Exhibt 18
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CONVERTIBLE DEBENTURE PURCHASE AGREEMENT
Among
FIX-CORP INTERNATIONAL, INC.,
JNC OPPORTUNITY FUND LTD.
and
DIVERSIFIED STRATEGIES FUND, L.P.
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October 24, 1997
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Exhibt 18
CONVERTIBLE DEBENTURE PURCHASE AGREEMENT, dated as of October 24, 1997
(this "AGREEMENT"), among Fix-Corp International, Inc., a Delaware corporation
(the "COMPANY"), JNC Opportunity Fund Ltd., a corporation organized under the
laws of the Cayman Islands ("JNC"), and Diversified Strategies Fund, L.P., an
Illinois limited partnership ("DSF"). Each of JNC and DSF is a "PURCHASER" and,
collectively JNC and DSF are the "PURCHASERS."
WHEREAS, subject to the terms and conditions set forth in this Agreement,
the Company desires to issue and sell to the Purchasers and the Purchasers
severally and not jointly desire to purchase an aggregate principal amount of
$5,000,000 of the Company's 6% Convertible Debentures, due October 24, 2000 (the
"DEBENTURES"), which are convertible into shares of the Company's common stock,
par value $.0001 per share (the "COMMON STOCK").
IN CONSIDERATION of the mutual covenants and agreements set forth herein
and for good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties agree as follows:
ARTICLE I
PURCHASE AND SALE OF DEBENTURES; CLOSING
1.1 THE CLOSING.
(a) THE CLOSING. (i) Subject to the terms and conditions set
forth in this Agreement, the Company shall issue and sell to the Purchasers
and the Purchasers shall purchase the Debentures for an aggregate purchase
price of $5,000,000. The closing of the purchase and sale of the Debentures
(the "CLOSING") shall take place at the offices of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP (the "ESCROW AGENT"), ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, immediately following the execution hereof or such
later date as the parties shall agree. The date of the Closing is
hereinafter referred to as the "CLOSING DATE."
(ii) Prior to the Closing the parties shall deliver to the
Escrow Agent such items as are required to be delivered by them in accordance
with and subject to the terms and conditions of the Escrow Agreement, dated
as of the date hereof, by and among the Company, the Purchasers and the
Escrow Agent (the "ESCROW AGREEMENT"), including, the following: (i) the
Company shall deliver or cause to be delivered (A) Debentures in aggregate
principal amount equal to $1,000,000, registered in the name of DSF, (B)
Debentures in aggregate principal amount equal to $4,000,000, registered in
the name of JNC, (C) the Warrants (as defined in Section 3.16), and (D) the
legal opinions of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP substantially in the form of EXHIBIT C
("LEGAL OPINION")
addressed to each Purchaser; (ii) DSF shall deliver or cause to be delivered
$1,000,000 in United States dollars; (iii) JNC shall deliver or cause to be
delivered $4,000,000 in United States dollars; and (iv) each party hereto
shall deliver or cause to be delivered all other executed instruments,
agreements and certificates as are required to be delivered by or on their
behalf at the Closing.
1.2 FORM OF DEBENTURES. The Debentures shall be in the form of
EXHIBIT A.
1.3 CERTAIN DEFINITIONS. For purposes of this Agreement, "CONVERSION
PRICE," "ORIGINAL ISSUE DATE," "CONVERSION DATE", "TRADING DAY", "BUSINESS
DAY " and "PER SHARE MARKET VALUE" shall have the meanings set forth in the
Debentures; and "MARKET PRICE" as at any date shall mean the average Per
Share Market Value for the five (5) Trading Days immediately preceding such
date.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY. The
Company hereby makes the following representations and warranties to the
Purchasers:
(a) ORGANIZATION AND QUALIFICATION. The Company is a
corporation, duly incorporated, validly existing and in good standing under
the laws of the jurisdiction of its incorporation, 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 in SCHEDULE 2.1(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,
could not, individually or in the aggregate, (x) adversely affect the
legality, validity or enforceability of this Agreement, the Debentures, the
Escrow Agreement, the Warrants or the Registration Rights Agreement, dated
the date hereof, among the Company and the Purchasers (the "REGISTRATION
RIGHTS AGREEMENT" and, together with this Agreement, the Debentures and the
Warrants, the "TRANSACTION DOCUMENTS"), (y) have a material adverse effect on
the results of operations, assets, prospects, or condition (financial or
otherwise) of the Company and the Subsidiaries, taken as a whole, or (z)
adversely impair the Company's ability to perform fully on a timely basis its
obligations under any Transaction Document (any of the foregoing, a "MATERIAL
ADVERSE EFFECT").
(b) AUTHORIZATION; ENFORCEMENT. The Company has the requisite
corporate power
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and authority to enter into and to consummate the transactions contemplated
by the Transaction Documents and otherwise to carry out its obligations
thereunder. The execution and delivery of each of the Transaction Documents
by the Company and the consummation by it of the transactions contemplated
thereby have been duly authorized by all necessary action on the part of the
Company. Each of the Transaction Documents has been duly executed by the
Company and when delivered in accordance with the terms hereof shall
constitute the legal, 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. Neither the Company nor
any Subsidiary is in violation of any of the provisions of its respective
certificate of incorporation, by-laws or other charter documents.
