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EXHIBIT 10.34
8% SERIES A CONVERTIBLE PREFERRED STOCK SUBSCRIPTION AGREEMENT
Between
Wall Street Strategies Corporation
and
CALP II Limited Partnership
Dated as of August 18, 2000
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TABLE OF CONTENTS
Exhibit A Form of 8% Series A Convertible Preferred Stock Designation
Exhibit B Form of Class A Warrant
Exhibit C Form of Escrow Agreement
Exhibit D Form of Opinion of ▇▇▇▇▇ ▇▇▇▇ LLP, counsel for the Company
Schedule 3.1(c) Capitalization
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THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT'), AND MAY NOT BE OFFERED OR SOLD IN THE UNITED
STATES OR TO U.S. PERSONS (OTHER THAN DISTRIBUTORS) UNLESS SUCH SECURITIES ARE
REGISTERED UNDER THE ACT, OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE ACT IS AVAILABLE IN THE OPINION OF THE COMPANY.
8% SERIES A CONVERTIBLE PREFERRED STOCK SUBSCRIPTION
AGREEMENT, dated as of August 18, 2000 (this "Agreement"), by and between Wall
Street Strategies Corporation, a Nevada corporation (the "Company"), and CALP II
Limited Partnership, a Bermuda limited partnership ("Purchaser").
WHEREAS, the Company has authorized the issuance of its
securities consisting of ten shares of its 8% Series A Convertible Preferred
Stock, par value $0.001 per share, with a stated of $100,000 (the "Series A
Preferred Stock"), and Class A warrants to purchase an aggregate of 80,000
shares of its common stock, par value $.001 per share (the "Common Stock"), at
$3.00 per share (the "Class A Warrants"); and
WHEREAS, the Company desires to sell and the Purchaser desires
to purchase the Class A Preferred Stock and the Class A Warrants, all on the
terms and conditions set forth herein
NOW,THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for good and valuable consideration, the receipt
of which is hereby acknowledged, the parties agree as follows:
I. CERTAIN DEFINITIONS
Certain Definitions. As used in this Agreement, and unless the
context requires a different meaning, the following terms have the meanings
indicated:
"Affiliate" means, with respect to any Person, any Person
that, directly or indirectly, controls, is controlled by or is under common
control with such Person. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlled by" and "under
common control with") shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities or by contract or
otherwise.
"Business Day" means any day except Saturday, Sunday and any
day which shall be a legal holiday or a day on which banking institutions in the
State of New York are authorized or required by law or other government actions
to close.
"Closing" shall have the meaning set forth in Section 2.1(b).
"Closing Date" shall have the meaning set forth in Section
2.1(b).
"Code" means the Internal Revenue Code of 1986, as amended,
and the rules and regulations thereunder as in effect on the date hereof.
"Commission" means the Securities and Exchange Commission.
"Distribution Compliance Period" shall have the meaning set
forth in Regulation S.
"Disclosure Materials" means the SEC Documents delivered to
the Purchaser in connection with the offering by the Company hereby of the
Series A Preferred Stock and Class A
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Warrants and the Schedules to this Agreement furnished by or on behalf of the
Company pursuant to Section 3.1.
"Escrow Agent" means ▇▇▇▇▇ ▇▇▇▇ LLP.
"Escrow Agreement" means that certain Escrow Agreement of even
date herewith among the Company, the Escrow Agent, and the Purchaser in
substantially the form of Exhibit D attached hereto.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, encumbrance, charge or security interest of any kind in or on such asset
or the revenues or income thereon or therefrom.
"Material Adverse Effect" shall have the meaning set forth in
Section 3.1(a).
"NASD" means the National Association of Securities Dealers,
Inc.
"Placement Agent" means ▇▇▇▇▇▇▇▇ Kernaghan & Co. Limited
"Person" means an individual or a corporation, partnership,
trust, incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or political
subdivision thereof) or other entity of any kind.
"Regulation S" means Regulation S as promulgated under the
Securities Act by the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"SEC Documents" shall have the meaning set forth in Section
3.1(i).
"Shares" means the Underlying Shares and the Warrant Shares.
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"Subsidiary" shall have the meaning set forth in Section
3.1(a).
