Exhibit 10.1
REGULATION S STOCK PURCHASE AGREEMENT
Dated March 10, 2004
by and between
LASERLOCK TECHNOLOGIES, INC.
and
CALIFORNIA SECURITIES S.A.
Regulation S Stock Purchase Agreement, dated as of March 10, 2004
between LaserLock Technologies, Inc., a Nevada corporation having offices at ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Company"), and California
Securities S.A., located at ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ Ed. ▇▇▇▇▇▇▇▇, ▇▇▇. ▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ of Panama. (the "Purchaser"). The Company and the Purchaser,
intending to be bound and for good and valuable consideration, the receipt and
sufficiency of which is acknowledged, covenant and agree as follows:
Definitions:
The "Company" means LaserLock Technologies, Inc., a corporation
organized under the laws of the State of Nevada.
"Purchaser" means California Securities S.A., a Panamanian business
company.
"Purchase Notice" means a written or an electronic notice from the
Purchaser to the Company of its binding, irrevocable commitment to purchase a
specific number of Shares in an exempt transaction subject to Regulation S. The
Purchase Notice shall set forth the closing date desired by Purchaser, the
number of Shares to be purchased with respect to each date (a "Purchase Date")
covered by the Purchase Notice (which shall be the same date or dates on which
Shares were sold by or on behalf of Purchaser to third parties), the Share Price
as of the trading day immediately preceding each Purchase Date, the proposed
Purchase Price per Share on each Purchase Date, the proposed aggregate Purchase
Price for all Shares covered by the Purchase Notice, the number of Share
certificates to be issued, and the number of Shares represented by each Share
certificate.
"Purchase Price" means an amount calculated by multiplying .30 times
the Share Price, calculated as of the trading day immediately preceding each
Purchase Date.
"Regulation S" shall mean Regulation S and the related Rules
promulgated by the SEC pursuant to the Securities Act as an exemption from
registration.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"SEC" shall mean the United States Securities and Exchange Commission.
"Shares" means shares of common stock of the Company and "Share" means
a single share of common stock of the Company.
"Share Price" means the closing bid price (if traded on the OTCBB) or
the closing price (if traded on the American Stock Exchange, or on such other
United States stock exchange or public trading market on which the Shares
trade).
"United States" means the United States of America, its territories and
possessions, any State of the United States and the District of Columbia.
PURCHASE, SALE AND TERMS OF SHARES
Purchase and Sale. In consideration of and in express reliance
upon the representations, warranties, covenants,
terms and conditions of this Agreement, the Company
agrees to sell to the Purchaser in an "offshore
transaction" as defined by Regulation S, and the
Purchaser agrees to purchase, subject to the
conditions hereinafter set forth, up to Twenty
Million (20,000,000) Shares of the Company, subject
to Section 1.4.
Closing. The Closing of each purchase of Shares hereunder will
occur as described in this Section 1.2. On or before
the proposed closing date specified in the Purchase
Notice (which shall not be less than two business
days after receipt by the Company of a Purchase
Notice for Shares), the Company will deliver stock
certificates representing such Shares in the name of
Purchaser (collectively "Certificate") at its office
in Panama, located at LABS, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Ed. ▇▇▇▇▇▇▇▇, ▇▇▇. ▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ of Panama, to
be held in escrow by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as custodian
(the "Custodian") pursuant to a written agreement
with Purchaser pending delivery to the Company of the
Purchase Price for such Shares. Purchaser will pay
the Purchase Price for the Shares to be purchased
pursuant to such Purchase Notice by wire transfer to
the Company of immediately available funds within
three (3) business days after receipt of the Share
certificates by the Custodian, at which time the
Custodian shall release the Share certificates as
directed by the Purchaser. The foregoing to the
contrary notwithstanding, the Custodian shall hold
the Certificate for the benefit of Purchaser and any
individuals purchasing from Purchaser for the
duration of the "Distribution Compliance Period" (as
defined by Rule 902(f) to Regulation S). Purchaser
will receive a one-time fee of US$500 to act as
custodian for all Certificates issued to Purchaser
pursuant to this Agreement. Purchaser may use the
offices of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, an attorney, located at
60 ▇. ▇▇▇▇▇▇▇▇ St., Chicago, IL USA, as disbursement
agent and custodian for the benefit of the parties.
All reasonable out-of-pocket expenses incurred by
Purchaser or the disbursement agent in connection
with the purchase and sale of Shares including, but
not limited to, courier fees, wire transfer fees,
stock transfer agent fees and any charge by custodian
or the disbursement shall be born by the Company and
deducted from the Purchase Price.
Floor Price. The Purchaser shall have no obligation to
present a Purchase Notice and the Company shall have
no obligation to accept and honor a Purchase Notice
received from Purchaser for Shares purchased on a day
when the Purchase Price for such day was based on a
Share Price that was less than $0.20 per share or as
may be specified by the Company by notice to the
Purchaser from time to time ("Floor Price").
Delivery of Purchase Notice; Term. Purchaser shall have until
5 p.m. Eastern time on May 31, 2004 to deliver one or
more Purchase Notices to the Company at its offices
at which time this Agreement shall terminate, unless
extended in writing by the parties. A Purchase Notice
may be for all or a part of the Shares described in
Section 1.1 above. Purchaser may deliver more than
one Purchase Notice; provided, however, that the
number of shares purchased pursuant to all Purchase
Notices shall not exceed the number of available
Shares described in Section 1.1. Anything herein to
the contrary notwithstanding, any Purchase Notice
accepted by the Company after the end of the term of
this Agreement shall be governed by the terms of this
Agreement as if it was timely delivered.
Covenant of Best Efforts. The Purchaser agrees to use its best
efforts to purchase up to 20,000,000 Shares between
the date hereof and May 31, 2004 ("Best Efforts
Period"), subject Section 1.4. Purchaser shall only
be obligated and liable to purchase the number of
Shares set forth in each Purchase Notice.
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER
The Purchaser represents and warrants to, and agrees with, the Company
as follows, which representations and warranties shall be true and correct, and
which agreements to the extent possible shall have been performed, in all
material respects on the date on which the Purchaser delivers each Purchase
Notice and on the date of each closing of the purchase of the Shares:
Access to Information. The Purchaser, in making the decision
to purchase the Shares, has relied upon the
representations and warranties contained in this
Agreement as well as independent investigations made
by it and/or its representatives, if any. The
Purchaser and/or its representatives during the
course of this transaction, and prior to the purchase
of any Shares, has had the opportunity to ask
questions of and receive answers from the management
of the Company concerning the business of the Company
and to receive any additional information, documents,
records and books relative to the business, assets,
financial condition, results of operations and
liabilities (contingent or otherwise) of the Company.
Purchaser acknowledges that it has reviewed the SEC
Filings (as hereinafter defined).
Sophistication and Knowledge. The Purchaser and/or its
representatives has such knowledge and experience in
financial and business matters that the Purchaser can
represent itself and is capable of evaluating the
merits and risks of the purchase of the Shares. The
Purchaser is not relying on the Company with respect
to the tax and other economic considerations of an
investment in the Shares, and the Purchaser has
relied on the advice of, or has consulted with, only
the Purchaser's own advisor(s). The Purchaser
represents that it has not been organized for the
purpose of acquiring the Shares.
