ADEX MEDIA, INC. SERIES A CONVERTIBLE PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT June ___, 2009
Exhibit
10.2
________________
June ___,
2009
TABLE OF
CONTENTS
Page
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1
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AUTHORIZATION AND SALE OF PREFERRED STOCK AND
WARRANTS
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1
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1.1
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Authorization.
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1
|
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1.2
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Sale of Series A Preferred
Stock
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1
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1.3
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Sale of Common Stock
Warrants
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1
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1.4
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Purchase Price
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2
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1.5
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Use of Proceeds
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2
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2
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CLOSING; DELIVERY
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2
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2.1
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Closing
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2
|
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2.2
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Agent’s Fee
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2
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2.3
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Mechanics of Subscription
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2
|
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2.4
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Company Acceptance
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3
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3
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REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
COMPANY
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3
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3.1
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Organization and Standing
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3
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3.2
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Corporate Power
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3
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3.3
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Authorization
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3
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3.4
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Compliance with Other
Instruments
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3
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3.5
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Governmental Consents, etc.
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4
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3.6
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Brokers or Finders
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4
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3.7
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Offering Valid
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4
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3.8
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No Variable Priced
Financing
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4
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4
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REPRESENTATIONS, WARRANTIES AND COVENANTS OF
PURCHASER
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4
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4.1
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Authorization
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5
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4.2
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Reliance
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5
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4.3
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Purchase Entirely for Own
Account
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5
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4.4
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No Public Market
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5
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4.5
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Governmental Review
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5
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4.6
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Disclosure of Information
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5
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4.7
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Company Information
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5
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4.8
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No General Solicitation
|
5
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|
4.9
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Investment Experience
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6
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4.1
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Speculative Nature of
Investment
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6
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4.11
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Accredited Investor
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6
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4.12
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Authorization
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6
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4.13
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Restricted Securities
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6
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4.14
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Legends
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6
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4.15
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Residency
|
7
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4.16
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No Registration; Exemption
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7
|
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4.17
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Purchaser Counsel
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7
|
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4.18
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Tax Advice
|
7
|
|
4.19
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Restrictions on Exercise and
Conversion
|
7
|
|
4.2
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Other Disposition of Company
Securities
|
8
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|
5
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LIMITATIONS ON DISPOSITION
|
8
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|
5.1
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General Restrictions on
Disposition
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8
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|
5.2
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Further Restriction on Disposition of
Series A Preferred Stock and Warrants
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8
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5.3
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Exception
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8
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5.4
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Removal of Legend
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8
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5.5
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Transfer Agent Instructions
|
9
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|
6
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CONDITIONS TO EACH PURCHASER’S OBLIGATION TO
PURCHASE
|
9
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6.1
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Representations and
Warranties
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9
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6.2
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Covenants
|
9
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6.3
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Consents; Notices
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9
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6.4
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Legal Investment
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9
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6.5
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Certificate of Designation
|
10
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|
7
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CONDITIONS TO THE COMPANY’S OBLIGATION TO
SELL
|
10
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7.1
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Execution and Delivery of Signature
Page
|
10
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7.2
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Delivery of Purchase Price
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10
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7.3
|
Representations and
Warranties
|
10
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7.4
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Consents; Notices
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10
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7.5
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Certificate of Designation
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10
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7.6
|
Legal Investment
|
10
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8
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INDEMNIFICATION
|
10
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8.1
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Indemnification by
Purchaser
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10
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9
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MISCELLANEOUS
|
11
|
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9.1
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No Voting Right
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11
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9.2
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Participation Rights
|
11
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9.3
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Registration Rights
|
11
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9.4
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Governing Law
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11
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9.5
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Survival
|
11
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9.6
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Successors and Assigns
|
11
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9.7
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Entire Agreement; Amendment
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12
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9.8
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Notices, etc.
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12
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9.9
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Expenses
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12
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9.1
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Third-Party Beneficiaries
|
12
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9.11
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Further Assurances
|
12
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9.12
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Counterparts; Facsimile
|
12
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9.13
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Severability
|
13
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9.14
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Gender
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13
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9.15
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Captions
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13
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Schedule
I Schedule
of Purchasers
Exhibit
A
Certificate of Designation
Exhibit
B
Form of Common Stock Warrant
This Series A Convertible
Preferred Stock and Warrant Purchase Agreement (“Agreement”)
is made as of June __, 2009, by and among Adex Media, Inc., a Delaware
corporation (the “Company”),
with its principal executive office at ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇-▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, and the purchasers listed on the Schedule of Purchasers
attached as Schedule
I hereto (each a “Purchaser”
and collectively the “Purchasers”).