(c) CAPITALIZATION. The authorized, issued and outstanding
capital stock of the Company is set forth in SCHEDULE 2.1(c). 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 any of the
Transaction Documents. Except as disclosed in SCHEDULE 2.1(c), there are no
outstanding options, warrants, script rights to subscribe to, calls or
commitments of any character whatsoever relating to, or, except as a result
of the purchase and sale of the Debentures and Warrants 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. To the knowledge of the Company, except as
specifically disclosed in the Disclosure Materials (as defined below) or
SCHEDULE 2.1(c), no Person (as defined below) beneficially owns (as
determined pursuant to Rule 13d-3 promulgated under the Securities Exchange
Act of 1934, as amended (the "EXCHANGE ACT")) or has the right to acquire by
agreement with or by obligation binding upon the Company, beneficial
ownership of in excess of 5% of the Common Stock. A "PERSON" means an
individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any kind.
(d) ISSUANCE OF DEBENTURES AND WARRANTS. The Debentures and the
Warrants are duly authorized, and, when issued in accordance with the terms
hereof, shall be validly issued, fully paid and nonassessable, free and clear
of all liens, encumbrances and rights of first refusals of any kind
(collectively, "LIENS"). The Company has and at all times while the
Debentures and the Warrants are outstanding will maintain an adequate reserve
of duly authorized shares of Common Stock to enable it to perform its
conversion, exercise and other obligations under this Agreement, the Warrants
and the Debentures and in no circumstances shall such reserved and available
shares of Common Stock be less than the sum of (i) 200% of (A) the number of
shares of Common Stock as would be issuable upon conversion in full of the
Debentures, assuming such conversion were effected on the Original Issue Date
and (B) the number of shares of Common Stock as are issuable as payment of
interest on the
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Debentures, and (ii) the number of shares of Common Stock as are issuable
upon exercise in full of the Warrants (the "INITIAL RESERVE"). If at any
time the sum of the number of shares of Common Stock issuable (a) upon
conversion in full of the then outstanding Debentures, (b) as the payment of
interest on the Debentures (assuming all such interest is to be paid in
Common Stock) and (c) upon exercise in full of the Warrants exceeds 85% of
the Initial Reserve, the Company shall duly reserve 200% of the number of
shares of Common Stock equal to such excess to fulfill such obligations. The
obligation shall similarly apply to successive excesses. The shares of
Common Stock issuable upon conversion of the Debentures, as payment of
interest in respect thereof and upon exercise of the Warrants are sometimes
referred to herein as the "UNDERLYING SHARES," and the Debentures, Warrants
and Underlying Shares are, collectively, the "SECURITIES." When issued in
accordance with the terms of the Debentures and the Warrants, the Underlying
Shares will be duly authorized, validly issued, fully paid and nonassessable,
and free and clear of all Liens.
(e) NO CONFLICTS. The execution, delivery and performance of
the Transaction Documents by the Company and the consummation by the Company
of the transactions contemplated thereby do not and will not (i) conflict
with or violate any provision of its certificate of incorporation, bylaws or
other charter documents (each as amended through the date hereof) or (ii)
subject to obtaining the consents referred to in Section 2.1(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 (evidencing a Company debt or otherwise) to which the
Company is a party or by which any property or asset of the Company is bound
or affected, 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 is subject (including federal and
state securities laws and regulations), or by which any property or asset of
the Company is bound or affected, except in the case of each of clauses (ii)
and (iii), as could not, individually or in the aggregate, have or result in
a Material Adverse Effect. The business of the Company is not being
conducted in violation of any law, ordinance or regulation of any
governmental authority, except for violations which, individually and in the
aggregate, could not have or result in a Material Adverse Effect.
(f) CONSENTS AND APPROVALS. Except as specifically set forth in
SCHEDULE 2.1(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 the Transaction Documents other
than (i) the filing of a registration statement covering the resale of the
Underlying Shares by the Purchasers (the "UNDERLYING SECURITIES REGISTRATION
STATEMENT") with the Securities and Exchange Commission (the "COMMISSION"),
(ii) the application for the listing of the Underlying Shares on the OTC
Bulletin Board (and with any other national securities exchange, market or
trading facility on which the Common Stock is then listed), (iii) state blue
sky laws, and (iv) other than, in all other cases, where the failure to
obtain such consent, waiver, authorization or order, or to give or make such
notice or filing, could not have or result in, individually or in the
aggregate, a Material Adverse Effect (together with the consents, waivers,
authorizations,
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orders, notices and filings referred to in SCHEDULE 2.1(f), the "REQUIRED
APPROVALS").
(g) LITIGATION; PROCEEDINGS. Except as specifically disclosed in
the Disclosure Materials (as hereinafter defined), 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) adversely affects or
challenges the legality, validity or enforceability of any of the Transaction
Documents or the Securities or (ii) could, individually or in the aggregate,
have or result in a Material Adverse Effect.
(h) NO DEFAULT OR VIOLATION. Neither the Company nor any
Subsidiary (i) is in default under or in violation of (or has received notice
of a claim that it is in default under or that it is in violation of) any
indenture, promissory note, 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, (ii) is in violation of any order of any court, arbitrator or
governmental body, or (iii) is in violation of any statute, rule or
regulation of any governmental authority, except as could not individually or
in the aggregate, have or result in, individually or in the aggregate, a
Material Adverse Effect.
(i) PRIVATE OFFERING. Subject in part to the truth and accuracy
of the Purchasers' representations set forth in Section 2.2, the offer, sale
and issuance of the Securities as contemplated by this Agreement are exempt
for the registration requirement of the Securities Act, and neither the
Company nor any Person acting on its behalf has taken or will take any action
which might subject the offering, issuance or sale of the Securities to the
registration requirements of Section 5 of the Securities Act.
