SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of March
27, 1998, by and between CAM DESIGNS INC., a corporation organized under the
laws of the State of Delaware (the "Company"), and the purchaser (the
"Purchaser") set forth on the execution page hereof (the "Execution Page").
WHEREAS:
A. The Company and the Purchaser are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by the provisions of Regulation D ("Regulation D"), as promulgated by the
United States Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "Securities Act").
B. The Company desires to sell, and the Purchaser desires to
purchase, upon the terms and conditions stated in this Agreement, for an
aggregate purchase price equal to Eight Hundred Thousand Dollars ($800,000)
(the "Purchase Price"), (i) Eight Hundred (800) shares of the Company's Series
A Convertible Preferred Stock, par value $.001 per share (the "Preferred
Shares"), convertible into shares of the Company's Class A Common Stock, par
value $.001 per share (the "Common Stock"), and (ii) warrants, in the form
attached hereto as Exhibit B, to acquire Fifty-Six Thousand (56,000) shares of
Common Stock (the "Warrants"). The rights, preferences and privileges of the
Preferred Shares, including the terms upon which such Preferred Shares are
convertible into shares of Common Stock, are set forth in the form of
Certificate of Designations, Preferences and Rights attached hereto as Exhibit
A (the "Certificate of Designation"). The shares of Common Stock issuable upon
conversion of the Preferred Shares or otherwise pursuant to the Certificate of
Designation are referred to herein as the "Conversion Shares" and the shares
of Common Stock issuable upon exercise of or otherwise pursuant to the
Warrants are referred to herein as the "Warrant Shares." The Preferred Shares,
the Warrants, the Conversion Shares and the Warrant Shares are collectively
referred to herein as the "Securities" and each of them may individually be
referred to herein as a "Security."
C. Contemporaneous with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights
Agreement, in the form attached hereto as Exhibit C (the "Registration Rights
Agreement"), pursuant to which the Company has agreed to provide certain
registration rights under the Securities Act and the rules and regulations
promulgated thereunder, and applicable state securities laws.
NOW, THEREFORE, the Company and the Purchaser hereby agree as
follows:
1. PURCHASE AND SALE OF SECURITIES.
a. Purchase. On the Closing Date (as defined below), subject to the
satisfaction (or waiver) of the conditions set forth in Section 6 and Section
7 below, the Company shall issue and sell to the Purchaser, and the Purchaser
agrees to purchase from the Company, the Preferred Shares and the Warrants.
b. Form of Payment. On the Closing Date, the Purchaser shall pay
the aggregate Purchase Price hereunder by wire transfer to the Company, in
accordance with the Company's written wiring instructions, against delivery of
duly executed certificates representing the Preferred Shares and duly executed
Warrants and the Company shall deliver such duly executed certificates and
Warrants against delivery of such aggregate Purchase Price.
c. Closing Date. Subject to the satisfaction (or waiver) of the
conditions thereto set forth in Section 6 and Section 7 below, the date and
time of the issuance and sale of the Preferred Shares and Warrants pursuant to
this Agreement (the "Closing") shall be 12:00 noon, New York City time, on
March 27, 1998, subject to a two (2) business day grace period at either
party's option, but in no event later than March 31, 1998, or such other time
as may be mutually agreed upon by the Company and the Purchaser (the "Closing
Date"). The Closing shall occur at the offices of Klehr, Harrison, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
2. PURCHASER'S REPRESENTATIONS AND WARRANTIES
The Purchaser represents and warrants to the Company as follows:
a. Investment Purpose. The Purchaser is purchasing the Preferred
Shares and the Warrants for the Purchaser's own account and not with a present
view towards the public sale or distribution thereof, except pursuant to sales
that are exempt from the registration requirements of the Securities Act
and/or sales registered under the Securities Act. The Purchaser understands
that the Purchaser must bear the economic risk of this investment
indefinitely, unless the Securities are registered pursuant to the Securities
Act and any applicable state securities or blue sky laws or an exemption from
such registration is available, and that the Company has no present intention
of registering the resale of any such Securities other than as contemplated by
the Registration Rights Agreement. Notwithstanding anything in this Section
2(a) to the contrary, by making the representations herein, the Purchaser does
not agree to hold 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 from the registration
requirements under the Securities Act.
b. Accredited Investor Status. The Purchaser is an "Accredited
Investor" as that term is defined in Rule 501(a) of Regulation D.
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c. Reliance on Exemptions. The Purchaser understands that the
Preferred Shares and the Warrants are being offered and sold to the Purchaser
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 Purchaser's compliance with,
the representations, warranties, agreements, acknowledgments and
understandings of the Purchaser set forth herein in order to determine the
availability of such exemptions and the eligibility of the Purchaser to
acquire the Preferred Shares and the Warrants.
d. Information. The Purchaser and its counsel, if any, have been
furnished all materials relating to the business, finances and operations of
the Company and materials relating to the offer and sale of the Preferred
Shares and the Warrants which have been specifically requested by the
Purchaser or its counsel. The Purchaser and its counsel have been afforded the
opportunity to ask questions of the Company and have received what the
Purchaser believes to be satisfactory answers to any such inquiries. Neither
such inquiries nor any other investigation conducted by the Purchaser or its
counsel or any of its representatives shall modify, amend or affect the
Purchaser's right to rely on the Company's representations and warranties
contained in Section 3 below. The Purchaser understands that the Purchaser's
investment in the Securities involves a high degree of risk.
e. Governmental Review. The Purchaser understands that no United
States federal or state agency or any other government or governmental agency
has passed upon or made any recommendation or endorsement of the Securities.
f. Transfer or Resale. The Purchaser understands that (i) except as
provided in the Registration Rights Agreement, the sale or resale of the
Securities have not been and are not being registered under the Securities Act
or any state securities laws, and the Securities may not be transferred unless
(a) the resale of the Securities has been registered thereunder; or (b) the
Purchaser shall have delivered to the Company an opinion of counsel (which
opinion shall be 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 (c) the Securities are sold under Rule 144 promulgated
under the Securities Act (or a successor rule) ("Rule 144"); or (d) the
Securities are sold or transferred to an affiliate of the Purchaser who agrees
to sell or otherwise transfer the Securities only in accordance with the
provisions of this Section 2(f) and who is an Accredited Investor; and (ii)
neither the Company nor any other person is under any obligation to register
such Securities under the Securities Act or any state securities laws (other
than pursuant to the Registration Rights Agreement). Notwithstanding the
foregoing or anything else contained herein to the contrary, the Securities
may be pledged as collateral in connection with a bona fide margin account or
other lending arrangement.