1. AUTHORIZATION
AND SALE OF PREFERRED STOCK AND WARRANTS
1.1 Authorization.
The
Company has authorized the sale and issuance of up to 4,000,000 shares of its
Series A Convertible Preferred Stock, par value $0.0001 per share (the “Series
A Preferred Stock”) pursuant to this Agreement, having the rights,
restrictions, privileges and preferences set forth in the Certificate of
Designations in the form attached to this Agreement as Exhibit
A (the “Certificate
of Designations”), as well as the issuance of shares of Common Stock (as
defined below) to be issued on conversion of the Series A Preferred Stock (the
“Conversion
Shares”), the issuance of the Warrants (as defined below) and the
issuance of shares of Common Stock to be issued on exercise of the Warrants (the
“Warrant
Shares”).
1.2 Sale
of Series A Preferred Stock. Subject
to the terms and conditions hereof, the Company agrees to issue and sell to each
of the Purchasers at the Closing, and each Purchaser, severally and not jointly,
agrees to purchase from the Company, that number of shares of Series A Preferred
Stock specified opposite each Purchaser’s name on the Schedule of Purchasers, at
a purchase price of $1.20 per share.
1.3 Sale
of Common Stock Warrants. Subject to
the terms and conditions hereof, the Company agrees to issue and sell to each of
the Purchasers at the Closing a warrant in substantially the form of Exhibit
B (individually, the “Warrant”
and collectively the “Warrants”)
exercisable for the number of shares of the Company’s common stock, par value
$0.0001 per share (the “Common
Stock”) equal to 50% of the number of shares that such Purchaser would
receive upon conversion of the Series A Preferred Stock purchased by such
Purchaser as of the Closing Date, (the Warrant Shares, as adjusted from time to
time pursuant to the terms of the Warrant, together with the shares of Series A
Preferred Stock to be issued pursuant to Section 1.2, the Warrant to be issued
pursuant to Section 1.3, and the Conversion
Shares, are collectively referred to as the “Shares”). The
exercise price of the Warrant Shares shall initially be equal to $1.56 and shall
be adjusted from time to time pursuant to the terms of the
Warrant.
1
1.4 Purchase
Price. The
purchase price (the “Purchase
Price”) of the Series A Preferred Stock and Warrants will be $1.20
per share of Series A Preferred Stock. The aggregate purchase
price for each Purchaser shall be the amount set forth below such Purchaser’s
name on such Purchaser’s Signature Page hereto.
1.5 Use
of Proceeds. The
Company will use the proceeds of the sale of Shares to increase its merchant
processing line of credit, fund the capital expenditure requirements necessary
to expand marketing, and for working capital purposes, including the payment of
fees and expenses incurred in connection with the Offering.
2. CLOSING;
DELIVERY
2.1 Closing. The
closing of the purchase and sale of the Series A Preferred Stock hereunder (the
“Initial
Closing”) shall be held at 10:00 a.m. on May 18, 2009 or on such later
date or dates as the Company and Purchasers may agree to (the date of the
Closing being referred to as the “Closing
Date”). The place of the Initial Closing (including the place
of delivery to the Purchasers by the Company of the Warrants and the
certificates evidencing the shares of Series A Preferred Stock being purchased
including the Certificate of Designation and the place of payment to the Company
by the Purchasers of the Purchase Price therefor, shall be at the offices of
Bullivant ▇▇▇▇▇▇ ▇▇▇▇▇▇ PC, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇, or such other place as the Purchasers and the Company may mutually
agree. If there is more than one closing, the term “Closing”
shall apply to each such closing unless otherwise specified. A final
Closing will occur when the Company receives an aggregate Purchase Price equal
to $4,800,000 (the “Maximum
Offering”) or no later than June 30, 2009, whichever occurs first; unless
the Company elects to extend such period.
2.2 Agent’s
Fee. The
Purchaser acknowledges that the Company has engaged StreetCapital Inc. (the
“Agent”)
as its exclusive agent in connection with the offering of Shares (the “Offering”)
and, as consideration for its services, has agreed to pay the Agent a commission
consisting of (a) 8% of the total purchase price of Shares sold to investors
directly introduced by StreetCapital to the Company in cash when such price is
paid to the Company and (b) a warrant to purchase an amount of shares of Common
Stock equal to 8% of the total number of shares of Common Stock issuable upon
conversion of the Series A Preferred Stock and exercise of the Warrant sold to
investors directly introduced by StreetCapital to the Company at closing.
Notwithstanding the foregoing, if any Warrants are exercised by a holder
directly introduced by StreetCapital to the Company, the cash component of
StreetCapital’s commission shall be reduced to 4% of the cash proceeds from the
exercise of such Warrants, payable on receipt of such funds.
