Exhibit 4.1
PLANGRAPHICS, INC.
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
Dated as of August 21, 2006
PLANGRAPHICS, INC.
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
Dated as of August 21, 2006
TABLE OF CONTENTS
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ARTICLE I PURCHASE AND SALE OF SHARES
1.1 Purchase and Sale of Series A Preferred Stock at the Closing 1
1.2 Warrant 1
1.3 The Warrant Shares 2
1.4 Security 2
1.5 Closing 3
1.6 Use of Proceeds 3
1.7 Piggyback Registration Rights 3
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY
2.1 Organization and Corporate Power 4
2.2 Authorization 4
2.3 Government Approvals 4
2.4 Authorized and Outstanding Stock 4
2.5 Subsidiaries 5
2.6 Financial Statements 5
2.7 Events Subsequent to the Date of the Financial Statements 5
2.8 Litigation 6
2.9 Compliance with Laws and Other Instruments 6
2.10 Taxes 6
2.11 Real Property 6
2.12 Personal Property 6
2.13 Patents, Trademarks, etc 7
2.14 Governmental and Industrial Approvals 7
2.15 Securities Act 7
2.16 Insurance Coverage 7
2.17 Labor Relations 7
2.18 Transactions with Affiliates and Employees 8
2.19 No Brokers or Finders 8
2.20 Assumptions, Guarantees, etc 8
2.21 Additional Securities 8
ARTICLE III INVESTMENT REPRESENTATIONS
3.1 Representations and Warranties 8
3.2 Permitted Sales; Legends 9
ARTICLE IV CONDITIONS OF PURCHASER'S OBLIGATIONS
4.1 Effect of Conditions 10
4.2 Representations and Warranties 10
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4.3 Performance 10
4.4 Certified Documents, etc 10
4.5 No Material Adverse Change 10
4.6 Consents and Waivers 10
4.7 Articles of Incorporation 10
4.8 Security Agreement 10
ARTICLE V CONDITIONS OF THE COMPANY'S OBLIGATION
ARTICLE VI ADDITIONAL AGREEMENTS
6.1 Preemptive Right 11
6.2 Financial Statement Covenant 12
6.3 Purchase Option 12
ARTICLE VII MISCELLANEOUS
7.1 Termination 13
7.2 Survival of Representations 13
7.3 Parties in Interest 13
7.4 Amendments and Waivers 13
7.5 Notices 13
7.6 Expenses 14
7.7 Counterparts 14
7.8 Effect of Headings 14
7.9 Governing Law; Jurisdiction 14
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SERIES A PREFERRED STOCK PURCHASE AGREEMENT
This Series A Preferred Stock Purchase Agreement (the "Agreement") is made
this 21st day of August, 2006, by and among PlanGraphics, Inc., a Colorado
corporation (the "Company") and Nutmeg Group, LLC, a U.S. Virgin Islands limited
liability company (the "Purchaser").
In consideration of the mutual undertakings set forth herein, the parties
hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
1.1 Purchase and Sale of Series A Preferred Stock at the Closing. At the
Closing (as herein defined), the Company will sell to the Purchaser, an
aggregate of Five Hundred (500) shares of Series A 12% Redeemable Preferred
Stock, $0.001 par value per share (the "Series A Preferred Stock"), at a price
of One Thousand Dollars ($1,000) per share, for an aggregate purchase price of
Five Hundred Thousand Dollars ($500,000) (the "Purchase Price") payable as
provided in Section 1.3. The Series A Preferred Stock shall have the rights,
terms and privileges set forth on Exhibit A attached hereto. The shares of
Series A Preferred Stock purchased pursuant to this Section 1.1 at the Closing
are referred to herein as the "Purchased Shares."
1.2 Warrant. At the Closing, the Company will issue to the Purchaser a
warrant to purchase shares of the Company's stock, on the terms and conditions
set forth in the Warrant in the form of Exhibit B attached hereto (the
"Warrant"). The Warrant shall be exercisable on the earlier of (i) the
consummation of an M&A Transaction and distribution of the consideration
received by the Company in such M&A Transaction to the Company's shareholders,
(ii) the completion of a Spin-Off Transaction, (iii) the Series A Redemption
Date (as defined in the Amendment to the Articles of Incorporation set forth in
Exhibit A hereto) but only if the Company completes the acquisition of a Target
Company (as defined herein) on or prior to the Series A Redemption Date, (iv)
forty-five (45) days after a Target Company is acquired by the Company but only
if such acquisition is completed after the Series A Redemption Date, or (v) the
first year anniversary of the Closing Date. The Warrant shall be exercisable for
that number of shares of common stock, no par value per share (the "Common
Stock") that will constitute eighty (80%) of the Common Stock outstanding on a
fully diluted basis, determined immediately after the exercise of the Warrant.
