Exhibit 10.17
EQUITY LINE PURCHASE AGREEMENT
By and Between
▇▇▇▇▇▇▇▇.▇▇▇ Inc.
and
Cornell Capital Partners, L.P.
EQUITY LINE PURCHASE AGREEMENT, dated as of August 17, 2001 (this
"Agreement"), by and between Cornell Capital Partners, L.P. (the "Investor") and
▇▇▇▇▇▇▇▇.▇▇▇ Inc., a Nevada corporation (the "Company").
WHEREAS, the Investor is a limited partnership and the business affairs
of the Investor are managed by Yorkville Advisors Management, LLC, a Delaware
limited liability company; and
WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company may issue and sell to Investor from
time to time as provided herein and pursuant to one or more of the exemptions
from the registration requirements of the Securities Act of 1933, as amended
(the "Securities Act"), provided by Section 4(2) of the Securities Act or
Regulation D promulgated thereunder, shares of its Common Stock (as defined
below) for an aggregate purchase of up to $10,000,000.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Investor agree
as follows:
ARTICLE I
CERTAIN DEFINITIONS
"Action" has the meaning ascribed to it in Section 4.15 hereof.
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls or is controlled by or under common control with
such Person. For the purposes of this definition, "control," when used with
respect to any Person, means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms of "affiliated," "controlling" and "controlled" have meanings
correlative to the foregoing.
"Average Daily Volume" means the sum of the daily trading volume of the
Common Stock on the Principal Market (as reported by Bloomberg L.P.) during the
40 Trading Days preceding the Put Date divided by 40.
"Bid Price" means the closing bid price of the Common Stock on the
Principal Market for its regular trading session on the date in question (as
reported by Bloomberg L.P.), or if there is no such price on such date, then the
closing bid price as reported on the date nearest preceding such date.
"Business Day" means any day (other than a Saturday or Sunday) on which
banks are open for business in New York City, New York.
"Calculation Notice" means the written notice of the Company, in the
form of Exhibit B hereto, which is delivered to the Investor on a Closing Date,
specifying the final Investment Amount as determined pursuant to Section 2.1(b)
hereof, the Settlement Amount for the Closing and number of Put Shares issuable
to the Investor at such Closing.
"Closing" has the meaning ascribed to it in Section 2.2(a) hereof.
"Closing Date" has the meaning ascribed to it in Section 2.2(a) hereof.
"Commission" means the U.S. Securities and Exchange Commission.
"Commitment Period" means the period commencing on the Effective Date
and expiring on the earliest to occur of: (x) the date on which the Investor
shall have paid an aggregate of $10,000,000 in Investment Amounts for Put Shares
pursuant to this Agreement, (y) the date this Agreement is terminated in
accordance with the terms hereof, or (z) the date occurring 36 months after the
Effective Date.
"Common Stock" means the Company's common stock, par value $.00001 per
share, or such securities into which such stock shall hereafter be reclassified.
"Company Required Items" has the meaning ascribed to it in Section
2.2(a) hereof.
"Condition Satisfaction Date" has the meaning ascribed to it in Section
6.1 hereof.
"Effective Date" means the date on which the Commission first declares
effective a Registration Statement meeting the requirements of the Registration
Rights Agreement and registering the resale by the Investor of the Put Shares.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"GAAP" has the meaning ascribed to it in Section 4.7 hereof.
"Intellectual Property Rights" has the meaning ascribed to it in Section
4.12 hereof.
"Investment Amount" means the dollar amount to be invested by the
Investor to purchase Put Shares in connection with a Put.
"Investor Fee Shares" has the meaning ascribed to it in Section 2.5(b)
hereof.
"Issuance Deadline" has the meaning ascribed to it in Section 2.2(c)
hereof.
"Market Price" means the lowest Bid Price during the applicable
Valuation Period.
"Material Permits" has the meaning ascribed to it in Section 4.13
hereof.
"Payment Deadline" has the meaning ascribed to it in Section 2.2(c)
hereof.
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"Person" means an individual, a corporation, a partnership, a limited
liability company, an association, a trust or other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"Principal Market" means whichever of the OTC Bulletin Board, Nasdaq
National Market, Nasdaq SmallCap Market, American Stock Exchange or New York
Stock Exchange that is then the principal trading exchange, market or quotation
system for the Common Stock.
"Purchase Price" means with respect to Put Shares, an amount equal to
95% of the Market Price for the applicable Valuation Period.
"Put" means the exercise by the Company of its right to require the
Investor to purchase Put Shares pursuant to the terms of this Agreement.
"Put Date" means the date that a Put Notice is deemed delivered in
accordance with Section 2.1(a).
"Put Notice" means the written notice of the Company, in the form of
Exhibit A, hereto which is delivered to the Investor pursuant to Section 2.1(a)
hereof.
"Put Shares" means the number of shares of Common Stock that will be
issued and sold to the Investor pursuant to a Put.
"Registrable Securities" shall include all Put Shares and, for purposes
of Section 6(e) of the Registration Rights Agreement only (Piggy-Back
Registrations), shall also include the Investor Fee Shares.
"Registration Rights Agreement" means the Registration Rights Agreement,
dated the date hereof, by and between the Company and the Investor, in the form
of Exhibit C hereto.
"Registration Statement" shall have the meaning set forth in the
Registration Rights Agreement.
"Securities" means,collectively, the Put Shares and Investor Fee Shares.
"SEC Documents" has the meaning ascribed to it in Section 4.7 hereof.
"Settlement Amount" has the meaning ascribed to it in Section
2.2(a) hereof.
"Subsidiary" has the meaning ascribed to it in Section 4.1 hereof.
"Trading Day" means (a) a day on which the Common Stock is traded on the
Principal Market on which the Common Stock is then listed or quoted, or (b) if
the Common Stock is not listed or quoted for trading on a Principal Market, a
day on which the Common Stock is traded in the over-the-counter market, as
reported by the National Quotation Bureau Incorporated (or any similar
organization or agency succeeding its functions of reporting prices); provided,
that in the event that the Common Stock is not listed or quoted as set forth in
(a) or (b) hereof, then Trading Day shall mean any Business Day.