(j) DISCLOSURE MATERIALS. The financial statements of the
Company dated December 31, 1996, July 31, 1997 and any other financial
statements delivered by the Company to the Purchasers (the "FINANCIAL
STATEMENTS" and, together with the Schedules to this Agreement and other
documents and information furnished by or on behalf of the Company at any
time prior to the Closing, the "DISCLOSURE MATERIALS") comply in all material
respects with applicable accounting requirements. Such Financial Statements
have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved, except
as may be otherwise specified in such Financial Statements or the notes
thereto, and fairly present in all material respects the financial position
of the Company as of and for 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. There are no liabilities,
contingent or otherwise, of the Company involving material amounts not
disclosed in said Financial Statements. The Disclosure Materials do not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Since July 31, 1997, there has been no event, occurrence or
development that has had or that could have or result in a Material Adverse
Effect.
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(k) INVESTMENT COMPANY. The Company is not, and is not an
"Affiliate person" of, an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(l) CERTAIN FEES. Except for fees payable to CDC Consulting,
Inc., no fees or commissions will be payable by the Company to any broker,
financial advisor, finder, investment banker, placement agent, or bank with
respect to the transactions contemplated hereby. The Purchasers shall have
no obligation with respect to such fees or with respect to any claims made by
or on behalf of other Persons for fees of a type contemplated in this Section
that may be due in connection with the transactions contemplated hereby. The
Company shall indemnify and hold harmless each Purchaser, its respective
employees, officers, directors, agents, and partners, and their respective
Affiliates (as such term is defined under Rule 405 promulgated under the
Securities Act), from and against all claims, losses, damages, costs
(including the costs of preparation and attorney's fees) and expenses
suffered in respect of any such claimed or existing fees, as and when
incurred.
(m) SOLICITATION MATERIALS. The Company has not (i) distributed
any offering materials in connection with the offering and sale of the
Securities other than the Disclosure Materials and any amendments and
supplements thereto or (ii) solicited any offer to buy or sell the Securities
by means of any form of general solicitation or advertising.
(n) FORM SB-2 ELIGIBILITY. The Company is, and at the Closing
Date will be, eligible to register securities for resale with the Commission
under Form SB-2 promulgated under the Securities Act.
(o) EXCLUSIVITY. The Company shall not issue and sell
Debentures to any Person other than the Purchasers.
(p) LISTING AND MAINTENANCE REQUIREMENTS COMPLIANCE. The
Company has not in the two years preceding the date hereof received written
notice from any stock exchange, market or trading facility on which the
Common Stock is or has been listed (or on which it has been quoted) to the
effect that the Company is not in compliance with the listing or maintenance
requirements of such exchange, market or trading facility. The Company has
no reason to believe that it does not now or will not in the future meet any
such maintenance requirements.
(q) PATENTS AND TRADEMARKS. The Company has, or has rights to
use, all patents, patent applications, trademarks, trademark applications,
service marks, trade names, copyrights, licenses and rights which are
necessary for use in connection with its business and which the failure to so
have would have a Material Adverse Effect (collectively, the "INTELLECTUAL
PROPERTY RIGHTS"). To the best knowledge of the Company, there is no
existing infringement on any of the Intellectual Property Rights.
(r) DISCLOSURE. All information relating to or concerning the
Company set forth in
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the Transaction Documents or provided to the Purchasers or their respective
representatives, agents and counsel in connection with the transactions
contemplated hereby is true and correct in all material respects and does not
fail to state any material fact necessary in order to make the statements
herein or therein, in light of the circumstances under which they were made,
not misleading. The Company confirms that it has not provided to any of the
Purchasers or any of their representatives or agents any information that
constitutes or might constitute material non-public information other than
information that has specifically been identified to the recipient as
material non-public information in writing. The Company understands and
confirms that the Purchasers shall be relying on the foregoing representation
in effecting transactions in securities of the Company.
(s) REGISTRATION RIGHTS. Except as provided in the Registration
Rights Agreement, the Company has not granted or agreed to grant any
registration rights, including piggy-back registration rights, to any Person.
2.2 REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each Purchaser
hereby, severally and not jointly, makes the following representations and
warranties to the Company.
(a) ORGANIZATION; AUTHORITY. Such Purchaser is an entity
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the requisite power and authority to
enter into and to consummate the transactions contemplated by the Transaction
Documents and to carry out its obligations thereunder. The acquisition of
the Securities to be acquired hereunder by such Purchaser has been duly
authorized by all necessary action on the part of such Purchaser. Each of
this Agreement, the Registration Rights Agreement and the Escrow Agreement
has been duly executed by such Purchaser and, when delivered by such
Purchaser in accordance with the terms hereof and the Escrow Agreement
constitutes the valid and legally binding obligation of such Purchaser,
enforceable against it in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws
of general applicability relating to or affecting creditors' rights generally
and to general principles of equity.
(b) INVESTMENT INTENT. Such Purchaser is acquiring the
Securities to be acquired hereunder by such Purchaser for its own account for
investment purposes only and not with a view to or for distributing or
reselling such Securities or any part thereof or interest therein, without
prejudice, however, to such Purchaser's right, subject to the provisions of
this Agreement and the Registration Rights Agreement, at all times to sell or
otherwise dispose of all or any part of such Securities pursuant to an
effective registration statement under the Securities Act and in compliance
with applicable state securities laws or under an exemption from such
registration.
(c) PURCHASER STATUS. At the time such Purchaser was offered
the Securities to be acquired hereunder by such Purchaser, it was, at the
date hereof, it is, and at the Closing Date, it will be, an "accredited
investor" as defined in Rule 501(a) under the Securities Act.
