Exhibit 10.21
STOCK PURCHASE AGREEMENT
Between
QUINTEK TECHNOLOGIES, INC.
and
▇▇▇▇▇▇▇ PARK INVESTMENTS PLC
July 7, 2004
The shares of common stock of Quintek Technologies, Inc. to be issued
to ▇▇▇▇▇▇▇ Park Investments PLC pursuant to this Agreement may not be sold for
two (2) years from the date of issuance pursuant to section 4.10 of this
Agreement. ▇▇▇▇▇▇▇ Park Investments PLC and its related parties may not engage
in short sales or hedging transactions involving Quintek Technologies, Inc.
common stock as long as they own shares of such common stock pursuant to section
4.11 of this Agreement.
TABLE OF CONTENTS
ARTICLE I CERTAIN DEFINITIONS
1.1 Certain Definitions
ARTICLE II PURCHASE AND SALE OF SHARES
2.1 Purchase and Sale; Purchase Price
2.2 Execution and Delivery of Documents; The Closing
ARTICLE III REPRESENTATIONS AND WARRANTIES
3.1 Representations, Warranties and Agreements of the Target Company
3.2 Representations and Warranties of ▇▇▇▇▇▇▇
ARTICLE IV OTHER AGREEMENTS OF THE PARTIES
4.1 Manner of Offering
4.2 Notice of Certain Events
4.3 Blue Sky Laws
4.4 Integration
4.5 Furnishing of Rule 144(c) Materials
4.6 Solicitation Materials
4.7 Listing of Common Stock
4.8 Indemnification
4.9 Sale of ▇▇▇▇▇▇▇ Shares
4.10 Lock Up by ▇▇▇▇▇▇▇
ARTICLE V MISCELLANEOUS
5.1 Fees and Expenses.
5.2 Entire Agreement
5.3 Notices.
5.4 Amendments; Waivers
5.5 Headings
5.6 Successors and Assigns.
5.7 No Third Party Beneficiaries
5.8 Governing Law; Venue; Service of Process.
5.9 Survival.
5.10 Counterpart Signatures.
5.11 Publicity.
5.12 Severability.
5.13 Limitation of Remedies.
LIST OF SCHEDULES:
Schedule 3.1(a) Subsidiaries
Schedule 3.1(c) Capitalization and Registration Rights Schedule
Schedule 3.1(d) Equity and Equity Equivalent Securities
Schedule 3.1(e) Conflicts
Schedule 3.1(f) Consents and Approvals
Schedule 3.1(g) Litigation
Schedule 3.1(h) Defaults and Violations
LIST OF EXHIBITS:
Exhibit A Escrow Agreement
Exhibit B Officer's Certificate
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of July 7, 2004, between Quintek Technologies, Inc., a corporation
organized and existing under the laws of the State of California (the "Target
Company"), and ▇▇▇▇▇▇▇ Park Investments PLC, a corporation organized under the
laws of England and Wales with its offices at ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ( "▇▇▇▇▇▇▇").
WHEREAS, subject to the terms and conditions set forth in this
Agreement, the Target Company desires to issue and sell to ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇
desires to acquire from the Target Company the shares of the Target Company's
common stock, par value $.001 (the "Common Stock") for the Total Purchase Price.
The consideration to be paid by ▇▇▇▇▇▇▇ for the Common Stock shall be subject to
certain downside price protection (the "Downside Price Protection") provided in
Section 2 of the Escrow Agreement.
IN CONSIDERATION of the mutual covenants contained in this Agreement,
the Target Company and ▇▇▇▇▇▇▇ agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.1 Certain Definitions.
As used in this Agreement, and unless the context requires a different
meaning, the following terms have the meanings indicated:
"Affiliate" means, with respect to any Person, any Person that,
directly or indirectly, controls, is controlled by or is under common control
with such Person. For the purposes of this definition, "control" (including,
with correlative meanings, the terms "controlled by" and "under common control
with") shall mean the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities or by contract or otherwise.
"Agreement" shall have the meaning set forth in the introductory
paragraph of this Agreement.
"Attorney-in-Fact" means Gottbetter & Partners, LLP, ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇; Tel: ▇▇▇-▇▇▇-▇▇▇▇; Fax: ▇▇▇-▇▇▇-▇▇▇▇.
"Business Day" means any day except Saturday, Sunday, any day which
shall be a legal holiday or a day on which banking institutions in the State of
New York are authorized or required by law or other government actions to close.
"Change of Control" means the acquisition, directly or indirectly, by
any Person of ownership of, or the power to direct the exercise of voting power
with respect to, a majority of the issued and outstanding voting shares of the
Target Company.
"Closing" shall have the meaning set forth in Section 2.2(a) hereof.
"Closing Bid Price" shall mean the closing bid price for a share of Common Stock
on such date on the OTCBB (or such other exchange, market, or other system that
the Common Stock is then traded on), as reported on Bloomberg, L.P. (or similar
organization or agency succeeding to its functions of reporting prices).
"Closing Date" shall have the meaning set forth in Section 2.2(a)
hereof.
"Closing Price" shall be the closing bid price of the Common Stock on
the day of Closing.
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"Common Stock" shall have the meaning in the recital.
"Consideration Stock" shall have the meaning set forth in Secion 2.1(a)
hereof.
"Control Person" shall have the meaning set forth in Section 4.8(a)
hereof.
"Default" means any event or condition which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Disclosure Documents" means the Target Company's reports filed under
the Exchange Act with the SEC.
"Downside Price Protection" shall have the meaning in the recital.
"Escrow Agent" means Gottbetter & Partners, LLP, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇; Tel: ▇▇▇-▇▇▇-▇▇▇▇; Fax: ▇▇▇-▇▇▇-▇▇▇▇.
"Escrow Agreement" means the escrow agreement, dated the date hereof,
by and among the Target Company, ▇▇▇▇▇▇▇ and the Escrow Agent annexed hereto as
Exhibit A.
"Event of Default" shall have the meaning set forth in Section 5.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Execution Date" means the date of this Agreement first written above.
"Indemnified Party" shall have the meaning set forth in Section 4.8(b)
hereof.
"Indemnifying Party" shall have the meaning set forth in Section 4.8(b)
hereof.
"G&P" means Gottbetter & Partners, LLP.
"▇▇▇▇▇▇▇" shall have the meaning in the introductory paragraph.
"▇▇▇▇▇▇▇ Consideration Shares" shall have the meaning in Section 2.1(c)
hereof.
"▇▇▇▇▇▇▇ Escrow Shares" means the ▇▇▇▇▇▇▇ Consideration Shares
deposited into escrow by the Target Company under the terms of the Escrow
Agreement in Exhibit A.
"▇▇▇▇▇▇▇ Protection Shares" means the ▇▇▇▇▇▇▇ Escrow Shares that the
Target Company is required to sell to ▇▇▇▇▇▇▇ under the terms of the Escrow
Agreement in Exhibit A.
"▇▇▇▇▇▇▇ Shares" shall mean ordinary shares of 1.0p each in ▇▇▇▇▇▇▇.
"Losses" shall have the meaning set forth in Section 4.8(a) hereof.
"Material" shall mean having a financial consequence in excess of
$25,000.
"Material Adverse Effect" shall have the meaning set forth in Section
3.1(a).
"NASD" means the National Association of Securities Dealers, Inc.
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"Nasdaq" shall mean the Nasdaq Stock Market, Inc.(R)
"OTCBB" shall mean the NASD over-the counter Bulletin Board(R).
