SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of
November 2, 2001 is made by and among Atlantic Technology Ventures, Inc., a
Delaware corporation, with headquarters located at The Empire State Building,
350 Fifth Avenue, Suite 5507, New York, NY 10118 (the "Company"), and the
investors named on the signature pages hereto, together with their permitted
transferees (each, an "Investor" and collectively, the "Investors").
RECITALS:
A. The Company and the Investors are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Section 4(2) of the Securities Act and Rule 506 under Regulation D.
B. The Investors desire, upon the terms and conditions stated in this
Agreement, to purchase, for an aggregate purchase price of a minimum of Two
Million Dollars ($2,000,000) and a maximumThree Million Dollars ($3,000,000),
shares of Common Stock of the Company.
C. The capitalized terms used herein and not otherwise defined have
the meanings given them in Article VII hereof.
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 Company and the Investors hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF SECURITIES
1.1 Purchase and Sale of Securities. At the Closing the Company will
issue and sell to each Investor, and each Investor will (on a several and not a
joint basis) purchase the Securities from the Company. The purchase price per
share of the Common Stock (the "Purchase Price") shall be $0.24. For each share
of Common Stock purchased by an investor, such investor shall receive a warrant,
substantially in the form attached hereto as Exhibit C (the "Warrant") to
purchase one (1) share of Common Stock at an exercise price equal to $0.29.
1.2 Payment. At the Closing, each Investor will pay the aggregate
Purchase Price set forth beneath its name on the signature page hereof by wire
transfer of immediately available funds in accordance with the Company's wire
instructions set forth on Exhibit A hereto. The Company will deliver
certificates representing the Securities against delivery of the aggregate
Purchase Price as described above.
1.3 Closing Date. The Closing will take place at 10 a.m. Eastern
Standard Time on November 2, 2001 or at such other date or time agreed upon by
the parties to this Agreement (the "Closing Date"). The Closing will be held at
the offices of the Company or at such other place as the parties agree.
ARTICLE II
INVESTOR'S REPRESENTATIONS AND WARRANTIES
Each Investor represents and warrants to the Company, severally and solely
with respect to itself and its purchase hereunder and not with respect to any
other Investor, that:
2.1 Investment Purpose. The Investor is purchasing the Securities for
its own account and not with a present view toward the public sale or
distribution thereof, except pursuant to sales registered or exempted from
registration under the Securities Act; provided, however, that by making the
representation herein, the Investor does not agree to hold any of the Securities
for any minimum or other specific term and reserves the right to dispose of the
Securities at any time in accordance with or pursuant to a registration
statement or an exemption under the Securities Act.
2.2 Accredited Investor Status. The Investor is an "accredited investor"
as defined in Rule 501(a) of Regulation D. The Investor has delivered an
Investor Questionnaire in the form of Exhibit B to the Company. The Investor
hereby represents that, either by reason of the Investor's business or financial
experience or the business or financial experience of the Investor's advisors,
if any, the Investor has the capacity to protect the Investor's own interests in
connection with the transaction contemplated hereby.
2.3 Reliance on Exemptions. The Investor understands that the Securities
are being offered and sold to it in reliance upon specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying upon the truth and accuracy of, and the Investor's
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of the Investor set forth herein in order to determine the
availability of such exemptions and the eligibility of the Investor to acquire
the Securities.
2.4 Information. The Investor and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company, and materials relating to the offer and sale of the Securities,
that have been requested by the Investor or its advisors, if any, including,
without limitation, any Current Reports on Form 8-K filed by the Company since
June 30, 2001 (the "8-Ks"), the Company's Quarterly Reports on Form 10-QSB for
the Quarters ended June 30, 2001, March 31, 2001, and September 30, 2000, and
the Company's Annual Report on Form 10-KSB for the year ended December 31, 2000.
The Investor and its advisors, if any, have been afforded the opportunity to ask
questions of the Company. Neither such inquiries nor any other due diligence
investigation conducted by Investor or any of its advisors or representatives
modify, amend or affect the Investor's right to rely on the Company's
representations and warranties contained in Article III below.
2.5 Acknowledgement of Risk. The Investor acknowledges and understands
that its investment in the Securities involves a significant degree of risk,
including, without limitation, (i) the Company remains a development stage
business with limited operating history and requires substantial funds in
addition to the proceeds from the sale of Securities; (ii) an investment in the
Company is highly speculative, and only investors who can afford the loss of
their entire investment should consider investing in the Company and the
Securities; (iii) the Investor may not be able to liquidate its investment; (iv)
transferability of the Securities is
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extremely limited; (v) in the event of a disposition of the Securities, the
Investor could sustain the loss of its entire investment and (vi) the Company
has not paid any dividends on its Common Stock since inception and does not
anticipate the payment of dividends in the foreseeable future. Such risks are
more fully set forth in the SEC Documents and the risk factors set forth on
Exhibit D attached hereto.
2.6 Governmental Review. The Investor 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 Securities or an
investment therein.
2.7 Transfer or Resale. The Investor understands that:
(a) except as otherwise provided in Article V, the Securities have
not been and are not being registered under the Securities Act or any applicable
state securities laws and, consequently, the Investor may have to bear the risk
of owning the Securities for an indefinite period of time because the Securities
may not be transferred unless (i) the resale of the Securities is registered
pursuant to an effective registration statement under the Securities Act; (ii)
the Investor has delivered to the Company an opinion of counsel (in form,
substance and scope customary for opinions of counsel in comparable
transactions) to the effect that the Securities to be sold or transferred may be
sold or transferred pursuant to an exemption from such registration; or (iii)
the Securities are sold or transferred pursuant to Rule 144;
(b) any sale of the Securities made in reliance on Rule 144 may be
made only in accordance with the terms of Rule 144 and, if Rule 144 is not
applicable, any resale of the Securities under circumstances in which the seller
(or the person through whom the sale is made) may be deemed to be an underwriter
(as that term is defined in the Securities Act) may require compliance with some
other exemption under the Securities Act or the rules and regulations of the SEC
thereunder; and
(c) except as set forth in Article V, neither the Company nor any
other person is under any obligation to register the Securities under the
Securities Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder.
2.8 Legends. The Investor understands the certificates representing the
Securities will bear a restrictive legend in substantially the following form
(and a stop-transfer order may be placed against transfer of the certificates
for such Securities):
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 MAY NOT BE SOLD, TRANSFERRED OR
ASSIGNED 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.
