EXHIBIT 10.20.16
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT, dated as of the date of
acceptance set forth below (this "Agreement"), is entered into by and between
EUROTECH, LTD., a District of Columbia corporation, with headquarters located at
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named on a signature page hereto ("Investor")
W I T N E S S E T H:
WHEREAS, the Company and the Investor are executing and
delivering this Agreement in accordance with and in reliance upon the exemption
from securities registration afforded, inter alia, by Rule 506 under Regulation
D ("Regulation D") as promulgated by the United States Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933, as amended (the "1933
Act"), and/or Section 4(2) of the 1933 Act; and
WHEREAS, the Investor wishes to purchase, upon the terms and
subject to the conditions of this Agreement, shares of Series A 3% Convertible
Preferred Stock, par value $ .01 per share and having a stated value of $100 per
share, of the Company (the "Convertible Preferred Stock") which will be
convertible into shares of Common Stock, $.00025 par value per share of the
Company (the "Common Stock"), upon the terms and subject to the conditions of
such Convertible Preferred Stock and subject to acceptance of this Agreement by
the Company;
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. AGREEMENT TO PURCHASE; PURCHASE PRICE.
a. PURCHASE; CERTAIN DEFINITIONS.
(i) The undersigned hereby agrees to purchase at the Purchase
Price from the Company Convertible Preferred Stock in the amount set forth on
the Investor's signature page of this Agreement (the "Preferred Stock," which
term includes the Initial Preferred Stock and the Additional Preferred Stock, as
defined below), and having the terms and conditions set forth in the Certificate
of Designation of the Series A Convertible Preferred Stock of the Company
attached hereto as ANNEX I (the "Certificate of Designation").
(ii) Subject to the terms and conditions of this Agreement and
the other Transaction Documents, the Investor will purchase (x) Preferred Stock
having a stated value of $1,000,000 (the "Initial Preferred Stock") on the
Initial Closing Date (as those terms are defined below) and (y) the balance of
$1,500,000 of the Preferred Stock (the "Additional Preferred Stock") in
installments of $500,000 on each Additional Closing Date (as defined below).
(iii) The aggregate purchase price to be paid by the Investor
shall be equal to the amount set forth on the Investor's signature page of this
Agreement, and shall be payable in United States Dollars.
b. CERTAIN DEFINITIONS. As used herein, each of the following
terms has the meaning set forth below, unless the context otherwise requires:
(i) "Additional Closing Date" means the dates of each closing
of the purchase and sale of the Additional Preferred Stock, which shall be May
30, 2002, August 30, 2002, and November 30, 2002.
(ii) "Closing Date" means the Initial Closing Date or the
Additional Closing Date, as the case may be.
(iii) "Converted Shares" means the shares of Common Stock
issuable upon conversion of the Preferred Stock and pursuant to the terms of the
Repricing Rights Agreement as they relate to the shares of Common Stock issuable
upon conversion of the Preferred Stock.
(iv) "Effective Date" means the effective date of the
Registration Statement covering the Registrable Securities (as those terms are
defined in the Registration Rights Agreement defined below).
(v) "Initial Closing Date" means the date of the closing of
the purchase and sale of the Initial Preferred Stock, as provided herein.
(vi) "Last Audited Date" means December 31, 2000.
(vii) "Principal Market" means the American Stock Exchange or
such other market or exchange on which the Common Stock is then traded.
(viii) "Purchase Price" means the purchase price for the
Initial Preferred Stock or the Additional Preferred Stock, as the case may be.
(ix) "Securities" means the Preferred Stock, and the Converted
Shares.
(x) "Shares" means the shares of Common Stock representing any
or all of the Converted Shares.
(xi) "Transaction Documents" means this Agreement, the
Registration Rights Agreement, the Certificate of Designation, and the Repricing
Rights Agreement annexed hereto.
c. FORM OF PAYMENT; DELIVERY OF CERTIFICATES.
(i) The Investor shall pay the Purchase Price for the relevant
Preferred Stock by delivering immediately available good funds in United States
Dollars to the escrow agent (the "Escrow Agent") identified in the Joint Escrow
Instructions attached hereto as ANNEX II (the "Joint Escrow Instructions") on
the date prior to the relevant Closing Date.
(ii) No later than the relevant Closing Date, but in any event
promptly following payment by the Investor to the Escrow Agent of the relevant
Purchase Price, the Company shall deliver one or more certificates representing
the Preferred Stock and, if relevant to the transactions to be consummated on
that Closing Date, each duly executed on behalf of the Company and issued in the
name of the Investor (collectively, the "Certificates") to the Escrow Agent.
(iii) By signing this Agreement, each of the Investor and the
Company, subject to acceptance by the Escrow Agent, agrees to all of the terms
and conditions of, and becomes a party to, the Joint Escrow Instructions, all of
the provisions of which are incorporated herein by this reference as if set
forth in full.
d. METHOD OF PAYMENT. Payment into escrow of the Purchase
Price shall be made by wire transfer of funds to:
Bank of New York
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ABA#
For credit to the account of ▇▇▇▇▇▇▇ & Prager LLP, Esqs.
Account No.:
Re: Eurotech
Not later than 5:00 p.m., New York time, on the date which is three (3) AMEX
trading days after the Company shall have accepted this Agreement and returned a
signed counterpart of this Agreement to the Escrow Agent by facsimile, the
Investor shall deposit with the Escrow Agent the Purchase Price for the Initial
Preferred Stock in immediately available funds. Time is of the essence with
respect to such payment, and failure by the Investor to make such payment, shall
allow the Company to cancel this Agreement.
e. ESCROW PROPERTY. The Purchase Price delivered to the Escrow
Agent as contemplated by Section 1(d) hereof is referred to as the "Escrow
Funds." The Escrow Funds and the Certificates delivered to the Escrow Agent as
contemplated by Section 1(c) hereof are referred to as the "Escrow Property."
2. INVESTOR REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO
INFORMATION; INDEPENDENT INVESTIGATION.
The Investor represents and warrants to, and covenants and
agrees with, the Company as follows:
a. Without limiting Investor's right to sell the Shares
pursuant to the Registration Statement, the Investor is purchasing the Preferred
Stock and will be acquiring the Shares for its own account for investment only
and not with a view towards the public sale or distribution thereof and not with
a view to or for sale in connection with any distribution thereof.
b. The Investor is (i) an "accredited investor" as that term
is defined in Rule 501 of the General Rules and Regulations under the 1933 Act
by reason of Rule 501(a)(3), (ii) experienced in making investments of the kind
described in this Agreement and the related documents, (iii) able, by reason of
the business and financial experience of its officers and professional advisors
(who are not affiliated with or compensated in any way by the Company or any of
its affiliates or selling agents), to protect its own interests in connection
with the transactions described in this Agreement, and the related documents,
and (iv) able to afford the entire loss of its investment in the Securities.
c. All subsequent offers and sales of the Preferred Stock and
the Shares by the Investor shall be made pursuant to registration of the Shares
under the 1933 Act or pursuant to an exemption from registration.
d. The Investor understands that the Securities are being
offered and sold to it in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and that the
Company is relying upon the truth and accuracy of, and the Investor's compliance
with, the representations, warranties, agreements, acknowledgments and
understandings of the Investor set forth herein in order to determine the
availability of such exemptions and the eligibility of the Investor to acquire
the Securities.
