Exhibit 10.9.1
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT, dated as of January 26, 2000, is
entered into by and between Max Internet Communications, Inc. (the "Company"),
and Boxer Partners LLC, a Delaware limited liability company (the "Purchaser").
W I T N E S S E T H:
WHEREAS, the Company and the Purchaser are executing and delivering
this Agreement in reliance upon the exemptions from registration provided by
Regulation D ("Regulation D") promulgated by the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended (the
"Securities Act"), or by Section 4(2) of the Securities Act; and
WHEREAS, the Purchaser wishes to purchase, and the Company wishes to
issue, upon the terms and subject to the conditions of this Agreement, 727,273
shares of the Company's Common Stock par value $.0001 per share (the "Common
Stock") and warrants (the "Warrants") to purchase four hundred thousand
(400,000) shares of the Company's common stock, for the aggregate purchase price
of four million dollars ($4,000,000) (the "Purchase Price"). The Warrants may be
exercised for the purchase of Common Stock, on the terms set forth therein; and
WHEREAS, the Purchaser has previously loaned to the Company the sum of
two million dollars ($2,000,000), which loan is represented by a promissory
note, dated January 20, 2000, issued by the Company (the Note"), and the
Purchaser has the right (i) to convert the Note into shares of Common Stock and
the Common Stock issued by the Company upon such conversion shall be deemed to
be credited against the issuance of the shares of Common Stock hereunder or (ii)
to have the principal and accrued interest under the Note applied towards
payment of the Purchase Price.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. AGREEMENT TO PURCHASE; PURCHASE PRICE
a. Purchase of Common Stock and Warrants. On the Closing Date
(as defined herein), the Purchaser hereby agrees to purchase from the Company
(i) the Common Stock and (ii) the Warrants to purchase four hundred thousand
(400,000) shares of Common Stock, which shall be issued in substantially the
form attached hereto as Exhibit A. The aggregate purchase price for the Common
Stock, and the Warrants (together, the "Securities") shall be four million
dollars ($4,000,000) and shall be payable in same day funds. The Company and the
Purchaser acknowledge and agree that the Purchaser is applying the principal and
interest accrued under the Note towards payment of the Purchase Price.
b. Closing. The Securities to be purchased by the Purchaser
hereunder, shall be delivered by or on behalf of the Company for the account of
the Purchaser in definitive form, and in such denominations and registered in
such names as the Purchaser or its representative, if any, may request upon
notice to the Company, against payment by the Purchaser or on its behalf of the
purchase price therefor by wire transfer to an account of the Company, all at
the offices of ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, 1350 Avenue of the ▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at 9:30 a.m., New York time on January 25,
2000, or at such other time and date as the Purchaser or its representative, if
any, and the Company may agree upon in writing (the "Closing Date").
2. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER; ACCESS TO INFORMATION;
INDEPENDENT INVESTIGATION.
The Purchaser represents and warrants to, and covenants and
agrees with, the Company as follows:
a. The Purchaser and each of its equity owners is (i)
experienced in making investments of the kind described in this Agreement and
the related documents, (ii) able, by reason of the business and financial
experience of its management, to protect its own interests in connection with
the transactions described in this Agreement and the related documents, (iii)
able to afford the entire loss of its investment in the Securities and (iv) an
accredited investor.
b. All subsequent offers and sales of the Securities,
including, without limitation the Warrants and the Common Stock issuable upon
exercise the Warrants, shall be made pursuant to an effective registration
statement under the Securities Act or pursuant to an applicable exemption from
such registration.
c. The Purchaser understands that the Securities are being
offered and sold to it in reliance upon exemptions from the registration
requirements of the United States federal securities laws, and that the Company
is relying upon the truth and accuracy of the Purchaser's representations and
warranties, and the Purchaser's compliance with its agreements, each as set
forth herein, in order to determine the availability of such exemptions and the
eligibility of the Purchaser to acquire the Securities.
d. The Purchaser: (i) has been provided with sufficient
information with respect to the business of the Company and such documents
relating to the Company as the Purchaser has requested and Purchaser has
carefully reviewed the same including, without limitation, the Company's Proxy
Statement for its 1999 annual meeting of shareholders, Form 10KSB for the year
ended June 30, 1999 and Form 10-QSB for the quarter ended September 30, 1999
filed with the Securities and Exchange Commission ("the Commission"), (ii) has
been provided with such additional information with respect to the Company and
its business and financial condition as the Purchaser, or the Purchaser's agent
or attorney, has requested, and (iii) has had access to management of the
Company and the opportunity to discuss the information provided by management of
the Company and any questions that the Purchaser has had with respect thereto
have been answered to the full satisfaction of the Purchaser.
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e. The Purchaser has the requisite power and authority to
enter into this Agreement and the registration rights agreement, dated the date
hereof, between the Company and the Purchaser (the "Registration Rights
Agreement") attached hereto as Exhibit B, and the transactions contemplated
hereby and thereby, have been duly and validly authorized by the Purchaser; and
such agreements, when executed and delivered by each of the Purchaser and the
Company will each be a valid and binding agreement of the Purchaser, enforceable
in accordance with their respective terms, except to the extent that enforcement
of each such agreement may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws now or hereafter in
effect relating to creditors' rights generally and to general principles of
equity.
