CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT Between MARKET CENTRAL, INC. and THE PURCHASER(S) LISTED ON SCHEDULE 1 HERETO March 25, 2004
EXHIBIT
4.4
Between
MARKET
CENTRAL, INC.
and
THE
PURCHASER(S) LISTED ON SCHEDULE 1 HERETO
March
25, 2004
TABLE
OF CONTENTS
|
Article
I CERTAIN DEFINITIONS
|
1
|
|
|
1.1
|
Certain
Definitions
|
1
|
|
ARTICLE
II PURCHASE AND SALE OF CONVERTIBLE PREFERRED SHARES
|
4
|
|
|
2.1
|
Purchase
and Sale: Purchase Price.
|
4
|
|
2.2
|
Execution
and Delivery of Documents: The Closing.
|
5
|
|
ARTICLE
III REPRESENTATIONS AND WARRANTIES
|
6
|
|
|
3.1
|
Representations
|
6
|
|
3.2
|
Representations
and Warranties of the Purchaser
|
10
|
|
ARTICLE
IV OTHER AGREEMENTS OF THE PARTIES
|
13
|
|
|
4.1
|
Manner
of Offering
|
13
|
|
4.2
|
Notice
of Certain Events
|
13
|
|
4.3
|
Blue
Sky Laws
|
13
|
|
4.4
|
Integration
|
13
|
|
4.5
|
Furnishing
of Rule 144(c) Materials
|
14
|
|
4.6
|
Solicitation
Materials
|
14
|
|
4.7
|
Listing
of Common Stock
|
14
|
|
4.8
|
Attorney-in-Fact
|
14
|
|
4.9
|
Indemnification
|
14
|
|
4.10
|
Notice
and Consultation Before Securities Issuances
|
16
|
|
4.11
|
Purchaser’s
Ownership of Common Stock
|
17
|
|
4.12
|
No
Violation of Applicable Law
|
17
|
|
4.13
|
Redemption
Restrictions
|
17
|
|
4.14
|
Option
for Additional Company Shares
|
18
|
|
4.15
|
Lock-Up
Agreement
|
18
|
|
4.16
|
Use
of Proceeds
|
18
|
|
ARTICLE
V MISCELLANEOUS
|
18
|
|
|
5.1
|
Fees
and Expenses
|
18
|
|
5.2
|
Entire
Agreement
|
19
|
|
5.3
|
Notices
|
19
|
|
5.4
|
Amendments;
Waivers
|
20
|
|
5.5
|
Headings
|
20
|
|
5.6
|
No
Third Party Beneficiaries
|
20
|
|
5.7
|
Governing
Law/Venue/Service of Process
|
20
|
|
5.8
|
Survival
|
20
|
|
5.9
|
Counterpart
Signatures
|
20
|
|
5.10
|
Publicity
|
20
|
|
5.11
|
Severability
|
21
|
|
5.12
|
Limitation
of Remedies
|
21
|
|
5.13
|
Successors
and Assigns
|
21
|
|
5.14
|
Legal
Fees and Interest Default Rate
|
21
|
i
THIS
CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT (this “Agreement”) is made and
entered into as of March __,2004, between Market Central, Inc., a corporation
organized and existing under the laws of the State of Delaware (the “Company”),
and the purchaser(s) listed on Schedule
1
hereto
(the “Purchaser”).
WHEREAS,
subject to the terms and conditions set forth in this Agreement, the Company
desires to issue and sell to the Purchaser and the Purchaser desires to acquire
from the Company three hundred fifty thousand (350,000) shares of the Company’s
Series B Convertible Preferred Stock, $.001 par value per share (the “Series B
Preferred Stock”), with a Stated Value of ten dollars ($10) per share, and an
aggregate Stated Value of three million five hundred thousand dollars
($3,500,000), for an aggregate purchase price of three million five hundred
thousand dollars ($3,5000,000).
IN
CONSIDERATION of the mutual covenants contained in this Agreement, the Company
and each Purchaser agree as follows:
ARTICLE
I
CERTAIN
DEFINITIONS
1.1 Certain
Definitions.
As used
in this Agreement, and unless the context requires a different meaning, the
following terms have the meanings indicated:
“Affiliate”
means,
with respect to any Person, any Person that, directly or indirectly, controls,
is controlled by or is under common control with such Person. For the purposes
of this definition, “control” (including, with correlative meanings, the terms
“controlled by” and “under common control with”) shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of
the
management and policies of such Person, whether through the ownership of
voting
securities or by contract or otherwise.
“Agreement”
shall
have the meaning set forth in the introductory paragraph of this
Agreement.
“Armadillo
Shares”
means of
the
Ordinary Shares of Armadillo Investments, Plc.
“Attorney-in-Fact”
means
Gottbetter & Partners, LLP, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇; Tel: ▇▇▇-▇▇▇-▇▇▇▇; Fax: ▇▇▇-▇▇▇-▇▇▇▇.
“Business
Day”
means
any day except Saturday, Sunday and pay which shall be a legal holiday or
a day
on which banking institutions in the State of New York are authorized or
required by law or other government actions to close.
“Certificate
of Designation”
means
the Certificate of Designation of the Series B Preferred Stock annexed as
Exhibit A hereto.
“Chance
of Control”
means
the acquisition, directly or indirectly, by any Person of ownership of, or
the
power to direct the exercise of voting power with respect to, a majority
of the
issued and outstanding voting shares of the Company.
“Closing”
shall
have the meaning set forth in Section 2.2 a.
“Closing
Date”
shall
have the meaning set forth in Section 2.2 a.
“Common
Stock”
means
shares now or hereafter authorized of the class of common stock, $___ par
value,
of the Company and stock of any other class into which such shares may hereafter
have been reclassified or changed.
“Company”
shall
have the meaning set forth in the introductory paragraph.
“Control
Person”
shall
have the meaning set forth in Section 4.11 (a) hereof.
“Conversion
Date”
shall
have the meaning set forth in the Certificate of Designation.
“Conversion
Price”
shall
have the meaning set forth in the Certificate of Designation.
“Default”
means
any event or condition which constitutes an Event of Default or which with
the
giving of notice or lapse of time or both would, unless cured or waived,
become
an Event of Default.
“Disclosure
Documents”
means
the Company’s reports filed under the Exchange Act with the SEC.
“Escrow
Agent”
means
Gottbetter & Partners, LLP, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇; Tel: ▇▇▇-▇▇▇-▇▇▇▇; Fax: ▇▇▇-▇▇▇-▇▇▇▇.
“Escrow
Agreement”
means
the Escrow Agreement in the form of Exhibit M annexed hereto.
“Event
of Default”
shall
have the meaning set forth in Section 5.
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended. “Execution Date” means the date
of this Agreement first written above. “Indemnified Party” shall have the
meaning set forth in Section 4.11 b hereof. “Indemnifying Party” shall have the
meaning set forth in Section 4.11 b hereof. “G&P” means Gottbetter &
Partners, LLP.
“Limitation
on Conversion”
shall
have the meaning set forth in Section 4.11 hereof.
“Losses”
shall
have the meaning set forth in Section 4.11 a hereof.
“Material”
shall mean having a financial consequence in excess of $25,000.
