not reasonably be expected to have
a Material Adverse Effect.
(k) ADM, Ivivi and the Subsidiaries maintain a system of internal
accounting and other controls sufficient to provide reasonable assurances 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 United States generally accepted accounting
principles and to maintain accountability for assets, (iii) access to assets is
permitted only in accordance with management's general or specific
authorization, and (iv) the recorded accounting for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(l) Except in connection with the Company's private offering completed in
December 2004 ("2004 PRIVATE OFFERING") pursuant to which the Company raised
gross proceeds of $3,637,500 through the sale of securities substantially
similar to the securities being sold herein, neither ADM, Ivivi nor any of their
affiliates (within the meaning of Rule 144 under the Securities Act)
(collectively, "AFFILIATES") has, prior to the date hereof, made any offer or
sale of any securities which could be "integrated" for purposes of the Act with
the offer and sale of the Securities pursuant to this Agreement.
(m) Except in connection with the 2004 Private Offering, neither ADM nor
Ivivi has granted or agreed to grant to any Person any rights (including
"piggy-back" registration rights) to have any securities of ADM or Ivivi
registered with the SEC or any other governmental authority which has not been
satisfied. No person has any right of first refusal, preemptive right, right of
participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents.
(n) Neither the Company nor any of its respective directors, officers,
employees, agents or representatives ("COMPANY REPRESENTATIVES") has taken or
will take any action which has caused or may cause the sale of Securities
contemplated in this Agreement not to qualify for exemption from the
registration requirements of the Act or of United States federal, state or other
securities or other laws. In connection with the sale of Securities hereunder,
neither the Company nor the Company Representatives shall offer or cause to be
offered the Securities by any form of general solicitation or general
advertising as defined in Rule 502(c) of Regulation D. The Company and the
Company Representatives have not taken and shall not take any action (except for
actions contemplated by the Transaction Documents and the 2004 Private Offering)
that would cause the sale of securities hereunder to be integrated with other
transactions under Rule 502(a) of Regulation D.
(o) No relationship, direct or indirect, exists between or among any of
ADM, Ivivi or any Affiliate of them, on the one hand, and any director, officer,
shareholder, customer or supplier of ADM, Ivivi or any Affiliate of them, on the
other hand, which is required by the Act or the Exchange Act to be described in
the Disclosure Documents which is not so described as required. There are no
outstanding loans, advances (except normal advances for business expenses in the
ordinary course of business) or guarantees of indebtedness by ADM or Ivivi to or
for the benefit of any of the officers or directors of ADM or Ivivi or any of
their respective family members, except as disclosed in the Disclosure
Documents. Neither ADM nor Ivivi has, in violation of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of
2002 ("SARB-OX"), directly or indirectly, including through a Subsidiary (other
than as permitted under the Sarb-Ox for depositary institutions), extended or
maintained credit, arranged for the extension of credit, or renewed an extension
of credit, in the form of a personal loan to or for any director or executive
officer of ADM or Ivivi.
(p) ADM is in material compliance with the provisions of Sarb-Ox and the
rules and regulations promulgated thereunder and related or similar rules and
regulations promulgated by NASDAQ or any other governmental or self regulatory
entity or agency that are applicable to an entity, the securities of which are
traded on the OTC Bulletin Board, except for such violations which, singly or in
the aggregate, would not have a Material Adverse Effect.
(q) Neither ADM nor Ivivi has taken and will not, in violation of
applicable law, take any action designed to, or that might reasonably be
expected to, cause or result in stabilization or manipulation of the price of
the common stock to facilitate the sale or resale of the Securities.
(r) Each of ADM and Ivivi (both before and after giving effect to the
transactions contemplated by the Transaction Documents) is solvent (i.e., its
assets have a fair market value in excess of the amount required to pay its
probable liabilities on its existing debts as they become absolute and matured),
and currently ADM and Ivivi has no information that would lead it to reasonably
conclude that ADM or Ivivi would not have the ability to, nor does it intend to
take any action that would impair its ability to, pay its debts from time to
time incurred in connection therewith as such debts mature.
(s) ADM, Ivivi and/or the Subsidiaries maintain insurance in such amounts
and covering such risks as they reasonably consider adequate for the conduct of
their businesses and the value of their properties and as is customary for
companies engaged in similar businesses in similar industries, all of which
insurance is in full force and effect. There are no claims by ADM, Ivivi or any
Subsidiary under any such policy or instrument as to which any insurance company
is denying liability or defending under a reservation of rights clause. ADM
reasonably believes that it (or Ivivi or the Subsidiaries, as applicable) will
be able to renew its existing insurance as and when such coverage expires or
will be able to obtain replacement insurance adequate for the conduct of the
businesses, except for such failure to renew which, singly or in the aggregate,
would not have a Material Adverse Effect.
(t) ADM, Ivivi and each Subsidiary owns or leases all such properties as
are necessary to the conduct of their businesses as presently operated and as
proposed to be operated. ADM, Ivivi and each Subsidiary have good and marketable
title in fee simple to all real property and good and marketable title to all
personal property owned by them, in each case free and clear of all liens and
encumbrances, except such as do not (individually or in the aggregate)
materially affect the business or prospects of ADM, Ivivi or any of the
Subsidiaries. Any real property and buildings held under lease or sublease by
ADM, Ivivi and the Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material to, and do not
interfere with, the use made and proposed to be made of such property and
buildings by ADM, Ivivi and the Subsidiaries. Neither ADM, Ivivi nor any
Subsidiary has received any notice of any claim adverse to its ownership of any
real or personal property or of any claim against the continued possession of
any real property, whether owned or held under lease or sublease by ADM, Ivivi
or any Subsidiary.
(u) ADM, Ivivi and each Subsidiary: (i) owns or possesses adequate right to
use all patents, patent applications, trademarks, service marks, trade names,
trademark registrations,
service ▇▇▇▇ registrations, copyrights, licenses, formulae, customer lists, and
know-how and other intellectual property (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information, systems
or procedures, "INTELLECTUAL PROPERTY") necessary for the conduct of their
respective businesses as being conducted and as described in the Disclosure
Documents, and (ii) does not believe that the conduct of their respective
businesses does or will conflict with, and have not received any notice of any
claim of conflict with, any such right of others. To the best of ADM's
knowledge, all material technical information developed by and belonging to ADM,
Ivivi or any Subsidiary which has not been patented has been kept confidential
so as, among other things, all such information may be deemed proprietary to the
applicable entity. Neither ADM, Ivivi nor any Subsidiary has granted or assigned
to any other person or entity any right to manufacture, have manufactured,
assemble or sell the current products and services of ADM, Ivivi or any
Subsidiary or those products and services described in the Disclosure Documents.
To ADM's knowledge, after due investigation, there is no infringement by third
parties of any such Intellectual Property; there is no pending or, to ADM's
knowledge, threatened action, suit, proceeding or claim by others challenging
ADM's, Ivivi's or any Subsidiary's rights in or to any such Intellectual
Property, and ADM is unaware of any facts which would form a reasonable basis
for any such claim. There is no pending or, to ADM's knowledge, threatened
action, suit, proceeding or claim by others that ADM, Ivivi or any Subsidiary
infringes or otherwise violates any patent, trademark, copyright, trade secret
or other proprietary rights of others, and ADM is unaware of any other fact
which would form a reasonable basis for any such claim.