e. The Investor and its advisors, if any, have been furnished
with all materials relating to the business, finances and operations of the
Company and materials relating to the offer and sale of the Preferred Stock
which have been requested by the Investor, including those set forth on ANNEX V
hereto. The Investor and its advisors, if any, have been afforded the
opportunity to ask questions of the Company and have received complete and
satisfactory answers to any such inquiries. Without limiting the generality of
the foregoing, the Investor has also had the opportunity to obtain and to review
the Company's (1) Annual Report on Form 10-K for the fiscal year ended December
31, 2000, (2) Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 2001; and (3) other reports filed pursuant to Section 13 of the
Securities Exchange Act of 1934, as amended since the date of the filing of the
most recent Form 10-Q (collectively, the "Company's SEC Documents").
f. The Investor understands that its investment in the
Securities involves a high degree of risk.
g. The Investor understands that no United States federal or
state agency or any other government or governmental agency has passed on or
made any recommendation or endorsement of the Securities.
h. This Agreement and the other Transaction Documents to which
the Investor is a party have been duly and validly authorized, executed and
delivered on behalf of the Investor and are valid and binding agreements of the
Investor enforceable in accordance with their respective terms, subject as to
enforceability to general principles of equity and to bankruptcy, insolvency,
moratorium and other similar laws affecting the enforcement of creditors' rights
generally.
i. The Investor is an entity duly organized, validly existing
and in good standing under the laws of the Cayman Islands and has the requisite
corporate power to own its properties and to carry on its business as now being
conducted. The Investor will fully observe the laws of such Investor's
jurisdiction in connection with the offer and sale of the Securities to the
Investor, the ownership of the Securities by the Investor, and the entering into
and performance of the Transaction Documents. The offer and sale of the
Securities, the ownership of the Securities by the Investor, and the entering
into and performance of the Transaction Documents will not violate any
applicable securities or other laws of the Investor's jurisdiction.
3. COMPANY REPRESENTATIONS, ETC. The Company represents and
warrants to the Investor as of the date hereof and as of each Closing Date that,
except as otherwise provided in the SEC Documents, the Company Disclosure
Materials attached hereto as ANNEX V hereto, or as otherwise publicly disclosed
by the Company in accordance with Regulation FD:
a. CONCERNING THE PREFERRED STOCK AND THE SHARES. The
Preferred Stock has been duly authorized, and when issued and paid for in
accordance with the terms of this Agreement, will be duly and validly issued,
fully paid and non-assessable and will not subject the holder thereof to
personal liability solely by reason of acquiring the Preferred Stock hereunder.
There are no preemptive rights of any stockholder of the Company, as such, to
acquire the Preferred Stock or the Shares.
b. REPORTING COMPANY STATUS. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the District
of Columbia and has the requisite corporate power to own its properties and to
carry on its business as now being conducted. The Company is duly qualified as a
foreign corporation to do business and is in good standing in each jurisdiction
where the nature of the business conducted or property owned by it makes such
qualification necessary, other than those jurisdictions in which the failure to
so qualify would not have a material adverse effect on the business, operations
or financial condition or results of operation of the Company and its
subsidiaries taken as a whole. The Company has registered its Common Stock
pursuant to Section12 of the 1934 Act and is obligated to file reports pursuant
to Section 13 of the 1934 Act. The Common Stock is listed and traded on The
American Stock Exchange. The Company has received no notice, either oral or
written, with respect to the continued eligibility of the Common Stock for such
listing, and the Company has maintained all requirements for the continuation of
such listing.
c. AUTHORIZED SHARES. The authorized capital stock of the
Company consists of (i) 100,000,000 shares of Common Stock, $.00025 par value
per share, of which approximately 62,021,770 shares have been issued and are
outstanding as of the date hereof and (ii) 5,000,000 shares of Preferred Stock,
par value $.01 per share, of which none have been issued and are outstanding as
of the date hereof. All issued and outstanding shares of Common Stock have been
duly authorized and validly issued and are fully paid and nonassessable. The
Company has sufficient authorized and unissued shares of Common Stock as may be
necessary to effect the issuance of the Shares (assuming (i) accrual of
dividends on the Preferred Stock for a period of one year from the date of
issuance of the Preferred Stock and (ii) no issuance of shares pursuant to the
terms of the Repricing Agreement) and, when issued upon conversion of the
Preferred Stock and pursuant to the foregoing assumptions, the Shares will have
been duly authorized and will be duly and validly issued, fully paid and
non-assessable and will not subject the holder thereof to personal liability by
reason of being such holder.
d. SECURITIES PURCHASE AGREEMENT; REGISTRATION RIGHTS
AGREEMENT AND STOCK. This Agreement and the Registration Rights Agreement
("Registration Rights Agreement"), the Repricing Rights Agreement ("Repricing
Rights Agreement"), the forms of which are attached as ANNEX IV and ANNEX VI
hereto, and the transactions contemplated thereby, have been duly and validly
authorized by the Company. This Agreement has been duly executed and delivered
by the Company and this Agreement is, and each of the other Transaction
Documents, when executed and delivered by the Company, will be, a valid and
binding agreement of the Company enforceable in accordance with their respective
terms, subject as to enforceability to general principles of equity and to
bankruptcy, insolvency, moratorium, and other similar laws affecting the
enforcement of creditors' rights generally.
e. NON-CONTRAVENTION. The execution and delivery of this
Agreement and the Registration Rights Agreement by the Company, the issuance of
the Securities pursuant to the assumptions set forth in Section 3(c), and the
consummation by the Company of the other transactions contemplated by the
Transaction Documents, the Registration Rights Agreement, and the terms of the
Preferred Stock do not and will not conflict with or result in a breach by the
Company of any of the terms or provisions of, or constitute a default under (i)
the articles of incorporation or by-laws of the Company, each as currently in
effect, (ii) any indenture, mortgage, deed of trust, or other material agreement
or instrument to which the Company is a party or by which it or any of its
properties or assets are bound, including any listing agreement for the Common
Stock except as herein set forth, or (iii) to its knowledge, any existing
applicable law, rule, or regulation or any applicable decree, judgment, or order
of any court, United States federal or state regulatory body, administrative
agency, or other governmental body having jurisdiction over the Company or any
of its properties or assets, except such conflict, breach or default which would
not have a material adverse effect on the business, operations, condition
(financial or otherwise), or results of operations of the Company and its
subsidiaries, taken as a whole, or on the transactions contemplated herein.
f. APPROVALS. No authorization, approval or consent of any
court, governmental body, regulatory agency, self-regulatory organization, or
stock exchange or market or the stockholders of the Company is required to be
obtained by the Company for the issuance and sale of the Securities to the
Investor as contemplated by this Agreement, except such authorizations,
approvals and consents that have been obtained.
g. SEC FILINGS. None of the Company's SEC Documents contained,
at the time they were filed, any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary to make
the statements made therein in light of the circumstances under which they were
made, not misleading, provided, however, that the Company makes no
representation with respect to any and all disclosure pertaining to the
Investor, its transactions and relationship with the Company, or its beneficial
ownership of securities of the Company. The Company has since April 1, 2000
timely filed all requisite forms, reports, and exhibits thereto with the SEC.