"Underlying Shares" means the shares of Common Stock into
which the Series A Preferred Stock are convertible in accordance with the terms
thereof.
"Warrant Shares" means the shares of Common Stock issuable
upon exercise of the Class A Warrants.
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II. PURCHASE OF SECURITIES
2.1. Purchase of Securities; Closing. Subject to the terms and
conditions herein set forth, and subject to the terms and conditions of the
Escrow Agreement, the Purchaser agrees to subscribe for and purchase, and the
Company agrees to sell to the Purchaser, ten (10) shares of Series A Preferred
Stock and the Class A Warrants (collectively, the "Securities") for an aggregate
consideration of One Million Dollars ($1,000,000)(the "Purchase Price"). The
terms of the Series A Preferred Stock shall be as set forth in the form of
Certificate of Designation attached hereto as Exhibit A.
The closing of the purchase and sale of the Securities (the
"Closing") shall take place at the offices of the Escrow Agent, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇. The Closing shall be deemed to occur when (a)
this Agreement has been executed by both the Purchaser and the Company, (b) the
Escrow Agreement has been executed by each of the parties thereto, and (c)
delivery by the Company of the Securities registered in the name of the
Purchaser and delivery by the Purchaser of the Purchaser Price for the
Securities has been made. In addition, the Company shall have delivered or
caused to be delivered to Purchaser the opinion of counsel provided for in
Section 6.1(a) hereof (the "Opinion"). The date of the Closing is hereinafter
referred to as the "Closing Date".
III. REPRESENTATIONS AND WARRANTIES
3.1. Representations and Warranties of the Company. The
Company hereby represents and warrants to the Purchaser as follows:
(a) Organization and Qualification. The Company is a
corporation, duly incorporated, validly existing and in good standing under the
laws of Nevada, with the requisite corporate power and authority to own and use
its properties and assets and to carry on its business as currently conducted.
The Company has no subsidiaries other than Wall Street Strategies, Inc. (the
"Subsidiary"). The Subsidiary is a corporation, duly incorporated, validly
existing and in good standing under the laws of Delaware, with the full
corporate power and authority to own and use its properties and assets and to
carry on its business as currently conducted. Each of the Company and the
Subsidiary is duly qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which the nature of the business conducted
or property owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be, could not
reasonably be expected to have, individually or in the aggregate, a material
adverse effect on the results of operations, assets, prospects, or financial
condition of the Company and the Subsidiary, taken as a whole (a "Material
Adverse Effect").
(b) Authorization; Enforcement. The Company has the
requisite corporate power and authority to enter into and to consummate the
transactions contemplated hereby and otherwise to carry out its obligations
hereunder and thereunder. The execution and delivery of this Agreement and the
Escrow Agreement by the Company and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
action on the part of the Company. Each of this Agreement and the Escrow
Agreement has been duly executed and delivered by the Company and constitutes
the valid and binding obligation of the Company enforceable against the Company
in accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally the enforcement of, creditors'
rights and remedies or by other equitable principles of general application.
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(c) Capitalization. The authorized, issued and
outstanding capital stock of the Company and the Subsidiary is set forth in
Schedule 3.1(c). No shares of Common Stock are entitled to preemptive or similar
rights. Except as specifically disclosed in Schedule 3.1(c), there are no
outstanding options, warrants, script rights to subscribe to, calls or
commitments of any character whatsoever relating to, or, except as a result of
the purchase and sale of the Securities hereunder, securities, rights or
obligations convertible into or exchangeable for, or giving any person any right
to subscribe for or acquire any shares of Common Stock, or contracts,
commitments, understandings, or arrangements by which the Company or the
Subsidiary is or may become bound to issue additional shares of Common Stock, or
securities or rights convertible or exchangeable into shares of Common Stock.
Neither the Company nor any Subsidiary is in violation of any of the provisions
of its respective certificate of incorporation, bylaws or other charter
documents.
(d) Issuance of Securities. The Securities have been
duly and validly authorized for issuance, offer and sale pursuant to this
Agreement and, when issued and delivered as provided hereunder, shall be valid
and binding obligations of the Company enforceable in accordance with their
terms. Subject to the provisions of Section 4.7, the Company has and at all
times while the Securities are outstanding will maintain an adequate reserve of
shares of Common Stock to enable it to perform its obligations under this
Agreement, the Series A Preferred Stock and the Class A Warrants. When issued in
accordance with the terms hereof and the Securities, the Shares will be duly
authorized, validly issued, fully paid and nonassessable.
