EXHIBIT 99.1
PREFERRED STOCK PURCHASE AGREEMENT
BETWEEN
ICEWEB, INC.
AND
▇▇▇▇▇▇ PARTNERS LP
DATED
MARCH 30, 2005
PREFERRED STOCK PURCHASE AGREEMENT
This PREFERRED STOCK PURCHASE AGREEMENT (the "AGREEMENT") is made and
entered into as of the 30th day of March, 2005 between ICEWEB, INC., a
corporation organized and existing under the laws of the State of Delaware and
▇▇▇▇▇▇ PARTNERS LP, a Delaware limited partnership ("INVESTOR").
PRELIMINARY STATEMENT:
WHEREAS, the Investor wishes to purchase from the Company, upon the
terms and subject to the conditions of this Agreement, 1,666,667 shares of
preferred stock of the Company, with such preferred stock being as described in
the Certificate of Designations, Rights and Preferences (the "CERTIFICATE OF
DESIGNATIONS") in substantially the form attached hereto as EXHIBIT A (the
"PREFERRED STOCK") for the Purchase Price set forth in Section 1.3.23 hereof.
Subject to the limitations set forth herein and in the Certificate of
Designation, the Preferred Stock shall be convertible into shares of common
stock of the Company at any time at a conversion price of 60 cents ($0.60) per
share (the "CONVERSION VALUE"). In addition, the Company will issue to the
Investor three Common Stock Purchase Warrants (the "WARRANTS") to purchase up to
an additional 4,500,000 shares of common stock of the Company at exercise prices
as stated in the Warrants; and
WHEREAS, the parties intend to memorialize the purchase and sale of
such Preferred Stock and the Warrants.
NOW, THEREFORE, in consideration of the mutual covenants and premises
contained herein, and for other good and valuable consideration, the receipt and
adequacy of which are hereby conclusively acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
ARTICLE I
INCORPORATION BY REFERENCE, SUPERSEDER AND DEFINITIONS
1.1 Incorporation by Reference. The foregoing recitals and the Exhibits and
Schedules attached hereto and referred to herein, are hereby acknowledged to be
true and accurate, and are incorporated herein by this reference.
1.2 Superseder. This Agreement, to the extent that it is inconsistent with any
other instrument or understanding among the parties governing the affairs of the
Company, shall supersede such instrument or understanding to the fullest extent
permitted by law. A copy of this Agreement shall be filed at the Company's
principal office.
PAGE 1
1.3 Certain Definitions. For purposes of this Agreement, the following
capitalized terms shall have the following meanings (all capitalized terms used
in this Agreement that are not defined in this Article 1 shall have the meanings
set forth elsewhere in this Agreement):
1.3.1 "1933 ACT" means the Securities Act of 1933, as amended.
1.3.2 "1934 ACT" means the Securities Exchange Act of 1934, as amended.
1.3.3 "AFFILIATE" means a Person or Persons directly or indirectly,
through one or more intermediaries, controlling, controlled by or under common
control with the Person(s) in question. The term "control," as used in the
immediately preceding sentence, means, with respect to a Person that is a
corporation, the right to the exercise, directly or indirectly, of more than 50
percent of the voting rights attributable to the shares of such controlled
corporation and, with respect to a Person that is not a corporation, the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such controlled Person.
1.3.4 "ARTICLES" means the Certificate of Incorporation of the Company,
as the same may be amended from time to time.
1.3.5 "CLOSING" shall mean the Closing of the transactions contemplated
by this Agreement on the Closing Date.
1.3.6 "CLOSING DATE" means the date on which the payment of the
Purchase Price (as defined herein) by the Investor to the company is completed
pursuant to this Agreement to purchase the Preferred Stock and Warrants, which
shall occur on or before March 24, 2005.
1.3.7 "COMMON STOCK" means shares of common stock of the Company, par
value $0.001 per share
1.3.8 "EFFECTIVE DATE" shall mean the date the registration statement
of the Company covering the shares being subscribed hereby is declared
effective.
1.3.9 "ESCROW AGREEMENT" shall mean the Escrow Agreement among the
Company, the Investor and ▇▇▇ ▇. ▇▇▇▇ PLC, as Escrow Agent, attached hereto as
EXHIBIT E.
1.3.10 "MATERIAL ADVERSE EFFECT" shall mean any adverse effect on the
business, operations, properties or financial condition of the Company that is
material and adverse to the Company and its subsidiaries and affiliates, taken
as a whole and/or any condition, circumstance, or situation that would prohibit
or otherwise materially interfere with the ability of the Company to perform any
of its material obligations under this Agreement or the Registration Rights
Agreement or to perform its obligations under any other material agreement.
1.3.11 "DELAWARE ACT" means the Delaware General Corporation Law, as
amended.
PAGE 2
1.3.12 "PERSON" means an individual, partnership, firm, Limited
Liability Company, trust, joint venture, association, corporation, or any other
legal entity.
1.3.13 "PURCHASE PRICE" means the $1,000,000 paid by the Investor to
the Company for the Preferred Stock and the Warrants.
1.3.14 REGISTRATION RIGHTS AGREEMENT" shall mean the registration
rights agreement between the Investor and the Company attached hereto as Exhibit
B.
1.3.15 "REGISTRATION STATEMENT" shall mean the registration statement
under the 1933 Act to be filed with the Securities and Exchange Commission for
the registration of the Shares pursuant to the Registration Rights Agreement
attached hereto as Exhibit B.
1.3.16 "SEC" means the Securities and Exchange Commission.
1.3.17 "SEC DOCUMENTS" shall mean the Company's latest Form 10-K or
10-KSB as of the time in question, all Forms 10-Q or 10-QSB and 8-K filed
thereafter, and the Proxy Statement for its latest fiscal year as of the time in
question until such time as the Company no longer has an obligation to maintain
the effectiveness of a Registration Statement as set forth in the Registration
Rights Agreement.
1.3.18 "SHARES" shall mean, collectively, the shares of Common Stock of
the Company issued upon conversion of the Preferred Stock subscribed for
hereunder and those shares of Common Stock issuable to the Investor upon
exercise of the Warrants.
1.3.19 "SUBSEQUENT FINANCING" shall mean any offer and sale of shares
of Preferred Stock or debt that is convertible into shares of Common Stock or
otherwise senior or superior to the Preferred Stock.
1.3.20 "TRANSACTION DOCUMENTS" shall mean this Agreement, all Schedules
and Exhibits attached hereto and all other documents and instruments to be
executed and delivered by the parties in order to consummate the transactions
contemplated hereby, including, but not limited to the documents listed in
Sections 3.2 and 3.3 hereof.
1.3.21 "WARRANTS" shall mean the Common Stock Purchase Warrants in the
form attached hereto Exhibit D.
PAGE 3
ARTICLE II
SALE AND PURCHASE OF ICEWEB, INC.
