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EXHIBIT 4.1
SECURITIES PURCHASE AGREEMENT
BETWEEN
INTEGRAL TECHNOLOGIES, INC.
AND
THE INVESTOR(S) SIGNATORY HERETO
STOCK PURCHASE AGREEMENT (the "Agreement"), between the person subscribing
for Investment Securities by its signatures hereto (the "Investor"), and
Integral Technologies, Inc., a corporation organized and existing under the laws
of the State of Nevada (the "Company"), effective as of the date of acceptance
by the Company as set forth on the signature page hereof.
WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to the Investor,
and the Investor shall purchase the Investment Securities, as defined below.
WHEREAS, such investments will be made in reliance upon the provisions of
Section 4(2) ("Section 4(2)") or 4(6) of the United States Securities Act of
1933, as amended, and Regulation D ("Regulation D") and the other rules and
regulations promulgated thereunder (the "Securities Act"), and/or upon such
other exemption from the registration requirements of the Securities Act as may
be available with respect to any or all of the investments in the Company's
securities to be made hereunder.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1. "Affiliate" means, with respect to any specified Person, any other
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person, and includes any immediate family member of such Person, and any trust
established by or for the benefit of any one or more such persons exclusively.
Section 1.2. "Closing" shall mean the closing of the purchase and sale of the
Investment Securities pursuant to Section 2.1.
Section 1.3. "Closing Date" shall mean the date on which all conditions to the
Closing have been satisfied (as defined in Section 2.1 hereto) and the Closing
shall have occurred.
Section 1.4. "Common Stock" shall mean the Company's $.001 par value common
stock.
Section 1.5. "Damages" shall mean any loss, claim, damage, liability, costs and
expenses (including, without limitation, reasonable attorney's fees and
disbursements and reasonable costs and expenses of expert witnesses and
investigation).
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Section 1.6. "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
Section 1.7. "Legend" shall mean the legend set forth in Section 9.1.
Section 1.8. "Material Adverse Effect" shall mean any effect on the business,
operations, properties, prospects, or financial condition of the Company that is
material and adverse to the Company and its subsidiaries and affiliates, taken
as a whole, and/or any condition, circumstance, or situation that would prohibit
or otherwise interfere with the ability of the Company to enter into and perform
any of its obligations under this Agreement in any material respect.
Section 1.9. "Outstanding" when used with reference to shares of Common Stock,
shall mean, at any date as of which the number of such shares is to be
determined, all issued and outstanding shares, and shall include all such shares
issuable in respect of outstanding scrip or any certificates representing
fractional interests in such shares; provided, however, that "Outstanding" shall
not mean any such shares then directly or indirectly owned or held by or for the
account of the Company.
Section 1.10. "Person" shall mean any individual, firm, corporation,
partnership, limited partnership, company, association, trust or other entity or
organization, as well as any syndicate or group that would be deemed to be a
Person under Section 13(d)(3) of the Exchange Act.
Section 1.11. "Investment Securities" shall mean the Investment Shares and the
Investment Warrants.
Section 1.12. "Investment Shares" shall mean the 1,000,000 shares of the
Company's Common Stock being offered and sold by the Company and purchased by
the Investor under and pursuant to this agreement.
Section 1.13. "Investment Warrant" shall mean a common stock purchase warrant to
purchase up to 500,000 shares of Common Stock on or before two years after the
Closing Date at an exercise price of US$1.80 per share, to be offered and sold
by the Company and purchased by the Investor simultaneously with the purchase of
the Investment Shares under and pursuant to this Agreement. The Investment
Warrant shall be in the form of Exhibit A attached hereto.
Section 1.14. "Principal Market" shall mean the OTC Bulletin Board, the American
Stock Exchange, the New York Stock Exchange, the NASDAQ National Market, or the
NASDAQ Small-Cap Market, whichever is at the time the principal trading exchange
or market for the Common Stock.
Section 1.15. "Purchase Price" shall mean, (i) as to the Investment Shares, one
dollar and fifty cents (US$1.50) per Investment Share, and (ii) as to the
Investment Warrant, $001 per share of Common Stock underlying the Investment
Warrant.
Section 1.16. "Registrable Securities" shall mean the Investment Shares and the
Warrant Shares until (i) the Registration Statement has been declared effective
by the SEC, and all Investment Shares and Warrant Shares have been disposed of
pursuant to the Registration Statement, (ii) all Investment Shares and Warrant
Shares have been sold under circumstances under which all of the applicable
conditions of Rule 144 (or any similar provision then in force) under the
Securities Act ("Rule 144") are met, (iii) all
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Investment Shares and Warrant Shares have been otherwise transferred to holders
who may trade such shares without restriction under the Securities Act, and the
Company has delivered a new certificate or other evidence of ownership for such
securities not bearing a restrictive legend or (iv) such time as, in the opinion
of counsel to the Company, all Investment Shares and Warrant Shares may be sold
without any time, volume or manner limitations pursuant to Rule 144(k) (or any
similar provision then in effect) under the Securities Act.