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2.9 Authorization; Enforcement. This Agreement has been duly and validly
authorized, executed and delivered on behalf of the Investor and represent the
valid and binding obligations of the Investor enforceable in accordance with its
terms, subject to the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of creditors
generally and the application of general principles of equity.
2.10 Residency. The Investor is a resident of the jurisdiction set forth
immediately below such Investor's name on the signature pages hereto.
2.11 Acknowledgements Regarding Placement Agent. The Investor
acknowledges that Joseph Stevens, Inc. is acting as a placement agent (the
"Placement Agent") for the Securities being offered hereby and will be
compensated by the Company for acting in such capacity. The Investor further
acknowledges that the Placement Agent has acted solely as a Placement Agent in
connection with the offering of the Securities by the Company, that the
information and data provided to the Investor in connection with the
transactions contemplated hereby have not been subjected to independent
verification by the Placement Agent, and that the Placement Agent makes no
representation or warranty with respect to the accuracy or completeness of such
information, data or other related disclosure material. The Investor further
acknowledges that in making its decision to enter into this Agreement and
purchase the Securities it has relied on its own examination of the Company and
the terms of, and consequences, of holding the Securities. The Investor further
acknowledges that the provisions of this Section 2.11 are for the benefit of,
and may be enforced by, the Placement Agent. The placement fee to be paid to the
Placement Agent is equal to 7% of the aggregate purchase price, plus 10% of the
Warrants and Common Stock purchased herein.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Investors that:
3.1 Organization and Qualification. The Company is duly incorporated,
validly existing and in good standing under the laws of the jurisdiction in
which it is incorporated, with full power and authority (corporate and other) to
own, lease, use and operate its properties and to carry on its business as and
where now owned, leased, used, operated and conducted. The Company is duly
qualified to do business and is in good standing in every jurisdiction in which
the nature of the business conducted by it makes such qualification necessary,
except where the failure to be so qualified or in good standing would not have a
Material Adverse Effect.
3.2 Authorization; Enforcement. (a) The Company has all requisite
corporate power and authority to enter into and to perform its obligations under
this Agreement, to consummate the transactions contemplated hereby and to issue
the Securities in accordance with the terms hereof; (b) the execution, delivery
and performance of this Agreement by the Company and the consummation by it of
the transactions contemplated hereby (including without limitation the issuance
of the Securities) have been duly authorized by the Company's Board of Directors
and no further consent or authorization of the Company, its Board of Directors,
or its shareholders is required; (c) this Agreement has been duly executed by
the Company; and (d) this Agreement constitutes a legal, valid and binding
obligation of the Company enforceable against the
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Company in accordance with its terms, subject to the effect of any applicable
bankruptcy, insolvency, reorganization, or moratorium or similar laws affecting
the rights of creditors generally and the application of general principles of
equity.
3.3 Capitalization. As of the date hereof, the authorized capital stock
of the Company consists of (a) 50,000,000 shares of Common Stock, par value
$.001 per share, of which 7,201,480 shares are issued and outstanding and
1,109,200 shares are reserved for issuance under the Company's employee and
director stock option plans and warrants to purchase 646,500 shares of Common
Stock at exercise prices between $0.875 and $8.05; and (b) 10,000,000 shares of
preferred stock, par value $.001 per share, of which 1,375,000 are designated as
Series A Convertible Preferred Stock, with 1,146,482 shares and warrants to
purchase 369,170 shares of Series A Convertible Preferred Stock outstanding, and
2,000,000 are designated as Series B Convertible Preferred Stock, with none
outstanding. All of such outstanding shares of capital stock are, or upon
issuance will be, duly authorized, validly issued, fully paid and nonassessable.
No shares of capital stock of the Company, including the Securities issuable
pursuant to this Agreement, are subject to preemptive rights or any other
similar rights of the stockholders of the Company or any liens or encumbrances
imposed through the actions or failure to act of the Company. Except as
disclosed in Schedule 3.3 and except for the transactions contemplated hereby,
(i) there are no outstanding options, warrants, scrip, rights to subscribe for,
puts, calls, rights of first refusal, agreements, understandings, claims or
other commitments or rights of any character whatsoever relating to, or
securities or rights convertible into, exercisable for, or exchangeable for any
shares of capital stock of the Company, or arrangements by which the Company is
or may become bound to issue additional shares of capital stock of the Company;
(ii) there are no agreements or arrangements under which the Company is
obligated to register the sale of any of its securities under the Securities Act
and (iii) there are no anti-dilution or price adjustment provisions contained in
any security issued by the Company (or in any agreement providing rights to
security holders) that will be triggered by the issuance of the Securities. The
Company has furnished to the Investors true and correct copies of the Company's
Certificate of Incorporation, as amended, as in effect on the date hereof, the
Company's Bylaws as in effect on the date hereof and the terms of all securities
convertible into or exercisable for Common Stock of the Company and the material
rights of the holders thereof in respect thereto.
3.4 Issuance of Securities. The shares of Common Stock of the Company
purchased under this Agreement and all Warrant Shares are duly authorized and,
upon issuance in accordance with the terms of this Agreement (and, in the case
of Warrant Shares, the Warrants), will be validly issued, fully paid and
non-assessable, free from all taxes, liens, claims, encumbrances and charges
with respect to the issue thereof, will not be subject to preemptive rights or
other similar rights of stockholders of the Company, and will not impose
personal liability on the holders thereof.
3.5 No Conflicts; No Violation.
(a) The execution, delivery and performance of this Agreement by
the Company and the consummation by the Company of the transactions contemplated
hereby (including, without limitation, the issuance of the Securities) will not
(i) conflict with or result in a violation of any provision of its Certificate
of Incorporation or Bylaws, (ii) violate or conflict with, or result in a breach
of any provision of, or constitute a default (or an event which with
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notice or lapse of time or both could become a default) under, or give to others
any rights of termination, amendment (including without limitation, the
triggering of any anti-dilution provision), acceleration or cancellation of, any
agreement, indenture, patent, patent license, or instrument to which the Company
is a party, or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including U.S. federal and state securities laws and
regulations and regulations of any self-regulatory organizations to which the
Company or its securities are subject) applicable to the Company or by which any
property or asset of the Company is bound or affected (except for such
conflicts, breaches, defaults, terminations, amendments, accelerations,
cancellations and violations as would not, individually or in the aggregate,
have a Material Adverse Effect).
