Exhibit 10.22
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT dated as of December 30, 1999, between
VIISAGE TECHNOLOGY, INC., a Delaware corporation with principal executive
offices located at ▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the
"Company"), and the undersigned ("Buyer").
W I T N E S S E T H:
WHEREAS, Buyer desires to purchase from Company, and the Company desires to
issue and sell to the Buyer, upon the terms and subject to the conditions of
this Agreement, (i) 1,500 shares of the Company's Series B 7% Convertible
Preferred Stock, par value $.001 per share (the "Preferred Shares") and (ii)
50,000 Common Stock Purchase Warrants in the form attached hereto as Exhibit A
(the "Warrants") on the Funding Date (as defined in Section VII below):
WHEREAS, upon the terms and subject to the designations, preferences and
rights set forth in the Company's Certificate of Designations to the Company's
Certificate of Incorporation in the form attached hereto as Exhibit B (the
"Certificate of Designation"), the Preferred Shares are convertible into shares
of the Company's common stock, par value $0.001 per share (the "Common Stock");
and
WHEREAS, the Warrants, upon the terms and subject to the conditions
therein, will be exercisable to purchase shares of Common Stock for a period of
three (3) years from and after the Funding Date.
NOW THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto, intending to be legally bound, hereby
agree as follows:
I. PURCHASE AND SALE OF PREFERRED SHARES AND WARRANTS
A. Transaction. Subject to the terms and conditions contained herein, Buyer
hereby agrees to purchase from the Company, and the Company hereby agrees to
issue and sell to the Buyer in a transaction exempt from the registration and
prospectus delivery requirements of the Securities Act of 1933, as amended (the
"Securities Act"), the Preferred Shares and the Warrants.
A. Purchase Price; Form of Payment.
1. The purchase price for the Preferred Shares and the Warrants to be
purchased by Buyer hereunder shall be $1,500,000, less deductions for fees and
expenses (the "Purchase Price").
1. Buyer shall pay the Purchase Price by wire transfer of immediately
available funds to the escrow agent (the "Escrow Agent") identified in those
certain Escrow Instructions dated as of the date hereof, a copy of which is
attached hereto as Exhibit C (the "Escrow Instructions"). Simultaneously against
receipt by the Escrow Agent of the Purchase Price, the Company shall deliver to
the Escrow Agent or its designated depository one or more duly authorized,
issued and executed certificates (in the name of Buyer or, if the Company has
been notified otherwise, in the name of Buyer's nominee) evidencing the
Preferred Shares and the Warrants which the Buyer is purchasing. By executing
and delivering this Agreement, Buyer and the Company each hereby agrees to
observe the terms and conditions of the Escrow Instructions, all of which are
incorporated herein by reference as if fully set forth herein.
A. Method of Payment. Payment into escrow of the Purchase Price shall be
made by wire transfer of immediately available funds to:
Chase Manhattan Bank
1211 Avenue of the Americas
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
For the Account of: ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ LLP Attorney Trust Account
Account# 967-123445
ABA Reference# ▇▇▇-▇▇▇-▇▇▇
Simultaneously with the execution of this Agreement, the Buyer shall deposit
with the Escrow Agent the Purchase Price and the Company shall deposit with the
Escrow Agent the Preferred Shares and the Warrants representing the securities
to be purchased.
I. BUYER'S REPRESENTATIONS, WARRANTIES; ACCESS TO INFORMATION;
INDEPENDENT INVESTIGATION.
Buyer represents and warrants to and covenants and agrees with the Company
as follows:
A. Buyer is purchasing the Preferred Shares, the Warrants, the Common Stock
issuable upon exercise of the Warrants (the "Warrant Shares") and the shares of
Common Stock issuable upon conversion of the Preferred Shares (the "Conversion
Shares" and, collectively with the Preferred Shares, the Warrants and the
Warrant Shares, the "Securities") for its own account, for investment purposes
only and not with a view towards or in connection with the public sale or
distribution thereof in violation of the Securities Act.
A. Buyer is (i) an "accredited investor" within the meaning of Rule 501 of
Regulation D under the Securities Act, (ii) experienced in making investments of
the kind contemplated by this Agreement, (iii) capable, by reason of its
business and financial experience, of evaluating the relative merits and risks
of an investment in the Securities, and (iv) able to afford the loss of its
investment in the Securities.
A. Buyer understands that the Securities are being offered and sold by the
Company in reliance on an exemption from the registration requirements of the
Securities Act and equivalent state securities and "blue sky" laws, and that the
Company is relying upon the accuracy of, and Buyer's compliance with, Buyer's
representations, warranties and covenants set forth in this Agreement to
determine the availability of such exemption and the eligibility of Buyer to
purchase the Securities;
A. Buyer has been furnished with or provided access to all materials
relating to the business, financial position and results of operations of the
Company, and all other materials requested by Buyer to enable it to make an
informed investment decision with respect to the Securities.
A. Buyer acknowledges that it has had access to all press releases issued
by the Company since December 31, 1998 and has had access to copies of the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1998, and all other reports and documents heretofore filed by the Company with
the Commission pursuant to the Securities Act and the Securities Exchange Act of
1934, as amended (the "Exchange Act"), since November 8, 1996 (collectively, the
"Commission Filings").
A. Buyer acknowledges that in making its decision to purchase the
Securities it has been given an opportunity to ask questions of, and to receive
answers from, the Company's executive officers, directors and management
personnel concerning the terms and conditions of the private placement of the
Securities by the Company.
A. Buyer understands that the Securities have not been approved or
disapproved by the Commission or any state securities commission and that the
foregoing authorities have not reviewed any documents or instruments in
connection with the offer and sale to it of the Securities and have not
confirmed or determined the adequacy or accuracy of any such documents or
instruments.
A. This Agreement has been duly and validly authorized, executed and
delivered by Buyer and is a valid and binding agreement of Buyer enforceable
against it in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally. B. Neither Buyer nor its
affiliates nor any person acting on its or their behalf will enter into, at any
time prior to the conversion of all the Preferred Stock and the exercise of the
Warrants, any put option, short position or other similar instrument or position
with respect to the Common Stock, and neither Buyer nor any of its affiliates
nor any person acting on its or their behalf has or will use at any time shares
of Common Stock acquired pursuant to this Agreement or otherwise to settle any
put option, short position or other similar instrument or position that may have
been entered into prior to the execution of this Agreement.