Section 1.17. "Registration Statement" shall mean a registration statement on
Form SB-2 (if use of such form is then available to the Company pursuant to the
rules of the SEC and, if not, on such other form promulgated by the SEC for
which the Company then qualifies and which counsel for the Company shall deem
appropriate, and which form shall be available for the resale of the Registrable
Securities to be registered thereunder in accordance with the provisions of this
Agreement and in accordance with the intended method of distribution of such
securities), for the registration of the resale by the Investor of the
Registrable Securities under the Securities Act.
Section 1.18. "Regulation D" shall have the meaning set forth in the recitals of
this Agreement.
Section 1.19. "SEC" shall mean the Securities and Exchange Commission.
Section 1.20. "Section 4(2)" shall have the meaning set forth in the recitals of
this Agreement.
Section 1.21. "Securities Act" shall have the meaning set forth in the recitals
of this Agreement.
Section 1.22. "SEC Documents" shall mean the Company's Form 10-SB filed December
2, 1999, the Company's Form 10-SB/A-1 filed February 8, 2000, and each report or
registration statement filed by the Company with the SEC pursuant to the
Exchange Act or the Securities Act through the date hereof.
Section 1.23. "Warrant Shares" shall mean all shares of Common Stock issuable
pursuant to exercise of the Investment Warrant.
ARTICLE II
PURCHASE AND SALE OF INVESTMENT SECURITIES
Section 2.1. Investment.
Upon the terms and subject to the conditions set forth herein, the Company
agrees to sell, and the Investor agrees to purchase, the Investment Securities
on the Closing Date as follows:
(a) Upon execution and delivery of this Agreement and in anticipation of
Closing, the Investor shall deliver the Purchase Price, and the Company shall
deliver the Investment Securities, to the law firm of Futro & Trauernicht, LLC,
(the "Escrow Agent") as follows:
(i) Investment Shares. Upon (i) execution and delivery of this
Agreement, the Investor shall deliver to the Escrow Agent
immediately available funds in the amount of the aggregate
Purchase Price for the Investment Shares of $1,500,000,
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and the Company shall deliver the Investment Shares to the
Escrow Agent upon receipt of the funds by the Escrow Agent.
(ii) Investment Warrant. Simultaneously with the purchase and sale
of the Investment Shares, the Investor shall deliver to the
Escrow Agent immediately available funds in the amount of the
aggregate Purchase Price for the Investment Warrant of
$500.00, and the Company shall deliver the Investment Warrant
to the Escrow Agent upon receipt of the funds by the Escrow
Agent.
(iii) Compliance with the delivery requirements set forth in the
preceding paragraphs (i) and (ii) is subject to the execution
of an escrow agreement among the Company , the Investor and
the Escrow Agent, simultaneously with the execution of this
Agreement.
(b) The Closing Date, for purposes of this Agreement, shall be, subject to
compliance with the delivery requirements set forth in the preceding paragraphs
(i) and (ii), on the date that the Company's registration statement on Form
10-SB, as amended, clears the review of the SEC and the Company's Common Stock
re-qualifies for quotation on a Principal Exchange; provided, however, that the
Closing Date shall not be later than March 15, 2000, unless otherwise agreed by
the parties. The obligation of the Investor to consummate the purchase and sale
of the Investment Securities on the Closing Date is subject to the satisfaction
of the following conditions:
(i) all representations and warranties of the Investor contained
herein shall remain true and correct as of the Closing Date
(as a condition to the Company's obligations);
(ii) all representations and warranties of the Company contained
herein shall remain true and correct as of the Closing Date
(as a condition to the Investor's obligations);
(iii) the Company shall have obtained all permits and qualifications
required by any state for the offer and sale of the Investment
Securities, or shall have the availability of exemptions
therefrom; and
(iv) the sale and issuance of the Investment Securities hereunder
shall be legally permitted by all laws and regulations to
which the Investor and the Company are subject and there shall
be no ruling, judgment or writ of any court prohibiting the
transactions contemplated by this Agreement.
Section 2.2. Registration Rights. (a) The Company agrees that it will prepare
and file with the Commission, within sixty (60) days after the Closing Date, a
Registration Statement, at the sole expense of the Company (except as provided
below), in respect of all Registrable Securities, so as to permit a public
offering and resale of the Registrable Securities under the Act.
(b) The Company shall use its best efforts to cause the Registration
Statement to become effective within one-hundred-twenty (120) days from the
Closing Date, or, if earlier, within five (5) days of SEC clearance to request
acceleration of effectiveness. The Company will notify Investor of the
effectiveness of the Registration Statement within one business day of such
event.