3. REPRESENTATIONS OF THE COMPANY
The Company represents and warrants to the Purchaser that:
a. Organization. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada.
Each of the Company's subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of its respective jurisdiction.
Each of the Company and its subsidiaries is duly qualified as a foreign
corporation in all jurisdictions in which the failure to so qualify would have a
material adverse effect on the Company and its subsidiaries taken as a whole.
Schedule 3(a) lists all subsidiaries of the Company and, except as noted
therein, all of the outstanding capital stock of such subsidiaries is owned of
record and beneficially by the Company.
b. Capitalization. On the date hereof, the authorized capital
of the Company consists of 50,000,000 shares of Common Stock, par value $.0001
per share, of which 15,924,492 are issued and outstanding and 50,000,000 shares
of preferred stock, par value $.0001 per share of which no shares are issued and
outstanding. Schedule 3(b) sets forth all of the options, warrants and
convertible securities of the Company, and any other rights to acquire
securities of the Company (collectively, the "Derivative Securities") which are
outstanding on the date hereof, including in each case (i) the name and class of
such Derivative Securities, (ii) the issue date of such Derivative Securities,
(iii) the number of shares of Common Stock of the Company into which such
Derivative Securities are convertible as of the date hereof, (iv) the conversion
or exercise price or prices of such Derivative Securities as of the date hereof,
(v) the expiration date of any conversion or exercise rights held by the owners
of such Derivative Securities and (vi) any registration rights associated with
such Derivative Securities or outstanding Common Stock..
c. Concerning the Common Stock and the Warrants. The Common
Stock and the Common Stock issuable upon exercise of the Warrants when issued,
shall be duly and validly issued, fully paid and non-assessable, and will not
subject the holder thereof to personal liability by reason of being such a
holder. There are no preemptive rights of any stockholder of the Company, as
such, to acquire any of the Securities, or the Common Stock issuable to the
Purchaser pursuant to the terms of the Securities Purchase Agreement Warrants.
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d. Reporting Company Status. The Common Stock is registered as
a reporting company under Section 12(g) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"). The Company has duly filed all materials and
documents required to be filed pursuant to all reporting obligations under
either Section 13(a) or 15(d) of the Exchange Act, if any, prior to the offer
and sale of the Securities. The Common Stock is listed and traded on the OTC
Bulletin Board, and the Company is not aware of any pending or contemplated
action or proceeding of any kind to suspend the trading of the Common Stock.
e. Authorized Shares. The Company has legally available a
sufficient number of authorized and unissued shares of Common Stock as may be
necessary to (i) issue the shares of Common Stock being purchased by the
Purchaser and (ii) effect the exercise of the Warrants. The Company understands
and acknowledges the potentially dilutive effect to the Common Stock of the
issuance of shares of Common Stock upon (i) issuance of the shares of Common
Stock purchasable hereunder by the Purchaser and (ii) the exercise of the
Warrants. The Company further acknowledges that its obligation to issue shares
of Common Stock (i) purchasable by Purchaser hereunder and (ii) upon exercise of
the Warrants, is absolute and unconditional regardless of the dilutive effect
that such issuance may have on the ownership interests of other stockholders of
the Company and notwithstanding the commencement of any case under 11 U.S.C. ss.
101 et seq. (the "Bankruptcy Code"). In the event the Company becomes a debtor
under the Bankruptcy Code, the Company hereby waives to the fullest extent
permitted any rights to relief it may have under 11 U.S.C. ss. 362 in respect of
the exercise of the Warrants. The Company agrees, without cost or expense to the
Purchaser, to take or consent to any and all action necessary to effectuate
relief under 11 U.S.C. ss. 362.
f. Legality. The Company has the requisite corporate power
and authority to enter into this Agreement and to issue and deliver (i) the
shares of Common Stock purchasable hereunder and the Warrants, and (ii) the
Common Stock issuable upon the exercise of the Warrants.
g. Transaction Agreements. This Agreement, the Registration
Rights Agreement, and the Warrants (collectively, the "Primary Documents"), and
the transactions contemplated hereby and thereby, have been duly and validly
authorized by the Company; this Agreement has been duly executed and delivered
by the Company and this Agreement is, and the other Primary Documents, which are
being executed and delivered by the Company simultaneously with the execution
and delivery of this Agreement, are the legal, valid and binding agreement of
the Company, enforceable in accordance with their respective terms, except to
the extent that enforcement of each of the Primary Documents may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws now or hereafter in effect relating to creditors' rights
generally and to general principles of equity.
h. Non-contravention. The execution and delivery of this
Agreement and each of the other Primary Documents, and the consummation by the
Company of the other transactions contemplated by this Agreement and each of the
other Primary Documents, does not and will not conflict with or result in a
breach by the Company of any of the terms or provisions of, or constitute a
default under, the Articles of Incorporation or By-laws of the Company, or any
material indenture, mortgage, deed of trust or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by which they or any
of their properties or assets are bound, or any existing applicable law, rule,
or regulation or any applicable decree, judgment or order of any court or United
States federal or state regulatory body, administrative agency, or any other
governmental body having jurisdiction over the Company, or its subsidiaries.