(v) Except as disclosed in the Disclosure Documents, and except for such
matters that, individually or in the aggregate, would not have a Material
Adverse Effect:
(i) ADM and each of its Subsidiaries (including Ivivi) are, and have
been, in compliance with all Environmental Laws (as defined below), and
neither ADM nor any of its Subsidiaries (including Ivivi) has received any:
(A) communication that alleges that the Company or any such Subsidiary is
in violation of, or has liability under, any Environmental Law, (B) written
request for information pursuant to any Environmental Law, or (C) notice
regarding any requirement that is proposed for adoption or implementation
under any Environmental Law and that would be applicable to the operations
of the Company or any of its Subsidiaries;
(ii) (A) the Company and each of its Subsidiaries have obtained and
are in compliance with all material permits, licenses and governmental
authorizations pursuant to all Environmental Laws (collectively,
"ENVIRONMENTAL PERMITS") necessary for their operations as currently
conducted, (B) all such Environmental Permits are valid and in good
standing, and (C) neither the Company nor any of its Subsidiaries has been
advised by any governmental entity or authority of any actual or potential
change in the status or terms and conditions of any Environmental Permit;
(iii) there are no Environmental Claims pending or, to the knowledge
of the Company, threatened, against the Company or any of its Subsidiaries;
(iv) there have been no Releases of any Hazardous Material that could
reasonably be expected to form the basis of any Environmental Claim against
the Company
or any of its Subsidiaries or against any person whose liabilities for such
Environmental Claims the Company or any of its Subsidiaries has, or may
have, retained or assumed, either contractually or by operation of law; and
(v) (A) neither the Company nor any of its Subsidiaries has retained
or assumed, either contractually or by operation of law, any liabilities or
obligations that could reasonably be expected to form the basis of any
Environmental Claim against the Company or any Subsidiary, and (B) to the
knowledge of the Company, no Environmental Claims are pending against any
person or entity whose liabilities for such Environmental Claims the
Company or any Company Subsidiary has, or may have, retained or assumed,
either contractually or by operation of law.
As used in this Agreement, the terms: (A) "ENVIRONMENTAL CLAIM" means any
and all administrative, regulatory or judicial actions, suits, orders, demands,
directives, claims, investigations, proceedings or notices of violation by or
from any person or entity alleging liability of whatever kind or nature arising
out of, based on or resulting from (y) the presence or release of, or exposure
to, any Hazardous Materials at any location; or (z) the failure to comply with
any Environmental Law; (B) "ENVIRONMENTAL LAWS" means all applicable federal,
state, local and foreign laws, rules, regulations, orders, decrees, judgments,
legally binding agreements or Environmental Permits issued, promulgated or
entered into by or with any governmental entity or authority, relating to
pollution, natural resources or protection of endangered or threatened species,
human health or the environment (including ambient air, surface water,
groundwater, land surface or subsurface strata); (C) "HAZARDOUS MATERIALS" means
(y) any petroleum or petroleum products, radioactive materials or wastes,
asbestos in any form, urea formaldehyde foam insulation and polychlorinated
biphenyls; and (z) any other chemical, material, substance or waste that in
relevant form or concentration is prohibited, limited or regulated under any
Environmental Law; and (D) "RELEASE" means any actual or threatened release,
spill, emission, leaking, dumping, injection, pouring, deposit, disposal,
discharge, dispersal, leaching or migration into or through the environment
(including ambient air, surface water, groundwater, land surface or subsurface
strata) or within any building, structure, facility or fixture.
(w) Each of ADM, Ivivi and the Subsidiaries has accurately prepared and
timely filed (or filed within any applicable extensions) all federal, state,
foreign and other tax returns that are required to be filed by it and has paid
or made provision for the payment of all taxes, assessments, governmental or
other similar charges, including without limitation, all sales and use taxes and
all taxes which ADM, Ivivi or any Subsidiary is obligated to withhold from
amounts owing to employees, creditors and third parties, with respect to the
periods covered by such tax returns (whether or not such amounts are shown as
due on any tax return). No deficiency assessment with respect to a proposed
adjustment of ADM, Ivivi any Subsidiary's federal, state, local or foreign taxes
is pending or, to the best of ADM's knowledge, threatened. The accruals and
reserves on the books and records of ADM, Ivivi and the Subsidiaries in respect
of tax liabilities for any taxable period not finally determined are adequate to
meet any assessments and related liabilities for any such period and, since the
date of the ADM's most recent audited financial statements, ADM, Ivivi and the
Subsidiaries have not incurred any liability for taxes other than in the
ordinary course of its business. There is no tax lien, whether
imposed by any federal, state, foreign or other taxing authority, outstanding
against the assets, properties or business of ADM, Ivivi or any Subsidiary.
(x) Neither ADM, Ivivi nor any Subsidiary has, nor any director, officer,
agent, employee or other person acting on behalf of ADM, Ivivi or any Subsidiary
has in the course of his actions for or on behalf of ADM or Ivivi, used any
corporate funds for any unlawful contribution, gift, entertainment or other
unlawful expenses relating to political activity; made any direct or indirect
unlawful payment to any foreign or domestic government official or employee from
corporate funds; violated or is in violation of any provision of the U.S.
Foreign Corrupt Practices Act of 1977, as amended; or made any bribe, rebate,
payoff, influence payment, kickback or other unlawful payment to any foreign or
domestic government official or employee. Without limiting the generality of the
foregoing, ADM, Ivivi and the Subsidiaries have not directly or indirectly made
or agreed to make (whether or not said payment is lawful) any payment to obtain,
or with respect to, sales other than usual and regular compensation to its or
their employees and sales representatives with respect to such sales.
(y) No labor disturbance by the employees of ADM, Ivivi or any Subsidiary
currently exists or, to the best of the ADM's knowledge, is likely to occur.
(z) The Company has not offered the Securities to any person or entity with
the intention of unlawfully influencing: (i) a customer or supplier of the
Company or any Subsidiary to alter the customer's or supplier's level or type of
business with the Company or any Subsidiary or (ii) a journalist or publication
to write or publish favorable information about the Company, any Subsidiary or
its products or services.
(aa) The Company will not offer the Securities for sale hereunder on the
basis of any communications or documents relating the Securities except the
Transaction Documents and documents described or referred to therein.
(bb) Neither ADM, Ivivi nor any Subsidiary is and, at all times up to and
including consummation of the transactions contemplated by this Agreement, and
after giving effect to application of the proceeds from the sale of Securities
hereunder, will not be, subject to registration as an "investment company" under
the Investment Company Act of 1940, as amended, and is not and will not be an
entity "controlled" by an "investment company" within the meaning of such act.
(cc) Neither ADM, Ivivi nor any Subsidiaries: (i) is or will become a
Person whose property or interests in property are blocked pursuant to Section 1
of Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting
Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism
(66 Fed. Reg. 49079 (2001)) or (ii) knowingly engages or will knowingly engage
in any dealings or transactions, or be otherwise knowingly associated, with any
such person. Neither ADM, Ivivi nor any Subsidiaries is or will be in violation
of the Uniting and Strengthening America By Providing Appropriate Tools Required
To Intercept And Obstruct Terrorism (USA Patriot Act of 2001).
(dd) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & Co., LLP, who expressed their opinion with
respect to the consolidated financial statements from the ADM's Annual Report on
Form 10-KSB from the year ended March 31, 2004, have advised ADM that they are,
and to the best knowledge of ADM they are, independent accountants as required
by the Securities Act and the rules and regulations promulgated therunder.
(ee) Each of ADM and Ivivi are currently eligible to file a registration
statement with the SEC on Form SB-2 under the Securities Act. There exists no
fact or circumstances that would prohibit or delay the preparation and filing of
a registration statement on Form SB-2 with respect to the applicable ADM
Securities within the time periods referred to herein.