I. COMPANY'S REPRESENTATIONS
The Company represents and warrants to Buyer that:
A. Capitalization.
1. The authorized capital stock of the Company consists of: (a) 20,000,000
shares of Common Stock, of which, as of December 30, 1999, 9,275,940 shares were
issued and outstanding and none were held in treasury; and (b) 2,000,000 shares
of preferred stock, of which (i) 3,000 shares have been designated Series A
Convertible Preferred, 1,500 of which Series A Convertible Preferred are issued
and outstanding on the date hereof, and (ii) 1,997,000 are "blank check"
preferred stock, none of which are issued and outstanding. All of the issued and
outstanding shares of Common Stock have been duly authorized and validly issued
and are fully paid and non-assessable. As of the date hereof, the Company has
outstanding 1,664,823 stock options under a management and director stock option
plan to purchase shares of Common Stock. The Conversion Shares and Warrant
Shares have been duly and validly authorized and reserved for issuance by the
Company, and when issued by the Company upon conversion of or in lieu of accrued
dividends on the Preferred Shares, or on exercise of the Warrants, will be duly
and validly issued, fully paid and non-assessable and will not subject the
holder thereof to personal liability by reason of being such holder. There are
no preemptive, subscription, "call", convertible debt instruments or other
similar rights to acquire the Common Stock (including the Conversion Shares and
Warrant Shares) that have been issued or granted to any person, except as
disclosed on Schedule III.A.1. hereto or otherwise previously disclosed in
writing to Buyer.
1. Except as disclosed on Schedule III.A.2. hereto, the Company does not
own or control, directly or indirectly, any material interest in any other
corporation, partnership, limited liability company, unincorporated business
organization, association, trust or other business entity.
A. Organization; Reporting Company Status.
1. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and is duly qualified as a
foreign corporation in all jurisdictions in which the failure to so qualify
would have a material adverse effect on the business, properties, prospects,
condition (financial or otherwise) or results of operations of the Company or on
the consummation of any of the transactions contemplated by this Agreement (a
"Material Adverse Effect").
1. The Company has registered certain of its Common Stock pursuant to
Section 12(g) of the Exchange Act and on a Registration Statement on Form S-1
under the Securities Act and has timely filed with the Commission all reports
and information required to be filed by it pursuant to all reporting obligations
under Section 13(a) or 15(d), as applicable, of the Exchange Act for the
12-month period immediately preceding the date hereof. Such Common Stock is
listed and traded on The NASDAQ Stock Market, Inc. national market system
("NMS") under the symbol "VISG" and the Company has not received any notice
regarding, and to its knowledge there is no threat, of the termination or
discontinuance of the eligibility of such Common Stock for such listing.
A. Authorized Shares. The Company has duly and validly authorized and
reserved for issuance shares of Common Stock sufficient in number for the
conversion of the Preferred Shares and the exercise of the Warrants. The Company
understands and acknowledges the potentially dilutive effect to the Common Stock
of the issuance of the Preferred Shares and Warrant Shares upon conversion of
the Preferred Shares and exercise of the Warrants. The Company further
acknowledges that its obligation to issue Conversion Shares upon conversion of
the Preferred Shares and Warrant Shares upon exercise of the Warrants in
accordance with this Agreement, the Certificate of Designation and the Warrants
is, subject to Section II.I, absolute and unconditional regardless of the
dilutive effect that such issuance may have on the ownership interests of other
stockholders of the Company.
A. Authority; Validity and Enforceability. The Company has the requisite
corporate power and authority to file and perform its obligations under the
Certificate of Designation and to enter into the Documents (as hereinafter
defined), and to perform all of its obligations hereunder and thereunder
(including the issuance, sale and delivery to Buyer of the Securities). The
execution, delivery and performance by the Company of the Documents, and the
consummation by the Company of the transactions contemplated hereby and thereby
(including, without limitation, the filing of the Certificate of Designation
with the Delaware Secretary of State's office, the issuance of the Preferred
Shares, the Warrants and the issuance and reservation for issuance of the
Conversion Shares and Warrant Shares), has been duly authorized by all necessary
corporate action on the part of the Company. Each of the Documents (as defined
below) has been duly and validly executed and delivered by the Company and the
Certificate of Designation has been duly filed with the Delaware Secretary of
State's office by the Company, and each instrument constitutes a valid and
binding obligation of the Company enforceable against it in accordance with its
terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally. The Securities have been duly and validly authorized for
issuance by the Company and, when executed and delivered by the Company, will be
valid and binding obligations of the Company enforceable against it in
accordance with their terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally. For purposes of this Agreement, the
term "Documents" means (i) this Agreement; (ii) the Registration Rights
Agreement of even date herewith between the Company and Buyer, a copy of which
is annexed hereto as Exhibit D (the "Registration Rights Agreement"); (iii) the
Warrants; (iv) the Certificate of Designation; and (v) the Escrow Instructions.
A. Authorization of the Securities. The authorization, issuance, sale and
delivery of the Preferred Shares and Warrants has been duly authorized by all
requisite corporate action on the part of the Company. As of the Funding Date,
the Preferred Shares and the Warrants, and the Conversion Shares and the Warrant
Shares upon payment of the consideration provided therefor and their issuance in
accordance with the Certificate of Designation and the Warrants, respectively,
will be validly issued and outstanding, fully paid and nonassessable, and not
subject to any preemptive rights, rights of first refusal or other similar
rights.
A. Non-contravention. The execution and delivery by the Company of the
Documents, the issuance of the Securities, and the consummation by the Company
of the other
transactions contemplated hereby and thereby, including, without limitation, the
filing of the Certificate of Designation with the Delaware Secretary of State's
office, do not and will not conflict with or result in a breach by the Company
of any of the terms or provisions of, or constitute a default (or an event
which, with notice, lapse of time or both, would constitute a default) under (i)
the certificate of incorporation or by-laws of the Company or (ii) any
indenture, mortgage, deed of trust or other material agreement or instrument to
which the Company is a party or by which its properties or assets are bound, or
any law, rule, regulation, decree, judgment or order of any court or public or
governmental authority having jurisdiction over the Company or any of the
Company's properties or assets.
A. Approvals. No authorization, approval or consent of any third party or
entity, including, without limitation, any court or public or governmental
authority is required to be obtained by the Company for the issuance and sale of
the Securities to Buyer as contemplated by this Agreement, except such
authorizations, approvals and consents that have been obtained by the Company
prior to the date hereof.
A. Commission Filings. None of the Commission Filings contained at the time
they were filed any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they were made, not
misleading.