(a) For purposes of this Agreement, "M&A Transaction" is defined as
any merger, reorganization, sale of all or substantially all of the assets of
the Company or PlanGraphics, Inc., a Maryland corporation and wholly owned
subsidiary of the Company ("PG-Maryland"), or any other transaction pursuant to
which the beneficial ownership of the securities possessing more than 50% of the
total combined voting power of the Company' s outstanding securities is acquired
by another person or entity.
(b) For purposes of this Agreement, "Spin-Off Transaction" is defined
as the Company's dividend or distribution of all of the outstanding capital
stock of PG-Maryland to the shareholders of the Company (excluding Purchaser),
or a similar transaction pursuant to which the Company is divested of all
ownership interests in PG-Maryland.
1.3 The Warrant Shares. The Company has authorized and reserved and hereby
covenants that it will continue to reserve, free of any preemptive rights or
encumbrances, a sufficient number of its authorized but previously unissued
shares of Common Stock, to satisfy the rights of conversion of the holder of the
Warrant. The shares of Common Stock issued or issuable upon conversion of the
Warrant are referred to herein as the "Warrant Shares."
1.4 Security. Pursuant to the terms and conditions set forth in the
Security Agreement between the Company, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and the Purchaser in
the form of Exhibit C attached hereto, the Company's obligations to redeem the
Series A Preferred Stock will be secured by security interests in the following
collateral:
(a) all of the accounts receivable of PG-Maryland (the "A/R"), subject
to the existing first priority security interest held by Rockland Credit Finance
LLC on the A/R;
(b) all of the assets of PG-Maryland other than the A/R (the "Other
Assets"), subject to the existing first priority security interest held by
Rockland Credit Finance LLC on the Other Assets; and
(c) the shares, and the proceeds from options to acquire shares, of
the Company's stock held by ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ (the "▇▇▇▇▇▇▇▇▇ Equity");
provided, however, that, upon obtaining a written guarantee of the Company's
obligations under this Agreement from GenuTec Business Solutions ("GenuTec"), or
from another company or person of equal or greater financial strength than
GenuTec as approved by Purchaser, which approval shall not be unreasonably
withheld, such guarantee will replace the security interest in the A/R, the
Other Assets and the ▇▇▇▇▇▇▇▇▇ Equity (the "Original Collateral"), in which case
the Original Collateral will be released from any security interest in favor of
the Purchaser and the Purchaser will take all steps reasonably requested by the
Company to confirm such release; provided, further, that any foreclosure or
other enforcement of the security interest in the Original Collateral must be
effected seriatim, so that, in the event of a default in the redemption
obligation that triggers the Purchaser's right to enforce its security
interests, the Purchaser must first take all steps reasonably necessary to
collect amounts that are due for the redemption from the A/R only, and then, if
and to the extent that the redemption obligation cannot be reasonably satisfied
from the A/R, Purchaser must take all steps reasonably necessary to collect
amounts that are due for the redemption from the Other Assets only, and finally,
if and to the extent that the redemption obligation cannot be satisfied from the
A/R or the Other Assets, then and only then may Purchaser seek to foreclose or
otherwise enforce the security interest in the ▇▇▇▇▇▇▇▇▇ Equity; and provided,
further that, upon the acquisition by the Company of capital stock in GenuTec or
in another company of equal or greater value than GenuTec, in exchange for
certain assets of the Company or the PG-Maryland, the capital stock of GenuTec
or such other company that is received by the Company in such acquisition may be
substituted for the Original Collateral as the only security, in which case the
Original Collateral will be released from any security interest in favor of the
Purchaser and Purchaser will take all steps reasonably requested by the Company
to confirm such release.
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1.5 Closing. Subject to the satisfaction or waiver of the conditions set
forth in Articles IV and V hereof, the purchase of the Purchased Shares, the
Warrant pursuant to Section 1.1 shall be made concurrently with the execution of
this Agreement at a closing (the "Closing") to be held at the offices of ▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, at
9:00 A.M. on August 21, 2006 (the "Closing Date"), or at such other time and on
such other date as the Purchaser and the Company may mutually agree. At the
Closing, the Purchaser shall pay the Purchase Price to the Company at the
Closing as payment for the Purchased Shares and the Warrant. Payment shall be
made by wire transfer payable in immediately available federal funds. At the
Closing, the Company will deliver to the Purchaser one or more certificates
representing the Purchased Shares purchased by the Purchaser at the Closing and
the Warrant.
1.6 Use of Proceeds. The Company shall use the proceeds received upon the
sale of the Purchased Shares for (1) payment to Sherb & Company amounts due for
completion of its 2005 annual report and subsequent quarterly reports, (2)
satisfaction of any portion of the Company's debt, (3) general working capital
purposes and (4) payment of fees, costs and expenses incurred by the Company in
connection with the transactions contemplated by this Agreement.