PREFERRED STOCK AND WARRANTS PURCHASE PRICE
2.1 SALE OF PREFERRED STOCK AND ISSUANCE OF WARRANTS.
(a) Upon the terms and subject to the conditions set forth herein, and
in accordance with applicable law, the Company agrees to sell to the Investor,
and the Investor agrees to purchase from the Company, on the Closing Date
1,666,667 shares of Preferred Stock and the Warrants for the (the "PURCHASE
PRICE") of One Million Dollars ($1,000,000.00). The Purchase Price shall be paid
by the Investor to the Company on the Closing Date by a wire transfer of the
Purchase Price into escrow to be held by the escrow agent pursuant to the terms
of the Escrow Agreement. The Company shall cause the Preferred Stock and the
Warrants to be issued to the Investor upon the release of the Purchase Price to
the Company by the escrow agent pursuant to the terms of the Escrow Agreement.
The Company shall register the shares of Common Stock into which the Preferred
Stock is convertible pursuant to the terms and conditions of a Registration
Rights Agreement attached hereto as EXHIBIT B.
(b) The Preferred Stock shall be convertible by the Investor into an
aggregate total of 1,666,667 shares of Common Stock (the "CONVERSION SHARES");
provided, however, that the Investor shall not be entitled to convert the
Preferred Stock into shares of Common Stock that would result in beneficial
ownership by the Investor and its affiliates of more than 4.99% of the then
outstanding number of shares of Common Stock on such date; provided, however,
that the Investor may revoke the restriction described in this paragraph upon
sixty-one (61) days prior written notice from the Investor to the Company. For
the purposes of the immediately preceding sentence, beneficial ownership shall
be determined in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended, and Regulation 13d-3 thereunder.
(c) Upon execution and delivery of this Agreement and the Company's
receipt of the Purchase Price from the Escrow Agent pursuant to the terms of the
Escrow Agreement, the Company shall issue to the Investor the Warrants to
purchase an aggregate of 4,500,000 shares of Common Stock at exercise prices as
stated in the Warrants, all pursuant to the terms and conditions of the form of
Warrants attached hereto as EXHIBIT C; provided, however, that the Investor
shall not be entitled to exercise the Warrants and receive shares of Common
Stock that would result in beneficial ownership by the Investor and its
affiliates of more than 4.99% of the then outstanding number of shares of Common
Stock on such date; provided, however, that the Investor may revoke the
restriction described in this section upon sixty-one (61) days prior written
notice from the Investor to the Company. For the purposes of
PAGE 4
the immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended, and Regulation 13d-3 thereunder.
2.2 PURCHASE PRICE. The Purchase Price shall be delivered by the Investor in the
form of a check or wire transfer made payable to the Escrow Agent in United
States Dollars pursuant to the Escrow Agreement on the Closing Date.
ARTICLE III
CLOSING DATE AND DELIVERIES AT CLOSING
3.1 CLOSING DATE The closing of the transactions contemplated by this Agreement
(the "CLOSING"), unless expressly determined herein, shall be held at the
offices of the Company, at 5:00 P.M. local time, on the Closing Date or on such
other date and at such other place as may be mutually agreed by the parties,
including closing by facsimile with originals to follow.
3.2 DELIVERIES BY THE COMPANY. In addition to and without limiting any other
provision of this Agreement, the Company agrees to deliver, or cause to be
delivered, to the escrow agent under the Escrow Agreement, the following:
(a) At or prior to Closing, an executed Agreement;
(b) At or prior to Closing, an executed Warrants in the name of
the Investor in the form attached hereto as Exhibit C;
(c) The executed Registration Rights Agreement;
(d) Certifications in form and substance acceptable to the Company
and the Investor from any and all brokers or agents involved
in the transactions contemplated hereby as to the amount of
commission or compensation payable to such broker or agent as
a result of the consummation of the transactions contemplated
hereby and from the Company or Investor, as appropriate, to
the effect that reasonable reserves for any other commissions
or compensation that may be claimed by any broker or agent
have been set aside;
(e) Evidence of approval of the Board of Directors and
Shareholders of the Company of the Transaction Documents and
the transactions contemplated hereby;
(f) Certificate of the President and the Secretary of the Company
that the Certificate of Designation has been adopted and
filed;
(g) Certificates of Existence or Authority to Transact Business of
the Company issued by each of the Secretary of State for the
State of Delaware and the Clerk of the Commonwealth of
Virginia State Corporation Commission;
PAGE 5
(h) An opinion from the Company's counsel concerning the
Transaction Documents and the transactions contemplated hereby
in form and substance reasonably acceptable to Investor;
(i) Stock Certificate in the name of Investor evidencing the
Preferred Stock; (j) The executed Escrow Agreement;
(k) Agreements executed by ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇
converting Company's promissory notes held by ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
and ▇▇▇▇▇ ▇▇▇▇ in the amount of $325,000 collectively into
shares of Common Stock at a conversion price of $0.60 per
share for a total consideration of 541,667 shares.
(l) Representation from the Company that at closing the maximum
debt on the books is $650,000 ($450,000 note to Comerica and
$150,000 note to ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, and $50,000 to ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, with the note to ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ only payable at
$10,000 per month with no interest)
(m) Evidence of appointment or election of four (4) additional
directors for the Company, in accordance with Paragraph 4.17
of the Agreement.
(n) Such other documents or certificates as shall be reasonably
requested by Investor or its counsel.
3.3 DELIVERIES BY INVESTOR. In addition to and without limiting any other
provision of this Agreement, the Investor agrees to deliver, or cause to be
delivered, to the escrow agent under the Escrow Agreement, the following:
(a) A deposit in the amount of the Investor Funds;
(b) The executed Agreement with all Exhibits and Schedules
attached hereto;
(c) The executed Registration Rights Agreement;
(d) The executed Escrow Agreement; and
(e) Such other documents or certificates as shall be reasonably
requested by the Company or its counsel.
In the event any document provided to the other party in Paragraphs 3.2 and 3.3
herein are provided by facsimile, the party shall forward an original document
to the other party within seven (7) business days.
PAGE 6
3.4 FURTHER ASSURANCES. The Company and the Investor shall, upon request, on or
after the Closing Date, cooperate with each other (specifically, the Company
shall cooperate with the Investor, and the Investor shall cooperate with the
Company) by furnishing any additional information, executing and delivering any
additional documents and/or other instruments and doing any and all such things
as may be reasonably required by the parties or their counsel to consummate or
otherwise implement the transactions contemplated by this Agreement.
3.5 WAIVER. The Investor may waive any of the requirements of Section 3.2 of
this Agreement, and the Company at its discretion may waive any of the
provisions of Section 3.3 of this Agreement. The Investor may also waive any of
the requirements of the Company under the Escrow Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
ICEWEB, INC.