A. Absence of Certain Changes. Except as provided on Schedule III.B.2,
since the Balance Sheet Date (as defined in Section III.M.), there has not
occurred any change, event or development in the business, financial condition,
prospects or results of operations of the Company, and there has not existed any
condition having or reasonably likely to have, a Material Adverse Effect.
A. Full Disclosure. There is no fact known to the Company (other than
general economic or industry conditions known to the public generally) that has
not been fully disclosed in writing to the Buyer or in the Commission Filings
that (i) reasonably could be expected to have a Material Adverse Effect or (ii)
reasonably could be expected to materially and adversely affect the ability of
the Company to perform its obligations pursuant to the Documents.
A. Absence of Litigation. There is no action, suit, claim, proceeding,
inquiry or investigation pending or, to the Company's knowledge, threatened, by
or before any court or public or governmental authority which, if determined
adversely to the Company, would have a Material Adverse Effect.
A. Absence of Events of Default. No "Event of Default" or "Default" (as
each such term is defined in any agreement or instrument to which the Company is
a party) and no event which, with notice, lapse of time or both, would
constitute an Event of Default (as so defined) or Default (as so defined), has
occurred and is continuing, which could have a Material Adverse Effect.
A. Financial Statements; No Undisclosed Liabilities. The Company has made
available to Buyer true and complete copies of its audited balance sheet as at
December 31,
1998, and the related audited statements of operations and cash flows for the
fiscal year ended December 31, 1998, including the related notes and schedules
thereto (collectively, the "Financial Statements"), and all management letters,
if any, from the Company's independent auditors relating to the dates and
periods covered by the Financial Statements. Each of the Financial Statements is
complete and fairly stated in all material respects, has been prepared in
accordance with United States Generally Accepted Accounting Principles ("GAAP")
(subject, in the case of the interim Financial Statements, to normal year end
adjustments and the absence of footnotes) and in conformity with the practices
consistently applied by the Company without modification of the accounting
principles used in the preparation thereof, and fairly presents the financial
position, results of operations and cash flows of the Company as at the dates
and for the periods indicated. For purposes hereof, the balance sheet of the
Company as at September 26, 1999, as filed in connection with the Company's
Quarterly Report on Form 10-Q on November 12, 1999, is hereinafter referred to
as the "Balance Sheet" and September 26, 1999, is hereinafter referred to as the
"Balance Sheet Date". The Company has no indebtedness, obligations or
liabilities of any kind (whether accrued, absolute, contingent or otherwise, and
whether due or to become due) that would have been required to be reflected in,
reserved against or otherwise described in the Balance Sheet or in the notes
thereto in accordance with GAAP, which was not fully reflected in, reserved
against or otherwise described in the Balance Sheet or the notes thereto or was
not incurred in the ordinary course of business consistent with the Company's
past practices since the Balance Sheet Date.
A. Compliance with Laws; Permits. The Company is in compliance with all
laws, rules, regulations, codes, ordinances and statutes (collectively "Laws")
applicable to it or to the conduct of its business, except for such
noncompliance which would not have a Material Adverse Effect. The Company
possesses all permits, approvals, authorizations, licenses, certificates and
consents from all public and governmental authorities which are necessary to
conduct its business, except for those the absence of which would not have a
Material Adverse Effect.
A. Related Party Transactions. Except as set forth on Schedule III.O.
hereto, or otherwise described in the Financial Statements or Commission
Filings, neither the Company nor any of its officers, directors or "Affiliates"
(as such term is defined in Rule 12b-2 under the Exchange Act) has borrowed any
moneys from or has outstanding any indebtedness or other similar obligations to
the Company. Except as set forth on Schedule III.O. hereto or Commission
Filings, neither the Company nor any of its officers, directors or Affiliates
(i) owns any direct or indirect interest constituting more than a one percent
equity (or similar profit participation) interest in, or controls or is a
director, officer, partner, member or employee of, or consultant to or lender to
or borrower from, or has the right to participate in the profits of, any person
or entity which is (x) a competitor, supplier, customer, landlord, tenant,
creditor or debtor of the Company, (y) engaged in a business related to the
business of the Company, or (z) a participant in any transaction to which the
Company is a party (other than in the ordinary course of the Company's
business), or (ii) is a party to any contract, agreement, commitment or other
arrangement with the Company.
A. Insurance. The Company maintains insurance coverage with financially
sound and reputable insurers and such insurance coverage is adequate, consistent
with industry
standards and the Company's historical claims experience, and includes coverage
for such things as property and casualty, general liability, workers'
compensation, personal injury and other similar types of insurance. The Company
has not received notice from, and has no knowledge of any threat by, any insurer
(that has issued any insurance policy to the Company) that such insurer intends
to deny coverage under or cancel, discontinue or not renew any insurance policy
presently in force.
A. Securities Law Matters. Based, in part, upon the representations and
warranties of Buyer set forth in Section II hereof, the offer and sale by the
Company of the Securities is exempt from (i) the registration and prospectus
delivery requirements of the Securities Act and the rules and regulations of the
Commission thereunder and (ii) the registration and/or qualification provisions
of all applicable state securities and "blue sky" laws. Other than pursuant to
an effective registration statement under the Securities Act, the Company has
not issued, offered or sold the Preferred Shares or any shares of Common Stock
(including for this purpose any securities of the same or a similar class as the
Preferred Shares or Common Stock, or any securities convertible into or
exchangeable or exercisable for the Preferred Shares or Common Stock or any such
other securities) within the one_year immediately preceding the date hereof,
except as disclosed on Schedule III.Q. hereto, and the Company shall not
directly or indirectly take, and shall not permit any of its directors, officers
or Affiliates directly or indirectly to take, any action (including, without
limitation, any offering or sale to any person or entity of the Preferred Shares
or shares of Common Stock or any of the other Securities), so as to make
unavailable the exemption from Securities Act registration being relied upon by
the Company for the offer and sale to Buyer of the Securities as contemplated by
this Agreement. No form of general solicitation or advertising has been used or
authorized by the Company or any of its officers, directors or Affiliates in
connection with the offer or sale of the Securities as contemplated by this
Agreement or any other agreement to which the Company is a party.