1.7 Piggyback Registration Rights.
(a) Whenever the Company proposes to register any of its securities
under the Securities Act, either pursuant to an underwritten primary
registration on behalf of the Company or pursuant to an underwritten secondary
registration on behalf of a holder or holders of the Company's securities (other
than on Form ▇-▇, ▇▇▇▇ ▇-▇ or any successor form) and the registration form to
be used may be used for the registration of any Warrant Shares (a "Piggyback
Registration"), the Company will give prompt written notice to each holder of
Warrant Shares of its intention to effect such a registration and will include
in such registration all Warrant Shares, with respect to which the Company has
received written requests for inclusion within ten (10) days after delivery of
the Company's notice to each holder of Warrant Shares.
(b) If the managing underwriter(s) advise the Company in writing that
in their opinion, the number of Warrant Shares requested to be included in such
registration exceeds the number which can be sold in such offering without
adversely affecting the marketability or pricing thereof, the Company will
include in such registration up to an aggregate amount determined advisable by
such underwriter(s): (i) first, any shares of Common Stock that the Company
desires to register; (ii) second, any shares of Common Stock requested to be
registered by the holder(s) of Common Stock pursuant to which the Registration
Statement is being filed and to which the holders of Warrant Shares hereunder
are receiving Piggyback Registration; and (iii) pro rata among the holders of
Warrant Shares on the basis of the number of Warrant Shares which are requested
to be registered hereunder.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
In order to induce the Purchaser to enter into this Agreement and to
purchase the Purchased Shares, the Company hereby represents and warrants to the
Purchaser as follows, except as set forth on the disclosure schedules attached
hereto to be dated as of the Closing, which exceptions shall refer to the
Sections of this Agreement to which they apply and shall be set forth in
reasonable detail therein:
2.1 Organization and Corporate Power. The Company is a corporation duly
organized and validly existing under the laws of Colorado and has all requisite
corporate power and authority to own its properties and to carry on its business
as presently conducted. The Company is duly licensed or qualified to do business
as a foreign corporation in each jurisdiction wherein the character of its
property, or the nature of the activities presently conducted by it, makes such
qualification necessary.
2.2 Authorization. The Company has all necessary corporate power and has
taken all necessary corporate action required for the due authorization,
execution, delivery and performance by the Company of this Agreement and any
other agreements or instruments executed by the Company in connection herewith
or therewith, including exhibits hereto (collectively, the "Related
Agreements"), and the consummation of the transactions contemplated herein or
therein, and for the due authorization, issuance and delivery of the Purchased
Shares and the Warrant. Sufficient shares of authorized but unissued Common
Stock have been reserved for issuance upon conversion of the Warrant. The
issuance of the Purchased Shares does not, and the issuance of the Warrant
Shares upon conversion of the Purchased Shares will not, require any further
corporate action and is not and will not be subject to any preemptive right,
right of first refusal or the like. Assuming due execution and delivery of this
Agreement and the Related Agreements and payment for the Purchased Shares, this
Agreement, the Related Agreements and the other agreements and instruments
executed by the Company in connection herewith or therewith will each be a valid
and binding obligation of the Company enforceable in accordance with their
respective terms.
2.3 Government Approvals. No consent, approval, license or authorization
of, or designation, declaration or filing with, any court or governmental
authority is or will be required on the part of the Company in connection with
the execution, delivery and performance by the Company of this Agreement, any of
the Related Agreements and any other agreements or instruments executed by the
Company in connection herewith or therewith, or in connection with the issuance
of the Purchased Shares or the Warrant Shares upon conversion of the Warrant,
except for (i) those which have already been made or granted, and (ii) the
filing with the Securities and Exchange Commission (the "Commission") and
applicable state securities commissions of a Form D pursuant to Regulation D
under the Securities Act of 1933 (the "Act").
2.4 Authorized and Outstanding Stock. Before giving effect to the
transactions to be effected at the Closing, the authorized capital stock of the
Company will consist of (i) 2,000,000,000 shares designated as Common Stock of
which 97,214,418 are issued and outstanding; and (ii) 20,000,000 shares
designated as Preferred Stock, consisting of 500 shares of Series A Preferred
Stock with the rights, terms and privileges set forth in Exhibit A, none of
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which are issued and outstanding. All issued and outstanding shares of capital
stock are, and when issued in accordance with the terms hereof, all Purchased
Shares and the Warrant Shares issued upon conversion of the Warrant, will be,
duly and validly authorized, validly issued and fully paid and non-assessable
and free from any restrictions on transfer, except for restrictions imposed by
federal or state securities or "blue-sky" laws and except for those imposed
pursuant to this Agreement, any Related Agreement. Except as a result of the
purchase and sale of the Purchase Shares and as set forth in all reports,
schedules, forms, statements and other documents filed by the Company under the
Securities Act and the Exchange Act, including pursuant to Section 13(a) or
15(d) thereof, for the two years preceding the date hereof (the foregoing
materials, including the exhibits thereto and documents incorporated by
reference therein, being collectively referred to herein as the "SEC Reports"),
there are no outstanding warrants, options, commitments, preemptive rights,
rights to acquire or purchase, conversion rights or demands of any character
relating to the capital stock or other securities of the Company.