g. Legends. The Purchaser understands that the Preferred Shares and
the Warrants and, until such time as the Conversion Shares and the Warrant
Shares have been registered under the Securities Act (including registration
pursuant to Rule 416 thereunder) as contemplated by the Registration Rights
Agreement or otherwise may be sold by the Purchaser under Rule 144, the
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certificates for the Conversion Shares and the Warrant Shares may bear a
restrictive legend in substantially the following form:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or the
securities laws of any state of the United States. The securities
represented hereby may not be offered, sold, transferred or assigned
in the absence of an effective registration statement for the
securities under applicable securities laws unless offered, sold,
transferred or assigned under an available exemption from the
registration requirements of those laws.
The legend set forth above shall be removed and the Company shall
issue a certificate without such legend to the holder of any Security upon
which it is stamped, if, unless otherwise required by state securities laws,
(a) the sale of such Security is registered under the Securities Act
(including registration pursuant to Rule 416 thereunder) as contemplated by
the Registration Rights Agreement; (b) such holder provides the Company with
an opinion of counsel, in form, substance and scope customary for opinions of
counsel in comparable transactions, to the effect that a public sale or
transfer of such Security may be made without registration under the
Securities Act; or (c) such holder provides the Company with reasonable
assurances that such Security can be sold under Rule 144. The Purchaser agrees
to sell all Securities, including those represented by a certificate(s) from
which the legend has been removed, pursuant to an effective registration
statement or under an exemption from the registration requirements of the
Securities Act. In the event the above legend is removed from any Security and
thereafter the effectiveness of a registration statement covering such
Security is suspended or the Company determines that a supplement or amendment
thereto is required by applicable securities laws, then upon reasonable
advance notice to the Purchaser the Company may require that the above legend
be placed on any such Security that cannot then be sold pursuant to an
effective registration statement or under Rule 144 and the Purchaser shall
cooperate in the replacement of such legend. Such legend shall thereafter be
removed when such Security may again be sold pursuant to an effective
registration statement or under Rule 144.
h. Authorization; Enforcement. This Agreement and the Registration
Rights Agreement have been duly and validly authorized, executed and delivered
on behalf of Purchaser and are valid and binding agreements of Purchaser
enforceable in accordance with their terms.
i. Residency. The Purchaser is a resident of the jurisdiction set
forth under the Purchaser's name on the Execution Page hereto executed by the
Purchaser.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to the Purchaser as follows:
a. Organization and Qualification. The Company and each of its
subsidiaries is a corporation duly organized and existing in good standing
under the laws of the jurisdiction in which it is incorporated, and has the
requisite corporate power to own its properties and to carry on its
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business as now being conducted. The Company and each of its subsidiaries is
duly qualified as a foreign corporation 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 and where the failure so to qualify would
have a Material Adverse Effect. "Material Adverse Effect" means any material
adverse effect on (i) the Securities, (ii) the ability of the Company to
perform its obligations hereunder or under the Certificate of Designation, the
Warrants or the Registration Rights Agreement or (iii) the business,
operations, properties, prospects or financial condition of the Company and
its subsidiaries, taken as a whole.
b. Authorization; Enforcement. (i) The Company has the requisite
corporate power and authority to enter into and perform its obligations under
this Agreement, the Warrants and the Registration Rights Agreement, to issue
and sell the Preferred Shares and the Warrants in accordance with the terms
hereof, and to issue the Conversion Shares upon conversion of the Preferred
Shares in accordance with the terms of the Certificate of Designation and to
issue the Warrant Shares upon exercise of the Warrants in accordance with the
terms of such Warrants; (ii) the execution, delivery and performance of this
Agreement, the Warrants and the Registration Rights Agreement by the Company
and the consummation by it of the transactions contemplated hereby and thereby
(including, without limitation, the issuance of the Preferred Shares and the
Warrants and the issuance and reservation for issuance of the Conversion
Shares and the Warrant Shares) have been duly authorized by the Company's
Board of Directors and no further consent or authorization of the Company, its
Board of Directors, any committee of the Board of Directors, or its
stockholders is required (except for such stockholder approvals as may be
required under Rules 4310(c)(25)(H) or 4460(i) promulgated by the National
Association of Securities Dealers ("NASD") or otherwise in order to issue
Conversion Shares in excess of the Cap Amount (as such term is defined under
Article IV.C(i) of the Certificate of Designation)); (iii) this Agreement has
been duly executed and delivered by the Company; and (iv) this Agreement
constitutes, and, upon execution and delivery by the Company of the Warrants
and the Registration Rights Agreement, such agreements will constitute, valid
and binding obligations of the Company enforceable against the Company in
accordance with their terms.
c. Capitalization. The capitalization of the Company as of the date
hereof, including the authorized capital stock, the number of shares issued
and outstanding, the number of shares issuable and reserved for issuance
pursuant to the Company's stock option plans, the number of shares issuable
and reserved for issuance pursuant to securities (other than the Preferred
Shares and the Warrants) exercisable or exchangeable for, or convertible into,
any shares of capital stock and the number of shares to be reserved for
issuance upon conversion of the Preferred Shares and exercise of the Warrants
is set forth on Schedule 3(c). All of such outstanding shares of capital stock
have been, or upon issuance in accordance with the terms of any such warrants,
options or preferred stock, will be, validly issued, fully paid and
non-assessable. None of the authorized but unissued shares of capital stock of
the Company (including the Preferred Shares, the Conversion Shares and the
Warrant Shares) are subject to preemptive rights or any other similar rights
of the stockholders of the Company or any liens or encumbrances. Except for
the Securities and as set forth on Schedule 3(c), as of the date of this
Agreement, (i) there are no outstanding options, warrants, scrip, rights to
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subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into or exercisable or exchangeable for, any
shares of capital stock of the Company or any of its subsidiaries, or
arrangements by which the Company or any of its subsidiaries is or may become
bound to issue additional shares of capital stock of the Company or any of its
subsidiaries, and (ii) there are no agreements or arrangements under which the
Company or any of its subsidiaries is obligated to register the sale of any of
its or their securities under the Securities Act (except the Registration
Rights Agreement). Except as set forth on Schedule 3(c), there are no
securities or instruments containing antidilution or similar provisions that
will be triggered by the issuance of the Securities in accordance with the
terms of this Agreement, the Certificate of Designation or the Warrants. The
Company has furnished to the Purchaser true and correct copies of the
Company's Certificate of Incorporation as in effect on the date hereof
("Certificate of Incorporation"), the Company's By-laws as in effect on the
date hereof (the "By-laws"), and all other instruments and agreements
governing securities convertible into or exercisable or exchangeable for
capital stock of the Company. The Certificate of Designation, in the form
attached hereto, will be duly filed prior to Closing with the Secretary of
State of the State of Delaware and, upon issuance of the Preferred Shares in
accordance with the terms hereof, the Purchaser shall be entitled to the
rights set forth therein.