A. Environmental Matters. To the Company's knowledge:
1. The operations of the Company are in compliance with all applicable
Environmental Laws (as defined below) and all permits issued pursuant to
Environmental Laws or otherwise;
1. the Company has obtained or applied for all permits required under all
applicable Environmental Laws necessary to operate its business;
1. the Company is not the subject of any outstanding written order of or
agreement with any governmental authority or person respecting (i) Environmental
Laws, (ii) Remedial Action or (iii) any Release or threatened Release of
Hazardous Materials;
1. the Company has not received, since the Balance Sheet Date, any written
communication alleging that it may be in violation of any Environmental Law or
any permit issued pursuant to any Environmental Law, or may have any liability
under any Environmental Law;
1. the Company does not have any current contingent liability in connection
with any Release of any Hazardous Materials into the indoor or outdoor
environment (whether on-site or off-site);
1. except as set forth on Schedule III.R.6 hereto, to the Company's
knowledge, there are no investigations of the business, operations, or currently
or previously owned, operated or leased property of the Company pending or
threatened which could lead to the imposition of any liability pursuant to any
Environmental Law;
1. there is not located at any of the properties of the Company any (A)
underground storage tanks, (B) asbestos-containing material or (C) equipment
containing polychlorinated biphenyls; and,
1. the Company has provided to Buyer all environmentally related audits,
studies, reports, analyses, and results of investigations that have been
performed with respect to the currently or previously owned, leased or operated
properties of the Company.
For purposes of this Section III.R.:
"Environmental Law" means any foreign, federal, state or local statute,
regulation, ordinance, or rule of common law as now or hereafter in effect in
any way relating to the protection of human health and safety or the environment
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C.ss.9601 et seq.), the Hazardous
Materials Transportation Act (49 U.S.C. App.ss.1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C.ss.6901 et seq.), the Clean Water Act
(33 U.S.C.ss.1251 et seq.), the Clean Air Act (42 U.S.C.ss.7401 et seq.), the
Toxic Substances Control Act (15 U.S.C.ss.2601 et seq.), the Federal
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C.ss.136 et seq.), and the
Occupational Safety and Health Act (29 U.S.C.ss.651 et seq.), and the
regulations promulgated pursuant thereto.
"Hazardous Material" means any substance, material or waste which is
regulated by the United States, Canada or any of its provinces, or any state or
local governmental authority including, without limitation, petroleum and its
by-products, asbestos, and any material or substance which is defined as a
"hazardous waste," "hazardous substance," "hazardous material," "restricted
hazardous waste," "industrial waste," "solid waste," "contaminant," "pollutant,"
"toxic waste" or toxic substance" under any provision of any Environmental Law.
"Release" means any release, spill, filtration, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, or leaching into the indoor
or outdoor environment, or into or out of any property.
"Remedial Action" means all actions to (x) clean up, remove, treat or in
any other way address any Hazardous Material; (y) prevent the Release of any
Hazardous Material so it does not endanger or threaten to endanger public health
or welfare or the indoor or outdoor environment; or (z) perform pre-remedial
studies and investigations or post-remedial monitoring and care.
A. Labor Matters. The Company is not party to any labor or collective
bargaining agreement and there are no labor or collective bargaining agreements
which pertain to employees of the Company. No employees of the Company are
represented by any labor organization and none of such employees has made a
pending demand for recognition, and there are no representation proceedings or
petitions seeking a representation proceeding presently pending or, to the
Company's knowledge, threatened to be brought or filed, with the National Labor
Relations Board or other labor relations tribunal. There is no organizing
activity involving the Company pending or to the Company's knowledge, threatened
by any labor organization or group of employees of the Company. There are no (i)
strikes, work stoppages, slowdowns, lockouts or arbitrations or (ii) material
grievances or other labor disputes pending or, to the knowledge of the Company,
threatened against or involving the Company. There are no unfair labor practice
charges, grievances or complaints pending or, to the knowledge of the Company,
threatened by or on behalf of any employee or group of employees of the Company.
A. ERISA Matters. The Company and its ERISA Affiliates (as defined below)
are in compliance in all material respects with all provisions of ERISA (as
defined below) applicable to it. No Reportable Event (as defined below) has
occurred, been waived or exists as to which the Company or any ERISA Affiliate
was required to file a report with the Pension Benefits Guaranty Corporation,
and the present value of all liabilities under all Plans (based on those
assumptions used to fund such Plans) did not, as of the most recent annual
valuation date applicable thereto, exceed the value of the assets of all such
Plans (as defined below) in the aggregate. None of the Company or ERISA
Affiliates has incurred any Withdrawal Liability that could result in a Material
Adverse Effect. None of the Company or ERISA Affiliates has received any
notification that any Multiemployer Plan is in reorganization or has been
terminated within the meaning of Title IV of ERISA, and no Multiemployer Plan is
reasonably expected to be in reorganization or termination where such
reorganization or termination has resulted or could reasonably be expected to
result in increases to the contributions required to be made to such Plan or
otherwise.
For purposes of this Section III.T.:
"ERISA" means the Employee Retirement Income Security Act of 1974, or any
successor statute, together with the regulations thereunder, as the same may be
amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not incorporated)
that was, is or hereafter may become, a member of a group of which the Company
is a member and which is treated as a single employer under ss. 414 of the
Internal Revenue Code of 1986, as amended (the "Internal Revenue Code").
"Multiemployer Plan" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA to which the Company or any ERISA Affiliate (other than one
considered an ERISA Affiliate only pursuant to subsection (m) or (o) of ss. 414
of the Internal Revenue Code) is making or accruing an obligation to make
contributions, or has within any of the preceding five plan years made or
accrued an obligation to make contributions.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.
"Plan" means any pension plan (other than a Multiemployer Plan) subject to
the provision of Title IV of ERISA or ss. 412 of the Internal Revenue Code that
is maintained for employees of the Company or any ERISA Affiliate.
"Reportable Event" means any reportable event as defined in Section 4043(b)
of ERISA or the regulations issued thereunder with respect to a Plan (other than
a Plan maintained by an ERISA Affiliate that is considered an ERISA Affiliate
only pursuant to subsection (m) or (o) of ss. 414 of the Internal Revenue Code.
"Withdrawal Liability" means liability to a Multiemployer Plan as a result
of a complete or partial withdrawal from such Multiemployer Plan, as such terms
are defined in Part I of Subtitle E of Title IV of ERISA.