3. Purchase, Sale and Delivery of the Securities; Maxim Fees. On the
basis of the representations, warranties, agreements and covenants herein
contained and subject to the terms and conditions herein set forth, the Company
agrees to issue and sell to the Purchaser, and Purchaser agrees to purchase from
the Company the Note, ADM Warrants and Ivivi Warrants in the amounts shown on
the signature page hereto. In connection with the purchase and sale of the
Securities, Maxim will be entitled to receive: (i) a cash commission of 8.0% of
the principal amount of Notes sold herein ("CASH COMMISSION"), (ii) a
non-accountable expense allowance of 3.0% of the principal amount of Notes sold
herein ("NON-ACCOUNTABLE EXPENSE ALLOWANCE"); (iii) a warrant (the "AGENT
WARRANT I") to purchase such number of shares of ADM Common Stock, equal to 8.0%
of the aggregate number of shares of ADM Common Stock into which the Notes sold
herein are convertible, at 100% of ADMT Valuation Price, subject to certain
anti-dilution protection, exercisable from January 1, 2005 through December 31,
2009; (iv) a warrant (the "AGENT WARRANT II") to purchase such number of shares
of Ivivi Common Stock, equal to 8.0% of the aggregate number of shares of Ivivi
Common Stock into which the Notes sold herein are convertible, at 100% of the
Conversion Price ("EXERCISE PRICE II"), (v) a warrant (the "AGENT WARRANT III")
to purchase such number of shares of ADM Common Stock, equal to 8.0% of the
aggregate number of shares of ADM Common Stock into which the ADM Warrants
issued herein are exercisable, at 100% of the ADMT Valuation Price ("EXERCISE
PRICE III"), together with the surrender of a proportionate number of Agent
Warrant IV's to the Company for no consideration; (vi) a warrant (the "AGENT
WARRANT IV") to purchase such number of shares of Ivivi Common Stock, equal to
8.0% of the aggregate number of shares of Ivivi Common Stock into which the
Ivivi Warrants issued herein are exercisable, at 100% of the Ivivi Warrant
Exercise Price ("EXERCISE PRICE IV"), together with the surrender of a
proportionate number of Agent Warrant III's to the Company for no consideration,
subject to certain anti-dilution protection, which shall expire on June 30,
2005. Agent Warrant I, Agent Warrant II, Agent Warrant III and Agent Warrant IV
shall collectively be referred to herein as the "AGENT WARRANTS."
The closing of the transactions described herein (the "CLOSING") shall
take place at a time and on a date (the "CLOSING DATE") to be specified by the
parties, which will be no later than 5:00 p.m. (eastern time) on February 10,
2005. On the Closing Date, the Company shall deliver: (a) Notes in definitive
form in the principal amount the Purchaser has agreed to purchase, as well as
the ADM Warrants and Ivivi Warrants in definitive form, in the names and amounts
set forth on the signature page hereto, (b) to Maxim the Cash Commision and the
Non-Accountable Expense Allowance by wire transfer of immediately available
funds to an account of Maxim designated by it in writing, (c) to Maxim the Agent
Warrants, (d) the legal fees of
$15,000 payable to Ellenoff ▇▇▇▇▇▇▇▇ & Schole LLP ("EGS") by wire transfer of
immediately available funds to an account of EGS designated by it in writing,
(e) the Subscription Agreement executed on behalf of the Company, and (f) the
opinion of counsel to the Company in the form attached hereto as Exhibit D. On
the Closing Date, Purchaser shall deliver (i) $_____ by wire transfer of
immediately available funds to an account previously designated in writing, and
(ii) the Subscription Agreement duly executed on behalf of the Purchaser. The
Closing will occur when all documents and instruments necessary or appropriate
to effect the transactions contemplated above are exchanged by the parties and
all actions taken at the Closing will be deemed to be taken simultaneously.
4. Certain Additional Covenants of the Company. ADM and Ivivi, jointly
and severally, hereby covenant and agree with Purchaser as follows:
(a) None of the proceeds of the Notes will be used to reduce or
retire any insider note or convertible debt held by an officer or director of
the Company.
(b) The Company shall: (i) issue a press release accurately
describing and disclosing the transactions contemplated hereby on the Closing
Date, (ii) file with the SEC a report on Form 8-K or Form 10-QSB disclosing the
transactions contemplated hereby within four (4) business days after the Closing
Date, and (iii) timely file a Form D (or equivalent form required by applicable
state law) if and as required under Regulation D and applicable state securities
laws and to provide a copy thereof to Purchaser promptly after such filing.
(c) So long as Purchaser owns any of the Securities, the Company
covenants to timely file (or obtain extensions in respect thereof and file
within the applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to Section 13(a) or 15(d) of the Exchange
Act. If at any time while Purchaser owns any of the Securities, the Company is
not required to file reports pursuant to Section 13(a) or 15(d) of the Exchange
Act, it will prepare and furnish to Subscriber and make publicly available in
accordance with Rule 144(c) promulgated under the Act annual and quarterly
financial statements, together with a discussion and analysis of such financial
statements in form and substance substantially similar to those that would
otherwise be required to be included in reports required by Section 13(a) or
15(d) of the Exchange Act, as well as any other information required thereby, in
the time period that such filings would have been required to have been made
under the Exchange Act. The Company further covenants that it will take such
further action as any holder of the Securities may reasonably request, all to
the extent required from time to time to enable such holder to sell the ADM
Common Stock or the Ivivi Common Stock, as the case may be, without registration
under the Exchange Act under Rule 144 promulgated under the Act. Upon the
request of any such holder, the Company shall deliver thereto a written
certification of a duly authorized officer as to whether it has complied with
such requirements.
(d) The Company shall take all action necessary to at all times
have authorized, and reserved for the purpose of issuance, no less than the
number of shares of common stock which are issuable upon conversion of the
Notes, in connection with the payment of interest on the Notes, upon exercise of
the ADM Warrants, upon exercise of the Ivivi Warrants and upon exercise of the
Agent Warrants.
(e) The Company shall promptly seek the listing of all common
stock issuable upon the exercise or conversion, as the case may be, of the
Notes, ADM Warrants, Ivivi Warrants and Agent Warrants, as such shares are
issued on the securities exchange, market or other quotation system on which the
common stock is then listed or traded and shall maintain, so long as any other
shares of common stock shall be so listed, such listing of all such securities
from time to time issuable under the terms of the Transaction Documents. Once
listed, the Company shall use commercially reasonable efforts to maintain the
common stock's authorization for listing on a securities exchange, market or
other quotation system on which the common stock is then listed or traded. The
Company shall promptly provide to Purchaser copies of any notices it receives
from a securities exchange, market or other quotation system on which the common
stock is then listed or traded regarding the continued eligibility of the common
stock for listing on such a securities exchange, market or other quotation
system. The Company shall pay all fees and expenses in connection with
satisfying its obligations under this Section.
(f) Each of the Company and Purchaser shall give prompt written
notice to the other of any breach by it of any representation, warranty or other
agreement contained in any Transaction Document, as well as any events or
occurrences arising after the date hereof, which would reasonably be likely to
cause any representation or warranty or other agreement of such party, as the
case may be, contained in the Transaction Document to be incorrect or breached
as of and after the Closing Date. However, no disclosure by any party pursuant
to this Section shall be deemed to cure any breach of any representation,
warranty or other agreement contained in any Transaction Document.