d. Issuance of Shares. The Preferred Shares are duly authorized
and, upon issuance in accordance with the terms of this Agreement, will be
validly issued, fully paid and non-assessable, and free from all taxes, liens,
claims and encumbrances and will not be subject to any preemptive or other
similar rights of stockholders of the Company and will not impose personal
liability on the holders thereof. The Conversion Shares and Warrant Shares are
duly authorized and reserved for issuance, and, upon conversion of the
Preferred Shares and exercise of the Warrants, as applicable, in accordance
with the terms thereof, will be validly issued, fully paid and non-assessable,
and free from all taxes, liens, claims and encumbrances and will not be
subject to any preemptive or other similar rights of stockholders of the
Company and will not impose personal liability upon the holder thereof.
e. No Conflicts. The execution, delivery and performance of this
Agreement, the Warrants and the Registration Rights Agreement by the Company,
the performance by the Company of its obligations under the Certificate of
Designation and the consummation by the Company of the transactions
contemplated hereby and thereby (including, without limitation, the issuance
and reservation for issuance, as applicable, of the Preferred Shares, the
Conversion Shares and the Warrant Shares) will not (i) result in a violation
of the Certificate of Incorporation or By-laws or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment (including, without limitation, the triggering of any anti-dilution
provisions), acceleration or cancellation of, any agreement, indenture or
instrument to which the Company or any of its subsidiaries is a party, or
result in a violation of any law, rule, regulation, order, judgment or decree
(including U.S. federal and state securities laws and regulations and rules or
regulations of any self-regulatory organizations to which either the Company
or its securities are subject) applicable to the Company or any of its
subsidiaries or by which any property or asset of the Company or any of its
subsidiaries is bound or
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affected (except, with respect to clause (ii), for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse Effect).
Neither the Company nor any of its subsidiaries is in violation of its
Certificate of Incorporation, By-laws or other organizational documents and
neither the Company nor any of its subsidiaries is in default (and no event
has occurred which, with notice or lapse of time or both, would put the
Company or any of its subsidiaries in default) under, nor has there occurred
any event giving others (with notice or lapse of time or both) any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its subsidiaries is a
party, except for actual or possible violations, defaults or rights as would
not, individually or in the aggregate, have a Material Adverse Effect. The
businesses of the Company and its subsidiaries are not being conducted, and
shall not be conducted so long as the Purchaser owns any of the Securities, in
violation of any law, ordinance or regulation of any governmental entity,
except for possible violations the sanctions for which either singly or in the
aggregate would not have a Material Adverse Effect. Except as specifically
contemplated by this Agreement and the Registration Rights Agreement, the
Company is not required to obtain any consent, approval, 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, the Warrants
or the Registration Rights Agreement or to perform its obligations under the
Certificate of Designation, in each case in accordance with the terms hereof
or thereof. Effective on March 26, 1998, the Company's Common Stock was
delisted from the Nasdaq National Market ("NNM") and became listed for trading
on the Nasdaq SmallCap Market ("SmallCap"). The Nasdaq Stock Market, Inc.
informed the Company on March 24, 1998 that it must increase its net tangible
assets (as defined in Rule 4450(a)(3) promulgated by the NASD) to three
million dollars ($3,000,000) on or before April 27, 1998 in order to maintain
the listing of the Common Stock on the SmallCap.
f. SEC Documents, Financial Statements. Since July 27, 1995, the
Company has timely filed (within applicable extension periods) all reports,
schedules, forms, statements and other documents required to be filed by it
with the SEC pursuant to the reporting requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") (all of the foregoing and all
exhibits included therein and financial statements and schedules thereto and
documents incorporated by reference therein, being hereinafter referred to
herein as the "SEC Documents"). The Company has delivered to the Purchaser
true and complete copies of the SEC 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. None of the statements made in any such SEC Documents is, or
has been, required to be amended or updated under applicable law (except for
such statements as have been amended or updated in subsequent filings made
prior to the date hereof). As of their respective dates, the financial
statements of the Company included in the SEC Documents complied as to form in
all material respects with applicable
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accounting requirements and the published rules and regulations of the SEC
applicable 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 consolidated financial position of the Company and its
consolidated subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to immaterial year-end audit adjustments).
Except as set forth in the financial statements of the Company included in the
SEC Documents filed prior to the date hereof, the Company has no liabilities,
contingent or otherwise, other than (i) liabilities incurred in the ordinary
course of business subsequent to the date of such financial statements, (ii)
liabilities not required by generally accepted accounting principles ("GAAP")
to be disclosed on a balance sheet prepared in accordance with GAAP, and (iii)
obligations under contracts and commitments incurred in the ordinary course of
business and not required under GAAP to be reflected in such financial
statements, which liabilities and obligations referred to in clauses (i), (ii)
and (iii), individually or in the aggregate, are not material to the financial
condition or operating results of the Company.
g. Absence of Certain Changes. Since May 31, 1997, there has been
no material adverse change and no material adverse development in the
business, properties, operations, prospects, financial condition or results of
operations of the Company and its subsidiaries, taken as a whole, except as
disclosed in Schedule 3(g) or in the SEC Documents filed prior to the date
hereof.