"Per Share Market Value" of the Common Stock means on any particular
date (a) the last sale price of shares of Common Stock on such date or, if no
such sale takes place on such date, the last sale price on the most recent prior
date, in each case as officially reported on the principal national securities
exchange on which the Common Stock is then listed or admitted to trading, or (b)
if the Common Stock is not then listed or admitted to trading on any national
securities exchange, the closing bid price per share as reported by Nasdaq, or
(c) if the Common Stock is not then listed or admitted to trading on the Nasdaq,
the closing bid price per share of the Common Stock on such date as reported on
the OTCBB or if there is no such price on such date, then the last bid price on
the date nearest preceding such date, or (d) if the Common Stock is not quoted
on the OTCBB, the closing bid price for a share of Common Stock on such date in
the over-the-counter market as reported by the Pinksheets LLC (or similar
organization or agency succeeding to its functions of reporting prices) or if
there is no such price on such date, then the last bid price on the date nearest
preceding such date, or (e) if the Common Stock is no longer publicly traded,
the fair market value of a share of the Common Stock as determined by an
appraiser selected in good faith by ▇▇▇▇▇▇▇ and the Target Company.
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.
"Proceeding" means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.
"Reporting Issuer" means a company that is subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act.
"Required Approvals" shall have the meaning set forth in Section 3.1(f).
"Securities" means the Common Stock and stock of any other class into
which such shares may hereafter have been reclassified or changed.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Subsidiaries" shall have the meaning set forth in Section 3.1(a).
"Target Company" shall have the meaning set forth in the introductory
paragraph.
"Total Purchase Price" shall have the meaning in the recital.
"Trading Day" means (a) a day on which the Common Stock is quoted on Nasdaq,
the OTCBB or the principal stock exchange on which the Common Stock has been
listed, or (b) if the Common Stock is not quoted on Nasdaq, the OTCBB or any
stock exchange, a day on which the Common Stock is quoted in the
over-the-counter market, as reported by the Pinksheets LLC (or any similar
organization or agency succeeding its functions of reporting prices).
"Transaction Documents" means this Agreement and all exhibits and
schedules hereto and all other documents, instruments and writings required
pursuant to this Agreement.
"U.S." means the United States.
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ARTICLE II
PURCHASE AND SALE OF SHARES
2.1 Purchase and Sale; Purchase Price.
(a) Subject to the terms and conditions set forth herein, the Target
Company shall issue and sell and ▇▇▇▇▇▇▇ shall purchase Fourteen Million
(14,000,000) shares of the Target Company's Common Stock (the "Consideration
Stock").
(b) The total purchase price (the "Total Purchase Price") shall be the
number of shares of Consideration Stock multiplied by the average of the Closing
Bid Price per share of Common Stock during the ten (10) Trading Days immediately
preceding July 30, 2004.
(c) The Total Purchase Price shall be paid by delivery to the Target
Company of the number of ▇▇▇▇▇▇▇ Shares (the "▇▇▇▇▇▇▇ Consideration Shares")
equal to the Total Purchase Price divided by the conversion rate of the British
Pound Sterling to purchase US Dollars determined below on the July 30, 2004. The
▇▇▇▇▇▇▇ Shares shall have a value of (pound)1 per share. The number of ▇▇▇▇▇▇▇
Shares to be issued will be based on the conversion rate of the British Pound
Sterling to the US Dollar in effect as of the close of business on the day
preceding the closing of the transaction, as quoted by ▇▇▇▇▇▇ & Co. as the
commercial rate it gives to purchase US Dollars. For example, if the effective
conversion rate is $1.80/(pound) 1 and the Total Purchase Price is $8,000,000,
then the number of ▇▇▇▇▇▇▇ Shares the Target Company will receive shall equal
the $8,000,000/$1.80, or 4,444,444 ▇▇▇▇▇▇▇ Shares. The ▇▇▇▇▇▇▇ Consideration
Shares shall be subject to the "Downside Price Protection" provided in Section 2
of the Escrow Agreement.
2.2 Execution and Delivery of Documents; The Closing.
(a) The Closing of the purchase and sale of the shares of Consideration
Stock (the "Closing") shall take place within sixty (60) days from the date
hereof (the "Closing Date"). On the Closing Date,
(i) the Target Company shall execute and deliver to the Escrow
Agent a certificate in the name of ▇▇▇▇▇▇▇ representing shares of
Consideration Stock;
(ii) the Target Company shall execute and deliver to ▇▇▇▇▇▇▇ a
certificate of its President, in the form of Exhibit B annexed hereto,
certifying that attached thereto is a copy of resolutions duly adopted
by the Board of Directors of the Target Company authorizing the Target
Company to execute and deliver the Transaction Documents and to enter
into the transactions contemplated thereby;
(iii) the Target Company, ▇▇▇▇▇▇▇ and the Escrow Agent shall
execute and deliver to each other the Escrow Agreement;
(iv) ▇▇▇▇▇▇▇ shall deliver the ▇▇▇▇▇▇▇ Consideration Shares to
the Escrow Agent; and (v) the Target Company shall wire the monies owed
to G&P pursuant to Section 5.1 hereof for legal fees with the following
wire instructions: Citibank, N.A. ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇ ABA
Routing No.: ▇▇▇▇▇▇▇▇▇ Account Name: Gottbetter & Partners, LLP Account
No. ▇▇▇▇▇▇▇▇ Reference: Quintek Technologies, Inc.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations, Warranties and Agreements of the Target Company.
The Target Company hereby makes the following representations and
warranties to ▇▇▇▇▇▇▇, all of which shall survive the Closing:
(a) Organization and Qualification. The Target Company is a
corporation, duly incorporated, validly existing and in good standing under the
laws of the State of California, with the requisite corporate power and
authority to own and use its properties and assets and to carry on its business
as currently conducted. The Target Company has no subsidiaries other than as set
forth on Schedule 3.1(a) attached hereto (collectively, the "Subsidiaries").
Each of the Subsidiaries is a corporation, duly incorporated, validly existing
and in good standing under the laws of the jurisdiction of its incorporation,
with the full corporate power and authority to own and use its properties and
assets and to carry on its business as currently conducted. Each of the Target
Company and the Subsidiaries is duly qualified to do business and is in good
standing as a foreign corporation in each jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing, as
the case may be, would not, individually or in the aggregate, have a material
adverse effect on the results of operations, assets, prospects, or financial
condition of the Target Company and the Subsidiaries, taken as a whole (a
"Material Adverse Effect").
(b) Authorization, Enforcement. The Target Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated hereby and by each other Transaction Document and to otherwise to
carry out its obligations hereunder and thereunder. The execution and delivery
of this Agreement and each of the other Transaction Documents by the Target
Company and the consummation by it of the transactions contemplated hereby and
thereby has been duly authorized by all necessary action on the part of the
Target Company. Each of this Agreement and each of the other Transaction
Documents has been or will be duly executed by the Target Company and when
delivered in accordance with the terms hereof or thereof will constitute the
valid and binding obligation of the Target Company enforceable against the
Target Company in accordance with its terms, except as such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the enforcement
of, creditors' rights and remedies or by other equitable principles of general
application.
(c) Capitalization. The authorized, issued and outstanding capital
stock of the Company is set forth on Schedule 3.1(c). No shares of Common Stock
are entitled to preemptive or similar rights, nor is any holder of the Common
Stock entitled to preemptive or similar rights arising out of any agreement or
understanding with the Target Company by virtue of this Agreement. Except as
disclosed in Schedule 3.1(c), there are no outstanding options, warrants,
script, rights to subscribe to, registration rights, calls or commitments of any
character whatsoever relating to securities, rights or obligations convertible
into or exchangeable for, or giving any person any right to subscribe for or
acquire, any shares of Common Stock, or contracts, commitments, understandings,
or arrangements by which the Target Company or any Subsidiary is or may become
bound to issue additional shares of Common Stock, or securities or rights
convertible or exchangeable into shares of Common Stock. Neither the Target
Company nor any Subsidiary is in violation of any of the provisions of its
Certificate of Incorporation, bylaws or other charter documents.
