Exhibit 1
CYCLE COUNTRY ACCESSORIES CORP.
CYCLE COUNTRY ACCESSORIES SUBSIDIARY CORP.
LAURUS MASTER FUND, LTD.
SECURITIES PURCHASE AGREEMENT
JUNE 9, 2003
TABLE OF CONTENTS
Page
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1. AGREEMENT TO SELL AND PURCHASE..................................................................1
2. FEES AND WARRANTS...............................................................................1
3. CLOSING, DELIVERY AND PAYMENT...................................................................2
3.1 Closing................................................................................2
3.2 Delivery...............................................................................2
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................................................2
5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS................................................5
5.1 Requisite Power and Authority...............................ERROR! BOOKMARK NOT DEFINED.
6. COVENANTS OF THE COMPANY........................................................................6
6.1 Stop-Orders............................................................................6
6.2 Listing................................................................................6
6.3 Market Regulations.....................................................................6
6.4 Reporting Requirements................................................................6
6.5 Use of Funds...........................................................................6
6.6 Access to Facilities...................................................................7
6.7 Taxes..................................................................................7
6.8 Insurance..............................................................................7
6.9 Intellectual Property..................................................................7
6.10 Confidentiality........................................................................7
6.11 Corporate Existence.........................................ERROR! BOOKMARK NOT DEFINED.
6.12 Reissuance of Securities...............................................................8
6.13 Opinion................................................................................8
7. COVENANTS OF THE COMPANY AND PURCHASERS REGARDING INDEMNIFICATION...............................8
7.1 Company Indemnification.....................................ERROR! BOOKMARK NOT DEFINED.
7.2 Purchaser's Indemnification.................................ERROR! BOOKMARK NOT DEFINED.
7.3 Procedures.............................................................................8
8. RESTRICTIONS ON TRANSFER........................................................................8
9. REGISTRATION RIGHTS..................................................ERROR! BOOKMARK NOT DEFINED.
9.1 Registration Rights Granted.................................ERROR! BOOKMARK NOT DEFINED.
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9.2 Non-Registration Events.....................................ERROR! BOOKMARK NOT DEFINED.
9.3 Expenses....................................................ERROR! BOOKMARK NOT DEFINED.
9.4 Indemnification and Contribution............................ERROR! BOOKMARK NOT DEFINED.
10. OFFERING RESTRICTIONS...........................................................................8
11. SECURITY INTEREST...............................................................................9
12. MISCELLANEOUS...................................................................................9
12.1 Governing Law..........................................................................9
12.2 Survival...............................................................................9
12.3 Successors and Assigns.................................................................9
12.4 Entire Agreement.......................................................................9
12.5 Severability..........................................................................10
12.6 Amendment and Waiver..................................................................10
12.7 Delays or Omissions...................................................................10
12.8 Notices...............................................................................10
12.9 Attorneys' Fees.......................................................................10
12.10 Titles and Subtitles..................................................................11
12.11 Counterparts..........................................................................11
12.12 Broker's Fees.........................................................................11
12.13 Indemnification.......................................................................11
12.14 Construction..........................................................................11
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CYCLE COUNTRY ACCESSORIES CORP.
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (the "AGREEMENT") is made and
entered into as of June 9, 2003, by and among CYCLE COUNTRY ACCESSORIES CORP. a
Nevada corporation ("PARENT") CYCLE COUNTRY ACCESSORIES CORP. Subsidiary, a
Nevada corporation and wholly owned subsidiary of Parent (the "COMPANY"), and
Laurus Master Fund, Ltd., a Cayman Islands company (the "PURCHASER").
RECITALS
WHEREAS, the Company has authorized the sale of (i) Series A
Convertible Preferred Stock, $0.01 par value (the "PREFERRED STOCK") for the
aggregate purchase price of TWO MILLION DOLLARS ($2,000,000) convertible into
shares of the Parent's common stock, $0.01 par value per share (the "COMMON
STOCK") .