h. Absence of Litigation. Except as disclosed in the SEC Documents
filed prior to the date hereof and except as disclosed in Section 3(e) hereof
with respect to the continued listing and inclusion of the Common Stock on the
SmallCap, there is no action, suit, 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 or any of its
subsidiaries, threatened against or affecting the Company, any of its
subsidiaries, or any of their respective directors or officers in their
capacities as such, which could reasonably be expected to have a Material
Adverse Effect. There are no facts which, if known by a potential claimant or
governmental authority, could give rise to a claim or proceeding which, if
asserted or conducted with results unfavorable to the Company or any of its
subsidiaries, could reasonably be expected to have a Material Adverse Effect.
i. Intellectual Property. Each of the Company and its subsidiaries
owns or is licensed to use all patents, patent applications, trademarks,
trademark applications, trade names, service marks, copyrights, copyright
applications, licenses, permits, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information,
systems or procedures) and other similar rights and proprietary knowledge
(collectively, "Intangibles") necessary for the conduct of its business as now
being conducted and as described in the Company's Annual Report on Form 10-K
for the fiscal year ended May 31, 1997. To the best knowledge of the Company,
neither the Company nor any subsidiary of the Company infringes or is in
conflict with any right of any other person with respect to any Intangibles
which, individually or in the aggregate, if the
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subject of an unfavorable decision, ruling or finding, would have a Material
Adverse Effect. Neither the Company nor any of its subsidiaries has received
written notice of any pending conflict with or infringement upon such third
party Intangibles, which alleged pending conflict or alleged infringement, if
adversely determined, would result in a Material Adverse Effect. Except as
disclosed in the SEC Documents, the termination of the Company's ownership of,
or right to use, any single Intangible would not result in a Material Adverse
Effect on the Company. Neither the Company nor any of its subsidiaries has
entered into any consent agreement, indemnification agreement, forbearance to
▇▇▇ or settlement agreement with respect to the validity of the Company's or
its subsidiaries' ownership or right to use its Intangibles and, to the best
knowledge of the Company, there is no reasonable basis for any such claim to
be successful. The Intangibles are valid and enforceable and no registration
relating thereto has lapsed, expired or been abandoned or canceled or is the
subject of cancellation or other adversarial proceedings, and all applications
therefor are pending and in good standing. The Company and its subsidiaries
have complied, in all material respects, with their respective contractual
obligations relating to the protection of the Intangibles used pursuant to
licenses. To the best knowledge of the Company, no person is infringing on or
violating the Intangibles owned or used by the Company or its subsidiaries.
j. Foreign Corrupt Practices. Neither the Company, nor any of its
subsidiaries, nor any director, officer, agent, employee or other person
acting on behalf of the Company or any subsidiary has, in the course of his
actions for, or on behalf of, the Company, used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expenses relating
to political activity; made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds;
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977; or made any bribe, rebate, payoff, influence payment,
kickback or other unlawful payment to any foreign or domestic government
official or employee.
k. Disclosure. All information relating to or concerning the
Company set forth in this Agreement or provided to the Purchaser pursuant to
Section 2(d) hereof and otherwise in connection with the transactions
contemplated hereby is true and correct in all material respects and the
Company has not omitted to state any material fact necessary in order to make
the statements made herein or therein, in light of the circumstances under
which they were made, not misleading. No event or circumstance has occurred or
exists with respect to the Company or its subsidiaries or their respective
businesses, properties, prospects, operations or financial conditions, which
has not been publicly disclosed but, under applicable law, rule or regulation,
would be required to be disclosed by the Company in a registration statement
filed on the date hereof by the Company under the Securities Act with respect
to the primary issuance of the Company's securities.
l. Acknowledgment Regarding Purchaser's Purchase of the Securities.
The Company acknowledges and agrees that the Purchaser is not acting as a
financial advisor or fiduciary of the Company (or in any similar capacity)
with respect to this Agreement or the transactions contemplated hereby, the
relationship between the Company and the Purchaser is "arms-length" and any
statement made by the Purchaser or any of its representatives or agents in
connection with this Agreement and the transactions contemplated hereby is not
advice or a recommendation and is
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merely incidental to the Purchaser's purchase of Securities and has not been
relied upon by the Company, its officers or directors in any way. The Company
further acknowledges that the Company's decision to enter into this Agreement
has been based solely on an independent evaluation by the Company and its
representatives.
m. Form S-3 Eligibility. The Company is currently eligible to
register the resale of its Common Stock on a registration statement on Form
S-3 under the Securities Act. There exist no facts or circumstances that would
prohibit or delay the preparation and filing of a registration statement on
Form S-3 with respect to the Registrable Securities (as defined in the
Registration Rights Agreement).
n. No General Solicitation. Neither the Company nor any distributor
participating on the Company's behalf in the transactions contemplated hereby
(if any) nor any person acting for the Company, or any such distributor, has
conducted any "general solicitation," as such term is defined in Regulation D,
with respect to any of the Securities being offered hereby.
o. 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 of any security or solicited any offers to
buy any security under circumstances that would require registration of the
Securities being offered hereby under the Securities Act or cause this
offering of Securities to be integrated with any prior offering of securities
of the Company for purposes of the Securities Act or any applicable
stockholder approval provisions.
p. No Brokers. Except for fees payable to Century City Securities,
Inc., no fees or commissions will be payable by the Company to any broker,
financial advisor, finder, investment banker, or bank with respect to the
transactions contemplated hereby. The Purchaser shall have no obligation with
respect to such fees or with respect to any claims made by or on behalf of
other persons for fees of a type contemplated in this Section 3(p) that may be
due in connection with the transactions contemplated hereby. The Company shall
indemnify and hold harmless the Purchaser, its respective employees, officers,
directors, agents and partners, and their respective Affiliates (as such term
is defined under Rule 405 promulgated under the Securities Act), from and
against all claims, losses, damages, costs (including the costs of preparation
and reasonable attorney's fees) and expenses suffered in respect of any such
claimed or existing fees.
q. Acknowledgment of Dilution. The number of Conversion Shares
issuable upon conversion of the Preferred Shares may increase substantially in
certain circumstances, including the circumstance wherein the trading price of
the Common Stock declines. The Company's executive officers have studied and
fully understand the nature of the Securities being sold hereunder. The
Company acknowledges that its obligation to issue Conversion Shares upon
conversion of the Preferred Shares in accordance with the terms of the
Certificate of Designation is absolute and unconditional, regardless of the
dilution that such issuance may have on the ownership interests of other
stockholders. Taking the foregoing into account, the Company's Board of
Directors has
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determined in its good faith business judgment that the issuance of the
Preferred Shares hereunder and the consummation of the other transactions
contemplated hereby are in the best interests of the Company and its
stockholders.