(g) The Company acknowledges that the issuance of common stock
will result in dilution of the outstanding shares of common stock, which
dilution may be substantial under certain market conditions. The Company further
acknowledges that its obligation to issue shares of common stock in accordance
with the terms of and with respect to the Notes, the ADM Warrants and the Ivivi
Warrants is unconditional and absolute regardless of the effect of any such
dilution.
(h) The Company shall not intentionally perform any act that if
performed, or intentionally omit to perform any act that, if omitted to be
performed, would prevent or excuse the performance of the Transaction Documents
or any of the transactions contemplated hereby or thereby or the benefits
intended to be secured thereby by the Purchaser.
(i) Each of ADM, Ivivi and the Subsidiaries will not enter into
any agreement or arrangement, written or oral, directly or indirectly, with an
affiliate, or provide services or sell goods to, or for the benefit of, or pay
or otherwise distribute monies, goods or other valuable consideration to, an
affiliate, except upon fair and reasonable terms under circumstances as
determined by ADM or Ivivi, as applicable, in good faith, taking into account
all of the facts and circumstances of such agreement or arrangement, and except
for existing intercompany debt or transaction with or between ADM or Ivivi and
any of the Subsidiaries and payments and benefits to officers and directors in
their capacities as such in the ordinary course of business, consistent with
past practices.
(j) The Company will use its best efforts to do and perform all
things required to be done and performed by it under this Agreement and the
other Transaction
Documents and to satisfy all conditions precedent on its part to the obligations
of the Purchasers to purchase and accept delivery of the Securities.
5. Conditions of the Purchaser's Obligations. The obligation of each
Purchaser to purchase and pay for the Securities is subject to the following
conditions unless waived in writing by the Purchaser:
(a) The representations and warranties of the Company contained
in this Agreement shall be true and correct in all material respects (other than
representations and warranties with a Material Adverse Effect qualifier, which
shall be true and correct as written) on and as of the Closing Date; the Company
shall have complied in all material respects with all agreements and satisfied
all conditions on its part to be performed or satisfied hereunder at or prior to
the Closing Date.
(b) None of the issuance and sale of the Securities pursuant to
this Agreement or any of the transactions contemplated by any of the other
Transaction Documents shall be enjoined (temporarily or permanently) and no
restraining order or other injunctive order shall have been issued in respect
thereof; and there shall not have been any legal action, order, decree or other
administrative proceeding instituted or, to the Company's knowledge, threatened
against the Company or against any Purchaser relating to the issuance of the
Securities or any Purchaser's activities in connection therewith or any other
transactions contemplated by this Agreement, the other Transaction Documents or
the Disclosure Documents.
(c) The Purchasers shall have received certificates, dated the
Closing Date and signed by the Chief Executive Officer of the Company, to the
effect of paragraphs 5(a) and (b).
(d) The Purchasers shall have received an opinion of ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ PC with respect to the authorization of the Note, the ADM Warrants, the
Ivivi Warrants and the ADM Common Stock and the Ivivi Common Stock issuable upon
the conversion or exercise of each of the above and other customary matters in
the form attached hereto as Exhibit D.
6. Representations and Warranties of the Purchaser.
(a) Purchaser represents and warrants to the Company that the
Securities to be acquired by it hereunder (including the Notes, ADM Warrants,
Ivivi Warrants, shares of ADM Common Stock and Ivivi Common Stock issuable upon
exercise or conversion thereunder, as the case may be) are being acquired for
its own account for investment and with no intention of distributing or
reselling such Securities or any part thereof or interest therein in any
transaction which would be in violation of the securities laws of the United
States of America or any State. Nothing in this Agreement, however, shall
prejudice or otherwise limit a Purchaser's right to sell or otherwise dispose of
all or any part of such Securities under an effective registration statement
under the Securities Act and in compliance with applicable state securities laws
or under an exemption from such registration. By executing this Agreement,
Purchaser further represents that such Purchaser does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participation to any Person with respect to any of the Securities.
(b) Purchaser understands that the Securities (including the
Notes, ADM Warrants, Ivivi Warrants, shares of ADM Common Stock and Ivivi Common
Stock issuable upon exercise or conversion thereunder, as the case may be) have
not been registered under the Securities Act and may not be offered, resold,
pledged or otherwise transferred except: (a) pursuant to an exemption from
registration under the Securities Act (and, if requested by the Company, based
upon an opinion of counsel acceptable to the Company) or pursuant to an
effective registration statement under the Securities Act and (b) in accordance
with all applicable securities laws of the states of the United States and other
jurisdictions.
Purchaser agrees to the imprinting, so long as appropriate, of the
following legend on the Securities (including the Notes, ADM Warrants, Ivivi
Warrants, shares of ADM Common Stock and Ivivi Common Stock issuable upon
exercise or conversion thereunder, as the case may be):
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE U.S. SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED ("TRANSFERRED") IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. IN THE ABSENCE OF SUCH
REGISTRATION, SUCH SECURITIES MAY NOT BE TRANSFERRED UNLESS, IF THE COMPANY
REQUESTS, THE COMPANY HAS RECEIVED A WRITTEN OPINION FROM COUNSEL IN FORM
AND SUBSTANCE SATISFACTORY TO THE COMPANY STATING THAT SUCH TRANSFER IS
BEING MADE IN COMPLIANCE WITH ALL APPLICABLE FEDERAL AND STATE SECURITIES
LAWS.
The legend set forth above may be removed if and when the ADM Common
Stock or the Ivivi Common Stock, as the case may be, are disposed of pursuant to
an effective registration statement under the Securities Act or in the opinion
of counsel to the Company experienced in the area of United States Federal
securities laws such legends are no longer required under applicable
requirements of the Securities Act. The Notes, the ADM Warrants, the Ivivi
Warrants, shares of ADM Common Stock and Ivivi Common Stock issuable upon
exercise or conversion thereunder, as the case may be, shall also bear any other
legends required by applicable Federal or state securities laws, which legends
may be removed when in the opinion of counsel to the Company experienced in the
applicable securities laws, the same are no longer required under the applicable
requirements of such securities laws. The Company agrees that it will provide
Purchaser, upon request, with a substitute certificate, not bearing such legend
at such time as such legend is no longer applicable. Purchaser agrees that, in
connection with any transfer of the Securities by it pursuant to an effective
registration statement under the Securities Act, Purchaser will comply with all
prospectus delivery requirements of the Securities Act. The Company makes no
representation, warranty or agreement as to the availability of any exemption
from registration under the Securities Act with respect to any resale of the
Notes, the ADM Warrants, the Ivivi Warrants, shares of ADM Common Stock and
Ivivi Common Stock issuable upon exercise or conversion thereunder, as the case
may be.
(c) Purchaser is an "accredited investor" within the meaning of
Rule 501(a) of Regulation D under the Securities Act. Purchaser did not learn of
the opportunity to acquire Securities or any other security issuable by the
Company through any form of general advertising or public solicitation.
(d) Purchaser represents and warrants to the Company that it has
such knowledge, sophistication and experience in business and financial matters
so as to be capable of evaluating the merits and risks of the prospective
investment in the Securities, having been represented by counsel, and has so
evaluated the merits and risks of such investment and is able to bear the
economic risk of such investment and, at the present time, is able to afford a
complete loss of such investment.
(e) Purchaser represents and warrants to the Company that: (i)
the purchase of the Securities to be purchased by it has been duly and properly
authorized and this Agreement has been duly executed and delivered by it or on
its behalf and constitutes the valid and legally binding obligation of the
Purchaser, enforceable against the Purchaser in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights generally and to general principles of equity; (ii) the
purchase of the Securities to be purchased by it does not conflict with or
violate its charter, by-laws or any law, regulation or court order applicable to
it; and (iii) the purchase of the Securities to be purchased by it does not
impose any penalty or other onerous condition on the Purchaser under or pursuant
to any applicable law or governmental regulation.