Except as set forth on Schedule 3(h), neither the filing of the registration
statement required to be filed by the Company pursuant to the Registration
Rights Agreement nor the offering or sale of the Warrant and if the Warrant is
exercised, the Common Stock issuable upon such exercise, as applicable, gives
rise to any rights, other than those which have been waived or satisfied on or
prior to the Closing Date, for or relating to the registration of any shares of
the Common Stock.
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i. Approvals. No authorization, approval or consent of any
court, governmental body, regulatory agency, self-regulatory organization, stock
exchange or market or the stockholders of the Company is required to be obtained
by the Company for the entry into or the performance of this Agreement and the
other Primary Documents.
j. SEC Filings. None of the reports or documents filed by the
Company with the Commission (the "SEC Documents") contained, at the time they
were filed, any untrue statement of a material fact or omitted to state any
material fact required to be stated therein, or necessary to make the statements
made therein, in light of the circumstances under which they were made, not
misleading.
k. Stabilization. Neither the Company, nor any of its
affiliates, has taken or may take, directly or indirectly, any action designed
to cause or result in, or which has constituted or which might reasonably be
expected to constitute, the stabilization or manipulation of the price of the
shares of Common Stock.
l. Absence of Certain Changes. Except as disclosed in the
Company's SEC Documents and since June 30, 1999, there has been no material
adverse change nor any material adverse development in the business, properties,
operations, financial condition, prospects, outstanding securities or results of
operations of the Company.
m. Full Disclosure. There is no fact known to the Company
(other than general economic conditions known to the public generally) that has
not been disclosed in writing to the Purchaser (i) that could reasonably be
expected to have a material adverse effect upon the condition (financial or
otherwise) or the earnings, business affairs, properties or assets of the
Company or (ii) that could reasonably be expected to materially and adversely
affect the ability of the Company to perform the obligations set forth in the
Primary Documents. The representations and warranties of the Company set forth
in this Agreement (and the schedules hereto) do not contain any untrue statement
of a material fact or omit any material fact necessary to make the statements
contained herein, in light of the circumstances under which they were made, not
misleading.
n. Title to Properties; Liens and Encumbrances. The Company
has good and marketable title to all of its material properties and assets, both
real and personal, and has good title to all its leasehold interests, in each
case subject only to mortgages, pledges, liens, security interests, conditional
sale agreements, encumbrances or charges created in the ordinary course of
business.
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o. Patents and Other Proprietary Rights. The Company has
sufficient title and ownership or holds under valid license of all patents,
trademarks, service marks, trade names, copyrights, trade secrets, information,
proprietary rights and processes necessary for the conduct of its business as
now conducted and as proposed to be conducted, and such business does not and
would not conflict with or constitute an infringement on the rights of others.
p. Permits. The Company has all franchises, permits, licenses
and any similar authority necessary for the conduct of its business as now
conducted, the lack of which would materially and adversely affect the business
or financial condition of the Company. The Company is not in default in any
respect under any of such franchises, permits, licenses or similar authority.
q. Absence of Litigation. Except as disclosed in the Company's
SEC Documents, there is no action, suit, proceeding, inquiry or investigation
before or by any court, public board or body pending or, to the knowledge of the
Company or any of its subsidiaries, threatened against or affecting the Company
or any of its subsidiaries, in which an unfavorable decision, ruling or finding
would have a material adverse effect on the properties, business, condition
(financial or other) or results of operations of the Company and its
subsidiaries, taken as a whole, or the transactions contemplated by the Primary
Documents, or which would adversely affect the validity or enforceability of, or
the authority or ability of the Company to perform its obligations under, the
Primary Documents.
r. No Default. Each of the Company and its subsidiaries is
not in default in the performance or observance of any obligation, covenant or
condition contained in any indenture, mortgage, deed of trust or other
instrument or agreement to which it is a party or by which it or its property
may be bound.
s. Transactions with Affiliates. Except as disclosed in the
Company's public filings with the Commission, there are no agreements,
understandings or proposed transactions between the Company and any of its
officers, directors or affiliates that, had they existed June 30, 1999, would
have been required to be disclosed in the Company's 1999 Annual Report to
stockholders.
t. Employment Matters. The Company is in compliance in all
material respects with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the regulations
and published interpretations thereunder ("ERISA"); no "reportable event" (as
defined in ERISA) has occurred with respect to any "pension plan" (as defined in
ERISA) for which the Company would have any liability; the Company has not
incurred and does not expect to incur liability under (i) Title IV of ERISA with
respect to termination of, or withdrawal from, any "pension plan" or (ii)
Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended, including
the regulations and published interpretations thereunder (the "Code"); and each
"pension plan" for which the Company would have any liability that is intended
to be qualified under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to act, which
would cause the loss of such qualification.