A. Tax Matters.
1. The Company has filed all Tax Returns which it is required to file under
applicable Laws, except for such Tax Returns in respect of which the failure to
so file does not and could not have a Material Adverse Effect; all such Tax
Returns are complete and fairly stated in all material respects and have been
prepared in compliance with all applicable Laws; the Company has paid all Taxes
(as defined below) due and owing by it (whether or not such Taxes are required
to be shown on a Tax Return) and have withheld and paid over to the appropriate
taxing authorities all Taxes which it is required to withhold from amounts paid
or owing to any employee, stockholder, creditor or other third parties; and
since the Balance Sheet Date, the charges, accruals and reserves for Taxes with
respect to the Company (including any provisions for deferred income taxes)
reflected on the books of the Company are adequate to cover any Tax liabilities
of the Company if its current tax year were treated as ending on the date
hereof.
1. No claim has been made by a taxing authority in a jurisdiction where the
Company does not file tax returns that such corporation is or may be subject to
taxation by that jurisdiction. There are no foreign, federal, state or local tax
audits or administrative or judicial proceedings pending or being conducted with
respect to the Company; no information related to Tax matters has been requested
by any foreign, federal, state or local taxing authority; and, except as
disclosed above, no written notice indicating an intent to open an audit or
other review has been received by the Company from any foreign, federal, state
or local taxing authority. There are no material unresolved questions or claims
concerning the Company's Tax liability. The Company (A) has not executed or
entered into a closing agreement pursuant to ss. 7121 of the Internal Revenue
Code or any predecessor provision thereof or any similar provision of state,
local or foreign law; or (B) has not agreed to or is required to make any
adjustments pursuant to ss. 481 (a) of the Internal Revenue Code or any similar
provision of state, local or foreign law by reason of a change in accounting
method initiated by the Company or any of its subsidiaries or has any knowledge
that the IRS has proposed any such adjustment or change in accounting method, or
has any application pending with any taxing authority requesting permission for
any changes in accounting methods that relate to the business or
operations of the Company. The Company has not been a United States real
property holding corporation within the meaning of ss. 897(c)(2) of the Internal
Revenue Code during the applicable period specified in ss. 897(c)(1)(A)(ii) of
the Internal Revenue Code.
1. The Company has not made an election under ss. 341(f) of the Internal
Revenue Code. The Company is not liable for the Taxes of another person that is
not a subsidiary of the Company under (A) Treas. Reg. ss. 1.1502-6 (or
comparable provisions of state, local or foreign law), (B) as a transferee or
successor, (C) by contract or indemnity or (D) otherwise. Except as disclosed in
the Commission Filings, the Company is not a party to any tax sharing agreement.
The Company has not made any payments, is obligated to make payments or is a
party to an agreement that could obligate it to make any payments that would not
be deductible under ss. 28OG of the Internal Revenue Code.
For purposes of this Section III.U.:
"IRS" means the United States Internal Revenue Service.
"Tax" or "Taxes" means federal, state, county, local, foreign, or other
income, gross receipts, ad valorem, franchise, profits, sales or use, transfer,
registration, excise, utility, environmental, communications, real or personal
property, capital stock, license, payroll, wage or other withholding,
employment, social security, severance, stamp, occupation, alternative or add-on
minimum, estimated and other taxes of any kind whatsoever (including, without
limitation, deficiencies, penalties, additions to tax, and interest attributable
thereto) whether disputed or not.
"Tax Return" means any return, information report or filing with respect to
Taxes, including any schedules attached thereto and including any amendment
thereof.
A. Property. The Company has good and marketable title to all real and
personal property owned by it, free and clear of all liens, encumbrances and
defects except as are described on Schedule III.V. hereto or in the Commission
Filings or such as do not materially affect the value of such property and do
not interfere with the use made and proposed to be made of such property by the
Company; and any real property and buildings held under lease by the Company are
held by it under valid, subsisting and enforceable leases with such exceptions
as are not material and do not interfere with the use made and proposed to be
made of such property and buildings by the Company.
A. Intellectual Property. The Company owns or possesses adequate and
enforceable rights to use all patents, patent applications, trademarks,
trademark applications, trade names, service marks, copyrights, copyright
applications, licenses, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures) and other similar rights and proprietary knowledge (collectively,
"Intangibles") for the conduct of its business as now being conducted as
described on Schedule III.W. hereto. The Company is not infringing upon or in
conflict with any right of any other person with respect to any Intangibles.
Except as disclosed on Schedule III.W. hereto, no
claims have been asserted by any person to the ownership or use of any
Intangibles and the Company has no knowledge of any basis for such claim.
A. Internal Controls and Procedures. The Company maintains accurate books
and records and internal accounting controls which provide reasonable assurance
that (i) all transactions to which the Company is a party or by which its
properties are bound are executed with management's authorization; (ii) the
reported accountability of the Company's assets is compared with existing assets
at regular intervals; (iii) access to the Company's assets is permitted only in
accordance with management's authorization; and (iv) all transactions to which
the Company is a party or by which its properties are bound are recorded as
necessary to permit preparation of the financial statements of the Company in
accordance with U.S. generally accepted accounting principles consistently
applied.
A. Payments and Contributions. Neither the Company nor any of its
directors, officers or, to its knowledge, other employees has (i) used any
Company funds for any unlawful contribution, endorsement, gift, entertainment or
other unlawful expense relating to political activity; (ii) made any direct or
indirect unlawful payment of Company funds to any foreign or domestic government
official or employee; (iii) violated or is in violation of any provision of the
Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any bribe,
rebate, payoff, influence payment, kickback or other similar payment to any
person with respect to Company matters.
A. No Misrepresentation. No representation or warranty of the Company
contained in this Agreement, any schedule, annex or exhibit hereto or any
agreement, instrument or certificate furnished by the Company to Buyer pursuant
to this Agreement, contains any untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein, not misleading.
I. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
A. Restrictive Legend. Buyer acknowledges and agrees that, upon issuance
pursuant to this Agreement, the Preferred Shares and the Warrants (and any
shares of Common Stock issued in conversion of the Preferred Shares or exercise
of the Warrants) shall have endorsed thereon a legend in substantially the
following form (and a stop-transfer order may be placed against transfer of the
Preferred Shares and the Conversion Shares until such legend has been removed):
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
STATE, AND ARE BEING OFFERED AND SOLD PURSUANT TO AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. THESE
SECURITIES MAY NOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OR SUCH OTHER LAWS."
A. Filings. The Company shall make all necessary Commission Filings and
"blue sky" filings required to be made by the Company in connection with the
sale of the Securities to the Buyer as required by all applicable Laws, and
shall provide a copy thereof to the Buyer promptly after such filing.
A. Reporting Status. So long as the Buyer beneficially owns any of the
Securities, the Company shall use its best efforts to timely file all reports
required to be filed by it with the Commission pursuant to Section 13 or 15(d)
of the Exchange Act.