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(c) The Company will maintain the Registration Statement or post-effective
amendment until the earlier of (i) the date that all of the Registrable
Securities have been sold pursuant to the Registration Statement, (ii) the date
the Investor receives an opinion of counsel to the Company that the Registrable
Securities may be sold under the provisions of Rule 144 without limitation as to
volume, (iii) all Registrable Securities have been otherwise transferred to
Persons who may trade such shares without restriction under the Securities Act,
and the Company has delivered a new certificate or other evidence of ownership
for such securities not bearing a restrictive legend, or (iv) all Registrable
Securities may be sold without any time, volume or manner limitations pursuant
to Rule 144(k) or any similar provision then in effect under the Securities Act
in the opinion of counsel to the Company.
(d) All fees, disbursements and out-of-pocket expenses and costs incurred
by the Company in connection with the preparation and filing of the Registration
Statement under subparagraph 3(a) and in complying with applicable securities
and Blue Sky laws (including, without limitation, all attorneys' fees of the
Company) shall be borne by the Company. The Investor shall bear the cost of
underwriting and/or brokerage discounts, fees and commissions, if any,
applicable to the Registrable Securities being registered and the fees and
expenses of its counsel.
(e) No provision contained herein shall preclude the Company from selling
securities pursuant to any Registration Statement in which it is required to
include Registrable Securities pursuant to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF INVESTOR
The Investor represents and warrants to the Company that:
Section 3.1. Intent. The Investor is entering into this Agreement for its own
account and the Investor has no present arrangement (whether or not legally
binding) at any time to sell the Investment Securities to or through any person
or entity; provided, however, that by making the representations herein, the
Investor does not agree to hold such securities for any minimum or other
specific term and reserves the right to dispose of the Investment Securities at
any time in accordance with Article IX of this Agreement.
Section 3.2. Sophisticated and Accredited Investor. The Investor is a
sophisticated investor (as described in Rule 506(b)(2)(ii) of Regulation D) and
an accredited investor (as defined in Rule 501 of Regulation D), and Investor
has such experience in business and financial matters that it is capable of
evaluating the merits and risks of an investment in the Investment Securities.
The Investor acknowledges that an investment in the Investment Securities is
speculative and involves a high degree of risk.
Section 3.3. Authority. This Agreement and each agreement which is required to
be executed by Investor has been duly authorized and validly executed and
delivered by the Investor and is a valid and binding agreement of the Investor
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, or similar laws relating to, or affecting generally the
enforcement of, creditors' rights and remedies or by other equitable principles
of general application.
Section 3.4. Absence of Conflicts. The execution and delivery of this Agreement
and any other agreements executed in connection herewith, and the consummation
of the transactions contemplated thereby, and compliance with the requirements
thereof, will not violate any law, rule, regulation, order,
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writ, judgment, injunction, decree or award binding on Investor or (a) violate
any provision of any indenture, instrument or agreement to which Investor is a
party or is subject, or by which Investor or any of its assets is bound; (b)
conflict with or constitute a material default thereunder; (c) result in the
creation or imposition of any lien pursuant to the terms of any such indenture,
instrument or agreement, or constitute a breach of any fiduciary duty owed by
Investor to any third party; or (d) require the approval of any third-party
(which has not been obtained) pursuant to any material contract, agreement,
instrument, relationship or legal obligation to which Investor is subject or to
which any of its assets, operations or management may be subject.
Section 3.5. Disclosure; Access to Information. The Investor has received all
documents, records, books and other publicly available information pertaining to
Investor's investment in the Company that have been requested by the Investor.
The Company is subject to the periodic reporting requirements of the Exchange
Act, and the Investor has received copies of all SEC Documents that have been
requested by it.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Investor that, except as may be set
forth in any Schedule of Exceptions attached hereto or as set forth in the SEC
Documents:
Section 4.1. Organization of the Company. The Company is a corporation duly
incorporated and existing in good standing under the laws of the State of Nevada
and has all requisite corporate authority to own its properties and to carry on
its business as now being conducted. The Company does not have any subsidiaries
and does not own more that fifty percent (50%) of or control any other business
entity except as set forth in the SEC Documents. The Company is duly qualified
and is in good standing as a foreign corporation to do business in every
jurisdiction in which the nature of the business conducted or property owned by
it makes such qualification necessary, other than those in which the failure so
to qualify would not have a Material Adverse Effect.
Section 4.2. Authority. (i) The Company has the requisite corporate power and
corporate authority to enter into and perform its obligations under this
Agreement and to issue the Investment Securities, (ii) the execution, issuance
and delivery of this Agreement and the Investment Securities by the Company and
the consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary corporate action and no further consent or
authorization of the Company or its Board of Directors or stockholders is
required, and (iii) this Agreement and the Investment Securities have been duly
executed and delivered by the Company and at the Closing shall constitute valid
and binding obligations of the Company enforceable against the Company in
accordance with their terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, or similar laws relating to, or affecting
generally the enforcement of, creditors' rights and remedies or by other
equitable principles of general application.