2.3 Mechanics
of Subscription. The
Purchaser may subscribe for the Series A Preferred Stock and the Warrants
(subject to the Company’s acceptance of such subscription) only by (i) fully
completing and signing the Subscription Agreement (the “Subscription
Agreement”), (ii) executing the signature page to this Agreement (the
“Signature
Page”), and (iii) delivering the Subscription Agreement and Signature
Page along with payment of such Purchaser’s aggregate Purchase Price payable by
check or wire transfer to the order of “Adex Media, Inc.”
2
2.4 Company
Acceptance. Only
the issuance of the Series A Preferred Stock and Warrant to each Purchaser by
the Company shall constitute the Company’s acceptance of such Purchaser’s
purchase. The Company reserves the right, in its sole discretion, to reject any
purchase. Following the Company’s acceptance of any purchase by a
Purchaser, the Company will deliver to such Purchaser a Series A Preferred Stock
in the amount set forth opposite such Purchaser’s name on Schedule of Purchasers
and a Warrant to purchase the Warrant Shares.
3. REPRESENTATIONS,
WARRANTIES AND COVENANTS OF THE COMPANY
The Company hereby
represents, warrants and covenants to the Purchasers as of the date hereof as
follows:
3.1 Organization
and Standing. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all requisite corporate power to
own and operate its properties and assets, and to carry on its business as
presently conducted.
3.2 Corporate
Power. The
Company has and will have at each Closing Date all requisite legal and corporate
power to execute and deliver this Agreement and the Warrants, and to sell and
issue the Shares, and to carry out and perform its obligations under the terms
of this Agreement. This Agreement constitutes a valid and binding obligation of
the Company, enforceable in accordance with its terms, except as the same may be
limited by bankruptcy, insolvency, moratorium, and other laws of general
application affecting the enforcement of creditors’ rights and by general
principles of equity.
3.3 Authorization
. All
corporate action on the part of the Company, its board of directors (the “Board”)
and shareholders necessary for the (i) authorization, execution, delivery and
performance by the Company of this Agreement and the Warrants; (ii) the filing
of the Certificate of Designation; (iii) the authorization, reservation, sale,
issuance and/or delivery of the Shares; and (iv) the performance of the
Company’s obligations hereunder has been taken or will be taken prior to the
Closing. The shares of Series A Preferred Stock, when issued in
compliance with the provisions of this Agreement, will be duly authorized and
validly issued and will be fully paid and non-assessable, and free of any liens
or encumbrances, and the Conversion Shares and the Warrant Shares have been duly
and validly reserved and, when issued in compliance with the provisions of this
Agreement and the Warrants, will be validly issued, fully paid and
non-assessable, and free of any liens or encumbrances.
3.4 Compliance
with Other Instruments. The
Company is not in violation (i) of any term of its Certificate of Incorporation
or Bylaws, as amended, (ii) in any material respect of any order, statute, rule
or regulation applicable to the Company or (iii) in any material respect of any
term or provision of any material mortgage, indenture, contract, agreement,
instrument, judgment or decree. To the Company’s knowledge, the
Company has not received any notice of any violation of any such statute, law,
regulation or order, which has not been remedied prior to the date hereof.
3
3.5 Governmental
Consents, etc. No
consent, approval or authorization of, or designation, declaration or filing
with, any governmental authority on the part of the Company is required in
connection with the valid execution and delivery of this Agreement, and the
Warrant, or the offer, sale or issuance of the Shares, or the consummation of
any other transaction contemplated hereby, except (a) filing of the Certificate
of Designations in the office of the Secretary of State of the State of
Delaware, and (b) qualification (or taking such action as may be necessary to
secure an exemption from qualification, if available) of the offer and sale of
the Shares under applicable state securities laws, which filing and
qualification, if required, will be accomplished in a timely manner prior to or
promptly upon completion of the Closing.
3.6 Brokers
or Finders. Except
for the payments to be made to the Agent, the Company has not incurred, and will
not incur, directly or indirectly, any liability for brokerage or finders’ fees
or agents’ commissions or any similar charges in connection with this Agreement
or any transaction contemplated hereby.
3.7 Offering
Valid. Assuming the
accuracy of the representations and warranties contained in Section 4, the offer, sale and
issuance of the Shares will be exempt from the requirement of the Securities Act
and will have been registered or qualified (or exempt from such registration or
qualification) under all applicable state securities laws.