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Lack of Liquidity. The Purchaser acknowledges that the
purchase of the Shares involves a high degree of risk
and further acknowledges that it can bear the
economic risk of the purchase of the Shares,
including the total loss of its investment. The
Purchaser acknowledges and understands that the
Shares may not be sold to a U.S. Person (as
hereinafter defined) or into the United States for a
period of one (1) year from the date of purchase and
that Purchaser or (to the Purchaser's knowledge) the
third party to whom the Purchaser sells such Shares
has no present need for liquidity in connection with
its purchase of the Shares.
No Public Solicitation. The Purchaser is not subscribing
for the Shares as a result of or subsequent to any
advertisement, article, notice or other communication
published in any newspaper, magazine or similar media
or broadcast over television or radio, or presented
at any seminar or meeting, or any solicitation of a
subscription by a person not previously known to the
Purchaser in connection with investments in
securities generally. Neither the Company nor the
Purchaser nor any person acting on behalf of either
of them has engaged or will engage in any "Directed
Selling Efforts in the U.S." as defined by Regulation
S with respect to the Shares purchased hereby.
Organization and Standing. The Purchaser has been duly
incorporated and is validly existing and in good
standing under the laws of the Republic of Panama and
has the requisite corporate power and authority
necessary to own its properties and to conduct its
business as presently conducted, to deliver this
Agreement and all other agreements required to be
executed by the Purchaser in connection with
performance under this Agreement (collectively, the
"Ancillary Agreements", and collectively with this
Agreement, the "Transaction Documents"), to purchase
the Shares and to carry out the provisions of, and
otherwise perform its obligations under, the
Transaction Documents.
Authority for Agreement. The execution and delivery by the
Purchaser of the Transaction Documents, and the
performance by the Purchaser of its obligations
thereunder, have been duly and validly authorized by
all requisite corporate action on the part of the
Purchaser. The Transaction Documents, when executed
and delivered, will be legally valid and binding
obligations of the Purchaser, enforceable against the
Purchaser in accordance with their terms, except as
limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general
application affecting enforcement of creditors'
rights, and general principles of equity that
restrict the availability of equitable remedies. The
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execution and delivery of the Transaction Documents
by the Purchaser and the performance by the Purchaser
of its obligations thereunder do not, as of the date
hereof, (i) conflict with or violate the provisions
of the Purchaser's Charter or Bylaws, (ii) require on
the part of the Purchaser any filing with, or any
permit, authorization, consent or approval of, any
governmental entity or regulatory body (a
"Governmental Entity"), (iii) conflict with, result
in a breach of, constitute (with or without due
notice or lapse of time or both) a default under,
result in the acceleration of, create in any party
the right to accelerate, terminate, modify or cancel,
or require any notice, consent or waiver under, any
contract, lease, sublease, license, sublicense,
franchise, permit, indenture, agreement or mortgage
for borrowed money, instrument of indebtedness, lien,
encumbrance or other arrangement to which the
Purchaser is a party or by which the Purchaser is
bound or to which its assets are subject, (iv) result
in the imposition of any security interest upon any
assets of the Purchaser or (v) violate or contravene
any United States federal, Panama corporate or
applicable state statute, rule or regulation
applicable to the Purchaser or any order, writ,
judgment, injunction, decree, determination or award.
Governmental Approval. No consent, approval, order or
authorization of, or registration, qualification,
designation, declaration or filing with, any
Governmental Entity is required on the part of the
Purchaser in connection with the execution and
delivery of the Transaction Documents, the purchase
and receipt of the Shares, any sale of Shares by the
Purchaser or any other transaction contemplated by
this Agreement.
Brokers or Finders. No person has or will have, as a result
of the transactions contemplated by this Agreement,
any right, interest or valid claim against or upon
the Company for any commission, fee or other
compensation as a finder or broker because of any act
or omission by Purchaser or its respective agents.
Requirements for Transfer. Purchaser agrees that it will not
transfer the Shares, and also agrees for itself and
any subsequent holder of the Shares that the Company
may refuse to transfer the shares on its books unless
the transferee executes a representation letter in a
form reasonably acceptable to the Company.
Compliance with Local Laws. The Purchaser will only make
offers and sales of the Shares during the
"Distribution Compliance Period" as defined by Rule
902(f) of Regulation S to persons permitted to
purchase such Shares in "offshore transactions" as
defined by Regulation S and in reliance upon
Regulation S. Further, any such sale of the Shares in
any jurisdiction outside of the United States will be
made in compliance with the securities laws and any
other applicable laws to such transactions of such
jurisdiction. Purchaser will not offer to sell or
sell the Shares in any jurisdiction unless the
Purchaser obtains all required consents, if any. If
Purchaser engages a third party to sell such Shares,
the Purchaser shall provide a copy of a
representation letter from such third party to the
Company, which confirms such third party's (i)
qualification to sell such Shares in such
jurisdiction and (ii) continued compliance with all
local and foreign laws, rules and regulations which
relate to the sale of such Shares. Such
representation letter shall be in a form acceptable
to the Company and substantially similar to the form
of representation letter attached hereto as Annex
2.10.
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Regulation S Exemption. The Purchaser understands that the
Shares are being offered and sold to it in reliance
on an exemption from the registration requirements of
United States federal and state securities laws under
Regulation S and that the Company is relying upon the
truth and accuracy of the representations,
warranties, agreements, acknowledgments and
understandings of the Purchaser set forth herein in
order to determine the applicability of such
exemptions and the suitability of the Purchaser to
acquire the Shares. In this regard, the Purchaser
represents, warrants and agrees that:
The Purchaser is not a U.S. Person (as defined below and as defined by
Regulation S) and is not an "affiliate" (as defined by Rule 501(b) under
the Securities Act) of the Company. The Purchaser is not acquiring the
Shares for the account of or benefit of any U.S. Person. A U.S. Person
means any one of the following:
any natural person resident in the United States;
any partnership or corporation organized or incorporated under the laws of
the United States;
any estate of which any executor or administrator is a U.S. person;
any trust of which any trustee is a U.S. person;
any agency or branch of a foreign entity located in the United States;
any non-discretionary account 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;
any discretionary account or similar account (other than an estate or
trust) held by a dealer or other fiduciary organized, incorporated or
(if an individual) resident in the United States; and
any partnership or corporation if:
organized or incorporated under the laws of any foreign jurisdiction; and
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formed by a U.S. person principally for the purpose of investing in securities
not registered under the Securities Act, unless it is organized or
incorporated, and owned, by "accredited investors" (as defined by Rule
501(a) under the Securities Act) who are not natural persons, estates or
trusts.
At the time of the origination of contact concerning this Agreement and the
date of the execution and delivery of this Agreement, the Purchaser was
outside of the United States and any person acting on its behalf reasonably
believes that the Purchaser is outside of the United States.
The Purchaser will not, during the period commencing on the date of issuance of
the Shares and ending on the first anniversary of such date, or such
shorter period as may be permitted by Regulation S or other applicable
securities law (the "Distribution Compliance Period"), offer, sell, pledge
or otherwise transfer the Shares in the United States, or to a U.S. Person
for the account or for the benefit of a U.S. Person, or otherwise in a
manner that is not in compliance with Regulation S.