The Company represents and warrants to the Investor as of the date
hereof and as of Closing (which warranties and representations shall survive the
Closing regardless of what examinations, inspections, audits and other
investigations the Investor has heretofore made or may hereinafter make with
respect to such warranties and representations) as follows:
4.1 ORGANIZATION AND QUALIFICATION. ICEWEB, INC. is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has the requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as it is now being conducted
and is duly qualified to do business in any other jurisdiction by virtue of the
nature of the businesses conducted by it or the ownership or leasing of its
properties, except where the failure to be so qualified will not, when taken
together with all other such failures, have a Material Adverse Effect on the
business, operations, properties, assets, financial condition or results of
operation of ICEWEB, INC. and its subsidiaries taken as a whole.
4.2 ARTICLES OF INCORPORATION AND BY-LAWS. The complete and correct copies of
the Company's Articles and By-Laws, as amended or restated to date which have
been filed with the Securities and Exchange Commission are a complete and
correct copy of such document as in effect on the date hereof and as of the
Closing Date.
PAGE 7
4.3 CAPITALIZATION.
4.3.1 The authorized and outstanding capital stock of ICEWEB, INC. is
set forth in ICEWEB, INC.'s Quarterly Report on Form 10-QSBK, filed on February
17th, 2005 with the Securities and Exchange Commission and updated on all
subsequent SEC Documents. All shares of capital stock have been duly authorized
and are validly issued, and are fully paid and no assessable, and free of
preemptive rights.
4.3.2 As of the date of this Agreement, the authorized capital stock of
the Company consists of 1,000,000,000 shares of Common Stock ($.001 par value)
and 10,000,000 shares of Preferred Stock ($.001 par value), of which
approximately 465,000,000 share of Common Stock are issued and outstanding. As
of Closing, following the issuance by the Company of the Preferred Stock to the
Investor, the authorized capital stock of the Company will consist of
1,000,000,000 shares of Common Stock and 10,000,000 shares of Preferred Stock,
of which approximately 465,000,000 shares of Common Stock ($.001 par value) and
1,666,667 shares of Preferred Stock will be issued and outstanding. Following
the 1 for 80 reverse split 1,000,000,000 shares of Common Stock will be
authorized, of which approximately 5,812,500 shares of Common Stock ($.001 par
value) will be issued and outstanding. Following the 1 for 80 reverse split
10,000,000 shares of Preferred Stock ($.001 par value) will be authorized, of
which 1,666,667 shares of Preferred Stock shall be issued and outstanding. As of
Closing, holders of options and warrants will hold a combination of options and
warrants to purchase an aggregate of approximately 50,000,000 shares of Common
Stock (effective post 80 to 1 reverse split amount will be approximately 625,000
shares of Common Stock). All outstanding shares of capital stock have been duly
authorized and are validly issued, and are fully paid and nonassessable and free
of preemptive rights (with the exception of shares held by not more than five
(5) persons, whose holdings are contested by the Company, none of which has a
Material Adverse Effect on the Company - See Schedule 4.3.2 attached). All
shares of capital stock described above to be issued have been duly authorized
and when issued, will be validly issued, fully paid and nonassessable and free
of preemptive rights.
4.3.3 Except pursuant to this Agreement and as set forth in Schedule
4.3 hereto, and as set forth in ICEWEB, INC.'s SEC Documents, filed with the
SEC, as of the date hereof and as of the Closing Date, there are not now
outstanding options, warrants, rights to subscribe for, calls or commitments of
any character whatsoever relating to, or securities or rights convertible into
or exchangeable for, shares of any class of capital stock of ICEWEB, INC., or
agreements, understandings or arrangements to which ICEWEB, INC. is a party, or
by which ICEWEB, INC. is or may be bound, to issue additional shares of its
capital stock or options, warrants, scrip or rights to subscribe for, calls or
commitment of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, any shares of any class of its capital
stock. The Company agrees to inform the Investors in writing of any additional
warrants granted prior to the Closing Date.
PAGE 8
4.3.3 The Company on the Closing Date (i) will have full right, power,
and authority to sell, assign, transfer, and deliver, by reason of record and
beneficial ownership, to the Investor, ICEWEB, INC. Shares hereunder, free and
clear of all liens, charges, claims, options, pledges, restrictions, and
encumbrances whatsoever; and (ii) upon conversion of the Preferred Stock or
exercise of the Warrants, the Investor will acquire good and marketable title to
such Shares, free and clear of all liens, charges, claims, options, pledges,
restrictions, and encumbrances whatsoever, except as otherwise provided in this
Agreement as to the limitation on the voting rights of such Shares in certain
circumstances.
4.4 AUTHORITY. ICEWEB, INC. has all requisite corporate power and authority to
execute and deliver this Agreement, the Preferred Stock, and the Warrants, to
perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement by ICEWEB, INC. and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action and no other
corporate proceedings on the part of ICEWEB, INC. is necessary to authorize this
Agreement or to consummate the transactions contemplated hereby except as
disclosed in this Agreement. This Agreement has been duly executed and delivered
by ICEWEB, INC. and constitutes the legal, valid and binding obligation of
ICEWEB, INC., enforceable against ICEWEB, INC. in accordance with its terms.
4.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS. The execution and delivery of
this Agreement by ICEWEB, INC. does not, and the performance by ICEWEB, INC. of
their respective obligations hereunder will not: (i) conflict with or violate
the Articles or By-Laws of ICEWEB, INC.; (ii) conflict with, breach or violate
any federal, state, foreign or local law, statute, ordinance, rule, regulation,
order, judgment or decree (collectively, "Laws") in effect as of the date of
this Agreement and applicable to ICEWEB, INC.; or (iii) result in any breach of,
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, give to any other entity any right of
termination, amendment, acceleration or cancellation of, require payment under,
or result in the creation of a lien or encumbrance on any of the properties or
assets of ICEWEB, INC. pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which ICEWEB, INC. is a party or by ICEWEB, INC. or any of its
properties or assets is bound. Excluding from the foregoing are such violations,
conflicts, breaches, defaults, terminations, accelerations, creations of liens,
or incumbency that would not, in the aggregate, have a Material Adverse Effect.
4.6 REPORT AND FINANCIAL STATEMENTS. ICEWEB, INC.'s Annual Report on Form 10-K,
filed on January 14th, 2005, with the SEC contains the audited financial
statements of the Company for fiscal year 2004. In addition the company has
provided the first quarter report on Form 10-QSB, filed on February 17th, 2005
with the SEC which has been reviewed by the companies auditors. Collectively,
the company has provided "FINANCIAL STATEMENTS" to the investor which accurately
represent the financial condition of the company through December 31st, 2004.
PAGE 9
Each of the balance sheets contained in or incorporated by reference into any
such Financial Statements (including the related notes and schedules thereto)
fairly presented the financial position of the Company, as of its date, and each
of the statements of income and changes in stockholders' equity and cash flows
or equivalent statements in such Financial Statements (including any related
notes and schedules thereto) fairly presents, changes in stockholders' equity
and changes in cash flows, as the case may be, of the Company, for the periods
to which they relate, in each case in accordance with United States generally
accepted accounting principles ("U.S. GAAP") consistently applied during the
periods involved, except in each case as may be noted therein, subject to normal
year-end audit adjustments in the case of unaudited statements. The books and
records of ICEWEB, INC. have been, and are being, maintained in all material
respects in accordance with U.S. GAAP and any other applicable legal and
accounting requirements and reflect only actual transaction.