2.5 Subsidiaries. All of the direct and indirect subsidiaries of the
Company are set forth on Schedule 2.5 (each, a "Subsidiary"). The Company owns,
directly or indirectly, all of the capital stock or other equity interests of
each Subsidiary free and clear of any liens, and all the issued and outstanding
shares of capital stock of each Subsidiary are validly issued and are fully
paid, non-assessable and free of preemptive and similar rights to subscribe for
or purchase securities.
2.6 Financial Statements. The Company has previously delivered to the
Purchaser (i) the audited financial statements of the Company for the fiscal
year ended September 30, 2004, (ii) the unaudited financial statements of the
Company for the fiscal year ended September 30, 2005, and (iii) the unaudited
balance sheet of the Company as of February 28, 2006, and the related statements
of earnings, stockholders' equity and changes in financial condition for the
five months then ended (the "Most Recent Financial Statements" and together with
the financial statements for the year ended September 30, 2004 and 2005, the
"Financial Statements"). The Financial Statements are complete and correct in
all material respects, are in accordance with the books and records of the
Company and present fairly in accordance with generally accepted accounting
principles applied on a basis consistent with prior periods the financial
condition and results of operations of the Company as of the dates and for the
periods shown.
2.7 Events Subsequent to the Date of the Financial Statements. Since the
date of the Most Recent Financial Statements, except as specifically disclosed
in the SEC Reports, (i) there has been no event, occurrence or development that
has had a material adverse effect on the Company, (ii) the Company has not
incurred any liabilities (contingent or otherwise) other than (A) trade payables
and accrued expenses incurred in the ordinary course of business consistent with
past practice and (B) liabilities not required to be reflected in the Company's
financial statements pursuant to GAAP or required to be disclosed in filings
made with the Commission, (iii) the Company has not altered its method of
accounting, (iv) the Company has not declared or made any dividend or
distribution of cash or other property to its stockholders or purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital
stock and (v) the Company has not issued any equity securities to any officer,
director or affiliate, except pursuant to existing Company stock option plans.
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2.8 Litigation. There is no litigation or governmental proceeding or
investigation pending or, to the knowledge of the Company threatened, against
the Company or affecting any of the Company's properties or assets, or against
any officer, key employee or stockholder of the Company in his capacity as such,
nor, to the knowledge of the Company, has there occurred any event or does there
exist any condition on the basis of which any litigation, proceeding or
investigation might properly be instituted with any substantial chance of
recovery where such recovery would likely have an adverse effect on the Company.
Neither the Company nor any officer of the Company in his capacity as such is,
to the knowledge of the Company, in default with respect to any order, writ,
injunction, decree, ruling or decision of any court, commission, board or other
government agency which may materially and adversely affect the business or
assets of the Company.
2.9 Compliance with Laws and Other Instruments. The Company is in
compliance with all of the provisions of this Agreement and of its articles of
incorporation and by-laws, and in all material respects with the provisions of
each mortgage, indenture, lease, license, other agreement or instrument,
judgment, decree, judicial order, statute, and regulation by which it is bound
or to which it or any of its properties are subject. Neither the execution,
delivery or performance of this Agreement and the Related Agreements, nor the
offer, issuance, sale or delivery of the Purchased Shares or the Warrant, with
or without the giving of notice or passage of time, or both, will violate, or
result in any breach of, or constitute a default under, or result in the
imposition of any encumbrance upon any asset of the Company pursuant to any
provision of the Company's articles of incorporation or by-laws, or any statute,
rule or regulation, contract, lease, judgment, decree or other document or
instrument by which the Company is bound or to which the Company or any of its
respective properties are subject.
2.10 Taxes. Except for matters that would not, individually or in the
aggregate, have or reasonably be expected to result in a material adverse
effect, the Company and each Subsidiary has filed all necessary federal, state
and foreign income and franchise tax returns and has paid or accrued all taxes
shown as due thereon, and the Company has no knowledge of a tax deficiency which
has been asserted or threatened against the Company or any Subsidiary.
2.11 Real Property.
(a) The Company has good and marketable title to, and owns free and
clear of all liens and encumbrances, all real property owned by the Company, and
there is no material violation by the Company of any law, regulation or
ordinance (including without limitation laws, regulations or ordinances relating
to zoning, environmental, city planning or similar matters) relating to any real
property owned, leased or subleased by the Company.