(f) Purchaser represents and warrants to the Company that neither
it nor any of its directors, officers, employees, agents, partners, members, or
controlling persons has taken, or will take, directly or indirectly, any actions
designed, or might reasonably be expected to cause or result in the
stabilization or manipulation of the price of the ADM Common Stock.
(g) Purchaser acknowledges it or its representatives have
reviewed the Disclosure Documents and further acknowledges that it or its
representatives have been afforded: (i) the opportunity to ask such questions as
it has deemed necessary of, and to receive answers from, representatives of the
Company concerning the terms and conditions of the offering of the Securities
and the merits and risks of investing in the Securities; (ii) access to
information about the Company and the Company's financial condition, results of
operations, business, properties, management and prospects sufficient to enable
it to evaluate its investment in the Securities; and (iii) the opportunity to
obtain such additional information which the Company possesses or can acquire
without unreasonable effort or expense that is necessary to verify the accuracy
and completeness of the information contained in the Disclosure Documents.
(h) Purchaser represents and warrants to the Company that it has
based its investment decision solely upon the information contained in the
Transaction Documents and the Disclosure Documents and such other information as
may have been provided to it or its representatives by the Company in response
to their inquiries, and has not based its investment decision on any research or
other report regarding the Company prepared by any third party ("THIRD PARTY
REPORTS"). Purchaser understands and acknowledges that: (i) the Company does not
endorse any Third Party Reports and (ii) its actual results may differ
materially from those projected in any Third Party Report.
(i) Purchaser understands and acknowledges that: (i) any
forward-looking information included in the Disclosure Documents supplied to
Purchaser by the
Company or its management is subject to risks and uncertainties, including those
risks and uncertainties set forth in the Disclosure Documents; and (ii) the
Company's actual results may differ materially from those projected by the
Company or its management in such forward-looking information.
(j) Purchaser understands and acknowledges that: (i) the
Securities are offered and sold without registration under the Securities Act in
a private placement that is exempt from the registration provisions of the
Securities Act and (ii) the availability of such exemption depends in part on,
and that the Company and its counsel will rely upon, the accuracy and
truthfulness of the foregoing representations and Purchaser hereby consents to
such reliance.
7. Covenants of Purchaser.
(a) Purchaser, on behalf of itself and its affiliates, hereby
covenant and agree not to, directly or indirectly, offer to "short sell",
contract to "short sell" or otherwise "short sell" the securities of ADM or
Ivivi, including, without limitation, shares of ADM Common Stock or Ivivi Common
Stock that will be received as a result of the conversion of the Note or the
exercise of either the ADM Warrants or Ivivi Warrants, as the case may be.
(b) Purchaser will negotiate in good faith with the Company and Maxim to enter
into a lock-up agreement with respect to the resale of the Ivivi Common Stock
underlying the Securities in connection with an initial public offering of
Ivivi's Common Stock.
8. Termination.
(a) This Agreement may be terminated in the sole discretion of
the Company by notice to Purchaser if at the Closing Date:
(i) the representations and warranties made by Purchaser in
Section 6 are not true and correct in all material respects; or
(ii) as to the Company, the sale of the Securities hereunder
(i) is prohibited or enjoined by any applicable law or governmental regulation
or (ii) subjects the Company to any penalty, or in its reasonable judgment,
other onerous condition under or pursuant to any applicable law or government
regulation that would materially reduce the benefits to the Company of the sale
of the Securities to such Purchaser, so long as such regulation, law or onerous
condition was not in effect in such form at the date of this Agreement.
(b) This Agreement may be terminated by Purchaser by notice to
the Company given in the event that the Company shall have failed, refused or
been unable to satisfy all material conditions on its part to be performed or
satisfied hereunder on or prior to the Closing Date, or if after the execution
and delivery of this Agreement and immediately prior to the Closing Date,
trading in securities of ADM on the OTCBB shall have been suspended.
(c) This Agreement may be terminated by mutual written consent of
all parties.
9. Registration. Subscriber shall have the registration rights set
forth on Exhibit E attached hereto.
10. Indemnification.
(a) Each of ADM and Ivivi agrees to indemnify and hold harmless the
Purchaser and Maxim, its respective officers, directors, employees,
stockholders, agents, legal counsel and affiliates, and any person acting on
behalf of Purchaser or Maxim, from and against any and all damage, loss,
liability, cost and expense (including reasonable attorneys' fees) which any of
them may incur by reason of the failure by ADM or Ivivi to fulfill any of the
terms and conditions of the Transaction Documents, or by reason of any breach of
the representations and warranties made by ADM or Ivivi herein, or in any other
document provided by the Company to the Purchaser. All representations,
warranties and covenants of each of Purchaser and ADM and Ivivi contained herein
shall survive the acceptance of this subscription.
(b) Purchaser agrees to indemnify and hold harmless the Company and
Maxim, its respective officers, directors, employees, stockholders, agents,
legal counsel and affiliates, and any person acting on behalf of the Company or
Maxim, from and against any and all damage, loss, liability, cost and expense
(including reasonable attorneys' fees) which any of them may incur by reason of
the failure by Purchaser to fulfill any of the terms and conditions of the
Transaction Documents, or by reason of any breach of the representations and
warranties made by Purchaser herein, or in any other document provided by
Purchaser to the Company. All representations, warranties and covenants of each
of Purchaser and ADM and Ivivi contained herein shall survive the acceptance of
this subscription.
11. Notices. All communications hereunder shall be in writing and
shall be hand delivered, mailed by first-class mail, couriered by next-day air
courier or by facsimile and confirmed in writing: (i) if to the Company, at the
addresses set forth below, or (ii) if to a Purchaser, to the address set forth
for such party on the signature page hereto.
If to the Company:
ADM Tronics Unlimited, Inc.
▇▇▇-▇ ▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
Tel: (▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or such other address as it shall have specified to the Subscriber in
writing, with a copy (which shall not constitute notice) to:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PC
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Business: (▇▇▇) ▇▇▇-▇▇▇▇
Business Fax: (▇▇▇) ▇▇▇-▇▇▇▇
All such notices and communications shall be deemed to have been duly
given: (i) when delivered by hand, if personally delivered; (ii) five business
days after being deposited in the mail, postage prepaid, if mailed certified
mail, return receipt requested; (iii) one business day after being timely
delivered to a next-day air courier guaranteeing overnight delivery; (iv) the
date of transmission if sent via facsimile to the facsimile number as set forth
in this Section or the signature page hereof prior to 6:00 p.m. on a business
day followed by overnight delivery, or (v) the business day following the date
of transmission if sent via facsimile at a facsimile number set forth in this
Section or on the signature page hereof after 6:00 p.m. or on a date that is not
a business day. Change of a party's address or facsimile number may be
designated hereunder by giving notice to all of the other parties hereto in
accordance with this Section.
12. Survival Clause. The respective representations, warranties,
agreements and covenants of the Company and the Purchaser set forth in this
Agreement shall survive the Closing Date.
13. Fees. If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the Notes, the ADM Warrants or the Ivivi
Warrants, the prevailing party or parties shall be entitled to receive from the
other party or parties reasonable attorneys' fees, costs and necessary
disbursements in addition to any other relief to which the prevailing party or
parties may be entitled.