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"Transaction Documents" has the meaning ascribed to it in Section 4.1
hereof.
"Valuation Period" means the period of 5 Trading Days commencing on
(a) the Put Date, in connection with the first Closing of a Put or (b) the first
Closing Date of a Put, in connection with the second Closing of a Put Date.
ARTICLE II
PURCHASE AND SALE OF COMMON STOCK
Section 2.1 Investments.
(a) Put Notice. Subject to the conditions and limitations set forth
herein, the Company may make a Put at any time during the Commitment Period by
the delivery of a duly completed Put Notice.
(i) Delivery. At least 10 Trading Days must have elapsed
since the immediately preceding Put Date before the Company delivers a new Put
Notice to the Investor pursuant to this Section 2.1. A Put Notice shall be
deemed delivered on: (A) the Trading Day it is received by facsimile or
otherwise by the Investor if such notice is received prior to the close of
business on such days, or (B) the immediately succeeding Trading Day if it is
received by facsimile or otherwise after close of business on a Trading Day or
at any time on a day which is not a Trading Day.
(ii) Content. Each Put Notice shall state the following
information: (A) the Put Date, (B) the first Closing Date for the Put, including
the first and last dates of the Valuation Period applicable to such Closing, (C)
the second Closing Date for the Put, including the first and last dates of the
Valuation Period applicable to such Closing, and (D) the Investment Amount that
the Company intends to sell to the Investor, which Investment Amount, subject to
the minimum funding requirements set forth in Section 2.1(b)(ii)(B) below, may
be adjusted in the Calculation Notice delivered by the Company at the first
Closing if the formula set forth in Section 2.1(b)(ii)(A) hereof when applied at
such Closing results in a lesser Investment Amount than initially requested.
(b) Limitations on Puts and Common Stock Issuable.
(i) The maximum Investment Amounts for all Puts is an
aggregate of $10,000,000.
(ii) The Investment Amount for each Put shall be
determined on the first closing Date of a Put as follows:
(A) The Investment Amount of a Put shall be equal
to 150% of the Average Daily Volume multiplied by the Purchase Price.
(B) Notwithstanding Section 2.1(b)(ii)(A) above,
during the first 12 months following the Effective Date, the Investment Amount,
net of any cash fees payable to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP and the Investor pursuant to
Sections 2.5(a) and (c) hereof, shall be no less than $50,000 per Put, it being
understood that during such 12-month period the Company shall have monthly
access to a minimum of $100,000 funding from the Investor, net of any cash fees
payable to the Investor and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP pursuant to Sections 2.5(a) and
(c) hereof.
(iii) The Company's right to deliver a Put Notice is
subject to the satisfaction by the Company, or waiver by the Investor, of the
conditions set forth in Section 6.1 (d) through (g) hereof.
Section 2.2 Closings.
(a) Company Obligations. Subject to the satisfaction of the conditions
set forth in Section 6.1 of this Agreement, the closing of the purchase by the
Investor of Put Shares hereunder (a "Closing") shall occur on the first Business
Day following the end of a Valuation Period for such Put (a "Closing Date").
There shall be two Closing Dates for each Put exercised by the Company
hereunder. The total Investment Amount shall be determined on the first Closing
Date of a Put pursuant to Section 2.1(b) hereof and funded in two equal tranches
on the first Closing Date and the second Closing Date of such Put. The number of
Put Shares issuable at each Closing Date of a Put shall be equal to one-half of
the Investment Amount (the "Settlement Amount") divided by the Purchase Price,
which shall be computed using a separate Valuation Period for each Closing. On
each Closing Date, the Company shall (x) deliver (or cause to be delivered) to
the Investor the calculation notice in the form of Exhibit B hereto setting
forth the calculation of the total number of Put Shares that are to be issued
and sold at such Closing for the specified Settlement Amount; (y) deliver (or
cause to be delivered) by
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1:00 p.m. EST to the Investor's account through the Depository Trust Company
DWAC system, per written account instructions delivered by the Investor to the
Company at least 3 Business Days preceding the Closing, the Put Shares to be
issued and sold to the Investor at such Closing; and (z) deliver (or cause to be
delivered) to the Investor all other documents, instruments and writings
required to be delivered by it pursuant to the Transaction Documents (as defined
herein) in order to effect a Closing hereunder (the items contemplated by
clauses (x) through (z) above are collectively referred to as the "Company
Required Items").
(b) Investor Obligations.Upon receipt of the Company Required Items and
subject to the satisfaction by the Company, or waiver by the Investor, of the
conditions to the Investor's obligation to purchase Put Shares set forth in
Section 6.1, on each Closing Date the Investor shall deliver (or cause to be
delivered) to the Company, the Settlement Amount for the Put Shares to be issued
and sold at such Closing, less any cash fee to which the Investor pursuant to
Section 2.5(c) hereof, or ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP pursuant to Section 2.5(a) hereof,
is entitled to with respect to such Closing, no later than the close of business
on the Closing Date.
(c) Delay or Cancellation of Closing. In the event that (i) the Company
delivers the Company Required Items on the Closing Date, (ii) the conditions to
the Investor's obligation to purchase the Put Shares set forth in Section 6.1
are either satisfied or waived on the Closing Date and (iii) Investor's account
is credited with the Put Shares after 1:00 p.m. EST on the Closing Date but
prior to the close of business on the Closing Date (the "Issuance Deadline"),
the Investor shall deliver (or cause to be delivered) to the Company, the
Settlement Amount for the Put Shares to be issued and sold at such Closing, less
any cash fee to which the Investor pursuant to Section 2.5(c) hereof, or ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP pursuant to Section 2.5(a) hereof, is entitled to with respect to
such Closing, no later than the close of business on the Business Day following
the initially scheduled Closing Date (the "Payment Deadline"). In the event
that: (i) any Company Required Item shall not have been delivered, (ii) any
condition set forth in Section 6.1 shall not have been fulfilled by the Company
or waived by the Investor, (iii) the Investor's account shall not have been
credited with the Put Shares to be issued and sold to the Investor by the
Issuance Deadline or (iv) the Investor shall for any reason fail to make payment
of the Settlement Amount to the Company by the Payment Deadline, such Closing
shall be canceled and any Company Required Items delivered to the Investor and
any Put Shares credited to the Investors account, in both cases, in connection
with such Closing, shall be returned to, or as directed by, the Company.