(b) The Company is not in violation of its Certificate of
Incorporation, Bylaws or other organizational documents and the Company is not
in default (and no event has occurred which with notice or lapse of time or both
could put the Company in default) under any agreement, indenture or instrument
to which the Company is a party or by which any property or assets of the
Company is bound or affected, except for possible defaults as would not,
individually or in the aggregate, have a Material Adverse Effect.
(c) The Company is not conducting its business in violation of any
law, ordinance or regulation of any governmental entity, the failure to comply
with which would, individually or in the aggregate, have a Material Adverse
Effect.
(d) Except as specifically contemplated by this Agreement and as
required under the Securities Act and any applicable state securities laws or
any listing agreement with any securities exchange or automated quotation
system, the Company is not required to obtain any consent, authorization or
order of, or make any filing or registration with, any court or governmental
agency or any regulatory or self regulatory agency in order for it to execute,
deliver or perform any of its obligations under this Agreement in accordance
with the terms hereof, or to issue and sell the Securities in accordance with
the terms hereof. All consents, authorizations, orders, filings and
registrations which the Company is required to obtain pursuant to the preceding
sentence have been obtained or effected on or prior to the date hereof.
3.6 SEC Documents, Financial Statements. The Company has timely filed
all reports, schedules, forms, statements and other documents required to be
filed by it with the SEC since January 1, 2001, pursuant to the reporting
requirements of the Exchange Act (all of the foregoing filed prior to the date
hereof and all exhibits included therein and financial statements and schedules
thereto and documents (other than exhibits) incorporated by reference therein,
being hereinafter referred to herein as the "SEC Documents"). The Company has
delivered to each Investor, or each Investor has had access to, true and
complete copies of the SEC Documents, except for such exhibits and incorporated
documents. As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Exchange Act or the Securities
Act, as the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to the SEC Documents, and none of the SEC Documents, at
the time they were filed with the SEC, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. As of their respective
dates, the financial statements of the Company included in the SEC Documents
complied as to
6
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto. Such financial
statements have been prepared in accordance with U.S. generally accepted
accounting principles, consistently applied, during the periods involved (except
(i) as may be otherwise indicated in such financial statements or the notes
thereto, or (ii) in the case of unaudited interim statements, to the extent they
may not include footnotes or may be condensed or summary statements) and fairly
present in all material respects the financial position of the Company as of the
dates thereof and the results of its operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal year-end
audit adjustments). Except as set forth in the financial statements included in
the SEC Documents, the Company has no liabilities, contingent or otherwise,
other than liabilities incurred in the ordinary course of business subsequent to
June 30, 2001, and liabilities of the type not required under generally accepted
accounting principles to be reflected in such financial statements. Such
liabilities incurred subsequent to June 30, 2001, are not, in the aggregate,
material to the financial condition or operating results of the Company.
3.7 Absence of Certain Changes. Except as disclosed in the SEC Documents
or on Schedule 3.7, since June 30, 2001, there has been no material adverse
change in the assets, liabilities, business, properties, operations, financial
condition, prospects or results of operations of the Company.
3.8 Absence of Litigation. Except as disclosed in the SEC Documents,
there is no action, suit, claim, proceeding, inquiry or investigation before or
by any court, public board, government agency, self-regulatory organization or
body pending or, to the knowledge of the Company, threatened against or
affecting the Company or any of its officers or directors acting as such that
could, individually or in the aggregate, have a Material Adverse Effect.
3.9 Intellectual Property Rights. The Company owns or possesses licenses
or rights to use all patents, patent applications, patent rights, inventions,
know-how, trade secrets, trademarks, trademark applications, service marks,
service names, trade names and copyrights necessary to enable it to conduct its
business as now operated (the "Intellectual Property"). Except as set forth in
the SEC Documents, there are no material options, licenses or agreements
relating to the Intellectual Property, nor is the Company bound by or a party to
any material options, licenses or agreements relating to the patents, patent
applications, patent rights, inventions, know-how, trade secrets, trademarks,
trademark applications, service marks, service names, trade names or copyrights
of any other person or entity. Except as disclosed in the SEC Documents, there
is no claim or action or proceeding pending or, to the Company's knowledge,
threatened that challenges the right of the Company with respect to any
Intellectual Property.
3.10 Tax Status. The Company has timely made or filed all federal, state
and foreign income and all other tax returns, reports and declarations required
by any jurisdiction to which it is subject (unless and only to the extent that
the Company has set aside on its books provisions reasonably adequate for the
payment of all unpaid and unreported taxes) and has timely paid all taxes and
other governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith, and has set aside on its books provisions
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. To the knowledge
of the Company, there are no unpaid taxes in any material amount claimed to
7
be due by the taxing authority of any jurisdiction, and the officers of the
Company know of no basis for any such claim. The Company has not executed a
waiver with respect to the statute of limitations relating to the assessment or
collection of any foreign, federal, state or local tax. None of the Company's
tax returns is presently being audited by any taxing authority.
3.11 Environmental Laws. The Company (i) is in compliance with all
applicable foreign federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("Environmental Laws"), (ii)
has received all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct its business and (iii) is in compliance
with all terms and conditions of any such permit, license or approval where, in
each of the three foregoing clauses, the failure to so comply would have,
individually or in the aggregate, a Material Adverse Effect
3.12 No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales in any security or solicited any offers to
buy any security under circumstances that would require registration under the
Securities Act of the issuance of the Securities to the Investors. The issuance
of the Securities to the Investors will not be integrated with any other
issuance of the Company's securities (past, current or future) for purposes of
the Securities Act or any applicable rules of Nasdaq.
3.13 No Brokers. The Company has taken no action which would give rise to
any claim by any person for brokerage commissions, finder's fees, placement
agent fees or similar payments relating to this Agreement or the transactions
contemplated hereby, except for dealings with Joseph Stevens & Company, Inc.,
whose commissions and fees will be paid by the Company.
3.14 Insurance. The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as management
of the Company believes to be prudent and customary in the businesses in which
the Company is engaged.
3.15 Employment Matters. The Company is in compliance with all federal,
state, local and foreign laws and regulations respecting employment and
employment practices, terms and conditions of employment and wages and hours
except where failure to be in compliance would not have a Material Adverse
Effect. The Company is not bound by or subject to (and none of its assets or
properties is bound by or subject to) any written or oral, express or implied,
contract, commitment or arrangement with any labor union, and no labor union has
requested or, to the Company's knowledge, has sought to represent any of the
employees, representatives or agents of the Company. There is no strike or other
labor dispute involving the Company pending, or to the Company's knowledge,
threatened, that could have a Material Adverse Effect nor is the Company aware
of any labor organization activity involving its employees. The Company is not
aware that any officer or key employee, or that any group of officers or key
employees, intends to terminate their employment with the Company, nor does the
Company have a present intention to terminate the employment of any of the
foregoing.