WHEREAS, the Parent wishes to issues a warrant (the "WARRANT") to the
Purchaser to purchase shares of the Parent's 's Common Stock in connection with
Purchaser's purchase of the Preferred Stock;
WHEREAS, Purchaser desires to purchase the Preferred Stock and Warrant
on the terms and conditions set forth herein; and
WHEREAS, the Company desires to issue and sell the Preferred Stock and
Warrant to the Purchaser on the terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises, representations, warranties and covenants hereinafter set forth
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. AGREEMENT TO SELL AND PURCHASE. Pursuant to the terms and conditions
set forth in this Agreement, on the Closing Date (as defined in Section 3), the
Company agrees to sell to the Purchaser, and the Purchaser hereby agrees to
purchase from the Company Preferred Stock in the amount of $2,000,000,
convertible in accordance with the terms thereof into shares of the Parent's
Common Stock. The Preferred Stock purchased on the Closing Date shall be known
as the "OFFERING." The Certificate of Designations for the Preferred Stock (the
"CERTIFICATE OF DESIGNATIONS") is annexed hereto as Exhibit A. Collectively, the
Preferred Stock and Warrant (as defined in Section 2) and Common Stock issuable
upon conversion of the Preferred Stock and exercise of the Warrant are referred
to as the "SECURITIES."
2. FEES AND WARRANT.
(a) The Parent will issue and deliver to the Purchaser a
Warrant to purchase 40,000 shares of its Common Stock in connection with the
Offering (the "WARRANT") pursuant to Section 1 hereof. The Warrant must be
delivered on the Closing Date. A form of Warrant is annexed hereto as Exhibit B.
All the representations, covenants, warranties, undertakings, and
indemnification, and other rights made or granted to or for the benefit of the
Purchaser by the Parent and the Company are hereby also made and granted in
respect of the Warrant and shares of the Parent's Common Stock issuable upon
exercise of the Warrant (the "WARRANT SHARES").
(b) The Parent shall reimburse the Purchaser for its
reasonable legal fees for services rendered to the Purchaser in preparation of
this Agreement and the Related Agreements.
(c) The Company will pay a cash fee in the amount of four and
one quarter percent (4.25%) of the aggregate gross purchase price to be paid to
the Company from the sale of the Preferred Stock in the Offering (the "FUND
MANAGEMENT FEE") to Laurus Capital Management, L.L.C., a Delaware limited
liability company. The Fund Management Fee must be paid on the Closing Date. The
aforementioned Fund Management Fee and legal fees will be payable at the Closing
out of funds held pursuant to a Funds Escrow Agreement to be entered into by the
Company, Purchaser and an Escrow Agent.
(d) For as long as the Purchaser holds the Preferred Stock, on
each anniversary of the date hereof, the Parent shall pay an additional fee to
the Purchaser equal to one percent (1%) of the aggregate gross purchase price to
be paid to the Company from the sale of the Preferred Stock in the Offering.
3. CLOSING, DELIVERY AND PAYMENT.
3.1 CLOSING. Subject to the terms and conditions herein, the
closing of the transactions contemplated hereby (the "CLOSING"), which closing
is comprised of Purchaser's purchase of the Preferred Stock in the aggregate
principal amount of $2,000,000, shall take place on the date hereof or at such
other time or place as the Company and Purchaser may mutually agree (such date
is hereinafter referred to as the "CLOSING DATE").
3.2 DELIVERY. At the Closing, subject to the terms and conditions
hereof, the Company will deliver to the Purchaser the Certificate of
Designations in the form attached as Exhibit A representing the principal amount
of $2,000,000 and a Common Stock Purchase Warrant in the form attached as
Exhibit B in the Purchaser's name representing Warrant Shares and the Purchaser
will deliver to the Company $2,000,000, less fees and expenses by certified
funds or wire transfer made payable to the order of the Company, cancellation of
indebtedness or any combination of the foregoing.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Each of the Parent and the Company hereby jointly and severally
represents and warrants, as applicable, to the Purchaser as of the date of this
Agreement as set forth below except as disclosed in the Parent's filings under
the Securities Exchange Act of 1934 (collectively, the "EXCHANGE ACT FILINGS"),
or the Schedules hereto.