Section 2.3 Termination of Investment Obligation.
(a) The obligation of the Investor to purchase Put Shares shall, at the
Investor's option, terminate permanently (including with respect to a Closing
Date that has not yet occurred) in the event that: (i) the Company shall at any
time breach in any material respect its obligations under the Transaction
Documents (as hereinafter defined) and such breach is not cured by the 20th day
following notice thereof, (ii) the Registration Statement shall not have become
effective by the expiration of the 180th day following the date of this
Agreement or (iii) if, after the Effective Date, the Registration Statement
ceases to be effective as to all Registrable Securities then owned by or
issuable to the Investor, or the prospectus thereunder is not available for use
by the Investor to sell Registrable Securities, in either case, for an aggregate
of 45 Trading Days.
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(b) The obligation of the Company to sell Put Shares to the Investor
following delivery of a Put Notice shall terminate if the Investor fails to
honor such Put Notice under circumstances where the conditions to the Closing of
such Put have been satisfied, and the Company notifies Investor of such
termination. Notwithstanding any such termination, the Company shall maintain
the Registration Statement in effect (and shall permit the Investor to use the
prospectus thereunder to sell Registrable Securities) for not less than 45
Trading Days following the date of any such termination.
(c) The Company shall have the right, by giving 5 days' prior notice,
to terminate this Agreement in its sole discretion at any time on or after the
90 day anniversary of the Effective Date without any liability to the Investor;
provided, however, that in the event of a termination of the Agreement pursuant
to this Section 2.3(c), the piggy-back registration rights granted to the
Investor with respect to the Investor Fee Shares pursuant to Section 6(e) of the
Registration Rights Agreement shall continue in full force and effect.
Section 2.4 Deliveries on the Date Hereof. Concurrently with their
execution and delivery of this Agreement, the parties shall deliver or cause to
be delivered the following:
(a) the Company shall deliver to the Investor, (i) executed
original copies of this Agreement and the Registration Rights Agreement, (ii)
the Investor Fee Shares pursuant to Section 2.5(b) hereof and (iii) an opinion
letter from counsel to the Company substantially in the form of Exhibit D
hereto; and
(b) the Investor shall deliver (or cause to be delivered) to the
Company (i) executed original copies of this Agreement and the Registration
Rights Agreement and (ii) original 5-year Warrants Nos. 02, 03 and 05 to
purchase an aggregate of 690,000 shares of Common Stock. Common Stock, each
dated July 21, 2000, issued to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇
▇▇▇▇▇▇▇, respectively, which warrants shall be cancelled effective as of the
date hereof.
Section 2.5 Fees and Expenses. The Company hereby agrees to pay the
following fees:
(a) Legal Fees. The Company shall pay on the first Closing Date
hereunder a one-time legal fee of Five Thousand Dollars ($5,000) to ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP for services rendered to the Investor in connection with the
preparation and negotiation of the Transaction Documents, which fee may be
deducted by the Investor directly from the gross proceeds due and payable to the
Company hereunder.
(b) Investor Fee Shares. The Company shall deliver to the
Investor, or its designee, concurrently with the execution of this Agreement, a
stock certificate issued in the name of the Investor or its designee, as the
case may be, in the amount of 1,500,000 shares of Common Stock (the "Investor
Fee Shares"). The stock certificate shall bear the following restrictive legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR STATE SECURITIES LAWS, AND NO TRANSFER OF THESE
SECURITIES MAY BE MADE EXCEPT (A)
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PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR
(B) PURSUANT TO AN EXEMPTION THEREFROM WITH RESPECT TO WHICH THE
COMPANY MAY REQUIRE AN OPINION OF COUNSEL FOR THE HOLDER THAT
SUCH TRANSFER IS EXEMPT FROM THE REQUIREMENTS OF THE ACT."
The Company agrees to grant to the Investor piggy-back
registration rights with respect to the Investor Fee Shares pursuant to the
terms and conditions of the Registration Rights Agreement.
(c) Cash Fee. On each Closing Date, the Company shall pay to the
Investor a cash fee in an amount equal to five percent (5%) of the Settlement
Amount for such Closing, which cash fee may be deducted from the gross proceeds
due and payable to the Company hereunder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF INVESTOR
The Investor represents and warrants to the Company as follows:
Section 3.1 Intent. The Investor is acquiring the Investor Shares for its
own account for investment purposes and not with a view towards their
distribution and has no present arrangement (whether or not legally binding) at
any time to sell or distribute the Put Shares to or through any Person or
entity; provided, however, that by making the representations herein, the
Investor does not agree to hold Securities for any minimum or other specific
term and reserves the right to dispose of the Securities at any time in
accordance with federal and state securities laws applicable to such disposition
and the terms and conditions, if any, relating thereto as set forth in this
Agreement and the Registration Rights Agreement.
Section 3.2 Sophisticated Investor. The Investor is a sophisticated
investor (as described in Rule 506(b)(2)(ii) of Regulation D) and an accredited
investor (as defined in Rule 501 of Regulation D), and Investor has such
experience in business and financial matters that it has the capacity to protect
its own interests in connection with this transaction and is capable of
evaluating the merits and risks of an investment in the Securities. The Investor
acknowledges that an investment in the Securities is speculative and involves a
high degree of risk.
Section 3.3 Authority. The Investor has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by this
Agreement and the Registration Rights Agreement and otherwise to carry out its
obligations thereunder. The execution and delivery of each of this Agreement and
the Registration Rights Agreement by the Investor and the consummation by it of
the transactions contemplated thereby have been duly authorized by all necessary
corporate action on the part of the Investor. Each of this Agreement and the
Registration Rights Agreement has been duly executed by the Investor and, when
delivered in accordance with the terms hereof, will constitute the valid and
binding obligation of the Investor enforceable against the Investor in
accordance with its terms.
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Section 3.4 Organization and Standing. Investor validly exists, and is in
good standing under the laws of the jurisdiction of its organization.