4.7 COMPLIANCE WITH APPLICABLE LAWS. ICEWEB, INC. is not in violation of, or, to
the knowledge of ICEWEB, INC. is under investigation with respect to or has been
given notice or has been charged with the violation of any Law of a governmental
agency, except for violations which individually or in the aggregate do not have
a Material Adverse Effect.
4.8 BROKERS. Except as set forth on Schedule 4.8, no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
Commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of ICEWEB, INC.
4.9 SEC DOCUMENTS. ICEWEB, INC. acknowledges that ICEWEB, INC. is a publicly
held company and has made available to the Investor after demand true and
complete copies of any requested SEC Documents. The Company has registered its
Common Stock pursuant to Section 12(d) [15(d)] of the 1934 Act, and the Common
Stock is quoted and traded on the OTC Bulletin Board of the National Association
of Securities Dealers, Inc. The Company has received no notice, either oral or
written, with respect to the continued quotation or trading of the Common Stock
on the OTC Bulletin Board. The Company has not provided to the Investor any
information that, according to applicable law, rule or regulation, should have
been disclosed publicly prior to the date hereof by the Company, but which has
not been so disclosed. As of their respective dates, the SEC Documents complied
in all material respects with the requirements of the 1934 Act, and rules and
regulations of the SEC promulgated thereunder and the SEC Documents did 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..
4.10 LITIGATION. To the knowledge of ICEWEB, INC., no litigation, claim, or
other proceeding before any court or governmental agency is pending or to the
knowledge of the Company, threatened against the Company, the prosecution or
outcome of which may have a Material Adverse Effect.
PAGE 10
4.11 EXEMPTION FROM REGISTRATION. Subject to the accuracy of the Investor's
representations in Article V, except as required pursuant to the Registration
Rights Agreement, the sale of the Common Stock and Warrants by the Company to
the Investor will not require registration under the 1933 Act, but may require
registration under New York state securities law if applicable to the Investor.
When validly converted in accordance with the terms of the Preferred Stock, and
upon exercise of the Warrants in accordance with their terms, the Shares
underlying the Preferred Stock and the Warrants will be duly and validly issued,
fully paid, and non-assessable. The Company is issuing the Preferred Stock and
the Warrants in accordance with and in reliance upon the exemption from
securities registration afforded, inter alia, by Rule 506 under Regulation D as
promulgated by the SEC under the 1933 Act, and/or Section 4(2) of the 1933 Act;
provided, however, that certain filings and registrations may be required under
state securities "blue sky" laws depending upon the residency of the Investor.
4.12 NO GENERAL SOLICITATION OR ADVERTISING IN REGARD TO THIS TRANSACTION.
Neither the Company nor any of its Affiliates nor, to the knowledge of the
Company, any Person acting on its or their behalf (i) has conducted or will
conduct any general solicitation (as that term is used in Rule 502(c) of
Regulation D as promulgated by the SEC under the ▇▇▇▇ ▇▇▇) or general
advertising with respect to the sale of the Preferred Stock or Warrants, or (ii)
made any offers or sales of any security or solicited any offers to buy any
security under any circumstances that would require registration of the
Preferred Stock or Warrants, under the 1933 Act, except as required herein.
4.13 NO MATERIAL ADVERSE EFFECT. Except as set forth in Schedule 4.13 attached
hereto, since December 31, 2004, no event or circumstance resulting in a
Material Adverse Effect has occurred or exists with respect to the Company. No
material supplier has given notice, oral or written, that it intends to cease or
reduce the volume of its business with the Company from historical levels. Since
December 31, 2004, no event or circumstance has occurred or exists with respect
to the Company or its businesses, properties, prospects, operations or financial
condition, that, under any applicable law, rule or regulation, requires public
disclosure or announcement prior to the date hereof by the Company but which has
not been so publicly announced or disclosed in writing to the Investor.
4.14 MATERIAL NON-PUBLIC INFORMATION. The Company has not disclosed to the
Investors any material non-public information that (i) if disclosed, would
reasonably be expected to have a material effect on the price of the Common
Stock or (ii) according to applicable law, rule or regulation, should have been
disclosed publicly by the Company prior to the date hereof but which has not
been so disclosed.
4.15 INTERNAL CONTROLS AND PROCEDURES. The Company maintains books and records
and internal accounting controls which provide reasonable assurance that (i) all
transactions to which the Company or any subsidiary is a party or by which its
properties are bound are executed with management's authorization; (ii) the
recorded accounting of the Company's consolidated assets is
PAGE 11
compared with existing assets at regular intervals; (iii) access to the
Company's consolidated assets is permitted only in accordance with management's
authorization; and (iv) all transactions to which the Company or any subsidiary
is a party or by which its properties are bound are recorded as necessary to
permit preparation of the financial statements of the Company in accordance with
U.S. generally accepted accounting principles.
4.16 FULL DISCLOSURE. No representation or warranty made by ICEWEB, INC. in this
Agreement and no certificate or document furnished or to be furnished to the
Investor pursuant to this Agreement contains or will contain any untrue
statement of a material fact, or omits or will omit to state a material fact
necessary to make the statements contained herein or therein not misleading.
4.17 INDEPENDENT BOARD. As of the date of this Agreement, the Board of Directors
of the Company consists of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇. At the Closing, the Board of
Directors of the Company shall consist of five directors, three of whom shall be
independent. As of the date of this Agreement, the Audit and Compensation
Committees of the Board of Directors of the Company are comprised, and at the
Closing will be comprised, of independent directors.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
The Investor represents and warrants to the Company that:
5.1 ORGANIZATION AND STANDING OF THE INVESTOR. The Investor is a limited
partnership duly formed, validly existing and in good standing under the laws of
the State of Delaware. The state in which any offer to purchase shares hereunder
was made or accepted by such Investor is the state shown as such Investor's
address. The Investor was not formed for the purpose of investing solely in the
Preferred Stock, the Warrants or the shares of Common Stock which are the
subject of this Agreement.
5.2 AUTHORIZATION AND POWER. The Investor has the requisite power and authority
to enter into and perform this Agreement and to purchase the securities being
sold to it hereunder. The execution, delivery and performance of this Agreement
by the Investor and the consummation by the Investor of the transactions
contemplated hereby have been duly authorized by all necessary partnership
action where appropriate. This Agreement and the Registration Rights Agreement
have been duly executed and delivered by the Investor and at the Closing shall
constitute valid and binding obligations of the Investor enforceable against the
Investor in accordance with their terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation, conservatorship, receivership or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application.