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u. Insurance. The Company maintains property and casualty,
general liability, personal injury and other similar types of insurance with
financially sound and reputable insurers that is adequate, consistent with
industry standards and the Company's historical claims experience. The Company
has not received notice from, and has no knowledge of any threat by, any insurer
(that has issued any insurance policy to the Company) that such insurer intends
to deny coverage under or cancel, discontinue or not renew any insurance policy
covering the Company, or any of its subsidiaries, presently in force.
v. Taxes. All applicable tax returns required to be filed by
the Company and each of its subsidiaries have been prepared and filed in
compliance with all applicable laws, or, if not yet filed, have been granted
extensions of the filing dates which extensions have not expired, and all taxes,
assessments, fees and other governmental charges upon the Company, its
subsidiaries, or upon any of their respective properties, income or franchises,
shown in such returns and on assessments received by the Company or its
subsidiaries to be due and payable have been paid, or adequate reserves therefor
have been set up if any of such taxes are being contested in good faith; or if
any of such tax returns have not been filed or if any such taxes have not been
paid or so reserved for, the failure to so file or to pay would not in the
aggregate have a material adverse effect on the business or financial condition
of the Company and its subsidiaries, taken as a whole.
w. Foreign Corrupt Practices Act. Neither the Company nor any
of its directors, officers or other employees has (i) used any Company funds for
any unlawful contribution, endorsement, gift, entertainment or other unlawful
expense relating to any political activity; (ii) made any direct or indirect
unlawful payment of Company funds to any foreign or domestic government official
or employee; (iii) violated or is in violation of any provision of the Foreign
Corrupt Practices Act of 1977, as amended; or (iv) made any bribe, rebate,
payoff, influence payment, kickback or other similar payment to any person. The
Company maintains a system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in accordance with
management's general or specific authorization; (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
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 accountability for
assets is compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
x. Investment Company Act. The Company is not conducting,
and does not intend to conduct, its business in a manner which would cause it to
become, an "investment company," as defined in Section 3(a) of the Investment
Company Act of 1940, as amended.
y. Agent Fees. Except for fees payable to ▇▇▇▇▇▇▇ & Company
Securities, Inc. as set forth on Schedule 3(y) hereto, which fees shall be paid
by the Company, the Company has not incurred any liability for any finder's or
brokerage fees or agent's commissions in connection with the offer and sale of
the transactions contemplated by this Agreement.
z. Private Offering. Subject to the accuracy of the
Purchaser's representations and warranties set forth in Section 2 hereof, the
offer, sale and issuance of (i) the Securities or (ii) the issuance of Common
Stock upon exercise of the Warrant are exempt from the registration requirements
of the Securities Act. The Company agrees that neither the Company nor anyone
acting on its behalf will offer any of the Common Stock or the Warrants, or any
similar securities for issuance or sale, or solicit any offer to acquire any of
the same from anyone so as to render the issuance and sale of such securities
subject to the registration requirements of the Securities Act. The Company has
not offered or sold the Securities by any form of general solicitation or
general advertising, as such terms are used in Rule 502(c) under the Securities
Act.
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aa. Year 2000 Processing. The computer systems used by the
Company and its subsidiaries (the "Systems"), both hardware and software, are in
good working order. The Company has taken steps that are reasonable to ensure
that the occurrence of the year 2000 will not materially and adversely affect
the Systems of the Company, its subsidiaries, or their business, and no material
expenditures in excess of currently budgeted items will be required in order to
cause such Systems to operate properly following the change of the year 1999 to
2000. The Company and its subsidiaries have resolved or are in the process of
resolving any issues discovered as a result of year 2000 inquires or compliance
testing or otherwise known to the Company.
bb. Environmental Matters. Neither the Company and its
subsidiaries, nor any predecessor in interest nor, to the Company's knowledge,
after due inquiry, any other person has ever caused or permitted any Hazardous
Material (as defined below) to be released, treated or disposed of on, at, under
or within any real property owned, leased or operated by the Company and its
subsidiaries or any predecessor in interest, and no such real property has ever
been used (either by the Company and its subsidiaries, any predecessor in
interest or, to the Company's knowledge, after due inquiry, by any other person)
as a treatment, storage or disposal site for any Hazardous Material. The Company
has no liabilities with respect to Hazardous Materials, and to the knowledge of
the Company, after due inquiry, no facts or circumstances exist which could give
rise to liabilities with respect to Hazardous Materials, which could have any
reasonable likelihood of having a material adverse effect on the Company. For
purposes of this Agreement "Hazardous Materials" shall mean (i) any pollutants
or contaminations, (ii) any asbestos or insulation or other material composed of
or containing asbestos and (iii) any petroleum product and any hazardous, toxic
or dangerous waste, substance or material defined as such in, or for purposes
of, the Comprehensive Environmental Response, Compensation and Liability Act,
any so-called "Superfund" or "Superlien" law, or any other applicable federal,
state, local or other statute, law, ordinance, code, rule, regulation, order or
decree concerning the protection of human health or the environment or otherwise
regulating, relating to, or imposing liability or standards of conduct
concerning, any hazardous, toxic or dangerous waste, substance or material, as
now or at any time hereafter in effect.
cc. Intellectual Property. Except as set forth in the SEC
Documents, to the best of the Company's knowledge, each of the Company and its
subsidiaries owns or possesses adequate rights to use all material patents,
patent rights, inventions, trade secrets, know-how, trademarks, service marks,
trade names and copyrights which are described in the SEC Documents; except as
set forth in the SEC Documents, the Company has not received any notice of, and
has no knowledge of, any infringement of or conflict with asserted rights of the
Company by others with respect to any patent, patent rights, inventions, trade
secrets, know-how, trademarks, service marks, trade names and copyrights which,
singly or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a material adverse effect on the condition (financial or
otherwise), earnings, operations, business of the Company and its subsidiaries,
taken as a whole, as presently conducted; and, except as set forth in the SEC
Documents, the Company has not received any notice of, and has no knowledge of,
any infringement of or conflict with the asserted rights of others with respect
to any patent, patent rights, inventions, trade secrets, know-how, trademarks,
service marks, trade names and copyrights which, singly or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would have a material
adverse effect on the condition (financial or otherwise), earnings, operations,
or business of the Company and its subsidiaries, taken as a whole, as presently
conducted.