(d) EXPERIENCE OF PURCHASER. Such Purchaser either alone or
together with its
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representatives, has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the merits
and risks of the prospective investment in the Securities, and has so
evaluated the merits and risks of such investment.
(e) ABILITY OF PURCHASER TO BEAR RISK OF INVESTMENT. Such
Purchaser acknowledges that an investment in the Securities is speculative
and involves a high degree of risk. Such Purchaser is able to bear the
economic risk of an investment in the Securities to be acquired hereunder by
such Purchaser, and, at the present time, is able to afford a complete loss
of such investment.
(f) ACCESS TO INFORMATION. Such Purchaser acknowledges receipt
of the Disclosure Materials and further acknowledges that it has been
afforded (i) the opportunity to ask such questions as it has deemed necessary
of, and to receive answers from, representatives of the Company concerning
the terms and conditions of the offering of the Securities, and the merits
and risks of investing in the Securities, (ii) access to information about
the Company and the Company's financial condition, results of operations,
business, properties, management and prospects sufficient to enable it to
evaluate its investment 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 contained in the Disclosure Materials. Neither such
inquiries nor any other investigation conducted by or on behalf of such
Purchaser or its representatives, agents or counsel shall modify, amend or
affect such Purchaser's right to rely on the truth, accuracy and completeness
of the Disclosure Materials and the Company's representations and warranties
contained in the Transaction Documents.
(g) RELIANCE. Such Purchaser understands and acknowledges that
(i) the Securities to be acquired by it hereunder are being offered and sold
to it without registration under the Securities Act in a private placement
that is exempt from the registration provisions of the Securities Act and
(ii) the availability of such exemption, depends in part on, and the Company
will rely upon the accuracy and truthfulness of, the foregoing
representations and such Purchaser hereby consents to such reliance.
The Company acknowledges and agrees that the Purchasers make no
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 2.2.
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ARTICLE III
OTHER AGREEMENTS OF THE PARTIES
3.1 TRANSFER RESTRICTIONS. (a) Securities may only be disposed of
pursuant to an effective registration statement under the Securities Act, to
the Company or pursuant to an available exemption from or in a transaction
not subject to the registration requirements thereof. In connection with any
transfer of any Securities other than pursuant to an effective registration
statement or to the Company, the Company may require the transferor thereof
to provide to the Company an opinion of counsel selected by the transferor,
the form and substance of which opinion shall be reasonably satisfactory to
the Company, to the effect that such transfer does not require registration
under the Securities Act. Notwithstanding the foregoing, the Company hereby
consents to and agrees to register on the books and records of the Company or
on the register of any transfer agent for the Securities (i) any transfer of
Securities by one Purchaser to another Purchaser, and agrees that no
documentation other than executed transfer documents shall be required for
any such transfer, and (ii) any transfer by any Purchaser to an Affiliate (as
such term is defined under Rule 405 promulgated under the Securities Act) of
such Purchaser or to an Affiliate of another Purchaser, or any transfers
among any such Affiliates provided the transferee certifies to the Company
that it is an "accredited investor" as defined in Rule 501(a) under the
Securities Act and makes the appropriate investment representations. Any
such Purchaser or Affiliate transferee shall have the rights of a Purchaser
under this Agreement and the Registration Rights Agreement.
(b) The Purchasers agree to the imprinting, so long as is required
by this Section 3.1(b), of the following legend on the Securities:
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE [CONVERTIBLE] [EXERCISABLE] HAVE BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY
STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT
BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN
A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
[FOR DEBENTURES ONLY] THIS DEBENTURE IS SUBJECT TO CERTAIN RESTRICTIONS
ON CONVERSION SET FORTH IN SECTION 3.8 OF THE CONVERTIBLE DEBENTURE
PURCHASE AGREEMENT, DATED AS OF OCTOBER 24, 1997, AMONG FIX-CORP PURCHASE
PURCHASE "COMPANY") AND THE
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ORIGINAL HOLDER HEREOF. A COPY OF THAT AGREEMENT IS ON FILE AT THE
PRINCIPAL OFFICE OF THE COMPANY.
Underlying Shares shall not contain the legend set forth above if
the conversion of Debentures, exercise of Warrants or other issuances of
Underlying Shares, as the case may be, occurs at any time while an Underlying
Securities Registration Statement is effective under the Securities Act or,
in the event there is not an effective Underlying Securities Registration
Statement at such time, if in the opinion of counsel to the Company such
legend is not required under applicable requirements of the Securities Act
(including judicial interpretations and pronouncements issued by the staff of
the Commission). The Company agrees that it will provide each Purchaser,
upon request, with a certificate or certificates representing Underlying
Shares, free from such legend at such time as such legend is no longer
required hereunder. The Company may not make any notation on its records or
give instructions to any transfer agent of the Company which enlarge the
restrictions of transfer set forth in this Section 3.1(b).
3.2 ACKNOWLEDGEMENT OF DILUTION. The Company acknowledges that the
issuance of Underlying Shares upon (i) conversion of the Debentures and as
payment of interest thereon and (ii) exercise of the Warrants may result in
dilution of the outstanding shares of Common Stock, which dilution may be
substantial under certain market conditions. The Company further acknowledges
that its obligation to issue Underlying Shares in accordance with the
Debentures and the Warrants is unconditional and absolute regardless of the
effect of any such dilution.