(e) No Conflicts. The execution, delivery and
performance of this Agreement and each of the Escrow Agreement by the Company
and the consummation by the Company of the transactions contemplated hereby and
thereby do not and will not (i) conflict with or violate any provision of its
certificate of incorporation or bylaws or (ii) conflict with, or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which
the Company is a party, or (iii) to the knowledge of the Company result in a
violation of any law, rule, regulation, order, judgment, injunction, decree or
other restriction of any court or governmental authority to which the Company is
subject (including Federal and state securities laws and regulations), or by
which any property or asset of the Company is bound or affected, except in the
case of each of clauses (ii) and (iii), such conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations as would not,
individually or in the aggregate, have a Material Adverse Effect. The business
of the Company is not being conducted in violation of any law, ordinance or
regulation of any governmental authority, except for violations which,
individually or in the aggregate, do not have a Material Adverse Effect.
(f) Consents and Approvals. Neither the Company nor the
Subsidiary is required to obtain any consent, waiver, authorization or order of,
or make any filing or registration with, any court or other federal, state,
local or other governmental authority or other Person in connection with the
execution, delivery and performance by the Company of this Agreement and the
Escrow Agreement, and other than, in all cases, where the failure to obtain such
consent, waiver, authorization or order, or to give or make such notice or
filing, would not materially impair or delay the ability of the Company to
effect the Closing and deliver to the Purchaser the Securities free and clear of
all Liens.
(g) Litigation; Proceedings. There is no action, suit,
notice of violation, proceeding or investigation pending or, to the best
knowledge of the Company, threatened against or affecting the Company or the
Subsidiary or any of their respective properties before or by any court,
governmental or administrative agency or regulatory authority (Federal, State,
county, local or foreign) which (i) relates to or challenges the legality,
validity or enforceability of this Agreement or the Securities (ii) could,
individually or in the aggregate, have a Material Adverse
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Effect or (iii) could, individually or in the aggregate, materially impair the
ability of the Company to perform fully on a timely basis its obligations under
this Agreement and the Escrow Agreement.
(h) No Default or Violation. Neither the Company nor
the Subsidiary (i) is in default under or in violation of any indenture, loan or
credit agreement or any other agreement or instrument to which it is a party or
by which it or any of its properties is bound, except such conflicts or defaults
as do not have a Material Adverse Effect, (ii) is in violation of any order of
any court, arbitrator or governmental body, except for such violations as do not
have a Material Adverse Effect, or (iii) is in violation of any statute, rule or
regulation of any governmental authority which could (individually or in the
aggregate) (x) adversely affect the legality, validity or enforceability of this
Agreement, (y) have a Material Adverse Effect or (z) adversely impair the
Company's ability or obligation to perform fully on a timely basis its
obligations under this Agreement or the Escrow Agreement.
(i) SEC Documents. The Company has delivered to the
Purchaser true and correct copies of each registration statement and quarterly
or current report filed by the Company with the SEC, as well as its most recent
Form 12(b)-25 relating to the quarter ended June 30, 2000 (collectively, the
"SEC Documents").
(j) Offshore Transaction. The Company has offered and
sold the Securities in an "offshore transaction" (as defined in Reg. S) only.
(k) No Directed Selling Efforts. The Company has not
conducted any "directed selling efforts" (as defined in Regulation S) nor has
the Company conducted any general solicitation relating to the offer and sale of
the Securities to persons resident within the United States or any other U.S.
person as that term is defined in Rule 902 of Regulation S.
(l) Offering Restrictions. The Company has complied or
will comply prior to delivery with all "offering restrictions" (as defined in
Regulation S) with respect to the Securities.
(m) Reporting Issuer. The Company is a "reporting
issuer" as defined in Rule 902 of Regulation S. The Company has filed all
reports, schedules, forms, statements and other documents required to be filed
by it with the SEC pursuant to the reporting requirements of the Securities
Exchange Act of 1934 (the "Exchange Act"), including pursuant to Section 13(a)
or 15(d) thereof, for the twelve months preceding the date hereof (or such
shorter period as the Company was required by law to file such material).