r. Title. The Company and its subsidiaries have good and marketable
title in fee simple to all real property and good and marketable title to all
personal property owned by them which is material to the business of the
Company and its subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in Schedule 3(r) or such
as do not materially affect the value of such property and do not materially
interfere with the use made and proposed to be made of such property by the
Company and its subsidiaries. Any real property and facilities held under
lease by the Company and its subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not material and
do not materially interfere with the use made and proposed to be made of such
property and buildings by the Company and its subsidiaries.
s. Tax Status. Except as set forth on Schedule 3(s), the Company
and each of its subsidiaries has made or filed all foreign, federal, state and
local 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 and each of its subsidiaries has set aside on its books provisions
reasonably adequate for the payment of all unpaid and unreported taxes) and
has 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. Except as set forth on Schedule 3(s), there are no unpaid
taxes in any material amount claimed to 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 any statute of
limitations relating to the assessment or collection of any federal, state or
local tax. Except as set forth on Schedule 3(s), none of the Company's tax
returns is presently being audited by any taxing authority.
4. COVENANTS.
a. Best Efforts. The parties shall use their best efforts timely to
satisfy each of the conditions described in Section 6 and Section 7 of this
Agreement.
b. Form D: Blue Sky Laws. The Company agrees to file a Form D with
respect to the Securities as required under Regulation D and to provide a copy
thereof to the Purchaser promptly after such filing. The Company shall, on or
before the Closing Date, take such action as the Company shall reasonably
determine is necessary to qualify the Securities for sale to the Purchaser
pursuant to this Agreement under applicable securities or "blue sky" laws of
the states of the United States or obtain exemption therefrom, and shall
provide evidence of any such action so taken to the Purchaser on or prior to
the Closing Date.
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c. Reporting Status. So long as the Purchaser beneficially owns any
of the Securities, the Company shall timely file all reports required to be
filed with the SEC pursuant to the Exchange Act, and the Company shall not
terminate its status as an issuer required to file reports under the Exchange
Act even if the Exchange Act or the rules and regulations thereunder would
permit such termination. In addition, the Company shall take all actions
necessary to continue to be eligible to register the resale of its Common
Stock on a registration statement on Form S-3 under the Securities Act.
d. Use of Proceeds. The Company shall use the proceeds from the sale
of the Securities as set forth in Schedule 4(d).
e. Additional Equity Capital; Right of First Offer. The Company
agrees that during the period beginning on the date hereof and ending on the
date which is 180 days following the Closing Date (the "Lock-Up Period"), the
Company will not contract with any party to obtain additional financing in
which any equity or equity-linked securities are issued (including any debt
financing with an equity component) ("Future Offerings") unless it shall have
first delivered to the Purchaser, at least ten (10) business days prior to the
closing of such Future Offering, written notice describing the proposed Future
Offering, including the terms and conditions thereof, and providing the
Purchaser and its affiliates an option during the ten (10) business day period
following delivery of such notice to purchase all of the securities being
offered in the Future Offering on the same terms as contemplated by such
Future Offering (the limitation referred to in this Section 4(e) is referred
to as the "Capital Raising Limitation"). The Capital Raising Limitation shall
not apply to any transaction involving issuances of securities as
consideration in a merger, consolidation or acquisition of assets, or in
connection with any strategic partnership or joint venture (the primary
purpose of which is not to raise equity capital), or as consideration for the
acquisition of a business, product or license by the Company. The Capital
Raising Limitation also shall not apply to (i) the issuance of securities
pursuant to an underwritten public offering, (ii) the issuance of securities
upon exercise or conversion of the Company's options, warrants or other
convertible securities outstanding as of the date hereof or (iii) the grant of
additional options or warrants, or the issuance of additional securities,
under any duly authorized Company stock option or restricted stock plan for
the benefit of the Company's employees or directors.
f. Expenses. The Company shall pay to the Purchaser, or at its
direction, at the Closing, reimbursement for the expenses reasonably incurred
by the Purchaser and its affiliates and advisors in connection with the
negotiation, preparation, execution and delivery of this Agreement and the
other agreements to be executed in connection herewith, including, without
limitation, the Purchaser's and its affiliates' and advisors' reasonable due
diligence and attorneys' fees and expenses (the "Expenses"). In addition, from
time to time thereafter, upon the Purchaser's written request, the Company
shall pay to the Purchaser such additional Expenses, if any, not covered by
such payment, in each case to the extent reasonably incurred by the Purchaser
in connection with the negotiation, preparation, execution and delivery of
this Agreement and the other agreements to be executed in connection herewith.
Notwithstanding the foregoing, the Company shall not be obligated to reimburse
the Purchaser for more than $35,000 pursuant to this Section 4(f).
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g. Financial Information. The Company agrees to send the following
reports to the Purchaser until such Purchaser transfers, assigns or sells all
of its Securities: (i) within ten (10) days after the filing with the SEC, a
copy of its Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q,
its proxy statements and any Current Reports on Form 8-K; and (ii) within one
(1) day after release, copies of all press releases issued by the Company or
any of its subsidiaries.
h. Reservation of Shares. The Company shall at all times have
authorized and reserved for the purpose of issuance a sufficient number of
shares of Common Stock to provide for the full conversion of the outstanding
Preferred Shares and the issuance of the Conversion Shares in connection
therewith and the full exercise of the Warrants and the issuance of the
Warrant Shares in connection therewith subject to and as otherwise required by
the Certificate of Designation and the Warrants. In that regard, a "sufficient
number of shares" with respect to the Preferred Shares shall be deemed to be
equal to the number of shares of Common Stock required to be reserved for
issuance by the Company pursuant to Article V of the Certificate of
Designation. The Company shall not reduce the number of shares reserved for
issuance upon conversion of the Preferred Shares and the full exercise of the
Warrants (except as a result of any such conversion or exercise) without the
consent of the Purchaser.