3.8 No
Variable Priced Financing. Until
such time, if any, as the Shares may be sold pursuant to Rule 144 under the
Securities Act, the Company shall not, without the prior written consent of the
holders of at least two-thirds of the shares of Series A Preferred Stock
then outstanding, contract for or consummate any equity financing (including any
debt financing with an equity component) or issue any equity securities of the
Company, or securities convertible or exchangeable into or for such securities,
which (i) are convertible into or exchangeable for an indeterminate number of
shares of Common Stock; (ii) are convertible into or exchangeable for Common
Stock at a price which varies with the market price of the Common Stock; (iii)
directly or indirectly provide for any “re-set” or adjustment of the purchase
price, conversion rate or exercise price after the issuance of the security; or
(iv) contain any “make-whole” provision based upon, directly or indirectly, the
market price of the common stock after the issuance of the security, in each
case, other than reasonable and customary antidilution adjustments.
4. REPRESENTATIONS,
WARRANTIES AND COVENANTS OF PURCHASER
Each
Purchaser represents, warrants and covenants to the Company, as of the date
hereof, severally and not jointly, with respect only to itself and its purchase
hereunder, as follows:
4
4.1 Authorization. Purchaser
has full power and authority to enter into this Agreement and this Agreement
will constitute valid and legally binding obligations of the Purchaser,
enforceable in accordance with their respective terms.
4.2 Reliance. The Company is entering
into this Agreement in reliance upon the Purchaser’s representations and
covenants made in this Section 4 (together with those
representations and warranties made in the Subscription Agreement), which by
Purchaser’s execution of this Agreement, Purchaser hereby
confirms.
4.3 Purchase
Entirely for Own Account. Purchaser
is purchasing the Shares for investment for Purchaser’s account only, not as a
nominee or agent, and not with a view to the resale or distribution of any part
thereof, and the undersigned has no present intention of selling, granting any
participation in, or otherwise distributing the Shares. Purchaser does not have
any contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participation in any of the Shares to such person or to any
third person.
4.4 No
Public Market. Purchaser
understands and acknowledges that no public market now exists for any of the
Series A Preferred Stock and the Warrants and that the Company has made no
assurances that a public market will ever exist for the Series A Preferred
Stock or the Warrants.
4.5 Governmental
Review. Purchaser
understands that no United States federal or state agency or any other
government or governmental agency has passed upon or made any recommendation or
endorsement of the Shares.
4.6 Disclosure
of Information. Purchaser
has reviewed the documents publicly filed by the Company with the Securities and
Exchange Commission and has read and understands the risk factors disclosed
therein. Purchaser has received all the information it considers
necessary or appropriate for deciding whether to purchase the Purchaser’s
Shares. Purchaser has had an opportunity to ask questions and has
received satisfactory answers from the Company regarding the terms and
conditions of the offering and sale of the Shares and the business and
operations of the Company. Purchaser is solely responsible for
conducting its own due diligence investigation of the Company and his or its
analysis of the merits and risks of an investment in the Company.
4.7 Company
Information. Except
for the representations and warranties in this Agreement, no representations or
warranties have been made to the Purchaser by the Company or any of its
officers, directors, employees, agents or affiliates.
4.8 No
General Solicitation. Purchaser
is not purchasing the Shares as a result of any advertisement, article, notice
or other communication regarding the Securities published in any newspaper,
magazine or similar media or broadcast over television or radio or presented at
any seminar or any other general solicitation or general
advertisement. Purchaser will not issue any press release or other
public statement with respect to the transactions contemplated by this Agreement
without the prior written consent of the Company. Other than to other
parties to this Agreement, Purchaser has maintained the confidentiality of all
disclosures made to Purchaser in connection with this transaction, including the
existence and terms of this transaction.
5
4.9 Investment
Experience. Purchaser
is an investor in securities of early-stage companies and acknowledges that the
Purchaser is able to bear the economic risk of the Purchaser’s investment,
including the complete loss thereof. The Purchaser has a preexisting
personal or business relationship with the Company or one or more of its
officers, directors or other persons in control of the Company, and the
Purchaser has such knowledge and experience in financial or business matters
that it is capable of evaluating the merits and risks of the investment in the
Shares.
4.10 Speculative
Nature of Investment. Purchaser
acknowledges that its investment in the Company is highly speculative and
entails a substantial degree of risk and the Purchaser is in a position to lose
the entire amount of such investment.
4.11 Accredited
Investor
. Purchaser
is an “accredited investor” within the meaning of Rule 501 of Regulation D,
promulgated under the Securities Act. The Purchaser has truthfully completed and
signed, and understands the provisions of the Subscription
Agreement.
4.12 Authorization. The
Purchaser, if acting in a representative capacity for a corporation,
partnership, limited liability company, or a trust, or as an agent for any
person or entity, has full power and authority to execute this Agreement in such
capacity and on behalf of such corporation, partnership, limited liability
company, trust, person or entity.