“Material
Adverse Effect”
shall
have the meaning set forth in Section 3.1(a).
“NASD”
means
the National Association of Securities Dealers, Inc.
“NASDAQ”
shall
mean the NASDAQ Stock Market, Inc.
2
“Original
Issue Date”
shall
have the meaning set forth in the Certificate of Designation. “OTCBB” shall mean
the NASD over-the counter Bulletin Board.
“Per
Share Market Value”
of the
Common Stock means on any particular date (a) the last sale price of shares
of
Common Stock on such date or, if no such sale takes place on such date, the
last
sale price on the most recent prior date, in each case as officially reported
on
the principal national securities exchange on which the Common Stock is then
listed or admitted to trading, or (b) if the Common Stock is not then listed
or
admitted to trading on any national securities exchange, the closing bid
price
per share as reported by Nasdaq, or (c) if the Common Stock is not then listed
or admitted to trading on the Nasdaq, the closing bid price per share of
the
Common Stock on such date as reported on the OTCBB or if there is no such
price
on such date, then the last bid price on the date nearest preceding such
date,
or (d) if the Common Stock is not quoted on the OTCBB, the closing bid price
for
a share of Common Stock on such date in the over-the-counter market as reported
by the Pinksheets LLC (or similar organization or agency succeeding to its
functions of reporting prices) or if there is no such price on such date,
then
the last bid price on the date nearest preceding such date, or (e) if the
Common
Stock is no longer publicly traded, the fair market value of a share of the
Common Stock as determined by an Appraiser (as defined in the Certificate
of
Designation) selected in good faith by the holders of a majority of the Series
B
Preferred Stock; provided, however, that the Company, after receipt of the
determination by such Appraiser, shall have the right to select an additional
Appraiser, in which case, the fair market value shall be equal to the average
of
the determinations by each such Appraiser.
“Person”
means an individual or a corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or political subdivision thereof)
or
other entity of any kind.
“Power
of Attorney”
means
the power of attorney in the form of Exhibit G annexed hereto.
“Proceeding”
means
an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.
“Purchase
Price”
shall
have the meaning set forth in Section 2.1(b).
“Purchaser”
shall
have the meaning set forth in the introductory paragraph.
“Redemption
Price”
shall
mean an amount equal to the Stated Value of the Shares outstanding that are
subject to redemption.
“Registration
Rights Agreement”
means
the Registration Rights Agreement in the form of Exhibit J annexed
hereto.
“Reporting
Issuer”
means a
company that is subject to the reporting requirements of Section 13 or 15(d)
of
the Exchange Act.
“Required
Approvals”
shall
have the meaning set forth in Section 3.1(f).
3
“Securities”
means
the Shares, the Underlying Shares and the Option Shares.
“SEC”
means
the Securities and Exchange Commission.
“Securities
Act”
means
the Securities Act of 1933, as amended.
“Series
B Preferred Stock”
shall
have the meaning set forth in the recital.
“Shares”
shall
have the meaning set forth in Section 2.1(a).
“Stated
Value”
means
the sum of ten dollars ($10) per Share or three million five hundred thousand
($3,500,000) for all of the Shares.
“Subsidiaries”
shall
have the meaning set forth in Section 3.1(a).
“Trading
Day”
means
(a) a day on which the Common Stock is quoted on Nasdaq, the OTCBB or the
principal stock exchange on which the Common Stock has been listed, or (b)
if
the Common Stock is not quoted on Nasdaq, the OTCBB or any stock exchange,
a day
on which the Common Stock is quoted in the over-the-counter market, as reported
by the Pinksheets LLC (or any similar organization or agency succeeding its
functions of reporting prices).
“Transaction
Documents”
means
this Agreement and all exhibits and schedules hereto and all other documents,
instruments and writings required pursuant to this Agreement.
“Underlying
Shares”
means
the shares of the Company’s Common Stock into which the Shares are convertible
as provided in the Certificate of Designation.
ARTICLE
II
PURCHASE
AND SALE OF CONVERTIBLE PREFERRED SHARES
2.1 Purchase
and Sale:
Purchase Price.
(a) Subject
to the terms and conditions set forth herein, the Company shall issue and
sell
and the Purchaser shall purchase three hundred fifty thousand (350,000) shares
of the Company’s Series B 0 % Convertible Preferred Stock, $.001 par value per
share (the “Shares”). The Series B Preferred Stock shall have the respective
rights, preferences and privileges as set forth in the Certificate of
Designation to be filed by the Company with the Secretary of State of Delaware
prior to the Execution Date.
(b) The
purchase price for each Share shall be Ten Dollars ($10) (the “Per Share
Consideration”). The Per Share Consideration multiplied by the number of Shares
to be purchased by the Purchaser is referred to as the “Purchase
Price.”
(c) The
Purchase Price shall be paid by delivery to the Company of _______________
Ordinary Shares (the “Armadillo Shares”) of Armadillo Investments, Plc. The
number of Ordinary Shares to be issued will be based on the conversion rate
in
effect as of the close of business on the day preceding the closing of the
transaction. For example, if the effective conversion rate is $1 .85/i 1,
then
Armadillo will issue $3,5000,000/$1.85, or 1,891,892 Ordinary
Shares.
4
(d) Notwithstanding
anything to the contrary contained in this Agreement, the Company’s obligations
hereunder shall be expressly contingent upon the Company selling the Armadillo
Shares to a purchaser to be located by Purchaser simultaneously with receipt
of
the Armadillo Shares for a price not less than £ .50 per share.
2.2 Execution
and Delivery of Documents: The Closing.
(a) The
Closing of the purchase and sale of the Shares (the “Closing”) shall take place
simultaneously with the execution and delivery of this Agreement (the “Closing
Date”). On the Closing Date,
(i) the
Company shall execute and deliver to the Purchaser the certificates representing
the Shares, which Shares shall have the respective rights, preferences and
privileges as set forth in the Certificate of Designation annexed as Exhibit
A
hereto and the Power of Attorney;
(ii) the
Company shall execute and deliver to the Purchaser a certificate of its
President, in the form of Exhibit I annexed hereto, certifying that attached
thereto is a copy of resolutions duly adopted by the Board of Directors of
the
Company authorizing the Company to execute and deliver the Transaction Documents
and to enter into the transactions contemplated thereby;
(iii) the
Company shall execute and deliver to Purchaser an executed Power of Attorney
in
the form annexed hereto as Exhibit G;
(iv) the
Company and the Purchaser shall execute and deliver to each other an executed
Registration Rights Agreement in the form annexed hereto as
Exhibit;
(v) counsel
for the Company shall execute and deliver to the Purchaser an executed copy
of
the opinion of counsel annexed hereto as Exhibit K;
(vi) the
Company, the Escrow Agent and the Purchaser shall execute and deliver to
each
other an executed Escrow Agreement in the form annexed hereto as Exhibit
M and
the certificates representing the Escrow Shares as defined in the Escrow
Agreement;
(vii) the
Purchaser shall deliver to the Company the Armadillo Shares.