PAGE 12
5.3 NO CONFLICTS. The execution, delivery and performance of this Agreement and
the consummation by the Investor of the transactions contemplated hereby or
relating hereto do not and will not (i) result in a violation of such Investor's
charter documents or bylaws where appropriate or (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 any agreement, indenture or
instrument to which the Investor is a party, or result in a violation of any
law, rule, or regulation, or any order, judgment or decree of any court or
governmental agency applicable to the Investor or its properties (except for
such conflicts, defaults and violations as would not, individually or in the
aggregate, have a Material Adverse Effect on such Investor). The Investor is not
required to obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it to execute,
deliver or perform any of such Investor's obligations under this Agreement or to
purchase the securities from the Company in accordance with the terms hereof,
provided that for purposes of the representation made in this sentence, the
Investor is assuming and relying upon the accuracy of the relevant
representations and agreements of the Company herein.
5.4 FINANCIAL RISKS. The Investor acknowledges that such Investor is able to
bear the financial risks associated with an investment in the securities being
purchased by the Investor from the Company and that it has been given full
access to such records of the Company and the subsidiaries and to the officers
of the Company and the subsidiaries as it has deemed necessary or appropriate to
conduct its due diligence investigation. The Investor is capable of evaluating
the risks and merits of an investment in the securities being purchased by the
Investor from the Company by virtue of its experience as an investor and its
knowledge, experience, and sophistication in financial and business matters and
the Investor is capable of bearing the entire loss of its investment in the
securities being purchased by the Investor from the Company.
5.5 ACCREDITED INVESTOR. The Investor is (i) an "accredited investor" as that
term is defined in Rule 501 of Regulation D promulgated under the 1933 Act by
reason of Rule 501(a)(3) and (6), (ii) experienced in making investments of the
kind described in this Agreement and the related documents, (iii) able, by
reason of the business and financial experience of its officers (if an entity)
and professional advisors (who are not affiliated with or compensated in any way
by the Company or any of its affiliates or selling agents), to protect its own
interests in connection with the transactions described in this Agreement, and
the related documents, and (iv) able to afford the entire loss of its investment
in the securities being purchased by the Investor from the Company.
5.6 BROKERS. Except as set forth in Schedule 4.8, no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
Commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Investor.
PAGE 13
5.7 KNOWLEDGE OF COMPANY. The Investor and such Investor's advisors, if any,
have been, upon request, furnished with all materials relating to the business,
finances and operations of the Company and materials relating to the offer and
sale of the securities being purchased by the Investor from the Company . The
Investor and such Investor's advisors, if any, have been afforded the
opportunity to ask questions of the Company and have received complete and
satisfactory answers to any such inquiries.
5.8 RISK FACTORS The Investor understands that such Investor's investment in the
securities being purchased by the Investor from the Company involves a high
degree of risk. The Investor understands that no United States federal or state
agency or any other government or governmental agency has passed on or made any
recommendation or endorsement of the securities being purchased by the Investor
from the Company. The Investor warrants that such Investor is able to bear the
complete loss of such Investor's investment in the securities being purchased by
the Investor from the Company.
5.9 FULL DISCLOSURE. No representation or warranty made by the Investor in this
Agreement and no certificate or document furnished or to be furnished to ICEWEB,
INC. pursuant to this Agreement contains or will contain any untrue statement of
a material fact, or omits or will omit to state a material fact necessary to
make the statements contained herein or therein not misleading. Except as set
forth or referred to in this Agreement, Investor does not have any agreement or
understanding with any person relating to acquiring, holding, voting or
disposing of any equity securities of the Company.
5.10 REIMBURSEMENT OF DUE DILIGENCE EXPENSES. The Company shall pay Investor
$35,000 for due diligence expenses.
ARTICLE VI
COVENANTS OF THE COMPANY
6.1. REGISTRATION RIGHTS. The Company shall cause the Registration Rights
Agreement to remain in full force and effect according to the provisions of the
Registration Rights Agreement and the Company shall comply in all material
respects with the terms thereof.
6.2. RESERVATION OF COMMON STOCK. As of the date hereof, the Company has
reserved and the Company shall continue to reserve and keep available at all
times, free of preemptive rights, shares of Common Stock for the purpose of
enabling the Company to issue the shares of Common Stock underlying the
Preferred Stock and Warrants.
PAGE 14
6.3. COMPLIANCE WITH LAWS. The Company hereby agrees to comply in all respects
with the Company's reporting, filing and other obligations under the Laws.
6.4. EXCHANGE ACT REGISTRATION. The Company (a) will continue its obligation to
report to the SEC under Section 12(d) of the 1934 Act [or (b) shall register
under Section 12(b) or (g) under the 1934 Act and thereafter shall continue to
be registered thereunder] and [ in either case] will use its best efforts to
comply in all respects with its reporting and filing obligations under the 1934
Act, and will not take any action or file any document (whether or not permitted
by the 1934 Act or the rules thereunder) to terminate or suspend any such
registration or to terminate or suspend its reporting and filing obligations
under the 1934 until the Investors have disposed of all of their Shares.
6.5. CORPORATE EXISTENCE; CONFLICTING AGREEMENTS. The Company will take all
steps necessary to preserve and continue the corporate existence of the Company.
The Company shall not enter into any agreement, the terms of which agreement
would restrict or impair the right or ability of the Company to perform any of
its obligations under this Agreement or any of the other agreements attached as
exhibits hereto.
6.6 PREFERRED STOCK. For a period of three years from the closing the Company
will not issue any Preferred Stock of the Company
6.7 CONVERTIBLE DEBT. On or prior to the Closing Date, the Company will cause to
be cancelled all convertible debt in the Company. For a period of three years
from the closing the Company will not issue any convertible debt.
6.8 RESET EQUITY DEALS. On or prior to the Closing Date, the Company will cause
to be cancelled any and all reset features related to any shares outstanding
that could result in additional shares being issued. For a period of three years
from the closing the Company will not enter into any transactions that have any
reset features that could result in additional shares being issued.
6.9 INDEPENDENT DIRECTORS. The Company shall have caused the appointment of the
majority of the board of directors to be qualified independent directors at or
before Closing. If at any time after Closing the board shall not be composed in
the majority of qualified independent directors, the Company shall pay to the
Investors, pro rata, as liquidated damages and not as a penalty, an amount equal
to twenty four percent (24%) of the Purchase Price per annum, payable monthly.
The parties agree that the only damages payable for a violation of the terms of
this Agreement with respect to which liquidated damages are expressly provided
shall be such liquidated damages. Nothing shall preclude the Investor from
pursuing or obtaining specific performance or other equitable relief with
respect to this Agreement. The parties hereto agree that the liquidated damages
provided for in this Section 6.9 constitute a reasonable estimate of the damages
that may be incurred by the Investor by reason of the failure of the Company to
appoint at least two independent directors in accordance with the provision
hereof.