Section 4.3. Capitalization. The authorized capital stock of the Company
consists of 50,000,000 shares of Common Stock, of which approximately 22,137,062
shares are issued and outstanding as of the date of execution of this Agreement
by the Company; and 20,000,000 shares of preferred stock, par value $0.001 per
share, of which 1,000,000 have been designated as Series A Convertible Preferred
Stock, of which 654,410 shares are issued and outstanding as of the date of
Execution of this Agreement by the Company. All of the outstanding shares of
Common Stock and Series A Convertible Preferred Stock of the Company have been
duly and validly authorized and issued and are fully paid and non-assessable.
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Section 4.4. SEC Documents. The Company has delivered or made available to the
Investor true and complete copies of the SEC Documents. The Company has not
provided to the Investor any information that, according to applicable law, rule
or regulation, should have been disclosed publicly prior to the date hereof by
the Company, but which has not been so disclosed. As of their respective dates,
the SEC Documents complied in all material respects with the requirements of the
Exchange Act, and rules and regulations of the SEC promulgated thereunder and
the SEC Documents did not contain any untrue statement of a material fact or
omit 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. The financial statements of the Company included
in the SEC Documents complied in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC or
other applicable rules and regulations with respect thereto at the time of such
inclusion. Such financial statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis 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 exclude 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 operations and cash
flows for the periods then ended (subject, in the case of unaudited interim
statements, to normal year-end audit adjustments). Neither the Company nor any
of its subsidiaries has any material indebtedness, obligations or liabilities of
any kind (whether accrued, absolute, contingent or otherwise, and whether due or
to become due) that would have been required to be reflected in, reserved
against or otherwise described in the financial statements or in the notes
thereto in accordance with GAAP, which was not fully reflected in, reserved
against or otherwise described in the financial statements or the notes thereto
included in the SEC Documents or was not incurred in the ordinary course of
business consistent with the Company's past practices since the last date of
such financial statements.
Section 4.5. Exemption from Registration; Valid Issuances. Subject to the
accuracy of the Investor's representations in Article III, the sale of the
Investment Securities will not require registration under the Securities Act
and/or any applicable state securities law. When issued and paid for the
Investment Securities will be duly and validly issued, fully paid, and
non-assessable. Neither the sales of the Investment Securities pursuant to, nor
the Company's performance of its obligations under, this Agreement will (i)
result in the creation or imposition by the Company of any liens, charges,
claims or other encumbrances upon the Investment Securities or any of the assets
of the Company, or (ii) entitle the holders of Outstanding Common Stock to
preemptive or other rights to subscribe to or acquire the Investment Securities
or other securities of the Company. The Investment Securities shall not subject
the Investor to personal liability to the Company or its creditors by reason of
the possession thereof.
Section 4.6. Corporate Documents. The Company has furnished or made available to
the Investor true and correct copies of the Company's Certificate of
Incorporation, as amended and in effect on the date hereof (the "Certificate"),
and the Company's By-Laws, as amended and in effect on the date hereof (the
"By-Laws").
Section 4.7. No Conflicts. 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 Investment
Securities, do not and will not (i) result in a violation of the Company's
Certificate of Incorporation or By-Laws or (ii) conflict with, or constitute a
material default (or an event that with notice or lapse of time or both would
become a default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any material agreement, indenture or
instrument, or any "lock-up" or similar provision of any underwriting or similar
agreement to which the Company is a party, or (iii) result in a violation of any
federal, state or local law, rule,
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regulation, order, judgment or decree (including federal and state securities
laws and regulations) applicable to the Company or by which any material
property or asset of the Company is bound or affected, nor is the Company
otherwise in violation of, conflict with or default under any of the foregoing
(except in each case for such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as would not have, individually or
in the aggregate, a Material Adverse Effect). The business of the Company is not
being conducted in violation of any law, ordinance or regulation of any
governmental entity, except for possible violations that either singly or in the
aggregate would not have a Material Adverse Effect. The Company is not required
under federal, state or local law, rule or regulation to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency in order for it to execute, deliver or perform any of its
obligations under this Agreement or issue and sell the Investment Securities in
accordance with the terms hereof (other than any SEC, Principal Market or state
securities filings that may be required to be made by the Company subsequent to
Closing and any registration statement that may be filed pursuant hereto);
provided that, for purposes of the representation made in this sentence, the
Company is assuming and relying upon the accuracy of the relevant
representations and agreements of the Investor herein.