3.2. Representations and Warranties of the Purchaser. The
Purchaser hereby represents and warrants to the Company as follows:
(a) Non-U.S. Person. The Purchaser is not a "U.S.
person" within the meaning of Regulation S. In general, "U.S. person" means (A)
any natural person resident in the United States; (B) any partnership or
corporation organized or incorporated under the laws of the United States; (C)
any estate of which any executor or administrator is a U.S. person (D) any trust
of which any trustee is a U.S. person; (E) any agency or branch of a foreign
entity located in the United States; (F) any non-discretionary or similar
account (other than an estate or trust) held by a dealer or other fiduciary for
the benefit or account of a U.S. person; (G) any partnership or corporation if
(1) organized or incorporated under the laws of any foreign jurisdiction; and
(2) formed by a U.S. person principally for the purpose of investing in
securities not registered under the Act, unless it is organized or incorporated,
and owned, by accredited Holders (as defined in Rule 501(a) promulgated under
the Act who are not natural persons, estates or trusts. For purposes of this
Agreement, the United States includes the United States of America, its
territories and possessions, any state of the United States and the district of
Columbia.
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(b) Organization; Authority. The Purchaser is not
organized under the laws of any jurisdiction within the United States, its
territories or possessions, and was not formed for the purpose of investing in
Regulation S securities; (ii) at the time the Agreement was executed and any
offer to purchase the Securities hereunder was made, the Purchaser was
physically outside the United States; (iii) the Purchaser is acquiring the
Securities and the Shares for its own account and not on behalf of or for the
benefit of any U.S. person and the sale of the Securities or Underlying Shares
or the Warrant Shares has not been prearranged with any buyer in the United
States; (iv) the Purchaser hereby agrees that the offer or sale of any of the
Securities by the Purchaser, if made prior to the expiration of the one-year
Distribution Compliance Period, will not be made to a U.S. Person or for the
account or benefit of a U.S. Person (other than a distributor) and otherwise
only in accordance with the provisions of Regulation S. The Purchaser is not a
distributor or dealer.
(c) High Degree of Risk. The Purchaser understands that
no United States federal or state agency or similar agency of any other country,
has passed upon or made any recommendation or endorsement of the Company or the
transactions contemplated hereunder. The Purchaser understands that its
investment in the Securities involves a high degree of risk.
(d) No Registration. The Purchaser understands that
none of the Securities, the Underlying Shares or the Warrant Shares have been
registered under the Act and are being offered and sold pursuant to an exemption
from registration contained in the Act based in part upon the truth and accuracy
of, and the Purchaser's compliance with, the representations, warranties,
agreements, acknowledgments and understandings of the Purchaser contained
herein.
(e) Own Account. The Purchaser is acquiring the
Securities for its own account for investment and not as a nominee and not with
a view to the distribution thereof. The Purchaser represents and warrants to the
Company and agrees that it will not offer or sell any of the Securities, the
Underlying Shares or the Warrant Shares only in accordance with Regulation S,
pursuant to a registration under the Act or pursuant to an available exemption
from registration; and agrees not to engage in any hedging transactions with
regard to such securities unless in compliance with the Act.
(f) Valid and Legally Binding. The Purchaser has the
full power and authority to execute, deliver and perform this Agreement and the
Escrow Agreement. Each of this Agreement and the Escrow Agreement has been duly
and validly authorized, executed and delivered by the Purchaser and is a valid
and legally binding obligation of the Purchaser, enforceable in accordance with
its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally the enforcement of, creditors' rights and
remedies or by other equitable principles of general application.
(g) Tax Liability. The Purchaser has reviewed with its
own tax advisors the foreign, federal, state and local tax consequences of this
investment, where applicable, and the transactions contemplated by this
Agreement. The Purchaser is relying solely on such advisors and not on any
statements or representations of the Company or any of its agents and
understands that the Purchaser (and not the Company) shall be responsible for
the Purchaser's own tax liability that may arise as a result of this investment
or the transactions contemplated by this Agreement.
(h) Experience of Purchaser. The Purchaser, either
alone or together with its representatives, has such knowledge, sophistication
and experience in business and financial matters so as to be capable of
evaluating the merits and risks of the prospective investment in the New
Securities, and has so evaluated the merits and risks of such investment.