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4.1 Each of the Parent and the Company is a corporation duly
incorporated and validly existing under the laws of the jurisdiction of its
incorporation and duly qualified and in good standing in every other state or
jurisdiction in which the nature of the Parent's or the Company's business
requires such qualification.
4.2 The execution, delivery and performance of this Agreement, the
Fund Escrow Agreement, the Stock Pledge Agreement and the Pledge and Security
Agreement (the "RELATED AGREEMENTS") (i) have been duly authorized, (ii) are not
in contravention of such either the Parent's or the Company's certificate of
incorporation, by-laws or of any indenture, agreement or undertaking to which
such Parent or Company is a party or by which such Parent or Company is bound
and (iii) are within such Parent or Company's corporate powers.
4.3 This Agreement and the Related Agreements executed and
delivered by each of the Parent and the Company constitute their legal, valid
and binding obligations, enforceable in accordance with their terms, except (a)
as limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application affecting enforcement of creditors' rights,
and (b) as limited by general principles of equity that restrict the
availability of equitable and legal remedies.
4.4 Based upon the Employee Retirement Income Security Act of 1974
("ERISA"), and the regulations and published interpretations thereunder each of
the the Parent and the Company: (i) have not engaged in any Prohibited
Transactions as defined in Section 406 of ERISA and Section 4975 of the Internal
Revenue Code, as amended; (ii) have met all applicable minimum funding
requirements under Section 302 of ERISA in respect of its plans; (iii do not
have any knowledge of any event or occurrence which would cause the Pension
Benefit Guaranty Corporation to institute proceedings under Title IV of ERISA to
terminate any employee benefit plan(s); (iv) do not have any fiduciary
responsibility for investments with respect to any plan existing for the benefit
of persons other than Companies' employees; and (v) have not withdrawn,
completely or partially, from any multi-employer pension plan so as to incur
liability under the Multiemployer Pension Plan Amendments Act of 1980.
4.5 Except as set forth on Schedule 4.5, each of the Parent and the
Company is solvent, able to pay its debts as they mature, has capital sufficient
to carry on its business and all businesses in which such Parent or the Company
is about to engage and the fair saleable value of its assets (calculated on a
going concern basis) is in excess of the amount of its liabilities.
4.6 There is no pending or threatened litigation, action or
proceeding which is probable of having a Material Adverse Effect.
4.7 All balance sheets and income statements which have been
delivered to Laurus fairly, accurately and properly state each of the Parent and
the Company's financial condition on a basis consistent with that of previous
financial statements and there has been no material adverse change in the either
the Parent's or Company's financial condition as reflected in such statements
since the date thereof and such statements do not fail to disclose any fact or
facts which might have a Material Adverse Effect on the Parent's or the
Company's financial condition.
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4.8 Each of the Parent and the Company possesses all of the
Intellectual Property necessary to conduct its respective business. There has
been no assertion or claim of violation or infringement with respect to any
Intellectual Property.
4.9 Neither this Agreement, the exhibits and schedules hereto, the
Related Agreements nor any other document delivered by the Parent and the
Company to Laurus or its attorneys or agents in connection herewith or therewith
or with the transactions contemplated hereby or thereby, contain any untrue
statement of a material fact nor omit to state a material fact necessary in
order to make the statements contained herein or therein, in light of the
circumstances in which they are made, not misleading. Any financial projections
and other estimates provided to Laurus by the Parent or the Company were based
on the such Parent's or Company's experience in the industry and on assumptions
of fact and opinion as to future events which the Parent or the Company, at the
date of the issuance of such projections or estimates, believed to be
reasonable. As of the date hereof no facts have come to the attention of the
Company that would, in its opinion, require the Parent or the Company to revise
or amplify in any material respect the assumptions underlying such projections
and other estimates or the conclusions derived there from.