Section 3.5 Manner of Sale. At no time was Investor presented with or
solicited by or through any leaflet, public promotional meeting, television
advertisement or any other form of general solicitation or advertising in
connection with its investment in the Securities.
Section 3.6 Financial Capacity. Investor currently has the financial
capacity to meet its obligations to the Company hereunder, and the Investor has
no present knowledge of any circumstances which could cause it to become unable
to meet such obligations in the future.
Section 3.7 Underwriter Liability. Investor understands that it is the
position of the Commission that with respect to any disposition of Securities
through a Registration Statement the Investor will be treated as an underwriter
within the meaning of Section 2(11) of the Securities Act. The Investor agrees
to be identified as an underwriter of the Registrable Securities sold by it in
the Registration Statement.
Section 3.8 Access to Information. Investor acknowledges that it has
reviewed the SEC Documents and 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 SEC Documents.
Neither such inquiries nor any other investigation conducted by or on behalf of
such Purchaser or its representatives or counsel shall modify, amend or affect
Investor's right to rely on the truth, accuracy and completeness of the SEC
Documents and the Company's representations and warranties contained in the
Transaction Documents.
The Company acknowledges and agrees that the Investor has not
made and does not make any representations or warranties with respect to the
transactions contemplated hereby other than as specifically set forth in this
Article III.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Investor as follows:
Section 4.1 Organization and Qualification. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Nevada, with the requisite corporate power and authority to own and use
its properties and assets and to carry on its business as currently conducted.
The Company has no subsidiaries other than its subsidiary in England which is in
the process of being dissolved (the "Subsidiary"). The
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Company is duly qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which the nature of the business conducted
or property owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be, would not
reasonably be expected to, individually or in the aggregate, (x) adversely
affect the legality, validity or enforceability of the Securities or any of this
Agreement and the Registration Rights Agreement (collectively, the "Transaction
Documents"), (y) have or result in a material adverse effect on the results of
operations, assets, prospects, or condition (financial or otherwise) of the
Company, taken as a whole, or (z) adversely impair the Company's ability to
perform fully on a timely basis its obligations under any of the Transaction
Documents (any of (x), (y) or (z), a "Material Adverse Effect").
Section 4.2 Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by each of 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 corporate action
on the part of the Company. Each of the Transaction Documents has been duly
executed by the Company and, when delivered (or filed, as the case may be) in
accordance with the terms hereof, will constitute the valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms. The Company is not in violation of any of the provisions of its articles
of incorporation or by-laws or other organizational documents.
Section 4.3 Capitalization. As of August 15, 2001, the Company had
100,000,000 shares of Common Stock authorized and 19,417,807 shares of Common
Stock issued and outstanding. The Company owns all of the capital stock of its
Subsidiary. No shares of Common Stock are entitled to preemptive or similar
rights, nor is any holder of securities of the Company entitled to preemptive or
similar rights arising out of any agreement or understanding with the Company by
virtue of any of the Transaction Documents. The issue and sale of the Securities
hereunder will not obligate the Company to issue shares of Common Stock or other
securities to any Person other than to the Investor and will not result in any
right of any holder of the Company's securities to adjust the exercise,
conversion or reset price under such securities.
Section 4.4 Issuance of the shares of Common Stock. When issued and paid
for in accordance with the terms hereof, the Securities will be duly and validly
issued, fully paid and nonassessable, free and clear of all liens, encumbrances
and rights of first refusal of any kind (collectively, "Liens"). The Company has
on the date hereof and will, at all times during the Commitment Period maintain
an adequate reserve of duly authorized shares of Common Stock, reserved for
issuance to the Investor to enable it to perform its exercise and other
obligations under this Agreement.
Section 4.5 Filings, Consents and Approvals. The Company is not required
to obtain any consent, waiver, authorization or order of, give any notice to, 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 the Registration Statement with the Commission,
(ii) filings as may be required under state securities laws, and (iii) in all
other cases where the failure to obtain such consent, waiver, authorization or
order, or to give such notice or
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make such filing or registration would not reasonably be expected to have or
result in, individually or in the aggregate, a Material Adverse Effect
(collectively, the "Required Approvals").
Section 4.6 No Default or Violation. Except as described in the SEC
Documents, the Company (i) is not in default under or in violation of (and no
event has occurred which has not been waived which, with notice or lapse of time
or both, would result in a default by the Company under), nor has the Company
received notice of a claim that it is in default under or that it is in
violation of, any indenture, loan or credit agreement or any other agreement or
instrument to which it is a party or by which it or any of its properties is
bound, (ii) is not in violation of any order of any court, arbitrator or
governmental body, and (iii) is not in violation of any statute, rule or
regulation of any governmental authority, in each case of clauses (i), (ii) or
(iii) above, except as would not reasonably be expected to individually or in
the aggregate, have or result in a Material Adverse Effect.
Section 4.7 SEC Documents; Financial Statements. Since January 5, 2000,
the Company has filed all reports required to be filed by it under the Exchange
Act including pursuant to Section 13(a) or 15(d) thereof (the foregoing
materials being collectively referred to herein as the "SEC Documents") on a
timely basis or has received a valid extension of such time of filing and has
filed any such SEC Documents prior to the expiration of any such extension. As
of their respective dates, the SEC Documents complied in all material respects
with the requirements of the Securities Act and the Exchange Act and the rules
and regulations of the Commission promulgated thereunder, and none of the SEC
Documents, when filed, contained any untrue statement of a material fact or
omitted 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. All material agreements to which the Company is
a party or to which the property or assets of the Company are subject have been
filed as exhibits to the SEC Documents as required unless properly excused from
filing by Commission regulation. The financial statements of the Company
included in the SEC Documents comply in all material respects with applicable
accounting requirements and the rules and regulations of the Commission with
respect thereto as in effect at the time of filing. Such financial statements
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved ("GAAP"), 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 and its consolidated subsidiaries 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, immaterial, year-end audit
adjustments. Since April 30, 2001, except as specifically disclosed in the SEC
Documents, (a) there has been no event, occurrence or development that has
resulted or that could result in a Material Adverse Effect, (b) the Company has
not incurred any liabilities (contingent or otherwise) other than (x)
liabilities incurred in the ordinary course of business consistent with past
practice and (y) liabilities not required to be reflected in the Company's
financial statements pursuant to GAAP or otherwise required to be disclosed in
filings made with the Commission, (c) the Company has not altered its method of
accounting or the identity of its auditors and (d) the Company has not declared
or made any payment or distribution of cash or other property to its
stockholders or officers or directors (other than in compliance with existing
compensation agreements or Company stock
10
option plans) with respect to its capital stock, or purchased, redeemed (or made
any agreements to purchase or redeem) any shares of its capital stock.