A. Use of Proceeds. The Company shall use the net proceeds from the sale of
the Securities (excluding amounts paid by the Company for legal fees and
finder's fees in connection with such sale) solely for general corporate and
working capital purposes.
A. Listing. Except to the extent the Company lists its Common Stock on The
New York Stock Exchange, the Company shall use its best efforts to maintain its
listing of the Common Stock on the NMS.
A. Reserved Conversion Shares. The Company at all times from and after the
date hereof shall have a sufficient number of shares of Common Stock duly and
validly authorized and reserved for issuance to satisfy the conversion, in full,
of the Preferred Shares and upon the exercise of the Warrants.
I. TRANSFER AGENT INSTRUCTIONS.
A. The Company undertakes and agrees that no instruction other than the
instructions referred to in this Section V and customary stop transfer
instructions prior to the registration and sale of the Common Stock pursuant to
an effective Securities Act registration statement will be given to its transfer
agent for the Common Stock and that the Common Stock issuable upon conversion of
the Preferred Shares and exercise of the Warrants otherwise shall be freely
transferable on the books and records of the Company as and to the extent
provided in this Agreement, the Registration Rights Agreement and applicable
law. Nothing contained in this Section V.A. shall affect in any way Buyer's
obligations and agreement to comply with all applicable securities laws upon
resale of such Common Stock. If, at any time, Buyer provides the Company with an
opinion of counsel reasonably satisfactory to the Company and its counsel that
registration of the resale by Buyer of such Common Stock is not required under
the Securities Act and that the removal of restrictive legends is permitted
under applicable law, the Company shall permit the transfer of such Common Stock
and, promptly instruct the Company's transfer agent to issue one or more
certificates for Common Stock without any restrictive legends endorsed thereon.
A. The Company shall permit Buyer to exercise its right to convert the
Preferred Shares by telecopying an executed and completed Notice of Conversion
to the
Company. Each date on which a Notice of Conversion is telecopied to and received
by the Company in accordance with the provisions hereof shall be deemed a
Conversion Date. The Company shall transmit the certificates evidencing the
shares of Common Stock issuable upon conversion of any Preferred Shares
(together with certificates evidencing any Preferred Shares not being so
converted) to Buyer via express courier, by electronic transfer or otherwise,
within ten (10) business days after receipt by the Company of the Notice of
Conversion (the "Delivery Date"). Within 30 days after Buyer delivers the Notice
of Conversion to the Company, Buyer shall deliver to the Company the Preferred
Shares being converted.
A. The Company shall permit Buyer to exercise its right to purchase shares
of Common Stock pursuant to exercise of the Warrants in accordance with its
applicable terms of the Warrants. The last date that the Company may deliver
shares of Common Stock issuable upon any exercise of Warrants is referred to
herein as the "Warrant Delivery Date."
A. The Company understands that a delay in the issuance of the shares of
Common Stock issuable in lieu of cash dividends on the Preferred Shares, upon
the conversion of the Preferred Shares or exercise of the Warrants beyond the
applicable Dividend Payment Due Date (as defined in the Certificate of
Designation), Delivery Date or Warrant Delivery Date could result in economic
loss to Buyer. As compensation to Buyer for such loss (and not as a penalty),
the Company agrees to pay to Buyer for late issuance of Common Stock issuable in
lieu of cash dividends on the Preferred Shares, upon conversion of the Preferred
Shares or exercise of the Warrants in accordance with the following schedule
(where "No. Business Days" is defined as the number of business days beyond ten
(10) business days from the Dividend Payment Due Date (as that term is defined
in the Certificate of Designation), the Delivery Date on the Warrant Delivery
Date, as applicable):
No. Business Days Compensation For Each 10 Shares of
----------------- Preferred Shares and Related
Dividends Not Converted Timely or
5,000 Shares of Common Stock
Issuable Upon Exercise of Warrants
----------------------------------
1 $25
2 $50
3 $75
4 $100
5 $125
6 $150
7 $175
8 $200
9 $225
10 $250
more than 10 $250 + $100 for each Business Day
Late beyond 10 business days
The Company shall pay to Buyer the compensation described above as liquidated
damages, by the transfer of immediately available funds upon Buyer's demand.
Nothing herein shall limit Buyer's right to pursue actual damages for the
Company's failure to issue and deliver Common Stock to Buyer, and in addition to
any other remedies which may be available to Buyer, in the event the Company
fails for any reason to effect delivery of such shares of Common Stock within
ten (10) business days after the relevant Dividend Payment Due Date, the
Delivery Date or the Warrant Delivery Date, as applicable, Buyer shall be
entitled to rescind the relevant Notice of Conversion or exercise of Warrants by
delivering a notice to such effect to the Company whereupon the Company and
Buyer shall each be restored to their respective original positions immediately
prior to delivery of such Notice of Conversion on delivery.
I. DELIVERY INSTRUCTIONS.
The Securities shall be delivered by the Company to the Escrow Agent
pursuant to Section I.B. hereof on a "delivery-against-payment basis" at the
closing of the transactions contemplated hereby.
I. FUNDING DATE.
The date and time of the issuance and sale of the Preferred Shares and the
Warrants (the "Funding Date") shall be the date hereof or such other date as
shall be mutually agreed upon in writing. The issuance and sale of the Preferred
Shares and the Warrants shall occur on the Funding Date, at the offices of the
Escrow Agent. Notwithstanding anything to the contrary contained herein, the
Escrow Agent shall not be authorized to release to the Company the Purchase
Price and to Buyer the certificate(s) evidencing the Preferred Shares and the
Warrants unless the conditions set forth in VIII.C. and IX.G hereof have been
satisfied.
I. CONDITIONS TO THE COMPANY'S OBLIGATIONS.
The Buyer understands that the Company's obligation to sell the Securities
on the Funding Date to Buyer pursuant to this Agreement is conditioned upon:
A. Delivery by Buyer to the Escrow Agent of the Purchase Price on the
Funding Date.
A. The accuracy in all material respects on the Funding Date of the
representations and warranties of Buyer contained in this Agreement as if made
on the Funding Date (except for representations and warranties which, by their
express terms, speak as of and relate to a specified date, in which case such
accuracy shall be measured as of such specified date) and the performance by
Buyer in all material respects on or before the Funding Date of all covenants
and agreements of Buyer required to be performed by it pursuant to this
Agreement on or before the Funding Date;
A. There shall not be in effect any Law or order, ruling, judgment or writ
of any court or public or governmental authority restraining, enjoining or
otherwise prohibiting any of the transactions contemplated by this Agreement.