Section 4.8. No Material Adverse Change. Since the date of filing of the SEC
Documents, no Material Adverse Effect has occurred or exists, and no facts have
arisen that would be reasonably expected to result in or constitute a Material
Adverse Effect, with respect to the Company.
Section 4.9. No Undisclosed Events or Circumstances. Since the date of filing of
the SEC Documents, no event or circumstance has occurred or exists with respect
to the Company or its businesses, properties, prospects, operations or financial
condition, that, under applicable law, rule or regulation, requires public
disclosure or announcement prior to the date hereof by the Company but which has
not been so publicly announced or disclosed in the SEC Documents.
Section 4.10. No Misleading or Untrue Communication. The Company and, to the
knowledge of the Company, any person representing the Company, or any other
person selling or offering to sell the Investment Securities in connection with
the transaction contemplated by this Agreement, have not made, at any time, any
oral communication in connection with the offer or sale of the same which
contained any untrue statement of a material fact or omitted to state any
material fact necessary in order to make the statements, in the light of the
circumstances under which they were made, not misleading.
Section 4.11. Material Non-Public Information. The Company has not disclosed to
the Investor any material non-public information that (i) if disclosed, would,
or could reasonably be expected to have, a material effect on the price of the
Common Stock or (ii) according to applicable law, rule or regulation, should
have been disclosed publicly by the Company prior to the date hereof but which
has not been so disclosed.
Section 4.12. No Misrepresentation. No representation or warranty of the Company
contained in this Agreement, any schedule, annex or exhibit hereto or any
agreement, instrument or certificate furnished by the Company to the Investor
pursuant to this Agreement, contains any untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein, not misleading.
Section 4.13. Additional Investors. The Company expressly reserves the right to
offer additional Investment Securities, in any amount, provided that the
Purchase Price and other material terms remain the same as set forth in this
Agreement, to additional investors at any time prior to the Closing Date.
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ARTICLE V
COVENANTS OF THE INVESTOR
Section 5.1. Compliance with Law. The Investor's trading activities with respect
to shares of the Company's Common Stock will be in compliance with all
applicable state and federal securities laws, rules and regulations and rules
and regulations of the Principal Market on which the Company's Common Stock is
listed.
Section 5.2. No Short Positions. The Investor agrees that neither the Investor
nor any of his, her or its affiliates has entered, has the intention of
entering, or will, at any time during which the Investor holds any equity
securities of the Company, enter into any put option, short position or other
similar instrument or position with respect to the Common Stock of the Company.
ARTICLE VI
COVENANTS OF THE COMPANY
Section 6.1. Listing of Common Stock. The Company hereby agrees to maintain the
listing of the Common Stock on a Principal Market, and as soon as reasonably
practicable following the Closing (but in any event prior to the effective date
of the Registration Statement) to list the Registrable Securities on the
Principal Market, if required by such market. The Company further agrees, if the
Company applies to have the Common Stock traded on any other Principal Market,
it will include in such application the Registrable Securities, and will take
such other action as is necessary or desirable in the opinion of the Investor to
cause the Common Stock to be listed on such other Principal Market as promptly
as possible. The Company will take all action to continue the listing and
trading of its Common Stock on a Principal Market (including, without
limitation, maintaining sufficient net tangible assets) and will comply in all
respects with the Company's reporting, filing and other obligations under the
bylaws or rules of the Principal Market and shall provide Investor with copies
of any correspondence to or from such Principal Market which questions or
threatens delisting of the Common Stock, within three (3) business days of the
Company's receipt thereof, until the Investor has disposed of all of its
Registrable Securities.
Section 6.2. Exchange Act Reporting. The Company will use its best efforts to
comply in all respects with its reporting and filing obligations under the
Exchange Act, and will not take any action or file any document (whether or not
permitted by the Exchange Act or the rules thereunder) to terminate or suspend
such registration or to terminate or suspend its reporting and filing
obligations under said Act until the Investor has disposed of all of its
Registrable Securities.
Section 6.3. Corporate Existence. The Company will take all steps necessary to
preserve and continue the corporate existence of the Company.
Section 6.4. Consolidation; Merger. The Company shall not, at any time after the
date hereof, effect any merger or consolidation of the Company with or into, or
a transfer of all or substantially all of the assets of the Company to, another
entity (a "Consolidation Event") unless the resulting successor or acquiring
entity (if not the Company) assumes by written instrument or by operation of law
the obligation
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to deliver to the Investor such shares of stock and/or securities as the
Investor is entitled to receive pursuant to this Agreement.
Section 6.5. Issuance of Investment Securities. The sale of the Investment
Securities shall be made in accordance with the provisions and requirements of
Section 4(2) and Regulation D and any applicable state securities law. The
Company shall make all necessary SEC and "blue sky" filings required to be made
by the Company in connection with the sale of the Investment Securities to the
Investor as required by all applicable Laws, and, upon request, shall provide a
copy thereof to the Investor promptly after such filing.