i. Listing. The Company shall promptly secure the listing of the
Conversion Shares and Warrant Shares upon each national securities exchange or
automated quotation system, if any, upon which shares of Common Stock are then
listed (subject to official notice of issuance) and shall maintain, so long as
the Purchaser (or any of its affiliates) own any Securities, such listing of
all Conversion Shares from time to time issuable upon conversion of the
Preferred Shares and all Warrant Shares from time to time issuable upon
exercise of the Warrants. The Company will take all action necessary to
continue the listing and trading of its Common Stock on the New York Stock
Exchange ("NYSE"), the American Stock Exchange ("AMEX"), the NNM or the
SmallCap and will comply in all respects with the Company's reporting, filing
and other obligations under the bylaws or rules of the NASD and such
exchanges, as applicable. The Company shall promptly provide to the Purchaser
copies of any notices it receives regarding the continued eligibility of the
Common Stock for trading on the SmallCap or, if applicable, any securities
exchange or automated quotation system on which securities of the same class
or series issued by the Company are then listed or quoted, if any.
j. Corporate Existence. Subject to the provisions of the
Certificate of Designation and the Warrants, so long as the Purchaser (or any
of its affiliates) beneficially owns any Securities, the Company shall
maintain its corporate existence, and in the event of a merger, consolidation
or sale of all or substantially all of the Company's assets, the Company shall
ensure that the surviving or successor entity in such transaction (i) assumes
the Company's obligations hereunder and under the Certificate of Designation,
the Warrants and the agreements and instruments entered into in connection
herewith regardless of whether or not the Company would have had a sufficient
number of shares of Common Stock authorized and available for issuance in
order to effect the full conversion of all Preferred Shares and the exercise
in full of all Warrants outstanding as of the date of such transaction and
(ii) is a publicly traded corporation whose common stock is listed for trading
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on the NNM, SmallCap, NYSE or AMEX; provided, however, that, subject to the
provisions of the Certificate of Designation and the Warrants, the foregoing
restrictions shall not apply to any consolidation or merger of the Company
with or into, or sale of all or substantially all of its assets to, another
corporation or entity, so long as (i) the Company provides written notice of
such proposed transaction to the Purchaser not less than seventy-five (75)
days prior to the date on which such transaction will take place, (ii) the
Common Stock is listed and included for quotation on the SmallCap at all times
during the period following the delivery of such notice by the Company until
the date on which such transaction takes place and (iii) the registration
statement required to be filed by the Company pursuant to Section 2(a) of the
Registration Rights Agreement is effective under the Securities Act at all
times during the period following the delivery of such notice by the Company
until the date on which such transaction takes place.
k. No Integrated Offerings. The Company shall not make any offers
or sales of any security (other than the Securities) under circumstances that
would require registration of the Securities being offered or sold hereunder
under the Securities Act or cause this offering of Securities to be integrated
with any other offering of securities by the Company for purposes of any
stockholder approval provision applicable to the Company or its securities.
l. Legal Compliance. The Company shall conduct its business and the
business of its subsidiaries in compliance with all laws, ordinances or
regulations of governmental entities applicable to such businesses, except
where the failure to do so would not have a Material Adverse Effect.
m. Stockholder Approval. The Company shall hold an annual or
special meeting of its stockholders no later than September 30, 1998 and use
its best efforts to obtain at such meeting such approvals of the Company's
stockholders as may be required to issue all of the shares of Common Stock
issuable upon conversion of, or otherwise with respect to, the Preferred
Shares without violating NASD Rules 4310(c)(25)(H) or 4460(i) (or any
successor rules thereto which may then be in effect) (the "Stockholder
Approval"). The Company shall comply with the filing and disclosure
requirements of Section 14 promulgated under the Exchange Act in connection
with the solicitation, acquisition and disclosure of such Stockholder
Approval. The Company represents and warrants that its Board of Directors has
unanimously recommended that the Company's stockholders approve the proposal
contemplated by this Section 4(m) and shall so indicate such recommendation in
the proxy statement used to solicit such Stockholder Approval.
5. TRANSFER AGENT INSTRUCTIONS.
a. The Company shall instruct its transfer agent to issue
certificates, registered in the name of the Purchaser or its nominee, for the
Conversion Shares and the Warrant Shares in such amounts as specified from
time to time by the Purchaser to the Company upon conversion of the Preferred
Shares or exercise of the Warrants, as applicable. To the extent and during
the periods provided in Sections 2(f) and 2(g) of this Agreement, all such
certificates shall bear the restrictive legend specified in Section 2(g) of
this Agreement.
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b. The Company warrants that no instruction other than such
instructions referred to in this Section 5, and stop transfer instructions to
give effect to Section 2(f) hereof in the case of the transfer of the
Conversion Shares and the Warrant Shares, as applicable, prior to registration
thereof under the Securities Act or without an exemption therefrom, will be
given by the Company to its transfer agent and that the Securities shall
otherwise be freely transferable on the books and records of the Company as
and to the extent provided in this Agreement, the Certificate of Designation,
the Warrants and the Registration Rights Agreement. Nothing in this Section
shall affect in any way the Purchaser's obligations and agreement set forth in
Section 2(g) hereof to resell the Securities pursuant to an effective
registration statement or under an exemption from the registration
requirements of applicable securities law.
c. If (i) (A) the Conversion Shares and the Warrant Shares, as
applicable, have been registered under the Securities Act as contemplated by
the Registration Rights Agreement, or (B) the Purchaser provides the Company
and the transfer agent with an opinion of counsel, which opinion of counsel
shall be 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
registration, or (C) the Purchaser provides the Company with reasonable
assurances that such Securities may be sold under Rule 144, and (ii) (A) the
Purchaser has delivered to the Company certificates representing the
Conversion Shares and/or Warrant Shares, as applicable, along with a written
request for the removal of any restrictive legend set forth thereon or (B) in
the case of the conversion by the Purchaser of the Preferred Shares or the
exercise by the Purchaser of the Warrants, the Purchaser has complied with the
procedures for conversion set forth in Article IV of the Certificate of
Designation and the procedures for exercise set forth in the Warrants, the
Company shall permit the transfer and promptly instruct its transfer agent to
issue the Conversion Shares and/or Warrant Shares, as applicable, in such name
and in such denominations as specified by the Purchaser. If the Company's
transfer agent is participating in the Depository Trust Company ("DTC") Fast
Automated Securities Transfer program, the Company shall cause its transfer
agent to electronically transmit the Conversion Shares and/or Warrant Shares,
as applicable, to the Purchaser or its transferee by crediting the account of
the Purchaser or its transferee with DTC through its Deposit Withdrawal Agent
Commission system ("DTC Transfer"). If the aforementioned conditions to a DTC
Transfer are not satisfied, the Company shall deliver to the Purchaser or its
transferee physical certificates representing the Conversion Shares and/or
Warrant Shares, as applicable, which certificates shall not bear any legend
restricting transfer of the Conversion Shares and/or Warrant Shares
represented thereby. Further, a Purchaser may instruct the Company to deliver
to the Purchaser or its transferee unlegended physical certificates
representing the Conversion Shares and/or Warrant Shares, as applicable, in
lieu of delivering such shares by way of DTC Transfer.