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3.16 Investment Company Status. The Company is not and upon consummation
of the sale of the Securities will not be an "investment company," a company
controlled by an "investment company" or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company" as such terms
are defined in the Investment Company Act of 1940, as amended.
3.17 Subsidiaries. Except as set forth in the SEC Documents, the Company
does not presently own or control, directly or indirectly, any interest in any
other corporation, association, joint venture, partnership or other business
entity and the Company is not a direct or indirect participant in any joint
venture or partnership.
3.18 No Conflict of Interest. The Company is not indebted, directly or
indirectly, to any of its officers or directors or to their respective spouses
or children, in any amount whatsoever other than in connection with expenses or
advances of expenses incurred in the ordinary course of business or relocation
expenses of employees. None of the Company's officers, directors or employees,
or any members of their immediate families, are directly, or indirectly,
indebted to the Company (other than in connection with purchases of the
Company's stock or as set forth on Schedule 3.18) or, to the best of the
Company's knowledge, have any direct or indirect ownership interest in any
entity with which the Company is affiliated or with which the Company has a
business relationship, or any entity which competes with the Company, except
that officers, directors, employees and/or stockholders of the Company may own
stock in (but not exceeding five percent (5%) of the outstanding capital stock
of) any publicly traded company that may compete with the Company. To the best
of the Company's knowledge, none of the Company's officers, directors or
employees or any members of their immediate families are, directly or
indirectly, interested in any material contract with the Company. The Company is
not a guarantor or indemnitor of any indebtedness of any other person or entity.
ARTICLE IV
COVENANTS
4.1
Form D; Blue Sky Laws. The Company will timely file a Notice of Sale
of Securities on Form D with respect to the Securities, as required under
Regulation D. The Company will take such action as is necessary to qualify the
Securities for sale to the Investors under this Agreement under applicable
securities (or "blue sky") laws of the states of the United States (or to obtain
an exemption from such qualification).
4.2 Reporting Status; Eligibility to Use Form S-3. The Company's Common
Stock is registered under Section 12 of the Exchange Act. During the
Registration Period (as defined below), the Company will timely file all
reports, schedules, forms, statements and other documents required to be filed
by it with the SEC under the reporting requirements of the Exchange Act, and the
Company will 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. The Company currently meets, and will
take all reasonably necessary action to continue to meet, the "registrant
eligibility" requirements set forth in the general instructions to Form S-3 to
enable the registration of the Registrable Securities.
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4.3 Expenses. The Company and each Investor is liable for, and will pay,
its own expenses incurred in connection with the negotiation, preparation,
execution and delivery of this Agreement, including, without limitation,
attorneys' and consultants' fees and expenses.
4.4 Financial Information. The financial statements of the Company will
be prepared in accordance with United States generally accepted accounting
principles, consistently applied, and will fairly present in all material
respects the consolidated financial position of the Company and results of its
operations and cash flows as of, and for the periods covered by, such financial
statements (subject, in the case of unaudited statements, to normal year-end
audit adjustments).
4.5 Compliance with Law. As long as an Investor owns any of the
Securities, the Company will conduct its business in compliance with all
applicable laws, rules and regulations of the jurisdictions in which it is
conducting business (including, without limitation, all applicable local, state
and federal environmental laws and regulations), the failure to comply with
which would have a Material Adverse Effect.
4.6 No Integration. The Company will not make any offers or sales of any
security (other than the Securities) under circumstances that would cause the
offering of the Securities to be integrated with any other offering of
securities by the Company (i) for the purpose of any stockholder approval
provision applicable to the Company or its securities or (ii) for purposes of
any registration requirement under the Securities Act.
4.7 Sales by Investors. Each Investor will sell any Securities sold by it
in compliance with applicable prospectus delivery requirements, if any, or
otherwise in compliance with the requirements for an exemption from registration
under the Securities Act and the rules and regulations promulgated thereunder.
No Investor will make any sale, transfer or other disposition of the Securities
in violation of federal or state securities laws.
ARTICLE V
REGISTRATION RIGHTS
5.1 As used in this Agreement, the following terms shall have the
following meanings:
(a) "Affiliate" shall mean, with respect to any Person (as defined
below), any other Person controlling, controlled by or under direct or indirect
common control with such Person (for the purposes of this definition "control,"
when used with respect to any specified Person, shall mean the power to direct
the management and policies of such person, directly or indirectly, whether
through ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" shall have meanings correlative to the
foregoing).
(b) "Business Day" shall mean a day Monday through Friday on which
banks are generally open for business in New York.
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(c) "Holders" shall mean the Investors and any person holding
Registrable Securities or any person to whom the rights under Article V have
been transferred in accordance with Section 5.9 hereof.
(d) "Person" shall mean any person, individual, corporation,
limited liability company, partnership, trust or other nongovernmental entity or
any governmental agency, court, authority or other body (whether foreign,
federal, state, local or otherwise).
(e) The terms "register," "registered" and "registration" refer to
the registration effected by preparing and filing a registration statement in
compliance with the Act, and the declaration or ordering of the effectiveness of
such registration statement.
(f) "Registrable Securities" shall mean (i) the shares of Common
Stock sold in the Offering; (ii) the shares of Common Stock issuable upon
exercise of the Warrants (the "Warrant Shares"); (iii) the shares of Common
Stock issuable upon exercise of the Unit Purchase Options (including the shares
of Common Stock issuable upon exercise of the Warrants which are themselves
issued upon exercise of the Unit Purchase Options); (iv) the additional shares
("Additional Shares") of Common Stock issuable upon exercise of the Additional
Warrants (as defined in Section 5.11(a)), if any; (v) any shares of Common Stock
issued to the Placement Agent, and any shares of Common Stock issuable upon
exercise of warrants granted to the Placement Agent, in connection with purchase
and sale of the Securities under this Agreement; and (vi) any shares of Common
Stock issued as (or issuable upon the conversion of any warrant, right or other
security which is issued as) a dividend or other distribution with respect to or
in replacement of the Common Stock; provided, however, that securities shall
only be treated as Registrable Securities if and only for so long as they (A)
have not been disposed of pursuant to a registration statement declared
effective by the SEC, (B) have not been sold in a transaction exempt from the
registration and prospectus delivery requirements of the Act so that all
transfer restrictions and restrictive legends with respect thereto are removed
upon the consummation of such sale or (C) are held by a Holder or a permitted
transferee pursuant to Section 5.9.