3.3 FURNISHING OF INFORMATION. As long as the Purchasers own
Securities, the Company covenants to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the Filing Date (as defined in the
Registration Rights Agreement) pursuant to Section 13(a) or 15(d) of the
Exchange Act. If at any time prior to the date on which the Purchasers may
resell all of their Underlying Shares without volume restrictions pursuant to
Rule 144(k) promulgated under the Securities Act (as determined by counsel to
the Company pursuant to a written opinion letter to such effect, addressed
and acceptable to the Company's transfer agent for the benefit of and
enforceable by the Purchasers) the Company is not required to file reports
pursuant to such sections, it will prepare and furnish to the Purchasers and
make publicly available in accordance with Rule 144(c) promulgated under the
Securities Act annual and quarterly financial statements, together with a
discussion and analysis of such financial statements in form and substance
substantially similar to those that would otherwise be required to be
included in reports required by Section 13(a) or 15(d) of the Exchange Act in
the time period that such filings would have been required to have been made
under the Exchange Act. The Company further covenants that it will take such
further action as any holder of Securities may reasonably request, all to the
extent required from time to time to enable such Person to sell Securities
without registration under the Securities Act within the limitation of the
exemptions provided by Rule 144 promulgated under the Securities Act,
including the legal opinion referenced above in this Section. Upon the
request of any such Person, the Company shall deliver to such Person a
written certification of a duly authorized officer as to whether it has
complied with such requirements.
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3.4 USE OF DISCLOSURE MATERIALS. The Company consents to the use of
the Disclosure Materials and any information provided by or on behalf of the
Company pursuant to Section 3.3, and any amendments and supplements thereto,
by the Purchasers in connection with resales of the Securities other than
pursuant to an effective registration statement; PROVIDED, THAT the Company
shall have a reasonable opportunity to update such information.
3.5 BLUE SKY LAWS. In accordance with the Registration Rights
Agreement, the Company shall qualify the Underlying Shares under the
securities or Blue Sky laws of such jurisdictions as the Purchasers may
request and shall continue such qualification at all times during the
Effectiveness Period (as defined in the Registration Rights Agreement);
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 or to take any action that would subject the
Company to general service of process in any such jurisdiction where it is
not then so subject.
3.6 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 issue or sale of the Securities to the Purchasers.
3.7 INCREASE IN AUTHORIZED SHARES. At such time as the Company would
be, if a notice of conversion or exercise (as the case may be) were to be
delivered on such date, precluded from (a) converting the full outstanding
principal amount of Debentures (and paying any accrued but unpaid interest in
respect thereof in shares of Common Stock) that remain unconverted at such
date or (b) honoring the exercise in full of the Warrants due to the
unavailability of a sufficient number of shares of authorized but unissued or
re-acquired Common Stock, the Board of Directors of the Company shall
promptly (and in any case within 30 Business Days from such date) prepare and
mail to the shareholders of the Company proxy materials requesting
authorization to amend the Company's restated certificate of incorporation to
increase the number of shares of Common Stock which the Company is authorized
to issue to at least a number of shares equal to the sum of (i) all shares of
Common Stock then outstanding, (ii) the number of shares of Common Stock
issuable on account of all outstanding warrants, options and convertible
securities (other than the Debentures and the Warrants) and on account of all
shares reserved under any stock option, stock purchase, warrant or similar
plan, (iii) 200% of the number of Underlying Shares as would then be issuable
upon a conversion in full of the then outstanding Debentures and as payment
of all future interest thereon in shares of common Stock in accordance with
the terms of this Agreement and the Debentures and (iv) such number of
Underlying Shares as would then be issuable upon the exercise in full of the
warrants. In connection therewith, the Board of Directors shall (x) adopt
proper resolutions authorizing such increase, (y) recommend to and otherwise
use its best efforts to promptly and duly obtain stockholder approval to
carry out such resolutions (and hold a special meeting of the shareholders no
later than the 60th day after delivery of the proxy materials relating to
such meeting) and (z) within 5 Business Days
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of obtaining such shareholder authorization, file an appropriate amendment to
the Company's certificate of incorporation to evidence such increase.
3.8 PURCHASER OWNERSHIP OF COMMON STOCK. In no event shall a
Purchaser be permitted to use its ability to convert Debentures or exercise
its Warrants to the extent that such conversion or exercise would result in
that Purchaser beneficially owning (for purposes of Rule 13d-3 under the
Exchange Act and the rules thereunder) in excess of 4.999% of the then issued
and outstanding shares of Common Stock, including shares issuable upon
conversion of the Debentures held by such Purchaser after application of this
Section. To the extent that the limitation contained in this Section applies,
the determination of whether Debentures are convertible (in relation to other
securities owned by a Purchaser) and of which Debentures are convertible
shall be in the sole discretion of such Purchaser, and the submission of
Debentures for conversion shall be deemed to be such Purchaser's
determination of whether such Debentures are convertible (in relation to
other securities owned by a Purchaser) and of which Debentures are
convertible, in each case subject to such aggregate percentage limitation,
and the Company shall have no obligation to verify or confirm the accuracy of
such determination. Nothing contained herein shall be deemed to restrict the
right of a Purchaser to convert Debentures at such time as such conversion
will not violate the provisions of this Section. Notwithstanding anything to
the contrary contained herein, if ten days have elapsed since a Purchaser has
declared an event of default under any Transaction Document and such event
shall not have been cured to such Purchaser's satisfaction prior to the
expiration of such ten-day period, the provisions of this Section 3.8 shall
be null and void AB INITIO.