d. If the Company fails (a "Legend Removal Failure") to deliver
such unlegended Conversion Shares and/or Warrant Shares to the Purchaser or
its transferee in accordance with Section 5(c) within five (5) business days
after the conditions to such delivery have been satisfied (the "Legend Removal
Period"), then the Company shall pay to the Purchaser an amount equal to:
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(.24) x (N/365) x (MP)
where:
"N" means the number of days after the expiration of the Legend
Removal Period through and including the Legend Removal Cure Date;
"MP" means the product of (x) the Closing Bid Price (as defined in
the Certificate of Designation) of the Common Stock in effect on the date of
the Legend Removal Failure and (y) the number of Conversion Shares and/or
Warrant Shares which are the subject of such Legend Removal Failure; and
"Legend Removal Cure Date" means the date the Company issues freely
tradeable shares of Common Stock in accordance with Section 5(c).
The payments to which a holder shall be entitled pursuant to this
Section 5(d) are referred to herein as "Legend Removal Payments." The
Purchaser may elect to receive accrued Legend Removal Payments in cash or to
convert all or any portion of such accrued Legend Removal Payments, at any
time, into Common Stock at the lowest Conversion Price (as defined in the
Certificate of Designation) in effect during the period beginning on the date
of the Legend Removal Failure through the date of conversion of such Legend
Removal Payments. In the event the Purchaser elects to take such payment in
cash, cash payment will be made by the Company within five (5) days after its
receipt of written notice of such election from the Purchaser. In the event
the Purchaser elects to convert all or any portion of the Legend Removal
Payment into Common Stock, the Purchaser shall provide written notice of such
election specifying the amount of such Legend Removal Payment to be converted
and the applicable Conversion Price at which such amount is to be converted.
The Company shall deliver the shares of Common Stock issuable upon any such
conversion to the Purchaser within five (5) days of its receipt of such
written notice from the Purchaser.
Nothing herein shall limited the Purchaser's right to pursue actual
damages for the Company's failure to deliver unlegended Conversion Shares and
Warrant Shares pursuant to Section 5(c), and the Purchaser shall have the
right to pursue all remedies available at law or in equity (including a decree
of specific performance and/or injunctive relief).
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to issue and sell the
Preferred Shares and Warrants to the Purchaser at the Closing is subject to
the satisfaction, on or before the Closing Date, of each of the following
conditions thereto, provided that these conditions are for the Company's sole
benefit and may be waived by the Company at any time in its sole discretion:
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a. The Purchaser shall have executed the signature page to this
Agreement and the Registration Rights Agreement, and delivered the same to the
Company.
b. The Purchaser shall have delivered the Purchase Price for the
Preferred Shares and Warrants in accordance with Section 1(b) above.
c. The representations and warranties of the Purchaser shall be
true and correct as of the date when made and as of the Closing Date as though
made at that time (except for representations and warranties that speak as of
a specific date, which representations and warranties shall be true and
correct as of such date), and the Purchaser shall have performed, satisfied
and complied in all material respects with the covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with by the Purchaser at or prior to the Closing Date.
d. No litigation, statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction or
any self-regulatory organization having authority over the matters
contemplated hereby which prohibits the consummation of any of the
transactions contemplated by this Agreement.
7. CONDITIONS TO THE PURCHASER'S OBLIGATION TO PURCHASE.
The obligation of the Purchaser hereunder to purchase the Preferred
Shares and Warrants at the Closing is subject to the satisfaction, on or
before the Closing Date, of each of the following conditions, provided that
these conditions are for the Purchaser's sole benefit and may be waived by the
Purchaser at any time in the Purchaser's sole discretion:
a. The Company shall have executed this Agreement, the Warrants and
the Registration Rights Agreement, and delivered the same to the Purchaser.
b. The Certificate of Designation shall have been accepted for
filing with the Secretary of State of the State of Delaware and a copy thereof
certified by the Secretary of State of the State of Delaware shall have been
delivered to the Purchaser.
c. The Company shall have delivered to the Purchaser duly executed
Warrants and certificates (in such denominations as the Purchaser shall
request) representing the Preferred Shares in accordance with Section 1(b)
above.
d. The Common Stock shall be authorized for quotation and listed on
the SmallCap and trading in the Common Stock (or the SmallCap generally) shall
not have been suspended by the SEC or the SmallCap, nor shall any such
suspension be pending or threatened.
e. The representations and warranties of the Company shall be true
and correct as of the date when made and as of the Closing Date as though made
at that time (except for representations
-17-
and warranties that speak as of a specific date, which representations and
warranties shall be true and correct as of such date) and the Company shall
have performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Company at or prior to the
Closing Date. The Purchaser shall have received a certificate, executed by the
Chief Executive Officer of the Company, dated as of the Closing Date, to the
foregoing effect and as to such other matters as may be reasonably requested
by the Purchaser.
f. No litigation, statute, rule, regulation, executive order,
decree, ruling, injunction, action or proceeding shall have been enacted,
entered, promulgated or endorsed by any court or governmental authority of
competent jurisdiction or any self-regulatory organization having authority
over the matters contemplated hereby which questions the validity of, or
challenges or prohibits the consummation of any of the transactions
contemplated by this Agreement.
g. The Purchaser shall have received an opinion of the Company's
counsel, dated as of the Closing Date, in form, scope and substance reasonably
satisfactory to the Purchaser and in substantially the form of Exhibit D
attached hereto.
h. The Company shall have delivered evidence reasonably
satisfactory to the Purchaser that the Company's transfer agent has agreed to
act in accordance with irrevocable instructions in the form attached hereto as
Exhibit E.
i. There shall have been no material adverse changes and no
material adverse developments in the business, properties, operations,
prospects, financial condition or results of operations of the Company and its
subsidiaries, taken as a whole, since the date hereof, and no information, of
which the Purchaser is not currently aware, shall come to the attention of the
Purchaser that is materially adverse to the Company.