I. CONDITIONS TO BUYER'S OBLIGATIONS.
The Company understands that Buyer's obligation to purchase the Securities
on the Funding Date pursuant to this Agreement is conditioned upon:
A. Delivery by the Company to the Escrow Agent on or before the Funding
Date of one or more certificates evidencing the Securities; B. The accuracy in
all respects on the Funding Date of the representations and warranties of the
Company contained in this Agreement as if made on the Funding Date (except for
representations and warranties which, by their express terms, speak as of and
relate to a specified date, in which case such accuracy shall be measured as of
such specified date) and the performance by the Company in all respects on or
before the Funding Date of all covenants
and agreements of the Company required to be performed by it pursuant to this
Agreement on or before the Funding Date;
A. Buyer having received an opinion of counsel for the Company, dated the
Funding Date, in form, scope and substance satisfactory to the Buyer.
A. There not having occurred (i) any general suspension of trading in, or
limitation on prices listed for, the Common Stock on the NMS, (ii) the
declaration of a banking moratorium or any suspension of payments in respect of
banks in the United States, (iii) the commencement of a war, armed hostilities
or other international or national calamity directly or indirectly involving the
United States or any of its territories, protectorates or possessions, or (iv)
in the case of the foregoing existing at the date of this Agreement, a material
acceleration or worsening thereof.
A. There not having occurred any event or development, and there being in
existence no condition, having or which reasonably and foreseeably could have a
Material Adverse Effect.
A. The Company shall have delivered to Buyer (as provided in the Escrow
Instructions) reimbursement of Buyer's reasonable out-of-pocket costs and
expenses incurred in connection with the transactions contemplated by this
Agreement.
A. There shall not be in effect any Law or order, ruling, judgment or writ
of any court or public or governmental authority restraining, enjoining or
otherwise prohibiting any of the transactions contemplated by this Agreement.
I. TERMINATION.
A. Termination by Mutual Written Consent. This Agreement may be terminated
and the transactions contemplated hereby may be abandoned, for any reason and at
any time prior to the Funding Date, by the mutual written consent of the Company
and Buyer.
A. Termination by the Company or Buyer. This Agreement may be terminated
and the transactions contemplated hereby may be abandoned by action of the
Company or Buyer if (i) the Funding Date shall not have occurred at or prior to
5:00 p.m., New York City time, on December 31, 1999; provided, however, that the
right to terminate this Agreement pursuant to this Section X.B.(i) shall not be
available to any party whose failure to fulfill any of its obligations under
this Agreement has been the cause of or resulted in the failure of the Funding
Date to occur at or before such time and date or (ii) any court or public or
governmental authority shall have issued an order, ruling, judgment or writ, or
there shall be in effect any Law, restraining, enjoining or otherwise
prohibiting the consummation of any of the transactions contemplated by this
Agreement.
A. Termination by Buyer. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned by Buyer at any time prior to
the Funding Date, if (i) the Company shall have failed to comply with any of its
covenants or agreements
contained in this Agreement, (ii) there shall have been a breach by the Company
with respect to any representation or warranty made by it in this Agreement, or
(iii) there shall have occurred any event or development, or there shall be in
existence any condition, having or reasonably and foreseeably likely to have a
Material Adverse Effect.
A. Termination by the Company. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned by the Company at any time
prior to the Funding Date, if (i) Buyer shall have failed to comply with any of
its covenants or agreements contained in this Agreement or (ii) there shall have
been a breach by Buyer with respect to any representation or warranty made by it
in this Agreement.
I. SURVIVAL; INDEMNIFICATION.
A. The representations, warranties and covenants made by each of the
Company and Buyer in this Agreement, the annexes, schedules and exhibits hereto
and in each instrument, agreement and certificate entered into and delivered by
them pursuant to this Agreement, shall survive the Funding Date and the
consummation of the transactions contemplated hereby for a period of three (3)
years from and after the Funding Date or such later date as when all of the
Preferred Shares have been converted to Common Stock. In the event of a breach
or violation of any of such representations, warranties or covenants, the party
to whom such representations, warranties or covenants have been made shall have
all rights and remedies for such breach or violation available to it under the
provisions of this Agreement or otherwise, whether at law or in equity,
irrespective of any investigation made by or on behalf of such party on or prior
to the Funding Date.
A. The Company hereby agrees to indemnify and hold harmless the Buyer, its
Affiliates and their respective officers, directors, partners and members
(collectively, the "Buyer Indemnitees"), from and against any and all losses,
claims, damages, judgments, penalties, liabilities and deficiencies
(collectively, "Losses"), and agrees to reimburse the Buyer Indemnitees for all
out-of-pocket expenses (including the fees and expenses of legal counsel), in
each case promptly as incurred by the Buyer Indemnitees and to the extent
arising out of or in connection with:
1. any misrepresentation, omission of fact or breach of any of
the Company's representations or warranties contained in this
Agreement or the other Documents, or the annexes, schedules or
exhibits hereto or thereto or any instrument, agreement or certificate
entered into or delivered by the Company pursuant to this Agreement or
the other Documents; or
1. any failure by the Company to perform in any material respect
any of its covenants, agreements, undertakings or obligations set
forth in this Agreement or the other Documents, or the annexes,
schedules or exhibits hereto or thereto or any instrument, agreement
or certificate entered into or delivered by the Company pursuant to
this Agreement or the other Documents.
A. Buyer hereby agrees to indemnify and hold harmless the Company, its
Affiliates and their respective officers, directors, partners and members
(collectively, the "Company Indemnitees"), from and against any and all Losses,
and agrees to reimburse the Company Indemnitees for all out-of-pocket expenses
(including the fees and expenses of legal counsel), in each case promptly as
incurred by the Company Indemnitees and to the extent arising out of or in
connection with:
1. any misrepresentation, omission of fact, or breach of any of
Buyer's representations or warranties contained in this Agreement or
the other Documents, or the annexes, schedules or exhibits hereto or
thereto or any instrument, agreement or certificate entered into or
delivered by Buyer pursuant to this Agreement or the other Documents;
or
1. any failure by Buyer to perform in any material respect any of
its covenants, agreements, undertakings or obligations set forth in
this Agreement or the other Documents or any instrument, certificate
or agreement entered into or delivered by Buyer pursuant to this
Agreement or the other Documents.