(g) "Registration Expenses" shall mean all expenses incurred by
the Company in complying with Section 5.2 hereof, including, without limitation,
all registration, qualification and filing fees, printing expenses, escrow fees,
fees and expenses of counsel for the Company, blue sky fees and expenses and the
expense of any special audits incident to or required by any such registration
(but excluding the fees of legal counsel for any Holder).
(h) "Registration Statement" shall have the meaning ascribed to
such term in Section 5.2.
(i) "Registration Period" shall have the meaning ascribed to such
term in Section 5.4.
11
(j) "Selling Expenses" shall mean all underwriting discounts and
selling commissions applicable to the sale of Registrable Securities and all
fees and expenses of legal counsel for any Holder.
5.2 No later than thirty (30) days after the Closing Date (the "Filing
Date"), the Company shall file a "shelf" registration statement covering the
Registrable Securities on the appropriate form (the "Registration Statement")
with the SEC and use its best efforts to effect the registration, qualifications
or compliances (including, without limitation, the execution of any required
undertaking to file post-effective amendments, appropriate qualifications or
exemptions under applicable blue sky or other state securities laws and
appropriate compliance with applicable securities laws, requirements or
regulations) prior to the date which is 90 days after the Final Closing Date.
Notwithstanding the foregoing, the Company shall not be obligated to enter into
any underwriting agreement for the sale of any of the Registrable Securities.
5.3 All Registration Expenses incurred in connection with any
registration, qualification, exemption or compliance pursuant to Section 5.2
shall be borne by the Company. All Selling Expenses relating to the sale of
securities registered by or on behalf of Holders shall be borne by such Holders
pro rata on the basis of the number of securities so registered.
5.4 In the case of the registration, qualification, exemption or
compliance effected by the Company pursuant to this Agreement, the Company
shall, upon reasonable request, inform each Holder as to the status of such
registration, qualification, exemption and compliance. At its expense the
Company shall:
(a) use its best efforts to keep such registration, and any
qualification, exemption or compliance under state securities laws which the
Company determines to obtain, continuously effective until the Holders have
completed the distribution described in the registration statement relating
thereto. The period of time during which the Company is required hereunder to
keep the Registration Statement effective is referred to herein as "the
Registration Period." Notwithstanding the foregoing, at the Company's election,
the Company may cease to keep such registration, qualification, exemption or
compliance effective with respect to any Registrable Securities, and the
registration rights of a Holder shall expire, at such time as they are no
longer, by reason of Rule 144 of the Act (or other exemption from registration
acceptable to the Company) required to register for the sale thereof; and
(b) advise the Holders:
(i) when the Registration Statement or any amendment thereto
has been filed with the SEC and when the Registration Statement or any
post-effective amendment thereto has become effective;
12
(ii) of any request by the SEC for amendments or supplements
to the Registration Statement or the prospectus included therein or for
additional information;
(iii) of the issuance by the SEC of any stop order suspending
the effectiveness of the Registration Statement or the initiation of any
proceedings for such purpose;
(iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Registrable Securities
included therein for sale in any jurisdiction or the initiation or threatening
of any proceeding for such purpose; and
(v) of the happening of any event that requires the making of
any changes in the Registration Statement or the prospectus so that, as of such
date, the statements therein are not misleading and do not omit to state a
material fact required to be stated therein or necessary to make the statements
therein (in the case of the prospectus, in the light of the circumstances under
which they were made) not misleading;
(c) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of any Registration Statement at the earliest
possible time;
(d) furnish to each Holder, without charge, at least one copy of
such Registration Statement and any post-effective amendment thereto, including
financial statements and schedules, and, if the Holder so requests in writing,
all exhibits (including those incorporated by reference) in the form filed with
the SEC;
(e) during the Registration Period, deliver to each Holder,
without charge, as many copies of the prospectus included in such Registration
Statement and any amendment or supplement thereto as such Holder may reasonably
request; and the Company consents to the use, consistent with the provisions
hereof, of the prospectus or any amendment or supplement thereto by each of the
selling Holders of Registrable Securities in connection with the offering and
sale of the Registrable Securities covered by the prospectus or any amendment or
supplement thereto. In addition, upon the reasonable request of the Holder and
subject in all cases to confidentiality protections reasonably acceptable to the
Company, the Company will meet with a Holder or a representative thereof at the
Company's headquarters to discuss all information relevant for disclosure in the
Registration Statement covering the Registrable Securities, and will otherwise
cooperate with any Holder conducting an investigation for the purpose of
reducing or eliminating such Holder's exposure to liability under the Act,
including the reasonable production of information at the Company's
headquarters;
13
(f) during the Registration Period, deliver to each Holder,
without charge, (i) as soon as practicable (but in the case of the annual report
of the Company to its stockholders, within 120 days after the end of each fiscal
year of the Company) one copy of the following documents, other than those
documents available via EDGAR: (A) its annual report to its stockholders, if any
(which annual report shall contain financial statements audited in accordance
with generally accepted accounting principles in the United States of America by
a firm of certified public accountants of recognized standing); (B) if not
included in substance in its annual report to stockholders, its annual report on
Form 10-KSB (or similar form); (C) each of its quarterly reports to its
stockholders, and, if not included in substance in its quarterly reports to
stockholders, its quarterly report on Form 10-QSB (or similar form), and (D) a
copy of the full Registration Statement (the foregoing, in each case, excluding
exhibits); and (ii) upon reasonable request, all exhibits excluded by the
parenthetical to the immediately preceding clause (D), and all other information
that is generally available to the public;
(g) prior to any public offering of Registrable Securities
pursuant to any Registration Statement, register or qualify or obtain an
exemption for offer and sale under the securities or blue sky laws of such
jurisdictions as any such Holders reasonably request in writing, provided that
the Company shall not for any such purpose be required to qualify generally to
transact business as a foreign corporation in any jurisdiction where it is not
so qualified or to consent to general service of process in any such
jurisdiction, and do any and all other acts or things reasonably necessary or
advisable to enable the offer and sale in such jurisdictions of the Registrable
Securities covered by such Registration Statement;
(h) cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold pursuant to any Registration Statement free of any restrictive legends
to the extent not required at such time and in such denominations and registered
in such names as Holders may request at least five (5) business days prior to
sales of Registrable Securities pursuant to such Registration Statement;
(i) upon the occurrence of any event contemplated by Section
5.4(b)(v) above, the Company shall promptly prepare a post-effective amendment
to the Registration Statement or a supplement to the related prospectus, or file
any other required document so that, as thereafter delivered to purchasers of
the Registrable Securities included therein, the prospectus will not include any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; and
5.5 The Holders shall have no right to take any action to restrain,
enjoin or otherwise delay any registration pursuant to Section 5.2 hereof as a
result of any controversy that may arise with respect to the interpretation or
implementation of this Agreement.