14. Successors. This Agreement shall inure to the benefit of and be
binding upon Purchaser and the Company and their respective successors and legal
representatives, and nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any other person any legal or equitable
right, remedy or claim under or in respect of this Agreement, or any provisions
herein contained; this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of such persons and
for the benefit of no other person. Neither the Company nor any Purchaser may
assign this Agreement or any rights or obligation hereunder without the prior
written consent of the other party.
15. No Waiver; Modifications in Writing. No failure or delay on the
part of the Company or Purchaser in exercising any right, power or remedy
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy. The
remedies provided for herein are cumulative and are not exclusive of any
remedies that may be available to the Company or Purchaser at law or in equity
or otherwise. No waiver of or consent to any departure by the Company or
Purchaser from any provision of this Agreement shall be effective unless signed
in writing by the party entitled to the benefit thereof, provided that notice of
any such waiver shall be given to each party hereto as set forth below. Except
as otherwise provided herein, no amendment, modification or termination of any
provision of this Agreement shall be effective unless signed in writing by or on
behalf of each of the Company and the Purchaser. Any amendment, supplement or
modification of or to any provision of this Agreement, any waiver of any
provision of this Agreement, and any consent to any departure by the Company or
Purchaser from the terms of any provision of this Agreement shall be effective
only in the specific instance and for the specific purpose for which made or
given. Except where notice is specifically required by this Agreement, no notice
to or demand on the Company in any
case shall entitle the Company to any other or further notice or demand in
similar or other circumstances.
16. Entire Agreement. This Agreement, together with Transaction
Documents, constitutes the entire agreement among the parties hereto and
supersedes all prior agreements, understandings and arrangements, oral or
written, among the parties hereto with respect to the subject matter hereof and
thereof.
17. Severability. If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby.
18. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT,
AND THE TERMS AND CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO
PROVISIONS RELATING TO CONFLICTS OF LAW TO THE EXTENT THE APPLICATION OF THE
LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. THE PARTIES HEREBY
IRREVOCABLY AND UNCONDITIONALLY AGREE THAT ACTIONS, SUITS OR PROCEEDINGS ARISING
OUT OF OR RELATING TO THIS AGREEMENT MAY BE BROUGHT ONLY IN STATE OR FEDERAL
COURTS LOCATED IN NEW YORK COUNTY AND HEREBY SUBMIT TO THE EXCLUSIVE
JURISDICTION OF SUCH COURTS FOR SUCH PURPOSE.
19. Counterparts. This Agreement may be executed in two or more
counterparts and may be delivered by facsimile transmission, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument.
20. If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this Agreement shall constitute a binding agreement among the Company
and the Purchaser.
Very truly yours,
ADM Tronics Unlimited, Inc.
By:
---------------------------------
Name:
--------------------------
Title:
--------------------------
Ivivi Technologies, Inc.
By:
---------------------------------
Name:
--------------------------
Title:
--------------------------
ACCEPTED AND AGREED:
Addresses for Notice to Purchaser:
with copy to:
Exhibit E
REGISTRATION RIGHTS
ADM Tronics Unlimited, Inc. and Ivivi Technologies, Inc. hereby grant to the
Purchaser the following registration rights.
1. Definitions.
Capitalized terms used herein without definition shall have the respective
meanings given such terms as set forth in the Subscription Agreement between ADM
Tronics Unlimited, Inc., Iviv Technologies, Inc. and the Purchaser thereto (the
"SUBSCRIPTION AGREEMENT") or in the Joint Unsecured 6% Convertible Promissory
Note, ADM Warrant and Ivivi Warrant, dated as of ________, ______ (together with
the Subscription Agreement referred to as the "Transaction Documents"). As used
herein, the following terms shall have the following meanings:
Business Day: Any day other than a day on which banks are authorized
or required to be closed in the State of New York.
Commission: The United States Securities and Exchange Commission.
Common Stock: The common stock, par value $.0005 per share, of ADM
Tronics Unlimited, Inc. and Ivivi Technologies, Inc., no par value per
share.
Exchange Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission promulgated thereunder.
Holder or Holders: Any holder of the Registrable Securities.
Person: Any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization
or government or other agency or political subdivision thereof.
Prospectus: The prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an
effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by
any prospectus supplement, with respect to the terms of the offering
of any portion of the Registrable Securities covered by such
Registration Statement, and all other amendments and supplements to
the prospectus, including post-effective amendments, and all material
incorporated by reference or deemed to be incorporated by reference in
such prospectus.
Registrable Securities: The shares of common stock issuable upon
conversion of the Notes, the common stock issuable upon the payment of
interest of the Notes, the common stock issuable upon the exercise of
ADM Warrants and the common stock issuable upon the exercise of AAN
Warrants, until such time as (1) a Registration Statement covering
such Registrable Securities has been declared effective by the
Commission and such Registrable Securities have been disposed of
pursuant to such effective Registration Statement or (2) such
Registrable Securities are saleable pursuant to Rule 144 (or any
similar
provision then in force) under the Securities Act, without any
restriction, whichever is earlier.
Registration Statement: Any registration statement of the Company that
covers any of the Registrable Securities pursuant to the provisions of
this Agreement, including the Prospectus, amendments and supplements
to such registration statements, including post effective amendments,
all exhibits, and all material incorporated by reference or deemed to
be incorporated by reference in such registration statement.
Securities Act: The Securities Act of 1933, as amended, and the rules
and regulations of the Commission promulgated thereunder.
2. Registration Rights.
(a) Spin Off and Demand Registration.
Ivivi agrees to file a registration statement covering the resale of the
shares of Ivivi common stock issuable upon the conversion of the Notes and
payment of interest on the Notes, and the exercise of the Ivivi Warrants in
conjunction with a pro rata distribution to ADM's stockholders ("SPIN OFF") or
an initial public offering ("IPO") of the shares of Ivivi Common Stock. The
Company will file a registration statement on Form SB-2 or other appropriate
form (the "Registration Statement") with the SEC no later than sixty (60) days
following the Closing Date. ADM shall use its best-efforts to have the
Registration Statement declared effective by the SEC by no later than ninety
(90) days following the filing thereof. In the event that the Registration
Statement has not been declared effective by the SEC on or before June 30, 2005,
then the number of shares of Ivivi Common Stock issuable upon the conversion of
the Notes and the exercise of the Ivivi Warrants shall be increased by two
percent (2%) for each 30 day period (or partial period, as the case may be)
following June 30, 2005.
In addition, the Company shall grant to the holders of Securities a demand
registration right to the effect that in the event that if, by June 30, 2005:
(i) the Spin Off or IPO is not effected, or (ii) the Registration Statement has
not been declared effective by the SEC, then ADM shall register with the SEC all
of the shares of ADM common stock issuable upon the conversion of the Notes and
the exercise of the ADM Warrants. ADM shall use its best efforts to have such
securities registered within 30 days of the demand made by the holders thereof.
In the event that the registration statement covering all of such securities is
not declared effective by the SEC within 90 days of the demand for registration
or the registration does not remain effective for 60 consecutive days, then the
number of shares of ADM Common Stock issuable upon the conversion of the Notes
and the exercise of the ADM Warrants shall be increased by one percent (1%) for
each 30 day period (or partial period, as the case may be) following such 90 day
period. ADM covenants to maintain the effectiveness of such ADM registration
statement until the third (3rd) anniversary of the date of such effectiveness.
(b) Piggyback Registration.