4.13 Restricted
Securities. The
Purchaser understands that the Shares the Purchaser is purchasing are
characterized as “restricted securities” under the federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and regulations such
securities may be resold without registration under the Securities Act only in
certain limited circumstances. In this connection, the Purchaser is
familiar with Rule 144, as presently in effect, and understands the resale
limitations imposed thereby and by the Securities Act. The Purchaser
understands Rule 144 is not currently available for the sale of the Shares and
may never be so available, and that the Company is under no obligation to
register the Shares under the Securities Act or any state securities
laws.
4.14 Legends. Purchaser
understands that until such time, if any, as the Shares may be sold by Purchaser
pursuant to Rule 144 (subject to and in accordance with the procedures
specified in Section 5 below), the
certificates for all Shares will bear a restrictive legend (the “Legend”),
which will include language in substantially the following
form:
6
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES. THE SECURITIES REPRESENTED HEREBY MAY NOT BE OFFERED
OR SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS OR UNLESS OFFERED,
SOLD OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THOSE LAWS.
In
addition to the foregoing, the Legend for certificates representing shares of
Series A Preferred Stock and Warrants shall include language in
substantially the following form:
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO RESTRICTIONS ON
TRANSFER PURSUANT TO AN AGREEMENT BETWEEN THE HOLDER AND THE CORPORATION, A COPY
OF WHICH MAY BE OBTAINED FROM THE CORPORATION.
4.15 Residency. The
Purchaser is a resident of the state given in such Purchaser’s address on the
Signature Page hereto.
4.16 No
Registration; Exemption. The
Purchaser acknowledges that the Shares have not been and will not be registered
under the Securities Act on the ground that the sale of the Shares pursuant to
this Agreement is exempt. The Purchaser acknowledges that the availability of
such exemption depends on among other things, Purchaser’s bona fide investment
intent, and that the Company will be relying on the accuracy and completeness of
the Purchaser’s representations and warranties in this Agreement to establish
the Company’s legal right to sell the Shares to the Purchaser without
registration under the federal securities laws and applicable state securities
laws.
4.17 Purchaser
Counsel. The
Purchaser has had the opportunity to review the Agreement, the Warrant and the
exhibits and schedules thereto, and the transactions contemplated by such
documents with its own legal counsel.
4.18 Tax
Advice. The
Purchaser has not relied and will not rely upon the Company or the Company’s
counsel with respect to any tax consequences related to the ownership, purchase,
or disposition of the Shares. The Purchaser assumes full
responsibility for all such consequences and for the preparation and filing of
all tax returns and elections which may or must be filed in connection with the
Shares.
4.19 Restrictions
on Exercise and Conversion. The
Purchaser shall not convert the Series A Preferred Stock or exercise the
Warrants to the extent that such Purchaser’s beneficial ownership, as defined in
Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), of Common Stock would exceed 4.99% of the Common Stock
outstanding. The Company shall have the right to refuse to issue Common Stock
with respect to any such conversion or exercise and shall not be obligated to
recognize or record such conversion or exercise in the Company’s
records.
7
4.20 Other
Disposition of Company Securities. Purchaser
has not directly or indirectly, nor has any person acting on behalf of or
pursuant to any understanding with Purchaser, (a) established a short position
in any securities of the Company during the twelve-month period before Closing
or (b) executed any other disposition in the securities of the Company from the
time Purchaser first received a written or oral description of the material
terms of the transactions contemplated by this Agreement until Closing. For as
long as Purchaser holds shares of Series A Preferred Stock or Warrants,
Purchaser will not establish a short position in the Company’s Common
Stock.
5. LIMITATIONS
ON DISPOSITION
5.1 General
Restrictions on Disposition. Without in any way
limiting the representations and warranties set forth in Section 4, Purchaser further agrees
not to directly or indirectly offer, sell, pledge or otherwise transfer all or
any portion of the Shares (other than the valid exercise thereof in accordance
with their respective terms) unless and until there is then in effect a
Registration Statement under the Securities Act covering such proposed
disposition and such disposition is made in accordance with such Registration
Statement or such proposed disposition is exempt from the registration
requirements of the Securities Act.
5.2 Further
Restriction on Disposition of Series A Preferred Stock and
Warrants. In
addition to the general restrictions set forth in Section 5.1, Purchaser shall
not directly or indirectly off er, sell, pledge or otherwise transfer all or any
portion of the Series A Preferred Stock or the Warrants without the
Company’s prior written consent.