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(d) Issuance of Securities. The shares of Consideration Stock have been
duly and validly authorized for issuance, offer and sale pursuant to this
Agreement and, when issued and delivered as provided hereunder against payment
in accordance with the terms hereof, shall be valid and binding obligations of
the Target Company enforceable in accordance with their respective terms.
(e) No Conflicts. The execution, delivery and performance of this
Agreement and the other Transaction Documents by the Target Company and the
consummation by the Target Company of the transactions contemplated hereby and
thereby do not and will not
(i) conflict with or violate any provision of its Certificate
of Incorporation or bylaws (each as amended through the date hereof) or
(ii) be subject to obtaining any consents except those
referred to in Section 3.1(f), 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,
acceleration or cancellation of, any agreement, indenture or instrument
to which the Target Company is a party, or
(iii) result in a violation of any law, rule, regulation,
order, judgment, injunction, decree or other restriction of any court
or governmental authority to which the Target Company or its
Subsidiaries is subject (including, but not limited to, those of other
countries and the federal and state securities laws and regulations),
or by which any property or asset of the Target Company or its
Subsidiaries is bound or affected, except in the case of clause (ii),
such conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations as would not, individually or in the
aggregate, have a Material Adverse Effect. The business of the Target
Company and its Subsidiaries is not being conducted in violation of any
law, ordinance or regulation of any governmental authority. (f)
Consents and Approvals. Except as specifically set forth in Schedule
3.1(f), neither the Target Company nor any Subsidiary is required to
obtain any consent, waiver, authorization or order of, or make any
filing or registration with, any court or other federal, state, local
or other governmental authority or other Person in connection with the
execution, delivery and performance by the Target Company of this
Agreement and each of the other Transaction Documents (together with
the consents, waivers, authorizations, orders, notices and filings
referred to in Schedule 3.1(f), the "Required Approvals").
(g) Litigation; Proceedings. Except as specifically disclosed in
Schedule 3.1(g), there is no action, suit, notice of violation, proceeding or
investigation pending or, to the best knowledge of the Target Company,
threatened against or affecting the Target Company or any of its Subsidiaries or
any of their respective properties before or by any court, governmental or
administrative agency or regulatory authority (federal, state, county, local or
foreign) which (i) relates to or challenges the legality, validity or
enforceability of any of the Transaction Documents or the shares of
Consideration Stock, (ii) could, individually or in the aggregate, have a
Material Adverse Effect or (iii) could, individually or in the aggregate,
materially impair the ability of the Target Company to perform fully on a timely
basis its obligations under the Transaction Documents.
(h) No Default or Violation. Except as set forth in Schedule 3.1(h)
hereto, neither the Target Company nor any Subsidiary
(i) is in default under or in violation of any indenture, loan
or credit agreement or any other agreement or instrument to which it is
a party or by which it or any of its properties is bound, except such
conflicts or defaults as do not have a Material Adverse Effect,
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(ii) is in violation of any order of any court, arbitrator or
governmental body, except for such violations as do not have a Material
Adverse Effect, or (iii) is in violation of any statute, rule or
regulation of any governmental authority which could (individually or
in the aggregate) (a) adversely affect the legality, validity or
enforceability of this Agreement, (b) have a Material Adverse Effect or
(c) adversely impair the Target Company's ability or obligation to
perform fully on a timely basis its obligations under this Agreement.
(i) Disclosure Documents. The Disclosure Documents are accurate in all
material respects and do not contain any untrue statement of material fact or
omit to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
(j) Non-Registered Offering. Neither the Target Company nor any Person
acting on its behalf has taken or will take any action (including, without
limitation, any offering of any securities of the Target Company under
circumstances which would require the integration of such offering with the
offering of the Securities under the Securities Act) which might subject the
offering, issuance or sale of the Securities to the registration requirements of
Section 5 of the Securities Act.
(k) Placing Agent. The Target Company accepts and agrees that Dungarvon
Associates, Inc. ("Dungarvon") is acting for ▇▇▇▇▇▇▇ and does not regard any
person other than ▇▇▇▇▇▇▇ as its customer in relation to this Agreement, and
that it has not made any recommendation to the Target Company, in relation to
this Agreement and is not advising the Target Company, with regard to the
suitability or merits of the ▇▇▇▇▇▇▇ Shares and in particular Dungarvon has no
duties or responsibilities to the Target Company for the best execution of the
transaction contemplated by this Agreement.
(l) Private Placement Representations. The Target Company
(i) has received and carefully reviewed such information and
documentation relating to ▇▇▇▇▇▇▇ that the Target Company has
requested, including, without limitation, ▇▇▇▇▇▇▇'▇ Confidential
Private Offering Memorandum dated June 17, 2004;
(ii) has had a reasonable opportunity to ask questions of and
receive answers from ▇▇▇▇▇▇▇ concerning the ▇▇▇▇▇▇▇ Shares, and all
such questions, if any, have been answered to the full satisfaction of
the Target Company; (iii) has such knowledge and expertise in financial
and business matters that it is capable of evaluating the merits and
risks involved in an investment in the ▇▇▇▇▇▇▇ Shares;
(iii) understands that ▇▇▇▇▇▇▇ has determined that the
exemption from the registration provisions of the Securities Act of
1933, as amended (the "Securities Act"), provided by Section 4(2) of
the Securities Act is applicable to the offer and sale of the ▇▇▇▇▇▇▇
Shares, based, in part, upon the representations, warranties and
agreements made by the Target Company herein; and
(iv) except as provided herein and in the Private Placement
Memorandum, dated June 17, 2004, no representations or warranties have
been made to the Target Company by ▇▇▇▇▇▇▇ or any agent, employee or
affiliate of ▇▇▇▇▇▇▇ and in entering into this transaction the Target
Company is not relying upon any information, other than the results of
independent investigation by the Target Company. ▇▇▇▇▇▇▇ acknowledges
and agrees that the Target Company makes no representation or warranty
with respect to the transactions contemplated hereby other than those
specifically set forth in Section 3.1 hereof.
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3.2 Representations and Warranties of ▇▇▇▇▇▇▇.
▇▇▇▇▇▇▇ hereby represents and warrants to the Target Company as
follows:
(a) Organization; Authority. ▇▇▇▇▇▇▇ is a corporation, duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
formation with the requisite power and authority to enter into and to consummate
the transactions contemplated hereby and by the other Transaction Documents and
otherwise to carry out its obligations hereunder and thereunder. The acquisition
of the shares of Consideration Stock to be purchased by ▇▇▇▇▇▇▇ hereunder has
been duly authorized by all necessary action on the part of ▇▇▇▇▇▇▇. This
Agreement has been duly executed and delivered by ▇▇▇▇▇▇▇ and constitutes the
valid and legally binding obligation of ▇▇▇▇▇▇▇, enforceable against it in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to, or affecting generally the enforcement of, creditors rights and
remedies or by other general principles of equity.
(b) Investment Intent. ▇▇▇▇▇▇▇ is acquiring the shares of Consideration
Stock to be purchased by it hereunder, for its own account for investment
purposes only and not with a view to or for distributing or reselling such
shares of Consideration Stock, or any part thereof or interest therein, without
prejudice, however, to ▇▇▇▇▇▇▇'▇ right, subject to the provisions of this
Agreement, at all times to sell or otherwise dispose of all or any part of such
shares of Consideration Stock in compliance with applicable federal and state
securities laws.