4.10 The offer, sale and issuance of the shares of the Parent's
Common Stock issuable upon the conversion of the Preferred Stock and the Warrant
will be registered under the Company's Registration Statement on Form SB-2 and
filed with the Securities and Exchange Commission. As such, the Preferred Stock,
the Warrant and the shares of Common Stock issuable upon conversion of the
Preferred Stock will be freely tradeable and the certificates evidencing those
securities will not have restrictive legends when such registration statement is
declared effective by the SEC..
4.11 The Common Stock of the Parent is registered pursuant to
Section 12(b) or 12(g) of the Exchange Act and the Company has timely filed all
proxy statements, reports, schedules, forms, statements and other documents
required to be filed by it under the Exchange Act. The Parent has furnished
Laurus with copies of (i) its Annual Report on Form 10-K for the fiscal year
ended December 31, 2002 and (ii) its Quarterly Reports on Form 10-Q for the
fiscal quarters ended March 31, 2003 (collectively, the "SEC Reports"). Each SEC
Report was, at the time of its filing, in substantial compliance with the
requirements of its respective form and none of the SEC Reports, nor the
financial statements (and the notes thereto) included in the SEC Reports, as of
their respective filing dates, contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading. The financial statements of the Parent included in
the SEC Reports comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the
Commission or other applicable rules and regulations with respect thereto. Such
financial statements have been prepared in accordance with GAAP applied on a
consistent basis during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto or (ii) in the case
of unaudited interim statements, to the extent they may not include footnotes or
may be condensed) and fairly present in all material respects the financial
position of the Parent as of the dates thereof and the results of operations and
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments).
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4.12 The Parent's Common Stock is listed for trading on the
Over-the-Counter Bulletin Board("OTCBB"). Upon completion of the several
transactions with Laurus, the Company's Common Stock will satisfy all
requirements for initial listing on the American Stock Exchange . The Company
has determined that as of June 9, 2003 the Common Stock does not meet all
requirements for such listing.
4.13 Upon the SEC declaring the Parent's registration statement
registering the Securities on Form SB-2 effective, the Securities will be freely
tradeable and the shares evidencing the Common Stock issuable under the
Securities will be free of restrictive legends. The Parent will not issue any
stop transfer order or other order impeding the sale and delivery of any of the
Securities.
4.14 Each of the Parent and the Company understands the nature of
the Securities being sold hereby and recognizes that they may have a potential
dilutive effect. The Parent specifically acknowledges that its obligation to
issue the shares of Common Stock upon conversion of the Preferred Stock and
exercise of the Warrant is binding upon the Parent and enforceable regardless of
the dilution such issuance may have on the ownership interests of other
shareholders of the Parent.
4.15 There is no agreement that has not been filed with the SEC as
an exhibit to a registration statement or other applicable form the breach of
which could have a material and adverse effect as to the Parent and its
subsidiaries, or would prohibit or otherwise interfere with the ability of the
Parent or the Company to enter into and perform any of their obligations under
this Agreement in any material respect.
5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
The Purchaser hereby represents and warrants to each of the Parent
and the Company with respect to itself or himself as follows (such
representations and warranties do not lessen or obviate the representations and
warranties of the Parent or the Company set forth in this Agreement):
5.1 REQUISITE POWER AND AUTHORITY. Purchaser has all necessary
power and authority under all applicable provisions of law to execute and
deliver this Agreement and the Related Agreements and to carry out their
provisions. All action on Purchaser's part required for the lawful execution and
delivery of this Agreement and the Related Agreements have been or will be
effectively taken prior to the Closing. Upon their execution and delivery, this
Agreement and the Related Agreements will be valid and binding obligations of
Purchaser, enforceable in accordance with their terms, except (a) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application affecting enforcement of creditors' rights, and (b) as
limited by general principles of equity that restrict the availability of
equitable remedies.