(b) Notwithstanding
the foregoing, at Closing, the Company shall deliver to the Escrow Agent
a
certificate representing the Shares (the “Closing Stock Certificate”), that
shall be held by the Escrow Agent upon the terms and conditions set forth
in the
Escrow Agreement, and that shall bear the following legends:
5
(1)
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN OFFERED AND SOLD IN
AN
“OFFSHORE TRANSACTION” IN RELIANCE UPON REGULATION S AS PROMULGATED BY THE
SECURITIES AND EXCHANGE COMMISSION AND IN ACCORDANCE WITH SECTION 4(2) OF
THE
SECURITIES ACT OF 1933 (THE “SECURITIES ACT”). ACCORDINGLY, THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 AND MAY NOT BE TRANSFERRED OTHER THAN IN ACCORDANCE WITH REGULATION
5, PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT, OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, THE AVAILABILITY
OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY.
(2)
ADDITIONALLY, THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD
OR
OTHERWISE TRANSFERRED UNLESS AND UNTIL THE COMPANY SELLS THE ARMADILLO SHARES
(AS DEFINED IN THE CONVERTIBLE STOCK PURCHASE AGREEMENT DATED AS OF MARCH
2004
BETWEEN THE COMPANY AND JUBILEE INVESTMENT TRUST PLC) AND PURCHASE PRICE
FOR
SUCH SHARES OF NOT LESS THAN FIFTY PERCENT(50%) of £1.00 PER SHARE, LESS
BROKERAGE COMMISSIONS.
Promptly
after the Company sells the Armadillo Shares and receives a purchase price
for
the Armadillo Shares of not less than fifty percent (50%) of £1.00 for each
Armadillo Share, less brokerage commissions, the Company shall issue to the
Escrow Agent a certificate representing the Shares that bears only paragraph
(1)
above as a legend (the “Final Stock Certificate”), in exchange for the Closing
Stock Certificate in the manner provided in the Escrow Agreement. In the
event
that the Company is unable to sell the Armadillo Shares within ten (10) days
of
the Closing in the manner described in the previous sentence, the Company
shall
return the certificate for the Armadillo Shares to Purchaser, and the Escrow
Agent shall return the Closing Stock Certificate to the Company.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES
3.1 Representations.
Warranties and Agreements of the Company. The Company hereby makes the following
representations and warranties to the Purchaser, all of which shall survive
the
Closing:
(a) Organization
and Qualification.
The
Company is a corporation, duly incorporated, validly existing and in good
standing under the laws of the State of Nevada, with the requisite corporate
power and authority to own and use its properties and assets and to carry
on its
business as currently conducted. The Company has no subsidiaries other than
as
set forth on Schedule 3.1(a) attached hereto (collectively, the “Subsidiaries”).
Each of the Subsidiaries is a corporation, duly incorporated, validly existing
and in good standing under the laws of the jurisdiction of its incorporation,
with the full corporate power and authority to own and use its properties
and
assets and to carry on its business as currently conducted. Each of the Company
and the Subsidiaries is duly qualified to do business and is in good standing
as
a foreign corporation in each jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary, except
where the failure to be so qualified or in good standing, as the case may
be,
would not, individually or in the aggregate, have a material adverse effect
on
the results of operations, assets, or financial condition of the Company
and the
Subsidiaries, taken as a whole (a “Material Adverse Effect”).
6
(b) Authorization,
Enforcement.
The
Company has the requisite corporate power and authority to enter into and
to
consummate the transactions contemplated hereby and by each other Transaction
Document and to otherwise to carry out its obligations hereunder and thereunder.
The execution and delivery of this Agreement and each of the other Transaction
Documents by the Company and the consummation by it of the transactions
contemplated hereby and thereby has been duly authorized by all necessary
action
on the part of the Company. Each of this Agreement and each of the other
Transaction Documents has been or will be duly executed by the Company and
when
delivered in accordance with the terms hereof or thereof will constitute
the
valid and binding obligation of the Company enforceable against the Company
in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
or
similar laws relating to, or affecting generally the enforcement of, creditors’
rights and remedies or by other equitable principles of general
application.
(c) Capitalization.
The
authorized, issued and outstanding capital stock of the Company is set forth
on
Schedule 3.1(c). No shares of the Series B Preferred Stock have been issued
as
of the date hereof. No shares of Common Stock are entitled to preemptive
or
similar rights, nor is any holder of the Common Stock entitled to preemptive
or
similar rights arising out of any agreement or understanding with the Company
by
virtue of this Agreement. Except as disclosed in Schedule 3.1(c), there are
no
outstanding options, warrants, script, rights to subscribe to, registration
rights, calls or commitments of any character whatsoever relating to, or,
except
as a result of the purchase and sale of the Series B Preferred Stock hereunder,
securities, rights or obligations convertible into or exchangeable for, or
giving any person any right to subscribe for or acquire, any shares of Common
Stock, or contracts, commitments, understandings, or arrangements by which
the
Company or any Subsidiary is or may become bound to issue additional shares
of
Common Stock, or securities or rights convertible or exchangeable into shares
of
Common Stock. Neither the Company nor any Subsidiary is in violation of any
of
the provisions of its Certificate of Incorporation, bylaws or other charter
documents.
(d) Issuance
of Securities.
The
Shares have been duly and validly authorized for issuance, offer and sale
pursuant to this Agreement and, when issued and delivered as provided hereunder
against payment in accordance with the terms hereof, shall be valid and binding
obligations of the Company enforceable in accordance with their respective
terms. The Company has and at all times while the Shares are outstanding
will
continue to maintain an adequate reserve of shares of Common Stock to enable
it
to perform its obligations under this Agreement and the Certificate of
Designation. When issued in accordance with the terms hereof, the Underlying
Shares and the Option Shares will be duly authorized, validly issued, fully
paid
and non-assessable. Except as set forth in Schedule 3.1(d) hereto, there
is no
equity or equity equivalent security outstanding that is substantially similar
to the Shares, including any security having a floating conversion price
substantially similar to the Shares.
7
(e) No
Conflicts.
The
execution, delivery and performance of this Agreement and the other Transaction
Documents by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby do not and will not (i) conflict with or
violate
any provision of its Certificate of Incorporation or bylaws (each as amended
through the date hereof) or (ii) be subject to obtaining any consents except
those referred to in Section 3.1(f), conflict with, or constitute a default
(or
an event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration
or
cancellation of, any agreement, indenture or instrument to which the Company
is
a party, or (iii) result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company or its Subsidiaries is subject (including,
but
not limited to, those of other countries and the federal and state securities
laws and regulations), or by which any property or asset of the Company or
its
Subsidiaries is bound or affected, except in the case of clause (ii), such
conflicts, defaults, terminations, amendments, accelerations, cancellations
and
violations as would not, individually or in the aggregate, have a Material
Adverse Effect. The business of the Company and its Subsidiaries is not being
conducted in violation of any law, ordinance or regulation of any governmental
authority.
(f) Consents
and Approvals.
Except
as specifically set forth in Schedule 3.1(f), neither the Company nor any
Subsidiary is required to obtain any consent, waiver, authorization or order
of,
or make any filing or registration with, any court or other federal, state,
local or other governmental authority or other Person in connection with
the
execution, delivery and performance by the Company of this Agreement and
each of
the other Transaction Documents, except for the filing of the Certificate
of
Designation with respect to the Series B Preferred Stock with the Secretary
of
State of the State of Nevada, which filing shall be effected prior to the
Closing Date (together with the consents, waivers, authorizations, orders,
notices and filings referred to in Schedule 3.1(0, the “Required
Approvals”).