5.3 Exception. Notwithstanding
the restrictions on disposition set forth in Sections 5.1 and 5.2 above,
Purchaser may transfer any Shares for bona fide estate planning purposes in
which no consideration is paid for such transfer, either during Purchaser’s
lifetime or on death, by will or intestacy, to Purchaser’s spouse, children,
parents, or siblings, or any custodian or trustee of any trust, partnership or
limited liability company for the benefit of, or the ownership interests of
which are wholly owned by, such Purchaser or any such family members, provided
that Purchaser shall deliver prior written notice to the Company of any such
transfer and such Shares shall at all times remain subject to the terms and
restrictions set forth in this Agreement and each transferee, shall, as a
condition to such transfer, deliver a counterpart signature page to this
Agreement as confirmation that such transferee shall be bound by all the terms
and conditions of this Agreement.
8
5.4 Removal
of Legend. The
Legend shall be removed and the Company shall issue a certificate without such
Legend to the holder of any Shares upon which it is printed, and a certificate
for a security shall be originally issued without the Legend, if (a) the sale of
such Security is registered under the Securities Act, (b) such holder provides
the Company with an opinion of counsel, in form, substance and scope customary
for opinions of counsel in comparable transactions and reasonably satisfactory
to the Company and its counsel to the effect that a public sale or transfer of
such Shares may be made without registration under the Securities Act pursuant
to an exemption from such registration requirements or (c) such Shares can be
sold pursuant to Rule 144 and the holder provides the Company with
reasonable assurances that the Shares can be so sold without
restriction. If the Legend is removed from any Shares or any Shares
are issued without the Legend and the Shares are to be disposed of other than
pursuant to a registration statement or pursuant to Rule 144, then prior
to, and as a condition to, such disposition such Shares shall be relegended as
provided herein in connection with any disposition if the subsequent transfer
thereof would be restricted under the Securities Act. Also, if the
Legend is removed from any Shares or any Shares are issued without the Legend
and thereafter the effectiveness of a registration statement covering the resale
of such Shares is suspended or the Company determines that a supplement or
amendment thereto is required by applicable securities laws, then upon
reasonable advance notice to Purchaser holding such Shares, the Company may
require that the Legend be placed on any such Shares that cannot then be sold
pursuant to an effective registration statement or Rule 144 or with respect
to which the opinion referred to above has not been rendered, which Legend shall
be removed when such Shares may be sold pursuant to an effective registration
statement or Rule 144 or such holder provides the opinion with respect
thereto.
5.5 Transfer
Agent Instructions. The
Company has appointed an independent agent to act as registrar and transfer
agent for the Shares. To ensure compliance with the restrictions
referred to in this Agreement, the Company may issue appropriate “stop transfer”
instructions with respect to the Shares and the Company may make appropriate
notations to the same effect in its records.
6. CONDITIONS
TO EACH PURCHASER’S OBLIGATION TO PURCHASE
Each Purchaser’s
obligation to purchase the shares of Series A Preferred Stock and Warrant at the
Closing is subject to the fulfillment on or prior to the date of Closing of the
following conditions, any of which may be waived in whole or in part by the
Purchasers (with respect to the sale to such
Purchaser):
6.1 Representations
and Warranties. The representations and
warranties made by the Company in Section 3 hereof shall be true
and correct in all material respects when made, and shall be true and correct in
all material respects on the Closing Date with the same force and effect as if
they had been made on and as of said date.
6.2 Covenants All
covenants, agreements and conditions contained in this Agreement to be performed
by the Company on or prior to the Closing Date shall have been performed or
complied with in all material respects.
6.3 Consents;
Notices. Except
for the notices required or permitted to be filed, if any, after the date of
Closing pursuant to federal and state securities laws, the Company shall have
obtained all governmental approvals required in connection with the lawful sale
and issuance of the Series A Preferred Stock and the Warrants.
6.4 Legal
Investment. At the
Closing, the sale and issuance by the Company, and the purchase by the
Purchaser, of such Purchaser’s Series A Preferred Stock and Warrant shall be
legally permitted by all laws and regulations to which such Purchaser or the
Company are subject.
9
6.5 Certificate
of Designation. The
Certificate of Designations shall have been duly adopted by the Company and
shall have been duly filed with the Secretary of State of the State of
Delaware.
7. CONDITIONS
TO THE COMPANY’S OBLIGATION TO SELL
The Company’s obligation
to sell and issue the Series A Preferred Stock and Warrant to any Purchaser at
the Closing is subject to the fulfillment on or prior to the date of Closing of
the following conditions, any of which may be waived in whole or in part by the
Company at the option of the Company, subject to the fulfillment of the
following conditions:
7.1 Execution
and Delivery of Signature Page. Such
Purchaser shall have completed, executed and delivered such Purchaser’s
signature page to this Agreement.