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(i) Ability of Purchaser to Bear Risk of Investment.
The Purchaser is able to bear the economic risk of an investment in the
Securities and, at the present time, is able to afford a complete loss of such
investment.
(j) Prohibited Transactions. The Securities to be
acquired by the Holder are not being acquired, directly or indirectly, with the
assets of any "employee benefit plan", within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended.
(k) Access to Information. The Purchaser acknowledges
receipt of the Disclosure Materials and further acknowledges that it has been
afforded (i) the opportunity to ask such questions as it has deemed necessary
of, and to receive answers from, representatives of the Company concerning the
terms and conditions of the Securities and the merits and risks of investing in
the Securities; (ii) access to information about the Company and the Company's
financial condition, results of operations, business, properties, management and
prospects sufficient to enable it to evaluate its investment in the Company; and
(iii) the opportunity to obtain such additional information which the Company
possesses or can acquire without unreasonable effort or expense that is
necessary to make an informed investment decision with respect to the purchase
of the Securities and to verify the accuracy and completeness of the information
contained in the Disclosure Materials.
(l) Status. At the time the Purchaser (and any account
for which it is purchasing) was offered the Securities, it (and any account for
which it is purchasing) was, and at the date hereof, it (and any account for
which it is purchasing) is, and at the Closing Date, it (and any account for
which it is purchasing) will be, an "accredited investor" as defined in Rule
501(a) under the Securities Act.
3.3. The Company acknowledges and agrees that the Purchaser
has made no representation or warranty with respect to the transactions
contemplated hereby other than those specifically set forth in Section 3.2
hereof.
IV. OTHER AGREEMENTS OF THE PARTIES
4.1. Manner of Offering. The Securities are being offered and
sold pursuant to Reg. S. The Series A Preferred Stock, the Class A Warrants and
the Shares will be subject to the restrictions on transfer set forth in Section
3.2 hereof and will contain restrictive legends.
4.2. Furnishing of Information. As long as the Purchaser owns
the Securities, the Company will promptly furnish to it all annual and quarterly
reports filed by the Company under, or comparable to those required by, Section
13(a) or 15(d) of the Exchange Act.
4.3. Notice of Certain Events. The Company shall advise the
Purchaser promptly after obtaining knowledge thereof, and, if requested by the
Purchaser, confirm such advice in writing, of any event that makes any statement
of a material fact made in the SEC Materials untrue or that requires the making
of any additions to or changes in the SEC Materials in order to make the
statements therein, in the light of the circumstances under which they are made,
not misleading.
4.4. Registration Statement. As soon as practicable following
the Closing but, in any event, on or before September 30, 2000, the Company
agrees to prepare and file, at its expense, a registration statement with the
Commission relating to the resale of the Shares (the "Registration Statement").
Without limiting the generality of the foregoing, the Registration Statement
shall include such number of shares of Common Stock as shall equal 200% of the
number of shares of Common Stock that would be required to be issued upon
conversion of all of the Series A Preferred Stock if converted on the Closing
Date or such other number of shares of Common Stock as the
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Company and the Purchaser shall agree. If such number shall prove to be
insufficient the Company shall amend the Registration Statement so as to include
additional shares of Common Stock or, if such amendment is not permitted, then
the Company shall file an additional registration statement with the Commission
to cover such additional shares and cause such additional registration statement
to be declared effective as soon as practicable. The Company shall exercise its
best efforts to cause the Registration Statement to be declared effective as
soon as practicable. If the Registration Statement is not filed on or before
September 30, 2000 or, if so filed, but not declared effective on or before
December 1, 2000, the Company shall pay to the Purchaser an amount equal to 2%
of the face value of the Class A Preferred Stock per every 30 day period, or a
pro rata portion thereof as the case may be (the "Liquidated Damages"). The
Company shall also register and qualify the Shares for resale in such states of
the United States as the Purchaser shall request provided that the Company shall
not be required to register or qualify the Shares in any jurisdiction that shall
require the Company to qualify to do business or to file a general consent to
service of process. The Registration shall include the shares of Common Stock to
be issued to the Placement Agent and the shares of Common Stock issuable upon
exercise of the warrant to be issued by the Company to the Placement Agent in
connection with the transactions contemplated hereunder. The Company shall keep
the Registration statement effective until the Shares have been resold or are
eligible for resale under Rule 144 (k). The Company's obligations hereunder are
conditioned upon the Purchaser providing the Company in a timely manner with all
information reasonably requested by the Company and required to be included in
the Registration Statement, including without limitation, the manner of
distribution. The Company and the Purchaser shall provide to the other customary
indemnities with respect to the Registration statement. If the Registration
Statement shall cease being effective on account of any act of the Company or
any omission to act by the Company during the period the Company is required to
keep the Registration Effective hereunder or if the Registration Statement shall
become "stale" and the Company shall fail to update the Registration Statement
within 15 days following such event, the Company shall be obligated to pay the
Purchaser the Liquidated Damages for any period that the Purchaser is unable to
sell Shares pursuant to the Registration Statement. Except as provided herein,
the company shall have no obligation to register any of the Securities or the
Shares.