(g) Litigation
Proceedings.
Except
as specifically disclosed in Schedule 3.1(g), there is no action, suit, notice
of violation, proceeding or investigation pending or, to the best knowledge
of
the Company, threatened against or affecting the Company or any of its
Subsidiaries or any of their respective properties before or by any court,
governmental or administrative agency or regulatory authority (federal, state,
county, local or foreign) which (i) relates to or challenges the legality,
validity or enforceability of any of the Transaction Documents, the Shares
or
the Underlying Shares, (ii) could, individually or in the aggregate, have
a
Material Adverse Effect or (iii) could, individually or in the aggregate,
materially impair the ability of the Company to perform fully on a timely
basis
its obligations under the Transaction Documents.
(h) No
Default or Violation.
Except
as set forth in Schedule 3.1(h) hereto, neither the Company nor any Subsidiary
(i) is in default under or in violation of any indenture, loan or credit
agreement or any other agreement or instrument to which it is a party or
by
which it or any of its properties is bound, except such conflicts or defaults
as
do not have a Material Adverse Effect, (ii) is in violation of any order
of any
court, arbitrator or governmental body, except for such violations as do
not
have a Material Adverse Effect, or (iii) is in violation of any statute,
rule or
regulation of any governmental authority which could (individually or in
the
aggregate) (x) adversely affect the legality, validity or enforceability
of this
Agreement, (y) have a Material Adverse Effect or (z) adversely impair the
Company’s ability or obligation to perform fully on a timely basis its
obligations under this Agreement.
8
(i) Intentionally
omitted.
(j) Disclosure
Documents.
The
Disclosure Documents are accurate in all material respects and do not contain
any untrue statement of material fact or omit to state any material fact
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
(k) Non-Registered
Offering.
Neither
the Company nor any Person acting on its behalf has taken or will take any
action (including, without limitation, any offering of any securities of
the
Company under circumstances which would require the integration of such offering
with the offering of the Securities under the Securities Act) which might
subject the offering, issuance or sale of the Securities to the registration
requirements of Section 5 of the Securities Act.
(l) Placing
Agent.
The
Company accepts and agrees that Dungarvon Associates, Inc. (“Dungarvon”) is
acting for the Purchaser and does not regard any person other than the Purchaser
as its customer in relation to this Agreement, and that it has not made any
recommendation to the Company, in relation to this Agreement and is not advising
the Company, with regard to the suitability or merits of the Armadillo Shares
and in particular Dungarvon has no duties or responsibilities to the Company
for
the best execution of the transaction contemplated by this
Agreement.
(m) Private
Placement Representations.
The
Company (i) has received and carefully reviewed such information and
documentation relating to the Purchaser that the Company has requested,
including, without limitation, the Purchaser’s Confidential Private Offering
Memorandum dated January 1, 2004; (ii) has had a reasonable opportunity to
ask
questions of and receive answers from the Purchaser concerning the Armadillo
Shares, and all such questions, if any, have been answered to the full
satisfaction of the Company; (iii) has such knowledge and expertise in financial
and business matters that it is capable of evaluating the merits and risks
involved in an investment in the Armadillo Shares; (iii) understands that
Armadillo has determined that the exemption from the registration provisions
of
the Securities Act of 1933, as amended (the “Securities Act”), provided by
Section 4(2) of the Securities Act and Rule 506 of Regulation D thereunder
is
applicable to the offer and sale of the Armadillo Shares, based, in part,
upon
the representations, warranties and agreements made by the Company herein;
and
(iv) except as set forth herein, no representations or warranties have been
made
to the Company by the Purchaser or any agent, employee or affiliate of the
Purchaser and in entering into this transaction the Company is not relying
upon
any information, other than the results of independent investigation by the
Company.
9
The
Purchaser acknowledges and agrees that the Company makes no representation
or
warranty with respect to the transactions contemplated hereby other than
those
specifically set forth in Section 3.1 hereof.
3.2 Representations
and Warranties of the Purchaser.
The
Purchaser hereby represents and warrants to the Company as follows:
(a) Organization
Authority.
The
Purchaser is a corporation, duly organized, validly existing and in good
standing under the laws of the jurisdiction of its formation with the requisite
power and authority to enter into and to consummate the transactions
contemplated hereby and by the other Transaction Documents and otherwise
to
carry out its obligations hereunder and thereunder. The acquisition of the
Shares to be purchased by the Purchaser hereunder has been duly authorized
by
all necessary action on the part of the Purchaser. This Agreement has been
duly
executed and delivered by the Purchaser and constitutes the valid and legally
binding obligation of the Purchaser, enforceable against it in accordance
with
its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws relating
to,
or affecting generally the enforcement of, creditors rights and remedies
or by
other general principles of equity.
(b) Investment
Intent.
The
Purchaser is acquiring the Shares to be purchased by it hereunder, and will
acquire the Underlying Shares relating to such Shares, and the Option Shares
for
its own account for investment purposes only and not with a view to or for
distributing or reselling such Shares, Underlying Shares or Option Shares,
or
any part thereof or interest therein, without prejudice, however, to such
Purchaser’s right, subject to the provisions of this Agreement, at all times to
sell or otherwise dispose of all or any part of such Shares, Underlying Shares
or Option Shares in compliance with applicable federal and state securities
laws.
(c) Experience
of Purchaser.
The
Purchaser, either alone or together with its representatives, has such
knowledge, sophistication and experience in business and financial matters
so as
to be capable of evaluating the merits and risks of an investment in the
Securities to be acquired by it hereunder, and has so evaluated the merits
and
risks of such investment.
(d) Ability
of Purchaser to Bear Risk of Investment.
The
Purchaser is able to bear the economic risk of an investment in the Securities
to be acquired by it hereunder and, at the present time, is able to afford
a
complete loss of such investment.
(e) Access
to Information.
The
Purchaser acknowledges that it has been afforded (i) the opportunity to ask
such
questions as it has deemed necessary of, and to receive answers from,
representatives of the Company concerning the terms and conditions of the
Securities offered hereunder and the merits and risks of investing in such
securities; (ii) access to information about the Company and the Company’s
financial condition, results of operations, business, properties, management
and
prospects sufficient to enable it to evaluate its investment in the Securities;
and (iii) the opportunity to obtain such additional information which the
Company possesses or can acquire without unreasonable effort or expense that
is
necessary to make an informed investment decision with respect to the investment
and to verify the accuracy and completeness of the information that it has
received about the Company.
10
(f) Reliance.
The
Purchaser understands and acknowledges that (i) the Shares, Underlying Shares
and Option Shares being offered and sold to it hereunder are being offered
and
sold without registration under the Securities Act in a private placement
that
is exempt from the registration provisions of the Securities Act under Section
4(2) of the Securities Act and (ii) the availability of such exemption depends
in part on, and that the Company will rely upon the accuracy and truthfulness
of, the foregoing representations and such Purchaser hereby consents to such
reliance.
(g) Regulation
S.