h. ABSENCE OF CERTAIN CHANGES. Since the Last Audited Date,
there has been no material adverse change and no material adverse development in
the business, properties, operations, condition (financial or otherwise), or
results of operations of the Company. Since the Last Audited Date, the Company
has not (i) incurred or become subject to any material liabilities (absolute or
contingent) except liabilities incurred in the ordinary course of business
consistent with past practices; (ii) discharged or satisfied any material lien
or encumbrance or paid any material obligation or liability (absolute or
contingent), other than current liabilities paid in the ordinary course of
business consistent with past practices; (iii) declared or made any payment or
distribution of cash or other property to stockholders with respect to its
capital stock, or purchased or redeemed, or made any agreements to purchase or
redeem, any shares of its capital stock; (iv) sold, assigned or transferred any
other tangible assets, or canceled any debts or claims, except in the ordinary
course of business consistent with past practices; (v) suffered any substantial
losses or waived any rights of material value, whether or not in the ordinary
course of business, or suffered the loss of any material amount of existing
business; (vi) made any changes in employee compensation, except in the ordinary
course of business consistent with past practices; or (vii) experienced any
material problems with labor or management in connection with the terms and
conditions of their employment.
i. FULL DISCLOSURE. There is no fact known to the Company
(other than general economic conditions known to the public generally or as
disclosed in the Company's SEC Documents) that has not been disclosed in writing
to the Investor that (i) would reasonably be expected to have a material adverse
effect on the business, operations, condition (financial or otherwise), or
results of operations of the Company and its subsidiaries, taken as a whole,
(ii) would reasonably be expected to materially and adversely affect the ability
of the Company to perform its obligations pursuant to this Agreement or any of
the Transaction Documents, or (iii) would reasonably be expected to materially
and adversely affect the value of the rights granted to the Investor in the
Transaction Documents.
j. ABSENCE OF LITIGATION. There is no action, suit,
proceeding, inquiry or investigation before or by any court, public board or
body pending or, to the knowledge of the Company, threatened against or
affecting the Company, wherein an unfavorable decision, ruling or finding would
have a material adverse effect on the properties, business, operations,
condition (financial or otherwise), or results of operation of the Company and
its subsidiaries taken as a whole or the transactions contemplated by any of the
Transaction Documents or which would adversely affect the validity or
enforceability of, or the authority or ability of the Company to perform its
obligations under, any of the Transaction Documents.
k. ABSENCE OF EVENTS OF DEFAULT. No Event of Default (or its
equivalent term), as defined in the respective agreement to which the Company is
a party, and no event which, with the giving of notice or the passage of time or
both, would become an Event of Default (or its equivalent term) (as so defined
in such agreement), has occurred and is continuing, which would have a material
adverse effect on the business, operations, condition (financial or otherwise),
or results of operations of the Company and its subsidiaries, taken as a whole.
l. PRIOR ISSUES. As of the date hereof, the Company has no
outstanding convertible debt securities.
m. NO UNDISCLOSED LIABILITIES OR EVENTS. The Company has no
liabilities or obligations other than those disclosed in the Company's SEC
Documents or those incurred in the ordinary course of the Company's business
since the Last Audited Date, and which individually or in the aggregate, do not
or would not have a material adverse effect on the properties, business,
operations, condition (financial or otherwise), or results of operations of the
Company and its subsidiaries, taken as a whole. No event or circumstances has
occurred or exists with respect to the Company or its properties, business,
operations, condition (financial or otherwise), or results of operations, which,
under applicable law, rule or regulation, requires public disclosure or
announcement prior to the date hereof by the Company but which has not been so
publicly announced or disclosed. There are no proposals currently under
consideration or currently anticipated to be under consideration by the Board of
Directors or the executive officers of the Company (other than the transactions
contemplated by the Transaction Documents) which proposal would (x) change the
certificate of incorporation or other charter document or by-laws of the
Company, each as currently in effect, with or without shareholder approval,
which change would reduce or otherwise adversely affect the rights and powers of
the shareholders of the Common Stock or (y) materially or substantially change
the business, assets or capital of the Company, including its interests in
subsidiaries.
n. NO DEFAULT. The Company is not in default in the
performance or observance of any material obligation, agreement, covenant or
condition contained in any material indenture, mortgage, deed of trust or other
material instrument or agreement to which it is a party or by which it or its
property is bound.
o. NO INTEGRATED OFFERING. Neither the Company nor any of its
affiliates nor any person acting on its or their behalf has, directly or
indirectly, at any time since November 1, 1999, made any offer or sales of any
security or solicited any offers to buy any security under circumstances that
would eliminate the availability of the exemption from registration under Rule
506 of Regulation D in connection with the offer and sale of the Securities as
contemplated hereby.
p. DILUTION. The number of Shares issuable upon conversion of
the Preferred Stock may increase substantially in certain circumstances,
including, but not necessarily limited to, the circumstance wherein the trading
price of the Common Stock declines prior to the conversion of the Preferred
Stock. The Company's executive officers and directors have studied and fully
understand the nature of the Securities being sold hereby and recognize that
they have a potential dilutive effect. The board of directors of the Company has
concluded, in its good faith business judgment, that such issuance is in the
best interests of the Company. The Company specifically acknowledges that its
obligation to issue the Shares upon conversion of the Preferred Stock and upon
exercise of the Repricing Rights is binding upon the Company and enforceable
regardless of the dilution such issuance may have on the ownership interests of
other shareholders of the Company, and the Company will honor every Notice of
Conversion (as defined in the Certificate of Designation) relating to the
conversion of the Preferred Stock and every Notice of Repricing relating to the
exercise of the Repricing Rights unless the Company is subject to an injunction
(which injunction was not sought by the Company) prohibiting the Company from
doing so or unless the Company does not have sufficient authorized and unissued
shares of Common Stock as may be necessary to effect the issuance of the Shares.
q. BROKERS, FINDERS. Except for payment of consulting fees to
Spinneret Financial Systems (the "Placement Agent"), payment of which is the
sole responsibility of the Company, the Company has taken no action which would
give rise to any claim by any person for brokerage commission, finder's fees or
similar payments by Investor relating to this Agreement or the transactions
contemplated hereby. Investor shall have no obligation with respect to such fees
or with respect to any claims made by or on behalf of other persons for fees of
a type contemplated in this Section 3(q) that may be due in connection with the
transactions contemplated hereby. The Company shall indemnify and hold harmless
each of Investor, its employees, officers, directors, agents, and partners, and
their respective affiliates, from and against all claims, losses, damages, costs
(including the costs of preparation and attorney's fees) and expenses suffered
in respect of any such claimed or existing fees, as and when incurred.