The Purchaser will, after expiration of the Distribution Compliance Period,
offer, sell, pledge or otherwise transfer the Shares only pursuant to
registration under the Securities Act or an available exemption therefrom,
and in accordance with all applicable U.S. federal, state and foreign
securities laws. Without limiting the foregoing, the Purchaser will not, in
connection with its resale of the Shares, make any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements made, in light of the circumstances under which they were made,
not misleading. Purchaser agrees that, in connection with its resale of
Shares, it will provide to the persons who purchase Shares no information
regarding the Company that is not contained in the SEC Filings or written
materials approved in advance in writing by the Company.
The Purchaser has not engaged in, and prior to the expiration of the
Distribution Compliance Period will not engage in, any short selling of or
any hedging transaction with respect to the Shares, including without
limitation, any put, call or other option transaction, option writing or
equity swap.
Neither the Purchaser nor any person acting on its behalf has engaged, nor will
engage, in any directed selling efforts to a U.S. Person with respect to
the Shares and the Purchaser and any person acting on its behalf have
complied and will comply with the "offering restrictions" as defined by
Regulation S.
All offers and sales of the securities prior to the expiration of the
Distribution Compliance Period shall be made in
accordance with the provisions of Regulation S;
pursuant to registration of the securities under the Securities Act, as amended;
or
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pursuant to an available exemption from the registration requirements of the
Securities Act.
Purchaser also agrees not to engage in hedging transactions with regard to
such securities prior to the expiration of the Distribution Compliance
Period.
The transactions contemplated by this Agreement have not been pre-arranged with
a buyer located in the United States or with a U.S. Person, and are not
part of a plan or scheme to evade the registration requirements of the
Securities Act.
All offering material and documents (other than press releases) used in
connection with offers and sales of the securities prior to the expiration
of the distribution compliance shall contain statements to the effect that
the securities have not been registered under the Securities Act.
Neither the Purchaser nor any person acting on its behalf has undertaken or
carried out any activity for the purpose of, or that could reasonably be
expected to have the effect of, conditioning the market in the United
States, its territories or possessions, for any of the Shares. The
Purchaser agrees not to cause any advertisement of the Shares to be
published in any newspaper or periodical or posted in any public place and
not to issue any circular relating to the Shares, except such
advertisements that include the statements required by Regulation S, and
only offshore and not in the U.S. or its territories, and only in
compliance with any local applicable securities laws.
Each certificate representing the Shares shall be endorsed with the following
legends, or substantially similar legends, in addition to any other legend
required to be placed thereon by applicable federal or state corporate or
securities laws:
A. "THE SHARES ARE BEING OFFERED TO INVESTORS
WHO ARE NOT U.S. PERSONS (AS DEFINED BY REGULATION S
UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("THE
SECURITIES ACT")) AND WITHOUT REGISTRATION WITH THE
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
UNDER THE SECURITIES ACT IN RELIANCE UPON REGULATION
S PROMULGATED UNDER THE SECURITIES ACT."
B. "TRANSFER OF THESE SHARES IS PROHIBITED,
EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF
REGULATION S, PURSUANT TO REGISTRATION UNDER THE
SECURITIES ACT, OR PURSUANT TO AVAILABLE EXEMPTION
FROM REGISTRATION. HEDGING TRANSACTIONS MAY NOT BE
CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES
ACT."
C. "THE SHARES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. SUCH SHARES HAVE BEEN ACQUIRED FOR INVESTMENT
AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR SUCH SHARES UNDER THE
SECURITIES ACT OF 1933, UNLESS, IN THE OPINION (WHICH
SHALL BE IN FORM AND SUBSTANCE SATISFACTORY TO THE
CORPORATION) OF COUNSEL SATISFACTORY TO THE
CORPORATION, SUCH REGISTRATION IS NOT REQUIRED."
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D. "THE SHARES REPRESENTED BY THIS CERTIFICATE
ARE FURTHER SUBJECT TO RESTRICTIONS SET FORTH IN A
REGULATION S STOCK PURCHASE AGREEMENT AMONG THE
COMPANY AND CERTAIN HOLDERS OF ITS COMMON STOCK.
COPIES OF THIS AGREEMENT ARE ON FILE WITH THE
SECRETARY OF THE COMPANY."
The Purchaser consents to the Company making a notation on its records or
giving instructions to any transfer agent of the Company in order to
implement the restrictions on transfer of the Shares set forth in this
Section 2.5.
COVENANTS OF THE COMPANY
Operations. From and after the date hereof through the final
purchase of the Shares, the Company will operate only
in the ordinary course of business.
Inspection. The Company shall permit authorized
representatives of the Purchaser to visit and inspect
any of the properties of the Company, including its
books of account (and to make copies thereof and take
extracts there from), and to discuss its affairs,
finances and accounts with its officers, employees,
independent accountants, consultants and attorneys,
all at such reasonable times and as often as may be
reasonably requested.
Share Registry; Removal of Legend. The Company consents to
Purchaser reselling Shares and to recording the
ownership of such shares in book entry form,
provided, however, that all such sales are conducted
in full compliance with Regulation S and all
applicable U.S. federal, state and foreign law or
regulation, and the Company and its transfer agent
are advised of the identity of each subsequent
purchaser. Purchaser or bona fide transferees of
Purchaser may request certification of Shares at any
time and the Company will instruct its transfer agent
to cooperate in this regard. Shares for which the
Regulation S Distribution Compliance Period and 144
Restricted Period (as defined by the Securities Act)
has expired shall be delivered free of any Regulation
S and 144 legend, provided that the Purchaser or
holder of such Shares provides the Company and its
counsel with such customary representations as may be
reasonably requested in connection with the
preparation and delivery to the Company's transfer
agent of any required legal opinion.
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Press Release; Filing Form 10Q-SB with the SEC. The Company
acknowledges that the successful completion of this
transaction will require the Company to include
information about the transaction in its next Form
10Q-SB filed with the SEC. The Company agrees to
provide the Purchaser or its counsel with a draft of
that portion of any press release that discusses this
Agreement or the sale of shares pursuant to this
Agreement at least three (3) days prior to
publication or filing.
Communications. The Company will first communicate with the
Purchaser or its authorized representative, A-Street
Capital Corp., before attempting to contact any third
party engaged by the Purchaser with regard to the
sale of Shares pursuant to this Agreement.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchaser as follows, which
representations and warranties shall be true and correct in all material
respects on the date of each closing of the purchase of the Shares:
Organization and Standing. The Company has been duly
incorporated and is validly existing and in good
standing under the laws of the State of Nevada and
has the requisite corporate power and authority
necessary to own its properties and to conduct its
business as presently conducted, to deliver this
Agreement and all other agreements required to be
executed by the Company in connection with
performance under this Agreement and the Transaction
Documents, to issue and sell the Shares and to carry
out the provisions of the Transaction Documents. The
Company is duly qualified to transact business as a
foreign corporation and is in good standing in every
jurisdiction in which the failure to so qualify would
have a material adverse effect on the operations or
financial condition of the Company.