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4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
a. Transfer Restrictions. The Purchaser acknowledges that,
except as provided in the Registration Rights Agreement, (i) neither (A) the
Securities, including without limitation, the Warrant, or Common Stock issuable
upon exercise of the Warrant, may not be transferred unless they are (1)
subsequently registered thereunder or otherwise registered pursuant to the
Securities Act, or (2) they are transferred pursuant to an exemption from such
registration; and (ii) any sale of the Securities, including without limitation
the Warrant, or the Common Stock issuable upon exercise of the Warrant made in
reliance upon Rule 144 under the Securities Act may be made only in accordance
with the terms of said Rule and further, if said Rule is not applicable, any
such resale under circumstances in which the seller, or the person through whom
the sale is made, may be deemed to be an underwriter, as that term is used in
the Securities Act, may require compliance with another exemption under the
Securities Act and the rules and regulations of the Commission thereunder. The
provisions of Section 4(a) and 4(b) hereof, together with the rights of the
Purchaser under this Agreement and the other Primary Documents, shall be binding
upon any subsequent transferee of the Securities and the Warrant.
b. Restrictive Legend. The Purchaser acknowledges and agrees
that, until such time as the Securities or the Common Stock issuable upon
exchange thereof shall have been registered under the Securities Act or the
Purchaser demonstrates to the reasonable satisfaction of the Company and its
counsel that such registration shall no longer be required, such Securities or
the Common Stock issuable upon exchange thereof may be subject to a
stop-transfer order placed against the transfer of such Securities, and such
Securities shall bear a restrictive legend in substantially the following form:
THESE SECURITIES (INCLUDING ANY UNDERLYING SECURITIES) HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER
SAID ACT OR AN OPINION OF COUNSEL OR OTHER EVIDENCE REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION SHALL NO
LONGER BE REQUIRED.
c. Filings. The Company undertakes and agrees that it will
make all required filings in connection with the sale of the Securities,
including shares of Common Stock issuable upon exercise of the Warrants, to the
Purchaser as required by United States laws and regulations, or by any domestic
securities exchange or trading market, including, upon exercise of the Warrants
for trading on the OTC Bulletin Board or the filing of a listing application
with NASDAQ to list all of the shares of Common Stock issuable upon the exercise
of the Warrants, as applicable, and if applicable, the filing of a notice on
Form D (at such time and in such manner as required by the rules and regulations
of the Commission), and to provide copies thereof to the Purchaser promptly
after such filing or filings.
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d. Reporting Status. So long as the Purchaser beneficially
owns any of the Securities, the Company shall timely file all reports required
to be filed with the Commission pursuant to Section 13 or 15(d) of the Exchange
Act and shall not terminate its status as an issuer required to file reports
under the Exchange Act even if the Exchange Act or the rules and regulations
thereunder would permit such termination.
e. State Securities Filings. The Company shall from time to
time promptly take such action as the Purchaser or any of its representatives,
if applicable, may reasonably request to qualify the Securities or the Common
Stock issuable upon exercise of the Warrants for offering and sale under the
securities laws (other than United States federal securities laws) of the
jurisdictions in the United States as shall be so identified to the Company, and
to comply with such laws so as to permit the continuance of sales therein,
provided that in connection therewith, the Company shall not be required to
qualify as a foreign corporation or to file a general consent to the service of
process in any jurisdiction.
f. Use of Proceeds. The Company will use all of the net
proceeds from the issuance of the Securities for technology application
developments and working capital.
g. Reservation of Common Stock. The Company will at all
times have authorized and reserved for the purpose of issuance a sufficient
number of shares of Common Stock to provide for the exercise of the Warrants.
h. Sales of Additional Shares. The Company shall not, directly
or indirectly, without the prior written consent of the Purchaser, offer, sell,
offer to sell, contract to sell or otherwise dispose of any of its securities or
any security or other instrument convertible into or exchangeable for shares of
its capital stock (each a "Capital Issuance Event"), in each case, for a period
beginning on the date hereof and ending two hundred seventy (270) days after the
Registration Statement (as defined in the Registration Rights Agreement) is
declared effective by the Commission (the "Lock-Up Period"), which (i) are
issued at or convertible into or contain rights to purchase Common Stock at a
price of less than $5.50 per share, (ii) contain provisions for re-pricing or
(iii) are convertible into Common Stock at a price which adjusts based upon
changes in market price.