PAGE 15
6.10 INDEPENDENT DIRECTORS BECOME MAJORITY OF AUDIT AND COMPENSATION COMMITTEES.
The Company will cause the appointment of a majority of outside directors to the
audit and compensation committees of the board of directors at or before
Closing. If at any time after Closing such independent directors do not compose
the majority of the audit and compensation committees, the Company shall pay to
the Investors, pro rata, as liquidated damages and not as a penalty, an amount
equal to twenty four percent (24%) of the Purchase Price per annum, payable
monthly. The parties agree that the only damages payable for a violation of the
terms of this Agreement with respect to which liquidated damages are expressly
provided shall be such liquidated damages. Nothing shall preclude the Investor
from pursuing other remedies or obtaining specific performance or other
equitable relief with respect to this Agreement. The parties hereto agree that
the liquidated damages provided for in this Section 6.10 constitute a reasonable
estimate of the damages that may be incurred by the Investor by reason of the
failure of the Company to appoint at least two independent directors in
accordance with the provision hereof.
6.11 USE OF PROCEEDS. The Company will use the proceeds from the sale of the
Preferred Stock and the Warrants (excluding amounts paid by the Company for
legal and administrative fees in connection with the sale of such securities)
for working capital and acquisitions.
6.12 RIGHT OF FIRST REFUSAL. Each Investor shall have the right to participate
in any subsequent funding by the Company on a pro rata basis at ninety-four
percent (94%) of the offering price.
6.13 PRICE ADJUSTMENT. If, within the 24 months following the Closing Date, the
Company closes on the sale of a note or notes, shares of Common Stock, or shares
of any class of Preferred Stock at a price per share of Common Stock, or with a
conversion right to acquire Common Stock at a price per share of Common Stock,
that is less than the Conversion Price (as adjusted to the capitalization per
share as of the Closing Date, following any stock splits, stock dividends, or
the like) (collectively, the "Subsequent Conversion Price"), the Company shall
make a post-Closing adjustment in the Conversion Price of outstanding preferred
stock so that the effective price per share paid by the Investor is reduced to
being equivalent to such lower conversion price after taking into account any
prior conversions of the Preferred Stock and/or exercises of the Warrant.
6.13a INSIDER SELLING. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ agrees to not sell shares of Company
common stock in excess of one percent of the total number of shares of Company
common stock outstanding per quarter or at a price less than $3.00 per share
during the 2 year period following the Closing Date. The earliest any other
"Insiders" can start selling their shares shall be two years from Closing.
Insiders shall include all officers and directors of the Company. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ and the Investor shall not be considered "Insiders".
PAGE 16
6.14 EMPLOYMENT AND CONSULTING CONTRACTS. Employment and consulting contracts
with officers and directors shall at time of Closing and for two years
thereafter shall not contain: any bonuses not related directly to increases in
earnings; any car allowances not approved by the unanimous vote of the board of
directors; any anti-dilution or reverse split protection provisions for shares,
options or warrants; any deferred compensation; any unreasonable compensation or
benefit clauses; or any termination clauses of over one year of salary. This
clause may be waived conditionally in specific conditions by the Investor.
6.15 NOTICE OF INTENT TO SELL OR MERGE COMPANY. The Company will give Investor
70 days notice before the event of a sale of all or substantially all of the
assets of the Company or the merger or consolidation of the Company in a
transaction in which the Company is not the surviving entity. The Investor shall
have the right to waive such notice requirement. Notice may only be given if
compliant with regulation FD.
6.16 SALE OR MERGER OF COMPANY. In the event of a sale or merger of
substantially all of the Company or an underwritten public offering of the
Common Stock of the Company, then the 4.99% restriction in the Preferred Stock
and in the Warrants will immediately be terminated and the Investors will have
the right to convert the Preferred Stock and exercise the Warrants concurrent
with the sale, subject to the conversion by the Investor of the Preferred Stock
and the payment by the Investor to the Company of the aggregate exercise price
of the Warrant.
6.17 DEBT LIMITATION. The Company agrees for three years after Closing not to
enter into any new borrowings of more than twice as much as the sum of the
EBITDA from recurring operations over the past four quarters, with the exception
of short-term borrowings ("Short Term PMSI Secured Borrowing") to purchase
hardware and commercial off-the-shelf (COTS) software to be resold to Company
customers for more than the short-term borrowings, where the amount borrowed is
secured by a purchase money security interest in the hardware and COTS software
being purchased, and said borrowing is to be repaid with accounts receivable
from the proceeds of the hardware and COTS software resale to the Company
customer. Short Term PMSI Secured Borrowing is permitted to exceed the debt
limitation otherwise required by this Paragraph.
6.18 SUBSEQUENT EQUITY SALES. From the date hereof until such time as no
Purchaser holds any of the Securities, the Company shall be prohibited from
effecting or entering into an agreement to effect any Subsequent Financing
involving a "Variable Rate Transaction" or an "MFN Transaction" (each as defined
below). The term "Variable Rate Transaction" shall mean a transaction in which
the Company issues or sells (i) any debt or equity securities that are
convertible into, exchangeable or exercisable for, or include the right to
receive additional shares of Common Stock either (A) at a conversion,
PAGE 17
exercise or exchange rate or other price that is based upon and/or varies with
the trading prices of or quotations for the shares of Common Stock at any time
after the initial issuance of such debt or equity securities, or (B) with a
conversion, exercise or exchange price that is subject to being reset at some
future date after the initial issuance of such debt or equity security or upon
the occurrence of specified or contingent events directly or indirectly related
to the business of the Company or the market for the Common Stock. The term "MFN
Transaction" shall mean a transaction in which the Company issues or sells any
securities in a capital raising transaction or series of related transactions
which grants to an investor the right to receive additional shares based upon
future transactions of the Company on terms more favorable than those granted to
such investor in such offering. Any Purchaser shall be entitled to obtain
injunctive relief against the Company to preclude any such issuance, which
remedy shall be in addition to any right to collect damages. Notwithstanding the
foregoing, this Section 4.14 shall not apply in respect of an Exempt Issuance,
except that no Variable Rate Transaction or MFN Transaction shall be an Exempt
Issuance.
ARTICLE VII
COVENANTS OF THE INVESTOR
7.1 COMPLIANCE WITH LAW. The Investor's trading activities with respect to
shares of the Company's Common Stock will be in compliance with all applicable
state and federal securities laws, rules and regulations and rules and
regulations of any public market on which the Company's Common Stock is listed.
7.2 TRANSFER RESTRICTIONS. The Investor's acknowledge that (1) the Preferred
Stock, Warrants and shares underlying the Preferred Stock and Warrants have not
been registered under the provisions of the 1933 Act, and may not be transferred
unless (A) subsequently registered thereunder or (B) the Investor shall have
delivered to the Company an opinion of counsel, reasonably satisfactory in form,
scope and substance to the Company, to the effect that the Preferred Stock,
Warrants and shares underlying the Notes and Warrants to be sold or transferred
may be sold or transferred pursuant to an exemption from such registration; and
(2) any sale of the Preferred Stock, Warrants and shares underlying the
Preferred Stock and Warrants made in reliance on Rule 144 promulgated under the
1933 Act may be made only in accordance with the terms of said Rule and further,
if said Rule is not applicable, any resale of such securities under
circumstances in which the seller, or the person through whom the sale is made,
may be deemed to be an underwriter, as that term is used in the 1933 Act, may
require compliance with some other exemption under the 1933 Act or the rules and
regulations of the SEC thereunder.