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5.2 PURCHASER BEARS ECONOMIC RISK. Purchaser has substantial
experience in evaluating and investing in private placement transactions of
securities in companies similar to the Company so that it is capable of
evaluating the merits and risks of its investment in the Company and has the
capacity to protect its own interests.
5.3 PURCHASER CAN PROTECT ITS INTEREST. Purchaser represents that
by reason of its, or of its management's, business or financial experience,
Purchaser has the capacity to protect its own interests in connection with the
transactions contemplated in this Agreement, and the Related Agreements.
Further, Purchaser is aware of no publication of any advertisement in connection
with the transactions contemplated in the Agreement.
6. ADDITIONAL COVENANTS. Each of the Parent and the Company jointly and
severally covenants and agrees, as applicable, with the Purchaser as follows:
6.1 STOP-ORDERS. The Parent will advise the Purchaser, promptly
after it receives notice of issuance by the Securities and Exchange Commission
(the "SEC"), any state securities commission or any other regulatory authority
of any stop order or of any order preventing or suspending any offering of any
securities of the Parent, or of the suspension of the qualification of the
Common Stock of the Parent for offering or sale in any jurisdiction, or the
initiation of any proceeding for any such purpose.
6.2 LISTING. The Parent will maintain the listing of its Common
Stock on the OTCBB or the American Stock Exchange (the "PRINCIPAL MARKET"), and
will comply in all material respects with the Parent's reporting, filing and
other obligations under the bylaws or rules of the Principal Market. The Parent
will provide the Purchaser copies of all notices it receives notifying the
Parent of the threatened and actual delisting of the Common Stock from any
Principal Market.
6.3 MARKET REGULATIONS. The Parent shall notify the SEC, and any
Principal Market and applicable state authorities, in accordance with their
requirements, of the transactions contemplated by this Agreement, and shall take
all other necessary action and proceedings as may be required and permitted by
applicable law, rule and regulation, for the legal and valid issuance of the
Securities to Purchaser and promptly provide copies thereof to Purchaser.
6.4 REPORTING REQUIREMENTS. The Parent will timely file with the
SEC all reports required to be filed pursuant to the Exchange Act and refrain
from terminating its status as an issuer required by the Exchange Act to file
reports there under even if the Exchange Act or the rules or regulations there
under would permit such termination.
6.5 USE OF FUNDS. Each of the Parent and the Company agrees that it
will use the proceeds of the sale of the Preferred Stock and Warrant for general
corporate purposes only, in the ordinary course of its business and consistent
with past practice.
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6.6 ACCESS TO FACILITIES. Each of the Parent and the Company will
permit any representatives designated by the Purchaser (or any transferee of the
Purchaser), so long as such person holds any Securities upon reasonable notice
and during normal business hours, at such person's expense and accompanied by a
representative of the Parent or the Company, to (a) visit and inspect any of the
properties of the Parent or the Company, (b) examine the corporate and financial
records of the Parent or the Company (unless such examination is not permitted
by federal, state or local law or by contract) and make copies thereof or
extracts there from and (c) discuss the affairs, finances and accounts of any
such corporations with the directors, officers and independent accountants of
the Parent or the Company.
6.7 TAXES. Each of the Parent and the Company will promptly pay and
discharge, or cause to be paid and discharged, when due and payable, all lawful
taxes, assessments and governmental charges or levies imposed upon the income,
profits, property or business of the Parent and the Company; provided, however,
that any such tax, assessment, charge or levy need not be paid if the validity
thereof shall currently be contested in good faith by appropriate proceedings
and if the Parent or the Company shall have set aside on its books adequate
reserves with respect thereto, and provided, further, that the Parent and the
Company will pay all such taxes, assessments, charges or levies forthwith upon
the commencement of proceedings to foreclose any lien which may have attached as
security there for.