Section 4.8 Investment Company. The Company is not, and is not an
Affiliate of, an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
Section 4.9 Certain Fees. Other than fees payable to the Investor, or its
designee, pursuant to Section 2.5 of this Agreement, no fees or commissions will
be payable by the Company to any broker, financial advisor or consultant,
finder, placement agent, investment banker, bank or other similar Person with
respect to the transactions contemplated by this Agreement.
Section 4.10 Solicitation Materials. Neither the Company nor any Person
acting on the Company's behalf has solicited any offer to buy or sell the
Securities by means of any form of general solicitation or advertising.
Section 4.11 Listing and Maintenance Requirements Compliance. The Common
Stock has not, during the two years preceding the date of this Agreement, been
delisted from any securities market or trading facility. The Company has not, in
the two years preceding the date of this Agreement received notice (written or
oral) from its Principal Market to the effect that the Company is not in
compliance with the listing or maintenance requirements of such exchange or
market.
Section 4.12 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
or material for use in connection with its business as described in the SEC
Documents and which the failure to so have would have a Material Adverse Effect
(collectively, the "Intellectual Property Rights"). The Company has not received
a written notice that the Intellectual Property Rights used by the Company
violates or infringes upon the rights of any Person, to the best knowledge of
the Company. To the Company's knowledge, all such Intellectual Property Rights
are enforceable and there is no existing infringement by another Person of any
of the Intellectual Property Rights.
Section 4.13 Regulatory Permits The Company possesses all certificates,
authorizations and permits issued by the appropriate Federal, state or foreign
regulatory authorities necessary to conduct its business as described in the SEC
Documents, except where the failure to possess such permits would not reasonably
be expected to, individually or in the aggregate, have or result in a Material
Adverse Effect ("Material Permits"), and the Company has not received any notice
of proceedings relating to the revocation or modification of any Material
Permit.
Section 4.14 Title. The Company has good and marketable title in fee
simple to all real property owned by it which is material to the business of the
Company and good and marketable title in all personal property owned by it which
is material to the business of the Company, in each case free and clear of all
Liens, except for Liens as do not materially affect the value of
11
such property and do not interfere with the use made and proposed to be made of
such property by the Company.
Section 4.15 Litigation. Except as set forth on Schedule 4.15 hereto,
there is no action, suit, inquiry, notice of violation, proceeding or
investigation pending or, to the knowledge of the Company, threatened against or
affecting the Company or any of its properties before or by any court,
arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an "Action") which
challenges the legality, validity or enforceability of any of the Transaction
Documents or the Securities.
Section 4.16 Taxes. All Federal, state, local and foreign tax returns,
information returns, reports and estimated Tax returns have been timely filed on
behalf of the Company and all Taxes shown on any such return or report have been
paid on a timely basis. There is no action, suit, proceeding, investigation,
audit or claim now proposed or pending with respect to any Tax of the Company
and the Company is not aware of any threatened claim for Tax deficiencies. There
are no outstanding agreements or waivers for the extension of time for
assessment of any Tax payable by the Company, nor has any such waiver or
agreement been requested by the Internal Revenue Service or any other taxing
authority. The Company has not filed or been included in a consolidated, unitary
or combined Tax return with another person. The Company has collected or
withheld all material amounts required to be collected or withheld by it for any
Taxes, and all such material amounts have been paid to the appropriate
governmental agencies or set aside in appropriate accounts for future payment
when due. The Company is in material compliance with, and its records contain
all material information and documents necessary to comply with, all applicable
information reporting and Tax withholding requirements. As used herein, the
terms "Tax" and "Taxes" shall mean (i) any income, alternative or add-on minimum
tax, gross income, gross receipts, franchise, profits, including estimated taxes
relating to any of the foregoing, or other similar tax or other like assessment
or charge of similar kind whatsoever, (ii) any sales, use, ad valorem, business
license, withholding, payroll, employment, excise, stamp, transfer, recording,
occupation, premium, property, value added, custom duty, severance, windfall
profit tax, license, or other tax, governmental fee or other similar assessment
or charge, and (iii) any interest and any penalty, addition to tax or additional
amount imposed by any federal, state, local or foreign governmental authority
responsible for the imposition of any such tax (domestic or foreign).
Section 4.17 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 the Company's certificate or articles of incorporation,
bylaws or other charter documents (each as amended through the date hereof), or
(ii) subject to obtaining the Required Approvals (as defined below), 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 (with or without notice, lapse of time
or both) of, any agreement, credit facility, debt or other instrument
(evidencing a Company debt or otherwise) or other understanding 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 and
foreign securities laws and regulations),
12
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 or in
the aggregate, could not have or result in a Material Adverse Effect.
Section 4.18 Disclosure. All disclosure provided to the Investor regarding
the Company, its business and the transactions contemplated hereby, furnished by
or on behalf of the Company are true and correct in all material respects and do
not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in light
of the circumstances under which they were made, not misleading.
Section 4.19 Absence of Certain Proceedings. None of the following has
occurred to the Company:
(a) A filing by or against the Company of a petition under federal
bankruptcy or state insolvency laws, or the appointment by a governmental
authority (with or without consent) of a receiver, trustee, fiscal agent or
similar Person for the business or property of the Company, or any partnership
in which it was a general partner or corporation or business association in
which it was an executive officer or director either at the time of such
petition or appointment or during the two years prior to that time.
(b) A conviction in a criminal Action or being named a subject of
a pending criminal Action (excluding traffic violations and other minor
offenses).