PAGE 18
7.3 RESTRICTIVE LEGEND. The Investor acknowledges and agrees that the Preferred
Stock, the Warrants and the Shares underlying the Preferred Stock and Warrants,
and, until such time as the Shares underlying the Preferred Stock and Warrants
have been registered under the 1933 Act and sold in accordance with an effective
Registration Statement, certificates and other instruments representing any of
the Shares, shall bear a restrictive legend in substantially the following form
(and a stop-transfer order may be placed against transfer of any such
securities):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER
SUCH SHARES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD,
PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A
REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE
UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES
LAWS, OR (2) IN ACCORDANCE WITH THE PROVISIONS OF REGULATION
S, OR (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT."
ARTICLE VIII
CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATIONS
The obligation of the Company to consummate the transactions
contemplated hereby shall be subject to the fulfillment, on or prior to Closing
Date, of the following conditions:
8.1 NO TERMINATION. This Agreement shall not have been terminated pursuant to
Article X hereof.
8.2 REPRESENTATIONS TRUE AND CORRECT. The representations and warranties of the
Investor contained in this Agreement shall be true and correct in all material
respects on and as of the Closing Date with the same force and effect as if made
on as of the Closing Date.
8.3 COMPLIANCE WITH COVENANTS. The Investor shall have performed and complied in
all material respects with all covenants, agreements, and conditions required by
this Agreement to be performed or complied by it prior to or at the Closing
Date.
8.4 NO ADVERSE PROCEEDINGS. On the Closing Date, no action or proceeding shall
be pending by any public authority or individual or entity before any court or
administrative body to restrain, enjoin, or otherwise prevent the consummation
of this Agreement or the transactions contemplated hereby or to recover any
damages or obtain other relief as a result of the transactions proposed hereby.
PAGE 19
ARTICLE IX
CONDITIONS PRECEDENT TO INVESTOR'S OBLIGATIONS
The obligation of the Investors to consummate the transactions
contemplated hereby shall be subject to the fulfillment, on or prior to Closing
Date unless specified otherwise, of the following conditions:
9.1 NO TERMINATION. This Agreement shall not have been terminated pursuant to
Article X hereof.
9.2 REPRESENTATIONS TRUE AND CORRECT. The representations and warranties of
ICEWEB, INC. contained in this Agreement shall be true and correct in all
material respects on and as of the Closing Date with the same force and effect
as if made on as of the Closing Date.
9.3 COMPLIANCE WITH COVENANTS . ICEWEB, INC. shall have performed and complied
in all material respects with all covenants, agreements, and conditions required
by this Agreement to be performed or complied by it prior to or at the Closing
Date.
9.4 NO ADVERSE PROCEEDINGS. On the Closing Date, no action or proceeding shall
be pending by any public authority or individual or entity before any court or
administrative body to restrain, enjoin, or otherwise prevent the consummation
of this Agreement or the transactions contemplated hereby or to recover any
damages or obtain other relief as a result of the transactions proposed hereby.
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
10.1 TERMINATION. This Agreement may be terminated at any time prior to the
Effective Time:
10.1.1 by mutual written consent of the Investor and the Company;
10.1.2 by the Company upon a material breach of any representation,
warranty, covenant or agreement on the part of the Investor set forth in this
Agreement, or the Investor upon a material breach of any representation,
warranty, covenant or agreement on the part of ICEWEB, INC. set forth in this
Agreement, or if any representation or warranty of ICEWEB, INC. or the Investor,
respectively, shall have become untrue, in either case such that any of the
conditions set forth in Article VIII or Article IX hereof would not be satisfied
(a "TERMINATING BREACH"), and such breach shall, if capable of cure, not have
been cured within five (5) business days after receipt by the party in breach of
a notice from the non-breaching party setting forth in detail the nature of such
breach.
PAGE 20
10.2 EFFECT OF TERMINATION. Except as otherwise provided herein, in the event of
the termination of this Agreement pursuant to Section 10.1 hereof, there shall
be no liability on the part of the Company or the Investor or any of their
respective officers, directors, agents or other representatives and all rights
and obligations of any party hereto shall cease; provided that in the event of a
Terminating Breach, the breaching party shall be liable to the non-breaching
party for all costs and expenses incurred by the non-breaching party not to
exceed $50,000.
10.3 AMENDMENT. This Agreement may be amended by the parties hereto any time
prior to the Closing Date by an instrument in writing signed by the parties
hereto.
10.4 WAIVER. At any time prior to the Closing Date, ICEWEB, INC. or the
Investor, as appropriate, may: (a) extend the time for the performance of any of
the obligations or other acts of other party or; (b) waive any inaccuracies in
the representations and warranties contained herein or in any document delivered
pursuant hereto which have been made to it or them; or (c) waive compliance with
any of the agreements or conditions contained herein for its or their benefit.
Any such extension or waiver shall be valid only if set forth in an instrument
in writing signed by the party or parties to be bound hereby.
ARTICLE XI
GENERAL PROVISIONS
11.1 TRANSACTION COSTS. Except as otherwise provided herein, each of the parties
shall pay all of his or its costs and expenses (including attorney fees and
other legal costs and expenses and accountants' fees and other accounting costs
and expenses) incurred by that party in connection with this Agreement;
provided., the Company shall pay the Investor's legal fees and costs, not to
exceed $35,000.
11.2 INDEMNIFICATION. The Investor agrees to indemnify, defend and hold the
Company (following the Closing Date) and its officers and directors harmless
against and in respect of any and all claims, demands, losses, costs, expenses,
obligations, liabilities or damages, including interest, penalties and
reasonable attorney's fees, that it shall incur or suffer, which arise out of or
result from any breach of this Agreement by such Investor or failure by such
Investor to perform with respect to any of its representations, warranties or
covenants contained in this Agreement or in any exhibit or other instrument
furnished or to be furnished under this Agreement. The Company agrees to
indemnify, defend and hold the Investor harmless against
PAGE 21
and in respect of any and all claims, demands, losses, costs, expenses,
obligations, liabilities or damages, including interest, penalties and
reasonable attorney's fees, that it shall incur or suffer, which arise out of,
result from or relate to any breach of this Agreement or failure by the Company
to perform with respect to any of its representations, warranties or covenants
contained in this Agreement or in any exhibit or other instrument furnished or
to be furnished under this Agreement. In no event shall the Company or the
Investors be entitled to recover consequential or punitive damages resulting
from a breach or violation of this Agreement nor shall any party have any
liability hereunder in the event of gross negligence or willful misconduct of
the indemnified party. In the event of a breach of this Agreement by the
Company, the Investor shall be entitled to pursue a remedy of specific
performance upon tender into the Court an amount equal to the Purchase Price
hereunder. The indemnification by the Investor shall be limited to the amount
they have invested on the Closing Date.