8. GOVERNING LAW; MISCELLANEOUS.
a. Governing Law; Jurisdiction. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware applicable
to contracts made and to be performed in the State of Delaware. The Company
irrevocably consents to the jurisdiction of the United States federal courts
and the state courts located in the State of Delaware in any suit or
proceeding based on or arising under this Agreement and irrevocably agrees
that all claims in respect of such suit or proceeding may be determined in
such courts. The Company irrevocably waives the defense of an inconvenient
forum to the maintenance of such suit or proceeding. The Company further
agrees that service of process mailed by first class mail shall be deemed in
every respect effective service of process in any such suit or proceeding.
Nothing herein shall affect the right of the Purchaser to serve process in any
other manner permitted by law. The Company agrees that a final non-appealable
judgment in any such suit or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on such judgment or in any other
lawful manner.
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b. Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party. 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. In the event any signature is delivered by facsimile transmission,
the party using such means of delivery shall cause the manually executed
Execution Page(s) to be physically delivered to the other party within five
(5) days of the execution hereof.
c. Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
d. Severability. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement or the validity or enforceability of this
Agreement in any other jurisdiction.
e. Entire Agreement; Amendments. This Agreement and the instruments
referenced herein contain the entire understanding of the parties with respect
to the matters covered herein and therein. No provision of this Agreement may
be waived other than by an instrument in writing signed by the party to be
charged with enforcement and no provision of this Agreement may be amended
other than by an instrument in writing signed by the Company and the
Purchaser.
f. Notices. Any notices required or permitted to be given under the
terms of this Agreement shall be sent by certified or registered mail (return
receipt requested) or delivered personally or by courier or by confirmed
telecopy, and shall be effective five days after being placed in the mail, if
mailed, or upon receipt or refusal of receipt, if delivered personally or by
courier or confirmed telecopy, in each case addressed to a party. The
addresses for such communications shall be:
If to the Company:
CAM Designs Inc.
Birmingham Road
Allesley, Coventry
CV ▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇
Telecopy: ▇▇▇ ▇▇ ▇▇▇▇ 407 335
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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with a copy simultaneously transmitted by like
means to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
If to the Purchaser, to the address set forth under the Purchaser's
name on the Execution Page hereto executed by the Purchaser.
Each party shall provide notice to the other parties of any change in
address.
g. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns. Except
as provided herein or therein, neither the Company nor the Purchaser shall
assign this Agreement, the Registration Rights Agreement or the Warrants or
any rights or obligations hereunder or thereunder. Notwithstanding the
foregoing, the Purchaser may assign its rights hereunder to any of its
"affiliates" (as that term is defined under the Exchange Act) who are
Accredited Investors without the consent of the Company (provided such
assignees agree to be bound by all of the terms and conditions hereof), or to
any other person or entity with the consent of the Company, which consent
shall not be unreasonably withheld. This provision shall not limit the
Purchaser's right to transfer the Securities pursuant to the terms of the
Certificate of Designation, the Warrants and this Agreement or to assign the
Purchaser's rights hereunder and/or thereunder to any such transferee.
h. 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.
i. Survival. The representations, warranties, agreements and
covenants of the Company set forth in Sections 3, 4, 5 and 8 hereof shall
survive the Closing hereunder notwithstanding any investigation conducted by
or on behalf of the Purchaser. Moreover, none of the representations and
warranties made by the Company herein shall act as a waiver of any rights or
remedies the Purchaser may have under applicable federal or state securities
laws. The Company agrees to indemnify and hold harmless the Purchaser and each
of the Purchaser's officers, directors, employees, partners, members, agents
and affiliates for loss or damage arising as a result of or related to any
breach or alleged breach by the Company of any of its representations or
covenants set forth herein, including advancement of reasonable expenses as
they are incurred.
j. Publicity. The Company and the Purchaser shall have the right to
review before issuance any press releases, SEC or NASD filings, or any other
public statements with respect to the transactions contemplated hereby;
provided, however, that the Company shall be entitled, without the prior
review of the Purchaser, to make any press release or SEC or NASD filings with
respect
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to such transactions as is required by applicable law and regulations
(although the Purchaser shall be consulted by the Company in connection with
any such press release and filing prior to its release and shall be provided
with a copy thereof).
k. Further Assurances. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
l. Termination. In the event that the Closing shall not have
occurred on or before March 31, 1998, unless the parties agree otherwise, this
Agreement shall terminate at the close of business on such date.
Notwithstanding any termination of this Agreement, any party not in breach of
this Agreement shall preserve all rights and remedies it may have against the
other party hereto for a breach of this Agreement prior to or relating to the
termination hereof.
m. Joint Participation in Drafting. Each party to this Agreement
has participated in the negotiation and drafting of this Agreement, the
Certificate of Designation, the Warrants and the Registration Rights
Agreement. As such, the language used herein and therein shall be deemed to be
the language chosen by the parties hereto to express their mutual intent, and
no rule of strict construction will be applied against any party to this
Agreement.
n. Equitable Relief. The Company acknowledges that a breach by it
of its obligations hereunder will cause irreparable harm to the Purchaser by
vitiating the intent and purpose of the transactions contemplated hereby.
Accordingly, the Company acknowledges that the remedy at law for a breach of
its obligations hereunder (including, but not limited to, its obligations
pursuant to Section 5 hereof) will be inadequate and agrees, in the event of a
breach or threatened breach by the Company of the provisions of this Agreement
(including, but not limited to, its obligations pursuant to Section 5 hereof),
that the Purchaser shall be entitled, in addition to all other available
remedies, to an injunction restraining any breach and requiring immediate
issuance and transfer of the Securities, without the necessity of showing
economic loss and without any bond or other security being required.
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IN WITNESS WHEREOF, the Purchaser and the Company have caused this
Agreement to be duly executed as of the date first above written.
CAM DESIGNS INC.
By:
Name:
Title:
PURCHASER:
JNC STRATEGIC FUND LTD.
By:
Name:
Title:
RESIDENCE: Cayman Islands
ADDRESS:
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with copies of all notices to:
Encore Capital Management, L.L.C.
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