(c) Being found or otherwise judged by a court of competent
jurisdiction in a non-criminal Action or by the Commission, a stock market or
another self-regulatory organization, to have violated any securities law or to
have breached a fiduciary duty, where such finding or judgment has not been
subsequently reversed, suspended, or vacated.
(d) Being subject to any order, judgment or decree (not
subsequently reversed, suspended or vacated) of any court of competent
jurisdiction, stock market authority or other self-regulatory organization,
permanently or temporarily enjoining, barring, suspending or otherwise limiting,
any of the then material activities of the Company.
ARTICLE V
OTHER AGREEMENTS OF THE PARTIES
Section 5.1 Listing of Common Stock. The Common Stock is traded on the OTC
Bulletin Board. The Company does not currently intend to list the Common Stock
on another Principal Market. The Company agrees that if the Company applies to
have the Common Stock traded on any other Principal Market, it will include in
such application the issued and issuable Securities.
Section 5.2 Exchange Act Registration; Rule 144 Compliance. The Company
will cause its Common Stock to continue to be registered under Section 12(g) or
12(b) of the
13
Exchange Act, will use its best efforts to timely comply in all respects
with its reporting and filing obligations under the Exchange Act, and will not
take any action or file any document (whether or not permitted by Exchange Act
or the rules thereunder) to terminate or suspend such registration or to
terminate or suspend its reporting and filing obligations thereunder. During the
Commitment Period, the Company will notify the Investor immediately following
each filing by the Company under the Exchange Act. As long as the Investor owns
Securities, if the Company is not required to file reports pursuant to such
sections, it will prepare and furnish to the Investor and make publicly
available in accordance with Rule 144(c) promulgated under the Securities Act
such information as is required for the Investor to sell the Securities under
Rule 144 promulgated under the Securities 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 such Securities without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144 promulgated under the
Securities Act, including causing its attorneys to render and deliver any legal
opinion required in order to permit such Person to sell its Securities under
Rule 144 upon notice of an intention to sell on Form 144 or other form of notice
having a similar effect. 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.
Section 5.3 Notice of Certain Events Affecting Registration; Suspension of
Right to Make a Put. The Company will immediately notify the Investor upon the
occurrence of any of the following events in respect of a Registration Statement
or related prospectus in respect of an offering of Registrable Securities; (i)
receipt of any request for additional information from the Commission or any
other federal or state governmental authority during the period of effectiveness
of the Registration Statement the response to which would require any amendments
or supplements to the registration statement or related prospectus; (ii) the
issuance by the Commission or any other federal or state governmental authority
of any stop order suspending the effectiveness of the Registration Statement or
the initiation of any proceedings for that purpose; (iii) receipt of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose; (iv) the happening of any event that makes any statement made in the
Registration Statement or related prospectus or any document incorporated by
reference untrue in any material respect or that requires the making of any
changes in the Registration Statement, related prospectus or documents so that,
in the case of the Registration Statement, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
that in the case of the related prospectus, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and (v) the Company's
reasonable determination that a post-effective amendment to the prospectus or
Registration Statement, as the case may be, would be appropriate; and the
Company will promptly make available to the Investor any such supplement or
amendment to the related prospectus or Registration Statement.
Section 5.4 Certain Securities Laws Disclosures; Publicity. The Company
may in its sole discretion issue a press release acceptable to the Investor
disclosing the transactions contemplated hereby, and shall file with the
Commission a Current Report on Form 8-K
14
disclosing the transactions contemplated hereby within 15 calendar days after
the date of this Agreement. The Company and the Investor shall consult with each
other in issuing any other press releases or otherwise making public statements
or filings and other communications with the Commission or any regulatory agency
or stock market or trading facility with respect to the transactions
contemplated hereby and neither party shall issue any such press release or
otherwise make any such public statement, filings or other communications
without the prior consent of the other, except that if such disclosure is
required by law or stock market regulation, in which such case the disclosing
party shall promptly provide the other party with prior notice of such public
statement, filing or other communication. Notwithstanding the foregoing, the
Company shall not publicly disclose the name of the Investor, or include the
names of the Investor in any filing with the Commission, or any regulatory
agency, trading facility or stock market without the prior written consent of
the Investor, except to the extent such disclosure (but not any disclosure as to
the controlling Persons thereof) is required by law or stock market regulations,
in which case the Company shall provide the Investor with prior notice of such
disclosure.
Section 5.5 Use of Proceeds. The Company shall use the net proceeds from
the sale of the Securities for working capital purposes and not for the
satisfaction of any portion of the Company's debt (other than payment of trade
payables in the ordinary course of the Company's business and prior practices)
or to redeem any securities of the Company.
Section 5.6 Market Activity. The Investor agrees that it will not engage,
and will not induce any of its Affiliates to engage, in (a) short sales of the
Common Stock it purchases hereunder and (b) any activity that manipulates the
price of the Common Stock in violation of Regulation M promulgated under the
Exchange Act.
ARTICLE VI
CONDITIONS PRECEDENT TO THE RIGHT OF THE COMPANY TO DELIVER A PUT
NOTICE AND THE OBLIGATION OF THE INVESTOR TO CLOSE
Section 6.1 Conditions Precedent to the Obligation of the Investor to
Close. In addition to the limitations contained in Section 2.1(b), the
obligation of Investor hereunder to perform its obligations at any Closing
hereunder is subject to the satisfaction, on the applicable Closing Date (a
"Condition Satisfaction Date"), of each of the following conditions, or the
waiver by the Investor of such conditions:
(a) Representations and Warranties. The representations and
warranties of the Company in the Transaction Documents shall be true and correct
in all material respects as of the date when made and as of the applicable
Condition Satisfaction Date as though first made at that time (except for
representations and warranties that speak of a specific date, which need only be
true and correct in all material respects as of such date).
(b) Performance by the Company. The Company shall have performed,
satisfied and complied in all material respects with all covenants and
agreements required by the Transaction Documents to be performed, satisfied or
complied with by the Company at or prior to each Condition Satisfaction Date.
15
(c) Delivery of Closing Items. The Company shall have transmitted
the Put Shares and the Company Required Items required to be delivered
pursuant to Section 2.2.
(d) Registration Statement.