(b) There are no defaults by the Company or, to the knowledge of the
Company, by any other party thereto, which might curtail in any respect the
present use of the Company's real property. The performance by the Company of
this Agreement and the Related Agreements will not result in the termination of,
or in any increase of any amounts payable under, any lease of real property.
2.12 Personal Property. Except for property sold or otherwise disposed of
in the ordinary course of business since the date of the Most Recent Financial
Statements, the Company owns free and clear of any liens or encumbrances, all of
the personal property reflected as owned by the Company in the balance sheet
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contained in the Most Recent Financial Statements, and all other material items
of personal property acquired by the Company through the date hereof. All
material items of such personal property used in the operation of the business
of the Company are in good operating condition, normal wear and tear excepted.
2.13 Patents, Trademarks, etc. The Company owns or possesses adequate
licenses or other rights to use all patents, patent applications, trademarks,
trademark applications, service marks, service ▇▇▇▇ applications, trade names,
copyrights, manufacturing processes, formulae, trade secrets and know how
(collectively, "Intellectual Property") necessary or desirable to the conduct of
their business as presently conducted. To the knowledge of the Company, the
operations of the Company do not infringe upon or conflict with the rights of
any other person under any Intellectual Property. No claim is pending or, to the
knowledge of the Company, threatened to the effect that any such Intellectual
Property owned or licensed by the Company, or which the Company otherwise has
the right to use, is invalid or unenforceable by the Company or infringes upon
the rights of any third party, and there is no known basis for any such claim
(whether, or not pending or threatened).
2.14 Governmental and Industrial Approvals. The Company has all the
material permits, licenses, orders, franchises and other rights and privileges
of all federal, state, local or foreign governmental or regulatory bodies
necessary for the Company to conduct its business as presently conducted. All
such permits, licenses, orders, franchises and other rights and privileges are
in full force and effect and, to the knowledge of the Company, no suspension or
cancellation of any of them is threatened, and none of such permits, licenses,
orders, franchises or other rights and privileges will be affected by the
consummation of the transactions contemplated in this Agreement and the Related
Agreements.
2.15 Securities Act. The Company has complied and will comply with all
applicable federal or state securities laws in connection with the issuance and
sale of the Purchased Shares and the issuance of the Warrant. Neither the
Company nor anyone acting on its behalf has offered any of the Purchased Shares,
or similar securities, or solicited any offers to purchase any of such
securities, so as to bring the issuance and sale of the Purchased Shares under
the registration provisions of the Act.
2.16 Insurance Coverage. The Company and the Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which the
Company and the Subsidiaries are engaged, including, but not limited to,
directors and officers insurance coverage at least equal to the aggregate
Purchase Price. Neither the Company nor any Subsidiary has any reason to believe
that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business without a significant increase in cost.
2.17 Labor Relations. No material labor dispute exists or, to the knowledge
of the Company, is imminent with respect to any of the employees of the Company
which could reasonably be expected to result in a Material Adverse Effect.
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2.18 Transactions with Affiliates and Employees. Except as set forth in the
SEC Reports, and as attached hereto, none of the officers or directors of the
Company and, none of the employees of the Company is presently a party to any
transaction with the Company or any Subsidiary (other than for services as
employees, officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
to or from any officer, director or such employee or, to the knowledge of the
Company, any entity in which any officer, director, or any such employee has a
substantial interest or is an officer, director, trustee or partner, in each
case in excess of $60,000 other than (i) for payment of salary or consulting
fees for services rendered, (ii) reimbursement for expenses incurred on behalf
of the Company and (iii) for other employee benefits, including stock option
agreements under any stock option plan of the Company.
2.19 No Brokers or Finders. Except for MidSouth Capital Inc. of Atlanta,
Georgia, no person has or will have, as a result of the transactions
contemplated by this Agreement, any right, interest or claim against or upon the
Company for any commission, fee or other compensation as a finder or broker
because of any act or omission by the Company.
2.20 Assumptions, Guarantees, etc. of Indebtedness of Other Persons. The
Company has not assumed, guaranteed, endorsed or otherwise become directly or
contingently liable on or for any indebtedness of any other person, except
guarantees by endorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of business.
2.21 Additional Securities. Subject to Section 1.7, the Company will not
register any securities prior to registering the Warrant Shares.