Authority for Agreement. The execution and delivery by the
Company of the Transaction Documents, and the
performance by the Company of its obligations
thereunder, have been duly and validly authorized by
all requisite corporate action on the part of the
Company. The Transaction Documents, when executed and
delivered, will be legally valid and binding
obligations of the Company, enforceable against the
Company in accordance with their terms, except as
limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general
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application affecting enforcement of creditors'
rights, and general principles of equity that
restrict the availability of equitable remedies. To
the Company's knowledge, the execution and delivery
of the Transaction Documents by the Company and the
performance by the Company of its obligations
thereunder do not, as of the date hereof, (i)
conflict with or violate the provisions of the
Company's Articles of Incorporation or Bylaws, each
as amended, (ii) require on the part of the Company
any filing with, or any permit, authorization,
consent or approval of, any U.S. federal or state
Governmental Entity, (iii) conflict with, result in a
breach of, constitute (with or without due notice or
lapse of time or both) a default under, result in the
acceleration of, create in any party the right to
accelerate, terminate, modify or cancel, or require
any notice, consent or waiver under, any material
contract, lease, sublease, license, sublicense,
franchise, permit, indenture, agreement or mortgage
for borrowed money, instrument of indebtedness, lien,
encumbrance or other arrangement to which the Company
is a party or by which the Company is bound or to
which its assets are subject, (iv) result in the
imposition of any security interest upon any assets
of the Company or (v) violate or contravene any
United States federal, Nevada corporate or applicable
state statute, rule or regulation or any order, writ,
judgment, injunction, decree, determination or award
applicable to the Company, except, in the case of
subsections (ii), (iii), (iv) or (v), for any such
items that would not have a material adverse effect
on the operations or financial condition of the
Company.
Securities Law Filings, Etc. The Company has previously
furnished to the Purchaser the Company's filings with
the SEC as follows: (i) all filings made with the SEC
on or after January 1, 2003 (the "SEC Filings"). The
SEC Filings, as of the date of the filing thereof
with the SEC, complied in all material respects with
the provisions of the Securities Exchange Act of 1934
(the "Exchange Act"), and in each case the rules and
regulations promulgated thereunder, and none of such
filings contained 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 therein, in light of the circumstances
under which they were made, not misleading.
Capitalization and Issuances of Stock. As of December 31,
2003, the Company has authorized and outstanding
capital stock as set forth on Schedule 4.4. All
outstanding shares of capital stock of the Company
are duly authorized, validly issued and outstanding,
fully paid and nonassessable. Except as set forth in
the Schedule 4.4: (i) there are no outstanding
options, stock subscription agreements, warrants or
other rights permitting or requiring the Company or
others to purchase or acquire any shares of capital
stock or other equity securities of the Company; (ii)
there are no securities issued or outstanding which
are convertible into or exchangeable for any of the
foregoing and there are no contracts, commitments or
understandings, whether or not in writing, to issue
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or grant any such option, warrant, right or
convertible or exchangeable security; (iii) there are
no shares of stock or other securities of the Company
reserved for issuance for any purpose; and (iv) there
are no voting trusts or other contracts, commitments,
understandings, arrangements or restrictions of any
kind with respect to the ownership, voting or
transfer of shares of stock or other securities of
the Company to which the Company or, to the best of
the Company's knowledge, any stockholder of the
Company is a party, including without limitation, any
preemptive rights, rights of first refusal, proxies
or similar rights. The issued and outstanding shares
of capital stock of the Company conform to all
statements in relation thereto contained in the SEC
Filings, and the SEC Filings describe all material
terms and conditions thereof. To the Company's
knowledge, all issuances by the Company of its
securities were exempt from registration under the
Securities Act and any applicable state securities
laws or were issued pursuant to a registration
statement declared effective by the SEC under the
Securities Act and which registration statement was
available for the sale of the type of securities sold
thereunder.
Subsidiaries. The Company has no operating subsidiaries.
Issuance of Securities. The issuance, sale and delivery of the
Shares in accordance with this Agreement, have been,
or will be on or prior to the Closing, duly
authorized, and the Shares reserved for issuance by
all necessary corporate action on the part of the
Company. The Shares, when issued, sold, delivered and
paid for in accordance with the provisions of this
Agreement will be duly and validly issued, fully paid
and non-assessable, and will be free of all liens,
charges, claims, encumbrances and restrictions on
transfer other than the restrictions on transfer
under the Transaction Documents and under applicable
state and federal securities laws.
Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification,
designation, declaration or filing with, any U.S.
federal or state Governmental Entity is required on
the part of the Company in connection with the
execution and delivery of the Transaction Documents,
the offer, issue, sale and delivery of the Shares or
the other transactions to be consummated as
contemplated by this Agreement, except qualifications
or filings under the Securities Act and other
applicable state securities laws which qualifications
or filings, if required, will be obtained or made and
will be effective within the time periods required by
law.
Offering Exemption. Assuming the accuracy of the
representations and warranties made by the Purchaser,
the offer, sale and issuance of the Shares to the
Purchaser will be exempt from the registration
requirements of the Securities Act and will have been
registered or qualified (or are exempt from
registration and qualification) under the
registration, permit or qualification requirements of
all applicable state securities laws. Neither the
Company nor any agent on its behalf has solicited or
will solicit any offers to sell or has offered to
sell or will offer to sell all or any part of the
Shares to any person or persons so as to bring the
sale of such Shares by the Company within the
registration provisions of the Securities Act or any
state securities laws.
12
Litigation. There is no action, suit, proceeding or
investigation pending or, to the Company's knowledge,
currently threatened, against the Company, except as
described in the SEC Filings or Schedule 4.9 hereto.
The Company is not aware of any basis for any of the
foregoing or any intent on its part to initiate any
of the foregoing.
Financial Statements. [Reserved]
Absence of Liabilities. Except as set forth in Schedule 4.11,
the Company has no material liabilities, contingent
or otherwise, other than (i) liabilities incurred in
the ordinary course of business subsequent to
September 30, 2003, that individually or in the
aggregate are not material to the financial condition
or operating results of the Company, and (ii)
obligations not required under generally accepted
accounting principles to be reflected in the
Financial Statements.
Taxes. The Company has paid all taxes due as of the date
hereof. The Company has filed or has obtained
presently effective extensions with respect to all
Federal, state, county, local and foreign tax returns
(collectively, "Tax Returns") that the Company is
required to file. The Tax Returns were true and
correct in all material respects when filed, and all
taxes shown thereon to be due have been paid, with
any exceptions permitted by any taxing authority not
having a materially adverse effect on the Company. No
material penalties or other charges are or will
become due with respect to any such Tax Returns as
the result of the late filing thereof. The Company
has either paid or established in the Financial
Statements adequate reserves for the payment of all
such taxes due or claimed to be due by any taxing
authority in connection with any such Tax Returns.
None of the Company's federal income tax returns have
been audited by the Internal Revenue Service, and no
controversy with respect to taxes of any type is
pending or, to the knowledge of the Company,
threatened. The Company has withheld or collected
from each payment made to its employees the amount of
all taxes required to be withheld or collected
therefrom and has paid all such amounts to the
appropriate taxing authorities when due. Neither the
Company nor, to the Company's knowledge, any of its
stockholders on behalf of the Company has ever filed
(i) an election pursuant to Section 1362 of the
Internal Revenue Code of 1986, as amended (the
"Code"), that the Company be taxed as an S
Corporation, or (ii) a consent pursuant to Section
341(f) of the Code relating to collapsible
corporations.