14
5.6 (a) To the extent permitted by law, the Company shall indemnify each
Holder, each underwriter of the Registrable Securities and each person
controlling such Holder within the meaning of Section 15 of the Act, with
respect to which any registration, qualification or compliance has been effected
pursuant to this Agreement, against all claims, losses, damages and liabilities
(or action in respect thereof), including any of the foregoing incurred in
settlement of any litigation, commenced or threatened (subject to Section 5.6(c)
below), arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any registration statement,
prospectus or offering circular, or any amendment or supplement thereof,
incident to any such registration, qualification or compliance, or based on any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements
15
therein not misleading, in light of the circumstances in which they were made,
and will reimburse each Holder, each underwriter of the Registrable Securities
and each person controlling such Holder, for reasonable legal and other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action as incurred; provided that the Company
will not be liable in any such case to the extent that any untrue statement or
omission or allegation thereof is made in reliance upon and in conformity with
written information furnished to the Company by or on behalf of such Holder and
stated to be specifically for use in preparation of such registration statement,
prospectus or offering circular; provided that the Company will not be liable in
any such case where the claim, loss, damage or liability arises out of or is
related to the failure of the Holder to comply with the covenants and agreements
contained in this Agreement respecting sales of Registrable Securities, and
except that the foregoing indemnity agreement is subject to the condition that,
insofar as it relates to any such untrue statement or alleged untrue statement
or omission or alleged omission made in the preliminary prospectus but
eliminated or remedied in the amended prospectus on file with the SEC at the
time the registration statement becomes effective or in the amended prospectus
filed with the SEC pursuant to Rule 424(b) or in the prospectus subject to
completion and term sheet under Rule 434 of the Act, which together meet the
requirements of Section 10(a) of the Act (the "Final Prospectus"), such
indemnity agreement shall not inure to the benefit of any such Holder, any such
underwriter or any such controlling person, if a copy of the Final Prospectus
furnished by the Company to the Holder for delivery was not furnished to the
person or entity asserting the loss, liability, claim or damage at or prior to
the time such furnishing is required by the Act and the Final Prospectus would
have cured the defect giving rise to such loss, liability, claim or damage.
(b) Each Holder will severally, if Registrable Securities held by
such Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors and officers, each underwriter of the Registrable Securities and
each person who controls the Company within the meaning of Section 15 of the
Act, against all claims, losses, damages and liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened (subject to Section 5.6(c) below), arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any registration statement, prospectus or offering
circular, or any amendment or supplement thereof, incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in light of the
circumstances in which they were made, and will reimburse the Company, such
directors and officers, each underwriter of the Registrable Securities and each
person controlling the Company for reasonable legal and any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action as incurred, in each case to the
extent, but only to the extent, that such untrue statement or omission or
allegation thereof is made in reliance upon and in conformity with written
information furnished to the Company by or on behalf of the Holder and stated to
be specifically for use in preparation of such registration statement,
prospectus or offering circular; provided that the indemnity shall not apply to
the extent that such claim, loss, damage or liability results from the fact that
a current copy of the prospectus was not made available to the Holder and such
current copy of the prospectus would have cured the defect giving rise to such
loss, claim, damage or liability. Notwithstanding the foregoing, in no event
shall a Holder be liable for any such claims, losses, damages or liabilities in
excess of the proceeds received by such Holder in the offering, except in the
event of fraud by such Holder.
(c) Each party entitled to indemnification under this Section 5.6
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
Indemnified Party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement, unless such failure
is materially prejudicial to the Indemnifying Party in defending such claim or
litigation. An Indemnifying Party shall not be liable for any settlement of an
action or claim effected without its written consent (which consent will not be
unreasonably withheld).
(d) If the indemnification provided for in this Section 5.6 is
held by a court of competent jurisdiction to be unavailable to an Indemnified
Party with respect to any loss, liability, claim, damage or expense referred to
therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party thereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and of the Indemnified Party on the other in
connection with the statements or omissions which resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
16
5.7 (a) Each Holder agrees that, upon receipt of any notice from the
Company of the happening of any event requiring the preparation of a supplement
or amendment to a prospectus relating to Registrable Securities so that, as
thereafter delivered to the Holders, such prospectus shall not contain an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, each
Holder will forthwith discontinue disposition of Registrable Securities pursuant
to the registration statement contemplated by Section 5.2 until its receipt of
copies of the supplemented or amended prospectus from the Company and, if so
directed by the Company, each Holder shall deliver to the Company all copies,
other than permanent file copies then in such Holder's possession, of the
prospectus covering such Registrable Securities current at the time of receipt
of such notice.
(b) Each Holder shall suspend, upon request of the Company, any
disposition of Registrable Securities pursuant to the Registration Statement and
prospectus contemplated by Section 5.2 during (i) any period not to exceed two
30-day periods within any one 12-month period the Company requires in connection
with a primary underwritten offering of equity securities and (ii) any period,
not to exceed one 45-day period per circumstance or development, when the
Company determines in good faith that offers and sales pursuant thereto should
not be made by reason of the presence of material undisclosed circumstances or
developments with respect to which the disclosure that would be required in such
a prospectus is premature, would have an adverse effect on the Company or is
otherwise inadvisable.
(c) As a condition to the inclusion of its Registrable Securities,
each Holder shall furnish to the Company such information regarding such Holder
and the distribution proposed by such Holder as the Company may request in
writing or as shall be required in connection with any registration,
qualification or compliance referred to in this Article V.
(d) Each Holder hereby covenants with the Company (i) not to make
any sale of the Registrable Securities without effectively causing the
prospectus delivery requirements under the Act to be satisfied, and (ii) if such
Registrable Securities are to be sold by any method or in any transaction other
than on a national securities exchange, Nasdaq National Market, Nasdaq SmallCap
Market or in the over-the-counter market, in privately negotiated transactions,
or in a combination of such methods, to notify the Company at least five (5)
business days prior to the date on which the Holder first offers to sell any
such Registrable Securities.