(c) Experience of ▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇, either alone or together with its
representatives, has such knowledge, sophistication and experience in business
and financial matters so as to be capable of evaluating the merits and risks of
an investment in the shares of Consideration Stock to be acquired by it
hereunder, and has so evaluated the merits and risks of such investment.
(d) Ability of ▇▇▇▇▇▇▇ to Bear Risk of Investment. ▇▇▇▇▇▇▇ is able to
bear the economic risk of an investment in the Securities to be acquired by it
hereunder and, at the present time, is able to afford a complete loss of such
investment.
(e) Access to Information. ▇▇▇▇▇▇▇ acknowledges acknowledges that it
has been afforded
(i) the opportunity to ask such questions as it has deemed
necessary of, and to receive answers from, representatives of the
Target Company concerning the terms and conditions of the Securities
offered hereunder and the merits and risks of investing in such
securities;
(ii) access to information about the Target Company and the
Target Company's financial condition, results of operations, business,
properties, management and prospects sufficient to enable it to
evaluate its investment in the Securities; and
(iii) the opportunity to obtain such additional information
which the Target Company possesses or can acquire without unreasonable
effort or expense that is necessary to make an informed investment
decision with respect to the investment and to verify the accuracy and
completeness of the information that it has received about the Target
Company.
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(f) Reliance. ▇▇▇▇▇▇▇ understands and acknowledges that
(i) the shares of Consideration Stock being offered and sold
to it hereunder are being offered and sold without registration under
the Securities Act in a private placement that is exempt from the
registration provisions of the Securities Act under Section 4(2) of the
Securities Act and
(ii) the availability of such exemption depends in part on,
and that the Target Company will rely upon the accuracy and
truthfulness of, the foregoing representations and ▇▇▇▇▇▇▇ hereby
consents to such reliance.
(g) Regulation ▇. ▇▇▇▇▇▇▇ understand and acknowledge that
(A) the shares of Consideration Stock have not been registered under
the Securities Act, are being sold in reliance upon an exemption from
registration afforded by Regulation S; and that such shares of Consideration
Stock have not been registered with any state securities commission or
authority;
(B) pursuant to the requirements of Regulation S, the shares of
Consideration Stock may not be transferred, sold or otherwise exchanged unless
in compliance with the provisions of Regulation S and/or pursuant to
registration under the Securities Act, or pursuant to an available exemption
hereunder; and
(C) ▇▇▇▇▇▇▇ is under no obligation to register the shares of
Consideration Stock under the Securities Act or any state securities law, or to
take any action to make any exemption from any such registration provisions
available. ▇▇▇▇▇▇▇ is not a U.S. person and is not acquiring the shares of
Consideration Stock for the account of any U.S. person; (B) no director or
executive officer of ▇▇▇▇▇▇▇ is a national or citizen of the United States; and
(C) it is not otherwise deemed to be a "U.S. Person" within the meaning of
Regulation ▇.
▇▇▇▇▇▇▇ was not formed specifically for the purpose of acquiring the
shares of Consideration Stock purchased pursuant to this Agreement.
▇▇▇▇▇▇▇ is purchasing the shares of Consideration Stock for its own
account and risk and not for the account or benefit of a U.S. Person as defined
in Regulation S and no other person has any interest in or participation in the
shares of Consideration Stock or any right, option, security interest, pledge or
other interest in or to the shares of Consideration Stock. ▇▇▇▇▇▇▇ understands,
acknowledges and agrees that it must bear the economic risk of its investment in
the shares of Consideration Stock for an indefinite period of time and that
prior to any such offer or sale, the Target Company may require, as a condition
to effecting a transfer of the shares of Consideration Stock, an opinion of
counsel, acceptable to the Target Company, as to the registration or exemption
therefrom under the Securities Act and any state securities acts, if applicable.
▇▇▇▇▇▇▇ will, after the expiration of the Restricted Period, as set
forth under Regulation S Rule 903(b)(3)(iii)(A), offer, sell, pledge or
otherwise transfer the shares of Consideration Stock only in accordance with
Regulation S, or pursuant to an available exemption under the Securities Act
and, in any case, in accordance with applicable state securities laws. The
transactions contemplated by this Agreement have neither been pre-arranged with
a purchaser who is in the U.S. or who is a U.S. Person, nor are they part of a
plan or scheme to evade the registration provisions of the United States federal
securities laws.
9
The offer leading to the sale evidenced hereby was made in an "offshore
transaction." For purposes of Regulation S, ▇▇▇▇▇▇▇ understands that an
"offshore transaction" as defined under Regulation S is any offer or sale not
made to a person in the United States and either (A) at the time the buy order
is originated, the purchaser is outside the United States, or the seller or any
person acting on his behalf reasonably believes that the purchaser is outside
the United States; or (B) for purposes of (1) Rule 903 of Regulation S, the
transaction is executed in, or on or through a physical trading floor of an
established foreign exchange that is located outside the United States or (2)
Rule 904 of Regulation S, the transaction is executed in, on or through the
facilities of a designated offshore securities market, and neither the seller
nor any person acting on its behalf knows that the transaction has been
prearranged with a buyer in the U.S.
Neither ▇▇▇▇▇▇▇ nor any affiliate or any person acting on ▇▇▇▇▇▇▇'▇
behalf, has made or is aware of any "directed selling efforts" in the United
States, which is defined in Regulation S to be any activity undertaken for the
purpose of, or that could reasonably be expected to have the effect of,
conditioning the market in the United States for any of the shares of
Consideration Stock being purchased hereby.
▇▇▇▇▇▇▇ understands that the Target Company is the seller of the shares
of Consideration Stock which are the subject of this Agreement, and that, for
purpose of Regulation S, a "distributor" is any underwriter, dealer or other
person who participates, pursuant to a contractual arrangement, in the
distribution of securities offered or sold in reliance on Regulation S and that
an "affiliate" is any partner, officer, director or any person directly or
indirectly controlling, controlled by or under common control with any person in
question. ▇▇▇▇▇▇▇ agrees that ▇▇▇▇▇▇▇ will not, during the Restricted Period set
forth under Rule 903(b)(iii)(A), act as a distributor, either directly or though
any affiliate, nor shall it sell, transfer, hypothecate or otherwise convey the
shares of Consideration Stock other than to a non-U.S. Person.
▇▇▇▇▇▇▇ acknowledges that the shares of Consideration Stock will bear a
legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN OFFERED AND SOLD IN AN
"OFFSHORE TRANSACTION" IN RELIANCE UPON REGULATION S AS PROMULGATED BY THE
SECURITIES AND EXCHANGE COMMISSION. ACCORDINGLY, THE SECURITIES REPRESENTED BY
THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
"SECURITIES ACT") AND MAY NOT BE TRANSFERRED OTHER THAN IN ACCORDANCE WITH
REGULATION S, PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT, OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, THE
AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE CANNOT BE THE SUBJECT OF HEDGING
TRANSACTIONS UNLESS SUCH TRANSACTIONS ARE CONDUCTED IN COMPLIANCE WITH THE
SECURITIES ACT. The Target Company acknowledges and agrees that ▇▇▇▇▇▇▇ makes no
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 3.2.
ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES
4.1 Manner of Offering. The Securities are being issued pursuant to
section 4(2) of the Securities Act and Regulation S thereunder. The ▇▇▇▇▇▇▇
Consideration Shares are being issued pursuant to section 4(2) of the Securities
Act and Rule 506 of Regulation D thereunder.