ARTICLE VII
SURVIVAL; INDEMNIFICATION
Section 7.1. Survival. The representations, warranties and covenants made by
each of the Company and the Investor in this Agreement, the annexes, schedules
and exhibits hereto and in each instrument, agreement and certificate entered
into and delivered by them pursuant to this Agreement, shall survive the Closing
and the consummation of the transactions contemplated hereby. In the event of a
breach or violation of any of such representations, warranties or covenants, the
party to whom such representations, warranties or covenants have been made shall
have all rights and remedies for such breach or violation available to it under
the provisions of this Agreement or otherwise, whether at law or in equity,
irrespective of any investigation made by or on behalf of such party on or prior
to the Closing Date.
Section 7.2. Indemnity. (a) The Company hereby agrees to indemnify and hold
harmless the Investor, its Affiliates and their respective officers, directors,
partners and members (collectively, the "Investor Indemnitees"), from and
against any and all losses, claims, Damages, judgments, penalties, liabilities
and deficiencies (collectively, "Losses"), and agrees to reimburse the Investor
Indemnitees for all reasonable out-of-pocket expenses (including the reasonable
fees and expenses of legal counsel), in each case promptly as incurred by the
Investor Indemnitees and to the extent arising out of or in connection with:
(i) any misrepresentation, omission of fact or breach of any of the
Company's representations or warranties contained in this Agreement, the
annexes, schedules or exhibits hereto or any instrument, agreement or
certificate entered into or delivered by the Company pursuant to this
Agreement; or
(ii) any failure by the Company to perform in any material respect any
of its covenants, agreements, undertakings or obligations set forth in this
Agreement, the annexes, schedules or exhibits hereto or any instrument,
agreement or certificate entered into or delivered by the Company pursuant
to this Agreement.
(b) The Investor hereby agrees to indemnify and hold harmless the Company,
its Affiliates and their respective officers, directors, partners and members
(collectively, the "Company Indemnitees"), from and against any and all Losses,
and agrees to reimburse the Company Indemnitees for reasonable all out-of-pocket
expenses (including the reasonable fees and expenses of legal counsel), in each
case promptly as incurred by the Company Indemnitees and to the extent arising
out of or in connection with:
(i) any misrepresentation, omission of fact, or breach of any of the
Investor's representations or warranties contained in this Agreement, the
annexes, schedules or exhibits
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hereto or any instrument, agreement or certificate entered into or
delivered by the Investor pursuant to this Agreement; or
(ii) any failure by the Investor to perform in any material respect
any of its covenants, agreements, undertakings or obligations set forth in
this Agreement or any instrument, certificate or agreement entered into or
delivered by the Investor pursuant to this Agreement.
Section 7.3. Notice. Promptly after receipt by either party hereto seeking
indemnification pursuant to Section 7.2 (an "Indemnified Party") of written
notice of any investigation, claim, proceeding or other action in respect of
which indemnification is being sought (each, a "Claim"), the Indemnified Party
promptly shall notify the party against whom indemnification pursuant to Section
7.2 is being sought (the "Indemnifying Party") of the commencement thereof; but
the omission to so notify the Indemnifying Party shall not relieve it from any
liability that it otherwise may have to the Indemnified Party, except to the
extent that the Indemnifying Party is materially prejudiced and forfeits
substantive rights and defenses by reason of such failure. In connection with
any Claim as to which both the Indemnifying Party and the Indemnified Party are
parties, the Indemnifying Party shall be entitled to assume the defense thereof.
Notwithstanding the assumption of the defense of any Claim by the Indemnifying
Party, the Indemnified Party shall have the right to employ separate legal
counsel and to participate in the defense of such Claim, and the Indemnifying
Party shall bear the reasonable fees, out-of-pocket costs and expenses of such
separate legal counsel to the Indemnified Party if (and only if): (x) the
Indemnifying Party shall have agreed to pay such fees, out-of-pocket costs and
expenses, (y) the Indemnified Party and the Indemnifying Party reasonably shall
have concluded that representation of the Indemnified Party and the Indemnifying
Party by the same legal counsel would not be appropriate due to actual or, as
reasonably determined by legal counsel to the Indemnified Party, potentially
differing interests between such parties in the conduct of the defense of such
Claim, or if there may be legal defenses available to the Indemnified Party that
are in addition to or disparate from those available to the Indemnifying Party,
or (z) the Indemnifying Party shall have failed to employ legal counsel
reasonably satisfactory to the Indemnified Party within a reasonable period of
time after notice of the commencement of such Claim. If the Indemnified Party
employs separate legal counsel in circumstances other than as described in
clauses (x), (y) or (z) above, the fees, costs and expenses of such legal
counsel shall be borne exclusively by the Indemnified Party. Except as provided
above, the Indemnifying Party shall not, in connection with any Claim in the
same jurisdiction, be liable for the fees and expenses of more than one firm of
legal counsel for the Indemnified Party (together with appropriate local
counsel). The Indemnifying Party shall not, without the prior written consent of
the Indemnified Party (which consent shall not unreasonably be withheld), settle
or compromise any Claim or consent to the entry of any judgment that does not
include an unconditional release of the Indemnified Party from all liabilities
with respect to such Claim or judgment.