7.2 Delivery
of Purchase Price. Such
Purchaser shall have delivered such Purchaser’s aggregate Purchase Price to the
Company.
7.3 Representations
and Warranties. The representations made
by each Purchaser in Section 4 hereof shall be true
and correct when made, and shall be true and correct on the Closing Date with
the same force and effect as if they had been made on and as of said
date.
7.4 Consents;
Notices. Except
for any notices required or permitted to be filed after the date of Closing
pursuant to federal or state securities laws, the Company shall have obtained
all governmental approvals required in connection with the lawful sale and
issuance of the Series A Preferred Stock and Warrant, and no statute, rule,
regulation, order, decree, ruling or injunction shall have been enacted,
entered, promulgated or endorsed by any court or governmental authority of
competent jurisdiction or any self-regulatory organization having authority over
the matters contemplated in this Agreement which restricts or prohibits the
consummation of the transactions contemplated herein.
7.5 Certificate
of Designation. The
Certificate of Designations shall have been accepted for filing by the Secretary
of State of the State of Delaware.
7.6 Legal
Investment
. At the
Closing, the sale and issuance by the Company, and the purchase by the
Purchasers, of the Series A Preferred Stock and Warrant shall be legally
permitted by all laws and regulations to which Purchaser or the Company are
subject.
8. INDEMNIFICATION
8.1 Indemnification
by Purchaser. Purchaser
agrees to indemnify, defend and hold the Company and its current and future
directors, officers, agents, employees, representatives, affiliates and
controlling persons harmless from and against any and all loss, damage, action,
claim, or liability (including reasonable attorneys’ fees and disbursements in
connection with any investigation, enforcement action, trial or appeal) due to
or arising out of any untruth, inaccuracy, or breach of any representation,
warranty or covenant of such Purchaser in this Agreement.
10
9. MISCELLANEOUS
9.1 No
Voting Right. Holders
of the Warrants shall have no right, solely by virtue of holding the Warrants,
to vote on any matter presented to the Company’s shareholders, and shall not
have any other rights of a shareholder, until such holder has been issued shares
of the Company’s voting stock upon exercise of a Warrant pursuant to the terms
of this Agreement and such Warrant.
9.2 Participation
Rights. If
the Company proposes to offer any equity or debt securities in a private
placement at any time until six months after the earlier of (i) the date that a
registration statement registering all shares of Common Stock underlying the
Series A Preferred Stock and Warrants become effective, and (ii) the date
that all shares of Common Stock underlying the Series A Preferred Stock and
Warrants may be sold pursuant to Rule 144, then each Purchaser will have
the right to purchase such securities on the same terms as in the proposed
offering, provided that such Purchaser’s aggregate purchase price for such
securities shall not exceed such Purchaser’s total dollar investment in the
Series A Preferred Stock.
9.3 Registration
Rights. If at
any time until six months after the earlier of (i) the date that a registration
statement registering all the shares of Common Stock underlying the Series A
Preferred Stock and Warrants become effective, and (ii) the date that all shares
of Common Stock underlying the Series A Preferred Stock and Warrants may be sold
pursuant to Rule 144, the Company grants demand registration rights or
“piggy-back” registration rights to any third-party investors in connection with
any equity or convertible debt offering, then each Purchaser will be entitled to
“piggy-back” registration rights with respect to the Common Stock underlying the
Series A Preferred Stock and Warrants for all demand registrations of any such
third-party investors and all registrations of the Company subject to such
third-party “piggy-back” registration rights; provided, however, that in each
case the Company and its underwriters shall have the right to reduce the number
of shares proposed to be registered pro rata in view of market
conditions.
9.4 Governing
Law. This
Agreement shall be governed in all respects by the laws of the State of
Delaware, without giving effect to the conflicts of laws principles
thereof.
9.5 Survival. The
representations, warranties, covenants, and agreements made herein shall survive
any investigation made by the Purchasers and the closing of the transactions
contemplated hereby.
9.6 Successors
and Assigns. Except
as otherwise provided herein, the provisions hereof shall inure to the benefit
of, and be binding upon, the successors, assigns, heirs, executors, and
administrators of the parties hereto; provided,
however, that the rights of the Purchasers to purchase shares of Series A
Preferred Stock shall not be assignable without the written consent of the
Company.
11
9.7 Entire
Agreement; Amendment. This
Agreement (including the schedule and exhibits hereto) and the instruments
referred to herein constitute the full and final understanding and agreement
among the parties with regard to the subjects hereof and
thereof. Except as otherwise expressly provided herein, neither this
Agreement nor any term hereof may be amended, waived, discharged, or terminated
other than by a written instrument signed by the party against whom enforcement
of any such amendment, waiver, discharge, or termination is sought.