If, at any time after the Closing Date, except in connection with the
Spin Off or IPO referenced in 2(a) above, the Company proposes to register any
of its securities under the Securities Act for sale to the public for its own
account or for the account of other security holders (or registration statements
on Forms S-4 or S-8 or another form not available for registering the
Registrable Securities for sale to the public), each such time it will give
written
notice thereof to Holders of its intention so to do (such notice to be given at
least fifteen (15) days prior to the filing thereof). Upon the written request
of any such Holder (which request shall specify the number of Registrable
Securities intended to be disposed of by such Holder and the intended method of
disposition thereof), received by the Company within ten (10) days after giving
of any such notice by the Company, to register any of such Holder's Registrable
Securities, the Company shall include in such registration statement all or any
part of such Registrable Securities such Purchaser requests to be registered
("PIGGYBACK REGISTRATION RIGHTS").
3. Registration Procedures.
In connection with the registration obligations of the Company pursuant to
the terms and conditions of this Agreement, the Company shall:
(a) prior to filing a Registration Statement or Prospectus or any
amendments or supplements thereto, including documents incorporated by reference
after the initial filing of the Registration Statement, the Company will furnish
to the Holders covered by such Registration Statement (the "Selling Holders"),
Holders' legal counsel and the underwriters, if any, draft copies of all such
documents proposed to be filed at least three (3) Business Days prior thereto,
which documents will be subject to the review of such Holders' counsel and the
underwriters, if any, and the Company will not, unless required by law, file any
Registration Statement or amendment thereto or any Prospectus or any supplement
thereto (including such documents incorporated by reference) to which Selling
Holders of at least a majority of the Registrable Securities (the "Objecting
Party") shall object, pursuant to notice given to the Company prior to the
filing of such amendment or supplement (the "Objection Notice"). The Objection
Notice shall set forth the objections and the specific areas in the draft
documents where such objections arise. The Company shall have five (5) Business
Days after receipt of the Objection Notice to correct such deficiencies to the
satisfaction of the Objecting Party, and will notify each Selling Holder of any
stop order issued or threatened by the Commission in connection therewith and
take all reasonable actions required to prevent the entry of such stop order or
to remove it if entered;
(b) as promptly as practicable prepare and file with the Commission
such amendments and post-effective amendments to the Registration Statement as
may be necessary to keep such Registration Statement effective for the period
required pursuant to Section 2; cause the Prospectus to be supplemented by any
required Prospectus supplement, and, as so supplemented, to be filed pursuant to
Rule 424 under the Securities Act; and comply with the provisions of the
Securities Act applicable to it with respect to the disposition of all
Registrable Securities covered by such Registration Statement during the
applicable period in accordance with the intended methods of disposition by the
Selling Holders set forth in such Registration Statement or supplement to the
Prospectus;
(c) as promptly as practicable furnish to any Selling Holder and the
underwriters, if any, without charge, such number or conformed copies of such
Registration Statement and any post-effective amendment thereto and such number
of copies of the Prospectus (including each preliminary Prospectus) and any
amendments or supplements thereto, and any documents incorporated by reference
therein, as such Selling Holder or underwriter may reasonably request in order
to facilitate the disposition of the Registrable Securities being sold by such
Selling Holder (it being understood that the Company consents to the use of the
Prospectus and any amendment or supplement thereto by each Selling Holder and
the underwriters, if any, in connection with the offering and sale of the
Registrable Securities covered by the Prospectus or any amendment or supplement
thereto); provided, that before filing a Registration Statement or Prospectus
relating to the Registrable Securities or any amendments or supplements thereto,
the Company will furnish to Holders' counsel copies of all documents proposed to
be filed at least three (3) Business Days prior to the filing thereof, which
documents will be subject to the review of such counsel;
(d) on or prior to the date on which the Registration Statement is
declared effective, register or qualify such Registrable Securities under such
other securities or "blue sky" laws of such jurisdictions as any Selling Holder,
Holders' Counsel or underwriter reasonably requests and do any and all other
acts and things which may be necessary or advisable to enable such Selling
Holder to consummate the disposition in such jurisdictions of such Registrable
Securities owned by such Selling Holder; keep each such registration or
qualification (or exemption therefrom) effective during the period which the
Registration Statement is required to be kept effective; and do any and all
other acts or things reasonably necessary or advisable to enable the disposition
in such jurisdictions of the Registrable Securities covered by the applicable
Registration Statement; provided that the Company shall not be required to (i)
qualify to do business as a foreign corporation or as a broker-dealer in any
jurisdiction where it is not then so qualified or (ii) take any action which
would subject it to general service of process or to taxation in any
jurisdiction where it is not then so subject;
(e) cause the Registrable Securities covered by such Registration
Statement to be registered with or approved by such other governmental agencies
or authorities as may be necessary by virtue of the business and operations of
the Company to enable the Selling Holders to consummate the disposition of such
Registrable Securities;
(f) as promptly as practicable notify each Selling Holder, Holders'
Counsel and any underwriter and (if requested by any such Person) confirm such
notice in writing, (i) when a Prospectus or any Prospectus supplement or
post-effective amendment has been filed and, with respect to a Registration
Statement or any post-effective amendment, when the same has become effective,
(ii) of any request by the Commission or any other federal or state governmental
authority for amendments or supplements to a Registration Statement or related
Prospectus or for additional information to be included in any Registration
Statement or Prospectus or otherwise, (iii) of the issuance by the Commission of
any stop order suspending the effectiveness of a Registration Statement or the
initiation or threatening of any proceedings for that purpose, (iv) of the
issuance by any state securities commission or other regulatory authority of any
order suspending the qualification or exemption from qualification of any of the
Registrable Securities under state securities or "blue sky" laws or the
initiation of any proceedings for that purpose and (v) of the happening of any
event which makes any statement made in a Registration Statement or related
Prospectus or any document incorporated or deemed to be incorporated by
reference therein untrue or which requires the making of any changes in such
Registration Statement, Prospectus or documents so that they will not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading; and, as promptly as practicable thereafter, prepare and file with
the
Commission and furnish a supplement or amendment to such Prospectus so that, as
thereafter deliverable to the purchasers of such Registrable Securities, such
Prospectus will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(g) make generally available to the Holders an earnings statement
satisfying the provisions of Section 11(a) of the Securities Act no later than
thirty (30) days after the end of the 12-month period beginning with the first
day of the Company's first fiscal quarter commencing after the effective date of
a Registration Statement;
(h) use its reasonable efforts to prevent the issuance of any order
suspending the effectiveness of a Registration Statement, and, if one is issued,
to obtain the withdrawal of any order suspending the effectiveness of a
Registration Statement at the earliest possible moment;
(i) as promptly as practicable after filing with the Commission of any
document which is incorporated by reference into a Registration Statement,
deliver a copy of such document to Holders' legal counsel;
(j) cooperate with the Selling Holders and the managing underwriter or
underwriters, if any, to facilitate the timely preparation and delivery of
certificates (which shall not bear any restrictive legends and shall be in a
form eligible for deposit with the Depository Trust Company) representing
securities sold under such Registration Statement, and enable such securities to
be in such denominations and registered in such names as the managing
underwriter or underwriters, if any, or such Selling Holders may request and
make available prior to the effectiveness of such Registration Statement a
supply of such certificates;
Each Selling Holder, upon receipt of any notice from the Company of the
happening of any event of the kind described in subsection (f) of this Section
3, shall forthwith discontinue disposition of the Registrable Securities until
such Selling Holder's receipt of the copies of the supplemented or amended
Prospectus contemplated by subsection (f) of this Section 3 or until it is
advised in writing (the "Advice") by the Company that the use of the Prospectus
may be resumed, and has received copies of any additional or supplemental
filings which are incorporated by reference in the Prospectus, and, if so
directed by the Company, such Selling Holder will, or will request the managing
underwriter or underwriters, if any, to, deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in such
Selling Holder's possession, of the Prospectus covering such Registrable
Securities current at the time of receipt of such notice. In the event that the
Company shall give any such notice, the time periods for which a Registration
Statement is required to be kept effective pursuant to Section 2 hereof shall be
extended by the number of days during the period from and including the date of
the giving of such notice to and including the date when each Selling Holder
shall have received (i) the copies of the supplemented or amended Prospectus
contemplated by Section 3(f) or (ii) the Advice.