r. AMENDMENTS, MODIFICATION OR WAIVERS. The Company shall pay
all reasonable fees and expenses incurred by the Investor in connection with any
amendments, modifications or waivers of this Agreement, the Registration Rights
Agreement, or the Repricing Rights Agreement, or incurred in connection with the
enforcement of this Agreement, the Registration Rights Agreement and the
Repricing Rights Agreement, including, without limitation, all reasonable
attorneys fees and expenses. The Company shall pay all stamp or other similar
taxes and duties levied in connection with issuance of the Shares pursuant
hereto
s. TRADING IN SECURITIES. THE COMPANY SPECIFICALLY
ACKNOWLEDGES THAT, EXCEPT TO THE EXTENT SPECIFICALLY PROVIDED HEREIN OR IN ANY
OF THE OTHER TRANSACTION DOCUMENTS (BUT LIMITED IN EACH INSTANCE TO THE EXTENT
SO SPECIFIED), THE INVESTOR RETAINS THE RIGHT (BUT IS NOT OTHERWISE OBLIGATED)
TO BUY, SELL, ENGAGE IN HEDGING TRANSACTIONS OR OTHERWISE TRADE IN THE
SECURITIES OF THE COMPANY, INCLUDING, BUT NOT NECESSARILY LIMITED TO, THE
SECURITIES, AT ANY TIME BEFORE, CONTEMPORANEOUS WITH OR AFTER THE EXECUTION OF
THIS AGREEMENT OR FROM TIME TO TIME AND IN ANY MANNER WHATSOEVER PERMITTED BY
APPLICABLE FEDERAL AND STATE SECURITIES LAWS.
4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
a. TRANSFER RESTRICTIONS. The Investor acknowledges that (1)
the shares of Preferred Stock have not been and are not being registered under
the provisions of the 1933 Act and, except as provided in the Registration
Rights Agreement, the Shares have not been and are not being registered under
the 1933 Act, and may not be transferred unless (A) subsequently registered
thereunder or (B) any proposed transferee agrees, in writing to be bound by the
terms of the Certificate of Designation and the Investor shall have delivered to
the Company an opinion of counsel, reasonably satisfactory in form, scope and
substance to the Company, to the effect that the Securities to be sold or
transferred may be sold or transferred pursuant to an exemption from such
registration; (2) any sale of the Securities made in reliance on Rule 144
promulgated under the 1933 Act may be made only in accordance with the terms of
said Rule and further, if said Rule is not applicable, any resale of such
Securities under circumstances in which the seller, or the person through whom
the sale is made, may be deemed to be an underwriter, as that term is used in
the 1933 Act, may require compliance with some other exemption under the 1933
Act or the rules and regulations of the SEC thereunder; and (3) neither the
Company nor any other person is under any obligation to register the Securities
(other than pursuant to the Registration Rights Agreement) under the 1933 Act or
to comply with the terms and conditions of any exemption thereunder.
b. RESTRICTIVE LEGEND. The Investor acknowledges and agrees
that the Preferred Stock, and, until such time as the Converted Shares have been
registered under the 1933 Act as contemplated by the Registration Rights
Agreement and sold in accordance with an effective Registration Statement,
certificates and other instruments representing any of the Securities shall bear
a restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of any such Securities):
THESE SECURITIES (THE "SECURITIES") HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED
FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES OR AN OPINION OF COUNSEL OR OTHER EVIDENCE
ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED.
c. REGISTRATION RIGHTS AGREEMENT. The parties hereto agree to
enter into the Registration Rights Agreement and the Repricing Rights Agreement
on or before the Initial Closing Date.
d. FILINGS. (i) The Company undertakes and agrees to promptly
and timely make all necessary filings and other applications in connection with
the sale of the Securities to the Investor under any United States laws and
regulations applicable to the Company, or by any domestic securities exchange or
trading market, and to provide a copy thereof to the Investor promptly after
such filing.
(ii) Subject to the conditions of the immediately
following sentence, the Company undertakes and agrees to take all steps
necessary to have a meeting and vote of the stockholders of the Company no later
than the Meeting Date (as defined below) regarding authorization of (i) an
increase in the number of authorized shares of Common Stock to 200,000,000
shares, and (ii) the Company's issuance to the holders of the Preferred Stock of
shares of Common Stock in excess of twenty percent (20%) of the outstanding
shares of Common Stock on the date of this Agreement in accordance with the
Listing Rules of the Principal Market, as may be applicable (the
"Authorizations"). The term "Meeting Date" means October 15, 2002 (or if duly
adjourned not later than December 31, 2002). The Company will recommend to the
stockholders that such authorization be granted and will seek proxies from
stockholders not attending the meeting naming a director or officer of the
Company as such stockholder's proxy and directing the proxy to vote, or giving
the proxy the authority to vote, in favor of such authorization. Upon
determination that the stockholders have voted in favor of such authorizations,
the Company shall cause its counsel to file all necessary amendments to the
Articles of Incorporation.
(iii) In furtherance of the provisions of the
immediately preceding subparagraph (ii) hereof, the Company commits to using its
best efforts to obtain any stockholder authorization contemplated by said
subparagraph (ii).
e. REPORTING STATUS. So long as the Investor beneficially owns
any of the Securities, the Company shall file all reports required to be filed
with the SEC pursuant to Section 13 or 15(d) of the 1934 Act, and the Company
shall not terminate its status as an issuer required to file reports under the
1934 Act even if the 1934 Act or the rules and regulations thereunder would
permit such termination. The Company will take all reasonable action under its
control to obtain and to continue the listing and trading of its Common Stock
(including, without limitation, all Converted Shares) on The American Stock
Exchange and will comply in all material respects with the Company's reporting,
filing and other obligations under the by-laws or rules of the National
Association of Securities Dealers, Inc. ("NASD") or the American Stock Exchange.
f. USE OF PROCEEDS. The Company will use the proceeds received
hereunder (excluding amounts paid by the Company for legal fees, and escrow fees
in connection with the sale of the Common Stock) for general working capital in
conjunction with the development and commercialization of its technologies.
Unless specifically consented to in advance in each instanceby the Investor,
these funds will not be used in the acquisition of new technologies or increased
share in existing technologies; nor will these proceeds be used for the
repayment of any outstanding loan or advance to the Company by any affiliate or
control person.
g. AVAILABLE SHARES. The Company shall, subsequent to
obtaining the Authorizations and the filing of all necessary amendments to the
Articles of Incorporation in connection therewith, have at all times thereafter
authorized and reserved for issuance, free from preemptive rights, shares of
Common Stock sufficient to yield the aggregate of one hundred and twenty five
percent (125%) of the number of shares of Common Stock as may be required, from
time to time to satisfy the conversion rights of the Investor pursuant to the
terms and conditions of the Certificate of Designation, the Repricing Rights
Agreement with respect to the Shares (assuming (i) accrual of dividends on the
Preferred Stock for a period of two years from the date of issuance of the
Preferred Stock and (ii) the issuance of 10,000,000 shares pursuant to the terms
of the Repricing Agreement). The foregoing sentence is not intended as a
limitation on the obligations of the Company to issue shares pursuant to the
Certificate of Designations or the Repricing Rights Agreement with respect to
the Shares subsequent to obtaining the Authorizations and the filing of all
necessary amendments to the Articles of Incorporation in connection therewith.
h. LISTING OF COMMON STOCK. The Company shall use its
commercially reasonable efforts to cause the Converted Shares to be listed on
the Principal Market and to maintain the listing and trading of the Common Stock
on the Principal Market (including, without limitation, maintaining sufficient
net tangible assets) and will comply in all respects with the Company's
reporting, filing and other obligations under the bylaws or rules of the
Principal Market. The Company further shall, if the Company applies to have the
Common Stock traded on any other trading market, include in such application the
Converted Shares, if any, and shall take such other action as is necessary or
desirable in the reasonable opinion of Investor to cause the Common Stock to be
listed on such other trading market as promptly as possible.