(i) The Registration Statement shall have been declared
effective by the Commission and the prospectus thereunder shall be available to
the Investor to resell all of the Registrable Securities thereunder.
(ii) Neither the Company nor the Investor shall have received
notice that the Commission has issued or intends to issue a stop order with
respect to the Registration Statement or that the Commission otherwise has
suspended or withdrawn the effectiveness of the Registration Statement, either
temporarily or permanently.
(iii) The Registration Statement (including the information or
documents incorporated by reference therein) and any amendments or supplements
thereto shall not contain any untrue statement of material fact or omit to state
any material fact required to be state d therein or necessary to make the
statements therein not misleading.
(e) No Suspension of Trading In or Delisting of Common Stock. The
Put Shares issuable at the Closing shall be authorized for trading or quotation
on the Principal Market and trading in the Common Stock shall not have been
suspended by the Commission or the Principal Market at any time from the Put
Date through the Closing Date. The Company shall not have received any notice
from the Principal Market threatening to delist the Common Stock from the
Principal Market.
(f) Principal Market Requirements; Compliance. The issuance of the
Put Shares with respect to the applicable Closing, if any, shall not violate the
rules and regulations of the Principal Market.
(g) Illegality. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction or by
the Principal Market that prohibits or materially impairs the transactions
contemplated by this Agreement.
(h) Market for Common Stock. On the Closing Date, there shall be
at least one bid for the Common Stock on the Principal Market.
ARTICLE VII
DUE DILIGENCE REVIEW; NON-DISCLOSURE OF NON-PUBLIC INFORMATION.
Section 7.1 Non-Disclosure of Non-Public Information.
(a) The Company shall not disclose non-public information to the
Investor or its advisors or representatives unless prior to disclosure of such
information the Company identifies such information as being non-public
information and the Investor enter into a non-disclosure agreement in form
mutually acceptable to the Company and the Investor.
16
(b) The Company shall notify the Investor of any event or the
existence of any circumstance (without any obligation to disclose the specific
event or circumstance) of which it becomes aware, (whether or not requested of
the Company specifically or generally during the course of due diligence by such
persons or entities), which, if not disclosed in the prospectus included in the
Registration Statement would cause such prospectus to include a material
misstatement or to omit a material fact required to be stated therein in order
to make the statements, therein in light of the circumstances in which they were
made, not misleading.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Governing Law. All questions concerning the construction,
validity, enforcement and interpretation of the Transaction Documents 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. Each party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Agreement and any other Transaction Documents (whether brought against a
party hereto or its respective Affiliates, directors, officers, shareholders,
employees or agents) shall be commenced in the state and federal courts sitting
in the City of New York, Borough of Manhattan (the "New York Courts"). Each
party hereto hereby irrevocably submits to the exclusive jurisdiction of the New
York Courts for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein
(including with respect to the enforcement of the any of the Transaction
Documents). Nothing contained herein shall be deemed to limit in any way any
right to serve process in any manner permitted by law.
Section 8.2 Notices. All notices, demands, requests, consents, approvals,
and other communications required or permitted hereunder shall be in writing
and, unless otherwise specified herein, shall be (i) personally served, (ii)
deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a Business Day during normal business hours where such notice is to
be received), or the first Business Day following such delivery (if delivered
other than on a Business Day during normal business hours where such notice is
to be received) or (b) on the second Business Day following the date of mailing
by reputable courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:
If to the Company: ▇▇▇▇▇▇▇▇.▇▇▇ Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Attn: President
17
With copies to: ▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Attn: W. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
If to the Investor: To the address set forth
under the Investor's name on the signature
page hereto.
A party may from time to time change its address or facsimile number for notices
under this Section by giving at least ten days' prior written notice of such
changed address or facsimile number to the other party hereto.
Section 8.3 Reporting Entity for the Common Stock. The reporting entity
relied upon for the determination of the trading price or trading volume of the
Common Stock on any given Trading Day for the purposes of this Agreement shall
be Bloomberg, L.P. or any successor to its function of reporting share prices.
The written mutual consent of the Investor and the Company shall be required to
employ any other reporting entity.
Section 8.4 Replacement of Certificates. Upon (i) receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of a certificate representing any Securities and (ii) in the case of
any such loss, theft or destruction of such certificate, upon delivery of an
indemnity agreement or security reasonably satisfactory in form and amount to
the Company (which shall not exceed that required by the Company's transfer
agent in the ordinary course) or (iii) in the case of any such mutilation, on
surrender and cancellation of such certificate, the Company will execute and
deliver, in lieu thereof, a new certificate.
Section 8.5 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 party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
Section 8.6 Entire Agreement. The Transaction Documents, together with the
exhibits and schedules thereto 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, which the parties
acknowledge have been merged into such documents, exhibits and schedules.
Section 8.7 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 the Company and the Investor 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
18
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.
Section 8.8 Survival. The representations, warranties and agreements
contained herein shall survive each Closing hereunder and shall cease to be of
further force and effect upon the expiration of the Commitment Period.
Section 8.9 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties and their successors and permitted
assigns. Neither the Investor nor the Company may assign this Agreement or any
rights or obligations hereunder without the prior written consent of the other
party hereto, provided, that the Investor shall be prohibited from assigning its
obligation to purchase Put Shares hereunder.
Section 8.10 Remedies. In addition to being entitled to exercise all
rights provided herein or granted by law, including recovery of damages, the
Investor will be entitled to specific performance of the obligations of the
Company under the Transaction Documents. The Company and the Investor agree that
monetary damages may not be adequate compensation for any loss incurred by
reason of any breach of its obligations described in the foregoing sentence and
hereby agree to waive in any action for specific performance of any such
obligation the defense that a remedy at law would be adequate.
Section 8.11 Severability. In case any one or more of the provisions of
this Agreement shall be invalid or unenforceable in any respect, the validity
and enforceability of the remaining terms and provisions of this Agreement shall
not in any way be affected or impaired thereby and the parties will attempt to
agree upon a valid and enforceable provision which shall be a reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Agreement such substitute provision to have the same force and
effect as if it were part of this Agreement as of the date hereof.
Section 8.12 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.
Section 8.13 Fees and Expenses. Except as otherwise set forth in Section
2.5 hereof and 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.