4.5. Listing. The Company shall cause the Shares and the
Warrant Shares to be approved for listing on such exchange as the Company's
securities may then be trading.
4.6. Conversion Procedures. Conversion of the Series A
Preferred Stock shall be pursuant to the terms and conditions of the Series A
Preferred Stock.
4.7. Adequate Reserve. The Company covenants that at all times
it will keep available and reserved for issuance such number of shares of its
duly authorized Common Stock as may be required to be issued upon conversion of
the Series A Preferred Stock. If at any time the Company shall have insufficient
shares of Common Stock to enable it to perform its obligations under the Series
A Preferred Stock then outstanding, the Company shall call and hold a special
meeting within 30 days of such occurrence for the sole purpose of increasing the
number of authorized shares of Common Stock. By his signature below, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇ agrees to vote all shares of Common Stock then owned by him in favor of
such increase.
4.8 Placement Agent. The Company and the Purchaser represent
and warrant to the other that neither has employed the services of a broker or
finder in connection with the transactions contemplated hereunder other than the
Placement Agent. The Company agrees to issue to the Placement Agent, as its fee
for services rendered by the Placement Agent in connection with the transactions
contemplated hereunder, an aggregate of 100,000 restricted shares of Common
Stock and a five year warrant to purchase 150,000 shares of Common Stock at an
exercise price of $3.00 per share.
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V. CONDITIONS PRECEDENT TO CLOSING
5.1. Conditions Precedent to Obligations of the Purchaser. The
obligation of the Purchaser to purchase the Securities is subject to the
satisfaction or waiver by the Purchaser, at or prior to the Closing, of each of
the following conditions:
(a) Legal Opinion. The Purchaser shall have received
the legal opinion, addressed to it and dated the Closing Date, of ▇▇▇▇▇ ▇▇▇▇
LLP, counsel for the Company, substantially in the form of Exhibit D;
(b) Accuracy of the Company's Representations and
Warranties. The representations and warranties of the Company contained herein
shall be true and correct in all material respects as of the date when made and
as of the Closing Date as though made at that time (except that representations
and warranties that are made as of a specific date need be true in all material
respects only as of such date);
(c) Performance by the Company. The Company shall have
performed, satisfied and complied in all material respects with all covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Company at or prior to the Closing;
(d) No Material Adverse Effect. No event which had a
Material Adverse Effect shall have occurred which is not disclosed in the
Disclosure Materials;
(e) No Prohibitions. The issuance of the Securities
(and upon conversion of the Series A Preferred Stock, the Underlying Shares, and
upon exercise of the Class A Warrants, the Warrant Shares) hereunder (i) shall
not be prohibited or enjoined (temporarily or permanently) by any applicable law
or governmental regulation and (ii) shall not subject the Purchaser to any
penalty, or in its reasonable judgment, other onerous condition under or
pursuant to any applicable law or governmental regulation that would materially
reduce the benefits to the Purchaser of the Series A Preferred Stock, the
Underlying Shares or the Warrant Shares (provided, however, that such
regulation, law or onerous condition was not in effect in such form at the date
of this Agreement);
(f) No Suspensions of Trading in Common Stock. Trading
in the Common Stock shall not have been suspended by the Commission or the NASD
or other exchange or market on which the Common Stock is listed or quoted
(except for any suspension of trading of limited duration solely to permit
dissemination of material information regarding the Company);
5.2. Conditions Precedent to Obligations of the Company. The
obligation of the Company to issue and deliver any Securities hereunder is
subject to the satisfaction or waiver by the Company, at or to the Closing, of
each of the following conditions:
(a) Accuracy of the Purchaser 's Representations and
Warranties. The representations and warranties of the Purchaser shall be true
and correct in all material respects as of the date when made and as of the
Closing Date as though made at that time (except that representations and
warranties that are made as of a specific date need be true in all material