i. REIMBURSEMENT. If (i) the Investor, other than by reason of
its gross negligence or willful misconduct, becomes involved in any capacity in
any action, proceeding or investigation brought by any shareholder of the
Company, in connection with or as a result of the consummation of the
transactions contemplated by the Transaction Documents, or if the Investor is
impleaded in any such action, proceeding or investigation by any person, or (ii)
the Investor, other than by reason of its gross negligence or willful misconduct
or by reason of its trading of the Common Stock in a manner that is illegal
under the federal or state securities laws, becomes involved in any capacity in
any action, proceeding or investigation brought by the SEC against or involving
the Company or in connection with or as a result of the consummation of the
transactions contemplated by the Transaction Documents, or if the Investor is
impleaded in any such action, proceeding or investigation by any person, then in
any such case, the Company will reimburse the Investor for its reasonable legal
and other expenses (including the cost of any investigation and preparation)
incurred in connection therewith, as such expenses are incurred. In addition,
other than with respect to any matter in which Investor is a named party, the
Company will pay to the Investor reasonable out-of-pocket costs with respect to
assisting in preparation for hearings, trials or pretrial matters, or otherwise
with respect to inquiries, hearing, trials, and other proceedings relating to
the subject matter of this Agreement. The reimbursement obligations of the
Company under this Section 4(i) shall be in addition to any liability which the
Company may otherwise have, shall extend upon the same terms and conditions to
any affiliates of the Investor that are actually named in such action,
proceeding or investigation, and partners, directors, agents, employees and
controlling persons (if any), as the case may be, of the Investor and any such
affiliate, and shall be binding upon and inure to the benefit of any successors,
assigns, heirs and personal representatives of the Company, the Investor and any
such affiliate and any such person.
j. RIGHT OF FIRST REFUSAL. (i) Subject to the provisions of
this paragraph (j), if at any time prior to fifteen months following the Initial
Closing Date the Company offers to enter into any transaction for the sale of
Common Stock, or securities convertible into or exercisable for Common Stock, at
a price below the then current market price (a "New Transaction"), then before
consummating the New Transaction, the Company shall give written notice (a "New
Transaction Notice") to the Investor summarizing all of the terms of such offer
(a "New Transaction Offer"). The Investor shall have the right (the "Right of
First Refusal"), exercisable by written notice given to the Company by the close
of business on the twentieth day after the Investor's receipt of the New
Transaction Offer (the "Right of First Refusal Expiration Date"), to participate
in all, but not less than all, of the New Transaction Offer on the terms so
specified.
(ii) If, and only if, the Investor does not exercise the Right
of First Refusal, the Company may consummate the New Transaction on the terms
specified in the New Transaction Offer.
(iii) If the terms of the New Transaction to be consummated
differ from the terms specified in the New Transaction Offer so that the terms
are more beneficial in any respect, the Company shall give the Investor a New
Transaction Offer relating to the terms of the New Transaction, as so changed,
and the Investor's Right of First Refusal and the preceding terms of this
paragraph (j) shall apply with respect to such changed terms.
(iv) The provisions of this Section 4(j) shall not apply to
any issuance under an Equity Credit Agreement not exceeding $10,000,000 with a
discount not exceeding 10% from the Market Price of the Common Stock.
k. RELEASE. Effective upon the execution hereof, the Company,
for itself and on behalf of all affiliated persons and entities,
representatives, and all predecessors in interest, successors and assigns
(collectively, the "Releasing Parties"), that except for the matters related to
the issuance and terms of the Convertible Preferred Stock, hereby releases and
forever discharges each of Investor, and Investor's direct and indirect
partners, officers, directors, employees, affiliates, representatives, agents,
trustees, beneficiaries, predecessors in interest, successors in interest and
nominees of and from any and all claims, demands, actions and causes of action,
whether known or unknown, fixed or contingent, arising prior to the date of
execution of this Agreement, that the Company may have had, may now have or may
hereafter acquire with respect to any matters whatsoever under, relating to or
arising from any prior Purchase Agreement, Registration Statement, and the
Documents entered into in connection therewith (sometimes collectively referred
to as the "Prior Agreements"). The Company also fully waives any offsets it may
have with respect to the amounts owed under the Prior Agreements. Additionally,
the Company represents, warrants and covenants that it has not, and at the time
this release becomes effective will not have, sold, assigned, transferred, or
otherwise conveyed to any other person or entity all or any portion of its
rights, claims, demands, actions, or causes of action herein released.
l. INDEMNIFICATION. If (i) the Investor becomes involved in
any capacity in any action, proceeding or investigation brought by any
stockholder of the Company, in connection with or as a result of the
consummation of the transactions contemplated by this Agreement, the Prior
Agreements or the Note, or if such the Investor impleaded in any such action,
proceeding or investigation by any person, or (ii) the Investor becomes involved
in any capacity in any action, proceeding or investigation brought by the
Securities and Exchange Commission, any self-regulatory organization or other
body having jurisdiction, against or involving the Company or in connection with
or as a result of the consummation of the transactions contemplated by this
Agreement, the Prior Agreements or the Note, or if the Investor is impleaded in
any such action, proceeding or investigation by any person, then in any such
case, the Company hereby agrees to indemnify, defend and hold harmless the
Investor from and against and in respect of all losses, claims, liabilities,
damages or expenses resulting from, imposed upon or incurred by the Investor,
directly or indirectly, and reimburse such Investor for its reasonable legal and
other expenses (including the cost of any investigation and preparation)
incurred in connection therewith, as such expenses are incurred. In addition,
the Company will reimburse the Investor for reasonable internal and overhead
costs for the time of any officers or employees of the Investor devoted to
appearing and preparing to appear as witnesses, assisting in preparation for
hearings, trials or pretrial matters, or otherwise with respect to inquiries,
hearing, trials, and other proceedings relating to the subject matter of this
Agreement, the Prior Agreements or the Note. The indemnification and
reimbursement obligations of the Company under this paragraph shall be in
addition to any liability which the Company may otherwise have (other than
matters specifically addressed in the Registration Rights Agreement, which shall
be governed solely by that agreement), shall extend upon the same terms and
conditions to any affiliates of the Investor who are actually named in such
action, proceeding or investigation, and partners, directors, agents, employees
and controlling persons (if any), as the case may be, of the Investor and any
such affiliate, and shall be binding upon and inure to the benefit of any
successors, assigns, heirs and personal representatives of the Company, the
Investor, any such affiliate and any such person. The Company also agrees that
neither the Investor nor any such affiliate, partner, director, agent, employee
or controlling person shall have any liability to the Company or any person
asserting claims on behalf of or in right of the Company in connection with or
as a result of the consummation of this Agreement, the Prior Agreements or the
Note, except as provided in or contemplated by this Agreement.
m. NON PUBLIC INFORMATION. Each of the Company, its officers,
directors, employees and agents has not in connection with the negotiation and
execution of the Transaction documents and shall in no event disclose non-public
information to Investor, advisors to or representatives of Investor, unless
prior to disclosure of such information, the Company identifies such information
as being non-public information and provides Investor, such advisors and
representatives with the opportunity to accept or refuse to accept such
non-public information for review.