3.9 LISTING OF UNDERLYING SHARES. (a) The Company shall (1) not later
than the fifth Business Day following the Closing Date prepare and file with
fthe OTC Bulletin Board (as well as any other national securities exchange,
market or trading facility on which the Common Stock is then listed) an
additional shares listing application covering at least the sum of (i) two
times the number of Underlying Shares as would be issuable upon a conversion
in full of (and as payment of interest in respect of) the Debentures,
assuming such conversion occurred on the Original Issue Date and (ii) the
Underlying Shares issuable upon exercise in full of the Warrants (2) take all
steps necessary to cause the such shares to be approved for listing on the
OTC Bulletin Board (as well as on any other national securities exchange or
market on which the Common Stock is then listed) as soon as possible
thereafter, and (3) provide to the Purchasers evidence of such listing, and
the Company shall maintain the listing of its Common Stock on such exchange
or market. In addition, if at any time the number of shares of Common Stock
issuable on conversion of all then outstanding Debentures, on account of
accrued and unpaid interest thereon and upon exercise in full of the Warrants
is greater than the number of shares of Common Stock theretofore listed with
the OTC Bulletin Board (and any such other national securities exchange,
market or trading facility), the Company shall promptly take such action
(including the actions described in the preceding sentence) to file an
additional shares listing application with the OTC Bulletin Board (and any
such other national securities exchange, market or trading facility) covering
at least a number of shares equal to the sum of (x) 200% of (A) the number of
Underlying Shares as would then be issuable upon a conversion in full of the
Debentures, and (B) the number of Underlying Shares as would be issuable as
payment of interest on the Debentures and (y) the
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number of Underlying Shares as would be issuable upon exercise in full of the
Warrants.
(b) The Company will use its commercially reasonable efforts to
list the Common Stock for trading on either the Nasdaq SmallCap Market or
Nasdaq National Market as soon as possible after the Closing Date and
immediately thereafter shall list the shares referenced in Section 3.9(a)
thereon, and maintain such listing thereafter as long as Underlying Shares
are outstanding.
3.10 CONVERSION PROCEDURES. EXHIBIT E sets forth the procedures with
respect to the conversion of the Debentures, including the form of legal
opinion, if necessary, that shall be rendered to the Company's transfer agent
and such other information and instructions as may be reasonably necessary to
enable the Purchasers to exercise its right of conversion smoothly and
expeditiously which are not set forth in the Debentures.
3.11 PURCHASERS' RIGHTS IF TRADING IN COMMON STOCK IS SUSPENDED OR
DELISTED. If at any time while any Purchaser (or any assignee thereof) owns
any Securities, trading in the shares of the Common Stock is suspended on or
delisted from the OTC Bulletin Board or any other principal market or
exchange for such shares (other than as a result of the suspension of trading
in securities on such market or exchange generally, or temporary suspensions
pending the release of material information) for more than three (3) Trading
Days, then, notwithstanding anything to the contrary contained in any
Transaction Document, at a Purchaser's option exercisable by ten Business
Days prior written notice to the Company, the Company shall, PROVIDED, THAT
trading has not been reinstated within such period, repay the entire
principal amount of then outstanding Debentures and redeem all then
outstanding Underlying Shares then held by such Purchaser, at an aggregate
purchase price equal to the sum of (I) the aggregate outstanding principal
amount of Debentures then held by such Purchaser divided by the Conversion
Price on (a) the day prior to the date of such suspension or delisting, (b)
the day of such notice or (c) the date of payment in full of the repurchase
price calculated under this Section, whichever is less, and multiplied by the
Market Price preceding (x) the day prior to the date of such suspension or
delisting, (y) the day of such notice and (z) the date of payment in full of
the repurchase price calculated under this Section, whichever is greater,
(II) the aggregate of all accrued but unpaid interest and other non-principal
amounts (including liquidated damages, if any) then payable in respect of all
Debentures to be repaid, (III) the number of Underlying Shares then held by
such Purchaser multiplied by the Market Price immediately preceding (x) the
day prior to the date of such suspension or delisting, (y) the date of the
notice or (z) the date of payment in full by the Company of the repurchase
price calculated under this Section, whichever is greater, and (IV) interest
on the amounts set forth in I - III above accruing from the 10th Business Day
after such notice until the repurchase price under this Section is paid in
full at the rate of 18% per annum. If after the Original Issue Date the
Common Stock shall be listed for trading or quoted on the Nasdaq SmallCap
Market, Nasdaq National Market or any other national securities exchange or
market, this provision shall similarly apply to any delistings or suspensions
therefrom.
3.12 USE OF PROCEEDS. The Company shall use all of the proceeds from
the sale of the Securities for working capital purposes and not for the
satisfaction of any portion of Company debt or
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to redeem Company equity or equity-equivalent securities. Pending application
of the proceeds of this placement in the manner permitted hereby the Company
will invest such proceeds in money market funds, interest bearing accounts
and/or short-term, investment grade interest bearing securities.
3.13 NOTICE OF BREACHES. Each of the Company and each Purchaser shall
give prompt written notice to the other of any breach by it of any
representation, warranty or other agreement contained in any Transaction
Document, as well as any events or occurrences arising after the date hereof,
which would reasonably be likely to cause any representation or warranty or
other agreement of such party, as the case may be, contained in the
Transaction Document to be incorrect or breached as of such Closing Date.
However, no disclosure by either party pursuant to this Section shall be
deemed to cure any breach of any representation, warranty or other agreement
contained in any Transaction Document.