Section 7.4. Direct Claims. In the event one party hereunder should have a claim
for indemnification that does not involve a claim or demand being asserted by a
third party, the Indemnified Party promptly shall deliver notice of such claim
to the Indemnifying Party. If the Indemnified Party disputes the claim, such
dispute shall be resolved by mutual agreement of the Indemnified Party and the
Indemnifying Party or by binding arbitration conducted in accordance with the
procedures and rules of the American Arbitration Association as set forth in
Article X. Judgment upon any award rendered by any arbitrators may be entered in
any court having competent jurisdiction thereof.
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ARTICLE VIII
DUE DILIGENCE REVIEW; NON-DISCLOSURE OF NON-PUBLIC INFORMATION.
Section 8.1. Due Diligence Review. Subject to Section 8.2, the Company shall
make available for inspection and review by the Investor, advisors to and
representatives of the Investor (who may or may not be affiliated with the
Investor and who are reasonably acceptable to the Company). All SEC Documents
and other filings with the SEC, and all other publicly available corporate
documents and properties of the Company as may be reasonably necessary for the
purpose of such review, and cause the Company's officers, directors and
employees to supply all such publicly available information reasonably requested
by the Investor or any such representative or advisor.
Section 8.2. Non-Disclosure of Non-Public Information. (a) The Company shall not
disclose material non-public information to the Investor, advisors to or
representatives of the Investor unless prior to disclosure of such information
the Company identifies such information as being non-public information and
provides the Investor, such advisors and representatives with the opportunity to
accept or refuse to accept such non-public information for review. The Company
may, as a condition to disclosing any non-public information hereunder, require
the Investor's advisors and representatives to enter into a confidentiality
agreement in form reasonably satisfactory to the Company and the Investor.
(b) Nothing herein shall require the Company to disclose material
non-public information to the Investor or its advisors or representatives, and
the Company represents that it does not disseminate material non-public
information to any investors who purchase stock in the Company in a public
offering, to money managers or to securities analysts.
ARTICLE IX
LEGENDS
Section 9.1. Legends. Unless otherwise provided below, each certificate
representing Investment Securities, the Warrant and Registrable Securities will
bear the following legend or equivalent (the "Legend"):
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY OTHER
APPLICABLE SECURITIES LAWS AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN
MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED, HYPOTHECATED
OR OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO A TRANSACTION THAT IS EXEMPT FROM, OR
NOT SUBJECT TO, SUCH REGISTRATION.
Section 9.2. No Other Legend or Stock Transfer Restrictions. No legend other
than the one specified in Section 9.1 has been or shall be placed on the Warrant
or the share certificates representing the
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Investment Securities and Registrable Securities and no instructions or "stop
transfer orders," so called, "stock transfer restrictions," or other
restrictions have been or shall be given to the Company's transfer agent with
respect thereto other than as expressly set forth in this Article IX. The
Company will not engage an independent transfer agent with respect to the
Investment Securities or the Warrant.
Section 9.3. Investor's Compliance. Nothing in this Article shall affect in any
way the Investor's obligations to comply with all applicable securities laws
upon resale of the Investment Securities, the Warrant and the Registrable
Securities.
ARTICLE X
CHOICE OF LAW
Section 10.1. Governing Law/Arbitration. This Agreement shall be governed by and
construed in accordance with the laws of the State of Colorado applicable to
contracts made in Nevada by persons domiciled in Colorado and without regard to
its principles of conflicts of laws. Any dispute under this Agreement or any
Exhibit attached hereto shall be submitted to arbitration under the American
Arbitration Association (the "AAA") in Denver, Colorado, and shall be finally
and conclusively determined by the decision of a board of arbitration consisting
of three (3) members (hereinafter referred to as the "Board of Arbitration")
selected as according to the rules governing the AAA. The Board of Arbitration
shall meet on consecutive business days in Denver, Colorado, and shall reach and
render a decision in writing (concurred in by a majority of the members of the
Board of Arbitration) with respect to the amount, if any, which the losing party
is required to pay to the other party in respect of a claim filed. In connection
with rendering its decisions, the Board of Arbitration shall adopt and follow
the laws of the State of Colorado. To the extent practical, decisions of the
Board of Arbitration shall be rendered no more than thirty (30) calendar days
following commencement of proceedings with respect thereto. The Board of
Arbitration shall cause its written decision to be delivered to all parties
involved in the dispute. Any decision made by the Board of Arbitration (either
prior to or after the expiration of such thirty (30) calendar day period) shall
be final, binding and conclusive on the parties to the dispute, and entitled to
be enforced to the fullest extent permitted by law and entered in any court of
competent jurisdiction. The non-prevailing party to any arbitration (as
determined by the Board of Arbitration) shall pay the expenses of the prevailing
party including reasonable attorney's fees, in connection with such arbitration.