n. PAR VALUE. THE COMPANY SHALL BE UNDER NO OBLIGATION TO
ISSUE shares of Common Stock issuable pursuant to the terms of the Repricing
Rights Agreement as they relate to the shares of Common Stock issuable upon
conversion of the Preferred Stock TO THE EXTENT THAT THE NUMBER OF THE CONVERTED
SHARES SHALL EXCEED THE PRODUCT OF THE PURCHASE PRICE AND THE CURRENT PAR VALUE
OF THE COMMON STOCK. THE COMPANY AND THE INVESTOR COVENANT AND AGREE THAT THE
PURCHASE PRICE IS THE CONSIDERATION PAID FOR THE PREFERRED STOCK AND THE shares
of Common Stock issuable pursuant to the terms of the Repricing Rights Agreement
as they relate to the shares of Common Stock issuable upon conversion of the
Preferred Stock. THE COMPANY COVENANTS AND AGREES THAT IT WILL NOT WITHOUT THE
PRIOR WRITTEN CONSENT OF THE INVESTOR INCREASE THE PAR VALUE OF ITS COMMON STOCK
UNTIL 90 DAYS AFTER THE END OF THE FINAL REPRICING PERIOD UNDER THE REPRICING
RIGHTS AGREEMENT.
o. ENCUMBRANCES. The Company shall not, until obtaining the
Authorizations and the filing of all necessary amendments to the Articles of
Incorporation in connection therewith, sell, assign, lien, pledge, directly or
indirectly, transfer or otherwise encumber any of its assets or any interest
therein (other than in the ordinary course of its business, in connection with a
bona fide license of intellectual property or a transaction in which the Company
or stockholders of the Company will own in excess of 50% of the record or
beneficial ownership in such assets or interest therein) without the prior
written consent, in each instance of the Investor, which shall not be
unreasonably withheld.
5. TRANSFER AGENT INSTRUCTIONS.
a. The Company warrants that, with respect to the Securities,
other than the stop transfer instructions to give effect to Section 4(a) hereof,
it will give its transfer agent no instructions inconsistent with instructions
to issue Common Stock from time to time upon conversion of the Preferred Stock
in such amounts as specified from time to time by the Company to the transfer
agent, bearing the restrictive legend specified in Section 4(b) of this
Agreement prior to registration of the Shares under the 1933 Act, registered in
the name of the Investor or its nominee and in such denominations to be
specified by the Investor in connection with each conversion of the Preferred
Stock. Except as so provided, the Shares shall otherwise be freely transferable
on the books and records of the Company as and to the extent provided in this
Agreement, the Registration Rights Agreement, and applicable law. Nothing in
this Section shall affect in any way the Investor's obligations and agreement to
comply with all applicable securities laws upon resale of the Securities. If the
Investor provides the Company with an opinion of counsel reasonably satisfactory
to the Company that registration of a resale by the Investor of any of the
Securities in accordance with clause (1)(B) of Section 4(a) of this Agreement is
not required under the 1933 Act, the Company shall (except as provided in clause
(2) of Section 4(a) of this Agreement) permit the transfer of the Securities
and, in the case of the Converted Shares, promptly instruct the Company's
transfer agent to issue one or more certificates for Common Stock without legend
in such name and in such denominations as specified by the Investor.
b. Subject to the provisions of this Agreement, the Company
will permit the Investor to exercise its right to convert the Preferred Stock in
the manner contemplated by the Certificate of Designation.
c. The Company understands that a delay in the issuance of the
Shares of Common Stock beyond the Delivery Date (as defined in the Certificate
of Designation) could result in economic loss to the Investor. As compensation
to the Investor for such loss, the Company agrees to pay late payments to the
Investor for late issuance of Shares upon conversion in accordance with the
following schedule (where "No. Business Days Late" is defined as the number of
business days beyond two (2) business days from the Delivery Date):
Late Payment For Each $10,000
of Stated Value or Dividend
No. Business Days Late Amount Being Converted
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1 $100
2 $200
3 $300
4 $400
5 $500
6 $600
7 $700
8 $800
9 $900
10 $1,000
>10 $1,000+$200 for each Business Day Late
beyond 10 days
The Company shall pay any payments incurred under this Section in immediately
available funds upon demand. Nothing herein shall limit the Investor's right to
pursue actual damages for the Company's failure to issue and deliver the Common
Stock to the Investor. Furthermore, in addition to any other remedies which may
be available to the Investor, in the event that the Company fails for any reason
to effect delivery of such shares of Common Stock within two (2) business days
after the Delivery Date, the Investor will be entitled to revoke the relevant
Notice of Conversion by delivering a notice to such effect to the Company
whereupon the Company and the Investor shall each be restored to their
respective positions immediately prior to delivery of such Notice of Conversion.
d. If, by the relevant Delivery Date, the Company fails for
any reason to deliver the Shares to be issued upon conversion of Preferred Stock
and after such Delivery Date, the holder of the Preferred Stock being converted
(a "Converting Holder") purchases, in an arm's-length open market transaction or
otherwise, shares of Common Stock (the "Covering Shares") in order to make
delivery in satisfaction of a sale of Common Stock by the Converting Holder (the
"Sold Shares"), which delivery such Converting Holder anticipated to make using
the Shares to be issued upon such conversion (a "Buy-In"), the Converting Holder
shall have the right, to require the Company to pay to the Converting Holder, in
addition to the amounts due under Section 5(c) hereof (but in addition to all
other amounts contemplated in other provisions of the Transaction Documents, and
not in lieu of any such other amounts), the Buy-In Adjustment Amount (as defined
below). The "Buy-In Adjustment Amount" is the amount equal to the excess, if
any, of (x) the Converting Holder's total purchase price (including brokerage
commissions, if any) for the Covering Shares over (y) the net proceeds (after
brokerage commissions, if any) received by the Converting Holder from the sale
of the Sold Shares. The Company shall pay the Buy-In Adjustment Amount to the
Company in immediately available funds immediately upon demand by the Converting
Holder. By way of illustration and not in limitation of the foregoing, if the
Converting Holder purchases shares of Common Stock having a total purchase price
(including brokerage commissions) of $11,000 to cover a Buy-In with respect to
shares of Common Stock it sold for net proceeds of $10,000, the Buy-In
Adjustment Amount which Company will be required to pay to the Converting Holder
will be $1,000.
e. In lieu of delivering physical certificates representing
the Common Stock issuable upon conversion, provided the Company's transfer agent
is participating in the Depository Trust Company ("DTC") Fast Automated
Securities Transfer program, upon request of the Investor and its compliance
with the provisions contained in this paragraph, so long as the certificates
therefore do not bear a legend and the Investor thereof is not obligated to
return such certificate for the placement of a legend thereon, the Company shall
use its best efforts to cause its transfer agent to electronically transmit the
Common Stock issuable upon conversion to the Investor by crediting the account
of Investor's Prime Broker with DTC through its Deposit Withdrawal Agent
Commission system.