13
Property and Assets. The Company has good title to, or a valid
leasehold interest in, all of its material properties
and assets, including all properties and assets
reflected in the Financial Statements. None of such
properties or assets is subject to any mortgage,
pledge, lien, security interest, lease, charge or
encumbrance other than those the material terms of
which are described in the Financial Statements. The
Company does not own any real estate. All personal
property of the Company is in good operating
condition and repair (ordinary wear and tear and
routinely scheduled maintenance excepted) and is
suitable and adequate for the uses for which it is
intended or is being used.
Intellectual Property. To the Company's knowledge, the Company
owns, or has the right to use, free and clear of all
liens, charges, claims and restrictions, all patents,
patent applications, trademarks, service marks,
trademark and service ▇▇▇▇ applications, trade names,
copyrights and licenses presently owned or held by
the Company or employed or proposed to be employed by
it in its business as now conducted or proposed to be
conducted, as well as any agreement under which the
Company has access to any confidential information
used by the Company in its business (the
"Intellectual Property Rights"). The Company has not
received any communications alleging that the Company
has violated any of the patents, trademarks, service
marks, trade names, copyrights, licenses, trade
secrets or other proprietary rights of any other
person or entity ("Third-Party Intellectual Property
Rights"), and to the Company's knowledge the business
proposed by the Company will not cause the Company to
infringe or violate any Third Party Intellectual
Property Rights. The Company is not aware of any
violation by any third party of any Intellectual
Property Rights of the Company or of any defects in
the title thereto. The Company is not aware that any
employee is obligated under any contract (including
any license, covenant or commitment of any nature) or
other agreement, or subject to any judgment, decree
or order of any court or administrative agency, that
would conflict or interfere with: (i) the performance
of such employee's duties as an officer, employee or
director of the Company; (ii) the use of such
employee's best efforts to promote the interests of
the Company; or (iii) the Company's business as
conducted.
Compliance. The Company has, in all material respects,
complied with all laws, regulations and orders
applicable to its business and has all material
permits and licenses required thereby. To the
Company's knowledge, no employee of the Company is in
violation in any material respect of any contract or
covenant (either with the Company or with another
entity) relating to employment, patent, other
proprietary information disclosure, non-competition,
or non-solicitation.
14
Employees. All employees of the Company who have access to
confidential or proprietary information of the
Company have executed and delivered nondisclosure
agreements, and all of such agreements are in full
force and effect. Except as set forth on Schedule
4.16, the Company is not aware that any employee of
the Company has plans to terminate his or her
employment relationship with the Company. The Company
has complied in all material respects with all
applicable laws relating to wages, hours, equal
opportunity, collective bargaining, workers'
compensation insurance and the payment of social
security and other taxes. None of the employees of
the Company is represented by any labor union, and
there is no labor strike or other labor trouble
(including, without limitation, any organizational
drive) pending or, to the knowledge of the Company,
threatened with respect to the Company.
Environmental and Safety Matters. To the Company's knowledge,
the Company is not in material violation of any
applicable environmental law, and to its knowledge,
no material expenditures are or will be required in
order to comply with any such environmental law.
Books and Records. The books of account, ledgers, order
books, records and documents of the Company
accurately and completely reflect all material
information relating to the business of the Company,
the location and collection of its assets, and the
nature of all transactions giving rise to the
obligations or accounts receivable of the Company.
Brokers or Finders. The Company has not agreed to incur,
directly or indirectly, any liability for brokerage
or finders' fees, agents' commissions or other
similar charges in connection with the Transaction
Documents or any of the transactions contemplated
hereby or thereby.
Disclosures. The Company has provided the Purchaser with all
information requested by the Purchaser in connection
with its decision to purchase the Shares. None of the
information provided to the Purchaser or its agents
by the Company pursuant to this Agreement, any
Exhibit hereto, the Transaction Documents, or any
report, certificate or instrument furnished to the
Purchaser or its agents in connection with the
transactions contemplated by this Agreement, when
read together, contains or will contain any material
misstatement of fact or omits to state a material
fact necessary to make the statements contained
herein or therein not misleading.
15
REGISTRATION RIGHTS
Piggy-Back Registrations. If at any time after the first
anniversary of the purchase of the Shares, the
Company shall determine to register for its own
account or the account of others under the Securities
Act (including pursuant to a demand for registration
of any stockholder of the Company) any of its equity
securities, other than on Form S-4 or Form S-8 or
their then equivalents relating to shares of Common
Stock to be issued solely in connection with any
acquisition of any entity or business or shares of
Common Stock issuable in connection with stock option
or other employee benefit plans, it shall send to
each holder of Registrable Shares who is entitled to
registration rights under this Section 5.1 written
notice of such determination and, if within fifteen
(15) days after such notice, such holder shall so
request in writing, the Company shall use its best
efforts to include in such registration statement all
or any part of the Registrable Shares such holder
requests to be registered, except that if in
connection with a public offering of the Company, the
managing underwriter shall impose a limitation on the
number of shares of such Common Stock which may be
included in the registration statement because, in
its judgment, such limitation is necessary to effect
an orderly public distribution, then the Company
shall be obligated to include in such registration
statement only such limited portion of the
Registrable Shares with respect to which such holder
has requested inclusion hereunder on a pro rata
basis.
"Registrable Shares" shall mean and include the Shares;
provided, however, that shares of Common Stock which are
Registrable Shares shall cease to be Registrable Shares upon
the first to occur of (i) the consummation of any sale
pursuant to a registration statement or Rule 144 under the
Securities Act, (ii) 90 days after the effectiveness of a
registration statement that includes such Registrable Shares,
(iii) the date when such Registrable Shares may be sold
without registration under the Securities Act pursuant to Rule
144(k) thereunder, or (iv) following the notice contemplated
by Section 5.1, fifteen (15) days after further notice to any
holder of Registrable Shares requesting each holder to furnish
to the Company any information reasonably requested by the
Company in connection with the preparation or filing of a
registration statement if such holder fails to provide such
information within such 15-day period.
Effectiveness. The Company will use its best efforts to
maintain the effectiveness for up to 90 days (or such
shorter period of time as the underwriters, if any,
need to complete the distribution of the registered
offering) of any registration statement pursuant to
which any of the Registrable Shares are being
offered, and from time to time will amend or
supplement such registration statement and the
prospectus contained therein to the extent necessary
to comply with the Securities Act and any applicable
state securities statute or regulation. The Company
will also provide each holder of Registrable Shares
with as many copies of the prospectus contained in
any such registration statement as it may reasonably
request.
16
Indemnification by the Company.