ARTICLE III
INVESTMENT REPRESENTATIONS
3.1 Representations and Warranties. The Purchaser hereby represents and
warrants to the Company as follows:
(a) Assuming due execution and delivery by the Company of the
Agreement and the Related Agreements, this Agreement and the Related Agreements
to which the Purchaser is party constitute legal, valid and binding obligations
of the Purchaser, enforceable against the Purchaser in accordance with their
respective terms;
(b) The Purchaser has been advised and understands that the Purchased
Shares, the Warrant and the Warrant Shares have not been registered under the
Act, on the grounds that no distribution or public offering of such securities
is to be effected, and that in this connection, the Company is relying in part
on the representations of the Purchaser set forth in this Article III;
(c) The Purchaser is purchasing the Purchased Shares and the Warrant
for investment purposes, for its own account and not with a view to, or for sale
in connection with, any distribution thereof in violation of federal or state
securities laws;
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(d) By reason of its business or financial experience, the Purchaser
has the capacity to protect his own interest in connection with the transactions
contemplated hereunder;
(e) The Purchaser is aware of the Company's business affairs and
financial condition and has acquired sufficient information about the Company to
reach an informed and knowledgeable decision to acquire the Purchased Shares and
the Warrant; provided, however, that nothing in this Section 3.1 shall be deemed
to vitiate or limit the representations, warranties and covenants of the Company
contained in this Agreement;
(f) No person has or will have, as a result of the transaction
contemplated by this Agreement, any right, interest or claim against or upon the
Company or any of its subsidiaries for any commission, fee or other compensation
as a finder or broker because of any act or omission by the Purchaser;
(g) The Purchaser has all necessary power and has taken all necessary
action required for the due authorization, execution, delivery and performance
by the Purchaser of this Agreement and the Related Agreements. The execution,
delivery and performance of this Agreement and the Related Agreements will not
violate or conflict with any agreement, contract or other instrument to which
the Purchaser is a party; and
(h) The Purchaser is an "accredited investor" as such term is defined
in Rule 501 of Regulation D under the Act.
3.2 Permitted Sales; Legends. Notwithstanding the foregoing
representations, the Company agrees that it will permit (i) a distribution of
Purchased Shares or the Warrant by the Purchaser to one or more of its
affiliates, and (ii) a sale or other transfer of any of the Purchased Shares or
the Warrant upon obtaining assurance satisfactory to the Company that such
transaction is exempt from the registration requirements of, or is covered by an
effective registration statement under, the Act and applicable state securities
or "blue-sky" laws, including, without limitation, receipt of an unqualified
opinion to such effect of counsel reasonably satisfactory to the Company. The
certificates representing the Purchased Shares, the Warrant and any Warrant
Shares shall bear a legend evidencing such restriction on transfer substantially
in the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 (THE "ACT") OR THE SECURITIES LAWS OF ANY STATE. THE SHARES MAY
NOT BE TRANSFERRED BY SALE, ASSIGNMENT, PLEDGE OR OTHERWISE UNLESS (I)
A REGISTRATION STATEMENT FOR THE SHARES UNDER THE ACT IS IN EFFECT OR
(II) THE CORPORATION HAS RECEIVED AN OPINION OF COUNSEL, WHICH OPINION
IS REASONABLY SATISFACTORY TO THE CORPORATION, TO THE EFFECT THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE ACT."
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ARTICLE IV
CONDITIONS OF PURCHASER'S OBLIGATIONS
4.1 Effect of Conditions. The obligation of the Purchaser to purchase and
pay for the Purchased Shares at the Closing shall be subject at his election to
the satisfaction of each of the conditions stated in the following Sections of
this Article.
4.2 Representations and Warranties. The representations and warranties of
the Company contained in this Agreement shall be true and correct on the date of
the Closing, subject to adjustments for operations in the ordinary course of
business which are in the aggregate not materially adverse, with the same effect
as though made on and as of such date, and the Purchaser shall have received a
certificate dated as of the Closing signed on behalf of the Company to that
effect.
4.3 Performance. The Company shall have performed and complied with all of
the agreements, covenants and conditions contained in this Agreement required to
be performed or complied with by it or them at or prior to the Closing, and the
Purchaser shall have received a certificate dated as of the Closing signed on
behalf of the Company to that effect.
4.4 Certified Documents, etc. Counsel for the Purchaser shall have received
a copy of the Company's Articles of Incorporation, as amended, certified by the
Secretary of State of the State of Colorado and copies of the Company's By-Laws
certified by its Secretary, as well as any and all other documents, including
certificates as to votes adopted and incumbency of officers and certificates
from appropriate authorities as to the legal existence of the Company, which the
Purchaser or its counsel may reasonably request.
4.5 No Material Adverse Change. The business, properties, assets or
financial condition of the Company shall not have been materially adversely
affected since the date of this Agreement, whether by fire, casualty, act of God
or otherwise, and there shall have been no other changes in the business,
properties, assets, or financial condition of the Company or any of its
Subsidiaries that would have a material adverse effect on their respective
businesses or assets.
4.6 Consents and Waivers. The Company shall have obtained all consents or
waivers necessary to execute this Agreement and the other agreements and
documents contemplated herein, to issue the Purchased Shares and the Warrant and
to carry out the transactions contemplated hereby and thereby, including but not
limited to the consent of Rockland Credit Finance LLC. All corporate and other
action and governmental filings necessary to effectuate the terms of this
Agreement, the Related Agreements, the Purchased Shares, the Warrant and other
agreements and instruments executed and delivered by the Company in connection
herewith shall have been made or taken.