10
4.2 Notice of Certain Events. The Target Company shall, on a continuing
basis,
(i) advise ▇▇▇▇▇▇▇ promptly after obtaining knowledge of, and,
if requested by ▇▇▇▇▇▇▇, confirm such advice in writing, of (A) the
issuance by any state securities commission of any stop order
suspending the qualification or exemption from qualification of the
shares of Consideration Stock, for offering or sale in any
jurisdiction, or the initiation of any proceeding for such purpose by
any state securities commission or other regulatory authority, or (B)
any event that makes any statement of a material fact made by the
Target Company in Section 3.1 or in the Disclosure Documents untrue or
that requires the making of any additions to or changes in Section 3.1
or in the Disclosure Documents in order to make the statements therein,
in the light of the circumstances under which they are made, not
misleading,
(ii) use its best efforts to prevent the issuance of any stop
order or order suspending the qualification or exemption from
qualification of the Securities under any state securities or Blue Sky
laws, and
(iii) if at any time any state securities commission or other
regulatory authority shall issue an order suspending the qualification
or exemption from qualification of the Securities under any such laws,
and use its best efforts to obtain the withdrawal or lifting of such
order at the earliest possible time.
4.3 Blue Sky Laws. The Target Company agrees that it will execute all
necessary documents and pay all necessary state filing or notice fees to enable
the Target Company to sell the Securities to ▇▇▇▇▇▇▇.
4.4 Integration. The Target Company shall not and shall use its best
efforts to ensure that no Affiliate shall sell, offer for sale or solicit offers
to buy or otherwise negotiate in respect of any security (as defined in Section
2 of the Securities Act) that would be integrated with the offer or sale of the
Securities in a manner that would require the registration under the Securities
Act of the sale of the Securities to ▇▇▇▇▇▇▇.
4.5 Furnishing of Rule 144(c) Materials. The Target Company shall, for
so long as any of the Securities remain outstanding and during any period in
which the Target Company is not subject to Section 13 or 15(d) of the Exchange
Act, make available to any registered holder of the Securities ("Holder" or
"Holders") in connection with any sale thereof and any prospective purchaser of
such Securities from such Person, such information in accordance with Rule
144(c) promulgated under the Securities Act as is required to sell the
Securities under Rule 144 promulgated under the Securities Act.
4.6 Solicitation Materials. The Target Company shall not
(i) distribute any offering materials in connection with the
offering and sale of the shares of Consideration Stock other than the
Disclosure Documents and any amendments and supplements thereto
prepared in compliance herewith or
(ii) solicit any offer to buy or sell the shares of
Consideration Stock by means of any form of general solicitation or
advertising.
4.7 Listing of Common Stock. If the Common Stock is or shall become
listed on the OTCBB or on another exchange, the Target Company shall (a) use its
best efforts to maintain the listing of its Common Stock on the OTCBB or such
other exchange on which the Common Stock is then listed until two years from the
date hereof, and (b) shall provide to ▇▇▇▇▇▇▇ evidence of such listing.
11
4.8 Indemnification.
(a) Indemnification.
(i) The Target Company shall, notwithstanding termination of
this Agreement and without limitation as to time, indemnify and hold
harmless ▇▇▇▇▇▇▇ and its officers, directors, agents, employees and
affiliates, each Person who controls or ▇▇▇▇▇▇▇ (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act)
(each such Person, a "Control Person") and the officers, directors,
agents, employees and affiliates of each such Control Person, to the
fullest extent permitted by applicable law, from and against any and
all losses, claims, damages, liabilities, costs (including, without
limitation, costs of preparation and attorneys' fees) and expenses
(collectively, "Losses"), as incurred, arising out of, or relating to,
a breach or breaches of any representation, warranty, covenant or
agreement by the Target Company under this Agreement or any other
Transaction Document.
(ii) ▇▇▇▇▇▇▇ shall, notwithstanding termination of this
Agreement and without limitation as to time, indemnify and hold
harmless the Target Company, its officers, directors, agents and
employees, each Control Person and the officers, directors, agents and
employees of each Control Person, to the fullest extent permitted by
application law, from and against any and all Losses, as incurred,
arising out of, or relating to, a breach or breaches of any
representation, warranty, covenant or agreement by ▇▇▇▇▇▇▇ under this
Agreement or the other Transaction Documents, except for Losses solely
arising out of negligence, bad faith or breach of this Agreement.
(iii) The Target Company and ▇▇▇▇▇▇▇ acknowledge that in the
SEC's opinion, directors, officers and persons controlling a company
subject to the Securities Act can not be indemnified for liabilities
arising under the Securities Act by such company.
(b) Conduct of Indemnification Proceedings. If any Proceeding shall be
brought or asserted against any Person entitled to indemnity hereunder (an
"Indemnified Party"), such Indemnified Party promptly shall notify the Person
from whom indemnity is sought (the "Indemnifying Party") in writing, and the
Indemnifying Party shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to the Indemnified Party and the payment of all
fees and expenses incurred in connection with defense thereof; provided, that
the failure of any Indemnified Party to give such notice shall not relieve the
Indemnifying Party of its obligations or liabilities pursuant to this Agreement,
except (and only) to the extent that it shall be finally determined by a court
of competent jurisdiction (which determination is not subject to appeal or
further review) that such failure shall have proximately and materially
adversely prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate counsel in
any such Proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party or
Parties unless: (1) the Indemnifying Party has agreed to pay such fees and
expenses; or (2) the Indemnifying Party shall have failed promptly to assume the
defense of such Proceeding and to employ counsel reasonably satisfactory to such
Indemnified Party in any such Proceeding; or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified Party
and the Indemnifying Party, and such Indemnified Party shall have been advised
by counsel that a conflict of interest is likely to exist if the same counsel
were to represent such Indemnified Party and the Indemnifying Party (in which
case, if such Indemnified Party notifies the Indemnifying Party in writing that
12
it elects to employ separate counsel at the expense of the Indemnifying Party,
the Indemnifying Party shall not have the right to assume the defense of the
claim against the Indemnified Party but will retain the right to control the
overall Proceedings out of which the claim arose and such counsel employed by
the Indemnified Party shall be at the expense of the Indemnifying Party). The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld. No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending Proceeding in respect of
which any Indemnified Party is a party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such Proceeding.
All fees and expenses of the Indemnified Party to which the Indemnified
Party is entitled hereunder (including reasonable fees and expenses to the
extent incurred in connection with investigating or preparing to defend such
Proceeding in a manner not inconsistent with this Section) shall be paid to the
Indemnified Party, as incurred, within ten (10) Business Days of written notice
thereof to the Indemnifying Party. No right of indemnification under this
Section shall be available as to a particular Indemnified Party if the
Indemnifying Party obtains a non-appealable final judicial determination that
such Losses arise solely out of the negligence or bad faith of such Indemnified
Party in performing the obligations of such Indemnified Party under this
Agreement or a breach by such Indemnified Party of its obligations under this
Agreement.
(c) Contribution. If a claim for indemnification under this Section is
unavailable to an Indemnified Party or is insufficient to hold such Indemnified
Party harmless for any Losses in respect of which this Section would apply by
its terms (other than by reason of exceptions provided in this Section), then
each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses in such proportion as is appropriate to reflect the relative
benefits received by the Indemnifying Party on the one hand and the Indemnified
Party on the other and the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions or omissions that resulted in
such Losses as well as any other relevant equitable considerations. The relative
fault of such Indemnifying Party and Indemnified Party shall be determined by
reference to, among other things, whether there was a judicial determination
that such Losses arise in part out of the negligence or bad faith of the
Indemnified Party in performing the obligations of such Indemnified Party under
this Agreement or the Indemnified Party's breach of its obligations under this
Agreement. The amount paid or payable by a party as a result of any Losses shall
be deemed to include any attorneys' or other fees or expenses incurred by such
party in connection with any Proceeding to the extent such party would have been
indemnified for such fees or expenses if the indemnification provided for in
this Section was available to such party.