11.3 HEADINGS. The table of contents and headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
11.4 ENTIRE AGREEMENT. This Agreement (together with the Schedule, Exhibits,
Warrants and documents referred to herein) constitute the entire agreement of
the parties and supersede all prior agreements and undertakings, both written
and oral, between the parties, or any of them, with respect to the subject
matter hereof.
11.5 NOTICES. All notices and other communications hereunder shall be in writing
and shall be deemed to have been given (i) on the date they are delivered if
delivered in person; (ii) on the date initially received if delivered by
facsimile transmission followed by registered or certified mail confirmation;
(iii) on the date delivered by an overnight courier service; or (iv) on the
third business day after it is mailed by registered or certified mail, return
receipt requested with postage and other fees prepaid as follows:
If to ICEWEB, INC.:
------------------
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, CEO
PAGE 22
With a copy to:
--------------
▇▇▇ ▇. ▇▇▇▇, PLC
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No.: ▇▇▇.▇▇▇.▇▇▇▇
Attn: ▇▇▇ ▇. ▇▇▇▇, Esq.
If to the Investor:
▇▇▇▇▇▇ Partners L.P.
c/▇ ▇▇▇▇▇▇ Capital Advisors, LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
11.6 SEVERABILITY. If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law or public policy, all
other conditions and provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any such term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that the transactions contemplated hereby are fulfilled to the extent
possible.
11.7 BINDING EFFECT. All the terms and provisions of this Agreement whether so
expressed or not, shall be binding upon, inure to the benefit of, and be
enforceable by the parties and their respective administrators, executors, legal
representatives, heirs, successors and assignees.
11.8 PREPARATION OF AGREEMENT. This Agreement shall not be construed more
strongly against any party regardless of who is responsible for its preparation.
The parties acknowledge each contributed and is equally responsible for its
preparation.
11.9 GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, without giving effect to
applicable principles of conflicts of law.
PAGE 23
11.10 JURISDICTION. This Agreement shall be exclusively governed by and
construed in accordance with the laws of the State of New York. If any action is
brought among the parties with respect to this Agreement or otherwise, by way of
a claim or counterclaim, the parties agree that in any such action, and on all
issues, the parties irrevocably waive their right to a trial by jury. Exclusive
jurisdiction and venue for any such action shall be the Federal Courts serving
the State of New York. In the event suit or action is brought by any party under
this Agreement to enforce any of its terms, or in any appeal therefrom, it is
agreed that the prevailing party shall be entitled to reasonable attorneys fees
to be fixed by the arbitrator, trial court, and/or appellate court.
11.11 PREPARATION AND FILING OF SECURITIES AND EXCHANGE COMMISSION FILINGS. The
Investor shall reasonably assist and cooperate with the Company in the
preparation of all filings with the SEC after the Closing Date due after the
Closing Date.
11.12 FURTHER ASSURANCES, COOPERATION. Each party shall, upon reasonable request
by the other party, execute and deliver any additional documents necessary or
desirable to complete the transactions herein pursuant to and in the manner
contemplated by this Agreement. The parties hereto agree to cooperate and use
their respective best efforts to consummate the transactions contemplated by
this Agreement.
11.13 SURVIVAL The representations, warranties, covenants and agreements made
herein shall survive the Closing of the transaction contemplated hereby.
11.14 THIRD PARTIES Except as disclosed in this Agreement, nothing in this
Agreement, whether express or implied, is intended to confer any rights or
remedies under or by reason of this Agreement on any persons other than the
parties hereto and their respective administrators, executors, legal
representatives, heirs, successors and assignees. Nothing in this Agreement is
intended to relieve or discharge the obligation or liability of any third
persons to any party to this Agreement, nor shall any provision give any third
persons any right of subrogation or action over or against any party to this
Agreement.
11.15 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No failure or delay
on the part of any party hereto in the exercise of any right hereunder shall
impair such right or be construed to be a waiver of, or acquiescence in, any
breach of any representation, warranty, covenant or agreement herein, nor shall
nay single or partial exercise of any such right preclude other or further
exercise thereof or of any other right. All rights and remedies existing under
this Agreement are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
11.16 COUNTERPARTS. This Agreement may be executed in one or more counterparts,
and by the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original, but all of which taken together
shall constitute one and the same agreement. A facsimile transmission of this
signed Agreement shall be legal and binding on all parties hereto.
PAGE 24
IN WITNESS WHEREOF, the Investors and the Company have as of the date
first written above executed this Agreement.
THE COMPANY:
ICEWEB, INC.,
A DELAWARE CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
INVESTOR:
▇▇▇▇▇▇ PARTNERS LP
By: ▇▇▇▇▇▇ Capital Advisors LLC,
General Partner
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Managing Member
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇
PAGE 25
SCHEDULE 4.3.2. - OUTSTANDING COMMON STOCK WHICH IS NOT FULLY PAID
1. 1-800-ATTORNEYS, Inc. holds 10,000,000 shares of Common Stock post 10 for 1
split, for which consulting services were to be provided by a predecessor in
interest and were not provided. Removal of the Rule 144 restriction has been
denied and suit is being filed in the Circuit Court of Fairfax County to rescind
and cancel these shares either through decree of the Court or through
arbitration, which will be demanded in the alternative. The Company has
previously demanded arbitration (called for in underlying agreement) and
1-800-ATTORNEYS, Inc. has refused to submit to arbitration in Virginia pursuant
to underlying agreement.
2. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ was formerly a shareholder and principal in Disease Sciences,
Inc., the prior name of the Company. When IceWEB was merged into Disease
Sciences, Inc. and the name of the corporation changed to IceWEB, Inc.,
▇▇▇▇▇▇▇▇▇ was required to surrender his stock certificate and did not do so. The
Company has been attempting to locate his whereabouts and will be likewise
seeking to cancel his stock certificate which, post 10 for 1 split, is for
50,000,000 shares of common stock. The certificate contains Rule 144
restrictions. Suit to be filed in the Circuit Court of Fairfax County, Virginia
3. Healthspan is part of the ▇▇▇▇▇▇▇▇▇ group and holds 4,000,000 shares post 10
for 1 split. Its stock certificate was likewise to be surrendered with
▇▇▇▇▇▇▇▇▇'▇ and was not. Cancellation of this stock certificate will likewise be
sought in litigation to be filed in the Circuit Court of Fairfax County,
Virginia. Certificate also contains Rule 144 restrictions.
SCHEDULE 4.8 - LIST OF BROKERS
The sole broker/dealer for this transaction is Liberty Company, LLC -- ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, Principal
PAGE 26
EXHIBIT A
FORM OF CERTIFICATE OF DESIGNATIONS OF PREFERENCES, RIGHTS AND LIMITATIONS
PAGE 27
EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
PAGE 28
EXHIBIT C
WARRANTS
PAGE 29
EXHIBIT D
ESCROW AGREEMENT
PAGE 30