A. Promptly after receipt by either party hereto seeking indemnification
pursuant to this Section XI (an "Indemnified Party") of written notice of any
investigation, claim, proceeding or other action in respect of which
indemnification is being sought (each, a "Claim"), the Indemnified Party
promptly shall notify the party against whom indemnification pursuant to this
Section XI is being sought (the "Indemnifying Party") of the commencement
thereof; but the omission to so notify the Indemnifying Party shall not relieve
it from any liability that it otherwise may have to the Indemnified Party,
except to the extent that the Indemnifying Party is materially prejudiced and
forfeits substantive rights and defenses by reason of such failure. In
connection with any Claim as to which both the Indemnifying Party and the
Indemnified Party are parties, the Indemnifying Party shall be entitled to
assume the defense thereof. Notwithstanding the assumption of the defense of any
Claim by the Indemnifying Party, the Indemnified Party shall have the right to
employ separate legal counsel and to participate in the defense of such Claim,
and the Indemnifying Party shall bear the reasonable fees, out-of-pocket costs
and expenses of such separate legal counsel to the Indemnified Party if (and
only if): (x) the Indemnifying Party shall have agreed to pay such fees,
out-of-pocket costs and expenses, (y) the Indemnified Party and the Indemnifying
Party reasonably shall have concluded that representation of the Indemnified
Party and the Indemnifying Party by the same legal counsel would not be
appropriate due to actual or, as reasonably determined by legal counsel to the
Indemnified Party, potentially differing interests between such parties in the
conduct of the defense of such Claim, or if there may be legal defenses
available to the Indemnified Party that are in addition to or disparate from
those available to the Indemnifying Party, or (z) the Indemnifying Party shall
have failed to employ legal counsel reasonably satisfactory to the Indemnified
Party within a reasonable period of time after notice of the commencement of
such Claim. If the Indemnified Party employs separate legal counsel in
circumstances other than as described in clauses (x), (y) or (z) above, the
fees, costs and expenses of such legal counsel shall
be borne exclusively by the Indemnified Party. Except as provided above, the
Indemnifying Party shall not, in connection with any Claim in the same
jurisdiction, be liable for the fees and expenses of more than one firm of legal
counsel for the Indemnified Party (together with appropriate local counsel). The
Indemnifying Party shall not, without the prior written consent of the
Indemnified Party (which consent shall not unreasonably be withheld), settle or
compromise any Claim or consent to the entry of any judgment that does not
include an unconditional release of the Indemnified Party from all liabilities
with respect to such Claim or judgment.
A. In the event one party hereunder should have a claim for indemnification
that does not involve a claim or demand being asserted by a third party, the
Indemnified Party promptly shall deliver notice of such claim to the
Indemnifying Party. If the Indemnified Party disputes the claim, such dispute
shall be resolved by mutual agreement of the Indemnified Party and the
Indemnifying Party or by binding arbitration conducted in accordance with the
procedures and rules of the American Arbitration Association. Judgment upon any
award rendered by any arbitrators may be entered in any court having competent
jurisdiction thereof.
I. GOVERNING LAW: MISCELLANEOUS.
This Agreement shall be governed by and interpreted in accordance with the
laws of the State of Delaware, without regard to the conflicts of law principles
of such state. Each of the parties consents to the jurisdiction of the federal
courts whose districts encompass any part of the City of New York or the state
courts of the State of New York sitting in the City of New York in connection
with any dispute arising under this Agreement and hereby waives, to the maximum
extent permitted by law, any objection, including any objection based on forum
non conveniens, to the bringing of any such proceeding in such jurisdictions. A
facsimile transmission of this signed Agreement shall be legal and binding on
all parties hereto. This Agreement may be signed in one or more counterparts,
each of which shall be deemed an original. The headings of this Agreement are
for convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement. if any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement or the validity or enforceability of this Agreement
in any other jurisdiction. This Agreement may be amended only by an instrument
in writing signed by the party to be charged with enforcement. This Agreement
supersedes all prior agreements and understandings among the parties hereto with
respect to the subject matter hereof.
I. NOTICES.
Except as may be otherwise provided herein, any notice or other
communication or delivery required or permitted hereunder shall be in writing
and shall be sent by facsimile with a copy delivered personally or sent by a
nationally recognized overnight courier service, and shall be deemed given when
so delivered personally or by overnight courier service, as follows:
(1) if to the Company, to:
VIISAGE TECHNOLOGY, INC.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Chief Executive Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Finnegan, Hickey, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, PC
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(1) if to the Buyer, to
THE SHAAR FUND LTD.,
c/o SHAAR ADVISORY SERVICES LTD.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ LLP
▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(1) if to the Escrow Agent, to:
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ LLP
▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
The Company, the Buyer or the Escrow Agent may change the foregoing address by
notice given pursuant to this Section XIII.
I. CONFIDENTIALITY.
Each of the Company and Buyer agrees to keep confidential and not to
disclose to or use for the benefit of any third party the terms of this
Agreement or any other information which at any time is communicated by the
other party as being confidential without the prior written approval of the
other party; provided, however, that this provision shall not apply to
information which, at the time of disclosure, is already part of the public
domain (except by breach of this Agreement) and information which is required to
be disclosed by law (including, without limitation, pursuant to Item 10 of Rule
601 of Regulation S-K under the Securities Act and the Exchange Act).
I. ASSIGNMENT.
This Agreement shall not be assignable by either of the parties hereto
without the prior written consent of the other party, and any attempted
assignment contrary to the provisions hereby shall be null and void; provided,
however, that Buyer may assign its rights and obligations hereunder, in whole or
in part, to any affiliate of Buyer who furnishes to the Company the
representations and warranties set forth in Section II hereof and otherwise
agrees to be bound by the terms of this Agreement.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement on the date first written above.
THE COMPANY:
VIISAGE TECHNOLOGY, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
President and Chief Executive Officer
BUYER:
THE SHAAR FUND LTD.
By: INTERCARRIBBEAN SERVICES, INC.
By: /s/ Declan Quillgan
Declan Quillgan
Director
EXHIBIT A
Common Stock Purchase Warrant
EXHIBIT B
Certificate of Designation
EXHIBIT C
Escrow Instructions
EXHIBIT D
Registration Rights Agreement
Schedule III.A.1
Capitalization
Schedule III.A.2
Subsidiaries
Schedule III.O.
Related Party Transactions
Schedule III.Q.
Securities Law Matters
Schedule III.R.6.
Environmental Matters
Schedule III.V.
Property
Schedule III.W.
Intellectual Property