6.8 INSURANCE. Each of the Parent and the Company will keep its
assets which are of an insurable character insured by financially sound and
reputable insurers against loss or damage by fire, explosion and other risks
customarily insured against by companies in the Parent's or the Company's line
of business, in amounts sufficient to prevent the Parent or the Company from
becoming a co-insurer and not in any event less than 100% of the insurable value
of the property insured; and each of the Parent and the Company will maintain,
with financially sound and reputable insurers, insurance against other hazards
and risks and liability to persons and property to the extent and in the manner
customary for companies in similar businesses similarly situated and to the
extent available on commercially reasonable terms.
6.9 INTELLECTUAL PROPERTY. Each of the Parent and the Company shall
maintain in full force and effect its corporate existence, rights and franchises
and all licenses and other rights to use Intellectual Property owned or
possessed by it and reasonably deemed to be necessary to the conduct of its
business.
6.10 CONFIDENTIALITY. Each of the Parent and the Company agrees
that it will not disclose, and will not include in any public announcement, the
name of the Purchaser, unless expressly agreed to by the Purchaser or unless and
until such disclosure is required by law or applicable regulation, including the
federal and state securities laws and then only to the extent of such
requirement.
6.11 CORPORATE EXISTENCE. Each of the Parent and the Company shall
maintain its corporate existence, and will not liquidate, dissolve or effect a
recapitalization, reclassification or reorganization in any form of transaction.
In addition, the each of the Parent and the Company shall not sell all or
substantially all of the Parent's or the Company's assets, except in the event
of a merger or consolidation or sale or transfer of all or substantially all of
the Parent's or the Company's assets, where the surviving or successor entity in
such transaction (i) assumes the Parent's or the Company's obligations hereunder
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and the Related Agreements and (ii) is a publicly traded company whose common
stock is quoted or listed on a Principal Market.
6.12 REISSUANCE OF SECURITIES. At the Closing and upon the issuance
of shares of Common Stock following conversion of the Preferred Stock and
exercise of the Warrants, each of the Parent and the Company, as applicable
agrees to issue certificates representing the Securities without any restrictive
legends. The Parent agrees to cooperate with the Purchaser in connection with
all resales of the Securities and provide legal opinions necessary to allow such
resales.
6.13 OPINION. On the Closing Date, the Parent will deliver to the
Purchaser an legal opinion acceptable to the Purchaser from the Parent's legal
counsel in the form annexed hereto as Exhibit C. The Parent will provide, at the
Parent's expense, such other legal opinions in the future as are reasonably
necessary for the conversion of the Preferred Stock and exercise of the
Warrants.
7. COVENANTS OF THE PARENT, COMPANY AND PURCHASER REGARDING
INDEMNIFICATION.
7.1 PARENT AND COMPANY INDEMNIFICATION. Each of the Parent and the
Company jointly and severally agrees to indemnify, hold harmless, reimburse and
defend Purchaser, each of Purchaser's officers, directors, agents, affiliates,
control persons, and principal shareholders, against any claim, cost, expense,
liability, obligation, loss or damage (including reasonable legal fees) of any
nature, incurred by or imposed upon the Purchaser which results, arises out of
or is based upon (i) any misrepresentation by Parent or the Company or breach of
any warranty by the Parent or the Company in this Agreement or in any exhibits
or schedules attached hereto or any Related Agreement, or (ii) any breach or
default in performance by Parent or the Company of any covenant or undertaking
to be performed by the Parent or the Company hereunder, or any other agreement
entered into by the Parent, the Company and Purchaser, as applicable, relating
hereto.