4. Registration Expenses.
(a) All expenses incident to the Company's performance of, or
compliance with, the provisions hereof, including without limitation, all
Commission and securities exchange or NASD registration and filing fees, fees
and expenses of compliance with securities or "blue sky" laws (including fees
and disbursements of counsel in connection with "blue sky" qualifications of the
Registrable Securities), printing expenses, messenger and delivery expenses,
internal expenses (including, without limitation, all salaries and expenses of
the Company's officers and employees performing legal or accounting duties),
fees and expenses incurred in
connection with the listing of the securities to be registered, if any, on each
securities exchange on which similar securities issued by the Company are then
listed, fees and disbursements of counsel for the Company and its independent
certified public accountants (including the expense of any special audit or
"cold comfort" letters required by, or incident to, such performance),
Securities Act liability insurance (if the Company elects to obtain such
insurance), reasonable fees and expenses of any special experts retained by the
Company in connection with such registration, fees and expenses of other Persons
retained by the Company in connection with each registration hereunder (but not
including the fees and expense of legal counsel retained by a Holder or Holders,
or any underwriting fees, discounts or commissions attributable to the sale of
Registrable Securities) are herein called "Registration Expenses."
(b) The Company will pay all Registration Expenses in connection with
each Registration Statement filed pursuant to Section 2 except as otherwise set
forth therein. Other than as specifically provided for in Section 2(a) hereto,
all expenses to be borne by the Holders in connection with any Registration
Statement filed pursuant to Section 2 (including, without limitation, all
underwriting fees, discounts or commissions attributable to such sale of
Registrable Securities) shall be borne by the participating Holders pro rata in
relation to the number of Registrable Securities to be registered by each
Holder.
5. Indemnification; Contribution.
(a) Indemnification by the Company. The Company agrees to indemnify
and hold harmless, to the full extent permitted by law, each Holder, its
officers, directors and each Person who controls such Holder (within the meaning
of the Securities Act), and any agent or investment adviser thereof, against all
losses, claims, damages, liabilities and expenses (including reasonable
attorneys' fees and costs of investigation) arising out of or based upon any
untrue or alleged untrue statement of material fact contained in any
Registration Statement, any amendment or supplement thereto, any Prospectus or
preliminary Prospectus or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as the same arise out of or are based
upon any such untrue statement or omission based upon information with respect
to such Holder furnished in writing to the Company by or on behalf of such
Holder expressly for use therein; provided that, in the event that the
Prospectus shall have been amended or supplemented and copies thereof as so
amended or supplemented, shall have been furnished to a Holder prior to the
confirmation of any sales of Registrable Securities, such indemnity with respect
to the Prospectus shall not inure to the benefit of such Holder if the Person
asserting such loss, claim, damage or liability and who purchased the
Registrable Securities from such holder did not, at or prior to the confirmation
of the sale of the Registrable Securities to such Person, receive a copy of the
Prospectus as so amended or supplemented and the untrue statement or omission of
a material fact contained in the Prospectus was corrected in the Prospectus as
so amended or supplemented.
(b) Indemnification by Holders of Registrable Securities. In
connection with any Registration Statement in which a Holder is participating,
each such Holder will furnish to the Company in writing such information with
respect to the name and address of such Holder and such other information as may
be reasonably required for use in connection with any such Registration
Statement or Prospectus and agrees to indemnify, to the full extent permitted by
law, the Company, its directors and officers and each Person who controls the
Company (within the meaning of the Securities Act) against any losses, claims,
damages, liabilities and expenses resulting from any untrue statement of a
material fact in the Registration Statement or Prospectus or any amendment
thereof or supplement thereto or necessary to make the statements therein not
misleading, to the extent, but only to the extent, that such untrue or alleged
untrue statement relates to any information with respect to such Holder so
furnished in writing by such Holder
specifically for inclusion in any Prospectus or Registration Statement;
provided, however, that such Holder shall not be liable in any such case to the
extent that prior to the filing of any such Registration Statement or Prospectus
or amendment thereof or supplement thereto, such Holder has furnished in writing
to the Company information expressly for use in such Registration Statement or
Prospectus or any amendment thereof or supplement thereto which corrected or
made not misleading information previously furnished to the Company. In no event
shall the liability of any Selling Holder hereunder be greater in amount than
the dollar amount of the proceeds received by such Selling Holder upon the sale
of the Registrable Securities giving rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. Any Person entitled to
indemnification hereunder agrees to give prompt written notice to the
indemnifying party after the receipt by such Person of any written notice of the
commencement of any action, suit, proceeding or investigation or threat thereof
made in writing for which such Person will claim indemnification or contribution
pursuant to the provisions hereof and, unless in the judgment of counsel of such
indemnified party a conflict of interest may exist between such indemnified
party and the indemnifying party with respect to such claim, permit the
indemnifying party to assume the defense of such claim. Whether or not such
defense is assumed by the indemnifying party, the indemnifying party will not be
subject to any liability for any settlement made without its consent (but such
consent will not be unreasonably withheld). No indemnifying party will consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect of such claim or
litigation. If the indemnifying party is not entitled to, or elects not to,
assume the defense of a claim, it will not be obligated to pay the fees and
expenses of more than one counsel (plus such local counsel, if any, as may be
reasonably required in other jurisdictions) with respect to such claim, unless
in the judgment of any indemnified party a conflict of interest may exist
between such indemnified party and any other of such indemnified parties with
respect to such claim, in which event the indemnifying party shall be obligated
to pay the fees and expenses of such additional counsel or counsels. For the
purposes of this Section 5(c), the term "conflict of interest" shall mean that
there are one or more legal defenses available to the indemnified party that are
different from or additional to those available to the indemnifying party or
such other indemnified parties, as applicable, which different or additional
defenses make joint representation inappropriate.
(d) Contribution. If the indemnification from the indemnifying party
provided for in this Section 5 is unavailable to an indemnified party hereunder
in respect of any losses, claims, damages, liabilities or expenses referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and indemnified parties in connection with the actions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of such indemnifying party
and indemnified parties shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact, has been made by, or relates to information supplied by,
such indemnifying party or indemnified parties, and the parties intent,
knowledge, access to information and opportunity to correct or prevent such
action. The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in Section 5(c), any reasonable legal or
other fees or expenses reasonably incurred by such party in connection with any
investigation or proceeding. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(e) If indemnification is available under this Section 5, the
indemnifying parties shall indemnify each indemnified party to the full extent
provided in Sections 5(a) and (b) without regard to the relative fault of said
indemnifying party or indemnified party or any other equitable consideration
provided for in this Section 5.
6. Transfer of Rights.
The rights to cause the Company to register Registrable Securities granted
pursuant to the provisions hereof may be transferred or assigned by any Holder
to a transferee or assignee; provided; however, that the transferee or assignee
of such rights assumes the obligations of such transferor or assignor, as the
case may be, hereunder.
7. Amendment
Except as otherwise provided herein, the provisions hereof may not be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given unless the Company has obtained the
written consent of Holders of at least a majority of the aggregate number of the
Registrable Securities then outstanding.