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i. Right of First Refusal. Subject to Section 4(h), if during
the nine (9) month period following the Lock-Up Period the Company shall desire
to sell, offer to sell, contract to sell or otherwise dispose of any securities
or any security or other instrument convertible into or exchangeable for shares
of Common Stock (collectively, the "Offered Securities") to a prospective
investor (the "Prospective Investor"), the Company shall notify (the "Offer
Notice") the Purchaser in accordance with Section 10 hereof of the terms (the
"Third Party Terms") on which the Company proposes to sell, contract to sell or
otherwise dispose of the Offered Securities to the Prospective Investor. If,
within the five (5) day period following the Purchaser's receipt of the Offer
Notice, the Purchaser delivers a written notice (the "Acceptance Notice") to the
Company stating its desire to purchase all or any portion of the Offered
Securities on the Third Party Terms, the Company shall be required to sell the
Offered Securities (or any portion thereof so desired by the Purchaser) to the
Purchaser at the price and on the terms set forth in the Offer Notice and the
Company shall not be permitted to sell such Offered Securities to the
Prospective Investor. If the Purchaser does not deliver an Acceptance Notice to
the Company in such five (5) day period, then for a period of sixty (60) days
following the date of the Offer Notice the Company may sell the Offered
Securities to the Prospective Investor on the terms set forth in the Offer
Notice. Notwithstanding the foregoing, the Purchaser shall not have a right to
purchase any portion of the Offered Securities if such Offered Securities
consist of shares of Common Stock and are to be sold or issued by the Company
(i) for the aggregate consideration of at least $15 million in connection with a
bona fide, firm commitment, underwritten public offering under the Securities
Act; (ii) in connection with a bona fide transaction involving the acquisition
of another business entity or segment of any such entity by the Company by
merger, asset, purchase, stock purchase or otherwise; (iii) in connection with a
stock split, stock dividend or similar recapitalization of the Company which
affects all holders of the Company's Common Stock on an equivalent basis, or
(iv) on arms length terms to a strategic third party investor providing business
services directly relating to the Company, in each case, without the prior
written consent of the Purchaser (each a "Capital Issuance Event"); provided,
however, that the Company shall give the Purchaser at least fifteen (15) days
prior written notice of the occurrence of any Capital Issuance Event. In
addition, the Company agrees that it will not cause any shares of its capital
stock that are issued in connection with a transaction of the type contemplated
by clause (ii) (or upon the conversion or exercise of other securities that are
issued in connection with such transaction) or that were issued in connection
with financing, acquisition or other transaction that occurred prior or
subsequent to the date of this Agreement to be covered by a registration
statement that is filed with the Commission or declared effective by the
Commission prior to the time that the Common Stock, Warrants and Common Stock
issuable upon exercise thereof are covered by a registration statement filed by
the Company pursuant to its obligations under the Registration Rights Agreement
has been effective under the Securities Act for a period of at least one hundred
twenty (120) days during which one hundred twenty (120) day period the Company
has not notified the Purchaser that such registration statement or the
prospectus included in such registration statement includes an untrue statement
of a material fact or omits to state a material fact required to be stated
therein in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
j. Ownership. At no time shall the Purchaser (including its
officers, directors and affiliates) maintain in the aggregate beneficial
ownership (as defined for purposes of Section 16 of the Securities Exchange Act
of 1934, as amended) of shares of Common Stock in excess of 9.999% of the
Company's outstanding Common Stock unless the Purchaser gives the Company at
least sixty-one days notice that it intends to increase its ownership position.
11
5. TRANSFER AGENT INSTRUCTIONS.
a. The Company warrants that no instruction, other than the
instructions referred to in this Section 5 and stop transfer instructions to
give effect to Sections 4(a) and 4(b) hereof prior to the registration and sale
of the Securities in the manner contemplated by the Registration Rights
Agreement, will be given by the Company to the transfer agent and that the
shares of Common Stock issuable upon exercise of the Warrants shall otherwise be
freely transferable on the books and records of the Company as and to the extent
provided in this Agreement, the Registration Rights Agreement and applicable
law. Nothing in this Section shall affect in any way the Purchaser's obligations
and agreement to comply with all applicable securities laws upon resale of the
Securities. If the Purchaser provides the Company with an opinion of counsel
reasonably satisfactory (as to both the identity of such counsel and the content
of such opinion) to the Company and its counsel that registration of a resale by
the Purchaser of any of the Securities in accordance with clause (1)(B) of
Section 4(a) of this Agreement is not required under the Securities Act, the
Company shall permit the transfer of the Securities and, in the case of the
Common Stock, promptly instruct the Company's transfer agent to issue one or
more certificates for Common Stock without legend in such names and in such
denominations as specified by the Purchaser.
b. The Company will permit the Purchaser to exercise its right
to exercise the Warrants by faxing an executed and completed Form of Election to
Purchase, as applicable, to the Company, and delivering within three (3)
business days thereafter, the original Form of Election to Purchase (and the
Warrant) to the Company by hand delivery or by express courier, duly endorsed.
Each date on which a Form of Election to Purchase is faxed to the Company in
accordance with the provisions hereof shall be deemed a "Conversion Date." The
Company will transmit the certificates representing the Common Stock issuable
upon exercise of the to the Purchaser via express courier as soon as
practicable, but in all events no later than five (5) business days in the case
of the exercise of the Warrant after the Conversion Date (the "Delivery Date").