7.2 PURCHASER'S INDEMNIFICATION. Purchaser agrees to indemnify,
hold harmless, reimburse and defend each of the Parent and the Company and each
of their officers, directors, agents, affiliates, control persons and principal
shareholders, at all times against any claim, cost, expense, liability,
obligation, loss or damage (including reasonable legal fees) of any nature,
incurred by or imposed upon the Parent or the Company which results, arises out
of or is based upon (i) any misrepresentation by Purchaser or breach of any
warranty by Purchaser in this Agreement or in any exhibits or schedules attached
hereto or any Related Agreement; or (ii) any breach or default in performance by
Purchaser of any covenant or undertaking to be performed by Purchaser hereunder,
or any other agreement entered into by the Parent, the Company and Purchaser, as
applicable, relating hereto.
7.3 PROCEDURES. The procedures and limitations set forth in Section
9.6 shall apply to the indemnifications set forth in Sections 7.1 and 7.2 above.
8. INTENTIONALLY OMITTED..
9. OFFERING RESTRICTIONS. Except as previously disclosed in the SEC
Reports or stock or stock options granted to employees or directors of the
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Company; or equity or debt issued in connection with an acquisition of a
business or assets by the Parent or the Company; or the issuance by the Parent
or the Company of stock in connection with the establishment of a joint venture
partnership or licensing arrangement (these exceptions hereinafter referred to
as the "EXCEPTED ISSUANCES"), the neither the Parent nor the Company will issue
any securities with a variable/floating conversion feature which are or could be
(by conversion or registration) free-trading securities prior to the repayment
in full or conversion in full of the Preferred Stock.
10. RESTRICTED CASH ACCOUNT. As a condition of Closing, the Company
will place $2,000,000 in a restricted account at a bank reasonably acceptable to
the Purchaser, and maintain such amount in the restricted account for as long as
the Purchaser shall hold any Preferred Shares. The account shall be pledged to
Purchaser as security for the performance of the Parent's obligations hereunder.
11. MISCELLANEOUS.
11.1 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to principles of conflicts of laws. Any action brought by either party against
the other concerning the transactions contemplated by this Agreement shall be
brought only in the state courts of New York or in the federal courts located in
the state of New York; provided, however that the Purchaser may choose to waive
this provision and bring an action outside the state of New York. Both parties
and the individuals executing this Agreement and other agreements on behalf of
the Company agree to submit to the jurisdiction of such courts and waive trial
by jury. The prevailing party shall be entitled to recover from the other party
its reasonable attorney's fees and costs. In the event that any provision of
this Agreement or any other agreement delivered in connection herewith is
invalid or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law. Any such provision which may prove invalid or unenforceable under any law
shall not affect the validity or enforceability of any other provision of any
agreement.
11.2 SURVIVAL. The representations, warranties, covenants and
agreements made herein shall survive any investigation made by the Purchaser and
the closing of the transactions contemplated hereby. All statements as to
factual matters contained in any certificate or other instrument delivered by or
on behalf of the Company pursuant hereto in connection with the transactions
contemplated hereby shall be deemed to be representations and warranties by the
Company hereunder solely as of the date of such certificate or instrument.
11.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of the Securities from time to time.
11.4 ENTIRE AGREEMENT. This Agreement, the exhibits and schedules
hereto, the Related Agreements and the other documents delivered pursuant hereto
constitute the full and entire understanding and agreement between the parties
with regard to the subjects hereof and no party shall be liable or bound to any
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other in any manner by any representations, warranties, covenants and agreements
except as specifically set forth herein and therein.
11.5 SEVERABILITY. In case any provision of the Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
11.6 AMENDMENT AND WAIVER.
(a) This Agreement may be amended or modified only upon the
written consent of the Company and the Purchaser.
(b) The obligations of the Company and the rights of the
holders of the Securities under the Agreement may be waived only with the
written consent of such holders of Securities. The rights of the holder of
Preferred Stock may be waived only with the written consent of such holder.