(e) Each Holder acknowledges and agrees that the Registrable
Securities sold pursuant to the Registration Statement are not transferable on
the books of the Company unless the stock certificate submitted to the transfer
agent evidencing such Registrable Securities is accompanied by a certificate
reasonably satisfactory to the Company to the effect that (i) the Registrable
Securities have been sold in accordance with such Registration Statement and
(ii) the requirement of delivering a current prospectus has been satisfied.
17
(f) Each Holder agrees not to take any action with respect to any
distribution deemed to be made pursuant to such Registration Statement which
would constitute a violation of Regulation M under the Exchange Act or any other
applicable rule, regulation or law.
(g) At the end of the Registration Period the Holders shall
discontinue sales of shares pursuant to such Registration Statement upon receipt
of notice from the Company of its intention to remove from registration the
shares covered by such Registration Statement which remain unsold, and such
Holders shall notify the Company of the number of shares registered which remain
unsold immediately upon receipt of such notice from the Company.
5.8 With a view to making available to the Holders the benefits of
certain rules and regulations of the SEC which at any time permit the sale of
the Registrable Securities to the public without registration, the Company shall
use its reasonable best efforts to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Act, at all times;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Exchange Act; and
(c) so ong as a Holder owns any unregistered Registrable
Securities, furnish to such Holder, upon any reasonable request, a written
statement by the Company as to its compliance with Rule 144 under the Act, and
of the Exchange Act, a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents of the Company as such Holder may
reasonably request in availing itself of any rule or regulation of the SEC
allowing a Holder to sell any such securities without registration.
5.9 The rights to cause the Company to register Registrable Securities
granted to the Holders by the Company under Section 5.1 may be assigned in full
by a Holder in connection with a transfer by such Holder of its Registrable
Securities, provided, however, that (i) such transfer may otherwise be effected
in accordance with applicable securities laws; (ii) such Holder gives prior
written notice to the Company; and (iii) such transferee agrees to comply with
the terms and provisions of this Agreement, and such transfer is otherwise in
compliance with this Agreement. Except as specifically permitted by this Section
5.9, the rights of a Holder with respect to Registrable Securities as set out
herein shall not be transferable to any other Person, and any attempted transfer
shall cause all rights of such Holder therein to be forfeited.
5.10 With the written consent of the Company and the Holders holding at
least a majority of the Registrable Securities that are then outstanding, any
provision of this Article V may be waived (either generally or in a particular
instance, either retroactively or prospectively and either for a specified
period of time or indefinitely) or amended. Upon the effectuation of each such
waiver or amendment, the Company shall promptly give written
18
notice thereof to the Holders, if any, who have not previously received notice
thereof or consented thereto in writing.
5.11 Additional Common Stock Issuable Upon Delay of Registration and
Other Events.
(a) Except to the extent any delay is due to the failure of a
Holder to reasonably cooperate in providing to the Company such information as
shall be reasonably requested by the Company in writing for use in the
Registration Statement, if the Registration Statement is not filed with the SEC
within 45 days following the Closing Date (the "Outside Target Date"), the
Company shall be required to immediately issue to each Holder of Registrable
Securities issued in the Offering (including, without limitation, the
Registrable Securities issuable upon exercise of the Placement Warrants)
additional Warrants (the "Additional Warrants") to purchase a number of
additional shares of Common Stock equal to one-half of one percent (0.5%) of the
aggregate number of shares of Common Stock (including the shares of Common Stock
underlying the Warrants) issued to such Holder in the Offering (as adjusted but
without reference to any shares issued pursuant to this Section 5.11(a)) for
each week after the Outside Target Date that the Registration Statement remains
unfiled.
(b) Except to the extent any delay is due to the failure of a
Holder to reasonably cooperate in providing to the Company such information as
shall be reasonably requested by the Company in writing for use in the
Registration Statement, if the Registration Statement is not declared effective
by the SEC by the date that is 120 days after the Final Closing Date (the
"Targeted Effective Date"), the Company shall immediately be required to issue
to each Holder of Registrable Securities issued in the Offering (including,
without limitation, the Registrable Securities issuable upon exercise of the
Placement Warrants) Additional Warrants to purchase a number of additional
shares of Common Stock equal to one-half of one percent (0.5%) of the aggregate
number of shares of Common Stock (including the shares of Common Stock
underlying the Warrants) issued to such Holder in the Offering (as adjusted but
without reference to any shares issued pursuant to Section 5.11(a)) for each
week the Registration Statement is not declared effective by the SEC following
the Targeted Effective Date.
(c) All Additional Warrants issuable pursuant to this Section 5.11
shall be duly authorized and all shares of Common Stock issuable upon exercise
of the Additional Warrants, when issued in accordance with the terms hereof for
the consideration expressed herein, will have been duly and validly issued,
fully paid and nonassessable and shall be included in the Registration Statement
contemplated by Section 5.2. Such shares shall be registered in the Holders'
names or the name of the nominee(s) of Holders in such denominations as Holders
shall request pursuant to instructions delivered to the Company.
(d) In no event, however, shall the aggregate number of Additional
Warrants exceed fifteen percent (15%) of the aggregated number of shares of
Common Stock (as adjusted) included sold in the Offering (including the shares
of Common Stock underlying the Warrants).
19
ARTICLE VI
INDEMNIFICATION
In consideration of each Investor's execution and delivery of this
Agreement and its acquisition of the Securities hereunder, and in addition to
all of the Company's other obligations under this Agreement, the Company will
indemnify and hold harmless each Investor and each other holder of the
Securities and all of their stockholders, officers, directors, employees and
direct or indirect investors and any of the foregoing person's agents or other
representatives (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) (collectively, the
"Indemnitees") from and against any and all actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith (regardless of whether any such Indemnitee is a party to
the action for which indemnification hereunder is sought), and including
reasonable attorneys' fees and disbursements (the "Indemnified Liabilities"),
incurred by an Indemnitee as a result of, or arising out of, or relating to (a)
any breach of any representation or warranty made by the Company herein or in
any other certificate, instrument or document contemplated hereby or thereby,
(b) any breach of any covenant, agreement or obligation of the Company contained
herein or in any other certificate, instrument or document contemplated hereby
or thereby or (c) any cause of action, suit or claim brought or made against
such Indemnitee and arising out of or resulting from the execution, delivery,
performance, breach or enforcement of this Agreement by the Company. To the
extent that the foregoing undertaking by the Company is unenforceable for any
reason, the Company will make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities that is permissible under
applicable law.