respects only as of such date);
(b) Performance by the Purchaser. The Purchaser shall
have performed, satisfied and complied in all material respects with all
covenants, agreements and conditions required by this Agreement to be performed,
satisfied or complied with by it at or prior to the Closing; and
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(c) No Prohibitions. The issuance of the Securities
(and upon conversion of the Series A Preferred Stock, the Underlying Shares and
upon exercise of the Class A Warrants, the Warrant Shares) hereunder (i) shall
not be prohibited or enjoined (temporarily or permanently) by any applicable law
or governmental regulation and (ii) shall not subject the Company to any
penalty, or in its reasonable judgment, any other onerous condition under or
pursuant to any applicable law or governmental regulation that would materially
reduce the benefits to the Company of the issuance of Series A Preferred Stock,
the Underlying Shares or the Warrant Shares to the Purchaser (provided, however,
that such regulation, law or onerous condition was not in effect in such form at
the date of this Agreement).
VI. TERMINATION
6.1. Termination by Mutual Consent. This Agreement may be
terminated at any time prior to Closing by the mutual consent of the Company and
the Purchaser.
6.2. Termination by the Company or the Purchaser. This
Agreement may be terminated prior to Closing by either the Company or the
Holder, by giving written notice of such termination to the other party, if:
(a) the Closing shall not have occurred by August ____,
2000; provided that the terminating party is not then in material breach of its
obligations under this Agreement in any manner that shall have caused the
failure referred to in this paragraph (a);
(b) there shall be in effect any statute, rule, law or
regulation that prohibits the consummation of the Closing or if the consummation
of the Closing would violate any non-appealable final judgment, order, decree,
ruling or injunction of any court of or governmental authority having competent
jurisdiction; or
(c) there shall have been an amendment to Regulation S
or an interpretive release promulgated or issued thereunder, which, in the
reasonable judgment of the terminating party, would materially adversely affect
the transactions contemplated hereby.
6.3. Termination by the Company. This Agreement may be
terminated prior to Closing by the Company, by giving notice of such termination
to the Purchaser, if the Purchaser has materially breached any representation,
warranty, covenant or agreement contained in this Agreement and such breach is
not cured within one business day following receipt by the Purchaser of notice
of such breach.
6.4. Termination by the Purchaser. This Agreement may be
terminated prior to Closing by the Purchaser, by giving notice of such
termination to the Company, if:
(a) the Company has breached any representation,
warranty, covenant or agreement contained in this Agreement and such breach is
not cured within one business day following receipt by the Company of notice of
such breach;
(b) there has occurred an event since the date of the
latest financial statements included in the Disclosure Materials which could
reasonably be expected to have a Material Adverse Effect and which is not
disclosed in the Disclosure Materials; or
(c) trading in the Common Stock has been suspended by
the Commission or the NASD or other exchange or market on which the Common Stock
is listed or quoted (except for any suspension of trading of limited duration
solely to permit dissemination of material information regarding the Company).
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VII. MISCELLANEOUS
7.1. Fees and Expenses The Company shall pay, out of the
Purchase Price, the reasonable fees and expenses of the attorney employed by the
Purchaser in connection with the negotiation, preparation, execution and
delivery of this Agreement. The Company shall further pay all stamp and other
taxes and duties levied in connection with the issuance of the Series A
Preferred Stock (and upon conversion thereof, the Underlying Shares, and upon
exercise of the Class A Warrants, the Warrant Shares) pursuant hereto. The
Purchaser shall be responsible for its own tax liability that may arise as a
result of the investment hereunder or the transactions contemplated by this
Agreement.
7.2. Entire Agreement; Amendments. This Agreement, together
with the Exhibits and Schedules hereto, contain the entire understanding of the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, oral or written, with respect to such matters.