11.7 DELAYS OR OMISSIONS. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any party, upon any breach,
default or noncompliance by another party under this Agreement or the Related
Agreements, shall impair any such right, power or remedy, nor shall it be
construed to be a waiver of any such breach, default or noncompliance, or any
acquiescence therein, or of or in any similar breach, default or noncompliance
thereafter occurring. It is further agreed that any waiver, permit, consent or
approval of any kind or character on the Purchaser's part of any breach, default
or noncompliance under this Agreement, the Preferred Stock or the Related
Agreements or any waiver on such party's part of any provisions or conditions of
the Agreement, the Certificate of Designations or the Related Agreements must be
in writing and shall be effective only to the extent specifically set forth in
such writing. All remedies, either under this Agreement, the Preferred Stock or
the Related Agreements, by law or otherwise afforded to any party, shall be
cumulative and not alternative.
11.8 NOTICES. All notices required or permitted hereunder shall be
in writing and shall be deemed effectively given: (a) upon personal delivery to
the party to be notified, (b) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day, (c) five days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (d) one day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the Company
at the address as set forth on the signature page hereof and to the Purchaser at
the address set forth on the signature page hereto for such Purchaser, with a
copy in the case of the Purchaser to ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq., ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, facsimile number (▇▇▇) ▇▇▇-▇▇▇▇, or at such other
address as the Company or the Purchaser may designate by ten days advance
written notice to the other parties hereto.
11.9 ATTORNEYS' FEES. In the event that any suit or action is
instituted to enforce any provision in this Agreement, the prevailing party in
such dispute shall be entitled to recover from the losing party all fees, costs
and expenses of enforcing any right of such prevailing party under or with
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respect to this Agreement, including, without limitation, such reasonable fees
and expenses of attorneys and accountants, which shall include, without
limitation, all fees, costs and expenses of appeals.
11.10 TITLES AND SUBTITLES. The titles of the sections and
subsections of the Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.
11.11 COUNTERPARTS. This Agreement may be executed by facsimile
signatures and in any number of counterparts, each of which shall be an
original, but all of which together shall constitute one instrument.
11.12 BROKER'S FEES. Each party hereto represents and warrants that
no agent, broker, investment banker, person or firm acting on behalf of or under
the authority of such party hereto is or will be entitled to any broker's or
finder's fee or any other commission directly or indirectly in connection with
the transactions contemplated herein, except as specified herein with respect to
the Purchaser. Each party hereto further agrees to indemnify each other party
for any claims, losses or expenses incurred by such other party as a result of
the representation in this Section 12.12 being untrue.
11.13 INDEMNIFICATION. The Company shall indemnify the Purchaser
for any losses or expenses incurred by the Purchaser in connection with any
claims brought against the Purchaser by any third party (including any other
stockholder of the Company) as a result of the transactions contemplated by this
Agreement, other than for a breach of representation or warranty made by the
Purchaser herein.
11.14 CONSTRUCTION. Each party acknowledges that its legal counsel
participated in the preparation of this Agreement and, therefore, stipulates
that the rule of construction that ambiguities are to be resolved against the
drafting party shall not be applied in the interpretation of this Agreement to
favor any party against the other.
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IN WITNESS WHEREOF, the parties hereto have executed the SECURITIES
PURCHASE AGREEMENT as of the date set forth in the first paragraph hereof.
COMPANY: PURCHASER:
CYCLE COUNTRY ACCESSORIES CORP. LAURUS MASTER FUND, LTD.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇ Grin
--------------------------- -----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇ Name:
Title: Vice President / CFO Address: LAURUS MASTER FUND, LTD.
Address: ▇.▇. ▇▇▇ ▇▇▇ c/o Ironshore Corporate Services Ltd.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ P.O. Box 1234 G.T., Queensgate House,
Milford, IA 51351 ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
CYCLE COUNTRY ACCESSORIES CORP.
SUBSIDIARY
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President / CFO
Address: ▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
[SECURITIES PURCHASE AGREEMENT SIGNATURE PAGE]
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