9.8 Notices,
etc.. All
notices and other communications required or permitted hereunder shall be
effective upon receipt and shall be in writing and may be delivered in person,
by telecopy, overnight delivery service or United States mail, in which event it
may be mailed by first-class, certified or registered, postage prepaid,
addressed (i) if to a Purchaser, at the Purchaser’s address set forth on the
Purchaser’s Signature Page hereto, or at such other address as the Purchaser
shall have furnished to the Company in writing, or (ii) if to the Company, at
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇-▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Chief
Financial Officer, or at such other address as the Company shall have furnished
to the Purchaser in writing, with a copy to ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ PC, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Fax (▇▇▇) ▇▇▇-▇▇▇▇.
9.9 Expenses. The
Company and the Purchasers shall each bear their own expenses and legal fees
with respect to this Agreement and the Warrant and the transactions contemplated
hereby; provided,
however, that, after the completion of any of the transactions
contemplated by this Agreement, the Company shall reimburse the reasonable legal
fees and expenses of the Purchasers not to exceed $20,000 in the
aggregate. The Purchasers acknowledge that payment of such fees by
the Company raises a potential conflict of interest and hereby consent to the
payment arrangement set forth herein.
9.10 Third-Party
Beneficiarie. This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns and is not for the benefit of, nor may any
provision by enforced or relied upon by, any other person.
9.11 Further
Assurances. Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as the other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.
9.12 Counterparts;
Facsimile. This
Agreement may be executed in any number of counterparts, each of which shall be
enforceable against the parties actually executing such counterparts, and all of
which together shall constitute one instrument. Delivery of an executed
signature page to this Agreement by facsimile transmission shall be as effective
as delivery of a manually signed counterpart hereof.
12
9.13 Severability. In
the event that any provision of this Agreement becomes or is declared by a court
of competent jurisdiction to be illegal, unenforceable or void, this Agreement
shall continue in full force and effect without said provision, provided that no
such severability shall be effective if it materially changes the economic
benefit of this Agreement to any party.
9.14 Gender. The
use of the neuter gender herein shall be deemed to include the masculine and the
feminine gender, if the context so requires.
9.15 Captions. The
captions or headings of the paragraphs in this Agreement are for convenience
only and shall not control or affect the meaning or construction of any of the
terms or provisions of this Agreement.
[remainder
of this page intentionally left blank – signature pages follow]
13
IN WITNESS WHEREOF, the
parties have caused this Series A Convertible Preferred Stock and Warrant
Purchase Agreement to be duly executed and delivered as of the date set forth
below.
COMPANY:
By: _______________________________
Name: _______________________________
Title: _______________________________
Date: _______________________________
14
IN WITNESS WHEREOF, the
parties have caused this Series A Convertible Preferred Stock and Warrant
Purchase Agreement to be duly executed and delivered as of the date set forth
below.
ENTITY
PURCHASER:
Purchaser
Name: ___________________________________
Signature: ___________________________________
Name of
Signatory: ___________________________________
Title: ___________________________________
Date: ___________________________________
Investment
Amount:
$___________________________________
Address
for
notices: ___________________________________
Attention: ___________________________________
Facsimile: ___________________________________
|
Type
of Ownership (check one):
|
|||
|
Trust
|
|||
|
Corporation
|
|||
|
Limited
Liability Company
|
|||
|
Other
(please
specify):__________________________
|
|||
15
IN WITNESS WHEREOF, the
parties have caused this Series A Convertible Preferred Stock and Warrant
Purchase Agreement to be duly executed and delivered as of the date set forth
below.
INDIVIDUAL
PURCHASER:
Purchaser
Name: ____________________________________
Signature: ____________________________________
Date:
____________________________________
Investment
Amount:
$ ____________________________________
Address
for
notices: ____________________________________
Attention:
____________________________________
Facsimile: ____________________________________
|
Type
of Ownership (check one):
|
|||
|
Individual
ownership
|
|||
|
Community
Property (each spouse must sign)
|
|||
|
Joint
Tenants w/ Right of Survivorship (all must sign)
|
|||
|
Tenants
in Common (all must sign)
|
|||
|
Other
(please
specify):__________________________
|
|||
16
SCHEDULE
I
SCHEDULE
OF PURCHASERS
|
Name
and
Address
of Purchaser
|
Shares
of
Series
A
Preferred
Stock
|
Shares
of
Common
Stock Subject to Warrant
|
Aggregate
Purchase Price
|
17
EXHIBIT
A
CERTIFICATE
OF DESIGNATIONS
18
EXHIBIT
B
FORM
OF COMMON STOCK WARRANT