7.3 Notices. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been received (a) upon hand delivery (receipt acknowledged) or delivery by telex
(with correct answer back received), telecopy or facsimile (with transmission
confirmation report) at the address or number designated below (if delivered on
a business day during normal business hours where such notice is to be
received), or the first business day following such delivery (if delivered other
than on a business day during normal business hours where such notice is to be
received) or (b) on the second business day following the date of mailing by
express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:
If to the Company:
Wall Street Strategies Corporation
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Purchaser
c/▇ ▇▇▇▇▇▇▇▇ Kernaghan & Co. Limited
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attn.: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
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or such other address as may be designated in writing hereafter, in the same
manner, by such person.
7.3. Amendments; Waivers. No provision of this Agreement may
be waived or amended except in a written instrument signed, in the case of an
amendment, by both the Company and the Holder, or, in the case of a waiver, by
the party against whom enforcement of any such waiver is sought. No waiver of
any default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any other provision, condition or requirement hereof, nor shall any delay or
omission of either party to exercise any right hereunder in any manner impair
the exercise of any such right accruing to it thereafter.
7.4. Headings. The headings herein are for convenience only,
do not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.
7.5. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their successors and permitted
assigns. Neither the Company nor the Holder may assign this Agreement or any
rights or obligations hereunder without the prior written consent of the other.
The assignment by a party of this Agreement or any rights hereunder shall not
affect the obligations of such party under this Agreement.
7.6. No Third Party Beneficiaries. This Agreement is intended
for the benefit of the parties hereto and their respective permitted successors
and assigns and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.
7.7. Governing Law. This Agreement and the Series A Preferred
Stock shall be governed by and construed in accordance with the laws of the
Province of Ontario, Canada; provided, however, if any provision of this
Agreement is unenforceable under Ontario law, but is enforceable under the laws
of the State of New York, then New York law shall govern the construction and
enforcement of that provision. The courts of the Province of Ontario, Canada,
shall have jurisdiction and venue for the adjudication of any civil action
between or among any of them arising out of or relating to this Agreement . The
parties hereby irrevocably consent to such jurisdiction and venue, and hereby
irrevocably waive any claim of forum non conveniens or right to change such
venue.
7.8. Survival. The representations and warranties of the
Company and the Purchaser contained in Article III and the agreements and
covenants of the parties contained in Article IV and this Article VII shall
survive the Closing (or any earlier termination of this Agreement) and any
conversion of Series A Preferred Stock hereunder.
7.9. Counterpart Signatures. This Agreement may be executed in
two or more counterparts, all of which when taken together shall be considered
one and the same agreement and shall become effective when counterparts have
been signed by each party and delivered to the other party, it being understood
that both parties need not sign the same counterpart. In the event that any
signature is delivered by facsimile transmission, such signature shall create a
valid and binding obligation of the party executing (or on whose behalf such
signature is executed) the same with the same force and effect as if such
facsimile signature page were an original thereof.
7.10. Publicity. Neither the Company nor the Purchaser shall
issue any such press release or otherwise make any public statement regarding
the transactions contemplated hereunder without the prior written consent of the
other, which consent shall not be unreasonably withheld or delayed, except as
may be required by applicable law, rule or regulation.
7.11. Severability. In case any one or more of the provisions
of this Agreement shall be invalid or unenforceable in any respect, the validity
and enforceability of the remaining
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terms and provisions of this Agreement shall not in any way be affecting or
impaired thereby and the parties will attempt to agree upon a valid and
enforceable provision which shall be a reasonable
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substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first indicated above.
Company:
WALL STREET STRATEGIES CORPORATION
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and CEO
PURCHASER:
CALP II LIMITED PARTNERSHIP
By: VMH Investment Management Ltd.,
General Partner
By:/s/ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇. ▇▇▇▇▇▇▇▇
Title: For: VMH INTERNATIONAL LTD., G.P.
Address: c/o Forum fund Services,
Washington Mall, Third Floor, Church
Street, ▇▇▇▇▇▇▇▇, ▇▇ 11 Bermuda
Ten (10)
-------------------------------------------
Number of shares of Preferred Stock to be
Issued (Issuable in Denominations of
$100,000)
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, with respect to Section 4.7
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