Notwithstanding the generality of the foregoing, the Company shall
promptly notify the Purchasers of any notice or claim (written or oral) that
it receives from any lender of the Company to the effect that the
consummation of the transactions contemplated by the Transaction Documents
violates or would violate any written agreement or understanding between such
lender and the Company, and the Company shall promptly furnish by facsimile
to the holders of the Debentures a copy of any written statement in support
of or relating to such claim or notice.
3.14 CONVERSION OBLIGATIONS OF THE COMPANY. The Company shall honor
conversions of the Debentures and exercises of the Warrants and shall deliver
Underlying Shares in accordance with the respective terms and conditions and
time periods set forth in the Debentures and the Warrants.
3.15 RIGHT OF FIRST REFUSAL; SUBSEQUENT REGISTRATIONS; CERTAIN
CORPORATE ACTIONS. (seq level2 \*alphabetica) The Company shall not,
directly or indirectly, without the prior written consent of the Encore
Capital Management, L.L.C. ("Encore") on behalf of the Purchasers, offer,
sell, grant any option to purchase, or otherwise dispose (or announce any
offer, sale, grant or any option to purchase or other disposition) of any of
its or its Affiliates equity, equity-equivalent or derivative securities (a
"SUBSEQUENT FINANCING") for a period of 180 days after the Closing Date,
except (i) the granting of options or warrants to employees, officers and
directors, and the issuance of shares upon exercise of options granted, under
any stock option plan heretofore or hereinafter duly adopted by the Company,
(ii) shares issued upon exercise of any currently outstanding warrants and
upon conversion of any currently outstanding convertible preferred stock in
each case disclosed in SCHEDULE 3.1(C), and (iii) shares of Common Stock
issued upon conversion of the Debentures, as payment of interest thereon, or
upon exercise of the Warrants in accordance with their respective terms,
unless (A) the Company delivers to Encore a written notice (the "SUBSEQUENT
FINANCING NOTICE") of its intention to effect such Subsequent Financing,
which Subsequent Financing Notice shall describe in reasonable detail the
proposed terms of such Subsequent Financing, the amount of proceeds intended
to be raised thereunder, the Person with whom such Subsequent Financing shall
be affected, and a term sheet or similar document relating thereto shall be
attached to such Subsequent Financing Notice and (B) Encore shall not have
notified the Company by 5:00 p.m. (New York City Time) on the tenth (10th)
Trading Day after its receipt of
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the Subsequent Financing Notice of its willingness to cause either or both of
the Purchasers to provide (or to cause its sole designee to provide), subject
to completion of mutually acceptable documentation, financing to the Company
on substantially the terms set forth in the Subsequent Financing Notice. If
Encore shall fail to notify the Company of its intention to enter into such
negotiations within such time period, the Company may effect the Subsequent
Financing substantially upon the terms and to the Persons (or Affiliates of
such Persons) set forth in the Subsequent Financing Notice; PROVIDED, that
the Company shall provide Encore with a second Subsequent Financing Notice,
and Encore shall again have the right of first refusal set forth above in
this paragraph (a), if the Subsequent Financing subject to the initial
Subsequent Financing Notice shall not have been consummated for any reason on
the terms set forth in such Subsequent Financing Notice within thirty (30)
Trading Days after the date of the initial Subsequent Financing Notice with
the Person (or an Affiliate of such Person) identified in the Subsequent
Financing Notice.
(b) Except Underlying Shares and other "Registrable Securities"
(as such term is defined in the Registration Rights Agreement) to be
registered in accordance with the Registration Rights Agreement, securities
to be registered pursuant to Schedule 6(c) to the Registration Rights
Agreement, and other than Company securities to be registered for resale in
connection with financings permitted pursuant to paragraph (a)(i) through
(iii) of this Section, the Company shall not, without the prior written
consent of Encore, (i) issue or sell any of its or any of its Affiliates'
equity or equity-equivalent securities pursuant to Regulation S promulgated
under the Securities Act, or (ii) register for resale any securities of the
Company for a period of not less than 90 Trading Days after the date that the
Underlying Securities Registration Statement is declared effective by the
Commission. Any days that a Purchaser is not permitted to sell Underlying
Shares under the Underlying Securities Registration Statement shall be added
to such 90 Trading Day period for the purposes of (i) and (ii) above.
(c) As long as there are Debentures outstanding, the Company
shall not and shall cause the Subsidiaries not to, without the consent of the
holders of the Debentures, (i) amend its certificate of incorporation, bylaws
or other charter documents so as to adversely affect any rights of the
holders of Debentures; (ii) repay, repurchase or offer to repay, repurchase
or otherwise acquire shares of its Common Stock other than as to the
Underlying Shares; or (iii) enter into any agreement with respect to any of
the foregoing.
3.16 THE WARRANTS. Prior to the Closing, the Company shall issue and
deliver to the Escrow Agent for delivery at the closing (a) a Common Stock
purchase warrant, in the form of EXHIBIT D and registered in the name of JNC
(the "JNC WARRANT"), pursuant to which JNC shall have the right at any time
and from time to time thereafter through the third anniversary of the date of
issuance thereof, to acquire 265,120 shares of Common Stock at an exercise
price per share equal to $3.91 and (b) to DSF, a Common Stock purchase
warrant, in the form of EXHIBIT D and registered in the name of DSF (the "DSF
WARRANT," and, collectively with the JNC Warrant, the "WARRANTS"), pursuant
to which DSF shall have the right at any time and from time to time
thereafter through the third anniversary of the date of issuance thereof, to
acquire 66,280 shares of Common Stock at an exercise price per share equal to
$3.91.