ARTICLE XI
ASSIGNMENT
Section 11.1. Assignment. Neither this Agreement nor any rights of the Investor
or the Company hereunder may be assigned by either party to any other person.
ARTICLE XII
NOTICES
Section 12.1. Notices. All notices, demands, requests, consents, approvals, and
other communications required or permitted hereunder shall be in writing and,
unless otherwise specified herein, shall be deemed to have been given or made
upon receipt and shall be (i) personally served, (ii) deposited in the
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mail, registered or certified, return receipt requested, postage prepaid, or
(iii) delivered by reputable air courier service with charges prepaid. In all
cases, at the same time any such communication is made or given, a copy shall be
delivered by facsimile, and the receiving party shall promptly acknowledge
receipt by return facsimile. The addresses for such communications shall be:
If to the Company: Integral Technologies, Inc.
1070 West Pender Street, Suite #3
Vancouver, B.C., Canada V6E 2N7
Attention: William S. Robinson, CEO
Telephone: (604) 685-9933
Facsimile: (604) 685-6794
with a copy to: Futro & Trauernicht LLC
(shall not constitute notice) 1401 Seventeenth Street
11th Floor
Denver, CO 80202
Attention: Peter G. Futro, Esq.
Telephone: (303) 295-3360
Facsimile: (303) 295-1563
if to the Investor: As set forth on the signature page
Either party hereto may from time to time change its address or facsimile number
for notices under this Section 12.1 by giving written notice of such changed
address or facsimile number to the other party hereto as provided in this
Section 12.1.
ARTICLE XIII
MISCELLANEOUS
Section 13.1. Counterparts/ Facsimile/ Amendments. This Agreement may be
executed in multiple counterparts, each of which may be executed by less than
all of the parties and shall be deemed to be an original instrument which shall
be enforceable against the parties actually executing such counterparts and all
of which together shall constitute one and the same instrument. Except as
otherwise stated herein, in lieu of the original documents, a facsimile
transmission or copy of the original documents shall be as effective and
enforceable as the original. This Agreement may be amended only by a writing
executed by all parties.
Section 13.2. Entire Agreement. This Agreement sets forth the entire agreement
and understanding of the parties relating to the subject matter hereof and
supersedes all prior and contemporaneous agreements, negotiations and
understandings between the parties, both oral and written relating to the
subject matter hereof. The terms and conditions of any exhibits to this
Agreement are incorporated herein by this reference and shall constitute part of
this Agreement as is fully set forth herein.
Section 13.3. 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
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force and effect without said provision; provided that such severability shall
be ineffective if it materially changes the economic benefit of this Agreement
to any party.
Section 13.4. Headings. The headings used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.
Section 13.5. Replacement of Certificates. Upon (i) receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of the Warrant or a certificate representing the Investment
Securities or the Registrable Securities and (ii) in the case of any such loss,
theft or destruction of such certificate, upon delivery of an indemnity
agreement or security reasonably satisfactory in form and amount to the Company
(which shall not exceed that required by the Company's transfer agent in the
ordinary course) or (iii) in the case of any such mutilation, on surrender and
cancellation of such certificate, the Company at its expense will execute and
deliver, in lieu thereof, a new certificate of like tenor.
Section 13.6. Fees and Expenses. Each of the Company and the Investor agrees to
pay its own expenses incident to the performance of its obligations hereunder.
Section 13.7. Brokerage. Each of the parties hereto represents that it has had
no dealings in connection with this transaction with any finder or broker who
will demand payment of any fee or commission from the other party. The Company
on the one hand, and the Investor, on the other hand, agree to indemnify the
other against and hold the other harmless from any and all liabilities to any
person claiming brokerage commissions or finder's fees on account of services
purported to have been rendered on behalf of the indemnifying party in
connection with this Agreement or the transactions contemplated hereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by the undersigned, thereunto duly authorized:, as of the dates set
forth below.
Address: INVESTOR:
------------------------------- ------------------------------------
Name of Investor
By:
------------------------------- ---------------------------------
Print Name:
------------------------------- -------------------------
Telephone: Title:
--------------------- ------------------------------
Fax: Date:
--------------------------- -------------------------------
================================================================================
ACCEPTED: INTEGRAL TECHNOLOGIES, INC.
DATED: By:
------------------------- --------------------------------
William S. Robinson, CEO
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