(d) Non-Exclusivity. The indemnity and contribution agreements
contained in this Section are in addition to any obligation or liability that
the Indemnifying Parties may have to the Indemnified Parties.
4.9 Sale of ▇▇▇▇▇▇▇ Consideration Shares. ▇▇▇▇▇▇▇ shall assist the Target
Company in setting up and maintaining a trading account at a registered broker
in the United Kingdom to facilitate the sale of the ▇▇▇▇▇▇▇ Consideration
Shares. Broker's commissions in the trading account shall not exceed one half
percent (0.5%).
4.10 Lock Up by ▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇ shall not sell, transfer or assign all or
any of the shares of Consideration Stock for a period of two (2) years following
the Closing, without the written consent of the Target Company, which consent
may be withheld in the Target Company's sole discretion. The Consideration Stock
13
shall be maintained in certificate form until ▇▇▇▇▇▇▇ is permitted to sell the
Consideration Stock. ▇▇▇▇▇▇▇ shall allow Target Company or its representatives
access to the certificates for the Consideration Stock for inspection during
ordinary business hours upon reasonable notice until ▇▇▇▇▇▇▇ is permitted to
sell the Consideration Stock.
4.11 Short Sales and Pledges. ▇▇▇▇▇▇▇, its officers, directors, and
Affiliates, and the assignees of Consideration Stock, agree that they will not
enter into any Short Sales (as hereinafter defined) or hedging transactions
until the date that ▇▇▇▇▇▇▇ no longer owns the shares of Consideration Stock.
For purpose hereof, a "Short Sale" shall mean either (a) a sale of Common Stock
by ▇▇▇▇▇▇▇ that is marked as a short sale and that is made at a time when there
is no equivalent offsetting long position in the Common Stock by ▇▇▇▇▇▇▇ or (b)
a sale against an offsetting long position in the Common Stock during the two
(2) year period following the Closing. ▇▇▇▇▇▇▇ shall not pledge or hypothecate
the Consideration Stock except for pledges involving all of ▇▇▇▇▇▇▇'▇
securities, including the Consideration Stock, for commercial borrowings that
shall not exceed ten percent (10%) of the net asset value of all of such
securities.
ARTICLE V
MISCELLANEOUS
5.1 Fees and Expenses. Except as set forth in this Agreement, each party
shall pay the fees and expenses of its advisers, counsel, accountants and other
experts, if any, and all other expenses incurred by such party incident to the
negotiation, preparation, execution, delivery and performance of this Agreement.
The Target Company shall pay all stamp and other taxes and duties levied in
connection with the issuance of the shares of Consideration Stock pursuant
hereto. ▇▇▇▇▇▇▇ shall be responsible for any taxes payable by ▇▇▇▇▇▇▇ that may
arise as a result of the investment hereunder or the transactions contemplated
by this Agreement or any other Transaction Document. The Target Company agrees
to pay a total ▇▇▇▇▇▇▇'▇ counsel $7,500 for legal fees associated with the
transactions contemplated by this Agreement at Closing. The Target Company shall
pay all costs, expenses, fees and all taxes incident to and in connection with:
(A) the issuance and delivery of the Securities, (B) the exemption from
registration of the Securities for offer and sale to ▇▇▇▇▇▇▇ under the
securities or Blue Sky laws of the applicable jurisdictions, and (C) the
preparation of certificates for the Securities (including, without limitation,
printing and engraving thereof), and (D) all fees and expenses of counsel and
accountants of the Target Company.
5.2 Entire Agreement This Agreement, together with all of the Exhibits
annexed hereto, and any other Transaction Document contains the entire
understanding of the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, oral or written, with respect
to such matters. This Agreement shall be deemed to have been drafted and
negotiated by both parties hereto and no presumptions as to interpretation,
construction or enforceability shall be made by or against either party in such
regard.
5.3 Notices. Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be deemed to have been duly given
upon facsimile transmission (with written transmission confirmation report) at
the number designated below (if delivered on a Business Day during normal
business hours where such notice is to be received), or the first Business Day
following such delivery (if delivered other than on a Business Day during normal
business hours where such notice is to be received) whichever shall first occur.
14
The addresses for such communications shall be:
If to the Target Company: Quintek Technologies, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: President and CEO
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
If to ▇▇▇▇▇▇▇: ▇▇▇▇▇▇▇ Park Investments PLC
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇
Tel: ▇▇.▇▇▇.▇▇▇.▇▇▇▇
Fax: ▇▇.▇▇▇.▇▇▇.▇▇▇▇
With copies to: Gottbetter & Partners, LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or such other address as may be designated hereafter by notice given pursuant to
the terms of this Section 5.3.
5.4 Amendments; Waivers. No provision of this Agreement may be waived or
amended except in a written instrument signed, in the case of an amendment, by
both the Target Company and ▇▇▇▇▇▇▇, or, in the case of a waiver, by the party
against whom enforcement of any such waiver is sought. No waiver of any default
with respect to any provision, condition or requirement of this Agreement shall
be deemed to be a continuing waiver in the future or a waiver of any other
provision, condition or requirement hereof, nor shall any delay or omission of
either party to exercise any right hereunder in any manner impair the exercise
of any such right accruing to it thereafter.
5.5 Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
5.6 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their respective successors and permitted
assigns. The assignment by a party of this Agreement or any rights hereunder
shall not affect the obligations of such party under this Agreement.
5.7 No 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.
5.8 Governing Law; Venue; Service of Process. The parties hereto
acknowledge that the transactions contemplated by this Agreement and the
exhibits hereto bear a reasonable relation to the State of New York. The parties
hereto agree that the internal laws of the State of New York shall govern this
Agreement and the exhibits hereto, including, but not limited to, all issues
related to usury. Any action to enforce the terms of this Agreement or any of
its exhibits, or any other Transaction Document shall be brought exclusively in
the state and/or federal courts situated in the County and State of New York. If
and only if New York declines jurisdiction within the State of New York, such
action shall be brought in the State and County where the Target Company's
15
principle place of business is situated. Service of process in any action by
▇▇▇▇▇▇▇ or the Target Company to enforce the terms of this Agreement may be made
by serving a copy of the summons and complaint, in addition to any other
relevant documents, by commercial overnight courier to the other party at its
principal address set forth in this Agreement.
5.9 Survival. The representations and warranties of the Target Company and
▇▇▇▇▇▇▇ contained in Article III and the agreements and covenants of the parties
contained in Article IV and this Article V shall survive the Closing.
5.10 Counterpart Signatures. This Agreement may be executed in two or more
counterparts, all of which when taken together 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, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
5.11 Publicity. The Target Company and ▇▇▇▇▇▇▇ shall consult with each other
in issuing any press releases or otherwise making public statements with respect
to the transactions contemplated hereby and neither party shall issue any such
press release or otherwise make any such public statement without the prior
written consent of the other, which consent shall not be unreasonably withheld
or delayed, unless counsel for the disclosing party deems such public statement
to be required by applicable federal and/or state securities laws. Except as
otherwise required by applicable law or regulation, the Target Company will not
disclose to any third party (excluding its legal counsel, accountants and
representatives) the names of ▇▇▇▇▇▇▇.
5.12 Severability. In case any one or more of the provisions of this
Agreement shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Agreement shall not
in any way be affected or impaired thereby and the parties will attempt to agree
upon a valid and enforceable provision which shall be a reasonable substitute
therefore, and upon so agreeing, shall incorporate such substitute provision in
this Agreement. 5.13 Limitation of Remedies. With respect to claims by the
Target Company or any person acting by or through the Target Company, or by
▇▇▇▇▇▇▇ or any person acting through ▇▇▇▇▇▇▇, for remedies at law or at equity
relating to or arising out of a breach of this Agreement, liability, if any,
shall, in no event, include loss of profits or incidental, indirect, exemplary,
punitive, special or consequential damages of any kind.