(i) The
Purchaser understands and acknowledges that (A) the Shares acquired pursuant
to
this Agreement have not been registered under the Securities Act, are being
sold
in reliance upon an exemption from registration afforded by Regulation 5;
and
that such Shares have not been registered with any state Securities commission
or authority; (B) pursuant to the requirements of Regulation 5, the Shares
may
not be transferred, sold or otherwise exchanged unless in compliance with
the
provisions of Regulation S and/or pursuant to registration under the Securities
Act, or pursuant to an available exemption thereunder; and (C) other than
as set
forth in this Agreement between the Company and the Purchaser, the Company
is
under no obligation to register the Shares under the Securities Act or any
state
securities law, or to take any action to make any exemption from any such
registration provisions available.
(ii) (A)
The
Purchaser is not a U.S. person and is not acquiring the Shares for the account
of any U.S. person; (B) if a corporation, it is not organized or incorporated
under the laws of the United States; (C) if a corporation, no director or
executive officer is a national or citizen of the United States; and (D)
it is
not otherwise deemed to be a “U.S. Person” within the meaning of Regulation
S.
(iii) The
Purchaser, was not formed specifically for the purpose of acquiring the Shares
purchased pursuant to this Agreement.
(iv) The
Purchaser is purchasing the Shares for its own account and risk and not for
the
account or benefit of a U.S. Person as defined in Regulation S and no other
person has any interest in or participation in the Shares or any right, option,
security interest, pledge or other interest in or to the Shares. The Purchaser
understands, acknowledges and agrees that it must bear the economic risk
of its
investment in the Shares for an indefinite period of time and that prior
to any
such offer or sale, the Company may require, as a condition to effecting
a
transfer of the Shares, an opinion of counsel, acceptable to the Company,
as to
the registration or exemption therefrom under the Shares Act and any state
Shares acts, if applicable.
(v) The
Purchaser will, after the expiration of the Restricted Period, as set forth
under Regulation S Rule 903(b)(3)(iii)(A), offer, sell, pledge or otherwise
transfer the Shares only in accordance with Regulation 5, or pursuant to
an
available exemption under the Securities Act and, in any case, in accordance
with applicable state Securities laws. The transactions contemplated by this
Subscription Agreement have neither been pre-arranged with a purchaser who
is in
the United States or who is a U.S. Person, nor are they part of a plan or
scheme
to evade the registration provisions of the United States federal securities
laws.
11
(vi) The
offer
leading to the sale evidenced hereby was made in an “offshore transaction.” For
purposes of Regulation 5, the Purchaser understands that an “offshore
transaction” as defined under Regulation S is any offer or sale not made to a
person in the United States and either (A) at the time the buy order is
originated, the purchaser is outside the United States, or the seller or
any
person acting on his behalf reasonably believes that the purchaser is outside
the United States; or (B) for purposes of (1) Rule 903 of Regulation 5, the
transaction is executed in, or on or through a physical trading floor of
an
established foreign exchange that is located outside the United States or
(2)
Rule 904 of Regulation 5, the transaction is executed in, on or through the
facilities of a designated offshore securities market, and neither the seller
nor any person acting on its behalf knows that the transaction has been
prearranged with a buyer in the United States.
(vii) Neither
the Purchaser nor any affiliate of the Purchaser or any person acting on
its
behalf has made or is aware of any “directed selling efforts” in the United
States, which is defined in Regulation S to be any activity undertaken for
the
purpose of, or that could reasonably be expected to have the effect of,
conditioning the market in the United States for any of the Shares being
purchased hereby.
(viii) The
Purchaser understands that the Company is the seller of the Shares which
are the
subject of this Agreement, and that, for purpose of Regulation 5, a
“distributor” is any underwriter, dealer or other person who participates,
pursuant to a contractual arrangement, in the distribution of securities
offered
or sold in reliance on Regulation S and that an “affiliate” is any partner,
officer, director or any person directly or indirectly controlling, controlled
by or under common control with any person in question. The Purchaser agrees
that it will not, during the Restricted Period set forth under Rule
903(b)(iii)(A), act as a distributor, either directly or though any affiliate,
nor shall it sell, transfer, hypothecate or otherwise convey the Shares other
than to a non-U.S. Person.
(ix) The
Purchaser acknowledges that the Shares will bear a legend in substantially
the
following form:
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN OFFERED AND SOLD IN
AN
“OFFSHORE TRANSACTION” IN RELIANCE UPON REGULATION S AS PROMULGATED BY THE
SECURITIES AND EXCHANGE COMMISSION AND IN ACCORDANCE WITH SECTION 4(2)OF
THE
SECURITIES ACT OF 1933 (THE “SECURITIES ACT”).ACCORDINGLY, THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 AND MAY NOT BE TRANSFERRED OTHER THAN IN ACCORDANCE WITH REGULATION
5, PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT, OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, THE AVAILABILITY
OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY. THE SECURITIES
REPRESENTED BY THIS CERTIFICATE CANNOT BE THE SUBJECT OF HEDGING TRANSACTIONS
UNLESS SUCH TRANSACTIONS ARE CONDUCTED INCOMPLIANCE WITH THE SECURITIES
ACT.
12
(h) Private
Placement Memorandum.
The
Private Placement Memorandum does not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
made therein, in light of the circumstances in which they are made, not
misleading.
The
Company acknowledges and agrees that the Purchaser makes no representations
or
warranties with respect to the transactions contemplated hereby other than
those
specifically set forth in this Section 3.2.
ARTICLE
IV
OTHER
AGREEMENTS OF THE PARTIES
4.1 Manner
of Offering.
The
Securities are being issued pursuant to section 4(2) of the Securities Act
and
Regulation S thereunder. The Armadillo shares are being issued pursuant to
section 4(2) of the Securities Act.
4.2 Notice
of Certain Events.
The
Company shall, on a continuing basis, (i) advise the Purchaser promptly after
obtaining knowledge of, and, if requested by the Purchaser, confirm such
advice
in writing, of (A) the issuance by any state securities commission of any
stop
order suspending the qualification or exemption from qualification of the
Shares
or the Underlying Shares, for offering or sale in any jurisdiction, or the
initiation of any proceeding for such purpose by any state securities commission
or other regulatory authority (ii) use its best efforts to prevent the issuance
of any stop order or order suspending the qualification or exemption from
qualification of the Securities under any state securities or Blue Sky laws,
and
(iii) if at any time any state securities commission or other regulatory
authority shall issue an order suspending the qualification or exemption
from
qualification of the Securities under any such laws, and use its best efforts
to
obtain the withdrawal or lifting of such order at the earliest possible
time.
4.3 Blue
Sky Laws.
The
Company shall cooperate with the Purchaser in connection with the exemption
from
registration of the Securities under the securities or Blue Sky laws of such
jurisdictions as the Purchasers may request; provided, however, that neither
the
Company nor its Subsidiaries shall be required in connection therewith to
qualify as a foreign corporation where they are not now so qualified. The
Company agrees that it will execute all necessary documents and pay all
necessary state filing or notice fees to enable the Company to sell the
Securities to the Purchasers.
4.4 Integration.
The
Company shall not and shall use its best efforts to ensure that no Affiliate
shall sell, offer for sale or solicit offers to buy or otherwise negotiate
in
respect of any security (as defined in Section 2 of the Securities Act) that
would be integrated with the offer or sale of the Securities in a manner
that
would require the registration under the Securities Act of the sale of the
Securities to the Purchaser.