In the event that the Company registers any of the Registrable Shares
under the Securities Act, the Company will indemnify and hold
harmless each holder and each underwriter of the Registrable
Shares (including their officers, directors, affiliates and
partners) so registered (including any broker or dealer through
whom such shares may be sold) and each person, if any, who
controls such holder or any such underwriter within the meaning of
Section 15 of the Securities Act (each, an "Indemnified Person")
from and against any and all losses, claims, damages, expenses or
liabilities, joint or several, to which they or any of them become
subject under the Securities Act, applicable state securities laws
or under any other statute or at common law or otherwise, as
incurred, and, except as hereinafter provided, will reimburse each
such holder, each such underwriter and each such controlling
person, if any, for any legal or other expenses reasonably
incurred by them or any of them in connection with investigating
or defending any actions whether or not resulting in any
liability, as incurred, insofar as such losses, claims, damages,
expenses, liabilities or actions arise out of or are based upon
any untrue statement or alleged untrue statement of a material
fact contained in the registration statement by which such
Indemnified Person's Registrable Securities are registered, in any
related preliminary or amended preliminary prospectus or in the
related final prospectus (or such registration statement or
prospectus as from time to time amended or supplemented by the
Company in connection with offers or resales of such Indemnified
Person's Registrable Securities) or arise out of or are based upon
the omission or alleged omission to state therein a material fact
required to be stated therein or necessary in order to make the
statements therein not misleading, or any violation by the Company
of any rule or regulation promulgated under the Securities Act or
any state securities laws applicable to the Company and relating
to action or inaction required of the Company in connection with
such registration, unless (i) such untrue statement or alleged
untrue statement or omission or alleged omission was made in such
registration statement, preliminary or amended preliminary
prospectus or final prospectus in reliance upon and in conformity
with information furnished in writing to the Company in connection
therewith by, or on behalf of, any such holder of Registrable
Shares (in the case of indemnification of such holder), any such
underwriter (in the case of indemnification of such underwriter)
or any such controlling person (in the case of indemnification of
such controlling person) expressly for use therein, or unless (ii)
in the case of a sale directly by such holder of Registrable
Shares (including a sale of such Registrable Shares through any
underwriter retained by such holder of Registrable Shares to
engage in a distribution solely on behalf of such holder of
Registrable Shares), such untrue statement or alleged untrue
statement or omission or alleged omission was contained in a
preliminary prospectus and corrected in a final or amended
prospectus copies of which were delivered to such holder of
Registrable Shares or such underwriter on a timely basis, and such
holder of Registrable Shares failed to deliver a copy of the final
or amended prospectus at or prior to the confirmation for the sale
of the Registrable Shares to the person asserting any such loss,
claim, damage or liability in any case where such delivery is
required by the Securities Act.
17
Promptly after receipt by any holder of Registrable Shares, any
underwriter or any controlling person of notice of the
commencement of any action in respect of which indemnity may be
sought against the Company, such holder of Registrable Shares, or
such underwriter or such controlling person, as the case may be,
will notify the Company in writing of the commencement thereof
(provided, that failure by any such person to so notify the
Company shall not relieve the Company from any liability it may
have hereunder to any other person entitled to claim indemnity or
contribution hereunder unless (and solely to the extent) the
Company is thereby prejudiced) and, subject to the provisions
hereinafter stated, the Company shall be entitled to assume the
defense of such action (including the employment of counsel, who
shall be counsel reasonably satisfactory to such holder of
Registrable Shares, such underwriter or such controlling person,
as the case may be), and the payment of expenses insofar as such
action shall relate to any alleged liability in respect of which
indemnity may be sought against the Company.
In order to provide for just and equitable contribution to joint
liability under the Securities Act in any case in which any holder
of Registrable Shares exercising rights under this Article V or
any controlling person of any such holder, makes a claim for
indemnification pursuant to this Section 5.3 but it is judicially
determined (by the entry of a final judgment or decree by a court
of competent jurisdiction and the expiration of time to appeal or
the denial of the last right of appeal) that such indemnification
may not be enforced in such case notwithstanding the fact that
this Section 5.3 provides for indemnification in such case, then,
the Company and such holder will contribute to the aggregate
losses, claims, damages or liabilities to which they may be
subject (after contribution from others) in such proportion as is
appropriate to reflect the relative fault of the Company on the
one hand and of the holder of Registrable Shares on the other in
connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative fault of the
Company on the one hand and of the holder of Registrable Shares on
the other shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates
to information supplied by the Company on the one hand or by, or
on behalf of, the holder of Registrable Shares on the other, and
each party's relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission;
provided, however, that, in any such case, (A) no such holder will
be required to contribute any amount in excess of the public
offering price of all such Registrable Shares offered by it
pursuant to such registration statement, net of any underwriting
discounts or commissions paid by such holder; and (B) no person or
entity guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) will be entitled to
contribution from any person or entity who was not guilty of such
fraudulent misrepresentation.
18
Indemnification by Holders of Registrable Shares.
In the event that the Company registers any of the Registrable Shares
under the Securities Act, each holder of the Registrable Shares so
registered will, as a condition to registration of the Registrable
Shares, agree to indemnify and hold harmless the Company, each of
its directors, each of its officers who have signed or otherwise
participated in the preparation of the registration statement,
each underwriter of the Registrable Shares so registered
(including any broker or dealer through whom such of the shares
may be sold) and each person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act from and
against any and all losses, claims, damages, expenses or
liabilities, joint or several, to which they or any of them may
become subject under the Securities Act, applicable state
securities laws or under any other statute or at common law or
otherwise, and, except as hereinafter provided, will reimburse the
Company and each such director, officer, underwriter or
controlling person for any legal or other expenses reasonably
incurred by them or any of them in connection with investigating
or defending any actions whether or not resulting in any
liability, insofar as such losses, claims, damages, expenses,
liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained
in the registration statement, in any preliminary or amended
preliminary prospectus or in the final prospectus (or in the
registration statement or prospectus as from time to time amended
or supplemented) or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary in order to make the statements
therein not misleading, but only insofar as any such statement or
omission was made in reliance upon and in conformity with
information furnished in writing to the Company in connection
therewith by such holder of Registrable Shares expressly for use
therein; provided, however, that such holder's obligations
hereunder shall be limited to an amount equal to the aggregate
public offering price of the Registrable Shares sold by such
holder in such registration, net of any underwriting discounts or
commissions paid by such holder.
In order to provide for just and equitable contribution to joint
liability under the Securities Act in any case in which the
Company or another person entitled to indemnification pursuant to
this Section 5.4 makes a claim for indemnification pursuant to
this Section 5.4, but it is judicially determined (by the entry of
a final judgment or decree by a court of competent jurisdiction
and the expiration of time to appeal or the denial of the last
right of appeal) that such indemnification may not be enforced in
such case notwithstanding that this Section 5.4 provides for
indemnification in such case, then, the Company and such holder
will contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (after contribution from
others) in such proportion as is appropriate to reflect the
relative fault of the Company on the one hand and of the holder of
Registrable Shares on the other in connection with the statements
or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable
considerations. The relative fault of the Company on the one hand
and of the holder of Registrable Shares on the other shall be
determined by reference to, among other things, whether the untrue
19
or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information
supplied by the Company on the one hand or by the holder of
Registrable Shares on the other, and each party's relative intent,
knowledge, access to information and opportunity to correct or
prevent such statement or omission; provided, however, that, in
any such case, (A) no such holder will be required to contribute
any amount in excess of the public offering price of all such
Registrable Shares offered by it pursuant to such registration
statement, net of any underwriting discounts or commissions paid
by such holder; and (B) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any person
or entity who was not guilty of such fraudulent misrepresentation.