[ SIGNATURE PAGE FOLLOWS ]
16
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first indicated above.
Target Company:
Quintek Technologies, Inc.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇
Title: Chief Financial Officer
▇▇▇▇▇▇▇:
Dungarvon Associates, Inc. on behalf of
▇▇▇▇▇▇▇ Park Investments Plc.
By:
-------------------------------------------
Name:
Title:
17
Schedule 3.1(a)
Subsidiaries
18
Schedule 3.1(c)
Capitalization and Registration Rights
Common Stock
Total
Options and Warrants
19
Schedule 3.1(d)
Equity and Equity Equivalent Securities
20
Schedule 3.1(e)
Conflicts
21
Schedule 3.1(f)
Consents and Approvals
22
Schedule 3.1(g)
Litigation
23
Schedule 3.1(h)
Defaults and Violations
24
EXHIBIT A
ESCROW AGREEMENT
ESCROW AGREEMENT (this "Agreement"), dated as of July 7, 2004, by and
between Quintek Technologies, Inc., a California corporation with its principal
place of business at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the
"Target Company"); Gottbetter & Partners, LLP with its principal place of
business at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Escrow Agent"); and
▇▇▇▇▇▇▇ Park Investments Plc, a corporation organized under the laws of England
and Wales with its offices at ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ("▇▇▇▇▇▇▇").
Recitals
A. Simultaneously with the execution of this Agreement,
▇▇▇▇▇▇▇ and the Target Company entered into a Stock Purchase Agreement (the
"Stock Purchase Agreement"), dated as of the date hereof and incorporated herein
by reference, pursuant to which the Target Company has agreed to issue and
▇▇▇▇▇▇▇ has agreed that the ▇▇▇▇▇▇▇ Consideration Shares shall be deposited into
escrow pursuant to this Agreement, including fifty percent (50%) of the ▇▇▇▇▇▇▇
Consideration Shares to be deposited into escrow as Downside Price Protection
(the "▇▇▇▇▇▇▇ Escrow Shares").
B. The Escrow Agent is willing to act as escrow agent pursuant
to the terms of this Agreement with respect to the purchase of the shares of
Consideration Stock.
C. All capitalized terms used but not defined herein shall
have the meanings ascribed thereto in the Stock Purchase Agreement.
NOW, THEREFORE, IT IS AGREED:
1. Deposit into Escrow. At Closing, the Target Company shall (i)
deposit the ▇▇▇▇▇▇▇ Consideration Shares with the Escrow Agent, (ii) deliver
blank stock powers (the "Stock Powers") for the ▇▇▇▇▇▇▇ Escrow Shares to the
Escrow Agent and (iii) deposit the Consideration Stock with the Escrow Agent.
The Escrow Agent shall hold the ▇▇▇▇▇▇▇ Consideration Shares, the Consideration
Stock and the Stock Powers in escrow when delivered.
2. Terms of Escrow.
(a) If the Market Value of the Common Stock two years after Closing is
less than the Closing Price, the Target Company shall sell to ▇▇▇▇▇▇▇ the number
of ▇▇▇▇▇▇▇ Escrow Shares (the "▇▇▇▇▇▇▇ Protection Shares") equal to (a) the
▇▇▇▇▇▇▇ Consideration Shares multiplied by (b) the Percentage Decrease, at a
purchase price of 1p per ▇▇▇▇▇▇▇ Consideration Share (the "Escrow Purchase
Price"). The "Percentage Decrease" shall be equal to 1 - Market Value/the
Closing Price. "Market Value" shall be the average of the ten (10) closing bid
prices per share of the Common Stock during the ten (10) trading days
immediately preceding the two year anniversary of the Closing.
Within three (3) Business Days of the two year anniversary of the
Closing, ▇▇▇▇▇▇▇ shall (i) send a notice ("Sale Notice") to the Target Company
and the Escrow Agent of the ▇▇▇▇▇▇▇ Protection Shares to be sold by the Target
Company to ▇▇▇▇▇▇▇, if any, and (ii) deposit the Escrow Purchase Price with the
Escrow Agent, if necessary. Within fourteen (14) Business Days of the Target
Company's and the Escrow Agent's receipt of the Sale Notice and Escrow Agent's
receipt of the Escrow Purchase Price, the Escrow Agent is authorized and
directed (i) to pay the Escrow Purchase Price to the Target Company, if any,
(ii) to deliver the ▇▇▇▇▇▇▇ Protection Shares, if any, and the Stock Powers to
▇▇▇▇▇▇▇, (iii) to deliver the remaining ▇▇▇▇▇▇▇ Escrow Shares, if any, to the
Target Company, and (iv) to deliver the Stock Powers to the Target Company if
the total number of ▇▇▇▇▇▇▇ Protection Shares is zero.
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(b) If at any time before September 30, 2004, the ▇▇▇▇▇▇▇ Consideration
Shares are admitted for trading on the London Stock Exchange plc (the "London
Exchange"), the Escrow Agent is authorized and directed to distribute, within
fourteen (14) Business Days of such admittance, (i) the Consideration Stock to
▇▇▇▇▇▇▇ and (ii) fifty percent (50%) of the ▇▇▇▇▇▇▇ Consideration Shares to the
Target Company. If the ▇▇▇▇▇▇▇ Consideration Shares are not admitted for trading
on the London Exchange by September 30, 2004, the Escrow Agent is authorized and
directed to distribute, no later than October 5, 2004, (i) the Consideration
Stock to the Target Company and (ii) the ▇▇▇▇▇▇▇ Consideration Shares to
▇▇▇▇▇▇▇.