13
4.5 Furnishing
of Rule 144(c) Materials.
The
Company shall, for so long as any of the Securities remain outstanding and
during any period in which the Company is no longer subject to Section 13
or
15(d) of the Exchange Act, make available to any registered holder of the
Securities (“Holder” or “Holders”) in connection with any sale thereof and any
prospective purchaser of such Securities from such Person, such information
in
accordance with Rule 144(c) promulgated under the Securities Act as is required
to sell the Securities under Rule 144 promulgated under the Securities
Act.
4.6 Solicitation
Materials.
The
Company shall not (i) distribute any offering materials in connection with
the
offering and sale of the Shares or Underlying Shares other than the Disclosure
Documents and any amendments and supplements thereto prepared in compliance
herewith or (ii) solicit any offer to buy or sell the Shares or Underlying
Shares by means of any form of general solicitation or advertising.
4.7 Listing
of Common Stock.
If the
Common Stock is or shall become listed on the OTCBB or on another exchange,
the
Company shall (a) use its best efforts to maintain the listing of its Common
Stock on the OTCBB or such other exchange on which the Common Stock is then
listed until expiration of the periods during which the Shares may be converted
and (b) shall provide to the Purchaser evidence of such listing.
4.8 Attorney-in-Fact.
For the
sole purpose of effectuating the terms and provisions of this Agreement and
the
Certificate of Designation, the Company hereby agrees to give a power of
attorney to G&P as is evidenced by Exhibit G annexed hereto. All acts done
under such power of attorney are hereby ratified and approved and neither
the
Attorney-in-Fact nor any designee or agent thereof shall be liable for any
acts
of commission or omission, for any error of judgment or for any mistake of
fact
or law, as long as the Attorney-in-Fact is operating within the scope of
the
power of attorney and this Agreement and its exhibits. The power of attorney,
being coupled with an interest, shall be irrevocable while any of the Shares
remain unconverted, or any portion of this Agreement remains unsatisfied.
In
addition, the Company shall give the Attorney-in-Fact resolutions executed
by
the Board of Directors of the Company which authorize transfers of the Shares
and future issuances of the Underlying Shares for the Shares, and which
resolutions state that they are irrevocable while any of the Shares remain
unconverted, or any portion of this Agreement remains unsatisfied.
4.9 Indemnification.
(a) Indemnification:
(i) The
Company shall, notwithstanding termination of this Agreement and without
limitation as to time, indemnify and hold harmless the Purchaser and its
officers, directors, agents, employees and affiliates, each Person who controls
or the Purchaser (within the meaning of Section 15 of the Securities Act
or
Section 20 of the Exchange Act) (each such Person, a “Control Person”) and the
officers, directors, agents, employees and affiliates of each such Control
Person, to the fullest extent permitted by applicable law, from and against
any
and all losses, claims, damages, liabilities, costs (including, without
limitation, costs of preparation and attorneys’ fees) and expenses
(collectively, “Losses”), as incurred, arising out of, or relating to, a breach
or breaches of any representation, warranty, covenant or agreement by the
Company under this Agreement or any other Transaction Document.
14
(ii) The
Purchaser shall, notwithstanding termination of this Agreement and without
limitation as to time, indemnify and hold harmless the Company, its officers,
directors, agents and employees, each Control Person and the officers,
directors, agents and employees of each Control Person, to the fullest extent
permitted by application law, from and against any and all Losses, as incurred,
arising out of, or relating to, a breach or breaches of any representation,
warranty, covenant or agreement by the Purchaser under this Agreement or
the
other Transaction Documents.
(b) Conduct
of Indemnification Proceedings.
If any
Proceeding shall be brought or asserted against any Person entitled to indemnity
hereunder (an “Indemnified Party”), such Indemnified Party promptly shall notify
the Person from whom indemnity is sought (the “Indemnifying Party”) in writing,
and the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Party and
the
payment of all fees and expenses incurred in connection with defense thereof
provided, that the failure of any Indemnified Party to give such notice shall
not relieve the Indemnifying Party of its obligations or liabilities pursuant
to
this Agreement, except (and only) to the extent that it shall be finally
determined by a court of competent jurisdiction (which determination is not
subject to appeal or further review) that such failure shall have proximately
and materially adversely prejudiced the Indemnifying Party.
An
Indemnified Party shall have the right to employ separate counsel in any
such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (1) the Indemnifying Party has agreed to pay such fees and expenses;
or
(2) the Indemnifying Party shall have failed promptly to assume the defense
of
such Proceeding and to employ counsel reasonably satisfactory to such
Indemnified Party in any such Proceeding; or (3) the named parties to any
such
Proceeding (including any impleaded parties) include both such Indemnified
Party
and the Indemnifying Party, and such Indemnified Party shall have been advised
by counsel that a conflict of interest is likely to exist if the same counsel
were to represent such Indemnified Party and the Indemnifying Party (in which
case, if such Indemnified Party notifies the Indemnifying Party in writing
that
it elects to employ separate counsel at the expense of the Indemnifying Party,
the Indemnifying Party shall not have the right to assume the defense of
the
claim against the Indemnified Party but will retain the right to control
the
overall Proceedings out of which the claim arose and such counsel employed
by
the Indemnified Party shall be at the expense of the Indemnifying Party).
The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld. No Indemnifying Party shall, without the prior written consent
of the
Indemnified Party, effect any settlement of any pending Proceeding in respect
of
which any Indemnified Party is a party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such Proceeding.
15
All
fees
and expenses of the Indemnified Party to which the Indemnified Party is entitled
hereunder (including reasonable fees and expenses to the extent incurred
in
connection with investigating or preparing to defend such Proceeding in a
manner
not inconsistent with this Section) shall be paid to the Indemnified Party,
as
incurred, within ten (10) Business Days of written notice thereof to the
Indemnifying Party.
No
right
of indemnification under this Section shall be available as to a particular
Indemnified Party if there is a non-appealable final judicial determination
that
such Losses arise solely out of the negligence or bad faith of such Indemnified
Party in performing the obligations of such Indemnified Party under this
Agreement or a breach by such Indemnified Party of its obligations under
this
Agreement.
(c) Contribution.
If a
claim for indemnification under this Section is unavailable to an Indemnified
Party or is insufficient to hold such Indemnified Party harmless for any
Losses
in respect of which this Section would apply by its terms (other than by
reason
of exceptions provided in this Section), then each Indemnifying Party, in
lieu
of indemnifying such Indemnified Party, shall contribute to the amount paid
or
payable by such Indemnified Party as a result of such Losses in such proportion
as is appropriate to reflect the relative benefits received by the Indemnifying
Party on the one hand and the Indemnified Party on the other and the relative
fault of the Indemnifying Party and Indemnified Party in connection with
the
actions or omissions that resulted in such Losses as well as any other relevant
equitable considerations. The relative fault of such Indemnifying Party and
Indemnified Party shall be determined by reference to, among other things,
whether there was a judicial determination that such Losses arise in part
out of
the negligence or bad faith of the Indemnified Party in performing the
obligations of such Indemnified Party under this Agreement or the Indemnified
Party’s breach of its obligations under this Agreement. The amount paid or
payable by a party as a result of any Losses shall be deemed to include any
attorneys’ or other fees or expenses incurred by such party in connection with
any Proceeding to the extent such party would have been indemnified for such
fees or expenses if the indemnification provided for in this Section was
available to such party.