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3.17 TRANSFER OF INTELLECTUAL PROPERTY RIGHTS. Except in connection
with the sale of all or substantially all of the assets of the Company, the
Company shall not transfer, sell or otherwise dispose of, any Intellectual
Property Rights, or allow the Intellectual Property Rights to become subject
to any Liens, or fail to renew such Intellectual Property Rights (if
renewable and would otherwise expire), without the prior written consent of
the Purchasers.
3.18 FORM 10-SB. The Company shall (a) not later than November 15,
1997, prepare and file with the Commission a Form 10-SB registration
statement pursuant to the Exchange Act, (b) take all commercially reasonable
steps necessary to cause such Form 10-SB registration statement to be
declared effective as soon as possible thereafter, and (c) provide to the
Purchasers evidence of such filing and effectiveness.
ARTICLE IV
MISCELLANEOUS
4.1 FEES AND EXPENSES. The Company shall pay at the Closing (i)
$15,000 to the Escrow Agent for the legal fees and disbursements incurred by
the Purchasers in connection with the preparation and negotiation of the
Transaction Documents and (ii) $3,000 to Encore for the due diligence
expenses and disbursements incurred in connection with the transactions
contemplated hereby. Other than the amounts contemplated by the immediately
preceding sentence, and except as set forth in the Registration Rights
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
Debentures pursuant hereto. The Purchasers shall be responsible for their
own respective tax liability that may arise as a result of the investment
hereunder or the transactions contemplated by this Agreement.
4.2 ENTIRE AGREEMENT; AMENDMENTS. This Agreement, together with
the Exhibits and Schedules hereto, the Debentures and the Warrants contain
the entire understanding of the parties with respect to the subject matter
hereof and supersede all prior agreements and understandings, oral or
written, with respect to such matters.
4.3 NOTICES. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile at
the facsimile telephone number specified in this Section prior to 7:00 p.m.
(New York City time) on a Business Day, (ii) the Business Day after the date
of transmission, if such notice or communication is delivered via facsimile
at the facsimile telephone number specified in the Purchase Agreement later
than 7:00 p.m. (New York City time) on any
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date and earlier than 11:59 p.m. (New York City time) on such date, (iii) the
Business Day following the date of mailing, if sent by nationally recognized
overnight courier service, or (iv) upon actual receipt by the party to whom
such notice is required to be given. The address for such notices and
communications shall be as follows:
If to the Company: Fix-Corp International, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: Chief Financial Officer
With copies to: ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇
If to JNC: JNC Opportunity Fund Ltd.
Olympia Capital (Cayman) Ltd.
c/o Olympia Capital (Bermuda) Ltd.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇
If to DSF: Diversified Strategies Fund, L.P.
c/o Encore Capital Management, L.L.C.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇
With copies to (for Encore Capital Management, L.L.C.
communications to ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
either Purchaser): ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇
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-and-
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇
or such other address as may be designated in writing hereafter, in the same
manner, by such Person.
4.4 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 Purchasers; 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.
4.5 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.
4.6 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted
assigns, including any Persons to whom any Purchaser transfers Debentures or
Warrants. The assignment by a party of this Agreement or any rights
hereunder shall not affect the obligations of such party under this Agreement.
4.7 NO THIRD-PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns and, other than with respect to permitted assignees under Section
4.6, is not for the benefit of, nor may any provision hereof be enforced by,
any other Person. The obligations of the Purchasers under this Agreement and
the other Transaction Documents are several and not joint and no Purchaser
shall be responsible for any obligations of any other Purchaser.
4.8 GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the internal laws of the State of New York
without regard to the principles of conflicts of law thereof.
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4.9 SURVIVAL. The representations, warranties, agreements and
covenants contained in this Agreement shall survive the Closing and the and
conversion of the Debentures and exercise of the Warrants.
4.10 EXECUTION. 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 parties, it being understood
that all 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.
4.11 PUBLICITY. The Company and the Purchasers shall consult with each
other in issuing any press releases or otherwise making public statements
with respect to the transactions contemplated hereby and no 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, except that no prior consent shall be
required if such disclosure is required by law, in which such case the
disclosing party shall provide the other party with prior notice of such
public statement.
4.12 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 therefor, and upon so agreeing, shall incorporate such substitute
provision in this Agreement.
4.13 REMEDIES. Each of the parties to this Agreement acknowledges and
agrees that the other parties would be damaged irreparably in the event any
of the provisions of this Agreement are not performed in accordance with
their specific terms or otherwise are breached. Accordingly, each of the
parties hereto agrees that the other parties shall be entitled to an
injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically this Agreement and the terms and
provisions of this Agreement in any action instituted in any court of the
United States of America or any state thereof having jurisdiction over the
parties to this Agreement and the matter, in addition to any other remedy to
which they may be entitled, at law or in equity.
4.14 LIQUIDATED DAMAGES. Each of the parties to this Agreement
acknowledges and agrees that the any and all liquidated damage provisions set
forth in the Transaction Documents express a reasonable pre-estimate of the
damages which would be incurred.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
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SIGNATURE PAGE FOLLOWS]
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Exhibt 18
IN WITNESS WHEREOF, the parties hereto have caused this Debenture
Purchase Agreement to be duly executed by their respective authorized persons
as of the date first indicated above.
FIX-CORP INTERNATIONAL, INC.
By:
----------------------------
Name:
Title:
JNC OPPORTUNITY FUND LTD.
By:
-----------------------------
Name:
Title:
DIVERSIFIED STRATEGIES FUND, L.P.
By: Encore Capital Management, L.L.C.
By:
--------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: Director