ARTICLE VII
DEFINITIONS
7.1 "Closing" means the closing of the purchase and sale of the
Securities under this Agreement.
7.2 "Closing Date" has the meaning set forth in Section 1.3.
7.3 "Common Stock" means the common stock, par value $.001 per share, of
the Company.
7.4 "Company" means Atlantic Technology Ventures, Inc.
7.5 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
7.6 "Indemnified Liabilities" has the meaning set forth in Article VI.
7.7 "Indemnitees" has the meaning set forth in Article VI.
7.8 "Investors" means the investors whose names are set forth on the
signature pages of this Agreement, and their permitted transferees.
7.9 "Material Adverse Effect" means a material adverse effect on (a) the
business, operations, assets or financial condition of the Company or (b) the
ability of the Company to
20
perform its obligations pursuant to the transactions contemplated by this
Agreement or under any instruments to be entered into or filed in connection
herewith.
7.10 "Nasdaq" means the Nasdaq National Market System.
7.11 "Regulation D" means Regulation D as promulgated under by the SEC
under the Securities Act.
7.12 "Rule 144" means Rule 144 promulgated under the Securities Act, or
any successor rule.
7.13 "SEC" means the United States Securities and Exchange Commission.
7.14 "SEC Documents" has the meaning set forth in Section 3.6.
7.15 "Securities" means the Common Stock and Warrants sold pursuant to
this Agreement.
7.16 "Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations thereunder, or any similar successor statute.
7.17 "to the Company's knowledge" and variations thereon mean to the
actual knowledge of Frederic P. Zotos.
ARTICLE VIII
GOVERNING LAW; MISCELLANEOUS
8.1 Governing Law; Jurisdiction. This Agreement will be governed by and
interpreted in accordance with the laws of the State of New York without regard
to the principles of conflict of laws. The parties hereto hereby submit to the
exclusive jurisdiction of the United States federal and state courts located in
the State of New York with respect to any dispute arising under this Agreement
or the transactions contemplated hereby or thereby.
8.2 Counterparts; Signatures by Facsimile. This Agreement may be
executed in two or more counterparts, all of which are considered one and the
same agreement and will become effective when counterparts have been signed by
each party and delivered to the other parties. This Agreement, once executed by
a party, may be delivered to the other parties hereto by facsimile transmission
of a copy of this Agreement bearing the signature of the party so delivering
this Agreement.
8.3 Headings. The headings of this Agreement are for convenience of
reference only, are not part of this Agreement and do not affect its
interpretation.
8.4 Severability. If any provision of this Agreement is invalid or
unenforceable under any applicable statute or rule of law, then such provision
will be deemed modified in order to conform with such statute or rule of law.
Any provision hereof that may prove invalid or unenforceable under any law will
not affect the validity or enforceability of any other provision hereof.
21
8.5 Entire Agreement; Amendments. This Agreement (including all
schedules and exhibits hereto) constitutes the entire agreement among the
parties hereto with respect to the subject matter hereof and thereof. There are
no restrictions, promises, warranties or undertakings, other than those set
forth or referred to herein or therein. This Agreement supersedes all prior
agreements and understandings among the parties hereto with respect to the
subject matter hereof. No provision of this Agreement may be waived or amended
other than by an instrument in writing signed by the party to be charged with
enforcement.
8.6 Notices. Any notices required or permitted to be given under the
terms of this Agreement must be sent by certified or registered mail (return
receipt requested) or delivered personally or by courier (including a recognized
overnight delivery service) and will be effective five days after being placed
in the mail, if mailed by regular U.S. mail, or upon receipt, if delivered
personally, or by courier (including a recognized overnight delivery service),
in each case addressed to a party. The addresses for such communications are:
If to the Company: Chief Executive Officer
Atlantic Technology Ventures, Inc.
350 Fifth Avenue, Suite 5507
New York, NY 10118
With a copy to: Ezra G. Levin, Esq.
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, NY 10022
If to an Investor: To the address set forth immediately below such
Investor's name on the signature pages hereto.
Each party will provide written notice to the other parties of any change
in its address.
8.7 Successors and Assigns. This Agreement is binding upon and inures to
the benefit of the parties and their successors and assigns. The Company will
not assign this Agreement or any rights or obligations hereunder without the
prior written consent of the Investors, and no Investor may assign this
Agreement or any rights or obligations hereunder without the prior written
consent of the Company. Notwithstanding the foregoing, an Investor may assign
all or part of its rights and obligations hereunder to any of its "affiliates,"
as that term is defined under the Securities Act, without the consent of the
Company so long as the affiliate is an accredited investor (within the meaning
of Regulation D under the Securities Act) and agrees in writing to be bound by
this Agreement. This provision does not limit the Investor's right to transfer
the Securities pursuant to the terms of this Agreement or to assign the
Investor's rights hereunder to any such transferee pursuant to the terms of this
Agreement.
8.8 Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
8.9 Further Assurances. Each party will do and perform, or cause to be
done and performed, all such further acts and things, and will execute and
deliver all other agreements,
22
certificates, instruments and documents, as another 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.
8.10 No Strict Construction. The language used in this Agreement is
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party.
8.11 Equitable Relief. The Company recognizes that, if it fails to
perform or discharge any of its obligations under this Agreement, any remedy at
law may prove to be inadequate relief to the Investors. The Company therefore
agrees that the Investors are entitled to seek temporary and permanent
injunctive relief in any such case.
IN WITNESS WHEREOF, the undersigned Investors and the Company have caused
this Agreement to be duly executed as of the date first above written.
COMPANY:
Atlantic Technology Ventures, Inc.
By: /s/ Frederic P. Zotos
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Name: Frederic P. Zotos
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Title: President and CEO
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23
OMNIBUS SIGNATURE PAGE TO
ATLANTIC TECHNOLOGY VENTURES, INC.
SECURITIES PURCHASE AGREEMENT
The undersigned hereby executes and delivers the Securities Purchase
Agreement to which this signature page is attached, which, together with all
counterparts of the Agreement and signature pages of the other parties named in
said Agreement, shall constitute one and the same document in accordance with
the terms of the Agreement.
Sign Name:
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Print Name:
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Address:
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Telephone:
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Facsimile:
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Number of Securities Purchased
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Aggregate Purchase Price
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