Exchange Act Reports. The Company will use its best efforts to
timely file with the Commission such information as
the Commission may require under the Exchange Act and
shall use its best efforts to take all action as may
be required as a condition to the availability of
Rule 144 under the Securities Act (or any successor
exemptive rule hereafter in effect) with respect to
its Common Stock. The Company shall furnish to any
holder of Registrable Shares forthwith upon request
(i) a written statement by the Company as to its
compliance with the reporting requirements of Rule
144, (ii) a copy of the most recent annual or
quarterly report of the Company as filed with the
Commission, and (iii) such other reports and
documents as a holder may reasonably request in
availing itself of any rule or regulation of the
Commission allowing a holder to sell any such
Registrable Shares without registration. The Company
agrees to use its commercially reasonable efforts to
facilitate and expedite transfers of the Shares
pursuant to Rule 144 under the Securities Act, which
efforts shall include timely notice to its transfer
agent to expedite such transfers of Shares.
Expenses. In the case of each registration effected under
Section 5.1, the Company shall bear all reasonable
costs and expenses of each such registration on
behalf of the selling holders of Registrable Shares,
including, but not limited to, the Company's
printing, legal and accounting fees and expenses,
Commission and NASD filing fees and "Blue Sky" fees;
provided, however, that the Company shall have no
obligation to pay or otherwise bear any portion of
the underwriters' commissions or discounts
attributable to the Registrable Shares being offered
and sold by the holders of the Registrable Shares, or
the fees and expenses of counsel for the selling
holders of Registrable Shares in connection with the
registration of the Registrable Shares.
Transferability. For all purposes of Article V of this
Agreement, Purchaser or an assignee thereof who
agrees to be bound by the provisions of this Article
V shall be deemed at any particular time to be the
holder of all Registrable Shares of which such person
shall at such time be the "beneficial owner,"
determined in accordance with Rule 13d-3 under the
Exchange Act.
20
MISCELLANEOUS
No Waiver; Cumulative Remedies. No failure or delay on the
part of any party to this Agreement in exercising
any right, power or remedy hereunder shall operate as
a waiver thereof; nor shall any single or partial
exercise of any such right, power or remedy preclude
any other or further exercise thereof or the exercise
of any other right, power or remedy hereunder. The
remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
Amendments, Waivers and Consents. Any provision in this
Agreement to the contrary notwithstanding, and except
as hereinafter provided, changes in, termination or
amendments of or additions to this Agreement may be
made, and compliance with any covenant or provision
set forth herein may be omitted or waived, if the
Company shall obtain consent thereto in writing from
the Purchaser. Any waiver or consent may be given
subject to satisfaction of conditions stated therein
and any waiver or consent shall be effective only in
the specific instance and for the specific purpose
for which given.
Notices. All notices, requests, demands and other
communications provided for hereunder to any person
other than the Company shall be in writing, shall be
sent by courier or registered or certified mail or by
facsimile to the Purchaser or its authorized
representative, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ at the following
address: ▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, facsimile: (▇▇▇) ▇▇▇-▇▇▇▇. All such
notices, requests, demands and other communications
shall be deemed delivered and effective five (5) days
after such notice is sent to the Purchaser or to its
authorized representative, A-Street Capital Corp.
All notices, requests, demands and other communications
provided for hereunder to the Company shall be sent by courier
or registered or certified mail or by facsimile to the Company
at the following address: Attention: Chief Executive Officer,
▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, facsimile
number: (▇▇▇) ▇▇▇-▇▇▇▇. All such notices, requests, demands
and other communications to the Company shall be deemed
delivered and effective upon receipt by the Chief Executive
Officer of the Company.
Costs, Expenses and Taxes. All parties shall bear their own
expenses.
Effectiveness; Binding Effect; Assignment. This Agreement
shall be binding upon and inure to the benefit of the
Company, the Purchaser and their respective
successors and assigns; provided, that, the Company
may not assign any of its rights or obligations under
this Agreement without the prior written consent of
the Purchaser. The Purchaser may assign all or any
part of its rights and obligations, except for it's
right to Purchase shares from the Company, hereunder
to any person who acquires any Shares owned by the
Purchaser subject to the conditions of this
Agreement. The Purchaser must assign its obligations
as described in Sections 2.9, 2.10, 2.11, 5.4 and 7.3
to all transferees.
21
Transfer of Shares. In connection with each transfer of any of
the Shares during the two-year period from the date
of the last Purchase Notice, the Purchaser (or any
subsequent transferee of any Shares) shall, prior to
such transfer, obtain the written agreement of each
transferee to assent to and become bound by the terms
of Sections 2.9, 2.10, 2.11, 5.4, 6.6 and 7.3 as to
all Shares to be transferred to such transferee. A
copy of such agreement shall be delivered to the
Company prior to any transfer. Any purported transfer
of Shares in violation of this Section 6.6 shall be
null and void.
Prior Agreements. The Transaction Documents executed and
delivered in connection herewith constitute the
entire agreement between the parties and supersede
any prior understandings or agreements concerning the
subject matter hereof.
Severability. The provisions of the Transaction Documents are
severable and, in the event that any court of
competent jurisdiction shall determine that any one
or more of the provisions or part of a provision
contained therein shall, for any reason, be held to
be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall
not affect any other provision or part of a provision
of such Transaction Document and the terms of such
Transaction Documents shall be reformed and construed
as if such invalid or illegal or unenforceable
provision, or part of a provision, had never been
contained therein, and such provisions or part
reformed so that it would be valid, legal and
enforceable to the maximum extent possible.
Governing Law; Venue.
This Agreement shall be enforced, governed and construed in accordance
with the commercial laws of the State of New York, the corporate
law of Nevada or U.S. federal securities law, as applicable,
without giving effect to choice of laws principles or conflict of
laws provisions. Any dispute arising out of this agreement shall
first be submitted to arbitration before a single arbitrator
sitting in New York, New York said arbitration to be conducted in
accordance with the commercial rules of the American Arbitration
Association. Any discovery permitted by the arbitrator shall be
conducted in accordance with the Federal Rules of Civil Procedure
relating to the conduct of written and oral discovery. Judgment
may be entered upon the award of the arbitrator in any state or
federal having jurisdiction. The arbitrator shall render his or
her findings and award within 30 days of the completion of the
hearing. The award shall be in writing and shall state the reasons
for the award. The arbitrator may award costs and expenses at his
or her discretion. Notwithstanding the foregoing, any party shall
be entitled to seek injunctive relief from a state or federal
court having jurisdiction and in any case where such relief may be
available.
22
Purchaser hereby waives, and agrees not to assert against the Company,
or any successor assignee thereof, by way of motion, as a defense,
or otherwise, in any suit, action or proceeding, (i) any claim
that the Purchaser is not personally subject to the jurisdiction
of the above-named courts, and (ii) to the extent permitted by
applicable law, any claim that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of any such
suit, action or proceeding is improper or that this Agreement may
not be enforced in or by such courts.
Headings. Article, section and subsection headings in this
Agreement are included herein for convenience of
reference only and shall not constitute a part of
this Agreement for any other purpose.
Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall
constitute one and the same instrument, and any of
the parties hereto may execute this Agreement by
signing any such counterpart.
Further Assurances. From and after the date of this
Agreement, upon the request of the Purchaser or the
Company, the Company and the Purchaser shall execute
and deliver such instruments, documents and other
writings as may be reasonably necessary or desirable
to confirm and carry out and to effectuate fully the
intent and purposes of the Transaction Documents and
the Shares.