f. If, at any time (i) the Company challenges, disputes or
denies the right of a holder of Preferred Stock to effect a conversion of the
Preferred Stock into Common Stock or otherwise dishonors or rejects any
Conversion Notice delivered in accordance with the terms of this Agreement or
the Certificate of Designation, or (ii) any third party who is not and has never
been an Affiliate of such holder commences any lawsuit or proceeding or
otherwise asserts any claim before any court or public or governmental
authority, which lawsuit, proceeding or claim seeks to challenge, deny, enjoin,
limit, modify, delay or dispute the right of such holder to effect the
conversion of the Preferred Stock into Common Stock, and the Company refuses to
honor any such Conversion Notice, then such holder shall have the right, by
written notice to the Company, to require the Company to promptly redeem the
Preferred Stock as set forth in Section 7 of the Certificate of Designation (the
"Mandatory Purchase Amount"); provided, however, that the Company shall have a
period of sixty (60) days within which to (i) have the lawsuit or proceeding
dismissed and honor the Conversion Notice, or (ii) raise the capital required to
redeem the Mandatory Purchase Amount, as the case may be. Under any of the
circumstances set forth above, the Company shall be responsible for the payment
of all costs and expenses of such holder, including, but not necessarily limited
to, reasonable legal fees and expenses, as and when incurred in connection with
such holder's disputing any such action or pursuing such holder's rights
hereunder (in addition to any other rights such holder may have hereunder or
otherwise). The Mandatory Purchase Amount will be payable to such holder in cash
within five (5) business days from the date such holder gives the Company
written notice that it is exercising its rights under this paragraph, to the
extent that the funds of the Company legally available for redemption are
sufficient.
g. The holder of any Preferred Stock shall be entitled to
exercise its conversion privilege with respect to the Preferred Stock
notwithstanding the commencement of any case under 11 U.S.C.ss.101 et seq. (the
"Bankruptcy Code"). In the event the Company is a debtor under the Bankruptcy
Code, the Company hereby waives, to the fullest extent permitted, any rights to
relief it may have under 11 U.S.C.ss.362 in respect of such holder's conversion
privilege. The Company hereby waives, to the fullest extent permitted, any
rights to relief it may have under 11 U.S.C.ss.362 in respect of the conversion
of the Preferred Stock. The Company agrees, without cost or expense to such
holder, to take or to consent to any and all action necessary to effectuate
relief under 11 U.S.C.ss.362.
h. The Company will authorize its transfer agent to give
information relating to the Company directly to the Investor or the Investor's
representatives upon the request of the Investor or any such representative, to
the extent such information relates to (i) the status of shares of Common Stock
issued or claimed to be issued to the Investor in connection with a Notice of
Conversion, or (ii) the number of outstanding shares of Common Stock of all
stockholders as of a current or other specified date. The Company will provide
the Investor with a copy of the authorization so given to the transfer agent.
6. CLOSING DATES.
a. The Initial Closing Date shall occur on the date which is
four (4) AMEX trading days after the Company shall have accepted this Agreement
and returned a signed counterpart of this Agreement to the Escrow Agent by
facsimile.
b. (i) The Additional Closing Date shall be the date which is
set forth in Section 1 (b) (i), and after each of the conditions contemplated by
Sections 7 and 8 hereof shall have either been satisfied or been waived by the
party in whose favor such conditions run.
(ii) The closing for the Additional Preferred Stock
shall be conducted upon the same terms and conditions as those applicable to the
Initial Preferred Stock.
c. Each closing of the purchase and issuance of Preferred
Stock shall occur on the relevant Closing Date at the offices of the Escrow
Agent and shall take place no later than 3:00 P.M., New York time, on such day
or such other time as is mutually agreed upon by the Company and the Investor.
d. Notwithstanding anything to the contrary contained herein,
the Escrow Agent will be authorized to release the Escrow Funds to the Company
and to others and to release the other Escrow Property on the relevant Closing
Date upon satisfaction of the conditions set forth in Sections 7 and 8 hereof
and as provided in the Joint Escrow Instructions. The Company and the Investor
covenant that they will each take every action reasonably required of it in
order to satisfy the conditions to closing set forth in this Agreement and
otherwise to ensure the prompt and expedient consummation of the transactions
contemplated hereby, and will exert all reasonable efforts to cause such
transactions to be promptly consummated.
7. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The Investor understands that the Company's obligation to sell
the relevant Preferred Stock to the Investor pursuant to this Agreement on the
relevant Closing Date, unless waived by the Company, is conditioned upon:
a. The Investor's execution and delivery of this Agreement and
the other Transaction Documents contemplated to be signed by the Investor;
b. Delivery by the Investor to the Escrow Agent of good funds
as payment in full of an amount equal to the Purchase Price for the relevant
Preferred Stock in accordance with this Agreement;
c. The accuracy on such Closing Date of the representations
and warranties of the Investor contained in this Agreement, each as if made on
such date, and the performance by the Investor on or before such date of all
covenants and agreements of the Investor required to be performed on or before
such date;
d. Except to the extent contemplated by specific provisions of
the Transaction Documents, there shall not be in effect any law, rule or
regulation prohibiting or restricting the transactions contemplated hereby to an
extent materially greater than contemplated herein, or requiring any consent or
approval which shall not have been obtained; and
e. The Company shall have received and been reasonably
satisfied with such other certificates and documents as shall have been
reasonably requested by the Company in order for the Company to confirm the
Investor's satisfaction of the conditions set forth in this Section including,
without limitation, a certificate in substantially the form and substance of
Exhibit 7(e) hereto, executed by an executive officer of the Investor and to the
effect that all the conditions to such Closing shall have been satisfied as at
the date of each such certificate.
8. CONDITIONS TO THE INVESTOR'S OBLIGATION TO PURCHASE.
The Company understands that the Investor's obligation to
purchase the Preferred Stock on the relevant Closing Date, unless waived by the
Investor, is conditioned upon:
a. The adoption of the Certificate of Designation by all
necessary corporate action of the Company and the filing of all filings
necessary to effectuate the Certificate of Designation as a part of the charter
documents of the Company;
b. The execution and delivery of this Agreement and the
Registration Rights Agreement by the Company;
c. Delivery by the Company to the Escrow Agent of the relevant
Certificates in accordance with this Agreement;
d. The accuracy in all material respects on such Closing Date
of the representations and warranties of the Company contained in this
Agreement, each as if made on such date, and the performance by the Company on
or before such date of all covenants and agreements of the Company required to
be performed on or before such date;
e. On such Closing Date, the Registration Rights Agreement
shall be in full force and effect and the Company shall not be in default
thereunder;
f. On such Closing Date, the Investor shall have received an
opinion of counsel for the Company, dated such Closing Date, in form, scope and
substance reasonably satisfactory to the Investor, substantially to the effect
set forth in ANNEX III attached hereto;
g. Except to the extent contemplated by specific provisions of
the Transaction Documents, there shall not be in effect any law, rule or
regulation prohibiting or restricting the transactions contemplated hereby to an
extent materially greater than contemplated herein, or requiring any consent or
approval which shall not have been obtained;
h. The trading of the Common Stock shall not have been
suspended by the SEC or The American Stock Exchange and trading in securities
generally on The American Stock Exchange shall not have been suspended or
limited, nor shall minimum prices been established for securities traded on The
American Stock Exchange, nor shall there be any outbreak or escalation of
hostilities involving the United States, the effect of which on the financial
markets of the United States is such as to make it, in the reasonable judgment
of the Investor, impracticable or inadvisable to purchase the Preferred Stock;
and
i. With respect to the Additional Closing Date,
(i) [Reserved]
(ii) the conditions of Section 6(b) shall have been satisfied;
(iii) each of the Transaction Documents shall continue to be
in full force and effect and be applicable, to the extent relevant, to the
Additional Preferred Stock (and the Company's issuance of the Additional
Preferred Stock shall constitute the Company's making a representation and
warranty to such effect as of such date);
(iv) the representations and warranties of the Company
contained in Section 3 hereof shall be true and correct in all material respects
and there shall have been no material adverse change to the business, operations
or financial condition or results of operation of the Company and its
subsidiaries taken as a whole from the Initial Closing Date through and
including the Additional Closing Date
(v) the Company shall have timely issued all shares issuable
pursuant to the Repricing Rights Agreement prior to such additional Closing
Date, to the extent it may lawfully do so;
(vi) the Company shall have available and shall reserve for
issuance to Investor the number of shares required under Section 4 (g) of this
Agreement
(vii) Investor shall have received and been reasonably
satisfied with such other certificates and documents as shall have been
reasonably requested by Investor in order for Investor to confirm the Company's
satisfaction of the conditions set forth in this Section including, without
limitation, a certificate in substantially the form and substance of Exhibit
8(i) hereto, executed by an executive officer of the Company and to the effect
that all the conditions to such Closing shall have been satisfied as at the date
of each such certificate.