For purposes of this Agreement, any exercise of the Warrants shall be deemed to
have been made immediately prior to the close of business on the Conversion
Date.
c. In lieu of delivering physical certificates representing
the Common Stock issuable upon the exercise of the Warrants, provided the
Company's transfer agent is participating in the Depository Trust Company
("DTC") Fast Automated Securities Transfer program, on the written request of
the Purchaser, who shall have previously instructed the Purchaser's prime broker
to confirm such request to the Company's transfer agent, the Company shall cause
its transfer agent to electronically transmit such Common Stock to the Purchaser
by crediting the account of the Purchaser's prime broker with DTC through its
Deposit Withdrawal Agent Commission ("DWAC") system no later than the applicable
Delivery Date.
d. The Company understands that a delay in the issuance of
Common Stock beyond the applicable Delivery Date could result in an economic
loss to the Purchaser. As compensation to the Purchaser for such loss, the
Company agrees to pay to the Purchaser for late issuance of Common Stock upon
exercise of the Warrants the sum of $2,500 per day for any or all shares of
Common Stock purchased upon the exercise of the Warrants. The Company shall pay
any payments that are payable to the Purchaser pursuant to this Section 5 in
immediately available funds upon demand. Nothing herein shall limit the
Purchaser's right to pursue actual damages for the Company's failure to so issue
and deliver Common Stock to the Purchaser. Furthermore, in addition to any other
remedies which may be available to the Purchaser, in the event that the Company
fails for any reason to effect delivery of such Common Stock within five (5)
business days after the relevant Delivery Date, the Purchaser will be entitled
to revoke the relevant Form of Election to Purchase by delivering a notice to
such effect to the Company, whereupon the Company and the Purchaser shall each
be restored to their respective positions immediately prior to delivery of such
Form of Election to Purchase. For purposes of this Section 5, "business day"
shall mean any day in which the financial markets of New York are officially
open for the conduct of business therein.
12
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO ISSUE THE SECURITIES.
Purchaser understands that the Company's obligation to issue the
Securities on the Closing Date to Purchaser pursuant to this Agreement is
conditioned upon:
a. The accuracy on the Closing Date of the representations and
warranties of Purchaser contained in this Agreement as if made on the Closing
Date and the performance by Purchaser on or before the Closing Date of all
covenants and agreements of Purchaser required to be performed on or before the
Closing Date;
b. The absence or inapplicability of any and all laws, rules
or regulations prohibiting or restricting the transactions contemplated hereby,
or requiring any consent or approval which shall not have been obtained.
7. CONDITIONS TO THE PURCHASER'S OBLIGATION TO PURCHASE THE SECURITIES.
The Company understands that Purchaser's obligation to purchase the
Securities on the Closing Date is conditioned upon:
a. The accuracy on the Closing Date of the representations and
warranties of the Company contained in this Agreement as if made on the Closing
Date, and the performance by the Company on or before the Closing Date of all
covenants and agreements of the Company required to be performed on or before
the Closing Date;
b. On the Closing Date, the Purchaser shall have received (i)
the shares of Common Stock purchasable hereunder, and (ii) the Warrants, in
substantially the form of Exhibit A hereto.
c. On the Closing Date, the Purchaser shall have received an
opinion of counsel for the Company, dated the Closing Date, in form, scope and
substance reasonably satisfactory to Purchaser, to the effect set forth in
Exhibit C attached hereto;
d. On the Closing Date the Company shall have executed and
delivered a signed counterpart to the Registration Rights Agreement, in form,
scope and substance reasonably satisfactory to Purchaser, to the effect set
forth in Exhibit B attached hereto;
e. On the Closing Date, the Purchaser shall have received a
certificate executed by (i) the President or the Chairman of the Company and
(ii) the Chief Financial Officer of the Company, stating that all of the
representations and warranties of the Company set forth in this Agreement are
accurate as of the Closing Date and that the Company has performed all of its
covenants and agreements required to be performed under this Agreement on or
before the Closing Date;
13
f. On the Closing Date, the Purchaser shall have received from
the Company such other certificates and documents as it or its representatives,
if applicable, shall reasonably request, and all proceedings taken by the
Company in connection with the Primary Documents contemplated by this Agreement
and the other Primary Documents and all documents and papers relating to such
Primary Documents shall be satisfactory to the Purchaser;
g. On or prior to the Closing Date, there shall not have
occurred any of the following: (i) a suspension or material limitation in the
trading of securities generally on the New York Stock Exchange, NASDAQ National
Market, NASDAQ SmallCap or OTC Bulletin Board; (ii) a general moratorium on
commercial banking activities in New York declared by the applicable banking
authorities; (iii) the outbreak or escalation of hostilities involving the
United States, or the declaration by the United States of a national emergency
or war; or (iv) a change in international, political, financial or economic
conditions, if the effect of any such event, in the reasonable judgment of the
Purchaser, makes it impracticable or inadvisable to proceed with the purchase of
the Securities on the terms and in the manner contemplated in this Agreement and
in the other Primary Documents.
h. The Company shall have delivered to the Purchaser
reimbursement of the Purchaser's out-of-pocket costs and expenses incurred in
connection with the transactions contemplated by this Agreement (including fees
and disbursements of the Purchaser's legal counsel in the amount of $16,800.00).