4.7 Articles of Incorporation. The Amendment to the Articles of
Incorporation of the Company, as set forth on Exhibit A hereto, shall have been
filed with the Secretary of State of Colorado and effective as of the date of
the Closing.
4.8 Security Agreement. A Security Agreement in the form of Exhibit C
attached hereto (the "Security Agreement") shall have been executed by the
Company and the Purchaser.
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ARTICLE V
CONDITIONS OF THE COMPANY'S OBLIGATION
The Company's obligation to sell the Purchased Shares shall be subject to
the accuracy on the date of the Closing of the representations and warranties of
the Purchaser and performance by the Purchaser of all applicable agreements,
covenants and conditions contained in this Agreement and required to be
performed as of such date.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Preemptive Right.
(a) Right of Purchase. The Company hereby grants to the Purchaser, so
long as he shall own, of record or beneficially, any shares of Series A
Preferred Stock, the right to purchase all or part of its pro rata share of New
Securities (as defined in Section 6.1(b) below) which the Company, from time to
time, proposes to sell and issue. The Purchaser's pro rata share, for purposes
of this preemptive right, is the ratio of the number of shares of Series A
Preferred Stock which such Holder owns to the total number of shares of issued
Series A Preferred Stock then outstanding.
(b) Definition of New Securities. "New Securities" shall mean any
capital stock of the Company whether now authorized or not, and rights, options
or warrants to purchase capital stock, and securities of any type whatsoever
that are, or may become convertible into or exchangeable for capital stock,
issued on or after the date hereof; provided that the term "New Securities" does
not include (i) the Series A Preferred Stock, (ii) the Warrant, (iii) the
Warrant Shares issuable upon conversion of the Warrant, (iv) Common Stock issued
as a stock dividend to holders of Common Stock or upon any stock split,
subdivision or combination of shares of Common Stock or in connection with an
acquisition, merger or recapitalization, (v) Series A Preferred Stock issued as
a dividend to holders of Series A Preferred Stock or upon any stock split,
subdivision or combination of Series A Preferred Stock, (vi) the aggregate
number of shares of Common Stock issued upon awards of stock or exercise of
options and warrants pursuant to and in accordance with any equity incentive
plan of the Company, or (vii) any merger, reorganization, acquisition or similar
transaction involving issuance of the Company's capital stock.
(c) Notice from the Company. In the event the Company proposes to
undertake an issuance of New Securities, it shall give the Purchaser written
notice of its intention, describing the type of New Securities and the price and
the terms upon which the Company proposes to issue the same. The Purchaser shall
have twenty (20) days from the date of receipt of any such notice to agree to
purchase up to the Purchaser's pro rata share of such New Securities for the
price and upon the terms specified in the notice by giving written notice to the
Company and stating therein the quantity of New Securities to be purchased. The
closing of the purchase of the New Securities shall be at the Company's
principal place of business within fifteen (15) days following the expiration of
the 20-day period, or at such other time or place as the Company and the
Purchaser may determine.
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(d) Sale by the Company. In the event the Purchaser fails to exercise
in full its preemptive right, the Company shall have ninety (90) days thereafter
to sell the New Securities with respect to which the Purchaser's option was not
exercised, at a price and upon terms comparable to those specified in the
Company's notice. To the extent the Company does not sell all the New Securities
offered within said 90-day period, the Company shall not thereafter issue or
sell such New Securities without first again offering such securities to the
Purchaser in the manner provided above.
6.2 Financial Statement Covenant. The Company agrees to use reasonable best
efforts to complete the audit of the Company's financial statements as of and
for the periods ended September 30, 2005 and to file all required periodic
reports with the SEC in order to bring the Company current in its filings prior
to the Series A Redemption Date.
6.3 Purchase Option. At any time prior to the Series A Redemption Date, the
Purchaser shall have the option to sell, assign or otherwise transfer to the
Company all or a portion of the capital stock or other ownership interests in
any entity (the "Target Company") subject to the following conditions:
(a) the Company's reasonable satisfaction, in all material respects
with the results of its due diligence regarding the Target Company;
(b) approval of such transaction by the Company's board of directors,
which approval shall not be unreasonably withheld;
(c) negotiation and execution of such agreements and documents
necessary to consummate such transaction, including an operating agreement
providing for the Purchaser's management of the Target Company;
(d) the Purchaser's waiver of dividends accruing on the Purchased
Shares between the date of the Company's acquisition of the Target Company and
the Series A Redemption Date;
(e) the Target Company's assumption of all costs and expenses related
to the Company being a public company, including any auditor, legal, filing and
related fees incurred by the Company related to the Company's filings with the
SEC; and
(f) if requested by the Company, the Purchaser's or Target Company's
loan (upon terms comparable to the preferred shares) of up to $150,000 to the
Company to be used to complete a Spin-Off Transaction.