9. GOVERNING LAW: MISCELLANEOUS.
a. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New York for contracts to be wholly
performed in such state and without giving effect to the principles thereof
regarding the conflict of laws. Each of the parties consents to the exclusive
jurisdiction of the federal courts whose districts encompass any part of the
City of New York or the state courts of the State of New York sitting in the
City of New York in connection with any dispute arising under this Agreement OR
ANY OF THE OTHER TRANSACTION DOCUMENTS and hereby waives, to the maximum extent
permitted by law, any objection, including any objection based on forum non
conveniens, to the bringing of any such proceeding in such jurisdictions.. To
the extent determined by such court, the Company shall reimburse the Investor
for any reasonable legal fees and disbursements incurred by the Investor in
enforcement of or protection of any of its rights under any of the Transaction
Documents.
b. Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.
c. This Agreement shall inure to the benefit of and be binding
upon the successors and assigns of each of the parties hereto.
d. All pronouns and any variations thereof refer to the
masculine, feminine or neuter, singular or plural, as the context may require.
e. A facsimile transmission of this signed Agreement shall be
legal and binding on all parties hereto.
f. This Agreement may be signed in one or more counterparts,
each of which shall be deemed an original.
g. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
h. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement or the
validity or enforceability of this Agreement in any other jurisdiction.
i. This Agreement may be amended only by an instrument in
writing signed by the party to be charged with enforcement thereof.
j. This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof.
10. NOTICES. All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder shall be in
writing and, unless otherwise specified herein, shall be (a) personally served,
(b) deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (c) delivered by reputable courier service which provides
evidence of delivery with charges prepaid, (d) transmitted by hand delivery, or
(e) by facsimile, addressed as set forth below or to such other address as such
party shall have specified most recently by written notice given in accordance
herewith. Any notice or other communication required or permitted to be given
hereunder shall be deemed effective (i) upon hand delivery or delivery 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) (ii) on the second business
day following the date of mailing by express courier service or on the fifth
business day after deposited in the mail, in each case, fully prepaid, addressed
to such address, or upon actual receipt of such mailing, whichever shall first
occur or (iii) if by facsimile, upon confirmation of receipt by the recipient or
confirmation of transmission in another manner provided in this Section 10. The
addresses for such communications shall be:
IF TO THE COMPANY:
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EUROTECH, LTD.
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Fax No.: (703)
WITH A COPY (WHICH SHALL NOT CONSTITUTE NOTICE) TO:
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
ATTENTION: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ESQ.
---------
TEL NO.: (▇▇▇)-▇▇▇-▇▇▇▇
FAX NO.: (▇▇▇)-▇▇▇-▇▇▇▇
IF TO INVESTOR:
---------------
▇▇▇▇▇▇▇▇ LLC
At the address set forth on the signature page of
this Agreement.
WITH A COPY (WHICH SHALL NOT CONSTITUTE NOTICE) TO:
---------------------------------------------------
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
ATTENTION: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ESQ.
---------
TEL NO.: (▇▇▇) ▇▇▇-▇▇▇▇
FAX NO: (▇▇▇) ▇▇▇-▇▇▇▇
EITHER PARTY HERETO MAY FROM TIME TO TIME CHANGE ITS ADDRESS OR FACSIMILE NUMBER
FOR NOTICES UNDER THIS SECTION 10 BY GIVING AT LEAST TEN (10) DAYS' PRIOR
WRITTEN NOTICE OF SUCH CHANGED ADDRESS OR FACSIMILE NUMBER TO THE OTHER PARTY
HERETO. Any notice required or permitted hereunder shall be given in writing
(unless otherwise specified herein).
11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The Company's
and the Investor's representations and warranties herein shall survive the
execution and delivery of this Agreement and the delivery of the Certificates
and the Repricing Rights and the payment of the Purchase Price and shall inure
to the benefit of the Investor and the Company and their respective successors
and assigns.
IN WITNESS WHEREOF, this Agreement has been duly executed by
the Investor by one of its officers thereunto duly authorized as of the date set
forth below.
STATED VALUE OF PREFERRED STOCK: $ 2,500,000
----------
PURCHASE PRICE OF PREFERRED STOCK: $ 2,500,000
----------
SIGNATURES FOR ENTITIES
IN WITNESS WHEREOF, the undersigned represents that the foregoing
statements are true and correct and that it has caused this Securities Purchase
Agreement to be duly executed on its behalf this 1st day of February 2002.
Harbor House Waterfront Drive ▇▇▇▇▇▇▇▇ LLC
---------------------------------- ------------------------------------
Address
P. O. BOX 972 Road Town, Tortola,
---------------------------------
British Virgin Islands
----------------------
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
Telecopier No. ▇▇▇-▇▇▇-▇▇▇▇ (Signature of Authorized Person)
------------
Navigator Management Ltd.
-------------------------
Cayman Islands Printed Name and Title
---------------------------------
Jurisdiction of Incorporation
or Organization
As of the date set forth below, the undersigned hereby accepts this Agreement
and represents that the foregoing statements are true and correct and that it
has caused this Securities Purchase Agreement to be duly executed on its behalf.
EUROTECH, LTD.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President & CEO
Date: February 1, 2002
-----------------------
ANNEX I CERIFICATE OF DESIGNATIONS
ANNEX II JOINT ESCROW INSTRUCTIONS
ANNEX III OPINION OF COUNSEL
ANNEX IV REGISTRATION RIGHTS AGREEMENT
ANNEX V COMPANY DISCLOSURE MATERIALS
ANNEX VI REPRICING RIGHTS AGREEMENT
ANNEX V
TO
SECURITIES PURCHASE AGREEMENT
COMPANY DISCLOSURE MATERIALS
----------------------------
[NONE]