8. EXPENSES.
The Company covenants and agrees with the Purchaser that the
Company will pay or cause to be paid the following: (a) the fees, disbursements
and expenses of the Purchaser and Purchaser's counsel in connection with the
issuance of the Securities payable on the Closing Date, (b) all expenses in
connection with registration or qualification of the Securities for offering and
sale under state securities laws as provided in Section 4(f) hereof, and (c) all
other costs and expenses incident to the performance of its obligations
hereunder which are not otherwise specifically provided for in this Section,
including the fees and disbursements of the Company's counsel, accountants and
other professional advisors, if any. If the Company fails to satisfy its
obligations or to satisfy any condition set forth in this Agreement, as a result
of which the Securities are not delivered to the Purchaser on the terms and
conditions set forth herein, the Company shall reimburse the Purchaser for any
out-of-pocket expenses reasonably incurred in making preparations for the
purchase, sale and delivery of the Securities not so delivered.
9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Company and the Purchaser
shall survive the execution and delivery of this Agreement and the delivery of
the Common Stock and the Warrants for a period of. eighteen (18 ) months.
14
10. GOVERNING LAW; MISCELLANEOUS
This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New York, without regard to principles
of conflict of laws. Each of the parties consents to the exclusive jurisdiction
of the federal courts whose districts encompass any part of the City of New York
or the state courts of the State of New York sitting in the City of New York in
connection with any dispute arising under this Agreement or any of the
transactions contemplated hereby, and hereby waives, to the maximum extent
permitted by law, any objection, including any objections based on forum non
conveniens, to the bringing of any such proceeding in such jurisdictions. This
Agreement may be signed in one or more counterparts, each of which shall be
deemed an original. The headings of this Agreement are for convenience of
reference only and shall not form part of, or affect the interpretation of this
Agreement. This Agreement and each of the Primary Documents have been entered
into freely by each of the parties, following consultation with their respective
counsel, and shall be interpreted fairly in accordance with its respective
terms, without any construction in favor of or against either party. If any
provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement or the validity or
unenforceability of this Agreement in any other jurisdiction. This Agreement
shall inure to the benefit of, and be binding upon the successors and assigns of
each of the parties hereto, including any transferees of the Securities. This
Agreement may be amended only by an instrument in writing signed by the party to
be charged with enforcement. This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof.
11. NOTICES.
Any notice required or permitted hereunder shall be given in
writing (unless otherwise specified herein) and shall be effective upon personal
delivery, via facsimile (upon receipt of confirmation of error-free
transmission) or two business days following deposit of such notice with an
internationally recognized courier service, with postage prepaid and addressed
to each of the other parties thereunto entitled at the following addresses, or
at such other addresses as a party may designate by five days advance written
notice to each of the other parties hereto.
If to the Company to:
MAX Internet Communications, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Att.: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Tel.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Glast, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
2200 One Galleria Tower
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇.▇. ▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Att.: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Tel.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
15
If to the Purchaser to:
Boxer Partners LLC
c\o WEC Asset Management LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ #▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
1350 Avenue of the ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Att.: ▇▇▇ ▇▇▇▇▇▇▇, Esq.
Tel.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
12. INDEMNIFICATION.
The Company agrees to indemnify the Purchaser and each
officer, director, employee, agent, partner, stockholder, member and affiliate
of the Purchaser (collectively, the "Indemnified Parties") for, and hold each
Indemnified Party harmless from and against: (i) any and all damages, losses,
claims and other liabilities of any and every kind, including, without
limitation, judgments and costs of settlement, and (ii) any and all reasonable
out-of-pocket costs and expenses of any and every kind, including, without
limitation, reasonable fees and disbursements of counsel for such Indemnified
Parties (all of which expenses periodically shall be reimbursed as incurred), in
each case, arising out of or suffered or incurred in connection with any of the
following: (a) any misrepresentation or any breach of any warranty made by the
Company herein or in any of the other Primary Documents, (b) any breach or
non-fulfillment of any covenant or agreement made by the Company herein or in
any of the other Primary Documents and (c) any claim relating to or arising out
of a violation of applicable federal or state securities laws by the Company in
connection with the sale or issuance of the Securities, by the Company to the
Purchaser (collectively, the "Indemnified Liabilities"). To the extent that the
foregoing undertaking by the Company may be unenforceable for any reason, the
Company shall make the maximum contribution to the payment and satisfaction of
each of the Indemnified Liabilities which is permissible under applicable law.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK, SIGNATURE PAGE TO FOLLOW]
16
IN WITNESS WHEREOF, this Securities Purchase Agreement has been duly
executed by each of the undersigned.
Max Internet Communications, Inc.
By:____________________________________
Name:
Title:
BOXER PARTNERS LLC
By: WEC Asset Management LLC,
Manager
By:____________________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Managing Director
17
EXHIBIT INDEX
EXHIBIT A FORM OF WARRANT
EXHIBIT B FORM OF REGISTRATION RIGHTS AGREEMENT
EXHIBIT C FORM OF OPINION OF COUNSEL TO COMPANY
SCHEDULE INDEX
SCHEDULE 3(a) LIST OF SUBSIDIARIES
SCHEDULE 3(b) CAPITALIZATION, DERIVATIVE
SECURITIES AND
REGISTRATION RIGHTS
SCHEDULE 3(h) NON-CONTRAVENTION
SCHEDULE 3(y) FEES