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ARTICLE VII
MISCELLANEOUS
7.1 Termination. This Agreement may be terminated by (a) mutual agreement
of the Purchaser and the Company, or (b) by either the Purchaser or the Company,
by written notice to the other party, if the Closing has not been consummated on
or before August 25, 2006; provided, however, that no such termination will
affect the right of any party to ▇▇▇ for any breach by the other party (or
parties).
7.2 Survival of Representations. The representations and warranties of the
Purchaser contained in Section 3.2 shall survive for the applicable statute of
limitations and those of the Company contained in Article II shall survive the
execution and delivery hereof and the Closing until the date three (3) years
from the Closing Date
7.3 Parties in Interest. Except as otherwise set forth herein, all
covenants, agreements, representations, warranties and undertakings contained in
this Agreement shall be binding on and shall inure to the benefit of the
respective successors and assigns of the parties hereto (including transferees
of any of the Purchased Shares or the Warrant). The parties agree to maintain in
confidence the terms of the purchase of the Purchased Shares hereunder and all
information provided to the Purchaser under Article II hereof, except that (i)
the Purchaser may disclose such terms and information to his affiliates in the
ordinary course, (ii) the Company may disclose such terms and information to its
stockholders in the ordinary course or as required by law, and (iii) the
Purchaser and the Company may make press releases concerning this transaction,
subject to the approval of the Purchaser or the Company, as the case may be.
7.4 Amendments and Waivers. Amendments or additions to this Agreement may
be made, agreements with any decision of the Company may be made, and compliance
with any term, covenant, agreement, condition or provision set forth herein may
be omitted or waived (either generally or in a particular instance and either
retroactively or prospectively) upon the written consent of the Company and the
Purchaser. Prompt notice of any such amendment or waiver shall be given to any
person who did not consent thereto. This Agreement (including the Schedules and
Exhibits annexed hereto, which are an integral part of this Agreement)
constitutes the full and complete agreement of the parties with respect to the
subject matter hereof.
7.5 Notices. All notices, reports and other communications required or
permitted hereunder shall be in writing and shall be hand delivered, sent by
facsimile, national courier service or via Internet in .pdf form to the Company,
at the address listed below, or the Purchaser at the following address, which
shall be the same address reflected on the records of the Company until such
time as the Company receives notice of a change:
The Company: PlanGraphics, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
---------------------------
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with a copy to: ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇.▇▇▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇
-----------------------
The Purchaser: The Nutmeg Group, LLC
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
-------------------
with copy to: ▇▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
Each such notice, report or other communication shall, for all purposes
hereof, be treated as effective or having been given when delivered if delivered
personally, or, if transmitted via the Internet in .pdf form, by national
courier service, or if sent by facsimile with written confirmation, at the
earlier of (i) 24 hours after confirmation of transmission by the sending
facsimile or computer machine or (ii) by courier receipt.
7.6 Expenses. Each party hereto will pay its own expenses in connection
with the transactions contemplated hereby.
7.7 Counterparts. This Agreement and any exhibit hereto may be executed in
multiple counterparts, each of which shall constitute an original but all of
which shall constitute but one and the same instrument. One or more counterparts
of this Agreement or any exhibit hereto may be delivered via facsimile, with the
intention that they shall have the same effect as an original counterpart
hereof.
7.8 Effect of Headings. The article and section headings herein are for
convenience only and shall not affect the construction hereof.
7.9 Governing Law; Jurisdiction. This Agreement shall be deemed a contract
made under the laws of the State of Illinois and together with the rights and
obligations of the parties hereunder, shall be construed under and governed by
the laws of such state. Each party agrees that all legal proceedings concerning
the interpretations, enforcement and defense of the transactions contemplated by
this Agreement and the Related Agreements (whether brought against a party
hereto or its respective affiliates, directors, officers, shareholders,
employees or agents) shall be commenced exclusively in the state and federal
courts sitting in the County of ▇▇▇▇, Illinois. Each party hereby irrevocably
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submits to the exclusive jurisdiction of the state and federal courts sitting in
the County of ▇▇▇▇, Illinois for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein (including with respect to the enforcement of any of the Related
Agreements), and hereby irrevocably waives, and agrees not to assert in any
suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is improper
or inconvenient venue for such proceeding. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law.
[Signature page follows.]
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IN WITNESS WHEREOF, the parties hereto have executed this Series A
Preferred Stock Purchase Agreement as an instrument under seal as of the date
first set forth above.
COMPANY:
PLANGRAPHICS, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President and CEO
PURCHASER:
NUTMEG GROUP, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Manager
(Signature Page to Stock Purchase Agreement)
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