3. Duties and Obligations of the Escrow Agent.
(a) The parties hereto agree that the duties and obligations of the
Escrow Agent shall be only those obligations herein specifically provided and no
other. The Escrow Agent's duties are those of a depositary only, and the Escrow
Agent shall incur no liability whatsoever, except as a direct result of its
willful misconduct or gross negligence in the performance of its duties
hereunder;
(b) The Escrow Agent may consult with counsel of its choice, and shall
not be liable for any action taken, suffered or omitted to be taken by it in
accordance with the advice of such counsel;
(c) The Escrow Agent shall not be bound in any way by the terms of any
other agreement to which ▇▇▇▇▇▇▇ and the Target Company are parties, whether or
not the Escrow Agent has knowledge thereof, and the Escrow Agent shall not in
any way be required to determine whether or not any other agreement has been
complied with by ▇▇▇▇▇▇▇ and the Target Company, or any other party thereto. The
Escrow Agent shall not be bound by any modification, amendment, termination,
cancellation, rescission or supersession of this Agreement unless the same shall
be in writing and signed jointly by ▇▇▇▇▇▇▇ and the Target Company and agreed to
in writing by the Escrow Agent;
(d) If the Escrow Agent shall be uncertain as to its duties or rights
hereunder or shall receive instructions, claims or demands which, in its
opinion, are in conflict with any of the provisions of this Agreement, the
Escrow Agent shall be entitled to refrain from taking any action other than
keeping safely the Consideration (as defined below) or taking certain action
until the Escrow Agent is directed otherwise in writing jointly by ▇▇▇▇▇▇▇ and
the Target Company or by a final judgment of a court of competent jurisdiction;
(e) The Escrow Agent shall be fully protected in relying upon any
written notice, demand, certificate or document which the Escrow Agent, in good
faith, believes to be genuine. The Escrow Agent shall not be responsible for the
sufficiency or accuracy of the form, execution, validity or genuineness of
documents or securities now or hereafter deposited hereunder or of any
endorsement thereon, or for any lack of endorsement thereon, or for any
description therein; nor shall the Escrow Agent be responsible or liable in any
respect on account of the identity, authority or rights of the persons executing
or delivering or purporting to execute or deliver any such document, security or
endorsement;
(f) The Escrow Agent shall not be required to institute legal
proceedings of any kind and shall not be required to defend any legal
proceedings which may be instituted against it or in respect of the
Consideration;
(g) If the Escrow Agent at any time, in its sole discretion, deems it
necessary or advisable to relinquish custody of any of the Securities (to the
extent delivered to the Escrow Agent pursuant hereto, the "Consideration"), it
26
may do so by delivering the same to another Person that agrees to act as escrow
agent hereunder and whose substitution for the Escrow Agent is agreed upon in
writing by ▇▇▇▇▇▇▇ and the Target Company; provided, however, that such
successor Escrow Agent must be resident in the United States. If no such escrow
agent is selected within three (3) days after the Escrow Agent gives notice to
▇▇▇▇▇▇▇ and the Target Company of the Escrow Agent's desire to so relinquish
custody of the Consideration and resign as Escrow Agent, then the Escrow Agent
may do so by delivering the Consideration to the clerk or other proper officer
of a state or federal court of competent jurisdiction situate in the state and
county of New York. The fee of any court officer shall be borne by the Target
Company. Upon such delivery, the Escrow Agent shall be discharged from any and
all responsibility or liability with respect to the Consideration and this
Agreement and each of the Target Company and ▇▇▇▇▇▇▇ shall promptly pay all
monies it may owe to the Escrow Agent for its services hereunder, including, but
not limited to, reimbursement of its out-of-pocket expenses pursuant to
paragraph (i) below;
(h) This Agreement shall not create any fiduciary duty on the Escrow
Agent's part to ▇▇▇▇▇▇▇ or the Target Company, nor disqualify the Escrow Agent
from representing either party hereto in any dispute with the other, including
any dispute with respect to the Purchase Agreement or Debenture; provided,
however, that in the event of such dispute, the Escrow Agent shall have the
right to commence an interpleader action in any court of competent jurisdiction
of the state of New York or of the United States located in the county and state
of New York, deposit the Consideration with such court;
(i) The parties acknowledge and agree that the Escrow Agent is counsel
to ▇▇▇▇▇▇▇. The parties agree to, and agree not to object to, the Escrow Agent's
engagement as Escrow Agent hereunder;
(j) Upon the full performance of this Agreement, the Escrow Agent shall
be deemed released and discharged of any further obligations hereunder.
4. Indemnification.
(a) ▇▇▇▇▇▇▇ hereby indemnifies and holds free and harmless the Escrow
Agent from any and all losses, expenses, liabilities and damages (including but
not limited to reasonable attorney's fees, and amounts paid in settlement)
resulting from claims asserted by the Target Company against the Escrow Agent
with respect to the performance of any of the provisions of this Agreement;
(b) The Target Company hereby indemnifies and holds free and harmless
the Escrow Agent from any and all losses, expenses, liabilities and damages
(including but not limited to reasonable attorney's fees, and amount paid in
settlement) resulting from claims asserted by ▇▇▇▇▇▇▇ against the Escrow Agent
with respect to the performance of any of the provisions of this Agreement;
(c) ▇▇▇▇▇▇▇ and the Target Company, jointly and severally, hereby
indemnify and hold the Escrow Agent harmless from and against any and all
losses, damages, taxes, liabilities and expenses that may be incurred by the
Escrow Agent, arising out of or in connection with its acceptance of appointment
as the Escrow Agent hereunder and/or the performance of its duties pursuant to
this Agreement, the Purchase Agreement and the Securities, including, but not
limited to, all legal costs and expenses of the Escrow Agent incurred defending
itself against any claim or liability in connection with its performance
hereunder, provided that the Escrow Agent shall not be entitled to any indemnity
for any losses, damages, taxes, liabilities or expenses that directly result
from its willful misconduct or gross negligence in its performance as Escrow
Agent hereunder
(d) In the event of any legal action or proceeding involving any of the
parties to this Agreement which is brought to enforce or otherwise adjudicate
any of the rights or obligations of the parties hereunder, the non-prevailing
party or parties shall pay the legal fees of the prevailing party or parties and
the legal fees, if any, of the Escrow Agent.
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5. Miscellaneous.
(a) All notices, including Notices of Conversion and Notices of
Exercise, objections, requests, demands and other communications sent to any
party hereunder shall be deemed duly given if (x) in writing and sent by
facsimile transmission to the Person for whom intended if addressed to such
Person at its facsimile number set forth below or such other facsimile number as
such Person may designate by notice given pursuant to the terms of this Section
5 and (y) the sender has confirmation of transmission:
(i) If to the Target Company:
Quintek Technologies, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: CEO
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
(ii) If to ▇▇▇▇▇▇▇:
▇▇▇▇▇▇▇ Park Investments PLC
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇
Tel: ▇▇.▇▇▇.▇▇▇.▇▇▇▇
Fax: ▇▇.▇▇▇.▇▇▇.▇▇▇▇
(iii) If to the Escrow Agent:
Gottbetter & Partners, LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(b) This Agreement has been prepared, negotiated and delivered in the
state of New York and shall be governed by and construed and enforced in
accordance with the laws of the state of New York applicable to contracts
entered into and performed entirely within New York, without giving effect to
the principles of New York law relating to the conflict of laws.
(c) This Agreement may be executed in two or more counterparts, all of
which when taken together 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, it being understood that both parties need not
sign the same counterpart. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
(d) This Agreement shall be binding upon and inure to the benefit of
the parties and their successors and permitted assigns. The assignment by a
party of this Agreement or any rights hereunder shall not affect the obligations
of such party under this Agreement.
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6. Termination of Escrow.
The term of this Escrow Agreement shall begin upon the date hereof and
shall continue until terminated upon the earlier to occur of (i) the ▇▇▇▇▇▇▇
Escrow Shares are fully distributed or (ii) the written agreement of the parties
to terminate this Agreement. Upon the termination of this Escrow Agreement
pursuant to subsection (ii), the Escrow Agent shall distribute any of the
▇▇▇▇▇▇▇ Escrow Shares then held by it pursuant to the terms of the written
agreement of the parties.
[ SIGNATURE PAGE FOLLOWS ]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed the day and year first above written.
The Target Company:
Quintek Technologies, Inc.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇
Title: Chief Financial Officer
▇▇▇▇▇▇▇:
Dungarvon Associates, Inc. on behalf of
▇▇▇▇▇▇▇ Park Investments Plc.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Administrative Director
Escrow Agent:
Gottbetter & Partners, LLP
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇
Title: Managing Partner
30
EXHIBIT B
Quintek Technologies, Inc.
OFFICER'S CERTIFICATE
I, ▇▇▇▇▇▇ ▇▇▇▇, being the Chief Financial Officer of Quintek
Technologies, Inc., a California corporation (the "Target Company"), pursuant to
Section 2.2(a)(ii) of that certain Stock Purchase Agreement (the "Purchase
Agreement"), dated as of July 7, 2004, by and between the Target Company and
▇▇▇▇▇▇▇ Park Investments PLC, do hereby certify on behalf of the Target Company
that attached hereto is a copy of the resolutions duly adopted by the Board of
Directors of the Target Company authorizing the Target Company to execute and
deliver the Transaction Documents, as such term is defined in the Purchase
Agreement and to enter into the transactions contemplated thereby.
IN WITNESS WHEREOF, I have executed this Officer's Certificate on
behalf of the Target Company this 7th day of July, 2004. Quintek Technologies,
Inc.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇, Chief Financial Officer
31