SURVIVAL AND INDEMNIFICATION
Survival of Representations and Warranties. All of the
representations and warranties of the Company and
Purchaser contained herein shall survive the Closing
and continue in full force and effect for two years
(subject to any applicable statutes of limitations).
Indemnification Provisions for Benefit of the Purchaser. In
the event the Company breaches any of its
representations, warranties, and covenants contained
herein, and, if there is an applicable survival
period pursuant to Section 7.1, provided that the
Purchaser makes a written claim for indemnification
against the Company within the applicable survival
period stated in Section 7.1, then the Company agrees
to indemnify, defend and hold harmless the Purchaser
and its directors, officers, and each person, if any,
who controls the Purchaser within the meaning of
Section 15 of the Securities Act, from and against
the entirety of any Adverse Consequences (as defined
by Section 7.5) the Purchaser or any such persons may
suffer through and after the date of the claim for
indemnification (including any Adverse Consequences
the Purchaser or any such persons may suffer after
the end of the applicable survival period) resulting
from, arising out of, relating to, in the nature of,
or caused by the breach (or the alleged breach).
23
Indemnification Provisions for Benefit of the Company. In the
event the Purchaser breaches any of its
representations, warranties, and covenants contained
herein, and, if there is an applicable survival
period pursuant to Section 7.1, provided that the
Company makes a written claim for indemnification
against the Purchaser within the applicable survival
period stated in Section 7.1, then the Purchaser
agrees to indemnify, defend and hold harmless the
Company and its directors, officers, and each person,
if any, who controls the Company within the meaning
of Section 15 of the Securities Act, from and against
the entirety of any Adverse Consequences the Company
or any such persons may suffer through and after the
date of the claim for indemnification (including any
Adverse Consequences the Company or any such persons
may suffer after the end of the applicable survival
period) resulting from, arising out of, relating to,
in the nature of, or caused by the breach (or the
alleged breach).
Matters Involving Third Parties.
If any third party shall notify any Party (the "Indemnified Party")
with respect to any matter (a "Third Party Claim") which may give
rise to a claim for indemnification against any other Party (the
"Indemnifying Party") under this Article VII, then each
Indemnified Party shall promptly notify the Indemnifying Party
thereof in writing; provided, however, that no delay on the part
of the Indemnified Party in notifying any Indemnifying Party shall
relieve the Indemnifying Party from any obligation hereunder
unless (and then solely to the extent) the Indemnifying Party
thereby is prejudiced.
Any Indemnifying Party will have the right to defend the Indemnified
Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (i)
the Indemnifying Party notifies the Indemnified Party in writing
within 15 days after the Indemnified Party has given notice of the
Third Party Claim that the Indemnifying Party will indemnify the
Indemnified Party from and against the entirety of any Adverse
Consequences the Indemnified Party may suffer resulting from,
arising out of, relating to, in the nature of, or caused by the
Third Party Claim, (ii) the Indemnifying Party provides the
Indemnified Party with evidence reasonably acceptable to the
Indemnified Party that the Indemnifying Party will have the
financial resources to defend against the Third Party Claim and
fulfill its indemnification obligations hereunder, (iii) the Third
Party Claim involves only money damages and does not seek an
injunction or other equitable relief, (iv) settlement of, or an
adverse judgment with respect to, the Third Party Claim is not, in
the good faith judgment of the Indemnified Party, likely to
establish a precedential custom or practice adverse to the
continuing business interests of the Indemnified Party, and (v)
the Indemnifying Party conducts the defense of the Third Party
Claim actively and diligently.
24
So long as the Indemnifying Party is conducting the defense of the
Third Party Claim in accordance with Section 7.4(b), (i) the
Indemnified Party may retain separate co-counsel at its sole cost
and expense and participate in the defense of the Third Party
Claim, (ii) the Indemnified Party will not consent to the entry of
any judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the
Indemnifying Party (not to be withheld unreasonably), and (iii)
the Indemnifying Party will not consent to the entry of any
judgment or enter into any settlement with respect to the Third
Party Claim without the prior written consent of the Indemnified
Party (not to be withheld unreasonably).
In the event any of the conditions in Section 7.4(b) is or becomes
unsatisfied, however, (i) the Indemnified Party may defend
against, and consent to the entry of any judgment or enter into
any settlement with respect to, the Third Party Claim in any
manner it reasonably may deem appropriate (and the Indemnified
Parties need not consult with, or obtain any consent from, any
Indemnifying Party in connection therewith), (ii) the Indemnifying
Parties will reimburse the Indemnified Party promptly and
periodically for the costs of defending against the Third Party
Claim (including reasonable attorneys' fees and expenses), and
(iii) the Indemnifying Party will remain responsible for any
Adverse Consequences the Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature of, or caused by
the Third Party Claim to the fullest extent provided in this
Article VII.
Adverse Consequences. As used in this Article VII, "Adverse
Consequences" means all proceedings, charges,
complaints, claims, causes of action, demands,
injunctions, judgments, orders, decrees, rulings,
damages, investigation and/or remediation costs,
dues, penalties, fines, costs of defense and other
costs, amounts paid in settlement, liabilities,
obligations, responsibilities, taxes, liens, losses,
expenses, and fees, including court costs and
reasonable attorneys' fees and expenses.
25
IN WITNESS WHEREOF, the parties hereto have caused this Regulation S
Stock Purchase Agreement to be executed as of the date first above written.
LaserLock Technologies, Inc. California Securities S.A.
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ By
---------------------------- --------------------------
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SCHEDULE 3.4
The information below is current as of December 31, 2003
1. Authorized Shares: 250,000,000
2. Issued and Outstanding: 41,990,506 of which 38,875,174 are restricted
3. Stock Option Plan: 2,775,00 options have been granted of which 1,275,000
are vested
4. Warrants: 7,565,447 warrants have been issued of which
5,515,585 are vested. *
*750,000 warrants were issued in January, 2004 of which 500,000 vested
immediately.
27
ANNEX 2.10
----------
FORM OF REPRESENTATION LETTER
[Brokerage Letterhead]
Date: March 5, 2004
To: California Securities S.A.
You have asked us to provide you with information regarding our ability to
comply with all laws applicable to our business of selling securities to persons
or entities in [list jurisdictions]. This letter confirms the following:
1. We, [Name of Brokerage], are duly registered with [Appropriate
Authority] for the transaction of securities business in [list
jurisdictions where Brokerage is licensed to transact securities
business] including, without limitation, dealing in shares as
agent.
2. We, [Name of Brokerage], are regularly examined by [Name of
Oversight agency] as part of the regulatory scheme applicable to
our business. This examination includes an audit of sales
practices for securities issued by companies domiciled in the
United States of which such securities are exempt from
registration in the United States pursuant to an exemption for
"offshore transactions" as defined by Regulation S ("Regulation
S"), promulgated by the Securities and Exchange Commission
pursuant to the Securities Act of 1933.
3. We, [Name of Brokerage], have in the past and will continue in the
future to offer such Regulation S securities to our clients in
full compliance with all applicable securities laws of the United
States and any other applicable local or foreign laws, rules and
regulations which govern or relate to such sales transactions.
You may provide this letter to any company with which you are dealing with
regard to the purchase and sale of such Regulation S securities and such company
may rely upon the representations made by us in this letter.
[Name of Brokerage]
_______________________________
[Signature of authorized person]
_______________________________
[Name of authorized person]
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