(d) Non-Exclusivity.
The
indemnity and contribution agreements contained in this Section are in addition
to any obligation or liability that the Indemnifying Parties may have to
the
Indemnified Parties.
4.10 Notice
and Consultation Before Securities Issuances.
Until
such time as Purchaser shall have sold all of the Shares and the Underlying
Shares, the Company shall not offer or issue any equity, equity equivalent
security or debt that with a floating conversion price, or any equity lines
of
credit (the “New Securities”), without first giving thirty (30) days notice
thereof to the Purchaser and thereafter consulting in good faith with the
Purchaser concerning such issuance. After such consultation between the Company
and the Purchaser, the Company may offer or sell the New Securities on such
terms and conditions as the Company deems appropriate. Purchaser shall keep
all
information concerning the New Securities confidential and shall not trade
any
of the Company’s securities until information about the New Securities is
publicly disclosed or the Company advises the Purchaser that it has determined
not to issue the New Securities.
16
4.11 Purchaser’s
Ownership of Common Stock.
In
addition to and not in lieu of the limitations on conversion set forth in
the
Certificate of Designation, the conversion and exercise rights of the Purchaser
set forth in the Certificate of Designation shall be limited, solely to the
extent required, from time to time, such that, unless the Purchaser gives
written notice seventy five (75) days in advance to the Company of the
Purchaser’s intention to exceed the Limitation on Conversion as defined herein,
with respect to all or a specified amount of the Shares and the corresponding
number of the Underlying Shares, in no instance shall the maximum number
of
shares of Common Stock which the Purchaser (singularly, together with any
Persons who in the determination of the Purchaser, together with the Purchaser,
constitute a group as defined in Rule 1 3d-S of the Exchange Act) may receive
in
respect of any conversion of the Shares exceed, at any one time, an amount
equal
to four and ninety nine one hundredths percent (4.99%) of the then issued
and
outstanding shares of Common Stock of the Company following such conversion
(the
foregoing being herein referred to as the “Limitation on Conversion”); provided,
however, that the Limitation on Conversion shall not apply to any forced
or
automatic conversion pursuant to this agreement or the Certificate of
Designation; and provided, further that if the Purchaser shall have declared
an
Event of Default and, if a cure period is provided, the Company shall not
have
properly and fully cured such Event of Default within any such cure period,
the
provisions of this Section 4.11 shall be null and void from and after such
date.
The Company shall, promptly upon its receipt of a Notice of Conversion tendered
by the Purchaser (or its sole designee) for the Shares, as applicable, notify
the Purchaser by telephone and by facsimile of the number of shares of Common
Stock outstanding on such date and the number of Underlying Shares which
would
be issuable to the Purchaser (or its sole designee, as the case may be) if
the
conversion requested in such Notice of Conversion or exercise requested in
such
Notice of Exercise were effected in full, whereupon, in accordance with the
Certificate of Designation and notwithstanding anything to the contrary set
forth therein, the Purchaser may within one (1) Business Day of its receipt
of
the Company notice required by this Section 4.11 by facsimile revoke such
conversion or exercise to the extent (in whole or in part) that the Purchaser
determines that such conversion or exercise would result in the ownership
by the
Purchaser of shares of Common Stock in excess of the Limitation on Conversion.
4.12 No
Violation of Applicable Law.
Notwithstanding any provision of this Agreement to the contrary, if the
redemption of the Shares otherwise required under this Agreement or the
Certificate of Designation would be prohibited by the relevant provisions
of
Delaware law, such redemption shall be effected as soon as it is permitted
under
such law; provided, however, that interest payable by the Company with respect
to any such redemption shall accrue in accordance with Article X(e) of the
Certificate of Designation until such redemption is effected.
4.13 Redemption
Restrictions.
Notwithstanding any provision of this Agreement to the contrary, if any
redemption of the Shares otherwise required under this Agreement or the
Certificate of Designation would be prohibited in the absence of consent
from
any lender to the Company or any of the Subsidiaries, or by the holders of
any
class of securities of the Company, the Company shall use its best efforts
to
obtain such consent as promptly as practicable after any such redemption
is
required. Interest payable by the Company with respect to any such redemption
shall accrue in accordance with Article X(e) of the Certificate of Designation
until such consent is obtained. Nothing contained in this Section 4.13 shall
be
construed as a waiver by the Purchaser of any rights they may have by virtue
of
any breach of any representation or warranty of the Company herein as to
the
absence of any requirement to obtain any such consent.
17
4.14 Option
for Additional Company Shares.
The
Company hereby grants to Purchaser an option to acquire that number of shares
of
the Company’s Common Stock (the “Option Shares”), such option to be exercisable
during the thirty (30) day period commencing on the date Purchaser completes
the
conversion of all of the Series B Preferred Stock (the “Conversion Completion
Date”), equal to the difference, if a positive amount, between (a) the number
of
the Company’s shares of Common Stock into which the original amount of the
Series B Preferred Stock would have been convertible on the Closing Date
at a
conversion price equal to fifty percent (50%) of the Fixed Conversion Price
(as
defined in the Certificate of Designation) less (b) the aggregate number
of the
shares of Common Stock into which the original amount of the Series B Preferred
Stock has actually been converted as of the Conversion Completion Date. The
exercise price for the Option Shares shall be the closing bid price for the
Company’s Common stock on the Closing Date plus ten cents ($.10). In case of any
stock split, stock dividend, reclassification of the Common Stock, any
consolidation or merger of the Company with or into another person, the sale
or
transfer of all or substantially all of the assets of the Company or any
compulsory share exchange pursuant to which the Common Stock is converted
into
other securities, cash or property, then each Option Share then outstanding
shall have the right thereafter upon exercise to receive only such shares
of
stock and other securities and property receivable upon or deemed to be held
by
holders of Common Stock following such stock split, stock dividend,
reclassification, consolidation, merger, sale, transfer or share exchange
(except in the event the property is cash, then the Purchaser shall have
the
right to exercise the Option Shares and receive cash in the same manner as
other
stockholders). In such event, if appropriate, the exercise price for the
Option
Shares shall be proportionately adjusted.
4.15 Lock-Up
Agreement.
Purchaser agrees not to sell, transfer or assign all or any part of the Series
B
Preferred Stock or the Underlying Shares for a period of two (2) years following
the Closing Date, without the express written consent of the Company.
Notwithstanding the foregoing, Purchaser may convert the Series B Preferred
Stock at any time and from time to time following the Closing Date.
4.16 Use
of
Proceeds.
The
Company agrees that none of the proceeds from the sale of the Series B Preferred
Stock shall be used to repay loans owed by the Company to any of its
shareholders.
ARTICLE
V
MISCELLANEOUS
5.1 Fees
and Expenses.