Section 8.14 No Third-Party Beneficiaries. This Agreement is intended for
the benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.
[REMAINDER OF PAGE INTENTIONALLY BLANK
SIGNATURE PAGES FOLLOW]
19
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by the undersigned, thereunto duly authorized, as of the date first set
forth above.
▇▇▇▇▇▇▇▇.▇▇▇ INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Executive Vice President
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR INVESTOR FOLLOWS]
CORNELL CAPITAL PARTNERS, L.P.
By: Yorkville Advisors, LLC
Its: General Partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Portfolio Manager
Address for Notice:
Cornell Capital Partners, L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ #▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
EXHIBIT A
---------
PUT NOTICE
To: Cornell Capital Partners, L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇.▇▇▇ Inc., a Nevada corporation (the "Company"), hereby
irrevocably elects to exercise its right pursuant to the Equity Line Purchase
Agreement, dated as of August 17, 2001 (the "Agreement"), to require Cornell
Capital Partners LP to purchase Put Shares pursuant to terms of the Agreement.
Terms used and not defined herein shall have the meaning ascribed to them in the
Agreement
The Company hereby certifies that:
1. The requested Investment Amount is: $_______________ or such greater
amount as may be permitted by the formula set forth in
Section 2.1(b)(ii) of the Agreement, but not to exceed $___________.
2. The Put Date is ____________.
3. The first Closing Date is ____________ using a Valuation Period that
runs from _________ to __________.
4. The second Closing Date is ____________ using a Valuation Period that
runs from _________ to __________.
By its delivery of this Put Notice, the Company hereby certifies that as
of the date of this Put Notice, it has satisfied all of the conditions set forth
in paragraphs 6.1(a), (b), (d), (e), (f) and (g) of the Agreement and that, to
the best of its knowledge, no statute, rule, regulation, executive order,
decree, ruling or injunction has been enacted, entered, promulgated or endorsed
by any court or governmental authority of competent jurisdiction or by the
Principal Market that prohibits or materially impairs the transactions
contemplated hereby.
The undersigned has executed this Put Notice as of this _____ day of ____, ____.
▇▇▇▇▇▇▇▇.▇▇▇ INC.
By:
--------------------------
Name:
Title:
EXHIBIT B
---------
CALCULATION NOTICE
To: Cornell Capital Partners, L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
In connection with the Put Notice delivered on ___________ by ▇▇▇▇▇▇▇▇.▇▇▇
Inc., a Nevada corporation (the "Company"), pursuant to the Equity Line Purchase
Agreement, dated as of August 17, 2001 (the "Agreement"), the Company hereby
certifies that:
1. The total Investment Amount is: $_______________ ("IA").
2. The Settlement Amount to be funded on this Closing Date is $__________
(IA/2)
3. The Valuation Period for this Closing runs from _________
to __________.
4. 95% of the lowest Bid Price (subject to adjustment) during the
applicable Valuation Period is: $________ ("PP")
5. The number of Put Shares (IA/PP) issuable on this Closing Date
is:_______________
The undersigned has executed this Calculation Notice as of this _____ day of
______,
▇▇▇▇▇▇▇▇.▇▇▇ INC.
By:
--------------------------
Name:
Title:
EXHIBIT C
---------
(Registration Rights Agreement)
(See Exhibit 10.18
to this Current Report
on Form 8-K)
Exhibit D
---------
(Form of Legal Opinion)
(1) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Nevada and has all requisite
power and authority (corporate and other) to carry on its business and to own,
lease and operate its properties and assets as described in the SEC Documents.
The Company is duly qualified as a foreign corporation to do business and is in
good standing in every jurisdiction in which the Company owns or leases
property, other than those jurisdictions in which the failure so to qualify
would not have a Material Adverse Effect.
(2) When issued and paid for, the Put Shares and the Investor Fee
Shares will be duly and validly issued, fully paid and nonassessable, and free
of any liens, encumbrances and preemptive or similar rights contained in the
Company's Certificate of Incorporation or Bylaws or in any agreement to which
the Company is party which is filed as an attachment to an SEC Document.
(3) The Company has the requisite corporate power and authority
to enter into and perform its obligations under the Transaction Documents and to
issue the Put Shares and the Investor Fee Shares. The execution and delivery of
the Transaction Documents by the Company and the consummation by it of the
transactions contemplated thereby have been duly authorized by all necessary
corporate action and no further consent or authorization of the Company, its
Board of Directors or stockholders is required. Each of the Transaction
Documents has been duly executed and delivered by the Company and each of the
Transaction Documents constitutes valid and binding obligations of the Company
enforceable against the Company in accordance with their respective terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, or similar laws relating to, or affecting generally the enforcement
of creditors' rights and remedies or by other equitable principles of general
application.
(4) The execution, delivery and performance of the Transaction
Documents by the Company and the consummation by the Company of the transactions
contemplated thereby, including, without limitation, the issuance of the Put
Shares and Investor Fee Shares, do not and will not (i) conflict with or violate
any provision of the Company's Certificate of Incorporation or Bylaws, (ii)
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, (A) any agreement,
indenture or other written instrument of the Company or instrument to which the
Company is a party attached as an exhibit to the SEC Documents and (B) to
counsel's knowledge, any other agreement, indenture or other written instrument
relating to indebtedness of the Company or instrument to which the Company is a
party, (iii) result in a violation of any law, rule or regulation of any
governmental authority, regulatory body, stock market or trading facility to
which the Company is subject, or by which any property or asset of the Company
is bound or affected, or (iv) result in any violation of any order, judgment,
injunction, decree or other restriction of which we have knowledge of any court
or governmental authority.
Schedule 4.15
(Litigation)
------------
1. May ▇▇▇▇▇ Group, Inc., plaintiff v. ▇▇▇▇▇▇▇▇.▇▇▇ Inc., defendant, Supreme
Court of the State of New York, County of New York (Index No. 125761/00),
commenced December 27, 2000.
2. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, plaintiff, v. ▇▇▇▇▇▇▇▇.▇▇▇ Inc., defendant, Supreme Court
of the State of New York, County of New York (Index No. 01603543),
commenced July 16, 2001.