Except
as set forth in this Agreement, each party shall pay the fees and expenses
of
its advisers, counsel, accountants and other experts, if any, and all other
expenses incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement. The Company shall
pay all
stamp and other taxes and duties levied in connection with the issuance of
the
Shares (and, upon conversion or exercise thereof the Underlying Shares) pursuant
hereto. The Purchaser shall be responsible for any taxes payable by the
Purchaser that may arise as a result of the investment hereunder or the
transactions contemplated by this Agreement or any other Transaction Document.
The Company agrees to pay a total Purchaser’s counsel $7,500 for legal fees
associated with the transactions contemplated by this Agreement, $5,000 prior
to
document preparation and $2,500 at Closing, and $5,000 for escrow services
pursuant to the Escrow Agreement, payable at or prior to Closing, and the
reasonable disbursements of counsel in connection with the transactions
contemplated by this Agreement. The Company shall pay all costs, expenses,
fees
and all taxes incident to and in connection with: (A) the issuance and delivery
of the Securities, (B) the exemption from registration of the Securities
for
offer and sale to the Purchaser under the securities or Blue Sky laws of
the
applicable jurisdictions, and (C) the preparation of certificates for the
Securities (including, without limitation, printing and engraving thereof),
and
(D) all fees and expenses of counsel and accountants of the
Company.
18
5.2 Entire
Agreement.
This
Agreement, together with all of the Exhibits and Schedules annexed hereto,
and
any other Transaction Document contains the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements
and
understandings, oral or written, with respect to such matters. This Agreement
shall be deemed to have been drafted and negotiated by both parties hereto
and
no presumptions as to interpretation, construction or enforceability shall
be
made by or against either party in such regard.
5.3 Notices.
Any
notice or other communication required or permitted to be given hereunder
shall
be in writing and shall be deemed to have been duly given upon facsimile
transmission (with written transmission confirmation report) at the 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) whichever shall first occur. The addresses
for such communications shall be:
|
If
to the Company:
|
Market
Central, Inc.
▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attn:
CEO
Tel:
Fax:
|
|
With
copies to:
|
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, LLP
Suite
400
▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, Esq.
Tel:
(▇▇▇)
▇▇▇-▇▇▇▇
Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
|
|
If
to the Purchaser:
|
See
Schedule 1 attached hereto
|
19
|
With
copies to:
|
Gottbetter
& Partners, LLP
12th
Floor ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Tel:
(▇▇▇)
▇▇▇-▇▇▇▇
Fax:
(▇▇▇)
▇▇▇-▇▇▇▇
|
or
such
other address as may be designated hereafter by notice given pursuant to
the
terms of this Section 5.3.
5.4 Amendments;
Waivers.
No
provision of this Agreement may be waived or amended except in a written
instrument signed, in the case of an amendment, by both the Company and the
Purchaser, or, in the case of a waiver, by the party against whom enforcement
of
any such waiver is sought. No waiver of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to
be a
continuing waiver in the future or a waiver of any other provision, condition
or
requirement hereof, nor shall any delay or omission of either party to exercise
any right hereunder in any manner impair the exercise of any such right accruing
to it thereafter.
5.5 Headings.
The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof.
5.6 No
Third Party Beneficiaries. This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns and is not for the benefit of, nor may any
provision hereof be enforced by, any other person.
5.7 Governing
Law/Venue/Service of Process.
The
parties hereto acknowledge that the transactions contemplated by this Agreement
and the exhibits hereto bear a reasonable relation to the State of New York.
The
parties hereto agree that the internal laws of the State of New York shall
govern this Agreement and the exhibits hereto, including, but not limited
to,
all issues related to usury. Any action to enforce the terms of this Agreement
or any of its exhibits, or any other Transaction Document shall be brought
exclusively in the state and/or federal courts situate in the County and
State
of New York. Service of process in any action by the Purchaser to enforce
the
terms of this Agreement may be made by serving a copy of the summons and
complaint, in addition to any other relevant documents, by commercial overnight
courier to the Company at its principal address set forth in this
Agreement.
5.8 Survival.
The
representations and warranties of the Company and the Purchaser contained
in
Article III and the agreements and covenants of the parties contained in
Article
IV and this Article V shall survive the Closing for a period of one (1)
year.
5.9 Counterpart
Signatures.
This
Agreement may be executed in two or more counterparts, all of which when
taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered
to the
other party, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid and binding obligation
of the
party executing (or on whose behalf such signature is executed) the same
with
the same force and effect as if such facsimile signature page were an original
thereof.
5.10 Publicity.
The
Company and the Purchaser shall consult with each other in issuing any press
releases or otherwise making public statements with respect to the transactions
contemplated hereby and neither party shall issue any such press release
or
otherwise make any such public statement without the prior written consent
of
the other, which consent shall not be unreasonably withheld or delayed, unless
counsel for the disclosing party deems such public statement to be required
by
applicable federal and/or state securities laws. Except as otherwise required
by
applicable law or regulation, the Company will not disclose to any third
party
(excluding its legal counsel, accountants and representatives) the names
of the
Purchaser.
20
5.11 Severability.
In case
any one or more of the provisions of this Agreement shall be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Agreement shall not in any way be affected or
impaired thereby and the parties will attempt to agree upon a valid and
enforceable provision which shall be a reasonable substitute therefore, and
upon
so agreeing, shall incorporate such substitute provision in this
Agreement.
5.12 Limitation
of Remedies.
With
respect to claims by the Company or any person acting by or through the Company,
or by the Purchaser or any person acting through the Purchaser, for remedies
at
law or at equity relating to or arising out of a breach of this Agreement,
liability, if any, shall, in no event, include loss of profits or incidental,
indirect, exemplary, punitive, special or consequential damages of any
kind.
5.13 Successors
and Assigns.
This
Agreement shall become effective when it is executed by the parties and shall
thereafter be binding upon and enure to the benefit of the parties hereto
and
their permitted successors and assigns. This agreement and any of the rights,
interests or obligations hereunder may be assigned by the Purchaser without
the
consent of the Company, provided that notwithstanding such assignment,
Purchaser’s obligations hereunder shall continue as if such assignment had not
occurred.
5.14 Legal
Fees and Interest Default Rate.
In the
event any party hereto commences legal action to enforce its rights under
this
Agreement or any other Transaction Document, the non-prevailing party shall
pay
all reasonable costs and expenses (including but not limited to reasonable
attorney’s fees, accountant’s fees, appraiser’s fees and investigative fees)
incurred in enforcing such rights. In the event of an uncured Event of Default
by any party hereunder, interest shall accrue on all unpaid amounts due the
aggrieved party at the rate of ten percent (10%) per annum, compounded
annually.
[SIGNATURE
PAGE FOLLOWS]
21
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first indicated above.
Company:
Market
Central, Inc.
By:
______________________________
Name:
____________________________
Title:
_____________________________
Purchaser:Dungarvon
Associates, Inc., on behalf of Armadillo Investments, PLC
By:
______________________________
Name:
____________________________
Title:
_____________________________
22
| Schedule 1 | ||
| Purchaser(s) | ||
|
Name
and Address of Purchaser
|
Purchase
Price
|
No.
of Share
|
|
Armadillo
Investments Plc.
▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇
▇▇▇
Fax: ▇▇▇.▇▇.▇▇.▇▇▇▇.▇▇▇▇
|
$3,500,000
|
350,000
|
23